PROXY
STATEMENT
FOR
THE
ANNUAL MEETING OF SHAREHOLDERS
OF
BANK OF SOUTH CAROLINA CORPORATION
TO
BE HELD ON APRIL 11, 2023
PROXY
STATEMENT
The
Board of Directors of Bank of South Carolina Corporation (the “Company”) is using this Proxy Statement to solicit
Proxies from the Company’s Shareholders for the 2023 Annual Meeting of Shareholders. The Company is making this Proxy Statement
and the enclosed form of Proxy available to its Shareholders on or about March 2, 2023. The mailing address of the Company's principal executive offices is 256 Meeting Street, Charleston, South Carolina 29401.
The
information provided in this Proxy Statement contains important information for you to consider when deciding how to vote on the
matters brought before the meeting. The Board encourages you to read it carefully.
INFORMATION
ABOUT THE ANNUAL MEETING
Time
and Place of the Annual Meeting
| The Annual Meeting will be held
as follows: |
| |
|
| Date: |
April
11, 2023 |
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|
| Time: |
2:00
p.m. Eastern Daylight Time |
| |
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| Place: |
The
Bank of South Carolina, 256 Meeting Street, Charleston, South Carolina |
Matters
to be Considered at the Annual Meeting
| At the meeting, you will be asked
to consider and vote upon the following matters: |
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|
| Proposal 1: |
To elect
eighteen Directors of Bank of South Carolina Corporation to serve until the Company’s 2024 Annual Meeting of Shareholders; |
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| Proposal 2: |
To ratify the appointment of Elliott Davis,
LLC as the Company’s independent registered public accounting firm for the year ended December 31, 2023; |
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| Proposal 3: |
To transact such
other business as may properly come before the meeting and any adjournment or postponement of the meeting. |
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDERS’ MEETING TO BE HELD APRIL 11, 2023
This
Proxy Statement (providing important information for the Annual Meeting) and the Company’s Annual Report (which includes
its Annual Report on Form 10-K as filed with the Securities and Exchange Commission) accompany this Notice. The Proxy Statement
and 2022 Annual Report to Shareholders are available at http://www.banksc.com and at http://www.proxyvote.com.
Who
is Entitled to Vote?
The
Board of Directors of the Company has fixed the close of business on February 23, 2023, as the record date for Shareholders entitled
to notice of and to vote at the Annual Meeting of Shareholders. Only holders of record of Bank of South Carolina Corporation’s
Common Stock on that date are entitled to notice of and to vote at the Annual Meeting. Each Shareholder is entitled to one vote
for each share of Bank of South Carolina Corporation Common Stock that the Shareholder owns; provided, however, that the Shareholders
have cumulative voting rights for the election of Directors. The right to cumulate votes means that the Shareholders are entitled
to multiply the number of votes they are entitled to cast by the number of Directors for whom they are entitled to vote and cast
the product for a single candidate or distribute the product among two or more candidates. On February 23, 2023, there were 5,552,351 shares of Bank of South Carolina Corporation’s Common Stock outstanding and entitled to vote at the Annual Meeting.
How
Do I Vote?
If
you are the “record holder” of your shares, meaning that you own your shares in your own name and not through a bank,
broker or other nominee, you may vote in one of four ways.
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1. |
You may vote
over the internet. If you have internet access, you may vote your shares from any location in the world by following
the “Vote by Internet” instructions on the enclosed proxy card. |
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2. |
You may vote
by telephone. You may vote your shares by following the “Vote by Telephone” instructions on the enclosed
proxy card. |
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3. |
You may vote
by mail. You may vote by completing and signing the proxy card enclosed with this proxy statement and promptly mailing
it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it in the
United States. |
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4. |
You may vote in
person. If you attend the Annual Meeting, you may vote by delivering your completed proxy card in person or voting in person at the Annual Meeting. |
How
Do I Vote at the Annual Meeting?
Proxies
are solicited to provide all Shareholders of record on the voting record date an opportunity to vote on matters scheduled for
the Annual Meeting and described in these materials. You are a Shareholder of record if your shares of the Company’s Common Stock
are held in your name. If you are a beneficial owner of the Company’s Common Stock held by a broker, bank or other nominee (i.e.,
in “street name”), please see the instructions in the following question.
Shares
of the Company’s Common Stock can only be voted if the Shareholder is present in person or by Proxy at the Annual Meeting. To ensure
your representation at the Annual Meeting, the Board recommends that you vote by Proxy even if you plan to attend the Annual Meeting.
You can always change your vote at the meeting if you are a Shareholder of record.
Voting
instructions are included in this material. Shares of the Company’s Common Stock represented by properly executed Proxies will
be voted by the individuals named on the Proxy, selected by the Board of Directors, in accordance with the Shareholder’s instructions.
Where properly executed Proxies are returned with no specific instructions as how to vote at the Annual Meeting, the persons named in
the Proxy will vote the shares” “For” the election of each of the eighteen nominees named in Proposal 1 and “For
Proposal 2. If any other matters are properly presented at the Annual Meeting for action, the persons named in the enclosed Proxy and
acting thereunder will have the discretion to vote on these matters in accordance with their best judgment.
As
a Shareholder of the Company’s Common Stock, you may receive more than one Proxy card depending on how your shares are held. For
example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In
this example, you will receive three separate Proxy cards to vote.
What
if My Shares Are Held in Street Name?
If
your shares are held in street name, you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage
statement or a letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares
of the Company’s Common Stock held in street name in person at the Annual Meeting, you will have to get a written Proxy in your
name from the broker, bank or other nominee who holds your shares.
The
solicitation of Proxies on behalf of the Board of Directors is conducted by Directors, officers and regular employees of the Company
and its wholly owned subsidiary, The Bank of South Carolina (the “Bank”), at no additional compensation over regular
salaries. All proxy solicitation expenses, including the cost of printing and mailing of all Proxy materials, will be paid by
the Company. Brokers and others involved in handling and forwarding the Proxy materials to their customers having beneficial
interests in the stock of the Company registered in the names of Nominees will be reimbursed for their reasonable expenses in doing
so.
How
Many Shares Must Be Present to Hold the Meeting?
A
quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by Proxy, of
at least a majority of the shares of the Company’s Common Stock entitled to vote at the Annual Meeting as of the record date shall
constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
What
if a Quorum is Not Present at the Meeting?
If
a quorum is not present at the scheduled time of the meeting, a majority of the Shareholders present or represented by Proxy may
adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment
is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more. An adjournment will have no effect
on the business that may be conducted at the meeting.
Will
Cumulative Voting Apply for the Election of Directors?
Yes. Per Article II, Section 13 of the Company’s by-laws, every shareholder
entitled to vote on the election of directors has the right to vote the number of shares owned for as many persons as there are directors
to be elected, or to cumulate their votes by giving one candidate a number of votes equal to the number of directors multiplied by the
number of shares owned by the shareholder, or by distributing such votes among any number of candidates. A shareholder who intends to
cumulate their votes shall either (1) give written notice of such intention to the President or other officer of the Company at least
48 hours before the Annual Meeting, or (2) announce their intention at the Annual Meeting before the voting for directors begins.
How
will votes be counted?
“Withhold” votes, abstentions, and broker
non-votes are counted as present or represented for purposes of determining the presence of absence of a quorum for the Annual Meeting.
A broker non-vote occurs when a nominee holding shares in street name for a beneficial owner votes on one proposal but does not vote on
another proposal because, with respect to such other proposal, the nominee does not have discretionary voting power and has not received
voting instructions from the beneficial owner.
Under New York Stock Exchange (“NYSE”)
rules, Proposal 2, the ratification of the appointment of Elliott Davis, LLC, as the Company’s independent registered public accounting
firm for 2023, is considered a “routine” matter, which means that brokerage firms may vote in their discretion on this proposal
on behalf of clients who have not furnished voting instructions. However, Proposal 1, the election of directors, is a non-routine matter
under the NYSE rules, which means that brokerage firms that have not received voting instructions from their clients on this matter may
not vote on this proposal.
With respect to Proposal 1, the election of directors,
only “for” and “withhold” votes may be cast. Broker non-votes are not considered votes cast for the foregoing
purpose and will therefore have no effect on the election of director nominees. “Withhold” votes will also generally have
no effect on the election of director nominees.
With respect to Proposal 2, you may vote “for”
or “against” this proposal or you may “abstain” from voting on this proposal. Abstentions will be counted as votes
present or represented and entitled to vote on this proposal and will therefore have the same effect as a vote “against” this
proposal. Because Proposal 2 is considered a “routine” matter, we do not expect any broker non-votes with respect to this
proposal.
What vote is required to approve each of the proposals?
The following sets forth the voting requirement to
approve each of the proposals:
Proposal 1, Election of Directors. Directors
are elected by a plurality of votes cast (meaning that the 18 director nominees who receive the highest number of votes cast “for”
their election will be elected as directors).
Proposal 2, Ratification of the Appointment of
Independent Registered Public Accounting Firm. Ratification of the appointment of Elliott Davis, LLC, to serve as the Company’s
independent registered public accounting firm for 2023 requires the affirmative vote of the holders of a majority of shares present in
person or represented by proxy and entitled to vote on the proposal (meaning that of the shares represented at the Annual Meeting and
entitled to vote, a majority of them must be voted “for” the proposal for it to be approved).
