Mercantile Bank (NASDAQ:MBWM) Adopts New Nonqualified Deferred Compensation Plan

On November 21, 2024, Mercantile Bank Corporation announced the adoption of a new Nonqualified Deferred Compensation Plan #2 by its subsidiary, Mercantile Bank. This plan is set to become effective on January 1, 2025, replacing the existing Mercantile Bank Amended and Restated Deferred Compensation Plan. The newly adopted Deferred Compensation Plan #2 will be overseen by Mercantile’s Compensation Committee.

Initially, participation in Deferred Compensation Plan #2 will be limited to members of the Board of Directors and Executive Vice Presidents of Mercantile and the Bank. Other eligible employees will still have access to the original Deferred Compensation Plan and can join Plan #2 starting from January 1, 2026. To be eligible, employees must belong to a select group of management or highly compensated staff.

Eligible employees, including executive officers, are allowed to defer up to 80% of their base salary and 100% of their performance-based bonuses into Deferred Compensation Plan #2. Directors of Mercantile and the Bank can defer 100% of their director fees into the plan. The company will not make any employer contributions to the plan, and participants are fully vested in their accounts at all times.

Under the new plan, participant accounts will earn returns based on investment fund performances managed by the Compensation Committee. Distributions from these accounts can occur upon separation from service, death, disability, or under certain unforeseen emergencies.

To ensure compliance and proper handling of participants’ funds, Mercantile Bank’s Board of Directors approved a Second Amendment to the Deferred Compensation Plan on the same day. The amendment clarifies several aspects, including participant eligibility and account crediting, in line with the transition to Deferred Compensation Plan #2.

Moreover, a rabbi trust agreement was established on November 21, 2024, to manage the funds credited to Deferred Compensation Plan #2. This Trust Agreement, held between the Bank and Delaware Charter Guarantee & Trust Company (doing business as Principal Trust Company), ensures the handling of plan assets and payment of benefits. The trust is irrevocable and will only terminate after all participants or their beneficiaries have received their distributions.

Attached to the filing were several exhibits including a copy of the Deferred Compensation Plan #2, the Second Amendment to the previous plan, and the Trust Agreement. These documents provide detailed information on the rules governing the plan and the handling of plan assets.

Overall, Mercantile Bank’s adoption of the new Deferred Compensation Plan #2 reflects an effort to enhance employee benefits and streamline compensation processes within the organization.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Mercantile Bank’s 8K filing here.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit.