SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy Statement
Pursuant to Section 14(a) of the Securities
Exchange Act
of 1934
Filed by
the Registrant ☒
Filed by
a Party other than the Registrant ☐
Check the appropriate
box:
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Preliminary Proxy Statement
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Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant
to §240.14a-12
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First Financial Bancorp.
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(Name of Registrant as
Specified In Its Charter)
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(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
Payment of Filing fee
(Check the appropriate box)
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Fee computed on table below
per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction
applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was
determined):
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing party:
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Date filed:
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NOTICE
OF ANNUAL MEETING OF
SHAREHOLDERS
Date:
May
24, 2016
Time:
10:00
am local time
Where:
First
Financial Center
255 East Fifth Street
Room 950
Cincinnati,
OH 45202
To
attend via live webcast, go to
www.virtualshareholdermeeting.com/ffbc16
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To
the Shareholders of First Financial Bancorp.:
Our
Annual Meeting of Shareholders will be held at 10:00 am local time, May 24, 2016 in Room 950 of the First Financial Center at
255 East Fifth Street, Cincinnati, Ohio. The Annual Meeting of Shareholders is held for the following purposes:
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1.
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To
elect thirteen directors nominated by the Board of Directors to serve until the next
annual meeting of shareholders and until their respective successors have been elected;
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2.
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Re-approve
the Company’s Amended and Restated Key Executive Short Term Incentive Plan;
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3.
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To
ratify the appointment of Crowe Horwath LLP as our independent registered public accounting
firm for 2016;
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4.
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To
approve, on an advisory basis, the compensation of the Company’s executive officers;
and
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5.
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To
consider and act upon any other matters that may properly come before the meeting.
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Only
shareholders of record at the close of business on March 30, 2016 are entitled to notice of and to vote at the Annual Meeting
or at any adjournment of the Annual Meeting.
Important
Notice regarding the Internet availability of Proxy Materials for the Annual Meeting
The
proxy statement and 2015 annual report are available at
www.bankatfirst.com/investor
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Your
vote is very important. We urge all shareholders to vote on the matters listed above and described in the proxy statement as soon
as possible, whether or not they attend the Annual Meeting.
For
your convenience, you may attend the Annual Meeting in person or through a webcast. You may attend the webcast of the meeting
via the Internet at
www.virtualshareholdermeeting.com/ffbc16
when you enter your 12-digit control number included with
the Notice of Internet Availability or proxy card. Instructions on how to attend and participate in the Annual Meeting via the
webcast are posted at
www.virtualshareholdermeeting.com/ffbc16
. You will be able to vote your shares while attending the
Annual Meeting by following the instructions on the website. While our management will address questions from shareholders physically
present or who have submitted their questions electronically prior to the Annual Meeting, the webcast will not allow you to ask
questions of management during the meeting.
You
may visit www.theinvestornetwork.com/forum/ffbc at any time prior to the Annual Meeting to ask questions of our executive management
that may be addressed in the Annual Meeting and access information about the Company.
The
Board of Directors unanimously recommends you vote
FOR
each of the proposals listed above and described in the proxy statement.
REVIEW
YOUR PROXY STATEMENT AND VOTE IN ONE OF THESE FOUR WAYS:
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Vote
Online
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Before the Meeting
: Go to
www.proxyvote.com
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During the Meeting:
Go to
www.virtualshareholdermeeting.com/ffbc16
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Vote
by Phone
By
calling 1-800-690-6903
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Vote
by Mail
By
signing, dating, and returning your proxy card in the enclosed envelope
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Vote
in Person
By
attending the Annual Meeting
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ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to help us reduce our costs incurred in mailing proxy materials, you can consent to receiving all future proxy
statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please
follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
Mailing
Date: April 14, 2016
BY ORDER OF THE BOARD OF DRECTORS
Shannon
M. Kuhl
Corporate Secretary
TABLE
OF CONTENTS [Will be updated on final version.]
Proxy
and Annual Meeting Summary
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Date
and Location of Annual Meeting
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How
to Vote
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Record
Date
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Meeting
Agenda and Voting Recommendations
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Proxy
Statement, Voting and Annual Meeting Information
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Proxy
Statement Information
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Electronic
Delivery of Proxy Statement and Annual Report
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Voting
Information
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Annual
Meeting Information
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Householding
Information
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Proposal
1 - Election of Directors
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Proposal
2 – Re-approval of the Amended and Restated Key Executive Short Term Incentive Plan
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Background
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Plan
Benefits
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Summary
of the STIP
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Proposal
3 - Ratify the appointment of Crowe Horwath LLP as our independent registered public accounting firm for 2016
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Accounting
Firm Fees
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Report
of the Audit Committee
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Proposal
4 - Non-Binding, Advisory Vote to Approve Executive Officer Compensation
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Share
Ownership
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Principal
Shareholders
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Compliance
with Section 16(a) of the
Exchange
Act
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Shareholdings
of Directors, Executive Officers and Nominees for Director
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Corporate
Governance
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General
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Succession
Planning
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Our
Board’s Role in Risk Oversight
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Board
Meetings
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Director
Independence
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Board
Committees
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Board
Leadership Structure
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2015
Board Compensation
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Board
Self-Assessment
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Review
and Approval of Related Person Transactions
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Evaluating
Nominees and Electing Directors
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Director
Education
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Policy
Against Hedging Activities
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Share
Ownership Guidelines
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Communicating
with the Board of Directors
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Executive
Compensation (See detailed Executive Compensation Table of Contents)
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Compensation
Committee Report
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2015
Summary Compensation Table
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Compensation
Discussion and Analysis (CD&A)
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Executive
Compensation Overview
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2017
Annual Meeting Information
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Shareholder
Proposals for the 2017 Annual Meeting
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Exhibit
A – Amended and Restated Key Executive Short Term Incentive Plan
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PROXY
STATEMENT
Mailing
Date: April 14, 2016
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Annual
Meeting of Shareholders
Date: May
24, 2016
Time: 10:00
am local time
Where:
First
Financial Center
255
East Fifth Street
Room
950
Cincinnati,
OH 45202
www.virtualshareholdermeeting.com/ffbc16
Record
Date:
March 30, 2016 -- Shareholders of record as of the close of business on March 30, 2016 are entitled to vote at
the Annual Meeting.
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How
to Vote
Vote
Online:
Before
the Meeting
: go to
www.proxyvote.com
During
the Meeting:
Go to
www.virtualshareholdermeeting.com/ffbc16
Vote
by phone by calling 1-800-690-6903
Vote
by mail by signing, dating, and returning your proxy card in the enclosed envelope
Vote
in person by attending the Annual Meeting
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We are
sending this proxy statement and the accompanying proxy card to you as a shareholder of First Financial Bancorp., an Ohio corporation,
in connection with the solicitation of proxies for the 2016 Annual Meeting of Shareholders (the “Annual Meeting”).
Our Board of Directors is soliciting proxies for use at the Annual Meeting, or at any postponement or adjournment of the Annual
Meeting.
Meeting
Agenda and Voting Recommendations:
Proposal
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Approval
Required
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Board’s
Recommendation
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Page
Reference
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1.
Election of Directors
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Affirmative
vote of a plurality
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For
Each Nominee
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xx
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2.
Re-approval of the Amended and Restated Key
Executive Short Term Incentive Plan
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Majority
of votes present, in person or by proxy, and entitled to vote
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For
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xx
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3.
Ratify the appointment of Crowe Horwath LLP
as our independent registered public accounting firm for 2016
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Majority
of votes present, in person or by proxy, and entitled to vote
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For
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xx
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4.
Approve, on an advisory basis, the compensation
of the Company’s executive officers
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Majority
of votes present, in person or by proxy, and entitled to vote
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For
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xx
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We are
not aware of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matter
is properly brought before the meeting, your completed proxy may, if you have so selected, give your proxies the authority to
vote on these other matters in their best judgment.
In this
proxy statement, the “Company,” “First Financial,” “First Financial Bancorp,” “we,”
“our,” or “us” all refer to First Financial Bancorp. and its subsidiaries. We also refer to the Board
of Directors of First Financial as the “Board.” References in this proxy statement to “common shares”
or “shares” refer to the Company’s common shares.
Unless
otherwise noted, the information in this proxy statement covers our 2015 fiscal year that began January 1, 2015 and ended December
31, 2015.
Proxy
Statement, Voting and Annual Meeting Information
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Proxy
Statement Information
Why
am I receiving this Proxy Statement?
We
are making available this Notice of Annual Meeting of Shareholders, proxy statement, and annual report for the year ended December
31, 2015 (the “proxy materials”), either online or by mail, in connection with the 2016 Annual Meeting of Shareholders
of First Financial because you are a shareholder of record of the Company as of the close of business on March 30, 2016 (the “record
date”). This proxy statement describes the matters on which you are asked to vote and provides information about those matters
and about the Company so that you can make an informed decision.
This
proxy statement and related materials are being mailed to, or can be accessed online by, shareholders on or about April 14, 2016.
What
is Notice and Access and why did First Financial elect to use it?
We
are making the proxy materials and annual report available to our shareholders electronically via the Internet under the Notice
and Access regulations of the U.S. Securities and Exchange Commission (“SEC”). Many of our shareholders have received
a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) in lieu of receiving a full
set of printed materials in the mail. We are using the Notice and Access method to expedite distribution and reduce the costs
associated with printing and mailing these materials.
The
Notice of Internet Availability includes information on how to access and review the proxy materials and how to vote online, by
phone, or by attending the Annual Meeting. The proxy materials and annual report, as well as other reports filed with or furnished
to the SEC, can be accessed free of charge at
www.bankatfirst.com/investor
. You may also access this information by searching
“Company Filings” at
www.sec.gov
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I
received a Notice of Internet Availability of Proxy Materials only. How can I receive printed copies of the proxy statement and
annual report?
Shareholders
may receive a printed copy of the annual report and proxy materials, free of charge, by following the instructions on the Notice
of Internet Availability for receiving such materials:
1)
BY INTERNET
:
www.proxyvote.com
2)
BY TELEPHONE
: 1-800-579-1639
3)
BY E-MAIL
:
sendmaterial@proxyvote.com
Who
is paying for the cost of this proxy solicitation?
First
Financial is paying for the costs associated with preparing, printing and mailing these proxy materials, as well as the cost of
soliciting proxies on behalf of the Board. We have retained Advantage Proxy to aid in the solicitation of proxies for the Annual
Meeting. Advantage Proxy will receive a base fee of $4,250 plus reimbursement of out-of-pocket fees and expenses for its services.
In addition, we will reimburse banks, brokers and other custodians, nominees and fiduciaries for reasonable expenses incurred
in forwarding the proxy materials to beneficial owners of our shares and soliciting their proxies.
Our
directors, officers and associates also may solicit proxies from our shareholders by further mailings, personal contact, phone,
or e-mail, but these individuals will not receive additional compensation for this solicitation activity.
Voting
Information
Who
can vote at the Annual Meeting?
Only
shareholders of record at the close of business on March 30, 2016 will be entitled to notice of and to vote at the Annual Meeting.
Each common share owned at the close of business on March 30, 2016 entitles its owner to one vote on each proposal being considered
at the Annual Meeting.
The
common shares are the Company’s only voting securities entitled to vote at the Annual Meeting. At the close of business
on March 30, 2016, there were xxxxxxxxx common shares outstanding and entitled to vote.
How
do I vote my shares?
Even
if you plan to attend the Annual Meeting, in person or virtually as described below, we strongly encourage you to vote prior to
the meeting. Shareholders of record may vote using any of the following methods:
Online
Voting
: You may vote before or during the meeting through the Internet as instructed on your Notice of Internet Availability
or proxy card. Before the Annual Meeting, you may go to
http://www.proxyvote.com
to transmit your voting instructions up
until 11:59 p.m. Eastern Time on May 23, 2016. During the meeting, you may go to
www.virtualshareholdermeeting.com/ffbc16
to attend the meeting via webcast and vote online. You should have your
proxy card or Notice of Internet Availability in hand when you access either of these websites and follow the instructions to
obtain your records and to vote.
Vote
by Phone
: Telephone voting is available toll-free at 1-800-690-6903 up until 11:59 pm Eastern Time on May 23, 2016. You should
have your proxy card or Notice of Internet Availability or proxy card in hand when making this call.
Vote
by Mail
: Complete, sign and date your proxy card and return it in the envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
Vote
in Person by Attending the Annual Meeting
: Please see the question and answer “
How can I attend the Annual Meeting?”
provided below for additional information.
If
you hold your shares in “street name” at a bank, broker or other nominee, you should follow the instructions provided
by your bank, broker or other nominee on how to vote your shares.
What
is the difference between holding shares directly as a shareholder of record and holding shares in “street name” at
a bank, broker or other nominee?
Shareholder
of Record
: If your shares are registered directly in your name with our transfer agent, Computershare Shareholder Services,
you are considered the shareholder of record and the proxy materials or a Notice of Internet Availability were sent directly to
you. As the shareholder of record, you have the right to grant your voting proxy directly by using the enclosed proxy card, through
the online voting methods described in this proxy statement, or by phone, or to vote in person at the Annual Meeting.
Holding
shares in “street name” at a bank, broker or other nominee
: If your shares are held by a bank, broker or other
nominee, you are considered the beneficial owner of shares held in “street name.” The proxy materials, Notice of Internet
Availability, or voting instruction card was forwarded to you by your bank, broker or other nominee who is considered the shareholder
of record of your shares. Your bank, broker or other nominee will send you, as the beneficial owner, separate information describing
how you can vote your shares.
What
happens if I sign, date and return my proxy card, or complete the online or telephonic proxy methods, but do not specify how I
want my shares voted on one or more of the proposals?
Your
shares will be voted in the manner you specify on each proposal. If you are a shareholder of record and complete and return a
proxy, but do not provide voting instructions on one or more proposals, your vote will be counted as a vote “for”
all of the Company’s nominees for directors and for Proposals 2, 3 and 4.
If
you hold your shares in “street name” and have not returned voting instructions on one or more proposals, your bank,
broker or nominee may vote your shares only on those proposals for which it has discretion to vote. We believe that under applicable
rules, your bank, broker or nominee has discretion to vote your shares on routine matters such as the ratification of our independent
registered accounting firm, Proposal 3. However, your bank, broker or nominee does not have discretion to vote your shares on
non-routine matters such as the election of directors or Proposals 2 and 4. If you do not provide voting instructions on a non-routine
proposal, your shares will be considered “broker non-votes.” The effect of a “broker non-vote” on each
proposal is detailed in the questions and answers concerning “Annual Meeting Information” below.
What
if I indicate “Withheld” with respect to the election of one or more directors or “Abstain” with respect
to any of the other proposals being considered?
The
effect of these voting specifications on each proposal is detailed in the questions and answers under the heading “Annual
Meeting Information” below.
If
you “abstain” on a proposal, your shares will be counted for purposes of whether a quorum exists but will otherwise
have the same effect as a vote against each proposal for which you abstain.
Can
I change my proxy vote?
You
may revoke your proxy at any time before it is actually exercised at the Annual Meeting by:
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Sending
a written notice of revocation to First Financial Bancorp, Attn: Shannon M. Kuhl, Corporate
Secretary, 255 East Fifth Street, Suite 2900, Cincinnati, Ohio 45202;
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Delivering
a later dated proxy (including by using the online or telephone voting methods); or
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Attending
the Annual Meeting and giving notice of revocation in person.
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If
you hold your shares in “street name” and instructed your bank, broker or other nominee to vote your common shares
and you would like to revoke or change your vote, you must follow the instructions provided by your bank, broker or other nominee.
What
if my shares are held through the First Financial Bancorp 401(k) Savings Plan (applicable to traditional or Roth contribution
plans)?
You
will receive an electronic Notice of Internet Availability unless you opted to receive paper copies of the proxy materials. The
Notice of Internet Availability will contain voting instructions for all shares registered in the exact same name, whether inside
or outside of the First Financial Bancorp 401(k) Savings Plan (the “Savings Plan”). If you hold shares outside of
the Savings Plan and they are not registered in the same name as those within the Savings Plan, you will receive a separate Notice
of Internet Availability or proxy card for the shares held outside of the Savings Plan.
Voting
instructions with respect to shares held in the Savings Plan must be received by 11:59 pm Eastern Time on May 22, 2016. All voting
instructions you give with respect to these shares will be kept confidential. If you do not timely submit voting instructions
for these shares, the shares allocated to you, together with all unallocated shares held in the Savings Plan, will be voted in
accordance with the pro-rata vote of participants in the Savings Plan who did provide instructions.
Who
should I contact if I have questions about this proxy solicitation and where can I get assistance in voting my shares?
You
may contact us at
shareholderrelations@bankatfirst.com
or call our Investor Relations department toll free at 1-877-322-9530
if you have any questions or need assistance in voting.
Annual
Meeting Information
How
many votes must be present in person or by proxy to hold the Annual Meeting?
A
quorum must exist before business can be conducted at the Annual Meeting. Under our Amended and Restated Regulations (the “Amended
Regulations”), a quorum will exist if a majority of the common shares outstanding as of the record date are present in person
or by proxy. At the close of business on March 30, 2016, there were
xxxxxxx common shares outstanding. A majority, or xxxxxxx
common shares, present in person or by proxy, will constitute a quorum.
What
proposals are being considered and how many votes are needed for each proposal to be approved by the shareholders?
Proposal
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Approval
Required
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Effect
of an Abstention (or Withheld Vote with respect to Proposal 1)
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Effect
of a Broker Non-Vote
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1.
Election of Directors
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Affirmative
vote of a plurality
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No
effect on election voting but see “Policy on Majority Voting” in the Corporate Governance section of this proxy
statement
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No
effect
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2.
Re-approval of the Amended and Restated Key
Executive Short Term Incentive Plan
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Majority
of votes present, in person or by proxy, and entitled to vote
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Will
be treated as a vote AGAINST the proposal
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No
effect
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3.
Ratify the appointment of Crowe Horwath as
our independent registered accounting firm for 2016
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Majority
of votes present, in person or by proxy, and entitled to vote
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Will
be treated as a vote AGAINST the proposal
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Not
Applicable
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4.
Approve, on an advisory basis, the compensation
of the Company’s executive officers
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Majority
of votes present, in person or by proxy, and entitled to vote
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Will
be treated as a vote AGAINST the proposal
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No
effect
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How
can I attend the Annual Meeting?
You
can attend our 2016 Annual Meeting in person, via the Internet, or by proxy.
Our
2016 Annual Meeting will take place at our principal executive offices at 255 East Fifth Street, Room 950, Cincinnati, Ohio. You
will need to present photo identification, such as a driver’s license, and proof of share ownership as of the record date,
such as an account statement or copy of the proxy card or Notice of Internet Availability with your printed name and address,
for admission to the Annual Meeting. If you hold your shares in “street name” and you wish to be able to vote at the
Annual Meeting, you must obtain and follow instructions provided by the bank, broker or other nominee who is the record holder
of the shares. Cameras, recording devices, and other electronic devices will not be permitted at the Annual Meeting.
You
may also attend the Annual Meeting via a webcast at
www.virtualshareholdermeeting.com/ffbc16
. You may vote while attending
the webcast meeting by following the instructions at
www.virtualshareholdermeeting.com/ffbc16
. You will not be able to
submit questions to executive management or the Board via this webcast during the Annual Meeting. To attend the Annual Meeting
via
www.virtualshareholdermeeting.com/ffbc16
, you will need the control number included on the Notice of Internet Availability
or proxy card that was mailed to you. Instructions on how to attend and participate in the Annual Meeting via the Internet are
posted at
www.virtualshareholdermeeting.com/ffbc16
.
How
do I find out the voting results from the Annual Meeting?
We
plan to announce preliminary voting results at the Annual Meeting and will disclose the final voting results in a current report
on Form 8-K filed with the SEC within four business days of the Annual Meeting.
Electronic
Delivery of Proxy Statement and Annual Report
Can
I elect to only receive First Financial’s proxy materials and annual reports electronically?
Shareholders
can elect to view future proxy materials and annual reports electronically instead of receiving print copies of these items in
the mail. You can make this election by following the instructions provided on your proxy card or Notice of Internet Availability
or by going to
www.proxyvote.com
and following the instructions provided there.
If
you choose to receive future proxy statements and annual reports electronically and you continue to hold shares as of the record
date of the next annual meeting, you will receive an e-mail message next year that includes access information for these materials
as well as instructions for online voting.
Householding
Information
What
is “householding?”
If
two or more shareholders reside at the same address and appear to be members of the same family, we may send a single copy of
the proxy materials, or Notice of Internet Availability, to that address unless one of the shareholders at that address notifies
us that they wish to receive individual copies of the material. This procedure reduces our printing and mailing costs. Shareholders
who participate in householding will continue to have access to and utilize separate proxy voting instructions for each shareholder
account.
How
do I stop participating in the householding program?
To
stop participating in the householding program, contact Broadridge Financial Solutions, Inc. by calling toll free at 1-800-542-1061
or by writing to Broadridge Financial Solutions, Attn: Householding Department, 51 Mercedes Way, Edgewood, NY 11717. You will
be removed from the householding program within 30 days of Broadridge’s receipt of your instruction.
Proposal
1 -- Election of Directors
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Our Board
currently consists of fourteen members, thirteen of whom are non-employee directors. Our Amended Regulations provide that the
Board shall consist of not less than nine nor more than 25 persons, with the exact number to be fixed and determined from time
to time by resolution of the Board or by resolution of the shareholders at any annual or special meeting of shareholders. Any
vacancy may be filled by the Board in accordance with law and our Amended and Restated Regulations for the remainder of the term
of the vacant directorship. The Board has established the number of directors at fourteen. Mark A. Collar has chosen not to stand
for re-election, and the Board has not appointed a nominee to fill Mr. Collar’s seat on the Board. As a result, the Board
has determined that it will decrease the number of directors to thirteen immediately following the Annual Meeting.
Our Board
has approved the nomination of the following thirteen persons as candidates for election as director, each for a one-year term:
J. Wickliffe Ach, David S. Barker, Cynthia O. Booth, Claude E. Davis, Corinne R. Finnerty, Peter E. Geier, Murph Knapke, Susan
L. Knust, William J. Kramer, Jeffrey D. Meyer, John T. Neighbours, Richard E. Olszewski, and Maribeth S. Rahe. Each of the nominees
is an incumbent director. The Corporate Governance and Nominating Committee (“CGNC”) recommended all thirteen nominees
to the Board, which in turn unanimously approved the nomination of all thirteen persons.
In the
event that any one or more of the nominees becomes unavailable or unable to serve as a director prior to the Annual Meeting, the
accompanying proxy will be voted to elect the remaining nominees and any substitute nominee or nominees designated by the Board.
We have no reason to believe that any nominee will be unable or decline to serve as a director.
The thirteen
nominees for director receiving the most votes at the Annual Meeting will be elected as directors. You can find additional information
about our Policy on Majority Voting in the Corporate Governance section of this proxy statement. The general considerations and
criteria for assessing director candidates are established in the Charter of the Board’s Governance and Nominating Committee
(available at
www.bankatfirst.com/investor
). These considerations and criteria are also summarized in the Corporate Governance
section of this proxy statement.
Below
is information concerning the nominees for directors such as their present and past professional positions, current directorships
with other companies or organizations, and key qualifications and attributes qualifying them to serve on our Board. The age indicated
for each nominee below is their age as of March 30, 2016. For information regarding ownership of shares of the Company by nominees
and directors of the Company, see the Shareholdings of Directors, Executive Officers and Nominees for Director section of this
proxy statement. Except as noted, there are no arrangements or understandings between any director or any nominee, and any other
person pursuant to which such director or nominee is or was nominated to serve as director.
J.
Wickliffe Ach
Director
Since:
2007
Age:
67
Committees:
Corporate Governance & Nominating (Chair), Compensation
|
Mr.
Ach currently serves as the President and Chief Executive Officer of Hixson Inc., an architectural engineering firm located
in Cincinnati, Ohio. He has held these positions with Hixson Inc. since 1993.
Mr.
Ach is the Vice Chair of the Board of Directors of First Financial Bancorp. He presently serves on the board of directors
of Hixson Inc. and Setzer Corp. (a private corporation located in Dayton, Ohio that is a construction contractor). Mr.
Ach also serves on the board of directors of the CISE Foundation, a Cincinnati not for profit organization. He is or has
been involved in a number of business and civic organizations including the Cultural Facilities Task Force of Hamilton
County, Ohio relating primarily to the Cincinnati Museum Center and Music Hall facilities.
Mr.
Ach is President of the Union Terminal Corporation. He also is on the board of trustees of the Architectural Foundation
of Cincinnati.
As
a seasoned business owner and entrepreneur, Mr. Ach brings valuable insight to the Board in strategic and cultural matters.
Mr. Ach’s involvement in the Cincinnati business community provides added understanding of our growing Cincinnati
market area. Furthermore, his specific background in architectural engineering provides added value in our strategies
related to physical banking center locations and design.
|
|
|
David
S. Barker
Director
Since:
2010
Age:
64
Committees:
Audit,
Capital Markets, Compensation
|
Mr.
Barker is the President and Chief Executive Officer of SIHO Insurance Services, Columbus, Indiana, a community health
care benefits company serving
o
ver 1
5
0,000 members
throughout Indiana. He has held these positions since 1999 and has more than 30 years of experience in the insurance
industry.
He
is active in many civic and community endeavors, including serving as current Chairman of the Indiana University Purdue
University Columbus Board of Advisors, a Board member of the Heritage Fund Community Foundation, and a member of the Indiana
University Advisory Board for Psychological & Brain Sciences School of Neurology. Mr. Barker has been a Board
member and past Chairman of the Columbus Area Economic Growth Council
,
the Columbus
Area Chamber of Commerce
, and
the United Way,
as
well as serving as a board member of the Riley’s Children’s Foundation (Columbus Leadership Team),
Mr.
