Michael Dunlap
About Michael Dunlap
Michael J. Dunlap (age 59) is President and Chief Operating Officer of Merchants Bancorp and Chief Executive Officer of Merchants Bank of Indiana; he has served on the board of Merchants Bancorp since May 2014, joined the company in 2009, and is a former licensed CPA with an accounting degree from Indiana University . Under Dunlap’s compensation framework, 2024 performance metrics were total revenue, EPS, and ROAE; the company delivered $646.5M revenue vs $591.4M target (109%), EPS of $6.30 vs $6.31 target (100%), and ROAE of 16.86% vs 17.12% target (99%), producing a 103% payout on both cash and equity incentives . Company pay-versus-performance disclosures show 2024 net income of $320.4M and cumulative TSR value of $294 on a $100 initial investment, with ROAE at 16.86% .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Merchants Bank of Indiana | Senior VP, Mortgage Banking | Not disclosed | Established mortgage warehouse lending platform and Merchants Mortgage (single-family origination & servicing) |
| National City Mortgage | Chief Financial Officer | Not disclosed | Led finance for major mortgage lender acquired by PNC; deep credit and finance discipline |
| Bank One | Finance roles | Not disclosed | Prior finance leadership, later acquired by JPMorgan Chase |
| Waterfield Mortgage Co. | Finance roles | Not disclosed | Prior finance leadership, later acquired by Huntington Bancshares |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Mortgage Bankers Association | Residential Board of Governors; Board of Directors Member | Not disclosed | Industry leadership and policy engagement; enhances network and market insight |
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 650,000 | 800,000 | 840,000 |
Notes:
- 2024 base salary increased 5.0% YoY .
Performance Compensation
| 2024 Incentive Structure | Target ($) | Actual Payout ($) | Payout Factor | Vesting |
|---|---|---|---|---|
| Cash Incentive | 850,000 | 875,600 | 103% | N/A |
| Equity Incentive (RSUs, grant-date fair value) | 850,000 | 875,530 | 103% | RSUs vest ratably over 3 years, first tranche Feb 1, 2026 (for 2024 awards) |
| 2024 Performance Metrics | Weighting | Target | Actual | Payout Factor |
|---|---|---|---|---|
| Total Revenue | 33.3% | $591,354,000 | $646,454,000 | 109% |
| EPS (Diluted) | 33.3% | $6.31 | $6.30 | 100% |
| ROAE | 33.3% | 17.12% | 16.86% | 99% |
| Average Incentive Payout | — | — | — | 103% |
Design features:
- Equal metric weighting; payout range 75–125% with threshold and capital adequacy conditions; RSUs only (no options) under the 2017 Plan .
Multi‑Year Compensation (Summary)
| Year | Salary ($) | Bonus ($) | Equity Incentive Awards ($) | Non‑Equity Incentive ($) | All Other ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2022 | 650,000 | 159,350 | 656,524 | 328,250 | 13,150 | 1,807,274 |
| 2023 | 800,000 | — | 848,014 | 848,100 | 13,900 | 2,510,014 |
| 2024 | 840,000 | — | 875,530 | 875,600 | 14,350 | 2,605,480 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial Ownership | 145,891 shares; less than 1% of outstanding |
| Unvested RSUs at 12/31/2024 | 59,686 units; MV $2,176,748 at $36.47/share |
| RSU Vesting Schedule | 29,504 vested Feb 1, 2025; 18,559 vest Feb 1, 2026; 11,623 vest Feb 1, 2027 |
| Ownership Guidelines | None in place for executives/directors |
| Hedging/Pledging Policy | No prohibition on hedging or pledging; transactions require General Counsel pre‑approval |
| ESOP/401(k) Contributions (2024) | ESOP allocation $4,000; 401(k) $10,350 |
Implications:
- February vesting cadence may create periodic supply; absence of ownership guidelines and permitted hedging/pledging are alignment risk flags relative to best practice .
Employment Terms
| Provision | Dunlap Terms |
|---|---|
| Employment Agreement | None (company generally does not have fixed-term agreements for NEOs) |
| Change‑in‑Control (CIC) | Double‑trigger; 2x base salary + 2x target cash incentive upon qualifying termination around a CIC |
| CIC Non‑Compete/Non‑Solicit | 12‑month post‑termination restrictions; confidentiality and clawback provisions included |
| Hypothetical CIC Severance (12/31/2024) | Cash $3,280,000; RSU acceleration value $2,176,748 (at $36.47/share) |
Board Governance
- Board service: Director since May 2014; executive officer and director (non‑independent by Nasdaq/SEC rules) .
- Committee roles: Committees are composed of independent directors; Dunlap is not a member of Audit, Compensation, Nominating & Corporate Governance, or Risk committees .
- Board leadership: CEO and Chairman roles are combined (held by Michael Petrie); an Independent Lead Director charter is in place (current Lead Independent Director: Andrew Juster), mitigating combined‑role concerns .
- Meeting cadence/attendance: Board held six meetings in 2024; all directors attended ≥75% of Board/committee meetings (one exception not involving Dunlap) .
Director Compensation
- Employee directors (including Dunlap) receive no additional director compensation; only Non‑Executive Directors receive retainers/equity .
Compensation Peer Group and Philosophy
- Peer group used in 2024 included 24 institutions across regional banks and specialty lenders (e.g., First Merchants Corp., Lakeland Financial Corp., Walker & Dunlop, The Bancorp) .
- Philosophy emphasizes performance‑based pay tied to revenue, EPS, ROE; no single‑trigger CIC, no option repricing, no tax gross‑ups; clawback policy aligned to SEC/Nasdaq rules .
Say‑on‑Pay & Shareholder Feedback
| Item | Result |
|---|---|
| 2024 Say‑on‑Pay | Over 70% approval |
| 2023 Say‑on‑Pay Frequency | Over 98% favored annual votes; company conducts annual say‑on‑pay |
Risk Indicators & Red Flags
- Hedging/pledging permitted (subject to pre‑approval), and no stock ownership guidelines in place—potential misalignment risk vs governance best practice .
- Related‑party law firm fees disclosed (Dinwiddie is partner), but not directly tied to Dunlap; oversight via Audit Committee and Code of Conduct .
- Clawback policy adopted per Dodd‑Frank/Nasdaq for restatements .
Expertise & Qualifications
- 30+ years mortgage banking; former CFO of National City Mortgage; prior finance roles at Bank One and Waterfield Mortgage; former licensed CPA; IU accounting degree .
Investment Implications
- Pay-for-performance alignment is reasonably tight: equal-weighted revenue/EPS/ROAE drove a 103% payout; RSUs vest over three years, supporting retention and deferred realization .
- Insider selling pressure may cluster around early‑February vesting dates; monitor Form 4 filings and trading windows for net share issuances/withholdings .
- Governance alignment is mixed: strong clawback/double‑trigger CIC and independent committee structure offset by combined CEO/Chairman (mitigated via Lead Independent Director), absence of executive ownership guidelines, and permitted hedging/pledging—areas to engage on for enhanced alignment .
- Track record and domain expertise in mortgage banking and warehouse lending underpin execution strength; incentive metrics tied to shareholder‑relevant outcomes (revenue/EPS/ROE) suggest continued linkage of pay to value creation, but vigilance on risk calibration is prudent given the cyclical mortgage environment .