UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of
the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
| x | Preliminary
Proxy Statement |
| ¨ | Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2)) |
| ¨ | Definitive
Proxy Statement |
| ¨ | Definitive Additional Materials |
| ¨ | Soliciting Material under §240.14a-12 |
Merchants Bancorp
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Fee computed on table in exhibit required by Item 25(b) per
Exchange Act rules 14a6(i)(1) and 0-11 |
PRELIMINARY
PROXY SUBJECT TO COMPLETION
NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS
| TIME
AND DATE | 8:30 a.m., Eastern Daylight Time, on Thursday, May 19,
2022 |
| PLACE | Online
at meetnow.global/MSQZDDN |
| PURPOSE | (1) |
The election of the Company’s Board of Directors, consisting of eleven (11) directors to serve until the Company’s 2023
annual meeting of shareholders and until his or her successor has been duly elected and qualified, or until his or her earlier resignation,
removal, or death; |
| (2) | An amendment to the Company’s Articles of Incorporation to increase the number of authorized shares; |
| (2) | The ratification of the appointment of BKD, LLP as the Company’s independent registered public accounting firm for the fiscal
year ending December 31, 2022; and |
| (3) | The transaction of such other matters as may properly come before the meeting and any adjournment or postponement of the meeting. |
| RECORD
DATE | In order to vote, you must have been a holder of our common
stock at the close of business on March 25, 2022. |
| PROXY
VOTING | It is important that your shares be represented and voted at
the meeting. You can vote your shares by completing and returning the proxy card. Voting instructions are printed on the proxy card.
You can revoke a proxy at any time before its exercise at the meeting by following the instructions in the proxy statement. |
| |
BY ORDER OF THE BOARD OF DIRECTORS |
| |
|
| |
 |
| |
|
| |
Michael F. Petrie |
| |
Chairman and Chief Executive Officer |
April ___, 2022
MERCHANTS BANCORP
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 19, 2022
These
proxy materials are furnished in connection with the solicitation by the Board of Directors (the “Board”) of Merchants Bancorp
(the “Company,” “Merchants,” “we,” “our,” or “us”),
an Indiana corporation, of proxies to be used at the 2022 annual meeting of shareholders of the Company (the “Annual Meeting”)
and at any adjournments or postponements of such meeting.
In accordance with rules and regulations of
the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each shareholder
of record, we make available proxy materials, which include the Notice of Annual Meeting, this proxy statement, and our Annual Report
on Form 10-K for the year ended December 31, 2021 (“Annual Report”), on the internet unless otherwise instructed
by the shareholder. If you received the Notice of Internet Availability of Proxy Materials (the “Notice”) by mail and would
like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials included in the
Notice.
The Notice is first being mailed to shareholders
and we intend to provide access to the proxy materials to the shareholders of record beginning on or about April ___, 2022.
This Proxy Statement and our Annual Report
are available at:
investors.merchantsbancorp.com
GENERAL INFORMATION
| Time and
Date: | 8:30 a.m., Eastern Daylight Time, on Thursday, May 19,
2022 |
| Place: | Online
at meetnow.global/MSQZDDN |
| Record
Date: | March 25, 2022 |
| Voting: | Only holders of our common stock as of the Record Date are entitled to vote. Each share of common stock is entitled to one (1) vote
for each director nominee and one (1) vote for each of the other proposals being voted on. |
MATTERS TO BE VOTED ON AND RECOMMENDATIONS
| Matter | |
Recommendation | |
Page Reference for More Detail |
| Election of Directors | |
FOR each nominee | |
4 |
| | |
| |
|
| Amendment to Articles of Incorporation to Increase Authorized Shares | |
FOR | |
8 |
| | |
| |
|
| Ratification of the Appointment of BKD, LLP as our Registered Independent Public Accounting Firm for the Fiscal Year Ending December 31, 2022 | |
FOR | |
9 |
INFORMATION ABOUT THE MEETING AND VOTING
The following is information regarding the Annual Meeting and the voting
process, presented in a question and answer format.
Why did you receive access to the
proxy materials?
We have made the proxy materials available to you
because, as of the Record Date, you held shares of our common stock. This proxy statement describes the matters that will be presented
for consideration by the shareholders at the Annual Meeting. It also provides information concerning those matters to assist you in making
an informed decision.
Why did you receive a Notice Regarding the Internet Availability
of Proxy Materials instead of paper copies of the proxy materials?
We are using the SEC notice and access rule that
allows us to furnish our proxy materials on the internet to our shareholders instead of mailing paper copies of those materials to each
shareholder. As a result, beginning on or about April ___, 2022, we sent our shareholders the Notice by mail with instructions on
how to access our proxy materials on the internet and vote online. The Notice is not a proxy card and cannot be used to vote your shares.
If you received the Notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following
the instructions on the Notice or on the website referred to in the Notice.
How can you attend the Annual Meeting?
Due to the ongoing COVID-19 pandemic, the Annual
Meeting will be a completely virtual meeting of shareholders and conducted exclusively online. You are entitled to virtually attend the
Annual Meeting only if you were a shareholder of our common stock as of the Record Date, or if you hold a valid proxy for the Annual Meeting.
No physical meeting will be held.
You
will be able to virtually attend the Annual Meeting online and submit your questions during the meeting by visiting meetnow.global/MSQZDDN.
You also will be able to vote your shares online by virtually attending the Annual Meeting.
If you are a shareholder of record, you do not
need to register to attend the Annual Meeting virtually. However, if you hold your shares in “street name” (as described below),
you must register in advance to attend the Annual Meeting virtually.
To participate in the Annual Meeting, you will
need to review the information included with the Notice, on your proxy card, or on the instructions that accompanied your proxy materials.
Why is the Company holding a virtual meeting instead of a physical
meeting?
We have decided that a virtual meeting would be
best to support the health and well-being of our employees, directors, and shareholders during the COVID-19 pandemic. A virtual meeting
will help enable more of our shareholders to attend and participate since the Annual Meeting can be accessed from any location with internet
access, while maintaining proper social distancing.
Who may vote at the Annual Meeting?
The proxy materials are provided holders of record
of our common stock on the Record Date. Only the common shareholders of record on the Record Date may vote at the Annual Meeting. As of
the Record Date, there were 43,267,776 shares of our common stock outstanding.
How can you vote?
You may own your shares of
our common stock in one or more of the following ways:
| ● | Directly in your name as shareholder of record; or |
| ● | Indirectly through a broker, bank, or other holder of record (your “nominee”), commonly referred
to as in “street name.” |
For shares of which you are the shareholder of
record, you may vote your shares on the internet, or by requesting a proxy card and completing, signing, and returning it in the postage-paid
envelope that will be provided. Simply follow the easy instructions provided on the Notice or proxy card. You may also vote during the
Annual Meeting. Execution of a proxy card or voting via the internet will not affect your right to virtually attend the Annual Meeting.
If your shares are held in street name, please
follow the instructions provided by your nominee on the voting instruction form or Notice in order to vote your shares. The method by
which you may vote your shares (e.g., by internet or telephone) may depend on the voting process of your nominee. If you desire to vote
virtually at the Annual Meeting, you must obtain a legal proxy from your nominee. Please contact the organization that holds your shares
for instructions regarding obtaining a legal proxy. As provided above, there will not be a physical meeting.
What happens if you do not give specific voting instructions?
Shareholders
of Record. If you are a shareholder of record and you (a) indicate when voting on the internet that you wish to vote as
recommended by the Board or (b) sign and return a proxy card without giving specific voting instructions, then the persons named
as proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as
the proxy holders may determine in their judgment with respect to any other matters properly presented for a vote at the meeting.
Shares
Held in Street Name. If your shares are held in street name and you do not provide your nominee with specific voting instructions,
then, under applicable rules, your nominee may generally vote on routine matters but cannot vote on non-routine matters. If your nominee
does not receive instructions from you on how to vote your shares on a non-routine matter, your nominee will inform us that it does not
have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”
For the Annual Meeting, the election of directors is considered a non-routine matter but the ratification of the appointment of our independent
registered public accounting firm is considered a routine matter.
Can you change your vote after you return the proxy card or after
voting electronically?
If you are a shareholder of record, you may revoke
your proxy and change your vote at any time before it is voted. Prior to the applicable cutoff time, you may change your vote using the
Internet, in which case only your latest Internet proxy submitted prior to the Annual Meeting will be counted. You may also revoke your
proxy and change your vote by signing and returning a new proxy card or voting instruction form dated as of a later date, or by attending
the meeting and voting in person. However, your attendance at the meeting will not automatically revoke your proxy unless you properly
vote at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to our
Secretary prior to the Annual Meeting.
If you hold your shares in street name, you may
revoke your proxy by following instructions provided by your nominee.
No notice of revocation or later-dated proxy will
be effective until received by our Secretary at or prior to the Annual Meeting.
What options do you have in voting
on each of the proposals?
For
Proposal 1 – Election of Directors, you may vote “FOR” or “WITHHOLD” for each Director nominee. For
Proposal 2 – Amendment to Articles of Incorporation to Increase Authorized Shares and Proposal 3 – Ratification of Independent
Registered Public Accounting Firm, and for any other proposal that may properly be brought before the Annual Meeting, you may vote “FOR,”
“AGAINST,” or “ABSTAIN.”
What is the quorum required for
each matter?
The holders of a majority of the shares of our
common stock outstanding as of the Record Date, represented in person or by proxy, will constitute a quorum for purposes of such matter
at the Annual Meeting. If less than a majority of the shares of our common stock are represented at the meeting, a majority of the shares
represented may adjourn the meeting at any time.
As of the Record Date, there were 43,267,776 shares
of our common stock outstanding. Therefore, at least 21,633,889 shares need to be represented in order to constitute a quorum.
How many votes are needed for approval
of each proposal?
Our
directors are elected by a plurality of the votes cast at the Annual Meeting. This means that the nominees for director receiving the
largest number of votes cast “FOR” will be elected up to the maximum number of directors to be elected at the Annual Meeting
to serve until the Company’s 2023 annual meeting of shareholders and until his or her successor has been duly elected and
qualified, or until his or her earlier resignation, removal, or death.
Approval of the Amendment to Articles of Incorporation
to increase the number of authorized shares requires the affirmative vote of a majority of the votes cast at the Annual Meeting.
Ratification of the selection of BKD, LLP as our
independent registered public accounting firm requires the affirmative vote of a majority of the votes cast at the Annual Meeting. If
the appointment of BKD, LLP is not ratified, the matter of the appointment of our independent registered public accounting firm will be
considered by the Board’s Audit Committee.
How are abstentions and broker non-votes treated?
Abstentions and, unless your nominee’s authority
to vote on a particular matter is limited, broker non-votes are counted in determining the votes present at the meeting. A nominee has
limited authority to vote on the election of directors and the Amendment to Articles of Incorporation but is not limited as to the ratification
of the selection of BKD, LLP as our independent registered public accounting firm. With respect to the election of directors, abstentions,
broker non-votes, and votes to “WITHHOLD” for a nominee will result in such nominee receiving fewer votes but will not affect
the outcome of the election. With respect to the Amendment to Articles of Incorporation and the ratification of the selection of BKD,
LLP, abstentions and broker non-votes have the same effect as a vote against the proposal.
Who will pay for the costs involved in the solicitation of proxies?
We will pay all costs of preparing, assembling,
and distributing the proxy materials, including printing and mailing any copy of this proxy statement requested by a shareholder. In addition
to solicitations by mail, directors and officers of the Company and its subsidiaries may solicit proxies personally, by telephone, email,
or in person, but such persons will not be specially compensated for their services.
Other Matters Related to the Meeting
Only matters brought before the Annual Meeting
in accordance with our Second Amended and Restated By-Laws (“By-Laws”) will be considered. Aside from the items listed above
in the Notice of Annual Meeting, we do not know of any other matters that will be presented at the Annual Meeting. However, if any other
matters properly come before the Annual Meeting or any adjournment, the proxy holders will vote them in accordance with their best judgment.
Each of the Board’s nominees for director
has consented to serving as a director of the Company. Should any nominee for director become unable or unwilling to accept nomination
or election, the persons acting under the proxy intend to vote for the election of another person recommended by the Nominating and Corporate
Governance Committee and nominated by the Board. We have no reason to believe that any of the nominees for director will be unable or
unwilling to serve if elected to office.
PROPOSAL 1 – ELECTION OF DIRECTORS
At
the Annual Meeting, shareholders entitled to vote will elect eleven (11) directors to serve until our 2023 annual meeting of shareholders
and until his or her successor has been duly elected and qualified, or until his or her earlier resignation, removal, or death. Set forth
below is information concerning the nominees for election as directors.
The
Board recommends that shareholders vote “FOR” each of the nominees for election as director.
NOMINEES
| Name | |
Age | |
Occupation | |
Director Since |
| Michael F. Petrie | |
68 | |
Chairman and Chief Executive Officer of the Company and Chairman of Merchants Bank | |
2006 |
| Randall D. Rogers | |
76 | |
Vice Chairman of the Company | |
2006 |
| Tamika D. Catchings | |
42 | |
Former Vice President of Basketball Operations and General Manager of the Indiana Fever | |
N/A |
| Thomas W. Dinwiddie | |
74 | |
Partner at the law firm of Dinsmore & Shohl LLP | |
N/A |
| Michael J. Dunlap | |
56 | |
President and Chief Operating Officer
of the Company and Chief Executive Officer of Merchants Bank | |
2014 |
| Scott A. Evans | |
57 | |
Richmond Market President and Chief Operating Officer of Merchants Bank | |
2006 |
| Sue Anne Gilroy | |
73 | |
Former Executive Director and Vice President of Development for the St. Vincent Foundation, Indianapolis, Indiana | |
2017 |
| Andrew A. Juster | |
69 | |
Former Chief Financial Officer of Simon Property Group, Inc., one of the largest publicly traded real estate investment trusts in the United States | |
2019 |
| Patrick D. O’Brien | |
64 | |
President of O’Brien Toyota, a Toyota dealership serving Indianapolis, Indiana | |
2013 |
| Anne E. Sellers | |
61 | |
Technology consultant and former Managing Principal and majority owner of Sensory Technologies, LLC | |
2017 |
| David N. Shane | |
74 | |
Former member of board of managers, President, and Chief Executive Officer of LDI Ltd., LLC | |
2013 |
There are no arrangements or understandings between
any of our nominees or executive officers and any other person pursuant to which any of our nominees or executive officers have been selected
for their respective positions. No nominee, current director, or executive officer is related to any other nominee, current director,
or executive officer. No nominee for director has been a director of another “public company” (i.e., subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) or of any investment company within
the past five years.
The business experience of each of the nominees
for director, as well as their qualifications to serve on the Board, is as follows:
Michael
F. Petrie. Mr. Petrie has served as Chairman and Chief Executive Officer of the Company since October 2006 and also
serves as Chairman of its subsidiary, Merchants Bank of Indiana (“Merchants Bank”). From March 2002 through December 2019,
Mr. Petrie served as Chief Executive Officer of Merchants Bank, and served as President of the Company’s subsidiary Merchants
Capital Corp. (“Merchants Capital”) from when it was founded by Mr. Petrie and Mr. Rogers in August 1990 until
January 2018.
In addition to Mr. Petrie’s positions
at the Company and its subsidiaries, Mr. Petrie serves as the trustee of the Michael F. Petrie & Jody J. Petrie Foundation
and as a director of the Indiana Affordable Housing Council and the Indianapolis Chamber of Commerce. Additionally, Mr. Petrie serves
on the National Board for the Indiana University Varsity Club and the Advisory Board for the Indiana University Center for Real Estate
Studies. In 2005, Mr. Petrie served as Chairman of the Mortgage Bankers Association Board of Directors, Washington, D.C. Mr. Petrie
is a graduate of Indiana University with both a Bachelor of Science and Master of Business Administration in finance.
Mr. Petrie brings to the Board, among other
skills and qualifications, extensive bank management experience derived from over 42 years in the mortgage banking industry. Mr. Petrie
also brings to the Board a broad strategic vision for the Company, and the Board believes this is valuable in developing and implementing
the Company’s strategic growth initiatives.
Randall
D. Rogers. Mr. Rogers has served as a director of the Company and the Vice Chairman of Merchants Bank since October 2006
and March 2002, respectively, and Vice Chairman of the Company since January 1, 2018. Prior to January 1, 2018, Mr. Rogers
also served as President and Chief Operating Officer of the Company and Chairman of Merchants Capital since it was founded by Mr. Petrie
and Mr. Rogers in August 1990.
In addition to Mr. Rogers’ positions
at the Company and its subsidiaries, Mr. Rogers is also directly involved with the Rogers Family Foundation, which is administered
by Central Indiana Community Foundation, which annually directs gifts to various 501(c)(3) organizations supporting causes such as
children’s arts, the environment, animal welfare, poverty, healthcare, childhood education, and re-employment support. Mr. Rogers
is a graduate of The University of North Carolina at Chapel Hill with a degree in economics and of the Stonier Graduate School of Banking
at Rutgers University.
Mr. Rogers’ over 50 years of mortgage
banking experience, including deep experience in multi-family lending and his involvement as a co-founder of our Company, make him uniquely
qualified to serve as a director and Vice Chairman of the Board.
Tamika
D. Catchings. Ms. Catchings is not currently a director of the Company and was nominated for election to the Board in
February 2022. From 2001 to 2016, Ms. Catchings played for the Indiana Fever, Indianapolis’s WNBA team, and became
one of the most decorated athletes of all time. Ms. Catchings is a 4-time Olympic gold medalist, 10-time WNBA All-Star, 5-time Defensive
Player of the Year, and a WNBA Champion. Beyond her on-court success, Ms. Catchings is known for her off-court professionalism and
was a 3-time recipient of the Kim Perrot Sportsmanship award. In 2004, Ms. Catchings launched the Catch the Stars Foundation, which
empowers youth by providing goal setting programs that promote fitness, literacy, and youth development. From 2017 to 2022, Ms. Catchings
served as the Vice President of Basketball Operations and General Manager of the Indiana Fever.
Since her retirement from professional basketball,
Ms. Catchings has been involved in the business community of Indianapolis as both a business owner and by serving on various boards,
including the Board of Directors of the Indianapolis Airport Authority. Additionally, Ms. Catchings is a color analyst with the ESPN/SEC
Network, where she provides expert analysis and background information, such as statistics and strategy. Ms. Catchings is a graduate
of the University of Tennessee, where she earned a bachelor’s degree and a master’s degree in sports management.
Ms. Catchings brings to the Board, among other
skills and qualifications, business management experience, extensive leadership, including in the philanthropic sector, and years of work
and service throughout the Indianapolis community.
Thomas
W. Dinwiddie. Mr. Dinwiddie is not currently a director of the Company and was nominated for election to the Board in
March 2022. Mr. Dinwiddie is a partner at the law firm if Dinsmore & Shohl, LLP and his practice focuses on the areas
of real estate, real estate finance, real estate development, and mortgage banking. Mr. Dinwiddie has been a director of Merchants
Bank since 2002. Additionally, Mr. Dinwiddie has represented the Indiana Mortgage Bankers Association for more than 30 years and
was the first recipient of their Distinguished Service Award. He is a graduate of DePauw University and received his juris doctor degree
from Indiana University Robert H. McKinney School of Law.
Mr. Dinwiddie brings to the Board, among other
skills and qualifications, a wide range of real estate and mortgage banking knowledge and experience.
Michael
J. Dunlap. Mr. Dunlap has served as a director of the Company since May 2014. Mr. Dunlap became President and
Chief Operating Officer of the Company in January 2018 and became Chief Executive Officer of Merchants Bank in January 2020.
Prior to becoming Chief Executive Officer of Merchants Bank, Mr. Dunlap had been President and Co-Chief Operating Officer of Merchants
Bank since May 2014. Mr. Dunlap has over 25 years of mortgage banking experience and joined Merchants Bank as Senior Vice
President of Mortgage Banking in August 2009. Mr. Dunlap has been primarily responsible for establishing our warehouse lending
platform and Merchants Mortgage, a division of Merchants Bank focused on single-family mortgage origination and servicing. Prior to joining
Merchants, Mr. Dunlap served as Chief Financial Officer of National City Mortgage, which was acquired by The PNC Financial Services
Group, Inc. and prior to that held similar finance positions at Bank One, which was acquired by JPMorgan Chase & Co.,
and Waterfield Mortgage Co., which was acquired by Huntington Bancshares, Inc. Mr. Dunlap is a graduate of Indiana University
with a degree in accounting and is a former licensed Certified Public Accountant.
Mr. Dunlap’s extensive experience and
knowledge of the Company and its products and services, particularly in mortgage banking, is tremendously valuable to the Board.
Scott
A. Evans. Mr. Evans has served as a director of the Company and President of the Lynn/Richmond market and Chief Operating
Officer of Merchants Bank since 2004 and Chairman of the Board of Directors of the Company’s Illinois bank subsidiary, Farmers-Merchants
Bank of Illinois, since 2017. Mr. Evans has over 32 years of community banking and related experience. Prior to joining Merchants,
Mr. Evans was Assistant Vice President, Agriculture Lending at Bath State Bank, Bath, Indiana from 2002 to 2004. Also, Mr. Evans
served as Vice President of The Farmers State Bank, New Madison, Ohio from 1989 to 2000 where he performed a variety of management functions,
including with respect to compliance, human resources, information technology, information security, and accounting.
In addition to Mr. Evans’ positions
at the Company and its subsidiaries, Mr. Evans also is a member of the Ohio Farm Bureau and Ohio Corn and Wheat Growers Association
and previously served as chairman of the finance committee of the St. Vincent Randolph Hospital Foundation. Mr. Evans is a graduate
of The Ohio State University with a Bachelor of Science degree in agriculture, with an emphasis in agriculture economics and finance.
Mr. Evans brings to the Board, among other
skills and qualifications, extensive experience in community banking, and agricultural lending in particular.
Sue
Anne Gilroy. Ms. Gilroy has served as a director of the Company since June 2017. Ms. Gilroy served as Executive
Director and Vice President of Development for the St. Vincent Foundation, Indianapolis, Indiana from 2005 until 2019.
Ms. Gilroy has held a number of offices in public service and previously served as Indiana’s first female Secretary of State
from 1994 to 2002, the first female director of Indianapolis and Marion County, Indiana’s consolidated city-county government,
as Director of Indianapolis Parks and Recreation from 1974 to 1976, Senator Richard G. Lugar’s Indiana State Director from 1990
to 1993, and on Indiana Governor Mitch Daniels’ Blue Ribbon Commission on Local Government Reform in 2007.
In addition, Ms. Gilroy also serves on the
boards of directors of the University of Indianapolis and University High School, Indianapolis, Indiana, and as trustee of the
Endowment Fund Board of Tabernacle Presbyterian Church. Ms. Gilroy is a graduate of DePauw University with a degree in speech and
secondary education and holds a master’s degree in public administration from Indiana University, Indianapolis.
Ms. Gilroy brings to the Board, among other
skills and qualifications, the experiences of a career in public sector management, as well as extensive leadership in the non-profit
world.
Andrew
A. Juster. Mr. Juster has served as a director of the Company since May 2019. From 1989 through 2018, Mr. Juster
was employed by Simon Property Group, Inc., a global leader in the ownership of premier shopping, dining, entertainment and mixed-use
destinations, an S&P 100 company, and one of largest publicly traded real estate investment trusts in the United States. From January 1,
2015 to October 1, 2018, Mr. Juster served as Executive Vice President and Chief Financial Officer of Simon Property Group, Inc.,
and previously served as its Executive Vice President and Treasurer from 2008 through 2014. Mr. Juster is a graduate of American
University and received a Master of Business Administration from the Wharton Graduate School of the University of Pennsylvania.
Mr. Juster brings extensive knowledge of the
commercial real estate market and significant experience in finance, including overseeing financing strategies and capital market activities,
and an understanding of the necessary accounting systems and controls of a publicly traded company.
Patrick
D. O’Brien. Mr. O’Brien has served as a director of the Company since November 2013. Since 1990, Mr. O’Brien
has been President of O’Brien Toyota, a Toyota dealership serving the Indianapolis, Indiana area. Mr. O’Brien is
also the owner and managing member of K&P Property Development, LLC, a real estate holding company, and co-owner and managing
member of Pinheads, a family entertainment center in Fishers, Indiana. Mr. O’Brien has previously served as chairman of
Toyota’s Regional Dealer Council, which serves a four-state area including Indiana, chairman of the Chicago Region Toyota Dealer
Advertising Association, and President of the Auto Dealers Association of Indiana. Mr. O’Brien is a graduate of Indiana University
with a bachelor’s degree in business management.
Mr. O’Brien
brings to the Board, among other skills, a wide range of knowledge and perspective relative to operating successful businesses and the
business community in our Indianapolis market.
