Level One Bancorp (FRMEP) DEF 14ADefinitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

NOTICE OF

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 5, 2020

To the shareholders of Level One Bancorp, Inc.:

        The annual meeting of the shareholders of Level One Bancorp, Inc., a Michigan corporation, will be held at the Company's headquarters located at 32991 Hamilton Court, Farmington Hills, Michigan 48334, on Tuesday, May 5, 2020, at 6:00 p.m., local time, for the following purposes:

        We are not aware of any other business to come before the annual meeting. The board of directors has fixed the close of business on March 9, 2020, as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting. If there are an insufficient number of shares for a quorum or to approve or ratify any of the foregoing proposals at the time of the meeting, the meeting may be adjourned or postponed to permit our further solicitation of proxies.

March 25, 2020

YOUR VOTE IS IMPORTANT. PLEASE EXERCISE YOUR SHAREHOLDER RIGHT TO VOTE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.

LEVEL ONE BANCORP, INC.

The Company is the holding company of Level One Bank (the "Bank").

QUESTIONS AND ANSWERS

        The following is information regarding the meeting and the voting process, presented in a question and answer format.

Why did I receive access to the proxy materials?

        We have made the proxy materials available to you over the Internet because on March 9, 2020, the record date for the annual meeting, you owned shares of our common stock. This proxy statement describes the matters that will be presented for consideration by the shareholders at the meeting. It also gives you information concerning those matters to assist you in making an informed decision.

Why did I receive a notice regarding the Internet availability of proxy materials instead of paper copies of the proxy materials?

        We are using the SEC notice and access rule that allows us to furnish our proxy materials over the Internet to our shareholders instead of mailing paper copies of those materials to each shareholder. As a result, beginning on or about March 26, 2020, we sent our shareholders by mail a notice containing instructions on how to access our proxy materials over the Internet and vote online. The notice is not a proxy card and cannot be used to vote your shares. If you received a notice this year, you will not receive paper copies of the proxy materials unless you request the materials by following the instructions on the notice or on the website referred to in the notice.

What matters will be voted on at the meeting?

        You are being asked to vote on the election of 11 directors and the ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for the year ending December 31, 2020. These matters are more fully described in this proxy statement.

What are the board's voting recommendations?

        The board recommends that you vote your shares "FOR" the election of each of the director nominees named in this proxy statement and the appointment of Plante & Moran, PLLC as our independent registered public accounting firm.

If I am the record holder of my shares, how do I vote?

        If your shares are registered directly in your name with the Company's transfer agent, Continental Stock Transfer & Trust Company, there are three ways to vote:

If I am a beneficial owner of the Company's shares held in street name, how do I vote?

        If you are a beneficial owner of shares held in street name (such as if you hold your shares through a broker, trustee or other fiduciary), then there are three ways to vote:

What happens if I do not give specific voting instructions?

        At the meeting, the election of directors is considered a non-routine matter, and the ratification of the appointment of our independent registered public accounting firm is considered a routine matter.

What options do I have in voting on each of the proposals?

        You may vote "FOR ALL," "WITHHOLD AUTHORITY to vote for all," or "FOR all nominees EXCEPT as marked" with respect to the election of director nominees, and "FOR," "AGAINST" or "ABSTAIN" with respect to the ratification of the appointment of our independent registered public accounting firm and any other proposal that may properly be brought before the meeting.

How many votes may I cast?

        You are entitled to cast one vote for each share of common stock you owned on the record date.

What is the quorum required for each matter?

        The holders of a majority of the outstanding shares of stock of the Company entitled to vote at the meeting, represented in person or by proxy, will constitute a quorum for purposes of such matter at the meeting. If less than a majority of the outstanding shares are represented at the meeting, the holders of the shares represented may adjourn the meeting at any time.

        On March 9, 2020, the record date, there were 7,734,564 shares of common stock issued and outstanding. Therefore, at least 3,867,283 shares need to be represented at the meeting to constitute a quorum.

How many votes are needed for approval of each proposal?

        With respect to the election of directors, the 11 nominees receiving the greatest number of votes cast "FOR" their election will be elected as directors to serve until the Company's 2021 annual meeting of shareholders and until his or her successor is elected and qualified, or until his or her earlier resignation or removal.

