DEF: Midland States Bancorp Sets 2026 Annual Meeting Agenda

Midland States Bancorp, Inc. announces its 2026 Annual Meeting of Shareholders to address director elections, executive compensation, and auditor ratification, alongside detailed corporate governance and compensation disclosures.

Summary

• The Annual Meeting of Shareholders will be held on May 4, 2026, to elect four Class I directors, approve executive officer compensation on an advisory basis, and ratify Crowe LLP as the independent registered public accounting firm for 2026.
• The record date for shareholders entitled to vote at the meeting is March 5, 2026.
• The board of directors unanimously recommends voting FOR all proposals.
• Executive compensation for 2025 included base salaries, annual cash incentive bonuses, and long-term equity incentive awards.
• For 2025, annual cash incentive bonuses were paid out at 40% of target, a discretionary reduction from a calculated 56% based on overall performance and stock price results.
• Adjusted Earnings Per Share (EPS) for 2025 was $1.46, significantly below the target goal of $2.85, resulting in a 0% payout for this metric.
• The company was required to prepare an accounting restatement for financial statements as of and for the years ended December 31, 2023, and 2022, and for interim quarterly periods in 2024 and 2023, due to errors related to third-party loan origination and servicing programs.
• The Audit Committee reviewed the restatement and determined that no erroneously awarded compensation, as defined by the clawback policy, was identified, thus no recovery was required.
• CEO Jeffrey G. Ludwig's total compensation for 2025 was $1,532,241, and the CEO pay ratio was 22.9:1 compared to the median employee's annual total compensation of $66,924.
• Jeffrey S. Mefford, Executive Vice President and President of the Bank, plans to retire effective June 30, 2026.
• Jeremy A. Jameson will be promoted to Executive Vice President Chief Banking Officer, effective March 31, 2026, in connection with Mr. Mefford's retirement.
• Eric T. Lemke, Senior Vice President and Chief Financial Officer, was terminated on March 5, 2026, and Claire A. Stack was appointed Vice President Chief Accounting Officer and interim Chief Financial Officer on the same date.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative filing. The accounting restatement and significant underperformance in TSR and Adjusted EPS, leading to discretionary reduction in executive bonuses, indicate notable operational and financial challenges. While governance practices are strong, the financial results are concerning.

Positives

• Strong corporate governance practices are in place, including separate Chairman and CEO roles since 1988 and a majority of independent directors.
• The board demonstrates a commitment to diversity, with female, Hispanic, or African American representation since before the company became publicly traded in 2016.
• A clawback policy compliant with SEC and Nasdaq rules has been adopted and applied.
• Stock ownership guidelines for executives and directors are in place to align interests with shareholders.
• An anti-hedging policy prohibits directors, executive officers, and employees from entering into hedging transactions with company securities.
• Corporate responsibility initiatives include solar power in 22 locations, LEED Silver Certification for the corporate headquarters, and significant community impact investments and financial literacy seminars.
• All directors attended at least 75% of board and committee meetings in 2025.
• The non-binding advisory vote on executive compensation at the 2025 annual meeting received strong shareholder support (approximately 87% approval).

Negatives

• The company was required to prepare an accounting restatement for financial statements as of and for the years ended December 31, 2023, and 2022, and for interim quarterly periods in 2024 and 2023, due to errors related to third-party loan origination and servicing programs.
• 2025 annual cash incentive bonuses for named executive officers were reduced by discretion from a calculated 56% of target to 40% of target, explicitly due to 'overall performance and stock price results'.
• Adjusted Earnings Per Share (EPS) for 2025 was $1.46, significantly below the target goal of $2.85, resulting in a 0% payout for this 35% weighted metric.
• Midland's 2025 cumulative Total Shareholder Return (TSR) of -$124.28 (based on an initial $100 investment on December 31, 2020) indicates significant underperformance.
• Eric T. Lemke, Senior Vice President and Chief Financial Officer, was terminated on March 5, 2026.

