Ralph Kauten
About Ralph R. Kauten
Independent director of First Business Financial Services, Inc. (FBIZ), age 73, serving since 2018 (Years on Company board: 6), and long-time director of First Business Bank since 2004; former interim Board Chair (June–Nov 2018). He chairs the Audit Committee, qualifies as an “audit committee financial expert,” and serves on the Operational Risk Committee. Education: BBA, Accounting (University of Iowa) and MBA, Accounting (University of Wisconsin–Madison). Background spans 40+ years as a biotechnology executive, auditor, controller, and finance leader.
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Promega Corporation | Vice President, Finance & Treasurer | 1979–1992 | Led financial reporting, controls, financing; foundation for “audit committee financial expert” credentials |
| PanVera Corporation | Co‑Founder, President & CEO | 1992–2001 | Strategy, M&A, growth; entrepreneurial expertise |
| Quintessence Biosciences, Inc. | Chair & CEO | 2002–2016 | M&A and strategic execution |
| Lucigen Corporation | Chair & CEO | 2006–2018 | Executive oversight, finance, strategy |
| Mirus Bio | Co‑Owner | 1996–2024 | Private equity/debt financing experience |
| Grant Thornton, CPAs | Senior Auditor | Not disclosed | Audit discipline; accounting controls |
| Heublein, Inc. | Plant Controller | Not disclosed | Cost controls, operations |
| University of Wisconsin–Whitewater | Faculty Member | Not disclosed | Financial education; governance literacy |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Air‑Lec Industries | Owner | Since 2013 | Private company ownership (manufacturing) |
| First Business Bank (FBB) | Director; Board Chair (Interim) | Director since 2004; Chair June–Nov 2018 | All Company directors also serve on the Bank’s board; streamlines governance |
| Other private organizations | Board member | Not disclosed | Additional private board service (unspecified) |
Board Governance
| Item | Detail |
|---|---|
| Committee assignments | Audit Committee (Chair); Operational Risk Committee (Member) |
| Audit financial expert | Board determined Mr. Kauten qualifies as an “audit committee financial expert” under SEC rules |
| Committee meeting cadence (2024) | Audit: 5; Operational Risk: 4 (Board committee table) |
| Independence | Independent director under Nasdaq and Exchange Act standards; Audit members meet Rule 10A‑3(b)(1) |
| Attendance | Board held 7 meetings in 2024; all directors attended ≥75% of Board/committee meetings; all seven directors attended the 2024 annual meeting |
| Board leadership | Independent Board Chair (Kilcoyne); CEO separate; rationale to avoid conflicts and balance power |
Fixed Compensation
| Year | Fees Earned or Paid in Cash ($) | Notes |
|---|---|---|
| 2024 | $38,375 | Comprised of annual board retainer, committee/chair retainers; effective Oct 1, 2024 cash structure: board retainer increased to $37,500, committee retainer $4,000, Audit Chair retainer $10,000; paid quarterly |
Key structure changes (effective Oct 1, 2024): non‑employee director annual cash retainer increased to $37,500; committee fees consolidated into a $4,000 annual retainer; chair retainers increased to $7,500 (Audit Chair $10,000). Designed to align with peer median compensation.
Performance Compensation
| Grant Date | Instrument | Shares/Units | Grant Date Fair Value | Vesting | Performance Metrics |
|---|---|---|---|---|---|
| May 16, 2024 | RSU (Annual Director Equity Retainer) | 655 | $22,500 | One‑year vest | None; time‑vested RSUs for directors |
Additional notes:
- Directors’ 2024 equity retainer was $22,500 issued as RSUs vesting after one year (20‑day share price avg $34.42). Beginning in 2025, annual equity shifts to $30,000 as fully‑vested stock.
