UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ |
Preliminary Proxy Statement |
| ☐ |
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☒ |
Definitive Proxy Statement |
| ☐ |
Definitive Additional Materials |
| ☐ |
Soliciting Material under §240.14a-12 |
First
Capital Inc
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing
Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ☐ |
Fee paid previously with preliminary materials. |
| ☐ |
Fee computed on table in exhibit required by Item 25(b) per Exchange Act rules 14a6(i)(1) and 0-11 |
April 12, 2023
Dear Shareholder:
You are cordially invited to attend the annual
meeting of shareholders of First Capital, Inc. We will hold the meeting at the main office of First Harrison Bank, 220 Federal Drive,
N.W., Corydon, Indiana, on Wednesday, May 24, 2023, at 12:00 noon, local time.
The notice of annual meeting and the proxy statement
appearing on the following pages describe the formal business to be transacted at the meeting. During the meeting, we also will report
on the operations of the Company. Directors and officers of the Company, as well as a representative of Monroe Shine & Co., Inc.,
the Company’s independent registered public accounting firm, will be present to respond to appropriate questions of shareholders.
It is important that your shares are represented
at this meeting, whether or not you attend the meeting in person and regardless of the number of shares you own. To make sure your shares
are represented, we urge you to vote via the internet, telephone, or by returning a completed proxy card. If you attend the meeting, you
may vote in person even if you have previously mailed a proxy card or voted via the internet or by telephone.
We look forward to seeing you at the meeting.
Sincerely,
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 |
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Kathryn W. Ernstberger |
William W. Harrod |
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Chairperson of the Board |
President and Chief Executive Officer |
FIRST CAPITAL, INC.
220 Federal Drive, N.W.
Corydon, Indiana
47112
(812) 738-2198
NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS
| TIME AND DATE |
12:00 noon, local time, on Wednesday, May 24, 2023 |
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| PLACE |
First Harrison Bank |
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220 Federal Drive, N.W. |
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Corydon, Indiana 47112 |
| ITEMS OF BUSINESS |
(1) |
The election of five (5) directors to serve for a term of three years; |
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(2) |
The ratification of the selection of Monroe Shine & Co., Inc. as our independent registered public accounting firm for the fiscal year ending December 31, 2023; |
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(3) |
An advisory vote on the compensation of our named executive officers as disclosed in the accompanying proxy statement; |
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(4) |
An advisory vote on the frequency of the advisory vote on the compensation of executive officers; and |
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(5) |
The transaction of such other business as may properly come before the meeting and any adjournment or postponement of the meeting. |
| RECORD DATE |
In order to vote, you must have been a shareholder at the close of business on April 3, 2023. |
| PROXY VOTING |
It is important that your shares be represented and voted at the meeting. You can vote your shares via the internet, by telephone, or by completing and returning a proxy card. A printed proxy card for the annual meeting and a self-addressed, postage pre-paid envelope will be mailed to those shareholders that have not voted as of April 24, 2023. You can revoke a proxy at any time before it’s exercised at the meeting by following the instructions in the proxy statement. |
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BY ORDER OF THE BOARD OF DIRECTORS |
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 |
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Jennifer Meredith |
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Corporate Secretary |
Corydon, Indiana
April 12, 2023
FIRST CAPITAL, INC.
PROXY STATEMENT
GENERAL INFORMATION
We are providing this proxy statement to you in
connection with the solicitation of proxies by the Board of Directors (the “Board”) of First Capital, Inc. for the 2023
annual meeting of shareholders and for any adjournment or postponement of the annual meeting. In this proxy statement, we may also refer
to First Capital, Inc. as “First Capital,” the “Company,” “we,” “our” or “us.”
First Capital is the holding company for First
Harrison Bank. In this proxy statement, we may also refer to First Harrison Bank as “First Harrison” or the “Bank.”
We will hold the annual meeting at the Bank’s
main office, 220 Federal Drive, N.W., Corydon, Indiana 47112, on Wednesday, May 24, 2023, at 12:00 noon, local time.
We intend to provide access to this proxy statement
and a proxy card to shareholders of record beginning on or about April 11, 2023.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING
TO BE HELD ON MAY 24, 2023
This Proxy Statement is available at http://www.edocumentview.com/FCAP.
Also available on this website is the Company’s
2022 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission (“SEC”), which includes the Company’s
audited consolidated financial statements.
INFORMATION ABOUT VOTING
Who Can Vote at the Meeting
You are entitled to vote your shares of First Capital
common stock if the records of the Company show that you held your shares as of the close of business on April 3, 2023. As of the
close of business on April 3, 2023, a total of 3,359,362 shares of First Capital common stock were outstanding. Each share of common
stock has one vote.
The Company’s Articles of Incorporation provide
that record holders of First Capital’s common stock who beneficially own, either directly or indirectly, in excess of 10% of the
Company’s outstanding shares are not entitled to any vote with respect to the shares held in excess of the 10% limit.
Ownership of Shares; Attending the Meeting
You may own your shares of common stock of First Capital
in one or more of the following ways:
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Directly in your name as shareholder of record; |
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Indirectly through a broker, bank, or other holder of record in “street name”; or |
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Indirectly through the First Harrison Bank Employee Stock Ownership Plan (the “ESOP”) and Trust. |
If your shares are registered
directly in your name, you are the holder of record of those shares and we are sending these proxy materials directly to you. As the holder
of record, you have the right to give your proxy directly to us to vote at the annual meeting or you may vote in person at the annual
meeting.
If you hold your shares in street name, your broker,
bank, or other holder of record is sending these proxy materials to you. As the beneficial owner, you have the right to direct your broker,
bank, or other holder of record how to vote by filling out a voting instruction form that accompanies your proxy materials. Your broker,
bank, or other holder of record may allow you to provide voting instructions by telephone or by the internet. Please see the instruction
form provided by your broker, bank, or other holder of record that accompanies this proxy statement. If you hold your shares in street
name, you will need proof of ownership to be admitted to the meeting. A recent brokerage account statement or a letter from your bank
or broker are examples of proof of ownership. If you want to vote your shares of First Capital common stock held in street name in person
at the meeting, you must obtain a written proxy in your name from the broker, bank, or other holder who is the record holder of your shares.
Participants in the ESOP may direct the ESOP trustees
how to vote the shares allocated to their accounts. See “Participants in the ESOP” below.
Quorum and Vote Required
Quorum.
We will have a quorum and will be able to conduct the business of the annual meeting if the holders of a majority of the outstanding
shares of common stock entitled to vote are present at the meeting, either in person or by proxy.
Votes
Required for Proposals. At this year’s annual meeting, shareholders will elect five (5) directors to
each serve for a term of three (3) years. In voting on the election of directors, you may vote in favor of all nominees, withhold
votes as to all nominees, or withhold votes as to specific nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This means that the nominees receiving the largest number of votes
cast will be elected up to the maximum number of directors to be elected at the annual meeting. The maximum number of directors to be
elected at the annual meeting is five (5).
In voting on the ratification of the appointment
of Monroe Shine & Co., Inc. as the Company’s independent registered public accounting firm, you may vote in favor
of the proposal, against the proposal, or abstain from voting. To be approved, the proposal requires the affirmative vote of a majority
of the votes cast at the annual meeting.
In voting on the advisory resolution to approve
the compensation of the Company’s named executive officers, you may vote in favor of the proposal, against the proposal, or abstain
from voting. To be approved, the proposal requires the affirmative vote of a majority of the votes cast at the annual meeting. Because
your vote is advisory, it will not be binding on the Board or the Company. However, the Board will review the voting results and take
them into consideration when making future decisions regarding executive compensation.
