DEF 14A of ServisFirst Bancshares, Inc.
Filed Apr 8, 2024 · FY20230001171843-24-001885
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Our Board has nominated the seven persons named below, all of whom currently serve as directors, for election as directors at the 2024 Annual Meeting. Each of these nominees has consented to serve as a director if re-elected. Unless otherwise instructed, the management proxies intend to vote the proxies received by them for the election of all seven of these nominees. If any nominee identified below becomes unable to serve as a director before the Annual Meeting, the management proxies will vote the proxies received by them for the election of a substitute nominee selected by our Board. Two out of our seven directors are either female or ethnically diverse. We are committed to our continued efforts to increase diversity and foster an inclusive work environment that supports our employees and the communities we serve. We recruit the best people for the job regardless of gender, race, ethnicity, age, disability, sexual orientation, gender identity, cultural background, or religious belief. We added one female director to our Board in 2023.
Annual Election of Directors
Annual Election of Directors The seven nominees receiving the most votes cast in the election of directors by holders of shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting will be elected to serve as directors of the Company for the next year. As a result, although shares as to which the authority to vote is withheld will be counted, such “withhold” votes will have no effect on the outcome of the election of directors, except with respect to our director resignation policy. Information regarding directors and director nominees and their ages as of the record date is as follows:
Annual Election of Directors
| | | | | | Committee Memberships | | | | Name | Age | Director Since | Primary Occupation | Independent | AC | CC | CGNC | | Thomas A. Broughton III | 68 | 2007 | Chairman, President and Chief Executive Officer of ServisFirst Bancshares, Inc. and ServisFirst Bank | | | | | | J. Richard Cashio | 66 | 2007 | Retired Chief Executive Officer of TASSCO, LLC | X | M | M | C,M | | James J. Filler | 80 | 2007 | Retired Chief Executive Officer of Jefferson Iron & Metal Brokerage, Inc. | X | | M | | | Betsy Bugg Holloway, Ph.D. | 54 | 2023 | Vice President of Samford University | X | | | M | | Christopher J. Mettler | 48 | 2019 | Founder and President of Sovereign Co. | X | M | M | M | | Hatton C. V. Smith | 73 | 2007 | Retired Chief Executive Officer, Royal Cup Coffee | X | | C,M | | | Irma L. Tuder | 62 | 2018 | Manager of Tuder Investments, LLC | X | C,FE,M | | M |
Annual Election of Directors
AC: Audit Committee CC: Compensation Committee CGNC: Corporate Governance & Nominations Committee C = Committee Chair M = Committee Member FE = Financial Expert The following summarizes the business experience and background of each of our nominees. Each of the director nominees also serves as a director of the Bank, and Mr. Broughton also serves as Chairman, President and Chief Executive Officer of us and the Bank.
Annual Election of Directors
| Thomas A. Broughton III | | | | Age: 68 | Committees: None | Position: President, CEO and Chairman | | Director Since: 2007 | Bank Director Since: 2005 | |
Annual Election of Directors
Mr. Broughton has served as our President and Chief Executive Officer and a director since 2007 and as President, Chief Executive Officer and a director of the Bank since its inception in May 2005. Mr. Broughton was named Chairman of the Board of the Company and the Bank effective January 1, 2019. Mr. Broughton has spent the entirety of his over 35-year banking career in the Birmingham area. In 1985, Mr. Broughton was named President of the de novo First Commercial Bank. When First Commercial Bank was bought by Synovus Financial Corp. in 1992, Mr. Broughton continued as President and was named Chief Executive Officer of First Commercial Bank. In 1998, he became Regional Chief Executive Officer of Synovus Financial Corp., responsible for the Alabama and Florida markets. In 2001, Mr. Broughton’s Synovus region shifted, and he became Regional Chief Executive Officer for the markets of Alabama, Tennessee and parts of Georgia. He continued his work in this position until his retirement from Synovus in August 2004. Mr. Broughton’s experience in banking has afforded him opportunities to work in many areas of banking and has given him exposure to all bank functions. Mr. Broughton served on the Board of Directors of Cavalier Homes, Inc. from 1986 until 2009, when the Company was sold to a subsidiary of Berkshire Hathaway. We believe that Mr. Broughton’s extensive experience in banking in Alabama and the Southeast, and, in particular, his success in building and growing new banks and developing new markets, makes him highly qualified to serve as a director.
Annual Election of Directors
| J. Richard Cashio | | | | Age: 66 | Committees: Audit; Compensation; Corporate Governance and Nominations (Chair) | Position: Director | | Director Since: 2007 | Bank Director Since: 2005 | |
Annual Election of Directors
Mr. Cashio has served as a director of the Company since 2007 and as a director of the Bank since its inception in May 2005. Mr. Cashio has been a private investor since his retirement. Mr. Cashio served as Chief Executive Officer of TASSCO, LLC from 2005 until his retirement in January 2014 and served as the Chief Executive Officer of Tricon Metals & Services, Inc. from 2000 until its sale in October 2008. We believe that Mr. Cashio’s experience as the chief executive officer of successful industrial enterprises allows him to offer our Board both the benefit of his business experience and the perspectives of one of our target customer groups, making him highly qualified to serve as a director.
Annual Election of Directors
| James J. Filler | | | | Age: 80 | Committees: Compensation | Position: Lead Independent Director | | Director Since: 2007 | Bank Director Since: 2005 | |
Annual Election of Directors
Mr. Filler has served as a director of the Company since 2007 and as a director of the Bank since its inception in May 2005. In January 2019, following Mr. Broughton becoming Chairman of our Board of Directors, Mr. Filler was appointed to serve as the Board’s Lead Independent Director. Mr. Filler has been a private investor since his retirement in 2006. Prior to his retirement, Mr. Filler spent 44 years in the metals recycling industry with Jefferson Iron & Metal, Inc. and Jefferson Iron & Metal Brokerage Co., Inc. We believe that Mr. Filler’s extensive business experience and strong ties to the Birmingham business community offer us valuable strategic insights and make him highly qualified to serve as a director.
Annual Election of Directors
| Betsy Bugg Holloway | | | | Age: 54 | Committees: Corporate Governance and Nominations | Position: Director | | Director Since: 2023 | Bank Director Since: 2023 | |
Annual Election of Directors
Dr. Holloway has served as a director of the Company and the Bank since 2023. Dr. Holloway has served as a Vice President for Samford University for the past nine years and as the Vice President for Advancement and Marketing since July 2022, where she leads all marketing, branding, and philanthropic initiatives for the university. Dr. Holloway currently serves on the Board of Directors and is a member of the executive committee and chair of the nominating committee for Blue Cross & Blue Shield of Alabama and is a member of the Board of Advisors for Founders Advisors. We believe that Dr. Holloway’s extensive business experience, civic engagement in Alabama, and long track record of innovative leadership and operational expertise make her highly qualified to serve as a director.
