hwbk-20240417

We are relying on a rule of the Securities and Exchange Commission that allows us to furnish our proxy statement and related proxy card, as well as our 2023 Annual Report, to shareholders over the internet. This means our shareholders will receive only a notice containing instructions on how to access the proxy materials over the internet and vote online. If you receive this notice but would still like to request paper copies of our proxy materials, please follow the instructions on the notice or on the website referred to on the notice. By delivering proxy materials electronically to our shareholders, we can reduce the costs of printing and mailing our proxy materials. Please visit www.voteproxy.com for more information about the electronic delivery of proxy materials.

The business to be conducted at the annual meeting is described in the accompanying notice of annual meeting and proxy statement. At this year's meeting, the agenda includes the election of four Class II directors, a proposal to ratify the selection of our independent registered public accounting firm and a proposal to provide non-binding advisory approval for the compensation of our executives disclosed in this proxy statement. In addition, there will be an opportunity to meet with members of senior management and review the business and operations of our Company.

Our board of directors has fixed the close of business on March 28, 2024 as the record date for the determination of the holders of our common stock entitled to notice of, and to vote at, the annual meeting. We solicit you to give your proxy to vote at the annual meeting by following the specific voting instructions appearing on the enclosed proxy card or voting instruction form, regardless of whether you intend to attend the meeting.

The board of directors of Hawthorn Bancshares, Inc. is providing these materials to you in connection with our annual meeting of shareholders on June 4, 2024. The information included in this proxy statement relates to the proposals to be voted on at the annual meeting, the voting process, and certain other required information. This proxy statement, the notice of annual meeting of shareholders and the accompanying proxy card or voting instruction form were first sent or given to our shareholders on or about April 19, 2024. As a shareholder of our Company, you are entitled and encouraged to vote on the items of business described in these proxy materials. Your vote is very important. For this reason, our board is requesting that you allow your shares to be represented at the annual meeting by the persons named as proxies on the enclosed proxy card or voting instruction form.

The annual meeting of shareholders will be held on Tuesday, June 4, 2024, commencing at 9:00 a.m., local time, at Hawthorn Bank located at 3600 Amazonas Drive, Jefferson City, Missouri, 65109. You may obtain directions to the location of the annual meeting by calling us at (573) 761-6100. You do not have to attend the annual meeting to be able to vote.

The only outstanding securities of our Company having voting rights at the annual meeting are the shares of our common stock, $1.00 par value. Each issued and outstanding share of our common stock as of the close of business on the March 28, 2024 record date for the annual meeting is entitled to one vote on each matter submitted to a vote at the annual meeting. As of the record date, 7,018,383 shares of our common stock were outstanding.

You may vote all shares of our common stock that you held as of the record date. This includes (i) shares held directly in your name as the shareholder of record, (ii) shares held for you as the beneficial owner through a broker, trustee or other nominee, sometimes referred to as shares held in "street name," and (iii) shares held for you in our Company's Profit-Sharing 401(k) Plan.

Generally, you may vote your shares by Internet, by telephone, by completing, signing and returning the proxy card or voting instruction form provided to you, or by attending the annual meeting and voting in person. If you vote by Internet or by telephone, you do not need to return the proxy card. You will need to have your proxy card in hand if you vote by Internet or by telephone. Specific voting instructions are found on the proxy card or voting instruction form provided to you.

Shares held by the shareholder of record. If your shares are registered directly in your name with our transfer agent, you are considered the shareholder of record, and these proxy materials were sent to you directly. As the shareholder of record, you have the right to grant your proxy vote directly or to vote in person at the annual meeting. We have enclosed a proxy card for you to use.

Shares held in street name. If you hold shares in a brokerage account or through some 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, trustee or other nominee, together with a voting instruction form. As the beneficial owner, you have the right to direct your broker, trustee or nominee how to vote your shares by following the instructions on the voting instruction form. Although you may attend the annual meeting, you may not vote these shares in person at the meeting unless you obtain a "legal proxy" from your broker, trustee or nominee. We may require a recent brokerage statement or other proof of ownership for admission to the meeting. You may vote your shares by any of the options listed on the voting instruction form.

Shares held in our Company benefit plans. If your shares are held for you in our Company's Profit-Sharing 401(k) Plan, you are receiving a voting instruction form from the plan trustee or administrator. To vote these shares, you will need to follow the specific voting instructions appearing on the voting instruction form. We must receive your completed voting instruction form by the deadline specified in such form. You may attend the annual meeting, however, you may not vote these shares in person at the meeting.

A majority of all outstanding shares of our common stock entitled to vote at the annual meeting must be present or represented by proxy in order to satisfy the quorum requirement for the transaction of business at the annual meeting. Both abstentions and broker non-votes (described below under "What is the effect of a broker non-vote?") are counted as present and entitled to vote for purposes of determining a quorum. If a quorum should not be present, the annual meeting may be adjourned from time to time until a quorum is obtained.

If you are a shareholder of record and you give your proxy, the shares represented by the proxy will be voted in accordance with your instructions. However, if you are a shareholder of record and you give your proxy without providing voting instructions on one or more proposals, your proxy will be voted for those unmarked proposals in accordance with the recommendation of our board of directors (which recommendation is identified above under "How does our board of directors recommend that I vote?").

If your shares are held in street name through a broker or other nominee, they will be voted in accordance with the voting instructions that you provide. If you do not provide voting instructions, your broker or other nominee is only permitted to vote your shares on proposals that are considered routine under applicable stock exchange rules. It is anticipated that only the proposal to ratify the appointment of FORVIS LLP as our independent registered public accounting firm would be considered to be routine.

If your shares are held in our Company's Profit-Sharing 401(k) Plan, they will be voted in accordance with your voting instructions. If the plan trustee or administrator does not receive voting instructions for shares held in the plan by the deadline specified in the voting instruction form, the shares credited to your account will be voted to "abstain." If your shares are represented at the meeting and are voted to "abstain" with respect to any nominee or proposal, this will have the same effect as a vote against such nominee or proposal.

Election of Directors. Directors are elected by receiving the affirmative vote of a majority of the shares represented at the annual meeting and entitled to vote in the election of directors. Shareholders may vote for or against any nominee for director or may abstain from voting for any or all nominees for director. If your shares are represented at the meeting and are voted to "abstain" with respect to a particular nominee, it will have the same effect as a vote against the nominee. Shareholders do not have cumulative voting rights in the election of directors.

Other Matters. Approval of the proposal to ratify and approve the selection of FORVIS LLP as our independent registered public accounting firm, the proposal for advisory approval of the compensation of our executives disclosed in this proxy statement and all other proposals that properly may come before the annual meeting require the affirmative vote of a majority of the shares represented at the meeting and entitled to vote on the particular proposal. Shareholders may vote for or against any proposal at the meeting or may abstain from voting on any such proposal. If your shares are represented at the meeting and are voted to "abstain" with respect to any proposal, this will have the same effect as a vote against the proposal.

A "broker non-vote" occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or other nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner. If you hold shares in street name through a broker or other nominee and do not vote your shares or provide voting instructions, your broker or other nominee may vote for you on "routine" proposals but not on "non-routine" proposals. It is anticipated that the ratification and approval of the selection of FORVIS LLP as our independent registered public accounting firm would be considered routine, but the election of directors and the advisory approval of the compensation of our executives would be considered non-routine. Therefore, if you do not vote on any non-routine proposal or provide voting instructions, your broker or other nominee will not be

allowed to vote your shares on such proposal. Broker non-votes are counted as present or represented for purposes of determining the presence or absence of a quorum for the annual meeting if the shares are otherwise properly represented at the meeting. Broker non-votes are not counted for purposes of determining the number of shares entitled to vote on any proposal for which the broker or other nominee lacks discretionary authority, and therefore would reduce the number of affirmative votes that are necessary to approve that proposal.

The only items of business that may be properly brought before the annual meeting are the matters set forth in this proxy statement or those brought before the meeting by or at the direction of our board of directors. We are not aware of any business to be acted upon at the annual meeting other than the items described in this proxy statement. Your signed proxy, however, will entitle the persons named as proxy holders to vote in their discretion for any other matter that is properly presented at the meeting.

Our board of directors is making this proxy solicitation, and our Company will bear all costs of this solicitation. In addition to the use of the mails, proxies may be solicited personally or by telephone by some of the regular employees of our Company and of our subsidiary bank, at no additional compensation. Our Company may reimburse brokers, banks and other persons holding stock in their names, or in the names of nominees, for their expenses incurred in sending proxy materials to their principals and obtaining their proxies. Our Company requests that brokerage houses and other custodians, nominees and fiduciaries forward the soliciting materials to the beneficial owners of the shares of common stock held of record by such persons. If you choose to access proxy materials or vote by Internet, you are responsible for any Internet access charges you may incur.

We will announce preliminary voting results at the annual meeting and will publish those results in a report on Form 8-K filed with the Securities and Exchange Commission or SEC within four business days of the day on which the annual meeting ends. If the voting results included in such Form 8-K are not final, we will publish the final results in an amended report on Form 8-K within four business days after the final voting results are known.

Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials via the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials to our shareholders. All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, shareholders may request to receive proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. We encourage shareholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of our annual meetings.

We have adopted a "householding" procedure which allows us, unless a shareholder withholds consent, to send one proxy statement and annual report to multiple shareholders sharing the same address. Each shareholder at a given address will receive a separate proxy card or voting instruction form. If you are receiving multiple sets of proxy materials and wish to have your accounts householded, or if you no longer wish to participate in householding and wish to revoke your consent, call our corporate secretary, Kathleen L. Bruegenhemke, at (573) 761-6179, or send written instructions to our corporate secretary at Hawthorn Bancshares, Inc., P.O. Box 688, Jefferson City, MO 65102. We will act in accordance with your wishes within 30 days after receiving such notification.

We filed our annual report on Form 10-K for the year ended December 31, 2023 with the SEC on March 18, 2024. Our annual report to shareholders, containing our audited financial statements for 2023, accompanies this proxy statement. This proxy statement, our annual report to shareholders, our Form 10-K and our other proxy materials are available on our internet website (www.hawthornbancshares.com) and on the SEC’s internet website (www.sec.gov). Information on any website that we refer to does not constitute part of this proxy statement.

Our board of directors consists of twelve directors. Our articles of incorporation divides the board into three classes of directors, with directors serving staggered terms of three years and until their respective successors are duly elected and qualified or until their respective earlier resignation or removal. The present terms of Frank E. Burkhead, Brent M. Giles, Jonathan L. States and Gus S. Wetzel, III, the four directors in Class II, expire at this annual meeting. Directors in Class III (Gregg A. Bexten, Shawna M. Hettinger, Kevin L. Riley and David T. Turner) and Class I (Kathleen L. Bruegenhemke, Douglas T. Eden, Philip D. Freeman and Jonathan D. Holtaway) have terms expiring at the time of the annual meeting of shareholders in 2025 and 2026, respectively. Our board of directors has determined that Messrs. Burkhead, Eden, Freeman, Holtaway, Riley, States and Wetzel and Mrs. Hettinger each satisfies the independence requirements of The Nasdaq Global Select Market or Nasdaq.

