As permitted by Securities and Exchange Commission, or SEC, rules, we are making this proxy statement, our proxy card and our Annual Report on Form 10-K for the year ended December 31, 2015 (which2018, which serves as our annual reportAnnual Report to shareholders)Shareholders, available to our shareholders electronically. On March 17, 2016,14, 2019, we posted these materials on our Internetinternet website, http://www.envisionreports.com/RNST, and we mailed to our institutional shareholders who own our stock in their name as well as other shareholders who previously elected to receive our proxy materials electronically a notice (the “Notice”) containing instructions on how to access our proxy materials and vote online (referred to asinstitutional and other shareholders who previously elected to receive our proxy materials over the “Notice”). Also on March 17, 2016, weinternet. We also mailed this proxy statement, our proxy card and our Annual Report on Form 10-K for the year ended December 31, 20152018, to individual shareholders on the same date.
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2. | “FOR” the election of nominees John M. Creekmore, Jill V. Deer, Neal A. Holland, Jr., E. Robinson McGraw and Hollis C. Cheek as Class 2 directors;
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3. | “FOR” the approval of an amendment to the Company’s 2011 Long-Term Incentive Compensation Plan to increase the number of shares of common stock available for grant, award or issuance under the plan;
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4. | “FOR” the approval of the performance measures related to the grant and award of performance-based compensation under the Company’s 2011 Long-Term Incentive Compensation Plan;
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5. | “FOR” the approval of an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock, par value $5.00 per share, of the Company from 75,000,000 shares to 150,000,000 shares; and
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6. | “FOR” the ratification of the appointment of HORNE LLP as our independent registered public accountants for 2016.
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If you hold your shares2018 FINANCIAL PERFORMANCE AND RELATIONSHIP TO COMPENSATION
Maintaining the Link Between Pay and Performance. Like his predecessor, Mr. Waycaster has continued to drive increases in a broker’s name (sometimes called “street name” or “nominee name”), you must provide voting instructions to your broker. If you do not provide instructions to your broker, your shares will not be voted on any matter on which your broker does not have discretionary authority to vote, which generally includes non-routine matters. A vote that is not cast for this reason is called a “broker non-vote.” Broker non-votes will be treated as shares present forshareholder value. As the purpose of determining whether a quorum is present at the meeting, but they will not be considered present for purposes of calculating the vote on a particular matter, nor will they be counted as a vote FOR or AGAINST a matter or as an abstention on the matter. The ratification oftables below indicate, in 2018 our appointment of our independent registered public accountants is generally considered a routine matter for broker voting purposes, but neither the election of directors nor any of the other proposals to be voted on at the annual meeting is considered a routine matter.
Under Mississippi law, an abstention by a shareholder who is either present in person at the annual meeting or represented by proxy is not a vote “cast” and is counted neither “for” nor “against” the matter subjectdiluted earnings per share again increased compared to the abstention.
How are sharesprior year. Total shareholder return decreased from 2017 to 2018, but we believe this decline is attributable to the decline in the Renasant 401(k) plan voted?
If an account is maintained for your benefit in our 401(k) plan, you can vote the number of sharesmarket price of our common stock allocatedover the course of 2018, similar to your account, including unitsthe decline in financial institution stock prices generally during 2018. The compensation paid to our chief executive officer has remained relatively stable, with the amount of compensation we paid to Mr. Waycaster during 2018 somewhat below that represent shares ofpaid to his predecessor, Mr. McGraw, in 2017.
During the same period, in addition to our common stock, determineddiluted EPS growth, our return on assets and return on equity have also increased, as of the close of business on February 16, 2016. On that date, our 401(k) plan held an aggregate of 895,908 shares, or 2.22%, of our common stock. The Bank is the trustee of the plan and acts as the proxy. In that capacity, the Bank votes your shares. If you do not timely furnish voting instructions, the trustee will vote your units or shares in a manner that mirrors how the units or shares for which it receives instructions have been voted.
How are sharesdemonstrated in the 401(k) and employee stock ownership plans sponsored by HeritageBank of the South voted?
If you are a participant in the HeritageBank of the South 401(k) plan or employee stock ownership plan, the “Heritage plans,” and your plan accounts hold our common stock, including units that represent shares of our common stock, determined as of the close of business on February 16, 2016, you can vote the number of shares allocable to your accounts by providing voting instructions to the trustee of each plan. On that date, the Heritage plans held an aggregate of 449,959 shares, or 1.12%, of our common stock. The Bank is the trustee of the Heritage plans and acts as the proxy. In that capacity, the Bank votes your shares. If you do not timely furnish voting instructions, the trustee will vote your units or shares in a manner that mirrors how the units or shares for which it receives instructions have been voted.
Can a proxy be revoked?
Yes. You can revoke your proxy at any time before it is voted. You revoke your proxy (1) by giving written notice to our Secretary before the annual meeting, (2) by granting a subsequent proxy either by telephone or on the Internet or (3) by delivering a signed proxy card dated later than your previous proxy. If you, rather than your broker, are the record holder of our stock, a proxy can also be revoked by appearing in person and voting at the annual meeting. Written notice of the revocation of a proxy should be delivered to the following address: Secretary, Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827. If you change voting instructions provided to the trustee of our 401(k) plan or the Heritage plans, your change must be received at least one business day before the meeting to be given effect.
STOCK OWNERSHIP
Common Stock Ownership of More than 5%
The following table sets forth information regarding the beneficial ownership of our common stock as of March 2, 2016, by each person or entity, including any group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, or the “Exchange Act”), known to us to be the beneficial owner of 5% or more of our outstanding common stock. Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act and is based upon the number of shares of our common stock outstanding as of March 2, 2016, which was40,348,437shares.below:
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| Name and Address | Number of Shares Beneficially Owned | Percent of Class |
| BlackRock, Inc. | 2,268,461 |
| (1) | 5.63 | % |
| 55 East 52nd Street | | | |
| New York, New York 10022 | | | |
| Dimensional Fund Advisors LP | 2,284,700 |
| (2) | 5.67 | % |
| Building One | | | |
| 6300 Bee Cave Road | | | |
| Austin, Texas 78746 | | | |
| Frontier Capital Management Co. LLC | 2,050,359 |
| (3) | 5.09 | % |
| 99 Summer Street | | | |
| Boston, Massachusetts 02110 | | | |
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| | Year Ended December 31, |
| | 2018 | | 2017 | | 2016 | | 2015 | | 2014 |
| Diluted EPS (GAAP) | $2.79 | | $1.96 | | $2.17 | | $1.88 | | $1.88 |
Diluted EPS, with exclusions (non-GAAP)(1)(2) | $3.00 | | $2.42 | | $2.31 | | $2.11 | | $1.89 |
| Return on Average Assets (GAAP) | 1.32 | % | | 0.97 | % | | 1.08 | % | | 0.99 | % | | 1.02 | % |
Return on Average Tangible Assets, with exclusions (non-GAAP)(1)(2) | 1.58 | % | | 1.32 | % | | 1.28 | % | | 1.23 | % | | 1.16 | % |
| Return on Average Shareholders’ Equity (GAAP) | 8.64 | % | | 6.68 | % | | 8.15 | % | | 7.76 | % | | 8.61 | % |
Return on Average Tangible Shareholders' Equity, with exclusions (non-GAAP)(1)(2) | 17.14 | % | | 14.48 | % | | 16.23 | % | | 16.10 | % | | 16.37 | % |
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| (1) | The amount shown in the table and the following information are based on a Schedule 13G (Amendment No. 6) filed with the SEC on January 27, 2016 by BlackRock, Inc. (“BlackRock”) reporting beneficial ownership as of December 31, 2015. Of the 2,268,461 shares covered by the Schedule 13G, BlackRock has sole voting powerExclusions include charges with respect to 2,176,619 shares and sole dispositive power with respectwhich we are unable to allaccurately predict when these charges will be incurred or, when incurred, the amount of the shares. No one person’s interest in our common stock is more than 5% of our total outstanding common shares.charge. For 2018, these charges were merger and conversion expenses on an after-tax basis. |
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| (2) | The amount shown in the tableDiluted EPS, with exclusions, return on average tangible assets, with exclusions, and the following informationreturn on average tangible shareholders’ equity, with exclusions, are based onnon-GAAP financial measures used by management to evaluate ongoing operating results and to assess ongoing profitability. For a Schedule 13G (Amendment No. 5) filed with the SEC on February 9, 2016 by Dimensional Fund Advisors LP (“Dimensional”) reporting beneficial ownership asreconciliation of December 31, 2015. Of the 2,284,700 shares covered by the Schedule 13G, Dimensional has sole voting powerthese measures to their most comparable GAAP measures, please see (a) with respect to 2,205,113 shares2016, 2017 and sole dispositive power2018, as to diluted EPS, the “Results of Operations-Net Income” section and, as to return on average tangible assets and return on average tangible shareholders’ equity, the “Non-GAAP Financial Measures” section, each in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2018, and (b) with respect to all2014 and 2015, as to diluted EPS, the “Results of Operations-Net Income” section and, as to return on average tangible assets and return on average tangible shareholders’ equity, the “Non-GAAP Financial Measures” section, each in Item 7, Management’s Discussion and |
Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2016.
Additional 2018 Results. In 2018, the Company also completed certain strategic objectives and achieved favorable operational and financial results:
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| a | We recorded our highest level of annual earnings in 2018, with net income of $146.9 million, marking our sixth consecutive year of record net income. Our diluted EPS of $2.79 represented an $0.83 improvement over 2017. Our 2017 diluted EPS was impacted by our writedown of our net deferred tax assets stemming from changes in tax rates effected by the Tax Cuts and Jobs Act enacted in December 2017. However, even excluding the $0.31 reduction to diluted EPS as a result of the shares. Dimensional is a registered investment advisor that furnishes investment advice to four registered investment companies and serves as investment manager to certain other commingled funds, group trusts and separate accounts (these companies, trusts and accounts are referred to as the “Funds”). The Funds are the owners of the shares covered by the Schedule 13G; to the knowledge of Dimensional, no single Fund owns more than 5% ofdeferred tax asset writedown, our common stock. Dimensional disclaims beneficial ownership of the shares of our common stock owned by the Funds.2018 diluted EPS grew approximately 23% from 2017. |
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(3)a | We completed our acquisition of Brand Group Holdings, Inc. and its subsidiary The amount shownBrand Banking Company (which we refer to collectively as “Brand” in this proxy statement) on September 1, 2018. By acquiring Brand, we added 13 locations throughout the table and the following information are based on a Schedule 13G filed with the SEC on February 12, 2016 by Frontier Capital Management Co. LLC (“Frontier”) reporting beneficial ownershipgreater Atlanta area, one of our strategic growth markets. Also, as of December 31, 2015. Of the 2,050,359 shares covered by the Schedule 13G, Frontier has sole voting power with respectacquisition date (and prior to 701,020 sharespurchase accounting adjustments), we acquired $2.0 billion in assets, including $1.6 billion in loans, and sole dispositive power with respect to all of the shares. No one person’s interest$1.7 billion in our common stock is more than 5% of our total outstanding common shares. |
Beneficial Ownership of Common Stock by Directors and Executive Officers
The following table includes information about the common stock owned by our directors, nominees and executive officers, as of March 2, 2016, including their name, position and the number of shares beneficially owned. Each of the persons listed in the table below under the heading “Directors and Nominees” currently serves as a director of the Company. Unless otherwise noted, the persons below have sole voting power and investment power with respect to the listed shares (subject to any applicable community property laws). The business address for each of the directors and executive officers listed below is 209 Troy Street, Tupelo, Mississippi 38804-4827.
