Company: FRME
Filing Date: 2025-04-01
Form Type: DEF 14A
Source: 0000712534-25-000077
Chunk: 48

Company: FIRST MERCHANTS CORP
Filing Date: 2025-04-01
Form: DEF 14A
Chunk 48
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 or equity-based incentive or other feature that might encourage executives to take unnecessary and excessive risks that threaten the value of the Company or encourage the manipulation of reported earnings of the Company to enhance the compensation of any executive. The Risk and Credit Policy Committee oversees the management of enterprise-wide risk for the Company; however, the Compensation and Human Resources Committee has the primary responsibility for

36 First Merchants Corporation 2025 Proxy Statement

overseeing the management of compensation plan risks. The two Committees share continuing responsibility for monitoring risk exposure to assure that it remains within established limits and that significant risk exposures are brought to the attention of the full Board.

Compensation plan risks are mitigated in a number of ways. They include the following:

• Executive compensation is a mix of cash and equity, fixed and variable compensation, and annual and long-term incentives.

• The SMICP, the non-equity incentive compensation plan covering the NEOs and other management employees, caps the NEOs’ incentive award payouts at 200% of target for the earnings per share metric, and less for other metrics.

• The SMICP has tiered goals and award levels, with narrower bands or increments, not “all or nothing” goals or larger bands or increments.

• The Company has a Clawback Policy under which the Company may recover a payment made to an executive officer if the payment is based on a materially inaccurate financial statement.

• The Company has a written policy prohibiting senior managers and members of the Board of Directors from engaging in hedging or short sales of FMC stock and from pledging their shares as collateral for a loan.

• The LTEIP, the equity incentive plan covering the NEOs and other management employees, requires a one-year minimum vesting period for each award and, in practice, the Compensation and Human Resources Committee has provided that restricted stock awards will not vest for three years.

• The Company has guidelines stating that executive officers participating in the LTEIP should acquire and hold shares of the Company's common stock equal in value to certain percentages of their then current salary.

• The Company does not have employment or severance agreements with its NEOs, thus avoiding multi-year guaranteed employment terms.

• None of FMC’s compensation programs include tax gross-ups, single trigger change of control agreements, or extravagant executive perquisites.

• The Company periodically engages a compensation consultant to review FMC’s executive salaries and compensation programs to ensure they are competitive but not overly generous.

• The Company has an Ethics and Integrity Policy, monitored by the Audit Committee, under which employees and others may