UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 20, 2014
Mercantile Bank Corporation
(Exact name of registrant as specified in its charter)
| Michigan | 000-26719 | 38-3360865 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification Number) | ||
| 310 Leonard Street NW, Grand Rapids, Michigan |
49504 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code 616-406-3000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers.
On February 20, 2014, the Boards of Directors of Mercantile Bank Corporation (“Mercantile”), and of Mercantile’s wholly-owned subsidiary, Mercantile Bank of Michigan (the “Bank”), adopted an executive officer bonus plan for the first six months of 2014 (the “Executive Officer Plan”).
The Executive Officer Plan provides for cash bonuses for Michael H. Price, the Chairman of the Board, President and Chief Executive Officer of Mercantile, and the Chairman of the Board and Chief Executive Officer of the Bank, Robert B. Kaminski, Jr., the Executive Vice President, Chief Operating Officer and Secretary of Mercantile, and the President, Chief Operating Officer and Secretary of the Bank, and Charles E. Christmas, the Senior Vice President, Chief Financial Officer and Treasurer of Mercantile, and the Senior Vice President and Chief Financial Officer of the Bank.
The maximum amount that can be paid from the bonus pool under the Executive Officer Plan is $213,600. The bonus pool under the Executive Officer Plan, if any, is based on the achievement of targets under the following metrics for the first six months of 2014:
| 20% | Net loan growth |
| 10% | Level of non-performing assets |
| 10% | Loan portfolio composition |
| 10% | Return on assets |
| 10% | Return on equity |
| 10% | Net interest income |
| 10% | Net interest margin |
| 10% | Efficiency ratio |
| 10% | Wholesale funds |
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 the bonus pool under the Executive Officer Plan. The accumulated percentage for each individual target attained will be applied to the maximum bonus pool amount of $213,600 to determine the total amount of the bonus pool to be awarded. For example, if the first four factors are attained and the next five factors are not attained, the bonus pool under the Executive Officer Plan would be $213,600 x 50% = $106,800.
The bonus pool will be paid to each executive officer pro rata based on a uniform percentage of the executive officer’s 2014 salary (not to exceed 20% of each executive
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officer’s 2014 salary.) Any bonus awards that are earned under the Executive Officer Plan will be paid to the executive officers on or before August 10, 2014.
Payments under the Executive Officer 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 Board of Directors of the Bank.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
| Exhibit |
Description | |
| 10.1 | 2014 Mercantile Executive Officer Bonus Plan | |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Mercantile Bank Corporation | ||
| By: | /s/ Charles E. Christmas | |
| Charles E. Christmas Senior Vice President, Chief Financial Officer and Treasurer | ||
Date: February 24, 2014
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Exhibit Index
| Exhibit |
Description | |
| 10.1 | 2014 Mercantile Executive Officer Bonus Plan | |
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Exhibit 10.1
MERCANTILE BANK CORPORATION/MERCANTILE BANK OF MICHIGAN
2014 MERCANTILE EXECUTIVE OFFICER BONUS PLAN
| 1. | Purpose of this Plan |
This 2014 Mercantile Executive Officer Bonus Plan (this “Plan”) is designed to reflect that the directors of Mercantile Bank Corporation (the “Company”) and Mercantile Bank of Michigan (the “Bank”) believe that the Company’s shareholders are willing to share financially in operating results that exceed certain specific financial metrics during the first six months of 2014.
The purpose of this Plan is to:
| • | Promote the growth, profitability and expense control necessary to accomplish corporate strategic long-term plans; |
| • | Encourage superior results by providing a meaningful incentive; and |
| • | Support teamwork among employees. |
| 2. | Eligibility |
Michael H. Price, Robert B. Kaminski, Jr. and Charles E. Christmas (the “Executive Officers,” and each an “Executive Officer”) are included in this Plan. The following provisions (a) – (d) set forth circumstances where an Executive Officer will, or will not, be eligible for a bonus payout, or where an unpaid bonus award will be cancelled:
(a) An Executive Officer must be an active employee as of June 30, 2014 to be eligible to receive a bonus payout.
(b) An Executive Officer that is out on medical leave as of June 30, 2014 will be eligible to receive a bonus award.
(c) An Executive Officer that is suspended with or without pay or is on final written warning as of June 30, 2014 will not be eligible to receive a bonus award.
(d) If an Executive Officer terminates his or her employment with the Bank during the first six months of 2014, any unpaid bonus award for the Executive Officer is cancelled.
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Notwithstanding any of the provisions (a), (b), (c) or (d) above, no such provision shall adversely affect an Executive Officer’s eligibility for, or right to receive, any bonus award, if during the first six months of 2014 pursuant to a notice given in 2014, such Executive Officer’s employment terminates under one or more circumstances set forth in Section 8.5 or 9 of the Employment Agreement made as of the 18th day of October 2001 between the Executive Officer, the Company and the Bank, as amended (a “Special Termination”).
| 3. | Performance Goal and Bonus Awards |
Bonus awards will be paid from the Executive Bonus Pool as defined in this Plan. The maximum amount that can be paid from the Executive Bonus Pool under this Plan is $213,600.