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| | | Amount and Nature of Beneficial Ownership | | | | |
| | | Direct | | Options Exercisable Within 60 Days | | Other | | Total | | Percent of Class |
Directors and Nominees:(1) | | | | | | | | | | | | |
| William M. Beasley | | 30,541 |
| | | — |
| | 8,806 |
| (2) | | 39,347 |
| | * |
| George H. Booth, II | | 25,354 |
| | | — |
| | — |
| | | 25,354 |
| | * |
| Frank B. Brooks | | 36,856 |
| | | — |
| | — |
| | | 36,856 |
| | * |
| Hollis C. Cheek | | 12,376 |
| | | — |
| | 9,906 |
| (3) | | 22,282 |
| | * |
| John M. Creekmore | | 14,373 |
| | | — |
| | — |
| | | 14,373 |
| | * |
| Albert J. Dale, III | | 64,224 |
| | | — |
| | — |
| | | 64,224 |
| | * |
| Jill V. Deer | | 7,266 |
| | | — |
| | — |
| | | 7,266 |
| | * |
| Marshall H. Dickerson | | 7,351 |
| (4) | | — |
| | — |
| | | 7,351 |
| | * |
| John T. Foy | | 33,174 |
| | | — |
| | — |
| | | 33,174 |
| | * |
| Richard L. Heyer, Jr. | | 21,911 |
| | | — |
| | 3,567 |
| (5) | | 25,478 |
| | * |
| Neal A. Holland, Jr. | | 59,764 |
| (6) | | — |
| | 162,847 |
| (6) | | 222,611 |
| | * |
| J. Niles McNeel | | 51,055 |
| | | — |
| | 2,912 |
| (7) | | 53,967 |
| | * |
| Hugh S. Potts, Jr. | | 167,654 |
| | | — |
| | 29,889 |
| (8) | | 197,543 |
| | * |
| Fred F. Sharpe | | 4,569 |
| | | — |
| | 27,147 |
| (9) | | 31,716 |
| | * |
| Michael D. Shmerling | | 153,300 |
| (10) | | — |
| | 1,519 |
| (10) | | 154,819 |
| | * |
| Named Executive Officers: | | | | | | | | | | | | |
| E. Robinson McGraw | | 178,722 |
| (11) | | 142,500 |
| | — |
| | | 321,222 |
| | * |
| Kevin D. Chapman | | 26,419 |
| (12) | | 31,750 |
| | — |
| | | 58,169 |
| | * |
| C. Mitchell Waycaster | | 59,480 |
| (13) | | 12,500 |
| | — |
| | | 71,980 |
| | * |
| R. Rick Hart | | 78,574 |
| (14) | | 61,424 |
| | — |
| | | 139,998 |
| | * |
| Michael D. Ross | | 42,370 |
| (15) | | 15,000 |
| | — |
| | | 57,370 |
| | * |
| O. Leonard Dorminey | | 93,811 |
| (16) | | — |
| | — |
| | | 93,811 |
| | * |
| All directors, nominees and executive officers as a group (27 persons total) | | 1,374,049 |
| | | 470,174 |
| | 247,599 |
| | | 2,091,822 |
| | 5.18% |
* Less than 1% of the outstanding common stock, based on 40,348,437shares of our common stock issued and outstanding as of March 2, 2016.
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(1) | For each non-employee director, direct ownership includes 652 shares representing an award of time-based restricted stock under the 2011 Long Term Incentive Compensation Plan, our LTIP, for 2016.deposits. |
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(2)a | Consists of 8,806 shares held by Mr. Beasley’s spouse.We increased our annual dividend twice in 2018. The annual dividend now stands at $0.84 per share, an approximately 10% increase from 2017. |
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(3)a | ConsistsIn 2018, in addition to the new locations added in the Brand merger, we expanded our geographic footprint in Tennessee and Georgia through new branch openings, and we also added market leaders and producers throughout our footprint, which, together with production from our existing locations, contributed to our non-purchased loan growth of 9,906 shares held by J.C. Cheek Contractors, of which Mr. Cheek is the President.over 14% from 2017. |
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(4)a | OfOur asset quality metrics continued to remain strong in 2018. Total non-purchased non-performing assets remained flat from December 31, 2017 to December 31, 2018 even as our total assets increased. Net loan charge-offs were 0.05% of average loans for 2018 compared to 0.06% of average loans for 2017. As a percentage of total assets, all credit metrics, including nonperforming assets, loans 30-89 days past due and our internal watch list were at or near historical lows at the 7,351 shares owned by Mr. Dickerson, 4,885 shares are pledged as collateral for a loan.end of 2018. |
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(5) | Consists of 3,567 shares held by Dr. Heyer’s spouse.CORPORATE GOVERNANCE AND BOARD OF DIRECTORS |
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(6) | Of the 59,764shares listed as directly owned, 49,918 shares are pledged as collateral for a loan. Other ownership consists of 1,303 shares held in an individual retirement account owned by Mr. Holland’s spouse, of which Mr. Holland is the beneficiary, 7,248 shares held by a family limited partnership, Holland Limited Partnership, 152,146 shares held by a family limited partnership, Holland Holding, LLP, 2,000 shares held in a living trust of which Mr. Holland serves as trustee, and 150 shares in a trust for his children.
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(7) | Consists of 2,912 shares held by Mr. McNeel’s spouse. |
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(8) | Consists of 29,889 shares held by Mr. Potts’s spouse. |
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(9) | Consists of 18,451 shares held by Mr. Sharpe’s spouse, 4,954 shares held in an individual retirement account owned by Mr. Sharpe's spouse, of which Mr. Sharpe is the beneficiary, 2,779 shares held in JDF Corporation of which Mr. Sharpe is the owner and 963 shares held in JDF Real Estate Corp, of which Mr. Sharpe is the owner. |
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(10) | Of the 153,300 shares listed as directly owned, 139,834 are pledged as collateral for a loan. Mr. Shmerling’s other ownership consists of 1,519 shares held by his children. |
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GOVERNING DOCUMENTS AND PRACTICES
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(11) | Mr. McGraw is also the Chairman of our board of directors. His direct ownership includes an aggregate of 33,312 shares that are allocated to his accounts under our 401(k) plan, over which Mr. McGraw has voting power, 12,000 shares representing an award of time-based restricted stock under our LTIP and 12,000 shares representing a target award of performance-based restricted stock under our LTIP. |
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(12) | Direct ownership includes an aggregate of 5,375 shares allocated to Mr. Chapman’s account under our 401(k) plan, over which he has voting power, 3,500 shares representing an award of time-based restricted stock under our LTIP and 3,500 shares representing a target award of performance-based restricted stock under our LTIP. |
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(13) | Direct ownership includes an aggregate of 14,902 shares that are allocated to Mr. Waycaster’s accounts under our 401(k) plan, over which he has voting power, 3,500 shares representing an award of time-based restricted stock under our LTIP and 3,500 shares representing a target award of performance-based restricted stock under our LTIP. |
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(14) | Mr. Hart is also a member of our board of directors. Direct ownership includes an aggregate of 695 shares that are allocated to his account under our 401(k) plan, over which Mr. Hart has voting power, 3,500 shares representing an award of time-based restricted stock under our LTIP and 3,500 shares representing a target award of performance-based restricted stock under our LTIP. |
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(15) | Direct ownership includes 3,500 shares representing an award of time-based restricted stock under our LTIP and 3,500 shares representing a target award of performance-based restricted stock under the LTIP. |
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(16) | Mr. Dorminey’s direct ownership includes 20,140 shares, over which he has voting power, that are allocated to his account under an ESOP maintained by Heritage Financial Group, Inc. which was terminated as of the date of our acquisition of Heritage. His direct ownership also includes 26,250 shares representing an inducement award of time-based restricted stock in accordance with terms set forth in Mr. Dorminey's employment agreement which also provide for voting and dividend rights. |
The performance-based restricted stock awardsCode of Ethics. We expect our directors, officers and employees to act and make decisions that are in our best interests, and we discourage situations which present a conflict between our interests and their own personal interests. Under our Code of Business Conduct and Ethics, our “Code of Ethics,” our directors, officers and employees may not engage in any business or conduct, or enter into any contract or arrangement, that would give rise to an actual or potential conflict of interest without the prior approval of our board or other appropriate supervisor. We require our directors, officers and employees to annually certify that they have read and understand their obligations under the LTIP describedCode of Ethics. A copy of our Code of Ethics is available at www.renasant.com by clicking on “Corporate Overview” under the “Investor Relations” tab, then clicking on “Governance Documents” and then “Code of Ethics.”
Committee Charters. The board of directors has five standing committees: an executive committee, an audit committee, a compensation committee, an enterprise risk management committee, or “ERM committee,” and a nominating and corporate governance committee, or “nominating committee.” Each committee is governed by a written charter, copies of which are available at www.renasant.com, by clicking on “Corporate Overview” under the “Investor Relations” tab, then on “Governance Documents” and then selecting the desired charter.
Insider Trading Policy. The board of directors has adopted a policy designed to prevent insider trading of our securities. Our insider trading policy generally prohibits our directors, officers and employees, their immediate family members and entities that they control from purchasing or selling our securities while in notes 11-15 above providepossession of material nonpublic information and from disclosing material nonpublic information to third parties. An additional restriction applies to our directors, senior executive officers and certain other individuals, such as senior accounting staff: these individuals may trade in our securities only during a “trading window” (and provided that he or she is not otherwise in possession of material nonpublic information). The trading window opens two trading days after our quarterly earnings release and closes early in the last month of each recipientquarter. Annually our directors, officers and employees must certify that they have reviewed our insider trading policy and understand their obligations under the policy.
In 2018, the board approved updates to our insider trading policy. The board added a “pre-clearance” requirement, applicable to those individuals who may trade only during a trading window, whom we refer to as “covered persons.” Under this requirement, a covered person may not trade in our securities, even during an open trading window, unless a committee made up of our chief operating officer, our chief accounting officer and our governance counsel approves the transaction. This pre-clearance requirement enhances our efforts to prevent insider trading by giving us the opportunity to evaluate a proposed trade in advance and independently decide whether the covered person possesses votingmaterial nonpublic information even though the trading window is open. The insider trading policy was also updated to clarify that a significant cybersecurity incident or disruption to our information technology infrastructure constitutes a “material” event that precludes trading in our securities until appropriate disclosures have been made.
Review and dividend rightsApproval of Related Person Transactions. The board of directors is responsible for reviewing and approving or ratifying all material transactions between us or our subsidiaries and any of our directors or executive officers, their immediate family members and businesses with respectwhich they are associated (we refer to his target shares pending settlement at the end of the annual performance cycle. Underthese persons and entities as “related persons”). The board reviews transactions involving related persons to ensure that the terms of any such transaction are substantially the same as the terms that would be expected if the transaction were with a person or entity that is not related to us or the Bank. To identify related person transactions, each performance award,year we require our directors and executive officers to complete Director and Officer Questionnaires. These questionnaires require our directors and executive officers to list all related persons and any transactions with us in which a related person has an interest. In addition, we review loan and deposit balances as well as accounts payable to our vendors to identify relationships with related persons. When the target numberboard reviews and approves or ratifies related person transactions, the director or executive officer associated with the matter is not present while discussions and deliberations are held and, if the transaction involves a director, this director must abstain from voting on the matter. The types of sharestransactions that must be reviewed and approved or ratified include extensions of credit, real property leases and other business relationships.
Other than our Code of Ethics, our related person transaction policy is subjectnot in writing. However, we have adopted written policies to increase or decrease based upon the outcome of Company performance objectives during 2016. Each recipient also possesses votingcomply with regulatory requirements and dividend rights with respectrestrictions applicable to the awardus, including Sections 23A and 23B of the time-based restricted stock described in note 1 forFederal Reserve Act (which govern certain transactions by the directors and notes 11-15 for the executives.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to fileBank with the SECits affiliates) and the NASDAQ Stock Market, LLC (“Nasdaq”) reports of ownership of our securities and changes in their ownership on Forms 3, 4 and 5. Executive officers, directors and greater than 10% shareholders are requiredFederal Reserve’s Regulation O (which governs loans by SEC rulesthe Bank to furnish us with copies of all Section 16(a) reports they file.
Based solely upon a review of the reports on Forms 3 and 4 and amendments thereto furnished to us in 2015 and Forms 5 and amendments thereto furnished to us with respect to 2015, or written representations from reporting persons that no Form 5 filing was required, we believe that in 2015 ourits executive officers, directors and greater than 10% owners, with the exception of Messrs. Dorminey and Sharpe, timely filed all reports they were required to file under Section 16(a)principal shareholders). For each of Messers. Dorminey and Sharpe, a Form 4 disclosing a single transaction in our common stock was filed after the deadline.
