SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2)).
[x] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting materials pursuant to Rule 14a-11(c) or Rule 14a-12.
MBT FINANCIAL CORP.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of filing fee (check appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11.
(1) Title of each class of security to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[MBT FINANCIAL CORP. LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 1, 2008
TO THE SHAREHOLDERS OF MBT FINANCIAL CORP.:
The Annual Meeting of Shareholders of MBT Financial Corp will be held at
the Monroe Bank & Trust headquarters at 10 Washington Street, Monroe, Michigan
48161 on Thursday, May 1, 2008, at 10:00 a.m. (local time), for the following
purposes:
1. ELECTION OF DIRECTORS - To elect eleven directors of MBT Financial Corp.;
2. APPROVAL OF THE MBT 2008 STOCK INCENTIVE PLAN - To consider and vote upon
the approval of a new incentive compensation plan, the MBT Financial Corp
2008 Stock Incentive Plan (the "Plan");
3. To transact such other business as may properly come before the meeting or
any adjournment of it.
Only shareholders of record at the close of business on March 14, 2008 are
entitled to notice of and to vote at the Annual Meeting or any adjournment of
it.
By order of the Board of Directors,
/s/ H. Douglas Chaffin
H. Douglas Chaffin, President and
Chief Executive Officer
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
OR FOLLOW THE VOTING INSTRUCTIONS FOR TELEPHONE VOTING.
TABLE OF CONTENTS
Date, Time and Place of the Annual Meeting 1
Introduction 1
General Information about the Meeting and Voting Securities and Procedures 1
Ownership of Voting Shares 5
Proposal No. 1: Election of Directors 6
Corporate Governance 8
Audit Committee Report 13
Principal Accounting Firm Fees 14
Compensation Discussion and Analysis 15
Compensation Committee Report on Executive Compensation 26
Additional Information Regarding Compensation 27
Director Compensation 43
Director Independence and Related Party Transactions 47
Review, Approval or Ratification of Transactions with Related Persons 48
Proposal No. 2: Approval of the MBT Financial Corp. 2008 Stock Incentive Plan 48
Section 16(a) Beneficial Ownership Reporting Compliance 54
Selection of Auditors 54
Other Business 54
Delivery of Documents to Shareholders Sharing an Address 55
MBT FINANCIAL CORP.
102 EAST FRONT STREET
MONROE, MICHIGAN 48161
PROXY STATEMENT FOR ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD MAY 1, 2008
DATE, TIME AND PLACE OF THE ANNUAL MEETING
The Annual Meeting of Shareholders of the Corporation will be held on
Thursday, May 1, 2008, at 10:00 a.m., local time, at the Monroe Bank & Trust
headquarters at 10 Washington Street, Monroe, Michigan 48161.
INTRODUCTION
This Proxy Statement is being furnished to shareholders of MBT Financial
Corp. ("MBT" or the "Corporation") in connection with the solicitation of
proxies by the Board of Directors of the Corporation to be used at the Annual
Meeting of Shareholders, and any adjournment of the meeting, to be held at the
time and place set forth in the accompanying notice ("Annual Meeting"). It is
anticipated that the mailing of this Proxy Statement and the enclosed proxy card
will commence on or about April 1, 2008.
At the Annual Meeting, shareholders of the Corporation will be asked to
elect eleven directors and to approve the MBT Financial Corp. 2008 Stock
Incentive Plan.
GENERAL INFORMATION ABOUT THE MEETING AND VOTING SECURITIES AND PROCEDURES
WHO MAY VOTE AT THE MEETING?
The Board of Directors has fixed the close of business on March 14, 2008
as the record date for the determination of shareholders who are entitled to
notice of and to vote at the meeting. The transfer books of the Corporation will
not be closed. You are entitled to one vote for each share of common stock you
held on the record date, including shares:
- held directly in your name; and
- held for you in an account with a broker, bank or other nominee
(shares held in "street name").
HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?
A majority of the Corporation's outstanding shares of common stock as of
the record date must be present at the meeting in order to hold the meeting and
conduct business. This is called a quorum. On the record date there were
16,127,870 shares of the Corporation's common stock, without par value ("Common
Stock") outstanding, the holders of which are entitled to one vote per share,
subject to the right to vote cumulatively in the election of directors, if
properly implemented. Your shares are counted as present at the meeting if you:
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- are present and vote in person at the meeting; or
- have properly submitted a proxy card or have voted electronically or
by telephone prior to the meeting.
Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business at the
meeting.
WHAT IS "HOUSEHOLDING"?
Householding is a procedure approved by the SEC under which stockholders
who have the same address and last name may receive only one copy of our Proxy
Statement and Annual Report from a single broker, bank or other nominee, unless
one or more of these stockholders notifies the broker, bank or other nominee
that they wish to continue to receive individual copies.
At the present time, the Company does not "household" for any of our
stockholders of record.
HOW MAY I OBTAIN A SEPARATE SET OF PROXY MATERIALS?
If you hold shares in street name, your broker, bank or other nominee may
be delivering only one copy of our Proxy Statement and the MBT Annual Report to
multiple stockholders of the same household who share the same address, and may
continue to do so, unless your broker, bank or other nominee has received
contrary instructions from one or more of the affected stockholders in the
household. If you are such a beneficial holder, contact your broker, bank or
other nominee directly in order to receive a separate set of our annual report
and proxy materials.
If you are a record owner of our shares you may obtain additional copies
of our annual report and proxy materials by contacting James E. Morr, Secretary,
MBT Financial Corp., 102 East Front Street, Monroe, Michigan 48161.
WHAT PROPOSALS WILL BE VOTED ON AT THE MEETING?
The only proposals scheduled to be voted on at the meeting is the election
of directors of the Corporation and the proposal to approve the MBT Financial
Corp. 2008 Stock Incentive Plan.
WHO IS REQUESTING MY VOTE?
The solicitation of proxies on the enclosed form is made on behalf of the
Board of Directors of the Corporation and will be conducted primarily through
the mail. Please mail your completed proxy in the envelope included with these
proxy materials. In addition to the use of the mail, members of the Board of
Directors and certain officers and employees of the Corporation or its
subsidiaries may solicit the return of proxies by telephone, facsimile, and
other electronic media or through personal contact. The Directors, officers and
employees that participate in such solicitation will not receive additional
compensation for such efforts, but will be reimbursed for out-of-pocket
expenses. The cost of preparing, assembling and mailing this Proxy Statement,
the Notice of Meeting and the enclosed proxy will be borne by the Corporation.
The Corporation will
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also request persons, firms and corporations holding shares in their names or in
the name of their nominees, which are beneficially owned by others, to send
proxy material to and obtain proxies from the beneficial owners and will
reimburse the holders for their reasonable expenses in doing so.
HOW MANY VOTES ARE REQUIRED TO APPROVE EACH PROPOSAL?
Proposal 1 to elect Directors: Directors will be elected by a plurality of
the votes cast at the Annual Meeting. This means that the 11 nominees who
receive the largest number of "FOR" votes cast will be elected as directors.
Proposal 2 to approve the MBT Financial Corp. Stock Incentive Plan:
Approval of the MBT Financial Corp. 2008 Stock Incentive Plan requires the
affirmative vote of a majority of the votes cast.
Many of the Corporation's shareholders hold their shares in "street
name"--in the name of a brokerage firm. If you hold your shares in "street
name," please note that only your brokerage firm can sign a proxy on your
behalf. THE BOARD OF DIRECTORS URGES YOU TO CONTACT THE PERSON RESPONSIBLE FOR
YOUR ACCOUNT TODAY, AND INSTRUCT THEM TO EXECUTE A PROXY ON YOUR BEHALF FOR THE
ANNUAL MEETING.
HOW ARE VOTES COUNTED?
A shareholder may:
As to the election of directors:
- Vote for all of the nominees for director
- Withhold votes on all of the nominees for director
- Withhold votes for one or more nominees
- Abstain from voting
As to approval of the MBT Financial Corp. 2008 Stock Incentive Plan
- Vote "FOR"
- Vote "AGAINST"
- Vote "ABSTAIN"
HOW DOES THE BOARD RECOMMEND THAT I VOTE?
The Board of Directors recommends that you vote "FOR" all of the director
nominees listed in proposal 1 and "FOR" proposal 2 to approve the MBT Financial
Corp. 2008 Stock Incentive Plan. In the absence of instruction, the proxy will
be voted "FOR" the election of the management director nominees listed in this
Proxy Statement, "FOR" approval of the MBT Financial Corp. 2008 Stock Incentive
Plan, and in the discretion of the proxy committee for any other business that
properly comes before the meeting.
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HOW DO I VOTE MY SHARES WITHOUT ATTENDING THE MEETING?
Whether you hold shares directly or in street name, you may direct your
vote without attending the Annual Meeting. If you are a shareholder of record,
you may vote by granting a proxy as follows:
- By Mail - You may vote by mail by signing and dating your proxy card
and mailing it in the envelope provided. You should sign your name
exactly as it appears on the proxy card. If you are signing in a
representative capacity (for example as guardian, trustee,
custodian, attorney or officer of a corporation), you should
indicate your name and title or capacity.
- By Phone - You may vote by phone by calling 1-800-PROXIES
(1-800-776-9437) and following the instructions given.
Your vote by phone is valid as authorized by the Michigan Business
Corporation Act.
For shares held in street name, you should follow the voting instructions
provided by your broker or nominee. You may complete and mail a voting
instruction card to your broker or nominee or, in some cases, submit voting
instructions by telephone or the Internet. If you provide specific voting
instructions by mail, telephone, or Internet, your broker or nominee will vote
your shares as you have directed.
HOW DO I VOTE MY SHARES IN PERSON AT THE MEETING?
Even if you plan to attend the meeting, we encourage you to vote by mail
or phone so your vote will be counted if you later decide not to attend the
meeting.
If you choose to vote at the Annual Meeting:
- If you are a shareholder of record, to vote your shares at the
meeting you should bring the enclosed proxy card and proof of
identity.
- If you hold your shares in street name, you must obtain a proxy in
your name from your bank, broker or other holder of record in order
to vote at the meeting.
Bring the proxy (for record holders) or proof of beneficial ownership (for
street name holders) such as a recent brokerage statement or a letter from your
bank or broker, and proof of identity for admission to the meeting.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE PROXY?
It likely means you hold shares registered in more than one account. To
ensure that all of your shares are voted, sign and return each proxy.
MAY I REVOKE OR CHANGE MY VOTE?
Yes. The proxy may be revoked at any time before it is voted by written
notice to the Corporation prior to the start of the meeting, and any shareholder
attending the meeting may vote in person whether or not he has previously
submitted a proxy. Written notices of revoked proxies may be directed to James
E. Morr, Secretary, MBT Financial Corp., 102 East Front Street, Monroe, Michigan
48161.
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WHEN WILL THE PROXY AND ANNUAL REPORT BE MAILED TO SHAREHOLDERS?
This Proxy Statement and the accompanying Notice of Annual Meeting of
Shareholders and Proxy are being mailed to the Corporation's shareholders on or
about April 1, 2008.
OWNERSHIP OF VOTING SHARES
The following table sets forth the beneficial ownership of the
Corporation's common shares by each of the Corporation's directors and nominees
for election as a director and the Corporation's named executive officers, and
the directors, nominees and executive officers as a group, as of March 14, 2008.
COMMON SHARES
NAME OF BENEFICIAL OWNER OWNED (1) PERCENT OF CLASS
- ------------------------------------- ------------- ----------------
Peter H. Carlton 50,000 (2) *
H. Douglas Chaffin 96,085 (3) *
Joseph S. Daly 12,433 (4) *
Thomas M. Huner 40,000 (5) *
Rocque E. Lipford 51,402 (6) *
William D. McIntyre, Jr. 57,907 (7) *
Scott E. McKelvey 34,938 (8) *
Michael J. Miller 25,000 (9) *
James E. Morr 118,223(10) *
Thomas G. Myers 50,300(11) *
Debra J. Shah 1,000 *
John L. Skibski 41,434(12) *
Philip P. Swy 10,575(13) *
Karen M. Wilson 1,500 *
All Directors, Nominees and Executive
Officers as a Group (15 in group) 654,123 4.1%
- ----------
* Ownership is less than 1% of the class.
(1) Except as otherwise noted, none of the named individuals shares with
another person either voting or investment power as to the shares
reported.
(2) Includes 46,300 shares subject to shared voting and investment power.
(3) Includes 82,500 shares subject to options, which are presently
exercisable.
(4) Includes 2,779 shares subject to shared voting and investment power and
9,654 share units issued under the director deferred compensation plan.
(5) Includes 14,131shares subject to shared voting and investment power.
(6) Includes 277 shares subject to shared voting and investment power and
3,407 shares subject to options, which are presently exercisable and
33,000 shares which are held in trusts for which the director, as
co-trustee, has shared voting and investment power and disclaims
beneficial ownership.
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(7) Includes 3,407 shares subject to options, which are presently exercisable.
(8) Includes 650 shares subject to shared voting and investment power and
31,134 shares subject to options, which are presently exercisable.
(9) Includes 25,000 shares subject to shared voting and investment power.
(10) Includes 60,400 shares subject to options, which are presently
exercisable.
(11) Includes 40,300 shares subject to options, which are presently
exercisable.
(12) Includes 3,300 shares subject to shared voting and investment power and
31,134 shares subject to options, which are presently exercisable.
(13) Includes 5,070 shares subject to shared voting and investment power and
3,093 shares subject to options, which are presently exercisable.
As of March 14, 2008, no person was known by the Corporation to be the
beneficial owner of more than 5% of the outstanding common shares of the
Corporation, except as follows:
NAME AND ADDRESS OF
BENEFICIAL OWNER COMMON SHARES OWNED PERCENT OF CLASS
- ---------------------- ------------------- ----------------
Monroe Bank & Trust
102 East Front Street
Monroe, Michigan 48161 1,611,935 (1) 10.0%
John F. Weaver
305 West Elm Avenue
Monroe, Michigan 48162 900,100 5.6%
- ----------
(1) These shares are held in various fiduciary capacities in the ordinary
course of business under numerous trust relationships by Monroe Bank &
Trust. As fiduciary, Monroe Bank & Trust has sole power to dispose of
1,273,161 of these shares, shared power to dispose of 338,774 of these
shares, sole power to vote 189,321 of these shares and shared power to
vote 52,862 of these shares.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The number of directors of the Corporation has been fixed at eleven. At
the Annual Meeting, eleven directors will be elected to a one-year term, to hold
office until the annual meeting of shareholders in 2008, or until their
successors shall be duly elected.
The nominees for election at the Annual Meeting are Peter H. Carlton, H.
Douglas Chaffin, Joseph S. Daly, Thomas M. Huner, Rocque E. Lipford, William D.
McIntyre, Jr., Michael J. Miller, Debra J. Shah, John L. Skibski, Philip P. Swy,
and Karen M. Wilson. Except for John L. Skibski, each of the nominees is
currently a director of the Corporation.
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NOMINEES
We have set forth below information about the nominees made by the
Corporation's Governance Committee for election to the Corporation's Board of
Directors.
POSITIONS AND
PRINCIPAL OCCUPATION FOR PAST FIVE OFFICES HELD WITH DIRECTOR
NAME AGE YEARS THE CORPORATION SINCE
- ------------------------ --- --------------------------------------- ----------------- --------
Peter H. Carlton 59 Member, Cooley, Hehl, Wohlgamuth & Director 2004
Carlton, PLLC, a Certified Public
Accounting firm
H. Douglas Chaffin 52 President and Chief Executive President, Chief 2004
Officer (2004-2007); President and Executive Officer
Chief Operating Officer (2003-2004). and a Director
Joseph S. Daly 48 President and General Counsel, Daly Director 2003
Merritt Inc., an independent
insurance agency; Manager, DM
Investments, LLC doing business as DM
Company, a real estate investment firm;
and Assistant Dean, University of
Detroit Mercy School of Law
Thomas M. Huner 58 General Partner, Thomas M. Huner Director 2000
Builders, a home building company.
Rocque E. Lipford 69 Attorney and Salaried Senior Director 1981
Principal, Miller, Canfield,
Paddock and Stone, P.L.C.;
Director, La-Z-Boy Inc.
William D. McIntyre, Jr. 72 Chairman and Managing Partner Chairman of the 1971
(2007), Chairman and Chief Board of
Executive Officer (2003-2006), Directors
President and Chief Executive Officer
(2003), Allegra Network, LLC, a
franchisor of printing businesses.
Michael J. Miller 59 Chief Executive Officer, Floral Director 2000
City Beverage, Inc., a wholesale
beer distributor.
Debra J. Shah 61 President, Sensational Beginnings, Director 2006
a catalog and internet retailer of
children's products.
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John L. Skibski 43 Executive Vice President and Chief Executive Vice
Financial Officer (2004-2007), President and
Senior Vice President and Chief Financial
Controller (2003); Director, Officer
Federal Home Loan Bank of
Indianapolis.
Philip P. Swy 54 President, Michigan Tube Swagers & Director 1997
Fabricators, Inc., a hospitality
table and chair manufacturer
marketing as MTS Seating.
Karen M. Wilson 62 President, Karen Colina Wilson Director 2005
Foundation (2007), Chairman and
Chief Executive Officer, Central
Distributors of Beer, Inc., a
wholesale beer distributor
(2003-2007)
There were no agreements or understandings pursuant to which any of the
persons listed above was selected as a director.
The Board of Directors of MBT met eighteen times in 2007. In 2007, each
director attended at least 75% of the combined total of meetings of the Board of
Directors and meetings of each committee on which such director served.
CORPORATE GOVERNANCE
BOARD INDEPENDENCE
The Board of Directors has determined that all current Directors and
nominees have met the independence standards of Rule 4200(a)(15) of the National
Association of Securities Dealers listing standards and SEC rules, with the
exception of Mr. Chaffin, our Chief Executive Officer and Mr. Skibski, our Chief
Financial Officer. The Board of Directors took into account the transactions
disclosed under the caption Director Independence and Related Party Transactions
appearing in this proxy. In making this determination, the board has concluded
that none of these members has a relationship which, in the opinion of the
board, would interfere with the exercise of independent judgment in carrying out
the responsibilities of a director. Directors and nominees deemed independent by
the Board of Directors are Peter H. Carlton, Joseph S. Daly, Thomas M. Huner,
Rocque E. Lipford, William D. McIntyre, Jr., Michael J. Miller, Debra J. Shah,
Philip P. Swy, and Karen M. Wilson.
BOARD MEETINGS
During 2007, the board held a total of 18 meetings. Each director attended
at least 75% of the total number of meetings of the board and at least 75% of
the meetings of all committees on which he or she served. The Corporation's
Corporate Governance Guidelines and Directors' Policy requires that the board
conduct at least one executive
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session per calendar quarter at which only non employee directors are present.
Neither the Board nor the Governance Committee has implemented a formal policy
regarding director attendance at the Annual Meeting. Typically, the Board holds
its annual organizational meeting directly following the Annual Meeting, which
results in most directors being able to attend the Annual Meeting. In 2007, all
ten Directors except Mr. McIntyre attended the Annual Meeting.
BOARD COMMITTEES
The board currently has, and appoints members to, three standing
committees: the audit committee, the compensation committee and governance
committee. Each member of these committees is independent as defined by
applicable NASDAQ(R) and SEC rules. Each of the committees has a written charter
approved by the board which may be found on the Corporation's website at
www.mbandt.com. The current members of the committees are identified below:
Director Audit Compensation Governance
- ------------------------ ----------- ------------ -----------
Peter H. Carlton [X] (Chair) [X] [X]
Joseph S. Daly
Thomas M. Huner [X] (Chair) [X]
Rocque E. Lipford [X]
William D. McIntyre, Jr. [X] [X] (Chair)
Michael J. Miller [X] [X]
Debra J. Shah [X]
Philip P. Swy [X] [X]
Karen M. Wilson
Audit Committee. (Mr. Carlton, Chair, and Messrs. McIntyre, Miller, and
Swy.)
The Audit Committee met eight times during 2007. The Audit Committee
serves in a multiple capacity as the Audit Committee of the Corporation and its
subsidiaries Monroe Bank & Trust and MBT Credit Company, Inc. The functions of
this Committee include the engagement of independent auditors, reviewing with
those independent auditors the plans and results of the audit engagement of the
Corporation, approving the annual audit plan and reviewing the results of the
procedures for internal auditing, reviewing the independence of the independent
auditors, reviewing the Corporation's financial results and Securities and
Exchange Commission filings, reviewing the effectiveness of the Corporation's
internal controls and similar functions and approving all auditing and
non-auditing services performed by its independent auditors. The Board of
Directors has adopted a written charter for the Audit Committee, which may be
found on the Corporation's website at www.mbandt.com. All members of the Audit
Committee are outside directors as determined under the MBT Corporate Governance
Guidelines & Directors' Policy. In addition the Board has determined that all
members meet the independence standards of Rule 4200(a)(15), the requirements of
SEC Rule 10A-3(b)(1),
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and the qualifications of Rule 4350(d)(2) of the National Association of
Securities Dealers listing standards. The Board of Directors has determined that
Peter H. Carlton is an audit committee financial expert and is independent as
described in the preceding sentence. The report of the Audit Committee with
respect to 2007 appears under the caption "Audit Committee Report."
Compensation Committee. (Mr. Huner, Chair, Messrs. Carlton, Miller and
Swy, and Mrs. Shah.)
The Compensation Committee met five times during 2007. The Compensation
Committee is responsible for the oversight and administration of the
compensation and benefit plans of the Corporation. Director and executive
officer and senior management's compensation are determined by this Committee of
the Board of Directors. All members of the compensation committee are outside
directors as required by and determined under the MBT Corporate Governance
Guidelines & Directors' Policy and the Board has determined that each member
meets the independence standards of Rule 4200(a)(15) of the National Association
of Securities Dealers. The report of the Compensation Committee with respect to
2007 compensation appears under the caption "Compensation Committee Report on
Executive Compensation."
The firm of Findley Davies, Inc. is engaged directly by the Compensation
Committee to provide consulting services to the Committee on matters relating to
the compensation of named executive officers and directors. The consultant is
engaged by the Committee to provide:
- Market pay data and related analysis;
- Timely and relevant information on industry and peer group pay
practices;
- Guidance on alternative approaches to delivering compensation to
executive officers and directors consistent with the Board's
compensation philosophies and objectives;
- Modeling of financial and compensation impact of pay plan
alternatives;
- Current and projected values for each element of compensation
delivered to executive officers;
- Technical briefings on statutes and regulations impacting executive
compensation and related compliance;
- Support as required in preparing plan documents, agreements and
disclosures; and
- Administrative support relating to maintaining reports, documents,
and analysis.
The consultant provides services and performs work under the direction of
the Compensation Committee Chairperson. The Committee chair provides instruction
to the consultant on the nature and scope of work to be performed, and
authorizes or is made aware of any work performed or communications with
management or the staff of the Corporation.
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Governance Committee. (Mr. McIntyre, Chair, and Messrs. Carlton, Huner and
Lipford.)
The Governance Committee met three times in 2007. The Governance Committee
of MBT serves as the nominating committee of the Board. The Board has determined
that each member of the Governance Committee meets the independence standards of
Rule 4200(a)(15) of the National Association of Securities Dealers. The
Governance Committee provides reports and makes recommendations to the Board of
Directors on matters such as nominees for director, the duties of directors,
director qualifications, Board structure, Board functions, Board committee
structure and responsibilities and general policies. The Board of Directors has
adopted a Governance Committee Charter.
DIRECTOR CANDIDATES
The Governance Committee reviews the performance of incumbent directors.
The Governance Committee seeks characteristics in proposed nominees to the Board
of Directors that will complement or expand those of the existing members and
which are particularly relevant to competitive and other issues anticipated by
the Corporation and its subsidiaries. The Governance Committee of the Board of
Directors selects nominees for the Board of Directors who are subsequently
authorized by the full Board for submission for approval by stockholders. The
Governance Committee has the responsibility to actively seek individuals
qualified to become members of the Board of Directors. The Governance Committee
is empowered to engage a third party search firm to assist it in identifying
qualified candidates but to date has determined that such assistance has not
been required.