With respect to the ratification of the appointment of our independent registered public accounting firm, the affirmative vote of a majority of the votes cast on the proposal (meaning the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal) is required to approve the ratification of the appointment of Plante & Moran, PLLC as our registered independent public accounting firm for the fiscal year ending December 31, 2020.

How are abstentions and broker non-votes treated?

        Broker non-votes and abstentions will not be counted as votes cast, but will count for purposes of determining whether a quorum is present. So long as a quorum is present, broker non-votes and abstentions will have no effect on the outcome of the matters to be presented for a vote at the annual meeting.

        In order to minimize the number of broker non-votes, the Company encourages you to vote or to provide voting instructions with respect to each proposal to the organization that holds your shares by carefully following the instructions provided.

What if I change my mind after I return my proxy?

        You may revoke your proxy and change your vote. If you voted by Internet, prior to the applicable cutoff time, you may change your vote using the Internet as described above, in which case only your latest Internet proxy submitted prior to the applicable cutoff time for Internet voting will be counted. If you voted by mail, you may revoke your proxy and change your vote by signing and returning a new proxy card dated as of a later date. If you voted by Internet or by mail, you may also revoke your proxy and change your vote by attending the meeting and voting in person. However, your attendance at the meeting will not automatically revoke your proxy unless you properly vote at the meeting. You may also revoke your proxy by specifically requesting that your prior proxy be revoked by delivering a written notice of revocation to the Company's secretary at 32991 Hamilton Court, Farmington Hills, Michigan 48334 prior to the meeting.

What happens if a nominee is unable to stand for election?

        The board may, by resolution, provide for a lesser number of directors or designate a substitute nominee. In the latter case, shares represented by proxies may be voted for a substitute nominee. Proxies cannot be voted for more than 11 nominees. The board has no reason to believe any nominee will be unable to stand for election.

Who will serve as the inspector of election?

        A representative of the Company will serve as the inspector of election.

Where do I find the voting results of the meeting?

        If available, we will announce voting results at the meeting. The voting results will also be disclosed in a Current Report on Form 8-K that we will file with the SEC within four business days after the annual meeting.

Who bears the cost of soliciting proxies?

We will bear the cost of soliciting proxies. In addition to solicitations by mail, officers, directors or employees of the Company or its subsidiaries may solicit proxies in person. These persons will not receive any special or additional compensation for soliciting proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation material to shareholders.

This proxy statement contains two proposals requiring shareholder action. Proposal 1 requests the election of 11 directors to the board of directors. Proposal 2 requests the ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for the year ending December 31, 2020.

PROPOSAL 1—ELECTION OF DIRECTORS

       Following a review and nomination from the Nominating and Governance Committee, the board of directors proposes that the following nominees be elected as directors for terms expiring at the 2021 annual meeting of shareholders and until their successors are elected and qualified:

Each of the nominees is an incumbent director. If re-elected, all of our directors will hold office until the annual meeting of shareholders in 2021 and until their respective successors are elected and qualified, or until their earlier death, resignation, removal or disqualification. There are no arrangements or understandings with any of the nominees pursuant to which they have been selected as nominees or directors, except that Jacob W. Haas was appointed to the board in connection with the Company’s acquisition of Ann Arbor Bancorp, Inc., as required by the terms of the merger agreement related to such transaction.

The business experience of each nominee, as well as their qualifications to serve on the board, is set forth below. Unless otherwise noted, nominees for director have been employed in their principal occupation with the same organization for at least the last five years. Other than as described below, no nominee or executive officer has any family relationship, as defined in Item 401 of Regulation S-K, with any other director or with any of our executive officers.

a member of the Michigan Bar Association having received his law degree from the Detroit College of Law. Our board considered Mr. Ansara's experience as the chief executive officer of a local business and his knowledge and experience with real estate investment in determining that he should be a member of our board and Compensation Committee.

President of the Medical Staff of Providence and serves on the health system board for Ascension Southeast Michigan Hospitals. He was a founder and managing partner of Independent Emergency Physicians, P.C. for over 20 years. Dr. Rivera received his B.S from the University of South Florida. He completed his M.D at the NOVA Southeastern University of Health Sciences in Ft. Lauderdale, Florida. In 2004, Dr. Rivera received his MBA from the University of Tennessee. Our board considered Dr. Rivera's management experience and knowledge of the business community in our market area in determining that he should be a member of our board, Nominating and Governance Committee and Compensation Committee.