The nominating and corporate governance committee of our board of directors has designated Frank E. Burkhead, Brent M. Giles, Jonathan L. States and Gus S. Wetzel, III as the nominees proposed for election at the annual meeting. Each of these nominees currently serves on our board. Unless authority to vote for the nominees or a particular nominee is withheld, it is intended that the shares represented by properly executed proxies in the form enclosed will be voted for the election as directors of Messrs. Burkhead, Giles, States and Wetzel.


Name	Age	Position With Our Company	Director Since
NOMINEES
Class II: New Term to expire in 2027
Frank E. Burkhead	52	Director	2014
Brent M. Giles	56	Chief Executive Officer and Director	2023
Jonathan L. States	53	Director	2022
Gus S. Wetzel, III	45	Director	2018

DIRECTORS CONTINUING IN OFFICE
Class III: Term to expire in 2025
Gregg A. Bexten	56	President and Director	2023
Shawna M. Hettinger	52	Director	2022
Kevin L. Riley	68	Director	1995
David T. Turner	67	Chairman and Director	1997

Class I: Term to expire in 2026
Kathleen L. Bruegenhemke	58	Senior Vice President, Chief Risk Officer, Secretary and Director	2017
Douglas T. Eden	53	Director	2023
Philip D. Freeman	70	Director	1993
Jonathan D. Holtaway	53	Director	2019

Described below is the business experience for at least the last five years of each person nominated for election as a director at the annual meeting and each person whose term of office as director will continue after the annual meeting, as well as the specific experience, qualifications, attributes and skills of each such person that led to the conclusion that such person should serve on our board.

Gregg A. Bexten has served as a director and president of our Company and of Hawthorn Bank since May 2023. From 2014 until May of 2023, he served as Regional President of the Central Region. From 2000 until 2014, he served as a commercial lender in our Central Region with the titles of Senior Vice President and Vice President. Prior to joining the Bank, Mr. Bexten served as a commercial lender with another financial institution and as a Commissioned Bank Examiner for the Federal Reserve Bank of St. Louis. Mr. Bexten possesses considerable expertise in overseeing lending, various finance and regulatory compliance aspects of community banking, which he attained through over 30 years of service, first as a bank regulator and then as a dedicated, tenured employee of Hawthorn Bank. His expertise, and the community banking relationships he has developed in the mid-Missouri market, will benefit board discussions and decisions in the future.

Kathleen L. Bruegenhemke has served as a director of our Company and of Hawthorn Bank since March 2017. From January 2017 until November 2023, she served as Chief Operating Officer of Hawthorn Bank. From October 2014 until December 2016, she served as Columbia Market President. She has served as Senior Vice President and Secretary of the Company since November 1997 and as Chief Risk Officer of the Company since June 2006. From January 1992 until November 1997, she served as Internal Auditor of Hawthorn Bank (or of one of its constituent predecessors). Prior to joining the Bank, Ms. Bruegenhemke served as a Commissioned Bank Examiner for the Federal Deposit Insurance

Corporation. Ms. Bruegenhemke is a certified public accountant and possesses considerable expertise in overseeing various finance, regulatory compliance and risk management aspects of community banking, which she attained through over 30 years of service, first as a bank regulator and then as a dedicated employee of Hawthorn Bank. Her expertise, and the customer relationships and community connections she has developed, particularly in the Columbia, Missouri market, will benefit board discussions and decisions and support the conclusion that Ms. Bruegenhemke should serve on our board.

Frank E. Burkhead has served as a director of Hawthorn Bank and of our Company since July 2014. Mr. Burkhead also serves on our nominating and corporate governance, audit and compensation committees. He is the co-owner of Burkhead & Associates LLC and owner of Burkhead Wealth Management since their founding in 1999. Mr. Burkhead is a certified public accountant and wealth and financial planner licensed in multiple states. Early in his working career, Mr. Burkhead served our Company as a teller, in customer service and as a loan adjuster in the Jefferson City market. Mr. Burkhead brings business success in over 30 years of experience in the financial planning and tax planning business. Mr. Burkhead contributes a strong accounting background as well as an excellent reputation as a business leader in the central Missouri business community.

Douglas T. Eden has served as a director of our Company and of Hawthorn Bank since October 2023. He is currently the Principal and Investment Advisor Representative of Eden Capital Management, LLC based in Lakewood Ranch, Florida. Mr. Eden earned his Bachelor’s Degree in Economics from The Wharton School of the University of Pennsylvania in 1992 and worked in the property & casualty insurance industry for 24 years serving as Senior Vice President with CNA Financial in Chicago, Illinois, Senior Vice President with The Main Street America Group in Jacksonville, Florida and Executive Vice President with Selective Insurance Company in Branchville, New Jersey. Mr. Eden is an active investor, privately managing assets for more than 25 years and from 2012 until 2014 he served on the Investment Committee of the Main Street America Group with oversight of the Property & Casualty insurer’s $2 billion investment portfolio. It is anticipated that board discussions and decisions will benefit from his over 30 years of experience in the property & casualty insurance industry and investment advising.

Philip D. Freeman has served as a director of Hawthorn Bank (or one of its constituent predecessors) since 1990 and of our Company since 1993. He is the owner of Freeman Properties JCMO, LLC. Mr. Freeman also serves on our nominating and corporate governance, audit and compensation committees. The conclusion that Mr. Freeman should serve on our board is founded on his over 50 years of experience in managing a successful business with compassion, which experience has given him an appreciation for the needs of people in our market and earned him the respect of many in the Jefferson City business community. His leadership on various committees of the board has been accompanied by his development of a high level of competency and expertise in areas of focus for our board, including executive compensation, financial reporting and investor relations.

Brent M. Giles has served as a director and CEO of our Company and of Hawthorn Bank since May 2023. For the prior three years, Mr. Giles was the CEO of Wisconsin Bank and Trust and Bank of Blue Valley. From 2003 until the sale in 2019, Mr. Giles served as Chairman and Chief Executive Officer of Liberty Bancorp, Inc. and BankLiberty where he took the company public, and through several acquisitions and organic growth, became one of the nation’s top performing community banks. BankLiberty was recognized many times as a “best bank,” “best place to work,” and “strongest mid-size bank.” Prior to 2003, Mr. Giles had several commercial banking roles of increasing responsibility and spent 9 years as an FDIC examiner. Mr. Giles received his bachelor’s degree in banking and finance and his MBA both from the University of Missouri where he is still involved by speaking to graduate banking classes. Mr. Giles provides valuable insight to our board through his extensive experience in the banking industry, including serving as a chief executive officer at a number of financial institutions and his role as CEO.

Shawna M. Hettinger has served as a director of Hawthorn Bank and of our Company since September 2022. Mrs. Hettinger is president and majority owner of Streetwise, Inc., a pavement marking and traffic control company based in Grandview, Missouri. She has over 15 years of experience in the construction industry. Mrs. Hettinger’s knowledge in business, the construction industry and her connections with customers in our Kansas City and Springfield markets are of value to our Company and led to the conclusion that she should serve on our board.

Jonathan D. Holtaway has served as a director of our Company and of Hawthorn Bank since March 2019. He is President of Ategra Capital Management, LLC, a registered investment advisor founded by Mr. Holtaway in 2005 and based in Vienna, Virginia. He serves as managing member of Ategra GP, LLC, the general partner of Ategra Community Financial Institution Fund, LP, a fund which invests primarily in the securities of companies in the bank and thrift industry and Ategra LS500, LP, a fund which invests primarily in large capitalization equities in the United States. From July 1992 until September 2001, Mr. Holtaway served as Managing Director and Partner of Danielson Associates, an investment

banking company which provided advisory services to community financial institutions. It is anticipated that board discussions and decisions will benefit from his understanding of the fundamentals of community banking derived from his over 30 years of experience as an analyst of, advisor to, and investor in, community banks and other financial institutions.

Kevin L. Riley has served as a director of Hawthorn Bank (or one of its constituent predecessors) and of our Company since 1995. He was co-owner of Riley Chevrolet, Buick, GMC, Cadillac and Riley Toyota, Inc., each a Jefferson City, Missouri automobile dealership since 1986 and 1992, respectively, having recently retired. His plans are to continue to live in the Jefferson City area and stay active in business, charitable and different board functions. Mr. Riley also serves on our nominating and corporate governance, audit and compensation committees. Mr. Riley's years of experience in managing successful automobile dealerships (for which customer financing is an important part) and in regularly coming in contact with people in our market are of value to our Company and led to the conclusion that he should serve on our board. Board discussions and decisions benefit from his knowledge of customer relationship management.

Jonathan L. States has served as a director of our Company and of Hawthorn Bank since September 2022. He is a member/owner of Little Dixie Construction, a Columbia, Missouri based general contracting firm. Mr. States has over 30 years’ experience in the commercial construction industry. Being in the construction business has allowed Mr. States the opportunity to be actively involved in the commercial real estate business keeping him aware of the local and regional market. His knowledge of the construction industry and his connections with customers throughout Missouri are of value to our Company and led to the conclusion that he should serve on our board.

David T. Turner has served as a director of our Company and of Hawthorn Bank (or of its constituent predecessors) since January 1997. He has served as our Chairman since his retirement as Executive Chairman in January 2024, and he previously served as Executive Chairman since April 2023. Mr. Turner served as president of our Company from March 2002 until April 2023 and as chairman and chief executive officer of our Company from January 2011 until his retirement in April 2023. He also served as chairman, chief executive officer and president of Hawthorn Bank from April 2002 until April 2023. Mr. Turner served as vice chairman of our Company from June 1998 through March 2002 and as senior vice president of our Company from 1993 until June 1998. He served as president of a predecessor to Hawthorn Bank from January 1997 through March 2002 when he assumed the position of chairman, chief executive officer and president. He served as senior vice president of that same predecessor from June 1992 through December 1996 and as its vice president from 1985 until June 1992. The conclusion that Mr. Turner should serve on our board is founded on his experience in the banking industry and familiarity with Hawthorn Bank and many of its customers. He brings valuable insights gained from his career at Hawthorn Bank in developing and promoting lasting customer relationships, sound ethical practices and a dedicated, service-oriented staff.