Barker is an important member of the business community in Columbus, Indiana and we look to his leadership and guidance
as we continue to build our presence in key southern Indiana markets. Furthermore, his experience as the President
of a company provides the board with insight on executive matters.
|
|
|
Cynthia
O. Booth
Director
Since:
2010
Age:
58
Committees:
Risk and Compliance (Chair), Corporate Governance & Nominating
|
Ms.
Booth is the President and Chief Executive Officer of COBCO Enterprises, LLC, the owner and operator of six McDonald’s
restaurants in the Cincinnati area. Prior to forming COBCO in 2000, she held various executive positions at Firstar Bank
(now U.S. Bank) in Cincinnati including President, Firstar Bank Foundation, Senior Vice President—Director of Community
Development, Vice President of Private Wealth Group, Vice President of Residential Real Estate, Vice President of Human
Resources, and Vice President, and before that was President of Diversified Solutions, Inc., a bank consulting firm.
Ms.
Booth is active in several civic and community organizations, including serving as a director and the treasurer of the
Greater Cincinnati Regional Chamber of Commerce and as a director of the YWCA of Greater Cincinnati.
Ms.
Booth brings deep banking experience to the Board, including extensive knowledge in residential real estate lending, regulatory
relations, the Community Reinvestment Act and other regulatory compliance, private banking and human resources matters.
Furthermore, her experience in the restaurant franchise area provides valuable insight into the specialty area of lending
conducted through our subsidiary First Franchise Capital Corporation.
|
|
|
Claude
E. Davis
Director
Since:
2004
Age:
55
|
Mr.
Davis is the Chief Executive Officer of both First Financial Bancorp and First Financial Bank, positions he has held since
October 1, 2004. He also serves as the Chairman of the Board of First Financial Bank. Mr. Davis has over 28
years of experience in the financial services industry.
Mr.
Davis was elected to the board of directors of the Federal Reserve Bank of Cleveland in 2013 and has served on its Executive
Committee and Audit Review Committee since January 2014. Beginning January 1, 2016, he is the chair of the board’s
Audit Review Committee for the Federal Reserve Bank of Cleveland. Mr. Davis also serves as a member of the Cincinnati
Business Committee and the American Banker’s Council.
Mr.
Davis’ years of experience in the banking industry as well as his extensive financial background provide leadership
to the Board. As CEO, he is intimately familiar with all aspects of our business activities. His involvement
in other boards and organizations gives him insight on important societal and economic issues relevant to our Company’s
business and markets. His involvement with the Federal Reserve Bank of Cleveland provides invaluable perspective
on the financial services industry.
|
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Corinne
R. Finnerty
Director
Since:
1998
Age:
59
Committees:
Corporate Governance & Nominating, Risk and Compliance
|
Ms.
Finnerty is the principal and sole shareholder of the law firm of McConnell Finnerty PC located in North Vernon, Indiana.
She has over 30 years of experience representing financial institutions in a wide variety of legal matters. Ms. Finnerty
was previously a director of a former affiliate bank of First Financial from 1987 to 2005 and joined the board of the
Company
in 1998.
Ms.
Finnerty served as a member of the Indiana Supreme Court Disciplinary Commission from 2003 to 2013.
Ms.
Finnerty’s deep roots in the North Vernon, Indiana area provide representation on the Board for our southeast Indiana
market. Her participation for ten years on the Indiana Supreme Court Disciplinary Commission allows her to provide insight
on governance and ethical issues. Furthermore, her years as a practicing attorney, including the representation of financial
institutions for over thirty years, give her enhanced perspective on legal and regulatory issues.
|
|
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Peter
E. Geier
Director
Since:
2014
Age:
58
Committees:
Audit,
Compensation
|
Mr.
Geier is principal of PGeier Consulting, LLC, a business consulting firm. As of April 1, 2016, he is a Senior Lecturer
at the Fisher College of Business, Department of Management Science at The Ohio State University.
He previously served as the Chief
Executive Officer of The Ohio State University Health System and the Chief Operating Officer of The Ohio State University
Wexner Medical Center from 2001 to 2015. In his roles with The Ohio State University Health System and The Ohio
State University Wexner Medical Center, he was responsible for the financial performance and operations of the university’s
academic medical center which includes six hospitals, multiple out-patient sites, the College of Medicine and an integrated
faculty practice group.
Mr.
Geier was previously a director and Chairman of the Board of Insight Bank since 2006, serving on the executive, asset
liability and loan committees of the bank. Pursuant to the Agreement and Plan of Merger among the Company, First Financial
Bank, and Insight Bank, the Company agreed to appoint one qualified, independent director associated with Insight Bank
to the Company’s Board as well as to the Board of Directors First Financial Bank, National Association. Mr. Geier
was appointed to our Board in September 2014 pursuant to this agreement following the consummation of the merger in August
2014. Mr. Geier also served on the board of directors of Huntington Bancshares from 1999 to 2001 where he held the positions
of President and Chief Operating Officer.
Mr.
Geier presently serves on the board of Santa Rosa Consulting, a for-profit consulting firm, as well as serving previously
on the board of the Ronald McDonald House and the boards of the following not-for-profit hospitals: University Hospital,
Ross Heart Hospital, Harding Hospital, James Cancer Hospital, The Ohio State University Hospital East, The Ohio State
University Wexner Medical Center, and Children’s Hospital.
Mr.
Geier’s extensive executive experience and financial expertise, including specific experience in the financial services
industry, provides valuable, sophisticated insight to the Company. He also qualifies as an audit committee financial expert.
Mr. Geier’s relationships and ties in Columbus, Ohio are an important asset as the Company strengthens its presence
in the Columbus market.
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|
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Murph
Knapke
Director
Since:
1983, Chairman of the Board since 2009
Age:
69
|
Mr.
Knapke is a partner of Knapke Law Office located in Celina, Ohio. He has served as the Company’s Chairman of the
Board since 2009 and has guided the Company through its many significant events since that time.
Mr.
Knapke has tenure with our Company and/or a bank affiliate since 1983 and provides valuable historical perspective on
both the Company and the banking industry. His deep roots in the Celina, Ohio area provide representation on the
Board for our Northwest Ohio market. His years as a practicing attorney give him enhanced perspective on legal and regulatory
issues, Board fiduciary duties, and a balanced perspective with regard to merger and acquisition opportunities.
|
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Susan
L. Knust
Director
Since:
2005
Age:
62
Committees:
Compensation
(Chair), Corporate Governance & Nominating
|
Ms.
Knust is the owner and managing partner or president of several businesses:
•
Omega Warehouse Services (since 2002) which
is located in Monroe, Ohio and provides public warehousing and manufacturing services;
•
K.P. Properties of Ohio (since 1986) which
is located in Monroe, Ohio and owns, leases and manages industrial and commercial real estate in Ohio;
•
K.P. Properties of Colorado (since 2010)
which is located in Monroe, Ohio and owns, leases and manages commercial real estate in Colorado; and
•
K.P. Properties of Florida (since 2014)
which is located in Monroe, Ohio and owns, leases and manages commercial real estate in Florida.
As
a seasoned business owner and entrepreneur for 33 years in the areas of manufacturing, warehousing and industrial real
estate, Ms. Knust brings valuable insight to the Board in strategic and other matters. Ms. Knust’s business interests
are similar in size to our key client base and she also has an understanding of our growing Cincinnati market area. Also,
as a female business owner, her perspective and experiences have proven valuable to us.
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|
William
J. Kramer
Director
Since:
2005
Age:
55
Committees:
Audit
(Chair), Capital Markets, Compensation
|
Mr.
Kramer is the Vice President of Operations and a member of the board of directors of Valco Companies, Inc. which has principal
offices in New Holland, Pennsylvania and whose principal activity is the design, manufacture, and sale of equipment used
in the animal production industry. He has held his current position with Valco Companies, Inc. since 2008, having previously
held other executive positions at Valco Companies, Inc. Mr. Kramer was previously a director of a former affiliate bank
of First Financial from 1987 to 2005 and joined the board of First Financial in 2005.
Mr.
Kramer has been a CPA since 1984 with both public accounting and private company experience with substantial experience
in financial reporting and accounting controls. He qualifies as an audit committee financial expert. Furthermore, his
tenure with our Company and/or a bank affiliate since 1987 provides valuable historical perspective on both the Company
and the banking industry.
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|
|
Jeffrey
D. Meyer
Director
Since:
2014
Age:
50
Committees:
Capital
Markets, Risk and Compliance
|
Mr.
Meyer is an owner and the President of Clean Title Agency, Inc. in Columbus, Ohio. He has held these positions since 1998.
He is also a part owner and operator of three other title agencies in central Ohio: Columbia Title Agency, Leadership
Title Agency, and Win Title Agency. Each of his title agencies issue title insurance and handle real estate closings.
Mr.
Meyer was a founder of The First Bexley Bank and previously a director of The First Bexley Bank since 2006, serving on
the loan, information technology and audit committees of the bank. Pursuant to the Agreement and Plan of Merger among
the Company, First Financial Bank, and The First Bexley Bank, the Company agreed to appoint one qualified, independent
director associated with The First Bexley Bank to the Company’s Board as well as to the Board of Directors of First
Financial Bank. Mr. Meyer was appointed to our Board in September 2014 pursuant to this agreement following the consummation
of the merger in August 2014.
Mr.
Meyer presently serves on the Board of Trustees and is President of The Columbus Jewish Foundation.
Mr.
Meyer’s extensive experience in residential and commercial real estate matters provides valuable insight to the
Company with respect to our mortgage and commercial lending business. Mr. Meyer’s relationships and ties in Columbus,
Ohio are an important asset as the Company strengthens its presence in the Columbus market.
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John
T. Neighbours
Director
Since:
2015
Age:
66
Committees:
Capital
Markets, Risk and Compliance
|
Mr.
Neighbours is a partner in the law firm of Faegre Baker Daniels. He has practiced law for over 40 years and has represented
employers throughout the country in all aspects of labor and employment law. Additionally, he has become an adviser to
business, educational and not-for-profit executives on a variety of topics which assist them in problem solving.
Mr.
Neighbours presently serves on the board of Real Estate Corporation of America. He
is involved
in and serves as a director (or in an equivalent position) of a number of non-profit and civic organizations including:
•
Greater Indianapolis Chamber of Commerce
•
United Way of Central Indiana
•
Meadows Community Foundation (Chair)
•
Charles A. Tindley Accelerated Schools
•
Indianapolis Public Safety Foundation
•
Christian Theological Seminary
•
Indiana University-Purdue University Indianapolis
Advisory Board
•
Indianapolis Zoological Society
In
addition, he served as a council member for the American Bar Association - Section on Labor and Employment Law for 12
years, as well as chairman of the Developments Under the National Labor Relations Act Committee from 1997 to 2000. He
also served on the Labor Relations Committee for the United States Chamber of Commerce.
Mr.
Neighbours is also active in the Indianapolis real estate market, with 35 years of experience in development and leasing
activities, including development projects in low income areas. His most recent development project involves managing
a $100 million investment in a low income area and coordinating the development with the City of Indianapolis, the local
YMCA, healthcare providers, and charter schools.
Mr.
Neighbours is well known in Indianapolis and is a recognized leader in the local business community, providing valuable
insight to the board on the local business environment. His years as a practicing attorney give him an enhanced perspective
on legal and employment matters as well the business climate generally given his national practice.
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|
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Richard
E. Olszewski
Director
Since:
2005
Age:
66
Committees:
Corporate
Governance & Nominating, Risk and Compliance
|
Mr.
Olszewski is the owner and operator of two 7-Eleven Food Store franchises in Griffith, Indiana. He was previously a director
of a former affiliate bank of First Financial from 1995 to 2005 and joined the board of the Company
in 2005.
Mr.
Olszewski’s 30 plus years of retail experience and several years of service to our Company provides us with a deeper
understanding of our important northwest Indiana market. Furthermore his business and retail experience as a small business
owner provides our Company with a better understanding of a key client constituency.
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Maribeth
S. Rahe
Director
Since:
2010
Age:
67
Committees:
Capital
Markets (Chair), Audit
|
Ms.
Rahe is the President and Chief Executive Officer of Fort Washington Investment Advisors, Inc., positions she has held
since 2003. She also serves on the board of directors of Fort Washington Advisors, Inc. Fort Washington Investment
Advisors, Inc. is an investment management firm and wholly owned subsidiary of Western & Southern Financial Group
located in Cincinnati, Ohio. Ms. Rahe has more than 43 years of experience in the banking and financial services
industries with 30 years of experience in management or executive management positions.
Since
2005, Ms. Rahe has served as a director of Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) which is an integrated
communication services company located in Mattoon, Illinois that provides exchange carrier and broadband services.
She serves as the chair of the audit committee and also on the compensation committee of the company.
Ms.
Rahe is involved in and serves as a director (or in an equivalent position) of several organizations, including:
•
Cincinnati Arts Association (Vice Chair)
•
Cincinnati Country Club (Board)
•
Cincinnati Women's Executive Forum (Board)
•
Cintrifuse (Advisory Board)
•
Commonwealth Club (Executive Committee)
•
Institutional Real Estate Inc. (Editorial Advisory
Board)
•
New York Landmark Conservancy (Life Trustee)
•
Rush-Presbyterian-St. Luke’s Medical Center
(Life Trustee)
•
Sisters of Notre Dame de Namur (Development Advisory
Board)
•
The Greater Cincinnati Foundation (Board)
•
United Way of Cincinnati (Investment Committee)
•
Xavier University Williams College of Business
(Board of Executive Advisors)
Ms.
Rahe is well known in Cincinnati and is a recognized leader in the financial services community, both locally and nationally.
She brings a seasoned perspective, insight, and financial acumen into issues and strategies relating to our business,
including regulatory relationships and enterprise risk management.
|
THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “
FOR
” THE ELECTION OF EACH OF THE NOMINEES
.
Proposal
2 – Re-approval of the Amended and Restated
Key Executive Short Term Incentive Plan
|
We are
asking you to re-approve the Company’s Amended and Restated Key Executive Short Term Incentive Plan, or STIP, to meet the
requirements under Section 162(m) of the United States Internal Revenue Code (the “Code”) so that payments made to
certain key executive employees of the Company will be tax deductible to the Company. The STIP was originally approved by our
shareholders on April 15, 2011 at the Company’s annual meeting.
A copy
of the STIP is attached as Exhibit A to this proxy statement. The description that follows is qualified in its entirety by reference
to the full text of the STIP as set forth in Exhibit A.
Background
The STIP
is designed to provide incentive compensation for designated officers and key executives of the Company that is directly related
to the performance of the Company and those employees. Section 162(m) of the Code generally does not allow publicly held companies
to obtain tax deductions for compensation of more than $1.0 million paid in any year to their chief executive officer or any of
their three highest compensated officers (other than the chief executive officer and chief financial officer) (together, the “Covered
Executives”) unless such payments are “performance-based” in accordance with the conditions specified under
Section 162(m) of the Code and the related Treasury Regulations. One of those conditions requires the Company to obtain shareholder
approval of the material terms of the performance goals set by a committee of outside directors. In addition, if such committee
has the authority to change the targets under a performance goal after shareholder approval of the goal, the material terms of
the performance goals must be disclosed and reapproved by shareholders no later than five years after such shareholder approval
was first obtained. Because the STIP was last approved
by shareholders
in 2011, the Company is now seeking re-approval of the STIP in order to meet the deductibility condition under the Code.
Under
the terms of the STIP, the Compensation Committee of the Board has the authority to establish performance goals and the applicable
targets thereunder each year based on the objective performance criteria set forth in the STIP. For this reason, the Board of
Directors is recommending that the shareholders approve the material terms of the STIP as described below. Subject to such approval,
and if the applicable performance goals are satisfied, this proposal would enable the Company to continue to pay “performance-based”
compensation to the Covered Executives and to obtain federal income tax deductions for such payments, without regard to the limitations
of Section 162(m) of the Code.
If shareholders
fail to re-approve the STIP, any compensation paid under the STIP in the future would not meet the conditions for tax deductibility
under Section 162(m).
Summary
of the STIP
Administration
The STIP
is administered by a committee that is selected by the Board and is composed of two or more members of the Board, each of whom
is required to be an “outside director” (within the meaning of Section 162(m) of the Code). The Board has designated
the Compensation Committee of the Board to act as such committee. The Compensation Committee has the authority that may be necessary
or appropriate to enable it to discharge its responsibilities with respect to the STIP, including authority to determine the eligibility
for participation, establish the maximum award that may be earned by each participant (which may be expressed in terms of dollar
amount, percentage of salary or any other measurement), establish goals for each participant, calculate and determine each participant’s
award based upon level of attainment of such goals. Except as otherwise specifically limited in the STIP, the Compensation Committee
has full power and authority to construe, interpret and administer the STIP.
Maximum
Award
The STIP
provides that the maximum 162(m) award payable for any fiscal year to an eligible participant is the lower of two times the target
award or $2.0 million.
Eligibility
Officers
and key executives of the Company and its subsidiaries designated by the Compensation Committee for each performance period (which
is the period during which the performance is measured to determine the level of an award), are eligible for awards. The
performance period is the fiscal year of the Company, which is currently the calendar year.
Incentive
Awards and Performance Goals
The Compensation
Committee establishes for each performance period a maximum award (and, if the committee so determines, a target or threshold
award) and goals relating to Company, subsidiary, division, department, or functional performance for each participant (the “Performance
Goals”) within the time frame permitted under Section 162(m) of the Code (the first 90 days of the Company’s fiscal
year) and communicates these Performance Goals to each participant. Participants earn awards based only upon the attainment of
the applicable Performance Goals during the applicable performance period.
The Performance
Goals for Covered Executives will be based on attainment of specific levels of performance of the Company (or of a subsidiary,
division, department or function thereof) with reference to one or more of the following criteria:
|
|
|
Assets
|
Average
Total Common Equity
|
Deposits
|
Earnings
Per Share
|
Economic
Profit Added
|
Efficiency
Ratio
|
Gross
Margin
|
Gross
Revenue
|
Internal
Rate Of Return
|
Loans
|
Net
Charge-Offs
|
Net
Income
|
Net
Income Before Tax
|
Net
Interest Income
|
Non-Interest
Expense
|
Non
Interest Income
|
Non-Performing
Assets
|
Operating
Cash Flow
|
Pre-Provision
Net Revenue
|
Return
On Assets
|
Return
On Equity
|
Return
On Risk Weighted Assets
|
Return
On Sales
|
Stock
Price
|
Tangible
Equity
|
Total
Shareholder Return
|
|
These
performance criteria may be measured against peer group performance over a period of one year or such other period as the Compensation
Committee may determine.
As soon
as practicable following the end of the applicable performance period, the Compensation Committee certifies the attainment of
the Performance Goals and calculates the award, if any, payable to each participant. Incentive awards are paid in a lump sum cash
payment as soon as practicable following the determination of the amount by the Compensation Committee, provided, however that
the Committee may elect to pay a percentage of such awards in common shares of the Company pursuant to the First Financial Bancorp.
2012 Stock Plan. Such shares may be subject to restrictions as may be
determined
by the Compensation Committee. The Compensation Committee retains the right to reduce any award, in its discretion. Incentive
awards are subject to clawback if the Compensation Committee determines that payment was based upon materially inaccurate financial
statements or any other materially inaccurate performance metric criteria.
If the
Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or other events or circumstances, renders the performance criteria to be unsuitable,
the Committee may modify the performance criteria or the related minimum acceptable level of achievement as the Committee deems
appropriate or equitable. However, no such modification may be made if the effect would be to cause an Incentive Award to fail
to meet the conditions for tax deductibility under Section 162(m).
Amendment
to Plan
The Company
may amend, suspend or terminate the STIP, at any time, provided that no amendment may be made without the approval of the Company’s
shareholders if the effect of the amendment would be to cause outstanding or pending Incentive Awards that are intended to qualify
for the performance-based compensation exception to Section 162(m) of the Code to cease to qualify for such exception.
Plan
Benefits
Future
benefits to be received by a person or group under the STIP are not determinable at this time and will depend on individual and
corporate performance. Actual awards under the STIP to our NEOs for 2015 are reported in this proxy statement in the “Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table and under the heading “2015 STIP Design and
Payout” and “2015 STIP Performance Results” in this proxy.
The
Board of Directors unanimously recommends a vote “
FOR
” the RE-APPROVAL OF THE STIP.
Proposal
3 -- Ratify the appointment of Crowe Horwath LLP
as
our independent registered public accounting firm for 2016
|
Our Audit
Committee has appointed Crowe Horwath LLP (“Crowe Horwath”) as the Company’s independent registered public accounting
firm for the Company’s 2016 fiscal year.
Ernst
& Young LLP (“Ernst & Young”) served as our independent registered public accounting firm for the year ended
December 31, 2015. The Audit Committee periodically considers whether there should be a rotation of the independent registered
public accounting firm. As part of that consideration, during 2015, the Audit Committee conducted a competitive selection process
to determine the Company’s independent registered public accounting firm. As a result of that process, the Audit Committee
decided to approve the appointment of Crowe Horwath for 2016. We are asking our shareholders to ratify this appointment.
Our Audit
Committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered
public accounting firm. The Audit Committee is also responsible for the negotiation of audit fees payable to Crowe Horwath.
While
the Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal, if shareholders
do not ratify the appointment, the Audit Committee will consider whether or not to retain Crowe Horwath in the future. Even if
the appointment is ratified, our Audit Committee, at its discretion, may change the appointment at any time if it determines that
doing so would be in the best interests of the Company and its shareholders.
No formal
statement by representatives of Crowe Horwath or Ernst & Young is anticipated at the Annual Meeting. However, representatives
of Crowe Horwath are expected to attend the Annual Meeting to respond to appropriate questions.
Accounting
Firm Fees
The following
table sets forth the aggregate fees billed for audit services, as well as fees billed with respect to audit-related, tax and all
other services, provided by Ernst & Young to the Company and its related entities for the last two fiscal years. Any engagement
of the Company’s independent registered public accounting firm for permissible audit, audit-related, tax and other services
are preapproved by the Audit Committee. The Audit Committee may provide a general preapproval for a particular type of service
or require specific preapproval.
Fees
by Category
|
2015
|
2014
|
Audit
Fees
|
$ 1,021,500
|
$ 913,000
|
Audit-Related
Fees
|
223,250
|
152,000
|
Tax
Fees
|
0
|
0
|
All
Other Fees
|
0
|
87,000
|
TOTAL
|
$ 1,246,750
|
$ 1,152,000
|
Description
of Services:
Audit
Fees
consist of fees billed for professional services rendered in connection with the audit of our annual consolidated financial
statements and internal control over financial reporting, review of consolidated financial statements included in Form 10-Qs,
review of certain periodic reports and other documents filed with the SEC, and services that are normally provided in connection
with statutory or regulatory filings or engagements.
Audit-Related
Fees
consist of fees billed for assurance and related services that are reasonably related to the performance of the audit
or review of financial statements, including employee benefit plan audits, due diligence services in connection with mergers and
acquisitions, services performed in connection with the issuance of subordinated debt offerings and attestation or audit services
that are not required by statute or regulation.
Tax
Fees
consist of fees for professional services for tax compliance, tax planning, and tax advice such as advice related to
mergers and acquisitions and employee benefit plans.
All
Other Fees
include fees related to information technology attack and penetration assessments and assessments relating to the
design and operating effectiveness of internal controls.
The
Board of Directors unanimously recommends a vote “
FOR
” the ratification of the appointment of Crowe Horwath
LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016.
Report
of the Audit Committee
In accordance
with its written charter, the Audit Committee oversees the Company’s financial reporting process on behalf of the Board.
Management has the primary responsibility for the financial statements and the reporting process including the systems of internal
controls. The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity
of the Company’s audited financial statements to generally accepted accounting principles and on the Company’s internal
control over financial reporting. In this context, the Audit Committee has reviewed and discussed with management and Ernst &
Young the audited financial statements for the year ended December 31, 2015 and Ernst & Young’s evaluation of the
Company’s internal control over financial reporting. The Audit Committee has discussed with Ernst & Young the matters
that are required to be discussed by Auditing Standards No. 16 (Communications with Audit Committees) as amended and adopted
by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T.
Ernst
& Young has provided to the Audit Committee the written disclosures and the letter required by applicable requirements of
the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and the
Audit Committee has discussed with Ernst & Young that firm’s independence. The Audit Committee has concluded that Ernst
& Young’s provision of audit and non-audit services to First Financial and its affiliates is compatible with Ernst &
Young’s independence.
The Audit
Committee discussed with the Company’s internal auditors and Ernst & Young the overall scope and plans for their respective
audits. The Audit Committee met with the internal auditors and with Ernst & Young, with and without management present, to
discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality
of the Company’s financial reporting.
In reliance
on the reviews and discussions referred to above, the Audit Committee recommended to the Board, 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, 2015, for filing
with the SEC.
|
Audit
Committee
|
|
|
|
William
J. Kramer, Chair
|
|
David
S. Barker
|
|
Peter
E. Geier
|
|
Maribeth
S. Rahe
|
Proposal
4 – Non-Binding, Advisory Vote to Approve Executive Officer Compensation
|
We are
asking our shareholders to approve, on a (non-binding) advisory basis, the compensation of the Company’s named executive
officers (“named executive officers“ or “NEOs”) identified in the Summary Compensation Table included
in the Executive Compensation portion of this proxy statement beginning at page xx. While this vote is advisory, and not binding
on our Company, it will provide information to us regarding shareholder sentiment about our compensation principles and objectives
and may be considered in future executive compensation related decisions. As determined by our shareholders at the 2011 Annual
Meeting of Shareholders, we request this advisory approval each year.
We
strongly encourage you to review the Executive Compensation - Compensation Discussion and Analysis section of this proxy statement
as well as the Summary Compensation Table and other related compensation tables for detailed information about the compensation
of our NEOs when making your voting decision on this proposal.
