The three principal components of our executive compensation program consist of:
| ● | Annual cash incentive compensation; and |
| ● | Long-term equity compensation, delivered through both performance- and service-based equity awards. |
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| 50 | OLD NATIONAL BANCORP 2025 PROXY STATEMENT |
In general, we strive to set the proportions of each component in a manner that aligns with similar roles at companies in our peer group or other comparable companies. For 2024, at-risk compensation represented approximately 79% of our CEO’s target total direct compensation and approximately 68% of our other Current Named Executive Officers’ target total direct compensation, as shown in the following charts:
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| CEO | | Other Current Named Executive Officers (Average) |
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The only elements of our executive officers’ compensation for 2024 that we paid in cash were base salary and annual cash incentive compensation. In structuring our long-term incentive opportunities for our CEO and the other Current NEOs in 2024, we emphasized the use of performance-based equity awards primarily through performance share units.
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| OLD NATIONAL BANCORP 2025 PROXY STATEMENT | 51 |
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The following table provides details on the three core elements of our 2024 executive compensation program:
| · COMPONENT · KEY FEATURES |
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| FIXED · Base SalaryFixed compensation for performing the responsibilities associated with an executive’s position · · · ●Set with reference to scope of role, individual skills and experience and demonstrated performance●Informed by peer and market data for similar positions, generally targeted at median●Reviewed annually with changes effective in March of each year · |
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| AT-RISK COMPENSATION · Annual Incentive CompensationRewards short-term financial and operational performance · · · ●Variable, at-risk incentive compensation●Target value aligned to peer and market data for similar positions●No award for performance below threshold; 50% of target value is paid for threshold performance; maximum award is capped at 200% of target●Target opportunities expressed as a percentage of base salary: · |
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| · 2024 NEOs · 2024 Target |
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| | CEO | 125% | |
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| | Executive Chairman1 | 90% of CEO Target | |
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| | President and COO | 90% | |
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| | CEO, Commercial Banking | 85% | |
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| | CFO | 80% | |
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| | Chief Credit Officer | 65% | |
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| | Chief Administrative Officer | 65% | |
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| | ●2024 awards were based on the Company’s adjusted EPS as compared to performance goals established by the Compensation Committee at the beginning of the year | |
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| Long-Term Equity CompensationAligns executive interests with those of our shareholders over the long-term, motivates sustained shareholder returns and shareholder value, as well as retention of critical talent | | | ●Awarded as a combination of performance share units and service-based restricted stock awards●Used peer group and market data when considering mix of performance and service-based awards: | |
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| | | | 2024 Equity Mix | |
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| | 2024 NEOs | Performance-Based | Service-Based | |
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| | CEO and ExecutiveChairman (1) | 60% | 40% | |
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| | Chief Credit Officer | 40% | 60% | |
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| | All Other NEOs | 50% | 50% | |
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| | ●Target value based on peer and market data for similar positions●For performance share units, no shares are earned for performance below threshold; 50% of shares are paid for threshold performance; maximum award is capped at 200% of target●Target opportunities expressed as a percentage of base salary: | |
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| | | 2024 NEOs | 2024 Target | |
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| | CEO | 260% | |
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| | Executive Chairman1 | 90% of CEO Target | |
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| | President and COO | 130% | |
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| | CEO, Commercial Banking | 110% | |
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| | CFO | 75% | |
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| | Chief Credit Officer | 80% | |
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| | Chief Administrative Officer | 80% | |
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| | | | ●Performance share units are based on three-year TSR (50%) and ROATCE (50%), with both metrics measured relative to the performance of companies in the KRX Index●Service-based restricted stock vests in three equal installments over three years | |
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| 1. | Mr. Scudder retired from our Board of Directors and as Executive Chairman on January 31, 2024, and remained as an employee of the Company. His 2024 base salary and short- and long-term target opportunities were set at 90% of the CEO’s base salary and target opportunities in accordance with his letter agreement, as contemplated by the First Midwest Merger. Mr. Scudder retired as an employee of the Company on February 15, 2025. |
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| 52 | OLD NATIONAL BANCORP 2025 PROXY STATEMENT |
The following metrics for our incentive compensation awards were selected given their alignment to short- and long-term value creation and our areas of strategic focus. We also selected these metrics because they are the foundation of what we believe is a responsible incentive program that rewards performance without encouraging excessive risks. In addition, these metrics are commonly used by shareholders and the investment community to evaluate a financial institution’s performance.
| The metrics for our incentive compensation programs are selected given their alignment to short-term and long-term value creation and our areas of strategic focus. We also have selected these metrics because they are the foundation of what we believe are a responsible incentive program that rewards performance without encouraging excessive risks and because they are commonly used by shareholders and the investment community to evaluate a financial institution’s performance. When determining the achievement of the performance goals for each metric, we utilize the audited financial results of the Company. | |
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| ONE-YEAR PERFORMANCE METRIC FOR ANNUAL INCENTIVE COMPENSATION | WHY IT MATTERS |
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| Adjusted EPS | Reflects the overall profitability of the Company for a given year; encourages management to continue to focus on near-term operating performance. |
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| THREE-YEAR PERFORMANCE METRICS FOR LONG-TERM EQUITY COMPENSATION | WHY IT MATTERS |
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| Relative TSR (50% weighting) | Reflects long-term shareholder value creation; measurement over a three-year period on a relative basis compared to the companies in the KRX Index; assesses our stock performance and dividend payments against a broad market of comparable companies. |
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| Relative ROATCE (50% weighting) | Aligns with long-term shareholder value creation; correlates to higher valuations for common stock of publicly traded bank holding companies; measurement is based on a relative basis compared to the performance of the companies in the KRX Index; assesses our operational performance against the companies in a broad market of comparable companies. |
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