Document

DEF 14A 1 cbsh12-31x2021def14a.htm DEF 14A Document

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 x
			Filed by a Party other than the Registrant o

			Check the appropriate box:


			o Preliminary Proxy Statement
			o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
			x Definitive Proxy Statement
			o Definitive Additional Materials
			o Soliciting Material Pursuant to §240.14a-12

Commerce Bancshares, Inc.

(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):


			x No fee required.
			o Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1)Title of each class of securities to which transaction applies:

2)Aggregate number of securities to which transaction applies:

3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

4)Proposed maximum aggregate value of transaction:

5)Total fee paid:


			o Fee paid previously with preliminary materials.


			o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

1)Amount Previously Paid:

2)Form, Schedule or Registration Statement No.:

3)Filing Party

4)Date Filed:


SEC 1913 (02-02)			Persons who 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.

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March 11, 2022

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of the Shareholders of Commerce Bancshares, Inc. In light of public health concerns regarding the coronavirus (COVID-19) pandemic, recommendations and orders from federal, state and local governmental authorities, and to support the health and well-being of our shareholders, this year's Annual Meeting will be a completely "virtual meeting" of shareholders. The meeting will be held at 9:30 a.m. on April 20, 2022, and you may attend the meeting via the live webcast by visiting https://meetnow.global/MTNK4PL. Shareholders will log in using their control numbers. There is no longer a password required. Please note that there will be no in-person meeting for you to attend.

We are again utilizing the Securities and Exchange Commission rule allowing companies to furnish proxy materials to their shareholders over the Internet. This process allows us to expedite receipt of materials, lower the costs of distribution, and reduce the environmental impact. The accompanying Notice of Annual Meeting of Shareholders and Proxy Statement describe the items to be considered and acted upon by the shareholders.

If you own shares of record, you may vote your shares online, by telephone, or you may request materials by following the instructions on the Notice. Whether or not you plan to attend this meeting via the live webcast, please vote as soon as possible so that your shares can be voted at the meeting in accordance with your instructions. You can revoke your proxy any time before the Annual Meeting and issue a new proxy as you deem appropriate. You will find the procedures to follow if you wish to change or revoke your proxy on page 3 of this Proxy Statement. Your vote is very important. I look forward to you attending the meeting.

Sincerely,

DAVID W. KEMPER

Executive Chairman

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Notice of Annual Meeting of Shareholders of

Commerce Bancshares, Inc.


Date:			April 20, 2022

Time:			9:30 a.m., Central Daylight Time

Place:			In light of public health concerns regarding the coronavirus (COVID-19) pandemic, recommendations and orders from federal, state and local authorities, and to support the health and well-being of our shareholders, this year's Annual Meeting will be conducted virtually. You are entitled to attend and participate in the Annual Meeting only if you were a shareholder of record as of the record date or hold a valid proxy for the meeting. Those shareholders will be able to attend the Annual Meeting virtually, vote their shares and submit questions during the meeting via live audio webcast by visiting: https://meetnow.global/MTNK4PL. To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card; there is no longer a password required. Please note that there will be no in-person meeting for you to attend.

Purposes:			1. To elect five Directors to the 2025 Class for a term of three years;

			2. To ratify the selection of KPMG LLP as the Company's independent registered public accounting firm for 2022;

			3. Advisory approval of the Company's executive compensation (“Say on Pay”); and

			4. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Who Can Vote:			Shareholders at the close of business on February 15, 2022 are entitled to vote at the meeting. If your shares are registered in the name of a bank or brokerage firm, such procedures are described on the voting form sent to you.

How You Can Vote:			You may vote your proxy over the Internet or by telephone; or you may request materials to vote by mail. The Notice of Internet Availability of Materials ("Notice") contains instructions on how to access our Proxy and Annual Report online and has instructions for requesting such materials by mail.

By Authorization of the Board of Directors,

THOMAS J. NOACK

Secretary

March 11, 2022


Important Notice regarding the availability of proxy materials for the Shareholder Meeting to be held on April 20, 2022 The Proxy Statement and Annual Report to Shareholders are available at www.edocumentview.com/CBSH The Proxy Statement and Annual Report to Shareholders are also available on the Company’s website at www.commercebank.com/ir


Your Vote Is Important. Whether You Own One Share or Many, Your Prompt Cooperation in Voting Your Proxy Is Greatly Appreciated.

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TABLE OF CONTENTS


SOLICITATION			1
VOTING INFORMATION			1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			5
COMPOSITION OF THE BOARD, BOARD DIVERSITY AND DIRECTOR QUALIFICATIONS			7
Composition of the Board			7
Board Diversity			7
Director Qualifications			7
PROPOSAL ONE — ELECTION OF THE 202 5 CLASS OF DIRECTORS			8
Nominees for Election to the 202 5 Class of Directors			8
CORPORATE GOVERNANCE			13
Corporate Governance Guidelines			13
Shareholder Communications			14
Director Independence			14
Board Meetings			14
Board Leadership Structure			14
Committees of the Board			1 5
Board Risk Oversight			17
Information Security and Data Privacy			17
Environmental, Social and Governance			18
Shareholder Proposals and Nominations			18
Transactions with Related Persons			19
Delinquent Section 16(a) Reports			20
Director Compensation			20
COMPENSATION DISCUSSION AND ANALYSIS			21
Introduction			21
Our Compensation Philosophy			21
Compensation and Human Resources Committee Processes			21
Elements of Compensation			24
Severance Agreements			28
Stock Ownership Guidelines			28
Impact of Accounting and Tax Treatment			28
Recoupment Policy			28
Other Policies			29
Incentive Compensation Risk Assessment			29
COMPENSATION AND HUMAN RESOURCES COMMITTEE REPORT			29
EXECUTIVE COMPENSATION			30
Summary Compensation Table			30
CEO Pay Ratio			31
Grants of Plan-Based Awards			32
Outstanding Equity Awards at Fiscal Year-End			33
Option Exercises and Stock Vested			34
Pension Benefits			34
Pension Benefits Narrative			35
Nonqualified Deferred Compensation			36
Nonqualified Deferred Compensation Narrative			36
Employment Agreements and Elements of Post-Termination Compensation			37
Potential Payments upon Termination or Change of Control			39
Equity Compensation Plan Information			41
Compensation and Human Resources Committee Interlocks and Insider Participation			41
AUDIT AND RISK COMMITTEE REPORT			42
Pre-approval of Services by the External Independent Registered Public Accounting Firm			43
Fees Paid to KPMG LLP			43

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PROPOSAL TWO - RATIFICATION OF THE SELECTION OF KPMG LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022			43
PROPOSAL THREE -- SAY ON PAY -- ADVISORY APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION			43
OTHER MATTERS			44
ELECTRONIC ACCESS TO PROXY STATEMENT AND ANNUAL REPORT			44

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PROXY STATEMENT

COMMERCE BANCSHARES, INC.

1000 Walnut Street

Kansas City, Missouri 64106

Annual Meeting April 20, 2022

SOLICITATION

This Proxy Statement, the accompanying proxy card and the 2021 Annual Report to Shareholders of Commerce Bancshares, Inc. (the “Company” or “Commerce”), are first being made available to security holders on or about March 11, 2022. The Board of Directors of the Company (the "Board" or “Board of Directors”) is soliciting your proxy to vote your shares at the Annual Meeting of Shareholders (the “Meeting”) on April 20, 2022. The Board is soliciting your proxy to give all shareholders of record the opportunity to vote on matters that will be presented at the Meeting. This Proxy Statement provides you with information on these matters to assist you in voting your shares.

What is a Proxy?

A proxy is your legal designation of another person (the “proxy”) to vote on your behalf. By completing and returning the enclosed proxy card, you are giving David W. Kemper and John W. Kemper, who were appointed by the Board, the authority to vote your shares in the manner you indicate on your proxy card.

Why did I receive more than one proxy card?

You will receive multiple proxy cards if you hold your shares in different ways (e.g., joint tenancy, trusts, custodial accounts) or in multiple accounts. If your shares are held by a broker, banker, trustee or nominee (i.e., in “street name”), you will receive your proxy card or other voting information from your broker, bank, trustee, or nominee, and you will return your proxy card or cards to your broker, bank, trustee or nominee. You should vote on and sign each proxy card you receive.

Only one Notice of Internet Availability of Proxy Materials or set of printed proxy materials was delivered to my address, but there are two or more shareholders at this address. How do I request additional copies of the proxy materials?

Computershare Trust Company, N.A., the entity retained to mail the Notice of Internet Availability of Proxy Materials or printed proxy materials to the Company’s registered owners, has been instructed to deliver only one notice or set of printed proxy materials to multiple security holders sharing an address unless the Company has received contrary instructions from you or one of the other shareholders. The Company will promptly deliver a separate copy of the notice or set of printed proxy materials for this year’s Annual Meeting or for any future meetings to any shareholder upon written or oral request. To make such request, please contact Computershare at 800-317-4445, hearing impaired/TDD at 800-952-9245, or write to Computershare, P.O. Box 505000, Louisville, Kentucky, 40233. Overnight correspondence should be sent to Computershare, 462 South 4th Street, Suite 1600, Louisville, Kentucky, 40202. Similarly, you may contact Computershare through any of these methods if you receive multiple notices or sets of printed proxy materials and would prefer to receive a single copy in the future.

VOTING INFORMATION

Who is qualified to vote?

You are qualified to receive notice of and to vote at the Meeting if you owned shares of common stock, $5.00 par value, of the Company ("Common Stock"), at the close of business on the record date of Tuesday, February 15, 2022.

How many shares of Common Stock may vote at the Meeting?

As of February 15, 2022, there were 121,426,655 shares of Common Stock outstanding and entitled to vote. Each share of Common Stock is entitled to one vote on each matter presented.

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What is the difference between a “shareholder of record” and a “street name” holder?

These terms describe how your shares are held. If your shares are registered directly in your name with Computershare Trust Company, N.A., the Company’s transfer agent, you are a “shareholder of record.” If your shares are held in the name of a broker, bank, trustee or other nominee as a custodian, you are a “street name” holder.

How do I vote my shares?

If you are a “shareholder of record,” you have several choices. You can vote your proxy:

•via the Internet,

•over the telephone, or

•by requesting materials and using the proxy card enclosed with the materials.