Other Directorships & Interlocks
| Category | Detail |
|---|---|
| Current public company boards | None disclosed for Mr. Kauten |
| Private company boards | Member of boards of other private organizations (unspecified) |
| Compensation Committee interlocks | Company discloses no interlocking relationships on Comp Committee |
Expertise & Qualifications
- Financial Reporting, Accounting & Controls; Audit chair experience; senior auditor/controller history
- Enterprise Risk Management and Strategic Planning; extensive biotech leadership; M&A execution
- Entrepreneurial operator with multiple co‑founder/owner roles; finance and capital raising background
- Education: BBA Accounting (Iowa); MBA Accounting (UW–Madison)
Equity Ownership
| Holder | Shares Beneficially Owned | % Outstanding | Notes |
|---|---|---|---|
| Ralph R. Kauten | 31,168 | <1% | Includes 3,300 shares via sole IRA and 12,687 shares held by a family‑owned LLC |
Ownership alignment:
- Director ownership guidelines: 3x combined annual cash + equity retainers; 5 years to reach; must retain 100% of all vested shares while serving; Company states all directors are in compliance.
- Hedging/pledging: Prohibited for Section 16 reporting persons; Company confirms compliance.
Governance Assessment
-
Strengths
- Audit Committee Chair with SEC‑recognized “financial expert” status; reinforces financial reporting oversight and “tone at the top.”
- Independent status and strong attendance (Board/committees ≥75% for all directors; annual meeting attendance for all).
- Ownership alignment via guidelines and mandatory retention; prohibition on hedging/pledging reduces misalignment risk.
- ERM oversight through Operational Risk Committee membership; structured risk dashboards and quarterly updates.
-
Potential conflicts / red flags
- Related‑party exposure: Affiliates of Mr. Kauten (spouse’s trust and adult children) purchased $3 million of FBIZ’s 7.5% Subordinated Debentures in Sept 2024 ($1M each). While permitted and disclosed, this warrants continued monitoring of independence perceptions; Audit Committee oversees related‑party vetting.
- Insider loans: Bank extends loans to executives/directors in ordinary course under Regulation O; approved by Bank Board. Industry‑standard terms, but insider credit relationships require persistent oversight.
-
Compensation signals
- 2024 director pay moved to peer median with increased cash/equity retainers; equity moves to fully‑vested stock in 2025 (reduces at‑risk component for directors, though normal for board pay).
Director Compensation (Detail)
| Component | 2024 Amount | Notes |
|---|---|---|
| Cash fees (retainers/chair/committee) | $38,375 | Reflects increased retainers effective Oct 1, paid quarterly |
| Equity retainer (RSUs) | $22,500 | 655 RSUs granted May 16, 2024; one‑year vest |
| Total 2024 | $60,875 | Cash + equity |
| 2025 Equity policy | $30,000 | Fully‑vested stock (not RSUs), to increase alignment and peer median positioning |
Insider Trades
| Period Searched | Form 4 Filings Found | Notes |
|---|---|---|
| 2024–2025 | None | No Form 4s returned for FBIZ in the period; Section 16 compliance noted with one late Form 4 for CEO, none for directors reported for 2024. [ListDocuments: type 4 returned 0] |
Committee Assignments & Meetings (Board‑wide)
| Committee | 2024 Meetings | Kauten Role |
|---|---|---|
| Audit | 5 | Chair; Audit financial expert |
| Operational Risk | 4 | Member |
Independence, Attendance & Engagement
- Independence: Board determined all directors other than CEO are independent; Audit Committee members meet Nasdaq 5605(c)(2)(A) and SEC Rule 10A‑3(b)(1).
- Attendance: Board held 7 meetings in 2024; every director met ≥75% threshold; all directors attended the 2024 annual meeting.
- Education & development: Ongoing Board education (AI, AML/CFT, regulatory compliance, investment research, private wealth process); directors in compliance with education guidelines.
Related‑Party & Loans (Oversight Context)
- Audit Committee pre‑approves audit/tax services and reviews related‑party transactions with defined independence and market‑terms criteria.
- Insider banking relationships (deposits, trust accounts, loans) conducted on market terms, within Regulation O, and approved by the Bank’s Board; disclosure of Kauten affiliates’ subordinated debt purchases detailed above.
Say‑on‑Pay & Shareholder Feedback (context for governance culture)
- 2024 say‑on‑pay approval: 92% support; Board/Comp Committee consider shareholder input in program design.
Conclusion
- Overall, Mr. Kauten’s audit leadership, independence, and deep finance/ERM experience support board effectiveness in a regulated banking environment. Key monitoring point is the 2024 subordinated debenture purchases by Kauten affiliates (total $3M), which are disclosed and governed but merit continued oversight for perceived conflicts. Ownership guidelines, no‑hedging/pledging, and high attendance bolster investor confidence.