MBT's Corporate Governance Guidelines & Directors' Policy and Code of
Ethics set forth the following criteria for Directors: independence; honesty and
integrity; willingness to devote sufficient time to fulfilling duties as a
Director; particular experience, skills or expertise relevant to the
Corporation's business and ties to MBT's geographic markets. The committee does
not assign specific weights to particular criteria and no particular criterion
is a prerequisite for each prospective nominee. MBT's Corporate Governance
Guidelines provide that shareholders may submit names to the Governance
Committee for consideration as director nominees.
SHAREHOLDER NOMINATIONS, SHAREHOLDER PROPOSALS AND SHAREHOLDER COMMUNICATIONS
Shareholder Nominations. Under MBT's Corporate Governance Guidelines and
Directors' Policy, the Governance Committee of the Board will consider
recommendations for nominations received by shareholders in accordance with the
Corporation's Bylaws. Shareholder recommendations for nomination should be
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submitted in writing to the Corporation at its principal office in Monroe,
Michigan, and must include the shareholder's name, address, and the number of
shares of the Corporation owned by the shareholder. In considering
recommendations the Governance Committee does not distinguish between
shareholder recommendations and those made by directors.
The recommendation should also include the name, age, business address,
residence address, principal occupation of and number of shares of the
Corporation owned by the recommended candidate for nomination. Shareholder
recommendations must also include the information that would be required to be
disclosed in the solicitation of proxies for the election of directors under
federal securities laws, including the candidate's consent to be elected and to
serve. The Corporation may also require any nominee to furnish additional
information regarding the eligibility and qualifications of the recommended
candidate. Assuming that appropriate biographical and background material has
been provided on a timely basis, the committee will evaluate
stockholder-recommended candidates by following substantially the same process,
and applying substantially the same criteria, as it follows for candidates
recommended by our board or others. If the board determines to nominate a
stockholder-recommended candidate and recommends his or her election, then his
or her name will be included in the proxy card for the next annual meeting.
The Corporation's Bylaws establish advance notice procedures as to the
nomination, other than by the Board of Directors, of candidates for election as
directors. In order to make a director nomination, it is necessary that the
shareholder making the nomination notify the Secretary of the Corporation no
fewer than thirty days in advance of next year's Annual Meeting unless the
Corporation gives less than forty days notice or prior public disclosure of the
Annual Meeting and then notice of nominations must be given no later than the
tenth day after the Corporation mails notice of the Annual Meeting or makes
public disclosure of the meeting, but in no event may a nomination be received
by the Secretary of the Corporation less than seven days prior to the Annual
Meeting. Notice of nominations of directors must also meet all other
requirements contained in the Corporation's Bylaws. Shareholders may obtain the
Bylaws by written request to the Corporation's Secretary at our principal
executive offices.
Shareholder Proposals To be considered eligible for inclusion in the
Corporation's Proxy Statement for the 2009 Annual Meeting of Shareholders, a
proposal must be made by a qualified shareholder and received by the Corporation
at its principal office in Monroe, Michigan, not later than December 8, 2008.
Any shareholder who intends to propose any other matter to be acted upon at the
2009 Annual Meeting of Shareholders must inform the Corporation not less than
thirty days prior to the meeting; provided, however, that if less than forty
days' notice or prior public disclosure of the date of the meeting is given to
shareholders, notice by the shareholder must be received not later than the
close of business on the tenth day following the day on which such notice of the
date of the meeting was mailed or such public disclosure was made. If notice is
not provided by that date, the persons named in the Corporation's proxy for the
2008 Annual Meeting will be allowed to exercise their discretionary authority to
vote
12
upon any such proposal without the matter having been discussed in the Proxy
Statement for the 2008 Annual Meeting. Shareholder proposals should be directed
to Mr. James E. Morr, Secretary, MBT Financial Corp., 102 East Front Street,
Monroe, Michigan 48161.
Shareholder Communications. Shareholders of the Corporation may send
communications to the Board of Directors through the Corporation's office of
Corporate Secretary, MBT Financial Corp., Inc., 102 E. Front Street, Monroe,
Michigan 48161. Communications sent by shareholders for proper, non-commercial
purposes will be transmitted to the Board of Directors or the appropriate
committee, as soon as practicable.
CODE OF CONDUCT AND ETHICS
We have adopted a written code of conduct and ethics that applies to all
our directors, officers and employees, including our chief executive officer and
our chief financial and accounting officer. We have posted a current copy of the
code on our website, which is located at www.mbandt.com.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All members of the compensation committee are independent directors, and
none of them are present or past employees or officers of ours or any of our
subsidiaries. During the past year, certain directors and officers, including
members of the Compensation Committee, and one or more of their associates may
have been customers of and had business transactions with the Corporation or its
subsidiaries. All loans included in such transactions were made in the ordinary
course of business and on substantially the same terms, including interest rates
and collateral, as those prevailing at the same time for comparable transactions
with other persons, and did not involve more than normal risk of collectibility
or present other unfavorable features. It is expected that similar transactions
will occur in the future. None of our executive officers has served on the board
or compensation committee (or other committee serving an equivalent function) of
any other entity, one of whose executive officers served on our board or
compensation committee.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Corporation's financial reporting process
on behalf of the Board of Directors. The Committee is composed of four
directors, each of whom is independent as defined by the NASDAQ(R) listing
standards and operates under a written charter adopted by the Board of Directors
which is available on the Corporation's website at www.mbandt.com. The Committee
retains the Corporation's independent accountants.
Management has the primary responsibility for the financial statements and
the reporting process, including the system of internal control. In fulfilling
its oversight responsibilities, the Committee reviewed the audited financial
statements in the Annual
13
Report with management, including a discussion of the quality, not just the
acceptability, of the accounting principles; the reasonableness of significant
judgments; and the clarity of disclosures in the financial statements.
The Committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with generally accepted accounting principles, their judgments as to
the quality, not just the acceptability, of the Corporation's accounting
principles and such other matters as are required to be discussed with the
Committee under generally accepted auditing standards (including Statement on
Auditing Standards No. 61). In addition, the Committee has discussed with the
independent auditors the auditors' independence from management and the
Corporation, including the matters in the written disclosures and the letter
from the independent auditors required by the Independence Standards Board
(including Independence Standards Board Standard No. 1), and considered the
compatibility of permitted non-audit services with the auditors' independence.
The Committee discussed with the Corporation's internal and independent
auditors the overall scope and plans for their respective audits. The Committee
meets with the internal and independent auditors, with and without management
present, to discuss the results of their examinations, their evaluations of the
Corporation the Corporation's internal control, and the overall quality of the
Corporation's financial reporting.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2007 for filing with the Securities and
Exchange Commission.
Peter H. Carlton, Chair
William D. McIntyre, Jr.
Michael J. Miller
Philip P. Swy
PRINCIPAL ACCOUNTING FIRM FEES
The following table sets forth the aggregate fees billed to the
Corporation for the fiscal years ended December 31, 2007 and December 31, 2006
by Plante & Moran, PLLC, the Corporation's principal accounting firm.
2007 2006
--------- ---------
Audit Fees $ 179,500 $ 188,900
Audit-Related Fees 47,900 (a) 59,599 (a)
Tax Fees 13,900 (b) 25,500 (b)
All Other Fees 115,550 (c) 63,468 (c)
--------- ---------
$ 356,850 $ 337,467
========= =========
- ----------
(a) Includes fees for services related to information technology external
testing and miscellaneous consultations.
(b) Includes fees for services related to tax compliance and tax planning.
(c) Includes fees for regulatory compliance review, website design, and
miscellaneous consultations.
14
The Audit Committee is responsible for pre-approving all auditing services
and permitted non-audit services to be performed by its independent auditors,
except as described below.
The Audit Committee will establish general guidelines for the permissible
scope and nature of any permitted non-audit services in connection with its
annual review of the audit plan and will review such guidelines with the Board
of Directors. Pre-approval may be granted by action of the full Audit Committee
or, in the absence of such Audit Committee action, by the Audit Committee Chair
whose action shall be considered to be that of the entire Committee.
Pre-approval shall not be required for the provision of non-audit services if
(1) the aggregate amount of all such non-audit services constitutes no more than
5% of the total amount of revenues paid by the Corporation to the auditors
during the fiscal year in which the non-audit services are provided, (2) such
services were not recognized by the Corporation at the time of engagement to be
non-audit services, and (3) such services are promptly brought to the attention
of the Audit Committee and approved prior to the completion of the audit. No
services were provided pursuant to these exceptions.
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION PHILOSOPHIES AND OBJECTIVES
The executive compensation philosophy of the Board is to deliver
competitive levels of total compensation that attract and retain top leadership
talent, with primary emphasis on pay for performance. Guiding principles that
influence the structure and level of compensation for executive officers are:
- The executive management team should be rewarded as a group for the
financial performance of the Corporation, and also rewarded for
individual performance;
- The level of total compensation opportunity for each individual
executive officer should reflect the relative level of job
responsibility, market pay, and expected impact on the current and
long term performance of the Corporation;
- A significant portion of total direct compensation should be at
risk, with the opportunity for executive officers to earn
correspondingly meaningful and competitive amounts of compensation
relative to performance that drives growth in shareholder value;
- Executive officers should be expected to retain a meaningful level
of ownership in MBT Financial Corp. stock as a means of aligning the
interests of management with those of shareholders;
15
- Incentive compensation should be structured to focus management on
achieving annual financial objectives in a manner that supports and
drives the company's long term success and profitability; and
- Elements of compensation other than direct pay, including
perquisites, personal benefits, or protection agreements should
serve a balance of interests among executives, the Corporation,
customers, and shareholders.
Specifically, the objective of the Board is to target base salary and
total cash compensation at approximately the 50th percentile (i.e., median) of
market pay (refer to benchmarking section of this Compensation Discussion and
Analysis (CD&A) for discussion of how market pay is defined for named executive
officers). Current base salary levels for named executive officers are on
average closer to the 25th percentile of market base salary pay, and total cash
compensation (i.e., base salary plus target annual incentive award) is on
average at or near the 50th percentile. The Board believes that improving base
salary over time to more closely align it with median market base salary is
essential in attracting and retaining the knowledge, skills, and top leadership
talent required to achieve the long term strategic objectives of the
Corporation. It is therefore the intent of the Board to increase levels of base
salary over a reasonable period of time to more competitive levels as supported
by both the performance of the bank and individual executives. As base salary is
adjusted, target annual incentive award levels may be adjusted concurrently to
maintain target total cash compensation at the 50th percentile of total cash
market pay. This is intended to achieve a reasonable and competitive balance
between base salary and annual incentive pay, without diminishing the strength
of incentive pay in motivating executives to achieve financial results.
The annual grant value of Long Term Incentive compensation (i.e.,
currently delivered in the form of equity awards) is targeted at levels that
deliver competitive total direct compensation (i.e., annual cash compensation
plus long term incentive compensation) in comparison to the Corporation's peer
group (refer to benchmarking section of CD&A for discussion of peer group
composition).
BENCHMARKING
The Compensation Committee maintains competitive levels of total
compensation for executive officers by applying market pay data and prevalence
of practice information provided by the compensation consultant to the
Committee. Market pay information is used by the Committee to establish and
maintain target levels of total direct compensation and to determine the level
of pay actually delivered to each named executive officer. Market pay data is
applied in setting target levels of:
- - base salary;
- - total cash compensation (i.e., base salary plus annual incentive awards );
and
- - total direct compensation (i.e., total cash compensation plus targeted
long term incentive compensation).
16
The Committee also relies on prevalent market practices in assessing the
competitiveness and appropriateness of perquisites, personal benefits, deferred
compensation, and payments in connection with events that may trigger payments
or benefits to executive officers such as a change-in-control.
Market pay for executive positions is measured within both a defined peer
group of commercial banks and the general commercial banking industry.
The peer group market for the Corporation includes thirteen (13) financial
institutions. The financial institutions included in the peer group are
identified by an independent management consultant and reviewed by the Committee
on an annual basis. Peer organizations are located within a multi-state
geographic region near Monroe, Michigan, and are of comparable asset size and
mix to the Corporation. The peer group composition for the current period
includes:
PEER COMPANY LOCATION ASSET SIZE ($000)
- --------------------------------------- ------------------- -----------------
First Financial Corp. Terre Haute, IN 2,175,998
First Indiana Corporation Indianapolis, IN 2,162,113
Macatawa Bank Corp. Holland, MI 2,074,816
Peoples Bancorp Inc. Marietta, OH 1,875,255
Mercantile Bank Corp. Grand Rapids, MI 2,067,268
Farmers Capital Bank Corp. Frankfort, KY 1,824,366
MainSource Financial Group Greensburg, IN 2,429,773
Lakeland Financial Corp. Warsaw, IN 1,836,706
Merchants & Manufacturers Bancorp, Inc. New Berlin, WI 1,505,940
S.Y. Bancorp Inc. Louisville, KY 1,426,321
Oak Hill Financial Jackson, OH 1,275,635
Mercantile Bancorp, Inc. Quincy, IL 1,422,827
Centrue Financial Corp. Ottawa, IL 1,283,025
The median asset size of $1,836,706 for this peer group is comparable to
the $1,566,819 asset size of the Corporation at the time the peer group was
determined. These peer companies remain in the peer group each year to maintain
a stable and consistent market pay measure, with additions and deletions
occurring when required to assure comparability to the Corporation.
The independent compensation consultant to the Committee provides the
Committee, on an annual basis, total direct compensation pay amounts delivered
by the peer group to each named executive officer. The source of data applied in
the market analysis is the annual proxy reports for each peer company. Market
pay data is
17
statistically summarized and presented for the CEO, CFO, and all other Executive
Vice President level officers. Market pay data is summarized separately for base
salary, total cash compensation, long term incentive compensation, and total
direct compensation.
The Committee also uses financial industry pay data provided by the
independent consultant. This data is sourced from published management
compensation surveys that report the level of base salary and total cash
compensation paid to executives in like positions by commercial banks of
comparable asset size.
Market pay data from both the peer group and financial industry data
sources are collectively a primary factor in the Committee's recommendations to
the full Board on setting target levels of base salary, annual incentive awards,
and long term incentive awards; and are taken into account along with
performance in determining base pay increases.
ELEMENTS OF EXECUTIVE COMPENSATION
The elements of total compensation delivered to all or certain named
executive officers, including potential payments or benefits include:
- Base salary (refer to column (c) of Summary Compensation Table)
- Annual incentive awards (refer to columns (d) and (g) of Summary
Compensation Table)
- Long Term Incentive Compensation in the form of Equity grants or
awards (refer to columns (e) and (f) of Summary Compensation Table)
- Perquisites and personal benefits (refer to Column (i) of Summary
Compensation Table, and Payments or Benefits in Connection with
Termination of Employment or Change-in-Control)
- Supplemental retirement benefits (refer to Pension table)
- Severance and/or change-in-control agreements (refer to Payments or
Benefits in Connection with Termination of Employment or
Change-in-Control)
Base Salary
Base salary is delivered to executive officers at levels that are improving each
year to more competitive levels. As discussed in the pay philosophy section,
base salary is targeted at the median market base salary for each executive
officer position. Market base salary is the primary determinant of base pay
levels, with internal equity or pay relationships among officer positions a
secondary consideration.
Base salary for each executive officer is reviewed annually and is subject to
adjustment consistent with individual performance. Other factors that influence
the amount of adjustment to base salaries are the budget made available
bank-wide for base pay increases, and the need for market equity adjustments
referenced in the pay philosophy section.
18
Annual Incentive Award
All named executive officers participate in an annual incentive pay plan that
provides a cash award opportunity tied to the level of the corporation's Net
Operating Income (NOI) for the fiscal year. The amount of the cash award payable
under the plan is dependent on the level of NOI achieved compared to the
Corporation's financial plan for the year. The objective of the plan is to place
a meaningful portion of targeted cash compensation at risk, and to deliver
reasonable and competitive awards to executive officers for achieving the income
objectives set for the year.
Target annual incentive awards, expressed as a percentage of base salary, are
established before the beginning of the fiscal year period for each executive
officer. The target award amounts for the fiscal year are disclosed under column
(d) of the Grants of Plan-based Awards Table for each named executive officer.
These award levels correspond to target levels of 75% of base salary for the
CEO, and 40% of base salary for all other named executive officers. The target
incentive award levels set for executive officers reflect the Board's executive
pay objectives explained under the pay philosophy section.
The award funding schedule presented below for the fiscal year determines the
level of cash award available for payment based upon the percentage of planned
NOI actually achieved.
AWARD SCHEDULE
ADJUSTED NOI PERFORMANCE AGAINST PLAN (% OF BASE)
- ------------ ------------------------ --------------
$27,303,398 120% 175%
$26,848,342 118% 168%
$26,393,285 116% 160%
$25,938,228 114% 153%
$25,483,172 112% 145%
$25,028,115 110% 138%
$24,576,059 108% 130%
$24,118,002 106% 123%
$23,662,945 104% 115%
$23,207,889 102% 108%
- ----------- --- ---
$22,752,832 100% 100%
- ----------- --- ---
$22,297,775 98% 93%
$21,842,719 96% 87%
$21,387,662 94% 80%
$20,932,605 92% 73%
$20,447,549 90% 67%
$20,022,492 88% 60%
$19,567,436 86% 53%
$19,339,907 85% 50%
19
NOI is net operating income before bonus accrual and taxes.
For example, at planned NOI for the year of $22,752,832, 100% of the target
awards would be paid to the executive officers. NOI for the fiscal year must be
at least 85% of planned NOI before any award is payable. At 85% performance, 50%
of the executive's target award is funded. Awards under the schedule are scaled
proportionately for performance between 85% and 100% of planned NOI. The award
schedule provides executives with the opportunity to earn incentive awards that
are greater than their target awards with NOI performance above plan. There is
no fixed award cap under the plan. Incentive awards funded for performance above
planned NOI increase proportionately based on the relationship between awards
paid at target NOI and 120% of planned NOI.
For the fiscal year period, NOI was 87.2% of plan resulting in a funded award
level of 57.4%. NOI performance for the fiscal year, for purposes of funding a
bonus award under the plan, excluded certain financial transactions that were
the result of systemic economic factors beyond the direct control of management.
These transactions related to the decline in certain real estate values leading
to increases in loan loss reserves and adjustments to the value of certain real
estate holdings. In determining NOI performance, the Board also did not take
into account the financial impact of a sale of certain securities during the
year, the timing of which was judged to be in the long term best interests of
the Bank. The Board took this action, consistent with the intent of the plan, to
reward management for operational performance under their control.
Beginning with fiscal year 2008, the incentive award under the plan will take
into account both financial performance, as measured by NOI, and individual
executive performance. Under the new plan design, 50% of the funded incentive
award, based on NOI performance, will be paid to the executives without further
adjustment. The remaining 50% of the funded award will be subject to adjustment
based on individual performance. Each executive officer's performance on defined
goals will be objectively rated at the end of the fiscal year based on a scale
that provides for an adjusted incentive award equal to:
- 50% of the funded award level for performance that meets minimum
expectations,
- 100% of the funded award level for performance that meets
expectations, and
- up to 120% of the funded award level for performance that exceeds
expectations.
In the event that the level of adjusted awards in the aggregate for all
executive officers exceeds the level of incentive awards funded by NOI
performance, the Board will retain the discretion to pay the adjusted award or
proportionately reduce the total adjusted awards to the funded award pool.
Long Term Incentive Compensation
The MBT Financial Corp. Long Term Incentive Compensation Plan (The Plan) was
approved by shareholders in 2000. The plan was established to enable the
Corporation to attract and retain future leadership talent and as a means of
aligning the long term
20
interests of executives with those of shareholders. The Plan allows the
Committee to deliver equity based awards to selected senior officers. Prior to
2006, equity awards were delivered annually to selected executive and senior
officers in the form of stock options. With the introduction of new accounting
rules under FAS 123R that treated all forms of equity based awards under a
common expense standard, the Committee adopted a new strategy beginning in 2006,
of delivering equity grants in the form of both stock options and Performance
Stock Units (PSU).
The grant of equity awards in the form of both stock options and PSUs strengthen
the pay for performance linkage by rewarding both growth in the value of MBT
Financial Corp. stock, and growth in profitability that drives shareholder
value. The combined grant date fair value of these equity awards for the current
year is disclosed in column (l) of the Grants of Plan-Based Awards table for
each named executive officer. The grant date fair value, determined in
accordance with FAS 123R, defines the compensation value of equity awards on the
grant date of January 2, 2007. Approximately 65% of the aggregate grant date
value of total 2007 equity awards is in the form of PSUs, with the remaining 35%
representing stock options.
Stock Options
Stock options were granted during the year to named executive officers in the
form of non-qualified options. Options are viewed as a direct link between
compensation value realized by the executive from the option (i.e., difference
between share price on exercise date and grant date fair market value of stock),
and shareholder interests. The grant date for all stock options approved by the
Board under The Plan has been consistently the first day of the fiscal year on
which MBT Financial Corp. stock is traded on the exchange. The current fiscal
year grant of options was approved by the Board on December 21, 2006, with a
grant date of January 2, 2007.
The authorized terms and conditions of the option grant are covered under a
written option agreement. All options were granted with an exercise price equal
to the average of the highest and lowest selling price of the Corporation shares
on the grant date. Other material terms and conditions of the grant are:
- The right to exercise the option vests on a scaled basis over three
years, with a third of the option shares incrementally vesting each
year.
- All options become immediately vested and subject to exercise upon
the death, disability, change-in-control, or retirement (age 62) of
the executive.
- The right to exercise a vested option expires on the earlier of 10
years from the date of grant, one year from date of participant's
termination of employment for reasons other than for cause, or
termination for cause.
- Options may be exercised by cash payment of exercise price,
tendering previously acquired shares subject to holding
requirements; or through a broker assisted transaction.
21
Performance Stock Units (PSUs)
PSU grants provide the recipient the right to receive a full-value share of MBT
Financial Corp. stock for each unit granted, upon satisfaction of the
performance conditions set forth under the grant agreement. This form of equity
award was chosen by the Board for several reasons including: favorable
accounting treatment under FAS 123R, direct linkage of pay to long term
financial performance, use of fewer shares relative to comparable value of stock
options, and retention of awarded shares by the executive when coupled with the
share ownership and retention policy. Up to 100% of PSU grants made on January
2, 2007, along with any dividend equivalents become fully vested based upon
Earnings Per Share (EPS) growth over a three year period ending on December 31,
2009, as follows:
Cumulative EPS
(Cumulative sum of EPS over 3 year period ending 12/31/09) Percent of 2007 PSU Grant Vested
- ---------------------------------------------------------- --------------------------------
$3.22 or greater 100%
$3.15 90%
$3.09 80%
$3.03 70%
$2.97 60%
$2.91 50%
Below $2.91 0%
The estimated range of future payout value of this PSU grant, based on MBT
Financial Corp's. stock price on December 31, 2007, is disclosed in columns (f)
and (h) under the Grants of Plan-Based Awards table.
The impact on vesting of outstanding PSUs in the event of the executive's death,
disability, or retirement at or after age 62; or in the event of a change in
control of the Corporation is explained under the Post Employment Compensation
section of this proxy statement. The executive forfeits any potential vesting in
awards in the event of voluntary termination of employment or termination for
cause during the performance period.
Stock Ownership and Retention Policy
Consistent with the stated philosophy of aligning the interests of executives
with those of shareholders, the Board believes that all executive officers
should maintain a meaningful level of ownership in the Corporation's stock over
their period of service. Under the current policy, a targeted share ownership
level (number of shares) is established for each named executive officer. The
targeted number of shares is subject to annual review and may be increased at
the discretion of the Board. Named executive officers are expected to attain
this ownership level within a minimum of five years from the inception of the
policy which was 2006, and maintain this level during their period of executive
officer service. Executive officers are expected to meet the share ownership
targets from either equity based awards or purchase of shares on the open
market. 100% of all shares awarded under the MBT Financial Corp. Long Term
Incentive Compensation Plan, net of taxes due, are to be retained by the
executive until the share ownership target is attained.
22
Upon attainment of the share ownership target, all future shares awarded under
any equity grant are to be retained for a minimum of one year
Personal Benefits, Perquisites, and Supplemental Retirement Benefits
The Board provides a reasonable level of personal benefits, perquisites, and
supplemental retirement benefits to one or more named executive officers to
support the business interests of the bank, provide competitive compensation,
and to recognize the substantial commitment both professionally and personally
expected from executive officers.
