Form DEF 14A MARLIN BUSINESS SERVICES For: Jun 02

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No.    )

Filed by the Registrant  ☑

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

☐  Preliminary Proxy Statement

☐  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☑  Definitive Proxy Statement

☐  Definitive Additional Materials

☐  Soliciting Material Pursuant to §240.14a-12

MARLIN BUSINESS SERVICES CORP.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☑  No fee required.

☐  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

☐  Fee paid previously with preliminary materials.

MARLIN BUSINESS SERVICES CORP.

300 Fellowship Road

Mount Laurel, NJ 08054

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held On June 2, 2021

To the Shareholders of Marlin Business Services Corp.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the “Annual Meeting”) of Marlin Business Services Corp. (the “Corporation”), a Pennsylvania corporation, will be held on Wednesday, June 2, 2021, at 9:00 a.m. virtually via the internet for the following purposes:

In the proxyholder’s discretion, the proxyholder is authorized to vote upon such other business as may properly be presented at the Annual Meeting or any adjournments or postponements thereof.

The Annual Meeting can be accessed virtually at: www.virtualshareholdermeeting.com/MRLN2021.

The Board of Directors has fixed April 15, 2021, as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof.

Your vote is important, regardless of the number of shares you own. Even if you plan to attend the meeting, please date and sign the enclosed proxy form, indicate your choice with respect to the matters to be voted upon, and return it promptly in the enclosed envelope. A proxy may be revoked before exercise by notifying the Secretary of the Corporation in writing or in open meeting, by submitting a proxy of a later date or by attending the meeting and voting.

Dated: April 28, 2021

PROXY STATEMENT FOR THE

2021 ANNUAL MEETING OF SHAREHOLDERS

MARLIN BUSINESS SERVICES CORP.

300 Fellowship Road

Mount Laurel, NJ 08054

This Proxy Statement and the enclosed proxy card are furnished in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or the “Board”) of Marlin Business Services Corp. (the “Corporation” or “Marlin”), a Pennsylvania corporation, to be voted at the Annual Meeting of Shareholders (the “Annual Meeting”) of the Corporation to be held on Wednesday, June 2, 2021, at 9:00 a.m., to be held virtually via the internet, or at any adjournment or postponement thereof, for the purposes set forth below:

In the proxyholder’s discretion, the proxyholder is authorized to vote upon such other business as may properly be presented at the Annual Meeting or any adjournments or postponements thereof.

The Annual Meeting can be accessed virtually at: www.virtualshareholdermeeting.com/MRLN2021.

This Proxy Statement and related proxy card have been mailed on or about April 28, 2021, to all holders of record of common stock of the Corporation as of the record date. The Corporation will bear the expense of soliciting proxies. The Board of Directors of the Corporation has fixed the close of business on April 15, 2021, as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. The Corporation has only one class of common stock, of which there were 12,013,245 shares outstanding as of April 15, 2021.

At the Annual Meeting, the Board of Directors recommends that the shareholders vote:

GENERAL INFORMATION ABOUT THE 2021 ANNUAL MEETING

Please take note that in light of the Covid-19 pandemic and in order to protect the health and safety of Marlin’s shareholders, directors, management and other stakeholders, the Annual Meeting will be a completely “virtual

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meeting” of shareholders. There will not be a physical meeting location. Marlin believes that hosting a virtual meeting will facilitate shareholder attendance and participation at the Annual Meeting by enabling shareholders to participate remotely from any location. Marlin has designed the Annual Meeting to provide the same rights and opportunities to participate to shareholders as they would have at an in-person meeting. Marlin is permitted to hold the meeting in this format pursuant to the Corporation’s bylaws (the “Bylaws”) and the laws of the Commonwealth of Pennsylvania, the jurisdiction in which the Corporation is incorporated.

Authorized shareholders will be able to attend the Annual Meeting, vote and submit questions during the Annual Meeting via live webcast by visiting www.virtualshareholdermeeting.com/MRLN2021. Prior to the Annual Meeting, authorized shareholders will be able to vote by proxy in the manner and upon the matters described herein.

Proxies and Voting Procedures

Each outstanding share of common stock of the Corporation will entitle the holder thereof to one vote on each separate matter presented for vote at the Annual Meeting. Votes cast at the meeting and submitted by proxy are counted by the inspectors of the meeting who are appointed by the Corporation. The shares represented by such proxy will be voted at the Annual Meeting and any adjournment or postponement thereof. If you specify a choice, the proxy will be voted as specified. If no choice is specified, the shares represented by the proxy will be voted for the election of all of the director nominees named in the Proxy Statement; for the adoption, on an advisory basis, of the resolution approving the compensation of the Corporation’s named executive officers, as described in the Proxy Statement under “Executive Compensation – Compensation Discussion and Analysis”; for the approval of an amendment to the Corporation’s 2019 Equity Compensation Plan to increase the number of shares of common stock authorized for issuance thereunder by 750,000 shares, as described under Proposal 3; for the ratification of Deloitte & Touche LLP as the Corporation’s independent registered public accounting firm for the fiscal year ending December 31, 2021; and in accordance with the judgment of the persons named as proxies with respect to any other matter which may come before the meeting. If you are the shareholder of record, you can also choose to vote your shares electronically at the Annual Meeting.

A proxy may be revoked before exercise by notifying the Secretary of the Corporation in writing or in open meeting, by submitting a proxy of a later date or attending the meeting and voting. You are encouraged to date and sign the enclosed proxy form, indicate your choice with respect to the matters to be voted upon and promptly return it to the Corporation.

If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your broker or nominee, who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct how your broker votes your shares. You are also invited to attend the Annual Meeting. However, because you are not the shareholder of record, you may not vote your street name shares at the Annual Meeting unless you obtain a proxy executed in your favor from the holder of record. Your broker or nominee has enclosed a voting instruction card for you to use in directing the broker or nominee to vote your shares.

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Voting of Shares Prior to the Annual Meeting. You can vote prior to the Annual Meeting by valid proxy received by telephone, via the internet or by mail. We urge you to vote by doing one of the following:

The deadline for voting by telephone or electronically through the Internet is set forth on your proxy card.

Voting of Shares at the Annual Meeting. The Annual Meeting will be held entirely online to allow greater participation. Shareholders may participate in the Annual Meeting by visiting the following website: www.virtualshareholdermeeting.com/MRLN2021. To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice, on your proxy card or on the instructions that accompanied your proxy materials. Shares held in your name as the shareholder of record may be voted electronically during the Annual Meeting. Shares for which you are the beneficial owner but not the shareholder of record also may be voted electronically during the Annual Meeting. However, even if you plan to attend the Annual Meeting, the Corporation recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting. You are entitled to attend the virtual Annual Meeting only if you were a shareholder of record as of April 15, 2021, the record date for the Annual Meeting, or you hold a valid proxy for the Annual Meeting. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership. If you do not comply with the procedures outlined above, you will not be admitted to the virtual Annual Meeting.

Quorum and Voting Requirements

The presence, via webcast or by proxy, of shareholders entitled to cast at least a majority of the votes that all shareholders are entitled to cast on a particular matter to be voted upon at the meeting will constitute a quorum for the meeting. If, however, the Annual Meeting cannot be organized because a quorum is not present, the shareholders entitled to vote and present at the Annual Meeting will have the power, except as otherwise provided by statute, to adjourn the meeting to such time and place as they may determine. Those who attend or participate at a meeting that has been previously adjourned for lack of a quorum, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing directors.

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The following chart shows the proposals to be acted upon at the Annual Meeting, and the votes needed for the proposals to be adopted.

At the Annual Meeting, in connection with Proposal 1 to elect directors, you will be entitled to cast one vote for each share held by you for each candidate nominated but will not be entitled to cumulate your votes. Votes may be cast “for” or “withheld” with respect to each candidate nominated. Directors shall be elected by a plurality of the votes cast, which means that seven (7) director nominees receiving the highest number of votes “for” their election will be elected to the Board of Directors. Votes that are withheld will be excluded entirely from the vote and will have no effect, other than for purposes of determining the presence of a quorum. However, the Board has adopted a director resignation policy, pursuant to which, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election will, promptly following certification of the shareholder vote, tender his or her resignation to the Board with such resignation expressly stating that it is contingent upon the acceptance of the resignation by the Board. See “Governance of the Corporation—Majority Voting in Director Elections/Director Resignation Policy.”

With respect to Proposal 2 regarding the advisory vote on executive compensation (“say-on-pay” vote), while the Corporation intends to carefully consider the voting results of this proposal, the final vote is advisory in nature and therefore not binding on the Corporation, the Board or the Compensation Committee. The Board and Compensation Committee value the opinions of all of the Corporation’s shareholders and will consider the outcome of this vote when making future compensation decisions for the Corporation’s named executive officers.

Proposal 3 regarding the approval of the proposed amendment to the Corporation’s 2019 Equity Compensation Plan requires, under the Corporation’s Bylaws, the affirmative vote of a majority of the votes cast by those shareholders present or by proxy at the Annual Meeting. Any abstentions and broker non-votes will not be considered votes cast on Proposal 3 and, therefore, will have no effect.

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Proposal 4 considers ratification of the appointment of Deloitte & Touche LLP as the Corporation’s independent registered public accounting firm. While shareholder approval of this appointment is not required by law, the Bylaws or otherwise, nor binding on the Corporation, the Corporation intends to carefully consider the voting results of this proposal. The Corporation believes that its shareholders should be given the opportunity to express their views on the Corporation’s external financial accounting firm and therefore is submitting this matter to shareholder vote as a matter of good corporate practice. If the shareholders do not ratify the appointment of Deloitte & Touche LLP as the Corporation’s independent auditor, the Audit and Risk Committee of the Board (the “Audit and Risk Committee”) will consider the same in determining whether to continue the engagement of Deloitte & Touche LLP as its independent auditor.

Generally, broker non-votes occur when shares held by a broker, bank or other nominee in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker, bank or other nominee (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting power to vote those shares with respect to that particular proposal. A broker is entitled to vote shares held for a beneficial owner on “routine” matters without instructions from the beneficial owner of those shares, such as Proposal 4. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on “non-routine” matters, such as the election of directors (Proposal 1), the advisory vote on executive compensation (Proposal 2), or the approval of the proposed amendment to the Corporation’s 2019 Equity Compensation Plan (Proposal 3)

If you hold your shares in street name and you do not indicate how you want your shares voted in the election of directors, then your broker, bank or other nominee is not allowed to vote those shares on your behalf in the election of directors or other “non-routine” matters as they felt appropriate. Thus, if you hold your shares in street name and you do not instruct your broker, bank or other nominee how to vote in the election of directors or other “non-routine” matters, no votes will be cast on your behalf. Such broker non-votes are counted for purposes of determining whether or not a quorum exists for the transaction of business, but will not be counted for purposes of determining the number of shares represented and voted with respect to an individual “non-routine” proposal, and therefore will have no effect on the outcome of the vote on an individual “non-routine” proposal.

