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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 ý

Filed by a Party other than the Registrant o

Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

First Financial Bancorp.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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No fee required.

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

o

 

Fee paid previously with preliminary materials.

o

 

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:
        
 

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Notice of Annual
Meeting of Shareholders

Items of Business:

Our Annual Meeting of Shareholders will be held at 10:00 am Eastern Time, Tuesday, May 26, 2020. You can attend the 2020 Annual Meeting online and vote your shares electronically. The Annual Meeting will be completely virtual and conducted through the online means described below. The Annual Meeting of Shareholders is held for the following purposes:

1.  To elect twelve directors nominated by the Board of Directors to serve until the next annual meeting of shareholders and until their respective successors have been elected;

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

3.  To approve the First Financial Bancorp. 2020 Stock Plan;

4.  To approve, on an advisory basis, the compensation of the Company's executive officers; and

5.  To consider and act upon any other matters that may properly come before the meeting.

Only shareholders of record at the close of business on March 27, 2020 are eligible to participate and entitled to vote at the Annual Meeting or at any adjournment of the Annual Meeting.

      About the Meeting:

Meeting Date: 
May 26, 2020

Time: 
10:00 am Eastern Time

Virtual Shareholder Meeting:
www.virtualshareholdermeeting.com/ffbc20

Record Date: 
March 27, 2020

Mailing Date: 
April 16, 2020

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BY ORDER OF THE BOARD OF DIRECTORS

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Karen B. Woods
Corporate Secretary

Important Notice regarding the Internet availability of Proxy Materials for the Annual Meeting The proxy statement and 2019 Annual Report are available at www.bankatfirst.com/investor. Your vote is very important. We urge all shareholders to vote on the matters listed above and described in the proxy statement as soon as possible, whether or not they attend the online Annual Meeting. For your convenience, you may attend the webcast of the meeting via the Internet at www.virtualshareholdermeeting.com/ffbc20 when you enter your 16-digit control number included with the Notice of Internet Availability or proxy card. Instructions on how to attend and participate in the Annual Meeting via the webcast are posted at www.virtualshareholdermeeting.com/ffbc20. You will be able to vote your shares while attending the Annual Meeting by following the instructions on the website. While our management will address questions from shareholders who have submitted their questions electronically prior to the Annual Meeting, the webcast will not allow you to ask questions of management during the meeting. You may visit www.proxyvote.com at any time prior to the Annual Meeting to ask questions of our executive management that may be addressed in the Annual Meeting and access information about the Company.


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TABLE OF CONTENTS

Proxy and Annual Meeting Summary   1

Voting Matters

 
1

How to Vote

 
1

First Financial Bancorp. Board of Directors

 
2

Business Highlights

 
3

Questions and Answers about this Proxy Statement and the Annual Meeting

 

4

Proposal 1—Election of Directors

 

8

Proposal 2—Ratify the Appointment of Crowe LLP as our Independent Registered Public Accounting Firm for 2020

 

21

Independent Registered Public Accounting Firm Fees

 
21

Report of the Audit Committee

 
22

Proposal 3—Approval of First Financial Bancorp. 2020 Stock Plan

 

23

Proposal 4—Non-Binding, Advisory Vote to Approve Executive Officer Compensation

 

32

Share Ownership

 

33

Principal Shareholders

 
33

Shareholdings of Directors, Executive Officers and Nominees for Director

 
34

Delinquent Section 16(a) Reports

 
35

Corporate Governance   36

General

 
36

Our Board's Role in Risk Oversight

 
37

Director Independence

 
38

Board Leadership Structure

 
38

Board Self-Assessment

 
39

Evaluating Nominees and Electing Directors

 
39

Director Education

 
40

Share Ownership Guidelines

 
40

Succession Planning

 
40

Meetings of the Board of Directors and Committees of the Board

 
40

Board Committees

 
41

Review and Approval of Related Person Transactions

 
43

Policy Against Hedging Activities

 
44

Communicating with the Board of Directors

 
44

Executive Compensation (See detailed Executive Compensation Table of Contents)

 

45

Compensation Discussion and Analysis (CD&A)

 
45

2019 Board Compensation

 
59

Compensation Committee Report

 
62

Compensation Tables

 
63

2021 Annual Meeting Information

 

74

Shareholder Proposals for the 2021 Annual Meeting

 
74

Appendix A

 

A-1

Non-GAAP Reconciliation

 
A-1

Annex A

 

i

2020 Stock Plan

 
i

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Proxy and Annual Meeting Summary

We are sending this proxy statement and the accompanying proxy card to you as a shareholder of First Financial Bancorp., an Ohio corporation, in connection with the solicitation of proxies for the 2020 Annual Meeting of Shareholders (the "Annual Meeting"). Our Board of Directors is soliciting proxies for use at the Annual Meeting, or at any postponement or adjournment of the Annual Meeting.                LOGO   If you would like to help us reduce our costs incurred in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

Voting Matters

Proposal
  Approval Required
  Board's
Recommendation

  Page
Reference

                 
1.   Election of Directors   Affirmative vote of a plurality   GRAPHIC For Each Nominee   8

2.

 

Ratify the Appointment of Crowe LLP as our Independent Registered Public Accounting Firm for 2020

 

Majority of votes present, in person or by proxy, and entitled to vote

 

GRAPHIC

 

21

3.

 

Approve First Financial Bancorp. 2020 Stock Plan

 

Majority of votes present, in person or by proxy, and entitled to vote

 

GRAPHIC

 

23

4.

 

Approve, on an Advisory Basis, the Compensation of the Company's Executive Officers

 

Majority of votes present, in person or by proxy, and entitled to vote

 

GRAPHIC

 

32

We are not aware of any other matters that will be brought before the shareholders for a vote at the Annual Meeting. If any other matter is properly brought before the meeting, your completed proxy may, if you have so selected, give your proxies the authority to vote on these other matters in their best judgment.

In this proxy statement, the "Company," "First Financial," "First Financial Bancorp," "we," "our," or "us" all refer to First Financial Bancorp. and its subsidiaries, unless the context otherwise requires. We also refer to the Board of Directors of First Financial as the "Board." References in this proxy statement to "common shares" or "shares" refer to the Company's common shares.

Unless otherwise noted, the information in this proxy statement covers our 2019 fiscal year that began January 1, 2019 and ended December 31, 2019.

How to Vote

Review the proxy statement and vote in one of these three ways:

Vote Online   Vote by Phone       Vote by Mail

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Before the Meeting: Go to
www.proxyvote.com
                     

During the Meeting: Go to
www.virtualshareholdermeeting.com/ffbc20

 

           By calling
           1-800-690-6903

     

                     By signing, dating, and returning your
                     proxy card in the enclosed envelope

2020 Proxy Statement    |    Proxy and Annual Meeting Summary        1


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First Financial Bancorp Board of Directors

Director Nominees

The first item of business at the Annual Meeting will be the election of twelve directors of the Company. The nominees, including their occupation and committee memberships during 2019, are set forth in the table below.


Name

 

Age

 

Occupation

 

Director
Since

 

Audit

 

Compensation

 

Corporate Governance
and Nominating

 

Enterprise
Risk and Compliance

 

Capital Markets
J. Wickliffe Ach   71   Retired as President and Chief Executive Officer of Hixson Inc.   2007           C        
William G. Barron   70   Chairman and President of Wm. G. Barron
Enterprises, Inc.
  2018           M   M    
Vincent A. Berta   61   President and Managing Director of Covington
Capital, LLC
  2018               CC   M
Cynthia O. Booth   62   President and Chief Executive Officer of COBCO Enterprises, LLC   2010               CC   VC
Archie M. Brown   59   President and Chief Executive Officer of First
Financial Bancorp. and First Financial Bank
  2018                    
Claude E. Davis   59   Chairman of First Financial Bancorp, and First
Financial Bank, and Managing Director of Brixey and Meyer Capital
  2004                    
Corinne R. Finnerty   63   Principal and sole shareholder of the law firm of McConnell Finnerty PC   1998           M   M    
Susan L. Knust   66   Owner and Manager of several businesses that own, lease and manage industrial and commercial real estate   2005       VC           M
William J. Kramer   59   Vice President of Operations and director of Valco Companies, Inc.   2005   C   M            
John T. Neighbours   70   General Counsel and advisor to the board of
AmeriQual Group Holdings
  2016               M   M
Thomas M. O'Brien   63   Senior advisor with the Boston Consulting Group   2018   M   C            
Maribeth S. Rahe   71   President and Chief Executive Officer of Fort
Washington Investment Advisors, Inc.
  2010   M               C

C = Chairperson

CC = Co-Chairperson

VC = Vice Chairman

M = Member

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Board Highlights

GRAPHIC

Business Highlights

2019 was the first full year of operations following the merger of First Financial and MainSource Financial Group, Inc. that was completed in April 2018. As projected when the merger was announced, the combination of First Financial and MainSource resulted in the creation of a top quartile performing bank. During 2019, the Company continued to execute upon its strategic plan, making several investments in order to position itself to compete innovate and win as discussed in the business highlights on page 46 of this proxy statement.

GRAPHIC

1.
Non-GAAP financial measure which management believes facilitates a better understanding of the Company's financial condition. See Appendix A for Non-GAAP reconciliation.

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Questions and Answers about this Proxy Statement and the Annual Meeting

Why am I receiving this Proxy Statement?

We are making available this Notice of Annual Meeting of Shareholders, proxy statement, and annual report for the year ended December 31, 2019 (the "proxy materials"), either online or by mail, in connection with the 2020 Annual Meeting of Shareholders of First Financial because you were a shareholder of record of the Company as of the close of business on March 27, 2020 (the "record date"). This proxy statement describes the matters on which you are asked to vote and provides information about those matters and about the Company so that you can make an informed decision.

This proxy statement and related materials are being mailed to, or can be accessed online by, shareholders on or about April 16, 2020.

What is Notice and Access and why did First Financial elect to use it?

We are making the proxy materials and annual report available to our shareholders electronically via the Internet under the Notice and Access regulations of the U.S. Securities and Exchange Commission ("SEC"). Many of our shareholders have received a Notice of Internet Availability of Proxy Materials ("Notice of Internet Availability") in lieu of receiving a full set of printed materials in the mail. We are using the Notice and Access method to expedite distribution and reduce the costs associated with printing and mailing these materials.

The Notice of Internet Availability includes information on how to access and review the proxy materials and how to vote online, by phone, or by attending the Annual Meeting virtually via the Internet. The proxy materials and annual report, as well as other reports filed with or furnished to the SEC, can be accessed free of charge at www.bankatfirst.com/investor. You may also access this information by searching "Company Filings" at www.sec.gov.

I received a Notice of Internet Availability of Proxy Materials only. How can I receive printed copies of the proxy statement and annual report?

Shareholders may receive a printed copy of the annual report and proxy materials, free of charge, by following the instructions on the Notice of Internet Availability for receiving such materials:

Who is paying for the cost of this proxy solicitation?

First Financial is paying for the costs associated with preparing, printing and mailing these proxy materials. In addition, we will reimburse banks, brokers and other custodians, nominees and fiduciaries for reasonable expenses incurred in forwarding the proxy materials to beneficial owners of our shares and soliciting their proxies.

In the event the Board hires a third party to solicit proxies, First Financial will pay the costs associated with the third-party proxy solicitor. Our directors, officers and associates also may solicit proxies from our shareholders by further mailings, personal contact, phone, or e-mail, but these individuals will not receive additional compensation for this solicitation activity.

Who can vote at the Annual Meeting?

Only shareholders of record at the close of business on March 27, 2020 will be entitled to notice of and to vote at the Annual Meeting. Each common share owned at the close of business on March 27, 2020 entitles its owner to one vote on each proposal being considered at the Annual Meeting.

The common shares are the Company's only voting securities entitled to vote at the Annual Meeting. At the close of business on March 27, 2020, there were 97,968,911 common shares outstanding and entitled to vote.

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How do I vote my shares?

Even if you plan to attend the Annual Meeting virtually via the Internet, as described below, we strongly encourage you to vote prior to the meeting. Shareholders of record may vote using any of the following methods:

If you hold your shares in "street name" at a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee on how to vote your shares.

What is the difference between holding shares directly as a shareholder of record and holding shares in "street name" at a bank, broker or other nominee?

What happens if I sign, date and return my proxy card, or complete the online or telephonic proxy methods, but do not specify how I want my shares voted on one or more of the proposals?

Your shares will be voted in the manner you specify on each proposal. If you are a shareholder of record and sign, date and return a proxy or submit a proxy online or by telephone, but do not provide voting instructions on one or more proposals, your vote will be counted as a vote "for" all of the Company's nominees for directors and "for" Proposals 2, 3 and 4.

If you hold your shares in "street name" and have not returned voting instructions on one or more proposals, your bank, broker or nominee may vote your shares only on those proposals for which it has discretion to vote. We believe that under applicable rules, your bank, broker or nominee has discretion to vote your shares on the ratification of our independent registered accounting firm (Proposal 2), which is considered a routine matter. However, your bank, broker or nominee does not have discretion to vote your shares on certain other matters considered non-routine such as the election of directors (Proposal 1), the approval of the First Financial Bancorp. 2020 Stock Plan (Proposal 3) or the advisory approval of executive compensation (Proposal 4). If you do not provide voting instructions on a non-routine proposal, your shares will be considered "broker non-votes." The effect of a "broker non-vote" on each proposal is detailed in the questions and answers under the heading "Annual Meeting Information" below.

What if I indicate "Withheld" with respect to the election of one or more directors or "Abstain" with respect to any of the other proposals being considered?

The effect of these voting specifications on each proposal is detailed in the questions and answers under the heading "Annual Meeting Information" below.

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Can I change my proxy vote?

You may revoke your proxy at any time before it is actually exercised at the Annual Meeting by:

If you hold your shares in "street name" and instructed your bank, broker or other nominee to vote your common shares and you would like to revoke or change your vote, you must follow the instructions provided by your bank, broker or other nominee.

What if my shares are held through the First Financial Bancorp. 401(k) Savings Plan (applicable to traditional or Roth contribution plans)?

You will receive an electronic Notice of Internet Availability unless you opted to receive paper copies of the proxy materials. The Notice of Internet Availability will contain voting instructions for all shares registered in the exact same name, whether inside or outside of the First Financial Bancorp. 401(k) Savings Plan (the "Savings Plan"). If you hold shares outside of the Savings Plan and they are not registered in the same name as those within the Savings Plan, you will receive a separate Notice of Internet Availability or proxy card for the shares held outside of the Savings Plan.

Voting instructions with respect to shares held in the Savings Plan must be received by 11:59 pm Eastern Time on May 21, 2020. All voting instructions you give with respect to these shares will be kept confidential. If you do not timely submit voting instructions for these shares, the shares allocated to you, together with all unallocated shares held in the Savings Plan, will be voted in accordance with the pro-rata vote of participants in the Savings Plan who did provide instructions.

Who should I contact if I have questions about this proxy solicitation and where can I get assistance in voting my shares?

You may contact us at [email protected] or call our Investor Relations department toll free at 1-877-322-9530 if you have any questions or need assistance in voting.

How many votes must be present in person or by proxy to hold the Annual Meeting?

A quorum must exist before business can be conducted at the Annual Meeting. Under our Amended and Restated Regulations (the "Amended Regulations"), a quorum will exist if a majority of the common shares outstanding as of the record date are present in person or by proxy. At the close of business on March 27, 2020, there were 97,968,911 common shares outstanding. A majority, or 48,984,456 common shares, present in person or by proxy, will constitute a quorum.

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What proposals are being considered and how many votes are needed for each proposal to be approved by the shareholders?

Proposal   Approval Required   Effect of an Abstention
(or Withheld Vote with
respect to Proposal 1)
  Effect of a Broker
Non-Vote
1.   Election of Directors   Affirmative vote of a plurality   No effect on election voting but see "Policy on Majority Voting" in the Corporate Governance section of this proxy statement   No effect

2.

 

Ratify the Appointment of Crowe LLP as our Independent Registered Accounting Firm for 2020

 

Majority of votes present, in person or by proxy, and entitled to vote

 

Will be treated as a vote AGAINST the proposal

 

Not Applicable

3.

 

Approve the First Financial Bancorp. 2020 Stock Plan

 

Majority of votes present, in person or by proxy, and entitled to vote

 

Will be treated as a vote AGAINST the proposal

 

No effect

4.

 

Approve, on an Advisory Basis, the compensation of the Company's Executive Officers

 

Majority of votes present, in person or by proxy, and entitled to vote

 

Will be treated as a vote AGAINST the proposal

 

No effect

How can I attend the Annual Meeting?

You can attend our 2020 Annual Meeting via the Internet or by proxy.

Our 2020 Annual Meeting will take place via a webcast at www.virtualshareholdermeeting.com/ffbc20. You may vote while attending the webcast meeting by following the instructions at www.virtualshareholdermeeting.com/ffbc20. You will not be able to submit questions to executive management or the Board via this webcast during the Annual Meeting. To attend the Annual Meeting via www.virtualshareholdermeeting.com/ffbc20, you will need the control number included on the Notice of Internet Availability or proxy card that was mailed to you. Instructions on how to attend and participate in the Annual Meeting via the Internet are posted at www.virtualshareholdermeeting.com/ffbc20.

