Page 7.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
CostAdvisory Vote on Executive Compensation. The affirmative vote of Proxy Solicitation. Trinity will bear the costholders of soliciting proxies. In addition to solicitations by mail, Trinity’s officers, directors or employees may solicit proxiesa majority of the votes represented and voting in person or by telephone. These personsProxy at the Annual Meeting is necessary to approve the non-binding, advisory proposal regarding the compensation of Trinity’s named executive officers. Non-Votes and abstentions are not counted toward the non-binding, advisory proposal regarding the compensation of Trinity’s executive officers. Thus, the effect of an abstention or a Non-Vote is the same as an “Against” vote.
Voting Instructions
Your vote is very important. If you are the record holder of your Shares, you may vote either online, by mail or in person at the meeting. The following are instructions on how to vote using each of the mechanisms provided by Trinity.
Voting Online. Shareholders of record on the Record Date will receive a Notice of Availability of Proxy Materials on or about April 6, 2012. This Notice will include an Online Voting Information page and the codes necessary to vote online. You will receive separate log-in codes for each of your accounts. The log-in codes will also be contained on the Proxy you will receive in the mail on or about April 16, 2012. This information is designed to authenticate your identity and to allow you to vote your Shares and confirm that your instructions have been properly recorded.
| ᶱ | Please have this information available and go to: http://www.lanb.com/Annual-Report.aspx or on the LANB webpage (www.lanb.com) and click on the “TCC Annual Report” link. |
| ᶱ | Click on the words “Vote Here” and enter the Holder ID and Verification Code found on the Online Voting Information page of the Notice of Availability or on your Proxy. |
| ᶱ | Please click on the radio buttons to select how you wish to vote on the electronic Proxy. When you have entered your vote on each of the three items, click once on the “Submit” button. You have then completed voting and will be taken back to the Annual Meeting webpage. |
| ᶱ | You may log on and vote at your convenience, 24 hours a day, 7 days a week. The deadline for voting online is 6:00 p.m. MT on May 17, 2012. |
| ᶱ | If you have multiple accounts, you must repeat the process for each account in order for all shares to be voted. |
| ᶱ | If you vote online and do not wish to change your vote, please do not complete and return the Proxy. |
| ᶱ | Answers to Frequently Asked Questions and instructions for online voting can be found on the TCC Annual Meeting webpage or you can find it directly at http://www.lanb.com/Company-FAQ.aspx. |
Voting by Mail. You will receive a Form of Proxy in the mail on or about April 16, 2012. Complete and sign the Form of Proxy and mail it to Trinity in the accompanying pre-addressed envelope. No postage is required if mailed in the United States. If you do not receive any special or additional compensation for soliciting proxies. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.a Form of Proxy in the separate mailing, please contact us by May 13, 2012.
Voting in Person. If you want to vote in person, please come to the Annual Meeting. We will distribute written ballots to anyone who wants to vote at the Annual Meeting. Please note, however, that if your shares are held in the name of your broker or fiduciary, you will need to arrange to obtain a legal Proxy from your broker or fiduciary, as described above, in order to vote in person at the meeting. Even if you plan to attend the Annual Meeting, you should vote online or complete, sign and return your Proxy in advance of the Annual Meeting in case your plans change.
If you have multiple accounts reflected in Trinity’s stock transfer records and/or in accounts with brokers or fiduciaries, you will receive Holder IDs and Control Numbers in the Notice of Availability for online voting and one Proxy form for each account. Please vote online for each account or complete, sign and return all Proxies to ensure that all of your shares are voted.
If you indicate how you want your Shares voted, they will be voted as instructed. If you submit an online Proxy or sign and return your Proxy, but do not indicate your voting instructions, the shares represented by your Proxy will be voted “for” all three nominees named in this Proxy Statement, “for” the ratification of Trinity’s independent registered public accounting firm and “for” approval of the advisory resolution approving the compensation of Trinity’s named executive officers and in accordance with the judgment of the Proxy judges on any other matter properly brought before the meeting and any adjournments and postponements of the meeting. The Board may, by resolution, provide for a lesser number of directors or designate a substitute nominee in the event a nominee cannot stand for election. In the latter case, shares represented by Proxies may be voted “for” substitute nominees. Proxies cannot be voted for more than three nominees. The Board has no reason to believe any nominee will be unable to stand for re-election.
List of Shareholders. Shareholders
Pursuant to state law and the bylaws of Trinity, the names of the shareholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and the 10 days prior to the Annual Meeting, during regular business hours, at the Corporate Offices at:corporate offices: 1200 Trinity Drive, Third Floor, Los Alamos, New Mexico 87544.
Contact Us.You may find copies of these documentsTrinity’s Proxy Materials at LANB’s website (www.lanb.com) under the “TCC Annual Report” link or directly at http://www.lanb.com/Annual-Report.aspx and. You may find copies of all of Trinity’s filings on the SEC’s website through Trinity’s website:website at http://www.lanb.com/SEC-Filings.aspx. Please contact the Trinity Capital Corporation Stock Representatives, Ada Beth CarothersTaylor Guskey or Danette Clark, to make the following requests:
· | Ifᶱ | if you wish to receive physical copies of these reportsthe Proxy Materials for the current year and/or permanently (please specify); |
· | Ifᶱ | if you currently receive multiple copies of materials and wish to receive only a single copy of these documents for your household; |
· | Ifᶱ | if you currently receive one copy of materials and wish to receive separate copies and do not wish to participate in householding; or |
· | Ifᶱ | if you need to change or correct your name, address or other information. |
You may contact us at:
| | By Telephone at: | (800) 525-9634; (505) 662-1099 or (505) 662-1036 |
| By E-Mail at: | tcc@lanb.com |
| By U.S. Mail:Mail at: | Trinity Capital Corporation |
| | 1200 Trinity Drive, | Stock Representative |
| | Post Office Box 60 |
| | Los Alamos, New Mexico 87544 |
| By E-mail: | tcc@lanb.com |
| By Telephone: | (800) 525-9634 or (505) 662-1099 or (505) 662-1036 |
BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Trinity periodically reviews its corporate governance policies and procedures to ensure that it reports results with accuracy and transparency and maintains compliance with the laws, rules and regulations that govern the operations of Trinity and its wholly-owned subsidiaries. As part of this periodic corporate governance review, the Board reviews and adopts corporate governance policies and practices for Trinity, as appropriate.
Page 8.………………………………………….………………………………Code of Ethics
All Trinity Capital Corporation 2010and all of its subsidiaries’ directors and employees, including Trinity’s principal executive officer, principal financial officer and principal accounting officer or persons performing similar functions, are required to abide by Trinity’s Code of Business Conduct and Business Ethics (the “Code of Ethics”). Accordingly, Trinity does not maintain a separate code of ethics applicable solely to its directors, principal executive officer, principal financial officer and/or its principal accounting officer or the persons performing similar functions. The Trinity Board of Directors believes that this Code of Ethics substantially confirms to the code of ethics required by the rules and regulations of the SEC. The Code of Ethics requires that the directors, executive officers, and employees of Trinity and its subsidiaries, avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in Trinity’s best interests. Under the terms of the Code of Ethics, directors, executive officers and employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics.
Trinity’s Code of Ethics is available on its website at www.lanb.com through the link to “TCC” and “View Corporate Governance” or may be found directly at www.lanb.com/TCC-BCE-Charter.aspx. Trinity intends to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the Code of Ethics by posting such information on its website. No waivers or amendments to Trinity’s Code of Ethics were granted or made in 2011.
Board Leadership Structure
Trinity has a strong, independent Board. It is Trinity’s policy that the Board consists of a majority of independent directors. In 2011, all of Trinity’s seven outside directors were considered independent. Our key committees (Audit, Compensation, Compliance, and Nominating and Corporate Governance) are chaired by, and comprised entirely of, independent directors. While not prohibited by its Bylaws, Trinity’s leadership structure since inception has been organized such that the positions of Chairman of the Board and the Chief Executive Officer (the “CEO”) are filled by two different persons, currently Jerry Kindsfather and William C. Enloe, respectively. The separation of these positions allows for checks and balances with respect to the CEO role and the audit functions of the Board.
Under Trinity’s Bylaws, the Chairman of the Board presides at all meetings of the shareholders and of the Board and its executive sessions during which management and staff are absent. Executive sessions of non-management directors can be requested at any committee or Board meeting and are held several times a year. The President and CEO’s duties include general supervision and control of all of the business affairs of Trinity, as well as the authority to sign certain documents or other instruments which the Board has authorized to be executed. In the absence of the Chairman of the Board, the CEO is authorized to perform all of the duties of the Chairman of the Board.
Board Risk Management
Oversight of risk management is central to the role of the Board. While the full Board is charged with ultimate oversight responsibility for risk management, various committees of the Board and members of management also have specific responsibilities with respect to our risk oversight. Each Board committee has been assigned oversight responsibility for specific areas of risk and risk management, and each committee considers risks within its areas of responsibility. For example, the Audit Committee is responsible for implementing internal audit controls and maintaining the safety, soundness and integrity of the institution by properly identifying, prioritizing, mitigating and managing risk and the steps taken to monitor and minimize such risks. The Audit Committee, along with the Nominating and Corporate Governance Committee, is tasked with ensuring the right risk and compliance culture exists at the organization by requiring adherence to our Code of Ethics and adopting best practices in corporate governance. The Audit Committee has a prominent role in our credit risk management as well as our operational risk, the integrity of our financial statements, compliance, legal risk and overall policies and practices related to risk management. The day-to-day implementation is the responsibility of the Internal Auditor. This individual is independent from management and reports directly to the Audit Committee, which provides regular updates to the full Board. Trinity's Audit Committee meets without management at least once annually with our external auditing firm, and individually with the Internal Auditor, Chief Financial Officer and General Counsel. The report of the Audit Committee is set forth in this Proxy Statement under the heading “Audit Committee Report” below.
The Compensation Committee is chiefly responsible for compensation-related risks. The report of the Compensation Committee is set forth in this Proxy Statement under the heading “Compensation Committee Report on Executive and Employee Compensation” below. In accordance with applicable requirements, the Compensation Committee conducts a risk based assessment of Trinity’s compensation plans, policies and practices to determine whether such plans, policies and practices create risks that are reasonably likely to have a material adverse effect on Trinity. As part of its assessment, the Compensation Committee evaluated Trinity’s compensation plans and programs to determine their propensity to cause undue risk relative to the level of risk associated with Trinity’s business model and operations.
In January 2010, in response to LANB’s entry into an agreement with its primary regulator (the “Agreement”), the Board established the Compliance Committee which is tasked with ensuring compliance with the Agreement and providing an additional review of the risk management and practices of LANB, particularly with respect to credit risk. The Board also has a standing Board Loan Committee which is responsible for ensuring the implementation of policies and procedures to ensure business is conducted within defined risk tolerances for our lending function, including lending policies, credit trends, and concentrations. The Board Loan Committee, along with the Audit Committee, reviews our risks related to credit exposure and the adequacy of our allowance for loan and lease losses and ensures the right risk and compliance culture exists at the organization.
The Board also has an Asset/Liability Management Committee which oversees key aspects of risks related to capital, liquidity, interest rates and market risks. The Board also has a Technology Committee which oversees the technology used, and changes to such technology, in order to ensure the integrity and security of our systems and to address any potential market or reputational risks associated with our service delivery systems. Finally, the Board has a Strategic Planning Committee which analyzes the market and reputational risks of, and ensures alignment between, Trinity's strategic objectives, business processes and resources. Additionally, the Board regularly conducts succession planning during which the CEO discusses the development of talent throughout the organization.
The membership of these committees overlaps with each of our directors serving on several of the committees and all directors are invited and often attend all committee meetings. Each committee reports and makes recommendations to the full Board on significant or risk-related matters within its responsibilities. Such interlocking memberships and sharing of information allows the Board insight into the management of strategic, credit, market, liquidity, compliance, operational and reputational risks facing Trinity. Management provides reports and data to the Board committees as well as participating in discussions. The Board interacts with key members of management within the organization on a regular basis through both Board and committee meetings and has access to these individuals outside of formal meetings.
Director Independence
Trinity annually examines the relationships with each director to determine whether that director can be considered “independent,” “outside,” and “non-employee.” The standards employed by Trinity are consistent with the requirements set forth by the Internal Revenue Code, the SEC and the NASDAQ Stock Market ("NASDAQ"). This analysis is reviewed by the Nominating and Corporate Governance Committee and the full Board. The Board has determined that each director, other than Messrs. William C. Enloe and Steve W. Wells, are independent within the meaning of the rules of the SEC and NASDAQ. In making these determinations, the Board was aware of and considered the loan and deposit relationships with directors and their related interests with which LANB enters into in the ordinary course of business, and any other arrangements which are disclosed under “Related Party Transactions” in this Proxy Statement.
Indemnification
The shareholders approved an amendment to the Articles of Incorporation at the 2003 Annual Meeting restating the indemnification provided to Trinity’s directors. The Articles of Incorporation provide for indemnification of directors to the fullest extent permitted by New Mexico law. This indemnification is provided so that Trinity’s directors may undertake their duties without undue concern regarding their personal liability.
Meetings and Committees of the Board of Directors
The Board of Trinity met 13 times for regularly scheduled meetings during the fiscal year-ended December 31, 2011. The Board of Directors of LANB also met 13 times for regularly scheduled meetings during the fiscal year-ended December 31, 2011. Each director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the meetings of the committees on which he or she served, with the exception of Arthur B. Montoya, Jr.
Attendance by our directors at the Annual Meetings of Shareholders gives directors an opportunity to meet, talk with and hear the concerns of shareholders who attend those meetings. It is Trinity’s policy that all directors shall attend the Annual Meetings, except in the event of illness or other unanticipated conflicts. All of the directors then serving, with the exception of Mr. Montoya and Deborah U. Johnson, attended Trinity’s 2011 Annual Meeting held on May 19, 2011.
2011 Committee Membership
Name | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee |
William C. Enloe (1) | | | |
| Jeffrey F. Howell | X (2) | X | X |
| Deborah U. Johnson | | | X |
| Jerry Kindsfather | | X | |
| Arthur B. Montoya, Jr. | X | | X (2) |
| Stanley D. Primak | | X | X |
| Charles A. Slocomb | X | X | |
Steve W. Wells (1) | | | |
| Robert P. Worcester | X | X (2) | X |
| | | | |
| Number of 2011 Committee Meetings | 4 | 3 | 1 |
| (1) | Messrs. Enloe and Wells are Executive Officers and as such are not members of the Board committees listed. |
| (2) | Committee Chair. |
| | |
Compensation Committee
In 2011, the Compensation Committee of Trinity consisted of Messrs. Worcester (Chair), Kindsfather, Primak and Slocomb and Ms. Howell, each of whom was “independent” as that term is defined by the SEC and NASDAQ. These committee members were also deemed to be “outside” directors under Section 162(m) of the Internal Revenue Code of 1986 and all are “non-employee” directors pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee has a written charter which may be found at LANB’s website under “TCC,” “View Corporate Governance,” then “Compensation Committee” or can be found directly at www.lanb.com/TCC-Compensation-Committee.aspx. The Compensation Committee of Trinity also serves as the Compensation Committee of LANB.
The Compensation Committee is responsible for making recommendations to the Board regarding compensation and incentive compensation awards and plans, and other forms of compensation for Messrs. Enloe and Wells, as well as the contributions toward the ESOP and profit sharing program and short- and long-term incentive compensation for all employees. Trinity is subject to certain compensation limitations and its Compensation Committee is obligated to undertake certain risk assessment reviews of the incentive compensation and compensation plans and policies. Such obligations and other executive compensation requirements are described in more detail under the heading “Compensation Discussion and Analysis – U.S. Treasury’s Capital Purchase Program and Federal Reserve Risk Analysis Rules.” The Compensation Committee regularly conducts such risk assessments and also approves the Compensation Committee Report for inclusion in the Trinity Proxy Statement. The report of the Compensation Committee is set forth in this Proxy Statement under the heading “Compensation Committee Report.”
Audit CommitteeIn 2011, the Audit Committee of Trinity consisted of Ms. Howell (Chair) and Messrs. Montoya, Slocomb and Worcester, each of whom was “independent” as that term is defined in the rules of NASDAQ and met the criteria for independence set forth in Rule 10A-3 of the Exchange Act. The Board has determined that each Audit Committee member is financially literate and has determined that Ms. Howell is an “audit committee financial expert” as defined under SEC rules and regulations by virtue of her background and experience, as described in her biography under the heading “Item I: Election of Directors.” The Audit Committee of Trinity also serves as the Audit Committee for LANB.
The responsibilities of the Audit Committee include the following:
| ᶱ | selecting and retaining Trinity’s independent registered public accounting firm, approval of the services they will perform and review of the results, both with management and in executive session with the accounting firm; |
| ᶱ | reviewing the performance of the independent registered public accountants; |
| ᶱ | reviewing with management and the independent public accounting firm the systems of internal controls, including the adequacy and effectiveness of the systems of internal controls over financial reporting and any significant changes in internal controls over financial reporting, accounting practices and disclosure controls and procedures; |
| ᶱ | reviewing annual and quarterly financial statements and other Trinity filings; |
| ᶱ | reviewing internal audit reports and associated controls; |
| ᶱ | instituting procedures for the receipt, retention and treatment of complaints received by Trinity regarding accounting, internal accounting controls or auditing matters; and |
| ᶱ | assisting the Board in the oversight of: |
| | · | the integrity of Trinity’s consolidated financial statements and the effectiveness of Trinity’s internal control over financial reporting; and |
| | · | the independent registered public accounting firm’s and Internal Auditor’s qualifications and independence. |
The Audit Committee will also carry out any other responsibilities delegated to the Audit Committee by the full Board. The report of the Audit Committee as required by the rules of the SEC is included in this Proxy Statement. See “Audit Committee Report.” The Committee has adopted a written charter which can be found at the LANB website under “TCC” then “View Corporate Governance” then “Audit Committee” or directly at http://www.lanb.com/TCC-Audit-Committee.aspx setting forth the Audit Committee’s duties and functions.
Nominating and Corporate Governance Committee
In 2011, the members of the Nominating and Corporate Governance Committee consisted of Messrs. Montoya (Chair), Worcester and Primak, and Mses. Johnson and Howell. Each member of the Committee was “independent,” as defined by the SEC and NASDAQ. The purpose of the Committee is to evaluate and recommend to the Board nominees for consideration by Trinity’s shareholders to serve as directors and to review and analyze the corporate governance policies and practices of Trinity. The Committee has adopted a written charter, which can be found on LANB’s website under “TCC” then “View Corporate Governance” then “Nominating and Corporate Governance Committee” or directly at http://www.lanb.com/TCC-NCGC-Charter.aspx setting forth the Committee’s duties and functions.
Nominating Process. The Nominating and Corporate Governance Committee follows the procedures contained in Trinity’s Bylaws and the nominating policies and procedures therein to identify, evaluate and select nominees for the Board. The Nominating and Corporate Governance Committee considers candidates suggested by the Board, management and shareholders. Existing directors whose terms will expire at the next Annual Meeting will automatically be evaluated unless that director expresses his or her intent not to stand for re-election.
After a new candidate for director is identified by the Board or nominated by a shareholder, the Committee will compile the information required in Trinity’s Bylaws and will make an initial determination whether to entertain the candidate based on information provided to the Committee, the directors’ own knowledge and any other inquiries made by the Committee. This preliminary determination is also based on Trinity’s director criteria, the current composition of the Board, the balance of management and independent directors, and the need for Audit Committee members or other expertise and any other factor deemed relevant by the Committee. While Trinity does not have a separate diversity policy, the Committee considers diversity in reviewing its current directors and any potential nominees. The Committee places value in a Board composed of characteristics reflective of our communities in terms of gender and race, as well as differing perspectives in terms of professional fields, education, skills, and community service. The Committee has broad discretion to consider any additional factors it deems relevant to an assessment of a proposed nominee’s suitability for the Board. If a candidate satisfies the initial review, the Committee will conduct an interview of the candidate. The Committee conducts interviews with all incumbent directors standing for re-election and reviews their independence, qualifications, conduct, background and areas of expertise. After conducting all interviews and evaluations, the Committee meets in closed-sessions to discuss each nominee and makes its recommendations to the Board. The Board will review the recommendations and make the final determination of which nominees will be presented for election.
In considering potential nominees to the Board, and when evaluating incumbent directors, the Nominating and Corporate Governance Committee shall seek to, among other things, promote collegiality among members of the Board, encourage directors to be active participants in the communities served by Trinity and contribute to organizations located in such communities. The Board has adopted criteria for nominees to serve on Trinity’s Board which can be found on LANB’s website at www.lanb.com under “TCC,” “View Corporate Governance” then “Nominating and Corporate Governance Committee” then “Nominating Policies and Procedures” or directly at http://www.lanb.com/TCC-NCGC-Nominating-Policies.aspx.
The “independence” of non-management nominees will also be taken into account so that at least a majority of the Board will be made up of directors who satisfy the independence standards set forth by NASDAQ and the rules and regulations of the SEC. Information regarding the nominating policies and procedures, the director criteria and Trinity’s Bylaws can be found on LANB’s website under “TCC” and “View Corporate Governance” or can be located directly at http://www.lanb.com/TCC-Corporate-Governance.aspx.
There are no arrangements or understandings between any of the nominees, directors or executive officers and any other person pursuant to which any of Trinity’s nominees, directors or executive officers have been selected for their respective positions. No nominee, director or executive officer is related to any other nominee, director or executive officer. No nominee or director is a director of another “public corporation” (i.e. subject to the reporting requirements of the Exchange Act) or of any investment company. We have no knowledge that any nominee will refuse or be unable to serve, but if any of the nominees are unavailable for election, the holders of the Proxies reserve the right to vote for substitute nominees proposed by the Board.
Shareholder Nomination Procedure. Shareholders may nominate candidates for the Board by following the procedures detailed in Trinity’s Bylaws. The Bylaws and the Shareholder Nominating Procedure can be found on LANB’s website under “TCC,” “View Corporate Governance,” then “Nominating and Corporate Governance Committee” then “Shareholder Nomination Procedures” or directly at http://www.lanb.com/TCC-NCGC-Shareholder-Nominating-Policies.aspx.
The following is a summary of the process for shareholder nominations:
| ᶱ | The shareholder must provide a written statement suggesting an individual as a candidate that includes the information required by Trinity’s Bylaws. |
| ᶱ | The statement must be received by the Corporate Secretary, in the case of an annual meeting, not less than 60 days and not more than 90 days prior to the first anniversary (day and month) of the previous year’s annual meeting or special meeting. |
Nominations that are not received at least 120 days prior to the anniversary of the mailing date of the previous year’s annual meeting will not be considered by the Board for inclusion in Trinity’s Proxy Statement but will be presented for a vote at the Annual Meeting. Shareholder nominations for the 2013 Annual Meeting must be received by Trinity’s Secretary not later than December 7, 2012 to be considered for inclusion in the Proxy Statement and no earlier than February 16, 2013 and no later than March 18, 2013 to be voted upon at the 2013 Annual Meeting.
The shareholder’s written statement must set forth: (a) as to each person whom the shareholder proposes to nominate for election as director: (i) the name, age, business address and residential address of such person; (ii) the principal occupation or employment and business experience for the previous five years of such person; (iii) the class and number of shares of Trinity’s stock which are beneficially owned by such person on the date of the written statement; and (iv) any other information relating to such person that would be required to be disclosed pursuant to rules and regulations promulgated under the Exchange Act; and (b) as to the nominating shareholder giving the written statement: (i) the name and address, as they appear on Trinity’s books, of the nominating shareholder and the name and principal business address of any other record or beneficial shareholder known by the nominating shareholder to support such nominee; and (ii) the class and number of shares of stock which are beneficially owned by the nominating shareholder on the date of such written statement and the number of shares owned beneficially by any other record or beneficial shareholders known by the nominating shareholder to be supporting such nominee on the date of such written statement. All submissions must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. The Nominating and Corporate Governance Committee may request additional information in order to make a determination as to whether to nominate the person for director.
Any deficiencies in a notice of shareholder nomination will be noted by the Corporate Secretary and the nominating shareholder will be informed and provided an opportunity to cure the defect, if possible. The presiding officer will determine whether a nomination was timely made and will make that determination at the shareholders meeting.
No shareholder nominations were received by the Corporate Secretary by March 20, 2012. The Nominating and Corporate Governance Committee has not retained or paid any third parties to assist in the identification of nominees. All of the nominees approved by the Nominating and Corporate Governance Committee for inclusion in this Proxy Statement and listed on the Proxy are incumbent directors standing for re-election.
Board Policies Regarding Communications with the Board of Directors
Trinity’s Board maintains a process for shareholders to communicate with the Board of Directors. Shareholders wishing to communicate with the Trinity Board should send any communication to the General Counsel of Trinity at 1200 Trinity Drive, Los Alamos, New Mexico 87544. The General Counsel of Trinity will forward such communication to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Trinity General Counsel has the authority to discard the communication or take appropriate legal action. Communications will be forwarded to the addressee and/or the appropriate committee chair or director. The General Counsel may summarize the contents of any communication prior to forwarding the message to its intended recipient. Directors may review a log of all communications received or request copies of any communications at any time. Concerns relating to accounting, internal controls and auditing matters will be promptly raised with Trinity’s Internal Auditor, if appropriate, and reported to the Audit Committee.
Trinity’s communication policy is available on LANB’s website (www.lanb.com) under the links to “TCC” and “View Corporate Governance” then “Communication with Directors Policy” or can be found directly at http://www.lanb.com/TCC-commpolicy.aspx. Communications regarding concerns over the management or financial reporting of Trinity can also be addressed directly to the Audit Committee Chair through LANB’s website (www.lanb.com) under the links to “TCC” and “View Corporate Governance” or can be found directly at http://www.lanb.com/AnonContact.aspx or by emailing auditchair@lanb.com.
Certain Relationships and Related Transactions
Trinity’s written Related Party Transaction Policy provides that all relationships between Trinity and any director, executive officer or an entity related to a director or executive officer, will be reviewed, approved or ratified by the Audit Committee of the Board, excluding loan transactions falling within the ordinary course of business with LANB. All transactions will be reviewed, regardless of type, when the transaction is anticipated to or actually meets or exceeds $120,000 in compensation to the director, executive officer or an entity related to a director or executive officer. The review will include the details of the relationship, including the nature of the relationship, the anticipated amount of compensation to be paid under the transaction, and, if possible, a comparison of market rates for similar products or services. The Audit Committee will consider the proposed relationship and either approve or deny the engagement. Additionally, the relationships with directors and their related entities will be reviewed each year as part of the determination of independence of each director and nominee. In the event that a relationship is entered into without prior approval of the Audit Committee, the Committee will be provided with detailed information regarding the relationship for ratification. If the Committee does not ratify the relationship, Trinity will terminate the relationship. Once a relationship has been created, Trinity will cause a request for proposals to be issued to the director, executive officer or entity related to a director or executive officer not less than every five years. This request will serve to ensure that Trinity is obtaining products and services on terms at least as favorable as if they were from an unrelated third party.