As to all other matters properly brought before the Annual Meeting, the majority of the votes cast at the meeting, via webcast or by proxy, by shareholders entitled to vote thereon will decide any question brought before the Annual Meeting, unless the question is one for which, by express provision of statute or of the Corporation’s Articles of Incorporation or Bylaws, a different vote is required. Generally, abstentions and broker non-votes on these matters will have no effect on the vote because under Pennsylvania law abstentions and broker non-votes are not considered votes cast. Broker non-votes and abstentions will be counted, however, for purposes of determining whether a quorum is present.

RECENT DEVELOPMENTS

On April 18, 2021, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Corporation, Madeira Holdings, LLC and Madeira Merger Subsidiary, Inc. (“Merger Sub”) pursuant to which all outstanding shares of the Corporation’s common stock will, subject to the terms and conditions of the Merger Agreement, be acquired by funds managed by HPS Investment Partners, LLC in a merger of the Corporation with and into Merger Sub, with the Corporation surviving.

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Proposal 1:

ELECTION OF DIRECTORS

PROPOSAL SUMMARY AND RECOMMENDATION

The Board has nominated for election as directors at the Annual Meeting John J. Calamari, Lawrence J. DeAngelo, Scott A. Heimes, Jeffrey A. Hilzinger, Matthew J. Sullivan, J. Christopher Teets and James W. Wert, each to serve until the 2022 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified, or until their earlier death, retirement or resignation.

Each nominee has consented to being named in this Proxy Statement and to serve if elected. Except to the extent that authority to vote for any directors is withheld in a proxy, shares represented by proxies will be voted for such nominees. In the event that any of the nominees for director should, before the Annual Meeting, become unable to serve if elected, shares represented by proxies will be voted for such substitute nominees as may be recommended by the Corporation’s existing Board, unless other directions are given in the proxies. To the best of the Corporation’s knowledge, all of the nominees will be able to serve.

Recommendation: The Board recommends that the shareholders vote “FOR” the seven (7) nominees listed above. Proxies received will be so voted unless shareholders specify otherwise in the proxy.

BOARD OF DIRECTORS

Currently, the Board has seven (7) members. From January 1, 2020 through December 31, 2020, there were eleven (11) meetings of the Board of Directors, six (6) meetings of the Audit and Risk Committee, eight (8) meetings of the Compensation Committee and three (3) meetings of the Nominating and Governance Committee. All of our directors attended at least 75% of the meetings of each of our Board and each Board committee on which they served.

Directors are encouraged, but not required, to attend annual meetings of the Corporation’s shareholders. Each director attended the Corporation’s 2020 Annual Meeting of Shareholders (the “2020 Annual Meeting”) virtually via the internet.

Nominees to Serve as Directors – Term Expires 2022

In general, the Corporation’s directors are elected at each annual meeting of shareholders. Currently, the number of directors of the Corporation is seven (7) with one vacancy.

Consequently, at the Annual Meeting, the Corporation’s shareholders are being asked to elect seven (7) directors to serve until the next annual meeting of shareholders and until their successors are elected and qualified, or until their earlier death, resignation or removal. The nominees receiving the greatest number of votes at the Annual Meeting, up to the number of authorized directors, will be elected.

After the Annual Meeting, there will remain one vacancy on the Board of Directors as the Nominating and Governance Committee has not identified a candidate to fill the remaining independent board member vacancy, but continually searches for candidates. Under the terms of our Amended and Restated Articles of Incorporation and Bylaws, the Board of Directors may fill a board of director vacancy at any time.

All seven (7) of the nominees for election as directors at the Annual Meeting as set forth in the following table are incumbent directors previously elected as directors by the Corporation’s shareholders. For each such nominee, set forth below is biographical and other information as of April 28, 2021, as to each nominee’s positions and offices held with the Corporation, principal occupations during the past five years, directorships of

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public companies and other organizations held during the past five years and the specific experience, qualifications, attributes or skills that, in the opinions of the Nominating and Governance Committee and the Board of Directors, make each nominee qualified to serve as a director of the Corporation:

John J. Calamari:

Biography.    Mr. Calamari has been a director since November 2003. Since November 2009, Mr. Calamari has served as an independent consultant in accounting and financial matters for various clients in diverse industries. Mr. Calamari served as the Executive Vice President and Chief Financial Officer of J.G. Wentworth from March 2007 until November 2009. Prior to that time, Mr. Calamari was Senior Vice President, Corporate Controller of Radian Group Inc., where he oversaw Radian’s global controllership functions, a position he held after joining Radian in September 2001. From 1999 to August 2001, Mr. Calamari was a consultant to the financial services industry, where he structured new products and strategic alliances, established financial and administrative functions and engaged in private equity financing for startup enterprises. Mr. Calamari served as Chief Accountant of Advanta from 1988 to 1998, as Chief Financial Officer of Chase Manhattan Bank Maryland and Controller of Chase Manhattan Bank (USA) from 1985 to 1988 and as Senior Manager at Peat, Marwick, Mitchell & Co. (now KPMG LLP) prior to 1985 where he earned his certified public accountant license (currently non-active status). In addition, Mr. Calamari served as a director of Advanta National Bank, Advanta Bank USA and Credit One Bank. Mr. Calamari received his undergraduate degree in accounting from St. John’s University in 1976.

Qualifications.    Mr. Calamari has over 40 years of banking and financial experience, including five years serving in the role of Chief Financial Officer for a bank and a financial services company. Mr. Calamari achieved the level of certified public accountant, and he has served as Chairman of the Corporation’s Audit and Risk Committee since July 2004. He has seven years of past service as a director of several non-public banks and financial services companies. Mr. Calamari currently serves on the Nominating and Governance Committee of the Corporation. Mr. Calamari has also had leadership positions with various community organizations. The Board has determined that Mr. Calamari is an independent director and is financially literate and an audit committee financial expert within the meaning of applicable United States Securities and Exchange Commission (“SEC”) rules. The Board views Mr. Calamari’s independence, his banking and financial experience, his experience as a director of other companies and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience for the Board’s conclusion that Mr. Calamari should serve as a director of the Corporation.

Lawrence J. DeAngelo:

Biography.    Mr. DeAngelo has been a director since July 2001 and has served as the Chairman of the Board since June 2014. Mr. DeAngelo is a Managing Director with Houlihan Lokey Inc., an investment bank, and is based in Atlanta, Georgia. From 2010 to 2016, Mr. DeAngelo was a Managing Director with Sun Trust Robinson

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Humphrey, an investment bank based in Atlanta, Georgia. Mr. DeAngelo served as a Managing Director with Roark Capital Group, a private equity firm based in Atlanta, Georgia from 2005 until January 2010. Prior to joining Roark in 2005, Mr. DeAngelo was a Managing Director of Peachtree Equity Partners, a private equity firm based in Atlanta, Georgia. Prior to co-founding Peachtree in April 2002, Mr. DeAngelo held numerous positions at Wachovia Capital Associates, the private equity investment group of Wachovia Bank, from 1996 to April 2002, the most recent of which was Managing Director. From 1995 to 1996, Mr. DeAngelo worked at Seneca Financial Group, and from 1992 to 1995, Mr. DeAngelo worked in the Corporate Finance Department at Kidder, Peabody & Co. From 1990 to 1992, Mr. DeAngelo attended business school. From 1988 to 1990, Mr. DeAngelo was a management consultant with Peterson & Co. Consulting. Mr. DeAngelo received his undergraduate degree in economics from Colgate University and his MBA from the Yale School of Management.

Qualifications.    Mr. DeAngelo has over 28 years of experience as an investment banker and private equity professional, including 19 years serving in the role of Managing Director for a variety of private equity firms. He served as Chairman of the Corporation’s Nominating and Governance Committee from November 2003 to March 2009 and as Chairman of the Corporation’s Compensation Committee from March 2009 to June 2014. He currently serves on the Corporation’s Nominating and Governance Committee (as Chairman) and on the Compensation Committee. He has served as a director of over a dozen privately held companies. The Board has determined that Mr. DeAngelo is an independent director and is financially literate within the meaning of applicable SEC rules. The Board views Mr. DeAngelo’s independence, his investment banking and private equity experience, his experience as a director of other companies and his demonstrated leadership roles in business as important qualifications, skills and experience for the Board’s conclusion that Mr. DeAngelo should serve as a director of the Corporation.

Scott A. Heimes:

Biography.    Mr. Heimes has been a director of the Corporation since April 2015. Since April 2018, Mr. Heimes has served as the Chief Marketing Officer of Zipwhip, a business-texting software and API provider. From 2015 to 2018, Mr. Heimes was the Chief Marketing Officer for SendGrid, Inc., a global digital communication platform, and from 2012 to 2015, he was the Chief Marketing Officer for Digital River, Inc., a global ecommerce, payments, and marketing services provider. From 2009 to 2012, Mr. Heimes worked as a Chief Marketing Officer for WebMD Health Corp. and from 2006 to 2009, Mr. Heimes worked with UnitedHealth Group in a variety of senior marketing roles. Mr. Heimes has worked in various other executive management positions between 1998 and 2006 with most of that time was spent in marketing roles. In 1991, Mr. Heimes received his undergraduate degree in English literature with a minor in French and Business Administration from the University of St. Thomas in St. Paul, Minnesota.

Qualifications.     The Board has determined that Mr. Heimes is an independent director. The Board views Mr. Heimes’ independence, his business and marketing experience, and his demonstrated leadership roles in business activities as important qualifications, skills and experience for the Board’s conclusion that Mr. Heimes should serve as a director of the Corporation.

Jeffrey A. Hilzinger:

Biography.    Mr. Hilzinger has been the Corporation’s Chief Executive Officer, President and Director since June 2016. Mr. Hilzinger was most recently President of EverBank Commercial Finance, Inc. From 2010 until 2013, Mr. Hilzinger served as Chief Operating Officer of EverBank Commercial Finance, Inc. From 2008 until 2010, Mr. Hilzinger served as Chief Financial Officer of Tygris Vendor Finance. In 2004, Mr. Hilzinger co-founded US Express Leasing, Inc. and served as Chief Financial Officer from 2004 until 2008. In 2002, Mr. Hilzinger co-founded Aternus Partners, LLC, a management consulting firm, and served as a Managing Director until 2004. From 1979 until 2002, Mr. Hilzinger served in various regional and global leadership roles with Heller Financial, Inc. and certain of its subsidiaries and affiliates. Since September 2019, Mr. Hilzinger has served on the board of directors of Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty

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finance company providing debt recovery solutions and other related services for consumers. Mr. Hilzinger earned a bachelor’s degree in Economics from the University of Michigan in 1979.

Qualifications.    Mr. Hilzinger has over 40 years of experience in financial services, including over 15 years in the equipment leasing industry. Mr. Hilzinger is the Corporation’s President and Chief Executive Officer, and has served as Director of the Corporation since joining the Corporation in June 2016. The Board views Mr. Hilzinger’s leadership ability along with his significant industry knowledge and broad financial services expertise as important qualifications, skills and experience for the Board’s conclusion that Mr. Hilzinger should serve as director of the Corporation.

Matthew J. Sullivan:

Biography.    Mr. Sullivan has been a director since April 2008. Mr. Sullivan is a Partner with Peachtree Equity Management (“Peachtree”), a private equity investment firm. Mr. Sullivan co-founded Peachtree in 2002. From 1994 to 2002, Mr. Sullivan held numerous positions at Wachovia Capital Associates, the private equity investment group of Wachovia Bank, the most recent of which was Managing Director. From 1983 to 1994, Mr. Sullivan worked in the Corporate Finance Department at Kidder, Peabody & Co. and previously with Arthur Andersen & Company where he earned his certified public accountant license (currently non-active status). Mr. Sullivan received his undergraduate degree in finance from the University of Pennsylvania and his MBA from Harvard Business School.

Qualifications.    Mr. Sullivan has over 30 years of experience as an investment banker and private equity professional, including over 20 years serving in the role of Managing Director for a variety of private equity firms. He has over ten years of past service as a director of privately held companies. Mr. Sullivan currently serves on the Corporation’s Audit and Risk Committee, Compensation Committee and Nominating and Governance Committee. Mr. Sullivan has also had leadership positions with various cultural and community organizations. The Board has determined that Mr. Sullivan is an independent director and is financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board views Mr. Sullivan’s independence, his investment banking and private equity experience, his experience as a director of other companies and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience for the Board’s conclusion that Mr. Sullivan should serve as a director of the Corporation.

J. Christopher Teets:

Biography.    Mr. Teets has been a director since May 2010. Mr. Teets has served as a Partner of Red Mountain Capital Partners LLC (“Red Mountain”), an investment firm, since February 2005. Before joining Red Mountain in 2005, Mr. Teets was an investment banker at Goldman Sachs & Co. Prior joining Goldman Sachs in 2000, Mr. Teets worked in the investment banking division of Citigroup. Mr. Teets currently serves on the boards of directors of Air Transport Services Group, Inc., Nature’s Sunshine Products, Inc. and Intrinsic LLC and previously served on the board of directors of Affirmative Insurance Holdings, Inc., Encore Capital Group, Inc. and Yuma Energy, Inc. Mr. Teets holds a bachelor’s degree from Occidental College and an MSc degree from the London School of Economics.

Qualifications.    Mr. Teets has 23 years of experience as an investment banker and investment professional, which includes advising and investing in financial institutions. Mr. Teets’ experience also includes over 16 years serving as a Partner for an investment firm. He has 14 years of service as a director of other public companies and currently sits on the boards of two other such companies. Mr. Teets currently serves on both the Corporation’s Audit and Risk Committee and Compensation Committee. In considering the independence of Mr. Teets, the Board considered the fact that he is a Partner of Red Mountain, the beneficial owner (via certain affiliates) of approximately 24.62% of the Corporation’s outstanding shares (reported as of June 10, 2020) as of April 1, 2021, and concluded that his relationship with Red Mountain does not impact his independence as a

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director of the Corporation. In reaching this conclusion, the Board took into account that while Red Mountain and certain of its affiliates received relief in December 2020 from the passivity commitments it had made to the Federal Reserve Board in 2014, Red Mountain and such affiliates remain subject to Federal Reserve Board rules regarding the exercise of “control” over a bank holding company such as the Corporation. The Board has determined that Mr. Teets is an independent director and is financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board views Mr. Teets’ independence, his investment banking and public and private investing experience, his experience with financial institutions, his experience as a director of other public companies and his demonstrated leadership roles in business as important qualifications, skills and experience for the Board’s conclusion that Mr. Teets should serve as a director of the Corporation.

James W. Wert:

Biography.    Mr. Wert has been a director since February 1998. Mr. Wert is Managing Member and CEO of CM Wealth Advisors LLC f/k/a Clanco Management Corp., which is a wealth management and investment advisory firm headquartered in Cleveland, Ohio. Prior to joining Clanco in May 2000, Mr. Wert served as Chief Financial Officer and then Chief Investment Officer of KeyCorp, a financial services company based in Cleveland, Ohio, and its predecessor, Society Corporation, until 1996, holding a variety of capital markets and corporate banking leadership positions. Mr. Wert received his undergraduate degree in finance from Michigan State University in 1971 and completed the Stanford University Executive Program in 1982. Mr. Wert also serves as lead Director of Park-Ohio Holdings Corp.

Qualifications.    Mr. Wert has over 30 years of experience in the banking and financial services industries, including over 20 years as a senior officer of a bank. He served as Chairman of the Corporation’s Audit and Risk Committee from November 2003 to July 2004. Mr. Wert presently serves as Chairman of the Corporation’s Compensation Committee and on the Corporation’s Audit and Risk Committee and Nominating and Governance Committee. He has over 23 years of service as a director of public companies, and has also spent over 20 years serving on the boards of several non-public entities. Mr. Wert has also had leadership positions with various cultural and community organizations. The Board has determined that Mr. Wert is an independent director and is financially literate and an audit committee financial expert within the meaning of applicable SEC rules. The Board views Mr. Wert’s independence, his banking and financial services experience, his experience as a director of other companies and his demonstrated leadership roles in business and community activities as important qualifications, skills and experience for the Board’s conclusion that Mr. Wert should serve as a director of the Corporation.

Independence of the Board of Directors

The Board has affirmatively determined that John J. Calamari, Lawrence J. DeAngelo, Scott A. Heimes, Matthew J. Sullivan, J. Christopher Teets and James W. Wert are each independent directors. Our Board has also determined that Mr. Hilzinger, who serves as a director and our President and Chief Executive Officer, is not an independent director. Accordingly, 86% of our current incumbent directors, who also constitute our director nominees, are independent. The standards applied by the Board in affirmatively determining whether a director is “independent” are those objective standards set forth in the listing standards of the NASDAQ Global Select Market (“NASDAQ”).

Only independent directors serve on our Audit and Risk Committee, Compensation Committee and Nominating and Governance Committee. Mr. DeAngelo, a non-employee independent director, serves as the Chairman of the Board. He was elected to that position in June 2014. The Board is responsible for ensuring that independent directors do not have a material relationship with the Corporation or any of the Corporation’s affiliates or any of our executive officers or their affiliates.

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It is the policy of the Board and NASDAQ’s rules require listed companies to have a board of directors with at least a majority of independent directors, as defined under NASDAQ’s Marketplace Rules. The Board has affirmatively determined that each member of our Board (other than the Corporation’s President and Chief Executive Officer, Jeffrey A. Hilzinger), is an independent director, and all standing committees of the Board are composed entirely of independent directors, in each case under NASDAQ’s independence definition. The NASDAQ independence definition includes a series of objective tests, such as that the director is not an employee of the Corporation and has not engaged in various types of business dealings with the Corporation. In addition, the Board has made a subjective determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the directors reviewed and discussed information provided by the directors and the Corporation with regard to each director’s business and other activities as they may relate to the Corporation and the Corporation’s management.

COMMITTEES OF THE BOARD

The Corporation has three standing committees: the Audit and Risk Committee, the Compensation Committee and the Nominating and Governance Committee.

Audit and Risk Committee

The Audit and Risk Committee currently consists of four independent directors: Messrs. Calamari (chairman), Sullivan, Teets and Wert. The Board has determined that Messrs. Calamari, Sullivan, Teets and Wert each qualify as an audit committee financial expert as defined under current rules and regulations of the SEC and under NASDAQ listing standards, and that all the members of the Audit and Risk Committee satisfy the independence and other requirements for audit committee members under such rules, regulations and listing standards.

The Audit and Risk Committee’s primary purpose is to assist the Board in overseeing and reviewing:

(1) the integrity of the Corporation’s financial reports and financial information provided to the public and to governmental and regulatory agencies;

(2) the adequacy of the Corporation’s internal accounting systems and financial controls;

(3) the annual independent audit of the Corporation’s financial statements, including the independent registered public accountant’s qualifications and independence; and

(4) the Corporation’s compliance with law and ethics programs as established by management and the Board.

In this regard, the Audit and Risk Committee, among other things, (a) has sole authority to select, evaluate, terminate and replace the Corporation’s independent registered public accountants; (b) has sole authority to approve in advance all audit and non-audit engagement fees and terms with the Corporation’s independent registered public accountants; and (c) reviews the Corporation’s audited financial statements, interim financial results, public filings and earnings press releases prior to issuance, filing or publication.

The Board has adopted a written charter for the Audit and Risk Committee, which is accessible in the Investors section of the Corporation’s website at www.marlincapitalsolutions.com. The Corporation’s website is not part of this Proxy Statement and references to the Corporation’s website address are intended to be inactive textual references only.

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Compensation Committee

The Compensation Committee of the Board (the “Compensation Committee”) currently consists of four independent directors: Messrs. Wert (chairman), DeAngelo, Sullivan and Teets.

The functions of the Compensation Committee include:

The Compensation Committee reviews and approves corporate goals and objectives relevant to chief executive officer compensation, evaluates the chief executive officer’s performance in light of those goals and objectives, and recommends to the Board the chief executive officer’s compensation levels based on its evaluation. The Compensation Committee also administers the Corporation’s 2003 Equity Compensation Plan, as amended (the “2003 Equity Plan”), 2014 Equity Compensation Plan (the “2014 Equity Plan”), 2019 Equity Compensation Plan (the “2019 Equity Plan”) and 2012 Employee Stock Purchase Plan. The Compensation Committee is governed by a written charter that is accessible on the Investors page of the Corporation’s website at www.marlincapitalsolutions.com.

Nominating and Governance Committee

The Nominating and Governance Committee of the Board (the “Nominating and Governance Committee”) currently consists of four independent directors: Messrs. DeAngelo (chairman), Calamari, Sullivan and Wert. The Nominating and Governance Committee is responsible for seeking, considering and recommending to the Board qualified candidates for election as directors and proposing a slate of nominees for election as directors at the Corporation’s Annual Meeting of Shareholders. The Nominating and Governance Committee is responsible for reviewing and making recommendations on matters involving general operation of the Board and its committees and will annually recommend to the Board nominees for each committee of the Board. The Nominating and Governance Committee is governed by a written charter that is accessible on the Investors page of the Corporation’s website at www.marlincapitalsolutions.com.

The Nominating and Governance Committee has determined that no one single criterion should be given more weight than any other criteria when it considers the qualifications of a potential nominee to the Board. Instead, it believes that it should consider the total “skill set” of an individual. In considering potential nominees for director, the Nominating and Governance Committee will consider each potential nominee’s personal abilities and qualifications, independence, knowledge, judgment, character, leadership skills, education and the diversity of such nominee’s background, expertise and experience in fields and disciplines relevant to the Corporation, including financial literacy or expertise. In addition, potential nominees should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated and be selected based upon contributions that they can make to the Corporation. The Nominating and Governance Committee considers all of these qualities when selecting, subject to ratification by the Board, potential nominees for director.

The Board views both demographic and geographic diversity among the directors as desirable. The Board does not have a formal diversity policy, but the Nominating and Governance Committee takes into account a

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candidate’s ability to contribute to the cognitive diversity of backgrounds on the Board. To this end, we consider attributes such as race, ethnicity, gender, age, cultural background and professional experience. The Nominating and Governance Committee reviews its effectiveness in balancing these considerations when assessing the composition of the Board.

Recognizing the significant added value diversity can provide to the functionality of a boardroom, the Nominating & Governance Committee continually evaluates opportunities to appoint female and racially or ethnically diverse directors to the Board. Without limiting additional actions it may choose to take, the Nominating & Governance Committee and the Board have committed to appointing at least one female director to the Board at or prior to the Corporation’s 2022 Annual Meeting of Shareholders. The Board has retained a leading global recruiting firm to assist the Nominating & Governance Committee in identifying female director candidates.

The Nominating and Governance Committee’s typical process for identifying and evaluating potential nominees includes soliciting recommendations from existing directors and officers of the Corporation, reviewing the Board and Committee assessments completed by the directors and, when deemed advisable by the Nominating and Governance Committee, engaging third parties to assist in identifying and evaluating potential nominees.

The Nominating and Governance Committee will also consider recommendations from shareholders regarding potential director candidates provided that such recommendations are made in compliance with the nomination procedures set forth in the Corporation’s Bylaws. The procedures in the Corporation’s Bylaws require the shareholder to submit written notice of the proposed nominee to the Secretary of the Corporation no less than 90 days prior to the anniversary date of the immediately preceding annual meeting of shareholders. To be in proper form, such written notice must include, among other things, (i) the name, age, business address and residence of the proposed nominee, (ii) the principal occupation or employment of such nominee, (iii) the class and number of shares of capital stock of the Corporation owned beneficially or of record by such nominee and (iv) any other information relating to the proposed nominee that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors. In addition, as to the shareholder giving the notice, the notice must also provide (a) such shareholder’s name and record address, (b) the class and number of shares of capital stock of the Corporation owned beneficially or of record by such shareholder, (c) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other persons (including their names) pursuant to which the nominations are to be made by such shareholder, (d) a representation that such shareholder (or his or her authorized representative) intends to attend the meeting, or have the shareholder’s proxy attend the meeting, to nominate the persons named in the notice and (e) any other information relating to the shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors. If the shareholder of record is not the beneficial owner of the shares, then the notice to the Secretary of the Corporation must include the name and address of the beneficial owner and the information referred to in clauses (c) and (e) above (substituting the beneficial owner for such shareholder).

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GOVERNANCE OF THE CORPORATION

Governance Highlights

Board Leadership Structure

The Board believes that separating the roles of Chairman of the Board and Chief Executive Officer strengthens the independence of each role and enhances overall corporate governance. As a result, in June 2014, the Board elected an independent director, Lawrence J. DeAngelo, to serve as the Board’s second non-executive Chairman of the Board. In his capacity as non-executive Chairman of the Board, Mr. DeAngelo leads all meetings of our Board at which he is present but does not serve as an employee or corporate officer. The non-executive Chairman of the Board serves on appropriate committees as requested by the Board, sets meeting schedules and agendas and manages information flow to the Board to assure appropriate understanding of, and discussion regarding matters of interest or concern to the Board. The Board believes that it is appropriate for the Chairman of the Board to be an independent, non-employee director to ensure that the Board operates independently of management in the fulfillment of its oversight function and that the matters presented for consideration by the Board and its committees reflect matters of key importance to the Corporation and its’ shareholders as determined by the independent directors.

Majority Voting in Director Elections/Director Resignation Policy

Pursuant to the Board’s director resignation policy, in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election will, promptly following certification of the shareholder vote, tender his or her resignation to the Board with such resignation expressly stating that it is contingent upon the acceptance of the resignation by the Board. The Nominating and Governance Committee will consider such tendered resignation and recommend to the Board whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, and publicly disclose its decision regarding the tendered resignation and, if such tendered resignation is rejected, the rationale behind the decision, within 90 days following certification of the shareholder vote. The Nominating and Governance Committee in making its recommendation, and the Board in making its decision, each may consider any factors and other information that they consider appropriate and relevant, including as a principal factor whether the issue(s) that caused the high withhold/against vote have been or will be addressed.

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Notwithstanding the foregoing, to the extent a director has received a greater number of votes “withheld” from his or her election than votes “for” such election in an uncontested election in two consecutive elections, the Board will accept such tendered resignation.

The director who has tendered his or her resignation will not participate in the Nominating and Governance Committee’s or the Board’s deliberations or decision with respect to the tendered resignation, but shall remain active and engaged in all other committee deliberations and decisions pending completion of the Nominating and Governance Committee and Board process. If a majority of the members of the Nominating and Governance Committee are required to tender resignations pursuant to our director resignation policy following any election, then the independent directors that are not required to tender their resignations will appoint a Board committee amongst themselves solely for the purpose of considering the tendered resignations and making a recommendation to the Board. In addition, if the only directors who are not required to tender resignations pursuant to the policy following any election constitute three or fewer directors, then all directors may participate in the Board action regarding whether to accept the tendered resignations.

Shareholder Nominations

Our Bylaws permit shareholders to submit director nominations for consideration at an annual meeting. Such nominations are subject to certain eligibility, procedural and disclosure requirements set forth in Article II Section 2.3 of the Bylaws, including the requirement that the notice of such nominations to the Corporate Secretary of the Corporation must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days prior to the anniversary date of the previous year’s annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, then notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. A copy of the Bylaws can be obtained from the Corporation’s Corporate Secretary at 300 Fellowship Road, Mount Laurel, NJ 08054.

In addition, our Bylaws provide for proxy access for properly nominated directors under certain circumstances. Article II Section 2.15 of the Bylaws permits a shareholder who has owned shares of the Corporation, or a group of up to 20 shareholders, representing an aggregate of at least three percent of the voting power entitled to vote in the election of directors continuously for at least three years (an “Eligible Shareholder”) to nominate and include in the Corporation’s annual meeting proxy materials director nominees in a number up to 25 percent of the Board of the Directors in office as of the last day on which a proxy access notice may be delivered under the Bylaws, provided the nominating shareholder(s) and the director nominee(s) satisfy all of the specified eligibility and other requirements in Section 2.15 of the Bylaws. The proxy access provision may only be used in connection with an annual meeting of shareholders. To use the proxy access provision, a shareholder must provide the Corporation with a notice of proxy access nomination and other important information, which must include certain representations and agreements by the shareholder, no earlier than one hundred and fifty (150) and no later than one hundred and twenty (120) days before the first anniversary of the date the Corporation mailed its proxy statement for the prior year’s annual meeting of shareholders; provided, however, that in the event that the annual meeting is not scheduled to be held within a period that commences thirty (30) days before and ends sixty (60) days after the first anniversary date of the previous year’s annual meeting, then the proxy access notice must be so delivered to, and received by, the Corporate Secretary of the Corporation no earlier than one hundred and eighty (180) days and no later than the tenth (10th) day following the date such annual meeting is first publicly announced or disclosed. The required information includes, but is not limited to, shareholder statements verifying qualifying stock ownership as of the date of the notice of proxy access nomination and a copy of the shareholder’s Schedule 14N as filed with the SEC. The required representations and agreement include, but are

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not limited to, the shareholder’s lack of intent to change or influence control at the Corporation and intent to maintain qualifying stock ownership through the date of the annual meeting. The Corporation may also require each shareholder nominee to provide any additional information that may be reasonably requested to determine if such nominee is independent or that may be reasonably required to determine the eligibility of such nominee to serve as a director of the Corporation.

Shareholder Proposals

Our Bylaws permit shareholders to submit proposals for consideration at future shareholder meeting. Such proposals are subject to certain eligibility, procedural and disclosure requirements set forth in Article II Section 2.3 of the Bylaws, including the requirement that the notice of such proposals to Corporate Secretary of the Corporation must delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred and twenty (120) days prior to the date of the Corporation’s proxy statement released to shareholders in connection with the previous year’s annual meeting; provided, however, that in the event that the current year’s annual meeting has been changed by more than thirty (30) days from the date of the previous year’s meeting, then notice by the shareholder to be timely must be so received within a reasonable time before the Corporation begins to print and mail its proxy materials.

Risk Management Oversight

The Corporation is subject to a variety of risks, including credit risk, liquidity risk, operational risk, regulatory risk, reputational risk and market risk. The Board oversees risk management through a combination of processes.

The Audit and Risk Committee, in conjunction with the Corporation’s management team, has developed risk management processes intended to:

The Board regularly reviews information regarding the Corporation’s credit, liquidity and operations, as well as the risks associated with each, during the Board meetings scheduled throughout the year.

The Corporation has established a Management Risk Committee (“Management Risk Committee”) comprised of the following voting members: the Corporation’s Chief Executive Officer; Chief Risk Officer; Chief Financial Officer; Chief Sales Officer; General Counsel; and Chief Operations Officer, and the President of the Corporation’s wholly owned bank subsidiary, Marlin Business Bank. In addition, the Management Risk Committee includes non-voting members comprised of senior and other management throughout the organization. The Management Risk Committee’s main task is to manage the risk profile and risk strategy of the Corporation by defining the risk appetite, defining the risk strategy, and actively monitoring the risk performance against the risk appetite and strategy as defined by the Management Risk Committee’s Charter, in each case ultimately subject to oversight by the Audit and Risk Committee. The Management Risk Committee Charter is subject to approval by the Board.

The Audit and Risk Committee, in consultation with management and the Corporation’s internal auditors, also discusses the Corporation’s policies and guidelines regarding risk assessment and risk management, as well as the Corporation’s significant financial risk and cybersecurity and information security risk exposures and the steps management has taken to monitor, control and report such exposures. The Compensation Committee

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considers the risks that may be presented by the structure of the Corporation’s compensation programs and the metrics used to determine individual compensation under that program. Among its other duties, the Nominating and Governance Committee develops corporate governance guidelines applicable to the Corporation and recommends such guidelines or revisions of such guidelines to the Board. The Nominating and Governance Committee reviews such guidelines at least annually and, when necessary or appropriate, recommends changes to the Board. The Board believes that the present leadership structure, along with the Corporation’s corporate governance policies and procedures, permits the Board to effectively perform its role in the risk oversight of the Corporation.

