German American Bancorp (GABC)

Base Salary

        The Corporation attempts to provide the executive officers with a base salary that is competitive with the salaries offered by the other bank holding companies of comparable size in Indiana and the surrounding states. When the Human Resources Committee determined recommended 2005 salaries, it first identified salary ranges for each executive position based on estimated compensation data provided in a previous year by Hay. From this data, the Human Resources Committee established salary ranges for the CEO and each other executive position within the organization for 2005. These salary ranges ranged from 80% to 120% of a midpoint value, which represented approximately the median of the estimated base salaries paid to comparable positions. This midpoint value was validated by the HR Committee by reference to the annual compensation survey of Midwest financial institutions published by a major consulting firm. Within these ranges, the Human Resources Committee determined 2005 base salary for the executive officers in accordance with the guidelines of the Corporation’s salary administration program and performance review system.

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Base Salary

        The Corporation attempts to provide the executive officers with a base salary that is competitive with the salaries offered by the other bank holding companies of comparable size in Indiana and the surrounding states. For 2004, the Human Resources Committee (without the participation of the CEO) recommended to the entire Board the amount of the base salary of the CEO. The base salaries of the Corporation’s other executive officers for 2004 were determined by the Human Resources Committee with recommendations from the CEO.

        When the Human Resources Committee determined 2004 salaries, it first determined salary ranges for each executive position based on estimated compensation data provided by the Hay Group, Inc. From this data, the Human Resources Committee established salary ranges for the CEO and each other executive position within the organization for 2004. These salary ranges ranged from 80% to 120% of a midpoint value, which represented approximately the median of the estimated base salaries paid to comparable positions. Within these ranges, the Human Resources Committee determined 2004 base salary for the executive officers in accordance with the guidelines of the Corporation’s salary administration program and performance review system.

        The Human Resources Committee determined its recommended CEO base salary for 2004 by applying the methodology described in the preceding paragraph. Accordingly, the Human Resources Committee determined a salary range between 80% and 120% of the median estimated 2004 base salary of the CEO’s of other Midwest bank organizations. The Human Resources Committee then recommended to the Board that the CEO’s 2004 base salary be fixed within that range, and the Board accepted this recommendation. The Human Resources Committee did not act with reference to any specific corporate or individual financial performance measure in recommending the CEO’s 2004 base salary.