Employment Agreements
Employment Agreements with Fred L. Drake, J. Lance Carter and Patrick F. Busch
On February 22, 2021, we entered into amended and restated employment agreements with each of Mr. Drake and Mr. Carter. These agreements replaced the existing employment agreements with each of Mr. Drake and Mr. Carter. The terms of the employment agreements are substantially similar for Mr. Drake and Mr. Carter except as provided below.
Under their respective agreements, Mr. Drake serves as Chairman and Chief Executive Officer of HBT Financial and Chairman of the board of Heartland Bank, and Mr. Carter serves as President and Chief Operating Officer of HBT Financial and Executive Vice President and Chief Operating Officer of Heartland Bank. Each of the agreements with Mr. Drake and Mr. Carter provide for an initial term ending December 31, 2023, with automatic one-year renewals beginning at the end of the initial term, unless either party chooses to not renew. The annual base salaries under the agreements are reviewed annually for adjustment by our Board or Compensation Committee. In February 2023, the Compensation Committee approved base salaries of $592,971 for Mr. Drake and $495,755 for Mr. Carter effective March 1, 2023. Mr. Drake and Mr. Carter are eligible to earn a performance-based annual cash bonus and an annual long-term incentive award for each fiscal year ending during the employment period. The target incentive bonus opportunity will be as determined by the Board or the Compensation Committee from time to time. The initial cash bonus opportunity was set at 40 percent of annual base salary and the long-term incentive award opportunity was set at 40 percent of annual base salary for each of Mr. Drake and Mr. Carter. Mr. Drake and Mr. Carter are also eligible to participate in the benefit plans generally available to Company executives.
Under the employment agreements, upon a termination by HBT Financial without “cause” or by the executive for “good reason” (each as defined in the agreement), the executives are eligible to receive severance benefits. If the termination is within 12 months after a “change in control” (as defined in the agreement), the executive is entitled to a lump sum payment equal to two times the sum of such executive’s then-current base salary and target bonus, plus a lump sum payment equal to the cost of 18 months of continued COBRA coverage. If the termination is not within 12 months after a change in control, the executive is entitled to continued base salary for six months after termination. All severance benefits under the agreements are conditioned upon the executive’s execution of a release of claims against HBT Financial and its affiliates.
The employment agreements contain confidential information, non-competition, and employee and customer non-solicitation restrictive covenants. The confidential information covenant is perpetual. The non-competition and non-solicitation covenants run during employment and for six months after a termination by us without cause or by the executive for good reason not in connection with a change in control, six months after a termination due to disability, 12 months after a termination by us for cause or by the executive without good reason, and 24 months after a termination by us without cause or by executive for good reason within 12 months following a change in control.
On February 22, 2021, we also entered into an amended and restated employment agreement with Mr. Busch, which contained substantially similar terms to Mr. Drake’s and Mr. Carter’s amended and restated employment agreements. On November 18, 2022, we entered into an amendment to Mr. Busch’s amended and restated employment agreement, as Mr. Busch expressed his intention to retire from his positions as of December 31, 2022 and continue thereafter as an employee of Heartland Bank. Pursuant to the amendment, Mr. Busch’s employment agreement terminated as of December 31, 2022, except that Mr. Busch continued to be eligible to earn a performance-based annual cash bonus and an annual long-term incentive award with respect to the 2022 performance period and will continue to be subject to the restrictive covenants described in the employment agreement while employed with the Bank. On January 1, 2023, Mr. Busch transitioned to the role of Heartland Bank’s Vice Chairman, in which he continues to serve, and receives an annual base salary of $280,000. Mr. Busch is eligible to receive bonuses, long-term incentive awards and other incentive compensation as may be determined by the Board or the Compensation Committee.
Health and Retirement Benefits
We provide medical, dental, vision, life insurance and disability benefits to all eligible employees. Our Named Executive Officers are eligible to participate in these benefits on the same basis as all other employees.
We maintain a 401(k) savings plan that allows participants, including our Named Executive Officers, to defer cash compensation (subject to applicable IRS guidelines). Eligible participants are all employees of Heartland Bank. Our Named Executive Officers are eligible to participate in the 401(k) plan on the same basis as all other employees. We provide discretionary employer matching contributions of 50% of the first 10% of an employee’s eligible compensation deferred for the year under the 401(k) plan.