Other Items. Approval of any other matters
requires the affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on
the item (meaning that of the shares represented at the Annual Meeting and entitled to vote, a majority of them must be voted “for”
the item for it to be approved).
How do I revoke my proxy or change my vote?
You may revoke your proxy or change your vote at any
time before the vote is taken at the Annual Meeting. If you are a shareholder of record, you may revoke your proxy or change your vote
by (1) submitting a written notice of revocation to the Company’s President; (2) delivered a proxy bearing a later date via the
internet, by telephone, or by mail until the applicable deadline for each method; or (3) attending the Annual Meeting and voting in person.
Attending the Annual Meeting will not cause your previously granted proxy to be revoked unless you vote during the meeting. For all methods
of voting, the last vote cast will supersede all previous votes. If you hold your shares in street name and you have instructed your broker,
bank, trustee, or other nominee to vote your shares, you may revoke or change your voting instructions by following the specific instructions
provided to you by your broker, bank, trustee, or other nominee.
PROPOSAL
1: ELECTION OF DIRECTORS:
Our
by-laws provide for a Board of Directors consisting of not fewer than 15 individuals and not more than 25 individuals. The number
of Directors may be increased or decreased from time to time by majority vote of the Board of Directors or the Shareholders.
The
Board of Directors proposes that the eighteen nominees described below be elected for a new term expiring at the 2024 Annual Meeting
of Shareholders or until their respective successors are duly elected and qualified. Each nominee has agreed to serve if elected.
If any named nominee is unable to serve, the Board of Directors, upon the recommendation of the Nominating Committee, may select
different nominees for election as Directors.
The
name of each Nominee designated by the Board of Directors of the Company for election as a Director of the Company and certain
information provided by such Nominee to the Company are set forth in the table below.
The
Board of Directors believes that it is necessary for each one of our Directors to possess many qualities and skills to fulfill
his or her role successfully. When searching for new candidates, the Nominating Committee considers the evolving needs of the
Board of Directors and searches for candidates that fill any current or anticipated future gap. The Board of Directors also believes
that all Directors must possess a considerable amount of business management (such as experience as a Chief Executive Officer
or Chief Financial Officer) and educational experience. The Nominating Committee first considers management experience and then
considers issues of judgment, background, community involvement, conflicts of interest, integrity, ethics, and commitment to the goal of maximizing
Shareholder value when considering Director candidates. The Nominating Committee focuses on issues of diversity, such as diversity
in gender, race and national origin, education, professional experience and differences in viewpoints and skills. The Nominating
Committee does not have a formal policy with respect to diversity; however, the Board of Directors and the Nominating Committee
believe that it is essential that the Board Members represent diverse viewpoints. The Company's board diversity matrix is available on its website, http//:www.banksc.com,
under “Investor Relations - Overview - Committee Charting.” In considering candidates for the Board of Directors,
the Nominating Committee considers the entirety of each candidate’s credentials in the context of these standards. With
respect to the nomination of continuing Directors for re-election, the individual’s contributions to the Board are also
considered.
Certain
information with respect to each of the nominees is set forth below, including his or her principal occupation, qualifications,
and directorships during the past five years. The Nominating Committee, whose goal is to assemble a Board that operates cohesively,
encourages candid communication and discussion, and focuses on activities that help us maximize Shareholder value, recommends
each of the nominees to the Board of Directors. The Nominating Committee also looks at the individual strengths of Directors,
his or her ability to contribute to the Board, and whether his or her skills and experience complement those of the other Directors.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR ALL” OF THE NOMINEES.
Executive
Officer Directors
| Susanne K. Boyd |
Age 46 |
First elected to the Board
2018 |
Ms.
Boyd has been with the Bank since 1997 and has served as the Courier Teller, Check Card Specialist, Electronic Banking Officer,
Information Security Officer, Assistant Vice President, Vice President, and Senior Vice President of Operations and Technology.
She has served as the Chief Operating Officer for the Bank and the Corporation since November 2015 and was named Executive Vice
President for the Bank and Corporation in December 2017. Ms. Boyd is a graduate of College of Charleston, South Carolina Bankers
School and Georgia Bankers Association Southern Operations and Technology School. She has received training in Information Security,
Administration of the Bank’s core system, Internet Banking Compliance and Cyber Crime and is a Certified Regulatory Vendor
Program Manager. Ms. Boyd has served on the South Carolina Bankers Association Operations Committee and has been a member of the
InfraGard South Carolina Chapter. Ms. Boyd serves on the Executive/Long-Range Planning Committee and Asset Liability/Investment
Committee.
The
Nominating Committee recommends the re-election of Ms. Boyd to the Board of Directors given her broad and unique experience in
banking, in-depth knowledge of the technology and its risks related to banks, and continued commitment to the success of the Company.
| Fleetwood S. Hassell |
Age 63 |
First elected to the Board
2006 |
Mr.
Hassell has been with the Bank since its organization in 1986. During his career of over thirty-six years in banking, Mr. Hassell
has held the position of Assistant Vice President, Vice President, Senior Vice President, Executive Vice President, Senior Lender,
and now, President/Chief Executive Officer. Born and raised in Charleston, SC, Mr. Hassell earned a BS and MBA from the University
of South Carolina School of Business. He was elected to the Board of Directors of the Bank and the Company in 2006. Mr. Hassell
serves as an Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mr. Hassell previously
served on the boards of the South Carolina State Board of Financial Institutions and the Association of the Blind and Visually
Impaired. Currently, he serves on the Board of the Trident United Way (Past Chairman), The College of Charleston Foundation Board,
and the South Carolina Bankers Association (Chariman). Mr. Hassell serves on the Executive/Long-Range Planning Committee, Asset
Liability/Investment Committee, Community Reinvestment Act Committee, and Loan Committee.
Given
Mr. Hassell’s experience in banking, his strong background in commercial lending and business development and his current
participation and contributions made to the Board of Directors and its committees, the Nominating Committee recommends his re-election
to the Board.
| Hugh C. Lane, Jr. |
Age 74 |
First elected to the Board
1995 |
Mr.
Lane, brother of Charles G. Lane, organized the Bank in 1986, where he served as President/Chief Executive Officer of the Bank from
1986 until 2012. He served as Chairman of the Board of Directors of the Bank since its organization in 1986, and Chairman of the
Board of Directors of the Company since its organization in 1995. Mr. Lane was born in Charleston, SC. He earned a BA in economics
from the University of Pennsylvania. Mr. Lane began his banking career at Citizens and Southern National Bank of Georgia in Atlanta.
His banking career also included working in the Bond, Leasing, and International Departments at the Chemical Bank in New York; City
Executive of Citizens and Southern National Bank in Sumter, South Carolina; and Executive Vice President, heading the Citizens and
Southern National Bank’s Southern Region. Mr. Lane also served on the Board of Directors of Citizens and Southern National
Bank of South Carolina for 14 years. Mr. Lane formerly served as an Administrator and Trustee of the Bank of South Carolina Employee
Stock Ownership Plan and Trust. In addition to his responsibilities at The Bank of South Carolina, Mr. Lane is the former Chairman
of the Charleston County Conservation Board, former Vice Chairman of the Baruch Foundation, and is the past Treasurer of Board of
Trustees of Ashley Hall School. He has been the recipient of Honorary Doctorates from Charleston Southern University, The Citadel,
and Wofford College. He has also received the “Distinguished Citizen Award” from Wofford College National Alumni
Council, the Avery Citizenship Award for outstanding community service, the Joseph P. Riley Leadership Award, and the Order of the
Palmetto presented by the Governor of South Carolina. In 2015, Mr. Lane was inducted into the South Carolina Business Hall of Fame.
Mr. Lane serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee, Community Reinvestment Act
Committee, and Loan Committee.
The
Nominating Committee recommends the re-election of Mr. Lane to the Board of Directors based on his unique and valuable perspective
relevant to our Bank’s business and financial performance and strong commitment to the local community. In addition, the
Committee considered his current contribution to the Board and his continued devotion to serving the Shareholders of the Company.
| Douglas H. Sass |
Age 65 |
First Elected to the Board
2013 |
Mr.
Sass joined the Bank in January 1994. He has over thirty-eight years of experience in banking and oversaw the implementation of the
Bank’s Real Estate Appraisal Review Program. He has served in various officer level positions at the Bank, including Security
Officer, Appraisal Officer, and CRA Officer before becoming Executive Vice President and Senior Lender in April 2012. Additionally,
he oversees the Bank’s Loan Department and Credit Department. Mr. Sass serves as an Administrator and Trustee of the Bank of
South Carolina Employee Stock Ownership Plan and Trust. Mr. Sass is a native of Charleston and a graduate of The Citadel with a
degree in Business Administration. He is a graduate of the South Carolina Bankers School and The Graduate School of Bank Management
at the University of Virginia. Mr. Sass is the immediate past President of The Charleston Museum Board of Trustees, and is active in
various civic organizations. Mr. Sass serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee,
Community Reinvestment Act Committee, and Loan Committee.
Based
on Mr. Sass’s experience in banking, appraising, his robust background in commercial lending and business development, and
his continued devotion to the success of the Company, the Nominating Committee recommends his re-election to the Board.
| Eugene H. Walpole, IV |
Age 37 |
First elected to the Board
2018 |
Mr.