The Executive Bonus Pool, if any, is based on the achievement of targets under the following 2014 Executive Bonus Metrics:
| 20% | Net loan growth |
| 10% | Level of non-performing assets |
| 10% | Loan portfolio composition |
| 10% | Return on assets |
| 10% | Return on equity |
| 10% | Net interest income |
| 10% | Net interest margin |
| 10% | Efficiency ratio |
| 10% | Wholesale funds |
The specific targets for each metric will be established by the Compensation Committee. Each individual target must be met or exceeded in order for the percentage associated with that metric to be credited toward the Executive Bonus Pool. The accumulated percentage for each individual target attained will be applied to the maximum Executive Bonus Pool amount of $213,600 to determine the total amount of the Executive Bonus Pool to be awarded. For example, if the first four factors are attained and the next five factors are not attained, the Executive Bonus Pool under this Plan would be $213,600 x 50% = $106,800.
The Executive Bonus Pool will be paid to each Executive Officer pro rata based on a uniform percentage of the Executive Officer’s 2014 salary (not to exceed 20% of each Executive Officer’s 2014 salary.)
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| 4. | Clawback Provision |
Payouts made under this Plan are subject to recovery or clawback, and an Executive Officer receiving a payout will be required to promptly return the monies (or any portion of the monies requested by the Company) in each of the following circumstances:
| • | if it is determined that the Executive Officer was engaging in an activity during the first six months of 2014 that would have resulted in the employee being suspended without pay, placed on final written warning or terminated on or before June 30, 2014, and no Special Termination of the Executive Officer is involved. |
| • | If the payout is based on materially inaccurate financial statements (which includes, but is not limited to statements of earnings, revenues, or gains) or any other materially inaccurate performance metric criteria, including net income. |
| • | If the payout is required to be returned pursuant to a policy adopted by the Company regarding clawback in order to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any stock exchange or other rule adopted pursuant to that Act. |
In the event that the Company or Bank demands recovery or clawback of any payout (or portion of any payout), and the Executive Officer who received the payout does not promptly return the payout (or demanded portion of the payout) to the Company or the Bank, the Executive Officer shall be required to pay to the Company or the Bank, immediately upon demand, all expenses, including reasonable attorneys’ fees, incurred to recover the payout (or demanded portion of the payout), unless the Executive Officer establishes in an appropriate legal proceeding that he or she had no obligation under this Section of this Plan to return the payout (or demanded portion of the payout). Executive Officers, as a condition to receiving a payout under this Plan, may be required to agree in writing to the terms of this Section.
| 5. | Timing of Bonus Payouts |
Bonus awards that are earned under this Plan for 2014 will be paid to eligible Executive Officers on or before August 10, 2014.
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| 6. | Plan Administration |
The Company’s Compensation Committee will have the authority to administer and interpret this Plan, and approve or determine the amounts to be distributed under this Plan as bonus awards, in its sole discretion. Any interpretation or construction of this Plan or approval or determination of bonus awards by the Compensation Committee will be final and binding on the Company, the Bank and their respective subsidiaries, all employees and past employees of any of them, their heirs, successors and assigns. No member of the Board of Directors of the Bank or the Company, or any of their affiliates, or any committee of the Board of Directors of the Bank, the Company, or any affiliate, will be liable for any action or determination made in good faith regarding this Plan or any bonus award.
| 7. | No Right to Employment |
This Plan does not give any Executive Officer any right to continued employment, or limit in any way the right of the Bank or any affiliated company to terminate his employment at any time.
| 8. | Withholding of Taxes |
The Bank and any affiliated company will have the right to deduct from any payment to be made pursuant to this Plan any Federal, state or local taxes required by law to be withheld. It is contemplated that substantially all payments that are made under this Plan will be made by the Bank or one of its subsidiaries, and not by the Company.
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| 9. | Amendment of this Plan |
This Plan may be amended from time to time by the Compensation Committee, without the consent of any Executive Officer or past Executive Officer, (a) to the extent required to comply with applicable law; (b) to make reasonable adjustments for any acquisition or sale of a business or branch, merger, reorganization, or restructuring, change in accounting principles or their application, or special charges or extraordinary items, that materially affect the Company or any of its consolidated subsidiaries; (c) to make any changes that do not materially and adversely affect the bonus award payable to any eligible employee; (d) to expand the Executive Officers or other employees who are eligible to receive a bonus from the amounts available for bonuses under this Plan; or (e) to make any other changes that the Compensation Committee, in its sole discretion, deems appropriate, even if such changes materially and adversely affect, or eliminate, the bonus award payable to any Executive Officer or past Executive Officer; provided that, after a Special Termination or notice that will result in a Special Termination, no amendment made under provision (d) or (e) of this paragraph above shall adversely affect either Executive Officer’s rights under this Plan. To the extent required to comply with applicable stock exchange rules, any amendment to this Plan shall be submitted to the Company’s Compensation Committee for a recommendation or approval.
| 10. | Governing Law |
The validity, construction and interpretation of this Plan will be determined in accordance with the laws of the State of Michigan.
| 11. | Effective Date |
This Plan was approved by the Compensation Committee of the Company and the Bank on February 20, 2014, and is effective as of January 1, 2014.
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