Gus S. Wetzel, III has served as a director of our Company since November 2018 and as a director of Hawthorn Bank since April 2017. Mr. Wetzel also serves on our nominating and corporate governance, audit and compensation committees. Mr. Wetzel has held his real estate license with Re/Max Truman Lake since 2008. He is also currently an owner of Meadows Contracting, LLC and Meadows Development Company where he has actively developed commercial and residential properties for over 20 years. Mr. Wetzel is a leader within the Clinton, Missouri business community. Mr. Wetzel's knowledge of the Clinton, Missouri real estate environment and his connections with customers in the community benefit directorate discussions.

Each of the nominees listed in this proxy statement has indicated his willingness to serve as a director if elected, and the board of directors has no reason to believe that any nominee will be unavailable for election. If, for some unforeseen reason, a nominee becomes unwilling or unable to serve, it is intended that shares represented by the proxies will be voted for the election of such substitute nominee as may be designated by our nominating and corporate governance committee, unless the authority to vote for all nominees or for the particular nominee who has ceased to be a candidate has been withheld.

Shareholders are being asked to ratify and approve the selection of FORVIS LLP as our independent registered public accounting firm for the year ending December 31, 2024. The selection of FORVIS LLP was made by the audit committee of our board of directors. FORVIS LLP began serving as our independent auditor on January 1, 2024. In connection with the audit of our financial statements and internal control over financial reporting, our Company entered into an engagement agreement with FORVIS LLP which sets forth the terms by which FORVIS LLP will perform audit services for our Company. That agreement may be subject to alternative dispute resolution procedures. The ratification and approval by shareholders of the selection of FORVIS LLP effectively would also be a ratification of that agreement.

Audit services to be provided by FORVIS LLP for 2024 will include the examination of the consolidated financial statements of our Company and services related to our periodic filings with the SEC. Audit services also will include an assessment of our Company's internal control over financial reporting as of December 31, 2024 for the purpose of expressing an opinion on the effectiveness of our Company's internal control over financial reporting. The services provided by our independent registered public accounting firm are more fully described in this proxy statement under the captions "Audit Committee Report" and "Independent Auditor Fees and Services."

One or more representatives of KPMG LLP (our independent registered public accounting firm for 2023) and FORVIS LLP (our independent registered public accounting firm for 2024) may be present at the annual meeting. If present, any such representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions from shareholders.

Shareholder ratification and approval of the audit committee's selection of FORVIS LLP as our independent registered public accounting firm is not required by any statute, regulation or by our bylaws. Nevertheless, if the shareholders do not ratify and approve the selection of FORVIS LLP at the annual meeting, the audit committee will reconsider the appointment. Submission of our selection of FORVIS LLP to the shareholders for ratification and approval will not limit the authority of the audit committee to appoint another independent certified public accounting firm to serve as independent auditor if the present auditor resigns or their engagement otherwise is terminated.

Resolved, that the shareholders approve the compensation paid to our Company's executives pursuant to the policies and procedures employed by our Company, as described in the proxy statement for the 2024 annual meeting of shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis and the tabular and narrative disclosure regarding named executive officer compensation.

Our Company has elected to have two separate individuals serve as Chairman and Chief Executive Officer (“CEO”). Mr. Turner serves as our Chairman, and Mr. Giles serves as our CEO. The board believes that this separation facilitates the independence of the board and is appropriate for the size and structure of the Company. In addition, the structure allows us to draw upon the skills and experiences of both our Chairman and our CEO, while allowing our CEO to focus on overseeing the Company’s day-to-day operations and long-term strategic planning. If in the future, the board, after considering facts and circumstances at the time, appoints the CEO as Chairman of the board, we will promptly publicly disclose the appointment.

The Chairman’s duties and responsibilities include: (1) developing and establishing board meeting agendas and the appropriate schedule of board meetings, in consultation with the CEO and the other directors; (2) along with other board members, engaging in communications with shareholders and other stakeholders, including at our annual meetings; (3) engaging with the CEO, chairs of board committees, and other members of the board regarding board structure; and (4) encouraging professional development of the board members and executive officers.

Our board of directors is comprised of Mr. Turner, Mr. Giles and ten other directors, including eight directors who satisfy Nasdaq's independence requirements. Our corporate governance guidelines provide that our independent directors will meet regularly in executive session. Our Company does not have a member of our board who is formally identified as the lead independent director; however, Philip D. Freeman, an independent director, leads these executive sessions. In addition, each of the board committees is comprised solely of independent directors. In meetings of the three board committees, the meetings are led by the respective independent chairs of each committee. Our board leadership structure has been effective for our Company. We believe that having a separate chairman of the board, a chief executive officer and an independent chair for each of our board committees currently provides the right form of leadership for our Company.

Although it is management's job to assess and manage our Company's exposure to risk, our board of directors oversees our Company's risk management and establishes policies that govern the process. Our board strives to ensure that risk management is incorporated into our Company's culture, and to foster risk-aware and risk-adjusted decision making throughout the organization. Our board also establishes standards for risk management by approving policies and directives that address and mitigate our Company's most material risks. These include policies and directives addressing credit risk, interest rate risk, capital risk and liquidity risk, as well as regulatory compliance. Our risk management processes are designed to bring to our board's attention our most material risks through various reports presented by management, including our chief risk officer, internal and external auditors, and regulatory examiners, and to enable our board to understand the risks and how they are addressed.

In overseeing our Company's risk management, our board conducts much of its risk oversight activities through our audit committee, which works closely with our chief risk officer. Our audit committee meets at least quarterly each year with our chief risk officer and other members of management and receives a comprehensive report on enterprise risk management, including management's assessment of risk exposures (including risks related to liquidity, credit, operations and regulatory compliance, among others), and the processes in place to monitor and control such exposures. Our chief risk officer provides a presentation on enterprise risk management to the full board at least once each year. From time to time our audit committee also receives updates between meetings from our chief risk officer, our chief executive officer, our chief financial officer and other members of management relating to risk oversight matters. Our audit committee reports to the full board of directors after each meeting of the committee.

In addition to our audit committee, our board relies on our compensation committee for risk oversight activities within its area of responsibility. Our compensation committee most closely monitors the risks to which our compensation policies and practices could subject us. In performing these functions, the committee considers input from our chief risk officer and other members of management. In 2023 the committee reviewed our compensation programs and determined that they do not subject our Company to unnecessary or excessive risk or motivate staff members to manipulate our earnings and therefore are not reasonably likely to have a material adverse effect on our Company.

Our insider trading policy is designed to promote compliance with insider trading laws, rules and regulations, and any applicable listing standards, and prohibits executive officers, directors, certain employees with access to our material, non-public information and certain of their respective relatives and controlled persons ("Covered Persons") from purchasing or selling any type of security, whether issued by the Company or another publicly-held company, while such person is aware of material, non-public information relating to the Company or such other publicly-held company or from providing such material, non-public information to any person who may trade while aware of such information. This policy also prohibits Covered Persons from engaging in transactions in securities of the Company that are speculative in nature. These transactions include, but are not limited to: (1) the writing of a call option and the purchase of a put option if the amount of securities underlying the option exceed the securities that the Covered Person otherwise owns; (2) "sales against the box" (i.e., selling of borrowed securities when the Covered Person owns sufficient shares to cover the sale); and (3) transacting in the securities of any entity with which the Company is dealing or is proposing to deal. This policy also strongly discourages Covered Persons from engaging in forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, and requires Covered Persons to obtain pre-clearance from the Company prior to entering into such transactions, with such request for pre-clearance setting forth a justification for such transactions.

Our board of directors has not established a formal process for shareholders to follow in sending communications to our board or its members, as our policy has been to forward to the directors any shareholder correspondence we receive that is addressed to them. Shareholders who wish to communicate with our board or any of our directors may do so. Such communications must be addressed to our board or any such director in care of our corporate secretary at Hawthorn Bancshares, Inc., P.O. Box 688, Jefferson City, MO 65102. Alternatively, such communications may be sent by e-mail to kbruegenhemke@hawthornbank.com. All such communications will be compiled by our corporate secretary and submitted to our board or the individual director, as applicable, on a periodic basis.

Neither our board of directors nor a specific director is required to respond to a shareholder communication. To avoid selective disclosure, our board or the individual director may respond to a shareholder's communication only if the communication involves information which is not material or which is already public. In such case, our board of directors, as a whole, or the individual director may respond, if at all:

If the communication involves material non-public information, our board of directors or the individual director will not provide a response to the shareholder concerning such information. Our Company may, however, publicly provide information responsive to such communication if (following consultation with our advisors, as our board determines appropriate) our board determines disclosure is appropriate. In that case, the responsive information will be provided in compliance with SEC Regulation FD and other applicable laws and regulations.

In identifying and evaluating director nominees, the nominating and corporate governance committee of our board of directors may receive recommendations from management, from other directors and from shareholders. The committee reviews and considers information on each candidate and evaluates it in light of the needs and requirements of our Company. The committee believes that our board and its committees should be comprised of persons who are of high character and integrity, who have a personal and professional reputation that is consistent with the image and reputation of our Company, and who have expertise that may be useful to our Company. The committee also considers various factors, including the independence of the candidate, as well as his or her education or special skills, areas of expertise, experience, business associations, reputation and other characteristics and qualities that the committee believes are likely to enhance the effectiveness of our board and its committees. In determining whether a director should be retained and stand for re-election, the committee also considers the director's past attendance at meetings and participation in and contributions to the activities of our board and each committee on which such director serves. The committee does not assign specific

weights to particular factors and no particular factor is necessarily applicable to all prospective nominees. No person will be eligible to stand for election as a director if he or she has been convicted of a felony without right of further appeal. In addition, no person may serve as a director after the end of the term in which his or her 75th birthday occurred, nor may any person be eligible to stand for election as a director after his or her 75th birthday. The committee does not have a formal policy concerning its consideration of diversity in identifying director nominees. Although the committee may consider diversity in identifying director nominees, it did not do so with respect to the selection of the nominees for this annual meeting. The committee seeks to identify and recruit the best available candidates, without regard to race, color, religion, sex, age, marital status, ancestry, national origin or disability.

Shareholders who wish the nominating and corporate governance committee to consider their recommendations for nominees for the position of director should submit their recommendations in writing to the nominating and corporate governance committee in care of our corporate secretary at Hawthorn Bancshares, Inc., P.O. Box 688, Jefferson City, MO 65102. All nominees, including those submitted by shareholders in accordance with these procedures, will be evaluated using generally the same methods and criteria described above, although those methods and criteria are not standardized and may vary from time to time. Shareholders also may submit director nominations to our Company in accordance with the procedures described below under "Shareholder Proposals."

