(2) The 2022 cash incentive payments under
The Middlefield Banking Companys Annual Incentive Plan were made on March 10, 2023, based on financial performance and the executives performance in 2022, and the 2021 cash incentive payments were made February 23, 2022, based
on financial performance and the executives performance in 2021. Messrs. Heslop and Stacys 2022 awards under the Annual Incentive Plan were based upon The Middlefield Banking Company achieving 100% or more of targeted performance goals
for net income, efficiency ratio, ROA, credit quality and regulatory status.
(3) The figures
in the All Other Compensation column are the sum of matching contributions under The Middlefield Banking Companys 401(k) plan, contributions and interest earnings credited by The Middlefield Banking Company for each executive under the
executive deferred compensation agreements, and directors fees paid to Messrs. Caldwell, Heslop and Zimmerly. In 2022, the bank made contributions of $9,616 to the 401(k) plan account of Mr. Caldwell, $12,188 to the 401(k) plan account of
Mr. Heslop, $11,536 to the 401(k) plan account of Mr. Stacy and $887 to the 401(k) plan account of Mr. Zimmerly. The 2022 contributions and interest earnings for the executive deferred compensation agreements were contributions of
$45,500 and interest earnings of $3,899 for Mr. Heslop, and contributions of $33,600 and interest earnings of $2,811 for Mr. Stacy. Mr. Caldwells director fees were $11,537 in 2022 and $30,573 in
2021. Mr. Heslops director fees were $35,074 in 2022 and $30,573 in 2021. Mr. Zimmerlys director fees were $500 in 2022.
(4) Messrs. Caldwell, Heslop, and Stacy received conditional stock awards on February 23, 2021.
The number of shares awarded was 5,291 shares to Mr. Caldwell, 2,921 shares to Mr. Heslop, and 2,467 shares to Mr. Stacy. The award amount is a percentage of the award recipients salary, divided by the share price at the close of market on
December 31, 2020. The closing price of the shares on December 31, 2020 was $22.50. The percentage of salary for purposes of calculating the award to Mr. Caldwell is 30% and for Messrs. Heslop and Stacy is 25%. To become vested in and entitled to
the stock award, each executive is required to maintain continuous service with Middlefield until the third anniversary of the award. Mr. Caldwell forfeited his restricted stock award upon his resignation as President and Chief Executive Officer of
Middlefield on March 31, 2022. The performance condition will be satisfied if the average annual return on Middlefield stock for the years 2021, 2022, and 2023 is at least 10.00%. For this purpose, annual return is the sum of annual dividends and
the excess of the closing stock price on the final trading day of the year over the closing price on the final trading day of the preceding year, divided by the closing stock price on the final trading day of the preceding year. The three-year
average of the annual returns for 2021, 2022, and 2023 will determine whether the 10.00% goal is satisfied. If the 10.00% goal is not satisfied but the average annual return is positive, the recipient will become the owner of and entitled to a
portion of the conditional stock award, forfeiting the remainder. The portion that will be issued to the recipient is the percentage of the total award equal to the percentage achievement of the 10.00% goal. If the average annual return is negative,
the entire award is forfeited, unless the Compensation Committee waives the performance condition. If average annual return exceeds 10.00%, the nominal amount of the conditional stock award will increase, up to a maximum of 125% of the nominal
award, increasing based on the percentage excess of actual average return over the 10.00% goal. Accordingly, the maximum potential conditional stock award total is 3,651 shares for Mr. Heslop and 3,083 shares for Mr. Stacy. The terms of the
conditional stock awards are set forth in the Form 8-K Current Report filed by Middlefield with the SEC on February 25, 2021.
(5) In connection with the closing of the merger with Liberty Bancshares, Inc.,
Middlefields board of directors approved payment of a discretionary incentive bonus of approximately $150,000 and $100,000 to CEO James R. Heslop, II, and SVP, CFO and Treasurer Donald L. Stacy, respectively. One half of each award was payable
in cash and the balance was payable in immediately vested shares on an after-tax basis. The stock portion of each bonus payable in shares was based upon the closing price of Middlefield common stock on
December 1, 2022. The discretionary incentive bonus rewarded Messrs. Heslop and Stacy for their efforts in completing the merger.
(6) Messrs. Heslop and Stacy received conditional stock awards on February 23, 2022. The
number of shares awarded was 3,931 shares to Mr. Heslop and 2,419 shares to Mr. Stacy. The award amount is a percentage of the award recipients salary, divided by the share price at the close of market on December 31, 2021. The
closing price of the shares on December 31, 2021 was $24.80. The percentage of salary for purposes of calculating the award to Mr. Heslop is 30% and to Mr. Stacy is 25%. To become vested in and entitled to the stock award, each
executive is required to maintain continuous service with Middlefield until the third anniversary of the award. The performance condition will be satisfied if the average annual shareholder return on Middlefield stock for the years 2022, 2023, and
2024 is at least 10.00%. For this purpose, annual return is the sum of annual dividends and the excess of the closing stock price on the final trading day of the year over the closing price on the final trading day of the preceding year, divided by
the closing stock price on the final trading day of the preceding year. The three-year average of the annual returns for 2022, 2023, and 2024 will determine whether the 10.00% goal is satisfied. If the 10.00% goal is not satisfied but the average
annual return is positive, the recipient will become the owner of and entitled to a portion of the conditional stock award, forfeiting the remainder. The portion that will be issued to the recipient is the percentage of the total award equal to the
percentage achievement of the 10.00% goal. If the average annual return is negative, the entire award is forfeited, unless the Compensation Committee waives the performance condition. If average annual return exceeds 10.00%, the nominal amount of
the conditional stock award will increase, up to a maximum of 125% of the nominal award, increasing based on the percentage excess of actual average return over the 10.00% goal. Accordingly, the maximum potential conditional stock award total is
4,913 shares for Mr. Heslop and 3,023 shares for Mr. Stacy. The terms of the conditional stock awards are set forth in the Form 8-K Current Report filed by Middlefield with the SEC on
February 25, 2022.
(7) In connection with Middlefields merger with Liberty
Bancshares, Inc., Mr. Zimmerly received a restricted stock award with a value of $325,000. The closing price of Middlefield stock on December 1, 2022 was $28.60 per share, resulting in a grant of 11,364 shares to Mr. Zimmerly. Mr. Zimmerlys
restricted stock grant will vest ratably over a three-year period, provided that Mr. Zimmerly remains continuously employed by Middlefield. Vesting of the restricted stock grant will accelerate in the event of good reason resignation, involuntary
termination without cause, or Mr. Zimmerlys resignation because the Companys board of directors does not appoint Mr. Zimmerly to the positions of Chief Executive Officer of the Company and The Middlefield Banking Company by January 1,
2024.
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