BOARD OF DIRECTORS
Current Directors
Prior to the annual meeting, a total of 17 directors serve on our board, divided into three classes of directors. Assuming that all of our nominees for director are elected, after the annual meeting there will be a total of 17 directors on our board, with six directors in Class 1, five directors in Class 2 and six directors in Class 3. The current term of office for our Class 2 directors expires at the 2016 annual meeting, while the current term of office for our Class 3 directors expires at the 2017 annual meeting and the current term of office for our Class 1 directors expires at the 2018 annual meeting.GOVERNANCE
The following information lists each director currently serving onRetirement Policy. Our Amended and Restated Bylaws, which we refer to as our board and includes“Bylaws,” include a brief discussion of the specific experience, qualifications, attributes and skills that led uswritten retirement policy applicable to conclude that such individual should be and remain a member of our board. We believe that our board of directors consists of a diverse collection of individuals who possess the integrity, education, work ethic and ability to work with others necessary to oversee our business effectively and to represent the interests of all shareholders, including the qualities listed under the heading “Nominating and Corporate Governance Committee” below. We have attempted below to highlight certain notable experience, qualifications and skills for each director, rather than provide an exhaustive catalog of each and every qualification and skill that a director possesses.directors:
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| Name | Age | Class | Background, Qualifications and Skills |
George H. Booth, II Director since 1994 | 62 | 1 | Background: Mr. Booth is co-owner of Tupelo Hardware Company, a closely-held family business primarily engaged in wholesale and retail hardware sales. Mr. Booth has served as president of Tupelo Hardware Company since 2000. Experience/Qualifications/Skills: Mr. Booth brings a borrower’s and depositor’s perspective to the board. He also provides insight on whether our products and services are responsive to the needs of small business owners. |
Frank B. Brooks Director since 1989 | 72 | 1 | Background: Mr. Brooks has been a cotton farmer since 1959 and has served as president of Yalobusha Gin Company, Inc., a cotton gin located in Yalobusha County, Mississippi, since 1992. Experience/Qualifications/Skills: Mr. Brooks has served as audit committee chairman for two other organizations. We use his leadership and knowledge to provide appropriate oversight of our financial reporting and operational risks. In addition, Mr. Brooks’ experience running businesses servicing other farmers provides insight on the needs of small business owners and on our agricultural lending operations. |
Albert J. Dale, III Director since 2007 | 65 | 1 | Background: Mr. Dale has served as president of Dale, Inc. since 1985. Dale, Inc., located in Nashville, Tennessee, is a specialty contractor and a Marvin Windows and Doors, Kolbe Windows and Doors and Sierra Pacific Windows and Doors dealer in Tennessee, Kentucky and Alabama. He was appointed as a director of the Company upon the completion of our acquisition of Capital Bancorp, Inc., or Capital, in July 2007. Experience/Qualifications/Skills: As a supplier to businesses and consumers, Mr. Dale’s professional experience provides the board with insight from the customer’s perspective on the needs and risks associated with business development. In addition, Mr. Dale brings to the board an intimate knowledge of Nashville, Tennessee, one of our growth markets. We rely on Mr. Dale for advice on where and how to serve the Nashville metropolitan area. |
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| Name | Age | Class | Background, Qualifications and Skills |
John T. Foy Director since 2004 | 68 | 1 | Background: Mr. Foy is retired. From February 2004 until February 2008 he served as president and chief operating officer of Furniture Brands International, Inc. During that time, he was also a member of the board of directors of Furniture Brands International. Prior to 2004 he served as president and chief executive officer of Lane Furniture Industries. Furniture Brands International was and Lane Furniture Industries is engaged in the manufacture of upholstered and wooden furniture. Experience/Qualifications/Skills: Furniture manufacturing represents a major segment of the economy in our North Mississippi markets. We believe that Mr. Foy’s broad experience in the furniture manufacturing industry gives us an advantage in soliciting these types of customers, as well as customers in the manufacturing industry in general. Also, Mr. Foy’s experience as the president and a director of Furniture Brands International, Inc., which was a publicly-traded company during Mr. Foy’s tenure with the company, provides him with insights on corporate governance. |
Hugh S. Potts, Jr. Director since 2014 | 71 | 1 | Background: Mr. Potts is retired. Prior to our acquisition of First M&F Corporation, or First M&F, in September 2013, Mr. Potts served as chairman and chief executive officer of First M&F, headquartered in Kosciusko, Mississippi. Prior to becoming chief executive officer, Mr. Potts had extensive experience especially in the trust, commercial lending and marketing areas of First M&F and its wholly-owned subsidiary Merchants and Farmers Bank. Mr. Potts also serves on the Board of Trustees of Belhaven University and the Board of Trustees of French Camp Academy. Mr. Potts was appointed as a director of the Company upon the completion of our merger with First M&F. Experience/Qualifications/Skills: Mr. Potts brings critical knowledge of our central Mississippi markets to our board, providing valuable insights on both preserving customer relationships acquired in connection with our merger with First M&F as well as expanding into this key growth market. Furthermore, Mr. Potts’ experience in managing a multi-state banking institution supplements our board with industry-specific technical knowledge and a deep understanding of the regulatory environment in which we operate. |
Fred F. Sharpe Director since 2015 | 67 | 1 | Background: Mr. Sharpe has been the president and owner of U-Save-It-Pharmacy, Inc., a pharmacy with more than 35 locations in the southeast, since 1979. He is a member and past district president of the Georgia Pharmacy Association and a member of the board of directors of the Academy of Independent Pharmacists. Mr. Sharpe is also a member of The Albany Symphony Association Board. Mr. Sharpe has previously served on the boards of the Albany Chamber of Commerce and the Albany-Dougherty Inner City Authority. Mr. Sharpe served as a director of HeritageBank of the South prior to our acquisition of Heritage Financial Group, Inc. in July 2015 Experience/Qualifications/Skills: Mr. Sharpe brings valuable insight to our Georgia markets, which are key growth markets for the Bank. In addition, as the owner of a business with multiple locations spread through a wide geographic area, Mr. Sharpe understands the issues associated with the expansion of a business, particularly into our Georgia markets. |
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| Name | Age | Class | Background, Qualifications and Skills |
Hollis C. Cheek Director since 2014 | 70 | 2 | Background: Mr. Cheek has been president of J.C. Cheek Contractors, a landscape engineering and contracting firm specializing in asphalt milling, striping, edge drains, debris grinding, debris removal, clearing, erosion control and site grading since 1967. Mr. Cheek is also a member of Techno-Catch, LLC, in Kosciusko, Mississippi, a manufacturer and supplier of poultry equipment. Mr. Cheek is on the board of the Mississippi Road Builders Association and the Attala Development Corporation. Mr. Cheek has formerly served in public capacities as a Mississippi state senator and on the Small Business Advisory Board of the U.S. Department of Energy. Mr. Cheek served on the board of directors of First M&F and was appointed as a director of the Company upon the completion of our acquisition of First M&F. Experience/Qualifications/Skills: Mr. Cheek’s success in both the public and private sectors of central Mississippi provides us with invaluable insight in this market. Mr. Cheek’s extensive business experience developing and implementing strategies, technology and organizational structure necessary to grow J.C. Cheek Contractors from a local landscaping company to a large commercial contractor allows him to assess our products and services from both a small business and large corporation perspective. |
John M. Creekmore Director since 1997 | 60 | 2 | Background: Mr. Creekmore has engaged in the practice of law since 1987 as the owner of the law firm Creekmore Law Office, PLLC. Experience/Qualifications/Skills: As a lawyer, Mr. Creekmore brings a legal point of view to the risks and challenges that we face. He also provides us with insights regarding the legal implications of our plans and strategies. Finally, Mr. Creekmore lives and works in Amory, Mississippi, and helps shape our policies with respect to our smaller markets. |
Jill V. Deer Director since 2011 | 53 | 2 | Background: Ms. Deer is Vice President of Administration and Development for Brasfield & Gorrie, L.L.C., one of the nation’s largest privately-held construction firms, which she joined in 2014. Prior to joining Brasfield & Gorrie, Ms. Deer served as a principal of Bayer Properties, L.L.C., a full service real estate company based in Birmingham, Alabama, that owns, develops and manages commercial real estate. Ms. Deer joined Bayer Properties in 1999 to serve as an executive officer and general counsel of the company. Prior to that time, she was a partner in a large regional law firm in Birmingham practicing in the area of commercial real estate finance. Experience/Qualifications/Skills: The Birmingham metropolitan area is the largest metropolitan area in Alabama and one of our key growth markets. Ms. Deer’s knowledge and experience in this market helps us develop strategies to further expand our presence in Birmingham. Furthermore, Ms. Deer’s professional experience in the real estate and construction industries gives the Board an additional resource in understanding the risks and trends associated with commercial real estate, especially because Brasfield & Gorrie operates in many of the same markets in which Renasant is located. |
Neal A. Holland, Jr. Director since 2005 | 60 | 2 | Background: Mr. Holland has been president of Holland Company, Inc., a diversified sand, stone and trucking company in Decatur, Alabama, since 1980. He is also the chairman and CEO of Alliance Sand and Aggregates, LLC. Mr. Holland was appointed as a director of the Company upon the completion of our acquisition of Heritage Financial Holding Corporation, in 2005. Mr. Holland is also the owner of Miracle Mountain Ranch LLC. Experience/Qualifications/Skills: Mr. Holland has given us valuable advice in shaping our policies and strategies in our Alabama markets. Mr. Holland’s service on the board and executive committee of Heritage Financial Holding Corporation has given him added experience and insight to the risks associated with serving on the board of a publicly-traded financial institution. As the owner of multiple businesses, he also is able to add a borrower’s perspective to the board’s discussions. |
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| Name | Age | Class | Background, Qualifications and Skills |
E. Robinson McGraw Director since 2000 | 69 | 2 | Background: Mr. McGraw has served as our and the Bank’s Chief Executive Officer since 2000, and he served as our and the Bank’s President from 2000 to January 2016. Since June 2005, Mr. McGraw has also served as Chairman of our and the Bank’s board of directors. Mr. McGraw served as Executive Vice President and General Counsel of the Bank prior to becoming our Chief Executive Officer. Experience/Qualifications/Skills: It is unlikely that there is any individual that has a more intimate knowledge of our history, our current operations and our future plans than Mr. McGraw. His insight is an essential part of formulating our plans and strategies. Mr. McGraw’s legal background and years of experience with the Company provides the board an additional resource on legal implications and the regulatory requirements specifically attributable to the banking industry and financial institutions. |
William M. Beasley Director since 1989 | 64 | 3 | Background: Mr. Beasley has been a partner in the law firm of Phelps Dunbar LLP since 1999 and has practiced law since 1975. Experience/Qualifications/Skills: Like Mr. Creekmore, Mr. Beasley brings a legal perspective to our operations. His analysis of the legal implications of our strategies is important to our mitigation of legal risk. In addition, Mr. Beasley invests and holds real estate in our Mississippi markets. His experience with these real estate investments provides the board with insight on the trends and risks associated with residential and commercial real estate within all of our markets. |
Marshall H. Dickerson Director since 1996 | 67 | 3 | Background: Mr. Dickerson is the retired owner and manager of Dickerson Furniture Company, a company primarily engaged in retail home furnishings sales. Experience/Qualifications/Skills: Mr. Dickerson owned and operated his own business for over 33 years. As a former small business owner, he understands the capital needs and other challenges that many of our small business customers face on a daily basis; he also understands the services that a small business owner requires from its banking relationship. We believe that Mr. Dickerson’s insights on these topics help us tailor our products, as well as our customer service operations, to meet the needs of this important segment of our business. |
R. Rick Hart Director since 2007 | 67 | 3 | Background: Mr. Hart has served as an Executive Vice President of the Company and President of the Northern Region of the Bank since October 2012. He served as the President of the Tennessee Division and Middle Tennessee Division of the Bank from July 2007 until October 2012. Prior to our acquisition of Capital, Mr. Hart served as chairman, president and chief executive officer of Capital Bank & Trust Company, in Nashville, Tennessee. Mr. Hart was appointed as a director of the Company upon the completion of our acquisition of Capital in July 2007. Experience/Qualifications/Skills: Mr. Hart brings the experience of a Nashville banker to the board, helping to formulate our plans for the Nashville market. Along with Mr. McGraw, Mr. Hart serves as a liaison between the board and our employees, keeping the board abreast of employee concerns and morale. |
Richard L. Heyer, Jr. Director since 2002 | 59 | 3 | Background: Dr. Heyer has served as a physician and partner of Tupelo Anesthesia Group, P.A. since 1989. In addition, Dr. Heyer is President and co-owner of TAG Billing, LLC, a medical billing service provider in the medical industry. Experience/Qualifications/Skills: Dr. Heyer’s experience in this business model in the medical industry brings a unique perspective to the challenges and opportunities that our board faces. Dr. Heyer’s background and experience is important in the formulation of board policy. Dr. Heyer is a business owner in the medical industry and adds this perspective to board discussions. |
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| Name | Age | Class | Background, Qualifications and Skills |
J. Niles McNeel Director since 1999 | 69 | 3 | Background: Mr. McNeel has engaged in the practice of law as a partner of the law firm of McNeel and Ballard since 1983. Experience/Qualifications/Skills: Mr. McNeel’s practice is based in Louisville, Mississippi, giving him insight into the issues facing our customers in our smaller markets. As an attorney, Mr. McNeel also brings a legal perspective to the board’s deliberations and analysis. |
Michael D. Shmerling Director since 2007 | 60 | 3 | Background: Mr. Shmerling has served as chairman of Choice Food Group, a manufacturer and distributor of food products, since July 2007 and chairman of XMI Holdings Inc. Mr. Shmerling served as a senior advisor to Kroll, Inc., a risk consulting company, from August 2005 to June 2007 and an executive vice president of Kroll, Inc. from August 2000 to June 2005. Effective as of May 2001, he also served as Chief Operating Officer of Kroll. Mr. Shmerling was appointed as a director of the Company upon the completion of our acquisition of Capital in July 2007. Mr. Shmerling is also a director for Healthstream, Inc., a publicly-traded company. Experience/Qualifications/Skills: Mr. Shmerling’s business and philanthropic endeavors in the Nashville market provide us with opportunities to create new business relationships and grow market share in this key area. In addition, his 37-year professional history as a licensed CPA (inactive) in public and private practice provides the board with a broad range of financial knowledge and business acumen. Mr. Shmerling is experienced in assessing and mitigating risk and formulating policies designed to minimize risk exposure. In addition, his experience as an officer and director of publicly-traded companies gives the board another resource for issues specific to publicly-traded companies in the areas of financial reporting and corporate governance. |
Retirement Policy
Under our Restated Bylaws, as amended (our “Bylaws”), aA director generally may not stand for election after reaching age 72,72; and any
Any director who reachesattains age 72 during his or her elected term may serve only until the next regular meeting of our shareholders.