Annual Election of Directors
| Christopher J. Mettler | | | | Age: 48 | Committees: Compensation Committee | Position: Director | | Director Since: 2019 | Bank Director Since: 2019 | |
Annual Election of Directors
Mr. Mettler has served as a director of the Company and the Bank since October 21, 2019. Mr. Mettler is Founder and President of Sovereign Co., where he leads strategy and business development. Mr. Metter assumed a full-time role at Sovereign as of April 26, 2019. Sovereign leverages proprietary marketing attribution and artificial intelligence technology to systematically measure thousands of simultaneous marketing messages to display the most relevant products for consumers. Previously, Mr. Mettler founded two marketing and financial technology businesses, CompareCards and SnapCap, both of which were acquired in two separate transactions by LendingTree (Nasdaq: TREE). Mr. Mettler served as President of Iron Horse Holdings LLC from January 1, 2014 until November 16, 2016. Following LendingTree’s acquisition of CompareCards from Iron Horse Holdings in November 2016, Mr. Mettler transitioned to serve as a salaried employee of LendingTree through April 26, 2019. We believe Mr. Mettler’s business experience, his strong background in the financial technology sector and his prior service on our Charleston, South Carolina advisory board makes him highly qualified to serve as a director.
Annual Election of Directors
| Hatton C. V. Smith | | | | Age: 73 | Committees: Compensation (Chair) | Position: Director | | Director Since: 2007 | Bank Director Since: 2005 | |
Annual Election of Directors
Mr. Smith has served as a director of the Company since 2007 and as a director of the Bank since its inception in May 2005. Mr. Smith served as the Chief Executive Officer of Royal Cup Coffee from 1996 until 2014 and in various other positions with Royal Cup Coffee prior to 1996. Mr. Smith retired from all positions with Royal Cup Coffee effective February 2020. He currently serves as the Chief Executive Officer of Back Forty Beer Company, which specializes in unique craft beers in the Southeast. Mr. Smith is also involved in many different charities and has served as Chair of the United Way and President of the Baptist Health System. We believe that Mr. Smith’s business experience, his strong roots in the greater Birmingham business and civic community, and his high profile and extensive community contacts in one of our largest markets make him highly qualified to serve as a director.
Annual Election of Directors
| Irma L. Tuder | | | | Age: 62 | Committees: Audit (Chair); Corporate Governance and Nominations | Position: Director | | Director Since: 2018 | Bank Director Since: 2018 | |
Annual Election of Directors
Ms. Tuder is currently a private investor. She is the founder, former CEO and Board Chairperson of Analytical Services, Inc. (ASI), a nationally recognized business providing management and technical solutions to federal government agencies. Ms. Tuder successfully led the acquisition of ASI by Arctic Scope Regional Corporation Federal Holding Company in 2007. Ms. Tuder has over 30 years of experience in strategic business planning and execution, executive leadership, financial management and business operations. Prior to founding ASI, Ms. Tuder spent five years as a controller in private industry and five years in public accounting. In addition to her service as a director of the Company and Bank, Ms. Tuder is a member of the Notre Dame Institute for Latino Studies Advisory Council, HudsonAlpha Institute for Biotechnology Board of Directors, University of Alabama in Huntsville (UAH) Foundation Board and UAH Business School Advisory Board. Ms. Tuder received a BBA in accountancy from the University of Notre Dame and MBA from Troy State University in Montgomery. We believe that Ms. Tuder’s extensive background in business, finance and accounting make her highly qualified to serve as both a director and as Chair of our Audit Committee.
The Board of Directors Unanimously Recommends a Vote “FOR” the Election of Each of the Board Nominees
The Board of Directors Unanimously Recommends a Vote “FOR” the Election of Each of the Board Nominees
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following summarizes the compensation earned by, or paid to, each person who served as a non-employee director during all or any part of our 2023 fiscal year. Mr. Broughton was not separately compensated for his service on the Board. Directors of the Company also serve on the Board of the Bank and receive no additional compensation for such service. Ms. Tuder also serves on the advisory board of our Huntsville, AL region, and her compensation for such service is included in the tabular disclosure below. As of March 27, 2024, our six non-employee directors beneficially owned, collectively, approximately 4.5% of our outstanding common stock. We seek to structure director compensation to further align the interests of directors with the interests of our stockholders.
Director Compensation for 2023
Director Compensation for 2023 The following table sets forth information regarding the compensation of our non-employee directors for the year ended December 31, 2023.
Director Compensation for 2023
| Name | Fees earned or paid in cash($) | Stock Awards($)(1) | All Other Compensation($) | Total($) | | J. Richard Cashio | $73,000 | $50,012 | - | $123,012 | | Michael D. Fuller(2) | - | - | - | - | | James J. Filler | 81,000 | 50,012 | - | 131,012 | | Betsy Bugg Holloway(3) | 54,000 | 150,037 | - | 204,037 | | Christopher J. Mettler | 68,000 | 50,012 | - | 118,012 | | Hatton C. V. Smith | 60,000 | 50,012 | - | 110,012 | | Irma L. Tuder(4) | 69,000 | 50,012 | $7,000 | 126,012 |
Director Compensation for 2023
| (1) Represents the grant date fair value of time-based restricted stock awarded on April 17, 2023 (964 shares valued at $51.88 per share, the closing price of the Company’s common stock on that date). All director restricted stock awards were outstanding on December 31, 2023. See Note 13 of our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding assumptions made in the valuation of these awards. These awards have a one-year vesting term. | | (2) Mr. Fuller retired from our Board in April 2023. | | (3) Ms. Holloway received a grant of 1,928 shares of restricted stock in connection with her appointment to the Board. | | (4) Ms. Tuder’s cash compensation includes $7,000 in fees paid for service on the Huntsville advisory board. |
Role of Compensation Committee
| • | Reviewed and approved base salary increases based on materials provided by its compensation consultant. |
Role of Compensation Committee
| • | Reviewed and approved the 2023 compensation peer group. | | • | Reviewed and approved the adoption of 2023 performance objectives under the annual incentive plan. | | • | Reviewed and approved 2023 equity grants and performance criteria for performance shares, including identification of 2023 performance share peer group. | | • | Reviewed contractual arrangements for named executive officers. | | • | Reviewed the Company’s compensation philosophy. | | • | Determined annual awards for named executive officers for 2023 performance and approved the payment of such awards in 2024. |
Role of Compensation Consultant
Role of Compensation Consultant As permitted by the Compensation Committee charter, the Compensation Committee periodically engages an independent outside compensation consultant to advise the Compensation Committee on executive compensation matters. The Compensation Committee continued to use Aon to provide executive compensation consulting services in 2023. Pursuant to the terms of its retention, Aon reported directly to the Compensation Committee, which retains sole authority to select, retain, terminate, and approve the fees and other retention terms of its relationship with Aon. During 2023, Aon assisted the Compensation Committee with the following:
Role of Compensation Consultant
| • | a review of named executive officer compensation. | | • | the evaluation of its incentive programs for 2023. | | • | the compilation of the 2023 Peer Group. | | • | in determining achievement of performance relative for performance share awards vesting in 2024 based upon Company TSR over a 3-year period as compared to the 2021 peer group. | | • | the preparation of its compensation disclosures as required under Regulation S‑K with respect to this proxy statement including this Compensation Discussion and Analysis and associated tables and disclosures included herein by reference. |
Role of Compensation Consultant
The Compensation Committee evaluated Aon’s analysis and recommendations alongside other factors when making compensation decisions affecting our 2023 executive compensation. In 2023, the Compensation Committee reviewed its relationship with Aon. Considering all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, the Compensation Committee determined that it is not aware of any conflict of interest that has been raised by the work performed by Aon.
