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Section 1: DEF 14A (DEF 14A)

rbcaa_Current folio_proxy

 

 

 

 

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  ☒

 

Filed by a Party other than the Registrant  ☐

 

Check the appropriate box:

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

 

Republic Bancorp, Inc.

(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):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

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):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

☐ 

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.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 

 

Picture 4

NOTICE OF  ANNUAL  MEETING OF  SHAREHOLDERS

OF  REPUBLIC  BANCORP, INC.

THURSDAY, APRIL 23, 2020

To our shareholders:  You are cordially invited to attend the 2020 Annual Meeting of Shareholders of Republic Bancorp, Inc.  The following are details for the meeting:

Date:      Thursday, April 23, 2020

Time:      10:00 A.M., EDT

Place:     Republic Bank Building, Lower Level, 9600 Brownsboro Road, Louisville, Kentucky 40241

Items on the agenda:

1.

    

To elect fifteen directors;

2.

 

To ratify the appointment of Crowe LLP as the independent registered public accounting firm for 2020; and

3.

 

To transact such other business as may properly come before the meeting.

 

Record date

 

The close of business on February 21, 2020 is the record date for determining the shareholders entitled to notice of, and to vote at, the 2020 Annual Meeting of Shareholders.

 

Your vote is important.  Whether or not you plan to attend the Annual Meeting of Shareholders, we hope you will vote as soon as possible.  Please review the instructions with respect to each of your voting options as described in the proxy statement and the Notice of Internet Availability of Proxy Materials.

IF YOU PLAN TO ATTEND:  Please note that space limitations may make it necessary to limit attendance at the Annual Meeting of Shareholders.  Shareholders holding stock in brokerage accounts (“street name holders”) may be asked to produce a brokerage statement reflecting stock ownership as of the record date and provide photo identification. Cameras, recording devices, or other like forms of electronic devices will not be permitted at the Annual Meeting of Shareholders.

 

 

 

Very truly yours,

 

Steve Trager sig

 

Steven E. Trager

 

Chairman and Chief Executive Officer

Louisville, Kentucky

 

March 13, 2020

 

 

Important Notice Regarding the Availability of Proxy Materials

for the Shareholder Meeting to be Held on April 23, 2020.

The proxy statement and annual report to shareholders are available online at www.investorvote.com/RBCAA.  

 

 

 

REPUBLIC  BANCORP, INC.

601 West Market Street

Louisville, Kentucky 40202

PROXY STATEMENT

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors of Republic Bancorp, Inc. (the “Company” or “Republic”).  The proxies will be voted at the 2020 Annual Meeting of Shareholders (“Annual Meeting”) of Republic on April 23, 2020, and at any adjournments of the meeting.

This proxy statement, notice of annual meeting, and form of proxy are first being mailed or made available to shareholders on or about March 13, 2020.  As used in this document, the terms “Republic,” the “Company,” “we,” and “our” refer to Republic Bancorp, Inc., a Kentucky corporation.

 

VOTING

Record date.  You are entitled to notice of and to vote at the Annual Meeting if you held of record shares of our Class A Common Stock or Class B Common Stock at the close of business on February 21, 2020.  On that date, 18,742,970 shares of Class A Common Stock and 2,205,051 shares of Class B Common Stock were issued and outstanding for purposes of the Annual Meeting. 

Voting rights.  Each share of Class A Common Stock is entitled to one (1) vote and each share of Class B Common Stock is entitled to ten (10) votes.  Based on the number of shares outstanding as of the record date, the shares of Class A Common Stock are entitled to an aggregate of 18,742,970 votes, and the shares of Class B Common Stock are entitled to an aggregate of 22,050,510 votes at the Annual Meeting.

Voting by proxy.  If you received the Notice of Internet Availability of Proxy Materials, you may follow the instructions on that notice to access the proxy materials and download the proxy and vote online via the Internet.  If you request a paper or electronic copy of the proxy materials, the proxy will be mailed or e-mailed to you along with the other proxy materials.  If you received a paper copy of this proxy statement, the proxy card is enclosed.  If a proxy card is properly executed, returned to Republic and not revoked, the shares represented by the proxy card will be voted in accordance with the instructions set forth on the proxy card.  If no instructions are given, the shares represented will be voted (i) “For” the Board of Director nominees named in this proxy statement, and (ii) “For” the ratification of Crowe LLP as the Company’s independent registered public accounting firm for 2020.  For participants in the Republic Bancorp, Inc. 401(k) Retirement Plan (the “Plan”), the Plan Trustee shall vote the shares for which it has not received voting direction from the Plan participants utilizing the same voting percentages derived from the Plan participants who did direct how their shares are to be voted.  The Board of Directors at present knows of no other business to be brought before the Annual Meeting. However, persons named in the proxy, or their substitutes, will have discretionary authority to vote on any other business which may properly come before the Annual Meeting and any adjournment thereof and will vote the proxies in accordance with the recommendations of the Board of Directors.

You may attend the Annual Meeting even though you have executed a proxy. You may revoke your proxy at any time before it is voted by delivering written notice of revocation to the Secretary of Republic, by delivering a subsequent dated proxy, by voting by telephone, or online through the Internet on a later date, or by attending the Annual Meeting and voting in person.

Quorum and voting requirements and counting votes.  The presence in person or by proxy of the holders of a majority in voting power of the combined voting power of the Class A Common Stock and the Class B Common Stock will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes will be counted as being present or represented at the Annual Meeting for the purpose of establishing a quorum. A broker non-vote occurs when a nominee holding shares for a beneficial owner is otherwise present by proxy but does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

2

The affirmative vote of a plurality of the votes duly cast is required for the election of Directors.  All other matters presented at the meeting will be approved if the votes cast in favor of the proposal exceed the votes cast opposing the proposal. Abstentions and broker non-votes are not counted as votes cast on any matter to which they relate and will have no impact on the outcome of any matter.

 

SHARE OWNERSHIP

The following table sets forth certain information regarding the beneficial ownership of the outstanding shares of Republic as of February 21, 2020, based on information available to the Company. The Class B Common Stock is convertible into Class A Common Stock on a share-for-share basis. In the following table, information in the column headed “Class A Common Stock” does not reflect the shares of Class A Common Stock issuable upon conversion of Class B Common Stock.  Information is included for:

(1)

persons or entities who own more than 5% of the Class A Common Stock or Class B Common Stock outstanding;

(2)

all Directors and Nominees;

(3)

the Chairman and Chief Executive Officer (“CHAIR/CEO”), the Chief Financial Officer (“CFO”), and three other executive officers of Republic, including its subsidiary Republic Bank & Trust Company (the “Bank”), who earned the highest total compensation payout during 2019 (collectively, with the CHAIR/CEO and CFO, the “Named Executive Officers” or “NEOs”); and,

(4)

all Executive Officers (“EOs”) and Directors of Republic and the Bank as a group.

Except as otherwise noted, Republic believes that each person named below has the sole power to vote and dispose of all shares shown as owned by such person.  Please note that the table provides information about the number of shares beneficially owned, as opposed to the voting power of those shares.  The amounts and percentages of common stock beneficially owned are reported on the basis of the regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days of February 21, 2020. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities. Included in the amount of common stock beneficially owned are shares of common stock subject to exercisable options or options that will become exercisable within 60 days of February 21, 2020. The calculation of percent owned by each person assumes that all such options held by such person have been exercised. The calculation of percent owned by all Directors and Executive Officers as a group assumes that all such options beneficially held by them have been exercised.  Also included in the amount of common stock beneficially owned are shares of common stock issuable within 60 days of February 21, 2020, for 2019 performance with respect to previously granted performance share units; the calculation of percent owned by each person assumes such issuance, as does the calculation of percent owned by all Directors and Executive Officers as a group.

3

Executive Officers and Directors as a group (collectively 14 persons) beneficially own 67% of the combined voting power of the Class A and Class B Common Stock which represents 52% of the total number of shares of Class A and Class B Common Stock outstanding as of February 21, 2020 as detailed below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A and Class B Common

 

 

 

Class A Common Stock

 

Class B Common Stock

 

Stock Combined

 

Name

    

Shares

    

Percent

    

Shares

    

Percent

    

Shares

    

Percent

 

Five Percent Shareholders:

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Steven E. Trager

  

8,528,127

(1)

45.4

%  

1,797,327

(2)

81.5

%  

10,325,454

(1)(2)

49.2

%

601 West Market Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Jean S. Trager

  

8,427,063

(3)

44.9

 

1,250,279

(4)

56.7

 

9,677,342

(3)(4)

46.1

 

601 West Market Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

A. Scott Trager

  

8,177,766

(5)

43.6

 

1,142,300

(6)

51.8

 

9,320,066

(5)(6)

44.4

 

601 West Market Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Sheldon G. Gilman

  

7,967,392

(7)

42.5

 

1,107,515

(8)

40.2

 

9,074,907

(7)(8)

43.3

 

500 West Jefferson Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Suite 2100

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Teebank Family

  

7,165,051

 

38.2

 

939,449

 

42.6

 

8,104,500

 

38.6

 

Limited Partnership (9)

  

 

 

 

 

 

 

 

 

 

 

 

 

601 West Market Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Jaytee Properties

  

750,067

 

4.0

 

168,066

 

7.6

 

918,133

 

4.4

 

Limited Partnership (9)

  

 

 

 

 

 

 

 

 

 

 

 

 

601 West Market Street

  

 

 

 

 

 

 

 

 

 

 

 

 

Louisville, Kentucky 40202

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Directors, Nominees and

  

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive Officers:

  

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Ronald F. Barnes

 

475

(10)

*

 

 —

 

*

 

475

(10)

*

 

Campbell P. Brown

 

375

(11)

*

 

 —

 

*

 

375

(11)

*

 

Laura M. Douglas

 

 —

(12)

*

 

 —

 

*

 

 —

(12)

*

 

David P. Feaster

 

 2

 

*

 

 —

 

*

 

 2

 

*

 

Craig A. Greenberg

 

375

(13)

*

 

 —

 

*

 

375

(13)

*

 

Heather V. Howell

 

375

(14)

*

 

 —

 

*

 

375

(14)

*

 

Ernest W. Marshall, Jr.