Walpole joined the Bank in September 2012. Since that time, he has served as an Assistant Vice President, Vice President, and
Senior Vice President in the role of Risk Management Officer. In March 2016, Mr. Walpole was named Chief Financial Officer of
the Bank and Corporation and, in December 2017, was named Executive Vice President of the Bank and Corporation. Mr. Walpole also
serves as Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Prior to joining the
Bank, Mr. Walpole spent four years performing financial statement audits, regulatory filing reviews, and Sarbanes-Oxley 404 compliance
testing for publicly traded and privately held financial institutions. Mr. Walpole is a Charleston native and graduate of Presbyterian
College, University of South Carolina, and South Carolina Bankers School. He holds the designations of Certified Public Accountant,
Certified Financial Services Auditor, and a Certification in Risk Management Assurance. Mr. Walpole previously served on the Board
of the Lowcountry Land Trust and currently serves on the Boards of Coastal Conservation Association of South Carolina as well
as the Preservation Society of Charleston. Mr. Walpole serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment
Committee, Community Reinvestment Act Committee, and Loan Committee and oversees the Bank's Mortgage Department.
The
Nominating Committee recommends the re-election of Mr. Walpole to the Board of Directors given his experience in banking, in-depth
knowledge of the financials of the Company, commitment to the local community, and continued devotion to the success of the Company.
Non-Employee
Directors and Nominee
| David W. Bunch |
Age 72 |
First elected to the Board
2009 |
Mr.
Bunch has been a member of the Board of Directors of the Bank and the Company since 2009. He was born in Charleston, South Carolina
and graduated from Clemson University. He has been employed by XO Bunch Organizations since 1973, serving as President, Hughes
Motors, Inc.; Vice-President, Bunch Leasing Co.; Vice-President, Florence Truck Center, Inc.; Partner, Bunch Truck & Equipment,
LLC; Partner, Bunch & Sons-Real Estate; Managing member, Wando Properties, LLC; and President, Double D Leasing Co., Inc.
In addition to serving on the Board of Directors of the Bank and Company, Mr. Bunch serves as Chairman of the Loan Committee and
Community Reinvestment Act Committee.
The
Nominating Committee recommends the re-election of David Bunch to the Board of Directors based on his valuable knowledge of business
and his participation on the Loan, Community Reinvestment Act, and Audit & Compliance Committees.
Graham
M. Eubank, Jr. |
Age
55 |
First
elected to the Board 2005 |
Mr.
Eubank has been a member of the Board of Directors of the Bank and the Company since 2005. He was born in Fayetteville, North
Carolina and raised in Charleston, South Carolina. He received a BS in Management from Clemson University. He is also a graduate
of the National Automobile Dealers Association Dealer Candidate Academy. In 1992, Mr. Eubank began working with his family’s
business, Palmetto Ford, Inc. where he has held various positions including New Car Sales Manager, Used Car Sales Manager and
Parts and Service Director. Currently Mr. Eubank is President and CEO of the Palmetto Car and Truck Group which is comprised of
Ford, Lincoln, Mama’s Used Cars and Quick Lane Auto and Tire Center. In addition to serving on the Board of Directors of
the Bank and the Company, Mr. Eubank currently serves on the Nominating Committee and is the Chairman of the Compensation Committee.
As
a local business owner, Mr. Eubank provides an important perspective on economic issues relevant to our community and company,
which is why the Nominating Committee recommends Mr. Eubank for re-election to the Board of Directors.
| Elizabeth M. Hagood |
Age 61 |
First elected to the Board
2013 |
Mrs.
Hagood is the former Executive Director of the Lowcountry Land Trust. Mrs. Hagood grew up in Charlotte, NC and graduated from
Davidson College and the Darden School of Business at the University of Virginia. Mrs. Hagood currently serves on the Boards of
the Preservation Society of Charleston, Conservation Loan Fund of the Coastal Community Foundation, Open Space Institute Advisory
Board, and the Charleston County Greenbelt Advisory Board. In addition to serving on the Board of Directors of the Bank and Company,
Ms. Hagood serves on the Loan Committee, Community Reinvestment Act Committee, and the Nominating Committee.
Her
education, distinct perspective on social responsibility and diversity, experience on various committees within the organization,
and continued service to the Charleston community through her leadership roles in various organizations, led the Nominating Committee
to recommend Mrs. Hagood for re-election to the Board of Directors.
| Glen B. Haynes, DVM |
Age 68 |
First elected to the Board
2007 |
Dr.
Haynes has been a member of the Board of Directors of the Bank and the Company since 2007. He was born in Charlottesville, Virginia
and has lived in Summerville, South Carolina for 33 years. He graduated from Virginia Tech with a BS in Biology. He received a
DVM from the University of Georgia. In addition to serving on the Board of Directors of the Bank and the Company, Dr. Haynes has
served as former President of the Summerville Rotary Club, President of Frances Willis SPCA, Chairman of the South Carolina Board
of Veterinary Medical Examiners, and former President of Trident Veterinary Medical Association. Dr. Haynes is a member of the
American Veterinary Medical Association and a member of St. Paul’s Anglican Church where he has served on the vestry. Currently,
Dr. Haynes is Chairman of the Frances Willis SPCA Endowment Board and is a construction volunteer for Habitat for Humanity. In
addition to serving on the Board of Directors of the Bank and Company, Dr. Haynes serves on the Loan Committee, Community Reinvestment
Act Committee, and is the Chairman of the Nominating Committee.
In
recommending Dr. Haynes for re-election to the Board of Directors, the Nominating Committee considered this experience as well
as his strong ties to the Summerville community and his work ethic demonstrated in having run his own practice.
| William L. Hiott, Jr. |
Age 78 |
First elected to the Board
1995 |
Mr.
Hiott was with the Bank from its organization in 1986 until his retirement in 2011. He held various positions including the Executive
Vice President and Cashier of the Bank and the Executive Vice President and Treasurer of the Company. He has served on the Board
of Directors of the Bank since its organization in 1986 and the Company since its organization in 1995. He received a BS in Accounting
from Charleston Southern University and is a graduate of South Carolina Bankers School and the University of Wisconsin’s
Bank Administration Graduate School. In addition to serving on the Board of Directors of the Bank and Company, Mr. Hiott serves
on the Asset Liability/Investment Committee, Community Reinvestment Act Committee, Loan Committee, Audit & Compliance Committee,
Executive/Long-Range Planning Committee, and Compensation Committee.
The
Nominating Committee recommends Mr. Hiott for re-election to the Board of Directors based on his experience in banking, in-depth
knowledge of the financials of the Company, his strong commitment to the local community, and his current contributions to the Board
of Directors.
| Richard W. Hutson, Jr. |
Age 65 |
First elected to the Board
2005 |
Mr.
Hutson has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from The University of
the South. Mr. Hutson is the Manager of William M. Means Insurance Company. Mr. Hutson has served on the Boards of the South Carolina
Historical Society and the Historic Charleston Foundation. He has served as President of the South Carolina Historical Society.
Mr. Hutson serves on the Asset Liability/Investment Committee, Audit & Compliance Committee, and is the Secretary of the Board
of Directors in addition to serving on the Board of Directors of the Bank and Company.
The
Nominating Committee recommends Mr. Hutson for re-election to the Board due to his business experience, commitment to the Bank
and Company, and strong ties to the Charleston community.
| Charles G. Lane |
Age 68 |
First elected to the Board
1995 |
Mr.
Lane is the brother of Hugh C. Lane, Jr. and has been a member of the Board of Directors of the Bank since its organization in
1986, and a member of the Board of Directors of the Company since its organization in 1995. He has devoted nearly thirty years
to ensuring the success of the Company. He is a graduate of Clemson University. Mr. Lane is a Managing Member of Holcombe, Fair
and Lane, LLC - a commercial real estate company. He currently serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment
Committee, Loan Committee, and Community Reinvestment Act Committee.
Mr.
Lane’s expertise in the real estate market and the local community has been valuable to the Board in its decision-making
and is why the Nominating Committee recommends his re-election.
| Alan I. Nussbaum, MD |
Age 71 |
First elected to the Board
1999 |
Dr.
Nussbaum has been a member of the Board of Directors of the Bank since 1999. He received a BA from Johns Hopkins University and
a MD from Harvard Medical School. Dr. Nussbaum completed his internship and residency in Internal Medicine at Duke University
Medical Center. In addition, Dr. Nussbaum completed a Fellowship in Rheumatology and Immunology at the Medical University of South
Carolina and has practiced rheumatology in Charleston since 1982. Dr. Nussbaum serves as the Lead Director of the Bank and Company
and has held this position since 2011. He is the Chairman of the Executive/Long-Range Planning Committee and serves on the Asset
Liability/Investment Committee and Compensation Committee.
The
Nominating Committee recommends the re-election of Dr. Alan Nussbaum to the Board of Directors based on the commitment that he
has made to the Board of Directors, community involvement, and knowledge of the Company.
| Josette R. E. Pelzer,
PhD, CPA |
Age 39 |
First elected to the Board
2022 |
Dr.
Pelzer is an assistant professor in the department of Accounting and Business Law at the College of Charleston (SC). She currently
teaches introductory accounting, intermediate accounting, and audit courses in the undergraduate program. Dr. Pelzer has five years
of audit experience with a global CPA firm, and seven years in academia during which time she has published several articles on
auditor reporting and audit education. She is a member of the American Accounting Association and a former member of the American
Institute of CPAs. Dr. Pelzer is a native Charlestonian and earned both a BS in Business Administration and a Master of
Accountancy from the University of South Carolina, as well as a PhD in Accounting from Florida State University. In addition to
serving on the Board of Directors of the Bank and Company, Dr. Pelzer serves on the Audit & Compliance Committee.
