BOARD OF DIRECTORS, BOARD MEETINGS AND COMMITTEES
Board Composition
Our Board currently consists of nine directors and will remain at nine members for the Annual Meeting. On February 14, 2022, Dale S. Strassheim submitted notice of his retirement and formal resignation from the Board effective March 1, 2022 as a result of reaching the mandatory retirement age of 75 during his term expiring at the Annual Meeting. On February 15, 2022, the Board accepted Mr. Strassheim’s retirement from the Board, and the committees on which Mr. Strassheim served, the Audit Committee and Compensation Committee.
On February 15, 2022, on the recommendation of its Nominating and Corporate Governance Committee, the Board appointed Roger A. Baker as director to the Board, and a member of the Audit Committee, effective March 1, 2022. Mr. Baker’s appointment filled the vacant seat created by the retirement of Mr. Strassheim. Mr. Baker was recommended to the Nominating and Corporate Governance Committee by Mr. Fred L. Drake, Chairman and Chief Executive Officer.
Board Leadership Structure
Our Board and our Bank’s board of directors meet at least quarterly. We do not have a policy regarding the separation of the Chairman of our Board and our Chief Executive Officer, as our Board believes that it is in the best interests of our organization to make that determination from time to time based on the position and direction of our organization and the membership of our Board. Our Board has determined that having both roles of Chief Executive Officer and Chairman held by Fred L. Drake is in the best interests of our stockholders at this time.
Controlled Company Status
We are a “controlled company,” as that term is set forth in Rule 5615(c) of the Nasdaq Listing Rules, because more than 50% of our voting power is held in a voting trust (the “Voting Trust”) pursuant to which Fred L. Drake, our Chief Executive Officer, exercises voting control. Under the Nasdaq Listing Rules, a “controlled company” may elect not to comply with certain Nasdaq corporate governance requirements, including the requirements: (1) that a majority of our board of directors consists of “independent directors,” as defined under Nasdaq Listing Rules; (2) that we have a nominating and corporate governance committee that consists entirely of independent directors; (3) that we have a compensation committee that consists entirely of independent directors; (4) that our independent directors meet in executive session at least twice annually; and (5) that we conduct annual performance evaluations of the nominating and corporate governance committee and compensation committee.
The “controlled company” exemption does not modify the independence requirements for our Audit Committee, and our Audit Committee is in compliance with the independence requirements of the Sarbanes-Oxley Act and Nasdaq Listing Rules.
We have elected to be treated as a “controlled company” and, while in 2021 we met many of the governance standards applicable to a Nasdaq company that is not a “controlled company,” we are not required to do so and we may not meet those standards in the future.
Director Independence
The Board has reviewed the materiality of any relationship that each of our directors has with us, either directly or indirectly. Based on this review, the Board has determined that each of Roger A. Baker, C. Alvin Bowman, Eric E. Burwell, Linda J. Koch, and Gerald E. Pfeiffer is independent under applicable Securities and Exchange Commission (“SEC”) rules and Nasdaq Listing Rules, and, therefore, we do have a majority of independent directors serving on the board. In making the independence determination, the Board considered:
| • | Ms. Koch’s relationship with the Illinois Bankers Association (“IBA”), where Ms. Koch previously served as President and Chief Executive Officer from 2001 to 2020, and currently serves as a Member/Business Relations Manager and as an advisor to IBA’s President and CEO on an as-needed basis. Heartland Bank and Trust Company is a member institution of the IBA. |
The Board concluded that these relationships did not impair the applicable directors’ independence.