Please refer to the specific instructions set forth on the Notice or proxy card. For security reasons, the electronic voting system has been designed to authenticate your identity as a shareholder.

If you hold your shares in “street name,” your broker, bank, trustee or nominee will provide you with materials and instructions for voting your shares.

Can I vote my shares in person at the Meeting?

In light of public health concerns regarding the coronavirus (COVID-19) pandemic, recommendations and orders from federal, state and local authorities, and to support the health and well-being of our shareholders, this year's Annual Meeting will be conducted virtually. You are entitled to attend and participate in the Annual Meeting only if you were a shareholder of record as of the record date or hold a valid proxy for the meeting. Those shareholders will be able to attend the Annual Meeting virtually, vote their shares and submit questions during the Meeting via live audio webcast by visiting: https://meetnow.global/MTNK4PL. To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card; there is no longer a password required. Please note that there will be no in-person meeting for you to attend.

What are the Board’s recommendations on how I should vote my shares?

The Board recommends that you vote your shares as follows:


			Proposal One			FOR the election of all five nominees for the 2025 Class of Directors with terms expiring at the 2025 Annual Meeting of Shareholders.

			Proposal Two			FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm (independent auditors) for the fiscal year ending December 31, 2022.

			Proposal Three			FOR the approval of the Company's executive compensation. (Say on Pay)

What are my choices when voting?


			Proposal One			You may cast your vote in favor of electing the nominees as Directors or withhold your vote on one or more nominees.

			Proposal Two			You may cast your vote in favor of, or against, the proposal, or you may elect to abstain from voting your shares.

			Proposal Three			You may cast your vote in favor of, or against, the proposal, or you may elect to abstain from voting your shares.

Shareholders do not have dissenters' rights of appraisal in connection with these proposals.

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How would my shares be voted if I do not specify how they should be voted?

If you sign and return your proxy card without indicating how you want your shares to be voted, the proxies will vote your shares as follows:


			Proposal One			FOR the election of all five nominees for the 2025 Class of Directors with terms expiring at the 2025 Annual Meeting of Shareholders.

			Proposal Two			FOR the ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm (independent auditors) for the fiscal year ending December 31, 2022.

			Proposal Three			FOR the approval of the Company's executive compensation. (Say on Pay)

How are votes withheld, abstentions and broker non-votes treated?

If your shares are held in street name, unless you provide voting instructions to your broker, bank, trustee, or other nominee, your shares will not be voted on Proposals One, Two or Three. Those unvoted shares are referred to as broker non-votes and will be treated as not entitled to vote and have no effect on the outcome. In the election of Directors, broker non-votes will be considered solely for quorum purposes and are not counted for the election of Directors; withheld votes will be treated as votes against a Director. On Proposal Two (ratification of the appointment of KPMG LLP), your broker, bank, trustee, or other nominee may exercise its discretion and vote on Proposal Two. Abstentions will be treated as votes against Proposal Two. On Proposal Three (approval of the Company's executive compensation), abstentions will be treated as votes against such matters.

Can I change my vote after I have mailed in my proxy card?

If you are a “shareholder of record,” you may revoke your proxy by doing one of the following:

•by sending a written notice of revocation to the Secretary of the Company that is received prior to the Meeting, stating that you revoke your proxy;

•by delivery of a later-dated proxy (including a telephone or Internet vote) and submitting it so that it is received prior to the Meeting in accordance with the instructions included on the proxy card(s); or

•by attending the meeting online at https://meetnow.global/MTNK4PL and voting your shares at the virtual meeting. To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card; there is no longer a password required.

If you hold shares in “street name,” contact your broker, bank, trustee or other nominee for directions on how to change your vote.

What vote is required to approve each proposal?


			Proposal One			requires the affirmative vote of a majority of those shares represented by proxy and entitled to vote thereon at the Meeting.

			Proposal Two			requires the affirmative vote of a majority of those shares represented by proxy and entitled to vote thereon at the Meeting.

			Proposal Three			requires the affirmative vote of a majority of those shares represented by proxy and entitled to vote thereon at the Meeting. The vote on Proposal Three is a non-binding advisory vote.

Who will count the votes?

Representatives from Computershare Trust Company, N.A., the transfer agent, will count the votes and provide the results to the Inspectors of Election who will then tabulate the votes at the Meeting.

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Who pays the cost of a proxy solicitation?

The cost of solicitation of proxies will be borne by the Company. In addition to solicitation by mail, proxies may be solicited personally or by telephone, facsimile transmission or via email by regular employees of the Company. Morrow Sodali LLC, 333 Ludlow Street, 5th Floor, South Tower, Stamford, Connecticut 06902, has been retained by the Company, at an estimated cost of $10,500 plus reasonable out-of-pocket expenses, to aid in the solicitation of proxies; shareholders may contact Morrow Sodali LLC, at 877-787-9239 and brokers and banks may contact Morrow Sodali LLC, at 203-658-9400. Brokerage houses and other custodians, nominees and fiduciaries may be requested to forward soliciting material to their principals and the Company will reimburse them for the expense of doing so. This Proxy Statement and proxy will be first sent to security holders on or about March 11, 2022.

Is this Proxy Statement the only way that proxies are being solicited?

No. As stated above, the Company has retained Morrow Sodali LLC to aid in the solicitation of proxy materials. In addition to mailing these proxy materials, certain directors, officers or employees of the Company may solicit proxies by telephone, facsimile transmission, e-mail or personal contact. They will not be compensated for doing so.

If you have any further questions about voting your shares or attending the Meeting, please call the Company’s Secretary, Thomas J. Noack, at 314-746-7352.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security ownership of certain beneficial owners:

This table includes each person known as of February 15, 2022 to be the beneficial owner of 5% or more of the Company’s outstanding Common Stock. Under applicable Securities and Exchange Commission Rules, beneficial ownership of shares includes shares as to which a person has or shares voting power and/or investment power.


Name and Address of Beneficial Owner	Number of shares (7)		Percent of Class (7)
Commerce Bank	7,728,265	(1)(2)	6.4
1000 Walnut Street Kansas City, Missouri 64106
The Vanguard Group	11,182,475	(3)	9.2
100 Vanguard Blvd. Malvern, PA 19355
BlackRock, Inc.	10,179,897	(4)	8.4
55 East 52nd Street New York, NY 10055
Aristotle Capital Management, LLC	9,804,204	(5)	8.1
11100 Santa Monica Blvd., Suite 1700 Los Angeles, CA 90025
State Street Corporation	6,112,417	(6)	5.0
1 Lincoln Street Boston, MA 02111

_______________________________________

(1)These shares represent the beneficial ownership of the Company’s Common Stock held in various trust capacities. Of those shares Commerce Bank had (i) sole voting power over 2,118,421 shares; (ii) shared voting power over 3,181,362 shares; (iii) sole investment power over 2,814,633 shares; and (iv) shared investment power over 1,412,085 shares.

(2)Those shares for which Commerce Bank has shared voting power include 2,702,941 shares held as Trustee for the Commerce Bancshares, Inc. Participating Investment Plan (the “Plan”), a 401(k) plan established for the benefit of the Company’s employees. Pursuant to the Plan, participants are entitled to direct the Trustee with regard to the voting of each participant’s shares held in the Plan. As to any shares for which no timely directions are received, the Trustee will vote such shares in accordance with the direction of the Company.

(3)This information is based solely on an amended Schedule 13G filed with the Securities and Exchange Commission (the "SEC") on February 9, 2022. Based upon the information contained in the filing, The Vanguard Group has sole voting and dispositive power with respect to 0 and 10,952,591 shares, respectively, shared voting and dispositive power with respect to 76,401 and 229,883 shares, respectively, and beneficially owns 11,182,475 shares of the Company’s Common Stock.

(4)This information is based solely on an amended Schedule 13G filed with the SEC on February 1, 2022. Based upon the information contained in the filing, BlackRock, Inc. has sole voting and dispositive power with respect to 9,563,334 and 10,179,897 shares, respectively, and beneficially owns 10,179,897 shares of the Company’s Common Stock.

(5)This information is based solely on a Schedule 13G filed with the SEC on February 14, 2022. Based upon the information contained in the filing, Aristotle Capital Management, LLC has sole voting and dispositive power with respect to 8,830,152 and 9,804,204 shares, respectively, and beneficially owns, 9,804,204 shares of the Company’s Common Stock.

(6)This information is based solely on a Schedule 13G filed with the SEC on February 10, 2022. Based upon the information contained in the filing, State Street Corporation shared voting and dispositive power with respect to 5,887,451 and 6,112,417 shares, respectively, and beneficially owns, 6,112,417 shares of the Company’s Common Stock.

(7)Ownership as of December 31, 2021.

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Security ownership of management:

The following information pertains to the Common Stock of the Company beneficially owned, directly or indirectly, by all Directors and nominees for Director, the executive officers named in the Summary Compensation Table, and by all Directors, nominees and executive officers of the Company as a group as of December 31, 2021.


Name of Beneficial Owner	Number of shares		Percent of Class
Kevin G. Barth	134,639	(2)	*
Terry D. Bassham	15,426		*
John R. Capps	12,842		*
Karen L. Daniel	7,131		*
Earl H. Devanny, III	21,257		*
June McAllister Fowler	—		*
W. Thomas Grant, II	37,314		*
Robert S. Holmes	43,390	(2)	*
David W. Kemper	1,231,376	(2)(4)	1.3
	109,496	(1)
	233,724	(3)
	44,115	(5)
John W. Kemper	207,438	(2)(5)	1.3
	233,724	(3)
	1,106,856	(4)
Jonathan M. Kemper	1,201,460	(2)	1.3
	116,225	(1)
	233,724	(3)
Charles G. Kim	135,186	(2)	*
Benjamin F. Rassieur, III	44,337		*
Todd R. Schnuck	19,101		*
Andrew C. Taylor	65,858		*
Christine B. Taylor-Broughton	371		*
Kimberly G. Walker	23,698		*
All Directors, nominees and executive officers as a group (including those listed above)	3,940,590	(2)	3.2

_______________________________________

(1)Shared voting power and investment power.

