Mark Klein
About Mark Klein
Mark A. Klein, age 70, is Chairman, President & CEO of SB Financial Group, Inc. and The State Bank and Trust Company; he has served as SBFG director since 2010, President & CEO since 2010, and was appointed Chairman in 2015 . He holds a BS in Finance (Defiance College), MBA (Bowling Green State University), Graduate School of Banking (University of Wisconsin–Madison), and Harvard Business School Certificate of Management Excellence . Pay-versus-performance shows 2024 cumulative TSR at 135 (indexed to $100), with net income of $11.5 million; 2023 TSR 92; 2022 TSR 87 . His 2024 bonus outcomes reflected mixed operating execution: ROA and efficiency ratio below threshold, while the stock-price metric paid at 111% relative to BKX; overall non-equity payout was 17.84% of salary .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| SB Financial Group, Inc. | Chairman, President & CEO | Chairman since 2015; President & CEO since 2010 | Led board/management integration; strategic oversight and growth |
| The State Bank and Trust Company | President | Since 2006 | Bank-level leadership; credit/growth execution |
| Sky Bank (Toledo, OH) | SVP, Private Banking | 2004–Jan 2006 | Built private banking; client acquisition |
| Sky Bank (Toledo, OH) | VP & Team Leader | 2000–2004 | Team leadership; lending/business development |
| Sky Bank affiliate | EVP & Senior Lender | 1994–1999 | Senior credit leadership at $450mm affiliate |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| ProMedica Defiance Regional Hospital | Past Chair | Not disclosed | Community healthcare governance |
| Defiance City Schools Board of Education | Member; President four terms | 20 years | Local education leadership |
| State of Ohio Banking Commission | Member | Not disclosed | State banking policy input |
| The Defiance College | Board of Trustees | Not disclosed | Higher education governance |
| Federal Reserve Bank of Cleveland (CDIAC, 4th District) | Member | Not disclosed | Depository institutions advisory |
| Community Improvement Corporation (CIC) | Board member; VP | Not disclosed | Local economic development |
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary (USD) | $476,377 | $489,478 |
| “All Other Compensation” (USD) | $56,775 | $55,518 |
| Director Fees | Not paid to employee-directors | Not paid to employee-directors |
Breakdown of “All Other Compensation” (2024):
- 401(k)/HSA match: $14,700
- Auto allowance: $17,851
- Social dues/memberships: $12,460
- Tax preparation and CEO physicals included under “Other”
Performance Compensation
2024 Non-Equity Incentive (Cash)
| Metric | Weighting | Threshold | Target | Maximum | Actual | Payout (USD) |
|---|---|---|---|---|---|---|
| Return on Assets (%) | 20% | 0.86 | 0.92 | 1.00 | 0.84 | $0 |
| Diluted EPS (USD) | 10% | $1.65 | $1.79 | $1.90 | $1.72 | $10,718 |
| Efficiency Ratio (%) | 20% | 73.25 | 71.50 | 69.75 | 75.33 | $0 |
| Non-performing Asset Ratio (peer) | 10% | 70% | 75% | 85% | 48% | $0 |
| Charge-offs & Loss on Assets (peer) | 10% | 60% | 65% | 75% | 62% | $22,139 |
| Return on Tangible Common Equity (%) | 10% | 10 | 12.50 | 14 | 11.34 | $10,976 |
| Common Stock Price (vs BKX) | 20% | 75% | 100% | 125% | 111% | $41,159 |
| Total Cash Award | $84,992 |
Notes:
- 2024 non-equity payout equaled 17.84% of salary based on results; plan includes a net-income “circuit breaker” at $6.5 million and requires good standing employment for payout .
Long-Term Equity (Restricted Shares)
| Grant Year | Performance Year | Shares Granted | Vesting Schedule | Grant Date Fair Value (USD/share) |
|---|---|---|---|---|
| 2025 | 2024 | 1,840 | 25% annually over 4 years (ratable) | Reflected in 2026 proxy; 2024 RS fair value $23.43 |
| 2024 | 2023 | 3,436 | 25% annually over 4 years (ratable) | $15.71 |
Vesting dates for outstanding restricted shares are February 5, 2025/2026/2027/2028 . Company has not granted stock options in more than 15 years; no options were granted in 2024 or 2023, and repricing/backdating are prohibited .