We believe
our compensation program has contributed to our Company’s recent and long-term successes. Our compensation philosophy is
based on the following guiding principles and that our executive compensation programs:
|
•
|
Drive
alignment between Company strategy, executive pay, and shareholder value creation;
|
|
•
|
Drive
alignment between an executive’s performance and the interests of shareholders
by tying compensation to our Company’s performance, also known as “Pay for
Performance;”
|
|
•
|
Attract,
motivate, and retain key talent to deliver consistent, long-term performance; and
|
|
•
|
Incorporate
proper governance practices to prevent or mitigate inappropriate risk-taking.
|
We believe
information provided in the Executive Compensation portion of this proxy statement demonstrates that our executive compensation
program has been designed appropriately to ensure our management’s interests are aligned with our shareholders’ interest
to support long-term value creation and to differentiate pay based on our performance within our peer group.
Your
vote is requested on the following resolution:
RESOLVED,
that the shareholders of First Financial Bancorp approve, on an advisory basis, the compensation of the Company’s named
executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation
tables, notes and narrative in the proxy statement for the Company’s 2016 Annual Meeting of Shareholders.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “
FOR
” THE APPROVAL OF THE ADVISORY RESOLUTION ON EXECUTIVE COMPENSATION.
Principal
Shareholders
The table
below identifies all persons known to us to own beneficially more than 5% of our outstanding common shares as of the record date
for the Annual Meeting (March 30, 2016).
|
Amount
and Nature of Beneficial Ownership of Common Shares
|
Percentage
of
Class
|
BlackRock,
Inc.
55
East 52
nd
Street
New
York, NY 10055
|
6,357,273
1
|
10.3%
|
The
Vanguard Group Inc.
100
Vanguard Blvd.
Malvern,
PA 19355
|
4,532,164
2
|
7.35%
|
1
Information based upon a Schedule 13G/A filed on January 8, 2016. As of December 31, 2015, BlackRock had sole voting power
for 6,204,411 and sole dispositive power for 6,357,273 shares.
2
Information based on a Schedule 13G/A filed on February 10, 2016. As of December 31, 2015, Vanguard had sole power to vote
for 76,981 shares; sole dispositive power for 4,453,283 shares; and shared dispositive power for 78,881 shares.
Shareholdings
of Directors, Executive Officers and Nominees for Director
The following
table shows the number of shares of First Financial beneficially owned, as of March 30, 2016, by each director and nominee for
director of the Company, each of the named executive officers listed in the Summary Compensation Table provided in the Executive
Compensation portion of this proxy statement, and all executive officers and directors of the Company as a group. None of the
individuals in the following table owned one percent or greater of the Company’s outstanding common shares.
A beneficial
owner of shares is a person who has sole or shared voting power, meaning the power to control voting decisions, or sole or shared
investment power, meaning the power to cause a sale or other disposition of the shares. A person is also considered the beneficial
owner of shares to which that person has the right to acquire beneficial ownership within 60 days. For this reason, the following
table includes exercisable share options and restricted shares that would become exercisable or vest within 60 days.
|
|
Amount
and Nature of Beneficial Ownership
|
Name
|
Position
|
Common
Shares Beneficially Owned Excluding Options
|
Stock
Options Exercisable within 60 days of Record Date
1
|
|
Total
Common Shares Beneficially Owned
|
Non-Employee
Directors
|
|
|
|
|
J.
Wickliffe Ach
|
Director
and Nominee
|
xxxxx
2
|
0
|
|
|
David
S. Barker
|
Director
and Nominee
|
xxxx
2
|
0
|
|
|
Cynthia
O. Booth
|
Director
and Nominee
|
xxxx
2
|
0
|
|
|
Mark
A. Collar
|
Director
|
xxxxx
2
|
0
|
|
|
Corinne
R. Finnerty
|
Director
and Nominee
|
xxxx
2
|
0
|
|
|
Peter
E. Geier
|
Director
and Nominee
|
xxxx
2
|
0
|
|
|
Murph
Knapke
|
Director
and Nominee
|
xxxx
2
|
0
|
|
|
Susan
L. Knust
|
Director
and Nominee
|
xxxxx
2,
|
0
|
|
|
William
J. Kramer
|
Director
and Nominee
|
xxxxx
2
|
0
|
|
|
Jeffrey
D. Meyer
|
Director
and Nominee
|
xxxxx
2
|
0
|
|
|
John
T. Neighbours
|
Director
and Nominee
|
______
|
0
|
|
|
Richard
E. Olszewski
|
Director
and Nominee
|
xxxxx
2
|
0
|
|
|
Maribeth
S. Rahe
|
Director
and Nominee
|
xxxxx
2
|
0
|
|
|
Named
Executive Officers
|
|
|
|
|
Claude
E. Davis
|
Director,
Nominee and CEO
|
3
|
0
|
|
|
John
Gavigan
|
Chief
Financial Officer
|
3
|
0
|
|
|
Richard
S. Dennen
|
President,
Oak Street Funding
|
3
|
0
|
|
|
C.
Douglas Lefferson
|
President,
Community Banking
|
3
|
Xx
|
|
|
Anthony
M. Stollings
|
President,
Chief Operating Officer of First Financial Bancorp; EVP, Chief Operating Officer of First Financial Bank
|
3
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
executive officers, directors and nominees as a group (28 persons)
Percent
of outstanding shares held by this group:
|
xxxxxxx
4
|
xxxxxx
|
|
xxxxx
|
1
xxxx of the xxxx options listed above have a strike price above the closing price of First Financial common stock on March
30, 2016, which was $xx.xx per share.
2
Includes 1,586 restricted shares that vest on May 26, 2016 for all directors except Mr. Neighbours. Mr. Knapke, Chairman
of the Board, received an additional 231 shares. Mr. Neighbours became a member of the Board on August 24, 2015 and received a
prorated amount of restricted shares (1,276 shares) that will vest on May 24, 2016. Directors retain voting and dividend rights
on unvested shares. However, dividends on unvested shares are held in escrow until vested. See “Board Compensation.”
3
Includes unvested restricted shares (Davis—xxxx; Gavigan – xxxx; Stollings—xxxxx; Dennen—xxxx; Lefferson—xxxxx;
and all executive officers as a group (xx
persons)—xxxx). Officers retain voting and dividend
(subject to escrow until vesting) rights on unvested shares. For vesting schedules, see “Grants of Plan-Based Awards”
and “Outstanding Equity Awards at Fiscal Year-End.”
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than 10 percent of a registered
class of the Company’s equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with
the SEC. Officers, directors and greater than 10 percent shareholders are required by SEC regulations to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based
solely on our review of the copies of these forms received by the Company and written representations from certain reporting persons
that they were not required to file a Form 5 for the specified fiscal year, the Company believes that all of its officers, directors
and greater than 10 percent shareholders complied with all filing requirements applicable to them with respect to transactions
completed in 2015, except that Mr. Langford filed a late Form 4 reporting one transaction.
General
We
at First Financial are committed to conducting business according to our core Company Values and our Mission Statement. Our Mission
Statement, Company Values, and our Code of Conduct embodying our Mission Statement and Company Values, guide us in managing our
business in line with high standards of business practices and in the best interest of our shareholders, clients, associates,
and other stakeholders.
Our
Mission
We
will exceed our clients’ expectations and satisfy their financial needs by building long-term relationships using
a client-centered, value-added approach.
|
Our
Values
|
|
Integrity.
We steadfastly adhere to ethical principles and professional standards.
Respect.
We value the diversity and individuality of each associate and client.
Responsiveness.
We readily react to the needs and deadlines of our clients and co-workers.
|
Commitment.
We are committed to doing whatever we can to meet the needs of our clients and other stakeholders.
Leadership.
We believe that leadership should be encouraged and demonstrated at every level in our Company.
Excellence.
Our business decisions and our service to every stakeholder should reflect the highest standards.
|
Code
of Conduct
Our
Board has adopted a Code of Conduct that applies to everyone at First Financial: our directors, officers and associates. The Code
of Conduct identifies our commitment to our Values and our responsibilities to our stakeholders, including our clients, our shareholders,
our fellow associates, our regulators, and our community. The Code of Conduct provides guidance on compliance with laws and regulations,
non-discrimination, diversity and equal opportunity, protecting Company assets and confidential information, conflicts of interest,
accuracy of records and information reporting, and our responsibilities to the communities in which we conduct business. The Code
of Conduct also encourages associates to report any illegal or unethical behavior. All newly hired associates are required to
certify that they have reviewed and understand the Code of Conduct. In addition, each year all other associates receive training
and are asked to affirmatively acknowledge their obligation to follow the Code of Conduct.
Code
of Ethics for the CEO and Senior Financial Officers
Our
Board has also adopted a Code of Ethics for our chief executive officer and senior financial officers that provides further guidance
about their responsibilities for full, fair, accurate, timely and understandable disclosure in the periodic reports we file with
the SEC.
Corporate
Governance Principles
We
believe that effective corporate governance is built on adherence to a number of “best practices.” These practices
are consistent with the Board’s responsibilities to effectively oversee the Company’s strategy, evaluate and compensate
Company executives, and plan for management succession. Most importantly, these practices are believed to strengthen the Company
and protect our shareholders’ interests. Accordingly, the Board has developed and follows our Corporate Governance Principles
to set forth common procedures and standards relating to corporate governance. The Corporate Governance Principles cover, among
other things, executive sessions of the Board,
director
qualifications, director responsibilities, director independence, voting for directors, limitations on membership on other boards,
continuing education for members of the Board, and Board performance evaluations.
Policies
and Procedures Relating to Complaints
The
Audit Committee has approved procedures for the receipt, retention and treatment of reports or complaints to the Audit Committee
regarding accounting, internal accounting controls, auditing matters and legal or regulatory matters. These procedures also provide
for the submission by associates of confidential, anonymous reports to the Audit Committee of concerns regarding questionable
accounting or auditing matters.
Please
visit the Corporate Governance portion of our investor relations website (at
www.bankatfirst.com/investor
) to learn more
about our corporate governance practices and access the following documents:
•
Code of Conduct
|
• Code
of Ethics for the CEO and Senior Financial Officers
|
• Corporate
Governance Principles
|
•
Charters for our Board Committees
|
Our
Board’s Role in Risk Oversight
Assessing
and managing risk is the responsibility of management of First Financial. Our Board, with the assistance of the Risk and Compliance
Committee and other Board committees as discussed below, reviews and oversees our Enterprise Risk Management (“ERM”)
program, which is designed to enable effective and efficient identification and management of critical enterprise risks and to
facilitate the incorporation of risk consideration into decision-making. The ERM program was established to clearly define risk
management roles and responsibilities, bring together senior management to discuss risk, and promote visibility and constructive
dialogue around risk at all levels of the organization.
The Company’s
risk governance structure starts with each line of business being responsible for managing its own risks. In addition, the Board
and executive management have appointed a Chief Risk Officer to support the risk-oversight responsibilities of the Board and its
committees.
An Enterprise
Risk Management Committee (“ERMC”) comprised of senior management is the senior most focal point within our Company
to monitor, evaluate, and recommend comprehensive policies and solutions to deal with all aspects of risk and to assess the adequacy
of any risk remediation plans in the Company’s businesses. Currently reporting up to the ERMC are various risk-related committees
whose members are comprised of representatives from the lines of business, risk management, and senior management.
The Chief
Risk Officer provides the Board with a quarterly risk profile of the Company, as well as a report on the risk exposure of the
Company from the viewpoint of the ERMC. Under the ERM program, management develops a holistic portfolio of Company enterprise
risks by facilitating business and function risk assessments, performing targeted risk assessments and incorporating information
regarding specific categories of risk gathered from various internal Company operations. Management then develops risk response
plans for risks categorized as needing management focus and response and monitors other identified risk focus areas. Management
provides regular reports on the risk portfolio and risk response and monitoring efforts to the ERMC and to the Risk and Compliance
Committee of our Board.
Our Board
assumes a significant oversight role in risk management both through its actions as a whole and through its committees. Additional
information concerning each of the following committees may be found in the “Corporate Governance – Board Committees”
section of this proxy statement.
|
•
|
The
Corporate Governance and Nominating Committee (“CGNC”) oversees our corporate
governance functions.
|
|
•
|
The
Compensation Committee evaluates, with our senior officers, risks posed by our incentive
compensation programs and seeks to limit any unnecessary or excessive risks these programs
may pose to us, in order to avoid programs that might encourage such risks.
|
|
•
|
The
Audit Committee reviews our internal control systems to manage and monitor financial
reporting and accounting risk with management and our internal audit department.
|
|
•
|
The
Risk and Compliance Committee assists the Board in overseeing enterprise-wide risks,
including credit, market, operational, technology, regulatory, legal, strategic, and
reputation risks.
|
|
•
|
The
Capital Markets Committee oversees the Company’s capital markets, treasury and
capital planning activities.
|
While
each of these committees is responsible for evaluating certain risks and overseeing the management of these risks, the entire
Board is regularly informed through committee reports about such risks. Select members of management attend our Board and Board
committee meetings (other than executive sessions) and are available for questions regarding particular areas of risk.
Director
Independence
Our Board
has determined that all of our directors, except our CEO, are independent directors as that term is defined in the Nasdaq Stock
Market Marketplace Rules (the “Nasdaq Rules”). In addition, our Board has determined that each member of the Audit,
Compensation, and Nominating and Corporate Governance Committees is independent under such definition and that the members of
the Audit Committee are independent under the additional, more stringent requirements of the Nasdaq Stock Market applicable to
audit committee members. These determinations are made annually, most recently in February 2016.
Under
the Nasdaq Rules and our Corporate Governance Principles, independent directors must not have a relationship with the Company
that would interfere with the exercise of independent judgment in carrying out the responsibilities of being a director. In making
this determination, our Board reviews and evaluates certain transactions and relationships with Board members to determine the
independence of each of the members. In making the independence determinations for each of the directors, the Board took into
consideration the transactions and relationships disclosed in this proxy statement under “Review and Approval of Related
Person Transactions” below.
Board
Leadership Structure
The Chairman
of our Board, Murph Knapke, is an independent director who presides over each board meeting and performs such other duties as
may be incident to the office. Although our corporate documents would allow our chair to also hold the position of chief executive
officer, our Corporate Governance Principles provide that these two positions must be separate. Our Board believes this separation
allows our chair to provide additional independent oversight of management. The offices of the chair of the Board and the chief
executive officer at the Company have been separate since 1997. In addition to our current Chairman, the Vice-Chair of our Board,
J. Wickliffe Ach, is also an independent director.
All members
of the Board of First Financial Bancorp also serve as directors of the Company’s subsidiary bank, First Financial Bank,
National Association.
Board
Self-Assessment
Our Board
conducts a self-assessment annually, which our CGNC reviews and discusses with the Board. In addition, each of the committees
of the Board is expected to conduct periodic self-assessments.
Evaluating
Nominees and Electing Directors
Evaluating
Nominees
The
CGNC evaluates director candidates based upon criteria established by the committee and applies the same evaluation process to
all director nominees regardless of whether the nominee is recommended by a shareholder or by the Company. The criteria evaluated
by the committee may include, among other things, the candidate’s judgment, integrity, leadership ability, business experience,
industry knowledge, public company experience, professional reputation, and ability to contribute to board member diversity (including,
but not limited to gender, race, and ethnicity, as well as experience, geography, qualifications, attributes, and skills). The
CGNC recognizes that diversity of the Board is an important part of its analysis as to whether the Board constitutes a body that
possesses a variety of complementary skills and experiences. The committee also considers whether the candidate meets independence
standards, is “financially literate” or a “financial expert” if appropriate for governance needs, is available
to serve, and is not subject to any disqualifying factor. No single individual trait is given particular weight in the decision
process.
Policy
on Majority Voting
Although
our Articles of Incorporation and Amended Regulations provide that director nominees who receive the greatest number of shareholder
votes are automatically elected to the Board, our Board has adopted a policy on majority voting for the election of directors
which is included in our Corporate Governance Principles. The majority voting policy requires nominees who receive a greater number
of votes “withheld” from his or her election than votes “for” his or her election to tender his or her
written resignation to the CGNC for consideration by the committee following the certification of the shareholder vote. This requirement
applies only in an uncontested election of directors, which is an election in which the only nominees are persons nominated by
the Board.
Upon
its receipt of a resignation from a director who has not received the requisite shareholder vote, the CGNC will then consider
the resignation and make a recommendation to the Board concerning whether to accept or reject such resignation. In making its
recommendation to the Board, the committee will consider all factors deemed relevant by members of the committee, including the
stated reason or reasons why shareholders who cast “withhold” votes for the director did so, the qualifications of
the director (including, for example, whether the director serves on the Audit Committee of the Board as an “audit committee
financial expert” and whether there are one or more other directors
qualified,
eligible, and available to serve on such committee in such capacity), and whether the director’s resignation from the Board
would be in the best interest of First Financial and its shareholders.
The
CGNC also will consider a range of possible alternatives concerning the director’s tendered resignation, including acceptance
of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address
and cure the underlying reasons reasonably believed by the committee to have substantially resulted in the “withheld”
votes. The Board will take formal action on the committee’s recommendation no later than 90 days following the certification
of the shareholder vote. In considering the committee’s recommendation, the Board will consider the information, factors
and alternatives raised by the committee and such additional information, factors and alternatives as the Board deems relevant.
We will publicly disclose, in a Form 8-K filed with the SEC, the Board’s decision, together with an explanation of
the process by which the Board made its decision and, if applicable, the Board’s reason or reasons for rejecting the tendered
resignation within four business days after the Board makes its decision.
Nominating
Procedures
The
CGNC will consider director candidates recommended by shareholders in accordance with the procedures outlined in the Amended Regulations.
In order to be recommended for a position on the Board by the committee, a proposed nominee must, at a minimum, (i) be able to
comply with the Company’s Corporate Governance Principles, and (ii) through a combination of experience and education, have
the skills necessary to make an effective contribution to the Board.
In
connection with next year’s Annual Meeting of Shareholders, the CGNC will consider director nominees recommended by shareholders
provided that notice of a proposed nomination is received by the Company no later than February 23, 2017, as provided in the Amended
Regulations. Notice of a proposed nomination must include the information outlined in the Amended Regulations and should be sent
to First Financial Bancorp, Attention: Shannon M. Kuhl, Corporate Secretary, 255 E. Fifth Street, Suite 2900, Cincinnati, OH 45202.
Director
Education
We recognize
the importance of our directors keeping current on Company and industry issues and their responsibilities as directors. All new
directors attend orientation training soon after being elected to the Board. The Board also encourages attendance at continuing
education programs for Board members, which may include internal strategy or topical meetings, third-party presentations, and
externally-offered programs.
Share
Ownership Guidelines
We require
directors to own First Financial shares equal to at least three times the director’s annual retainer, with a minimum of
4,000 shares, within three years of first becoming a director of the Company. All directors who have been non-employee directors
for at least three years are in compliance with this requirement. We have also implemented stock ownership and retention guidelines
for our named executive officers described further in the Executive Compensation portion of this proxy statement.
Succession
Planning
In light
of the critical importance of executive leadership to our success, we have instituted an annual succession planning process which
is guided by the CGNC. The succession planning process addresses our chief executive officer position, the positions directly
reporting to the chief executive officer, and senior-level managers enterprise-wide. Management regularly identifies high-potential
executives for additional responsibilities, new positions, promotions, or similar assignments to expose them to diverse operations
within the Company, with the goal of developing well-rounded and experienced senior leaders. The CGNC reports to the full Board
on its findings and the Board deliberates in executive session on the CEO succession plan.
Board
Meetings
During
2015, the Board held eight scheduled meetings and one special meeting. We believe it is important for our directors to participate
in board and committee meetings. Directors who participate in fewer than 75% of scheduled board and committee meetings, or who
do not attend the annual meeting of shareholders, unless excused by the Board, are subject to not being re-nominated to the Board.
In 2015, all of the incumbent directors/nominees attended more than 75% of the scheduled meetings. All directors who were on the
Board at the time attended the 2015 Annual Meeting of Shareholders.
The Board
also held eight executive sessions in 2015 where only independent directors were present.
Board
Committees
Our Board
has established the following standing committees: Audit Committee, Capital Markets Committee, Compensation Committee, CGNC, and
Risk and Compliance Committee. Each committee operates pursuant to a committee charter that is approved by the Board, which is
the case for the CGNC Charter, or by the CGNC to whom the Board has delegated the authority to approve other committee charters.
Each Board committee serves as a joint board committee of First Financial Bank in addition to being a Board committee of First
Financial Bancorp.
The charters
of the Audit, Compensation, Corporate Governance and Nominating, and Risk and Compliance Committees each comply with current Nasdaq
Rules relating to charters and corporate governance. Each of these charters is available under the Corporate Governance portion
of our investor relations website (at
www.bankatfirst.com/investor
).
Audit
Committee
Members:
William
J. Kramer, Chair
David
S. Barker
Peter
E. Geier
Maribeth
S. Rahe
All
members of the Audit Committee were determined to meet the independence and financial literacy standards of the Nasdaq
Rules. Directors Kramer and Geier are “audit committee financial experts” for purposes of SEC regulations.
Number
of Meetings in 2015: 9
|
Committee
Primary Responsibilities:
■
Monitor the integrity of the consolidated financial
statements of the Company.
■
Monitor compliance with the Company’s
Code of Conduct and Code of Ethics for the CEO and Senior Financial Officers.
■
Evaluate and monitor the qualifications
and independence of the Company’s independent auditors.
■
Evaluate and monitor the performance of
the Company’s internal audit function and independent auditors, with respect to First Financial and its subsidiaries
|
|
|
Compensation
Committee
Members:
Susan
L. Knust, Chair
J.
Wickliffe Ach
David
S. Barker
Peter
E. Geier
William
J. Kramer
All
members of the Compensation Committee were determined to meet the independence standards of the Nasdaq Rules.
Number
of Meetings in 2015: 5
|
Committee
Primary Responsibilities:
■
Determine and approve the compensation
of the CEO and each executive officer of the Company.
■
Evaluate the performance of the Company’s
CEO for all elements of compensation and all other executive officers with respect to incentive goals and compensation.
■
Review and evaluate all equity and benefit
plans of the Company.
■
Oversee the preparation of the compensation
discussion and analysis and recommend to the full Board its inclusion in the annual proxy statement.
■
Annually review the executive incentive
compensation arrangements to see that such arrangements do not encourage such officers to take unnecessary and excessive
risks that threaten the value of the Company.
■
Recommend to the Board compensation for
non-employee directors.
|
|
|
Corporate
Governance and Nominating Committee
Members:
J.
Wickliffe Ach, Chair
Cynthia
O. Booth
Corinne
Finnerty
Susan
L. Knust
Richard
E. Olszewski
All
members of the CGNC were determined to meet the independence standards of the Nasdaq Rules.
Number
of Meetings in 2015: 5
|
Committee
Primary Responsibilities:
■
Develop and periodically review the effectiveness
of the Company’s Corporate Governance Principles.
■
Monitor and protect the Board’s independence.
■
Consult with the Chairman of the Board
concerning the appropriate Board committee structures and appointment of members to each committee of the Board.
■
Establish procedures for the director nomination
process and recommend nominees for election to the Board.
■
Oversee the formal evaluation of the Board
and all Board committees, including any formal assessment of individual directors.
■
Review shareholder proposals and proposed
responses.
■
Promote the quality of directors through
continuing education experiences.
■
Annually delegate to the respective committees
of the Board or to management, the authority and responsibility for reviewing and approving policies and procedures of
the Board (including the board of directors of First Financial Bank) in connection with the Company’s ERM program.
|
|
|
Risk
and Compliance Committee
Members:
Cynthia
O. Booth , Chair
Mark
A. Collar
Corinne
Finnerty
Jeffrey
D. Meyer
John
T. Neighbours
Richard
E. Olszewski
All
members of the Risk and Compliance Committee were determined to meet the independence standards of the Nasdaq Rules.
Number
of Meetings in 2015: 4
|
Committee
Primary Responsibilities:
■
Review with management the Company’s
procedures and techniques and approve policies to measure the Company's risk exposures and for identifying, evaluating
and managing the significant risks to which the Company is exposed.
■
Review with management the Company’s
policies, procedures, and practices involving compliance with applicable laws and regulations.
■
Monitor the Company’s risk management
performance and obtain reasonable assurance that the Company's risk management policies for significant risks are being
adhered to.
■
Consider and provide advice to the Board
on the risk impact of any strategic decision that the Board may be contemplating.
■
Periodically examine the risk and compliance
cultures of the Company.
■
Periodically set the risk appetite for
the Company and monitor compliance with the risk appetite statement including development of risk tolerances, targets
and limits.
|
|
|
Capital
Markets Committee
Members:
Maribeth
S. Rahe, Chair
David
S. Barker
Mark
A. Collar
William
J. Kramer
Jeffrey
D. Meyer
John
T. Neighbours
Number
of Meetings in 2015: 4
|
Committee
Primary Responsibilities:
■
Monitor the management of the purchase,
sale, exchange, and other disposition of the investments of the Company, including review of management reports concerning
current equity debt security investment positions.
■
Monitor the investment activities of the
Company to ensure compliance with external regulations and the Company’s applicable policies including requirements
relating to composition, diversification, credit risk, and yield.
■
Monitor the capital position of the Company
and the capital management activities undertaken by the Company to ensure that capital levels are maintained in accordance
with regulatory requirements and management directives.
■
Monitor and oversee interest rate risk,
capital market activities, the investment portfolio, and capital planning of First Financial Bank.
|
2015
Board Compensation
Our Compensation
Committee reviews the individual components and total amount of director compensation at least annually. The Compensation Committee
will recommend changes in director compensation to the Board aided by its review of competitive pay data for non-employee directors
of financial services companies in the Company’s peer group (described in the Compensation Discussion and Analysis –
Market Competitiveness section of this proxy statement). It may recommend changes to director compensation based on its analysis
of this competitive data. The Compensation Committee uses the same Peer Group for this purpose as used by the committee to determine
competitive pay for named executive officers listed in the Summary Compensation Table (see Compensation Discussion and Analysis).
The Compensation Committee has retained Willis Towers Watson to act as the committee’s independent compensation consultant.
Our director compensation is designed to align the Board with our shareholders, and to attract, motivate, and retain high performing
members critical to the Company’s success.
In 2015,
we provided the following compensation to our non-employee directors. Claude E. Davis, who is also an employee of the Company,
did not receive any additional fees for serving on the Board and therefore has been omitted from the table. For a discussion of
Mr. Davis’s compensation, see “Executive Compensation.”
Name
|
Fees Earned
or Paid in Cash
1, 2
($)
|
Stock
Awards
3
($)
|
All
Other Compensation
4
($)
|
Total
($)
|
J.
Wickliffe Ach
|
49,750
|
27,500
|
980
|
78,230
|
David
S. Barker
|
38,750
|
27,500
|
980
|
67,230
|
Cynthia
O. Booth
|
32,750
|
27,500
|
980
|
61,230
|
Mark
A. Collar
|
29,750
|
27,500
|
980
|
58,230
|
Corinne
R. Finnerty
|
32,000
|
27,500
|
980
|
60,480
|
Peter
E. Geier
|
36,500
|
27,500
|
-
|
64,000
|
Murph
Knapke
|
68,250
|
31,500
|
1,074
|
100,824
|
Susan
L. Knust
|
45,375
|
27,500
|
980
|
73,855
|
William
J. Kramer
|
49,500
|
27,500
|
980
|
77,980
|
Jeffrey
D. Meyer
|
32,000
|
27,500
|
-
|
59,500
|
John
T. Neighbours
5
|
10,833
|
22,917
|
|
33,750
|
Richard
E. Olszewski
|
42,125
|
27,500
|
980
|
70,605
|
Maribeth
S. Rahe
|
40,750
|
27,500
|
980
|
69,230
|
1
Includes retainers, board and committee attendance fees and retainers for committee chairs for both First Financial Bancorp
and First Financial Bank.
2
Pursuant to the Company’s Director Fee Stock Plan, directors may elect to have all or any part of the annual retainer
fee paid in common shares. See also “- Director Stock Fee Plan” below. This column includes fees used to purchase
shares in the open market under such plan as follows:
Name
|
Amount
of Fees Used to Purchase Common Shares ($)
|
J.
Wickliffe Ach
|
6,500
|
David
S. Barker
|
26,000
|
Cynthia
O. Booth
|
15,600
|
Mark
A. Collar
|
2,600
|
Corinne
R. Finnerty
|
10,400
|
Peter
E. Geier
|
6,500
|
Murph
Knapke
|
13,000
|
Susan
L. Knust
|
13,000
|
William
J. Kramer
|
6,500
|
Jeffrey
D. Meyer
|
26,000
|
John
T. Neighbours
|
6,500
|
Richard
E. Olszewski
|
17,342
|
Maribeth
S. Rahe
|
26,000
|
3
Total value is computed utilizing the grant date market value for restricted stock awards. See Note 17—Stock Options
and Awards of the Company’s Annual Report on Form 10-K for additional information on valuation methodology. Based on the
closing price of First Financial’s common shares as of the date of grant (May 26, 2015) of $17.34 per share, Directors Ach,
Barker, Booth, Collar, Finnerty, Knapke, Knust, Olszewski, and Rahe received 1,586 shares each. Director Knapke received an award
of 1,586 shares and an additional 231 shares as the chairperson of the First Financial Bancorp Board of Directors. These shares
vest on May 26, 2016. Director Neighbors received a prorated award of 1,276 shares upon becoming a director on August 24, 2015.
The value of Mr. Neighbors’ share grant is based on the closing price of First Financial’s common shares as of the
date of grant (August 24, 2015) of $17.97 per share. These shares vest on May 26, 2016. Dividends on unvested restricted stock
are held in escrow and only paid upon vesting of the shares. See “Director Fee Stock Plan.”
4
Includes accrued dividends paid on restricted stock vesting in 2015.
5
New Director effective August 24, 2015.
Board/Committee
Fees
Non-employee
directors of the Company received annual retainers of $13,000 and received annual retainers of $13,000 as non-employee directors
of First Financial Bank. The Chair and Vice Chair of the Board receive additional annual retainers of $40,000 and $7,500, respectively.
The chair of the CGNC of the Company received an additional annual retainer of $7,500. The chairs of the Audit Committee, Compensation
Committee, and Risk and Compliance Committee receive additional $10,000 annual retainers. These committee chair retainers are
to recognize the extensive time that is devoted to committee matters including meetings with management, auditors, attorneys and
consultants, and preparing committee agendas. Director fees are paid quarterly.
Director
Stock Plans
In
2009, First Financial’s shareholders approved the 2009 Non-Employee Director Stock Plan and in 2012 approved amendments
to the plan. In 2012, our shareholders also approved the First Financial Bancorp. 2012 Stock Plan to become available for share
grants to the directors upon depletion of the shares held in the 2009 Non-Employee Director Stock Plan. The shares in the 2009
Non-Employee Director Stock Plan were depleted in May of 2015, and all shares granted after that time came from the 2012 Stock
Plan.
In
2015, each non-employee director received $27,500 in value of restricted stock, or a prorated portion of this amount, which vests
one year from the date of grant, or in the case of the pro-rated restricted stock grant to Mr. Neighbours on August 24, 2015,
which shares will vest on the date of the next annual meeting. The Chair of the Board received an additional $4,000 in value of
restricted stock which also vests one year from the date of grant. All dividends on such restricted stock accrue and are paid
at the time the restricted stock vests. Grants to non-employee directors are made on the date of the annual meeting based on the
closing price of the Company’s common shares that day unless a director takes office after an annual meeting in which case
such director receives a pro-rated number of restricted shares.
Stock
Grants to Nominee Directors
In
the event the twelve nominees currently serving as non-employee directors are re-elected to the Board, each of these directors
will receive a grant of restricted stock having a market value of $27,500 from the 2012 Stock
Plan.
At March 30, 2016, the closing price of our common shares was $xx.xx per share, which would equate to a grant of approximately
xxxx restricted shares each. The Chair of the Board will receive an additional $4,000 in value of restricted stock. All restricted
stock grants will vest one year from the date of grant and all dividends on such restricted stock will accrue and be paid at the
same time as the restricted stock vests.
Director
Fee Stock Plan
Each
year, directors are given the opportunity to have all or a portion of their board fees invested in the Company’s common
shares. Elections are made once a year. Shares are purchased on the open market by an independent broker dealer after the payment
of the quarterly Board fees.
Reimbursement
Directors
are entitled to reimbursement of their reasonable travel expenses for attending Board and committee meetings.
Review
and Approval of Related Person Transactions
Each
year, our directors and executive officers complete annual questionnaires designed to elicit information about potential related
person transactions and transactions that may otherwise affect the independence of an independent director. The responses to these
questionnaires are reviewed by the Chief Legal Officer and Corporate Secretary of the Company, and outside counsel if appropriate,
to determine if there are related person transactions. Related person transactions will originally be submitted to the Audit Committee
of the Board for approval as well as to the CGNC for its consideration when making independence determinations.
Pursuant
to the Corporate Governance Principles, no director shall perform professional services for the Company or its affiliates in a
manner that interferes with that director’s independence under the Nasdaq Rules. This prohibition applies to services provided
(1) directly by the director (or an immediate family member) or (2) where the director (or an immediate family member) is affiliated
with the organization that provides the professional services to the Company. This prohibition does not apply to professional
services that are provided by the director to clients of the Company (or its affiliates) where the Company (or its affiliates)
has not given instruction that the service be provided by the director and the Company (or its affiliates) is not the party responsible
for payment for the professional services. Professional services can be characterized as advisory in nature, generally involve
access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment
structure. Professional services may include services such as investment services, insurance services, accounting/auditing services,
consulting services, marketing services, legal services, property management services, realtor services, lobbying services, executive
search services, and IT consulting services. This prohibition does not apply to services initiated prior to January 1, 2011.
First
Financial Bank has had, and expects to have in the future, banking relationships in the ordinary course of business with directors,
officers, principal shareholders, and their affiliates on the same terms, including interest rates and collateral on loans, as
those prevailing at the same time for comparable transactions with others. We do not consider normal, arms-length banking relationships
entered into in the ordinary course of business, and consistent with applicable federal banking regulations, to interfere with
a director’s independence. Any loan or extension of credit to a director or officer, or their affiliate, will only be made
in compliance with Federal Reserve Board Regulation O. To comply with Regulation O, any loan or extension of credit to an officer
or director, or their affiliate, must (1) be made in the ordinary course of business, (2) be made on substantially the same terms,
including interest and nature of collateral, as those prevailing at the time for comparable transactions with other persons, and
(3) not involve more than the normal risk of collectability or present other unfavorable features. In addition, the Company or
its subsidiaries from time to time pays immaterial amounts for such items as membership, event sponsorship, and contributions
made to non-profit entities with which our directors have relationships and which payments are in furtherance of our Company’s
business interests.
During
2015, no related person transactions involving our directors or executive officers (or members of their immediate family) requiring
disclosure in this proxy statement were identified. In making the independence determinations for each of the directors,
the Board took into consideration the following transactions and relationships involving members of the Board: the payment of
rent to an entity in which a director has an ownership interest (with the lease agreements being entered into prior to 2015 following
arms-length negotiations) and the payment of rent to an entity in which a director has an ownership interest for placement of
an “ATM” machine. The Board concluded that these transactions were routine transactions and considered them to be
immaterial and did not impact the independence of the relevant director.
Policy
Against Hedging Activities
Our
Insider Trading Policy prohibits our directors, officers and associates from engaging in any hedging transactions with respect
to First Financial shares, including prepaid variable forward contracts, equity swaps, collars and exchange funds, and trading
in any derivative security relating to First Financial shares.
Communicating
with the Board of Directors
Shareholders
may send communications to the Company’s Board or to individual directors by writing to:
Attn:
Board of Directors (or name of individual director)
First
Financial Bancorp
255
E. Fifth Street, Suite 2900
Cincinnati,
OH 45202
Letters
mailed to this address will be received by the director who serves as Chair of the Audit Committee or the director who serves
as Chair of the CGNC, as alternate. A letter addressed to an individual director will be forwarded unopened to that director by
the Chair of the Audit Committee.
Shareholders
may also contact the Company’s Corporate Secretary, Shannon M. Kuhl, at First Financial Bancorp, 255 E. Fifth Street, Suite
2900, Cincinnati, OH 45202.
Information
regarding this process is also available within the Investor Relations section of our website at
www.bankatfirst.com/investor
under the “Corporate Governance” link under the “Corporate Information” tab.
|
|
EXECUTIVE
COMPENSATION SPECIAL TABLE OF CONTENTS
|
|
Compensation
Committee Report
|
|
Pension
Plan
|
|
Compensation
Discussion and Analysis
|
|
Executive
Supplemental Retirement Plan
|
|
Summary
Compensation Table
|
|
Nonqualified
Deferred Compensation
|
|
Executive
Compensation
|
|
Deferred
Compensation Plan
|
|
Grants
of Plan-Based Awards
|
|
Executive
Supplemental Savings Agreement
|
|
Outstanding
Equity Awards at Fiscal Year End
|
|
Split-Dollar
and Group Term Life Insurance
|
|
Option
Exercises and Stock Vested
|
|
Other
Potential Post Employment Payment
|
|
Pension
Benefits Table
|
|
Compensation
Committee Interlocks and Insider Participation
|
|
|
|
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed with management the CD&A below. Based on this review and these discussions,
the Compensation Committee has recommended to the Board that the CD&A be included in this proxy statement and incorporated
by reference in our Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.
Members
of the Compensation Committee
Susan
L. Knust, Chair
J.
Wickliffe Ach
David
S. Barker
Peter
E. Geier
William
J. Kramer
Compensation
Discussion and Analysis (CD&A)
This
CD&A describes and explains the material elements of 2015 compensation for the executive officers named in the Summary Compensation
Table (the “NEOs”). We also provide an overview of our executive compensation philosophy and our executive compensation
program. In addition we explain how and why the Compensation Committee of our Board arrived at specific compensation policies
and decisions involving the NEOs who are listed below:
Claude
E. Davis, Chief Executive Officer
John
M. Gavigan, Chief Financial Officer and Principal Accounting Officer
Richard
S. Dennen, President, Oak Street Funding
C.
Douglas Lefferson, President, Community Banking
Anthony
M. Stollings, President, Chief Operating Officer
Kevin
T. Langford, President, Community Banking (through October 23, 2015)
You
should read this section of the proxy statement when determining your vote on the compensation of our NEOs (see Proposal 4 –
Non-Binding, Advisory Vote to Approve Executive Officer Compensation). This CD&A contains information that is important to
your voting decision.
Introduction
Despite
challenges the banking industry has faced over the past several years, through a combination of robust organic loan and deposit
growth, strong credit results, solid non-interest income growth, and diligent expense management, First Financial extended its
profitability to 101 consecutive quarters during 2015.
2015
Business Highlights
|
•
|
Acquired
Oak Street Funding, LLC, a nationwide specialty lender to insurance brokers and agencies.
|
|
•
|
Celebrated
the first anniversary of our expansion into the vibrant Columbus, Ohio market.
|
|
•
|
Executed
a $120 million Tier 2 qualifying subordinated debt offering.
|
|
•
|
Introduced
our new website, enhancing product and service delivery to our clients through a more
modern online experience.
|
|
•
|
Total
loans increased by $612 million, or 12.8% during the year.
|
|
•
|
Total
deposits increased by $524 million, or 9.3% during the year.
|
|
•
|
Return
on average assets was 1.00%, or 1.04% when adjusted for non-recurring items,
1
which compares favorably to the KBW Regional
Bank Index component company median of 1.00%.
|
|
•
|
Return
on average equity of 9.33%, or 9.73% when adjusted for the non-recurring items,
1
which also compares favorably to the peer median of 8.21%.
2
|
|
•
|
Maintained
strong capital position. Tangible Common Equity ratio of 7.53% and Common Equity Tier
1 Capital ratio of 10.28% compared to peer medians of 8.64% and 10.68%, respectively.
2
|
|
•
|
Dividend
yield of 3.54% as of December 31, 2015, which compares favorably to the peer median of
2.47%.
2
|
2015
Executive Compensation Highlights
|
•
|
Consistent
with Company-wide merit practices, on March 10, 2015, the Compensation Committee increased
base salaries by approximately 3% for all NEOs except for Mr. Gavigan and Mr. Stollings
who received base salary increases of approximately 35% and 9% respectively as a result
of their promotions to Chief Financial Officer and Chief Operating Officer, respectively,
in late 2014. Mr. Dennen joined the Company on August 14, 2015 as a result of the acquisition
of Oak Street Funding LLC by First Financial Bank. At the time of the acquisition, Mr.
Dennen’s base pay was increased from $365,790 to $380,000 (4%).
|
|
•
|
There
were no target incentive changes for NEOs except for Mr. Gavigan whose short-term incentive
target increased from 20% to 30% and long-term incentive target increased from 25% to
30% as a result of the promotion mentioned above.
|
|
•
|
Consistent
with past practice, annual awards under the Company’s Long-Term Incentive Plan,
or LTIP, were in the form of restricted stock grants. 2015 restricted stock grants to
the NEOs included both time-based and performance-based vesting features. The time-based
awards vest over a three year period. The performance-based awards vest after three years
only upon the attainment of certain pre-determined performance measures concerning total
shareholder return and return on assets relative to peers for all NEOs except for Mr.
Dennen.
|
|
•
|
Mr.
Dennen was awarded restricted stock with both time-based and performance-based vesting
features at the closing of the acquisition of Oak Street Funding LLC by First Financial
on August 14, 2015. The time-based awards vest over three years while the performance-based
awards vest over three years only upon the
attainment
of certain pre-determined performance measures concerning Oak Street Funding LLC net income. See “2015 Long-Term Incentive
Plan Design and Awards.”
|
1
Full year results included approximately $5.0 million of pre-tax, non-operating expenses which were primarily related to
severance benefits accrued during the year, expenses related to the Oak Street acquisition and adjustments to reserves for litigation
related items.
1
Based upon KBW Regional Bank Index peer reporting through February 19, 2016.
|
•
|
The
Company’s payout for 2015 under its Short-Term Incentive Plan, or STIP, was 100%
of target for all NEOs except for Mr. Dennen who received a payout of 100% of target
under the Oak Street Funding short-term incentive arrangement in place prior to the acquisition.
See “2015 STIP Design and Payout – 2015 STIP Performance Results.”
|
|
•
|
The
committee revised the share ownership and retention guidelines in 2015 requiring NEOs
(other than the CEO) and other executives to hold the lesser of two times base salary
or 75,000 shares.
|
|
•
|
Additionally,
the Compensation Committee approved a change in the retention requirement for NEOs and
other executives such that 100% of shares from exercises or vestings must be retained
until ownership guidelines are met.
|
Committee
Actions for 2016
The
Company’s executive compensation program is reviewed annually to ensure the program continues to support the Company’s
compensation philosophy and strategic business objectives. During the most recent review, the Compensation Committee identified
opportunities to more closely align the program with the Company’s overall compensation philosophy and objectives. The following
changes to the program were made for 2016:
|
•
|
Consistent
with Company-wide merit practices, on March 8, 2016, the Compensation Committee increased
base salaries by approximately 2.4% and 9% for NEOs.
|
|
•
|
There
were no changes from 2015 to 2016 to the short- or long-term incentive target percentages
for the NEOs except for Mr. Dennen whose short-term incentive target was reduced from
the pre-acquisition target of 70% to 40% to reflect the addition of a long-term incentive
plan target of 50% to his post-acquisition target compensation.
|
|
•
|
A
portion of long-term incentive awards to the NEOs and to certain other executives will
continue to include a performance-based vesting feature.
|
|
•
|
Similar
to 2015, the Company’s 2016 STIP will be based on two equally weighted measures:
return on assets versus the peer group and actual net income compared to the Company’s
2016 budget. 100% of each NEO’s short-term incentive will be based on performance
under this plan except for Mr. Dennen who will have 25% of his short-term incentive based
on the Company’s STIP and 75% based on net income performance of Oak Street Funding.
|
|
•
|
Due
to business needs requiring Mr. Davis to spend a significant amount of time in Indianapolis
as well as in the Company’s Cincinnati headquarters, a taxable
housing and mileage allowance of $25,000 was approved to compensate Mr. Davis
as reimbursement for this travel as related travel expenses
will no longer be considered deductible business travel expenses by the Company.
|
Compensation
Philosophy and Objectives
Our
Compensation Committee has identified the following guiding principles to best support the overall objectives of the executive
compensation program and our business strategy. Our executive compensation programs should:
|
•
|
Drive
alignment between Company strategy, executive pay, and shareholder value creation
|
|
o
|
Create
a clear line of sight between individual responsibilities and Company objectives
|
|
o
|
Provide
transparency around corporate goals and objectives, measures, and performance outcomes
|
|
o
|
Incorporate
simplicity, flexibility and discretion to reflect individual circumstances and changing
business conditions/priorities
|
|
o
|
Align
with market (peer) median for target performance and incorporate upside potential for
top quartile performance
|
|
o
|
Differentiate
pay based on performance, contribution, and value added
|
|
•
|
Attract,
motivate, and retain key talent to deliver consistent long-term performance
|
|
o
|
Promote
a competitive, balanced market-based total compensation package
|
|
o
|
Support
internal equity through eligibility and target opportunities
|
|
•
|
Incorporate
proper governance practices to prevent/mitigate inappropriate risk-taking by:
|
|
o
|
Encompassing
a long-term focus with the ability to claw back compensation
|
|
o
|
Limiting
upside potential via maximum payout ceilings
|
|
o
|
Including
threshold requirement(s) before payout is made
|
|
o
|
Cross-functional
plan design reviews and committee approval of final design and payouts
|
Elements
and Mix of Compensation
To
achieve the above-stated principles and objectives, the 2015 executive compensation program, as in prior years, consisted primarily
of the following elements:
|
•
|
Base
Salary.
To competitively compensate for day-to-day contributions, skills, experience,
and expertise.
|
|
•
|
Annual
short-term incentive compensation.
To motivate and share in the rewards of
the current year’s results.
|
|
•
|
Long-term
equity incentive compensation.
To motivate and share in the rewards of sustained
long-term results and value creation consisting of both time- and performance-based restricted
stock.
|
|
•
|
Non-performance
based benefits.
To provide for the security and protection of executives and
their families, including:
|
|
o
|
Employment
agreements and change in control and severance agreements;
|
|
o
|
Retirement
and other benefits; and
|
|
o
|
Certain
perquisites and other personal benefits.
|
The
Compensation Committee takes a holistic approach to establishing the total compensation package for its executives and each element
of compensation is interdependent on the other elements. Applying the Company’s core values and drawing upon the principles
and philosophy discussed above, the Compensation Committee utilizes these elements of compensation as building blocks to construct
a complete compensation package for each executive that appropriately satisfies the core design criteria of pay for performance,
alignment with shareholder interests, competitiveness, and compliance with all legal and regulatory guidelines.
The
mix and the relative weighting of each compensation element reflect the competitive market and the Company’s compensation
philosophy. The mix of pay may be adjusted from time to time to best support our immediate or longer-term objectives, changes
in executive responsibility, as well as internal consistency.
Target
compensation for each NEO is a mix of cash and long-term incentives. A substantial portion of this mix is at risk and varies based
on performance. The emphasis on compensation elements related to performance is specifically intended to affect the actual level
of compensation realized versus target. If the Company performs well (based on internal objectives, as well as peer group comparison)
and longer-term shareholder value increases, award levels are intended to be strong. If the Company underperforms, award levels
and values will be negatively impacted.
Below
is a chart that reflects the mix of each element of target compensation as well as compensation at risk as percentages of target
total compensation as of December 31, 2015. Compensation at risk is comprised of short and long-term incentives. Approximately
63% of our CEO’s and 46% of our other NEOs’ target compensation in 2015 was subject to performance and/or vesting
requirements.
|
Base
Salary
|
Annual
Short-Term
Incentive
|
Long-Term
Incentive
|
%
of Total Compensation
at
Risk
|
CEO
|
37%
|
22%
|
41%
|
63%
|
Other
NEOs (Average)
|
54%
|
20%
|
26%
|
46%
|
The
2015 Compensation Decision-Making Process
Three
parties play an important role in establishing compensation levels for the Company’s executive officers: (i) the Compensation
Committee, (ii) senior management, and (iii) outside advisors. The sections that follow describe the role that each of these parties
plays in the compensation-setting process, as well as other important factors that impact compensation decisions.
Role
of the Compensation Committee.
The Compensation Committee has the authority to:
|
•
|
Review
and approve the composition of the peer group companies used to assess the Company’s
pay practices, target pay opportunities, and establish performance goals and objectives;
|
|
•
|
Approve
the executive compensation plan design and target structure, including setting targets
for incentives using management’s internal business plan, industry and market conditions
and other factors;
|
|
•
|
Review
the performance and compensation of the CEO and other NEOs, as well as other senior officers;
|
|
•
|
Determine
the amount of, and approve, each element of total compensation paid to the NEOs, and
determine the general elements of total compensation for other senior officers;
|
|
•
|
Review
all components of compensation (both target and actuals) for the CEO and the other NEOs,
including base salary, bonus, and long-term incentives; and
|
|
•
|
Define
potential payments to executive officers under various termination events, including
retirement, termination for cause and not for cause, and upon a change in control.
|
In
determining the amount of NEO compensation each year, the Compensation Committee reviews competitive market data from the banking
industry as a whole and as well as peer group data. It makes specific compensation decisions and awards based on such information,
along with Company performance, individual performance and other circumstances as appropriate.
At
meetings in early 2015, the Compensation Committee reviewed and considered corporate and individual performance, changes in NEO
responsibilities, data regarding peer practices, and other factors. In addition, the committee reviewed tally sheets prepared
by management. The tally sheets provide a comprehensive view of the Company’s payout to NEOs, including all components of
compensation, benefits and perquisites. (See also “Tally Sheets”).
At
the annual meeting of shareholders in 2015, the Company’s 2014 executive compensation program received overwhelming shareholder
approval with 95% of shareholder votes cast in favor of the Company’s “say on pay” resolution. The committee
carefully considers the substantial support that shareholders have consistently conveyed for our executive compensation program.
The committee has and will continue to consider the Company’s “say-on-pay” vote results when making future compensation
decisions.
Role
of Executive Management in Compensation Decisions for NEOs
Throughout
the year, the Compensation Committee meets with the CEO and other executive officers to solicit and obtain recommendations with
respect to the Company’s compensation programs and practices. The CEO makes recommendations to the Compensation Committee
as to the appropriate base salaries, annual cash incentive opportunities, and stock awards for the NEOs other than himself. In
making a recommendation for any executive officer who does not report directly to him, the CEO considers compensation recommendations
made by the executive officer’s manager.
The
Company’s Talent Management Department and other members of management assist the Compensation Committee in the administration
of the Company’s executive compensation program and the Company’s overall benefits program. Members of the Talent
Management Department periodically make available to the Compensation Committee information regarding the value of prior long-term
incentive grants and participation in the Company’s plans. This information includes: (i) accumulated gains, both realized
and unrealized, under restricted stock, stock options, and other equity grants; (ii) the cost of providing each perquisite; (iii)
projected payments under the Company’s retirement plans; and (iv) aggregate amounts accumulated under nonqualified deferred
compensation plans. Management helps prepare the information, including the tally sheets, used by the Compensation Committee in
making its decisions.
Management
also provides the Compensation Committee with information regarding potential payments to the Company’s executive officers
under various termination events, including both the dollar value of benefits that are enhanced as a result of the termination
event and the total accumulated benefit, which is sometimes called the “walk-away” amount. Similar information is
provided regarding the “Other Potential Post-Employment Payments” defined below.
In
2015, the CEO and Chief Talent Management Officer attended Compensation Committee meetings, but were not present at executive
sessions when matters related to them were being decided. In addition, the Company’s Total Rewards Director attends committee
meetings and participates in executive sessions of the committee.
In
approving compensation for 2015, the Compensation Committee considered the CEO’s recommendations for the NEOs other than
himself. The Compensation Committee, in consultation with Willis Towers Watson, made its own determinations regarding the compensation
for the CEO, which were then ratified and approved by the Board.
Role
of the Compensation Consultant
To
assist in its efforts to meet the objectives outlined above in 2015, the Compensation Committee retained Willis Towers Watson
to provide general executive compensation consulting services to the committee and to support management’s need for advice
and counsel. Pursuant to the Compensation Committee’s charter, the Compensation Committee has the power to retain or terminate
such consultant and engage other advisors
.
The
independent compensation consultant typically collaborates with management to obtain data, clarify information, and review preliminary
recommendations prior to the time they are shared with the Compensation Committee. The consultant provides data regarding market
practices and works with management to develop recommendations for changes to plan designs and policies consistent with the philosophies
and objectives discussed earlier.
Fees
billed by Willis Towers Watson in 2015 for advice and services provided to the Compensation Committee were $45,710.
During
2015, Willis Towers Watson also provided services to our Company relating to non-executive compensation, including ad hoc compensation
projects, retirement and pension plan administration, health benefits and actuarial services and related disclosure requirements.
Services provided to management and not the Compensation Committee were approved by management and not the Compensation Committee.
Fees billed by Willis Towers Watson in 2015 for additional services provided were $260,284.
Upon
consideration of factors pursuant to NASDAQ compensation committee independence rules, the committee has concluded that no conflict
of interest exists that would prevent the outside compensation advisor from independently representing the committee. The committee’s
conclusion was based on the following factors:
|
•
|
Executive
compensation consulting services provided to the Compensation Committee and other consulting
services provided to management were performed by separate and distinct divisions of
Willis Towers Watson;
|
|
•
|
The
Compensation Committee’s decision to engage Willis Towers Watson was independent
of management’s engagement of Willis Towers Watson;
|
|
•
|
Total
fees paid in 2015 to Willis Towers Watson were not material in the context of total revenues
disclosed in Willis Towers Watson’s most recent annual report;
|
|
•
|
Willis
Towers Watson has adopted and disclosed to the committee its executive compensation consulting
protocols for client engagements and the committee believes these protocols provide reasonable
indications that conflicts of interest will not arise;
|
|
•
|
The
advisor reports directly to the Compensation Committee Chair;
|
|
•
|
The
Compensation Committee members and executive officers of the Company have no business
or personal relationship with the advisor; and
|
|
•
|
The
Compensation Committee, in its discretion, determines whether to retain or terminate
the advisor.
|
Market
Competitiveness
To
ensure market competitiveness, Willis Towers Watson presents market pricing information from published surveys of financial services
companies of approximately the same asset size. Information from surveys representative of the broader general industry population
are utilized to provide appropriate compensation data for positions that are not specific to the financial services/banking industry.
Willis
Towers Watson also provides a customized proxy analysis of similarly sized publicly-traded financial services/banking organizations
designated as the Company’s peer group. Companies have historically been included in the Company’s peer group based
on their relevance in terms of asset size (one-half to two times the asset size of the Company), business model, products, services
and geographic location as compared to that of the Company, as well as those the committee deems to be high performing financial
institutions. With data gathered from Willis Towers Watson and management, the committee conducts its annual peer group review
to assess the continued relevance of the individual peers. From 2014 to 2015, no peers were removed from the peer group while
United Bancshares Inc. was added to the group for 2015.
The
2015 peer group consisted of the following 17 financial services companies:
1st
Source Corp.
|
First
Merchants Corp.
|
Republic
Bancorp, Inc.
|
Chemical
Financial Corp.
|
First
Midwest Bancorp, Inc.
|
Texas
Capital Bancshares, Inc.
|
Columbia
Banking System Inc.
|
MB
Financial, Inc.
|
Trustmark
Corporation
|
Community
Banking System Inc.
|
National
Penn Bancshares, Inc.
|
United
Bancshares Inc.
|
First
Busey Corp.
|
Old
National Bancorp
|
WesBanco
Inc.
|
First
Commonwealth Financial
|
Park
National Corporation
|
|
The
market review assists the committee in making executive compensation decisions that are consistent with the stated philosophy
and objectives for executive compensation, especially those of attracting, retaining, and motivating our executive officers and
paying for performance. Willis Towers Watson also reviews competitive pay data for non-employee directors of companies in the
peer group and advises the Compensation Committee on the market competitiveness paid to the Company’s non-employee directors.
Company
Performance
Willis
Towers Watson provides an annual pay for performance analysis using most recent proxy filings that compares the Company’s
pay and performance versus the peer group. This analysis demonstrates pay and performance in various perspectives to facilitate
a broad assessment of how pay relates to performance. The committee reviews and discusses this information typically in the latter
half of the year and it serves as one of the other factors described herein that the committee considers when making pay decisions
for the following year.
In
determining payouts under the STIP, Company performance is also assessed across specific performance measures and a broader peer
group (Component companies of the KBW Regional Bank Index) as described under “2015 Short-term Incentive Plan Design and
Payout.” We believe our approach of reviewing pay and performance from multiple perspectives enables well-informed pay decisions
both in terms of setting appropriate targets and determining the overall payout levels.
Evaluation
for Excessive Risk
The
following outlines the method by which the Company reviews and evaluates compensation policies and procedures to prevent unnecessary
and excessive risks that could threaten the value of the Company:
|
•
|
Internal
talent management, finance, legal, and risk management personnel conduct a review of
the components of the Company’s incentive plans including any proposed design changes;
|
|
•
|
Incentive
plans undergo a risk assessment that considers specific risk factors and plan alignment
with the
Guidance on Sound Incentive Compensation Policies
adopted by banking
regulators in 2010;
|
|
•
|
The
Compensation Committee discusses annually the relationship between risk management policies
and practices and compensation policies and procedures; and
|
|
•
|
To
further mitigate risk, the committee has responsibility for the evaluation and ratification
of the Company’s incentive compensation plans.
|
In
light of the above reviews, the Company and the Compensation Committee have not identified any risks arising from the Company’s
compensation policies and practices for the Company’s NEOs and our associates generally that are reasonably likely to have
a material adverse effect on the Company. It is both the committee’s and management’s intent to continue to evolve
our processes going forward by monitoring regulations and best practices for sound incentive compensation.
Tally
Sheets
When
making executive compensation decisions, the Compensation Committee reviews tally sheets showing, for each executive officer:
(i) targeted value of base pay, annual incentive bonus and equity grants for the current year and each of the past several
years; (ii) actual realized value for each of the past several years (the sum of cash received, gains realized from equity
awards, and the value of perquisites and other benefits); (iii) the amount of unrealized value from prior equity grants and
accumulated deferred compensation; and (iv) the amount the executive could realize upon a change in control or any severance
arrangement. Although tally sheets do not drive individual executive compensation decisions, the Compensation Committee uses tally
sheets for several purposes. First, it uses tally sheets as a reference so that committee members understand the total compensation
being delivered to executives each year and over a multi-year period. Second, tally sheets enable the Compensation Committee to
validate its strategy of paying a substantial portion of executive compensation in the form of equity by showing amounts realized
and unrealized by executives from prior equity grants. In some cases, the Compensation Committee’s review of tally sheets
may lead to changes in the NEO’s benefits and perquisites.
Use
of Discretion and Other Factors in Pay Decisions
The
exercise of discretion by the Compensation Committee in determining the various elements of compensation is an important feature
of the Company’s compensation philosophy. Because the Company has always taken a long-term view, we use judgment and discretion
rather than relying solely on formulaic results and we do not reward executives for taking outsized risks that produce short-term
results. Therefore, the Company believes it is important that the Compensation Committee have sufficient flexibility to respond
to: (i) the Company’s unique circumstances; (ii) prevailing market trends; (iii) the rapidly evolving financial and regulatory
environment in which the Company operates; (iv) the Company’s use of cross-functioning of executive assignments and cross-training
as a matter of executive development and succession planning; and (v) risk management objectives. The Company also believes it
is in the best interest of the Company and its shareholders that the Compensation Committee have sufficient discretion to recognize
and reward extraordinary individual performance in non-financial areas that may or may not directly affect the Company’s
achievement of specific financial metrics for a particular year, but are nevertheless important to long-range growth and the enhancement
of shareholder value.
Summary
Compensation Table
The
table below sets forth the annual and long-term compensation of our (i) CEO, (ii) our Chief Financial Officer, (iii) and the three
most highly compensated executive officers, other than the CEO and the Chief Financial Officer, who were serving as executive
officers at the end of 2015, and (iv) Kevin Langford, who served as an executive officer through October 23, 2015 and would have
been included in the group described in clause (iii) if he had been an executive officer as of the end of 2015.
Year
|
Salary
1
|
Bonus
2
|
Stock
Awards
3
|
Non-Equity
Incentive Plan Compensation
4
|
Change
in
Pension Value
and
Non-qualified
Deferred
Compensation
Earnings
5,6
|
All
Other Compensation
7
|
Total
|
Claude
E. Davis, Chief Executive Officer
|
|
|
|
2015
|
$756,370
|
$0
|
$805,532
|
$453,822
|
$78,509
|
$87,550
|
$2,181,783
|
2014
|
$706,967
|
$0
|
$889,859
|
$424,180
|
$113,550
|
$105,815
|
$2,240,371
|
2013
|
$686,154
|
$0
|
$759,024
|
$0
|
$121,840
|
$151,124
|
$1,718,142
|
John
M. Gavigan,
8
Senior Vice Pres., Chief Financial Officer
|
|
|
2015
|
$235,906
|
$0
|
$67,524
|
$70,772
|
$17,264
|
$5,109
|
$396,575
|
2014
|
$165,169
|
$0
|
$41,614
|
$32,670
|
$9,884
|
$4,436
|
$253,773
|
Richard
S. Dennen,
9
President, OSF
|
|
|
|
|
2015
|
$146,154
|
$0
|
$1,444,500
|
$99,750
|
$0
|
$67,222
|
$1,757,626
|
C.
Douglas Lefferson, Community Banking President
|
|
|
|
2015
|
$383,347
|
$0
|
$259,709
|
$153,339
|
$16,354
|
$30,048
|
$842,797
|
2014
|
$358,889
|
$0
|
$252,722
|
$141,976
|
$183,714
|
$32,288
|
$969,589
|
2013
|
$348,077
|
$0
|
$245,000
|
$70,451
|
$0
|
$40,611
|
$704,139
|
Anthony
M. Stollings, President, Chief Operating Officer
|
|
|
|
2015
|
$368,075
|
$50
|
$180,018
|
$147,230
|
$31,474
|
$21,383
|
$748,230
|
2014
|
$328,071
|
$0
|
$165,026
|
$129,785
|
$24,272
|
$18,975
|
$666,129
|
2013
|
$292,625
|
$0
|
$142,514
|
$59,227
|
$31,544
|
$24,780
|
$550,690
|
Kevin
T. Langford,
10
Community Banking President
|
|
|
|
2015
|
$351,152
|
$188,843
|
$170,022
|
$0
|
$46,287
|
$18,684
|
$774,988
|
2014
|
$328,071
|
$0
|
$165,026
|
$129,785
|
$23,924
|
$286,966
|
$933,772
|
2013
|
$293,510
|
$0
|
$142,514
|
$59,406
|
$26,296
|
$25,381
|
$547,107
|
|
|
|
|
|
|
|
|
|
1
The dollar value of base salary earned during the fiscal year.
2
The dollar value of bonus (cash and non-cash) earned during the fiscal year. For 2015, represents the post-employment short-term
bonus payment paid to Mr. Langford as a result of his termination on December 31, 2015. Mr. Stollings bonus represents a referral
incentive.
3
Includes long-term restricted stock incentive amounts both time- and performance-based awarded during the year shown. In
2014 for Mr. Davis only, also includes portion of short-term incentive payout above 100% that was awarded in immediately vested
restricted stock with a three year holding period. Our accounting for employee stock-based incentives granted during the years
ended December 31, 2015, 2014 and 2013, in accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) topic 718, Stock Compensation is described in Note 17—Stock Options and Awards
to the Company’s consolidated financial statements in the 2015 Annual Report at page 91 (generally multiplying the number
of restricted shares granted by the NASDAQ closing price per share on the grant date). These amounts do not reflect the actual
value that may be realized by the NEOs. Depending on our stock performance, the actual value may be more or less than the amount
shown or zero. For actual value received in 2015 for awards granted in previous years, see the table “Options Exercised
and Stock Vested” in this proxy. See also “Outstanding Equity Awards at Fiscal Year End.”
4
The dollar value of all earnings for services performed during the fiscal year pursuant to awards under non-equity incentive
plans (Short-Term Incentive Plan). In 2014 for Mr. Davis only, the amount above 100% was paid in immediately vested restricted
stock with a three year holding period and is reported in the Stock Awards column.
5
The amounts in this column represent the annual net increase in the present value of accumulated benefits under the SERP
and the Pension Plan for the years ended December 31, 2015, 2014 and 2013 (the measurement date for reporting purposes of these
plans in the Company’s Annual Report on Form 10-K) with respect to our NEOs. No NEO participated in a plan with above-market
earnings. Effective January 1, 2014, the annual Pension Benefits allocation for all associates, including NEOs and other executives,
was reduced from 9% to 5% of eligible earnings. The present values of accumulated benefits under the SERP and Pension Plan were
determined using assumptions consistent with those used for reporting purposes of these plans in the Company’s Annual Report
on Form 10-K for each year, with no reduction for mortality risk before age 65. Actual amount for Mr. Lefferson for 2013 was a
negative $86,996 and is shown as $0 for purposes of the Summary Compensation Table. See also the “Pension Benefits Table”
and related narrative for a detailed explanation of the terms of the Pension Plan and SERP.
6
For Mr. Davis only, the amounts provided include 2015 nonqualified deferred compensation earnings of $2,395 for the Nonqualified
Deferred Compensation. 2015 earnings under the Supplemental Savings Plan were negative $1,391.57 and are included as $0 for purposes
of the Summary Compensation Table. In 2014 earnings were $8,247 and $14,996 for the Nonqualified Deferred Compensation and Supplemental
Savings Plan, and in 2013 earnings were $34,441 and $35,112 for the Nonqualified Deferred Compensation and Supplemental Savings
Plan. Please refer to the Nonqualified Deferred Compensation Earnings table and related narrative for a detailed explanation of
these items. May reflect unvested benefits, which the NEO may not be entitled to receive if he terminates employment before the
required vesting date.
7
All other compensation for the year that could not properly be reported in any other column. The specific elements are discussed
below. The “Other” category includes (where applicable): taxable benefits for health savings accounts, long-term disability
gross-up, and company paid benefits.
8
Mr. Gavigan became Chief Financial Officer effective December 1, 2014. He received a base salary increase on March 13, 2015
that was retroactive to the date of his appointment as Chief Financial Officer. Of the amount shown for him for 2015, $5,183.83
was retroactive pay for 2014. Amounts reported in this table for 2014 also include compensation paid to Mr. Gavigan prior to being
named Chief Financial Officer.
9
Mr. Dennen joined First Financial as a result of the acquisition of Oak Street Funding by First Financial Bank. Amounts
reported in this table for 2015 include compensation paid to Mr. Dennen since the close of the acquisition on August 14, 2015.
10
Mr. Langford served as an executive officer of the Company through October 23, 2015, although he remained an associate of
the Company through December 31, 2015. Compensation reported in this table includes compensation paid to Mr. Langford in all capacities
in 2015.
|
Imputed
Income Split-Dollar Insurance
|
Accrued
Dividends Paid on Vested
Restricted Stock
|
Other
1
|
Total
2
|
2015
|
|
|
|
|
|
|
|
|
|
Davis
3
|
$7,562
|
$64,473
|
$15,515
|
$87,550
|
Gavigan
|
$408
|
$3,175
|
$1,526
|
$5,109
|
Dennen
4
|
$270
|
$0
|
$66,952
|
$67,222
|
Lefferson
|
$2,442
|
$25,908
|
$1,698
|
$30,048
|
Stollings
|
$6,202
|
$13,573
|
$1,608
|
$21,383
|
Langford
|
$1,738
|
$15,871
|
$1,075
|
$18,684
|
2014
|
|
|
|
|
|
|
|
|
|
Davis
|
$6,300
|
$87,490
|
$12,025
|
$105,815
|
Gavigan
|
$303
|
$3,133
|
$1,000
|
$4,436
|
Lefferson
|
$2,127
|
$28,486
|
$1,675
|
$32,288
|
Stollings
|
$4,774
|
$12,598
|
$1,603
|
$18,975
|
Langford
5
|
$1,349
|
$16,232
|
$269,385
|
$286,966
|
2013
|
|
|
|
|
|
|
|
|
|
Davis
|
$4,941
|
$94,610
|
$41,374
|
$140,925
|
Stollings
|
$3,063
|
$9,859
|
$1,658
|
$14,580
|
Lefferson
|
$1,667
|
$27,068
|
$1,676
|
$30,411
|
Langford
|
$1,019
|
$12,589
|
$1,573
|
$15,181
|
1
For Mr. Davis includes $31,121 in 2013 for the 401(k) restoration plan or executive supplemental savings agreement. No
additional employer contributions have been provided under the Supplemental Savings Account (see “- Executive Supplemental
Savings Agreement”).
2
For 2013, the Total amounts include company paid matches under the 401(k) Plan.
3
Amount includes $10,410 in organizational dues and memberships, a $500 Company-provided health savings account contribution,
$3,406 for a taxable housing allowance, $598 for additional parking benefit and $601 for the executive long-term disability benefit
(including a tax gross-up).
4
Amount in "Other" includes $66,952 paid to Mr. Dennen under the Oak Street Funding LLC Nonqualified Deferred Compensation
Plan that was terminated on August 13, 2015 in connection with the acquisition of Oak Street Funding by First Financial Bank.
5
Amount in "Other"
includes total payments related to relocation of $267,829. These payments include
a tax gross-up in the amount of $104,651.
Executive
Compensation
2015
Compensation Decisions for Named Executives
Annual
Base Salary Decisions
.
Base salaries for our NEOs reflect their role and value to the Company. Base salaries are reviewed
annually and adjusted as appropriate to reflect each NEO’s performance, contribution, and experience as well as relative
position to the market and each other. Base salary levels are a foundational component of compensation since several elements
of compensation are linked to this core element (e.g., cash and stock incentives). At lower executive levels, base salaries represent
the largest portion of total compensation, but at senior executive levels such fixed compensation is progressively replaced by
compensation that is “at risk” and that varies based on performance outcomes.
The
Compensation Committee sets base salaries for NEOs by utilizing published survey data that is position specific at or near the
median of the estimated base salaries. In addition, the committee, to the extent available, will supplement the survey data with
proxy information on base salaries paid by the peer group to executive officers with comparable positions. The committee will
also allow for recognition of each executive’s role, contribution, performance and experience. The Compensation Committee
annually reviews base salaries and has increased them as necessary to address competitive increases or to reflect increases in
a particular NEO’s responsibilities. In March 2015, consistent with Company-wide merit practices, base salary increases
for the NEOs were approximately 3% for all NEOs except for Mr. Gavigan and Mr. Stollings who received base salary increases of
approximately 35% and 9% respectively as a result of their promotions to Chief Financial Officer and Chief Operating Officer,
respectively, in late 2014. Mr. Dennen joined the Company on August 14, 2015 as a result of the acquisition of Oak Street Funding
LLC by First Financial Bank. At the time of the acquisition, Mr. Dennen’s base pay was increased from $365,790 to $380,000
(4%).
Target
Compensation Structure Changes.
Target compensation levels for our NEOs are set at the beginning of each fiscal year
by the Compensation Committee taking into consideration such factors as the board-approved compensation philosophy, program objectives,
relevant market data, individual performance and the scope and responsibility of each individual. In general, pay opportunities
are targeted at market median levels, with actual compensation realized being higher or lower as determined by overall performance
of the Company.
On
March 10, 2015, the Compensation Committee established 2015 target compensation levels for its senior executives, including the
NEOs. Short- and long-term incentive targets remained unchanged from 2014 levels except for Mr. Gavigan whose short-term incentive
target increased from 20% to 30% and long-term incentive target increased from 25% to 30% as a result of the promotion mentioned
above.
Mr.
Dennen’s 2015 short-term incentive target did not change as a result of the merger and remained at 70% through the end of
2015. His short-term incentive target will be reduced to 40% in 2016 to align with the Company’s target compensation structure
and eligibility for annual long-term incentives starting in 2016.
The
Compensation Committee believes the 2015 target compensation decisions provided reasonable target pay opportunities in relation
to pay offered for comparable positions by financial services companies included in our peer group.
2015
STIP Design and Payout
Overview.
Short-term incentives serve as a key mechanism to vary pay levels according to Company-wide short-term performance, thereby
linking executive financial rewards to value delivered to our shareholders. Such incentives are earned and paid annually but only
after established threshold corporate performance levels are achieved. To underscore the importance of creating value for our
shareholders, payouts under the Company’s STIP are based entirely on corporate, rather than individual, performance. This
approach also suggests that the collective individual performance will result in improved business performance and favorably impact
shareholder value.
Targets.
As mentioned above, target annual short-term incentive opportunities are established by the Compensation Committee early in
the year and are intended to approximate market median levels for similarly- positioned roles. Target award opportunities are
expressed as a percentage of actual base salary paid for the performance year for all participants (minimum of 3%). Actual awards
may range from 0% to a maximum of 200% of the target award opportunity based on financial, risk management, and other considerations.
The NEO target levels were as follows for the 2015 plan year:
|
2015
Target STIP % of Base
|
2015
Target Payout @ 100% Target
1, 2
|
Claude
E. Davis
|
60%
|
$
439,380
|
John
M. Gavigan
|
30%
|
$
67,500
|
Richard
S. Dennen
3
|
70%
|
$
99,750
|
C.
Douglas Lefferson
|
40%
|
$
148,400
|
Anthony
M. Stollings
|
40%
|
$
144,000
|
Kevin
T. Langford
4
|
40%
|
$
136,000
|
1
100% target payout amounts are based on salary as of 12/31/2015.
2
Actual payout is derived from applying the Performance Payout Percent to actual base wages earned in 2015.
3
Mr. Dennen's target and payout are in accordance with the Oak Street Funding plan that was in place for 2015. Amounts shown
reflect the pro-rated target and payout under that plan after the close of the Oak Street Funding acquisition on August 14, 2015.
Amounts earned under this plan prior to the close are not included in this chart.
4
Mr. Langford was not eligible for payout under the STIP due to his termination on 12/31/2015. Per his Severance and Change
in Control Agreement, he received a bonus payout of $188,843 in place of a payout under the STIP.
Performance
Measures.
Performance measures and their relative weightings are selected and approved by the Compensation Committee based
on their relevance as key, balanced measures that drive shareholder value creation and align with the Company’s internal,
board-approved business plan. Performance is measured over a 12-month period for all participants (including the NEOs). For 2015,
the Compensation Committee set the following parameters:
Financial
and Operating Performance Measures
(equally weighted):
•
Return on assets (ROA) relative to peers:
The
Company’s ROA performance for the year is compared against peers in the KBW Regional Bank Index. This index is made up of
approximately 49 regional banks (excluding the Company, which is a component company of the index) located throughout the country
that are generally within an asset and market capitalization range comparable to the Company. This peer group is broader than
the peer group established for compensation competitive assessment purposes as previously described.
|
•
|
Net
income goal attainment:
|
The
Company’s actual net income achieved at the end of the year is compared to the net income target established by the Company
for the year.
Enterprise
Risk Management Performance.
This category applies only to senior management (including NEOs) participants. Performance and
results against ERM objectives are assessed to determine whether the payout factor as calculated for financial performance should
be adjusted downward. A risk management performance modifier is available to the Compensation Committee as a discretionary tool
to make a downward adjustment to the payout in the event of a material risk management failure or a material error that results
in financial restatement.
The committee did not identify any risk management failures or financial errors that would indicate
a reduction in the payout level for the 2015 STIP was warranted.
Other
Considerations.
The Compensation Committee may use discretion to adjust the formulaically calculated payout for performance
in non-financial areas that may or may not directly affect the Company’s achievement of specific financial metrics for a
particular year, but are nevertheless important to the enhancement of shareholder value
.
Payout
Calculation.
ROA
performance must be equal to or greater than the 25th percentile of the peer group to generate a payout for the ROA component.
The actual ROA component payout is interpolated with a maximum payout of 200% of the target award opportunity for performance
at or above the top quartile (75th percentile) of the peer group.
A
threshold portion of the net income goal (84%) must be achieved in order to generate a payout under this component. The actual
net income component payout is interpolated with a maximum payout of 200% of the target award opportunity for exceeding the net
income goal by 18%.
In
total and for each participant, the STIP payout may not exceed 200% of the target award opportunity.
Earnings
per diluted common share greater than $0 must be achieved before any payout will be made under the STIP.
Payout
Method.
Incentive payments under the STIP are paid in cash to eligible participants with the exception of payouts above 100%
of target to senior executive officers (including NEOs) which are delivered in stock that is subject to a three-year holding period.
2015
STIP Performance Results
Payout
for NEOs.
As mentioned earlier, the Compensation Committee approved a payout under the Company’s STIP for 2015
of 100% of the target opportunity for all NEOs except for Mr. Dennen whose approved payout of 100% of target was under the Oak
Street Funding short-term incentive arrangement in place prior to the acquisition.
Under
the approved plan design, performance results for the STIP exclude merger and acquisition (M&A) related expenses. However,
the acquisition of Oak Street Funding, LLC (a commercial finance firm focused on insurance industry financing) by the Company
was distinct in the type of business being acquired and its impact on the Company’s results when compared with prior activity
involving entire bank mergers. Mr. Davis recommended that the Committee consider this distinction and include expenses related
to the Oak Street acquisition when assessing the Company’s performance for 2015. Upon considering Mr. Davis’ recommendation
and the Company’s performance against the pre-acquisition net income goal, the Committee exercised its discretion to approve
a reduction to the standard payout calculation down to 100% of target.
The
Company’s final 2015 results for each STIP component, including acquisition-related expenses for Oak Street Funding, are
set forth below.
2015
STIP Results
|
|
FFBC
Results
1
(%)
|
Peer
Median (%)
|
FFBC
Percentile Rank versus Peers
|
Payout
Multiple (%)
|
Approved
Payout
|
Return
on Assets versus Peers
2
|
1.02
|
.99
|
52.7
|
108.1
|
100%
of Target
|
Net
Income Goal Attainment
|
99
|
N/A
|
N/A
|
88.1
|
1
Results exclude merger and acquisition-related costs except for those related to the Oak Street Funding acquisition.
2
Peer performance reflects data for the twelve months ending September 30, 2015. Company performance based on 12 month GAAP
(adjusted) actuals ending December 31, 2015.
Final
Payout
. The table below sets forth the STIP payouts to our NEOs for 2015.
|
2015
Target STIP % of Base
|
2015
Target Payout @ 100% Target
1
|
2015
STIP Performance Payout Percent
|
Actual
Results Total Value of Payout
2
|
Claude
E. Davis
|
60%
|
$
439,380
|
100.0%
|
$
453,822
|
John
M. Gavigan
|
30%
|
$
67,500
|
100.0%
|
$
70,772
|
Richard
S. Dennen
3
|
70%
|
$
99,750
|
100.0%
|
$
99,750
|
C.
Douglas Lefferson
|
40%
|
$
148,400
|
100.0%
|
$
153,339
|
Anthony
M. Stollings
|
40%
|
$
144,000
|
100.0%
|
$
147,230
|
Kevin
T. Langford
4
|
40%
|
$
136,000
|
0.0%
|
$
0
|
1
100% target payout amounts are based on salary as of 12/31/2015.
2
Actual payout is derived from applying the Performance Payout Percent to actual base wages earned in 2015.
3
Mr. Dennen's target and payout are in accordance with the Oak Street Funding plan that was in place for 2015. Amounts shown
reflect the pro-rated target and payout under that plan after the close of the Oak Street Funding acquisition on August 14, 2015.
Amounts earned under this plan prior to the close are not included in this chart.
4
Mr. Langford was not eligible for payout under the STIP due to termination on 12/31/2015. Per his Severance and Change in
Control Agreement, he received a bonus payout of $188,843 in place of a payout under the STIP.
2015
Long-Term Incentive Plan (LTIP) Design and Awards
The
LTIP is designed for the Company’s top leaders who have a direct and measurable impact on the long-term performance of the
Company. In addition to base pay and short-term incentive opportunities, the LTIP is a key component of the total compensation
package to attract, motivate and retain top professionals in the organization and serves to align management and shareholder interests
through stock incentives linked to the long-term success of the Company and increased shareholder value. The LTIP is the only
plan available for new grants of stock-based long-term incentive compensation to eligible associates, including the NEOs.
Senior
managers and key sales executives of the Company are eligible to participate in the LTIP. Actual participation is determined annually
and is at the discretion and approval of management, the CEO, and the Compensation Committee.
LTIP
Targets.
In March 2015, the Committee reviewed target compensation levels in the context of relative performance versus peers
as well as survey and peer proxy data. The following chart summarizes NEO LTIP target amounts for 2015:
|
Grant
Date
|
Total
Number of Shares Granted
|
Grant
Date Fair Value
1
|
Shares
of Time-based Restricted Stock Granted
2
|
Shares
of Performance-based Restricted Stock Granted
2
|
Claude
E. Davis
|
3/10/2015
|
47,468
|
$
805,532
|
23,734
|
23,734
|
John
M. Gavigan
|
3/10/2015
|
3,979
|
$
67,524
|
2,984
|
995
|
Richard
S. Dennen
3
|
8/14/2015
|
75,000
|
$
1,444,500
|
37,500
|
37,500
|
C.
Douglas Lefferson
|
3/10/2015
|
15,304
|
$
259,709
|
11,478
|
3,826
|
Anthony
M. Stollings
|
3/10/2015
|
10,608
|
$
180,018
|
7,956
|
2,652
|
Kevin
T. Langford
|
3/10/2015
|
10,019
|
$
170,022
|
7,514
|
2,505
|
1
This is the amount reported in the Grants of Plan-Based Awards table, below (based on a stock price of $16.97 per share
as of March 10, 2015 and $19.26 per share as of August 14, 2015).
2
Mr. Davis' long-term incentive award was divided 50% time-based restricted stock and 50% performance-based restricted stock.
Messrs. Gavigan, Stollings, Lefferson, and Langford long-term incentive awards were divided 75% time-based restricted stock and
25% performance-based restricted stock.
3
Shares awarded to Mr. Dennen on August 14, 2015 were in connection with the acquisition of Oak Street Funding by First Financial
Bank. 75,000 shares were awarded, 50% as time-based restricted stock and 50% as performance-based restricted stock.
Restricted
Stock Awards.
In connection with its annual review of executive salaries, historically the Compensation Committee
has granted stock awards in the beginning of each fiscal year. The stock awards in recent years, have primarily been in the form
of restricted stock awards with a three-year vesting period to satisfy the retention goals for granting the awards and to align
executive interests with those of the shareholders. Dividends paid on restricted stock are held in escrow and not paid until the
restrictions lapse and the stock is fully vested.
Performance-Based
Restricted Stock Awards.
Performance-based restricted stock vests after three years only upon the attainment of certain
pre-determined performance measures (generally total shareholder return and return on assets). The award is structured such that
at the end of the three-year performance period:
|
•
|
No
portion of the award may vest if performance against peers in the KBW Regional Bank Index
is below the 25
th
percentile.
|
|
•
|
Above
median performance (60
th
percentile versus peers) must be achieved in order
for 100% of the award to vest.
|
|
•
|
The
award has limited upside potential. The maximum payout is capped at 120% of the initial
award amount for performance at or above the 75
th
percentile.
|
Mr.
Dennen’s 2015 award was issued in connection with the acquisition of Oak Street Funding
by First Financial Bank. The award is structured such that at the end of each of the three performance
years:
|
•
|
No
portion of the award may vest if less than 85% of the established annual net income target
is attained;
|
|
•
|
The
annual net income target must be achieved in order for 100% of the award to vest; and
|
|
•
|
The
award has limited upside potential as the maximum payout is capped at 120% for performance
at or above 125% of the annual net income target.
|
Mix
of Awards.
The following chart summarizes the mix of award types granted to the NEOs in 2015:
|
Portion
of LTIP Awarded as Performance Based Restricted Stock
|
Portion
of LTIP Awarded as Time Based Restricted Stock
|
Claude
E. Davis
|
50%
|
50%
|
John
M. Gavigan
|
25%
|
75%
|
Richard
S. Dennen
|
50%
|
50%
|
C.
Douglas Lefferson
|
25%
|
75%
|
Anthony
M. Stollings
|
25%
|
75%
|
Kevin
T. Langford
|
25%
|
75%
|
Mr.
Dennen’s 2015 awards were in connection with the acquisition of Oak Street Funding
by First Financial Bank. Additional information about the long-term incentive grants can be found
in the Summary Compensation Table and following tables and footnotes, as well as the narrative following these tables.
Pay
for Performance Compared to KBW Regional Bank Index
The
following charts illustrate how the CEO’s compensation, over the past four years (as shown in the Summary Compensation Table)
compares to the Company’s performance in Return on Assets, EPS Growth Rate and Efficiency Ratio over the same period as
well as to KBW Regional Bank Index median performance.
|
•
|
The
Company’s return on assets was consistent with or better than the median performance
of the peer group during 2012 through 2015, while CEO compensation declined in both 2013
and 2015.
|
|
•
|
CEO
pay in 2014 reflected an increase from 2013 that was consistent with (i) a significant
increase in the Company’s earnings per share in 2014 and (ii) a 2014 total shareholder
return that exceeded the median return of companies in the KBW Regional Bank Index.
|
|
•
|
During
the period from 2011 thru 2014, the Company’s efficiency ratio has been generally
consistent with or better than the median level of the companies in the KBW Regional
Bank Index.
|
Total
Shareholder Return Performance.
The following graph compares the cumulative return to shareholders of the Company with that
of companies that comprise the NASDAQ Composite Index and KBW Regional Bank Index (which are peers under the Company’s STIP)
over a one, three, five, and seven year period. The Company’s long-term cumulative return over the last seven years has
outpaced the returns of KBW peers who experienced dramatic declines in shareholder return during the financial crisis. From a
three- and five-year perspective, peer returns reflect recovery from the substantial declines experienced during the financial
crisis. The Company did not experience such declines during the crisis, therefore, the Company’s return for this period
did not achieve levels similar to that of peers. On a one-year basis returns continue to converge to more normalized levels post
crisis.
Executive
Benefits and Perquisites
Benefits.
Executives can participate in group medical and life insurance programs, a 401(k) plan with a performance-based contribution
by the Company, and a pension plan which are generally available to all of our associates on a non-discriminatory basis. The benefits
serve to protect executives and their families against financial risks associated with illness, disability, and death and provide
financial security during retirement through a combination of personal savings and Company contributions, taking advantage of
tax-deferral opportunities where permitted. Our NEOs are also participants in a life insurance program that insures them for two
to three times their base salary.
Executive
Benefits.
NEOs are eligible for the Supplemental Executive Retirement Plan (“SERP”). The SERP is designed to make
up for pension allocations limited by the IRS for highly compensated individuals, so that our NEOs receive the same percentage
of compensation funded for retirement as all other associates. See “Executive Supplemental Retirement Plan.”
Mr.
Davis is a party to an Executive Supplemental Savings Agreement (SSA) which was designed to supplement his 401(k) Plan benefits
above the IRS statutory limits. Since January 1, 2014, no additional credits have been provided to Mr. Davis under the SSA. See
“Executive Supplemental Savings Agreement.” Additionally Mr. Davis is the only NEO that in the past has utilized the
deferred compensation plan. See “Nonqualified Deferred Compensation.”
Other
Guidelines and Procedures Affecting Executive Compensation
Section 162(m).
The Compensation Committee has reviewed the qualifying compensation regulations issued by the Internal Revenue Service under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) which provide that no deduction
is allowed for applicable employee remuneration paid by a publicly-held corporation to its CEO or any of its other three highest
paid officers, excluding the principal financial officer, to the extent that the remuneration paid to such employees exceeds $1.0 million
for the applicable taxable year, unless certain conditions are met. Compensation pursuant to certain stock option plans and other
performance-based compensation may be excluded from Section 162(m). While in general the Compensation Committee attempts
to design its compensatory arrangements to preserve the deductibility of executive compensation, in certain situations, the Compensation
Committee may approve compensation that will not meet these requirements in order to ensure competitive levels of total compensation
for its executive officers. The Company believes that shareholders’ interests are best served if the Compensation Committee’s
discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible
compensation expenses. Neither First Financial nor any of its subsidiaries currently has a policy requiring that compensation
paid to a covered officer be deductible under Section 162(m). The Board, however, does consider the after-tax cost and value
to First Financial and its subsidiaries of all compensation.
It
is the Company’s position that stock options awarded under its stock option plans will not count toward the Section 162(m)
limit. Restricted stock grants that are not performance based are not, however, treated as exempt
from
the calculation. Furthermore, amounts previously deferred by executives under the Deferred Compensation Plan will not count toward
the Section 162(m) limit.
The
Company believes that qualifying awards made under the STIP after 2012 will not count toward the Section 162(m) limit. Also, it
is anticipated that a portion of the performance-based long-term incentive awards made to the CEO and other NEOs as described
in “2015 Long-Term Plan Design and Awards” will qualify as deductible under Section 162(m), thus reducing the amount
of foregone deductions in the future.
In
2015, the Company paid an aggregate of approximately $523,400 in compensation to its NEOs in excess of the applicable individual
deduction limits under Section 162(m) of the Code (all of which was paid to the CEO), thereby foregoing approximately $183,200
in aggregate tax deductions related to NEO compensation, calculated at a 35% corporate tax rate. Based on the Company’s
2015 income before taxes of approximately $111 million, the amount of deduction lost represents approximately 0.17% of such income.
While the Compensation Committee believes the tax-deductibility of executive compensation is important, it was outweighed for
2015 executive compensation purposes by the critical importance to the Company’s future success to provide competitive pay.
Sections 280G.
Since January 1, 2011, we have not provided for a 280G gross-up to our NEOs.
Stock-Based
Compensation—Procedures Regarding Timing and Pricing of Grants.
Our policy is to make grants of equity-based compensation
only at current market prices. We have not granted options since 2008; however at that time we set the exercise price of stock
options at the closing stock price on the date of grant, and did not grant “in-the-money” options or options with
exercise prices below market value on the date of grant. Absent special circumstances, it is our policy to make the majority of
equity grants at a regularly scheduled meeting of our Compensation Committee. However, we may make a small percentage of grants
at other times throughout the year, generally once per quarter, in connection with exceptional circumstances, such as the hiring
or promotion of an executive officer, special retention circumstances, or merger and acquisition activity.
We
try to make equity-based grants at times when they will not be influenced by scheduled releases of information. Grants of equity-based
awards primarily have grant dates corresponding to regularly scheduled meetings of the Compensation Committee in the early part
of the fiscal year. For 2015, we chose the March meeting of the Committee. This date allowed time for performance reviews following
the determination of corporate financial performance for the previous year. We seek to make grants when our financial results
have already become public, and when there is little potential for abuse of material non-public information in connection with
equity-based grants. We believe we minimize the influence of our disclosures of non-public information on the long-term incentives
by selecting meeting dates well in advance which fall several days or weeks after we report our financial results, and by setting
the initial vesting periods at least one year from the date of grant. We follow the same procedures regarding the timing of grants
to our NEOs as we do for all other participants.
Claw
backs.
For awards made prior to 2012, in the event: (a) the Company is required to prepare an accounting restatement
due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the
securities laws during the Performance Period; or (b) the committee determines that senior executive management has taken risks
that jeopardize the safety and soundness of the Company, the members of senior executive management (including the NEOs) shall
reimburse the Company for any award under the STIP.
For
awards made during and after 2012, any bonus, commission, or other compensation, including but not limited to payments made under
the STIP or stock grants may be subject to recovery, or “claw back”, by the Company for a period of three years (or
such longer period as may be required by law) if the payments were based on materially inaccurate financial statements or any
other materially inaccurate performance metric criteria, or as otherwise required by law.
Share
Ownership Requirements.
The Company maintains a share ownership requirement for its CEO equal to the lesser of five
times base pay or 250,000 shares. The CEO is currently in compliance with this requirement.
The
share ownership requirement for the other NEOs and other executives is the lesser of two times base salary or 75,000 shares. The
timeframe for executives to comply with this requirement is two years or within five years of being first appointed to a role
with share ownership guidelines. All NEO’s are currently in compliance with this requirement except for Messrs. Gavigan
and Dennen who, as of February 2016, have three and five years, respectively, to comply.
Share
Retention Guidelines.
Beginning
in 2015, NEOs and other executives must retain 100% of shares acquired through exercises or vestings until their share ownership
guidelines are met. All associates receiving options, including our NEOs, are required to hold the shares received upon the exercise
of options for a period of one year after the exercise of the option.
Hedging
or Pledging.
The Company considers it improper and inappropriate for insiders to engage in short-term or speculative transactions
in the Company's securities. It therefore is the Company's policy that such individuals may not engage in hedging or pledging
transactions, unless otherwise in compliance with the pre-clearance and approval requirements as set forth in the Company’s
Insider Trading Policy.
Grants
of Plan-Based Awards
The following
table shows all individual grants of plan-based awards to the NEOs of the Company during the fiscal year ended December 31, 2015.
Total value is computed utilizing the grant date market value for restricted stock awards and the grant date fair value in accordance
with ASC Topic 718 on stock option awards. There were no stock options awarded in 2015.
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plans
1,2,3
|
All
Other Stock Award: No. of Shares of Stock or Units
4,5
|
Grant
Date fair Value of Stock and Options Awards
|
|
Grant
Date
|
Award
Type
|
Threshold
|
Target
|
Maximum
|
Claude
E. Davis
|
|
n/a
|
STIP
|
$0
|
$439,380
|
$878,760
|
|
|
|
3/10/2015
|
Restricted
Stock
|
|
|
|
23,734
|
$402,766
|
|
3/10/2015
|
Performance
Stock
|
|
|
|
23,734
|
$402,766
|
|
|
|
|
|
|
|
|
John
M. Gavigan
|
|
n/a
|
STIP
|
$0
|
$67,500
|
$135,000
|
|
|
|
3/10/2015
|
Restricted
Stock
|
|
|
|
2,984
|
$50,638
|
|
3/10/2015
|
Performance
Stock
|
|
|
|
995
|
$16,885
|
|
|
|
|
|
|
|
|
Richard
S. Dennen
|
|
n/a
|
STIP
|
$0
|
$0
|
$0
|
|
|
|
8/14/2015
|
Restricted
Stock
|
|
|
|
37,500
|
$722,250
|
|
8/14/2015
|
Performance
Stock
|
|
|
|
37,500
|
$722,250
|
|
|
|
|
|
|
|
|
C.
Douglas Lefferson
|
|
n/a
|
STIP
|
$0
|
$148,400
|
$296,800
|
|
|
|
3/10/2015
|
Restricted
Stock
|
|
|
|
11,478
|
$194,782
|
|
3/10/2015
|
Performance
Stock
|
|
|
|
3,826
|
$64,927
|
|
|
|
|
|
|
|
|
Anthony
M. Stollings
|
|
n/a
|
STIP
|
$0
|
$144,000
|
$288,000
|
|
|
|
3/10/2015
|
Restricted
Stock
|
|
|
|
7,956
|
$135,013
|
|
3/10/2015
|
Performance
Stock
|
|
|
|
2,652
|
$45,004
|
|
|
|
|
|
|
|
|
Kevin
T. Langford
|
|
n/a
|
STIP
|
$0
|
$136,000
|
$272,000
|
|
|
|
3/10/2015
|
Restricted
Stock
|
|
|
|
7,514
|
$127,513
|
|
3/10/2015
|
Performance
Stock
|
|
|
|
2,505
|
$42,510
|
|
|
|
|
|
|
|
|
1
Cash payouts equal to 100% of target under the 2015 STIP were made February 19, 2016, for all NEOs except Mr. Dennen who
was paid under the Oak Street Funding short-term incentive plan.
2
The amounts of the estimated future payouts under the non-equity incentive plans column represent the opportunities in the
event the Company meets certain targets pursuant to the terms of the Short-term Incentive Plan. See "2015 Short-term Incentive
Plan Design and Payout" in the Compensation Discussion and Analysis.
3
Mr. Dennen's target and payout are in accordance with the continued 2015 Oak Street Funding plan at a target of 70% or $266,000
based on his First Financial salary.
4
Restricted
shares vest annually over a three-year period beginning March 10, 2015. The closing price of the Company’s common
shares on the date of grant was $16.97 (March 10, 2015). 50% of Mr. Davis’ 2015 long-term-incentive award
(23,734 shares) and 25% of Messrs. Gavigan, Langford, Lefferson, and Stollings' long-term-incentive awards (995 shares, 2,505
shares, 3,826 and 2,652 shares respectively) were comprised of performance-based restricted stock that vests after three
years only upon the attainment of certain pre-determined performance measures (generally, total shareholder return and return
on assets). Depending on the performance level achieved, the maximum award that may be earned for these performance-based
restricted shares is 120% of
the initial shares awarded. See “Performance Based Restricted Stock Awards” for more details. Dividends paid on both
types of stock shares are held in escrow until the shares vest.
5
For Mr. Dennen, restricted shares vest annually over a three-year period beginning August 14, 2015. The closing price of
the Company’s common shares on the date of grant was $19.26 (August 14, 2015). 50% of Mr. Dennen's 2015 long-term-incentive
award (37,500 shares) was comprised of performance-based restricted stock that vests annually over a three-year performance period
beginning January 1, 2016 only upon the attainment of certain pre-determined performance measures (generally, Oak Street Funding
net income results). Depending on the performance level achieved, the maximum award that may be earned for these performance-based
restricted shares is 120% of the initial shares awarded. See “Performance Based Restricted Stock Awards” for more
details. Dividends paid on both types of stock shares are held in escrow until the shares vest.
Outstanding
Equity Awards at Fiscal Year End
The
following table represents stock options and restricted stock awards outstanding for each NEO as of December 31, 2015. All stock
options and restricted awards have been adjusted for stock dividends and stock splits. The closing per share price of the Company’s
stock on the last trading date of the fiscal year was $18.07.
Option
Awards
|
Restricted
Stock Awards
|
|
Number
of Securities Underlying Unexercised Options Exercisable
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
Option
Exercise Price
|
Option
Expiration Date
|
Number
of Shares or Units of Stock That Have Not Vested
1
|
Market
Value of Shares or Units of Stock That Have Not Vested
|
|
|
|
|
|
|
|
Claude
E. Davis
|
|
|
|
|
|
118,641
|
2,143,843
|
|
0
|
0
|
|
|
|
|
John
M. Gavigan
|
|
|
|
|
|
6,314
|
114,094
|
|
0
|
0
|
|
|
|
|
Richard
S. Dennen
|
|
|
|
|
|
75,000
|
1,355,250
|
|
0
|
0
|
|
|
|
|
C.
Douglas Lefferson
|
|
|
|
|
|
31,814
|
574,879
|
|
25,500
|
0
|
$16.02
|
04/24/2016
|
|
|
|
28,200
|
0
|
$14.90
|
04/30/2017
|
|
|
|
38,409
|
0
|
$11.64
|
02/14/2018
|
|
|
Anthony
M. Stollings
|
|
|
|
|
|
21,016
|
379,759
|
|
0
|
0
|
|
|
|
|
Kevin
T. Langford
2
|
|
|
|
|
|
0
|
0
|
|
0
|
0
|
|
|
|
|
1
Restricted shares vest according to the following schedule:
Vesting
Date
|
Davis
|
Gavigan
|
Dennen
|
Lefferson
|
Stollings
|
Langford
2
|
March
3, 2016
|
7,758
|
826
|
0
|
3,760
|
2,455
|
0
|
March
6, 2016
|
8,096
|
683
|
0
|
5,227
|
3,040
|
0
|
March
6, 2016 (Performance)
|
24,281
|
0
|
0
|
0
|
0
|
0
|
March
10, 2016
|
7,910
|
994
|
0
|
3,825
|
2,651
|
0
|
August
14, 2016
|
0
|
0
|
12,498
|
0
|
0
|
0
|
January
31, 2017 (Performance)
|
0
|
0
|
12,498
|
0
|
0
|
0
|
March
3, 2017
|
7,761
|
826
|
0
|
3,762
|
2,457
|
0
|
March
3, 2017 (Performance)
|
23,277
|
0
|
0
|
3,761
|
2,456
|
0
|
March
10, 2017
|
7,911
|
995
|
0
|
3,826
|
2,652
|
0
|
August
14, 2017
|
0
|
0
|
12,499
|
0
|
0
|
0
|
January
31, 2018 (Performance)
|
0
|
0
|
12,499
|
0
|
0
|
0
|
March
10, 2018
|
7,913
|
995
|
0
|
3,827
|
2,653
|
0
|
March
10, 2018 (Performance)
|
23,734
|
995
|
0
|
3,826
|
2,652
|
0
|
August
14, 2018
|
0
|
0
|
12,503
|
0
|
0
|
0
|
January
31, 2019 (Performance)
|
0
|
0
|
12,503
|
0
|
0
|
0
|
2
Mr. Langford's unvested restricted shares were cancelled on 12/31/2015.
Option
Exercises and Stock Vested
The following
table shows the stock options exercised by, and restricted stock that vested for, the NEOs in 2015 and the value realized upon
exercise.
|
Option
Awards
|
Stock
Awards
|
|
|
Number
of Shares Acquired on Exercise
|
Value
Realized on Exercise
|
Number
of Shares Acquired on Vesting
|
Value
Realized on Vesting
|
Claude
E. Davis
|
0
|
$0
|
39,740
|
$691,029
|
John
M. Gavigan
|
0
|
$0
|
2,126
|
$36,679
|
Richard
S. Dennen
|
0
|
$0
|
0
|
$0
|
C.
Douglas Lefferson
|
10,000
|
$55,300
|
14,953
|
$258,476
|
Anthony
M. Stollings
|
0
|
$0
|
8,366
|
$144,597
|
Kevin
T. Langford
|
9,077
|
$46,724
|
9,212
|
$159,371
|
Pension
Benefits Table
The following
table shows, for each NEO, each pension plan that the NEO participates in, the number of years of credited service and the present
value of accumulated benefits. Values reflect the actuarial assumptions used for financial reporting purposes.
|
Plan
Name
1
|
Number
of Years of Credited Service
2
|
Present
Value of Accumulated Benefit
3
|
Payments
During Last Fiscal Year
|
Claude
E. Davis
|
Pension
Plan
|
11
|
$220,973
|
$0
|
|
SERP
|
11
|
$551,833
|
$0
|
John
M. Gavigan
|
Pension
Plan
|
7
|
$55,821
|
$0
|
|
SERP
|
7
|
$0
|
$0
|
Richard
S. Dennen
|
Pension
Plan
|
0
|
$0
|
$0
|
|
SERP
|
0
|
$0
|
$0
|
C.
