SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Filed
by the Registrant
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Filed
by a Party other than the Registrant
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£
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Check the
appropriate box:
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R
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Preliminary
Proxy Statement
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£
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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£
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Definitive
Proxy Statement
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£
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Definitive
Additional Materials
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£
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Soliciting
Material Under Rule 14a-12
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SERVISFIRST
BANCSHARES, INC.
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(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant
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Payment
of Filing Fee (Check the appropriate box):
R No
fee required
£ Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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(5)
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Total
fee paid:
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£
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Fee
paid previously with preliminary
materials.
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£
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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SERVISFIRST
BANCSHARES, INC.
3300
Cahaba Road, Suite 300
Birmingham,
Alabama 35223
April
10, 2009
Dear
Fellow Stockholder:
You are cordially invited to attend the
annual meeting of stockholders of ServisFirst Bancshares, Inc. Our annual
meeting will be held at Vulcan Park Center located at 1701 Valley View Drive,
Birmingham, Alabama 35209 on Thursday, May 28, 2009, at 5:00 p.m.,
Birmingham local time. We will have a cocktail hour after the
meeting.
We are furnishing proxy materials to
our stockholders over the Internet. You may read, print and download our Notice
of Annual Meeting of Stockholders, our Proxy Statement, our proxy card and our
Annual Report for the year ended December 31, 2008 at www.cfpproxy.com/6547. On
April 10, 2009, we mailed you our Notice of Internet Availability of Proxy
Materials (sometimes referred to as the "Notice") containing instructions on how
to access these materials and how to vote your shares online. The Notice
provides instructions on how you can request a paper copy of these materials by
mail, by telephone or by email.
You may vote your shares by Internet,
by regular mail, telephone or in person at the annual meeting. Instructions
regarding the various methods of voting are contained on the Notice, in the
Proxy Statement and on the Proxy Card.
The proxy materials describe the formal
business to be transacted at the annual meeting, which includes a report on our
operations. Certain directors and officers will be present to answer any
questions that you and other stockholders may have. Included in the materials is
our Annual Report on Form 10-K, which contains detailed information concerning
our activities and operating performance.
The business to be conducted at the
annual meeting consists of the election of six directors, the ratification of
the appointment of Mauldin & Jenkins LLC as our independent registered
public accounting firm for the year ending December 31, 2009 and the approval of
our 2009 Stock Incentive Plan. Our board of directors unanimously recommends a
vote “FOR” the election of the director nominees; “FOR” the ratification of the
appointment of Mauldin & Jenkins LLC as our independent registered public
accounting firm for the year ending December 31, 2009; and "FOR" the approval of
our 2009 Stock Incentive Plan.
On behalf of our board of directors, we
request that you vote your shares now, even if you currently plan to attend the
annual meeting. This will not prevent you from voting in person, but will assure
that your vote is counted. Your vote is important.
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Sincerely,
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/s/Thomas A. Broughton III
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Thomas
A. Broughton, III
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President,
Chief Executive Officer and Board Member
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TABLE OF CONTENTS
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A-1
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SERVISFIRST
BANCSHARES, INC.
3300
Cahaba Road, Suite 300
Birmingham,
Alabama 35223
NOTICE OF 2009 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY
28, 2009
AND
INTERNET AVAILABILITY OF PROXY MATERIALS
To Our
Stockholders:
Notice is hereby given that our annual
meeting of stockholders will be held at Vulcan Park Center, 1701 Valley View
Drive, Birmingham, Alabama 35209 on Thursday, May 28, 2009, at 5:00 p.m.,
Birmingham local time, for the following purposes:
1. The
election of six nominees to serve on our board of directors until the next
annual meeting of stockholders and until their successors are duly elected and
qualified, as set forth in the accompanying proxy statement;
2. To
ratify our board of directors' decision to engage Mauldin & Jenkins, LLC as
independent auditors of the Company for the for the year ending December 31,
2009;
3. To
approve the ServisFirst Bancshares, Inc. 2009 Stock Incentive Plan which sets
aside a total of 425,000 shares of common stock; and
4 To
transact such other business as may properly come before the annual meeting or
any postponement or adjournment thereof.
Our board of directors is not aware of
any other business to come before the annual meeting.
Stockholders of record as of the close
of business on April 3, 2009 are entitled to notice of and to vote their shares
by proxy or at the annual meeting.
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YOUR
VOTE IS IMPORTANT
IT
IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE SIGN, DATE
AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED
RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE ANNUAL
MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON. IF YOU CHOOSE
TO VOTE VIA THE INTERNET, YOU CAN FIND THIS NOTICE OF ANNUAL MEETING, THE
ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 2008 AND THE PROXY STATEMENT
AT
HTTP://WWW.CFPPRPXY.COM/6547.
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By
Order of the Board of Directors,
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/s/William M. Foshee
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William
M. Foshee
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Secretary
and Chief Financial Officer
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Birmingham,
Alabama
April 10,
2009
2009
ANNUAL MEETING OF STOCKHOLDERS
OF
SERVISFIRST
BANCSHARES, INC.
——————————————
PROXY
STATEMENT
——————————————
Our board
of directors solicits the accompanying proxy for use at our annual meeting of
stockholders to be held on Thursday, May 28, 2009, at 5:00 p.m., Birmingham
local time, at Vulcan Park Center, 1701 Valley View Drive, Birmingham, Alabama
35209. We mailed a Notice of Internet Availability of Proxy Materials (sometimes
referred to as the "Notice") on April 10, 2009 to make this Proxy Statement
available to our stockholders of record, as of April 3, 2009.
Our
corporate headquarters are located at 3300 Cahaba Road, Suite 300, Birmingham,
Alabama 35223 and our toll free telephone number is (866) 317-0810.
Throughout
this proxy statement, unless the context indicates otherwise, when we use the
terms “the Company”, “we,” “our” or “us,” we are referring to ServisFirst
Bancshares, Inc. and its wholly owned subsidiary, ServisFirst Bank (the
"Bank").
ABOUT THE ANNUAL MEETING
In
accordance with the rules and regulations adopted by the Securities and Exchange
Commission ("SEC"), instead of mailing a printed copy of our proxy materials to
each stockholder of record, we may now furnish proxy materials including this
Proxy Statement, the Proxy Card, and the Company's Annual Report for the year
ended December 31, 2008 to our stockholders by providing access to such
documents on the Internet. Stockholders will not receive printed
copies of the proxy materials unless requested. Instead, the Notice will
instruct stockholders as to how they may access and review all of the proxy
materials. The Notice also instructs stockholders how to submit a proxy through
the Internet. We will mail each
stockholder of record a paper Proxy Card 10 days after we mail the
Notice, so stockholders who prefer to execute a paper Proxy Card may do so. This
subsequent mailing will not include a copy of the Proxy Statement or a copy of
the Company's Annual Report for the year ended December 31, 2008. If
you would like to receive a paper copy or e-mail copy of all your proxy
materials, you should follow the instructions for requesting such materials
included in the Notice. We will pay the entire cost of preparing, assembling,
printing, mailing and distributing these proxy materials and soliciting votes.
If you choose to access the proxy materials and/or vote over the Internet, you
are responsible for any Internet access charges you may incur.
What
are the purposes of the annual meeting?
At the
annual meeting, stockholders will vote on: (i) the election of six directors, as
more fully described in Proposal 1 below; (ii) the ratification of our board of
directors' decision to engage Mauldin & Jenkins, LLC as independent auditors
of the Company for the 2009 fiscal year, as more fully described in Proposal 2
below; (iii) the approval of the ServisFirst Bancshares, Inc. 2009 Stock
Incentive Plan (referred to as the "2009 Stock Incentive Plan" in this Proxy
Statement), as more fully described in Proposal 3 below; and (iv) such other
business as may properly come before the annual meeting or any postponement or
adjournment thereof. Our board of directors is not aware of any matters that
will be brought before the annual meeting, other than procedural matters, that
are not listed above. However, if any other matters properly come before the
annual meeting, the individuals named on the Proxy Card, or their substitutes,
will be authorized to vote on those matters in their own judgment.
Who
is entitled to vote?
Only
stockholders of record at the close of business on the record date, April 3,
2009, are entitled to receive notice of the annual meeting and to vote shares of
common stock held as of the record date at the annual meeting.
Each
outstanding share of common stock entitles its holder to cast one vote on each
matter to be voted upon, and there are no cumulative rights.
If you
did not receive an individual copy of this year's Proxy Statement or our Annual
Report, we will send a copy to you if you address a written request to our
Secretary, William M. Foshee, 3300 Cahaba Road, Suite 300, Birmingham, Alabama
35223, telephone (205) 949-0302.
What
is proxy?
It is
your legal designation of another person to vote the stock you
own. That other person is called a proxy. If you designate
someone as your proxy in a written document, that document is called a proxy or
a proxy card. We have designated two of our officers as proxies for
the 2009 Annual Meeting of Shareowners. These two different officers
are Thomas A. Broughton, III and William M. Foshee.
What
is a proxy statement?
It is a
document that Securities and Exchange Commission (“SEC”) regulations require us
to give you when we ask you to sign a proxy card designating Thomas A.
Broughton, III and William M. Foshee as proxies to vote on your
behalf.
What
constitutes a quorum?
The
presence at the annual meeting, in person or by proxy, of the holders of a
majority of the shares entitled to vote at the annual meeting will constitute a
quorum. As of the record date, 5,513,482 shares of our common stock, $.001 par
value per share, held by 918 stockholders of record, were issued and
outstanding. Proxies received, but marked as abstentions will be included in the
calculation of the number of shares considered to be present at the annual
meeting.
What
vote is required to approve each item?
Directors
are elected by a plurality of the votes cast. Any other matter that may properly
come before the annual meeting must be approved by the affirmative vote of a
majority of the shares entitled to vote and present or represented by proxy at
the annual meeting.
Under the
General Corporation Law of the State of Delaware (referred to as "Delaware law"
in this Proxy Statement) an abstention from voting on any proposal will have the
same legal effect as an “against” vote, except election of directors, where an
abstention has no effect under plurality voting.
How
do I vote by proxy?
We are
making our proxy materials available to our stockholders on the Internet. You
may read, print and download our Annual Report for the year ended December 31,
2008 and our Proxy Statement at www.cfpproxy.com/6547. On April 10, 2009, we
mailed the Notice, which contains instructions on how to access our proxy
materials and vote online. On an ongoing basis, stockholders may request to
receive proxy materials in paper form. Additionally, you may vote by mail or by
returning the Proxy Card. To vote via the Internet or by telephone, follow the
instructions set forth on the Notice you receive. To vote by mail, sign and date
each Proxy Card you receive, mark the boxes indicating how you wish to vote and
return the Proxy Card, it will be voted as you directed. Do not return the Proxy
Card if you vote via the Internet or by telephone.
Can
I change my vote after I return my Proxy Card?
Yes. You
can change or revoke your proxy at any time before the annual meeting by
notifying our Secretary, William M. Foshee, in writing, sending another executed
proxy dated later than the first Proxy Card or making a subsequent vote using
the Internet or telephone. Attendance at the annual meeting will not cause your
previously granted proxy to be revoked unless you specifically so request. For
shares held beneficially by you, you may accomplish this by submitting new
voting instructions to your broker or nominee.
Can
I vote in person at the annual meeting instead of voting by proxy?
Yes.
However, we encourage you to vote by proxy to ensure that your shares are
represented and voted. If you attend the annual meeting in person, you may then
vote in person even though you returned your Proxy Card.
What
are the Board’s recommendations?
Our board
of directors unanimously recommends that stockholders vote for: (i) the election
of the six nominees for the board of directors, as more fully described in
Proposal 1 below; (ii) for the ratification of our board of directors' decision
to engage Mauldin & Jenkins, LLC as independent auditors of the Company for
the 2009 fiscal year, as more fully described in Proposal 2 below; and (iii) for
the approval of the 2009 Stock Incentive Plan, as more fully described in
Proposal 3 below.
If your
Proxy Card is properly executed and received in time for voting, and not
revoked, such Proxy Card will be voted in accordance with your instructions
marked on the Proxy Card. In the absence of any instructions or directions to
the contrary, persons named in the enclosed proxy will vote all shares of common
stock for the approval of proposals stated above.
Our board
of directors does not know of any other matters other than the proposals set
forth above that may be brought before the annual meeting or any postponement or
adjournment thereof. In the event that any other matters should come before the
annual meeting, the persons named in the enclosed proxy, Thomas A. Broughton III
or William M. Foshee, will have discretionary authority to vote all proxies not
marked to the contrary with respect to such matters in accordance with their
best judgment.
In
particular, the persons named will have discretionary authority to vote with
respect to the following matters that may come before the annual meeting or any
postponement or adjournment thereof: (i) approval of the minutes of the prior
meeting if such approval does not amount to ratification of the action or
actions taken at that meeting; (ii) any proposal omitted from the Proxy
Statement and form of proxy pursuant to Rules 14a-8 and 14a-9 of the Securities
Exchange Act of 1934, as amended, referred to as the Exchange Act in this Proxy
Statement; and (iii) matters incident to the conduct of the annual meeting or
any postponement or adjournment thereof. In connection with such matters, the
persons named in the enclosed form of proxy, Thomas A. Broughton, III or William
M. Foshee, will vote in accordance with their best judgment.
Who
pays for this proxy solicitation?
We do. We
will pay all costs in connection with the meeting, including the cost of
preparing, assembling and mailing the notice of the annual meeting, Proxy
Statement and Proxy Card, as well as handling and tabulating the proxies
returned. In addition to the use of mail, proxies may be solicited by directors,
officers and regular employees of the Company, without additional compensation,
in person or by other electronic means. We will reimburse brokerage houses and
other nominees for their expenses in forwarding proxy material to beneficial
owners of our common stock.
Who
can help answer your questions?
If you
have questions about the annual meeting or would like additional copies of this
Proxy Statement, you should contact our Secretary, William M. Foshee, 3300
Cahaba Road, Suite 300, Birmingham, Alabama 35223, telephone
(205) 949-0302.
Annual
Report on Form 10-K
On
written request, we will provide, without charge, a copy of our Annual Report on
Form 10-K for the year ended December 31, 2008, as amended (including
a list briefly describing the exhibits thereto), filed with the SEC, to any
record holder or beneficial owner of our common stock on April 3, 2009, the
record date, or to any person who subsequently becomes such a record holder or
beneficial owner. Requests should be directed to the attention of our Secretary
at the address set forth above.
PROPOSAL 1
ELECTION
OF DIRECTORS
Our Bylaws, provide that the number of
directors constituting our board of directors shall be six unless otherwise
fixed from time to time exclusively by resolution passed by a majority of our
board of directors. Six directors will be elected at the annual meeting to hold
office until the 2010 Annual Shareholders Meeting is held and until their
successors are elected and have qualified. Our board has nominated, for election
to our board of directors at this year’s annual meeting, each of the persons
named below. Each of those nominees has consented to serve as a director, if
re-elected. Unless otherwise instructed, the proxy holders named in the enclosed
proxy intend to vote the proxies received by them for the election of all six of
these nominees. If, prior to the annual meeting, any nominee of the board of
directors becomes unable to serve as a director, the proxy holders will vote the
proxies received by them for the election of a substitute nominee selected by
our board of directors.
Vote
Required and Recommendation of the Board of Directors
The six 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 ensuing year. As a
result, shares as to which the authority to vote is withheld, which will be
counted, will have no effect on the outcome of the election of
directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF
THE NOMINEES NAMED BELOW.
Information
regarding directors and director nominees and their ages as of the record date
is as follows:
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ServisFirst
Bancshares, Inc.
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ServisFirst
Bank
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Name
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Age
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Director
Since
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Position
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Director
Since
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Position
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Thomas
A. Broughton III
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54
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2007
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President,
Chief Executive Officer and Director
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2005
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President,
Chief Executive Officer and Director
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Stanley
M. Brock
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58
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2007
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Chairman
of the Board
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2005
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Chairman
of the Board
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Michael
D. Fuller
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55
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2007
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Director
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2005
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Director
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James
J. Filler
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65
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2007
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Director
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2005
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Director
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Joseph
R. Cashio
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51
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2007
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Director
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2005
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Director
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Hatton
C. V. Smith
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58
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2007
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Director
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2005
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Director
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The
following summarizes the business experience and background of each of our
nominees.
Thomas A. Broughton III – Mr.
Broughton has served as our President, 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 has spent the entirety
of his 30-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 received a Bachelor of Science in Finance
from the University of Alabama in 1976 and a Master of Business Administration
from the J. L. Kellogg Graduate School of Management at Northwestern University
in 1977. Mr. Broughton also serves on the Board of Directors of
Cavalier Homes, Inc.
Stanley M. Brock – Mr. Brock
has served as our Chairman of the Board since 2007 and has served as Chairman of
the Board of the Bank since its inception in May 2005. He has served
as President of Brock Investment Company, Ltd., a private venture capital firm
since its formation in 1995. Prior to 1995, Mr. Brock practiced
corporate law for 20 years with one of the largest law firms based in
Birmingham, Alabama. Mr. Brock also served as a director of Compass
Bancshares, Inc., a publicly traded bank holding company, from 1992 to
1995. Mr. Brock received a Bachelor of Arts in English from the
University of Virginia in 1972 and a Doctor of Jurisprudence from Vanderbilt
University in 1975.
Michael D. Fuller – Mr.