Executive Officers

        The following table sets forth certain information regarding our executive officers, including their names, ages and positions:

President, Risk Management Officer and Assistant Corporate Secretary of the Bank, positions she has held since 2007. With over 17 years of experience in the banking industry, including most recently as Credit Training Manager and Commercial Lender at LaSalle Bank, Ms. Scurlock, who joined us at inception, is responsible for the strategic leadership of enterprise risk management, including credit and compliance risk. Ms. Scurlock was selected by Crain's Detroit Business as a "40 Under 40" honoree in 2013. Ms. Scurlock received her B.A. in finance from Michigan State University.

CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

        Under the rules of The Nasdaq Stock Market LLC ("Nasdaq"), independent directors must comprise a majority of the board of directors. The rules of Nasdaq, as well as those of the SEC, also impose several other requirements with respect to the independence of our directors.

        The board of directors has evaluated the independence of its members based upon the rules of Nasdaq and the SEC. Applying these standards, and based on information provided by each director concerning his or her background, employment and affiliations, the board of directors has affirmatively determined that, with the exception of Mr. Fehring, each of the current directors is an independent director, as defined under the applicable rules. Because Mr. Fehring is an executive officer of the Company and the Bank, Mr. Fehring cannot be deemed to be independent under the rules of Nasdaq and the SEC. In making these determinations, the board of directors considered the current and prior relationships that each non-employee director has with the Company and all other facts and circumstances the board of directors deemed relevant in determining their independence, including the beneficial ownership of our shares by each non-employee director, and the matters discussed under "Certain Relationships and Related Party Transactions."

Board Leadership Structure

        The board of directors does not have a formal policy requiring the separation of the roles of Chairman of the Board and Chief Executive Officer. It is the directors' view that rather than having a rigid policy, the board of directors, with the advice and assistance of the Nominating and Governance Committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Since our formation, the positions of Chairman and Chief Executive Officer have been combined and held by Mr. Fehring. We believe this board leadership structure is the most appropriate for the Company at this time because of the efficiencies achieved in having the roles of Chairman and Chief Executive Officer combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly enhances the decision-making processes of the board of directors as a whole. As noted above, Mr. Fehring is not currently considered to be "independent" according to Nasdaq rules.

        Because the Chairman of the Board is not an independent director, we have a separate lead independent director who organizes and presides at sessions of our independent directors. Currently, Mr. Wanczyk serves as the lead independent director. Consistent with Nasdaq listing requirements, the independent directors regularly have the opportunity to meet without Mr. Fehring present. In 2019, two independent sessions were held.

Board Committees

        The board of directors has established standing committees in connection with the discharge of its responsibilities. These committees include an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Mr. Fehring is not a member of any of these committees. The responsibilities of these committees are described below. The board of directors may also establish such other committees as it deems appropriate, in accordance with applicable law and regulations and our corporate governance documents. The following table summarizes the membership of each of the committees of the board of directors:

      The Audit Committee has adopted a written charter, which sets forth the committee's duties and responsibilities. The current charter of the Audit Committee is available on the investor relations section of the Bank's website at

http://investor.levelonebank.com. As described in its charter, our Audit Committee has responsibility for, among other things:

        The Compensation Committee has adopted a written charter, which sets forth the committee's duties and responsibilities and which is available on the investor relations section of the Bank's website at http://investor.levelonebank.com. As described in its charter, the Compensation Committee has responsibility for, among other things:

The Compensation Committee has the authority to retain consultants and advisors, which it does periodically. Refer to the "Executive Compensation" section of this proxy statement for further details on the independent consultants the Company engaged during 2019.

        The Nominating and Governance Committee has adopted a written charter, which sets forth the committee's duties and responsibilities. The current charter of the Nominating and Governance Committee is available on the investor relations section of the Bank's website at http://investor.levelonebank.com. As described in its charter, the Nominating and Governance Committee has responsibility for, among other things:

        In carrying out its nominating function, the Nominating and Governance Committee has developed qualification criteria for all potential director nominees, including incumbent directors, board nominees and shareholder nominees. These criteria

include the following attributes:

        The committee also evaluates potential nominees to determine if they have any conflicts of interest that may interfere with their ability to serve as effective board members and to determine whether they are "independent" in accordance with Nasdaq rules (to ensure that, at all times, at least a majority of our directors are independent).

        Prior to nominating an existing director for re-election to the board, the committee will consider and review the following attributes with respect to each existing director:

regarding each nominee proposed by such nominating shareholder as is requested by the board of directors; and (f) the consent of each nominee to serve as a director of the Company if so elected. Persons nominated for election to the board pursuant to this paragraph will not be included in our proxy statement.

Board Oversight of Risk Management

        The board of directors believes that effective risk management and control processes are critical to our safety and soundness, our ability to predict and manage the challenges that we face and, ultimately, our long-term corporate success. The board of directors, both directly and through its committees, is responsible for overseeing our risk management processes, with each of the committees of the board of directors assuming a different and important role in overseeing the management of the risks we face.

        The full board of directors oversees the enterprise-wide risk management framework, which establishes the overall risk appetite and risk management strategy and enables management to understand, manage and report on the risks we face. The full board of directors also reviews and oversees policies and practices established by management to identify, assess, measure and manage key risks we face, including the risk appetite metrics developed by management. The Audit Committee of the board of directors is responsible for overseeing risks associated with financial matters (particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal control over financial reporting). The Compensation Committee of the board of directors has primary responsibility for the design and evaluation of the compensation plans, in connection with its responsibility to limit the risks and exposures associated with compensation policies, plans and practices, regarding both executive compensation and the compensation structure in general. In particular, the Compensation Committee reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by employees. The Nominating and Governance Committee of our board of directors oversees risks associated with the independence of our board of directors and potential conflicts of interest.

        The senior management team is responsible for implementing and reporting to the board of directors regarding the risk management processes, including by assessing and managing the risks we face, including strategic, operational, regulatory, investment and execution risks, on a day-to-day basis. The senior management team is also responsible for creating and recommending to the board of directors for approval appropriate risk appetite metrics reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.

        The role of the board of directors in our risk oversight is consistent with our leadership structure, with the members of our senior management team having responsibility for assessing and managing our risk exposure, and our board of directors and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systemic and effective approach for identifying, managing and mitigating risks throughout our operations.

Compensation Committee Interlocks and Insider Participation

        During 2019, Ms. Allushuski, Messrs. Ansara and Brillati, and Drs. Rivera and David served as members of the Compensation Committee. None of the members of the Compensation Committee is or has been an officer or employee of the Company. None of the executive officers of the Company serve or have served as a member of the board of directors, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.

Code of Business Conduct and Ethics

        The board of directors has adopted a code of business conduct and ethics that applies to all directors and employees, including our principal executive officer, principal financial officer, and principal accounting officer. The code sets forth the standard of ethics by which all directors and employees are expected to follow. The code of business conduct and ethics is available on the investor relations section of the Bank’s website at http://investor.levelonebank.com. We intend to satisfy the disclosure requirements under Item 5.05(c) of Form 8-K regarding any amendments to the code, or any waivers of its requirements, applicable to our principal executive officer, principal financial officer, or principal accounting officer by posting such information on this website, as well as any other means required by Nasdaq rules.

Corporate Governance Guidelines

        Our board of directors has adopted a set of corporate governance guidelines to assist our board of directors in the exercise of its fiduciary duties and to promote the effective functioning of our board and its committees. Our corporate governance guidelines are available on the investor relations section of the Bank's website at http://investor.levelonebank.com.

Anti-Hedging Policy

Our insider trading policy prohibits our directors, officers and employees from entering into any hedging transaction with respect to any of the Company’s securities. This prohibition includes the purchase or use of, directly or indirectly, stock options, prepaid variable forward contracts, equity swaps, collars, exchange funds or any other instruments designed to offset any decrease in the market value of the Company’s securities.

Director Compensation

        The following table sets forth information regarding 2019 compensation for each of our nonemployee directors. Mr. Fehring does not receive director's fees or other compensation for serving as a director.

