Gary Lehman
FIRST MERCHANTSAbout Gary J. Lehman
Gary J. Lehman (age 72) has served as an independent director of First Merchants Corporation (FRME) since 2011. He is a former CEO across global manufacturing and technology businesses (Oerlikon Drive Systems, Fairfield Manufacturing, Philips Lighting Electronics/Advance Transformer) and co‑founded The Cannelton Group to provide operational and financial assistance to manufacturing firms. He is Board Chair of Purdue University and sits on multiple Indiana civic and economic boards, bringing operations, risk, and integration expertise aligned to FRME’s markets; he resides in Lafayette, IN, a principal FRME market .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| The Cannelton Group | Managing Director; co‑founder | Co‑founded in 2002 | Operations/financial assistance to private equity & closely held manufacturing firms |
| Oerlikon USA Holdings (Oerlikon Group) | President | 2012–2014 | Oversight of U.S. businesses within a global tech group |
| Oerlikon Drive Systems | Chief Executive Officer | 2010–2012 | Led global drive systems segment integration and risk management |
| Fairfield Manufacturing Company | President & CEO; later Chair | CEO continued until 2012; Chair until 2014 | Led largest independent U.S. gear manufacturer; integration post‑acquisition |
| Philips Lighting Electronics NA / Advance Transformer | President & CEO | Prior to 2002 | Led electronics business within Philips Electronics NV |
| ITT Automotive | SVP Worldwide Operations; GM Body Systems Division | Prior to Philips | Global operations leadership |
External Roles
| Organization | Role | Tenure | Notes |
|---|---|---|---|
| Purdue University | Chairman, Board of Trustees | Current | Also on Executive Committee of Purdue Research Foundation Board |
| Greater Lafayette Commerce | Director | Current | Regional economic development |
| Meridian Health Services | Director | Current | Healthcare services governance |
| Wabash Heartland Innovation Network | Director | Current | Technology/innovation ecosystem |
| Indiana Chamber of Commerce | Director | Current | Statewide business advocacy |
Board Governance
- Independence: The Board determined Lehman is an independent director under Nasdaq Rule 5605(a)(2) .
- Committee assignments: Member, Compensation and Human Resources Committee (CHRC) .
- Attendance: The Board met six times in 2024; no director attended fewer than 75% of Board+committee meetings, and all directors attended the 2024 Annual Meeting .
- Board structure & risk oversight: Independent Chair separate from CEO; executive sessions each regular meeting; risk oversight primarily via Risk & Credit Policy Committee; Audit oversees financial reporting risks; CHRC oversees incentive‑comp risk .
- Tenure and retirement: Director since 2011; Bylaws require retirement following the Annual Meeting after the calendar year in which a director turns 73, implying near‑term succession planning consideration for Lehman .
Fixed Compensation
| Component | Amount | Notes |
|---|---|---|
| Annual retainer (non‑employee directors) | $140,000 | Standard for all non‑employee directors in 2024 |
| Committee/Chair fees (policy) | Varies | Board Chair $50,000; Vice Chair $10,000; Audit Chair $15,000; Risk Chair $10,000; N&G Chair $5,000; CHRC Chair $5,000; certain Audit/Risk members $5,000 due to time demands |
| 2024 cash fees (Lehman) | $67,547 | Includes director cash portion and specific committee/member fee mix for 2024 |
| Additional compensation from subsidiary (FMB) | $15,000 | Received for serving as regional advisory Bank director; included in total |
Performance Compensation
| Element | Grant/Metric Detail | Vesting/Terms |
|---|---|---|
| Equity Compensation Plan for Non‑Employee Directors (ECPND) | Requires at least 62.5% of director compensation to be paid in restricted stock at fair market value on date of payment; cash portion 37.5% | |
| Quarterly RS grant fair values (2024) | Mar 31: $34.90; Jun 30: $33.29; Sep 30: $37.20; Dec 31: $39.89 per share | |
| Vesting schedule | Restrictions lapse at earliest of third anniversary, director retirement, death/disability, or change of control (as defined in LTEIP) | |
| Hedging/pledging | Prohibited for directors; reinforces alignment and risk discipline |
No performance‑conditioned equity (e.g., PSUs) or options for directors were disclosed for 2024; equity is time‑vested restricted stock under ECPND .
Other Directorships & Interlocks
- Public company boards: None disclosed for Lehman in the proxy; external roles are university, civic, and non‑profit boards .
- Interlocks: CHRC interlocks and insider participation disclosure notes no relationships requiring Item 404 or Item 407(e)(4) disclosure in 2024; consultants deemed independent .
- Subsidiary role: Received $15,000 from FMB as regional advisory Bank director; normal inclusion in director compensation .
Expertise & Qualifications
- Executive leadership across global manufacturing/technology, including post‑merger integration, operations, and risk management—skills relevant to bank operations and enterprise risk oversight .
- Deep Indiana market ties; residence in Lafayette, one of FRME’s principal markets, enhancing regional insight and business development .
Equity Ownership
| Holder | Shares Beneficially Owned | Of which Restricted | Ownership % of Class |
|---|---|---|---|
| Gary J. Lehman | 50,667 | 7,067 | <1% (as defined by proxy “*”) |
Additional director equity details:
- Unvested ECPND shares for Lehman at 12/31/2024: 7,067 .
- Director stock ownership guideline: at least 3× total annual director compensation; all current directors have met the guideline or are on course within six years of first election .
- Hedging/pledging of FRME stock is prohibited for directors .
Governance Assessment
-
Strengths:
- Independent status, long tenure, and deep operating/risk management experience; member of CHRC overseeing pay risk—supports disciplined incentive structures .
- High engagement: at least 75% meeting attendance and presence at annual meeting; Board maintains executive sessions and independent Chair/CEO separation .
- Strong alignment mechanisms: majority equity compensation via time‑vested RS, strict hedging/pledging bans, and robust director ownership guidelines with reported compliance trajectory .
- Compensation oversight quality: use of independent consultant (Aon), conflicts assessed and found none; clawback policy for executives enhances pay‑for‑performance culture .
-
Watch‑items / potential red flags:
- Near‑term mandatory retirement: Bylaws require retirement after age 73; Lehman is 72—Board succession planning should address continuity of CHRC expertise and Indiana market ties .
- Subsidiary advisory role compensation: $15,000 from FMB for advisory directorship—customary, disclosed, and included in totals; not flagged under Item 404 thresholds but merits continued monitoring for potential perceived conflicts in local market decisions .
- No performance‑conditioned director equity (e.g., PSUs): While directors’ equity is appropriately long‑term and aligns interests, lack of explicit performance conditions places more emphasis on meeting attendance, committee effectiveness, and ownership guidelines for alignment .
-
Broader shareholder signals:
- 2024 Say‑on‑Pay support at 92.65% indicates investor confidence in compensation governance; while focused on executives, CHRC effectiveness influences these outcomes .
Overall, Lehman’s manufacturing/operations background, independence, CHRC role, and market connectivity are positives for board effectiveness and investor confidence, with succession timing the primary governance consideration in the next cycle .