Michael Petrie
About Michael Petrie
Michael F. Petrie, age 71, is Co‑Founder, Chairman and Chief Executive Officer of Merchants Bancorp and Chairman of Merchants Bank; he has served as CEO/Chairman of the Company since October 2006 and Chairman of Merchants Bank since March 2002, and previously served as CEO of Merchants Bank (2002–2019) and President of Merchants Capital (1990–2018) . He holds a B.S. and MBA in finance from Indiana University and has over 45 years in mortgage banking, including service as 2005 Chairman of the Mortgage Bankers Association . Pay-versus-performance disclosures show 2024 net income of $320.4 million, ROAE of 16.86%, and cumulative TSR of $294 on a $100 base (2020–2024), versus $147 for the Nasdaq Bank Index peer group, indicating strong multi‑year value creation relative to peers . In 2024, executive incentives were tied equally to total revenue, EPS, and ROAE; actual results produced a 103% payout against targets, signaling near‑target performance on core shareholder‑relevant metrics .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Merchants Bancorp | Chairman & CEO | 2006–present | Co‑founder; led strategic growth across banking and capital markets platforms . |
| Merchants Bank of Indiana | Chairman | 2002–present | Oversight of bank strategy and risk; previously CEO of the bank (2002–2019) . |
| Merchants Capital (subsidiary) | President | 1990–2018 | Built national multifamily finance platform; fee-income engine . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Mortgage Bankers Association | Chairman, Board of Directors | 2005 | Industry leadership; policy influence in mortgage banking . |
| Michael F. & Jody J. Petrie Foundation | Trustee | Ongoing | Philanthropy; community engagement . |
| Indiana Affordable Housing Council; Multifamily Lenders Council | Former President (each) | N/A | Sector leadership in affordable and multifamily housing finance . |
| Indiana University Varsity Club (National Board); Marian University (Trustee); IU Center for Real Estate Studies (Advisory Board) | Board/Advisory roles | Ongoing | Network/market insight; talent pipeline . |
Board Governance & Committee Roles
- Board service: Director of Merchants Bancorp since 2006; Chairman and CEO; not independent under Nasdaq rules due to executive status .
- Committee memberships: Management directors do not serve on the independent Board committees (Audit, Compensation, Nominating & Governance, Risk); these committees are composed of independent directors (with one Risk exception) .
- Dual-role implications: The Board combines the CEO and Chairman roles, mitigated by a formal Lead Independent Director Charter; the current Lead Independent Director is Andrew A. Juster, who sets agendas with the CEO, convenes independent sessions, and serves as liaison to independent directors .
- Board independence/attendance: 6 of 11 directors are independent; all directors attended ≥75% of 2024 meetings, except one Compensation Committee instance (Sellers) .
- Director pay: Executive directors (including Petrie) receive no additional fees for Board service .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 850,000 | 900,000 | 950,000 |
| All Other Compensation ($) | 30,282 | 31,437 | 32,798 |
| Total Compensation ($) | 1,908,889 | 2,839,538 | 2,939,929 |
| YoY Base Salary Increase (%) | — | — | 5.6% |
Additional 2024 salary context (targets approved in Jan 2024): Base $950,000; target cash incentive $950,000; target equity incentive $950,000 .
Performance Compensation
2024 Incentive Design and Outcomes
| Metric | Weighting | Target | Actual | % of Target | Payout Mechanics |
|---|---|---|---|---|---|
| Total Revenue | 33.3% | $591,354,000 | $646,454,000 | 109% | 75–125% payout curve; bank must remain “well capitalized” each quarter . |
| EPS (Primary) | 33.3% | $6.31 | $6.30 | 100% | 75–125% payout curve . |
| ROAE | 33.3% | 17.12% | 16.86% | 99% | 75–125% payout curve . |
| Aggregate Payout | — | — | — | — | 103% payout for 2024 awards; CEO cash incentive paid at 103%; equity paid in RSUs at 103% (3‑yr ratable vesting) . |
Design features and policies:
- Instruments: Company grants RSUs only (no stock options); no dividends on RSUs before vest .
- Vesting: RSU awards vest ratably over three years; 2024 awards vest starting Feb 1, 2026 .
- Risk controls: Double‑trigger change‑in‑control severance for covered NEOs; no repricing; no tax gross‑ups; cash incentives can be zero if thresholds not met .
- Clawback: Adopts Dodd‑Frank/Nasdaq clawback policy for excess incentive comp after restatement .
CEO Pay Mix and Realized/Vested
- 2024 Summary Comp components for CEO: Salary $950,000; Non‑Equity Incentive $978,600; Equity Incentive Awards (grant date fair value) $978,531; All Other $32,798 .
- RSUs vested in 2024: 38,893 shares; gross value realized $1,640,118; company withholds shares to cover taxes and delivers net shares .
