BWBBP Bridgewater Bancshares Inc

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

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4450 Excelsior Blvd., Suite 100

St. Louis Park, MN 55416

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Fellow Shareholders,

On behalf of the Board of Directors of Bridgewater Bancshares, Inc., I would like to invite you to join us at our 2024 annual meeting of shareholders, which will be held virtually through a live webcast. Our virtual meeting will be held on Tuesday, April 23, 2024 at 2:00 p.m. CT. Please see the enclosed Notice of Annual Meeting of Shareholders for additional details regarding the meeting.

As we look back at 2023, I am proud of the way Bridgewater responded to a very challenging banking environment, which included several bank failures and the continuation of an unprecedented rise in interest rates. We leveraged our talented teams and deep client relationships, optimized our balance sheet, managed our expenses, and maintained our superb asset quality, all while never losing sight of the culture and core values that have made Bridgewater Bank the finest entrepreneurial bank in the Twin Cities. As a result, we saw momentum build in the second half of the year, which we believe positions us well for 2024. This included a stabilizing net interest margin, improving loan demand in a strong Twin Cities market, and optimism that interest rate cuts and a more normalized yield curve could eventually be on the horizon.

We have also taken steps to further enhance our overall corporate governance practices. These included eliminating our classified board structure, adopting an executive compensation clawback policy, and including a Say-on-Pay proposal in this year’s proxy statement to ensure our executive compensation structure aligns with the interests of our shareholders. Lastly, we continued to make progress on our Environmental, Social and Governance (ESG) initiatives and shared updates on that progress with our stakeholders via our ESG Webpage.

In closing, we encourage you to vote your shares by following the enclosed instructions. Thank you for your continued support and investment in Bridgewater.  

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NOTICE OF 2024 ANNUAL MEETING
OF SHAREHOLDERS

There will not be a physical meeting at the Company’s principal executive offices. You will be able to attend the meeting online, vote your shares electronically, and submit your questions during the meeting by visiting: www.virtualshareholdermeeting.com/BWB2024. We are not aware of any other business to come before the annual meeting. The Board of Directors has fixed the close of business on February 26, 2024 as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting. If there are an insufficient number of votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the meeting, the meeting may be adjourned or postponed to permit our further solicitation of proxies.

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YOUR VOTE IS IMPORTANT. PLEASE EXERCISE YOUR SHAREHOLDER RIGHT TO VOTE,
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING.

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BRIDGEWATER BANCSHARES, INC.

PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

APRIL 23, 2024

These proxy materials are furnished in connection with the solicitation by the Board of Directors (the “Board”) of Bridgewater Bancshares, Inc. (the “Company”) of proxies to be used at the 2024 annual meeting of shareholders of the Company, to be held virtually on Tuesday, April 23, 2024 at 2:00 p.m., Central Time, and at any adjournments or postponements of such meeting. There will not be a physical meeting at the Company’s principal executive office. You will be able to attend the meeting online, vote your shares electronically, and submit your questions during the meeting by visiting: www.virtualshareholdermeeting.com/BWB2024. A complete list of the shareholders entitled to vote at the 2024 annual meeting of shareholders will be kept on file at the Company’s principal executive office, located at 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416 and will be available during the virtual meeting.

The Company is a Minnesota corporation and a registered financial holding company, which owns all of the issued and outstanding capital stock of Bridgewater Bank, a Minnesota state-chartered bank (the “Bank”).

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on April 23, 2024:

We are using the “Notice and Access” method of providing proxy materials to you instead of mailing printed copies. We believe that this process provides you with a convenient and quick way to access the proxy materials, including our proxy statement and our annual report on Form 10-K for the year ended December 31, 2023, and to authorize a proxy to vote your shares, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials.

Shareholders will not receive paper copies of the proxy materials unless they request them. Instead, the Notice of Internet Availability of Proxy Materials (the “Notice”) has been mailed to our shareholders as of the record date to provide instructions regarding how to access and review all of the proxy materials on the internet. The Notice also provides instructions on how to submit your proxy vote. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials printed on the Notice.

Our proxy statement and our annual report on Form 10-K for the year ended December 31, 2023 are available online at https://materials.proxyvote.com/108621 or by following the instructions on the Notice.

To ensure that as many shares as possible are represented, we strongly recommend that you vote in advance of the annual meeting.

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QUESTIONS AND ANSWERS

The following is information regarding the meeting and the voting process, presented in a question and answer format.

Why haven’t I received a printed copy of the Proxy Statement, Proxy Card or Annual Report?

We are using the U.S. Securities and Exchange Commission’s (the “SEC”) “Notice and Access” rules that allow us to provide proxy materials to you via the internet instead of mailing printed copies. This means our shareholders will only receive the Notice, which contains instructions on how to access the proxy materials over the internet. We believe that this process provides you with a convenient and quick way to access the proxy materials, including our proxy statement and our annual report on Form 10-K for the year ended December 31, 2023, and to authorize a proxy to vote your shares, while allowing us to conserve natural resources and reduce the costs of printing and distributing the proxy materials. Shareholders will not receive paper copies of the proxy materials unless they request them. Instead, the Notice has been mailed to our shareholders as of the record date to provide instructions regarding how to access and review all of the proxy materials on the internet. The Notice also lets you know how to submit your proxy vote. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials printed on the Notice. Once you request a printed copy of the proxy materials, you will continue to receive printed proxy materials in future years until such time as you opt out of paper delivery.

How do I attend the virtual meeting?

The annual meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by live webcast. You are entitled to participate in the meeting only if you were a shareholder of record as of the close of business on the record date for the annual meeting, February 26, 2024, or if you hold a valid proxy for the annual meeting. There is no physical location for the annual meeting. You will be able to attend the annual meeting online, vote your shares electronically and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/BWB2024 and entering the 16-digit control number found on the Notice, or proxy card if you received a printed copy of the proxy materials, distributed to each shareholder as of the record date. If you are not a shareholder of record but hold shares as a beneficial owner in street name, you should follow the instructions for attending the annual meeting provided by your broker or other fiduciary.

If you do not comply with the procedures outlined above, you may not be admitted to the virtual annual meeting. Online check-in will start shortly before the meeting, which will begin promptly at 2:00 p.m., Central Time on April 23, 2024. The virtual meeting platform is fully supported across browsers (Firefox, Chrome, Microsoft Edge, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong internet connection if they intend to participate in the meeting. Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the meeting. A technical support number will be made available on the webpage during check-in for shareholders who experience technical difficulties accessing the virtual annual meeting. A complete list of the shareholders entitled to vote at the annual meeting will be made available for inspection by clicking the designated shareholder list link that will appear on your screen. The shareholder list may be accessed at any time during the meeting.

How do I ask a question at the virtual meeting?

In order to submit a question at the annual meeting, you will need to log into www.virtualshareholdermeeting.com/BWB2024 and enter the 16-digit control number found on the Notice, or proxy card if you received a printed copy of the proxy materials, distributed to each shareholder. We will only entertain and respond to questions regarding the meeting and the proposals outlined in this proxy statement. If you would like to ask a question during the meeting, you can type your question in the “ask a question” text box that will appear on your screen and click “submit”. We encourage you to submit any questions as soon as possible during the meeting to ensure your question is received.

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QUESTIONS AND ANSWERS

What matters will be voted on at the meeting?

You are being asked to vote on:

These matters are more fully described in this proxy statement.

What are the Board’s voting recommendations?

The Board recommends that you vote your shares as follows:

How do I vote?

Shareholders of Record. If you are a shareholder of record (that is, if your shares are registered in your own name with our transfer agent), you may vote by following the instructions on the Notice, or on the proxy card if you received a printed copy of the proxy materials. You may not vote by filling out and returning the Notice. The Notice identifies the items to be voted on at the annual meeting and provides instructions on how to access the proxy materials and submit your vote.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in “street name” (that is, if you hold your shares through a bank, broker or other holder of record), you must provide your voting instructions in accordance with the voting instruction form provided by your bank, broker or other holder of record, who will then vote your shares on your behalf. The availability of telephone or internet voting will depend upon your bank’s, broker’s, or other holder of record’s voting process.

What happens if I do not give specific voting instructions?

Shareholders of Record. If you are a shareholder of record and you: (i) indicate when voting on the internet or by telephone that you wish to vote as recommended by the Board; or (ii) sign and return a proxy card without giving specific voting instructions; then the persons named as proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxy holders may determine in their judgment with respect to any other matters properly presented for a vote at the meeting.

Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting instructions, then, under applicable rules, the organization that holds your shares may generally vote on “routine” matters but cannot vote on “non-routine” matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine

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QUESTIONS AND ANSWERS

matter, that organization will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.”

At the meeting, all of the proposals are considered non-routine matters, except for the ratification of the appointment of our independent registered public accounting firm, which is considered a routine matter.

What options do I have in voting on each of the proposals?

You may vote “FOR” or withhold your vote with respect to the election of each director nominee. You may vote “1 YEAR”, “2 YEARS”, “3 YEARS”, or “ABSTAIN” with respect to the Say-On-Frequency proposal. You may vote “FOR,” “AGAINST” or “ABSTAIN” with respect to each other proposal described in this proxy statement, and with respect to any other proposal that may properly be brought before the meeting.

How many votes may I cast?

You are entitled to cast one vote for each share of common stock you owned on the record date.

What is the quorum required for each matter?

The holders of a majority of the outstanding shares of the Company’s common stock entitled to vote on each matter represented in person or by proxy will constitute a quorum for purposes of such matter at the meeting. Virtual attendance at the annual meeting constitutes presence “in person” for purposes of determining a quorum at the meeting. If less than a majority of the outstanding shares are represented at the meeting, a majority of the shares represented may adjourn the meeting at any time.

As of the close of business on February 26, 2024, the record date, there were 27,710,319 shares of common stock issued and outstanding. Therefore, at least 13,855,160 shares need to be represented in order to constitute a quorum.

Broker non-votes will count for purposes of determining whether or not a quorum is present since a routine matter (the ratification of the appointment of our independent registered public accounting firm) is on the proxy ballot. Similarly, abstentions will be considered in determining the presence of a quorum.

How many votes are needed for approval of each proposal?

With respect to the election of directors, the four individuals receiving the highest number of votes cast “FOR” their election will be elected as directors of the Company to serve until the Company’s next annual meeting of shareholders and until his or her successor has been duly elected and qualified, or until his or her earlier resignation or removal. In an uncontested election, all director-nominees will be elected if they receive at least one vote. As a result, abstentions and broker non-votes, if any, will not affect the outcome of the election.

With respect to the approval, on a non-binding advisory basis, of the Say-on-Pay proposal, if a majority of votes cast are voted “FOR” the approval of the proposal, then it will be approved.

With respect to the vote, on a non-binding advisory basis, on the Say-on-Frequency proposal, the choice that receives the highest number of votes cast will be considered the choice of the shareholders.

With respect to the ratification of the appointment of our independent registered public accounting firm, if a majority of the voting power of the shares of common stock present and entitled to vote are voted “FOR” the approval of the proposal, then it will be approved.

How are abstentions and broker non-votes treated?

With respect to (i) the election of directors, (ii) the Say-on-Pay proposal, and (iii) the Say-on-Frequency proposal, abstentions will not affect the outcome of the election or the proposals. Broker non-votes, which occur when brokers are prohibited from exercising voting authority for beneficial owners who have not provided voting instructions or otherwise do not vote on the proposal, will be disregarded and have no effect on the election or the proposals.

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With respect to the ratification of the appointment of our independent registered public accounting firm, an abstention will have the effect of a vote “AGAINST” the approval of the proposal. A broker non-vote will not be treated as entitled to vote on the proposal, and therefore will not have an effect.

In order to minimize the number of broker non-votes, we encourage you to vote or to provide voting instructions with respect to each proposal to the organization that holds your shares by carefully following the instructions provided.

What if I change my mind after I return my proxy?

You may revoke your proxy and change your vote at any time prior to the taking of the vote at the meeting. Prior to the applicable cutoff time, you may revoke your proxy and change your vote by signing and returning a new proxy card dated as of a later date, or by attending the virtual meeting and voting online. However, your attendance at the virtual meeting will not automatically revoke your proxy unless you properly vote at the virtual meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to the Company’s Secretary at 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416, prior to the meeting.

What happens if a nominee is unable to stand for election?

The Board may, by resolution, designate a substitute nominee. Shares represented by proxies may be voted for a substitute nominee. Proxies cannot be voted for more than four nominees. The Board has no reason to believe any nominee will be unable to stand for election.

Where do I find the voting results of the meeting?

If available, we will announce voting results at the meeting. The voting results will also be disclosed in a Current Report on Form 8-K that we will file with the SEC within four business days after the annual meeting.

Who bears the cost of soliciting proxies?

We will bear the cost of soliciting proxies. In addition to solicitations by mail, officers, directors or employees of the Company or its subsidiaries may solicit proxies in person or by telephone. These persons will not receive any special or additional compensation for soliciting proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.

How can multiple shareholders sharing the same address request to receive only one set of proxy materials or one Notice and other investor communications?

You may elect to receive future proxy materials, including the Notice, as well as other investor communications, in a single package per address. This practice, known as “householding,” is designed to reduce our paper use and printing and postage costs. To make the election, please indicate on your proxy card under “Householding Election” your consent to receive such communications in a single package per address. Once we receive your consent, we will send a single package per household until you revoke your consent or request separate copies of the Notice or our proxy materials by contacting the Company’s Secretary at 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416 or (952) 893-6868. We will start sending you an individual Notice or copies of our proxy materials and other investor communications following receipt of your revocation.

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At the Company’s 2023 annual meeting, the shareholders approved a proposal to declassify the Board. Starting this year, at the annual meeting, all directors standing for election will be elected for a term of one year rather than a term of three years. At the 2024 annual meeting, our shareholders will be entitled to elect four directors for a term expiring at the 2025 annual meeting of shareholders. All of our directors will hold office until the annual meeting of shareholders in the year their term expires (as indicated below), and until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation, removal or disqualification. There are no arrangements or understandings with any of the nominees pursuant to which they have been selected as nominees or directors.

As described further below, each of the four nominees for election as directors is an incumbent director. Each of the nominees has consented to serving as a nominee and serving on the Board, if elected, but if any of the nominees becomes unavailable for election, the holders of the proxies reserve the right to vote for another nominee when voting at the meeting. With respect to the election of directors, the four nominees receiving the highest number of votes cast “FOR” their election will be elected as directors of the Company to serve until the Company’s 2025 annual meeting of shareholders and until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation, removal or disqualification. In an uncontested election, all director-nominees will be elected if they receive at least one vote. As a result, abstentions and broker non-votes, if any, will not affect the outcome of the election. Shareholders of the Company have no cumulative voting rights with respect to the election of directors.

Set forth below is information concerning the nominees for election and for the other directors whose terms of office will continue after the meeting.

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PROPOSAL 1

The business experience of each nominee and continuing director, as well as their qualifications to serve on the Board, is set forth below. Unless otherwise noted, nominees for director have been employed in their principal occupation with the same organization for at least the last five years. Other than as described below, no nominee, continuing director or executive officer has any family relationship, as defined in Item 401 of Regulation S-K promulgated under the Securities Act of 1933, as amended (“Regulation S-K”), with any other director or with any of our executive officers.

Director Nominees

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Continuing Directors

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Other than Mr. Baack and Mr. Shellberg, who also serve as directors, the business and banking background and experience of each of our executive officers for at least the past five years is set forth below. No executive officer has any family relationship, as defined in Item 401 of Regulation S-K, with any other executive officer or any of our current directors. There are no arrangements or understandings between any of the officers and any other person pursuant to which he or she was selected as an officer.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

We currently have ten directors serving on our Board, a majority of whom we have determined to be “independent,” as that term is defined by the rules of The Nasdaq Stock Market LLC (“Nasdaq”). Our Board has evaluated the independence of its members based upon the rules of Nasdaq and the SEC. Applying these standards, and based on information provided by each director concerning his or her background, employment and affiliations, our Board has affirmatively determined that, with the exceptions of Mr. Baack and Mr. Shellberg, each of our current directors is an independent director, as defined under the applicable rules. The Board determined that Mr. Baack and Mr. Shellberg do not qualify as independent directors because they are executive officers of the Company and the Bank.

Generally, the Board oversees our business and monitors the performance of our management. In accordance with our corporate governance procedures, the Board does not involve itself in the day-to-day operations of the Company, which are monitored by our executive officers and management. Our directors fulfill their duties and responsibilities by attending regular meetings of the Board, with additional special meetings held from time to time. Our directors also discuss business and other matters with Mr. Baack, other key executives and our principal external advisers (legal counsel, auditors and other consultants) at times other than regularly scheduled meetings when appropriate.

