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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

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

Exchange Act of 1934 (Amendment No. )

Filed by the Registrant ☑

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ | Preliminary Proxy Statement

☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2))

☑ | Definitive Proxy Statement

☐ | Definitive Additional Materials

☐ | Soliciting Material Pursuant to Section 240.14a-12

MERCANTILE BANK CORPORATION

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (check the appropriate box):

☑ | No fee required.

☐ | Fee paid previously with preliminary materials.

☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

PERSONS WHO POTENTIALLY ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.

SEC 1913 (02-02)

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To our Shareholders:

We are pleased to announce that the 2024 annual meeting of shareholders of Mercantile Bank Corporation will be held virtually, in lieu of an in-person meeting, on Thursday, May 23, 2024, at 9:00 a.m., Eastern Time. Shareholders who wish to attend the meeting may do so via live webcast. Shareholders who attend the virtual meeting will be able to participate and submit questions prior to and during the meeting as described in more detail in the accompanying proxy statement. The meeting is being held for the purpose of considering and voting on the following matters:

| 1. | Election of eight directors, each for a one-year term.

| 2. | Ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for 2024.

| 3. | An advisory vote to approve the compensation of our named executive officers disclosed in this proxy statement.

| 4. | Any other business that may properly be brought before the meeting or any adjournment of the meeting.

All shareholders of record at the close of business on Thursday, March 28, 2024 are entitled to notice of the meeting, and any postponements or adjournments of the meeting. Shareholders of record will have the opportunity to vote on the matters to be presented at the meeting via proxy in advance of the meeting. In light of the virtual format, we will not receive in-person voting at this year’s meeting.

Your vote is important. We urge you to submit your proxy (1) over the internet, (2) by telephone or (3) by mail, in advance of the virtual meeting, whether or not you plan to attend. For specific instructions, please refer to the discussion beginning on the first page of the proxy statement and the instructions on the proxy card relating to the annual meeting. We would appreciate receiving your proxy by Friday, May 10, 2024.

| By Order of the Board of Directors,
| Michael H. Price
| Chairman of the Board
| Dated: April 4, 2024

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TABLE OF CONTENTS

TABLE OF CONTENTS | 1
PROXY SUMMARY | 3
PROXY STATEMENT | 9
INFORMATION REGARDING THE ANNUAL MEETING OF SHAREHOLDERS | 9
Matters to be Considered at the Annual Meeting of Shareholders | 9
Notice and Access | 9
Purpose of the Annual Meeting | 10
Record Date, Voting and Voting Procedures | 10
Voting Matters | 11
Proxy and Proxy Statement | 12
Other Matters | 12
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 13
Stock Owned by 5% Beneficial Owners | 14
PROPOSAL #1 – ELECTION OF DIRECTORS | 15
Information About Our Directors | 15
Information About Our Executive Officers | 18
CORPORATE GOVERNANCE | 20
Director Independence | 20
Board Meetings | 20
Board Committees | 20
Board Leadership Structure | 23
Board Role in Risk Oversight | 23
Cybersecurity and Data Privacy | 24
Board Diversity | 25
Communications with Directors | 25
Code of Ethics and Insider Trading Policy | 26
Diversity, Equity, and Inclusion Policy | 26
Human Rights Policy | 26
Environmental Policy | 26
Supplier Diversity Program Policy and Supplier and Vendor Code of Conduct | 27
Anti-Bribery and Anti-Corruption Policy | 27
Clawback Policy | 27
Cybersecurity and Risk Management | 27
Compensation Committee Interlocks and Insider Participation | 27
AUDIT COMMITTEE REPORT | 28
COMPENSATION COMMITTEE REPORT | 29
EXECUTIVE COMPENSATION | 29
Compensation Discussion and Analysis | 29
Potential Payments upon Termination or Change in Control | 46
Director Compensation for 2023 | 51
CEO Pay Ratio | 52
Pay Versus Performance | 53
AUDIT COMMITTEE MATTERS | 56
PROPOSAL #2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 57
PROPOSAL #3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION | 57
TRANSACTIONS WITH RELATED PERSONS | 58
SHAREHOLDER PROPOSALS FOR 2025 ANNUAL MEETING | 58
OTHER MATTERS | 58

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PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement of Mercantile Bank Corporation (“we,” “our,” “us,” “Company,” or “Mercantile”). This summary provides an overview and is not intended to contain all the information that you should consider before voting.

We encourage you to read the entire proxy statement for more detailed information on each topic prior to casting your vote.

MEETING INFORMATION

Meeting: | Annual Meeting of Shareholders
Date: | Thursday, May 23, 2024
Time: | 9:00 a.m., Eastern Time
Live Webcast: | https://signin.webex.com/join
| The meeting number is: 2310 336 6249 The meeting password is: MBWM2024
| You may register ahead of time to receive the meeting link via e-mail by using the internet address and meeting number above.
Record Date: | March 28, 2024

GENERAL INFORMATION

Stock Symbol: | MBWM
Exchange: | NASDAQ Global Select
Common Stock Outstanding: | 16,122,213 shares (as of record date)
Registrar & Transfer Agent: | Computershare Trust Company, N.A.
Website: | www.mercbank.com

| MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT | 3

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OVERVIEW OF VOTING MATTERS

PROPOSAL 1 |
ELECTION OF DIRECTORS We are asking shareholders to elect eight directors, each for a one-year term. | BOARD’S RECOMMENDATION
Additional information about each of the directors and director nominees can be found beginning on page 15. | “FOR” EACH NOMINEE

NAME | DIRECTOR SINCE | AGE | GENDER | ETHNICITY | AUDIT COMMITTEE | COMPENSATION COMMITTEE | GOVERNANCE & NOMINATING COMMITTEE
MICHAEL S. DAVENPORT* | 2020 | 54 | M | African American | M | M | M
MICHELLE L. ELDRIDGE | 2016 | 58 | F | White | M | C | M
ROBERT B. KAMINSKI, JR.** | 2016 | 62 | M | White | --- | --- | ---
MICHAEL H. PRICE | 1997 | 67 | M | White | --- | --- | ---
DAVID B. RAMAKER | 2020 | 68 | M | White | M | M | C
RAYMOND E. REITSMA** | 2023 | 61 | M | White | --- | --- | ---
NELSON F. SANCHEZ | 2024 | 59 | M | Hispanic | M | M | M
AMY L. SPARKS*** | 2023 | 51 | F | White | C | M | M

* Executive Session Facilitator/Lead Director

** Non-Independent Director

*** Ms. Sparks is the Board-appointed Chairperson of the Audit Committee, effective as of David Cassard’s retirement on May 23, 2024.

C = Chairperson

M = Member

PROPOSAL 2
RATIFICATION OF AUDITORS Ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for 2024. |  | BOARD’S RECOMMENDATION “FOR”

PROPOSAL 3
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION An advisory vote to approve the compensation of our named executive officers disclosed in this proxy statement. |  | BOARD’S RECOMMENDATION “FOR”

PROPOSAL 4
Any other business that may properly be brought before the meeting or any adjournment of the meeting.

4 | MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT |

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HOW TO VOTE

Your vote is important. We urge you to submit your proxy (1) over the internet, (2) by telephone or (3) by mail, prior to the virtual meeting, whether or not you plan to attend. For specific instructions, please refer to the discussion beginning on the first page of the proxy statement and the instructions on the proxy card relating to the annual meeting. We would appreciate receiving your proxy by Friday, May 10, 2024.

INTERNET | TELEPHONE OR CELLPHONE | MAIL
1. 2. 3. 4. 5. | Go to: www.envisionreports.com/MBWM Click on Cast Your Vote. Follow the instructions to log in. Make your selections as instructed on each screen for your delivery preferences. Vote your shares. | Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada | If you wish to vote by mail, send your completed and signed proxy card using the enclosed envelope.

On April 4, 2024, we began sending our shareholders a Notice Regarding the Internet Availability of Proxy Materials.

| MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT | 5

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CORPORATE GOVERNANCE HIGHLIGHTS

| ● | All directors attended at least 92% of the Board meetings and Committee meetings on which they served during 2023;
| ● | Code of Ethics, Human Rights, Diversity, Equity and Inclusion, Insider Trading, Clawback, Anti-Bribery and Anti-Corruption, Environmental, and Cyber Security policies are in place for all directors, officers, and employees, as applicable (available on our website under Investor Relations –Overview – Governance Documents);
| ● | Corporate Governance Guidelines are in place for all directors (available on our website under Investor Relations);
| ● | Supplier Diversity Program Policy and Vendor and Supplier Code of Conduct is in place for suppliers and vendors (available on our website under Investor Relations – Overview – Governance Documents; additional information, resources and application are available on our website under About Us);
| ● | Anti-Hedging and Anti-Pledging policies are in place as components of our Insider Trading Policy;
| ● | Three-quarters of directors are independent;
| ● | Chairman of the Board and Chief Executive Officer are separate positions;
| ● | Executive Session Facilitator is an independent director;
| ● | Ongoing and active risk oversight is performed by the Board and Committees; and
| ● | The oversight of the Environmental, Social and Governance sustainability matters is the responsibility of the Governance and Nominating Committee.

BOARD OF DIRECTORS EXPERIENCE AND SKILLS

88% | ACCOUNTING & FINANCE |
100% | MANAGEMENT & OPERATIONS |
88% | ENTERPRISE RISK MANAGEMENT |
88% | HUMAN CAPITAL MANAGEMENT |
63% | LEGAL |
88% | MERGERS & ACQUISITIONS |
63% | REGULATORY & GOVERNANCE |
75% | RESIDENTIAL & COMMERCIAL REAL ESTATE |

6 | MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT |

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75% INDEPENDENT DIRECTORS |  | 60 YEARS AVERAGE AGE |  | 6.6 YEARS AVERAGE TENURE |  | 25% GENDER DIVERSITY |  | 25% RACIAL/ETHNIC DIVERSITY

BOARD OF DIRECTORS |  | ● | Majority of our Board is independent
| ● | Board consists of directors with a mix of tenures, including founding members who have actively overseen the Company’s strategic journey through various business cycles and have a deep knowledge of the Company
| ● | Approximately 50% of our Board members possess characteristics of racial and gender diversity, our Executive Session Facilitator identifies as a diverse director, our Compensation Committee is chaired by a female director and the Audit Committee will be chaired by a female director as of the annual meeting
| ● | Directors reflect a variety of experiences, skills and geographic reach that match the Company’s complexity and strategic direction giving the Board the collective capability necessary to oversee the Company’s activities
| ● | All directors attended at least 92% of meetings of the Board and Committees on which they served during 2023
BOARD LEADERSHIP STRUCTURE |  | ● | Chairman of the Board and Chief Executive Officer are separate positions
| ● | Chief Executive Officer and President and the Executive Vice President are the only members of management who serve as Company Directors
| ● | Executive Session Facilitator is an independent Director annually recommended by Governance and Nominating Committee and elected by our Board of Directors
| ● | Active and empowered Committee Chairs, all of whom are independent
BOARD GOVERNANCE BEST PRACTICES |  | ● | Executive sessions are held by independent directors
| ● | Annual evaluations of the Board, its committees and individual directors conducted by the Governance and Nominating Committee
| ● | Annual assessment of director independence
| ● | Regular discussions regarding Board recruiting and succession, including diverse director skills and qualifications for the Company’s long-term strategic objectives
| ● | Active risk and strategy oversight by the Board and Committees
| ● | Direct access by the Board to key members of management at the discretion of independent directors; executive sessions regularly include separate meetings with our Chief Executive Officer, Chief Financial Officer, General Counsel, Chief Risk Officer, Internal Audit Director, Credit Administration Risk Manager, Chief Compliance Officer, Bank President, Chief Operating Officer, Chief Human Resource Officer, Chief Experience Officer, Engagement and Learning Director, Community Development Officer and Chief Commercial Banking Officer
| ● | Annual evaluation process of the Chief Executive Officer is led by the Compensation Committee Chair
| ● | Regular talent and succession planning discussions regarding the Chief Executive Officer and other key executive roles
| ● | Management maintains strong working relationships with Federal and State Regulators
| ● | Environmental, social and corporate governance sustainability oversight by the Governance and Nominating Committee
SHAREHOLDER ENGAGEMENT AND SHAREHOLDER ROLE IN GOVERNANCE |  | ● | Regular outreach and engagement with shareholders take place throughout the year about Company strategy and performance by Chief Executive Officer, Executive Vice President and Chief Financial Officer
| ● | Feedback from investors regularly shared with the Board and its Committees to ensure that the Board has insight on investor views
| ● | Directors are elected annually
| ● | Quarterly conference calls are webcast for investors on earnings release dates with the ability to ask questions

| MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT | 7

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OUR COMPENSATION PHILOSOPHY

Our philosophy in setting compensation policies for executive officers is to align pay with performance, while at the same time provide competitive compensation that will attract and retain executive talent. Our Compensation Committee believes that executive compensation should be directly linked to continuous improvements in corporate performance and increasing shareholder value over the long term. Our executive compensation program includes the following primary elements:

| ● | Base salary
| ● | Short-term incentive compensation
| ● | Long-term incentive compensation
| ● | Other benefits
| ● | The equity-based plans encourage our executive officers and other employees to focus on increasing shareholder value over a period of years
| ● | The deferred compensation and 401(k) plans provide helpful ways for our employees to save for retirement
| ● | Bonus plans are typically based on a variety of metrics tied to our financial performance and contain "claw-back" provisions if the executive officer engages in certain activities or a payout is based on materially inaccurate financial statements or other materially inaccurate performance metric criteria

The Compensation Discussion and Analysis section beginning on page 29 gives a more detailed description of the Corporation’s compensation policies and practices.

2023 EXECUTIVE COMPENSATION SUMMARY

|  | Salary |  |  | Bonus |  |  | Stock Awards |  |  | Non-Equity Incentive Plan Compensation |  |  | Change in Pension Value and Non- qualified Deferred Compensation Earnings |  |  | All Other Compensation |  |  | Total Compensation |
EXECUTIVE OFFICER |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Robert B. Kaminski, Jr. |  |  | 665,700 |  |  |  | — |  |  |  | 348,673 |  |  |  | 366,135 |  |  |  | 270 |  |  |  | 97,211 |  |  |  | 1,477,989 |
Raymond E. Reitsma |  |  | 484,784 |  |  |  | — |  |  |  | 316,208 |  |  |  | 242,392 |  |  |  | — |  |  |  | 92,464 |  |  |  | 1,135,848 |
Charles E. Christmas |  |  | 394,921 |  |  |  | — |  |  |  | 186,707 |  |  |  | 157,968 |  |  |  | — |  |  |  | 73,484 |  |  |  | 813,080 |
Brett E. Hoover |  |  | 220,000 |  |  |  | — |  |  |  | 109,989 |  |  |  | 66,000 |  |  |  | — |  |  |  | 38,724 |  |  |  | 434,713 |
Robert T. Worthington |  |  | 260,000 |  |  |  | — |  |  |  | 53,788 |  |  |  | 52,000 |  |  |  | 2,721 |  |  |  | 27,290 |  |  |  | 395,799 |

8 | MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT |

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PROXY STATEMENT

310 Leonard Street N.W.

Grand Rapids, MI 49504

DATE OF DISTRIBUTION: April 4, 2024

INFORMATION REGARDING THE ANNUAL MEETING OF SHAREHOLDERS

Matters to be Considered at the Annual Meeting of Shareholders

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of Mercantile Bank Corporation (“we,” “our,” “Company” or “Mercantile”). The proxies are being solicited for use at the annual meeting of shareholders to be held on Thursday, May 23, 2024, at 9:00 a.m., Eastern Time, virtually via live webcast at https://signin.webex.com/join (the meeting number is: 2310 336 6249 and the meeting password is: MBWM2024), and at any and all adjournments of the meeting. An annual report that consists of our Annual Report on Form 10-K for the year ended December 31, 2023, and other information is first being mailed or made available to shareholders, along with these proxy materials, on or about April 4, 2024.

Important Notice Regarding the Availability of Proxy Materials for the

Shareholder Meeting

to be Held on May 23, 2024:

Our proxy statement and 2023 Annual Report are available at

www.envisionreports.com/MBWM

Notice and Access

We use the “Notice and Access” method of providing proxy materials to you via the internet instead of mailing printed copies. We believe that this process provides you with a convenient and quick way to access the proxy materials, including our proxy statement and 2023 Annual Report to shareholders on Form 10-K, and to authorize a proxy to vote your shares, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials.

Most shareholders will not receive paper copies of the proxy materials unless they request them. Instead, the Important Notice Regarding Availability of Proxy Materials, which we refer to as the Notice and Access card, that was mailed to our shareholders on April 4, 2024, provides instructions regarding how you may access and review all of the proxy materials on the internet. The Notice and Access card also includes instructions on how to submit your proxy via the internet or telephone. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials printed on the Notice and Access card.

If your shares are held by a brokerage house or other custodian, nominee, or fiduciary in “street name,” you will receive a Notice and Access card intended for beneficial holders with instructions for providing to such intermediary voting instructions for your shares. You may also request paper copies of the proxy materials and provide voting instructions by completing and returning the enclosed voting instruction form in the addressed, postage paid envelope provided. Alternatively, if you receive paper copies, many intermediaries provide instructions for their beneficial holders to provide voting instructions via the internet or by telephone.

| MERCANTILE BANK CORPORATION | 2024 PROXY STATEMENT | 9

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Purpose of the Annual Meeting

At our annual meeting, shareholders will act upon the matters outlined in the accompanying notice of the meeting and described in this proxy statement. These matters include the election of directors, the ratification of the selection of our independent registered public accounting firm, and an advisory (non-binding) vote on the compensation of our named executive officers disclosed in this proxy statement.

Please read this proxy statement carefully. You should consider the information contained in this proxy statement when deciding how to vote your shares.

Record Date, Voting and Voting Procedures

The Board of Directors has set March 28, 2024, as the record date for the annual meeting. If you were a shareholder of record at the close of business on the record date, March 28, 2024, you are entitled to receive notice of the meeting and to vote your shares via proxy prior to the meeting. Holders of Mercantile common stock are entitled to one vote per share.

All shareholders as of the record date, or their duly appointed proxies, may attend the virtual meeting. Shareholders of record as of the record date will have the opportunity to vote on the matters to be presented to the meeting via proxy in advance of the meeting. In light of the virtual format, we will not receive in-person voting at this year’s meeting.

These terms describe how your shares are held. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are a “shareholder of record.” If your shares are held in a stock brokerage account or by a bank, trust or other nominee, then the broker, bank, trust or other nominee is considered to be the shareholder of record with respect to those shares. However, you still are considered the beneficial owner of those shares, and your shares are said to be held in “street name.” Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank, trust or other nominee how to vote their shares using the voting instructions provided by it.

If you are a shareholder of record as of the record date, you can give a proxy to be voted at the meeting in any of the following ways:

| ● | over the telephone by calling a toll-free number;
| ● | electronically, using the internet; or
| ● | by completing, signing, and mailing the printed proxy card.

The telephone and internet voting procedures have been set up for your convenience. We encourage you to reduce corporate expense by submitting your vote by telephone or internet. The procedures have been designed to authenticate your identity, to allow you to give voting instructions, and to confirm that those instructions have been recorded properly. If you are a shareholder of record and you would like to submit your proxy by telephone or internet, please refer to the specific instructions provided on the enclosed proxy card. If you wish to submit your proxy by mail, please return your signed proxy card to us before the annual meeting.

If the shares you own are held in street name, your broker, bank, trust or other nominee, as the record holder of your shares, is required to vote your shares according to your instructions. Your broker, bank, trust or other nominee is required to send you directions on how to vote those shares. If you do not give instructions to your broker, bank, trust or other nominee, it will still be able to vote your shares with respect to certain “discretionary” items but will not be allowed to vote your shares with respect to certain “non-discretionary” items. In the case of non-discretionary items, the shares that do not receive voting instructions will be treated as “broker non-votes.”

If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the virtual Annual Meeting. In order to do so, you must submit proof of your proxy power (legal proxy) reflecting your Mercantile Bank Corporation holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on May 17, 2024. Requests for registration should be directed to Computershare at the following:

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By E-Mail:

Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com

By Mail:

Computershare

Mercantile Bank Corporation Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

You will receive a confirmation of your registration by email after we receive your registration materials. If you have questions about attending the virtual annual meeting, please write to the Secretary, Mercantile Bank Corporation, 310 Leonard Street NW, Grand Rapids, Michigan 49504 or call 616-726-1601.