Audit Committee. The audit committee of our board of directors currently is comprised of Mr. Burkhead, its chairman, and Messrs. Freeman, Riley and Wetzel. Our board of directors has determined that each member of the audit committee is independent as defined by Nasdaq's independence standards. The committee members also each meet the additional independence standards of Rule 10A-3 of the Securities Exchange Act of 1934. In addition, our board of directors has determined that Frank E. Burkhead meets the SEC's definition of an "audit committee financial expert." The audit committee assists our board in fulfilling its responsibilities with respect to accounting and financial reporting practices and the scope and expense of audit and related services provided by external auditors, among others. The audit committee is responsible for apprising our board of management's compliance with board mandated policies, internal procedures and applicable laws and regulations. The committee works with the internal audit department and external auditors and supervises the internal audit function directly, reviews and approves the hiring of audit personnel and evaluates the performance of the internal audit function and the external auditors. The committee also has the duty to make, or cause to be made, a suitable examination and audit of the financial affairs of our Company and its subsidiaries at least annually, and to report its findings to our board of directors. A more complete description of the audit committee's functions is provided in its charter, a copy of which is available on our internet website (www.hawthornbancshares.com) under the "Governance Documents" menu tab. The audit committee met nine times during 2023.

Compensation Committee. The compensation committee of our board of directors currently is comprised of Mr. Wetzel, its chairman, and Messrs. Burkhead, Freeman and Riley. Our board of directors has determined that each member of the compensation committee is independent as defined by Nasdaq's independence standards. The committee members also each meet the definition of "non-employee director" under SEC Rule 16b-3. The committee is responsible for reviewing and making recommendations to our board of directors regarding the compensation and benefits of our executive officers and directors and for establishing and administering our executive compensation program. Our chief executive officer assists the committee from time to time on a variety of compensation matters, including making recommendations for the appropriate salaries and bonuses of our executive officers (other than our chief executive officer). The committee has the authority to consult with management and to engage the services of outside advisors, experts and others to assist it in its efforts. A more complete description of the committee's functions is provided in its charter, a copy of which is available on our internet website (www.hawthornbancshares.com) under the "Governance Documents" menu tab. The compensation committee met six times during 2023.

Nominating and Corporate Governance Committee. The members of our nominating and corporate governance committee currently are Mr. Freeman, its chairman, and Messrs. Burkhead, Riley and Wetzel, each of whom is independent, as defined by Nasdaq's independence standards. This committee is responsible for the director nomination process, including evaluating and recommending director nominees and committee appointments. It also is responsible for various other governance related matters, including an annual board assessment. A more complete description of the committee's functions is provided in its charter, a copy of which is available on our internet website

During 2023, our board of directors held 10 meetings. Each director attended at least 75% of the total meetings of our board of directors and of the committees of our board on which he or she served during that year. Our directors discharge their responsibilities throughout the year, not only at such board of directors and committee meetings, but through personal meetings and other communications with members of management and others regarding matters of interest and concern to our Company. All of our directors are also board members of our subsidiary bank, which meets on a regular basis.

Directors are encouraged by our Company to attend our annual meeting of shareholders if their schedules permit, but our Company does not otherwise have a policy regarding such attendance. Each director was either present at the annual meeting of shareholders held in June 2023 or attended by phone. The board of directors typically meets immediately following the annual meeting of shareholders, which facilitates the directors' attendance at the annual meeting of shareholders.

Our board of directors has adopted a code of business conduct and ethics applicable to all employees, officers and directors, including our principal executive officer and our principal financial officer. A copy of the code of business conduct and ethics is available without charge to any shareholder who requests it by writing to our corporate secretary at Hawthorn Bancshares, Inc., P.O. Box 688, Jefferson City, MO 65102. It also is available on our internet website (www.hawthornbancshares.com) under the "Governance Documents" menu tab. Any substantive amendment to, or waiver from, a provision of this code that applies to our principal executive officer or principal financial officer will be disclosed on our internet website and, if required by rules of the SEC or Nasdaq, in reports we file with the SEC.


Name	Fees Earned or Paid in Cash ($) (1)	All Other Compensation ($)	Total ($)
Frank E. Burkhead	46,000	—	46,000
Douglas T. Eden	5,800	—	5,800
Philip D. Freeman	46,000	—	46,000
Shawna M. Hettinger	36,900	—	36,900
Jonathan D. Holtaway	36,900	—	36,900
Kevin L. Riley	46,000	—	46,000
Jonathan L. States	36,900	—	36,900
Gus S. Wetzel, III	46,000	—	46,000


Name	Hawthorn Bancshares Retainer ($)	Hawthorn Bancshares Meeting Fees ($)	Hawthorn Bank Meeting Fees ($)	Total Fees Earned or Paid in Cash ($)
Frank E. Burkhead	24,000	21,350	650	46,000
Douglas T. Eden	4,000	1,800	—	5,800
Philip D. Freeman	24,000	21,350	650	46,000
Shawna M. Hettinger	24,000	12,250	650	36,900
Jonathan D. Holtaway	24,000	12,250	650	36,900
Kevin L. Riley	24,000	21,350	650	46,000
Jonathan L. States	24,000	12,250	650	36,900
Gus S. Wetzel, III	24,000	21,350	650	46,000

This compensation discussion and analysis describes the material elements of compensation of our chief executive officers (there were two in 2023) and our two other most highly compensated executive officers for 2023, collectively referred to as our "named executive officers." It also provides information on our compensation philosophy and our compensation policies and programs designed to achieve our compensation objectives. This discussion and analysis should be read in conjunction with the Summary Compensation Table, its accompanying footnotes and the additional tabular and narrative disclosure that follows the Summary Compensation Table.

The compensation committee of our board of directors has overall responsibility for the establishment, direction and administration of all aspects of the compensation policies and programs for the executive officers of our Company and its subsidiary bank. The committee seeks to ensure that the total compensation paid to the executive officers, taking into account any compensation received from our subsidiary bank, is fair, reasonable and competitive. Our compensation program is reviewed annually to ensure that compensation levels and incentive opportunities are competitive and reflect the performance of our Company and its subsidiary bank as well as performance of the individual executive officer. In this regard, from time to time our Company may retain the services of human resources and executive compensation consulting firms to review and make recommendations concerning our executive compensation program. In 2023, the compensation committee engaged Aon Consulting, Inc. (“Aon”), as its outside independent compensation consultant. The services provided by Aon included: (1) advising the compensation committee on the principal aspects of the executive compensation program and evolving best practices; (2) advising the committee with respect to the composition of a custom peer group; and (3) providing market information and analysis regarding the competitiveness of our program design and awards in relation to our performance.

Applicable SEC rules require companies to assess whether the work of any compensation consultant who has played any role in determining or recommending the amount or form of executive or director compensation raises any “conflicts of interest.” If so, the company must disclose in its proxy statement the nature of any such conflict of interest and how it is being addressed. The compensation committee reviewed the relationships among AON and the Company’s directors and executive officers in order to assess whether the work done by AON raised any conflicts of interest. The compensation committee did not identify any such conflicts of interest in its inquiry of these parties as a part of this assessment. Under its charter, the compensation committee also has the authority to retain, approve fees for and terminate advisors, consultants and legal counsel as it deems necessary to assist in the fulfillment of its responsibilities. Prior to engaging any such advisor, consultant or legal counsel, the compensation committee considers the independence assessment of such advisor pursuant to applicable Nasdaq and SEC rules, but the committee retains discretion to engage any such advisor, without regard to its independence, after considering the findings in such assessment.

In determining the structure and levels of each of the components of executive compensation needed to achieve these objectives, all elements of the compensation package are considered in total, rather than any one component in isolation. As more fully described below, the determination of such levels of executive compensation is a subjective process in which many factors are considered, including our Company's and/or subsidiary bank's performance and the individual executive's specific responsibilities, historical and anticipated personal contribution to our business, and length of service with our Company or subsidiary bank.

executive officers other than our chief executive officer, is administered by our chief executive officer with respect to non-equity compensation and by the compensation committee with respect to equity compensation. In approving equity compensation awards to our executive officers other than our chief executive officer, the compensation committee gives some deference to the recommendations of our chief executive officer. Mr. Giles, our chief executive officer, and other executive officers of our Company and subsidiary bank, may attend meetings of the committee, but are not present during discussions or deliberations regarding their own compensation.

Our compensation program provides variable compensation opportunities, with adequate levels of fixed compensation (“variable compensation” refers to opportunities that are directly linked to the performance of the Company or the value of Hawthorn stock.) We use variable compensation to address shareholder alignment and to drive our financial results. Fixed compensation is used to address the predictable and recurring financial needs of our executives. The table below provides more information about the structure of our program.


	Form	Features	Rationale
Fixed Compensation	Base Salary	Determined annually; based on individual performance (subject to broader Company goals), internal pay equity and peer group practices at or near the median	Provides a source of predictable income
Variable Compensation	Performance-Based Incentive Cash Awards	Annual cash bonus, with the amount contingent on attainment of absolute performance measures	Aligns pay and short-term Company performance
	Performance-Based Incentive Equity Awards	Shares are issued in a “target” amount at the beginning of a three-year performance cycle and relative performance measures are designated, with final payouts contingent on actual performance during the cycle	Aligns pay and long-term Company performance
	Time-Based Equity Awards	Shares are issued at the beginning of a service-based vesting period, with vesting subject to continuous employment during the period	Acts as a retention device

It is our view that these compensation components collectively promote the achievement of our compensation program objectives identified above by advancing both the short- and long-term interests of our shareholders. Among other things, the long-term interests of our shareholders are advanced by designating a portion of executive compensation to be at risk: namely, incentive compensation (which permits individual performance to be recognized on an annual and long-term basis based, in part, on an evaluation of the executive's contribution to our Company's and/or subsidiary bank's performance) and the grant of stock options and other long-term equity incentive compensation (which directly ties a portion of the executive’s long-term remuneration to stock price appreciation realized by shareholders). The applicable components of the compensation program are addressed separately below.

Base Salary. Our Company provides our named executive officers and other employees with base salary to compensate them for services rendered during the year. We view base salary as a key element of our employee attraction and retention objective. Base salary ranges for executive officers are determined for each executive based on his or her position and responsibility and on management's recommendations, subjective assessments of each executive's growth and effectiveness in the performance of his or her duties and available market data. In this regard, there is a subjective analysis of the role played by each individual executive in generating our Company's and/or subsidiary bank's performance, including a consideration of the executive's specific responsibilities, contributions to our Company's and/or subsidiary bank's business, and length of service. The factors impacting base salary levels are not independently assigned specific weights. We believe that base salary levels must bear a reasonable relationship to those that we perceive to exist in our market for executive talent in order to protect our ability to retain our executives and attract new executives when necessary. Base salary levels typically are considered annually as part of our Company's performance review process as well as upon a promotion or other change in job responsibility. Mr. Giles’ base salary for 2023 was established pursuant to the terms of his Employment Agreement (as defined below), but any subsequent increases will be made after considering

•market data, to the extent available, that places the executive's compensation in context to that provided to similarly situated executives of other employers. Our most recent external analysis was performed in 2023 for 2024 compensation by Aon in which Aon's general market and executive banking databases were selected for peer comparison purposes in conjunction with relevant peer proxy information.

The committee increased the base salaries of our named executive officers (other than Mr. Giles, who joined our Company in May 2023 and whose base salary was established pursuant to his Employment Agreement) in 2023 as follows: Mr. Turner – 4%; Mr. Bexten – 54%; and Ms. Bruegenhemke – 4.9%. Mr. Bexten was appointed President of the Company and subsidiary bank effective May 1, 2023. Following his promotion, Mr. Bexten’s salary was increased based on a review of the compensation peer group and a market range analysis and aligns with the median compensation of the peer group. The base salaries were determined subjectively for the other named executive officers by the committee after considering cost of living adjustments and each employee's perceived merit performance.

Incentive Compensation. In 1997, the committee recommended, and the full board of directors approved, the adoption of an incentive bonus program. This program has been an important part of our compensation program in that it was designed to provide incentives to achieve Company and individual performance objectives. Under this program, our Company's and subsidiary bank's officers are eligible to receive annual incentive bonus awards. The officers participating in the program are identified by our chief executive officer and our compensation committee. Performance objectives are established for each of these officers.

The performance objectives for participants may include corporate performance objectives, functional or operating unit performance objectives and personal targeted objectives for performance. In the case of our chief executive officer and other senior officers, the performance objectives for 2023 were focused primarily on the achievement of budgetary, credit quality and operational objectives, while those for the junior officers of our subsidiary bank primarily concern their functional or operating unit performance and the achievement of personal performance objectives. The performance objectives are not independently assigned specific weightings, but instead are subjectively considered based upon their perceived relative importance to each individual officer's job category and responsibilities.

Each officer who is eligible to receive bonus awards is assigned to one of five bonus tiers, which assignment is made primarily according to job complexity and responsibility. Tier one consists of our chief executive officer (there were two in 2023), Messrs. Turner and Giles. Tier two generally consists of senior officers of our Company and of our subsidiary bank, including Mr. Bexten and Ms. Bruegenhemke. Target and maximum award levels are established for each tier and are expressed as a percentage of base salary for the officers in the applicable tier. Target awards are established at levels that, when combined with base salary, will achieve the perceived market level of annual compensation for performance that exceeds expectations. No awards are paid if the target level is not achieved. The maximum awards are established at 150% of the targeted award opportunity to reward exceptional performance. Mr. Giles’ annual incentive bonus opportunity for 2023 was established pursuant to the terms of his Employment Agreement. The following table presents the target and maximum award levels (expressed as a percentage of base salary) for each tier of our incentive bonus program.

Equity Incentive Compensation. As described below under “Executive Compensation and Related Matters—Equity Incentive Plan,” our board of directors adopted, and our shareholders subsequently approved in June 2023, the Hawthorn Bancshares, Inc. Equity Incentive Plan (the “Equity Plan”). Under the Equity Plan, equity-based awards may be made to eligible directors, officers and employees. The maximum number of shares that may be issued pursuant to awards under the Equity Plan is 203,000 shares.

This plan is available to provide long-term incentives to executive officers and other employees, as well as non-employee directors, through grants of stock options (non-qualified stock options and incentive stock options), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance shares, stock appreciation rights (“SARs”), performance units, bonus shares or other stock-based awards. Awards under the Equity Plan serve to advance the longer term interests of our Company and its shareholders by rewarding executives upon the creation of incremental shareholder value.

The selection of the persons eligible to receive equity awards and the designation of the number of equity awards to be granted to such persons are made by our compensation committee after taking into account management’s assessment of each person’s relative level of authority and responsibility with our subsidiary bank, years of service and base salary, among other factors. To date, the only awards issued under our Equity Plan have been RSUs. In 2023, we issued RSUs to Mr. Giles under the Equity Plan pursuant to his Employment Agreement, which were the only equity awards issued to our named executive officers during 2023.

Retirement Benefits. As described below under "Executive Compensation and Related Matters—Pension Plan," all full-time employees of our Company and subsidiary bank who were hired before July 1, 2017 and have completed five continuous years of employment, including Mr. Turner, Mr. Bexten and Ms. Bruegenhemke, earn the right to receive certain benefits upon retirement under our defined benefit pension plan. The normal retirement benefits provided under the plan for an employee retiring at age 65 with at least 25 years of continuous service are based upon 45% of his or her average compensation over a ten-year period, less 50% of his or her social security benefit. For employees with less than 25 years of continuous service, retirement benefits are reduced proportionally.

Excess Benefit Plan. As described below under "Executive Compensation and Related Matters—Excess Benefit Plan," we established an excess benefit plan to restore certain retirement benefits to selected key management and highly compensated employees, including Mr. Turner, that are limited under the Company's defined benefit pension plan due to limitations under the Internal Revenue Code. Under this excess benefit plan, a participant is eligible to receive a monthly benefit, beginning upon the later of the participant's termination of employment or attainment of age 65, equal to the difference between the monthly benefit the participant would have received under our pension plan if certain limits under the Code were not imposed and the participant's actual monthly benefit amount under the pension plan.

Perquisites and Other Personal Benefits. Our Company provides our named executive officers with perquisites and other personal benefits that the compensation committee believe are reasonable and consistent with its overall compensation program to better enable our Company to attract and retain superior employees for key positions. The compensation committee periodically reviews the levels of perquisites and other personal benefits provided to named executive officers.

Our Company provides each of our named executive officers with the use of an automobile because their responsibilities for our Company and subsidiary bank requires travel to our various branch offices on a regular basis. They may use the automobile for personal use as well. Our Company pays local country club membership dues on behalf of each of our named executive officers to assist them in developing and enhancing business relationships in our markets. Considered both individually and in the aggregate, we believe that the perquisites we offer to our named executive officers are reasonable and appropriate. No named executive officers received a perquisite in excess of $25,000 in 2023.

We have entered into an Employment Agreement with Mr. Giles, our chief executive officer. The agreement is primarily intended to promote retention, impose standard restrictive covenants that protect our proprietary information and business and provide compensation opportunities that are relatively consistent for our chief executive officer. More

Our Company has entered into change in control agreements with various executive officers including each of our named executive officers, which agreements are described below under the caption "Change in Control Agreements." These agreements provide for the payment of certain benefits if we terminate the executive's employment or if the executive quits for good reason within two years after a change in control of our Company. This "double trigger" arrangement, which requires both a change in control of our Company and a termination of employment must occur before benefits are triggered, is intended to provide continuity for the business by encouraging the continued employment of the executive following the change in control.

The committee believes the change in control agreements protect shareholder interests by reducing the distraction and uncertainty of key executives during a rumored or actual change in control of our Company. The agreements reinforce and encourage the executives' continued attention and dedication to their duties and provide incentives for them to remain with our Company during the transition. Continuation of the management team is often a crucial factor for the acquiring company. Severance benefits that encourage the executives to continue in their positions, therefore, may result in shareholders receiving a higher value from the deal.

The committee considers the potential amounts payable under the change in control agreements as part of its annual compensation review, but it did not review or revise the agreements in 2023. The benefits provided under these agreements do not impact the committee's decisions regarding other elements of the executives' compensation. Since these agreements provide contingent compensation, not regular compensation, they are evaluated separately in view of their intended purpose.

We have adopted a policy providing for recovery of erroneously awarded incentive-based compensation in the event of a restatement of the Company’s financial statements (the “Clawback Policy”). The Clawback Policy was adopted, effective as of October 2, 2023, to comply with the listing standards adopted by Nasdaq regarding compensation recovery, and the full policy is disclosed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Section 162(m) of the Internal Revenue Code generally disallows an income tax deduction to public companies for compensation over $1 million paid to certain executive officers. Our policy is to take reasonable and practical steps to avoid or minimize compensation that exceeds the cap so that all or most compensation is tax deductible. All compensation paid to our named executive officers in 2023 was deductible for federal income tax purposes.

At the annual meeting of shareholders held on June 6, 2023, shareholders provided advisory approval of the compensation of our executives disclosed in the proxy statement for that meeting pursuant to the compensation disclosure rules of the SEC. Over 92% of the shares voted were voted for approval of the compensation of our executives at that annual meeting, which encouraged the compensation committee to continue its practices in determining executive compensation. At the annual meeting of the shareholders held on June 2, 2020, shareholders provided advisory approval for holding future advisory votes on executive compensation every year. In light of this shareholder approval for annual advisory votes on executive compensation, shareholders are being asked again to consider and act upon providing advisory approval for the compensation of our executives at this year's annual meeting of shareholders. We value the opinions of shareholders and, to the extent there is any significant advisory vote against the compensation of our executives, the compensation committee will consider the concerns of shareholders reflected by such vote and will evaluate whether any actions are necessary to address those concerns. It is anticipated that shareholders will next be asked to provide advisory approval concerning the frequency of providing advisory approval of the compensation of our executives at our 2026 annual meeting of shareholders.

The following summary compensation table summarizes the compensation paid or accrued by our Company and/or subsidiary bank (or its constituent predecessors) in the years indicated with respect to our principal executive officers (there were two for 2023) and our two other most highly compensated executive officers for 2023. In this proxy statement, these individuals are referred to as our "named executive officers."


Name and Principal Position	Year	Salary ($)	Bonus ($)	Option Awards ($)	Stock Awards ($) (1)	Non-Equity Incentive Plan Compensation ($) (2)	Nonqualified Deferred Compensation Earnings ($)	All other Compensation ($) (3)	Total ($)
David T. Turner	2023	546,218	—	—	—	191,176	—	48,789	786,183
Chairman and Former	2022	525,210	1,000	—	—	273,109	—	48,045	847,364
Chief Executive Officer	2021	509,912	800	—	—	178,469	—	46,153	735,334

Brent M. Giles (4)	2023	300,000	—	—	225,000	156,000	—	10,278	691,278
Chief Executive Officer

Gregg A. Bexten (5)	2023	311,844	3,750	—	—	65,626	—	42,912	424,132
President

Kathleen L. Bruegenhemke	2023	237,827	—	—	—	44,218	—	39,406	321,451
Senior Vice President	2022	226,757	1,000	—	—	56,684	—	38,779	323,220
Secretary & Risk Officer	2021	220,152	800	—	—	55,034	—	36,957	312,943

(1)Amounts reflect the aggregate grant date fair value of such awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. For policies used in determining these values refer to Note 12 of the Company’s consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC. These amounts reflect an accounting expense and do not necessarily correspond to the actual value that may be earned by the named executive officer.

(4)Mr. Turner retired as Chief Executive Officer and Mr. Giles joined our Company and succeeded Mr. Turner as Chief Executive Officer, in each case, effective May 1, 2023. Mr. Turner served as Executive Chairman until January 5, 2024, at which time he retired from that role and became Chairman. Mr. Giles’ salary was established pursuant to his Employment Agreement to be no less than $450,000 and is prorated for 2023.


	Stock Awards
Name	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($) (1)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
David T. Turner	—	—	—	—
Brent M. Giles	12,277 (2)	311,467	—	—
Gregg A. Bexten	—	—	—	—
Kathleen L. Bruegenhemke	—	—	—	—

Our board of directors adopted, and our shareholders subsequently approved in June 2023, the Equity Plan. The purpose of the Equity Plan is to allow eligible participants of the Company and its subsidiaries to acquire or increase a proprietary and vested interest in the growth and performance of the Company. The Equity Plan is also designed to assist the Company in attracting and retaining selected service providers by providing them with the opportunity to participate in the success and profitability of the Company. The terms of the Equity Plan provide for the grant of stock options, SARs, RSAs, RSUs, performance shares, other equity-based awards and cash awards. Subject to certain adjustments, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the Equity Plan is 203,000 shares. Eligible participants under the Equity Plan include all employees, non-employee directors and consultants of the Company or its subsidiaries. The Equity Plan is administered by the board or a committee thereof.

We have established a profit-sharing plan under which all employees of the controlled group of corporations (namely, our Company and our subsidiary bank) who have completed one year of service and attained age 21 are eligible to participate. The members of the controlled group may make a discretionary contribution to the trust associated with the plan. In general, the contributions by members of the controlled group to the trust for any given year are allocated to the accounts of the participants in direct proportion to the compensation of the participants for such year. The plan permits eligible participants to make elective deferrals up to a maximum dollar amount as set forth by law. These deferrals and earnings thereon are fully vested. Our Company matches a participant's deferral contributions dollar for dollar up to 3% of such participant's compensation (as compensation is defined in the plan).

Each participant may direct the trustee as to investment of his or her account. At the direction of a participant, the trustee can "invest" assets in a participant's account in our common stock. Each participant may direct the trustee with respect to the voting of shares of our stock allocated to his or her account on such matters upon which shareholders are entitled to vote. As of December 31, 2023, the trust held 444,756 shares (or 6.3%) of our outstanding common stock.

The interest of a participant in employer contributions is subject to graded vesting over five years. After five years a participant becomes fully vested in the value of his or her employer contribution account. A participant whose employment terminates because of his or her normal retirement, death, or permanent disability is also fully vested. Payments are made to participants upon termination of service. A participant may withdraw his or her own contributions, but a participant may not borrow from the trust. The plan and the trust is administered by a retirement committee which is appointed by our board of directors.


Name	Executive Contributions in Last Fiscal Year ($)	Registrant Awards/ Contributions in Last Fiscal Year ($)	Aggregate Earnings in Last Fiscal Year ($)	Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at Last Fiscal Year-End ($)
David T. Turner	30,000	27,454	504,440	—	2,820,163
Brent M. Giles	7,269	3,635	3,383	—	14,286
Gregg A. Bexten	30,000	26,525	201,718	—	1,106,984
Kathleen L. Bruegenhemke	30,000	24,192	422,178	—	2,025,294

Pension Plan. We previously established a defined benefit plan for employees of our Company and of our subsidiary bank. Effective July 1, 2017, the plan was frozen to new and rehired employees, which means employees hired or rehired after June 30, 2017 are not eligible to participate in the plan. With respect to employees hired before July 1, 2017, all full-time employees become or became participants on the earlier of the first of January or the first of July coincident with or immediately following the later to occur of (i) the completion of one year of service or (ii) the attainment of the age of 21, and continue to participate so long as they continue to be full-time employees, until their retirement, death or termination of employment prior to normal retirement date. The plan has a five-year vesting schedule under which a participant becomes fully vested in his or her accrued benefit after completing five years of service. This plan provides for the payment of retirement and death benefits that are funded by investments which, at December 31, 2023, had an aggregate market value of approximately $36,242,290.

The normal retirement benefits provided under the plan for an employee retiring at age 65 with at least 25 years of continuous service are based upon 45% of his/her average compensation over a ten-year period, less 50% of his/her social security benefit. Compensation covered by the plan is an employee's W-2 compensation plus deferrals under the cafeteria plan and 401(k) plan. Amounts reported in the compensation table include salaries, directors' fees, commissions and bonuses. For employees with less than 25 years of continuous service, retirement benefits are reduced proportionally. Provision is made for early or late retirement and optional payment provisions are available. For a married participant, payment is by monthly benefit to the participant during his or her lifetime, and 50% of that amount is paid to the spouse monthly during the spouse's life after the participant's death. There are additional optional provisions to take a reduced payment for their lifetime with an amount then paid to the spouse for their lifetime. For an unmarried participant, payment is by a lifetime monthly benefit, with payments guaranteed for the first 120 months. As of December 31, 2023, the present value of accumulated benefits payable to each of the named executive officers (other than Mr. Giles) under the pension plan, determined using interest rate and mortality rate assumptions consistent with those used in our consolidated financial statements, was $1,630,000 for Mr. Turner, $561,000 for Mr. Bexten and $701,000 for Ms. Bruegenhemke. Mr. Giles joined our Company after the pension plan had been frozen to new employees, and therefore is not eligible to participate in the plan.

Excess Benefit Plan. In 2018, we established an Excess Benefit Plan to restore certain retirement benefits that are denied under our defined benefit pension plan to selected key management and highly compensated employees because of applicable benefit limits under the Internal Revenue Code. Mr. Turner is the only NEO eligible to participate in this plan.

Under the terms of the Excess Benefit Plan, a participant is eligible to receive a monthly benefit beginning upon the later of the participant's termination of employment or attainment of age 65. Benefits under the Excess Benefit Plan are paid as a single life annuity, with ten years certain. The monthly benefit generally will be equal to the hypothetical amount the participant would have received under our defined benefit pension plan if (i) the limits imposed by section 401(a)(17) of the Internal Revenue Code (annual compensation limit eligible to be taken into account for qualified retirement plan benefits) and section 415 of the Internal Revenue Code (maximum annual benefit under a pension plan) did not exist, minus the participant's actual monthly benefit amount under our defined benefit pension plan. For purposes of the benefit calculations, any reduction for benefits commencing between the participant's early retirement date and the normal retirement date or any increase in benefits commencing between the participant's normal retirement date and late retirement

The supplemental benefit under the Excess Benefit Plan commences in the first month after the later of the participant's termination of employment or the participant's attainment of age 65. If, on the participant's benefit commencement date, the benefit has an actuarial equivalent single-sum value of less than $50,000, the benefit will be distributed in a single lump-sum payment. If required by section 409A of the Internal Revenue Code, benefit commencement may be delayed until the first business day of the seventh month following a participant's separation from service.

The Excess Benefit Plan also provides for death benefits to a participant's spouse or designated beneficiary. If a participant dies after benefits have started, the existing benefit (single life annuity with ten year certain payments) continues. If a participant's death occurs before benefit payments have started, the death benefit amount is calculated based on a 120-month payment benefit commencing on the first day of the month following the month in which the participant would have attained age 65 and reduced by (i) 1/180th for each of the first 60 months the participant died before his or her 65th birthday, (ii) 1/360th for each of the second 60 months the participant died before his or her 65th birthday and (iii) actuarial reduced if the participant dies before age 55. If a participant dies before benefits have commenced, the death benefit will be paid for a period of 120 months and start within 90 days of the participant's death. As of December 31, 2023, the present value of accumulated benefits payable to each of the named executive officers under the excess benefit plan, determined using interest rate and mortality rate assumptions consistent with those used in our consolidated financial statements was $1,768,857 for Mr. Turner. Ms. Bruegenhemke and Messrs. Giles and Bexten are not participants in the Excess Benefit Plan.

Our Company has entered into an employment agreement, effective May 1, 2023, with Mr. Giles (the “Employment Agreement”), under which he is entitled to, among other things: (i) an annual base salary of no less than $450,000, subject to annual review and increase; (ii) an annual incentive bonus of up to 52% with a target bonus percent of 35% of his then-current base salary, subject to agreed upon performance and other criteria (prorated for fiscal year 2023); (iii) participate in any benefit or bonus programs of the Company or its subsidiary bank and any stock option or equity incentive plan of the Company, which are applicable to all employees of the Company’s subsidiary bank or executive employees of the bank in accordance with the bank’s policies; (iv) a grant of RSUs as soon as reasonably practicable after the effective date of the Employment Agreement relating to that number of shares of common stock of the Company equal to a fair market value of $225,000 (based on the 30-day average trailing closing price for the Company’s common stock prior to grant) with time-based vesting on a three-year annual graded vesting schedule and future annual equity grants of RSUs with a target bonus of up to 50% of his then-current base salary with service and/or performance-based vesting conditions; (v) reimbursement of reasonable business expenses; (vi) use of a Company-owned vehicle; and (vii) reimbursement of country club dues.

Under the Employment Agreement, if Mr. Giles’ Term of Employment is terminated (i) by the Company or its subsidiary bank for “cause” (as such term is defined in the Employment Agreement), (ii) by Mr. Giles (other than for “good reason” or in connection with a “change in control” (in each case, as such terms are defined in the Employment Agreement)), or (iii) through expiration of the Term of Employment (other than in connection with a change in control), the Company and its subsidiary bank will have no further obligations to Mr. Giles other than payment of his base salary accrued through the date of termination or expiration.

Under the Employment Agreement, if Mr. Giles’ Term of Employment is terminated (i) by the Company or its subsidiary bank “without cause” (as such term is defined in the Employment Agreement) or by Mr. Giles for good reason, Mr. Giles will be entitled to receive as severance pay (in addition to the payment of base salary through the date of

Under the Employment Agreement, Mr. Giles’ Term of Employment will terminate upon his death or disability (in the case of disability, subject to the additional terms of the Employment Agreement) and Mr. Giles will only be entitled to his base salary payable through the date of termination. The Employment Agreement provides Mr. Giles with certain additional severance payments upon certain terminations in connection with a change in control of the Company or its subsidiary bank. Under the Employment Agreement, if Mr. Giles’ employment is terminated without cause or if Mr. Giles terminates his employment for good reason, in each case, during a period beginning on the earlier of the six-month period prior to the execution of a definitive agreement for a change in control transaction and consummation of a change in control and ending 24 months following the change in control transaction, Mr. Giles will be entitled to a severance payment equal to the sum of: (i) two times his then-current base salary; plus (ii) two times the average amount of his annual incentive bonus for the three fiscal years immediately preceding the fiscal year in which the change in control occurs. The severance payments will be conditioned upon receipt of a general release of claims.

Our Company has entered into change in control agreements with certain of its executive officers, including Mr. Turner, Mr. Bexten and Ms. Bruegenhemke. These agreements provide that if, within two years after a “change in control” (as defined in the change in control agreements), our Company or any subsidiary that is the primary employer of the executive terminates the executive's employment other than by reason of the executive's death, disability or for “cause” (as defined in the change in control agreements) or if the executive terminates his or her employment for “good reason” (as defined in the change in control agreements), the executive will be entitled to receive the following (in addition to any compensation and benefits earned but not yet paid as of the date of termination):

Under some change in control agreements, the amounts described above would also be payable if the termination of employment is made during the "pre-CIC protected period" (generally defined as the period commencing when (i) our Company enters into an agreement, the consummation of which would result in the occurrence of a change in control, (ii) there is a public announcement of an intention to take actions which, if consummated, would constitute a change in control, (iii) any person becomes the beneficial owner, directly or indirectly, of 10% or more of the combined voting power of our Company's outstanding voting securities, or (iv) the board or our shareholders approves any of the foregoing or any change in control, and ends upon the date the change in control transaction is either consummated, abandoned or terminated).

Except as provided in some change in control agreements, the total payments made under the change in control agreements and under any other agreements, plans or arrangements as a result of a change in control is not permitted to be in excess of 5% of the aggregate cash consideration that our shareholders would receive as a result of a change in control. Under some change in control agreements, the total payments made will be subject to reduction if, on a present value basis net of all resulting taxes imposed on the executive applying the highest marginal rate, the reduced amount would be equal or greater than the amount that would otherwise be paid to the executive (on that same present value basis). Our Company will reimburse the executive for any excise taxes that result from any of the change in control payments being considered "excess parachute payments" under Section 280G of the Internal Revenue Code of 1986, and will make a gross-up payment

The Company has issued RSUs to Mr. Giles under the Equity Plan, which were the only outstanding equity awards issued to our named executive officers as of December 31, 2023. Pursuant to the Equity Plan, unless otherwise provided in an award agreement governing the terms of the RSUs, otherwise provided for in an employment agreement (in which case such provisions will apply), or as determined in the sole discretion of the committee administering the Equity Plan before or at the time the RSUs would otherwise be forfeited, in the event a grantee holding RSUs ceases to be a service provider for any reason before the RSUs have fully vested, any unvested portion of such award will be immediately forfeited upon such cessation of service.

Under the terms of the award agreement governing the RSUs and the Equity Plan, in the event of a “change in control” (as defined in the Equity Plan) of the Company, and the acquiring or successor company does not assume the outstanding RSUs or provide a cash incentive program preserving the economic value of the RSUs, then all unvested RSUs will immediately vest and be settled at the time of the change in control. If the acquiring or successor company assumes the RSUs, issues comparable substitute equity awards or provides a cash incentive program preserving the economic value of the RSUs, then the RSUs (or substitute awards) will continue to vest in accordance with their terms; provided, however, any unvested RSUs will become immediately vested and be settled if during the 24-month period following the consummation of the change in control, the grantee’s employment is terminated by the Company (or successor) other than for “cause” or the grantee resigns with “good reason.” The terms “cause” and “good reason” have the meaning provided under the RSU award agreement or the Equity Plan, unless otherwise defined in the grantee’s employment agreement (in which case such definition shall control).


Benefit	Termination Without Cause or for Good Reason Outside of a Change in Control ($)	Termination Without Cause or for Good Reason in Connection with a Change in Control ($)
Cash payment based on base salary (1)	900,000	900,000
Cash payment based on prior year bonuses (2)	—	312,000
Cash payment based on insurance premiums (3)	23,933	23,933
Accelerated vesting of RSUs (4)	—	311,467
Total for Mr. Giles	923,933	1,547,400

(2)Represents the amount calculated pursuant to the Employment Agreement equal to two times the average amount of Mr. Giles’ annual incentive bonus for the three fiscal years immediately preceding the fiscal year in which the change in control occurs. Mr. Giles joined the Company in 2023; therefore, the amount shown is two times the amount of Mr. Giles’ annual incentive bonus for 2023.


Benefit			Termination without Cause or for Good Reason After Change in Control ($)
David T. Turner
Cash payment based on base salary (1)			1,638,654
Cash payment based on prior year bonus (2)			819,327
Cash payment based on current year bonus (3)			191,176
Accrued and unpaid vacation pay			84,034
280G tax gross-up (4)			1,706,877
Total for Mr. Turner			4,440,068

Gregg A. Bexten
Cash payment based on base salary (1)			700,000
Cash payment based on prior year bonus (2)			141,546
Cash payment based on current year bonus (3)			65,626
Accrued and unpaid vacation pay			53,846
280G tax gross-up (4)			600,156
Total for Mr. Bexten			1,561,174

Kathleen L. Bruegenhemke
Cash payment based on base salary (1)			475,654
Cash payment based on prior year bonus (2)			113,368
Cash payment based on current year bonus (3)			44,218
Accrued and unpaid vacation pay			36,589
280G tax gross-up (4)			418,308
Total for Ms. Bruegenhemke			1,088,137

(1)Represents the amount calculated pursuant to the change in control agreements equal to the product of the executive's multiple (36, in the case of Mr. Turner, and 24, in the case of the other named executives) times the executive's highest monthly base salary for the twelve-month period immediately preceding the month in which employment was terminated.

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between compensation actually paid to our principal executive officers ("PEO") and the other named executive officers (the "Non-PEO NEOs") and certain financial performance metrics of the Company using a methodology that has been prescribed by the SEC.

(5)The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Giles, or our PEO-1, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Giles during 2023. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Giles’ total compensation for 2023 to determine the compensation actually paid;

(6)Cumulative total shareholder return is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.

(1)Consolidated net income decreased $19.8 million to $1.0 million, or $0.14 per diluted share, for the year ended December 31, 2023 compared to $20.8 million, or $2.94 per diluted share, for the year ended December 31, 2022. The Company proactively elected a strategy to begin repositioning its balance sheet during the fourth quarter of 2023 by selling $83.7 million in book value of investment securities, with an average yield of 1.57%, for an after-tax realized loss of $9.1 million. In addition, the Company recognized a $1.1 million mortgage servicing rights valuation write-down upon accepting a letter of intent to sell the Company's servicing portfolio during the first quarter of 2024 and recorded a $4.7 million valuation write-down primarily related to two foreclosed property relationships.

Our executive officers, directors and director nominees, their immediate family members, and companies associated with any such persons, may have been customers of, and had banking transactions with, our subsidiary bank (or its constituent predecessors) in the ordinary course of the bank's business during 2023 and 2022. Among these banking transactions were the provision of loans and loan commitments by our subsidiary bank that (i) were made in the ordinary course of business, (ii) were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to our Company or any of its subsidiaries, and (iii) did not involve more than the normal risk of collectability or present other unfavorable features.

On an annual basis, each executive officer, director and director nominee is obligated to complete a director and officer questionnaire which requires disclosure of any transactions with our Company in which the executive officer, director and director nominee, or any member of his or her immediate family, have a direct or indirect material interest. Pursuant to our corporate governance guidelines, our board of directors is charged with resolving any conflict of interest question involving our chief executive officer or any other executive officer, and our chief executive officer is charged with resolving any conflict of interest issue involving any other officer or employee of our Company.

The following table presents fees for professional audit services rendered by KPMG LLP, our former independent registered public accounting firm, for the audit of our annual financial statements and internal control over financial reporting for 2023 and 2022, and fees billed for other services rendered by KPMG LLP during such years. All audit and non-audit services provided to our Company by KPMG LLP were approved by our audit committee.

Pursuant to its charter, the audit committee of our board of directors is responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement or relationship between our Company and its independent auditor. Our engagement of KPMG LLP to conduct the audit of our Company for 2023 was approved by the audit committee on January 30, 2023. Additionally, each permissible non-audit engagement or relationship between our Company and KPMG LLP entered into since January 1, 2023 has been reviewed and approved by the audit committee. All audit-related, tax and all other fees were pre-approved by the audit committee. We have been advised by KPMG LLP that substantially all of the work done in conjunction with its audit of our financial statements for the most recently completed fiscal year was performed by permanent full time employees and partners of KPMG LLP.

The audit committee will pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for our Company by its independent registered public accounting firm, subject to the exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 which must be approved by the audit committee prior to the completion of the audit.

The audit committee conducted a comprehensive, competitive process to determine the Company’s independent registered public accounting firm for the Company’s fiscal year ending December 31, 2024. The audit committee invited several firms to participate in this process, including KPMG LLP, the Company’s prior independent registered public accounting firm. As a result of this process, following the review and evaluation of proposals from participating firms, on December 20, 2023, the audit committee and the board approved the dismissal of KPMG LLP as the Company’s independent registered public accounting firm, effective upon completion of their audit of the Company’s consolidated financial statements as of and for the year ending December 31, 2023, and the issuance of their reports thereon. The Company notified KPMG LLP of the dismissal on December 21, 2023 (the “Notice Date”).

The audit reports of KPMG LLP on the consolidated financial statements of the Company for each of the two most recent fiscal years ended December 31, 2022 and 2021 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Company’s two most recent fiscal years ended December 31, 2022 and 2021 and during the subsequent interim period from January 1, 2023 through the Notice Date, there were (i) no disagreements between the Company and KPMG LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which, if not resolved to the satisfaction of KPMG LLP, would have caused KPMG LLP to make reference to the subject matter of the disagreement in connection with KPMG LLP’s reports on the Company’s consolidated financial statements for 2022 and 2021, and (ii) no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions.

On the Notice Date, the Company notified FORVIS LLP that it had been selected to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024 (beginning with a review of the Company’s quarterly consolidated financial statements for the first quarter of the 2024 fiscal year), subject to completion of FORVIS LLP’s standard client acceptance procedures. The selection of FORVIS LLP was approved by each of the audit committee and the board on December 20, 2023.

During the Company’s two most recent fiscal years ended December 31, 2022 and 2021, and the subsequent interim period from January 1, 2023 through the Notice Date, neither the Company nor anyone on its behalf consulted FORVIS LLP regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that FORVIS LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” (as defined in Regulation S-K Item 304(a)(1)(iv)) or a “reportable event” (as defined in Regulation S-K Item 304(a)(1)(v)).