PROPOSAL 2—RATIFICATION OF THE APPOINTMENT OF PLANTE & MORAN, PLLC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

General

Accountant Fees

        For the years ended December 31, 2018 and 2019, the Company incurred the following fees for professional services performed. The fees in the table below for 2018 were paid to Crowe LLP, the Company's previous independent registered public accounting firm, and the fees in the table below for 2019 were paid to PM, the Company's current independent registered public accounting firm.

(1) The 2018 audit fees include fees for professional services performed by Crowe LLP, the Company’s previous independent registered public accounting firm, for the audit of the Company's consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports on Form 10-Q. These services also included fees for HUD audits and $254,800 related to the Company's initial public offering in 2018. The 2019 audit fees include fees for professional services performed by PM for the audit of the Company's consolidated financial statements and review of the interim condensed consolidated financial statements included in quarterly reports on Form 10-Q. These services also included fees for HUD audits.

(2) Tax fees consist of tax advice, planning and consulting services.

(3) All other fees consist of accounting research and acquisition related consulting services paid to PM.

        The Audit Committee, after consideration of these matters, does not believe that the rendering of these services by PM was incompatible with maintaining their independence as our principal accountants.

Audit Committee Pre-Approval Policy

        Among other things, the Audit Committee is responsible for appointing, setting compensation for and overseeing the work

of the independent registered public accounting firm. We have adopted a pre-approval policy under which the Audit Committee approves in advance all audit and non-audit services to be performed by our independent registered public accounting firm. As part of its pre-approval policy, the Audit Committee considers whether the provision of any proposed non-audit services is consistent with the SEC's rules on auditor independence. In accordance with the pre-approval policy, the Audit Committee has pre-approved certain specified audit and non-audit services to be provided by PM for up to twelve months from the date of the pre-approval. All of the services referred to above for 2019 were pre-approved by the Audit Committee.

Past Change in Independent Registered Public Accounting Firm

Crowe LLP (“Crowe”) was the Company’s independent registered public accounting firm for the year ended December 31, 2018, and was dismissed effective following the completion of its audit for that year.

The Audit Committee conducted a competitive process to determine the Company’s independent registered public accounting firm for the year ended December 31, 2019. The Audit Committee invited several independent registered public accounting firms to participate in this process.

Following review of proposals from the independent registered public accounting firms that participated in the process, including Crowe, on December 20, 2018, the Audit Committee approved the engagement of PM as the Company’s independent registered public accounting firm for the year ended December 31, 2019, subject to completion of PM’s standard client acceptance procedures and execution of an engagement letter.

Crowe’s reports on the Company’s consolidated financial statements as of and for the years ended December 31, 2017 and 2016 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended December 31, 2017 and 2016, and the interim period from January 1, 2018 through December 21, 2018, there were: (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions between the Company and Crowe on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Crowe’s satisfaction, would have caused Crowe to make reference thereto in its reports; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

The Company has requested that Crowe furnish a letter addressed to SEC stating whether or not it agrees with the statements in the above paragraph. A copy of Crowe’s letter, dated December 21, 2018, was filed as Exhibit 16.1 to the Company’s Form 8-K filed on December 21, 2018.

During the fiscal years ended December 31, 2017 and 2016 and the subsequent interim period from January 1, 2018 through the date of PM’s engagement, neither the Company nor anyone on its behalf consulted with PM regarding: (i) the application of accounting principles to a specific transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PM concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions; or (iii) any reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.

EXECUTIVE COMPENSATION

       As an emerging growth company under the Jumpstart Our Business Startups Act, we have opted to comply with the executive compensation disclosure rules applicable to "smaller reporting companies," as such term is defined in the rules promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Therefore, we are permitted to report compensation of the principal executive officer and the two other most highly compensated executive officers, which are referred to as the "named executive officers."

The named executive officers for 2019 were:

Summary Compensation Table

        The following table sets forth information regarding the compensation paid, awarded to, or earned for the fiscal years ended December 31, 2019 and 2018 for each of the named executive officers.

(iii) Amount reflects the Company's contribution to the SERP based on 2019 Company performance.