The types of transactions, relationships and arrangements that are considered in determining independence but are not disclosed as a related party transaction include, but are not limited to, borrowing relationships and business relationships. Trinity has no indebtedness transactions with its directors or Named Executive Officers (“NEOs”). Trinity is a financial holding company which controls LANB, a national bank. LANB commonly enters into customary loan, deposit and associated relationships with its directors and NEOs, all of which are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features. All loans by LANB to Trinity’s directors and executive officers are subject to the regulations of the Office of the Comptroller of Currency. National banks are generally prohibited from making loans to their directors and executive officers at favorable rates or on terms not comparable to those available to the general public or other employees. LANB does not offer any preferential loans to Trinity’s directors or NEOs.
Security Ownership of Certain
Beneficial Owners, Directors and Management
The following table sets forth certain information with respect to theregarding beneficial ownership of Trinity’s common stockShares as of March 15, 2010,2012 by:
| ᶱ | Any person who is known to Trinity to own beneficially more than 5% of Trinity’s Shares; |
| ᶱ | Each of Trinity’s directors; |
| ᶱ | The NEOs of Trinity; and |
| ᶱ | All current executive officers and Directors as a group. |
All Shares are owned with sole voting and investment power by each person knownlisted, unless otherwise indicated by us to be the beneficial owner of more than 5% of Trinity’s outstanding common stock, by each Director or nominee, by each Executive Officer named in the summary compensation table which can be found later in this Proxy Statement and by all Directors and Executive Officers of Trinity as a group.footnote. Beneficial ownership has been determined for this purpose in accordance with Rule 13d-3 under the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), under which a person is deemed to be the beneficial owner of securities if he or she has or shares voting power or investment power with respect to such securities or has the right to acquire beneficial ownership of securities within 60 days of March 15, 2010.2012. The shares of common stock subject to options currently exercisable or exercisable within 60 days of March 15, 2012 are deemed outstanding for calculating the percentage of outstanding shares of the person holding those options, but are not deemed outstanding for calculating the percentage of any other person. The address for theof each beneficial owner is c/o Trinity, Capital Corporation Employee Stock Ownership Plan f/k/a Los Alamos National Bank Employee Stock Ownership Plan (“ESOP”) isat 1200 Trinity Drive, Los Alamos, New Mexico 87544.87544, unless otherwise indicated by footnote. As of March 15, 2012, there were 6,449,726 Shares outstanding, each share entitled to one vote.
| Beneficial Ownership |
Name of Individual or Individuals in Group | Reporting Type | Beneficial Ownership | Percent of Class |
Trinity Capital Corporation ESOP (1) | 5% Shareholder | 627,030 | 9.74% |
George A. Cowan (2) | 5% Shareholder | 729,097 | 11.32% |
William C. Enloe (3) | Director and Named Executive Officer | 227,372 | 3.53% |
Jeffrey F. Howell (4) | Director | 7,028 | * |
Deborah U. Johnson (5) | Director | 10,000 | * |
Jerry Kindsfather (6) | Director | 124,700 | 1.94% |
Arthur B. Montoya, Jr. (7) | Director | 7,796 | * |
Lewis A. Muir (8) | Director | 286,288 | 4.44% |
Stanley D. Primak (9) | Director | 8,866 | * |
Charles A. Slocomb (10) | Director | 3,336 | * |
Steve W. Wells (11) | Director and Named Executive Officer | 116,879 | 1.81% |
Robert P. Worcester (12) | Director | 8,888 | * |
Daniel R. Bartholomew (13) | Other Named Executive Officer | 21,792 | * |
| | |
All directors and executive officers as a group (11 persons) (14) | 822,945 | 12.78% |
Directors and Executive Officers |
| Name of Individual or Individuals in Group | Reporting Type | Beneficial Ownership | Percent of Class |
| William C. Enloe (1) | Director and Named Executive Officer | 174,535 | 2.67% |
| Jeffrey F. Howell | Director | 7,028 | * |
| Deborah U. Johnson (2) | Director | 11,000 | * |
| Jerry Kindsfather (3) | Director | 189,160 | 2.93% |
| Arthur B. Montoya, Jr. (4) | Director | 15,300 | * |
| Stanley D. Primak (5) | Director | 8,866 | * |
| Charles A. Slocomb (6) | Director | 5,836 | * |
| Steve W. Wells (7) | Director and Named Executive Officer | 119,033 | 1.83% |
| Robert P. Worcester (8) | Director | 9,674 | * |
| Daniel R. Bartholomew (9) | Named Executive Officer | 21,980 | * |
| | | |
Total of Directors and Executive Officers (10) | 562,412 | 8.54% |
* Indicates that the individual or entity owns less than one percent of Trinity’s common stock. |
* Indicates that the individual or entity owns less than one percent of Trinity’s common stock.
Persons known to Trinity to own more than 5% of the outstanding shares |
| Name of Individual or Individuals in Group | Reporting Type | Beneficial Ownership | Percent of Class |
| Trinity Capital Corporation ESOP (11) | 5% Shareholder | 646,675 | 10.02% |
| George A. Cowan (12) | 5% Shareholder | 703,097 | 10.90% |
| (1) | Of the 627,030 shares held by Trinity’s ESOP, all are allocated or will be allocated in 2010 to the individual participants’ accounts, |
(2) | Dr. Cowan’s shares are held by The Delle Foundation, a non-profit corporation controlled by Dr. Cowan and his spouse. |
(3) | Includes 24,350 shares24,740 Shares over which Mr. Enloe shares voting and investment power with his spouse, 63,022 shares65,795 Shares held by Mr. Enloe in Trinity’s ESOP and 140,000 shares84,000 Shares available to Mr. Enloe through the exercise of options over which shares he has no voting power or investment power.options. All options which Mr. Enloe may exercise within 60 days of March 15, 20102012 are included in his percentage of ownership. |
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(4) | This number includes 100 shares held by Ms. Howell’s spouse to which she has disclaimed any beneficial ownership. |
(5)(2) | Ms. Johnson shares voting and investment power in 8,200 shares with her spouse. The remainingholds 1,800 shares are held by Ms. JohnsonShares in her individual retirement account. |
(6) | Includes(3) | Mr. Kindsfather holds 74,868 Shares in the Kindsfather Family Revocable Trust. Mr. Kindsfather’s beneficial ownership also includes 114,292 shares,Shares, one-half of the 228,584 sharesShares held by J&G Investments, in which Mr. Kindsfather is a 50% partner with shared voting and investment power. |
(7) | (4) | Dr. Montoya shares voting and investment power in 7,496 shares15,000 Shares with his spouse. The remaining 300 sharesShares are held by the Arthur B. Montoya, Jr., DDS Profit Sharing Plan over which Dr. Montoya shares voting and investment power. |
(8) | Includes 279,525 shares held in the Lewis and Janice Muir Revocable Trust, of which Mr. Muir and his spouse are the trustees and share voting and investment power, 1,105 shares over which Mr. Muir has sole voting and investment power and 5,658 shares over which his spouse has sole voting and investment power. |
(9)(5) | Includes 8,452 shares over which Mr. Primak shares voting and investment power with his spouse, 206 sharesShares held in his individual retirement account and 208 shares held in the individual retirement account of his spouse. |
(10) | (6) | Mr. Slocomb shares voting and investment power in such sharesShares with his spouse. |
(11) | (7) | Includes 46,850 shares49,004 Shares Mr. Wells owns in Trinity’s ESOP, 12,705 sharesShares held in his individual retirement account, 14,263 sharesShares over which Mr. Wells has sole voting and investment power and 42,000 sharesShares available to Mr. Wells through the exercise of options, over which shares he has no voting or investment power.options. This number includes 1,061 sharesShares held by Mr. Wells’ spouse, obtained prior to marriage, to which he has disclaimed any beneficial ownership. All options which Mr. Wells may exercise within 60 days of March 15, 20102012 are included in his percentage of ownership. |
(12) | (8) | Mr. Worcester shares voting and investment power over such sharesShares with his spouse. |
(13) | (9) | Mr. Bartholomew owns 14,082 shares14,870 Shares through Trinity’s ESOP 10 sharesand 110 Shares over which Mr. Bartholomew shares voting and investment power with his wife and 400 shares owned by a Revocable Trust created by Mr. Bartholomew’s father and will transfer upon death to Mr. Bartholomew.wife. Additionally, 7,000 sharesShares are available to Mr. Bartholomew through the exercise of options, over which shares he has no voting or investment power.options. All options which Mr. Bartholomew may exercise within 60 days of March 15, 20102012 are included in his percentage of ownership. |
(14) | (10) | The total of all Directors and Executive Officers does not include George A. Cowan as he is no longer a Director, but serves as a Director Emeritus and is the beneficial owner of more than 5% of Trinity’s outstanding common stock. The total percentage of ownership for all Directors and Executive Officers includes all options exercisable within 60 daysdays. |
| (11) | Of the 646,675 Shares held by Trinity’s Named Executive Officers.ESOP, all are allocated or will be allocated in 2012 to the individual participants’ accounts. |
| (12) | Dr. Cowan’s Shares are held by The Delle Foundation, a non-profit corporation controlled by Dr. Cowan. The address of Dr. Cowan and The Delle Foundation is 721 42nd Street, Los Alamos, NM 87544. |
Section 16(a) Beneficial Ownership Reporting Compliance. Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that the directors, executive officers and persons who own more than 10% of Trinity’s common stock file reports of ownership and changes in ownership with the Securities and Exchange Commission.SEC. These persons are also required to furnish us with copies of all sectionSection 16(a) forms they file. Based solely on Trinity’s review of the copies of such forms furnished to us and, if appropriate, representations made by any reporting person concerning whether a Form 5 was required to be filed for 2009, we are not aware of any failures to comply with the2011, there was one reported late filing requirements ofrequired under Section 16(a) during 2009.2011. A Form 4 reporting the sale of 23,000 shares of stock on April 29, 2011 by the Delle Foundation, controlled by George A. Cowan, was reported on May 3, 2011.
Page 10.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Board of Directors and Corporate Governance
Trinity’s Board conducts its business through meetings of the Board and through the activities of its committees. The Board meets monthly and may schedule special meetings as needed. During 2009, Trinity’s Board held 13 meetings. Each of Trinity’s directors attended at least 75% of the total number of Board meetings held and meetings of the committees on which such directors served during 2009. It is Trinity’s policy that all directors shall attend the Annual Meetings, except in the event of illness or other unanticipated conflicts. All of the directors then serving attended Trinity’s 2009 Annual Meeting held on May 21, 2009.
The Board has established a standing Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, among other committees. The table below provides membership and meeting information for each of these committees.
Name | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee |
William C. Enloe 1 | | | |
| Jeffrey F. Howell | X2 | | X |
| Deborah U. Johnson | | | X |
| Jerry Kindsfather | | X | |
| Arthur B. Montoya, Jr. | X | | X2 |
| Lewis A. Muir | X | X | |
| Stanley D. Primak | | X | X |
| Charles A. Slocomb | X | X | |
Steve W. Wells 1 | | | |
| Robert P. Worcester | X | X2 | X |
| | | | |
Number of 2009 Committee Meetings | 4 | 5 | 1 |
1 | Messrs. Enloe and Wells are Executive Officers and as such are not members of the Board committees listed. |
2Committee Chair.
Trinity's Board Leadership Structure and Board Oversight of Risk. Trinity has a strong, independent Board of Directors. It is Trinity’s policy that the Board consists of a majority of independent directors. Our key committees are chaired by and comprised entirely of independent directors (Audit, Compensation, Compliance and Nominating and Corporate Governance). In addition, while Trinity's Bylaws allow for the Chief Executive Officer ("CEO") and Board Chair to be held by the same person, the Board believes a separation of these roles reflects good corporate governance practices. Consequently, Trinity's CEO and Board Chair have been separate positions from the Company's inception. The separation of these positions allows for checks and balances with respect to the CEO role and the audit functions of the Board The Board Chair is responsible for conducting the business at Trinity's Board of Director Meetings and its executive sessions during which management and staff are absent. Executive sessions of non-management directors can be requested at any committee or Board of Directors meeting and are held several times a year.
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While the full Board is charged with ultimate oversight responsibility for risk management, various committees of the Board and members of management also have specific responsibilities with respect to our risk oversight. Each Board committee has been assigned oversight responsibility for specific areas of risk and risk management, and each committee considers risks within its areas of responsibility. For example, the Audit Committee is responsible for implementing internal audit controls and maintaining the safety, soundness and integrity of the institution by properly identifying, prioritizing, mitigating and managing risk. The Audit Committee, along with the Nominating and Corporate Governance Committee, is tasked with ensuring the right risk and compliance culture exists at the organization by requiring adherence to our Code of Business Conduct and Business Ethics and adopting best practices in corporate governance. The Audit Committee has a prominent role in our credit risk management as well as our operational risk, the integrity of our financial statements, compliance, legal risk and overall policies and practices related to risk management. The day-to-day implementation is the responsibility of the Internal Auditor. This individual is independent from management and reports directly to the Audit Committee, who provides regular updates to the full Board. Trinity's Audit Committee meets in executive session at least once annually with our external auditing firm, the Internal Auditor, Chief Financial Officer and General Counsel.
As previously disclosed, in January of 2010, Los Alamos National Bank became subject to an agreement with the Office of the Comptroller of the Currency, requiring the Bank to take certain actions to address risk management and capital matters (the "Agreement"). In response to the Agreement, the Board established the Compliance Committee which is tasked with ensuring compliance with the Agreement, as well as providing an additional review of the risk management and practices of the Bank, particularly with respect to credit risk. In addition, the Board has a Board Loan Committee which is responsible for ensuring the implementation of policies and procedures to ensure business is conducted within defined risk tolerances for our lending function, including lending policies, credit trends, and concentrations. This committee, along with the Audit Committee, reviews our risks related to credit exposure and the adequacy of our allowance for loan and lease losses and ensures the right risk and compliance culture exists at the organization. The Board also has a Asset/Liability Management Committee which oversees key aspects of risks related to capital, liquidity, interest rates and market risks. The Board has a Compensation Committee which oversees Trinity's compensation practices to ensure they do not encourage unnecessary or excessive risk taking by our management or employees and we comply with all requirements of the Treasury's Capital Program. The Board also has a Technology Committee which oversees the technology used and changes to such technology in order to ensure the integrity and security of our systems and to address any potential market or reputational risks associated with our service delivery systems. Finally, the Board has a Strategic Planning Committee which analyzes the market and reputational risks of, and ensures alignment between, Trinity's strategic objectives, business processes and resources. Additionally, the Board conducts succession planning at least annually, during which the CEO discusses the development of talent throughout the organization.
The membership of these committees overlaps with all directors serving on several of the committees. Each committee reports out to the full Board on significant or risk-related matters within its responsibilities. Such interlocking memberships and sharing of information allows the Board insight into the management of strategic, credit, market, liquidity, compliance, operational and reputational risks facing the company. Management provides reports and data to the Board committees as well as participating in discussions. The Board interacts with key members of management within the organization on a regular basis through both Board and committee meetings and has access to these individuals outside of formal meetings.
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Director Independence. Trinity annually examines the relationships with each director to determine whether that director can be considered “independent,” “outside,” and “non-employee.” These standards are consistent with the requirements set forth by the NASDAQ stock market ("Nasdaq") and can be found on its website at http://www.lanb.com/TCC-Nominating-and-Corporate-Governance-Committee-.aspx. This analysis is reviewed by the Nominating and Corporate Governance Committee and the full Board. All of Trinity’s non-employee directors, with the exception of Ms. Johnson, were deemed independent in 2009. Ms. Johnson’s employer, Rick Johnson & Company, Inc. (“RJC”), an advertising and marketing firm, received over 5% of its gross revenue in 2009 from Trinity, resulting in Ms. Johnson not being considered “independent” under the Nasdaq rules.
Audit Committee. The members of the Audit Committee are Ms. Howell (Chair) and Messrs. Montoya, Muir, Slocomb, and Worcester, each of whom served on the Committee in 2009 and will continue in 2010 (with the exception of Mr. Muir who, as described below, is not eligible to stand for re-election under the provisions of Trinity's Bylaws as he is over the age of 75 at the time of the 2010 Annual Meeting when his current term expires). Each member of the Committee is deemed to be “independent” as discussed above. The Board has determined that Ms. Howell qualifies and has appointed her to serve as the “audit committee financial expert” as defined in the SEC’s rules and regulations. The Board based this decision on Ms. Howell’s extensive professional experience, as described in her biography on page 42 of this Proxy Statement.
The Audit Committee is responsible for the following:
· | selection and retention of Trinity’s independent registered public accounting firm, approval of the services they will perform and review of the results, both with management and in executive session with the accounting firm; |
· | reviewing the performance of the independent registered public accountants; |
· | reviewing with management the systems of internal controls, including the adequacy and effectiveness of the systems of internal controls over financial reporting and any significant changes in internal controls over financial reporting, accounting practices and disclosure controls and procedures; |
· | reviewing annual and quarterly financial statements and other Company filings; and |
· | reviewing internal audit reports and associated controls. |
The Committee has adopted a written charter which can be found on Trinity’s website at http://www.lanb.com/Management.aspx setting forth the Committee’s duties and functions.
Compensation Committee. The members of the Compensation Committee are Messrs. Worcester (Chair), Kindsfather, Muir, Primak and Slocomb, and Ms. Howell, each of whom served on the Committee in 2009 and will continue in 2010 (with the exception of Mr. Muir, as described above). Ms. Johnson ceased being a member of the Compensation Committee in March 2009 as a result of Ms. Johnson not being deemed to be independent and the new requirement as a participant in the Capital Purchase Program that all members must be independent. Each continuing member of the Committee is deemed to be “independent” as discussed above; each member of the Committee is deemed to be an “outside” director under Section 162(m) of the Internal Revenue Code of 1986, and a “non-employee” director pursuant to Section 16 of the Exchange Act. The Committee has adopted a written charter, which can be found on Trinity’s website at http://www.lanb.com/TCC-Compensation-Committee.aspx. The charter sets forth the Committee’s duties and functions.
The Compensation Committee is responsible for the following:
· | discharging the Board’s responsibilities relating to the compensation of the Company’s executive officers; |
· | evaluating and making recommendations to the Board with regard to the compensation of directors; |
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· | ensuring that the compensation of the Company’s executive officers and employees complies with all requirements of the United States Department of the Treasury's Capital Purchase Program ("CPP") and related laws and regulations as more fully described in the Compensation Discussion and Analysis beginning on page 17; and |
· | reviewing the Compensation Discussion and Analysis and issuing the Compensation Committee Report for inclusion in Trinity’s Proxy Statement in accordance with all applicable rules and regulations. |
Pursuant to its charter, the Compensation Committee may delegate authority to subcommittees and individual members of the Committee, where appropriate. However, the Committee cannot delegate its decision-making authority or its authority to make recommendations to the Board.
Nominating and Corporate Governance Committee. The members of the Nominating and Corporate Governance Committee are Messrs. Montoya (Chair), Worcester, Primak, Ms. Johnson and Ms. Howell each of whom served on the Committee in 2009 and will continue in 2010. Each member of the Committee is “independent” as discussed above, with the exception of Ms. Johnson. The purpose of the Committee is to evaluate and recommend to the Board nominees for consideration by Trinity’s shareholders to serve as directors and to review and analyze the corporate governance policies and practices of Trinity, including Trinity’s Code of Business Conduct and Business Ethics which may be found on Trinity’s website at: http://www.lanb.com/TCC-BCE-Charter.aspx. The Committee has adopted a written charter, which can be found on Trinity’s website at http://www.lanb.com/TCC-Nominating-and-Corporate-Governance-Committee-.aspx setting forth the Committee’s duties and functions.
Shareholder Proposals. Under Trinity’s bylaws, no business may be brought before an annual meeting unless it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the direction of the Board or by a shareholder entitled to vote who has delivered written notice to Trinity’s Corporate Secretary. Such written notice of proposal (containing certain information specified in the bylaws about the shareholders and proposed action) must be submitted to Trinity's Secretary not later than 120 days prior to the first anniversary of the preceding year's annual meeting to be included in Trinity's proxy statement. For proposals to be otherwise brought by a shareholder and voted upon at an annual meeting, the shareholder must file written notice of the proposal (containing certain information specified in the bylaws about the shareholder and the proposed action) to Trinity’s Corporate Secretary no less than 60 days prior to the first anniversary of the preceding year’s annual meeting.
No shareholder proposals were received by Trinity by March 23, 2010.
To be considered for inclusion in Trinity’s proxy statement and form of proxy for Trinity’s 2011 Annual Meeting of Shareholders, shareholder proposals must be received by Trinity’s Corporate Secretary, at the above address, no later than January 27, 2011, and must otherwise comply with the notice and other provisions of Trinity’s bylaws, as well as Securities and Exchange Commission rules and regulations. For Trinity’s 2011 Annual Meeting of Shareholders, to be considered for a vote, such proposal must be filed with Trinity’s Corporate Secretary not later than March 28, 2011. Additional information on shareholder nominations is provided on page 37 of this Proxy Statement within Item I Election of Directors.
Page 14.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Related Party Transactions. Trinity’s written Related Party Transaction Policy provides that all relationships between Trinity and any director, Named Executive Officer (“NEO”) or an entity related to a director or NEO, will be reviewed, approved or ratified by the Audit Committee of the Board, excluding loan transactions falling within the ordinary course of business exception for LANB. All transactions will be reviewed, regardless of type, when the transaction is anticipated to or actually meets or exceeds $120,000 in compensation to the director, NEO or an entity related to a director or NEO. The review will include the details of the relationship, including the nature of the relationship, the anticipated amount of compensation to be paid under the transaction, and, if possible, a comparison of market rates for similar products or services. The Audit Committee will consider the proposed relationship and either approve or deny the engagement. Additionally, the relationships with directors and their related entities will be reviewed each year as part of the determination of independence of each director and nominee. In the event that a relationship is entered into without prior approval of the Audit Committee, the Committee will be provided with detailed information regarding the relationship for ratification. If the Committee does not ratify the relationship, Trinity will terminate the relationship. Once a relationship has been created, Trinity will cause a request for proposals to be issued to the director, NEO or entity related to a director or NEO not less than every five years. This request will serve to ensure that Trinity is obtaining products and services on terms at least as favorable as if they were from an unrelated third party.
As stated above, Trinity engaged the services of RJC, an advertising and marketing firm, in 2009. Deborah U. Johnson, a Trinity director, was a principal shareholder and officer of RJC. Under the terms of Trinity’s agreement with RJC, we paid RJC approximately $494,129 in 2009 for advertising and marketing services, which is over 5% of RJC’s annual gross revenue, resulting in Ms. Johnson not being considered an independent director under the Nasdaq rules. Trinity’s policy did not require review, approval or ratification of its relationship with RJC, as described above as this relationship was in existence prior to the adoption of its Related Party Transaction Policy. However, Trinity has followed its policy with regard to renewals and modifications in its relationship with RJC. Based upon a Request for Proposals issued during 2007, we believe that the quality and terms for the advertising and marketing services provided by RJC are similar to those we would find with an unrelated third party.
The types of transactions, relationships and arrangements that are considered in determining independence but are not disclosed as a related party transaction include, but are not limited to, borrowing relationships and business relationships. Trinity has no indebtedness transactions with its directors or NEOs. Trinity is a financial holding company which controls LANB, a national bank. LANB commonly enters into customary loan, deposit and associated relationships with its directors and executive officers, all of which are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present other unfavorable features. All loans by LANB to Trinity’s directors and executive officers are subject to the regulations of the Office of the Comptroller of Currency. National banks are generally prohibited from making loans to their directors and executive officers at favorable rates or on terms not comparable to those available to the general public or other employees. LANB does not offer any preferential loans to Trinity’s directors or executive officers.
Page 15.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Communications with Directors. All communications to Trinity’s directors should be made in writing to: Trinity Capital Corporation, General Counsel, 1200 Trinity Drive, Post Office Box 60, Los Alamos, New Mexico 87544. Communications will be forwarded to the addressee and/or the appropriate committee chair or director. The General Counsel may summarize the contents of any communication prior to forwarding the message to its intended recipient. Directors may review a log of all communications received or request copies of any communications at any time. Concerns relating to accounting, internal controls and auditing matters will be promptly raised with Trinity’s internal auditor, if appropriate, and reported to the Audit Committee. Trinity’s communication policy is available on Trinity’s website at http://www.lanb.com/TCC-commpolicy.aspx. Communications regarding concerns over the management or financial reporting of Trinity can also be addressed directly to the Audit Committee Chair through Trinity’s website at http://www.lanb.com/Management.aspx or by emailing auditchair@lanb.com.
Code of Business Conduct and Business Ethics. We have a Code of Business Conduct and Business Ethics (“Code”) in place that applies to all of Trinity’s directors, officers and employees, including Trinity’s Chief Executive Officer and Chief Financial Officer. Our Code requires ethical conduct at all times and conduct in accordance with all laws and regulations. The Code is posted on Trinity’s website at http://www.lanb.com/TCC-BCE-Charter.aspx. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the Code by posting such information on our website. No waivers or amendments to Trinity’s Code were granted or made in 2009.
Indemnification. The shareholders approved an amendment to the Articles of Incorporation at the 2003 Annual Meeting restating the indemnification provided to Trinity’s directors. The Articles of Incorporation provide for indemnification of directors to the fullest extent permitted by New Mexico law. This indemnification is provided so that Trinity’s directors may undertake their duties without undue concern regarding their personal liability.
Page 16.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Compensation Discussion and Analysis
Overview. This Compensation Discussion and Analysis (“CD&A”) describes Trinity’s compensation philosophy and polices,policies, as well as the compensation decisions made for 20092011 as applicable to the Named Executive Officers (“NEOs”). This sectionCD&A explains the structure and rationale associated with each material element of the NEOs’ compensation, and the rationale for the compensation determinations made by the Compensation Committee in 2009 and it2011. The CD&A also provides important context for the more detailed disclosure tables and specific compensation amounts provided following thethis section.