If you receive more than one proxy card or voting instruction form, it means that you hold shares registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card, or if you submit your proxy vote by telephone or internet, vote once for each proxy card or voting instruction form you receive.

At least a majority of the shares of our common stock outstanding on the record date must be present at the virtual meeting in order to hold the meeting and conduct business. This is called a quorum. Your shares are counted as present at the meeting if:

| ● | you are present and vote via the live webcast at the meeting; or
| ● | you have properly submitted a proxy by mail, telephone or internet.

As of the record date, 16,122,213 shares of our common stock were outstanding and entitled to vote. Proxies that are received and voted as withholding authority, abstentions, and broker non-votes (where a bank, trust, broker or other nominee does not exercise discretionary authority to vote on a matter) will be included in the calculation of the number of shares considered to be present at the meeting.

Voting Matters

Election of Directors. The affirmative vote of the holders of a plurality of the votes cast on the election of directors at the meeting is required for nominees to be elected as directors. The eight nominees receiving the highest number of votes will be elected to the Board. Votes withheld and broker non-votes are not counted as shares voted on the matter.

Independent Registered Public Accounting Firm. The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote on the matter is necessary to ratify the appointment of our independent registered public accounting firm. For purposes of counting votes on this matter, abstentions will not be counted as votes cast on the matter. Brokerage firms have discretionary authority to vote customers’ unvoted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such broker non-votes will not be counted as votes cast on the matter.

Advisory approval of compensation of our Named Executive Officers. The affirmative vote of a majority of the votes cast by the holders of shares entitled to vote on this proposal is required to approve, on an advisory basis, the compensation of our named executive officers, as described in this proxy statement. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on this proposal. As a result, any shares not voted by a customer will be treated as a broker non-vote. For purposes of counting votes on this matter, abstentions and broker non-votes will not be counted as shares voted on the matter. Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

As of the date of this proxy statement, our Board of Directors does not know of any matters which may come before the meeting, other than the matters described in this proxy statement. Should any other matter requiring a vote of the shareholders arise and be properly presented at the annual meeting, the proxy gives the persons named in the proxy and designated to vote the shares discretionary authority to vote or otherwise act with respect to any such matter in accordance with their best judgment.

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The Board of Directors recommends that you vote:

| ✔ | FOR the election of all the eight nominees for director;
| ✔ | FOR the ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for 2024; and
| ✔ | FOR the advisory approval of the compensation of our named executive officers disclosed in this proxy statement.

Proxy and Proxy Statement

A proxy is your designation of another person to vote on your behalf. The other person is called a proxy. If you designate someone as your proxy in a written document, that document also is called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We sometimes refer to this as your “proxy vote.” By completing and returning the enclosed proxy card, or voting by internet or telephone, you are giving the persons appointed as proxies by our Board of Directors the authority to vote your shares.

You may revoke your proxy and change your vote at any time before the proxy ballot is cast at the annual meeting. If you are a shareholder of record, you may revoke your proxy and change your vote by submitting a later-dated proxy by telephone, internet or mail, or by delivering to our Secretary a written notice of revocation prior to the meeting. Attending the virtual meeting will not revoke your proxy.

If you submit a signed proxy card or submit your proxy by telephone or internet and do not specify how you want to vote your shares, the proxies will vote your shares:

| ✔ | FOR the election of all the eight nominees for director;
| ✔ | FOR the ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for 2024;
| ✔ | FOR the advisory approval of the compensation of our named executive officers disclosed in this proxy statement; and
| ✔ | In the discretion of the persons named as proxies as to all other matters that may be properly presented at the annual meeting.

If you hold your shares in street name, contact your broker, bank, trust or other nominee regarding how to revoke your proxy and change your vote.

A proxy statement is a document that we are required to give you, or provide you access to, in accordance with regulations of the Securities and Exchange Commission (the “SEC”), when we ask you to designate proxies to vote your shares of our common stock at a meeting of our shareholders. The proxy statement includes information regarding the matters to be acted upon at the meeting and certain other information required by regulations of the SEC and rules of The NASDAQ Stock Market (“NASDAQ”).

Other Matters

All costs of soliciting proxies will be borne by us. Our directors, officers, and other employees, and employees of our subsidiary, Mercantile Bank (the “Bank”), may, without compensation other than their regular compensation, solicit proxies by further mailing or personal conversation, or by telephone, facsimile, or electronic means. We will reimburse brokerage houses and other custodians, nominees, and fiduciaries for their out-of-pocket expenses for forwarding soliciting material to the beneficiary owners of our common stock.

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STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table presents information regarding the beneficial ownership of our common stock, as of March 13, 2024, by each of our current directors, each nominee for election as a director, our executive officers and all our directors and executive officers as a group.

Name of Beneficial Owner |  | Amount Beneficially Owned(1) |  |  | Percent of Class Beneficially Owned(13) |
David M. Cassard |  |  | 34,941(2) |  |  |  | * |
Charles E. Christmas |  |  | 116,008(3) |  |  |  | * |
Michael S. Davenport ● |  |  | 8,272(4) |  |  |  | * |
Michelle L. Eldridge ● |  |  | 17,269(5) |  |  |  | * |
Brett E. Hoover |  |  | 13,975(6) |  |  |  | * |
Robert B. Kaminski, Jr.● |  |  | 128,724(7) |  |  |  | * |
Michael H. Price ● |  |  | 61,197(8) |  |  |  | * |
David B. Ramaker ● |  |  | 11,470 |  |  |  | * |
Raymond E. Reitsma ● |  |  | 73,915(9) |  |  |  | * |
Nelson F. Sanchez ● |  |  | 1,750(10) |  |  |  | * |
Scott P. Setlock |  |  | 27,307(11) |  |  |  | * |
Amy L. Sparks ● |  |  | 3,047 |  |  |  | * |
All Directors and Executive Officers as a group (12 persons) |  |  | 497,875(12) |  |  |  | 3.08% |

● | Member of our Board of Directors and Nominee for Re-election
* | Less than 1%

| (1) | The number of shares beneficially owned includes any shares over which the person has sole or shared voting power or investment power and also any shares that the person can acquire within 60 days of March 13, 2024 through the exercise of any stock options or other right. Unless otherwise indicated, each person has sole investment and voting power (or shares such power with their spouse) over the shares set forth in the table.

| (2) | Includes 8,115 shares that Mr. Cassard holds jointly with his spouse. Mr. Cassard is a current member of our Board of Directors but is retiring as of the annual meeting date and will not stand for reelection.

| (3) | Includes 24,260 shares that Mr. Christmas holds jointly with his spouse, 18,331 shares of restricted stock, and 46,465 shares that Mr. Christmas owns under the Bank’s 401(k) plan. Also includes 1,946 shares that Mr. Christmas’ spouse, who is currently employed by the Bank, owns under the Bank’s 401(k) plan as well as 477 shares that she owns in her IRA.

| (4) | Includes 1,800 shares that Mr. Davenport holds in an IRA.

| (5) | Includes 6,750 shares that Ms. Eldridge holds in an IRA and a Roth IRA and 100 shares jointly owned with two of her sisters.

| (6) | Includes 4,200 shares of restricted stock and 971 shares that Mr. Hoover owns under the Bank’s 401(k) plan.

| (7) | Includes 51,826 shares that Mr. Kaminski holds jointly with his spouse, 42,897 shares of restricted stock, and 34,001 shares that Mr. Kaminski owns under the Bank’s 401(k) plan.

| (8) | Includes 14,363 shares that Mr. Price holds jointly with his spouse, 17,344 shares that Mr. Price owns under the Bank’s 401(k) plan, and 13,773 shares Mr. Price holds in an IRA.

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| (9) | Includes 31,032 shares of restricted stock, 19,005 shares that Mr. Reitsma owns jointly with his spouse, 21,725 shares that Mr. Reitsma owns under the Bank’s 401(k) plan as well as 2,153 shares that he owns in his IRA.

| (10) | Includes 485 shares that Mr. Sanchez holds in an IRA.

| (11) | Includes 7,570 shares that Mr. Setlock holds jointly with his spouse, 11,340 shares of restricted stock, and 8,397 shares that Mr. Setlock owns under the Bank’s 401(k) plan.

| (12) | Includes 107,800 shares of restricted stock awarded under our stock-based compensation plans, and 130,849 shares that such persons own under the Bank’s 401(k) plan, including 1,946 shares held by Mr. Christmas’ spouse.

| (13) | The percentages shown are based on the 16,122,213 shares of our common stock outstanding as of March 13, 2024, plus the number of shares that the named person or group has the right to acquire within 60 days of March 13, 2024. For purposes of computing the percentages of outstanding shares of common stock held by each person, any shares that the person has the right to acquire within 60 days after March 13, 2024, are deemed to be outstanding with respect to such person but are not deemed to be outstanding for the purpose of computing the percentage of ownership of any other person.

Stock Owned by 5% Beneficial Owners

The following table presents information regarding the beneficial ownership of our common stock by each person known to us to beneficially own more than 5% of our outstanding shares of common stock as of March 13, 2024.

Name and Address of Beneficial Owner |  | Amount Beneficially Owned |  |  | Percent of Class Beneficially Owned(3) |
BlackRock, Inc. 55 East 52nd Street New York, NY 10055(1) |  |  | 1,554,923 |  |  |  | 9.6% |
Dimensional Fund Advisors LP 6300 Bee Cave Road Austin, TX 78746(2) |  |  | 1,151,731 |  |  |  | 7.1% |

| (1) | The information is based on a Schedule 13G, Amendment No. 1, filed with the SEC on January 24, 2024. BlackRock, Inc. may be deemed to have beneficial ownership of the shares reflected in the table as of December 31, 2023. BlackRock reported aggregate beneficial ownership of 1,554,923 shares, with sole voting power over 1,452,817 shares and sole dispositive power over 1,554,923 shares.

| (2) | The information is based on a Schedule 13G, Amendment No. 7, filed with the SEC on February 9, 2024. Dimensional Fund Advisors LP (“Dimensional”) is an investment adviser registered under Section 203 of the Investment Advisors Act of 1940. It furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). Dimensional reported aggregate beneficial ownership of 1,151,731 shares, with sole voting power over 1,133,624 shares and sole dispositive power over 1,151,731 shares. Though Dimensional may possess voting and/or investment power over the shares, it disclaims beneficial ownership of such securities, which are owned by the Funds.

| (3) | The percentages shown are based on the 16,122,213 shares of our common stock outstanding as of March 13, 2024.

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PROPOSAL #1 – ELECTION OF DIRECTORS

Information About Our Directors

Our articles of incorporation and bylaws provide that our Board of Directors will consist of between six and fifteen directors, with the exact number of directors determined from time to time by our Board of Directors. Our directors are elected annually to one-year terms. Our Board of Directors currently has nine members. David M. Cassard currently serves as a member of our Board but will retire when his term expires at the annual meeting and will not stand for reelection. As a result of this action, the Board will be comprised of eight members following this year’s annual meeting. The Board intends to take immediate action following the meeting to reduce the number of directors to eight, leaving no vacancies.

Our Board of Directors has nominated:

| ● | Michael S. Davenport,

| ● | Michelle L. Eldridge,

| ● | Robert B. Kaminski, Jr.,

| ● | Michael H. Price,

| ● | David B. Ramaker,

| ● | Raymond E. Reitsma,

| ● | Nelson F. Sanchez, and

| ● | Amy L. Sparks

as directors for election at this year’s annual meeting for one-year terms expiring at the 2025 annual meeting. Each of the nominees is presently a director whose term expires at this year’s annual meeting.

Our Board of Directors recommends that you vote FOR each of the eight nominees named above. Unless otherwise instructed, the persons named as proxies intend to vote all proxies received for the election of the eight nominees.

All of the nominees have indicated their willingness to continue to serve. If any nominee should become unwilling or unavailable to serve, our Board of Directors may select a substitute nominee, and in that event the proxies intend to vote all proxies for the person selected, as well as the other nominees. If a substitute nominee is not selected, the proxies intend to vote for the election of the remaining nominees. Our Board of Directors has no reason to believe that any of the nominees will become unavailable.

Set forth below is information about the nominees for election as directors. The factual information about each nominee and director has been provided by that person. The particular experience, qualifications, attributes or skills that led our Board of Directors to conclude that each should serve on our Board, in light of our business and structure, were determined by our Board or its Governance and Nominating Committee. There are no family relationships among any of our directors, nominees for director and executive officers.

Nominees for Director

MICHAEL S. DAVENPORT DIRECTOR SINCE 2020 AGE: 54 |  | Mr. Davenport has served as President and Chief Executive Officer of Jireh Metal Products since 2015. Prior to that, he held a variety of positions at major financial institutions, including U.S. Bank, Fifth Third Bank and First Financial Bank. Overall, his background includes over 13 years in the banking industry, holding positions in sales, risk management and community development. Mr. Davenport earned a Bachelor of Science degree in psychology from Xavier University and a Juris Doctor degree from the University of Cincinnati College of Law. Mr. Davenport serves on the Boards of The Right Place, Grand Rapids Chamber of Commerce, The Right Place Manufacturing Council, The Michigan Manufacturing Technology Center and the Xavier University President's Advisory Council. He has been a member of the Bank’s Board since 2017. Mr. Davenport’s background in banking, risk management, law and community development were key factors in our determination that he should be a member of our Board.

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MICHELLE L. ELDRIDGE DIRECTOR SINCE 2016 AGE: 58 |  | Ms. Eldridge is a Principal of Clear Ridge Wealth Management (“Clear Ridge”) in Kalamazoo, Michigan, which she co-founded in 2014. Clear Ridge provides integrated wealth management to high-net-worth families and customized investment management to institutional organizations. Prior to founding Clear Ridge, Ms. Eldridge was a Principal of LVM Capital Management for 16 years. Ms. Eldridge is a member of the Western Michigan University Foundation Investment Committee, is part of the Leadership Council of the Small Business Association of Michigan and is on the Finance Committee of Prince of Peace Lutheran Church. She is a CFA® charterholder, Certified Private Wealth Advisor ®, and a graduate of Western Michigan University. Ms. Eldridge served as a director of Keystone Community Bank from 2007 through 2014. Ms. Eldridge's experience as a CFA® charterholder and Registered Investment Advisor, as well as her leadership roles in the communities we serve, were key factors in our determination that she should be a member of our Board.
ROBERT B. KAMINSKI, JR. DIRECTOR SINCE 2016 AND PREVIOUSLY FROM 2011 TO 2014 AGE: 62 President and Chief Executive Officer of Mercantile; Chief Executive Officer of the Bank |  | Mr. Kaminski was one of the founding officers of Mercantile in 1997 and has 40 years of commercial banking experience. Mr. Kaminski was appointed President and Chief Executive Officer (“CEO”) of Mercantile on January 1, 2017, and continues to serve as CEO of the Bank, a position he has held since 2015. Mr. Kaminski has been in various positions of influence and responsibility with Mercantile and the Bank, serving Mercantile and the Bank as Senior Vice President and Secretary from 1997 to 2003, Executive Vice President and Secretary from 2003 to 2015 and President and CEO of the Bank from 2015 through 2016. In addition, he served as the Bank's Chief Operating Officer from 2000 to 2015. Mr. Kaminski serves on the Boards of Directors for the Grand Valley State University Foundation, the City of Wyoming Retirement Board, the West Michigan Policy Forum and the Finance Committee for The Right Place. Mr. Kaminski also serves as a Director of Mercantile, a position to which he was appointed by the Board on December 15, 2016. Mr. Kaminski served as a Director of Mercantile previously from 2011 to 2014. On October 12, 2023, Mr. Kaminski announced his intention to retire from his role of President and CEO of the Company and CEO of Bank, effective on June 1, 2024. Mr. Kaminski’s in-depth knowledge of the organization since its inception, experience as our President and CEO, and length of experience in commercial banking were key factors in our determination that he should be a member of our Board.
MICHAEL H. PRICE DIRECTOR SINCE 1997 AGE: 67 Chairman of Mercantile and of the Bank |  | Mr. Price has over 45 years of commercial banking experience and joined the Bank in 1997. Mr. Price retired as the President and Chief Executive Officer of Mercantile and Chief Executive Officer of the Bank on January 1, 2017; positions he had held since 2007. Mr. Price served as President and Chief Operating Officer of Mercantile and the Bank in 1997 and 1998, and as President and Chief Operating Officer of Mercantile and President and Chief Executive Officer of the Bank from 1999 to June of 2007. Mr. Price also served as Chairman of the Board of Mercantile from 2007 through the date of the Firstbank merger and resumed his position as Chairman of Mercantile following Thomas J. Sullivan’s retirement in May of 2015. From 2005 to 2007, he served on the Board of Directors of the Federal Home Loan Bank of Indianapolis. Mr. Price also held leadership positions on the Boards of Metro Health Corporation, Aquinas College, Habitat for Humanity of Kent County, Project Rehab and Network180. Mr. Price was the founding President of our organization and has demonstrated excellent leadership qualities and a strong understanding of the fundamentals of our industry. These attributes led us to conclude that he should be a member of our Board.

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DAVID B. RAMAKER DIRECTOR SINCE 2020 AGE: 68 |  | Mr. Ramaker was appointed as Director of Mercantile in August of 2020. Mr. Ramaker retired from Chemical Financial Corporation and Chemical Bank in 2017. Mr. Ramaker was the Chairman, President and Chief Executive Officer of Chemical Financial Corporation and Chemical Bank from 2006 until its merger with Talmer Bank Corporation in 2016. He served as President and Chief Executive Officer of Chemical Financial Corporation and Chemical Bank from 2001 through June of 2017. He joined Chemical Bank in 1989 as Vice President of Commercial Lending. Prior to that, he held a variety of banking positions with financial institutions in Texas from 1977 through 1989. Mr. Ramaker holds a bachelor’s degree with a major in finance and minor in accounting from Southern Methodist University. Mr. Ramaker, as a former Chief Executive Officer of a publicly traded financial company, brings extensive governance, banking industry experience and strong leadership qualities, which were key factors in our determination that he should be a member of our Board.
RAYMOND E. REITSMA DIRECTOR SINCE 2023 AGE: 61 Executive Vice President of Mercantile and President of the Bank |  | Mr. Reitsma was appointed as Director of Mercantile in October of 2023. Mr. Reitsma was appointed Executive Vice President of Mercantile effective May 24, 2018, and served as Chief Operating Officer of Mercantile from January 1, 2022, through December 31, 2023. He has been with the Bank for 20 years, beginning with his initial role as a Commercial Loan Manager in 2003. In June 2015, Mr. Reitsma was appointed as the Bank's West Region President and became President of the Bank on January 1, 2017. Mr. Reitsma’s areas of responsibility have included commercial lending, treasury/cash management, mortgage lending, operations, risk management, retail/branches, and credit administration. Mr. Reitsma was also very instrumental in the preparation, transition and integration periods surrounding the merger with Firstbank Corporation. Mr. Reitsma currently serves on the Kent Community Hospital Finance Authority, the Advisory Council of The Mill Steel Company and is Chair of the Mel Trotter capital campaign. Additionally, he serves on the Advisory Council of DA Blodgett/St. John’s Home and has done so since 2011. Previously, Mr. Reitsma has served on the local boards of the American Heart Association and the Pine Rest Foundation for six years, including two years as Treasurer. He has also been involved with the local United Way agency, most recently as the annual Campaign Chair for the Bank. Mr. Reitsma graduated from Calvin College with a B.A. in Business Administration and also holds an MBA in Finance from Michigan State University. Mr. Reitsma’s extensive tenure and dynamic leadership roles with the Company as well as his extensive commercial banking experience were key factors in our determination that he should be a member of our Board.
NELSON F. SANCHEZ DIRECTOR SINCE 2024 AGE: 59 |  | Mr. Sanchez is a strong finance executive with broad strategic leadership experience in all aspects of finance, operations, marketing and general management. He is the Chief Executive Officer of RoMan Manufacturing, Inc. (“RoMan”). Mr. Sanchez joined RoMan as Chief Financial Officer in 2013, became Chief Operating Officer in 2016, President in January of 2023 and was appointed as Chief Executive Officer in June of 2023. Before joining RoMan, he held executive positions in finance, marketing, and management in various companies, including Deloitte, Windquest Companies, Ridgeview Industries, and Kaydon Corporation. Mr. Sanchez is a Certified Public Accountant, fluent in Spanish and has an extensive background in strategic leadership and diversity training. He serves on various boards and committees in the West Michigan community, including the Grand Rapids Community Foundation, Grand Rapids Chamber of Commerce and Holland Home. Mr. Sanchez’s experience in a variety of business sectors encompassing domestic, international, private, public, and family-owned organizations, along with his financial expertise as a Certified Public Accountant, led us to conclude that he should serve on our Board.

