Michael Dunlap

About Michael Dunlap

Michael S. Dunlap (age 61) is Executive Chairman of Nelnet, Inc. and has served on the Board since 1996; he was Chairman from inception, Co‑CEO (1996–2007), CEO (2007–2013), and Executive Chairman since 2014, bringing 30+ years of banking, financial services, leadership, and strategic operations experience as a co‑founder focused on customer service, innovation, and excellence . As a controlling shareholder with 80.6% combined voting power, he can effectively elect and remove directors; the Board maintains a Lead Independent Director structure to mitigate governance concentration, and classifies him as non‑independent . Nelnet reported 2024 net income excluding derivative market value adjustments of $176.4 million ($4.81/share), and its “most important” compensation‑linked measures include this non‑GAAP net income and annual growth in per‑share book value (with dividends included); the pay‑versus‑performance framework also tracks TSR against the S&P 500 Financials peer group .

Past Roles

External Roles

Fixed Compensation

Performance Compensation

• Program design: Annual incentive awards under the Executive Officers Incentive Compensation Plan (shareholder‑approved) based on measures including net income/EPS, non‑GAAP net income excluding derivative market value adjustments, fee‑revenue growth/diversification, ROE/ROA, capital ratios, operating efficiency, segment EBITDA/profitability, customer satisfaction, employee engagement, regulatory compliance, and strategic transactions; award cap of 150% of base salary .
• 2024 assessment: No specific quantitative formulas or targets disclosed; Committee evaluated execution on DoE servicing platform consolidation and contract, Nelnet Business Services earnings strength, diversification, customer/employee metrics, and individual achievement, while noting negative impact from renewable energy and modest book value per share growth (6.4% with dividends) .
• Equity modality: Company uses restricted stock awards (no stock options) under a Restricted Stock Plan, with minimum vesting standards in compensation practices; shares issued for bonuses are fully vested and may include transfer restrictions in certain years .

Equity Ownership & Alignment

• Structure and vehicles: Beneficial ownership aggregates shares held directly, via spouse/family entities, Dunlap Holdings LLC (1.6 million Class B), Union Financial Services, Inc. (50% owned; holds 1,586,691 Class B), and numerous trusts advised by Whitetail Rock Capital Management, LLC (WRCM), a majority‑owned NNI subsidiary; Union Bank & Trust also acts as trustee/manager for trusts and accounts holding NNI stock .
• Hedging/pledging governance: Board and officers are prohibited from hedging/short sales; pledging/margin discouraged and limited to ≤25% of total shares with prior approval and demonstration of liquidity capacity; officers must use Rule 10b5‑1 plans for trades .
• Director ownership guideline: Directors encouraged to own shares equal to 50% of base annual retainer ($150,000) multiplied by years of service; as of Feb 28, 2025, all directors exceeded guideline thresholds .

Employment Terms

• Appointment/term: Executive officers elected annually by the Board; each holds office for one year or until successor is elected/qualified .
• Employment contracts: None; Company does not maintain employment contracts for Named Executive Officers (and applies a “no employment contracts” principle broadly) .
• Severance/change‑of‑control: No individual change‑in‑control or severance arrangements; restricted stock agreements generally accelerate vesting upon death, disability, or retirement after age 65 .
• Clawback: Incentive Compensation Clawback Policy applies to current/former Section 16 officers and designated executives; recovery triggered by restatements, misconduct, or restrictive covenant breaches; 2024 immaterial error corrections did not require recovery .
• Trading policy: Officers must transact only under Rule 10b5‑1 trading plans; Company maintains insider trading policy and repurchase procedures aligned with NYSE standards .
• Perquisites: Limited; Company co‑owns an aircraft (82.5%) with an entity owned by Michael Dunlap (17.5%) for travel efficiency; costs allocated pro‑rata and per‑use; personal use value measured at incremental cost .

Board Governance

• Roles/structure: Michael Dunlap serves as Executive Chairman; CEO role is separate (Jeffrey R. Noordhoek). Thomas E. Henning is Lead Independent Director to provide strong independent oversight, agenda development, and executive session leadership .
• Independence: Board majority independent; Michael Dunlap and Matthew Dunlap are classified as non‑independent employees; Michael’s beneficial ownership enables effective control over Board composition .
• Committees: Standing committees include Audit, People Development & Compensation, Compliance, Nominating & Corporate Governance, Risk & Finance, and Executive; Michael serves on the Executive Committee (Farrell, Michael Dunlap, Henning); he is not listed on Audit, Compensation, Compliance, Nominating/CG, or Risk/Finance .
• Meetings/attendance: Full Board met five times in 2024; all directors attended at least 75% of Board and committee meetings; all directors attended prior year’s annual meeting .
• Family relationships: Michael and Matthew Dunlap are father and son; no other family relationships among directors/executives .