The difficultyear 2011 saw a still stressed but improving economic environment in 2009 presented significant challenges tofor Trinity. Pressure remained on the economy and particularly onresidential real estate values ledand construction markets, but stabilizing and improving trends resulted in a significant increase in net income for Trinity, due in large part to increased nonperforming assets held by the Bank and significantly increased provisions for loan losses. Because our executivea decrease in net charge-offs. As Trinity’s compensation programs are designed to align the compensation of our executivesNEOs with the financial performance of Trinity, our NEO compensation was increased in 2011 based upon 2010 results. Our NEOs each received a salary increase of 3% due to their efforts toward improving the 2009 financial performance impactedof Trinity. None of the compensation of our executive officers. The Board determined that pay raises would not be awarded to Mr. Enloe or Mr. Wells and that no bonusesNEOs, nor any other employee, received profit sharing or stock incentives would be granted to any employees, with the exception of the Profit Sharing program shared by all eligible employees of the Company. Mr. Bartholomew received a raisein 2011 based upon his performance and due to the significant deviation from average and median peer compensation and internal equity.
U.S. Treasury’s Capital Purchase Program and Federal Reserve Risk Analysis Rules
In order to more fully understand the Compensation Committee’s decisions with respect to compensation during 2009 and 2010 the Committee believes it is beneficial to understand the changing regulatory context in which these decisions were made. In some cases, the regulatory changes clearly impacted the Compensation Committee’s decisions with respect to compensation paid to the NEOs, while in other cases the regulatory changes simply required the Committee to reconfirm its existing processes and procedures for determining executive compensation.
On March 27, 2009, Trinity became a participant in the Treasury’s Troubled Asset Relief Program (“TARP”) by participating in the Capital Purchase Program (“CPP”) element of TARP. As a result of its participation in the CPP, Trinity and certain of its employees will be subject to compensation related limitations and restrictions for the period that the company continues to participate in the CPP (the “Participation Period”). The CPP compensation limitations and restrictions include the following:
· | Except in limited circumstances, Trinity’s five most highly compensated employees (as determined on an annual basis) will be prohibited from receiving cash bonus payments during the Participation Period. Messrs. Enloe and Wells were subject to this limitation during 2009 and Messrs. Enloe, Wells and Bartholomew will be subject to this limitation during 2010. |
· | Except in limited circumstances, Trinity’s NEOs and its next five most highly compensated employees (each as determined on an annual basis) will be prohibited from receiving any severance payments upon a termination of employment or any payments triggered by the occurrence of a change control. |
· | Trinity’s NEOs and next 20 most highly compensated employees will be subject to a “clawback” of incentive compensation if that compensation is based on materially inaccurate financial statements or performance metrics. Further, no one in this group of employees can receive any tax gross-up payment during the Participation Period. |
Page 17.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
· | Trinity will be limited to an annual deduction of $500,000 with respect to the compensation paid to each of its NEOs. |
In connection with the CPP transaction, Trinity obtained waivers from its NEOs and five most highly compensated employees waiving claims against Treasury or Trinity for changes to the individual's compensation or benefits in order to comply with the CPP rules. Trinity also obtained Omnibus Compensation Amendments from its NEOs and five most highly compensated employees modifying the terms of the Employment Agreements with Mr. Enloe and Mr. Wells and the general terms and arrangements, policies and agreements with the remaining employees with respect to such compensation prohibited by the CPP rules during the Participation Period. As a consequence of such modifications of the Employment Agreements with Mr. Enloe and Mr. Wells, the non-compete provisions of their Employment Agreements were removed during the Participation Period.
As a result of its participation in the CPP, the primary means remaining available to the Company for compensating the employees covered by the CPP rules are now limited to cash salary, stock salary and, on a limited basis, restricted shares compliant with the CPP rules.results. The Compensation Committee made significant effortsdetermined that increases in 2009 to determine how best to continue to meetcompensation were warranted in 2012 based upon the objectives2011 results. All three of our compensation program within the contextNEOs received salary increases as well as awards of these limitations, specifically the ability to attract and retain our key employees. It was determined that, at this time, the Company would not increase the compensationrestricted stock units (“RSUs”), each of Mr. Enloe or Mr. Wells.which is described in more detail below.
Trinity also implemented an Excessive or Luxury Expenses Policy effective September 13, 2009 which is posted on its website at http://www.lanb.com/Management.aspx. This policy was required under the CPP rules. Its implementation did not result in material changes to Trinity's previous expense policies.
In addition to the foregoing, the CPP rules and regulations will require the Compensation Committee to undertake a semi-annual risk assessment with respect to certain of the compensation plans, programs and arrangements maintained by Trinity, regardless of whether the individual employee(s) covered by the plan, program or arrangement is an NEO. The risk assessments are intended to reduce the chance that any employee will be incentivized to take unacceptable risks in order to maximize his or her compensation under such plans, programs and arrangements. The Compensation Committee is required to certify that it has conducted these assessments and made all reasonable changes. Trinity's Compensation Committee has so certified within the Compensation Committee Report on page 26 of this Proxy Statement.
As the CPP final rules were implemented in 2009, the Committee continually discussed its compliance obligations with respect to our executive compensation programs at each Committee meeting. It has depended upon guidance from our legal counsel to fully interpret the extent of the application of each of these requirements on our executive compensation programs. As a result of Trinity's participation in the CPP, the Compensation Committee modified its charter to require semi-annual meetings to undertake the required semi-annual risk assessments and to require all members be qualified as independent directors.
Similar to the required CPP semi-annual risk assessment, in late 2009, the Board of Governors of the Federal Reserve issued proposed guidance that set forth a framework for assessing the soundness of incentive compensation plans, programs and arrangements maintained by financial institutions. Although the guidance is designated as proposed, the Federal Reserve has indicated that it expects current compliance with the guidance. The Federal Reserve’s framework focuses on balanced risk-taking incentives, compatibility with effective controls and risk management, and strong corporate governance.
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The Compensation Committee believes that an awareness and assessment of the impact of risk has always been, and will continue to be, a component of its analysis of executive compensation. As such, the Committee recognizes the role of risk assessment in the overall processes and procedures for establishing such executive compensation. In this regard, the Committee believes that the CPP semi-annual risk assessment and the Federal Reserve’s proposed rules will serve as a framework for reconfirming the appropriateness of the process and procedure the Committee has previously followed in reaching its decisions with respect to compensation related matters.
Compensation Philosophy and Objectives
The Compensation Committee seeks to achieve four goals in connection with the compensation program and decisions regarding the NEOs. Trinity’s compensation programs align with the Company’sTrinity’s culture, philosophy and strategy to provide long-term sustainable growth for its investors. In keeping with this strategy, Trinity’s compensation programs are focused on four factors. First, the following factors:compensation awarded should reflect the qualifications, skills, experience and responsibilities of each NEO. Second, the Compensation Committee structures the compensation program in a manner that the Committee believes will enable Trinity and the Bank to retain the most qualified, intelligent, honest and loyal employees by providing competitive compensation and benefits. Third, the Compensation Committee establishes the compensation program to provide each NEO with incentive and motivation to achieve superior job performance, deliver excellent customer service, and achieve his or her personal goals and contribute to the overall success of the organization. Finally, the compensation programs are designed to encourage both generation of income and reduction of expenses by making all employees owners of Trinity thereby aligning their interests with those of Trinity’s shareholders. However, so long as Trinity is participating in the Capital Purchase Program (“CPP”) element of the Treasury’s Troubled Asset Relief Program (“TARP”), certain limitations on the compensation of senior executive officers are applicable and may affect the available elements of the compensation program. See “Changing Regulatory Environment” below.
· | Reflect the qualifications, skills, experience and responsibilities of each NEO; |
· | To attract and retain the most qualified, intelligent, honest and loyal employees by providing competitive compensation and benefits; |
· | To provide each NEO with incentive and motivation to achieve superior job performance, deliver excellent customer service, and achieve his or her personal goals and contribute to the overall success of the organization; and |
· | To encourage both generation of income and reduction of expenses by making all employees owners of Trinity. |
We believe that Trinity’s employees are the key to our success as a company. As Trinity’s operations are located in geographic areas with lower than national unemployment rates and highly educated employee pools, Trinity’s compensation programs must be very competitive in order to attract and retain the highest quality employees. Compensation is awarded both on the basis of individual performance and Trinity’s success. NEOs share in many of the same compensatory programs as our other employees and many of these programs are shared in equal proportions by NEOs and employees, including ourthe profit sharing program and the Trinity Capital Corporation Employee Stock Ownership Plan (“ESOP”). These programs are employeddesigned to reward longevity and corporate performance, thereby aligning all of ourTrinity’s employees’ interests with those of ourits shareholders. Trinity’s contributions to the ESOP and profit sharing program are based upon its profitability.
At the Company’s 2011 Annual Meeting, nearly 92% of voting shareholders approved the non-binding advisory proposal on the compensation of certain executive officers. The Company, the Board and the Compensation Committee consider communications received from shareholders regarding executive compensation, including the non-binding advisory vote. The Company considered the positive result of the 2011 advisory vote on executive compensation but not for specific 2011 compensation decisions. Based on this consideration and the other factors described in this Compensation Discussion & Analysis, the Compensation Committee did not alter the policies or structure for the NEOs’ compensation for 2011.
Compensation Factors and Committee Processes
General. Trinity’s NEOs’ base salaries are used to reflect individual performance, while short-term and long-term incentives are used to reflect corporate performance as well as toand provide incentives for Trinity’s NEOs and other employees to continue to work to ensure the long-term profitability of Trinity. Trinity reviews the compensation practices forof several peer groups, as discussed below, to ensure its compensation is competitive. Trinity does not use static performance criteria or measures, but instead looks at the complete picture of our returns in light of the market environment, competitors, economic conditions and other relevant factors that affect the profitability of Trinity. The Compensation Committee has discretion to take into account all factors and measures throughout the year, as well as the agility and performance of its NEOs in responding to challenges and opportunities as they arise, rather than certain items set at the beginning of the year whichthat circumstances may have made lessmake a lower priority over the course of a priority.the year.
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Corporate Performance. In establishing compensation for Trinity’s NEOs for 2009,2011, the Compensation Committee weighed the financial and other performance indicators and levels of success desired and expected in assessing the performance of its NEOs. The financial indicators were based upon the budget created by management and approved by the Board and focus primarily on the returns for LANB, including return on average equity, asset quality, efficiency, net income, return on average assets and regulatory compliance. Trinity’sThe Compensation Committee sets the expectations of meeting or exceeding these goals, but takes into account other internal and external factors that influence the levels of success that can be achieved in the given year. Additionally, Trinity provides equal consideration to LANB’s customer satisfaction levels and employee satisfaction levels. Trinity’s goals are set as “stretch” goals which are not easily attainable. As a result, Trinity retains the flexibility and full discretion to determine whether to reward its NEOs and to determine at what level based on corporate performance even if the measures contained in the budget are or are not fully met.achieved.
Individual Performance. Included in the consideration of individual performance isare the expertise, skill set and workload requirements for each position, as well as the responsibilities resultant from being a public company. All employees of Trinity and its subsidiaries set individual goals each year that are in alignmentalign with departmental goals which, in turn, align with corporate goals and strategies. The goals are set by the employees and are discussed with, and approved by, each employee’s supervisor. The focus inIn developing annual and long-term goals, remainsTrinity is focused on the interests of Trinity’s three key stakeholders: excellence in customer service, employee satisfaction and investor returns. Goals for Trinity’s NEOs typically include reachingachievement of budget for financial measures, progress toward or achievement of Trinity’s strategic goals, meeting opportunities and challenges as they arise, personnel management and development, and community support and involvement.
Peer Comparison. Trinity’s Compensation Committee believes that the compensation paid to similarly situated executives at other financial institutions should be a point of reference for measurement, but not the determinative factor in setting the compensation for Trinity’s NEOs. Recognizing the inherent difficulty in assessing and comparing compensation programs and awards, the Compensation Committee retains the discretion to determine the nature and extent of use of comparative compensation data.
In its 20092011 compensation review, the Committee compared Trinity's compensation program to certain peer financial institutions. Data was provided by SNL Financial, Inc. regarding the 20082010 reported compensation of NEOs for several peer sets of financial institutions, including: financial institutions by asset size, by CPP participation status, by geographic region, and by 20082010 peer group (based on asset size and geography). The primary peer group used for 20092011 included thirty-five (35)28 banking organizations with total assets ranging from slightly under $1 billion to $9.7 billion in assets primarily located within our region (the Southwestern and Western United States). with total assets ranging from $1.1 billion to $3.0 billion. Approximately 60% of our primary peer group participated in CPP. The peer group was chosen because of the relative size in total assets, and the geographic location. location and CPP participation status.
The institutions included within the Compensation Committee'sCommittee’s primary peer group analysesanalysis were:
AllianceBank of Marin Bancorp | Heritage Commerce Corp |
| BofI Holding, Inc. | Heritage Financial Corporation |
| Bridge Capital Holdings | First Financial Bankshares,Home Federal Bancorp, Inc. |
BancFirstCenter Financial Corporation | First Guaranty Bankshares, Inc.Mechanics Bank |
Bancorp Rhode Island, Inc. | First State Bancorporation |
Beverly Hills Bancorp, Inc. | Firstbank Corporation |
Canandaigua National Corporation | Guaranty Bancorp |
Centrue Financial Corporation | Horizon Financial Corp. |
City Bank | IBERIABANK Corporation |
| CoBiz Financial Inc. | Merchants Bancshares, Inc. |
Eagle Bancorp, Inc. | MetroCorp Bancshares, Inc. |
| Encore Bancshares, Inc. | MidSouth Bancorp, Inc. |
| Exchange Bank | North Dallas Bank & Trust Co. |
| F & M Bancorporation | PalmettoOmniAmerican Bancorp, Inc. |
| First California Financial Group, Inc. | Pacific Continental Corporation |
| First Guaranty Bancshares, Inc. | Pacific Mercantile Bancorp |
First Bancorp, Inc.National Bank Alaska | Peapack-Gladstone Financial CorporationPremierWest Bancorp |
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Preferred BankGuaranty Bancorp | Southwest Bancorp, Inc. |
PremierWest Bancorp | Texas CapitalGuaranty Bancshares, Inc. |
Reliance Bancshares, Inc. | West Bancorporation, Inc. |
Sierra Bancorp | Wilson Bank HoldingWashington Banking Company |
Southeastern Bank Financial Corp. | Yadkin ValleyHanmi Financial Corporation |
Southside Bancshares,Wilshire Bancorp, Inc. | |
The Compensation Committee believes that the peer group is representative of the sector in which Trinity operates. From that analysis, theThe Committee concluded based on its analysis that itsthe NEOs’ total compensation is generally below the median and average levels for itsTrinity’s peers and its 2009Trinity’s 2011 performance was generally above median and average levels. The Committee does not target a certain benchmark within its peer group, but rather, uses the peer evaluation to validate that Trinity's compensation is competitive with our peers.
Compensation Committee Interlocks and Insider Participation.
During the fiscal year 2011, no executive officer of Trinity served as: a member of a compensation committee (or other board committee performing equivalent functions, or in the absence of such committee the entire board of directors) of another entity whose executive officers served on Trinity’s compensation committee; a director of another entity whose executive officers served on Trinity’s compensation committee; or a member of the compensation committee (or other board committee performing equivalent functions, or in the absence of any such committee, the entire board of directors) of another entity whose executive officers served as a director of Trinity. In addition, none of the members of the Compensation Committee was an officer or employee of Trinity or any of its subsidiaries in 2011, was formerly an officer or employee of Trinity or any of its subsidiaries, or had any relationship requiring disclosure under “Related Party Transactions” contained herein.
Role of Management and Compensation Consultants. Consultants
William C. Enloe, Trinity’s Chief Executive Officer (CEO), sets the salary and bonus for Mr. Wells and Mr. Bartholomew. Mr. Enloe receivesprovides input and recommendations fromto the Compensation Committee with regard to the salary and bonus for Mr. Wells. Mr. Enloe provides recommendations regarding the stock incentives awarded and on the amount of Trinity’s contributions to the ESOP, profit sharing and other bonus programs. Mr. Enloe plays no role in determining the form or amount of his own compensation and does not make recommendations with regard to director compensation. Mr. Wells and Mr. Bartholomew doesdo not participate in discussions regarding the other NEOs’ compensation.
The Compensation Committee has the authority to, pursuant to its charter, and has engaged compensation consultants from time to time, as deemed appropriate.appropriate and as pursuant to its authority under its charter. When such consultants are retained, they are contracted for, and the scope of the engagement, is established by the Committee. TheIn 2011, no compensation consultant was engaged by the Compensation Committee, did not engage consultantsBoard of Directors or management to assist with establishing executive compensation.
Changing Regulatory Environment
In order to more fully understand the Compensation Committee’s decisions with respect to compensation from 2009 to 2011, the Committee believes it is beneficial to understand the changing regulatory context in which these decisions were made. In some cases, the regulatory changes clearly impacted the Compensation Committee’s decisions with respect to compensation ofpaid to the NEOs, or directors.while in other cases the regulatory changes simply required the Committee to reconfirm its existing processes and procedures for determining executive compensation.
Elements of Compensation
General. Troubled Asset Relief Program—Capital Purchase Program. On March 27, 2009, Trinity uses short-became a participant in TARP by participating in the CPP. As a result of its participation in the CPP, Trinity and certain of its employees will be subject to compensation related limitations and restrictions for the period that Trinity continues to participate in the CPP (the “Participation Period”). The CPP compensation limitations and restrictions include the following:
| ᶱ | Except in limited circumstances, Trinity’s five most highly compensated employees (as determined on an annual basis) will be prohibited from receiving cash bonus payments during the Participation Period. Messrs. Enloe and Wells were subject to this limitation during 2011 and Messrs. Enloe and Wells will be subject to this limitation during 2012. |
| ᶱ | Except in limited circumstances, Trinity’s NEOs and its next five most highly compensated employees (as determined on an annual basis) will be prohibited from receiving any severance payments upon a termination of employment or any payments triggered by the occurrence of a change in control. |
| ᶱ | Trinity’s NEOs and next 20 most highly compensated employees will be subject to a “clawback” of incentive compensation if that compensation is based on materially inaccurate financial statements or performance metrics. Further, no one in this group of employees can receive any tax gross-up payment during the Participation Period. |
| ᶱ | Trinity will be limited to an annual tax deduction of $500,000 with respect to the compensation paid to each of its NEOs. |
In connection with the CPP transaction, Trinity obtained waivers from its NEOs and five most highly compensated employees waiving claims against the U.S. Treasury or Trinity for changes to the individual's compensation or benefits in order to comply with the CPP rules. Trinity also obtained omnibus compensation amendments from its NEOs and five most highly compensated employees modifying the terms of the employment agreements with Mr. Enloe and Mr. Wells and the general terms and arrangements, policies and agreements with the remaining employees with respect to such compensation prohibited by the CPP rules during the Participation Period. As a consequence of such modifications to the employment agreements with Mr. Enloe and Mr. Wells, the non-compete provisions of their employment agreements were removed during the Participation Period.
As a result of its participation in the CPP, the primary methods remaining for compensating the employees covered by the CPP rules are now limited to cash salary, salary stock and, on a limited basis, long-term restricted shares compliant with the CPP rules. The Compensation Committee made significant efforts in 2011 to determine how best to continue to meet the objectives of our compensation program within the context of these limitations, specifically the ability to attract and retain our key employees.
Trinity also implemented an Excessive or Luxury Expenses Policy effective September 13, 2009 which can be found on the LANB website under “TCC” then “View Corporate Governance” the “TCC Luxury Expenses Policy” or can be located directly at http://www.lanb.com/CMFiles/Docs/TCC/TCCLuxuryExpense.pdf. The adoption of this policy was required under the CPP rules. Its implementation did not result in material changes to Trinity's previous expense policies.
In addition to the foregoing, the CPP rules and regulations require the Compensation Committee to undertake a semi-annual risk assessment with respect to certain of the compensation plans, programs and arrangements maintained by Trinity. The risk assessments are intended to reduce the chance that any employee will be incentivized to take unacceptable risks in order to maximize his or her compensation under such plans, programs and arrangements. The Compensation Committee is required to certify that it has conducted these assessments and made all reasonable changes. Trinity's Compensation Committee has so certified within the Compensation Committee Report on page 43 of this Proxy Statement.
As the CPP final rules were implemented in 2009, the Committee continually discussed its compliance obligations with respect to our executive compensation programs at each Committee meeting. It has depended upon guidance from our legal counsel to fully interpret the extent of the application of each of these requirements on our executive compensation programs. As a result of Trinity's participation in the CPP, the Compensation Committee modified its charter to require semi-annual meetings to undertake the required semi-annual risk assessments and to require all members be qualified as wellindependent directors.
Additional Regulatory Considerations. In addition to the effect the CPP executive compensation limitations and restrictions have on Trinity, as a publicly-traded financial institution, we must contend with several often overlapping layers of regulations when considering and implementing compensation-related decisions. These regulations do not set specific parameters within which compensation decisions must be made, but do require Trinity and the Compensation Committee to be mindful of the risks that often go hand-in-hand with compensation programs designed to incentivize the achievement of better than average performance. While the regulatory focus on risk assessment has been heightened over the last several years, the incorporation of general concepts of risk assessment into compensation decisions is not a recent development.
Under its long-standing Interagency Guidelines Establishing Standards for Safety and Soundness, the FDIC has long held that excessive compensation is prohibited as an unsafe and unsound practice. In describing a framework within which to make a determination as to whether compensation is to be considered excessive, the FDIC has indicated that financial institutions should consider whether aggregate cash amounts paid, or noncash benefits provided, to employees are unreasonable or disproportionate to the services performed by an employee. The FDIC encourages financial institutions to review an employee’s compensation history and non-cashto consider internal pay equity, and, as appropriate, to consider benchmarking compensation to ensurepeer groups. Finally, the FDIC provides that Trinity's compensation program is competitive withsuch an assessment must be made in light of the market andinstitution’s overall financial condition.
In the summer of 2010, the various financial institution regulatory agencies worked together to motivate employeesissue additional guidance, Guidance on Sound Incentive Compensation Policies, that was in many respects intended to contributeserve as a compliment to the profitabilitySafety and sustainabilitySoundness standards. As its title would imply, the joint agency guidance sets forth a framework for assessing the soundness of incentive compensation plans, programs and arrangements maintained by financial institutions. The joint agency guidance is narrower in scope than the Safety and Soundness standards because it applies only to senior executive officers and those other individuals who, either alone or as a group, could pose a material risk to the institution. With respect to those identified individuals, the joint agency guidance is intended to focus the institution’s attention on balanced risk-taking incentives, compatibility with effective controls and risk management, and a focus on general principles of strong corporate governance.
Also, once further risk assessment guidelines and procedures, as required under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), are finalized by the financial institution regulatory agencies and the Securities and Exchange Commission, Trinity expects that it will also be subject to those further guidelines and procedures. However, initial guidance respecting the Dodd-Frank Act risk assessment guidelines and procedures was issued during 2011 and, in large part, that guidance restates the frameworks set forth in the Safety and Soundness standards and joint agency guidance described above.
Finally, in addition to the foregoing, as a publicly-traded corporation, Trinity is also subject to the Securities and Exchange Commission’s rules regarding risk assessment. Those rules require a publicly-traded company to determine whether any of its existing incentive compensation plans, programs or arrangements create risks that are reasonably likely to have a material adverse effect on the company.
The Compensation Committee believes that a sensible approach to balancing risk-taking and rewarding reasonable, but not necessarily easily attainable, goals has always been a component of its overall assessment of the company. compensation plans, programs and arrangements it has put in place for Trinity’s NEOs. In this regard, the committee has regularly revisited the components of the frameworks set forth in the Safety and Soundness standards and the joint guidance as an effective tool for conducting its own assessment of the balance between risk and reward built into Trinity’s compensation programs for our NEOs. In addition, the Compensation Committee continues to anticipate final guidance under the Dodd-Frank Act and will be prepared to incorporate into its risk assessment procedures any new guidelines and procedures as may be necessary or appropriate.
Compensation Components
Trinity’s compensation program includes the following elements which are available to all eligible employees: base salary, profit sharing program, ESOP, discretionary performance bonuses, and benefits which include health insurance, life and disability insurance, flexible spending accounts, leave (vacation, sick and sabbatical), leave incentives, 401(k) Plan,plan, health club memberships, education assistance, and productsproduct and service discounts. Trinity does not contribute to, or match contributions to, any employee’s 401(k) plan account. Trinity pays commissions in limited circumstances. Trinity’s managers may award performance bonuses to select employees for extraordinary efforts; however, certain employees are ineligible for bonuses under the CPP rules. Trinity also pays a portion of the premiums for certain insurance plans and makes available other plans at the employees' expense. In addition, Trinity has Stock Incentivestock incentive and Deferred Income Plansdeferred income plans for employees designated by the Board. Trinity recognizes and celebrates each employee’s employment anniversary with the grant of additional vacation hours at each such anniversary, pins at 1, 3, 5, 10, 20, 25 and 30 years of service, four-week paid sabbaticals for every ten10 years of employment and special awards atevery five years beginning with an employee’s 20 25 and 30 years.th anniversary. The anniversary award program has also been suspended for employees subject to the CPP bonus prohibition.
NEO compensation historically consisted of base salary, benefits, profit sharing, ESOP contributions, ESOP top-heavy cash payments for salaries in excess of plan caps, discretionary performance bonuses and discretionary stock incentives. NEOs are eligible to participate in all benefits on an equal basis with all other employees; however, during the CPP Participation Period, the top five highest compensated employees are not eligible to receive profit sharing, ESOP top-heavy cash payments, discretionary performance bonuses or discretionary stock incentives except as permitted by the CPP rules. Mr. Enloe is also provided with a vehicle allowance for one-half of his car lease, insurance, maintenance, gas and expenses for this vehicle.
