Exhibit 10.1

MERCANTILE BANK CORPORATION/MERCANTILE BANK OF MICHIGAN

2014 MERCANTILE EXECUTIVE OFFICER BONUS PLAN

 

1. Purpose of this Plan

This 2014 Mercantile Executive Officer Bonus Plan (this “Plan”) is designed to
reflect that the directors of Mercantile Bank Corporation (the “Company”) and
Mercantile Bank of Michigan (the “Bank”) believe that the Company’s shareholders
are willing to share financially in operating results that exceed certain
specific financial metrics during the first six months of 2014.

The purpose of this Plan is to:

 

  •   Promote the growth, profitability and expense control necessary to
accomplish corporate strategic long-term plans;

 

  •   Encourage superior results by providing a meaningful incentive; and

 

  •   Support teamwork among employees.

 

2. Eligibility

Michael H. Price, Robert B. Kaminski, Jr. and Charles E. Christmas (the
“Executive Officers,” and each an “Executive Officer”) are included in this
Plan. The following provisions (a) – (d) set forth circumstances where an
Executive Officer will, or will not, be eligible for a bonus payout, or where an
unpaid bonus award will be cancelled:

(a) An Executive Officer must be an active employee as of June 30, 2014 to be
eligible to receive a bonus payout.

(b) An Executive Officer that is out on medical leave as of June 30, 2014 will
be eligible to receive a bonus award.

(c) An Executive Officer that is suspended with or without pay or is on final
written warning as of June 30, 2014 will not be eligible to receive a bonus
award.

(d) If an Executive Officer terminates his or her employment with the Bank
during the first six months of 2014, any unpaid bonus award for the Executive
Officer is cancelled.

 

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Notwithstanding any of the provisions (a), (b), (c) or (d) above, no such
provision shall adversely affect an Executive Officer’s eligibility for, or
right to receive, any bonus award, if during the first six months of 2014
pursuant to a notice given in 2014, such Executive Officer’s employment
terminates under one or more circumstances set forth in Section 8.5 or 9 of the
Employment Agreement made as of the 18th day of October 2001 between the
Executive Officer, the Company and the Bank, as amended (a “Special
Termination”).

 

3. Performance Goal and Bonus Awards

Bonus awards will be paid from the Executive Bonus Pool as defined in this Plan.
The maximum amount that can be paid from the Executive Bonus Pool under this
Plan is $213,600.

The Executive Bonus Pool, if any, is based on the achievement of targets under
the following 2014 Executive Bonus Metrics:

 

  20% Net loan growth

  10% Level of non-performing assets

  10% Loan portfolio composition

  10% Return on assets

  10% Return on equity

  10% Net interest income

  10% Net interest margin

  10% Efficiency ratio

  10% Wholesale funds

The specific targets for each metric will be established by the Compensation
Committee. Each individual target must be met or exceeded in order for the
percentage associated with that metric to be credited toward the Executive Bonus
Pool. The accumulated percentage for each individual target attained will be
applied to the maximum Executive Bonus Pool amount of $213,600 to determine the
total amount of the Executive Bonus Pool to be awarded. For example, if the
first four factors are attained and the next five factors are not attained, the
Executive Bonus Pool under this Plan would be $213,600 x 50% = $106,800.

The Executive Bonus Pool will be paid to each Executive Officer pro rata based
on a uniform percentage of the Executive Officer’s 2014 salary (not to exceed
20% of each Executive Officer’s 2014 salary.)

 

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4. Clawback Provision

Payouts made under this Plan are subject to recovery or clawback, and an
Executive Officer receiving a payout will be required to promptly return the
monies (or any portion of the monies requested by the Company) in each of the
following circumstances:

 

  •   if it is determined that the Executive Officer was engaging in an activity
during the first six months of 2014 that would have resulted in the employee
being suspended without pay, placed on final written warning or terminated on or
before June 30, 2014, and no Special Termination of the Executive Officer is
involved.