In voting on the advisory resolution regarding
the frequency of the shareholder vote to approve the compensation of the named executive officers, you may vote for a frequency of one
year, two years, or three years or abstain from voting. The option of one year, two years, or three years that receives the highest number
of votes cast by shareholders will be the frequency that has been selected by shareholders. Because your vote is advisory, it will not
be binding on the Board or the Company. However, the Board will review the voting results and take them into consideration when making
future decisions regarding the frequency of the advisory vote on executive compensation.
Effect
of Not Casting Your Vote. If you hold your shares in street name, it is critical that you cast your vote if you want it
to count in the election of directors or with respect to the two advisory proposals regarding executive compensation. Your bank or broker
is unable to vote your uninstructed shares in the election of directors or with respect to the advisory proposals regarding executive
compensation. Therefore, if you hold your shares in street name and you do not instruct your bank or broker how to vote in the election
of directors or with respect to the advisory proposals regarding executive compensation, no votes will be cast on your behalf. These are
referred to as “broker non-votes.” Your bank or broker, however, will continue to have discretion to vote any uninstructed
shares on the ratification of the appointment of the Company’s independent registered public accounting firm. If you are a shareholder
of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the annual meeting.
How
We Count Votes. If you return valid proxy instructions or attend the meeting in person, we will count your shares
to determine whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted to determine the existence
of a quorum.
In the election of directors, votes that are withheld
and broker non-votes will have no effect on the outcome of the election.
In counting votes on the ratification of the appointment
of the independent registered public accounting firm and the advisory resolutions regarding executive compensation, abstentions and broker
non-votes will have no effect on the outcome of the proposals.
Voting by Proxy
The Board is sending you this proxy statement for
the purpose of requesting that you allow your shares of our common stock to be represented at the annual meeting by the designated proxies
named by the Board. All shares of our common stock represented at the meeting by properly executed and dated proxies will be voted according
to the instructions indicated on the proxy card. If you sign, date, and return a proxy card without giving voting instructions, your shares
will be voted as recommended by the Board.
The Board recommends a vote:
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“FOR” each of the nominees for director; |
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“FOR” the ratification of Monroe Shine & Co., Inc. as the Company’s independent registered public accounting firm; |
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“FOR” the approval of the compensation of the Company’s named executive officers as disclosed in this proxy statement; and |
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To hold the advisory vote to approve the compensation of the Company’s named executive officers every “ONE YEAR.” |
If any matters not described in this proxy statement
are properly presented at the annual meeting, the persons named in the proxy card will use their own best judgment as to how to vote your
shares. This includes a motion to adjourn or postpone the annual meeting in order to solicit additional proxies. If the annual meeting
is postponed or adjourned, your common stock may be voted by the persons named in the proxy card on the new meeting date as well unless
you have revoked your proxy. The Company does not know of any other matters to be presented at the meeting.
You may revoke your proxy at any time before the
vote is taken at the annual meeting. To revoke your proxy, you must either advise the Company’s Corporate Secretary in writing before
your shares have been voted at the annual meeting, deliver valid proxy instructions with a later date, or attend the meeting and vote
your shares in person. Attendance at the annual meeting will not in itself constitute revocation of your proxy.
Instead of voting by mailing a proxy card, registered
shareholders can vote their shares of First Capital common stock via the internet or by telephone. The internet and telephone voting procedures
are designed to authenticate shareholders’ identities, allow shareholders to cast their vote, and confirm that their vote has been
recorded properly. Specific instructions for internet and telephone voting are set forth on the proxy card. The deadline for voting
via the internet or by telephone is 1:00 a.m., local time, on May 24, 2023.
Participants in the ESOP
If you participate in the ESOP, you will receive
a voting instruction form for all shares you may vote under the plan. Under the terms of the ESOP, the ESOP trustees vote all shares held
by the ESOP, but each participant in the ESOP may direct the trustees how to vote the shares of First Capital common stock allocated to
his or her account. The ESOP trustees will vote all allocated shares for which no timely voting instructions are received in the same
proportion as shares for which the trustees have received valid voting instructions. The deadline for returning your voting instructions
to the ESOP trustees is May 19, 2023.
CORPORATE GOVERNANCE
General
The Company periodically reviews its corporate
governance policies and procedures to ensure that the Company meets the highest standards of ethical conduct, reports results with accuracy
and transparency, and fully complies with the laws, rules, and regulations that govern the Company’s operations. As part of this
periodic corporate governance review, the Board reviews and adopts best corporate governance policies and practices for the Company.
Director Independence
The Board currently consists of thirteen members.
All of the directors are independent under the listing standards of the The NASDAQ Stock Market LLC (the “Nasdaq Rules”),
except for William W. Harrod, our Chief Executive Officer, and Michael C. Frederick, our Executive Vice President. In determining the
independence of its directors, the Board considered transactions, relationships and arrangements between the Company and its directors
that are not required to be disclosed in this proxy statement under the heading “Other Information Relating to Directors and
Executive Officers—Transactions With Related Persons,” including loans or lines of credit that the Bank has, directly
or indirectly, made to Directors Byrd, Ernstberger, Frederick, Harrod, Huber, Kraft, Moore, Orwick, and Wallace.
Board Leadership Structure and Board’s Role in Risk Oversight
Kathryn W. Ernstberger currently serves as Chairperson
of the Board. The Chairperson is independent under the Nasdaq Rules and does not serve as Chief Executive Officer. However, the Board
does not believe that mandating a particular structure, such as requiring that the Chairperson of the Board be independent under the Nasdaq
Rules or separating the Chairperson and Chief Executive Officer positions, are necessary to achieve effective oversight. The Board
endorses the view that one of its primary functions is to protect shareholders’ interests by providing independent oversight of
management, including the Chief Executive Officer. The Chairperson of the Board has no greater nor lesser vote on matters considered by
the Board than any other director, and the Chairperson does not vote on any related party transaction. All directors of the Company, including
the Chairperson, are bound by fiduciary obligations, imposed by law, to serve the best interests of the shareholders.
Risk is inherent with every business, and how well
a business manages risk can ultimately determine its success. The Company faces a number of risks, including credit risk, interest rate
risk, liquidity risk, operational risk, strategic risk, and reputation risk. Management is responsible for the day-to-day management of
the risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management.
In its risk management oversight role, the Board has the responsibility to satisfy itself that the risk management processes designed
and implemented by management are adequate and functioning as designed. Toward this end, the Chairperson of the Board meets regularly
with management to discuss strategy and the risks facing the Company. Senior management attends the Board meetings and is available to
address any questions or concerns raised by the Board on risk management and any other matters. The Chairperson of the Board and independent
members of the Board work together to provide strong, independent oversight of the Company’s management and affairs through the
Board’s standing committees and, when necessary, special meetings of independent directors.
Committees of the Board of Directors
The following table identifies our standing committees
and their members. The members of the Audit, Compensation, and Nominating Committees are each independent in accordance with the relevant
Nasdaq Rules. The charters of the Audit Committee, Nominating Committee, and Compensation Committee are available in the Investor Relations
section of the Bank’s website (www.firstharrison.com).
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Executive |
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Audit |
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Compensation |
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Nominating |
| Director |
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Committee |
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Committee |
|
Committee |
|
Committee |
| Christopher L. Byrd |
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X |
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X |
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| Kathryn W. Ernstberger |
|
X* |
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X |
|
X* |
| Michael C. Frederick |
|
X |
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| Robert C. Guilfoyle |
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X |
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| William W. Harrod |
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X |
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| Dana L. Huber |
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X |
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| Pamela G. Kraft |
|
X |
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X |
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X* |
|
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| Lou Ann Moore |
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| William I. Orwick, Sr. |
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X |
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| Jill S. Saegesser |
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X |
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| Mark D. Shireman |
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| Michael L. Shireman |
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X |
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| Carolyn E. Wallace |
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X |
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X* |
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| Number of Meetings in 2022 |
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0 |
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8 |
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4 |
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1 |
* Denotes Chairperson
Executive
Committee. The Executive Committee evaluates issues of major importance to the Company between regularly scheduled Board
meetings. The Executive Committee acts on issues delegated to it by the Board.
Audit
Committee. The Board has a separately-designated standing Audit Committee established in accordance with the Securities
Exchange Act of 1934, as amended (the “1934 Act”). The Audit Committee meets periodically with the Company’s independent
registered public accounting firm and management to review accounting, auditing, internal control structure and financial reporting matters.
The Board has determined that Christopher L. Byrd, William I. Orwick, Sr., and Carolyn E. Wallace are “audit committee financial
experts” under the rules of the SEC. The report of the Audit Committee required by the rules of the SEC is included in
this proxy statement. See “Report of the Audit Committee.”
Compensation
Committee. The Compensation Committee approves the compensation objectives for the Company and the Bank and establishes
the compensation for the Chief Executive Officer and periodically reviews and makes recommendations to the Board regarding the compensation
of non-employee directors. The Compensation Committee reviews all compensation components for the Company’s Chief Executive Officer
including base salary, annual incentives, short-term incentives, benefits and other perquisites. In addition to reviewing competitive
market values, the Compensation Committee also examines the total compensation mix, pay-for-performance relationship, and how all elements,
in the aggregate, comprise the Chief Executive Officers’ total compensation package. Decisions by the Compensation Committee with
respect to the compensation of the Chief Executive Officer are approved by the full Board, excluding any member of the Board that also
serves as the Chief Executive Officer. The Compensation Committee reviews and makes recommendations to the Board with respect to any employment
agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for
the Chief Executive Officer and other executive officers. The Compensation Committee also assists the Board in evaluating potential candidates
for executive positions.
Nominating
Committee. The Nominating Committee annually selects the Board’s nominees for election as directors. For the procedures
of the Nominating Committee, see “Nominating Committee Procedures” below.
Nominating Committee Procedures
General.
It is the policy of the Nominating Committee to consider director candidates recommended by shareholders who appear qualified
to serve on the Board. The Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the Board
and the Nominating Committee does not perceive a need to increase the size of the Board. In order to avoid the unnecessary use of the
Nominating Committee’s resources, the Nominating Committee will consider only those director candidates recommended in accordance
with the procedures set forth below.
Procedures
to be Followed by Shareholders. To submit a recommendation of a director candidate to the Nominating Committee, a shareholder
should submit the following information in writing, addressed to Kathryn W. Ernstberger, Chairperson of the Nominating Committee, care
of the Corporate Secretary, at the main office of the Company:
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The name of the person recommended as a director candidate; |
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All information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the 1934 Act, as amended; |
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The written consent of the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director if elected; |
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As to the shareholder making the recommendation, the name and address, as he or she appears on the Company’s books, of such shareholder; provided, however, that if the shareholder is not a registered holder of First Capital’s common stock, the shareholder should submit his or her name and address, along with a current written statement from the record holder of the shares that reflects ownership of First Capital’s common stock; and |
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A statement disclosing whether such shareholder is acting with or on behalf of any other person and, if applicable, the identity of such person. |
In order for a director candidate to be considered
for nomination at the Company’s annual meeting of shareholders, the Nominating Committee must receive the recommendation at least
120 calendar days before the date the Company’s proxy statement was released to shareholders in connection with the previous year’s
annual meeting, advanced by one year.
Minimum
Qualifications for Nominees. The Nominating Committee has adopted a set of criteria that it considers when it selects individuals
to be nominated for election to the Board. First, a candidate must meet the age limitation requirements set forth in the Company’s
Bylaws. A candidate also must meet any qualification requirements set forth in any Board or committee governing documents.
The Nominating Committee will consider the following
criteria in selecting nominees: financial, regulatory, and business experience; familiarity with and participation in the local community;
integrity, honesty and reputation; dedication to the Company and its shareholders; independence; and any other factors the Nominating
Committee deems relevant, including age, diversity, size of the Board, and regulatory disclosure obligations. The Board will also consider
the extent to which the candidate helps the Board reflect the diversity of the Company’s shareholders, employees, customers, and
communities. The Nominating Committee also may consider the current composition of the Board, the balance of management and independent
directors, and the need for audit committee expertise.
In addition, before nominating an existing director
for re-election to the Board, the Nominating Committee will consider and review an existing director’s Board and committee attendance
and performance; length of Board service; experience, skills, and contributions that the existing director brings to the Board; and independence.
Process
for Identifying and Evaluating Nominees. For purposes of identifying nominees for the Board, the Nominating Committee relies
on personal contacts of the committee members and other members of the Board, as well as its knowledge of members of First Capital’s
local communities. The Nominating Committee will also consider director candidates recommended by shareholders in accordance with the
policy and procedures set forth above. The Nominating Committee has not used an independent search firm in identifying nominees.
In evaluating potential candidates, the Nominating
Committee determines whether the candidate is eligible and qualified for service on the Board by evaluating the candidate under the selection
criteria set forth above. In addition, the Nominating Committee will conduct a check of the individual’s background and interview
the candidate.
Board and Committee Meetings
The business of First Capital and First Harrison
is conducted through meetings and activities of their respective Boards of Directors and committees. During the fiscal year ended December 31,
2022, the Board held 12 meetings and the Board of Directors of First Harrison held 13 meetings.
Directors Attendance at Annual Meeting
The Board encourages directors to attend the Company’s
annual meeting of shareholders. All directors attended the Company’s 2022 annual meeting of shareholders. Robert C. Guilfoyle attended
fewer than 75% of the Board meetings and Audit Committee meetings held in 2022.
Code of Ethics and Business Conduct
The Company has adopted a Code of Ethics and Business
Conduct (the “Code”) that is designed to ensure that the Company’s directors and employees meet the highest standards
of ethical conduct. The Code, which applies to all employees and directors, addresses conflicts of interest, the treatment of confidential
information, general employee conduct and compliance with applicable laws, rules and regulations. In addition, the Code is designed
to deter wrongdoing and promote honest and ethical conduct, the avoidance of conflicts of interest, full and accurate disclosure and compliance
with all applicable laws, rules and regulations.
REPORT OF THE AUDIT COMMITTEE
The Company’s management is responsible for
the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for performing
an independent audit of the Company’s consolidated financial statements and issuing an opinion on the conformity of those financial
statements with accounting principles generally accepted in the United States of America. The Audit Committee oversees the Company’s
internal controls and financial reporting process on behalf of the Board.
In this context, the Audit Committee has met and
held discussions with management and the independent registered public accounting firm. Management represented to the Audit Committee
that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in
the United States of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management
and the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting
firm matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board,
including the quality, and not just the acceptability, of the accounting principles, the reasonableness of significant judgments and the
clarity of the disclosures in the financial statements.
In addition, the Audit Committee has received the
written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the
Public Company Accounting Oversight Board and has discussed with the independent registered public accounting firm the firm’s independence
from the Company and its management. In concluding that the independent registered public accounting firm is independent, the Audit Committee
considered, among other factors, whether the non-audit services provided by the firm were compatible with its independence.
The Audit Committee discussed with the Company’s
independent registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent
registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation
of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting process.
In performing all of these functions, the Audit
Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s
management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting
firm who, in their report, expresses an opinion on the conformity of the Company’s financial statements to accounting principles
generally accepted in the United States of America. The Audit Committee’s oversight does not provide it with an independent basis
to determine that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal
control over financial reporting designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore,
the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not
assure that the Company’s financial statements are presented in accordance with accounting principles generally accepted in the
United States of America, that the audit of the Company’s financial statements has been carried out in accordance with the standards
of the Public Company Accounting Oversight Board (United States) or that the Company’s independent registered public accounting
firm is in fact “independent.”