 

175

(15)

*

 

 —

 

*

 

175

(15)

*

 

W. Patrick Mulloy, II

 

16,161

(16)

*

 

 —

 

*

 

16,161

(16)

*

 

W. Kenneth Oyler, III

 

375

(17)

*

 

 —

 

*

 

375

(17)

*

 

Michael T. Rust

 

3,358

(18)

*

 

 —

 

*

 

3,358

(18)

*

 

R. Wayne Stratton

 

17,150

(19)

*

 

2,063

(20)

*

 

19,213

(19)(20)

*

 

Susan Stout Tamme

 

11,120

(21)

*

 

 —

 

*

 

11,120

(21)

*

 

Andrew Trager-Kusman

  

 —

(22)

*

 

 —

 

*

 

 —

(22)

*

 

Mark A. Vogt

  

7,391

(23)

*

 

 —

 

*

 

7,391

(23)

*

 

Juan M. Montano

  

13,859

(24)

*

 

 —

 

*

 

13,859

(24)

*

 

William R. Nelson

  

22,097

(25)

*

 

 —

 

*

 

22,097

(25)

*

 

Kevin D. Sipes

 

77,278

(26)

*

 

 —

 

*

 

77,278

(26)

*

 

A. Scott Trager

  

8,177,766

(5)

43.6

 

1,142,300

(6)

51.8

 

9,320,066

(5)(6)

44.4

 

Steven E. Trager

 

8,528,127

(1)

45.4

 

1,797,327

(2)

81.5

 

10,325,454

(1)(2)

49.2

 

  

  

 

 

 

 

 

 

 

 

 

 

 

 

Directors and All

  

 

 

 

 

 

 

 

 

 

 

 

 

Executive Officers (14 persons):

  

9,035,937

(27)

48.2

%  

1,834,175

(27)

83.2

%  

10,870,112

(27)

51.8

%


*      Represents less than 1% of total

(1)

Includes 7,165,051 shares held of record by Teebank Family Limited Partnership (“Teebank”) and 750,067 shares held of record by Jaytee Properties Limited Partnership (“Jaytee”).  With respect to Teebank and Jaytee, Steven E. Trager is (i) trustee of a trust that is co-general partner and a limited partner and (ii) co-trustee of a trust that is the other co-general partner and a limited partner of each of these limited partnerships.  Steven E. Trager shares voting authority over shares held by both Teebank and Jaytee as a member of each partnership’s voting committee.  Trusts for the benefit of, among others, Steven E. Trager’s two children and his mother, are limited partners of both Teebank and Jaytee.  Includes 7,478 shares held by Steven E. Trager’s spouse, Amy Trager.  Includes 511,945 shares held of record by the Trager Family Foundation, a charitable foundation organized under Section 501(c)(3) of the Internal Revenue Code.  Steven E. Trager shares voting and investment power over these

4

shares with Jean S. Trager, Shelley Trager Kusman, and Amy Trager.  Also includes 12,085 shares held in Republic’s 401(k) plan and 225 shares held by Trager Marital Trust, for which Steven E. Trager is trustee.

(2)

Includes 939,449 shares held of record by Teebank and 168,066 shares held of record by Jaytee.  With respect to Teebank and Jaytee, Steven E. Trager is (i) trustee of a trust that is co-general partner and a limited partner and (ii) co-trustee of a trust that is the other co-general partner and a limited partner of each of these limited partnerships.  Steven E. Trager shares voting authority over shares held by both Teebank and Jaytee as a member of each partnership’s voting committee.  Trusts for the benefit of, among others, Steven E. Trager’s two children and his mother are limited partners of both Teebank and Jaytee.  Also includes 1,215 shares held in Republic’s 401(k) plan and 671,583 shares held by Trager Marital Trust, for which Steven E. Trager serves as trustee.

(3)

Includes 7,165,051 shares held of record by Teebank and 750,067 shares held of record by Jaytee.  With respect to Teebank and Jaytee, Jean S. Trager is (i) co-trustee of a trust that is a co-general partner and a limited partner of each of those limited partnerships and (ii) a beneficiary of certain trusts that are limited partners of each of those limited partnerships.  Includes 511,945 shares held of record by the Trager Family Foundation, a charitable foundation organized under Section 501(c)(3) of the Internal Revenue Code.  Jean S. Trager shares voting and investment power over these shares with Steven E. Trager, Shelley Trager Kusman, and Amy Trager.

(4)

Includes 939,449 shares held of record by Teebank and 168,066 shares held of record by Jaytee.  With respect to Teebank and Jaytee, Jean S. Trager is (i) co-trustee of a trust that is a co-general partner and a limited partner of each of these limited partnerships and (ii) a beneficiary of certain trusts that are limited partners of each of those limited partnerships.

(5)

Includes 7,165,051 shares held of record by Teebank and 750,067 shares held of record by Jaytee.  A. Scott Trager is a limited partner of both Teebank and Jaytee.  A. Scott Trager shares voting authority over shares held by both Teebank and Jaytee as a member of each partnership’s voting committee.  Includes 51,697 shares held of record by a family trust of which A. Scott Trager is a co-trustee and a beneficiary.  Also includes 37,921 shares held in Republic’s 401(k) Plan.  Also includes 2,500 shares issuable within 60 days of February 21, 2020 for 2019 performance with respect to previously granted performance stock units.

(6)

Includes 939,449 shares held of record by Teebank and 168,066 shares held of record by Jaytee.  A. Scott Trager is a limited partner of both Teebank and Jaytee.  A. Scott Trager shares voting authority over shares held by both Teebank and Jaytee as a member of each partnership’s voting committee.  Includes 4,107 shares held of record by a family trust of which A. Scott Trager is a co-trustee and a beneficiary.  Also includes 1,190 shares held in Republic’s 401(k) Plan.

(7)

Includes 7,165,051 shares held of record by Teebank and 750,067 shares held of record by Jaytee.  Sheldon G. Gilman, as trustee of trusts, is a limited partner of both Teebank and Jaytee.  Sheldon G. Gilman shares voting authority over shares held by both Teebank and Jaytee as a member of each partnership’s voting committee.  Also includes 39,307 shares held by Sheldon G. Gilman’s spouse.

(8)

Includes 939,449 shares held of record by Teebank and 168,066 shares held of record by Jaytee.  Sheldon G. Gilman, as trustee of trusts, is a limited partner of both Teebank and Jaytee.  Sheldon G. Gilman shares voting authority of both Teebank and Jaytee as a member of each partnership’s voting committee.

(9)

Teebank and Jaytee are limited partnerships of which Jean S. Trager, A. Scott Trager, Trager Marital Trust, Andrew Trager-Kusman, and trusts for which each of Steven E. Trager and Sheldon G. Gilman serve as trustees are limited partners.  Steven E. Trager is (i) trustee of a revocable trust that is a co-general partner and a limited partner of each partnership and (ii) co-trustee with Jean S. Trager of a trust that is the other general partner and a limited partner of Teebank and Jaytee.  Teebank and Jaytee each have voting committees comprised of Steven E. Trager, A. Scott Trager, and Sheldon G. Gilman.  These committees direct the voting of the shares held by Teebank and Jaytee.  Teebank and Jaytee each have a total of 2 million units outstanding.  The following table provides

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information about the units of Teebank and Jaytee beneficially owned by Directors, Nominees, Officers, and 5% shareholders of Republic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Percent of Jaytee

 

Number of

 

Percent of Teebank

 

Name

    

Jaytee Units

    

Units Outstanding

    

Teebank Units

    

Units Outstanding

 

Jean S. Trager

 

20,046

(a)  

1.0

%  

20,046

(c)  

1.0

Steven E. Trager

 

1,908,751

(b)  

95.4

%  

1,755,933

(d)  

87.8

A. Scott Trager

 

5,293

 

*

%  

5,293

 

*

Andrew Trager-Kusman

 

3,232

 

*

%  

54,920

 

2.7

Sheldon G. Gilman, Trustee

 

44,050

 

2.2

%  

156,608

 

7.8

 

 

 

 

 

 

 

 

 

 


*     - Represents less than 1% of total

(a)

Includes 20,000 general partner units and 46 limited partner units held by the Jean S. Trager Trust, of which Jean S. Trager and Steven E. Trager are co-trustees. 

(b)

Includes 268,130 limited partner and 20,000 general partner units held in a revocable trust and 20,000 general partner units and 46 limited partner units held by the Jean S. Trager Trust, of which Steven E. Trager and Jean S. Trager are co-trustees.  Also includes 1,600,575 limited partner units held in trusts for family members, of which Steven E. Trager is trustee.

(c)

Includes 20,000 general partner units and 46 limited partner units held by the Jean S. Trager Trust, of which Jean S. Trager and Steven E. Trager are co-trustees.

(d)

Includes 36,905 limited partner and 20,000 general partner units held in a revocable trust and 20,000 general partner units and 46 limited partner units held by the Jean S. Trager Trust, of which Jean S. Trager and Steven E. Trager are co-trustees.  Also includes 1,562,618 limited partner units held in trusts for family members, of which Steven E. Trager is trustee.  Also includes 116,364 limited partner units held in an irrevocable trust of which Steven E. Trager’s spouse is co-trustee.

(10)

Does not include 6,667 shares issuable beyond 60 days of February 21, 2020 to Ronald F. Barnes upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(11)

Does not include 363 shares issuable beyond 60 days of February 21, 2020 to Campbell P. Brown upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(12)

Does not include 312 shares issuable beyond 60 days of February 21, 2020 to Laura M. Douglas upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(13)

Does not include 11,918 shares issuable beyond 60 days of February 21, 2020 to Craig A. Greenberg upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(14)

Does not include 2,385 shares issuable beyond 60 days of February 21, 2020 to Heather V. Howell upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(15)

Does not include 682 shares issuable beyond 60 days of February 21, 2020 to Ernest W. Marshall, Jr. upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

6

(16)

Includes 15,310 shares held jointly by W. Patrick Mulloy, II with his spouse.  Does not include 2,943 shares issuable beyond 60 days of February 21, 2020 to W. Patrick Mulloy, II upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(17)

Does not include 176 shares issuable beyond 60 days of February 21, 2020 to W. Kenneth Oyler, III upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(18)

Includes 2,045 shares held jointly by Michael T. Rust with his spouse.  Michael T. Rust shares investment and voting power over these shares.  Does not include 11,802 shares issuable beyond 60 days of February 21, 2020 to Michael T. Rust upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(19)

Includes 5,352 shares held jointly by R. Wayne Stratton with his spouse and 11,423 shares held by R. Wayne Stratton’s spouse.  R. Wayne Stratton shares investment and voting power over these shares.  Does not include 7,854 shares issuable beyond 60 days of February 21, 2020 to R. Wayne Stratton upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(20)

Includes 849 shares held jointly by R. Wayne Stratton with his spouse and 1,214 shares held by R. Wayne Stratton’s spouse.  R. Wayne Stratton shares investment and voting power over these shares.

(21)

Does not include 5,835 shares issuable beyond 60 days of February 21, 2020 to Susan Stout Tamme upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(22)

Andrew Trager-Kusman owns Jaytee and Teebank units, both individually and through various trusts, as disclosed in Footnote 9.

(23)

Includes 3,000 shares held jointly by Mark A. Vogt with his spouse.  Does not include 2,820 shares issuable beyond 60 days of February 21, 2020 to Mark A. Vogt upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(24)

Includes 3,692 shares held in Republic’s 401(k) Plan.  Also includes voting rights for 1,250 restricted shares that vest in June 2020 and 3,000 restricted shares that vest 50% in March 2023 and 50% in March 2024.  Also includes 2,000 shares issuable within 60 days of February 21, 2020 to Juan M. Montano for 2019 performance with respect to previously granted performance stock units.  Does not include 934 shares issuable beyond 60 days of February 21, 2020 to Juan M. Montano upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(25)

Includes voting rights for 3,000 restricted shares that vest 50% in March 2023 and 50% in March 2024.  Also includes 2,000 shares issuable within 60 days of February 21, 2020 to William R. Nelson for 2019 performance with respect to previously granted performance stock units.  Does not include 751 shares issuable beyond 60 days of February 21, 2020 to William R. Nelson upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(26)

Includes 3,954 shares held in Republic’s 401(k) Plan.  Also includes voting rights for 3,000 restricted shares that vest 50% in March 2023 and 50% in March 2024.  Also includes 2,500 shares issuable within 60 days of February 21, 2020 to Kevin D. Sipes for 2019 performance with respect to previously granted performance stock units.  Also includes 2,750 shares for stock options held by Kevin D. Sipes that are exercisable within 60 days.  Does not include 937 shares issuable beyond 60 days of February 21, 2020 to Kevin D. Sipes upon vesting in accordance with the terms of the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan.

