HBNC.NASDAQHorizon Bancorp INC /IN/
DEF: Horizon Bancorp Details 2026 Annual Meeting, Executive Pay
Sentiment:
Definitive Proxy Statement
Horizon Bancorp's definitive proxy statement outlines proposals for its 2026 Annual Meeting, including director elections, executive compensation, and auditor ratification, while disclosing a significant net loss for 2025.
Worse than expectedNet Income for 2025 was -$150.48 million, a significant decline from $35.43 million in 2024 and $27.98 million in 2023.Return on Average Assets for 2025 was -2.06%, a substantial decrease from 0.45% in 2024 and 0.36% in 2023.
Summary
- The 2026 Annual Meeting of Shareholders will be held virtually on Thursday, May 7, 2026, at 10:00 a.m. Central Daylight Time.
- Shareholders will vote on the election of four directors for three-year terms expiring in 2029, an advisory vote on executive compensation, and the ratification of Forvis Mazars, LLP as the independent registered public accounting firm for 2026.
- Horizon Bancorp reported a net loss of $150.48 million and a Return on Average Assets of -2.06% for the fiscal year ended December 31, 2025.
- The company's CEO, Thomas M. Prame, received total compensation of $1,965,115 in 2025, with a pay ratio of 38.7 to 1 compared to the median employee's $50,839.
- The Board of Directors reduced its size by one to 12 members effective January 20, 2026, and will further reduce it to 11 members at the close of the 2026 annual meeting, following the resignation of Julie S. Freigang and the announced retirement of James B. Dworkin.
- Executive compensation for 2025 included base salary increases for Thomas M. Prame (14.17% to $685,000), John R. Stewart (3.00% to $453,200), Kathie A. DeRuiter (3.50% to $335,837), Lynn M. Kerber (9.50% to $355,306), and Mark E. Secor (3.00% to $309,000 after role change).
- Audit fees paid to Forvis Mazars, LLP increased to $1,295,430 in 2025 from $1,016,305 in 2024, while tax fees decreased significantly to $16,650 in 2025 from $110,287 in 2024.
Sentiment
Score: 3
Explanation: StockSavvy.ai views this as a low score due to the significantly negative financial performance reported for 2025, despite strong corporate governance practices and shareholder support for compensation policies. The substantial net loss and negative return on assets are major concerns.
Positives
- The company maintains robust corporate governance practices, including a Director Resignation Policy, strong insider trading, anti-hedging, and anti-pledging policies.
- The Board of Directors has a diverse skill set, including expertise in financial services, manufacturing, academia, accounting, law, finance, retail, human capital, and cybersecurity.
- 11 out of 12 current directors are independent, and key committees (Audit, Compensation, Corporate Governance and Nominating) consist entirely of independent directors.
- Shareholders demonstrated strong support for executive compensation in 2025, with 95.05% approval, and favored annual say-on-pay votes with 92% approval in 2024.
- The Compensation Committee engages an independent compensation consultant (Pearl Meyer & Partners, LLC) to ensure competitive and appropriate executive and director compensation.
Negatives
- Horizon Bancorp reported a significant net loss of $150.48 million for the fiscal year ended December 31, 2025, a substantial decline from net incomes of $35.43 million in 2024 and $27.98 million in 2023.
- The Return on Average Assets for 2025 was -2.06%, a sharp decrease from 0.45% in 2024 and 0.36% in 2023.
- The Board of Directors' size was reduced by one member effective January 20, 2026, and will be further reduced by one at the close of the 2026 annual meeting, indicating a contraction in board size.
Risks
- Cybersecurity threats are severe, and while past incidents have not materially affected the company to date, they remain a significant concern, requiring continuous monitoring and defensive measures.
- The financial services business is complex and undergoing changes that generate uncertainties about future events, impacting the company's ability to achieve long-term objectives.
- Compensation policies and practices could potentially create risks if they incentivize undue risk-taking, although the company has measures in place to mitigate this.
Future Outlook
The Board anticipates a similar review of high-level risks at least quarterly in 2026. The next advisory vote on the frequency of say-on-pay votes is scheduled for 2030. The company will continue to hold say-on-pay votes on an annual basis.
Management Comments
- We believe holding a virtual meeting expands access, improved communication, and cost savings.
- We are committed to ensuring that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting.
- The Board believes that the high percentage of shares voting in support of the say-on-pay proposal indicated that shareholders approve the work of Horizons Compensation Committee and that shareholders consider Horizons executive compensation programs to be aligned with shareholders interests.
Industry Context
StockSavvy.ai notes that the banking industry is undergoing complex changes, generating uncertainties about future events. Horizon Bancorp's emphasis on ESG, robust corporate governance, and cybersecurity risk management aligns with broader industry trends focusing on sustainability, transparency, and digital security. The use of a compensation consultant and peer group benchmarking for executive pay is a standard practice in the financial sector to ensure competitive and performance-aligned compensation.