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 consolidated financial statements
be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for filing with the SEC.
The Audit Committee has appointed, subject to shareholder ratification, the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2023.
The Audit Committee of the Board of Directors
of First Capital, Inc.
Carolyn E. Wallace, Chairperson
Christopher L. Byrd
William I. Orwick, Sr.
Pamela G. Kraft
Robert C. Guilfoyle
DIRECTORS’ COMPENSATION
The following table provides the compensation received
by individuals who served as non-employee directors of the Company and the Bank during the 2022 fiscal year. The table excludes perquisites,
which did not exceed $10,000 in the aggregate for each director.
| Name | |
Fees Earned
or Paid
in Cash | | |
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings (1) | | |
All Other
Compensation
(2) | | |
Total | |
| Christopher L. Byrd | |
$ | 18,050 | | |
$ | — | | |
$ | 1,805 | | |
$ | 19,855 | |
| Kathryn W. Ernstberger | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Robert C. Guilfoyle | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Dana L. Huber | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Pamela G. Kraft | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Lou Ann Moore | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| William I. Orwick, Sr | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Jill S. Saegesser | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Mark D. Shireman | |
| 18,050 | | |
| 7,348 | | |
| 1,805 | | |
| 27,203 | |
| Michael L. Shireman | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| Carolyn E. Wallace | |
| 18,050 | | |
| — | | |
| 1,805 | | |
| 19,855 | |
| (1) |
Represents above market earnings credited to the directors’ deferred compensation arrangements in fiscal 2022. Only Mark D. Shireman maintains a deferred compensation agreement with First Harrison Bank. |
| (2) |
Represents a bonus earned in 2022 and paid in the first quarter of 2023. |
Directors’ Fees
For the year ending December 31, 2023, members
of First Harrison’s Board of Directors will receive $1,569 per month. No separate fees will be paid for service on committees or
on First Capital’s Board of Directors.
Directors’ Deferred Compensation Agreements
Effective April 1, 1992, First Harrison Bank
entered into a Director Deferred Compensation Agreement with Mark D. Shireman. The agreement provided Mr. Shireman with an opportunity
to defer a portion of his respective fees for a specified period of time. All deferrals have ceased under the agreements. The agreement
provides Mr. Shireman with a fixed benefit which, at his election, is payable in a lump sum or monthly over a 180-month period. The
agreement provides that Mr. Shireman may receive his respective deferred compensation benefit upon the earlier of: attainment of
age 70, disability, early retirement or death.
STOCK OWNERSHIP
First Capital does not know of any beneficial owners
of more than 5% of the Company’s outstanding common stock. The following table provides information as of April 3, 2023 about
the shares of First Capital common stock that may be considered to be beneficially owned by each director, each nominee for director,
by each named executive officer listed in the “Summary Compensation Table” and by all directors and executive officers
of the Company as a group. A person may be considered to beneficially own any shares of common stock over which he or she has, directly
or indirectly, sole or shared voting or investment power. Unless otherwise indicated, each of the named individuals has sole voting power
and sole investment power with respect to the shares shown and none of the named individuals has pledged his or her shares.
| Name | |
Number
of Shares
Owned | | |
Percent of
Common
Stock
Outstanding(1) | |
| Christopher L. Byrd | |
| 5,704 | (2) | |
| * | |
| Kathryn W. Ernstberger | |
| 2,264 | (2) | |
| * | |
| Michael C. Frederick | |
| 7,984 | (3) | |
| * | |
| Robert C. Guilfoyle | |
| 637 | (4) | |
| * | |
| William W. Harrod | |
| 16,332 | (5) | |
| * | |
| Dana L. Huber | |
| 23,775 | (6) | |
| * | |
| Pamela G. Kraft | |
| 2,766 | (7) | |
| * | |
| Joseph D. Mahuron | |
| 5,347 | (10) | |
| * | |
| Lou Ann Moore | |
| 625 | (4) | |
| * | |
| William I. Orwick, Sr | |
| 5,397 | (2) | |
| * | |
| Jill S. Saegesser | |
| 218 | | |
| * | |
| Mark D. Shireman | |
| 51,649 | (8) | |
| 1.54 | % |
| Michael L. Shireman | |
| 16,797 | (9) | |
| * | |
| Carolyn E. Wallace | |
| 2,114 | (2) | |
| * | |
| All directors and executive officers as a group (14 persons) | |
| 141,610 | | |
| 4.22 | % |
| *Less than 1.0%. |
| (1) |
Based on 3,359,362 shares of First Capital common stock outstanding and entitled to vote as of April 3, 2023. |
| (2) |
Includes 425 shares of restricted stock. |
| (3) |
Includes 3,417 shares allocated under the ESOP as to which Mr. Frederick exercises voting but not investment power and 1,275 shares of restricted stock. |
| (4) |
Includes 325 shares of restricted stock. |
| (5) |
Includes 4,190 shares allocated under the ESOP as to which Mr. Harrod exercises voting but not investment power and 1,275 shares of restricted stock. |
| (6) |
Includes 425 shares of restricted stock and 10,000 shares held in the name of Ms. Huber’s spouse. |
| (7) |
Includes 850 shares held by the individual retirement account of Ms. Kraft’s spouse and 425 shares of restricted stock. |
| (8) |
Includes 7,992 shares owned by Mr. Mark Shireman’s spouse, 2,200 shares held by the individual retirement account of Mr. Mark Shireman’s spouse, and 425 shares of restricted stock. |
| (9) |
Includes 5,744 shares owned by Mr. Michael Shireman’s spouse, and 425 shares of restricted stock. |
| (10) |
Includes 1,512 shares allocated
under the ESOP as to which Mr. Mahuron exercises voting but not investment power and 850 shares of restricted stock. |
ITEMS TO BE VOTED ON BY SHAREHOLDERS
Item 1 — Election of Directors
The Board is divided into three (3) classes
with three-year staggered terms, with approximately one-third of the directors elected each year. Five (5) directors will be elected
at the annual meeting to serve for a three-year term or until their respective successors have been elected and qualified, or their earlier
resignation, removal, or death. The nominees are William W. Harrod, Michael C. Frederick, Lou Ann Moore, Robert C. Guilfoyle, and Dana
L. Huber, each of whom are currently directors of the Company and the Bank.
The Board intends to vote the proxies solicited
by it in favor of the election of the nominees named above. If any nominee is unable to serve, the persons named in the proxy card will
vote your shares to approve the election of any substitute proposed by the Board. Alternatively, the Board may adopt a resolution to reduce
the size of the Board. At this time, the Board does not know of any reason why any nominee might be unable to serve.
The Board of Directors recommends a vote “FOR”
the election of William W. Harrod, Michael C. Frederick, Lou Ann Moore, Robert C. Guilfoyle, and Dana L. Huber.
Information regarding the Board’s nominees
and the directors continuing in office is provided below. Unless otherwise stated, each individual has held his or her current occupation
for the last five years. The age indicated in each individual’s biography is as of the date of the 2023 annual meeting. The indicated
period for service as a director includes service as a director of First Harrison.
Director Nominees for Terms Ending in 2026
William
W. Harrod became the President and Chief Executive Officer of First Capital in January 2000 and became the President
and Chief Executive Officer of First Harrison in October 2012. Mr. Harrod retired from his position as President and Chief Executive
Officer of First Harrison on March 31, 2023, and pursuant to the succession plan of First Capital will transition out of the role
of President and Chief Executive Officer in 2023. Mr. Harrod previously served as President and Chief Executive Officer of HCB Bancorp, Inc.
and Harrison County Bank. Mr. Harrod is a former director of HCB Bancorp, Inc. Age 67. Director since 2000.