Fuller has served as a director since 2007 and as a director of the Bank since
its inception in May 2005. For over twenty years, Mr. Fuller has been
a private investor in real estate investments. Prior to that time,
Mr. Fuller played professional football for nine years. Mr. Fuller
received a Bachelor of Arts in Business Administration from Auburn University in
1976 and received a Master of Business Administration from San Diego National
University in 1979. Mr. Fuller has served as President of Double Oak
Water Reclamation, a private collection and wastewater treatment facility in
Shelby County, Alabama since 1998.
James J. Filler – Mr. Filler
has served as a director since 2007 and as a director of the Bank since its
inception in May 2005. 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. Mr. Filler attended
Samford University.
J. Richard Cashio – Mr.
Cashio has served as a director since 2007 and as a director of the Bank since
its inception in May 2005. Mr. Cashio serves as CEO of TASSCO, LLC
and served as the CEO of Tricon Metals & Services, Inc. from 2000 until its
sale in October 2008, and had served in various other positions with Tricon
Metals & Services, Inc. prior to 2000. Mr. Cashio received a
Bachelor of Science degree from the University of Alabama in 1979.
Hatton C. V. Smith – Mr.
Smith has served as a director since 2007 and as a director of the Bank since
its inception in May 2005. Mr. Smith has served as the CEO of Royal
Cup Coffee since 1986 and various other positions with Royal Cup Coffee prior to
1986. Mr. Smith received a Bachelor of Arts degree from Washington
& Lee University in 1973. He is involved in many different
charities and is a director of the United Way and the Baptist Health
System.
THE
ROLE OF THE BOARD OF DIRECTORS
In
accordance with our Bylaws and Delaware law, our board of directors oversees the
management of the business and affairs of the Company. The members of our board
also are members of the board of directors of our wholly-owned subsidiary
Alabama state chartered bank, ServisFirst Bank (as defined supra, the "Bank"), which
accounts for substantially all of the Company’s consolidated operating results.
The members of our board keep informed about our business through discussions
with senior management and other officers and managers of the Company and its
subsidiaries, including the Bank, by reviewing analyses and reports sent to them
by management and outside consultants, and by participating in board and in
board committee meetings.
COMMITTEES OF THE BOARD OF DIRECTORS
Our board maintains three standing
committees: Audit, Compensation, and Nominating and Corporate Governance. The
governing charter for each of the three committees is available on our website
under the "Committee Charter" heading.
Audit Committee
The Audit Committee assists our board
of directors in maintaining the integrity of our financial statements, and of
our financial reporting processes and systems of internal audit controls, and
our compliance with legal and regulatory requirements. The Audit Committee
reviews the scope of independent audits and assesses the results. The Audit
Committee meets with management to consider the adequacy of the internal control
over, and the objectivity of, financial reporting. The Audit Committee also
meets with the independent auditors and with appropriate financial personnel
concerning these matters. The Audit Committee selects, determines the
compensation of, appoints and oversees our independent auditors. The independent
auditors periodically meet with the Audit
Committee
and always have unrestricted access to the Audit Committee. The Audit Committee,
which currently consists of Michael J. Fuller, J. Richard Cashio and Stanley M.
Brock met eight times in 2008. Our board of directors has determined that each
of Fuller, Cashio, and Brock is independent under the standards of
independence of the Marketplace Rules of the NASDAQ Stock Market and
Rule 10A-3 of the Exchange Act. We have not designated any of our Audit
Committee members as a “audit committee financial expert,” as such term is
defined under Item 407 of Regulation S-K. While we believe that each of our
Audit Committee members have had careers which provide them with the skills to
understand financial statements and are competent to serve as members of the
Audit Committee, none of the current members has the financial background or
education which we believe unequivocally allows us to make such a designation
and our board of directors does not believe that designating a member of the
Audit Committee as a "audit committee financial expert" is necessary at this
time.
Compensation Committee
The Compensation Committee administers
incentive compensation plans, including stock option plans, and advises our
board of directors regarding employee benefit plans. The Compensation Committee
establishes the compensation structure for our senior management, approves the
compensation of our senior executives, and makes recommendations to the
independent members of our board of directors with respect to compensation of
the Chief Executive Officer and all other executive officers of the Company. The
Compensation Committee, which currently consists of Hatton C.V. Smith, J.
Richard Cashio and James J. Filler, met six (6) times in 2008. Our board of
directors has determined that each of Smith, Cashio and Filler is
independent under the standards of independence of the Marketplace Rules of the
NASDAQ Stock Market, and Rule 10A-3 of the Exchange Act and an “outside
director” for purposes of Section 162(m) of the Internal Revenue Code of
1986.
In
January 2008, the Compensation Committee retained an outside consultant, Clark
Consulting, to advise it regarding our compensation practices. Clark Consulting
provided us with a report dated January 2008 (the "Clark Report") which compared
the compensation paid to our president and chief executive officer in 2007
versus a peer group which included Pinnacle Financial Partners, Inc. (Nashville,
TN), FNB United Corp. (Asheboro, NC), Great Florida Bank (Coral Gables, FL),
Capital Bank Corporation (Raleigh, NC), Bancorp, Inc. (Wilmington, DE), Gateway
Financial Holding, Inc. (Virginia Beach, VA), Integrity Bancshares, Inc.
(Alpharetta, GA), Bank of Florida Corporation (Naples, FL), Commonwealth
Bankshares, Inc. (Norfolk, VA), Omni Financial Services, Inc. (Atlanta, GA),
Crescent Financial Corporation (Cary, NC), Patriot National Bancorp, Inc.
(Stamford, CT), Tennessee Commerce Bancorp (Franklin, TN), Southern First
Bancshares, Inc. (Greenville, SC) and Sun American Bancorp (Boca Raton,
FL). The Clark Report concludes that while we are in the top 40% in
most all performance measures and the top 5% for asset growth, the base salary
of our president and CEO is in the bottom 12% and his total compensation is in
the bottom 30% versus such peer group.
We have not retained Clark Consulting
regarding our compensation practices for fiscal year 2008 and upcoming fiscal
year 2009. Instead, the Compensation Committee independently determines the
appropriate levels of compensation for executive officers and directors taking
into account, among other factors, the performance of such individuals, our
financial performance, shareholder return and efforts and undertakings and
initiatives to build shareholder value.
Nominating/Corporate Governance
Committee
The
Nominating/Corporate Governance Committee functions include establishing the
criteria for selecting candidates for nomination to our board; actively seeking
candidates who meet those criteria; and making recommendations to our board of
nominees to fill vacancies on, or as additions to, our board and to monitor the
Company's corporate governance structure. The Nominating/Corporate Governance
Committee, which currently consists of Michael J. Fuller, J. Richard Cashio and
Stanley M. Brock, met one (1) time in 2008. Our board of directors has
determined that each of Fuller, Cashio and Brock is independent under the
standards of independence of the Marketplace Rules of the NASDAQ Stock Market,
and Rule 10A-3 of the Exchange Act and an “outside director” for purposes
of Section 162(m) of the Internal Revenue Code of 1986.
The
Compensation Committee seeks director candidates based upon a number of
qualifications/criteria, including their independence, knowledge, judgment,
character, leadership skills, education, experience and financial literacy. The
Committee will consider nominees for election to our board that are timely
recommended by shareholders provided that a complete description of the
nominees' qualifications, experience and background,
together
with a statement signed by each nominee in which he or she consents to act as
such, accompany the recommendations.
Committee Membership
The following chart provides a summary
of our board committee membership for fiscal year ended December 21,
2008.
|
Committee
Membership
|
||||||
|
Names
|
Nominating
and Corporate Governance
|
Audit
|
Compensation
|
|||
|
Thomas
A. Broughton, III
|
||||||
|
Stanley
M. Brock
|
X
|
X
|
||||
|
Michael
D. Fuller
|
X
|
X
|
||||
|
James
J. Filler
|
X
|
|||||
|
Joseph
R. Cashio
|
X
|
X
|
X
|
|||
|
Hatton
C.V. Smith
|
X
|
|||||
Advisory
Boards
The Bank has established the following
advisory boards for the Huntsville, Montgomery and Dothan markets:
Huntsville
Market:
E. Wayne Bonner
Hoyt A. “Tres” Childs, III,
MD
Donald J. Davidson
David J. Slyman, Jr.
Irma Tuder
Danny J. Windham
Sidney R. White
William (Bill) B. Watson,
Jr.
Thomas J. Young
Montgomery
Market:
Ray B. Petty
Todd Strange
G. L. Pete Taylor
W. Ken Upchurch, III
Alan E. Weil, Jr.
Dothan
Market:
Charles H. Chapman III
William C. (Bill)
Thompson
John Downs
Charles E. Owens
INDEPENDENCE OF THE BOARD OF DIRECTORS
Our common stock is not being listed on
any exchange upon registration, and we have no current plans to list our common
stock on any exchange; therefore, the Exchange Act requires that we select an
exchange’s director independence requirements with which to
comply. We have selected the director independence requirements of
The NASDAQ Global
Market. Our
Corporate Governance and Nominating Committee has and will, as deemed necessary,
conduct a review of director independence utilizing the listing standards of The
NASDAQ Global Market. During this review, our board considered
transactions and relationships between each director or any member of his
immediate family and us and our only subsidiary or affiliate, the Bank. Our
board also considered whether there were any transactions or relationships
between directors or any member of their immediate family (or any entity of
which a director or an immediate family member is an executive officer, general
partner or significant equity holder). The purpose of this review was
to determine whether any such relationships or transactions existed that were
inconsistent with a determination that a director is
independent. Independent directors must be free of any relationship
with us or our management that may impair the director’s ability to make
independent judgments.
Our Corporate Governance
and Nominating Committee has determined in its business judgment that
five (5) of the Company's six (6) Directors are independent as defined
in the applicable NASDAQ Global Market
listing standards, including that each member is free of any relationships that
would interfere with his individual exercise of independent judgment: Stanley M. Brock, Michael
D. Fuller, James J. Filler, J. Richard Cashio and Hatton C. V.
Smith.
Mr. Broughton is considered an inside
director because of his employment as our President and Chief Executive
Officer.
COMMUNICATIONS WITH DIRECTORS
You may contact any of our independent
directors, individually or as a group, by writing to them c/o William M. Foshee,
Chief Financial Officer, ServisFirst Bancshares, Inc., 3300 Cahaba Road, Suite
300, Birmingham, Alabama 35223. Mr. Foshee will review and forward to the
appropriate directors copies of all such correspondence that, in the opinion of
Mr. Foshee, deals with the functions of the board of directors or its committees
or that he otherwise determines requires their attention. Concerns relating to
accounting, internal controls or auditing matters will be brought promptly to
the attention of the Chairman of the Audit Committee and will be handled in
accordance with procedures established by the Audit Committee.
CORPORATE
GOVERNANCE GUIDELINES
Our board of directors believes that
sound governance practices and policies provide an important framework to assist
them in fulfilling their oversight duty. In December 2007, our board formally
adopted Corporate Governance Guidelines of ServisFirst Bancshares, Inc. (the
“Governance Guidelines”), which include a number of the practices and policies
under which our board has operated for some time, together with concepts
suggested by various authorities in corporate governance and the new
requirements under the NASDAQ’s listed company rules and the Sarbanes-Oxley Act
of 2002. Some of the principal subjects covered by our Governance Guidelines
include:
|
|
•
|
Director
Qualifications, which include a board candidate’s independence,
experience, knowledge, skills, expertise, integrity, ability to make
independent analytical inquiries; his or her understanding of our business
and the business environment in which we operate; and the candidate’s
ability and willingness to devote adequate time and effort to board
responsibilities, taking into account the candidate’s employment and other
board commitments.
|
|
|
•
|
Responsibilities of
Directors, including acting in the best interests of all
shareholders; maintaining independence; developing and maintaining a sound
understanding of our business and the industry in which we operate;
preparing for and attending board and board committee meetings; and
providing active, objective and constructive participation at those
meetings.
|
|
|
•
|
Director Access to management
and, as necessary and appropriate, independent advisors, including
encouraging presentations to our board from the officers responsible for
functional areas of our business and from outside consultants who are
engaged to conduct periodic reviews of various aspects of the Company’s
operations or the quality of certain of the Company’s assets, such as the
loan portfolio.
|
|
|
•
|
Director Orientation and
Continuing Education, including programs to familiarize new
directors with our business, strategic plans, significant financial,
accounting and risk management issues, compliance programs, conflicts
policies, code of business conduct and corporate governance guidelines. In
addition, each director is expected to participate in continuing education
programs relating to developments in the Company’s business and in
corporate governance.
|
|
|
•
|
Regularly Scheduled Executive
Sessions, without management, will be held by our board and by the
Audit Committee, which meets separately with the Company’s outside
auditors.
|
CODE
OF BUSINESS CONDUCT
Our board of directors has adopted a
Code of Ethics that applies to all of our employees, officers and directors. The
Code of Ethics covers compliance with law; fair and honest dealings with us,
with competitors and with others; fair and honest disclosure to the public; and
procedures for compliance with the Code of Ethics. A copy of our Code of Ethics
is available free of charge on our website at www.servisfirstbancshares.com.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The primary functions of the
compensation committee are to evaluate and administer the compensation of our
president and chief executive officer and other executive officers and to review
our general compensation programs. As of December 31, 2008, and
currently, the members of this committee are: Hatton C. V.
Smith, J. Richard Cashio and James J. Filler. No member of
this committee has served as one of our officers or employees or of any
subsidiary. In addition, none of our executive officers has served as
a director or as a member of the compensation committee of a company which
employs any of our directors.
DIRECTOR COMPENSATION
The following table sets forth
information regarding the compensation of our non-employee directors for the
year ended December 31, 2008. Thomas A. Broughton III is a named executive
officer and his compensation is reflected in the Summary Compensation
Table.
|
Fees
earned
|
||||||
|
Name
|
or
paid in cash
|
Stock
Awards
|
Total
|
|||
|
($)
|
($)
|
($)
|
||||
|
Stanley
M. Brock, Chairman of the Board
|
22,500
|
47,222(1)
|
69,722
|
|||
|
Michael
D. Fuller
|
23,000
|
47,222(1)
|
70,222
|
|||
|
James
J. Filler
|
17,500
|
47,222(1)
|
64,722
|
|||
|
J.
Richard Cashio
|
17,750
|
47,222(1)
|
64,972
|
|||
|
Hatton
C. V. Smith
|
17,000
|
47,222(1)
|
64,222
|
(1) Each
director received a warrant to purchase 10,000 shares of common stock on May 2,
2005 at $10.00 per share which are fully vested as of May 2008 and each director
further received an option to purchase 10,000 shares of common stock on December
20, 2007 at $20.00 per share which vest 100% at one time at the end of five
years from the date of the grant. Consequently, each of the Directors
held warrants/options to purchase up to 20,000 shares as of December 31,
2008. The dollars amount recognized here is fair value in
accordance with FAS 123R.
MEETINGS OF THE BOARD OF DIRECTORS
In 2008, our board of directors held
seven (7) meetings. In 2008, each director attended more than 75% of the
aggregate of: (i) the number of meetings of the board of directors held during
the period he served on the board; and (ii) the number of meetings of committees
of the board of directors held during the period he served on such
committees.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF
THE NOMINEES NAMED IN PROPOSAL 1.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Certain
Relationships and Related Transactions
We have not entered into any business
transactions with related parties required to be disclosed under Rule 404(a) of
Regulation S-K other than banking transactions in our ordinary course of
business with our Directors and officers, as well as members of their families
and corporations, partnerships or other organizations in which they have a
controlling interest. Management recognizes that related party
transactions can present unique risks and potential conflicts of interest (in
appearance and in fact). Therefore, we maintain written policies
around interactions with related parties which require that these transactions
are on the following terms:
|
|
•
|
In
the case of banking transactions, each is on substantially the same terms,
including price or interest rate, collateral and fees, as those prevailing
at the time for comparable transactions with unrelated parties, and will
not be expected to involve more than the normal risk of collectability or
present other unfavorable features to the Bank;
and
|
|
|
•
|
In
the case of any related party transactions including banking transactions,
each is approved by a majority of the directors who do not have an
interest in the transaction.
|
The
aggregate amount of indebtedness from directors and executive officers
(including their affiliates) to the Bank as of December 31, 2008, including
extensions of credit or overdrafts, endorsements and guarantees outstanding on
such date, was $15,934,000, which equaled 18.36% of our total equity capital as
of that date. Less than 5% of these loans were installment loans to
individuals. These loans are secured by real estate and other
suitable collateral to the same extent, including loan to value ratios, as loans
to similarly situated unaffiliated borrowers. We anticipate making
related party loans in the future to the same extent as we have in the
past.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a)
of the Exchange Act requires our directors and executive officers, and persons
who own more than 10% of a registered class of our equity securities, to file
with the SEC, initial reports of ownership and reports of changes in ownership
of common stock and other equity securities. Executive officers, directors and
greater than 10% stockholders are required by SEC regulations to furnish us with
copies of all Section 16(a) reports they file. Based solely upon
information made available to us, we believe that each filing required to be
made pursuant to Section 16(a) was timely filed by our executive officers
and directors and the beneficial owners of more than 10% of our common stock
except for: (1) one initial statement of beneficial ownership on Form 3 in
connection with Mr. DeVane's appointment as an officer, as such term is defined
under Exchange Act Rule 16a-3, and in connection with a stock option granted to
Mr. DeVane to purchase up to 50,000 shares of common stock, which vests 4,000
shares per year beginning on September 11, 2010 and each year thereafter with
the final 34,000 shares vesting on September 11,
2014 and (2) one change in beneficial ownership on Form 4
in connection with 8,000 shares of common stock acquired by Mr. DeVane pursuant
to the Dothan private placement offering.
