Pay Versus Performance
Under the rules of the Securities and Exchange Commission (“SEC”), the following tabular disclosure is required to illustrate the relationship between compensation actually paid to the Company’s principal executive officer (“PEO”) and other named executive officers (“Other NEOs”) and the Company’s performance as measured by total shareholder return and net income.
| Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Other NEOs(3) | Average Compensation Actually Paid to Other NEOs(4) | Value of Initial Fixed $100 Investment Based On Total Shareholder Return(5) | Company Net Income(6) |
|---|
| 2024 | $419,678 | $419,678 | $288,644 | $288,644 | $78.18 | $10,218,000 |
| 2023 | $409,757 | $409,757 | $276,367 | $276,367 | $96.41 | $10,817,000 |
| 2022 | $448,520 | $448,520 | $305,207 | $305,207 | $100.97 | $19,293,000 |
Notes:
| (1) | The figures in this column represent the total compensation paid to John P. Nelson, the PEO, for each year as reported in the Summary Compensation Table. |
| (2) | The figures in this column represent the compensation actually paid to the PEO for each year. Under SEC rules governing the “pay versus performance” disclosure, total compensation for the PEO as reported in the Summary Compensation Table and as actually paid to the PEO is identical, as no adjustment to the figures as reported in the Summary Compensation Table is required to reflect compensation actually paid to the PEO. |
| (3) | The figures in this column for 2024 and 2023 represent the average of the total compensation paid to Scott T. Bauer and Michael A. Wilson, the Other NEOs as reported in the Summary Compensation Table for 2024 and 2023. The figures in this column for 2022 represent the average of the total compensation paid to John L. Pierschbacher and Scott T. Bauer, the Other NEOs, as reported in the Summary Compensation Table for 2022. |
| (4) | The figures in this column represent the average compensation actually paid to the Other NEOs for each year. Under SEC rules governing the “pay versus performance” disclosure, compensation for the Other NEOs as reported in the Summary Compensation Table and as actually paid to the Other NEOs is also identical, as no adjustment to the figures as reported in the Summary Compensation Table is required to reflect average compensation actually paid to the Other NEOs. |
| (5) | The figures in this column represent the cumulative total shareholder return of the Company’ Common Stock as of the end of each year presented, assuming the investment of $100 in the Common Stock on December 31, 2021. Total shareholder return is calculated based on the change in value for the period designated, assuming the reinvestment of all dividends paid during the period. |
| (6) | The figures in this column represent the net income of the Company as reported in its consolidated financial statements for each year presented. |
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 deferred salary and performance awards as determined under the MIC Plan. As that discussion also explains, the primary factor in determining the amount of incentive compensation payable to the PEO and Other NEOs is the performance of each Bank relative to the “return on assets” target ratio designated for each Bank under the MIC Plan at the outset of each year. Under the MIC Plan, neither total shareholder return nor net income is a direct factor in determining entitlement to either form of incentive compensation. As such, there is no direct relationship between compensation actually paid to the PEO or to average compensation actually paid to the Other NEOs, on the one hand, and total shareholder return or net income, on the other hand. However, as demonstrated by the figures in the table above and as described below, there is a significant degree of correlation between compensation actually paid and these performance measures during the three-year period:
| ● | Net Income v. Compensation Actually Paid. As compensation actually paid to the PEO declined from $448,520 in 2022 to $409,757 in 2023, and as average compensation actually paid to the Other NEOs declined from $305,207 in 2022 to $276,367 in 2023, the Company’s net income also experienced a decline, decreasing from $19.3 million in 2022 to $10.8 million in 2023. Similarly, as compensation actually paid to the PEO slightly increased from $409,757 in 2023 to $419,678 in 2024, and as average compensation actually paid to the Other NEOs slightly increased from $276,367 in 2023 to $288,644 in 2024, the Company’s net income experienced a smaller decline, decreasing from $10.8 million to $10.2 million. Notably, during the three-year period (2022 through 2024) when net income declined from $19.3 million to $10.2 million, or by 47%, the amount of incentive compensation actually paid to the PEO and the average amount of incentive compensation actually paid to the Other NEOs declined from $60,760 to $5,078, or by 92%, and from $43,624 to $1,269, or by 97%, respectively, reflecting a high degree of correlation between incentive compensation actually paid to the executive officers and the decline in profitability of the Company. The decline in incentive compensation actually paid was partially offset by modest increases in base salary during the three-year period (from $369,460 to $393,900, or 7%, for the PEO and from $244,530 to $269,455, or 10%, for the Other NEOs) that were awarded to maintain the relative level of base salary in light of the inflationary pressures affecting the economy during the period. |
| ● | Total Shareholder Return v. Compensation Actually Paid. As compensation actually paid to the PEO declined from $448,520 in 2022 to $409,757 in 2023, and as average compensation actually paid to the Other NEOs declined from $305,207 in 2022 to $276,367 in 2023, total shareholder return decreased on a year-over-year basis from $100.97 to $96.41. As compensation actually paid to the PEO slightly increased from $409,757 in 2023 to $419,678 in 2024, and as average compensation actually paid to the Other NEOs slightly increased from $276,367 in 2023 to $288,644 in 2024, total shareholder return declined from $96.41 in 2023 to $78.18 in 2024. Again, it is notable that during the three-year period (2022-2024) when total shareholder return declined from $100.97 to $78.18, or by 23%, the amount of incentive compensation actually paid to the PEO and the average amount of incentive compensation actually paid to the Other NEOs declined from $60,760 to $5,078, or by 92%, and from $43,624 to $1,269, or by 97%, respectively, further reflecting the high degree of correlation between total shareholder return and the amount of incentive compensation actually paid to the executive officers. |