The Bylaws giveboard may waive the requirement and permit a director to stand for reelection after he or she reaches the age of 72, or the board the authority to waive, as to incumbent directors, the prohibition on a director who is age 72 standing for election. The Bylaws also permit the board tomay waive the requirement that a director who attains agehas attained 72 during his or her term resign at the next regular meeting of shareholders. To be effective, a waiver must be approved by the affirmative vote of at least two-thirds of the directors then in office, excluding the vote of the director to whom the waiver vote applies. A waiver applies only until the next regular meeting of our shareholders. At the next such meeting, the board may again waive the requirement that a director at or over age 72 resign from the board, but no director may receive more than three such waivers.
Frank B. BrooksMr. McGraw is age 72. At its January 20162019 meeting, theour board unanimously voted to waive the requirement thatnominate Mr. Brooks resign from the boardMcGraw for election as a Class 2 director. Accordingly, assuming Mr. McGraw is elected at the 2016 annual meeting. Accordingly, Mr. Brooks’ term of office will expire at the 2017 annual meeting, of shareholders ofhe may serve as a director until the Company (instead of2020 annual meeting (rather than the 2018 shareholders2022 annual meeting, as is the case for theour other Class 1 directors)2 director nominees), subject to his receipt of anothera waiver from the board allowing him to serve an additional year.
Independent DirectorsA waiver applies only until the next regular meeting of our shareholders, when the board may again waive the requirement that a director who has attained age 72 resign from the board. In no event may a director receive more than three waivers, with the result that all of our directors must cease to serve as of the regular meeting of shareholders that follows the attainment of age 75.
Director Stock Ownership Guidelines.Our board has determinedadopted stock ownership guidelines that require our non-employee directors to own a substantial number of shares of Renasant common stock. The board believes that ownership of our stock achieves two important goals: (1) it demonstrates to our shareholders and the investing public the directors’ commitment to and belief in the long-term value of our stock and (2) it enhances the alignment of our directors’ financial interests with those of our shareholders.
The stock ownership guidelines were most recently updated in February 2019. Under the current guidelines, within five years of becoming a director, each non-employee director must own stock with a value equal to at least three times the annual cash retainer. In addition, within the first year of Williamhis or her election or appointment to the board, a director must own at least 500 shares of common stock, regardless of value. Shares that a director has pledged do not count toward his or her required minimum ownership levels.
Based on an annual cash retainer of $40,000 (the retainer for 2019), the guidelines require directors with at least five years of service to own Renasant common stock with a value of at least $120,000. Using our stock price as of March 4, 2019, all of our directors own at least $192,130 of our common stock, except for Sean M. Beasley, George H. Booth, II, Frank B. Brooks, Hollis C. Cheek, John M. Creekmore, Albert J. Dale, III, Jill V. Deer, Marshall H. Dickerson, John T. Foy, RichardSuggs and Connie L. Heyer, Jr., Neal A. Holland, Jr., J. Niles McNeel, Fred F. SharpeEngel, who joined the board in May and September 2018, respectively. Mr. Suggs and Ms. Engel both own at least 500 shares of our stock.
Board, Committee and Director Performance Assessments. As part of its effort to ensure that the Company has a high-functioning board with the collective knowledge, experience and skills necessary to guide a financial institution such as Renasant, our nominating committee annually conducts a board assessment that has been developed and is administered by an independent third party. As part of the assessment, each director is asked to provide, on an anonymous basis, his or her opinions on various topics, including: (1) the interaction between the board and management, (2) the organization of the board, (3) the conduct of board and committee meetings, (4) each director’s fulfillment of his or her responsibilities as a director and (5) director compensation. After analyzing the results, the nominating committee makes recommendations to improve the operations of the board and to address any deficiencies that have been identified during the assessment process.
In addition to the assessment of the entire board, the nominating committee facilitates a peer assessment of each director whose term in office is expiring at the next annual meeting. For this assessment, the nominating committee asks each director to assess the individual contribution to the board and participation in board and committee meetings and other board activities, among other things, of each director whose term in office is expiring. The committee uses this information as one tool in determining whether a director whose term is expiring should be nominated for reelection.
Finally, most committees of the board annually perform a self-assessment. These committee self-assessments are designed to elicit input from committee members regarding the efficiency of the committee’s operations and ways that the committee can better fulfill its particular obligations. We expect the committees that do not already conduct annual
self-assessments to have an assessment process in place before the end of 2019.
BOARD OF DIRECTORS
Structure. There are currently 15 members of our board of directors, divided into three classes:
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| Class 1 | Class 2 | Class 3 |
| Donald Clark, Jr. | John M. Creekmore | Marshall H. Dickerson |
| Albert J. Dale, III | Jill V. Deer | R. Rick Hart |
| John T. Foy | Neal A. Holland, Jr. | Richard L. Heyer, Jr. |
| C. Mitchell Waycaster | E. Robinson McGraw | J. Niles McNeel(1) |
| Connie L. Engel | Sean M. Suggs | Michael D. Shmerling |
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| (1) | Mr. McNeel will retire effective as of the annual meeting, as required pursuant to our retirement policy. |
The current term of office for our Class 1 directors expires at the 2021 annual meeting; the current term of office for our Class 2 directors expires at the 2019 annual meeting; and the current term of office for our Class 3 directors expires at the 2020 annual meeting.
After our annual meeting and assuming that all of our nominees are elected, the board will have 14 members, which the board has determined is an “independent director” as defined under Rule 5605(a)(2)appropriate number to fulfill its responsibilities in light of our current and anticipated size and nature of operations. The board will remain divided into three classes, with five Class 1 directors, five Class 2 directors and four Class 3 directors.
Meetings. Our board held 13 meetings in 2018. All directors attended at least 75% of the Nasdaq Marketplace Rules. Being Renasant employees, Mr. McGrawtotal number of board meetings and Mr. Hart are not independent under the Nasdaq Marketplace Rules, nor is Mr. Potts independent. Finally, Jack C. Johnson and Theodore S. Moll, eachmeetings of whom were directorsthe committees on which they served. The members of Renasant that retired from the board effective at the 2015 annual meeting, also werewho are “independent directors” under the Nasdaq Marketplace Rules.
The board considered the relationships between our directors and Renasant or the Bank when determining each director’s status as an “independent director” under Rule 5605(a)(2)Listing Rules of the NASDAQ Stock Market, LLC, or Nasdaq, Marketplace Rules. In additionmet in executive session six times during 2018. We do not have a policy requiring director attendance at our annual meeting. All of our current directors attended the 2018 annual meeting, and we expect our entire board to the relationships listed below under the headings “attend this year’s annual meeting.Indebtedness
BOARD LEADERSHIP STRUCTURE
Our executive chairman serves as chairman of Directors and Officers” and “Other Related Person Transactions” the board, considered the following relationships:
We and the Bank employ Phelps Dunbar LLP,board has appointed a law firm of which William M. Beasley is a partner, to provide advice in various legal areas, including litigation services, employee benefits, and general corporate and securities law.
The Bank employs Mr. Creekmore’s son as a vice president at one of its Nashville branches and Dr. Heyer’s son as an investment officer in its wealth management division, although neither individual’s total compensation is at a level such that his employment would constitute a “related person transaction” under applicable SEC regulations. The compensation paid to each of Mr. Creekmore’s son and Dr. Heyer’s son is consistent with the compensation paid to similarly-situated employees of the Bank.
The board determined that none of these relationships affects the status of the relevant director as an “independent director.” Furthermore, we are not aware of any family relationships between any director, executive officer or person nominated to become a director or executive officer.
Leadership Structure of the Board of Directors
Chairman. E. Robinson McGraw, our chief executive officer,chairman, serves as chairman of the board of the Company and the board of the Bank. We have retained Mr. McGraw as chairman of the board following his transition from our chief executive officer to our executive chairman because we believe this structure continues to enhance the board’s operations. Mr. McGraw serves as an effective bridge between our non-employee directors and management. As executive chairman, Mr. McGraw remains significantly involved, with Mr. Waycaster and the rest of Renasant’s senior executive management, in developing Renasant’s strategic plan and implementing the steps needed to achieve the goals set forth in the strategic plan. In addition, Mr. McGraw is able to provide critical insight on the current state of our overall operations, future prospects and the risks faced by the Company and the Bank. With such a deep knowledge of the Company and the Bank, while Mr. McGraw is ideally suited to leading the board’s discussions.
Lead Director. John M. Creekmore serves as “lead director” onof our board of directors.directors and is a member of the board’s executive committee. The members of the board who meet the definition of “independent director” under the Nasdaq MarketplaceListing Rules select our lead director, except thatdirector; no lead director is required to be selected if the chairman of the board qualifies as an “independent director.” The lead director’s responsibilities are explained below.
We have chosen a board leadership structure with Mr. McGraw serving as our chairman because we believe this structure results in a single voice speaking for the Company and presents a unified and clear chain of command. Also, the chairman of the board is expected to manage the board in performing its duties and lead board discussion. As our and the Bank’s Chief Executive Officer, Mr. McGraw is ideally positioned to provide insight on the current status of our overall operations, our future plans and prospects and the risks that we and the Bank face. Thus, the individual with the most knowledge about us and the Bank and our respective operations is responsible for leading the board’s discussions. The board retains the authority to separate the positions of chairman and chief executive officer if it finds that the board’s responsibilities can be better fulfilled with a different structure.
We also have a lead director. The lead director serves as an independent counterbalance to the chairman ensuring that all of our directors’ concerns are addressed and otherwise facilitating robust discussions among the entire board (which, as noted above, is comprised almost entirely of “independent directors”). In terms of board leadership, we view the lead director as essentially a co-equal with the chairman of the board.board and essentially as a co-equal. Mr. Creekmore has been a director since 1997, predating Mr. McGraw’s (and Mr. Waycaster’s) service on the board, which we believe adds weight to his independent voice on the board. Also, at each meeting, if he deems it necessary,The duties of the lead director may call the board into executive session (that is, a meeting of only those directors who are “independent directors” under the Nasdaq Marketplace Rules) to discuss matters outside the presence of the chairman and other non-independent directors.
Article III, Section 8, ofdescribed in our Bylaws sets forth a complete description ofand include the lead director’s responsibilities. In general, the lead director is responsible for:following:
With Mr. McGraw,the chairman, scheduling and setting the agenda for board meetings;
Scheduling, setting the agenda for, and chairing all executive sessions of the “independent directors” of the board;
Determining the appropriate materials to be sent to directors for all meetings;
Acting as a liaison between the board and Mr. McGrawthe chief executive officer and our other executive officers;
Assisting the compensation committee in evaluating Mr. McGraw’sthe chief executive officer’s performance;
Assisting the nominating and corporate governance committee in its annual assessment of the board’s committee structure and each committee’s performance; and
Overseeing the board’s communications with our shareholders.
