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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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[X]
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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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By order of the Board of Directors,
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John T. Taylor
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Chief Executive Officer |
1.
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The election of eight nominees as directors;
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2.
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A proposal to approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as disclosed in the accompanying proxy statement;
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3.
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A proposal to ratify the appointment of the Company’s independent registered public accounting firm; and
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4.
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Such other business as may properly come before the meeting.
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By order of the Board of Directors,
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John T. Taylor |
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Chief Executive Officer
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•
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The election of eight directors (Proposal 1);
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•
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A proposal to approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as disclosed under “Executive Compensation” (Proposal
2); and
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•
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A proposal to ratify the appointment of our independent registered public accounting firm (Proposal 3).
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•
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FOR the election of the nominees listed in this proxy statement;
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•
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FOR the proposal to approve, on an advisory basis, the compensation of the Company’s named executive
officers as disclosed in this proxy statement; and
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•
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FOR the ratification of the appointment of our independent registered public accounting firm.
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•
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FOR the election of all the director nominees recommended by the Board;
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•
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FOR the approval of our executive compensation; and
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•
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FOR the ratification of the appointment of our independent registered public accounting firm.
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Director Nominees
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Age
|
Position
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W. Glenn Hogan
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60
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Chairman of the Board of Directors
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Celia P. Catlett
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45
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Director
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Kevin J. Kooman
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52
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Director
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Michael T. Levy
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53
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Director
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James M. Parsons
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65
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Director
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Bradford T. Ray
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64
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Director
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Dr. Edmond J. Seifried
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75
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Director
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John T. Taylor |
62 |
President, CEO and Director of Limestone Bancorp |
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President, CEO and Chairman of the Board of Limestone Bank, Inc.
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Name
|
Age
|
Position
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||||
Phillip W. Barnhouse
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51
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Chief Financial Officer Limestone Bancorp and Limestone Bank
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John R. Davis
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59
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Chief Credit Officer of Limestone Bank
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Joseph C. Seiler
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55
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Executive Vice President of Limestone Bank
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Name
|
Fees Earned
or Paid in Cash |
Stock
Awards (1) |
Option
Awards |
All Other
Compensation
|
Total
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W. Glenn Hogan
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$52,500
|
$25,000
|
$
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-
|
$
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-
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$77,500
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Celia P. Catlett
|
27,500
|
25,000
|
-
|
-
|
52,500
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Kevin J. Kooman (2)
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27,500
|
25,000
|
-
|
-
|
52,500
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Michael T. Levy
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32,500
|
25,000
|
-
|
-
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57,500
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James M. Parsons
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32,500
|
25,000
|
-
|
-
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57,500
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Bradford T. Ray
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32,500
|
25,000
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-
|
-
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57,500
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Edmond J. Seifried
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27,500
|
25,000
|
-
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-
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52,500
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(1)
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On June 1, 2021, each non-employee director received an award of 1,573 restricted shares with a grant date fair value of $15.90 per share. The restricted shares vested
on December 31, 2021. The amounts in the Stock Awards column reflect the grant date fair value for the restricted stock awards for the fiscal year ended December 31, 2021. The assumptions used in the calculation of these amounts for awards
granted in 2021 are included in Note 17 “Stock Plans and Stock-based Compensation” in the “Notes to Consolidated Financial Statements” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
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(2)
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Mr. Kooman’s fees and restricted stock award are for the benefit of Patriot Financial Manager LP.
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Name and Address of Beneficial Owner(1)
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Common
Shares
Beneficially
Owned
|
%
of Class |
Non-Voting
Common
Shares
Beneficially
Owned
|
%
of Class
|
|
Directors and Nominees
|
|
|
|
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John T. Taylor
|
147,757
|
2.2%
|
-
|
-%
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W. Glenn Hogan
|
487,061
|
7.4
|
-
|
-
|
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Celia P. Catlett
|
6,477
|
*
|
-
|
-
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Kevin J. Kooman (2)
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-
|
*
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-
|
-
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Michael T. Levy
|
80,424
|
1.2
|
-
|
-
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James M. Parsons
|
44,655
|
*
|
-
|
-
|
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Bradford T. Ray
|
72,815
|
1.1
|
-
|
-
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Dr. Edmond J. Seifried
|
82,899
|
1.3
|
-
|
-
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Other Named Executive Officers
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John R. Davis
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48,611
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*
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-
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-
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Phillip W. Barnhouse
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46,495
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*
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-
|
-
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Joseph C. Seiler
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36,237
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*
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-
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-
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Named Executive Officers and Directors as a Group
(11 persons)
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1,053,431
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15.9%
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-
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-
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*
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Represents beneficial ownership of less than 1%.
