First Citizens Bancshares, Inc.
One First Citizens Place
Dyersburg
,
Tennessee 38024
Proxy Statement
Annual Meeting of Shareholders
April 18, 2012
Solicitation
The
proxy accompanying this statement is solicited by and on behalf of the board of
directors of First Citizens Bancshares, Inc. (the Company) for use at the
annual meeting of shareholders and any adjournment or postponement thereof. The
annual meeting of shareholders of the Company will be held in the Lipford Room
of First Citizens National Bank, One First Citizens Place, Dyersburg, Tennessee, on April 18, 2012 at 10:00 a.m.
We
will pay the expense of preparing, assembling, printing and mailing the proxy
statement and materials used in the solicitation of proxies for the meeting. We
will solicit proxies principally through use of the mail, but our officers,
directors and employees may solicit proxies personally or by telephone, without
receiving special compensation therefor. Brokers, custodians and similar
parties will be requested to send proxy material to beneficial owners of stock
and will be reimbursed for reasonable expenses. We have commenced mailing this
proxy statement and accompanying form of proxy to shareholders on or about
March 14, 2012.
We
will vote all proxies that are properly executed and returned to management in
accordance with your directions. You may revoke any proxy you deliver to us at
any time before it is exercised by providing written notice to Laura Beth
Butler, Corporate Secretary of the Company, or by voting another proxy at a
later date. If you are present at the meeting and wish to vote in person, you
should advise the Chairman of your intention to vote in person prior to any
vote being taken.
If
you are a record holder and return your proxy but do not specify how you wish
your shares to be voted, we will vote the shares represented by your executed
proxy
FOR
the nominees for election as directors (provided that in the
event cumulative voting occurs, the proxy holders will cumulate votes using
their judgment so as to ensure the election of as many of the nominees as
possible), and
FOR
the ratification of Alexander Thompson Arnold PLLC
to serve as our independent registered public accounting firm for the year
ending December 31, 2012. If any other business is properly presented at the
meeting, the proxy holders will vote your proxy in accordance with their
discretion.
Voting
Securities
At
the close of business on February 21, 2012, we had 3,607,854 shares of common
stock outstanding and entitled to vote. You are entitled to one vote, in person
or by proxy, for each share of common stock you owned as of February 21, 2012,
the record date for the annual meeting.
A
majority of the shares of our common stock, representing a majority of the
votes entitled to be cast, present or represented by proxy, constitutes a
quorum for the annual meeting. A quorum is necessary to conduct business at the
annual meeting.
If any shareholder present at the annual meeting gives
notice of the intention to vote cumulatively at the meeting prior to the voting
for election of directors, then all shareholders eligible to vote will be
entitled to cumulate their shares in voting for the election of directors.
Cumulative voting allows you to cast a number of votes equal to the number of
shares held in your name as of the record date, multiplied by the number of
directors to be elected. You may cast votes for any one nominee or you may
distribute your votes among as many nominees as you wish. You may not, however,
cumulate your votes against a nominee. If cumulative voting is declared at the
meeting, we will cumulate votes represented by proxies delivered pursuant to
this proxy statement at the discretion of the proxy holders, in accordance with
managements recommendation.
1
If
cumulative voting is not declared at the meeting, director nominees will be
elected by a plurality of the votes cast by the shareholders of our common
stock entitled to vote in the election of directors. The appointment of
Alexander Thompson Arnold PLLC to serve as our independent registered public
accounting firm for the year ending December 31, 2012 will be ratified if the
votes cast (in person or by proxy by the shares of common stock entitled to
vote at the meeting) favoring ratification exceed the votes cast (in person or
by proxy by the shares of common stock entitled to vote at the meeting)
opposing ratification. The approval of all other matters submitted to the
shareholders will be approved if the votes cast favoring the matter exceed the
votes cast opposing the matter.
Inspectors of election will treat shares represented
by proxies that reflect abstentions as shares that are present and entitled to
be cast for purposes of determining the presence of a quorum. Inspectors of
election will also treat broker non-votes as shares that are present and
entitled to vote for purposes of determining the presence of a quorum. Broker
non-votes are shares held of record by brokers or nominees as to which voting
instructions have not been received from the beneficial owner with respect to
any proposal that does not relate to a routine matter, such as ratifying the
appointment of our independent registered public accounting firm. Because the
election of directors is not a routine matter, if shares are held in street
name through a broker or other holder of record and the beneficial holder does
not indicate how to vote in the election of directors, the record holder will
not vote the beneficial holders shares on that matter.
Abstentions and broker non-votes do not constitute a
vote for or against and will be disregarded in the calculation of both a
plurality and votes cast. Therefore, neither abstentions nor broker non-votes
will have any effect on either of the proposals presented for shareholder
approval at the annual meeting.
2
PROPOSAL 1: ELECTION OF DIRECTORS
Our board of directors currently consists
of 21 members, with the terms of approximately one-third of the directors expiring
every year. At the meeting you will be asked to elect the individuals listed
below who have been nominated by the board of directors to serve a term of
three years. Once elected, each director shall serve the stated term or until
his or her successor has met the necessary qualifications and has been elected.
Should any nominee determine that he or she is unable to serve, the persons
named in the accompanying proxy intend to vote for the balance of the nominees
named. Each member of the Companys board of directors also serves as a
director on the board of First Citizens National Bank (the Bank), a
wholly-owned subsidiary of the Company.
Stallings Lipford, a director
whose term was scheduled to expire in 2013, passed away on May 23, 2011. On
September 21, 2011, our board of directors elected Judy Long to serve as a
director, filling the vacancy resulting from Mr. Lipfords death.
Our Corporate Governance Guidelines
provide that a director shall be deemed to retire from the board of directors
as of January 1
st
following his or her 75
th
birthday.
Pursuant to this policy, William Cloar will retire as of April 18, 2012, because
he has reached 75 years of age. The remaining directors have not yet decided
whether to fill the pending vacancy on the board of directors that will result from
this retirement. The board of directors could decide to fill the vacancy,
however, in accordance with the terms of our bylaws, which require approval of
a majority of the directors then in office.
The information below sets forth the
name, age, length of service and a summary of specific experience,
qualifications, attributes or skills for each of our nominees and for directors
whose terms expire in the years 2013 and 2014. No director holds a directorship
with any other public company or registered investment company. Each nominee
has consented to be a candidate and to serve as a director, if elected.
Nominees for Election Whose Terms Will Expire in 2015
Jeffrey D. Agee
|
Age 51
|
Director Since
2005
|
Mr. Agee serves as President and Chief Executive
Officer of the Bank and the Company. He previously served as Executive Vice
President and Chief Financial Officer of the Bank and Vice President and Chief
Financial Officer of the Company from August 1999 to June 2004. Mr. Agee holds
a bachelors degree in accounting from the University of Tennessee and is a
graduate of ABA Stonier Graduate School of Banking at Georgetown University and of BAI School of Bank Administration at University of Wisconsin. He is also a
Certified Public Accountant and certified through FINRA as holder of a Series
27 license. He serves as Financial and Operations Principal of First Citizens
Financial Plus, Inc. (a wholly-owned subsidiary of the Bank) and possesses an
understanding of SEC rules and regulations, internal controls and financial
reporting. He also currently serves on boards of directors of 16 community and
professional organizations.
Mr. Agee brings to the board of directors vast
experience in banking, a strong financial background and commitment to our
community. Based on this experience and his prior participation on and
contributions to the board of directors and its committees, the Corporate
Governance Committee nominated him for re-election.
Eddie E. Anderson
|
Age 64
|
Director Since
1984
|
Mr. Anderson is owner and operator of Anderson Farms
and attended the University of Tennessee. He is member and Chairman of Board
of Dyer County Fair Association and Vice Chairman of Agriculture Dyersburg/Dyer
Chamber of Commerce. He has also served as past Chairman of Dyersburg/Dyer
County Chamber of Commerce.
Mr. Andersons institutional knowledge and
longstanding service on the board of directors make him a qualified member of
the board of directors. Based on this experience and his prior participation on
and contributions to the board of directors and its committees, the Corporate
Governance Committee nominated him for re-election.
3
Christian E. Heckler
|
Age 44
|
Director Since
2006
|
Mr. Heckler was appointed Regional President of the
Southwest Region for the Bank in April 2006. He previously served as Community
Bank President and Commercial Lender from 2002 to April 2006. Mr. Heckler
earned a bachelors degree in business administration from the University of Tennessee and is a 2007 graduate from the Graduate School of Banking from Louisiana State University. He also served as Vice President/Commercial Lending for
Renasant Bank from 2000 to 2003 and Vice President/Commercial Lending of Trustmark
National Bank from 1998 to 2000. He also serves as Chairman on the board of
directors for Millington YMCA, on the Memphis Metro Board of Directors and as
Tipton County Fundraising Campaign Chair for Dyersburg State Community College.
Mr. Heckler brings to the board experience in banking,
commercial lending and business development. Based on this experience and his
prior participation on and contributions to the board of directors and its
committees, the Corporate Governance Committee nominated him for re-election.
Barry T. Ladd
|
Age 71
|
Director Since 1996
|
Mr. Ladd is retired and previously served as Executive
Vice President and Chief Administrative Officer of the Company and the Bank
from January 1996 to December 31, 2006. Prior to his service as Executive Vice
President of the Bank, he also served as Branch Manager and Lending Officer of
the Bank and as Commercial Lending Officer of the Bank. He earned a bachelors
degree and masters degree in business from the University of Tennessee. He is a graduate of School of Banking of the South. He also previously served as
Technical Representative for Shell Chemical Company, Account Production Officer
for Security Bank and as Partner in family farming/cattle operation business.
He has served as Chairman of Newbern Industrial board of directors and on the
boards of directors of Newbern Housing Authority and Dyer County Community
Housing.
Mr. Ladd possesses extensive banking knowledge,
experience in commercial lending and business development and institutional
knowledge regarding operations of the Bank. Based on this experience and his
prior participation on and contributions to the board of directors and its
committees, the Corporate Governance Committee nominated him for re-election.
John
M. Lannom
|
Age 58
|
Director Since 1999
|
Mr. Lannom is an attorney in private legal practice in
Dyersburg, Tennessee. He also serves as Board Chairman and Chief Executive
Officer of Forcum-Lannom, Inc. He earned a bachelors degree from Vanderbilt University and his law degree from University of Memphis School of Law. He also
serves as Secretary of Forcum Lannom Contractors, LLC and on the boards of
directors for Dyer County Adult Education, Dyersburg State Community College
Foundation, Dyer County United Way and Dyersburg/Dyer County Chamber of
Commerce. He is also past Chairman of Dyersburg/Dyer County Chamber of
Commerce.
Mr. Lannom brings an extensive legal background and
executive decision-making and risk assessment skills to the board of directors.
He has also served on the boards of directors of other corporations and
charitable organizations. Based on this experience and his prior participation
on and contributions to the board of directors and its committees, the
Corporate Governance Committee nominated him for re-election.
Milton E. Magee
|
Age 75
|
Director Since 1969
|
Mr. Magee is retired from Chic Farm Co., a general
farming operation. He is Partner of Magee and Taylor Family Limited Partnership
and J&M FLP. He earned a bachelors degree in agriculture from the University of Tennessee. He is a member and Chairman of Dyer County Commission. He has
also served on the Finance Committee of Dyer County Commission. He is a member
of the board of directors of Baptist Memorial Health Care Corporation in Memphis, Tennessee and has served as past and incoming Chairman of that corporation.
Mr. Magee brings leadership, business knowledge and
executive decision-making skills to the board of directors through his over 40
years of service on the board of directors as well as service on other boards. Based
on this experience and his prior participation on and contributions to the
board of directors and its committees, the Corporate Governance Committee
nominated him for re-election.
4
G. W. Smitheal
|
Age 56
|
Director Since 1993
|
Mr. Smitheal is Managing Partner of Smitheal Farm
& Biesel and Smitheal Cattle Company. He earned a bachelors degree in
agriculture and economics from University of Tennessee. He serves as Treasurer
of Farming Partnership and served on the Advisory Board for Boy Scout Troop 88
and participated in the Annual Fund Drive for West Tennessee Area Council of
Boy Scouts of America. He is also a member of Dyer County Ag Committee.
Mr. Smitheal brings entrepreneurial and business
building skills and experience to the board of directors, having successfully
managed his own business. His expertise in agriculture is also helpful, given
the size of the Banks agricultural loan portfolio. Based on this experience
and his prior participation on and contributions to the board of directors and
its committees, the Corporate Governance Committee nominated him for
re-election.
Incumbents Whose Terms Will Expire in 2014
J. Walter Bradshaw
|
Age 50
|
Director Since 1993
|
Mr. Bradshaw is manager of Bradshaw & Company,
Insurors, an independent insurance agency. Mr. Bradshaw holds a bachelors
degree from University of Tennessee and law degree from the University of
Memphis School of Law. He has served as past Chairman of Dyersburg/Dyer County
Chamber of Commerce and is on the board of directors for Dyersburg Electric
System. He is past President of Dyersburg Rotary Club, member and past
President of Dyer County Fair Association and past President of Insurors of
Tennessee.
Mr. Bradshaw brings strong and broad financial services
experience to the board of directors as well as an understanding of our
business and operations.
Larry W. Gibson
|
Age 65
|
Director Since 1995
|
Mr. Gibson is owner and President of Roberts-Gibson,
Inc., a gasoline jobber company. He is past President and co-Chair of Executive
Committee for Dyer County Fair Board and has served on the Tennessee State Fair
board of directors. He is past President of Tennessee State Fair Association,
past President of Dyer County Young Farmers & Homemakers and past President
of Dyer County Ducks Unlimited. He has also previously served on Foundation
Board of Dyersburg State Community College and is former member of
Dyersburg/Dyer County Chamber of Commerce board of directors. He also serves
on Board of Crime Stoppers.
Mr. Gibson brings entrepreneurial and business
building skills and experience to the board of directors, having successfully
managed his own business and served on other boards.
Allen G. Searcy
|
Age 70
|
Director Since 1999
|
Mr. Searcy is Secretary of Allen Searcy
Builder-Contractor, Inc., President of Crestwood Development Corporation, Vice
President of Building Solutions, Inc., Partner of Allens Building Materials
Company and Vice President of Latimer & Searcy Investments, Inc. Mr.
Searcy attended the University of Tennessee.
Mr. Searcy brings executive decision-making,
leadership and risk assessment skills to the board of directors as a result of
his experience in the construction industry. His experience in real estate
development and construction is especially important to the board of directors
as we manage through the current economic recession, much of which is real
estate driven.
David R. Taylor
|
Age 65
|
Director Since 1997
|
Mr. Taylor is Chairman of Forcum Lannom Contractors,
LLC, a company of engineers, contractors and developers. He holds a bachelors
degree in civil engineering from the University of Tennessee. He previously served
as President and Chief Executive Officer from 1993 to 2003 of CENTEX/FORCUM
LANNOM and President and Chief Executive Officer from 2003 to 2008 of Forcum Lannom
Contractors, LLC. He has served as Past Chairman of Dyersburg/Dyer County
Chamber of Commerce, Vice-Chairman of Dyersburg/Dyer County Chamber of
Commerce, Industrial & Economic Development, member of Dyersburg State
Community College Foundation Board, Chairman of Investment Committee for DSCC
Foundation Board, member of Dyer County United Way Board of Directors, Past
Chairman of Dyer County United Way, Past President for Tennessee Society of
Professional Engineers and Past President of West Tennessee Area Council, Boy
Scouts of America.
5
Mr. Taylor brings experience in leadership, strategic
planning, executive decision-making and risk assessment to the board of
directors, as a result of his roles in business and on other boards.
Dwight Steven Williams
|
Age 56
|
Director Since
1991
|
Mr. Williams is owner and President of
Johnson-Williams Funeral Home, Inc. and a member of West TN Golf, LLC. He holds
a bachelors degree in agriculture business from the University of Tennessee and a B.A. in mortuary science from Northwest Mississippi School of Mortuary
Science. He has a State Board Certification as a licensed Funeral Director and
Embalmer. He is manager of a farming and land management operation. Mr.
Williams serves on the Workforce Development Board, Dyer County High School
Advisory Board, Newberns Lions Club, Fellowship of Christian Athletes Board,
and as Chairman of the Newbern Housing Authority. Mr. Williams also serves as
President of the Newbern Industrial Corporation.
Mr. Williams brings entrepreneurial and business
building skills and experience to the board of directors, having successfully
managed his own business.
Katie S. Winchester
|
Age 71
|
Director Since
1990
|
Ms. Winchester serves as Chairman of the Company and
the Bank. She previously served as President of the Company and the Bank from
1992 to 2006 and Chief Executive Officer and Vice Chairman of the Company and
the Bank from 1996 to April 2007. She served as Past Chairman of the Tennessee
Higher Education Commission and Past Chairman of Baptist Memorial Health Care
Corporation in Memphis, Tennessee. She served as a Member of Federal Advisory
Council for the Federal Reserve Board in Washington, D.C. in 2000, 2001 and
2002. She is also a member of the boards of directors for Dyersburg State
Community College Foundation Board, United Way of Dyer County, Dyer County
Adult Education and Tennessee Vocational Rehabilitation (Dyersburg).
As our previous Chief Executive Officer, Ms.
Winchester
brings deep institutional
knowledge and perspective to the board of directors regarding our strengths,
challenges and opportunities. She also provides governance and community-service
skills and experience gained through her service on the boards of various
companies and charities.
Joe Yates
|
Age 49
|
Director Since 2005
|
Mr. Yates is President and Chief Executive Officer of
General Appliance & Furniture Co., a retail furniture and appliance
outlet. He earned a bachelors degree in business from the University of Tennessee and is past Chairman of Dyersburg/Dyer County Chamber of Commerce. He
has also served as Chairman of Dyersburg City Schools Board, member and
Chairman of Dyersburg Downtown Association, and member of board of directors
for Dyersburg/Dyer County Chamber of Commerce.
Mr. Yates brings business management skills and
experience to the board of directors, having successfully managed his own
business.
Incumbents Whose Terms
Will Expire in 2013
James Daniel Carpenter
|
Age 62
|
Director Since 1993
|
Mr. Carpenter retired as Managing Partner of Flatt
Heating & Air Conditioning in 2011. He holds a bachelors degree from the University of Tennessee. Mr. Carpenter previously served as Lending and Credit Manager for
Dyersburg Production Credit Association and managed a farming operation for 20
years. Mr. Carpenter has served as member of Dyer County Community Housing
Board and past President of Newbern Rotary Club.
6
Mr. Carpenter brings a valuable lending background and
strong knowledge of business to the board of directors through his successful
operation of his own business.
Richard W. Donner
|
Age 61
|
Director Since
1985
|
Mr.
Donner is President of Trenton
Textile Company, a textile manufacturing facility, and attended the University of Tennessee. Mr. Donner previously served as Vice President of Sales and
Marketing at Dyersburg Fabrics. He is also the owner/operator of a livestock
farm in Dyer County. Mr. Donner has served as chair of annual fund drives for
Boy Scouts of America, Girl Scouts of America and West Tennessee Heart Fund.
Mr. Donner possesses strong business experience as
well as a commitment to the success of the Company, as shown by his 25 years of
service on the board of directors and various committees.
Bentley F. Edwards
|
Age 54
|
Director Since 1997
|
Mr.
Edwards is Chief Operating Officer of Burks Beverage, L.P., a distributor of
Dr. Pepper-Pepsi Cola products, and Executive Vice President of Burks
Enterprises, Inc. Mr. Edwards has previously served as past Chairman of
Dyersburg/Dyer County Chamber of Commerce, Partner of Pennwards Associates,
L.P., and Partner of Green Village Partners, L.P. He has also served as
Chairman of Beverage Association of Tennessee, past President and member of
Dyersburg Kiwanis Club, and Vice-Chair of Dyersburg/Dyer County Chamber of
Commerce Retail Development.
Mr.
Edwards brings to the board of directors solid experience in business
operations and commitment to our community.
Ralph E. Henson
|
Age 70
|
Director
Since 1997
|
Mr.
Henson serves as a consultant to the Bank. He previously served as Chief Credit
Officer of the Bank from February 1993 to December 31, 2006, at which time he
transitioned to part-time employment through December 31, 2011. Mr. Henson
holds a bachelors degree from the University of Tennessee and has over 45
years of experience in commercial banking. He has also served as Managing
Partner of a commercial real estate company. He has also serves as member of
the Northwest Tennessee Regional Port Authority board of directors and as
member of the Dyer County Industrial Development Board.
Mr.
Henson possesses extensive experience in commercial lending and real estate and
has contributed to our success, demonstrated by his many years of service to
the Company as an employee and director.
Judy Long
|
Age 57
|
Director Since 2011
|
Ms.
