Fred L. Drake
About Fred L. Drake
Executive Chairman of HBT Financial, Inc. and Heartland Bank & Trust Company; age 68; BS in Finance and MBA from the University of Illinois. Board service since 1984 (Company) and 1982 (Bank); Chairman since 2006; served as CEO until May 24, 2023 and President from 1998 to August 2019. Led entry into the Bloomington‑Normal market in 1992, setting the tone for organic growth; today HBT has ~$5.0B in assets and ~$4.3B in deposits. Company performance context: 2024 net income of $71.78M; company‑selected performance measure Adjusted EPS–Diluted was $2.37; cumulative TSR since 12/31/2021 measured at 130.02 vs peer index 103.80.
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| HBT Financial, Inc. | Chief Executive Officer | Until May 24, 2023 | Oversaw strategy, growth, and acquisitions; transitioned to Executive Chairman in 2023. |
| HBT Financial, Inc. | President | 1998–Aug 2019 | Led corporate development; continuity of leadership. |
| Heartland Bank & Trust Company | President | In 1992 | Led entry into Bloomington‑Normal, a highly successful market expansion. |
| Heartland Bank & Trust Company | Officer | Since 1983 | Executive leadership across trust, finance, strategy. |
External Roles
No additional public company directorships or external roles disclosed in the proxy.
Fixed Compensation
| Metric | 2023 | 2024 | 2025 | Notes |
|---|---|---|---|---|
| Base Salary ($) | $350,000 | $350,000 | $350,000 | No increase 2024–2025. |
| All Other Compensation ($) | $2,210 | $2,210 | — | Term and group life premiums, etc. |
Summary compensation (total):
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Total Compensation ($) | $1,165,497 | $924,763 | $738,280 |
Performance Compensation
Short‑Term Incentive (Company plan; 2024):
| Metric | Threshold | Target | Maximum | Actual | Weighting | Payout % |
|---|---|---|---|---|---|---|
| Adjusted PPNR less net charge‑offs ($000s) | $76,075 | $89,500 | $102,925 | $103,162 | 25% | 37.50% |
| Adjusted ROAA (%) | 1.11% | 1.30% | 1.50% | 1.50% | 25% | 37.50% |
| Adjusted Efficiency Ratio (%) | 61.00% | 56.00% | 51.00% | 52.42% | 10% | 13.58% |
| Nonperforming Assets / Total Assets (%) | 1.00% | 0.625% | 0.25% | 0.16% | 10% | 15.00% |
| Relative Peer Ranking (percentile) | 25 | 50 | 75 | 95.20 | 30% | 45.00% |
| Total Plan Payout | — | — | — | — | 100% | 148.58% |
Drake’s 2024 bonus:
| Item | Target | Actual |
|---|---|---|
| % of Base Salary | 40.0% | 59.4% |
| Cash Bonus ($) | $140,000 | $208,012 |
Long‑Term Equity Grants (2/29/2024):
| Award Type | Shares | Grant Date Fair Value ($) | Vesting | Performance Metrics |
|---|---|---|---|---|
| RSUs | 4,671 | $89,029 | 33% on 2/28/2025; 33% on 2/28/2026; 34% on 2/28/2027 | Time‑based; dividend equivalents paid at vest |
| PRSUs | 4,671 | $89,029 | Cliff vest 2/28/2027 | AAROAA absolute/relative; up to 150% of target; peer percentile overlay; dividend equivalents paid at vest |
Prior PRSUs (2021–2023 cycle) vested 2/29/2024 at 150% based on AAROATCE and adjusted performance excluding acquisition‑related items.
Stock vested in 2024:
| Shares Vested (#) | Value Realized ($) |
|---|---|
| 20,415 | $391,360 |
Equity Ownership & Alignment
Beneficial ownership:
| Holder | Shares | % Outstanding | Notes |
|---|---|---|---|
| Fred L. Drake | 17,276,215 | 54.6% | Voting power over 17,210,400 shares via Voting Trust (trustee); Drake disclaims beneficial ownership except to his pecuniary interest; 20,000 shares held in his revocable trust outside the Voting Trust. |
Outstanding awards and vesting schedule (as of 12/31/2024; market price $21.90):
| Item | Count | Market Value ($) |
|---|---|---|
| Unvested RSUs | 10,254 | $224,563 |
| Unearned PRSUs (reported at max) | 24,040 | $526,476 |
Upcoming vesting (indicative share counts; PRSUs subject to performance):
| Vest Date | RSUs | PRSUs |
|---|---|---|
| 2/28/2025 | 5,349 | 9,203 |
| 2/28/2026 | 3,317 | 7,830 |
| 2/28/2027 | 1,588 | 7,007 |
Ownership policy and hedging/pledging:
- Stock ownership guidelines: Executive Chairman must hold ≥3× annual base salary; unvested RSUs count; PRSUs do not; compliance within 3 years of policy effective date (April 1, 2024). Given reported beneficial ownership, Drake exceeds the guideline.
- Clawback policy compliant with SEC/Nasdaq; enables recovery of incentive compensation upon restatement or misconduct.
- Insider trading policy prohibits hedging and margin accounts (unless non‑marginable); allows pre‑cleared 10b5‑1 plans.
- Pledging: proxy notes 41,660 shares pledged by an executive officer; no pledging disclosure for Drake.
Option/SAR exposure:
- The company does not currently grant new options/SARs; Drake has no options outstanding.