Whistleblower Procedures

The Corporation has established procedures that provide employees with the ability to make anonymous submissions directly to the Audit and Risk Committee regarding concerns about accounting or auditing matters. The independent directors that comprise the Audit and Risk Committee will review, investigate and, if appropriate, respond to each submission made. Additionally, the Corporation has reminded employees of its policy to not retaliate or take any other detrimental action against employees who make submissions in good faith.

Code of Ethics and Business Conduct

All of the Corporation’s directors, officers and employees (including its senior executive, financial and accounting officers) are held accountable for adherence to the Corporation’s Code of Ethics and Business Conduct (the “Code”). The Code is posted in the Investors section of the Corporation’s website at www.marlincapitalsolutions.com. The purpose of the Code is to establish standards to deter wrongdoing and to promote honest and ethical behavior. The Code covers many areas of professional conduct, including compliance with laws, conflicts of interest, fair dealing, financial reporting and disclosure, confidential information and proper use of the Corporation’s assets. Employees are obligated to promptly report any known or suspected violation of the Code through a variety of mechanisms made available by the Corporation. Waiver of any provision of the Code for a director or executive officer (including our principal executive, financial and accounting officers) may only be granted by the Board of Directors or the Audit and Risk Committee. The Code is available free of charge in the Investors section of our website at www.marlincapitalsolutions.com. We intend to post on our website any amendments and waivers to the Code that are required to be disclosed by SEC rules, or file a Form 8-K, Item 5.05, to the extent required by NASDAQ listing standards.

Communications with the Board

Shareholders may communicate with the Board or any of the directors by sending written communications addressed to the Board or any of the directors, c/o Corporate Secretary, Marlin Business Services Corp., 300 Fellowship Road, Mount Laurel, New Jersey 08054. All communications are compiled by the Corporate Secretary and forwarded to the Board or the individual director(s) accordingly.

CERTAIN RELATED PERSON TRANSACTIONS

Under the Code, the Audit and Risk Committee must review and approve transactions with “related persons” (directors, director nominees and executive officers or their immediate family members, or shareholders owning 5% or greater of the Corporation’s outstanding common stock) in which the amount exceeds $120,000 and in which the related person has a direct or indirect material interest. Under this policy, full written disclosure must be submitted in writing to the Corporation’s General Counsel, who will submit it to the Audit and Risk Committee for review. The transaction must receive Audit and Risk Committee approval prior to the consummation of the transaction.

The March 20, 2007 (the “Order”) of the Federal Deposit Insurance Company (“FDIC”) originally approving the application for federal deposit insurance for the Corporation’s wholly-owned subsidiary, Marlin Business Bank,

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an industrial bank chartered by the State of Utah (the “Bank”) is subject to certain conditions set forth in the Order. The Order provided that the approval was conditioned on, among other things, Peachtree Equity Investment Management, Inc. (“Peachtree”) and WCI (Private Equity) LLC (“WCI”), whose sole manager is Peachtree, executing a passivity agreement with the FDIC to eliminate Peachtree’s and WCI’s ability to control the Bank. As a result, on June 18, 2007, Peachtree, WCI and the FDIC entered into a Passivity Agreement (the “Passivity Agreement”) and Peachtree, WCI and the Corporation entered into a related Letter Agreement (the “Letter Agreement”). On March 11, 2008, the Corporation received approval from the FDIC for federal deposit insurance for the Bank, and approved the Bank to commence operations effective March 12, 2008. As a result of the approval, the Corporation became subject to the Letter Agreement, pursuant to which the Corporation agreed to create one vacancy on the Board by increasing the size of the Board. The Corporation also agreed to take all necessary action to appoint one individual proposed by Peachtree and WCI as a member of the Board to serve as a director. On April 17, 2008, Matthew J. Sullivan was appointed to the Board under the terms of the Letter Agreement, and Mr. Sullivan has continued to serve as a Board member under the provisions of the Letter Agreement that requires the Corporation to include an individual proposed by Peachtree and WCI on the Board’s slate of nominees for election as a director of the Corporation and to use its best efforts to cause the election of such individual so long as Peachtree and WCI are subject to the terms and conditions of the Passivity Agreement. While on March 24, 2020, the FDIC issued an amended order that eliminated many of the conditions in the Order, the amended order specifically requires Peachtree and WCI to keep the Passivity Agreement in place.

NON-EMPLOYEE DIRECTORS’ COMPENSATION

Members of the Board who are not employees are eligible for compensation in the form of cash and equity as described below. Frederic W. Cook & Co., Inc. (“FW Cook”) conducted a comprehensive evaluation of the compensation programs for non-employee independent members of the Board of Directors, which resulted in updates to the program in 2017. No subsequent refinements have been made to the program since 2017.

Cash Compensation

Annual Retainer. Each outside (non-employee independent) director receives an annual cash retainer of $50,000 for serving on the Board of Directors. The cash retainers are paid quarterly and prorated for fractional periods.

Chairman of the Board Retainer. In addition to the compensation described above, the non-employee Chairman of the Board of the Corporation receives and additional $50,000 annual retainer (payable in quarterly installments).

Committee and Chair Retainers. The chairpersons and non-chair members of the Board’s three standing committees are entitled to the following additional cash retainers each year (paid quarterly and prorated for fractional periods):

None of the above-described cash retainers have changed since 2017. However, following the onset of the Covid-19 pandemic, our independent directors voluntarily agreed to temporarily reduce their cash retainer by 25% from April 13, 2020 through May 31, 2020.

Equity Compensation

Annual Equity Award. In 2020, independent members of the Board of Directors received annual grants under the Corporation’s 2019 Equity Plan of restricted stock yielding a fair market value of $60,000 at the stock award

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grant date. The transfer restrictions on restricted stock granted pursuant to the annual equity awards lapse at the earlier of (a) seven years from the grant date and (b) six months following the non-employee independent director’s termination of Board service.

Total 2020 Director Compensation

The following table sets forth compensation from the Corporation for the non-employee independent members of the Board of Directors in 2020. The table does not include reimbursement of travel expenses related to attending Board, Committee and Corporation business meetings.

Director Compensation Table

The following table sets forth information with respect to the beneficial ownership of our common stock held by our independent directors as of April 1, 2021.

Security Ownership of Directors Table

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Director Ownership Guidelines

The Board of Directors believes that non-employee independent directors should own and hold common stock of the Corporation to further align their interests and actions with the interests of the Corporation’s shareholders. The Corporation’s current Director Stock Ownership Guidelines require each non-employee independent director to own an amount of the Corporation’s stock having a value (based on the average daily closing price per share of the Corporation’s stock for the three (3) year period immediately preceding such date) equal to five times his or her annual board cash retainer. Restricted shares count toward the ownership requirement. Each non-employee independent director receives an annual grant of restricted shares for which the transfer restrictions lapse at the earlier of (a) seven years from the grant date and (b) six months following the non-employee director’s termination of Board service. As of April 1, 2021, all of the non-employee independent directors were in compliance with the ownership requirement.

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Proposal 2:

ADVISORY APPROVAL OF OUR NAMED EXECUTIVE OFFICERS’ PAY

PROPOSAL SUMMARY AND RECOMMENDATION

In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and rules promulgated by the SEC, we are requesting the approval of the following advisory resolution:

“RESOLVED, that the compensation paid to the Corporation’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion. is hereby APPROVED.”

Although the foregoing resolution is only advisory in nature and is not binding on the Board or the Corporation, the Board and the Compensation Committee intend to review the voting results so that such voting results may be taken into consideration in connection with future executive compensation decisions.

Recommendation. The Board of Directors recommends a vote “FOR” the adoption of the above resolution indicating approval, on an advisory basis, of the compensation of the Corporation’s named executive officers.

Why the Board recommends a vote FOR the “say-on-pay” proposal. The Board believes that the Corporation’s executive compensation program is effective and aligned with shareholders’ interests. In 2017, the Corporation instituted a new rigorous performance-based approach to its compensation programs. The following highlights key objectives of our executive pay program:

We hold “say-on-pay” votes annually in support of our Board’s policy. The next “say-on-pay” vote will occur at the Corporation’s 2022 annual meeting of shareholders.

COMPENSATION COMMITTEE REPORT

The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis set forth below with management and, based on such review and discussion, recommended to the Board of Directors that it be included in the Corporation’s Proxy Statement and Annual Report on Form 10-K for the year ended December 31, 2020.

This report is submitted by the members of the Compensation Committee of the Board of Directors.

James W. Wert (Chairman)

Lawrence J. DeAngelo

Matthew J. Sullivan

J. Christopher Teets

Date: April 20, 2021

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OUR EXECUTIVE OFFICERS

The Board chooses executive officers, who then serve at the Board’s discretion. There is no family relationship between any of the Corporation’s directors or executive officers and any other director or executive officer of the Corporation or its subsidiaries. Our executive officers as of April 28, 2021, and the ages of such officers at such date, were as follows:

Mr. Hilzinger’s biographical information is set forth above in “Proposal 1 – Election of Directors – Board of Directors”.

Mr. Bogansky joined the Corporation on February 1, 2019 as Senior Vice President, Chief Financial Officer. Prior to joining the Corporation, Mr. Bogansky worked for PHH Corporation, a New York Stock Exchange listed company (“PHH”), where he was most recently Senior Vice President and Chief Financial Officer from March 2017 until PHH was acquired by Ocwen Financial Corporation on October 4, 2018. Prior to that, Mr. Bogansky served as the Senior Vice President and Controller of PHH since April, 2014. Mr. Bogansky joined PHH’s subsidiary, PHH Mortgage Corporation (“PHH Mortgage”), in 2003 as Manager, Financial Reporting and held roles of increasing responsibility in the accounting and finance functions of PHH and its subsidiaries, including serving as Vice President, Financial Reporting of PHH Mortgage from 2009 to 2010, as PHH’s Vice President and Assistant Controller from 2010 to 2012 and as PHH’s Vice President and Controller from to 2012 until 2014. Prior to joining PHH in 2003, Mr. Bogansky served as a Senior Auditor with Deloitte & Touche LLP, which currently serves as the Corporation’s independent registered public accounting firm.

Ms. Anger joined the Corporation in July 2017 as Senior Vice President, Chief Human Resources Officer. Ms. Anger has an extensive background in human resources with over 30 years of experience, much of it in the commercial finance and banking industries. Prior to joining the Corporation, Ms. Anger led the human resources function for the North American Connected Car unit of Harman International, a Samsung company from November 2014 to July 2017. Prior to joining Harman International, she held the top human resources leadership role at Flagstar Bancorp, Inc. and Crain Communications Inc. Earlier in her career, she also held human resources leadership positions at AT&T Capital, Heller Financial and GE Capital.