(2)Includes shares which could be acquired within 60 days by exercise of stock appreciation rights (SARs). Shares acquired by exercise of SARs were computed on a net basis, assuming the rights were exercised at a price equal to the fair market value of the Common Stock at December 31, 2021. Shares which could be acquired within 60 days by exercise of SARs are as follows: Messrs. Kevin G. Barth — 7,118; Robert S. Holmes — 4,377; David W. Kemper — 12,625; John W. Kemper — 31,877; Jonathan M. Kemper — 63,089; Charles G. Kim — 15,399; and all Directors, nominees and executive officers as a group (including those listed above) — 156,935.

(3)Owned by a corporation for which Messrs. David W. Kemper, John W. Kemper and Jonathan M. Kemper are shareholders and serve as Directors. Messrs. David W. Kemper, John W. Kemper and Jonathan M. Kemper disclaim beneficial ownership of such shares, other than to the extent of their pecuniary interests.

(4)Includes 1,106,856 shares of which Mr. David W. Kemper is the beneficial owner, but shares voting power with Mr. John W. Kemper.

(5)Includes 44,115 shares of which Mr. John W. Kemper is the beneficial owner, but shares voting power with Mr. David W. Kemper.

* Less than 1%

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COMPOSITION OF THE BOARD, BOARD DIVERSITY AND DIRECTOR QUALIFICATIONS

Composition of the Board

The full Board consists of twelve Directors. The Board is divided into three classes consisting of four Directors per class. The Directors in each class serve a three-year term. The term of each class expires at successive Annual Meetings so that the shareholders elect one class of Directors at each Annual Meeting.

Board Diversity

The Committee on Governance/Directors seeks nominees with a broad diversity of experience, professions, and perspectives, including diversity with respect to race, ethnicity, gender, geography, and areas of expertise. The Committee ensures that women and minority candidates are included in the candidate pool from which non-incumbent Director nominees are selected, and it employs a variety of strategies to help develop a diverse candidate pool.

The table below provides certain highlights of the composition of our Board members as of December 31, 2021. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).


Board Diversity Matrix (As of December 31, 2021)
Total Number of Directors	12
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	1	9	—	2
Part II: Demographic Background
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	—	—	—
Hispanic or Latino/a	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	1	9	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—
Did Not Disclose Demographic Background	2

Director Qualifications

With respect to its recommendations of prospective candidates to the Board, the Committee on Governance/Directors may establish the criteria for Director service and will consider, among other things, the independence of the candidates under applicable standards and such experience and moral character as to create value to the Board, the Company and its shareholders. With respect to incumbent candidates, the Committee on Governance/Directors also considers meeting attendance, meeting participation and ownership of Company stock. The criteria and selection process are not standardized and may vary from time to time. Relevant experience in business, government, the financial industry, cybersecurity, education and other areas are prime measures for any nominee. Additional areas of expertise typically sought by the Committee include, but are not limited to: audit and controls, corporate governance, finance, accounting, major lines of business within the Company, business strategy, specific industries strategically important to the Company, and risk management.

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PROPOSAL ONE

ELECTION OF THE 2025 CLASS OF DIRECTORS

Director Nominees

Effective as of the date of the Meeting, the full Board will consist of thirteen Directors. The Board will be divided into three classes consisting of one class of five Directors (2025 Class) and two classes of four Directors (2023 and 2024 Classes).

The election of five Directors to the 2025 Class will take place at the Meeting. At its meeting on February 4, 2022, the Board approved the recommendation of the Committee on Governance/Directors that five 2025 Class Directors be elected for a three-year term.

If elected, the five 2025 Class Director nominees will serve on the Board until the Annual Meeting in 2025, or until their successors are duly elected and qualified in accordance with the Company’s Bylaws. If any of the five nominees should become unable to accept election, the persons named on the proxy card as proxies may vote for such other person(s) recommended by the Company’s Board of Directors. Management has no reason to believe that any of the five nominees for election named below will be unable to serve.


The Board of Directors Recommends that Shareholders Vote FOR All Five Nominees Listed Below


Nominees For Election to the 2025 Class of Directors:


Earl H. Devanny, III, 70 Retired Chief Executive Officer TractManager Director Since: April 2010						Committees: Compensation and Human Resources Committee (Chairman); Committee on Governance/Directors; and Executive Committee Other Directorships: None Discussion: Mr. Devanny is a former advisory director of Commerce Bank and has extensive experience with regulated industries. Mr. Devanny holds a Bachelor of Arts degree in English from the University of the South (Sewanee). Mr. Devanny served as CEO of TractManager Holdings, LLC from September 2016 to April 2021, until his retirement. Prior to this position, Mr. Devanny served as the President of Healthcare at Nuance Communications from April 2014 to August 2016, as CEO of The TriZetto Group from July 2010 to May 2013, and the President of Cerner Corporation from August 1999 to July 2010. This experience brings a professional insight into the healthcare industry, one of the Company's most important target industries for financial services.

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June McAllister Fowler, 65 Retired, Senior Vice President, Communications, Marketing and Public Affairs of BJC HealthCare Director Since: New Director Nominee						Committees: Compensation and Human Resources Committee (if elected) Other Directorships: None Discussion: Until her retirement in December, 2021, as Senior Vice President of Communications, Marketing and Public Affairs of BJC HealthCare, June McAllister Fowler led internal, external, and public policy communications and government and community relations efforts on behalf of BJC HealthCare, one of the largest nonprofit health care organizations in the United States and one of the largest private employers in the state of Missouri. Ms. Fowler had responsibility for multiple areas, including media relations, executive communications, community benefit, community affairs, government and external relations, health literacy, corporate marketing, creative services, web development, media services and the award‐winning employee online newspaper, BJC Today. Prior to joining BJC, Ms. Fowler was senior director of communications and community affairs for Mallinckrodt. She began her career as an urban planner with St. Louis County government, ultimately serving as director of the Department of Planning. Ms. Fowler earned her master’s degree in urban affairs from Washington University in St. Louis. She completed her bachelor’s degree at the University of Missouri–Columbia. Ms. Fowler has been an active volunteer throughout the region for many years. She currently serves as the board chair of the Cortex Innovation and KIPP St. Louis Public Charter School. She is on the boards of Citizens for Modern Transit (immediate past chair), Lambert St. Louis International Airport and The Muny, one of the oldest outdoor theaters in the United States, where she is board secretary. She also serves as a member of Washington University Public Affairs National Council, and the Health Care Industry Council of the Federal Reserve Bank of St. Louis. Ms. Fowler is a past chair of the Girl Scout Council of Eastern Missouri and the Metropolitan Association for Philanthropy.



Benjamin F. Rassieur, III, 67 President Paulo Products Company Director Since: August 1997						Committees: Audit and Risk Committee (Chairman); Committee on Governance/Directors; and Executive Committee Other Directorships: None Discussion: Mr. Rassieur is President of a successful, private company that performs heat treating and metal finishing at six plants in three states and Mexico. His business provides a leading indicator of general economic conditions. Mr. Rassieur graduated cum laude from Amherst College with a degree in economics. He has been a director of Commerce Bank and has been a long time member of the Company’s Audit and Risk Committee. He is the current Chairman of the Audit and Risk Committee. His community involvement includes being a Director of Concordance Academy.



Todd R. Schnuck, 63 Chairman of the Board and Chief Executive Officer Schnuck Markets, Inc. Director Since: April 2010						Committees: Audit and Risk Committee Other Directorships: None Discussion: Todd R. Schnuck is Chairman and Chief Executive Officer of Schnuck Markets, Inc. (since October 2014; from 2006 to 2014 served as President and Chief Operating Officer; and prior to 2006, served as Chief Financial Officer). As Chairman and Chief Executive Officer of Schnuck Markets, Inc., Mr. Schnuck brings to the Board a unique perspective from a consumer driven industry that faces many of the same issues that the Company faces, such as selection of retail locations, geographic expansion, and customer loyalty. With stores in Missouri, Illinois, Indiana, and Wisconsin, Schnuck Markets, Inc. operates in much of the same footprint as the Company. A graduate of the University of Virginia with an M.B.A. from Cornell, Mr. Schnuck had several years' experience in the investment banking profession before joining the family-owned business and serving as its Chief Financial Officer and Chief Operating Officer prior to his current position. Mr. Schnuck has previously served as an advisory director of Commerce Bank.

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Christine B. Taylor-Broughton, 46 Enterprise Holdings, Inc. Director Since: New Director Nominee						Committees: Committee on Governance/Directors (if elected) Other Directorships: None Discussion: Ms. Taylor-Broughton is President and Chief Executive Officer for Enterprise Holdings, Inc., and is a 20-year veteran of the company. Ms. Taylor-Broughton is the fourth CEO in the company’s history and is part of the third generation of leadership of the privately-owned Enterprise Holdings, preceded by her father, Andy Taylor, and grandfather, Jack Taylor. As President and CEO, Ms. Taylor-Broughton serves on the corporate board of Enterprise Holdings and is one of the highest-ranking women among the world’s largest travel companies and one of the top female CEOs across all industries, based on company revenue. Ms. Taylor-Broughton joined Enterprise Rent-A-Car’s Management Training Program in 2000 and worked at several rental locations before relocating to London in 2006. In 2008, Ms. Taylor-Broughton returned to St. Louis and held various leadership roles within different areas of the business over the next several years. Taylor was named Senior Vice President of North American Operations in 2013, promoted to Executive Vice President and Chief Operating Officer in 2016 and named President in 2019. Ms. Taylor-Broughton was promoted to Chief Executive Officer in January 2020 in addition to retaining her current title of President. Ms. Taylor-Broughton received a bachelor’s degree from Miami University in Oxford, Ohio and an MBA from Washington University in St. Louis. Ms. Taylor-Broughton also serves on the Crawford Group Board of Directors and several local St. Louis boards and committees, including the Crawford Taylor Foundation.

The following information is provided with respect to the Directors who are continuing in office for the respective periods and until their successors are elected and qualified.