Elements of our Compensation Program
| Compensation Element | Description and Purpose | Link to Performance | Fixed/ Performance Based | Short/Long- Term | | Base Salary | Helps attract and retain executives through periodic payments of market-competitive base pay | Based on individual performance, experience, and scope of responsibility. Used to establish cash and equity incentive award opportunities. | Fixed | Short-Term | | Annual Short-Term Incentives | Encourages achievement of financial performance metrics that create near‑term stockholder value | Ties the executive’s compensation directly to factors that we believe are important to the success of the Company. | Performance Based | Short-Term | | | | Performance metrics include loan growth and earnings per share. Loan growth is integral to the future success of the Company, while earnings per share aligns executive pay with overall Company success. | | | | | | Annual short-term incentives are paid in cash. | | | | Long-Term Equity Incentive Awards | Aligns long-term interests of executives and stockholders while creating a retention incentive through multi-year vesting | Restricted stock awards are time‑vested over three years. Performance share awards are determined based on Company TSR over a 3-year period as compared to the custom 2023 Peer Group. | Fixed & Performance Based | Long-Term | | Change in Control Agreements | Provides protection to our named executive officers in the event we are subject to a change in control. | - - | Fixed | Long-Term | | Endorsement Split-Dollar Agreements | Bank-owned life insurance on Messrs. Broughton, Rushing and Foshee. Designed to provide a long‑term retention incentive for the named executives, along with generating a favorable return for the Bank. | - - | Fixed | Long-Term | | Other Compensation | Dividends on restricted stock, limited perquisites and health and welfare benefits on the same basis as other employees | Dividends on restricted stock further enhance the executive’s link to stockholders by ensuring they share in the distribution of income generated from ongoing financial performance. | Fixed & Performance Based | |
Peer Group Benchmarking
Peer Group Benchmarking For 2023 compensation determinations, the Compensation Committee (with assistance from its independent compensation consultant Aon), selected a benchmark group of publicly-traded financial institutions to use in assessing the compensation of our executive officers and directors. The peer group data is used by our Compensation Committee as information about pay levels and practices of similarly-sized financial institutions in the areas we compete for key talent. This information guides our Compensation Committee in providing a competitive level of total compensation to our executive officers while also maintaining “common sense” flexibility where necessary. Our Compensation Committee utilized the following criteria to select a peer group for use in 2023 compensation, while also giving consideration to whether the selected peers had business models compatible with the Company’s business model:
Peer Group Benchmarking
| ● | Total Assets between $7.3 - $30 billion |
Peer Group Benchmarking
| ● | Primarily located in or near states where the Bank operates |
Peer Group Benchmarking
| ● | Generally located within metropolitan areas |
Peer Group Benchmarking
| ● | Commercial lending focus |
Peer Group Benchmarking
| ● | Individual consideration given for business model compatibility |
Peer Group Benchmarking
Our Compensation Committee also utilized a proprietary database from Aon when making compensation determinations for our Chief Credit Officer, Mr. Abbott. The 2023 benchmark group of publicly-traded financial institutions used to set 2023 compensation (the “2023 Peer Group”) included the following companies:
Peer Group Benchmarking
| Company Name | State | | Bank OZK | AR | | Ameris Bancorp | GA | | Atlantic Union Bkshs Corp. | VA | | Independent Bk Group Inc. | TX | | Trustmark Corp. | MS | | WesBanco, Inc. | WV | | First Financial Bancorp. | OH | | TowneBank | VA | | International Bancshares Corp. | TX | | WSFS Financial Corp. | DE | | Provident Financial Services | NJ | | Sandy Spring Bancorp Inc. | MD | | First Busey Corp. | IL | | Enterprise Financial Services | MO | | First Financial Bankshares | TX | | Eagle Bancorp Inc | MD | | Veritex Holdings Inc. | TX | | First Foundation Inc. | TX | | ConnectOne Bancorp Inc. | NJ | | Amerant Bancorp Inc. | FL |
Peer Group Benchmarking
The 2023 Peer Group added the following company: First Foundation Inc. The 2023 Peer Group does not include the following company previously included in the 2022 Peer Group: Lakeland Bancorp. When determining compensation for our executive officers for 2023, our Compensation Committee considered the median range of total compensation and components of compensation for the comparable roles within the 2023 Peer Group companies. As discussed above, our Compensation Committee did not seek to set compensation at specific target levels as compared to the 2023 Peer Group. Instead, our Compensation Committee used the information provided by the 2023 Peer Group to assess compensation levels and to provide a competitive level of total compensation for our executives.
Annual Incentive Compensation
Annual Incentive Compensation In 2021, our Board and Compensation Committee adopted an annual incentive plan administered by the Compensation Committee. The adoption of a performance-based annual incentive plan accomplished two goals: (1) tied short-term compensation for our named executive officers to specific Company performance metrics; and (2) provided a mechanism for delivery of additional cash compensation to our named executive officers in a manner that is recognized as a best practice in the market. The annual incentive plan provides a framework for annual or short-term cash incentive award opportunities for our executive officers and key employees. Prior to or shortly after the beginning of each performance period, our Compensation Committee establishes the specific performance goals and designates each participant’s target award under the plan. For 2023, each of our named executive officers other than Mr. Pressley was named as a participant in the annual incentive plan, with target awards approved by the Compensation Committee as follows:
Annual Incentive Compensation
| Named Executive Officer | Target Award (as a % of base salary) | Target Award ($) | | Thomas A. Broughton III, Principal Executive Officer (“PEO”) | 105% | $757,050 | | Rodney E. Rushing | 75% | 318,750 | | William M. Foshee, Principal Financial Officer (“PFO”) | 50% | 180,500 | | Henry F. Abbott | 50% | 119,500 | | Kirk Pressley | --* | --* |
Annual Incentive Compensation
* Mr. Pressley joined ServisFirst in 2023 and did not participate in the Annual Incentive Plan.