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AMY L. SPARKS DIRECTOR SINCE 2023 AGE: 51 |  | Ms. Sparks was appointed as Director of Mercantile in October of 2023. Ms. Sparks is the Owner, President, and Chief Executive Officer of Nuvar, Inc., a Michigan-based manufacturing company specializing in finished product contract manufacturing for the office furniture, health care, education, appliance and transportation industries. Ms. Sparks is also a Certified Public Accountant and currently serves on the Grand Valley State University Seidman School of Business Dean's Advisory Board and is a mentor volunteer with Inforum's ManufacturingNEXT program. Ms. Sparks has nearly 30 years of demonstrated executive leadership in solidifying financial performance, enhancing organizational development and diversifying into new markets. Her strong financial background and experience were key factors in our determination that she should be a member of our Board.

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Our Executive Officers are listed in the table below:

Name of Executive Officer | Title
Robert B. Kaminski, Jr. | President and Chief Executive Officer of Mercantile and Chief Executive Officer of the Bank
Charles E. Christmas | Executive Vice President, Chief Financial Officer and Treasurer of Mercantile, and Executive Vice President and Chief Financial Officer of the Bank
Raymond E. Reitsma | Executive Vice President of Mercantile and President of the Bank
Scott P. Setlock | Executive Vice President, Chief Operating Officer and Secretary of Mercantile and of the Bank
Brett E. Hoover | Executive Vice President, Chief Human Resource Officer of Mercantile and of the Bank

Mr. Kaminski and Mr. Reitsma are also members of our Board of Directors, and information regarding their business experience is described above under the heading “Election of Directors.” The business experience for Mr. Christmas, Mr. Setlock, and Mr. Hoover for at least the past five years is summarized below. Our Executive Officers are generally elected each year at the annual meeting of our Board of Directors that follows the annual meeting of the shareholders. Their terms of office are at the discretion of our Board of Directors.

Executive Officers

Charles E. Christmas, age 58

Executive Vice President, Chief Financial Officer and Treasurer of Mercantile, and Executive Vice President and Chief Financial Officer of the Bank

Mr. Christmas joined the Bank in 1998 and has over 35 years of banking experience. Before being promoted to his current position as Executive Vice President and Chief Financial Officer of Mercantile and the Bank, Mr. Christmas served as Senior Vice President and Chief Financial Officer of Mercantile and the Bank from 2000 to 2015. Mr. Christmas also serves as Treasurer of Mercantile, a position he has held since 2000. Prior to joining Mercantile, he examined various financial institutions for over ten years while serving as a bank examiner with the Federal Deposit Insurance Corporation (“FDIC”). He began his tenure with the FDIC upon his graduation from Ferris State University. Mr. Christmas holds a Bachelor of Science degree in Accountancy. Mr. Christmas serves on the Michigan Bankers Association Funds Management Committee, is an instructor at the Michigan Bankers Association Perry School of Banking, is a member of the Ferris State University College of Business Advisory Board, serves as a Board member and Finance Committee member of the Frederik Meijer Gardens & Sculpture Park, and assists the Make-A-Wish Foundation of Michigan in its fundraising activities.

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Scott P. Setlock, age 42

Executive Vice President, Chief Operating Officer and Secretary of Mercantile and of the Bank

Mr. Setlock was appointed to the role of Executive Vice President, Chief Operating Officer and Secretary of Mercantile effective January 1, 2024, and has served as Executive Vice President, Chief Operating Officer of the Bank since January 1, 2022. In his nearly 20-year tenure with the Bank, Mr. Setlock has held roles within Commercial Credit, Commercial Credit Management, Commercial Lending and Mortgage Lending Management. He maintains an active role in the community, serving on the Board and Executive Committee of Junior Achievement of the Michigan Great Lakes where he also regularly volunteers directly with students. Mr. Setlock has previously served as an Adjunct Professor of Bank Management at the Seidman College of Business at Grand Valley State University, on the Board and Executive Committee of the Seidman Alumni Board and on the Seidman Finance Advisory Committee. Other prior community service includes holding the role of Board Chair at In the Image for six years and on the Heart of West Michigan United Way Campaign Cabinet overseeing the Finance Division. Mr. Setlock graduated from Grand Valley State University with a BBA and an MBA in Finance and Economics. He is also a graduate of the American Banking Association Stonier Graduate School of Banking and associated Wharton leadership programs.

Brett E. Hoover, age 53

Executive Vice President, Chief Human Resource Officer of Mercantile and of the Bank

Mr. Hoover was appointed as Senior Vice President, Human Resource Director of the Bank on March 4, 2022, and was most recently appointed as Senior Vice President, Human Resource Director of Mercantile on January 1, 2023. Previously, Mr. Hoover was promoted to Human Resource Associate Director in January of 2020. Mr. Hoover joined the Bank in 2006 as a Vice President, Human Resource Administrator and is a Society for Human Resource Management - Senior Certified Professional. In addition, he has the Group Benefit Associate (“GBA”) certification. Mr. Hoover serves the local community as the President of the Board of IKUS Life Enrichment Services. He also serves as a Director for the Michigan Bankers Workers Compensation Fund. Mr. Hoover has previously served on the Board of Grand Rapids Opportunities for Women (“GROW”). He holds a master’s degree in management from Aquinas College.

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CORPORATE GOVERNANCE

Director Independence

Applicable NASDAQ rules require that a majority of our Board of Directors be independent. In March of 2024, our Board of Directors reviewed the independence of our directors and determined that each of the directors, including those nominated for election at the annual meeting, are independent as defined by applicable NASDAQ rules, with the exception of Mr. Kaminski, who currently serves as President and Chief Executive Officer and Mr. Reitsma, who currently serves as Executive Vice President of Mercantile. Further, in making independence determinations, our Board of Directors has concluded that none of the independent directors has a relationship that in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. While the Board has determined that Mr. Price is independent under applicable NASDAQ and SEC rules, the Board has elected not to place Mr. Price on any of our committees due to the policies of certain institutional shareholders against a former company Chief Executive Officer occupying such a position.

Board Meetings

During 2023, our Board of Directors held a total of nine meetings. During 2023, each director attended at least 92% of the meetings of our Board and its Committees on which he or she then served.

Our Board of Directors has a policy of encouraging members of the Board of Directors to attend the annual meetings of the shareholders. All of our directors then serving on our Board attended last year’s annual meeting.

Board Committees

Our Board of Directors has, and appoints members to, three standing committees: the Audit Committee, the Compensation Committee, and the Governance and Nominating Committee. The membership of these committees, as of March 13, 2024, was as follows:

DIRECTOR NAME | Audit Committee | Compensation Committee | Governance & Nominating Committee
David M. Cassard** | C | M | M
Michael S. Davenport* | M | M | M
Michelle L. Eldridge | M | C | M
David B. Ramaker | M | M | C
Nelson F. Sanchez | M | M | M
Amy L. Sparks** | M | M | M
TOTAL MEETINGS IN 2023 | 6 | 6 | 3

* Executive Session Facilitator (ESF)

** Mr. Cassard retires from the Board effective May 23, 2024 and Ms. Sparks has been appointed by the Board as the successor Chairperson of the Audit Committee effective on the same date.

C = CHAIR

M = MEMBER

Each of the members of these committees is an independent Director as defined by applicable NASDAQ and the SEC rules. Each of these committees has a Charter that has been approved by our Board of Directors and is available on our website, www.mercbank.com.

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AUDIT COMMITTEE

Committee Members: |  | Primary Responsibilities:
David M. Cassard (Chair)* Michael S. Davenport Michelle L. Eldridge David B. Ramaker Nelson F. Sanchez Amy L. Sparks Meetings Held in 2023: 6 * Mr. Cassard retires from the Committee effective May 23, 2024. |  | ■ | The Audit Committee had five members and met six times in 2023.
| ■ | The Audit Committee assists our Board of Directors in overseeing our financial reporting process, internal controls and audit functions, and is directly responsible for the appointment, evaluation, retention and compensation of our independent registered public accounting firm.
| ■ | Our Board of Directors has determined that Ms. Eldridge, Mr. Ramaker, Mr. Sanchez, and Ms. Sparks, who are members of the Audit Committee, are qualified as audit committee financial experts, as that term is defined in the rules of the SEC.
| ■ | More information about the Audit Committee is included below under the heading “Audit Committee Report.”

COMPENSATION COMMITTEE

Committee Members: |  | Primary Responsibilities:
David M. Cassard* Michael S. Davenport Michelle L. Eldridge (Chair) David B. Ramaker Nelson F. Sanchez Amy L. Sparks Meetings Held in 2023: 6 * Mr. Cassard retires from the Committee effective May 23, 2024. |  | ■ | The Compensation Committee had five members and met six times in 2023.
| ■ | The Compensation Committee assists our Board of Directors in carrying out its responsibilities relating to compensation and benefits for our directors, officers, and employees.
| ■ | The Compensation Committee reviews and approves the goals and objectives relating to the compensation of our executive officers and evaluates the performance of the Chief Executive Officer.
| ■ | The Compensation Committee determines or recommends to our Board for determination, all elements of compensation for our executive officers and considers the results of the most recent advisory vote of the shareholders on executive compensation in making compensation determinations and recommendations.
| ■ | The Compensation Committee reviews the Company’s compensation of its Directors, including cash and equity-based compensation and benefits, and recommends or makes changes in compensation for Directors.
| ■ | The Committee sets guidelines for Directors’ and Executive Officers’ ownership of our stock.
| ■ | The Compensation Committee reviews our incentive compensation arrangements to determine whether they encourage excessive risk-taking; administers and makes awards under our stock-based incentive plans for directors, officers and employees, to the extent provided for in the plans; and has sole discretion in retaining or obtaining the advice of a compensation consultant, legal counsel or other adviser (each, a “Compensation Adviser”), and the direct responsibility for the appointment, compensation and oversight of the work of any Compensation Adviser it retains.
| ■ | The Compensation Committee Charter grants the Compensation Committee the authority, in its discretion, to delegate appropriate matters to subcommittees of the Compensation Committee.

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GOVERNANCE AND NOMINATING COMMITTEE

Committee Members: |  | Primary Responsibilities:
David M. Cassard* Michael S. Davenport Michelle L. Eldridge David B. Ramaker (Chair) Nelson F. Sanchez Amy L. Sparks Meetings Held in 2023: 3 * Mr. Cassard retires from the Committee effective May 23, 2024. |  | ■ | The Governance and Nominating Committee had five members and met three times in 2023.
| ■ | The Governance and Nominating Committee advises our Board of Directors regarding corporate governance principles and practices and recommends candidates to the Board for election as directors. It also makes recommendations to our Board of Directors regarding the composition, leadership and duties of the Board’s committees.
| ■ | The Governance and Nominating Committee will consider as potential nominees persons recommended by shareholders, provided they comply with the advance notice and other requirements set forth in our articles of incorporation. Recommendations should be submitted to the Governance and Nominating Committee in care of the Secretary, Mercantile Bank Corporation, 310 Leonard Street NW, Grand Rapids, Michigan 49504. Each recommendation should include a personal biography of the suggested nominee, an indication of the background or experience that qualifies the person for consideration, and a statement that the person has agreed to serve if nominated and elected.
| ■ | The Committee considers diversity as one of many important aspects as they contemplate Director Candidates for both of the Boards. Mercantile is committed to fostering, cultivating and preserving a culture of diversity, equity and inclusion, because embracing human diversity makes the organization stronger and reflective of the communities we serve. The Committee considers gender, racial and ethnic diversity to be an asset when identifying Director Candidates. Additional general factors include the candidate’s personal and professional integrity, business judgment, diversity, relevant experience and skills, and potential to be an effective director in collaboration with the rest of our Board of Directors, collectively serving the long-term interests of our shareholders.
| ■ | The Committee is responsible for the oversight of the Environmental, Social and Governance (“ESG”) Committee, by reviewing quarterly reports, discussing key initiative updates with the Chief Risk Officer, providing guidance and ensuring the appropriateness of the Company’s strategies and goals.
| ■ | The Committee organizes and conducts an annual performance evaluation of the Board, its Committees and an assessment of each individual Director’s performance, reporting the results to the Board of Directors.
| ■ | Although the Governance and Nominating Committee has the authority to retain a search firm to assist it in identifying director candidates, there has to date been no need to employ a search firm. The Governance and Nominating Committee does not evaluate potential nominees for director differently based on whether they are recommended by a shareholder.

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Board Leadership Structure

Our Board is led by Michael H. Price, Chairman of the Board. Mr. Price is an independent director under applicable NASDAQ and SEC standards. The decision as to who should serve as Chairman of the Board, and who should serve as Chief Executive Officer, and whether those offices should be combined or separate, is properly the responsibility of our Board. The members of our Board possess considerable experience and unique knowledge of the challenges and opportunities we face and are in the best position to evaluate our needs and how best to organize the capabilities of the directors and senior officers to meet those needs. The Board believes that the most effective leadership structure for us at this time is for the roles of Chairman of the Board and Chief Executive Officer be separate and these roles are currently served by Mr. Price and Mr. Kaminski, respectively. The Board believes that this leadership structure promotes strategy development and execution and facilitates information flow between management and the Board. As the non-executive Chairman, Mr. Price acts as the key liaison with the Chief Executive Officer, sets the agendas for Board meetings, presides over meetings of the Board and the shareholders, communicates the Board of Directors’ feedback to the Chief Executive Officer and communicates on behalf of the Board with various constituencies involved with the Company.

Unlike many companies, our Board of Directors does not have an Executive Committee through which a Chief Executive Officer and Chairman of the Board are able to undertake decisions without the participation of the full Board of Directors. Instead, our Board of Directors accomplishes most of its corporate governance role, including new director and succession planning, through its committees, which are chartered to undertake significant activities and are made up entirely of independent directors.

In addition, our independent directors participate in at least two executive sessions during the year, in which our non-independent directors do not participate. Any independent director may request additional executive sessions at any meeting. Our executive sessions are led by our executive session facilitator, who is an independent director recommended by our Governance and Nominating Committee and appointed by our Board. Our executive session facilitator is responsible for setting the agenda for executive sessions and leading them. Our current executive session facilitator is Michael S. Davenport.

Board Role in Risk Oversight

Our Board and Audit Committee oversee our risk management practices. In carrying out these responsibilities, our Board appointed Robert Worthington as our Chief Risk Officer. Our Chief Risk Officer, with supervision from our Board, is responsible for the definition, structure, implementation, and coordination of our risk management plan. Our Chief Risk Officer reports to the Chief Operating Officer and meets at least quarterly with our Board and Board Committees to discuss the topics specified below.

Our Chief Risk Officer is the Chair of our Enterprise Risk Management (“ERM”) and a member of the Environmental, Social and Governance (“ESG”) Committee. The ERM Committee is comprised of senior management, and its purpose is to provide high-level attention and coordination to the risk management process and to discuss and address significant risks that we face. The Bank’s compliance management program includes training, monitoring, policies, procedures and routine oversight to mitigate risks. Regulatory implementation processes, new product reviews, change management processes, and a complaint review process contribute to the strength of the Bank’s controls. The Bank monitors its risk factors continuously, formally documenting risk and control assessments on each factor on a quarterly basis, maintaining historical documentation along with an analysis of the projected and desired risk outcomes and any projected risk discrepancy. The Board of Directors reviews and discusses the Enterprise-Wide Risk Assessment Report on a quarterly basis with the Chief Risk Officer. The Bank regularly consults with its independent audit firm, legal counsel, independent investment banking firms and regulators to anticipate emerging risks and mitigate future threats. The ESG Committee is comprised of senior management, and its purpose is to develop, track and improve key ESG sustainability initiatives, provide guidance and ensure the appropriateness of the Company’s strategies and goals. The Chairperson reports on the sustainability matters and provides initiative updates at the Governance and Nominating Committee meetings.

The Disclosure Committee, comprised of senior management, including our internal audit team, meets on a quarterly basis to review controls and procedures. The Disclosure Committee reports to the Audit Committee on a quarterly basis.

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Our Chief Risk Officer prepares annual reports assessing risks associated with our compensation plans. The Compensation Committee, with the advice of the Chief Risk Officer, assesses whether our compensation plans encourage taking unnecessary and excessive risks that threaten our value, or encourage the manipulation of reported earnings to enhance the compensation of any employee.

Cybersecurity and Data Privacy

Mercantile recognizes the importance of safeguarding sensitive customer information. Therefore, the Board recognizes that the protection of this information ranks as one of its highest priorities. The Board is responsible for reviewing and approving the Information Cyber Security Program and Policy (“ICSPP”) and Information Cyber Security Response Policy (“ICSRP”) at least annually and monitoring material risks facing our Company.

The Board has tasked a team of senior management (“SMT”) with overseeing efforts to develop, implement and maintain the ICSPP. The SMT designates a chief information security officer (“CISO”) who also serves as the incident response team (“IRT”) leader.

The CISO is responsible for leading company-wide cybersecurity strategy, policy, standards, architecture, and processes. The CISO is charged with all logical security related matters, which include but are not limited to PC/server security, network security, internet security, and database and application security. Our ICSRP is based on applicable federal and state laws as well as cybersecurity incident response best practices. The purpose of the ICSRP is to define procedures for reporting and responding to cybersecurity incidents. It creates objectives for actionable procedures that can be measured, evaluated, scaled and revised as necessary for each specific incident. These objectives include maximizing the effectiveness of the Company's operations through an established plan of action and assigning responsibilities to appropriate personnel and/or third-party contractors.

The Company has engaged a third-party managed detection and response-company to monitor the security of its information systems around-the-clock, including intrusion detection, and to provide instantaneous alerting should a cybersecurity event occur. If a cybersecurity threat or cybersecurity incident is identified through the Company’s information systems, the CISO and its IRT will take immediate steps to mitigate the threat and assess any damages. Upon report from the CISO, the SMT will evaluate the materiality of the cybersecurity threat or cybersecurity incident to determine if any public disclosures are required under the Security and Exchange Commission’s cybersecurity disclosure rule. If deemed necessary, third-party consultants, legal counsel, and assessors will be engaged to evaluate the materiality assessment.

As part of its oversight responsibilities, the Board of Directors is responsible for discussing with the SMT our major risk exposures, such as cybersecurity, and the steps management has taken to monitor and control those exposures, including our risk assessment and risk management policies. The Board also monitors our compliance with legal and regulatory requirements and the risks associated therewith. On a regular basis, the Board reviews with the SMT significant areas of risk exposure involving cybersecurity. The CISO prepares reports on IT general controls and cybersecurity metrics for the SMT and Board on a regular basis, and the CISO presents those reports to the SMT and Board and addresses any questions and concerns raised by the SMT and Board. At least annually, the Board meets with the CISO in person to discuss cybersecurity in greater detail.

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Board Diversity

Mercantile is committed to fostering, cultivating, and preserving a culture of diversity, equity and inclusion, because we believe that embracing human diversity makes us a better organization. The Governance and Nominating Committee considers gender, racial and ethnic diversity to be an asset when identifying director candidates. Approximately 50% of our Board members possess characteristics of racial and gender diversity, our Compensation Committee is chaired by a female director and our Executive Session Facilitator identifies as a diverse director. The Governance and Nominating Committee considers diversity as one of many important aspects as we contemplate director candidates for our Board. We also believe that the composition of our Board has consistently demonstrated diversity as defined by viewpoint, background, geographic representation and professional experience.

Pursuant to NASDAQ’s rules pertaining to disclosure of Board-level diversity, the following table presents a diversity matrix with respect to our 2024 and 2023 director nominees.

BOARD DIVERSITY MATRIX
| As of 03/13/2024 | As of 03/29/2023
Total Number of Directors | 8 | 6
| Female | Male | Non-Binary | Did Not Disclose Gender | Female | Male | Non-Binary | Did Not Disclose Gender
Part I: Gender Identity
Directors | 2 | 6 | - | - | 1 | 5 | - | -
Part II: Demographic Background
African American or Black | - | 1 | - | - | - | 1 | - | -
Alaskan Native or Native American | - | - | - | - | - | - | - | -
Asian | - | - | - | - | - | - | - | -
Hispanic or Latinx | - | 1 | - | - | - | - | - | -
Native Hawaiian or Pacific Islander | - | - | - | - | - | - | - | -
White | 2 | 4 | - | - | 1 | 4 | - | -
Two or More Races or Ethnicities | - | - | - | - | - | - | - | -
LGBTQ+ | - | - | - | - | - | - | - | -
Did Not Disclose Demographic Background | - | -

Communications with Directors

Shareholders and other persons may send communications to members of our Board of Directors who serve on the Audit Committee by utilizing the webpage on our website, www.mercbank.com, designated for that purpose. Communications received through the webpage are reviewed by a member of our internal audit staff and the Chair of the Audit Committee. Communications that relate to functions of our Board of Directors or its committees, or that either of them believes requires the attention of members of our Board of Directors, are provided to the entire Audit Committee and reported to our Board of Directors by a member of the Audit Committee. Directors may review a log of these communications and request copies of any of the communications.

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Code of Ethics and Insider Trading Policy

We have adopted a written Code of Ethics that applies to all our and the Bank’s directors, officers and employees, including our Chief Executive Officer and our Chief Financial Officer. We have posted a copy of the code on our website, www.mercbank.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ listing standards concerning any amendments to, or waivers from, any provision of the code. Information contained in, or accessible through, our website does not constitute part of this proxy statement.

We have also adopted an Insider Trading Policy that prohibits directors, officers and employees of the Company and Mercantile Bank from purchasing or selling any Company security while in possession of material non-public information about the Company. We have posted a copy of the policy on our website, www.mercbank.com. The policy also prohibits the directors, executive officers, and employees, of the Company and the Bank, including members of the strategic planning team and Asset/Liability Management Committee, and their related persons, from hedging our stock, engaging in short sales or buying or selling put or call options on our stock, or holding our stock in margin accounts. Further, the policy prohibits executive officers and directors of Mercantile and the Bank from pledging our stock as collateral for a lending relationship without first submitting the facts and circumstances of the proposed pledge to an appointed compliance officer and obtaining prior approval of the Governance and Nominating Committee. The policy allows the Governance and Nominating Committee to either reject the proposed pledge, permit the proposed pledge, or place conditions upon the proposed pledge, as it deems prudent to protect the interests of Mercantile and its shareholders.

Diversity, Equity, and Inclusion Policy

We have adopted a written Diversity, Equity and Inclusion Policy that applies at the Company and the Bank level. A copy of the Diversity, Equity and Inclusion Policy is posted on our website, www.mercbank.com, under Investor Relations/Overview/Governance Documents. Mercantile is committed to fostering, cultivating, and preserving a culture of diversity, equity and inclusion. Employees with dissimilar backgrounds, perspectives, opinions, and lifestyles help us understand the motivations and desires of our many different customers. Thus, Mercantile strives to maintain a workforce that reflects the diversity of the communities it serves. The collective sum of the individual differences, life experiences, knowledge, inventiveness, innovation, self-expression, unique capabilities, and talent that our employees invest in their work represents a significant part of not only the Company’s culture, but also its reputation and achievements as well.

Human Rights Policy

We have adopted a written Human Rights Policy that applies at the Company and the Bank level. A copy of the Human Rights Policy is located on our website, www.mercbank.com, under Investor Relations/Overview/Governance Documents. Mercantile recognizes the important responsibility to respect human rights and is fully committed to bringing products and services to the markets served, respecting human rights, and adding value to all the relationships that are built. Consistent with the Diversity, Equity and Inclusion Policy, each member of the team shall be accorded the utmost respect, and all will be given equal opportunity and encouragement to achieve their full potential. Mercantile believes in the principles of equality and non-discrimination, is committed to treating all individuals with respect and dignity and works to promote the opportunity for all people throughout the organization to exercise and enjoy their fundamental human rights. This is done in accordance with Mercantile’s endorsement of the United Nations Guiding Principles on Business and Human Rights and the United Nations Sustainable Development Goals.

Environmental Policy

We have adopted a written Environmental Policy that applies at the Company and the Bank level. We have posted a copy of the Environmental Policy on our website, www.mercbank.com, under Investor Relations/Overview/ Governance Documents. The primary goal of Mercantile’s environmental posture is to minimize, to the extent possible, our adverse impacts to the natural world as we carry out our mission to our stakeholders. We recognize that everyone depends on the health of the planet in order to thrive.

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Supplier Diversity Program Policy and Supplier and Vendor Code of Conduct

We have adopted a written Supplier Diversity Program Policy that applies at the Company and the Bank level and a Supplier and Vendor Code of Conduct that applies to all our suppliers and vendors. We have posted a copy of the Supplier Diversity Program Policy on our website, www.mercbank.com, under Investor Relations/Overview/ Governance Documents. The purpose of Mercantile’s Supplier Diversity Program is to identify the best suppliers, support our competitive pledge of excellence, ensure customer satisfaction, increase sustainability, and promote diversity, innovation and social responsibility while reflecting, supporting and creating a positive economic impact in the communities that Mercantile serves.

Anti-Bribery and Anti-Corruption Policy

We have adopted an Anti-Bribery and Anti-Corruption Policy that applies at the Company and Bank level. We have posted a copy of the Anti-Bribery and Anti-Corruption Policy on our website, www.mercbank.com, under Investor Relations/Overview/ Governance Documents. Mercantile is committed to doing business with integrity and the highest ethical standards, in accordance with all applicable anti-bribery and anti-corruption laws and regulations. The purpose of the Anti-Bribery and Anti-Corruption Policy is to set standards for the prevention of corruption and bribery, to outline clear guidance for compliance with all applicable anti-bribery and anti-corruption laws and provide direction for the reporting of any suspected violations.

Clawback Policy

We have adopted a Clawback Policy which provides for the recovery of certain incentive compensation in the event of an accounting restatement. Under the Clawback Policy, if the Company’s financial results are restated, due to the Company’s material noncompliance with any financial reporting requirements under securities laws, the portion of any amounts of incentive compensation paid to the Company’s current and former executive officers based on erroneous data will be recouped from those current and former executive officers, as determined by our Compensation Committee. We have posted a copy of the Clawback Policy on our website, www.mercbank.com, under Investor Relations/Overview/ Governance Documents.

Cybersecurity and Risk Management

We have adopted a Cyber Security Program and Policy and Information Cyber Security Response Policy that apply at the Company and the Bank level. The purpose of the Cyber Security Program and Policy is to set standards for the implementation and management of security measures that safeguard customer and company information. The purpose of the Cyber Security Response Policy is to define procedures for reporting and responding to cybersecurity incidents. The Company has also engaged a third-party managed detection and response company to monitor the security of its information systems around-the-clock, including intrusion detection, and to provide instantaneous alerting should a cybersecurity event occur. The Board of Directors oversees the senior management team and chief information security officer who are primarily responsible for assessing and managing the Company’s cybersecurity risk.

Compensation Committee Interlocks and Insider Participation

None of Mercantile’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, an executive officer of which served as a director of Mercantile or member of the Compensation Committee during fiscal year 2023.

No member of the Compensation Committee has any relationship with us requiring disclosure under Item 404 of SEC Regulation S-K.

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AUDIT COMMITTEE REPORT

Each member of the Audit Committee is independent, as independence for audit committee members is defined in the NASDAQ listing standards and the rules of the SEC. The Audit Committee’s primary purpose is to assist the Board of Directors in overseeing:

| ■ | the accounting and financial reporting process;
| ■ | audits of financial statements and internal control over financial reporting;
| ■ | internal accounting and disclosure controls; and
| ■ | the internal audit functions.

In carrying out its responsibilities, the Audit Committee supervises the relationship between Mercantile and its independent registered public accounting firm and carries direct responsibility for the independent registered public accounting firm’s appointment, compensation and retention, reviewing the scope of its audit services, and approving audit and permissible non-audit services. The Audit Committee reviews and discusses the annual and quarterly financial statements, as well as the internal audit plan.

Management is responsible for the preparation, presentation, and integrity of Mercantile’s financial statements and for the appropriateness of the accounting principles and reporting policies that are used. Management is also responsible for testing the system of internal controls, and reporting to the Audit Committee on any significant deficiencies or material weaknesses that are found. Our independent registered public accounting firm for 2023, Plante & Moran, PLLC (“Plante & Moran”), was responsible for auditing Mercantile’s financial statements and internal control over financial reporting and for reviewing its unaudited quarterly financial statements.

The Audit Committee reviewed with Plante & Moran, the overall scope and plan of the audit. In addition, the Audit Committee met with Plante & Moran, with and without management present, to discuss the results of Plante & Moran’s audit, its evaluation of Mercantile’s internal control over financial reporting, the overall quality of Mercantile’s financial reporting and such other matters as are required to be discussed under the standards of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also received from, and discussed with, Plante & Moran the matters required to be discussed by PCAOB Auditing Standard No. 16 (Communications with Audit Committees) as amended.

The Audit Committee has discussed with Plante & Moran that firm’s independence from management and Mercantile and has received from Plante & Moran the written disclosures and the letter required by applicable requirements of the PCAOB regarding Plante & Moran’s communications with the Audit Committee concerning independence. The Audit Committee has also considered the compatibility of audit related and tax services with Plante & Moran’s independence.

In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements in the Annual Report on Form 10-K for the year ended December 31, 2023, with both management and our independent registered public accounting firm. The Audit Committee’s review included a discussion of the quality and integrity of the accounting principles, the reasonableness of significant estimates and judgments, and the clarity of disclosures in the financial statements.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2023 for filing with the SEC.

Additionally, the Audit Committee evaluates the performance of Mercantile’s independent registered public accounting firm, including the senior audit engagement team, each year and determines whether to reengage the current independent registered public accounting firm or consider other audit firms. As a threshold matter, the Committee confirms that the most recent PCAOB inspection report pertaining to the current firm does not contain any

information that would render inappropriate its continued service as Mercantile’s independent public accountants, including consideration of the public portion of the report and discussion in general terms of the types of matters covered in the non-public portion of the report. The Audit Committee also considers: (i) the quality, efficiency and cost-effectiveness of the previous services rendered by the current auditors; (ii) the auditor’s technical expertise and knowledge of Mercantile’s operations and industry; and (iii) the effectiveness of the auditor’s audit plan and communication with management.

| Audit Committee David M. Cassard Michael S. Davenport Michelle L. Eldridge David B. Ramaker Nelson F. Sanchez Amy L. Sparks

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COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management. Based on the review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for filing with the SEC.

| Compensation Committee David M. Cassard Michael S. Davenport Michelle L. Eldridge David B. Ramaker Nelson F. Sanchez Amy L. Sparks

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Philosophy

Our philosophy in setting compensation policies for executive officers is to align pay with performance, while at the same time providing competitive compensation that will attract and retain executive talent. Our Compensation Committee believes that executive compensation should be directly linked to continuous improvements in corporate performance and increasing shareholder value over the long term. The design of executive compensation programs affects all employees by setting general levels of compensation and helping to create an environment of goals, rewards and expectations. Because we believe the performance of every employee is important to our success, we are mindful of the effect of executive compensation and incentive programs on all our employees.

We believe that the compensation of our executive officers should reflect their performance as a management team and as individuals. By setting key operating objectives, such as growth in revenues, growth of operating earnings and earnings per share, and growth or maintenance of market share, we expect to be successful in providing increasing value to our shareholders. We believe that the performance of our executive officers in managing our business, when considered in light of general economic and specific company, industry and competitive conditions, should be the basis for determining their overall compensation. We also believe that their compensation should not be based on short-term results, whether favorable or unfavorable, but rather on long-term operating results which truly reflect the ability of our executives to manage our business. Long-term gains in shareholder value will be reflected in executive compensation through our stock-based compensation and other equity incentive programs.

Our policy for allocating between currently paid and long-term compensation is to provide adequate base compensation to attract and retain personnel, while offering incentives to maximize long-term value for our shareholders. We provide cash compensation in the form of a base salary to meet competitive salary norms and reward good performance on an annual basis, and, in years when the Compensation Committee determines it appropriate, in the form of bonus compensation to reward superior performance against short-term goals. We provide stock-based compensation to reward superior performance against specific objectives and long-term strategic goals. Our Compensation Committee granted performance-based restricted stock to our executive officers in 2023, 2022, and 2021.

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Our Compensation Committee reviews and takes into consideration elements such as the following in setting compensation policies:

| ● | peer group comparisons with our financial performance, including net interest margin, efficiency ratio, return on average assets, return on average equity, shareholder returns, stock price, stock price to earnings ratios and stock yield;
| ● | strategic planning effectiveness and attainment of strategic goals, ability to react to changing markets and conditions, leadership and vision provided to employees and other stakeholders, and succession planning and effectiveness;
| ● | regulatory requirements and results of audits and examinations;
| ● | amount of time and effort expended by employees for our communities;
| ● | rate of employee turnover;
| ● | content and effectiveness of our employee training;
| ● | results of any employee surveys;
| ● | general attitude of employees;
| ● | ability to retain and attract new employees;
| ● | any customer complaints that come to our attention;
| ● | level and commitment of our executive officers to our communities; and
| ● | financial commitment to our communities

Our Compensation Committee’s goal is to establish salary compensation for the executive officers based upon our operating performance relative to comparable peer companies over a three-year period. In setting base salaries, consideration is given to salary compensation of executive officers with comparable qualifications, experience and responsibilities at financial institutions within our peer group. Operating performance and salary compensation information is obtained from the annual SNL Executive Compensation Review for Banks and Thrifts. We also utilize industry compensation studies prepared by the Michigan Bankers Association and an independent public accounting firm, but to a lesser degree.

Our Compensation Committee may engage an independent compensation consultant periodically to conduct a competitive analysis of our executive compensation program relative to the market. In 2021, the Compensation Committee engaged Pearl Meyer to provide a market analysis of our executive compensation program, including base salary, target annual incentive, target total cash compensation, long-term incentives, and total direct compensation. The Compensation Committee concluded that Pearl Meyer is independent under applicable SEC and NASDAQ rules, based on the Committee’s review of the services provided to the Committee and information provided by Pearl Meyer, and concluded that no conflict of interest existed that would prevent Pearl Meyer from independently advising the Compensation Committee. The Compensation Committee did not retain a compensation consultant in 2023 but intends to engage a consultant in 2024.

The peer group of companies, which was utilized by the Compensation Committee as a reference for 2024 and 2023 compensation decisions, is listed below. The current peer group differs slightly from the peer group used by Pearl Meyer as we have added Byline Bancorp, Inc. and Old Second Bancorp, Inc. as peer companies and removed First Busey Corporation and Macatawa Bank Corporation.

2023 AND 2024 PEER GROUP
Byline Bancorp, Inc. | Lakeland Financial Corporation
Community Trust Bancorp, Inc. | Midland States Bancorp, Inc.
Farmers National Banc Corp. | Nicolet Bancshares, Inc.
First Financial Corporation | Peoples Bancorp, Inc.
First Mid Bancshares, Inc. | Old Second Bancorp, Inc.
German American Bancorp, Inc. | Stock Yards Bancorp, Inc.
Horizon Bancorp, Inc. | 1st Source Corporation
Independent Bank Corporation |

Consistent with the Compensation Committee’s philosophy and guiding principles for determining overall executive compensation, the Compensation Committee does not target any particular percentile at which to align compensation. However, the Compensation Committee will use the peer group median as a reference point when making pay decisions. Although the median is used as a reference point, actual levels of pay depend on a variety of factors such as experience, seniority, and individual and Company performance.

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Base Salary

In view of our operating performance and financial condition, the increase in the size of the organization, and changes in responsibilities under our management succession plan, our Board of Directors, based on the recommendation of our Compensation Committee, approved an 8.6% merit-based increase in Mr. Reitsma's 2022 base salary and a 22.1% increase in Mr. Kaminski's 2022 base salary, as the Pearl Meyer market analysis indicated that his base salary was below the median for a chief executive officer. The 2022 base salaries for each of Mr. Christmas and Mr. Worthington were not increased, as the Board concluded their base salaries were at least equal to the median for comparable positions. Based on the recommendation of our Compensation Committee, the Board increased the 2023 base salary for Mr. Kaminski by approximately 5.00%, Mr. Reitsma by approximately 10.00%, and Mr. Christmas by approximately 6.00%. These increases were merit-based. The 2023 salary for Mr. Worthington was not increased, as the Board concluded that his base salary was at least equal to the median of comparable positions. Based on the recommendation of our Compensation Committee, the Board increased the 2024 base salary for Mr. Reitsma by 18.61% based on the transition to his new role upon Mr. Kaminski’s retirement on June 1, 2024, Mr. Christmas by 5.08%, and Mr. Hoover by 25.00%. These increases were promotion and merit-based. Mr. Kaminski’s 2024 base salary was not increased in view of his pending retirement.

Executive Officer Bonus Compensation

For most years, it has been our policy to provide cash bonus awards for eligible executive officers and employees based on predetermined performance goals. We believe that paying such cash awards:

| ● | promotes the growth, profitability, and expense control necessary to accomplish corporate strategic long-term plans;
| ● | encourages superior results by providing a meaningful incentive; and
| ● | supports teamwork among employees.

We adopted bonus plans for our executive officers in each of 2023, 2022, and 2021, as described below.

Bonus Plan for 2023

On June 22, 2023, we adopted an Executive Officer Bonus Plan for 2023 (the “2023 Executive Officer Bonus Plan”), which provided for cash bonuses for our executive officers.

The maximum amount that could be allocated to the bonus pool was $884,495 under the 2023 Executive Officer Bonus Plan provided, however, that the maximum amount would be appropriately adjusted if (a) a newly hired employee became eligible to participate in the plan, (b) a participant's base salary was adjusted during the year, or (c) a participant became ineligible before December 31, 2023.

Payment from the bonus pool under the 2023 Executive Officer Bonus Plan, if any, was based on the achievement of targets under the following metrics for 2023, which were measured pre-bonus accrual and excluding unbudgeted and one-time/non-core income and expenses, as established by our Compensation Committee:

METRICS FOR THE 2023 EXECUTIVE OFFICER BONUS PLAN

PERCENTAGE OF TOTAL | METRIC | TARGET | RESULTS | MET?
25.0% | Earnings Per Share | $5.09 for 2023 | $5.46 | Yes
12.5% | Return on Assets | 1.61% for 2023 | 1.73% | Yes
12.5% | Return on Equity | 17.30% for 2023 | 18.35% | Yes
12.5% | Net Interest Margin | 3.96% for 2023 | 4.05% | Yes
12.5% | Efficiency Ratio | 49.40% for 2023 | 48.05% | Yes
12.5% | Non-Performing Assets | Average < 0.50% for 2023 | 0.11% | Yes
12.5% | Wholesale Funds | Average < 20% for 2023 | 11% | Yes

The target levels are based on GAAP financial measures.

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The Award Amount was paid to each executive officer pro rata based on a uniform percentage of the executive officer's 2023 salary, not to exceed 55% of the 2023 salary of the Chief Executive Officer; 50% of the 2023 salary of the President of the Bank; 40% of the 2023 salary of the Chief Financial Officer; 30% of the 2023 salary of the Chief Human Resource Officer, and 20% of the 2023 salary of the Chief Risk Officer. Any bonus awards that were earned under the 2023 Executive Officer Bonus Plan were paid to the executive officers on or before March 15, 2024.

Payments under the 2023 Executive Officer Bonus Plan were subject to specified conditions, qualifications, and clawback provisions. The plan, to the extent provided for in the plan, may be amended by the Compensation Committee of our Board of Directors.

We attained 100% of the targets established in the 2023 Executive Officer Bonus Plan. The bonus pool of $884,495 under the 2023 Executive Officer Bonus Plan was paid to our executive officers as follows:

EXECUTIVE OFFICER | PAYMENT | PERCENT OF 2023 SALARY
Robert B. Kaminski, Jr. | $366,135 | 55%
Raymond E. Reitsma | $242,392 | 50%
Charles E. Christmas | $157,968 | 40%
Brett E. Hoover | $66,000 | 30%
Robert T. Worthington | $52,000 | 20%

Payments under the 2023 Executive Officer Bonus Plan are reported in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

Bonus Plan for 2022

On July 14, 2022, we adopted an Executive Officer Bonus Plan for 2022 (the “2022 Executive Officer Bonus Plan”), which provided for cash bonuses for our executive officers.

The maximum amount that could be allocated to the bonus pool was $729,950 under the 2022 Executive Officer Bonus Plan provided, however, that the maximum amount would be appropriately adjusted if (a) a newly hired employee became eligible to participate in the plan, (b) a participant's base salary was adjusted during the year, or (c) a participant became ineligible before December 31, 2022.

Payment from the bonus pool under the 2022 Executive Officer Bonus Plan, if any, was based on the achievement of targets under the following metrics for 2022, which were established by our Compensation Committee:

METRICS FOR THE 2022 EXECUTIVE OFFICER BONUS PLAN

PERCENTAGE OF TOTAL | METRIC | TARGET | RESULTS | MET?
25.0% | Earnings Per Share | $3.86 for 2022 | $4.20 | Yes
12.5% | Level of Non-Performing Assets | Average of not more than 0.50% as a percent of total assets measured quarterly during 2022 | 0.16% | Yes
12.5% | Net Interest Margin* | 3.05% for 2022 | 3.33% | Yes
12.5% | Net Revenue* | $180.7 million for 2022 | $189.8 million | Yes
12.5% | Efficiency Ratio* | 56.30% for 2022 | 52.95% | Yes
12.5% | Return on Assets* | 1.21% for 2022 | 1.32% | Yes
12.5% | Return on Equity* | 13.65% for 2022 | 15.35% | Yes

| (*) | Measured pre-bonus-accrual and excluding unbudgeted one-time/non-core income and expenses

The target levels are based on GAAP financial measures.

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The Award Amount was paid to each executive officer pro rata based on a uniform percentage of the executive officer's 2022 salary, not to exceed 55% of the 2022 salary of the Chief Executive Officer; 45% of the 2022 salary of the President of the Bank; 35% of the 2022 salary of the Chief Financial Officer; and 20% of the 2022 salary of the Chief Risk Officer. Any bonus awards that were earned under the 2022 Executive Officer Bonus Plan were paid to the executive officers on or before March 15, 2023.

Payments under the 2022 Executive Officer Bonus Plan were subject to specified conditions, qualifications, and clawback provisions. The plan, to the extent provided for in the plan, may be amended by the Compensation Committee of our Board of Directors.

We attained 100% of the targets established in the 2022 Executive Officer Bonus Plan. The bonus pool of $730,315 under the 2022 Executive Officer Bonus Plan was paid to our executive officers as follows:

EXECUTIVE OFFICER | PAYMENT | PERCENT OF 2022 SALARY
Robert B. Kaminski, Jr. | $348,700 | 55%
Raymond E. Reitsma | $198,393 | 45%
Charles E. Christmas | $131,222 | 35%
Robert T. Worthington | $52,000 | 20%

Payments under the 2022 Executive Officer Bonus Plan are reported in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

Due to the outstanding financial performance of the Company, the Compensation Committee decided to award an additional discretionary bonus of $20,000 to Mr. Christmas (for a total bonus of $151,222 or approximately 40% of his 2022 base salary).

Bonus Plan for 2021

On July 15, 2021, we adopted an executive officer bonus plan for 2021 (the “2021 Executive Officer Bonus Plan”), which provided for cash bonuses for our executive officers.

The maximum amount that could be allocated to the bonus pool was $706,040 under the 2021 Executive Officer Bonus Plan provided, however, that the maximum amount would be appropriately adjusted if (a) a newly hired employee became eligible to participate in the plan, (b) a participant's base salary was adjusted during the year, or (c) a participant became ineligible before December 31, 2021.

Payment from the bonus pool under the 2021 Executive Officer Bonus Plan, if any, was based on the achievement of targets under the following metrics for 2021, which were established by our Compensation Committee:

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METRICS FOR THE 2021 EXECUTIVE OFFICER BONUS PLAN

PERCENTAGE OF TOTAL | METRIC | TARGET | RESULTS | MET?
16.7% | Level of Non-Performing Assets | Not to exceed 0.50% of total assets on December 31, 2021 | 0.05% | Yes
16.7% | Net Interest Margin* | 2.94% for 2021 | 2.76% | No
16.7% | Noninterest Income* | $31.9 million for 2021 | $54.7 million | Yes
16.7% | Efficiency Ratio* | 64.1% for 2021 | 56.9% | Yes
16.7% | Return on Assets* | 0.96% for 2021 | 1.35% | Yes
16.7% | Return on Equity* | 9.10% for 2021 | 14.45% | Yes

(*) | Measured pre-bonus-accrual and excluding unbudgeted one-time/non-core income and expenses

The target levels are based on GAAP financial measures.

The Award Amount was paid to each executive officer pro rata based on a uniform percentage of the executive officer's 2021 salary, not to exceed 50% of the 2021 salary of the Chief Executive Officer; 40% of the 2021 salary of the President of the Bank; 35% of the 2021 salary of the Chief Financial Officer; 32.5% of the 2021 salary of the Human Resources Director; and 25% of the 2021 salary of the Chief Operating Officer. Any bonus awards that were earned under the 2021 Executive Officer Bonus Plan were paid to the executive officers on or before March 15, 2022.

Payments under the 2021 Executive Officer Bonus Plan were subject to specified conditions, qualifications, and clawback provisions. The plan, to the extent provided for in the plan, may be amended by the Compensation Committee of our Board of Directors.

We attained 83.5% of the targets established in the 2021 Executive Officer Bonus Plan. The bonus pool of $588,130 under the 2021 Executive Officer Bonus Plan was paid to our executive officers as follows:

EXECUTIVE OFFICER | PAYMENT | PERCENT OF 2021 SALARY
Robert B. Kaminski, Jr. | $216,163 | 41.7%
Raymond E. Reitsma | $135,207 | 33.3%
Charles E. Christmas | $109,308 | 29.2%
Lonna L. Wiersma* | $73,307 | 27.1%
Robert T. Worthington | $54,145 | 20.8%

*Ms. Wiersma retired on March 4, 2022.

Payments under the 2021 Executive Officer Bonus Plan are reported in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table.

Management decided to pay all employees other than the executive officers the maximum bonus under the non-executive officer bonus plans, even though one of the financial metrics was not met, due to the outstanding financial performance of the Company and the other metrics. Based on the same criteria, the Compensation Committee decided to award the executive officers an additional discretionary bonus in the following amounts – Mr. Kaminski, $70,000 (for a total bonus of $286,163 or 55% of his 2021 base salary); Mr. Reitsma, $50,000 (for a total bonus of $185,207, or 46% of his 2021 base salary); Mr. Christmas, $40,000 (for a total bonus of $149,308 or 40% of his 2021 base salary); Ms. Wiersma, $30,000 (for a total bonus of $103,307 or 38% of her 2021 base salary); and Mr. Worthington, $20,000 (for a total bonus of $74,145 or 29% of his 2021 base salary).

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Stock Incentive Plan

The overall objective for our stock-based compensation is to provide an equitable and competitive means to reward our executive and other officers for their contributions to our long-range success. Our goal is to meet the following objectives:

| ● | link each participant’s remuneration to our long-term success through the appreciation of stock price;

| ● | align the interests of our officers with the interests of our shareholders by linking the long-term value of the compensation to shareholder returns;

| ● | provide annual long-term incentive awards that are market competitive; and

| ● | improve our ability to attract and retain officers.

In recent years, we have utilized restricted stock as our primary long-term incentive tool to retain and motivate our key employees. Prior to 2018, we granted restricted stock subject to time-based vesting to our executive officers and other key employees. We believe this is an excellent way to reward them for, and to motivate them toward, superior performance. Restricted stock is an important retention instrument in that it has immediate value to the recipient. Unlike stock option grants that create economic value only if the stock price appreciates above the price at the date of grant, restricted stock provides value and motivation to the recipient even if the stock price declines.

Historically, we have made stock-based awards annually in late Fall in conjunction with the performance review of our executive and other officers. It has generally been our practice, when stock-based compensation awards are made, to make them to all recipients on the same date. In December 2023, we awarded shares of time-based restricted stock to 115 employees and shares of performance-based restricted stock to our executive officers.

The restricted stock granted in 2021, 2022 and 2023 to key employees other than our executive officers is subject to a three-year vesting period to encourage retention as well as provide value to our key employees.

In each year beginning in 2018, our Compensation Committee determined that grants of performance-based restricted stock would be made to our executive officers, and restricted stock subject to time-based vesting would be made to other key employees. In order to become vested in their restricted stock, our executive officers would need to be employed throughout the three-year performance period, which satisfies a retention goal, and Mercantile must meet certain pre-determined financial performance goals. The Compensation Committee believes it is important for the restricted stock, which is intended to be a long-term incentive, to focus our executive officers on, and reward them for, the achievement of multi-year performance objectives. The performance goals were set at a target performance level. If Mercantile meets the target performance level, the executive officers would be vested in the number of shares designated as the “target award.” Performance levels would also be set at a maximum level to provide an incentive for superior performance, and at a threshold level, below which no shares would be earned. Depending on Mercantile’s performance relative to the performance goals, the executive officers could earn between 0% and 150% of the target award.

Beginning in December 2020, the Company evaluated our progress toward achieving the performance goals set for the outstanding performance-based grants. Based on our actual and projected financial performance as of late December of each year, the Company will annually adjust the number of shares that are anticipated to be earned at the end of the three-year performance period. This process is intended to align the number of shares used for financial reporting purposes as well as more accurately project the amount of compensation that will be earned by our officers in the form of performance-based restricted stock.

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Grant of Performance-Based Restricted Stock for the 2024-2026 Performance Period

Our Compensation Committee determined the goals and the target number of shares for the 2024-2026 performance period in December 2023. For the performance period of 2024-2026, our Compensation Committee set the target number of shares by reference to the 2024 base salary of each executive officer, as follows: Mr. Kaminski, 55%; Mr. Reitsma, 55%; Mr. Christmas, 45%, Mr. Hoover, 40%, and Mr. Worthington, 20%. The number of shares of performance-based restricted stock earned during the performance period will be based upon Mercantile’s achievement of certain performance levels for each of the measurement criteria. The performance goals for the performance period are based on a comparison of Mercantile’s average performance over the performance period (i.e., the summation of performance for calendar years 2024, 2025, and 2026 divided by three) for:

| (1) | Return on Average Assets (“ROAA”) (weighted at 25%);

| (2) | Diluted Earnings per Share Growth (“Diluted EPS Growth”) (weighted at 50%); and

| (3) | Return on Average Equity (“ROE”) (weighted at 25%).

Our Compensation Committee will determine whether the performance goals have been met by taking into consideration Mercantile’s performance as compared to budget. In addition, our Compensation Committee may take into consideration the 3-year average of the median performance for the Peer Group with respect to ROAA, Diluted EPS Growth and ROE, business unit and individual performance and such other factors as the Committee may determine and approve in its sole discretion. The “Peer Group” means a group of similarly sized financial institutions located in the Midwest, as determined by the Compensation Committee in its sole discretion; provided, however, that a financial institution will be deleted from the Peer Group for 2026 if it has not reported its year-end financial results by January 31, 2027. Following the Compensation Committee’s determination, the shares will become vested, in whole or in part, on February 15, 2027.

Grant of Performance-Based Restricted Stock for the 2023-2025 Performance Period

Our Compensation Committee determined the goals and the target number of shares for the 2023-2025 performance period in December 2022. For the performance period of 2023-2025, our Compensation Committee set the target number of shares by reference to the 2023 base salary of each executive officer, as follows: Mr. Kaminski, 55%; Mr. Reitsma, 50%; Mr. Christmas, 45%; and Mr. Worthington, 20%. The number of shares of performance-based restricted stock earned during the performance period will be based upon Mercantile’s achievement of certain performance levels for each of the measurement criteria. The performance goals for the performance period are based on a comparison of Mercantile’s average performance over the performance period (i.e., the summation of performance for calendar years 2023, 2024 and 2025 divided by three) for:

| (1) | Return on Average Assets (“ROAA”) (weighted at 25%);

| (2) | Diluted Earnings per Share Growth (“Diluted EPS Growth”) (weighted at 50%); and

| (3) | Return on Average Equity (“ROE”) (weighted at 25%).

Our Compensation Committee will determine whether the performance goals have been met by taking into consideration Mercantile’s performance as compared to budget. In addition, our Compensation Committee may take into consideration the 3-year average of the median performance for the Peer Group with respect to ROAA, Diluted EPS Growth and ROE, business unit and individual performance and such other factors as the Committee may determine and approve in its sole discretion. The “Peer Group” means a group of similarly sized financial institutions located in the Midwest, as determined by the Compensation Committee in its sole discretion; provided, however, that a financial institution will be deleted from the Peer Group for 2025 if it has not reported its year-end financial results by January 31, 2026. Following the Compensation Committee’s determination, the shares will become vested, in whole or in part, on February 15, 2026.

The Company did not make any adjustments in December 2023 to the number of shares that are expected to be earned by our executive officers based on our actual and expected performance for the 2023–2025 performance periods.

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Grant of Performance-Based Restricted Stock for the 2022-2024 Performance Period

Our Compensation Committee determined the goals and the target number of shares for the 2022-2024 performance period in December 2021. For the performance period of 2022-2024, our Compensation Committee set the target number of shares by reference to the 2022 base salary of each executive officer, as follows: Mr. Kaminski, 55%; Mr. Reitsma, 50%; Mr. Christmas, 45%; and Mr. Worthington, 20%. Ms. Wiersma did not receive a grant due to her pending retirement of March 4, 2022. The number of shares of performance-based restricted stock earned during the performance period will be based upon Mercantile’s achievement of certain performance levels for each of the measurement criteria. The performance goals for the performance period are based on a comparison of Mercantile’s average performance over the performance period (i.e., the summation of performance for calendar years 2022, 2023 and 2024 divided by three) for:

| (1) | Return on Average Assets (“ROAA”) (weighted at 25%);

| (2) | Diluted Earnings per Share Growth (“Diluted EPS Growth”) (weighted at 50%); and

| (3) | Return on Average Equity (“ROE”) (weighted at 25%).

Our Compensation Committee will determine whether the performance goals have been met by taking into consideration Mercantile’s performance as compared to budget. In addition, our Compensation Committee may take into consideration the 3-year average of the median performance for the Peer Group with respect to ROAA, Diluted EPS Growth and ROE, business unit and individual performance and such other factors as the Committee may determine and approve in its sole discretion. The “Peer Group” means a group of similarly sized financial institutions located in the Midwest, as determined by the Compensation Committee in its sole discretion; provided, however, that a financial institution will be deleted from the Peer Group for 2024 if it has not reported its year-end financial results by January 31, 2025. Following the Compensation Committee’s determination, the shares will become vested, in whole or in part, on February 15, 2025.

On December 31, 2022, we increased the number of shares that are expected to be earned by our officers based on our actual and expected performance for the 2022-2024 performance period as follows: Mr. Kaminski, shares increased from 10,023 to 15,035; Mr. Reitsma, shares increased from 6,335 to 9,503; Mr. Christmas, shares increased from 4,850 to 7,275; and Mr. Worthington, shares increased from 1,495 to 2,243.

The Company did not make any adjustments in December 2023 to the number of shares that are expected to be earned by our executive officers based on our actual and expected performance for the 2022–2024 performance periods.

Grant of Performance-Based Restricted Stock for the 2021-2023 Performance Period

Our Compensation Committee determined the goals and the target number of shares for the 2021-2023 performance period in December 2020. For the performance period of 2021-2023, our Compensation Committee set the target number of shares by reference to the 2021 base salary of each executive officer, as follows: Mr. Kaminski, 55%; Mr. Reitsma, 50%; Mr. Christmas, 45%; and Ms. Wiersma and Mr. Worthington, 35%. The number of shares of performance-based restricted stock earned during the performance period will be based upon Mercantile’s achievement of certain performance levels for each of the measurement criteria. The performance goals for the performance period are based on a comparison of Mercantile’s average performance over the performance period (i.e., the summation of performance for calendar years 2021, 2022 and 2023 divided by three) for:

| (1) | Return on Average Assets (“ROAA”) (weighted at 25%);

| (2) | Diluted Earnings per Share Growth (“Diluted EPS Growth”) (weighted at 50%); and

| (3) | Return on Average Equity (“ROE”) (weighted at 25%).

Our Compensation Committee will determine whether the performance goals have been met by taking into consideration Mercantile’s performance as compared to budget. In addition, our Compensation Committee will take into consideration the 3-year average of the median performance for the Peer Group with respect to ROAA, Diluted EPS Growth and ROE, business unit and individual performance and such other factors as the Committee may determine and approve in its sole discretion. The “Peer Group” means a group of similarly sized financial institutions located in the Midwest, as determined by the Compensation Committee in its sole discretion; provided, however, that a financial institution will be deleted from the Peer Group for 2023 if it has not reported its year-end financial results by January 31, 2024. Following the Compensation Committee’s determination, the shares will become vested, in whole or in part, on February 15, 2024.

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On December 16, 2021, we increased the number of shares that are expected to be earned by our officers based on our actual and expected performance for the 2021-2023 performance period as follows: Mr. Kaminski, shares increased from 10,599 to 14,478; Mr. Reitsma, shares increased from 7,534 to 10,291; Mr. Christmas, shares increased from 6,264 to 8,557; and Mr. Worthington, shares increased from 3,379 to 4,616.

On December 31, 2022, we increased the number of shares that are expected to be earned by our officers based on our actual and expected performance for the 2021-2023 performance period as follows: Mr. Kaminski, shares increased from 14,478 to 15,538; Mr. Reitsma, shares increased from 10,291 to 11,045; Mr. Christmas, shares increased from 8,557 to 9,183; and Mr. Worthington, shares increased from 4,616 to 4,954. No adjustments were made in December 2023.

Shares Earned under the Performance-Based Restricted Stock for the 2021-2023 Performance Period

For the three-year performance period ended December 31, 2023, our Compensation Committee determined that the performance goals were achieved at the following levels:

PERFORMANCE METRIC | 2021-2023 TARGET PERFORMANCE | 2021-2023 ACTUAL PERFORMANCE | WEIGHTED PAYOUT PERCENTAGE
3 Year Return on Average Assets | 1.25% | 1.47% | 34.1%
3 Year Return on Average Equity | 8.70% | 16.05% | 37.5%
3 Year Diluted Earnings Per Share Growth | 5.00% | 24.00% | 75.0%
Payout Percentage |  |  | 146.6%

The Compensation Committee decided that the officers would earn the number of shares as calculated in December 2023, which became vested on February 15, 2024:

EXECUTIVE OFFICER | SHARES EARNED FOR THE 2021-2023 PERFORMANCE PERIOD
Robert B. Kaminski, Jr. | 15,538
Raymond E. Reitsma | 11,045
Charles E. Christmas | 9,183
Robert T. Worthington | 4,954

Stock Ownership Guidelines

Our Board, on the recommendation of our Compensation Committee, adopted stock ownership guidelines for our executive officers that became effective on January 1, 2018. The stock ownership guidelines require each named executive officer to own our stock at the following levels:

POSITION | NUMBER OF SHARES
Chief Executive Officer | Value equivalent to 3 times base salary
Each other Named Executive Officer | Value equivalent to 2 times base salary

The time period for attainment of the stock ownership levels set forth above is five years from the later of January 1, 2018, or the date on which a named executive officer becomes subject to the guidelines.

All shares beneficially owned by each named executive officer will be credited toward the target level under the guidelines, including:

| ● | Shares owned outright or with an immediate family member;

| ● | Shares beneficially owned through a trust or other estate planning vehicle;

| ● | Shares held in benefit plans (e.g., 401(k), stock purchase plan, etc.); and

| ● | Unvested restricted shares.

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Perquisites

We limit the perquisites that we make available to our executive officers. We believe that providing excessive perquisites to executive officers sends mixed messages to the rest of our employees and can destroy the “team” effort. Our executive officers are entitled to a few benefits that are not generally available to all of our employees. We do not provide a defined benefit pension plan, post-retirement health coverage (other than certain COBRA benefits as discussed below), or similar benefits for our executive officers or other employees.

During 2023, we provided the following perquisites for our executive officers:

| ● | in addition to the general health and insurance plan that we maintain for all of our employees, we provided our executive officers with additional life insurance, and we provided Mr. Kaminski, Mr. Reitsma, Mr. Christmas, Mr. Hoover and Mr. Worthington with additional disability insurance and long-term care insurance; and

| ● | a local country club membership was provided for Mr. Reitsma. Mr. Reitsma made significant use of the membership in connection with our business.

