Katie A. Lorenson
ALERUS FINANCIALAbout Katie A. Lorenson
Katie A. Lorenson, age 44, is President & Chief Executive Officer of Alerus Financial Corporation and has served as a director since 2021; she joined Alerus as CFO in December 2017, led multiple product areas in 2020, and was named CEO in 2021 after prior CFO roles at MidWestOne Financial Group and Central Bancshares, and earlier tenure at RSM on the Financial Institutions team . Under her tenure, the company’s pay-versus-performance metrics show 2024 company TSR of $73 versus peer group TSR of $107, GAAP net income of $17.8 million, and ROE of 7.03% (with prior years shown below) . The 2024 Short-Term Incentive plan (STI) used Adjusted Net Income, Adjusted Total Revenue, and ROE and paid out at 104% of target to NEOs, reflecting above-target results aided by HMNF accretion .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Alerus Financial Corporation | CFO; then CEO/President & Director | CFO since Dec 2017; CEO/President from 2021; Director since 2021 | Led finance and later all product areas; elevated to CEO; board leadership continuity |
| MidWestOne Financial Group, Inc. | Chief Financial Officer | Prior to joining Alerus in 2017 | Executive financial leadership at a regional bank |
| Central Bancshares, Inc. | Chief Financial Officer | Before MidWestOne acquisition in 2015 | CFO through acquisition into MidWestOne |
| RSM (formerly McGladrey & Pullen) | Manager, Financial Institutions Team | Earlier career | Technical/accounting leadership focused on financial institutions |
External Roles
No current external public company directorships disclosed for Ms. Lorenson in the latest proxy .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $550,000 | $550,000 | $600,000 |
| Target Bonus % of Salary | 50% | 50% | 55% |
| Annual Bonus Paid ($) | $247,320 | $173,250 | $343,200 (104% of target) |
| Stock Awards (Grant-date Fair Value, $) | $275,000 | $275,000 | $360,000 |
| All Other Compensation ($) | $28,955 | $30,530 | $36,340 |
Notes:
- 2024 base salary rose 9% to continue phasing toward peer CEO levels .
- 2024 director/NEO perquisites include auto and cell allowances and executive physicals .
Performance Compensation
Short-Term Incentive (STI) – FY 2024
| Performance Metric | Threshold | Target | Maximum | Weight | Actual |
|---|---|---|---|---|---|
| Adjusted Net Income (ANI) | $23.733m | $27.921m | $32.109m | 50% | $27.955m |
| Adjusted Total Revenue | $169.304m | $199.181m | $229.058m | 25% | $218.035m |
| ROE (non-GAAP) | 6.10% | 7.18% | 8.62% | 25% | 7.03% |
| Total Achievement | 106.0% (Committee approved 104.0%) |
| STI Outcome (Lorenson) | Target Bonus ($) | Payout ($) |
|---|---|---|
| FY 2024 | $330,000 (55% of $600k) | $343,200 |
Calculation methods and non-GAAP adjustments are defined by the Compensation Committee for incentive purposes (e.g., M&A costs, severance/signing bonuses) .
Long-Term Incentive (LTI)
- 2024 design: 60% performance-based RSUs; 40% time-based RSUs; performance measured over 2024–2026 against KBW Regional Bank Index peers on two equally-weighted metrics—relative three-year EPS CAGR and relative three-year average ROE; payouts: 50% at 25th percentile, 100% at median, 150% at 75th percentile .
- 2022–2024 cycle under prior design (three-year Cumulative Net Income) paid zero based on $101.370m performance below threshold .
| 2024 Equity Grants (Feb 27, 2024) | Threshold (#) | Target (#) | Maximum (#) | Grant-date Fair Value ($) |
|---|---|---|---|---|
| Performance-based RSUs (PBRSUs) | 4,945 | 9,890 | 14,835 | $216,000 |
| Time-based RSUs (TBRSUs) | — | — | — | $144,000; 6,594 units |
Vesting: TBRSUs vest after three years (Feb 27, 2027), with accelerated vesting on death/disability/retirement conditions per plan; PBRSUs vest based on certified performance vs peers at end of cycle .
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Total Beneficial Ownership | 50,490 shares (includes 2,125 ESOP; 3,263 unvested restricted stock; 11,626 held jointly with spouse) |
| Ownership as % of Shares Outstanding | ~0.20% (50,490 / 25,510,740 shares outstanding as of Mar 12, 2025) |
| Unvested Time-based Shares (as of Dec 31, 2024) | 19,287 shares; market value $371,082; vesting tranches: 3,858 (Feb 3, 2025), 5,572 (Feb 21, 2026), 6,594 (Feb 27, 2027); plus 3,263 restricted stock (Dec 14, 2027) |
| Unearned Performance Units (as of Dec 31, 2024) | 24,037 units; market value $462,472 |
| Stock Ownership Guidelines | CEO: 3x base salary; all NEOs/directors in compliance or within 5-year window as of Feb 26, 2025 |
| Hedging/Pledging | Hedging prohibited; no pledging disclosed for Lorenson (others’ pledges noted in footnotes) |
| Recent Vesting Activity | 4,671 RSUs vested in 2024; value realized $103,480 |
Upcoming vesting may create periodic liquidity events; governance policies prohibit hedging and require guideline compliance, moderating misalignment risks .