Long has served as Executive Vice President for the Company and Executive Vice
President, and Chief Operating Officer of the Bank since August 1999. Ms. Long
previously served as Corporate Secretary of the Company from 1997 until
September 2011, at which time she was appointed to the board of directors of
the Bank and the Company. Ms. Long previously served as Senior Vice President
and Chief Operating Officer from 1997 to 1999, Senior Vice President and
Administrative Officer from 1996 to 1997 and Vice President and Loan Operations
Manager from 1992 to 1996. Ms. Long has been employed by the Company since July
1974. Ms. Long holds a Bachelor of Business Administration with a major in
finance and is a graduate of the Mid South School of Banking, the School for
Bank Administration, BAI Graduate School of Bank Operations and Technology, and
Dyersburg/Dyer County Leadership and Weststar Leadership programs. In addition,
she serves on the Board of Directors for Fidelity National Information Systems
(FNIS) Charter Bank Group, the Board of Directors of NACHA The Electronic
Payments Association and Chairperson of Tennessee Bankers Technology Conference
Advisory Committee. Ms. Long has also served various charitable organizations
such as Rotary Past President, American Cancer Society, Leukemia Society of
Tennessee, Life Choices, Dyersburg State Community College Annual Fund Campaign
and Dyer County Agricultural Committee.
7
Ms.
Longs extensive experience in bank operations and technology has contributed
to our success, demonstrated by her many years of service as a member of executive
management and as Corporate Secretary to the Company. She has also served on
the boards of directors of other corporations and charitable organizations.
Larry S. White
|
Age 63
|
Director Since
1997
|
Mr. White is President of White & Associates
Insurance Agency, Inc., a general insurance agency offering all lines of
insurance, and Managing Partner of First Citizens/White and Associates
Insurance Company (50%-owned subsidiary of the Bank). He earned a bachelors
degree in business from the University of Tennessee. He is President of Home
Health Company and serves on Dyersburg State Community College Foundation Board
and Dyersburg/Dyer County Chamber of Commerce Board. He is past President and
member of Dyersburg Rotary Club and past President of Dyersburg Lions Club. He
has also served as Chairman of Dyersburg Regional Medical Center.
Mr. White has extensive business knowledge and
experience in the insurance industry and experience serving on other boards of
directors. His commitment to our success is also demonstrated by his service as
Managing Partner of the Banks 50%-owned insurance subsidiary.
Required Vote
If cumulative voting is not declared at the annual
meeting, and assuming the presence of a quorum, director nominees will be
elected by a plurality of the votes cast by the shares of our common stock
entitled to vote at the annual meeting. If cumulative voting is properly declared
at the annual meeting, the seven director nominees receiving the highest number
of votes cast by the shares of our common stock present in person or by proxy
at the annual meeting will be elected, assuming the presence of a quorum.
The board of directors recommends a vote FOR each of
the nominees listed above.
8
PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee has selected Alexander Thompson Arnold PLLC as our independent
registered public accounting firm for the year ending December 31, 2012. We are
presenting this proposal to the shareholders for ratification at the annual
meeting. A representative of Alexander Thompson Arnold PLLC is expected to be
present at the meeting, will have the opportunity to make a statement and will
be available to respond to appropriate questions.
Total
fees paid to Alexander Thompson Arnold PLLC for the fiscal years ended December
31, 2011 and 2010 were as follows:
|
|
|
|
Audit Fees
(1)
|
$125,601
|
|
$116,069
|
Audit-Related Fees
|
|
|
|
Tax Fees
(2)
|
19,070
|
|
20,665
|
All Other Fees
|
|
|
|
Total
|
$144,671
|
|
$136,734
|
__________________________
(1)
|
Audit fees for the years ended December
31, 2011 and 2010 consisted principally of fees for professional services in
connection with the audit of the Companys consolidated financial statements
and the audit of internal control over financial reporting as well as various
statutory and compliance audits.
|
(2)
|
Tax fees for the years ended December 31,
2011 and 2010 consisted principally of fees for professional services for tax
compliance, tax advice and tax planning.
|
The Audit Committee reviews and pre-approves each
audit and non-audit service provided by Alexander Thompson Arnold PLLC prior to
its engagement to perform such services. The Audit Committee has not adopted
any other pre-approval policies or procedures.
Required
Vote
Assuming the presence of a quorum, the appointment of
Alexander Thompson Arnold PLLC as our independent registered public accounting
firm for the year ending December 31, 2012 will
be ratified if the votes cast (in person or by proxy by the shares of
common stock entitled to vote at the meeting) favoring ratification exceed the
votes cast (in person or by proxy by the shares of common stock entitled to
vote at the meeting) opposing ratification
.
In the event that shareholders do not ratify the appointment of Alexander
Thompson Arnold PLLC by such vote, the Audit Committee would consider the vote
in connection with the engagement of an independent registered public
accounting firm for fiscal year 2013, but would likely not consider a change
for fiscal year 2012 because of the difficulty and expense of making such a
change.
The board of directors recommends a vote FOR the
ratification of the appointment of
Alexander Thompson Arnold PLLC as our independent
registered public accounting firm
for the year ending December 31, 2012.
9
CORPORATE GOVERNANCE
Director
Independence
The Corporate Governance Committee of
the board of directors of the Bank has determined that a majority of our
directors are independent, as that term is defined below. The Corporate
Governance Committee has determined that Messrs. Agee and Heckler and Mss. Long
and Winchester are not independent, because each is an employee of the Bank.
Mr. Henson is also considered not independent because he served as Executive
Vice President of the Bank until December 31, 2010 and continues to provide real
estate consulting services to the Bank. Although Mr. White meets the criteria
defined below for independence, the Corporate Governance Committee does not
consider Mr. White to be independent because he serves as Managing Partner of
First Citizens/White and Associates Insurance Company, which is a 50% owned
subsidiary of the Bank. The Corporate Governance Committee annually reviews
relationships that exist between the Company and each director and his or her
related interests for the purpose of determining whether the director is
independent. The full board conducts this review on directors serving as
members of the Corporate Governance Committee. A director is presumed to be
independent unless the director (or his or her immediate family members):
-
Has been an employee or executive
of the Company at any time during the last three years;
-
Has been an employee or partner of
the Companys independent registered public accounting firm at any time during
the last three years;
-
Is an owner, partner, employee or
director of an entity with material relationships (i.e., makes payments to, or
receives payments from, the Company which exceed the greater of $1 million or
2% of the entitys gross revenues) with the Company, either as a vendor or
customer, except in situations where revenues are generated as a result of a
competitive bid process in which the board determines the business relationship
is in the best interest of the Company; or
-
Receives more than $100,000 per
year in direct compensation from the Company, other than director and related
fees.
These
independence standards can also be found in the About Us Investor Relations
Corporate Governance Guidelines Director Independence section of our
website at www.firstcitizens-bank.com. The Corporate Governance Committee does not consider any additional transactions below the threshold
amount of $100,00 in determining whether any director is independent.
Board
and Committee Meetings
Our
board of directors met seven times in 2011 and the Banks board of directors
held 12 meetings in 2011. The Companys board of directors has no standing
committees. All directors attended at least 75% of the total of all meetings of
the Companys board of directors and all Bank board committees on which such
director served during the fiscal year. Although we have no specific policy
with regard to attendance by directors at the annual meeting, all directors
attended the annual meeting in 2011 except for Mr. Lipford.
Committees of the Board of Directors
Although the Companys board
of directors has no standing committees, the Banks board of directors has an
Audit Committee and a Corporate Governance/Nominating/Compensation Committee. The
Banks board of directors also has an Executive Committee, Trust Committee, CRA
Committee, Information Technology Committee and Risk Committee. On April 18,
2011, the Banks board appointed members of each of these committees to serve
for a term of one year.
All members of the Audit Committee and
the Corporate Governance/Nominating/Compensation Committee are independent as
described above in the section entitled Director Independence. The Audit
Committee met five times during 2011 and the Corporate
Governance/Nominating/Compensation Committee met five times during 2011. The
Audit Committee charter and the Corporate Governance/Nominating/Compensation
Committee charter can be found in the About Us Investor Relations section
of our website at www.firstcitizens-bank.com.
10
Audit Committee
The Audit Committee charter requires members of the
committee to be financially literate. The Audit Committee currently does not
have an audit committee financial expert, as defined by Item 407(d)(5)(i) of
Regulation S-K. Because of our size and limited resources, we have not been
able to attract a director who qualifies as an audit committee financial
expert, but have focused on identifying directors who have overall
characteristics that are beneficial to the board of directors as a whole. In
the future, the board of directors hopes to attract an independent director who
qualifies as an audit committee financial expert. The Audit Committees
meetings include, whenever appropriate, sessions with our independent
registered public accounting firm and our senior internal auditor, in each case
without the presence of management.
Nominating
Committee
The
Corporate Governance/Nominating/Compensation Committee assists the Companys
board in identifying individuals qualified to become directors and recommends
to the Companys board nominees to be voted upon at each annual meeting of
shareholders. The committee has responsibility for the selection and
composition of the Companys board. The process for shareholders to propose nominees
for election to the board is discussed in detail in the section below entitled
General Information Proposals by Shareholders/Director Selection. The
committee also has the responsibility to review shareholder proposals, if any,
including shareholder nominations of directors, that are duly and properly
submitted and recommend appropriate action to the Companys board. Currently,
neither the committee nor the Companys board has a specific policy that takes
diversity into consideration in identifying nominees for director, except that
the committee seeks members from diverse professional backgrounds who combine a
broad spectrum of experience and expertise with a reputation for integrity. The
committee does consider diversity of the board, however, as part of its annual
evaluation of the effectiveness of board oversight.
Compensation
Committee
The Corporate Governance/Nominating/Compensation
Committee addressed compensation issues during two of the five meetings of the
committee in 2011. One purpose of the committee is to discharge the boards
responsibilities relating to compensation of executive officers of the Company.
The committee has overall responsibility for evaluating and approving executive
officer salary, benefits, bonus, incentive compensation, severance,
equity-based or other compensation plans, as well as compensation policies and
programs. The committee also annually reviews the compensation of directors
serving on the boards of the Company and the Bank and the Banks committees.
Based on its review, the committee annually recommends director compensation to
the Companys board for consideration and approval. The committee does not
delegate any of its responsibilities to other officers or directors.
Board
Leadership Structure and Role in Risk Oversight
The
board seeks composition of members with diverse professional backgrounds who
combine a broad spectrum of experience, expertise and integrity, reside in
markets served by the Company and represent financial and business interests of
existing and potential customers. The positions of Chairman and Chief Executive
Officer have been separate since
April
2007.
The Companys board is ultimately responsible for
overall risk management functions. Many components of risk management, however,
are divided among various Bank board committees to facilitate efficiency and
effectiveness of these functions. Each committee is responsible for reporting
its activities to the Banks board. The Risk Committee is responsible for
assisting the board in overseeing and reviewing information regarding the
Banks overall risk management framework and processes. The Audit Committee is
responsible for oversight of financial reporting processes, system of internal
controls, internal and external audit processes, and monitoring compliance with
laws and regulations. The CRA Committee is responsible for assessment and
implementation of actions necessary to comply with the Community Reinvestment
Act. The Trust Committee is responsible for oversight of risk management as it
relates to the Banks trust department.
11
The Information Technology Committee is
responsible for risk management oversight of activities related to the Banks
information technology infrastructure, computer services, data communication
systems, data security and utilization of all technology resources. The
Executive Committee has risk management responsibilities related to the
approval of loans in accordance with our loan policy.
The
Corporate Governance/Nominating/Compensation Committee
is responsible for oversight of risk management as it relates to compliance
with corporate governance laws, safe and sound corporate governance practices,
nomination of directors and compensation of executive officers and directors.
As part of its responsibility to ensure strong corporate governance practices
are followed, this committee has the responsibility to evaluate effectiveness
of board oversight. In this process, the committee reviews the charter and
activities of each committee on an annual basis to ascertain if each committee
is functioning as outlined in the appropriate charter and as it relates to the
overall oversight function of the board.
Compensation
Committee Interlocks and Insider Participation
The
Corporate Governance/Nominating/Compensation Committee consists of five
directors as identified in the Compensation Committee Report. No member of this
committee has at any time been an officer or employee of the Company, the Bank
or any of its subsidiaries and all are considered independent based on
guidelines described above. None of our executive officers serves, or in the
past year served, as a member of the board of directors or compensation
committee of any entity that has or had one or more of its executive officers
serving on our board of directors or the Corporate
Governance/Nominating/Compensation Committee.
Code
of Ethics
The Company has a Code of Conduct
applicable to all employees, including the principal executive officer as well
as all professionals serving in a finance, accounting, treasury, tax or
investor relation role. A separate Code of Ethics for Financial Professionals contains
provisions specific to professionals serving in finance, accounting, treasury,
tax or investor relations roles. Both the Code of Conduct and the Code of
Ethics for Financial Professionals are available under the About Us Investor
Relations section on our website at www.firstcitizens-bank.com. We also intend
to post changes and amendments (if any) to our Code(s) of Conduct and Ethics on
our website.
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below sets forth, as of February 21, 2012,
the record date for the annual meeting, the beneficial ownership of our common
stock by (i) each person known by us to be the beneficial owner of more than 5%
of the outstanding shares of our common stock, (ii) each director and nominee,
(iii) each of our Named Executive Officers identified in the section below
entitled Executive Compensation Summary Compensation Table and (iv) all
directors and executive officers as a group. As of February 21, 2012, there
were 3,607,854 shares of our common stock outstanding. We relied on information
supplied by directors, executive officers and beneficial owners for purposes of
this table.
Name and Address of Beneficial
Owner
(1)
|
Amount and Nature of
Beneficial Ownership
|
|
|
First
Citizens National Bank Employee
Stock Ownership Plan and Trust
|
750,798
|
|
20.81%
|
Jeffrey D. Agee
|
10,296
|
(2)
|
*
|
Eddie
E. Anderson
|
10,556
|
|
*
|
Sherrell
Armstrong
|
822
|
(2)
|
*
|
J.
Walter Bradshaw
|
43,047
|
|
1.19
|
Laura
Beth Butler
|
400
|
(2)
|
*
|
James
Daniel Carpenter
|
3,226
|
|
*
|
William
C. Cloar
|
20,208
|
|
*
|
Richard
W. Donner
|
10,383
|
|
*
|
Bentley
F. Edwards
|
2,020
|
|
*
|
Larry
W. Gibson
|
6,887
|
|
*
|
Christian
E. Heckler
|
750
|
(2)
|
*
|
Ralph
E. Henson
|
13,450
|
(2)
|
*
|
Barry
T. Ladd
|
24,693
|
|
*
|
John
M. Lannom
|
26,840
|
|
*
|
Judy
Long
|
4,379
|
(2)
|
*
|
Milton
E. Magee
|
53,155
|
|
1.47
|
Allen
G. Searcy
|
19,031
|
|
*
|
G.
W. Smitheal
|
32,811
|
|
*
|
David
R. Taylor
|
2,544
|
|
*
|
Larry
S. White
|
59,751
|
|
1.66
|
Dwight
Steven Williams
|
12,113
|
|
*
|
Katie
S. Winchester
|
1,702
|
(2)
|
*
|
Joseph
S. Yates
|
24,418
|
|
*
|
Directors
and executive officers as a group (24 persons)
|
384,429
|
(2)
|
10.66
|
_________________________
*
|
Less than one percent.
|
(1)
|
The address for all listed beneficial
owners is One First Citizens Place, Dyersburg, Tennessee 38024.
|
(2)
|
Excludes shares of our common stock held
through the First Citizens National Bank Employee Stock Ownership Plan and
Trust (the ESOP). As of February 21, 2012, the numbers of shares of our
common stock held by directors and Named Executive Officers through the ESOP
were as follows:
|
|
|
Jeffrey
D. Agee
|
22,079
|
Sherrell Armstrong
|
4,764
|
Laura Beth Butler
|
1,258
|
Christian
E. Heckler
|
1,873
|
Ralph
E. Henson
|
31,191
|
Judy
Long
|
17,899
|
Katie
S. Winchester
|
30,038
|
13
COMPENSATION DISCUSSION AND ANALYSIS
Our compensation program is designed
to align compensation with business objectives and performance, and to enable us
to attract, retain and reward executive officers who contribute to our success.
In order to link pay to performance, the Compensation Committee has implemented
an executive compensation program that includes base pay, annual incentive
bonuses and retirement benefits through contributions to our ESOP and 401(k)
plan. In addition, all Named Executive Officers except for the Chief Financial
Officer are provided life insurance during the term of their employment and in
post-retirement periods.
Life insurance benefits for the Chief
Financial Officer are limited to the term of her employment.
Compensation
Philosophy
The
same philosophies used in determining compensation for all Named Executive
Officers are used in determining compensation for the Chief Executive Officer
and Chief Financial Officer. The Chief Executive Officers compensation has
been reviewed and set by the Compensation Committee since 1996. The
Compensation Committee establishes compensation of the Chief Executive Officer
based on the achievement of specific financial and non-financial objectives, as
discussed below. The Chief Executive Officer makes recommendations for the base
salaries of all executive officers (other than himself), subject to approval of
the Compensation Committee. No specific weighting or formula is used to
determine the aggregate amount of base salary and cash incentive bonus for the
Chief Executive Officer or the Chief Financial Officer. The Company has not
engaged any compensation consultants to assist in determining or recommending
the amount or form of executive compensation awarded.
In determining the aggregate amount of
base salary and cash incentive bonus for each of the Named Executive Officers
for 2011, the Compensation Committee considered the aggregate amount of base
salary and cash incentive bonus levels for chief executive officer, chief
financial officer and other similarly-situated executive officer positions at
peer financial institutions as published in 2011 annual compensation and
benefits surveys conducted by the American Bankers Association, The Delves Group
and The Travillian Group. The Compensation Committee also reviewed salary and
bonus information included in 2011 SEC filings of certain banks and bank
holding companies with asset size and geographic location comparable to the
Company and that were included in the Top 200 Community Banks as of December
31, 2010, as presented in U.S. Banker magazine based on the three-year average
return on equity for public banks under $2 billion. The Compensation Committee
used selected peer group data from these surveys that it believed most closely
matched the characteristics of the Company.
The American Bankers Association survey
provided compensation data for 386 banks located across the United States. This survey did not list the names of all of the participant banks, but it
did provide a breakdown of participants by asset size. The Compensation
Committee used data from a peer category consisting of 44 banks with total
assets ranging from $1 billion to $2.9 billion. In its analysis, the
Compensation Committee considered the average salary and bonus range for banks
in this peer category.
The Delves Group is a consulting firm that
designs, conducts and administers compensation surveys to banking and financial
services companies and provides data on salaries, cash incentives, equity
incentives benefits and perquisites for positions from teller to chief
executive officer. The Delves Group survey provided compensation data for 106
banks located across the United States. This survey did not list the names of
all of the participant banks, but it did provide a breakdown of participants by
asset size. The Compensation Committee used data from a peer group category
consisting of 10 banks with an asset size of $500 million to $1 billion and 12
banks with an asset size of greater than $1 billion located in the Southeast
and Central United States.
In its analysis, the Compensation Committee
considered the 75
th
percentile salary and bonus range for banks in
the $500 million to $1 billion peer group category and the 25
th
percentile salary and bonus range for the greater than $1 billion peer group
category.
The Travillian Group is an executive
recruiting firm with a niche focus on banking. The Travillian Group provided
compensation data for chief executive officers and chief financial officers for
publicly-traded banks and thrifts in the Southeast United States. This survey
did not list the names or total number of participant banks, but it did provide
a breakdown of the data by asset size. The Compensation Committee used data
from a peer group category consisting of banks with an asset size of $1 billion
to $5 billion located in the Southeast United States for its evaluation of
compensation for Mr. Agee and Ms. Butler.
14
The
Compensation Committee used the survey data points of the aggregate of base
salary plus incentive bonus for similarly situated executives described above,
taking into consideration the asset size and location of the financial
institutions surveyed, as the benchmark to determine if the aggregate of base
salary plus incentive bonus for each Named Executive Officer was competitive
and appropriate to retain and reward the executive. The Compensation Committee
followed this process to evaluate the base salary and incentive bonus for each
of the Named Executive Officers, except with respect to Ms. Winchester, whose
compensation was based solely on the terms of her employment agreement, as
described below in the section entitled Executive Compensation Summary
Compensation Table Employment Agreements. As a result of this analysis, the
Compensation Committee determined that the aggregate base salary and incentive
bonus for each of the Named Executive Officers was in the range of 85% to 120%
of the comparable benchmark compensation.
2011
Say-on-Pay Advisory Vote
At
our 2011 annual meeting of shareholders, 94% of the votes cast on the advisory say-on-pay
proposal voted in favor of our executive compensation. The Compensation
Committee believes that this vote affirmed overwhelming shareholder support for
our compensation program. This vote took place in April 2011, after the
Compensation Committee had already established executive compensation for 2011.
As a result of the level of shareholder approval and the timing of the vote,
the Compensation Committee did not make any significant changes to the
compensation program for 2011 based on the say-on-pay advisory vote.
Base
Salary
Ms.
Winchesters base salary is determined in accordance with the terms of her
employment agreement, as discussed below in the section entitled Executive
Compensation Summary Compensation Table Employment Agreements. Subject to
approval of the Compensation Committee, base salaries of the other Named
Executive Officers are set annually based upon job-related experience,
individual performance and pay levels of similar positions at peer
institutions. For each executive office position, salary and incentive bonus
ranges for similarly situated executives in our peer group as published in
annual surveys are averaged and compared to current salary and incentive bonus
levels for our executives. The Compensation Committee adjusted the 2011 base
salary for certain of the Named Executive Officers so that their respective
aggregate base salary plus cash incentive bonus opportunity could be in the
range of 85% to 120% of the aggregate average base salary plus incentive bonus
reported in the surveys.
The following table provides
the base salary for each of the Named Executive Officers for the year ended
December 31, 2011:
|
|
Change from
2010 Base Salary
|
Jeffrey D. Agee
|
$260,120
|
|
24%
|
|
Laura Beth Butler
|
150,000
|
|
7%
|
|
Katie S. Winchester
|
200,000
|
|
%
|
|
Judy Long
|
180,000
|
|
7%
|
|
Sherrell
Armstrong
|
150,000
|
|
5%
|
|
Incentive Compensation Plan
With
the exception of Ms. Winchester, whose compensation is determined in accordance
with the terms of her employment agreement, as described in the section below
entitled Executive Compensation Summary Compensation table Employment
Agreements, each of the Named Executive Officers is eligible for a cash incentive
bonus under our incentive compensation plan. The incentive compensation plan
provides bonus cash compensation opportunities based on corporate, business
unit and individual performance goals established each year by the Compensation
Committee. For 2011 cash bonuses, the level of incentive compensation for the
four eligible Named Executive Officers was based on a minimum return on equity
of 9.0% for the Company. Because our return on equity was 12.20% for the year
ended December 31, 2011, each of the eligible Named Executive Officers received
a cash incentive bonus under the incentive compensation plan. After the amount
of each earned bonus is determined for each eligible Named Executive Officer,
as discussed below, up to 25% of each such bonus can be deducted from the total
amount actually paid if the executive does not meet or exceed personal business
development goals during the plan year.
15
For 2011, all eligible Named Executive
Officers met or exceeded their respective personal business development goals
and, therefore, no cash incentive bonuses were reduced for this metric.
Cash incentives are paid
annually in January following the year in which the incentives are earned. The
following bonuses were paid to the Named Executive Officers in 2012 based on
achievement of corporate and individual performance goals for 2011:
|
Percentage
of Potential
Bonus Received
|
Incentive
Plan Compensation
|
Jeffrey D. Agee
|
90%
|
$117,054
|
|
Laura Beth Butler
|
90%
|
67,500
|
|
Katie S. Winchester
|
N/A
|
|
|
Judy Long
|
90%
|
81,000
|
|
Sherrell
Armstrong
|
90%
|
67,500
|
|
The incentive plans for our executives and other
employees are designed to promote efficient and effective individual job
performance, provide accountability for specific job responsibilities and are
directly aligned with our strategic plan to promote achievement of specific
strategic initiatives and objectives. Efficient and effective job performance
and achievement of key objectives of our strategic plan is in the interest of
shareholders and creates long-term shareholder value. The strategic plan is
divided into four major areas employees, shareholders, customers and risk
management. The various components of the incentive plan relate to these areas
and the plan has various components that balance risk and reward. Furthermore,
executives and other employees are shareholders of the Company through
ownership in individual shares and/or ownership through participation in our ESOP.
Ownership in the Company provides an incentive for executives and other
employees to pursue actions that drive long-term shareholder value rather than
pursuing short-term goals that may expose us to material risk.
Prior
to 2011, the Compensation Committee had established separate, individualized
incentive compensation plans for the Named Executive Officers.
For 2011, however, the Compensation Committee adopted
a single incentive plan for Messrs. Agee and Armstrong and Mss. Butler and
Long.
The adoption of a single incentive
plan was a strategic effort to ensure that the Named Executive Officers are
equally accountable and responsible for all key areas of our performance.
The 2011 plan provided an incentive of 25% to 50% of
base salary based on performance in certain categories. Performance was
measured using a balanced scorecard matrix, which was aligned with our
strategic goals of creating long-term shareholder value and protecting the
interests of the Banks depositors
.
The balanced scorecard matrix for 2011
included the following five, equally-weighted categories:
-
Employees (comprised of employee
turnover rate and results of corporate culture surveys);
-
Customers;
-
Growth and Innovation (comprised
of growth in total assets, Tier I leverage ratio, growth in services per
household, household retention and innovation);
-
Shareholder Return (comprised of
the Companys return on equity, total shareholder return and dividend yield);
and
-
Regulatory Ratings.
Based on a comparison of the 2011 performance to the
targets established by the Compensation Committee for each category, an overall
rating of 1-5 (i.e., low to high) was assigned for each category. For 2011, the
performance metrics, targets, actual performance and resultant ratings were as
follows:
16
|
|
|
|
Employee Turnover
|
<18%
|
8%
|
4.5
(1)
|
Corporate Culture Survey Results
|
92%
|
91%
|
Customers
(2)
|
Qualitative
(2)
|
Achieved
(2)
|
4.74
|
Asset Growth
|
3%
(3)
|
8.1%
|
5.0
(5)
|
Tier I Leverage Ratio
|
>9.0%
|
9.15%
|
Services per Household
|
2.4
|
2.5
|
Household Retention
|
93%
|
94%
|
Innovation
(4)
|
Qualitative
(4)
|
Achieved
(4)
|
Return on Equity
|
(2.81)%
(6)
|
12.20%
|
5
(7)
|
Total Shareholder Return
|
(18.7)%
(6)
|
9.12%
|
Dividend Yield
|
1.73%
(6)
|
3.24%
|
Regulatory Ratings
|
(8)
|
(8)
|
(8)
|
_____________
(1)
|
This overall rating reflects an average
rating based on the achievement of both of the performance metrics related to
the Employees category.
|
(2)
|
This performance metric was qualitative
and based on results of various customer surveys conducted throughout the year,
including independent mystery shopping results.
|
(3)
|
This target was based on the average
asset growth for peer institutions (depository institutions with an asset size
of $300 million to $1 billion), as set forth in the Uniform Bank Performance
Report as of September 30, 2011.
|
(4)
|
This performance metric was qualitative
and considered factors such as new strategic initiatives designed to improve
efficiencies of work flow and various recognitions received by the Company.
During 2011, we implemented, among other things, new sales training, new vault
and lockbox services, improved electronic channels to deliver products,
efficiency strategies related to utilization of technology for improved
operations and communications to customers and increased resources used to
combat fraud. We also received recognition as, among other things, one of the
top agricultural lenders, one of the largest donors to certain charitable
organizations within the communities it serves and as a leader in health and
wellness efforts in West Tennessee.
|
(5)
|
This overall rating reflects an average
rating based on a comparison of the 2011 performance compared to the targets
for each of the performance metrics related to the Growth and Innovation
category.
|
(6)
|
This target was based on information set
forth in the Southeast Public Bank Peer Report, or the Peer Report, produced by
Mercer Capital with data provided by SNL Financial LC as of December 31, 2011.
|
(7)
|
This overall rating reflects an average
rating based on a comparison of the 2011 performance compared to the targets
for each of the performance metrics related to the Shareholder Return
category.
|
(8)
|
This
information is confidential.
|
Based
on the results of the balanced scorecard matrix for 2011, each of Messrs.
Agee and Armstrong and Mss. Butler and Long received incentive pay totaling 45%
of their respective base salaries. The Compensation Committee did not award a
discretionary bonus to any of the Named Executive Officers with respect to 2011
performance.
The above-referenced categories and performance
metrics were designed to incentivize each of the Named Executive Officers (except
for Ms. Winchester) with measurable goals. It is possible, however, that
certain of these metrics, taken alone, could encourage an executive to take
certain risks that could have a material adverse effect on the Company. For
example, with respect to the asset growth performance metric in the Growth and
Innovation category, an executive could attempt to grow assets in a given year
by increasing the loan portfolio without considering the ability of borrowers
to repay such loans, which could increase the amount of non-performing loans in
the future. The Compensation Committee believes, however, that the balanced
scorecard approach mitigates such risks because risk-taking in one performance
metric would likely negatively impact results for another performance metric.
For example, if an executive increased the loan portfolio without considering
the ability of borrowers to repay in order to increase his or her Growth and
Innovation category rating, then ratings for the Regulatory Ratings and
Shareholder Return categories would likely decrease in subsequent years.
Because each of the categories in the balanced scorecard matrix are weighted
equally and address broad areas of overall performance, the Compensation
Committee believes that the executives are not incentivized to take risks that
might have a material adverse effect on the Company.
17
The Compensation Committee believes that the overall
balanced mixture of performance metrics in the incentive compensation plan for
the Named Executive Officers (except for Ms. Winchester) are designed to reward
long-term, rather than short-term, shareholder value. The Employee
performance metric relates to maintaining strong employee retention rates and
strong favorable corporate culture survey results. Low employee turnover rates
and positive corporate culture help foster success with customers and
shareholder return, both long-term and short-term. The Customers performance
metric relates to strategic objectives to provide an exceptional level of
customer service, as measured by customer retention and customer surveys. Incentivizing strong customer service levels helps create long-term shareholder
value by establishing a strong base of profitable customers, which is measured
by their satisfaction with our products and services. The Growth and
Innovation performance metric measures growth in assets and Tier I leverage
ratio. Strong performance in these areas helps create both short-term and
long-term value for the Company and shareholders. The other three factors in
the Growth and Innovation performance metric are designed to incent quality
growth that is in the best interest of the Company and its shareholders. Growth
without regard to quality is not fully rewarded, as it would likely result in
lower ratings or the failure to achieve goals in the other performance metrics
of the incentive plan. For example, if loan growth was pursued without regard
to quality, then target Regulatory Ratings and Shareholder Return goals
would likely not be met in the future. The Shareholder Return performance
metric measures dividend yield, return on equity and total shareholder return
against peer institutions. Dividend yield and return on equity are short-term
measures, but if participants focus on these metrics without regard to the
overall impact on our risk profile, then target Regulatory Ratings goals
would likely not be met in the future. Total shareholder return is used to
measure our performance over time and combines share price appreciation and
dividends paid to provide total return to the shareholder. The Regulatory
Ratings performance metric serves as an independent measure of the overall
risk level and risk management practices of the Company. This is a key
balancing factor in the incentive plan and is designed to promote strong risk
management practices as well as the overall safety and soundness of the
Company.