Mr. Maslowe joined the Corporation in January 2017 as Chief Risk Officer. Mr. Maslowe manages all of Marlin’s underwriting practices, policies, procedures, risk appetite and overall credit risk management across all of Marlin’s businesses. Mr. Maslowe has an extensive background in commercial finance with over 30 years of credit experience. Prior to joining Marlin, he was Senior Vice President and Chief Risk Officer of the Americas for DLL, a global provider of asset-based financial solutions and a wholly owned subsidiary of Rabobank Group from 2005 until January 2017. In his role at DLL, Mr. Maslowe was responsible for all credit adjudication, enterprise risk management and credit scorecard management for the Americas. In addition, he served as Co-Chairman of the Global Model Risk Committee and was a member of DLL’s Global Risk, Credit and Audit Committees. Previously, Mr. Maslowe held senior leadership positions in credit and risk management with several other leading bank owned, independent and captive leasing companies.

Mr. Melcher joined the Corporation as Senior Vice President, Deputy General Counsel on November 1, 2019, and assumed the role of Senior Vice President, General Counsel, Chief Compliance Officer and Corporate

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Secretary on January 1, 2020. Prior to joining the Corporation, Mr. Melcher worked for PHH Corporation, a New York Stock Exchange listed company (“PHH”), where he was most recently Vice President, Deputy General Counsel and Corporate Secretary from January 2018 until February 2019, following the acquisition of PHH by Ocwen Financial Corporation in October 2018. Prior to that, Mr. Melcher served as Assistant General Counsel and Assistant Secretary of PHH since October 2013. Prior to joining PHH, Mr. Melcher was an associate and subsequently counsel in the corporate department of the law firm Lowenstein Sandler LLP from 2004 to 2013.

Mr. Rajappa joined the Corporation in September 2017 as Senior Vice President, Chief Marketing Officer and was appointed Senior Vice President, Chief Strategy Officer in October 2020. Prior to joining the Corporation, Mr. Rajappa was Vice President, Digital Marketing & Product Development at CAN Capital from January 2016 to June 2017. Prior to that, from June 2014 to December 2015 he was Senior Vice President, Head of Marketing at Lendkey Technologies, a leading lending-as-a-service fintech platform for banks and credit unions. Mr. Rajappa spent the fourteen years prior to that in increasing roles in marketing and product development at Capital One Financial.

Mr. Sherlock has been with the Corporation since 2007, and has served as Senior Vice President, Chief Information Officer since 2016. Prior to that, he served as the Corporation’s Vice President of Information Technology. Prior to joining the Corporation in 2007, Mr. Sherlock worked at PHH Mortgage Corporation from 2003 to 2007 as Director of Applications Development, and prior to that held various positions in increasing technology roles at Wave Systems Corp., a platform security company and MFS Trans Tech, an electronic toll and traffic management company.

Mr. Sting joined the Corporation in late 2014 to manage the Corporation’s lease and loan portfolio and drive improvements in the servicing departments. Prior to joining the Corporation, Mr. Sting worked for seven years for CIT Group in Jacksonville, Florida. In 2007, he joined CIT Group as Vice President of Operations for Vendor Healthcare and through the subsequent four years was given various promotions. By July 2011, Mr. Sting became the Chief Operations Officer of CIT Finance LLC. Mr. Sting’s areas of responsibility in this role included collections, customer care, bad debt recovery, accounts payable, accounts receivable, booking, sales support, onboarding and asset management. Prior to working at CIT, Mr. Sting held various positions with Dana Commercial Credit in Ohio, including his final position there as Corporate Director.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

In this Compensation Discussion and Analysis (“CD&A”) section, we provide an overview of our performance and the business environment during 2020, followed by a description of the components of our executive compensation program for our Named Executive Officers, or “NEOs,” whose compensation is set forth in the Summary Compensation Table and other compensation tables contained in this CD&A. Also, this CD&A includes an overview of our executive compensation philosophy and our executive compensation program, as well as an explanation of how and why the Compensation Committee arrived at specific compensation policies and decisions involving our NEOs.

Named Executive Officers

Our NEOs for 2020 are:

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Executive Summary

Our 2020 executive compensation program was designed to tie pay to performance, with a significant portion of our NEOs’ compensation based on the attainment of operating and financial goals that are viewed as key drivers of shareholder value creation. Consistent with our historical pay for performance philosophy, in January 2020 the Compensation Committee instituted an annual cash incentive plan with rigorous financial objectives and awarded equity compensation to NEOs in the form of 35% restricted stock units (“RSUs”) and 65% performance stock units (“PSUs”) earned based on three-year average return on equity (“ROE”). In addition, Messrs. Hilzinger, Bogansky and Rajappa were granted supplemental performance stock units (“Supplemental PSUs”) designed to provide an enhanced reward for delivering exceptional above-target financial performance and above-market shareholder returns over a three-year measurement period.

In March 2020, mere weeks after the 2020 executive compensation program was approved and implemented by the Compensation Committee, the Covid-19 pandemic began to cause significant negative effects on the global economy and on our financial and operational results. Throughout 2020, the pandemic significantly curtailed economic activities in the industry segments we service, contributing to a significant decline in our origination volumes and elevated credit losses.

Despite the unprecedented operating challenges and macro-economic uncertainty we encountered from the Covid-19 pandemic, the Corporation and the leadership team managed the impact of the pandemic and generated profitability of $0.3 million, or $0.03 per diluted share, for the full 2020 fiscal year. These results were achieved in large part through (i) the implementation of significant cost reduction initiatives, including a reorganization of our front office, reduced headcount and lower general and administrative expenses and (ii) proactive portfolio performance management, including the completion of approximately 5,600 loan and lease modification requests. Furthermore, we were able to maintain our regular quarterly dividend to shareholders throughout 2020 and returned capital through share repurchases totaling $4.2 million during the year.

Notwithstanding the unexpected and significant negative impact of the Covid-19 pandemic on the Corporation’s financial results, the Compensation Committee did not make any adjustments to the performance objectives or thresholds under our 2020 cash incentive plan. Rather, in January 2021, after the completion of the fiscal year, the Compensation Committee reviewed the impact of the Covid-19 pandemic on the Corporation for the entire fiscal year and determined to calculate performance under our 2020 incentive plan on an adjusted basis (as described in detail below in Compensation for Named Executive Officers in 2020—Annual Cash Incentive Plan) to account for those aspects of the pandemic impact that were beyond management’s control and could not be mitigated by management action. As a result, and as discussed in more detail below, our NEOs received awards under our annual cash incentive plan ranging between 63% and 77% of their target awards.

At 2020 year-end, PSUs granted on March 20, 2018, which based performance upon our three-year average ROE for 2018, 2019 and 2020, were forfeited in their entirety as performance fell below the threshold level set forth in the award, in part because of the negative impact the Covid-19 pandemic had on the Corporation’s financial performance in 2020. The impact of the Covid-19 pandemic has also made it unlikely that PSUs granted on March 29, 2019 and February 14, 2020 will meet the threshold performance levels set forth in the awards at the conclusion of the performance periods on December 31, 2021 and December 31, 2022, respectively. No adjustments have been made to outstanding equity awards to account for the impact of the pandemic.

To retain our NEOs, incentivize continued efforts to improve the Corporation’s long-term performance as it emerges from the Covid-19 pandemic and drive long-term shareholder value creation, on December 14, 2020 the Compensation Committee granted PSUs to our NEOs tied to the achievement of rigorous share price goals (the “Stock Price-Based PSUs”). No portion of these awards will be earned unless the Corporation’s 20 consecutive trading day average closing price on December 14, 2023 is at least 28% above the closing share price on the date of grant and earning the full award requires price growth of 123%.

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Compensation Philosophy, Structure and Governance Process and Considerations

Compensation Philosophy.    The Compensation Committee believes that the most effective executive compensation program is one that rewards the achievement of specific annual, long-term and strategic goals, and aligns executives’ interests with those of our shareholders, with the ultimate objective of creating long-term shareholder value. The Compensation Committee evaluates both performance and compensation levels to ensure that compensation opportunities provided to key employees remains competitive in the marketplace and allows us to attract and retain superior talent needed to execute on the business strategy. To that end, the Compensation Committee believes compensation packages provided to our executives, including the NEOs, should include both cash and equity-based compensation that rewards for the achievement of performance measured against rigorous pre-established goals.

Key Governance Considerations.     Our executive compensation program is heavily weighted toward at-risk compensation tied to the Corporation’s financial and operational performance. To that end, we have implemented executive compensation policies and practices that reinforce our pay-for-performance philosophy and align with sound governance principles, as follows:

Say-on-Pay Vote.    At the 2020 Annual Meeting, shareholders approved our executive compensation policies and programs with over 90% support. The Compensation Committee believes this affirms shareholders’ support of our approach to executive compensation. The Compensation Committee appreciates and values the views of our shareholders. In considering the results of the favorable 2020 advisory vote on executive compensation, the Compensation Committee recognizes that executive pay practices and governance principles continue to evolve. While no changes were specifically made as a result of the vote, the Compensation Committee intends to continue to pay close attention to the advice and counsel of its compensation advisors and invites our shareholders to communicate any concerns or opinions on our executive pay practices directly to the Compensation Committee or the Board.

Parties Involved in the Corporate Governance of our Executive Compensation Programs.     The governance of our executive compensation programs generally occurs through interaction of three groups: the Compensation Committee, management and the Compensation Committee’s independent compensation consultant. In 2020, on occasion and as appropriate, the Compensation Committee also enlisted the advice of Morgan, Lewis & Bockius, LLP, independent counsel specializing in executive and non-employee director compensation matters.

Role of the Compensation Committee.     The Compensation Committee, consisting of four independent directors, is responsible for the review and approval of our executive compensation program. The Compensation Committee considers a multitude of factors in setting executive compensation, including individual performance, company performance, internal equity and competitive market pay levels and practices. Specifically, the Compensation Committee’s review of NEO compensation includes:

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Role of Management.    The Compensation Committee makes all compensation decisions relating to our NEOs; however, certain of our executive officers play a role, including managing the process for plan/metrics approvals and recommending salary and cash incentive levels and equity awards for plan participants other than the CEO, whose compensation is independently reviewed and approved without recommendations from management.