Performance Objectives
Performance Objectives Our Compensation Committee utilized two performance objectives for the 2023 annual incentive plan: deposit growth and earnings per share. Deposit growth is an important factor for our success, particularly in the current environment of increased deposit competition, so thirty percent (30%) of the total performance objective was weighted to deposit growth. Our Compensation Committee allocated seventy percent (70%) of the annual incentive to earnings per share in order to incentivize our named executive officers to work towards results that directly benefit our stockholders in the near term. A credit quality modifier consisting of the ratio of nonperforming assets to total assets was utilized because credit quality is an important component of our success and financial performance. The assigned weight for each performance objective for our 2023 annual incentive plan, and the threshold, target and maximum performance level for each objective are set forth in the table below, along with our 2023 actual performance:
Annual Incentive Plan Award Opportunities
Annual Incentive Plan Award Opportunities The Compensation Committee established the annual incentive plan award opportunities for our named executive officers as a percentage of base salary. Target award opportunities were designed to provide for total cash compensation that rewards executives for successful achievement of deposit growth and earnings per share while being competitive with total cash compensation among our peers. The potential annual incentive award payments, expressed as a percentage of base salary, were as follows:
Annual Incentive Plan Award Opportunities
| Named Executive Officer | Threshold as a % of Base Salary (%) | Threshold Incentive Payment ($) | Target as a % of Base Salary (%) | Target Incentive Payment ($) | Maximum as a % of Base Salary (%) | Maximum Incentive Payment ($) | | Thomas A. Broughton | 52.5% | $378,525 | 105% | $757,050 | 157.5% | $1,135,575 | | Rodney E. Rushing | 37.5 | 159,375 | 75 | 318,750 | 112.5 | 478,125 | | William M. Foshee | 25 | 90,250 | 50 | 180,500 | 75 | 270,750 | | Henry F. Abbott | 25 | 59,750 | 50 | 119,500 | 75 | 179,250 | | Kirk Pressley* | -- | -- | -- | -- | -- | -- |
Annual Incentive Plan Award Opportunities
* Mr. Pressley joined ServisFirst in 2023 and did not participate in the Annual Incentive Plan. Threshold, target and maximum incentive payments in the chart above are based on base salaries effective at year-end 2023, and do not take into effect the Credit Quality Modifier described above.
Annual Incentive Plan Award Payouts
Annual Incentive Plan Award Payouts The payout level under our annual incentive plan in 2023, based on actual results of the two performance objectives, was 45% of the target payout level. The Company enjoyed successful deposit growth for the year ended December 31, 2022, achieving nearly 125% of the deposit growth required to attain the maximum performance level. Accordingly, that component of our 2023 annual incentive plan was earned at the maximum level. The Company also maintained exceptional credit quality with a nonperforming assets to total assets ratio of 0.18%, significantly below the first adjustment threshold of 1.50%. The 2023 year presented significant challenges for the banking industry that impacted earnings per share. The increase in market interest rates created increased deposit competition while also generally reducing net interest income, net interest spread and net interest margins. Additionally, bank failures in the spring of 2023 caused the Federal Deposit Insurance Corporation to make special assessments on financial institutions, including ours, which impacted earnings per share. The Company also had several non-recurring items that impacted earnings per share, including an adjustment to a privilege tax accrual and contract termination costs. As a result of these events, the actual earnings per share of $3.79 fell below the threshold of $4.97. The Compensation Committee and Board credit our named executive officers for our results despite the challenges that 2023 presented. As a result of our results and other achievements during 2023, our Board elected to exercise its discretion to award each of our named executive officers a discretionary bonus equal to the threshold amount for the earnings per share component (with a corresponding weighting of seventy percent (70%)), equaling $264,968 for Mr. Broughton, $111,563 for Mr. Rushing, $63,175 for Mr. Foshee and $41,825 for Mr. Abbott. Mr. Pressley was given a discretionary bonus of $109,000 for his performance during the year ended December 31, 2023. The results, achievements and factors the Compensation Committee and Board considered in granting the discretionary bonuses include our named executive officers’ having navigated the challenges in the banking industry during 2023, achieving high deposit growth in a time of increased deposit competition with peers, maintaining loan balance in an increased interest rate environment, and the impact of unique items on earnings per share for the performance period. The total award amounts for 2023 were 48% lower than the total award amounts for 2022 for Mr. Broughton, and range between 27% and 45% lower for our other named executive officers when compared to 2022. The actual awards (including the discretionary bonus), award as a percentage of the target award, and award as percentage of base salary are shown in the table below.
Annual Incentive Plan Award Payouts
| Named Executive Officer | 2023 Award ($) | Award as % of Target(1) | Award as % of Base Salary(1) | | Thomas A. Broughton | $605,640 | 80.0% | 84.0% | | Rodney E. Rushing | 255,000 | 80.0 | 60.0 | | William M. Foshee | 144,400 | 80.0 | 40.0 | | Henry F. Abbott | 95,600 | 80.0 | 40.0 | | Kirk Pressley* | 109,000 | -- | -- | | (1) Percentages are rounded to the nearest tenth of a percent. * Mr. Pressley joined ServisFirst in 2023 and did not participate in the Annual Incentive Plan, but was given a discretionary bonus of $109,000 for performance during the year ended December 31, 2023. | | | |
Equity-Based Incentive Compensation
Equity-Based Incentive Compensation Our Compensation Committee made annual equity grants to our named executive officers in order to be competitive with market best practices, to align executives with stockholders and to address potential retention concerns. With the exception of Mr. Abbott and for 2023, Mr. Pressley, annual equity-based incentive awards are composed 50% of time-based restricted stock grants and 50% of performance-based performance shares. Mr. Abbott’s equity award consisted of a single time-based restricted stock grant and was last granted in January 2022. Mr. Pressley received a grant of 10,000 shares of time-based restricted stock upon joining the Company in June 2023. Time-based restricted stock awards are intended to aid in retention of our named executive officers, while performance share awards reward our named executive officers for delivering total shareholder returns in the highest percentile when compared against our peer companies. On February 21, 2023 (and June 30, 2023 for Mr. Pressley), the Board approved the Compensation Committee’s grants of time-based restricted stock and performance shares for 2023.
Equity-Based Incentive Compensation
| Named Executive Officer | Time-based Restricted Stock (#) | Fair Value of 2023 Restricted Stock Award ($) | Target Performance Shares (#) | Fair Value of 2023 Performance Shares ($) | Total Target Award Value ($) | | Thomas A. Broughton III, Principal Executive Officer (“PEO”) | 5,161 | $378,525 | 5,385 | $378,525 | $757,050 | | Rodney E. Rushing | 1,363 | 100,000 | 1,423 | 100,000 | 200,000 | | William M. Foshee, Principal Financial Officer (“PFO”) | 1,230 | 90,250 | 1,284 | 90,250 | 180,500 | | Henry F. Abbott | --- | --- | --- | --- | --- | | Kirk Pressley | 10,000 | 448,800 | --- | --- | 448,800 |
Equity-Based Incentive Compensation
| Performance Level | Company Percent Rank Relative to 2022 Peer Group | Number of Performance Shares Earned | | Threshold | 35th Percentile | 50% of Target | | Target | 50th Percentile | 100% of Target | | Maximum | 75th Percentile | 150% of Target |
Equity-Based Incentive Compensation
The percentage of performance shares earned if our TSR Percent Rank Relative to the 2023 Peer Group is between Threshold and Target or between Target and Maximum shall be determined by linear interpolation. Notwithstanding the foregoing, if our TSR at the end of the Performance Period is negative, then the maximum number of performance shares that can be earned is the Target number of performance shares, regardless of how our TSR compares to the 2023 Peer Group at the end of the Performance Period. This mechanism is intended to prevent our named executive officers from receiving more than the Target number of performance shares if our TSR at the end of the Performance Period is negative, even if such TSR exceeds 50% of our 2023 Peer Group.
2022 Performance Share Award Performance
2022 Performance Share Award Performance Our 2022 performance share awards to our named executive officers remain outstanding. The number of performance shares earned will be determined by reference to the Company’s TSR relative to the 2022 Peer Group over the performance period commencing on January 1, 2022 and ending on December 31, 2024 (the “2022 Performance Period”). Depending on our TSR percent rank relative to the 2022 Peer Group, our named executive officers may earn between 0% and 150% of the Target number of performance shares set forth in the above table corresponding to the Company’s attainment of the TSR percent rank relative to the 2022 Peer Group on the last day of the 2022 Performance Period. As of December 31, 2023, the Company’s TSR percent rank relative to the 2022 Peer Group equaled the 35th percentile, which, if maintained as of the end of the 2022 Performance Period, would entitle our named executive officers to 50% of the Target 2022 performance shares awarded. Our Stock Incentive Plan allows for the accelerated vesting of equity awards in the event of a change in control. In general, under this Plan a “change in control” means a reorganization, merger or consolidation of the Company or the Bank with or into another entity where our stockholders before the transaction own less than 50% of our combined voting power after the transaction, a sale of all or substantially all of our assets or a purchase of more than 50% of the combined voting power of our outstanding capital stock in a single transaction or a series of related transactions by one “person” (as that term is used in Section 13(d) of the Exchange Act) or more than one person acting in concert. The 2022 benchmark peer group used to determine 2022 performance share awards and assess the Company’s TSR performance is the same 2022 Peer Group previously identified.
2021 Performance Share Award Performance
2021 Performance Share Award Performance In January 2024, our Compensation Committee reviewed the achievement levels of the 2021 performance share awards with the assistance of our compensation consultant. The number of performance shares earned were determined by reference to the Company’s TSR relative to the 2021 peer group over the performance period commencing on January 1, 2021 and ending on December 31, 2023 (the “2021 Performance Period”). Depending on our TSR percent rank relative to the 2021 Peer Group, our named executive officers could have earn between 0% and 150% of the Target number of performance shares awarded to them. The Compensation Committee, with the assistance of our compensation consultant, determined that the 2021 performance shares were awarded at the maximum level based upon a relative TSR rank of one, and awarded Mr. Broughton 12,399 performance shares, Mr. Rushing 3,280 shares and Mr. Foshee 2,974 performance shares.
Severance and Change in Control
Severance and Change in Control As of February 25, 2021, we entered into Change in Control Agreements with each of our named executive officers based upon our determined that financial institutions in the markets in which we operate routinely enter into change in control agreements with their executives. Each of these agreements provides the officer with certain employment protections for a two-year period following a change in control of the Company (the “Protected Period”). The Change in Control Agreements are “double-trigger” agreements, meaning that an executive’s employment must be terminated during the Protected Period in order to receive benefits under the agreement. If the officer’s employment is terminated during the Protected Period without Cause or by the officer with Good Reason (as those terms are defined in the Change in Control Agreements), the officer would be entitled to receive, among other benefits: (1) a cash severance payment equal to a specific multiple (2.99x for Mr. Broughton, 2x for each of Messrs. Foshee and Rushing, and 1.5x for Mr. Abbott) of the sum of (a) the officer’s base salary at the time of termination, and (b) the average cash bonus paid to the officer over the prior three years; and (2) a pro-rata bonus for the fiscal year in which the termination occurs. Each of the named executive officers would also be entitled to receive a lump sum cash payment equal to 18 months’ worth of COBRA premiums, based on the officer’s then-current coverage elections. In addition, certain pre-change in control terminations will be deemed to constitute change in control terminations if such terminations occur at the request or direction of a person who has entered into an agreement which would constitute a change in control upon consummation, or in connection with or anticipation of a change in control transaction with such person, subject to certain conditions. See “Executive Compensation — Potential Payments Upon Termination or Change in Control” for more information. As a condition to receipt of any of the payments or benefits described herein, each named executive officer would be required to execute a standard separation and release agreement containing a release of all claims, if any, against the Company within a 45-day period following the officer’s termination date. Each named executive officer would also be subject to certain confidentiality, non-competition and non-solicitation obligations and receipt of payments and benefits would be subject to the officer’s continued compliance with such obligations. Our officers agree to maintain the confidentiality of our confidential information. For a period of six months following such officer’s termination date, each of our officers has agreed to not engage in similar activities within a sixty (60) mile radius of any Company office, and has further agreed to not solicit any Company employees or customers for a period of one year following such officer’s termination date. Our officers would not be entitled to any tax gross-ups for excise taxes that may be triggered under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. However, our officers are entitled to receive the “best net” treatment, which means that if the total of all change in control payments due such officer exceeds the threshold that would trigger the imposition of excise taxes, the officer will either (1) receive all payments and benefits due and the officer will be responsible for paying all such taxes or (2) have such payments and benefits reduced such that imposition of the excise tax is no longer triggered, depending on which method provides the officer with the better after-tax result. Each Change in Control Agreement has an initial term of five (5) years from execution through December 31, 2025, but is subject to additional five year “evergreen” renewal periods unless we provide written notice to the officer by June 30 of the final year in the then current term.
Summary Compensation Table
Summary Compensation Table The following table sets forth the aggregate compensation paid by us or the Bank to our named executive officers:
Summary Compensation Table
| Name and Principal Position Held | Year | Salary | Bonus (1) | Stock Awards (2) | Option Awards | Non-Equity Incentive Plan Comp (3) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings | All Other Compensation(4) | Total | | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | Thomas A. Broughton III | 2023 | 721,000 | 264,968 | 757,050 | - | 340,673 | - | 56,297(4) | 2,139,984 | | President and Chief | 2022 | 700,000 | 67,500 | 691,000 | - | 1,102,500 | - | 51,554(4) | 2,612,554 | | Executive Officer | 2021 | 675,000 | 100,000 | 660,699 | - | 1,063,125 | - | 47,678(4) | 2,546,502 | | Rodney E. Rushing | 2023 | 425,000 | 111,563 | 200,000 | - | 143,438 | - | 39,277 | 919,278 | | EVP and Chief | 2022 | 400,000 | 50,000 | 188,151 | - | 300,000 | - | 35,975 | 974,126 | | Operating Officer | 2021 | 364,477 | - | 174,785 | - | 281,250 | - | 33,896 | 864,931 | | William M. Foshee | 2023 | 361,000 | 63,175 | 180,500 | - | 81,225 | - | 40,731 | 726,631 | | Former EVP and Chief | 2022 | 350,000 | 500 | 164,592 | - | 262,500 | - | 36,511 | 814,103 | | Financial Officer | 2021 | 336,667 | - | 158,481 | - | 255,000 | - | 35,448 | 788,929 | | Henry F. Abbott | 2023 | 239,000 | 41,825 | - | - | 53,775 | - | 34,080 | 368,680 | | SVP and Chief Credit | 2022 | 232,000 | 1,000 | 42,330 | - | 174,000 | - | 28,518 | 477,848 | | Officer | 2021 | 217,500 | - | - | - | 168,750 | - | 29,503 | 423,253 | | Kirk Pressley | 2023 | 198,319 | 109,000 | 448,800 | - | - | - | - | 756,119 | | EVP of Strategic | | | | | | | | | | | Planning | | | | | | | | | |
Summary Compensation Table
| (1) Reflects the upward discretionary adjustment under the Annual Incentive Plan as discussed above under Annual Incentive Plan Award Payouts. | | | | | | | | (2) Amounts shown represent the grant date fair value of the grants of restricted stock under our 2009 Amended and Restated Stock Incentive Plan in accordance with FASB ASC Topic 718 of awards made during 2023. Please refer to Note 13 (Employee and Director Benefits) in our 2023 Annual Report on Form 10-K for a discussion of the assumptions used to calculate this amount. Awards that are subject to performance conditions are included in the Summary Compensation Table assuming that target level performance conditions will be achieved. The following table summarizes the value of the awards subject to performance conditions at the grant date assuming that the highest level of performance conditions is achieved. Note that fractional shares do not vest until such fractional shares total a full share: | | | | | | | | Name | | | | Grant Date Fair Value of Stock Awards; Highest Level of Performance Conditions Achieved ($) | | | | Thomas A. Broughton | | | | $567,788 | | | | Rodney E. Rushing | | | | $150,000 | | | | William M. Foshee | | | | $135,375 | | | | Kirk Pressley | | | | - | | | | (3) Represents amount awarded under our annual incentive plan. See Compensation Discussion & Analysis: Annual Incentive Compensation for additional information regarding amounts earned in 2023. | | | | | | | | (4) The amounts in this column include the following for 2023: | | | | | | | | Name | Car Allowance | Country Club Allowance | Healthcare Premiums | Employer Contributions to 401(k) Plan | Group Life and Long-Term Disability Insurance Premiums | Imputed Income for Endorsement Split-Dollar Agreement | | Thomas A. Broughton | $9,000 | $10,380 | $11,135 | $13,200 | $1,362 | $11,220 | | Rodney E. Rushing | 9,000 | - | 11,135 | 13,200 | 1,362 | 4,580 | | William M. Foshee | 9,000 | - | 11,135 | 13,200 | 1,362 | 6,034 | | Henry F. Abbott | 9,000 | 2,700 | 11,135 | 13,200 | 1,362 | - | | Kirk Pressley | - | - | - | - | - | - | | Mr. Broughton’s spouse travels with him on business trips using the Company aircraft from time to time. The Company has determined that Mrs. Broughton’s travel results in no additional incremental cost to the Company. | | | | | | |
Grants of Plan-Based Awards for Fiscal 2023
Grants of Plan-Based Awards for Fiscal 2023 The following table summarizes each named executive officer’s 2023 annual incentive plan opportunity under the heading Estimated Future Payouts Under Nonequity Incentive Plan Awards. Actual annual incentive plan amounts earned are set forth in the Summary Compensation Table. See “Compensation Discussion and Analysis - Annual Incentive Compensation” for additional information regarding 2023 objectives and performance. The table also reflects equity incentive opportunities granted to our named executive officers in 2023. The threshold, target and maximum number of performance share awards are summarized under the heading Estimated Future Payouts under Equity Incentive Awards, while the heading All Other Stock Awards reflects time-based restricted stock awards. Our named executive officers did not receive stock option awards during fiscal 2023. See Compensation Discussion and Analysis: Equity-Based Incentive Compensation for additional detail.
Grants of Plan-Based Awards for Fiscal 2023
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards ($)(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (#)(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock and Option Awards ($) | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Thomas A. Broughton III (PEO) | 2/21/23 | | | | | | | 5,161 | $378,525 | | | 2/21/23 | $378,525 | $757,050 | $1,135,575 | 2,693 | 5,385 | 8,078 | | 378,525(4) | | Rodney E. Rushing | 2/21/23 | | | | | | | 1,363 | 100,000 | | | 2/21/23 | 159,375 | 318,750 | 478,125 | 711 | 1,423 | 2,134 | | 100,000(4) | | William M. Foshee | 2/21/23 | | | | | | | 1,230 | 90,250 | | Former (PFO) | | | | | | | | | | | | 2/21/23 | 90,250 | 180,500 | 270,750 | 642 | 1,284 | 1,926 | | 90,525(4) | | Henry F. Abbott | 2/21/23 | 59,750 | 119,500 | 179,250 | -- | -- | -- | -- | -- | | Kirk Pressley | 6/20/23 | -- | -- | -- | -- | -- | -- | 10,000 | 448,800 |
Grants of Plan-Based Awards for Fiscal 2023
| (1) Represents potential cash payments under our annual incentive compensation program for performance during the year ended December 31, 2023. The 2023 annual incentive opportunity consists of two performed factors: earnings per share and deposit growth. Threshold amounts may be lower if only one of the criteria is met. | | (2) Represents performance-based share awards granted in 2023 under our equity incentive program. | | (3) Represents time-based restricted stock granted in 2023. | | (4) Grant date fair value of 2023 performance share awards assuming target performance. |
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End The below table details all outstanding equity awards as of December 31, 2023. All equity awards identified below were granted under our 2009 Amended and Restated Stock Incentive Plan.
Outstanding Equity Awards at 2023 Fiscal Year-End
| | Option Awards | | | | | Stock Awards | | | | | Name | Number of securities underlying unexercised options (#) Exercisable | Number of Securities underlying unexercised options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option exercise price ($) | 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 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | Thomas A. Broughton III (CEO) | - | - | - | - | - | 5,161(1) | $343,877 | - | - | | | - | - | - | - | - | 2,894(2) | $192,827 | - | - | | | - | - | - | - | - | 2,756(3) | 183,610 | - | - | | | - | - | - | - | - | - | - | 5,385(4) | $358,803 | | | - | - | - | - | - | - | - | 2,170(5) | 144,587 | | | - | - | - | - | - | - | - | 12,399(6) | 826,145 | | Rodney E. Rushing | - | - | - | - | - | 1,363(7) | 90,817 | - | - | | | - | - | - | - | - | 788(8) | 52,504 | - | - | | | - | - | - | - | - | 729(9) | 48,573 | - | - | | | - | - | - | - | - | - | - | 1,423(4) | 94,814 | | | - | - | - | - | - | - | - | 591(5) | 39,378 | | | - | - | - | - | - | - | - | 3,280(6) | 218,546 | | William M. Foshee (CFO) | - | - | - | - | - | 1,230(10) | 81,955 | - | - | | | - | - | - | - | - | 689(11) | 45,930 | - | - | | | - | - | - | - | - | 661(12) | 44,042 | - | - | | | - | - | - | - | - | - | - | 1,284(4) | 85,553 | | | - | - | - | - | | - | - | 517(5) | 34,448 | | | - | - | - | - | - | - | - | 2,974(6) | 198,157 | | Henry F. Abbott | - | - | - | - | - | 500(13) | 33,315 | - | - | | Kirk Pressley | - | - | - | - | - | 10,000(14) | 666,300 | - | - |
Outstanding Equity Awards at 2023 Fiscal Year-End