The
Nominating Committee recommends Dr. Pelzer for re-election due to her leadership within the community, financial expertise, and
unique perspective relevant to financial performance.
| Karen J. Phillips |
Age 62 |
First elected to the Board
2017 |
Mrs.
Phillips received a BA in Political Science from The University of the South and an MBA in Finance from The University of South
Carolina. She is a Certified Financial Planner and is President of Atlantic Coast Asset Management, Inc. a financial management
firm. She is a member of the Board of Directors of Kanuga Conferences, Inc., the past Chairman of the Board of Trustees of Ashley
Hall School where she currently serves as a Trustee, and previous board member of Life Resources, Inc. In addition to serving
on the Board of Directors of the Bank and Company, Mrs. Phillips serves on the Audit & Compliance Committee, Nominating Committee,
Loan Committee, and Community Reinvestment Act Committee.
The
Nominating Committee recommends Mrs. Phillips for re-election due to her leadership within the community, financial expertise,
and unique perspective relevant to financial performance.
| Malcolm M. Rhodes, MD |
Age 63 |
First elected to the Board
2005 |
Dr.
Rhodes has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from Duke University and
a MD from the Medical University of South Carolina. He has been a partner at Parkwood Pediatric Group since 1988; however
after 35 years of service he retired from the practice in 2022. He remains on the clinical faculty at MUSC and Bon-Secours St.
Francis Hospitals. In addition to serving on the Board of Directors of the Bank and the Company, Dr. Rhodes represents South Carolina
on the Atlantic States Marine Fisheries Commission and serves on the boards of the Carolina Gold Rice Foundation and the TriCounty
Forestry Association. He has served previously on the boards of Charleston Stage Company, Coastal Conservation Association and
the Board of Trustees at Ashley Hall School.
The
Nominating Committee recommends the re-election of Dr. Rhodes to the Board of Directors based on his knowledge of business including
running a medical practice and involvement with several local hospitals.
| Sheryl G. Sharry |
Age 68 |
First elected to the Board
2010 |
Mrs.
Sharry was with the Bank since its organization in 1986 until her retirement in 2016. She held various positions in the Bank,
including Assistant Vice President – Operations Department, Vice President – Operations & Technology,
Senior Vice President – Operations & Technology, and Chief Financial Officer/Executive Vice President. Mrs. Sharry serves
as a Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mrs. Sharry became a member of the Board of
Directors of the Bank and Company in 2010. She is a graduate of the College of Charleston, South Carolina Bankers School, and
the School of Bank Investments and Financial Management. In addition to serving on the Board of Directors of the Bank and the
Company, Mrs. Sharry serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee, and is the Chairman
of the Audit & Compliance Committee.
The
Nominating Committee recommends Mrs. Sharry to re-election of the Board of Directors based on her strong background in operations
and technology of the Company, experience in banking, valuable knowledge of financial reporting and performance of the Company,
and continued devotion to the success of the Company.
| Thaddeus T. Shuler |
Age 43 |
Director Nominee |
Mr.
Shuler is a Charleston native. After receiving a BS in Industrial Management and minor in German at Clemson University, he worked
overseas for a large multi-national corporation. When he returned home to Charleston, he began working for his family business,
Southern Lumber and Millwork Corporation, and assumed the role of President and CEO in 2016. Mr. Shuler has served on the Board
of the Building Materials Supplier Association for over 10 years, and served as Chairman in 2019. Mr. Shuler has served on the Clemson University Wood Utilization Department Board. He currently serves on the Lumbermen Merchandising
Corporation Education Committee.
The Nominating Committee recommends the election of Mr. Shuler to the Board of Directors based on his valuable knowledge of business and
local industry as well as his strong ties to the community.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following tables set forth, as of February 23, 2023, information regarding share ownership of:
| |
● |
those persons or
entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of our
common stock; |
| |
● |
each non-employee Director; and |
| |
● |
each employee Director |
Persons
and groups who beneficially own more than five percent of our common stock are required to file with the Securities and Exchange
Commission (“SEC”), and provide us, reports disclosing their ownership pursuant to the Securities Exchange Act of
1934 (“Exchange Act”). To the extent known to the Board of Directors, no other person or entity, other than those
set forth below, beneficially owned more than five percent of the outstanding shares our Common Stock as of the close of business
on December 31, 2022.
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 under the Exchange
Act, a person is deemed the beneficial owner of any shares of Common Stock if he or she has voting and/or investment power with
respect to those shares. Therefore, the tables below include shares owned by spouses, other immediate family members in trust,
shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership over which shares
the persons named in the table may possess voting and/or investment power.
The
table below shows the security ownership of certain owners known to us to beneficially own more than 5 percent of any class of
Common Stock.
| Title
of class | |
Name
and Address of Beneficial Owner | |
Amount
and Nature
of Beneficial
Ownership | | |
Percent
of Class | |
| Common
Stock | |
Hugh C.
Lane, Jr.(1)
256 Meeting Street
Charleston, South Carolina 29401 | |
| 818,843 | (2) | |
| 14.75 | % |
| Common
Stock | |
The Bank of South Carolina
Employee Stock Ownership
Plan and Trust (“the ESOP”)
256 Meeting
Street
Charleston, South Carolina 29401 | |
| 336,088 | (3) | |
| 6.05 | % |
The
table below shows the security ownership of management, directors, and nominees.
| Title
of class | |
Name
of Beneficial Owner | |
Amount
and Nature
of Beneficial Ownership | | |
Percent
of Class | |
| Executive Officers/Directors | |
| |
| | | |
| | |
| Common Stock | |
Hugh C.
Lane, Jr.(1) | |
| 818,843 | (2) | |
| 14.75 | % |
| Common Stock | |
Fleetwood S. Hassell(3) | |
| 126,283 | (4) | |
| 2.27 | % |
| Common Stock | |
Susanne K. Boyd | |
| 13,410 | (4) | |
| * | |
| Common Stock | |
Douglas H. Sass(3) | |
| 44,683 | (4) | |
| * | |
| Common Stock | |
Eugene H. Walpole,
IV(3) | |
| 16,420 | (4) | |
| * | |
| Current Directors | |
| |
| | | |
| | |
| Common Stock | |
David W. Bunch | |
| 3,710 | | |
| * | |
| Common Stock | |
Graham M. Eubank, Jr. | |
| 1,041 | | |
| * | |
| Common Stock | |
Elizabeth M. Hagood | |
| 421 | | |
| * | |
| Common Stock | |
Glen B. Haynes, DVM | |
| 8,173 | | |
| * | |
| Common Stock | |
William L. Hiott, Jr. | |
| 210,171 | (4) | |
| 3.79 | % |
| Common Stock | |
Richard W. Hutson, Jr. | |
| 10,231 | | |
| * | |
| Common Stock | |
Charles G. Lane(1) | |
| 260,511 | (4) | |
| 4.69 | % |
| Common Stock | |
Alan I. Nussbaum, MD | |
| 4,302 | | |
| * | |
| Common Stock | |
Josette R. E. Pelzer, PhD, CPA | |
| 110 | | |
| * | |
| Common Stock | |
Karen J. Phillips | |
| 6,624 | (4) | |
| * | |
| Common Stock | |
Edmund Rhett, Jr., MD | |
| 7,554 | (4) | |
| * | |
| Common Stock | |
Malcolm M. Rhodes, MD | |
| 4,918 | | |
| * | |
| Common Stock | |
Sheryl G. Sharry | |
| 99,918 | | |
| 1.80 | % |
| Common Stock | |
Steve D. Swanson | |
| 16,538 | | |
| * | |
| Nominee | |
| |
| | | |
| | |
| Common Stock | |
Thaddeus T. Shuler | |
| — | | |
| * | |
| Total | |
| |
| 1,653,860 | | |
| 29.79 | % |
| |
(1) |
To the extent known
to the Board, the emancipated children and grandchildren of Hugh C. Lane, Jr. and Charles G. Lane, collectively, have beneficial
ownership of 455,507 shares or 8.20% of the outstanding shares. As more fully described in the following footnotes, Hugh C.
Lane, Jr., is the only one of the above who has a beneficial ownership interest in more than 5% percent of our common stock.
Hugh C. Lane, Jr., disclaims any beneficial interest in those shares in which other members of his family have a beneficial
interest other than those shares his wife owns directly and those for which he serves as Trustee or she serves as custodian
(as more fully described in the following footnote). |
| |
|
|
| |
(2) |
To the extent known
to the Board, Hugh C. Lane, Jr., Chairman of the Board of both the Bank and the Company, directly owns and has sole voting
and investment power with respect to 277,445 shares; as a Trustee for the Mills Bee Lane Memorial Foundation, he has shared
voting and investment power with respect to 13,084 shares; he is indirectly beneficial owner of 16,986 shares owned by his
wife and 49,964 shares owned by the ESOP in which he has a vested interest. Hugh C. Lane, Jr. disclaims any beneficial interest
in the 461,360 shares owned by extended family members. Hugh C. Lane, Jr., has had beneficial ownership of more than 5% of
our common stock since October 23, 1986. |
| |
|
|
| |
(3) |
The Trustees of
the Employee Stock Ownership Plan (“ESOP’), Fleetwood S. Hassell, President/Chief Executive Officer and Director
of the Bank and Company; Eugene H. Walpole, IV, Chief Financial Officer/Executive Vice President and Director of the Bank
and Company; Douglas H. Sass, Senior Lender/Executive Vice President and Director of the Bank and Company; and Sheryl G. Sharry,
Director of the Bank and Company disclaim beneficial ownership of the 336,088 shares owned by the ESOP with all shares allocated
to members of the Plan each of whom under the terms of the Plan has the right to direct the Trustees as to the manner in which
voting rights are to be exercised. |
| |
|
|
| |
(4) |
To
the extent known to the Board of Directors, each of the following Directors and nominees for election as Director (each
of whom directly owns and has sole voting and investment power of all shares beneficially owned by him or her except as
set forth in this footnote) indirectly owns the following number of shares: Fleetwood S. Hassell – an aggregate
of 61,450 shares owned by his wife; held by him as a co-Trustee with Charles G. Lane for the children of Hugh C. Lane,
Jr.; and shares owned by the ESOP in which he has a vested interest; Douglas H. Sass – an aggregate
of 25,022 shares owned by the ESOP in which he has a vested interest and held by his wife; William L. Hiott, Jr.