How do I find out the voting results from the Annual Meeting?

We plan to announce preliminary voting results at the Annual Meeting and will disclose the final voting results in a current report on Form 8-K filed with the SEC within four business days of the Annual Meeting.

Can I elect to only receive First Financial's proxy materials and annual reports electronically?

Shareholders can elect to receive future proxy materials and annual reports electronically instead of receiving print copies of these items in the mail. You can make this election by following the instructions provided on your proxy card or Notice of Internet Availability or by going to www.proxyvote.com and following the instructions provided there.

If you choose to receive future proxy statements and annual reports electronically and you continue to hold shares as of the record date of the next annual meeting, you will receive an e-mail message next year that includes access information for these materials as well as instructions for online voting.

What is "householding?"

If two or more shareholders reside at the same address and appear to be members of the same family, we may send a single copy of the proxy materials, or Notice of Internet Availability, to that address unless one of the shareholders at that address notifies us that they wish to receive individual copies of the material. This procedure reduces our printing and mailing costs. Shareholders who participate in householding will continue to have access to and utilize separate proxy voting instructions for each shareholder account.

How do I stop participating in the householding program?

To stop participating in the householding program, contact Broadridge Householding Department by calling toll free at 1-866-540-7095 or by writing to Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717. You will be removed from the householding program within 30 days of Broadridge's receipt of your instruction.

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Proposal 1—Election of Directors

As of the record date, our Board consisted of fifteen members, fourteen of whom were non-employee directors. In March 2020, three directors notified the Company of their intention to retire from the Board effective as of the date of the Annual Meeting, and their desire not to be included as a nominee for the Board in the Company's proxy materials. As the Board continues to evaluate the appropriate mix of skills, qualifications and attributes of the current Board and the skills needed to position the Board to lead the Company in the future, we anticipate additional directors will retire and new directors will be added from time to time to fill any vacancies.

Our Amended Regulations provide that the Board shall consist of not less than nine nor more than 25 persons, with the exact number to be fixed and determined from time to time by resolution of the Board or by resolution of the shareholders at any annual or special meeting of shareholders. Any vacancy may be filled by the Board in accordance with law and our Amended Regulations for the remainder of the term of the vacant directorship. The Board has established the number of directors at twelve as of the date of the Annual Meeting.

Our Board has approved the nomination of the following twelve persons as candidates for election as director, each for a one-year term: J. Wickliffe Ach, William G. Barron, Vincent A. Berta, Archie M. Brown, Cynthia O. Booth, Claude E. Davis, Corinne R. Finnerty, Susan L. Knust, William J. Kramer, John T. Neighbours, Thomas M. O'Brien, and Maribeth S. Rahe. Each of the nominees is an incumbent director. The Corporate Governance and Nominating Committee ("CGNC") recommended all twelve nominees to the Board, which in turn unanimously approved the nomination of all twelve persons.

In the event that any one or more of the nominees becomes unavailable or unable to serve as a director prior to the Annual Meeting, your submitted proxy will be voted to elect the remaining nominees and any substitute nominee or nominees designated by the Board. We have no reason to believe that any nominee will be unable or decline to serve as a director.

The twelve nominees for director receiving the most votes at the Annual Meeting will be elected as directors. You can find additional information about our Policy on Majority Voting in the Corporate Governance section of this proxy statement. The general considerations and criteria for assessing director candidates are established in the Charter of the Board's Governance and Nominating Committee (available at www.bankatfirst.com/investor). These considerations and criteria are also summarized in the Corporate Governance section of this proxy statement.

Below is information concerning the nominees for directors, including their present and past professional positions, current directorships with other companies or organizations, and key qualifications and attributes qualifying them to serve on our Board. The age indicated for each nominee below is their age as of March 27, 2020. For information regarding ownership of shares of the Company by nominees and directors of the Company, see the Shareholdings of Directors, Executive Officers and Nominees for Director section of this proxy statement. Except as noted, there are no arrangements or understandings between any director or any nominee and any other person pursuant to which such director or nominee is or was nominated to serve as director.

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J. Wickliffe Ach

Mr. Ach retired in 2018 from his role as President and Chief Executive Officer of Hixson Inc.

     

Age:

Director Since:

2019
Committees:

 

71

2007
2019 Lead Independent Director

Corporate Governance and Nominating (Chair)


 

 

 

 

 

 

 

 

 
Mr. Ach retired on May 31, 2018 from his role as President and Chief Executive Officer of Hixson Inc., an architectural engineering firm located in Cincinnati, Ohio. He served in this role from 1993.

Mr. Ach served as the Lead Independent Director of the Board of Directors of First Financial Bancorp in 2019. He previously served as the Vice Chair of the Board of Directors.

Mr. Ach presently serves on the board of directors of Setzer Corp. (a private corporation located in Dayton, Ohio that is a construction contractor) and on the board of trustees of Grote Enterprises (a private construction company located in Cincinnati, Ohio). Mr. Ach also serves on the board of directors of the CISE Foundation, a Cincinnati not-for-profit organization. He is or has been involved in a number of business and civic organizations, including the Cultural Facilities Task Force of Hamilton County, Ohio, relating primarily to the Cincinnati Museum Center and Music Hall facilities. Mr. Ach is President of the Union Terminal Corporation.

As a seasoned business owner and entrepreneur, Mr. Ach brings valuable insight to the Board in strategic and cultural matters. Mr. Ach's involvement in the Cincinnati business community provides added understanding of our growing Cincinnati market area. Furthermore, his specific background in architectural engineering provides added value in our strategies related to physical banking center locations and designs.

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GRAPHIC  

William G. Barron

Mr. Barron has been Chairman and President of Wm. G. Barron Enterprises, Inc., a commercial real estate broker, manager and developer, since June 1994.

     

Age:

Director Since:

2019
Committees:

 

70

2018

Enterprise Risk and Compliance, Corporate Governance and Nominating


 

 

 

 

 

 

 

 

 
Mr. Barron is a commercial-industrial real estate specialist. He has been Chairman and President of Wm. G. Barron Enterprises, Inc., a commercial real estate broker, manager and developer, since June 1994. Since 1997, Mr. Barron has been designated a Certified Commercial Investment Member, which signifies expertise in commercial real estate brokerage, leasing, valuation, asset management and investment analysis.

In addition, Mr. Barron is President of Owensboro Self Bailment, LLC, a self-storage holding company, and Gunston, LLC, a real estate holding company. Prior to these activities, Mr. Barron served as Vice President (1974-81), President (1981-87) and Chairman and CEO (1987-94) of Barron Homes, Inc., a residential home building company.

Mr. Barron previously served as a director of MainSource Financial Group, Inc. beginning in 1989 and as a director of MainSource Bank from 2011 until April 1, 2018, following prior service on the MainSource Bank board from 1983 to 2000.

Mr. Barron is very active in his community in both civic and charitable positions, including Former Chairman of the Board of the Owensboro Family YMCA, YMCA Endowment Fund Committee, Former Board member of Mentor Kids Kentucky, Board member and past President of the Owensboro Homebuilders Association, and Board member of Owensboro Daviess County Chamber of Commerce. Mr. Barron has served as President of the Owensboro Rotary Club. Mr. Barron is a graduate of Leadership Owensboro and Leadership Kentucky.

Mr. Barron brings extensive experience in the banking, homebuilding and commercial real estate development industries and a deep commitment to community which provide valuable expertise to the Company.

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GRAPHIC  

Vincent A. Berta

Mr. Berta currently serves as the President and Managing Director of Covington Capital, LLC.

     

Age:

Director Since:

2019 Committees:

 

61

2018

Capital Markets, Enterprise Risk and Compliance (Co-Chair)


 

 

 

 

 

 

 

 

 
Mr. Berta currently serves as the President and Managing Director of Covington Capital, LLC, a private investment firm providing specialized investment banking and advisory services primarily to financial, real estate and investment companies.

Mr. Berta has 35 years of experience in the financial services industry, previously serving as the Executive Vice President and Regional Chairman of US Bank Corporation, the Chairman, President and Chief Executive Officer of Trans Financial, Inc., a $2.3 billion bank acquired by US Bank Corporation in 1998, and a partner in Landmark Financial Advisors, Inc., a registered investment advisory company he co-founded in 2002. Mr. Berta also served as a chief financial officer and in various other roles for banking institutions. Mr. Berta is active in various community and civic associations, including work on the Focus 2030 Comprehensive Plan, which was formed to provide a community framework for growth in Bowling Green, Kentucky.

Mr. Berta previously served as a director of MainSource Financial Group, Inc. and MainSource Bank from 2016 until April 1, 2018.

Mr. Berta's significant experience in the financial services industry, including specifically his executive experience as an officer of banking institutions, provides valuable insight and knowledge to the Board.

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GRAPHIC  

Cynthia O. Booth

Ms. Booth is the President and Chief Executive Officer of COBCO Enterprises, LLC.

     

Age:

Director Since:

2019 Committees:

 

62

2010

Capital Markets (Vice Chair), Enterprise Risk and Compliance (Co-Chair)


 

 

 

 

 

 

 

 

 
Ms. Booth is the President and Chief Executive Officer of COBCO Enterprises, LLC, the owner and operator of eight McDonald's restaurants in the Cincinnati area. Prior to forming COBCO in 2000, she held various executive positions at Firstar Bank (now U.S. Bank) in Cincinnati, including President, Firstar Bank Foundation, Senior Vice President—Director of Community Development, Vice President of Private Wealth Group, Vice President of Residential Real Estate, Vice President of Human Resources, and before that was President of Diversified Solutions, Inc., a bank consulting firm.

Ms. Booth is active in several civic and community organizations, including serving as a director and the treasurer of the Greater Cincinnati Regional Chamber of Commerce and as a director of the YWCA of Greater Cincinnati.

Ms. Booth brings deep banking experience to the Board, including extensive knowledge in residential real estate lending, regulatory relations, the Community Reinvestment Act and other regulatory compliance, private banking and human resources matters. Furthermore, her experience in the restaurant franchise area provides valuable insight into the specialty area of lending conducted through our subsidiary First Franchise Capital Corporation.

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GRAPHIC  

Archie M. Brown

Mr. Brown is the President and Chief Executive Officer of First Financial Bancorp. and First Financial Bank.

     

Age:

Director Since:

 

59

2018


 

 

 

 

 

 

 

 

 
Mr. Brown is the President and Chief Executive Officer of First Financial Bancorp. and First Financial Bank, having been appointed to these positions effective April 1, 2018. Previously, he served as the President and Chief Executive Officer of MainSource from August 2008 until April 1, 2018. Mr. Brown also served as the Chairman of the Board of MainSource from April 2011 until April 1, 2018.

During his 35 years in banking, Mr. Brown has held management positions in branch management, region management, bank operations (both deposit and loan), business development, small business and consumer lending. Mr. Brown has experience in many areas of banking, including enterprise risk management, change management, expense reduction initiatives, process re-engineering, balance sheet management and restructures, loan workout initiatives, business startups within the bank, business consolidation, market selection, branch and bank acquisitions and integration, board communication, investor and shareholder relations and working with bank regulators.

Mr. Brown serves on the board and executive committee of the Cincinnati City Centre Development Corp (3CDC), is a board member of the Cincinnati Business Committee (CBC), a board member of United Way of Greater Cincinnati, and a board member of the Cincinnati Chamber Minority Business Accelerator Advisory Board. He served as the 2019 Campaign Chair for the United Way of Greater Cincinnati, and formerly served as a director of the Indiana Community Business Credit Corporation, the Indiana Bankers Association, the Indiana Chamber of Commerce and the Greensburg Decatur County Economic Development Corporation.

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GRAPHIC  

Claude E. Davis

Mr. Davis is the Chair of the Board of First Financial Bancorp. and First Financial Bank.

     

Age:

Director Since:

 

59

2004


 

 

 

 

 

 

 

 

 
Mr. Davis became Chair of the Board of Directors of First Financial Bancorp. and First Financial Bank effective January 1, 2020. He previously served as Executive Chairman of both First Financial Bancorp. and First Financial Bank from April 1, 2018 through December 31, 2019, and as Chief Executive Officer of both companies from October 1, 2004 through March 31, 2018. Mr. Davis has over 30 years of experience in the financial services industry.

Effective January 1, 2020, Mr. Davis accepted a position as the Managing Director of Brixey and Meyer Capital with responsibility for management of the portfolio companies and staff of the firm, and as a member of the board of directors of City Dash, a Brixey portfolio company and a Cincinnati-based logistics company. He previously served on the boards of directors of the Cincinnati Regional Economic Development Committee (REDI), the Cincinnati Business Committee and the Federal Reserve Bank of Cleveland from 2013 to 2018.

Mr. Davis' years of experience in the banking industry as well as his extensive financial background provide leadership to the Board. He is intimately familiar with all aspects of our business activities. His involvement on other boards and organizations gives him insight on important societal and economic issues relevant to our Company's business and markets.

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GRAPHIC  

Corinne R. Finnerty

Ms. Finnerty is the principal and sole shareholder of the law firm of McConnell Finnerty PC.

     

Age:

Director Since:

2019 Committees:

 

63

1998

Enterprise Risk and Compliance, Corporate Governance and Nominating


 

 

 

 

 

 

 

 

 
Ms. Finnerty is the principal and sole shareholder of the law firm of McConnell Finnerty PC located in North Vernon, Indiana. She has over 35 years of experience representing financial institutions in a wide variety of legal matters. Ms. Finnerty was previously a director of a former affiliate bank of First Financial from 1987 to 2005 and joined the board of the Company in 1998.

Ms. Finnerty served as a member of the Indiana Supreme Court Disciplinary Commission from 2003 to 2013. She currently serves as a Commissioner on the Indiana State Ethics Commission, having been appointed to a 4 year term by Indiana's Governor beginning in January 2018.

Ms. Finnerty's deep roots in the North Vernon, Indiana area provide representation on the Board for our southeast Indiana market. Her participation for ten years on the Indiana Supreme Court Disciplinary Commission and her current position as a Commissioner on the Indiana State Ethics Commission allow her to provide insight on governance and ethical issues. Furthermore, her years as a practicing attorney, including the representation of financial institutions for over 35 years, give her an enhanced perspective on legal and regulatory issues.  

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GRAPHIC  

Susan L. Knust

Ms. Knust is the owner and managing partner or president of several businesses engaged in the ownership, leasing and management of commercial real estate.

     

Age:

Director Since:

2019 Committees:

 

66

2005

Capital Markets, Compensation (Vice Chair)


 

 

 

 

 

 

 

 

 
Ms. Knust is the owner and managing partner or president of several businesses:

Omega Warehouse Services (since 2002) which is located in Monroe, Ohio and provides public warehousing and manufacturing services;

K.P. Properties of Ohio (since 1986) which is located in Monroe, Ohio and owns, leases and manages industrial and commercial real estate in Ohio;

K.P. Properties of Colorado (since 2010) which is located in Monroe, Ohio and owns, leases and manages commercial real estate in Colorado; and

K.P. Properties of Florida (since 2014) which is located in Monroe, Ohio and owns, leases and manages commercial real estate in Florida.

As a seasoned business owner and entrepreneur for 35 years in the areas of manufacturing, warehousing and industrial real estate, Ms. Knust brings valuable insight to the Board in strategic and other matters. Ms. Knust's business interests are similar in size to our key client base and she also has an understanding of the Cincinnati market. As a female business owner, her perspective and experiences have proven valuable to the Company.

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GRAPHIC  

William J. Kramer

Mr. Kramer is the Vice President of Operations and a member of the board of directors of Valco Companies, Inc.

     

Age:

Director Since:

2019 Committees:

 

59

2005

Audit (Chair), Compensation


 

 

 

 

 

 

 

 

 
Mr. Kramer is the Vice President of Operations and a member of the board of directors of Valco Industries, Inc. which has principal offices in New Holland, Pennsylvania and whose principal activity is the design, manufacture, and sale of equipment used in the animal production industry. He has held his current position, since 2008, having previously held other executive positions at Valco Industries, Inc. Mr. Kramer was previously a director of a former affiliate bank of First Financial from 1987 to 2005 and joined the board of First Financial in 2005.

Mr. Kramer has been a CPA since 1984 with both public accounting and private company experience providing experience in financial reporting and accounting controls. He qualifies as an audit committee financial expert. Furthermore, his tenure with our Company or a bank affiliate provides valuable historical perspective on both the Company and the banking industry.

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GRAPHIC  

John T. Neighbours

Mr. Neighbours is the General Counsel and an advisor to the board of AmeriQual Group Holdings.

     

Age:

Director Since:

2019 Committees:

 

70

2016

Capital Markets, Enterprise Risk and Compliance


 

 

 

 

 

 

 

 

 
Mr. Neighbours is General Counsel and Board Secretary of AmeriQual Group Holdings, an aggregation of companies that produce, package and distribute food products for branded food companies, retailers and the US government, located in Evansville, Indiana. Previously, Mr. Neighbours was a partner in the law firm of Faegre Baker Daniels until his retirement on January 1, 2018, where he practiced for over 40 years, representing employers throughout the country in all aspects of labor and employment law. Additionally, he served as an advisor to business, educational and not-for-profit executives on a variety of business and legal issues.

Mr. Neighbours is involved in and serves as a director (or in an equivalent position) of a number of non-profit and civic organizations including:

Greater Indianapolis Chamber of Commerce

United Way of Central Indiana

Meadows Community Foundation (Chair)

Charles A. Tindley Accelerated Schools

Indianapolis Public Safety Foundation

Indiana University-Purdue University Indianapolis Advisory Board

Indianapolis Zoological Society

Mr. Neighbors served as a council member for the American Bar Association—Section on Labor and Employment Law for 12 years, as well as Chairman of the Developments Under the National Labor Relations Act Committee from 1997 to 2000. He also served on the Labor Relations Committee for the United States Chamber of Commerce.

Mr. Neighbours serves on the board of Real Estate Corporation of America, a family corporation involved in rehabilitating and managing properties in Indianapolis. Also, for the last 10 years, Mr. Neighbours has chaired the Meadows Community Foundation, which has stimulated $70 million of investment in one of Indianapolis' most challenging low income communities, and coordinated the development of mixed income housing, a health complex which includes a YMCA, a retail center and charter schools.

Mr. Neighbours is well known in Indianapolis and is a recognized leader in the local business community, providing valuable insight to the board on the local business environment. His years as a practicing attorney give him an enhanced perspective on legal and employment matters as well the business climate generally given his national practice.

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GRAPHIC  

Thomas M. O'Brien

Mr. O'Brien is a senior advisor with the Boston Consulting Group.

     

Age:

Director Since:

2019 Committees:

 

63

2018

Audit, Compensation (Chair)


 

 

 

 

 

 

 

 

 
Mr. O'Brien retired from Procter & Gamble in 2010 after 31 years of service, primarily in management positions in the areas of sales, IT and marketing. Mr. O'Brien served as Vice President Customer Business Development, Global Business Units and Global eCommerce from 2007 until his retirement. During his time at Procter & Gamble, Mr. O'Brien developed strategies, conceptual innovations and relationships that consistently delivered successful results in revenue, market share and productivity.

Mr. O'Brien is currently a senior advisor with the Boston Consulting Group, working with many top consumer product companies on commercial strategies. Mr. O'Brien also currently serves as Chairman of Simpactful Consulting, is on the advisory board for Harry's, Inc., is a director of One 80 Place and has served on the National Board of Inroads and the St. Vincent De Paul Cincinnati board of directors.

Mr. O'Brien previously served as a director of MainSource Financial Group, Inc. and MainSource Bank from 2010 until April 1, 2018.

Mr. O'Brien's extensive experience in sales and marketing, his management experience, and his experience interacting with the board of directors of a publicly traded company provides valuable perspective to the Board and the Company.

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GRAPHIC  

Maribeth S. Rahe

Ms. Rahe is the President and Chief Executive Officer of Fort Washington Investment Advisors, Inc.

     

Age:

Director Since:

2019 Committees:

 

71

2010

Audit, Capital Markets (Chair)


 

 

 

 

 

 

 

 

 
Ms. Rahe is the President and Chief Executive Officer of Fort Washington Investment Advisors, Inc., positions she has held since 2003. Fort Washington Investment Advisors, Inc. is an investment management firm and wholly owned subsidiary of Western & Southern Financial Group located in Cincinnati, Ohio. She also serves on the board of directors of Fort Washington Investment Advisors, Inc. Ms. Rahe has more than 48 years of experience in the banking and financial services industries with more than 30 years of experience in management or executive management positions.

Since 2005, Ms. Rahe has served as a director of Consolidated Communications Holdings, Inc. (NASDAQ: CNSL) which is an integrated communication services company located in Mattoon, Illinois that provides exchange carrier and broadband services. She serves as the chair of the audit committee and also on the compensation committee of the company.

Ms. Rahe is involved in and serves as a director (or in an equivalent position) of several organizations, including:

Cincinnati Arts Association (Vice Chair)

Cincinnati Country Club (Board)

Cintrifuse (Advisory Board)

Commonwealth Club (Executive Committee)

New York Landmark Conservancy (Life Trustee)

Rush-Presbyterian-St. Luke's Medical Center (Life Trustee)

Sisters of Notre Dame de Namur (Development Advisory Board)

The Greater Cincinnati Foundation (Board)

United Way of Cincinnati (Investment Committee)

Xavier University Williams College of Business (Board of Executive Advisors)

Ms. Rahe is a recognized leader in the financial services community, both locally and nationally. She brings a seasoned perspective, insight, and financial acumen into issues and strategies relating to the Company's business, including regulatory relationships and enterprise risk management.

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Proposal 2—Ratify the Appointment of Crowe LLP as our Independent Registered Public Accounting Firm for 2020

Our Audit Committee has appointed Crowe LLP ("Crowe") as the Company's independent registered public accounting firm for the Company's 2020 fiscal year. Our Audit Committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm. The Audit Committee is also responsible for the negotiation of audit fees payable to Crowe. While the Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal, if shareholders do not ratify the appointment, the Audit Committee will consider whether or not to retain Crowe in the future. Even if the appointment is ratified, our Audit Committee, at its discretion, may change the appointment at any time if it determines that doing so would be in the best interests of the Company and its shareholders.

Representatives of Crowe are anticipated to attend the Annual Meeting and will be available for questions from shareholders who have submitted their questions electronically prior to the Annual Meeting. No formal statement by representatives of Crowe is anticipated at the Annual Meeting.

Independent Registered Public Accounting Firm Fees

The following table sets forth the aggregate fees billed for audit services, as well as fees billed with respect to audit-related, tax and all other services, provided by Crowe to the Company and its related entities for the last two fiscal years. Any engagement of the Company's independent registered public accounting firm for permissible audit, audit-related, tax and other services are preapproved by the Audit Committee. The Audit Committee may provide a general preapproval for a particular type of service or require specific preapproval.

Fees by Category

    2019     2018
 

Audit Fees

    $1,090,500     $1,070,800  

Audit-Related Fees

    $108,000     $84,000  

Tax Fees

    $155,602     $205,085  

All Other Fees

    $0     $87,159  

TOTAL

  $1,354,102   $1,447,044  

Description of Services:


 

 

þ

 


 

The Board of Directors unanimously recommends a vote FOR the ratification of the appointment of Crowe LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020.

 

 
​                   
​      

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Report of the Audit Committee

In accordance with its written charter, the Audit Committee oversees the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. The Company's independent registered public accounting firm is responsible for expressing an opinion on the conformity of the Company's audited financial statements to generally accepted accounting principles and on the Company's internal control over financial reporting. In this context, the Audit Committee has reviewed and discussed with management and Crowe the audited financial statements for the year ended December 31, 2019 and Crowe's evaluation of the Company's internal control over financial reporting. The Audit Committee has discussed with Crowe the matters that are required to be discussed by Auditing Standards No. 16 (Communications with Audit Committees) as amended and adopted by the Public Company Accounting Oversight Board ("PCAOB") in Rule 3200T.

Crowe has provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence, and the Audit Committee has discussed with Crowe that firm's independence. The Audit Committee has concluded that Crowe's provision of audit and non-audit services to First Financial and its affiliates is compatible with Crowe's independence.

The Audit Committee discussed with the Company's internal auditors and Crowe the overall scope and plans for their respective audits. The Audit Committee met with the internal auditors and with Crowe, with and without management present, to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee, on February 21, 2020, recommended to the Board, and the Board has approved, that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2019, for filing with the SEC.

    Members of the Audit Committee

 

 

William J. Kramer, Chair
Kathleen L. Bardwell, Vice Chair
Thomas M. O'Brien
Maribeth S. Rahe

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Proposal 3—First Financial Bancorp. 2020 Stock Plan

The First Financial Bancorp. 2020 Stock Plan (the "2020 Stock Plan") was approved and adopted by our Board of Directors (the "Board") in March 2020 upon the recommendation of the Executive Compensation Committee of the Board, subject to shareholder approval. Upon approval, the 2020 Stock Plan will replace the First Financial Amended and Restated 2012 Stock Plan (the "2012 Plan") in its entirety and no additional awards may be granted under the 2012 Plan.

Shareholder approval of the 2020 Stock Plan is required (i) to satisfy the Nasdaq Stock Market shareholder approval requirement for equity compensation plans and (ii) to qualify stock options as incentive stock options for purposes of Section 422 of the Code. The affirmative vote of a majority of the votes represented at the Annual Meeting, either in person or by proxy and entitled to vote on this proposal, is required to adopt the 2020 Stock Plan.

If the 2020 Stock Plan is approved by our shareholders at the Annual Meeting, awards granted prior to such approval will be governed by the terms of the 2012 Plan whereas new awards will be governed by the 2020 Stock Plan.

Description of the 2020 Stock Plan

The principal features of the 2020 Stock Plan are summarized below, but this summary is qualified in its entirety by reference to the 2020 Stock Plan itself, a copy of which is included with this Proxy Statement as Annex A. References in this Proposal 3 to "shares" refer to the common shares of First Financial.

Reason for Adoption of the 2020 Stock Plan.    If approved by our shareholders, the 2020 Stock Plan will be the sole means by which First Financial may grant long-term equity-based compensation awards to key employees of First Financial and its subsidiaries ("employees"). The 2020 Stock Plan will also become the sole means by which First Financial may grant Stock-based awards to its directors who are not employees ("non-employee directors"). If the 2020 Stock Plan is not approved by the shareholders, First Financial can continue to issue shares to employees and non-employee directors under the 2012 Plan until the earlier of May 23, 2022, or the date all shares previously authorized under that plan have been granted. If the 2020 Stock Plan is approved, it will not affect awards outstanding under the 2012 Plan that were granted prior to approval of the 2020 Stock Plan by the shareholders.

When amended in 2017, the 2012 Plan provided for the issuance of 1,750,000 shares of First Financial stock plus shares remaining available for issuance under the 2012 plan as originally approved (approximately 423,000 shares). As of March 27, 2020, 1,017,592 shares of stock remained available for issuance under the 2012 Plan, representing approximately 1.04% of First Financial's issued and outstanding shares. Based upon the number of shares of stock granted in 2018 and 2019 to First Financial employees and non-employee directors, management believes the 2012 Plan would run out of shares within the next 2 years if the 2020 Plan is not adopted by the shareholders.

The Board considers equity compensation to be a significant component of total compensation for First Financial's employees, and believes that a combination of short and long-term incentives is essential to maintain a competitive compensation program and to attract, reward and retain top talent. The Board believes adoption of the 2020 Stock Plan is an important part of the pay-for-performance program of First Financial and that the authorization of a total of 4.4 million shares, representing, if issued, approximately 4.5% of First Financial's issued and outstanding shares, will permit First Financial to continue its compensation program for the next five years.

Purpose of the 2020 Stock Plan.    The purpose of the 2020 Stock Plan is to recognize the contributions made to First Financial and its subsidiaries by employees and non-employee directors, to provide such persons with additional incentive to devote themselves to the future success of First Financial and its subsidiaries, and to enhance the ability of First Financial and its subsidiaries to attract, retain and motivate such individuals by providing them with the opportunity to acquire or increase their proprietary interest in First Financial. The 2020 Stock Plan serves these purposes by making equity- and cash-based awards available for grant to eligible participants in the form of:

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Highlights of the 2020 Stock Plan.    The 2020 Stock Plan contains certain features that the Board believes are consistent with the interests of shareholders and sound governance principles. Provided below is a summary of these key plan features.

Shares Authorized Under the 2020 Stock Plan.    The Board and the Compensation Committee understand their responsibility to shareholders in granting equity-based awards. In setting the number of proposed additional shares issuable under the 2020 Stock Plan and recommending the adoption of the plan by the Board, the Committee consulted with Meridian Compensation Partners, LLC, its independent compensation consultant, and considered a number of factors, including:

Shares Currently Available for Issuance.    As of March 27, 2020, we had 97,968,911 shares issued and outstanding (not including treasury shares) and 1,017,592 shares were available for future awards under the 2012 Plan, assuming

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performance stock awards at target (957,406 with such awards at maximum). The Committee considered that the shares currently available for issuance may not be sufficient to cover future equity awards in the near term if material fluctuations in our stock price or material changes from historical granting practices occur. As of March 12, 2020, the proposed 4,400,000 additional shares would represent, if issued, approximately 4.5% of the issued and outstanding shares.

Equity Award Granting Practices and Share Usage.    In setting and recommending to shareholders the increase in the number of shares authorized, the Committee considered historic share usage and resulting burn rate as reflected in the table below.

    2017     2018     2019
 

Total Shares Granted1

    232,440     303,092     380,051  

Based Weighted Average Shares Outstanding

    61,529,000     88,582,000     98,306,000  

Burn Rate2

    0.38 %   0.34 %   0.39 %
1.
Includes the number of full value awards (restricted stock and performance stock awards) granted each year.

2.
Burn rate is calculated by dividing the total number of all awards granted to participants in each calendar year by the total shares outstanding as of December 31st of the respective year.

Total Potential Dilution.    The Committee considered the potential shareholder dilution represented by outstanding employee equity awards and shares available for future grants. Basic dilution is calculated as shown below.

Total Potential Dilution (or overhang) =   (shares to be issued on exercise or conversion of outstanding equity awards under a plan) + (shares proposed to be authorized under the new plan)

Total number of issued and outstanding shares

As of March 27, 2020, and prior to any additional shares authorized under the 2020 Stock Plan, total potential dilution is 1.85%. Based upon the 4,400,000 shares proposed to be authorized under the 2020 Stock Plan, total potential dilution increases to 4.5%, which is lower than the industry thresholds established by major proxy advisory firms and institutional investors.

Estimated Plan Life.    The Committee also considered the estimated plan life (in years) for various potential share requests at different annual grant rates. Based upon the 2019 annual burn rate of approximately 0.4% of outstanding shares annually, the Committee anticipates that the 2020 Stock Plan shares would last for the anticipated plan duration of five years. The actual plan duration will vary depending upon First Financial's stock price and its financial performance, both of which may be heavily influenced by market conditions.

    Share Request   Estimated Annual Grant Rate    
    # of Shares   % of CSO*   0.4%   0.6%   0.8%    
    4,400,000   4.4%   11.1   7.4   5.5    
*
Based on outstanding shares of 99.4 million

Summary of the First Financial Bancorp. 2020 Stock Plan

The following is a summary of the material features of the 2020 Stock Plan. This summary is qualified in its entirety by reference to Annex A, which contains the complete text of the 2020 Stock Plan.

Available Common Shares and Limitations on Awards

Total Common Shares Authorized

The 2020 Stock Plan authorizes a total of 4,400,000 shares. As of the date on which this 2020 Stock Plan is adopted by the shareholders, no additional shares may be issued under the 2012 Plan. The Board believes the number of shares authorized for issuance under the 2020 Stock Plan will be sufficient, on the basis of current expectations, for all anticipated awards during the 2020 Stock Plan's proposed five-year term.

Shares issued pursuant to the 2020 Stock Plan may be authorized and unissued shares or treasury shares. The number of shares issuable under the 2020 Stock Plan is subject to adjustment as to the number and kind of shares in

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the event of stock splits, stock dividends or certain other changes in the capitalization of First Financial as described below.

Share Counting

Shares subject to an award that are withheld or repurchased by First Financial to satisfy a tax withholding obligation or that are tendered to First Financial to pay the exercise price of an Option or which are tendered in satisfaction of any condition to a grant of Restricted Stock will not again be available for issuance under the 2020 Stock Plan. In addition, the gross number of shares covered by a SAR, to the extent it is exercised, will not again become available for issuance pursuant to the 2020 Stock Plan, regardless of the number of shares used to settle the SAR upon its exercise. Any awards issued pursuant to the 2020 Stock Plan that are settled in cash or otherwise forfeited thereafter will again become available for grant under the 2020 Stock Plan.

Limitations on Awards

The 2020 Stock Plan provides for the following limitations on awards granted under the 2020 Stock Plan:

ISOs.    The maximum number of Common Shares that may be issued under the 2020 Stock Plan as incentive stock options or ISOs is 1,250,000 shares.

Award Grants to Non-Employee Directors.    The maximum aggregate dollar value of awards (based upon the grant date fair market value of awards) granted to a non-employee director in any twelve-month period is $500,000.

The share limitations described above are subject to adjustment by the Committee as to the number and kind of shares in the event of stock splits, stock dividends or certain other changes in the capitalization of First Financial.

Administration of the 2020 Stock Plan

The 2020 Stock Plan will be administered by the Compensation Committee of the Board, which is comprised solely of independent directors of First Financial. The 2020 Stock Plan provides that, to the extent the Board determines it is appropriate for awards under the 2020 Stock Plan to qualify for the exemption available under SEC Rule 16b-3(d)(1) or Rule 16b-3(e) promulgated under the Securities Exchange Act of 1934, the Committee shall be composed of two or more members who are "non-employee directors" within the meaning of Rule 16b-3. The Committee has the power in its discretion to grant awards under the 2020 Stock Plan, to determine the terms of such awards, to interpret the provisions of the 2020 Stock Plan and to take action as it deems necessary or advisable for the administration of the 2020 Stock Plan.