2024 Class of Directors

Terry D. Bassham, 61 Retired Chief Executive Officer and President Evergy, Inc. Director Since: February 2013						Committees: Audit and Risk Committee; and Compensation and Human Resources Committee Other Directorships: None Discussion: Prior to his retirement as President & CEO of Evergy, Inc., Mr. Bassham served as Chairman of the Board, President and CEO (since June 2012), of Great Plains Energy, KCP&L, and Greater Missouri Operations. As of January 2021, Mr. Bassham retired from all responsibilities at Evergy. Mr. Bassham originally served as KCP&L Executive Vice President of Finance, Strategic Development and CFO, more recently as Executive Vice President of Utility Operations. He graduated from the University of Texas-Arlington and earned a Juris Doctor degree from St. Mary's University Law School in San Antonio, Texas. Mr. Bassham previously practiced as a regulatory attorney and has served as an advisory director of the Company's banking subsidiary in Kansas City. He is active in the Kansas City area community and during 2021, he serves as a board member of the Kansas City Scholars. Mr. Bassham brings to the Board an inside perspective of the energy industry and experience in a highly regulated industry with a publicly traded company.

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John W. Kemper, 44 President and Chief Executive Officer Commerce Bancshares, Inc. Director Since: September 2015						Committees: Executive Committee Other Directorships: Tower Properties Company (since March 2008) Discussion: John W. Kemper is President and Chief Executive Officer of Commerce Bancshares, Inc., and Chairman and Chief Executive Officer of Commerce Bank. Mr. Kemper joined Commerce in 2007 leading strategy and working across a number of leadership roles within the Company. Prior to his current role, Mr. Kemper served as the Company’s President and Chief Operating Officer. Before joining Commerce, Mr. Kemper worked as an Engagement Manager in the New York and Chicago offices of McKinsey & Co. While at McKinsey, Mr. Kemper led consulting teams on strategy and operations engagements for a number of clients in the financial services and airline industries. Mr. Kemper holds a Bachelor of Arts in history and political science from Stanford University, a Master of Science in economic history from the London School of Economics and an M.B.A. from Northwestern University's Kellogg School of Management. Mr. Kemper is a member of the Visa Senior Client Counsel and serves on the boards of several civic organizations in the St. Louis region. Mr. Kemper is the son of David W. Kemper, Executive Chairman of the Board, and nephew of Jonathan M. Kemper, Chairman Emeritus, Commerce Bank, Kansas City Region.



Jonathan M. Kemper, 68 Chairman Emeritus Commerce Bank, Kansas City Region Director Since: February 1997						Committees: None Other Directorships: Tower Properties Company (Non-Executive Chairman since April 2005) Discussion: Mr. Kemper transitioned from day-to-day responsibilities at the Company in August 2018; he currently oversees the Commerce Bank Trusts and Foundations Office. After graduating from Harvard, Mr. Kemper received an M.B.A. from Harvard University's Graduate School of Business. Prior to working for the Company, Mr. Kemper held various positions in the financial industry in New York and Chicago, including positions with Citicorp, the Federal Reserve Bank of New York, and M. A. Schapiro and Company. Mr. Kemper previously served on the Federal Advisory Council to the Federal Reserve Board from January 2012 to December 2015. Mr. Kemper is involved in several community and business organizations in addition to his responsibilities at Commerce Bank. Mr. Kemper is a recognized community leader in one of the Company's largest markets and also brings expertise in current and emerging technologies to the Board. Mr. Kemper is the brother of David W. Kemper, Executive Chairman of the Board, and the uncle of John W. Kemper, President and Chief Executive Officer of the Company.



Kimberly G. Walker, 63 Retired Chief Investment Officer Washington University in St. Louis Director Since: February 2007						Committees: Audit and Risk Committee Other Directorships: None Discussion: Ms. Walker holds an M.B.A. in finance, with distinction, from the University of Michigan, an M.A. in economics from Washington University in St. Louis, and a B.A. in economics and public administration from Miami University of Ohio, where she graduated magna cum laude. Ms. Walker also holds the Chartered Financial Analyst designation. She has extensive experience in institutional asset management and has knowledge of internal controls and audit committee functions. Ms. Walker served as Chief Investment Officer at Washington University for 10 years through December 31, 2016 and as Executive in Residence at Washington University’s Olin Business School in 2017.

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2023 Class of Directors

John R. Capps, 71 Vice President Weiss Toyota Director Since: January 2000						Committees: Audit and Risk Committee Other Directorships: None Discussion: Mr. Capps, a graduate of Stanford University, created a group of automobile dealership franchises in St. Louis County, Missouri that was acquired by Asbury Automotive Group in 1997. Mr. Capps stayed active in the acquiring company through its initial public offering. In 2011, Mr. Capps left Asbury Automotive Group to operate a new automotive dealership under BCJ Motors, Inc. and Weiss Toyota. Mr. Capps gives the Board a direct insight into a major line of business for the Company. He is active in the community and currently serves as a board member of St. Louis Priory School, the St. Louis Art Museum, KIPP Schools of St. Louis and the Backstoppers, Inc.


Karen L. Daniel, 64 Retired Chief Financial Officer and Executive Director Black & Veatch Director Since: January 2018						Committees: Audit and Risk Committee Other Directorships: Snap-on Tools (since 2005); and Teladoc Health, Inc. (since 2020) Discussion: Ms. Daniel graduated from Northwest Missouri State University and received her master's degree in accounting from the University of Missouri-Kansas City. She spent 11 years with the certified public accounting firm of Peat Marwick (KPMG), rising to Senior Audit Manager. Ms. Daniel joined Black & Veatch in 1992 with the internal audit group, was named Chief Financial Officer in 1999 and joined the Black & Veatch Board of Directors in 2006. In her role as CFO, she was responsible for developing and executing business strategies, and as President of Black & Veatch's Global Finance & Technology Solutions Division, she led the global finance and IT organizations. Ms. Daniel retired from Black & Veatch in July 2018 as Chief Financial Officer (CFO) and Executive Director. Ms. Daniel serves on numerous public and philanthropic boards, including Snap-on Tools, Inc., Teladoc Health, Inc., Giant Eagle and Northwest Missouri State University Foundation, Kansas City Campus for Animal Care, KC Royals Charities, Kauffman Foundation, Phoenix Family and City Year Kansas City. Ms. Daniel also served as Vice-Chair of former President Obama's Advisory Council on Doing Business in Africa.


W. Thomas Grant, II, 71 Director SelectQuote Director Since: June 1983						Committees: Compensation and Human Resources Committee; and Committee on Governance/Directors Other Directorships: SelectQuote (since November 2009) Discussion: Mr. Grant served as President of SelectQuote, an insurance exchange, from 2015-2019, and Director of SelectQuote from 2008 - current. During his tenure with the company, SelectQuote grew from $60 million in revenue to approximately $1 billion today with 3,500 employees. SelectQuote went public in May with a market capital of just under $4 billion. Mr. Grant also served as a Consultant of Quest Diagnostics from 2007-2010, and Chief Executive Officer of LabOne, Inc. from 1995 through the sale of the company to Quest Diagnostics in 2005, where he served as Senior Vice President until 2007. During his tenure, the company grew from a market capitalization of less than $80 million to $934 million at the time of sale. Prior to LabOne, Mr. Grant was the Chairman, President and Chief Executive Officer at Seafield Capital Corporation, a healthcare holding company, from 1990 to1995. From 1986 to 1990, he served as Chief Executive Officer of Business Men's Assurance Company, an insurance company. Mr. Grant received a Bachelor's degree in History from the University of Kansas and a Master's degree in Business Administration from the Wharton School of Finance, University of Pennsylvania, and brings to the Board an insight into the insurance and healthcare industries. Mr. Grant is currently serving on the Board of SelectQuote.

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David W. Kemper, 71 Executive Chairman Commerce Bancshares, Inc. Director Since: February 1982						Committees: Executive Committee (Chairman) Other Directorships: Tower Properties Company (since October 1989); and Post Holdings, Inc. (since September 2015) Discussion: Mr. Kemper became Executive Chairman in August 2018. He previously was the Chairman and Chief Executive Officer of the Company from 1991 to 2018 and was President of the Company from 1982 until February 2013. He graduated cum laude from Harvard College, earned a masters degree in English literature from Oxford University, and an M.B.A. from the Stanford Graduate School of Business. He is the Past President of the Federal Advisory Council to the Federal Reserve Board. Mr. Kemper is active in the St. Louis community, serving as a board member of Washington University in St. Louis, the Missouri Botanical Garden, the Donald Danforth Plant Science Center, and a member of Civic Progress in St. Louis. Mr. Kemper brings to the Board a thorough understanding of the financial industry and an appreciation of the values upon which the Company was founded. Mr. Kemper is the brother of Jonathan M. Kemper, Chairman Emeritus, Commerce Bank, Kansas City Region, and the father of John W. Kemper, President and Chief Executive Officer of the Company.


Other Directors

Andrew C. Taylor, 74 Executive Chairman Enterprise Holdings, Inc. Director Since: February 1990						Committees: Committee on Governance/Directors (Chairman); and Executive Committee Other Directorships: None Discussion: Andrew C. Taylor is Executive Chairman of Enterprise Holdings, Inc. (formerly known as Enterprise Rent-A-Car) (since 2001). Mr. Taylor has led Enterprise Holdings and its operating subsidiaries (collectively “Enterprise”), to the position of the largest rental car provider in the world. He has public company board experience and is actively engaged in community service and philanthropic activities in the St. Louis area. His company is ranked high in customer satisfaction and as a place to work and start a career. Mr. Taylor is also the Executive Chairman of Enterprise Fleet Management, Inc., which leases over 300,000 vehicles to small and medium sized businesses. Managing credit risk is an important component of this business. Mr. Taylor is a graduate of the University of Denver with a degree in business administration.

Mr. Taylor will be retiring from the Board, effective as of the date of the Meeting, at the end of his current term, in accordance with the Company's Bylaws that require a Director who is the "lead director" to retire at the age of 72 or at the end of the current term if he has been asked to continue to serve beyond age 72.

“Other Directorships,” both for nominees and those continuing in office, includes directorships at any public company or registered investment company during the previous five years.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

The Board has adopted guidelines on significant corporate governance matters that, together with the Company’s Code of Ethics and other policies, create the corporate governance standards for the Company. You may view the Corporate Governance Guidelines on the Company’s website at investor.commercebank.com/overview/corporate-governance, where you will also find the Corporate Code of Ethics, the Code of Ethics for Senior Financial Officers, the Supplier Code of Conduct, the Related Party Transaction Policy, and the charters of the Audit and Risk Committee, Committee on Governance/Directors and the Compensation and Human Resources Committee.

Each Director and all executive officers are required to complete annually a Director and Executive Officer Questionnaire (“Questionnaire”). The information contained in the responses to the Questionnaire is used, in part, to determine Director independence and identify material transactions with the Company in which a Director or executive officer may have a direct or indirect material interest.

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Shareholder Communications

The Board has not adopted a formal policy for shareholder communications. We believe a formal policy is unnecessary because the Company has a longstanding practice that shareholders may communicate with the Board or any individual Director through the Secretary of the Company. The Secretary will forward all such communications to the Board or any individual Director. The Secretary will not forward any communications that: (i) constitute commercial advertising of products; (ii) contain offensive language or material; (iii) are not legible or coherent; or (iv) are in the nature of customer complaints that can be handled by Company management.

Director Independence

In accordance with the rules of the NASDAQ Stock Market LLC (“NASDAQ”), the Board, on the recommendation of the Committee on Governance/Directors, determines the independence of each Director and nominee for election as a Director. The Committee on Governance/Directors applies the definition of “independent director” adopted by NASDAQ to information derived from responses to the Questionnaire and from research of the Company’s records provided by the General Counsel, Controller and Auditor of the Company. The Board, on the basis of the recommendation of the Committee on Governance/Directors, determined that the following non-employee Directors of the Company and Director nominees are independent:


Terry D. Bassham						Benjamin F. Rassieur, III
John R. Capps						Todd R. Schnuck
Karen L. Daniel						Andrew C. Taylor
Earl H. Devanny, III						Christine B. Taylor-Broughton*
June McAllister Fowler*						Kimberly G. Walker
W. Thomas Grant, II
______________________________
* Director nominees

Based on the NASDAQ definition of “independent director,” the Board determined that David W. Kemper and John W. Kemper, as employed executive officers of the Company, are not independent, and that Jonathan M. Kemper, as an employed officer of the Company, is not independent.

Board Meetings

The Board held four regularly scheduled meetings in 2021. In conjunction with scheduled meetings, the Board regularly meets in Executive Session without the presence of any non-independent employee Directors. All Directors attended 100% of the Board and Committee meetings on which they served in 2021. Although it is not the policy of the Company that Directors attend the Annual Meeting of Shareholders, all the Directors attended the 2021 Annual Meeting of Shareholders on April 21, 2021.

Board Leadership Structure

Prior to August 1, 2018, David W. Kemper served as both principal executive officer and chairman of the Board. Combining the principal executive officer position with the chairmanship of the board was established in the Company’s original governing documents. Until February 8, 2013, under the Company’s Bylaws, the Chairman of the Board was the chief executive officer of the Company by definition. The incorporators of the Company believed in establishing direct accountability to the shareholders for the chief executive officer who is responsible for the day-to-day decisions that affect the Company’s value. A combined Chairman and Chief Executive Officer avoids potential conflicts between incumbents, establishes accountability, and has the added advantage of eliminating additional compensation expense that would result from separating these two functions. Since its incorporation, the financial strength and esteemed reputation the Company has achieved are a testament to, and a direct result of, the leadership of the two people who have held these combined positions, James M. Kemper, Jr. and current Executive Chairman, David W. Kemper. At its meeting on February 8, 2013, the Board amended the Bylaws to permit, but not require, the separation of the positions of Chairman and Chief Executive Officer. At its meeting on April 2, 2018, the Board determined that, effective on August 1, 2018, the positions of Chairman and Chief Executive Officer would be separated, with David W. Kemper assuming the position of Executive Chairman and John W. Kemper assuming the position of President and Chief Executive Officer.

The Chairman of the Committee on Governance/Directors serves as the Lead Director of the Board. The purpose and effect of this designation is to establish leadership in the Board room during the executive sessions of the non-employee Board members. Non-independent Directors and other officers of the Company are excused for a portion of every Board meeting for the executive sessions of the independent Directors.

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Committees of the Board

The Board has four committees, three of which (the Compensation and Human Resources Committee, the Committee on Governance/Directors, and the Audit and Risk Committee) are standing committees that meet at least once per year. The Compensation and Human Resources Committee, the Committee on Governance/Directors, and the Audit and Risk Committee are comprised solely of non-employee, independent Directors in accordance with NASDAQ listing standards. The members of the Compensation and Human Resources Committee are also "non-employee Directors" under Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and "outside Directors" under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The charter for each committee is available online as noted herein. The charters are also available in print to any shareholder who makes a request of the Secretary of the Company. Pursuant to the Company’s Bylaws, the Board has established an Executive Committee to meet as necessary. The Executive Committee does not have a charter and consists of both independent, non-employee Directors and employee Directors.

The Executive Committee is comprised of David W. Kemper, John W. Kemper, Earl H. Devanny, III, Benjamin F. Rassieur, III, and Andrew C. Taylor. The table below shows the current membership of the standing committees of the Board:

Compensation and Human Resources

Governance/Directors

Audit and Risk

Terry D. Bassham

Earl H. Devanny, III

Terry D. Bassham

Earl H. Devanny, III*

W. Thomas Grant, II

John R. Capps

W. Thomas Grant, II

Benjamin F. Rassieur, III

Karen L. Daniel

Andrew C. Taylor **

Benjamin F. Rassieur, III*

Todd R. Schnuck

Kimberly G. Walker

______________________________

* Committee Chairman

** Committee Chairman and Lead Director

Compensation and Human Resources Committee

The Compensation and Human Resources Committee met once in 2021. The Compensation and Human Resources Committee is comprised solely of independent, non-employee Directors. The charter of the Compensation and Human Resources Committee may be found on the Company’s website at investor.commercebank.com/overview/corporate-governance.

The Compensation and Human Resources Committee’s responsibilities, discussed in detail in the charter, include the following:

•Establishing the Company’s general compensation philosophy and overseeing the development and implementation of executive and senior management compensation programs;

•Reviewing and approving corporate goals and objectives relevant to the compensation of executives and senior management;

•Reviewing the performance of executives and senior management;

•Determining the appropriate compensation levels for executives and senior management;

•Making recommendations to the Board with respect to the Company’s incentive plans and equity-based plans;

•Overseeing regulatory compliance with respect to compensation matters, including overseeing the Company's policies on structuring compensation programs to preserve tax deductibility; and

•Advising and consulting with management on succession planning.

The Compensation and Human Resources Committee’s processes for considering and determining executive compensation are described under the heading “Compensation and Human Resources Committee Processes” in the section entitled "Compensation Discussion and Analysis".

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Committee on Governance/Directors

The Committee on Governance/Directors met once in 2021. The Committee on Governance/Directors is comprised solely of independent, non-employee Directors. The charter of the Committee on Governance/Directors may be found on the Company’s website at investor.commercebank.com/overview/corporate-governance.

The Committee on Governance/Directors’ responsibilities, discussed in detail in the charter, include the following:

•Evaluating proposed candidates for directorship in the Company;

•Evaluating Board performance;

•Establishing the agenda for the annual meeting of shareholders;

•Evaluating the quality of the information and analysis presented to the Board and standing committees;

•Assessing the independence of Directors; and

•Evaluating the performance of the Company relative to corporate governance matters.

The Chairman of the Committee on Governance/Directors serves as the Lead Director of the Board and chairs the Board’s Executive Sessions.

Typically, by the end of January of each year, the Committee on Governance/Directors meets and makes its recommendations to the Board of its proposed slate of Directors for the class of Directors to be elected at the next annual meeting; the date, time and place of the annual meeting; and the matters to be placed on the agenda for the annual meeting. During this year's Committee meeting, with regard to each nominee approved by the Committee for inclusion on the Company's proxy card (other than nominees who are Directors standing for re-election), the nominees were recommended by the Chief Executive Officer.

The Committee will consider individuals for Board membership that are proposed by shareholders in accordance with the provisions of the Company’s Bylaws. A description of those provisions can be found under “Shareholder Proposals and Nominations” below. The Committee on Governance/Directors will consider individuals proposed by shareholders under the same criteria as all other individuals.

Audit and Risk Committee

The Company has a separately designated standing Audit and Risk Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. In 2021, the Audit and Risk Committee had six members and met four times. The Audit and Risk Committee is comprised solely of independent, non-employee Directors, and is chaired by Mr. Rassieur. The Board has determined that Ms. Daniel and Mr. Schnuck are each an “Audit and Risk Committee financial expert” as required by the SEC and Mr. Bassham is an "Audit and Risk Committee risk expert" as required by Regulation YY as adopted by the Federal Reserve Board. As a regulated financial company, risk evaluation is inherent in overseeing the Company’s financial reporting processes, and the Company’s compliance with legal and regulatory requirements. For that reason, the Audit and Risk Committee is the primary vehicle for risk oversight by the Board and reviews reports from legal, audit, compliance, credit review, corporate finance and the Enterprise Risk Management Committee at each of its meetings. The charter of the Audit and Risk Committee may be found on the Company’s website at investor.commercebank.com/overview/corporate-governance.

The Audit and Risk Committee’s responsibilities, discussed in detail in the charter, include monitoring and oversight over:

•The internal control over financial reporting of the Company and the audits of its financial statements;

•The independent auditor's qualification and independence;

•The performance of the Company's internal audit function and independent auditors;

•The Internal Audit Director's impartiality and independence;

•Compliance by the Company with legal and regulatory requirements;

•The Company's risk management governance structure and risk management framework, including the strategies, policies, and processes established by management to identify, assess, measure, and manage major risks facing the Company;

•The performance of the Company's internal credit review function; and

•The Company's progress on Environmental, Social and Governance (ESG) initiatives and activities.

Additional information on the activities of the Audit and Risk Committee is provided in the section entitled "Audit and Risk Committee Report".

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Board Risk Oversight

The Board is actively engaged in overseeing the Company’s risk management efforts. The Company and Commerce Bank are subject to examination by the Federal Reserve Bank (“Federal Reserve”), the Missouri Division of Finance ("MDOF") and the Consumer Financial Protection Bureau (“CFPB”). Examinations focus on and evaluate compliance with applicable laws and regulations as well as assessing how the Company, Commerce Bank and their subsidiaries manage credit, market (interest rate), liquidity, operational, legal, compliance, strategic and reputational risks.