– an aggregate of 10,713 shares directly owned by his wife; Charles G. Lane – an aggregate of 65,384 shares
owned by his wife; held by him as a co-Trustee with Fleetwood S. Hassell for the children of Hugh C. Lane, Jr.; held by
him as a Trustee of Mills Bee Lane Memorial Foundation; and held by him as a Trustee of Holcombe Trust; Karen J.
Phillips – 3,649 shares owned by her husband; Edmund Rhett, Jr. MD – 1,005 shares owned
by his wife; Susanne K. Boyd – an aggregate of 9,384 shares owned by children and shares owned
by the ESOP in which she has a vested interest; Eugene H. Walpole, IV – 6,037 shares owned by the ESOP in
which he has a vested interest. All such indirectly owned shares are included in the totals of the number of shares set
forth in the above table and beneficially owned by the Directors.
|
No
Director or Executive Officer was involved in or has any pending legal proceedings related to bankruptcy, securities, or commodities
laws nor have any members been convicted in criminal proceedings in the past 10 years.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
AND
CORPORATE GOVERNANCE MATTERS
Introduction
The
Company’s Board of Directors conducts its business through Board meetings and through its committees. Hugh C. Lane, Jr.
presently serves as Chairman of the Board of Directors. The Board of Directors of the Company held six meetings (including all
regularly scheduled and special meetings) during the year ended December 31, 2022. No Directors attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees
of the Board of Directors on which they served. The Company does not have a policy with regard to board members' attendance
at annual meetings of shareholders. The Company has historically not retained records with respect to director attendance at annual meetings
of shareholders, but intends to do so on a going-forward basis.
Director
Independence
The
Board of Directors is comprised of a majority of independent Directors in compliance with SEC and NASDAQ rules. All members of the Audit & Compliance Committee, the Compensation
Committee, and the Nominating Committee are independent pursuant to SEC and NASDAQ rules. The members of these committees do not
have any relationship to the Bank or Company that may interfere with the exercise of their independence from management. None
of the members of the Nominating Committee are current or former officers or employees of the Bank or Company. One member of the
Compensation Committee and Audit & Compliance Committee, William L. Hiott, Jr., retired from the Bank in April 2010. Two members
of the Executive/Long-Range Planning Committee, William L. Hiott, Jr. and Sheryl G. Sharry, retired from the Bank in April 2010
and 2016, respectively. All members of the Board of Directors are independent except Hugh C. Lane, Jr., Chairman of the Board,
Fleetwood S. Hassell, President/Chief Executive Officer, Douglas H. Sass, Senior Lender/Executive Vice President, Susanne K. Boyd,
Chief Operations Officer/Executive Vice President, Eugene H. Walpole, IV, Chief Financial Officer/Executive Vice President and
Charles G. Lane, brother of Hugh C. Lane, Jr.
Board
Leadership Structure
The
Board of Directors currently separates the roles of Chairman of the Board and CEO. The Board of Directors believes that Hugh C.
Lane, Jr., is the best person to serve as Chairman because he is the Director most familiar with our business and industry, and most
capable of effectively identifying strategic priorities and leading the discussion and execution of strategy.
Independent
Directors and management have different perspectives and roles in strategy development. Our independent Directors bring experience,
oversight and expertise from outside the Company and industry, while Hugh C. Lane, Jr. brings Company-specific experience and
expertise. The Board of Directors believes that the combined experience as Chairman and past President/Chief Executive Officer
promotes strategic development and executions, and facilitates information flow between management and the Board of Directors
which are essential to effective governance.
One
of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for the
execution of strategy once it is developed. The Board believes the combined role of the Chairman and an independent Lead Director,
having the duties described below, is in the best interest of Shareholders as it provides the appropriate balance between strategy
development and independent oversight of management.
Lead
Director
The
Board of Directors selected Alan I. Nussbaum, MD, an independent director, to serve as the Lead Director of all meetings of the
non-management Directors held in executive session. Dr. Nussbaum has held this position since April 12, 2011. Under NASDAQ rules, non-management Directors
of the Board of Directors are required to meet on a regular scheduled basis without the presence of Directors that are not considered
independent. The Lead Director chairs these sessions.
Risk
Management
The
Board of Directors has an active role, as a whole and at the committee level, in overseeing the management of our risks. The Board
of Directors regularly reviews information regarding our credit, liquidity, and operations, as well as the risks associated with
each. The Audit & Compliance Committee oversees the management of financial risks. The Nominating Committee manages risks
associated with the independence of the Board of Directors and potential conflicts of interest. The Board of Directors monitors
financial and independence risks and oversees the management of such risks through committee reports. In addition, the Audit &
Compliance Officer oversees internal controls.
Committees
and Committee Charters
The
Board of Directors of the Company has four standing committees: the Executive/Long-Range Planning Committee, the Compensation
Committee, the Nominating Committee, and the Audit & Compliance Committee. Each committee serves in a dual capacity as a committee
of the Company and the Bank.
The
following table lists the membership of the standing committees of the Board of Directors of the Company.
| Director |
Audit
&
Compliance |
Executive/Long-
Range Planning |
Compensation
Committee |
Nominating
Committee |
| Susanne K. Boyd |
|
● |
|
|
| David W. Bunch |
|
|
|
|
| Graham M. Eubank, Jr. |
|
|
● |
● |
| Elizabeth M. Hagood |
|
|
|
● |
| Fleetwood S. Hassell |
|
● |
|
|
| Glen B. Haynes, DVM |
|
|
|
● |
| William L. Hiott, Jr. |
● |
● |
● |
|
| Richard W. Hutson, Jr. |
● |
|
|
|
| Charles G. Lane |
|
● |
|
|
| Hugh C. Lane, Jr. |
|
● |
|
|
| Alan I. Nussbaum, MD |
|
|
● |
|
| Josette R. E. Pelzer, PhD, CPA |
● |
|
|
|
| Karen J. Phillips |
● |
● |
|
● |
| Edmund Rhett, Jr. MD |
|
|
|
|
| Malcolm M. Rhodes, MD |
|
|
|
|
| Douglas H. Sass |
|
● |
|
|
| Sheryl G. Sharry |
● |
● |
|
|
| Steve D. Swanson |
|
● |
|
|
| Eugene H. Walpole, IV |
|
● |
|
|
Audit
& Compliance Committee
The
Board of Directors appoints and approves the members of the Audit & Compliance Committee annually. Under the terms of its
Charter, the Audit & Compliance Committee is to be comprised of not less than four members of the Board or such larger number as
approved by the Board of Directors. During 2022, the Audit & Compliance Committee held four meetings. Members are considered
independent of the Company under applicable rules and regulations.
The
Audit & Compliance Committee operates under a written Charter adopted by the Board of Directors which is renewed and reassessed
for adequacy on an annual basis. The Charter outlines the Committee’s responsibilities for overseeing the entire audit function
and appraising the effectiveness of internal and external audit efforts including reviewing our financial statements, evaluating
internal accounting controls, reviewing reports of regulatory authorities, and determining that all examinations required by law
are performed. The Board of Directors may amend the Charter at any time. The most recent Audit & Compliance Committee Charter
may be obtained at our internet website http://www.banksc.com.
The
Audit & Compliance Committee recommends to the Board of Directors the appointment of the independent auditors for the next
fiscal year, reviews and approves the auditors’ audit plan, and reviews with the independent auditors the results of the
audit and management’s response.
Review
of the Company’s Audited Financial Statements for the Fiscal Year Ended December 31, 2022
Management
is responsible for our internal controls and the financial reporting process. The independent auditors are responsible for performing
an independent audit of our consolidated financial statements in accordance with accounting principles generally accepted in the
United States of America and issuing a report thereon. The Audit & Compliance Committee’s responsibility is to monitor
and oversee the process.
In
this context, the Audit & Compliance Committee has met and held discussions with management and Elliott Davis, LLC, our independent
auditors, in 2022. The Audit Committee has discussed with the independent auditors their independence from the Company and management.
The Audit & Compliance Committee also discussed with management, the internal auditors and the independent auditors
the quality and adequacy of our internal controls. The Audit & Compliance Committee reviewed the audit plans, audit scope
and identification of audit risks with the independent auditor.