The CEO, with the assistance of our Chief Human Resources Officer, works with the Compensation Committee Chairman in establishing the agenda for Compensation Committee meetings. Management also prepares information for each Compensation Committee meeting. The CEO also occasionally participates in Compensation Committee meetings at the Compensation Committee Chairman’s request to provide:

The Compensation Committee regularly meets without management present, including to annually evaluate the CEO’s performance. The Committee also determines and approves the CEO’s pay, where the outcome of the performance evaluation is considered. A formal review is conducted with the CEO to share the Committee’s evaluation and compensation decisions.

The Compensation Committee is ultimately responsible for approving any recommendations and retains full discretion to modify (or reject) recommendations developed by management. The Compensation Committee operates under a written charter (accessible on the Investors page of our website at www.marlincapitalsolutions.com) and only independent directors serve on the Compensation Committee.

External Consultants and Market Data.    The Compensation Committee has utilized the services of independent consulting firms in order to provide advice on the design of the executive compensation program and related policies, senior executive pay levels, and non-employee director compensation.

In 2020, the Compensation Committee engaged FW Cook to provide general advice around the design of the 2020 executive compensation program, which largely mirrored the prior year’s design. In the second half of 2020, FW Cook was also engaged to advise on approaches to address the impact the Covid-19 pandemic had on the executive compensation program.

Furthermore, when evaluating our executive compensation program, the Compensation Committee refers to data from a peer group that includes companies in similar industries and of comparable size. Specifically, peers were identified based on Global Industry Classification Standards (GICS) code, and include those in the Diversified Financials, Trading Companies and Distributors and Technology Distributors industries, with a focus on companies in the equipment leasing space. At the time of selection, peer companies were limited to those with both revenue and market capitalization value of 0.25x-to-4.0x the Corporation’s size.

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The Compensation Committee-approved peer group used to help inform 2020 pay decisions consisted of the following 12 companies:

In early 2021, the Compensation Committee revisited the peer group and chose to remove certain peers with notably different business focuses and/or size. The Compensation Committee simultaneously added comparably sized peer companies in related industries. Therefore, the following peer group will be used to inform pay decisions:

Compensation for Named Executive Officers in 2020

Direct NEO compensation for 2020 consisted primarily of base salary, an annual cash incentive opportunity and grants of equity-based incentives in the form of RSUs, PSUs and Stock Price-Based PSUs, and for Messrs. Hilzinger, Bogansky and Rajappa, Supplemental PSUs. Each of those categories of compensation is discussed in more detail below.

Base Salary.    Our NEOs’ current base salaries are intended to provide a competitive ongoing level of pay and are the only element of our direct compensation program for executives not tied to performance. Salary determinations are informed by positioning relative to competitive market practice, experience, tenure, performance and contributions to our success. None of our NEOs received increases to their base salary rates in 2020. The NEOs’ base salary rates as of December 31, 2020 are listed in the below table.

In 2020, each of our NEOs voluntarily agreed to temporarily reduce their base salary following the onset of the Covid-19 pandemic, with Mr. Hilzinger reducing his base salary by 25% from April 13, 2020 through July 16, 2020 and our remaining NEOs reducing their base salaries by 15% from April 13, 2020 through May 31, 2020.

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Annual Cash Incentive Plan.    Our annual cash incentive plan is designed to motivate and reward NEOs for achieving short-term performance objectives, with earned amounts paid in the first quarter of the following year after the certification of results by the Compensation Committee.

The performance criteria and weightings under the 2020 cash incentive plan were identical to the 2019 plan and were set in January 2020 prior to the onset of the Covid-19 pandemic. Specifically, incentive payments were based 80% on corporate financial objectives and 20% on individual personal goal objectives. Corporate objectives were based on two independently evaluated measures that serve as primary indicators of short-term financial performance, with two-thirds of the corporate objective weighting (and 53.3% of the overall weighting) based on fully-diluted earnings per share (“EPS”) and one-third of the corporate objective weighting (and 26.7% of the overall weighting) based on adjusted net interest income (“NIM”). Target performance is tied to internally defined objectives, with maximum earn-out of 200% of target for results at 115% of goal or greater and threshold earn-out of 50% of target at 85% of goal. Below the threshold performance level (i.e., below 85% of goal), there is no payout. The maximum, target and threshold performance goals under the corporate objectives, were as follows (with various additional target amounts enumerated in the plan and linear interpolation in between):

The Covid-19 pandemic had a significant adverse impact on the Corporation’s financial results for the 2020 fiscal year. EPS for 2020 was $0.03 and NIM (which consists of net interest and fee income adjusted for gain on sale of leases and loans, servicing revenue and referral income) was $88.041 million, in each case failing to meet the above-referenced threshold performance level for any funding under the 2020 cash incentive plan. While EPS was negatively impacted by significant loss provisions in the first half of the year, the second half of the year benefited from management’s actions to reduce costs, re-organize the origination and processing functions and focused activities to protect the portfolio. NIM was negatively impacted by lower origination volumes and a lack of access to the capital markets to sell assets.

The Compensation Committee chose not to adjust the corporate performance objectives or funding levels originally enumerated in the cash incentive plan to account for the unexpected and significant negative impact of the Covid-19 pandemic on the Corporation’s financial results. Rather, in January 2021, the Compensation Committee determined to adjust how EPS and NIM were calculated to account for those aspects of the pandemic’s impact that were beyond management’s control and could not be mitigated by management action.

Specifically, in January 2021, the Compensation Committee approved an adjusted EPS calculation that took into consideration (i) changes in the Corporation’s loss provision based upon the economic forecast and qualitative adjustments made by management in determining the allowance for credit losses, (ii) the variance to the original 2020 business plan from significantly reduced asset sale and referral volume because of disruptions in the capital markets arising from the pandemic, and (iii) the cost of additional liquidity in the form of deposits maintained by the Corporation over the last nine months of 2020 in response to the onset of the pandemic and the potential impact on the brokered deposit market. At the same time, the Compensation Committee approved an adjusted NIM calculation taking into consideration the latter two factors referenced above. As more fully detailed in the table below, Covid-19 adjusted corporate financial objectives resulted in funding under the 2020 cash incentive plan for NEOs at 92.9% of target funding attributable thereto. After this result was determined, the Compensation Committee subsequently exercised negative discretion and reduced funding to 70% of target for the corporate performance objectives and to cap overall plan funding (inclusive of the individual performance factor which comprises 20% of individual’s award opportunities) at 70% of target.

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The Compensation Committee then evaluated and decided whether to increase an individual NEO’s award for outstanding personal performance, with the understanding that any such increase would be offset through reductions for other plan participants in order to not exceed the 70% aggregate cap set by the Compensation Committee.

For 2020, the Compensation Committee did not increase or decrease the cash incentive award for Mr. Hilzinger, our CEO. Mr. Bogansky, our CFO, and Mr. Rajappa, our Chief Strategy Officer, were the only NEOs to receive funding in excess of 70% of their target award. Particularly, Mr. Bogansky received 77% funding, as the Compensation Committee recognized his strong financial leadership in response to the Covid-19 pandemic, including his aggressive management of liquidity, capital and expense reduction efforts. Mr. Rajappa also received 77% funding, as the Compensation Committee recognized the leadership role he played in designing the Corporation’s digital strategy and IT roadmap and in conceptualizing the front office restructuring in 2020.

Each individual NEO’s target cash incentive award has historically been based upon a designated percentage of base salary wages earned during the calendar year. Each NEO’s designated target percentage remained unchanged in 2020 from 2019. However, given that our NEOs voluntarily agreed to a temporary salary reduction during 2020, in lieu of being based upon base salary wages earned, each NEO’s target award was based upon the designated percentage of salary wages that would have been earned had each NEO not voluntarily agreed to a temporary salary reduction during the year (“Annualized Wages”).

As a result of the above, the NEOs’ 2020 total annual cash incentive payments, which were approved by the Compensation Committee and paid in the first quarter of 2021, were as follows:

Annual Equity-Based Incentives.    In January 2020, the Compensation Committee reviewed and approved stock-based awards for our Named Executive Officers that were designed to align the NEOs’ interests with the long-term interests of our shareholders while simultaneously providing a competitive award opportunity relative to our peer group. The number of shares underlying each award, and the terms and conditions of each award, were determined by the Compensation Committee after consultation with management and FW Cook. The standard stock-based awards for the NEOs in 2020 consisted of 65% PSUs and 35% RSUs, a structure the

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Compensation Committee believes continues to emphasize pay-for-performance. For Messrs. Hilzinger, Bogansky and Rajappa, Supplemental PSUs were provided to reward for exceptional performance over a three-year measurement period, with funding only available for results at or above target for the regular PSU award.

In December 2020, the Compensation Committee considered the fact that PSUs granted on March 20, 2018, which based performance upon our three-year average ROE for 2018, 2019 and 2020, would be forfeited in their entirety as performance fell below the threshold level set forth in the award, in part because of the negative impact the Covid-19 pandemic had on the Corporation’s financial performance in 2020. The Compensation Committee also considered the fact that the financial impact of the pandemic made it likely that PSUs granted on March 29, 2019 and February 14, 2020 will fall short of the threshold performance levels at the conclusion of the performance periods on December 31, 2021 and December 31, 2022. In light of the foregoing and the fact that the Compensation Committee has no intention of modifying the terms of the PSUs granted in 2019 and 2020, on December 14, 2020 the Compensation Committee granted Stock Price-Based PSUs to our NEOs in order to support retention and alignment with shareholders and incentivize our NEOs to continue efforts to drive the Corporation’s long-term performance as it emerges from the Covid-19 pandemic.

Grants made to our NEOs in 2020 under the 2019 Equity Plan are described below.

Restricted Stock Unit Awards:    The RSUs issued to NEOs in 2020 vest in equal 33.3% annual installments on each anniversary date of the grant. In January 2020, the Compensation Committee determined to make the following RSU awards to the NEOs with a February 14, 2020 grant date:

PSUs based on ROE. The number of PSUs granted to our NEOs in 2020 that may become earned and vested will be determined based on the Corporation’s three-year average ROE during the performance period of fiscal years 2020, 2021 and 2022 (“2020-2022 ROE”). PSUs can be earned from 0-200% of target, based on achievement of the Performance Goals set forth in the chart below (with linear interpolation between the listed levels):

2020 PSU Award Metrics

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In January 2020, the Compensation Committee made the following PSU awards (target amounts) to the NEOs with a February 14, 2020 grant date:

Supplemental PSUs based on ROE and Total Shareholder Return. In addition to the PSU awards granted to all NEOs, in January 2020 the Compensation Committee awarded Supplemental PSUs with a February 14, 2020 grant date to Messrs. Hilzinger, Bogansky and Rajappa that were designed to be realized only upon exceptional financial performance of the Corporation. Mr. Hilzinger was granted this award based upon his prior performance and to provide further motivation and retentive value, Mr. Bogansky was granted this award given the significant role he will play in the Corporation’s long term financial performance and Mr. Rajappa was granted this award given the leadership role he will play in the Corporation’s growth strategy. Target amounts of Supplemental PSU awards were granted as follows:

The Supplemental PSU award only starts to be earned if 2020-2022 ROE exceeds 100% of the target level for the standard 2020 PSU award described above, and the 2020-2022 ROE would have to reach 14.375% in order for the target number of Supplemental PSUs to vest. Furthermore, even if the ROE metric results in achievement, (i) the number of Supplement PSUs awarded would be reduced if the Corporation’s total shareholder return (“TSR”) over the three year measurement period is below the 65^th percentile in relation to a 62 company comparison group and (ii) regardless of 2020-2022 ROE performance, the Supplemental PSU award would be forfeited entirely if the TSR was less than the 40^th percentile relative to that comparison group. The Performance Goals for the 2020 Supplemental PSU awards and the potential downward adjustment based upon relative TSR rank are set forth in the charts below (with linear interpolation between the listed levels).