Comparison to Industry Standards
- Horizon's executive compensation peer group for the 2024 Pearl Meyer report included companies such as Byline Bancorp, German American Bancorp, Inc., Nicolet Bankshares, Inc., Community Trust Bancorp, and others, indicating a focus on regional and mid-sized banks for benchmarking.
- Performance shares are evaluated based on a comparison of Horizon's average performance for core return on average assets relative to publicly traded peer banks (selected by the Compensation Committee) and total shareholder return compared to the Nasdaq Bank Index.
- The CEO pay ratio of 38.7 to 1 is within the range observed in the financial industry, though specific comparisons would require detailed peer data not provided in this filing.
- The significant net loss and negative Return on Average Assets for 2025 (-$150.48 million and -2.06% respectively) are substantially below typical industry profitability standards and the positive performance of the SNL Micro Cap Bank Index (Peer Group TSR of 160.37 for 2025, compared to Company TSR of 131.87).
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Executive Officer | Craig M. Dwight | Thomas M. Prame | 2023-06-01 | Mr. Dwight's retirement. |
| Executive Vice President and Chief Financial Officer | Mark E. Secor | John R. Stewart | 2024-05-20 | Mr. Stewart's appointment; Mr. Secor transitioned to Chief Administration Officer. |
| Director | Larry Magnesen | 2025-10-10 | Appointment to the Board. | |
| Director | Michelle A. Samuels | 2025-05-20 | Appointment to the Board. | |
| Director | Brian C. Walker | 2025-05-20 | Appointment to the Board. | |
| Director | Julie S. Freigang | 2026-01-20 | Resignation from the Board. | |
| Director | James B. Dworkin | 2026-05-07 | Retirement from the Board at the end of his current term. | |
| Chairman of the Board | Eric P. Blackhurst | 2025-05-01 | Election by the Board of Directors. |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Leadership Structure | Independent director Eric P. Blackhurst was elected Chairman of the Board, effective May 1, 2025, terminating the independent Lead Director position. | 2025-05-01 | Strengthens independent oversight by having an independent Chairman, aligning with best practices for corporate governance. |
| Director Resignation Policy | Adopted a policy requiring any director nominee receiving a greater number of withhold votes than 'for' votes in an uncontested election to promptly tender their resignation, subject to Board acceptance. | 2023-01-01 | Enhances accountability of directors to shareholders in uncontested elections. |
| Board Size Reduction | Board positions reduced by one to 12 members effective January 20, 2026, and will be further reduced by one to 11 members at the close of the 2026 annual meeting. | 2026-01-20 | Potentially streamlines decision-making and reduces governance costs, but could also reduce diversity of perspectives. |
| Compensation Recovery Policy (Clawback Policy) | Adopted a policy incorporating SEC and Nasdaq requirements for recovery of incentive-based compensation in the event of an accounting restatement based on erroneous data. | 2025-10-17 | Increases accountability for executive officers and protects shareholder interests against financial misstatements. |
| Nonqualified Deferred Compensation Plan | Adopted the Horizon Bancorp Nonqualified Deferred Compensation Plan, amending and restating the 2005 SERP, effective January 1, 2025. Horizon common shares are no longer an investment alternative under the new plan or the 2005 SERP. | 2025-01-01 | Modifies executive retirement benefits and investment options, potentially reducing direct exposure to company stock within deferred compensation plans. |
Related Party Transactions
- Directors and executive officers of Horizon and their associates were customers of, and had transactions with, Horizon Bank in the ordinary course of business during 2025.
- These transactions were made on substantially the same terms, including interest rates, collateral, and repayment terms, as those prevailing at the time for comparable transactions with unrelated third parties.
- Management believes these transactions did not involve more than normal risk of collectability or present other unfavorable features.
Stakeholder Impact
- Shareholders: Directly impacted by the proposals to be voted on at the Annual Meeting, including director elections and executive compensation. The significant net loss in 2025 will likely concern shareholders.
- Employees: Compensation policies and benefit plans, including the Thrift Plan and Deferred Compensation Plan, directly affect employees. The CEO pay ratio provides transparency on executive-to-employee compensation disparity.
- Customers: The company's community bank approach and ESG framework aim to positively impact communities and customers.
- Management: Executive compensation structure, performance reviews, and succession planning directly affect management's incentives and career paths.
- Regulatory Authorities: Compliance with SEC rules, NASDAQ listing standards, and federal banking regulations is a key focus, impacting the company's relationship with regulators.
Next Steps
- Shareholders to attend and vote at the virtual Annual Meeting on May 7, 2026.
- Election of four directors to serve three-year terms expiring in 2029.
- Advisory vote on executive compensation.
- Ratification of Forvis Mazars, LLP as the independent registered public accounting firm for 2026.
- Board anticipates quarterly reviews of high-level risks in 2026.
- Next advisory vote on the frequency of say-on-pay votes in 2030.