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(1)
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The business address for these individuals is c/o Limestone Bancorp, Inc., 2500 Eastpoint Parkway, Louisville, Kentucky 40223.
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(2)
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Mr. Kooman does not have direct ownership of LMST shares. This total does not include 16,180 common shares beneficially owned by Patriot Financial Manager, L.P. of which Mr. Kooman
is a partner, or the 319,118 common shares and 1.0 million non-voting common shares held by Patriot Financial Partners III, L.P. Mr. Kooman disclaims beneficial ownership of the 335,298 common shares and the 1.0 million non-voting common
shares, except to the extent of his pecuniary interest therein. See footnote 6 to the share ownership table on the following page.
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Common Shares
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Non-Voting Common Shares
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Name and Address of Beneficial Owner
|
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Beneficially
Owned
|
Percent
of Class |
Beneficially
Owned
|
Percent
of Class |
||||||||||||
J. Chester Porter Trust Funds (1)
318 S. Buckman Street Shepherdsville, Kentucky 40165 |
614,999
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9.3
|
%
|
–
|
–
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Banc Funds Company LLC (2)
200 North Wacker Drive, Suite 300 Chicago, IL 60606 |
428,777
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6.5
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%
|
–
|
–
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Maria L. Bouvette (3)
c/o Limestone Bancorp, Inc. 2500 Eastpoint Parkway Louisville, Kentucky 40223 |
393,717
|
5.9
|
%
|
–
|
–
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||||||||||||
Elizabeth Park Capital Advisors, Ltd. (4)
29525 Chagrin Boulevard, Suite 318 Pepper Pike, OH 44122 |
378,859
|
5.7
|
%
|
–
|
–
|
||||||||||||
FJ Capital Management, LLC. (5)
29525 Chagrin Boulevard, Suite 318 Pepper Pike, OH 44122 |
361,392
|
5.5
|
%
|
–
|
–
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Patriot Financial Group (6)
Four Radnor Corporate Center 100 Matsonford Road, Suite 210 Radnor, PA 19087 |
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335,298
|
5.1
|
%
|
1,000,000
|
100%
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(1)
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The information is included in reliance upon information provided by the J. Chester Porter Trust Funds as of February 28, 2022 and a Form 4 filed with the SEC by
Jack C. Porter, Jr and Jennifer E. Porter, Co-Trustees on October 3, 2019. J. Chester Porter Trust Fund A and J. Chester Porter Trust Fund B (together the “J. Chester Porter Trust Funds”) are the beneficial owners of 266,879 and 342,857
common shares, respectively. Shared voting power of these funds is held by Jack C. Porter, Jr. and Jennifer E. Porter. Mr. Porter and Ms. Porter disclaim beneficial ownership of these shares except to the extent of his or her pecuniary
interest therein. In addition, Mr. Porter is the beneficial owner with sole voting power of 4,131 common shares and Ms. Porter is the beneficial owner with sole voting power of 1,132 common shares.
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(2)
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This information is included in reliance upon Form 13G filed with the SEC by Banc Funds Company, LLC on February 10, 2022.
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(3)
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The information is included in reliance upon information provided by Maria L. Bouvette to the Company as of February 28, 2022.
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(4)
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This information is included in reliance upon Form 13F filed with the SEC by Elizabeth Park Capital Advisors, Ltd. on February 14, 2022.
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(5)
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This information is included in reliance upon Form 13G filed with the SEC by FJ Capital Management, LLC on March 18, 2022.
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(6)
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This information is included in reliance upon Form 13D filed with the SEC by Patriot Financial Partners GP, LP on July 6, 2021 and Mr. Kooman’s Form
4 filed with the SEC on June 28, 2021. Includes 319,118 common shares and 1.0 million non-voting common shares beneficially owned directly by Patriot Financial Partners III, L.P.; 16,180 common shares beneficially owned directly by Patriot
Financial Manager, L.P. Securities owned by Patriot Financial Partners III, L.P. may be regarded as being beneficially owned by Patriot Financial Partners GP III, L.P, and Patriot Financial GP III, LLC. Mr. Kooman disclaims beneficial
ownership of the shares that Patriot beneficially owns, except to the extent of his pecuniary interest therein.
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•
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made in the ordinary course of our consumer credit business;
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•
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of a type we generally make available to the public; and
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•
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made on market terms, or terms that are no more favorable than those offered by the issuer to the general public.
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•
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provide fair and competitive compensation to executives, based on their performance and contributions to our Company, that will attract, motivate and retain
individuals who will enable our Company to successfully compete with other financial institutions in our markets;
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•
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provide incentives that reward executives for attaining predetermined objectives that promote and reward individual performance, Company financial performance,
achievement of strategic goals and Company stock performance;
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•
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instill in our executives a long-term commitment and a sense of ownership through the use of equity-based compensation; and
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•
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ensure that the interests of our executives are aligned with our shareholders’ interests.
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•
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A base salary that is competitive with levels paid by comparable financial institutions;
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•
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Annual incentive cash payments based on the attainment of targeted performance goals; and
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•
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Equity-based compensation, generally in the form of restricted stock awards, based on the attainment of targeted performance goals.
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Position
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Median Base Salary of Midwest
Financial Institutions with Assets of
$500 million to $1 billion
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Median Base Salary of Midwest
Financial Institutions with Assets of $1
billion to $5 billion
|
CEO
|
$339,414
|
$444,231
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CFO
|
192,868
|
246,242
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CCO
|
n/a
|
250,371
|
SLO
|
188,156
|
254,642
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Position
|
Median Total Compensation of
Midwest Financial Institutions with
Assets of $500 million to $1 billion
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Median Total Compensation of
Midwest Financial Institutions with
Assets of
$1 billion to $5 billion
|
CEO
|
$574,329
|
$772,057
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CFO
|
364,612
|
433,531
|
CCO
|
n/a
|
457,235
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SLO
|
354,748
|
429,392
|
Metric (dollar amounts in millions)(1)
|
Threshold
|
Maximum
|
2021 Results
|
||||
Earnings per share
|
$1.30
|
$1.62
|
$1.96
|
||||
Loans
|
$1,010.0
|
$1,090.0
|
$1,001.8
|
||||
Efficiency ratio
|
64.6%
|
60.6%
|
56.1%
|
||||
Core deposits
|
$694.2
|
$814.2
|
$948.1
|
||||
Classified assets to capital
|
18%
|
6%
|
11.8%
|
||||
(1) |
Excludes gain on sale of securities, other than temporary impairment charges and non-recurring items as determined at the discretion of the Compensation Committee.
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Metric (dollar amounts in millions)(1)
|
Threshold
|
Target
|
Maximum
|
|||||||||
Earnings per share
|
$1.51
|
$1.63
|
$1.85
|
|||||||||
Loans
|
$1,025.0
|
$1,065.0
|
$1,105.0
|
|||||||||
Efficiency ratio
|
62.0%
|
60.0%
|
58.0%
|
|||||||||
Core deposits
|
$852.0
|
$912.0
|
$972.0
|
|||||||||
Classified assets to capital
|
18%
|
12%
|
6%
|
|||||||||
(1) |
Excludes gain on sale of securities, other than temporary impairment charges and non-recurring items as determined at the discretion of the Compensation Committee.
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•
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Incentive compensation must be sufficiently competitive to attract and retain talented employees who can contribute to the Company's future success;
|
•
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Compensation should be allocated among equity and cash incentives based on the specific role of the employee. A significant portion of compensation should be
performance-based for higher levels of responsibility;
|
•
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A significant portion of senior level compensation should be equity grants with appropriate vesting or holding periods that align the interests of our senior officers
with the interests of shareholders;
|
•
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Performance measures should not be so difficult to achieve that they fail to provide an adequate incentive for the employee to perform, and the metrics should be
measurable and enforceable; and
|
•
|
Performance measures should be tailored to encompass performance of both individuals and business units, considering business objectives and other factors such as
revenue production, expertise, compliance with corporate policies, and leadership.
|
•
|
Whether incentive features could encourage the manipulation of reported earnings to increase compensation;
|
•
|
Whether incentive features could encourage a lender to promote a loan transaction that is not in the Company’s best interest and could result in the borrower
subsequently becoming insolvent or otherwise unable to meet its financial obligations;
|
•
|
Whether compensation policies appropriately encourage the identification and correction of possible weaknesses in operations, data security and internal controls or
systems;
|
•
|
Whether compensation policies appropriately emphasize compliance with legal rules, regulations or guidelines issued by banking regulators;
|
•
|
Whether compensation practices could expose the Company and the Board to criticism from regulators, shareholders, or the public and risk opposition to proposals
regarding executive compensation and/or share availability; and
|
•
|
Whether compensation policies create risks that could endanger the Company's existence as an ongoing enterprise.
