Ann Marie Rhodes

About Ann Marie Rhodes

Ann Marie Rhodes, age 70, has served as a director of Hills Bancorporation since 1993 and is currently Chairperson of the Board of Hills Bank and Trust Company and Vice President of the Company, with a background as an Emeritus Professor of Nursing at the University of Iowa and a law degree from the University of Iowa College of Law . She is an attorney and member of the American and Iowa Bar Associations, reflecting core credentials in healthcare and legal governance relevant to fiduciary oversight . The Board has determined she is independent under NASDAQ Rule 5605(a)(2), despite her Vice President title at the Company, with only the President/CEO and one other director deemed non‑independent .

Past Roles

External Roles

Board Governance

• Current roles: Chairperson of the Bank’s Board and Vice President of the Company .
• Independence: Independent under NASDAQ rules; only Seegmiller (PEO), Shileny (President/CEO), and Hodge are not independent .
• Committee assignments: Member of the Employee Stock Ownership Plan (ESOP) Committee, Trust Committee, and Compensation and Incentive Stock Committee; serves as Chairperson of the Compensation and Incentive Stock Committee .
• Attendance: In 2024, all directors attended at least 75% of board and committee meetings to which they were appointed; all attended the annual shareholders’ meeting .
• Committee activity levels (Bank): Trust Committee met 12 times; ESOP Committee met 2 times; Compensation and Incentive Stock Committee held 10 meetings; Audit Committee met 9 times; Risk Committee met 5 times; Loan Committee met 12 times .
• Leadership structure: The Bank’s chair is a non‑employee director; the Company’s Board has no designated lead independent director, a structure the Company believes is appropriate given operations primarily at the Bank level .

Fixed Compensation

Performance Compensation

• Committee pay policy: Compensation and Incentive Stock Committee and Governance and Nominating Committee meetings are not compensated, aligning with governance best practice to limit pay tied to sensitive oversight functions .
• Equity program: While certain directors received options in 2024 (e.g., Sparks, Wever), Rhodes received no equity awards; options generally have 10-year terms with five-year vesting for directors when granted .

Other Directorships & Interlocks

Expertise & Qualifications

• Healthcare leadership: Emeritus Professor of Nursing at University of Iowa, providing perspective on the largest employer in HBIA’s trade area .
• Legal credentials: J.D. from University of Iowa College of Law; member of American and Iowa Bar Associations .
• Community leadership: Active in leadership roles across community organizations, supporting local market knowledge and stakeholder engagement .

Equity Ownership

• Options/derivatives: No options disclosed for Rhodes; 2019/2024 options exist for select other directors, not for Rhodes .
• Ownership guidelines: HBIA has not adopted director or executive share ownership or retention policies, reducing formal alignment requirements .
• Hedging/pledging: HBIA has not adopted policies restricting hedging; insider trading policy exists and is filed with the 2024 Form 10‑K; no pledging by Rhodes disclosed in the proxy .

Governance Assessment

• Strengths

  • Tenured, independent director with dual expertise in healthcare and law; chairs the Compensation and Incentive Stock Committee—a central role for pay oversight .
  • Strong engagement: Meets attendance thresholds; participates actively across ESOP and Trust committees; Bank chair role supports governance separation from management .
  • Shareholder support: 98% Say‑on‑Pay approval in 2024, indicating broad investor confidence in compensation governance .

• Potential Risks and RED FLAGS

  • No director/executive ownership guidelines and no hedging restrictions—lack of formal alignment controls is a governance gap; consider monitoring voluntary ownership and any future policy changes .
  • Title overlap: Rhodes is Vice President of the Company while serving as an “independent” director—though the Board has expressly deemed her independent, dual roles can blur lines for investors; continued disclosure and recusal practices are important mitigants .
  • Imminent turnover risk: Mandatory retirement age is 72; Rhodes is 70, implying potential near‑term board transitions that could affect compensation committee continuity .

• Compensation Committee Process

  • Composition: Twelve non‑employee directors (excluding PEO and President/CEO), with Rhodes as Chair; Hodge is classified as not independent due to related‑party ties (construction/lease), though he sits on the committee .
  • Methodology: Annual review of performance vs. budget (EPS, growth, asset quality, ROA, ROE), subjective determinations, and peer benchmarking without strict formulaic payouts; no outside consultant engaged in 2024 .
  • Clawback/recoupment: Committee will consider adjusting or recovering awards upon material restatement or misconduct; equity vests on change in control, which raises acceleration risk but is standard for plans of this type .

• Related-Party Transactions

  • None identified for Rhodes; board reviews and approves non‑loan related‑party transactions >$120,000 with recusals; insider loans must comply with Regulation O .

Overall, Rhodes brings deep local market, healthcare, and legal expertise and leads compensation oversight, supporting board effectiveness; investors should monitor policy gaps on ownership/hedging, her dual title optics, and impending age‑related turnover for continuity of compensation governance .