☐
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Preliminary Proxy Statement
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☐
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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☒
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Definitive Proxy Statement
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☒
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Definitive Additional Materials
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☐
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Soliciting Material Pursuant to §240.14a-12
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[X]
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1) |
Title of each class of securities to which transactions applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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[ ]
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Fee paid previously with preliminary materials.
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[ ]
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement no.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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By order of the Board of Directors,
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John T. Taylor
Chief Executive Officer
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1.
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The election of eight nominees as directors;
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2.
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A proposal to approve, in a non-binding advisory vote, the compensation of the Company’s executives as disclosed in the
accompanying proxy statement;
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3.
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A proposal to ratify the appointment of the Company’s independent registered public accounting firm; and
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4.
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Such other business as may properly come before the meeting.
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By order of the Board of Directors, | |
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John T. Taylor
Chief Executive Officer
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●
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The election of eight directors (Proposal 1);
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A proposal to approve, in a non-binding advisory vote, the compensation of the Company’s executives as disclosed under “Executive
Compensation” (Proposal 2); and
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A proposal to ratify the appointment of our independent registered public accounting firm (Proposal 3).
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FOR
the election of the nominees listed in this proxy statement;
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FOR
the proposal to approve, on an advisory basis, the compensation of the Company’s executives as disclosed in this proxy statement; and
FOR
the ratification of the appointment of our independent registered public accounting firm.
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FOR
the election of all the director nominees recommended by the Board;
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FOR
the approval of our executive compensation; and
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FOR
the ratification of the appointment of our independent registered public accounting firm.
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Director Nominees
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Age
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Position
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W. Glenn Hogan
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57
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Chairman of the Board of Directors
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Celia P. Catlett
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42
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Director
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Kevin J. Kooman
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49
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Nominee
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Michael T. Levy
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50
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Director
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James M. Parsons
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62
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Director
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Bradford T. Ray
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61
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Director
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Dr. Edmond J. Seifried
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72
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Director
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John T. Taylor
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59
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President, Chief Executive Officer and Director of Limestone Bancorp
President, Chief Executive Officer and Chairman of the Board of
Directors of Limestone Bank
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Name
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Age
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Position
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Phillip W. Barnhouse
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48
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Chief Financial Officer Limestone Bancorp and Limestone Bank
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John R. Davis
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56
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Chief Credit Officer of Limestone Bank
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Joseph C. Seiler
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52
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Executive Vice President of Limestone Bank
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Name
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Fees Earned
or Paid in Cash |
Stock
Awards (1) |
Option
Awards |
All Other
Compensation
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Total
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|||||||||||||||
W. Glenn Hogan
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$
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50,000
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$
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25,000
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$
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-
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$
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-
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$
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75,000
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Celia P. Catlett
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8,333
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21,512
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-
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-
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29,845
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Michael T. Levy
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30,000
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25,000
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-
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-
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55,000
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James M. Parsons
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30,000
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25,000
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-
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-
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55,000
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Bradford T. Ray
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30,000
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25,000
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-
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-
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55,000
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Edmond J. Seifried
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25,000
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25,000
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-
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-
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50,000
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W. Kirk Wycoff (2)
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25,000
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25,000
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-
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-
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50,000
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(1)
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On June 1, 2018, each non-employee director received an award of 1,795 restricted shares with a grant date fair value of $13.93 per
share. Ms. Catlett became a director on September 26, 2018 and was issued an award on September 26, 2018 of 1,347 restricted shares with a grant date fair value of $15.97 per share. The restricted shares vested on December 31, 2018. The
amounts in the Stock Awards column reflect the grant date fair value for the restricted stock awards for the fiscal year ended December 31, 2018. The assumptions used in the calculation of these amounts for awards granted in 2018 are
included in Note 17 “Stock Plans and Stock-based Compensation” in the “Notes to Consolidated Financial Statements” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.
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(2)
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Mr. Wycoff’s fees and restricted stock award are for the benefit of Patriot Financial Manager LP.