Termination and Amendment of the 2020 Stock Plan

Unless earlier terminated by the Board or the Committee, the 2020 Stock Plan will terminate five (5) years after the date it is approved by our shareholders, which is expected to occur at the Annual Meeting.

In addition, the Board or the Committee may, at any time and for any reason, suspend or terminate the 2020 Stock Plan or from time to time amend the 2020 Stock Plan, provided that any amendment will be submitted to our shareholders for approval if such shareholder approval is required by federal or state law or regulation or the rules of Nasdaq (or any other stock exchange on which the Common Shares may then be listed or quoted). Even if the 2020 Stock Plan is suspended or terminated, the Committee will still retain authority to exercise powers given to it under the 2020 Stock Plan with respect to awards granted before the suspension or termination.

Eligibility and Participation

Any employee of First Financial or its subsidiaries or any non-employee director of First Financial is eligible to receive an award under the 2020 Stock Plan. However, pursuant to applicable law, only employees of First Financial or its subsidiaries are eligible to receive ISOs. As of March 27, 2020, there were approximately 2,103 employees and 14 non-employee Directors eligible to participate in the 2020 Stock Plan.

Options and SARs

Options entitle the Option holder to purchase shares at a price established by the Committee. Options may be either ISOs or NQSOs. ISOs may only be granted to qualifying employees. SARs entitle the SAR holder to receive cash or shares equal to the positive difference (if any) between the exercise price and the fair market value of the shares underlying the SAR on the exercise date. We do not currently have a practice of awarding Options or SARs to employees or directors. The 2020 Stock Plan provides for a definition of "fair market value."

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Exercise Price

The exercise price of an Option or SAR granted under the 2020 Stock Plan may not be less than the fair market value of the underlying shares on the date of grant. The 2020 Stock Plan prohibits any repricing, replacement, re-grant or modification of Options or SARs that would reduce the exercise price of the Options or SARs without shareholder approval, other than in connection with a change in our capitalization or certain corporate transactions described below in "Adjustment of Plan Shares."

Vesting/Expiration of Options and SARs

The Committee determines the terms under which Options and SARs vest and become exercisable. Option awards may contain provisions that allow the Option holder to exercise the Option after his or her termination of service due to death or disability or for such other reason established by the Committee. Any part of the Option that has not been exercised by the end of the Option term expires and is forfeited. Option and SAR terms may not exceed 10 years from the date of grant. The 2020 Stock Plan provides that Options and SARs will be subject to a minimum service requirement or a minimum performance requirement (or both) of not less than one year before they can vest, except that (i) if provided in the applicable award agreement, awards of Options, SARs, Restricted Stock or Stock Units may vest prior to one year as a result of retirement, death or disability; (ii) up to 5% of the shares available under the 2020 Stock Plan may be granted under awards of Options, SARs, Restricted Stock or Stock Units that have a vesting requirement of less than one year and (iii) subject to the "double trigger" requirements of the 2020 Stock Plan, awards may vest prior to one year as a result of a Change in Control or as a result of death or disability (the "Vesting Limitation Exceptions").

Exercise of Options

An option holder may exercise an Option by completing the required steps as specified by the record keeper. The Option holder must state the number of shares for which the Option is being exercised and must tender payment for the shares. The Committee may, in its discretion, accept cash, check, electronic funds transfer or previously acquired shares (valued at the fair market value on the date of exercise) and held for the period required by the Committee. In the alternative, the Committee may reduce the number of Common Shares deliverable upon exercise of the Option through an established net exercise process or the Committee may permit payment through a broker-facilitated cashless exercise program.

Exercise of SARs

Upon exercise of a SAR, a participant will be entitled to receive cash or shares, or a combination of both, as specified in the award agreement, having an aggregate fair market value equal to the excess of (i) the fair market value of one share on the date of exercise, over (ii) the SAR exercise price, multiplied by the number of shares covered by the SAR or the number being exercised.

Termination of Options and SARs

In the event that a participant's service with First Financial and all of its subsidiaries terminates prior to the expiration of an Option or SAR, the participant's right to exercise vested Options or SARs generally terminates, provided that the Committee may specify in the applicable Option or SAR agreement those circumstances in which the participant may exercise his or her Option after termination of service.

Restricted Stock Awards

First Financial may grant Restricted Stock to employees and non-employee directors. Such awards may vest as a result of continued service to First Financial and may vest upon achievement of applicable performance criteria established by the Committee; provided, that Restricted Stock awards will be subject to a minimum service requirement or a minimum performance requirement (or both) of not less than one year before they can vest, subject to the Vesting Limitation Exceptions describe above.

Restricted Stock granted to a participant may not be sold, transferred, pledged or otherwise encumbered or disposed of during the restricted period established by the Committee. In the event a participant's service with First Financial and its subsidiaries terminates prior to the vesting of a Restricted Stock award, that award will be forfeited unless the terms of the award, as approved by the Committee at the time of grant, provide (subject to the 2020 Stock Plan's minimum vesting requirements) for accelerated vesting or continued vesting. The Committee may impose additional restrictions on a participant's right to dispose of or to encumber Restricted Stock, including satisfaction of performance objectives.

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Stock Unit Awards

First Financial may grant Stock Unit grants under the 2020 Stock Plan. An award of Stock Units gives the recipient the right to receive, upon exercise of the Stock Units, (a) a cash payment based upon the fair market value of the number of shares provided for in the award agreement at the time of exercise of the Stock Units, or (b) the shares specified in the Stock Unit award. Stock Unit awards may vest as a result of continued service to First Financial or upon the achievement of applicable performance criteria established by the Committee; provided, that Stock Units granted under the 2020 Stock Plan will be subject to a minimum service requirement or minimum performance requirement (of both) of not less than one year before they can vest, subject to the Vesting Limitation Exceptions. In the event a participant's service with First Financial and its subsidiaries terminates prior to the vesting of a Stock Unit award, that award will be forfeited unless the terms of the award, as approved by the Committee at the time of grant and subject to the 2020 Stock Plan's minimum vesting requirements, provide for accelerated vesting or continued vesting.

Performance-Based Compensation

The Committee may specify that the grant, retention, vesting, or issuance of any award under the 2020 Stock Plan (whether in the form of an Option, SAR, Restricted Stock or Stock Unit) or the amount to be paid out under any award, will be subject to or based on performance objectives or other standards of financial performance and/or personal performance evaluations. Performance criteria may include, in the Committee's discretion, performance goals relating to one or more of the following objectives:

assets

 

average total common equity

 

deposits

earnings per share

 

economic profit added

 

efficiency ratio

gross margin

 

gross revenue

 

internal rate of return

loans

 

net charge-offs

 

net income

net income before tax

 

net interest income

 

non-interest expense

non-interest income

 

non-performing assets

 

operating cash flow

pre-provision net revenue

 

return on assets

 

return on equity

return on risk weighted assets

 

return on sales

 

share price

tangible equity

 

total shareholder return

   

A performance goal may be set in any manner determined by the Committee, including looking to achievement on an absolute or relative basis in relation to peer groups or indexes, and may relate to First Financial as a whole or one or more operating units of First Financial. In the Committee's discretion, the business criteria may include or exclude "extraordinary items", including extraordinary charges, losses from discontinued operations, restatements and accounting changes and other unplanned special charges such as restructuring expenses, acquisitions, acquisition expenses, including expenses related to goodwill and other intangible assets, stock offerings, stock repurchases and loan loss provisions. The Committee may also adjust any performance goal for a period as it deems equitable in recognition of unusual or nonrecurring events affecting First Financial, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine.

Performance based awards granted for a performance period shall be paid to participants as soon as administratively practicable following the Committee's determination that the applicable performance criteria have been satisfied, but in no event later than 21/2 months following the end of the calendar year during which the performance period is completed.

Other Plan Features

Limited Transferability of Awards

Unless the Committee determines otherwise, awards may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution, and during the participant's lifetime, may be exercised only by the participant (or his or her personal representative or guardian if the participant is incapacitated).

Tax Withholding

The Committee may require payment, or withhold payments made pursuant to awards, to satisfy applicable income and employment withholding tax requirements.

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Adjustment of Plan Shares

In the event First Financial has a stock dividend or stock split, or a corporate transaction, such as a reorganization, separation or liquidation, merger, consolidation or similar transaction that affects First Financial's capitalization, the Committee will adjust in an equitable manner the number, kind or class of shares reserved under the 2020 Stock Plan and the individual and aggregate limits imposed on grants to the extent required to preserve the economic value of the awards, subject to certain limitations set forth in the 2020 Stock Plan. The Committee will make similar adjustments to shares underlying any grant previously made of Restricted Stock and any related grant or forfeiture conditions and to shares related to previously granted Options and the Option exercise price and to SARs and the SAR exercise price. If we assume awards or grant substitute awards in a corporate transaction for awards previously granted by another company we acquire, such substitute awards will not reduce the shares authorized for issuance under the 2020 Stock Plan or any individual or aggregate annual limits.

Change in Control

The 2020 Stock Plan provides that the Committee may provide in any award agreement for provisions relating to a Change in Control, as that term is defined in the 2020 Stock Plan, including, without limitation, the acceleration of the vesting, delivery or exercisability of, or the lapse of restrictions with respect to, any outstanding Awards; provided, however, that, in addition to any conditions provided for in the award agreement, any acceleration of the vesting, delivery or exercisability of, or the lapse of restrictions with respect to, any outstanding awards in connection with a Change in Control may occur with respect to any participant who is an employee only if (i) the Change in Control occurs and (ii) the participant's employment with First Financial or any of its subsidiaries is terminated without Cause or by the Participant for Good Reason within 18 months following such Change in Control. The terms "Cause" and "Good Reason" are defined in the 2020 Stock Plan.

The 2020 Stock Plan also provides that unless otherwise determined by the Committee, in the event of a merger, consolidation, mandatory share exchange or other similar business combination of First Financial with or into any other entity or any transaction in which another person or entity acquires all of the issued and outstanding Common Shares or all or substantially all of the assets of First Financial and its subsidiaries, an outstanding award may be assumed or an award of equivalent value may be substituted by such successor entity or a parent or subsidiary of such successor entity.

With respect to awards subject to performance goals, except as otherwise determined by the Committee, in the event of a Change in Control, all incomplete performance periods in respect of such award in effect on the date the Change in Control occurs will end on the date of the Change in Control and the Committee shall (i) determine the extent to which performance goals with respect to each such performance period have been met based upon such audited or unaudited financial information then available and (ii) cause to be paid to the participant a pro-rated award (based on each completed day of the performance period prior to the Change in Control) based upon the Committee's determination of the degree of attainment of the applicable performance goals or, if not determinable, assuming that the applicable target levels of performance have been attained (or on such other basis as the Committee determines to be appropriate); provided that in no event shall a participant become entitled to a payout in excess of the target level payout with respect to a performance goal for which the Committee has not determined the actual level of achievement.

Rights as Shareholders

Until exercised, holders of Options will have no rights as a shareholder with respect to those Options. With respect to shares of Restricted Stock, except as limited by the 2020 Stock Plan or award agreement, the participant shall have all of the voting rights of a shareholder of First Financial with respect to the same class of shares as are represented by such Restricted Stock. With respect to SARs and Stock Units exercisable for shares, a participant shall have no voting rights with respect to such awards until the shares underlying such awards are properly issued to the participant.

In no event may cash dividends paid with respect to Restricted Stock or Stock Units become payable before the date such Restricted Stock or Stock Units have become fully vested and nonforfeitable. Any cash dividends paid with respect to unvested shares of Restricted Stock shall be withheld by First Financial for the participant's account. The cash dividends so withheld by First Financial will be distributed to the participant in cash or, at the discretion of the Committee, in shares equal to the fair market value of the amount of such dividends upon the vesting and release of restrictions on such Restricted Stock and, if such Restricted Stock is forfeited, then the participant shall have no right to, and will forfeit, such dividends. Unless otherwise set forth in the applicable award agreement which evidences a Stock Unit grant, cash dividends will be treated as reinvested in shares at the fair market value of such shares on the date of payment of such dividend and will increase the number of shares subject to such Stock Unit grant. If a share dividend is declared on a share of Restricted Stock, such dividend will be treated as part of the grant of the related

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Restricted Stock, and a participant's interest in such dividend will be forfeited or shall become vested at the same time as the shares with respect to which the dividend was paid is forfeited or becomes vested and nonforfeitable. Unless otherwise set forth in the applicable award agreement, if a share dividend is declared on any shares described in a Stock Unit grant, such dividend shall increase the number of shares described in such Stock Unit grant, but shall only be issuable if and when the related Stock Unit becomes exercisable.

U.S. Federal Income Tax Consequences

Options

There are no federal income tax consequences to a participant or to First Financial upon the grant of an ISO or an NQSO under the 2020 Stock Plan.

Upon exercise of an NQSO, the Option holder generally recognizes ordinary income in an amount equal to: (i) the fair market value of the acquired shares on the date of exercise, reduced by (ii) the exercise price the participant pays for the shares received in the exercise. Provided First Financial satisfies applicable reporting requirements, it is entitled to a tax deduction in the same amount as the participant includes as ordinary income.

An Option retains its status as an ISO during the period the Option holder is an employee and, if the ISO does not expire at termination of employment, for three months after such termination of employment (with certain exceptions for death and disability). Upon the exercise of an ISO, an Option holder generally recognizes no immediate taxable income. When the Option holder sells shares acquired through the exercise of an ISO, the gain is treated as long-term capital gain (or the loss is a long-term capital loss) unless the sale is a "disqualifying disposition." A "disqualifying disposition" occurs if the Option holder sells shares acquired on exercise within two years from the grant date of the ISO or within one year from the date of exercise. On a disqualifying disposition, the Option holder includes the gain realized on the sale of the shares as ordinary income (or ordinary loss). Gain (or loss) is determined by subtracting the exercise price paid from the greater of (i) the fair market value of the shares on the exercise date, or (ii) the amount realized by the Option holder on the date of sale. The gain may constitute a tax preference item for computing the participant's alternative minimum tax.

Generally, First Financial will not be entitled to any tax deduction for the grant or exercise of an ISO. If, however, the sale of shares acquired through exercise of an ISO is a disqualifying disposition, then provided it satisfies applicable reporting requirements, First Financial will be entitled to a deduction in the same amount the participant includes in income.

SARs

There are no federal income tax consequences to either a participant or First Financial upon the grant of a SAR. However, the participant generally will recognize ordinary income upon the exercise of a SAR in an amount equal to the aggregate amount of cash and the fair market value of the shares received upon exercise. Provided it satisfies applicable reporting requirements, First Financial will be entitled to a deduction equal to the amount included in the participant's income.

Restricted Stock

Except as otherwise provided below, there are no federal income tax consequences to either a participant or to First Financial as a result of the grant of Restricted Stock. The participant recognizes ordinary income in an amount equal to the fair market value on the date of vesting of the Restricted Stock. Provided First Financial satisfies applicable reporting requirements, it will be entitled to a corresponding deduction. Notwithstanding the above, a recipient of a Restricted Stock grant that is subject to a substantial risk of forfeiture may make an election under Section 83(b) of the Code, within 30 days after the date of the grant, to recognize ordinary income as of the date of grant and First Financial will be entitled to a corresponding deduction at that time.

Stock Units

When a Stock Unit is settled, the participant will recognize ordinary income in an amount equal to the fair market value of the shares received or, if the Stock Unit is paid in cash, the amount paid.

Golden Parachute Payments

Awards that are granted, accelerated or enhanced upon the occurrence of, or in anticipation of, a Change in Control of First Financial may give rise, in whole or in part, to "excess parachute payments" under Section 280G and

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Section 4999 of the Code. With respect to any excess parachute payment, the participant would be subject to a 20% excise tax on, and First Financial would be denied a deduction for, the "excess" amount.

409A of the Code

We intend that, to the extent any provisions of the 2020 Stock Plan or any awards granted under the 2020 Stock Plan are subject to Section 409A of the Code (which relates to nonqualified deferred compensation), they will be interpreted and administered in good faith in accordance with Section 409A requirements and that the Committee will have the authority to amend any outstanding awards so that they are in compliance with Section 409A or qualify for an exemption from Section 409A. First Financial will not indemnify any participant for taxes or penalties imposed by Section 409A. To the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the 2020 Stock Plan during the six (6) month period immediately following the participant's termination of employment or service will instead be paid on the first payroll date after the six-month anniversary of the participant's separation from service (or the participant's death, if earlier).


Securities authorized for issuance under equity compensation plans

 
  Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
  Weighted-average
exercise price of
outstanding options,
warrants and rights
  Number of securities
remaining available for
future issuance under
equity compensation
plans
(excluding securities
reflected in column (a))
 
Plan category
  (a)
  (b)
  (c)1
 

Equity compensation plans approved by security holders

    37,856   $ 9.54     1,519,231  

Equity compensation plans not approved by security holders

    N/A     N/A     N/A  
1.
The securities included in this column are available for issuance under the 2012 Plan, which was approved by the shareholders at the 2017 Annual Meeting. The 2012 Plan includes provisions regarding adjustments to the number of securities available for future issuance under the 2012 Plan in the event of a merger, reorganization, consolidation, recapitalization, reclassification, split-up, spin-off, separation, liquidation, stock dividend, stock split, reverse stock split, property dividend, share repurchase, share combination, share exchange, issuance of warrants, rights or debentures or other change in corporate structure of First Financial affecting First Financial's common shares. In any of the foregoing events, the 2012 Plan permits the Board of Directors or the Compensation Committee of the board to make such substitution or adjustments in the aggregate number and kind of shares available for issuance under the respective plans as the Board of Directors or the Compensation Committee, as the case may be, determine to be appropriate in its sole discretion. All of the securities reported in column (c) are available under the 2012 Plan.