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
Our
compensation process is designed to address both annual and longer term
corporate objectives. We have been in a period of accelerated growth and change
in recent years and our compensation processes have been designed to permit us
to attract and retain highly skilled executive and management staff in our
competitive market place. This Compensation Discussion and Analysis
describes our compensation program for our "named executive officers" who are
Thomas A. Broughton III, William M. Foshee, Clarence C. Pouncey III, Andrew N.
Kattos, G. and Carlton Barker.
On
November 29, 2007, we consummated the Bank's holding company reorganization
causing us to become a bank holding company and the Bank to become our
wholly-owned subsidiary. Our board of directors and the board of
directors of the Bank consist of the same individuals. Of the named
executive officers, three of them were appointed as executive officers of us
and, in each case, with the same title as they hold for the Bank, namely Thomas
A. Broughton III, President and CEO, Clarence C. Pouncey III, Executive Vice
President and COO, and William M. Foshee, Executive Vice President and
CFO. Consequently, from May 2, 2005 until November 29, 2007, the Bank
operated as an independent bank with no holding company and, consequently, all
compensation decisions for the named executive officers to date, including for
the year ended December 31, 2008, have been made solely by the compensation
committee of the Bank and approved by the board of directors of the
Bank.
In
December 2007, following our bank holding company reorganization, our board of
directors appointed a separate compensation committee consisting of the same
individuals as the compensation committee of the Bank with the authority to
determine the compensation of our Chief Executive Officer and, either
independently or with other independent directors of the board, the compensation
of our other executive officers, and to further administer any stock incentive
plans. To date, all of the named executive officers remain employees
of the Bank for payroll and tax purposes including Mr. Broughton, Mr.Foshee and
Mr. Pouncey. It is expected that, at this time, the name
executive
officers will remain employees of the Bank and therefore the compensation
committee of the Bank will continue to set compensation for the named executive
officers as approved by the board of directors of the Bank and subsequently
approved by our board of directors. We have not yet determined when
any of our named executive officers will have their compensation determined by
our compensation committee rather than the Bank's compensation
committee. However, as stated above, both compensation committees
consist of the same individuals. References herein to "our" or "the"
Compensation Committee will refer to our compensation committee and/or the
Bank's compensation committee, as applicable.
Compensation
Philosophy and Objectives
Our Compensation Committee believes
that the most effective executive compensation program is one that is designed
to reward the achievement of specific annual, long-term and strategic goals by
us and the Bank, and which aligns executives’ interests with those of our
stockholders by rewarding performance, with the ultimate objective of improving
stockholder value. The Compensation Committee evaluates both performance
and compensation to ensure that we maintain our ability to attract and retain
superior employees in key positions and that compensation provided to the named
executive officers and other officers remains competitive relative to the
compensation paid to similarly situated executives of our peers; provided that,
our Compensation Committee has not yet designated a specific peer group for this
purpose. To that end, the compensation committee believes that executive
compensation packages should include cash, annual short-term cash incentives and
long-term equity based incentives that reward performance as measured against
established goals. These goals may include any number of criteria and may be
unique to the particular executive officer based upon his or her duties, and may
include, among others, criteria based upon our net income, our asset growth, our
loan growth, such executive officer’s personal deposit production and our
efficiency and asset quality. Additionally, the Compensation
Committee believes that we should offer competitive benefit plans including
health insurance and 401(k). We have also entered into change in
control agreements where we believe it is important to ensure the retention of
certain key executives during the critical period immediately preceding a change
in control, if and when applicable.
In order to recruit and retain the most
qualified and competent individuals as executive officers, we strive to maintain
a compensation program that is competitive in our market.
The fundamental purpose of our
executive compensation program is to assist us in achieving our financial and
operating performance objectives. Specifically, our compensation
program has three basic objectives:
|
|
·
|
To
attract, retain and motivate our executive officers, including our named
executive officers;
|
|
|
·
|
To
reward executives upon the achievement of measurable corporate, business
unit and individual performance goals;
and
|
|
|
·
|
To
align each executive's interests with the creation of stockholder
value.
|
Elements
of our Compensation Program
Base salary: This element is
intended to directly reflect an executive’s job responsibilities and his value
to us; we also use this element to attract and retain our executives and, to
some extent, acknowledge each executive’s individual efforts in furthering our
strategic goals.
Annual short-term cash
incentives: This annual cash incentive is one of the
performance-based elements of our compensation; it is intended to motivate our
executives and to provide a current or immediate reward for short-term (annual)
measurable performance.
Equity-based
incentives: The grant of stock options is the most important
method we use to align the interests of our named executive officers with the
interests of our stockholders, which is another element of performance-based
compensation.
Perquisites and
benefits: These benefits and plans are intended to attract and
retain qualified executives, by ensuring that our compensation program is
competitive and provides an adequate opportunity for retirement savings; to a
limited degree these programs tend to reward long-term service or loyalty to
us.
Change in control
agreements: These agreements, or such provisions in an
employment or similar agreement, provide a form of severance payable in the
event of a change in control of us. They are primarily intended to align the
interests of our executives with our stockholders by providing a secure
financial transition in the event of termination in connection with a change in
control.
General
Compensation Policies
To
reward both short and long-term performance in the compensation program and in
furtherance of our compensation objectives noted above, our executive officer
compensation philosophy includes the following principles:
Compensation should be related to
performance. The Compensation
Committee believes that a significant portion of an executive officer’s
compensation should be tied not only to individual performance, but also company
performance measured against both financial and non-financial goals and
objectives.
Incentive compensation should
represent a portion of an executive officer’s total
compensation. The Compensation Committee is committed to
providing competitive compensation that reflects the performance of us and of
the individual officer or employee.
Compensation levels should be
competitive. The Compensation Committee reviews the available
data to ensure that our compensation is competitive with that provided by other
comparable companies. The Compensation Committee believes that competitive
compensation enhances our ability to attract and retain executive
officers. Clark Consulting has issued a report to us in January 2008
that compares our compensation arrangements with those of other comparable banks
and industry standards. The report indicates that Mr. Broughton’s
compensation is below average overall, particularly his base salary, and our
compensation committee will review accordingly.
Incentive compensation should
balance short-term and long-term performance. The Compensation
Committee seeks to achieve a balance between encouraging strong short-term
annual results and ensuring our long-term viability and success. To
reinforce the importance of balancing these perspectives, executive officers
will be provided both short- and long-term incentives. For year ended
December 31, 2008 and fiscal years ended prior, we provided our executive
officers, non-employee directors and employees with the means to become
stockholders of us and to share accretion in value with our stockholders through
our 2005 Amended and Restated Stock Incentive Plan. In order to continue
to be able to make Awards to our named executive officers, other employees and
non-employee directors in fiscal year 2009 and years forward, our board of
directors has adopted and is recommending that the stockholders vote in favor of
the 2009 Stock Incentive Plan, described more fully in Proposal 3
below.
The
Compensation Committee does not use a specific formula to determine the amount
allocated to each element of compensation. Instead, the Compensation
Committee evaluates the total compensation paid to each executive and makes
individual compensation decisions as to the mixture between base salary, annual
short-term cash incentives and equity-based incentives. To date, in
determining the amount or mixture of compensation to be paid to any executive,
the Compensation Committee has not considered any severance payment to be paid
under an employment agreement or change-in-control agreement or any equity-based
incentives previously awarded. Further, the Compensation Committee
has not adopted any specific stock ownership or holding guidelines that would
affect such determinations.
For
fiscal year 2008, an average of 14.2% of our named executive officers'
compensation was in annual short-term cash incentives and an average of 13.8% of
our named executive officers' compensation was in long-term equity-based
incentives, or stock options. The following table illustrates the
percentage of each named executive officer’s total compensation, as reported in
the "Summary Compensation Table" below, related to base salary, annual
short-term cash incentives and long-term equity-based
incentives:
|
Percentage
of Total Compensation
(Fiscal
Year 2008)
|
||||||||||||||||
|
Named Executive Officer
|
Annual
Base Salary
|
Annual
Short-Term Cash Incentives
|
Equity-Based
Incentives
|
Perquisites
and Benefits
|
||||||||||||
|
Thomas
A. Broughton III, PEO
|
55.8 | % | 22.3 | % | 10.7 | % | 11.2 | % | ||||||||
|
William
M. Foshee, PFO
|
70.1 | % | 13.1 | % | 8.5 | % | 8.3 | % | ||||||||
|
Clarence
C. Pouncey III
|
64.5 | % | 16.9 | % | 11.8 | % | 6.8 | % | ||||||||
|
G.
Carlton Barker
|
64.6 | % | n/a | 25.4 | % | 10.0 | % | |||||||||
|
Andrew
N. Kattos
|
62.6 | % | 14.8 | % | 12.6 | % | 9.9 | % | ||||||||
Annual
Base Salary
The
Compensation Committee endeavors to establish base salary levels for executives
that are consistent and competitive with those provided for similarly situated
executives of other similar financial institutions, taking into account each
executive's areas and level of responsibility. To date, the
Compensation Committee has not designated a specific peer group for its
use. For the year ended December 31, 2008, the Compensation Committee
increased Mr. Broughton’s base compensation to $250,000 from $225,000, an
increase of $25,000 or 11.11%.
For the
year ended December 31, 2008, the Compensation Committee increased the base
salary of William M. Foshee to $160,000 from $140,000, an increase of $20,000 or
14.29%, Clarence C. Pouncey III to $210,000 from $200,000, an increase of
$10,000 or 5.00%, Andrew N. Kattos to $190,000 from $180,000, an increase of
$10,000 or 5.60%; G. Carlton Barker's base salary remained the same at
$200,000.
None of
the named executive officers have employment agreements other than Mr. Barker
and Mr. Kattos. Mr. Kattos has an employment agreement which set his
base salary initially at $170,000 and required a $10,000 increase to $180,000 on
March 28, 2007 and required another $10,000 increase in his base salary to
$190,000 beginning on March 28, 2008, as reflected in the above
paragraph. Mr. Barker's employment agreement provides that his
minimum base salary shall be $200,000 subject to periodic discretionary
raises. See "Employment Agreements" below for a more detailed
discussion.
Annual Short-Term Cash Incentive
Compensation
For the
year ended December 31, 2008, the Compensation Committee relied on various
performance measurements for defining executive officer incentive compensation
for the named executive officers which included, among others, our net income,
our asset growth, our loan growth, the executive’s individual loan production
and our efficiency and asset quality. Each of the performance
measurements was applied and determined at the discretion of the Compensation
Committee. The potential award level for Mr. Broughton is purely
discretionary but the potential award level for each of our other named
executive officers, Mr. Pouncey, Mr. Foshee, Mr. Barker and Mr. Kattos, is
limited to 50% of their respective base salaries. Each of the
employment agreements for Mr. Barker and Mr. Kattos provide that they shall have
the opportunity to receive discretionary annual short-term incentive
compensation of up to 50% of their respective base salaries. The
Compensation Committee makes a determination of awards based on the information
available to it at the time. The Compensation Committee has no policy
to adjust or recover awards or payments if the relevant company performance
measures upon which they are based are restated or otherwise adjusted in a
manner that would reduce the size of an award or payment.
The table
below details, for each named executive officer, the various elements comprising
the performance targets for each named executive officer, the range of incentive
cash compensation each was eligible to earn (expressed as a percentage of base
salary), cash incentive compensation paid as a percentage of base salary and
cash incentive compensation paid for 2008 performance.
|
Name
|
Performance
Targets
|
2008
Incentive Range(%)
|
2008
Incentive as
a
Percentage of
Base
Salary(%)
|
2008
Incentive Paid($)
|
||||
|
Thomas
A. Broughton III
|
None
|
None
|
40%
|
$100,000
|
||||
|
William
M. Foshee
|
Net
Income
Regulatory
Compliance
|
0%-50%
|
18.8%
|
$30,000
|
||||
|
Clarence
C. Pouncey III
|
Net
Income
Non
Performing Asset Levels
|
0%-50%
|
26.2%
|
$55,000
|
||||
|
G.
Carlton Barker
|
Montgomery
Office Deposits and Loans
Montgomery
Office Net Income
Non
Performing Asset Levels
|
0%-50%
|
n/a
|
n/a
|
||||
|
Andrew
N. Kattos
|
Huntsville
Office Net Income
Non
Performing Asset Levels
|
0%-50%
|
23.7%
|
$45,000
|
The
Compensation Committee did not set specific objective numerical targets for any
of the above-stated criteria for each named executive
officer. Instead, the Compensation Committee made a subjective
determination for each named executive officer's performance using, other than
in the case of Mr. Broughton, the above criteria as guidelines. The
Compensation Committee determined that the named executive officers of the
Company performed exceptionally with regard to the above criteria, particularly
when considering that the financial services industry as a whole, as well as the
securities markets generally, have been materially and adversely affected by
very significant declines in the values of nearly all asset classes and by a
very serious lack of liquidity. For the year ended December 31, 2008 and based
upon its subjective determination of our overall performance for 2008, the
Compensation Committee awarded Mr. Broughton $100,000 or 40.0% of his base
salary. The compensation committee awarded Mr. Foshee $30,000 or
18.8% of his base salary; Mr. Pouncey $55,000 or 26.2% of his base salary and
Mr. Kattos $45,000 or 23.7% of his base salary.
Equity
–Based Incentive Compensation
On May 19 2005, Mr. Broughton received
a stock option to purchase up to 75,000 shares of our common stock at $10.00 per
share, and a now vested warrant in his capacity as a founding director to
purchase up to 10,000 shares of our common stock for $10.00 per
share. Such 75,000 share option vests 10,000 shares per year each May
19 and thus has vested 30,000 shares to date and will vest an additional 10,000
shares on May 19, 2009 (for an aggregate of 40,000 shares) and each May 19
thereafter until the final 5,000 shares vest on May 19, 2013. Since
such time, Mr. Broughton has not been granted any further stock options as
performance compensation, but was granted a stock option to purchase up to
10,000 shares of common stock at $20.00 per share in December 2007 which vests
100% after five years for his services as a director. The
Compensation Committee based its determination of Mr. Broughton’s compensation
package with the intent of providing a compensation package designed to retain
Mr. Broughton’s services and motivate him to perform to the best of his
abilities. Mr. Broughton’s 2008 base salary reflects our board’s
determination of the salary level necessary to meet this objective.
To date,
we have granted incentive stock options to our other named executive officers
only upon their initial hiring but with vesting schedules designed to enhance
their retention and align their interest with our stockholders. These
incentive stock options generally fully vest over 6 to 8 years from their date
of grant, with most of such grants not beginning to vest until 3 to 5 years
following their date of grant, the first of which just began to vest in February
2009. See "Outstanding Equity Awards at Fiscal Year-End" below for a
detailed description of the vesting schedules of each of the options granted to
the named executive officers.
Certain provisions exist under our 2005
Amended and Restated Stock Incentive Plan and our proposed 2009 Stock Incentive
Plan to allow for the acceleration of vesting equity awards in the event of a
change of control. Under both the 2005 Amended and Restated Stock Incentive Plan
and the 2009 Stock Incentive Plan, a “change of control” means a reorganization,
merger or consolidation of us with or into another corporation or entity where
our
stockholders
before the transaction own less than 50 percent 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 percent 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.
Severance and Change in
Control.
We do not
have an employment or other agreement with Mr. Broughton which requires us to
pay him severance payments upon termination of his employment. We
have, however, entered into agreements to pay severance payments under certain
circumstances to Mr. Barker and Mr. Kattos under their employment agreements,
and we have entered into change in control agreements with Mr. Foshee and Mr.
Pouncey. Mr. Barker's employment agreement also contains a change in
control provision. See “Employment Agreements”, “Change in Control
Agreements” and "Estimated Payments upon a Termination or Change in Control"
below.
REPORT
OF THE COMPENSATION COMMITTEE
The
Compensation Committee of the board of directors of ServisFirst Bancshares, Inc.
(the “Company”) has reviewed and discussed the Compensation Discussion and
Analysis for the Company for the year ended December 31, 2008 with
management. In reliance on the reviews and discussions with management, the
Compensation Committee recommended to the board of directors, and the board of
directors has approved, that the Compensation Discussion and Analysis be
included in the required company filings with the Securities and Exchange
Commission (SEC), including the Proxy Statement for the 2009 Annual
Meeting.
The Compensation Committee Report shall
not be deemed incorporated by reference in any document previously or
subsequently filed with the SEC that incorporates by reference all or any
portion of this Proxy Statement.
Submitted
by the Compensation Committee:
|
Hatton
C.V. Smith, Chairman
|
|
|
J.