To manage these risks, the Company's management has adopted a Risk Management Governance Structure including, without limitation, the following risk management committees: Enterprise Risk Management Committee, Asset Liability Committee, Consumer Risk Committee, Credit Policy Committee, Operational Risk Committee, Volcker Committee, Commerce Trust Company Risk Management Committee, and Information Security Strategy Board. These committees routinely report on risk issues and provide updates to the Audit and Risk Committee.

Additionally, the Board and the Audit and Risk Committee regularly review Reports of Examination from the Federal Reserve, MDOF and CFPB. The Audit and Risk Committee periodically meets with officers and examiners of the Federal Reserve and MDOF. Regular presentations are made to the Board and the Audit and Risk Committee by the Chief Financial Officer, the Chief Credit Officer, and the Chief Risk Officer and include matters noted in the Reports of Examination.

Further, the Audit and Risk Committee annually reviews and approves a Risk Appetite Statement presented by management setting forth the Company’s general appetite for credit, liquidity, market, operational, legal, compliance, strategic and reputational risks. The Audit and Risk Committee monitors exposure to and management of these risks by reviewing results of key risk indicators and related risk metrics on a quarterly basis.

Information Security and Data Privacy

The Company has adopted comprehensive information security and data privacy policies, aligned with the National Institute of Standards and Technology (“NIST”) and International Organization for Standardization (“ISO”) standards, and regularly benchmarks its information security program against reputable industry assessments. The Company’s security governance framework includes a dedicated information security program that reports regularly to the Information Security Strategy Board, the Operational Risk Committee, the Enterprise Risk Management Committee and the Board’s Audit and Risk Committee.

The Company protects customer information in compliance with Federal Reserve SR Letter 01-15 in support of the Gramm-Leach-Bliley Act (GLBA) section 501(b), section 216 of the Fair and Accurate Credit Transaction Act of 2003 (FACT Act), Health Insurance Portability and Accountability Act (HIPAA), and the Payment Card Industry Data Security Standards (PCI DSS). The Company's information security program balances security risks with business goals and provides appropriate protections for the confidentiality, integrity and availability of bank and customer information. The program is audited twice each year by Company internal auditors and annually by federal and state regulators. Independent third-party penetration testing is conducted quarterly against external network and high risk applications. The Company maintains insurance commensurate with assessed levels of security and privacy risk.

All employees and contractors are required to take regular training on information security requirements and must acknowledge policies and standards annually. In addition, the Company conducts quarterly phishing campaigns to test and educate all employees on how to spot phishing attacks and to measure the effectiveness of our training program. The Commerce Privacy Statement, found on the Company's website at www.commercebank.com/security-center/privacy-statement, serves as a standard for all employees for collection, use, retention and security of nonpublic personal information and provides detail on how customers may limit use of their information.

Finally, applications, databases, information technology infrastructure, service providers and business units that handle sensitive information are evaluated annually as part of the information security risk assessment. New applications, infrastructure components and service providers are also assessed prior to integration with existing systems. The Company and Commerce Bank contractually require all service providers, contractors, sub-contractors, or other third parties that process, transmit, access, or store bank or customer data to comply with all relevant Company policies (including, but not limited to, retention, encryption, transmission, and application security policies) and safeguards and to be in compliance with all applicable laws.

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Environmental, Social and Governance

The Company is committed to our environmental, social and governance (“ESG”) practices, with the Audit and Risk Committee assuming primary oversight responsibility for our ESG related efforts. In 2021, the Company formed an ESG Management Committee, along with two cross-functional ESG working groups, and engaged a third-party consultant as part of an overall effort to enhance our ESG program and reporting.

We believe ESG standards and our business practices are intrinsically aligned with our corporate core values: We have a long-term view; We collaborate as one team; We act with integrity; We are customer focused; and We strive for excellence. We recognize the importance for our stakeholders to know and understand our efforts and have included several highlights below to demonstrate our ongoing commitments and progress in these areas.

Environmental

Though our business model does not include traditional production or distribution processes, we recognize that our operations and employees do impact the environment, and we’ve taken steps to minimize that effect and promote sustainable business practices for the long term. In addition to reducing energy demand in our corporate facilities by curtailing usage during peak hours, we have installed solar panels in over 10% of our branches, continue to promote recycling, and installed video conferencing throughout our buildings and conference rooms to reduce the need for travel. Among our branch network and within our corporate buildings, we continue to look for ways to be good stewards of the environment.

Social

We recognize the importance of engaging our employees and our communities to build strong relationships and ensure long-term success. We demonstrate our customer promise – helping you focus on what matters most – by collaborating with our customers to develop products and solutions that fit their needs. We demonstrate our commitment to excellence by striving to be an employer of choice.

•Employee Engagement – We believe our strong internal culture is one of the key drivers of our long-term success. We strive for excellence in our recruiting and retention of top talent in the markets we serve. The Company promotes diversity, equity and inclusion amongst our employees because we believe that diversity, equity and inclusion leads to building stronger teams and achieving higher levels of collaboration. We sponsor four Employee Resource Groups (RISE – empowering women, EMERGE – connecting young professionals, VIBE – valuing multi-cultural perspective, and PRIDE – engaging the LGBTQIA+ community) that give employees opportunities to connect with each other, learn about each other, and encourage diverse perspectives. Additionally, we offer an array of competitive benefits, educational assistance, and flexible work schedules to promote financial, emotional, and physical well-being.

•Community Engagement – We build long-term relationships in the communities in which we operate. We build these relationships over time and in tangible ways such as through employee volunteerism that the Company formally encourages by providing paid time off for our employees who wish to participate. Additionally, we take care to ensure our lending products and solutions meet the needs of the community, our marketing practices support a clear and informative approach to advertising, and our employees are motivated to do what’s right for our customers. Finally, we offer affordable options for home ownership through various programs for our customers. We are proud of the Outstanding CRA rating the Company has received for 25 years for our efforts to support low and moderate income families.

Governance

The Company has developed strong governance practices, including many of the policies, standards and procedures referenced above, with the goal to act with integrity and to ensure that our decisions and practices comply with legal and regulatory requirements.

Shareholder Proposals and Nominations

If a shareholder intends to present a proposal for consideration at the Company’s annual meeting to be held on April 19, 2023 and have the proposal included in the Company's proxy statement, the proposal must be in proper form pursuant to SEC Rule 14a-8 and must be received by the Secretary of the Company at its principal offices no later than November 11, 2022.

Shareholder nominations for Directors and shareholder proposals that are not presented pursuant to SEC Rule 14a-8 must comply with the Company’s Bylaws. In order to be considered, shareholders must provide timely notice to the Secretary. To be timely, the notices for the April 19, 2023 annual meeting must be received by the Secretary no later than February 18, 2023 nor before January 19, 2023. The notice must contain the name and record address of the shareholder, as well as the class or series and the number of shares of Company capital stock owned beneficially or of record by the shareholder.

Any notice proposing to nominate a Director must also provide a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to

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which the nomination(s) or shareholder proposal is made; and a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the person named in the notice. The notice must also set forth as to each person the shareholder proposes to nominate for election as a Director the name, age, business and residence address of the nominee; the principal occupation or employment of the nominee; the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the nominee; and any other information relating to the nominee or the nominating shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Exchange Act. Lastly, the notice must also be accompanied by a written consent of each proposed nominee to be named a nominee and to serve as a Director if elected.

If the notice is for a shareholder proposal, the notice must also set forth a brief description of the business to be brought before the meeting, the reasons for conducting such business at the meeting, any material interest of such shareholder in such business, and a representation that the shareholder intends to appear in person or by proxy at the Annual Meeting to bring the business before the meeting.

Transactions with Related Persons

The Board of Directors has adopted a Related Party Transaction Policy (“Policy”). The purpose of the Policy is to establish procedures for the identification and approval, if necessary, of transactions between the Company and any Director, nominee for Director, beneficial owner of more than 5% of the Company’s securities, executive officer or any person or entity deemed related to any of the foregoing (“Related Party”) that are material or not in the ordinary course of business.

The Policy may be found on the Company’s website at investor.commercebank.com/overview/corporate-governance. The Policy is intended to identify all transactions with Related Parties where payments are made by the Company to or for the direct or indirect benefit of a Related Party. The procedures, discussed in detail in the Policy, include the following:

•The collection and maintenance of a Related Party list derived from the records of the Company and the responses to an annual Questionnaire completed by Directors and executive officers;

•The distribution of the list to the appropriate officers and employees of the Company so that transactions with Related Parties may be identified;

•A quarterly comparison of the list to payments made by the Company; and

•Preparation and delivery of a report to the General Counsel of the Company for review, analysis and an initial determination of whether the transaction is material and falls within the Policy.

The Policy provides guidance for determination of materiality of Related Party transactions. The amount of the transaction, the application of any exemption or exclusion, the provisions of the Company’s Corporate Code of Ethics, and general principles of corporate transparency may be considered in evaluating materiality. The Policy deems certain transactions exempt and pre-approved, including compensation paid for service as a Director or executive officer, transactions involving depositary or similar payment services, transactions that are the result of a competitive bidding process, and transactions arising solely from the ownership of the Company’s equity securities. The Policy provides further guidance to the Board or Audit and Risk Committee in regard to the approval or ratification of the transaction and prohibits the participation by a Related Party in the discussion, approval or ratification of a transaction.

Pursuant to the application of the Policy, the following transactions were identified:

•It was determined that Messrs. David W. Kemper, John W. Kemper and Jonathan M. Kemper are shareholders and Directors of Tower Properties Company (“Tower”), and Mr. Jonathan M. Kemper is the Non-Executive Chairman of the Board of Tower. Tower is primarily engaged in the business of owning, developing, leasing and managing real property. At December 31, 2021, Messrs. David W. Kemper, John W. Kemper and Jonathan M. Kemper together with members of their immediate families beneficially own approximately 66% of Tower. During 2021, the Company, or its subsidiaries, paid Tower $31,000 for leasing agent fees, $71,000 for operation of parking garages, $143,000 for property construction management fees, $84,000 for project consulting fees and $2,046,000 for building management fees. The Company has entered into contracts with Tower effective January 1, 2018 and December 4, 2020 for management services and consulting services, respectively. The contracts under which Tower has been retained have been disclosed to the Audit and Risk Committee and the Board of Directors.