Personal benefits and perquisites provided to all named executive officers
include club memberships and supplemental disability benefits. The aggregate
value of perquisites and personal benefits, as defined under SEC rules, provided
to each named executive officer is less than the reporting threshold value of
$10,000. The named executive officers are also participants in the MBT Executive
Officer Death Benefit Only Plan (DBO Plan). The DBO Plan provides a death
benefit payable to the beneficiaries of the executive in the event of the
executive's death during employment equal to two times salary. For all
participating officers who satisfy minimum age and service requirements, a post
retirement death benefit equal to one times salary is provided. While the stated
death benefit of two times salary is the same as that provided to all employees
of the Bank under its general group term life insurance coverage, the
arrangement for executive officers under the DBO Plan, including all of the
named executive officers, is structured as a general obligation of the
Corporation and is not provided under the group term life insurance policy.
Participants in the DBO Plan do not report taxable income associated with their
benefit arrangement and the death benefit amount is increased in an amount
necessary to pay all income taxes due on the benefit amount when it is paid to
the participants' beneficiaries. The Corporation has purchased life insurance
policies on the lives of all participants in the DBO Plan. Proceeds from such
policies provide the sums necessary to pay the beneficiaries. The actual gross
death benefit amounts payable under this plan are disclosed under Payments and
Benefits in Connection with Termination or Change-in-Control. The amount of
benefits paid from the supplemental disability benefit, and conditions for
receipt of such benefits are also set forth under the Post Employment
Compensation section of this proxy statement.
The Board entered into an agreement with Mr. Chaffin, President and CEO, that
provides a Supplemental Retirement Benefit. This benefit was provided to Mr.
Chaffin as an incentive to accept the position of CEO, and to establish a
meaningful incentive for him to remain with the organization, thereby promoting
continuity and stability of leadership. The level of benefit provided, material
terms and conditions, and the present value of his accrued benefit under the
plan at year-end is disclosed and explained under the Pension Benefits Table.
23
Severance or Change-in-Control Agreements
The Board entered into a change-in-control agreement with Mr. Chaffin (CEO) on
July 30, 2001, severance agreements with Messrs. Myers, Morr, and Skibski
January 26, 2006, and a severance agreement with Mr. McKelvey on May 11, 2007.
These agreements are intended to provide fair treatment of executive officers
and a reasonable amount of protection against loss of income and benefits in the
event of termination without cause, or termination in connection with a
change-in-control. These agreements also serve to promote the objectivity of
executives in evaluating a potential change-in-control. Severance agreements
entered into with named executive officers other than the CEO provide identical
terms and conditions. The level of payments and benefits, and an explanation of
the material terms and conditions are provided under the Payments and Benefits
upon Termination or Change-in-Control.
TOTAL COMPENSATION PERSPECTIVE (INTERRELATIONSHIP OF PAY ELEMENTS)
The mix of total direct compensation (base salary, target annual incentive
bonus, and target long term incentive compensation, expressed as a percent of
total target direct compensation) for 2007, is summarized in the table below for
the CEO and all other named executive officers:
NAMED TARGET LONG TERM
EXECUTIVE INCENTIVE TOTAL DIRECT
OFFICER BASE SALARY TARGET BONUS COMPENSATION COMPENSATION
- -------------- ----------- ------------ --------------- ------------
CEO 46% 35% 19% 100%
All Other NEOs 59% 24% 17% 100%
Consistent with the Board's executive compensation philosophy, a significant
percentage of total direct compensation is at risk with payments contingent on
the short and long term performance of the Bank (i.e., 54% of total direct
compensation at risk for CEO; and 41% at risk for all other named executive
officers). The amount at risk for the CEO is greater than the amount at risk for
all other named executive officers in recognition of the higher level of
accountability held by the CEO for the performance of the Corporation.
Other important interrelationships between elements of total compensation are:
- The annual incentive bonus plan and the long term incentive
compensation plan both link pay opportunity to the profitability of
the Corporation.
- Awards of MBT Financial Corp. shares from vested Performance Stock
Units are further tied to shareholder interests by the
implementation during 2006 of the share ownership and retention
policy.
- The delivery of long term incentive compensation in the form of both
PSUs and stock options reflects the balanced interest in rewarding
performance that drives share value growth, and aligning the
interests of executives with those of shareholders.
24
- The value of stock awards and the Supplemental Executive Retirement
Plan for the CEO collectively represents wealth accumulation that
will be monitored by the Board to assure delivery of reasonable,
fair, and competitive compensation that is aligned with the stated
executive compensation philosophies.
- Payments or benefits triggered by death, disability, termination
without cause, or change-in-control share a common purpose of
providing a reasonable and fair level of protection against loss of
income or benefits in connection with events over which the
executive has no control.
EXECUTIVE COMPENSATION DECISIONS IN 2007
Base Salary
All named executive officers received base salary increases effective January 1,
2007 as follows: Mr. Chaffin (4.0%); Mr. Skibski (4.4%); Mr. Myers (4.2%); Mr.
Morr (3.0%); and Mr. McKelvey (3.9%). Refer to the Summary Compensation table
for actual base salaries paid in 2007. The rates of increase in base salaries
were based on a combination of factors including the overall budget set by the
Corporation for pay increases; individual executive performance; and the intent
of the Board referenced earlier in the Compensation Discussion and Analysis to
increase base salary levels of executive officers to more competitive levels.
Role of Executive Officers in Determining Compensation
H. Douglas Chaffin, our President and Chief Executive Officer, recommends to the
Committee base salary, target bonus levels, and long-term incentive grants for
our executive officer group (other than himself). Mr. Chaffin makes these
recommendations to the Committee based on guidelines provided by the
Compensation Committee, and judgments regarding individual performance. Mr.
Chaffin is not involved with any aspect of determining his own pay.
IMPACT OF ACCOUNTING AND TAX TREATMENTS OF COMPENSATION
The accounting and tax treatment of compensation generally has not been a factor
in determining the amounts of compensation for our executive officers. However,
the Committee and management have considered the accounting and tax impact of
various program designs to balance the potential cost to the Corporation with
the benefit/value to the executive.
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
disallows a tax deduction to public companies for compensation in excess of $1
million paid to the corporation's chief executive officer and four other most
highly paid executive officers. Qualifying performance-based compensation will
not be subject to the deduction limitation if certain requirements are met. We
periodically review the potential consequences of Section 162(m) and may
structure the performance-based portion of our executive compensation to comply
with certain exemptions in Section 162(m). However,
25
we reserve the right to use our judgment to authorize compensation payments that
do not comply with the exemptions in Section 162(m) when we believe that such
payments are appropriate and in the best interests of the stockholders, after
taking into consideration changing business conditions or the officer's
performance.
With the adoption of FAS 123R, we do not expect accounting treatment of
differing forms of equity awards to vary significantly and, therefore,
accounting treatment is not expected to have a material effect on the selection
of forms of equity compensation in the future.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee is responsible for discharging the responsibilities
of the board with respect to the compensation of our executive officers. The
compensation committee sets performance goals and objectives for the chief
executive officer and the other executive officers, evaluates their performance
with respect to those goals and sets their compensation based upon the
evaluation of their performance. In evaluating executive officer pay, the
compensation committee may retain the services of a compensation consultant and
consider recommendations from the chief executive officer with respect to goals
and compensation of the other executive officers. The compensation committee
assesses the information it receives in accordance with its business judgment.
The compensation committee also periodically reviews director compensation. All
decisions with respect to executive and director compensation are approved by
the compensation committee and recommended to the full board for ratification.
The compensation committee has reviewed and discussed the Compensation
Discussion and Analysis (the "CD&A") for the year ended December 31, 2007 with
management. In reliance on the reviews and discussions referred to above, the
compensation committee recommended to the board, and the board has approved,
that the CD&A be included in the proxy statement for the year ended December 31,
2007 for filing with the SEC.
By the Compensation Committee of the Board of Directors:
COMPENSATION COMMITTEE
Thomas M. Huner, Chair
Peter H. Carlton
Michael J. Miller
Debra J. Shah
Philip P. Swy
26
ADDITIONAL INFORMATION REGARDING COMPENSATION
SUMMARY COMPENSATION TABLE
CHANGE IN
PENSION VALUE
AND
NONQUALIFIED
STOCK OPTION NON-EQUITY DEFERRED ALL OTHER
NAME AND AWARDS AWARDS INCENTIVE PLAN COMPENSATION COMPENSATION
PRINCIPAL SALARY BONUS ($) ($) COMPENSATION EARNINGS ($) ($) TOTAL
POSITION YEAR ($) ($) (#1) (#2) ($) (#3) (#4) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i) (j)
- ------------- ---- ------- ----- ------- ------ -------------- ------------- ------------ --------
H. Douglas
Chaffin
President &
Chief
Executive 2007 277,642 - - 80,508 119,525 39,700 23,738 541,113
Officer (PEO) 2006 267,063 - - 89,718 - 40,844 23,441 421,066
John L.
Skibski
EVP & Chief
Financial 2007 143,737 - - 31,013 32,750 - 14,394 221,894
Officer (PFO) 2006 136,740 - - 38,586 - - 14,138 189,464
Thomas G.
Myers
EVP, Chief
Lending 2007 148,017 - - 33,563 33,961 - 15,069 230,610
Manager 2006 142,012 - - 42,896 - - 14,895 199,803
James E. Morr
EVP, General
Counsel and
Chief Risk 2007 138,280 - - 33,563 31,507 - 14,536 217,886
Officer 2006 133,324 - - 42,896 - - 14,397 190,617
Scott E.
McKelvey
EVP, Senior
Wealth
Management 2007 141,345 - - 25,492 32,219 - 12,646 211,702
Officer 2006 127,260 - - 31,636 15,000 - 13,144 187,040
Summary Compensation Table Footnotes:
- ----------
(1) Reflects the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R.
Reported values are zero due to the absence of any vesting of performance
stock units expected based on earnings per share growth during the fiscal
year.
(2) Reflects the dollar amount recognized for financial statement reporting
purposes with respect to the fiscal year in accordance with FAS 123R. This
reported value represents the grant date value of all vested stock options
that are attributed to the 2007 fiscal year period for financial statement
reporting purposes.
(3) Reports increase in present value of Supplemental Executive Retirement
Benefit accrual from 2006 to 2007. Refer to Pension Benefits table for
explanation of benefit and disclosure of present value of accumulated
benefit as of December 31, 2007.
27
(4) Includes contributions to the MBT Retirement Plan and certain life
insurance premiums paid by the Corporation for the benefit of the Named
Executive Officer to provide the benefit under the terms of the Death
Benefit Only plan for certain executive officers.
Name Retirement Contributions($) Life Insurance Premiums($) Total ($)
- ---- --------------------------- -------------------------- ------------
H. Douglas Chaffin 22,500 1,238 23,738
John L. Skibski 14,045 349 14,394
Thomas G. Myers 14,450 619 15,069
James E. Morr 13,511 1,025 14,536
Scott E. McKelvey 12,161 485 12,646
Narrative Explanation to the Summary Compensation table
Named Executive Officers participate in an annual incentive plan that provides
for awards tied to the profit performance of the Corporation during the fiscal
year. The value of any awards paid is disclosed in column (g) of the summary
compensation table. Refer to the compensation discussion and analysis for a
complete explanation of the Plan and awards made under the Plan for the fiscal
year.
The stock awards reported in column (e) of the Summary Compensation Table
represent the value of Performance Stock Units granted to Named Executive
Officers during the fiscal year. The vesting of this award depends on the
cumulative growth in Earnings Per Share over a three year measurement period
ending December 31, 2009. The range of award value that could vest is reported
on the Grants of Plan Based Awards table in columns (f) and (h).
Mr. Chaffin participates in a supplemental retirement benefit plan. The increase
in value for the fiscal year is reported in column (h) of the Summary
Compensation Table. The full present value accrued through the end of the fiscal
year is reported on the Pension Benefits Table in column (d). The value of Mr.
Chaffin's accrued benefit becomes fully vested with continued service to April
2, 2009. The benefit structure is more fully explained with the Pension Table
and in the Compensation Discussion & Analysis section of this proxy statement.
The named Executive Officers are participants in the MBT Retirement Plan. This
plan is a qualified profit sharing, 401(k) plan. The employer contribution
amounts for the fiscal year period for each named Executive Officer included in
column (i) and reported under footnote number 4 of the Summary Compensation
Table. Employer contributions under the Plan are structured as a percent of base
salary up to statutory compensation limits. Employer contributions for the
fiscal-year include Safe-Harbor contributions, matching contributions, and
discretionary contributions, applied on a non-discriminatory basis for all Plan
participants.
28
GRANTS OF PLAN-BASED AWARDS
ALL
OTHER
ALL OTHER STOCK
STOCK AWARDS: GRANT
AWARDS: NUMBER EXERCISE DATE
NUMBER OF OF OR FAIR
SHARES OF SECURITIES BASE VALUE OF
DATE ESTIMATED FUTURE PAYOUTS ESTIMATED FUTURE PAYOUTS STOCK OR UNDER- PRICE STOCK &
EQUITY UNDER NON-EQUITY INCENTIVE UNDER EQUITY INCENTIVE STOCK LYING OF OPTION EQUITY
GRANT PLAN AWARDS PLAN AWARDS UNITS OPTIONS AWARDS AWARDS
APPROVED -------------------------- ------------------------ --------- ---------- --------- --------
GRANT BY BOARD THRESHOLD TARGET MAXIMUM THRESHOLD TARGET MAXIMUM ($/SHARE) ($)
NAME DATE ($) ($) ($) (#) (#) (#) (#) (#) (#2) (#3)
(a) (b) (b) ( c) (d) (e) (f) (g) (h) (i) (j) (k) (l)
- ------------ --------- ---------- --------- ------- -------- --------- ------ ------- --------- ---------- --------- --------
H. Douglas
Chaffin
(PEO) 104,116 208,232
H. Douglas
Chaffin 1/03/2006 12/22/2005 1,200 6,000 97,440
(PEO) 1/02/2007 12/21/2006 3,000 6,000 91,980
H. Douglas
Chaffin 1/03/2006 12/22/2005 15,500 $ 16.24 55,955
(PEO) 1/02/2007 12/21/2006 15,500 $ 15.33 42,780
John L.
Skibski
(PFO) 28,528 57,056
John L.
Skibski 1/03/2006 12/22/2005 440 2,200 35,728
(PFO) 1/02/2007 12/21/2006 1,100 2,200 33,726
John L.
Skibski 1/03/2006 12/22/2005 5,800 $ 16.24 20,938
(PFO) 1/02/2007 12/21/2006 5,800 $ 15.33 16,008
Thomas G. 29,603 59,207
Myers
Thomas G. 1/03/2006 12/22/2005 440 2,200 35,728
Myers 1/02/2007 12/21/2006 1,100 2,200 33,726
Thomas G. 1/03/2006 12/22/2005 5,800 $ 16.24 20,938
Myers 1/02/2007 12/21/2006 5,800 $ 15.33 16,008
James E. 27,445 54,890
Morr
James E. 1/03/2006 12/22/2005 440 2,200 35,728
Morr 1/02/2007 12/21/2006 1,100 2,200 33,726
James E. 1/03/2006 12/22/2005 5,800 $ 16.24 20,938
Morr 1/02/2007 12/21/2006 5,800 $ 15.33 16,008
Scott E. 28,066 56,131
McKelvey
Scott E. 1/03/2006 12/22/2005 400 2,000 32,480
McKelvey 1/02/2007 12/21/2006 1,000 2,000 30,660
Scott E. 1/03/2006 12/22/2005 4,800 $ 16.24 17,328
McKelvey 1/02/2007 12/21/2006 4,800 $ 15.33 13,248
- ----------
(2) Exercise price is the average of the lowest and highest grant date selling
price on the exchange, as provided for under the MBT Financial Corp.
Long-Term Incentive Compensation Plan.
(3) Reflects grant date fair value of performance stock units and stock
options, computed in accordance with FAS 123R. Refer to financial
statements for assumptions applied in valuation of Equity Awards.
29
Narrative Explanation to the Grants of Plan Based Award table
Named Executive Officers participate in an annual incentive bonus plan that
provides a cash award tied to Net Operating Income, adjusted for income taxes
and bonus amounts (Adjusted NOI). The award amounts reported in column (d) of
the Grants of Plan-Based Award table are set prior to the beginning of the
fiscal year and are paid under the plan if the Corporation earns the targeted
level of Adjusted NOI. The awards reported in column (c) of the table are paid
if the threshold or minimum level of Adjusted NOI performance is achieved. No
awards are payable under the plan if profit falls below the established
performance threshold. A fixed award schedule defines the level of bonus awards
paid for levels of Adjusted NOI between threshold and target performance levels,
and for profit performance above the target. There is no defined award cap under
the plan, and therefore no award value reported in the maximum column (e). Bonus
awards earned for performance above target level increase proportionately based
on the defined relationship between awards paid and Adjusted NOI above target.
Refer to the Annual Incentive Bonus section of the Compensation Discussion and
Analysis section of this proxy statement for a complete description of the
annual incentive plan.
The grant date for all equity awards is the first day of the fiscal year on
which MBT stock is traded, unless otherwise determined by Board. The date of
grant for fiscal year 2007 awards was January 2, 2007. The Board approved these
equity grants and the related terms and conditions on December 21, 2006. Equity
grants were delivered in the form of non-qualified stock options, and
Performance Stock Units as provided for under the MBT Financial Corp. Long-Term
Incentive Plan.
Payouts under the Performance Stock Unit award disclosed in columns (f) through
(h) are conditioned on the cumulative growth in earnings per share over a three
year vesting period ending December 31, 2009. Each Performance Stock Unit is
equivalent in value to a share of MBT Financial Corp. common shares. Cumulative
earnings per share over the three year vesting period must be at least $2.91 to
vest in the threshold level of units awarded on the grant date (i.e., refer to
column (f)), representing 50% of the number of units awarded on the grant date.
Cumulative earnings per share over the three year vesting period must be at
least $3.22 per share to vest in the maximum number of units awarded on the
grant date (refer to column (h), representing 100% of the units granted on date
of grant. Cumulative earnings per share between $2.91 and $3.22 over the three
year performance period correspond to scheduled levels of vesting between 50%
and 100%. Dividend equivalent units accrue during the three year performance
period in proportion to actual dividends declared on MBT Financial Corp stock,
and are subject to the same performance vesting conditions applied to units
awarded on the date of grant. All vested performance stock units and dividend
equivalent units are paid in the form of MBT Financial Corp. common shares at
the end of the performance period.
30
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(a) (b) ( c ) (d) (e) (f) (g) (h) (i) (j)
Option Awards Stock Awards
- ----------------------------------------------------------------------------------------- ---------------------------------------
EQUITY
EQUITY INCENTIVE
INCENTIVE PLAN
PLAN AWARDS:
AWARDS: MARKET
MARKET NUMBER OR
NUMBER VALUE OF PAYOUT
OF OF UNEARNED VALUE OF
EQUITY SHARES SHARES SHARES, UNEARNED
INCENTIVE OR OR UNITS SHARES,
PLAN UNITS UNITS OR UNITS OR
NUMBER OF NUMBER OF AWARDS: OF OF OTHER OTHER
SECURITIES SECURITIES NUMBER OF STOCK STOCK RIGHTS RIGHTS
UNDERLYING UNDERLYING SECURITIES THAT THAT THAT THAT
UNEXERCISED UNEXERCISED UNDERLYING OPTION HAVE HAVE HAVE HAVE NOT
OPTIONS OPTIONS (#) UNEXERCISED EXERCISE OPTION NOT NOT NOT VESTED
(#) UNEXERCISABLE UNEARNED PRICE EXPIRATION VESTED VESTED VESTED ($)
NAME EXERCISABLE (#1) OPTIONS (#) ($) DATE (#) ($) (#) (#2)
- ------------------ ------------ ------------- ------------ ----------- ------------- ------- ------ ---------- -----------
H. Douglas Chaffin 19,000 - - 13.20 1/2/2013
(PEO) 20,000 - - 16.69 1/2/2014
28,000 - - 23.40 1/3/2015 4,200 $ 37,044
10,333 5,167 - 16.24 1/3/2016
5,167 10,333 - 15.33 1/3/2017
John L. Skibski 1,000 - - 13.85 1/2/2012
(PFO) 2,334 - - 13.20 1/2/2013
11,000 - - 16.69 1/2/2014
11,000 - - 23.40 1/3/2015 1,540 $ 13,583
3,867 1,933 - 16.24 1/3/2016
1,934 3,866 - 15.33 1/3/2017
Thomas G. Myers 9,500 - - 13.20 1/2/2013
12,500 - - 16.69 1/2/2014
12,500 - - 23.40 1/3/2015 1,540 $ 13,583
3,867 1,933 - 16.24 1/3/2016
1,934 3,866 - 15.33 1/3/2017
James E. Morr 19,600 - - 18.125 6/30/2010
4,500 - - 13.85 1/2/2012
5,500 - - 13.20 1/2/2013
12,500 - - 16.69 1/2/2014 1,540 $ 13,583
12,500 - - 23.40 1/3/2015
3,867 1,933 - 16.24 1/3/2016
1,934 3,866 - 15.33 1/3/2017
Scott E. McKelvey 8,334 - - 13.2 1/2/2013
9,000 - - 16.69 1/2/2014
9,000 - - 23.40 1/3/2015 1,400 $ 12,348
3,200 1,600 - 16.24 1/3/2016
1,600 3,200 - 15.33 1/3/2017
- ----------
(1) Vesting dates for reported unexercisable shares are: All reported options
expiring on 1/3/2016 become fully vested on 12/31/2008. With respect to
reported options expiring on 1/3/2017: 5,167 options held by Mr. Chaffin
become fully vested on 12/31/2008 and 5,166 become fully vested on
12/31/2009; 1,933 options held by Messrs. Skibski, Myers, and Morr become
fully vested on 12/31/2008, and 1,933 options held by Messrs. Skibski,
Myers, and Morr become fully vested on 12/31/2009; 1,600 options held by
Mr. McKelvey become fully vested on 12/31/2008 and 1,600 options held by
Mr. McKelvey become fully vested on 12/31/2009.
(2) Market value based on closing market price of MBT Financial Corp. stock on
December 29, 2007, of $8.82, and threshold vesting level.
31
OPTION EXERCISES AND STOCK VESTED
(a) (b) (c ) (d) (e)
Option Awards Stock Awards
- ---------------------------- ----------------------------------------- ----------------------------------
NUMBER OF NUMBER OF
SHARES SHARES VALUE
ACQUIRED ON VALUE REALIZED ON ACQUIRED ON REALIZED ON
NAME EXERCISE (#) EXERCISE ($) VESTING (#) VESTING ($)
- ---------------------------- ------------------ --------------------- --------------- -----------------
H. Douglas Chaffin (PEO) - - - -
John L. Skibski (PFO) - - - -
Thomas G. Myers - - - -
James E. Morr - - - -
Scott E. McKelvey - - - -
PENSION BENEFITS
(a) (b) (c ) (d) (e)
- ---------------------------- -------------------------- ----------------- --------------- -------------
PRESENT VALUE PAYMENTS
NUMBER OF YEARS OF DURING LAST
CREDITED SERVICE ACCUMULATED FISCAL YEAR
NAME PLAN NAME (#) BENEFIT ($) ($)
- ---------------------------- -------------------------- ----------------- --------------- -------------
Monroe Bank & Trust
H. Douglas Chaffin (PEO) Supplemental Executive
Retirement Agreement n/a $ 168,373 -
- ----------
(1) Reports the present value of Mr. Chaffin's unvested benefit accrued under
the plan as of the end of the fiscal year period, based upon the his 2007
base salary and projected benefit offset values at age 65. Actuarial
assumptions applied in determining this value include the 1994 GAR
mortality table, current Social Security Law and related index factor
assumptions, and an interest rate of 6%. This value is approximately 36%
of the full benefit accrual otherwise payable with continued service to
age 65, and based on current fiscal year pay and projected benefit offset
values at 65.