Employment Terms
Employment agreement (severance economics; double trigger for change‑in‑control cash):
| Scenario | Cash Severance | COBRA | Equity Treatment |
|---|---|---|---|
| Termination without Cause / Resignation for Good Reason (not in COC) | 6 months base salary (≈$175,000) | — | As per award agreements; no acceleration absent qualifying conditions. |
| Termination without Cause / Resignation for Good Reason (in COC; double trigger) | Lump sum 2× base + 2× target bonus (≈$980,000 cash) | 18 months lump sum COBRA (≈$28,703) | Acceleration of earned PRSUs and RSUs per change‑in‑control provisions (≈$751,039 at 12/31/2024 prices). |
| Qualifying Retirement (not in COC) | — | — | RSUs accelerate; PRSUs vest based on actual performance at target/pro rata as applicable (≈$495,290 at 12/31/2024). |
| Death/Disability (not in COC) | — | — | 100% of unvested RSUs and earned PRSUs vest (≈$751,039 at 12/31/2024). |
Other governance features:
- No tax gross‑ups on severance payments; no single‑trigger cash payments; no option repricing without shareholder approval; dividends are not paid on unvested awards (dividend equivalents accrue and are paid at vest).
Board Governance
- Executive Chairman and director; Chairman since 2006; director since 1984 (Company) and 1982 (Bank).
- Controlled company: more than 50% voting power held in a Voting Trust for which Drake is trustee; HBT elects controlled‑company exemptions under Nasdaq (e.g., board majority independence not required), though Audit and other committee independence requirements are met.
- Committee service: standing committees (Audit; Enterprise Risk Management; Compensation; Nominating) are composed of independent directors; Drake is not listed as a member of these committees.
- Board meeting cadence: 9 meetings in 2024; no director below 75% attendance; all directors attended 2024 Annual Meeting.
- Director compensation: employee directors do not receive director fees; non‑employee directors receive cash retainers/meeting fees and annual RSUs (600 units; vested 2/28/2025).
Say‑on‑Pay & Shareholder Feedback
2025 Annual Meeting results:
| Item | For | Against | Abstain | Broker Non‑Votes |
|---|---|---|---|---|
| Advisory vote to approve NEO compensation | 27,023,829 | 334,840 | 21,108 | 2,622,754 |
| Say‑on‑Pay frequency | 1 Yr: 26,613,591; 2 Yr: 10,119; 3 Yr: 732,116; Abstain: 23,951; Broker Non‑Votes: 2,622,754 |
Compensation Committee: Independent; chaired by Eric E. Burwell; used external consultant review in 2023; met 4 times in 2024; conducts annual compensation risk assessment.
Compensation Structure Analysis
- Mix shifts: Drake’s total compensation declined post‑CEO transition (2022: $1.17M; 2024: $0.74M), with equity retention via RSUs/PRSUs continuing as Executive Chairman.
- Incentive rigor: 2024 cash bonus exceeded target (148.58%) driven by strong AROAA, efficiency, credit quality, and peer ranking; short‑term incentive caps at 150% of target.
- Long‑term alignment: PRSUs tied to AAROAA (absolute and relative) with up to 150% payout; dividend equivalents paid only at vesting.
- Governance controls: clawback policy; ownership guidelines; no gross‑ups; no single‑trigger cash; no option repricing.
Related Party & Control Considerations
- Voting Trust Agreement (established May 4, 2016): Drake exercises sole voting discretion over pre‑IPO family shares; initial duration 15 years, extendable by two‑thirds holders; registration rights for trust.
- Ownership concentration risk: Voting Trust ~54.4% of outstanding shares; potential alignment but also entrenchment concerns and reduced minority shareholder influence.
Risk Indicators & Red Flags
- Controlled company governance exemptions (balanced by independent Audit/other committees).
- Concentrated voting control via Voting Trust (potential entrenchment).
- Hedging/margin accounts prohibited; clawback adopted.
- Pledging noted for an executive officer (41,660 shares), but none disclosed for Drake.
Expertise & Qualifications
- Education: BS Finance; MBA, University of Illinois.
- Industry experience: multi‑decade executive tenure; M&A integration track record (e.g., Town and Country acquisition completed Feb 1, 2023; core conversion in April 2023).
- Strategic achievements: market expansion leadership; sustained profitability focus.
Employment Terms (Detailed)
| Provision | Drake |
|---|---|
| Non‑COC severance | 6 months base salary continuation; release required. |
| COC severance (double trigger) | Lump sum 2× base + 2× target bonus; 18 months COBRA in lump sum; release required. |
| Equity treatment on retirement/death/disability/COC | RSUs accelerate in Qualifying Termination/Retirement; PRSUs vest pro rata/target or accelerate if earned upon qualifying termination in COC within 24 months. |
Investment Implications
- Alignment: Extremely high beneficial ownership and trustee control suggest strong alignment and influence on strategic direction; ownership guidelines easily met or exceeded.
- Near‑term supply/vesting: RSUs scheduled to vest (5,349 shares on 2/28/2025); PRSUs potential vest (9,203 shares) contingent on performance; dividend equivalents paid at vest—watch for potential 10b5‑1 plan activity around windows.
- Pay‑for‑performance: 2024 bonus paid at 148.58% of target reflects strong AROAA, efficiency, asset quality, and peer ranking; long‑term PRSUs tied to AAROAA with peer overlays support durable ROA discipline.
- Governance risk: Controlled‑company structure and Voting Trust concentration represent potential minority rights and independence concerns; partially mitigated by independent committee structure and compliance controls.
- Change‑of‑control economics: Double‑trigger cash and equity acceleration terms are standard for regional banks; aggregate COC package at 12/31/2024 market values totals ~$1.76M for Drake, limiting excessive parachute risk.
Overall: Drake’s incentive design (AROAA‑based PRSUs, capped short‑term payouts, clawback) and large ownership stake support alignment; monitor vesting calendars and any pre‑cleared trading plans for potential insider selling pressure, and weigh governance concentration against continued delivery on profitability, efficiency, and credit quality.