General

      The Company’s compensation program (the "program”) is structured to align the interests of our executives with the interests of our key stakeholders—team members, shareholders, and the communities in which we do business. The program is designed to attract, retain and motivate leadership to achieve growth in the financial sector; to deliver pay commensurate with the achievement of annual financial results; to encourage attainment of outstanding financial results and shareholder returns over the long term; and to reduce incentives for unnecessary and excessive risk taking. The program generally sets target compensation opportunities near the median of the Company's peer group, with actual payouts in respect of variable compensation dependent on performance. The program is comprised of a mix of variable compensation components with rewards delivered in cash and shares of the Company’s stock. The Company's balanced approach to compensation supports our business strategies, aligns with our pay for performance philosophy, and is reinforced through sound compensation governance to mitigate excessive risk taking.

Annual Executive Incentive Award for Performance

        Each named executive officer participates in the Executive Incentive Plan (the "Incentive Plan"), which incentivizes the achievement of specific financial goals determined by the board. The purpose of the Incentive Plan is to communicate expectations

for business goals and results, recognize and reward achievement of the Company's annual business goals, motivate and reward superior performance, attract and retain talent, encourage teamwork and collaboration, and appropriately balance incentives and risks. Participation and payments under the Incentive Plan are recommended by the Compensation Committee and approved by the board.

Equity Awards

        The equity awards reflected in the summary compensation table above, or the outstanding equity awards at fiscal year end table below, are comprised of restricted stock and stock option awards issued pursuant to the 2018 Equity Incentive Plan (the “2018 EIP”), the 2014 Equity Incentive Plan (the “2014 EIP”), and the 2007 Stock Option Plan (the “2007 Plan”), each of which, as described more fully below, allows the Compensation Committee to establish the terms and conditions of the awards, subject to the applicable plan terms.

Benefits and Other Perquisites

Employment Agreements

       Each of the named executive officers has entered into an employment agreement that provides for a specified term of employment, establishes base salary, bonus opportunity and other benefits and perquisites, sets forth the duties and obligations of each party in the event of a termination of employment prior to expiration of the employment term and provides the Company with a measure of protection by obligating the named executive officers to abide by the terms of restrictive covenants during employment and thereafter for a specified period of time.

the Company other than for cause (or by Mr. Wernette for good reason within 12 months following a change in control), he will be entitled to a payment equal to 100% of his base salary payable in 26 bi-weekly installments (or a lump sum if such termination is within 12 months following a change in control) as well as reimbursement of COBRA premiums for a period of 12 months.

        The obligation to pay any severance under each of the employment agreements is conditioned on execution by the named executive officer of a general release and waiver of any and all claims with respect to his employment with the Company.

Long Term Incentive Plans

        Equity based incentive awards are currently made though the Company’s 2018 EIP. The Company also maintains the 2014 EIP and the 2007 Plan. As of the effective date of the 2018 EIP, no further awards may be granted under the 2014 EIP or the 2007 Plan. However, any previously outstanding equity award granted under the 2014 EIP or 2007 Plan remains subject to the terms of such plan until the time the award is no longer outstanding.

The 2018 EIP was adopted by the board on March 15, 2018 and became effective on April 17, 2018, the date it was approved by our shareholders. The 2018 EIP was designed to promote the Company's long term financial success by providing a means to attract, retain and reward individuals who can and do contribute to such success, and to further align their interests with those of the Company's shareholders. Pursuant to the 2018 EIP, the Compensation Committee is allowed to grant awards to eligible persons in the form of incentive and non-qualified stock options, stock awards, stock appreciation rights, and other incentive awards. Up to 250,000 shares of common stock are available for issuance under the 2018 EIP. As of December 31, 2019, 203,767 shares remain available for issuance under the 2018 EIP. Awards vest, become exercisable and contain such other terms and conditions as determined by the Compensation Committee and set forth in individual agreements with the participants receiving the awards. The 2018 EIP enables the Compensation Committee to set specific performance criteria that must be met before an award vests under the 2018 EIP. The 2018 EIP allows for acceleration of vesting and exercise privileges of awards at the discretion of the Compensation Committee. If a participant's employment is terminated for cause, then all vested and unvested awards expire at the date of termination.