•During 2021, Commerce Bank paid a salary and other compensation of $297,698 to Jonathan M. Kemper, Chairman Emeritus, Commerce Bank, Kansas City Region, brother of David W. Kemper, and uncle of John W. Kemper.

•During 2021, Commerce Bank paid a salary and other compensation of $216,897 to Charlotte Kemper Black, Foundation Director, daughter of Jonathan M. Kemper, niece of David W. Kemper, and cousin of John W. Kemper.

•Various Related Parties have deposit accounts with Commerce Bank and some Related Parties also have a direct or indirect interest in other transactions with Commerce Bank, including loans in the ordinary course of business, all of

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which were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with persons not related to the Company, and did not involve more than normal risk of collectability or present other unfavorable features. Additionally, David W. Kemper purchased Missouri state tax credits from Commerce Bank in a face amount of $810,000 for a price of 95.25% of par, or $771,525; John W. Kemper purchased Missouri state tax credits from Commerce Bank in a face amount of $305,000 for a price of 95.25% of par, or $290,513; Jonathan M. Kemper purchased Missouri state tax credits from Commerce Bank in a face amount of $650,000 for a price of 95.25% of par, or $619,125. The terms of the sales and the amounts paid by Messrs. David W. Kemper, John W. Kemper, and Jonathan M. Kemper were the same as the terms of the sales and the amounts paid for similar tax credits by persons not related to the Company.

Delinquent Section 16(a) Reports

Pursuant to Section 16 of the Exchange Act, the Company’s Directors and certain executive officers are required to report, within specified due dates, their initial ownership of the Company’s Common Stock and all subsequent acquisitions, dispositions or other transfers of interest in such securities, if and to the extent reportable events occur which require reporting by such due dates. The Company is required to identify in its proxy statement whether it has knowledge that any person required to file such a report may have failed to do so in a timely manner. Based on a review, all of the Company’s Directors and all executive officers subject to the reporting requirements satisfied such requirements in full, except for the following delinquencies which were filed on either Form 3, Form 4 or Form 5: for David W. Kemper, a delinquent Form 4 was filed to report a transfer of shares out of John W. Kemper's trust account. This transaction was also reportable to David W. Kemper.

Director Compensation

An employee of the Company or a subsidiary of the Company receives no additional compensation for serving as a Director. Non-employee Directors of the Company are required to participate in the Stock Purchase Plan for Non-Employee Directors (the “Director Plan”). Under the Director Plan, compensation payable to a non-employee Director is credited to an account in the name of such Director as earned and the Company contributes to the account of such Director an additional amount equal to 25% of the compensation credited to the Director’s account as additional consideration for the Director's participation in the Director Plan. As of the last business day of each month, the cash balance in a Director's account is converted to whole shares of Common Stock of the Company. Prior to 2022, the conversion was based on the last sale price of the Company’s Common Stock as reported by the National Market System of NASDAQ on such date, or if no sale price is reported on such date, the next preceding day for which a sale price is reported. With the amendment and restatement of the Director Plan at the end of 2021, the conversion will now be based on the consolidated closing bid price as reported by NASDAQ. Any balance remaining in a Director’s account is carried forward for investment in the next month.

As soon as practicable after the end of each year, the Company issues each non-employee Director the number of shares of Company Common Stock credited to the Director’s account and any cash balance in the account is carried forward for investment in the next year. If a Director dies or ceases to be a non-employee Director during the year, the Company will distribute to the Director (or his or her beneficiary), as soon as reasonably practicable, the number of shares of Company Common Stock credited to the Director’s account, along with any cash credited to the account. A participant in the Director Plan has no right to vote or receive cash dividends or any other rights as a shareholder with respect to shares credited to the participant’s account until such shares are actually issued.

Each non-employee Director of the Company is paid the following amounts, as applicable: an annual retainer of $20,000 (paid on a quarterly basis); a fee of $7,500 for attendance (in person or virtually) at each meeting of the Board of Directors; a fee of $1,000 for attendance (in person or virtually) at each meeting of a committee of which the Director is a member; at the end of each calendar year, an additional annual fee of $50,000; and an annual fee of $10,000 for service as a committee chair. Changes to Directors’ compensation are initiated by the Company's CEO and presented to the Compensation and Human Resources Committee. The Chairman of the Compensation and Human Resources Committee then presents any changes to the full Board of Directors for its approval.

The Company has a stock ownership requirement of $300,000 for non-employee Directors. All standing non-employee Directors as of December 31, 2021 have met this requirement. New Directors will have 5 years from the election date to meet the stock ownership requirement.

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Compensation earned during 2021 by the non-employee Directors of the Company for their service as Directors is listed in the table below.


	Fees Earned or Paid in Cash (1)		Stock Awards		Option Awards		Non-Equity Incentive Plan Compensation		Change in Pension Value and NQDC Earnings		All Other Compensation		Total
Name	$		$		$		$		$		$		$
Terry D. Bassham	$	105,000	$	—	$	—	$	—	$	—	$	—	$	105,000
John R. Capps	104,000		—		—		—		—		—		104,000
Karen L. Daniel	104,000		—		—		—		—		—		104,000
Earl H. Devanny, III	112,000		—		—		—		—		—		112,000
W. Thomas Grant, II	102,000		—		—		—		—		—		102,000
Benjamin F. Rassieur, III	115,000		—		—		—		—		—		115,000
Todd R. Schnuck	104,000		—		—		—		—		—		104,000
Andrew C. Taylor	111,000		—		—		—		—		—		111,000
Kimberly G. Walker	104,000		—		—		—		—		—		104,000

_______________________________________

(1)Fees earned were credited to the Director Plan and converted to shares of the Company’s Common Stock during 2021. In January and February 2022, the following number of shares were issued to the non-employee Directors: Mr. Bassham — 1,519 shares; Mr. Capps — 1,504 shares; Ms. Daniel — 1,505 shares; Mr. Devanny — 1,619 shares; Mr. Grant — 1,477 shares; Mr. Rassieur — 1,660 shares; Mr. Schnuck — 1,505 shares; Mr. Taylor — 1,604 shares; and Ms. Walker — 1,504 shares.

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This section provides information regarding the compensation programs for our chief executive officer ("CEO"), chief financial officer (“CFO”), and three most highly compensated other executives (collectively, our "Named Executive Officers" or “NEOs”), including the overall objectives of our compensation program and what it is designed to reward, each element of compensation that we provide, and an explanation of the reasons for the compensation decisions we have made regarding these individuals with respect to 2021. Our NEOs for 2021 were as follows:


Name						Title
John W. Kemper						President and CEO
Charles G. Kim						Executive Vice President and CFO
Kevin G. Barth						Executive Vice President
Robert S. Holmes						Executive Vice President
David W. Kemper						Executive Chairman

Our Compensation Philosophy

The Company's compensation philosophy is to provide a total compensation program that is competitive with the market for bank holding companies in geographic proximity, of a comparable asset size, or those financial institutions considered to be a direct competitor for any of our lines of business in order to attract and retain top performers. In doing so we strive to:

•Align interests of our executive officers with the long-term interests of our shareholders;

•Provide reward systems that are credible, consistent with our core values and appropriately structured so as not to encourage undue risk; and

•Reward individuals for results rather than on the basis of seniority, tenure, or other entitlement.

Compensation and Human Resources Committee Processes

Our Compensation and Human Resources Committee (the “Committee”) meets annually to review the performance of the Executive Management Committee (the “EMC”) and the total compensation program for this group of individuals. The NEOs, except David Kemper, are all part of the EMC. During this review process, the Committee considers a number of factors and data to determine appropriate compensation for the NEOs. The Committee noted that the advisory "Say on Pay" shareholder vote for 2021 compensation resulted in 94% approval. The Committee considered the result of the "Say on Pay" vote and determined that the principles on which the Committee's compensation decisions are based are appropriate.

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Benchmarks

For all NEOs, the Committee reviewed market survey data compiled by Willis Towers Watson, an outside consulting firm retained by the Committee. The market survey utilized in the compilation was the Willis Towers Watson 2021 Financial Services Executive Compensation Survey (the "Willis Towers Watson Survey"). In order to get the best data match possible, three groupings of data from that survey were used: data for the total sample of financial services companies participating in the survey; data for financial services companies with asset size from $15-$50 billion; and data for a Commercial Bank grouping including those financial institutions considered to be peer banks (the "NEO Peer Group"). Banks included in the NEO Peer Group were determined by first selecting those banks included in the 19 peer banks used in the return on equity element of the Company's Executive Incentive Compensation Plan ("EICP") that participated in the Willis Towers Watson Survey. Since not all 19 peer banks participated in the Willis Towers Watson Survey, to that reduced group of participants we added banks similar to our asset size to ensure a sufficient sample to obtain data for all of the benchmark jobs. We feel the broader view of data helps us determine the most appropriate benchmark data when attempting to reflect the diverse responsibilities of our NEO's. The final grouping - the NEO Peer Group - consisted of the following 19 companies:

Associated Banc-Corp

BancorpSouth Bank

Bank OZK

BOK Financial Corporation

Cullen/Frost Bankers, Inc.

F.N.B. Corporation

First Midwest Bancorp

Fulton Financial Corporation

Hancock Whitney Corporation

Old National Bancorp

Pinnacle Financial Partners, Inc.

Simmons First National Corporation

South State Corporation

UMB Financial Corporation

Umpqua Bank

United Bankshares, Inc.

Valley National Bancorp

Webster Financial Corporation

Wintrust Financial Corporation

The companies included in the NEO Peer Group may change from year to year as it is driven by the companies that participate in the Willis Towers Watson Survey for the particular positions and year.

Each NEO's responsibilities were individually compared to job descriptions in the Willis Towers Watson Survey in order to best align roles with compensation levels of comparable executive officer positions for the companies included in the Willis Towers Watson Survey. The input of Willis Towers Watson was limited to ensuring a sufficient sample size for the NEO Peer Group to provide data for each of the positions previously matched by Willis Towers Watson. The Committee did not use any other outside compensation consultants in determining or recommending any amount or form of compensation for our NEOs. For 2021, the Company paid Willis Towers Watson approximately $111,000 for Willis Towers Watson survey services, and other compensation and benefits related consulting projects.