The
Audit & Compliance Committee reviewed and discussed with the independent auditors all communications required by generally
accepted auditing standards, including those described in the PCAOB Auditing Standard 16, as modified or supplemented, “Communications
with Audit Committees,” and Rule 2-07 of Regulation S-X, promulgated by the SEC, and, with and without management present,
discussed and reviewed the results of the independent auditors’ examination of the financial statements. The Audit &
Compliance Committee also discussed the results of the internal audit examinations.
The
Audit & Compliance Committee reviewed and discussed the audited consolidated financial statements of the Company as of and
for the year ended December 31, 2022, with management and the independent auditors. The Audit & Compliance Committee has also (i) discussed with Elliott
Davis the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”)
and the SEC, (ii) reviewed the written disclosures from Elliott Davis as required by the rules of the PCOAB regarding the independent
registered public accounting firm's communications with the Audit & Compliance Committee concerning independence and (iii) discussed
with Elliott Davis its independence from the Company.
Based
on the above-mentioned review and discussion with management and the independent auditors, the Audit & Compliance Committee
recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in its Annual
Report on Form 10-K for the year ended December 31, 2022, for filing with the SEC. During 2022, the Committee appointed Elliott
Davis, LLC as our independent auditors for the year ending December 31, 2022.
Sheryl
G. Sharry, Chairman
Richard
W. Hutson, Jr.
William
L. Hiott, Jr.
Dr.
Josette R. E. Pelzer, PhD, CPA
Karen
J. Phillips
Executive/Long-Range
Planning Committee
The
Executive/Long-Range Planning Committee consists of our President/Chief Executive Officer, Chairman, Senior Lender/Executive Vice
President, Chief Operating Officer/Executive Vice President, Chief Financial Officer/Executive Vice President and five designated
Directors. Alan I. Nussbaum, MD, an independent Director, serves as Chairman of the Committee. During 2022, the Executive/Long-Range
Planning Committee held one meeting. In addition to long-range and strategic planning, the principal function of the Committee
is to exercise all authority of the Board of Directors in the management and affairs of the Company and the Bank. In addition,
the Committee acts on behalf of the entire Board of Directors between the regular Board meetings.
Compensation
Committee
The
Compensation Committee consists of three independent Directors appointed by the Board of Directors to assist the Board in fulfilling
its oversight responsibilities. The Committee also functions as the Compensation Committee of the Bank. The duties and responsibilities
of the Compensation Committee are as follows:
| |
● |
to review and approve
compensation of the Executive Officers in light of our goals and objectives (Executive Officers may not be present during
voting or deliberations on their compensation), |
| |
● |
to administer the 2021 Stock Incentive Plan for Independent Directors; |
| |
● |
to oversee regulatory
compliance and risk management with respect to compensation matters; |
| |
● |
to make regular
reports to the Board of Directors; |
| |
● |
to review and approve
the Report of Compensation for inclusion in our annual Proxy Statement, in accordance with applicable rules and regulations; |
| |
● |
to review and approve
the Compensation Discussion and Analysis of the Company’s annual Proxy Statement, and recommend to management that it
be included in the annual Proxy Statement; and |
| |
● |
to perform any other
duties or responsibilities expressly delegated to the Committee by the Board of Directors from time to time. |
The
Compensation Committee’s policies and procedures for decisions did not change since the positive advisory vote by the shareholders
on the compensation of the most highly compensated Executive Officers at the Annual Meeting held April 12, 2022.
The
Board of Directors has determined that each of the Directors serving on our Compensation Committee is independent and satisfies
other requirements imposed by:
| |
● |
NASDAQ; |
| |
● |
The Exchange Act and the rules and regulations
of the SEC under the Exchange Act; and |
| |
● |
Any other laws, rules or regulations applicable
to us. |
The
Compensation Committee has sole discretion to hire, retain, terminate and approve fees and other retention terms of independent
legal, accounting or other advisors (including compensation consultants) as it deems appropriate without management or Board approval.
In doing so, the Compensation Committee shall comply with all applicable rules of the SEC or NASDAQ. The Committee met three times
during 2022 and did not consult independent legal counsel or compensation consultants. The Compensation Committee operates under a written Charter adopted by the Board of Directors which is reviewed and reassessed for adequacy
on an annual basis. The most recent Compensation Committee
charter may be obtained at our website http://www.banksc.com.
Nominating
Committee
The
Nominating Committee consists of four independent Directors. The function of the Nominating Committee is to recommend a slate
of proposed Directors to the Board of Directors. The Nominating Committee operates under a written Charter adopted by the Board of Directors which is reviewed and reassessed for adequacy
on an annual basis. A copy of this Charter
may be obtained at our website http://www.banksc.com. The Nominating Committee met once during 2022.
Nominations,
other than those made by the Nominating Committee, may be made in writing and delivered or mailed to the President/Chief Executive
Officer of the Company not less than 14 days or no more than 50 days prior to any meeting of Shareholders calling for election
of Directors; provided however, that if less than 21 days’ notice of the meeting is given to Shareholders, such nomination
shall be mailed or delivered to the President/Chief Executive Officer of the Company not later than the close of business on the
7th day following the day on which the Notice of Meeting was mailed. Nominations not made according to these procedures
will be disregarded.
The
Nominating Committee has a policy with regard to consideration of any Director candidates recommended by Shareholders and that
policy is to consider any and all such recommendations. The Nominating Committee has adopted specific minimum qualifications which
the Nominating Committee believes must be met by a nominee for a position on our Board of Directors. The qualifications include:
| |
● |
nominee must be
recognized as successful in such nominee’s business or community efforts; |
| |
● |
have a recognized
reputation for honesty and integrity; |
| |
● |
have demonstrated
a commitment to the community in which we operate; |
| |
● |
have demonstrated
in meetings with the Nominating Committee a commitment to the best interest of the Company, its subsidiary Bank, and their
officers, Directors, employees and Shareholders |
The
Nominating Committee’s process for identifying and evaluating nominees for Director, including nominees recommended by Shareholders,
is to investigate whether or not such nominee meets the specific minimum qualifications adopted as a policy by the Committee through
contacts the members have in their community. There are no differences in the manner in which the Committee evaluates nominees
for Director whether the nominee is recommended by a committee member or a Shareholder.
We
do not utilize or pay a fee to any third party to evaluate nominees for Director.
Code
of Business Conduct and Ethics
We
expect all of our employees to conduct themselves honestly and ethically. Our Board of Directors has adopted a Code of Ethics
that applies to all employees. The Code of Ethics requires the officers, employees, and Directors to maintain the highest standards
of professional ethical conduct. The Code includes guidelines relating to the ethical handling of actual or potential conflicts
of interest, compliance with laws, accurate financial reporting and procedures for promoting compliance with, and reporting violations
of the Code. The Code of Ethics may be obtained at our website http://www.banksc.com.
Pledging,
Hedging and Other Transactions
We do not
currently have a policy prohibiting our officers, directors and employees from pledging their Company common shares as collateral to
secure loans, utilizing their common shares as collateral for margin loans, engaging in hedging transactions and otherwise speculating
on short-term movements in the price of our common shares.
Shareholder
Communication with the Board of Directors
The
Board of Directors has adopted a process by which Shareholders may communicate with them. Shareholders may send a written communication
to Fleetwood S. Hassell, President/Chief Executive Officer, Bank of South Carolina Corporation, 256 Meeting Street, Charleston,
South Carolina 29401, or email such communication to Fleetwood S. Hassell, President/Chief Executive Officer, at fhassell@banksc.com.
A Shareholder is free to address any communication to any Director at the address of the Bank of South Carolina. Any communication
from a Shareholder received by the President/Chief Executive Officer shall be sent to all members of the Executive Committee and,
if any member of the Executive Committee so directs, will be sent to all members of the Board of Directors.
In
addition, any Shareholder or interested party who has any concerns or complaints relating to accounting, internal accounting controls
or auditing matters, may contact the Audit & Compliance Committee by writing to one or both of the following addresses:
Bank
of South Carolina Corporation Audit & Compliance Committee
c/o
Sheryl G. Sharry, Chairman
Bank
of South Carolina Corporation
1550
Kentwood Circle
Charleston,
SC 29412
ssharry@banksc.com
Related
Party Transactions
Sass,
Herrin and Associates, Inc. an appraisal firm, is on our list of approved appraisal companies. Herbert R. Sass, III, MAI, SRA,
fifty percent owner of Sass, Herrin and Associates, Inc., is the brother of Douglas H. Sass, Executive Vice President. We do not
have any other existing continuing contractual relationships with any Director, nominee for election as Director or Executive
Officer, or any Shareholder owning, directly or indirectly, more than 5% of the shares of our common stock, or any associate of
the foregoing persons. Related party transactions have been and will continue to be made as any other ordinary business transaction
using substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions
with other persons. These transactions did not and will not involve more than the normal risk of collectability or present any
other unfavorable features.
Executive
Compensation
This
section discusses our compensation program, including how it relates to the Executive Officers named in the compensation tables
which follow in this section. The Executive Officers of the Company and the Bank consist of:
| |
● |
Susanne K. Boyd,
Chief Operating Officer/Executive Vice President, Director |
| |
● |
Fleetwood S. Hassell,
President/Chief Executive Officer, Director |
| |
● |
Hugh C. Lane, Jr.,
Chairman, Director |
| |
● |
Douglas H. Sass,
Senior Lender/Executive Vice President, Director |
| |
● |
Eugene. H. Walpole,
IV, Chief Financial Officer/Executive Vice President, Director |
Set
forth below is an analysis of the objectives of our compensation program, the material compensation policy made under this program
and the material factors that the Compensation Committee considers in making those decisions.