In addition, to these specific duties, we expect the lead director may call the board into executive session (that is, a meeting of only those directors who are “independent directors”) to discuss matters outside the presence of the chairman and other non-independent directors. The lead director is also expected to familiarize himself with the Company, the Bank and the banking industry in general. He also is expected to keep abreast of developments in the principles of good corporate governance.
BOARD COMMITTEES
The lead director is alsocurrent members of each of our Executive, Audit, Nominating and Corporate Governance, Compensation and Enterprise Risk Management Committees, and a memberbrief description of each committee’s function, are discussed below:
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| Executive Committee |
| John M. Creekmore, Chair | The executive committee exercises the power and authority of the full board of directors between scheduled board meetings. Among other things, the executive committee takes a lead role in succession planning for our senior management. The ability of the executive committee to act is subject to limitations imposed under Mississippi law and the committee’s charter. The executive committee is comprised of the chairman of the board, the lead director, the chief executive officer and three additional directors who are “independent directors” as defined in the Nasdaq Listing Rules. During 2018, the committee held 15 meetings. |
| Neal A. Holland, Jr., Vice-Chair |
| Albert J. Dale, III |
| John T. Foy |
| E. Robinson McGraw |
| C. Mitchell Waycaster |
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| Audit Committee | |
| John T. Foy, Chair | The audit committee's responsibilities include the following: |
| Marshall H. Dickerson, Vice-Chair | Ÿ | Appointing, compensating and overseeing our independent registered public accountants; |
| Jill V. Deer |
| Connie L. Engel | Ÿ | Monitoring the integrity of our financial reporting process and system of internal controls; |
| J. Niles McNeel |
| Michael D. Shmerling | Ÿ | Monitoring the independence and performance of our independent registered public accountants and internal auditing department; |
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| | Ÿ | Pre-approving all auditing and permitted non-audit services provided by our independent registered public accountants; |
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| | Ÿ | Facilitating communication among our independent registered public accountants, management, the internal auditing department and the board of directors; and |
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| | Ÿ | Establishing procedures for (1) the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters, and (2) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. |
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| | The sections below titled “Report of the Audit Committee” and “Independent Registered Public Accountants” describe the actions taken in 2018 and the committee's processes. |
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| | Each member of our audit committee is an “independent director” within the meaning of the Nasdaq Listing Rules, satisfies the other requirements for audit committee membership under the Nasdaq Listing Rules and meets all independence requirements under SEC regulations. The board has determined that Mr. Shmerling qualifies as an “audit committee financial expert” under applicable SEC regulations and satisfies the financial sophistication requirements under the Nasdaq Listing Rules. During 2018, the committee held 18 meetings. |
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| Nominating and Corporate Governance Committee |
| Neal A. Holland, Jr., Chair | The nominating committee evaluates, nominates and recommends individuals for membership on our board of directors and the board’s committees. Specific information about our director selection process is below under the heading “Director Selection.” In addition, the committee oversees the formation and implementation of our governance policies, including our stock ownership guidelines and the annual board and director performance assessments. More information about our stock ownership guidelines and these assessments may be found above under the “Board Governance” heading in the paragraphs titled “Director Stock Ownership Requirements” and “Board and Director Performance Assessments,” respectively. Each member of the nominating committee is an “independent director” under the Nasdaq Listing Rules. During 2018, the committee held 11 meetings. |
| John M. Creekmore, Vice-Chair |
| Marshall H. Dickerson |
| John T. Foy |
| Michael D. Shmerling |
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| Compensation Committee |
| Albert J. Dale, III, Chair | The compensation committee’s primary functions are setting our compensation strategy and administering the compensation of our named executive officers. The “Compensation Discussion and Analysis,” or CD&A, section below explains the compensation committee’s processes and procedures and discusses its specific decisions with respect to 2018 compensation. Each member of the committee is an “independent director” within the meaning of the Nasdaq Listing Rules and a “non-employee director” under SEC regulations. In determining independence, the board considered each member’s ability to be independent from management in light of his relationships with us and the Bank, including any compensation (such as consulting, advisory or other compensatory payments), received from us or the Bank, whether the member is considered our affiliate and additional relevant factors. The committee met sixtimes during 2018. |
| Richard L. Heyer, Jr., Vice-Chair |
| J. Niles McNeel |
| John M. Creekmore |
| Neal A. Holland, Jr. |
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| Enterprise Risk Management (ERM) Committee |
| Michael D. Shmerling, Chair | The ERM committee has overall responsibility for our enterprise-wide risk assessment management and oversight process. More information about the Company’s risk assessment process and the role of the committee may be found below under the heading “Role of the Board in Risk Oversight.” Each member of the ERM committee is an “independent director” as defined under the Nasdaq Listing Rules. During 2018, the committee held four meetings.
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| John T. Foy, Vice-Chair |
| John M. Creekmore |
| Albert J. Dale, III |
| Marshall H. Dickerson |
| Richard L. Heyer, Jr. |
| Neal A. Holland, Jr. |
We update our corporate website, www.renasant.com, to reflect any changes in the executive committeemembership of these committees. You can find this information by clicking on “Corporate Overview” under the board.“Investor Relations” tab, then clicking on “Committee Charting.”
Role of the Board in Risk OversightROLE OF THE BOARD IN RISK OVERSIGHT
Although ourOur full board of directors is ultimately responsible for the oversight and management of our risk management processes,and mitigation functions. To identify and mitigate risk, the board primarily acts through a committee structure, as detailed below. At least annually the full board receives presentations from management on the processes and procedures that we have implemented to identify and mitigate various risks facing the Company. These presentations assist our directors not only in performing their risk-oversight responsibilities on various committees but also reviewing on an informed basis the work of committees on which they do not serve. In 2018, among other topics, our chief risk officer detailed our enterprise risk management program, our chief credit officer outlined our credit underwriting and administration program and our chief technology officer gave a presentation on our current cybersecurity infrastructure and the planned enhancements thereto.
The board’s ERM committee is assisted in this taskprimarily responsible for identifying enterprise-wide risks (including cyber-security risks), assessing how each risk might affect other risks and facilitating the Company’s operations within risk tolerance levels that are established by management and reviewed by the Enterprise Risk Management Committee (“ERM committee”), whose members areboard. The committee oversees and assists management in the chairs of the various committees of the Companyrisk assessment process and the Bank. implementation of comprehensive risk management processes and procedures, it validates risk tolerance levels suggested by management, and it reviews and adopts policies, procedures and controls
that are intended to mitigate risk.
The ERM committee is taskedgenerally addresses enterprise-wide risk. Other standing committees, working with monitoring the risks identified by the Company and Bankmanagement committees in the context of the impact of each identified risk on other identified risks and ultimately on the Company as a whole. In additionthat report to the ERM committee, our and the Bank’s otherthese committees, are responsible for consideringused to identify and mitigate more specific risks, including:
and overseeing the risks within their particular area of concern. For example, ourThe audit committee, which focuses on financial reporting and operational risk. As provided in its charter, the auditThis committee meets regularly with management, our independent registered public accountants and our internal auditors to discuss the integrity of our financial reporting processes and internal controls as well asand the steps that have been taken to monitor and control related risks. In addition, at almost every meeting the committee receives a management presentation designed to give the committee a better understanding of our operations and how the subject of the presentation impacts our overall operational risk. More information about the audit committee can be found above under the heading “Board Committees”and below in the“Report of the Audit Committee” and “Independent Registered Public Accountants” sections.
The compensation committee, which evaluates risks relatedassociated with our executive compensation programs. The compensation committee is assisted by the incentive compensation committee, which is comprised of senior management and reports directly to such matters. Our Bank’sthe compensation committee. The incentive compensation committee reviews our cash and equity incentive compensation arrangements (for both executive and non-executive employees) to ensure that these arrangements appropriately balance risks and financial rewards in a manner that does not encourage or expose the Bank or the Company to imprudent risks, whether financial, credit, regulatory or otherwise. The steps we have taken to address risks associated with our executive compensation program are described in the CD&A section below. Other risk mitigation practices apply to specific groups of employees. For example, our lenders may be eligible for incentives based on their loan production. This creates a risk that a lender may try to make riskier loans to boost his or her incentive. We have addressed this risk by, among other things, requiring that a lender satisfy loan quality thresholds consistent with our overall goals for loan portfolio performance as a condition to his or her eligibility to receive an incentive payment. As another example, mortgage originators are compensated on a commission basis, based on the volume of loans originated. This creates a risk that employees may focus on higher income, non-minority areas, exposing us to criticism from a fair lending perspective, among other things. We have addressed this risk by imposing goals for low income and minority lending. On an ongoing basis, the incentive compensation committee monitors our incentive compensation arrangements to determine whether additional risk mitigants are necessary. The CD&A section provides more information about the activities of the compensation committee.
The loan committee, which is primarily responsible for credit and other risks arising in connection with our lending activities which includesand overseeing management committees that also address these risks. The Bank’sloan committee’s work is supplemented by a number of management committees that report to it on various aspects of our lending activities, such as loss management.
The investment committee, which monitors our interest rate and liquidity risk. The committee has two primary goals with respect to risk with the goal of structuringoversight: (1) to structure our asset-liability composition to maximizein a way that maximizes our net interest income while minimizing the adverse impact of changes in interest rates on net interest income and capital. Finally,capital; and (2) to ensure that we have adequate sources of short and long-term liquidity both under the current interest rate environment and under various hypothetical interest rate scenarios. The asset/liability committee, a management committee reporting to the investment committee, monitors our compensation committee, whose duties are described in more detail below, evaluates the risksinterest rate sensitivity and makes decisions relating to that our executive compensation programs may generate.process.
Each committee meets regularly with management to assist management in identifying all of the risks within such committee’s areas of responsibility and in monitoring, and, where necessary, taking appropriate action to mitigate the applicable risks.
At each board meeting, theeach committee chairmanchair provides a report to the full board of directors on issues related to suchthe committee’s specific risk oversight duties.and mitigation responsibilities. To the extent that any risksrisk reported to the full board needneeds to be discussedaddressed outside the presence of management, the board willmay call an executive session to discuss these issues.the issue.
We believe the board’s approachIn addition to fulfilling its risk oversight responsibilities complements its leadership structure. In his capacityour full board of directors and committee structure, Mr. Waycaster, as chairman of the board, Mr. McGraw reviews whether board committees are addressing their risk oversight duties in a comprehensive and timely manner. Since he is also our chief executive officer, Mr. McGraw is ableoversees management’s role in the implementation of our risk management processes by ensuring access to assist these committees in fulfilling their duties by (1) requiring that our management team provide these committees with all requestedadequate and timely reports and other information, as well as with access to our employees and (2) implementingthe prompt implementation of recommendations of the various board committees to mitigate risk. At the same time,by our committees. Mr. Creekmore, as our lead director, is able to lead an independent review of the risk assessments developed by management and reported to the committees. Finally, we have a chief risk officer who leads management’s assessment of the risks we face, the determination of our risk tolerance levels and the implementation of effective risk management processes and procedures.
Director Compensation
The compensation committee recommends the compensation for our non-employee directors; our full board of directors approves or modifies the recommendation. Any modifications are implemented after the annual meeting. Directors who are also our employees receive no additional compensation for their service as directors, but they are reimbursed for any direct expenses incurred to attend our meetings.