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Base Salary. SalariesTrinity’s base salary program is designed to provide a competitive base salary to management and other employees. The salary levels of all employees, including the NEOs, are establishedset to reflect the duties and levels of responsibilities inherent in the position, the competitive conditions in the banking business in Trinity’s market area and the value received by Trinity from yearthat employee. Comparative salaries paid by peer financial institutions and market salaries are considered in establishing the salary for NEOs. Comparative information collected from publicly available information and other independent sources of salaries paid to year based primarily onexecutive officers of other bank holding companies and financial institutions similar in size, markets and other characteristics are consulted in such determinations. The base salaries of the NEOs are reviewed annually, taking into account the competitive level of pay as reflected in the data utilized. In setting base salaries, a number of factors relating to the individual, including the individual performance, as well as evaluationhistoric salary levels, general market conditions, job responsibilities, level of peerexpertise, ability and market rates.knowledge of position and complexity of Trinity’s operations are also considered. These factors are considered in the aggregate and none of the factors are accorded a specific weight. See “Executive Compensation –Summary Compensation Table” for base salaries paid to the NEOs during 2011. Salaries for Mr. Enloe’s salary isEnloe and Mr. Wells are set annually by the Board, based on the recommendations of the Compensation Committee. Mr. Enloe sets with the approval of the Committee and the Board, the salariessalary for Mr. Wells and Mr. Bartholomew.
At its March 23, 2010January 25, 2011 meeting, the Compensation Committee determined that Mr. Enloe and Mr. Wells would not receive any salary increases. In makingincreases for 2011. The Board determined that, based upon the determination,improvements made in the Committee recognized that Trinity’s financial performance in 2009, while better than many peer and direct competitors, did not meet budgeted levels. In addition, due toresults for the economic environmentsecond half of 2010 and the continuing economicprogress made on Trinity’s strategic goals, as well as the performance of both Mr. Enloe and Mr. Wells in confronting the many challenges the Committee determined that it would continue a conservative approach to compensation. The Compensation Committee and management determined that such a short-term course was prudent andfaced in 2010, that the best interests ofsalary increases were warranted. Accordingly, Mr. Enloe’s and Mr. Wells’ salaries for 2011 were set at $383,781 and $263,224, respectively. Similarly, the shareholders was to continue holding executive compensation expense static. Mr. Enloe granted Mr. Bartholomew an 8.5% salary increase on February 20, 2010. Mr. Bartholomew’s salary increase was based upon his individual performance in 2009 in the management of the Cashiers’ Department, financial reporting and controls, accomplishment of departmental goals and service to the community and, in part, to make Mr. Bartholomew's compensation more competitive with Trinity's peers. The Board determined at its January 27, 200924, 2012 meeting to provide an increase in Mr. Enloe’s salary to $400,000 (4.23% increase) and an increase in Mr. Wells’ salary to $276,385 (5% increase). In January 2012, Mr. Enloe determined that Mr. Bartholomew would receive a salary increase for 2012 to $177,625 (5% increase).
Short-Term Incentives.
Performance Bonuses. Trinity does not to grant any salary increases to Messrs. Enloe, Wells or Bartholomewemploy a bonus plan but rather provides for 2009. The Board reevaluated the compensation ofdiscretionary bonuses to its NEOs at its meeting of August 27, 2009 and determined not to make any changes based upon Trinity's performance during the first two quarters of 2009.
The NEOs’ base salaries constitute the majority of total compensation for each. In 2009, the base salary accounted for approximately: 93% of Mr. Enloe’s total compensation; 90% of Mr. Wells’ total compensation; and 92% of Mr. Bartholomew’s total compensation. The NEOs’ total compensation isother key employees based upon the total amount shownefforts and results for each fiscal year, based upon the goals, objectives, challenges and opportunities for the given year. In 2011, Trinity’s NEOs were not eligible for cash bonus payments under the applicable limitations imposed by virtue of Trinity’s participation in the Summary Compensation Table on page 29. The makeup of total compensation with the salary constituting the largest portion allows Trinity’s NEOs to strive to reach individual, departmentCPP and corporate goals to grow Trinity’s profits, assets and returns on a consistent basis, without having conflicting incentives for year-to-year performance returns that may adversely affect long-term sustainable returns.
Short-Term Incentives.
Discretionary Performance Bonus. The Committee and the Board have the discretion to award Mr. Enloe a performance bonus, and Mr. Enloe has the discretion to award Mr. Wells and Mr. Bartholomew a performance bonus, based upon their individual and Trinity’s annual performance. The Board has traditionally retained bonuses as a smaller portion of total compensation as it believes management’s focus should be on long-term sustainability goals. In addition, as described below, the majority of Trinity’s NEOs receive short-term incentives through Trinity’s profit sharing and ESOP programs on the same basis as all other employees. Messrs. Enloe, Wells and Bartholomew did not receive a performanceany bonus in 2009.payments.
The Board did not use predetermined performance criteria in 2009 to determine the amount of performance bonus a NEO may be eligible for, but rather, uses a wholly discretionary approach. The Board reviewed Trinity’s performance as a guide, including a review of the key financial measures and adaptation to events, whether anticipated or unanticipated. The Compensation Committee believes this approach allows for an effective compensation program for Trinity’s NEOs that is also in alignment with Trinity’s compensation philosophy, corporate strategy and corporate culture.
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Profit Sharing and Employee Stock Ownership Plan.Program. Short-term incentives are granted based upon Trinity’s performance. Trinity contributes to the profit sharing program based on its belief that sharing corporate profits is an effective motivating technique for employees. Trinity believes that sharing profits leads to employees who are more conscientious in reducing costs and increasing income and efficiency, thereby aligning their interests with those of our shareholders. Trinity firmly believes that employee/owners act differently than employees who do not have a personal stake in their company. Trinity pays into the ESOP in accordance with its culture of ownership and as a method for providing some retirement funds for its employees.
All eligible hourly and salaried employees participate, on a proportional basis, in Trinity’s ESOP and Trinity’s profit sharing program. All eligible employees receive the same percentage of their eligible compensation, consisting primarily of their base salaries, through these programs. Sixty percentthe program. Full time employees become eligible for profit sharing participation the year following the completion of each eligible employee’s award is in the form18 months of a cash bonus throughservice. Trinity’s contribution to the profit sharing program is based upon the recommendation of the Compensation Committee and forty percentdetermined by the full Board based upon the profitability of Trinity and is contributedentirely discretionary. During the Participation Period, the top five most highly paid employees are not eligible to participate in the profit sharing program.
Employee Stock Ownership Plan. Trinity contributes to the employee'semployee stock ownership plan (ESOP) based on its belief that employee/owners act differently than employees who do not have a personal stake in their company. Trinity contributes to the ESOP account.in accordance with its culture of ownership and as a method for providing retirement funds for its employees. The ESOP is fully funded by the discretionary contributions of Trinity and participants cannot invest in the plan. The ESOP is the second-largest shareholder of Trinity, tying the financial interest of our employees to the interests of our shareholders in enhancing the value of Trinity’s stock. All eligible hourly and salaried employees participate, on a proportional basis, in Trinity’s ESOP program. All eligible employees receive contributions on their behalf equal to the same percentage of their eligible compensation, consisting primarily of their base salaries. Full-time employees become eligible for ESOP participation the year following the completion of 1,000 hours of service. An employee’s ownership of his or her ESOP account currently vests incrementally over a period of six years. Full-time employees become eligible for profit sharing participation the year following the completion of 18 months of service. Trinity’s contribution to these programsthe ESOP is recommended by the Compensation Committee and determined by the full Board based on the profitability of Trinity and is entirely discretionary. As a qualified retirement plan, Trinity’s NEOs are permitted to participate in the ESOP.
At its January 24, 2012 meeting, the Board determined that the Company would contribute to Trinity’s profit sharing program and ESOP in the aggregate amount of approximately 7% of pre-tax net income, with ineligible employees’ payments retained by the Company. Sixty-percent of the amount, or approximately $391,000, was allocated to the profit sharing program, with the remaining 40% of the amount, or approximately $287,000, allocated to the ESOP. To the extent permitted under the CPP rules during the Participation Period, Trinity’s NEOs participate in Trinity’s profit sharing program and ESOP program on the same basis as all eligible employees. The Board determines, based on the Committee’s recommendation, the contribution amount, if any, each year based on Trinity’s performance. Trinity has granted approximately 7%All three of its pre-tax net income to these plans for each of the last nine years. Trinity’s ESOP program has top-heavy provisions that exclude an employee’s base salary in excess of $220,000. In 2008, the Board approved a top-heavy make-up cash payment to Trinity’s NEOs whose salaries are in excess of this amount so that theywere ineligible to participate in the same percentage, although those funds are granted as a cash award in 2009. In January 2009, Mr. Enloe received top-heavy make-up payment (based upon the 2008 ESOPprofit sharing program for 2011. The NEOs and other top five most highly compensated employees were not paid profit sharing contributions of 7% of pre-tax net income forand amounts that year) of $8,240 and Mr. Wells received a top-heavy make-up payment of $2,361. In 2009,would have otherwise been paid to them under the profit sharing and ESOP portion of Trinity’s NEOs’ compensation, including any top-heavy make-up payments paid in 2009 for 2008 contributions to the ESOP, constituted 6.8% of Mr. Enloe’s total compensation; 9.4% of Mr. Wells’ total compensation; and 7.5% of Mr. Bartholomew’s total compensation. The NEOs’ total compensation is based upon the total amount shown in the Summary Compensation Table on page 29.
In its December 22, 2009 meeting, the Board determined the Company would contribute to Trinity’s profit sharing and ESOP in the amount of approximately 7% of pre-tax net income, with ineligible employee's paymentsprogram were retained by the Company. These programs reward all employees for their efforts contributing to the profitability of Trinity. Additionally, the ESOP is the second-largest shareholder of Trinity, tying the financial interest of our employees to the interests of the shareholder in enhancing the value of Trinity’s stock.
Page 23.………………………………………….………………………………Long-Term Equity Incentive Compensation Program. The Compensation Committee, from time to time, includes grants of long-term equity compensation awards as part of the annual compensation provided to the NEOs. In the past, Trinity Capital Corporation 2010 Proxy Statement
Long-Term Incentives.
Generalhas provided long-term equity incentives in the form of nonqualified stock options (“NQSOs”) and stock appreciation rights (“SARs”). Trinity typically has granted stock incentives to key employees, including its NEOs, as motivation to enhance the appreciation of Trinity’s stock price and returns and to reward their efforts through the long-term appreciation of Trinity’s stock price. price and to strengthen retention of key employees and NEOs. The full benefit of the NQSOs and SARs are only realized upon the appreciation of Trinity’s stock price, providing an incentive for participants to create value for Trinity’s shareholders by delivering consistent and sustainable returns and equity in Trinity.
Under the CPP rules and regulations, Trinity is prohibited from granting equity compensation awards to NEOs unless such awards are made in the form of “long-term restricted stock” that complies with various requirements specified in the regulations through which the recipient would receive stock or equivalent stock units that would then have certain vesting and retention requirements. In 2012, the Board of Directors of Trinity awarded RSUs to its NEOs and other key personnel.
While such grants of equity incentives have a minimal dilutive effect on the interests of existing shareholders, the Committee and the Board believe that aligning the senior leaders’ personal long-term interests with those of the shareholders outweighs this effect. The full benefit of theIn deciding to award stock incentives, are only realized upon the appreciationCompensation Committee considers a number of Trinity’s stock price, providing an incentive for participants to createfactors, including the number of options outstanding or previously granted and the aggregate size and value for Trinity’s shareholders by delivering consistent and sustainable returns and equity in the Company.of current awards.
Trinity Capital Corporation 2005 Stock Incentive Plan (“2005 Plan”). The following is a brief description of the material terms of the 2005 Plan. The following summary is qualified in its entirety by reference to the full Plan which may be found as Appendix A to Trinity’s 2005 Proxy Statement.
· | ᶱ | A maximum of 500,000 shares of Trinity’s common stock are reserved for issuance. A maximum of 100,000 sharesoptions and SARs may be granted to an individual during any calendar year. Shares delivered will be authorized but unissued shares of Trinity common stock, treasury shares or shares purchased in the open market or otherwise. |
· | ᶱ | In the event of recapitalizations, reclassifications or other specified events affecting Trinity or shares of Trinity’s common stock, appropriate and equitable adjustments maywill be made to the number and kind of shares of Trinity’s common stock available for grant, as well as to other maximum limitations under the 2005 Plan, and the number and kind of shares of Trinity common stock or other rights and prices under outstanding awards. |
· | ᶱ | The 2005 Plan is an “omnibus” stock plan that permits the Compensation Committee to utilize various types of equity-based awards. |
· | ᶱ | The exercise price of any stock option granted may not be less than the fair market value of Trinity’s common stock on the date the option is granted. The option price is payable in cash, shares of Trinity’s common stock, through a broker-assisted cashless exercise or as otherwise permitted by the Compensation Committee. |
· | ᶱ | The 2005 Plan does not permit the repricing of options or stock appreciation rights (“SARs”)SARs without the approval of shareholders or permit the granting of discounted options. |
· | ᶱ | The 2005 Plan will have a term of ten years expiringwas approved by shareholders at the 2005 Annual Shareholder Meeting and expires on April 7,May 26, 2015, unless terminated earlier by the Board. The Board may at any time and from time to time, and in any respect, amend or modify the 2005 Plan. The Board may seekseeks the approval of any amendment or modification by Trinity’s shareholders to the extent it deems necessary or advisable in its sole discretion for purposes of compliance with Section 162(m) or Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or another exchange or securities market or for any other purpose. |
1998 Stock Option Plan.Plan for Trinity Capital Corporation (“1998 Plan”). Awards granted prior to January 1, 2005 were issued under the 1998 Stock Option Plan. This Plan can be found as Exhibit 10.4 to Trinity’s Form 10 filed on April 30, 2003. Trinity no longer grants awards under the 1998 Plan although 17,000 shares are still authorized for issuance under this Plan. Stock Options to purchase 229,000133,000 shares of Trinity common stock issued under the 1998 Plan were outstanding as of December 31, 2009.2011.
Page 24.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Equity Awards. Mr. Enloe makes recommendations to the Board with regard to the amount and type of stock awards for all employees other employees.than himself. These recommendations are considered by the Compensation Committee which, in turn, provides its own recommendations for approval by the full Board.Board, including the recommendation for awards to Mr. Enloe. The Committee delegates administration of the awards to management. Trinity does not have a program, plan or practice to time equity awardsaward grants to its executives in coordination with the release of material nonpublic information nor does Trinity time the release of material non-public information for the purpose of affecting the values of executive compensation. Trinity has not repriced any compensation awards, including stock incentive grantsoptions or SARs, nor has it made any material modifications to these Plansits stock incentive plans or awards. Trinity typically determines grants of stock incentives near the end of each fiscal year and announces those awards as soon as practicable following the grant.
Trinity’s stock incentive awards have been priced at or above the market value of the Trinity stock based on the last reported sale price as of the date of grant which is also the date of approval, with the exception of the July 1998 stock option grant, which was granted at $0.25 below the last reported sale price and the January 1, 2006 stock appreciation right grant which was approved on December 15, 2005 and granted at the closing market price as of December 31, 2005. Trinity set the SARs grant date on a date other than the approval date as the result of an accounting rule change benefiting Trinity that took effect on January 1, 2006.price. Trinity has awarded all stock optionoptions and SARs based on the last reported market price of Trinity’s stock on the optionaward grant date, with the exception of the July 1998 and January 2006 grants asgrant described above. Trinity will in the future price all options and other equity awards at or above market price as of the actual grant date.
Trinity has shifted from the grant of Non-Qualified Stock Options (NQSOs)NQSOs to the grant of SARs beginning in 2006 due to several considerations. The Compensation Committee and the Board determined that the dilutive effect of such awardsNQSOs were reduced by the grant of SARs rather than NQSOs as fewer shares will be issued upon maturity, thereby benefitting Trinity’s shareholders. Additionally, the Committee and the Board considered the expense to exercise and pay taxes associated with NQSOs, thereby limiting the motivational effect on grantees. The Committee and the Board concluded that the grant of SARs, rather than NQSOs, better served the interests of both grantees and shareholders.
As discussednoted above, Trinity did not award any stock incentives to the NEOs in 20082010 or 2009.2011.
In January 2012, Trinity awarded RSUs to its NEOs and key personnel based upon the financial performance of Trinity in 2011. Trinity shifted to the grant of RSUs due to the restrictions imposed by the CPP. The RSU awardees will receive one share of Trinity’s common stock for each unit granted upon the lapse of the restrictions. During the restriction periods, the awardees will receive cash in lieu of the dividends paid on Trinity’s common stock but will not be entitled to any voting rights until the awards are settled and shares are distributed under the awards. Under the terms of the RSUs granted based upon 2011 performance, for grantees not subject to the CPP limitations, the restrictions will lapse on the second anniversary of the grant date, January 24, 2014. For grantees subject to the CPP limitations, the restrictions for 25% of the RSUs will lapse upon the later of the second anniversary of the grant date, January 24, 2014, and the date 25% of the amounts received under the CPP are repaid, the restrictions for an additional 25% of the RSUs will lapse upon the later of January 24, 2014 and the date 50% of the amounts received under the CPP are repaid, the restrictions for an additional 25% of the RSUs will lapse upon the later of January 24, 2014 and the date 75% of the amounts received under the CPP are repaid, and the restrictions for an additional 25% of the RSUs will lapse upon the later of January 24, 2014 and the date 100% of the amounts received under the CPP are repaid. In January 2012, Mr. Enloe received an award of 2,353 RSUs; Mr. Wells received 1,177 RSUs and Mr. Bartholomew received 588 RSUs for performance in 2011.
Tax and Accounting Considerations
In consultation with advisors, the tax and accounting treatment of each of Trinity’s compensation programs is evaluated at the time of adoption and, as necessary, with changes in tax or other applicable rules or conditions making such a review prudent to ensure we understand the financial impact of each program on Trinity and the value of the benefit provided to our officers and employees.
Code Section 162(m) limits the Bank’s Federal income tax deduction for certain executive compensation in excess of $1 million paid to each NEO. The $1 million deduction limit does not apply, however, to “performance-based compensation” as that term is defined in Code Section 162(m). The Compensation Committee recognizes the possibility that if the amounts of the base salary of an NEO, and other compensation not described in the preceding paragraph, exceeds $1 million, it may not be fully deductible for Federal income tax purposes. The Compensation Committee will make a determination at any such time whether to authorize the payment of such amounts without regard to deductibility or whether the terms of payment should be modified as to preserve any deduction otherwise available. Notwithstanding the foregoing, for so long as any NEO is a “senior executive officer” within the meaning of TARP, Trinity’s annual federal tax deduction for compensation paid to each “senior executive officer” is limited to $500,000, with no exception for performance-based compensation. The Compensation Committee evaluates this limitation when making determinations whether to authorize payment of an amount that would exceed this limit. In 2011, the limitation on deductibility of compensation to the senior executive officers did not affect Trinity’s compensation practices nor did Trinity pay any senior executive officer an amount in excess of the applicable deductibility limit.
Page 25.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Compensation Committee Report
The report of the Compensation Committee below shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent Trinity specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Compensation Committee reviewed and discussed Trinity’s Compensation Discussion and Analysis with management. The Compensation Committee also reviewed its composition and concluded that a majority of Directors serving on the Compensation Committee are independent pursuant to the standards promulgated by Nasdaq. The Compensation Committee has met and held discussions with management regarding the fair and complete presentation of Trinity’s compensation practices, policies and plans.
In addition, the Compensation Committee certifies that:Stock Ownership Requirements
· | In May 2009 and again in December 2009, it reviewed with Trinity’s Internal Auditor and General Counsel, the Company’s NEO incentive compensation arrangements and made all reasonable efforts to ensure that such arrangements do not encourage NEOs to take unnecessary and excessive risks that threaten the value of the Company; |
Trinity has not adopted stock ownership requirements for the NEOs or directors apart from the requirements of the bank regulators under 12 U.S.C. Section 72, which require directors to own a minimum of $1,000 in Trinity’s stock. Each of Trinity’s directors satisfies this requirement. See “Security Ownership of Certain Beneficial Owners, Director and Management.” As a practical matter, the NEOs and directors hold significant interests in Trinity’s stock, which they have accumulated primarily through individual purchases and, for NEOs, through the exercise of stock incentive awards, as reflected in the Security Ownership table on page 13.
· | During the six month period beginning September 14, 2009, it reviewed with Trinity’s Internal Auditor and General Counsel the employee compensation plans, including NEO incentive compensation plans, and made all reasonable efforts to limit any unnecessary risks these plans pose to the Company; and |
· | During the six month period beginning September 14, 2009, it reviewed with Trinity’s Internal Auditor and General Counsel the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of Trinity to enhance the compensation of any employee. |
The certification above is being provided in accordance with the requirement of the Interim Final Rule issued June 15, 2009 by the U.S. Department of the Treasury.
In the course of conducting its Risk Assessment, the Compensation Committee considered the overall business and risk environment confronting Trinity and how the NEO compensation plans and employee compensation plans serve to motivate employee behavior when operating within that environment. In particular, the Compensation Committee’s Risk Assessment focused on the following compensation plans (* denotes plans in which NEOs participate):
Base Salary* | Employee Stock Ownership Plan* |
Performance Bonuses* | Equity Incentive Plan* |
Annual Bonuses | Change in Control Agreements* |
Profit Sharing* | 401(k) Plan |
With the exception of Change in Control Agreements, Trinity does not maintain any compensation plans in which only NEOs participate. For purposes of this discussion, references to “NEO compensation plans” mean the portion of an employee plan in which the NEOs participate.
Page 26.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
With respect to the NEO compensation plans, the Compensation Committee believes that such plans do not encourage Trinity's NEOs to take unnecessary or excessive risks that could harm the value of the company. The Compensation Committee believes this to be true because, as is more fully described in the Compensation Discussion and Analysis, the Compensation Committee strives to provide a balanced aggregate compensation package to our NEOs that serves to incentivize our NEOs to manage the business of Trinity in a way that will result in company-wide financial success and value growth for our shareholders.
We believe it is appropriate for our executives to focus certain of their efforts on near-term goals that have importance to the company; however, we also acknowledge that near-term focus should not be to the detriment of a focus on the long-term health and success of Trinity. In practice, providing base salary to any employee provides the most immediate reward for job performance. The Compensation Committee engages in an annual process, as is described in the Compensation Discussion and Analysis, to set base salary. We believe our process for establishing base salary is relatively free from risk to the company, as we do not typically make significant adjustments to base salary based on a single year’s performance. The Committee believes it is appropriate to reward our executives' focus on near-term goals, when such goals correspond to the overall company goals and direction set by our Board of Directors. To reward the executives for such focus, the Compensation Committee may award, at its full discretion, cash bonuses to our executives. In awarding cash bonuses through our profit sharing program, we try to provide an adequate level of reward and future incentive for the achievement of company goals, while also ensuring that the amounts awarded are not such a substantial portion of the total compensation that they could promote behavior that would encourage unreasonable or excessive risks. In this way, we believe the awards under our profit sharing program do not encourage our executives to take unnecessary or excessive risks that could harm the value of Trinity.
The other incentive compensation elements offered to our NEOs, with the exception of perquisites, are intended to reward performance over the long-term or are intended to focus our executives’ attention on the long-term performance of the company. We feel there is little, if any, risk associated with our Employee Stock Ownership Plan (ESOP) and 401(k) Plan as both are tax-qualified retirement plans that are subject to and maintained in accordance with the mandates of the Internal Revenue Code and the Employee Retirement Income Security Act. We believe our Equity Incentive Plans help to tie our executives’ interest more closely to those of our shareholders by giving them an equity interest in the company. We feel this equity interest in Trinity promotes a long-term focus among our executives on the financial success of the company. Finally, while Trinity has adopted a deferred compensation plan, it has not yet granted its use by any employee or NEO.
With respect to the employee compensation plans, the Risk Assessment has not resulted in a determination by the Compensation Committee that changes were necessary to bring such plans into compliance with the CPP rules. We believe the company has adequate policies and procedures in place to balance and control any risk-taking that may be incentivized by the employee compensation plans. The Committee further believes that such policies and procedures will work to limit the risk that any employee would manipulate reporting earnings in an effort to enhance his or her compensation.
The Committee intends to continue, in accordance with its obligations under CPP, to periodically review and assess the NEO compensation plans and employee compensation plans to ensure that the risk-taking behavior incentivized by such plans is kept to an appropriate level. The Committee will, as necessary, amend or discontinue any plan or revise any company policy or procedure to meet its obligations under CPP.
Page 27 .………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Based on the review and discussions, the Compensation Committee determined that the risk management oversight and the internal controls embedded within the organization, the discretionary nature of most compensation plans or a combination of these features, are key features that serve to ensure that the compensation plans do not encourage undesirable risk-taking activities or the manipulation of earnings. The Compensation Committee has recommended to the Board, and the Board has approved, that the Compensation Discussion and Analysis contained herein be included in Trinity’s Annual Report on Form 10-K for the year ended December 31, 2009 and Proxy Statement, for filing with the Securities and Exchange Commission.
