James Schmitt
About James C. Schmitt
Independent director of Hills Bancorporation since 2019; age 69. Chair of the Audit Committee (designated “audit committee financial expert”), and member of the Loan Committee and the Compensation and Incentive Stock Committee. Background includes 13 years at RSM US LLP (Partner-in-Charge, Charlotte) and 13 years as president of an electrical distributor in Cedar Rapids; education includes a B.S. in Accounting (UNI), MBA (University of Iowa), and CPA. Term runs to the 2026 Annual Meeting; the Board class reports all directors attended ≥75% of Board and committee meetings in 2024 and attended the 2024 annual meeting; Schmitt is deemed independent under NASDAQ rules.
Past Roles
| Organization | Role | Tenure/Timing | Committees/Impact |
|---|---|---|---|
| RSM US LLP (Cedar Rapids, IA; Charlotte, NC) | Partner; Partner-in-Charge (Charlotte office) | 13 years (prior role) | Deep audit/accounting leadership; supports audit oversight as committee financial expert. |
| Electrical distributor (Cedar Rapids, IA) | President | 13 years (prior role) | Operating leadership; commercial/industrial client insight for loan oversight. |
External Roles
| Organization | Role | Tenure/Timing | Committees/Impact |
|---|---|---|---|
| Various commercial businesses and non-profits (Cedar Rapids area) | Director (unspecified entities) | Not disclosed | Community relationships; local market knowledge valuable to expansion in Cedar Rapids/Marion. |
| Other public company boards (last 5 years) | None | N/A | No other public company directorships reported. |
Board Governance
- Committees and chair roles (2024 activity):
- Audit Committee: Chair; 9 meetings; all members independent; Schmitt and Peck designated “financial experts.”
- Loan Committee: Member; 12 meetings (Bank level).
- Compensation & Incentive Stock Committee: Member; 10 meetings; committee is non-employee directors (one member, Hodge, not independent).
- Independence: Schmitt is an “Independent Director” under NASDAQ Rule 5605(a)(2).
- Attendance/engagement: In 2024, all directors attended at least 75% of Board and committee meetings; all directors attended the 2024 annual shareholders’ meeting.
- Board leadership: Bank Board Chair is a non-employee director; Company Board has no designated Lead Independent Director; meetings typically chaired de facto by the CEO (Shileny) at Company level, before Bank Board meetings.
- Risk oversight: Separate Board Risk Committee; ERM framework with ERMC and ORMC cascades; reporting to Risk Committee. (Context for overall board effectiveness.)
Fixed Compensation
Director fees are paid primarily at the Bank level; schedule and Schmitt’s 2024 amounts:
| Compensation Item | Company | Bank | Source |
|---|---|---|---|
| Annual retainer – Board Chair | N/A | $25,125 | |
| Annual retainer – Board Member | N/A | $19,000 | |
| Per meeting – Board | $470 | $730 | |
| Per meeting – Audit Committee | N/A | $470 | |
| Per meeting – Risk/Loan/Trust/ESOP | N/A | $470 | |
| Governance and Compensation Committee meetings | N/A | No additional fee |
| Director | 2024 Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Total ($) |
|---|---|---|---|---|
| James C. Schmitt | $42,815 | — | — | $42,815 |
| Source: Director Compensation Table. |
- Deferrals: Directors may defer up to 50% of cash fees into stock-unit credits under the Nonqualified Deferred Compensation Plan (book-entry units, paid in cash, unfunded).
Performance Compensation
| Component (Directors) | 2024 Detail |
|---|---|
| Equity grants (RSUs/PSUs/options) | None reported for Schmitt; several other directors (new in 2024) received option awards, but not Schmitt. |
| Performance metrics tied to director pay | None disclosed (director compensation is fixed retainer/meeting fees; no performance metrics). |
Other Directorships & Interlocks
- Public company directorships (current/past 5 years): None.
- Compensation committee interlocks: None disclosed; no executive officer of HBIA/Bank served on another company’s board or compensation committee that employed any HBIA director.
Expertise & Qualifications
- CPA; Accounting degree (UNI) and MBA (University of Iowa).
- Designated “Audit Committee Financial Expert” and Audit Chair.
- Significant leadership in audit/accounting (RSM) and as operating president (electrical distributor), plus local market connectivity in Cedar Rapids/Marion expansion areas.
Equity Ownership
| Holder | Total Beneficial Ownership (shares) | % of Class | Notes |
|---|---|---|---|
| James C. Schmitt | 5,090 | 0.06% | Includes currently exercisable options. |
Options detail (exercisable vs. unexercisable):
- Stock options: 1,935 options granted 5/14/2019 at $62.00, expiring 5/14/2029; identified as “currently exercisable” in beneficial ownership footnote.
- Unvested/Unexercisable: Not indicated for Schmitt (2019 grant is currently exercisable).
Alignment policies and practices:
- Stock ownership guidelines: The Company has not adopted a share ownership or retention policy for directors or executive officers.
- Hedging/pledging: The Company “has not adopted any practice or policies” restricting hedging/derivative transactions by insiders (hedging policy not adopted); insider trading policy exists and is being filed as an exhibit to the 10-K.
Governance Assessment
Key positives
- Audit oversight strength: Schmitt chairs an independent Audit Committee with 9 meetings in 2024 and is designated an audit financial expert; Audit Committee report affirms review of FY2024 audit, PCAOB communications, and auditor independence, and recommends inclusion of audited statements in the 10-K.
- Independence and attendance: Schmitt is independent; Board reports ≥75% attendance across Board/committees and full annual-meeting attendance.
- Shareholder support: Say‑on‑Pay received 98% support at the 2024 Annual Meeting, a constructive signal on compensation governance and engagement.
Potential concerns and red flags
- No director ownership guidelines: Lack of mandatory ownership/retention requirements may weaken long‑term alignment.
- No anti‑hedging policy: The proxy states no adopted hedging policies for insiders—commonly viewed as a governance red flag at public companies.
- No Lead Independent Director at Company: The Company Board has no designated lead independent director; meetings are de facto chaired by the CEO at the Company level.
- Single‑trigger equity acceleration on change in control: Unvested awards vest upon a change in control (and upon death/disability), which is generally less shareholder‑friendly than double‑trigger structures.
- Compensation committee composition includes one non‑independent director (Hodge), although Schmitt himself is independent; continues to warrant monitoring.
Contextual notes
- Director compensation for Schmitt is all cash in 2024 ($42,815), with no new equity, limiting additional alignment but also limiting dilution.
- Audit fees rose to $635,321 in 2024 from $364,868 in 2023; Audit Committee pre‑approves all auditor services. This places emphasis on rigorous oversight of scope, fees, and internal control work.