(27)

Includes the shares as described above held by the Directors and NEOs, along with an additional 144,807 shares held by other executive officers.

 

7

PROPOSAL ONE: ELECTION OF DIRECTORS

Republic’s Board of Directors is comprised of one class of Directors that are elected annually.  Each Director serves a term of one (1) year until the 2021 Annual Meeting and until his or her successor is duly elected or qualified. Republic’s Bylaws provide for not less than five (5) nor more than fifteen (15) Directors. In accordance with the Company’s Bylaws, the Board of Directors has fixed the number of Directors to be elected at the 2020 Annual Meeting at fifteen (15). The Nominating Committee and the Board of Directors have nominated for election as directors: Steven E. Trager, A. Scott Trager, Andrew Trager-Kusman, Ronald F. Barnes, Campbell P. Brown, Laura M. Douglas, David P. Feaster, Craig A. Greenberg, Heather V. Howell, Ernest W. Marshall, Jr., W. Patrick Mulloy, II, W. Kenneth Oyler, III, Michael T. Rust, Susan Stout Tamme, and Mark A. Vogt.  Steven E. Trager, A. Scott Trager, Andrew Trager-Kusman, Craig A. Greenberg, Michael T. Rust, Susan Stout Tamme, and Mark A. Vogt are current members of the Board of Directors of the Company.  Steven E. Trager, A. Scott Trager, Ronald F. Barnes, Campbell P. Brown, Laura M. Douglas, David P. Feaster, Heather V. Howell, Ernest W. Marshall, Jr., W. Patrick Mulloy, II, and W. Kenneth Oyler, III are current members of the Board of Directors of the Bank.  The Director Nominees are proposed to serve on both the Company and the Bank Boards of Directors.   

Non-employee Director Nominees Ronald F. Barnes, Campbell P. Brown, Laura M. Douglas, Craig A. Greenberg, Heather V. Howell, Ernest W. Marshall, Jr., W. Patrick Mulloy, II, W. Kenneth Oyler, III, Michael T. Rust, Susan Stout Tamme, and Mark A. Vogt would collectively comprise a majority of the Board of Directors, and the Board has determined that each is an “independent director” as defined in Rule 5605(a)(2) of the NASDAQ listing standards. Director Nominee David P. Feaster, while a non-employee Director Nominee, recently retired from the Bank in 2019 and currently provides consulting services. Accordingly, David P. Feaster is not identified as an “independent director.” While the Company is a “controlled company” as defined under the NASDAQ rules and thus is entitled to an exemption from the majority independence rule, the Company has not elected this exemption for its 2020 election of directors but reserves the right to claim this exemption in the future.

Neither the Nominating Committee nor the Board of Directors has reason to believe that any nominee for director will not be available for election or to serve following election. However, if any of the Nominees should become unavailable for election, and unless authority is withheld, the holders of the proxies solicited hereby will vote for such other individual(s) as the Nominating Committee or the Board of Directors may recommend.

The following table details the indicated information for each Nominee and incumbent Director, including service as a director of the Company or its predecessors:

8

 

 

 

Director Nominees:

 

Director

Name and Principal Occupation for Past Five Years

Age

Since

 

 

 

Steven E. Trager began serving as both Chairman and CEO of Republic in 2012.  He previously served as President and CEO of Republic since 1998.  He also currently serves as Chairman and CEO of the Bank.  Mr. Trager began his career with the Bank in 1988 as General Counsel.

59

1988

 

 

 

Mr. Trager received his undergraduate degree in finance at the University of Texas at Austin.  He received his Juris Doctor degree from the University of Louisville Brandeis School of Law and engaged in the practice of law with the firm of Wyatt, Tarrant & Combs.  He has more than thirty years banking experience.  In 1994, he provided the leadership resulting in the complex merger and reorganization of the Republic group of multiple banks into a consolidated and more efficient banking structure.  He provided the leadership for the Company’s initial public offering.  He has direct experience not only in banking, but also in finance, operations, and retail management.  He also has leadership and directorate experience in multiple community service organizations.  Mr. Trager is past chairman for the Kentucky Bankers Association, the University of Louisville Board of Overseers, the 2016 Fund for the Arts Campaign and Leadership Kentucky, and is a former board member of the Federal Reserve Bank of St. Louis’ Louisville Branch and the Louisville Regional Airport Authority.  Mr. Trager currently serves on the Bellarmine University Board of Trustees.  Mr. Trager’s past recognition includes the Louisvillian of the Year in 2017, the Lincoln Foundation’s 2018 Spirit of Excellence Award, the Juvenile Diabetes Research Foundation’s Man of the Year in 2003, and recipient of the 2003 Ernst & Young Entrepreneur of the Year Award for the Southern Ohio and Kentucky region.  Based on Mr. Trager's experience as a Bank Board Director, his direct banking experience, his proven leadership skills, his education and legal background, his extensive community involvement, his vested interest in the long-term success of Republic as a material equity owner, and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should continue to serve as a Director. 

 

 

 

 

 

A. Scott Trager has served as President of Republic since 2012 and was appointed Vice Chairman of Republic in March 2017.  He previously served as Vice Chairman of Republic from 1994 to 2012.  He has served as Vice Chairman of the Bank since 2017. 

67

1990

 

 

 

Mr. Trager holds a degree in Business Administration from the University of Tennessee and has spent his entire working career in various finance and banking capacities.  He has extensive leadership experience in marketing, operations, and retail branch management.  He has extensive community board experience and broad-based community connections in the metropolitan Louisville area.  Based on Mr. Trager's experience as a Bank Board Director, his direct banking experience, his proven leadership skills, his educational background, his extensive community involvement and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should continue to serve as a Director. 

 

 

 

 

 

Andrew Trager-Kusman has served as Vice President, Managing Director of Corporate Strategies of the Bank since 2016, primarily overseeing strategic initiatives, a new profitability model, and reviewing potential acquisition opportunities.  He has served as a Director of Republic from 2019 to present.

33

2019

 

 

 

Mr. Trager-Kusman received his undergraduate degree in Finance from Indiana University. From 2012-2015, Mr. Trager-Kusman served as Portfolio Analyst with EJF Capital LLC, an alternative asset manager primarily focused on United States and global financial institutions. In his role at EJF Capital LLC, Mr. Trager-Kusman focused on TARP investments and small bank private equity funds, recapitalizations of struggling institutions, and placement of capital for growth in well-performing banks. He routinely spoke with company management and boards regarding regulatory issues and long-term strategies. Previously, he worked in the U.S. House of Representatives.   Mr. Trager-Kusman serves as a trustee for Spalding University, on the JTomorrow Louisville Board, and is part of the Leadership Louisville Bingham Fellows class of 2019.  Based on Mr. Trager-Kusman’s experience with the Bank and other entities, his leadership ability, and his specific experience, qualifications, and attributes herein disclosed, the Board has determined that he should continue to serve as a Director.  

 

 

 

 

 

Ronald F. Barnes is Partner Emeritus with MCM CPA’s & Advisors, LLP.  He was a partner with McCauley, Nicolas & Company LLC from 1980-1990 and then managing partner from 1990-2012 until it merged with MCM CPA’s & Advisors, LLP in 2013.  He continued as a partner and on the firm’s Executive Committee until he became Partner Emeritus in 2015.  Mr. Barnes is a Certified Public Accountant.  Mr. Barnes has served as a Director of the Bank since 2007.

70

N/A

 

 

 

Mr. Barnes earned a Bachelor of Science at Indiana University Southeast.  He received his CPA certificate in Indiana in 1975 and in Kentucky in 1993.  Mr. Barnes is also credentialed by the AICPA as a Personal Financial Specialist (PFS) and is designated as a Chartered Global Management Accountant (CGMA).  Mr. Barnes also served 32 years in the military and rose to the rank of Colonel in the Army Reserves where he has also served as Ambassador as appointed by the Chief of the Army Reserves, Washington, D.C.  He has held membership in numerous professional, business, civic and social organizations, including directorships on the boards of the YMCA, Madison Chamber of Commerce, Bridgepoint Goodwill Industries, Community Foundation of Southern Indiana, Leadership Southern Indiana, Boy Scouts of America (Lincoln Heritage Council) and the Venture Club of Louisville.  Based on Mr. Barnes’ experience as a Bank Board Director, his accounting background, his certification as a Certified Public Accountant, his leadership and directorate experience, and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

9

 

 

 

 

Director Nominees:

 

Director

Name and Principal Occupation for Past Five Years (continued)

Age

Since

 

 

 

Campbell P. Brown has been employed by Brown-Forman Corporation since 1994 and serves as President and Managing Director of Old Forester.  Mr. Brown has served as a Director of the Bank since 2008.

52

N/A

 

 

 

Mr. Brown earned degrees from Rollins College and the University of Miami.  He spent his early years developing the spirits portfolio of the Brown-Forman Corporation in India, the Philippines and Turkey.  Subsequently, Mr. Brown led Brown-Forman’s wine and spirits portfolio in Canada and the Midwest region of the United States.  He also held positions as the Southern Comfort U.S. Brand Manager, Jack Daniel’s U.S. Brand Manager, and as Director, Southern Comfort Americas. In 2007, Mr. Brown founded the Brown-Forman Family Shareholders Committee.  Mr. Brown has been a director of Brown-Forman’s board since 2016.  He has also served on the Board of Trustees at Rollins College since 2019.  Based on Mr. Brown’s experience as a Bank board director, his managerial and business background, and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

 

 

 

Laura M. Douglas was employed for 14 years by LG&E and KU Energy LLC and retired as of January 2017.  She previously served as Vice President of Corporate Responsibility & Community Affairs of LG&E and KU Energy LLC and as Director of Communications at LG&E.  She was appointed as interim co-executive director of Transit Authority of River City in 2020.  Ms. Douglas has served as a Director of the Bank since 2004.

70

N/A

 

 

 

Ms. Douglas earned a Bachelor of Arts degree in Political Science from the University of Louisville and a Juris Doctor degree from the University of Louisville Brandeis School of Law.  Prior to her employment with LG&E, she held various positions as legal counsel to the Louisville Metropolitan Sewer District and General Counsel and Secretary for the Louisville Water Company.  She also held the position of Secretary of the Public Protection and Regulation Cabinet of the Commonwealth of Kentucky for several years.  She has served many professional organizations including the Kentucky Bar Association, the American Bar Association, the American Bar Foundation, the Jefferson County Women Lawyers Association, the Law Alumni Council for the Brandeis School of Law, and the Rotary Club of Louisville.   Ms. Douglas also serves or has served on numerous boards and commissions, including serving as Chair of the Board of Directors for the Muhammad Ali Center, Chair of the Citizens Commission on Police Accountability, and the Kentucky State University Board of Regents. Based on Ms. Douglas’ experience as a Bank Board Director, her education and legal experience, her professional affiliations and community and civic involvement and her specific experience, qualifications and attributes herein disclosed, the Board has determined that she should serve as a Director.