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Name and
Principal
Position
|
Year
|
Salary
|
Stock
Award(1)
|
Non-Equity
Incentive Plan
Compensation(2)
|
Change in
Nonqualified
Deferred
Compensation
Earnings
|
All Other
Compensation(3)
|
Total
|
John T. Taylor
President and
CEO
|
2021
|
$450,000
|
$172,125
|
$172,125
|
$ - |
$17,732
|
$811,982
|
2020
|
431,021
|
71,802
|
143,597
|
-
|
15,185
|
661,605
|
|
2019
|
425,000
|
63,750
|
127,500
|
-
|
15,094
|
631,344
|
|
John R. Davis
Chief Credit
Officer
|
2021
|
260,000
|
198,565
|
68,900
|
-
|
15,975
|
413,775
|
2020
|
258,542
|
68,900
|
33,313
|
-
|
14,638
|
505,058
|
|
2019
|
255,000
|
50,000
|
50,000
|
-
|
14,546
|
369,546
|
|
Joseph C. Seiler
Head of
Commercial
Banking
|
2021
|
250,000
|
66,250
|
66,250
|
-
|
13,279
|
393,467
|
2020
|
248,483
|
187,156
|
41,406
|
-
|
10,967
|
490,324
|
|
2019
|
244,800
|
37,000
|
37,000
|
-
|
13,020
|
331,820
|
|
Phillip W. Barnhouse
Chief Financial
Officer
|
2021
|
250,000
|
66,250
|
66,250
|
-
|
13,579
|
396,079
|
2020
|
248,483
|
196,537
|
32,301
|
-
|
11,910
|
489,231
|
|
2019
|
244,800
|
37,000
|
37,000
|
-
|
12,528
|
331,328
|
|
(1)
|
Includes restricted stock granted as equity incentive compensation on February 13, 2020, January 20, 2021, and January 19, 2022, based on prior year financial results. Additionally, on
January 20, 2021, Mr. Davis, Mr. Seiler, and Mr. Barnhouse received 11,000 long-term incentive shares vesting pro-ratably over the third through seventh anniversary dates of grant. The grant date fair value for the February 13, 2020, stock
awards was $17.03 per share, for the January 20, 2021, stock awards was $13.25, and for the January 19, 2022, stock awards was $19.45 per share.
|
|
(2)
|
Our cash and equity incentive plan is discussed in further detail under “Compensation Discussion and Analysis -- Executive Compensation Components -- Cash and Equity Incentives.”
|
|
(3)
|
All other compensation for the named executive officers is set forth below:
|
Name
|
Vehicle
Allowance
|
401(k)
Matching
Contribution
|
H S A
Matching
Contribution
|
Life & LTD
Premiums Paid for
Benefit of Employee
|
Total Other
Compensation
|
John T. Taylor
|
$ -
|
$10,150
|
$1,250
|
$6,332
|
$17,732
|
John R. Davis
|
-
|
10,150
|
1,000
|
4,825
|
15,975
|
Joseph C. Seiler
|
-
|
5,828
|
750
|
4,389
|
10,967
|
Phillip W. Barnhouse
|
-
|
8,385
|
1,250
|
3,944
|
13,579
|
•
|
for “Cause;”
|
•
|
as a result of disability, retirement or death; or
|
•
|
by the executive other than for “Good Reason.”
|
•
|
by the Company other than for Cause, disability, retirement or death;
|
•
|
by the executive for Good Reason; or
|
•
|
by the Company for other than Cause, disability, retirement or death within six months following the expiration of the term of the agreement.
|
•
|
a material diminution in the executive’s base salary or opportunity to earn cash incentive compensation (as a percentage of base salary),
|
•
|
a material diminution in his authority, duties or responsibilities (including, in the case of Mr. Taylor, his position as Chairman of the Board of the Bank), or
|
•
|
any change in the executive’s reporting duties.