| (1) Represents the unvested portion of the grant of 5,161 shares of restricted stock made to Mr. Broughton on February 21, 2023, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting dates. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (2) Represents the unvested portion of the grant of 4,341 shares of restricted stock made to Mr. Broughton on January 24, 2022, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 2,894 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (3) Represents the unvested portion of the grant of 8,267 shares of restricted stock made to Mr. Broughton on January 25, 2021, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 2,756 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (4) Reflects performance shares for the performance period ending December 31, 2025. Performance shares are earned based on the Company’s TSR relative to the 2024 Peer Group. The number of performance shares reported in this column assumes achievement at the threshold level for the performance criteria based on performance through December 31, 2023. The market value of this performance share award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (5) Reflects performance shares for the performance period ending December 31, 2024. Performance shares are earned based on the Company’s TSR relative to the 2022 Peer Group. The number of performance shares reported in this column assumes achievement at the threshold level for the performance criteria based on performance through December 31, 2023. The market value of this performance share award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (6) Reflects the number of performance shares actually issued for the performance period ending December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (7) Represents the unvested portion of the grant of 1,363 shares of restricted stock made to Mr. Rushing on February 21, 2023, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting dates. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (8) Represents the unvested portion of the grant of 1,182 shares of restricted stock made to Mr. Rushing on January 24, 2022, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 788 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (9) Represents the unvested portion of the grant of 2,187 shares of restricted stock made to Mr. Rushing on January 25, 2021, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 729 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (10) Represents the unvested portion of the grant of 1,230 shares of restricted stock made to Mr. Foshee on February 21, 2023, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting dates. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (11) Represents the unvested portion of the grant of 1,034 shares of restricted stock made to Mr. Foshee on January 24, 2022, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 689 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (12) Represents the unvested portion of the grant of 1,983 shares of restricted stock made to Mr. Foshee on January 25, 2021, which vests 1/3 per year on the first three anniversaries of the grant date, provided the executive remains employed by the Company through the applicable vesting date. 661 shares were unvested as of December 31, 2023. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (13) Represents the unvested portion of the grant of 500 shares of restricted stock made to Mr. Abbott on January 24, 2022, which vests in full on the fifth anniversary of the grant date, provided the executive remains employed by the Company through the applicable vesting date. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. | | (14) Represents the unvested portion of the grant of 10,000 shares of restricted stock made to Mr. Pressley on June 20, 2023, which vests in one-fifth increments on each anniversary of the grant date, provided the executive remains employed by the Company through the applicable vesting date. The market value of this restricted stock award is based on $66.63 per share, the closing price of our common stock on December 29, 2023, the last trading day of fiscal year 2023. |
Option Exercises and Stock Vested for Fiscal 2023
Option Exercises and Stock Vested for Fiscal 2023 The following table sets forth information regarding option exercises by and restricted stock vesting for our named executive officers during 2023:
Option Exercises and Stock Vested for Fiscal 2023
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Thomas A. Broughton III(1) | - | - | 4,202 | $274,770 | | Rodney E. Rushing(2) | 10,000 | $490,300 | 1,123 | 73,427 | | William M. Foshee(3) | - | - | 1,002 | 65,525 | | Henry F. Abbott(4) | - | - | 2,127 | 113,969 | | Kirk Pressley | - | - | - | - |
Option Exercises and Stock Vested for Fiscal 2023
___________________
Option Exercises and Stock Vested for Fiscal 2023
| (1) On January 24, 2023, Mr. Broughton had 1/3 of his 2022 restricted stock award vest, in the amount of 1,447 shares, and on January 25, 2023, Mr. Broughton had 1/3 of his 2021 restricted stock award vest, in the amount of 2,755 shares. The value of the portion of the award vesting is based on a value closing price of the Company’s common stock on the vesting date, which was $64.82 on January 24, 2023, and $65.69 on January 25, 2023. | | (2) On January 24, 2023, Mr. Rushing had 1/3 of his 2022 restricted stock award vest, in the amount of 394 shares, and on January 25, 2023, Mr. Rushing had 1/3 of his 2021 restricted stock award vest, in the amount of 729 shares. The value of the portion of the award vesting is based on a value closing price of the Company’s common stock on the vesting date, which was $64.82 on January 24, 2023, and $65.69 on January 25, 2023. Additionally, Mr. Rushing exercised options for 10,000 shares at a price of $6.92 per share on December 4, 2023. Based upon a value of $55.95 per share, the closing price of the Company’s common stock on the date of exercise, and the exercise price of $6.92, the value realized by Mr. Rushing on the exercise of such options was $490,300. | | (3) On January 24, 2023, Mr. Foshee had 1/3 of his 2022 restricted stock award vest, in the amount of 341 shares, and on January 25, 2023, Mr. Foshee had 1/3 of his 2021 restricted stock award vest, in the amount of 661 shares. The value of the portion of the award vesting is based on a value closing price of the Company’s common stock on the vesting date, which was $64.82 on January 24, 2023, and $65.69 on January 25, 2023. | | (4) On February 20, 2023, Mr. Abbott had all of his 2022 restricted stock award vest, in the amount of 600 shares, and on May 18, 2023, Mr. Abbott had all of his 2020 restricted stock award vest, in the amount of 1,527 shares. The value of the vesting is based on a value closing price of the Company’s common stock on the vesting date, which was $74.10 on February 17, 2023, the closing price of the last trading day prior to the vesting date, and $45.52 on May 18, 2023. |
Pension Benefits
Pension Benefits The Company does not maintain any benefit plan that provides for payments or other benefits at, following or in connection with retirement, other than the Company’s 401(k) plan.
Nonqualified Deferred Compensation Plans
Nonqualified Deferred Compensation Plans The Company does not maintain any defined contribution or other plans that provide for the deferral of compensation on a basis that is not tax-qualified.
Chief Executive Officer Pay Ratio
Chief Executive Officer Pay Ratio Rules adopted by the SEC following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act require us to provide a reasonable estimate of the ratio of the annual total compensation of our Chief Executive Officer to the median annual total compensation of our employees. We last identified our median employee in 2022 by comparing all salary, matching contributions to our 401(k) plan, annual incentive compensation, bonus compensation, long-term incentive awards vested in 2022 and our payment of insurance premiums and provision of other perquisites, as reported to the Internal Revenue Service on Form W-2 for 2022 for all of our employees (excluding our Chief Executive Officer) as of December 31, 2022. As further detailed in the paragraphs and Summary Compensation Table below, Mr. Broughton’s total annual compensation in fiscal 2023 was $2,139,984. The Company has determined that the annual compensation for its median employee for the same fiscal year was approximately $88,974. Accordingly, we believe that the ratio of the annual total compensation of Mr. Broughton, our Chief Executive Officer, to the median of the annual total compensation of all our employees in 2023 was 24.1 to 1.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and our performance for the fiscal years listed below.