Key Dates
| Date | Description |
|---|---|
| 1873 | Horizon Bancorp began operating as a community bank. |
| 2003-01-01 | Executive Officer Bonus Plan adopted by the Compensation Committee. |
| 2004-12-31 | Horizon Bancorp Supplemental Executive Retirement Plan (Frozen SERP) was frozen. |
| 2005-01-01 | Horizon Bancorp 2005 Supplemental Executive Retirement Plan (2005 SERP) became effective. |
| 2009-12-01 | Board of Directors approved a second SERP investment alternative in Horizon common shares. |
| 2012-04-01 | Board adopted Ownership Guidelines for independent directors. |
| 2013-02-01 | 2013 Omnibus Equity Incentive Plan became effective. |
| 2014 | Horizon began awarding performance-based shares as its preferred form of long-term equity compensation. |
| 2017-12-01 | Board of Directors adopted stand-alone anti-hedging and anti-pledging policies. |
| 2020-01-01 | Effective date of amended Change in Control Agreement with Ms. DeRuiter. |
| 2020-10-01 | Effective date of Change in Control Agreement with Ms. Kerber. |
| 2021-05-06 | Horizon Bancorp, Inc. 2021 Omnibus Equity Incentive Plan became effective. |
| 2021-06-30 | Inaugural sustainability report published. |
| 2022-12-01 | Amendment to Change in Control Agreements with Mses. DeRuiter and Kerber became effective. |
| 2022-12-20 | Board adopted a Director Resignation Policy, effective January 1, 2023. |
| 2022-12-01 | Cyber Security Committee of the Board established. |
| 2023-01-01 | Director Resignation Policy became effective. |
| 2023-03-21 | Insider Trading Policy amended. |
| 2023-05-18 | Amended and Restated Employment Agreement and Change in Control Agreement with Mr. Prame entered into. |
| 2023-06-01 | Thomas M. Prame's appointment as Chief Executive Officer became effective. |
| 2024 | Annual Meeting where shareholders voted on the frequency of say-on-pay votes. |
| 2024-01-01 | Bylaws amended to add additional requirements for shareholder director nominations. |
| 2024-05-10 | Employment Agreement and Change in Control Agreement with Mr. Stewart entered into. |
| 2024-05-20 | John R. Stewart's appointment as Executive Vice President and Chief Financial Officer became effective; Mark E. Secor's employment agreement expired and he assumed new role as Chief Administration Officer. |
| 2024-12-17 | Horizon adopted the Horizon Bancorp Nonqualified Deferred Compensation Plan (Deferred Compensation Plan). |
| 2024-12-01 | Board of Directors amended and restated the SERP to remove all investments in Horizon common shares. |
| 2025-01-01 | Deferred Compensation Plan became effective. |
| 2025-01-22 | Form 3 for Mr. Magnesen filed two days late due to government shutdown. |
| 2025-02-25 | Eric P. Blackhurst elected independent Chairman of the Board, effective at the conclusion of the 2025 annual meeting. |
| 2025-05-01 | Craig M. Dwight retired from the Board; Eric P. Blackhurst assumed office of Chairman, terminating the Lead Director position. |
| 2025-05-20 | Michelle A. Samuels and Brian C. Walker joined the Board. |
| 2025-08-12 | Horizon reviewed its compensation policies and practices for all employees. |
| 2025-10-10 | Larry Magnesen joined the Board. |
| 2025-10-17 | Horizon adopted a compensation recovery policy (Clawback Policy). |
| 2025-12-31 | Fiscal year end for 2025. |
| 2026-01-20 | James B. Dworkin submitted notice of retirement from the Board, effective May 7, 2026; Julie S. Freigang resigned from the Board, effective January 20, 2026; Board positions reduced by one to 12 members. |
| 2026-03-11 | Corporate Social Responsibility report for 2025 published. |
| 2026-03-13 | Record Date for shareholders entitled to vote at the Annual Meeting. |
| 2026-03-18 | Notice of Internet Availability of Proxy Materials mailed to shareholders. |
| 2026-03-20 | Date of this Proxy Statement. |
| 2026-04-17 | Deadline for street name holders to register in advance to attend the virtual meeting (9:00 a.m. CDT). |
| 2026-05-07 | Date of the 2026 Annual Meeting of Shareholders. |
| 2026-11-20 | Deadline for shareholder proposals for the 2027 Annual Meeting to be received by Horizon. |
| 2029 | Expiration of terms for directors elected at the 2026 Annual Meeting. |
| 2030 | Next advisory vote on the frequency of say-on-pay votes. |
Recommendation
strong sellThe filing discloses a substantial net loss of $150.48 million and a negative Return on Average Assets of -2.06% for 2025, a dramatic reversal from prior years' profitability. While the document is a proxy statement focusing on governance and compensation, these financial results are a critical indicator of severe operational or market challenges. A seasoned investor would view such a sharp decline in profitability as a major red flag, warranting a 'strong sell' recommendation until a clear path to sustained profitability is demonstrated and underlying issues are resolved.
Keywords
Proxy Statement, Annual Meeting, Executive Compensation, Corporate Governance, Director Election, Auditor Ratification, Financial Performance, Net Income, Return on Average Assets, Cybersecurity, Risk Management, Shareholder Vote, Banking Industry
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