Performance Reviews

Each of our executive officers receives an annual rating for previous year performance and sets goals for the upcoming year. Performance conversations are then conducted with each of the NEOs other than the CEO. Results, performance, and recommendations as to their compensation are presented to the Committee. The Committee evaluates these recommendations and conducts the performance review of our CEO. The performance review of our CEO is based on the financial performance of the Company, growth in the human capital of the organization, and the Company’s overall management of risk. The Committee discusses the CEO's performance review and determines the final rating without the CEO being present.

All NEOs are evaluated against the measurements within our annual bonus formula, which include net income, revenue and relative performance to peers. The targets and results of the measurements are based on corporate-wide results. All NEOs have the same corporate goals and all are measured against the final results. In addition to the corporate-wide measures, each executive is evaluated on his individual areas of responsibility and against the objectives outlined in his performance review. The individual performance and contribution criteria may include:

•overall job knowledge and technical skills;

•alignment of personal behavior with our company core values;

•achievement of financial metrics related to a specific line of business;

•achievement of defined operational goals;

•contribution to special projects;

•management of risk;

•development of people within their respective team;

•effective communication practices;

•ability to solve problems effectively; and

•assumption of new responsibilities.

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Setting Compensation

Based on the performance evaluations, an analysis of total compensation against the benchmark data, and a review of the Company's goals and objectives, the Committee approves and reports to the Board of Directors its decisions regarding base salary changes (effective March 20th in 2021), annual cash incentive compensation targets and long-term equity awards for our executive officers for the current year, as well as cash incentive compensation earned for the prior year and vesting in prior long-term equity awards. The Committee's decisions generally occur during January and the Committee presents their approvals to the Board of Directors at the next regularly scheduled meeting, which generally occurs in late January or early February. All NEO equity award agreements were granted as of February 2, 2021, the date the Committee approved the awards, using the fair market value of the Company's stock (restricted stock awards) or Black Scholes valuation (stock appreciation rights) at the close of that business day.

The process includes a review by the CEO of the benchmark data for the other NEOs prior to the Committee meeting. The outside benchmark data for the other NEOs are reviewed to assess current market data on base salary, annual cash incentives and long-term equity awards. The benchmark data is compared to each of the other NEO's current compensation as detailed on the tally sheets described below. The CEO details the compensation data and discusses the reasons for his recommendations for the other NEOs during the Committee meeting. A Committee member presents the Committee’s approvals for executive officer compensation to the full Board of Directors.

There is no policy for the allocation between cash and non-cash or annual and long-term compensation. Instead, the Committee determines the allocation of each component of compensation based on the role of each executive officer in the Company, performance evaluations, the benchmark data, and knowledge of our local markets. Generally, the percentage of compensation tied to the annual cash incentive and long-term equity awards increases as the responsibilities of the executive officer and his or her ability to affect Company performance increase.

In setting the 2021 salary and 2021 bonus opportunity, and awarding the Current Year Stock (comprised of "Current Year Restricted Stock" and/or "Current Year SARs" as defined below) award in 2021 and the Long-Term Restricted Stock (defined below) award in 2021, the Committee compared the annualized rate of salary in effect on December 31, 2020, annual cash incentive paid in 2020, and long-term equity awards made in 2020 (based on date of grant value) individually and in the aggregate (the "Benchmarked Compensation") to the average compensation level of the benchmark data for the applicable position. Elements of compensation are not designed to be at the same benchmark data percentile for each NEO and are not intended to equal any particular percentile of the applicable benchmark data. The Committee then considers each individual’s performance, experience, specific job requirements and the contribution of that job to the Company’s success, and then makes subjective adjustments as appropriate in setting salary for the current year, the Current Year Stock award, the bonus opportunity for the current year (payable the following year) and the next formulation for making Long-Term Restricted Stock awards. For all NEOs, the Willis Towers Watson Survey was used as a comparison for each component of compensation and for the aggregate of all such components. The Committee determined that all compensation components, both at the individual and aggregate levels, were appropriate compared to the applicable benchmark data for each respective NEO's position except David Kemper whose annual stock grant value was decreased to $500,000 from $750,000 based on his role as Executive Chairman and John Kemper whose annual stock grant value was increased based on the benchmark data. Realized and unrealized equity compensation gains and vesting of prior equity grants are not considered by the Committee when establishing compensation. The factors used to determine base salary, annual cash incentives, and long-term equity awards are discussed in more detail under the heading “Elements of Compensation” below.

The Committee reviewed tally sheets during the process to set compensation for our executive officers for 2021. The tally sheets were included in the packet of data that was sent to the Committee for review prior to the meeting and used during the meeting for discussion purposes. The tally sheets were used as tools for review of total compensation comparison of the NEOs and included information such as:

•Base salary for 2019 and 2020;

•Bonus information for 2019 and 2020;

•Restricted Stock awards with specific grant date value for 2019 and 2020;

•Stock Appreciation Rights information with specific grant date value for 2019 and 2020;

•Change in pension value; and

•Details on all other compensation by category.

If our financial statements were to be restated or adjusted in a manner that would have reduced the size of a prior incentive award, the Committee will consider that information when determining future compensation.

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Elements of Compensation

As shown in the chart below, we have four main elements of Compensation:

The percentage ranges in the chart above are based on the total compensation values for the last three years and do not necessarily correspond to, and are not a substitute for, the values disclosed in the Summary Compensation Table and supplemental tables.

Base Salary

Base salary is a fixed element of annual compensation on which our executive officers may rely. Base salary reflects the external market value of a particular position based on the experiences and qualifications that an individual brings to the position. Base salary levels for our NEOs were compared against the median base salary of the benchmark data to determine whether salary levels are appropriate. Factors included in the comparison of base salaries of our NEOs to those in the benchmark data included the relative size of companies, financial performance (both currently and over a period of time), and the experience and responsibility of the individuals. The Committee does not assign a weight to any particular factor.

Annual Cash Incentive Compensation

In furtherance of the Company's pay for performance philosophy, the EICP is a short-term cash incentive plan to reward our executive officers for the achievement of Company annual performance goals. There were no changes made to the factors included in the formula for all the calculation of incentives for the NEOs. The factors considered by the Committee were net income, revenue, and return on equity.

Our NEOs are eligible to receive an annual cash incentive equal to a percentage of their base salary. The target annual cash incentive percentage for each NEO is compared each year by the Committee to the target percentage level of the annual cash incentive component of the benchmark data mentioned previously for the applicable NEO. The Committee then determines the appropriateness of the target annual cash incentive percentages based on individual performance, experience, specific job requirements and contribution of the job to the Company's success to arrive at a target percentage. The target annual cash incentive percentages for 2021 were the same as they were in 2020 for all NEOs.

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The target annual cash incentives as percentages of base salary for our NEOs in 2021 were as follows:


Name			Target Percentage
John W. Kemper			100%
Charles G. Kim			65%
Kevin G. Barth			65%
Robert S. Holmes			60%
David W. Kemper			50%

In determining the amount of annual cash incentives to be paid under the EICP in 2022 for 2021 performance, the Committee weighted the components of the Company Performance Factor as follows:

•60% based on actual net income of $531 million with the payout percent determined on a scale which targeted $359 million as the 100% payout level. For the net income component there is a 1% decrease in payment for each $1 million below target down to $334 million and a 1.3% decrease in payment for each $1 million below $334 million down to $297 million. There is no net income component allocation for net income below $296 million. For net income exceeding the 100% level there is a 2.5% increase for each $1 million above $359 million up to $371 million; a 5% increase for each $1 million above $371 million up to $383 million; and a 10% increase above $383 million up to a maximum of $384 million;

•20% based on actual revenue results of $1.43 billion with the payout percent on a scale of 0% to 120%, with achievement of target revenue of $1.33 billion resulting in 100% payout. The payout percent increases/decreases by 5% for every 1% that actual revenue results fall above or below target; and

•20% based on a comparison of return on equity (ROE) measured against 19 pre-established peer banks. If the Company's ROE (performance assessed using end of 3Q data) is at or above the 75th percentile, 100% is credited for this factor; if the Company's ROE is above the 50th percentile but below the 75th percentile, 75% is credited for this factor; if the Company's ROE is above the 25th percentile but below the 50th percentile, 50% is credited for this factor; and if the Company's ROE is below the 25th percentile, 25% is credited for this factor. For 2021, the Company's ROE exceeded the 75th percentile compared to the peer banks.

The 19 peer banks for the return on equity element were:

Associated Banc-Corp

BancorpSouth Bank

Bank OZK

BOK Financial Corporation

Cullen/Frost Bankers, Inc.

F.N.B. Corporation

First Midwest Bancorp

Fulton Financial Corporation

Hancock Whitney Corporation

Old National Bancorp

Pinnacle Financial Partners, Inc.

Simmons First National Corporation

South State Corporation

UMB Financial Corporation

Umpqua Holdings Corporation

United Bankshares Inc.

Valley National Bancorp

Webster Financial Corporation

Wintrust Financial Corporation

For purposes of the EICP:

•Net income means the amount of net income available to common shareholders of the Company for the year as set forth in our Income Statement;

•Revenue means the Company’s net interest income and non-interest income (including securities gains/losses);

•Return on Equity means year to date net income divided by stockholders equity as reported by S&P Global Market Intelligence; and

•The Committee retains discretion to reduce any annual cash incentive prior to payment.

All NEOs except David Kemper are measured 100% on the Company Performance Factor, and for 2021 performance, the calculated payout was 164% of target. As Executive Chairman, David Kemper receives a set amount as an annual bonus without considering the Company Performance Factor.

Long-Term Equity Awards

Stock appreciation rights (“SARs”) and restricted stock grants have been awarded in two separate ways described below to provide our executive officers with long-term equity awards that more closely align their interests with the interests of our shareholders, and for retention purposes. The 2005 Equity Incentive Plan, which was approved at the 2005 Annual Meeting of Shareholders and reapproved at the 2017 Annual Meeting of Shareholders, provides for the issuance of equity-based awards, including stock options, SARs, restricted stock awards, restricted stock units, performance shares, and performance units. In

SEC Form DEF 14A filed by Commerce Bancshares Inc.