Scott Setlock
About Scott Setlock
Scott P. Setlock, age 43, is Executive Vice President, Chief Operating Officer and Secretary of Mercantile Bank Corporation and Mercantile Bank, a role he assumed January 1, 2024, after serving as Executive Vice President, Chief Operating Officer of the Bank since January 1, 2022 . He holds a BBA and an MBA in Finance and Economics from Grand Valley State University, and graduated from the ABA Stonier Graduate School of Banking and associated Wharton leadership programs . Over nearly 20 years at Mercantile, he has held roles across Commercial Credit, Commercial Credit Management, Commercial Lending and Mortgage Lending Management . The Company’s executive compensation framework explicitly ties long-term equity awards to TSR, ROE and EPS change performance versus a peer index, indicating pay-for-performance alignment for Named Executive Officers (NEOs) including Setlock .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Mercantile Bank Corporation | EVP, Chief Operating Officer & Secretary | 2024–Present | Leadership across corporate operations; career experience spans Commercial Credit, Lending, Mortgage management |
| Mercantile Bank | EVP, Chief Operating Officer | 2022–Present | Operational leadership; prior roles in Commercial Credit, Lending, Mortgage management |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Junior Achievement of the Michigan Great Lakes | Board & Executive Committee member; frequent volunteer | Not disclosed | Community engagement and youth financial education |
| Grand Valley State University (Seidman College of Business) | Adjunct Professor of Bank Management | Not disclosed | Academic contribution in banking management |
| Seidman Alumni Board; Seidman Finance Advisory Committee | Board/Committee member | Not disclosed | Alumni and advisory service |
| In the Image | Board Chair | Not disclosed | Non-profit leadership |
| Heart of West Michigan United Way | Campaign Cabinet, Finance Division | Not disclosed | Community fundraising oversight |
Fixed Compensation
| Metric | 2024 | 2025 |
|---|---|---|
| Base Salary ($) | $330,000 | $353,100 (effective March 1, pro-rated for Jan–Feb) |
| Annual Bonus Paid ($) | $132,825 | Not disclosed |
| Bonus as % of Salary | 40.2% | Not disclosed |
- Clawback provisions apply to bonus plans and equity if payouts are based on materially inaccurate financial statements or performance metrics; the company maintains a clawback policy and anti-hedging/anti-pledging rules under its Insider Trading Policy .
Performance Compensation
| Program | Metric | Weighting | Target Definition | Threshold | Maximum | Actual/Payout | Vesting |
|---|---|---|---|---|---|---|---|
| Performance-Based Restricted Stock (2025–2027) | Total Shareholder Return vs designated index | 33.33% | 50th percentile | 25th percentile | 75th percentile | Determined after performance period; Committee may adjust for extraordinary items | Vests February 15, 2028 |
| Performance-Based Restricted Stock (2025–2027) | Return on Average Equity vs designated index | 33.33% | 50th percentile | 25th percentile | 75th percentile | Determined after performance period; Committee may adjust for extraordinary items | Vests February 15, 2028 |
| Performance-Based Restricted Stock (2025–2027) | Diluted EPS Change vs designated index | 33.33% | 50th percentile | 25th percentile | 75th percentile | Determined after performance period; Committee may adjust for extraordinary items | Vests February 15, 2028 |
- Structure notes: In 2025, target shares for NEO PSUs were set as a percentage of base salary; for Setlock the target was 45% of base salary . Restricted stock awards granted under the Stock Incentive Plan of 2023 generally fully vest after three years; performance-based restricted stock for executive officers is subject to pre-determined goals . No grants of plan-based awards were made in 2024 due to a process change .
