DEF 14A of Auburn National Bancorporation, Inc
Filed Apr 3, 2024 · FY20230001193125-24-085801
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS Eleven persons have been nominated to serve on the Company’s Board of Directors for one-year terms expiring at the Company’s next scheduled annual meeting of shareholders and until their successors have been elected and qualified. All the nominees for director are current directors of the Company, and all have agreed to serve, if elected. Proxies cannot be voted for more than the 11 nominees. Cumulative voting for directors is not permitted. All shares represented by valid Proxies received and not revoked before they are exercised will be voted in the manner specified therein. If no specification is made, the Proxies will be voted for the election of all 11 nominees listed below. In the unanticipated event that any nominee is unable to serve, the persons designated as proxy holders will cast votes for the remaining nominees and for such other replacements as may be nominated by the Company’s Board of Directors. The nominees have been nominated by the Company’s Board of Directors based on the recommendation of the Nominating and Corporate Governance Committee, and the Board unanimously recommends a vote “FOR” the election of all 11 nominees listed below.
Information about Nominees for Directors and Executive Officers
Information about Nominees for Directors and Executive Officers The following table sets forth the name and age of each nominee for director, a brief description of his or her principal occupation and business experience, certain other directorships and how long he or she has been a director for the Company or the Bank. In addition, we have also provided a brief discussion of the specific experience, qualifications, attributes or skills that led to the Nominating and Corporate Governance Committee’s conclusion that the nominee should serve as one of our directors. Except for Robert W. Dumas, Chairman of the Board of Directors of the Company and the Bank and David A. Hedges, President and CEO of the Company and the Bank, none of the nominees are employed by the Company or the Bank or any entity that is an affiliate of the Company or the Bank.
Information about Nominees for Directors and Executive Officers
| Name, Principal Occupation, Business Experience, Age, Directorships and Qualifications | Director Since | | C. Wayne Alderman | 2004 | | Dean and Professor Emeritus, former Dean of Enrollment Services and former Dean, College of Business, Auburn University; former Director of Financial Operations of the Bank from 2000 to 2007; employed by Auburn University from 1979 to 2022. Dr. Alderman is 73. | | | Dr. Alderman, a certified public accountant and former Torchmark Professor of Accounting at Auburn University, has strategic planning expertise, public accounting and risk and general management knowledge to the Board. He also has valuable insight and banking knowledge as a result of his service as the Bank’s Director of Financial Operations from 2000 to 2007, in addition to serving as a director of the Bank since 1993. | | | Terry W. Andrus | 1998 | | Retired President and Chief Executive Officer of the East Alabama Medical Center from 1984 to 2018; Director of Care Network Southeast, Former Director of Blue Cross/Blue Shield of Alabama. Mr. Andrus is 72. | | | Mr. Andrus has executive decision-making, financial expertise, and business-building skills from his past service as the Chief Executive Officer of a regional hospital. Mr. Andrus also has served as Chairman of the Alabama Hospital Association. He possesses banking knowledge through his service as a director of the Bank since 1991. | |
Information about Nominees for Directors and Executive Officers
| Name, Principal Occupation, Business Experience, Age, Directorships and Qualifications | Director Since | | J. Tutt Barrett | 2010 | | Mr. Barrett is a senior partner in the law firm of Dean & Barrett, located in Opelika, Alabama, where he has worked since 1992. Mr. Barrett is 72. Mr. Barrett brings a wealth of legal and risk management skills to the Board. He also provides governance skills and experience gained through his service on the boards of various charitable organizations. In addition, Mr. Barrett served on one of the Bank’s local advisory boards from 1991 to 2010. | | | Laura J. Cooper | 2020 | | Executive Director of Lee County Youth Development Center in Opelika, Alabama since 2000. She has held various positions with the Lee County Youth Development Center since 1987. Ms. Cooper is 65. | | | Ms. Cooper has extensive executive experience as head of a large non-profit in Lee County, Alabama. She also currently serves on the Auburn Industrial Development Board of Directors, the Opelika Chamber of Commerce Board