 

  •   If the payout is based on materially inaccurate financial statements
(which includes, but is not limited to statements of earnings, revenues, or
gains) or any other materially inaccurate performance metric criteria, including
net income.

 

  •   If the payout is required to be returned pursuant to a policy adopted by
the Company regarding clawback in order to comply with the Dodd-Frank Wall
Street Reform and Consumer Protection Act or any stock exchange or other rule
adopted pursuant to that Act.

In the event that the Company or Bank demands recovery or clawback of any payout
(or portion of any payout), and the Executive Officer who received the payout
does not promptly return the payout (or demanded portion of the payout) to the
Company or the Bank, the Executive Officer shall be required to pay to the
Company or the Bank, immediately upon demand, all expenses, including reasonable
attorneys’ fees, incurred to recover the payout (or demanded portion of the
payout), unless the Executive Officer establishes in an appropriate legal
proceeding that he or she had no obligation under this Section of this Plan to
return the payout (or demanded portion of the payout). Executive Officers, as a
condition to receiving a payout under this Plan, may be required to agree in
writing to the terms of this Section.

 

5. Timing of Bonus Payouts

Bonus awards that are earned under this Plan for 2014 will be paid to eligible
Executive Officers on or before August 10, 2014.

 

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6. Plan Administration

The Company’s Compensation Committee will have the authority to administer and
interpret this Plan, and approve or determine the amounts to be distributed
under this Plan as bonus awards, in its sole discretion. Any interpretation or
construction of this Plan or approval or determination of bonus awards by the
Compensation Committee will be final and binding on the Company, the Bank and
their respective subsidiaries, all employees and past employees of any of them,
their heirs, successors and assigns. No member of the Board of Directors of the
Bank or the Company, or any of their affiliates, or any committee of the Board
of Directors of the Bank, the Company, or any affiliate, will be liable for any
action or determination made in good faith regarding this Plan or any bonus
award.

 

7. No Right to Employment

This Plan does not give any Executive Officer any right to continued employment,
or limit in any way the right of the Bank or any affiliated company to terminate
his employment at any time.

 

8. Withholding of Taxes

The Bank and any affiliated company will have the right to deduct from any
payment to be made pursuant to this Plan any Federal, state or local taxes
required by law to be withheld. It is contemplated that substantially all
payments that are made under this Plan will be made by the Bank or one of its
subsidiaries, and not by the Company.

 

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9. Amendment of this Plan

This Plan may be amended from time to time by the Compensation Committee,
without the consent of any Executive Officer or past Executive Officer, (a) to
the extent required to comply with applicable law; (b) to make reasonable
adjustments for any acquisition or sale of a business or branch, merger,
reorganization, or restructuring, change in accounting principles or their
application, or special charges or extraordinary items, that materially affect
the Company or any of its consolidated subsidiaries; (c) to make any changes
that do not materially and adversely affect the bonus award payable to any
eligible employee; (d) to expand the Executive Officers or other employees who
are eligible to receive a bonus from the amounts available for bonuses under
this Plan; or (e) to make any other changes that the Compensation Committee, in
its sole discretion, deems appropriate, even if such changes materially and
adversely affect, or eliminate, the bonus award payable to any Executive Officer
or past Executive Officer; provided that, after a Special Termination or notice
that will result in a Special Termination, no amendment made under provision
(d) or (e) of this paragraph above shall adversely affect either Executive
Officer’s rights under this Plan. To the extent required to comply with
applicable stock exchange rules, any amendment to this Plan shall be submitted
to the Company’s Compensation Committee for a recommendation or approval.

 

10. Governing Law

The validity, construction and interpretation of this Plan will be determined in
accordance with the laws of the State of Michigan.

 

11. Effective Date

This Plan was approved by the Compensation Committee of the Company and the Bank
on February 20, 2014, and is effective as of January 1, 2014.

 

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