Richard Cashio
|
|
|
James
J. Filler
|
EXECUTIVE
COMPENSATION
Summary Compensation
Table
The following table sets forth the
aggregate compensation paid by us or the Bank for services for the years ended
December 31, 2008, 2007 and 2006 to our named executive officers:
|
Name
and Principal
Position
Held
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Awards
(1)
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other
Compensation
|
Total
|
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
||
|
Thomas
A. Broughton III,
|
2008
|
250,000
|
100,000
|
—
|
47,996
|
50,149 (3)
|
448,145
|
||
|
President
and CEO
|
2007
|
225,000
|
175,000
|
—
|
38,576
|
—
|
—
|
41,611
|
480,187
|
|
(PEO)
|
2006
|
200,000
|
150,000
|
—
|
38,394
|
—
|
—
|
|
388,394
|
|
William
M. Foshee,
|
2008
|
160,000
|
30,000
|
—
|
19,433
|
18,961 (4)
|
228,394
|
||
|
Executive
Vice
|
2007
|
140,000
|
70,000
|
—
|
14,731
|
—
|
—
|
16,068
|
240,799
|
|
President
and Chief
|
2006
|
120,000
|
36,000
|
—
|
13,630
|
—
|
—
|
169,630
|
|
|
Financial
Officer (PFO)
|
|||||||||
|
Clarence
C. Pouncey III
|
2008
|
210,000
|
55,000
|
—
|
38,286
|
22,236 (5)
|
325,522
|
||
|
Executive
Vice
|
2007
|
200,000
|
80,000
|
—
|
38,286
|
—
|
—
|
21,198
|
339,484
|
|
President
and Chief
|
2006
|
175,000
|
52,500
|
—
|
26,747
|
—
|
—
|
254,247
|
|
|
Operating
Officer
|
|||||||||
|
G.
Carlton Barker (2)
|
2008
|
200,000
|
—
|
—
|
78,561
|
31,045 (6)
|
309,606
|
||
|
Executive
Vice
|
2007
|
200,000
|
60,000
|
—
|
70,460
|
—
|
—
|
25,231
|
355,691
|
|
President
of Bank and
|
2006
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|
|
Montgomery
President
|
|||||||||
|
and
CEO of Bank
|
|||||||||
|
Andrew
N. Kattos (2) Executive Vice
|
2008
|
190,000
|
45,000
|
—
|
38,286
|
30,130 (7)
|
303,416
|
||
|
President
of Bank
|
2007
|
180,000
|
89,100
|
—
|
38,286
|
—
|
—
|
29,765
|
337,151
|
|
Huntsville
President
|
2006
|
170,000
|
51,000
|
—
|
26,747
|
—
|
—
|
247,747
|
|
|
and
CEO of Bank
|
|
(1)
|
The
amounts in this column reflect the aggregate grant date fair value under
FAS 123(R) of awards made during the
respective year.
|
|
(2)
|
Although
Mr. Barker and Mr. Kattos are employees of the Bank only, we have included
them as named executive officers due to their salary level and since they
are president and chief executive officer of the Huntsville and Montgomery
offices, respectively.
|
|
(3)
|
All
Other Compensation for 2008 includes car allowance ($9,000), director’s
fees ($16,800), country club allowance ($5,547), healthcare premiums
($6,135), matching contributions to 401(k) plan ($14,375) and group life
and long-term disability insurance premiums ($1,212).
|
|
(4)
|
All
Other Compensation for 2008 includes car allowance ($9,000), matching
contributions to 401(k) plan ($9,134) and group life and long-term
disability insurance premiums ($827).
|
|
(5)
|
All
Other Compensation for 2008 includes car allowance ($9,000), country club
allowance ($6,040), group life and long-term disability insurance premiums
($1,061) and healthcare premiums ($6,135).
|
|
(6)
|
All
Other Compensation for 2008 includes car allowance ($9,000), matching
contributions to 401(k) plan (9,200), country club allowance ($5,649),
group life and long-term disability insurance premiums ($1,061) and
healthcare premiums ($6,135).
|
|
(7)
|
All
Other Compensation for 2008 includes car allowance ($9,000), matching
contributions to 401(k) plan ($7,200), country club allowance ($6,704),
group life and long-term disability insurance premiums ($1,091) and
healthcare premiums
($6,135).
|
Fiscal
Year 2009 Compensation
In order to continue to be able to make
option awards to our named executive officers, other employees and non-employee
directors in fiscal year 2009 and years forward, our board of directors has
adopted and is recommending to that the stockholders vote in favor of the 2009
Stock Incentive Plan, described more fully in Proposal 3 below.
Grants
of Plan-Based Awards in 2008
The table below sets forth information
regarding grants of plan-based awards made to our named executive officers
during 2008.
|
Name
|
Grant
Date
|
All
Other Option Awards:
Number
of Securities Underlying Options (#)
|
Exercise
or Base Price of Option Awards ($/Sh)
|
Grant
Date Fair Value ($)
|
||||||||||||
|
Thomas
A. Broughton III, President and CEO (PEO)
|
||||||||||||||||
|
William
M. Foshee, Executive Vice President Chief Financial
Officer
|
||||||||||||||||
|
Clarence
C. Pouncey III Executive Vice President Chief Operating
Officer
|
||||||||||||||||
|
G.
Carlton Barker Executive Vice President President and CEO Montgomery
Bank
|
||||||||||||||||
|
Andrew
N. Kattos Executive Vice President President and CEO Huntsville
Bank
|
||||||||||||||||
|
____________________
|
(1) Awarded
under our 2005 Amended and Restated Stock Incentive Plan.
Outstanding
Equity Awards at Fiscal Year-End
The following table details all
outstanding equity grants as of December 31, 2008.
|
Name
|
Number
of securities underlying unexercised options (#)
exercisable
|
Option
Awards Number of securities underlying unexercised options (#)
unexercisable
|
Option
exercise price ($)
|
Option
expiration date
|
|||||||||
|
Thomas
A. Broughton III,
|
30,000 | 45,000 | $ | 10.00 |
05/19/2015
|
||||||||
|
President
and CEO (PEO) (1)
|
— | 10,000 | $ | 20.00 |
12/20/2017
|
||||||||
|
William
M. Foshee, Executive
|
— | 20,000 | $ | 10.00 |
05/19/2015
|
||||||||
|
Vice
President and Chief Financial Officer
|
— | 5,000 | $ | 11.00 |
04/20/2016
|
||||||||
|
(PFO)
(2)
|
— | 5,000 | $ | 20.00 |
02/19/2018
|
||||||||
|
Clarence
C. Pouncey, III Executive Vice
|
— | 50,000 | $ | 11.00 |
04/20/2016
|
||||||||
|
President
and Chief Operating Officer(3)
|
|||||||||||||
|
G.
Carlton Barker Executive Vice President
|
— | 68,334 | $ | 15.00 |
02/01/2017
|
||||||||
|
of
Bank and Montgomery President and CEO of Bank (4)
|
|||||||||||||
|
Andrew
N. Kattos Executive Vice President
of
Bank and Huntsville President and CEO
of
Bank (5)
|
— | 50,000 | $ | 11.00 |
04/20/2016
|
||||||||
____________________
|
(1)
|
The
option to purchase 75,000 shares at $10.00 per share granted to Mr.
Broughton on May 19, 2005 vests 10,000 shares per year with the final
5,000 vesting on May 19, 2013. The option to purchase 10,000
shares at $20.00 per share granted to Mr. Broughton on December 20, 2007
vests 100% on December 20, 2012.
|
|
(2)
|
The
option to purchase 20,000 shares at $10.00 per share granted to Mr. Foshee
on May 19, 2005 vests 10,000 shares on May 19, 2010 and 10,000 shares on
May 19, 2011. The option to purchase 5,000 shares at $11.00 per
share granted to Mr. Foshee on April 20, 2006 vests all 5,000 shares on
April 20, 2011. The option to purchase 5,000 shares at $20.00
per share granted to Mr. Foshee on February 19, 2008 vests all 5,000
shares on February 19, 2013.
|
|
(3)
|
The
option to purchase 50,000 shares at $11.00 per share granted to Mr.
Pouncey on April 20, 2006 vests 9,000 shares per year beginning on April
20, 2009, with the final 5,000 shares vesting on April 20,
2014.
|
|
(4)
|
The
option to purchase 75,000 shares at $15.00 per share granted to Mr. Barker
on February 1, 2007 vests 6,666 shares per year beginning on February 1,
2009 with the final 48,336 shares vesting at one time on February 1,
2013.
|
|
(5)
|
The
option to purchase 50,000 shares at $11.00 per share granted to Mr. Kattos
on April 20, 2006 vests 9,000 shares per year beginning on April 20, 2009,
with the final 5,000 shares vesting on April 20,
2014.
|
Plan
Option Exercises and Stock Vested in Fiscal 2008
There were no options exercised during
fiscal 2008, and we have no restricted stock or other stock awards to have
vested.
Non-Plan
Warrants and Stock Options
We also issued to each of our directors
upon the formation of the Bank in May 2005 warrants to purchase up to 10,000
shares of our common stock, or 60,000 in the aggregate, for a purchase price of
$10.00 per share, expiring in ten years. These warrants vest over
three years from date of grant and thus became fully vested in May
2008.
We have granted non-plan stock options
to certain key relationships to purchase up to an aggregate of 55,000 shares of
our common stock at between $15.00 and $20.00 per share for 10
years. These stock options are non-qualified and not part of our 2005
Amended and Restated Stock Incentive Plan. They vest 100% at one time
five years after the date of grant. No warrants or non-plan options were
exercised during fiscal year 2008.
EMPLOYMENT
CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Employment
Agreements
G. Carlton
Barker. G. Carlton Barker entered into an employment agreement
with the Bank on February 1, 2007, pursuant to which he serves as executive vice
president of the Bank and president and chief executive officer of the
Montgomery office. Mr. Barker’s agreement provides that he will
receive a base salary of $200,000 per year, an option to purchase up to 75,000
shares of our common stock as set forth in the above table, automobile allowance
and reimbursement, life, health, dental, and disability insurance, and other
benefits afforded to employees of the Bank. Mr. Barker is eligible to receive
incentive-based compensation up to fifty percent (50%) of base salary, the terms
of which shall be established by the Bank annually. In addition, the
Bank may increase Mr. Barker's base salary upon a periodic review. The
agreement's initial term is until January 31, 2012, and upon expiration of the
initial term shall automatically renew for subsequent one-year terms, unless
earlier terminated.
The Bank may terminate Mr. Barker's
employment upon his death, disability or for “cause.” The Bank may
further terminate Mr. Barker's employment at any time without cause by providing
proper notice and the payment to Mr. Barker in a lump sum an amount equal to
what Mr. Barker would have been paid during the remainder of the term or twelve
months, whichever is greater, plus any other cash payments due including
incentive pay. Comparatively, Mr. Barker can terminate his employment
voluntarily by providing proper notice. Under his agreement, Mr.
Barker agrees to maintain the confidentiality of the Bank's confidential
information during the term of the agreement and at all times
thereafter. Furthermore, Mr. Barker agrees to not solicit, directly
or indirectly, any individual who is employed by the Bank, for himself or as an
employee or agent of any person, firm, or corporation, for a period of no less
than twelve (12) months, but no greater than twenty-four (24) months, following
his employment with the Bank.
For purposes of this agreement, "Cause"
shall mean any of the following: (i) conviction in connection with a felony,
(ii) conviction in connection with any crime, whether a felony or a misdemeanor,
involving the purchase or sale of any security, mail or wire fraud, theft,
embezzlement, moral turpitude or misappropriation of the Bank’s property; (iii)
willful or gross neglect of his duties or obligations hereunder; (iv) willful
misconduct in connection with the performance of his duties hereunder; (v) a
material breach of the Bank’s Code of Ethics; or (vi) suspension or removal by
any bank or securities regulator or such regulatory agency.
Furthermore, Mr. Barker’s agreement
provides that, in the event of a change of control, Mr. Barker may elect to
terminate his employment and shall be entitled to a lump sum payment equal to
three times his base salary and any unvested stock options shall immediately
vest. In the event that the payments due in a change in control
results in adverse tax consequences to Mr. Barker, then we will reduce such
payment to such amount as Mr. Barker determines will not result in such adverse
tax consequences. For purposes of this agreement, the term "change in
control" means (i) the occurrence of any transaction with respect to which
either notice or application must be filed with the Federal Reserve Board
pursuant to certain provisions of the Code of Federal Regulations, and as a
result of which more than 50% of our outstanding shares becomes owned by any
person, or group of persons acting in concert, who prior to the transaction
owned less than 50% of our outstanding shares, (ii) individuals who were our
directors immediately prior to a "control transaction" shall cease within one
year of such control transaction to constitute a majority of our board of
directors, or (iii) we are merged or consolidated with another corporation and
are not the surviving corporation or we sell or otherwise dispose of
substantially all of our assets. A "control transaction" is (i) any
tender offer for or acquisition of our shares, (ii) any merger, consolidation,
or sale of substantially all of our assets, (iii) any contested election of
directors or (iv) any combination of the foregoing which results in a change in
voting power sufficient to elect a majority of the board of
directors.
Andrew N.
Kattos. Andrew N. Kattos entered into an employment agreement
with the Bank on April 27, 2006, pursuant to which he serves as executive vice
president of the Bank and president and chief executive officer of the
Huntsville office. Mr. Kattos’ agreement provides that he will
receive a base salary of $180,000 per year, subject to an additional $10,000
increase in March 2008, an option to purchase up to 50,000 shares of our common
stock as set forth in the table above, automobile allowance and reimbursement,
partial health and disability insurance and other benefits afforded to employees
of the Bank. Mr. Kattos is eligible to receive incentive-based
compensation up to fifty percent (50%) of base salary, the terms of which shall
be established by the Bank annually. Mr. Kattos may be eligible for
additional incentive based compensation based on performance as may be awarded
at the discretion of the Bank. The agreement's initial term expires
on March 29, 2009 and, upon expiration of the initial term, shall automatically
renew for a subsequent two-year term, ending on March 29, 2011.
The Bank may terminate Mr. Kattos'
employment upon his death, disability or for “cause.” The Bank may
terminate Mr. Kattos' employment without cause by providing proper notice and
continuing to pay his salary every two weeks for the remainder of the term or
twelve months, whichever is greater, plus all other cash obligations (unused
vacation) and 50% of any incentive compensation earned as of the termination
date. Comparatively, Mr. Kattos can terminate his employment
voluntarily by providing proper notice. Under the agreement, Mr.
Kattos agrees to maintain the confidentiality of the Bank's confidential
information during the term of the agreement and at all times
thereafter. Furthermore, Mr. Kattos agrees to not solicit, directly
or indirectly, any individual who is or was employed by the Bank at or within
180 days of his termination, for himself or as an employee or agent of any
person, firm, or corporation, for a period of no less than twelve (12) months,
following his employment with the Bank, and Mr. Kattos agrees to refrain from
becoming employed by or become a consultant to any individual or entity other
than the Bank or its subsidiaries or affiliates, for said period. For
purposes of this agreement, "Cause" shall mean any of the following: (i)
indictment in connection with a felony, (ii) indictment in connection with any
crime whether a felony or misdemeanor, involving the purchase or sale of any
security, mail or wire fraud, theft, embezzlement, moral turpitude or
misappropriation of the Bank’s property, (iii) willful or gross neglect of his
duties hereunder, (iv) willful misconduct in connection with the performance of
his duties hereunder, (v) a material breach of the Bank’s Code of Ethics, or
(vi) suspension or removal by any bank or securities regulator or such
regulatory agency.
Change
in Control Agreements
General
As of December 31, 2008, we had two
change in control severance agreements with named executive officers, William M.
Foshee and Clarence C. Pouncey, III; however, there is a similar change in
control provision in Mr. Barker’s employment agreement as set forth
above. Each of these change in control agreements were originally
entered into with the Bank but also apply to a change in control of us since our
holding company reorganization in 2007.
These agreements generally provide for
a lump sum payment (equal to two times annual base salary for Mr. Foshee and one
times annual base salary for Mr. Pouncey) in the event of the termination of
their respective employment within 24 months after a "change in control" (as
defined in their agreements) either: (i) by us, other than for “Cause”, death,
disability or the attainment of normal retirement date, or (ii) by them for the
specific reasons set forth in the contract. These agreements are not
employment agreements and do not guarantee employment for any term or period;
they only apply if a change in control occurs. In the case of Mr.
Barker, in the event of a change of control as defined in his employment
agreement above, Mr. Barker may elect to terminate his employment at anytime
within one year following the change of control in which case we must pay him a
lump sum payment equal to three times his base salary.
The size of each benefit was set
through arms' length negotiations with each of such individuals upon their
employment and consistent with general industry standards. Each of
these respective agreements were approved by the Board of Directors of the
Bank.