 

 

 

 

 

David P. Feaster is retired and was previously employed by the Bank serving as its Florida Market President from 2016-2019.  Prior to that, Mr. Feaster was the CEO, President and Director of Cornerstone Community Bank beginning in January 2009 until Cornerstone merged with Republic Bank. Since 2019, Mr. Feaster has served as a consultant to the Bank.  He has served as a Director of the Bank since September 2019.

66

N/A

 

 

 

Mr. Feaster has 43 years of banking experience and was a founder, CEO, and President of Signature Bank in St. Petersburg, Florida which eventually merged into Whitney National Bank.  Mr. Feaster became Area President of Whitney National Bank after the merger.  Prior to his association with Signature Bank, Mr. Feaster was an Executive at several banks in Florida including Sun Bank, Bank of America and he helped open Northern Trust Bank in the Tampa Bay area serving in a regional capacity.  He has been very active in civic affairs. He serves on the board of the Florida Bankers Association, was Chair of the St. Petersburg Area Chamber of Commerce, Chair of All Children’s Hospital Board, and a member of the St. Petersburg College Banking School Board.  Mr. Feaster graduated with honors from the University of Florida with a degree in Business Administration.  Based on Mr. Feaster’s experience as a Bank board director, his extensive banking experience, his significant community involvement and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

 

 

 

Craig A. Greenberg has served as President of 21c Museum Hotels since 2011 and also as CEO since September 2017.  He has served in various roles with 21c since its founding in 2007.  Mr. Greenberg also served as Counsel with the general legal services law firm of Frost Brown Todd LLC in Louisville, Kentucky until 2017.  He served as a Director of the Bank from 2006 to 2008 and has served as a Director of Republic from 2008 to present.

46

2008

 

 

 

Mr. Greenberg is a graduate of the University of Michigan, where he served as Student Government President.  He is a Harvard Law School cum laude graduate.  He has extensive experience in securing and deploying federal, state, and local tax credits and other incentives in connection with the development of urban revitalization projects across the country.  He has direct experience in commercial finance, capital raising, transaction structuring, and the leadership of multi-million-dollar developments.  He is active in local civic and charitable organizations.  Based on Craig A. Greenberg’s experience as a bank board director, his commercial finance and development knowledge, his educational background, including legal knowledge and skills, his extensive community involvement and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should continue to serve as a Director.

 

 

 

10

 

 

 

 

Director Nominees:

 

Director

Name and Principal Occupation for Past Five Years (continued)

Age

Since

 

 

 

Heather V. Howell has been employed by Brown-Forman Corporation since May 2015 and is currently the Global Director of Trademark & Innovation for Jack Daniel’s Brands.  She was Chief Tea Officer of Rooibee Red Tea from June 2010 to May 2015.  She has served as a Director of the Bank since 2015.

47

N/A

 

 

 

Ms. Howell is a graduate of Eastern Kentucky University and received her Executive MBA from Bellarmine University.  Ms. Howell previously served as CEO for Rooibee Red Tea.  In 2014, Ms. Howell helped launch Rooibee Roo, a line of ready-to-drink tea with less calories and sugar for children, which was the first brand extension for Rooibee Red Tea.  She has been recognized numerous times on a local, regional and national scale including the 2013 Ernst & Young E.D.G.E. award as an emerging entrepreneur.  In addition, Business First of Louisville honored Ms. Howell with the 2014 Enterprising Woman to Watch award and named her a finalist in 2013 for the Business Leader of the Year award.  In addition, Ms. Howell serves on the greater Louisville Project Board of Directors.  Based on Ms. Howell’s experience as a Bank Board Director, her education, her business and entrepreneurial experience, and her specific experience, qualifications and attributes herein disclosed, the Board has determined that she should serve as a Director.

 

 

 

 

 

Ernest W. Marshall, Jr. has been employed as an Executive Vice President and Chief Human Resources Officer at Eaton Corporation located in Cleveland, Ohio since July 2018.  He was Vice President of Human Resources of GE Aviation at the General Electric Company (“GE”) from August 2013 to April 2018.  Mr. Marshall has served as a Director of the Bank since 2017.

51

N/A

 

 

 

Mr. Marshall earned a Bachelor’s degree with a dual major in Accounting and Business Administration from Bellarmine University in Louisville, Kentucky.  During his tenure at Bellarmine, he spent two semesters abroad at New College in Oxford, England.  He also earned his MBA/J.D. from Indiana University – Bloomington.  Prior to his current position at Eaton Corporation, he was employed by GE and its affiliates and divisions in various capacities.  Mr. Marshall has been active in Louisville and surrounding communities.  He served on the boards of directors of Bellarmine University, Kindway and the Cincinnati Art Museum. He was selected by Black MBA magazine in its ’50 under 50’ feature and by Network Journal in its ‘Top 40 under 40’ feature.  Based on Mr. Marshall’s experience as a Bank Board Director, his business experience and accomplishments, his extensive civic and community involvement and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

 

 

 

W. Patrick Mulloy, II has been Of Counsel with the law firm of Wyatt, Tarrant & Combs since 2018.  He is also an Executive in Residence with Chrysalis Ventures, a venture capital company in Louisville, Kentucky as well as the Managing Member of Commodore Capital LLC.  From 2006 to 2018, he served as Chairman and CEO of Elmcroft Senior Living, a national provider of senior housing services, headquartered in Louisville, Kentucky.  He has served as a Director of the Bank since 2012.

66

N/A

 

 

 

Mr. Mulloy graduated summa cum laude from Vanderbilt University with a Bachelor of Arts degree and an interdisciplinary major in history, economics and philosophy.  He received his Juris Doctor degree from the Vanderbilt University School of Law and engaged in the practice of law in a Louisville based law firm from 1978-1992 and again in 1994-1996 in the regional law firm of Greenebaum, Doll & McDonald.  From 1992-1994, he served as the Secretary of Finance to the Governor of Kentucky.  Prior to his position as CEO of Elmcroft Senior Living, Mr. Mulloy also served as President and CEO of two other senior housing companies, LifeTrust America, Inc, based in Nashville, Tennessee and Atria, Inc. in Louisville, Kentucky.  Mr. Mulloy serves as a member of the Board of Trustees of Bellarmine University, a member of the Board of Advisors of Vanderbilt University School of Law and is the Vice Chair of University of Louisville Health, Inc.  Based on Mr. Mulloy’s experience as a Bank Board Director, his managerial and business background, his educational and legal background and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

 

 

 

W. Kenneth Oyler, III serves as CEO of OPM Services, Inc., a financial-services and investment firm.  He was Managing Partner of OPM from 1992 to 2015 and President and CEO of Greater Louisville, Inc. (“GLI”), the Louisville, Kentucky Metro Chamber of Commerce from 2014 to 2020.  He serves as Director for Alliance Cost Containment, LLC and Simpak International, LLC.  He has served as a Director of the Bank since 2008.

61

N/A

 

 

 

Mr. Oyler received a Bachelor of Science in Commerce (Marketing) and a Master of Business Administration (MBA) from the University of Louisville.  Prior to his position at GLI, he served as CEO of OPM Services, Inc.  He also served as the Cash Management Officer of Citizens Fidelity (now PNC) Bank and as Treasurer, VP of Finance and CFO of Henry Vogt Machine Co.  In 1997, Mr. Oyler co-founded the broadband internet provider, High Speed Access Corp. Mr. Oyler has founded or co-founded nineteen businesses ranging in industries from financial services, real estate, internet access, manufacturing, railway, equipment leasing and research.  In 2016, he was inducted into the Kentucky Entrepreneur Hall of Fame.  Mr. Oyler has extensive experience in leadership roles and directorships with various civic and community organizations, including Leadership Louisville, Metro YMCA, University of Louisville, Metro United Way, Kentuckiana Works, the Metro Police Foundation, and Downtown Development Corp. Based on Mr. Oyler’s experience as a Bank Board Director, his education, his entrepreneurial and business background, his significant civic and community involvement, and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should serve as a Director.

 

 

 

11

 

 

 

Director Nominees:

 

Director

Name and Principal Occupation for Past Five Years (continued)

Age

Since

 

 

 

Michael T. Rust has served as President of Kentucky Hospital Association (“KHA”), located in Louisville, Kentucky, since 1996. He served as a Director of the Bank from 2001 to 2007 and has served as a Director of Republic from 2007 to present.    

68

2007

 

 

 

Mr. Rust graduated from Glenville State College in West Virginia where he received his undergraduate degree in Business Administration.  He received a Master’s degree in Public Health from the University of Tennessee.  He serves as a Community Based Faculty Member at the University of Kentucky.  In his role as President of the KHA, he has extensive management and regulatory experience.  He also has extensive advocacy experience in Washington, D.C. and Frankfort, Kentucky.  He is a proven recruiter and organizer and has significant community involvement experience.  He has leadership and directorate experience in multiple community service organizations.  As a member of the Audit Committee, he can read and understand basic financial statements, such as a balance sheet, income statement, and cash flow statement. Based on Mr. Rust's experience as a Bank Board Director, his managerial and regulatory compliance background, his business and educational background, his extensive community involvement, including governmental affairs and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should continue to serve as a Director. 

 

 

 

 

 

Susan Stout Tamme was employed by Baptist Healthcare System, Inc. and is retired as of April 2014. In July of 2013, she was appointed as President of Baptist Health Collaborations.  She was formerly in the position of President of the Louisville Market from 2011 to 2013 and she was President and CEO of Baptist Hospital East from 1995 to 2011 and Vice President of Baptist Healthcare System, Inc.  She served as a Director of the Bank from 1999 to 2003 and has served as a Director of Republic from 2003 to present. 

68

2003

 

 

 

Ms. Tamme received an Associate degree in nursing from Eastern Kentucky University, a Bachelor of Science degree in nursing from the University of Louisville, and a Master of Science degree in Health Systems Administration, also from the University of Louisville.  She has extensive experience in administration, specifically in broad-based multi-hospital systems and is proficient in working with department heads, clinical staff, and governing regulatory bodies.  She has leadership and directorate experience in multiple community service organizations and has received multiple community service awards for excellence and achievement.  Based on Ms. Tamme’s experience as a Bank Board Director, her managerial and administrative background, regulatory compliance experience, her extensive community involvement, and her specific experience, qualifications and attributes herein disclosed, the Board has determined that she should continue to serve as a Director. 

 

 

 

 

 

Mark A. Vogt is an accomplished and insightful leader with over 30 years of experience. He has served as the CEO of Galen College of Nursing since 2004, leading one of the largest nursing colleges in the country with campuses and programs in Louisville, Kentucky; Hazard, Kentucky; Cincinnati, Ohio; San Antonio, Texas; Tampa, Florida; and online.    He served as a Director of the Bank from 2012 to 2016 and has served as a Director of Republic since 2016. 

51

2016

 

 

 

Prior to joining Galen, Mr. Vogt was Chief Operating Officer of a private equity investment group specializing in the education sector.  He served as Senior Vice President and Chief Financial Officer of Republic from 1995 to 2000.  As CFO, he provided leadership in accounting, finance, treasury, and various operational functions.  During his tenure, he was significantly involved in the Company's initial public offering and the sale and acquisition of several business units.  Previously, he was employed for five years by the public accounting firm of Deloitte & Touche LLP where he provided accounting and consulting services to a wide array of financial service clients.  In addition, he has leadership and directorate experience in several national, civic and community organizations.  Mr. Vogt meets NASDAQ’s financial knowledge and sophistication requirements and qualifies as an “audit committee financial expert” under SEC rules.  Based on Mr. Vogt's experience as a Bank Board Director, his managerial and accounting background, his education and certification as a Certified Public Accountant, his business background, and his specific experience, qualifications and attributes herein disclosed, the Board has determined that he should continue to serve as a Director.   

 

 

 

Except for Mr. Brown’s service as a member of the Board of Directors of Brown-Forman Corporation (NYSE), none of the persons placed in nomination currently holds or has in the past five (5) years held any directorships in any other company with a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 or subject to the requirements of Section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940, as amended.

Republic’s Directors were elected at the most recent Annual Meeting held on April 24, 2019, to a one (1) year term. The Company’s executive officers are recommended by the Chairman and CEO, Steven E. Trager, and are subsequently approved by the Compensation Committee and formally approved by the Board of Directors.  Executive Officers hold office at the discretion of the Board of Directors.  All but two (2) of the Company Directors attended the 2019 Annual Meeting of Shareholders.

Steven E. Trager and A. Scott Trager are cousins.  Steven E. Trager is Andrew Trager-Kusman’s uncle.

The Board of Directors recommends that shareholders vote “FOR” all of the proposed Board of Director Nominees named in this proxy statement.

 

12

The Board of Directors and its Committees

The Board

Each Director is expected to devote sufficient time, energy, and attention to ensure diligent performance of his or her duties and to attend all meetings of the shareholders, the Board, and the Board committees to which they are appointed. The Board of Directors held six (6) regularly scheduled board meetings in 2019. Each of the Directors attended at least 75% of the total number of meetings of the Board of Directors and the meetings held by committees on which such directors served during their respective terms of service in 2019.  Also, some selected Company Directors were paid a committee fee for attending certain Bank committee meetings. Directors that are also employees of the Company or the Bank are not paid for attending board or committee meetings.

The Company believes it is both prudent and expedient and in the best interest of shareholders that the Chairman and CEO positions are combined and that such combination has no negative effect on the operation and direction of the Company.  The Company will continue to evaluate whether or not splitting the positions between two persons will be a viable preferred alternative in the future. This current structure, combining the positions, allows the independent Directors to concentrate on the oversight of the Company without the added burden of also addressing what are normally less material day-to-day managerial concerns.  The Company does not have a lead independent Director, but the independent Directors meet privately following each regularly scheduled board meeting and have the authority to request to speak with any officer or other employee of the Company or the Bank.  They also have direct access to and the authority to retain, at the Company’s expense, any outside auditors, accountants or attorneys at their discretion.

While the Company’s Board of Directors is ultimately responsible for risk oversight, selected committees of the Company’s Board and the Bank’s Board play an important role in assisting the Company’s Board of Directors in fulfilling its oversight responsibilities.  The Company’s Board of Directors analyzes enterprise risk at its regularly scheduled board meetings and more specifically as described below through the Company’s Audit Committee, the Company’s Compensation Committee, the Bank’s Compliance and Community Reinvestment Committee, and the Bank’s IT Steering Committee.  The Company’s Board of Directors and the Bank’s Board of Directors receive regular and timely reports from management and the chairpersons of these committees, as appropriate.  More specifically, the Audit Committee is responsible for oversight of the Internal Audit function and regularly reviews risks associated with insurance, credit, debt, financial, accounting, legal, operational, reputational, compliance, third-party, information technology security, and other risk matters involving the Company and the Bank.  The Audit Committee is also responsible for the oversight of the Third-Party Risk Management Program of the Company and the Bank.  The Third- Party Risk Management Steering Committee, chaired by the Bank’s Chief Risk Officer, reviews and approves management’s third-party due diligence completed by the Company’s management responsible for third-party relationships with the Company and the Bank.  Reports concerning the Third-Party Risk Management Program and any significant third-party arrangements are provided through the Audit Committee on a regular basis to the Company’s and the Bank’s Board of Directors.  The Company’s Audit Committee also reviews Enterprise Risk Management reports and Business Continuity Planning reports.

The Company’s Compensation Committee considers risks related to succession planning and approves the Company’s Succession Plan. The Compensation Committee also considers risks related to the attraction and retention of critical employees and risks relating to the Company’s incentive compensation programs and contractual employee arrangements.  In addition, the Compensation Committee reviews compensation and benefit plans affecting employees generally, in addition to those applicable to NEOs.

The Bank’s Compliance and Community Reinvestment Committee oversees and monitors the Bank’s Compliance Management Program and is responsible for reviewing the Compliance Policy of the Bank.  The Bank’s Compliance and Community Reinvestment Committee also monitors the consumer compliance and community reinvestment activities of the Bank, including compliance with all applicable laws and regulations with respect to compliance and community reinvestment, and compliance with all related orders and agreements entered into between the Bank or the Company and their respective Board of Directors with any regulatory supervisory agency.  This Committee also monitors and oversees the activities of the Bank’s Compliance Department including Community Reinvestment Act requirements and Bank Secrecy Act requirements. 

The Company’s Board and the Bank’s Board also receive regular and timely reports from the IT Steering Committee.  Management, Company Directors, and Bank Directors serve on the IT Steering Committee.  The IT

13

Steering Committee assists the Bank’s Board of Directors with monitoring the Bank’s IT plans, policies, and major expenditures, in addition to compliance with information security and technology risk management requirements.  Reports from the Information Security Officer about internal and external threats and cyber risks that could result in unauthorized disclosure, misuse, alteration, or destruction of data or information systems are reviewed by the Bank’s IT Steering Committee.

Committees of the Company’s Board of Directors

The Company’s Board has three (3) standing committees to facilitate and assist the Board in the execution of its responsibilities. The Board committees consist of the Audit Committee, the Compensation Committee, and the Nominating Committee. In accordance with NASDAQ listing standards, the Board determines that each of the Board committee members meets the definition of “independent director” and satisfies the NASDAQ listing standards for service on the Board committees on which each serves.  In making these determinations, the Board considers all relevant factors.

Charters for each Board committee, as well as the Code of Conduct and Ethics Policy, are available on the Company’s website at www.republicbank.com.  The information contained on Republic’s website is not incorporated by reference in, or considered to be a part of, this proxy statement.

The table below details current membership for each of the standing Board committees:

 

 

 

 

 

 

Audit Committee

 

Compensation Committee

 

Nominating Committee

 

Craig A. Greenberg

 

Craig A. Greenberg*

 

Craig A. Greenberg*

 

Michael T. Rust

 

Susan Stout Tamme

 

Susan Stout Tamme

 

R. Wayne Stratton, CPA*

 

Mark A. Vogt

 

Mark A. Vogt

 


*Denotes Committee Chair

The Audit Committee held eight (8) meetings during 2019. The Company’s Board of Directors evaluated the credentials of and designated and appointed R. Wayne Stratton, CPA, as Chair of the Audit Committee and as the “audit committee financial expert” as required by Section 407 of the Sarbanes-Oxley Act of 2002.  Following Mr. Stratton’s retirement as a Director at the Annual Meeting, and assuming Mr. Vogt’s election, Mr. Vogt is expected to be appointed to the Audit Committee and serve as its “audit committee financial expert.”

The Company’s Board of Directors adopted a written charter for the Audit Committee, which sets out the functions and responsibilities of the Audit Committee.  As described in the charter, the Audit Committee, among other things, is directly responsible for the selection, oversight and compensation of the Company’s independent registered public accounting firm.  It is also responsible for the oversight of the accounting and financial reporting processes of the Company, audits of the financial statements and pre-approval of any non-audit services of the independent registered public accounting firm. The Audit Committee is responsible for making recommendations to the Company’s Board of Directors with respect to: the review and scope of audit arrangements; the independent registered public accounting firm’s suggestions for strengthening internal accounting controls; matters of concern to the Audit Committee, the independent registered public accounting firm, or management relating to the Company’s consolidated financial statements or other results of the annual audit; the review of internal accounting procedures and controls with the Company’s financial and accounting staff; the review of the activities and recommendations of the Internal Auditor; and the review of the consolidated financial statements and other financial information published by the Company. Auditors for the Company are required to report directly to the Audit Committee. The Audit Committee is required to pre-approve all audit and permitted non-audit services provided by the Company’s independent registered public accounting firm.

The Audit Committee has recommended, and the Board of Directors has approved and adopted, a Code of Conduct and Ethics Policy that applies to all Directors, Officers, and employees of the Company and the Bank. The Company intends to post amendments to, or waivers from, its Code of Conduct and Ethics Policy, if any, on its website. 

The Compensation Committee held four (4) meetings during 2019. The Compensation Committee makes recommendations to the Company’s Board of Directors as to the amount and form of NEO compensation and stock incentive awards, if any. The Compensation Committee also reviews and approves the Company’s and the Bank’s Management Succession Plan on an annual basis. The Compensation Committee, in addition to other Bank committees,

14

has reviewed the Company’s incentive plans in accordance with the recommendations of the Consumer Financial Protection Bureau’s Guidance issued on November 28, 2016, Bulletin 2016-03.  The Compensation Committee, the Board, the Company, and management did not utilize the services of an independent compensation consultant in 2019, nor do any of them have any current arrangements with any compensation advisors or consultants. The CHAIR/CEO makes recommendations to the Compensation Committee with respect to all NEO compensation, including his own.

The Nominating Committee held one (1) meeting in 2019. In 2020, the Nominating Committee and the Company’s Board of Directors approved the director nominees to be considered for election at the Annual Meeting.  As discussed above, all Director Nominees for 2020 served as Company and/or Bank Directors during 2019. No candidates for Director Nominees for the 2020 Annual Meeting election of Directors were submitted to the Nominating Committee or the Company’s Board of Directors for consideration by any non-management shareholder.

The Nominating Committee will consider candidates for director nominees at the 2021 Annual Meeting properly put forth by shareholders. Shareholders should submit such nominations, if any, to the Company’s Secretary, at 601 West Market Street, Louisville, Kentucky 40202, along with the information required in the Bylaws, no later than January 23, 2021.  The Nominating Committee will consider candidates who have a strong record of community leadership in the Company’s and the Bank’s markets.  Candidates should possess a strong record of achievement in both business and civic endeavors, possess strong ethics, and display leadership qualities including the ability to analyze and interpret bank financial statements and regulatory requirements, the competence to evaluate endeavors of an entrepreneurial nature and be able to attract new Company banking relationships.  Board diversity is also considered, although the Company does not have a formal diversity policy.  Recommendations of the “Trager Family Members” (generally defined to include Steven E. Trager and Jean S. Trager and their descendants, companies, partnerships, or trusts in which they are majority owners or beneficiaries) as well as prior service and performance as a Director will also be strongly considered.  The Company does not pay a third-party to assist in identifying and evaluating Director Nominees, but the Company does not preclude the potential for utilizing such services, if needed, as may be determined at the discretion of the Nominating Committee.  No candidate that was recommended by a beneficial owner of more than five percent (5%) of the Company’s voting Common Stock was rejected.  The “Trager Family Members” recommended all Director Nominees submitted to the Nominating Committee and the Company’s Board of Directors.  No other shareholders submitted a recommendation for a Director Nominee for 2020.

