Hills Bancorporation (HBIA) DEF 14ADefinitive proxy

HILLS BANCORPORATION

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

April 15, 2024

The Annual Meeting of the Shareholders of Hills Bancorporation, an Iowa corporation (the “Company”), will be held at the Hills Community Center, 110 E. Main Street, Hills, Iowa, on Monday, the 15th day of April, 2024, at 4:00 p.m., (Central Time), for the following purposes:

The Board of Directors has fixed the close of business on March 1, 2024, as the record date for the determination of the shareholders entitled to notice of, and to vote at, the meeting. Accordingly, only shareholders of record at the close of business on that date will be entitled to vote at the meeting, or any adjournments thereof.

 

Pursuant to the rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our proxy materials both by: (i) sending you this full set of proxy materials, including a proxy card; and (ii) notifying you of the availability of our proxy materials on the internet.

If you would like to reduce the costs we incur to mail paper copies of our annual meeting materials, you can consent and elect to receive all future proxy statements, proxy cards and annual reports electronically by accessing www.envisionreports.com/HBIA as indicated above. You may also sign up for electronic access by logging in to the Investor Center at https://www-us.computershare.com/investor and indicating that you agree to access future proxy materials electronically. Please note that you may unsubscribe to the receipt of your proxy statements, proxy cards and annual reports by electronic delivery at any time by changing your elections at the Investor Center. You will continue to receive a paper copy of any future Notice of Annual Meeting, along with information on where electronic copies of the Proxy Statement, Form of Proxy, and our Annual Report to Shareholders may be accessed.

Date: March 15, 2024                    By Order of the Board of Directors

Hills Bancorporation                    Dwight O. Seegmiller

131 E. Main Street, PO Box 160                President and CEO                    

Hills, Iowa 52235

This Proxy Statement is furnished to shareholders of Hills Bancorporation (the “Company”) in connection with the solicitation of proxies by the Board of Directors of the Company for the Annual Meeting of Shareholders to be held at the Hills Community Center, 110 E. Main Street, Hills, Iowa, on Monday, April 15, 2024, at 4:00 p.m. (Central Time), and any adjournments thereof. This Proxy Statement and form of Proxy enclosed herewith are first being sent to the shareholders of the Company entitled to vote at the Annual Meeting on or about March 15, 2024.

The Board of Directors has fixed the close of business on March 1, 2024 as the record date for the determination of shareholders who are entitled to notice of and to vote at the meeting. You are entitled to one vote for each share of common stock you held on the record date, including shares:

Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the meeting.

There are three proposals scheduled to be voted on at the meeting which include: (i) the election of members to serve on the Company's Board of Directors; (ii) an advisory vote to approve the executive compensation programs of the Company and (iii) an advisory vote on the selection of our independent registered accounting firm, which gives you the opportunity to endorse or not endorse the Company’s appointment of the independent registered public accounting firm.

The solicitation of proxies on the enclosed form is made on behalf of the Board of Directors of the Company and will be conducted primarily through the mail. Please mail your completed proxy in the envelope included with these proxy materials. You may also vote by phone or online. Instructions for online and phone voting are on page 5 of this Proxy. In addition to the use of the mail, members of the Board of Directors and certain officers and employees of the Company or its subsidiary may solicit the return of proxies by telephone, facsimile, and other electronic media or through personal contact. The directors, officers and employees who participate in such solicitation will not receive additional compensation for such efforts, but will be reimbursed for out-of-pocket expenses. The cost of preparing, assembling and mailing this Proxy Statement, the Notice of Meeting and the enclosed proxy will be borne by the Company.

Because the election of Directors is determined by a plurality, the nominees receiving the most votes “FOR” will be elected. Shareholders of the Company do not have cumulative voting rights in the election of Directors.

Proposal Two, commonly known as a “Say on Pay” proposal, gives you as a shareholder the opportunity to endorse or not endorse our executive compensation programs. The affirmative vote of a majority of the votes cast by the holders of the Company’s common stock is required to approve Proposal Two, a non-binding advisory vote on executive compensation.

The affirmative vote of a majority of the votes cast by the holders of the Company’s common stock is required to approve Proposal Three, a non-binding advisory vote on the appointment of the independent registered public accounting firm.

If you hold your shares in a trust or brokerage account (sometimes referred to as holding shares in “street name”), please note that your bank or brokerage firm has no discretionary voting authority with respect to Proposals One and Two, and therefore cannot vote on any of such proposal in the absence of your instructions. As a result, unless you direct your broker on how to vote your shares with respect to those proposals, your shares will remain un-voted on Proposals One and Two. Shares held in street name for which no voting instructions have been provided by the beneficial owner (and which are not voted by the broker pursuant to discretionary voting authority) are generally referred to as “broker non-votes.” Although abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum, they are not considered votes cast at the meeting.

Under Proposal One, Directors will be elected by a plurality of the votes cast at the Annual Meeting. This means that the six nominees who receive the largest number of “FOR” votes cast will be elected as directors. Abstentions from voting and broker non-votes, if any, on Proposal One will have no effect on the outcome on the election of Directors.

The approval of Proposal Two requires only the vote of the majority of the “votes cast” at the Annual Meeting. Because abstentions from voting and broker non-votes are not treated as “votes cast,” they will have no effect on the outcome of this proposal.

Proposal Three requires only the vote of the majority of the “votes cast” at the Annual Meeting. Because abstentions from voting and broker non-votes are not treated as “votes cast,” they will have no effect on the outcome of this proposal.

For Proposal One, a shareholder may:

For Proposals Two and Three, a shareholder may:

If your shares are held in street name, your bank or broker is not permitted to discretionarily vote on your behalf in the absence of voting instructions from you for any of Proposals One and Two. For your vote to be counted on such proposals, you must communicate your voting decisions to your bank, broker or other holder of record before the date of the Annual Meeting.

Whether you hold shares directly or in “street name”, you may direct your vote without attending the Annual Meeting. If you are a shareholder of record, you may vote by granting a proxy as follows:

It likely means you hold shares registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy. You may also vote each proxy by telephone or online.

Yes. You may revoke your proxy at any time prior to the voting thereof by filing with the Treasurer of the Company at the Company’s principal office at 131 E. Main Street, PO Box 160, Hills, Iowa 52235, a written revocation or a duly executed proxy bearing a later date. You may also revoke your proxy by phone by calling 1-800-652-VOTE (8683) within the USA, US territories and Canada and following the instructions given, or by internet by going to https://www.envisionreports.com/HBIA, following the instructions given and entering the requested information. Any such revocation must be executed prior to 11:59 a.m. (Central Time) on the day of the Annual Meeting. A shareholder may also withdraw the proxy in person at the meeting at any time before it is exercised. The presence of a shareholder at the Annual Meeting, however, will not automatically revoke such shareholder’s previously submitted proxy.

This Proxy Statement and the accompanying Notice of Annual Meeting of Shareholders and Annual Report to Shareholders are being mailed to the Company's shareholders on or about March 15, 2024.

The Proxy Statement, and our Annual Report to Shareholders for the fiscal year ended December 31, 2023, are available online and may be accessed at www.envisionreports.com/HBIA or www.edocumentview.com/HBIA. 

Each Director of the Company also serves as a Director of the Company’s wholly-owned subsidiary, Hills Bank and Trust Company (the “Bank”), which is a commercial bank.  The Company anticipates that, following the election of the nominees set forth below, all Directors of the Company will serve, or continue to serve, as Directors of the Bank.  The Directors of the Bank are elected by the vote of the Company as the sole shareholder of the Bank.

Set forth below are the names of the six persons nominated by the Board of Directors for election as Directors of the Company at the 2024 Annual Meeting, along with certain other information concerning such persons.

None of the nominees currently serves, or has served in the past five years, as a Director of another company whose securities are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or whose securities are subject to the requirements of Section 15(d) of the Exchange Act or a company registered under the Investment Company Act of 1940, as amended.  There are no family relationships among the Company’s Directors, nominees for Director and executive officers.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), Section 14A of the Securities Exchange Act (15 USC 78n-1) and related SEC regulations, the Company is providing shareholders with an advisory (non-binding) vote on compensation programs for our Named Executive Officers (commonly referred to as “Say on Pay”).  As approved by its shareholders at the 2023 annual meeting, the Company is submitting this non-binding vote to shareholders on an annual basis. The following resolution is presented for consideration at the Annual Meeting.

“RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K of the SEC, including the Compensation Discussion and Analysis, compensation tables, and the related narrative disclosure is hereby APPROVED.”

This vote is non-binding.  The Board and the Compensation and Incentive Stock Committee, which is comprised of non-employee  Directors, expect to take into account the outcome of the vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.

Shareholders are encouraged to review the Compensation Discussion and Analysis section of this Proxy Statement for a detailed discussion of our executive compensation programs. The affirmative vote of a majority of the shares of common stock cast at the meeting, in person or by proxy, and entitled to vote thereon is required to approve Proposal Two.

The Audit Committee of the Board of Directors proposes and recommends that the shareholders approve the selection by the Committee of the firm of FORVIS, LLP to serve as the Company’s independent registered public accounting firm for the 2024 fiscal year. The firm has served as independent auditors for the Company since 2012.  Action by the shareholders is not required by law in the appointment of an independent registered public accounting firm, but the firm's appointment is submitted by the Audit Committee of the Board of Directors in order to give the shareholders a voice in the designation of auditors. If the resolution approving FORVIS, LLP as the Company’s independent registered public accounting firm is rejected by the shareholders, the Committee will reconsider its choice of independent auditors. Even if the resolution is approved, the Audit Committee, in its discretion, may direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.

Proxies in the form solicited hereby which are returned to the Company will be voted in favor of this non-binding proposal unless otherwise instructed by the shareholder.  The affirmative vote of a majority of the shares of common stock cast at the meeting, in person or by proxy, and entitled to vote thereon is required to approve Proposal Three.

The following tables set forth certain information with respect to Directors of the Company who will continue to serve as Directors subsequent to the 2024 Annual Meeting and who are not nominees for election at the 2024 Annual Meeting.

neighboring Marion so Mr. Phelan’s knowledge and contacts in this area have been invaluable in assisting with the expansion of this market.  Mr. Phelan is a past president of the State of Iowa Broadcasters Association and a long-term Board member of that organization. 

Additional information regarding the Directors to serve until the 2026 Annual Meeting is as follows:

bar associations.  Ms. Hughes’ experience with the largest employer in the Company’s trade area, the University of Iowa, and her legal expertise provide important insight to the Board of Directors. 

 

None of the Directors currently serves, or has served in the past five years, as a Director of another company whose securities are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or whose securities are subject to the requirements of Section 15(d) of the Exchange Act or a company registered under the Investment Company Act of 1940, as amended.  There are no family relationships among the Company’s Directors, nominees for Director and executive officers.

Board of Directors of the Company

The Board of Directors of the Company meets on a regularly scheduled basis. During 2023, the Board of Directors of the Company held an annual meeting, one special meeting and twelve regular meetings. During 2023, all Directors of the Company attended at least seventy-five percent of the total number of meetings of the Board and all of the committees to which such Directors were appointed.  Although the Company does not have a formal policy regarding attendance by Directors at annual shareholder meetings, such attendance is encouraged. In 2023, all of the Company’s Directors attended the annual shareholders’ meeting.

The Board of Directors of the Company has established a committee (the "Governance and Nominating Committee") consisting of the ten non-employee Directors (all Directors but Mr. Seegmiller and Ms. Shileny), all of whom are considered to be independent as defined under the rules of NASDAQ, except for Mr. Hodge. The Governance and Nominating Committee assists in identifying individuals qualified to become Board members, recommends nominees for director (including evaluating candidates recommended by shareholders), recommends the corporate governance guidelines applicable to the Company, oversees an annual review of the Board's performance, recommends director nominees for each committee, recommends a determination of each outside director's "independence" under applicable rules and guidelines, oversees the Company's engagement with stockholders and other interested parties concerning governance and other related matters, and oversees reputation risk related to Committee's responsibilities. The Governance and Nominating Committee

met four times during 2023. Directors are not compensated for meetings of the Governance and Nominating Committee.  The Board of Directors has adopted a written charter for the Governance and Nominating Committee, a copy of which is available on the Company's website at www.hillsbank.com under the heading of "Investor Relations."

The Board of Directors of the Company has established a committee (the “Audit Committee”) consisting of three non-employee Directors, currently consisting of Directors Peck, Yoder and Schmitt. The Board of Directors has adopted a written charter for the Audit Committee.  A copy of the charter is available on the Company’s website at www.hillsbank.com under the heading of "Investor Relations."  The Audit Committee is responsible for the engagement of the independent registered public accounting firm and reviews with the independent registered public accounting firm the scope and results of the audits, the Company’s internal accounting controls and the professional services furnished by the independent registered public accounting firm. All three members of the Audit Committee are “independent” as defined under the rules of NASDAQ. Due to their experience as noted above, the Board has determined that Directors Schmitt and Peck qualify as Audit Committee Financial Experts under applicable regulations. The Audit Committee met six times in 2023.  Audit Committee members are compensated by the Bank as indicated below under the heading “Schedule of Directors Fees.”

The Board of Directors of the Company has established a committee (the “Compensation and Incentive Stock Committee”) consisting of the ten non-employee Directors (all Directors but Mr. Seegmiller and Ms. Shileny), all of whom are considered to be independent as defined under the rules of NASDAQ, except for Mr. Hodge. The Compensation and Incentive Stock Committee makes decisions regarding executive officer salaries, bonuses, grants of awards to all officers pursuant to the Hills Bancorporation 2020 Stock Option and Incentive Plan (the “Incentive Stock Plan”), contributions to the Hills Bank and Trust Company Employee Stock Ownership Plan (the “ESOP”), and contributions to the Hills Bank and Trust Company 401(k) Profit Sharing Plan (the “Profit Sharing Plan”). The Compensation and Incentive Stock Committee held ten meetings during 2023.  The ten meetings involved approval of grants of restricted stock to officers. Directors are not compensated for meetings of the Compensation and Incentive Stock Committee.  The Board of Directors has adopted a written charter for the Compensation and Incentive Stock Committee, a copy of which is available on the Company's website at www.hillsbank.com under the heading of "Investor Relations."

The Board of Directors of the Company has established a committee (the "Risk Committee") consisting of three non-employee Directors, currently consisting of Directors Donovan, Frey and Hughes. The Board of Directors has adopted a written charter for the Risk Committee. A copy of the charter is available on the Company's website at www.hillsbank.com under the heading of "Investor Relations." The Risk Committee oversees and approves the Company-wide risk management practices to assist the board in overseeing the management team's identification and assessment of risks facing the organization and establishment of a risk management infrastructure capable of addressing those risks, the division on risk-related responsibilities to each Board committee as clearly as possible to determine that the oversight of risks is not missed, and approval of the Company's enterprise risk management framework. The Risk Committee held six meetings during 2023. Risk Committee members are compensated by the Bank as indicated below under the heading "Schedule of Directors Fees."

 

Each of the Company’s Directors, with the exception of Mr. Seegmiller, Ms. Shileny, and Mr. Hodge, has been determined by the Board of Directors to be an “Independent Director” as defined by Rule 5605(a)(2) of the Marketplace Rules of the National Association of Securities Dealers Automated Quotation system (“NASDAQ”).  Mr. Seegmiller is not considered to be independent since he is the President and CEO of the Company and the CEO of the Bank. Ms. Shileny is not considered to be independent since she is the President of the Bank. In determining Director independence, the Board of Directors considers all relevant facts and circumstances, including the independence standards set forth in the rules of NASDAQ.  In order to be considered independent, a Director must be free from any relationship which, in the opinion of the Company’s Board of Directors would interfere with the exercise of independent judgment.  The Board of Directors considered certain transactions, relationships or arrangements which are described herein under the heading “Compensation and Incentive Stock Committee Interlocks and Insider Participation” in making its determination of director independence.

Board of Directors of the Bank

The business and affairs of the Bank are managed by the Board of Directors of the Bank, the membership of which is identical to that of the Board of Directors of the Company. The Board of Directors of the Bank holds regular monthly meetings. In 2023, the Board of Directors of the Bank held an annual meeting, one special meeting and twelve regular meetings. The Board of Directors of the Bank has established the Trust Committee, the Audit Committee, the Risk Committee, the Loan Committee and the Employee Stock Ownership Plan (“ESOP”) Committee as standing committees of the Board of Directors of the Bank. Directors Wiele, Phelan, Rhodes, Seegmiller and Shileny serve on the Trust Committee; Directors Peck, Yoder and Schmitt serve on the Audit Committee; Directors Donovan, Hughes and Frey serve on the Risk Committee; Directors Hughes, Hodge, Schmitt, Seegmiller and Shileny serve on the Loan Committee; and Director Rhodes

serves on the ESOP Committee. The seven Directors not appointed to the Loan Committee are invited to attend meetings of that committee and are compensated for such attendance at the same rate as members of the Loan Committee for each meeting attended. The Board of Directors of the Bank has established the Governance and Nominating Committee that meets as needed as part of regularly scheduled Board meetings.

The Trust Committee of the Bank is responsible for overseeing and annually reviewing the operations of the Trust Department of the Bank and the status of all trusts for which the Bank’s Trust Department acts in a fiduciary capacity. The Trust Committee met twelve times during 2023. The Audit Committee held six meetings during 2023 and is responsible for coordinating the audit with FORVIS, LLP and addressing internal audit functions. The Risk Committee held six meetings during 2023 and is responsible for oversight of the Bank's enterprise risk management program. The Loan Committee held twelve meetings during 2023 and is responsible for review and oversight of the loan activities of the Bank. The ESOP Committee, which is responsible for overseeing the ESOP in connection with which the Bank’s Trust Department serves as trustee, had three meetings during 2023. During 2023, all of the Directors of the Bank attended at least seventy-five percent of the total number of meetings of the Board of Directors and all of the Directors of the Bank appointed to committees attended at least seventy-five percent of the meetings of the committee to which such Directors were appointed.

Board Leadership Structure and Role in Risk Oversight

The leadership structure of the Board of Directors has historically separated the function of the Chairperson of the Board of the Bank and the Principal Executive Officer.  This structure is expected to continue in the future with the Chairperson of the Bank’s Board of Directors being a non-employee Director.  This structure promotes good corporate governance by providing a non-management leadership structure and such a leadership structure is encouraged by bank regulators.  The Company’s Board of Directors has not designated a Chairperson, and Mr. Seegmiller currently acts as the de facto chair at all meetings thereof, which generally precedes meetings of the Bank’s Board of Directors. The Company currently has no designated “lead independent director” with respect to its Board and believes this structure is appropriate because all significant business operations continue to be conducted at the Bank level.