Definitions
The term “change in control” is defined
in the change in control agreements to include:
|
|
·
|
a
merger, consolidation or other corporate reorganization (other than a
holding company reorganization) of us in which we do not survive, or if we
survive, our stockholders before such transaction do not own more than 50%
of, respectively, (i) the common stock of the surviving entity, and (ii)
the combined voting power of any other outstanding securities entitled to
vote on the election of directors of the surviving
entity.
|
|
|
·
|
the
acquisition, other than from us, by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act of
beneficial ownership of 50% or more of either the then outstanding shares
of our common stock or the combined voting power of our then outstanding
voting securities entitled to vote generally in the election of directors;
provided, however, that neither of the following shall constitute a change
in control:
|
|
|
-
|
any
acquisition by us, any of our subsidiaries, or any employee benefit plan
(or related trust) of us or our subsidiaries,
or;
|
|
|
-
|
any
acquisition by any corporation, entity, or group, if, following such
acquisition, more than 50% of the then outstanding voting rights of such
corporation, entity or group are owned, directly or indirectly, by all or
substantially all of the persons who were the owners of our common stock
immediately prior to such acquisition;
or
|
|
|
·
|
approval
by our stockholders of:
|
|
|
-
|
our
complete liquidation or dissolution,
or
|
|
|
-
|
the
sale or other disposition of all or substantially all our assets, other
than to a corporation, with respect to which immediately following such
sale or other disposition, more than 50% of, respectively, the then
outstanding shares of common stock of such corporation, and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, is then
beneficially owned, directly or indirectly, by all or substantially all of
the individuals and entities who were the beneficial owners, respectively,
of our outstanding common stock, and
our
|
outstanding
voting securities immediately prior to such sale or other disposition, in
substantially the same proportions as their ownership, immediately prior to such
sale or disposition, of our outstanding common stock and our outstanding
securities, as the case may be.
|
|
·
|
Notwithstanding
the foregoing, if Section 409A of the Code would apply to any payment or
right arising hereunder as a result of a change in control as hereinabove
described, then with respect to such right or payment the only events that
would constitute a change in control for purposes hereof shall be those
events that would constitute a change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion
of the assets of the corporation in accordance with said section
409A.
|
Mr. Pouncey’s agreement further defines
a “change in control” to include individuals who, as of the effective date of
his agreement, constitute our board of directors (the “Incumbent Board”) cease
for any reason to constitute at least a majority of our board of directors,
provided that any individual becoming a director subsequent to such date, whose
election, or nomination for election by our stockholders, was approved by a vote
of at least a majority of the directors then compromising the Incumbent Board,
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any individual whose initial assumption
of office is in connection with an actual or threatened election contest
relating to the election of the directors (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act).
The term “Cause” is defined in each of
the agreements to include: (i) a pattern of conduct which tends to hold us up to
ridicule, or which adversely affects us, in the business community, (ii)
engaging in conduct disloyal to us, (iii) non-diligent performance of their
duties, (iv) failure to appear for work during regularly scheduled hours without
a sufficient reason, (v) failure to comply with any of our policies and
procedures as from time to time amended, (vi) any action against them by federal
or state banking regulatory authorities acting under lawful authority pursuant
to provisions of federal or state law or regulation which may be in effect from
time to time, (vii) any act (including any omission or failure to act) that
constitutes, on the part of them, fraud, dishonesty, gross negligence,
misconduct, incompetence, or breach of fiduciary duty involving direct or
indirect gain to or personal enrichment of them, (viii) conviction of any felony
crime and (ix) dependence upon, or abuse of, any addictive substance, including
but not limited to, alcohol, amphetamines, barbiturates, LSD, cocaine,
marijuana, or narcotic drugs.
Mr. Foshee and Mr. Pouncey can each
terminate their employment and still trigger the change in control payment if
they terminate because, after the change in control, (i) they are assigned to
duties or responsibilities that are materially inconsistent with their position,
duties, responsibilities or status immediately preceding such change in control,
or a change in their reporting responsibilities or titles in effect at such time
resulting in a reduction of their responsibilities or position, (ii) the
reduction of their base salary or, to the extent such has been established by
the board of directors or its Compensation Committee, target bonus (including
any deferred portions thereof) or substantial reduction in their level of
benefits or supplemental compensation from those in effect immediately preceding
such change in control; or (iii) their transfer to a location requiring a change
in residence or a material increase in the amount of travel normally required of
them in connection with their employment.
In addition to the cash payments set
forth in the change in control agreements, incentive stock options granted to
named executive officers will immediately vest upon a change in
control.
Estimated
Payments upon a Termination or Change in Control
Termination
In the event that Mr. Barker had been
terminated by us without "Cause" as of December 31, 2008, then we would have
been required to pay a lump sum cash payment to Mr. Barker equal to $600,000
upon the date of termination.
In the event that Mr. Kattos had been
terminated by us without "Cause" as of December 31, 2008, then we would be
required to continue to pay Mr. Kattos his salary equal to $15,833 per month
through December 31, 2009.
Change
in Control
Assuming that we had a change in
control as of December 31, 2008 as defined in both the change in control
agreements above and Mr. Barker's employment agreement, and assuming further
that each of the requisite triggering events had occurred as of such date for
each, then we would have had to pay cash payments of $320,000 to Mr. Foshee and
$210,000 to Mr. Pouncey, each in a lump sum payment within 30 days of their
respective termination, and $600,000 to Mr. Barker no less than 30 days and no
more than 90 days following his notice of his intent to exercise his change of
control rights.
Furthermore, assuming we had a change
in control as of December 31, 2008 as defined in the 2005 Amended and Restated
Stock Incentive Plan and further assuming that the value of the stock as of that
date was $25 per share (the most recent sale price), then each of the named
executive officers would become immediately vested in their unvested incentive
stock options as of such date equal to the following value based upon the
difference between $25 per share and their respective exercise prices per share
for such shares: (i) Thomas A. Broughton III – $725,000, (ii) William
M. Foshee - $395,000, (iii) Clarence C. Pouncey, III - $700,000, (iv) G. Carlton
Barker - $683,340 and (v) Andrew N. Kattos - $700,000.
EQUITY
COMPENSATION PLAN INFORMATION
The following table gives information
about our common stock that may be issued upon the exercise of options and
rights under all of our existing equity compensation plans and arrangements as
of December 31, 2008. On March 23, 2009, our board of directors adopted the
2009 Stock Incentive Plan. This data does not include the 2009 Stock Incentive
Plan since our board of directors do not intend to make grants under it unless
approved by the stockholders.
|
Plan
Category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
|||||||||
|
Equity
compensation awards plans approved by security
holders
|
801,000 | 13.98 | 284,000 | |||||||||
|
Equity
compensation awards plans not approved by security holders
|
55,000 | 17.27 | — | |||||||||
|
Total
|
856,000 | 14.19 | 284,000 | |||||||||
We grant stock options as an incentive
to employees, officers, directors, and consultants, as a means to attract or
retain these individuals, to maintain and enhance our long-term performance and
profitability, and to allow these individuals to acquire an ownership interest
in the Company. Our Compensation Committee administers this program,
making all decisions regarding grants and amendments to these
awards. All shares to be issued upon the exercise of these options
must be authorized and unissued shares. In the event an option holder
leaves us we may provide for varying time periods for exercise of options after
the termination of ones employment; provided, that, an incentive stock option
plan may not be exercised later than 90 days after an option holder terminates
his or her employment with us unless such termination is a consequence of such
options holder’s death or disability in which case the option period may be
extended for up to 1 year after termination of employment. All of our
issued options will vest immediately upon a transaction in which we merge or
consolidate with or into any other corporation, or sell or otherwise transfer
our property, assets, or business substantially in its entirety to a successor
corporation. At that time, upon the exercise of the option, the
option holder will receive the number of shares of stock or other securities or
property, including cash, to which the holder of a like number of shares of
common stock would have been entitled upon the merger, consolidation, sale or
transfer if such option had been exercised in full immediately prior
thereto. All of our issued options have a term of 10
years. This means the options must be exercised within 10 years from
the date of the grant. At December 31, 2008, we have issued and
outstanding options to purchase 681,000 shares of our common stock.
STOCK
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Security
Ownership of Certain Beneficial
Owners
As of December 31, 2008, there is no
beneficial ownership by any person (including any group) who is known to us to
be the beneficial owner of more than 5% of our common stock.
Security
Ownership of Management
The
following table sets forth the beneficial ownership of our common stock as of
April 3, 2009 by: (i) each of our directors; (ii) our named executive officers;
and (iii) all of our directors and our executive officers as a
group. Except as otherwise indicated, each person listed below has
sole voting and investment power with respect to all shares shown to be
beneficially owned by him except to the extent that such power is shared by a
spouse under applicable law. The information provided in the table is
based on our records, information filed with the SEC and information provided to
the Company.
|
Name
and Address of Beneficial Owner(1)
|
Amount
and Nature of Beneficial Owner
|
Percentage of Outstanding Common Stock (%)(2) | ||
|
Thomas
A. Broughton III
|
132,252
(3)(4)
|
2.40%
|
||
|
Stanley
M. Brock
|
138,500
(3)(5)
|
2.51%
|
||
|
Michael
D. Fuller
|
135,002
(3)
|
2.45%
|
||
|
James
J. Filler
|
161,252
(3)
|
2.92%
|
||
|
J.
Richard Cashio
|
87,502
(3)(6)
|
1.59%
|
||
|
Hatton
C. V. Smith
|
37,500
(3)(7)
|
*
|
||
|
William
M. Foshee
|
39,992(8)
|
*
|
||
|
Clarence
C. Pouncey III
|
83,667
(9)
|
1.52%
|
||
|
Andrew
N. Kattos
|
19,400
(10)
|
*
|
||
|
G.
Carlton Barker
|
56,666(11)
|
1.03%
|
||
|
Ronald
A. DeVane
|
8,000(12)
|
*
|
||
|
Directors
and executive officers (11 total)
|
899,733
|
16.32%
|
||
|
*
|
Less
than 1%.
|
|
(1)
|
The
addresses for all above listed individuals is 3300 Cahaba Road, Suite 300,
Birmingham, Alabama 35223.
|
|
(2)
|
Except
as otherwise noted herein, the percentage is determined on the basis of
5,513,482 shares of our common stock outstanding plus securities deemed
outstanding pursuant to Rule 13d-3 promulgated under the Exchange
Act. Under Rule 13d-3, a person is deemed to be a beneficial
owner of any security owned by certain family members and any security of
which that person has the right to acquire beneficial ownership within 60
days, including, without limitation, shares of our common stock subject to
currently exercisable options.
|
|
(3)
|
Includes
the shares underlying a warrant issued to each director on May 13, 2005
pursuant to which each director may purchase an additional 10,000 shares
of common stock for $10.00 per share which vests in three equal annual
installments beginning on May 13, 2006, and thus each director has the
right to acquire within 60 days up to the entire 10,000
shares. Does not include an option granted to each director on
December 20, 2007 to purchase 10,000 shares of common stock for $20.00 per
share which vests 100% after five
years.
|
|
(4)
|
Includes
40,000 shares exercisable within 60 days of an option granted on May 19,
2005 to Mr. Broughton to purchase up to 75,000 shares of common stock for
$10.00 per share which vests 10,000 shares per year beginning May 19, 2006
and each year thereafter with the final 5,000 vesting on May 19,
2013.
|
|
(5)
|
Includes
22,000 shares owned by immediate family members. Mr. Brock was issued a
warrant to purchase up to 6,500 shares of common stock for the purchase
price of $25 per share until the later of September 1, 2013 or such date
as is the
|
60th day
following the date upon which our common stock is listed on a “national
securities exchange” as defined under the Exchange Act.
|
(6)
|
Includes
2,500 shares owned by immediate family members. Mr. Cashio was
issued a warrant to purchase up to 2,500 shares of common stock for the
purchase price of $25 per share until the later of September 1, 2013 or
such date as is the 60th
day following the date upon which our common stock is listed on a
“national securities exchange” as defined under the Exchange
Act.
|
|
(7)
|
Includes
2,500 shares owned by immediate family members. Mr. Smith was
issued a warrant to purchase up to 2,500 shares of common stock for the
purchase price of $25 per share until the later of September 1, 2013 or
such date as is the 60th
day following the date upon which our common stock is listed on a
“national securities exchange” as defined under the Exchange
Act.
|
|
(8)
|
Does
not include an option granted to Mr. Foshee on May 19, 2005 to purchase up
to 20,000 shares of common stock for $10.00 per share which vest 10,000
shares per year beginning on May 19, 2010 and 10,000 shares on May 19,
2011, an option granted on April 20, 2006 to purchase up to 5,000 shares
of common stock for $11.00 per share which vests 100% on April 20, 2011
and an option granted on February 19, 2008 to purchase up to 5,000 shares
of common stock for $20.00 per share which vests 100% on February 19,
2013.
|
|
(9)
|
Includes
9,000 shares of common stock exercisable within 60 days of an option
granted to Mr. Pouncey on April 20, 2006 to purchase up to 50,000 shares
of common stock for $11.00 per share which vests at 9,000 shares per year
beginning on April 20, 2009 and 5,000 shares on April 20,
2014. Includes 3,000 shares beneficially owned by Mr. Pouncey’s
wife through a limited liability
company.
|
|
(10)
|
Includes
9,000 shares of common stock exercisable within 60 days of an option
granted to Mr. Kattos on April 20, 2006 to purchase up to 50,000 shares of
common stock for $11.00 per share which vests at 9,000 shares per year
beginning on April 20, 2009 and 5,000 shares on April 20,
2014. Includes 7,000 shares owned through a family limited
liability company.
|
|
(11)
|
Includes
6,666 shares of common stock currently exercisable on an option granted to
Mr. Barker on February 1, 2007 to purchase up to 75,000 shares of common
stock for $15.00 per share which vests beginning on February 1, 2009 at
6,666 shares each year thereafter with the final 48,336 shares vesting on
February 1, 2013.
|
|
(12)
|
Does
not include an option granted to Mr. DeVane on September 11, 2008 to
purchase up to 50,000 shares of common stock for $25.00 per share, which
vests 4,000 shares per year beginning September 11, 2010 and each year
thereafter with the final 34,000 vesting on September 11,
2014.
|
PROPOSAL 2
RATIFICATION OF OUR BOARD OF DIRECTORS' DECISION TO
ENGAGE MAULDIN & JENKINS, LLC AS INDEPENDENT AUDITORS FOR THE
2009 FISCAL YEAR
On March 23, 2009, our board of
directors appointed Mauldin & Jenkins, LLC as our independent registered
public accounting firm for the fiscal year ending December 31,
2009.
The submission of this matter for
approval by stockholders is not legally required; however, our board of
directors believes that such submission is consistent with best practices in
corporate governance and is an opportunity for stockholders to provide direct
feedback to the directors on an important issue of corporate governance. A
majority of the total votes cast at the annual meeting, either in person or by
proxy, will be required for the ratification of the appointment of the
independent registered public accounting firm. If our stockholders do not ratify
the selection of Mauldin & Jenkins, LLC the appointment of the independent
registered public accounting firm will be reconsidered by the Audit Committee
and the board of directors.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
MAULDIN & JENKINS, LLC AS OUR INDEPENDENT AUDITORS FOR THE 2009 FISCAL
YEAR.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
There have been no disagreements with
our independent registered public accounting firm and no changes in the past two
fiscal years.
Our consolidated balance sheets as of
December 31, 2008 and 2007 and the related consolidated statements of income,
comprehensive income (loss), stockholders' equity and cash flows for the years
then ended 2008, 2007 and
2006,
have been audited by Mauldin & Jenkins, LLC, our independent auditor, as
stated in their report appearing herein and has been so
included. Mauldin & Jenkins, LLC was engaged as our independent
auditor on July 11, 2006.
Audit
and Non-Audit Services Pre-Approval Policy
The Audit Committee’s Charter provides
that the Audit Committee must pre-approve services to be performed by our
independent registered public accounting firm. In accordance with that
requirement, the Audit Committee pre-approved the engagements of Mauldin &
Jenkins, LLC pursuant to which it provided the audit and audit-related services
described below for the fiscal year ended December 31, 2008 and
2007.
Audit
Fees
The aggregate fees billed by Mauldin
& Jenkins, LLC for professional services rendered for the audit of our
annual financial statements for the fiscal year ended December 31, 2008,
for the audit of our financial statements included on our registration statement
on Form 10 and for the reviews of the interim financial statements
included in our Quarterly Reports on Form 10-Q for such fiscal year were
approximately $122,000. The aggregate fees billed by Mauldin & Jenkins, LLC
for professional services rendered for the audit of our annual financial
statements for the fiscal year ended December 31, 2007 were approximately
$75,000.
Audit-Related
Fees
The aggregate fees billed by Mauldin
& Jenkins, LLC for professional services rendered for assurance and related
services for the fiscal years ended December 31, 2008 and 2007 were $5,000
and $3,500, respectively. These fees related to services performed by Mauldin
& Jenkins, LLC in connection with providing its consent to include, or
incorporate by reference, our annual financial statements in filings with the
SEC, including registration statements and proxy statements.
Tax
Fees
The aggregate fees billed by Crowe
Horwath, LLP for professional services rendered for tax compliance, tax advice
and tax planning for the fiscal years ended December 31, 2008 and 2007 were
$20,000 and $19,000, respectively. Tax services included federal and state tax
reviews and consulting services.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the board of
directors of ServisFirst Bancshares, Inc. (the “Company”) has reviewed and
discussed the audited consolidated financial statements of the Company and its
subsidiary, ServisFirst Bank, with management of the Company and Mauldin &
Jenkins, LLC, independent public accountants for the Company for the year ended
December 31, 2008. Management represented to the Audit Committee that the
Company’s audited consolidated financial statements were prepared in accordance
with generally accepted accounting principles in the United States.
The Audit Committee has discussed with
Mauldin & Jenkins, LLC the matters required to be discussed by Statement on
Auditing Standards No. 61, “Communication with Audit Committees,” as
amended. The Audit Committee has received the written disclosures and confirming
letter from Mauldin & Jenkins, LLC required by Independence Standards Board
Standard No. 1, “Independence Discussions with Audit Committees,” and has
discussed with Mauldin & Jenkins, LLC their independence from the
Company.
Based on these reviews and discussions
with management of the Company and Mauldin & Jenkins, LLC referred to above,
the Audit Committee has recommended to our board of directors that the audited
consolidated financial statements of the Company and its subsidiaries for the
fiscal year ended December 31, 2008 be included in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2008.
This Audit Committee Report shall not
be deemed incorporated by reference in any document previously or subsequently
filed with the SEC that incorporates by reference all or any portion of this
Proxy Statement.
Submitted
by the Audit Committee:
|
Michael
J. Fuller, Chairman
|
|
|
J.
Richard Cashio
|
|
|
Stanley
M. Brock
|
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
MAULDIN & JENKINS, LLC AS OUR INDEPENDENT AUDITORS FOR THE 2009 FISCAL
YEAR.
PROPOSAL 3
APPROVAL
OF THE SERVISFIRST BANCSHARES, INC. 2009 STOCK
INCENTIVE PLAN
On March 23, 2009
our board of directors adopted the ServisFirst Bancshares, Inc. 2009 Stock
Incentive Plan (the "2009 Stock Incentive Plan"). The 2009 Stock Incentive Plan
shall be effective upon its approval of our stockholders. The following is a
summary of certain principal features of the 2009 Stock Incentive Plan. This
summary does not purport to be a complete description of the 2009 Stock
Incentive Plan, and is qualified in its entirety by the full text of the 2009
Stock Incentive Plan, which is attached as Appendix A to this proxy
statement and incorporated herein by this reference.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF THE
SERVISFIRST BANCSHARES, INC. 2009 STOCK INCENTIVE PLAN.
General
The general purpose of the 2009 Stock
Incentive Plan is to attract and retain valued employees, officers and directors
by offering them a greater stake in the success of us or the Bank, and to
encourage ownership of our stock by those employees, officers and directors of
us or the Bank. We believe that the most effective executive compensation
program is one that is designed to reward the achievement of our of the Bank's
specific annual, long-term and strategic goals, and which aligns employees,
officers and Directors’ interests with those of our stockholders by rewarding
performance, with the ultimate objective of improving stockholder value.
Summary
of the 2009 Stock Incentive Plan
The
2009 Stock Incentive Plan will authorize the grant of Stock Appreciation Rights
("SARs"), Restricted Stock, Options, Non-stock share equivalents, performance
shares or performance units and other equity-based awards under the 2009 Stock
Incentive Plan (collectively referred to as "Award(s)"). Options granted under
the 2009 Stock Incentive Plan may be either "incentive stock options" as defined
in Section 422 of the Internal Revenue Code (the "Code"), or nonqualified
stock options, as determined by our Compensation Committee. Shares of our
commons stock that may be awarded under the plan may consist, in whole or in
part, of authorized and unissued shares or treasury shares.
Subject
to an adjustment necessary upon a stock dividend, recapitalization, forward
split or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase or share exchange, extraordinary or unusual cash
distribution or other similar corporate transaction or event, the maximum number
of shares of common stock available for Awards under the 2009 Stock Incentive
Plan shall be 425,000.
If
any Award is forfeited, or if any option terminates, expires or lapses without
being exercised, shares of common stock subject to such Award will again be
available for future grant. If there is any change in our corporate
capitalization, the Compensation Committee shall proportionately and equitably
adjust the number and kind of shares of common stock which may be issued in
connection with future Awards, the number and kind of shares of common stock
covered by Awards then outstanding under the 2009 Stock Incentive Plan, the
number and kind of shares of common stock available under the 2009 Stock
Incentive Plan, the exercise or grant price of any Award, or if deemed
appropriate, make provision for a cash payment with respect to any outstanding
Award, provided that no adjustment may be made that would adversely affect the
status of any Award that is intended to be a performance-based Award under
Section 162(m) of the Code, unless otherwise determined by the Compensation
Committee. In addition, the Compensation Committee may make adjustments in the
terms and conditions of any Awards, including any performance goals, in
recognition of unusual or nonrecurring events affecting us or the Bank, or in
response to
changes
in applicable laws, regulations or accounting principles, provided that no
adjustment may be made that would adversely affect the status of any Award that
is intended to be a performance-based Award under Section 162(m) of the
Code, unless otherwise determined by the Compensation Committee.
Administration
The 2009 Stock Incentive Plan provides
that it shall be administered by our board of directors or a committee of the
board of directors designated by it. The board of directors has designated its
Compensation Committee to administer, and to make grants of Awards under the
2009 Stock Incentive Plan. References to the Compensation Committee shall refer
to our board of directors if the Compensation Committee ceases to exist and the
board of directors does not appoint a successor committee. The
Compensation Committee may also delegate all or a portion of its responsibility
to one or more of its members, one or more of the officers of the Company, or to
a secondary committee made up of one or more board members, however, only the
Compensation Committee may grant Awards to participants subject to
Rule 16b-3 of the Exchange Act or Section 162(m) of the
Code. Subject to the terms of the 2009 Stock Incentive Plan, the
Compensation Committee is authorized to select persons eligible to receive
Awards and to determine the form, amount, timing and other terms of the Awards
to be granted. The Compensation Committee is authorized to interpret and
construe the 2009 Stock Incentive Plan and the terms and conditions of any Award
granted under the 2009 Stock Incentive Plan, to prescribe such rules and
procedures as it may deem necessary or advisable for the administration of the
2009 Stock Incentive Plan, to interpret and amend any of such rules
or procedures and to make all other decisions and determinations required
pursuant to the 2009 Stock Incentive Plan or any Awards or as the Compensation
Committee deems necessary or advisable to administer the 2009 Stock Incentive
Plan. With respect to any or all Awards under the 2009 Stock Incentive Plan, the
Compensation Committee may accelerate the Award, meaning that the Compensation
Committee may determine that outstanding options, stock appreciation rights, and
other Awards in the nature of rights that may be exercised shall become fully
exercisable, all restrictions on outstanding Awards shall lapse and applicable
performance objectives shall be deemed satisfied. In exercising its discretion
to accelerate Awards under the plan, the Compensation Committee may distinguish
among recipients and among Awards.
Eligibility
All
employees, officers, consultants and directors are eligible to participate in
the 2009 Stock Incentive Plan. However, only employees, officers, consultants
and directors who are selected by the Compensation Committee will receive Awards
under the 2009 Stock Incentive Plan. Each Award granted under the 2009 Stock
Incentive Plan will be evidenced by a written Award agreement between the
participant and us describing the Award and the terms and conditions to which
the Award is subject.
Types
of Awards Under the 2009 Stock Incentive Plan
Options.
An option is a right to purchase shares of common stock
for a specified period of time at a fixed price (the "Exercise Price"). An
option may be either an "incentive stock option," satisfying the requirements of
Section 422 of the Code, or a nonqualified stock option, as determined by
the Compensation Committee. Incentive stock options may not be granted to
non-employee directors. Each option agreement will specify the number
of shares which may be purchased pursuant to the option, the Exercise Price, the
term of the option, the date or dates on which the option will become
exercisable and the terms and conditions under which the option may be
exercised.
No options may be granted under the
2009 Stock Incentive Plan after the date of the tenth anniversary of the
effective date of the 2009 Stock Incentive Plan’s approval, expected to be
May 28, 2019. The option price per share of non-qualified stock options
shall not be less than the fair market value of the common stock on the date of
the grant. Options may be exercised by payment in cash, or in the discretion of
the Compensation Committee, by delivery of shares having a market value equal to
the option price, or in any combination of cash and shares. An option may be
exercised only subject to such terms as the Compensation Committee may impose at
the time the option is granted. In general, an option must terminate not later
than ten years after the date of the grant.
Stock Appreciation
Rights (SARs).
SARs may be granted under the 2009 Stock Incentive Plan
in connection with all or any part of non-qualified stock options, or
independent of stock options. SARs permit the recipient to receive from us an
amount determinable in relation to any increase in fair market value of our
common stock. The amount awardable upon exercise of a SAR for each share covered
by the exercise is equal to the difference between the exercise price and the
fair market value of the share on the date of exercise. The Compensation
Committee has the discretion to establish the terms of a SAR award at the time
of grant, including the method of exercise, method of settlement, form of
consideration payable in settlement, and any other terms and conditions of the
Award. Any
SAR Award
and the terms and conditions thereof must be evidenced by an award agreement
between us and the recipient. The aggregate amount due on exercise of a SAR may
be paid wholly or partly in cash or in common stock, in the discretion of the
Compensation Committee.
Restricted Stock.
An Award of restricted stock under the 2009 Stock
Incentive Plan consists generally of a grant or sale of our common stock to the
recipient subject to conditions determined by the Compensation Committee. The
terms determinable by the Compensation Committee in each Award of restricted
stock include the number of shares, the price, if any, to be paid by the
recipient, the time within which the Award may be subject to forfeiture, the
nature of the restrictions, including performance criteria if any, and the
circumstances upon which restrictions will lapse. A recipient of restricted
stock may not sell or transfer such shares during the restriction period, and
the certificates representing such shares remain in the custody of the Company
until the conditions of restriction are satisfied. Upon lapse or removal of the
restrictions, the recipient will have unrestricted ownership of the covered
shares.
Performance-Based
Awards. The 2009 Stock Incentive Plan also provides for the
grant of Awards in the form of performance shares and performance units.
Performance-based Awards are certain Awards that are based on the attainment of
specified performance goals. A performance-based Award will vest and become
payable to and/or exercisable by the participant upon achievement during a
specified performance period of performance goals established by the
Compensation Committee. If the specific performance objectives are exceeded, the
Compensation Committee in its discretion may award a multiple of the Award, and
if the performance objectives are satisfied in part, the Compensation Committee
in its discretion may grant the recipient a portion of the Award. Performance
goals may be established on a Company-wide basis, or with respect to the Bank or
any business unit of ours.
In
the case of performance-based Awards which are intended to satisfy
Section 162(m) of the Code and which are granted to participants who are
"covered employees" under Section 162(m) of the Code, the applicable
performance goals are limited to one or more of the
following: (i) interest income or interest income growth,
(ii) net interest income or net interest income growth, (iii) net
interest margin or net interest margin improvements, (iv) non-interest
income or non-interest income growth, (v) reductions in non-interest
expense or improvement in the Company’s efficiency ratio, (vi) reductions
in non-accrual loans or other problem assets, (vii) earnings before income
taxes, (viii) net income, (ix) per share earnings, (x) increases
in core deposits, either in absolute dollars or as a percentage or total
deposits, or both, (xi) return on average equity, (xii) total
stockholder return, (xiii) share price performance, (xiii) return on
average assets or on various categories of assets, (xiv) comparisons of
selected Company performance metrics, including any of the metrics set forth in
the preceding clauses, to the comparable metrics of a selected peer group of
banking institutions or a stock index, as applicable, (xv) customer
satisfaction, (xvi) individualized business or performance objectives
established for the participant, or (xvii) any combination of the
foregoing.
Dividend
Equivalents. The 2009 Stock Incentive Plan provides for the
grant of full value stock Awards in the form of dividend equivalents. Generally,
a dividend equivalent entitles the recipient to receive an amount equivalent to
the cash dividends declared on our common stock over a specified period. The
Compensation Committee has the discretion to set the terms and conditions of a
dividend equivalent Award at the time of grant, including the number of shares
referable to the Award, the time period, the form of consideration in which an
Award is to be settled, and the method of settlement.
Reorganization
The 2009
Stock Incentive Plan provides for appropriate adjustment, as determined by the
Compensation Committee, in the number of shares reserved under the plan and in
the number and kind of shares subject to unexercised options in the event of any
change in the outstanding shares of common stock by reason of a stock split,
stock dividend, combination or reclassification of shares, recapitalization,
merger or similar event. In the event of specified corporate
reorganizations, the Compensation Committee, may, within the terms of the plan
and the applicable agreement, substitute, cancel, accelerate, cancel for cash or
otherwise adjust the terms of an Award.
Effective
Date, Amendments, and Termination
The
2009 Stock Incentive Plan will be effective as of the date of approval by our
shareholders. Our
board of directors has the authority to amend, terminate or suspend the 2009
Stock Incentive Plan. Our board of Directors will not be required to
obtain stockholder approval to amend, suspend or terminate the 2009 Stock
Incentive Plan. However, no such action may be taken without
stockholder approval which would materially increase the total number of shares
of common stock or common stock equivalents which may be issued under the 2009
Stock
Incentive
Plan, relax the performance objectives for performance based awards, or
materially increase the benefits of the 2009 Stock Incentive Plan within the
meaning of NASDAQ listing standards. Also, no action may be taken without a
recipient’s consent which would reduce or impair any vested rights or
obligations under any then outstanding award under the 2009 Stock Incentive
Plan.
New
Plan Benefits
There
have been no grants made under the 2009 Stock Incentive Plan. Employees and
directors who will participate in the 2009 Stock Incentive Plan in the future,
and the amounts of their Awards, will be determined by the Compensation
Committee subject to the restrictions outlined above. The amount of shares
subject to these Awards has not yet been determined. As no additional
determinations have yet been made, it is not possible to state the terms of any
individual Awards that may be issued under the 2009 Stock Incentive Plan or the
names or positions of, or respective amounts payable or allocable to any
participants in the 2009 Stock Incentive Plan, other than as provided in this
summary.
Certain
Federal Income Tax Consequences
THE
FOLLOWING INFORMATION IS NOT INTENDED TO BE A COMPLETE DISCUSSION OF THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE 2009 STOCK
INCENTIVE PLAN AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE CODE, AND
THE REGULATIONS ADOPTED PURSUANT THERETO. THE PROVISIONS OF THE CODE DESCRIBED
IN THIS SECTION INCLUDE CURRENT TAX LAW ONLY AND DO NOT REFLECT ANY PROPOSALS TO
REVISE CURRENT TAX LAW.
Incentive
Stock Options. In general, neither the grant nor
the exercise of an incentive stock option results in taxable income to an option
holder or a deduction to us. If the option holder holds the stock received upon
exercise for at least two years from date of grant and one year after the date
of exercise, then the gain realized on disposition of the stock is treated as a
long-term capital gain, and we will not be entitled to a deduction. If, however,
the shares are disposed of prior to the completion of this period (a
"disqualifying disposition"), then the option holder will include as
compensation income for the year of the disposition, an amount equal to the
excess of the fair market value of the shares upon exercise over the exercise
price of the option, or if less, the excess of the amount realized upon
disposition over the exercise price. We will be entitled to a corresponding
deduction at that time. Any proceeds in excess of the fair market value of the
shares on the date of exercise will be treated as short-term or long-term
capital gain, depending upon whether the shares have been held for more than one
year. If the sales price is less than the exercise price of the option, this
amount will be treated as a short-term or long-term capital loss, depending on
whether the shares have been held for more than one year.
Non-Qualified
Stock Options. A non-qualified stock option
results in no taxable income to the option holder or deduction to us at the time
it is granted. An option holder will recognize compensation income at the time a
non-qualified stock option is exercised in an amount equal to the excess of the
fair market value of the underlying shares on the exercise date over the
exercise price. We will generally be entitled to a deduction for federal income
tax purposes in the same amount as the amount included in compensation income by
the option holder. Gain or loss on a subsequent sale or other disposition of the
shares acquired upon the exercise of a non-qualified stock option will be
measured by the difference between the amount realized on the disposition and
the tax basis of such shares, and will be short-term or long-term capital gain
depending on whether the shares have been held for more than one year. The tax
basis of the shares acquired upon the exercise of any non-qualified stock option
will be equal to the sum of the exercise price and the amount included in income
with respect to such option.
Stock Appreciation Rights.
A recipient realizes no taxable income when an SAR is
granted. Upon exercising an SAR, a recipient will realize ordinary income in an
amount equal to the cash or value of the shares received. Generally, there will
be no federal income tax deduction allowed to us upon the grant or termination
of SARs. However, upon exercise of a SAR, we will be entitled to a deduction
equal to the amount of ordinary income the recipient is required to recognize as
a result of the exercise.
Restricted Stock.
Restricted stock received pursuant to Awards will be
considered subject to a substantial risk of forfeiture for federal income tax
purposes. If a holder of restricted stock does not make the election described
below, the holder realizes no taxable income upon the receipt of restricted
stock and we are not entitled to a deduction at such time. When the forfeiture
restrictions applicable to the restricted stock lapse, the holder will realize
compensation income equal to the fair market value of the shares at that time,
less any amount paid for the shares, and we will be entitled to a corresponding
deduction. A holder's tax basis in restricted stock will be equal
to
the fair
market value when the forfeiture restrictions lapse, and the holding period for
such shares will begin at that time. Upon a subsequent sale of the shares, the
holder will realize short-term or long-term gain or loss, depending on whether
the shares have been held for more than one year at the time of sale. Such gain
or loss will be equal to the difference between the amount realized upon the
sale of the shares and the holder's tax basis in the shares.
Individuals
receiving shares of restricted stock may make an election under
Section 83(b) of the Code with respect to the shares. By making a
Section 83(b) election, the restricted stock holder elects to realize
compensation income with respect to the shares when the restricted stock is
granted rather than at the time the forfeiture restrictions lapse. The amount of
such compensation income will be equal to the fair market value of the shares
when the holder receives them (valued without taking the restrictions into
account), less any amount paid for the shares, and we will be entitled to a
corresponding deduction at that time. By making a Section 83(b) election,
the holder will realize no additional compensation income with respect to the
shares when the forfeiture restrictions lapse, and will instead recognize gain
or loss with respect to the shares when they are sold. The holder's tax basis in
the shares with respect to which a Section 83(b) election is made will be
equal to their fair market value when received by the holder, and the holding
period for such shares begins at that time. If, however, the shares are
subsequently forfeited, the holder will not be entitled to claim a loss with
respect to the shares to the extent of the income realized by the holder upon
the making of the Section 83(b) election. To make a Section 83(b)
election, a holder must file an appropriate form of election with the Internal
Revenue Service and with us, each within 30 days after shares of restricted
stock are received, and the holder must also attach a copy of his or her
election to his or her federal income tax return for the year in which the
shares are received.
In
general, during the restriction period, dividends and distributions paid with
respect to restricted stock will be treated as compensation income (not dividend
income) received by the holder. Dividend payments received with respect to
shares of restricted stock for which a Section 83(b) election has been made
generally will be treated as dividend income.
Withholding.
We are entitled to deduct from the payment of any Award
all applicable income and employment taxes required by federal state or local
law to be withheld, or to take such other action as the Compensation Committee
may deem advisable to enable us or the Bank and participants to satisfy tax
obligations relating to any Award.
Section 162(m)
Limitations. Section 162(m) of the Code
limits the deductibility of compensation paid to certain executive officers,
unless the compensation is "performance-based compensation" and meets certain
other requirements outlined in Code Section 162(m) and related regulations.
Under the 2009 Stock Incentive Plan, the Compensation Committee may in its
discretion grant Awards that are intended to qualify as performance-based
compensation.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADOPTION OF THE
SERVISFIRST BANCSHARES, INC. 2009 STOCK INCENTIVE
PLAN.
STOCKHOLDER PROPOSALS
Under Exchange Act Rule 14a-8, any
stockholder desiring to submit a proposal for inclusion in our proxy materials
for our 2010 Annual Meeting of Stockholders must provide the Company with a
written copy of that proposal by no later than 120 days before the first
anniversary of the date on which the Company’s proxy materials for 2009 were
first released or December 11, 2009. However, if the date of our annual meeting
in 2010 changes by more than 30 days from the date of our 2009 annual meeting,
then the deadline would be a reasonable time before we begin distributing our
proxy materials for our 2010 annual meeting. Matters pertaining to such
proposals, including the number and length thereof, eligibility of persons
entitled to have such proposals included and other aspects are governed by the
Exchange Act, and the rules of the SEC thereunder and other laws and regulations
to which interested shareholders should refer.
GENERAL
INFORAMTION
As of the date of this proxy statement,
the board of directors does not know of any other business to be presented for
consideration or action at the Annual Meeting, other than that stated in the
notice of the Annual Meeting. If other matters properly come before
the Annual Meeting, the persons named in the accompanying form of proxy will
vote thereon in their best judgment.
|
By
Order of the Board of Directors
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|
|
ServisFirst
Bancshares, Inc.
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|
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/s/William M. Foshee
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William
M. Foshee
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|
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Secretary
and Chief Financial Officer
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Birmingham,
Alabama
April 10,
2009
APPENDIX A
SERVISFIRST
BANCSHARES, INC. 2009 STOCK INCENTIVE PLAN
1. Establishment, Purpose and
Duration of the Plan.
(a) Establishment and
Purpose. ServisFirst Bancshares, Inc., a Delaware corporation
(the “Company”), hereby establishes an incentive compensation plan to be known
as the “ServisFirst Bancshares, Inc. 2009 Stock Incentive Plan” (the “Plan”), as
set forth herein. The purpose of the Plan is to further the growth
and development of the Company and its direct and indirect subsidiaries (each a
“Subsidiary” and collectively, “Subsidiaries”) by encouraging selected
employees, directors, consultants, agents, independent contractors and other
persons who contribute or are expected to contribute materially to the Company's
success (collectively, “Participants”) to obtain a proprietary interest in the
Company through the ownership of stock or receipt of performance-based
incentives, thereby providing such persons with added incentives to promote the
best interests of the Company and affording the Company a means of attracting to
its service persons of outstanding ability. Notwithstanding any
contrary provision hereof, no Award (as defined in Section 2 below) may be made
to any Participant if such Award would cause this Plan to cease to be an
“employee benefit plan”, as such term is defined in Rule 405 under the
Securities Act of 1933, and any such Award shall be void and of no
effect.
(b) Effective Date and
Duration. The Plan shall be effective on March 26, 2009, the
date of its adoption by the Board of Directors of the Company (the “Effective
Date”), and shall remain in effect, subject to the right of the Board of
Directors to amend or terminate the Plan at any time pursuant to the provisions
hereof, until all shares of Common Stock of the Company subject to the Plan have
been purchased or acquired pursuant to the provisions hereof; provided, however,
that in no event may an Award of an Incentive Option (as such terms are defined
in Sections 2 and 5(a) hereof, respectively) be granted under the Plan
after March 25, 2019, although an Incentive Option granted prior thereto may
extend beyond such date.
2. Stock Subject to the
Plan. An aggregate of 425,000 shares of the
Company's Common Stock, par value $.001 per share (the “Common Stock”), shall be
reserved for issuance under the Plan pursuant to the exercise of Options (as
defined in Section 5 hereof) or SARs (as defined in Section 6(a) hereof) or as
Restricted Stock (as defined in Section 6(b) hereof) or Performance Shares (as
defined in Section 6(c) hereof) (such Options, SARS, Restricted Stock and
Performance Shares are hereinafter collectively referred to as
“Awards”). Such shares of Common Stock may be, in whole or in part,
authorized but unissued shares or issued shares which have been reacquired by
the Company. If, for any reason, an Option or SAR shall lapse, expire
or terminate without having been exercised in full, or if Restricted Stock or
Performance Shares are forfeited, the unused shares of Common Stock covered by
such Option, Restricted Stock or Performance Shares, or the number of shares of
Common Stock upon which the SAR is based, shall again be available for Awards
under the Plan.
3. Adjustments Upon Changes in
Capitalization. If at any time after the date of grant of an
Award, the Company shall by stock dividend, split-up, combination,
reclassification or exchange, or through merger, consolidation or otherwise,
change its shares of Common Stock into a different number or kind or class of
shares or other securities or property, then the number of shares available for
grant under the Plan or subject to outstanding Awards and, with respect to an
Award, the price thereof, as applicable, shall be appropriately adjusted by the
Compensation Committee (as defined in Section 4(a) hereof), in its sole
discretion, to prevent dilution or enlargement of rights; provided, however,
that the number of shares of Common Stock subject to any Award shall always be a
whole number.
4. Administration.
(a) Administration by
Compensation Committee. The Plan shall be administered by the
Compensation Committee of the Board of Directors of the Company (“Compensation
Committee”). The Compensation Committee shall be composed of at least
two Non-Employee Directors, in accordance with Rule 16b-3 promulgated pursuant
to the Securities Exchange Act of 1934, or any successor rule
thereto.
(b) Powers of Compensation
Committee. The Compensation Committee shall administer the
Plan and, subject to the provisions of the Plan and of the Certificate of
Incorporation and Bylaws of the Company, shall have sole authority in its
discretion to determine the types of Awards to be granted, the persons to whom,
and the time or times at which, Awards shall be granted, and the terms,
conditions, and provisions of, and restrictions relating to, each Award,
including, without limitation, vesting provisions, and applicable performance
criteria. In making such determinations, the Compensation Committee may take
into account the nature of the services rendered by such Participants, their
present and potential contributions to the Company's success and such other
factors as the Compensation Committee in its sole discretion may deem
relevant. The Compensation Committee shall also have the authority to
interpret the Plan, to prescribe, amend and
rescind
rules and regulations relating thereto, to establish procedures deemed
appropriate for the administration thereof, to determine the terms and
provisions of the respective agreements, which evidence the Awards that are
granted (collectively, “Award Agreements”), and to make all other determinations
necessary or advisable for the administration of the Plan, all of which
determinations shall be conclusive and not subject to review. All
determinations and decisions made by the Compensation Committee pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company, its stockholders, directors, officers, employees,
Participants, and their respective estates and beneficiaries.
(c) Definition of “Change in
Control.” For purposes of the Plan, a “Change in
Control” shall mean any of the following events: (i) the acquisition at any
time by a “person” or “group” (as such terms are used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) of
beneficial ownership (as defined in Rule 13(d)-3 under the Exchange Act),
directly or indirectly, of securities representing more than 50% of the combined
voting power in the election of directors of the then outstanding securities of
the Company or any successor of the Company; (ii) during any period of two
consecutive years or less, the individuals who at the beginning of such period
constituted a majority of the Board of Directors cease, for any reason other
than death, disability or retirement, to constitute a majority of the Board of
Directors, unless the election of or nomination for election of each new
director during such period was approved by a vote of at least a majority of the
directors still in office who were directors at the beginning of the period;
(iii) approval by the stockholders of the Company of any sale or
disposition of substantially all of the assets or earning power of the Company;
or (iv) approval by the stockholders of the Company of any merger,
consolidation, or statutory share exchange to which the Company is a party and
as a result of which the persons who were stockholders of the Company
immediately prior to the effective date of the merger, consolidation or share
exchange shall have beneficial ownership of less than 50% of the combined voting
power in the election of directors of the surviving corporation; provided,
however, that no Change in Control shall be deemed to have occurred if, prior to
such time as a Change in Control would otherwise be deemed to have occurred in
accordance with the foregoing, the Board of Directors, by vote of at least 75%
of the entire membership of the Board of Directors, determines that the event
otherwise qualifying as a Change in Control shall not be treated as a Change in
Control hereunder. Each determination concerning whether an event
constitutes a Change in Control under an Award Agreement shall be made in a
consistent manner as to the particular event with respect to all Award
Agreements of all Participants in effect at the time of the event.
5. Options.
(a) General. The
Company may grant options to purchase shares of Common Stock (“Options”) subject
to the provisions of this Plan and the applicable Award
Agreement. The Compensation Committee shall determine
whether all or any portion of such Options shall be incentive stock options
(“Incentive Options”) qualifying under Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”), or stock options which do not so qualify
(“Nonqualified Options”). Both Incentive Options and Nonqualified
Options may be granted to the same person at the same time; provided, however,
that each type of Option must be clearly designated, and any Option not
expressly designed as an Incentive Option shall be conclusively deemed to be a
Nonqualified Option. Incentive Options shall have a term of not more
than ten years.
(b) Exercise of
Options. The exercise of an Option shall be contingent upon
the Company’s receipt from the holder thereof of a written representation that
at the time of such exercise it is the optionee's then present intention to
acquire the shares of Common Stock subject to the Option for investment and not
with a view to the distribution or resale thereof (unless a registration
statement covering such shares of Common Stock shall have been declared
effective by the Securities and Exchange Commission), and an Option may not be
exercised for fewer than ten shares at any one time (or the remaining shares
then purchasable if less than ten) and may not be exercised for fractional
shares of Common Stock. No shares of Common Stock shall be issued
upon exercise of an Option until full payment therefor has been made and any
withholding obligations of the Company have been satisfied. The
proceeds received by the Company upon exercise of an Option shall be added to
the Company's working capital and be available for general corporate
purposes.
(c) No Rights as a
Stockholder. The holder of an Option shall have none of the
rights of a stockholder with respect to the shares of Common Stock purchasable
upon exercise of the Option until a certificate for such shares shall have been
issued to the holder upon due exercise of the Option.
(d) Incentive
Options. Incentive Options may be granted only to employees
(including officers) of the Company or any Subsidiary; provided, however, that
Incentive Options may not be granted to any person who, at the time the
Incentive Option is granted, owns (or is considered as owning within the meaning
of Section 424(d) of the Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
(a “10% Owner”), unless at the time the Incentive Option is granted, its
exercise price is at least 110% of the Fair Market Value (as defined in Section
7 hereof) of the Common Stock and such Incentive Option by its terms is not
exercisable subsequent to five years from the date of grant. A
director or other person who is not an employee of the Company or of a
Subsidiary is not
eligible
to receive Incentive Options under the Plan. The aggregate Fair
Market Value (determined on the date the Award is granted) of Common Stock with
respect to which Incentive Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company and its
Subsidiaries) shall not exceed $100,000. The exercise price of an
Incentive Option shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant or 110% of Fair Market Value in the case of
Incentive Options granted to a ten percent Owner.
(e) Nonqualified
Options. Options may be granted to any Company employees
(including employees who have been granted Incentive Options), directors,
consultants, agents, independent contractors and other persons whom the
Compensation Committee determines will contribute to the Company's
success.
(f) Substitute
Options. Notwithstanding any other provision of this Plan, in
the event that the Company or a Subsidiary consummates a transaction described
in Section 424(a) of the Code (e.g., the acquisition of property or stock from
an unrelated corporation), persons who become employees of the Company or any
Subsidiary on account of such transaction may be granted Options in substitution
for the options granted by such former employer. If such substitute
Options are granted, the Compensation Committee, in its sole discretion,
consistent with section 424(a) of the Code, shall determine the exercise price
of such substitute Options.
6. Other
Awards.
(a) SARs. The
Company may grant stock appreciation rights (“SARs”), subject to the provisions
of this Plan and the applicable Award Agreement. An SAR shall
constitute the right of the Participant to receive an amount equal to the
appreciation, if any, in the Fair Market Value of a share of Common Stock from
the date of grant of such right to the date of payment. Upon exercise
of the SAR, the Company shall pay such amount in cash or shares of Common Stock
of equivalent value or in some combination thereof (as determined by the
Compensation Committee) as soon as practicable after the date on which such
election is made in accordance with the Award Agreement evidencing the
SAR.
(b) Restricted
Stock. The Company may grant shares of restricted Common Stock
(“Restricted Stock”) under the Plan, subject to the provisions of this Plan and
the applicable Award Agreement. Restricted Stock shall be subject to
forfeiture provisions and such other restrictive terms and conditions as may be
determined by the Compensation Committee in its sole discretion and set forth in
the applicable Award Agreement pursuant to which such Restricted Stock is
issued, and shall not be transferable until all such restrictions and conditions
(other than securities law restrictions) have been
satisfied. Restricted Stock shall be issued and delivered at the time
of grant or at such other time as is determined by the Compensation
Committee. Certificates evidencing shares of Restricted Stock shall
bear a restrictive legend referencing the risk of forfeiture and the
non-transferability of such shares. The Compensation Committee may,
in its sole discretion, require the automatic deferral of dividends or
reinvestment of dividends for the purchase of additional shares of Restricted
Stock. During the period of restriction as set forth in the Award
Agreement, the Participant owning shares of Restricted Stock may exercise full
voting rights with respect to such shares.
(c) Performance
Shares. The Company may grant the right to receive shares of
Common Stock subject to the attainment of performance objectives determined by
the Compensation Committee in its sole discretion (“Performance Shares”),
subject to the provisions of this Plan and the applicable Award
Agreement. The performance goals to be met over a specified period
(the “Performance Period”), the amount of payment to be made if the performance
goals or other conditions are met and additional terms and conditions of the
issuance of Performance Shares shall be determined by the Compensation Committee
and set forth in the applicable Award Agreement. The value of a
Performance Share at the time of an Award shall be the Fair Market Value of a
share of common stock at such time. An Award of Performance Shares
shall be expressed in terms of shares of Common Stock. After the
completion of a Performance Period, the performance of the Company, subsidiary,
division or individual, as the case may be, shall be measured against the
performance goals or other conditions, and the Compensation Committee shall
determine whether all, none or a portion of an Award shall be
paid. The Compensation Committee shall pay any earned Performance
Shares as soon as practicable after they are earned in the form of cash, Common
Stock of equivalent value or in some combination thereof (as determined by the
Compensation Committee) having an aggregate Fair Market Value equal to the value
of the earned Performance Shares as of the date they are earned. Any
Common Stock used to pay earned Performance Shares may be issued subject to any
restrictions deemed appropriate by the Compensation Committee. In
addition, the Compensation Committee, in its discretion, may cancel any earned
Performance Shares and grant Options to the Participant which the Compensation
Committee determines to be of equivalent value based on a conversion formula
stated in the applicable Award Agreement. The Compensation Committee,
in its discretion, may also grant dividend equivalent rights with respect to
earned but unpaid Performance Shares as evidenced by the applicable Award
Agreement. Performance Shares shall have no voting
rights.
7. Fair Market
Value.
(a) Periods During Which Common
Stock is Publicly Traded. For purposes of the Plan, the “Fair
Market Value” as of any date means (i) with respect to an Award of an Incentive
Option and an Award which is intended to qualify under the “performance-based
exception” set forth in section 162(m) of the Code, the average of the high and
low sales price of a share of Common Stock on such date as reported by any
national securities exchange on which the Common Stock is actively traded or, if
no Common Stock is traded on such exchange on such date, then on the next
preceding date on which any Common Stock was traded on such exchange; and (ii)
with respect to all other Awards, the closing sales price of a share of Common
Stock on such date as reported by any national securities exchange on which the
Common Stock is actively traded or, if no Common Stock is traded on such
exchange on such date, then on the next preceding date on which any Common Stock
was traded on such exchange.
(b) Periods During Which Common
Stock is Not Publicly Traded. Notwithstanding subsection (a)
above with respect to any date on which the Common Stock (or Common Stock
convertible therefrom) is not listed or traded as set forth in subsection (a),
above, “Fair Market Value” for a share of Common Stock as of any date of
reference hereunder (the “Determination Date”) shall be the value per share of
Common Stock as determined by the most recent appraisal conducted by a
professional independent appraiser engaged by the Company for the purpose of
determining Fair Market Value under the Plan, which appraisal is as of a date
within 12 months prior to the Determination Date or, if no such appraisal has
been made during such prior 12-month period, the highest of (i) the book value
of the Common Stock as of the last day of the Company's fiscal year next
preceding the Determination Date, (ii) the average price per share of the Common
Stock paid by all persons (other than Participants) during the 12 months prior
to the Determination Date in arms-length transactions with the Company, and
(iii) the fair market value per share of the Common Stock as determined by the
Compensation Committee as of the Determination Date. Notwithstanding
the preceding, in the case of the occurrence of a Change in Control involving
the Company, for the period beginning with the Change in Control and extending
until the one-year period following the Change in Control, Fair Market Value
shall equal (x) in the case of a Change in Control involving the sale of Common
Stock to an entity, person or group, the average price per share of Stock paid
by the entity, person or group for the shares of Common Stock purchased by such
entity, person or group in the 12-month period ending on the Change in Control
date or, (y) in the case of a Change in Control involving the sale of
substantially all of the assets of the Company, the amount per share of Common
Stock which each holder of record of Common Stock immediately following such
sale would receive as a liquidation distribution.
(c) Material Changes Affecting
Fair Market Value. Notwithstanding subsection (b) above, if,
as of any Determination Date, subsection (a) above is inapplicable and, because
of material events occurring prior to the Determination Date but subsequent to
an event to be used to assess Fair Market Value under subsection (b) above, the
Compensation Committee believes in its sole and absolute discretion that a
business development or other event has occurred indicating that the amount
otherwise determined under subsection (b) above does not accurately reflect the
fair market value of the Common Stock as of the Determination Date, the
Compensation Committee shall have the right in its sole and absolute discretion,
but not the obligation, to obtain an independent appraisal of the Common Stock
as of the Determination Date, and such independent appraisal shall be conclusive
to determine Fair Market Value as of the Determination Date. Pending
any such determination by an independent appraiser, any payments due hereunder
that require Fair Market Value assessment shall be delayed until the appraisal
is complete.
8. Payment and
Withholding.
(a) Payment. Upon
the exercise of an Option or Award that requires payment by a Participant to the
Company, the amount due to the Company shall be paid in cash or by check payable
to the order of the Company for the full purchase price of the shares of Common
Stock for which such election is made. Except as otherwise determined
by the Compensation Committee before the Option is exercised all or a part of
the exercise price may be paid by the Participant by delivery of shares of the
Company’s Common Stock owned by the Participant and acceptable to the
Compensation Committee having an aggregate Fair Market Value (valued at the date
of exercise) that is equal to the amount of cash that would otherwise be
required.
(b) Withholding. The
Company shall have the right to deduct from all Awards paid any federal, state,
local or employment taxes that the Company deems are required by law to be
withheld with respect to such payments. Whenever shares of Common
Stock are to be issued in satisfaction of the exercise of an Award, the Company
shall have the right to require the Participant (or legal representative, as
applicable) to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements or make other arrangements
therefore prior to the delivery of any certificate or certificates for such
shares. At the election of the Participant, and subject to such rules
and limitations as may be established by the Compensation Committee from time to
time, such withholding obligations may be satisfied through the surrender
of
shares of
the Company’s Common Stock which the Participant already owns, or to which the
Participant is otherwise entitled under the Plan.
9. Non-Transferability of
Awards. Except by will or pursuant to the laws of descent and
distribution or as provided in an Award Agreement, no benefit provided under
this Plan shall be subject to alienation, assignment or transfer by the
Participant (or by any person entitled to such benefit pursuant to the terms of
this Plan), nor shall it be subject to attachment or other legal process of
whatever nature, and any attempted alienation, assignment, attachment or
transfer shall be void and of no effect whatsoever and, upon any such attempt,
the benefit shall expire and lapse. Each Participant may, from time
to time, designate any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in case of the Participant’s death before the participant receives any or all of
such benefit. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Company, and shall be effective only when filed by the Participant in writing
with the Company during the Participant’s lifetime. In the absence of
such designation, benefits remaining unpaid at the Participant’s death shall be
paid to the Participant’s estate. Shares of Common Stock shall be
delivered only to the Participant entitled to receive the same or to the
Participant's authorized legal representative. Deposit of any sum in
any financial institution to the credit of any Participant (or of any person
entitled to such sum pursuant to the terms of this Plan) shall constitute
payment to that Participant (or such person).
10. Termination of Employment;
Acceleration of Vesting
(a) Options. Upon
termination of employment for any reason other than death, Disability
(as defined below in this subsection 10(a)), Retirement or a Change in Control,
any Option held by the Participant shall expire on the earlier of (i) the
last day of the term of the Option or (ii) the date which is 90 days after
the date of termination of such employment. Upon termination of
employment by reason of death, Disability or Retirement, the Option held by such
Participant shall expire on the earlier of (w) the last day of the term of the
Option or (x) the date which is one year after the date of termination of such
employment. Upon termination of employment by reason of a Change in
Control, the Option held by such Participant shall expire on its original
expiration date. The term “Disability” with respect to a Participant
means physical or mental inability to perform the normal duties of his
employment or engagement as determined by the Compensation Committee, after
examination of the Participant by a physician, selected by the Compensation
Committee; provided, however, that if such Participant fails or refuses to
cooperate in such examination, the determination of his Disability shall be made
by the Compensation Committee in its sole discretion. The term
“Retirement” with respect to a Participant means the Participant’s termination
of employment in a manner which qualifies the Participant to receive immediately
payable retirement benefits under any retirement plan adopted or hereafter
adopted by the Company, or which in the absence of any such retirement plan is
determined by the Compensation Committee to constitute retirement.
An
installment of a Participant’s Option shall not become exercisable on the
otherwise applicable vesting date of such Award if the Participant’s date of
termination occurs on or before such vesting date. Notwithstanding
the foregoing sentence, an Option shall become fully and immediately exercisable
upon (y) the death or Disability of the Participant or (z) or the occurrence of
a Change of Control.
(b) SARs. Upon
termination of employment for any reason other than death,
Disability, Retirement or a Change in Control, an SAR held by the Participant
shall expire on the earlier of (i) the last day of the term of the Option or
(ii) the date which is three months after the date of termination of such
employment. Upon termination of employment by reason of death,
Disability or Retirement, the SAR held by such Participant shall expire on the
earlier of (w) the last day of the term of the SAR or (x) the date which is one
year after the date of termination of such employment. Upon
termination of employment by reason of a Change in Control, the SAR held by such
Participant shall expire on its original expiration date.
An
installment of an SAR shall not become exercisable on the otherwise applicable
vesting date if the Participant’s date of termination occurs before such vesting
date. Notwithstanding the foregoing sentence, an SAR shall become
fully and immediately exercisable upon (y) the death or Disability of the
Participant or (z) the occurrence of a Change in Control.
(c) Restricted
Stock. If the Participant’s date of termination of
employment does not occur during the restricted period set forth in the Award
Agreement (the “Restricted Period”), then, at the end of the Restricted Period,
the Participant shall become vested in the shares of Restricted Stock, and shall
own the shares free of all restrictions otherwise imposed. The
Participant shall become vested in the shares of Restricted Stock, and become
owner of the shares free of all restrictions otherwise imposed by this
Agreement, prior to the end of the Restricted Period if the Participant’s date
of termination of employment occurs by reason of the Participant’s death,
Disability or a Change in Control.
Shares of
Restricted Stock may not be sold, assigned, transferred, pledged or otherwise
encumbered until the expiration of the Restricted Period or, if earlier, until
the Participant is vested in the shares. Except as otherwise provided
in
this
subsection 10(c), if the Participant’s date of termination of employment occurs
prior to the end of the Restricted Period, the Participant shall forfeit the
Restricted Stock as of the Participant s date of termination.
(d) Performance
Shares. If the Participant’s employment with the Company
terminates during the Performance Period because of the Participant’s
Retirement, Disability, or death, the Participant shall be entitled to a
prorated value of the Performance Shares earned, determined at the end of the
Performance Period, and based on the ratio of the number of days the Participant
is employed during the Performance Period to the total number of days in the
Performance Period. If a Change in Control occurs during the Performance Period,
and the Participant’s date of termination does not occur before the Change in
Control date, the Participant shall earn the Performance Shares that would have
been earned by the Participant in accordance with the terms of the Award as if
100% of the Performance measures set forth in the Award Agreement for the
Performance Period had been achieved, but prorated based on the ratio of the
number of days the Participant is employed during the Performance Period through
the date of the Change in Control, to the total number of days in the
Performance Period.
(e) Forfeiture by Reason of
Misconduct. Notwithstanding any other provision hereof to the
contrary, if the Compensation Committee determines that a Participant has
committed an act of embezzlement, fraud, dishonesty, breach of fiduciary duty or
deliberate disregard of any rules of the Company or any Subsidiary which results
in loss, damage or injury to the Company or any Subsidiary, neither the
Participant nor his representative or estate shall be entitled to exercise any
Award. In making such determination, the Compensation Committee shall
act fairly and shall give the Participant an opportunity to appear before the
Compensation Committee and present evidence on his behalf.
(f) Non-Employee
Participants. With respect to Awards made to Participants who
are not employees of the Company or any Subsidiary, all references in this
Section 10 to termination of employment shall be deemed to refer to the
effective date of termination of any contractual arrangement (whether oral or
written) pursuant to which any such non-employee Participant provides services
to the Company or its Subsidiaries.
11. Deferrals. The
Compensation Committee may permit a Participant to defer such Participant’s
receipt of the payment of cash or the delivery of Common Stock that would
otherwise be due to such Participant by virtue of the exercise of an Option or
SAR, the lapse or waiver of restrictions with respect to Restricted Stock or the
satisfaction of any requirements or goals with respect to Performance
Shares. If any such deferral election is required or permitted, the
Compensation Committee shall, in its sole discretion, establish rules and
procedures for such payment deferral.
12. No Right to Continued
Employment or Engagement. Nothing contained in this Plan or in
any Award Agreement shall confer upon any Participant any right to continue in
the employ of the Company or any Subsidiary or obligate the Company or any
Subsidiary to continue the engagement of any Participant or interfere in any way
with the right of the Company or any such Subsidiary to terminate such
Participant's employment or engagement at any time.
13. Vesting of Rights Under
Awards. Nothing contained in the Plan or in any resolution
adopted by the Board of Directors shall constitute the vesting of any rights
under any Award. The vesting of such rights shall take place only
pursuant to a written Award Agreement with respect to such Award, in form and
substance satisfactory to the Company, which shall be duly executed and
delivered by and on behalf of the Company and the Participant to whom the Award
shall be granted.
14. Agreement to Refrain from
Sales. Holders of Options, Restricted Stock and Performance
Shares shall agree, pursuant to the applicable Award Agreement, to refrain from
selling or offering to sell the shares of Common Stock issuable upon exercise of
the Options or the unrestricted shares of Common Stock upon termination of the
forfeiture and other restrictive provisions of the Restrictive Stock and
Performance Shares for such reasonable period of time after the effective date
of any registration statement relating to an underwritten offering of securities
of the Company, as may be requested by the managing underwriter of such
underwritten offering and approved by the Board of Directors.
15. Termination, Amendment and
Modification. The Board of Directors or the Compensation
Committee may at any time and from time to time alter, amend, suspend or
terminate this Plan in whole or in part, except (i) without such stockholder
approval as may be required by law, no such action may be taken which changes
the minimum Incentive Option price, increases the maximum term of Incentive
Options, materially increases the benefits accruing to Participants receiving
Incentive Options hereunder, materially increases the number of securities which
may be issued pursuant to Incentive Options, extends the period for granting
Incentive Options past the tenth anniversary of the initial effective date of
the Plan or materially modifies the requirements as to eligibility for receipt
of Incentive Options hereunder, and (ii) without the consent of the Participant
to whom any Award shall theretofore have been granted, no such action may be
taken which adversely affects the rights of such Participant concerning such
Award, except to the extent such action is required by statute, or rules and
regulations promulgated thereunder, or as otherwise permitted
hereunder.
16. Indemnification. Each
person who is or at any time serves as a member of the Compensation Committee
shall be indemnified and held harmless by the Company against and from (i) any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by such person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action or failure to act under this Plan; and (ii) any
and all amounts paid by such person in satisfaction of judgment in any such
action, suit or proceeding relating to the Plan. Each person covered
by this indemnification shall give the Company an opportunity, at its own
expense, to handle and defend the same before such person undertakes to handle
and defend the same on such person's own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled under the charter or bylaws of the
Company, as a matter of law, or otherwise, or any power that the Company may
have to indemnify such person or hold such person harmless.
17. Reliance On
Reports. Each member of the Compensation Committee shall be
fully justified in relying or acting in good faith upon any report made by the
independent public accountants of the Company, any independent appraisal of the
Common Stock and any other information furnished in connection with this
Plan. In no event shall any such person be liable for any
determination made or other action taken or any omission to act in reliance upon
any such report or information, or for any action taken, including the
furnishing of information, or failure to act, if on good faith, all consistent
with and subject to the requirements of Section 141(e) of the General
Corporation Law of the State of Delaware.
18. Miscellaneous.
(a) Gender and
Number. Whenever the context so requires, the singular shall
include the plural and the plural shall include the singular and the gender of
any pronoun shall include the other gender.
(b) Severability. The
invalidity of this Plan with respect to one or more persons shall not affect the
rights and obligations of any other person hereunder in any manner
whatsoever. The invalidity of one or more provisions of this Plan
shall not affect the validity of any other provision of this Plan in any manner
whatsoever as long as the fundamental benefits and obligations of the parties
hereto are not materially modified by such invalidity.
(c) Requirements of
Law. The granting of Awards and the issuance of Common Stock
under the Plan shall be subject to all applicable laws, rules and regulations,
and to such approvals by any governmental agencies as may be
required.
(d) Governing
Law. All matters relating to this Plan or to Awards granted
hereunder shall be governed by the laws of the State of Delaware, without regard
to the principles of conflict of laws thereof, except to the extent preempted by
the laws of the United States.
(e) Compliance with Section
409A. Notwithstanding anything contained herein to the
contrary, this Plan shall be construed in a manner consistent with Section 409A
of the Code and the parties shall take such actions as are required to comply in
good faith with the provisions of Section 409A of the Code.
SERVISFIRST
BANCSHARES, INC.
PROXY
SOLICITED
BY THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON THURSDAY MAY 28, 2009
The undersigned hereby appoints Thomas
A. Broughton III and William M. Foshee, or either of them, as proxies, each with
the power to appoint his substitute, and hereby authorizes them or either of
them to represent and to vote, as designated below, all of the common stock of
ServisFirst Bancshares, Inc., which the undersigned would be entitled to vote if
personally present at the 2009 Annual Meeting of Stockholders of ServisFirst
Bancshares, Inc. to be held at Vulcan Park Center, and at any adjournments of
the annual meeting, upon the proposals described in the accompanying Notice of
the Annual Meeting and the Proxy Statement relating to the annual meeting,
receipt of which are hereby acknowledged.
Important Notice Regarding the
Availability of Proxy Materials for the Annual Stockholder Meeting to be held on
May 28, 2009:
ServisFirst Bancshares, Inc.'s Proxy
Statement, proxy card and Annual Report for the year ended December 31, 2008
available at https://www.cfpproxy.com/___
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
ALL
OF THE PROPOSALS
|
Proposal
1:
|
To
elect the following persons to serve as directors for a one-year term
until the 2010 annual meeting:
|
|
|
Nominees:
|
|
Thomas
A. Broughton III
|
Stanley
M. Brock
|
Joseph
R. Cashio
|
|
James
J. Filler
|
Michael
D. Fuller
|
Hatton
C.V. Smith
|
|
o
|
For
All Nominees
|
o
|
Withhold
Authority to Vote
|
|
(except
as noted below)
|
for
All Nominees Listed
Above
|
To
withhold authority to vote for any nominee, mark “For All Nominees” above and
write that nominee’s name below:
|
Proposal
2:
|
To
ratify the appointment of Mauldin & Jenkins, LLC, independent
registered public accounting firm, to serve as the independent auditor of
ServisFirst Bancshares, Inc. for the fiscal year ended December 31,
2009.
|
|
o FOR
|
o AGAINST
|
o ABSTAIN
|
|
Proposal
3:
|
To
approve the ServisFirst Bancshares, Inc. 2009 Stock Incentive
Plan.
|
|
o FOR
|
o AGAINST
|
o ABSTAIN
|
[Sign on
Other Side]
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE,
FOR PROPOSALS 2 AND 3 AND IN THE DISCRETION OF THE PERSONS APPOINTED HEREIN UPON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
OR POSTPONEMENTS THEREOF.
If stock is held in the name of more
than one person, all holders must sign. Signatures should correspond
exactly with the name or names appearing on the stock
certificate(s). When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
|
Signature(s)
of Stockholder(s)
|
||||||
|
Print
Name(s) of Stockholders(s)
|
||||||
|
Date:
|
, 2009
|
|||||
|
(Be
sure to date your Proxy)
|
||||||
Please
mark, sign and date this Proxy, and return it in the enclosed return-addressed
envelope. No postage necessary if mailed in the United
States.
I WILL
__________ WILL
NOT ___________ ATTEND THE 2009 ANNUAL STOCKHOLDERS MEETING.
PLEASE RETURN PROXY AS SOON
AS POSSIBLE