Narrative Explanation to the Pension Table
The Corporation has established The Monroe Bank & Trust Supplemental Executive
Retirement Agreement (SERP) for the benefit of Mr. Chaffin. The SERP provides
for payment of a supplemental retirement benefit payable at age 65 equal to 65%
of the executive's annual base salary at retirement reduced by 50% of the
executive's Primary Social Security Benefit and the life annuity value of
accumulated employer contributions at age 65 in the executive's account balance
under the Monroe Bank Retirement Plan. The resulting annual benefit amount is
converted to 12 equal monthly amounts and paid
32
monthly for 120 months commencing at age 65. The executive's annual benefit at
normal retirement age (65) is projected to be $132,663, based on current fiscal
year compensation and continued service to normal retirement age. The agreement
further provides for an early termination benefit equal to a portion of the full
accrued benefit value determined at the early termination date and otherwise
payable at age 65. The value of the executive's vested accrued benefit at early
termination is payable in the form of 120 equal monthly installments commencing
at age 60, if termination is before age 60, or upon termination after age 60.
The executive becomes fully vested in his accrued benefit with continued service
as the PEO to April 2, 2009. If the executive were to terminate employment at
his vesting date, he is projected to be vested in approximately 43% of the full
benefit accrual otherwise payable with continued service to age 65, taking into
account pay and the benefit offset amounts valued at termination of employment.
POST-EMPLOYMENT COMPENSATION
We have summarized below the payments that would be made to each of our named
executive officers upon their termination of employment or upon a change in
control as follows:
PAYMENTS OR BENEFITS UPON TERMINATION OF EMPLOYMENT IN CONNECTION WITH A
CHANGE-IN-CONTROL
The Corporation has entered into certain severance or change-in-control
agreements with its named executive officers.
H. Douglas Chaffin Change in Control Agreement
The Corporation has entered into a Change in Control Agreement with Mr. Chaffin,
the Corporation's Chief Executive Officer. Table 1 below describes the potential
payments upon termination of Mr. Chaffin's employment in connection with a
change in control. The Corporation has not entered into any other agreements
with Mr. Chaffin which would provide for payment of severance benefits unless a
change in control event occurs.
The terms of the Change in Control Agreement provide that in the event of a
change in control of the Corporation as defined in the agreement, Mr. Chaffin is
entitled to a severance payment in the event of his termination, without cause,
equal to his annual compensation, which is defined to include his then current
salary plus his previous year's cash bonus. The severance payment is also
payable in the event of his involuntary termination of employment or demotion
within two years of the change in control, or his voluntary termination during
the period beginning six months following the change in control and ending nine
months after the change in control. In addition, Mr. Chaffin is entitled under
the terms of the agreement to receive certain health, disability, dental, life
insurance and other benefits for a one-year period following a change in
control.
33
Mr. Chaffin's Change in Control Agreement provides for the reimbursement of
certain excise taxes imposed upon payments received by Mr. Chaffin, which are
deemed "excess parachute" payments under the provisions of Section 280G of the
Internal Revenue Code. In the event such payments are deemed excess parachute
payments, then the amount of the payment is increased in an amount sufficient to
eliminate any excise tax imposed under Section 4999 of the Internal Revenue Code
and otherwise payable by Mr. Chaffin.
TABLE I - PAYMENTS TO MR. CHAFFIN IN CONNECTION WITH A CHANGE-IN-CONTROL (1)
H. DOUGLAS
CHAFFIN
-------------
CASH COMPENSATION: (2)
Base Salary $ 277,642
Non-Equity Incentive Plan Compensation $ 0
LONG-TERM INCENTIVE AWARDS: (3)
Stock Options/SARs
Unvested and Accelerated Vesting (4) $ 0
Performance Stock Units (5)
* 2006-08 (performance period) $ 52,920
* 2007-09 (performance period) $ 52,920
CONTINUATION OF WELFARE BENEFIT COVERAGE AND PERQUISITES
Post-termination Health Care (6) $ 10,266
Post-termination Dental (6) $ 546
Post-termination Disability (6) $ 3,408
Post-termination Life Insurance and AD&D (6) $ 60
Outplacement Services (7) $ 10,000
Club Membership (8) $ 4,740
-----------
TOTAL $ 412,502
===========
- ----------
(1) Change in Control event assumed to occur on December 31, 2007 for
disclosure purposes. Fiscal-year-end base salary is $277,642. Cash bonus
awarded for the last whole calendar year preceding the executive's
termination of employment is $0.
(2) Change-in-Control agreement provides for cash payment equal to one times
base salary plus the total cash bonuses for the last whole calendar year
preceding termination of employment for payment triggering events
including (i) termination of executive without cause or voluntary
resignation of executive for specified reasons within two years after a
Change-in-Control with specified reasons including a) demotion, b)
reduction in compensation, c) transfer away from principal place of
employment of Monroe County, Michigan, or a county contiguous thereto, or
d) material reduction of job title, status or responsibility; or (ii)
voluntary termination of employment not earlier than six months and not
later than nine months following a Change-in-Control of the Corporation,
or (iii) discharge of executive other than for cause and there is a
Change-in-Control within two years following the date of discharge.
(3) The price per share of the Corporation's stock on December 31, 2007 is
$8.82 per share. Only incremental value of equity awards attributed to
payment events is reported.
(4) Vesting of outstanding unvested stock options is accelerated upon a
Change-in-Control assumed to be December 31, 2007 for disclosure purposes.
Realizable value is equal to the difference between the December 31, 2007
per share price and the exercise price for stock options with accelerated
vesting, multiplied by the number of option shares vested upon
change-in-control event. Realizable value is reported as $0 given that the
December 31, 2007 share price is below the exercise price of all
applicable option shares.
(5) Change-in-control agreement provides that all outstanding Performance
Stock Units become immediately vested upon a Change-in-Control. Value
realized is equal to the total number of Performance Stock Units with
accelerated vesting multiplied by the December 31, 2007 per share value of
$8.82.
(6) Change-in-control agreement provides for the continuation of referenced
benefits with the full cost of benefits paid by the Corporation for a 12
month period following the Executive's termination of employment in
connection with a Change-in-Control. Cost is based on policy rates in
effect at December 31, 2007.
(7) Change-in-control agreement provides for 6 months of out-placement
services following termination of employment in connection with a
Change-in-Control. Reported cost is estimate.
(8) Change-in-control agreement provides for cash payment to executive equal
to 12 month cost of current club membership.
34
Other Named Executive Officers - Separation and Change in Control Agreements
The Corporation has entered into identical agreements with Messrs. McKelvey,
Morr, Myers, and Skibski providing for certain severance payments following
termination of employment other than for cause. Table 2 describes the potential
payments upon involuntary not for cause termination or good reason resignation
as defined in each of the agreements. Table 3 describes the potential payments
in connection with a change-in-control termination.
The agreements for the other named executive offices provide that in the event
such payments are deemed excess parachute payments, then the amount of the
payments provided for in the agreement for each executive will be reduced in an
amount which eliminates any and all excise tax to be imposed under Section 4999
of the Internal Revenue Code.
Involuntary Not For Cause Termination or Good Reason Resignation. In the event
the Corporation terminates the employment of any of the named executive
officers, without cause, prior to a "change in control," as that term is defined
in each of the agreements, the executive is entitled to receive as severance pay
one year of his base salary. Under the terms of the agreements, 50% of the
severance payment is disbursed in a lump sum upon termination, with the
remaining amount payable over the twelve months immediately following
termination. In addition, the Corporation is obligated to pay the COBRA premiums
for the continuation of healthcare benefits for the executive and his eligible
dependants for the twelve month period following termination of employment.
35
TABLE 2
PAYMENTS IN CONNECTION WITH INVOLUNTARY NOT FOR CAUSE TERMINATION OR GOOD REASON
RESIGNATION(1)
THOMAS G. JAMES E. JOHN L. SCOTT E.
MYERS MORR SKIBSKI MCKELVEY
-------------- ------------ ------------ ------------
CASH COMPENSATION:
Base Salary (2) $ 147,912 $ 137,224 $ 142,640 $ 141,000
Short-term Incentive (3) No Payment No Payment No Payment No Payment
LONG-TERM INCENTIVE AWARDS: (4)
Stock Options
Unvested and Accelerated (5) No Payment No Payment No Payment No Payment
Performance Stock Units (6)
* 2006-08 (performance period) No Payment No Payment No Payment No Payment
CONTINUATION OF WELFARE BENEFITS
Post-termination Health Care (7) $ 13,266 $ 0 $ 10,354 $ 15,456
Post-termination Dental (7) $ 995 $ 0 $ 995 $ 995
-------------- ------------ ------------ ------------
TOTAL $ 162,173 $ 137,224 $ 153,989 $ 157,451
============== ============ ============ ============
- ----------
(1) Severance agreement provides for severance payment equal to one times base
salary. Assumes Executive has either (i) been discharged without Cause, or
(ii) has resigned within 90 days of an event constituting Good Reason
which shall mean a) material reduction in job, b) reduction in base
salary, or c) receipt of Notice of Non-renewal of separation agreement,
and such event is prior to a Change in Control. Amount of payments are
reduced to extent necessary to eliminate any excise tax imposed under IRC
Section 4999.
(2) Payment triggering events are assumed to occur on December 31, 2007. Base
salary at fiscal-year-end for each Messrs. Myers, Morr, Skibski and
McKelvey are $147,912; $137,224, $142,640, and $141,000 respectively.
(3) Agreement does not provide for short-term incentive severance payment.
(4) The price per share of the Corporation's stock on the assumed payment
triggering date of December 31, 2007 is $8.82 per share. Only incremental
value of awards attributed to triggering events are reported.
(5) No acceleration of outstanding unvested stock options occurs.
(6) No acceleration of outstanding unvested performance stock units occurs.
(7) Agreement provides for the continuation of health care benefits with the
full cost of benefits paid by the Corporation for the 12 month period
following the executive's termination of employment. Cost is computed
based on policy rates in effect at December 31, 2007.
Involuntary Termination or Good Reason Resignation in Connection with Change in
Control. In the event the Corporation terminates the employment of the named
executive officer, without cause, within one year after a change in control, the
executive is entitled to severance payment equal to one year of his base salary,
plus an amount equal to his average annual cash bonus for the prior three year
period. Under the terms of the agreements, the entire severance payment is due
within ten days after the executive's termination.
36
TABLE 3
PAYMENTS IN CONNECTION WITH INVOLUNTARY TERMINATION OR GOOD REASON RESIGNATION
WITHIN ONE YEAR FOLLOWING CHANGE IN CONTROL (1)
THOMAS G. JAMES E. JOHN L. SCOTT E.
MYERS MORR SKIBSKI MCKELVEY
--------- --------- --------- ---------
CASH COMPENSATION:
Base Salary (2) $ 147,912 $ 137,224 $ 142,640 $ 141,000
Short-term Incentive (3) $ 15,903 $ 15,865 $ 14,063 $ 23,760
LONG-TERM INCENTIVE AWARDS: (4)
Stock Options
Unvested and Accelerated (5) $ 0 $ 0 $ 0 $ 0
Performance Stock Units (6)
* 2006-08 (performance period) $ 19,404 $ 19,404 $ 19,404 $ 17,640
* 2007-09 (performance period) $ 19,404 $ 19,404 $ 19,404 $ 17,640
CONTINUATION OF WELFARE BENEFITS
Post-termination Health Care (7) $ 13,266 $ 0 $ 10,354 $ 15,456
Post-termination Dental (7) $995 $ 0 $ 995 $ 995
--------- --------- --------- ---------
TOTAL $ 216,884 $ 191,897 $ 206,860 $ 216,491
========= ========= ========= =========
- ----------
(1) Severance agreement provides for severance payment equal to one times base
salary plus the average annual cash bonus received during the prior three
year period. Assumes Executive has either (i) been discharged without
Cause, or (ii) has resigned within 90 days of an event constituting Good
Reason which shall mean a) material reduction in job, b) reduction in base
salary, or c) receipt of Notice of Non-renewal of separation agreement,
and such event is within one year following a Change in Control as defined
in the agreement. Amount of payments are reduced to extent necessary to
eliminate any excise tax imposed under IRC Section 4999.
(2) Payment triggering events are assumed to occur on December 31, 2007. Base
salary at fiscal-year-end for each Messrs. Myers, Morr, Skibski and
McKelvey are $147,912; $137,224, $142,640, and $141,000 respectively.
(3) Average annual cash bonus for the three year period ending 12/31/06 for
Messrs. Myers, Morr, Skibski, and McKelvey were $15,903, $15,865, $14,063,
and $23,760 respectively.
(4) The price per share of the Corporation's stock on the assumed payment
triggering date of December 31, 2007 is $8.82 per share. Only incremental
value of awards attributed to triggering events are reported.
(5) Vesting of outstanding unvested stock options is accelerated upon a
Change-in-Control assumed to be December 31, 2007 for disclosure purposes.
Realizable value is equal to the difference between the December 31, 2007
per share price and the exercise price for stock options with accelerated
vesting, multiplied by the number of option shares vested upon
change-in-control event. Realizable value reported is $0 given that the
December 31, 2007 share price is below the exercise price of all
applicable option shares.
(6) Agreement provides that all outstanding PSUs become immediately vested
upon a change-in-control. Value realized is equal to the total number of
Performance Stock Units with vesting accelerated multiplied by December
31, 2007 per share value of $8.82
(7) Agreement provides for the continuation of health care benefits with the
full cost of benefits paid by the Corporation for the 12 month period
following the executive's termination of employment. Cost is computed
based on policy rates in effect at December 31, 2007.
Material Terms of Agreements
The following additional terms apply to both Mr. Chaffin's Change in Control
Agreement and the Separation and Change in Control Agreements with the other
named executive officers.
37
Confidentiality, Non-competition and Non-solicitation Agreements. While employed
by the Corporation and for a period of one year following the executive's
termination of employment for any reason, the executive shall be bound by the
terms of a confidentiality, non-solicitation, and non-competition agreement
which prohibits the executive, without prior written consent of the Corporation,
from rendering services directly or indirectly, as an employee, officer,
director, consultant, advisor, partner, or otherwise, for any organization or
enterprise which competes directly or indirectly with the business of the
Corporation in providing financial products or services to consumers or
businesses in Monroe County, Michigan and its contiguous counties and
municipalities.
Termination for Cause. The executives will be entitled to certain benefits as
described in the tables above if the executive's employment is terminated by the
Corporation for reasons other than for cause. A termination is for cause if it
is for any of the following reasons: (i) the executive's criminal dishonesty,
(ii) the executive's refusal to perform his duties on an exclusive and
substantially full-time basis, (iii) executive's refusal to act in accordance
with any specific substantive instructions given by the Corporation with respect
the executive's performance of duties normally associated with his position
prior to a Change in Control, or (iv) the executive's engaging in conduct which
could be materially damaging to the Corporation without a reasonable good faith
belief that such conduct was in the best interest of the Corporation.
Definition of a Change in Control. We have defined a Change in Control under Mr.
Chaffin's Change in Control Agreement and the Separation and Change in Control
Agreements covering our other named executive officers as an event that is a:
(i) Change in Ownership, ii) Change in Effective Control, or iii) Change in
Ownership of a Substantial Portion of Assets.
Change in Ownership. A change in ownership of the corporation occurs when
one person or a group acquires stock that combined with stock previously
owned, controls more than 50% of the value or voting power of the stock of
the corporation.
Change in Effective Control. A change in effective control occurs on the
date that, during any 12-month period, either (x) any person or group
acquires stock possessing 35% of the voting power of the corporation, or
(y) the majority of the board is replaced by persons whose appointment or
election is not endorsed by a majority of the board.
Change in Ownership of a Substantial Portion of Assets. A change in
ownership of a substantial portion of the assets occurs on the date that a
person or a group acquires, during any 12-month period, assets of the
corporation having a total gross fair market value equal to 40% or more of
the total gross fair market value of all of the corporation's assets.
38
Acceleration of Vesting - Equity Acceleration. In the event of Change in Control
of the Corporation, as defined under the MBT Financial Corporation Long-Term
Incentive Compensation Plan, all unvested stock options and performance stock
units (PSUs) granted under the plan shall become immediately and unconditionally
vested.
PAYMENTS OR BENEFITS MADE UPON TERMINATION DUE TO RETIREMENT
Retiree Medical Coverage
Upon retirement, executive officers named on the Summary Compensation Table who
have attained the age of 55 with at least 5 years of service, and who are
covered under a medical plan offered by the Corporation at retirement, may
participate in the retiree medical plan provided by the Corporation. Employees
below the Senior Vice President level may also participate in the retiree
medical plan if they are at least age 55, and their age plus years of service is
at least 80. All eligible employees of the Corporation participate in the same
retiree medical benefits plan insured through BlueCross/BlueShield. The
Corporation pays the full cost of coverage for the retiree up to a capped amount
(i.e., the current monthly premium cost for under age 65 employee coverage of
$393.02 is above the cap amount of $375.22). The retiree must pay the full
premium cost of coverage for a spouse. Upon attainment of age 65, benefits
provided under the plan coordinate with Medicare, with Medicare becoming the
primary payor, and the plan becoming the secondary payor.
As of December 31, 2007, Mr. Morr is the only named executive officer who would
meet the minimum age and service requirements for participation in the plan. Had
Mr. Morr retired on December 31, 2007, assuming he had active employee medical
coverage in force at retirement, the Corporation would have paid an annual
premium of $4,503 for his coverage. The portion of the total FAS 106 expense
attributed to each of the named executive officers during 2007, for financial
statement reporting purposes are:
NAMED EXECUTIVE OFFICER FAS106 EXPENSE ($)
- ----------------------- ------------------
Mr. Chaffin 540
Mr. Skibski 457
Mr. Myers 972
Mr. Morr 2,381
Mr. McKelvey 710
Accelerated Vesting of Equity Awards
Upon termination of employment on or after attainment of age 62, the Performance
Stock Unit Agreement provides that the participant's unvested Performance Stock
Units, outstanding at retirement, will remain subject to the applicable
performance vesting schedule, but the amount of any earned award of shares will
be reduced in proportion to the number of months the participant was actively
employed during the performance period.
39
PAYMENTS OR BENEFITS AT TERMINATION DUE TO DISABILITY
Benefit payments from supplemental disability policy
All named executive officers are covered under a supplemental disability policy
written by Metropolitan Life. This policy provides for payment of a disability
benefit in the event of total disability as defined under the policy. Benefit
payments from this policy are in addition to any disability benefit payable
under the group long term disability plan covering all employees of the
Corporation. Monthly total disability benefit payments to named executive
officers in the event of disability as of December 31, 2007 are disclosed below.
In addition to the total disability benefit reported below, named executive
officers may also become eligible for a Catastrophic Disability Benefit in the
event of catastrophic disability as defined under the policy (e.g., loss of
sight in both eyes):
MONTHLY MONTHLY CATASTROPHIC
NAMED EXECUTIVE OFFICER DISABILITY BENEFIT ($) DISABILITY BENEFIT ($)
- ----------------------- ---------------------- ----------------------
Mr. Chaffin 5,000 8,000
Mr. Skibski 3,550 2,250
Mr. Myers 3,850 2,550
Mr. Morr 3,350 2,550
Mr. McKelvey 2,950 2,400
Accelerated Vesting of Equity Awards
In the event of disability as defined under the MBT Long Term Incentive
Compensation Plan (i.e., permanent and total disability as defined under IRC
Section 22(e)(3)), all outstanding unvested stock options become fully vested
and subject to exercise. At December 31, 2007, the stock price was less than the
exercise price of all outstanding, unvested options; therefore, there is no
realizable value associated with these stock options held by named executive
officers at this year-end date. An assumption is made for purposes of this
disclosure that the executive officer's employment would cease upon becoming
totally and permanently disabled.
Related to the same disability condition, the Performance Stock Unit Agreement
provides that the participant's unvested Performance Stock Units, outstanding at
date of disability, will remain subject to the applicable performance vesting
schedule, but the amount of any earned award of shares will be reduced
proportionate to the number of months the participant was actively employed
during the performance period. With respect to unvested Performance Stock Units
as of December 31, 2007, no awards are expected to be made given the
Corporation's financial performance.
40
PAYMENTS OR BENEFITS AT TERMINATION DUE TO DEATH OF EXECUTIVE OFFICER DURING
EMPLOYMENT PERIOD
Death Benefits
Under the terms of the MBT Executive Officer Death Benefit Only Plan (DBO Plan)
all named executive officers are eligible for a death benefit in the event of
death while employed as an executive officer of the Corporation. The death
benefit is payable to the executive officer's named beneficiary. The death
benefit amount is equal to two times the executive officer's base salary at
death, plus an amount equal to a tax gross-up (i.e., tax rate of 39% assumed for
disclosure purposes) on this death benefit. A tax gross-up amount is paid
because the death benefits are fully taxable benefit payments made from the
general assets of the Corporation. The total death benefit payments to
beneficiaries of named executive officers, assuming a December 31, 2007 payment
trigger date, are:
NEO Death Benefit ($)
- ----------------- -----------------
Mr. Chaffin 1,811,941(1)
Mr. Skibski 385,705
Mr. Myers 402,990
Mr. Morr 367,948
Mr. McKelvey 380,328
- ----------
(1) Mr. Chaffin's death benefits reflect his benefits under both the Executive
Officer Death Benefit Only Plan and the Director Death Benefit Only
program.
The cost of the insurance attributable to providing this death benefit
protection is reflected in all other compensation column (i) of the Summary
Compensation Table.
The referenced death benefit payments are paid from the general assets of the
Corporation in accordance with death-benefit-only agreements between the
Corporation and each named executive officer. The Corporation has insurance
policies in place on the lives of each named executive officer, with the bank
named as the beneficiary. Proceeds from these policies serve to reimburse the
bank for all death benefit payments made to the executive officer's beneficiary.
In addition to the death benefit payments referenced in the table above, Mr.
Chaffin's beneficiary will receive his full accrued benefit under the
Supplemental Executive Retirement Plan at the date of death, unreduced for early
termination before normal retirement age. Assuming a payment trigger date of
December 31, 2007, the benefit payment under this plan would be $467,959. This
benefit payment would be made from proceeds from a Split Dollar Endorsement
attached to certain insurance policies held by the Corporation on the life of
Mr. Chaffin. This agreement was entered into between Mr. Chaffin and Monroe Bank
& Trust on July 1, 2003, which is the effective date of the Supplemental
Executive Retirement Plan. The pension table under column (d) discloses a
present value of accumulated benefit amount of $168,373. This amount is lower
than the full benefit accrual amount above because it reflects the impact of
early termination before attainment of normal retirement age of 65.
Accelerated Vesting of Equity Awards
In the event of death while employed, all outstanding unvested stock options
become fully vested and subject to exercise. At December 31, 2007, the stock
price was less than the exercise price of all outstanding, unvested options;
therefore, there is no realizable value associated with these stock options held
by named executive officers at this year-end date.
41
Related to the same event, the Performance Stock Unit Agreement provides that
the participant's unvested Performance Stock Units, outstanding upon death, will
remain subject to the applicable performance vesting schedule, but the amount of
any earned award of shares will be reduced proportionate to the number of months
the participant was actively employed during the performance period. With
respect to unvested Performance Stock Units as of December 31, 2007, no awards
are expected to be made given the Corporation's financial performance.
PAYMENTS OR BENEFITS AT TERMINATION DUE TO DEATH OF EXECUTIVE OFFICER AFTER
TERMINATION OF EMPLOYMENT
Death Benefits
Under the terms of the MBT Executive Officer Death Benefit Only Plan (DBO Plan)
all named executive officers are eligible for a death benefit after termination
of employment upon attainment of at least age 55 with at least five year of
service, or upon termination of employment due to disability as defined under
the group long term disability plan. Upon the death of the eligible executive
officer, a benefit payment equal to one times the executive's base salary at
termination of employment will be paid to the named beneficiary. In addition to
this payment, a benefit equal to a tax gross-up on the death benefit amount will
be paid to the beneficiary. A tax gross-up amount is paid because the death
benefits are fully taxable benefit payments made from the general assets of the
Corporation. The total death benefit payments to beneficiaries of named
executive officers, assuming a December 31, 2007 payment trigger date and a 39%
tax rate, are:
NEO Death Benefit ($)
- ------------------ -----------------
Mr. Chaffin 455,151
Mr. Skibski 233,836
Mr. Myers 242,479
Mr. Morr 224,957
Mr. McKelvey 231,148
The accumulated liability accrued under FAS 158 and the incremental FAS 106
expense for the current financial reporting period in connection with the post
service benefit under the DBO Plan, attributed to the benefit amounts for each
of the named executive officers are:
NEO Accrued Liability FAS 106 Expense
- ------------ ----------------- ---------------
Mr. Chaffin $ 106,071 $ 16,527
Mr. Skibski $ 37,360 $ 5,821
Mr. Myers $ 50,006 $ 7,801
Mr. Morr $ 84,518 $ 13,169
Mr. McKelvey $ 33,781 $ 5,263
42
DIRECTOR COMPENSATION
GENERAL. We review the level of compensation of our non-employee directors
on an annual basis. To determine the appropriateness of the current level of
compensation for our non-employee directors, we have historically obtained data
from a number of different sources including:
- publicly available data describing director compensation in peer
companies; and
- survey data collected by our compensation consultant.