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| DIRECTOR COMPENSATION FOR 2015 |
| Name | | Fees Earned or Paid in Cash | | Stock Award | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | All Other Compensation | | Total |
| A | | B | | C | | D | | E | | F |
| William M. Beasley | | $ | 29,750 |
| | $ | 20,000 |
| | $ | 3,269 |
| | $ | 6,391 |
| | $ | 59,410 |
|
| George H. Booth, II | | 29,000 |
| | 20,000 |
| | 4,313 |
| | 4,803 |
| | 58,116 |
|
| Frank B. Brooks | | 45,500 |
| | 20,000 |
| | 4,122 |
| | 7,013 |
| | 76,635 |
|
| Hollis C. Cheek | | 37,000 |
| | 20,000 |
| | — |
| | 491 |
| | 57,491 |
|
| John M. Creekmore | | 51,000 |
| | 20,000 |
| | 4,375 |
| | 11,561 |
| | 86,936 |
|
| Albert J. Dale, III | | 53,125 |
| | 20,000 |
| | 9,246 |
| | 5,807 |
| | 88,178 |
|
| Jill V. Deer | | 37,250 |
| | 20,000 |
| | — |
| | 491 |
| | 57,741 |
|
| Marshall H. Dickerson | | 52,500 |
| | 20,000 |
| | — |
| | 7,013 |
| | 79,513 |
|
| John T. Foy | | 49,000 |
| | 20,000 |
| | — |
| | 7,013 |
| | 76,013 |
|
| Richard L. Heyer, Jr. | | 34,000 |
| | 20,000 |
| | 3,097 |
| | 491 |
| | 57,588 |
|
| Neal A. Holland, Jr. | | 58,125 |
| | 20,000 |
| | — |
| | 491 |
| | 78,616 |
|
| J. Niles McNeel | | 31,500 |
| | 20,000 |
| | — |
| | 7,013 |
| | 58,513 |
|
| Hugh S. Potts, Jr. | | 27,500 |
| | 20,000 |
| | — |
| | 7,013 |
| | 54,513 |
|
| Fred Sharpe | | 14,000 |
| | — |
| | — |
| | 13 |
| | 14,013 |
|
| Michael D. Shmerling | | 41,875 |
| | 20,000 |
| | — |
| | 4,380 |
| | 66,255 |
|
The table above includes information about the compensation paid to our non-employee directors for services they rendered during our fiscal year ended December 31, 2015. The compensation included in the table represents both cash payments and the value of other forms of payments and benefits as follows:
Column B, “Fees Earned or Paid in Cash”-Amounts in this column reflect the retainers and meeting fees we paid to our non-employee directors, which may be voluntarily deferred under our Deferred Stock Unit Plan or Directors’ Deferred Fee Plan.
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◦ | We paid the following retainers, prorated in the form of equal monthly payments: |
| |
▪ | All directors received the amount of $20,000; |
| |
▪ | Our lead director received an additional retainer in the amount of $7,500; |
| |
▪ | The chairman of the audit committee received an additional retainer in the amount of $6,000; and |
| |
▪ | The chairmen of the compensation, nominating and corporate governance, executive and loan committees each received an additional retainer in the amount of $3,000. |
| |
◦ | We also paid the following meeting fees: |
| |
▪ | Committee chairmen who do not receive a retainer for acting as such receive $750 for each meeting chaired; and |
| |
▪ | Committee members receive $500 for each meeting they attend. |
| |
▪ | Each of our non-employee directors who serves on one of our state bank boards was paid a $500 fee for each meeting attended, a $125 fee in each month during which a meeting was not held, and a $200 fee for attendance at state bank board committee meetings. |
Column C, “Stock Award,” - On April 28, 2015, each director received a time-based restricted stock award in the aggregate amount of 652 shares of our common stock that will vest at the 2016 annual meeting. Column C reports the aggregate fair value of the award, determined as of the date of award, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation.” Dividends payable on restricted stock awards are not included in our fair value determination. Please refer to Note N, “Employee Benefit and Deferred Compensation Plans,” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2015 for details regarding the assumptions used to derive the fair value of our restricted stock.
Column D, “Changes in Pension Value and Nonqualified Deferred Compensation Earnings” - Amounts in this column report above-market earnings on amounts deferred under the Deferred Fee Plan. Interest earned on deferred amounts is considered above-market only if the interest rate exceeded 120% of the applicable federal long-term rate with compounding as prescribed by the Internal Revenue Service. Column D does not include the $154,077 change in the actuarial present value of Mr. Potts’s accumulated pension plan benefit, determined as of December 31, 2015, which was earned while he was an employee of First M&F. Mr. Pott’s benefit is held in the Bank’s pension plan pending distribution.
Column E, “All Other Compensation” - Amounts in this column report the value of other benefits we provide to our non-employee directors, which consist of:
| |
◦ | Non-employee directors and their eligible dependents may enroll in our medical and dental plans on the same terms as our active employees; amounts in Column E represent the portion of the premiums paid by the Company; |
| |
◦ | We provide term life and accidental death and dismemberment insurance coverage with a face amount of $10,000, at a cost of $25, which is included in Column E; and |
| |
◦ | Column E includes the dividends paid on the restricted stock award. |
During 2015, the Bank maintained two types of deferred compensation plans in which our non-employee directors were eligible to participate. Under one plan, the Deferred Stock Unit Plan, or the “DSU Plan,” deferred retainer and fees are deemed invested in units representing shares of our common stock and are credited with dividend equivalent units as and when we pay dividends. Units are allocated to each participant’s account based on a quarterly average market price. Under the other plan, the Directors’ Deferred Fee Plan, or the “Deferred Fee Plan,” deferred retainer and fees are notionally invested by each director in investment alternatives substantially similar to those offered under our 401(k) plan and in the Moody’s Average Corporate Bond Rate, or the
Moody’s Rate, which was a weighted average interest rate of 4.24% in 2015. Benefits under either plan are payable when a director ceases to serve as a member of the board or attains a specified age. Under the DSU Plan, deferred amounts are paid in the form of shares of our common stock; under the Deferred Fee Plan, deferred amounts are paid in cash.
Meetings Held During 2015
Our board held sevenmeetings during 2015. All directors attended at least 75% of the total number of board meetings and the meetings of the committees on which they served. The members of the board who are “independent directors” under Nasdaq Rule 5605(a)(2) met in executive session sixtimes during 2015.
We do not have a policy requiring director attendance at our annual meeting. All of our current directors attended the 2015 annual meeting.We expect our entire board to attend this year’s annual meeting.
Board Committees
The board of directors of the Company has established, among others, an audit committee, a compensation committee and a nominating and corporate governance committee (which we refer to as the “nominating committee”). The composition and responsibilities of each of these committees are described below.
Audit Committee
Our audit committee has six members. Its chairman is Frank B. Brooks; the other members of the audit committee are John M. Creekmore, Jill V. Deer, Marshall H. Dickerson, John T. Foy and Michael D. Shmerling. The board has determined that each member of the audit committee: (1) is an “independent director” as defined in Rule 5605(a)(2) of the Nasdaq Marketplace Rules; (2) meets the criteria for independence in Rule 10A-3(b)(1) of the Exchange Act; and (3) satisfies the other requirements for audit committee membership under the Nasdaq Marketplace Rules. The board has determined that Michael D. Shmerling qualifies as an “audit committee financial expert” under applicable SEC rules and regulations and satisfies the financial sophistication requirements under Rule 5605(c)(2)(A) of the Nasdaq Marketplace Rules. During 2015, the audit committee held 18meetings.
The audit committee has adopted a written charter, a copy of which is available at www.renasant.com, by clicking on “Corporate Overview” under the “Investor Relations” tab, then clicking on “Governance Documents” and then “Audit Committee Charter.” The audit committee reviews our financial reporting process on behalf of the board of directors. The audit committee’s duties and responsibilities under its charter include the following:
Appointing, compensating and overseeing our independent registered public accountants;
Monitoring the integrity of our financial reporting process and system of internal controls;
Monitoring the independence and performance of our independent registered public accountants and internal auditing department;
Pre-approving all auditing and permitted non-audit services provided by our independent registered public accountants;
Providing an avenue of communication among our independent registered public accountants, management, the internal auditing department and the board of directors; and
Establishing procedures for (1) the receipt, retention and treatment of complaints we receive regarding accounting, internal accounting controls or auditing matters, and (2) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters.
Compensation Committee
Our compensation committee has six members. Its chairman is Albert J. Dale, III; the other members of the committee are Frank B. Brooks, John M. Creekmore, Richard L. Heyer, Jr., Neal A. Holland, Jr., and J. Niles McNeel. Each member of the committee is considered: (1) an “independent director” within the meaning of Rule 5605(a)(2) of the Nasdaq Marketplace Rules, (2) a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act and (3) an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code. The compensation committee met eight times during 2015.
The compensation committee has adopted a written committee charter, most recently amended January 19, 2016, which describes its specific authority, powers and responsibilities. A copy of the charter is available at www.renasant.com by clicking on “Corporate Overview” under the “Investor Relations” tab, then clicking on “Governance Documents” and then “Compensation Committee Charter.” As provided in the charter, the responsibilities of the compensation committee include:
Setting the Company’s compensation strategy;
Determining the compensation of our CEO and other named executives, subject to the approval of our board;
Making annual grants and awards under our LTIP, subject to the approval of our board; and
Otherwise providing oversight and management of the compensation practices, plans and policies for our named executive and senior executive officers.
The analyses and decisions made by the compensation committee about the compensation of our named executives can be found below in the “Compensation Discussion & Analysis” section.
Nominating and Corporate Governance Committee
The nominating committee evaluates, nominates and recommends individuals for membership on our board of directors and the board’s committees and plays a leadership role in our formulation of corporate governance policies. Its chairman is Neal A. Holland, Jr.; the other members of the nominating committee are John M. Creekmore, Marshall H. Dickerson, John T. Foy, J. Niles McNeel and Michael D. Shmerling. Each of the current members of the nominating committee is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Marketplace Rules. During 2015, the nominating committee held 11meetings.
The nominating committee has adopted a written charter, a copy of which is available at www.renasant.com, by clicking on “Corporate Overview” under the “Investor Relations” tab, then clicking on “Governance Documents” and then “Nominating and Governance Committee Charter.”DIRECTOR SELECTION
The nominating committee evaluates and recommends potential new directors based upon the needs of the board and the Company. The committee’s objective is to craft a board composed of individuals with a broad mix of backgrounds and experiences and possessing, as a whole, all of the knowledge, skills and experience necessary to guide a publicly-traded companyfinancial institution like usRenasant in the prevailing business environment.
Although there is no formal policy, the board and nominating committee, as well as our management, believe that board membership should reflect diversity in its broadest sense. The nominating committee usesconsiders a candidate’s gender, ethnicity, experience, education, geographic location and difference of viewpoint when evaluating his or her qualifications for election to the same criteria to assess all candidates for director, whether proposed by the committee itself, by a shareholder or otherwise. board.
In addition to the eligibility requirements included in our Bylaws, the criteria include, without limitation, whether the candidate possesses the following qualifications and qualities:qualities, among others, are evaluated by the nominating committee:
Independence for purposes of Rule 5605(a)(2)“Independence” within the meaning of the Nasdaq MarketplaceListing Rules and SEC rules and regulations;
Experience in banking or in marketing, finance, legal, accounting or other professional disciplines;
Diversity of background and other characteristics whichthat are reflective of our shareholders;
Familiarity with and participation in the local communities in which we do business;
Prominence and a highly-respected reputation in his or her profession;
A proven record of honest and ethical conduct, personal integrity and independent judgment;
Ability to represent the interests of our shareholders; and
Ability to devote time to fulfill the responsibilities of a director and to enhance their knowledge of our industry.
Neither the board nor the nominating committee has adopted a formal policy with regard to the consideration of diversity when evaluating candidates for election to the board. However, the nominating committee believes that board membership should reflect diversity in its broadest sense, and so it does consider a candidate’s gender, ethnicity, experience, education, geographic location and difference of viewpoint when evaluating his or her qualifications for election to the board. Whenever the nominating committee evaluates a potential candidate, the committee considers that individual in the context of the composition of the board as a whole.
Shareholder Nominees to the Board of Directors
Usually, nominees for election to the board are proposed by the current members of the board.board or executive management. For example, Mr. Suggs, who joined the board in May 2018, was recommended by Messrs. McGraw and Waycaster. As to Ms. Engel, as part of our merger agreement with Brand, we agreed to appoint one Brand director to our board upon completion of the merger. After reviewing the qualifications of the members of Brand’s board and interviewing certain candidates, the nominating committee recommended the appointment of Ms. Engel to our board upon completion of the merger. The nominating committee will also consider candidates that shareholders and others recommend. recommend, and the committee uses the same criteria in assessing shareholder-recommended candidates as it does for candidates proposed by the committee or another board member. More information about the process for shareholder recommendations may be found below under the heading “Shareholder recommendationsCommunications” in the paragraph titled “Process for Shareholder Recommendations.”