Equity Ownership & Alignment
| Ownership/Equity Detail | Amount |
|---|---|
| Beneficial Ownership (shares) | 12,590,122 |
| Beneficial Ownership (% of outstanding) | 27.4% |
| Individually Held by Petrie (subset) | 1,931,949 shares |
| Unvested RSUs Outstanding (12/31/2024) | 70,541 units |
| Market Value of Unvested RSUs (at $36.47) | $2,572,630 |
| Upcoming RSU Vesting Schedule | 22,146 on 2/1/2026; 13,076 on 2/1/2027 (35,319 vested on 2/1/2025) |
| Ownership Guidelines | None required for executives or directors |
| Hedging/Pledging Policy | No current prohibition on hedging or pledging; pre‑clearance required for insiders |
| CEO Post‑Vesting Hold | CEO must hold shares at least 12 months post‑vest, per plan |
Notes: RSUs accelerate upon change in control under the plan; the 2017 Plan allows acceleration of vesting and exercise privileges if change in control and a termination without cause occurs following the change in control .
Employment Terms
| Topic | Terms |
|---|---|
| Employment Agreement | None for CEO (Company generally avoids employment agreements; exception for Dury) . |
| Change‑in‑Control (CIC) Agreement | None for CEO; CIC agreements cover certain other executives at 2x salary + 2x target cash incentive on double‑trigger; 12‑month non‑compete and non‑solicit; 280G cutback; release required . |
| Potential CIC Payments (12/31/2024, illustrative) | CEO: $0 cash; $2,572,630 equity acceleration value; others vary per table . |
| Clawback | Dodd‑Frank/Nasdaq‑compliant clawback for excess incentive compensation after restatement . |
| Perquisites | Country club dues for CEO; $18,448 in 2024 (part of $32,798 “All Other”) . |
| Retirement/ESOP | 401(k) contributions and ESOP allocations available to CEO (ESOP contribution equal to 2% of eligible wages for 2024) . |
Performance & Track Record
| Year | CEO “Compensation Actually Paid” ($) | Company TSR (value of $100) | Peer TSR (Nasdaq Bank Index) | Net Income ($) | ROAE (%) |
|---|---|---|---|---|---|
| 2020 | 1,842,387 | 143 | 87 | 180,533,000 | 25.09 |
| 2021 | 2,159,020 | 246 | 120 | 227,104,000 | 22.07 |
| 2022 | 2,317,600 | 192 | 99 | 219,721,000 | 17.21 |
| 2023 | 4,982,645 | 340 | 109 | 279,234,000 | 17.63 |
| 2024 | 3,603,163 | 294 | 147 | 320,386,000 | 16.86 |
Say‑on‑Pay: Over 70% approval at the 2024 annual meeting; annual frequency supported by shareholders in 2023 .
Compensation Structure Analysis
- Cash vs equity mix: CEO target pay structured one‑third salary, one‑third cash incentive, one‑third equity incentive ($950k/$950k/$950k in 2024), indicating high at‑risk pay tied to Company performance .
- Metric rigor: Equal weighting on Revenue, EPS, and ROAE; payout band 75–125% with bank “well capitalized” condition; actual payout at 103% reflects near‑target performance discipline .
- Instrument choice: Use of RSUs only; no options, no dividend equivalents pre‑vest; three‑year ratable vesting supports retention .
- Shareholder protections: Double‑trigger CIC severance for covered NEOs; no option repricing; no tax gross‑ups; adoption of Dodd‑Frank clawback .
- Share ownership policy gap: No ownership guidelines; hedging/pledging not prohibited—misaligned with many bank governance best practices (red flag) .
Related Party Transactions (Governance Risk Indicators)
- Family employment: Company employs CEO’s son‑in‑law (SVP – Originations, Merchants Capital) with 2024 total compensation of $1,561,707 (salary, production bonus, benefits) .
- Legal services: Dinsmore & Shohl LLP (director is a partner) received $4.0 million in 2024 fees tied largely to loan documentation/collections; $2.2 million paid by the Company; $1.8 million paid by third parties (e.g., borrowers) .
- Ordinary banking relationships with insiders conducted on market terms and approved per regulatory requirements .
Director Compensation (as it pertains to Petrie)
- Executive directors (including the CEO) receive no additional compensation for Board service; non‑executive director retainers were adjusted in 2024 based on market review .
Compensation Peer Group (for benchmarking context)
- The Compensation Committee engaged Aon in 2022 to refine a 26‑company peer group emphasizing multifamily exposure and comparable revenues; used peer data as one input rather than strict percentile targeting; the 2024 cycle used the same peer group (adjusted for mergers) without re‑engaging Aon .
Investment Implications
- Alignment and control: Petrie’s 27.4% beneficial ownership creates strong economic alignment but also confers substantial influence; combined CEO/Chair role heightens reliance on the Lead Independent Director framework for governance balance .
- Incentive quality: The pay program is anchored to Revenue, EPS, and ROAE with a disciplined payout band and a three‑year RSU vesting schedule; 2024 payout at 103% aligns with near‑target operating performance (limited aggression) .
- Retention/liquidity signals: Meaningful unvested RSUs (70,541 units) and defined vesting dates support retention; the company withholds shares for taxes at vest, which can create modest trading flow around vest dates (governed by insider trading pre‑clearance) .
- Governance red flags to monitor: Absence of stock ownership guidelines, and no hedging/pledging prohibition; related‑party ties (family employment; law firm) require continuous Audit Committee oversight; say‑on‑pay support was >70% but below typical high‑80s/90s bank medians, suggesting room for engagement .
- Change‑in‑control economics: CEO has no CIC severance agreement; equity acceleration value at year‑end 2024 was ~$2.57 million under plan terms; covered NEOs have double‑trigger 2x salary+bonus CIC protections—balanced but not excessive .