The Compensation Committee:
Robert P. Worcester (Chair)
Jerry Kindsfather
Lewis A. Muir
Stanley D. Primak
Charles A. Slocomb
Page 28 .………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Executive Compensation
Named Executive Officers (“NEOs”). Trinity currently has three NEOs. These officers are: William C. Enloe, Chief Executive Officer and President of Trinity, Chief Executive Officer and Chairman of LANB and Chief Executive Officer and Chairman of Title Guaranty; Steve W. Wells, Secretary of Trinity and President and Chief Administrative Officer of LANB; and Daniel R. Bartholomew, Chief Financial Officer of Trinity and LANB. The following table contains the summary of compensation paid to Trinity’s NEOs from 20072009 to 2009.2011. Trinity’s NEOs are compensated by Trinity’s subsidiary, LANB.
| 2009 Summary Compensation Table |
Name and Principal Position | Year | Salary | | | | Total |
| ($) | ($) | ($) | ($) | ($) |
| (a) | (b) | (c) | (d) | (f) | (i) | (j) |
| William C. Enloe, Chief Executive Officer of Trinity | 2009 2008 | 372,339 372,339 | 0 250 | 0 0 | 29,054 57,542 | 401,393 430,131 |
| 2007 | 347,975 | 45,275 | 128,355 | 68,240 | 589,845 |
| Steve W. Wells, President of LANB | 2009 2008 | 255,549 255,549 | 0 250 | 0 0 | 27,187 44,590 | 282,736 300,389 |
| 2007 | 240,822 | 20,250 | 64,178 | 33,690 | 358,940 |
| Daniel R. Bartholomew, Chief Financial Officer of Trinity | 2009 2008 | 149,248 149,248 | 0 0 | 0 0 | 12,218 20,532 | 161,466 169,780 |
| 2007 | 132,475 | 7,000 | 29,928 | 17,074 | 186,477 |
Name and Principal Position | Year | Salary (1) | | | All Other Compensation (2) | Total |
| ($) | ($) | ($) | ($) | ($) |
| (a) | (b) | (c) | (d) | (f) | (i) | (j) |
William C. Enloe, Chief Executive Officer of Trinity | 2011 | 383,781 | 0 | 0 | 4,878 | 388,659 |
| 2010 | 379,775 | 0 | 0 | 4,803 | 384,578 |
| 2009 | 372,339 | 0 | 0 | 29,054 | 401,393 |
Steve W. Wells, President of LANB | 2011 | 263,223 | 0 | 0 | 3,749 | 266,972 |
| 2010 | 260,464 | 0 | 0 | 2,774 | 263,238 |
| 2009 | 255,549 | 0 | 0 | 27,187 | 282,736 |
Daniel R. Bartholomew, Chief Financial Officer of Trinity | 2011 | 169,167 | 0 | 0 | 1,806 | 170,973 |
| 2010 | 165,798 | 0 | 0 | 3,456 | 169,254 |
| 2009 | 149,248 | 0 | 0 | 12,218 | 161,466 |
(1) | Bonus consists of discretionary performance and other bonuses.(1) | Base salaries did not increase from 2009 to 2010, but there was an additional pay period in 2010 resulting in increased salary paid from the previous year. |
| (2) | "All Other Compensation” for the NEOs during fiscal 2011 is summarized below. |
(2) | Amounts reported under this column reflect the grant date fair value of during the years ended December 31, 2009, 2008 and 2007, in accordance with FASB ASC Topic 718. The assumptions used in calculating these amounts are set forth in Note 13 to our consolidated financial statements for the year ended December 31, 2009, which is located on pages 96 and 97 of our Annual Report on Form 10-K. Option awards were awarded to Mr. Enloe and Mr. Wells in both January 2007 and December 2007. The awards in January were based upon 2006 performance. |
Included in the above Summary Compensation Table is Other Compensation (Column i). The following table provides more detail on the compensation paid to Trinity’s NEOs in 2009 included in that column.
| All Other Compensation Table |
| Name | Year | Perquisites and Other Personal Benefits | Profit Sharing | Insurance Premiums ($) | Company Contributions Related to ESOP | Total ($) |
| ($) | ($) | ($) |
| William C. Enloe | 2009 | - | 21,225 | 1,958 | 5,871 | 29,054 |
| Steve W. Wells | 2009 | - | 20,748 | 568 | 5,871 | 27,187 |
| Daniel R. Bartholomew | 2009 | - | 8,306 | 120 | 3,792 | 12,218 |
Page 29 .………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Name | Perquisites and Other Personal Benefits | Insurance Premiums ($) | Company Contributions Related to ESOP | Total ($) |
| ($) | ($) |
| William C. Enloe | - | 2,639 | 2,239 | 4,878 |
| Steve W. Wells | 447 | 1,063 | 2,239 | 3,749 |
| Daniel R. Bartholomew | 37 | 215 | 1,554 | 1,806 |
Profit Sharing paidPerquisites and Other Personal Benefits include memberships to fitness clubs provided to our NEOs was paid in January 2009, prioron the same terms as to our entry into CPP, and was based upon the financial performance of Trinity in 2008.all other employees. Included in “Insurance Premiums” are health,is excess life and disability insurance for our NEOs which are provided on the same terms to all employees. “Company Contributions Related to ESOP” is constitutedconsists of Company contributions to the ESOP and ESOP top heavy contributions received by the NEOs in cash. ESOP top heavy payments were paid in January 2009, prior to our entry into CPP, and based upon the financial performance of Trinity in 2008.ESOP.
2011 Grants of Plan-Based Awards
One element of the compensation for Trinity’s NEOs is the granting of long-term stock incentives. All stock incentives are granted based on incentive plans approved by the shareholders. These include the 1998 Stock Option Plan and the Trinity Capital Corporation 2005 Stock Incentive Plan.Awards. Trinity did not grant any stock incentivesawards to itsthe NEOs in 2009.2011 and therefore the Grants of Plan-Based Awards table has been omitted. As noted on page 24 above, Trinity did award RSUs to the NEOs in January of 2012.
Outstanding Equity Awards at Fiscal-Year End2011 Fiscal Year-End. The following table provides information as of December 31, 2011, regarding Trinity’s outstanding stock incentive awards to the NEOs under the 1998 Plan and the 2005 Plan.
The table below depicts all equity awards outstanding as of the 2009 year-end.
| 2009 Outstanding Equity Awards at Fiscal Year-End Table | |
| | Number of Securities Underlying Unexercised Options (#) | | | Number of Securities Underlying Unexercised Options (#) | | Type of Equity Award | |
| Name | Exercisable | Unexercisable | Option Exercise Price ($) | Option Expiration Date | Exercisable | Unexercisable | Option Exercise Price ($) | Option Expiration Date |
| William C. Enloe | 0 | 16,000 | $ 25.00 | 12/18/2012 | 0 | 16,000 | 25.00 | SAR | 12/18/2012 |
| | 0 | 18,000 | $ 28.75 | 1/16/2012 | |
| | 0 | 28,000 | $ 28.00 | 1/1/2011 | |
| | 28,000 | 0 | $ 30.50 | 8/16/2015 | |
| | 28,000 | 0 | $ 32.00 | 12/18/2013 | 0 | 18,000 (3) | 28.75 | SAR | 1/16/2012 |
| | 28,000 | 0 | $ 22.00 | 12/19/2012 | 28,000 | 0 | 30.50 | NQSO | 8/16/2015 |
| | 28,000 | 0 | $ 20.00 | 12/20/2011 | 28,000 | 0 | 32.00 | NQSO | 12/18/2013 |
| | 28,000 | 0 | $ 20.00 | 12/14/2010 | 28,000 | 0 | 22.00 | NQSO | 12/19/2012 |
| Steve W. Wells | 0 | 8,000 | $ 25.00 | 12/18/2012 | 0 | 8,000 | 25.00 | SAR | 12/18/2012 |
| | 0 | 9,000 | $ 28.74 | 1/16/2012 | 0 | 9,000 (3) | 28.75 | SAR | 1/16/2012 |
| | 0 | 14,000 | $ 28.00 | 1/1/2011 | 14,000 | 0 | 30.50 | NQSO | 8/16/2015 |
| | 14,000 | 0 | $ 30.50 | 8/16/2015 | 14,000 | 0 | 32.00 | NQSO | 12/18/2013 |
| | 14,000 | 0 | $ 32.00 | 12/18/2013 | 14,000 | 0 | 22.00 | NQSO | 12/19/2012 |
| | 14,000 | 0 | $ 22.00 | 12/19/2012 | |
| Daniel R. | 0 | 4,000 | $ 25.00 | 12/18/2012 | 0 | 4,000 | 25.00 | SAR | 12/18/2012 |
| 0 | 4,000 | $ 28.75 | 1/16/2012 | 0 | 4,000 (3) | 28.75 | SAR | 1/16/2012 |
| | 0 | 7,000 | $ 28.00 | 1/1/2011 | 7,000 | 0 | 30.50 | NQSO | 12/16/2014 |
| | 7,000 | 0 | $ 30.50 | 12/16/2014 | |
(1)SARs vest on the fifth anniversary of the date of grant.
| | (1) | SARs vest on the fifth anniversary of the date of grant. |
| (2) | NQSOs vest in equal amounts over the first three years following grant and expire on the tenth anniversary of the date of grant. |
| (3) | The SARs reflected in this row expired on January 16, 2012 without any payment to the awardees as they were granted with a strike price greater than the market price at expiration. |
Page 30.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Option Exercises and Stock Vested in 2009
The following table shows the number of shares of stock acquired through the exercise of options in 2009 and the value realized on exercise. The value realized on exercise is calculated by the difference of the option exercise price and the reported trade price as of the date of exercise multiplied by the number of shares exercised. The options exercised in 2009 were all Non-Qualified Stock Options issued under the 1998 Stock Option Plan and as such the value realized on exercise listed below is taxable as ordinary income to the grantee.
| 2009 Option Exercises and Stock Vested Table |
| Name | Option Awards |
| Number of Shares Acquired on Exercise | Value Realized on Exercise |
| (#) | ($) |
| William C. Enloe | - | - |
| Steve W. Wells | 14,000 | 24,500 |
| Daniel R. Bartholomew | - | - |
Employment Agreements
Trinity has entered into Employment Agreementsemployment agreements with Mr. Enloe and Mr. Wells. Trinity entered into these agreements to provide certainty in the relationship between Trinity and these two key employees in relation to their positions, non-compete and non-solicitation agreements and change of control provisions. The key provisions toof these agreements are discussed below in the Post-Employment Compensation“Potential Payments Upon Termination or Change in Control” section and are qualified in their entirety by reference to the full Employment Agreements, as modified,employment agreements, which may be found as Exhibits 10.11 and 10.12 to Trinity’s Form 10-K filed on March 16, 2007, and Amendedas amended on March 13, 2008, which Amendmentsamendments may be found as Exhibits 10.11 and 10.12 to Trinity’s Form 10-K filed on March 17, 2008, and Amendedas further amended by an Omnibus Compensation Amendmentomnibus compensation amendment executed on March 24, 2009, the form of which Amendmentsamendments may be found as Exhibit 10.3 to Trinity’s Form 8-K filed on March 27, 2009. In addition, Mr. Enloe and Mr. Wells have entered into a Waiver,waiver, the form of which may be found as Exhibit 10.2 to Trinity’s Form 8-K filed on March 27, 2009, waiving certain rights under the Employment Agreementsemployment agreements and other benefit and compensation plans pursuant to the requirements for participation in the CPP.
Page 31.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Trinity’s Employment Agreementsemployment agreements contain non-compete,non-competition, non-solicitation, non-disparagement and confidentiality provisions, equitable enforcement provisions, and dispute resolution provisions. Mr. Enloe and Mr. Wells are required to provide 60 days’ notice of their intent to terminate employment voluntarily under their employment agreements. These provisions were consideration to induce Trinity to enter into the agreements and thus, any benefit conferred by the Employment Agreementsemployment agreements is conditioned on the honoring of these terms by the employee. Trinity’s Employment Agreementsemployment agreements further precondition the receipt of any severance pay or other benefits upon the employee remaining available for consultation for a twelve month period following termination, not to exceed 100 hours and the release of any employment related claims. Trinity modified these Employment Agreementsemployment agreements on March 24, 2009, through an Omnibus Amendmentomnibus amendment and Waiverwaiver in order to comply with the CPP rules, as discussed in more detail in the Compensation Discussion and Analysis beginning on page 17CD&A above. The Omnibus Amendmentsomnibus amendments and Waivers,waivers, among other provisions, required Mr. Enloe and Mr. Wells to relinquish all rights to severance payments during the CPP Participation Period. Trinity determined that it was appropriate to eliminate the non-compete provisions of those Employment Agreementsemployment agreements in the limited circumstance that the employment of Mr. Enloe or Mr. Wells is terminated and said employee(s) are prohibited by law from receiving the severance provided in consideration for such non-competition provisions. The non-solicitation and non-disparagement provisions remain in full effect regardless of the receipt of severance or other benefits. Upon repayment in full of CPP funds, Mr. Enloe and Mr. Wells will again be entitled to severance payments in accordance with the terms of the Employment Agreementsemployment agreements and will again be subject to their non-compete provisions.
Trinity’s amendmentsThe omnibus amendment and waiver to the Employment Agreements with Mr. Enloe and Mr. Wells on March 24, 2009,employment agreements also included the imposition of a provision that requires the adjustment or recovery of awards or payments upon restatement or other adjustment of relevant company financial statements or performance metrics. Thus, to the extent that such adjustment or recovery is required under applicable securities law, the CPP rules or other law, Trinity’s Employment Agreementsemployment agreements with Mr. Enloe and Mr. Wells provide that they will make restitution. Awards or payments made to Mr. Bartholomew and the top twenty highest compensated employees will likewise be subject to recovery upon restatement or other adjustment of relevant company financial statements or performance metrics.
Post-Employment CompensationPotential Payments Upon Termination or Change in Control
The CPP rules will prohibit the CompanyTrinity from making any payment to the NEOs for departure from Trinity for any reason, except for payments "for services performed or benefits accrued." Except in the case of an NEO's death or disability, the CPP rules generally will prohibit the payment of any severance amounts and will also serve to restrict the ability of Trinity to accelerate the vesting of any compensation and/or benefits upon a termination of employment or a change in control.
The Compensation Committee believes that, even though the CPP rules will prohibit such payments if a change in control or other termination of employment occurs during the Participation Period, it is beneficial to understand the terms of the arrangements that would apply except for such CPP rules.
Trinity has various agreements which require payments be made to its NEOs upon termination or constructive termination. The following is a descriptionUpon the conclusion of the applicable post-employment plans and benefits provided by Trinity through its employment plans and agreements to its NEOs. As noted above and in the Compensation Discussion and Analysis section of this Proxy Statement, because of the application ofParticipation Period, when the CPP rules if a termination of eitherare no long applicable to Trinity and its employees, Mr. Enloe orand Mr. Wells had occurred as of December 31, 2009, neither would have beenwill again be eligible to receive any severance. Mr. Bartholomew is not a party to an agreement that provides for anycertain severance payments under their employment agreements as described below. Based upon a terminationthe last reported sale price of employment.
Trinity’s common stock on December 31, 2011 of $12.75 per share, no post-termination payments would be made in connection with outstanding stock incentives held by the NEOs, as all stock incentives that may be exercisable would be out-of-the-money as the strike prices are all above the last reported sale price. Trinity does not have a Pension Benefits Planpension benefits plan nor have its employees usedchosen to participate in the Trinity Capital Corporation 2005 Deferred Income Plan. Trinity’s NEOs participate in Trinity’s ESOP, which is a qualified retirement plan, in the same manner as all other Trinity employees. All of Trinity’s NEOs are fully vested in the ESOP and would be entitled to distribution of their account balances upon termination for any reason. The values of the NEOs’ ESOP accounts are not included in the Post-Termination Paymentstable immediately below and would not be subject to the CPP's prohibition on severance payments.
Upon the conclusion
| Reason for Termination | William C. Enloe | Steve W. Wells | Daniel R. Bartholomew |
| Voluntary Termination, including retirement | None | None | None |
| Termination Without Cause (without Change of Control) | None ($383,781 if no CPP restriction on severance) | None ($263,224 if no CPP restriction on severance) | None |
Termination For Cause (without Change of Control) | None | None | None |
| Termination following Change of Control | None ($383,781 if no CPP restriction on severance) | None ($263,224 if no CPP restriction on severance) | None |
| Termination due to Death or Disability | None | None | None |
The following is a description of the CPP Participation Period, when the CPP rules are no long applicable post-employment plans and benefits provided by Trinity through its employment plans and agreements to Trinity and its employees, Mr. Enloe and Mr. Wells will again be eligible to receive certain severance payments under their Employment Agreements as described below.
Page 32.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Payments upon Voluntary Termination. NEOs. As New Mexico is an “at will” employment state, and does not require severance payments upon voluntary termination with or without cause in the absence of an agreement to the contrary. contrary, Mr. Bartholomew is not eligible to receive any severance as he is not a party to an agreement that provides for any such payments upon a termination of employment.
Payments upon Voluntary Termination. None of Trinity’s NEOs are entitled to payment of severance upon voluntary termination. Mr. Enloe and Mr. Wells are required to provide 60 days prior notice of their intent to terminate employment voluntarily under their Employment Agreements. The NQSOs granted under the 1998 Plan exercisable as of the date of an NEO or other recipient’s voluntary termination must be exercised by the earlier of the specified expiration date or two years following the date of termination. Alltermination and all non-vested NQSOs are forfeited on the date of voluntary termination. Under the 2005 Plan, NEOs or other recipient employees who voluntarily terminate must exercise all vested NQSOs within 90 days following termination. NQSOs granted under the 2005 Plan that are not vested on the date of voluntary termination are forfeited. Under the 2005 Plan, all SARs immediately vest and are settled as of the date of voluntary terminationtermination.
Page 34.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Director Compensation
In 2009, Trinity’s Board was composedconsisted of ten directors, eightnine members in 2011. In addition, George A. Cowan and Lewis A. Muir served as Director Emeriti throughout 2011. Two of whomTrinity’s Directors are non-employee directors. We also had one Director Emeritus.employed as executive officers. Trinity provides compensation to Trinity’s outside directors based on the service they provide to the Company.Trinity. Trinity’s insideemployed directors, William C. Enloe and Steve W. Wells, and Trinity’s Director Emeritus,Directors Emeriti, George A. Cowan and Lewis A. Muir, are provided no compensation for their services as directors, butdirectors. Trinity’s employed directors are compensated for their positions within Trinity as described above.
| 2009 Director Compensation |
| Name | Fees Earned or Paid in Cash ($) | All Other Compensation ($) | Total ($) |
| Jeffrey F. Howell | 18,000 | 1,283 | 19,283 |
| Deborah U. Johnson | 18,000 | 1,283 | 19,283 |
| Jerry Kindsfather | 18,000 | 1,283 | 19,283 |
| Arthur B. Montoya, Jr. | 18,000 | 1,283 | 19,283 |
| Lewis A. Muir | 18,000 | 1,283 | 19,283 |
| Stanley D. Primak | 21,600 | 1,539 | 23,139 |
| Charles A. Slocomb | 18,000 | 1,283 | 19,283 |
| Robert P. Worcester | 24,000 | 1,710 | 25,710 |
| George A. Cowan | - | - | - |
| 2011 Director Compensation |
| Name | Fees Earned or Paid in Cash ($) | All Other Compensation (1) ($) | Total ($) |
| Jeffrey F. Howell | 18,000 | 1,316 | 19,316 |
| Deborah U. Johnson | 18,000 | 1,316 | 19,316 |
| Jerry Kindsfather | 27,000 | 1,974 | 28,974 |
| Arthur B. Montoya, Jr. | 18,000 | 1,316 | 19,316 |
| Stanley D. Primak | 19,800 | 1,448 | 21,248 |
| Charles A. Slocomb | 24,000 | 1,755 | 25,755 |
| Robert P. Worcester | 27,000 | 1,974 | 28,974 |
| George A. Cowan | - | - | - |
| Lewis A. Muir | - | - | - |
| (1) | All Other Compensation consists of tax gross-ups. Trinity does not provide for the payment of any tax gross-ups to its NEOs. |
| | |
AllThe entire Board annually reviews and determines compensation for Trinity’s non-employee directors. As a starting point for its review, the Compensation Committee uses the peer group compensation data prepared by management. Trinity’s Board of Trinity’s directors areDirectors modified the fees paid to non-employee members effective March 1, 2012, as presented in the table below.
Each non-employee of the Board receives a retainer on a monthly basis for their service to Trinity and LANB. No compensation was paid toLANB as presented in the directors of Title Guaranty. The monthly fee paid for service as a director of Trinity is $500 and the monthly fee paid for service as a director of LANB is $1,000. Trinity’s Chair and Vice-Chair are paid an additional fee per month of service. The Chair receives an additional $500 per month and the Vice-Chair receives an additional $300 per month. Committee Chairs are not paid additional fees. Beginning in March 2010, Trinity's three members of the Board Compliance Committee, Messrs. Kindsfather, Slocomb and Worcester, will be paid an additional $500 per month for service on this Committee.table below.
Trinity does not have any stock ownership guidelines; however, each of its directors is required to comply with 12 U.S.C. Section 72 which requires its directors to own a minimum of $1,000 in Trinity’s stock. Each of Trinity’s directors owns in excess of $1,000 worth of Trinity’s stock. See “Security Ownership of Certain Beneficial Owners, Directors and Management” table on page 8 for further information.| Board or Committee | 2011 Fee Schedule ($) | 2012 Fee Schedule (1) ($) |
| Trinity Board of Directors | 500 | 500 |
| LANB Board of Directors | 1,000 | 1,500 |
| Title Guaranty Board of Directors | - | - |
| Trinity Chair of the Board of Directors | 500 | 500 |
| Trinity Vice-Chair of the Board of Directors (2) | 300 | - |
| Los Alamos National Bank Compliance Committee | 500 | - |
| Trinity and LANB Audit Committee Chair | - | 500 |
| (1) | The 2012 Fee Schedule became effective on March 1, 2012. |
| (2) | The Board of Directors eliminated the position of Vice-Chair of the Board effective July 1, 2011. |
Page 35.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
Trinity’s Board is divided into three classes with one class elected each year to serve for a three-year term. For 2012, the Board resolved to continue with a Board consisting of nine directors. Three Class III directors, all incumbent nominees, are to be elected at the Annual Meeting to serve until the Annual Meeting of Shareholders in 2015 or until their respective successors are elected or appointed. If any nominee is unable to stand for election, the Proxies will be voted for such substitute as the Board of Directors recommends. As of the date of mailing this Proxy Statement, the Board of Directors knows of no reason why any nominee would be unable to serve if elected.
The following descriptions provide the background and qualifications for each person who has been nominated for election as a director and for continuing directors, including the year each became a director of Trinity and his or her positions with us. The age indicated for each individual is as of April 6, 2012. There are no family relationships among directors or executive officers of Trinity.
2012 DIRECTOR NOMINEES
| Nominee | | Principal Occupation, Directorships, Qualifications, Attributes and Skills |
JEFFREY F. HOWELL Age 59 Director Since 2002 Current Term expires 2012 | | Ms. Howell has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2002 and was Chairman of the Board of Trinity from 2004 to 2008. She is the Chair of the Audit Committee and serves as the audit committee financial expert. Ms. Howell is also a member of the Board’s Compensation and ALCO Management Committees. She was President and Chief Executive Officer of Howell Fuel and Lumber Company, Inc., headquartered in Wallkill, New York. She was the founder and managing Director of Howell Meyers Associates from 1997 to 2001, was employed in various capacities at Harvard University from 1985 to 1991, including as Associate Director for Administration at Harvard College Observatory and Assistant Dean for Financial Operations in the Faculty of Arts and Sciences. She was an accountant in the Emerging Business Systems Group at Coopers & Lybrand from 1982 to 1984 after receiving her Masters of Business Administration from Yale University. She is also a member of the Board of Directors of the Los Alamos National Laboratory Foundation of which she is a past President, member of the Board of Directors of The Delle Foundation, member of the League of Women Voters of Los Alamos, a member of the J. R. Oppenheimer Memorial Committee and a past Dog Handler and Search and Rescue volunteer for the K-9 Unit of the Pajarito Ski Patrol. Ms. Howell is also a member of the Executive Committee of the Lady Bird Johnson Wildflower Center Advisory Council. Ms. Howell’s qualifications include her business experience and financial expertise. Ms. Howell has extensive experience in business operations and has served as the Chair of Trinity's Audit Committee since 2003. |
ARTHUR B. MONTOYA, JR. Age 48 Director Since 2001 Current Term expires 2012 | | Dr. Montoya has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001. Dr. Montoya has served as Secretary for Los Alamos National Bank since 2011. He is Chair of the Board's Nominating and Corporate Governance Committee and is a member of the Board's Audit and Loan Committees. Dr. Montoya runs a successful dental practice in Los Alamos, New Mexico. He also serves as a director for the Los Alamos Historical Society. Dr. Montoya has been on the Pajarito Home Owners' Association Board of Directors and is a past Chairman, taught religious education at Immaculate Heart of Mary Catholic Church, is a past Chairman and a member of the Board of Directors of the Los Alamos Chamber of Commerce, a past Chairman and member of the Board of Directors for the Los Alamos Medical Center, is active in the Northern New Mexico Interdisciplinary Study Club, has coached little league girls basketball at the Los Alamos Middle School, assisted with the Los Alamos Fusion Volleyball Club, and is involved with Special Olympics Los Alamos. Dr. Montoya provides insight from his experience as a small business owner as well as from the dental and general medical community. Dr. Montoya has served the community through his participation in various boards and organizations. |
STANLEY D. PRIMAK Age 61 Director Since 2001 Current Term expires 2012 | | Mr. Primak has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001 and served as Vice Chairman of the Board of Directors from 2008 to 2011. He is also a member of the Board’s Loan, Compensation and Nominating and Corporate Governance Committees. Mr. Primak is Vice President of Primak Builders, Inc., a construction company in Los Alamos, New Mexico, a position he has held since 1996, and is Vice-President of Tranquillo Partners, a residential construction and real estate management company. He is also a member of the Board of Directors of the Los Alamos Commerce and Development Corporation. Mr. Primak is also a member of the Green Builders Association, the Santa Fe Area Homebuilders Association, the New Mexico Homebuilders Association and a member of Habitat for Humanity. Mr. Primak also serves on the Design and Build Committee for the Habitat for Humanity for Los Alamos and Rio Arriba Counties. Mr. Primak took the lead and served as the Project Manager for LANB’s Habitat for Humanity House in Espanola, New Mexico in 2008. Mr. Primak currently serves as the construction manager for the New Mexico Consortium. Mr. Primak's professional knowledge of the construction and building industry in our markets makes him a valuable resource for Trinity’s credit activities. As a small business owner, Mr. Primak also provides insight into the challenges and needs of this significant customer segment. |
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the election of all nominees named above.