IRC Section 162(m)

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to their chief executive officer or certain other highly compensated officers. For taxable years before 2018, qualifying performance-based compensation was not subject to the deduction limitation if certain requirements are met. We periodically reviewed the potential consequences of Section 162(m) and considered whether to structure some or all of the performance-based portion of our executive compensation so that it was not subject to the deduction limitations of Section 162(m).

The performance-based compensation exception was eliminated for compensation paid in taxable years after December 31, 2017, and the limit on deductibility was expanded to include all named executive officers. As a result, Section 162(m) no longer permits a public company to take a deduction for any compensation paid to its named executive officers in excess of $1 million, unless the compensation is provided under a written binding contract in effect on November 2, 2017, that was not materially modified on or after that date.

Post-Employment Compensation

We do not provide a defined benefit pension plan or post-retirement health insurance coverage for our executive officers or other employees. Our executive officers and most of our other employees are eligible to participate in our 401(k) plan. We provide for each eligible participant a matching contribution to the 401(k) plan. On and after April 1, 2018, our matching contribution is "dollar for dollar" on the first 5.00% of each participant's contribution to the 401(k) plan. All our executive officers participated in our 401(k) plan during 2023.

All employees, except our executive officers and certain key employees, are employees-at-will and do not have an employment agreement. The employment agreements that we have with our executive officers are described below under the heading “Employment Agreements.” We do not provide post-employment health insurance coverage or other benefits to any employee, except those provided for executive officers and key employees in their employment agreements.

Change in Control Agreements

On November 29, 2018, we entered into an amended change in control agreement with each of our executive officers, other than Mr. Hoover. Mr. Hoover’s amended employment agreement effective as of January 1, 2023 contains change in control provisions. The change in control agreements for the executive officers provide for a lump sum payment if the executive officer is terminated without “Cause” or terminates employment for “Good Reason” (as those terms are defined under the employment agreements) within 24 months after a change in control of Mercantile or the Bank. The lump sum payment would be in addition to severance payments under each officer's respective employment agreement.

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In entering into the change in control agreements, we took into account that, prior to 2015, the employment agreements with our executive officers did not provide any benefits if the officer were to be terminated in connection with a change in control. We believe that a pending or threatened change in control would provide significant distraction for our executive officers. We believe that providing an additional payment to each executive officer in the event that he or she is involuntarily terminated within 24 months after a change in control will provide the officer with financial protection and is an incentive to maintain a high level of dedication to Mercantile and the Bank in the event of a pending or threatened change in control.

Additional information regarding the change in control agreements is included below under the heading "Potential Payments Upon Termination or Change in Control."

Overview of the Compensation Process

The composition of compensation for our executive officers can include: salary, cash bonus, stock-based awards, health, disability and life insurance and perquisites. The elements of executive compensation are discussed at the meetings of our Compensation Committee. During the Fall of each year, the Compensation Committee discusses the base salaries and cash bonus plan, if any, for the next year for our executive officers, and makes recommendations to the Board of Directors for its approval. The Board of Directors usually approves the Compensation Committee’s recommendations; though if it does not, it could ask the Compensation Committee to prepare revised recommendations. At or about the same time, in years when stock-based awards are to be made, the Compensation Committee grants stock-based awards to our executive and other officers.

As part of the Compensation Committee’s process, it meets with our Human Resource Director and reviews the elements of each executive officer’s compensation during the preceding three years. Typically, the Human Resource Director makes compensation recommendations to the Compensation Committee for each of our executive officers (other than with respect to their own compensation). The Compensation Committee may accept or reject all or any part of such recommendations. As part of our Human Resource Director’s process of formulating the recommendations, the Human Resources Director may confer with our President and Chief Executive Officer. Our executive officers are not present when our Human Resource Director makes the recommendations, or during the Compensation Committee’s deliberations on the compensation of our executive officers. Our Human Resources Director is not present during the Compensation Committee’s deliberations on their compensation.

Compensation Risk Assessment

The Compensation Committee reviews a report from our Chief Risk Officer on our compensation policies and practices every six months and does not believe that they are reasonably likely to have a material adverse effect on us by encouraging our executive officers to take unnecessary or excessive risks that threaten our value. The Compensation Committee does not believe that the features of our compensation plans make it likely that taking unnecessary or excessive risks that threaten our value will provide greater compensation than actions that involve a prudent level of risk.

| ● | The equity-based plans encourage our executive officers and other employees to focus on increasing shareholder value over a period of years.

| ● | The deferred compensation and 401(k) plans provide helpful ways for our employees to save for retirement.

| ● | The bonus plans are typically based on a variety of metrics tied to improving our performance and contain "clawback" provisions if the executive officer or employee engages in certain activities or a payout is based on materially inaccurate financial statements or other materially inaccurate performance metric criteria.

Based on its review, the Compensation Committee believes that our compensation policies and procedures do not pose any unnecessary risks, and do not encourage employees to manipulate reported earnings to enhance the compensation of any employee.

Shareholder Advisory Vote on Executive Compensation

At our 2023 annual meeting, our shareholders voted on an advisory proposal to approve the compensation of our executive officers as disclosed in our proxy statement for that annual meeting. Approximately 97.9% of the 9,676,683 votes cast on the proposal voted in favor of the proposal. Our Compensation Committee considered the result of this vote, viewed the result as favorable, and sought to maintain consistent compensation policies and procedures.

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Summary Compensation Table

The following table provides information regarding the compensation earned by the named executive officers for the three years ended December 31, 2023.

Name and Principal Position | Year |  | Salary ($) |  |  | Bonus ($) |  |  | Stock Awards ($)(1) |  |  | Options Awards ($) |  |  | Non-Equity Incentive Plan Compensation ($)(2) |  |  | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) |  |  | All Other Compensation ($)(4) |  |  | Total ($) |
Robert B. Kaminski, Jr. | 2023 |  |  | 665,700 |  |  |  | — |  |  |  | 348,673 |  |  |  | — |  |  |  | 366,135 |  |  |  | 270 |  |  |  | 97,211 |  |  |  | 1,477,989 |
President and Chief Executive | 2022 |  |  | 634,000 |  |  |  | — |  |  |  | 366,133 |  |  |  | — |  |  |  | 348,700 |  |  |  | 78 |  |  |  | 81,115 |  |  |  | 1,430,026 |
Officer of Mercantile, and Chief Executive Officer of the Bank | 2021 |  |  | 519,000 |  |  |  | — |  |  |  | 348,700 |  |  |  | — |  |  |  | 286,163 |  |  |  | 67 |  |  |  | 54,989 |  |  |  | 1,208,919 |
Raymond E. Reitsma | 2023 |  |  | 484,784 |  |  |  | — |  |  |  | 316,208 |  |  |  | — |  |  |  | 242,392 |  |  |  | — |  |  |  | 92,464 |  |  |  | 1,135,848 |
Executive Vice President of Mercantile, | 2022 |  |  | 440,874 |  |  |  | — |  |  |  | 242,387 |  |  |  | — |  |  |  | 198,393 |  |  |  | — |  |  |  | 80,629 |  |  |  | 962,283 |
and President of the Bank | 2021 |  |  | 405,784 |  |  |  | — |  |  |  | 220,395 |  |  |  | — |  |  |  | 185,207 |  |  |  | — |  |  |  | 59,274 |  |  |  | 870,660 |
Charles E. Christmas | 2023 |  |  | 394,921 |  |  |  | — |  |  |  | 186,707 |  |  |  | — |  |  |  | 157,968 |  |  |  | — |  |  |  | 73,484 |  |  |  | 813,080 |
Executive Vice President, Chief | 2022 |  |  | 374,921 |  |  |  | — |  |  |  | 177,706 |  |  |  | — |  |  |  | 151,222 |  |  |  | — |  |  |  | 63,317 |  |  |  | 767,166 |
Financial Officer and Treasurer of Mercantile, and Executive Vice President and Chief Financial Officer of the Bank | 2021 |  |  | 374,921 |  |  |  | — |  |  |  | 168,732 |  |  |  | — |  |  |  | 149,308 |  |  |  | — |  |  |  | 47,452 |  |  |  | 740,413 |
Brett E. Hoover (5) | 2023 |  |  | 220,000 |  |  |  | — |  |  |  | 109,989 |  |  |  | — |  |  |  | 66,000 |  |  |  | — |  |  |  | 38,724 |  |  |  | 434,713 |
Executive Vice President, Chief Human | 2022 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Resource Officer of Mercantile and the Bank | 2021 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Robert T. Worthington | 2023 |  |  | 260,000 |  |  |  | — |  |  |  | 53,788 |  |  |  | — |  |  |  | 52,000 |  |  |  | 2,721 |  |  |  | 27,290 |  |  |  | 395,799 |
Senior Vice President, Chief Risk | 2022 |  |  | 260,000 |  |  |  | — |  |  |  | 51,970 |  |  |  | — |  |  |  | 52,000 |  |  |  | 786 |  |  |  | 27,637 |  |  |  | 392,393 |
Officer, Secretary and General Counsel of Mercantile and the Bank | 2021 |  |  | 260,000 |  |  |  | — |  |  |  | 52,011 |  |  |  | — |  |  |  | 74,145 |  |  |  | 642 |  |  |  | 22,183 |  |  |  | 408,981 |

| (1) | Refer to Note 10, "Stock-Based Compensation," in the Notes to our Consolidated Financial Statements included in our Annual Report to the SEC on Form 10-K for the year ended December 31, 2023, for the relevant assumptions used to determine the valuation of the stock awards. In 2023, restricted stock grants were issued to Messrs. Kaminski, Reitsma, Christmas, Hoover and Worthington in the amount of 8,667, 7,860, 4,641, 2,734 and 1,337 respectively.

| (2) | Payments were made for 2023, 2022 and 2021 pursuant to the terms of the 2023 Executive Officer Bonus Plan, the 2022 Executive Officer Bonus Plan, and the 2021 Executive Officer Bonus Plan, respectively. The Compensation Committee also awarded an additional discretionary bonus for 2022 to Mr. Christmas of $20,000.

| (3) | The amounts shown above are the above-market interest credited to the accounts of the executive officers for the applicable year on compensation they have deferred under our non-qualified deferred compensation plan. Interest is considered to be above-market interest to the extent that it exceeds 120% of the applicable federal long-term rate, with compounding (as prescribed under section 1274(d) of the Internal Revenue Code), at the rate that corresponds most closely to the rate under the plan at the beginning of each quarter.

| (4) | Includes for 2023 (a) matching contributions to the 401(k) plan accounts of Messrs. Kaminski, Reitsma, Christmas, Hoover and Worthington in the amounts of $16,500, $16,500, $16,500, $14,025 and $13,833, respectively; (b) medical, life, disability, and long-term care insurance premiums paid on policies insuring them; (c) a country club membership for Mr. Reitsma; and (d) cash dividends paid on restricted stock.

| (5) | Mr. Hoover was appointed as an executive officer effective January 1, 2023.

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Employment Agreements

The Bank and Mercantile have entered into employment agreements with our executive officers, Mr. Kaminski, Mr. Reitsma, Mr. Christmas, Mr. Hoover, and Mr. Worthington, which provide for their employment, annual base compensation, and severance, as well as confidentiality and non-compete arrangements. The employment agreements for each executive officer (other than Mr. Hoover) were amended and restated effective as of December 31, 2018, so that the terms would be uniform. Mr. Hoover’s amended employment agreement, which was effective on January 1, 2023, includes terms that align with the employment agreements for the other executive officers. Each agreement establishes an employment period that extends an additional year, each December 31, so that as of each December 31, there are three years remaining in the employment period. The annual extension of the employment period can be avoided by the Bank, Mercantile, or the officer giving notice to the others that the employment period is not to be extended. Our Board determined not to extend Mr. Worthington’s contract for an additional year effective December 31, 2022. Therefore, his employment agreement will expire on December 31, 2024.

The employment agreements provide the officers with annual base salaries for each year in the amounts established from year to year by the Board of Directors of the Bank. The annual base salary for each year for each officer may not be less than the amount established for the immediately preceding year. The Board of Directors established the annual base salaries of each executive officer as follows:

NAMED EXECUTIVE OFFICER | 2024 | 2023
Mr. Kaminski | $665,700 | $665,700
Mr. Reitsma | $575,000 | $484,784
Mr. Christmas | $415,000 | $394,921
Mr. Hoover | $275,000 | $220,000
Mr. Worthington | $267,800 | $260,000

In addition to the annual base salary, the employment agreements provide that the officers are entitled to participate in our employee benefit and incentive compensation plans, including health insurance, life and disability insurance, stock option, profit sharing and retirement plans. Under the 2023 Executive Officer Bonus Plan, our officers received the following bonus payments for 2023: Mr. Kaminski, $366,135 (55% of 2023 salary); Mr. Reitsma, $242,392 (50% of 2023 salary); Mr. Christmas, $157,968 (40% of 2023 salary); Mr. Hoover, $66,000 (30% of 2023 salary); and Mr. Worthington, $52,000 (20% of 2023 salary).

Additional information regarding the employment agreements, including compensation and benefits payable to the officers on termination of employment and officer confidentiality and non-compete obligations, is included below under the heading “Potential Payments Upon Termination or Change in Control.”

Salary and Bonus Compared to Total Compensation

We have not established a proportion that salary and bonus should be of an executive officer’s total compensation. As indicated in the Summary Compensation Table above, the proportion for 2023 that salary and bonus were of total compensation ranged from approximately 64.02% to 78.83% for our executive officers.

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Grants of Plan-Based Awards In 2023

The following table provides information regarding grants of plan-based awards to the named executive officers during the year ended December 31, 2023.

|  |  |  | Estimated Future Payouts Under Non- Equity Incentive Plan Awards |  |  | Estimated Future Payouts Under Equity Incentive Plan Awards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Name |  | Grant Date |  | Thres- hold ($) |  |  | Target ($) |  |  | Maxi- mum ($) |  |  | Thres- hold (#) |  |  | Target (#) |  |  | Maxi- mum (#) |  |  | All Other Stock Awards: Number of Shares of Stock or Units (#) |  |  | All Other Option Awards: Number of Securities Underlying Options (#) |  |  | Exercise or Base Price of Option Awards ($ / Sh) |  |  | Grant Date Fair Value of Stock and Option Awards ($) (1) |
Robert B. Kaminski, Jr. |  | 12/14/2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,333 |  |  |  | 8,667 |  |  |  | 13,001 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 348,673 |
Raymond E. Reitsma |  | 12/14/2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,930 |  |  |  | 7,860 |  |  |  | 11,790 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 316,208 |
Charles E. Christmas |  | 12/14/2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,320 |  |  |  | 4,641 |  |  |  | 6,962 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 186,707 |
Brett E. Hoover |  | 12/14/2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,367 |  |  |  | 2,734 |  |  |  | 4,101 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 109,989 |
Robert T. Worthington |  | 12/14/2023 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 668 |  |  |  | 1,337 |  |  |  | 2,006 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 53,788 |

| (1) | The grant date fair value of the restricted stock awards is based on the number of shares granted times the market value of the shares on the grant date. The target number of shares was used in the fair value calculation. The grant date was December 14, 2023, and the market value per share on that date was $40.23.

Restricted Stock Awards

The stock awards shown in the table above are restricted stock that was awarded to the named executive officers by our Compensation Committee on December 14, 2023, under our Stock Incentive Plan of 2023. The grant of performance-based restricted stock to the executive officers would vest at the end of a 3-year performance period (January 1, 2024 - December 31, 2026), depending on whether Mercantile satisfied pre-determined performance goals. The performance goals were set at a target performance level. If Mercantile meets the target performance level, the executive officers would be vested in the number of shares designated as the “target award” shown in the table above. Performance levels were also set at a maximum level to provide an incentive for superior performance, and at a threshold level, below which no shares would be earned. Depending on Mercantile’s performance relative to the performance goals, the executive officers could earn between 0% and 150% of the target award. The restricted stock is forfeited if the executive officer ceases to be employed with us, or ceases to serve as a Board member prior to the restricted stock vesting, subject to accelerated or pro-rated vesting at the target award level as provided for in the applicable restricted stock award agreement in the event of the executive officer's death, disability, retirement, termination other than for “Cause,” a change in control, or exercise of discretion by the Compensation Committee. The executive officers are entitled to receive cash dividends on their restricted stock to the same extent as other holders of our common stock.

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Outstanding Equity Awards At 2023 Fiscal Year-End

The following table provides information as of December 31, 2023, regarding equity awards, including unexercised stock options and restricted stock that had not vested, for each of the named executive officers.

|  | Option Awards |  |  | Stock Awards |
Name |  | Number of Securities Underlying Unexercised Options (#) Exercisable |  |  | Number of Securities Underlying Unexercised Options (#) Unexercisable |  |  | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |  |  | Option Exercise Price ($) |  |  | Option Expiration Date |  |  | Number of Shares or Units of Stock That Have Not Vested (#) |  |  | Market Value of Shares or Units of Stock That Have Not Vested ($) |  |  | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1)(2) |  |  | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) |
Robert B. Kaminski, Jr. |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,538 |  |  |  | 627,424 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 15,035 |  |  |  | 607,113 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,406 |  |  |  | 460,574 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,667 |  |  |  | 349,973 |
Raymond E. Reitsma |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11,045 |  |  |  | 445,997 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,503 |  |  |  | 383,731 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,551 |  |  |  | 304,909 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,860 |  |  |  | 317,387 |
Charles E. Christmas |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 9,183 |  |  |  | 370,810 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 7,275 |  |  |  | 293,765 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5,536 |  |  |  | 223,544 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,641 |  |  |  | 187,404 |
Brett E. Hoover |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000 |  |  |  | 40,380 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3,200 |  |  |  | 129,216 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,731 |  |  |  | 110,278 |
Robert T. Worthington |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,953 |  |  |  | 200,002 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,242 |  |  |  | 90,532 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,619 |  |  |  | 65,375 |
|  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,337 |  |  |  | 53,988 |

| (1) | The performance-based restricted stock awards for Mr. Kaminski, Mr. Reitsma, Mr. Christmas, and Mr. Worthington, in the order listed in the column and depicted at the adjusted target level, cliff vest on February 15, 2024, February 15, 2025, February 15, 2026, and February 15, 2027. The restricted stock awards are subject to forfeiture and restrictions on transfer until they vest. The first two target level awards shown in the column for each officer were adjusted on December 31, 2022, to reflect the anticipated achievement of the performance metrics, based on actual and projected performance as of that date for each of the respective three-year performance periods, resulting in an additional number of shares as follows:

Name | 2021-2023 Performance Period | 2022-2024 Performance Period
Mr. Kaminski | 1,060 | 5,012
Mr. Reitsma | 753 | 3,168
Mr. Christmas | 626 | 2,425
Mr. Worthington | 338 | 748

| (2) | For Mr. Hoover, two time-based restricted stock awards and one performance-based restricted stock award, in the order listed in the column, cliff vest on December 16, 2024, December 15, 2025, and February 15, 2027. The restricted stock awards are subject to forfeiture and restrictions on transfer until they vest.
| (3) | Based on the closing stock price of $40.38 per share as of December 31, 2023.

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Option Exercises and Stock Vested In 2023

The following table provides information regarding the exercise of stock options and vesting of restricted stock during 2023 for each of the named executive officers.

|  | Option Awards |  |  | Stock Awards |
Name |  | Number of Shares Acquired on Exercise (#) |  |  | Value Realized on Exercise ($) |  |  | Number of Shares Acquired on Vesting (#) |  |  | Value Realized on Vesting ($) (1) |
Robert B. Kaminski, Jr. |  |  | — |  |  |  | — |  |  |  | 11,558 |  |  |  | 404,414 |
Raymond E. Reitsma |  |  | — |  |  |  | — |  |  |  | 7,809 |  |  |  | 273,237 |
Charles E. Christmas |  |  | — |  |  |  | — |  |  |  | 6,831 |  |  |  | 239,017 |
Brett E. Hoover |  |  | — |  |  |  | — |  |  |  | 1,386 |  |  |  | 50,866 |
Robert T. Worthington |  |  | — |  |  |  | — |  |  |  | 3,684 |  |  |  | 128,903 |

| (1) | For officers other than Mr. Hoover, the value realized on vesting is equal to the market value of the shares on February 15, 2023, the date that the performance-based restricted stock for the 2020-2022 performance period became vested, of $34.99. For Mr. Hoover, the value realized is equal to the market value of 1,386 shares that became cliff vested on November 19, 2023. Mr. Hoover’s shares were granted to him before he became an executive officer and were subject to time-based vesting and were not performance-based restricted stock.

Nonqualified Deferred Compensation For 2023

The following table provides information regarding our plan that provides for the deferral of compensation for the named executive officers on a basis that is not tax qualified.

Name |  | Executive Contributions in Last FY ($) |  |  | Registrant Contributions in Last FY ($) |  |  | Aggregate Earnings in Last FY ($)(1) |  |  | Aggregate Withdrawals/ Distributions ($) |  |  | Aggregate Balance at Last FYE ($)(2) |
Robert B. Kaminski, Jr. |  |  | — |  |  |  | — |  |  |  | 532 |  |  |  | — |  |  |  | 8,889 |
Raymond E. Reitsma |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Charles E. Christmas |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Brett E. Hoover |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Robert T. Worthington |  |  | 2,800 |  |  |  | — |  |  |  | 5,538 |  |  |  | — |  |  |  | 73,022 |

| (1) | The earnings consist of interest credited monthly at a rate equal to the prime rate as published in the Wall Street Journal, determined quarterly, as of the first day of each quarter. The above-market portion of this interest in 2023 is reported for each officer in the Summary Compensation Table. The amounts so reported are for Mr. Kaminski, $261 and for Mr. Worthington, $2,721. The above-market portion is the amount of the interest that exceeds 120% of the applicable federal long-term rate, with compounding (as prescribed under section 1274(d) of the Internal Revenue Code), at the rate that corresponds most closely to the rate established under the deferred compensation plan.

| (2) | The amount that was reported as compensation in the Summary Compensation Tables for previous years is: for Mr. Kaminski, $3,880 and Mr. Worthington, $3,577.

Deferred Compensation Plan

The information in the table above pertains to our executive officers’ participation in the Bank’s non-qualified deferred compensation plan. Participants in the plan may elect to defer up to 100% of their salary and other cash compensation each year. Under the plan, the amount of any compensation deferred is credited with interest monthly at a rate equal to the prime rate as published in the Wall Street Journal, determined quarterly, on the first day of each quarter.

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The plan provides that the Bank will pay to each executive officer, from the executive officer’s deferred compensation account, a lump sum payment or installment payments, whichever the officer elected, after he or she leaves employment with us due to normal retirement, early termination, disability, or a change of control. If installment payments are elected on or after January 1, 2015, the maximum payment period is ten years. If the executive officer dies before leaving employment, the Bank will distribute the payments to the executive officer’s designated beneficiary in a lump sum, or installments, if installments were elected. If death occurs during the time that payments are being made, the Bank will distribute the remaining payments to the executive officer’s designated beneficiary at the same time and in the same amounts that would have been distributed if the executive officer had not died.

The plan is subject to Section 409A of the Internal Revenue Code, which specifies requirements that non-qualified deferred compensation plans must meet in order to avoid adverse tax consequences for participants.

Potential Payments upon Termination or Change in Control

Employment Agreements

We have entered into employment agreements with each of our executive officers. The agreement for each officer other than Mr. Worthington establishes an employment period that extends an additional year, each December 31, so that as of each December 31, there are three years remaining in the employment period. Our Board determined not to extend Mr. Worthington’s contract for an additional year effective December 31, 2022. Therefore, his employment agreement will expire on December 31, 2024. The annual extension of the employment period can be avoided by giving notice that the employment period is not to be extended. These agreements include provisions that provide compensation and benefits to the executive officers in the event that their employment with us is terminated:

| ● | during the employment period, voluntarily by the executive officer for Good Reason, or by us without Cause; or

| ● | during the employment period, due to disability or death.

The employment agreements also provide compensation and benefits to the officers in the event that their employment with us is terminated after the employment period and before they reach the age of 65, voluntarily by them if their annual base salary is reduced without Cause, or by us without Cause.

The terms “Cause” and “Good Reason” are defined in the employment agreements. Cause includes certain acts of dishonesty and intentional gross neglect, conviction of a felony, and certain intentional breaches of an officer’s obligations in the employment agreement relating to confidentiality of our information and not competing with us. Good Reason includes an assignment to the officer of a title or duties that are materially inconsistent with the officer’s position, titles, duties or responsibilities, and certain failure by us to comply in a material respect, even after notice to us, with our obligations to the officer under the employment agreement.

Termination During the Employment Period

The employment agreements provide the executive officers with compensation and benefits in the event that their employment is terminated by us without Cause, or the officers elect to terminate their employment for Good Reason during the employment period. In such event, the officer in question is entitled to receive the greater of the officer’s annual base salary through the end of the employment period or (i) for Mr. Kaminski, $500,000; (ii) for Mr. Reitsma and Mr. Christmas, $350,000; (iii) Mr. Hoover, $250,000 and (iv) Mr. Worthington, $250,000, in any case payable over 18 months. In addition, in the case of such a termination of employment, the officer is entitled to continue the officer’s participation in our life, disability and health insurance plans for 18 months, to the extent permitted under the plans, to an assignment of any assignable term life insurance policies owned by us insuring the officer’s life, and to $15,000 for out-placement, interim office and related expenses.

For a termination of an executive officer by us during the employment period to be with Cause, it must be done within 90 days of our learning of the Cause. For a termination by the officer during the employment period to be with Good Reason, it must be done by the officer within 90 days of the officer learning of the Good Reason.

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If an officer becomes disabled or dies during the employment period, the officer is entitled to compensation and benefits under the officer’s employment agreement. In the event of disability, the officer continues to receive their then current annual base salary through the end of the employment period, and any disability benefits payable under disability plans that we provide. The officer also continues to participate in our life, disability, and health insurance plans, through age 65, to the extent permitted under the plans. If the officer dies during the employment period, we are obligated to pay the officer’s legal representative a death benefit. The death benefit is (i) for Mr. Kaminski, $300,000; (ii) for Mr. Reitsma and Mr. Christmas, $200,000; (iii) and for Mr. Hoover and Mr. Worthington, $100,000. In addition, if we own any life insurance insuring the life of the officer, the proceeds of the policies are payable to the named beneficiaries.

Under the employment agreements, in the event that an officer’s employment is terminated for Cause, the officer is not entitled to any accrued rights that the officer may then have under any of our stock incentive plans.

Termination After the Employment Period

The employment agreements provide compensation and benefits in the event that after the employment period and prior to the officer reaching the age of 65, the officer’s employment is terminated by us without Cause or the officer’s annual base salary is reduced without Cause, and the officer terminates the officer’s employment within 90 days of the reduction. In such event, the officer is entitled to receive an amount, for Mr. Kaminski of $500,000; for Mr. Reitsma or Mr. Christmas of $350,000; and for Mr. Hoover or Mr. Worthington, of $250,000, payable over 18 months. In addition, in the case of such a termination of employment, the officer is entitled to continue participation in our life, disability and health insurance plans for 18 months, to the extent permitted under the plans, to an assignment of any assignable term life insurance policies owned by us insuring the officer’s life, and to $15,000 for out-placement, interim office and related expenses.

Obligations of Executive Officers

Under the employment agreements, each officer agreed not to disclose, except as required by law, any confidential information relating to our business or customers, or use any confidential information in any manner adverse to us. In addition, each officer has agreed that for 18 months following the officer’s employment with us, the officer will not be employed by, or act as a director or officer of, any business engaged in banking within a 50-mile radius of any city in which at any time during the 18-month period we or the Bank has a branch or other office.

Change in Control Agreements

We have entered into a change in control agreement with each of our executive officers. If the officer's employment is terminated without Cause (as defined in the employment agreement) or if the officer terminates employment for Good Reason (as defined in the employment agreement), in each case within 24 months after a "change in control," the officer will receive a lump sum payment within 15 days after the termination. The amount of the lump sum payment is: (i) $500,000 for Mr. Kaminski; (ii) $350,000 for each of Mr. Reitsma and Mr. Christmas; and (iii) $250,000 for each of Mr. Hoover and Mr. Worthington. This amount is paid in addition to any other payments and benefits under the officer's employment agreement. If the officer is a "specified employee" within the meaning of Section 409A of the Internal Revenue Code, payment is delayed until the first business day of the seventh month after the date on which termination of employment occurs.

A "change in control" is defined as (a) a change in ownership of more than 50% of the total fair market value or total voting power of Mercantile or the Bank; (b) a change in effective control, which includes (i) an acquisition by a person of 30% or more of the total voting power of the stock of Mercantile or the Bank; or (ii) a majority of the members of the Board of Directors of Mercantile or the Bank is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors prior to the date of the appointment or election; or (c) an acquisition by a person of assets of Mercantile or the Bank with a total gross fair market value of more than 40% of the total gross fair market value of all assets of Mercantile or the Bank immediately prior to the acquisition.

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Rights Under the Stock Incentive Plan of 2020

In general, stock options granted under the Stock Incentive Plan of 2020 that are vested at the time employment terminates may be exercised by the executive officer within three months after termination of employment. However, if employment terminates due to death or disability, stock options become 100% vested and may be exercised within 12 months after the date of termination, but not later than the expiration date of the option. In addition, the Stock Incentive Plan of 2020 provides that all outstanding options granted under the plan are forfeited if an officer’s employment is terminated for Cause, whether or not the options are vested.

If an executive officer terminates employment due to death, disability or retirement at or after age 65, then restricted stock granted to the officer under the Stock Incentive Plan of 2020 will be 100% vested. If we terminate the employment of an executive officer other than for Cause, or if the officer retires at or after age 62, but before age 65, with 5 or more years of service with us, restricted stock granted to the officer under the plan will be partially vested. The number of shares that will be vested is equal to the number of shares granted to the executive officer multiplied by the number of months that have elapsed since the grant date divided by the number of months in the vesting period. Our Compensation Committee has discretion to accelerate the vesting of restricted stock.

Rights Under the Stock Incentive Plan of 2023

In general, stock options granted under the Stock Incentive Plan of 2023 that are vested at the time employment terminates may be exercised by the executive officer within three months after termination of employment. However, if employment terminates due to death or disability, stock options become 100% vested and may be exercised within 12 months after the date of termination, but not later than the expiration date of the option. In addition, the Stock Incentive Plan of 2023 provides that all outstanding options granted under the plan are forfeited if an officer’s employment is terminated for Cause, whether or not the options are vested.

If an executive officer terminates employment due to death, disability or retirement at or after age 65, then restricted stock granted to the officer under the Stock Incentive Plan of 2023 will be 100% vested. If we terminate the employment of an executive officer other than for Cause, or if the officer retires at or after age 62, but before age 65, with 5 or more years of service with us, restricted stock granted to the officer under the plan will be partially vested. The number of shares that will be vested is equal to the number of shares granted to the executive officer multiplied by the number of months that have elapsed since the grant date divided by the number of months in the vesting period. Our Compensation Committee has discretion to accelerate the vesting of restricted stock.

Distribution from the Deferred Compensation Plan

Each executive officer will receive a distribution of the executive officer’s account under the deferred compensation plan upon termination of employment. Distributions will generally be delayed for six months after the termination of employment, to the extent required by Section 409A of the Internal Revenue Code. However, if employment is terminated due to Cause, or if an executive officer is subject to a final removal or prohibition order issued by a federal banking agency, then the executive officer will only receive a distribution of the officer’s own deferrals, without any interest credits.

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Table of Potential Payments Upon Termination of Employment

The following tables provide information regarding compensation and benefits payable to our executive officers under their respective employment agreements, Stock Incentive Plan of 2020 or the Stock Incentive Plan of 2023 upon termination of their employment. The amounts shown assume that termination of employment was effective as of December 29, 2023, the last business day of our 2023 fiscal year, and include estimates of the amounts that would be paid based on the officer’s 2023 base salary. The actual amounts would only be determined upon an officer’s termination of employment. The value of restricted stock that would have become vested due to termination without “Cause,” retirement, death or disability is based on the closing stock price of $40.38 on December 29, 2023.

|  | During Employment Period |  |  | After Employment |  |  |  |  |
Name |  | Termination Without Cause or for Good Reason ($)(1) |  |  | Termination Due to Death ($) |  |  | Termination Due to Disability ($)(5) |  |  | Period and Before Age 65, Termination Without Cause or Due to Base Salary Reduction ($)(6) |  |  | Retirement ($)(7) |
Robert B. Kaminski, Jr. |  |  | 3,198,876 |  |  |  | 3,245,084(2) |  |  |  | 4,224,561 |  |  |  | 1,701,776 |  |  |  | 2,045,085 |
Raymond E. Reitsma |  |  | 2,560,049 |  |  |  | 2,554,024(3) |  |  |  | 3,273,118 |  |  |  | 1,185,058 |  |  |  | 1,452,024 |
Charles E. Christmas |  |  | 1,922,772 |  |  |  | 2,175,482(3) |  |  |  | 2,656,826 |  |  |  | 1,027,772 |  |  |  | 1,075,521 |
Brett E. Hoover |  |  | 940,608 |  |  |  | 1,279,995(4) |  |  |  | 1,281,530 |  |  |  | 365,608 |  |  |  | 279,995 |
Robert T. Worthington |  |  | 557,874 |  |  |  | 1,409,857(4) |  |  |  | 843,141 |  |  |  | 540,074 |  |  |  | 409,897 |

| (1) | Includes (a) annual base salary through the end of 2026 of $1,997,100 for Mr. Kaminski, $1,725,000 for Mr. Reitsma, and $1,245,000 for Mr. Christmas, and $825,000 for Mr. Hoover, and through the end of 2024 of $267,800 for Mr. Worthington; (b) life, disability and medical insurance premiums for 18 months for Mr. Kaminski, $36,689, Mr. Reitsma, $39,693, Mr. Christmas, $41,267, Mr. Hoover, $26,527 and Mr. Worthington, $2,464; (c) out-placement, office and related expenses of $15,000 for each officer; and (d) the value of restricted shares that would have become vested due to termination without Cause, for Mr. Kaminski, $1,150,087, for Mr. Reitsma $780,356, for Mr. Christmas, $621,505, for Mr. Hoover, $74,081, and for Mr. Worthington $272,610, which value would not apply and should be subtracted in the case of a termination by the officer for Good Reason.

| (2) | Includes payment of death benefit from us of $300,000, and from the applicable insurance companies, supplemental life insurance proceeds of $300,000 and group term life insurance proceeds of $600,000, and the value of restricted shares that would have become vested due to death of $2,045,084 for Mr. Kaminski.

| (3) | Includes payment of death benefit from us of $200,000, and from the applicable insurance companies, supplemental life insurance proceeds of $300,000 and group term life insurance proceeds of $600,000, and the value of restricted shares that would have become vested due to death of $1,454,024 for Mr. Reitsma and $1,075,482 for Mr. Christmas.

| (4) | Includes payment of death benefit from us of $100,000 and from the applicable insurance companies, supplemental life insurance proceeds of $300,000 and group term life insurance proceeds of $600,000, and the value of restricted shares that would have become vested due to death of $279,995 for Mr. Hoover and $409,857 for Mr. Worthington.

| (5) | Includes (a) annual base salary through the end of 2026 for Mr. Kaminski, $1,902,100, Mr. Reitsma, $1,484,784, Mr. Christmas, $1,184,763, and Mr. Hoover, $660,000, and through the end of 2024, for Mr. Worthington of $260,000; (b) life, disability and medical insurance premiums until age 65 for Mr. Kaminski, $73,377 (calculated at $24,459 annually), Mr. Reitsma, $132,310 (calculated at $22,968 annually), Mr. Christmas, $192,581 (calculated at $27,512 annually), Mr. Hoover, $194,535 (calculated at $17,685 annually) and Mr. Worthington, $26,284 (calculated at $1,643 annually); and (c) the value of restricted shares that would have become vested due to disability, for Mr. Kaminski, $2,045,084, for Mr. Reitsma, $1,452,024, for Mr. Christmas, $1,075,482, for Mr. Hoover, $279,995, and for Mr. Worthington, $409,857. In addition, the executive officers would receive long term disability benefits from the applicable insurance companies for as long as the officer is disabled up to age 65, in the following annual amounts, for Mr. Kaminski, $204,000, Mr. Reitsma, $204,000, Mr. Christmas, $204,000, Mr. Hoover, $147,000, and Mr. Worthington, $147,000. If the disability was catastrophic as defined in the disability insurance policies, the annual disability benefits in the prior sentence would be about 22% to 41% more, depending on the executive officer.

| (6) | Includes (a) for Mr. Kaminski, $500,000, for Mr. Reitsma and Mr. Christmas, $350,000, and for Mr. Hoover and Mr. Worthington, $250,000 in lieu of base salary; (b) life, disability and medical insurance premiums for 18 months for Mr. Kaminski, $36,689, Mr. Reitsma, $39,693, Mr. Christmas, $41,267, Mr. Hoover, $26,527, and Mr. Worthington, $2,464; (c) out-placement, office and related expenses of $15,000 for each officer; and (d) the value of restricted shares that would have become vested due to termination without Cause, for Mr. Kaminski, $1,150,087, for Mr. Reitsma, $780,365, for Mr. Christmas, $621,505, for Mr. Hoover, $74,081, and for Mr. Worthington, $272,610, which value would not apply and should be subtracted in the case of a termination by the officer because of a reduction in the officer’s base salary. The amounts are calculated as though the employment period had ended before December 31, 2023.

| (7) | Includes the value of restricted shares that would have become vested at retirement. The amounts in the table are calculated as though the officer had reached 65 years of age as of December 31, 2023. If the officer had retired and had reached age 62 but was not yet 65 as of December 31, 2023 and had five or more years of service with us, the value of restricted stock that would have vested would be for Mr. Kaminski, $1,150,087, for Mr. Reitsma, $780,356, for Mr. Christmas, $621,505, for Mr. Hoover $74,081 and for Mr. Worthington, $272,610.

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Change in Control

If a change in control of Mercantile or the Bank occurs and the employment of an executive officer is terminated without Cause or the officer terminates employment for Good Reason within 24 months after the change in control, the officer will receive a lump sum payment in addition to severance benefits under the employment agreement. Under each of the Stock Incentive Plan of 2020 and the Stock Incentive Plan of 2023, stock options and restricted stock awards may be assumed or a substitute award may be granted in connection with a change in control of Mercantile. In such event, the executive officer will become 100% vested if, within one year after the change in control, the officer's employment is terminated without Cause or due to death or disability, or if the officer terminates employment for Good Reason. If the stock options and restricted stock awards are not assumed or a substitute award granted, then unless the Compensation Committee prescribes an economically equivalent alternative, shares of restricted stock and stock options will be 100% vested. The awards will be cancelled immediately prior to the change in control, with the executive officer receiving a payment equal to the per share consideration paid to the shareholders in connection with the change in control transaction minus, in the case of stock options, the exercise price per share. A “change in control” is defined in each of the Stock Incentive Plan of 2020 and the Stock Incentive Plan of 2023 as (a) the failure of the continuing directors to constitute a majority of the Board of Directors; (b) the acquisition by any person of ownership of 30% or more of the outstanding common stock of Mercantile; (c) a reorganization, merger or consolidation after which the Mercantile shareholders do not own at least 50% of the value and voting power of the outstanding capital stock of the entity surviving the transaction; (d) a liquidation or dissolution of Mercantile, or a sale of all or substantially all of its assets; or (e) any other change in control transaction that is reportable to the SEC under Item 6(e) of Schedule 14A of Regulation 14A issued under the Securities Exchange Act of 1934.

Each executive officer will receive a distribution of the executive officer’s account under the deferred compensation plan if employment terminates within 12 months after a change in control. The value of each officer’s account as of December 31, 2023, is shown above in the table under the heading “Nonqualified Deferred Compensation For 2023.”