Anne
E. Sellers. Ms. Sellers has served as a director of the Company since June 2017. Ms. Sellers is an audio/visual
technology consultant and, from 2006 through 2019, Ms. Sellers served as Managing Principal and majority owner of Sensory Technologies, LLC,
an Indianapolis-based company that specializes in audiovisual integration technologies, including videoconferencing system design, web
streaming and distribution, and sound and acoustic design.
Ms. Sellers has also previously served in
a variety of accounting and finance roles, including with Ernst & Young. In addition, Ms. Sellers is a member of the boards
of directors of WFYI Public Television and the St. Richards Foundation, serves as First Vice Chair of the board of trustees of Newfields,
is a member of the executive committee of The Gathering, and is a past member of the board of directors of the National Systems Contractors
Association, The Alliance Group, and the National Association of Women Business Owners, Indianapolis Chapter. Ms. Sellers is
a graduate of DePauw University with a degree in economics.
Ms. Sellers brings to the Board, among other
skills and qualifications, extensive experience in management and leadership in the technology industry.
David
N. Shane. Mr. Shane has served as a director of the Company since November 2013. Mr. Shane previously served
as Vice-President and Executive Vice-President (from 1997 to 2006) and President and Chief Executive Officer and member of the board of
managers (from 2007 until his retirement in 2013) of LDI Ltd., LLC, an Indianapolis-based diversified holding company that
focuses on funding and operating middle-market companies. From 1975 to 1995, Mr. Shane was an attorney and partner at the law
firm of Baker & Daniels LLP, now Faegre Drinker Biddle & Reath LLP.
In addition, Mr. Shane currently serves as
a member of the boards of directors of Lilly Endowment, Inc., The Mind Trust, and Ascend Indiana, Inc., and the board of trustees
of the Institute for Citizens & Scholars, and as an emeritus member of the board of trustees of Wabash College. He previously
served as a director of Our Health, Inc. and Syndicate Sales, Inc. He is a graduate of Wabash College with a degree in English
and received his juris doctor degree from Duke University School of Law.
Mr. Shane brings to the Board, among other
skills and qualifications, extensive business and legal skills that assist the Board in fulfilling its oversight role of management.
PROPOSAL 2 – Amendment
to Articles of Incorporation
to Increase
Authorized Shares
Description of the Proposed Amendment of Section 4.1
At a meeting held on February 17, 2022, the
Board unanimously adopted resolutions approving, recommending, and submitting to a vote of the Company’s shareholders entitled to
vote an amendment to Section 4.1 of the Company’s First Amended and Restated Articles of Incorporation, as amended (“Articles”),
which would increase the total number of authorized shares from fifty-five million (55,000,000) to eighty million (80,000,000) and the
authorized number of shares of common stock from fifty million (50,000,000) to seventy-five million (75,000,000). No change is being proposed
to the number of the Company’s authorized shares of preferred stock. The complete text of Section 4.1, as amended, reads as
follows:
Section 4.1.
The total number of shares which the Corporation has authority to issue shall be eighty million (80,000,000) shares, consisting of seventy-five
million (75,000,000) shares of common stock, without par value (the “Common Stock”) and five million (5,000,000) shares designated
as preferred stock, without par value (the “Preferred Stock”).
Discussion of the Proposed Amendment of Section 4.1
Although
the Company has no current plans, agreements, arrangements, or intentions to issue any common shares, the Board believes that authorizing
additional shares is advisable and in the best interest of the shareholders and Company. The
ability to issue these additional common shares in the future will provide the Company with additional financial and management flexibility
in structuring capital raising transactions, acquisitions, financings, joint ventures, and strategic partnerships as well as other general
corporate transactions.
The
Company was incorporated in 2006 with 10,000 total authorized shares, all of which was common stock. The Company has amended its
articles of incorporation several times since 2006 to increase its number of authorized shares and has from time to time split its
common stock. The Company’s most recent amendment to its articles of incorporation to increase the number of authorized shares
was in 2017, when it increased the total number of authorized shares to 55,000,000, with 50,000,000 designated as common stock and
5,000,000 designated as preferred stock. Additionally, in January 2022 the Company completed a three-for-two stock split
whereby shareholders received one (1) additional share of common stock for every two (2) shares of common stock held (the
“2022 Stock Split”). As of the Record Date, after accounting for the 2022 Stock Split, the Company has 43,267,776
shares of common stock outstanding out of the 50,000,000 authorized.
If shareholder
approval of an increase in total authorized shares and authorized shares of common stock is postponed until the transactions described
above arise, the delay and expense incident to obtaining shareholder approval at that time could impair our ability to successfully execute
those transactions.
An
increase in the Company’s authorized shares and common stock would not have any immediate effect on the rights of existing shareholders.
However, the Board will have the authority to issue the additional shares of common stock without requiring future shareholder approval
of such issuances, except as may be required by the Articles, rules of The Nasdaq Stock Market LLC (“Nasdaq”),
or other applicable rules and regulations. To the extent that additional authorized shares of common stock are issued from time to
time in the future, they could dilute the Company’s current and then existing common shareholders’ stock ownership.
The Board recommends that shareholders vote
“FOR” the Amendment to Articles of Incorporation to increase the Company’s total authorized shares and authorized shares
of common stock.
PROPOSAL 3 – RATIFICATION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Board’s Audit Committee has appointed,
and the Board has ratified, BKD, LLP to be the Company’s independent registered public accounting firm for the fiscal year ending
December 31, 2022, subject to ratification by shareholders. A representative of BKD, LLP is not expected to be present at the annual
meeting to respond to questions from shareholders or make a statement.
If the ratification of the appointment of the independent
registered public accounting firm is not approved by a majority of the votes cast by shareholders at the annual meeting, the Audit Committee
will consider other independent registered public accounting firms.
The Board recommends that shareholders vote
“FOR” the ratification of the appointment of BKD, LLP as the Company’s independent registered public accounting firm.
CORPORATE GOVERNANCE
Generally, the Board oversees our business and
monitors the performance of our management. In accordance with our corporate governance procedures, the Board does not involve itself
in the day-to-day operations of the Company, which are monitored by our executive officers and management. Our directors fulfill their
duties and responsibilities by attending regular meetings of the Board, with additional special meetings held from time to time. Our directors
also discuss business and other matters with Messrs. Petrie and Dunlap, and other key executive officers, as well as our principal
external advisers (legal counsel, auditors, and other consultants) at times other than regularly scheduled meetings when appropriate.
The Board has established standing committees in
connection with the discharge of its responsibilities. These committees are: Audit, Compensation, Nominating and Corporate Governance,
and Risk. The Board also may establish such other committees as it deems appropriate, in accordance with applicable laws and regulations
and our Articles and By-Laws.
The Board held five (5) regularly scheduled
and special meetings during 2021. In 2022, the Board intends to meet at least four (4) times, with additional special meetings held
from time to time when necessary, and through committee membership, which is discussed below. During 2021, all directors attended at least
75 percent of the meetings of the Board and the committees on which they served. Although we do not have a formal policy regarding
director attendance at the annual meeting, we encourage and expect all of our directors to attend. All of the directors were present at
the Company’s 2021 annual meeting of shareholders.
Director Independence
Under the rules of Nasdaq and the SEC, the
Board has determined that five (5) of the current nine (9) directors qualify as independent directors: Ms. Gilroy, Mr. O’Brien,
Mr. Juster, Ms. Sellers, and Mr. Shane. The Board has also determined that if elected, Ms. Catchings will qualify
as an independent director, but Mr. Dinwiddie will not qualify as an independent director.
Messrs. Petrie, Dunlap, and Evans do not qualify
as independent directors because each is an executive officer. Mr. Rogers does not qualify as an independent director because he
is an employee and was our President and Chief Operating Officer in 2017.
A director or nominee that is not employed by us
is referred to as a “Non-Executive Director.”
The Board has a Chairman whose duties are described
in our By-Laws. The Board may select any of its members as its Chairman and has no formal policy as to whether our Chief Executive Officer
will serve as Chairman or whether any other director, including a non-employee or independent director, may be elected to serve as Chairman.
At present, the positions of Chairman and Chief Executive Officer are both held by Mr. Petrie. The Board believes that Mr. Petrie
is best situated to serve as Chairman because of his familiarity with the Company’s business and because he is the most capable
of effectively identifying strategic opportunities and leading the execution of our business strategy.
However, the Board has adopted a written charter
to govern in the event the positions of Chairman and Chief Executive Officer are held by the same individual. This “Independent
Lead Director Charter” was developed to describe the responsibilities of the Independent Lead Director if the same individual is
Chairman and Chief Executive Officer; it states that the Independent Lead Director will be a member of the Board who satisfies the requirements
for independent directors under the Nasdaq rules. Our Independent Lead Director is currently Andrew A. Juster.
As described in the charter, the Independent Lead
Director has responsibility for, among other things:
| ● | consulting with the Chief Executive Officer for Board schedules and agendas, including advising the Chief Executive Officer as to
the quality, quantity, and timeliness of the information submitted by Merchants’ management; |
| ● | organizing meetings of the independent directors as necessary to, in part, ensure they have adequate resources for decision making
and to serve as the principal liaison between the independent directors and the Chief Executive Officer; |
| ● | conducting exit interviews with all departing executive officers, as appropriate; and |
| ● | handling other such matters that are specifically delegated to the Independent Lead Director by the Board from time to time. |
Board’s Role in Risk Management
Risk is inherent in any business; as is the case
with other management functions, our senior management has the primary responsibility for managing the risks we face. However, as a financial
institution, our business involves financial risks that do not exist, or that are more extensive than the risks that exist, in some other
types of businesses. We are subject to extensive regulation that requires us to assess and manage those risks, and during their periodic
examinations our regulators assess our performance in that regard. As a result, the Board is actively involved in overseeing our risk
management programs.
While the full Board is charged with ultimate oversight
responsibility for risk management, various committees of the Board and members of management also have responsibilities with respect
to our risk oversight. In particular, the Audit Committee oversees and assesses our financial risk, and the Risk Committee monitors our
credit, operational, and compliance risks, including our enterprise risk management program, and each receives regular reports from senior
management regarding comprehensive risk as well as particular areas of concern. The Compensation Committee monitors and assesses the various
risks associated with compensation policies and oversees incentives that encourage a level of risk-taking consistent with our overall
strategy.
Further, our Chairman meets regularly with senior
management to discuss strategy and the risks we face. Senior management attends Board meetings and is available to address any questions
or concerns raised by the Board on risk management and any other matters.
Board Committees
The Board currently has four (4) standing
committees: Audit, Compensation, Nominating and Corporate Governance Committee, and Risk. Each committee is comprised solely of directors
that meet the definition of “independent director” under the Nasdaq rules, and as to the Audit Committee, also satisfy the
requirements of SEC Rule 10A-3. Each committee meets at such times as determined to be necessary.
Each
of the committees has a written charter which sets forth the committee’s duties and responsibilities and is reviewed by the committee
on a regular basis. The current charters of the committees are available on our website (investors.merchantsbancorp.com)
under the corporate profile – governance documents section.
The following table identifies the committee members.
| Director | |
Audit | | |
Compensation | | |
Nominating and
Corporate
Governance | | |
Risk (1) | |
| Sue Anne Gilroy | |
| M | | |
| M | | |
| M | | |
| M | |
| Andrew A. Juster | |
| C | | |
| M | | |
| M | | |
| M | |
| Patrick D. O’Brien | |
| M | | |
| C | | |
| M | | |
| M | |
| Anne E. Sellers | |
| M | | |
| M | | |
| C (2) | | |
| M | |
| David N. Shane | |
| M | | |
| M | | |
| M | | |
| C (2) | |
| Number of Meetings in 2021 | |
| 8 | | |
| 1 | | |
| 1 | | |
| 1 | |
M: Member of Committee
C: Chair of Committee
| (1) | The Risk Committee was established by the Board in August 2021 and had its first meeting in November 2021. |
| (2) | In 2021, Mr. Shane served as Chair of the Nominating and Corporate Governance Committee until August when
he was appointed Chair of the Risk Committee and at which time Ms. Sellers replaced Mr. Shane as Chair of the Nominating and
Corporate Governance Committee. |
Audit Committee
The Board has determined that each member of the
Audit Committee also satisfies the additional independence standards under the Nasdaq rules and applicable SEC rules for audit
committee service and has the ability to read and understand fundamental financial statements. In addition, the Board has determined that
each of Mr. Juster, Ms. Sellers, and Mr. Shane qualify as an “audit committee financial expert,” as that term
is defined under the applicable SEC rules.