Our Board has established standing committees in connection with the discharge of its responsibilities. These committees include the Audit Committee, Compensation Committee, and Nominating and ESG Committee. Our Board also may establish such other committees as it deems appropriate, in accordance with applicable laws and regulations and our Third Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) and Second Amended and Restated Bylaws (the “Bylaws”).

The current charters of the Audit Committee, Compensation Committee, and Nominating and ESG Committee are available on the Company’s website at investors.bridgewaterbankmn.com under the “Investor Relations – Governance Documents” heading.

The Board held 14 regularly scheduled and special meetings during 2023. In 2024, the full Board intends to meet at least 10 times with special meetings held from time to time when necessary and through committee membership, which is discussed below. During 2023, all directors attended at least 75 percent of the aggregate of the total number of meetings of the Board and the total number of meetings held by the committees on which they served. Although we do not have a formal policy regarding director attendance at the annual meeting, we encourage and expect all of our directors to attend. Last year, nine directors attended the virtual annual shareholder meeting and one director was unable to attend.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Corporate Governance Highlights

The Board is committed to exercising good corporate governance practices. This includes, among other things, the highlights below:

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Audit Committee

Our Audit Committee currently consists of Douglas Parish (Chairperson), James Johnson, and Thomas Trutna. Our Board has evaluated the independence of the members of our Audit Committee and has affirmatively determined that: (i) each of the members of our Audit Committee meets the definition of “independent director” under Nasdaq rules; (ii) each of the members satisfies the additional independence standards under Nasdaq rules and applicable SEC rules for audit committee service; and (iii) each of the members has the ability to read and understand fundamental financial statements. In addition, Nasdaq rules require at least one member of the Audit Committee to have a certain level of financial sophistication, and our Board has determined that Mr. Parish has the required financial sophistication due to his experience and background. Our Board has determined that Mr. Parish also qualifies as an “audit committee financial expert,” as that term is defined under applicable SEC rules.

Our Board has adopted a written charter, which sets forth the Audit Committee’s duties and responsibilities. The current charter of the Audit Committee is available on our investor relations website at investors.bridgewaterbankmn.com. As described in its charter, our Audit Committee has the primary responsibility for, among other things, the matters listed below.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Compensation Committee

Our Compensation Committee currently consists of David Juran (Chairperson), Todd Urness and David Volk. Our Board has evaluated the independence of the members of our Compensation Committee and has affirmatively determined that all of the members of our Compensation Committee are “independent” under Nasdaq rules and also satisfy the additional independence standards under Nasdaq rules for compensation committee service.

Our Board has adopted a written charter, which sets forth the Compensation Committee’s duties and responsibilities. The current charter of the Compensation Committee is available on our investor relations website at investors.bridgewaterbankmn.com. As described in its charter, our Compensation Committee has the primary responsibility for, among other things, the matters listed below.

Our Compensation Committee has the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Compensation Committee may deem appropriate in its sole discretion. Non-employee director compensation decisions are made by our Board, which includes two named executive officers.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Nominating and ESG Committee

Our Nominating and ESG Committee currently consists of Lisa Brezonik (Chairperson), James Johnson, Mohammed Lawal, Thomas Trutna and David Volk. Our Board has evaluated the independence of the members of our Nominating and ESG Committee and has affirmatively determined that each of the members of our Nominating and ESG Committee is “independent” under Nasdaq rules.

Our Board has adopted a written charter, which sets forth the Nominating and ESG Committee’s duties and responsibilities. The current charter of the Nominating and ESG Committee is available on our investor relations website at investors.bridgewaterbankmn.com. As described in its charter, our Nominating and ESG Committee has the primary responsibility for, among other things, the matters listed below.

In carrying out its nominating functions, the Nominating and ESG Committee has developed qualification criteria to consider for all potential director nominees, including incumbent directors, Board nominees and shareholder nominees. The Nominating and ESG Committee will consider for nomination prospective director nominees who:

The Nominating and ESG Committee also evaluates potential nominees to determine if they have any conflicts of interest that may interfere with their ability to serve as effective Board members and to determine whether they are “independent” in accordance with Nasdaq rules (to ensure that, at all times, at least a majority of our directors are independent).

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Prior to nominating an existing director for re-election to the Board, the Nominating and ESG Committee will also consider the director’s attendance at, participation in, and contributions to Board and committee activities.

The Nominating and ESG Committee will give appropriate consideration to candidates for board membership properly proposed by shareholders that are supported by adequate information about the candidates’ qualifications and will evaluate such candidates in the same manner as other candidates identified by or submitted to the Nominating and ESG Committee. The procedures required for shareholders to properly propose candidates for board membership are set forth in more detail in this proxy statement.

Commitment to ESG

We are committed to establishing and advancing impactful initiatives that support the Company’s corporate responsibility as a growing local bank in the Twin Cities, while regularly sharing our progress with stakeholders.

The Nominating and ESG Committee oversees the Company’s ESG strategy and practices and a management-level ESG Committee is responsible for developing, implementing and growing a formal ESG program. We have identified four ESG priorities that guide our ESG strategy:

In an effort to increase communication with stakeholders regarding our progress on ESG, we maintain an ESG webpage to share a summary of the actions we have taken to support our ESG priorities. The webpage is updated periodically to highlight ongoing efforts to support ESG-related initiatives. For more information regarding our ESG commitment, please visit our ESG webpage at www.BWBMN.com/about-bridgewater/esg.

Stakeholder Engagement

We believe active two-way engagement with stakeholders is an important way to not only communicate the Company’s story, but also to solicit feedback from stakeholders about aspects of the business they feel are most important. For example, we regularly meet with shareholders to discuss the Company’s business model, strategy and financials. We also integrate ESG into these discussions as a way to understand the views and expectations of our shareholders regarding ESG, specifically for small-cap banks like ours. In 2023, we estimate that we engaged with institutional shareholders owning approximately 8.5 million shares of Company common stock, representing over 50% of the total institutional ownership as of December 31, 2023.

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Board Leadership Structure

Our Board does not have a formal policy requiring the separation of the roles of Chairperson of the Board and Chief Executive Officer. It is our directors’ view that rather than having a rigid policy, the Board, with the advice and assistance of the Nominating and ESG Committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Since our formation, the positions of Chairperson and Chief Executive Officer have been combined and held by Mr. Baack. We believe this Board leadership structure is the most appropriate for our Company because of the efficiencies achieved in having the role of Chairperson and Chief Executive Officer combined, and because the detailed knowledge of our day-to-day operations and business that the Chief Executive Officer possesses greatly enhances the decision-making processes of the Board as a whole.

As noted above, Mr. Baack is not currently considered to be “independent” according to Nasdaq rules. Because the Chairperson of the Board is not an independent director, the Board has determined that it is appropriate to appoint a lead independent director (“Lead Director”). The duties and responsibilities of the Lead Director are included in our Corporate Governance Guidelines and are set forth below.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Lead Director

Mr. David Juran currently serves as the Lead Director. Mr. Juran brings a strong understanding of the Company and its business, as well as significant leadership, to this important role. The principal duties and responsibilities of the Lead Director include:

Board Diversity, Composition and Refreshment

Our Board is composed of directors with a mix of tenure, with longer serving directors providing important experience and institutional knowledge, and newer directors providing fresh perspectives to Board discussions.

The Nominating and ESG Committee regularly assesses our directors' mix of skills, experience, tenure and diversity in light of the Company's long term strategy and advises the Board of its determinations with respect to Board composition and director refreshment. Our incumbent directors and director nominees have a mix of skills and experience that we believe are relevant to the Company’s long term strategy and success.

As needed, the Nominating and ESG Committee identifies and evaluates potential director nominees, taking into consideration the overall needs, composition, and size of the Board.

Our Board refreshment efforts have been active in recent years with 50% of our non-employee directors having been on the Board fewer than seven years.

The Board Diversity Matrices below set forth information about the diversity of our Board as of the date indicated. The information shown below is based on voluntary self-identification of each member of our Board.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

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Independent Director Sessions

Consistent with Nasdaq listing requirements, the independent directors regularly meet without the non-independent directors present. In 2023, the independent directors held two executive sessions without the non-independent directors present.

Board’s Role in Risk Oversight

Our Board believes that proactive risk management and control processes are critical to our safety and soundness, our ability to predict and manage the challenges that we face and, ultimately, our long term corporate success. Our Board, both directly and through its committees, is responsible for overseeing our risk management processes, with each of the committees of our Board assuming a different and important role in overseeing the management of the risks we face.

Our full Board oversees our enterprise-wide risk management program and framework, which establishes our overall risk appetite, risk management strategies, and enables our management to identify, quantify, manage and report on the risks we face. Our full Board also reviews and oversees various policies and practices established by management to identify, assess, measure and manage key risks we face, including risk appetite key risk indicators developed by management. The Audit Committee of our Board is responsible for overseeing risks associated with financial matters (particularly financial reporting, accounting practices and policies, disclosure controls and procedures and internal controls over financial reporting). The Compensation Committee of our Board has primary responsibility for risks and exposures associated with our compensation policies, plans and practices, regarding both executive compensation and the compensation structure generally. In particular, our Compensation Committee reviews our incentive compensation arrangements to ensure these programs are consistent with applicable laws and regulations, including safety and soundness requirements, and do not encourage imprudent or excessive risk-taking by our employees. The Nominating and ESG Committee of our Board oversees risks associated with the independence of our Board and potential conflicts of interest.

Our management-level Enterprise Risk Management Committee (“ERMC”) consists of our strategic leadership team, our Chief Risk Officer, and members from other key functional areas of the Company. The ERMC is responsible for implementing and reporting to our Board or an appropriate Board committee the development and continuous enhancement of our Risk Management program and framework, including by identifying, assessing, quantifying, monitoring, reporting, and managing the risks we face, including strategic, operational, reputational, capital, liquidity, market, credit and compliance risks, on a day-to-day basis. Our ERMC is also responsible for creating and recommending to our Board for approval a risk appetite statement and key risk indicators reflecting the aggregate levels and types of risk we are willing to accept in connection with the operation of our business and pursuit of our business objectives.

The role of our Board in risk oversight is consistent with our leadership structure, with the members of our ERMC having responsibility for assessing and managing our risk exposure, and our Board and its committees providing oversight in connection with those efforts. We believe this division of risk management responsibilities presents a consistent, systematic and effective approach for identifying, managing and mitigating risks throughout our operations.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Compensation Committee Interlocks and Insider Participation

During 2023, David Juran, Todd Urness and David Volk served on our Compensation Committee. None of the members of our Compensation Committee will be or has been an officer or employee of the Company. None of our executive officers serves or has served as a member of the Board, compensation committee or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.

Our branch building in Greenwood, Minnesota, is leased by the Bank from Bridgewater Properties Greenwood, LLC (“Greenwood”), an entity owned in part by Mr. Juran and Mr. Urness, members of the Compensation Committee, each of whom owns a 12.5% membership interest in Greenwood. In 2020, the Bank exercised a renewal option to extend the term of the lease to August 1, 2026. The Bank has one additional five-year renewal option that will permit the Bank to extend the lease through August 1, 2031. The total amount of rent payable by the Bank to Greenwood during the remaining current term of the lease is approximately $1.00 million (inclusive of base rent, estimated real estate taxes and estimated operating costs). The total amount of rent paid by the Bank to Greenwood during 2022 was approximately $298 thousand and the amount paid in 2023 was approximately $275 thousand (in both cases, inclusive of base rent, real estate taxes and operating costs). The Company and the Bank believe the terms of this lease are consistent with the terms of leases for similar properties that could be received in arm’s-length negotiations with third parties.

In 2022, 2023 and prior years, we purchased loan participation interests from and held an interest in a syndicated loan originated by Colliers Mortgage LLC (“Colliers Mortgage”) and entered into amendments and extensions regarding the same. Mr. Juran is an executive officer of and owns more than ten percent of Colliers Mortgage Holdings LLC, the parent company of Colliers Mortgage and Colliers Securities LLC (“Colliers Securities”). For each of the loans, Colliers Mortgage acts as the servicer of the loans. Pursuant to servicing and participation agreements for each of the loans, in lieu of a direct payment of a servicing fee by the Company to Colliers Mortgage, the loans have pass-through rates which are between 15 basis points and 125 basis points lower than the loan’s contractual rate. Servicing fees are negotiated on a loan-by-loan basis. As of December 31, 2022, our interests in the subject loans had an aggregate outstanding balance of $18.4 million, and in 2022, the servicing fees paid to Colliers Mortgage were approximately $42 thousand. As of December 31, 2023, our interests in the subject loans had an aggregate outstanding balance of $19.2 million, and in 2023, the servicing fees paid to Colliers Mortgage were approximately $44 thousand. Additionally, we purchased $2.4 million of securities in 2022 and $8.7 million of securities in 2023 in transactions in which Colliers Securities acted as broker for the Company or the issuer of the securities and received commissions of approximately $18 thousand and $47 thousand in 2022 and 2023, respectively.

In 2023, we acquired an undeveloped parcel of land from a third party and entered into a development services agreement to engage North Shore Development Partners LLC (“North Shore”) to perform services for the development of and coordination of infrastructure improvements to the parcel. Mr. Urness and Mr. Juran each own 50% of the membership interests in North Shore. Pursuant to the agreement, we agreed to pay North Shore a fee equal to five percent of the total project costs, but not to exceed a total of $250,000. No development service fees were paid to North Shore in 2023.  

Code of Business Conduct and Ethics

We have a Code of Business Conduct and Ethics in place that applies to all of our directors and employees. The code sets forth the standard of ethics that we expect all of our directors and employees to follow and is available on our website at investors.bridgewaterbankmn.com. In accordance with SEC rules, we intend to disclose on the “Investor Relations” section of our website any amendments to the code, or any waivers of its requirements, that apply to our executive officers to the extent such disclosure is required.

Anti-Hedging Policy

The Company’s insider trading policy includes provisions that specifically prohibit our directors, officers and employees from entering into hedging transactions with respect to the Company’s securities. To our knowledge, none of our directors, officers or employees has entered into a hedging transaction involving Company securities in violation of this prohibition.

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CORPORATE GOVERNANCE AND THE BOARD OF DIRECTORS

Director Compensation

The following table sets forth information regarding 2023 compensation for each of our non-employee directors. None of the directors receives any compensation or other payment in connection with his or her service as a director other than compensation received from the Company as set forth below.

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In 2023, the Company’s non-employee directors were paid a quarterly retainer equal to $20,000. Pursuant to the Company’s non-employee director compensation program, each non-employee director is paid one-half of the quarterly retainer fee in cash and one-half in fully-vested stock awards, provided that each non-employee director was permitted to make an advance annual election to receive all such non-employee director’s retainer in fully-vested stock awards. For retainers paid to an affiliate of a non-employee director through arrangements made with such non-employee director, all of the retainer is paid to such affiliate in cash unless the non-employee director made an election for the affiliate to receive all of the retainer in fully-vested stock awards. The Company paid an additional quarterly cash retainer of $5,000 to Mr. Parish as the Chairperson of the Audit Committee. Pursuant to an arrangement made with Mr. Volk, the retainer for Mr. Volk was paid to Castle Creek Advisors IV LLC, which retainer was paid in cash. The program provides for payment of a $1,000 travel stipend for non-employee directors that travel to attend meetings from outside of Minnesota or states contiguous to Minnesota. Messrs. Baack and Shellberg, who also serve as executive officers of the Company, do not receive compensation for their service on the Board.

Previously, the Compensation Committee retained an independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”), to provide a summary of market compensation and pay levels to non-employee directors, key findings, and preliminary recommendations with respect to the compensation of our non-employee directors as compared to those of our peers. No change was made to the amount of the retainer paid to non-employee directors for 2023.

Director Stock Ownership and Retention Guidelines

In 2020, the Board adopted stock ownership and retention guidelines for non-employee directors as another way to align the long term interests of the Company’s non-employee directors with those of the Company’s shareholders. Our director stock ownership and retention guidelines provide that directors are expected to own, within five years of the effective date of the policy, shares of common stock with an aggregate fair market value equal to or greater than four times the annual cash retainer received by each director, which is currently $40,000, not including fees payable for committee service. Directors of the Company elected in the future will be required to meet the stock ownership guidelines within five calendar years following the year in which they were elected.

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The Compensation Committee reviews progress towards satisfying stock ownership guidelines annually. All non-employee directors have either achieved the minimum stock ownership requirements or are making appropriate progress toward the requirements and are still within the permitted period for attaining the ownership requirements.

Shareholder Communications with the Board

Shareholders may contact our Board by contacting Jerry Baack, Chairman, Chief Executive Officer and President, Bridgewater Bancshares, Inc. at 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416 or (952) 893-6868.

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SHAREHOLDER PROPOSALS

The matters to be considered and brought before any annual or special meeting of our shareholders shall be limited to only those matters as shall be brought properly before such meeting, in compliance with the procedures set forth in our Bylaws. For proposals to be brought by a shareholder of the Company and voted upon at an annual meeting, including with respect to the nomination of a director other than the Board’s nominees, the shareholder must deliver written notice of the proposal to the Company’s Secretary not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. However, if the annual meeting is not scheduled to be held within a period that commences 30 days before such anniversary date and ends within 60 days after such anniversary date (such period being, referred to herein as an “Other Meeting Date Period” and an annual meeting date outside such period being referred to herein as an “Other Meeting Date”), the shareholder’s notice shall be given by the later of the close of business on (1) the date 90 days prior to such Other Meeting Date or (2) the 10th day following the date such Other Meeting Date is first publicly announced or disclosed. In the event that the number of directors to be elected to the Board is increased and either all of the nominees for director or the size of the increased Board is not publicly announced or disclosed by us at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Company’s Secretary at our principal executive office not later than the close of business on the 10th day following the first date all of such nominees or the size of the increased Board is publicly announced or disclosed. Any shareholder’s notice to the Company’s Secretary must include, the information required by SEC rule 14a-19, as well as, among other things set forth in our Bylaws: (a) a brief description and the text of the proposal desired to be brought before the meeting and the reasons why such shareholder favors the proposal; (b) the name and address of the shareholder proposing such business; (c) the number of shares of our common stock or other equity or debt securities beneficially owned by such shareholder on the date of such shareholder’s notice; and (d) any financial or other interest of such shareholder in the proposal. Shareholders should refer to the full text of our advance notice provisions contained in Article II, Section 12 of our Bylaws. A copy of our Bylaws is incorporated herein by reference to Exhibit 3.2 on Form 8-K filed with the SEC on April 27, 2023.

Written notice of shareholder proposals to be brought at our 2025 annual meeting of shareholders in accordance with the above procedures must be delivered to the Company’s Secretary no earlier than December 24, 2024 and no later than January 23, 2025, unless the 2025 annual meeting is scheduled during an Other Meeting Date Period, in which case the notice delivery requirements will be as set forth above with respect to meetings with Other Meeting Dates.

In lieu of the foregoing notice procedures, shareholders seeking to submit a proposal for inclusion in our proxy statement for the 2025 annual meeting of shareholders must follow the procedures and meet the other requirements outlined in Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we must receive such proposal at our principal executive office on or before November 11, 2024.

Any proposals, notices or nominations must be sent to the attention of the Company’s Secretary at Bridgewater Bancshares, Inc., 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In addition to the compensation arrangements with directors and executive officers described in “Executive Compensation” below, the following is a description of transactions in the 2022 and 2023 fiscal years to which we have been a party in which the amount involved exceeded or will exceed $120 thousand, and in which any of our directors, executive officers or beneficial holders of more than five percent of our common stock, or their immediate family members or entities affiliated with them, had or will have a direct or indirect material interest.

Our branch building in Greenwood, Minnesota, is leased by the Bank from Greenwood, an entity owned by certain of our executive officers and directors. Mr. Baack, Chairman of the Board, Chief Executive Officer and President, and Mr. Shellberg, our Executive Vice President, Chief Credit Officer and Director are members and are on the board of governors of Greenwood, and Mr. Shellberg also serves as the chief manager of the entity. The following directors of the Company and the Bank are also members of Greenwood: Messrs. Johnson, Juran, Trutna and Urness. Messrs. Baack, Shellberg, Johnson, Juran, Trutna and Urness each own a 12.5% membership interest in Greenwood. In 2020, the Bank exercised a renewal option to extend the term of the lease to August 1, 2026. The Bank has one additional five-year renewal option that will permit the Bank to extend the lease through August 1, 2031. The total amount of rent payable by the Bank to Greenwood during the remaining current term of the lease is approximately $1.00 million (inclusive of base rent, estimated real estate taxes and estimated operating costs). The total amount of rent paid by the Bank to Greenwood during 2022 was approximately $298 thousand and the amount paid in 2023 was approximately $275 thousand (in both cases, inclusive of base rent, real estate taxes and operating costs). In lieu of the Company’s stated related party transaction approval process, described below, our Board formed a special committee in 2020 to review the transaction consisting of all of the Company’s non-employee directors that did not have an interest in the transaction. In approving the related party transaction, the special committee considered, among other factors, the fairness of the transaction, the direct or indirect nature of the related party’s interest in the transaction, the appearance of any improper conflicts of interest for any director or executive officer taking into account the size of the transaction and the financial position of the related party, whether the transaction would impair an outside director’s independence, the acceptability of the transaction to our regulators and any potential violations of other corporate policies. The Company and the Bank believe the terms of this lease are consistent with the terms of leases for similar properties that could be received in arm’s-length negotiations with third parties.

In 2022, 2023 and prior years, we purchased loan participation interests from and held an interest in a syndicated loan originated by Colliers Mortgage and entered into amendments and extensions regarding the same. Mr. Juran is an executive officer of and owns more than ten percent of Colliers Mortgage Holdings LLC, the parent company of Colliers Mortgage LLC and Colliers Securities. For each of the loans, Colliers Mortgage acts as the servicer of the loans. Pursuant to servicing and participation agreements for each of the loans, in lieu of a direct payment of a servicing fee by the Company to Colliers Mortgage, the loans have pass-through rates which are between 15 basis points and 125 basis points lower than the loan’s contractual rate. Servicing fees are negotiated on a loan-by-loan basis. As of December 31, 2022, our interests in the subject loans had an aggregate outstanding balance of $18.4 million, and in 2022, the servicing fees paid to Colliers Mortgage were approximately $42 thousand. As of December 31, 2023, our interests in the subject loans had an aggregate outstanding balance of $19.2 million, and in 2023, the servicing fees paid to Colliers Mortgage were approximately $44 thousand. Additionally, we purchased $2.4 million of securities in 2022 and $8.7 million of securities in 2023 in transactions in which Colliers Securities acted as broker for the Company or the issuer of the securities and received commissions of approximately $18 thousand and $47 thousand in 2022 and 2023, respectively.

In 2023, we acquired an undeveloped parcel of land from a third party and entered into a development services agreement to engage North Shore to perform services for the development of and coordination of infrastructure improvements to the parcel. Mr. Urness and Mr. Juran each own 50% of the membership interests in North Shore. Pursuant to the agreement, we agreed to pay North Shore a fee equal to five percent of the total project costs, but not to exceed a total of $250,000. No development service fees were paid to North Shore in 2023.  

Ordinary Banking Relationships

Our directors, officers, certain of our beneficial owners of more than five percent of our common stock and their respective associates were customers of and had transactions with us in the past, and additional transactions with these

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persons are expected to take place in the future. All outstanding loans and commitments to lend with these persons were made in the ordinary course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank, and did not involve more than the normal risk of collectability or present other unfavorable features. All such loans are approved by the Bank’s board of directors in accordance with applicable bank regulatory requirements. Similarly, all certificates of deposit and depository relationships with these persons were made in the ordinary course of business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or the Bank.

Policies and Procedures Regarding Related Party Transactions

Transactions by the Company or the Bank with related parties are subject to certain regulatory requirements and restrictions, including Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by the Bank to its executive officers, directors and principal shareholders).

Under applicable SEC and Nasdaq rules, related party transactions are transactions in which we are a participant, the amount involved exceeds $120 thousand and a related party has or will have a direct or indirect material interest. Related parties of the Company include directors (including nominees for election as directors), executive officers, five percent shareholders and the immediate family members of these persons. Our Board has adopted a written policy governing the procedures for reviewing and approving related party transactions. Our Audit Committee, in consultation with management and outside counsel, as appropriate, will review potential related party transactions to determine if they are subject to the policy. If so, the transaction will be referred to the Audit Committee for approval. In determining whether to approve a related party transaction, the Audit Committee will consider, among other factors, the fairness of the proposed transaction, the direct or indirect nature of the related party’s interest in the transaction, the appearance of any improper conflicts of interest for any director or executive officer taking into account the size of the transaction and the financial position of the related party, whether the transaction would impair an outside director’s independence, the acceptability of the transaction to our regulators and the potential violations of other corporate policies.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information as of February 26, 2024 regarding the beneficial ownership of our common stock:

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities, or has the right to acquire such powers within 60 days. For purposes of calculating each person’s percentage ownership, common stock issuable pursuant to options currently exercisable or exercisable within 60 days are included as outstanding and beneficially owned for that person or group, but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person’s name.

The percentage of beneficial ownership is based on 27,710,319 shares of our common stock outstanding as of February 26, 2024.

Except as otherwise indicated, the address for each shareholder listed in the table below is: c/o Bridgewater Bancshares, Inc., 4450 Excelsior Blvd., Suite 100, St. Louis Park, Minnesota 55416.

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* Indicates one percent or less.

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DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Exchange Act requires the Company’s executive officers and directors, as well as persons who own 10% or more of a class of the Company’s equity securities, to file reports of their ownership of the Company’s securities, as well as statements of changes in such ownership, with the SEC. The Company believes that all such filings required during 2023 were made on a timely basis, except for one late Form 4 for Ms. Brezonik.

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COMPENSATION DISCUSSION AND ANALYSIS

We became a public company in March 2018, and have filed with the SEC since that date under the scaled reporting rules applicable to “emerging growth companies.” As of December 31, 2023, we are no longer an emerging growth company and, therefore, our 2023 executive compensation disclosure includes additional information that was not included in prior years’ proxy materials.

This Compensation Discussion and Analysis (“CD&A”) describes our compensation philosophy and policies as applicable to the named executive officers (“NEOs”) listed below for 2023. This CD&A also describes the Compensation Committee’s process for making pay decisions, as well as the rationale for specific decisions related to the fiscal year ended December 31, 2023.

Named Executive Officers

Our NEOs, which consist of our principal executive officer, our principal financial officer, and the Company’s three other most highly compensated executive officers, for 2023 were:

2023 Business Highlights and Positioning for Long Term Success

Our Compensation Philosophy and Governance Practices

We compensate our NEOs through a combination of base salaries, annual bonuses, equity awards, earnings credited under our Deferred Incentive Plan, and other benefits including perquisites, as well as periodic grants of incentive and non-statutory stock options. The goal of our executive compensation program is to generate long term value for our shareholders by attracting, motivating and retaining outstanding executives who have the background, leadership skills and entrepreneurial drive to execute our strategic goals. Our Board believes the executive compensation packages that we provide to our executives, including the NEOs, should include both cash and equity compensation that reward performance as measured against established corporate and individual goals. The purpose and key features of each primary element of our executive compensation program in 2023 are described below.

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COMPENSATION DISCUSSION AND ANALYSIS

Elements of Compensation.

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Role of the Compensation Committee. The Compensation Committee oversees the executive compensation program for our NEOs. The Compensation Committee is comprised of independent members of the Board. Details of the Compensation Committee’s authority and responsibilities are specified in its charter, which is available on our investor relations website at investors.bridgewaterbankmn.com.

Role of Executive Officers. As requested by the Compensation Committee, some members of management support the Compensation Committee’s review and consideration of executive compensation by providing information for the Compensation Committee’s review. In particular, the CEO provides recommendations with respect to the other NEOs. Such recommendations from the CEO address, among other items, financial results and analysis, performance evaluations, compensation provided to our NEOs (other than the CEO), technical and regulatory considerations and input on program design and possible modifications.

 The Compensation Committee has final discretion over all compensation decisions regarding the CEO and each of the other NEOs. The Compensation Committee discusses the CEO’s recommendations and accepts or adjusts them based upon its own assessment of Company strategic goals, executive responsibilities, internal pay equity and its independent review of market data. The CEO is not involved in discussions or decisions related to his own compensation.

Use of Independent Consultants. Under its charter, the Compensation Committee has the sole authority to select, retain, or replace compensation advisors. The Compensation Committee has historically engaged a compensation consultant to provide independent, objective analyses and professional opinions about executive and director compensation matters. The Compensation Committee believes that working with an independent compensation consultant furthers the Company’s objectives to attract and retain qualified executives, aids the Compensation Committee in aligning executives’ interests with those of our shareholders and ensures that our executive compensation program appropriately motivates and rewards ongoing achievement of strategic goals.

In 2021, the Compensation Committee retained an independent compensation consultant, Pearl Meyer, LLC, to provide a summary of market compensation levels to executive officers, key findings, and preliminary recommendations with respect to the compensation of our executive officers as compared to those of our peers. In 2022, the Compensation Committee retained Pearl Meyer to assist in the development of the 2023 short term Incentive Plan, discussed below. The Compensation Committee considered the analysis provided by Pearl Meyer and other factors, including individual NEO experience and performance in the development and issuance of annual cash bonuses under the 2023 short term incentive plan and to approve and recommend that the Board issue restricted stock unit awards to the Company’s NEOs effective February 2, 2022. The Compensation Committee also considered the analysis provided by Pearl Meyer, among other factors, in establishing base salaries in employment agreements for our NEOs that became effective as of January 1, 2022, discussed in more detail below.

Say-on-Pay Vote on Executive Compensation.  In prior years, we were an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and were not required to hold a say-on-pay on the compensation of our NEOs. Starting at the 2024 annual meeting of shareholders, we will be conducting our first Say-on-Pay vote as described in Proposal No. 2 of this proxy statement. Because we value the opinions of our shareholders, our Board and Compensation Committee will consider the outcome of the say-on-pay vote, and the related Say-on-Frequency vote described in Proposal No. 3 of this proxy statement, as well as feedback received throughout the year, when making compensation decisions for our NEOs in the future.

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Best Practices. Our pay-for-performance philosophy and compensation practices provide an appropriate risk-managed framework in which our executives are encouraged to achieve our strategic goals without excessive risk taking in their business decisions. We adhere to several best practices for executive compensation, including:

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2023 Peer Group

The Compensation Committee, in consultation with Pearl Meyer, annually reviews and defines a peer group used in determining executive compensation. The 2023 Peer Group was developed based on an analysis of publicly-traded, commercial banks to identify peers with similar characteristics to Bridgewater based on a variety of factors including asset size, financial performance, geography, and overall business model.  

Bridgewater’s 2023 Peer Group included the following 16 banks:

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2023 Executive Compensation Program

We compensate our NEOs with a combination of base salary, annual incentive bonuses in cash, annual and other periodic grants of equity, and other benefits including perquisites. Each element is designed to achieve a specific purpose and to contribute to a total package that is competitive with similar packages provided by other institutions that compete for the services of individuals like our NEOs.

Base salary is an essential component to any market-competitive compensation program. Annual incentives reward the achievement of short term goals, while long term incentives having four-year vesting schedules serve as important retention incentives and drive our NEOs to focus on long term sustainable shareholder value creation. Based on our

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performance and consistent with the design of our program, the Compensation Committee made the following executive compensation decisions for fiscal year 2023:

Base salaries. Current NEO base salaries were established in 2022 based on Pearl Meyer’s assessment of our peer compensation in 2022, as was previously disclosed in the Company’s 2022 proxy statement.

Short Term Incentives. Based on 2023 performance, our NEOs’ annual incentives were earned at between 45% and 53% of target under the Company’s short term incentive plan.

Long Term Incentives. To continue to strengthen alignment with the market and provide a balance between performance and retention, the Compensation Committee decided to continue use of restricted stock units as part of granting long term incentives to the NEOs for 2023.

Base Salary

Our Compensation Committee reviews and approves the base salaries of our NEOs and relied on the recommendations of Pearl Meyer, survey data from industry resources and individual considerations in setting the base salary for each of our NEOs. Salary levels are typically reviewed annually as part of our performance review process and upon a promotion or other change in job responsibility. The Compensation Committee did not review or approve any changes to NEO base salaries during 2023.

Short Term Incentive Plan

The Company’s short term incentive plan (“STI Plan”) for NEOs is based in equal part on the Company’s pre-provision, pre-tax net revenue (“PPNR”), a non-GAAP financial measure (see “GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures” in the 2023 Form 10-K for further details), and the individual performance goals of each NEO, as determined at the discretion of the Compensation Committee. The Compensation Committee believes PPNR is the best overall objective metric for evaluating the NEOs’ performance and believes the subjective evaluation of each NEO’s achievements provides the Compensation Committee with the opportunity to specifically tailor compensation commensurate to the contributions of each NEO individually and as a collective leadership team.

On a year-by-year basis, the Compensation Committee structures the PPNR component of the STI Plan by selecting PPNR goals under which bonuses may be earned. Our NEOs are eligible to earn a portion of their target bonuses if the Company attains a sufficient level of PPNR performance. The Compensation Committee selects PPNR performance goals to establish threshold, target, and maximum metric achievement levels and payout percentages. If we fail to attain the threshold level of the PPNR performance goal, our NEOs earn no amount of their target bonuses subject to the PPNR metric. If we achieve a PPNR exceeding the threshold amount but less than 100% of the target performance goal, our NEOs earn between the threshold payout percentage and the amount of their target bonuses subject to the metric, with actual payouts determined based on a sliding scale. If we achieve a PPNR exceeding the target performance goal but less than an established maximum performance level amount, our NEOs earn between 100% of their target bonuses and the maximum payout percentage subject to the metric, with actual payouts determined based on a sliding scale.

On a year-by-year basis, the Compensation Committee structures the subjective component of the STI Plan by reviewing and approving individual and Company performance goals under which bonuses may be earned.  Actual payouts are established based on a subjective evaluation by the Compensation Committee on the achievement by each NEO and the Company of the approved performance goals.  

For 2023, the annual incentive opportunity was set at 75% of the annual base salary of the CEO and 60% of the annual base salary of each non-CEO NEO. The annual cash bonus for each NEO was determined in equal part based on the Company’s PPNR metric and individual performance goals.  

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COMPENSATION DISCUSSION AND ANALYSIS

For 2023, the Compensation Committee established the following PPNR performance goals and payout percentages:

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In 2023, the Company did not achieve the threshold PPNR performance level, and the NEOs did not earn any amount of their target bonuses subject to the PPNR metric.

For 2023, the Compensation Committee determined subjective payout levels between 90% and 105% of target payouts for each NEO. The 2023 STI bonus for each NEO is set forth below:

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Long Term Incentive Plan

All of our NEOs are eligible to receive grants of equity awards, including incentive and non-statutory stock options, restricted stock, and restricted stock units at the discretion of the Compensation Committee or the Board. Stock options, restricted stock, and restricted stock units may be granted under the 2023 Equity Incentive Plan (the “2023 Equity Plan”) or the 2019 Equity Incentive Plan (the “2019 Equity Plan”) described more fully below. Stock options may also be issued from the Bridgewater Bancshares, Inc. 2017 Combined Incentive and Non-Statutory Stock Option Plan (the “2017 Stock Option Plan”) described more fully below. The 2023 Equity Plan, 2019 Equity Plan, and the 2017 Stock Option Plan allow the Compensation Committee or the Board to grant equity awards under the plans and to establish the terms and conditions of the awards, subject to the plan terms. Previously, the Board has also granted stock options from the Bridgewater Bancshares, Inc. 2012 Combined Incentive and Non-Statutory Stock Option Plan (the “2012 Stock Option Plan”) described in more detail below. Restricted stock unit awards issued as long term incentives are generally issued annually in the first quarter of each year, after release of our earnings for the fourth quarter of the prior year. In addition, we issue incentive and non-statutory stock options to our NEOs on a non-annual, periodic basis.  We do not take material nonpublic information into account when determining the timing and terms of equity awards. In 2023, the Compensation Committee approved grants of restricted stock units, as set forth on the compensation tables below. 

Deferred Incentive Plan

The Compensation Committee may award each NEO a discretionary contribution to the Deferred Incentive Plan, described in more detail below, based on Company and individual performance for each calendar year. To encourage retention, amounts contributed to the Deferred Incentive Plan are subject to forfeiture contingent on the NEO’s continued employment. No amounts previously contributed are outstanding under the Deferred Incentive Plan, and no contributions were made to any NEO under the Deferred Incentive Plan in 2023.  

Equity Plans

Equity awards are currently made through the Company’s 2023 Equity Plan. The Company also maintains the 2019 Equity Plan, the 2017 Stock Option Plan, and the 2012 Stock Option Plan.

Bridgewater Bancshares, Inc. 2023 Equity Incentive Plan. The 2023 Equity Plan was adopted by our Board on February 28, 2023 and became effective upon approval by our shareholders on April 25, 2023. The 2023 Equity Plan is

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COMPENSATION DISCUSSION AND ANALYSIS

designed to promote the Company’s long term financial success by providing a means to attract, retain and reward individuals who can and do contribute to such success, and to further align their interests with those of the Company. The 2023 Equity Plan will continue in effect for so long as any awards remain outstanding under the plan; provided, however, that no awards may be granted under the plan after the tenth anniversary of its effective date. The types of awards which may be granted under the 2023 Equity Plan include incentive and non-qualified stock options, stock appreciation rights, stock awards, restricted stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees, and certain service providers for up to 1,500,000 shares of common stock (all of which may be granted as incentive stock options). As of December 31, 2023, there were 1,107,752 of unissued shares of the Company’s common stock authorized for grants under the 2023 Equity Plan. Awards vest, become exercisable and contain such other terms and conditions as determined by the Compensation Committee and set forth in individual agreements with the individuals receiving the awards. The 2023 Equity Plan allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant is terminated for cause, then all vested and unvested awards are forfeited at the date of termination. The maximum number of shares subject to awards granted during a single calendar year to any one director participant, together with any cash fees paid to such director during such calendar year, may not exceed a total of $400,000. The exercise price of each incentive stock option and non-qualified stock option award equals the fair market value of the Company’s stock on the date of the grant and an option’s maximum term is ten years. All outstanding awards have been granted with a vesting period of four years.

Bridgewater Bancshares, Inc. 2019 Equity Incentive Plan. The 2019 Equity Plan was adopted by our Board on January 22, 2019 and became effective upon approval by our shareholders on April 23, 2019. The 2019 Equity Plan is designed to promote the Company’s long term financial success by providing a means to attract, retain and reward individuals who can and do contribute to such success, and to further align their interests with those of the Company. The 2019 Equity Plan will continue in effect for so long as any awards remain outstanding under the plan; provided, however, that no awards may be granted under the plan after the tenth anniversary of its effective date. The types of awards which may be granted under the 2019 Equity Plan include incentive and non-qualified stock options, stock appreciation rights, stock awards, restricted stock units, restricted stock and cash incentive awards. The Company may grant these awards to its directors, officers, employees, and certain service providers for up to 1,000,000 shares of common stock (all of which may be granted as incentive stock options). As of December 31, 2023, there were no unissued shares of the Company’s common stock authorized for grants under the 2019 Equity Plan. Awards vest, become exercisable and contain such other terms and conditions as determined by the Compensation Committee and set forth in individual agreements with the individuals receiving the awards. The 2019 Equity Plan allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant is terminated for cause, then all vested and unvested awards are forfeited at the date of termination. The maximum number of shares subject to awards granted during a single calendar year to any one director participant, together with any cash fees paid to such director during such calendar year, may not exceed a total of $400,000. The exercise price of each incentive stock option and non-qualified stock option award equals the fair market value of the Company’s stock on the date of the grant and an option’s maximum term is ten years. All outstanding awards have been granted with a vesting period of four years.

Bridgewater Bancshares, Inc. 2017 Combined Incentive and Non-Statutory Stock Option Plan. The 2017 Stock Option Plan was adopted by our Board on March 28, 2017 and approved by our shareholders on April 24, 2017. The 2017 Stock Option Plan is designed to promote the growth and general prosperity of the Company by permitting the Company to grant option awards to consultants, employees, officers and directors that will assist the Company in its efforts to attract and retain the best available persons for positions of substantial responsibility and to provide such persons with an additional incentive to contribute to the future success of the Company and its affiliates. Pursuant to the 2017 Stock Option Plan, the Board may grant eligible persons incentive stock options and non-statutory stock options to purchase stock at an exercise price. The exercise price of an incentive stock option may not be less than the fair market value of Company common stock on the date the option is granted. The exercise price of an incentive stock option awarded to a 10% shareholder may not be less than 110% of the fair market value of the stock on the date the option is granted. Each stock option must be granted pursuant to an award agreement setting forth the terms and conditions of the individual award. Awards of incentive stock options may expire no later than 10 years from the date of grant (and no later than five years from the date of grant in the case of a 10% shareholder). Initially up to 1,500,000 shares of common stock were available for issuance under the plan. As of December 31, 2023, there were 5,000 shares available for issuance under the plan. The 2017 Stock Option Plan provides for acceleration of vesting and exercise privileges of outstanding option awards upon a change in control.