GRAPHIC

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Proposal 4—Non-Binding, Advisory Vote to Approve Executive Officer Compensation

As required pursuant to Section 14A of the Securities and Exchange Act of 1934, we are asking our shareholders to approve, on a (non-binding) advisory basis, the compensation of the Company's named executive officers ("named executive officers" or "NEOs") identified in the Summary Compensation Table included in the Executive Compensation portion of this proxy statement beginning at page 45. While this vote is advisory, and not binding on our Company, it will provide information to us regarding shareholder sentiment about our compensation principles and objectives and may be considered in future executive compensation related decisions. As determined by our shareholders at the 2011 Annual Meeting of Shareholders, and reconfirmed at the 2017 Annual Meeting of Shareholders, we request this advisory approval each year.

We strongly encourage you to review the Executive Compensation—Compensation Discussion and Analysis section of this proxy statement as well as the Summary Compensation Table and other related compensation tables for detailed information about the compensation of our NEOs when making your voting decision on this proposal.

We believe our compensation program has contributed to our Company's recent and long-term successes. Our compensation philosophy is based on the following guiding principles and that our executive compensation programs:

We believe information provided in the Executive Compensation portion of this proxy statement demonstrates that our executive compensation program has been designed appropriately to ensure our management's interests are aligned with our shareholders' interest to support long-term value creation and to differentiate pay based on our performance within our peer group.

Your vote is requested on the following resolution:

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Share Ownership

A beneficial owner of shares is a person who has sole or shared voting power, meaning the power to control voting decisions, or sole or shared investment power, meaning the power to cause a sale or other disposition of the shares. A person is also considered the beneficial owner of shares to which that person has the right to acquire beneficial ownership within 60 days. For this reason, the following tables may include stock options that are exercisable and that will become exercisable within 60 days.

Principal Shareholders

The table below identifies all persons known to us to own beneficially more than 5% of our outstanding common shares as of December 31, 2019.

    Amount and Nature of
Beneficial Ownership of
Common Shares
  Percentage
of Class

BlackRock, Inc.
55 East 52nd Street
New York, NY 10055

    14,655,088 1 14.90%

The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355

    10,391,760 2 10.45%

Macquarie Group Limited
50 Martin Place
Sydney, New South Wales, Australia

    6,256,898 3 6.29%

Dimensional Fund Advisors LP
Building One
6300 Bee Cave Road
Austin, TX 78746

    5,524,442 4 5.56%
1.
Information based upon a Schedule 13G/A filed on February 4, 2020. As of December 31, 2019, BlackRock had sole voting power for 14,439,871 shares and sole dispositive power for 14,655,088 shares.

2.
Information based on a Schedule 13G/A filed on February 12, 2020. As of December 31, 2019, Vanguard had sole power to vote for 97,178 shares; shared power to vote for 15,410 shares; sole dispositive power for 10,292,419 shares; and shared dispositive power for 99,341 shares.

3.
Information based on a Schedule 13/G filed on February 13, 2020, by Macquarie Group Limited on behalf of itself and Macquarie Bank Limited, Macquarie Investment Management Holdings Inc., Macquarie Investment Management Business Trust and Macquarie Funds Management Austria Kapitalanlage AG. According to the Schedule 13G, as of December 31, 2019, Macquarie Investment Management Holdings Inc. has sole voting and dispositive power over 6,230,004 shares, Macquarie Investment Management Business Trust has sole voting and dispositive power over 6,230,004 shares, Macquarie Bank Limited has sole voting and dispositive power over 4,500 shares and Macquarie Funds Management Austria Kapitalanlage AG has sole voting and dispositive power over 3,912 shares. Macquarie Group Limited and Macquarie Bank Limited are each deemed to beneficially own 6,256,898 shares due to their ownership of the entities above. The address of Macquarie Bank Limited is 50 Martin Place, Sydney, New South Wales, Australia. The address of Macquarie Investment Management Holdings Inc. and Macquarie Investment Management Business Trust is 2005 Market Street, Philadelphia, PA 19103. The address of Macquarie Funds Management Austria Kapitalanlage AG is L3, Kaerntner Strasse 28, Vienna C4 1010.

4.
Information based on a Schedule 13/G filed on February 12, 2020. As of December 31, 2019, Dimensional Fund Advisors LP had sole power to vote for 5,424,168 shares and sole dispositive power for 5,524,442 shares. Shares are owned by funds in which Dimensional or one of its subsidiaries acts as investment advisor, sub-advisor and/or manager, and although Dimensional or its subsidiaries may possess voting and/or investment power over the securities and may be deemed the beneficial owner of the shares, Dimensional disclaims beneficial ownership of such securities.

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Shareholdings of Directors, Executive Officers and Nominees for Director

The following table shows the number of shares of First Financial beneficially owned, as of March 27, 2020, by each director and named executive officer of the Company, and all named executive officers and directors of the Company as a group.

    Amount and Nature of Beneficial
Ownership

Name

    Common Shares
Beneficially
Owned
  Percent of
Class

Non-Employee Directors

         

J. Wickliffe Ach

    24,872   *

Kathleen R. Bardwell

    27,305   *

William G. Barron

    805,604 2 *

Vincent A. Berta

    18,234 3 *

Cynthia O. Booth

    21,500   *

Claude E. Davis

    294,934 1 *

Corinne R. Finnerty

    60,357 4 *

Erin P. Hoeflinger

    9,734   *

Susan L. Knust

    49,785 5 *

William J. Kramer

    31,644   *

John T. Neighbours

    10,597   *

Thomas M. O'Brien

    91,065 6 *

Richard E. Olszewski

    53,307 7 *

Maribeth S. Rahe

    34,438   *

Named Executive Officers

         

Archie M. Brown

    229,207 1,8 *

James M. Anderson

    79,937 1,9 *

John M. Gavigan

    39,446 1 *

Anthony M. Stollings

    56,647   *

Karen B. Woods

    33,726 1 *

All named executive officers and directors as a group (19 persons)

  1,972,339   2.0%
*
Less than 1%

1.
Includes unvested performance-based restricted shares (Davis—31,848, Brown—52,880; Anderson—9,454; Gavigan—8,554; Woods—8,467). Executives retain voting and dividend (subject to escrow until vesting) rights on unvested performance-based restricted shares.

2.
Includes 2,750 shares jointly owned with spouse, 74,155 shares owned by spouse, and 656,200 shares owned by family trusts.

3.
Includes 11,285 shares owned by revocable trust.

4.
Includes 20,086 shares jointly owned with spouse.

5.
Includes 2,000 shares jointly owned with spouse in trust, 21,072 shares owned by revocable trust, 525 shares owned by agency trust and 4,231 shares owned by spouse in revocable trust.

6.
Includes 36,285 shares owned in revocable trust, and 25,227 shares owned by spouse in revocable trust.

7.
Includes 16,226 shares jointly owned with spouse.

8.
Includes 77,523 shares jointly owned with spouse, 41,846 shares held by 401(k) Savings Plan, and 14,273 options to purchase shares.

9.
Includes 17,008 shares owned by 401(k) Savings Plan, 436 shares owned for benefit of daughter and 637 shares owned for benefit of son.

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Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 requires officers, directors and persons who own more than 10 percent of a registered class of First Financial's equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC.

Based solely on a review of the copies of these Forms 3, 4, and 5 that are publicly available on the SEC's Edgar filing system and written representations from certain reporting persons that they were not required to file a Form 5 for the specific fiscal year, First Financial believes that all of its officers, directors and greater than 10 percent shareholders complied with all filing requirements applicable to them with respect to transactions completed in 2019, except that Claude Davis, John Gavigan and Richard Dennen filed amended Form 4s on February 14, 2020, to report shares acquired by them through the vesting of performance-based restricted shares that were omitted from previously filed Form 4s dated January 31, 2019 and March 8, 2019 and from subsequent filings.

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Corporate Governance

General

At First Financial we are committed to conducting business in accordance with our Corporate Strategy, which defines why we exist, and our Corporate Strategic Intent, which defines what we believe in.

Why do we exist?

To be woven into the communities we serve. To understand needs and offer financial solutions and resources in order to make lives better.

 

What do we believe in?
            
​  

 

 

Our Company We are confident in our collective abilities and believe that lives are made better by our existence.

 

 
            
​  
            

 

 

Whole-life Balance Our associates should be successful at work and at home.

 

 
            
​  
            

 

 

Being in-it Together Our team-based approach means we are all in it together.

 

 
            
​  
            

 

 

Mutual Respect We seek out, value and respect differences—in opinions, expertise and experiences.

 

 
            
​  
            

 

 

Doing the Right Thing We do the right thing for each other, our clients, communities and shareholders.

 

 
            
​  

Our Corporate Strategy and our Code of Conduct guide us in managing our business in line with high standards of business practices and in the best interest of our shareholders, clients, associates and stakeholders.

Code of Conduct

Our Board has adopted a Code of Conduct that applies to everyone at First Financial: our directors, officers and associates. The Code of Conduct identifies our commitment to our values and our responsibilities to our stakeholders, including our clients, our shareholders, our fellow associates, our regulators, and our communities. The Code of Conduct provides guidance on compliance with laws and regulations, non-discrimination, diversity and equal opportunity, protecting Company assets and confidential information, conflicts of interest, accuracy of records and information reporting, and our responsibilities to the communities in which we conduct business. The Code of Conduct also encourages associates to report any illegal or unethical behavior. All newly hired associates are required to certify that they have reviewed and understand the Code of Conduct. In addition, each year all other associates receive training and are asked to affirmatively acknowledge their obligation to follow the Code of Conduct.

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Code of Ethics for the CEO and Senior Financial Officers

Our Board has also adopted a Code of Ethics for our chief executive officer and senior financial officers that provides further guidance about their responsibilities for full, fair, accurate, timely and understandable disclosure in the periodic reports we file with the SEC.

Corporate Governance Principles

We believe that effective corporate governance is built on adherence to a number of "best practices." These practices are consistent with the Board's responsibilities to effectively oversee the Company's strategy, evaluate and compensate Company executives, and plan for management succession. Most importantly, these practices are believed to strengthen the Company and protect our shareholders' interests. Accordingly, the Board has developed and follows our Corporate Governance Principles to set forth common procedures and standards relating to corporate governance. The Corporate Governance Principles cover, among other things, board composition, executive sessions of the Board, director qualifications, director responsibilities, director independence, voting for directors, limitations on membership on other boards, continuing education for members of the Board, and Board performance evaluations.

Policies and Procedures Relating to Complaints

The Audit Committee has approved procedures for the receipt, retention and treatment of reports or complaints to the Audit Committee regarding accounting, internal accounting controls, auditing matters and legal or regulatory matters. These procedures also provide for the submission by associates of confidential, anonymous reports to the Audit Committee of concerns regarding questionable accounting or auditing matters.

Please visit the Corporate Governance portion of our investor relations website (at www.bankatfirst.com/investor) to learn more about our corporate governance practices and access the following documents:

Code of Conduct

 

Code of Ethics for the CEO and Senior Financial Officers

Corporate Governance Principles

 

Charters for our Board Committees

Our Board's Role in Risk Oversight

Assessing and managing risk is the responsibility of the Board and management of First Financial. Our Board, with the assistance of the Enterprise Risk and Compliance Committee and other Board committees as discussed below, reviews and oversees our Enterprise Risk Management ("ERM") program, which is designed to enable effective and efficient identification and management of critical enterprise risks and to facilitate the incorporation of risk consideration into decision-making. The ERM program was established to clearly define risk management roles and responsibilities, bring together senior management to discuss risk and promote visibility and constructive dialogue around risk at all levels of the organization.

The Company's risk governance structure starts with each line of business being responsible for managing its own risks. In addition, the Board and executive management have appointed a Chief Risk Officer to support the risk-oversight responsibilities of the Board and its committees.

An Enterprise Risk Management Committee ("ERMC") comprised of senior management is the senior most focal point within our Company to monitor, evaluate, and recommend comprehensive policies and solutions to deal with all aspects of risk and to assess the adequacy of any risk remediation plans in the Company's businesses. Various risk-related committees whose members are comprised of representatives from the lines of business, risk management, and senior management report to the ERMC.

The Chief Risk Officer provides the Board with a quarterly risk profile of the Company, as well as a report on the risk exposure of the Company from the viewpoint of the ERMC. Under the ERM program, management develops a holistic portfolio of Company enterprise risks by facilitating business and function risk assessments, performing targeted risk assessments and incorporating information regarding specific categories of risk gathered from various internal Company operations. Management then develops risk response plans for risks categorized as needing management focus and response and monitors other identified risk focus areas. Management provides regular reports on the risk portfolio and risk response and monitoring efforts to the ERMC and to the Enterprise Risk and Compliance Committee of our Board.

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Our Board assumes a significant oversight role in risk management both through its actions as a whole and through its committees. Additional information concerning each of the following committees may be found in the "Corporate Governance—Board Committees" section of this proxy statement.

The Audit Committee reviews our internal control systems to manage and monitor financial reporting and accounting risk with management and our internal audit department.

The Capital Markets Committee oversees the Company's capital markets, treasury and capital planning activities.

 

The Executive Compensation Committee evaluates, with our senior officers, risks posed by our incentive compensation programs and seeks to limit any unnecessary or excessive risks these programs may pose to us, in order to avoid programs that might encourage such risks.

The Enterprise Risk and Compliance Committee assists the Board in overseeing enterprise-wide risks, including credit, regulatory compliance, market, operational, technology, legal, strategic, and reputation risks.

The Corporate Governance and Nominating Committee ("CGNC") oversees our corporate governance functions.

While each of these committees is responsible for evaluating certain risks and overseeing the management of these risks, the entire Board is regularly informed through committee reports about such risks. Select members of management attend our Board and Board committee meetings (other than executive sessions) and are available for questions regarding particular areas of risk.

Director Independence

Our Board has determined that all of our directors, except Claude Davis, who served as Executive Chair and Chief Executive Officer within the past three years, and Archie M. Brown, our current Chief Executive Officer, are independent directors as that term is defined in the Nasdaq Stock Market Marketplace Rules (the "Nasdaq Rules"). In addition, our Board has determined that each member of the Audit, Executive Compensation, and Corporate Governance and Nominating Committees is independent under such definition and that the members of the Audit Committee are independent under the additional, more stringent requirements of the Nasdaq Stock Market and the Securities Exchange Act of 1934 applicable to audit committee members. These determinations are made annually, most recently in March 2020.

Under the Nasdaq Rules and our Corporate Governance Principles, independent directors must not have a relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of being a director. In making this determination, our Board reviews and evaluates transactions and relationships with Board members to determine the independence of each of the members. In making the independence determinations for each of the directors, the Board took into consideration the transactions and relationships disclosed in this proxy statement under "Review and Approval of Related Person Transactions" below.

Board Leadership Structure

Beginning in 2018, our Board leadership structure changed to include an Executive Chair (Claude Davis) and an independent Lead Director (J. Wickliffe Ach). Claude Davis retired from his position as an employee of the Company on December 31, 2019, but remains Chair of the Board, with responsibility for presiding over each Board meeting and performing such other duties as may be incident to the office as determined by the Board. Because Mr. Davis is not currently independent due to his previous roles as CEO and Executive Chair, the Board continues to have an independent Lead Director. Effective as of the date of the Annual Meeting, Vince Berta will become the Lead Director, with responsibility for consulting with the Chair regarding Board meetings and meeting agendas, acting as a liaison between the Chair and the independent directors with respect to various matters, and leading executive sessions of the independent directors. Although our corporate documents would allow our chair to also hold the position of chief executive officer, our Corporate Governance Principles provide that these two positions must be separate.

The Board believes that the existing structure with an independent Lead Director has worked effectively, particularly with respect to the Lead Director's role as liaison between the Chair and the independent directors. The Chair, Mr. Davis, is best situated to serve as chair of the board because of his extensive experience in the banking industry and his history as former President and CEO of the Company, and the Company and the shareholders are well served by having his industry expertise, knowledge and visibility in the role. The Board intends to continue to evaluate the appropriate structure of the Board from time to time.

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Board Self-Assessment

Our Board conducts a self-assessment annually, which our CGNC reviews and discusses with the Board. In addition, each of the committees of the Board is expected to conduct periodic self-assessments.

Evaluating Nominees and Electing Directors


Evaluating Nominees

The CGNC evaluates director candidates based upon criteria established by the committee and applies the same evaluation process to all director nominees regardless of whether the nominee is recommended by a shareholder or by the Board. The criteria evaluated by the CGNC may include, among other things, the candidate's judgment, integrity, leadership ability, business experience, industry knowledge, public company experience, professional reputation, and ability to contribute to board member diversity (including, but not limited to gender, race, and ethnicity, as well as experience, geography, qualifications, attributes, and skills). The CGNC recognizes that diversity of the Board is an important part of its analysis as to whether the Board constitutes a body that possesses a variety of complementary skills and experiences. The CGNC also considers whether the candidate meets independence standards, is "financially literate" or a "financial expert" if appropriate for governance needs, is available to serve, and is not subject to any disqualifying factor. No single individual trait is given particular weight in the decision process.