Perquisites
We
provide our executive officers with perquisites in amounts that we believe help
us attract and retain highly-qualified leaders. For certain executives,
including Mr. Agee and Mss. Winchester and Long, we provide a company
automobile.
Compensation Policies and Practices Related to Risk
Management
The
Compensation Committee and management endeavor to structure compensation for
all employees, including executive officers, in a manner that will not incentivize risk-taking activities above acceptable risk tolerance levels
established by the board of directors and aligned with our strategic plan. The
Compensation Committee endeavors to include broad areas of overall performance
and individual performance in the incentive compensation plan in a balanced
manner so that no executive is incentivized to take risks that might have a
material adverse effect on the Company. In particular, the Compensation
Committee believes that none of the Named Executive Officers are incentivized
to take any such risks, as described in the previous section entitled
Incentive Compensation Plan.
Certain employees of the Company and the
Bank are eligible for commissions and other cash incentives. Management has
adopted various plans and policies that govern potential cash incentives that
are payable to non-executives and the Compensation Committee annually reviews
and approves these plans and policies. Management endeavors to include broad
areas of our overall performance and individual performance in the
various employee incentive compensation plans in a balanced manner so that
no employees are incentivized to take risks that might have a material
adverse effect on us. Management believes that the performance
targets in each employee incentive compensation plan mitigate such risks
because risk-taking in one performance area would likely negatively impact
the results for another performance area, resulting in a decreased commission
or cash incentive for a given employee. Management believes that none
of the non-executive employees are incentivized to take risks that might
have a material adverse effect on the Company.
Retirement Contributions
The
ESOP provides for participation by all employees of the Bank who are at least
21 years old and who have completed a year of service if, at the end of the first 12 consecutive months of
employment, the employee has been credited with at least 1,000 hours of service.
All Named Executive Officers are participants in the ESOP. The Bank annually
makes a discretionary contribution under the ESOP, which equaled 6% of each
participants total compensation for 2011, subject to applicable limits under the
Internal Revenue Code.
18
The Banks 401(k) plan provides for participation by all
employees of the Bank who are at least 21 years old and who have completed a
year of service if, at the end of the first 12 consecutive months of
employment, the employee has been credited with at least 1,000 hours of
service. All Named Executive Officers are participants in the 401(k) plan. The Bank
makes contributions under the 401(k) plan equal to 3% of each participants
total compensation. In addition, employees may elect to make employee
contributions, subject to applicable limits under the Internal Revenue Code.
Total compensation for retirement contribution purposes is based on total
compensation subject to federal income tax for each calendar year.
Endorsement Split Dollar Life Insurance and Imputed
Income Tax Reimbursement Agreements
The Bank has a bank-owned life
insurance plan that offers endorsement split dollar life insurance to certain
officers of the Bank with a position of Vice President and higher. Each Named
Executive Officer participates in this plan. Each of the Named Executive
Officers, except for Ms. Butler, is eligible for death benefits in
post-retirement periods under this plan. Ms. Butler is eligible for death
benefits under the plan limited to the term of her employment. The Bank has
also entered into an Amended and Restated Split Dollar Agreement with each of
Mr. Agee and Mss. Winchester and Long. The agreements combine the death
benefits from the bank-owned life insurance plan with the death benefits
established in the Executive Management Life Insurance Death Benefit Only
Salary Continuation Plans.
Because the endorsement split dollar
life insurance plans create imputed income to each participant without
generating cash to pay the tax expense associated with the imputed income, we
entered into Imputed Income Tax Reimbursement Agreements with each of Mr. Agee
and Mss. Winchester and Long. The Imputed Income Tax Reimbursement Agreements
provide for annual cash payments to the participants until death for the
previous tax year in amounts equal to a portion of federal income taxes
attributable to (i) the income imputed to the participant on the benefit under
the Amended and Restated Split Dollar Agreement and (ii) the additional cash
payments under the Imputed Income Tax Reimbursement Agreement
. Each participant is 100% vested in this benefit and
interest accrues monthly at a discount rate of 7.0%.
19
EXECUTIVE COMPENSATION
Executive
Officers
Our board of directors has the authority to appoint
officers of the Company. Each officer will hold office for such term as may be
prescribed by the board of directors and until such persons successor is
chosen and qualified or until such persons death, resignation or removal. Each
of Mr. Agee and Mss. Winchester and Long has entered into an employment
agreement with the Company. The biographies of Mr. Agee and Mss. Winchester and
Long are provided in the section above entitled Proposal 1: Election of
Directors.
Laura Beth Butler
, age 36, has served as Executive Vice President and Chief Financial
Officer for the Company and the Bank since April 2009. Ms. Butler was appointed
Corporate Secretary of the Bank and the Company in September 2011. Ms. Butler
previously served as Senior Vice President and Chief Financial Officer from
June 2004 to April 2009. Ms. Butler is a Certified Public Accountant and
previously served as Senior Audit Manager of the banking practice of a local
accounting firm from 2000 to 2004.
Sherrell Armstrong
, age 49, has served as Executive Vice President of the Company and
Executive Vice President and Chief Credit Officer for the Bank since January 1,
2007. Mr. Armstrong previously served as Executive Vice President and Loan
Administrator of the Bank from 2003 to 2007. He also served as Senior Vice
President of the Bank from 2002 to 2003 as well as a Vice President and
Commercial Lender of the Bank from 1997 to 2002. Mr. Armstrong has been
employed by the Bank since June 1997.
Summary
Compensation Table
The
table below discloses compensation paid to each of the Chief Executive Officer,
Chief Financial Officer and the three other most highly compensated executive
officers who were serving as executive officers at December 31, 2011 and whose
total compensation for 2011 exceeded $100,000 (the Named Executive Officers).
This tabulation is for the years ended December 31, 2011, 2010 and 2009.
Name and Principal Position
|
|
|
|
Non-Equity
Incentive Plan
Compensation
(2)
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
(3)
|
All Other
Compensation
(4)
|
|
Jeffrey D. Agee
Chief Executive Officer
and President
|
2011
|
$260,120
|
$
|
$117,054
|
|
$1,257
|
|
$38,845
|
|
$417,276
|
2010
|
210,120
|
42,000
|
94,564
|
|
1,201
|
|
26,976
|
|
374,861
|
2009
|
206,000
|
32,000
|
72,163
|
|
1,145
|
|
26,848
|
|
338,156
|
Laura Beth Butler
Chief Financial Officer
|
2011
|
150,000
|
|
67,500
|
|
|
|
21,156
|
|
238,656
|
2010
|
140,000
|
|
48,000
|
|
|
|
9,501
|
|
197,501
|
2009
|
113,300
|
10,000
|
38,000
|
|
|
|
7,124
|
|
168,424
|
Katie S. Winchester
Chairman
|
2011
|
200,000
|
|
|
|
3,093
|
|
44,656
|
|
247,749
|
2010
|
200,000
|
|
|
|
3,411
|
|
32,110
|
|
235,521
|
2009
|
200,000
|
|
|
|
3,671
|
|
32,981
|
|
236,652
|
Judy Long
Chief Operating Officer
|
2011
|
180,000
|
|
81,000
|
|
1,959
|
|
38,208
|
|
301,167
|
2010
|
168,096
|
|
75,678
|
|
1,914
|
|
25,128
|
|
270,816
|
2009
|
164,800
|
|
57,680
|
|
1,867
|
|
24,175
|
|
248,522
|
Sherrell Armstrong
Chief Credit Officer
|
2011
|
150,000
|
|
67,500
|
|
|
|
17,124
|
|
234,624
|
2010
|
142,579
|
15,000
|
21,384
|
|
|
|
8,487
|
|
187,450
|
2009
|
139,783
|
|
20,850
|
|
|
|
8,937
|
|
169,570
|
__________________________
(1)
|
Reflects
a discretionary cash bonus awarded by the Compensation Committee.
|
(2)
|
Reflects cash bonus earned under
incentive compensation plan.
|
(3)
|
The key assumptions used to determine the
present value of the accumulated benefit under the Imputed Income Tax
Reimbursement Agreements are described below in the section entitled Pension
Benefits.
|
(4)
|
Details of the amounts
reported as All Other Compensation for 2011 are as follows:
|
20
|
Taxable
Automobile
Fringe Benefit
|
Imputed Income for
Life Insurance Benefit
|
Retirement
Plan
Contribution
|
|
Jeffrey D. Agee
|
$1,093
|
|
$ 702
|
|
$22,050
|
|
$15,000
|
|
Laura Beth Butler
|
|
|
102
|
|
18,054
|
|
3,000
|
|
Katie S. Winchester
|
6,193
|
|
4,471
|
|
18,992
|
|
15,000
|
|
Judy Long
|
3,176
|
|
982
|
|
22,050
|
|
12,000
|
|
Sherrell Armstrong
|
|
|
319
|
|
16,805
|
|
|
|
__________________________
(a)
|
Named
Executive Officers who are also directors or attend board meetings as Corporate
Secretary receive fees for board meetings they attend but not for Bank board
committee meetings. For additional information about fees for board meetings,
see the section below entitled Director Compensation. Compensation for service by Named Executive Officers on
our board of directors and the Bank board of directors during the year ended
December 31, 2011 is reflected in the following table:
|
|
Fees Earned
or
Paid in Cash
|
|
|
Jeffrey
D. Agee
|
$ 4,000
|
|
$10,000
|
|
$15,000
|
|
Laura
Beth Butler
|
3,000
|
|
|
|
3,000
|
|
Katie
S. Winchester
|
4,000
|
|
11,000
|
|
15,000
|
|
Judy Long
|
11,000
|
|
1,000
|
|
12,000
|
|
__________________________
* All Other Compensation consists of
director fees paid to charitable organizations.