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Name and Address of Beneficial Owner(1)
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Common
Shares
Beneficially
Owned
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%
of Class |
Non-Voting
Common
Shares
Beneficially
Owned
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%
of Class
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Directors and Nominees
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John T. Taylor
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141,119
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2.3
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%
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-
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-
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%
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W. Glenn Hogan
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451,931
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7.2
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-
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-
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Celia P. Catlett
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1,347
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*
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-
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-
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Kevin J. Kooman
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-
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*
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-
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-
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Michael T. Levy
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75,294
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1.2
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-
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-
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James M. Parsons
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38,825
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*
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-
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-
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Bradford T. Ray
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67,685
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1.1
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-
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-
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Dr. Edmond J. Seifried
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77,769
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1.2
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-
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-
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W. Kirk Wycoff(2)
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118,542
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1.9
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-
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-
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Other Named Executive Officers
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John R. Davis
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34,168
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*
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-
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-
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Phillip W. Barnhouse
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29,910
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*
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-
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-
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Joseph C. Seiler
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25,037
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*
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-
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-
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Named Executive Officers and Directors as a Group
(12 persons)
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1,061,627
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17.0
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%
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-
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-
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*
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Represents beneficial ownership of less than 1%.
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(1)
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The business address for these individuals is c/o
Limestone Bancorp, Inc., 2500 Eastpoint Parkway, Louisville, Kentucky 40223.
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(2)
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Mr. Wycoff has direct ownership of 118,542 shares. This total does not include 11,050 common shares beneficially owned by Patriot
Financial Manager, L.P. of which Mr. Wycoff is one of the general partners, or the 261,494 common shares and 1.0 million non-voting common shares held by Patriot Financial Partners III, L.P. Mr. Wycoff disclaims beneficial ownership of
the 272,544 common shares and the 1.0 million non-voting common shares, except to the extent of his pecuniary interest therein. See footnote 4 to the share ownership table on the following page.
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Common Shares
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Non-Voting Common Shares
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|||||||||||||||
Name and Address of Beneficial Owner
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Beneficially
Owned
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Percent
of Class
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Beneficially
Owned
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Percent of Class |
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J. Chester Porter Trust Funds (1)
318 S. Buckman Street Shepherdsville, Kentucky 40165 |
644,727
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10.3
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%
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–
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–
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Maria L. Bouvette (2)
c/o Limestone Bancorp, Inc. 2500 Eastpoint Parkway Louisville, Kentucky 40223 |
541,623
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8.7
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%
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–
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–
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|||||||||||
RMB Capital Management LLC (3)
115 S. LaSalle St., 34th Floor Chicago, IL 60603
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251,200
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4.0
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%
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220,000
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18
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%
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||||||||||
Patriot Financial Group (4)
Four Radnor Corporate Center 100 Matsonford Road, Suite 210 Radnor, PA 19087 |
391,086
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6.3
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%
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1,000,000
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82
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%
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||||||||||
(1)
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The information is included in reliance upon Form 13G filed with the SEC by Jack C. Porter, Jr and Jennifer E.
Porter, Co-Trustees on January 11, 2018. J. Chester Porter Trust Fund A and J. Chester Porter Trust Fund B (together the “J. Chester Porter Trust Funds”) are the beneficial owners of 342,587 and 296,877 common shares, respectively.
Shared voting power of these funds is held by Jack C. Porter, Jr. and Jennifer E. Porter. Mr. Porter and Ms. Porter disclaim beneficial ownership of these shares except to the extent of his or her pecuniary interest therein. In
addition, Mr. Porter is the beneficial owner with sole voting power of 4,131 common shares and Ms. Porter is the beneficial owner with sole voting power of 1,132 common shares.
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(2)
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The information is included in reliance upon Form 13 D/A filed with the SEC by Maria L. Bouvette on February 5,
2018.