Overview
of Compensation Program
The
Compensation Committee of the Board of Directors, which consists solely of independent Directors, has the responsibility for developing,
implementing, and monitoring adherence to our compensation philosophies and program. Our compensation program is based upon the
following philosophies:
| |
● |
preserve the financial
strength, safety and soundness of the Company and the Bank; |
| |
● |
reward and retain
key personnel by compensating them in the midpoint salary ranges at comparable financial institutions and making them eligible
for the Employee Stock Ownership Plan and Trust (“ESOP”) and the Stock Incentive Plans; and |
| |
● |
focus management
on maximizing earnings while managing risk by maintaining high asset quality, managing interest rate risk within Board guidelines,
emphasizing cost control, and maintaining appropriate levels of capital. |
Our
primary forms of compensation for Executive Officers include base salary, the ESOP, and the 2010 Omnibus Stock Incentive Plans
and 2020 Stock Incentive Plan.
Base
Salary
The
Compensation Committee sets the base salary for the five Executive Officers. The Committee’s objectives are:
| |
● |
to encourage the
achievement of our long-range objectives by providing compensation that reflects the performance of the individual and the
achievement of our objectives. The level of compensation shall be reasonable based upon our goals and objectives, normal and
customary levels of compensation within the banking industry (taking into consideration geographic and competitive factors),
our asset quality, capital level, operations and profitability, and the duties performed and responsibilities held by the
individual. |
| |
● |
to establish compensation
guidelines that will attract and retain qualified personnel through an overall level of compensation opportunity that is competitive
within the banking industry. |
The following table sets forth all remuneration paid during the years ended
December 31, 2022, 2021, and 2020, by the Bank to the Chairman of the Board of Directors and the two most highly compensated Executive
officers of the Company and the Bank for their services in all capacities. Such Executive Officers receive no compensation from
the Company as Executive Officers or as Directors or in any other capacity. We did not issue any stock awards to our Executive
Officers during the years ended December 31, 2022, 2021, and 2020. No options were granted to any Executive Officer during the
years ended December 31, 2022 and 2021. All Executive Officers received 10,000 stock option grants during the year ended December
31, 2020. Additionally, there was no non-equity incentive plan compensation or nonqualified deferred compensation earnings given
during the years ended December 31, 2022, 2021, and 2020.
| Summary
Compensation Table |
| Name
and Principal Position |
|
Year |
|
|
Salary(1) |
|
|
Bonus |
|
|
All Other
Compensation(2) |
|
|
Total |
|
| Hugh C. Lane, Jr. |
|
|
2022 |
|
|
$ |
335,000 |
|
|
$ |
20,400 |
|
|
$ |
30,641 |
|
|
$ |
386,041 |
|
| Chairman |
|
|
2021 |
|
|
$ |
320,000 |
|
|
$ |
20,400 |
|
|
$ |
28,452 |
|
|
$ |
368,852 |
|
| |
|
|
2020 |
|
|
$ |
305,000 |
|
|
$ |
20,250 |
|
|
$ |
25,330 |
|
|
$ |
350,580 |
|
| Fleetwood S. Hassell |
|
|
2022 |
|
|
$ |
331,313 |
|
|
$ |
20,400 |
|
|
$ |
30,641 |
|
|
$ |
382,354 |
|
| President/Chief Executive Officer |
|
|
2021 |
|
|
$ |
316,313 |
|
|
$ |
20,400 |
|
|
$ |
28,452 |
|
|
$ |
365,165 |
|
| |
|
|
2020 |
|
|
$ |
301,313 |
|
|
$ |
20,250 |
|
|
$ |
25,330 |
|
|
$ |
346,893 |
|
| Douglas H. Sass |
|
|
2022 |
|
|
$ |
250,708 |
|
|
$ |
20,400 |
|
|
$ |
27,237 |
|
|
$ |
298,345 |
|
| Senior Lender/Executive Vice President |
|
|
2021 |
|
|
$ |
235,708 |
|
|
$ |
20,400 |
|
|
$ |
25,128 |
|
|
$ |
281,236 |
|
| |
|
|
2020 |
|
|
$ |
220,708 |
|
|
$ |
20,250 |
|
|
$ |
21,416 |
|
|
$ |
262,374 |
|
| |
(1) |
The Compensation
Committee, consisting of Graham M. Eubank, Jr., Alan I. Nussbaum, and William L. Hiott, Jr., compares salaries for similar
positions at similar sized banks within South Carolina as well as the overall bank and individual performance. Once the Compensation
Committee establishes the salary levels, the salaries are recommended to the Board of Directors for approval. (See “Compensation
Committee” for further discussion.) The Compensation Committee recommended and the Board of Directors approved a $15,000
increase in salary for the Chairman of the Board, a $15,000 increase in the salary of the President/Chief Executive Officer
and a $15,000 increase in salary for the Senior Lender/Executive Vice President for the year ended December 31, 2022. The
Compensation Committee recommended and the Board of Directors approved a $15,000 increase in salary for the Chairman of the
Board, a $15,000 increase in the salary of the President/Chief Executive Officer and a $15,000 increase in salary for the
Senior Lender/Executive Vice President for the year ended December 31, 2021. The Compensation Committee recommended and the
Board of Directors approved a $15,000 increase in salary for the Chairman of the Board, a $15,000 increase in the salary of
the President/Chief Executive Officer and a $10,000 increase in salary for the Senior Lender/Executive Vice President for
the year ended December 31, 2020. |
| |
(2) |
On November 2, 1989,
the Bank adopted an ESOP to provide retirement benefits to eligible employees for long and faithful service. The other compensation
represents the amount contributed to the Bank’s ESOP. (See table and discussion below for other compensation.) |
The
median salary for all employees other than the Executive Officers was $50,053 as of December 31, 2022 and $49,305 as of December
31, 2021.
Employee
Stock Ownership Plan and Trust Agreement
Fleetwood
S. Hassell, Douglas H. Sass, Sheryl G. Sharry, and Eugene H. Walpole, IV currently serve as Plan Administrators and as Trustees
for the ESOP. Any employee of the Bank is eligible to become a participant in the ESOP upon reaching 21 years of age and credited
with one-year of service (1,000 hours of service). The employee may enter the Plan on the January 1st that occurs nearest
the date on which the employee first satisfies the age and service requirements described above. No contributions by employees
are permitted. The amount and time of contributions to the Plan are at the sole discretion of the Board of Directors. The contribution
for all participants is based solely on each participant’s respective regular or base salary and wages paid by the Bank
including commissions, bonuses, and overtime, if any.
The
Board of Directors approved the contribution of $540,000 to the ESOP for the fiscal year ended December 31, 2022. The contribution
was made during 2022.
A
participant becomes vested in the ESOP based upon the employee’s credited years of service. The vesting schedule is as follows:
| |
● |
1 Year
of Service |
0% Vested |
| |
● |
2 Years of Service |
25% Vested |
| |
● |
3 Years of Service |
50% Vested |
| |
● |
4 Years of Service |
75% Vested |
| |
● |
5 Years of Service |
100% Vested |
The
Plan became effective as of January 1, 1989, was amended effective January 1, 2007, and approved by the Board of Directors on
January 18, 2007. This amendment was made to comply with the Pension Protection Act of 2006. Periodically the Internal Revenue
Service (“IRS”) requires a restatement of a qualified retirement plan to ensure that the plan document includes provisions
required by legislative and regulatory changes made since the last restatement. There have been no substantive changes to the
plan. The Board of Directors approved a restated plan, on January 26, 2012 (incorporated as Exhibit 10.5 in the 2011 10-K). The
Plan was submitted to the IRS for approval and a determination letter was issued September 26, 2013, stating that the plan satisfies
the requirements of Code Section 4975(e)(7). On January 26, 2017, the Board of Directors approved a restated plan (incorporated
as Exhibit 10.6 in the 2016 10-K). The Plan was submitted to the IRS for approval and a determination letter was issued November
17, 2017, stating that the plan satisfies the requirements of Code Section 4975(e)(7).
The
Plan currently owns 336,088 shares or 6.05% of our common stock outstanding.
The
following table sets forth details of “All Other Compensation” as presented above in the Summary Compensation Table.
| Name | |
Employee
Stock
Ownership Plan | | |
Total | |
| Hugh C. Lane, Jr. | |
$ | 30,641 | | |
$ | 30,641 | |
| Fleetwood S. Hassell | |
$ | 30,641 | | |
$ | 30,641 | |
| Douglas H. Sass | |
$ | 27,237 | | |
$ | 27,237 | |
Stock
Incentive Plans
The
Shareholders approved the 2010 Omnibus Stock Incentive Plan on April 13, 2010. Under this Plan, any employee of the Company or
the Bank is eligible to participate in the Plan if the Executive Committee, in its sole discretion, determines that such a person
has contributed or can be expected to contribute to the profits or growth of the Company or the Bank. No member of the Committee
may participate in this Plan during the time that their participation would prevent the Committee from being “disinterested”
for purposes of the Securities and Exchange Commission Rule 16b-3. This plan expired on April 14, 2020. The remaining outstanding
options granted under this plan can still be exercised in accordance with the plan.