Employment Agreements
Employment
agreements are currently in effect for each of Mr. Agee and Mss. Long and Winchester. Agreements for Mr. Agee and Ms. Long include severance provisions in the event
the executive voluntarily terminates his or her employment or the executive is
terminated under certain circumstances, including without cause or in
connection with a change in control, as specified below. Under the employment
agreements for Mr. Agee and Ms. Long, cause generally means (i) the
conviction of the executive or the rendering of a final non-appealable judgment
for the willful and continued failure to substantially perform his or her
duties under the agreement, our policies or federal or state law, which breach
of duty materially adversely affected the safety and soundness of the Company
or (ii) the non-appealable conviction of a felony.
Further, change in control generally means (i) the
acquisition by any person or group of persons of the shares of the Company or
the Bank which, when added to any other shares beneficially owned by such
acquiror, results in ownership by any person(s) of 10% of such stock or which
would require prior notification under federal or state banking laws or
regulations, or (ii) the occurrence of any merger, consolidation or
reorganization to which the Company or the Bank is a party and to which the
Bank or the Company is not a surviving entity, or the sale of substantially all
assets of the Company or the Bank.
Under the employment agreements for Mr. Agee and Ms.
Long, if termination by the Company for cause occurs before, coincident with or
after a change in control or termination by the executive occurs prior to a
change in control (including by reason of death, disability or retirement), the
executive is entitled to receive (a) his or her base salary at the annual rate
in effect through the last day of the month in which the termination occurs,
(b) a pro-rata portion of any bonus earned prior to the date of termination to
the extent not paid and (c) any amounts due under any other benefit plan in
effect at the
date of termination. If
termination by the Company without cause occurs at least six months before a
change in control, the executive is entitled to receive payments under the
agreement through the end of the term of the agreement without further
automatic extensions. Both of these employment agreements are renewable
annually in April.
In the event that either Mr. Agee or Ms. Long is
terminated without cause or terminates his or her employment coincident with or
following a change of control (including by reason of death, disability or
retirement), the employment agreements provide for compensation in addition to
the amount specified above that the executive would receive upon termination for
cause. In these circumstances, the executive would also receive a lump sum cash
payment in an amount equal to two times compensation paid in the preceding
calendar year, or scheduled to be paid to the executive during the year of the
termination, whichever is greater, plus an additional amount sufficient to pay
United States income tax on such lump sum amount; provided, however, that if
the lump sum payment, together with other payments that the executive is
entitled to receive from the Company, would constitute a parachute payment
under Section 280G of the Internal Revenue Code, the payment will be reduced to
the largest amount that would result in no portion of the lump sum payment
being subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code. For purposes of this calculation, compensation is equal to the amount of
total compensation reported or to be reported on the executives Form W-2 for
the applicable year.
21
Pursuant to these employment agreements as amended by
the Amended and Restated Split Dollar Agreements (described above in the
section entitled Compensation Discussion and Analysis Endorsement Split
Dollar Life Insurance and Imputed Income Tax Reimbursement Agreements), we
have purchased a life insurance policy for each of Mr. Agee and Ms. Long with a
face amount of $650,000. Upon the
death of Mr. Agee prior to separation of service, we will pay an amount
equal to $650,000 from the proceeds of the policy to the person(s) he properly
designated or the personal representative of the his estate. Upon the death of
Mr. Agee after separation of service, we will pay an amount equal to $300,000
from the proceeds of the policy to the person(s) he properly designated or the
personal representative of his estate. Upon the death of Ms. Long prior to or
after separation of service, we will pay an amount equal to $650,000 from the
proceeds of the policy to the person(s) she properly designated or the personal
representative of her estate. All proceeds received from the policies in excess
of these amounts will be retained by the Company to offset the cost of
providing these benefits.
The
employment agreement with Ms. Winchester was amended and restated effective
January 1,
2012 to provide for part-time
employment with annual base compensation of $100,000 plus payment of premiums
on her long-term care insurance. This employment agreement is renewable
annually in January. Additional benefits include payment of premiums on health
insurance and use of a bank-owned vehicle. Ms. Winchester participates in the
ESOP and 401(k) plan and will serve as a member of the board during the term of
her employment for so long as shareholders continue to elect her. Ms.
Winchester does not participate in the incentive compensation plan offered to
other Named Executive Officers.
Pursuant
to her Amended and Restated Split Dollar Agreement (described above in the
section entitled Compensation Discussion and Analysis Endorsement Split
Dollar Life Insurance and Imputed Income Tax Reimbursement Agreements), we have
purchased a life insurance policy for Ms. Winchester with a face amount of
$850,000. Upon the death of Ms. Winchester prior to or after separation of
service, we will pay an amount equal to $850,000 from proceeds of the policy to
the person(s) she properly designated or the personal representative of her
estate. All proceeds received from the policy in excess of this amount will be
retained by the Company to offset the cost of providing the benefit.
Grants
of Plan-Based Awards
The following table sets forth certain information
regarding incentive compensation plan awards granted to the Named Executive
Officers during 2011:
|
Estimated Future Payouts Under
Non-
Equity Incentive Plan Awards
|
|
|
|
Jeffrey D. Agee
(1)
|
$65,030
|
$130,060
|
|
Laura Beth Butler
(1)
|
37,500
|
75,000
|
|
Katie S. Winchester
|
|
|
|
Judy Long
(1)
|
45,000
|
90,000
|
|
Sherrell Armstrong
(1)
|
37,500
|
75,000
|
|
__________________
(1) The
incentive compensation plan for this Named Executive Officer did not specify a
maximum payout amount.
Pension Benefits
The following table provides
information regarding the present value of the accumulated benefit to each of
the Named Executive Officers under the corresponding Imputed Income Tax
Reimbursement Agreement, each of which is a non-qualified defined benefit plan
and not a pension plan, as of December 31, 2011:
22
|
|
Number of
Years Credited Service
|
Present Value
of Accumulated Benefit
|
Payments
During Last Fiscal Year
|
Jeffrey D. Agee
|
Imputed Income Tax Reimbursement
Agreement
|
N/A
|
$ 24,280
|
|
$ 356
|
|
Laura Beth Butler
|
|
|
|
|
|
|
Katie S. Winchester
|
Imputed Income Tax Reimbursement
Agreement
|
N/A
|
129,999
|
|
5,311
|
|
Judy Long
|
Imputed Income Tax Reimbursement
Agreement
|
N/A
|
40,520
|
|
723
|
|
Sherrell Armstrong
|
|
|
|
|
|
|
Under each
Imputed Income Tax Reimbursement Agreement, the
present value of the accumulated benefit consists of two components service
costs and interest costs. Service costs are based on the net present value of
the sum of payments in accordance with each participants agreement. Interest
costs are credited at an interest rate of 7%.
Potential Payments Upon Termination or
Change-in-Control
We have entered into certain
agreements and maintain certain plans that will require us to provide
compensation to Mr. Agee and Ms. Long in the event of a termination of
employment or change in control. We are not required to make any payments to
Mr. Armstrong or Mss. Winchester or Butler upon their termination or a change
in control, except for death benefits from life insurance plans described above
in the section entitled Compensation Discussion and Analysis Endorsement
Split Dollar Life Insurance and Imputed Income Tax Reimbursement Agreements.
The amount of compensation payable to each Named Executive Officer if each
situation occurred on December 31, 2011 is listed in the tables below.
Jeffrey D. Agee
Executive
Benefits and Payments upon
Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
$79,818
(1)
|
$
|
$731,701
(2)
|
$650,000
(3)
|
Federal Tax Gross-Up Payments
|
|
|
|
256,095
(4)
|
|
Laura Beth Butler
Executive Benefits
and Payments upon
Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash
Payments
|
$
|
$
|
$
|
$
|
$300,000
(3)
|
Federal Tax Gross-Up Payments
|
|
|
|
|
|
Katie S. Winchester
Executive Benefits
and Payments upon
Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash
Payments
|
$
|
$
|
$
|
$
|
$850,000
(3)
|
Federal Tax Gross-Up Payments
|
|
|
|
|
|
Judy Long
Executive Benefits
and Payments upon
Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash
Payments
|
$
|
$55,233
(1)
|
$
|
$506,326
(2)
|
$650,000
(3)
|
Federal Tax Gross-Up Payments
|
|
|
|
177,217
(4)
|
|
23
Sherrell Armstrong
Executive Benefits
and Payments upon
Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash
Payments
|
$
|
|
$
|
|
$
|
|
$
|
|
$350,000
(3)
|
|
Federal Tax Gross-Up Payments
|
|
|
|
|
|
|
|
|
|
|
_________________
(1)
|
Pursuant to the Named Executive Officers
employment agreement, the amount shown reflects a severance payment equal to
the executives base salary at the annual rate for the period from December 31,
2011 to the end of the current term of the agreement, April 18, 2012, and
assumes that the termination occurs at least six months before a change in
control.
|
(2)
|
Pursuant to the Named Executive Officers
employment agreement, the amount shown reflects a severance payment equal to
two times the compensation that is subject to federal income taxes for 2011.
|
(3)
|
Pursuant to the Named Executive Officers
Amended and Restated Split Dollar Agreement, the amount shown reflects the
proceeds from a life insurance policy purchased and maintained by the Company,
offset by our cost in providing the benefit. For Mr. Agee, the amount shown
reflects a payment upon his death prior to separation of service.
|
(4)
|
Pursuant to the Named Executive Officers
employment agreement, the amount shown reflects an amount sufficient to pay
income tax on the severance amount, assuming a tax rate of 35%.