The Company is exposed to risks as part of the normal course of business. Risk exposure requires sound risk management practices that comprise a comprehensive framework of programs and processes that apply to the Company. The Company has established a risk management framework to manage risks and provide reasonable assurance of the achievement of the Company's strategic objectives. The primary risks identified and managed through the framework are strategic risk, liquidity risk, market risk, credit risk, trust risk, information technology and security risk, operational risk, legal risk and reputational risk.

The principal risk management functions of the Board are to oversee processes for evaluating the adequacy of internal controls, risk management, financial reporting and compliance with laws and regulations. The Board, through its Risk Committee, has developed a formal plan to address Enterprise Risk Management ("ERM") within the Company. The Company's ERM includes a formal process to identify and document the key risks to the Company and provides a common framework and terminology to ensure consistency in identification, reporting and management of key risks. The Board annually approves, upon the recommendation of its Risk Committee, a Risk Appetite and Tolerance Statement that reflects core business principles and provides the foundation of the Company's risk appetite, which is the aggregate amount of risk the Company is willing to accept in pursuit of its mission. By establishing boundaries around risk taking and business decisions, and by incorporating the needs and goals of its shareholders, regulators, customers and other stakeholders, the Company's risk appetite is aligned with its priorities and goals.

The Board has formed an Enterprise Risk Management Committee ("ERMC") of the Company comprised of the Company's business unit leaders and led by the Company's Senior Vice President, General Counsel, to help ensure the consistent application of the Company's risk management approach. The primary activities of the ERMC include:

The Company has also formed an Officers Risk Management Committee ("ORMC") which consists of a cross-functional group of Bank officers representing various departments across the Bank. The primary activities of the ORMC include:

As part of the risk assessment process, the ERMC and ORMC each report the results of their evaluations to the Risk Committee of the Board of Directors and make recommendations to the Risk Committee regarding adjustments to controls as conditions or risk tolerances change.

Schedule of Directors Fees

Directors of the Company and the Bank who are not employees of the Company or the Bank (all Directors but Mr. Seegmiller and Ms. Shileny) are compensated for their service as Directors as indicated in the table below:

Director Deferral Plan:

Director Compensation Table

The following table provides information concerning the compensation of all the Directors other than Mr. Seegmiller and Ms. Shileny for the fiscal year ended December 31, 2023.  Compensation information for Mr. Seegmiller and Ms. Shileny is discussed below in the section captioned “Summary of Cash and Certain Other Compensation Paid to the Named Executive Officers.”

Set forth in the following table is certain information on each person who is known to the Board of Directors to be the beneficial owner as of March 1, 2024 of more than 5% of the Company’s Common Stock, which is the only class of equity securities that the Company has outstanding.

The following table sets forth as of March 1, 2024 the number of shares of the Company’s Common Stock beneficially owned by each Director, nominee for Director, the non-Director executive officers and all the Directors and the non-Director executive officers as a group.  The Company has not adopted a share ownership policy or a share retention policy for the Directors or the executive officers.

Hedging Practices

The Company has not adopted any practice or policies regarding the ability of directors or employees (including officers), or their designees, to purchase financial instruments, or otherwise engage in transactions, that are designed to hedge or offset any decrease in the market value of the Company’s stock held by such insiders.

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors, executive officers and persons who own more than 10 percent of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership of such securities with the Securities and Exchange Commission.  Directors and executive officers and greater than 10 percent beneficial owners are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of the forms furnished to the Company, or written representations from certain reporting persons that no other reports were required, the Company believes that all filing requirements applicable to the Directors and executive officers were complied with during 2023.

All compensation decisions affecting the executive officers of the Company and the Bank are made by the Compensation and Incentive Stock Committee of the Board of Directors consisting of the ten non-employee Directors (all Directors but Mr. Seegmiller and Ms. Shileny). The Committee makes compensation decisions with respect to each of the Company Named Executive Officers identified in the Summary Compensation Table and other tables on the following pages of this Proxy Statement.  The compensation paid to the Bank Named Executive Officers is not directly determined by the Committee, but is determined by Mr. Seegmiller, as the senior executive of the Company and the Bank, and Ms. Shileny, as President of the Bank, which determinations are then reviewed and ratified by the Committee.

Michael E. Hodge, in his capacity as a member of the Boards of Directors of the Company and the Bank and of the Compensation and Incentive Stock Committee, participated in deliberations concerning executive compensation matters during 2023.  Within the last three fiscal years, the Bank has had certain business relationships with Hodge Construction Company, a general contractor.  In addition, Mr. Hodge is a 17.65% investor in the limited liability corporation, OC Group, L.C. that is the owner of the Old Capitol Town Center, a portion of which is leased by the Bank for a bank office location, and he is a 29% owner of Hodge Construction Company, from which the Bank utilized construction management services in 2023.

The Bank has an agreement with the OC Group, L.C. under which it leased 5,845 square feet of space in Old Capitol Town Center, a two-story building with a total of 99,612 square feet, located in downtown Iowa City.  Mr. Hodge holds a 17.65% ownership interest in OC Group, L.C., the owner of Old Capitol Town Center.  The ten-year lease began on June 1, 2004 and was extended in 2019 until 2024, the second renewal period under the lease.  The lease term is subject to two additional five-year renewal options.  The Bank’s annual lease payment on this space is currently $26.22 per square foot and increases 2% per year, plus annual common area maintenance charges of $4.00 per square foot.  The Bank is also responsible for payment of the real estate taxes allocated to the leased space.  The annual lease cost in 2023 was $152,269 before payment of such real estate taxes, which were $25,260 for the year.  In the opinion of management, the cost of the leased space is similar to the cost of leasing comparable commercial property in downtown Iowa City.

The Bank hired Hodge Construction Company to provide construction management for roof repairs of its office location in Hills, IA. Mr. Hodge holds a 29% ownership in Hodge Construction Company. During 2023, the Bank paid Hodge Construction Company $158,719.

The Board of Directors of the Bank does not believe that the participation by Mr. Hodge in the deliberations concerning executive compensation has provided the Company Named Executive Officers with more favorable compensation arrangements than would have been the case absent his participation in such deliberations.  As disclosed elsewhere in this proxy statement under the caption "Corporate Governance and the Board of Directors," management has concluded that Mr. Hodge is not an independent Director as defined by NASDAQ's rules.

In addition, certain of the officers and Directors of the Company, their associates or members of their families, were customers of, and have had transactions with, the Bank from time to time in the ordinary course of business, and additional transactions may be expected to take place in the ordinary course of business in the future. Federal Reserve Regulation O requires loans made by the Bank to executive officers and Directors to be made on substantially the same terms, including interest rates and collateral, and following credit-underwriting procedures that are no less stringent than those prevailing at the time for other transactions by the Bank with other unrelated persons. Such loans may not involve more than the normal risk of repayment or present other unfavorable features. Regulation O also requires approval by the Board of Directors for all insider loans in excess of $500,000.

The Company does not have a formal written policy regarding the review and approval of transactions, other than extensions of credit under the Insider Credit Policy, between the Company and its Directors, executive officers and other related interests. However, it is the general practice of the Board of Directors to review and approve any new non-loan transactions that would exceed $120,000, with the interested Director recusing him- or herself from deliberations and voting on the proposal.  In making a determination to approve a related party transaction the Board of Directors will take into account, among other factors it deems appropriate, whether the proposed transaction is on terms no less favorable to the Company than those generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the proposed transaction. On a yearly basis, the Board of Directors reviews information on any existing and ongoing transactions with the Directors as disclosed under the Compensation and Incentive Stock Committee Interlocks and Insider Participation section.  Management of the Company anticipates that the Bank and the Company will continue to maintain such business relationships in the future on a similar basis to the extent that such goods and services are required by the Bank and the Company.

No executive officer of the Company or Bank serves or has served as a member of the Board of Directors or the Compensation Committee of any other company which employs any member of the Company's Board of Directors.

Introduction

The Company’s overall compensation objectives are to pay salaries and provide benefits that are both fair and reasonable, consistent with the compensation practices of the financial services industry in general, and appropriate and competitive in the Bank’s local marketplace.  The Company’s goal is to attract, develop and retain high caliber executives who are capable of increasing the Company’s performance for the benefit of its shareholders while maintaining the philosophy of community banking. Ultimately, the Company desires to base its compensation on individual performance as it affects the overall financial results of the Company.  Specifically, the executive compensation program of the Company has been designed to:

To achieve its objectives the Company has structured its compensation program: (1) to reward current corporate and individual performance through salary increases and opportunities for cash bonuses; and (2) to reward long-term corporate and individual performance through participation in the ESOP and Profit Sharing Plan, the Deferred Compensation Plan and

participation in the Incentive Stock Plan.  The amounts and types of compensation paid in 2023 (as set forth below) fit into the Company’s overall compensation objectives by achieving those two objectives.

The Compensation and Incentive Stock Committee (the “Committee”), which is comprised of the full Board of Directors with the exception of Directors Seegmiller and Shileny, has responsibility for implementing and overseeing the Company’s executive compensation program.  In this respect, the Committee has strategic and administrative responsibility for a broad range of issues, including ensuring that the Company compensates key management employees effectively and in a manner consistent with the Company’s compensation strategy.  The Committee also oversees the administration of executive compensation plans, including the design, performance measures, and award opportunities for management compensation programs, and certain employee benefits. The Committee also makes compensation decisions with respect to each of the Company Named Executive Officers identified in the Summary Compensation Table and other tables on the following pages of this Proxy Statement.  The compensation paid to the Bank Named Executive Officers is not directly determined by the Committee, but is determined by Mr. Seegmiller, as the senior executive of the Company and the Bank, and Ms. Shileny, as the President of the Bank, which determinations are then reviewed and ratified by the Committee.

The Committee’s policy is to review management compensation at least annually.  The Committee makes these reviews to ensure that management compensation is consistent with the Company’s compensation philosophies articulated above.

The factors the Committee considers in either determining or ratifying, as the case may be, the level and composition of compensation include but are not limited to the following: (1) the Bank’s performance as compared to internally-established goals for the most recently ended fiscal year and to the performance of other Iowa-based financial institutions; (2) the individual officer’s level of responsibility within the Bank; and (3) competitive compensation data.  In addition, the Committee considers the financial performance for the current year including the business plan containing the financial performance goals measured primarily in terms of earnings per share, growth of the Company, asset quality, return on assets and return on stockholders’ equity.  The Committee also considers the financial budget for the upcoming fiscal year and the Company’s updated strategic plan.  While the foregoing factors are not specifically weighted in the decision-making process, primary emphasis is placed on the Bank’s performance during the previous year as compared to the internally-established goals.  Although the Committee reviewed a number of objective factors in setting compensation for 2023, its final decision was based on a subjective determination.  Details regarding the compensation of each of the Company and Bank Named Executive Officers are set forth in the tables that appear below.

The internally established goals for purposes of the compensation discussion focus on the financial budget for the year under review compared to the actual results.  However, there are no predetermined increases or decreases in the compensation based solely upon the financial results in terms of net income compared to the budget.  Any significant variance to the budget is analyzed fully with the Board of Directors to determine the reasons behind the variance and to determine if such variance is a result of management’s efforts or is driven by factors in the financial area outside of their control.  Compensation adjustments are not made based on any predetermined formulas of the financial performance goals established during the financial budget process.

The Committee has not engaged outside consultants, but that option is available to the Committee.  However, in evaluating the salary component of the compensation of the Company and Bank Named Executive Officers each year, the Committee reviews salaries paid to officers holding similar positions in other Iowa-based financial institutions.  The companies included in the peer group are reviewed annually and may change based on size, merger and acquisition activity and other pertinent factors. Review of this information is done primarily to determine that the salaries established are at a competitive level.  The Committee does not set strict parameters using this data.  Rather, the Committee uses this data to ensure that the Company and Bank Named Executive Officers' compensation paid by the Bank is not inconsistent with compensation levels at appropriately defined peer organizations.

In determining the compensation to be paid to the Company Named Executive Officers in 2023, the Committee took the actions listed below:

After considering all the compensation paid to the Company and Bank Named Executive Officers, the Committee determined that the compensation paid to the Company and Bank Named Executive Officers is reasonable and not excessive.

The Company provides a competitive mix of pay elements that align executive incentives with shareholder value.  The executive compensation program includes salary, cash bonuses and long-term compensation.

