Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Adoption of Bonus Plans
On June 22, 2023, the Boards of Directors of Mercantile Bank Corporation (“Mercantile”), and of Mercantile’s wholly-owned subsidiary, Mercantile Bank (the “Bank”), adopted an executive officer bonus plan for 2023 (the “Executive Officer Plan”).
The Executive Officer Plan provides for cash bonuses for: Robert B. Kaminski, Jr., the President and Chief Executive Officer of Mercantile and the Chief Executive Officer of the Bank; Raymond E. Reitsma, the President of the Bank and Executive Vice President of Mercantile; Charles E. Christmas, the Executive Vice President, Chief Financial Officer, and Treasurer of Mercantile, and the Executive Vice President and Chief Financial Officer of the Bank; Brett E. Hoover, the Senior Vice President and Human Resource Director of the Bank and Mercantile; and Robert T. Worthington, the Senior Vice President, Chief Risk Officer, Secretary and General Counsel of Mercantile and the Bank.
The maximum amount that can be allocated to the bonus pool is $884,496 under the Executive Officer Plan, provided, however, that the maximum amount will be appropriately adjusted if (a) a newly hired employee becomes eligible to participate in the plan, (b) a participant's base salary is adjusted during the year, or (c) a participant becomes ineligible before December 31, 2023.
Payment from the bonus pool under the plan, if any, is based on the achievement of targets under the following metrics for 2023:
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12.5%
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Net interest margin
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12.5%
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Non-performing assets
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The specific targets for each metric will be established by the Compensation Committee of Mercantile's Board of Directors.
Each individual target must be met or exceeded in order for the percentage associated with that metric to be credited toward payment from the bonus pool under the plan. The accumulated percentage for each individual target attained will be applied to the bonus pool amount to determine the total amount of the bonus pool to be awarded (the "Award Amount"). For example, if the first four factors are attained and the next three factors are not attained, and if the maximum amount is allocated to the bonus pool under the Executive Officer Plan, the Award Amount would be $884,496 x 62.5% = $552,810.
The Award Amount will be paid to each participant pro rata based on a uniform percentage of the participant's 2023 salary (not to exceed: 55% of the 2023 salary of the Chief Executive Officer; 50% of the 2023 salary of the President of the Bank; 40% of the 2023 salary of the Chief Financial Officer; 30% of the 2023 salary of the Human Resources Director; and 20% of the 2023 salary of the Chief Risk Officer). Any bonus awards that are earned under the plan will be paid to the executive officers on or before March 15, 2024.
Payments under the plan are subject to specified conditions, qualifications, and clawback provisions. The plan, to the extent provided for in the plan, may be amended by the Compensation Committee of Mercantile's Board of Directors.
A copy of the Executive Officer Plan is attached as Exhibit 10.1.