Cash compensation is paid to non-employee directors in the form of
retainers and meeting fees. The standard annual retainer for board service is
$10,000, paid in quarterly amounts of $2,500. The non-executive officer Chairman
receives an additional annual retainer of $10,000. The Chairpersons of the Audit
and Compensation Committees are paid additional annual retainers of $5,000 and
$2,500, respectively. An $800 fee is paid to a director for each board meeting
attended. A $700 fee is paid to a director for each committee meeting attended.
An additional committee meeting fee of $350 is paid to committee chairpersons.
43
The following table sets forth a summary of the compensation of our directors
for service as directors in 2007.
DIRECTOR COMPENSATION TABLE
(a) (b) (c) (d) (e) (f) (g) (h)
- ----------------- --------- ------ ------ -------------- ------------- ------------ ---------
CHANGE IN
FEES PENSION VALUE
EARNED AND
OR PAID NON-EQUITY NONQUALIFIED ALL OTHER
IN STOCK OPTION INCENTIVE PLAN DEFERRED COMPENSATION
CASH AWARDS AWARDS COMPENSATION COMPENSATION ($) TOTAL
NAME ($) ($) (1) ($) EARNINGS ($) (2) ($)
- ----------------- --------- ------ ------ -------------- ------------- ------------ ---------
Peter H. Carlton $ 41,800 - - - - $ 2,631 $ 44,431
H. Douglas
Chaffin (3) - - - - - (3) -
Joseph S. Daly 46,100 - - - - 1,403 47,503
Thomas M. Huner 41,850 - - - - 2,865 44,715
Rocque E. Lipford
(4) 34,900 - - - - 10,139 45,039
William D.
McIntyre, Jr. 40,850 - - - - 13,131 53,981
Michael J. Miller 43,700 - - - - 3,377 47,077
Debra J. Shah 36,300 - - - - 1,630 37,930
Philip P. Swy (5) 38,900 - - - - 6,756 45,656
Karen M. Wilson 38,200 - - - - 2,001 40,201
- ----------
(1) As of December 31, 2007, Messrs. Lipford and McIntyre had 3,407, and Mr.
Swy had 3,093, unexercised fully vested options to purchase shares of our
common stock issued under the terms of the Director Plan, which is
described below. The following presents the information regarding such
options.
OUTSTANDING
STOCK OPTIONS
NAME GRANT DATE EXPIRATION DATE EXERCISE PRICE (EXERCISABLE)
- ------------------------ ---------- --------------- -------------- -------------
Rocque E. Lipford 1/2/2001 1/2/2011 $13.94 1,572
1/2/2002 1/2/2012 $13.85 1,835
William D. McIntyre, Jr. 1/2/2001 1/2/2011 $13.94 1,572
1/2/2002 1/2/2012 $13.85 1,835
Philip P. Swy 1/2/2001 1/2/2011 $13.94 1,258
1/2/2002 1/2/2012 $13.85 1,835
(2) Represents the annual mortality cost of the life insurance that we
purchased necessary to fund the death benefit amount payable to the
director's named beneficiary pursuant to the Director DBO Plan, as
described below.
(3) Other than the participation by Mr. Chaffin in the Director DBO Plan, Mr.
Chaffin does not receive any compensation for service on the board in
addition to compensation payable for his service as our employee. The life
insurance premiums associated with providing the death benefits to Mr.
Chaffin under the Director DBO Plan are included in the all other
compensation column of the Summary Compensation table.
44
(4) We have recorded an accrued liability under FAS 158 of $767,316 as of
December 31, 2007 to reflect our obligation to pay $1,639,344 to Mr.
Lipford's beneficiaries after his death, and recorded a FAS 106 expense of
$119,557 during 2007 related to Mr. Lipford's post-service death benefits
under the Director DBO Plan, which is described below. The total FAS 158
liability for directors, including Mr. Lipford and 4 retired directors is
$2,693,972. The total FAS 106 expense recorded in 2007 for directors,
including Mr. Lipford and 4 retired directors was $419,753.
(5) Mr. Swy elected to forgo receipt of his $10,000 cash retainer and to
receive in lieu an award of an equivalent value in shares of our common
stock.
DIRECTOR COMPENSATION PLAN. We have established the MBT Director
Compensation Plan (the "Director Plan"). Under the terms of the Director Plan,
non-employee directors may elect each year to have their quarterly cash retainer
paid in any combination of the following:
- cash paid on a quarterly basis;
- a deferred cash payment;
- deferred payment in MBT stock;
- MBT stock; and
- MBT stock options valued using the Black-Scholes stock option
pricing model.
Non-employee directors may elect each year to have their meeting fees paid in
any of the foregoing except MBT options. Amounts deferred are paid:
- in a lump sum at termination of such service as a director,
- over a 2-5 year period following termination of service, or
- a specified date indicated in the director's initial election.
Options granted and MBT stock issued to directors in connection with the
Director Plan are made pursuant to, and are subject to all of the terms of, the
MBT Long-Term Incentive Compensation Plan. The Director Plan has been amended to
comply with the requirements imposed upon nonqualified deferred compensation
arrangements by Section 409A of the Internal Revenue Code of 1986, as amended.
DIRECTOR DEATH BENEFITS.
The Company maintains the MBT Director Death Benefit Only Plan, which
became effective March 1, 2006 (the "Director DBO Plan") for the benefit of its
directors. The Director DBO Plan provides death benefits, to be payable directly
by us to the director's beneficiaries, under the following schedule:
YEARS OF SERVICE AMOUNT
- --------------------- -----------
Less than Three years $ 500,000
Three to Six years $ 600,000
Six to Ten years $ 750,000
Ten plus years $ 1,000,000
45
The Director DBO Plan does not require the annual imputation of taxable income
to the director, but beneficiaries are taxed on the receipt of the death
benefits paid to them by us. Accordingly, the Director DBO Plan provides for a
gross-up of the amount payable to the beneficiary in an amount sufficient to
cover all taxes paid by the beneficiaries. We have purchased life insurance
policies on the lives of all participants in the Director DBO Plan in amounts
sufficient to cover our payment obligations to beneficiaries under the Director
DBO Plan, including the death benefit and the tax gross-up obligation. Included
in the Director Compensation table in column "g" All Other Compensation, is the
mortality charge incurred during 2007 for the benefit of the directors
associated with the split-dollar agreements and the Director DBO Plan.
If any of the non employee directors had died on December 31, 2007, their
beneficiary would have received the following payments, consisting of the death
benefit and tax gross-up payment, assuming a tax rate of 39%. Shah and Wilson
$819,672; Carlton and Daly $983,607; Huner and Miller; $1,229,508, and McIntyre,
Lipford, and Swy; $1,639,344.
At the time of its original adoption in March of 2006 the Director DBO
Plan provided the death benefits to the participating directors both during and
after their service as a director. During December 2006, all then currently
serving directors who were participants in the Director DBO Plan, except for Mr.
Lipford, agreed, in exchange for a $100 payment, to waive any death benefits
after termination of service as a director (other than by reason of death),
except if a "change of control," as referred to below, occurs during the
director's service. In the event of such a change of control, the director's
death benefit would continue through his or her death, including the tax
gross-up provisions and credit for years of service as a director. We have
defined a Change in Control as an event that is a: (i) Change in Ownership, ii)
Change in Effective Control, or iii) Change in Ownership of a Substantial
Portion of Assets.
Change in Ownership. A change in ownership of the corporation occurs when
one person or a group acquires stock that combined with stock previously
owned, controls more than 50% of the value or voting power of the stock of
the corporation.
Change in Effective Control. A change in effective control occurs on the
date that, during any 12-month period, either (x) any person or group
acquires stock possessing 35% of the voting power of the corporation, or
(y) the majority of the board is replaced by persons whose appointment or
election is not endorsed by a majority of the board.
46
Change in Ownership of a Substantial Portion of Assets. A change in
ownership of a substantial portion of the assets occurs on the date that a
person or a group acquires, during any 12-month period, assets of the
corporation having a total gross fair market value equal to 40% or more of
the total gross fair market value of all of the corporation's assets.
Because of his age, length of service, and insurable status, Mr. Lipford
did not elect to execute the waiver during December of 2006, and therefore his
beneficiaries will be entitled to receive the specified payments upon his death
during or after his service as a director. As of December 31, 2007 the
Corporation had accrued a current liability of $767,316 to reflect this
obligation. Assuming Mr. Lipford lives to his actuarial mortality age of 82, the
Corporation will record additional expense to provide him with this benefit of
$119,557, resulting in a fully accrued liability of $1,639,344 on the date of
his death.
DIRECTOR INDEPENDENCE AND RELATED PARTY TRANSACTIONS
DIRECTOR INDEPENDENCE
The Governance Committee of the Board of Directors of the Corporation
undertakes a review of director independence annually and reports on its
findings to the full board in connection with its recommendation of nominees for
election to the Board of Directors. Based upon this review, the Board of
Directors has determined that all directors are independent, other than Mr.
Chaffin, the current President and Chief Executive Officer.
In making its determination regarding the independence of all directors
and nominees for director, the Governance Committee reviewed and the board
considered a number of specific transactions as follows:
Director Carlton. Monroe Bank & Trust paid NC, Inc. owned by Nicholas
Carlton, Peter H. Carlton's brother, $199,157 in 2007 for janitorial services at
its branch offices. We anticipate paying NC, Inc. a comparable amount for these
same services in 2008. Monroe Bank & Trust has used NC, Inc. for janitorial
services for several years, beginning prior to Peter H. Carlton's service as our
director. We believe the terms, including price, on which NC, Inc.'s services
are provided are competitive and reflect an arms-length transaction. Peter H.
Carlton has no interest in NC, Inc. and receives no benefits from the
Corporation's use of its services.
Director Daly. Monroe Bank & Trust, pursuant to the terms of a lease
entered into on October 15, 2002, paid DM Company $74,247 in 2007, and over the
ten year term of the lease, payments will total $739,094 as lease payments for
the branch located at 2517 Fort Street, Wyandotte, Michigan. Mr. Daly is Manager
and part owner of DM Investments, LLC, doing business as DM Company, a real
estate investment firm. The lease agreement was entered into prior to Mr. Daly
becoming a director, and management believes the lease between the Corporation
and DM Company was made on an arms-length
47
basis. In addition, Monroe Bank & Trust purchased employee benefits insurance
coverage in 2007 for which Daly Merritt, Inc. received $101,458 in commissions.
Monroe Bank & Trust anticipates renewing these insurance policies in 2008, for
which Daly Merritt, Inc. would receive additional commissions anticipated to be
approximately $106,531. Mr. Daly is President, General Counsel and part owner of
Daly Merritt, Inc.
Director Lipford. The law firm of Miller, Canfield, Paddock and Stone,
PLC, in which Mr. Lipford is a Salaried Senior Principal, provides us with legal
services and has done so for many years. Miller, Canfield, Paddock and Stone has
advised us that the revenues paid to Miller, Canfield, Paddock and Stone during
2007 were less than 0.05% of their total revenues for the same period. We
believe that the transactions with the firm are on terms no less favorable than
those that could be obtained from unrelated third parties.
TRANSACTIONS WITH RELATED PARTIES
Certain directors, nominees, and executive officers or their associates
were customers of and had transactions with the Corporation or its subsidiaries
during 2007. Transactions that involved loans or commitments by the Bank were
made in the ordinary course of business and on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and did not involve more than the
normal risk of collectability or present other unfavorable features. Except for
the specific transactions described above no director, executive officer or
beneficial owner of more than five percent of the Corporation's outstanding
voting securities (or any member of their immediate families) engaged in any
transaction (other than such a loan transaction as described) with the
Corporation during 2007, or proposes to engage in any transaction with the
Corporation, in which the amount involved exceeds $120,000.
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
The Corporation's Governance Committee Charter requires that all related
party transactions be pre-approved by the Corporation's Governance Committee.
Excepted from that pre-approval requirement are routine banking transactions,
including deposit and loan transactions, between our subsidiaries and any
related party that are made in compliance with, and subject to the approvals
required by, all federal and state banking regulations. In making a
determination to approve a related party transaction the Corporate Governance
Committee will take into account, among other factors it deems appropriate,
whether the proposed transaction is on terms no less favorable than those
generally available to an unaffiliated third-party under the same or similar
circumstances and the extent of the related party's interest in the proposed
transaction.
48
PROPOSAL NO. 2: APPROVAL OF
THE MBT FINANCIAL CORP 2008 STOCK INCENTIVE PLAN
The Board of Directors of the Company has adopted the MBT Financial Corp.
2008 Stock Incentive Plan (the "Plan") upon the recommendation of the Company's
Compensation Committee and recommends that shareholders approve the Plan at the
Annual Meeting. The Company's prior plan, the MBT Financial Corp Long Term
Incentive Plan, adopted in the year 2000, is being replaced by the new Plan.
The Board believes the Plan is an integral part of its compensation
programs and strategies. It believes the Plan provides the Company the
flexibility to implement competitive compensation programs and will be an
effective tool for recruiting, motivating, and retaining the quality of
employees and directors key to the achievement of the Company's success.
The Plan permits the grant of incentive awards in the form of options,
stock appreciation rights, restricted share and share unit awards, and
performance share awards. Under the terms of the Plan a portion of a
participant's compensation otherwise payable in cash may be paid in common
shares of the Company. A summary of the principal provisions of the Plan appears
below. The summary is qualified in it entirely by reference to the complete text
of the Plan that is attached to this proxy statement as Appendix A.
SUMMARY OF THE PLAN
Administration: The Plan provides that it will be administered by a committee
that is comprised of at least three non-employee Directors (the "Committee").
The Committee must be comprised of "Outside Directors" within the definitions of
the terms "outside director" set forth in Section 162(m) of the Internal Revenue
Code (the "Code"), "independent director" set forth in The Nasdaq Stock Market
rules, and "non-employee director" set forth in Rule 16b-3, or any successor
definitions adopted by the Internal Revenue Service, The Nasdaq Stock Market and
Securities and Exchange Commission, respectively, and similar requirements under
any other applicable laws and regulations.
The Committee selects participants from among eligible persons and, subject to
the terms of the Plan, determines the type, size and time of grant of stock
incentive awards, determines the terms and conditions of awards and makes all
other determinations necessary or advisable for the administration of the Plan.
Each award under the Plan will be evidenced by a written award agreement
approved by the Committee (the "Award Agreement").
Eligibility: The Committee may make awards to any person who is an officer,
director or key employee of the Company or a Subsidiary.
Shares Available for Awards: No more than 1,000,000 shares of the Company's
common stock may be issued under the Plan. The shares that may be issued may be
authorized but unissued shares or treasury shares. If there is a stock split,
stock dividend or other relevant change affecting the common shares, the
Committee will make appropriate adjustments in the maximum number of shares
issuable under the Plan and subject to outstanding incentive awards. Shares that
were subject to an incentive award under the
49
Plan but were not issued for any reason and are no longer subject to award or
were issued and reacquired by the Company because of a participant's failure to
comply with the terms of an award are again available for award under the Plan.
Types of Awards and Annual Award Limits: Shares incentives that may be issued
under the Plan consist of options, shares appreciation rights, restricted share
and share unit awards, and performance share awards. In addition, under the
terms of the Plan, a portion of a participant's compensation otherwise payable
in cash may be paid in common shares of the Company. The Plan contains annual
limits on certain types of awards to individual participants. In any calendar
year, no participant may be granted awards covering more than 100,000 shares.
Options: A stock option provides for the purchase of shares in the future at an
exercise price per share that may not be less than 100% of the fair market value
of a share on the date the option is granted. Stock options may be either
nonqualified options or incentive stock options, which meet the requirements of
Section 422 of the Code. The term of an option may not exceed ten years. Subject
to the provisions of the Plan and approval of the Committee, and in the case of
incentive stock options the limitations imposed by the applicable provisions of
the Code, the exercise price may be paid (i) in cash, (ii) shares of Company
common stock (iii) any combination of cash and shares of Company common stock;
and (iv) by any other method permitted by law and affirmatively approved by the
Committee which assures full and immediate payment or satisfaction of the
exercise price, which may include broker assisted cashless exercise.
Stock Appreciation Rights. Awards may be made of stock appreciation rights
("SAR") which may include awards that are settled solely in shares of the
Company known as "stock only stock appreciation rights" ("SOSARs"). The exercise
price of a SAR will never be less than the fair market value of the shares on
the date of the award. Upon exercise, the holder of a SAR is entitled to receive
shares or other property as set forth in the award.
Restricted Share and Share Unit Awards: A restricted share or share unit award
is an award of shares (or in the case of units convertible into shares) that may
not be sold, transferred, pledged, or otherwise transferred until the
restrictions established by the Committee at the time of grant is satisfied. The
award agreement sets forth the restrictions applicable to an individual award
and may include time vesting restrictions, noncompetition restrictions, and
performance restrictions.
Performance Share Awards. The Committee may grant performance share awards under
which payment is made, in the Committee's discretion, in shares upon the
attainment of specified performance objectives selected by the Committee. At the
time of grant of a Performance Share Award, the Committee will specify the
performance objectives which, depending on the extent to which they are met,
will determine the number of Shares that will be distributed to the participant.
Shareholder approval of the Plan will also permit the granting of
performance-based awards discussed below to qualify for deductibility under
Section 162(m) of the Code.
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Stock Awards. The Committee may grant eligible persons awards of shares of the
Company's common stock for services in lieu of bonus or other cash compensation,
or for any other valid purpose determined by the Committee. Stock awards are
free of any restrictions on transfer and upon issuance of the shares, the holder
has all of the rights of a shareholder.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the principal United States Federal income
tax consequences of awards under the Plan and is based on Federal income tax
laws currently in effect.
Limitation on Corporate Deductions for Certain Executives' Compensation. Under
Section 162(m) of the Code, the Company may not deduct compensation of more than
$1,000,000 that is paid to an individual who, on the last day of the taxable
year, is either the Company's chief executive officer or is among one of the
four most highly-compensated officers for that taxable year as reported in the
Company's proxy statement ("Section 162(m) Persons"). The limitation on
deductions does not apply to certain types of compensation, including
"performance-based compensation" if approved by shareholders. Under the Plan,
options will qualify as performance-based compensation and restricted stock
awards and performance share awards may also qualify if the Committee so
designates these awards (herein called "Section 162(m) Awards") as
performance-based compensation and administers the Plan with respect to these
designated awards in compliance with Section 162(m) of the Code.
Under the Plan, the Committee is authorized to grant awards that qualify as
performance-based compensation under Section 162(m) of the Code. The Company may
not be entitled to any deduction if the individual in question is a Section
162(m) Person, the amount in question does not qualify as performance-based
compensation, and the amount in question, when added to the covered employee's
other taxable compensation that is not performance-based in the same taxable
year, exceeds $1 million. With respect to Section 162(m) Awards the Committee
will also specify the time period or periods (the "Performance Period") during
which the performance objectives must be met. The Committee may use performance
objectives based on one or more of the following: earnings per share, total
revenue, net interest income, non-interest income, net income, net income before
tax, non-interest expense, efficiency ratio, return on equity, return on assets,
economic profit added, loans, deposits, tangible equity, assets, net
charge-offs, new market growth, product line developments, and nonperforming
assets. The Committee may designate a single goal criterion or multiple goal
criteria for performance measurement purposes. Performance measurement may be
described in terms of objectives that are related to the performance by the
Company, by any Subsidiary, or by any employee or group of employees in
connection with services performed by that employee or those employees for the
Company, a Subsidiary, or one or more subunits of the Company or of any
Subsidiary. The performance objectives may be made relative to the performance
of other companies. The performance objectives and periods need not be
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the same for each participant or for each Award. The Committee may modify, amend
or otherwise adjust the performance objectives specified for outstanding
Performance Share Awards if it determines that an adjustment would be consistent
with the objectives of this Plan and taking into account the interests of the
participants and the public shareholders of the Company and such adjustment
complies with the requirements of Section 162(m) of the Code for Section 162(m)
Persons, to the extent applicable, unless the Committee indicates a contrary
intention. The types of events which could cause an adjustment in the
performance objectives include, without limitation, accounting changes which
substantially affect the determination of performance objectives, changes in
applicable laws or regulations which affect the performance objectives, and
divisive corporate reorganizations, including spin-offs and other distributions
of property or stock.
Stock Options. There are no Federal income tax consequences either to the
optionee or the Company upon the grant of an incentive stock option or a
nonqualified option. If shares are purchased under an incentive stock option
(i.e., an incentive option is exercised) during employment or within three
months thereafter, the optionee will not recognize any income and the Company
will not be entitled to a deduction in respect of the option exercise. However,
the excess of the fair market value of the shares on the date of such exercise
over the purchase price of the shares under the option will be includible in the
optionee's alternative minimum taxable income. Generally, if the optionee
disposes of shares purchased under an incentive stock option within two years of
the date of grant or one year of the date of exercise of the incentive stock
option, the optionee will recognize ordinary income, and the Company will be
entitled to a deduction, equal to the excess of the fair market value of the
shares on the date of exercise (or, if less, the amount realized by the optionee
on the disposition of the shares) over the purchase price of such shares. Any
gain after the date on which the optionee purchased the shares will be treated
as capital gain to the optionee and will not be deductible by the Company. If
the shares are disposed of after the two-year and one-year periods mentioned
above, the Company will not be entitled to any deduction, and the entire gain or
loss realized by the optionee will be treated as capital gain or loss. When
shares are purchased under a nonqualified option, the excess of the fair market
value of the shares on the date of purchase over the purchase price of such
shares under the option will generally be taxable to the optionee as ordinary
income and deductible by the Company. The disposition of shares purchased under
a nonqualified option will generally result in a capital gain or loss for the
optionee, but will have no tax consequences for the Company.
Other Awards: An employee who receives cash or shares of company stock pursuant
to an award other than an option will generally recognize ordinary income equal
to the sum of the cash and the fair market value of the shares received when
vested and no longer subject to a substantial risk of forfeiture and the Company
will generally be entitled to a corresponding deduction from its income. A
participant who receives an award of Company shares that is not yet vested may
make a special election in accordance with applicable Treasury regulations to be
taxed (at ordinary income rates) on the fair market value of the shares at that
time (with fair market value determined for this purpose without regard to any
restrictions other than restrictions, if any, which by their terms will never
lapse), in which case the Company would be entitled to a deduction at the same
52
time equal to the amount of income realized by the employee but would not be
entitled to deduct any dividends thereafter paid on the shares. Absent such an
election, an employee who has been awarded such restricted stock will not
recognize taxable income until the shares become transferable or cease to be
subject to a substantial risk of forfeiture, at which time the recipient will
recognize ordinary income and the Company will be entitled to a corresponding
deduction equal to the excess of the fair market value of the shares at that
time over the amount (if any) paid by the recipient for the shares. Dividends
paid to the recipient on the restricted shares prior to that time will be
ordinary compensation income to the recipient and deductible by the Company.
OTHER PROVISIONS
Vesting. All awards are subject to such time and performance vesting
conditions as the Committee may determine and are set forth in the Award
Agreement. Unless otherwise set forth in the Award Agreement all Awards
immediately vest upon death, disability or Change in Control as defined under
the terms of the Plan. The Plan defines a change in control as any transaction
that is a: (i) Change in Ownership, ii) Change in Effective Control, or iii)
Change in Ownership of a Substantial Portion of Assets.
Change in Ownership. A change in ownership of the corporation occurs when
one person or a group acquires stock that combined with stock previously
owned, controls more than 50% of the value or voting power of the stock of
the corporation.
Change in Effective Control. A change in effective control occurs on the
date that, during any 12-month period, either (x) any person or group
acquires stock possessing 35% of the voting power of the corporation, or
(y) the majority of the board is replaced by persons whose appointment or
election is not endorsed by a majority of the board.
Change in Ownership of a Substantial Portion of Assets. A change in
ownership of a substantial portion of the assets occurs on the date that a
person or a group acquires, during any 12-month period, assets of the
corporation having a total gross fair market value equal to 40% or more of
the total gross fair market value of all of the corporation's assets.
IRC 409A Compliance. Unless an Award Agreement approved by the Committee
provides otherwise, each Award granted under the Plan is intended to meet the
requirements for exclusion from coverage under Code Section 409A.
Plan Amendments. The Board of Directors may amend, alter, or discontinue the
Plan at any time, provided that no amendment, alteration, or discontinuance may
be made that materially and adversely affects the rights of a participant under
any award granted prior to the date such action is adopted by the Board of
Directors without the participant's written consent. In addition no amendment
may be made without shareholder approval, if shareholder approval is required
under applicable laws, regulations or exchange
53
requirements (including Section 422 of the Code with respect to ISOs, and for
the purpose of qualification as "performance-based compensation" under Section
162(m) of the Code), unless the required to: (i) comply with any law; (ii)
preserve any intended favorable tax effects for the Company, the Plan or
participants; or (iii) avoid any unintended unfavorable tax effects for the
Company, the Plan or participants.
Term of the Plan: Unless earlier terminated by the Board, the Plan would
terminate on the day immediately preceding the tenth anniversary date of its
approval by shareholders of the Company. Termination of the Plan does not affect
any outstanding awards granted prior to the termination of the Plan.
Forfeiture upon Termination for Cause. Subject to the provisions of the Award
Agreement to which such award relates, upon the termination of employment of an
employee for cause the employee forfeits all benefits associated with any award
including all unexercised Options whether or not previously vested, all
unexercised SARs whether or not previously vested and all Restricted Shares,
Restricted Share Units and Performance Shares for which the delivery of Shares
has not yet occurred.
VOTE REQUIRED FOR APPROVAL
Approval of the Plan requires the affirmative vote of a majority of the votes
cast at the Annual Meeting.
THE BOARD OF DIRECTORS APPROVES AND RECOMMENDS TO THE SHAREHOLDERS THE ADOPTION
OF PROPOSAL 2.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires MBT Financial
Corp.'s executive officers, directors and more than ten percent shareholders
("Insiders") to file with the Securities and Exchange Commission and MBT
Financial Corp. reports of their ownership of MBT Financial Corp. securities.
Based upon written representations and copies of reports furnished to MBT
Financial Corp. by Insiders, all Section 16 reporting requirements applicable to
Insiders during 2007 were satisfied on a timely basis with the exception of a
late filing for one transaction by Mr. Huner and a late filing of five
transactions by Mr. McKelvey.
SELECTION OF AUDITORS
The Audit Committee has retained Plante & Moran, PLLC as the Corporation's
independent registered public accounting firm for 2008. Representatives of
Plante & Moran, PLLC will be in attendance at the Annual Meeting of
Shareholders, and such representatives will have an opportunity to make a
statement if they desire to do so, and will be available to respond to
appropriate questions.
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OTHER BUSINESS
Management is not aware of any other matter which may be presented for
action at the meeting other than the matters set forth herein. Should any matter
other than those set forth herein be presented for a vote of the shareholders,
the proxy in the enclosed form directs the persons voting such proxy to vote in
accordance with their judgment.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
If you share an address with another MBT shareholder, you may request our
transfer agent, American Stock Transfer and Trust Company, to deliver one set of
voting materials to your address. You will then receive only one set of voting
materials at that address, unless otherwise requested by one or more of the
shareholders at that address. A separate proxy card is included in the voting
materials for each of these shareholders. If you have only received one set, you
may request separate copies of the voting materials at no additional cost to you
by calling American Stock Transfer and Trust Company at (800) 937-9449 or by
writing to American Stock Transfer and Trust Company at American Stock Transfer
and Trust Company, 59 Maiden Lane, New York, NY 10038.
You may also contact American Stock Transfer and Trust Company by calling
or writing if you would like to receive separate voting materials for future
annual meetings.
You may request that we send you and the other shareholders who share an
address with you only one set of voting materials by calling American Stock
Transfer and Trust Company at (800) 937-9449 or by writing to American Stock
Transfer and Trust Company at American Stock Transfer and Trust Company, 59
Maiden Lane, New York, NY 10038.
WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS
POSSIBLE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
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APPENDIX A
MBT FINANCIAL CORP.
2008 STOCK INCENTIVE PLAN
ARTICLE 1
General Purpose of Plan; Definitions
1.1 Name and Purposes. The name of this Plan is the MBT Financial Corp.
2008 Stock Incentive Plan. The purpose of this Plan is to enable MBT Financial
Corp. and its Affiliates to: (i) attract and retain skilled and qualified
directors, officers and key employees who are expected to contribute to the
Company's success by providing long-term incentive compensation opportunities
competitive with those made available by other companies; (ii) motivate
participants to achieve the long-term success and growth of the Company; (iii)
facilitate ownership of shares of the Company; and (iv) align the interests of
the participants with those of the Company's shareholders.
1.2 Certain Definitions. Unless the context otherwise indicates, the
following words used herein shall have the following meanings whenever used in
this instrument:
(a) "Affiliate" means any corporation, partnership, joint venture or
other entity, directly or indirectly, through one or more intermediaries,
controlling, controlled by, or under common control with the Company, as
determined by the Board of Directors in its discretion.
(b) "Award" means any grant under this Plan of a Stock Option, Stock
Appreciation Right, Restricted Share, Restricted Share Unit or Performance Share
to any Plan participant.
(c) "Board of Directors" means the Board of Directors of the
Company, as constituted from time to time.
(d) "Cause" with respect to an employee of the Company or any
affiliate of the Company means and is limited to (a) criminal dishonesty, (b)
refusal to perform duties on an exclusive and substantially full-time basis, (c)
refusal to act in accordance with any specific substantive instructions given by
the Company or any affiliate of the Company with respect to performance of
duties normally associated with such employee's position, or (d) engaging in
conduct which could be materially damaging to the Company or any affiliate of
the Company without a reasonable good faith belief that such conduct was in the
best interest of the Company or any affiliate of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended, and
any lawful regulations or guidance promulgated thereunder. Whenever reference is
made to a specific Internal Revenue Code section, such reference shall be deemed
to be a reference to any successor Internal Revenue Code section or sections
with the same or similar purpose.
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(f) "Committee" means the committee administering this Plan as
provided in Section 2.1.
(g) "Common Shares" mean the common shares no par value per share,
of the Company.
(h) "Company" means MBT Financial Corp., a corporation organized
under the laws of the State of Michigan and, except for purposes of determining
whether a Change in Control has occurred, any corporation or entity that is a
successor to MBT Financial Corp. or substantially all of the assets of MBT
Financial Corp. and that assumes the obligations of MBT Financial Corp. under
this Plan by operation of law or otherwise.
(i) "Date of Grant" means the date on which the Committee grants an
Award.
(j) "Director" means a member of the Board of Directors.
(k)"Disability" means the person (a) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, (b) is, by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months, receiving income replacement benefits for a period of not
less than 3 months under an accident and health plan of the Company or an
affiliate covering the person, or (c) has been determined to be totally disabled
by the United States Social Security Administration.
(l) "Eligible Participant" is defined in Article 4.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and any lawful regulations or guidance promulgated thereunder.
(n) "Exercise Price" means the purchase price of a Share pursuant to
a Stock Option, or the exercise price per Share related to a Stock Appreciation
Right.
(o) "Fair Market Value" means the closing price of a Share as
reported on The Nasdaq Stock Market, or, if applicable, on any national
securities exchange or automated quotation system on which the Common Shares are
principally traded: (i) on the date for which the determination of Fair Market
Value is made, or (ii) if the closing price is not yet known as of such date
then the date prior to that, or, (iii) if there are no sales of Common Shares on
such date, then on the most recent immediately preceding date on which there
were any sales of Common Shares. If the Common Shares are not, or cease to be,
traded on The Nasdaq Stock Market or any national securities exchange or
automated quotation system, the "Fair Market Value" of Common Shares shall be
determined pursuant to a reasonable valuation method prescribed by the
Committee. Notwithstanding the foregoing, as of any date, the "Fair Market
Value" of Common Shares shall be determined in a manner consistent with Code
Section 409A and the guidance then-existing thereunder. In addition, "Fair
Market Value" with respect to ISOs and related SARs shall be determined in
accordance with Section 6.2(f).
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(p) "Incentive Stock Option" and "ISO" mean a Stock Option that is
identified as such and which is intended to meet the requirements of Section 422
of the Code.
(q) "Non-Qualified Stock Option" and "NQSO" mean a Stock Option
that: (i) is governed by Section 83 of the Code; and (ii) is not intended to
meet the requirements of Section 422 of the Code.
(r) "Outside Director" means a nonemployee Director. In addition, at
all times during which the Company is subject to the reporting requirements of
the Exchange Act, "Outside Director means a nonemployee Director who meets the
definitions of the terms "outside director" set forth in Section 162(m) of the
Code, "independent director" set forth in The Nasdaq Stock Market rules, and
"non-employee director" set forth in Rule 16b-3, or any successor definitions
adopted by the Internal Revenue Service, The Nasdaq Stock Market and Securities
and Exchange Commission, respectively, and similar requirements under any other
applicable laws and regulations.
(s) "Parent" means any corporation which qualifies as a "parent
corporation" of the Company under Section 424(e) of the Code.
(t) "Performance Shares" is defined in Article 9.
(u) "Performance Period" is defined in Section 9.2.
(v) "Plan" means this MBT Financial Corp. 2008 Stock Incentive Plan,
as amended from time to time.
(w) "Restricted Share Units" is defined in Article 8.
(x) "Restricted Shares" is defined in Article 8.
(y) "Rule 16b-3" is defined in Article 16.
(z) "Section 162(m) Person" means, for any taxable year, a person
who is a "covered employee" within the meaning of Section 162(m)(3) of the Code.
(aa) "Share" or "Shares" mean one or more of the Common Shares.
(bb) "Shareholder" means an individual or entity that owns one or
more Shares.
(cc) "Stock Appreciation Rights" and "SARs" mean any right to
receive the appreciation in Fair Market Value of a specified number of Shares
over a specified Exercise Price pursuant to an Award granted under Article 7.
(dd) "Stock Option" means any right to purchase a specified number
of Shares at a specified price which is granted pursuant to Article 5 and may be
an Incentive Stock Option or a Non-Qualified Stock Option.
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(ee) "Stock Power" means a power of attorney executed by a
participant and delivered to the Company which authorizes the Company to
transfer ownership of Restricted Shares, Performance Shares or Common Shares
from the participant to the Company or a third party.
(ff) "Subsidiary" means any corporation which qualifies as a
"subsidiary corporation" of the Company under Section 424(f) of the Code.
(gg) "Vested" means, with respect to a Stock Option, that the time
has been reached when the option to purchase Shares first becomes exercisable;
and with respect to a Stock Appreciation Right, when the Stock Appreciation
Right first becomes exercisable for payment; with respect to Restricted Shares,
when the Shares are no longer subject to forfeiture and restrictions on
transferability; with respect to Restricted Share Units and Performance Shares,
when the units or Shares are no longer subject to forfeiture and are converted
to Shares. The words "Vest" and "Vesting" have meanings correlative to the
foregoing.
ARTICLE 2
Administration
2.1 Authority and Duties of the Committee.
(a) The Plan shall be administered by a Committee of at least three
Directors who are appointed by the Board of Directors. Unless otherwise
determined by the Board of Directors, the Compensation Committee of the Board of
Directors (or any subcommittee thereof) shall serve as the Committee, and all of
the members of the Committee shall be Outside Directors. Notwithstanding the
requirement that the Committee consist exclusively of Outside Directors, no
action or determination by the Committee or an individual then considered to be
an Outside Director shall be deemed void because a member of the Committee or
such individual fails to satisfy the requirements for being an Outside Director,
except to the extent required by applicable law.
(b) The Committee has the power and authority to grant Awards pursuant to
the terms of this Plan to Eligible Participants. The Committee may, at any time
and from time to time, at the request of a Participant or at the discretion of
the Committee, designate that a portion of such Participant's compensation
otherwise payable in cash be payable in Common Shares, Options or SARs. The
Committee shall have the sole discretion to determine the value of the Common
Shares, Options, or SARs so payable and the terms and conditions under which
such Common Shares shall be issued or such Options or SARs shall be granted.
(c) The Committee has the sole and exclusive authority, subject to any
limitations specifically set forth in this Plan, to:
(i) select the Eligible Participants to whom Awards are granted;
(ii) determine the types of Awards granted and the timing of such
Awards;
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(iii) determine the number of Shares to be covered by each Award
granted hereunder;
(iv) determine whether an Award is, or is intended to be,
"performance-based compensation" within the meaning of Section
162(m) of the Code;
(v) determine the other terms and conditions, not inconsistent
with the terms of this Plan, of any Award granted hereunder;
such terms and conditions include, but are not limited to, the
Exercise Price, the time or times when Options or Stock
Appreciation Rights may be exercised (which may be based on
performance objectives), any Vesting, acceleration or waiver
of forfeiture restrictions, any performance criteria
(including any performance criteria as described in Section
162(m)(4)(C) of the Code) applicable to an Award, and any
restriction or limitation regarding any Option or Stock
Appreciation Right or the Common Shares relating thereto,
based in each case on such factors as the Committee, in its
sole discretion, shall determine;
(vi) determine whether any conditions or objectives related to
Awards have been met, including any such determination
required for compliance with Section 162(m) of the Code;
(vii) subsequently modify or waive any terms and conditions of
Awards, not inconsistent with the terms of this Plan;
(viii) adopt, alter and repeal such administrative rules, guidelines
and practices governing this Plan as it deems advisable from
time to time;
(ix) promulgate such administrative forms as it from time to time
deems necessary or appropriate for administration of the Plan;
(x) construe, interpret, administer and implement the terms and
provisions of this Plan, any Award and any related agreements;
(xi) correct any defect, supply any omission and reconcile any
inconsistency in or between the Plan, any Award and any
related agreements;
(xii) prescribe any legends to be affixed to certificates
representing Shares or other interests granted or issued under
the Plan; and
(xii) otherwise supervise the administration of this Plan.
(d) All decisions made by the Committee pursuant to the provisions of this
Plan are final and binding on all persons, including the Company, its
shareholders and participants, but may be made by their terms subject to
ratification or approval by, the Board of Directors, another committee of the
Board of Directors or shareholders.
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(e) The Company shall furnish the Committee with such clerical and other
assistance as is necessary for the performance of the Committee's duties under
the Plan.
2.2 Delegation of Duties. The Committee may delegate ministerial duties to
any other person or persons, and it may employ attorneys, consultants,
accountants or other professional advisers for purposes of plan administration
at the expense of the Company. The power to delegate provided for herein does
not include the power to grant an Award.
2.3 Limitation of Liability. Members of the Board of Directors, members of
the Committee and Company employees who are their designees acting under this
Plan shall be fully protected in relying in good faith upon the advice of
counsel and shall incur no liability except for gross or willful misconduct in
the performance of their duties hereunder.
ARTICLE 3
Stock Subject to Plan
3.1 Total Shares Limitation. Subject to the provisions of this Article,
the maximum number of Shares that may be issued or transferred under
this Plan, shall not exceed in the aggregate 1,000,000 Common
Shares, which may be treasury or authorized but unissued Shares.
3.2 Participant Limitation. The aggregate number of Shares underlying
Awards granted under this Plan to any participant in any fiscal year (including
but not limited to Awards of Stock Options and SARs), regardless of whether such
Awards are thereafter canceled, forfeited or terminated, shall not exceed
100,000 Shares. The foregoing annual limitation is intended to include the grant
of all Awards, including but not limited to, Awards representing
"performance-based compensation" as described in Section 162(m)(4)(C) of the
Code.
3.3 Awards Not Exercised; Effect of Receipt of Shares. If any
outstanding Award, or portion thereof, expires, or is terminated,
canceled or forfeited, the Shares that would otherwise be issuable
or released from restrictions with respect to the unexercised or
non-Vested portion of such expired, terminated, canceled or
forfeited Award shall be available for subsequent Awards under this
Plan. If the Exercise Price of an Award is paid in Shares, the
Shares received by the Company in connection therewith shall not be
added to the maximum aggregate number of Shares which may be issued
under Section 3.1.
3.4 Dilution and Other Adjustments. In the event that the Committee
determines that any dividend or other distribution (whether in the
form of cash, Shares, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization,
redesignation, reclassification, merger, consolidation, liquidation,
split-up, reverse split, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of
the Company or other similar corporate transaction or event affects
the Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under
this Plan, then the Committee shall, in such manner as it deems
equitable, adjust
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any or all of (i) the number and type of Shares (or other securities
or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or
other property) subject to outstanding Awards, (iii) the limitations
set forth above and (iv) the purchase or exercise price or any
performance objective with respect to any Award; provided, however,
that the number of Shares or other securities covered by any Award
or to which such Award relates is always a whole number.
Notwithstanding the foregoing, the foregoing adjustments shall be
made in compliance with: (i) Sections 422 and 424 of the Code with
respect to ISOs; (ii) Treasury Department Regulation Section 1.424-1
(and any successor) with respect to NQSOs, applied as if the NQSOs
were ISOs; (iii) Section 409 A of the Code, to the extent necessary
to avoid its application or avoid adverse tax consequences
thereunder; and (iv) Section 162(m) of the Code with respect to
Awards granted to Section 162(m) Persons that are intended to be
"performance-based compensation," unless specifically determined
otherwise by the Committee. In applying the provisions of this
Section 3.4, the Committee shall lack discretion with respect to any
adjustment which is required to prevent enlargement or dilution of
rights under any Award and shall promptly make such adjustments as
are required to prevent an enlargement or dilution of rights.
ARTICLE 4
Participants
4.1 Eligibility. Directors, Officers and all other key employees of the
Company or any of its Affiliates (each an "Eligible Participant") who are
selected by the Committee in its sole discretion are eligible to
participate in this Plan.
4.2 Award Agreements. Awards shall be evidenced by a written agreement in a
form prescribed by the Committee (hereinafter "Award Agreement").
Execution of an Award Agreement shall constitute the participant's
irrevocable agreement to, and acceptance of, the terms and conditions of
the Award set forth in such agreement and of the terms and conditions of
the Plan applicable to such Award. Award Agreements may differ from time
to time and from participant to participant.
ARTICLE 5
Stock Option Awards
5.1 Option Grant. Each Stock Option granted under this Plan will be
evidenced by minutes of a meeting, or by a unanimous written consent without a
meeting, of the Committee and by an Award Agreement dated as of the Date of
Grant and executed by the Company and by the appropriate participant.
5.2 Terms and Conditions of Grants. Stock Options granted under this Plan
are subject to the following terms and conditions and may contain such
additional terms, conditions, restrictions and contingencies with respect to
exercisability and/or with respect to the Shares acquired upon exercise as may
be provided in the relevant agreement evidencing the Stock Options, so long as
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such terms and conditions are not inconsistent with the terms of this Plan, as
the Committee deems desirable:
(a) Exercise Price. Subject to Section 3.4, the Exercise Price shall never
be less than 100% of the Fair Market Value of the Shares on the Date of Grant.
If a variable Exercise Price is specified at the time of grant, the Exercise
Price may vary pursuant to a formula or other method established by the
Committee; provided, however, that such formula or method will provide for a
minimum Exercise Price equal to the Fair Market Value of the Shares on the Date
of Grant. Except as otherwise provided in Section 3.4, no subsequent amendment
of an outstanding Stock Option may reduce the Exercise Price to less than 100%
of the Fair Market Value of the Shares on the Date of Grant. Nothing in this
Section 5.2(a) shall be construed as limiting the Committee's authority to grant
premium price Stock Options which do not become exercisable until the Fair
Market Value of the underlying Shares exceeds a specified percentage (e.g.,
110%) of the Exercise Price; provided, however, that such percentage will never
be less than 100%.
(b) Option Term. Any unexercised portion of a Stock Option granted
hereunder shall expire at the end of the stated term of the
Stock Option. The Committee shall determine the term of each
Stock Option at the time of grant, which term shall not exceed
10 years from the Date of Grant. The Committee may extend the
term of a Stock Option, in its discretion, but not beyond the
date immediately prior to the tenth anniversary of the
original Date of Grant. If a definite term is not specified by
the Committee at the time of grant, then the term is deemed to
be 10 years. Nothing in this Section 5.2(b) shall be construed
as limiting the Committee's authority to grant Stock Options
with a term shorter than 10 years.
(c) Vesting. Stock Options, or portions thereof, are exercisable
at such time or times as determined by the Committee in its
discretion at or after grant. The Committee may provide that a
vesting schedule shall be specified in an Award Agreement. If
the Committee provides that any Stock Option becomes Vested
over a period of time or upon performance events, in full or
in installments, the Committee may waive or accelerate such
Vesting provisions at any time. Unless otherwise determined by
the Committee in connection with the grant and set forth in
the Award Agreement, all unvested Stock Options shall
immediately vest upon the Death or Disability of the holder.
(d) Method of Exercise. Vested portions of any Stock Option may be
exercised in whole or in part at any time during the option
term by giving written notice of exercise to the Company
specifying the number of Shares to be purchased. The notice
must be given by or on behalf of a person entitled to exercise
the Stock Option, accompanied by payment in full of the
Exercise Price, along with any tax withholding pursuant to
Article 15. Subject to the approval of the Committee, the
Exercise Price may be paid:
(i) in cash in any manner satisfactory to the Committee;
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(ii) by tendering (by either actual delivery of Shares or by attestation)
unrestricted Shares that have been owned for at least six months on
the date of exercise by the person entitled to exercise the Stock
Option having an aggregate Fair Market Value on the date of exercise
equal to the Exercise Price applicable to such Stock Option
exercise, and, with respect to the exercise of NQSOs, including
restricted Shares;
(iii) by a combination of cash and unrestricted Shares that are owned on
the date of exercise by the person entitled to exercise the Stock
Option; and
(iv) by another method permitted by law and affirmatively approved by the
Committee which assures full and immediate payment or satisfaction
of the Exercise Price, which may include broker assisted cashless
exercise.
The Committee may withhold its approval for any method of payment for any
reason, in its sole discretion, including but not limited to concerns that the
proposed method of payment will result in adverse financial accounting
treatment, adverse tax treatment for the Company or a participant or a violation
of any law applicable to the Company from time to time, and related regulations
and guidance.
If the Exercise Price of an NQSO is paid by tendering Restricted Shares,
then the Shares received upon the exercise will contain restrictions that are no
less restrictive then the Restricted Shares so tendered.
(e) Form. Unless the grant of a Stock Option is expressly designated at
the time of grant as an ISO, it is deemed to be an NQSO. ISOs are subject to the
additional terms and conditions in Article 6.
(f) Special Limitations on Stock Option Awards. Unless an Award Agreement
approved by the Committee provides otherwise, Stock Options awarded under
this Plan are intended to meet the requirements for exclusion from
coverage under Code Section 409A and applicable Treasury regulations and
all Stock Option Awards shall be construed and administered accordingly.
5.3 Termination of Grants Prior to Expiration. Subject to Article 6 with
respect to ISOs, if the employment of an optionee with the Company or its
Affiliates terminates for any reason, all unexercised Stock Options may be
exercised only in accordance with rules established by the Committee or as
specified in the relevant agreement evidencing the Stock Options. Such rules may
provide, as the Committee deems appropriate, for the expiration, continuation
(but only to the originally scheduled expiration date), or acceleration of the
vesting of all or part of the Stock Options.
ARTICLE 6
Special Rules Applicable to Incentive Stock Options
6.1 Eligibility. Notwithstanding any other provision of this Plan to the
contrary, an ISO may only be granted to full or part-time employees
(including officers) of the Company or of an Affiliate, provided
that the Affiliate is a Parent or Subsidiary.