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Bridgewater Bancshares, Inc. 2012 Combined Incentive and Non-Statutory Stock Option Plan. The Company adopted the Bridgewater Bancshares, Inc. 2012 Combined Incentive and Non-Statutory Stock Option Plan, or the 2012 Stock Option Plan, effective March 27, 2012, subject to shareholder approval. Our shareholders approved the plan on April 24, 2012. Under the 2012 Stock Option Plan, we were permitted to grant awards to eligible persons in the form of incentive and non-statutory stock options. We had reserved up to 750,000 shares of common stock for issuance under the plan. Any shares subject to options that are cancelled or expire prior to exercise become available for reissuance under the plan; however, no new grants can be made from the plan after March 27, 2022. Options that were granted under this plan will vest, become exercisable and contain such other terms and conditions as determined by the Board and set forth in individual agreements with the employees receiving the awards. The plan provides for acceleration of vesting and exercise privileges of outstanding options upon the occurrence of a change in control transaction.

Benefits and Other Perquisites

The NEOs are eligible to participate in the same benefit plans designed for all of our full-time employees, including medical, dental, disability, group and life, accidental death and travel accident insurance coverage. We also provide our employees, including our NEOs, with various retirement benefits. Our retirement plans are designed to assist our employees in planning for retirement and securing appropriate levels of income during retirement. The purpose of our retirement plans is to attract and retain quality employees by offering benefit plans similar to those typically offered by our competitors.

Bridgewater Bank 401(k) Safe Harbor Plan. The Bridgewater Bank 401(k) Safe Harbor Plan, or the 401(k) Plan, is designed to provide retirement benefits to all eligible full-time and part-time employees of the Company and the Bank. The 401(k) Plan provides employees with the opportunity to save for retirement on a tax-favored basis. NEOs, all of whom were eligible during 2023 may elect to participate in the 401(k) Plan on the same basis as all other employees. Employees may defer 0% to 100% of their compensation to the 401(k) Plan up to the applicable IRS limit. We currently match 100% of employee contributions on the first 4% of employee compensation. The matching contribution is contributed in the form of cash and is invested according to the employee’s current investment allocation. We also made a discretionary profit sharing contribution equal to 3% of employee compensation to the 401(k) Plan for each of 2023 and 2022.

Health and Welfare Benefits. Our NEOs are eligible to participate in our standard health and welfare benefits program, which offers medical, dental, life, accident, and disability coverage to all of our eligible employees. We do not provide the NEOs with any health and welfare benefits that are not generally available to our other employees, other than payment of a greater portion of health and dental insurance premiums, the Mayo Clinic physical exam program, and additional life insurance benefit, each as described below.

Bank-Owned Life Insurance Policy Benefits. To attract and retain key employees, the Company purchased bank-owned-life insurance policies (the “BOLI Policies”) for the NEOs. The policies include a split-dollar feature pursuant to which a portion of the death benefit payable thereunder will be paid directly to the beneficiaries of the NEOs.

Perquisites. We provide our NEOs with certain perquisites that we believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided to NEOs. Based on this periodic review, perquisites are awarded or adjusted on an individual basis. The perquisites received by our NEOs in 2023 included an automobile allowance, a health club family membership reimbursement program, and health and dental insurance premiums partially paid for by the Company. Additionally, our NEOs are eligible to obtain an annual executive physical exam at the Mayo Clinic in Rochester, Minnesota at the NEO’s option and the Company’s expense.

Other Risk Mitigating Features

Clawback Policy. Effective as of October 2, 2023, the Company maintains a formal clawback policy which provides the Board with the authority to recover certain bonus or other incentive compensation (whether paid in cash or stock) paid to any NEO in appropriate circumstances where there has been a restatement of the Company’s financial statements filed with the SEC or in the event an NEO engages in misconduct as specified in the policy. A copy of the Company’s Clawback Policy is attached as an exhibit to the Company’s form 10-K, and is available on the Company’s website at investors.bridgewaterbankmn.com under the “Investor Relations – Governance Documents” heading.

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Insider Trading Policy. The Company’s Insider Trading Policy permits open market transactions in Company stock beginning the day after the second full trading day after quarterly earnings have been made public until two weeks before the end of each fiscal quarter. A copy of the Company’s Insider Trading Policy is attached as an exhibit to the Company’s form 10-K, and is available on the Company’s website at investors.bridgewaterbankmn.com under the “Investor Relations – Governance Documents” heading.

Anti-Hedging Policy. The Company’s Insider Trading Policy prohibits all employees and directors from entering into any hedging transactions involving the Company’s stock. A copy of the Company’s Insider Trading Policy is available on the Company’s website at investors.bridgewaterbankmn.com under the “Investor Relations – Governance Documents” heading.

Regulatory Impact on Compensation. As a publicly traded financial institution, the Company must comply with multiple layers of regulations when considering and implementing compensation decisions. Although these regulations do not set specific parameters within which compensation decisions must be made, they do require that the Company and the Compensation Committee be mindful of the risks associated with compensation programs designed to incentivize superior performance.

Under the FDIC’s 2015 Interagency Guidelines Establishing Standards for Safety and Soundness (the “Safety and Soundness Standards”), excessive compensation is prohibited as an unsafe and unsound practice. When determining whether compensation is excessive, the FDIC has directed financial institutions to consider whether aggregate cash amounts paid or non-cash benefits provided to an employee are unreasonable or disproportionate to the services the employee performs. The Safety and Soundness Standards set forth a framework within which financial institutions should evaluate an employee’s compensation, with factors including compensation history, internal pay equity and, if appropriate, comparable compensation practices at peer institutions. This framework also requires the Company to consider its overall financial condition.

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Separately, the FDIC, the Federal Reserve, the Office of the Comptroller of the Currency and the Office of Thrift Supervision, together, issued the Guidance on Sound Incentive Compensation Policies, (the “Joint Guidance”) in 2010. The Joint Guidance complements the Safety and Soundness Standards and establishes a framework within which financial institutions must assess the soundness of their incentive compensation plans, programs and arrangements. Because the Joint Guidance is limited to senior executive officers and those other individuals who, either alone or as a group, could pose a material risk to the financial institution, it is somewhat narrower in scope than the Safety and Soundness Standards. With respect to those individuals to which it applies, the Joint Guidance aims to ensure that any available incentive compensation arrangements appropriately balance risk and reward, are compatible with effective controls and risk management and have the support of strong corporate governance.

In addition to the foregoing, proposed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) that intend to implement further risk assessment guidelines and procedures may eventually be finalized by the financial institution regulatory agencies and the SEC. It is likely the Company will be subject to those further guidelines and procedures if and when they become finalized and effective. During 2011, the regulatory agencies issued initial proposed guidance with respect to the Dodd-Frank Act risk assessment guidelines and procedures, and they revised and re-proposed this guidance in 2016. In large part, any guidance under the Dodd-Frank Act would likely restate and codify the frameworks presently set forth in the Safety and Soundness Standards and the Joint Guidance.

The Company is also subject to the SEC’s rules regarding risk assessment, which apply to all publicly traded companies. The SEC rules require the Company to determine whether any of its existing incentive compensation plans, programs or arrangements create risks that are reasonably likely to have a material adverse effect on the Company. Accordingly, the Compensation Committee evaluates the risks associated with the Company’s compensation programs and components on an annual basis. The Compensation Committee annually reviews the Company’s incentive compensation plans, programs and arrangements to ensure they do not create risks that are reasonably likely to have a material adverse effect on the Company.

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The Compensation Committee believes that its regular, overall assessment of the compensation plans, programs and arrangements established for the Company’s NEOs includes a sensible, responsible approach toward balancing risks and rewarding reasonable goals. The Committee annually revisits the frameworks set forth in the Safety and Soundness Standards and the Joint Guidance, as both are effective parts of the Committee’s overall assessment of the balance between risk and reward in the Company’s compensation arrangements. In addition, the Committee continues to monitor the status of the proposed guidance under the Dodd-Frank Act and remains prepared to incorporate into its risk assessment procedures any new guidelines and procedures as may be necessary or appropriate.

Stock Ownership Guidelines. Our Compensation Committee periodically reviews and considers whether to adopt stock ownership guidelines for our CEO and other NEOs. Due to the significant ownership of our Company common stock by our CEO and other NEOs and the historical retention rates of such Company common stock by our CEO and other NEOs, the Compensation Committee has determined it is not necessary to implement stock ownership guidelines for the NEOs at this time.  

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information regarding the compensation paid to, awarded to, or earned by each of our NEOs for our fiscal years ended December 31, 2023, 2022 and 2021.