Risks

• General economic risks.
• Credit risks.
• Regulatory risks.
• Audit risks.
• Reputational risks.
• Impact of competition.
• Challenges in attracting and retaining national-level executive talent to Effingham, Illinois, a smaller metropolitan area.
• Risks associated with incentive compensation plans, programs, and arrangements, as per joint agency Guidance on Sound Incentive Compensation Policies.

Future Outlook

The company anticipates holding its 2027 annual meeting of shareholders on May 3, 2027. The full board intends to hold eight regularly scheduled meetings in 2026, with special meetings as necessary. The Compensation Committee does not expect to elect a different discount percentage for the Employee Stock Purchase Plan (ESPP) in the foreseeable future. The company will continue to review, evaluate, and modify its compensation program to maintain a competitive total compensation package.

Management Comments

• "YOUR VOTE IS IMPORTANT. PLEASE EXERCISE YOUR SHAREHOLDER RIGHT TO VOTE, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING."
• "The board of directors unanimously recommends that you vote FOR each of the nominees for director."
• "The board of directors unanimously recommends that you vote to approve the overall compensation of our named executive officers by voting FOR this proposal."
• "The board of directors unanimously recommends that you vote FOR the ratification of the appointment of Crowe LLP to serve as our independent registered public accounting firm for the year ending December 31, 2026."
• "Our board believes that having separate positions and having a non-executive director serve as Chairman is the appropriate leadership structure for the Company at this time and demonstrates our commitment to good corporate governance."
• "The Compensation Committee believes that performance-based compensation can and should incentivize our NEOs to drive the Companys growth, balanced with the assumption of reasonable risk."
• "We strive to be among the top performing community banks in the nation."
• "One of our challenges has been persuading top-level talent, often from major metropolitan areas, to relocate to and remain in Effingham, which is a town of slightly more than 12,000 people situated approximately two hours from St. Louis, Missouri and Indianapolis, Indiana."

Industry Context

StockSavvy.ai notes that the banking sector, particularly community banks, faces ongoing challenges in attracting and retaining top-tier executive talent, especially in non-major metropolitan areas like Effingham, Illinois. The company's explicit mention of this challenge highlights a common industry-wide issue where smaller markets struggle to compete with the allure and compensation packages of larger financial hubs. The emphasis on robust corporate governance and performance-based compensation aligns with broader industry trends towards increased accountability and shareholder value creation, particularly in the wake of regulatory scrutiny and economic volatility. The accounting restatement, while resolved without clawbacks, underscores the heightened regulatory environment and the importance of meticulous financial reporting in the financial services industry.

Comparison to Industry Standards

• Midland's 2025 cumulative Total Shareholder Return (TSR) of -$124.28 (based on an initial $100 investment on December 31, 2020) significantly underperformed the S&P Small Cap 600 Banks Index, which had a cumulative TSR of $145.06 for the same period, indicating substantial underperformance relative to its peer group index.
• The company's CEO pay ratio of 22.9:1 for 2025 is within the typical range for financial institutions, though specific comparisons would require detailed peer data.
• The use of performance metrics like Non-Performing Assets/Total Assets, Adjusted EPS, and Adjusted Pre-Tax, Pre-Provision Income for executive bonuses is standard practice in the banking industry, aligning executive incentives with key financial health and profitability indicators.
• The adoption of a clawback policy and stock ownership guidelines aligns with best practices in corporate governance for publicly traded companies, particularly in the financial sector, following increased regulatory focus post-Dodd-Frank Act.