Equity Ownership & Alignment
| Item | Details |
|---|---|
| Total Beneficial Ownership (shares) | 29,594 |
| Ownership % of Shares Outstanding | <1% |
| Direct/Joint Ownership | 10,105 shares jointly with spouse |
| Restricted Stock (unvested) | 10,819 shares |
| 401(k) Plan Holdings | 8,670 shares |
| Stock Ownership Guidelines | NEOs must own stock equal to 2x base salary; CEO 5x; updated October 10, 2024 |
| Time to Compliance | Five years from the later of January 1, 2025 or date subject to guidelines |
| Hedging/Pledging Policy | Hedging, short sales, and options trading prohibited; pledging requires prior Governance & Nominating Committee approval |
- Outstanding Equity Awards at FY2024 year-end (Setlock): Unearned performance/time-based shares 4,000 ($177,960) and 3,690 ($164,168), as disclosed in the equity awards table . Under change-in-control scenarios where awards are not assumed/substituted, time-based restricted stock fully vests; Setlock had 7,690 time-based restricted shares subject to vesting .
Employment Terms
| Scenario | Cash/Benefits | Equity Treatment | Total (if disclosed) |
|---|---|---|---|
| Termination Without Cause or for Good Reason (during employment period) | Salary continuation through end of 2027 ($1,059,300), insurance premiums for 18 months ($27,875), outplacement ($15,000) | Value of restricted shares that would vest due to termination ($178,664) | $1,280,839 |
| Death | Supplemental life insurance ($300,000), group term life ($600,000), Company death benefit ($100,000 if applicable), plus restricted shares vest value ($342,128) | Accelerated vesting of restricted shares ($342,128) | $1,442,128 |
| Disability | Salary-related disability benefit per amended agreement; long-term disability insurance up to age 65 ($204,000 annually), plus insurance premiums until age 65 ($408,826), and restricted shares vest value ($342,128) | Accelerated vesting of restricted shares ($342,128) | $1,944,954 |
| After Employment Period and Before Age 65 (termination without cause or due to salary reduction) | Lump sum severance $350,000; insurance premiums for 18 months ($27,875); outplacement $15,000 | Restricted shares vest value excluded if termination due to salary reduction; otherwise $178,664 | $571,539 |
| Retirement (age 65 assumption in calculation) | N/A | Restricted stock vesting value $342,128 | $342,128 |
| Change in Control (CIC) | Lump sum cash $350,000 (upon CIC with termination without Cause or Good Reason) | Accelerated vesting of restricted stock $342,128 (assuming awards not assumed/substituted) | Not aggregated in proxy; components shown |
- Agreement structure: Setlock’s employment agreement effective January 1, 2024 aligns with other executive officers; all employment agreements were amended and restated effective January 1, 2025 to standardize terms (including disability benefit paid over 36 months, offset by long-term disability insurance) . Employment agreements include confidentiality and non-compete arrangements; specific durations/scopes not disclosed . Under the Stock Incentive Plans, if awards are not assumed/substituted in a CIC, restricted stock becomes 100% vested or is cashed out per merger consideration; if assumed, vesting accelerates only with qualifying terminations within one year post-CIC .
Investment Implications
- Alignment and incentives: Setlock’s pay mix includes a meaningful performance-based equity component for 2025–2027 tied to TSR, ROE, and EPS change against a bank index, with target PSU sizing at 45% of base salary—supporting pay-for-performance alignment over a multi-year horizon . Restricted stock generally vests over three years, promoting retention and long-term focus .
- Retention and severance economics: Termination protections (e.g., $1.28M for without-cause/Good Reason in-period; CIC cash $350k plus accelerated vesting) and disability provisions (including insurance and vesting) reduce near-term departure risk but create defined payout obligations if separation occurs, particularly around change-in-control scenarios .
- Ownership and potential selling pressure: Beneficial ownership of 29,594 shares (<1% of outstanding), including 10,819 restricted and 8,670 in the 401(k), indicates skin-in-the-game yet not concentration risk; vesting cycles and any February 15 cliff dates for performance cycles may introduce periodic liquidity events, though hedging is prohibited and pledging requires Board committee approval .
- Governance safeguards: Active clawback policies for bonuses and equity, plus anti-hedging/anti-pledging rules, mitigate misalignment and reputational risk tied to compensation outcomes; no defined benefit pension reduces legacy liability exposure .