Policy on Majority Voting

Although our Articles of Incorporation and Amended Regulations provide that director nominees who receive the greatest number of shareholder votes are automatically elected to the Board, our Board has adopted a policy on majority voting for the election of directors which is included in our Corporate Governance Principles. The majority voting policy requires nominees who receive a greater number of votes "withheld" from his or her election than votes "for" his or her election to tender his or her written resignation to the CGNC for consideration by the committee following the certification of the shareholder vote. This requirement applies only in an uncontested election of directors, which is an election in which the only nominees are persons nominated by the Board.

Upon its receipt of a resignation from a director who has not received the requisite shareholder vote, the CGNC will then consider the resignation and make a recommendation to the Board concerning whether to accept or reject such resignation. In making its recommendation to the Board, the CGNC will consider all factors deemed relevant by members of the committee, including the stated reason or reasons why shareholders who cast "withhold" votes for the director did so, the qualifications of the director (including, for example, whether the director serves on the Audit Committee of the Board as an "audit committee financial expert" and whether there are one or more other directors qualified, eligible, and available to serve on such committee in such capacity), and whether the director's resignation from the Board would be in the best interest of First Financial and its shareholders.

The CGNC also will consider a range of possible alternatives concerning the director's tendered resignation, including acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the committee to have substantially resulted in the "withheld" votes. The Board will take formal action on the CGNC's recommendation no later than 90 days following the certification of the shareholder vote. In considering the committee's recommendation, the Board will consider the information, factors and alternatives raised by the committee and such additional information, factors and alternatives as the Board deems relevant. We will publicly disclose, in a Form 8-K filed with the SEC, the Board's decision, together with an explanation of the process by which the Board made its decision and, if applicable, the Board's reason or reasons for rejecting the tendered resignation within four business days after the Board makes its decision.


Shareholder Nominations for Election to the Board

The CGNC will consider director candidates recommended by shareholders in accordance with the procedures outlined in the Amended Regulations. In order to be recommended for a position on the Board by the committee, a proposed nominee must, at a minimum, (i) be able to comply with the Company's Corporate Governance Principles, and (ii) through a combination of experience and education, have the skills necessary to make an effective contribution to the Board.

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In connection with next year's Annual Meeting of Shareholders, the CGNC will consider director nominees recommended by shareholders provided that notice of a proposed nomination is received by the Company no later than February 25, 2021, as provided in the Amended Regulations. Notice of a proposed nomination must include the information outlined in the Amended Regulations and should be sent to First Financial Bancorp., Attention: Karen B. Woods, Corporate Secretary, 255 E. Fifth Street, Suite 2900, Cincinnati, OH 45202.

Director Education

We recognize the importance of our directors keeping current on Company and industry issues and their responsibilities as directors. All new directors attend orientation training soon after being elected to the Board. The Board also encourages attendance at continuing education programs for Board members, which may include internal strategy or topical meetings, third-party presentations, and externally-offered programs.

Share Ownership Guidelines

All directors are required to own First Financial shares equal to the lesser of five times the director's annual retainer or 10,000 shares. All current directors are in compliance with these guidelines. Future directors will be required to satisfy this requirement within four years of first becoming a director of the Company. We have also implemented stock ownership and retention guidelines for our named executive officers described further in the Executive Compensation portion of this proxy statement.

Succession Planning

In light of the critical importance of executive leadership to our success, we have instituted an annual succession planning process which is guided by the CGNC.

The succession planning process addresses

our chief executive officer position,

 

senior-level managers enterprise-wide.

the positions directly reporting to the chief executive officer, and

 

 


Management regularly identifies high-potential executives for

additional responsibilities,

new positions,

promotions,

 

or similar assignments to expose them to diverse operations within the Company, with the goal of developing well-rounded and experienced senior leaders.


The CGNC reports to the full Board on its findings and the Board deliberates in executive session on the CEO succession plan.

Meetings of the Board of Directors and Committees of the Board

During 2019, the Board held nine scheduled meetings. We believe it is important for our directors to participate in board and committee meetings. A director who participates in fewer than 75% of scheduled meetings of the Board and committees of which the director is a member, or who does not attend the annual meeting of shareholders, unless excused by the Board, is subject to not being re-nominated to the Board. In 2019, all directors attended more than 75% of the scheduled meetings. All directors attended the 2019 Annual Meeting of Shareholders.

The Board also held eight executive sessions in 2019 where only independent directors were present.

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Board Committees

Through March 31, 2020, our Board had established the following standing committees: Audit Committee, Capital Markets Committee, Executive Compensation Committee (the "Compensation Committee"), Corporate Governance and Nominating Committee, and Enterprise Risk and Compliance Committee. Each committee operates pursuant to a committee charter that is approved by the Board, which is the case for the CGNC Charter, or by the CGNC to whom the Board has delegated the authority to approve other committee charters. Each Board committee serves as a joint board committee of First Financial Bank in addition to being a Board committee of First Financial Bancorp.

The charters of the Audit, Compensation, Corporate Governance and Nominating and Enterprise Risk and Compliance Committees each comply with current Nasdaq Rules relating to charters and corporate governance. Each of these charters is available under the Corporate Governance portion of our investor relations website (at www.bankatfirst.com/investor).

Audit Committee

   Members: William J. Kramer, Chair, Kathleen L. Bardwell, Vice Chair, Thomas M. O'Brien, Richard E. Olszewski,
                       Maribeth S. Rahe

Number of Meetings in 2019: 9

 
Committee Primary Responsibilities:    

Monitor the integrity of the consolidated financial statements of the Company.

 

Monitor compliance with the Company's Code of Conduct and Code of Ethics for the CEO and Senior Financial Officers.

Evaluate and monitor the qualifications and independence of the Company's independent auditors.

 

Evaluate and monitor the performance of the Company's internal audit function and independent auditors, with respect to First Financial and its subsidiaries

All members of the Audit Committee were determined to meet the independence and financial literacy standards of the Nasdaq Rules. Directors Kramer, Rahe, and Bardwell are "audit committee financial experts" for purposes of SEC regulations.

Compensation Committee

   Members: Thomas M. O'Brien, Chair, Susan L. Knust, Vice Chair, Erin P. Hoeflinger, William J. Kramer

Number of Meetings in 2019: 5

 
Committee Primary Responsibilities:    

Determine and approve the compensation of the CEO and each executive officer of the Company.

 

Evaluate the performance of the Company's CEO for all elements of compensation and all other executive officers with respect to incentive goals and compensation.

Review and evaluate all equity and benefit plans of the Company.

 

Oversee the preparation of the compensation discussion and analysis and recommend to the full Board its inclusion in the annual proxy statement.

Annually review the incentive compensation arrangements to see that such arrangements do not encourage unnecessary and excessive risks that threaten the value of the Company.

 

Recommend to the Board compensation for non-employee directors.

All members of the Compensation Committee were determined to meet the independence standards of the Nasdaq Rules.

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Corporate Governance and Nominating Committee

   Members: J. Wickliffe Ach, Chair, Kathleen L. Bardwell, Vice Chair, William G. Barron, Corinne R. Finnerty, Richard E.
                       Olszewski

Number of Meetings in 2019: 4

 
Committee Primary Responsibilities:    

Develop and periodically review the effectiveness of the Company's Corporate Governance Principles.

 

Monitor and protect the Board's independence.

Consult with the Chairman of the Board concerning the appropriate Board committee structures and appointment of members to each committee of the Board.

 

Establish procedures for the director nomination process and recommend nominees for election to the Board.

Oversee the formal evaluation of the Board and all Board committees, including any formal assessment of individual directors.

 

Review shareholder proposals and proposed responses.

Promote the quality of directors through continuing education experiences.

 

Annually delegate to the respective committees of the Board or to management, the authority and responsibility for reviewing and approving policies and procedures of the Board (including the board of directors of First Financial Bank) in connection with the Company's ERM program.

All members of the CGNC were determined to meet the independence standards of the Nasdaq Rules.

Enterprise Risk and Compliance Committee

   Members: Vincent A. Berta, Co-Chair, Cynthia Boothe, Co-Chair, William G. Barron, Corinne R. Finnerty, Erin Hoeflinger,
                       John T. Neighbours

Number of Meetings in 2019: 4

 
Committee Primary Responsibilities:    

Review with management the Company's procedures and techniques to measure the Company's risk exposures and for identifying, evaluating and managing the significant risks to which the Company is exposed and approve related policies.

 

Monitor the Company's risk management performance and ensure that the Company's risk management policies for significant risks are being adhered to.

Consider and provide advice to the Board on the risk impact of any strategic decision that the Board may be contemplating.

 

Periodically examine the risk culture of the Company.

Periodically set the risk appetite for the Company and monitor compliance with the risk appetite statement including development of risk tolerances, targets and limits.

 

Review the Company's credit portfolio.

Review disclosures regarding risk in annual and, if necessary, quarterly SEC filings.

 

 

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Capital Markets Committee

   Members: Maribeth S. Rahe, Chair, Cynthia O. Booth, Vice Chair, Vincent A. Berta, Susan L. Knust, John T. Neighbours

Number of Meetings in 2019: 4

 
Committee Primary Responsibilities:    

Monitor the management of the purchase, sale, exchange, and other disposition of the investments of the Company, including review of management reports concerning current equity debt security investment positions.

 

Monitor the investment activities of the Company to ensure compliance with external regulations and the Company's applicable policies including requirements relating to composition, diversification, credit risk, and yield.

Monitor the capital position of the Company and the capital management activities undertaken by the Company to ensure that capital levels are maintained in accordance with regulatory requirements and management directives.

 

Monitor and oversee interest rate risk, capital market activities, the investment portfolio, and capital planning of First Financial Bank.

Review and Approval of Related Person Transactions

Each year, our directors and executive officers complete annual questionnaires designed to elicit information about potential related person transactions and transactions that may otherwise affect the independence of a director. The responses to these questionnaires are reviewed by the General Counsel and Corporate Secretary of the Company, and outside counsel if appropriate, to determine if there are related person transactions. Related person transactions will originally be submitted to the Audit Committee of the Board for approval as well as to the CGNC for its consideration when making independence determinations.

Pursuant to the Corporate Governance Principles, no director shall perform professional services for the Company or its affiliates in a manner that interferes with that director's independence under the Nasdaq Rules. This prohibition applies to services provided (1) directly by the director (or an immediate family member) or (2) where the director (or an immediate family member) is affiliated with the organization that provides the professional services to the Company. This prohibition does not apply to professional services that are provided by the director to clients of the Company (or its affiliates) where the Company (or its affiliates) has not given instruction that the service be provided by the director and the Company (or its affiliates) is not the party responsible for payment for the professional services. Professional services can be characterized as advisory in nature, generally involve access to sensitive company information or to strategic decision-making, and typically have a commission- or fee-based payment structure. Professional services may include services such as investment services, insurance services, accounting/auditing services, consulting services, marketing services, legal services, property management services, realtor services, lobbying services, executive search services, and IT consulting services.

First Financial Bank has, and expects to have in the future, banking relationships in the ordinary course of business with directors, executive officers, principal shareholders, and their affiliates on the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with others. Normal, arms-length banking relationships entered into in the ordinary course of business, and consistent with applicable federal banking regulations, are not considered to interfere with a director's independence. Service specialization, rate concessions, fee concessions, or other service or product modifications may similarly be offered to directors and executive officers, and their affiliates, if the same would be offered to other similarly situated clients on a non-discriminatory basis in the ordinary course of business. All loans or extensions of credit to a director or officer, or their affiliates, (i) were made in compliance with Federal Reserve Board Regulation O, (ii) were made in the ordinary course of business, (iii) were made on substantially the same terms, including interest rates and nature of collateral, as those prevailing at the time for comparable transactions with other persons not related to the Company, and iv) did not involve more than the normal risk of collectability or present other unfavorable features. In addition, the Company or its subsidiaries from time to time may pay immaterial amounts for such items as event sponsorships and contributions to not-for-profit entities with which our directors have relationships and which payments are in furtherance of our Company's business interests.

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Transactions with Related Parties

During 2019, no related person transactions involving our directors or executive officers (or members of their immediate family) requiring disclosure in this proxy statement were identified nor are any such related person transactions currently proposed.

Compensation Committee Interlocks and Insider Participation

During 2019, no member of the Compensation Committee was an employee, officer or former officer of the Company. None of our executive officers served in 2019 on the board of directors or compensation committee (or other committee serving an equivalent function) of any entity that had an executive officer serving as a member of our Board or the Compensation Committee. All banking or financial services transactions between the Compensation Committee members and First Financial Bank were entered into in the ordinary course of business. No other relationships required to be reported under the rules promulgated by the SEC exist with respect to members of the Company's Compensation Committee.

Policy Against Hedging Activities

Our Insider Trading Policy prohibits our directors, officers and associates from engaging in any hedging transactions with respect to First Financial shares, including prepaid variable forward contracts, equity swaps, collars and exchange funds, and trading in any derivative security relating to First Financial shares.

Communicating with the Board of Directors

Shareholders may send communications to the Company's Board or to individual directors by writing to:

Letters mailed to this address will be received by the director who serves as Chair of the Audit Committee or the director who serves as Chair of the CGNC, as alternate. A letter addressed to an individual director will be forwarded unopened to that director by the Chair of the Audit Committee or his delegate.

Shareholders may also contact the Company's Corporate Secretary, Karen B. Woods, at First Financial Bancorp., 255 E. Fifth Street, Suite 2900, Cincinnati, OH 45202.

Information regarding this process is also available within the Investor Relations section of our website at www.bankatfirst.com/investor under the "Corporate Governance" tab, by clicking on the link "Communicating with the Board of Directors."

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Executive Compensation

Compensation Discussion and Analysis

I.   Executive Summary     45       Market Competitiveness     50  
    Introduction     45   IV.   Compensation of Executives in 2019     51  
    2019 Business Highlights     46       Elements and Mix of Compensation     52  
    2019 Executive Compensation Highlights     47       Pay for Performance     52  
    Best Practices     48   V.   2019 Board Compensation     59  
II.   Compensation Philosophy and Objectives     48   VI.   Compensation of Executives in 2020     60  
III.   Compensation Decision Making     49   VII.   Policies, Guidelines and Other Practices     60  
    Role of the Compensation Committee     49                
    Role of Executive Management     50   Compensation Committee Report     62  
    Role of the Compensation Consultant     50                


I.    Executive Summary

Introduction

This Compensation Discussion and Analysis (this "CD&A") describes and explains the material elements of 2019 compensation for our Chief Executive Officer, our Chief Financial Officer, and our other highly compensated executive officers. Detailed information regarding the compensation of these executive officers, also called "Named Executive Officers" or "NEOs", is set forth in the tables following this Compensation Discussion and Analysis. We also provide an overview of our executive compensation philosophy and our executive compensation program. In addition, we explain how and why the Compensation Committee (or the "Committee") of our Board arrived at specific compensation policies and decisions involving the NEOs.

For 2019, our Named Executive Officers are:

Name
  Title
Archie M. Brown   President and Chief Executive Officer
James M. Anderson   Chief Financial Officer
Claude E. Davis1   Executive Chair
John M. Gavigan   Chief Operating Officer
Anthony M. Stollings2   EVP, Commercial Banking
Karen B. Woods   General Counsel and Chief Risk Officer
1.
Mr. Davis retired from the Company on December 31, 2019 but remains Chair of the Board of Directors.

2.
Mr. Stollings retired from the Company on September 1, 2019.

You should read this section of the proxy statement when determining your vote on the compensation of our NEOs (see Proposal 4—Non-Binding, Advisory Vote to Approve Executive Officer Compensation). This CD&A contains information that is important to your voting decision.

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2019 Business Highlights

2019 was the first full year of operations following the merger of First Financial and MainSource Financial Group, Inc. in April 2018. As projected when the merger was announced, the combination of First Financial and MainSource resulted in the creation of a top quartile performing bank. During 2019, the Company continued to execute upon its strategic plan, making several investments in order to position itself to compete, innovate and win. The 2019 highlights include:

These significant investments coincided with the Company's achievment of strong financial success:

GRAPHIC
1.
Non-GAAP financial measure which management believes facilitates a better understanding of the Company's financial condition. See Appendix for Non-GAAP reconciliation.

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2019 Executive Compensation Highlights

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Best Practices

Our Compensation Committee follows many compensation and corporate governance best practices when establishing executive compensation:

What We Do
  What We Don't Do

Mandate that all members of the Compensation Committee must be independent

 

Include tax gross-ups in our compensation plans

Impose robust stock ownership guidelines on our executive officers

 

Provide our executives with significant perquisites.

Emphasize long-term compensation for executives, including a three-year vesting period on all long-term incentive awards

 

Pay dividends on unvested restricted stock. All dividends accrue and are paid only on earned shares once the stock has vested.

