First Bancorp Inc ME

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X. COMPENSATION POLICIES AND PRACTICES

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COMPENSATION PROGRAMS

The Company has four primary means of compensating its employees: base pay, the Stakeholder Bonus Program, the short-term incentive plan, and the equity-based long-term incentive plan. Full details on these programs are provided in the Compensation Discussion and Analysis. A summary is provided below.

Base Pay: Base salary is used to recognize the experience, skills, and responsibilities of all of the Company’s employees, including its Named Executive Officers. To determine appropriate levels of base pay for employees other than NEOs, the Company participates in a salary survey conducted by Pearl Meyer. This survey, conducted of financial institutions in New England provides much of the information needed to determine base pay for hourly employees, line supervisors and members of middle management. In 2024, the Company also utilized the Pearl Meyer’s Northeast Banking survey to provide further guidance on base pay for these groups of employees. For the average employee of the Company, it is expected that total compensation will be comprised of base pay, equaling 85% to 90% of total compensation, and that the Stakeholder Bonus Program will be 5% to 15% of total compensation. The total compensation mix for NEOs is detailed in the Compensation Discussion and Analysis.

Stakeholder Bonus Program: The other key component of compensation for most employees is the Stakeholder Cash Bonus program. This program is not available to NEOs and certain other senior officers. The Stakeholder program was originally implemented in 1994 and is available to all eligible employees. This element of the performance compensation program is designed to support the long-term viability of the Company and increase shareholder value. It addresses these objectives by tying the performance payout to multiple goals which include profitability, growth, productivity, and loan quality. The guiding principle is to reach a balance of these goals, which should collectively have a positive impact on maximizing long-term shareholder value without incentivizing employees to take undue risk. The Compensation Committee believes that this performance-based program provides a reward for high levels of current performance without sacrificing the achievement of long-term goals. Each year specific key performance indicators are chosen along with Company-wide financial performance trigger levels. The objective of the program is to align the performance of employees with the Company’s short- and long-term objectives so neither set of goals is sacrificed for the other.

Short-Term Incentive Plan: In 2012, the Board of Directors approved a short-term incentive plan for the five NEOs and certain other senior officers of the Company. This element of the compensation program is specifically designed to ensure clarity of expectations in terms of expected results on a short-term basis, to recognize and reward achievement of annual business goals, and to motivate and reward superior performance. This program also ensures that incentives are appropriately risk-balanced in that they do not motivate, or reward excessive risk taking, and ensures that the Company is competitive with the market in order to attract and retain talent needed to grow the Company. The short-term incentive is intended to be a cash bonus.

Long-Term Incentive Plan: At the 2020 Annual Meeting, the Company’s Shareholders voted to establish an equity-based long-term incentive plan which grants authority to issue stock options, restricted stock, and other equity-based grants to retain existing high-performing employees and to attract new members to the Management team should the need arise. The purpose of this plan is to incentivize executives through equity ownership and align their interests with those of the shareholders while providing longer-term incentives tied to overall Company performance. It is among the objectives of this plan that, by having a portion of the executive’s compensation tied to the performance of the Company’s stock, the individual will be rewarded for enhancing long-term shareholder value.

The mid- to long-term outlook of this type of compensation serves as a balance to the short-term rewards of base compensation and the short-term incentive plan. Stock options and restricted stock grants are also intended to encourage an executive to remain with the Company. The value of the equity award granted reflects the executive’s position in the organization, level of responsibility, impact on the Company’s performance and actual performance in meeting individual performance goals.

Miscellaneous Compensation: In addition to the compensation elements outlined above, the Company also offers a small cash bonus for successful hiring referrals and for referrals to the Company’s investment management and financial services division.

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