Pay vs Performance (Context)
| Year | PEO Compensation Actually Paid (USD) | Cumulative TSR (Indexed $100) | Net Income (USD mm) |
|---|---|---|---|
| 2022 | $821,958 | 87 | $12.5 |
| 2023 | $566,257 | 92 | $12.1 |
| 2024 | $663,306 | 135 | $11.5 |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 114,705 common shares; 1.76% of shares outstanding |
| Stock ownership guideline | Minimum 10,000 shares within 5 years; all executives/directors in compliance |
| Unvested restricted shares (12/31/2024) | 4,547; 3,047; 1,547; 859; Total 10,000 (closing price $20.91 used for MV) |
| Anti-hedging | Prohibits hedging (margin purchases, puts/calls, short-term trading) |
| Pledging | No explicit pledging disclosure; Insider Trading Policy summary does not mention pledging |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment Agreement | Amended & Restated 1/22/2018; rolling 36-month term auto-extends annually unless 90-day notice; base salary initially $396,378 with Board discretion for increases (2024 base $489,478) |
| Severance (no CoC) | If terminated without Cause or resign with Good Reason: 24 months salary continuation + lump-sum COBRA equivalent of 24 months; release required |
| Non-compete | 2-year non-compete and non-solicit post-termination (except in connection with change of control provisions) |
| Change-of-Control Agreement | Rolling 36 months; double-trigger within 6 months before/24 months after CoC: lump sum 2.99× Annual Direct Salary + 36× monthly COBRA and group life/disability premiums + accrued obligations; release required |
| SERP | 25% of Annual Direct Salary paid monthly over 180 months upon retirement at age 65 (or early retirement formula); CoC accelerates funding with trustee; similar structure for CFO at 15% |
| Clawback | Formal policy adopted 2024 aligned to Exchange Act 10D/Nasdaq 5608; three-year lookback on restatements |
Potential Payments (as of 12/31/2024):
| Scenario | Lump Sum CoC (USD) | COBRA (USD) | Group Term Life (USD) | Value of Stock (USD) | SERP (USD) | BOLI (USD) | Total (USD) |
|---|---|---|---|---|---|---|---|
| Voluntary termination | — | $68,422 | — | $185,869 | $1,908,963 | — | $2,163,255 |
| Termination w/o cause under CoC | $1,463,539 | $102,633 | — | $185,869 | $1,908,963 | — | $3,661,005 |
| Death | — | — | $978,956 | $185,869 | — | $1,974,320 | $3,139,145 |
| Early retirement | — | — | — | $185,869 | $1,908,963 | — | $2,094,832 |
| Disability | — | — | — | $185,869 | $1,908,963 | — | $2,094,832 |
Split Dollar Agreement death benefit for Klein: up to $1,974,320 prior to separation of service; option to purchase policy at cash surrender value upon termination of agreement .
Board Governance
- Board roles: Klein is Chairman and CEO; not independent under Nasdaq Rule 5605(a)(2) .
- Structure: CEO/Chair dual role adopted in 2015; Lead Independent Director (Richard L. Hardgrove) provides independent leadership, oversees executive sessions and evaluations .
- Committees: Audit, Compensation, Governance & Nominating, Risk Management, Loan Review; Klein is not listed as a member on standing committees; meeting attendance ≥75% for directors in 2024; Board met 15 times (12 regular) .
- Independence: Majority independent; independence affirmed for all directors except Klein .
Director Compensation (Context)
- Non-employee director cash retainer: $36,570 in 2024; lead independent director additional $20,000; chair fees $3,500; audit financial expert additional $6,000 .
- Equity grants to directors: 1,528 restricted shares on 2/5/2024 at $15.71; vested 8/5/2024 at $16.24 .
- Employee-directors (including Klein) do not receive director compensation .
Compensation Peer Group and Say-on-Pay
- Peer group: 19 publicly traded bank holding companies with assets ~$1.0–$3.5B, Midwest footprint; examples include Civista Bancshares, Macatawa, ACNB, Southern Missouri Bancorp, F&M Bancorp, LCNB, PSB Holdings, CSB Bancorp, etc. .
- Targeting: Median when expectations are met; upper quartile for exceed; BCG engaged for independent studies (2022; next planned 2025) .
- Say-on-pay: 95.09% approval in 2024; annual frequency recommendation “Every One Year” .
Risk Indicators and Related Party
- Clawback policy implemented in 2024 for restatements aligning with SEC/Nasdaq .
- Insider Trading Policy with pre-clearance and window trading; anti-hedging restrictions; policy appended to 2024 Form 10-K .
- Related-party banking transactions conducted on market terms; Regulation O-compliant; no unfavorable features disclosed .
Equity Ownership & Alignment Details
| Category | Shares | Market Value Basis |
|---|---|---|
| Beneficially owned | 114,705 (incl. 945 ESOP) | — |
| Unvested restricted shares | 4,547; 3,047; 1,547; 859; Total 10,000 | $20.91 close used to compute MV per table |
| Ownership guideline | 10,000 minimum; compliant | — |
Investment Implications
- Pay-for-performance alignment: Cash incentives tied to ROA, EPS, ROATCE, efficiency and stock relative performance; 2024 results drove lower ROA/efficiency payouts but paid on stock/BKX and credit metrics, indicating discipline and alignment with shareholder returns .
- Retention and change-of-control economics: Robust SERP (25% of Annual Direct Salary over 15 years) and 2.99× CoC multiple plus benefits support retention and program continuity; however, generous CoC could be dilutive in an acquisition scenario; non-compete provides post-termination protection .
- Equity ownership and selling pressure: Significant unvested RS inventory with scheduled vest dates through 2028 may create periodic liquidity events; absence of options reduces near-term exercise-driven selling; anti-hedging and trading windows mitigate opportunistic timing .
- Governance considerations: Dual CEO/Chair role is counterbalanced by an engaged Lead Independent Director and majority-independent board; Klein not on standing committees reduces concentrated control risk .
- Say-on-pay support and peer benchmarking: Strong shareholder support and periodic independent benchmarking suggest moderated pay inflation risk; committee uses external consultant and targets median/upper quartile based on performance .
- Execution risk: 2024 efficiency and ROA shortfalls highlight continued focus on operating leverage; incentive design puts weight on core profitability metrics and TSR, creating direct links to investor outcomes .
Overall, Klein’s compensation framework is structurally aligned with shareholder outcomes via ROA/EPS/ROATCE and TSR, with meaningful long-term equity and SERP-based retention. Watch vesting calendars for potential Form 4 activity, and monitor operating efficiency/credit metrics as key drivers of annual cash payouts and sentiment.