Kathleen L. Bruegenhemke
About Kathleen L. Bruegenhemke
Kathleen L. Bruegenhemke is Senior Vice President, Corporate Secretary, and Chief Risk Officer of Hawthorn Bancshares (HWBK), and has served as a director since March 2017. She previously served as Chief Operating Officer from January 2017 to November 2023; earlier roles include Columbia Market President (2014–2016), Internal Auditor (1992–1997), and Commissioned Bank Examiner at the FDIC; she is a Certified Public Accountant, with 30+ years of banking risk, regulatory, and operations experience . Her age was 57 in 2023 and 56 in 2022 per the proxy director tables . Company pay-versus-performance disclosures show TSR of $126.29 on a hypothetical $100 investment in 2021 and $113.23 in 2022, and net income of $22.5M and $20.8M respectively .
Company Performance (context)
| Metric | FY 2021 | FY 2022 |
|---|---|---|
| TSR ($100 initial) | 126.29 | 113.23 |
| Net Income ($000s) | 22,517 | 20,751 |
| Metric | FY 2023 | FY 2022 | FY 2021 |
|---|---|---|---|
| Revenues ($USD)* | [GetFinancials]* | [GetFinancials]* | [GetFinancials]* |
| EBITDA ($USD)* | [GetFinancials]* | [GetFinancials]* | [GetFinancials]* |
| Net Income ($USD)* | [GetFinancials]* | [GetFinancials]* | [GetFinancials]* |
Values retrieved from S&P Global.*
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Hawthorn Bancshares/Hawthorn Bank | Chief Operating Officer | 2017–Nov 2023 | Led enterprise operations; deep risk and regulatory execution |
| Hawthorn Bank | Columbia Market President | 2014–2016 | Local market growth and relationships |
| Hawthorn Bancshares | SVP & Corporate Secretary | Since Nov 1997 | Governance and corporate actions; disclosure leadership |
| Hawthorn Bancshares | Chief Risk Officer | Since Jun 2006 | Enterprise risk management; regulatory oversight |
| Hawthorn Bank | Internal Auditor | 1992–1997 | Controls and audit discipline |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Federal Deposit Insurance Corporation (FDIC) | Commissioned Bank Examiner | Prior to 1992 | Regulatory credibility; prudential supervision expertise |
Fixed Compensation
| Component | FY 2021 | FY 2022 | FY 2023 |
|---|---|---|---|
| Base Salary ($) | 220,152 | 226,757 | 237,827 |
| Bonus ($) | 800 | 1,000 | — |
| All Other Compensation ($) | 36,957 | 38,779 | 39,406 |
| Total ($) | 312,943 | 323,220 | 321,451 |
Notes:
- 2023 perquisites include company auto personal-use ($6,694) and country club dues ($6,435) for Ms. Bruegenhemke .
- Base salaries were increased in 2023; her increase was 4.9% amid market benchmarking by Aon for 2024 compensation .
Performance Compensation
Hawthorn operates a tiered annual incentive cash program. Senior officers (Tier 2) including Ms. Bruegenhemke have a 25% target and 37% maximum of base salary; metrics emphasize budgetary, credit quality, and operational objectives, with subjective weightings and no payout if targets are not achieved .
| Metric | Weighting | Target | Actual | Payout | Vesting |
|---|---|---|---|---|---|
| Budgetary, credit quality, operational objectives (aggregate) | Subjective | Tier 2: 25% of base salary | FY 2023 Non-Equity Incentive $44,218 | 18.6% of base salary (44,218 / 237,827) | Cash, annual |
Equity Incentives: Shareholders approved a new Equity Incentive Plan in June 2023 (203,000-share reserve). As of 12/31/2023, 18,277 RSUs were outstanding company-wide; the 2023 compensation table shows no stock awards for Ms. Bruegenhemke (no RSUs/RSAs granted to her in 2023) .
Equity Ownership & Alignment
| Year (Record Date) | Shares Beneficially Owned | % Outstanding | 401(k) Plan Shares Included |
|---|---|---|---|
| 2021 (1/29/2021) | 77,023.79 | 1.2% | 52,473.43 |
| 2022 (1/31/2022) | 84,237.03 | 1.3% | 58,185.01 |
| 2023 (1/31/2023) | 92,049.38 | 1.4% | — |
| 2024 (1/31/2024) | 97,931.33 | 1.4% | 69,118.51 |
Policies:
- Hedging: Insiders strongly discouraged from hedging/monetization; pre-clearance required; speculative transactions prohibited .
- Pledging: No explicit pledging prohibition disclosed; not otherwise flagged in proxy .
Stock Ownership Guidelines: Not disclosed in proxies; compliance status not provided.