The
Shareholders approved the 2020 Stock Incentive Plan on April 14, 2020. Under this Plan, any employee of the Company or the Bank
is eligible to participate in the Plan if the Executive Committee, in its sole discretion, determines that such a person has contributed
or can be expected to contribute to the profits or growth of the Company or the Bank. No member of the Committee may participate
in this Plan during the time that their participation would prevent the Committee from being “disinterested” for purposes
of the Securities and Exchange Commission Rule 16b-3. This plan expires on February 27, 2030. Options granted before that date
shall remain valid in accordance with their terms. The Executive/ Long-Range Planning Committee will obtain approval from the
Compensation Committee for all stock options granted to Executive Officers.
The
following information with respect to the outstanding equity awards as of December 31, 2022, is presented for the named Executive
Officers with additional discussion below.
| OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2022 |
| OPTION
AWARDS |
|
|
|
|
STOCK
AWARDS |
|
| Name |
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable |
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) |
|
|
Option
Exercise
Price ($) |
|
|
Option
Expiration
Date |
|
|
Number
of
Shares of
Units of
Stock That
Have Not
Vested (#) |
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#) |
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout Value
or Unearned
Shares,
Units or
Other Rights
That Have
Not Vested (#) |
|
| Hugh
C. Lane, Jr. |
|
|
— |
|
|
|
10,000 |
|
|
|
— |
|
|
$ |
16.73 |
|
|
|
April
15, 2025 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Fleetwood
S. Hassell |
|
|
— |
|
|
|
10,000 |
|
|
|
— |
|
|
$ |
15.21 |
|
|
|
April
15, 2030 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Douglas H. Sass |
|
|
— |
|
|
|
10,000 |
|
|
|
— |
|
|
$ |
15.21 |
|
|
|
April
15, 2030 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
In
the event of a prospective reorganization, consolidation or sale of substantially all of the assets or any other form of corporate
reorganization in which the Company would not be the surviving entity or in the event of the acquisition, directly or indirectly,
of the beneficial ownership of 24% of our common stock or the making, orally or in writing, of a tender offer for, or any request
or invitation for tender of, or any advertisement making or inviting tenders of our stock by any person, all options in effect
at that time would accelerate so that all options would become immediately exercisable and could be exercised within one-year
immediately following the date of acceleration but not thereafter.
In
the case of termination of employment of an option holder other than involuntary termination without just cause, retirement, death
or legal disability, the option holder may exercise the option only with respect to those shares of common stock as to which he
or she has become vested. The option holder may exercise the option with respect to such shares no more than 30 days after the
date of termination of employment (but in any event prior to the expiration date).
In
the event that the option holder’s employment is terminated without just cause, the option shall become fully vested and
fully exercisable as of the date of his or her termination without regard to the five-year vesting schedule. The option holder
may exercise the option following an involuntary termination without just cause until the expiration date of the option.
In
the event the option holder remains in the continuous employment of the Company or any subsidiary from the date of the grant until
the option holder’s retirement, the option shall become fully vested and fully exercisable as of the date of his or her
retirement without regard to the five-year schedule. The option holder may exercise the option following his or her retirement
until the expiration date.
In
the event the option holder remains in the continuous employment of the Company or a subsidiary from the date of the grant until
his or her death, the option shall become fully vested and fully exercisable as of the date of death without regard to the five-year
vesting schedule. The person or persons entitled to exercise the option following the option holder’s death may exercise
the option until the expiration date.
In
the event the option holder remains in the continuous employment of the Company or any subsidiary from the date of the grant until
the date of his or her legal disability, the option shall become fully vested and fully exercisable as of the date of his or her
termination of employment on account of his or her legal disability without regard to the five-year vesting schedule. The option
holder may exercise the option following such termination of employment until the expiration date.
The
2010 and 2020 Stock Incentive Plans provides for adjustment in the number of shares of common stock authorized under the Plan
or granted to an employee to protect against dilution in the event of changes in the Company’s capitalization, including
stock splits and dividends.
No options were exercised to purchase shares by Hugh C. Lane, Jr, Fleetwood S. Hassell and Douglas H. Sass during
2022.
Equity
Compensation Plan Information
The
following table summarizes the total outstanding options and the weighted-average exercise price of the Company’s equity
compensation plans as of December 31, 2022:
| 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(1) |
|
| 2010 Omnibus Stock Incentive
Plan approved by Shareholders(2) (3) |
|
|
30,912 |
|
|
$ |
15.89 |
|
|
|
— |
|
| 2020 Stock Incentive Plan approved by Shareholders |
|
|
153,500 |
|
|
$ |
16.40 |
|
|
|
133,000 |
|
| 2021 Stock Incentive
Plan approved by Shareholders(4) |
|
|
70,000 |
|
|
$ |
20.81 |
|
|
|
80,000 |
|
| Total |
|
|
254,412 |
|
|
$ |
17.56 |
|
|
|
213,000 |
|
| (1) | In
accordance with the 2010 Omnibus Stock Incentive Plan, options are no longer granted
under this Plan. This Plan expired April 14, 2020. Options granted before this date remain
valid in accordance with their terms. |
| (2) | The
number of securities to be issued upon exercise of the outstanding options represents
the total outstanding options under the 2010 Omnibus Stock Incentive Plan. As per the
agreement, the above options remain valid in accordance with their terms. |
| (3) |
The
2010 Omnibus Stock Incentive Plan was approved by the Shareholders at the 2010 Annual Meeting. There
were 363,000 shares reserved under this Plan. All shares have been adjusted to reflect two 10% stock
dividends declared August 27, 2015 and April 10, 2018.
|
| (4) |
Participants in
the 2021 Stock Incentive Plan are limited to Independent Directors of the Company that the Compensation Committee, in its
sole discretion, determines has contributed or can be expected to contribute to the profits or growth of the Company. |
During
the fiscal year ended December 31, 2022, we had no plans or arrangements pursuant to which any Executive Officer, Director or
principal Shareholder received contingent remuneration or personal benefits other than the contingent remuneration and life, disability,
dental and health insurance benefits. Life, disability, dental and health insurance benefits are available for all employees of
the Bank who work at least 30 hours a week. Benefit programs provided to Executive Officers, officers and employees are listed
in the table below.
| Benefit
Plan |
Executive
Officers |
Officers |
Full
Time Employees |
| Employee Stock Ownership
Plan |
x |
x |
x |
| Medical and Dental
Plans |
x |
x |
x |
| Life and Disability
Plans |
x |
x |
x |
| Stock Option Plans |
x |
x |
x |
We
do not have an employment agreement with any officer or employee. We currently believe that the named Executive Officers receive
sufficient compensation that employment agreements are not necessary to induce them to remain with the Company. In addition, we
do not have any agreement with the Company’s Executive Officers that provide for cash severance payments upon termination
of employment or in connection with a change in control.
Although
there is inherent risk in the business of banking, we do not believe that any of our compensation policies and practices provide
incentives to our employees to take risks that are reasonably likely to have a material adverse effect on us. We believe
that our compensation policies and practices are consistent with those of similar bank holding companies and their banking subsidiaries
and are intended to encourage and reward performance that is consistent with safe and sound practices in the industry.
Pay
versus Performance Information
The
following table sets forth information concerning the compensation of our principal executive officer, or “PEO,” and, on an average basis,
the compensation of our other named executive officers, or “NEOs,” for each of the fiscal years ending December 31, 2022 and 2021, as
such compensation relates to our financial performance for each such fiscal year.
| |
|
|
|
|
Value of Intial Fixed $100
Investment(5) Based on: |
|
|
| Year |
Summary Compensation
Table Total for PEO(1) |
Compensation Actually Paid to PEO(1)(2)(3) |
Average Summary Compensation Table Total for Non-PEO NEO's(1) |
Average Compensation Actually Paid to Non-PEO NEO's(1)(2)(4) |
Total Shareholder Return |
Peer Group
Total
Shareholder
Return |
Net Income |
Company-
Selected Measure |
| 2022 |
$ |
386,041 |
$ |
385,424 |
$ |
340,350 |
$ |
339,789 |
$ |
102.31 |
* |
$ |
6,655,140 |
* |
| 2021 |
$ |
368,852 |
$ |
382,653 |
$ |
323,201 |
$ |
335,747 |
$ |
127.89 |
* |
$ |
6,744,865 |
* |
* Not required for smaller reporting companies
| (1) | For each of 2022 and 2021, the PEO is Hugh C. Lane, Jr., Chairman,
and the non-PEO NEOs are Fleetwood S. Hassell, President/Chief Executive Officer, and Douglas H. Sass, Senior Lender/Executive Vice President. |
|
(2) | We do not have pensions; therefore, an adjustment to the Summary Compensation Table (SCT) totals related to pension value for any
of the years in this table is not needed. |
|
(3) | To calculate Compensation Actually Paid (CAP) for the PEO, adjustments were made to SCT total compensation, calculated in accordance
with the SEC methodology for determining CAP for each year. Adjustments to CAP of ($617) and $13,801 for the years 2022 and 2021, respectively,
consisted solely of the change in value of prior years’ award unvested at the respective year end. |
|
(4) | To calculate Compensation Actually Paid (CAP) for the non-PEO NEO’s, adjustments were made to SCT total compensation, calculated
in accordance with the SEC methodology for determining CAP for each year. Adjustments to CAP of ($561) and $12,547 for the years 2022
and 2021, respectively, consisted solely of the change in value of prior years’ award unvested at the respective year end. |
|
(5) | Total Shareholder Return assumes $100 was invested on December 31, 2020. |