CONTINUING DIRECTORS
| Director | Principal Occupation, Directorships, Qualifications, Attributes and Skills |
WILLIAM C. ENLOE Age 63 Director Since 1979 Term will expire 2013 | Mr. Enloe has served as President and Chief Executive Officer of Trinity since 1979. Mr. Enloe has also served as the Chairman and Chief Executive Officer of Los Alamos National Bank since 1994. He is a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Enloe has been employed by Los Alamos National Bank since 1971 and served as the President and Chief Executive Officer from 1978-1994; Vice President from 1975-1978; Cashier from 1973-1975; and as a Loan Officer from 1971-1973. Additionally, he has served as Chief Executive Officer and Chairman of the Board of Title Guaranty since May 2000 and TCC Advisors since its formation in February 2006. In addition to his service to Trinity, Mr. Enloe is committed to New Mexico charities and economic development efforts. Mr. Enloe is on the Boards of the American Bankers Association Government Relations Committee, NM Bankers Association, Los Alamos Trinity Site Revitalization Project Advisory Committee, LANS Venture Acceleration Fund Review Panel (RAB), The Santa Fe Institute, The Delle Foundation, Los Alamos Economic Development Corporation, Los Alamos Economic Development Land Use Council, and Los Alamos Technical Associates, Inc. Mr. Enloe is also a managing member of KKSE, LLC. Mr. Enloe served as a director for the Federal Reserve Board in Denver from 2008 to January 2010. Mr. Enloe’s qualifications include his extensive banking career beginning in 1971, with executive experience in all areas of banking. Mr. Enloe has extensive knowledge of the local, state and national economy, and has served on countless boards and organizations serving the communities in which Trinity operates. |
DEBORAH U. JOHNSON Age 60 Director Since 2001 Term will expire 2013 | Ms. Johnson has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001. She has also served as Strategic Planning Committee Chair since 2002 and is a member of the Nominating and Corporate Governance, and Trust Committees. Ms. Johnson served on the Trinity Compensation Committee from 2001 to 2009. Ms. Johnson was a co-owner and managing partner in Rick Johnson & Company, Inc., a communications firm based in Albuquerque, New Mexico, for over 30 years. Currently, Ms. Johnson is an Executive Director of REISTER, an advertising and marketing firm headquartered in Phoenix, Arizona. Ms. Johnson is a New Mexico member on the Federal Reserve Bank of Kansas City’s Tenth District Economic Advisory Council. Very active in the business community in Albuquerque, Ms. Johnson serves as Director for the Albuquerque Chamber of Commerce, Albuquerque Economic Development Committee (Chairman 2002 and 2003), and has served on the Boards of University of New Mexico Anderson School of Management (Chairman 1999), the New Mexico Better Business Bureau (Chairman 1999), the Central New Mexico Susan G. Komen Foundation (Chairman 2001), and the United Way Women’s Leadership Council. Ms. Johnson has a long history of commitment to the business community as well as charitable organizations in New Mexico and has served as, among other positions, a Director of the New Mexico Association of Commerce and Industry, Quality New Mexico and the Governor’s Business Executives for Education. Ms. Johnson is past chairman of Affiliated Advertising Agencies International, and has received numerous professional awards including “Female Executive of the Year” by the New Mexico Chapter, National Association of Female Executives; “Top 100 Power Broker” by New Mexico Business Weekly; “Woman on the Move,” 1996 and “New Mexico of Vision,” 2004, by the YWCA; “Top 25 Women Business Owners” by New Mexico Woman Magazine; “Maxie Anderson Small Business Award” by the Greater Albuquerque Chamber of Commerce, 1999; and The “ZIA” Achievement Award from the University of New Mexico. The New Mexico Business Weekly named her one of the state’s ten “Most Influential Women.” Ms. Johnson’s qualifications include extensive executive, public relations and strategic planning experience. Ms. Johnson’s skills and experience as an advertising executive aid in communications to shareholders and customers. Ms. Johnson’s clear commitment to the business and economic development in New Mexico make her knowledgeable about the Albuquerque market and the state as a whole. |
JERRY KINDSFATHER Age 62 Director Since 1984 Current Term expires 2014 | Jerry Kindsfather has served as the Chairman of the Board of Directors of Trinity since June 2011 and previously served as Chairman from 2000 to 2004. Mr. Kindsfather has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1984 and as a member of the Board of Directors of Title Guaranty & Insurance Company since May 2000. He is also a member of the Audit, Compensation, Trust, Strategic Planning, Loan and Funds Management Committees. Mr. Kindsfather retired in November 2003 after serving as President of AKC, Inc. since 1970 and as co-owner of Ed's Foods, a retail grocery store located in Los Alamos, New Mexico, since 1970. Mr. Kindsfather is a partner in J&G Investments and is a managing member of KKSE, LLC. Mr. Kindsfather has business management experience and experience as a small business owner. Mr. Kindsfather has extensive accounting and financial expertise. Mr. Kindsfather has significant experience serving as a director for Trinity for 28 years. |
CHARLES A. SLOCOMB Age 65 Director Since 1999 Term will expire 2013 | Mr. Slocomb has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1999. Mr. Slocomb is a member of the Board's Technology, Trust, Compensation and Audit Committees. He retired from the Los Alamos National Laboratory in August of 2004 and accepted a job with SAIC as a consulting employee in November 2004 and a position with Compa in 2011. He held various management positions at the Laboratory, including Project Director, Division Director and Group Leader. He also serves as a member of the Road Committee of Laguna Vista Land Owners Association and as a volunteer firefighter for the Laguna Vista Volunteer Fire Department. He and his wife, Connie, live in Santa Fe, New Mexico. Mr. Slocomb’s qualifications include his expertise in technology and computing, including data security. Mr. Slocomb has been a long-time resident of Los Alamos and has knowledge about our communities and the Laboratory, which constitutes a major employer and business in our markets. |
STEVE W. WELLS Age 56 Director Since 1985 Current Term expires 2014 | Mr. Wells has served as President and Chief Administrative Officer of Los Alamos National Bank since 1994. He has served on the Boards of Directors of Los Alamos National Bank and Trinity since 1986, as Trinity’s Secretary since 1986 and as a member of the Board of Directors of Title Guaranty since May 2000. He is also a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Wells has been employed by Los Alamos National Bank since 1985 and previously held the position of Executive Vice President from 1985 to 1994. He is currently a member of the Boards of Directors and Chair of the Los Alamos Medical Center Advisory Board, and a member of the Board of Directors of Northern New Mexico Health Grant Group and the Regional Development Corporation. Mr. Wells’ qualifications include his extensive banking career beginning in 1978, including executive experience as President. Mr. Wells has served on countless boards and organizations serving the communities in which Trinity operates. |
ROBERT P. WORCESTER Age 65 Director Since 1995 Current Term expires 2014 | Mr. Worcester has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1995 and served as the Chairman of the Board of Directors from 2008 to 2011. Mr. Worcester served as the Vice Chairman of the Board from 2004 to 2008. Mr. Worcester is also the Chair of the Compensation Committee. He is a member of the Audit, Trust and Strategic Planning Committees. He has been the President and a 50% shareholder of Worcester & McKay, LLC. In 2011, Mr. Worcester was recognized by Best Lawyers as Santa Fe Trusts and Estates Lawyer of the Year. Mr. Worcester has been recognized by "The Best Lawyers in America" for the last 17 years and has been recently recognized by "Outstanding Lawyers in America" and in "Super Lawyers of the Southwest." He is also a Fellow of the American College of Trust and Estate Counsel. He is the past President of the Georgia O'Keefe Foundation. In addition, Mr. Worcester serves as a member of the Board of Directors and President of the Santa Fe Art Foundation, as a member of the Board of Directors and as President of the John Bourne Foundation, as a member of the Board of Directors and Secretary of the Allan Houser Foundation, as a member of the Board of Directors and Secretary of the Veritas Foundation, as a member and Secretary of the Board of Directors of the Don and Susan Meredith Foundation, as a member of the Council of Benefactors of the Santa Fe Community Foundation, as a member of the Endowment Committee of St. Michael's High School, as a member of the Council on International Relations, as Vice-President and Director of the First Tee of Santa Fe and as a member of the Board of Directors of the National Dance Institute (NDI). Mr. Worcester’s qualifications include his knowledge and expertise as a trust and estate attorney. Mr. Worcester has knowledge of a broad range legal and business issues. Mr. Worcester has also served the communities through professional, educational and community service organizations. |
DIRECTORS EMERITI
GEORGE A. COWAN Age 92 Director Emeritus Since 2006 | Dr. Cowan served as a member of the Board of Directors of Trinity since its formation in 1975 to 2006 and was a director of Los Alamos National Bank from 1963 to 2006. Dr. Cowan resigned at the end of his term in May 2006. Dr. Cowan was Chairman of the Board of Trinity from 1977 to 1995 and of Los Alamos National Bank from 1965 to 1994. In 1988, he retired from Los Alamos National Laboratory after 40 years of service, over which period he was employed as a staff member, Associate Director for Research and Senior Fellow. Dr. Cowan continues to serve as a Senior Fellow Emeritus to the Laboratory and was awarded the Los Alamos National Laboratory Medal in 2002. He served as a member of the White House Science Council under President Reagan from 1982 to 1985. Dr. Cowan is the founding member of the Santa Fe Institute, serving as its President from 1984 to 1991. He continues to serve on the Board of Directors as a Lifetime Director Emeritus and is a Distinguished Fellow of the Institute. He also served as a member of the Board of Directors of Los Alamos National Laboratory Foundation and serves as a member of the Advisory Board for the Center for Neural Basis of Cognition. Dr. Cowan was awarded a Presidential Citation from the Department of Energy in 1990, the New Mexico Academy of Science Distinguished Scientist Award in 1975, the Robert H. Goddard Award in 1984, the E.O. Lawrence Award in 1965 and the Enrico Fermi Prize in 1991 for contributions during his career as a nuclear scientist. He was awarded the Los Alamos Living Treasures Award in 2003. He is a fellow and/or member of several societies, including the American Academy of Arts and Sciences, the American Chemical Society, the American Physical Society and Sigma Xi, and has received honorary degrees from several universities. In 2010, Dr. Cowan published his memoirs in Manhattan Project to the Santa Fe Institute: The Memoirs of George A. Cowan. Dr. Cowan also assisted the National Dance Institute (NDI) in establishing a program in Santa Fe, ensuring that children in Northern New Mexico have access to the arts. Dr. Cowan's long knowledge of the community, his connections within the scientific community and institutional knowledge from Trinity's inception make him an invaluable resource. |
LEWIS A. MUIR Age 79 Director Emeritus since 2010 | Mr. Muir served as a member of the Boards of Directors of Trinity and Los Alamos National Bank from 1990 to 2010, and was the Audit Committee Chair from 1999 to 2003. Mr. Muir also serves as President and a member of the Board of Directors of Universal Properties, and is a member of the Los Alamos Chamber of Commerce where he was a past ex officio member of the Board of Directors. He was also a member of the Board of Directors of the Maternal Child Health Council. Mr. Muir has been extensively involved in Los Alamos County government for many years, serving as a member of the Council of the Incorporated County of Los Alamos from 1993 to 2003, as a member of the Board of Directors and as Treasurer of the New Mexico Association of Counties from 1993 to 2003. Mr. Muir is a current member and past President of the Los Alamos Rotary Club. He is a former member of the Board of Directors and past President of the Los Alamos Retirement Center. Mr. Muir serves as a Consultant Pharmacist for the Los Alamos County Detention Center, the Los Alamos Endoscopy Center and works part-time at the Los Alamos Medical Center Pharmacy. Mr. Muir provides insight from his experience as a small business owner as well as a member of the medical community. Mr. Muir has served the community through his participation in various boards and organizations, most notably his long service to the County of Los Alamos. |
In addition, the following individual serves as an executive officer of Trinity and LANB:
Daniel Bartholomew. Mr. Bartholomew, age 46, has served as Chief Financial Officer of Trinity and Vice President and Chief Financial Officer of Los Alamos National Bank since February 2003. Mr. Bartholomew has been with Los Alamos National Bank since 1987, serving in a variety of positions, including Teller Supervisor, Assistant Cashier, Cashier and Vice President/Cashier. He is also the Chairman of the Board’s Asset/Liability Management Committee and a member of the ESOP Advisory Board of Trinity Capital Corporation.
ITEM II: APPROVAL OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
The Board selected Crowe Horwath LLP (“Crowe”) as the independent registered public accounting firm of Trinity and LANB for the year-ending December 31, 2012. Trinity previously employed Moss Adams, LLP (“Moss Adams”) as our independent registered public accounting firm since January 2006. In accordance with its established practice, Trinity requests proposals for its auditors at least every five years. As part of its process, the Audit Committee of the Board of Directors of Trinity selected Crowe to be its accounting firm for the first quarter of 2012 and thereafter. Moss Adams completed its engagement for Trinity’s fiscal year ended December 31, 2011 upon the filing of Trinity’s Form 10-K for the year ended December 31, 2011 on March 15, 2012.
The audit reports of Moss Adams on Trinity’s consolidated financial statements as of and for the years ended December 31, 2011 and 2010 did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During Trinity’s two most recent fiscal years and the period preceding the replacement of Moss Adams, there has not been any disagreement with Moss Adams on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Moss Adams, would have caused it to make reference to the subject matter of the disagreement in connection with its report on Trinity’s financial statements for such years. During the same periods, there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years and the subsequent interim period up to the date of engagement with Crowe, Trinity did not consult with Crowe regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Trinity’s financial statements or as to any disagreement or “reportable event” as described in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K.
In the event that the ratification of the selection of the independent registered public accounting firm is not approved by a majority of the Shares represented and voting, the Audit Committee and the Board will review the matter of appointment of independent registered public auditors.
Management expects that representatives of both Crowe and Moss Adams will be present at the Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions.
Required Vote
The affirmative vote of the holders of a majority of the Shares represented and voting in person or by Proxy at the Annual Meeting is necessary to ratify the selection of Crowe as the independent registered public accounting firm of Trinity for the current fiscal year. Abstentions and Non-Votes have no effect on this proposal. If, however, a shareholder has signed and dated a Proxy, but has not voted on the ratification of the selection of Crowe as the independent registered public accounting firm by marking the appropriate box on the Proxy, such person’s Shares will be voted “FOR” the ratification of the selection of Crowe as the independent registered public accounting firm and will not be considered Non-Votes.
Audit and Other Fees Paid to Moss Adams
Aggregate fees for professional services rendered for Trinity and LANB by Moss Adams for the years ended December 31, 2011 and 2010 are described below.
| Services Provided | 2011 ($) | 2010 ($) |
Audit Fees, including audits of our consolidated financial statements, the audit of management’s assertion on internal control over financial reporting and reviews of our interim consolidated financial statements, including those in our Quarterly Reports on Form 10-Q | 196,000 | 187,000 |
Audit Related Fees, including assurance related services the majority of which relate to the audits of Trinity’s ESOP and 401(k) plan and evaluation of compliance with the Sarbanes-Oxley Act of 2002 | 22,200 | 18,300 |
Tax Fees, including preparation of our federal and state income tax returns and non-routine tax consultations | 16,300 | 17,550 |
All Other Fees | - | - |
TOTAL | $ 234,500 | $ 222,850 |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing and reviewing the work of the independent registered public accounting firm and setting the independent registered public accounting firm’s compensation. In accordance with its charter, the Audit Committee reviews and pre-approves all audit services and permitted non-audit services provided by the independent registered public accounting firm to Trinity or LANB and ensures that the independent public accounting firm is not engaged to perform the specific non-audit services prohibited by law, rule or regulation. During the years ended December 31, 2011 and 2010, all services were approved in advance by the Audit Committee in compliance with these processes. The Committee concluded that the provision of such services by Moss Adams was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the ratification of the selection of Crowe as the independent registered public accounting firm of Trinity for the year ending December 31, 2012.
Audit Committee Report
The report of the Audit Committee below shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent Trinity specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Committee obtained from Moss Adams a formal written statement describing all relationships between Moss Adams, LLP (“Moss Adams”) and Trinity that might bear on the independent registered public accounting firm’s independence consistent the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee discussed with the independent registered accounting firm any relationships that may impact its objectivity and independence, and satisfied itself as to the firm’s independence. The Committee also reviewed its composition and concluded that all directors serving on the Committee are independent pursuant to the standards promulgated by Nasdaq.
The Committee met and held discussions with management and Moss Adams regarding the fair and complete presentation of Trinity’s results and the assessment of the quality and adequacy of Trinity’s internal control over financial reporting. The Committee reviewed and discussed Trinity’s policies with respect to risk assessment and risk management. The Committee discussed with Trinity’s internal auditor and Moss Adams the overall identification of audit risks, scope and plans for their respective audits. The Audit Committee has reviewed and discussed Trinity’s audited financial statements for the year ended December 31, 2009 with Trinity’s management, Trinity’s internal auditors and Moss Adams.
The Committee met with the internal auditor and Moss Adams, with and without management present, to discuss the results of their examinations, the evaluations of Trinity’s internal controls, and the overall quality of Trinity’s financial reporting. The Audit Committee discussed and reviewed with the independent registered public accounting firm all communications required by generally accepted accounting standards, including those described in Statement on Auditing Standards No. 114, “The Auditor’s Communication with those Charged with Governance,” as amended. Management has the responsibility for the preparation of Trinity’s financial statements and the independent registered public accounting firm has the responsibility for the audit of those statements in accordance with the standards of the Public Company Accounting Oversight Board.
Based on the review and discussions with management and Moss Adams, the Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in Trinity’s Annual Report on Form 10-K for the year ended December 31, 2009, for filing with the Securities and Exchange Commission. The Audit Committee also reappointed the independent registered public accounting firm, Moss Adams, LLP, and the Board of Directors concurred in such reappointment.
The Audit Committee:
Jeffrey F. Howell, Chair
Lewis A. Muir
Arthur B. Montoya, Jr.
Charles A. Slocomb
Robert P. Worcester
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Item I
Election of Directors
Trinity has a staggered Board of Directors, divided into three classes. One class is elected annually to serve for a three-year term or until his or her successor is elected. Mr. Muir is not eligible to stand for re-election under the provisions of Trinity’s Bylaws as he is over the age of 75 at the time of the 2010 Annual Meeting when his current term expires. The Board has determined to continue with a Board consisting of nine directors. Three Class I directors will be elected at the 2010 Annual Meeting to serve for a three-year term expiring in 2013. Each of the nominees for election as Class I directors are incumbent directors.
Director Nominations and Qualifications. The Nominating and Corporate Governance Committee follows the procedures contained in Trinity’s bylaws and the nominating policies and procedures to identify, evaluate and select nominees for the Board of Directors. The Nominating and Corporate Governance Committee considers candidates suggested by the Board, management and shareholders. Existing directors whose terms will expire at the next Annual Meeting will automatically be evaluated unless that director expresses his or her intent not to stand for re-election.
After a new candidate for director is identified by the Board or nominated by a Shareholder, the Committee will compile the information required in Trinity’s bylaws and will make an initial determination whether to entertain the candidate based on information provided to the Committee, the directors’ own knowledge and any other inquiries made by the Committee. This preliminary determination is also based on Trinity’s Director Criteria, the current composition of the Board, the balance of management and independent directors, and the need for Audit Committee members or other expertise and any other factor deemed relevant by the Committee. While we do not have a separate diversity policy, the Committee also considers diversity in reviewing its current directors and any potential nominees. The Committee places value in a board composed of characteristics reflective of our communities in terms of gender and race, as well as differing perspectives in terms of professional fields, education, skills, and community service. The Committee has broad discretion to consider any additional factors it deems relevant to an assessment of a proposed nominee’s suitability for the Board. If a candidate satisfies the initial review, the Committee will conduct an interview of the candidate. The Committee will also conduct interviews with all incumbent directors standing for re-election and review their independence, qualifications, conduct, background and areas of expertise. After conducting all interviews and evaluations, the Committee meets in closed-sessions to discuss each nominee and makes its recommendations to the Board. The Board will review the recommendations and make the final determination of which nominees will be presented for election.
In considering potential nominees to the Board, and when evaluating incumbent directors, the Nominating and Corporate Governance Committee shall seek to, among other things, promote collegiality among members of the Board, encourage directors to be active participants in the communities served by the Company and contribute to organizations located in such communities. The Board has adopted the following criteria for nominees to serve on Trinity’s Board:
| i. | Each nominee should meet the minimum requirements for service on the Board contained in Trinity’s bylaws. |
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| ii. | No nominee can be eligible for election or re-election as a director if at the time of election such person is 75 or more years of age, unless the nominee was over the age of 75 when the bylaws were amended on February 18, 2003. |
| iii. | Each nominee should possess the highest personal and professional ethics, integrity and values. |
| iv. | Each nominee should have, in the Nominating and Corporate Governance Committee’s opinion, a sufficient educational and professional background and have relevant past and current employment affiliations, board affiliations and experience for service on the Board. |
| v. | Each nominee should have demonstrated effective leadership and sound judgment in his or her professional life. |
| vi. | Each nominee should have a strong sense of service to the communities which Trinity and its subsidiaries serve. |
| vii. | Each nominee should have exemplary management and communication skills. |
| viii. | Each nominee should be free of conflicts of interest that would prevent him or her from serving on the Board. For the purposes of this item, individuals who (a) have a borrowing relationship or (b) conduct business in the ordinary course with Trinity or any of its subsidiaries should not, solely because of such relationships, be deemed to have a “conflict of interest.” |
| ix. | Each nominee should be expected to ensure that other existing and future commitments do not materially interfere with his or her service as a director of Trinity. |
| x. | Each nominee should review and agree to meet the standards and duties set forth in Trinity’s Code of Business Conduct and Business Ethics. |
| xi. | Each nominee should be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serve on the Board for an extended period of time. |
The “independence” of non-management nominees will also be taken into account so that at least a majority of the Board will be made up of directors who satisfy the independence standards set forth by Nasdaq and the rules and regulations of the SEC. Information regarding the nominating policies and procedures, the director criteria and Trinity’s bylaws can be found on Trinity’s website at http://www.lanb.com/TCC-Corporate-Governance.aspx.
There are no arrangements or understandings between any of the nominees, directors or executive officers and any other person pursuant to which any of Trinity’s nominees, directors or executive officers have been selected for their respective positions. No nominee, member of the Board or executive officer is related to any other nominee, member of the Board or executive officer. No nominee or director is a director of another “public corporation” (i.e. subject to the reporting requirements of the Exchange Act) or of any investment company. We have no knowledge that any nominee will refuse or be unable to serve, but if any of the nominees are unavailable for election the holders of the proxies reserve the right to vote for substitute nominees proposed by the Board.
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Shareholder Nomination Procedure. Shareholders may nominate candidates for the Board by following the procedure detailed in Trinity’s bylaws. The following is a summary of the process for shareholder nominations:CONTINUING DIRECTORS
· | The shareholder must provide a written statement suggesting an individual as a candidate that includes the information required by Trinity’s bylaws. |
· | The statement must be received by the Corporate Secretary, in the case of an annual meeting, not less than 60 days and not more than 90 days prior to the first anniversary (day and month) of the previous year’s annual meeting and, in the case of a special meeting, not less than 60 days and not more than 90 days prior to the special meeting. |
Nominations that are not received at least 120 days prior to the anniversary of the previous year’s annual meeting will not be included in Trinity’s proxy statement but will be presented for a vote at the Annual Meeting.
Shareholder nominations for the 2011 Annual Meeting must be received by Trinity’s Secretary not later than January 27, 2011 for inclusion in the Proxy Statement and no earlier than February 28, 2011 and no later than March 28, 2011 to be voted upon at the 2011 Annual Meeting.
Each shareholder written statement must set forth: (a) as to each person whom the shareholder proposes to nominate for election as director: (i) the name, age, business address and residential address of such person; (ii) the principal occupation or employment and business experience for the previous five years of such person; (iii) The class and number of shares of Trinity’s stock which are beneficially owned by such person on the date of the written statement; and (iv) any other information relating to such person that would be required to be disclosed pursuant to rules and regulations promulgated under the Securities Exchange Act; and (b) as to the nominating shareholder giving the written statement: (i) the name and address, as they appear on Trinity’s books, of the nominating shareholder and the name and principal business address of any other beneficial shareholder known by the nominating shareholder to support such nominee; and (ii) the class and number of shares of stock which are beneficially owned by the nominating shareholder on the date of such written statement and the number of shares owned beneficially by any other record or beneficial shareholders known by the nominating shareholder to be supporting such nominee on the date of such written statement. All submissions must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected. The Nominating and Corporate Governance Committee may request additional information in order to make a determination as to whether to nominate the person for director.
Any deficiencies in a notice of shareholder nomination will be noted by the Corporate Secretary and the nominating shareholder will be informed and provided an opportunity to cure the defect, if possible. The presiding officer will determine whether a nomination was timely made and will make that determination at the shareholders meeting.
No shareholder nominations were received by the Corporate Secretary by March 23, 2010. The Nominating and Corporate Governance Committee has not retained or paid any third parties to assist in the identification of nominees. All of the nominees approved by the Nominating and Corporate Governance Committee for inclusion in this Proxy Statement and listed on the Proxy Card are incumbent directors standing for re-election.
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2010 DIRECTOR NOMINEES
The following descriptions provide the background and qualifications for each person who has been nominated for election as a director, including the year each became a director of Trinity and his or her positions with us.
Nominee | Director | Principal Occupation, Directorships, Qualifications, Attributes and Skills |
WILLIAM C. ENLOE Age 6163 Director Since 1979 Term will expire 2013 | Mr. Enloe has served as President and Chief Executive Officer of Trinity since 1979. He is a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Enloe has also served as the Chairman and Chief Executive Officer of Los Alamos National Bank since 1994. He is a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Enloe has been employed by Los Alamos National Bank since 1971 and served as the President and Chief Executive Officer from 1978-1994; Vice President from 1975-1978; Cashier from 1973-1975; and as a Loan Officer from 1971-1973. Additionally, he has served as Chief Executive Officer and Chairman of the Board of Title Guaranty since May 2000 and TCC Advisors since its creationformation in February 2006. In addition to his service to Trinity, Mr. Enloe is committed to New Mexico charities and economic development efforts. Mr. Enloe is on the ChairBoards of the American Bankers Association Government Relations Committee, NM Bankers Association, Los Alamos Economic Development Land UseTrinity Site Revitalization Project Advisory Committee, and serves as a member on the Board of the LANS Venture Acceleration Fund Review Panel (RAB), and theThe Santa Fe Institute, The Delle Foundation, Los Alamos Economic Development Corporation. Additionally, he serves as a member of the Boards of Directors of the Santa Fe Institute, the Delle Foundation,Corporation, Los Alamos Economic Development Land Use Council, and Los Alamos Technical Associates, Inc. andMr. Enloe is also a managing member of KKSE, LLC. Mr. Enloe served as a director for the Federal Reserve Board in Denver from 2008 to 2009.January 2010. Mr. Enloe’s qualifications include his extensive banking career beginning in 1971. Mr. Enloe also has1971, with executive experience in all areas of banking. Mr. Enloe has extensive knowledge of the local, state and national economy, and has served on countless boards and organizations serving the communities in which Trinity operates. |
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DEBORAH U. JOHNSON Age 5860 Director Since 2001 Term will expire 2013 | Ms. Johnson has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001. She has also served as Strategic Planning Committee Chair since 2002 and is a member of the Nominating and Corporate Governance, Compensation and Trust Committees. Ms. Johnson isserved on the ChairmanTrinity Compensation Committee from 2001 to 2009. Ms. Johnson was a co-owner and Director ofmanaging partner in Rick Johnson & Company, Inc., a communications firm based in Albuquerque, New Mexico, for over 30 years. Currently, Ms. Johnson is an Executive Director of REISTER, an advertising and marketing firm headquartered in Albuquerque, New Mexico.Phoenix, Arizona. Ms. Johnson is thea New Mexico member on the Federal Reserve Bank of Kansas City’s Tenth District Economic Advisory Council. Very active in the business community in Albuquerque, Ms. Johnson serves as Director for the Albuquerque Chamber of Commerce, Albuquerque Economic Development Committee (Chairman 2002 and 2003), and has served on the Boards of University of New Mexico Anderson SchoolsSchool of Management (Chairman 1999), the New Mexico Better Business Bureau (Chairman 1999), and the Central New Mexico Susan G. Komen Foundation (Chairman 2001), and the United Way Women’s Leadership Council. Ms. Johnson has a long history of commitment to the business community as well as charitable organizations in New Mexico and has served as, among other positions, a Director of the New Mexico Association of Commerce and Industry, Quality New Mexico and the Governor’s Business Executives for Education. Ms. Johnson is past chairman of Affiliated Advertising Agencies International, and has received numerous professional awards including “Female Executive of the Year” by the New Mexico Chapter, National Association of Female Executives; “Top 100 Power Broker” by New Mexico Business Weekly; “Woman on the Move,” 1996 and “New Mexico of Vision,” 2004, by the YWCA; “Top 25 Women Business Owners” by New Mexico Woman Magazine; “Maxie Anderson Small Business Award” by the Greater Albuquerque Chamber of Commerce, 1999; and The “ZIA” Achievement Award from the University of New Mexico. The New Mexico Business Weekly named her one of the state’s ten “Most Influential Women.” Ms. Johnson’s qualifications include extensive executive, public relations and strategic planning experience. Ms. Johnson’s skills and experience as an advertising executive aid in communications to shareholders and customers. Ms. Johnson’s clear commitment to the business and economic development in New Mexico make her knowledgeable about the Albuquerque market and the state as a whole. |
JERRY KINDSFATHER Age 62 Director Since 1984 Current Term expires 2014 | Jerry Kindsfather has served as the Chairman of the Board of Directors of Trinity since June 2011 and previously served as Chairman from 2000 to 2004. Mr. Kindsfather has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1984 and as a member of the Board of Directors of Title Guaranty & Insurance Company since May 2000. He is also a member of the Audit, Compensation, Trust, Strategic Planning, Loan and Funds Management Committees. Mr. Kindsfather retired in November 2003 after serving as President of AKC, Inc. since 1970 and as co-owner of Ed's Foods, a retail grocery store located in Los Alamos, New Mexico, since 1970. Mr. Kindsfather is a partner in J&G Investments and is a managing member of KKSE, LLC. Mr. Kindsfather has business management experience and experience as a small business owner. Mr. Kindsfather has extensive accounting and financial expertise. Mr. Kindsfather has significant experience serving as a director for Trinity for 28 years. |
CHARLES A. SLOCOMB Age 6365 Director Since 1999 Term will expire 2013 | Mr. Slocomb has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1999. Mr. Slocomb is a member of the Board’sBoard's Technology, Trust, Compensation and Audit Committees. He retired from the Los Alamos National Laboratory in August of 2004 and accepted a job with SAIC as a consulting employee in November 2004.2004 and a position with Compa in 2011. He held various management positions at the Laboratory, including Project Director, Division Director and Group Leader. He also serves as a member of the Board of DirectorsRoad Committee of Laguna Vista Land Owners Association and as a volunteer firefighter for the Laguna Vista Volunteer Fire Department. He and his wife, Connie, live in Santa Fe, New Mexico. Mr. Slocomb’s qualifications include his expertise in technology and computing, including data security. Mr. Slocomb has been a long-time resident of Los Alamos and has knowledge about our communities and the Laboratory, which constitutes a major employer and business in our markets. |
STEVE W. WELLS Age 56 Director Since 1985 Current Term expires 2014 | Mr. Wells has served as President and Chief Administrative Officer of Los Alamos National Bank since 1994. He has served on the Boards of Directors of Los Alamos National Bank and Trinity since 1986, as Trinity’s Secretary since 1986 and as a member of the Board of Directors of Title Guaranty since May 2000. He is also a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Wells has been employed by Los Alamos National Bank since 1985 and previously held the position of Executive Vice President from 1985 to 1994. He is currently a member of the Boards of Directors and Chair of the Los Alamos Medical Center Advisory Board, and a member of the Board of Directors of Northern New Mexico Health Grant Group and the Regional Development Corporation. Mr. Wells’ qualifications include his extensive banking career beginning in 1978, including executive experience as President. Mr. Wells has served on countless boards and organizations serving the communities in which Trinity operates. |
ROBERT P. WORCESTER Age 65 Director Since 1995 Current Term expires 2014 | Mr. Worcester has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1995 and served as the Chairman of the Board of Directors from 2008 to 2011. Mr. Worcester served as the Vice Chairman of the Board from 2004 to 2008. Mr. Worcester is also the Chair of the Compensation Committee. He is a member of the Audit, Trust and Strategic Planning Committees. He has been the President and a 50% shareholder of Worcester & McKay, LLC. In 2011, Mr. Worcester was recognized by Best Lawyers as Santa Fe Trusts and Estates Lawyer of the Year. Mr. Worcester has been recognized by "The Best Lawyers in America" for the last 17 years and has been recently recognized by "Outstanding Lawyers in America" and in "Super Lawyers of the Southwest." He is also a Fellow of the American College of Trust and Estate Counsel. He is the past President of the Georgia O'Keefe Foundation. In addition, Mr. Worcester serves as a member of the Board of Directors and President of the Santa Fe Art Foundation, as a member of the Board of Directors and as President of the John Bourne Foundation, as a member of the Board of Directors and Secretary of the Allan Houser Foundation, as a member of the Board of Directors and Secretary of the Veritas Foundation, as a member and Secretary of the Board of Directors of the Don and Susan Meredith Foundation, as a member of the Council of Benefactors of the Santa Fe Community Foundation, as a member of the Endowment Committee of St. Michael's High School, as a member of the Council on International Relations, as Vice-President and Director of the First Tee of Santa Fe and as a member of the Board of Directors of the National Dance Institute (NDI). Mr. Worcester’s qualifications include his knowledge and expertise as a trust and estate attorney. Mr. Worcester has knowledge of a broad range legal and business issues. Mr. Worcester has also served the communities through professional, educational and community service organizations. |
DIRECTORS EMERITI
GEORGE A. COWAN Age 92 Director Emeritus Since 2006 | Dr. Cowan served as a member of the Board of Directors of Trinity since its formation in 1975 to 2006 and was a director of Los Alamos National Bank from 1963 to 2006. Dr. Cowan resigned at the end of his term in May 2006. Dr. Cowan was Chairman of the Board of Trinity from 1977 to 1995 and of Los Alamos National Bank from 1965 to 1994. In 1988, he retired from Los Alamos National Laboratory after 40 years of service, over which period he was employed as a staff member, Associate Director for Research and Senior Fellow. Dr. Cowan continues to serve as a Senior Fellow Emeritus to the Laboratory and was awarded the Los Alamos National Laboratory Medal in 2002. He served as a member of the White House Science Council under President Reagan from 1982 to 1985. Dr. Cowan is the founding member of the Santa Fe Institute, serving as its President from 1984 to 1991. He continues to serve on the Board of Directors as a Lifetime Director Emeritus and is a Distinguished Fellow of the Institute. He also served as a member of the Board of Directors of Los Alamos National Laboratory Foundation and serves as a member of the Advisory Board for the Center for Neural Basis of Cognition. Dr. Cowan was awarded a Presidential Citation from the Department of Energy in 1990, the New Mexico Academy of Science Distinguished Scientist Award in 1975, the Robert H. Goddard Award in 1984, the E.O. Lawrence Award in 1965 and the Enrico Fermi Prize in 1991 for contributions during his career as a nuclear scientist. He was awarded the Los Alamos Living Treasures Award in 2003. He is a fellow and/or member of several societies, including the American Academy of Arts and Sciences, the American Chemical Society, the American Physical Society and Sigma Xi, and has received honorary degrees from several universities. In 2010, Dr. Cowan published his memoirs in Manhattan Project to the Santa Fe Institute: The Memoirs of George A. Cowan. Dr. Cowan also assisted the National Dance Institute (NDI) in establishing a program in Santa Fe, ensuring that children in Northern New Mexico have access to the arts. Dr. Cowan's long knowledge of the community, his connections within the scientific community and institutional knowledge from Trinity's inception make him an invaluable resource. |
LEWIS A. MUIR Age 79 Director Emeritus since 2010 | Mr. Muir served as a member of the Boards of Directors of Trinity and Los Alamos National Bank from 1990 to 2010, and was the Audit Committee Chair from 1999 to 2003. Mr. Muir also serves as President and a member of the Board of Directors of Universal Properties, and is a member of the Los Alamos Chamber of Commerce where he was a past ex officio member of the Board of Directors. He was also a member of the Board of Directors of the Maternal Child Health Council. Mr. Muir has been extensively involved in Los Alamos County government for many years, serving as a member of the Council of the Incorporated County of Los Alamos from 1993 to 2003, as a member of the Board of Directors and as Treasurer of the New Mexico Association of Counties from 1993 to 2003. Mr. Muir is a current member and past President of the Los Alamos Rotary Club. He is a former member of the Board of Directors and past President of the Los Alamos Retirement Center. Mr. Muir serves as a Consultant Pharmacist for the Los Alamos County Detention Center, the Los Alamos Endoscopy Center and works part-time at the Los Alamos Medical Center Pharmacy. Mr. Muir provides insight from his experience as a small business owner as well as a member of the medical community. Mr. Muir has served the community through his participation in various boards and organizations, most notably his long service to the County of Los Alamos. |
In addition, the following individual serves as an executive officer of Trinity and LANB:
Daniel Bartholomew. Mr. Bartholomew, age 46, has served as Chief Financial Officer of Trinity and Vice President and Chief Financial Officer of Los Alamos National Bank since February 2003. Mr. Bartholomew has been with Los Alamos National Bank since 1987, serving in a variety of positions, including Teller Supervisor, Assistant Cashier, Cashier and Vice President/Cashier. He is also the Chairman of the Board’s Asset/Liability Management Committee and a member of the ESOP Advisory Board of Trinity Capital Corporation.
ITEM II: APPROVAL OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
The Board selected Crowe Horwath LLP (“Crowe”) as the independent registered public accounting firm of Trinity and LANB for the year-ending December 31, 2012. Trinity previously employed Moss Adams, LLP (“Moss Adams”) as our independent registered public accounting firm since January 2006. In accordance with its established practice, Trinity requests proposals for its auditors at least every five years. As part of its process, the Audit Committee of the Board of Directors of Trinity selected Crowe to be its accounting firm for the first quarter of 2012 and thereafter. Moss Adams completed its engagement for Trinity’s fiscal year ended December 31, 2011 upon the filing of Trinity’s Form 10-K for the year ended December 31, 2011 on March 15, 2012.
The audit reports of Moss Adams on Trinity’s consolidated financial statements as of and for the years ended December 31, 2011 and 2010 did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During Trinity’s two most recent fiscal years and the period preceding the replacement of Moss Adams, there has not been any disagreement with Moss Adams on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Moss Adams, would have caused it to make reference to the subject matter of the disagreement in connection with its report on Trinity’s financial statements for such years. During the same periods, there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years and the subsequent interim period up to the date of engagement with Crowe, Trinity did not consult with Crowe regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Trinity’s financial statements or as to any disagreement or “reportable event” as described in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K.
In the event that the ratification of the selection of the independent registered public accounting firm is not approved by a majority of the Shares represented and voting, the Audit Committee and the Board will review the matter of appointment of independent registered public auditors.
Management expects that representatives of both Crowe and Moss Adams will be present at the Annual Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions.
Required Vote
The affirmative vote of the holders of a majority of the Shares represented and voting in person or by Proxy at the Annual Meeting is necessary to ratify the selection of Crowe as the independent registered public accounting firm of Trinity for the current fiscal year. Abstentions and Non-Votes have no effect on this proposal. If, however, a shareholder has signed and dated a Proxy, but has not voted on the ratification of the selection of Crowe as the independent registered public accounting firm by marking the appropriate box on the Proxy, such person’s Shares will be voted “FOR” the ratification of the selection of Crowe as the independent registered public accounting firm and will not be considered Non-Votes.
Audit and Other Fees Paid to Moss Adams
Aggregate fees for professional services rendered for Trinity and LANB by Moss Adams for the years ended December 31, 2011 and 2010 are described below.
| Services Provided | 2011 ($) | 2010 ($) |
Audit Fees, including audits of our consolidated financial statements, the audit of management’s assertion on internal control over financial reporting and reviews of our interim consolidated financial statements, including those in our Quarterly Reports on Form 10-Q | 196,000 | 187,000 |
Audit Related Fees, including assurance related services the majority of which relate to the audits of Trinity’s ESOP and 401(k) plan and evaluation of compliance with the Sarbanes-Oxley Act of 2002 | 22,200 | 18,300 |
Tax Fees, including preparation of our federal and state income tax returns and non-routine tax consultations | 16,300 | 17,550 |
All Other Fees | - | - |
TOTAL | $ 234,500 | $ 222,850 |
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing and reviewing the work of the independent registered public accounting firm and setting the independent registered public accounting firm’s compensation. In accordance with its charter, the Audit Committee reviews and pre-approves all audit services and permitted non-audit services provided by the independent registered public accounting firm to Trinity or LANB and ensures that the independent public accounting firm is not engaged to perform the specific non-audit services prohibited by law, rule or regulation. During the years ended December 31, 2011 and 2010, all services were approved in advance by the Audit Committee in compliance with these processes. The Committee concluded that the provision of such services by Moss Adams was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Recommendation of the Board of Directors unanimously
The Board recommends that youa vote “FOR” all nominees.“FOR” the ratification of the selection of Crowe as the independent registered public accounting firm of Trinity for the year ending December 31, 2012.
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CONTINUING DIRECTORS
Set forth below is information concerning the business experience and qualifications for each of the continuing directors.
| Director | Principal Occupation, Directorships, Qualifications, Attributes and Skills |
JEFFREY F. HOWELLWILLIAM C. ENLOE
Age 5663 Director Since 20021979 Current Term expires 2012will expire 2013
| Mr. Enloe has served as President and Chief Executive Officer of Trinity since 1979. Mr. Enloe has also served as the Chairman and Chief Executive Officer of Los Alamos National Bank since 1994. He is a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Enloe has been employed by Los Alamos National Bank since 1971 and served as the President and Chief Executive Officer from 1978-1994; Vice President from 1975-1978; Cashier from 1973-1975; and as a Loan Officer from 1971-1973. Additionally, he has served as Chief Executive Officer and Chairman of the Board of Title Guaranty since May 2000 and TCC Advisors since its formation in February 2006. In addition to his service to Trinity, Mr. Enloe is committed to New Mexico charities and economic development efforts. Mr. Enloe is on the Boards of the American Bankers Association Government Relations Committee, NM Bankers Association, Los Alamos Trinity Site Revitalization Project Advisory Committee, LANS Venture Acceleration Fund Review Panel (RAB), The Santa Fe Institute, The Delle Foundation, Los Alamos Economic Development Corporation, Los Alamos Economic Development Land Use Council, and Los Alamos Technical Associates, Inc. Mr. Enloe is also a managing member of KKSE, LLC. Mr. Enloe served as a director for the Federal Reserve Board in Denver from 2008 to January 2010. Mr. Enloe’s qualifications include his extensive banking career beginning in 1971, with executive experience in all areas of banking. Mr. Enloe has extensive knowledge of the local, state and national economy, and has served on countless boards and organizations serving the communities in which Trinity operates. |
DEBORAH U. JOHNSON Age 60 Director Since 2001 Term will expire 2013 | Ms. HowellJohnson has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001. She has also served as Strategic Planning Committee Chair since 2002 and was Chairman of the Board of Trinity from 2004 to 2008. She is the Chair of the Audit Committee and serves as the audit committee financial expert. Ms. Howell is also a member of the Board’s LoanNominating and Funds ManagementCorporate Governance, and Trust Committees. She is PresidentMs. Johnson served on the Trinity Compensation Committee from 2001 to 2009. Ms. Johnson was a co-owner and Chief Executive Officer of Howell Fuel and Lumbermanaging partner in Rick Johnson & Company, Inc., a communications firm based in Albuquerque, New Mexico, for over 30 years. Currently, Ms. Johnson is an Executive Director of REISTER, an advertising and marketing firm headquartered in Wallkill,Phoenix, Arizona. Ms. Johnson is a New York. She wasMexico member on the founder and managing DirectorFederal Reserve Bank of Howell Meyers Associates from 1997 to 2001, was employedKansas City’s Tenth District Economic Advisory Council. Very active in various capacities at Harvard University from 1985 to 1991, includingthe business community in Albuquerque, Ms. Johnson serves as Associate Director for Administration at Harvard College Observatorythe Albuquerque Chamber of Commerce, Albuquerque Economic Development Committee (Chairman 2002 and Assistant Dean for Financial Operations in2003), and has served on the FacultyBoards of Arts and Sciences. She was an accountant inUniversity of New Mexico Anderson School of Management (Chairman 1999), the EmergingNew Mexico Better Business Systems Group at Coopers & Lybrand from 1982 to1984 after having received her Masters of Business Administration from Yale University. She is also a member ofBureau (Chairman 1999), the Board of Directors of The DelleCentral New Mexico Susan G. Komen Foundation (Chairman 2001), and the J. R. Oppenheimer Memorial Committee.United Way Women’s Leadership Council. Ms. Howell was electedJohnson has a long history of commitment to the Lady Bird Johnson Wildflower Center Advisory Councilbusiness community as well as charitable organizations in 2009. Ms. Howell is a former member of the Board of Directors and President of the Los Alamos National Laboratory Foundation, membership chair of the League of Women Voters of Los Alamos, a member of Rotary International and a past Dog Handler and Search and Rescue volunteer for the K-9 Unit of the Pajarito Ski Patrol. Ms. Howell’s qualifications include her business experience and financial expertise. Ms. Howell has extensive experience in business operationsNew Mexico and has served as, among other positions, a Director of the ChairNew Mexico Association of Trinity's Audit Committee since 2003.Commerce and Industry, Quality New Mexico and the Governor’s Business Executives for Education. Ms. Johnson is past chairman of Affiliated Advertising Agencies International, and has received numerous professional awards including “Female Executive of the Year” by the New Mexico Chapter, National Association of Female Executives; “Top 100 Power Broker” by New Mexico Business Weekly; “Woman on the Move,” 1996 and “New Mexico of Vision,” 2004, by the YWCA; “Top 25 Women Business Owners” by New Mexico Woman Magazine; “Maxie Anderson Small Business Award” by the Greater Albuquerque Chamber of Commerce, 1999; and The “ZIA” Achievement Award from the University of New Mexico. The New Mexico Business Weekly named her one of the state’s ten “Most Influential Women.”
Ms. Johnson’s qualifications include extensive executive, public relations and strategic planning experience. Ms. Johnson’s skills and experience as an advertising executive aid in communications to shareholders and customers. Ms. Johnson’s clear commitment to the business and economic development in New Mexico make her knowledgeable about the Albuquerque market and the state as a whole. |
JERRY KINDSFATHER Age 6062 Director Since 1984 Current Term expires 20112014 | Mr.Jerry Kindsfather has served as the Chairman of the Board of Directors of Trinity since June 2011 and previously served as Chairman from 2000 to 2004. Mr. Kindsfather has served as a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1984 and as a member of the Board of Directors of Title Guaranty & Insurance Company since May 2000. He is also a member of the Audit, Compensation, Trust, Strategic Planning, Loan and Funds Management Committees. Mr. Kindsfather retired in November 2003 after serving as the President of AKC, Inc. since 1970 and as co-owner of Ed’sEd's Foods, a retail grocery store located in Los Alamos, New Mexico, since 1970. Mr. Kindsfather is a partner in J&G Investments and is a managing member of KKSE, LLC.
Mr. Kindsfather has business management experience and experience as a small business owner. Mr. Kindsfather has extensive accounting and financial expertise. Mr. Kindsfather has significant experience serving as a director for Trinity for over 2528 years. |
Page 42.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
ARTHUR B. MONTOYA, JR.
Age 45
Director Since 2001
Current Term expires 2012
| Dr. Montoya has served as a member of the Board of Directors of Trinity and Los Alamos National Bank since 2001. He is Chair of the Board’s Nominating and Corporate Governance Committee and is a member of the Board’s Audit and Loan Committees. Dr. Montoya runs a successful dental practice in Los Alamos, New Mexico. He also serves as a member of the Board of Directors of the Los Alamos Girls Basketball League, and is a director and Secretary for the Los Alamos Historical Society. Dr. Montoya has been on the Pajarito Home Owners Association Board of Directors and is a past Chairman, taught religious education at Immaculate Heart of Mary Catholic Church, is a past Chairman and member of the Board of Directors of the Los Alamos Chamber of Commerce, a past Chairman and member of the Board of Directors for the Los Alamos Medical Center, is active in the Northern New Mexico Interdisciplinary Study Club, is a girls basketball coach at Los Alamos Middle School, is a volunteer for the Los Alamos Fusion Volleyball Club and is involved in the Special Olympics of New Mexico.
Dr. Montoya provides insight from his experience as a small business owner as well as from the dental and general medical community. Dr. Montoya has served the community through his participation in various boards and organizations.
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STANLEY D. PRIMAKCHARLES A. SLOCOMB
Age 5865 Director Since 20011999 Current Term expires 2012will expire 2013
| Mr. PrimakSlocomb has served asbeen a member of the Boards of Directors of Trinity and Los Alamos National Bank since 2001 and Vice Chairman of the Board of Directors since 2008. He1999. Mr. Slocomb is also a member of the Board’s Loan,Board's Technology, Trust, Compensation and Nominating and Corporate GovernanceAudit Committees. Mr. Primak is Vice President of Primak Builders, Inc., a residential construction company inHe retired from the Los Alamos New Mexico,National Laboratory in August of 2004 and accepted a job with SAIC as a consulting employee in November 2004 and a position he haswith Compa in 2011. He held since 1996,various management positions at the Laboratory, including Project Director, Division Director and is Vice-President of Tranquillo Partners, a residential construction and real estate management company.Group Leader. He is also serves as a member of the BoardRoad Committee of DirectorsLaguna Vista Land Owners Association and Chairmanas a volunteer firefighter for of the Los Alamos CommerceLaguna Vista Volunteer Fire Department. He and Development Corporation, a member of the Los Alamos County Personnel Board, a member of the League of Women Voters and is President of the Los Alamos Chamber of Commerce. Mr. Primak is also a member of the Green Builders Association, thehis wife, Connie, live in Santa Fe, Area Homebuilders AssociationNew Mexico. Mr. Slocomb’s qualifications include his expertise in technology and the New Mexico Homebuilders Association.computing, including data security. Mr. Primak also serves on the Design and Build Committee for the Habitat for Humanity forSlocomb has been a long-time resident of Los Alamos and Rio Arriba Counties. Mr. Primak tookhas knowledge about our communities and the leadLaboratory, which constitutes a major employer and served as the Project Manager for LANB’s Habitat for Humanity Housebusiness in Espanola, New Mexico in 2008.our markets. Mr. Primak's professional knowledge of the construction and building industry in our markets makes him a valuable resource for the Company's credit activities. As a small business owner, Mr. Primak also provides insight into the challenges and needs of this significant customer segment.
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Page 43.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
STEVE W. WELLS Age 5456 Director Since 1985 Current Term expires 20112014 | Mr. Wells has served as President and Chief Administrative Officer of Los Alamos National Bank since 1994. He has served on the Boards of Directors of Los Alamos National Bank and Trinity since 1986, as Trinity’s Secretary since 1986 and as a member of the Board of Directors of Title Guaranty since May 2000. He is also a member of the Board’s Loan, Funds Management, Technology, Trust and Strategic Planning Committees. Mr. Wells has been employed by Los Alamos National Bank since 1985 and previously held the position of Executive Vice President from 1985 to 1994. He is currently a member of the Boards of Directors and PresidentChair of the Los Alamos Public Schools Foundation,Medical Center Advisory Board, and a member of the BoardsBoard of Directors of Los Alamos Family YMCA,Northern New Mexico Health Grant Group and the Los Alamos Medical Center for which he is also Chair of the Board of Trustees.Regional Development Corporation. Mr. Wells’ qualifications include his extensive banking career beginning in 1978, including executive experience as Executive Vice President. Mr. Wells has served on countless boards and organizations serving the communities in which Trinity operates. |
ROBERT P. WORCESTER Age 6365 Director Since 1995 Current Term expires 20112014 | Mr. Worcester has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1995 and has served as the Chairman of the Board of Directors since 2008.from 2008 to 2011. Mr. Worcester served as the Vice Chairman of the Board from 2004 to 2008. Mr. Worcester is also the Chair of the Compensation Committee. He is a member of the Audit, Trust and Strategic Planning Committees. He has been the President and a 50% shareholder of Worcester & McKay, P.C. since 1993, where he is a practicing attorney,LLC. In 2011, Mr. Worcester was recognized by Best Lawyers as Santa Fe Trusts and is a memberEstates Lawyer of Worcester & McKay, LLC.the Year. Mr. Worcester has been recognized by “The"The Best Lawyers in America”America" for the last 1617 years and has been recently recognized by “Outstanding"Outstanding Lawyers in America”America" and in “Super"Super Lawyers of the Southwest.”" He is also a Fellow of the American College of Trust and Estate Counsel. He serves asis the past President of the Georgia O’KeefeO'Keefe Foundation. In addition, Mr. Worcester serves as a member of the Board of Directors and President of the Santa Fe Art Foundation, as a member of the Board of Directors and as President of the John Bourne Foundation, as a member of the Board of Directors and Secretary of the Allan Houser Foundation, as a member of the Board of Directors and Secretary of the Veritas Foundation, as a member and Secretary of the Board of Directors of the Don and Susan Meredith Foundation, as a member of the Council of Benefactors of the Santa Fe Community Foundation, as a member of the Endowment Committee of St. Michael’sMichael's High School, Directoras a member of the Council on International Relations, as Vice-President and PresidentDirector of the First Tee of Santa Fe and as a member of the Council on International Relations.Board of Directors of the National Dance Institute (NDI). Mr. Worcester’s qualifications include his knowledge and expertise as a trust and estate attorney. Mr. Worcester has knowledge of a broad range legal and business issues. Mr. Worcester has also served the communities through professional, educational and community service organizations. |
Page 44.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
DIRECTOR WHOSE TERM EXPIRES AT 2010 MEETINGDIRECTORS EMERITI
Lewis A. Muir, who has been a Director of Trinity and Los Alamos National Bank since 1990 and currently serves as Secretary of the Bank is not eligible for reelection at the conclusion of his current term, which expires at the 2010 Annual Meeting. Trinity’s Bylaws provide that any director who has attained the age of 75 prior to the Annual Meeting at which he or she would stand for election or reelection is not eligible to serve. Mr. Muir is currently 77 years of age and as such is not eligible to stand for reelection under Trinity’s bylaws.