of Directors, and the Auburn University Human Development and Family Studies Advisory Council. Ms. Cooper has held numerous other leadership positions, including her past service as President of the Auburn City School Board, Chairperson of the Auburn Chamber of Commerce Board, Chairperson of the United Way of Lee County Board, and as a member of the Auburn University College of Education Advisory Council. Ms. Cooper provides a unique perspective to the Board of Directors regarding the financial needs of the local community. | | | Robert W. Dumas | 2001 | | Chairman of the Board of the Company and the Bank since January 2020; President and CEO of the Company from 2017 to December 31, 2022 and the Bank from 2001 to December 31, 2022; Vice Chairman of the Company and the Bank from 2013 until his election as the Chairman; President and Chief Lending Officer of the Bank from 1998 to 2001. He has been employed by the Bank since 1984; and is a Director of East Alabama Medical Center. Mr. Dumas is 70. | | | Mr. Dumas brings valuable insight and knowledge to the Board as a result of his service as President and CEO of the Company and the Bank. Mr. Dumas currently serves as a trustee or director of the Auburn University Board of Trustees, the Auburn Research and Technology Board of Directors, and recently ended terms on the Alabama Bankers Association Board of Directors, and the Federal Reserve Bank of Atlanta Board of Directors. He has held numerous other positions in professional leadership, including his service as President and Chairman of the Alabama Bankers Association and a member of the Auburn University Business Advisory Council. Mr. Dumas has valuable knowledge from his 46 years of service in the banking industry, including serving as a director of the Bank since 1997. | | | William F. Ham, Jr. | 2004 | | Former Mayor of City of Auburn from 1998 to 2018; owner of Varsity Enterprises, a company providing coin laundry services, since 1977. Mr. Ham is 70. | | | Mr. Ham brings a wealth of business-building skills and community knowledge to the Board as a result of his experience as an entrepreneur and as the former Mayor of City of Auburn. He also has valuable knowledge through his service as a director of the Bank since 1993. | |
Information about Nominees for Directors and Executive Officers
| Name, Principal Occupation, Business Experience, Age, Directorships and Qualifications | Director Since | | David A. Hedges | 2022 | | President and Chief Executive Officer of the Company and the Bank since January 1, 2023; formerly Executive Vice President and Chief Financial Officer of the Company and the Bank since December 2015; and various other positions with the Company and Bank since 2006. Mr. Hedges is 45. Mr. Hedges brings valuable knowledge and insight to the Board as a result of his service as Executive Vice President and Chief Financial Officer of the Company and the Bank. He has demonstrated a thorough and thoughtful approach to strategy, execution, and service to employees, customers, shareholders and the community. Prior to joining the Company, Mr. Hedges worked at KPMG LLP in their financial services audit practice from 2002 to 2006. | | | David E. Housel | 2004 | | Director of Athletics Emeritus at Auburn University since January 2006; Director of Athletics at Auburn University from 1994 to January 2006. He was employed by Auburn University from 1970 to 2006. Mr. Housel is 77. | | | Mr. Housel brings valuable business, public relations, and strategic planning skills to the Board through his previous experience managing a major collegiate athletic program with numerous employees and supervising multi-million dollar budgets. He also possesses banking knowledge through his service as a director of the Bank since 1997. | | | Michael A. Lawler | 2024 | | Founder and Chief Executive Officer of Fullsteam Holdings LLC (“Fullsteam”) since April 2018; formerly President – Strategic Markets Group and executive officer for Heartland Payment Systems, Inc. from 2012 until its sale to Global Payment System Inc. in 2016. After the sale, Mr. Lawler briefly retired before discussions that led to the formation of Fullsteam. Mr. Lawler is 61. | | | Mr. Lawler has executive decision-making, strategic planning, and business-building skills as the founder and Chief Executive Officer of Fullsteam and previously as an executive officer of Heartland Payment Systems. He also possesses valuable insight regarding the intersection of technology and payments for a variety of small business industry verticals and as a vendor to banks. Mr. Lawler was elected to the Boards of the Company and the Bank effective March 29, 2024. | | | Anne M. May | 1990 | | Retired Partner, Machen & McChesney, LLP, an accounting firm located in Auburn, Alabama, from 1983 to 2018. Ms. May is 73. | | | Ms. May has valuable risk management skills, public accounting knowledge and expertise in compensation and tax compliance as a partner and former managing partner for a local accounting firm. She also possesses extensive banking knowledge through her service as a director of the Bank since 1982. | | | Sandra J. Spencer | 2024 | | Retired from Auburn University; where she served as Director for the Alabama 4-H Youth Development and Conference Center in Columbiana, Alabama from 2000 to 2014. Ms. Spencer is 64. | | | Ms. Spencer has valuable business insights and expertise from her 25+ years working in the hospitality industry. She also possesses a wealth of community knowledge from her service and dedication to local philanthropic efforts, including Chapter A, P.E.O., a philanthropic organization focused on the education and advancement of women. Ms. Spencer was elected to the boards of the Company and the Bank effective March 29, 2024. | |
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Board Leadership Structure
Board Leadership Structure Robert W. Dumas serves as Chairman of the Company and the Bank, and was President and CEO of the Company and the Bank through December 31, 2022. The Board of Directors does not have a policy with respect to the separation of the offices of Chairman and the Chief Executive Officer. The Board believes this issue is part of the succession planning process and that it is in the best interests of the Company and our shareholders to retain the flexibility to combine or separate these functions. The Board believes there were a number of important advantages of combining the positions of Chairman and Chief Executive Officer, including the following:
Board Leadership Structure
| • | Mr. Dumas has 40 years of experience at the Bank, including 21 years as President and Chief Executive Officer and 10 years as Vice Chairman and three years as Chairman of the Company and the Bank. He has the knowledge, expertise, and experience to understand the opportunities and challenges facing the Company, as well as the community and banking industry leadership and management experience and skills to promote and execute our values and strategy, particularly during the current economic environment; |
Board Leadership Structure
| • | Prior to retiring as President and CEO at the end of 2022, Mr. Dumas could lead Board discussions regarding our business and strategy, and provided unified leadership for the Company. His services as Chairman offers continuity and support for our management team and strategic advice; |
Board Leadership Structure
| • | The previous combination of the positions and Mr. Dumas’ continued service as Chairman since the end of 2022 creates a firm link between management and the Board and promotes the development and implementation of corporate strategy; and |
Board Leadership Structure
| • | Mr. Dumas’s continuing service as Chairman facilitates timely communication with the Board on critical business matters given the complexity of our business and his knowledge of our customers, communities and other stakeholders. |
Board Leadership Structure
The Board believes that combining the positions of Chairman and Chief Executive Officer did not adversely affect the Board’s independence. The Company’s Board had nine members and Mr. Dumas was the only inside director prior to the election of Mr. Hedges in November 2022 as part of the Company’s and the Bank’s management succession plan. After filling two vacancies on the Board in March 2024, eight directors have been determined to be independent under Nasdaq’s listing standards, and one outside director is a strong community and business leader who has not served as an employee or officer of the Company or the Bank. Our corporate governance guidelines provide that the independent directors will meet at least semi-annually in executive session without management present. The Company also has established an Independent Director Committee. Anne M. May is currently the chairperson of such committee and therefore is formally identified as the Lead Independent Director. The Lead Independent Director has broad responsibility and authority, including to:
Board Leadership Structure
| • | Preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent Directors; |
Board Leadership Structure
| • | Call meetings of Independent Directors Committee; and |
Board Leadership Structure
| • | Serve as the principal liaison between the Chairman and the Independent Directors. |
Board Leadership Structure
The Company believes the foregoing structure, policies and practices, when combined with the Company’s other governance policies and procedures, provide appropriate oversight, discussion and evaluation of decisions and direction from the Board of Directors.