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(3)
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This information is included in reliance upon Form 13G/A filed with the SEC by RMB Capital Management LLC on
February 14, 2019. RMB Capital Management LLC is the sub-adviser to the Mendon Capital Master Fund Ltd. and investment adviser to Iron Road Multi-Strategy L.P. and Mendon Capital QP LP. Anton Schutz is a Director of RMB Capital
Management LLC and may be deemed to have voting and investment power with respect to the shares held by each of the three funds. Totals for common shares do not include non-voting common shares. Mendon Capital Master Fund Ltd is the
beneficial owner of 177,420 non-voting common shares, and Mendon Capital QP LP is the beneficial owner of 42,580 non-voting common shares. Each non-voting common share automatically converts into one voting common share upon, among other
things, transfer in a widespread public distribution, including pursuant to a registration statement filed with and declared effective by the SEC or pursuant to Rule 144 under the Securities Act.
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(4)
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This information is included in reliance upon Form 13F-HR filed with the SEC by Patriot Financial Partners GP,
LP on February 12, 2019 and Mr. Wycoff’s Form 4 filed with the SEC on December 21, 2018. Includes 261,494 common shares and 1.0 million non-voting shares beneficially owned directly by Patriot Financial Partners III, L.P. (“Patriot”);
11,050 common shares beneficially owned directly by Patriot Financial Manager, L.P., and 118,542 common shares beneficially owned directly by W. Kirk Wycoff. Mr. Wycoff is the managing director of Patriot Financial Partners GP III, L.P,
the general partner of Patriot. Mr. Wycoff is also the managing partner of Patriot Financial Manager, L.P. Accordingly, securities owned by Patriot Financial Partners III, L.P. may be regarded as being beneficially owned by Patriot
Financial Partners GP III, L.P, Patriot Financial GP III, LLC and W. Kirk Wycoff. Securities owned by Patriot Financial Manager, L.P. may be regarded as being beneficially owned by W. Kirk Wycoff. Mr. Wycoff disclaims beneficial
ownership of the shares that Patriot beneficially owns, except to the extent of his pecuniary interest therein.
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●
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made in the ordinary course of our consumer credit business;
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●
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of a type we generally make available to the public; and
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●
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made on market terms, or terms that are no more favorable than those offered by the issuer to the general public.
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●
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provide fair and competitive compensation to executives, based on their performance and contributions to our Company, that will
attract, motivate and retain individuals who will enable our Company to successfully compete with other financial institutions in our markets;
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●
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provide incentives that reward executives for attaining predetermined objectives that promote and reward individual performance,
Company financial performance, achievement of strategic goals and Company stock performance;
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●
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instill in our executives a long-term commitment and a sense of ownership through the use of equity-based compensation; and
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●
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ensure that the interests of our executives are aligned with our shareholders’ interests.
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●
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A base salary that is competitive with levels paid by comparable financial institutions;
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●
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Annual incentive cash payments based on the attainment of targeted performance goals; and
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●
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Equity-based compensation, generally in the form of restricted stock awards, based on the attainment of targeted performance
goals.
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Position
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Median Base Salary of Midwest
Financial Institutions with Assets of
$500 million to $1 billion
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Median Base Salary of Midwest
Financial Institutions with Assets of $1
billion to $5 billion
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CEO
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$305,192 | $443,456 | ||
CFO
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178,753 | 240,000 | ||
CCO
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191,100 | 231,347 | ||
SLO
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159,135 | 252,308 |
Position |
Median Total Compensation of
Midwest Financial Institutions with
Assets of $500 million to $1 billion
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Median Total Compensation of
Midwest Financial Institutions with
Assets of $1 billion to $5 billion
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CEO
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$435,044 | $848,265 | ||
CFO
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272,894 | 381,524 | ||
CCO
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260,231 | 389,371 | ||
SLO
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247,016 | 404,489 |
Metric (dollar amounts in
millions)(1)
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Threshold
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Maximum
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2018 Results
|
||||
Pre-tax net income
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> $10.25 | $12.5 | $13.4 | ||||
Loans
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> $770.0 | $800.0 | $765.2 | ||||
Non-interest expense
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< $27.75 | $25.5 | $27.6 | ||||
Core deposits
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> $482.0 | $527.0 | $448.3 | ||||
Classified assets to capital
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< 18% | 12% | 13.8% |
(1) |
Excludes gain on sale of securities, other than temporary impairment charges and non-recurring items as determined at the discretion of the Compensation
Committee.