Employment Terms
Change-in-Control Agreements (double-trigger: termination without cause or good reason after a change in control):
- Economics: 24× highest monthly base salary (equals ~2× annual base), 2× prior-year incentive bonus, pro-rated current-year bonus, accrued vacation, and 280G excise tax gross-up (shareholder-unfriendly) .
| Scenario (Hypothetical as of date) | Cash on Base ($) | 2× Prior-Year Bonus ($) | Pro-Rata Current Bonus ($) | Vacation ($) | 280G Gross-up ($) | Total ($) |
|---|---|---|---|---|---|---|
| 12/31/2022 | 453,514 | 110,068 | 56,684 | 34,886 | 409,142 | 1,064,294 |
| 12/31/2023 | 475,654 | 113,368 | 44,218 | 36,589 | 418,308 | 1,088,137 |
Other Terms:
- Non-compete/non-solicit, garden leave, consulting: Not disclosed in proxies.
- Clawbacks: Not explicitly disclosed; the equity plan prohibits option repricing without shareholder approval and may include restrictive covenants in award agreements .
Retirement & Deferred Compensation
401(k) Profit-Sharing Plan: Company matches up to 3% of compensation; plan held ~6.0% of common stock at 12/31/2022. Five-year graded vesting of employer contributions; participants can direct investment into Company stock .
| Year | Executive Contributions ($) | Company Contributions ($) | Aggregate Earnings ($) | Year-End Balance ($) |
|---|---|---|---|---|
| 2021 | 26,000 | 23,263 | 340,099 | 1,721,664 |
| 2022 | 27,000 | 26,677 | (226,417) | 1,548,924 |
Defined Benefit Pension Plan: For employees hired before July 1, 2017 (including Ms. Bruegenhemke), normal retirement benefit at age 65 with ≥25 years is 45% of 10-year average compensation less 50% of Social Security; reduced proportionally for <25 years .
Board Governance
- Board Service: Director since March 2017 .
- Independence: Employee-director; not independent under Nasdaq; committees composed solely of independent directors .
- Committees: Audit (Burkhead chair; Freeman, Riley, Wetzel), Compensation (Wetzel chair; Burkhead, Freeman, Riley), Nominating & Governance (Freeman chair; Burkhead, Riley, Wetzel); Ms. Bruegenhemke does not serve on these committees .
- Attendance: Board met 10 times in 2023; each director attended ≥75% of meetings; executive sessions held at least annually without management .
- Board Leadership: Historically combined CEO-Chairman; independent committee chairs; independent director Philip D. Freeman leads executive sessions; no formal Lead Independent Director .
Director Compensation:
- Only non-employee directors are paid. Retainer $2,000/month; $900 per Board meeting; $650 per committee meeting; also $650 per Hawthorn Bank board meeting; employee-directors (including Ms. Bruegenhemke) are not paid director fees .
Say-on-Pay & Peer Benchmarking
- Say-on-Pay approval: >87% support in 2022; annual say-on-pay adopted (vote frequency) in 2020 .
- Peer benchmarking: Aon general market/executive banking databases used in 2023 for 2024 compensation review; targeting median market pay for roles (e.g., President adjustment aligned to peer median) .
Trading Signals & Insider Selling Pressure
- Equity awards: No stock awards for Ms. Bruegenhemke in 2021–2023; company RSUs outstanding as of 12/31/2023 but not disclosed as granted to her, reducing near-term vest-driven selling pressure .
- Hedging/monetization discouraged; pre-clearance required—reduces speculative trading; pledging not explicitly prohibited .
Risk Indicators & Red Flags
- 280G tax gross-up embedded in change-in-control agreements (shareholder-unfriendly) .
- Combined CEO-Chairman historical structure mitigated by independent committees and executive sessions led by an independent director .
- No option repricing without shareholder approval under the Equity Plan (positive control) .
Investment Implications
- Alignment: High insider ownership (~1.4% for Ms. Bruegenhemke; significant 401(k) holdings in Company stock) supports long-term alignment; limited personal equity grants reduce short-term selling pressure .
- Incentives: Annual cash bonus (Tier 2 target 25%, max 37%) tied to budgetary, credit quality, and operational goals suggests focus on risk-adjusted profitability and underwriting discipline—important for bank cyclicality .
- Retention/COC Economics: Double-trigger severance with 280G gross-up creates retention but raises potential sale/COC cost; investors should model ~$1.1M impact for Ms. Bruegenhemke in a transaction scenario .
- Governance: Employee-director status implies non-independence, but independent committees and regular executive sessions mitigate dual-role concerns; no director pay for employees avoids cross-comp conflicts .
- Performance trend: TSR and net income dipped in 2022 vs 2021; monitoring 2023–2024 fundamentals and risk metrics is key. Equity plan capacity (203k shares) introduces potential dilution if executive awards ramp; current RSU overhang is modest at ~18k shares .
Values retrieved from S&P Global.*