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6.2 Special ISO Rules.
(a) Term. No ISO may be exercisable on or after the tenth
anniversary of the Date of Grant, and no ISO may be granted
under this Plan on or after the tenth anniversary of the
effective date of this Plan.
(b) Ten Percent Shareholder. No grantee may receive an ISO under
this Plan if such grantee, at the time the Award is granted,
owns (after application of the rules contained in Section
424(d) of the Code) equity securities possessing more than 10%
of the total combined voting power of all classes of equity
securities of the Company, its Parent or any Subsidiary,
unless (i) the option price for such ISO is at least 110% of
the Fair Market Value of the Shares as of the Date of Grant,
and (ii) such ISO is not exercisable on or after the fifth
anniversary of the Date of Grant.
(c) Limitation on Grants. The aggregate Fair Market Value
(determined with respect to each ISO at the time of grant) of
the Shares with respect to which ISOs are exercisable for the
first time by a grantee during any calendar year (under this
Plan or any other plan adopted by the Company or its Parent or
its Subsidiary) shall not exceed $100,000. Unless otherwise
set forth in an Award Agreement, if such aggregate Fair Market
Value shall exceed $100,000, such number of ISOs as shall have
an aggregate Fair Market Value equal to the amount in excess
of $100,000 shall be treated as NQSOs.
(d) Non-Transferability. Notwithstanding any other provision
herein to the contrary, no ISO granted hereunder (and, if
applicable, related Stock Appreciation Right) may be
transferred except by will or by the laws of descent and
distribution, nor may such ISO (or related Stock Appreciation
Right) be exercisable during a grantee's lifetime other than
by him (or his guardian or legal representative to the extent
permitted by applicable law).
(e) Termination of Employment. No ISO may be exercised more than three
months following termination of employment for any reason (including retirement)
other than death or Disability, nor more than one year following termination of
employment for the reason of death or Disability (as defined in Section 422 of
the Code). If the Award Agreement for an ISO permits exercise after such date
such option will no longer qualify as an ISO and shall thereafter be, and
receive the tax treatment applicable to, an NQSO. For this purpose, a
termination of employment is cessation of employment such that no employment
relationship exists between the participant and the Company, a Parent or a
Subsidiary.
(f) Fair Market Value. For purposes of any ISO granted hereunder (or, if
applicable, related Stock Appreciation Right), the Fair Market Value of Shares
shall be determined in the manner required by Section 422 of the Code and any
Treasury regulations thereunder.
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6.3 Subject to Code Amendments. The foregoing limitations are designed to
comply with the requirements of Section 422 of the Code and shall be
automatically amended or modified to comply with amendments or modifications to
Section 422 of the Code. Any ISO which fails to comply with Section 422 of the
Code is automatically treated as an NQSO appropriately granted under this Plan
provided it otherwise meets the Plan's requirements for NQSOs.
ARTICLE 7
Stock Appreciation Rights
7.1 SAR Grant and Agreement. Stock Appreciation Rights (including SOSARs
with the meaning set forth below) may be granted under this Plan and each SAR
granted under this Plan will be evidenced by minutes of a meeting, or by a
unanimous written consent without a meeting, of the Committee and by an Award
Agreement dated as of the Date of Grant and executed by the Company and by the
appropriate participant.
(a) Term. Any unexercised portion of a Stock Appreciation Right
granted hereunder shall expire at the end of the stated term
of the Stock Appreciation Right. The Committee shall determine
the term of each Stock Appreciation Right at the time of
grant, which term shall not exceed ten years from the Date of
Grant. The Committee may extend the term of a Stock
Appreciation Right, in its discretion, but not beyond the date
immediately prior to the tenth anniversary of the original
Date of Grant. If a definite term is not specified by the
Committee at the time of grant, then the term is deemed to be
ten years.
(b) Vesting. A Stock Appreciation Right is exercisable, in whole
or in part, at such time or times as determined by the
Committee at or after the time of grant. Unless otherwise
determined by the Committee in connection with the grant and
set forth in the Award Agreement, all unvested Stock
Appreciation Rights shall immediately vest upon the Death or
Disability of the holder.
(c) Exercise Price. Subject to Section 3.4, the Exercise Price of
a Stock Appreciation Right will never be less than 100% of the
Fair Market Value of the related Shares on the Date of Grant.
If a variable Exercise Price is specified at the time of
grant, the Exercise Price may vary pursuant to a formula or
other method established by the Committee; provided, however,
that such formula or method will provide for a minimum
Exercise Price equal to the Fair Market Value of the Shares on
the Date of Grant. Except as otherwise provided in Section
3.4, no subsequent amendment of an outstanding Stock
Appreciation Right may reduce the Exercise Price to less than
100% of the Fair Market Value of the Shares on the Date of
Grant. Nothing in this Section 7.3(c) shall be construed as
limiting the Committee's authority to grant premium price
Stock Appreciation Rights which do not become exercisable
until the Fair Market Value of the related Shares exceeds a
specified percentage (e.g., 110%) of the Exercise Price;
provided, however, that such percentage will never be less
than 100%.
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(d) Method of Exercise. A Stock Appreciation Right may be
exercised in whole or in part during the term by giving
written notice of exercise to the Company specifying the
number of Shares in respect of which the Stock Appreciation
Right is being exercised. The notice must be given by or on
behalf of a person entitled to exercise the Stock Appreciation
Right. Upon the exercise of a Stock Appreciation Right,
subject to satisfaction of the tax withholding requirements
pursuant to Article 15, the holder of the Stock Appreciation
Right is entitled to receive Shares or cash as specified in
the original Award Agreement (as set forth below) equal in
value to the excess of the Fair Market Value of a Share on the
exercise date over the Exercise Price of the SAR multiplied by
the number of Stock Appreciation Rights being exercised. At
any time the Fair Market Value of a Share on a proposed
exercise date does not exceed the Exercise Price of the SAR,
the holder of the Stock Appreciation Right shall not be
permitted to exercise such right.
(i) Stock Appreciation Right designated as a Stock Only
Stock Appreciation Right ("SOSAR") in the original Award
Agreement. With respect to an Award designated by the
Company in the original Award Agreement as a SOSAR, the
holder shall be entitled to receive only Shares of the
Company upon exercise.
(ii) All Other Stock Appreciation Rights. With respect to all
other Awards the holder shall be entitled to the cash or
other property set forth in the Award Agreement.
(e) Early Termination Prior to Expiration. If the employment of an
optionee with the Company or its Affiliates terminates for any reason, all
unexercised Stock Appreciation Rights may be exercised only in accordance with
rules established by the Committee or as specified in the relevant agreement
evidencing such Stock Appreciation Rights. Such rules may provide, as the
Committee deems appropriate, for the expiration, continuation (but only to the
originally scheduled expiration date), or acceleration of the vesting of all or
part of such Stock Appreciation Rights.
7.2 Other Terms and Conditions of SAR Grants. Stock Appreciation Rights
are subject to such other terms and conditions, not inconsistent with the
provisions of this Plan, as are determined from time to time by the Committee.
7.3 Special Limitations on SAR Awards. Unless an Award Agreement approved
by the Committee provides otherwise, Stock Appreciation Rights awarded under
this Plan are intended to meet the requirements for exclusion from coverage
under Code Section 409A and applicable Treasury regulations and all Stock
Appreciation Rights Awards shall be construed and administered accordingly.
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ARTICLE 8
Restricted Share and Restricted Share Unit Awards
8.1 Restricted Share Grants and Agreements. Restricted Share Awards
consist of Shares which are issued by the Company to a participant at no cost or
at a purchase price determined by the Committee which may be below their Fair
Market Value but which are subject to forfeiture and restrictions on their sale
or other transfer by the participant. Each Restricted Share Award granted under
this Plan will be evidenced by minutes of a meeting, or by a unanimous written
consent without a meeting, of the Committee and by an Award Agreement dated as
of the Date of Grant and executed by the Company and by the participant. The
timing of Restricted Share Awards and the number of Shares to be issued (subject
to Section 3.2) are to be determined by the Committee in its discretion. By
accepting a grant of Restricted Shares, the participant consents to any tax
withholding as provided in Article 15.
8.2 Terms and Conditions of Restricted Share Grants. Restricted Shares
granted under this Plan are subject to the following terms and conditions,
which, except as otherwise provided herein, need not be the same for each
participant, and may contain such additional terms, conditions, restrictions and
contingencies not inconsistent with the terms of this Plan and any operative
employment or other agreement, as the Committee deems desirable:
(a) Purchase Price. The Committee shall determine the prices, if
any, at which Restricted Shares are to be issued to a participant, which may
vary from time to time and from participant to participant and which may be
below the Fair Market Value of such Restricted Shares at the Date of Grant.
(b) Restrictions. All Restricted Shares issued under this Plan will
be subject to such restrictions as the Committee may determine, which may
include, without limitation, the following:
(i) a prohibition against the sale, transfer, pledge or
other encumbrance of the Restricted Shares, such
prohibition to lapse at such time or times as the
Committee determines (whether in installments or
otherwise, but subject to the Change in Control
provisions in Article 11);
(ii) a requirement that the participant forfeit such
Restricted Shares in the event of termination of the
participant's employment with the Company or its
Affiliates prior to Vesting;
(iii) a prohibition against employment or retention of the
participant by any competitor of the Company or its
Affiliates, or against dissemination by the participant
of any secret or confidential information belonging to
the Company or an Affiliate;
(iv) any applicable requirements arising under the Securities
Act of 1933, as amended, other securities laws, the
rules and regulations of The Nasdaq Stock Market or any
other stock exchange or transaction reporting system
upon which such Restricted Shares are then listed or
quoted and any state laws, rules and regulations,
including "blue sky" laws;
(v) such additional restrictions as are required to avoid
adverse tax consequences under Code Section 409A; and
(vi) delivery of a valid election under Code Section 83(b).
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The Committee may at any time waive such restrictions or accelerate the date or
dates on which the restrictions will lapse.
(c) Performance-Based Restrictions. The Committee may, in its sole
discretion, provide restrictions that lapse upon the attainment of specified
performance objectives. In such case, the provisions of Sections 9.2 and 9.3
will apply (including, but not limited to, the enumerated performance
objectives). If the Award Agreement governing an Award to a Section 162(m)
Person provides that such Award is intended to be "performance-based
compensation," the provisions of Section 9.4(d) will also apply.
(d) Delivery of Shares. Restricted Shares will be registered in the
name of the participant and the stock certificate deposited, together with a
Stock Power, with the Company or its designated officer or escrow agent. Each
such certificate will bear a legend in substantially the following form:
"The transferability of this certificate and the Common Shares
represented by it are subject to the terms and conditions (including
conditions of forfeiture) contained in the MBT Financial Corp. 2008
Stock Incentive Plan and an agreement entered into between the
registered owner and the Company. A copy of this Plan and agreement
are on file in the office of the Secretary of the Company."
At the end of any time period during which the Restricted Shares are subject to
forfeiture and restrictions on transfer, and after any tax withholding, such
Shares will be delivered free of all restrictions (except for any pursuant to
Article 14) to the participant or other appropriate person and with the
foregoing legend removed from the stock certificate.
(e) Forfeiture of Shares. If a participant who holds Restricted
Shares fails to satisfy the restrictions, vesting requirements and other
conditions relating to the Restricted Shares prior to the lapse, satisfaction or
waiver of such restrictions and conditions, except as may otherwise be
determined by the Committee, the participant shall forfeit the Shares and
transfer them back to the Company in exchange for a refund of any consideration
paid by the participant or such other amount which may be specifically set forth
in the Award Agreement. A participant shall execute and deliver to the Company
one or more Stock Powers with respect to Restricted Shares granted to such
participant.
(f) Voting and Other Rights. Except as otherwise required for
compliance with Section 162(m) of the Code and the terms of the applicable
Restricted Share Agreement, during any period in which Restricted Shares are
subject to forfeiture and restrictions on transfer, the participant holding such
Restricted Shares shall have all the rights of a Shareholder with respect to
such Shares, including, without limitation, the right to vote such Shares and
the right to receive any dividends paid with respect to such Shares.
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8.3 Restricted Share Unit Awards and Agreements. Restricted Share Unit
Awards consist of Shares that will be issued to a participant at a future time
or times at no cost, or at a purchase price determined by the Committee which
purchase price may be below their Fair Market Value if continued employment
and/or other terms and conditions specified by the Committee are satisfied. Each
Restricted Share Unit Award granted under this Plan will be evidenced by minutes
of a meeting, or by a unanimous written consent without a meeting, of the
Committee and by an Award Agreement dated as of the Date of Grant and executed
by the Company and the Plan participant. The timing of Restricted Share Unit
Awards and the number of Restricted Share Units to be awarded (subject to
Section 3.2) are to be determined by the Committee in its sole discretion. By
accepting a Restricted Share Unit Award, the participant agrees to remit to the
Company when due any tax withholding as provided in Article 15.
8.4 Terms and Conditions of Restricted Share Unit Awards. Restricted Share
Unit Awards are subject to the following terms and conditions, which, except as
otherwise provided herein, need not be the same for each participant, and may
contain such additional terms, conditions, restrictions and contingencies not
inconsistent with the terms of this Plan and any operative employment or other
agreement, as the Committee deems desirable:
(a) Purchase Price. The Committee shall determine the prices, if
any, at which Shares are to be issued to a participant after
Vesting of Restricted Share Units, which may vary from time to
time and among participants and which may be below the Fair
Market Value of Shares at the Date of Grant.
(b) Restrictions. All Restricted Share Units awarded under this
Plan will be subject to such restrictions as the Committee may
determine, which may include, without limitation, the
following:
(i) a prohibition against the sale, transfer, pledge or other
encumbrance of the Restricted Share Unit;
(ii) a requirement that the participant forfeit such Restricted
Share Unit in the event of termination of the participant's
employment with the Company or its Affiliates prior to
Vesting;
(iii) a prohibition against employment of the participant by, or
provision of services by the participant to, any competitor of
the Company or its Affiliates, or against dissemination by the
participant of any secret or confidential information
belonging to the Company or an Affiliate;
(iv) any applicable requirements arising under the Securities Act
of 1933, as amended, other securities laws, the rules and
regulations of The Nasdaq Stock Market or any other stock
exchange or transaction reporting system upon which the Common
Shares are then listed or quoted and any state laws, rules and
interpretations, including "blue sky" laws; and
(v) such additional restrictions as are required to avoid adverse
tax consequences under Code Section 409A.
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The Committee may at any time waive such restrictions or accelerate the date or
dates on which the restrictions will lapse.
(d) Performance-Based Restrictions. The Committee may, in its sole
discretion, provide restrictions that lapse upon the attainment of specified
performance objectives. In such case, the provisions of Sections 9.2 and 9.3
will apply (including, but not limited to, the enumerated performance
objectives). If the Award Agreement governing an Award to a Section 162(m)
Person provides that such Award is intended to be "performance-based
compensation," the provisions of Section 9.4(d) will also apply.
(e) Voting and Other Rights. A participant holding Restricted Share
Units shall not be deemed to be a Shareholder solely because of such units. Such
participant shall have no rights of a Shareholder with respect to such units;
provided, however, that an Award Agreement may provide for payment of an amount
of money (or Shares with a Fair Market Value equivalent to such amount) equal to
the dividends paid from time to time on the number of Common Shares that would
become payable upon vesting of a Restricted Share Unit Award.
(f) Lapse of Restrictions. If a participant who holds Restricted
Share Units satisfies the restrictions and other conditions relating to the
Restricted Share Units prior to the lapse or waiver of such restrictions and
conditions, the Restricted Share Units shall be converted to, or replaced with,
Shares which are free of all restrictions except for any restrictions pursuant
to Article 14.
(g) Forfeiture of Restricted Share Units. If a participant who holds
Restricted Share Units fails to satisfy the restrictions, Vesting requirements
and other conditions relating to the Restricted Share Units (prior to the lapse,
satisfaction or waiver of such restrictions and conditions), except as may
otherwise be determined by the Committee, the participant shall forfeit the
Restricted Share Units.
(h) Termination. A Restricted Share Unit Award or unearned portion
thereof will terminate without the issuance of Shares on the termination date
specified on the Date of Grant or upon the termination of employment of the
participant during the time period or periods specified by the Committee during
which any performance objectives must be met (the "Performance Period"). If a
participant's employment with the Company or its Affiliates terminates by reason
of his or her death, disability or retirement, the Committee in its discretion
at or after the Date of Grant may determine that the participant (or the heir,
legatee or legal representative of the participant's estate) will receive a
distribution of Shares in an amount which is not more than the number of Shares
which would have been earned by the participant if 100% of the performance
objectives for the current Performance Period had been achieved prorated based
on the ratio of the number of months of active employment in the Performance
Period to the total number of months in the Performance Period. However, with
respect to Awards intended to be performance-based compensation (as described in
Section 9.4(d)), distribution of the Shares shall not be made prior to
attainment of the relevant performance objectives.
(i) Special Limitations on Restricted Share Unit Awards. Unless an
Award Agreement approved by the Committee provides otherwise, Restricted Share
Units awarded under this Plan are intended to meet the requirements for
exclusion from coverage under Code Section 409A and all Restricted Share Unit
Awards shall be construed and administered accordingly.
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8.5 Time Vesting of Restricted Share and Restricted Share Unit Awards.
Restricted Shares or Restricted Share Units, or portions thereof, are
exercisable at such time or times as determined by the Committee in its
discretion at or after grant, subject to the restrictions on time Vesting set
forth in this Section. If the Committee provides that any Restricted Shares or
Restricted Share Unit Awards become Vested over time (with or without a
performance component), the Committee may waive or accelerate such Vesting
provisions at any time, subject to the restrictions on time Vesting set forth in
this Section. Unless otherwise determined by the Committee in connection with
the grant and set forth in the Award Agreement, all unvested Restricted Share
and Restricted Share Unit Awards shall immediately Vest with respect to any
required time vesting upon the Death or Disability of the holder.
8.6 Special Limitations on Restricted Share and Restricted Stock Unit
Awards. Unless an Award Agreement approved by the Committee provides otherwise,
Restricted Share and Restricted Stock Units awarded under this Plan are intended
to meet the requirements for exclusion from coverage under Code Section 409A and
applicable Treasury regulations and all Awards shall be construed and
administered accordingly.
ARTICLE 9
Performance Share Awards
9.1 Performance Share Awards and Agreements. A Performance Share Award is
a right to receive Shares in the future conditioned upon the attainment of
specified performance objectives and such other conditions, restrictions and
contingencies as the Committee may determine. Each Performance Share Award
granted under this Plan will be evidenced by minutes of a meeting, or by a
unanimous written consent without a meeting, of the Committee and by an Award
Agreement dated as of the Date of Grant and executed by the Company and by the
Plan participant. The timing of Performance Share Awards and the number of
Shares covered by each Award (subject to Section 3.2) are to be determined by
the Committee in its discretion. By accepting a grant of Performance Shares, the
participant agrees to remit to the Company when due any tax withholding as
provided in Article 15.
9.2 Performance Objectives. At the time of grant of a Performance Share
Award, the Committee will specify the performance objectives which, depending on
the extent to which they are met, will determine the number of Shares that will
be distributed to the participant. The Committee will also specify the time
period or periods (the "Performance Period") during which the performance
objectives must be met. With respect to awards to Section 162(m) Persons
intended to be "performance based compensation," the Committee may use
performance objectives based on one or more of the following: earnings per
share, total revenue, net interest income, non-interest income, net income, net
income before tax, non-interest expense, efficiency ratio, return on equity,
return on assets, economic profit added, loans, deposits, tangible equity,
assets, net charge-offs, new market growth, product line developments, and
nonperforming assets. The Committee may designate a single goal criterion or
multiple goal criteria for
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performance measurement purposes. Performance measurement may be described in
terms of objectives that are related to the performance by the Company, by any
Subsidiary, or by any employee or group of employees in connection with services
performed by that employee or those employees for the Company, a Subsidiary, or
one or more subunits of the Company or of any Subsidiary. The performance
objectives may be made relative to the performance of other companies. The
performance objectives and periods need not be the same for each participant nor
for each Award.
9.3 Adjustment of Performance Objectives. The Committee may modify, amend
or otherwise adjust the performance objectives specified for outstanding
Performance Share Awards if it determines that an adjustment would be consistent
with the objectives of this Plan and taking into account the interests of the
participants and the public Shareholders of the Company and such adjustment
complies with the requirements of Section 162(m) of the Code for Section 162(m)
Persons, to the extent applicable, unless the Committee indicates a contrary
intention. The types of events which could cause an adjustment in the
performance objectives include, without limitation, accounting changes which
substantially affect the determination of performance objectives, changes in
applicable laws or regulations which affect the performance objectives, and
divisive corporate reorganizations, including spin-offs and other distributions
of property or stock.
9.4 Other Terms and Conditions. Performance Share Awards granted under
this Plan are subject to the following terms and conditions and may contain such
additional terms, conditions, restrictions and contingencies not inconsistent
with the terms of this Plan and any operative employment or other agreement as
the Committee deems desirable:
(a) Delivery of Shares. As soon as practicable after the applicable
Performance Period has ended, the participant will receive a distribution of the
number of Shares earned during the Performance Period, depending upon the extent
to which the applicable performance objectives were achieved. Such Shares will
be registered in the name of the participant and will be free of all
restrictions except for any restrictions pursuant to Article 14. Notwithstanding
the forgoing, the distribution of Shares provided for herein shall occur not
later than two and one-half months following the end of the calendar year in
which the Performance Period has ended.
(b) Termination. A Performance Share Award or unearned portion
thereof will terminate without the issuance of Shares on the termination date
specified at the time of grant or upon the termination of employment of the
participant during the Performance Period. If a participant's employment with
the Company or its Affiliates terminates by reason of his or her death,
disability or retirement (except with respect to Section 162(m) Persons), the
Committee in its discretion at or after the time of grant may determine,
notwithstanding any Vesting requirements, that the participant (or the heir,
legatee or legal representative of the participant's estate) will receive a
distribution of a portion of the participant's then-outstanding Performance
Share Awards in an amount which is not more than the number of shares which
would have been earned by the participant if 100% of the performance objectives
for the current Performance Period had been achieved prorated based on the ratio
of the number of months of active employment in the Performance Period to the
total number of months in the Performance Period. However, with respect to
Awards intended to be "performance-based compensation" (as described in Section
9.4(d)), distribution of the Shares shall not be made prior to attainment of the
relevant performance objective.
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(c) Voting and Other Rights. Awards of Performance Shares do not
provide the participant with voting rights or rights to dividends prior to the
participant becoming the holder of record of Shares issued pursuant to an Award;
provided, however, that an Award Agreement may provide for payment of an amount
of money (or Shares with a Fair Market Value equivalent to such amount) equal to
the dividends paid from time to time on the number of Common Shares that would
become payable upon vesting of a Performance Share Award. Prior to the issuance
of Shares, Performance Share Awards may not be sold, transferred, pledged,
assigned or otherwise encumbered.
(d) Performance-Based Compensation. The Committee may designate
Performance Share Awards as being "remuneration payable solely on account of the
attainment of one or more performance goals" as described in Section 162(m)
(4)(C) of the Code. Such Awards shall be automatically amended or modified to
comply with amendments to Section 162 of the Code to the extent applicable,
unless the Committee indicates a contrary intention.
9.5 Time Vesting of Performance Share Awards. Performance Share Awards, or
portions thereof, are exercisable at such time or times as determined by the
Committee in its discretion at or after grant which may include time Vesting. If
the Committee provides that any Performance Shares become Vested over time
(accelerated by a performance component), the Committee may waive or accelerate
any performance Vesting provisions in favor of time Vesting provisions as
provided for herein. Unless otherwise determined by the Committee in connection
with the grant and set forth in the Award Agreement, all unvested Performance
Share Awards shall immediately vest with respect to any required time vesting
upon the Death or Disability of the holder.
9.6 Special Limitations on Performance Share Awards. Unless an Award
Agreement approved by the Committee provides otherwise, Performance Shares
awarded under this Plan are intended to meet the requirements for exclusion from
coverage under Code Section 409A and all Performance Share Awards shall be
construed and administered accordingly.