Regularly obtain guidance from an independent compensation consultant as to the amount and mix of compensation

 

Allow our directors, executives or other employees to hedge, pledge or sell short our stock

Require a double trigger in the event of a change in control (both a change in control and an involuntary termination or reduction in compensation must occur) before severance awards may be paid

 

Allow shares forfeited under our equity plans to be re-issued (share recycling)

Require a double trigger for the acceleration of vesting of our equity awards in the event of a change in control

 

Allow for the repricing of any stock options

Require a clawback of incentive compensation in the event of fraud that results in the restatement of our financial statements or willful misconduct

   

Permit significant discretion by the Compensation Committee to adjust compensation for various factors, including the creation of excess risk

   

Consider the Company's "say-on-pay" vote results when making compensation decisions. At the annual meeting of shareholders in 2019, the Company's 2018 executive compensation program received overwhelming shareholder approval with 97.7% of shareholder votes cast in favor of the Company's "say-on-pay" resolution.

   


II.    Compensation Philosophy and Objectives

The compensation program adopted by the Compensation Committee is designed to reward employee performance and the growth of long-term shareholder value. The Compensation Committee seeks to attract, retain and motivate the Company's employees by aligning competitive, market-based compensation programs with the Company's objectives, business strategy and financial performance. At the same time, the Committee seeks to ensure that the Company's compensation program promotes a customer-focused culture in which employees are not incentivized to take inappropriate risks.

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The Compensation Committee has identified the following guiding principles that form the basis for the Company's compensation program. Compensation should:

    Support a pay-for-performance culture that results in the growth of long-term shareholder value.

      For executives, a higher percentage of pay should be variable based on the achievement of corporate financial goals. The compensation program should also promote stock ownership to enhance alignment with shareholders.

      For non-executives, compensation should motivate both corporate and individual goals.
    Drive alignment with the Company's strategic plan and business goals, creating a clear line of sight between objectives and the rewards for achieving them.
    Be competitive within the market to enable the Company to attract and retain high performing employees who are critical to the Company's success.
    Incorporate proper governance practices and be structured to ensure employees are not incentivized to take unnecessary or excessive risks.
    Be fair, internally equitable and flexible when appropriate and necessary.


III.    Compensation Decision-Making

Three parties play an important role in establishing compensation levels for the Company's executive officers: (i) the Compensation Committee, (ii) senior management, and (iii) outside advisors. The sections that follow describe the role each of these parties plays in the compensation-setting process, as well as other important factors that impact compensation decisions.

Role of the Compensation Committee.    The Compensation Committee has the responsibility to:

In determining the amount of NEO compensation each year, the Compensation Committee reviews competitive market data from the banking industry as a whole, as well as peer group data. It makes specific compensation decisions and awards based on such information, along with Company performance, individual performance and other circumstances as appropriate.

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Role of Executive Management in Compensation Decisions for NEOs

Throughout the year, the Compensation Committee meets with the CEO and other executive officers to solicit and obtain recommendations with respect to the Company's compensation programs and practices. The CEO makes recommendations to the Compensation Committee as to the appropriate base salaries, annual cash incentive opportunities, and stock awards for the executive officers other than himself.

In approving compensation for 2019, the Compensation Committee considered the CEO's recommendations for the executive officers. The Compensation Committee, in consultation with its compensation consultant and the Executive Chair of the Board, made its own determinations regarding the compensation for the CEO, which were then ratified and approved by the Board.

Role of the Compensation Consultant

To assist in its efforts to meet the objectives outlined above in 2019, the Compensation Committee retained Meridian Compensation Partners, LLC to provide general executive compensation consulting services to the Committee and to advise and counsel management. Pursuant to the Compensation Committee's charter, the Compensation Committee has the power to retain or terminate such consultant and engage other advisors.

The independent compensation consultant typically collaborates with management to obtain data, clarify information, and review preliminary recommendations prior to the time they are shared with the Compensation Committee. The consultant provides data regarding market practices, and works with management to develop recommendations for changes to plan designs and policies consistent with the philosophies and objectives discussed earlier.

In accordance with SEC Rules and NASDAQ listing standards, the Committee took appropriate actions to confirm the independence of Meridian Compensation Partners, LLC.

Market Competitiveness

From time to time, our Compensation Committee considers the compensation practices of a group of similarly-sized publicly-traded financial services/banking organizations designated as the Company's peer group in establishing and reviewing the compensation of our executive officers. Companies have historically been included in the Company's peer group based on their relevance in terms of asset size (approximately one-half to two times the asset size of the Company), business model, products, services and geographic location as compared to that of the Company, as well as those the Compensation Committee deem to be high performing financial institutions. The Committee reviews and approves the peer group annually with input from our independent compensation consultant and management.

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The 2019 peer group consisted of the following 20 financial services companies:

Name of Institution

    Asset Size as of October 2019
(In Billions)
 

Pinnacle Financial Partners, Inc.

    $26.5  

TCF Financial Corporation

    $24.6  

Chemical Financial Corporation

    $22.5  

Fulton Financial Corporation

    $21.3  

Old National Bancorp

    $20.1  

United Bankshares, Inc.

    $19.9  

BancorpSouth Bank

    $18.9  

Simmons First National Corporation

    $17.9  

Cadence Bancorporation

    $17.5  

First Midwest Bancorp, Inc.

    $17.5  

Peer Median

  $17.3  

Atlantic Union Bankshares Corporation

    $17.2  

South State Corporation

    $15.7  

Trustmark Corporation

    $13.5  

Renasant Corporation

    $12.9  

United Community Banks, Inc.

    $12.8  

WesBanco, Inc.

    $12.5  

Heartland Financial USA, Inc.

    $12.2  

Customers Bancorp, Inc.

    $11.2  

First Merchants Corporation

    $10.7  

Park National Corporation

    $8.7  

First Financial Bancorp

  $14.4  

Our Compensation Committee uses peer information as a reference point when evaluating the elements and amounts of the compensation paid to our Chief Executive Officer and our other executive officers. The Committee does not establish the compensation of our executive officers using direct comparisons to our peer group, but instead uses peer group data as a competitive market check on executive officer compensation. Peer group data is one of several factors used by the Compensation Committee when setting the compensation of our Chief Executive Officer and other executive officers.


IV.    Compensation of Executives in 2019

The Compensation Committee regularly reviews peer and industry information concerning levels of compensation and performance in order to make competitive pay decisions. In 2019, the Compensation Committee used this information and analysis as a benchmark for setting pay opportunities, such as changes to base salary, annual incentive awards and long-term incentive grants.

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Elements and Mix of Compensation

The three primary components of executive compensation are base salary, annual incentive awards and equity based long-term incentive awards. Benefits comprise a smaller component of overall pay. The purpose and features of each component are summarized in the sections below.

    Performance-Based Compensation:    
                                    
    Base Salary—

To competitively compensate executives for day-to-day contributions, skills, experience, and expertise.

          Short-Term Incentive Compensation—

To motivate executives through the opportunity to share in the rewards of the current year's results.

          Long-Term Equity Incentive Compensation—

To motivate executives through the opportunity to share in the rewards of sustained long-term results and value creation consisting of both time- and performance-based restricted stock.

   
                                    

 

 

Non-Performance Based Benefits:

 

 
                                    
    To provide competitive benefits that encourage retention by supporting the security and protection of executives and their families, including:

Employment agreements and change in control and severance agreements;

Retirement and other benefits; and

Limited perquisites and other personal benefits.

   

The Compensation Committee takes a holistic approach to establishing the total compensation package for its executives and each element of compensation is interdependent on the other elements. Applying the Company's core values and drawing upon the principles and philosophy discussed above, the Compensation Committee utilizes these elements of compensation as building blocks to construct a complete compensation package for each executive that appropriately satisfies the core design criteria of pay for performance, alignment with shareholder interests, market competitiveness, proper governance and compliance with all legal and regulatory guidelines.

The mix and relative weighting of each compensation element reflect the competitive market and the Company's compensation philosophy. The mix of pay may be adjusted from time to time to best support our immediate or longer-term objectives, changes in executive responsibility, and internal consistency.

Target compensation for each NEO is a mix of short-term (cash) and long-term (stock) incentives. A substantial portion of this mix is at risk and varies based on the performance of the Company, including the creation of long-term shareholder value. The emphasis on compensation elements related to performance is specifically intended to affect the actual level of compensation realized versus target. If the Company performs well (based on both internal objectives and peer group comparisons), award levels are intended to be strong. If the Company underperforms, award levels and values will be negatively impacted.

The mix of compensation awarded in 2019 to our NEOs reflects our compensation philosophy. A substantial portion of our executives' compensation is performance-based and at risk.

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CEO

GRAPHIC

Other NEOs:

GRAPHIC

Base Salary

Base salaries for our NEOs reflect their role and value to the Company. Base salaries are reviewed annually and adjusted as appropriate to reflect each NEO's performance, contribution, and experience as well as relative position to the market and each other. Base salary levels are a foundational component of compensation since several elements of compensation are linked to this core element (e.g., cash and stock incentives). At lower executive levels, base salaries represent the largest portion of total compensation, but at senior executive levels such fixed compensation is progressively replaced by compensation that is "at risk" and varies based on performance outcomes.

The Compensation Committee sets base salaries for NEOs by utilizing published survey data that is position specific. In addition, the Committee, to the extent available, will supplement the survey data with proxy information on base salaries paid by the peer group to executive officers with comparable positions. The Committee will also allow for recognition of each executive's role, contribution, performance and experience. The Compensation Committee reviews base salaries annually but may engage in additional reviews as necessary to address competitive increases or to reflect increases in a particular NEO's responsibilities.

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The Compensation Committee reviewed peer data in order to ensure that base salaries are competitive within the market, with a general goal of ensuring that base salaries and total compensation are competitive with the median of the market data. The table below provides the base salaries as of March 2019:

Named Executive Officer

    Base Salary
 

Archie M. Brown

    $800,207  

James M. Anderson

    $395,000  

Claude E. Davis

    $776,900  

John M. Gavigan

    $350,000  

Karen B. Woods

    $365,000  

Anthony M. Stollings

    $430,000  

Short-Term Incentive Compensation

Short-term incentives serve as a key mechanism to vary pay levels according to Company-wide short-term performance, linking executive financial rewards to the value delivered to our shareholders. Such incentives are earned and paid annually, but only after established threshold corporate performance levels are achieved. To underscore the importance of creating value for our shareholders, payouts for the Company's executive officers under the short-term incentive plan ("STIP") are based entirely on corporate, rather than individual, performance. This approach also emphasizes that collective individual performances will result in improved business performance and favorably impact shareholder value.

2019 Target Compensation.    Generally, the Compensation Committee establishes target compensation levels for our executives under the STIP at the beginning of each fiscal year, taking into consideration such factors as the compensation philosophy, program objectives, relevant market data, individual performance and the scope and responsibility of each individual. In general, target short-term incentive opportunities are targeted at or below market median levels, with executives having the opportunity to earn higher payouts if warranted based on the overall performance of the Company.

In 2019, the Compensation Committee engaged in a review of the executive team's STIP target levels and made certain adjustments in order to ensure that 2019 target compensation provided reasonable target pay opportunities in relation to pay offered for comparable positions by financial services companies included in our peer group.

Target award opportunities are expressed as a percentage of actual base salary paid for the performance year for all participants. Actual awards may range from 0% to a maximum of 200% of the target award opportunity. The NEO target levels were as follows for the 2019 plan year:

Named Executive Officer

    Target STIP (as a percentage
of base salary)
 

Archie M. Brown

    70 %

James M. Anderson

    50 %

Claude E. Davis

    60 %

John M. Gavigan

    50 %

Karen B. Woods

    50 %

Anthony M. Stollings1

    n/a  
1.
Mr. Stollings did not receive a short-term incentive compensation award in 2019 due to his retirement on September 1, 2019.

2019 Performance Measures

Performance measures and their relative weightings are selected and approved by the Compensation Committee based on their relevance as key, balanced measures that drive shareholder value creation and align with the Company's internal, board-approved business plan. Performance is measured over a 12-month period for all participants (including the NEOs).

Traditionally the STIP performance measures include a mix of 2-3 absolute and relative measures designed to reflect the Company's performance compared to its budget and its peers. For 2019, the Compensation Committee selected

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2 measures. The first is Return on Assets (ROA) relative to the KBW Regional Banking Index (KBW Index), comprising 75% of the STIP payout. The KBW Index is made up of approximately 50 regional banks (excluding the Company) located throughout the country that are generally within an asset and market capitalization range comparable to the Company. This peer group is broader than the Company's established peer group which is used for setting overall compensation. This goal was selected because of its strong correlation with shareholder value.

Additionally, the Compensation Committee selected classified assets as a percentage of total assets compared to the KBW Index, comprising 25% of the STIP payout. The Committee believed this measure was important as a component of short-term compensation in order to ensure that the Company remained focused on the quality, and not just the quantity, of growth.

Based upon these considerations, the Committee approved the following metrics for the Company's 2019 STIP:

      Payout

Metric

  Weight   <25% of
Peers
  50% of Peers   75% of Peers   >90% of
Peers

Return on Assets (relative to peer)

  75%   0% Target
Payout
  100% Target
Payout
  150% Target
Payout
  200% Target
Payout

Classified Assets (relative to peer)

  25%   0% Target
Payout
  100% Target
Payout
  150% Target
Payout
  200% Target
Payout

In order to generate a payout, the Company's ROA and Classified Assets were each required to exceed a threshold of the 25th percentile of the peer group. Thereafter, the actual payout was interpolated with a maximum of 200% of the payout of the target award opportunity.

Additionally, the Committee determined that no payouts under the STIP would be made if the Company's earnings per diluted share was below $0.

The Compensation Committee has discretion to make a downward adjustment to STIP payouts in the event of a material risk management failure or a material error that results in financial restatement. Additionally, the Compensation Committee has discretion to adjust the formulaically-calculated payout for performance in non-financial areas that may or may not directly affect the Company's achievement of specific financial metrics for a particular year but are nevertheless important to the enhancement of shareholder value. The Committee did not make any adjustments in 2019 as a result of this discretion.

2019 STIP Payouts

The calculation of the payouts for 2019 under the annual Short-Term Incentive Compensation Plan for all participants, including the named executive officers of the Company, was as follows:

          FFBC—12 months GAAP (adjusted)
ending December 31, 2019
KRX Peer Group1—3Q19 ending September 30, 2019

Measure

      FFBC
Results
(%)
  FFBC
Ranking
(percentile)
  Payout
Multiple
  Total
Payout
(%)
  Peer
Group
Component
Median
(%)
  Peer
Group
Component
Top
Quartile
(%)
  Peer
Group
Component
Lowest
Quartile
(%)

Return on Assets

  75%   1.49   75.5   3.3   151.7   1.28   1.47   1.14

Classified Assets

  25%   0.62   82.0   3.3   173.3   0.96   0.66   1.44

                  157.1            
1.
Peer performance reflects data for the twelve months ended September 30, 2019. Company performance based on 12-month GAAP (adjusted) actuals ended December 31, 2019. Information concerning the reconciliation of non-GAAP information is provided in Appendix A.

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Based upon the Company's performance at 157.1% of target, the Compensation Committee approved the following STIP payouts to the Company's NEOs for 2019:

Named Executive Officer

    Total STIP Payout
 

Archie M. Brown

    $876,617  

James M. Anderson

    $306,657  

Claude E. Davis

    $732,306  

John M. Gavigan

    $273,892  

Karen B. Woods

    $285,158  

Anthony M. Stollings1

    n/a  
1.
Mr. Stollings did not receive a payment under the STIP as a result of his retirement on September 1, 2019.

Long-Term Incentive Compensation

The Company's long-term incentive program ("LTIP") is designed for the Company's senior leaders who have a direct and measurable impact on the long-term performance of the Company. The LTIP is a key component of the total compensation package and is intended to help attract, motivate and retain top professionals in the organization. Because the LTIP awards vest over a three-year period, the awards serve to align management and shareholder interests, including the long-term success of the Company and increased shareholder value.

The LTIP awards for senior executives, including the NEOs, include a portion of restricted stock with time vesting and a portion of restricted stock with performance vesting.

Time-Based Restricted Stock Awards.    Time-based restricted stock awards generally vest over three years, with a third of each award vesting on each anniversary date of the date of grant. Dividends paid on restricted stock are held in escrow and not paid until the restrictions lapse and the stock is fully vested.

Performance-Based Restricted Stock Awards.    Performance-based restricted stock vests after three years only upon attainment of certain pre-determined performance measures (generally relative total shareholder return and relative return on assets). The award is structured such that at the end of the three-year performance period:

Performance-based restricted stock comprised 50% of LTIP for our Executive Chair and our CEO, and 25% of LTIP for our other NEOs.