Management Changes

Corporate Governance

Related Party Transactions

• Directors, officers, beneficial owners of more than 5% of voting securities, and their associates had and are expected to have ordinary course banking relationships and transactions.
• All outstanding loans and commitments to loan with these persons were made in the ordinary course of business, on substantially the same terms as comparable loans with unrelated persons, and did not involve more than normal risk.
• All such loans are approved by the Bank's board of directors in accordance with bank regulatory requirements.
• All certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms as comparable relationships with unrelated persons.
• Mr. Deutsch's compensation is paid to Patriot Financial Partners, L.P., and in lieu of equity awards, Patriot receives a cash amount equal to the grant date value. Mr. Deutsch is a senior partner with Patriot Financial Partners, L.P., a private equity fund and current shareholder.
• Mr. Ludwig has 100,000 shares pledged to secure indebtedness.
• Mr. Bingham is the Chief Executive Officer of Agracel, Inc., which owns 42,554 shares.
• Mr. McDonnell is the beneficiary of the Jeffrey M. McDonnell Revocable Trust UA, which holds 24,245 shares.
• Mr. Schultz is the managing member of J.M. Schultz Investment, L.L.C. (200,030 shares), Red Bird Investors LLC (30,153 shares), and Summit Investors, LLP (37,846 shares).

Stakeholder Impact

• Shareholders will vote on key governance matters (director elections, executive compensation, auditor ratification) and are impacted by the accounting restatement and the underperformance in TSR and Adjusted EPS, which led to reduced executive bonuses. The clawback policy and stock ownership guidelines aim to align management interests with shareholders.
• Employees are eligible for 401(k) Plan, Employee Stock Purchase Plan (ESPP), and health and welfare benefits. Executive officers are subject to performance-based compensation, and some are eligible for career transition bonuses upon retirement. The termination of the CFO and the planned retirement of the President of the Bank indicate changes in senior leadership.
• Customers are served through the Bank's operations and community initiatives, including financial literacy seminars for lowto moderate-income and minority neighborhoods.
• Management/Executives' compensation is tied to performance metrics, but 2025 bonuses were reduced due to overall performance. They are subject to the clawback policy and stock ownership guidelines. Some executives have employment or change-in-control agreements providing severance benefits.
• Regulatory Authorities maintain oversight, with the company subject to SEC and Nasdaq rules, as well as Interagency Guidelines Establishing Standards for Safety and Soundness (FDIC) and Guidance on Sound Incentive Compensation Policies. The accounting restatement highlights ongoing regulatory scrutiny.

Next Steps

• Shareholders to vote on director elections, executive compensation, and auditor ratification at the Annual Meeting on May 4, 2026.
• Voting results will be announced at the meeting and disclosed in an SEC filing within four business days after the annual meeting.
• Jeremy A. Jameson will be promoted to Executive Vice President Chief Banking Officer, effective March 31, 2026.
• Jeffrey S. Mefford plans to retire, effective June 30, 2026.
• The board intends to hold eight regularly scheduled meetings in 2026.
• The company will continue to review, evaluate, and modify its compensation program.
• Shareholder proposals for the 2027 annual meeting must be received by November 23, 2026, for inclusion in the proxy statement.
• Notice of nominations for directors for the 2027 annual meeting must be delivered between January 3, 2027, and February 2, 2027.
• Notice of shareholder proposals to be brought at the 2027 annual meeting must be delivered between January 3, 2027, and February 2, 2027.

Key Dates

Recommendation

The filing reveals significant underperformance in Total Shareholder Return and Adjusted EPS for 2025, alongside a required accounting restatement for prior years. While the company demonstrates strong corporate governance practices and has addressed the restatement without clawbacks, the financial results and discretionary reduction in executive bonuses suggest ongoing challenges. The management changes, including a CFO termination and a key retirement, add an element of transition. Given the mixed signals – robust governance and community initiatives against poor financial performance and an accounting issue – a "hold" recommendation is appropriate. Investors should monitor future financial results and the impact of new leadership appointments to assess if the company can reverse its recent underperformance.

Keywords

Proxy Statement, Annual Meeting, Director Election, Executive Compensation, Say-on-Pay, Auditor Ratification, Corporate Governance, SEC Filing, Financial Reporting, Accounting Restatement, Midland States Bancorp, MSBI, Bank, Financial Services, Risk Management, Shareholder Vote, Compensation Committee, Audit Committee, Nasdaq, Restricted Stock, CEO Pay Ratio, Total Shareholder Return, Adjusted EPS, Non-Performing Assets, Clawback Policy, Management Changes, Retirement, CFO Termination