DIRECTOR INDEPENDENCE
The board has determined that each of our directors (including Mr. McNeel, whose service on the board will cease after the annual meeting) is an “independent director” as defined under Rule 5605(a)(2) of the Nasdaq Listing Rules, with the exception of Messrs. McGraw, Hart and Waycaster who are not independent directors because they are Renasant employees. In addition, the board previously determined that Hollis C. Cheek and Fred F. Sharpe, whose terms as directors ended as of the 2018 annual meeting, were independent directors under Rule 5605(a)(2) while they served on our board. When determining each director’s status as an “independent director,” the board evaluated the following relationships involving Renasant or the Bank:
Transactions involving a director, members of his or her immediate family and business with which they are associated and the Company or the Bank (more information about these transactions may be found below under the headings “Indebtedness of Directors and Executive Officers”and “Other Related Person Transactions”).
The Bank employs the sons of three of our directors: (1) Mr. Creekmore’s son works as a portfolio manager in the Bank's corporate banking department; (2) Dr. Heyer’s son is employed as an investment officer in the Bank’s wealth management division; and (3) Mr. Holland's son is a trainee in the Bank's wealth management division. None of these employees is considered an “executive officer” of the Company, nor did any of them receive compensation for 2018 at a level that would cause his employment to constitute a “related person” transaction under applicable SEC regulations. The compensation paid to each employee was consistent with the
compensation paid to similarly-situated employees of the Bank.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
Certain of our directors and executive officers, members of their immediate families and businesses with which they are associated are customers of the Bank and have entered into loan transactions with the Bank. These transactions were made in the ordinary course of the Bank’s business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank, and did not involve more than the normal risk of collectability or present other unfavorable features. The Bank’s board of directors approved all such loans in accordance with the Federal Reserve’s Regulation O and other bank regulatory requirements.
OTHER RELATED PERSON TRANSACTIONS
In addition to the loan transactions described above, we have deposit and other financial services-related relationships in the ordinary course of the Bank’s business with our directors and executive officers, members of their immediate families and businesses with which they are associated, and we expect to engage in similar transactions with these persons in the future. All certificates of deposit and depository relationships with these persons were made in the ordinary course of the Bank’s business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or the Bank.
In addition, in 2018 we entered into transactions in which Bartow Morgan, Jr., our chief commercial banking officer, has a direct or indirect material interest, or we became a party to transactions in which Mr. Morgan has a material interest as a result of the completion of the Brand acquisition on September 1, 2018. Our related person transactions involving Mr. Morgan are described below:
Brand was party to real estate leases with entities owned by a trust of which Mr. Morgan is a trustee and an approximate 25% beneficiary (taking into account the interest of Mr. Morgan and his children) (together with his siblings) (this trust is referred to as the “Morgan Family Trust”), under which Brand leased from the entities owned by the Morgan Family Trust real estate on which a Brand branch was located. Upon the completion of the Brand acquisition, Renasant assumed these leases. The following table sets forth (1) the location of each of these branches; (2) the lease payments made in 2018; and (3) the payments due over the remaining terms of each of the leases, which expire at various times between 2022 and 2025 (amounts in the columns below include, to the extent known, triple net charges):
|
| | |
| Branch Address | Lease payments in 2018(1) | Lease payments due from January 1, 2019 through remaining term of lease |
| 2255 Buford Highway Buford, Georgia 30518 | $407,549 (138,121) | $1,373,255 |
| 6224 Sugarloaf Parkway, 1st floor Duluth, Georgia 30097 | $444,378 (139,713) | $1,493,860 |
| 6224 Sugarloaf Parkway, 2nd and 3rd floors Duluth, Georgia 30097 | $500,172 (173,895) | $2,264,810 |
| 6515 Sugarloaf Parkway, Suites 150 and 160 Duluth, Georgia 30097 | $68,106 (34,069) | $301,280 |
| 1255 Lakes Parkway, Buildings 100 and 200 Lawrenceville, Georgia 30043 | $523,891 (175,641) | $2,656,121 |
| 1255 Lakes Parkway, Suites 110 and 180 Lawrenceville, Georgia 30043 | $237,180 (79,750) | $1,206,131 |
| 480 Peachtree Industrial Boulevard Suwanee, Georgia 30024 | $197,788 (67,309) | $560,319 |
| |
| (1) | Amounts in parenthesis represent the portion of the lease payments paid after September 1, 2018, the date on which we completed the Brand acquisition. The balance was paid by Brand prior to September 1, 2018. |
On account of his understanding of the markets in which the above-listed branches operate, Mr. Morgan will likely play a role in determining whether the Bank should continue to maintain a branch in the market generally. He will not, however, participate in discussions as to whether to renew any expiring lease or find another location
for the branch within the market. If management elects to renew an expiring lease, Mr. Morgan will not participate in the negotiations regarding the rent or the other terms and conditions of the lease renewal, which will ultimately be addressed to: Secretary,subject to final approval by our board.
Brand Properties, LLC and Brand Real Estate Services, Inc., both of which are owned by the Morgan Family Trust, provided property management services for the above-listed branch locations and our Dacula, Georgia branch location to Brand, prior to September 1, 2018, and to us, after the completion of the Brand acquisition. In 2018, these entities were paid $33,358 in the aggregate for property management services, and we expect to pay an aggregate of approximately $139,000 to these entities over the remaining terms of the above leases for such services (these entities do not provide property management services with respect to any of our other locations). Additionally, Brand had contracted with Brand Properties, LLC to develop and construct its Dacula branch, which construction was completed in the summer of 2018. Brand Properties was paid an aggregate of $2,252,152 under this contract, of which $464,439 was paid after September 1, 2018.
Brand maintained “split-dollar” insurance arrangements for the benefit of life insurance trusts established by Mr. Morgan and certain of his siblings, which we assumed upon the completion of the Brand acquisition. Under these arrangements, the trusts (whose beneficiaries were parties related to Mr. Morgan or his siblings) acquired and owned life insurance policies on the lives of Mr. Morgan and the siblings, and Brand was contractually obligated to pay the premiums. Upon the insured’s death or the earlier termination of the split dollar arrangements, each trust is obligated to repay to Brand (and now to us) the aggregate amount of the premium payments made on behalf of the trust or, under some of the arrangements, the cash surrender value of policy, if greater than the aggregate premiums paid. We intend to terminate these split-dollar insurance arrangements in a manner that avoids loss to the Company. In 2018, premium payments in the aggregate amount of $335,362 were made by Brand (prior to September 1, 2018) and Renasant (after the completion of the Brand acquisition), and we have made premium payments in the aggregate amount of $158,662 in the first two months of 2019.
Upon the completion of our acquisition of Brand, GardenBrand, LLC, previously a wholly-owned subsidiary of The Brand Banking Company, became a wholly-owned subsidiary of the Bank. GardenBrand, LLC is party to a purchase and sale agreement with two entities owned by the Morgan Family Trust. Under this agreement, GardenBrand, LLC has agreed to sell a vacant lot in Atlanta, Georgia, to one of the entities owned by the Morgan Family Trust in exchange for the real estate, owned by the other entity owned by the Morgan Family Trust, on which the Bank’s branch in Suwanee, Georgia, is located and cash. The purchase and sale agreement was entered into in 2015; in November 2018 we agreed to extend the deadline for closing the transaction for six months. As a condition of the extension, $150,000 in earnest money was irrevocably released to us. Our executive committee reviewed and approved the terms of the proposed extension before we amended the purchase sale and agreement to provide for the extension.
Brand owned warrants to purchase the common stock of a “fintech” company, and the Bank acquired these warrants upon the completion of the Brand acquisition. Our management decided to sell these warrants, which Mr. Morgan offered to purchase for their book value, which was $603,009. To evaluate Mr. Morgan’s offer, the board directed management to ascertain whether (1) there were any other parties interested in acquiring the warrants and (2) the Bank would be likely to obtain a better price than the price offered by Mr. Morgan. Management contacted investment bankers with knowledge of the industry in which this fintech company operates and was advised that, due to the speculative nature of the warrants and the fintech company’s operating results to date, the Bank was unlikely to find any other buyer for the warrants at all, much less a buyer willing to pay more than book value for the warrants. After receiving this advice, the board approved the sale of the warrants for $603,009 to an entity of which Mr. Morgan is a 50% owner. The sale was completed in December 2018.
LEGAL PROCEEDINGS INVOLVING A DIRECTOR OR EXECUTIVE OFFICER AND THE COMPANY OR THE BANK
We are not aware of any current legal proceedings where any of our directors, executive officers or other affiliates, any holder of more than 5% of our common stock, or any of their respective associates, is a party adverse to, or has a material interest adverse to, us, the Bank or any of our other subsidiaries.
SHAREHOLDER COMMUNICATIONS
Receipt of Proxy Materials. If you received a paper copy of this proxy statement, you can elect to receive future proxy materials over the internet. Please refer to your proxy card for instructions for requesting electronic delivery of our
proxy materials. If you received the Notice of the electronic availability of our proxy materials, you may obtain a paper copy of the materials. Please refer to the Notice for instructions for ordering a paper copy of the proxy materials and selecting a future delivery preference.
Shareholder Questions. Although we have no formal policy, shareholders may send communications to the board and individual directors by contacting Kevin D. Chapman, our Chief Financial and Operating Officer, in one of the following ways:
By writing to Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827. Your recommendations38804-4827, Attention: Chief Financial Officer;
By e-mail to KChapman@renasant.com; or
By phone at (662) 680-1450.
Mr. Chapman will forward to the audit committee any communication concerning employee fraud or accounting matters, and he will forward to the full board any communication relating to corporate governance or requiring action by the board of directors. Mr. Chapman will respond to communications that may be addressed most effectively by management.
Process for Shareholder Recommendations. Shareholders may recommend candidates for election to the board of directors. Recommendations should be addressed to Renasant Corporation, 209 Troy Street, Tupelo, Mississippi 38804-4827, Attention: Secretary. Recommendations must be submitted to us no earlier than December 28, 2016,25, 2019, and no later than January 27, 2017,24, 2020, for consideration as a possible nominee for election to the board at our 20172020 annual meeting.
The specific requirements of our advance notice and eligibility provisions whichthat apply to shareholder recommendations of director candidates for director, are set forth in Article III, Section 9, of our Bylaws, a copy of which is available upon request. Among other things, a shareholders’shareholder's notice must include the following information as to each nominee:
The reason for making the nomination;
All arrangements or understandings between or among the recommending shareholder(s) and the nominee, as well as any information that would have to be disclosed under Item 404 of Regulation S-K if the recommending shareholder (and any beneficial owner on whose behalf the recommendation has been made) were the registrant;
All information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and
The nominee’s written consent to being named in the proxy statement and to serve as a director if elected.
The shareholders’A shareholder's notice must also set forthinclude the name and address of the nominating shareholder and information relating to, among other thingsthings: (1) all direct and indirect ownership interests (including hedges, short positions and derivatives) and economic interest in our stock (such as rights to dividends) and all proxies and other arrangements to vote our stock held by the nominating shareholder,shareholder; and (2) all other information that the shareholder would be required to disclose under Section 14 of the Exchange Act in connection with the solicitation of proxies by sucha shareholder in a contested election. If a shareholder intends to recommend a nominee for election as director on behalf of the beneficial owner of the shares that the recommending shareholder is the record owner of, the recommending shareholder must also provide the information described above with respect to the beneficial owner.
RespondingShareholder Proposals for the 2020 Annual Meeting. At the annual meeting each year, the board of directors submits to Shareholder Questionsshareholders its nominees for election as directors, a non-binding advisory resolution relating to our executive compensation and a proposal to ratify the audit committee’s appointment of our independent registered public accountants for the upcoming fiscal year. In addition, the board may submit other matters to the shareholders for action at the annual meeting. Shareholders may also submit proposals for action at the annual meeting.
The board has not adoptedShareholders interested in submitting a formal procedure that you must follow to send communications to it, but it does have informalproposal for inclusion in our proxy materials for the 2020 Annual Meeting of Shareholders may do so by following the procedures described below, that it believes adequately facilitate shareholder communications with the board. Shareholders can send communications to the board and individual directors by contacting Kevin D. Chapman, our Chief Financial Officer, in oneRule 14a-8 of the following ways:
By writing to Renasant Corporation,Exchange Act. If the 2020 annual meeting is held within 30 days of April 23, 2019, shareholder proposals must be received by our Secretary at 209 Troy Street, Tupelo, Mississippi 38804-4827; Attention: Chief Financial Officer;38804-4827, no later than the close of business onNovember 15, 2019, in order for such
By e-mail
proposals to KChapman@renasant.com; orbe considered for inclusion in the proxy statement and form of proxy relating to such meeting.