Board Compensation
| Name | Fees Earned or Paid in Cash | Non-equity Incentive Plan Compensation | Total | | C. Wayne Alderman | $34,500 | $ — | $34,500 | | Terry W. Andrus | 18,750 | — | 18,750 | | J. Tutt Barrett | 23,500 | — | 23,500 | | Laura J. Cooper | 14,500 | — | 14,500 | | Robert W. Dumas | 35,000 | — | 35,000 | | William F. Ham, Jr. | 20,500 | — | 20,500 | | David E. Housel | 18,500 | — | 18,500 | | Anne M. May | 18,250 | — | 18,250 | | Edward Lee Spencer, III (1) | 18,750 | — | 18,750 |
Summary Compensation Table
Summary Compensation Table The following table provides information concerning the compensation of our named executive officers for the years ended 2023 and 2022.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus (5) | All Other Compensation (6) | Total | | David A. Hedges | 2023 | $300,000 | $ — | $41,224 | $341,224 | | President and Chief Executive Officer of the Bank and the Company (1) | 2022 | 237,392 | 75,000 | 19,196 | 331,589 | | Robert W. Dumas | 2022 | 358,944 | 100,000 | 60,866 | 519,810 | | Chairman, President and Chief Executive Officer of the Bank and the Company (2) | | | | | | | Robert L. Smith (3) | 2023 | 227,212 | 34,000 | 8,996 | 270,208 | | Senior Vice President and Chief Lending Officer of the Bank | 2022 | 216,393 | 35,000 | 8,446 | 259,839 | | W. James Walker, IV (3)(4) | 2023 | 235,000 | 27,000 | 10,030 | 272,030 | | Senior Vice President and Chief Financial Officer of the Bank and the Company | 2022 | 210,968 | 30,000 | 9,069 | 250,037 |
Summary Compensation Table
| (1) Mr. Hedges was the Executive Vice President and Chief Financial Officer of the Company and the Bank through December 31, 2022. On January 1, 2023, Mr. Hedges succeeded Mr. Dumas as President and CEO of the Company and the Bank. Mr. Hedges was elected as a director of the Company and the Bank on November 8, 2022. He received fees for his service as a director of the Company and the Bank of $21,250 in 2023, and $2,500 in 2022. |
Summary Compensation Table
| (2) Mr. Dumas was the Chairman, President and Chief Executive Officer of the Company and the Bank through December 31, 2022. On January 1, 2023, Mr. Dumas remained Chairman and was succeeded as President and Chief Executive Officer by Mr. Hedges. Accordingly, Mr. Dumas’ compensation is shown for 2022, but not for 2023. In addition to his salary and other compensation, Mr. Dumas received fees for his services as a director of the Company and the Bank of $35,000 in 2023. His 2022 all other compensation includes $42,050 for his service as a director of the Company and the Bank. |
Summary Compensation Table
| (3) Considered the two most highly compensated executive officers other than the principal executive officer for the year ended December 31, 2023. |
Summary Compensation Table
| (4) Mr. Walker was the Senior Vice President and Chief Accounting Officer of the Company and the Bank through December 31, 2022. On January 1, 2023, Mr. Walker succeeded Mr. Hedges as Chief Financial Officer of the Company and the Bank. |
Summary Compensation Table
| (5) Represents cash incentive awards paid to the Company’s executive officers. Bonuses that were earned in 2022 and 2023 were paid in 2023 and 2024, respectively. |
Summary Compensation Table
| (6) For 2023, includes compensation as described under “All Other Compensation” below. |
2023 Grants of Plan-Based Awards
2023 Grants of Plan-Based Awards The Company did not grant any equity or non-equity incentive plan awards in 2023.
2023 Option Exercises and Stock Vested
2023 Option Exercises and Stock Vested There were no stock options exercised or stock awards vested in 2023.
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023 There were no unexercised options, unvested stock, and equity incentive plan awards for named executive officers outstanding as of December 31, 2023.
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation The Company does not offer any pension or nonqualified deferred compensation benefits to its named executive officers.
Pay-Versus-Performance
| Year | Summary Compensation Table Total for PEO (3) | Compensation Actually Paid to PEO (3) | Average Summary Compensation Table Total for Other NEOs (3) | Average Compensation Actually Paid to Other NEOs (3) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (4) | Net Income | | 2023 (1) | $341,224 | $341,224 | $271,119 | $271,119 | $57.29 | $1,395,000 | | 2022 (2) | 519,810 | 519,810 | 290,714 | 290,714 | 58.95 | 10,346,000 | | 2021 (2) | 453,163 | 453,163 | 255,900 | 255,900 | 79.65 | 8,039,000 |
Pay-Versus-Performance
| (3) The Company did not have any equity awards for the years presented; therefore, the Summary Compensation Table Total for PEO and Compensation Actually Paid to PEO are the same, and the Average Summary Compensation Table Total for Other NEOs and Average Compensation Actually Paid to Other NEOs are the same. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The Company does not have any severance or change in control agreements with any of its named executive officers.