The audit committee of our board of directors assists the board in fulfilling its responsibilities with respect to accounting and financial reporting practices and the scope and expense of audit and related services provided by external auditors, among others. The audit committee is composed of four directors. All committee members satisfy the definition of an "independent" director as established in the Nasdaq listing standards, and the board of directors has determined that Mr. Burkhead qualifies as an "audit committee financial expert" within the meaning of the rules and regulations of the SEC. The audit committee has adopted a written charter, which is available on our internet website (www.hawthornbancshares.com) under the "Governance Documents" menu tab.

•Received the written disclosures and the letter from our independent accountants required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and discussed with our independent accountants that firm's independence. In this regard, the audit committee has considered whether the services provided under other non-audit services are compatible with maintaining the independence of KPMG LLP.

Based upon the audit committee's discussions with management and the independent accountants, and the audit committee's review of the representations of management, the audit committee recommended that the board of directors include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023, to be filed with the SEC.

Owners of More than 5% of the Outstanding Shares. The table below sets forth information as of January 31, 2024 (unless otherwise indicated below) with respect to the beneficial ownership of shares of all series of our common stock by each person known to our Company to own beneficially more than 5% of the aggregate number of the outstanding shares of our common stock. All information with respect to beneficial ownership has been furnished by the respective 5% or more shareholders.


Name	Amount and Nature of Beneficial Ownership(1)	Percentage of Shares Outstanding(1)
Douglas Eden (2)	684,268	9.7%
FJ Capital Management, LLC Financial Opportunity Fund, LLC Financial Opportunity Long/Short Fund, LLC Financial Hybrid Opportunity Fund, LLC Financial Hybrid Opportunity SPVI, LLC Martin Friedman (3)	445,335	6.3%
Ategra Community Financial Institution Fund, L.P. Ategra GP, LLC Ategra Capital Management, LLC Jonathan D. Holtaway Jacques Rebibo (4)	417,513	5.9%

(2)Includes: (i) 23,174 shares directly held by Mr. Eden for which he has sole voting and dispositive power; (ii) 582 shares held by Mr. Eden’s wife’s trust, for which he has shared voting and dispositive power; (iii) 10 shares held jointly with his minor child for which he has shared voting and dispositive power; (iv) 61,826 shares held by a trust, for which Mr. Eden has sole voting and dispositive power; and (v) 598,676 shares held by funds managed by Mr. Eden, for which he has shared voting and dispositive power as of March 11, 2024. The address of Douglas Eden is 13029 Sorrento Way, Bradenton, FL 34211.

(3)According to a Schedule 13G filed with the SEC on February 13, 2024 by FJ Capital Management, LLC. Financial Opportunity Fund, LLC, Financial Opportunity Long/Short Fund, LLC, Financial Hybrid Opportunity Fund, LLC, Financial Hybrid Opportunity SPVI, LLC and Martin Friedman are reported as having shared voting and dispositive power with respect to 445,335 shares as of that date. The address of each of the reporting persons is 7901 Jones Branch Drive, Suite 210, McLean, VA 22102.

(4)Ategra Community Financial Institution Fund, L.P., Ategra GP, LLC, Ategra Capital Management, LLC, Jonathan Holtaway and Jacques Rebibo are reported as having shared voting and dispositive power with respect to 407,513 shares as of March 8, 2024. Jonathan Holtaway is reported as having sole voting and dispositive power with respect to 10,000 shares as of March 8, 2024. The address of each of the reporting persons is 8229 Boone Blvd., Suite 305, Vienna, VA 22182.


Name	Amount and Nature of Beneficial Ownership(1)	Percentage of Shares Outstanding(1)
Gregg A. Bexten (2)	26,327.39	*
Kathleen L. Bruegenhemke (3)	97,931.33	1.4%
Frank E. Burkhead (4)	19,894.95	*
Douglas T. Eden (5)	684,268.00	9.7%
Philip D. Freeman (6)	98,683.79	1.4%
Brent M. Giles (7)	6,887.89	*
Shawna M. Hettinger (8)	3,103.00	*
Jonathan D. Holtaway (9)	417,513.00	5.9%
Kevin L. Riley (10)	36,645.67	*
Jonathan L. States (11)	3,255.00	*
David T. Turner (12)	109,478.83	1.6%
Gus S. Wetzel, III (13)	115,198.82	1.6%
All directors & executive officers as a group (14 persons)	1,647,062.61	23.4%

(1)Beneficial ownership is determined in accordance with the rules of the SEC which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power and/or investment power with respect to those securities. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Percentage ownership calculations are based on 7,039,323 shares of common stock outstanding on January 31, 2024.

(5)Includes: (i) 23,174 shares directly held by Mr. Eden for which he has sole voting and dispositive power; (ii) 582 shares held by Mr. Eden’s wife’s trust, for which he has shared voting and dispositive power; (iii) 10 shares held jointly with his minor child for which he has shared voting and dispositive power; (iv) 61,826 shares held by a trust, for which Mr. Eden has sole voting and dispositive power; and (v) 598,676 shares held by funds managed by Mr. Eden, for which he has shared voting and dispositive power as of March 11, 2024.

(9)Includes: (i) 407,513 shares are held by Ategra Community Financial Institution Fund, LP (the "Fund") as to which shares Mr. Holtaway has shared voting and investment power; and (ii) 10,000 shares held by Mr. Holtaway for which he has sole voting and dispositive power as of March 14, 2024. Mr. Holtaway serves as an owner and a managing member of the general partner of the Fund, as an owner, president and managing member of the registered investment advisor that manages the Fund and as co-portfolio manager of the Fund. See also "Owners of More than 5% of the Outstanding Shares" above.

(13)Includes: (i) 4,420.14 shares held of record by a revocable living trust, of which Mr. Wetzel is a trustee, for the benefit of Mr. Wetzel; and (ii) 110,778.68 shares held by Wetzel Investments, LP. Mr. Wetzel is a minority owner of Wetzel Investments, LP. and, together with his siblings, has shared dispositive power with respect to the 110,778.68 shares held by it but has sole voting power with respect to those shares. Mr. Wetzel disclaims beneficial ownership of the shares held by Wetzel Investments, LP except to the extent of his pecuniary interest therein.


Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity Compensation Plan Approved by Shareholders (1)	18,277 (2)	—	184,723
Equity Compensation Plan Not Approved by Shareholders	—	—	—
Total	18,277 (2)	—	184,723

It is anticipated that our 2025 annual meeting of shareholders will be held on June 3, 2025. For a shareholder proposal to be considered for inclusion in our proxy materials for that meeting, our corporate secretary must receive the written proposal at our principal executive offices no later than December 20, 2024. Each such proposal also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of shareholder proposals in Company-sponsored proxy materials. Proposals should be addressed to:

For a shareholder proposal that is not intended to be included in our proxy materials for that meeting under Rule 14a-8, the shareholder must provide the information required by our Bylaws and give timely notice to our corporate secretary in accordance with our Bylaws, which, in general, require that the notice be received by the secretary between:

the date of the shareholder meeting is moved more than 30 days before or after June 3, 2025 (the date currently contemplated for our 2025 annual meeting), in which case notice of a shareholder proposal that is not intended to be included in our proxy materials under Rule 14a-8 must be received not later than the close of business on the later of 90 days in advance of such annual meeting or 10 days following the date on which public announcement of the date of the meeting is first made.

the date of the shareholder meeting is moved more than 30 days before or after June 3, 2025 (the date currently contemplated for our 2025 annual meeting), in which case the nomination must be received not later than the close of business on the later of 90 days in advance of such annual meeting or 10 days following the date on which public announcement of the date of the meeting is first made.

You may contact our corporate secretary at the address set forth above for a copy of the relevant Bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to our Secretary at the address set forth above that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 5, 2025 unless the required information has been provided in a preliminary or definitive proxy statement previously filed by the shareholder. If the date of the 2025 annual meeting is changed by more than 30 calendar days from June 4, 2025, then such notice must be provided by the later of 60 calendar days prior to the date of the 2025 annual meeting or the 10th calendar day following the day on which the Company publicly announces the date of the 2025 annual meeting. In order to comply with Rule 14a-19, the notice must be postmarked or transmitted electronically on or before the applicable deadline. The notice requirements under Rule 14a-19 are in addition to the applicable advance notice requirements under our bylaws as described above.

Proxies solicited in connection with our 2025 annual meeting of shareholders will confer on the appointed proxies discretionary voting authority to vote on shareholder proposals that are not presented for inclusion in the proxy materials unless the proposing shareholder notifies our Company by March 5, 2025 that such proposal will be made at the meeting.


Year (a)	Summary Compensation Table Total for PEO-1 ($)(1) (b)	Compensation Actually Paid to PEO-1 ($)(5) (c)	Summary Compensation Table Total for PEO-2 ($)(2) (d)	Compensation Actually Paid to PEO-2 ($)(4) (e)	Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) (f)	Average Compensation Actually Paid to Non-PEO NEOs ($)(4) (g)	Value of Initial Fixed $100 Investment Based On Total Shareholder Return ($)(6) (h)	Net Income ($) (000's) (i)
2023	691,278	777,745	786,183	786,183	372,792	372,792	142.18	956
2022	—	—	847,364	847,364	356,106	356,106	113.23	20,751
2021	—	—	735,334	735,334	337,664	337,664	126.29	22,517


Year	Reported Summary Compensation Table Total for PEO-1 ($)	Subtract Reported Value of Equity Awards ($) (a)	Equity Award Adjustments ($)(b)	Compensation Actually Paid to PEO-1 ($)
2023	691,278	(225,000)	311,467	777,745


Type of Fee	2023		2022
Audit Fees (1)	$	448,000	$	435,000
Audit-Related Fees (2)	53,000		52,000
Tax Fees (3)	63,000		60,000
All Other Fees (4)	123,087		129,545
Total	$	687,087	$	676,545


Proxy Statement			1
Question and Answers About the Proxy Materials and the Annual Meeting			1

Matters to be Considered at the Annual Meeting			6
Item 1: Election of Directors			6
Item 2: Selection of Independent Registered Public Accounting Firm			10
Item 3: Non-Binding Advisory Vote on Executive Compensation			11

Corporate Governance and Board Matters			12

Executive Compensation and Related Matters			17

Pay Versus Performance			29

Related Party Transactions			32

Independent Auditor Fees and Services			33

Audit Committee Report			35

Ownership of Common Stock			36

Securities Authorized for Issuance under Equity Compensation Plans			38

Shareholder Proposals			39

Other Matters			41

Appendix A - Proxy Cards			A-1


Tier	Target		Maximum
Tier 1	35	%	52	%
Tier 2	25	%	37	%
Tier 3	20	%	30	%
Tier 4	15	%	22	%
Tier 5	10	%	15	%


Year	Average Year End Fair Value of Equity Awards	Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards	Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year	Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year	Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year	Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation	Total Average Equity Award Adjustments
2023	311,467	—	—	—	—	—	311,467


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