|
Name
|
Grant
|
Estimated
Possible Payouts
Under Non-Equity Incentive Plan Awards (1) |
Estimated
Possible Payouts
Under Equity Incentive Plan Awards (1,2) |
All Other Stock
Awards:
Number of
Shares of Stock
|
Grant Date
Fair Value
of Stock
|
||
Name
|
Date
|
Threshold
|
Maximum
|
Threshold
|
Maximum
|
or Units
|
Awards (2)
|
John T. Taylor
|
1/20/21
|
$6,750
|
$225,000
|
509
|
16,981
|
n/a
|
$71,802
|
John R. Davis
|
1/20/21
|
2,600
|
91,000
|
196
|
6,868
|
11,000
|
198,565
|
Joseph C. Seiler
|
1/20/21
|
2,500
|
87,500
|
189
|
6,604
|
11,000
|
187,156
|
Phillip W. Barnhouse
|
1/20/21
|
2,500
|
87,500
|
189
|
6,604
|
11,000
|
196,537
|
(1)
|
Under our incentive plan for 2021, the maximum cash incentive award and the maximum equity incentive award that the named executive officers (other than Mr. Taylor)
can earn are each 35% of base salary based upon the attainment of the highest level for all five financial metrics. Mr. Taylor can earn a maximum cash incentive award of 50% of base salary and the maximum equity incentive award of 50% of
base salary. The threshold cash and equity incentive awards represent attainment of only the minimum level for the lowest weighted financial metric.
|
(2)
|
The grant date fair value for the January 20, 2021, stock awards was $13.25 per share.
|
Stock Awards
|
||||||||
Name
|
Number of
Shares or
Units
of Stock that
Have Not
Vested |
Market Value
of Shares or
Units of Stock
That Have Not
Vested (5)
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights
That Have
Not Vested (5)
|
||||
John T. Taylor
|
n/a
|
n/a
|
1,006 (1)
|
$18,772
|
||||
2,495 (2)
|
46,557
|
|||||||
5,419 (3)
|
101,119
|
|||||||
John R. Davis
|
11,000 (4)
|
$205,260
|
603 (1)
|
11,252
|
||||
1,957 (2)
|
36,518
|
|||||||
3,986 (3)
|
74,379
|
|||||||
Joseph C. Seiler
|
11,000 (4)
|
205,260
|
579 (1)
|
10,804
|
||||
1,448 (2)
|
27,020
|
|||||||
3,125 (3)
|
58,313
|
|||||||
Phillip W. Barnhouse
|
11,000 (4)
|
205,260
|
579 (1)
|
10,804
|
||||
1,448 (2)
|
27,020
|
|||||||
3,833 (3)
|
71,524
|
|||||||
(1)
|
Restricted shares granted on February 13, 2019. One-third of the shares vest over three years on each anniversary date of the grant.
|
(2)
|
Restricted shares granted on February 13, 2020. One-third of the shares vest over three years on each anniversary date of the grant.
|
(3)
|
Restricted shares granted on January 20, 2021. One-third of the shares vest over three years on each anniversary date of the grant.
|
(4)
|
Long-term restricted shares granted on January 20, 2021. One-fifth of the shares vest on January 20, 2024 and each year thereafter.
|
(5)
|
Based on the $18.66 per share closing price of Limestone Bancorp, Inc. common shares on December 31, 2021.
|
Stock Awards
|
||||
Name |
Number of Shares
Acquired on Vesting (1) |
Value Realized
on Vesting (2) |
||
John T. Taylor
|
3,843
|
$57,723
|
||
John R. Davis
|
2,659
|
$39,904
|
||
Joseph C. Seiler
|
2,381
|
$35,900
|
||
Phillip W. Barnhouse
|
2,381
|
$35,900
|
||
(1) |
One-third of the restricted shares awarded in each of 2018, 2019, and 2020 vested on the anniversary date of grant in 2021.
|
(2) |
Value realized on vesting is based on the Nasdaq closing price per share of LMST common stock on each vesting date in 2021.
|
•
|
has reviewed and discussed the audited consolidated financial statements with management;
|
•
|
has discussed with the independent auditors the matters required to be discussed by the applicable standards of the Public Company Accounting Oversight Board (“PCAOB”)
and the Securities and Exchange Commission;
|
•
|
has received the written disclosures and the letter from the independent accountant required by applicable requirements of the PCAOB regarding the independent
accountant’s communications with the Audit Committees concerning independence, and has discussed with the independent accountant, the independent accountant’s independence; and
|
•
|
has approved the audit and non-audit services of the independent registered public accounting firm for 2021.
|
2021
|
2020
|
|||
Audit Fees
|
$265,000
|
$255,000
|
||
Audit-Related Fees
|
17,862
|
78,301
|
||
Tax Fees
|
38,825
|
38,700
|
||
All Other Fees
|
--
|
--
|