Director Compensation (Michael Dunlap)

• Michael Dunlap does not receive any compensation for Board or committee service; Director program (retainer, committee fees, meeting fees, and stock election) applies to non‑employee directors only .

Related Party Transactions and Interlocks

• Aircraft joint ownership: Company owns 82.5% and an entity owned by Michael Dunlap (“MSD”) owns 17.5% of a corporate aircraft; maintenance agreement fees totaled $1.6 million to a third‑party service company in 2024; joint ownership agreement includes MSD’s right to require Company purchase at FMV or sale and distribution of proceeds .
• Union Bank/F&M affiliations: Michael is Co‑Chair of F&M and Director of Union Bank; Union Bank (controlled by F&M) is deemed beneficial owner of 10.5% of NNI stock via trust/managed accounts; extensive cross‑holdings exist among Dunlap/Muhleisen family trusts and WRCM‑advised vehicles .
• Hudl transactions and co‑ownership: Company, Michael Dunlap, and his children collectively hold ~25% of Hudl equity (primarily preferred with liquidation preferences); in Dec 2024, NNI purchased Hudl stock for $3.3 million; NNI paid Hudl ~$594,000 in 2024 for cafeteria/common area services in a building owned by TDP (25% owned by NNI) where Hudl is primary tenant and NNI is also a tenant; Union Bank participates (27%) in Hudl’s $150 million syndicated facility (U/L revolver and delayed draw term loan; UBT’s term share $9.1 million outstanding at year‑end; maturity May 9, 2028) .
• WRCM advisory to Butterfield trusts: WRCM (majority‑owned subsidiary) serves as investment adviser to trusts holding NNI stock; Union Bank (trustee) pays WRCM five basis points annually on aggregate NNI equity value; 2024 fees earned ~$115,000 .

Compensation Structure Analysis

• Pay‑for‑performance posture: Committee emphasizes performance‑based cash and equity with a focus on non‑GAAP net income and per‑share book value growth; minimum vesting standards on stock awards; prohibition on hedging/short sales; clawback policy in place .
• Mix and instruments: Company does not grant stock options; long‑term equity via Restricted Stock Plan (three‑ to ten‑year vesting); annual incentives are elective cash/stock mixes; stock issued for incentives typically fully vested but may have transfer restrictions in some years .
• Market benchmarking: Towers Watson engagement (2022) concluded executive compensation is conservative relative to general industry, financial services, and high‑tech perspectives; consultant independence affirmed .
• Shareholder feedback: Say‑on‑pay approval 99.7% at 2024 annual meeting; Committee made no significant changes given strong support .

Equity Ownership & Alignment — Detail Breakout

Note: Composition reflects SEC beneficial ownership aggregation across direct/indirect holdings, family entities, trusts, advisory relationships, and affiliate trustees; Class B carries 10 votes per share .

Employment & Contracts — Specific Provisions

• No employment contracts or individual change‑in‑control/severance arrangements; restricted stock awards accelerate on death/disability/retirement ≥65 .
• Clawback policy applies to incentive compensation for Section 16 officers; no recovery required from 2024 immaterial restatement corrections .
• Hedging/short sales prohibited; pledging/margin discouraged, limited to ≤25% with prior approval; officers must use Rule 10b5‑1 trading plans .
• Executive officer terms are annual per Bylaws; Board elects officers at annual meeting following shareholder meeting .

Investment Implications

• Alignment and control: Massive insider ownership and 80.6% voting control align long‑term orientation but create governance concentration and limited minority influence; non‑independence and father‑son board presence underscore independence risk mitigated partly by Lead Independent Director and majority‑independent committees .
• Pay structure: Executive Chairman compensation is primarily cash‑based (no 2024 equity grants disclosed), while company‑wide incentives emphasize non‑GAAP net income and book value growth with no options; clawback, hedging ban, and 10b5‑1 trading requirements reduce misalignment/insider‑selling signaling risk, but vesting acceleration at retirement/disability remains a consideration in succession scenarios .
• Related party exposure: Aircraft co‑ownership, affiliate banking/trust relationships, WRCM advisories, and Hudl ties introduce recurring related‑party dynamics; terms are negotiated and reviewed by Nominating & Corporate Governance, but investors should monitor pricing, fee flows, and incremental commitments, especially affiliate banking support obligations for Nelnet Bank .
• Performance linkage: 2024 non‑GAAP net income of $176.4m and modest 6.4% book value per share growth inform incentive outcomes; strong prior say‑on‑pay support indicates investor acceptance of framework; however, segment volatility (renewable energy) affected earnings and could influence future incentive calibration .