The forms of compensation paid in 2023 are comprised of the following:

No Named Executive Officers received cash bonuses in 2023. The Committee determines cash bonuses, if any, on a discretionary basis. Cash bonuses are utilized as a means to reward and incentivize achieving short-term and annual performance measures.

As part of the Profit Sharing Plan, the Company offers a qualified 401(k) plan to provide a tax-advantaged savings vehicle.  The Company makes matching contributions to the 401(k) plan to encourage employees to save money for their retirement.  This 401(k) plan and such matching contributions enhance the range of benefits offered to employees and the Company’s ability to attract and retain employees.  The 401(k) segment of the Profit Sharing Plan covers all eligible employees of the Bank.  Employees are eligible to participate in elective salary deferrals.  Participants may contribute up to 100% of eligible

compensation, limited to the maximum amount deductible under the Internal Revenue Code for employee salary reduction.  The Plan provides for an employer matching contribution equal to 25% of the employee’s deferral, limited to deferrals of up to 4% of compensation, therefore the maximum Company contribution is 1% of compensation. Subject to certain exceptions, both employee contributions and the Company’s matching contribution are vested immediately.

Any amount so deferred is credited to the Company Named Executive Officer’s deferred compensation account and converted to units equivalent in value to the fair market value of a share of stock in Hills Bancorporation.  The “stock units” are book entry only and do not represent an actual purchase of stock.  The Company Named Executive Officer’s account is adjusted each year for dividends paid and the change in the market value of Company stock.  The deferrals and earnings grow tax deferred until withdrawn from the plan.  Earnings credited to each individual’s account are recorded as compensation expense when earned. The amounts accrued in the Named Executive Officer’s account are payable in five annual installments after the Named Executive Officer reaches the age of 65, or 70 if a five-year deferral is selected. If the amount in the Named Executive Officer's account is less than $100,000, the balance will be paid in a lump sum.

Stock-Based Compensation - Procedures Regarding Approval and Timing and Pricing of Awards

The terms of the Incentive Stock Plan require that the Committee approve all grants of stock options and that stock options be granted only at current market prices.  The exercise price of stock options is set at the stock price on the date of grant.  The Company tries to make stock option grants at times when they will not be influenced by a scheduled release of information.  The Company does not otherwise time or plan the release of material, non-public information for the purpose of affecting the value of executive compensation.

Role of Executive Officers in Determining Executive Compensation

The Committee oversees the administration of executive compensation plans, including the design, performance measures, award opportunities and certain employee benefits that are included in the Company’s compensation program.  Each year the Company Named Executive Officers make recommendations to the Committee concerning the amount of the ESOP contribution and the amount of the Profit Sharing Plan contribution.  The Committee has the authority to determine, and approves all compensation and awards to Mr. Seegmiller without his participation.  Mr. Seegmiller and Ms. Shileny made recommendations to the Committee concerning the compensation of Mr. Roetlin.  The Committee annually reviews and makes determinations concerning the elements of such compensation.  The Company Named Executive Officers do not otherwise determine or make recommendations regarding the amount or form of executive or Director compensation.  The compensation for the Bank Named Executive Officers is not directly determined by the Committee, but is determined by Mr. Seegmiller, as the senior executive of the Company and the Bank, and Ms. Shileny, as the President of the Bank, which determinations are then reviewed and ratified by the Committee.

Tax Considerations

The accounting and tax treatment of particular forms of compensation do not materially affect the Committee’s compensation decisions. However, the Committee evaluates the effect of such accounting and tax treatment on an ongoing basis and may make appropriate modifications to its compensation policies if appropriate.

Consideration of Most Recent Advisory Vote on Executive Compensation and Summary

The Company conducted the first advisory vote on executive compensation at the 2011 Annual Meeting, and it is the Company's policy to provide shareholders with an advisory vote on compensation at each Annual Meeting.  While the "Say on Pay" vote is not binding on the Company, its Board of Directors or the Committee, the Company believes that it is important for the shareholders to have an opportunity to vote on this proposal on an annual basis as a means to express their views regarding the Company's executive compensation philosophy, compensation policies and programs, and decisions regarding executive compensation, all as disclosed in the Company's proxy statement.  The Company's Board of Directors and the Committee value the opinions of the shareholders and, to the extent there is any significant vote against the compensation of the Company's Named Executive Officers as disclosed in the proxy statement, the Company will consider the shareholders’ concerns and the Committee will evaluate whether any actions are necessary to address those concerns.  In addition to the annual advisory vote on executive compensation, the Company is committed to ongoing engagement with the shareholders on executive compensation and corporate governance issues.  These engagement efforts take place throughout the year through meetings, telephone calls and correspondence involving senior management, Directors and representatives of the shareholders.

At the 2023 Annual Meeting, 97% of the votes cast on the advisory vote on executive compensation proposal (Proposal 2) were in favor of the Company's Named Executive Officer compensation as disclosed in the proxy statement, and as a result the Named Executive Officer compensation was approved.  The Board of Directors and the Committee reviewed these final vote results and determined that, given the significant level of support, no changes to the executive compensation policies and decisions were necessary at this time to address shareholder concerns based on the vote results.

In summary, the Committee believes the mix of compensation elements described above motivates management to produce strong returns for shareholders.  The Committee believes this program strikes an appropriate balance between the interests and needs of the Company in operating its business and appropriate employee rewards based on shareholder value creation.

The Compensation and Incentive Stock Committee of the Board of Directors has reviewed and discussed with management the “Compensation Discussion and Analysis” included in this Proxy Statement, and based on such review and discussion, the Compensation and Incentive Stock Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.

Overview

The following sections provide a summary of cash and certain other compensation the Company paid for the year ended December 31, 2023 to the Named Executive Officers.  Except where noted, the information in the Summary Compensation Table generally pertains to compensation to the Named Executive Officers for the year ended December 31, 2023.

The compensation disclosed below is presented in accordance with SEC regulations.  According to those regulations the Company is required in some cases to include:

Therefore, shareholders are encouraged to read the following tables closely.  The narratives preceding the tables and the footnotes accompanying each table are important parts of each table.  Also, shareholders are encouraged to read this section in conjunction with the Compensation Discussion and Analysis above.

CEO Pay Ratio

The Securities and Exchange Commission adopted a rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requiring annual disclosure of the ratio of the median employee's annual total compensation to the annual total compensation of the chief executive officer ("CEO"). The purpose of the required disclosure is to provide a measure of the equitability of pay within the Company. The Company believes that the executive compensation program must be consistent and internally equitable to motivate the Company's employees to perform in ways that enhance shareholder value. The Company is committed to internal pay equity, and the Compensation Committee monitors the relationship between the pay of the executive officers and the pay of the non-executive officers.

The Compensation Committee reviewed a comparison of the Company CEO's total annual compensation in fiscal year 2023 to that of all other Company employees for the same period.

In determining the median employee, a listing was prepared of all employees as of December 31, 2023. As of that date, the Company employed 496 persons. The median employee was selected from the list of all employees.

The calculation of annual total compensation of all employees was determined in the same manner as the Total Compensation shown for the Company's CEO in the Summary Compensation Table on page 26 of this Proxy Statement. Pay elements that were included in the total annual compensation for each employee are:

The total annual compensation for fiscal year 2023 for the CEO was $633,720, and for the median employee was $52,378. The resulting ratio of the CEO's pay to the pay of the median employee for fiscal year 2023 was 12.10 to 1.

Summary Compensation Table

The table below summarizes the total compensation paid or earned by each of the Named Executive Officers for the last three fiscal years. The Company has not entered into any employment agreements with any of the Named Executive Officers. When setting the total compensation for each of the Named Executive Officers, the Committee reviews information concerning the executive’s current compensation and all other compensation.  

 

NOTES:

* Anthony Roetlin joined the Company as Treasurer and PFO effective December 30, 2022, therefore, no compensation was paid in 2022.

No other Company or Bank Named Executive Officers were granted any stock, stock options or other equity awards in 2023. As noted above, the compensation paid to the Company and Bank Named Executive Officers consists of base salary, cash bonuses, where appropriate, and participation in the profit sharing and ESOP plans.

Outstanding Equity Awards at Fiscal Year-End

Except as otherwise provided hereafter, there were no unexercised options, stock that has not vested, or equity incentive plan awards for the applicable Company Named Executive Officers outstanding as of December 31, 2023. Mr. Seegmiller does not have any options vested nor unvested as of year-end 2023.

No other Named Executive Officer of the Bank has any options vested or unvested as of December 31, 2023.

(1) All reported awards vested on October 13, 2023.

(2) The value realized on vesting is based on the per share market value of the Company shares on the vesting date of $66.00.

No other Company or Bank Named Executive Officers had any stock vest during the fiscal year ended December 31, 2023. No Company Named Executive Officers exercised stock options nor had any stock options vest during the year ended December 31, 2023.

The Company and the Bank do not have any qualified or non-qualified defined benefit plans.

The following table provides information with respect to the Deferred Compensation Plan for the Named Executive Officer.  The amounts shown on the table include (1) compensation deferred in the prior fiscal year; (ii) Company contributions during the prior fiscal year; (iii) aggregate earnings on amounts held in the Plan during the prior fiscal year; and (iv) any distributions under this Plan during the prior fiscal year.  The Bank Named Executive Officers are not eligible to participate in the Deferred Compensation Plan. A discussion of the general terms of this Plan is located in the section of this Proxy Statement captioned "Compensation Discussion and Analysis - Elements of Compensation."

There are no employment contracts, termination of employment agreements, change in control agreements or other arrangements with the executive officers of the Company and the Bank that provide for payment or benefits to any executive officer at, following, or in connection with a change in control of the Company, a change in an executive officer’s responsibilities, or an executive officer’s termination of employment, including resignation, severance, retirement, or constructive termination.

Information regarding potential payouts to Named Executive Officers under the Company’s nonqualified deferred compensation plan is provided above in the Nonqualified Deferred Compensation Table.  Both the contributions of the Named Executive Officers and of the Company to this plan are fully vested, and each Named Executive Officer would be entitled to receive his/her accrued balances in these plans upon termination of employment for any reason.

All benefits payable to the Named Executive Officers in connection with a change in control or termination of service pursuant to the Company’s qualified retirement plans would be paid in accordance with plan terms applicable to all employees of the Company.

The compensation policies and practices of the Company and the Bank are not believed to create risks that are reasonably likely to have a material adverse effect on operations or financial results.  The compensation policies and practices of the Company and the Bank are not designed to provide enormous bonuses and do not encourage employees to take undue amounts of risk.   The incentives provided to employees are designed to encourage sound performance over time rather than the pursuit of immediate high-risk profits.   The policies and practices of the Company and the Bank include controls that mitigate the potential impact of compensation policies that might otherwise create unacceptable levels of risk.

The Committee will consider adjusting future awards or recovering past awards in the event of a material restatement of the Company’s financial results.  If, in the exercise of its business judgment, the Committee believes that it is in the Company’s best interests to do so, the Committee will seek recovery or cancellation of any bonus or other incentive payments made to an executive on the basis of having met or exceeded performance targets during a period of fraudulent activity or a material misstatement of financial results where the Committee determines that such recovery or cancellation is appropriate due to intentional misconduct by the executive officer that resulted in such performance targets being achieved which would not have been achieved absent such misconduct.

March 12, 2024

To the Board of Directors:

The Audit Committee consists of the following members of the Board of Directors:  Casey L. Peck, Sheldon E. Yoder and James C. Schmitt. As noted above, the Board of Directors has determined that Mr. Schmitt, Chairperson of the Audit Committee, and Casey L. Peck, are “financial experts” as defined under SEC regulations.  Each of the members of the Audit Committee is independent as defined under the rules of NASDAQ.

The Audit Committee has:

Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the Securities and Exchange Commission.

Aggregate fees billed to the Company for the years ending December 31, 2023 and 2022 by the Company’s independent registered public accounting firm are presented in the table below.

 

The Company’s Audit Committee pre-approves all audit, audit-related, tax and other services proposed to be provided by the Company’s independent registered public accounting firm prior to engaging the independent registered public accounting firm for that purpose.  The charter of the Audit Committee sets forth this approval requirement.  All of the audit fees and audit-related fees and the tax fees for 2023 and 2022 were pre-approved by the Audit Committee.

 

The Audit Committee has selected FORVIS, LLP as the Company’s independent registered public accounting firm for 2024. Representatives of FORVIS, LLP are expected to be present at the Annual Meeting.  They will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.

Shareholder proposals intended to be presented at the Annual Meeting of Shareholders to be held in 2025 must be received by the Company no later than November 15, 2024 for inclusion in the Company’s proxy statement and form of proxy relating to that meeting. Proposals should be submitted to the Company at its principal executive offices at 131 East Main Street, PO Box 160, Hills, Iowa 52235.  Proposals from shareholders for next year’s annual meeting received by the Company after January 29, 2025 will be considered untimely.  With respect to such proposals, the Company will vote all shares for which it has received proxies in the interest of the Company as determined in the sole discretion of its Board of Directors.  The Company also retains its authority to discretionarily vote proxies with respect to shareholder proposals received by the Company after November 15, 2024 but prior to January 29, 2025, unless the proposing shareholder takes the necessary steps outlined in Rule 14a-4(c)(2) under the Securities Exchange Act of 1934 to ensure the proper delivery of proxy materials related to the proposal.

The Company has a Governance and Nominating Committee. In connection with its performance of such nominating functions, the Board of Directors has adopted a written charter, a copy of which is available on the Company's website at www.hillsbank.com under the heading of "Hills Bancorporation."

The Governance and Nominating Committee is responsible for the consideration of Director nominees.  Each of the Directors, with the exception of Mr. Seegmiller, Ms. Shileny, and Mr. Hodge, is independent as defined under the rules of NASDAQ.  If one or more positions on the Board of Directors were to become vacant for any reason, the vacancy would be filled by the Governance and Nominating Committee, and the Governance and Nominating Committee would participate in the selection of a person to fill each such vacancy.

The process by which the Governance and Nominating Committee identifies and evaluates nominees for Director is described below.  The size of the Board is established by the Company’s Bylaws.  In the event any vacancy would reduce the number of Directors to less than eleven, the Committee will consider various potential candidates for Director.  Candidates may come to the attention of the Committee through current Board members, shareholders, or other persons. The Committee has no

formal policy for the consideration of candidates recommended by shareholders but will consider such recommended candidates.  Shareholders who wish to recommend an individual for consideration by the Committee as a nominee for election to the Board of Directors should submit a written notice to the Secretary of the Corporation containing information sufficient for the Committee to fully evaluate the experience and character of the potential candidate. In that respect, the Committee recommends that shareholders submit information substantially equivalent to what is required in connection with an outright nomination, as discussed more thoroughly below. Individuals recommended by shareholders for nomination will be evaluated in the same manner as other nominees, and the Board of Directors retains absolute discretion to either approve for nomination or reject any person recommended for consideration by a shareholder.

The Board is not obligated to nominate any particular candidate for election.  Candidates will be evaluated at meetings of the Board. In evaluating possible candidates for membership on the Board of Directors, the Board will seek to achieve a balance of knowledge, experience, and capability on the Board and will consider the qualifications of possible candidates based on the criteria described below.  Members of the Board should have the highest professional and personal ethics and values, excellent personal and professional reputations, and must satisfy any necessary regulatory requirements to serve as Directors. They should have broad experience at the policy-making level in business, government, education, technology, or public interest. They should be committed to furthering the long-term as well as short-term interest of the Company and its shareholders, and in doing so they should be willing to consider the effect of any action on the Company’s shareholders, employees, suppliers, creditors and customers, and on the communities in which the Company and its subsidiary operate.  They should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience. Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all Directors’ duties for the Company.  The Board deems it a requirement that members of the Board reside within the trade area of the Bank and the Company.  The Board of Directors reserves the right to modify these qualifications from time to time. 

In addition, pursuant to the Charter of the Governance and Nominating Committee, the Board directs the Governance and Nominating Committee to take into consideration Board diversity when evaluating candidates, including but not limited to business and industry skills and experience, gender and ethnicity, on the basis that the benefits of increased corporate diversity are manifestly apparent, including an increased variety of fresh perspectives, improved decision making and oversight, and strengthened internal controls. In that respect, it is the Board’s position that having a Board comprised of individuals with gender, racial, and ethnic diversity, as well as skills, experience, backgrounds, and perspectives provides for:

In evaluating the current Board composition, as well as potential candidates, based on their skills, experience, independence, and knowledge, it is the belief that the Board should also collectively reflect the diverse nature of the business environment in which the Company operates. In its evaluation of potential director nominees, the Governance and Nominating Committee gives significant consideration to racial, gender and ethnic diversity in conjunction with business and industry skills, leadership experience, and the added value to the Company and its stakeholders. The Board of Directors aspires to attain levels of Board composition in which females and underrepresented minorities are adequately represented.

Shareholders who wish to nominate an individual for election to the Board of Directors may do so only pursuant to a timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 120 calendar days before the first anniversary of the mailing date of the proxy statement sent to shareholders in connection with the previous year’s annual meeting of shareholders. Such shareholder’s notice shall set forth (a) as to each person who is not an incumbent director whom the shareholder proposes to nominate for election as a director, (i) the name, age, business address and residence address of such person; (ii) the principal occupation or employment of such person; (iii) the class and number of shares of the Corporation which are beneficially owned by such person; and (iv) any other information relating to such person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended; and (b) as to the shareholder giving the notice, (i) the name and record address of such shareholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such shareholder. Such notice shall be accompanied by the written consent of each proposed nominee to serve as a director of the Corporation, if elected.

To comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees for the 2025 Annual Meeting of Shareholders, other than the nominees of the Corporation’s Board of Directors, must also comply with the additional requirements of Rule 14a-19 under the Exchange Act, including providing a statement that such shareholder intends to solicit the holders of shares representing at least 67% of the voting power of shares of the Corporation entitled to vote on the election of directors in support of director nominees other than the Corporation’s nominees. To be effective, such notice must be postmarked or electronically submitted to the Secretary of the Corporation no later than February 17, 2025.

Management of the Company knows of no other matters which will be presented for consideration at the 2024 Annual Meeting of Shareholders other than those stated in the Notice of 2024 Annual Meeting, which is part of this Proxy Statement, and management does not intend to present any such other business. If any other matters do properly come before the meeting, it is intended that the persons named in the accompanying proxy will vote thereon in accordance with their judgment. The proxy will also have the power to vote for the adjournment of the meeting from time to time.

A copy of the Annual Report of the Company for the year ended December 31, 2023, is being mailed to shareholders together with this Proxy Statement. Such report is not incorporated in this Proxy Statement and is not to be considered a part of the proxy soliciting material.