Vesting of 2016 LTIP Performance-Based Stock Awards

In 2019, the Committee approved the vesting of certain awards of performance-based restricted stock issued on March 8, 2016. The performance-based restricted stock vested on March 8, 2019, upon the attainment of the following performance targets, each of which made up 50% of the metric:

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The peer performance was calculated using the KBW Index. The calculation of the payouts for 2019 for all participants, including the named executive officers of the Company, was as follows:

      KBW Index Results       FFBC Percentile

Measure

  25th Percentile   Median   75th Percentile   FFBC Results   Ranking

Return on Assets

  .94   1.10   1.29   1.28   69.5

Total Return (%)

  3.52%   23.80%   38.49%   42.67   79.5

          Total Payout   116.4%    

The following NEOs received grants of performance shares in 2016 and received final payouts in 2019:

    Original
Grant
    2019
Shares Awarded
 

Claude E. Davis

    23,022     26,798  

John M. Gavigan

    1,021     1,189  

Anthony M. Stollings

    2,706     3,150  

2019 LTIP Grants.    In March 2019, the Committee reviewed target compensation levels in the context of relative performance versus peers as well as survey and peer proxy data. The following chart summarizes LTIP target amounts (as a percentage of base salary) for the named executive officers in 2019:

  Grant
Date
    LTI
Target
(%)
    Total
Number of
Shares
Granted
    Grant
Date
Fair Value1
    Shares of
Time-based
Restricted
Stock
Granted
    Shares of
Performance-
based
Restricted
Stock
Granted
 

Claude E. Davis

  3/5/19     110 %   31,558     $854,591     15,779     15,779  

Archie M. Brown

  3/5/19     110 %   31,558     $854,591     15,779     15,779  

John M. Gavigan

  3/5/19     60 %   6,279     $170,035     4,709     1,570  

James M. Anderson

  3/5/19     60 %   6,648     $180,028     4,986     1,662  

Karen B. Woods

  3/5/19     60 %   6,463     $175,018     4,847     1,616  

Anthony M. Stollings2

                       
1.
Based on a closing stock price of $27.08 per share as of March 5, 2019.

2.
Mr. Stollings did not receive an LTIP award for 2019 as a result of his retirement on September 1, 2019.

Executive Benefits and Perquisites

In addition to the three key elements noted above, the Company provides its executives with certain other benefits and perquisites, as follows:

Employment, Severance and Change in Control Agreements.

The Company has entered into Employment and Non-Competition Agreements with Mr. Davis, Mr. Brown and Mr. Stollings, and Severance and Change in Control Agreements with its other NEOs. The purpose of the agreements is to secure the continued service and dedication of the executives and to provide for certainty and fairness in the event an executive's employment is terminated without cause or in the event of an actual or threatened change in control of the company. The Company believes the agreements are important in the Company's ability to attract and retain executives, particularly in the event the Company is engaged in a transaction which could constitute a change in control. Each of the NEOs entered into new employment or severance and change in control agreements in connection with the Company's merger with MainSource after consulting with the Company's compensation consultant and examining peer data regarding employment and change in control agreements.

The potential payments to be made to each of the NEOs in the event of their termination either without cause or in connection with a change in control are discussed in the tables on page 72 of this proxy statement.

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On June 3. 2019, in anticipation of his announced retirement on December 31, 2019, the Company entered into a Letter Agreement (the "Letter") with Claude Davis that amended certain terms of his Employment and Non-Competition Agreement (the "Agreement"). Specifically, the Letter revised the termination date of the Agreement from April 1, 2021 to December 31, 2019. In lieu of base salary, short-term incentive compensation and long-term incentive compensation that would have been payable to Mr. Davis during 2020 and 2021, the Letter provided that the Company would pay Mr. Davis a single, lump payment of $3,150,000 as of December 31, 2019. Additionally, the Letter provided that Mr. Davis' restricted stock and performance share awards granted prior to the date of the Letter would continue to vest on the dates set forth in the applicable award agreements. In the event Mr. Davis resigns from the Board, any unvested restricted stock or performance share awards will terminate. Mr. Davis will not receive any additional awards of Company stock.

The Letter also provides that Mr. Davis agreed to continue to provide advisory services to the Company's management in the areas of board governance, succession planning, corporate strategy, capital allocation and deployment, investor relations, enterprise risk, and strategy for the First Financial Foundation through December 31, 2021. In consideration of these additional responsibilities, the Company agreed to pay Mr. Davis a board retainer fee of $450,000 during each of 2020 and 2021, payable in the same manner and on the same schedule as retainer fees are paid to current members of the Board of Directors. Beginning in 2022, any retainer fees paid to Mr. Davis will be determined by the Compensation Committee of the Board in the normal course of its responsibilities. See 2019 Board Compensation below for a discussion of the Board's current compensation structure.

The Company and Mr. Davis believed that the amendment of Mr. Davis' Agreement was in the Company's best interests because it reduced the total amount to be paid to Mr. Davis over the remaining term of his Agreement, it allowed Mr. Davis to complete his shift from an employee to an independent member of the Board of Directors, and it reflected Mr. Davis' confidence in the success of the integration with MainSource and Mr. Brown as Chief Executive Officer of the Company.

Mr. Stollings' Employment Agreement terminated effective with his retirement on September 1, 2019.

Pension and Other Deferred Compensation Plans

Pension Plan

The First Financial Bancorp Associate Pension Plan and Trust ("Pension Plan") is a tax-qualified pension plan covering eligible employees of the Company. See the Pension Benefits Table on page 67 for the material terms and conditions of the Pension Plan as applicable to the NEOs for 2019 who are currently employees of the Company.

Executive Supplemental Retirement Plan

The Company maintains a supplemental executive retirement plan to supplement the retirement benefits provided under the Pension Plan for certain senior executive officers of the Company in order to make up for legal limits applicable to the benefits provided under the Pension Plan. The SERP is an unfunded, unsecured pension benefit plan for a select group of highly compensated employees. See the Pension Benefits Table for the material terms and conditions of the SERP as they pertain to the NEOs for 2019

Split-Dollar and Group Term Life Insurance

As of December 31, 2019, the Company maintains split-dollar insurance solely on the life of Claude Davis. Under the split-dollar insurance program, upon Mr. Davis' death , the company-owned life insurance policy first pays the Company the premiums that the Company paid for the policy, and then pays Mr. Davis' beneficiary a death benefit equal to three times his base salary in effect at the time of his retirement.

The Company previously maintained a split-dollar insurance policy on the life of Tony Stollings. The benefit to Mr. Stollings terminated upon his retirement on September 1, 2019.

All the NEOs are eligible for the Company-paid group term-life insurance benefit that is available to all full-time associates in the amount of two times annual base salary up to $600,000.

Other Benefits.    Executives can participate in group medical and life insurance programs, a 401(k) plan with a discretionary performance-based contribution by the Company, and a pension plan, all of which are generally available to all our associates on a non-discriminatory basis. The benefits serve to protect executives and their families against financial risks associated with illness, disability, and death and provide financial security during retirement through a combination of personal savings and Company contributions, taking advantage of tax-deferral opportunities where permitted.

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V. 2019 Board Compensation

Board members are compensated with a combination of cash and stock-based compensation. The goal of the compensation package is to attract and retain qualified candidates to serve on the Board of Directors, and to align the interests of the Board with those of the shareholders of the Company. In setting compensation, the Board considers primarily the fees paid by the Company's compensation peer group, which is made up of financial institutions of similar size located primarily in the Midwest United States.

Compensation Consultant.    In 2019, the Board engaged Meridian Compensation Partners, LLC as its consultant with respect to the Company's director compensation. Meridian reviewed the amount of the Board's compensation as well as the breakdown between cash and equity compensation in comparison to the Company's peers. The Executive Compensation Committee considered Meridian's analysis in establishing 2019 director compensation.

Board/Committee Fees.    In 2019, non-employee directors of the Company received annual retainers of $100,000, of which $50,000 was paid in cash on a quarterly basis and $50,000 was awarded in restricted stock on the date of the 2019 Annual Meeting of shareholders with a one year vesting period. Directors did not receive any fees for service on the board of directors of First Financial Bank. The lead director of the board was paid an additional annual retainer of $25,000 and each committee chair was paid an additional annual retainer of $10,000 in order to recognize the extensive time that is devoted to lead director and committee matters including meetings with management, auditors, attorneys and consultants, and preparing committee agendas. Director fees are paid quarterly.

Election to Purchase Stock with Cash Retainer.    Directors have the opportunity, pursuant to the 2019 Director Fee Stock Plan, to elect to use all or a portion of their board fees to purchase the Company's common shares. For those directors who make an annual election to participate in the Director Fee Stock Plan, shares are issued directly to directors quarterly in lieu of cash payments under the Amended and Restated 2012 Stock Plan.

Director Compensation Table

During the fiscal year ended December 31, 2019, we provided the following compensation to our non-employee directors. Claude E. Davis and Archie M. Brown, who were also employees of the Company in 2019, did not receive any additional fees for serving on the Board and therefore have been omitted from the table. For a discussion of Mr. Davis and Mr. Brown's compensation, see "Executive Compensation" below.

Name

   
Fees Earned
or Paid in Cash1
($)
   
Stock Awards2
($)
   
All Other
Compensation3
($)
   
Total
($)
 

J. Wickliffe Ach

    75,000     50,000     1,254     126,254  

Kathleen L. Bardwell

    50,000     50,000     1,254     101,254  

William G. Barron

    50,000     50,000     1,254     101,254  

Vincent A. Berta

    60,000     50,000     1,254     111,254  

Cynthia O. Booth

    60,000     50,000     1,254     111,254  

Corinne R. Finnerty

    50,000     50,000     1,254     101,254  

Erin P. Hoeflinger

    50,000     50,000     1,254     101,254  

Susan L. Knust

    50,000     50,000     1,254     101,254  

William J. Kramer

    60,000     50,000     1,254     111,254  

John T. Neighbours

    50,000     50,000     1,254     101,254  

Thomas M. O'Brien

    60,000     50,000     1,254     111,254  

Richard E. Olszewski

    50,000     50,000     1,254     101,254  

Maribeth S. Rahe

    60,000     50,000     1,254     111,254  
1.
Includes board retainer and additional retainers for lead director and committee chairs.

2.
Based on the closing price of First Financial's common shares as of the date of grant (May 28, 2019) of $23.12 per share. These shares were issued as restricted stock which vests on May 28, 2020. Dividends on unvested restricted stock are held in escrow and paid upon vesting of the shares.

3.
Includes accrued dividends paid on restricted stock that vested in 2019.

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VI. Compensation of Executives in 2020

In March 2020, the Compensation Committee met to consider the executive compensation program for 2020. The Committee, in consultation with its independent compensation consultant Meridian Compensation Partners, LLC, reviewed the Company's compensation philosophy, the overall structure of the compensation program, the targets and metrics to be used in 2020, peer data regarding the mix and structure of compensation for executives in each role and the compensation to be awarded to executives. Based upon this review, the Compensation Committee approved certain changes to the Company's compensation program for 2020.

Based upon its review of peer data and its goal of executives receiving target total compensation and target total cash compensation slightly below the median of our peer group, the Committee authorized certain adjustments to executives' base compensation. Additionally, based on a review of the mix between short- and long-term compensation as well as the median long-term incentives paid within our peer group, the Committee approved certain adjustments to executives' long-term compensation targets beginning with the award in 2020.

The Committee also considered the performance metrics and payout under the Company's short-term incentive plan. The Committee noted the Company's outstanding performance in 2019, which represented performance within the top quartile of its peer group, and wanted to continue motivating top quartile relative performance while ensuring our absolute performance supports incentive payouts. The Committee also noted its desire to drive alignment between compensation and the Company's strategic plan and business goals. Based upon these considerations, the Committee decided to continue the use of Return on Assets compared to the KBW Index as the primary metric (50%) for determining short-term incentive compensation, plus a second credit-related metric (25%) to ensure credit quality remains strong. The Committee added a third metric for 2020, weighted at 25%, based upon the Company's adjusted operating expenses compared to budget. The Committee also continued the requirement that earnings per share exceed a pre-set threshold, below which the Committee is mandated to evaluate whether any short-term incentive payouts are appropriate.


VII. Policies, Guidelines and Other Practices

Evaluation for Excessive Risk in Compensation Programs

The following outlines the method by which the Company reviews and evaluates compensation programs, policies and procedures to prevent unnecessary and excessive risks that could threaten the value of the Company:

In light of the above reviews, the Company and the Compensation Committee have not identified any risks arising from the Company's compensation programs, policies, and practices for the Company's NEOs, or in general our associates, that are reasonably likely to have a material adverse effect on the Company. It is both the Committee's and management's intent to continue to evolve our processes going forward by monitoring regulations and best practices for sound incentive compensation.

Clawbacks

The Committee has approved the Policy Regarding Recoupment of Incentive Compensation pursuant to which the Company may seek recoupment of all or part of any incentive compensation paid, or forfeiture of all or part of any incentive compensation to be paid, to senior management in the event:

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This policy applies to all executive officers (including the NEOs) and all officers holding the title of senior vice president or higher (or equivalent positions). The policy will apply to all incentive compensation paid or received during the three years prior to any event as described above.

Share Ownership Requirements

The Company maintains a share ownership requirement for its CEO and Executive Chair equal to the lesser of five times base salary or 250,000 shares. The CEO and Executive Chair are each currently in compliance with this requirement.

The share ownership requirement for the other NEOs and other executives is the lesser of two times base salary or 75,000 shares. The timeframe for executives to comply with this requirement is within two years from adoption of the policy or within five years of the executive being first appointed to a role with share ownership guidelines. All NEO's are currently in compliance, or within the time to comply, with this requirement.

In calculating executives' share ownership, the Company includes shares owned individually, unvested restricted shares (both time and performance based) and shares held in the Company's 401(k) Savings Plan or other non-qualified deferred compensation plan.

Use of Discretion and Other Factors in Pay Decisions

The exercise of discretion by the Compensation Committee in determining the various elements of compensation is an important feature of the Company's compensation philosophy. Because the Company has always taken a long-term view, we use judgment and discretion rather than relying solely on formulaic results, and we do not reward executives for taking outsized risks that produce short-term results. Therefore, the Company believes it is important that the Compensation Committee have sufficient flexibility to respond to: (i) the Company's unique circumstances; (ii) prevailing market trends; (iii) the rapidly evolving financial and regulatory environment in which the Company operates; (iv) the Company's use of cross-functioning of executive assignments and cross-training as a matter of executive development and succession planning; and (v) risk management objectives. The Company also believes it is in the best interest of the Company and its shareholders that the Compensation Committee have sufficient discretion to recognize and reward extraordinary individual performance in non-financial areas that may or may not directly affect the Company's achievement of specific financial metrics for a particular year, but are nevertheless important to long-range growth and the enhancement of shareholder value.

Tax Deductibility of Compensation

As part of its responsibilities, the Compensation Committee has historically reviewed and considered the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986, which generally disallowed tax deductions for compensation of over $1 million to our covered executive officers unless that compensation met a "performance-based" exception.

Historically, significant aspects of the Company's compensation programs were designed to permit (but not require) compensation to qualify for this performance-based compensation exception. In December 2017, Section 162(m) was amended by the Tax Cuts and Jobs Act to eliminate the exception for performance-based compensation (other than with respect to payments made pursuant to certain "grandfathered" arrangements entered into prior to November 2, 2017), so that now any compensation above $1 million paid to covered executive officers is not deductible unless it qualifies as "grandfathered." Incentive payments and grants made to our covered executive officers in 2019 and thereafter under the STIP and the LTIP will not meet the grandfather requirements of Section 162(m) and will no longer be deductible to the extent compensation exceeds $1 million for a covered executive. Despite these new limits on the deductibility of performance-based compensation, the Compensation Committee continues to believe a significant portion of our NEOs' compensation should be tied to Company performance. Therefore, it is not anticipated that the changes to Section 162(m) will significantly impact the design of our compensation program going forward.

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Stock-Based Compensation—Procedures Regarding Timing and Pricing of Grants

Our policy is to make grants of equity-based compensation only at current market prices. We have not granted options since 2008. At that time we set the exercise price of stock options at the closing stock price on the date of grant, and did not grant "in-the-money" options or options with exercise prices below market value on the date of grant. Absent special circumstances, it is our policy to make the majority of equity grants at a regularly scheduled meeting of our Compensation Committee. However, we may make a small percentage of grants at other times throughout the year, generally once per quarter, in connection with exceptional circumstances, such as the hiring or promotion of an executive officer, special retention circumstances, or merger and acquisition activity.

We try to make equity-based grants at times when they will not be influenced by scheduled releases of information. Grants of equity-based awards primarily have grant dates corresponding to regularly scheduled meetings of the Compensation Committee in the early part of the fiscal year. For 2019, we chose the March meeting of the Committee. This date allowed time for performance reviews following the determination of corporate financial performance for the previous year. We seek to make grants when our financial results have already become public, and when there is little potential for abuse of material non-public information in connection with equity-based grants. We believe we minimize the influence of our disclosures of non-public information on the long-term incentives by selecting meeting dates well in advance which fall several days or weeks after we report our financial results, and by setting the initial vesting periods at least one year from the date of grant. We follow the same procedures regarding the timing of grants to our NEOs as we do for all other participants.

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis. Based on this review and these discussions, the Compensation Committee has recommended to the Board that the CD&A be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC.

    Members of the Compensation Committee

 

 

Thomas M. O'Brien, Chair
Susan Knust, Vice Chair
Erin Hoeflinger
William Kramer

62        2020 Proxy Statement    |    Executive Compensation