Unless otherwise provided in an award agreement, upon the occurrence of a change in control of the Company (as defined in the 2018 EIP), all stock options and stock appreciation rights under the 2018 EIP then held by the participant will become fully exercisable immediately if, and all stock awards and cash incentive awards will become fully earned and vested immediately if, (i) the 2018 EIP is not an obligation of the successor entity following a change in control or (ii) the 2018 EIP is an obligation of the successor entity following a change in control and the participant incurs a termination of service without cause or for good reason following the change in control. If vesting of an outstanding award is conditioned upon the achievement of performance measures, then (i) if, at the time of the change in control, the established performance measures are less than 50% attained, then such award shall become vested and exercisable on a fractional basis with the numerator being the percentage of attainment and the denominator being 50% upon the change in control and (ii) if, at the time of the change in control, the performance measures are at least 50% attained, then such award shall become fully earned and vested immediately upon the change in control.

adoption of the 2018 EIP, no additional grants are to be made under the 2014 EIP. Awards that were granted under the 2014 EIP will vest, become exercisable and contain such other terms and conditions as determined by the Compensation Committee and set forth in individual agreements with the participants receiving the awards. The 2014 EIP allows for acceleration of vesting and exercise privileges of awards at the discretion of the Compensation Committee. If a participant's job is terminated for cause, then all vested and unvested awards are forfeited at the date of termination.

Outstanding Equity Awards at Fiscal Year End

        The following table provides information for each of our named executive officers regarding outstanding stock options and unvested stock awards held by the officers as of December 31, 2019. Market values are presented as of the end of 2019 (based on the closing price of our common stock of $25.16 on December 31, 2019) for outstanding stock awards, which include 2019 grants and prior-year grants.

        The following table sets forth information as of March 9, 2020, regarding the beneficial ownership of our common stock:

        We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities, or has the right to acquire such powers within 60 days. For purposes of calculating each person's percentage ownership, common stock issuable pursuant to options exercisable within 60 days are included as outstanding and beneficially owned for that person or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person's name.

        The percentage of beneficial ownership is based on 7,734,564 shares of our common stock outstanding as of March 9, 2020, including 47,540 shares of restricted stock awarded under our stock incentive plan but not vested as of such date.

        Except as otherwise provided, the address for each shareholder listed in the table below is: c/o Level One Bancorp, Inc., 32991 Hamilton Court, Farmington Hills, Michigan 48334.

DELINQUENT SECTION 16(A) REPORTS

        Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes in ownership with the SEC. We are not aware that any of our directors, executive officers or 10% shareholders failed to comply with the filing requirements of Section 16(a) during the fiscal year ended December 31, 2019, except for Stefan Wanczyk, a director, who filed one late Form 4 with respect to four transactions, and James Bellinson, a director, who filed one late Form 4 with respect to one transaction.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Ordinary Banking Relationships

        Our directors, officers, beneficial owners of more than five percent of our voting securities and their associates were customers of and had transactions with the Bank in the past, and additional transactions with these persons are expected to take place in the future. All outstanding loans and commitments to loan with these persons were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved by the Bank's board of directors in accordance with the bank regulatory requirements. The insider cannot participate in the board's deliberation or voting on the extension of credit with respect to that insider. Similarly, all certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or the Bank.

Policies and Procedures Regarding Related Party Transactions

        Transactions by the Company or the Bank with related parties are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve's Regulation O (which governs certain loans by the Bank to its executive officers, directors and principal shareholders).

        Under applicable SEC and Nasdaq rules, related party transactions are transactions in which we are a participant, the amount involved exceeds $120,000 and a related party has or will have a direct or indirect material interest. Related parties of the Company include directors (including nominees for election as directors), executive officers, five percent shareholders and the immediate family members of these persons. Management, in consultation with outside counsel, as appropriate, will review potential related party transactions to determine if they are subject to the policy. If so, the transaction will be referred to the audit committee for approval. In determining whether to approve a related party transaction, the audit committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature of the related party's interest in the transaction, the appearance of an improper conflict of interests for any director or executive officer taking into account the size of the transaction and the financial position of the related party, whether the transaction would impair an outside director's independence, the acceptability of the transaction to our regulators and the potential violations of other corporate policies.

AUDIT COMMITTEE REPORT

        The Audit Committee assists the board in carrying out its oversight responsibilities for our financial reporting process, audit process and internal controls. The Audit Committee also reviews the audited financial statements and recommends to the board that they be included in our Annual Report on Form 10-K. The committee is currently comprised of Messrs. Wanczyk, Fabbri, Herman and Dr. David. All of the members have been determined to be "independent," as defined by Nasdaq.