As described in its charter, the Audit Committee
has responsibility for, among other things:
| ● | selecting and reviewing the performance of our independent auditors and approving, in advance, all engagements and fee arrangements; |
| ● | reviewing the independence of our independent auditors; |
| ● | reviewing actions by management on recommendations of the independent auditors and internal auditors; |
| ● | meeting with management, the internal auditors, and the independent auditors to review the effectiveness of our system of internal
control and internal audit procedures and results; |
| ● | reviewing earnings releases, financial statements, and reports to be filed with the SEC or otherwise; |
| ● | reviewing and approving transactions for potential conflicts of interest under our Code of Conduct; and |
| ● | handling other such matters that are specifically delegated to the Audit Committee by the Board from time to time. |
Compensation Committee.
As described in its charter, the Compensation Committee
has responsibility for, among other things:
| ● | overseeing executive compensation and management succession plans; personnel policies, benefits programs, and incentive compensation
as they relate to our executive officers; and ensuring the competitiveness thereof; |
| ● | establishing performance goals and objectives relative to the compensation of our executive officers; |
| ● | determining the annual compensation of our Chief Executive Officer; |
| ● | recommending to the Board the compensation of all other executive Officers, including annual base salary, annual or short-term incentive
opportunities, long-term incentive opportunities, employment, severance, and/or change-in-control agreements, and any perquisites or special
benefits; |
| ● | reviewing the talent development and executive succession planning process with our Chief Executive Officer; |
| ● | recommending to the Board any changes to the compensation of Non-Executive Directors; |
| ● | preparing the Compensation Committee report that may be required by SEC rules to be included in our future annual reports and
proxy statements; and |
| ● | handling such other matters that are specifically delegated to the Compensation Committee by the Board from time to time. |
The Compensation Committee maintains the authority
to engage any compensation consultant at any time as it deems necessary or appropriate. However, the Compensation Committee generally
has not engaged outside compensation consultants in determining or recommending the amount or form of executive officer or director compensation
and did not in 2021. Instead, the Compensation Committee has primarily relied on publicly available data and internal resources, such
as our human resources department. Additionally, executive officers may participate in discussions with the Compensation Committee regarding
our compensation practices and the Compensation Committee regularly requests recommendations from and then has discussions with our Chief
Executive Officer regarding other executive officers’ compensation. However, no executive officer is present during the Compensation
Committee’s vote on any executive officer’s compensation. For 2022, the Compensation Committee is considering engaging an
outside compensation consultant with respect amount and structure of executive officer compensation but has not made any final determination
on whether it will use such a consultant or if it does, who that consultant may be.
Nominating and Corporate Governance
Committee.
As described in its charter, the Nominating and
Corporate Governance Committee has responsibility for, among other things:
| ● | recommending persons to be selected by the Board as nominees for election as directors or to fill any vacancies on the Board; |
| ● | monitoring the functioning of our standing committees and recommending any changes, including the creation or elimination of any committee; |
| ● | reviewing and assessing the standard for determining director independence consistent with the requirements of applicable laws, regulations,
and the Nasdaq rules; |
| ● | annually assessing the independence of directors and recommending action to the Board to effect changes in incumbent directors (if
deemed appropriate by the Committee); |
| ● | recommending to the Board on an annual basis an independent director to serve as Chairman or Lead Independent Director, as applicable; |
| ● | reviewing shareholder proposals properly submitted, including any proposed amendments to our Articles or By-Laws; and |
| ● | generally advising the Board on corporate governance matters, including reviewing and assessing the Company’s compliance with
the requirements of applicable laws, regulations, including state and federal banking laws and the Sarbanes-Oxley Act, and the Nasdaq
rules; |
Additionally, as provided for in its charter, our
Nominating and Corporate Governance Committee also has the power and authority to conduct certain activities as it deems appropriate,
including:
| ● | advise and make recommendations to the Board on the appropriate size and composition of the Board; and |
| ● | make recommendations to the Board with respect to the qualifications and independence of members of the Board, committee member qualifications,
and committee structure and operations. |
Risk Committee
As described in its charter, the Risk Committee
has responsibility for, among other things:
| ● | establishing the strategy, policy-setting, centralized oversight, communication, and reporting to management and the Board regarding
our Enterprise Risk Management Program; |
| ● | exercising oversite and monitoring of major risk types (i.e., strategic, credit, operational, fraud, compliance, reputational, and
market risks) against established key risk indicators and risk tolerances to monitor the direction and potential trends, including risk
mitigation efforts; |
| ● | reviewing managements risk management framework and associated procedures for effective identification and management of the major
risk types; |
| ● | making periodic reports to the Board and coordinating with other Board-level and management-level committees, as appropriate, concerning
risk management issues within the other committees’ respective areas of responsibility; and |
| ● | reviewing results of examinations by regulatory agencies, including any significant observations or communications by regulatory agencies,
and reviewing and monitoring management’s response to address reported issues. |
Shareholder Communication with
the Board, Nomination, and Proposal Procedures
General
Communications with the Board. Shareholders may contact the Board by contacting our Secretary, Terry A. Oznick at
410 Monon Boulevard, Carmel, Indiana 46032 or (317) 569-7420.
Nominations
of Directors. In accordance with our By-Laws, a shareholder may nominate a director for election at an annual meeting of
shareholders by giving written notice of such nomination to our Secretary at the above address, which must be received not less than 90 days
nor more than 120 days prior to the annual meeting. However, if less than 100 days’ notice or prior public disclosure
of the date of the annual meeting is given or made to shareholders, such written notice, to be timely, must be delivered or mailed to
the Secretary and received at our principal office not later than the close of business on the 10th day following the day on
which notice of the date of the meeting was mailed to shareholders or such prior public disclosure was made. On April 9, 2021, we
filed our proxy statement for our 2021 annual meeting of shareholders and within announced the date of the Annual Meeting, which means
any shareholder nomination for a director must have been received by our Secretary no later than February 18, 2022 for the Annual
Meeting. We did not receive any shareholder nominations for director.
The shareholder’s notice to the Secretary
must include: (a) the name and address of record of the nominating shareholder; (b) a representation that the nominating shareholder
is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the persons specified in the notice; (c) the name, age, business and residence addresses, and principal occupation or
employment of each nominee; (d) a description of all arrangements or understandings between the nominating shareholder and each nominee
and any other person (naming such person) pursuant to which the nominations are to be made by the nominating shareholder; (e) such
other information regarding each nominee proposed by such nominating shareholder as is required to be included in a proxy statement filed
pursuant to the proxy rules of the SEC, as in effect; and (f) the consent of each nominee to serve as a director of the Company
if so elected.
Other
Shareholder Proposals. In accordance with our By-Laws, for proposals to be otherwise brought by a shareholder and voted
upon at an annual meeting of shareholders, the shareholder must give written notice of the proposal to our Secretary, at the above address,
which must be received not less than 90 days nor more than 120 days prior to the annual meeting. However, if less than 100 days’
notice or prior public disclosure of the date of the annual meeting is given or made to shareholders, such written notice, to be timely,
must be delivered or mailed to the Secretary and received at our principal office not later than the close of business on the 10th
day following the day on which notice of the date of the meeting was mailed to shareholders or such prior public disclosure was made.
On April 9, 2021, we filed our proxy statement for our 2021 annual meeting of shareholders and within announced the date of the Annual
Meeting, which means any shareholder proposal must have been receive by our Secretary no later than February 18, 2022 for the Annual
Meeting. We did not receive any shareholder proposals.
The shareholder’s notice to the Secretary
must include: (a) a brief description of the proposal desired to be brought before the meeting and the reasons for conducting such
business at the meeting; (b) the name and address of record of the shareholder proposing such business; (c) the number of shares
of our common stock beneficially owned by such shareholder on the date of such shareholder’s notice; and (d) any financial
or other interest of such shareholder in the proposal.
Compensation Committee Interlocks
and Insider Participation
No member of our Compensation Committee (a) is
or has ever been an employee of ours; (b) was, during 2021, a participant in any related party transaction requiring disclosure under
Certain Relationships and Related Party Transactions, except with respects to loans made to such committee members in the ordinary
course of business on substantially the same terms as those prevailing at the time for comparable transactions with unrelated parties;
or (c) had, during the last completed fiscal year, any other interlocking relationship requiring disclosure under applicable SEC
rules.
Code of Conduct
We
have a Code of Conduct that applies to all of our directors, executive officers, and employees. The Code of Conduct sets forth the standard
of ethics that we expect all of our directors, executive officers, and employees to follow. Our Code of Conduct is available on our website
(investors.merchantsbancorp.com) under the corporate profile – governance documents section. In accordance with SEC
rules, we intend to disclose on the governance documents section of our website any amendments to the Code of Conduct, or any waivers
of its requirements, that apply to our executive officers to the extent such disclosure is required.
DIRECTOR COMPENSATION
The following table provides the compensation received
by our Non-Executive Directors during the fiscal year ended December 31, 2021. The table excludes perquisites, which did not exceed
$10,000 in the aggregate for any Non-Executive Director. Each of Messrs. Petrie, Rogers, Dunlap, and Evans were employed by us in
2021 and did not receive additional compensation for their service as a director.
| Name | |
Fees Earned
or Paid in
Cash ($) | | |
Stock
Awards ($)(1) | | |
Total ($) | |
| Sue Anne Gilroy | |
| 44,500 | | |
| 37,563 | | |
| 82,063 | |
| Andrew A. Juster | |
| 59,500 | | |
| 37,563 | | |
| 97,063 | |
| Patrick D. O’Brien | |
| 54,500 | | |
| 37,563 | | |
| 92,063 | |
| Anne E. Sellers | |
| 50,125 | | |
| 37,563 | | |
| 87,688 | |
| David N. Shane | |
| 57,625 | | |
| 37,563 | | |
| 95,188 | |
| (1) | For 2021, each director was to receive a number of shares of the Company’s common stock equal to
$37,500, payable in three (3) equal installments, with the first installment in May 2021 and the number of shares for each installment
based on the closing price of the Company’s common stock on the day immediately prior to the issuance of such shares, rounded up
to the nearest whole share. Each director received one installment of shares based on the closing price of $28.63 on May 19, 2021,
one installment of shares based on the closing price of $23.51 on August 18, 2021, and a final installment of shares based on the
closing price of $31.11 on November 16, 2021. The closing prices within this footnote have been adjusted for the 2022 Stock Split. |
Directors’
Fees
In
late 2020, our Chairman recommended to the Compensation Committee that there be a review of the overall compensation, including total
amount and structure, for Non-Executive Directors. The Chairman’s recommendation was based on a variety of factors, including
that the most recent review of director compensation was in early 2018, shortly after our 2017 initial public offering, that it is in
the best interest of our shareholders to ensure that that we are able to attract and retain qualified individuals to serve on the Board,
and that Non-Executive Director compensation be commensurate with the level of responsibility and expectations placed on the Board.
Under the Compensation Committee’s charter,
the Compensation Committee is responsible for reviewing and making recommendations to the Board regarding the compensation of Non-Executive
Directors. Following the Chairman’s recommendation, the Compensation Committee conducted a thorough review of Non-Executive Director
compensation (the “2020 Director Compensation Review”).
During
the 2020 Director Compensation Review, the Compensation Committee reviewed the compensation structure for the boards of directors of the
same peer group as used by the Compensation Committee in its review of executive compensation (as discussed below under Executive Compensation)
and the compensation structure for the boards of directors of other publicly traded companies based in the Indianapolis area. Although
the other publicly traded companies based in the Indianapolis area may not necessarily compete with us for financial services, they may
compete with us for the services of individuals to serve on their boards of directors. Additionally, the Compensation Committee discussed
our strategic objectives, growth, and other relevant circumstances with our Chief Executive Officer, Mr. Petrie, President and Chief
Operating Officer, Mr. Dunlap, and General Counsel, Terry A. Oznick
In
early 2021 the Compensation Committee completed the 2020 Director Compensation Review and recommended certain changes to the Board to
our Non-Executive Director compensation. The Board then considered and ultimately adopted those recommendations and the changes to became
effective immediately following the Company’s 2021 annual meeting of shareholders.
Prior to the Company’s 2021 annual meeting
of shareholders, Non-Executive Directors received:
| ● | Annual cash retainer of $15,000 (paid immediately following election by the Company’s shareholders at its annual meeting); |
| ● | Annual award of restricted stock equal to $10,000 (rounded up to the nearest whole share and paid immediately following election by
the Company’s shareholders at its annual meeting); |
| ● | $7,500, $2,500, and $2,500 annual cash retainers to the Chairpersons of the Audit, Compensation, and Nominating and Corporate Governance
Committees, respectively (paid immediately following annual appointment to such chair after the Company’s annual meeting of shareholders); |
| ● | $1,000 per Board meeting and any meeting with a bank regulatory authority where the presence of the directors is encouraged or required
by such bank regulatory authority (whether in person or by telephone); and |
| ● | $1,000, $500, and $500 per Audit, Compensation, and Nominating and Corporate Governance Committee meeting attended, respectively (whether
in person or by telephone). |
After
the Company’s 2021 annual meeting of shareholders, Non-Executive Directors received:
| ● | $100,000 annual retainer, comprised of $50,000 in cash and a number of shares of restricted common stock equal to $50,000 (rounded
up to the nearest whole share), to be paid in equal quarterly installments so long as the Non-Executive Director remains on the Board
at the time of payment; and |
| ● | $15,000, $10,000, $7,500, and $15,000 annual cash retainer for the Chairpersons of the Audit, Compensation, Nominating and Corporate
Governance, and Risk Committees, respectively, to be prorated if changes in committee leadership are made mid-year. |
Each of our directors also serves as director of
Merchants Bank. No additional compensation is paid to directors for service as a director of Merchants Bank or any of our other subsidiaries.
Additionally, no additional compensation is paid to any director for attendance at any meeting.
EXECUTIVE COMPENSATION
As an emerging growth company under the JOBS Act,
we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,”
as such term is defined in the rules promulgated under the Securities Act, which permit us to limit reporting of executive compensation
to our Principal Executive Officer and our two other most highly compensated executive officers, which are referred to as our “Named
Executive Officers.”
Our Named Executive Officers for 2021 were:
| ● | Michael F. Petrie, Chairman of the Board and Chief Executive Officer; |
| ● | Michael J. Dunlap, President and Chief Operating Officer of the Company and President and Chief Executive Officer of Merchants Bank;
and |
| ● | Michael R. Dury, President and Chief Executive Officer of Merchants Capital. |
The following summary compensation table shows
all cash and non-cash compensation earned or deferred by our Named Executive Officers for services rendered to us and our subsidiaries
in all capacities during the fiscal years ended December 31, 2021 and 2020.
Summary Compensation Table
| Name and Principal Position | |
Year | | |
Salary
($) | | |
Bonus (1)
($) | | |
Equity
Incentive
Awards (2)
($) | | |
Non-Equity
Incentive
Awards (3)
($) | | |
All Other
Compensation (3)
($) | | |
Total
($) | |
| Michael F. Petrie | |
| 2021 | | |
| 800,000 | | |
| - | | |
| 728,014 | | |
| 100 | | |
| 20,950 | | |
| 1,549,064 | |
Chairman
of the Board and Chief Executive Officer | |
| 2020 | | |
| 750,000 | | |
| 150,000 | | |
| 656,264 | | |
| 100 | | |
| 22,319 | | |
| 1,578,683 | |
| Michael J. Dunlap | |
| 2021 | | |
| 620,000 | | |
| 48,400 | | |
| 604,802 | | |
| 201,600 | | |
| 12,700 | | |
| 1,487,502 | |
| President and Chief Operating Officer of the Company and President and Chief Executive Officer of Merchants Bank | |
| 2020 | | |
| 600,000 | | |
| 250,000 | | |
| 525,015 | | |
| 150,100 | | |
| 12,550 | | |
| 1,537,665 | |
| Michael R. Dury | |
| 2021 | | |
| 250,000 | | |
| 7,898,645 | | |
| 196,007 | | |
| 100 | | |
| 12,700 | | |
| 8,357,352 | |
| President and Chief Executive Officer of Merchants Capital | |
| 2020 | | |
| 130,000 | | |
| 4,174,190 | | |
| 113,766 | | |
| 100 | | |
| 12,550 | | |
| 4,430,606 | |
| (1) | For 2021, Mr. Dunlap received an additional discretionary cash bonus
as discussed below. For 2020, Mr. Petrie and Mr. Dunlap received an additional discretionary cash bonus in consideration of
the Company’s performance that year in comparison to our peer group despite the effects of the COVID-19 pandemic. Mr. Dury’s
bonus for 2021 related to commissions and volume bonus, and for 2020 related to commissions only, earned under his “at will”
employment agreement discussed below. |
| (2) | Equity awards are generally made in the first quarter of the following year based on our full year performance. For 2021, restricted
stock units were awarded in January 2022, and for 2020, restricted stock units were awarded in January 2021. The amounts reflect
the aggregate grant date fair value of stock awards for the years ended December 31, 2021 and 2020 in accordance with FASB ASC Topic
718. |
| (3) | Each Named Executive Officer is eligible to receive certain nominal incentive awards to the same extent as all employees. For 2021,
Mr. Petrie and Mr. Dury received, and for 2020 each Named Executive Officer received, a $100 award for completing certain training,
which was the same amount awarded to all other employees who completed the same training. Mr. Dunlap’s awards (other than the
nominal incentive awards) related to cash incentive awards based on Company performance. |
| (4) | For Mr. Dunlap and Mr. Dury, the amounts consisted of a contribution under our 401(k) Plan and an allocation under
our ESOP. For Mr. Petrie, the amount consisted of a contribution under our ESOP and monthly country club dues and assessments. For
2021: |
| Name | |
ESOP
Allocation ($) | | |
401(k)
Contribution ($) | | |
Country Club Dues and
Assessments ($) | |
| Michael F. Petrie | |
| 4,000 | | |
| - | | |
| 16,950 | |
| Michael J. Dunlap | |
| 4,000 | | |
| 8,700 | | |
| - | |
| Michael R. Dury | |
| 4,000 | | |
| 8,700 | | |
| - | |
General
The Compensation Committee annually reviews and
determines the compensation of our Chief Executive Officer and recommends to the Board the compensation of our other Named Executive Officers.
The Compensation Committee relies on market data provided by internal parties that the Compensation Committee deems reasonable and appropriate,
including our internal human resources department, and survey data from industry resources. The Compensation Committee may also retain
independent consultants as it deems appropriate. Salary levels are typically considered annually as part of our performance review process
and upon a promotion or other change in job responsibility.
We compensate our Named Executive Officers through
a combination of base salary, cash bonus awards, cash incentive awards, equity incentive awards, and other benefits. Our compensation
packages for our Named Executive Officers focus on rewarding performance as measured against established corporate goals, and in the case
of Mr. Dury, the performance of Merchants Capital. Each element of our Named Executive Officers’ compensation is designed to
achieve a specific purpose and to contribute to a total package that is competitive with similar packages provided by other institutions
that compete for the services of individuals like our Named Executive Officers.
During its annual review, the Compensation Committee
members meet with employees and review materials prepared by both the Company and third parties to, among other reasons, ensure that the
Compensation Committee understands each executive officer’s current role and future plans we may have for such executive officer
and the broader market for such executive officer’s services.
Additionally, the Compensation Committee discusses
our performance and strategic objectives with our management, including our Chief Executive Officer,
Mr. Petrie, President and Chief Operating Officer, Mr. Dunlap, and General Counsel, Terry A. Oznick, and compares our
performance and executive compensation against the below previously established peer group. Because
our business operates much differently than most traditional bank holding companies, the peer group includes bank holding companies throughout
the United States with asset sizes ranging from approximately $4 billion to $18 billion (as of December 31, 2021) that compete with
us either locally (such as through our community banking and single family mortgage businesses) or nationally (such as through our mortgage
warehouse or multi-family mortgage businesses) or have a similarly unique aspect to their business model.
| 1st Source Corporation |
First Internet Bancorp |
Live Oak Bancshares, Inc. |
| Customers Bancorp, Inc. |
First Merchants Corporation |
Luther Burbank Corporation |
| Dime Community Bancshares, Inc. |
German American Bancorp, Inc. |
Midland States Bancorp, Inc. |
| FB Financial Corporation |
HomeStreet, Inc. |
Republic Bancorp, Inc. |
| First Busey Corporation |
Horizon Bancorp, Inc. |
Stock Yards Bancorp, Inc. |
| First Financial Corporation |
Impac Mortgage Holdings, Inc. |
Triumph Bancorp, Inc. |
| First Foundation Inc. |
Lakeland Financial Corporation |
|
In particular, the
Compensation Committee reviews the publicly available data and terms of the peer group’s named executive officers’ base salary,
cash bonus awards, cash incentive awards, equity incentive awards, employment agreements, change in control agreements, and perquisites.
The Compensation Committee generally completes
its annual review in January following the fiscal year-end and meets in that same month to determine the compensation of our Chief
Executive Officer and make recommendations to the Board regarding the compensation of our other Named Executive Officers for the upcoming
fiscal year, in each case including both the specific components and amounts of such compensation. In determining the Chief Executive
Officer’s compensation and making recommendations to the Board regarding the other Named Executive Officers’ compensation,
the Compensation Committee considers, among other factors, each of the Named Executive Officers’ respective responsibilities, the
complexity of the Company, and the desirability of their services by competitors. No executive officer is present during the Compensation
Committee’s vote to determine or to approve any recommendation to the Board regarding any executive officer’s compensation.
The Compensation Committee is responsible for establishing
the target performance measures for all cash incentive awards and equity incentive awards and the payout ranges therefor for all Named
Executive Officers. The Compensation Committee believes that including payout ranges is more in line with market practice and provides
proper incentive for outstanding performance, without encouraging overly risky behavior. Additionally, for the equity incentive awards,
the Compensation Committee generally uses the closing share price of the Company’s common stock on December 31st
of the prior fiscal year for determining the amount of the payout. The Compensation Committee believes that using such date takes into
account the Company’s performance through the fiscal year and more closely associates the Named Executive Officers’ award
to the shareholders’ return.
After each fiscal year-end, the Compensation Committee
meets to review our strategic, operational, and financial performance for that prior fiscal year,
including each Named Executive Officers’ contributions thereto. The Compensation Committee is solely responsible for determining
the level of achievement for established target performance measures and the payout level, if any, therefor.
For 2021, the Compensation Committee met in January 2021
to determine the compensation of Mr. Petrie (as our Chief Executive Officer) and make recommendation to the Board regarding the compensation
of Messrs. Dunlap and Dury (as our other Named Executive Officers). The Compensation Committee ultimately: (a) established a
base salary of $800,000 and target equity incentive award of 70% of base salary for Mr. Petrie; (b) recommended a base salary
of $620,000, a target cash incentive award of 29% of base salary, and a target equity incentive award of 80% of base salary for Mr. Dunlap;
and (c) recommended a base salary of $250,000 and a target equity incentive award of 70% of base salary for Mr. Dury, in addition
to the compensation Mr. Dury would receive under his employment agreement (as discussed below under Employment Agreements).
After reviewing the Compensation Committee’s recommendations, the Board approved of such recommendations.
For 2021, the Compensation Committee established
total revenue growth, earnings per common share, and return on average total equity as the performance measures for all cash incentive
awards and equity incentive awards for each of Messrs. Petrie, Dunlap, and Dury, with each performance measure equally weighted and
having a payout range of 75% to 125% of target. The Compensation Committee believes that these performance measures are meaningful and
challenging without encouraging excessive risk and help to ensure that Named Executive Officers’ incentives are aligned with the
benefits and return received by shareholders.
The
Compensation Committee met in January 2022 to review the Company’s performance in 2021 and to make determinations with respect
to established target performance measures. Also at that meeting, the Compensation Committee determined the compensation of Mr. Petrie
(as our Chief Executive Officer) and make recommendation to the Board regarding the compensation of Messrs. Dunlap and Dury (as our
other Named Executive Officers) for 2022, which were subsequently approved by the Board. A summary of the Compensation Committee’s
determinations for 2021 and the compensation changes for 2022 for our Named Executive Officers are provided below.
Base Salary
Base salary
is the only component of compensation that is not subject to the achievement of performance or vesting criteria. Base salary is designed
to provide a fixed level of cash compensation for performing the responsibilities associated with an executive’s position. We review
base salaries annually and adjust them effective as of January 1st of each year to take into account such factors as market
changes, changes in duties, individual performance, and experience.
For 2022, Mr. Petrie’s base salary was
increased from $800,000 to $850,000, Mr. Dunlap’s base salary was increased from $620,000 to $650,000, and Mr. Dury’s
base salary was increased from $250,000 to $260,000.
Cash Bonus and Cash Incentive Awards
Other than nominal bonuses which all employees
are eligible to receive (see footnote 1 to the Summary Compensation Table), Mr. Dunlap is our only Named Executive Officer
for which a target cash incentive award has been established. Mr. Dunlap’s cash incentive award is tied to our achievement
of certain performance measures established by the Compensation Committee for that fiscal year. The performance measures established must
be consistent with those permitted under our 2017 Equity Incentive Plan.
As provided above, in addition to establishing
the relevant performance measures, the Compensation Committee establishes a target and weight for each performance measure and payout
percentage for above target performance. Further, after each fiscal year-end, the Compensation Committee reviews our overall performance
as compared to the established targets for the performance measures and determines whether Mr. Dunlap is entitled to receive a payout
of such cash award bonus.
For 2021, if the 75% of target threshold for a
performance measure was not met, Mr. Dunlap would not receive a payout with respect to the portion of his cash incentive award associated
with that performance measure. Further, Mr. Dunlap would not receive a payout if Merchants Bank was not well capitalized at the end
of any quarter in 2021. In January 2022, the Compensation Committee determined that for 2021 we achieved an average of 112% of the
target performance measures, and Merchants Bank was well capitalized at the end of each quarter, and therefore Mr. Dunlap received
a payout of 112% of his target cash incentive award.
Consistent with 2021, for 2022, Mr. Dunlap
is the only Named Executive Officer for which a target cash incentive award has been established and the Compensation Committee has established
total revenue growth, earnings per common share, and return on average total equity as the performance measures for such cash incentive
award, with each equally weighted and having a payout range of 75% (threshold) to 125% (maximum); provided, however, if Merchants Bank
is not well capitalized at the end of any quarter in 2022, Mr. Dunlap will not receive a cash award payout. Mr. Dunlap’s
target cash incentive award is equal to 50% of base salary.
In addition to the target cash incentive award
described above, the Compensation Committee and the Board have authorized Mr. Petrie and Mr. Dunlap to make a discretionary
cash bonus award to any executive officer (other than to themselves or, in the case of Mr. Dunlap, to Mr. Petrie) based on exceptional
individual performance (e.g., performance of business unit well beyond budget). The amount of any such cash bonus may not exceed 10% of
such executive’s target total compensation, or in the case of Mr. Dunlap and Mr. Dury may not exceed $100,000, without
the Board’s prior approval. Mr. Petrie or Mr. Dunlap must provide the details of any such cash bonus to the Compensation
Committee promptly after the award. For 2021, Mr. Petrie granted Mr. Dunlap a cash bonus award of $48,400 in consideration of
Mr. Dunlap’s leadership efforts in 2021, in particular with respect to the effects caused and attention required by the ongoing
COVID-19 pandemic on us and our employees and to manage customer relationships.
Equity Awards
Under our 2017 Equity Incentive Plan (“2017
Plan”), we have the ability to award a variety of instruments, but to date have only issued restricted stock units, with each restricted
stock unit subject to vesting requirements established by the Compensation Committee. For 2021, each of our Named Executive Officers was
eligible to receive an equity incentive award under the 2017 Plan based on our achievement of certain performance measures established
by the Compensation Committee
As provided above, and in the same manner as for
Mr. Dunlap’s cash award bonus, after our fiscal year-end, the Compensation Committee reviews our overall performance as compared
to the established performance measures and determines whether our Named Executive Officers are entitled to receive a payout of the established
target equity incentive award. For 2021, if the 75% of target threshold for a performance measure was not met, none of our Named Executive
Officers would receive a payout with respect to the portion of his equity incentive award associated with that performance measure. Additionally,
no Named Executive Officer would receive a payout if Merchants Bank was not well capitalized at the end of any quarter in 2021. The Compensation
Committee determined that for 2021 we achieved an average of 112% of the target performance measures, and Merchants Bank was well capitalized
at the end of each quarter, and therefore each Named Executive Officer received a payout of 112% of their respective target equity incentive
award in the form of restricted stock units. Each award vests ratably over a three (3) year period, with the first portion vesting
on the February 1st after the first anniversary date of the award (i.e., for 2021 equity incentive awards, the first portion
will vest on February 1, 2023). The Compensation Committee believes the vesting period for equity incentive awards is a valuable
retention tool for the services of our Named Executive Officers.
Consistent with 2021, for 2022, the Compensation
Committee has established total revenue growth, earnings per common share, and return on average total equity as the performance measures
for all of our Named Executive Officers’ equity incentive awards, with each equally weighted and having a payout range of 75% (threshold)
to 125% (maximum); provided, however, if Merchants Bank is not well capitalized at the end of any quarter in 2022, no Named Executive
Officer will receive an equity incentive award payout.
For 2022, Mr. Petrie’s target equity
incentive award is equal to 100% of base salary, Mr. Dunlap’s target equity incentive award is equal to 100% of base salary,
and Mr. Dury’s target equity incentive award is equal to 70% of base salary. If a payout is received, such payout will be in
the form of restricted stock units, with the number of units based on the $31.55 closing share price of the Company’s common stock
on December 31, 2021 (adjusted for the 2022 Stock Split), and will be subject to a three (3) year vesting period.
Benefits
401(k) Plan. Our
401(k) Plan is designed to provide retirement benefits to all eligible full-time and part-time employees (including those of our
subsidiaries). The 401(k) Plan provides employees with the opportunity to save for retirement on a tax-favored basis. Named Executive
Officers, all of whom were eligible during 2021, may elect to participate in the 401(k) Plan on the same basis as all other employees.
Employees may defer between 1% and 100% of their compensation to the 401(k) Plan, up to the applicable IRS limit. In 2021 we matched,
dollar for dollar, the first 3% of an employee’s contribution to the 401(k) Plan. Starting in 2022 for each employee we will
make a discretionary contribution equal 3% of an employee’s eligible compensation under 401(k) Plan each pay period regardless
of whether such employee also contributes to the 401(k) Plan. Our contribution is in the form of cash and is invested according to
the employee’s current investment allocation.
Employee
Stock Ownership Plan. In 2020, we established the Merchants Bancorp Employee Stock Ownership Plan (“ESOP”)
in order to reward employees for their contributions towards our success and to help ensure that
our employees’ interests are more aligned with our shareholders. Under the ESOP, from time to time we may make a contribution of
newly issued shares of our common stock or cash to purchase shares of our common stock, which is then allocated to eligible employees.
The ESOP contribution is completely funded by the Company, is in addition to all other wages, incentives, and benefits, and requires nothing
from our employees other than their ongoing hard work and dedication. An employee’s allocation in the ESOP vests ratably over a
five (5) year service period with credit for service prior to the ESOP’s adoption. ESOP participants are entitled to vote and
receive dividends on all shares allocated to them in the ESOP, including any portion of their respective allocation that has not vested.
Our Named Executive Officers are eligible to participate in the ESOP to the same extent as all other employees. For 2021, we made a contribution
of newly issued shares of our common stock to the ESOP equal to 2% of all participants’ eligible wages. A participant’s eligible
wages includes commissions but excludes bonuses and other one-time payments (e.g., sign-on bonus, cash bonus, cash incentive, and equity
incentive awards), up to a maximum of $200,000. Each of Messrs. Petrie, Dunlap, and Dury received an allocation within the ESOP equal
to $4,000 (as of December 31, 2021).
Health
and Welfare Benefits. Our Named Executive Officers are eligible to participate in our standard health
and welfare benefits program, which offers medical, dental, vision, life, accident, and disability coverage to all of our eligible employees.
We do not provide the Named Executive Officers with any health and welfare benefits that are not generally available to our other employees.
Perquisites. We
pay monthly dues and assessments for country club memberships for Mr. Petrie, which he uses primarily to entertain current and prospective
customers. We do not provide any other perquisites to our Named Executive Officers.
Employment Agreements
We do not have employment agreements with any of
our Named Executive Officers other than an “at will” employment agreement with Mr. Dury and change in control agreements
described below. We believe that not having employee agreements provides us with more flexibility and adaptability when making annual
compensation decisions.
As of January 1, 2021, we entered into that
First Amended and Restated Employment Agreement (“2021 Employment Agreement”) with Mr. Dury which substantially revised
his prior employment agreement. In particular, we increased the thresholds Mr. Dury must achieve
to receive commission compensation, limited his commission compensation to only a particular group of Merchants Capital’s customers,
and added a volume bonus of 5% of Merchants Capital’s total fee income (the calculation of total fee income excludes any fees received
related to customers for which Mr. Dury receives a commission). We believe the 2021
Employment Agreement, among other things, closely associates Mr. Dury’s compensation
to the overall success of Merchants Capital.
Under the 2021 Employment Agreement, Mr. Dury
receives a base salary of $250,000, which may be adjusted by Mr. Dunlap as Chief Executive Officer of Merchants Bank, and earns the
5% volume bonus and the following commissions:
Fees on Loans to Designated Borrowers
Originated by Mr. Dury | |
Commissions Earned by Mr. Dury |
| Under an amount equal to 2x base salary | |
None |
| Exceed 2x base salary but less than $750,000 | |
20% of the portion of the fees that exceeds 2x base salary does not exceed $750,000 |
| Exceeds $750,000 but less than $1,000,000 | |
25% of the portion of the fees that exceeds $750,000 but does not exceed $1,000,000 |
| Exceeds $1,000,000 | |
30% of the portion of the fees that exceeds $1,000,000 |
The
loan fees on which Mr. Dury earns commissions are determined in our sole discretion and do not include fees paid prior to or after
closing, or fees paid by any party other than the borrower.
The 2021 Employment Agreement includes certain
restrictive covenants, including a 12-month non-competition period.
Change in Control Agreements
In January 2020, the Compensation Committee
recommended to the Board, and the Board concluded that it was in the best interests of the Company and its shareholders to take reasonable
steps to compensate key executives, including our Named Executive Officers other than Mr. Petrie, in the event of a change in control
event. With these agreements in place, if we should receive takeover or acquisition proposals from third parties, we will be able to call
upon these key executives for their advice and assessment of whether such proposals are in the best interests of shareholders, free of
the influences of their personal employment situations. The Compensation Committee determined that it would not be appropriate or in the
best interest of shareholders to offer a change in control agreement to Mr. Petrie, in particular because of the significant amount
of our common stock Mr. Petrie beneficially owns.
Each change in control agreement contains identical
terms and, in particular: (a) provides for a severance payment of an amount equal to two times base salary plus two times the target
cash incentive award most recently approved by the Board in the event both (1) there is a change in control event and (2) employment
is terminated by (i) us for any reason other than cause or (ii) by the executive with good reason, within a period between 120
days prior to an announcement of the change in control event and 18 months after the change in control event becomes effective; (b) contains
customary restrictive covenants regarding confidentiality; (c) contains a clawback provision should any benefit thereunder be subject
to recapture under any Company policy or applicable law; and (d) prohibits, for a 12-month period, (1) competing with us in
any commercial banking, mortgage lending, or any similar lending or banking services provided by us anywhere in, or for any person whose
principal office is located in, any county in which we maintain an office, after receipt of their severance payment and (2) soliciting
our customers or employees, regardless of whether a severance payment is received. Severance payments will be made only if the executive
fully releases all claims against us.
The existing change in control agreements for Messrs. Dunlap
and Dury were in effect for 2021 and will remain in effect for 2022 (subject to the termination provisions therein).
Long-Term Incentive Plans
Equity-based incentive awards are currently made
under the 2017 Plan. Although the 2017 Plan permits us to issue various types of awards, to date we have only issued restricted stock
awards under the 2017 Plan.
Merchants Bancorp 2017 Equity
Incentive Plan
The 2017 Plan was adopted by the Board on June 22,
2017 and approved by our shareholders on July 5, 2017. The 2017 Plan was designed to ensure availability of equity awards that will
assist us in attracting, retaining, and rewarding key employees, directors, and other service providers. Pursuant to the 2017 Plan, a
committee of the Board (the “Committee,” for which the Compensation Committee has been appointed by the Board to serve in
such role) is allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock,
restricted stock units, stock appreciation rights, and other incentive awards. Up to 2,250,000 shares of common stock are available for
issuance under the 2017 Plan. This number automatically increased from 1,500,000 in January 2022 to account for the 2022 Stock Split,
as provided under the 2017 Plan. To date, we have issued 98,927 shares of common stock under the 2017 Plan.
Awards vest, become exercisable, and contain such
other terms and conditions as determined by the Committee and set forth in individual agreements with the participants receiving the awards.
Awards to our Chief Executive Officer must have a vesting period of at least three (3) years. The 2017 Plan enables the Committee
to set specific performance criteria, in compliance with the United States Treasury Department’s final “Guidance on Sound
Incentive Compensation Policies,” that must be met before an award vests under the 2017 Plan. In establishing criteria, the Committee
must attempt to balance risk and financial results in a manner that does not encourage participants to expose us to unnecessary or excess
risks. At least 50% of any award to the Chief Executive Officer must be performance-based. An award agreement with the Chief Executive
Officer also must stipulate that the Chief Executive Officer will hold shares of stock received for at least a 12-month period after vesting
requirements are satisfied, unless the Chief Executive Officer incurs a termination of service, in which case the holding period ends
on the termination date.
The 2017 Plan allows for acceleration of vesting
and exercise privileges of grants if a change in control occurs and a participant incurs a termination of service without cause following
the change in control. If a participant’s employment is terminated, then all unvested awards expire at the date of termination.
Outstanding Equity Awards at Fiscal Year End
The following table provides information for each
of our Named Executive Officers regarding outstanding unvested stock awards held by the Named Executive Officers as of December 31,
2021.
As of December 31, 2021, our Named Executive
Officers only had restricted stock units outstanding. Each restricted stock unit represents a right to receive one (1) share of our
common stock upon vesting. The number of restricted stock units and the market values are presented as of the end of 2021 as adjusted
for the 2022 Stock Split.
| | |
Stock Awards | |
| Name | |
Number of Units
of Stock That
Have Not Vested
(#)(1) | | |
Market Value of Units
Units of Stock That
Have Not Vested
($)(2) | |
| Michael F. Petrie (3) | |
| 49,944 | | |
| 1,575,733 | |
| Michael J. Dunlap (4) | |
| 60,088 | | |
| 1,895,776 | |
| Michael R. Dury (5) | |
| 14,825 | | |
| 467,729 | |
| (1) | Each restricted stock unit will accelerate and vest upon a change in control in accordance with the 2017 Plan. |
| (2) | Based on the 2022 Stock Split adjusted closing price of $31.55 on December 31, 2021 |
| (3) | 16,647 have since vested on February 1, 2022; 16,649 will vest on February 1, 2023; and 16,648 will vest on February 1,
2024. |
| (4) | 26,562 have since vested on February 1, 2022; 20,208 will vest on February 1, 2023; and 13,318 will vest on February 1,
2024. |
| (5) | 6,949 have since vested on February 1, 2022; 4,990 will vest on February 1, 2023; and 2,886 will vest on February 1,
2024. |
EXECUTIVE OFFICERS
A description of the background and business experience
of our current executive officers who are not directors is provided below. Messrs. Petrie’s, Dunlap’s, and Evans’,
each of whom currently serves as a director, background and business experience is discussed in Election of Directors above.
Michael
R. Dury, 37, President and Chief Executive Officer of Merchants Capital. Mr. Dury joined Merchants Capital in July 2007
and has served in various capacities, starting as a Real Estate Investment Officer and is currently in the position of President and Chief
Executive Officer of Merchants Capital. During his employment with Merchants Capital, Mr. Dury has also served as the Assistant Vice
President, Vice President, Senior Vice President, Executive Vice President, and Chief Operating Officer. Mr. Dury also previously
served as President of The Notre Dame Club of Indiana.
Jerry
F. Koors, 58, President – Merchants Mortgage. Mr. Koors joined Merchants in October 2013 as the President of
Merchants Mortgage, a division of Merchants Bank. Prior to joining Merchants Mortgage, Mr. Koors had served as a Regional Vice President
for PNC Mortgage since February 1995. Mr. Koors has spent 30 years in lending and bank-related management roles, including
managing up to 120 loan officers in up to five states in the origination of investment quality loans sold to various agencies.
Susan
Dehner Kucer, 67, President – Indianapolis Market. Ms. Kucer joined Merchants Bank in February 2016 as the
President of the Indianapolis Market. Prior to joining Merchants Bank, Ms. Kucer served as Senior Vice President and the Business
Banking Market Manager for PNC Bank from November 1982 through December 2016. At PNC Bank, Ms. Kucer led a team of sales
and relationship managers to provide deposit, lending, treasury management and merchant services to business customers throughout four
Midwest states. Ms. Kucer is currently on the Board of Visitors for Butler University’s College of Liberal Arts and Sciences.
Kevin
T. Langford, 54, Chief Administrative Officer. Mr. Langford joined Merchants in January 2017 and currently serves
as Senior Vice President and Chief Administrative Officer. Mr. Langford’s responsibilities include overseeing information technology,
marketing, facilities, and our portfolio of loans held for investment. Prior to joining Merchants, Mr. Langford served in various
executive and management capacities with First Financial Bank in Cincinnati, Ohio, including as President of Community Banking, President
of Consumer Banking, CIO, and CAO.
John
F. Macke, 56, Chief Financial Officer. Mr. Macke joined Merchants in July 2017 as the Chief Financial Officer. Prior
to joining Merchants, Mr. Macke served as Executive Vice President of Capital Markets at Stonegate Mortgage Corporation where he
also served as Chief Financial Officer from April 2013 to May 2014 after joining in January 2012. Mr. Macke also held
executive positions with Freedom Mortgage and Irwin Mortgage and has over 25 years of mortgage banking experience. Mr. Macke
holds a Bachelor of Science degree in Business Administration from the University of Dayton and an MBA from Indiana University.
Terry
A. Oznick, 38, General Counsel. Mr. Oznick joined Merchants as Senior Vice President and General Counsel in September 2018.
Mr. Oznick has extensive experience representing financial institutions, including advising on mergers and acquisitions, SEC filings
and compliance, operational issues, cash management products, and electronic banking. In addition to overseeing our legal affairs, Mr. Oznick
is also responsible for human resources, compliance, and vendor management. Prior to joining Merchants, Mr. Oznick served as Senior
Associate at the law firm of Krieg DeVault LLP, Senior Counsel and Vice President at Citibank, N.A., and Assistant General Counsel and
Vice President at JPMorgan Chase Bank, N.A.
Martin
A. Schroeter, 60, President – Warehouse Lending. Mr. Schroeter joined Merchants as President of Warehouse Lending
in November 2019 and his responsibilities include overseeing Merchants Bank’s mortgage warehouse business. Mr. Schroeter
has more than 35 years of mortgage banking experience, including as an executive for several mortgage warehouse lenders. Prior to joining
Merchants, Mr. Schroeter served as Executive Vice President of ArcHome Mortgage, Partner of ArcLine Lending, LLC, President and COO
of Cooper River Financial, LLC, which ultimately became part of Ocwen Financial Corp., and Senior Managing Director, Warehouse Lending
Group of GMAC, which became Ally Bank.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The below table sets forth the following information
as of the Record Date regarding the beneficial ownership of our common stock for:
| ● | each shareholder known by us to beneficially own more than 5% of our outstanding common stock; |
| ● | each of our directors and nominees; |
| ● | each of our Named Executive Officers; and |
| ● | all of our directors, nominees, and executive officers as a group. |
We have determined beneficial ownership in accordance
with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person
has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities, or has the
right to acquire such powers within 60 days. Except as disclosed in the footnotes to this table, we believe that each person identified
in the table has sole voting and investment power over all of the shares shown opposite such person’s name.
The
percentage of beneficial ownership is based on 43,267,776 shares of our common stock outstanding as of the Record Date.
The address for each shareholder listed in the
table below is: c/o Merchants Bancorp, 410 Monon Boulevard, Carmel, Indiana, 46032.
| | |
Amount
and Nature of
Beneficial Ownership (1) | |
| Name | |
Number | | |
% | |
| 5% shareholders: | |
| | | |
| | |
| Jody J. Petrie (2) | |
| 13,802,225 | | |
| 31.90 | |
| Mary H. Rogers (3) | |
| 3,375,155 | | |
| 7.80 | |
| Katherine H. Rogers (4) | |
| 2,956,194 | | |
| 6.83 | |
| Carey Rogers Kulongoski (4) | |
| 3,222,106 | | |
| 7.45 | |
| Randall D. Rogers, Jr. (4) | |
| 3,853,606 | | |
| 8.91 | |
| | |
| | | |
| | |
| Directors, Nominees, and Named Executives Officers: | |
| | | |
| | |
| Tamika D. Catchings | |
| - | | |
| - | |
| Thomas W. Dinwiddie | |
| 15,000 | | |
| * | |
| Michael J. Dunlap | |
| 85,088 | | |
| * | |
| Michael R. Dury | |
| 70,588 | | |
| * | |
| Scott A. Evans | |
| 22,682 | | |
| * | |
| Sue Anne Gilroy | |
| 6,298 | | |
| * | |
| Andrew A. Juster | |
| 18,406 | | |
| * | |
| Patrick D. O’Brien | |
| 111,955 | | |
| * | |
| Michael F. Petrie (5) | |
| 13,802,225 | | |
| 31.90 | |
| Randall D. Rogers (6) | |
| 3,375,155 | | |
| 7.80 | |
| Anne E. Sellers | |
| 4,893 | | |
| * | |
| David N. Shane | |
| 16,142 | | |
| * | |
| All directors, Nominees, and Executive Officers as a group (17 persons) | |
| 17,632,084 | | |
| 40.75 | |
*denotes less than 1%
| (1) | Does not include portions of awards under the 2017 Plan that are unvested, will not vest within sixty (60) days hereof, and for which
the recipient is not entitled to vote or receive dividends. Does include shares allocated in the ESOP (rounded down to the nearest whole
share) for which the person is entitled to vote and receive dividends. |
| (2) | Jody J. Petrie is the wife of Michael F. Petrie and individually holds 2,131,668 shares and is the sole trustee of the following trusts:
The Julia L. Petrie Irrevocable GST Trust 2010 (1,425,000 shares); The Emily J. Petrie Irrevocable GST Trust 2010 (1,425,000 shares);
The Emily J. Petrie Irrevocable Trust – 2010 (3,589,185 shares); and The Julia L. Petrie Irrevocable Trust – 2010 (2,580,616
shares). Mrs. Petrie is also a trustee of the Petrie Grandchildren Trust (627,429 shares). Mrs. Petrie’s reported beneficial
ownership includes 2,023,327 shares held by Mr. Petrie. Mrs. Petrie disclaims beneficial ownership of shares held individually
by Mr. Petrie. |
| (3) | Mary H. Rogers is the wife of Randall D. Rogers and is the sole trustee of the following trusts: The Katherine H. Rogers Irrevocable
GST Trust 2011 (873,000 shares); The Carey Rogers Kulongoski Irrevocable GST Trust 2010 (873,000 shares); and The Randall D. Rogers, Jr.
Irrevocable GST Trust 2011 (873,000 shares). Mrs. Rogers’ beneficial ownership also includes 756,155 shares held individually
by Mr. Rogers and a trust for which Mr. Rogers serves as trustee, as described in footnote (6) below, as to which Mrs. Rogers
may be deemed to have beneficial ownership. Mrs. Rogers disclaims beneficial ownership of shares held individually by Mr. Rogers. |
| (4) | Katherine H. Rogers, Carey Rogers Kulongoski, and Randall D. Rogers, Jr. are the adult children of Randall D. Rogers. |
| (5) | Includes 2,023,327 shares held individually by Mr. Petrie, 2,131,668 shares held individually by Jody J. Petrie, and 9,647,230
shares held by trusts of which Jody J. Petrie is a trustee, as described in footnote (2) above, as to which Mr. Petrie may be
deemed to have beneficial ownership. Mr. Petrie disclaims beneficial ownership of all shares that he does not hold individually. |
| (6) | Includes 645,961 shares held individually by Mr. Rogers, 110,194 shares held by a trust for which Mr. Roger serves as true,
and 2,619,000 shares held by trusts of which Mary H. Rogers is the sole trustee, as described in footnote (3) above, as to which
Mr. Rogers may be deemed to have beneficial ownership. Mr. Rogers disclaims beneficial ownership of all shares that he does
not hold individually. |
Equity Compensation Plan Information as of December 31, 2021:
| Plan category | |
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights (a) | |
Weighted-average
exercise price of
outstanding options,
warrants and rights (b) | |
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))(1) |
| Equity compensation plans approved by security holders | |
- | |
N/A | |
2,216,035 |
| Equity compensation plans not approved by security holders | |
- | |
N/A | |
- |
| Total | |
- | |
N/A | |
2,216,035 |
| (1) | shares have been adjusted for the 2022 Stock Split. |
We do not currently have any compensation plans
under which equity securities are authorized for issuance that have not been approved by security holders.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of
the Exchange Act requires our directors and executive officers and persons who own more than 10% of a registered class of our equity
securities to file reports of ownership of, and transactions in, our equity securities with the SEC. Our directors and executive
officers are also required to furnish us with copies of all such Section 16(a) reports they file. These reports are available
on our website (investors.merchantsbancorp.com) under the filings section.
Based on a review of these reports, and on written
representations from our reporting persons, we believe that all such Section 16(a) filing requirements applicable to our directors
and executive officers were satisfied during 2021, except that a Form 4 for Patrick D. O’Brien inadvertently was not filed
after an open market purchase of our Series B preferred stock by a company Mr. O’Brien controls. A late Form 4 filing
for such purchase was filed on March 18, 2021.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In addition to the compensation arrangements with
directors and executive officers described in Executive Compensation above, the following is a description of transactions since
January 1, 2021, to which we have been a party in which the amount involved exceeded or will exceed $120,000, and in which any of
our directors, directors, executive officers, or beneficial holders of more than 5% of our capital stock, or their immediate family members
or entities affiliated with them, had or will have a direct or indirect material interest.
Employment Relationships with Related Parties
We employ Matt Kaercher, the son-in-law of our
Chairman and Chief Executive Officer, Michael J. Petrie, as Senior Vice President – Midwest/Correspondent Lending of Merchants Capital.
Mr. Kaercher’s compensation for 2021 totaled $1,617,105, which consisted of a base salary, production bonus, and benefits.
Payment for Services of Related Parties
We retain the services of various law firms, including
Dinsmore & Shohl LLP, a law firm that one of our nominees, Thomas W. Dinwiddie, is a partner of. In 2021, we
paid Dinsmore & Shohl LLP $6.6 million in total fees, primarily related to the documentation
of loan originations and loan collections for Merchants Bank.
Ordinary Banking Relationships
Certain of our directors, officers, beneficial
owners of more than 5% of our common stock and their associates were customers of, and had transactions with, us in the past and additional
transactions with these persons are expected to take place in the future. All outstanding loans and commitments to loan with these persons
were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable loans with persons not related to us, and did not involve more than the normal risk of collectability
or present other unfavorable features. All such loans are approved by the board of directors of the relevant bank subsidiary, Merchants
Bank or Farmers-Merchants Bank of Illinois, in accordance with bank regulatory requirements. Similarly, all certificates of deposit and
depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms, including
interest rates, as those prevailing at the time for comparable depository relationships with persons not related to us.
Policies and Procedures Regarding Related Party Transactions
Transactions by us, Merchants Bank, or our other
insured depository institution subsidiary, Farmers-Merchants Bank of Illinois, and certain of our other subsidiaries with related parties,
are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal Reserve Act (which
govern certain transactions by Merchants Bank and Farmers-Merchants Bank of Illinois with its affiliates) and the Board of Governors of
the Federal Reserve System’s Regulation O (which governs certain loans by Merchants Bank and Farmers-Merchants Bank of Illinois
to its executive officers, directors, and principal shareholders).
Under applicable SEC and Nasdaq rules, related
party transactions are transactions in which we are a participant, the amount involved exceeds $120,000, and a related party has or will
have a direct or indirect material interest. Our related parties include directors (including nominees for election as directors), executive
officers, 5% shareholders, and the immediate family members of these persons or entities affiliated with them. In accordance with our
Audit Committee Charter, related party transactions are evaluated in accordance with our Code of Conduct. In determining whether to approve
a related party transaction, the Audit Committee will consider, among other factors, the fairness of the proposed transaction, the direct
or indirect nature of the related party’s interest in the transaction, the appearance of an improper conflict of interest for any
director or executive officer taking into account the size of the transaction and the financial position of the related party, whether
the transaction would impair a Non-Executive Director’s independence, the acceptability of the transaction to our regulators and
the potential violations of other corporate policies.
Stock Ownership and Hedging
We do not currently require our directors or executive
officers to maintain any particular level of ownership of any of our securities. However, our directors receive a portion of their retainer
in the form of our common stock and our Named Executive Officers are each eligible to receive, and have received in prior years, awards
of restricted stock units as part of their compensation. Additionally, we do not currently have any prohibition on our directors, executive
officers, or employees hedging or pledging any securities they may own. However, all of our directors, executive officers, or employees
are subject to our Code of Conduct and insider trading policies and directors and executive officers in particular are required to seek
the approval of our General Counsel prior to engaging in any transaction in our securities.
REPORT OF THE AUDIT COMMITTEE
Our
management is responsible for the internal control over financial reporting. The independent registered public accounting firm is
responsible for performing an independent audit of our consolidated financial statements and issuing an opinion on the conformity of those
financial statements with accounting principles generally accepted in the United States of America. The Audit Committee oversees
our internal controls and financial reporting process on behalf of the Board. The Audit Committee has met and held discussions
with management and the independent registered public accounting firm on these matters. Management represented to the Audit Committee
that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States
of America, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the independent
registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm matters
required to be discussed by Auditing Standard 1301, as adopted by the Public Company Accounting Oversight Board, including the quality,
and not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures
in the financial statements.
In addition, the Audit Committee has received the
written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the
Public Company Accounting Oversight Board and has discussed with the independent registered public accounting firm the firm’s independence
from us and our management. In concluding that the independent registered public accounting firm is independent, the Audit Committee
considered, among other factors, whether the non-audit services provided by the firm were compatible with its independence.
The Audit Committee discussed with the independent
registered public accounting firm the overall scope and plans for their audit. The Audit Committee meets with the independent registered
public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of our internal
control over financial reporting, and the overall quality of our financial reporting process.
In performing all of these functions, the Audit
Committee acts only in an oversight capacity. In its oversight role, the Audit Committee relies on the work and assurances of our
management, which has the primary responsibility for financial statements and reports, and of the independent registered public accounting
firm who, in its report, expresses an opinion on the conformity of our financial statements to accounting principles generally accepted
in the United States of America. The Audit Committee’s oversight does not provide it with an independent basis to determine
that management has maintained appropriate accounting and financial reporting principles or policies, or appropriate internal control
over financial reporting designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore,
the Audit Committee’s considerations and discussions with management and the independent registered public accounting firm do not
assure that our financial statements are presented in accordance with accounting principles generally accepted in the United States of
America, that the audit of our financial statements has been carried out in accordance with the standards of the Public Company Accounting
Oversight Board or that our independent registered public accounting firm is in fact “independent.”
In reliance on the reviews and discussions referred
to above, the Audit Committee recommended to the Board, and the Board has approved, the audited consolidated financial statements be included
in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC. The Audit Committee has appointed,
subject to shareholder ratification, BKD, LLP as our independent registered public accounting firm for the fiscal year ending December 31,
2022.
The Audit Committee of the Board of Directors
of Merchants Bancorp
Andrew A. Juster, Chair
Sue Anne Gilroy
Patrick D. O’Brien
Anne E. Sellers
David N. Shane
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Fees
The following table sets forth the aggregate fees
billed for audit services rendered by BKD, LLP in connection with its audit of our consolidated financial statements and reports for our
fiscal years ended December 31, 2021 and 2020 and for other services rendered during fiscal years ended December 31, 2021 and
2020, as well as all out-of-pocket costs incurred in connection with these services.
| | |
2021 | | |
2020 | |
| Audit Fees (1) | |
$ | 542,820 | | |
$ | 441,000 | |
| Audit-Related Fees (2) | |
| 40,000 | | |
| 23,625 | |
| Tax Fees (3) | |
| 73,435 | | |
| 72,716 | |
| All Other Fees (4) | |
| - | | |
| 1,560 | |
| TOTAL | |
$ | 656,255 | | |
$ | 538,901 | |
| (1) | Includes fees billed for the audit of consolidated financial statements,
including review of interim financial information contained in Quarterly Reports on Form 10-Q and other regulatory reports. |
| (2) | Includes fees associated with the audit of our employee benefits plans and the audit associated with the Uniform Single Attestation
Program. |
| (3) | Includes fees billed for tax compliance services, including preparation of federal and state income tax returns, preparation of property
tax returns, and tax payment and planning advice. |
| (4) | This amount includes fees associated with the construction and planning of our new headquarters building. |
Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Registered Public Accounting Firm.
The Audit Committee is responsible for appointing,
setting compensation, and overseeing the work of the independent registered public accounting firm. In accordance with its charter, the
Audit Committee approves, in advance, all audit and permissible non-audit services to be performed by the independent registered public
accounting firm.
Shareholder
Proposals for the 2023 Annual Meeting
We
anticipate holding our 2023 annual meeting of shareholders on May 18, 2023. Based on the date this proxy statement is being made
available to shareholders, proposals submitted by shareholders under Rule 14a-8 of the Exchange Act to be presented at the 2023 annual
meeting must be received by the Company at its principal executive office no later than December ____, 2022, to be considered
for inclusion in the proxy statement and form of proxy relating to that meeting and must otherwise comply with the SEC rules and
regulations. Any such proposals should be sent to the attention of the Secretary of the Company at 410 Monon Boulevard, Carmel, Indiana
46032.
All
director nominations and other shareholder proposals must be made in accordance with the requirements contained in the Company’s
By-Laws, however, the Company is not required to include such nomination
or proposal in its proxy statement. See the description of the nomination procedures beginning on page 13.
OTHER MATTERS
The Board does not know of any matters for action
by shareholders at the Annual Meeting other than the matters described in the accompanying Notice of 2022 Annual Meeting of Shareholders.
However, your proxy will confer upon the named proxies discretionary authority with respect to matters which are not known to the Board
at the time of this proxy statement and which may properly come before the Annual Meeting. It is the intention of the persons named as
proxies to vote pursuant to the proxy with respect to such matters in accordance with their best judgment.
YOUR VOTE
IS IMPORTANT. PLEASE EXERCISE YOUR SHAREHOLDER RIGHT TO VOTE, REGARDLESS OF WHETHER YOU PLAN TO VIRTUALLY ATTEND THE ANNUAL MEETING.
| 01 - Michael F. Petrie 02 - Randall D. Rogers 03 - Tamika D. Catchings
04 - Thomas W. Dinwiddie 05 - Michael J. Dunlap 06 - Scott A. Evans
07 - Sue Anne Gilroy 08 - Andrew A. Juster 09 - Patrick D. O’Brien
10 - Anne E. Sellers 11 - David N. Shane
01 02 03 04 05 06 07 08 09
Mark here to vote FOR all nominees
1UPX
For All EXCEPT - To withhold a vote for one or more nominees, mark the
box to the left and the corresponding numbered box(es) to the right.
Mark here to WITHHOLD vote from all nominees
10 11
Using a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated areas.
03M2MA
+
+ Proposals — The Board of Directors recommends a vote FOR all nominees listed, and FOR Proposals 2 and 3. A
2. Approval of the Amendment to Section 4.1 of the Articles of
Incorporation to increase the total number of authorized
shares of capital stock from 55,000,000 to 80,000,000 and
common stock from 50,000,000 to 75,000,000.
1. Election of Directors:
For Against Abstain
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. Date (mm/dd/yyyy) — Please print date below.
Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below B
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Annual Meeting Proxy Card
3. Ratification of the appointment of BKD, LLP as our independent
registered public accounting firm for the year ending
December 31, 2022.
For Against Abstain
000004
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
ADD 4
ADD 5
ADD 6
ENDORSEMENT_LINE______________ SACKPACK_____________
1234 5678 9012 345
MMMMMMMMM
MMMMMMMMMMMMMMM
538902
MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE
140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
C 1234567890 JNT
C123456789
MMMMMMMMMMMM
MMMMMMM
000000000.000000 ext
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000000000.000000 ext
000000000.000000 ext
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000000000.000000 ext
If no electronic voting,
delete QR code and control #
Δ≈
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or scan the QR code — login details are
located in the shaded bar below.
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Notice of 2022 Annual Meeting of Shareholders
Proxy Solicited by Board of Directors for Annual Meeting – May 19, 2022
John F. Macke and Tami L. Durle, or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the
undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Merchants Bancorp to
be held on May 19, 2022 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all director
nominees listed in Proposal 1 and FOR Proposals 2 and 3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)
Proxy – Merchants Bancorp
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Non-Voting Items C
+
+
Meeting Attendance
Mark box to the right if
you plan to attend the
Annual Meeting.
Change of Address — Please print new address below.
2022 Annual Meeting Admission Ticket
2022 Annual Meeting of
Merchants Bancorp Shareholders
Thursday, May 19, 2022 at 8:30 a.m.
Virtual Meeting Only |
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