All but two of the Company’s Directors attended the 2019 Annual Meeting.  All Company Directors and Director Nominees are requested to attend and are expected to attend the 2020 Annual Meeting.

 

Hedging Transactions Prohibited

 

The Company has an insider trading policy that, among other things, prohibits all of its employees (including officers) and directors from engaging in hedging transactions in the Company’s shares.  Hedging transactions can be accomplished through a number of ways, including through the use of financial instruments such as prepaid variable forward contracts, equity swaps, collars and exchange funds.  Such transactions may permit a director, officer or employee to continue to own Company securities obtained through employee benefit plans or otherwise, but without the full risks and rewards of ownership.  When that occurs, the director, officer or employee may no longer have the same objectives as the Company’s other shareholders.  Therefore, directors, officers and employees are prohibited from engaging in any hedging transactions.

15

 

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee, which is comprised of three independent Company directors, is responsible for approving the compensation of the Company’s NEOs and NEO compensation policies. The Compensation Committee also recommends the appointment of the Company’s and the Bank’s other EOs.  The Compensation Committee’s determinations are routinely subsequently approved by the Company’s and the Bank’s Board of Directors without change. The Company does not separately compensate its NEOs, all of whom are EOs of the Company’s sole banking subsidiary, the Bank, and are compensated directly by the Bank for their services. Following is a list of the Company’s NEOs along with other pertinent information:

 

 

 

 

 

 

 

Named Executive
Officer

Age

Company Office

Bank Office

Immediate Supervising
Executive

Area of Management

Proposer of Compensation
Package (1)

Steven E. Trager (CHAIR/CEO)

59

Chairman and Chief Executive Officer

Chairman and Chief Executive Officer

N/A

Company and Bank

CHAIR/CEO

A. Scott Trager (PRES)

67

President and Vice Chairman

Vice Chairman

Chief Executive Officer

Company and Bank

CHAIR/CEO

Kevin D. Sipes (CFO)

48

Executive Vice President and Chief Financial Officer

Executive Vice President and Chief Financial Officer

Chief Executive Officer

Company and Bank

CHAIR/CEO

William R. Nelson (PRES/RPG)

56

N/A

President of Republic Processing Group

Chief Executive Officer

Republic Processing Group

CHAIR/CEO

Juan M. Montano (EVP/CMBO)

50

N/A

Executive Vice President and Chief Mortgage Banking Officer

Chief Financial Officer

Core Bank, Warehouse Lending Segment, and Mortgage Banking Operations

CFO


N/A–Not Applicable

(1)

All NEO compensation packages are subject to the discretion of the CHAIR/CEO and approval of the Compensation Committee.

In deciding to generally continue with the Company’s existing compensation practices, the Compensation Committee considered that holders of approximately 99% of the votes cast on an advisory basis at the Company’s 2019 Annual Meeting of Shareholders approved the compensation of the Company’s NEOs.  Shareholders will have the opportunity to cast their advisory vote on executive compensation at the 2021 Annual Meeting of Shareholders.  The Company’s current policy is to hold this advisory vote every two years.

Objectives of the Company’s Compensation Program.  The purpose of the Company’s Compensation Program is to establish and maintain suitable financial compensation and financial rewards for job performance that principally focus on the degree to which the Company’s profit objectives, as outlined in the Company’s budget, have been met or substantially met.  Other goals are assigned and attributed to certain NEOs in the primary areas of loan and deposit growth, loan loss control, risk management, regulatory control, customer service, product development, and operations.

Gross operating profit (“GOP”) for the Company and the Bank remains the central and most important metric in evaluating and determining most NEO compensation.  GOP is defined as “income before income tax expense” in accordance with generally accepted accounting principles (“GAAP”) adjusted for any extraordinary income or other non-recurring items as determined by the CHAIR/CEO.  “Total Company GOP” as used herein includes the GOP of the Republic Processing Group (“RPG”) business operations, while “Core Bank GOP” is the Company’s GOP excluding the RPG business operations.  As described below, the PRES/RPG is evaluated based on the GOP of his individual operating unit.  Base salary and incentive compensation awards are discussed in more detail below.  With respect to the NEOs, the Compensation Committee approves goals other than profit objectives to provide incentives for the NEOs to perform in the best interests of the Company and its shareholders and also to provide additional metrics against which the NEOs’ total performance and contributions can be evaluated. 

16

The Company’s Bonus Incentive Compensation Program, described below, is flexible in design and considers factors beyond the control of any NEO in determining the amount of compensation to be paid to a particular NEO in any given year.  If the applicable GOP or non-GOP related goals are not fully achieved, then a percentage of a potential incentive payout may be awarded based on intervening factors, such as economic factors, regulatory changes impacting profit objectives, or management decisions that may impact current profitability, normally made in return for the potential for greater long-term profitability.  Management decisions may include such things as technology upgrades, by way of example, or other similar management actions that were not evident at the time the Company’s budget was approved by its Board of Directors. 

Compensation Elements.  The Company’s Compensation Program has four (4) principal elements: Base Salary Compensation Program, Bonus Incentive Compensation Program, Stock Incentive Program, and Non-Employee Director and Key Employee Deferred Compensation Plan.  The Base Salary Compensation Program and the Company’s Bonus Incentive Compensation Program are annual programs.  The Stock Incentive Program is not typically an annual program, but stock incentives may be awarded at any time during the year to some or all Company NEOs, subject to the recommendation of the CHAIR/CEO and the approval of the Compensation Committee and the Board of Directors.  For a description of the Non-Employee Director and Key Employee Deferred Compensation Plan, see the accompanying description in the “Nonqualified Deferred Compensation” table herein.

In addition to the four elements listed above, some NEOs, based on their respective participation, may be included in the Company’s Acquisition Bonus Plan. The Company’s Acquisition Bonus Plan provides for a bonus payout for the achievement of profit objectives based solely on the profitability of the Company’s acquisitions, as may be applicable. 

NEOs also participate in Company-wide employee benefit plans and typically are rewarded, as part of their base compensation, additional selected customary business-related perquisites such as, by way of example, car allowances, and country club memberships.

Purpose of the Company’s Compensation Elements.  The primary purpose of the Base Salary Compensation Program component of the Company’s Compensation Program is to provide base compensation for ordinary living expenses.  The Company wants to provide its NEOs with a Base Salary that supports a reasonable lifestyle that is comparable to their high and visible standing in the community, one that supports the demands from the community given that standing and their community visibility, and one that also provides reasonable compensation for the performance of their duties and responsibilities directly associated with their NEO status. 

Bonus Incentive Compensation Program goals, in terms of both incentive to be paid and GOP profit goals, are set at the beginning of the Company’s fiscal year (except for the PRES/RPG whose goals are set at mid-fiscal year) by the Compensation Committee and are used to provide the NEOs and EOs with incentives to improve both short-term and long-term Company performance.  Stock Incentive Program compensation awards are also granted from time to time to provide the NEOs and EOs with incentives to maximize the Company’s GOP, as well as to provide retention incentives.  Similarly, matching contributions made for NEOs and EOs pursuant to the Non-Employee Director and Key Employee Deferred Compensation Plan are designed to provide retention incentives.  Acquisition Bonus Plan awards are granted to incentivize NEOs, EOs, and other Company associates to maximize Company earnings and to implement target integration components relating to acquisitions, such as timely and accurate system conversions, in order to maximize operational efficiencies associated with acquisitions.

Establishment of Compensation Levels.  The Company’s compensation elements are designed to be generally competitive with similar employment opportunities or positions in similarly sized companies in the metropolitan Louisville, Kentucky area.  The Compensation Committee, however, has not historically relied on benchmarking to determine its compensation elements; rather, the Compensation Committee has given strong consideration to, and has not historically deviated from, the recommendations of the CHAIR/CEO, whose recommendations are based upon his individual judgment.  The Compensation Committee annually reviews various peer data to determine if compensation levels are within reasonable ranges as compared to those benchmarks.  In 2019, the Compensation Committee made no additional compensation adjustments based on the various peer data reviewed.  The Compensation Committee has not previously engaged a third-party executive compensation consultant.

The CHAIR/CEO makes specific executive compensation recommendations to the Compensation Committee on all NEO compensation elements, including his own. The CHAIR/CEO will recommend his own compensation,

17

which, if reasonable in the subjective judgment of the Compensation Committee, is normally and historically accepted and approved by the Compensation Committee and ultimately the Board of Directors without modification.  If the Company’s financial performance is deemed acceptable in the view of the CHAIR/CEO, regardless of whether or not the Company’s GOP goals are met, annual increases to Base Salary are typically, but not always, granted in response to generally recognized cost of living factors and as a reward for acceptable performance. While the Compensation Committee considers cost of living adjustments when evaluating Base Salary, such adjustments are not automatic, but are also dependent on satisfactory earnings and other performance factors.  The Compensation Committee does not apply any particular formula or measurement in making these determinations.  The Compensation Committee used its collective judgment and considered the recommendations of the CHAIR/CEO in determining Base Salary levels for 2019 and 2020.  Going forward, the Compensation Committee will continue to make its determinations by using its collective judgment and by considering the recommendations of the CHAIR/CEO.  It will continue not to apply any particular formula or measurement regarding Base Salary, but the degree to which the Company’s GOP budget goals are attained remains a primary consideration in all compensation decisions.

The Compensation Committee or the CHAIR/CEO is authorized to make adjustments in the terms and conditions of, and the criteria included in, the Bonus Incentive Compensation Program in recognition of unusual or non‑recurring events, including acquisitions and dispositions of businesses and assets affecting the Company, or the financial statements of the Company, or in response to changes in applicable laws, regulations, accounting principles, tax rates, and regulations or business conditions or in view of the Compensation Committee’s or CHAIR/CEO’s assessment of the business strategy of the Company, economic and business conditions, personal performance of a particular NEO, and any other circumstances deemed relevant.

As previously stated, the compensation of the NEOs is principally recommended by the CHAIR/CEO with consideration of the recommendations of the NEO’s immediate supervising executive.  These recommendations, if reasonable in the subjective judgment of the Compensation Committee, are also normally and typically accepted and approved by the Compensation Committee and ultimately the Board of Directors without modification.  All NEO base salary and incentive compensation is approved by the Board of Directors upon recommendation by the Compensation Committee. 

The Company’s Bonus Incentive Compensation Program.  The Bonus Incentive Compensation Program is designed to reward those individuals who contribute through their own performance and their influence on others to achieve and exceed the Company’s financial goals, and to a lesser extent, other goals that target performance in areas required to run a successful banking operation.

The incentive bonus compensation potential for the CHAIR/CEO and the CFO is tied to the Total Company GOP.  The incentive bonus compensation potential of the PRES is tied to the Core Bank GOP.  The Total Company GOP and Core Bank GOP objectives at the “Entry Level” for 2019 were $104.6 million and $70.1 million, respectively.  The Total Company GOP and Core Bank GOP objectives at the “Maximum Level” for 2019 were $110.6 million and $74.3 million, respectively. 

The RPG business operation’s GOP budgeted “Entry Level” objective for the 2019 measurement period was $28.5 million, with the “Maximum Level” set at $35.5 million.  Unlike other NEOs, whose goals are based on the Company’s fiscal year of January 1 through December 31, for 2019 the PRES/RPG had goals based on RPG’s seasonally-based measurement period from June 1, 2018 through May 31, 2019. 

The incentive bonus compensation program for the EVP/CMBO consisted of two separate components for the overall maximum incentive compensation potential for 2019.  The first component was based upon the Company’s Warehouse Lending segment’s attainment of various levels of GOP, with a minimum bonus of $25,000 for Warehouse Lending GOP up to $12.0 million and a sliding scale upward in $25,000 increments per additional $1.0 million of GOP up to a maximum bonus of $175,000 for GOP of $17.0 million and above.  The second component focused on the

Company’s mortgage loan production, with the actual bonus awarded upon whichever calculation provided the higher bonus award to the EVP/CMBO.  One potential bonus calculation was based on overall Company mortgage loan production and the second potential bonus calculation was based on the mortgage loan production of mortgage loan officers (the “MLO Production”) reporting to the EVP/CMBO and his direct reports, i.e., excluding from the overall Company mortgage loan production any revenue generated by the banking centers and private banking group.  With respect to the overall Company mortgage loan production, the “Entry Level” objective was $600.0 million with a bonus potential of $50,000, a mid-level objective of $700.0 million with a bonus potential of $75,000, and a “Maximum Level”

18

objective of $800.0 million or more with a bonus potential of $100,000.  As related to the MLO Production, the “Entry Level” objective was $275.0 million with a bonus potential of $50,000, a mid-level objective of $375.0 million with a bonus potential of $75,000, and a “Maximum Level” objective of $475.0 million or more with a bonus potential of $100,000.

 

The higher “Maximum Level” budget goal, which was not achieved in 2019, usually results in the full NEO bonus potential being awarded.  Bonus potentials for all NEOs are recommended by the CHAIR/CEO, including his own, and are subsequently routinely approved by the Compensation Committee and the Board of Directors.  No adjustments were made to the Bonus Incentive Compensation Program in 2019. See “Awards Under the Company’s Bonus Incentive Compensation Program” below.

The amount of incentive compensation or bonus actually awarded to the NEOs is determined by the Compensation Committee and the Board of Directors.  The “Entry Level” and “Maximum Level” budget goals are designed to be a challenge to meet, particularly for the “Maximum Level” performance tier, but the budget goals and the tiers associated with those goals are not set so as to be impractical or impossible to achieve.  For 2019, the NEO budget goals were designed to provide an incentive for the NEOs to achieve performance which meets or exceeds operating budgeted financial expectations.  The Company’s budgeted goals should not be relied upon by any investor or shareholder as an indication of management’s prediction of its future financial performance.

In its discretion, the Company may modify its budget goals and the Compensation Committee may elect to exclude any extraordinary income or other non-recurring items from its determination as to whether or not the budget goals were, in fact, met or substantially met.  A percentage of the total bonus potential may be awarded to the NEOs even if the “Entry Level” budget goals for incentive compensation purposes are not fully achieved.

Pursuant to the Bonus Agreement with each NEO, the Bonus Incentive Compensation Program potential is subject to amendment, either upward or downward, at the discretion of the CHAIR/CEO, subject to the approval of the Compensation Committee and ultimately the Board of Directors.  With respect to the amounts paid under the Bonus Incentive Compensation Program for 2019 performance, the Compensation Committee deferred to the recommendations of the CHAIR/CEO regarding non-recurring items.  See “Awards Under the Company’s Bonus Incentive Compensation Program” below.

The Compensation Committee, on the recommendation of the CHAIR/CEO, sets individual incentive bonus potentials at the end of each fiscal year to be applied to the next fiscal year, except for the PRES/RPG, whose bonus potential is typically determined in the third quarter of each calendar year. 

Participants in the Company’s Bonus Incentive Compensation Program described above agree that during their employment or service with Republic and for certain periods following the date of termination of employment or service for whatever reason, they will not (i) solicit or divert or attempt to divert from Republic or its affiliates, any current or targeted customer or business and (ii) directly or indirectly, solicit to employ or engage, offer employment or engagement to, hire, employ, or engage any employees or independent contractors of Republic or any of its affiliates.

The Compensation Committee also considered and determined that the Company’s incentive compensation for all employees follows reasonable best practices as outlined in the Consumer Financial Protection Bureau Guidance, Bulletin 2016-03, regarding incentive compensation.  The Legal Department reviews the applicable regulatory policy statements, internal policies regarding incentive compensation, and the Bank’s Strategic Plan to ensure that the bonus agreements are not in conflict with the policies.  The Compensation Committee receives a report regarding incentive compensation.  Internal Audit conducts reviews concerning incentive compensation and provides reports to the Audit Committee. 

19

Awards Under the Company’s Base Salary Compensation Program.  Upon the recommendation of the CHAIR/CEO, the Compensation Committee approved the annualized Base Salaries for the NEOs for 2019 along with their respective percentage increases over the prior year as shown in the table below.  These annualized Base Salary increases for 2019 were effective December 22, 2018 for all NEOs except for the PRES/RPG; his increase was effective May 31, 2019. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive Officer

    

2019 Salary

    

Approximate % Increase Over Prior Year

 

Steven E. Trager (CHAIR/CEO)

 

$

394,000

 

3.0%

 

A. Scott Trager (PRES)

 

$

372,000

 

0.0%

 

Kevin D. Sipes (CFO)

 

$

343,743

 

3.0%

 

William R. Nelson (PRES/RPG)

 

$

378,750

 

1.0%

 

Juan M. Montano (EVP/CMBO)

 

$

317,343

 

4.0%

 

 

 

 

 

 

 

 

 

Upon the recommendation of the CHAIR/CEO, the Compensation Committee approved the annualized salaries for the NEOs for 2020, based on 2019 performance and other competitive factors, along with their respective percentage increases over the prior year as shown in the table below.  All annualized Base Salary increases, except for the PRES/RPG, were effective January 14, 2020.  The PRES/RPG will be evaluated in mid-year 2020, primarily based on the performance of the RPG business operations from July 1, 2019 to June 30, 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive Officer

    

2020 Salary

    

Approximate % Increase Over Prior Year

 

Steven E. Trager (CHAIR/CEO)

 

$

425,000

 

7.9%

 

A. Scott Trager (PRES)

 

$

380,000

 

2.2%

 

Kevin D. Sipes (CFO)

 

$

354,055

 

3.0%

 

William R. Nelson (PRES/RPG)

 

$

378,750

 

N/A

 

Juan M. Montano (EVP/CMBO)

 

$

326,863

 

3.0%

 

 

 

 

 

 

 

 

 

Awards Under the Company’s Bonus Incentive Compensation Program.  The maximum bonus incentive potential of the NEOs for 2019 is listed in the table below under the heading Incentive Payout Potential. Adjusted GOP results for 2019 for the Total Company and Core Bank were $100.4 million and $63.9 million, respectively.  Total Company GOP and Core Bank GOP are for the twelve months ended December 31, 2019.  For RPG, its GOP was $28.8 million for the twelve months ended May 31, 2019.  Awards for the NEOs and related factors are outlined in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Named Executive
Officer

  

Performance
Criteria

  

Entry Level Goal

  

Maximum Level Goal

  

Incentive Payout
Potential

  

Percent of 
Total Payout Potential Awarded

  

Incentive
Payout
Award

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven E. Trager (CHAIR/CEO)

 

Total Company GOP

 

Achieved

 

Not Achieved

 

$

225,000

 

70%

 

$

157,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Scott Trager (PRES)

 

Core Bank GOP

 

Achieved

 

Not Achieved

 

$

175,000

 

70%

 

$

122,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kevin D. Sipes (CFO)

 

Total Company GOP

 

Achieved

 

Not Achieved

 

$

140,000

 

70%

 

$

98,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William R. Nelson (PRES/RPG)

 

RPG GOP

 

Achieved

 

Not Achieved

 

$

360,000

 

75%

 

$

270,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Juan M. Montano (EVP/CMBO)

 

1. Warehouse Lending

 

Achieved

 

Not Achieved

 

$

175,000

 

14%

 

$

25,000

 

 

2. Mortgage Lending (1)

 

Achieved

 

Not Achieved

 

$

100,000

 

75%

 

$

75,000


(1)

Juan M. Montano received a bonus of $75,000 based on the MLO Production of $451.0 million; this amount exceeded the bonus amount of $50,000 which Juan M. Montano would have received based upon the overall Company mortgage loan production of $697.0 million.

20

The Company’s Stock Incentive Plan and Non-Employee Director and Key Employee Deferred Compensation Plan.  The Company’s primary form of equity-based incentive compensation has historically been stock options and stock grant awards.  This form of compensation was historically used by the Company due to previously favorable accounting and tax treatment.  Stock option and grant awards are also granted by the Company’s competitors and the Compensation Committee believes stock option and grant awards have been an expectation of business executives in Republic’s marketplace.  Despite the ramifications from the adoption of the Financial Accounting Standards Board (“FASB”) ASC Topic 718, the Compensation Committee believes that stock option awards, as well as stock grants, and Performance Stock Units (“PSUs”) constitute a favorable retention factor and enhance the Company’s ability to maintain the employment of its high performing executives.  Additionally, Republic’s equity-based incentive agreements provide that for certain periods following the date of termination of employment or service for whatever reason, participants in the Stock Incentive Plan will not (i) solicit or divert or attempt to divert from Republic or its affiliates, any current or targeted customer or business and (ii) directly or indirectly, solicit to employ or engage, offer employment or engagement to, hire, employ, or engage any employees or independent contractors of Republic or any of its affiliates.  The Company’s equity-based incentive agreements also have confidentiality requirements which act to protect the Company’s proprietary information.  A violation of those provisions allows the Company to require a forfeiture of equity-based incentives or the profits derived from the sale of that stock if sold.  All equity-based incentive agreements have a change in control provision providing for immediate vesting of any unexercised equity-based incentives.

Company stock performance is not a component of evaluation for the purpose of NEO incentive compensation.  Republic’s stock is not actively traded and thus may be subject to market fluctuations beyond the reasonable control of management.  Also, in the view of the CHAIR/CEO and the Compensation Committee, the significant stock holdings of the CHAIR/CEO and his related interests provide material executive motivation to not only preserve but to grow shareholder value, particularly long-term shareholder value.  Therefore, stock awards have not been traditionally awarded to the CHAIR/CEO.