2020 Supplemental PSU Award Metrics

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Relative TSR Modifier for 2020 Supplemental PSU Award

Stock Price-Based PSUs. The Stock Price-Based PSUs condition vesting based upon the trailing 20 consecutive trading day average closing price of our common stock on December 14, 2023, adjusted to assume the reinvestment of dividends from the grant date to the measurement date (the “Adjusted Ending Stock Price”). The Stock Price-Based PSUs were granted to our NEOs as follows:

The Stock Price-Based PSUs will vest based upon the Adjusted Ending Stock Price but will be forfeited in their entirety if the Adjusted Ending Stock Price is less than $16.00. No more than 100% of the target Stock Price-Based PSUs may vest per the award terms. Specifically, thresholds for the Adjusted Ending Stock Price, and the resulting vesting of units for each NEO, are as follows:

The NEOs will receive accrued dividend equivalents, if and to the extent dividends on the Corporation’s common stock are declared and paid from the grant date to the Stock Price-Based PSU distribution date, with respect to the number of Stock Price-Based PSUs that vest, which will be paid to the NEO in cash only if and when the Stock Price-Based PSUs are distributed to the NEO.

In the event a NEO’s employment is terminated prior to the end of the performance period by the Corporation on account of death, disability or without cause (in each case as defined in the 2019 Equity Plan), or by the NEO for good reason (as defined in the Corporation’s Severance Pay Plan for Senior Management), then the NEO will be entitled to a pro rata number of Stock Price-Based PSUs determined by multiplying the number of Stock Price-Based PSUs that ultimately vest under the award as if the NEO did not have a termination of employment by a fraction, the numerator of which is the number of days during the performance period that the NEO was employed and the denominator of which is the total number of days in the performance period.

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Upon a “change of control” as defined in the 2019 Equity Plan prior to the end of the performance period, a NEO’s award will be eligible to vest on the date of the change of control. In that case, instead of being based upon the Corporation’s trailing 20 consecutive trading day average closing price, the “Adjusted Ending Stock Price” used to determine the number of Stock Price-Based PSUs that vest pursuant to the thresholds described above will be calculated based on the per-share transaction price payable to the Corporation’s shareholders in such change of control transaction, adjusted to assume the reinvestment of dividends from the grant date to the change of control date. Any outstanding Stock Price-Based PSUs that do not vest as of the date of the change of control will be forfeited as of such date.

PSU Awards with Performance Periods Concluding in 2020

In 2020, the performance period closed for two previously granted PSU awards. Specifically, PSU awards granted on March 20, 2018 to all NEOs other than Mr. Bogansky (who was not employed with us at the time of the grant) required that the average ROE for fiscal years 2018, 2019 and 2020 be at least 13.40% for any PSUs under those awards to be earned. The Compensation Committee certified in January 2021 that average ROE over the performance period (after application of defined adjustments) for these PSUs was 9.58%. As such, in January 2021 the Compensation Committee certified that these awards were forfeited in their entirety.

In addition, a PSU award granted to Mr. Maslowe on March 31, 2017 was earned at one-third of target. This award was designed such that one-sixth of the target PSUs were earned based on achievement of six unique performance thresholds set at the highest level of 30 day average TSR during the performance period of the grant date until the three-year anniversary of the grant date reaching +18%, +36%, +53%, +71%, +88%, and +106% of a baseline stock price of $20.87. In July 2020, the Compensation Committee certified that the highest 30 day average TSR achieved during the performance period was $31.58, or +51% of the baseline stock price, resulting in two of the six unique performance thresholds being met and one-third of the target PSUs being earned. The PSUs vested on March 31, 2021, as they had been conditioned upon Mr. Maslowe’s continued employment with the Corporation through that date.

The table below provides further detail on the number of units earned and forfeited under each PSU award described above.

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Change of Control and Other Severance Arrangements

Our NEOs are all participants in our Severance Pay Plan for Senior Management (the “Severance Plan”). The purpose of the Severance Plan is to provide severance benefits to certain key eligible executives whose employment is terminated without “cause” or for “good reason” (each as defined in the Severance Plan) and contains different levels of benefits for terminations independent of, and related to, a change in control (“CIC”). Payments under the Severance Plan are subject to the NEO executing a release and complying with certain restrictive covenants. Payments and benefits under the Severance Plan would also cease upon any subsequent finding of any actions that constitute “cause” under the Severance Plan. Benefits under the Severance Plan are described below, with related values set forth in the “Potential Payments Upon Termination of Employment or Change in Control” table below.

Termination Independent of Change in Control

Upon a termination without cause, or by the executive for good reason, that occurs independent of a CIC (as further described below), our NEOs would be eligible to receive the following severance benefits (plus any accrued payments or benefits):

Salary Continuation.    A continuation of their annual base salary for the severance period, paid in accordance with the Corporation’s regular payroll schedule.

Annual Cash Incentive.    A pro rata annual cash incentive payment for the year of termination, based on actual performance results and paid at the same time as for then-employed participants, as well as, solely for Mr. Hilzinger, a target cash incentive payment for the year of termination.

Health Benefits Continuation.    Continuation of the executive’s eligibility to participate in the Corporation’s medical, dental, vision and prescription drug plans in which the executive was participating (including dependents) immediately prior to termination. Specifically, the Corporation will reimburse the executive for the difference between the executive’s monthly COBRA premium and the amount the executive would be required to pay for such coverage if employed by the Corporation at such time, subject to termination upon subsequent full-time employment.

Mr. Hilzinger would be eligible to receive the above-described salary continuation and health benefits continuation for 18 months following termination, and Messrs. Bogansky, Maslowe, Rajappa and Sting would be eligible to receive such continuation for 12 months following termination.

Termination in Connection with Change in Control

Upon a qualifying termination of employment (a termination without “cause” or for “good reason”) during the protected period of 24 months following a CIC, the Severance Plan provides that the NEOs will be eligible to receive the following severance benefits (in addition to any accrued benefits or payments):

Change in Control Payment.    A lump sum amount equal to the sum of (i) the executive’s annual base salary, multiplied by 2.0 for Mr. Hilzinger and 1.5 for Messrs. Bogansky, Maslowe, Rajappa and Sting, and (ii) the executive’s target cash incentive payment for the year of termination.

Change of Control Benefits Continuation.    Health care continuation for a period of up to 18 months on the same terms as described above for a non-CIC related termination.

Retirement Benefits and Other Perquisites and Compensation

The Named Executive Officers participate in employee benefits plans generally available to all of our employees, including medical and health plans, the 401(k) plan (which for 2020 included, for all employees, a 25% company match for the first 6% of employee contribution) and the 2012 Employee Stock Purchase Plan. See the Summary Compensation Table below for further detail.

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Executive Compensation Tax Considerations

Under Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), a public company generally may not deduct compensation in excess of $1 million paid to its CEO and other covered officers. The Tax Cuts and Jobs Act made certain changes to Section 162(m), including repealing the exemption for qualified performance-based compensation for taxable years beginning after December 31, 2017 and expanding the scope of persons covered by the limitations on deductibility. Accordingly, compensation paid after 2017 to our covered executive officers in excess of $1 million will not be deductible. The elimination of the performance-based exemption from Section 162(m)’s deduction limit has not altered the Compensation Committee’s commitment to a pay-for-performance executive compensation program. The Compensation Committee believes that the Section 162(m) related tax deduction is one of several relevant considerations in setting compensation and that the Section 162(m) tax deduction limitation should not compromise its ability to design and maintain executive compensation arrangements that, among other things, are intended to attract, retain and motivate talented, high-performing people. In 2020, the Compensation Committee considered the potential effect on the limitation of deductibility of compensation under Section 162(m) when determining NEO compensation and the Compensation Committee intends to continue to consider the potential future effects of the deduction limitation under Section 162(m) when determining future NEO compensation.

COMPENSATION RISK ASSESSMENT

As part of its oversight of our executive compensation program and in light of regulatory guidance on sound incentive compensation policies, the Compensation Committee considers the impact of our executive compensation program, and the incentives created by the compensation awards that it administers, on the Corporation’s risk profile. In addition, we review all of our compensation plans, policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk taking, to determine whether they present a significant risk to the Corporation. The Compensation Committee does not believe its compensation policies, procedures or practices are reasonably likely to have a material adverse effect on the Corporation.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists entirely of “non-employee directors” under SEC Rule 16b-3 and “independent” directors as affirmatively determined by the Board pursuant to the NASDAQ Listing Standards. The current members of the Compensation Committee, all of whom have served on the committee at all times since January 1, 2020, are the individuals named as signatories to the Compensation Committee Report set forth above. None of those individuals are current or former officers or employees of the Corporation. There were no compensation committee “interlocks” during 2020, which generally means that none of our executive officers served as a director or member of the compensation committee of another entity, one of whose executive officers served as a member of the Board or as a member of the Compensation Committee.

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SUMMARY COMPENSATION TABLE

The following table sets forth the compensation awarded or paid or earned or accrued for services rendered to the Corporation in all capacities during fiscal years 2020, 2019 and 2018 by our NEOs. In accordance with SEC rules, the compensation described in the table does not include medical, group life insurance or other benefits which are available generally to all our salaried employees.

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GRANTS OF PLAN-BASED AWARDS DURING 2020

The following Grants of Plan-Based Awards table provides information about equity and cash incentive plan awards granted to our NEOs during the fiscal year ended December 31, 2020. The annual cash incentive plan under which the cash incentive amounts in the following table were made is described above in “Compensation for Executive Officers in 2020 — Annual Cash Incentive Plan.” The equity-based incentive plans under which the equity grants in the following table were made are described above in “Compensation for Executive Officers in 2020 — Annual Equity-Based Incentives.”

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2020

The following table summarizes the equity awards we have made to our NEOs which are outstanding as of December 31, 2020.

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OPTION EXERCISES AND STOCK VESTED DURING 2020