|
24
DIRECTOR COMPENSATION
The following table provides information with respect
to director compensation for directors who were not Named Executive Officers
for the fiscal year ended December 31, 2011:
|
Fees Earned or
Paid in Cash
|
Change in Pension Value and
Nonqualified Deferred
Compensation Earnings
(1)
|
All Other
Compensation
(2)
|
|
Eddie E. Anderson
|
$20,000
|
|
$
|
$ 2,000
|
|
$ 22,000
|
|
J. Walter Bradshaw
|
11,000
|
|
|
6,000
|
|
17,000
|
|
James Daniel Carpenter
|
9,000
|
|
|
8,000
|
|
17,000
|
|
William C. Cloar
|
17,000
|
|
|
|
|
17,000
|
|
Richard W. Donner
|
24,000
|
|
|
8,000
|
|
32,000
|
|
Bentley F. Edwards
|
21,000
|
|
|
1,000
|
|
22,000
|
|
Larry W. Gibson
|
20,000
|
|
|
2,000
|
|
22,000
|
|
Christian Heckler
|
13,750
|
|
|
182,683
|
|
196,433
|
|
Ralph E. Henson
|
24,500
|
|
989
|
8,500
|
|
33,989
|
|
Barry T. Ladd
|
26,000
|
|
979
|
1,000
|
|
27,979
|
|
John M. Lannom
|
31,500
|
|
|
|
|
31,500
|
|
Stallings Lipford
(3)
|
3,500
|
|
|
52,788
|
|
56,288
|
|
Milton E. Magee
|
34,000
|
|
|
|
|
34,000
|
|
Allen G. Searcy
|
32,000
|
|
|
|
|
32,000
|
|
G. W. Smitheal
|
20,000
|
|
|
2,000
|
|
22,000
|
|
David R. Taylor
|
20,500
|
|
|
13,000
|
|
33,500
|
|
Larry S. White
|
1,000
|
|
|
20,500
|
|
21,500
|
|
Dwight Steven Williams
|
14,000
|
|
|
8,000
|
|
22,000
|
|
Joseph S. Yates
|
15,500
|
|
|
1,000
|
|
16,500
|
|
__________________________
(1)
|
The Bank has entered an Imputed Income
Tax Reimbursement Agreement, as described in the section above entitled
Compensation Discussion and Analysis
Endorsement Split Dollar Life
Insurance and Imputed Income Tax Reimbursement Agreements, with each of
Messrs. Henson and Ladd. The key assumptions used to determine the present
value of the accumulated benefit under the Imputed Income Tax Reimbursement
Agreements are described above in the section entitled Executive Compensation
Pension Benefits. Participant information for these directors is as follows:
|
|
|
Number of
Years Credited
Service
|
Present Value
of Accumulated
Benefit
|
Payments
During Last
Fiscal
Year
|
Ralph E. Henson
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
$75,704
|
|
$3,853
|
|
Barry T. Ladd
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
75,093
|
|
3,824
|
|
(2) In general, the amounts reported as All Other
Compensation consisted of fees contributed to charitable organizations, at the
election of the respective director. Details of the aggregate amounts that
exceeded $10,000, however, are as follows:
|
|
Non-Equity
Incentive Plan Compensation
|
|
Taxable
Automobile
Fringe Benefit
|
Imputed
Income
for Life Insurance
Benefits
|
Retirement
Plan
Contribution
|
Fees Paid to
Charitable
Organizations
|
Christian Heckler
|
$136,578
|
|
$24,035
(a)
|
|
$1,154
|
|
$3,807
|
|
$183
|
|
$15,926
|
|
$ 1,000
|
|
Stallings Lipford
|
48,140
|
|
|
|
|
|
|
|
|
|
4,648
|
|
|
|
David R. Taylor
|
|
|
|
|
|
|
|
|
|
|
|
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13,000
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Larry S. White
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|
|
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|
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|
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|
|
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20,500
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__________________________
(a) Reflects cash bonus earned
under incentive compensation plan.
(3) Mr. Lipford's
service on the board terminated May 23, 2011 due to death.
25
The board of directors
establishes director fees on an annual basis. Directors who are executive
officers of the Bank or any of its subsidiaries receive fees for service on the
board, but do not receive additional compensation for service on a Bank board
committee. In 2011, directors were paid $500 for each Bank board meeting
attended as well as an annual retainer fee of $6,000. In addition, annual fees
were paid in the amount of $3,000 to each of Ms. Winchester and Messrs. Heckler
and Agee for service on our Southwest Region Advisory Board. This Advisory
Board considers issues specific to customers in our southwest markets.
We
pay additional amounts annually for service on various Bank board committees.
Members of the Audit Committee and Corporate Governance/Nominating/Compensation
Committee are each paid an annual fee of $10,000 with an additional $2,000 paid
to each committee chairman. Outside directors serving on all other Bank board
committees (Trust, CRA, Information Technology and Risk)
are compensated
at $5,000 annually, except Executive Committee members (Messrs. Anderson,
Donner, Henson, Magee, Searcy and White) who receive $10,000 annually.
All director fees are paid in cash.
Directors may elect to have all or any portion of their fees donated to a
charitable organization qualifying under Section 501(c)(3) of the Internal
Revenue Code.
26
COMPENSATION COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed the section titled
Compensation Discussion and Analysis with management. Based on the review and
discussions with management, the Compensation Committee recommended to the
board that the Compensation Discussion and Analysis be included in this proxy
statement and incorporated by reference into our Annual Report on Form 10-K for
the year ended December 31, 2011.
Compensation
Committee:
|
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Milton
Magee, Chairman
|
Richard
Donner
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John Lannom
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Allen Searcy
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David Taylor
|
27
AUDIT COMMITTEE REPORT
The role and responsibilities of the Audit Committee
are set forth in the committees charter, a copy of which
can
be found in the About Us Investor Relations section of our website at
www.firstcitizens-bank.com. In fulfilling its responsibilities, the Audit
Committee:
-
Has reviewed and discussed the
audited financial statements with management.
-
Has discussed with Alexander Thompson Arnold PLLC the matters required to
be discussed by the statement on Auditing Standards No. 61, as amended (AICPA,
Professional
Standards
, Vol. 1. AU Section 380), as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
-
Has received written disclosures
and the letter from the independent accountants required by applicable
requirements of the Public Company Accounting Oversight Board regarding the
independent accountants communications with the audit committee concerning
independence, and has discussed with the independent accountants the
independent accountants independence.
Based on the review and discussions
referred to above, the Audit Committee recommended to the Companys board of
directors that the audited financial statements be included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2011 and for filing
with the Securities and Exchange Commission.
Audit Committee:
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David Taylor, Chairman
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Bentley Edwards
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Barry Ladd
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John Lannom
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G. W. Smitheal
|
28
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We conduct certain transactions with
executive officers, directors, principal shareholders and their affiliates
(collectively referred to hereafter as related persons). Such transactions
are conducted in the ordinary course of business and consist primarily of loan
and deposit activities. Extensions of credit to related persons are governed by
board-approved policies. Such policies are designed and implemented to comply
with applicable regulations including but not limited to Regulation O (12 CFR
215). Our Code of Conduct provides guidance regarding transactions with related
persons. Written policies and procedures as well as the Code of Conduct require
related person transactions to be entered into under substantially the same
terms as unrelated person transactions. All non-lending transactions with
related persons of a material nature must be approved by the board of
directors.
Banking transactions in the ordinary
course of business with related persons are on substantially the same terms,
including interest rates and collateral on loans, as those prevailing at the
time for comparable loans with persons not related to the Company. An affiliate
includes a corporation or other entity of which an officer or director of the
Company is an officer, partner, or 10% shareholder, any trust or estate of
which he is a trustee, executor or significant beneficiary or any relative or
spouse or spouses relative who lives in his home. These loans do not represent
unfavorable features or more than a normal risk of collectability. These loans aggregated
$6.5 million and represented approximately 6.3% of total equity capital as of
December 31, 2011.
29
GENERAL INFORMATION
Section
16(a) Beneficial Ownership Reporting Compliance
Our directors and certain of our
officers are subject to reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended. Based solely on a review of
relevant filings and representations made to us by these persons, all changes
in beneficial ownership of securities by insiders were reported to the
Securities and Exchange Commission in 2011 on a timely basis.
Proposals by Shareholders/Director Selection
Shareholder
proposals intended to be presented in proxy materials to be mailed in 2013 must
be submitted by certified or registered mail to Laura Beth Butler, Corporate Secretary,
First Citizens Bancshares, Inc., P.O. Box 370, Dyersburg, Tennessee 38025-0370. Such proposals must include proof of ownership of our common stock in accordance
with Rule 14a-8(b)(2) promulgated under the Securities Exchange Act of 1934, as
amended. We must receive all such proposals no later than November 14, 2012 in order for the nomination or proposal
to be included in our proxy statement. Shareholder proposals submitted after November
14, 2012 will not be included in our proxy statement, but may be included in
the agenda for our 2013 annual meeting if properly submitted to our Corporate Secretary
at the address listed above.
Names
of nominees to be proposed for election to the board of directors other than
those made by the Nominating Committee must be delivered in writing to the Corporate
Secretary of the Company no later than December 14, 2012. The written notice
must include the full name of the proposed director, age and date of birth,
educational background and a list of business experience and positions held by
the proposed director for the preceding five years. The notice must include
home and business addresses and telephone numbers. In addition, the submission
must include a signed representation by the nominee to timely provide all
necessary information requested by the Company in order that disclosure
requirements may be met in the solicitation of proxies for the election of
directors. Shareholder nominations submitted after November 14, 2012 but before
December 14, 2012 will not be included in our proxy materials, but may be
included in the agenda for our 2013 annual meeting if the preceding
requirements are satisfied. The name of each nominee for director must be
placed in nomination by a shareholder present in person at the annual meeting.
The nominee must also be present in person at the annual meeting for the
nomination to be made.
Shareholder Communication
Shareholders desiring to communicate
directly with the board of directors may do so through the Corporate Governance/Nominating/Compensation
Committee by contacting the chairman or any member of the committee. Committee
membership is identified in the About Us Investor Relations section of our
website at www.firstcitizens-bank.com or may be obtained by calling the Audit
Department at 731-287-4275. Letters sent via the U.S. Postal Service may be
mailed to Chairman, Corporate Governance Committee, First Citizens National
Bank Audit Department, P.O. Box 890, Dyersburg, Tennessee 38025-0890. The Chairman of the Corporate Governance Committee will directly forward written
communications to the individual director(s) to whom they are addressed.
Other
Business
The
board of directors knows of no other business other than that set forth herein to
be transacted at the meeting. If other matters requiring a vote of shareholders
arise, persons designated as proxies will vote their judgment on such matters.
If you specify a different choice on the proxy, your shares will be voted in
accordance with the specifications you make.
Annual
Reports
A copy of our Annual Report to
Shareholders for the year ended December 31, 2011 accompanies this proxy
statement.
A copy of our Annual Report on Form 10-K for the year ended
December 31, 2011 will be furnished without charge to any shareholder who
requests such report by sending a written request to:
30
First Citizens Bancshares, Inc.
P.O. Box
370
Dyersburg
, Tennessee 38025-0370
Attention: Laura Beth Butler, Corporate Secretary
Neither the Annual Report to Shareholders nor the
Annual Report on Form 10-K is considered proxy-soliciting material.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting
This proxy statement and our 2011
Annual Report to Shareholders are available in the About Us Investor Relations
section of our website at www.firstcitizens-bank.com. If you wish to attend
the annual meeting and need directions, please call us at (731) 288-4580.
By Order of the Board of Directors
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/s/
Laura Beth Butler
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Laura Beth Butler
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Corporate Secretary
|
Dyersburg
, Tennessee
March 14, 2012
31