Mr. Harrod’s extensive experience in
the local banking industry and involvement in business and civic organizations in the communities in which the Bank serves affords the
Board valuable insight regarding the business and operations of the Company and Bank. In addition, Mr. Harrod’s knowledge of
all aspects of the Company’s and Bank’s business and history, combined with his success and strategic vision, position him
well to continue to serve as President and Chief Executive Officer of the Company.
Michael
C. Frederick is currently the Executive Vice President of the Company and the President and Chief Executive Officer of
the Bank. Pursuant to the succession plan of the Company, Mr. Frederick will transition into the role of President and Chief Executive
Officer of the Company in 2023. Age 55. Director since 2020. Mr. Frederick served as Chief Financial Officer of the Company and Bank
during 2022.
Mr. Frederick provides extensive experience
in the local banking industry, and knowledge of all aspects of the Company’s and Bank’s business and financial history, all
of which will provide the Board with valuable insights.
Lou
Ann Moore is currently an Owner and real estate broker for Century 21 Advantage Plus. She also serves on the Board of Directors
of the Jefferson County Technical College, Bullitt County YMCA and Bullitt County Chamber of Commerce and serves on the Board of Trustees
for the Bernheim Arboretum and Research Forest. Age 66. Director since 2018.
Ms. Moore’s expertise in real estate
affords the Board valuable insight regarding particular real estate markets and offers the Board a unique perspective on operations of
the Company and the Bank.
Robert
C. Guilfoyle is the founder and past Chief Executive Officer of Abe AI, Inc. Mr Guilfoyle now serves as the CEO of
PinSeeker, FP where he works with golf simulation companies providing payment platforms for the indoor golf industry. He holds a Bachelor
of Science in Informatics with a focus on Information Security and Computer Science from Indiana University. Age 34. Director since 2018.
Mr. Guilfoyle’s financial and technology
background provides the Board with valuable insights into how the Bank can leverage vendors to create better experiences.
Dana
L. Huber is currently the Vice President, Distribution and Public Relations at Huber’s Orchard, Winery, &
Vineyards. Prior to joining Huber’s Orchard, Winery, & Vineyards in 2003, Ms. Huber worked for Humana, Citicorp, and
Kindred Healthcare. She currently sits on the Agribusiness Council at the Federal Reserve Bank of St. Louis. Age 55. Director since 2015.
Ms. Huber’s experience managing a sixth
generation family owned business offers the Board substantial small company management experience. She is also very familiar with the
region in which the Bank conducts its business and provides the Board with insight regarding the local business and consumer environment.
Directors Continuing in Office with Terms Ending
in 2024
Kathryn
W. Ernstberger is a professor of Decision Sciences at Indiana University Southeast in New Albany, Indiana. Age 60.
Director since 2003.
Ms. Ernstberger’s expertise provides
the Board with quantitative business analysis skills, specifically in the areas of statistics and mathematical modeling.
William
I. Orwick, Sr. is a retired Director from the accounting firm of D.M.L.O. CPA’s in New Albany, Indiana.
Mr. Orwick was previously a partner in the accounting firm of Rodefer Moss & Co., PLLC prior to such firm’s acquisition
by D.M.L.O. CPA’s in October 2020. Age 66. Director since 2010.
As a former partner in a certified public accounting
firm, Mr. Orwick provides the Board with significant experience regarding accounting and compliance matters. Mr. Orwick’s
experience also offers the Board substantial small and local company operations and management experience, specifically within the region
in which the Bank conducts its business, and provides the Board with valuable insight regarding the local business and consumer environment.
In addition, Mr. Orwick offers the Board significant business experience individually and from his network of professionals and organizations
both familiar with matters outside and inside of the financial services industry.
Jill
S. Saegesser is the Vice President of Redevelopment and Grant Services for the Wheatley Group, LLC in New Albany, Indiana.
Age 51. Director since 2020.
Ms. Saegesser works as an Economic Development
Consultant in her position with the Wheatley Group, LLC. She has been there since 2019. Prior to that Ms. Saegesser was employed
by River Hills Economic Development Regional Planning Group, where she provided technical assistance to local governmental units. Ms. Saegesser’s
work in this area provides opportunities for lending and community support for the bank.
Carolyn
E. Wallace is the Director of Business Operations for the South Harrison Community School Corporation in Corydon, Indiana.
Age 54. Director since 2010.
Ms. Wallace’s training as a certified
public accountant and accounting background provide the Board with experience regarding accounting and financial matters.
Director Continuing in Office with Terms Ending
in 2025
Christopher
L. Byrd is the manager and owner of Hoosier Hollywood Development, LLC (d/b/a Corydon Cinemas) in Corydon, Indiana,
and is also a licensed certified public accountant and attorney. Age 55. Director since 2010.
Mr. Byrd’s background offers the Board
significant small company management experience, specifically within the community in which the Bank conducts its business, and provides
the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Byrd offers the Board significant
business experience from a setting outside of the financial services industry.
Pamela
G. Kraft is the President of Generations Monuments & Memorials, Inc. in New Albany, Indiana and serves
as Vice President — Treasurer of the Funeral Consumer Guardian Society in New Albany, Indiana. Age 64. Director since 2010.
Ms. Kraft’s involvement with the Funeral
Consumer Guardian Society has allowed her to develop strong ties to the community and has provided the Board with valuable insight regarding
the local business environment.
Mark
D. Shireman is past Chairperson of the Board of James L. Shireman, Inc. in Corydon, Indiana. Age 71. Director
since 1989.
Mr. Shireman’s substantial small company
management experience, specifically within the region in which the Bank conducts its business, provides the Board with valuable insight
regarding the local business and consumer environment. In addition, Mr. Shireman offers the Board significant business experience
from a setting outside of the financial services industry through his involvement in business and civic organizations in the communities
in which the Bank serves.
Michael
L. Shireman is past Chairperson of the Board of Uhl Truck Sales, Inc., a medium and heavy truck dealer in Louisville,
Kentucky and Palmyra, Indiana. Mr. Shireman is a former director of HCB Bancorp, Inc. Age 74. Director since 2000.
Mr. Shireman’s background offers the
Board significant small company management experience, specifically within the community in which the Bank conducts its business, and
provides the Board with valuable insight regarding the local business and consumer environment. In addition, Mr. Shireman offers
the Board significant business experience from a setting outside of the financial services industry.
Item 2 — Ratification of Independent Registered Public Accounting
Firm
The Audit Committee of the Board has appointed
Monroe Shine & Co., Inc. to be the Company’s independent registered public accounting firm for the 2023 fiscal year,
subject to ratification by shareholders. A representative of Monroe Shine & Co., Inc. is expected to be present at the annual
meeting to respond to appropriate questions from shareholders and will have the opportunity to make a statement should he/she desire to
do so.
If the ratification of the appointment of the independent
registered public accounting firm is not approved by a majority of the votes cast by shareholders at the annual meeting, the Audit Committee
of the Board will consider other independent registered public accounting firms.
The Board recommends that shareholders vote
“FOR” the ratification of the appointment of Monroe Shine & Co., Inc. as the Company’s independent registered
public accounting firm.
Audit
Fees. The following table sets forth the fees that Monroe Shine & Co., Inc. billed to the Company for the
fiscal years ended December 31, 2022 and 2021.
| | |
2022 | | |
2021 | |
| Audit Fees (1) | |
$ | 166,930 | | |
$ | 139,915 | |
| Audit-Related Fees (2) | |
| 16,340 | | |
| 15,760 | |
| Tax Fees (3) | |
| 28,085 | | |
| 26,445 | |
| All Other Fees | |
| — | | |
| — | |
| TOTAL | |
| 211,355 | | |
| 182,120 | |
| |
(1) |
Includes fees billed for the audit of the consolidated financial statements, and the review of interim financial information contained in quarterly reports on Form 10-Q and other regulatory reports. |
| |
(2) |
Includes fees billed for attestation and related services traditionally performed by the auditor, including attestation services not required by statute or regulation, and consultation concerning financial accounting, reporting and regulatory standards. |
| |
(3) |
Includes fees billed for tax compliance services, including preparation of federal and state income tax returns, preparation of property tax returns, and tax payment and planning advice. |
Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm. The
Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting
firm. In accordance with its charter, the Audit Committee approves, in advance, all audit and permissible non-audit services to be performed
by the independent registered public accounting firm. This approval process ensures that the firm does not provide any non-audit services
to the Company that are prohibited by law or regulation.
Item 3 — Advisory Vote on Executive Compensation
As required by federal securities laws, the Board
is providing the Company’s shareholders with an opportunity to provide an advisory vote on the compensation of our named executive
officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation tables and the related
narrative discussion contained in this proxy statement.
This proposal, commonly known as a “say-on-pay”
proposal, gives the Company’s shareholders the opportunity to endorse or not endorse the Company’s executive pay program and
policies through a vote on the following resolution:
“RESOLVED, that the compensation
paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities
and Exchange Commission, including the compensation tables and related narrative discussion contained in the 2023 proxy statement, is
hereby approved.”
This advisory vote on the compensation of our named
executive officers is not binding on us, our Board, or the Compensation Committee. However, our Board and the Compensation Committee will
review and consider the outcome of this advisory vote when making future compensation decisions for our named executive officers.
The Board recommends that shareholders vote
“FOR” the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure
rules of the SEC, including the compensation tables and related narrative discussion contained in this proxy statement.
Item 4 — Advisory Vote on the Frequency of the Advisory
Vote on Executive Compensation
As required by federal securities laws, the Board
is providing the Company’s shareholders with an opportunity to provide an advisory vote on the frequency of the advisory vote on
the compensation of our named executive officers (“NEO”). We are asking shareholders whether the advisory vote should occur
every year, every two years or every three years.
The Board has considered the frequency of the advisory
vote on the compensation of the Company’s NEOs that it should recommend. After considering the benefits and consequences of each
option for the frequency of submitting the advisory vote on the compensation of the Company’s NEOs to shareholders, the Board recommends
submitting the advisory vote on the compensation of the Company’s NEOs to shareholders annually.
The Board believes an annual advisory vote on the
compensation of the Company’s NEOs will allow the Board to obtain information on the shareholders’ views of the compensation
of the Company’s NEOs on a more consistent basis. In addition, the Board believes an annual advisory vote on the compensation of
the Company’s executive officers will provide the Board with frequent input from shareholders on the Company’s compensation
programs for its NEOs. Finally, the Board believes an annual advisory vote on the compensation of the Company’s NEOs aligns more
closely with the Company’s objective to engage in regular dialogue with its shareholders on corporate governance matters, including
the Company’s executive compensation philosophy, policies and programs.
This advisory vote on the frequency of the advisory
vote on the compensation of our NEOs is not binding on us, our Board, or the Compensation Committee. However, our Board and the Compensation
Committee will review and consider the outcome of this advisory vote when making decisions on the frequency of the advisory vote.
The Board recommends that shareholders vote
to hold the advisory vote on the compensation of the Company’s named executive officers every year.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding
the compensation paid, awarded to, or earned for the fiscal years ended December 31, 2022, and 2021 by each of the Company’s
executive officers.
| | |
| | |
| | |
| | |
Non-Equity | | |
| | |
| |
| | |
| | |
| | |
| | |
Incentive | | |
All Other | | |
| |
| Name and Principal Position | |
Year | | |
Salary (1) | | |
Stock Awards | | |
Compensation (2) | | |
Compensation (3) | | |
Total | |
| William W. Harrod | |
| 2022 | | |
$ | 275,125 | | |
$ | — | | |
$ | 30,707 | | |
$ | 35,841 | | |
$ | 341,673 | |
| President, Chief Executive Officer | |
| 2021 | | |
| 265,352 | | |
| — | | |
| 37,229 | | |
| 32,542 | | |
| 335,123 | |
| Michael C. Frederick | |
| 2022 | | |
| 203,449 | | |
| — | | |
| 24,819 | | |
| 23,535 | | |
| 251,803 | |
| Executive Vice President (4) | |
| 2021 | | |
| 169,191 | | |
| — | | |
| 26,660 | | |
| 25,647 | | |
| 221,498 | |
| Joseph D. Mahuron (5) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Chief Credit Officer | |
| 2022 | | |
| 113,567 | | |
| — | | |
| 16,357 | | |
| 23,421 | | |
| 153,345 | |
| |
(1) |
For Mr. Harrod, includes directors’ fees for service as an employee director of $17,370 and $18,050 for 2021 and 2022, respectively. For Mr. Frederick, includes directors’ fees for service as an employee director of $17,370 and $18,050 for 2021 and 2022, respectively. |
| |
(2) |
The Board adopted a supplemental bonus plan under which executive officers and directors are eligible to receive cash incentives when the Bank’s performance exceeds certain profitability and efficiency performance goals and thresholds (the “Bonus Plan”). Under the Bonus Plan, bonus amounts earned in 2022 were paid in the first quarter of 2023. |
| |
(3) |
Details of the amounts reported in the “All Other Compensation” column for 2023 are provided in the table below: |
| |
|
|
| | |
Harrod | | |
Frederick | | |
Mahuron | |
| Employer contributions to 401(k) plan | |
$ | 17,998 | | |
$ | 13,005 | | |
$ | 8,008 | |
| Health insurance | |
| 15,225 | | |
| 8,762 | | |
| 13,253 | |
| Disability insurance | |
| 1,118 | | |
| 1,118 | | |
| 975 | |
| Life insurance | |
| 168 | | |
| 192 | | |
| 128 | |
| Dental insurance | |
| 275 | | |
| 275 | | |
| — | |
| Vision insurance | |
| 57 | | |
| 57 | | |
| 57 | |
| Employer contributions to health savings account | |
| 1,000 | | |
| 1,000 | | |
| 1,000 | |
| Wellness Incentive | |
| — | | |
| 410 | | |
| — | |
| |
(4) |
Michael C. Frederick served as Chief Financial Officer of the Company and Bank during the entirety of 2022 and 2021. |
| |
(5) |
Joseph D. Mahuron became the Bank’s Chief Credit Officer effective January 1, 2022. |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning
outstanding stock awards at December 31, 2022 held by our executive officers. At December 31, 2022 there were no outstanding
stock options. Market values for outstanding stock awards are based on the closing price of our common stock on December 30, 2022
(the last trading day of the year) of $24.90.
| | |
Number of
Shares of Stock
That Have Not
Vested | | |
Market Value of
Shares of Stock
That Have Not
Vested | |
| William W. Harrod (1) | |
| 1,275 | | |
$ | 31,748 | |
| Michael C. Frederick (1) | |
| 1,275 | | |
| 31,748 | |
| Joseph D. Mahuron (2) | |
| 850 | | |
| 21,165 | |
| (1) | For each executive officer, 675 shares of common stock will vest on July 1, 2023; 375 on July 1, 2024; and 225 shares of
common stock will vest on July 1, 2025. |
| (2) | For Mr. Mahuron, 450 shares of common stock will vest on July 1, 2023; 250 on July 1, 2024; and 150 shares of common
stock will vest on July 1, 2025. |
Stock Vested in 2022
The following table sets forth information concerning
the exercise of options and the vesting of stock awards in 2022 by our named executive officers.
| |
|
Number of
Shares Acquired
on Vesting |
|
|
Value Realized
on Vesting |
|
| William W. Harrod (1) |
|
|
675 |
|
|
$ |
19,622 |
|
| Michael C. Frederick (1) |
|
|
675 |
|
|
|
19,622 |
|
| Joseph D. Mahuron (2) |
|
|
450 |
|
|
|
13,082 |
|
| |
(1) |
Based on a closing price of $29.07 on July 1, 2022, the date on which 675 shares vested. |
| |
(2) |
Based on a closing price of $29.07 on July 1, 2022, the date on which 450 shares vested. |
Accrued Pay, Certain Retirement Benefits and Vested Equity Awards
The amounts shown in the table above do not include
payments and benefits to the extent they are provided on a non-discriminatory basis to salaried employees generally upon termination of
employment, or amounts that are fully vested under the terms of the applicable plan, such as accrued salary and vacation pay.
Change in Control Agreements
First Harrison and First Capital maintain a Change
in Control Agreement dated January 20, 2015 with each of William W. Harrod and Michael C. Frederick, which was amended and restated
on January 6, 2023. Joseph D. Mahuron entered into a Change in Control Agreement with First Harrison and First Capital on January 3,
2023.
Upon the occurrence of a change
in control (as defined in the agreement) followed within twelve (12) months of the effective date of the change in control by the voluntary
or involuntary termination of the executive’s employment, other than for “cause” (as defined in the agreement), the
executive will be entitled to certain post-termination payments and benefits. For purposes of this agreement, “voluntary termination”
is limited to the circumstances in which the executive elects to voluntarily terminate his or her employment within twelve (12) months
of the effective date of a change in control following any material demotion, loss of title, office or significant authority, material
reduction in his or her annual compensation or benefits (other than a reduction affecting the personnel or the Bank generally), or the
relocation of his or her principal place of employment by more than 25 miles from its location immediately prior to the change in control.
Under the terms of the agreements, the executive
is entitled to receive, as severance pay, a sum equal to three (3) times the sum of the executive’s wages, salary, bonus, and
other compensation, if any, paid (including accrued amounts) by the Company or the Bank to the executive during the twelve (12) month
period ending on the last day of the month preceding the effective date of the change in control. The executive is entitled to receive
this payment in a lump sum no later than thirty (30) days after the date of his or her termination. In addition to a cash severance payment,
the executive is also entitled to continued life, medical, dental and disability insurance coverage for twelve (12) months following termination
of employment. Notwithstanding any provision in the employment agreements to the contrary, payments and benefits under the agreements
are limited so that they will not constitute excess parachute payments under Section 280G of the Internal Revenue Code.
Following termination of employment for any reason,
each named executive officer is entitled to his or her own non-forfeitable interest in the Bank’s tax-qualified plans. The tax-qualified
benefits are distributed in accordance with each executive’s distribution election.
All payments due under the employment agreements
are guaranteed by First Capital. All reasonable costs and legal fees incurred by an executive under any dispute or question of interpretation
relating to the employment agreements will be paid by First Capital, if the executive is successful on the merits in a legal judgment,
arbitration or settlement.
Potential Payments Upon Termination or Change in Control
None of our executive officers are subject to any
employment agreement which would entitle them to any payment upon termination of employment, absent a change in control. As is more fully
described below, all of the named executive officers were subject to change in control agreements with us that were in effect on December 31,
2022, unless otherwise noted below (each, a “Change in Control Agreement”), which provide for payments and benefits to our
executive officers following a change in control of First Capital, Inc. and termination of the executive officer’s employment
within twelve (12) months (a “Change in Control Termination”). The following table sets forth information concerning potential
payments and benefits to which our executive officers would be entitled as of December 31, 2022 in the event of a Change in Control
Termination. For purposes of estimating the value of certain equity awards, we have assumed a price per share of our common stock of 24.90,
which was the closing price of our stock on December 30, 2022, the last trading day of the year.
| | |
Harrod | | |
Frederick | | |
Mahuron
(4) | |
| Salary | |
$ | 825,375 | | |
$ | 610,347 | | |
$ | 340,701 | |
| Bonus (1) | |
| 146,415 | | |
| 112,620 | | |
| 76,095 | |
| Benefits (2) | |
| 16,843 | | |
| 10,404 | | |
| 14,413 | |
| Stock Awards (3) | |
| 31,748 | | |
| 31,748 | | |
| 21,165 | |
| Total | |
| 1,020,381 | | |
| 765,119 | | |
| 452,374 | |
| |
(1) |
Includes cash payments and stock awards for 2022 under the Bonus Plan and amounts contributed to the executive’s 401(k) and health savings account by the Company in 2022. |
| |
(2) |
Consists of life, medical, dental, and disability insurance benefits. The value is based upon the type of insurance coverage the Company carried for each executive officer as of December 31, 2022, and is valued at the premiums in effect on December 31, 2022. |
| |
(3) |
Represents shares of common stock that would vest under the terms of the award agreements therefore. |
| |
(4) |
Mr. Mahuron entered into his change in control agreement on January 3, 2023. |
Pay vs. Performance
The Company believes that executive compensation
should be structured in a way that aligns with long-term shareholder value. The following table illustrates compensation actually paid
to our principal executive officer (“PEO”) and other NEOs and our financial performance. The following table sets forth information
required by Item 402(v) of Regulation S-K for each of the last two recently completed years, including: (i) the total compensation
earned by our PEO (as reported in the Summary Compensation Table above); (ii) the compensation “actually paid” to our
PEO (calculated in accordance with Regulation S-K); (iii) the average of the total compensation earned by our other NEOs (calculated
based upon our Summary Compensation Table above); (iv) the average compensation “actually paid” to our other NEOs (calculated
in accordance with Regulation S-K); (v) our total shareholder return (“TSR”); and (iv) our net income:
| Year | | | Summary
Compensation
Table Total for
PEO ($) (1) | | | Compensation
Actually Paid
to PEO ($) | | | Average
Summary
Compensation
Table Total for
non-PEO
NEOs ($) | | | Average
Compensation
Actually Paid to
non-PEO NEOs
($) | | | Value
of Initial
Fixed $100
Investment Based
On:
TSR ($) | | | Net
Income
($) | |
| | 2022 | | | $ | 341,673 | | | $ | 341,673 | | | $ | 202,574 | | | $ | 202,574 | | | $ | 43.93 | | | $ | 11,902,000 | |
| | 2021 | | | | 335,123 | | | | 335,123 | | | $ | 189,522 | | | $ | 189,522 | | | $ | 68.59 | | | $ | 11,424,000 | |
| | (1) | William W. Harrod was our PEO for each of the years presented. |
| | (2) | For 2021 the non-PEO NEOs consisted of Michael C. Frederick, Jill R. Keinsley, and Dennis L. Thomas. For 2022, our non-PEO NEOs consisted of Michael C. Frederick and Joseph Mahuron. |
As discussed above in the Executive Compensation
section of this Proxy Statement, the compensation payable to the PEO and Other NEOs consists primarily of base salary and incentive compensation
in the form of performance awards as determined under the Bonus Plan. Incentive compensation under the Bonus Plan is largely determined
by the pre-tax income performance of the Bank but there are provisions for the award of stock compensation if certain performance thresholds
are met. No stock compensation was awarded under the Bonus Plan in 2022 or 2021. As such, there is no direct relationship between compensation
actually paid to the PEO or to average compensation actually paid to the other NEOs and TSR.
Management attributes the majority of the decline
in TSR to the Company’s stock being removed from the Russell 2000 Index (the “Index”) in June 2021. Inclusion in
the Index is determined each year based on a company’s market capitalization and is subject to a variety of factors outside of management’s
control. However, as demonstrated by the figures in the table above, there is a general degree of correlation between compensation actually
paid and net income during the two-year period, in that compensation actually paid to our PEO and other NEOs increased 2.0% and 6.9%,
respectively, in 2022 from 2021 while net income increased 4.2% during the same period.
OTHER INFORMATION RELATING TO DIRECTORS AND
EXECUTIVE OFFICERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the 1934 Act, requires
the Company’s executive officers and directors, and persons who own more than 10% of any registered class of the Company’s
equity securities, to file reports of ownership and changes in ownership with the Securities Exchange Commission. Executive officers,
directors and greater than 10% shareholders are required by regulation to furnish the Company with copies of all Section 16(a) reports
they file.
Based solely on its review of the copies of the
reports it has received and written representations provided to the Company from the individuals required to file the reports, the Company
believes that each of its executive officers, directors and greater than 10% beneficial owners has complied with applicable reporting
requirements for transactions in First Capital common stock during the fiscal year ended December 31, 2022, except for on September 1,
2022 a late Form 4 was filed for Dana L. Huber relating to the acquisition of 5,000 shares between August 25, 2022, and August 26,
2022.
Transactions with Related Persons
The Sarbanes-Oxley Act generally prohibits First
Capital from extending loans to its executive officers and directors. However, the Sarbanes-Oxley Act contains a specific exemption from
this prohibition for loans by First Harrison to its executive officers and directors in compliance with federal banking regulations. Federal
regulations require that all loans or extensions of credit to executive officers and directors of insured financial institutions must
be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions
with other persons and must not involve more than the normal risk of repayment or present other unfavorable features. First Harrison,
therefore, is prohibited from making any new loans or extensions of credit to executive officers and directors at different rates or terms
than those offered to the general public. Notwithstanding this rule, federal regulations permit First Harrison to make loans to its executive
officers and directors at reduced interest rates if the loan is made under a benefit program generally available to all other employees
and does not give preference to any executive officer or director over any other employee. First Harrison currently offers a benefit program
to all employees that provides a discount off the interest rate of any loan; officers and directors are permitted to participate in this
benefit program.
The Company does not have a comprehensive written
policy for the review, approval or ratification of certain transactions with related persons. However, in accordance with banking regulations,
the Board reviews all loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans
to such person and his or her related interests, exceeds the greater of $25,000 or 5% of First Capital’s capital and surplus (up
to a maximum of $500,000) and such loans are approved in advance by a majority of the disinterested members of the Board. Additionally,
as required by the Company’s Code of Ethics and Business Conduct, all executive officers and directors of the Company must disclose
any existing or emerging conflicts of interest to the Company’s President and Chief Executive Officer. Such potential conflicts
of interest include, but are not limited to: (i) the Company conducting business with or competing against an organization in which
a family member of an executive officer or director has an ownership or employment interest and (ii) the ownership of more than 5%
of the outstanding securities or 5% of total assets of any business entity that does business with or is in competition with the Company.
There are no other transactions or series of similar
transactions between us and any of our directors or executive officers in which the amount involved exceeds $120,000 since the beginning
of our last fiscal year, or which are currently proposed.
SUBMISSION OF BUSINESS PROPOSALS AND SHAREHOLDER
NOMINATIONS
Proposals that shareholders seek to have included
in the proxy statement for the Company’s next annual meeting must be received by the Company no later than December 12, 2023.
If next year’s annual meeting is held on a date more than 30 days from May 24, 2023, a shareholder proposal must be received
within a reasonable time before the Company begins to print and mail its proxy solicitation materials for such annual meeting. Any such
proposals will be subject to the requirements of the proxy rules adopted by the Securities Exchange Commission.
The Company’s Bylaws provide that, in order
for a shareholder to make nominations for the election of directors or proposals for business to be brought before the annual meeting,
a shareholder must deliver notice of such nominations and/or proposals to the Corporate Secretary not less than 90 nor more than 120 days
before the date of the annual meeting; provided that if less than 100 days’ notice of the annual meeting is given to shareholders,
such notice must be delivered not later than the close of the tenth day following the day on which notice of the annual meeting was mailed
to shareholders. A copy of the Bylaws may be obtained from the Company upon request.
SHAREHOLDER COMMUNICATIONS
The Company encourages shareholders to communicate
with the Board and/or individual directors. Shareholders who wish to communicate with the Board or an individual director should do so
in writing to William W. Harrod, President and Chief Executive Officer of First Capital, Inc., 220 Federal Drive, N.W., Corydon, Indiana
47112. Communications regarding financial or accounting policies may be made in writing to the Chairperson of the Audit Committee, Carolyn
E. Wallace, at the same address. All other communications should be sent in writing to the attention of the Chairperson of the Nominating
Committee, Kathryn W. Ernstberger, also at the same address.
MISCELLANEOUS
The Company will pay the cost of this proxy solicitation.
The Company will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses they incur in sending
proxy materials to the beneficial owners of First Capital common stock. In addition to soliciting proxies by mail, directors, officers
and regular employees of the Company may solicit proxies personally or by telephone without receiving additional compensation.
A notice of internet availability regarding this
proxy statement and the Company’s Annual Report on Form 10-K has been mailed to persons who were shareholders as of the close
of business on April 3, 2023. Any shareholder who would like to receive a paper copy of the proxy statement or Form 10-K may
obtain a copy by writing to the Corporate Secretary of the Company. The Form 10-K is not to be treated as part of the proxy solicitation
material or as having been incorporated in this proxy statement by reference.
Whether or not you plan to attend the annual meeting,
please vote by marking, signing, dating and promptly returning a proxy card.
| |
BY ORDER OF THE BOARD OF DIRECTORS |
| |
|
| |
 |
| |
Jennifer Meredith |
| |
Corporate Secretary |
Corydon, Indiana
April 12, 2023
| Proposals — The Board of Directors recommend a vote FOR all the nominees listed, FOR Proposals X – X and for every X YEARS on Proposal X.
01 - William W. Harrod
04 - Robert C. Guilfoyle
02 - Michael C. Frederick 03 - Lou Ann Moore
For Against Abstain For Against Abstain For Against Abstain
1UPX
05 - Dana L. Huber
4. An advisory vote on the frequency of the advisory
vote on the compensation of First Capital, Inc.’s
named executive officers.
1 Year 2 Years 3 Years Abstain
Using a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated areas.
03RQAA
+
+
A Proposals — The Board of Directors recommend a vote FOR all the nominees listed, and FOR Proposals 2, 3 and 1 YEAR on Proposal 4.
2. The ratification of the appointment of Monroe Shine and Co. as
First Capital, Inc.’s independent registered public accounting firm
for the fiscal year ending December 31, 2023.
3. The approval of an advisory vote on the compensation of First
Capital, Inc.’s named executive officers as disclosed in the
proxy statement.
1. Election of Directors:
For Against Abstain
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below.
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
2023 Annual Meeting Proxy Card
For Against Abstain
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MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
ENDORSEMENT_LINE______________ SACKPACK_____________
1234 5678 9012 345
MMMMMMMMM
MMMMMMMMMMMMMMM
573197
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
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If no electronic voting,
delete QR code and control #
Δ ≈
You may vote online or by phone instead of mailing this card.
Online
Go to www.investorvote.com/FCAP or scan
the QR code — login details are located in
the shaded bar below.
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Sign up for electronic delivery at
www.investorvote.com/FCAP
Phone
Call toll free 1-800-652-VOTE (8683) within
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Votes submitted electronically must be
received by 1:00 AM (EDT) on May 24, 2023
Your vote matters – here’s how to vote! |
 | Small steps make an impact.
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delivery. Sign up at www.investorvote.com/FCAP
Notice of 2023 Annual Meeting of Shareholders
Proxy Solicited by Board of Directors for Annual Meeting — May 24, 2023
Kathryn W. Ernstberger and William W. Harrod, or either of them, each with the 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 Capital, Inc. to be held on May 24, 2023 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election
of the Board of Directors, FOR Proposals 2, 3 and 1 Year on Proposal 4.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side)
First Capital, Inc.
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Change of Address — Please print new address below. Comments — Please print your comments below.
C Non-Voting Items
+
+
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.
The material is available at: www.investorvote.com/FCAP |
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