MUNCIE, IN—First Merchants Corporation (NASDAQ:FRME), a $2.63 billion regional bank currently trading near its 52-week high of $46.13, has introduced a new incentive program for its top executives, according to a recent 8-K filing with the SEC. According to InvestingPro data, the bank has demonstrated strong momentum with a 26.71% return over the past six months. The 2025 Senior Management Incentive Compensation Program (SMICP), adopted by the Board of Directors on Monday, is designed to align the interests of the executives with the company’s financial performance.
Under the SMICP, named executive officers and other senior management employees will receive cash payments based on the achievement of specific performance goals. The potential payouts, expressed as a percentage of the executives’ base salaries, range from threshold to maximum levels for meeting or exceeding their objectives. This comes as the company maintains healthy profitability with a diluted EPS of $3.41 and trades at a P/E ratio of 13.21.
CEO Mark K. Hardwick could earn from 40% to 160% of his base salary, while President Michael J. Stewart, EVP and CFO Michele M. Kawiecki, and EVP and Chief Credit Officer John J. Martin each have the opportunity to earn between 30% and 120% of their respective base salaries. EVP and Chief Commercial Officer Joseph C. Peterson’s incentive payout will be based 70% on the corporation’s operating earnings and 30% on the performance of the Commercial line of business, with a potential payout ranging from 25% to 100% of his base salary.
To qualify for these payments, executives must meet the minimum threshold, and payouts will be proportionate for performance between the threshold and maximum. The Board has determined that the primary goal for the executives, except for Peterson, will be the corporation’s operating earnings calculated on a diluted GAAP basis.
The Compensation and Human Resources Committee will review the results at the end of the fiscal year to determine the appropriate payouts. Participants must be employed at the time of payment, except in cases of death, disability, or retirement, to be eligible.
First Merchants has established a Clawback Policy that allows the company to recover payments if they are based on materially inaccurate financial statements or if deemed appropriate under applicable laws. The company’s commitment to strong governance is reflected in its 36-year track record of maintaining dividend payments and overall "Good" financial health score. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, one of 1,400+ detailed company analyses available to subscribers.
This announcement comes as part of the company’s ongoing efforts to maintain strong corporate governance and incentivize its leadership team. The details of the SMICP are provided in the 8-K filing, which serves as the source of the information presented in this article.
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