ARTICLE 10
Transfers and Leaves of Absence
10.1 Transfer of Participant. For purposes of this Plan, the
transfer of a participant among the Company and its Affiliates
is deemed not to be a termination of employment.
10.2 Effect of Leaves of Absence. For purposes of this Plan, the
following leaves of absence are deemed not to be a termination
of employment:
(a) a leave of absence, approved in writing by the Company, for military
service, sickness or any other purpose approved by the Company, if the period of
such leave does not exceed 90 days;
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(b) a leave of absence in excess of 90 days, approved in writing by
the Company, but only if the employee's right to reemployment is guaranteed
either by a statute or by contract, and provided that, in the case of any such
leave of absence, the employee returns to work within 30 days after the end of
such leave; and
(c) any other absence determined by the Committee in its discretion
not to constitute a termination of employment.
ARTICLE 11
Effect of Change in Control
11.1 Change in Control Defined. "Change in Control" shall mean a "Change
in Ownership" as defined in (a) hereof; a "Change in Effective Control" as
defined in (b), hereof; or a "Change in Ownership of a Substantial Portion of
Assets" as defined in (c) hereof.
(a) Change in Ownership. For purposes of this Agreement, a change in
the ownership of the Company occurs on the date that any one person, or more
than one person acting as a group (as defined in subsection (d) hereof),
acquires ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50 percent of the total fair market
value or total voting power of the stock of the Company. However, if any one
person, or more than one person acting as a group, is considered to own more
than 50 percent of the total fair market value or total voting power of the
stock of the Company, the acquisition of additional stock by the same person or
persons is not considered to cause a change in the ownership of the Company (or
to cause a change in the effective control of the Company within the meaning of
subsection (b) hereof). An increase in the percentage of stock owned by any one
person, or persons acting as a group, as a result of a transaction in which the
Company acquires its stock in exchange for property will be treated as an
acquisition of stock for purposes of this section.
(b) Change in the Effective Control. For purposes of this Agreement,
a change in the effective control of the Company occurs on the date that
either-
(i) Any one person, or more than one person acting as a
group (as determined under subsection (d) hereof),
acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by
such person or persons) ownership of stock of the
Company possessing 35 percent or more of the total
voting power of the stock of the Company; or
(ii) a majority of members of the Company's board of
directors is replaced during any 12-month period by
directors whose appointment or election is not endorsed
by a majority of the members of the Company's board of
directors prior to the date of the appointment or
election.
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In the absence of an event described in subsection (b)(i) or (ii)
above, a change in the effective control of a Company will not have occurred.
(c) Change in the Ownership of a Substantial Portion of the
Company's Assets. For purposes of this Agreement, a change in the ownership of a
substantial portion of the Company's assets occurs on the date that any one
person, or more than one person acting as a group (as determined in subsection
(d) hereof), acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or persons) assets from the
Company that have a total gross fair market value equal to or more than 40
percent of the total gross fair market value of all of the assets of the Company
immediately prior to such acquisition or acquisitions. For this purpose, gross
fair market value means the value of the assets of the Company, or the value of
the assets being disposed of, determined without regard to any liabilities
associated with such assets.
There is no Change in Control Event under this subsection (c) when there
is a transfer to an entity that is controlled by the shareholders of the Company
immediately after the transfer, as provided in this paragraph. A transfer of
assets by the Company is not treated as a change in the ownership of such assets
if the assets are transferred to --
(i) A shareholder of the Company (immediately before the
asset transfer) in exchange for or with respect to its
stock;
(ii) An entity, 50 percent or more of the total value or
voting power of which is owned, directly or indirectly,
by the Company;
(iii) A person, or more than one person acting as a group,
that owns, directly or indirectly, 50 percent or more of
the total value or voting power of all the outstanding
stock of the Company; or
(iv) An entity, at least 50 percent of the total value or
voting power of which is owned, directly or indirectly,
by a person described in section (iii) above.
For purposes of this subsection (c) and except as otherwise
provided, a person's status is determined immediately after the transfer of the
assets. For example, a transfer to a corporation in which the transferor
corporation has no ownership interest before the transaction, but which is a
majority-owned subsidiary of the transferor corporation after the transaction is
not treated as a change in the ownership of the assets of the transferor
corporation.
(d) Persons Acting as a Group. Persons will not be considered to be
acting as a group solely because they purchase assets or purchase or own stock
of the same corporation at the same time, or as a result of the same public
offering. However, persons will be considered to be acting as a group if they
are owners of a corporation that enters into a merger, consolidation, purchase
or acquisition of stock, purchase or acquisition of assets, or similar business
transaction with the Company. If a person, including an entity shareholder, owns
stock in both corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders in a corporation only to the extent
of the ownership in that corporation prior to the transaction giving rise to the
change and not with the ownership interest in the other corporation.
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11.2 Effect of Change in Control. Unless otherwise determined by the
Committee in connection with the grant and set forth in the Award Agreement, in
the event of a Change in Control of the Company:
(a) all Stock Options or SARs, notwithstanding any limitations set
forth in the Plan or Award Agreement shall become fully Vested;
(b) all Restricted Shares, notwithstanding any limitations set forth
in the Plan or Award Agreement shall become fully Vested; and
(c) all Restricted Share Units and Performance Shares,
notwithstanding any limitations set forth in the Plan or Award Agreement shall
become fully Vested.
In addition, in connection with a Change in Control the Committee shall have the
right, in its sole discretion, to:
(d) cancel any or all outstanding Stock Options, SARs, Restricted
Share Units and Performance Shares in exchange for the kind and amount of shares
of the surviving or new corporation, cash, securities, evidences of
indebtedness, other property or any combination thereof receivable in respect of
one Share upon consummation of the transaction in question (the "Acquisition
Consideration") that the holder of the Stock Option, SAR, Restricted Share Unit
or Performance Share would have received had the Stock Option, SAR, Restricted
Share Unit or Performance Share been exercised or converted into Shares, as
applicable, prior to such transaction, less the applicable exercise or purchase
price therefor;
(e) cause the holders of any or all Stock Options, SARs, Restricted
Share Units and Performance Shares to have the right thereafter and during the
term of the Stock Option, SAR, Restricted Share Unit or Performance Share to
receive upon exercise thereof the Acquisition Consideration receivable upon the
consummation of such transaction by a holder of the number of Common Shares
which might have been obtained upon exercise or conversion of all or any portion
thereof, less the applicable exercise or purchase price therefor, or to convert
such Stock Option, SAR, Restricted Share Unit or Performance Share into a stock
option, appreciation right, restricted share unit or performance share relating
to the surviving or new corporation in the transaction; or
(f) take such other action as it deems appropriate to preserve the
value of the Award to the Participant, including the cancellation of such Award
and the payment of the value of the Acquisition Consideration attributable to
the Award, net of payments due from the holder thereof upon exercise if any, in
cash.
The Committee may provide for any of the foregoing in an Award Agreement
governing an Award in advance, may provide for any of the foregoing in
connection with a Change in Control, or do both. Alternatively, the Committee
shall also have the right to require any purchaser of the Company's assets or
stock, as the case may be, to take any of the actions set forth in the preceding
sentence.
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The manner of application and interpretation of the foregoing provisions
of this Section 11.2 shall be determined by the Committee in its sole and
absolute discretion.
11.3 Code Section 409A. Unless an Award Agreement approved by the
Committee provides otherwise, each Award granted under this Plan is intended to
meet the requirements for exclusion from coverage under Code Section 409A. If
the Committee provides than an Award shall be subject to Code Section 409A,
then, notwithstanding the other provisions of this Article 11, the Committee may
provide in the Award Agreement for such changes to the definition of Change in
Control from the definition set forth in this Article 11, and for such changes
to the Committee's rights upon a Change in Control, as the Committee may deem
necessary in order for such Award to comply with Code Section 409A.
ARTICLE 12
Transferability of Awards
12.1 Awards Are Non-Transferable. Except as provided in Sections 12.2 and
12.3, Awards are non-transferable and any attempts to assign, pledge,
hypothecate or otherwise alienate or encumber (whether by operation of law or
otherwise) any Award shall be null and void.
12.2 Inter-Vivos Exercise of Awards. During a participant's lifetime,
Awards are exercisable only by the participant or, as permitted by applicable
law and notwithstanding Section 12.1 to the contrary, the participant's guardian
or other legal representative.
12.3 Limited Transferability of Certain Awards. Notwithstanding Section
12.1 to the contrary, Awards may be transferred by will and by the laws of
descent and distribution. Moreover, the Committee, in its discretion, may allow
at or after the time of grant the transferability of Awards which are Vested,
provided that the permitted transfer is made (a) if the Award is an Incentive
Stock Option, the transfer is consistent with Section 422 of the Code; (b) to
the Company (for example in the case of forfeiture of Restricted Shares), an
Affiliate or a person acting as the agent of the foregoing or which is otherwise
determined by the Committee to be in the interests of the Company; or (c) by the
participant for no consideration to Immediate Family Members or to a bona fide
trust, partnership or other entity controlled by and for the benefit of one or
more Immediate Family Members. "Immediate Family Members" means the
participant's spouse, children, stepchildren, parents, stepparents, siblings
(including half brothers and sisters), in-laws and other individuals who have a
relationship to the participant arising because of a legal adoption. No transfer
may be made to the extent that transferability would cause Form S-8 or any
successor form thereto not to be available to register Shares related to an
Award. The Committee in its discretion may impose additional terms and
conditions upon transferability.
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ARTICLE 13
Amendment and Discontinuation
13.1 Amendment or Discontinuation of this Plan. The Board of Directors may
amend, alter, or discontinue this Plan at any time, provided that no amendment,
alteration, or discontinuance may be made:
(a) which would materially and adversely affect the rights of a
participant under any Award granted prior to the date such action is adopted by
the Board of Directors without the participant's written consent thereto; and
(b) without shareholder approval, if shareholder approval is
required under applicable laws, regulations or exchange requirements (including
Section 422 of the Code with respect to ISOs, and for the purpose of
qualification as "performance-based compensation" under Section 162(m) of the
Code).
Notwithstanding the foregoing, this Plan may be amended without
participants' consent to: (i) comply with any law; (ii) preserve any intended
favorable tax effects for the Company, the Plan or participants; or (iii) avoid
any unintended unfavorable tax effects for the Company, the Plan or
participants.
13.2 Amendment of Grants. The Committee may amend, prospectively or
retroactively, the terms of any outstanding Award, provided that no such
amendment may be inconsistent with the terms of this Plan (specifically
including the prohibition on granting Stock Options or SARs with an Exercise
Price less than 100% of the Fair Market Value of the Common Shares on the Date
of Grant) or would materially and adversely affect the rights of any holder
without his or her written consent.
ARTICLE 14
Issuance of Shares and Share Certificates
14.1 Issuance of Shares. The Company will issue or cause to be issued
Shares as soon as practicable upon exercise or conversion of an Award that is
payable in Shares. No certificates for Shares will be issued until full payment
has been made, to the extent payment is required. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
shareholder will exist with respect to the Shares, notwithstanding the exercise
or conversion of the Award payable in shares.
14.2 Delivery of Share Certificates. The Company is not required to issue
or deliver any certificates for Shares issuable with respect to Awards under
this Plan prior to the fulfillment of all of the following conditions:
(a) payment in full for the Shares and for any tax withholding (See
Article 15);
(b) completion of any registration or other qualification of such
Shares under any Federal or state laws or under the rulings or
regulations of the Securities and Exchange Commission or any other
regulating body which the Committee in its discretion deems
necessary or advisable;
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(c) admission of such Shares to listing on The Nasdaq Stock Market
or any stock exchange on which the Shares are listed;
(d) in the event the Shares are not registered under the Securities
Act of 1933, qualification as a private placement under said Act;
(e) obtaining of any approval or other clearance from any Federal or
state governmental agency which the Committee in its discretion
determines to be necessary or advisable; and
(f) the Committee is fully satisfied that the issuance and delivery
of Shares under this Plan is in compliance with applicable Federal,
state or local law, rule, regulation or ordinance or any rule or
regulation of any other regulating body, for which the Committee may
seek approval of counsel for the Company.
14.3 Applicable Restrictions on Shares. Shares issued with respect to
Awards may be subject to such stock transfer orders and other restrictions as
the Committee may determine necessary or advisable under any applicable Federal
or state securities law rules, regulations and other requirements, the rules,
regulations and other requirements of The Nasdaq Stock Market or any stock
exchange upon which the Shares are then-listed, and any other applicable Federal
or state law and will include any restrictive legends on stock certificates that
the Committee may deem appropriate to include.
14.4 Book Entry. In lieu of the issuance of stock certificates evidencing
Shares, the Company may use a "book entry" system in which a computerized or
manual entry is made in the records of the Company to evidence the issuance of
such Shares. Such Company records are, absent manifest error, binding on all
parties.
ARTICLE 15
Satisfaction of Tax Liabilities
15.1 In General. The Company shall withhold any taxes which the Committee
determines the Company is required by law or required by the terms of this Plan
to withhold in connection with any payments incident to this Plan. The
participant or other recipient shall provide the Committee with such additional
information or documentation as may be necessary for the Company to discharge
its obligations under this Section. The Company may withhold: (a) cash, (b)
subject to any limitations under Rule 16b-3, Common Shares to be issued, or (c)
any combination thereof, in an amount equal to the amount which the Committee
determines is necessary to satisfy the obligation of the Company, a Subsidiary
or a Parent to withhold federal, state and local income taxes or other amounts
incurred by reason of the grant or exercise of an Award, its disposition, or the
disposition of the underlying Common Shares. Alternatively, the Company may
require the holder to pay to the Company such amounts, in cash, promptly upon
demand.
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15.2 Withholding from Share Distributions. With respect to a distribution
in Shares pursuant to Restricted Share, Restricted Share Unit or Performance
Share Award under the Plan, the Committee may cause the Company to sell the
fewest number of such Shares for the proceeds of such sale to equal (or exceed
by not more than that actual sale price of a single Share) the Company's
required tax withholding relating to such distribution. The Committee may
withhold the proceeds of such sale for purposes of satisfying such tax
withholding obligation.
15.3 Section 83(b) Election. The Committee may, where applicable, provide
in an Award Agreement the right of the participant to make an election pursuant
to Section 83(b) of the Code, or comparable provisions of any state tax law, to
include in the participant's gross income the fair market value as of the Award
as of the Date of Grant. The participant may make such an election only if,
prior to making any such election, the participant (a) notifies the Company of
participant's intention to make such election in accordance with any notice
requirements set forth in the Award Agreement, and (b) pays to the Company an
amount sufficient to satisfy any taxes or other amounts required by any
governmental authority to be withheld or paid over to such authority for
participant's account, or otherwise makes arrangements satisfactory to the
Company for the payment of such amounts through withholding or otherwise.
ARTICLE 16
General Provisions
16.1 No Implied Rights to Awards or Employment. No potential participant
has any claim or right to be granted an Award under this Plan, and there is no
obligation of uniformity of treatment of participants under this Plan. Neither
this Plan nor any Award thereunder shall be construed as giving any individual
any right to continued employment with the Company or any Affiliate. The Plan
does not constitute a contract of employment, and the Company and each Affiliate
expressly reserve the right at any time to terminate employees free from
liability, or any claim, under this Plan, except as may be specifically provided
in this Plan or in an Award Agreement.
16.2 Other Compensation Plans. Nothing contained in this Plan prevents the
Board of Directors from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only in specific
cases.
16.3 Rule 16b-3 Compliance. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 of the Exchange Act, as such rule may be
amended from time to time ("Rule 16b-3"). All transactions involving any
participant subject to Section 16(a) of the Exchange Act shall be subject to the
conditions set forth in Rule 16b-3, regardless of whether such conditions are
expressly set forth in this Plan. Any provision of this Plan that is contrary to
Rule 16b-3 does not apply to such participants.
16.4 Code Section 162(m) Compliance. The Plan is intended to comply with
all applicable requirements of Section 162(m) of the Code with respect to
"performance-based compensation" for Section 162(m) Persons. Unless the
Committee expressly determines otherwise, any provision of this Plan that is
contrary to such requirements does not apply to such "performance-based
compensation."
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16.5 Successors. All obligations of the Company with respect to Awards
granted under this Plan are binding on any successor to the Company, whether as
a result of a direct or indirect purchase, merger, consolidation or otherwise of
all or substantially all of the business and/or assets of the Company.
16.6 Severability. In the event any provision of this Plan, or the
application thereof to any person or circumstances, is held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
parts of this Plan, or other applications, and this Plan is to be construed and
enforced as if the illegal or invalid provision had not been included.
16.7 Governing Law. To the extent not preempted by Federal law, this Plan
and all Award Agreements pursuant thereto are construed in accordance with and
governed by the laws of the State of Michigan. This Plan is not intended to be
governed by the Employee Retirement Income Security Act and shall be so
construed and administered.
16.8 Legal Requirements. No Awards shall be granted and the Company shall
have no obligation to make any payment under the Plan, whether in Shares, cash,
or a combination thereof, unless such payment is, without further action by the
Committee, in compliance with all applicable Federal and state laws and
regulations, including, without limitation, the Code and Federal and state
securities laws.
16.9 Forfeiture by Employees in Connection with Termination for Cause.
Notwithstanding any other provision of this Plan, subject to the provisions of
the Award Agreement to which such Award relates, upon the termination of
employment of an employee Participant for Cause such employee Participant shall
forfeit all benefits associated with any Award as provided for herein. Pursuant
to this provision, an employee shall forfeit all unexercised Options whether or
not previously vested, all unexercised SARs whether or not previously vested and
all Restricted Shares, Restricted Share Units and Performance Shares for which
the delivery of Shares has not yet occurred.
ARTICLE 17
Effective Date and Term
17.1 Effective Date. The effective date of this MBT Financial Corp. 2008
Stock Incentive Plan is the date on which the shareholders of the Company
approve it at a duly held shareholders' meeting.
17.2 Termination Date. This Plan will continue in effect until midnight on
the day before the tenth anniversary of the effective date specified in Section
17.1; provided, however, that Awards granted on or before that date may extend
beyond that date.
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PROXY FOR
MBT FINANCIAL CORP.
SHAREHOLDERS' ANNUAL MEETING
KNOW ALL MEN BY THESE PRESENTS, That I, the undersigned holder of common shares
of MBT Financial Corp. do hereby constitute and appoint with the full power of
substitution, H. Douglas Chaffin, James E. Morr, and John L. Skibski my true and
lawful attorneys and proxies, and each of them my true and lawful attorney and
proxy, to attend the annual meeting of shareholders of MBT Financial Corp. to be
held at the Monroe Bank & Trust headquarters, 10 Washington Street, Monroe,
Michigan 48161, on Thursday, May 1, 2008 at 10:00 o'clock a.m., or at any
adjournment thereof, and at such meeting or any adjournment thereof, to vote the
shares of stock of MBT Financial Corp. standing in my name with respect to the
following matters.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
ANNUAL MEETING OF SHAREHOLDERS OF
MBT FINANCIAL CORP.
MAY 1, 2008
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach along perforated line and mail in the envelope provided. -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTOR OF EACH OF THE NOMINEES LISTED BELOW AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of Directors - To elect a board of Directors for 3 To take any action which may be necessary or proper in connection
the ensuing year. with the foregoing matters, or any other matter legally coming
before the meeting, or any adjournments thereof.
NOMINEES: I hereby give to said attorneys and proxies, and to each of them, or
[ ] FOR ALL NOMINEES o Peter H. Carlton to any substitute or substitutes, full power and authority to do any
o H. Douglas Chaffin and all acts and things which I might or could do if personally
[ ] WITHHELD AUTHORITY o Joseph S. Daly present, and hereby ratify and confirm all that said attorneys and
FOR ALL NOMINEES o Thomas M. Huner proxies, and each of them, or their substitute or substitutes, might
o Rocque E. Lipford lawfully do or cause to be done by virtue thereof.
[ ] FOR ALL EXCEPT o William D. McIntyre, Jr.
(See instructions below) o Michael J. Miller In their discretion, the proxies are authorized to vote in their
o Debra J. Shah judgment upon such other business as properly may come before the
o John L. Skibski meeting or any adjournment thereof. At the present time, the Board
o Philip P. Swy of Directors knows of no other business to be presented at the
o Karen M. Wilson meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
INSTRUCTION: To withhold authority to vote for any individual DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION
nominee(s), mark "FOR ALL EXCEPT" and fill in IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR
the circle next to each nominee you wish to ELECTION AS DIRECTOR AND FOR PROPOSAL 2.
withhold, as
shown here: -
- -------------------------------------------------------------
2. Approval of the MBT Financial Corp. 2008 Stock Incentive THIS PROXY IS REVOCABLE AND IS SOLICITED ON BEHALF OF THE BOARD OF
Plan DIRECTORS.
For [ ] Against [ ] Abstain [ ]
- -------------------------------------------------------------
To change the address on your account, please check the
box at the right and indicate your new address in the
address space above. Please note that changes to the [ ]
registered name(s) on the account may not be submitted
via this method.
Signature of Shareholder ________________________ Date: ________ Signature of Shareholder _________________________ Date: _________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
ANNUAL MEETING OF SHAREHOLDERS OF
MBT FINANCIAL CORP.
MAY 1, 2008
-------------------------
PROXY VOTING INSTRUCTIONS
-------------------------
MAIL - Date, sign and mail your proxy card in the envelope provided as soon as ----------------------------------------------------
possible. COMPANY NUMBER
-OR- ----------------------------------------------------
TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States ACCOUNT NUMBER
or 1-718-921-8500 from foreign countries and follow the instructions. Have ----------------------------------------------------
your proxy card available when you call.
-OR- ----------------------------------------------------
IN PERSON - You may vote your shares in person by attending the Annual Meeting.
- ------------------------------------------------------------------------------------------------------------------------------------
You may enter your voting instructions at 1-800-PROXIES in the United States or 1-718-921-8500 from foreign countries up until
11:59 PM Eastern Time the day before the cut-off or meeting date.
- ------------------------------------------------------------------------------------------------------------------------------------
- Please detach along perforated line and mail in the envelope provided. -
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION AS DIRECTOR OF EACH OF THE NOMINEES LISTED BELOW AND FOR PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
1. Election of Directors - To elect a board of Directors for 3 To take any action which may be necessary or proper in connection
the ensuing year. with the foregoing matters, or any other matter legally coming
before the meeting, or any adjournments thereof.
NOMINEES: I hereby give to said attorneys and proxies, and to each of them, or
[ ] FOR ALL NOMINEES o Peter H. Carlton to any substitute or substitutes, full power and authority to do any
o H. Douglas Chaffin and all acts and things which I might or could do if personally
[ ] WITHHELD AUTHORITY o Joseph S. Daly present, and hereby ratify and confirm all that said attorneys and
FOR ALL NOMINEES o Thomas M. Huner proxies, and each of them, or their substitute or substitutes, might
o Rocque E. Lipford lawfully do or cause to be done by virtue thereof.
[ ] FOR ALL EXCEPT o William D. McIntyre, Jr.
(See instructions below) o Michael J. Miller In their discretion, the proxies are authorized to vote in their
o Debra J. Shah judgment upon such other business as properly may come before the
o John L. Skibski meeting or any adjournment thereof. At the present time, the Board
o Philip P. Swy of Directors knows of no other business to be presented at the
o Karen M. Wilson meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
INSTRUCTION: To withhold authority to vote for any individual DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION
nominee(s), mark "FOR ALL EXCEPT" and fill in IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR
the circle next to each nominee you wish to ELECTION AS DIRECTOR AND FOR PROPOSAL 2.
withhold, as
shown here: -
- -------------------------------------------------------------
2. Approval of the MBT Financial Corp. 2008 Stock Incentive THIS PROXY IS REVOCABLE AND IS SOLICITED ON BEHALF OF THE BOARD OF
Plan DIRECTORS.
For [ ] Against [ ] Abstain [ ]
- -------------------------------------------------------------
To change the address on your account, please check the
box at the right and indicate your new address in the
address space above. Please note that changes to the [ ]
registered name(s) on the account may not be submitted
via this method.
Signature of Shareholder ________________________ Date: ________ Signature of Shareholder _________________________ Date: _________
NOTE: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When
signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.