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Metric (dollar amounts in
millions)(1)
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Threshold
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Maximum
|
|||||
Pre-tax net income
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> $13.25 | $15.50 | |||||
Loans
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> $870.0 | $900.0 | |||||
Efficiency ratio
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< 64.7% | 63.2% | |||||
Core deposits
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> $457.6 | $502.6 | |||||
Classified assets to capital
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< 18% | 12% |
(1) |
Excludes gain on sale of securities, other than temporary impairment charges and non-recurring items as determined at the discretion of the Compensation
Committee.
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● |
Incentive compensation must be sufficiently competitive to attract and retain talented employees who can contribute to the
Company's future success;
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●
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Compensation should be allocated among equity and cash incentives based on the specific role of the employee. A significant
portion of compensation should be performance-based for higher levels of responsibility;
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●
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A significant portion of senior level compensation should be equity grants with multi-year vesting periods that align the
interests of our senior officers with the interests of shareholders;
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●
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Performance measures should not be so difficult to achieve that they fail to provide an adequate incentive for the employee to
perform, and the metrics should be measurable and enforceable; and
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●
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Performance measures should be tailored to encompass performance of both individuals and business units, considering business
objectives and other factors such as revenue production, expertise, compliance with corporate policies, and leadership.
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●
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Whether incentive features could encourage the manipulation of reported earnings to increase compensation;
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●
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Whether incentive features could encourage a lender to promote a loan transaction that is not in the Company’s best interest
and could result in the borrower subsequently becoming insolvent or otherwise unable to meet its financial obligations;
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●
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Whether compensation policies appropriately encourage the identification and correction of possible weaknesses in operations,
data security and internal controls or systems;
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●
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Whether compensation policies appropriately emphasize compliance with legal rules, regulations or guidelines issued by banking
regulators;
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●
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Whether compensation practices could expose the Company and the Board to criticism from regulators, shareholders, customers and
the public and risk opposition to proposals regarding executive compensation and/or share availability; and
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●
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Whether compensation policies create risks that could endanger the Company's existence as an ongoing enterprise.
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Name and Principal
Position
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Year
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Salary
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Stock
Award(1)
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Non-Equity
Incentive Plan
Compensation(2)
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Change in
Nonqualified
Deferred
Compensation
Earnings(3)
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All Other
Compensation(4)
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Total
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|||||||||||||||||||||
John T. Taylor
President and
CEO
|
2018
2017
2016
|
$
|
425,000
412,019
381,731
|
$
|
43,860
66,428
40,000
|
$
|
133,000
132,855
80,000
|
$
|
-
-
-
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$
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14,170
7,332
7,332
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$
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616,030
618,634
509,063
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John R. Davis
Chief Credit
Officer
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2018
2017
2016
|
255,000
253,654
245,961
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26,316
45,000
37,500
|
46,000
45,000
37,500
|
-
-
-
|
13,622
6,852
6,852
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340,938
350,506
327,813
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|||||||||||||||||||||
Joseph C. Seiler
Head of Commercial
Banking
|
2018
2017
2016
|
244,800
243,508
237,308
|
25,263
45,000
36,000
|
42,000
45,000
36,000
|
-
-
-
|
11,717
6,748
6,659
|
323,780
340,256
315,967
|
|||||||||||||||||||||
Phillip W. Barnhouse
Chief Financial
Officer
|
2018
2017
2016
|
244,800
243,508
235,962
|
25,263
45,000
36,000
|
49,000
45,000
36,000
|
14,764
24,579
23,151
|
11,428
7,035
6,109
|
345,255
365,122
337,222
|
(1)
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Includes restricted stock granted as equity incentive compensation on March 22, 2017, June 1, 2018, and February 13, 2019 based on prior year financial results.
The grant date fair value for the March 22, 2017 stock awards was $9.44 per share, for the June 1, 2018 stock awards was $13.93 per share, and for the February 13, 2019 stock awards was $14.53 per share.
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(2)
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Our cash and equity incentive plan is discussed in further detail under “Compensation Discussion and Analysis -- Executive Compensation Components -- Cash and
Equity Incentives.”
|
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(3)
|
The amounts reflect the increase in the present value of Supplemental Executive Retirement Benefit accrual from the previous year for the named executive
officer’s benefit. Please see the Pension Benefits table for an explanation of benefits and disclosure of present value of accumulated benefit as of December 31, 2018. Plan was terminated effective January 31, 2018.
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(4)
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All other compensation for the named executive officers is set forth below:
|
Name |
Vehicle
Allowance
|
401(k)
Matching
Contribution
|
H S A
Matching
Contribution
|
Life & LTD
Premiums Paid for
Benefit of Employee
|
Total Other
Compensation
|
|||||||||||||||
John T. Taylor
|
$
|
-
|
$
|
9,625
|
$
|
1,000
|
$
|
3,545
|
$
|
14,170
|
||||||||||
John R. Davis
|
-
|
9,625
|
1,000
|
2,997
|
13,622
|
|||||||||||||||
Joseph C. Seiler
|
-
|
8,166
|
1,000
|
2,551
|
11,717
|
|||||||||||||||
Phillip W. Barnhouse
|
-
|
8,568
|
1,000
|
1,860
|
11,428
|
John T. Taylor
|
$
|
425,000
|
|||
John R. Davis
|
255,000
|
||||
Joseph C. Seiler
|
244,800
|
||||
Phillip W. Barnhouse
|
244,800
|
●
|
termination for “Cause”;
|
●
|
as a result of disability, retirement or death; or
|
●
|
by the executive other than for “Good Reason.”
|
●
|
by the Company other than for Cause, disability, retirement or death;
|
●
|
by the executive for Good Reason; or
|
●
|
by the Company for other than Cause, disability, retirement or death within six months following the expiration of the term of
the agreement.
|
●
|
a material diminution in the executive’s base salary or opportunity to earn cash incentive compensation (as a percentage of base
salary),
|
●
|
a material diminution in his authority, duties or responsibilities (including, in the case of Mr. Taylor, his position as
Chairman of the Board of the Bank), or
|
●
|
any change in the executive’s reporting duties.
|
Grant |
Estimated
Possible Payouts
Under Non-Equity Incentive Plan Awards (1) |
Estimated
Possible Payouts
Under Equity Incentive Plan Awards (1,2) |
All Other Stock
Awards:
Number of
Shares of Stock
|
Grant Date
Fair Value
of Stock
|
|||||||||||||||||||||
Name | Date |
Threshold | Maximum | Threshold | Maximum | or Units |
Awards (2)
|
||||||||||||||||||
John T. Taylor | 6/1/18 | $ | 5,313 | $ | 212,500 | 192 | 7,627 | n/a | $ | 66,428 | |||||||||||||||
John R. Davis | 6/1/18 | 1,607 | 63,750 | 115 | 4,576 | n/a | 45,000 | ||||||||||||||||||
Joseph C. Seiler | 6/1/18 | 1,542 | 61,200 | 111 | 4,393 | n/a | 45,000 | ||||||||||||||||||
Phillip W. Barnhous | 6/1/18 | 1,542 | 61,200 | 111 | 4,393 | n/a | 45,000 |
(1)
|
Under our incentive plan for 2018, the maximum cash incentive award and the maximum equity incentive award that the named
executive officers (other than Mr. Taylor) can earn are each 25% of base salary based upon the attainment of the highest level for all five financial metrics. Mr. Taylor can earn a maximum cash incentive award of 50% of base salary and
the maximum equity incentive award of 25% of base salary. The threshold cash and equity incentive award represents attainment of only the minimum level for the lowest weighted financial metric.
|
(2)
|
The grant date fair value for the June 1, 2018 stock awards was $13.93 per share.
|
Stock Awards
|
||||||||||||||||
Name |
Number of
Shares or Units
of Stock that
Have Not
Vested
|
Market Value
of Shares or
Units of Stock
That Have Not
Vested (5)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights
That Have
Not Vested (5)
|
||||||||||||
John T. Taylor
|
28,333
|
(1)
|
$
|
389,862
|
1,159(2
|
)
|
$
|
15,948
|
||||||||
2,824(3)
4,
|
(3)
(4)
|
38,858
65,621
|
||||||||||||||
John R. Davis
|
10,666
|
(1)
|
146,764
|
727(2
|
)
|
10,004
|
||||||||||
2,648(3)
3,
|
(3)
(4)
|
36,436
44,445
|
||||||||||||||
Joseph C. Seiler
|
7,666
|
(1)
|
105,484
|
711(2
|
)
|
9,783
|
||||||||||
2,542(3)
3,
|
(3)
(4)
|
34,978
44,445
|
||||||||||||||
Phillip W. Barnhouse
|
7,666
|
(1)
|
105,484
|
696(2
|
)
|
9,577
|
||||||||||
2,542(3)
3,
|
(3)
(4)
|
34,978
44,445
|
(1)
|
Restricted shares granted on March 26, 2015. One-third of the shares vests on the second anniversary date of grant and one-third
on each of the next two anniversary dates of the grant.
|
(2)
|
Restricted shares granted on June 1, 2016. One-third of the shares vests on the second anniversary date of grant and one-third on
each of the next two anniversary dates of the grant.
|
(3)
|
Restricted shares granted on March 22, 2017. One-third of the shares vest over three years on each anniversary date of the grant.
|
(4)
|
Restricted shares granted on June 1, 2018. One-third of the shares vest over three years on each anniversary date of the grant.
|
(5)
|
Based on the $13.76 per share closing price of Limestone Bancorp, Inc. common shares on December 31, 2018.
|
Stock Awards
|
||||||||
Name |
Number of Shares
Acquired on Vesting (1) |
Value Realized
on Vesting (2) |
||||||
John T. Taylor | 30,906 | $ | 424,600 | |||||
John R. Davis | 12,719 | $ | 174,804 | |||||
Joseph C. Seiler | 9,651 | $ | 132,676 | |||||
Phillip W. Barnhouse | 8,635 | $ | 118,723 | |||||
(1)
|
One-third of the restricted shares awarded in each of 2015, 2016, and 2017 vested on the anniversary date of grant in 2018.
|
(2)
|
Value realized on vesting is based on the Nasdaq closing price per share of LMST common stock on each vesting date in 2018.
|
Name
|
Plan Name
|
Number
of Years Credited Service |
Present
Value of Accumulated Benefits (1) |
Payments
During Last Fiscal Year |
||||||||||
Phillip W. Barnhouse
|
Supplemental executive retirement plan
|
n/a
|
$
|
248,000
|
$
|
-
|
(1)
|
Reports the present value of the obligation to each executive upon retirement at age 62 as of the end of the fiscal year. The
plan is designed to provide monthly retirement income to the executive for ten years equal to 30% of his projected salary at age 62. This projected salary was determined at plan inception. The present value utilizes a discount rate of
6%. The supplemental executive retirement plan was terminated effective January 31, 2018, liquidated on February 1, 2019 and is discussed in further detail under the heading “Other Benefits” in the Compensation Discussion and Analysis
section.
|
●
|
has reviewed and discussed the audited consolidated financial statements with management;
|
●
|
has discussed with the independent registered public accounting firm, the matters required to be discussed by Statement on
Auditing Standards Nos. 16 and 114, Communication with Audit Committees, as amended, as adopted by the Public Company Accounting
Oversight Board in Rule 3200T;
|
●
|
has received the written disclosures and the letter from the independent registered public accounting firm required by
Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees),
and has discussed with the independent registered public accounting firm, the independent registered public accounting firm’s independence; and
|
●
|
has approved the audit and non-audit services of the independent registered public accounting firm for 2018.
|
2018
|
2017
|
|||||||
Audit Fees
|
$
|
275,000
|
$
|
165,000
|
||||
Audit-Related Fees
|
54,447
|
34,575
|
||||||
Tax Fees
|
47,475
|
67,810
|
||||||
All Other Fees
|
5,597
|
19,007
|