Pay Versus Performance Disclosure
| | | | | | Value of Initial Fixed $100 Investment based on: | | | | | Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2)(3) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs (2)(3) | TSR | Peer Group TSR (4) | Net Income (millions) | Basic Earnings Per Share | | 2023 | $2,139,984 | $2,109,738 | $692,677 | $736,614 | $188.97 | $115.64 | $206.9 | $3.80 | | 2022 | 2,612,554 | 2,634,492 | 755,359 | 807,351 | 191.23 | 116.10 | 251.5 | 4.63 | | 2021 | 2,546,502 | 3,583,655 | 962,371 | 960,478 | 232.85 | 124.74 | 207.7 | 3.83 | | 2020 | 1,560,626 | 1,547,188 | 504,616 | 525,789 | 109.19 | 91.29 | 169.6 | 3.15 |
Pay Versus Performance Disclosure
| (1) Thomas A. Broughton was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below. |
Pay Versus Performance Disclosure
| 2020 | 2021 - 2022 | 2023 | | Rodney E. Rushing | Rodney E. Rushing | Rodney E. Rushing | | William M. Foshee | William M. Foshee | William M. Foshee | | Henry F. Abbott | Henry F. Abbott | Henry F. Abbott | | Clarence C. Pouncey III | | Kirk Pressley |
Pay Versus Performance Disclosure
| (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by our NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. | | (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the applicable Summary Compensation Table. |
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO | Exclusion of Stock Awards and Option Awards for PEO | Inclusion of Equity Values for PEO | Compensation Actually Paid to PEO | | 2023 | $2,139,984 | $(757,050) | $726,804 | $2,109,738 |
Pay Versus Performance Disclosure
| Year | Average Summary Compensation Table Total for Non-PEO NEOs | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs | Average Inclusion of Equity Values for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $692,677 | $(207,325) | $251,262 | $736,614 |
Pay Versus Performance Disclosure
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance Disclosure
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO | Total - Inclusion of Equity Values for PEO | | 2023 | $678,110 | $62,310 | $(13,616) | $726,804 |
Pay Versus Performance Disclosure
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs | Total - Average Inclusion of Equity Values for Non-PEO NEOs | | 2023 | $253,149 | $7,732 | $(9,620) | $251,262 |
Pay Versus Performance Disclosure
| (4) The Peer Group TSR set forth in this table utilizes the KBW Nasdaq Regional Bank Index (KRX), which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year for the Company and in the KBW Nasdaq Regional Bank Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. | | (5) We determined Basic Earnings Per Share to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. This performance measure may not have been the most important financial performance measure for prior years, and we may determine a different financial performance measure to be the most important financial performance measure in future years. |
Pay Versus Performance Disclosure
PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, the cumulative TSR over the four most recently completed fiscal years for the Company, and the KBW Nasdaq Regional Bank Index cumulative TSR over the same period. PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four most recently completed fiscal years. PEO and Non-PEO NEO Compensation Actually Paid and Earnings Per Share The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Earnings Per Share during the four most recently completed fiscal years. Tabular List of Most Important Financial Performance Measures The following table presents the financial performance measures that we consider to have been the most important in linking Compensation Actually Paid to our PEO and Non-PEO NEOs for 2023 to our performance. The measures in this table are not ranked.
Pay Versus Performance Disclosure
| Earnings Per Share Relative Total Stockholder Return Loan and Deposit Growth |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control
Estimated Payments upon a Termination or Change in Control
Estimated Payments upon a Termination or Change in Control The tables below contain the total payments one would receive under each termination scenario if the NEOs separated on December 31, 2023. For all termination scenarios, the figures for long-term, equity-based incentive compensation awards are as of December 30, 2023, at the closing stock price of $66.63 on December 29, 2023. Terminations following a change in control are assumed to be within the Protected Period and either without “cause” if the Company terminated the NEO or with “good reason” if the NEO terminated employment.
Estimated Payments upon a Termination or Change in Control
| | Termination Scenarios | | | | | Executive | Voluntary ($)(1)(4) | With Cause | Death ($)(2)(4) | Disability ($)(3)(4) | | Thomas A. Broughton III | $1,042,138 | - | $4,762,452 | $1,762,452 | | Rodney E. Rushing | 276,403 | - | 1,968,298 | 468,298 | | William M. Foshee | 249,640 | - | 1,921,568 | 421,568 | | Henry F. Abbott | - | - | 33,315 | 33,315 | | Kirk Pressley | - | - | 666,300 | 666,300 |
Estimated Payments upon a Termination or Change in Control
| (1) Amounts in this column include the amount of performance shares each NEO is entitled to retain for meeting all retirement eligibility criteria under outstanding award agreements. Restricted stock is not included in these amounts because it does not vest upon retirement or other voluntary departures. Mr. Abbot and Mr. Pressley only held restricted stock as of December 31, 2023. | | (2) Amounts in this column include benefits paid under the endorsement split-dollar agreements for Messrs. Broughton, Rushing, and Foshee upon death and the total amount of long-term, equity-based compensation (including restricted stock and performance shares) each NEO is entitled either to retain or to have the vesting accelerated due to death. | | (3) Amounts in this column include the total amount of long-term, equity-based compensation (including restricted stock and performance shares) each NEO is entitled either to retain or to have the vesting accelerated due to disability. | | (4) For purposes of calculating the value of performance share awards, (i) the estimated performance of the 2021 performance shares are shown at the maximum amount, (ii) the 2022 performance share awards are shown at the threshold amount, and (iii) the 2023 awards are shown at the threshold amount, all based on relative performance at December 31, 2023. These are further adjusted based on the ratio of the number of days the participant provided service during the performance period to the total number of days in the performance period. |
Estimated Payments upon a Termination or Change in Control
| | Termination Following a Change in Control Without Cause or for Good Reason | | | | | Executive | Cash Severance(1) ($) | Unvested Equity(2) ($) | Other Benefits(3) ($) | Total(4) ($) | | Thomas A. Broughton III | $6,021,641 | $1,583,573 | $28,236 | $7,633,461 | | Rodney E. Rushing | 1,673,834 | 421,723 | 28,236 | 2,123,794 | | William M. Foshee | 1,348,400 | 378,503 | 28,236 | 1,755,139 | | Henry F. Abbott | 655,975 | 33,315 | 31,779 | 721,069 | | Kirk Pressley | 1,192,000 | 666,300 | 31,779 | 1,890,079 |
Estimated Payments upon a Termination or Change in Control
| (1) Includes (1) a cash severance payment equal to a specific multiple (2.99x for Mr. Broughton, 2x for Messrs. Rushing, Foshee and Pressley, and 1.5x for Mr. Abbott) of the sum of (a) base salary at the time of termination (base salary in effect during year ended December 31, 2023) and (b) average cash bonus paid over the prior three years (years ended December 31, 2020, 2021 and 2022); and (2) a pro-rata cash bonus for the fiscal year in which the termination occurs based on actual performance (for these purposes the actual bonus for the year ended December 31, 2023 is used). For Mr. Pressley, the average bonus over the prior three years is calculated as his base salary in effect during the year ended December 31, 2023 multiplied by the target opportunity of 50%. |
Estimated Payments upon a Termination or Change in Control
| (2) Restricted stock vests in full due to change in control. Performance shares are shown at target performance and adjusted based on the ratio of the number of days the participant provided service during the performance period to the total number of days in the performance period. |
Estimated Payments upon a Termination or Change in Control
| (3) Lump sum cash payment equal to 18-months of COBRA premiums, based on the officer’s then-current coverage elections. |
Estimated Payments upon a Termination or Change in Control
| (4) Subject to adjustment for “best net” treatment, which means that if the total of all change in control payments due an NEO exceeds the threshold that would trigger the imposition of excise taxes, the NEO will either (1) receive all payments and benefits due him and be responsible for paying all such taxes or (2) have his payments and benefits reduced such that imposition of the excise taxes is no longer triggered, depending on which method provides him with the better after-tax result. Each column rounded to nearest full dollar amount. |
Estimated Payments upon a Termination or Change in Control
PROPOSAL 3: RATIFY APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM