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TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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TENNESSEE COMMERCE BANCORP, INC.
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(Name of Registrant as Specified In Its Charter)
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N/A
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Date Filed:
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Table of Contents
Tennessee Commerce Bancorp, Inc.
381 Mallory Station Road, Suite 207
Franklin, Tennessee 37067
April [ ], 2010
Dear
Shareholder:
You
are cordially invited to attend and participate in the Annual Meeting of Shareholders of Tennessee Commerce Bancorp, Inc. (the "Corporation," "we" or "us") to be held at
3:30 p.m., Central Time, on Thursday, May 20, 2010 at Franklin Marriott Conference Center, 700 Cool Springs Boulevard, Franklin, Tennessee 37067.
We
have enclosed our Annual Report to Shareholders. Please read it and the attached Proxy Statement carefully as they contain important information about the Corporation and the matters
to be addressed at the annual meeting.
Whether
you plan to attend the annual meeting in person or not, it is important that your shares are represented and voted at the annual meeting. For your convenience, you can vote your
proxy in one of the following ways:
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Use the Internet at the web address shown on your proxy card;
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Use the telephone number shown on your proxy card; or
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Complete, sign, date and return your proxy card in the postage-paid envelope provided.
Instructions
regarding each method of voting are contained in the Proxy Statement and on the enclosed proxy card. If you attend the annual meeting and desire to vote your shares
personally rather than by proxy, you may withdraw your proxy at any time before it is exercised.
We
appreciate the trust and confidence that you have placed in us. I look forward to seeing you at this year's annual meeting.
Enclosures:
1. Proxy Card and Business Reply Envelope
2. Annual Report to Shareholders
YOUR VOTE IS VERY IMPORTANT. PLEASE VOTE YOUR PROXY BY INTERNET, TELEPHONE OR BY COMPLETING, SIGNING, DATING AND RETURNING THE ENCLOSED PROXY CARD
PROMPTLY.
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Tennessee Commerce Bancorp, Inc.
381 Mallory Station Road, Suite 207
Franklin, Tennessee 37067
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 20, 2010
Notice is hereby given that the Annual Meeting of Shareholders of Tennessee Commerce Bancorp, Inc. (the "Corporation") will be held at 3:30 p.m.,
Central Time, on May 20, 2010, at Franklin Marriott Conference Center, 700 Cool Springs Boulevard, Franklin, Tennessee 37067 for the following purposes:
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1.
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To
elect three directors to serve until the 2013 annual meeting of shareholders;
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2.
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To
ratify the appointment of KraftCPAs PLLC as the Corporation's independent registered public accounting firm for fiscal year 2010;
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3.
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To
approve a proposed amendment to the Corporation's 2007 Equity Plan;
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4.
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For
purposes of complying with NASDAQ Marketplace Rule 5635(d) in connection with one or more capital-raising transactions, to authorize the
Corporation to issue up to 8,000,000 shares of common stock (including preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock) for
aggregate consideration of not more than $75 million in cash and at a price not less than 80% of the market price of the Corporation's common stock at the time of issuance, with such issuances
to occur, if at all, within the three-month period commencing on the date of the approval of this proposal by the shareholders, and upon such terms as the board of directors shall deem to be in the
best interests of the Corporation;
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5.
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To
approve, in an advisory (non-binding) resolution, the compensation of certain of the Corporation's executive officers described in the
attached Proxy Statement; and
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6.
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To
transact such other business as may properly come before the meeting or any adjournment thereof.
Only
shareholders of record at the close of business on April 6, 2010 are entitled to notice of and to vote at the annual meeting and any adjournment thereof.
April [ ],
2010
YOUR VOTE IS IMPORTANT
Whether or not you expect to attend the meeting, please vote your proxy by Internet, telephone or by completing, signing, dating and returning the enclosed proxy card promptly.
In the event you attend the meeting and wish to vote your shares personally, you may do so at any time before the proxy is exercised.
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Tennessee Commerce Bancorp, Inc.
381 Mallory Station Road, Suite 207
Franklin, Tennessee 37067
PROXY STATEMENT
This Proxy Statement is being furnished to shareholders of Tennessee Commerce Bancorp, Inc. (the "Corporation,"
"we" or "us") in connection with the solicitation of proxies by the board of directors to be voted at the annual meeting of shareholders. Your vote is very important. For this reason, the board of
directors is requesting that, if you are not able to attend the annual meeting of shareholders, you allow your common stock to be represented at the meeting by the
proxies named in the enclosed proxy card. This Proxy Statement, the notice of annual meeting and the enclosed proxy card are being mailed to shareholders beginning on or about
April [ ], 2010.
The
Corporation is a bank holding company for Tennessee Commerce Bank (the "Bank"), headquartered in Franklin, Tennessee.
INFORMATION ABOUT THE ANNUAL MEETING
When is the annual meeting?
Thursday, May, 20, 2010 at 3:30 p.m., Central Time.
Where will the annual meeting be held?
Franklin Marriott Conference Center, 700 Cool Springs Boulevard, Franklin, Tennessee 37067.
What items will be voted on at the annual meeting?
You will be voting on the following matters:
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Election of three directors to serve until the 2013 annual meeting of shareholders;
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Ratification of the appointment of KraftCPAs PLLC as our independent registered public accounting firm for fiscal year
2010;
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Approval of the proposed amendment to our 2007 Equity Plan;
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Approval of the proposal to authorize us to issue securities in connection with capital-raising transactions in accordance
with NASDAQ Marketplace Rule 5635(d);
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Approval, in an advisory (non-binding) resolution, of the compensation of our Named Executive Officers
identified in the section below entitled "Executive CompensationSummary Compensation Table"; and
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Transaction of such other business as may properly come before the meeting or any adjournment thereof.
Who can vote?
You are entitled to vote your common stock if our records show that you held your shares as of the close of business on April 6,
2010, the record date for the annual meeting. On that date, we had 20,000,000 authorized shares of common stock, par value $0.50 per share, of which there were
[ ] shares outstanding and entitled to vote. Each shareholder is entitled to one vote for each share of common stock
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held
on April 6, 2010. The common stock is our only class of outstanding voting securities for purposes of participation in the annual meeting of shareholders.
How do I vote by proxy?
Shareholders are encouraged to vote their proxies by Internet, telephone or completing, signing, dating and returning the enclosed
proxy card, but not by more than one method. If you vote by more than one method, only the last vote that is submitted will be counted and each previous vote will be disregarded. If your proxy is
properly given and not revoked, your shares will be voted as you direct. For the election of directors, you may (i) vote for all of the nominees, (ii) withhold authority to vote for all
of the nominees or (iii) vote for all of the nominees except those you designate. For the ratification of our auditors, approval of the proposed amendment to our 2007 Equity Plan, approval of
the proposal to authorize us to issue securities in accordance with NASDAQ Marketplace Rule 5635(d) and approval of the non-binding advisory resolution of the compensation of the
Named Executive Officers, you may vote "for" or "against" or you may abstain from voting.
If
your proxy is properly given and not revoked, your shares will be voted in accordance with the instructions, if any, given by you, and if no instructions are given, your shares will
be voted (i) "
FOR
" the election as directors of the nominees listed in this Proxy Statement,
(ii) "
FOR
" the ratification of the appointment of KraftCPAs PLLC as our independent registered public accounting firm,
(iii) "
FOR
" the approval of the proposed amendment to our 2007 Equity Plan, (iv) "
FOR
" the
approval of the proposal to authorize us to issue securities in accordance with NASDAQ Marketplace Rule 5635(d) and (v) "
FOR
" the
approval, in an advisory (non-binding) resolution, of the compensation of the Named Executive Officers.
The
board of directors knows of no other business to be presented at the annual meeting. If any matters other than those set forth above are properly brought before the annual meeting,
the individuals named in your proxy card may vote your shares in accordance with their best judgment.
A
proxy to vote submitted by Internet or telephone has the same validity as one submitted by mail. To submit your proxy to vote by Internet, please access the website
www.proxyvote.com
and follow the
instructions on the website. To submit your proxy to vote by telephone, please call
1-800-690-6903 and follow the instructions. You may submit your proxy to vote by Internet or telephone at any time until 11:59 p.m. (Eastern Time) on
May 19, 2010 and either method should not require more than a few minutes to complete. To submit your proxy to vote by mail, please complete, sign, date and return the enclosed proxy card in
the enclosed business reply envelope.
How do I change or revoke my proxy?
You can change or revoke your proxy at any time before it is voted at the annual meeting by:
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Submitting another proxy with a more recent date than that of the proxy first given;
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Sending written notice of revocation to the Corporate Secretary, c/o Tennessee Commerce Bancorp, Inc., 381 Mallory
Station Road, Suite 207, Franklin, Tennessee 37067; or
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Attending the annual meeting and voting in person, although attending the meeting will not by itself revoke your
previously granted proxy.
If I plan to attend the annual meeting, should I still vote by proxy?
Yes. Casting your vote in advance does not affect your right to attend or vote at the annual meeting. Written ballots will be available
at the annual meeting for shareholders of record. If your proxy is properly given and you also attend the meeting, you do not need to vote again at the meeting unless you want to change your vote.
How many votes are required?
Assuming a quorum is present at the annual meeting, the director nominees will be elected by a plurality of the votes cast in person or
by proxy by the shares of common stock entitled to vote at the
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meeting.
Assuming a quorum is present, the appointment of the independent registered public accounting firm, the approval of the amendment to our 2007 Equity Plan, the approval, in an advisory
(non-binding) resolution, of the compensation of the Named Executive Officers and any other matters submitted to the shareholders will be ratified or approved if the votes cast (in person
or by proxy by the shares of common stock entitled to vote at the meeting) for the action exceed the votes cast (in person or by proxy by the shares of common stock entitled to vote at the meeting)
against the action. Further, assuming a quorum is present, the proposal to authorize us to issue securities in accordance with NASDAQ Marketplace Rule 5635(d) requires approval of a majority of
the total votes cast (in person or by proxy by the shares of common stock entitled to vote at the meeting). Shareholders do not have cumulative voting rights with respect to the election of our
directors.
What constitutes a "quorum" for the annual meeting?
A majority of the shares of our common stock, representing a majority of the votes entitled to be cast, present or represented by
proxy, constitutes a quorum for the annual meeting. A quorum is necessary to conduct business at the annual meeting. As of April 6, 2010, there were
[ ] shares of common stock issued and outstanding, so at least [ ]
shares must be present or represented by proxy for a quorum to exist.
What is the effect of abstentions and broker non-votes?
Abstentions and broker non-votes are included in determining the number of shares present or represented at the annual
meeting for purposes of determining whether a quorum exists. Abstentions will be disregarded in the calculation of a plurality with respect to the election of directors, the proposal to ratify the
appointment of KraftCPAs PLLC as our independent registered public accounting firm, the proposal to approve the proposed amendment to our 2007 Equity Plan, and the proposal to approve, in an advisory
(non-binding)
resolution, of the compensation of the Named Executive Officers. Abstentions will have the effect of a vote "against," however, with respect the proposal to authorize us to issue securities in
accordance with NASDAQ Marketplace Rule 5635(d).
Broker
non-votes occur when a broker returns a proxy but does not have discretionary authority to vote on a particular proposal because it has not received voting
instructions from the beneficial holder. When a proposal is not a "routine" matter (such as the election of directors, the approval of the proposed amendment to our 2007 Equity Plan, the proposal to
approve, in an advisory (non-binding) resolution, of the compensation of the Named Executive Officers and the proposal to authorize us to issue securities in accordance with NASDAQ
Marketplace Rule 5635(d)) and a broker has not received voting instructions from the beneficial holder of the shares with respect to that proposal, the broker cannot vote the shares on that
proposal. For "routine" matters (such as the ratification of the appointment of KraftCPAs PLLC as our independent registered public accounting firm), brokers generally may vote on behalf of beneficial
holders who have not furnished voting instructions.
Who pays for the solicitation of proxies?
This Proxy Statement is being furnished in connection with the solicitation of proxies by our board of directors. We will pay the cost
of preparing, printing and mailing material in connection with this solicitation of proxies. In addition to being solicited through the mails, proxies may be solicited personally or by telephone,
facsimile or email by our officers, directors or employees who will receive no additional compensation for such activities. Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares held of record by such persons. Such brokerage houses and other custodians, nominees, and fiduciaries will
be reimbursed for their reasonable expenses incurred in such connection.
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When are shareholder proposals for next year's annual meeting due?
Proposals by shareholders to be considered for inclusion in the proxy materials solicited by the directors for the annual meeting in
2011 must be received by the Corporate Secretary at Tennessee Commerce Bancorp, Inc., 381 Mallory Station Road, Suite 207, Franklin,
Tennessee 37067, no later than December [ ], 2010. The use of certified mail, return receipt requested, is advised. To be
eligible for inclusion, a proposal must comply with Rule 14a-8 and all other applicable provisions of Regulation 14A under the Securities Exchange Act of 1934, as amended.
If
a shareholder, rather than placing a proposal in our proxy materials as discussed above, commences his or her own proxy solicitation for the 2011 annual meeting or seeks to nominate a
director candidate for election or propose business for consideration at such meeting, the shareholder must notify us of such proposal at the address above on or before
March [ ], 2011. If notice is not received by this date, the individuals named as proxies on the proxy card for our 2011 annual
meeting of shareholders will be entitled to exercise their discretionary authority in voting proxies on any such shareholder proposal.
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PROPOSAL 1: ELECTION OF DIRECTORS
Introduction
Our bylaws provide that the board of directors shall determine the number of directors by board resolution. The board of directors has
set the size of the board at nine members. The board of directors is divided into three classes, designated Classes I, II and III, which are
as nearly equal in number as the then total number of directors permits. Each director holds office for a term of three years and until his or her successor is elected and qualified.
All
of the current directors and nominees have served as our directors since we were formed in March 2000 and have been members of the board of directors of the Bank since it began
operations in January 2000.
Information
about the individuals nominated as directors and the remaining members of the board is provided below. Shares of common stock voted by proxy will be voted
FOR
the nominees listed below unless you
specify otherwise.
Nominees
The term of the Class II directors expires at the annual meeting. A majority of our independent directors recommended for the
board's nomination each of H. Lamar Cox, Thomas R. Miller and Darrel E. Reifschneider to serve as Class II directors until the 2013 annual meeting of shareholders and the board
approved such nominees. Each nominee has consented to be a candidate and to serve as a director if elected. We do not anticipate that any of these nominees will be unavailable for election but, if
such a situation arises, the proxy will be voted in accordance with the best judgment of the named proxies unless you have directed otherwise. The Class I and Class III directors will
continue as members of the board until their respective terms expire, as indicated below.
The
table below, along with the corresponding biographical summaries, includes the names, ages, principal occupations, qualifications and other public company directorships of each
nominee, and the year in which each was first elected to the board of directors.
Class II Nominees (Term Expiring 2010)
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Name
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Age
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Principal Occupation
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H. Lamar Cox
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Chief Operating Officer and Secretary of the Bank and the Corporation
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Thomas R. Miller
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Commercial Realtor, Coldwell Banker
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Darrel E. Reifschneider
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President and Chief Executive Officer, Harpeth True Value Hardware
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H. Lamar Cox
has served as Chief Operating Officer of the Corporation and the Bank since December 2009, previously served as Chief Administrative
Officer from 2005 to 2009 and has been responsible for operations and support functions since September 2005. Prior to that, he served as Chief Financial Officer of the Corporation and the Bank from
2000 to 2005 and acting Chief Financial Officer from March 7, 2008 until August 18, 2008. Mr. Cox's banking career brings in-depth knowledge of the financial services
industry and significant financial expertise to assist the board in overseeing the management of the Corporation. He has over 35 years of banking experience in the areas of finance, operations,
retail banking, compliance and lending. Mr. Cox is a Certified Public Accountant, licensed in Georgia and Tennessee, and is a veteran of the United States Navy.
Thomas R. Miller
has been a licensed commercial realtor for Coldwell Banker since August 2005. Mr. Miller brings executive decision-making and
risk assessment skills to the board as a result of his
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experience
in local government and the real estate and insurance industries. Mr. Miller's experience in real estate is especially important as we manage through the current economic downturn,
much of which is real estate driven. Mr. Miller served as Mayor of the City of Franklin, Tennessee from 2003 to 2007 and served as an Alderman for Franklin from 1997 to 2003. Prior to that
time, Mr. Miller was involved in sales and marketing for New York Life Insurance Company, Lumberman's Underwriting Alliance (a specialty insurer of lumber and woodworking properties), a marine
insurance department and a manager of a housing corporation. He previously served as Chief Executive Officer of Mid-Continent Systems in Arkansas and as President of its insurance
subsidiary and also served as a sales manager of Johnson & Higgins, an international insurance broker located in Nashville, Tennessee.
Darrel E. Reifschneider
has served as the President and Chief Executive Officer of Harpeth True Value Hardware, a retail store and lumber yard in
Franklin, Tennessee, since 2000, and is also involved in a number of entrepreneurial endeavors throughout Middle Tennessee. Mr. Reifschneider provides the board with operations, risk
management, strategic planning and corporate governance expertise. Mr. Reifschneider previously served as President of Manchester Tank Company, the second largest manufacturer of propane tanks
in the United States, and was associated with that company from 1946 to 1999. He is active in the Franklin Chamber of Commerce and the Rotary Club of Franklin Breakfast.
Continuing Directors
Each person named below will continue to serve as a director until the annual meeting of shareholders in the year indicated for the
expiration of his term. You are not voting on the election of the Class I and Class III directors listed below. The tables below, along with the corresponding biographical summaries,
include the names, ages, principal occupations, qualifications and other public company directorships of each continuing director, and the year in which each was first elected to the board of
directors.
Class III Directors (Term Expiring 2011)
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Name
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Age
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Principal Occupation
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Paul W. Dierksen
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55
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Private Investor; Consultant, North American Marine Industry
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Dennis L. Grimaud
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63
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Chairman and Chief Executive Officer, Diatherix Laboratories, Inc.
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Michael R. Sapp
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Chairman, President and Chief Executive Officer of the Bank and the Corporation
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Paul W. Dierksen
is a private investor and consultant to the North American Marine Industry. Mr. Dierksen brings strategic planning, business
development and operations management expertise to the board, which facilitates its oversight of our business strategy implementation. From 1996 to December 2008, he served as Senior Vice President of
Marketing and Strategic Business Development for Volvo Penta of the Americas Inc., a division of AB Volvo, Sweden. His professional career includes sales and management positions with Yamaha
Motor Corporation, U.S.A. and Mercury Marine, a division of Brunswick Corporation. He was also Vice President of Sales and Marketing for Chris Craft Boats, Sarasota, Florida, a division of Outboard
Marine Corporation. Mr. Dierksen served on the board of directors of the National Marine Manufacturers Association from 2000 through December 2008 and was elected Chairman of NMMA's Engine
Manufacturers Division Board in October 2008. He attended Franklin University in Columbus, Ohio and the Brunswick Advanced Management Program in Skokie, Illinois.
Dennis L. Grimaud
is Chairman and Chief Executive Officer of Diatherix Laboratories, Inc. Mr. Grimaud brings entrepreneurial and
business-building skills and experience to the board, having successfully founded and grown several businesses. His extensive career managing a diverse portfolio of projects provides risk assessment
skills and experience to the board. In addition, Mr. Grimaud has over
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20 years
of experience overseeing the preparation of financial statements and the review of accounting matters. Mr. Grimaud served as Chief Executive Officer of Genaco Biomedical
Products, Inc., a subsidiary of Qiagen N.V., from August 2004 to June 2008. He is a founder and was President and Chief Executive Officer of Cytometry Associates, Inc., a leading
biomedical company located in Brentwood, Tennessee, from 1988 to 1999. He was President of the Tennessee Biotechnology Association. In addition, he was Chief Executive Officer of Premier Micronutrient
Corporation and has been Chairman of ScyTech, Inc., a biotechnology firm headquartered in Nashville, since 2000. Mr. Grimaud has previously served as a director of American Red
Cross/Nashville Chapter, Nashville Health Care Council and Easter Seals/Middle Tennessee and Vice Chairman/Business Services, Nashville Area Chamber of Commerce.
Michael R. Sapp
is a founding director and has served as Chairman, Chief Executive Officer and President of the Corporation and the Bank since
December 31, 2009. Prior to that, he served as President and Chief Lending Officer from 2001 through 2009. Mr. Sapp brings strong and broad financial services experience to the board as
well as a deep understanding of the Corporation's business and operations and the economic, social and regulatory environment in which we operate. He has over 30 years of banking experience,
with 25 years of such service in Middle Tennessee. He was Division Manager/Senior Vice President, Equipment Finance Division at First American National Bank in Nashville for 13 years
until 1997. Mr. Sapp began his banking career in 1978 at BancOhio National Bank (now The PNC Financial Services Group, Inc.) as a branch lending officer. He has been active in the Middle
Tennessee Leadership Council.
Class I Directors (Term Expiring 2012)
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Name
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Age
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Principal Occupation
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Arthur F. Helf
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72
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Retired (Former Chairman and Chief Executive Officer of the Bank and the Corporation)
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William W. McInnes
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61
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Private Investor
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Paul A. Thomas, M.D.
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55
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Orthopedic Surgeon, The Bone & Joint Clinic, P.C.
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Arthur F. Helf
served as Chairman and Chief Executive Officer of the Corporation and the Bank from their inception in 2000 until his retirement
effective December 31, 2009. As our previous Chairman and Chief Executive Officer, Mr. Helf brings deep institutional knowledge and perspective to the board regarding our strengths,
challenges and opportunities. He is actively involved in the community and is a member of the board of directors of the Cool Springs Chamber of Commerce. Mr. Helf has served as President and
Chairman of the board of directors of the Rotary Club of Franklin Breakfast, where he also held various leadership positions. He has served as a board member of the Franklin YMCA. He is a former
member of the Tennessee Bankers Association Government Relations Committee. Mr. Helf was designated one of the 25 Most Influential Individuals in Williamson County in 2003 and again in 2006 by
the
Nashville Business Journal
and the Williamson County Economic Development Council. Mr. Helf also served as a commissioned officer
(Airborne/Ranger) in the U.S. Army.
William W. McInnes
is a private investor and is active in a number of local and national businesses and activities. Mr. McInnes brings strong
leadership, entrepreneurial and business development skills to the board from his diverse business experience. He also provides governance and community-service skills and experience gained through
his service on the board of various companies and charities. Mr. McInnes qualifies as an "audit committee financial expert" under the rules of the Securities Exchange Commission. During his
professional career, Mr. McInnes worked as a broker, analyst and in corporate finance with J.C. Bradford & Company in Nashville. Additionally, Mr. McInnes served as Vice
PresidentFinance and Treasurer for Hospital Corporation of America from 1978 to 1993, where he initiated a successful leveraged buyout that netted $2.5 billion upon that company's
initial public offering. He is a director of Advanced Biomarker Technologies, LLC. He has previously served as a director of various companies, including four public
companiesCandela Corporation, Surgical Care Affiliates, Inc., Gulf South Medical
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Supply, Inc.
and CTI Molecular Imaging. He is currently Managing Director of Caroland, McInnes & Co., a merchant bank, and Chief Manager of Veritas Media Group, a diversified
entertainment company. His civic involvement includes the Nashville Community Foundation, Tennessee Performing Arts Center, Harpeth Hall School (Treasurer), WPLN (Treasurer), Friends of Warner Parks,
Tennessee Botanical Gardens and Fine Arts Center, Vanderbilt Children's Hospital, YMCA (Advisory Board), Tennessee Special Olympics (Chairman), Tennessee Repertory Theatre (Chairman), Junior
Achievement, Ensworth School, Nashville Child Center, HCA Foundation and the Jack C. Massey School of Business, Belmont University. His professional involvements include the Financial Executives
Institute, Society of Chartered Financial Analysts and the Nashville Society of Financial Analysts (President).
Paul A. Thomas, M.D.
is an orthopedic surgeon and has been a member of The Vanderbilt Bone & Joint Clinic, P.C. in Franklin, Tennessee since
1991. Dr. Thomas brings extensive leadership and strategic planning experience to the board through his experience as a surgeon and a member of various hospital physician committees.
Dr. Thomas is a member of the Williamson Medical Society, Tennessee Medical Association, American Medical Association and the Nashville Orthopedic Association. He is a fellow and board
certified by the American Academy of Orthopedic Surgeons. Dr. Thomas currently serves as an active staff physician at Williamson Medical Center, chairman of the Emergency Room and Outpatient
Committee and a member of the Surgery Department Committee. Dr. Thomas presently serves as team physician for Battle Ground Academy and is a member of the board of directors for Battle Ground
Academy's Wildcat Club.
Required Vote
Assuming a quorum is present, the election of directors requires a plurality of the votes cast in person or by proxy by the shares of
common stock entitled to vote in the election of directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES LISTED ABOVE.
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PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed KraftCPAs PLLC as our independent registered public accounting firm for fiscal year 2010. KraftCPAs
PLLC has served as our independent registered public accounting firm since November 2005. Representatives from KraftCPAs PLLC will be at the annual meeting, will have the opportunity to make a
statement if they choose to do so and will be available to respond to appropriate questions.
The
aggregate fees billed for the services rendered to us by KraftCPAs PLLC for the years ended December 31, 2009 and December 31, 2008 were as follows:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
Audit Fees
(1)
|
|
$
|
149,750
|
|
$
|
152,580
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
|
|
|
|
|
All Other Fees
(2)
|
|
|
8,573
|
|
|
10,655
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
158,323
|
|
$
|
163,235
|
|
-
(1)
-
The
Audit Fees for the years ended December 31, 2009 and 2008 consisted principally of fees for professional services in connection with the audits
of our annual financial statements and reviews of our quarterly financial statements.
-
(2)
-
All
Other Fees for the year ended December 31, 2008 consisted principally of fees in connection with our offering of trust preferred securities, our
response to a comment letter from the SEC and a U.S. Department of Labor investigation. All Other Fees for the year ended December 31, 2009 consisted principally of fees in connection with our
offering of shares of common stock and the related registration statement on Form S-3 filed with the SEC.
The
Audit Committee has adopted pre-approval policies and procedures for audit and non-audit services to be performed by KraftCPAs PLLC as the independent
registered public accounting firm that performs the audit of our consolidated financial statements. All audit and non-audit services performed by KraftCPAs PLLC must be
pre-approved by the Audit Committee, and all such fees were pre-approved for the years ended December 31, 2009 and December 31, 2008.
Required Vote
Assuming a quorum is present, the appointment of KraftCPAs PLLC as our independent registered public accounting firm for fiscal year
2010 will be ratified if the votes cast (in person or by proxy by the shares of common stock entitled to vote at the meeting) for ratification exceed the votes cast (in person or by proxy by the
shares of common stock entitled to vote at the meeting) against ratification. In the event that the shareholders do not ratify the appointment of KraftCPAs, the Audit Committee would consider the vote
in connection with the engagement of an independent registered public accounting firm for fiscal year 2011, but would likely not consider a change for fiscal year 2010 because of the difficulty and
expense of making such a change.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" RATIFICATION OF THE APPOINTMENT OF KRAFTCPAS PLLC AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL YEAR 2010.
9
Table of Contents
PROPOSAL 3: AMENDMENT TO OUR 2007 EQUITY PLAN
Introduction
Our board of directors has adopted an amendment to the Tennessee Commerce Bancorp, Inc. 2007 Equity Plan, or the 2007 Equity
Plan. The descriptions and explanations in this proposal are qualified in their entirety by reference to the full text of the amendment to the 2007 Equity Plan, or the Amendment, a copy of which is
attached hereto as
Appendix A
. If the
Amendment is approved by the shareholders at the annual meeting, it will become effective without further action in accordance with its terms and conditions. Currently, the 2007 Equity Plan is
administered by a committee that generally determine the terms of each grant to eligible participants and makes its recommendations to the Compensation Committee or the full board of directors.
Currently,
under the 2007 Equity Plan, 1,000,000 shares of our common stock have been reserved for issuance under awards, of which 242,000 shares are either subject to outstanding awards
or have been issued.
Explanation of Changes
The purpose of the Amendment is to (i) increase the number of shares of our common stock that are available for award under the
plan from 1,000,000 shares to a total of 2,000,000 shares, (ii) eliminate the restriction that limits the number of restricted shares of our common stock that may be issued as awards to 50% of
the total shares available under the plan, (iii) clarify that the 2007 Equity Plan will be administered by a committee of the board of directors comprised solely of "outside directors" in
accordance with Section 162(m) of the Internal Revenue Code, (iv) clarify the effect of adjustments upon changes in our common stock, and (v) clarify that dividends will not be
paid for restricted stock awards until vesting occurs.
The
board of directors determined that the number of shares that are available for award under the 2007 Equity Plan should be increased so that awards may be granted to
non-employee directors and additional awards may be granted to selected employees. In 2007, all 1,000,000 shares available for award under the plan were originally allocated to the
then-current executive officers. For more information, see the section below entitled "Compensation Discussion and AnalysisComponents of Total CompensationEquity
Incentive." The Amendment, which increases the number of shares that may be awarded under the plan, will provide additional shares that can be granted to employees and non-employee
directors as long-term incentive compensation. Further, at a special meeting of our shareholders held in July 2009, our shareholders approved an amendment to our charter that increased the
number of authorized shares of our common stock from 10,000,000 to 20,000,000 shares. The increased number of shares that may be awarded under the plan as a result of the proposed Amendment is
consistent with the increased number of authorized shares approved by our shareholders in 2009.
As
a result of our participation in the U.S. Department of the Treasury's Troubled Asset Relief Program, or TARP, our Named Executive Officers cannot receive option awards under the 2007
Equity Plan, but can only receive certain restricted stock awards. For more information about this restriction, see the section below entitled "Compensation Discussion and AnalysisEffect
of the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009." The Amendment will facilitate the granting of restricted stock awards under the plan to our
Named Executive Officers during the TARP period, as defined under the Emergency Economic Stabilization Act of 2008, or EESA.
General Description of 2007 Equity Plan
The purpose of the 2007 Equity Plan is to provide financial incentives for selected employees and non-employee directors,
promoting our long-term growth and financial success by:
-
-
Attracting and retaining employees and non-employee directors of outstanding ability;
10
Table of Contents
-
-
Strengthening our capability to develop, maintain and direct a competent management team;
-
-
Providing an effective means for selected employees and non-employee directors to acquire and maintain
ownership of our common stock;
-
-
Motivating employees to achieve long-range goals and objectives; and
-
-
Providing incentive compensation opportunities competitive with peer financial institution companies.
The
2007 Equity Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted performance stock, unrestricted shares of
our common stock and performance unit awards. As of March 31, 2010, we employed 94 people. Unless earlier terminated by the board of directors, the plan will terminate on the tenth anniversary
of its effective date, or June 8, 2017.
The
2007 Equity Plan is currently administered by the plan committee. Under the plan, however, the board of directors has the authority, upon the recommendation of the plan committee, to
grant awards to directors. The plan committee or the board, as the case may be, determines which employees and/or non-employee directors are to receive awards under the plan, the type of
award to be granted, the vesting schedule (if any) of the award, the time when such award will be granted and all other terms and conditions of any award. For any awards that are intended to qualify
as "performance-based compensation" under Section 162(m) of the Internal Revenue Code, the plan sets forth certain performance criteria that the plan committee may use as goals relating to the
payment or vesting of an award. The plan committee must establish any performance goals related to an award in writing no later than the earlier of 90 days after the beginning of the
performance period or the expiration of 25% of the performance period. At the end of each performance period, the plan committee must certify in writing the extent to which a participant has or has
not met the relevant performance goals.
The
exercise price of stock option awards under the 2007 Equity Plan may not be less than 100% of the fair market value of our common stock on the date of grant. With respect to
incentive stock option awards under the plan granted to employees who own more than 10% of the total outstanding common stock, however, the exercise price may not be less than 110% of the fair market
value of our common stock on the date of grant. The aggregate fair market value of common stock with regard to which incentive stock options are exercisable by an individual for the first time during
any calendar year may not exceed $100,000. No stock option award shall be exercisable after the expiration of ten years from the date it is granted (five years for incentive stock options granted to
employees who own more than 10% of the total outstanding shares of common stock).
Outstanding
options, stock appreciation rights and restricted stock will generally become fully vested and exercisable upon a participant's death, disability or retirement. Outstanding
options and stock appreciation rights may be exercised at any time within three months after a participant's "separation from service," as defined under Section 409A of the Internal Revenue
Code, upon a participant's separation from service for any reason other than death, disability, retirement or discharge for "cause," as defined in the 2007 Equity Plan. Upon a participant's death, any
exercisable options or stock appreciation rights may be exercised by the participant's representative at any time before the earlier of one year after the participant's death or the expiration date of
the award. Upon a participant's disability or retirement, any exercisable options or stock appreciation rights may be exercised by the participant at any time before the earlier of one year after the
participant's disability or retirement, or the expiration date of the award.
If
we are not the surviving corporation following a "change in control," as defined in the 2007 Equity Plan, and the surviving or acquiring corporation does not assume the outstanding
awards or does not substitute equivalent equity awards relating to the securities of such surviving or acquiring corporation, then all outstanding awards under the plan will become immediately and
fully exercisable (or in the case of restricted stock, fully vested and all restrictions immediately lapse). In the case of awards subject to
11
Table of Contents
performance
criteria, the target payout opportunities will be deemed to have been fully earned based on achievement of target performance as of the effective date of the change in control. In
addition, our board of directors may provide for a cash payment to be made to each participant for the outstanding awards upon the consummation of the change in control, determined on the basis of the
fair market value that would be received in the change in control by the holders of our securities relating to such awards.
If
a participant is terminated without cause within 24 months following a change in control, and we are the surviving corporation or the other surviving or acquiring corporation
assumes the outstanding awards under the 2007 Equity Plan or substitutes equivalent equity awards relating to the securities of such surviving or acquiring corporation, then all outstanding awards
under the plan will become immediately and fully exercisable (or in the case of restricted stock, fully vested and all restrictions immediately lapse). In the case of awards subject to performance
criteria, the target payout opportunities will be deemed to have been fully earned based on achievement of target performance.
As
of March 31, 2010, there were options outstanding to purchase 242,000 shares of our common stock under the 2007 Equity Plan. The exercise price for these options is the fair
market value of our common stock on the date of grant. As of March 31, 2010, there were 12,971 shares of restricted stock outstanding under the plan, 6,047 shares of which were unvested and
6,924 shares of which were originally scheduled to vest on December 1, 2009 but, because we are a TARP recipient, will fully vest after the TARP financial assistance is no longer outstanding,
provided that the applicable executives provide services for at least two years after the date of grant. Based upon the closing sale price of our common stock on
April [ ], 2010, the aggregate market value of the 242,000 shares of common stock underlying outstanding options and 12,971
shares of unvested restricted stock granted pursuant to the 2007 Equity Plan was approximately $[ ]. The number of outstanding options
excludes options to purchase 152,308 shares of our common stock claimed by our former chief financial officer to be owed to him. The U.S. Department of Labor has ordered that these options be
"reinstated." We intend to appeal this decision and do not treat these options as outstanding.
New Plan Benefits
Because awards under the 2007 Equity Plan are granted at the discretion of the Compensation Committee, it is not possible to determine
the amount of awards that will be granted if the Amendment is approved or the amount of awards that would have been received by non-employee directors in 2009 if the Amendment had been in
effect. The Compensation Committee has not approved any awards under the 2007 Equity Plan that are conditioned upon shareholder approval of the Amendment.
Federal Income Tax Consequences
The tax consequences to us and our employees and directors will vary with the type of award. Generally, an employee or director will
not recognize income and we are not entitled to take a deduction upon the grant of non-qualified stock options or restricted stock under the 2007 Equity Plan.
Upon
exercise of a non-qualified stock option, the employee or director recognizes ordinary income in an amount equal to the difference between the fair market value of the
common stock and the exercise price paid. The individual is also subject to capital gains treatment on the gain realized pursuant to a subsequent sale of the common stock acquired upon exercise of a
non-qualified stock option. For this purpose, the individual's basis in the common stock is its fair market value at the time the non-qualified stock option is exercised. We
are not entitled to a tax deduction upon the grant of a non-qualified stock option under the 2007 Equity Plan. We are generally entitled to take a deduction for the ordinary income that is
recognized by an individual upon exercise of a non-qualified stock option in the same amount and at the time of such recognition.
With
respect to awards of restricted stock, employees and directors will recognize ordinary income based on the market value of common stock at the time it becomes vested or earned under
an award.
12
Table of Contents
Employees
and directors can make an election under Section 83(b) of the Internal Revenue Code, however, to be taxed at the time that the restricted stock is granted. In either case, the
individual is
also subject to capital gains treatment on the subsequent sale of the common stock acquired through an award of restricted stock. For this purpose, the individual's basis in the common stock is its
fair market value at the time the common stock subject to the award becomes vested. If an election under Section 83(b) is made, the individual's basis in the common stock is determined at the
time the restricted stock was transferred. We will receive a deduction for the amount constituting ordinary income to the executive officer or director for restricted stock.
Equity Compensation Plan Information
The following table provides information as of December 31, 2009 with respect to compensation plans under which shares of our
common stock are authorized for issuance:
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities to
be Issued Upon Exercise
of Outstanding Options,
Warrants and Rights
(a)
|
|
Weighted-average
Exercise Price of
Outstanding Options,
Warrants, and Rights
(b)
|
|
Number of Securities Remaining
Available for Future Issuance
Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(c)
|
|
Equity Compensation Plans Approved by Shareholders
(1)
|
|
|
242,000
|
|
$
|
23.92
|
|
|
758,000
|
|
Equity Compensation Plans Not Approved by Shareholders (incentive options for executive officers, directors and incorporators)
(2)
|
|
|
623,820
|
|
$
|
9.68
|
|
|
|
|
Total
|
|
|
865,820
|
|
$
|
13.66
|
|
|
758,000
|
|
-
(1)
-
Includes
the 2007 Equity Plan.
-
(2)
-
Includes
various stock option agreements entered into with employees of the Bank between January 14, 2000 and November 1, 2005. For additional
information regarding the terms of these stock options, see Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2009.
Required Vote
Assuming a quorum is present, the Amendment will be approved if the votes cast (in person or by proxy by the shares of common stock
entitled to vote at the meeting) for the Amendment exceed the votes cast (in person or by proxy by the shares of common stock entitled to vote at the meeting) against the Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" APPROVAL OF THE PROPOSED AMENDMENT TO OUR 2007 EQUITY PLAN.
13
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PROPOSAL 4: AUTHORIZATION TO ISSUE SECURITIES IN CONNECTION WITH CAPITAL-RAISING TRANSACTIONS IN ACCORDANCE WITH NASDAQ MARKETPLACE RULE 5635(d)
Introduction
Our common stock is currently listed on The NASDAQ Global Market and, therefore, we are subject to the marketplace rules of The NASDAQ
Stock Market LLC. NASDAQ Marketplace Rule 5635(d) requires us to obtain shareholder approval prior to the issuance of our common stock in connection with a transaction other than a
public offering involving the sale, issuance or potential issuance by the Corporation of common stock (or securities convertible into or exercisable for common stock) (i) at a price less than
the greater of book or market value, which together with sales by our officers, directors or substantial shareholders equals 20% or more of common stock or 20% or more of the voting power outstanding
before the issuance; or (ii) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the
stock. Shares of our common stock issuable upon the exercise or conversion of warrants, options, debt instruments, preferred stock or other equity securities issued or granted in such a
capital-raising transaction will be considered shares issued in such a transaction in determining whether the 20% limit has been reached, except in certain circumstances such as issuing warrants that
are not exercisable for six months and have an exercise price that exceeds the market value.
We
are seeking shareholder approval for the potential issuance of shares of our common stock, or securities convertible into our common stock, in one or more capital-raising
transactions, or Offerings, subject to the following limitations:
-
-
The aggregate number of shares issued in the Offerings will not exceed 8,000,000 shares of our common stock (including
pursuant to preferred stock, options, warrants, convertible debt or other securities exercisable for or convertible into common stock);
-
-
The total aggregate consideration will not exceed $75 million in cash;
-
-
The maximum discount at which the shares of common stock may be offered will be 20% below the market price of our common
stock at the time of issuance;
-
-
Such Offerings will occur, if at all, within the three-month period commencing on the date of the approval by the
shareholders; and
-
-
Such other terms as the board of directors shall deem to be in the best interests of the Corporation and its shareholders.
Background
In December 2009, we raised approximately $3.2 million through a private placement of 903,394 shares of our common stock at a
"discount," as defined under rules of The NASDAQ Stock Market LLC, to the market value. This number of shares equaled approximately 19% of the number of shares of our common stock that was
outstanding immediately prior to the issuance. Under the marketplace rules of The NASDAQ Stock Market LLC, the shares that we issued in connection with the December 2009 offering could be
aggregated with any shares that we issue in connection with the Offerings for purposes of determining if the 20% limit has been reached. Therefore, even if we issue in any Offerings an amount of
shares that is less than 20% of the outstanding shares of our common stock, we would likely need to obtain shareholder approval in the event that the 20% threshold is exceeded as a result of
aggregating the number of shares we issued in December 2009 with the number of shares that we issue in any Offerings.
We
intend to seek additional capital to implement our business strategy and enhance our overall capitalization. We have not determined the particular terms for such prospective Offerings
because of uncertainty and volatility in the current business climate. Because we may seek additional capital that triggers the requirements of NASDAQ Marketplace Rule 5635(d), we are seeking
shareholder approval
14
Table of Contents
now,
so that we will be able to move quickly in the near future to take full advantage of any opportunities that may develop in the equity markets.
Effect on Outstanding Common Stock
The issuance of shares of our common stock, or other securities convertible into shares of our common stock, in accordance with any
Offerings would dilute, and thereby reduce, each existing shareholder's proportionate ownership in our common stock. The board of directors has not yet determined the terms and conditions of any
Offerings. As a result, the level of potential dilution cannot be determined at this time, but as discussed above, we may not issue more than 8,000,000 shares of common stock in the aggregate pursuant
to the authority requested from shareholders under this proposal. It is possible that if we conduct a non-public stock offering, some of the shares we sell could be purchased by one or
more investors who could acquire a large block of our common stock. This would concentrate voting power in the hands of a few shareholders who could exercise greater influence on our operations or the
outcome of matters put to a vote of shareholders in the future. Although we do not anticipate that the issuance of common stock pursuant to the Offerings will result in a "change in control" (as used
in NASDAQ Marketplace Rule 5635), in the event it does, shareholder approval of the Offerings will also constitute approval of any change of control for the purposes of NASDAQ Marketplace
Rule 5635 and no additional shareholder approval will be required or sought.
We
cannot determine what the actual net proceeds of the Offerings will be until they are completed, but as discussed above, the aggregate dollar amount of the non-public
offerings will be no more than $75 million. If all or part of the Offerings is completed, the net proceeds will be used for general corporate purposes. We currently have no arrangements or
understandings regarding any specific transaction with investors, so we cannot predict whether we will be successful should we seek to raise capital through any Offerings.
Required Vote
Assuming a quorum is present, approval of the Offerings requires the affirmative vote of a majority of the total votes cast (in person
or by proxy by the shares of common stock entitled to vote at the meeting), in accordance with NASDAQ Marketplace Rule 5635(e)(4).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" APPROVAL OF THE OFFERINGS.
15
Table of Contents
PROPOSAL 5: APPROVAL OF A NON-BINDING ADVISORY
RESOLUTION OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
Section 111(e) of EESA, as amended by the American Recovery and Reinvestment Act of 2009, or ARRA, requires financial
institutions that receive financial assistance under TARP to permit a separate shareholder non-binding vote on compensation of their executives. As a result, at our annual meeting of
shareholders, our board of directors will submit a resolution for approval by our shareholders. In connection with this resolution, we encourage you to carefully review the sections below entitled
"Compensation Discussion and Analysis" and "Executive Compensation."
This
proposal, commonly known as a "say-on-pay" proposal, gives you the opportunity to endorse or not endorse the compensation provided to our Named Executive
Officers as described in this Proxy Statement by voting on the following resolution:
"RESOLVED, that the shareholders of Tennessee Commerce Bancorp, Inc. (the "Corporation") approve the compensation provided to the Named Executive Officers of the
Corporation, as described in the sections entitled "Compensation Discussion and Analysis" and "Executive Compensation" in the Corporation's proxy statement for its 2010 annual meeting of
shareholders."
We
believe that our compensation program strongly aligns the interests of our executives with the interests of our shareholders in the creation of long-term value as well as
the components that drive long-term value. We also believe that our executive compensation policies and procedures are focused on pay-for-performance principles and
are reasonable in comparison both to similar-sized companies in the industry and to our performance during 2009. In particular:
-
-
No base salary increases were awarded to any of our Named Executive Officers in 2008 or 2009, except that Frank Perez
received a salary adjustment in December 2009 to bring his compensation to a level commensurate with his experience and tenure;
-
-
We did not pay any bonuses to our Named Executive Officers in 2009; and
-
-
Our Named Executive Officers forfeited stock options previously granted in 2009 as a result of our participation in the
TARP Capital Purchase Program.
Required Vote and Effect
Assuming a quorum is present, the resolution on executive compensation will be approved by the shareholders if the votes cast (in
person or by proxy by the shares of common stock entitled to vote at the meeting) favoring approval of the resolution exceed the votes cast (in person or by proxy by the shares of common stock
entitled to vote at the meeting) opposing approval of the resolution.
Because
your vote is advisory, it will not be binding on our board of directors or our Compensation Committee, overrule any decision made by our board of directors or our Compensation
Committee or create or imply any additional fiduciary duty of our board of directors or our Compensation Committee. The Compensation Committee may, however, take into account the outcome of the vote
when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" APPROVAL OF THE NON-BINDING ADVISORY RESOLUTION OF THE COMPENSATION OF THE NAMED EXECUTIVE
OFFICERS.
16
Table of Contents
CORPORATE GOVERNANCE
Role of the Board
Pursuant to Tennessee law, our business, property and affairs are managed under the direction of our board of directors. The board has
the responsibility for establishing broad corporate policies and for our overall performance and direction, but is not involved in day-to-day operations. Members of the board
keep informed of our
business by participating in board and committee meetings, by reviewing analyses and reports provided to them regularly, and through discussions with our executive officers.
Director Independence
The board has determined that each of Messrs. McInnes, Thomas, Miller, Reifschneider, Dierksen and Grimaud, constituting a
majority of our directors, are "independent" under the rules of The NASDAQ Stock Market LLC. Under applicable SEC and NASDAQ rules, the existence of certain "related person" transactions above
certain thresholds between a director and the Corporation are required to be disclosed and preclude a finding by the board that the director is independent. None of our directors currently serves as a
director of another public company. We are not aware of any family relationships among any of our directors and executive officers.
During
2009, there were no additional relationships or transactions that the board of directors discussed in making its independence determinations with respect to each director
identified as independent and no relationships or transactions precluded any such directors from being independent.
Board Leadership Structure
The board of directors is comprised of two members of senior management, one former member of senior management and six independent
directors. Currently, the board does not have a fixed policy regarding the separation of the offices of the Chairman and Chief Executive Officer and believes that it should maintain the flexibility to
select the Chairman and its board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Corporation and its shareholders. At this time, the
offices of the Chairman and Chief Executive Officer are combined and the board believes that there are a number of important advantages to combining these positions. Having a Chairman who also serves
as the Chief Executive Officer allows timely communication with the board on critical business matters. Combining these positions also creates a firm link between management and the board and promotes
the development and implementation of corporate strategy. Further, the board believes that combining these roles does not undermine the independence of the board, because Mr. McInnes was
appointed as Lead Independent Director in January 2008 and its two standing committees are comprised entirely of independent directors.
The
Lead Independent Director's responsibility is to coordinate the activities of the other independent directors, including without limitation (i) advising the Chairman of the
Board as to an appropriate
schedule of meetings of the board of directors, (ii) reviewing and providing the Chairman of the Board with input regarding the agendas for the meetings of the board of directors,
(iii) calling, chairing and developing the agendas for quarterly meetings of the independent directors and assuming other responsibilities which the independent directors as a whole might
designate from time to time, (iv) reporting to the board of directors concerning the meetings or deliberations of the independent directors, (v) recommending to the Chairman of the Board
the membership of the various committees of the board of directors, as well as the selection of the chair of each such committee, (vi) serving as Chairman of the Board when the Chairman of the
Board is not present, (vii) serving as a liaison for consultation and communication with shareholders and (viii) performing such other duties as the board of directors may from time to
time delegate.
17
Table of Contents
Risk Oversight
The board of directors is responsible for providing oversight of our risk management processes. The board oversees planning and
responding to risks arising from changing business conditions. The board also is responsible for overseeing compliance with laws and regulations, responding to recommendations from supervisory
authorities and overseeing management's conformance with internal policies and controls addressing the operations and risks of significant activities. Full board meetings regularly include reports on
risk exposures as well as reporting on financial condition, credit risks, liquidity risks and other risk related matters inherent in our operation. Our senior risk officer and chief credit officer
frequently provide reports at board meetings with respect to management's assessment of risk exposure and the controls in place to monitor those risks.
While
the board of directors has the ultimate oversight responsibility for the risk management process, the committees of the board also have responsibility for risk management. The
Audit Committee monitors the integrity of the process by which our financial statements are prepared, our independent auditor's qualifications and independence, the performance of our internal audit
function and independent auditors and our compliance with legal and regulatory requirements, in order to mitigate risk associated with our financial reporting process. The Audit Committee periodically
meets privately in separate executive sessions with each of management, our internal auditors and our independent auditor. The Compensation Committee meets periodically to consider the risks
associated with our compensation policies and practices and strives to create incentives for our executives that encourage a level of risk-taking behavior that is consistent with our
business strategy. In addition, because we are a "TARP recipient" as that term is defined under ARRA, the Compensation Committee meets at least semi-annually with one of our senior risk
officers to review our employee compensation plans in light of an assessment of any risk posed to us from such plans.
Committees of the Board of Directors
The board currently has two standing committees, the Audit Committee and the Compensation Committee. The following table shows the
current membership of each committee of the board of directors:
|
|
|
|
|
Director
|
|
Audit Committee
|
|
Compensation Committee
|
H. Lamar Cox
|
|
|
|
|
Paul W. Dierksen
|
|
|
|
|
Dennis L. Grimaud
|
|
X
|
|
|
Arthur F. Helf
|
|
|
|
|
William W. McInnes
|
|
Chair
|
|
|
Thomas R. Miller
|
|
X
|
|
X
|
Darrel E. Reifschneider
|
|
|
|
Chair
|
Michael R. Sapp
|
|
|
|
|
Paul A. Thomas, M.D.
|
|
|
|
X
|
Audit Committee
The Audit Committee consists of Messrs. Grimaud, McInnes (Chair) and Miller. The board of directors has determined that each of
the members of the Audit Committee meets the independence standards of The NASDAQ Stock Market LLC and SEC Rule 10A-3 and that Mr. McInnes is an "audit committee
financial expert," as defined in Item 407(d)(5)(ii) of SEC Regulation S-K. The Audit Committee has the authority and responsibility to ensure the accuracy and reliability of
our financial
18
Table of Contents
statements,
adequate internal controls and operating procedures, and compliance with all laws, regulations and policies. The Audit Committee's primary duties are to:
-
-
Hire one or more independent public accountant to audit our books, records and financial statements and to review our
system of accounting, including our systems of internal control;
-
-
Monitor and evaluate, independently and objectively, our internal controls and financial reporting procedure;
-
-
Discuss with the independent public accountant the results of its audits and reviews;
-
-
Periodically communicate the committee's findings to the board of directors; and
-
-
Facilitate communication among the board of directors, our independent public accountant and our management.
The
Audit Committee held four meetings in 2009. A copy of the charter of the Audit Committee, which was amended in 2009, is attached as
Appendix B
to this Proxy Statement. The Audit Committee reviews
and reassesses the adequacy of its charter on an annual basis.
Compensation Committee
The Compensation Committee consists of Messrs. Reifschneider (Chair) and Miller and Dr. Thomas. The members of the
Compensation Committee are appointed annually and the board of directors has determined that each of the members of the committee meets the independence standards of The NASDAQ Stock
Market LLC, SEC Rule 16b-3 and Section 162(m) of the Internal Revenue Code. The Compensation Committee held five meetings in 2009. The Compensation Committee does not
have a charter.
The
board of directors has granted the Compensation Committee with the authority to review and approve corporate goals and objectives relevant to the compensation of the Named Executive
Officers, including the Chief Executive Officer, evaluate the performance of the Named Executive Officers in light of those goals and objectives and set the compensation levels of the Named Executive
Officers based on this evaluation. The Compensation Committee may not delegate any of such authority to any other persons.
The
Compensation Committee generally determines the base salary of the Named Executive Officers on an annual basis in executive session independent of management. The Chief Executive
Officer is not involved in the determination of his own salary but recommends to the Compensation Committee salary levels for the other Named Executive Officers. Other compensation matters (for
example, bonuses and equity awards) involving executives are considered and reviewed by management, including the Chief Executive Officer, and recommended to the Compensation Committee. The
Compensation Committee uses a consultant in formulating many of its recommendations, both for advice and as a source of peer-company data. The Compensation Committee engaged Meyer
Chatfield Compensation Advisors, LLC in 2009 to update various components of our executive compensation arrangements, including the preparation of new employment agreements and updating the
annual incentive plan for our Named Executive Officers.
Pursuant
to Section 111 of EESA, as amended by Section 7001(c) of ARRA, the Compensation Committee meets at least semi-annually with one of our senior risk
officers to review our employee compensation plans in light of an assessment of any risk posed to us from such plans.
Executive Committee
The Executive Committee was dissolved by the board in April 2009. The full board of directors now conducts monthly meetings. Prior to
its dissolution, the Executive Committee met two times in 2009.
19
Table of Contents
Nominations of Directors
We currently have no standing nominating committee. Our board of directors is of the view that it is appropriate not to have such a
committee because of the long tenure of the current directors and the fact that a majority of the members of the board are independent. Consistent with the rules of The NASDAQ Stock Market LLC,
any director nominees will be recommended for the full board's selection by a majority of the independent directors.
With
respect to the nominating process, the independent directors discuss and evaluate possible candidates in detail. The independent directors will recommend to the board new nominees
as independent directors based on the following criteria:
-
-
Personal qualities and characteristics, experience, accomplishments and reputation in the business community;
-
-
Current knowledge and contacts in Franklin/Williamson County and in the banking industry or other industries relevant to
our business;
-
-
Diversity of viewpoints, background, experience and other demographics;
-
-
Ability and willingness to commit adequate time to board and committee matters; and
-
-
The fit of the individual's skills and personality with those of other directors and potential directors in building a
board that is effective and responsive to its duties and responsibilities.
The
independent directors do not set specific, minimum qualifications that nominees must meet in order for the independent directors to recommend them to the board as nominees, but
rather believe that each nominee should be evaluated based on his or her individual merits, taking into account our needs and the existing composition of the board of directors. Once a candidate whom
the independent directors seriously want to consider and move toward recommendation for nomination is identified, the independent directors will enter into discussions with that nominee.
We
do not pay a fee to any third party to identify, evaluate or assist in the identification or evaluation of potential nominees to our board.
Shareholder Nominations of Directors
The board will consider nominees recommended by shareholders, and any such nominee is given appropriate consideration in the same
manner as other nominees using the same criteria described above and considering the additional information referred to below. Shareholders who wish to nominate a candidate for election as director to
be considered by the board may do so by submitting in writing such nominee's name to the Corporate Secretary at Tennessee Commerce Bancorp, Inc., 381 Mallory Station Road, Suite 207,
Franklin, Tennessee 37067. Nominations for directors must be received by the Corporate Secretary at the Corporation's principal office not less than 120 days prior to the meeting at which
directors are to be elected. A shareholder's nomination should contain:
-
-
A statement that the writer is a shareholder and is proposing a candidate for consideration by the board;
-
-
The name of and contact information for the candidate;
-
-
A statement of the candidate's business and educational experience;
-
-
A statement detailing any relationship or understanding between the proposing shareholder and the candidate;
-
-
A statement that the candidate is willing to be considered and willing to serve as a director if nominated and elected;
and
20
Table of Contents
-
-
A statement of the number of shares of our common stock that the nominating shareholder holds of record or in which
shareholder has a beneficial interest and the number of such shares that have been held for more than one year.
Shareholder Communication with the Board of Directors
Shareholders desiring to communicate with our board of directors on matters other than director nominations should submit their
communication in writing to the Chairman
of the Board, c/o the Corporate Secretary, Tennessee Commerce Bancorp, Inc., 381 Mallory Station Road, Suite 207, Franklin, Tennessee 37067 and identify themselves as a shareholder. All
such communications will be forwarded to the Chairman of the Board for a determination as to an appropriate response.
Director Attendance at Board, Committee and Annual Meetings
During 2009, the board of directors held 14 meetings. The increased number of meetings, as compared to prior years, was a result of the
board dissolving the Executive Committee in April 2009. Each director attended at least 75% of the total of all meetings of the board of directors and all committees on which such director served. All
directors are expected to attend the annual meeting of shareholders on May 20, 2010. In 2009, all of our directors attended the annual meeting of shareholders.
Executive Sessions
In order to promote open discussion among our independent directors, we schedule executive sessions at least twice each year in which
only those directors are present. The Lead Independent Director, currently Mr. McInnes, presides at these meetings.
Code of Ethics
Our board of directors has not adopted a Code of Ethics, as defined by the rules and regulations of the SEC, because the principal
business of the consolidated company is conducted by the Bank rather than the Corporation. The board of directors of the Bank, however, has adopted a Code of Ethics for all the employees of the Bank,
including all of the executive officers and directors of the Bank who are also executive officers and directors of the Corporation. A copy of this Code of Ethics can be obtained by a written request
to the Corporate Secretary, Tennessee Commerce Bancorp, Inc., 381 Mallory Station Road, Franklin, Tennessee 37067.
21
Table of Contents
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information, as of January 1, 2010 (unless otherwise indicated), with respect to the
beneficial ownership of our common stock by (i) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, (ii) each director and
nominee, (iii) each of our Named Executive Officers and (iv) all of our directors and executive officers as a group. As of January 1, 2010, there were 5,646,368 shares of our
common stock outstanding. We relied on information supplied by our directors, executive officers and beneficial owners for purposes of this table.
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
(1)
|
|
Amount and Nature of
Beneficial Ownership
(2)
|
|
Percent of Class
|
|
Gilder, Gagnon, Howe & Co. LLC
|
|
|
879,898
|
(3)
|
|
15.6
|
%
|
H. Lamar Cox
|
|
|
127,064
|
(4)
|
|
2.2
|
%
|
Paul W. Dierksen
|
|
|
42,108
|
(5)
|
|
*
|
|
Dennis L. Grimaud
|
|
|
53,332
|
|
|
*
|
|
Arthur F. Helf
|
|
|
247,912
|
(6)
|
|
4.3
|
%
|
William W. McInnes
|
|
|
79,832
|
|
|
1.4
|
%
|
Thomas R. Miller
|
|
|
36,332
|
|
|
*
|
|
Frank Perez
|
|
|
|
|
|
*
|
|
Darrel E. Reifschneider
|
|
|
172,120
|
(7)
|
|
3.0
|
%
|
Michael R. Sapp
|
|
|
348,296
|
|
|
5.9
|
%
|
Paul A. Thomas, M.D.
|
|
|
89,616
|
(8)
|
|
1.6
|
%
|
|
All directors and executive officers as a group (10 persons)
|
|
|
1,195,736
|
|
|
19.1
|
%
|
-
*
-
Less
than 1%
-
(1)
-
The
address of Gilder, Gagnon, Howe & Co. is 1775 Broadway, New York, NY 10019.
-
(2)
-
Beneficial
ownership is deemed to include shares of our common stock that an individual has the right to acquire within 60 days after
January 1, 2010, including upon the exercise of stock options reflected in the table below. These shares are deemed to be outstanding for the purposes of computing the "percentage of class" for
that individual, but are not deemed outstanding for the purposes of computing the percentage of any other person.
|
|
|
|
|
Name
|
|
Common Stock Underlying Options
Exercisable Within 60 Days
|
|
H. Lamar Cox
|
|
|
107,848
|
|
Paul W. Dierksen
|
|
|
26,600
|
|
Dennis L. Grimaud
|
|
|
30,000
|
|
Arthur F. Helf
|
|
|
118,400
|
|
William W. McInnes
|
|
|
30,000
|
|
Thomas R. Miller
|
|
|
21,500
|
|
Frank Perez
|
|
|
|
|
Darrel E. Reifschneider
|
|
|
30,000
|
|
Michael R. Sapp
|
|
|
219,272
|
|
Paul A. Thomas, M.D.
|
|
|
30,000
|
|
Information
in the table for individuals also includes shares held in our 401(k) Plan and in individual retirement accounts for which the shareholder can direct the vote. Except as indicated in the
footnotes to this table, each person listed has sole voting and investment power with respect to all shares of common stock shown as beneficially owned by him pursuant to applicable law.
-
(3)
-
As
reported in Amendment No. 6 to the Schedule 13G filed on January 11, 2010 with the Securities and Exchange Commission, Gilder,
Gagnon, Howe & Co. LLC claims to have sole voting power with respect to 40,625 shares of our common stock, shared dispositive power with respect to 839,273 shares of our
22
Table of Contents
-
-
common
stock and beneficial ownership of 879,898 shares of our common stock. In this Schedule 13G, Gilder Gagnon reported that it
beneficially owned 18.6% of the outstanding shares of our common stock. This calculation does not factor in additional shares that we issued in connection with a registered direct offering on
December 18, 2009. As a result of such additional shares, Gilder Gagnon beneficially owned 15.6% of the outstanding shares of our common stock as of January 1,
2010.
-
(4)
-
On
January 8, 2008, pursuant to the 2007 Equity Plan, 10,955 shares of restricted stock were granted to Mr. Cox. Eighty percent (80%) of these
shares vest over five years in equal increments, subject to the achievement of certain performance criteria, and 20% of these shares vest over five years in equal increments, subject to continued
employment. The amount shown also includes 2,016 shares of restricted stock that vested as of December 31, 2009.
-
(5)
-
Includes
3,200 shares held by Mr. Dierksen's wife, of which Mr. Dierksen disclaims beneficial ownership.
-
(6)
-
Includes
34,132 shares held by Mr. Helf's wife, of which Mr. Helf disclaims beneficial ownership, and 17,832 shares which are pledged as
collateral for a loan.
-
(7)
-
Includes
6,570 shares held by Mr. Reifschneider's children, of which Mr. Reifschneider disclaims beneficial ownership.
-
(8)
-
Includes
34,950 shares held by Dr. Thomas' spouse, of which Dr. Thomas disclaims beneficial ownership.
23
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee is currently comprised of Messrs. Reifschneider and Miller and Dr. Thomas and is responsible
for making decisions concerning cash and other compensation paid to our Chief Executive Officer and our other Named Executive Officers.
The
Compensation Committee meets periodically to evaluate the compensation and benefits of our Named Executive Officers as well as the compensation of the non-employee
directors. The Compensation Committee also evaluates the performance criteria upon which cash incentive bonuses and other incentives, including equity-based incentives, are based.
Because
we are a TARP recipient, during the period in which we have any obligation arising from financial assistance provided under the Capital Purchase Program, all compensation
decisions will be guided by the current requirements for participants in the Capital Purchase Program.
Executive Compensation Philosophy
We seek to provide an executive compensation package that is driven by our overall financial performance and changes in shareholder
value. Executive compensation is intended to be set at levels that the Compensation Committee, based upon information developed with independent consultants, believes is consistent with a peer group
of banks agreed upon by the Compensation Committee. At our 2009 annual meeting of shareholders, 87% of the votes cast by our shareholders approved the compensation of our executive officers in an
advisory, non-binding resolution. This approval confirmed the Compensation Committee's belief that our compensation practices are appropriate and, therefore, continued with a consistent
approach for the rest of 2009 and early 2010.
We
believe that the compensation of the Named Executive Officers should reflect the value of our position in the marketplace. To attract and retain a highly skilled workforce, we believe
that we must remain competitive with the pay of other employers, and particularly other financial services companies, who compete with us for talent. We believe that our compensation program must
deliver top-tier compensation for top-tier individual and company performance. Where individual performance falls short of expectations and/or company performance lags the
industry, our program should deliver lower-tier compensation. In addition, we believe that the objectives of pay for performance and retention must be balanced. Even in periods of
temporary downturns in company performance, our program is designed to ensure that successful, high-achieving employees remain motivated and committed to us.
Our
compensation practices are designed to provide a competitive level of compensation to the executive officers and to provide rewards for satisfactory performance. For the Named
Executive Officers, before we became a TARP recipient, our practice was to provide a base salary that accounts for approximately 45% to 55% of their total compensation, a cash bonus incentive that
accounts for approximately 40% to 45% of their total compensation, an equity-based incentive that accounts for approximately 5% to 10% of their total compensation and other compensation that accounts
for approximately 5% to 10% of their total compensation. Now that we are a TARP recipient, in 2009 the
base salaries of the Named Executive Officers accounted for approximately 81% to 87% of their total compensation, no cash bonus incentives were awarded, equity awards accounted for 0% to approximately
4% of their total compensation and other compensation accounted for approximately 10% to 19% of their total compensation. As a component of total compensation, for example, each Named Executive
Officer receives a car allowance. We have also purchased term life insurance policies for each of Messrs. Helf, Sapp and Cox that provide 60% of the policy benefit to each executive's
beneficiaries.
24
Table of Contents
Objectives of Executive Compensation
The objectives of our executive compensation program are to attract and retain quality executive leadership and to enhance each
executive's performance. The Compensation Committee bases our executive compensation program on the same objectives that guide us in establishing all of our compensation
programscompensation is based upon the level of job responsibility, individual performance and company performance. As employees progress to higher levels of responsibility in the
organization, an increasing proportion of their pay is linked to our performance and changes in shareholder value, because at higher levels they are more able to affect our results.
The
Compensation Committee strives to meet these objectives while maintaining market-competitive pay levels and ensuring that we make efficient use of our resources and have predictable
expense recognition.
Competitive Positioning
In the past, we have utilized the services of Clark Consulting of Atlanta, Georgia in the development and design of our overall
executive compensation program. In 2007, Clark Consulting prepared an analysis of the market competitiveness of base salary for our executive officers and developed a customized
high-performing peer group of bank holding companies. The peer group was developed based on a number of factors, including asset size and similarity with our business model. The
Compensation Committee further stratified the peer group by factors relating
to similarities to us in operations and organization. An analysis of proxy statements was performed comparing our Named Executive Officers' overall compensation to the peer group. The Compensation
Committee and Clark Consulting determined that compensation for a select peer group of banking organizations with assets ranging from $500 million to $2.0 billion was an appropriate
benchmark for us. The peer group was comprised of the following organizations:
|
|
|
Bank Holding Company
|
|
Location
|
Ameris Bancorp
|
|
Moultrie, Georgia
|
Capital Bancorp, Inc.
|
|
Nashville, Tennessee
|
Cass Information Systems, Inc.
|
|
Bridgeton, Missouri
|
Centrue Financial Corporation
|
|
Ottawa, Illinois
|
Civitas BankGroup, Inc.
|
|
Franklin, Tennessee
|
Commonwealth Bankshares, Inc.
|
|
Norfolk, Virginia
|
Cooperative Bankshares, Inc.
|
|
Wilmington, North Carolina
|
Crescent Financial Corporation
|
|
Cary, North Carolina
|
Enterprise Financial Services Corp
|
|
Saint Louis, Missouri
|
First Security Group, Inc.
|
|
Chattanooga, Tennessee
|
Greene County Bancshares, Inc.
|
|
Greenville, Tennessee
|
Integrity Bancshares, Inc.
|
|
Alpharetta, Georgia
|
Intervest Bancshares Corporation
|
|
New York, New York
|
Macatawa Bank Corporation
|
|
Holland, Michigan
|
Mercantile Bank Corporation
|
|
Grand Rapids, Michigan
|
MetroCorp Bancshares, Inc.
|
|
Houston, Texas
|
MidWestOne Financial Group, Inc.
|
|
Oskaloosa, Iowa
|
Nexity Financial Corporation
|
|
Birmingham, Alabama
|
Patriot National Bancorp, Inc.
|
|
Stamford, Connecticut
|
Peoples Bancorp of North Carolina, Inc.
|
|
Newton, North Carolina
|
Pinnacle Financial Partners
|
|
Nashville, Tennessee
|
Royal Bancshares of Pennsylvania, Inc.
|
|
Narberth, Pennsylvania
|
Rurban Financial Corp.
|
|
Defiance, Ohio
|
Smithtown Bancorp, Inc.
|
|
Hauppauge, New York
|
Southcoast Financial Corporation
|
|
Mount Pleasant, South Carolina
|
Tower Financial Corporation
|
|
Fort Wayne, Indiana
|
Yadkin Valley Financial Corporation
|
|
Elkin, North Carolina
|
25
Table of Contents
Clark Consulting provided the Compensation Committee with comparisons of our results to the peer group's results for the one-year and
three-year periods ended December 31, 2006, for the following measurements:
-
-
Total assets;
-
-
Asset growth;
-
-
Return on average assets;
-
-
Return on average equity;
-
-
Net interest margin;
-
-
Efficiency ratio;
-
-
Core earnings per share growth;
-
-
Total return;
-
-
Price/earnings ratio;
-
-
Price/tangible book ratio; and
-
-
Price/assets ratio.
The
composition of our peer group remained the same for 2007, 2008 and 2009.
Use of Compensation Consultants
In November 2008, the Compensation Committee engaged Meyer Chatfield Compensation Advisors, LLC to update various components of
our executive compensation. As part of its services, during 2009 Meyer Chatfield helped prepare (i) amended and restated employment agreements and split dollar agreements for each of
Messrs. Helf, Sapp and Cox, (ii) salary continuation plans for each of Messrs. Sapp and Cox, and (iii) consulting and non-competition agreements for each of
Messrs. Helf and Cox. In 2009, we paid Meyer Chatfield $135,702 in connection with the services it rendered to the Compensation Committee related to executive and director compensation.
Composition of Total Compensation
We believe that our executive compensation should include both short-and long-term compensation, with an emphasis on
long-term compensation that is tied to corporate performance. By using long-term incentives, we believe we align our executive's interests with our shareholders and create a
strong retention tool.
Base
salaries are designed to provide competitive levels of compensation to executives based upon their experience, duties and scope of responsibility. Our practice has been to set base
salary levels competitively coupled with the opportunity for the executive to substantially increase his compensation through cash bonus incentives, when permitted, by meeting aggressive performance
criteria goals. Annual cash bonus incentives, when permitted, are used as a short-term incentive to drive achievement of annual performance criteria goals and to encourage teamwork. For
more information about restrictions on our ability to pay cash bonus incentives to our Named Executive Officers, see the section below entitled "Cash Bonus Incentives."
Base Salary
Base salaries for the Named Executive Officers were initially determined by evaluating the responsibilities of their respective
positions, and by reference to the competitive marketplace for talent, including a comparison of base salaries for comparable positions at comparable companies within the
26
Table of Contents
financial
services industry. The Compensation Committee determines annual salary adjustments by evaluating the competitive marketplace, our performance and the performance of the individual executive
officer.
In
June 2007, based upon the compensation analysis provided by Clark Consulting, the board of directors set base salary levels for the Chief Executive Officer and the other Named
Executive Officers at levels commensurate with our performance within the peer group. In general, our performance was comparable to the 50
th
and
75
th
percentile of the peer group. The Compensation Committee did not increase the base salaries of Messrs. Helf, Sapp and Cox during 2008 or 2009. Mr. Perez
received a salary adjustment in December 2009 to bring his compensation to a level commensurate with his experience and tenure. The base salary for each of the Named Executive Officers for the year
ended December 31, 2009 was as follows:
|
|
|
|
|
Named Executive Officer
|
|
Base Salary
|
|
Michael R. Sapp
|
|
$
|
400,000
|
|
Frank Perez
|
|
|
165,000
|
(1)
|
H. Lamar Cox
|
|
|
350,000
|
|
Arthur F. Helf
(2)
|
|
|
400,000
|
|
-
(1)
-
Mr. Perez's
base salary increased to $215,000, effective December 15, 2009.
-
(2)
-
Mr. Helf
retired effective December 31, 2009.
The
differences between the base salaries of (i) Messrs. Helf and Sapp as compared to Mr. Cox, and (ii) Messrs. Helf, Sapp and Cox as compared to
Mr. Perez is a reflection of differences in the level and scope of responsibility of their respective positions, and the market's pattern of providing progressive salaries at higher levels.
Cash Bonus Incentive
Because we were in 2009, and continue to be, a TARP recipient, we are prohibited from paying or accruing any bonus during the period in
which any obligation arising from financial assistance provided under the Capital Purchase Program remains outstanding. Therefore, no cash bonus was paid to or accrued for any of our Named Executive
Officers during 2009.
Equity Incentive
We currently have one equity incentive plan, the 2007 Equity Plan, which was approved by our board of directors and shareholders on
June 8, 2007. The Compensation Committee believes the 2007 Equity Plan provides financial incentives for selected employees, promoting our long-term growth and financial success by
(i) attracting and retaining employees of outstanding ability, (ii) strengthening our capability to develop, maintain and direct a competent management team, (iii) providing an
effective means for selected employees to acquire and maintain ownership of our common stock, (iv) motivating employees to achieve long-range goals and objectives and
(v) providing incentive compensation opportunities competitive with peer financial institution companies.
The
Compensation Committee believes that stock ownership or its equivalent by management aligns the interest of management with our shareholders. The committee anticipates that on a
going-forward basis, equity awards granted to the Named Executive Officers will serve as the primary long-term compensation component of our executive compensation program.
Under
the 2007 Equity Plan, Messrs. Helf, Sapp and Cox, acting as the committee administrating these plans, have generally determined the terms of each grant to eligible
participants and make their recommendations to the Compensation Committee. As a result of Mr. Helf's retirement at the end of 2009, Messrs. Sapp and Cox will make such recommendations
beginning in 2010. Grants relating to our
27
Table of Contents
common
stock may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted performance stock, performance units and unrestricted
shares of our common stock. The exercise price of options granted under the 2007 Equity Plan may not be less than the fair market value of the shares of our common stock on the date of grant.
Based
on the recommendations of Clark Consulting, in 2007 Messrs. Helf, Sapp, Cox and the former Chief Financial Officer, as the plan committee for the 2007 Equity Plan,
determined, and the Compensation Committee subsequently approved, the award of nonqualified stock options to purchase 50,000 shares of our common stock (or shares of restricted stock with an
equivalent value to such stock options, at the grantee's discretion) to be granted to each of the Named Executive Officers during each of the five fiscal years 2007 through 2011. When this
determination was made in 2007, these awards were limited to the Named Executive Officers because they are responsible for long-term investment, operating or policy decisions. The plan
committee determined that 20% of each award grant would vest annually over five years, subject to continued employment, and 80% of each award grant would vest annually over five years, subject to the
achievement of certain performance goals.
On
January 20, 2009, pursuant to the 2007 award, the Compensation Committee granted nonqualified stock options to purchase 50,000 shares of our common stock to each of
Messrs. Helf, Sapp and Cox under the 2007 Equity Plan. The Compensation Committee also established performance criteria and goals with respect to these awards. Because we are a TARP recipient,
however, we are prohibited from paying or accruing any incentive compensation (other than long-term restricted stock under certain conditions) during the period in which any obligation
arising from financial assistance provided under the Capital Purchase Program remains outstanding. The rules that enumerated this restriction were promulgated under EESA and adopted by Treasury in
June 2009. As a result, because our Named Executed Officers may only receive restricted stock awards for so long as we are a TARP recipient, Messrs. Helf, Sapp and Cox subsequently forfeited
the options that were granted in January 2009.
On
May 19, 2009, the board of directors approved a recommendation by the Compensation Committee to adjust total compensation for our directors to "peer levels." This
recommendation included an equity award under the 2007 Equity Plan with a value of $15,000, in the form of either restricted stock or stock options, at the election of each non-employee
director. The number of shares of restricted stock granted was based on the closing sale price of our common stock on the date of grant, and the number of options granted was based on the
Black-Scholes option-pricing model on the date of grant, rounded to the nearest one thousand shares. As indicated above, however, the Named Executive Officers who also serve as directors
(i.e., Messrs. Helf, Sapp and Cox) were only eligible to receive this equity award in the form of restricted stock. Therefore, on June 1, 2009, 2,308 shares of restricted stock
were granted to each of Messrs. Helf, Sapp and Cox based on their service as directors. These shares of restricted stock were originally scheduled to vest on December 1, 2009, but
because we are a TARP recipient, they will fully vest after the TARP financial assistance is no longer outstanding, provided that the executive provides services for at least two years after the date
of grant. For more information about the limitations on incentive compensation for our Named Executive Officers, see the section below entitled "Effect of the Emergency Economic
Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009."
Perquisites and Benefits
Each
Named Executive Officer receives five weeks of paid time off each year (excluding holidays). We provide sick leave for all employees, including the Named
Executive Officers. Employees, including the Named Executive Officers, are not permitted to carry over unused paid time off into a subsequent fiscal year. We provide medical and other benefits to the
Named Executive Officers that are generally available to other employees. In 2009, we purchased term life insurance policies covering Messrs. Helf, Sapp and
28
Table of Contents
Cox
that provide 60% of the policy benefit to their beneficiaries. We provide a car allowance to each of Messrs. Sapp and Cox and pay each of their annual dues at a local country club,
long-term care insurance premiums, expenses related to their respective use of such country club for matters related to our business and their respective reasonable expenses for continuing
education courses necessary to maintain any certifications or licenses that they hold. We also provide Mr. Perez with an automobile allowance. For information about the amounts of these
payments, see the section below entitled "Executive CompensationSummary Compensation Table." We provide these perquisites to the Named Executive Officers in recognition of the service
they provide, as well as to help us attract and retain talented leaders. These perquisites are a key way to offer a competitive package to the Named Executive Officers beyond their base salaries.
We
maintain a 401(k) Plan as part of our retirement program that is intended to provide payments to the Named Executive Officers upon their resignation or
retirement. The purpose of this retirement program is to provide competitive retirement benefits that enable us to attract and retain talented leaders who will exert considerable influence on our
direction and success. Each Named Executive Officer is eligible to participate in the 401(k) Plan, pursuant to which each could contribute up to a maximum of $16,500 for 2009 (the same limit
applicable to all employees and for 2009, each of Messrs. Helf, Sapp and Cox was eligible to contribute up to a maximum additional $5,500 "catch-up" permitted for employees over the
age of 50). We do not provide matching contributions under the 401(k) Plan at this time.
Split Dollar Agreements.
On May 19, 2009, each of Messrs. Helf, Sapp and Cox entered into a split dollar agreement with the
Corporation
and the Bank. Pursuant to each split dollar agreement, we allocate a portion of the death proceeds of life insurance policies on the executive's life to a beneficiary designated by the executive. We
own the life insurance policies and pay the premiums on the policies from our general assets. Upon the executive's death, the death benefit payable to the executive's beneficiary will generally be the
lesser of (i) the difference between the death benefit payable under the life insurance policy and the cash value of such policy, and (ii) an amount equal to two times the executive's
aggregate annual salary and bonus paid for the most recent full year of employment, as reduced by any payments due or payable under the salary continuation plans and/or consulting and
non-competition agreements, which are discussed in the sections below entitled "Salary Continuation Plans" and "Executive CompensationSummary Compensation
TableConsulting and Non-Competition Agreements." To the extent that any payments under the split dollar agreements would be "parachute payments," such payments will be reduced
to the extent that the payments, when aggregated with all other "parachute payments," would not create an "excess parachute payment" pursuant to Section 280G of the Internal Revenue Code.
Salary Continuation Plans.
On May 19, 2009, each of Messrs. Sapp and Cox entered into a salary continuation plan with the
Corporation
and the Bank. Each salary continuation plan is an unfunded arrangement maintained primarily to provide supplemental retirement benefits for the executive. The
29
Table of Contents
following
table shows the amounts payable to each executive under the salary continuation plans upon the occurrence of certain events:
|
|
|
|
|
|
|
Amount Payable under Salary Continuation Plan
|
Event
|
|
Michael R. Sapp
|
|
H. Lamar Cox
|
Termination on or after Normal Retirement Date
|
|
180 identical monthly payments in an amount equal to his average annual base salary for the highest three-year period ending at his normal retirement date divided by 48
|
|
96 identical monthly payments in an amount equal to the greater of (a) $4,166.67 or (b) his average annual base salary for the highest three-year period ending at his normal retirement date divided by
48
|
Early Retirement
|
|
180 identical monthly payments in an amount equal to the accrual balance earned as of the last day of the plan year immediately preceding his early retirement date divided by 180
|
|
96 identical monthly payments in an amount equal to the accrual balance earned as of the last day of the plan year immediately preceding his early retirement date divided by 96
|
Termination in connection with Disability Before Normal Retirement Age
|
|
180 identical monthly payments in an amount equal to the accrual balance earned as of the last day of the plan year immediately preceding his termination of employment divided by 180
|
|
96 identical monthly payments in an amount equal to the accrual balance earned as of the last day of the plan year immediately preceding his termination of employment divided by 96
|
Change of Control
(1)
|
|
The greater of (i) the present value of 180 identical monthly payments in an amount equal to his average annual base salary for the highest three-year period ending at his normal retirement date divided by 48, or
(ii) his accrual balance as of the last day of the plan year preceding the effective date of the change in control
|
|
The greater of (i) the present value of 96 identical monthly payments in an amount equal to the greater of (a) $4,166.67 or (b) his average annual base salary for the highest three-year period ending at
his normal retirement date divided by 48, or (ii) his accrual balance as of the last day of the plan year preceding the effective date of the change in control
|
-
(1)
-
Includes
a termination of employment within the period beginning 12 months before and ending 24 months following a change in control, as
defined in the salary continuation plan.
The
executive or his beneficiary, as applicable, is only entitled to one of the foregoing benefits, which will be determined by the first of such events to occur. No benefits are payable
under a salary continuation plan, however, in the event the executive's employment is terminated for "cause." Further, any monthly payments made to an executive or his beneficiary pursuant to the
salary continuation plan will be reduced by any payments made pursuant to the corresponding consulting and non-competition agreement, which is discussed in the section below entitled
"Executive CompensationSummary Compensation TableConsulting and Non-Competition Agreements."
If
the executive dies while employed by us, instead of any benefits payable under the salary continuation plan described above, we will pay to the executive's beneficiary an amount equal
to the accrual balance earned as of the last day of the plan year immediately preceding the date of the executive's
30
Table of Contents
death.
To the extent that any payments under a salary continuation plan would be "parachute payments," as described in Section 280G of the Internal Revenue Code, such payments will be reduced
to the extent that the payments, when aggregated with all other "parachute payments," would not create an "excess parachute payment" pursuant to Section 280G of the Internal Revenue Code.
Because we are a TARP recipient, however, we are prohibited from making any "golden parachute payments" to the Named Executive Officers during the TARP period, as defined under EESA. For purposes of
this prohibition, a "golden parachute" is any payment for the departure from the Corporation for any reason or any payment because of a change of control. As a result, Messrs. Sapp and Cox
would not receive these payments under the salary continuation plans if such triggering events occur at any time during the period that we continue to be a TARP recipient.
Effect of the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009
In 2009, pursuant to EESA, as amended by ARRA, Treasury issued regulations to implement specified limitations on the compensation paid
or accrued by financial institutions that participate in TARP. The compensation standards that apply to us as a result of our participation in the TARP Capital Purchase Program extend beyond our
"senior executive officers" and apply to up to 20 of our next "most highly compensated employees," as such terms are defined under EESA. The executive compensation requirements applicable to us during
the TARP period, as defined under EESA, include the following:
-
-
No Unnecessary and Excessive Risk.
Compensation is limited
to exclude incentives for senior executive officers to take unnecessary and excessive risks that threaten our value. Further, our Compensation Committee must meet with one of our senior risk officers
at least semiannually to discuss and evaluate employee compensation plans in light of an assessment of any risk posed to us by such plans.
-
-
Prohibition on Bonus, Retention Awards or Incentive Compensation
Payments.
With certain exceptions, we are prohibited from paying or accruing any bonus, retention award or incentive compensation to at
least our five most highly-compensated employees. The following compensation is excluded from this prohibition:
-
-
Long-term restricted stock, if it does not (i) fully vest until after the TARP financial assistance is
no longer outstanding, (ii) vest unless the employee provides services to the TARP recipient for at least two years after the date of grant, and (iii) have a value greater than
one-third of the employee's total annual compensation; and
-
-
Any such compensation required to be paid pursuant to a written employment contract executed on or before
February 11, 2009.
-
-
Prohibition on Severance/Golden Parachutes.
We are
generally prohibited from making any payment to a senior executive officer or any of the next five most highly-compensated employees for departure from the Corporation for any reason, except "payments
for services performed or benefits accrued."
-
-
Clawback.
We must recover any bonus, retention award or
incentive compensation paid to a senior executive officer and any of the next 20 most highly-compensated employees that was based on materially inaccurate financial or other performance criteria.
-
-
Limit on Tax Deduction.
Pursuant to
Section 162(m)(5) of the Internal Revenue Code, we cannot deduct annual compensation in excess of $500,000 for any of the Named Executive Officers.
-
-
Prohibition on Compensation Plans that Encourage Earnings
Manipulation.
We are prohibited from having any compensation plan in place that would encourage manipulation of our reported earnings to
enhance the compensation of any of our employees.
31
Table of Contents
-
-
Prohibition on Tax Gross-Ups.
We are generally
prohibited from providing tax gross-ups or other reimbursements for the payment of taxes to any senior executive officer and the next 20 most highly-compensated employees relating to
severance payments, perquisites or any other form of compensation. For this purpose, a gross-up includes providing a right to a payment of such gross-up at a future date, such
as a date after the TARP period.
-
-
Policy on Luxury Expenditures.
Our board of directors
adopted and implemented a company-wide policy regarding excessive or luxury expenditures, which governs expenditures on entertainment, events, office and facility renovations, aviation and
other transportation services and certain other activities or events. A copy of this policy is available on our website at
www.tncommercebank.com
on our
Investor Relations webpage under the caption "Corporate Governance."
-
-
Perquisites and Compensation Consultants.
We disclose in
this Proxy Statement certain information regarding perquisites paid to senior executive officers and certain highly-compensated employees. In addition, we disclose in this Proxy Statement certain
information regarding our engagement of any compensation consultants. For more information, see the sections above entitled "Components of Total CompensationPerquisites and
Benefits" and "Use of Compensation Consultants."
-
-
Nonbinding Shareholder Vote on Executive Compensation.
We
have included in this Proxy Statement a separate shareholder "say on pay" vote to approve the compensation of our executives. For more information, see the section above entitled "Proposal 3: Approval
of a Non-Binding Advisory Resolution of the Compensation of the Named Executive Officers."
-
-
Compliance Certification.
Our Chief Executive Officer and
Chief Financial Officer certify annually that we are in compliance with the executive compensation provisions of EESA, as amended by ARRA. These certifications are filed as exhibits to our Annual
Report on Form 10-K. The Compensation Committee also makes certain certifications required under EESA, as amended by ARRA, on an annual basis. These certifications are included in
the section below entitled "Compensation Committee Report."
-
-
Treasury Review of Prior Payments to Executives.
Treasury
has stated that it will review all bonuses, retention awards or other compensation paid to our senior executive officers and the next 20 most highly-compensated employees to determine if such payments
were inconsistent with the purposes of EESA, as amended by ARRA, and negotiate for any appropriate reimbursements.
Compensation Policies and Practices Related to Risk Management
The Compensation Committee reviews the risks and rewards associated with our compensation programs. We believe that our executive
compensation program discourages behavior that leads to excessive or unnecessary risk-taking as follows:
-
-
Because we are a TARP recipient, the Compensation Committee meets at least semi-annually with one of our
senior risk officers to review our employee compensation plans and to make reasonable efforts to ensure that such arrangements do not encourage senior executive officers to take unnecessary and
excessive risks that threaten our value. The Compensation Committee's certification to this effect is included below in the section entitled "Compensation Committee Report";
-
-
Because we are a TARP recipient, we are prohibited from paying or accruing any bonus to our five most highly-compensated
employees;
-
-
Because we are a TARP recipient, we are prohibited from granting long-term incentive awards to our five most
highly-compensated employees. We may, however, grant restricted stock awards, if the restricted stock does not (i) fully vest until after the TARP financial assistance is no longer
32
Table of Contents
outstanding,
(ii) vest unless the employee provides services to the TARP recipient for at least two years after the date of grant, and (iii) have a value greater than
one-third of the employee's total annual compensation;
-
-
Because we are a TARP recipient, we must clawback any bonus, retention award or incentive compensation paid to a senior
executive officer and any of the next 20 most highly-compensated employees that was based on materially inaccurate financial or other performance criteria;
-
-
Because we are a TARP recipient, we are prohibited from having any compensation plan in place that would encourage
manipulation of our reported earnings to enhance the compensation of any of our employees;
-
-
The base salary for our Named Executive Officers does not encourage risk-taking, as it is a fixed amount.
Further, as indicated above under "Components of Total CompensationBase Salary," three out of our four Named Executive Officers did not receive an increase in base salary
during 2009.
We
provide incentive-based pay opportunities for our non-executive officers. For certain employees, these opportunities are based on management-designed goals related to the
applicable department and/or job function. These goals are typically short-term goals defined by management that are quantifiable by objective results. These goals are generally designed
to mitigate risk.
In
addition, we provide incentive-based pay opportunities for our loan officers. Our loan officers receive compensation for new and renewed loans that they generate based on the
profitability of the transaction. These incentives are also subject to certain credit quality requirements. Management uses penalties to mitigate the risk of making loans based on volume rather than
credit quality. Penalties are incurred for past due loans, outstanding exceptions and charge-offs each quarter. These penalties are financial in nature and significant in terms of the
overall incentive payout. As a policy, management also reserves a right to clawback any incentive paid on a charged-off loan for up to two years.
Summary
We believe the mix of salary, potentially significant cash bonus incentives (when permitted) and the future potential for equity-based
incentives motivates our management team to produce strong results for shareholders. We further believe that this program strikes an appropriate balance between prudent business operations and
appropriate employee rewards based on creation of shareholder value.
33
Table of Contents
EXECUTIVE OFFICERS
Our board of directors has the authority to appoint our officers. Each officer will hold office for such term as may be prescribed by
the board of directors and until such person's successor is chosen and qualified or until such person's death, resignation or removal. Each of Messrs. Sapp and Cox has entered into an
employment agreement with us. The biographies of Messrs. Sapp and Cox are provided in the section above entitled "Proposal 1: Election of Directors." Mr. Helf served as our Chairman and
Chief Executive Officer until his retirement effective December 31, 2009.
Frank Perez,
age 41, has served as Chief Financial Officer of the Corporation and the Bank since August 2008. Mr. Perez previously
served as Chief Financial Officer of Cumberland Bank & Trust, an internal audit manager of Crowell & Crowell, PLLC and a senior accountant of AIG American General.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below sets forth the aggregate remuneration paid by us or the Bank for services for the three most recently completed fiscal
years ended December 31, 2009 to the Named Executive Officersthe Chief Executive Officer, the Chief Financial Officer and our two other most highly compensated executive officers
and whose total compensation for 2009 exceeded $100,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
(1)
|
|
Option
Awards
(2)
|
|
Non-Equity
Incentive Plan
Compensation
(3)
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
All Other
Compensation
(4)
|
|
Total
|
|
|
Michael R. Sapp
(5)
|
|
|
2009
|
|
$
|
400,000
|
|
$
|
|
|
$
|
15,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
45,985
|
|
$
|
460,985
|
|
|
|
Chairman, Chief
|
|
|
2008
|
|
|
400,000
|
|
|
|
|
|
|
|
|
222,500
|
|
|
360,000
|
|
|
|
|
|
36,939
|
|
|
1,019,439
|
|
|
|
Executive Officer and President
|
|
|
2007
|
|
|
400,000
|
|
|
|
|
|
|
|
|
287,500
|
|
|
400,000
|
|
|
|
|
|
30,939
|
|
|
1,118,439
|
|
|
Frank Perez
(6)
|
|
|
2009
|
|
|
169,167
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39,000
|
|
|
208,167
|
|
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
61,875
|
|
|
|
|
|
|
|
|
|
|
|
55,688
|
|
|
|
|
|
3,750
|
|
|
121,313
|
|
|
H. Lamar Cox
(7)
|
|
|
2009
|
|
|
350,000
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
58,256
|
|
|
423,256
|
|
|
|
Chief Operating Officer
|
|
|
2008
|
|
|
350,000
|
|
|
|
|
|
48,750
|
|
|
|
|
|
315,000
|
|
|
|
|
|
49,256
|
|
|
763,006
|
|
|
|
|
|
2007
|
|
|
350,000
|
|
|
|
|
|
|
|
|
287,500
|
|
|
350,000
|
|
|
|
|
|
43,256
|
|
|
1,030,756
|
|
|
Arthur F. Helf
(5)
|
|
|
2009
|
|
|
400,000
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
61,592
|
|
|
476,592
|
|
|
|
Former Chairman and
|
|
|
2008
|
|
|
400,000
|
|
|
|
|
|
|
|
|
222,500
|
|
|
360,000
|
|
|
|
|
|
54,913
|
|
|
1,037,413
|
|
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
400,000
|
|
|
|
|
|
|
|
|
287,500
|
|
|
400,000
|
|
|
|
|
|
48,914
|
|
|
1,136,414
|
|
-
(1)
-
The
amounts shown reflect the aggregate grant date fair value for restricted stock awards granted under the 2007 Equity Plan, in accordance with Financial
Accounting Standards Board Accounting Standards Codification Topic 718, "Stock Compensation," or FASB ASC 718, assuming the achievement of all performance criteria and continued employment. For
restricted stock awards granted in 2008, an aggregate of 92% of each award is subject to annual vesting based on continued employment.
-
(2)
-
The
amounts shown reflect the aggregate grant date fair value for option awards granted under the 2007 Equity Plan, in accordance with FASB ASC 718,
assuming the achievement of all performance criteria and continued employment. For option awards granted in 2008, an aggregate of 92% of each award is subject to annual vesting based on continued
employment. For option awards granted in 2007, 20% of each award is subject to annual vesting based on continued employment and 80% of each award is subject to annual vesting based on performance
goals that have already been met.
-
(3)
-
Reflects
cash bonus awards earned during the years indicated.
34
Table of Contents
-
(4)
-
During
2009, we provided the Named Executive Officers with other forms of compensation, including paid life insurance premiums, automobile allowances, fees
for services as a director, and long-term care insurance premiums, as applicable, as set forth below. The Bank also pays for each of Messrs. Helf, Sapp and Cox their annual dues at
a local country club, expenses related to their respective use of such country club for matters related to our business and their respective reasonable expenses for continuing education courses
necessary to maintain any certifications or licenses that they hold.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Life Insurance
Premiums
|
|
Automobile
Allowance
|
|
Fees for Services
as Director
(a)
|
|
Long-Term
Care Insurance
Premiums
|
|
|
Michael R. Sapp
|
|
$
|
524
|
|
$
|
12,000
|
|
$
|
30,000
|
|
$
|
3,461
|
|
|
Frank Perez
|
|
|
|
|
|
9,000
|
|
|
|
|
|
|
|
|
H. Lamar Cox
|
|
|
12,350
|
|
|
12,000
|
|
|
30,000
|
|
|
3,906
|
|
|
Arthur F. Helf
|
|
|
5,630
|
|
|
17,188
|
|
|
30,000
|
|
|
8,774
|
|
-
(a)
-
Mr. Perez
is not a director, but received $30,000 for attending board meetings during 2009. Compensation for service by Named Executive Officers on
our board of directors and its committees during the year ended December 31, 2009 is reflected in the following table:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid
in Cash*
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
All Other
Compensation
|
|
Total
|
|
|
Michael R. Sapp
|
|
$
|
30,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
30,000
|
|
|
H. Lamar Cox
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
Arthur F. Helf
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
-
*
-
Executive
officers who are also directors receive fees for board meetings they attend but not for committee meetings. For additional information about fees
for board meetings, see the section below entitled "Director Compensation."
-
(5)
-
Mr. Helf
retired as Chairman and Chief Executive Officer effective December 31, 2009. Upon Mr. Helf's retirement, Mr. Sapp was
appointed Chairman and Chief Executive Officer.
-
(6)
-
Because
Mr. Perez was not a Named Executive Officer with respect to 2007, information is only provided for 2008 and 2009. Mr. Perez's base
salary increased from $165,000 to $215,000, effective December 15, 2009.
-
(7)
-
Prior
to December 1, 2009, Mr. Cox was Chief Administrative Officer. Effective as of that date, Mr. Cox was appointed Chief Operating
Officer.
For 2009, the base salaries paid to the Named Executive Officers accounted for 81% to 87% of their respective total compensation, equity awards
represented 0% to 4% of their respective total compensation and all other compensation represented the remaining 10% to 19% of their respective total compensation.
Employment Agreements
On December 30, 2008, the Bank entered into new employment agreements with each of Messrs. Helf, Sapp and Cox. Except for
the initial base salary amounts and titles of each executive, the material terms of the employment agreements are otherwise substantially identical to one another. Mr. Perez does not currently
have an employment agreement. Because Mr. Helf retired effective December 31, 2009, his employment agreement is no longer in effect.
Under
the new employment agreements, the initial base salary of each of Messrs. Helf and Sapp was $400,000, and the initial base salary of Mr. Cox was $350,000. Under each
employment agreement, the executive is entitled to receive a performance-based annual incentive payment that will be determined by the board of directors and will be based on specific performance
criteria to be identified in writing in advance to the executive. Notwithstanding this provision in the employment agreements, because we are a "TARP recipient" as that term is defined under ARRA, we
are prohibited from paying or accruing any bonus, retention award or incentive compensation (other than long-term restricted stock under certain
35
Table of Contents
conditions)
during the period in which any obligation arising from financial assistance provided under the Capital Purchase Program remains outstanding.
Each
employment agreement has a term of two years and is automatically renewable each day during its term for one additional day so that the term is always two years, unless and until
either the Bank or the executive notifies the other party of its intent not to renew. Under each employment agreement, the executive may be terminated for "cause" or without "cause," and termination
will also result from death or disability (as defined). In general, "cause" means:
-
-
Fraud;
-
-
Embezzlement;
-
-
Conviction of by the executive of any felony;
-
-
A material breach of, or the willful failure or refusal by the executive to perform and discharge the executive's duties,
responsibilities and obligations under the agreement;
-
-
Any act of moral turpitude or willful misconduct by the executive intended to result in personal enrichment of the
executive at the expense of the Bank or any of its affiliates or which has a material adverse impact on the business or reputation of the Bank or any of its affiliates (such determination to be made
by the board in its reasonable judgment);
-
-
Intentional material damage to the property or business of the Bank;
-
-
Gross negligence; or
-
-
The ineligibility of the executive to perform his duties because of a ruling, directive or other action by any agency of
the United States or any state of the United States having regulatory authority over the Bank.
Each
executive may also generally terminate his employment agreement for any reason upon written notice, upon a voluntary termination, for "good reason" or if the Bank materially breaches the
agreement and such breach is not cured within 30 days after written notice. In general, "good reason" means:
-
-
Without the executive's express written consent, a material diminution in authority, duties or responsibilities;
-
-
Any reduction by the Bank in the executive's base salary;
-
-
A material diminution in the authority, duties or responsibilities of the supervisor to whom the executive reports,
including a requirement to report to an officer or other employee, rather than directly to the board of directors;
-
-
A material diminution in the budget over which the executive retains authority;
-
-
Any failure of the Bank to obtain the assumption of, or the agreement to perform, the agreement by any successor; or
-
-
The Bank requiring the executive to be permanently assigned to a location other than the current or future headquarters of
the Bank.
If
an executive is terminated without "cause" or the executive terminates his employment for "good reason," he will be entitled to receive severance in an amount equal to two times the
executive's aggregate cash compensation (including cash incentive bonus) as calculated in the employment agreement, less applicable taxes and other deductions, and all equity awards will be deemed to
have vested. Notwithstanding this provision in the employment agreements, because we are a TARP recipient, no "golden parachute payments" may be paid to any Named Executive Officer during the period
in which any
36
Table of Contents
obligation
arising from financial assistance provided under the Capital Purchase Program remains outstanding.
Upon
a change in control of the Bank and termination of the executive's employment without cause or for good reason during the period beginning one year prior to and ending two years
following such change in control, each executive would be entitled to receive a lump sum payment equal to one dollar ($1) less than the amount that would constitute an "excess parachute payment," as
defined in Section 280G of the Internal Revenue Code. "Change in control" is defined in the employment agreements as a change in the ownership or effective control of the Bank, or in the
ownership of a
substantial portion of the assets of the Bank. Notwithstanding this provision in the employment agreements, because we are a TARP recipient, no "golden parachute payments" may be paid to any Named
Executive Officer during the period in which any obligation arising from financial assistance provided under the Capital Purchase Program remains outstanding.
Amended and Restated Employment Agreements
On May 19, 2009, each of Messrs. Helf, Sapp and Cox entered into an amended and restated employment agreement with the
Corporation and the Bank. As indicated above, Mr. Helf's amended and restated employment agreement is no longer in effect. The primary purposes of amending and restating the existing employment
agreements were to clarify certain provisions and to comply with the requirements of EESA, as amended by ARRA. The amended agreements added the Corporation as a party and clarified that the change in
control payment is payable if the executive's employment is involuntarily terminated for any reason other than death, disability or cause during the period beginning one year prior to and ending two
years following a change in control.
Pursuant
to the amended agreements, during the period that the U.S. Department of Treasury owns any of our debt or equity securities acquired pursuant to the TARP Capital Purchase
Program, the terms of Section 15 of the amended agreements amend and override any contrary or inconsistent terms contained in any and all other employment, compensation and benefit agreements,
plans and policies with respect to the executive. Section 15 of the amended agreements generally provides, among other things, that: (i) if the executive receives compensation that was
based on financial statements or performance metric criteria that are determined to be materially inaccurate, the executive will repay the Employer upon demand the amount of the bonus or incentive
compensation received by the executive in excess of the amount that would have been paid to the executive had the inaccurate statements or criteria been accurate; (ii) upon executive's
termination of employment, severance payments to the executive may not be made to the extent that the payment would otherwise constitute a "golden parachute" as defined under Section 111(a) of
EESA; and (iii) to the extent required by the TARP Capital Purchase Program, the executive will not receive or accrue any bonus, retention award, or incentive compensation; provided, however,
that this prohibition will not apply to (A) the payment of long-term restricted stock that (1) does not fully vest during the period that Treasury owns any of our debt or
equity securities acquired pursuant to the TARP Capital Purchase Program, (2) does not have a value greater than one-third of the executive's total annual compensation amount and
(3) is subject to such other terms and conditions as Treasury may determine are in the public interest or (B) any bonus payment required to be paid under a written employment agreement
executed on or before February 11, 2009 and determined to be valid by Treasury.
Consulting and Non-Competition Agreements
On May 19, 2009, each of Messrs. Helf and Cox entered into a consulting and non-competition agreement with
the Corporation and the Bank. Pursuant to each consulting and non-competition agreement, the executive will provide consulting services as our independent contractor for the first
24 months after separation from service, at our sole discretion. Mr. Helf's consulting and non-competition agreement remains in full force and effect after his retirement
effective December 31, 2009. The amount of
37
Table of Contents
time
that the executive provides such consulting services each month may not exceed 25% of the amount of time that the executive provided services to the Employer before such separation from service.
For
the executive's separation from service and in consideration of the consulting services provided and the non-competition covenants, the Company will pay the executive
(i) 24 monthly payments, each in an amount equal to the executive's greatest annual cash compensation (including base salary and bonus) paid in any of the last three calendar years of
employment preceding separation from service, divided by 48, and (ii) 96 monthly payments, each in an amount equal to the executive's greatest annual cash compensation (including base
salary and bonus) paid in any of the last three calendar years of employment preceding separation from service, divided by 48. No amounts are payable under a consulting and non-competition
agreement, however, in the event the executive's employment is terminated for cause or as a result of death or disability.
Each
consulting and non-competition agreement includes covenants against competition, solicitation or disclosure of confidential information, which covenants will apply
throughout the 24-month period that the executive is providing consulting services and the eight-year period thereafter. If an executive breaches any of such covenants, the
right of the executive to any payments under the consulting and non-competition agreement after the date of the breach will be forever forfeited. This forfeiture is in addition to any
injunctive or other relief that may be available to the Employer.
If
a change in control occurs after the executive's separation from service and if, when such change in control occurs the executive is receiving payments for consulting services under
the consulting and non-competition agreement, the executive will be entitled to receive in a single lump sum within five days after the date on which the change in control occurs all
payments not yet made, without present value discount for the time value of money. If a change in control of the Company occurs after the executive's separation from service, the executive's
obligations to provide consulting services and comply with the covenants against competition, solicitation and disclosure of confidential information will become null and void immediately after the
change in control occurs.
To
the extent that any payments under a consulting and non-competition agreement would be "parachute payments," such payments will be reduced to the extent that the payments,
when aggregated with all other "parachute payments," would not create an "excess parachute payment" pursuant to Section 280G of the Internal Revenue Code. Notwithstanding any provision in the
consulting and non-competition agreements, because we are a TARP recipient, no "golden parachute payments" may be paid to any Named Executive Officer during the period in which any
obligation arising from financial assistance provided under the Capital Purchase Program remains outstanding.
38
Table of Contents
Grants of Plan-Based Awards
The following table summarizes certain information regarding grants of plan-based awards to the Named Executive Officers
during 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards
|
|
All Other
Stock
Awards:
Number of
Shares
of Stock
or Units
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
|
|
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards
(1)
|
|
|
|
|
|
|
Exercise
or Base
Price of
Option
Awards
|
|
|
|
|
Grant
Date
|
|
|
|
|
Name
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
Michael R. Sapp
|
|
|
6/1/09
|
|
$
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(2)
|
|
|
|
$
|
|
|
$
|
15,000
|
|
|
Frank Perez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Lamar Cox
|
|
|
6/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(2)
|
|
|
|
|
|
|
|
15,000
|
|
|
Arthur F. Helf
|
|
|
6/1/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(2)
|
|
|
|
|
|
|
|
15,000
|
|
-
(1)
-
Reflects
the aggregate grant date fair value of all awards computed in accordance with FASB ASC 718, assuming the achievement of all performance criteria
and continued employment.
-
(2)
-
Reflects
a grant of 2,308 shares of restricted stock under the 2007 Equity Plan. These shares of restricted stock will fully vest after the TARP financial
assistance is no longer outstanding, provided that the executive provides services for at least two years after the date of grant.
On June 1, 2009, 2,308 shares of restricted stock were granted to each of Messrs. Helf, Sapp and Cox under the 2007 Equity Plan
based on their service as directors. These shares of restricted stock were originally scheduled to vest on December 1, 2009, but because we are a TARP recipient, they will fully vest after the
TARP financial assistance is no longer outstanding, provided that the executive provides services for at least two years after the date of grant. For more information about the grant, see the section
above entitled "Compensation Discussion and AnalysisComponents of Total CompensationEquity Incentive."
On
January 20, 2009, the Compensation Committee granted nonqualified stock options to purchase 50,000 shares of our common stock to each of Messrs. Helf, Sapp and Cox under
the 2007 Equity Plan. Because our Named Executed Officers may only receive restricted stock awards for so long as we are a TARP recipient, however, Messrs. Helf, Sapp and Cox subsequently
forfeited the options. For more information about the grant and forfeiture, see the section above entitled "Compensation Discussion and AnalysisComponents of Total
CompensationEquity Incentive."
39
Table of Contents
Outstanding Equity Awards at 2009 Fiscal Year-End
The following table sets forth information with respect to our outstanding equity awards as of December 31, 2009 for our Named
Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Number of
Shares or
Units of
Stock That
Have not
Vested
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
(1)
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(1)
|
|
|
Michael R. Sapp
|
|
|
100,872
|
|
|
|
|
|
|
|
$
|
5.00
|
|
|
1/14/2010
|
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
7.50
|
|
|
2/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
10.50
|
|
|
8/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
11.00
|
|
|
3/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
20,000
|
(2)
|
|
25.00
|
|
|
6/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,400
|
|
|
|
|
|
27,600
|
(3)
|
|
22.15
|
|
|
1/07/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(4)
|
|
10,086
|
|
|
|
|
|
|
|
|
Frank Perez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Lamar Cox
|
|
|
7,848
|
|
|
|
|
|
|
|
|
5.00
|
|
|
1/14/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
7.50
|
|
|
2/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
10.50
|
|
|
8/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
11.00
|
|
|
3/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
20,000
|
(2)
|
|
25.00
|
|
|
6/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,047
|
(3)
|
|
26,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(4)
|
|
10,086
|
|
|
|
|
|
|
|
|
Arthur F. Helf
|
|
|
30,000
|
|
|
|
|
|
|
|
|
7.50
|
|
|
2/18/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
10.50
|
|
|
8/31/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
11.00
|
|
|
3/16/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
16,000
|
(2)
|
|
25.00
|
|
|
6/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,400
|
|
|
|
|
|
21,600
|
(3)
|
|
22.15
|
|
|
1/07/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,308
|
(4)
|
|
10,086
|
|
|
|
|
|
|
|
-
(1)
-
Based
upon the closing sale price of our common stock of $4.37 per share, as reported on The NASDAQ Global Market on December 31, 2009.
-
(2)
-
Reflects
a grant as of June 14, 2007 of nonqualified stock options to purchase 50,000 shares of our common stock under the 2007 Equity Plan, 80% of
which vest over five years in equal increments, subject to the achievement of certain performance criteria, and 20% of which vest over five years in equal increments, subject only to continued
employment. Based on the achievement of all of the performance goals for 2007, the performance-based portion of each award that vests over each of the five years is 80%. Because Mr. Helf
retired effective December 31, 2009, the remaining portion of his option award that is subject to continued employment will not vest any further but the remaining portion that is subject to the
achievement of the 2007 performance goals will continue to vest. As of December 31, 2009, options to purchase 30,000 shares of our common stock had vested.
-
(3)
-
Reflects
a grant as of January 8, 2008 of nonqualified stock options to purchase 50,000 shares of our common stock or 10,955 shares of restricted
stock, as the case may be, under the 2007 Equity Plan, 80% of which vest over five years in equal increments, subject to the achievement of certain performance criteria, and 20% of which vest over
five years in equal increments, subject to continued employment. Based on the achievement of seven of the eight performance goals for 2008 and rounding such percentage upward to the nearest 10%, the
performance-based portion of each award that will vest over each of the five years is 72% (i.e., the product of 90% times 80%). Accordingly, if each of Messrs. Sapp and Cox remains
employed at the end of each year in the five-year vesting period (2009 to 2012), an aggregate of 92% of each award that is subject to annual vesting (i.e., options to purchase 9,200
shares of our common stock or 2,016 shares of restricted stock) will vest each year for each individual. Because Mr. Helf retired effective December 31, 2009, the remaining portion of
his option award that is subject to continued employment will not vest any further but the remaining portion that is subject to the achievement of the 2007 performance goals will continue to vest. As
of December 31, 2009, options to purchase 18,400 shares of our common stock and
40
Table of Contents
4,032
shares of restricted stock had vested and options to purchase 27,600 shares of our common stock and 6,047 shares of restricted stock remained subject to annual vesting.
-
(4)
-
Reflects
a grant as of June 1, 2009 of 2,308 shares of restricted stock under the 2007 Equity Plan based on their service as directors. These shares
of restricted stock were originally scheduled to vest on December 1, 2009, but because we are a TARP recipient, they will fully vest after the TARP financial assistance is no longer
outstanding, provided that the executive provides services for at least two years after the date of grant. For more information about the grant, see the section above entitled "Compensation Discussion
and AnalysisComponents of Total CompensationEquity Incentive."
Options Exercised and Stock Vested
The following table sets forth certain information with respect to options exercised by restricted stock vested for the Named Executive
Officers in fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise
|
|
Value Realized
on Exercise
|
|
Number of Shares
Acquired on
Vesting
|
|
Value Realized
on Vesting
(1)
|
|
|
Michael R. Sapp
|
|
|
|
|
$
|
|
|
|
|
|
$
|
|
|
|
Frank Perez
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H. Lamar Cox
|
|
|
|
|
|
|
|
|
2,016
|
|
|
12,559
|
|
|
Arthur F. Helf
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
value realized by each Named Executive Officer is calculated as the number of shares of our common stock multiplied by the market value of such shares
on the vesting date.
Potential Payments Upon Termination or Change-in-Control
We have entered into certain agreements and maintain certain plans that will require us to provide compensation to Named Executive
Officers in the event of a termination of employment or our change in control. The amount of compensation payable to each Named Executive Officer if each event occurred on December 31, 2009 is
listed in the tables below. Because we are a TARP recipient, no "golden parachute payments" may be paid to any Named Executive Officer during the period in which any obligation arising from financial
assistance provided under the Capital Purchase Program remains outstanding. Therefore, the amounts payable to each Named Executive Officer in the tables below have been adjusted to reflect this
restriction.
Mr. Sapp
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Benefits and Payments upon Termination
|
|
Retirement
|
|
Involuntary
Termination
without Cause
|
|
Involuntary
Termination
for Cause
|
|
Termination
Related
to Change
in Control
|
|
Disability
|
|
Death
|
|
|
Cash Payments
|
|
$
|
(1)
|
|
$
|
(2)
|
|
$
|
|
|
$
|
(3)
|
|
$
|
6,038
(4),(5)
|
|
$
|
1,239,544
(4),(6)
|
|
|
Stock Options (unvested)
|
|
|
|
|
|
(7)
|
|
|
|
|
|
(8)
|
|
|
|
|
|
|
|
|
Insurance Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
(9)
|
|
|
Excise Tax Gross-up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41
Table of Contents