Employment Terms
| Provision | Terms |
|---|---|
| Agreement | Evergreen two-year severance agreement; terminates two years after a change in control |
| Termination without Cause (no CIC) | 12 monthly installments equal to 100% of annual base salary + average of last three annual bonuses + 12 months of company-paid health/disability/life premiums |
| Termination without Cause / Good Reason within 24 months of CIC | Lump sum at 2.99x for CEO (vs 2.0x for other NEOs) of above formula; modified 280G cutback applies |
| Equity Treatment on CIC | Immediate vesting if plan not assumed or upon qualifying termination if assumed; performance awards vest per attainment thresholds |
| Potential Payments (as of Dec 31, 2024) | Death/Disability/No-CIC Termination: $1,718,275 total; CIC qualifying termination: $3,437,698 total (includes cash severance, insurance continuation, and equity acceleration) |
| Clawback & Policies | SEC/Nasdaq-compliant clawback policy; anti-hedging; insider trading policy in place |
Board Governance
- Board service: Director since 2021; not independent due to executive role .
- Leadership structure: Independent Executive Chairman (Daniel E. Coughlin) separate from CEO; board affirms separation is in stockholders’ best interests .
- Committee roles: Committees comprise non-employee directors only; Ms. Lorenson is not on Audit/Compensation/Nominating/Risk committees .
- Attendance: In 2024, all directors except two attended at least 75% of meetings; Ms. Lorenson was among those at or above the 75% threshold .
- Stockholder communications: CEO is the designated contact for board communications .
Dual-role implications: CEO-director structure is mitigated by an independent chair, regular executive sessions of independent directors, and clear committee independence .
Director Compensation
As an employee-director, Ms. Lorenson does not receive non-employee director retainers; director compensation pertains to non-employee directors only .
Compensation Peer Group (for benchmarking)
Peer group used by FW Cook included diversified banks and financial services firms such as Bank First (BFC), Cass Information Systems (CASS), Community Trust Bancorp (CTBI), First Mid Bancshares (FMBH), Lakeland Financial (LKFN), Stock Yards Bancorp (SYBT), 1st Source (SRCE), among others (20-company reference group) .
Say-on-Pay & Shareholder Feedback
Alerus is conducting its first say-on-pay and say-on-frequency votes at the 2025 annual meeting, with board recommendations “FOR” and “1 YEAR,” respectively; management reported active stockholder engagement in the prior year .
Performance & Track Record
| Measure | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Company TSR (Value of $100) | $82 | $82 | $73 |
| Peer Group TSR (Value of $100) | $86 | $88 | $107 |
| GAAP Net Income ($mm) | $40.0 | $11.7 | $17.8 |
| ROE (Company-selected measure) | 12.74% | 9.33% | 7.03% |
Context: 2024 STI targets were calibrated for higher deposit costs and one-time items; actuals exceeded targets, aided by HMNF acquisition EPS accretion .
Risk Indicators & Red Flags
- Performance RSUs for 2022–2024 paid zero (alignment signal to missed three-year CNI target) .
- Section 16(a) reporting: one Form 5 in 2024 noted for Ms. Lorenson for a 2023 transaction not timely on Form 4 (administrative) .
- CRE concentration above supervisory indicators (422.9% of capital; 50% of loan book); Board discloses enhanced risk management in response .
- Cyber and third-party dependencies highlighted; robust policies but industry-wide elevated attempts noted .
Compensation Structure Analysis
- Mix shift: Continued emphasis on equity with 60% PBRSUs tied to relative EPS CAGR and ROE vs peers—higher at-risk pay; 40% TBRSUs balance retention .
- STI adjustments: Non-GAAP adjustments applied within defined parameters to exclude one-time items; payout restrained to 104% despite 106% achievement .
- No tax gross-ups; clawback adopted; anti-hedging in place; no option repricing and no new options granted under current policy .
- Ownership guidelines met; no pledging by CEO disclosed .
Equity Vesting Schedule (selected time-based tranches)
| Vest Date | Shares | Type |
|---|---|---|
| Feb 3, 2025 | 3,858 | TBRSUs (2019/2022 cycle per footnotes) |
| Feb 21, 2026 | 5,572 | TBRSUs |
| Feb 27, 2027 | 6,594 | TBRSUs (2024 grant) |
| Dec 14, 2027 | 3,263 | Restricted Stock (hire grant) |
PBRSUs from the 2024 grant vest contingent on 2024–2026 relative performance certification .
Investment Implications
- Alignment: Zero payout on 2022–2024 performance RSUs and relative peer-based LTI metrics indicate tightening performance linkage; anti-hedging and ownership guidelines further align CEO incentives .
- Near-term selling pressure: Time-based RSU tranches vest in 2025–2027; combined with PBRSU outcomes, periodic liquidity events are likely but mitigated by guidelines and lack of hedging/pledging .
- Retention/costs: 2.99x CIC multiple for CEO elevates potential change-in-control costs; however, the structure is double-trigger and consistent with peer practices; evergreen terms maintain protection .
- Performance risk: Company TSR lagged peers in 2024 while STI exceeded target due partly to HMNF accretion; successful execution on CRE concentration management, deposit costs, and integration is critical to future payouts and equity realization .
- Governance: Independent chair, committee independence, and executive sessions mitigate dual-role concerns; first say-on-pay vote will provide feedback on pay design .