Potential Payments Upon a Change in Control

The following table provides information regarding the value of benefits that would be provided to our executive officers in the event of a change in control of Mercantile. A lump sum cash payment would be made pursuant to the terms of the officer's change in control agreement assuming there was both a change in control and a termination without Cause or a Good Reason termination on December 31, 2023. The cash payments shown in the table below are in addition to severance payments that would be paid to the officer under their change in control or employment agreement in the event of a termination without Cause or a Good Reason termination during the employment period. Under our Stock Incentive Plan of 2020 and our Stock Incentive Plan of 2023, there are provisions regarding a change in control. The amounts shown assume that the change in control occurred as of December 29, 2023, the last business day of our 2023 fiscal year, include estimates of the value of restricted stock that would be vested upon a change in control and reflect that incentive awards were not assumed or substituted by an acquiring company. The actual amounts would only be determined upon a change in control.

|  | Termination Without Cause or Good Reason Termination After a Change |  |  | Accelerated Vesting Upon Change in Control |
Name |  | in Control ($) |  |  | Stock Options ($) |  |  | Restricted Stock ($)(6) |
Robert B. Kaminski, Jr. |  |  | 500,000 |  |  |  | — |  |  |  | 2,045,085(1) |
Raymond E. Reitsma |  |  | 350,000 |  |  |  | — |  |  |  | 1,452,024 (2) |
Charles E. Christmas |  |  | 350,000 |  |  |  | — |  |  |  | 1,075,521 (3) |
Brett E. Hoover |  |  | 250,000 |  |  |  | — |  |  |  | 279,995 (4) |
Robert T. Worthington |  |  | 250,000 |  |  |  | — |  |  |  | 409,897 (5) |

| (1) | Consisting of 50,646 shares of performance-based restricted stock that would have vested for Mr. Kaminski at the adjusted target award level.

| (2) | Consisting of 35,959 shares of performance-based restricted stock that would have vested for Mr. Reitsma at the adjusted target award level.

| (3) | Consisting of 26,635 shares of performance-based restricted stock that would have vested for Mr. Christmas at the adjusted target award level.

| (4) | Consisting of 2,734 shares of performance-based restricted stock that would have vested for Mr. Hoover at the adjusted target award level, plus 4,200 shares of restricted stock subject to time-based vesting.

| (5) | Consisting of 10,151 shares of performance-based restricted stock that would have vested for Mr. Worthington at the adjusted target award level.

| (6) | Based on the closing stock price for our common stock of $40.38 per share as of December 29, 2023.

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Director Compensation for 2023

The following table provides information about the compensation of our directors for the year ended December 31, 2023.

Name(1) |  | Fees Earned or Paid in Cash ($) |  |  | Stock Awards ($)(2) |  |  | Option Awards ($)(3) |  |  | Non-Equity Incentive Plan Compensation ($) |  |  | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |  |  | All Other Compensation ($) |  |  | Total ($) |
David M. Cassard |  |  | 35,900 |  |  |  | 35,892 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 71,792 |
Michael S. Davenport |  |  | 31,200 |  |  |  | 31,190 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 62,390 |
Michelle L. Eldridge |  |  | 34,300 |  |  |  | 34,284 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 68,584 |
Jeff A. Gardner(2) |  |  | 8,163 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,163 |
Michael H. Price |  |  | 45,150 |  |  |  | 45,146 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 90,296 |
David B. Ramaker |  |  | 32,025 |  |  |  | 32,646 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 64,671 |
Amy L. Sparks |  |  | 22,351 |  |  |  | 26,647 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 48,998 |

| (1) | The compensation of our Chief Executive Officer, Mr. Kaminski, and our Executive Vice President, Mr. Reitsma, have been omitted from this table because they received no special compensation for serving on our Board of Directors. The compensation of Mr. Kaminski and Mr. Reitsma is included in the Summary Compensation Table.

| (2) | Each non-employee director who was serving on May 25, 2023, received a stock award on June 1, 2023, in payment of 50% of such director's annual retainer fee. Mr. Gardner retired from the Board on March 31, 2023, and therefore, did not receive any stock awards.

| (3) | No option awards were made to our non-employee directors during 2023, and no non-employee director held any unexercised options as of December 31, 2023.

Compensation Arrangements for Non-employee Directors

The Compensation Committee of our Board of Directors reviews director compensation at least annually and recommends to our Board of Directors for approval any changes that the Compensation Committee deems appropriate. Beginning in 2018, we based our director compensation on a single retainer figure and discontinued the use of meeting fees from prior years. The retainer fee was higher for each director who served as Chairman of the Board, Chairperson of our Audit Committee, Compensation Committee or Governance and Nominating Committee, or Executive Session Facilitator, as reflected in the chart below. One-half (50%) of the retainer value was paid in shares of Mercantile common stock as of the annual meeting date, with the share count calculated based on the closing stock price on the day of issuance. One-half (50%) of the retainer value was paid in cash, with payments divided into equal installments payable at the end of each calendar quarter. Directors who fail to meet an attendance threshold of 75% of scheduled board and committee meetings would not receive their fourth quarter cash payment.

The annual retainer fee values through December 31, 2023, and as of January 1, 2024, are as follows:

|  | Retainer Value |
|  | Until December 31, 2023 |  |  | As of January 1, 2024 |
Chairman of the Board |  | $ | 90,300 |  |  | $ | 90,300 |
Chair of the Audit Committee |  | $ | 71,800 |  |  | $ | 71,800 |
Chair of the Compensation Committee |  | $ | 68,600 |  |  | $ | 68,600 |
Chair of the Governance and Nominating Committee |  | $ | 65,300 |  |  | $ | 65,300 |
Executive Session Facilitator |  | $ | 2,100 |  |  | $ | 2,100 |
Non-Chair Directors |  | $ | 60,300 |  |  | $ | 60,300 |

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Under the Bank’s deferred compensation plan for non-employee directors, Mercantile directors who are also directors of the Bank may elect to defer the cash portion of their annual retainer until they are no longer serving on the Board or until specific dates that they select. Directors are eligible to receive stock-based awards under the Stock Incentive Plan of 2023.

Deferred Compensation Plan

Directors are eligible to participate in the Bank’s non-qualified deferred compensation plan. Directors who participate in the plan may elect to defer up to 100% of their annual cash retainer. Under the plan, the amount of any director’s fees that are deferred is credited with interest at a rate equal to the prime rate as published in the Wall Street Journal, credited on a monthly basis.

The plan provides that the Bank will pay to each director, from the director’s deferred compensation account, a lump sum payment, or installment payments, whichever is elected, after the director’s term of office as a director ends. If installment payments are elected, the maximum payment period is ten years. In the event that a director dies before their term of office ends, the Bank will distribute the payments to the director’s designated beneficiary in a lump sum, or installments, if installments were elected. If death occurs during the time that payments are being made, the Bank will distribute the remaining payments to the director’s designated beneficiary at the same time and in the same amounts that would have been distributed if the director had not died.

The plan is subject to Section 409A of the Internal Revenue Code, which specifies requirements that non-qualified deferred compensation plans must meet in order to avoid adverse tax consequences for participants.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Robert B. Kaminski, Jr., our Chief Executive Officer (“CEO”).

For 2023, our last completed fiscal year:

| ● | The annual total compensation of the employee identified at the median of our Company (other than our CEO) was $63,298; and

| ● | The annual total compensation of our CEO was $1,477,989.

Based on this information, for 2023, the ratio of the annual total compensation of Mr. Kaminski, our CEO, to the annual total compensation of our median employee was estimated to be 23.35 to 1.

The pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

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Pay Versus Performance

In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are providing the following disclosures regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO named executive officers (“Non-PEO NEOs”) and Company performance for the fiscal years listed below.

We have identified Return on Equity (“ROE”) as our Company-Selected Measure (“CSM”). In our view, ROE represents the most important financial performance measure (not otherwise required to be disclosed in the table) used to link “Compensation Actually Paid” to our NEOs for the 2023 fiscal year to company performance. We chose ROE as our Company-Selected Measure for evaluating pay versus performance because it is a key metric in our 2023 executive officer bonus plan as well as under the performance-based restricted stock grants made in 2023. See Compensation Discussion and Analysis—Bonus Plan for 2023 on page 31 and Compensation Discussion and Analysis – Grant of Performance-Based Restricted Stock for the 2024-2026 Performance Period on page 36 for a discussion of the metrics used by the Compensation Committee to evaluate performance.

Pay Versus Performance Table

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Value of initial fixed $100 investment based on: |  |  |  |  |  |  |  |  |
|  | Summary compensation table total for PEO (1) |  |  | Compensation actually paid to PEO (2)(3) |  |  | Average summary compensation table total for non-PEO named executive officers (1) |  |  | Average compensation actually paid to non-PEO named executive officers (2)(3) |  |  | Total shareholder return |  |  | Peer group total shareholder return(4) |  |  | Net income |  |  | Return on |
(a) |  | (b) |  |  | (c) |  |  | (d) |  |  | (e) |  |  | (f) |  |  | (g) |  |  | (h) |  |  | equity |
2023 |  | $ | 1,477,989 |  |  | $ | 1,789,395 |  |  | $ | 694,860 |  |  | $ | 812,860 |  |  |  | 173.48 |  |  |  | 131.57 |  |  | $ | 82,217,000 |  |  |  | 17.24 | %
2022 |  | $ | 1,430,026 |  |  | $ | 1,679,446 |  |  | $ | 558,287 |  |  | $ | 605,716 |  |  |  | 116.19 |  |  |  | 109.23 |  |  | $ | 61,063,000 |  |  |  | 14.07 | %
2021 |  | $ | 1,208,919 |  |  | $ | 2,033,701 |  |  | $ | 608,292 |  |  | $ | 1,021,656 |  |  |  | 117.18 |  |  |  | 138.97 |  |  | $ | 59,021,000 |  |  |  | 13.11 | %
2020 |  | $ | 1,087,367 |  |  | $ | 645,575 |  |  | $ | 609,392 |  |  | $ | 490,267 |  |  |  | 87.59 |  |  |  | 100.46 |  |  | $ | 44,138,000 |  |  |  | 10.32 | %

(1) | Robert B. Kaminski, Jr. was our PEO for each year presented. The non-PEO NEOs for 2022 and 2021 are Raymond E. Reitsma, Charles E. Christmas, Lonna L. Wiersma and Robert T. Worthington. The non-PEO NEOs for 2023 are Raymond E. Reitsma, Charles E. Christmas, Brett E. Hoover, and Robert T. Worthington. Ms. Wiersma retired on March 4, 2022.

(2) | Compensation Actually Paid amounts shown have been calculated in accordance with Item 402(v) of Regulation 402(v) of Regulation S-K and do not reflect compensation actually earned, realized or received by the NEOs.

(3) | Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. For each NEO, we have subtracted the totals from the Stock Awards column set forth in the Summary Compensation Table. The equity value adjustments for each applicable year are derived from the following tables.

(4) | The peer group TSR set forth in this table utilizes the KBW Nasdaq Bank Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the KBW Nasdaq Bank Index, respectively. Historical stock performance is not necessarily indicative of future stock performance.

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Year |  | Year-End Fair Value of Equity Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) |  |  | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) |  |  | Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) |  |  | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) |  |  | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) |  |  | Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Included for PEO ($) |  |  | Total Inclusion of Equity Values for PEO ($) |
2023 |  |  | 349,973 |  |  |  | 289,654 |  |  |  | - |  |  |  | 17,452 |  |  |  | - |  |  |  | 56,252 |  |  |  | 713,331 |
2022 |  |  | 381,873 |  |  |  | 156,752 |  |  |  | - |  |  |  | 31,830 |  |  |  | - |  |  |  | 45,098 |  |  |  | 615,553 |
2021 |  |  | 351,106 |  |  |  | 802,132 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 20,244 |  |  |  | 1,173,482 |
2020 |  |  | 287,975 |  |  |  | (402,776 | ) |  |  | - |  |  |  | (64,020 | ) |  |  | - |  |  |  | 22,460 |  |  |  | (156,361 | )

Year |  | Average Year-End Fair Value of Equity Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO ($) |  |  | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO ($) |  |  | Average Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO ($) |  |  | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO ($) |  |  | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO ($) |  |  | Average Value of Dividends or Other Earnings Paid on Stock or Option Awards Not Otherwise Included for Non-PEO ($) |  |  | Total Average Inclusion of Equity Values for Non-PEO ($) |
2023 |  |  | 167,294 |  |  |  | 108,863 |  |  |  | - |  |  |  | 8,033 |  |  |  | - |  |  |  | 21,488 |  |  |  | 305,678 |
2022 |  |  | 123,089 |  |  |  | 41,682 |  |  |  | - |  |  |  | 18,927 |  |  |  | (35,626 | ) |  |  | 17,372 |  |  |  | 165,444 |
2021 |  |  | 111,045 |  |  |  | 402,580 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 10,024 |  |  |  | 523,649 |
2020 |  |  | 140,578 |  |  |  | (93,241 | ) |  |  | - |  |  |  | (39,285 | ) |  |  | - |  |  |  | 12,160 |  |  |  | 20,212 |

Relationship Between PEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)

The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and the Company’s cumulative TSR as well as TSR relative to the KBW Nasdaq Bank Index, over the four most recently completed fiscal years.

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Relationship Between PEO and Other NEO Compensation Actually Paid and Net Income

The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our net income during the three most recently completed fiscal years.

Relationship Between PEO and Other NEO Compensation Actually Paid and Return on Equity (”ROE”)

The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our other NEOs, and our ROE during the three most recently completed fiscal years.

Tabular List of Most Important Performance Measures

The following table presents the financial performance measures that the Company considers to be the most important in linking Compensation Actually Paid to our PEO and other NEOs for 2023 to Company performance. The measures in this table are not ranked.

Earnings per share
Level of non-performing assets
Net interest margin
Net revenue
Efficiency ratio
Return on assets
Return on equity

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AUDIT COMMITTEE MATTERS

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

As reported on our Current Report on Form 8-K filed with the SEC on March 16, 2023, on March 14, 2023, the Audit Committee approved the dismissal of BDO USA, LLP (“BDO”) as our independent registered public accounting firm effective immediately. BDO’s audit reports on our consolidated financial statements for the fiscal years ended December 31, 2022, and December 31, 2021, did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years December 31, 2022 and December 31, 2021, and the subsequent interim period from January 1, 2023 through March 14, 2023, there were (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between Mercantile and BDO on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to BDO’s satisfaction, would have caused BDO to make reference to the subject matter of the disagreements in connection with its reports on Mercantile’s consolidated financial statements for such years and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

We previously provided BDO with a copy of the disclosures above and requested that BDO furnish us with a letter addressed to the SEC stating whether it agrees with the statements and, if not, stating the respects in which it does not agree. A copy of BDO’s letter, dated March 15, 2023, was filed as Exhibit 16 with our Current Report on Form 8-K filed with the SEC on March 16, 2023.

On March 14, 2023, the Audit Committee approved the appointment of Plante & Moran, PLLC (“Plante & Moran) as our independent registered public accounting firm to perform independent audit services for the fiscal year ending December 31, 2023. During the fiscal years ended December 31, 2022 and December 31, 2021, and the subsequent interim period from January 1, 2023 through March 14, 2023, neither we nor anyone acting on our behalf consulted Plante & Moran 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 with respect to our consolidated financial statements, in any case where a written report or oral advice was provided to us by Plante & Moran that Plante & Moran concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” within the meaning of Item 304(a)(1)(iv) of Regulation S-K or a “reportable event” within the meaning of Item 304(a)(1)(v) of Regulation S-K.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table shows the fees for audit and other professional services provided to us by Plante & Moran and BDO for 2023 and 2022.

|  | 2023 |  |  | 2022 |
|  | Plante & Moran |  |  | BDO |
Audit Fees |  | $ | 470,700 |  |  | $ | 612,600 |
Audit-Related Fees* |  | $ | 3,000 |  |  | $ | 36,000 |
Tax Fees |  | $ | 0 |  |  | $ | 0 |
All other fees |  | $ | 0 |  |  | $ | 0 |
Total |  | $ | 473,700 |  |  | $ | 648,600 |

* Included normal recurring accounting consultations provided by BDO during those years and fees associated with the 401(k) Plan audit.

AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES

The Audit Committee’s policy is to pre-approve all audit services and non-audit services that are to be performed for us by our independent auditor. Under the Audit Committee’s policy, authority to pre-approve permitted services has been delegated to two members of the Audit Committee, either of whom can act alone, for circumstances when pre-approval is not obtained from the full Audit Committee. Any pre-approval by the delegated authority is required to be reported to the Audit Committee at its next meeting. All of the services described in the table above were pre-approved by the Audit Committee.

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PROPOSAL #2 – RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Our Board of Directors is asking our shareholders to ratify the selection of Plante & Moran, PLLC as our independent registered public accounting firm. Although ratification is not required by our bylaws or otherwise, our Board is submitting the selection of Plante & Moran, PLLC to our shareholders for ratification as a matter of good corporate practice. In the event shareholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in our best interest and the best interest of our shareholders.

Representatives of Plante & Moran, PLLC plan to attend the annual meeting of shareholders, who will have the opportunity to make a statement if they desire to do so and will respond to appropriate questions by shareholders.

Our Board of Directors recommends that you vote FOR ratification of the appointment of Plante & Moran, PLLC as our independent registered public accounting firm for 2024. Unless otherwise instructed, the persons named as proxies intend to vote all proxies received for ratification of the appointment of Plante & Moran, PLLC.

PROPOSAL #3 – ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that we provide our shareholders with the opportunity to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers (“NEOs”) as disclosed in this proxy statement in accordance with the rules of the SEC. We intend to continue to hold such an advisory vote on the compensation of our NEOs, commonly known as a “say-on-pay” vote, each year in connection with our annual meeting of shareholders until the next vote on the frequency of the “say-on-pay” vote or until our Board otherwise determines that a different frequency for this advisory vote is in the best interests of our shareholders. The next advisory vote on the frequency of “say-on-pay” votes will occur no later than 2025.

Our executive compensation program is intended to attract, motivate, reward and retain the senior management talent required to achieve our corporate objectives and increase shareholder value. Our philosophy in setting compensation policies for executive officers is to align pay with performance, while at the same time providing competitive compensation. We believe that our compensation policies and procedures are aligned with the long-term interests of our shareholders.

As required by Section 14A of the Exchange Act, this proposal seeks a shareholder advisory vote on the approval of compensation of our named executive officers as disclosed pursuant to Item 402 of Regulation S-K through the following resolution:

“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of Mercantile Bank Corporation’s executives, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosure contained in the proxy statement.”

Our Board of Directors urges you to endorse the compensation program for our executive officers by voting FOR the above resolution. The Compensation Committee of the Board of Directors believes that the executive compensation for 2023 is reasonable, appropriate and justified by Mercantile’s performance.

Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

Our Board of Directors recommends that you vote FOR the approval of our executive compensation program as described in the Compensation Discussion and Analysis and the compensation tables and otherwise in this proxy statement. Unless otherwise instructed, the persons named as proxies intend to vote all proxies received for approval of our executive compensation program.

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TRANSACTIONS WITH RELATED PERSONS

We have a written policy requiring that our Audit Committee review and approve related person transactions that involve us and are of the type that are required to be disclosed in our proxy statement by SEC rules. A transaction may be a related person transaction if any of our directors, executive officers, owners of more than 5% of our common stock, or their immediate family have a material interest in the transaction and the amount involved exceeds $120,000. The policy authorizes the Audit Committee to approve a related person transaction if it determines that the transaction is at least as favorable to us as would have been expected if the transaction had been with a person who is not related to us or is in our best interest. The policy does not cover loan transactions described in the next paragraph, which are generally subject to approval by the Bank’s Board of Directors to the extent required by applicable banking laws and regulations.

The Bank has had, and expects in the future to have, loan transactions in the ordinary course of business with our directors, executive officers, or their immediate family, or companies they have a material interest in, on substantially the same terms as those prevailing for comparable transactions with others. All such transactions (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 the Bank, and (iii) did not involve more than the normal risk of collectability or present other unfavorable features.

SHAREHOLDER PROPOSALS FOR 2025 ANNUAL MEETING

A proposal submitted by a shareholder for the 2025 annual meeting of shareholders must be sent to the Secretary, Mercantile Bank Corporation, 310 Leonard Street NW, Grand Rapids, Michigan 49504 and received by December 5, 2024, in order to be eligible to be included in our proxy statement for that meeting.

A shareholder who intends to present a proposal for the 2025 annual meeting of shareholders, other than pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, must provide us with notice of such intention by at least February 18, 2025, or the persons named in the proxy to vote the proxies will have discretionary voting authority at the 2025 annual meeting with respect to any such proposal without discussion of the matter in our proxy statement pursuant to Rule 14a-4(c) under the Exchange Act.

In addition to satisfying the foregoing requirements, to comply with the SEC's universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than Mercantile’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 24, 2025.

OTHER MATTERS

Our Board of Directors does not know of any other matters to be brought before the annual meeting. If other matters are presented upon which a vote may properly be taken, it is the intention of the persons named in the proxy to vote the proxies in accordance with their best judgment.

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