Michael Donovan
About Michael S. Donovan
Independent director of Hills Bancorporation since 2007; age 62; graduate of North Iowa Area Community College; farmer and President of Donovan & Sons, Ltd. and partner in PVP1, LLP, bringing deep agricultural and hog production expertise to board risk discussions and lending oversight . Determined independent under NASDAQ rules; not a public-company director elsewhere in the past five years; attends at least 75% of board and committee meetings with full annual meeting participation in 2024 .
Past Roles
| Organization | Role | Tenure | Committees/Impact |
|---|---|---|---|
| Hills Bancorporation | Director | First elected 2007 | Risk Committee member; Compensation & Incentive Stock Committee member; contributes agricultural risk and lending insights |
| Donovan & Sons, Ltd. (Iowa farm corporation) | President, shareholder | Ongoing | Sector expertise applied to Board loan responsibilities |
| PVP1, LLP (pork production) | Partner | Ongoing | Hog production operations inform agricultural risk oversight |
External Roles
| Organization | Role | Public/Private | Notes |
|---|---|---|---|
| Donovan & Sons, Ltd. | President | Private | Local Johnson County farm corporation |
| PVP1, LLP | Partner | Private | Pork production operation in HBIA trade area |
| Other public-company boards | — | — | None in past five years per HBIA disclosure |
Board Governance
- Committee assignments: Risk Committee (3 members: Donovan, Frey, Sparks; 5 meetings in 2024) and Compensation & Incentive Stock Committee (non-employee directors; 10 meetings in 2024) .
- Independence: Independent director under NASDAQ Rule 5605(a)(2); exceptions are Seegmiller, Shileny, and Hodge (due to related-party ties), not Donovan .
- Attendance: Board held 1 annual, 1 special, 12 regular meetings in 2024; all directors attended ≥75% of board and committee meetings and attended the annual shareholders’ meeting .
- Board leadership: No designated lead independent director at the Company; Bank’s board chair is a non-employee director, with enterprise risk oversight formalized via Risk Committee and ERM framework .
Fixed Compensation
| Item | 2024 Amount | Notes |
|---|---|---|
| Fees earned or paid in cash | $41,425 | Director fees only; no stock awards or non-equity incentive compensation |
| Stock awards | $0 | No director equity grants for Donovan in 2024 |
| Option awards | $0 | 2019/2024 option grants apply to other directors (Frey, Peck, Schmitt; Sparks, Wever), not Donovan |
Schedule of Director Fees (Bank level)
| Compensation Item | Company | Bank |
|---|---|---|
| Annual retainer – Chairperson | N/A | $25,125 |
| Annual retainer – Board member | N/A | $19,000 |
| Board meeting fee | $470 | $730 |
| Committee meeting fee (Audit, Risk, ESOP/Profit Sharing, Loan, Trust) | N/A | $470 each |
Director Deferral Plan (structure)
- Directors may defer up to 50% of cash retainers/fees into book-entry stock units tracking HBIA share value and dividends; liabilities are unfunded and unsecured; distributed in cash over five annual installments upon change of control, board departure, or age 72 .
Performance Compensation
| Performance-linked Element | Metric/Terms | 2024 Value |
|---|---|---|
| Director equity/variable pay | None disclosed for Donovan | $0 |
- HBIA does not tie director compensation to explicit performance metrics; Donovan received cash fees only in 2024 .
Other Directorships & Interlocks
| Category | Status | Evidence |
|---|---|---|
| Current public-company boards | None | Company discloses no directors (including Donovan) serving on other public-company boards in past five years |
| Interlocks/consultant conflicts | None disclosed for Donovan | Comp Committee is board-only; no external consultants used in 2024; Hodge-related party exposures noted separately, not Donovan |
Expertise & Qualifications
- Agriculture and hog production expertise informs loan review and risk oversight; supports Board’s credit responsibilities in HBIA’s trade area .
- Community-based operator; practical insight into regional economic conditions relevant to HBIA lending .
- Independent governance contributor on compensation and risk oversight; participates in committee processes and annual reviews .
Equity Ownership
| Holder | Total Beneficial Ownership (shares) | Sole Power | Shared Power | % of Class |
|---|---|---|---|---|
| Michael S. Donovan | 24,177 | 14,922 | 9,255 | 0.27% |
- Options: No currently exercisable options listed for Donovan; 2019/2024 director option grants apply to Frey, Peck, Schmitt; Sparks, Wever .
- Ownership guidelines: HBIA has not adopted director or executive share ownership/retention policies—governance misalignment risk .
- Hedging/Pledging: HBIA has not adopted hedging policies for directors/employees; insider trading policy exists, to be filed as Exhibit 19 to 2024 Form 10-K .
Governance Assessment
-
Strengths
- Independent director with domain expertise aligned to HBIA’s loan and risk profile (agriculture/hog production) .
- Active committee participation: Risk Committee member (5 meetings), Compensation & Incentive Stock Committee member (10 meetings); attendance thresholds met; annual meeting attended .
- Shareholder support backdrop: strong say‑on‑pay approval (2025: For 4,380,344 vs. Against 207,251; 2024 approval 98%), indicating broad confidence in compensation governance, which Donovan helps oversee .
-
Watch items / RED FLAGS
- No director ownership/retention policy—reduces formal alignment requirements; Donovan’s ownership is 0.27% of shares outstanding .
- No hedging policy adopted—potential misalignment risk if hedging occurs, though insider trading policy exists .
- No formal related-party transaction approval policy (beyond general practice); material related-party arrangements exist with another committee member (Hodge), raising oversight sensitivity for the Compensation Committee where Donovan serves .
- No designated lead independent director at the Company level—may dilute independent leadership signaling; risk oversight largely at Bank level .
-
Overall implication: Donovan’s independence, attendance, and sector expertise positively contribute to board effectiveness in risk and compensation oversight; however, the absence of formal ownership/hedging policies and the presence of unrelated party exposures elsewhere on the board warrant ongoing monitoring from investors focused on governance alignment .