LEWIS A. MUIR
Age 77
Director Since 1990
Current Term expires 2010
| Mr. Muir has been a member of the Boards of Directors of Trinity and Los Alamos National Bank since 1990 and was the Audit Committee Chair from 1999 to 2003. He is a member of the Board’s Loan, Funds Management, Compensation, Audit, and Strategic Planning Committees. Mr. Muir also serves as President and a member of the Board of Directors of Universal Properties, and is a member of the Los Alamos Chamber of Commerce where he was a past ex officio  member of the Board of Directors. He was also a member of the Board of Directors of the Maternal Child Health Council. Mr. Muir has been extensively involved in Los Alamos County government for many years, serving as a member of the Council of the Incorporated County of Los Alamos from 1993 to 2003, as a member of the Board of Directors and as Treasurer of the New Mexico Association of Counties from 1993 to 2003. Mr. Muir is a current member and past President of the Los Alamos Rotary Club. He is a former member of the Board of Directors and past President of the Los Alamos Retirement Center. Mr. Muir serves as a Consultant Pharmacist for the Los Alamos County Detention Center, the Los Alamos Endoscopy Center and works part-time at the Los Alamos Medical Center Pharmacy.Mr. Muir provides insight from his experience as a small business owner as well as a member of the medical community. Mr. Muir has served the community through his participation in various boards and organizations, most notably his long service to the County of Los Alamos.
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Page 45.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
DIRECTOR EMERITUS
GEORGE A. COWAN Age 9092 Director Emeritus Since 2006 | Dr. Cowan served as a member of the Board of Directors of Trinity since its formation in 1975 to 2006 and was been a director of Los Alamos National Bank from 1963 to 2006. Dr. Cowan resigned at the end of his term in May 2006. Dr. Cowan was Chairman of the Board of Trinity from 1977 to 1995 and of Los Alamos National Bank from 1965 to 1994. In 1988, he retired from Los Alamos National Laboratory after 40 years of service, over which period he was employed as a staff member, Associate Director for Research and Senior Fellow. Dr. Cowan continues to serve as a Senior Fellow Emeritus to the Laboratory and was awarded the Los Alamos National Laboratory Medal in 2002. He served as a member of the White House Science Council under President Reagan from 1982 to 1985. Dr. Cowan is the founding member of the Santa Fe Institute, serving as its President from 1984 to 1991. He continues to serve on the Board of Directors as a Lifetime Director Emeritus and is a Distinguished Fellow of the Institute. He also served as a member of the Board of Directors of Los Alamos National Laboratory Foundation and serves as a member of the Advisory Board for the Center for Neural Basis of Cognition. Dr. Cowan was awarded a Presidential Citation from the Department of Energy in 1990, the New Mexico Academy of Science Distinguished Scientist Award in 1975, the Robert H. Goddard Award in 1984, the E.O. Lawrence Award in 1965 and the Enrico Fermi Prize in 1991 for contributions during his career as a nuclear scientist. He was awarded the Los Alamos Living Treasures Award in 2003. He is a fellow and/or member of several societies, including the American Academy of Arts and Sciences, the American Chemical Society, the American Physical Society and Sigma Xi, and has received honorary degrees from several universities. In 2010, Dr. Cowan published his memoirs in Manhattan Project to the Santa Fe Institute: The Memoirs of George A. Cowan. Dr. Cowan also assisted the National Dance Institute (NDI) in establishing a program in Santa Fe, ensuring that children in Northern New Mexico have access to the arts. Dr. Cowan's long knowledge of the community, his connections within the scientific community and institutional knowledge from Trinity's inception make him an invaluable resource. |
LEWIS A. MUIR Age 79 Director Emeritus since 2010 | Mr. Muir served as a valuable resource.member of the Boards of Directors of Trinity and Los Alamos National Bank from 1990 to 2010, and was the Audit Committee Chair from 1999 to 2003. Mr. Muir also serves as President and a member of the Board of Directors of Universal Properties, and is a member of the Los Alamos Chamber of Commerce where he was a past ex officio member of the Board of Directors. He was also a member of the Board of Directors of the Maternal Child Health Council. Mr. Muir has been extensively involved in Los Alamos County government for many years, serving as a member of the Council of the Incorporated County of Los Alamos from 1993 to 2003, as a member of the Board of Directors and as Treasurer of the New Mexico Association of Counties from 1993 to 2003. Mr. Muir is a current member and past President of the Los Alamos Rotary Club. He is a former member of the Board of Directors and past President of the Los Alamos Retirement Center. Mr. Muir serves as a Consultant Pharmacist for the Los Alamos County Detention Center, the Los Alamos Endoscopy Center and works part-time at the Los Alamos Medical Center Pharmacy. Mr. Muir provides insight from his experience as a small business owner as well as a member of the medical community. Mr. Muir has served the community through his participation in various boards and organizations, most notably his long service to the County of Los Alamos. |
In addition, the following individual serves as an executive officer of Trinity and Los Alamos National Bank:LANB:
Daniel Bartholomew. Mr. Bartholomew, age 44,46, has served as Chief Financial Officer of Trinity and Vice President and Chief Financial Officer of Los Alamos National Bank since February 2003. Mr. Bartholomew has been with Los Alamos National Bank since 1987, serving in a variety of positions, including Teller Supervisor, Assistant Cashier, Cashier and Vice President/Cashier. He is also the Chairman of the Board’s Asset/Liability Management Committee and a member of the ESOP Advisory Board of Trinity Capital Corporation. Mr. Bartholomew serves as Chairman of the Board of Directors for Casa Mesita, Inc. d/b/a Casa Mesita Group Home.
Page 46.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
ITEM II: APPROVAL OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
Item II
Approval of Independent Registered Public Accountant
Shareholders will be asked to ratify The Board selected Crowe Horwath LLP (“Crowe”) as the appointment of Moss Adams, LLP as Trinity’s independent registered public accounting firm of Trinity and LANB for the year-ending December 31, 2012. Trinity previously employed Moss Adams, LLP (“Moss Adams”) as our independent registered public accounting firm since January 2006. In accordance with its established practice, Trinity requests proposals for its auditors at least every five years. As part of its process, the Audit Committee of the Board of Directors of Trinity selected Crowe to be its accounting firm for the first quarter of 2012 and thereafter. Moss Adams completed its engagement for Trinity’s fiscal year ended December 31, 2011 upon the filing of Trinity’s Form 10-K for the year endingended December 31, 2010. If the appointment2011 on March 15, 2012.
The audit reports of Moss Adams on Trinity’s consolidated financial statements as of and for the years ended December 31, 2011 and 2010 did not contain any adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles. During Trinity’s two most recent fiscal years and the period preceding the replacement of Moss Adams, there has not been any disagreement with Moss Adams on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the satisfaction of Moss Adams, would have caused it to make reference to the subject matter of the disagreement in connection with its report on Trinity’s financial statements for such years. During the same periods, there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
During the two most recent fiscal years and the subsequent interim period up to the date of engagement with Crowe, Trinity did not consult with Crowe regarding the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Trinity’s financial statements or as to any disagreement or “reportable event” as described in Item 304(a)(1)(iv) and Item 304(a)(1)(v) of Regulation S-K.
In the event that the ratification of the selection of the independent registered public accounting firm is not ratified,approved by a majority of the Shares represented and voting, the Audit Committee and the Board will review the matter of the appointment of independent registered public accounting firm will be considered by the Audit Committeeauditors.
Management expects that representatives of both Crowe and Board. A representative of Moss Adams is expected towill be present at the Annual Meeting, will be givenhave the opportunity to make a statement if the representative desires to do sothey desire and will be available to respond to appropriate questions.
Accountant Fees. Required Vote
The following areaffirmative vote of the auditholders of a majority of the Shares represented and voting in person or by Proxy at the Annual Meeting is necessary to ratify the selection of Crowe as the independent registered public accounting firm of Trinity for the current fiscal year. Abstentions and Non-Votes have no effect on this proposal. If, however, a shareholder has signed and dated a Proxy, but has not voted on the ratification of the selection of Crowe as the independent registered public accounting firm by marking the appropriate box on the Proxy, such person’s Shares will be voted “FOR” the ratification of the selection of Crowe as the independent registered public accounting firm and will not be considered Non-Votes.
Audit and Other Fees Paid to Moss Adams
Aggregate fees audit related fees, tax feesfor professional services rendered for Trinity and other fees billedLANB by Moss Adams for the 2009years ended December 31, 2011 and 2008 audits2010 are described below.
| Services Provided | 2011 ($) | 2010 ($) |
Audit Fees, including audits of our consolidated financial statements, the audit of management’s assertion on internal control over financial reporting and reviews of our interim consolidated financial statements, including those in our Quarterly Reports on Form 10-Q | 196,000 | 187,000 |
Audit Related Fees, including assurance related services the majority of which relate to the audits of Trinity’s ESOP and 401(k) plan and evaluation of compliance with the Sarbanes-Oxley Act of 2002 | 22,200 | 18,300 |
Tax Fees, including preparation of our federal and state income tax returns and non-routine tax consultations | 16,300 | 17,550 |
All Other Fees | - | - |
TOTAL | $ 234,500 | $ 222,850 |
Policy on Audit Committee Pre-Approval of Trinity’s financial statements.Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
| Services Provided | 2009 | 2008 |
| Audit Fees | $ 213,600 | $169,391 |
| Audit Related Fees | $ 45,000 | $ 22,500 |
| Tax Fees | $ 19,800 | $ 16,500 |
| All Other Fees | $ - | $ - |
| TOTAL | $ 278,400 | $ 208,391 |
The Audit Fees. TheCommittee is responsible for appointing and reviewing the work of the independent registered public accounting firm and setting the independent registered public accounting firm’s compensation. In accordance with its charter, the Audit Committee reviews and pre-approves all audit services includedand permitted non-audit services provided by the review ofindependent registered public accounting firm to Trinity or LANB and ensures that the consolidated financial statementsindependent public accounting firm is not engaged to perform the specific non-audit services prohibited by law, rule or regulation. During the years ended December 31, 2011 and internal control over financial reporting, and other2010, all services normally performed by independent auditorswere approved in connection with statutory and regulatory filings.
Audit Related Fees. The majority of these services related to the audit of Trinity’s ESOP and 401(K) plan and evaluation of compliance with the Sarbanes-Oxley Act of 2002.
Tax Fees. The tax fees billed were for the preparation of Trinity’s federal and state tax returns.
All Other Fees. Moss Adams did not bill for any other services in 2009 or 2008.
Pre-Approval. All audit services, audit related services, tax services and other services performed in 2008 and 2009 were pre-approvedadvance by the Audit Committee.Committee in compliance with these processes. The Committee concluded that the provision of such services by Moss Adams was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the ratification of the selection of Crowe as the independent registered public accounting firm of Trinity for the year ending December 31, 2012.
Audit Committee will, going forward, consider annually and, if appropriate, approveReport
The report of the provision of audit and non-audit services by Moss Adams. The Audit Committee will,below shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as necessary, consideramended (the “Securities Act”) or under the Exchange Act (collectively, the “Acts”), except to the extent Trinity specifically incorporates this information by reference, and if appropriate, approve the provision of audit and non-audit services which areshall not encompassed by the Audit Committee’s annual pre-approval and are not prohibited by law.otherwise be deemed filed under such Acts.
The Audit Committee discussed withobtained from Moss Adams a formal written statement describing all relationships between Moss Adams and Trinity that might bear on the independent registered public accounting firm’s independence, from Trinity and its management, includingconsistent with the matters in the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee.audit committee, and discussed with Moss Adams any relationships that may impact its objectivity and independence, and satisfied itself as to the firm’s independence. The Committee also reviewed its composition and concluded that all directors serving on the Committee are independent pursuant to the standards promulgated by NASDAQ.
The Committee met and held discussions with management and Moss Adams is independent from Trinityregarding the fair and itscomplete presentation of Trinity’s results and the assessment of the quality and adequacy of Trinity’s internal control over financial reporting. The Committee reviewed and discussed Trinity’s policies with respect to risk assessment and risk management. The Committee discussed with Trinity’s Internal Auditor and Moss Adams the overall identification of audit risks, scope and plans for their respective audits. The Audit Committee has reviewed and discussed Trinity’s audited financial statements as of and for the year-ended December 31, 2011 with Trinity’s management, Trinity’s Internal Auditors and Moss Adams.
The Board unanimously, andCommittee met with the recommendationInternal Auditor and Moss Adams, with and without management present, to discuss the results of their examinations, the evaluations of Trinity’s internal controls, and the overall quality of Trinity’s financial reporting. The Audit Committee recommends a vote “for”discussed and reviewed with the approval of Moss Adams, LLP as Trinity’s independent registered public accounting firm all communications required by generally accepted accounting standards, including those described in Statement on Auditing Standards No. 61, “Communications with Audit Committees.” Management has the responsibility for the year ending 2010.preparation of Trinity’s financial statements and the independent registered public accounting firm has the responsibility for the audit of those statements in accordance with the standards of the Public Company Accounting Oversight Board.
Based on the review and discussions with management and Moss Adams, the Committee has recommended to the Board, and the Board has approved, that the audited financial statements be included in Trinity’s Annual Report on Form 10-K for the year-ended December 31, 2011, for filing with the Securities and Exchange Commission. The Audit Committee also appointed the independent registered public accounting firm, Crowe, and the Board concurred in such appointment.
Page 47.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement | The Audit Committee: | |
| Jeffrey F. Howell, Chair | |
| Arthur B. Montoya, Jr. | |
| Charles A. Slocomb | |
| Robert P. Worcester | |
ITEM III: APPROVAL OF A NON-BINDING ADVISORY RESOLUTION APPROVING
Item III
ApprovalThe American Recovery and Reinvestment Act of an Advisory Resolution
Approving2009, signed into law on February 17, 2009, includes a provision requiring CPP participants, such as Trinity, so long as any obligation arising under the Compensationprogram remains outstanding (the “Participation Period”), to submit a separate non-binding shareholder vote each year to approve the compensation of
Trinity’s Named Executive Officers
During the Participation Period in which Trinity participates inNEOs as disclosed pursuant to the CPP, Trinity is required to provide shareholders withcompensation rules of the right to cast an advisory vote on Trinity’s compensation program for its Named Executive Officers (a so-calledSEC. This proposal, commonly known as a “Say-on-Pay”) at each annual meeting of shareholders. As a result, Trinity is presenting this proposal, which gives the shareholders the opportunity to endorse or not endorse Trinity’s executive pay programprogram. This vote is advisory, meaning that it will not be binding upon the Board, will not overrule any decision by voting forthe Board or againstCompensation Committee and does not imply any additional fiduciary duty owed by the directors. However, the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.
In addition, under the rules promulgated by the SEC as part of the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, certain public companies are required to hold an advisory Say-on-Pay vote at least once each three years and must also hold an advisory vote on the frequency of presentation of the Say-on-Pay vote at least once every six years by submitting a non-binding vote of shareholders whether to hold the Say-on-Pay vote every one, two or three years. As a CPP participant, Trinity is not required to comply with the Dodd-Frank Say-on-Pay rules during the Participation Period.
Resolution to be Approved
The holders of a majority of the votes cast in person or by Proxy at the Annual Meeting are asked to approve the following resolution:
“RESOLVED,Resolved, that the shareholders approve the compensation of Trinity’s Named Executive Officers,Trinity Capital Corporation’s executives as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the accompanying narrative disclosures contained in the Proxy Statement dated April 6, 2012.”
Required Vote
The affirmative vote of the holders of a majority of the shares represented and voting in person or by Proxy at the Annual Meeting is necessary to approve the non-binding, advisory resolution relating to Trinity’s executive compensation policies and procedures. Abstentions and Non-Votes have no effect on this proxy statement.”proposal. If, however, a shareholder submits a signed and dated Proxy but has not voted on the non-binding, advisory resolution relating to Trinity’s executive compensation policies and procedures by marking an appropriate box on the Proxy, such person’s shares will be voted “For” the approval of the non-binding, advisory resolution relating to Trinity’s executive compensation policies and procedures.
Recommendation of the Board of Directors
The Board of Directors urges shareholders to endorse the compensation program for Trinity’s Named Executive Officers by votingrecommends a vote “FOR”the above resolution.approval of the non-binding, advisory resolution relating to Trinity’s executive compensation policies and procedures. As discussed in the Compensation Discussion and Analysis contained in this Proxy Statement, the Compensation Committee believes that the executive compensation for 2009 is2011 was reasonable and appropriate, is justified by the performance of Trinity in an extremely difficult environment and is consistent with Trinity’s compensation philosophy.
This vote is advisory meaning that it will not be binding upon the Board of Directors and will not overrule any decision by the Board or Compensation Committee or imply any additional fiduciary duty owed by the Directors. However, the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements.Report
The Board unanimously, and with the recommendationreport of the Compensation Committee recommendsbelow shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent Trinity specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
The Compensation Committee reviewed and discussed Trinity’s Compensation Discussion and Analysis with management. The Compensation Committee also reviewed its composition and concluded that a vote “for” the approval the advisory Resolutionmajority of directors serving on the compensationCompensation Committee are independent pursuant to the standards promulgated by NASDAQ. The Compensation Committee has met and held discussions with management regarding the fair and complete presentation of Trinity’s Named Executive Officers for 2009.compensation practices, policies and plans.
In addition, the Compensation Committee certifies that, at least once every six months, during the twelve month period ending on December 31, 2011, conducted the following assessments (collectively, the “Risk Assessment”):
Page 48.………………………………………….……………………………… | ᶱ | it reviewed with the senior risk officer (the “SRO”), the senior executive officers’ (“SEO”) compensation arrangements and has made all reasonable efforts to ensure that such arrangements do not encourage SEOs to take unnecessary and excessive risks that threaten the value of Trinity; |
| ᶱ | it has reviewed with the SRO the employee compensation plans and has made all reasonable efforts to limit any unnecessary risks these plans pose to Trinity; and |
| ᶱ | it has reviewed with the SRO the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of Trinity to enhance the compensation of any employee. |
The certification above is being provided in accordance with the requirement of the Interim Final Rule issued June 15, 2009 by the U.S. Department of the Treasury.
In the course of conducting its Risk Assessment, the Compensation Committee considered the overall business and risk environment confronting Trinity Capital Corporation 2010 Proxy Statementand how the NEO compensation plans and employee compensation plans serve to motivate employee behavior when operating within that environment. In particular, the Compensation Committee’s Risk Assessment focused on the following compensation plans (* denotes plans in which NEOs participate):
| Base Salary* | Employee Stock Ownership Plan* |
| Performance Bonuses* | Equity Incentive Plan* |
| Annual Bonuses | Change in Control Agreements* |
| Profit Sharing* | 401(k) Plan* |
With the exception of Change in Control Agreements, Trinity does not maintain any compensation plans in which only NEOs participate. For purposes of this discussion, references to “NEO compensation plans” mean the portion of an employee plan in which the NEOs participate.
With respect to the NEO compensation plans, the Compensation Committee believes that such plans do not encourage Trinity's NEOs to take unnecessary or excessive risks that could harm the value of Trinity. The Compensation Committee believes this to be true because, as is more fully described in the Compensation Discussion and Analysis, the Compensation Committee strives to provide a balanced aggregate compensation package to our NEOs that serves to incentivize our NEOs to manage the business of Trinity in a way that will result in company-wide financial success and value growth for our shareholders, subject to the limitations of the CPP rules and regulations without incentivizing undue risk.
The Compensation Committee believes it is appropriate for our NEOs to focus certain of their efforts on near-term goals that have importance to Trinity; however, the Compensation Committee also acknowledges that near-term focus should not be to the detriment of a focus on the long-term health and success of Trinity. In practice, providing base salary to any employee provides the most immediate reward for job performance. The Compensation Committee engages in an annual process, as is described in the Compensation Discussion and Analysis, to set base salary. We believe our process for establishing base salary is relatively free from risk to Trinity, as we do not typically make significant adjustments to base salary based on a single year’s performance. The Compensation Committee believes it is appropriate to reward our NEO’s focus on near-term goals, when such goals correspond to the overall goals and direction set by our Board. To reward the NEOs for such focus, the Committee may award, at its full discretion, cash bonuses to our executives. In awarding cash bonuses through our profit sharing program, we try to provide an adequate level of reward and future incentive for the achievement of corporate goals, while also ensuring that the amounts awarded are not such a substantial portion of the total compensation that they could promote behavior that would encourage unreasonable or excessive risks. In this way, we believe the awards under our profit sharing program do not encourage our executives to take unnecessary or excessive risks that could harm the value of Trinity.
The other incentive compensation elements offered to our NEOs, with the exception of perquisites, are intended to reward performance over the long-term or are intended to focus the NEOs’ attention on the long-term performance of the company. The Compensation Committee feels there is little, if any, risk associated with our ESOP and 401(k) Plan as they are tax-qualified retirement plans that are subject to and maintained in accordance with the mandates of the Internal Revenue Code and the Employee Retirement Income Security Act. The Compensation Committee believes our equity incentive plans help to tie the NEOs’ interests more closely to those of our shareholders by giving them an equity interest in Trinity. As the RSUs granted include restrictions that will not lapse until at least two years from the date of grant, the Compensation Committee feels this equity interest in Trinity promotes a long-term focus among our executives on the financial success of Trinity. Finally, while Trinity has adopted a deferred compensation plan, it has not yet granted its use by any employee or NEO.
With respect to the employee compensation plans, the Risk Assessments resulted in a determination by the Compensation Committee that no changes were necessary to bring the plans into compliance with the CPP rules. The Committee believes there exist adequate policies and procedures to balance and control any risk-taking that may be incentivized by the employee compensation plans. The Compensation Committee further believes that such policies and procedures will work to limit the risk that any employee would manipulate reporting earnings in an effort to enhance his or her compensation.
The Compensation Committee intends to continue, in accordance with its obligations under the CPP and applicable rules and regulations of the federal banking regulators, to periodically review and assess the NEO compensation plans and employee compensation plans to ensure that the risk-taking behavior incentivized by such plans is kept to an appropriate level. The Compensation Committee will, as necessary, amend or discontinue any plan or revise any company policy or procedure to meet its obligations under the CPP and applicable rules and regulations of the federal banking regulators.
Based on review and discussions, the Compensation Committee determined that the risk management oversight and the internal controls embedded within the organization, the discretionary nature of most compensation plans or a combination of these features, are key features that serve to ensure that the compensation plans do not encourage undesirable risk-taking activities or the manipulation of earnings. The Compensation Committee has recommended to the Board, and the Board has approved, that the Compensation Discussion and Analysis contained herein be included in Trinity’s Annual Report on Form 10-K for the year-ended December 31, 2011 and this Proxy Statement, for Common Shares Solicited on Behalffiling with the Securities and Exchange Commission.
| The Compensation Committee: | |
| Robert P. Worcester (Chair) |
| Jeffrey Howell | | Jerry Kindsfather |
| Stanley D. Primak | | Charles A. Slocomb |
PROPOSALS OF SHAREHOLDERS
Under Trinity’s Bylaws, no business may be brought before an Annual Meeting unless it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the direction of the Board
or by a shareholder entitled to vote who has delivered written notice to Trinity’s Corporate Secretary. Such written notice of Directorsproposal (containing certain information specified in the Bylaws about the shareholders and proposed action) must be submitted to Trinity's Secretary not later than 120 days prior to the first anniversary of the mailing date of Trinity’s Proxy Statement for the preceding year's annual meeting to be included in Trinity's Proxy Statement. For proposals to be otherwise brought by a shareholder and voted upon at an Annual Meeting, the shareholder must file written notice of the proposal (containing certain information specified in the bylaws about the shareholder and the proposed action) to Trinity’s Corporate Secretary no less than 60 days prior to the first anniversary of the preceding year’s annual meeting.
No shareholder proposals were received by Trinity by March 20, 2012.
To be considered for inclusion in Trinity’s Proxy Statement and form of Proxy for Trinity’s 2013 Annual Meeting of Shareholders, shareholder proposals must be received by Trinity’s Corporate Secretary, at the above address, no later than December 7, 2012, and must otherwise comply with the notice and other provisions of
Trinity Capital Corporation Trinity’s bylaws, as well as SEC rules and regulations. For Trinity’s 2013 Annual Meeting of Shareholders, to be heldconsidered for a vote, such proposal must be filed with Trinity’s Corporate Secretary no later than March 18, 2013. Additional information on May 27, 2010shareholder nominations is provided on page 10 of this Proxy Statement.
The undersigned hereby appoints Jill Cook and Tim Doyle, or either oneManagement knows of them acting in the absence of theno other with power of substitution, attorneys and proxies, for and in the name and place of the undersigned, to vote the number of common sharesbusiness that the undersigned wouldmay be entitled to vote if then personally present atbrought before the Annual Meeting, including matters incident to the conduct of shareholders, to be held at the Hilltop House Hotel located at 400 Trinity Drive, Los Alamos, New Mexico,Annual Meeting. It is the intention of the persons named as Proxy judges on the 27th day of May 2010 at 6:00 p.m., or any adjournments or postponements of the meeting, upon the matters set forthProxy to vote such Proxy in the Notice of Annual Meeting and Proxy Statement, receipt of which is hereby acknowledged, as follows:
ITEM I.Election of Directors:
FOR all nominees
¨
| FOR only nominees as marked below
¨ William C. Enloe
¨ Deborah U. Johnson
¨ Charles A. Slocomb
| WITHHOLD AUTHORITY to vote for all nominees
¨
|
ITEM II. | Ratification of the Appointment of Moss Adams, LLP as Trinity's independent public accountants for the year ending December 31, 2010:
|
ITEM III. | To Approve the Advisory Resolution on the compensation of Trinity’s Named Executive Officers:
|
Other Items: In accordance with their discretion, upon allbest judgment on any other matters that may properly comebe brought before said meeting and any adjournments or postponements of the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this Proxy will be voted “FOR” all Nominees listed under Item I, “FOR” Item II and “FOR” Item III.
| Dated:____________________________, 2010 |
Signature(s) ____________________________________________________________________
Note: Please date Proxy and sign it exactly as name or names appear on the label above. All joint owners of shares must sign. State full title when signing as executor, Administrator, Trustee, Guardian, Etc. Please return signed Proxy CardAnnual Meeting.
Page 49.………………………………………….……………………………… Trinity Capital Corporation 2010 Proxy Statement