Ultimately, the Compensation Committee believes that reasonable and consistent earnings over time will translate into appropriate and favorable stock performance.  The Compensation Committee’s policies are not designed to encourage Republic’s NEOs to manage the Company on a quarter-to-quarter time horizon or even over a one-year time period.  Investment in capital improvements, product development, and new market expansion can act to reduce short-term profits while providing for a larger future, longer-term profit potential and/or provide for the long-term soundness and sustainability of the Company’s operations and, thus, its long-term profit potential.  All of these factors are considered by the Compensation Committee in its subjective annual evaluation process and deliberations.

Any equity stock incentives for NEOs are typically recommended to the Compensation Committee by the CHAIR/CEO.  In choosing the date for the grant of equity stock incentives, the Compensation Committee gives no consideration to market events, as any relationship between the equity stock incentive date and the price of the Company’s stock on that date is strictly coincidental.

The Company’s 2015 Stock Incentive Plan provides for both stock option grants and stock awards.  There were no awards to NEOs under the Stock Incentive Plan during 2019. 

In January 2016 the Compensation Committee approved the grant of PSUs to a group of employees, including the NEOs and EOs.  On January 26, 2016, 5,000 PSUs were awarded to each of the PRES and CFO and 4,000 PSUs were awarded to each of the PRES/RPG and EVP/CMBO.  The awards provide that to the extent that the performance criteria, defined as the Company’s achievement of a Return on Average Assets (ROAA) of 1.25% for any calendar year beginning with the one ending on December 31, 2017 and for any subsequent calendar years through December 31, 2020, is met and as approved by the Compensation Committee, the NEO participant would be issued stock between March 1 and March 15 in an amount equal to 50% of the PSUs in each of the first and second years the performance criteria is met.  Once shares of stock equal to 100% of the PSUs are issued the award shall be complete.  The Compensation Committee approved the issuance of 50% of the stock underlying the PSUs on February 27, 2019. 

The Compensation Committee determined that the Company’s adjusted ROAA for 2019 was 1.52% and on January 13, 2020 approved the issuance of the remaining stock underlying the PSUs.  With respect to the previously issued PSUs, the Compensation Committee approved the issuance of 2,500 shares of Class A Common Stock to each of the PRES and CFO and 2,000 shares of Class A Common Stock to each of the PRES/RPG and EVP/CMBO.  

21

To further tie executives’ interests with those of the Company’s shareholders, stock reserved for issuance under the Stock Incentive Plan will also be used to cover payment in stock under the Company’s Non-Employee Director and Key Employee Deferred Compensation Plan, for which many executives were first made eligible in 2018 and which was amended in 2018 to provide for matching of executives’ deferrals.  Both voluntary deferrals and such matching are deemed to be invested in Class A Common Stock.  Cash dividend equivalents with respect to deferred amounts are accumulated and converted into stock equivalents on a quarterly basis.

The Company’s Acquisition Bonus Plan.  In addition to the incentive potential described above, certain NEOs may qualify under the Company’s Acquisition Bonus Plan for an additional incentive bonus to be determined by the CHAIR/CEO and approved by the Company’s Compensation Committee relating to Company or Bank acquisitions.

The purpose of the Acquisition Bonus Plan is to reward the job performance of associates of the Company, including certain NEOs, who materially participate in the negotiation, consummation, and transition of an acquisition or merger and contribute to the long-term profitability of the acquisitions, whether through an asset purchase, stock purchase, merger, or other corporate transaction.  The Company may engage in acquisitions from time to time, and each acquisition may have a specific bonus incentive program subject to the provisions of the Acquisition Bonus Plan.

The bonus incentive pool, with respect to each acquisition, will be in an amount not to exceed $2,000,000, the amount determined by the Company’s CHAIR/CEO within sixty (60) days of the closing of each acquisition and subject to the approval of the Compensation Committee. 

The determination of the amount of Acquisition Bonus Plan awards that may be paid to any individual will be based on performance criteria as determined by the Compensation Committee.  Where applicable, the performance targets may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, all as determined by the Compensation Committee.  The performance targets may include a threshold level of performance below which no payment will be made, levels of performance at which specified payments will be made, and a maximum level of performance above which no additional payment will be made.  Each performance target shall be determined in accordance with GAAP, if applicable, and shall be subject to certification by the Compensation Committee provided that the Compensation Committee shall have the authority to adjust such targets in recognition of extraordinary items or other items that may not be infrequent or unusual, but which may have inconsistent effects on performance. 

The Acquisition Bonus Plan is administered by the Compensation Committee.  The Compensation Committee has delegated to the CHAIR/CEO of the Company the authority, subject to such terms as the Compensation Committee shall determine, to perform such functions, including administrative functions, except that the Compensation Committee may not delegate authority to an officer or employee to grant a bonus award or otherwise make determinations with respect to the officer or employee to whom the authority is delegated. 

Unless otherwise specifically determined by the Compensation Committee or the CHAIR/CEO, an award under the Acquisition Bonus Plan is deemed earned and vested only with respect to a participant who remains employed at the Company and is in good standing at the time of the determination.  However, under certain special conditions, this requirement may be subject to waiver by the CHAIR/CEO.

During 2019, there were no acquisitions that would trigger the Acquisition Bonus Plan.

Post-Employment Benefits.  As described under the heading “Post-Employment Compensation” elsewhere in this proxy statement, the Company has entered into Officer Compensation Continuation Agreements with each of the NEOs who served in that capacity during 2019, with the exception of the PRES/RPG and the EVP/CMBO.  As described herein, the Officer Compensation Continuation Agreements provide for the payment to a NEO terminated following a change in control equal to up to 24 months of the NEO’s Base Salary and benefits.  The Company deems the agreements necessary for the maintenance of sound management and essential to protecting the best interests of the Company and its shareholders. The agreements are intended to encourage the NEOs to remain in the employment of the Company and to continue to perform their assigned duties without distraction in the face of potentially disruptive events that would normally surround a Company change in control.  Potential payments and benefits under these arrangements have no bearing on the Compensation Committee’s deliberations regarding all other compensation elements.

 

22

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Members of the Compensation Committee:

Craig A. Greenberg, Chair

Susan Stout Tamme

Mark A. Vogt

 

DIRECTOR COMPENSATION

Non-employee Directors of the Company and the Bank received fees of $2,000 for each board meeting attended and fees ranging from $500 to $750, based on the particular committee, for each committee meeting attended.  The committee chairperson was paid a fee of $1,000 to $1,500 per committee meeting attended. In addition, all Company and Bank non-employee Directors were each awarded 175 shares of Class A Common Stock following the May 2019 regularly scheduled board meeting.   

On occasion, brief, typically single-issue meetings are held for which there is no compensation.  Non-employee Directors have the option of allocating their stock awards and fees into the Non-Employee Director and Key Employee Deferred Compensation Plan.  Amounts deferred in the Non-Employee Director and Key Employee Deferred Compensation Plan are deemed to be invested in Class A Common Stock.  Cash dividend equivalents with respect to deferred amounts were accumulated and converted into stock equivalents on a quarterly basis during 2019.  The Company does not make matching contributions for amounts deferred by the Directors.  Compensation paid or deferred to Directors of Republic during 2019 for services as a Director of Republic were as follows:

2019 DIRECTOR SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

(b)

 

(c)

 

(d)

 

(e)

 

(f)

 

(g)

 

(h)

 

 

  

Fees
Earned
or Paid in
Cash (2)

  

Stock

Awards (2, 3)

  

Option
Awards

  

Non-Equity Incentive Plan

Compensation

  

Change in Pension Value and Non-Qualified Deferred

Compensation

Earnings

  

All Other
Compensation

  

Total

 

Name (1)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

Craig A. Greenberg

 

22,000

 

8,682

 

 —

 

 —

 

 —

 

 —

 

30,682

 

Michael T. Rust

 

17,250

 

8,682

 

 —

 

 —

 

 —

 

 —

 

25,932

 

R. Wayne Stratton

 

25,500

 

8,682

 

 —

 

 —

 

 —

 

 —

 

34,182

 

Susan Stout Tamme

 

17,000

 

8,682

 

 —

 

 —

 

 —

 

 —

 

25,682

 

Mark A. Vogt

 

12,000

 

8,682

 

 —

 

 —

 

 —

 

 —

 

20,682

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(1)

Steven E. Trager, A. Scott Trager, and Andrew Trager-Kusman, who served as Directors in 2019, are not included in this table as they are executive officers and received no additional compensation for their services as Directors.  The compensation received by Steven E. Trager and A. Scott Trager is included in the "Summary Compensation Table."

(2)

Of these stock awards and fees, the Directors deferred the entire amount earned, except for R. Wayne Stratton who was paid $12,750 in cash with the balance being deferred and Susan Stout Tamme who received 175 shares of Class A Common Stock with the balance being deferred.

(3)

Reflects 175 shares of Class A Common Stock awarded in 2019.

 

23

CERTAIN INFORMATION AS TO MANAGEMENT

The following table contains information concerning the compensation received by Republic’s CHAIR/CEO, its CFO, and its other three most highly compensated EOs for the fiscal year ended December 31, 2019:

2019 SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

(b)

 

(c)

 

(d)

 

(e)

 

(f)

 

(g)

 

(h)

 

(i)

 

(j)

 

Name and Principal

  

 

  

Salary (1)

  

Bonus

  

Stock
Awards (2)

  

Option
Awards (2)

  

Non-Equity
Incentive Plan
Compensation (3)

  

Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings (4)

  

All Other
Compensation (5)

  

Total

 

Position

 

Year

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

($)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Steven E. Trager (CHAIR/CEO)

 

2019

 

394,000

 

 —

 

 —

 

 —

 

157,500

 

 —

 

40,073

 

591,573

 

 

 

2018

 

382,502

 

 —

 

 —

 

 —

 

185,000

 

 —

 

39,830

 

607,332

 

 

 

2017

 

376,502

 

 —

 

 —

 

 —

 

129,500

 

 —

 

39,523

 

545,525

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

A. Scott Trager (PRES)

 

2019

 

372,000

 

 —

 

 —

 

 —

 

122,500

 

 —

 

29,612

 

524,112

 

 

 

2018

 

372,000

 

 —

 

 —

 

 —

 

175,000

 

 —

 

29,971

 

576,971

 

 

 

2017

 

372,000

 

 —

 

 —

 

 —

 

140,000

 

 —

 

38,101

 

550,101

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kevin D. Sipes (CFO)

 

2019

 

343,743

 

 —

 

 —

 

 —

 

98,000

 

 —

 

48,243

 

489,986

 

 

 

2018

 

333,731

 

 —

 

114,900

 

 —

 

125,000

 

 

 

39,942

 

613,573

 

 

 

2017

 

326,730

 

 —

 

 —

 

 —

 

87,500

 

 

 

23,648

 

437,878

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William R. Nelson (PRES/RPG)

 

2019

 

378,750

 

 —

 

 —

 

 —

 

270,000

 

 —

 

37,781

 

686,531

 

 

 

2018

 

292,013

 

 —

 

574,900

 

 —

 

200,000

 

 —

 

21,821

 

1,088,734

 

 

 

2017

 

286,241

 

 —

 

 —

 

 —

 

200,000

 

 —

 

13,190

 

499,431

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Juan M. Montano (EVP/CMBO)

 

2019

 

317,343

 

 —

 

 —

 

 —

 

100,000