Randy L. Newman

About Randy L. Newman

Randy L. Newman, age 71, is an independent director of Alerus Financial Corporation and serves as Chair of the Board Risk Committee and as a member of the Nominating & Corporate Governance Committee. The proxy lists him as a director since 1988; he joined the company (formerly First National Bank of North Dakota) in 1981, served as President in 1987, CEO in 1995, and retired from the CEO role on January 1, 2022. He holds a BSBA (1975) and MBA (1979) from the University of North Dakota and previously taught corporate finance and business strategy there . The Board has determined that, other than the CEO, all current directors are independent under Nasdaq rules, which includes Mr. Newman .

Past Roles

External Roles

Board Governance

• Committee assignments: Risk Committee (Chair); Nominating & Corporate Governance Committee (member) .
• Independence: Board affirms independence for all directors except the CEO; Newman is independent under Nasdaq rules .
• Attendance: In 2024, all directors except Mr. Uribe and Mr. Bolton attended at least 75% of aggregate Board and committee meetings—implying Mr. Newman met the ≥75% threshold. All directors attended the 2024 Annual Meeting .
• Committee activity: Risk Committee met four times in 2024; Nominating & Corporate Governance met four times in 2024 .
• Board structure: Executive Chairman is independent (Daniel E. Coughlin); CEO and Chair roles are separated .

Fixed Compensation

Director pay structure (2024):

• Annual cash retainer: $40,000; equity retainer: restricted stock with $50,000 grant date value (vests at earlier of first anniversary or next annual meeting) .
• Chair fees: Risk Committee Chair fee was $7,000 in 2024 (increased to $8,000 after the 2024 annual meeting); Board Chair fee increased from $25,000 to $30,000; Audit Chair $10,000; Compensation Chair $7,750; Nominating & Corporate Governance and Risk Chairs increased from $6,000 to $8,000 post-annual meeting .
• Meeting fees: $1,000 per quarterly committee meeting (first half of 2024 only; eliminated after 2024 annual meeting). Special meetings: $1,000 if ≤3 hours; $2,000 if >3 hours .
• Deferral: Directors may defer up to 100% of cash fees under the Deferred Compensation Plan .

Notes:

• Mr. Newman’s 2024 cash reflects retainer, chair fees, and meeting/education fees; equity under the 2019 Equity Incentive Plan .
• Newman’s 2024 mix ≈ 51.5% cash / 48.5% equity (computed from table values) .

Performance Compensation

• Non-employee director equity is time-based restricted stock; there is no disclosed performance-based component for directors. Vesting occurs at the earlier of the first anniversary of the grant date or the next annual meeting .

Other Directorships & Interlocks

Expertise & Qualifications

• Banking leadership (decades of executive experience including CEO), strategic planning, mergers and acquisitions, strong regulatory exposure (FHLB, Federal Reserve) .
• Academic credentials: BSBA (1975) and MBA (1979), University of North Dakota .

Equity Ownership

Security ownership as of March 12, 2025 (beneficial ownership rules):

• Total beneficial ownership: 804,230 shares (3.2% of outstanding) .
• Footnote detail: includes 2,559 restricted shares; 97,629 shares in an IRA; 2,000 shares held by spouse; 156,705 shares in the Anita D. Newman Revocable Living Trust (spouse trustee); 339,765 shares in the Anita D. Newman 2021 GST Trust (Mr. Newman trustee and beneficiary); 156,705 shares are pledged as security for indebtedness .

Stock ownership alignment policies:

• Directors must hold shares equal to 5x annual stock retainer; all directors were in compliance as of Feb 26, 2025 (or in role <5 years) .
• Anti-hedging: directors are prohibited from hedging company securities under the insider trading policy .

Governance Assessment

• Strengths:

  • Deep banking and regulatory oversight experience; Risk Committee Chair role aligns with background and enhances board risk oversight .
  • Independence affirmed; attendance met ≥75% threshold; full board participation at annual meeting .
  • Meaningful share ownership (3.2%) supports alignment; director ownership guidelines met .

• Watch items / RED FLAGS:

  • Share pledging: 156,705 shares pledged as security for indebtedness—potential misalignment/forced-sale risk, particularly for a financial institution. The proxy discloses anti-hedging but does not state an outright prohibition on pledging for directors .
  • Related-party connection: Brother-in-law (Bill Carlson) employed by the Bank as Lead Business Advisor (approx. $270,000 total compensation in 2024). Company states related-party transactions are conducted on market terms and subject to a formal policy with Audit Committee oversight, but the family tie is a potential perceived conflict .

• Director compensation structure:

  • Balanced cash/equity mix; standard bank-appropriate retainers; 2024 chair fee increases for Nominating & Corporate Governance and Risk committees to $8,000 post-annual meeting, supporting recognition of committee workload without outsized guarantees .

• Overall view:

  • Mr. Newman’s long operational tenure, regulatory roles, and current Risk Chair position bolster board effectiveness in a regulated banking context. Primary governance risk relates to pledged shares; investors may seek clarification on any board-level limits on pledging and ongoing monitoring under the Related Party and Insider Trading policies .