Douglas Lefferson
|
Pension
Plan
|
30
|
$673,397
|
$0
|
|
SERP
|
30
|
$331,031
|
$0
|
Anthony
M. Stollings
|
Pension
Plan
|
9
|
$155,097
|
$0
|
|
SERP
|
9
|
$51,010
|
$0
|
Kevin
T. Langford
|
Pension
Plan
|
10
|
$148,985
|
$0
|
|
SERP
|
10
|
$70,561
|
$0
|
1
Effective January 1, 2014, the annual Pension Benefits allocation for all employees, including NEOs and other executives,
was reduced from 9% to 5% of eligible earnings.
2
The number of years of service credited to the NEOs under the plan are computed as of December 31, 2015, the pension plan
measurement date used for financial statement reporting purposes with respect to the registrant's audited financial statements
which are included with the Company's 2015 Annual Report and filed with the 2015 Form 10-K.
3
The present value of accumulated benefits shown in this column is calculated as of December 31, 2015, the measurement date
used for reporting purposes in the Company's 2015 Annual Report. Assumptions used in determining these amounts include a 4.05%
discount rate, a 4.05% lump sum interest rate, and the 2015 PPA Mortality Table, described in IRS Notice 2013-49 consistent with
assumptions used for reporting purposes in the Company's 2015 Annual Report filed with the Form 10-K of the present value of accumulated
benefits under the SERP and Pension Plan, except without reduction for mortality risk before age 65. (See Footnote 14 –
Employee Benefit Plans to the consolidated financial statements contained in the Company's 2015 Annual Report filed with the 2015
Form 10-K – for information regarding the assumptions made by the Company for reporting purposes in the Company's 2015 Annual
Report.)
Pension
Plan
The First
Financial Bancorp Associate Pension Plan and Trust (“Pension Plan”) is a tax-qualified pension plan covering eligible
employees of the Company. Effective January 1, 2008 (July 1, 2007 for new participants), we made several changes to the Pension
Plan to be better positioned competitively to attract and retain employees and to manage the escalating and varying costs of retiree
benefits. These changes also resulted in revisions to benefits under our non-qualified retirement plans.
Benefits
under the Pension Plan’s previous traditional pension benefit formula were frozen as of December 31, 2007 (except with respect
to certain employees, as explained below), and as of January 1, 2008 participants accrue benefits under a new account balance
formula. The changes reflect a shift towards account balance formulas and a shift away from traditional annuity-type formulas.
The material terms and conditions of the Pension Plan as applicable to the NEOs for 2015 who are currently employees of the Company
are as follows:
Eligibility
The
Pension Plan covers employees of the Company who have attained age 21 and completed the earlier of 1,000 hours of service within
a calendar year, the first anniversary of hire or any subsequent calendar year.
Benefit
Formula
The
Pension Plan provides an accrual to a participant’s account for each year in which he works 1,000 hours. Prior to 2014,
the accrual was equal to 5% of the participant's compensation plus an additional 4% of the participant’s compensation in
excess of 50% of the Social Security wage base. Effective January 1, 2014, the composition of the Company’s overall retirement
benefit changed. As a result, the additional accrual of 4% of the participant’s compensation in excess of 50% of the Social
Security wage base was discontinued. All eligible associates now receive a pension benefit annual accrual of 5% of compensation.
For
this purpose, compensation means the participant’s total cash remuneration from the Company prior to contributions to a
cafeteria plan or a 401(k) plan, including bonuses, overtime pay and other special cash remuneration. However, compensation cannot
exceed the compensation limit of Code Section 401(a) (17).
Interest
For
allocations prior to 2014, participant accounts are credited with interest for each year at the rate on five-year Treasury securities
as of November of the preceding plan year. For allocations after January 1, 2014, participant accounts are credited with a rate
of return equal to the S&P 500 Index and Barclays U.S. Aggregate Bond Index weighted 40% and 60% respectively.
Vesting
A
participant becomes immediately vested in this retirement benefit upon hire.
Distribution
A
participant’s account may be distributed at the participant’s election at any time after the participant separates
from service. However, it must be distributed no later than 60 days after the later of the date the participant attains age 65
and the date of the participant’s separation from service. The participant may elect to receive his account in a lump sum
or as an annuity with an actuarial value equivalent to the value of his account.
Each
of our NEOs is eligible to participate in the Pension Plan with respect to the account balance formula and are fully vested in
their Pension Plan retirement benefit.
Traditional
Pension Benefit Formula
Benefits
accruing prior to January 1, 2008 are generally calculated based on benefit service and average monthly compensation as of December
31, 2007.
Executive
Supplemental Retirement Plan
The
Company maintains a supplemental executive retirement plan to supplement the retirement benefits provided under the Pension Plan
for certain senior executive officers of the Company in order to make up for legal limits applicable to the benefits provided
under the Pension Plan. The SERP is an unfunded, unsecured pension benefit plan for a select group of highly compensated employees.
The material terms and conditions of the SERP as they pertain to the NEOs for 2015 are as follows:
Eligibility
The
SERP benefit is generally provided to those highly compensated employees of the Company whose compensation exceeds the IRS limits
imposed on the Pension Plan and who have been designated as eligible to participate in the plan by the Company. With the exception
of Mr. Gavigan and Mr. Dennen, all NEOs participated in the SERP in 2015.
Benefit
Formula
The
SERP provides a benefit in excess of the IRS compensation and benefit limits imposed by Sections 401(a) (17) and 415 of the Code,
respectively, with respect to the service benefit component of the Pension Plan and the account benefit component of the Pension
Plan. The benefit under the SERP is calculated as the difference between (x) the lump sum or periodic benefit the executive would
have received under the Pension Plan, but for the applicable IRS compensation limits under Section 415 and 401(a) (17) of the
Code, and (y) the lump-sum or periodic benefit the executive is entitled to under the Pension Plan. Compensation and years of
service under the SERP generally have the same meanings provided under the Pension Plan.
Vesting
Participants
are vested in their SERP benefit to the same extent they are vested in their retirement benefit provided under the Pension Plan.
However, the Company generally reserves the right to forfeit and/or reduce a participant's benefit under the SERP.
Time
and Form of Payment
Payment
of benefits under the SERP generally commence upon the participant’s qualifying termination of employment. The benefit generally
may be payable in an annuity or lump sum, as agreed to by the executive and the Company.
Pursuant
to the Defined Benefit Plan changes effective January 1, 2014 described above, SERP benefits for all NEOs and other executives
were reduced from 9% to 5% of eligible earnings.
Nonqualified
Deferred Compensation
The Company
maintains two nonqualified deferred compensation plans for the CEO: the First Financial Bancorp Deferred Compensation Plan ("DCP")
and the Supplemental Savings Agreement (“SSA”). The DCP was frozen in 2010 to any future employee or Company contributions.
Effective January 1, 2014, the annual Company contribution pursuant to the terms of the SSA was discontinued. No other NEO is
eligible to participate in these plans. The table below shows earnings and distributions for the DCP and SSA.
|
Plan
Name
|
Executive
Contributions in Last Fiscal Year
1
|
Registrant
Contributions in Last Fiscal Year
|
Aggregate
Earnings in Last Fiscal Year
2
|
Aggregate
Withdrawals / Distributions
|
Aggregate
Balance at Last Fiscal Year End
3
|
Claude
E. Davis
|
|
DCP
|
$0
|
$0
|
$2,395
|
$0
|
$178,175
|
|
SSA
4
|
$0
|
$0
|
$0
|
$0
|
$252,569
|
Richard
S. Dennen
5
|
|
Oak
Street Deferred Compensation Plan
|
$0
|
$0
|
$0
|
$66,952
|
$0
|
|
|
|
|
|
|
|
1
The DCP was frozen to future contributions in 2010.
2
The investment earnings / loss for 2015 reported in this column is included in the Summary Compensation table.
3
The aggregate balance for the DCP as of December 31, 2014 includes prior deferrals of base salary and bonus that were previously
earned and reported as compensation on the Summary Compensation Table for prior years. These amounts have since been adjusted,
pursuant to the terms of the plan, for investment performance (e.g., earnings and losses), deferral credits and distributions
(as applicable).
4
Effective January 1, 2014, no additional employer contributions will be provided under the Supplemental Savings Account.
5
Amount in "Aggregate Withdrawals / Distributions" includes $66,951.56 paid to Mr. Dennen under the Oak Street
Funding LLC Nonqualified Deferred Compensation Plan that was terminated on August 13, 2015 in connection with the acquisition
of Oak Street Funding by First Financial Bank.
Deferred
Compensation Plan
The DCP
is an unfunded, unsecured deferred compensation plan maintained for the CEO only that was frozen to future employee and employer
contributions in 2010. The material terms and conditions of the DCP in 2015 are as follows:
Investments
The
account is credited with earnings and losses based on investments selected by the CEO from the investments available under the
DCP, as determined by the Company. Investment elections can be changed monthly. No securities of the Company are available for
investment under the DCP.
Distributions
Distribution
of the DCP account will be paid or commence as of the first day of the third month following the participant’s termination
of employment, except as otherwise required by Section 409A of the Code. Before any deferrals are made under the plan, the participant
may elect to receive distribution of his DCP account in a lump sum or in monthly, quarterly or annual installments over up to
ten years. If the participant dies while receiving installment payments, the remainder of his DCP account will be distributed
to his beneficiary in a lump sum 60 days following the participant’s death; otherwise, the DCP account of the participant
will be distributed on the first day of the ninth month following the participant’s death.
Executive
Supplemental Savings Agreement
The Company
has entered into an Executive Supplemental Savings Agreement with Mr. Davis to supplement the benefits provided under the First
Financial Bancorp 401(k) Savings Plan. The SSA is an unfunded, unsecured deferred compensation plan. The SSA was amended and restated
effective December 31, 2013 to state that no additional Company contributions will be provided under the SSA after December 31,
2013. The material terms and conditions of the SSA are as follows:
Employer
Contributions
For
each calendar year, ending with the 2013 calendar year, the Company made a contribution to Mr. Davis' account in the SSA equal
to 4% of the difference between (i) Mr. Davis’s total pay for the year and (ii) the compensation limit of Code Section 401(a)
(17).
Earnings
Mr.
Davis’s account under the SSA accrues earnings as if it were invested in investments available under the 401(k) Savings
Plan as selected by the Company.
Vesting
Mr.
Davis’s account under the SSA is 100% vested at all times, except that it will be forfeited if he is terminated for cause
(as is defined by the SSA).
Distribution
Mr.
Davis’s account under the SSA will be distributed in a lump sum six months following his separation from service. In the
event of his death before distribution, his account will be distributed to his beneficiary.
Split-Dollar
and Group Term Life Insurance
The Company
maintains split-dollar insurance on the lives of all its NEOs who are currently employed with the Company (with the exception
of Messrs. Gavigan and Dennen). Under the split-dollar insurance program, upon the death of a NEO, the company-owned life insurance
policy first pays the Company the premiums that the Company paid for the policy, and then pays the NEO’s beneficiary a death
benefit equal to three times the executive’s base salary in effect at his or her death.
In the
event Mr. Davis or Mr. Lefferson terminate employment and are also eligible to receive an immediate retirement benefit under the
Pension Plan (including an early retirement benefit), the Company will keep their life insurance policies in force until the executive’s
death with a death benefit payable to the executive’s beneficiary equal to three times the executive’s base salary
at the time of his termination of employment. The Company no longer offers this retirement benefit provision in its life
insurance policies. As of December 31, 2015, Mr. Davis and Mr. Lefferson are the only NEOs eligible for this benefit.
Messrs.
Gavigan and Dennen are eligible for the Company-paid group term-life insurance benefit that is available to all full-time associates
in the amount of two times annual base salary up to $600,000.
Other
Potential Post-Employment Payments
NEO
Employment and Non-Competition Agreements
The
Company is a party to
Employment and Non-Competition Agreements with each of Messrs. Davis, Stollings, Lefferson, and Dennen
(the “NEO Employment Agreements”). The NEO Employment Agreements provide for the employment of these individuals in
their current positions with the Company or in a position that is comparable to such position in responsibility.
Term
of the NEO Employment Agreements
. The current terms of the NEO Employment Agreements for Messrs. Davis, Lefferson, and
Stollings will expire on April 30, 2016, and the current term of the NEO Employment Agreement for Mr. Dennen will expire on
August 14, 2018. The NEO Employment Agreements renew automatically for additional one-year periods unless the executive or
the Company gives at least 90 days written notice prior to a scheduled expiration date that the term will not
renew.
Compensation
.
Under the NEO Employment Agreements, an executive is entitled to receive a minimum annual base salary at the rate stated in the
executive’s agreement. In addition, each of the NEO Employment Agreements provides that the executive is eligible to participate
in the Company’s STIP as in effect from time to time. The agreement for Mr. Davis provides for a target annual bonus opportunity
that is presently 60% (as established by the Compensation Committee) of his annual base salary, and the agreements for Messrs.
Dennen, Lefferson, and Stollings provide for target bonus opportunities of 40% of their annual base salaries. In addition, the
NEO Employment Agreements for Messrs. Davis, Dennen, Lefferson, and Stollings provide that the executive is eligible to receive,
during the term of the agreement, an annual long-term incentive award having a value on the grant date equal to a specified percentage
of the executive’s base salary. The applicable percentages for Messrs. Davis, Dennen, Lefferson, and Stollings are 110%,
50%, 70% and 50%, respectively, of their annual base salaries. The NEO Employment Agreements also provide that the executives
are eligible to participate in all employee benefit plans and benefits that are offered generally to the Company’s other
executive officers, subject to the terms and conditions of the applicable plan or program.
Severance
Benefits
. The NEO Employment Agreements provide for the payment of severance benefits if, during the term of the agreement
or during the one-year period following the expiration of such term due to the Company’s non-renewal of the term, the Company
terminates the executive’s employment without “Cause” (as defined in the agreement) or the executive resigns
his employment with “Good Reason” (as defined in the agreement). Upon termination of employment by the Company without
Cause (other than for disability or death) or by the executive for Good Reason, the executive is entitled to receive the following
payments and benefits:
|
•
|
earned
and unpaid base salary and vacation pay through the date of termination;
|
|
•
|
continued
payment of base salary for 24 months;
|
|
•
|
a
lump sum amount, or installments in the case of Mr. Davis, equal to two times the executive’s
target bonus amount under the STIP, except that for Mr. Davis and Mr. Stollings the amount
is the lesser of (i) two times the average of the STIP bonuses earned during the three
years prior to the termination and (ii) two and one-half times the STIP bonus target
in effect for the year of termination if Mr. Davis or Mr. Stollings is a “Covered
Employee” under Section 162(m) of the Code for the year in which employment terminates
or would have been a “Covered Employee” if he had continued his employment
through the end of such year;
|
|
•
|
outplacement
assistance at the Company’s expense (at a cost of up to 5% of the executive’s
base salary); and
|
|
•
|
up
to twelve months of the employer portion of COBRA premium payment contributions from
the Company.
|
If
an executive’s employment is terminated by reason of his death or long-term disability, by the Company for Cause or voluntarily
by the executive other than for Good Reason, the Company's obligations to the executive are limited to payment of any accrued
and unpaid base salary through the date of termination and the payment of any other benefits that are required to be provided
to the executive under the terms of a plan or program in which such executive is a participant.
Change
in Control
. Upon a Change in Control of the Company, the terms of the NEO Employment Agreements for Messrs. Davis, Lefferson,
and Stollings will end on the second anniversary of the date of occurrence of the Change in Control, and the term of the NEO Employment
Agreement for Mr. Dennen will end on the first anniversary of the Change in Control.
Section
280G
. In the event that any of the payments or benefits provided under the NEO Employment Agreements or otherwise would constitute
an “excess parachute payment” as defined in Section 280G of the Code, the payments or benefits under such agreements
will be reduced to the maximum level that would not result in an excise tax under Section 4999 of the Code, if such reduction
would cause the executive to retain an after-tax amount in excess of what would be retained if no reduction were made.
Restrictive
Covenants
. The NEO Employment Agreements prohibit the executive from revealing confidential information of the Company and
disparaging the Company. In addition, the NEO Employment Agreements prohibit the executive from competing with the Company or
its affiliated companies or soliciting their clients or hiring their employees while employed by the Company or an affiliated
company and for varying time periods after employment terminates. The noncompetition period will end one year following separation
of employment
for Mr. Davis, six months
following separation of employment for Messrs. Lefferson and Stollings, and three years following separation of employment for
Mr. Dennen (one year if separation of employment occurs during a renewal term of the agreement). The nonsolicitation period for
Messrs. Davis, Stollings, and Lefferson will end two years following separation of employment and three years following separation
of employment for Mr. Dennen (one year if separation of employment occurs during a renewal term).
Definitions
.
As used in the NEO Employment Agreements, the terms “Change in Control” and “Good Reason” are defined
as follows:
|
•
|
A
“Change in Control” is deemed to have occurred if (i) any person (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) acquires beneficial
ownership (within the meaning of the Securities Exchange Act of 1934) of shares representing
20% or more of the Company’s voting power in the election of directors, (ii) there
is a change in a majority of the members of the Board of Directors over a two-year period,
unless each new director is approved by a vote of at least two-thirds of the directors
in office at the beginning of such two-year period, (iii) there is a reorganization,
merger, consolidation or share exchange as a result of which the Company’s common
shares are exchanged or converted for shares of another corporation, a dissolution or
liquidation of the Company or a sale or disposition of 50% or more of the Company’s
assets, (iv) there is any other form of reorganization, merger, consolidation or share
exchange, unless the persons who were beneficial owners of the Company’s common
shares before the completion of such transaction own more than 65% of the outstanding
shares of the successor or surviving corporation following the completion of such transaction
and certain other conditions are met; or (v) any other transaction occurs that would
be required to be reported by the Company as a change of control under specified provisions
of the federal securities laws.
|
|
•
|
“Good
Reason” is defined in the NEO Employment Agreements as the occurrence, without
the executive’s consent, of: (i) a significant/material reduction in the executive’s
base salary/base compensation, except for any decrease that is generally applicable to
other similarly situated senior executives/officers of the Company; (ii) the failure
of the Company (after notice and an opportunity to cure) to pay or provide to the NEO
when due any material amount of compensation or material benefit that is required to
be paid or provided under the agreement; (iii) a significant reduction in the NEO’s
authority or responsibilities; or (iv) the failure of the Company to obtain the written
agreement of any successor to the Company or the business of the Company to assume the
agreement (solely to the extent such assumption does not occur by operation of law).
|
Severance
and Change in Control Agreement.
The
Company is a party to a Severance and Change in Control Agreement with Mr. Gavigan dated March 13, 2015 (the “CIC Agreement”).
Under the CIC Agreement, Mr. Gavigan will receive severance benefits in the event the Company terminates his employment without
Cause or he terminates his employment for Good Reason within 12 months following a Change in Control. As used in the CIC Agreement,
the definitions of the terms “Cause,” and “Change in Control” are substantially the same as the definitions
for those terms in the NEO Employment Agreements. The term “Good Reason” is defined in the CIC Agreement to include
termination of employment by the executive within 90 days following the occurrence (and after the expiration of any cure period)
of either (i) a material reduction in the executive’s base compensation (other than a reduction applicable to all similarly
situated executives) or (ii) a material breach by the Company of the CIC Agreement.
The
initial term of the CIC Agreement will end on April 30, 2016. The CIC Agreement will renew automatically for an additional, one-year
period, and will continue to renew unless Mr. Gavigan or the Company gives at least 90 days written notice prior to a scheduled
expiration date that the term will not renew. In the event of a Change in Control, the term of the CIC Agreement will be the one-year
period following the consummation of the Change in Control, provided that the agreement will not automatically renew at the end
of the term following such Change in Control.
Upon
termination of Mr. Gavigan by the Company without Cause (other than as a result of death or disability) and not in connection
with a Change in Control, Mr. Gavigan will be entitled to receive the following payments and benefits: (i) earned and unpaid base
salary and vacation pay through the date of termination; (ii) continued payment of base salary for 24 months; (iii) an amount
equal to a multiple of Mr. Gavigan’s target bonus amount under the STIP as described below; (iii) outplacement assistance
at the Company’s expense (at a cost of up to 5% of the executive’s base salary); and (iv) up to twelve months of the
employer portion of COBRA premium payment contributions from the Company. If Mr. Gavigan is a covered employee for purposes of
Section 162(m)(3) of the Code for the year in which employment terminates (or would have been a Covered Employee if the executive
had continued employment until the end of the year), the STIP severance amount payable to Mr. Gavigan will be equal to the lesser
of (i) two times the average of the STIP bonuses earned during the three years prior to the qualifying termination (or such lesser
period for which Mr. Gavigan was eligible to participate in the STIP) or (ii) two and one-half times the STIP bonus target in
effect for the year of termination. If Mr. Gavigan is not a Covered Employee or if a severance benefit is being paid in connection
with a Change in Control, the STIP severance amount will be two times his target bonus amount under the STIP. Mr. Gavigan is not
presently a Covered Employee.
If,
immediately prior to a Change in Control or during the one-year period that commences upon a Change in Control, the Company terminates
Mr. Gavigan’s employment without Cause (other than for disability or death) or if Mr. Gavigan terminates his employment
for Good Reason, Mr. Gavigan will be entitled to receive the following payments and benefits: (i) earned and unpaid base salary
and vacation pay through the date of termination; (ii) continued payment of base salary for 24 months; (iii) an amount equal to
two times his target amount under the STIP; (iii) outplacement assistance at the Company’s expense (at a cost of up to 5%
of the executive’s base salary); and (iv) up to twelve months of the employer portion of COBRA premium payment contributions
from the Company.
The
CIC Agreement provides that, in the event that any of the payments or benefits provided under such agreement or otherwise would
constitute an “excess parachute payment” as defined in Section 280G of the Code, the payments or benefits will be
reduced to the maximum level that would not result in an excise tax under Section 4999 of the Code, if such reduction would cause
the executive to retain an after-tax amount in excess of what would be retained if no reduction were made.
For
six months following termination of employment (other than upon termination for Cause), Mr. Gavigan may not compete with the Company
and, for two years following termination of employment, he may not solicit the Company’s clients or solicit or hire the
Company’s employees.
Potential
Payments for Termination Following a Change-in-Control
The
table below summarizes the potential change-in-control benefits that would become payable to each of the NEOs as of December 31,
2015 pursuant to such executive’s NEO Employment Agreement or CIC Agreement, as applicable, and under such executive’s
equity award agreements (“Equity Agreements”). Mr. Langford is not included because he was not an executive officer
of the Company on December 31, 2015.
In
calculating these benefits, we assumed a change in control of the Company on December 31, 2015. To the extent relevant, the
amounts are based on the Company’s closing share price on December 31, 2015 of $18.07 per share. If we calculated these
amounts using a different date, the change in the amounts could be significant. For example, other equity awards have vested and/or
were granted since December 31, 2015 and our stock value has fluctuated. Therefore, if we had calculated the amounts payable based
on an April 2016 change in control and termination, the total payment amount would differ. In addition, several of the items shown
(particularly under “Cash Severance” and “Excise Tax Gross-Up”) depend on compensation received over a
period of time.
We
are applying the definitions of a change in control that are included in the NEO Employment Agreements, the CIC Agreements and
the Equity Agreements, which are substantially identical with the exception of Mr. Dennen’s Equity Agreements. The definition
of a change in control in Mr. Dennen’s Equity Agreements includes, in addition to the
change
in control definitions used in the other Equity Agreements, that the sale of Oak Street Funding by First Financial will also be
treated as a change in control under the agreement.
In
accordance with SEC regulations, we do not show in the table any amount to be provided to a NEO under any arrangement which does
not discriminate in scope, terms or operation in favor of our executive officers and which is available generally to all salaried
employees. Also, the following table does not include amounts disclosed above under the Pension Benefits Table, the Nonqualified
Deferred Compensation Table or the Outstanding Equity Awards at Fiscal Year End Table, except to the extent that the amount payable
to the NEO would be enhanced by the termination event.
The
benefits shown under “Acceleration of Unvested Equity” reflect the market value of restricted stock held by each of
the NEOs on December 31, 2015 for all outstanding, unvested awards including accrued dividends. Awards made in 2014 and 2015
do not immediately vest upon a change in control. In order for these awards to vest, a second qualifying trigger (i.e., loss of
employment) must occur in conjunction with the change in control. The values shown in assume a double trigger event for those
awards and thus include the value of all outstanding equity awards and accrued dividends.
We
computed the amounts in accordance with the terms of the change in control employment or severance agreements. In addition, it
is possible that an excise tax payment may be required if a change in control occurred even without a qualifying employment termination
with respect to those benefits that become payable or vested solely upon the occurrence of a change in control.
|
Mr.
Davis
|
Mr.
Gavigan
|
Mr.
Dennen
|
Mr.
Lefferson
|
Mr.
Stollings
|
Change-in-Control
("CIC") Severance Benefits
|
|
|
|
Base
Salary
1
|
$1,464,600
|
$450,000
|
$760,000
|
$742,000
|
$720,000
|
Bonus
for Year of Separation
2
|
$512,687
|
$135,000
|
$304,000
|
$296,800
|
$182,522
|
General
Health and Welfare Benefits / Outplacement
|
$53,716
|
$28,107
|
$29,873
|
$34,757
|
$35,101
|
CIC
Severance Benefits
|
$2,031,003
|
$613,107
|
$1,093,873
|
$1,073,557
|
$937,623
|
Acceleration
of Unvested Equity
3
|
|
|
|
|
Restricted
Stock
|
$2,143,843
|
$96,114
|
$1,355,250
|
$574,879
|
$379,759
|
Accrued
Dividends on Restricted Stock
|
$127,300
|
$5,032
|
$24,000
|
$29,741
|
$19,003
|
Unvested
Options
|
$0
|
$0
|
$0
|
$0
|
$0
|
Total
Unvested Equity
|
$2,271,143
|
$101,146
|
$1,379,250
|
$604,620
|
$398,762
|
Total
Compensation Under Agreements
|
|
|
|
|
Cutback
to avoid 280G Excise tax
(if applicable)
4
|
$0
|
$0
|
$0
|
$0
|
$0
|
Total
Benefits
5
|
$4,302,146
|
$714,253
|
$2,473,123
|
$1,678,177
|
$1,336,385
|
|
|
|
|
|
|
1
The multiplier for all NEOs is 2 times base salary.
2
Bonus for Messrs. Davis and Stollings is equal to the lesser of (x) two and one-half times the Target Bonus Amount or (y)
two times the three-year average of the actual annual bonus awards paid (or payable) to the employee by the Company for the three
(3) completed calendar years that immediately precede the employee’s termination of employment, payable in equal bi-weekly
installments over the Severance Period, commencing with the first payroll period following the sixtieth (60th) day after employee’s
date of termination of employment (the Termination Compensation and Termination Short-Term Bonus, collectively, the “Severance
Benefits”). Messrs. Gavigan, Dennen, and Lefferson have a multiplier of 2 times bonus.
3
Per the 1999, 2009 and 2012 Stock Plans, all unvested stock options and restricted shares shall become fully exercisable
or vested as of the date of a Change in Control. The values shown in the table above assume a double trigger event for those awards
and thus includes the value of all outstanding equity awards and accrued dividends. For purposes of this table, performance shares
are assumed to be earned at target, however under a true change in control the Committee would assess actual performance prior
to the change and control, if possible and pro-rate the awards.
4
Includes reduction in payments to avoid 280G excise tax only in the event the reduction in payment results in a greater
net after-tax amount than retained by the executive had no cutback been made.
5
These are the amounts assigned to these benefits for purposes of IRC Section 280G calculations. They do not necessarily
reflect the actual cash payments to be paid to the applicable employees upon the event of a change in control.
Payments
for Termination Without Regard to a Change in Control
The
table below summarizes the potential benefits payable to each of the NEOs under his NEO Employment Agreements or CIC agreement,
as applicable, upon an involuntary termination of the NEO's employment by the Company without Cause or upon the NEO’s resignation
for “Good Reason” without regard to the occurrence of a change in control of the Company.
As
described above, a NEO is entitled to certain payments if he terminates his employment for “Good Reason.”
|
Mr.
Davis
|
Mr.
Gavigan
|
Mr.
Dennen
|
Mr.
Lefferson
|
Mr.
Stollings
|
|
|
|
|
|
|
Termination
for Good Reason Severance Benefits
|
|
|
|
Base
Salary
1
|
$1,464,600
|
$450,000
|
$760,000
|
$742,000
|
$720,000
|
Bonus
for Year of Separation
2
|
$512,687
|
$48,219
|
$304,000
|
$296,800
|
$182,522
|
General
Health and Welfare Benefits / Outplacement
|
$53,716
|
$28,107
|
$29,873
|
$34,757
|
$35,101
|
|
|
|
|
|
|
Total
Benefits
|
$2,031,003
|
$526,326
|
$1,093,873
|
$1,073,557
|
$937,623
|
|
|
|
|
|
|
1
The multiplier for all NEOs is 2 times base salary.
2
In the event Messrs. Davis, Gavigan, and Stollings are covered employees as defined under Section 162 (m) of the Code, payout,
as shown above, is equal to the lesser of (x) two and one-half times the Target Bonus Amount or (y) two times the three-year average
of the actual annual bonus awards paid (or payable) to the employee by the Company for the three (3) completed calendar years
that immediately precede the employee’s termination of employment, payable in equal bi-weekly installments over the Severance
Period, commencing with the first payroll period following the sixtieth (60th) day after employee’s date of termination
of employment (the Termination Compensation and Termination Short-Term Bonus, collectively, the “Severance Benefits”).
However, Mr. Gavigan in his current role as Chief Financial Officer is not a covered employee and his bonus amount would be equal
to 2 times target or $135,000 in this instance. Messrs. Dennen and Lefferson have a multiplier of 2 times bonus target amount.
Payments
for Voluntary Termination by NEO, Termination for Cause
In
the event of a NEO’s voluntary termination of the agreement (other than as specifically set forth in the agreement) or termination
for cause, the NEO is not entitled to any special benefits under his employment agreement or any stock awards. All such benefits
are void.
Payments
upon Death or Disability
There
are no additional benefits or payments due to disability of a NEO, other than under the existing disability policies of the Company
that apply to all employees.
Upon
the death of a NEO (other than Messrs. Gavigan and Dennen), the NEO’s estate would be entitled to three (3) times the NEO’s
base salary at the time of death pursuant to the split-dollar life insurance policies previously discussed. Messrs. Gavigan and
Dennen are eligible for the Company-paid group life benefit that is available to all full time associates. See “Split-Dollar
and Group Term Life Insurance.”
Awards
granted after January 1, 2014, immediately vest in the event of death or disability.
Retirement
Benefits
In
the event of retirement by the NEOs, they would be entitled to certain retirement benefits that can be paid over time or taken
in a lump sum. Below is a presentation regarding lump sum benefits for early retirement under the Pension Plan:
|
Total
Present Value of Accumulated Benefit using ASC Topic 715 Assumptions
1
|
Total
Present Value of Vested Accumulated Benefit using Actual Lump Sum Basis
2
|
Incremental
Value due to the Difference between ASC Topic 715 Assumptions and Actual Lump Sum Basis
3
|
Incremental
Value due to Early Retirement Subsidies
|
Claude
E. Davis
|
$772,806
|
$847,004
|
$66,887
|
$7,311
|
John
M. Gavigan
|
$55,821
|
$74,588
|
$18,767
|
$0
|
Richard
S. Dennen
|
$0
|
$0
|
$0
|
$0
|
C.
Douglas Lefferson
|
$1,004,428
|
$936,582
|
($67,846)
|
$0
|
Anthony
M. Stollings
|
$206,107
|
$218,059
|
$11,952
|
$0
|
Kevin
T. Langford
|
$219,546
|
$264,429
|
$44,883
|
$0
|
|
|
|
|
|
1
See "Pension Benefits Table."
2
Calculated assuming NEO terminates employment on December 31, 2015 and receives an immediate lump sum distribution using
the rate in effect for December 2015 payments.
3
For information purposes only. Allocates the increase in retirement value over the values shown in the Pension Benefit Table
to its two primary sources: (i) Difference between U.S GAAP assumptions and actual lump sum interest rate basis; and (ii) Value
of early retirement subsidies that are included in the actual lump sum payment if the NEO terminates employment.
Other
than as set forth above, NEOs are not entitled to any additional benefits. For example, there currently is no acceleration of
restricted stock or options upon retirement.
Compensation
Committee Interlocks and Insider Participation
During
2015, no member of the Compensation Committee was an employee, officer or former officer of the Company. None of our executive
officers served in 2015 on the Board or Compensation Committee (or other committee serving an equivalent function) of any entity
that had an executive officer serving as a member of our Board or the Compensation Committee. All Compensation Committee members
had banking or financial services transactions in the ordinary course of business with our bank subsidiary. No other relationships
required to be reported under the rules promulgated by the SEC exist with respect to members of the Company’s Compensation
Committee.
2017
Annual Meeting Information
|
Shareholder
Proposals for the 2017 Annual Meeting
If an
eligible shareholder wishes to present a proposal to be included in the Company’s proxy statement and form of proxy relating
to the 2017 Annual Meeting of Shareholders, the proposal must be received by our Corporate Secretary no later than December 16,
2016 (120 calendar days prior to the anniversary of this year’s proxy statement mailing date). Any such proposal must comply
with Rule 14a-8 promulgated by the SEC pursuant to the Securities Exchange Act of 1934, as amended. Upon receipt of such a proposal,
we will determine whether or not to include the proposal in the proxy statement and proxy in accordance with applicable regulations.
If an
eligible shareholder wishes to nominate a director at our 2017 Annual Meeting of Shareholders written notice of this nomination
must be received by our Corporate Secretary, no later than February 23, 2017 (90 calendar days prior to the anniversary of this
year’s annual meeting).
All shareholder
proposals should be sent to First Financial Bancorp, Attention: Shannon M. Kuhl, Chief Legal Officer and Corporate Secretary,
255 E. Fifth Street, Suite 2900, Cincinnati, Ohio 45202.
April
14, 2016
BY ORDER OF THE BOARD OF DIRECTORS
Shannon
M. Kuhl
Corporate Secretary
EXHIBIT
A
FIRST
FINANCIAL BANCORP.
KEY
EXECUTIVE SHORT TERM INCENTIVE PLAN
(Amended
and Restated March 10, 2015)
The purpose
of the Plan is to establish a program of incentive compensation for designated officers and/or key executive employees of the
Company and its subsidiaries and divisions that is directly related to the performance results of the Company and such employees.
The Plan provides annual incentives, contingent upon continued employment and meeting certain corporate goals, to certain key
executives who make substantial contributions to the Company.
“Board”
means the Board of Directors of the Company or the Executive Committee thereof.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
means either (i) the Board or (ii) a committee selected by the Board to administer the Plan and composed of not less than two
directors, each of whom is an “outside director” (within the meaning of Section 162(m) of the Code). If at any time
such a Committee has not been so designated, the Compensation Committee of the Board shall constitute the Committee or if there
shall be no Compensation Committee of the Board, the Board shall constitute the Committee.
“Company”
means First Financial Bancorp and each of its subsidiaries.
“Designated
Beneficiary” means the beneficiary or beneficiaries designated in accordance with Article XIII hereof to receive the amount,
if any, payable under the Plan upon the Participant’s death.
“162(m)
Incentive Award” means a Incentive Award which is intended to qualify for the performance-based compensation exception to
Section 162(m) of the Code, as further described in Article VII.
“Incentive
Award” means the award, as determined by the Committee, to be granted to a Participant based on that Participant’s
level of attainment of his or her goals established in accordance with Articles IV and V.
“Participant”
means any officer or key executive designated by the Committee to participate in the Plan. At a minimum, the participant
group will consist of the Chief Executive Officer and certain officers of First Financial Bancorp reporting directly to the Chief
Executive Officer and selected by the Committee who either are, or are determined by the Committee to be likely to become, a “covered
employee” within the meaning of Section 162(m) of the Code.
“Performance
Criteria” means objective performance criteria established by the Committee with respect to 162(m) Incentive Awards. Performance
Criteria shall be measured in terms of one or more of the following objectives, described as such objectives relate to Company-wide
objectives or of the subsidiary, division, department or function with the Company or subsidiary in which the Participant is employed:
assets
|
|
average
total common equity
|
|
deposits
|
earnings
per share
|
|
economic
profit added
|
|
efficiency
ratio
|
gross
margin
|
|
gross
revenue
|
|
internal
rate of return
|
loans
|
|
net
charge-offs
|
|
net
income
|
net
income before tax
|
|
net
interest income
|
|
non-interest
expense
|
non-interest
income
|
|
non-performing
assets
|
|
operating
cash flow
|
pre-provision
net revenue
|
|
return
on assets
|
|
return
on equity
|
return
on risk weighted assets
|
|
return
on sales
|
|
stock
price
|
tangible
equity
|
|
total
shareholder return
|
|
|
Each grant
of a 162(m) Incentive Award shall specify the Performance Criteria to be achieved, a minimum acceptable level of achievement below
which no payment or award will be made, and a formula for determining the amount of any payment or award to be made if performance
is at or above the minimum acceptable level but falls short of full achievement of the specified Performance Criteria. The Performance
Criteria may be measured against peer group performance.
If the Committee
determines that a change in the business, operations, corporate structure or capital structure of the Company, or the manner in
which it conducts its business, or the performance criteria would produce excessive or unnecessary risk to the institution, or
other events or circumstances render the Performance Criteria to be unsuitable, the Committee may modify such Performance Criteria
or the related minimum acceptable level of achievement, in whole or in part,
as the Committee
deems appropriate and equitable; provided, however, that no such modification shall be made if the effect would be to cause a
162(m) Incentive Award to fail to qualify for the performance-based compensation exception to Section 162(m) of the Code.
“Performance
Period” means the period during which performance is measured to determine the level of attainment of an Incentive Award,
which shall be the fiscal year of the Company or such other period as the Company may determine.
“Plan”
means the First Financial Bancorp Key Executive Short Term Incentive Plan.
Participants
in the Plan shall be selected by the Committee for each Performance Period from those officers and key executives of the Company
and its subsidiaries whose efforts contribute materially to the success of the Company. No employee shall be a Participant unless
he or she is selected by the Committee, in its sole discretion. No employee shall at any time have the right to be selected as
neither a Participant nor, having been selected as a Participant for one Performance Period, to be selected as a Participant in
any other Performance Period.
The Committee,
in its sole discretion, will determine eligibility for participation, establish the maximum award which may be earned by each
Participant (which may be expressed in terms of dollar amount, percentage of salary or any other measurement), establish goals
for each Participant (which may be objective or subjective, and based on individual, Company, subsidiary and/or division performance),
calculate and determine each Participant’s level of attainment of such goals, and calculate the Incentive Award for each
Participant based upon such level of attainment.
Except as
otherwise herein expressly provided, full power and authority to construe, interpret, and administer the Plan shall be vested
in the Committee, including the power to amend or terminate the Plan as further described in Article XVI. The Committee may at
any time adopt such rules, regulations, policies, or practices as, in its sole discretion, it shall determine to be necessary
or appropriate for the administration of, or the performance of its respective responsibilities under, the Plan. The Committee
may at any time amend, modify, suspend, or terminate such rules, regulations, policies, or practices.
The Committee,
based upon information to be supplied by management of the Company and, where determined as necessary by the Board, the ratification
of the Board, will establish for each Performance Period a maximum award (and, if the Committee deems appropriate, a threshold
and target award) and goals relating to Company, subsidiary, divisional, departmental and/or functional performance for each Participant
and communicate such award levels and goals to each Participant prior to or during the Performance Period for which such award
may be made. Incentive Awards will be based on an annual calendar year performance period or such other period as the Committee
may determine, provided that the performance period of any 162(m) Incentive Award will comply with the requirements of Section
162(m) of the Code. Incentive Awards will be earned by each Participant based upon the level of attainment of his or her goals
during the applicable Performance Period; provided that the Committee may reduce the amount of any Incentive Award in its sole
and absolute discretion. As soon as practicable after the end of the applicable Performance Period, the Committee shall determine
the level of attainment of the goals for each Participant and the Incentive Award to be made to each Participant.
VI.
|
Payment
of Incentive Awards
|
Incentive
Awards earned during any Performance Period shall be paid as soon as practicable following the end of such Performance Period
and the determination of the amount thereof shall be made by the Committee. Payment of Incentive Awards shall be made in the form
of cash, provided, however that the Committee may elect to pay a percentage of such Incentive Awards in shares of the Company’s
common shares, no par value (“Shares”) pursuant to the any shareholder approved stock plan then in effect with available
shares and for which the Participant is eligible. Any Shares shall be subject to restrictions as may be determined by the
Committee. Incentive Award amounts earned but not yet paid will not accrue interest. Incentive Awards, including any grant
of Shares in lieu of cash, shall be paid or issued by March 15 of the calendar year following the year in which the Performance
Period closes, after the determination of the amount thereof by the Committee.
VII.
|
162(m)
Incentive Awards
|
Unless determined
otherwise by the Committee, each Incentive Award, awarded under the Plan shall be a 162(m) Incentive Award and will be subject
to the following requirements, notwithstanding any other provision of the Plan to the contrary:
1.
No 162(m) Incentive Award may be paid unless and until the shareholders of the Company have approved the Plan in a manner which
complies with the shareholder approval requirements of Section 162(m) of the Code.
2.
A 162(m) Incentive Award may be made only by a Committee which is comprised solely of not less than two directors, each of whom
is an “outside director” (within the meaning of Section 162(m) of the Code)
3.
The performance goals to which a 162(m) Incentive Award is subject must be based solely on Performance Criteria. Such performance
goals, and the maximum, target and/or threshold (as applicable) Bonus Amount payable upon attainment thereof, must be established
by the Committee within the time limits required in order for the 162(m) Incentive Award to qualify for the performance-based
compensation exception to Section 162(m) of the Code.
4. No 162(m) Incentive Award may be paid until the Committee has certified the level of attainment of the applicable Performance
Criteria.
5.
The maximum amount of a 162(m) Incentive Award is the lower of 2x target Incentive Award or $2.0 million to a single Participant.
VIII.
|
Termination
of Employment
|
A Participant
shall be eligible to receive payment of his or her Incentive Award earned during a Performance Period, so long as the Participant
is employed on the last day of such Performance Period, notwithstanding any subsequent termination of employment prior to the
actual payment of the Incentive Award. In the event of a Participant’s death prior to the payment of an Incentive Award
which has been earned, such payment shall be made to the Participant’s Designated Beneficiary or, if there is none living,
to the estate of the Participant.
IX.
|
Reorganization
or Discontinuance
|
The obligations
of the Company under the Plan shall be binding upon any successor corporation or organization resulting from merger, consolidation
or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The Company will make appropriate provision for the preservation of Participants’ rights
under the Plan in any agreement or plan which it may enter into or adopt to effect any such merger, consolidation, reorganization
or transfer of assets.
If the business
conducted by the Company shall be discontinued, any previously earned and unpaid Incentive Awards under the Plan shall become
immediately payable to the Participants then entitled thereto.
X.
|
Non-Alienation
of Benefits
|
A Participant
may not assign, sell, encumber, transfer or otherwise dispose of any rights or interests under the Plan except by will or the
laws of descent and distribution. Any attempted disposition in contravention of the preceding sentence shall be null and void.
XI.
|
No
Claim or Right to Plan Participation
|
No employee
or other person shall have any claim or right to be selected as a Participant under the Plan. Neither the Plan nor any action
taken pursuant to the Plan shall be construed as giving any employee any right to be retained in the employ of the Company.
The Company
shall deduct from all amounts paid under the Plan all federal, state, local and other taxes required by law to be withheld with
respect to such payments.
XIII.
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Designation
and Change of Beneficiary
|
Each Participant
may indicate upon notice to him or her by the Committee of his or her right to receive an Incentive Award a designation of one
or more persons as the Designated Beneficiary who shall be entitled to receive the amount, if any, payable under the Plan upon
the death of the Participant. Such designation shall be in writing to the Committee. A Participant may, from time to time, revoke
or change his or her Designated Beneficiary without the consent of any prior Designated Beneficiary by filing a written designation
with the Committee. The last such designation received by the Committee shall be controlling; provided, however, that no designation,
or change or revocation thereof, shall be effective unless received by the Committee prior to the Participant’s death, and
in no event shall it be effective as of a date prior to such receipt.
XIV.
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Payments
to Persons Other Than the Participant
|
If the Committee
shall find that any person to whom any amount is payable under the Plan is unable to care for his or her affairs because of incapacity,
illness or accident, or is a minor, or has died, then any payment due to such person or his or her estate (unless a prior claim
therefore has been made by a duly appointed legal representative) may, if the Committee so
directs,
be paid to his or her spouse, a child, a relative, an institution maintaining or having custody of such person, or any other person
deemed by the Committee, in its sole discretion, to be a proper recipient on behalf of such person otherwise entitled to payment.
Any such payment shall be a complete discharge of the liability of the Company therefore.
XV.
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No
Liability of Committee Members
|
No member
of the Committee shall be personally liable by reason of any contract or other instrument related to the Plan executed by such
member or on his or her behalf in his or her capacity as a member of the Committee, nor for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each employee, officer, or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan may be allocated or delegated, against any cost or expense
(including legal fees, disbursements and other related charges) or liability (including any sum paid in settlement of a claim
with the approval of the Board) arising out of any act or omission to act in connection with the Plan unless arising out of such
person’s own fraud or bad faith.
XVI.
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Termination
or Amendment of this Plan
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The Committee
may amend, suspend or terminate this Plan at any time; provided that no amendment may be made without the approval of the Company’s
shareholders if the effect of such amendment would be to cause outstanding or pending 162(m) Incentive Awards to cease to qualify
for the performance-based compensation exception to Section 162(m) of the Code.
Participants
shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, Beneficiary, legal
representative or any other person. To the extent that any person acquires a right to receive payments from the Company under
the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made
hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.
The Plan
is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
The terms
of the Plan and all rights thereunder shall be governed by and construed in accordance with the laws of the State of Ohio, without
reference to principles of conflict of laws.
XIX.
|
Section
409A of the Internal Revenue Code
|
It is the
Company’s intent that the Plan complies with or be exempt from the requirements of Section 409A and that the Plan be administered
and interpreted accordingly. If and to the extent that any payment or benefit under the Plan is determined by the Company to constitute
“non-qualified deferred compensation” subject to Section 409A and is payable to a Participant by reason of the Participant’s
termination of employment, then (a) such payment or benefit shall be made or provided to the Participant only upon a “separation
from service” as defined for purposes of Section 409A under applicable regulations and (b) if the Participant is a “specified
employee” (within the meaning of Section 409A and as determined by the Company), such payment or benefit shall be made or
provided on the date that is six months and one day after the date of the Participant’s separation from service (or earlier
death). Any amount not paid in respect of the six month period specified in the preceding sentence will be paid to the Participant
(plus interest at the applicable federal rate as defined in Section 1274(d) of the Code) in a lump sum on the date that is six
months and one day after the Participant’s separation from service (or earlier death). Each payment made under the Plan
shall be deemed to be a separate payment for purposes of Section 409A.
The Plan
is intended to comply with, and shall be interpreted and administered consistent with, any applicable banking rules and regulations
relating to compensation.
If, following
the payment of any bonus, the Committee determines that such payment was based on materially inaccurate financial statements (which
includes, but is not limited to, statements of earnings, revenues or gains) or any other materially inaccurate performance metric
criteria, the Company shall be entitled to receive, and the Participant shall be obligated to pay to the Company immediately upon
demand therefor, the portion of the bonus that the Committee determines was not earned.
The effective
date of the Plan shall be as of January 1, 2011, subject to approval of the Company’s shareholders on May 24, 2011, as required
to comply with the requirements of Section 162(m) of the Code, and thereafter shall remain in effect until terminated in accordance
with section XVI hereof. No payments shall be made under the Plan if it is not approved by the Company's shareholders.
|
PROXY
CARD
ANNUAL
MEETING OF SHAREHOLDERS
May
24, 2016
THIS
PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
|
John
M. Gavigan and Billie L. Meents, or either of them, with full power of substitution, are hereby authorized to represent and vote
the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting
of Shareholders of First Financial Bancorp. (the “Company”) to be held at the Company’s headquarters, First
Financial Center, 255 E. Fifth Street, 9
th
Floor, Room 950, Cincinnati, Ohio 45202 on Tuesday, May 24, 2016 at 10:00
a.m., local time, or at any adjournment thereof.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and may be revoked prior to its exercise. Receipt of the accompanying proxy
statement is hereby acknowledged.
Shares
represented by this proxy will be voted by the shareholder. If no such directions are indicated, the proxies will have authority
to vote “FOR” the election of directors; and “FOR” Proposals Two, Three and Four.
In
their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.
TO
VOTE: MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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☐
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|
KEEP
THIS PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board
of Directors recommends that you vote
FOR
the following:
1. Election
of Directors
Nominees
|
01
|
J.
Wickliffe Ach
|
06
|
Peter
E. Geier
|
10
|
Jeffrey
D. Meyer
|
|
02
|
David
S. Barker
|
07
|
Murph
Knapke
|
11
|
John
T. Neighbours
|
|
03
|
Cynthia
O. Booth
|
08
|
Susan
L. Knust
|
12
|
Richard
E. Olszewski
|
|
04
|
Claude
E. Davis
|
09
|
William
J. Kramer
|
13
|
Maribeth
S. Rahe
|
|
05
|
Corinne
R. Finnerty
|
|
|
|
|
For
All
|
Withhold
All
|
For All
Except
|
|
☐
|
☐
|
☐
|
|
To withhold authority to vote for any individual
nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
The Board
of Directors recommends you vote FOR the following proposals:
|
|
For
|
Against
|
|
Abstain
|
|
2.
|
Re-approval
of the Amended and Restated Key Executive Short Term Incentive Plan.
|
☐
|
☐
|
|
☐
|
|
3.
|
Ratification
of Crowe Horwath LLP as the Company’s independent registered public accounting firm for 2016.
|
☐
|
☐
|
|
☐
|
|
4.
|
Advisory
(non-binding) vote on the compensation of the Company’s executive officers.
|
☐
|
☐
|
|
☐
|
|
|
NOTE:
The proxies are authorized to consider and act upon such other matters as may properly come before the Annual Meeting or any
adjournment thereof.
|
|
|
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VOTE
BY INTERNET:
Before
the meeting, go to
www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the website and follow
the instructions to obtain your records and to create an electronic voting instruction form.
|
|
|
|
During
the meeting, go to
www.virtualshareholdermeeting.com/ffbc16
You
may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked
by the arrow available and follow the instructions.
|
|
|
|
VOTE
BY PHONE: 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
|
|
|
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VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report & proxy statement are available
at
www.proxyvote.com
.
Please sign
exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full
title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in
full corporate or partnership name, by authorized officer.
|
Date
|
|
|
Date
|
|
|
|
|
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Signature
(PLEASE SIGN WITHIN BOX)
|
|
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Signature
(Joint Owners)
|
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