By phoneFor any shareholder proposal to be presented in connection with the 2020 Annual Meeting of Shareholders but without inclusion in our proxy materials, including any proposal relating to the nomination of an individual to be elected to the board of directors, a shareholder must give timely written notice thereof in writing to the Secretary in compliance with the advance notice and eligibility requirements contained in our Bylaws. To be timely, a shareholder’s notice must be delivered to the Secretary at (662) 680-1450.
If you request information or ask questions that can209 Troy Street, Tupelo, Mississippi 38804-4827 not less than 90 days nor more efficiently be addressed by management, Mr. Chapman will respondthan 120 days prior to your questions insteadthe first anniversary of the board. He will forwardimmediately preceding year’s annual meeting. If, however, the date of the annual meeting is advanced by more than 30 days or delayed by more than 90 days from such anniversary date, notice by the shareholder to be timely must be delivered not earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or, if public announcement of the date of such meeting is made less than 120 days in advance, the 10th day following the date of the first public announcement of the date of such meeting. The notice must contain information specified in our Bylaws about each nominee or the proposed business and the shareholder making the nomination or proposal.
Under our Bylaws, based upon the meeting date of April 23, 2019 for the 2019 Annual Meeting of Shareholders, a qualified shareholder intending to introduce a proposal or nominate a director at the 2020 Annual Meeting of Shareholders but not intending the proposal or nomination to be included in our proxy materials for such meeting must give written notice to our Secretary not earlier than the close of business on December 25, 2019, and not later than the close of business on January 24, 2020.
The advance notice provisions in our Bylaws also provide that in the case of a special meeting of shareholders called for the purpose of electing one or more directors, a shareholder may nominate a person or persons (as the case may be) for election to such position if the shareholder’s notice is delivered to the audit committee any communication concerning employee fraud or accounting matters and will forwardSecretary at the above address not earlier than the 120th day prior to the full board any communication relatingspecial meeting and not later than the close of business on the later of the 90th day prior to corporate governancethe special meeting or, those requiring actionif public announcement of the date of such meeting is made less than 120 days in advance, the 10th day following the date of the first public announcement of the date of the special meeting and of the nominees proposed by the board of directors.directors to be elected at such meeting.
Indebtedness of Directors and Officers
CertainThe specific requirements of our directorsadvance notice and officers, businesses witheligibility provisions are set forth in Article III, Section 9 of our Bylaws, a copy of which they are associated and members of their immediate families are customers of the Bank and have entered into loan transactions with the Bank. These transactions were made in the ordinary course of the Bank’s business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not relatedis available upon request. Requests should be sent to the Company or the Bank, and did not involve more than the normal riskSecretary at 209 Troy Street, Tupelo, Mississippi 38804-4827.
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| BOARD MEMBERS AND COMPENSATION |
MEMBERS OF THE BOARD OF DIRECTORS
The following information sets forth each member of collectability or present other unfavorable features. The Bank’sour board of directors approvedwho will continue after the 2019 annual meeting (ages are as of the meeting), assuming all such loans in accordance with bank regulatory requirements.
Other Related Person Transactions
In additionof our nominees to the loan transactions described above, we have depositboard are elected. The information below includes highlights of the specific experience, qualifications, attributes and other financial services-related relationshipsskills that led us to conclude that each should be and remain a member of our board. We believe that our board of directors consists of a diverse collection of individuals who possess the integrity, education, work ethic and ability to work with others necessary to oversee our business effectively and to represent the interests of all shareholders, including the qualities listed in the ordinary course“Corporate Governance and Board of Directors” section under the Bank’s business with our directors and officers, businesses with which they are associated and members of their immediate families, and we expect to engage in additional transactions with these persons in the future. All certificates of deposit and depository relationships with these persons were made in the ordinary course of the Bank’s business and involved substantially the same terms, including interest rates, as those prevailing at the time for comparable depository relationships with persons not related to the Company or the Bank.heading “Director Selection” above.
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| Name | Age | Class | Background, Qualifications and Skills |
Donald Clark, Jr. Director since 2017 | 69 | 1 | Background: Mr. Clark currently serves as Chairman of Butler Snow, LLP, the largest Mississippi-based law firm. As a member of the firm’s Public Finance and Incentives Group, Mr. Clark has extensive experience in municipal bonds, economic development incentives and government relations. Mr. Clark was appointed a director of the Company upon the completion of our acquisition of Metropolitan BancGroup, Inc. in July 2017. Experience/Qualifications/Skills: Mr. Clark is highly regarded in the legal profession. As Chairman of Butler Snow, he oversees the operations of a firm with over 350 attorneys located in 26 offices spread throughout the United States (as well as two international offices), many of which are located within the Bank’s footprint. This experience provides the board with insight on the needs of customers within many of our markets. As the leader of a law firm, Mr. Clark also can provide valuable input to the board on enterprise-wide risk management practices. Finally, Mr. Clark’s experience in public finance, economic development incentives and government relations makes him a resource to the board in these areas. |
Albert J. Dale, III Director since 2007 | 68 | 1 | Background: Mr. Dale has served as president of Dale, Inc. since 1985. Dale, Inc., located in Nashville, Tennessee, is a specialty contractor and a Marvin Windows and Doors, Kolbe Windows and Doors and Sierra Pacific Windows and Doors dealer in Tennessee, Kentucky and Alabama. He was appointed a director of the Company upon the completion of our acquisition of Capital Bancorp, Inc., or Capital, in July 2007. Experience/Qualifications/Skills: As a supplier to businesses and consumers, Mr. Dale’s professional experience provides the board with insight from the customer’s perspective on the needs and risks associated with business development. In addition, Mr. Dale brings to the board an intimate knowledge of Nashville, Tennessee, one of our growth markets. We rely on Mr. Dale for advice on where and how to serve the Nashville metropolitan area. |
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| Name | Age | Class | Background, Qualifications and Skills |
Connie L. Engel Director since 2018 | 66 | 1 | Background: Ms. Engel is a partner in the Atlanta Office Division of Childress Klein, Inc., a commercial real estate firm engaged in the development, management and leasing of commercial real estate throughout the Southeastern United States. Ms. Engel has been responsible for the development and leasing of the Atlanta Galleria Office Park located in Atlanta, Georgia, for over 25 years. Since 2005, Ms. Engel has served on the Board of Trustees of Kennesaw State University Foundation, Kennesaw, Georgia, as Chairwoman and trustee. She is the Vice Chair of the Cumberland Community Improvement District and currently serves on the Board of Directors of the Atlanta chapter of National Association of Corporate Directors. Experience/Qualifications/Skills: Commercial real estate lending is a significant aspect of our operations. Ms. Engel's extensive experience in commercial real estate and development enables her to provide valuable insight with respect to our commercial real estate operations throughout our footprint, but particularly in the Atlanta metropolitan area, one of our most significant growth markets. In addition, Ms. Engel served on the audit committee of Brand prior the merger. We believe this experience allows her to be a valuable member of our audit committee. |
John T. Foy Director since 2004 | 71 | 1 | Background: Since February 2008, Mr. Foy has been retired. From February 2004 until February 2008, he served as president and chief operating officer of Furniture Brands International, Inc. During that time, he was also a member of the board of directors of Furniture Brands International. Prior to 2004 he served as president and chief executive officer of Lane Furniture Industries. Furniture Brands International was, and Lane Furniture Industries is, engaged in the manufacture of upholstered and wooden furniture. Experience/Qualifications/Skills: Furniture manufacturing is a major segment of the economy in our North Mississippi markets. We believe that Mr. Foy’s broad experience in the furniture manufacturing industry gives us an advantage in soliciting these types of customers, as well as customers in the manufacturing industry in general. Also, Mr. Foy’s experience as the president and a director of Furniture Brands International, Inc., which was a publicly-traded company during Mr. Foy’s tenure, provides him with insights on the operation of a company with diverse operations as well as on corporate governance. |
C. Mitchell Waycaster Director since 2018 | 60 | 1 | Background: Mr. Waycaster has served as our and the Bank’s Chief Executive Officer since May 1, 2018, and he has been President of the company and the Bank since January 2016. Prior to assuming his current position, Mr. Waycaster was our Chief Operating Officer since January 2016. Prior to being named President, Mr. Waycaster was our Executive Vice President since February 2003 and a Senior Executive Vice President since June 2005. He served as Chief Administrative Officer of the Bank from April 2007 to January 2016. Mr. Waycaster served as President of the Mississippi Division of Renasant Bank from January 2005 to April 2007; previously Mr. Waycaster served as Executive Vice President and Director of Retail Banking of the Bank from 2000 until December 2004. Experience/Qualifications/Skills: Mr. Waycaster has been an employee of the Bank for over 40 years. During that time, he has worked in virtually all of the Bank’s areas of operation. This experience gives Mr. Waycaster a detailed understanding of our operations as well as the opportunities and challenges that we face. Aside from Mr. McGraw, it is unlikely that any other Renasant employee has a better understanding of our history, our current operations and our future strategies than Mr. Waycaster. His insights are essential to assisting the board in developing and implementing our strategic plans. |
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| Name | Age | Class | Background, Qualifications and Skills |
John M. Creekmore Director since 1997 | 63 | 2 | Background: Since June 2017, Mr. Creekmore has served as general counsel for United Furniture Industries, Inc. Prior to taking this position, Mr. Creekmore was the owner of the Creekmore Law Office, PLLC. Experience/Qualifications/Skills: As general counsel of a large manufacturing enterprise, Mr. Creekmore brings a legal point of view to the risks and challenges that we face. He also provides us with insights regarding the legal implications of our plans and strategies as well as internal operational matters. Finally, Mr. Creekmore works in Verona, Mississippi, and helps shape our policies with respect to our smaller markets. |
Jill V. Deer Director since 2010 | 56 | 2 | Background: Ms. Deer is Vice President of Planning, Administration and Risk for Brasfield & Gorrie, L.L.C., one of the nation’s largest privately-held construction firms, with revenues in excess of $3 billion. Prior to joining Brasfield & Gorrie in 2013, Ms. Deer served as a principal of Bayer Properties, L.L.C., a full service real estate company based in Birmingham, Alabama, that owns, develops and manages commercial real estate. Ms. Deer joined Bayer Properties in 1999 to serve as an executive officer and general counsel of the company. Prior to that time, she was a partner in a large regional law firm in Birmingham practicing in the area of commercial real estate finance. Experience/Qualifications/Skills: The Birmingham metropolitan area is the largest metropolitan area in Alabama and one of our key growth markets. Ms. Deer’s knowledge and experience in this market helps us develop strategies to further expand our presence in Birmingham. Furthermore, Ms. Deer’s professional experience in the real estate and construction industries gives the board an additional resource in understanding the risks and trends associated with commercial real estate, especially because Brasfield & Gorrie operates in many of the same markets in which Renasant is located. |
Neal A. Holland, Jr. Director since 2005 | 63 | 2 | Background: Mr. Holland has been president of Holland Company, Inc., a diversified sand, stone and trucking company in Decatur, Alabama, since 1980. He is also the chairman and CEO of Alliance Sand and Aggregates, LLC and the owner of Miracle Mountain Ranch LLC. Mr. Holland was appointed a director of the Company upon the completion of our acquisition of Heritage Financial Holding Corporation in 2005. Experience/Qualifications/Skills: Mr. Holland gives us valuable advice in shaping our policies and strategies in our Alabama markets. Mr. Holland’s service on the board and executive committee of Heritage Financial Holding Corporation, which we acquired in 2005, has given him added experience and insight to the risks associated with serving on the board of a publicly-traded financial institution. As the owner of multiple businesses, he also is able to add a borrower’s perspective to the board’s discussions. |
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| Name | Age | Class | Background, Qualifications and Skills |
E. Robinson McGraw Director since 2000 | 72 | 2 | Background: Since May 1, 2018, Mr. McGraw has been Executive Chairman of the Company and the Bank. Prior to assuming this position, he served as our and the Bank’s Chief Executive Officer since 2000, and he served as our and the Bank’s President from 2000 to January 2016. Since June 2005, Mr. McGraw has served as Chairman of our and the Bank’s board of directors. Mr. McGraw served as Executive Vice President and General Counsel of the Bank prior to becoming our Chief Executive Officer. Experience/Qualifications/Skills: It is unlikely that there is any individual that has a more intimate knowledge of our history, our current operations and our future plans than Mr. McGraw. His insight is an essential part of formulating our plans and strategies. Mr. McGraw’s legal background and years of experience with the Company provide the board an additional resource on legal implications and the regulatory requirements specifically attributable to the banking industry and financial institutions. |
Sean M. Suggs Director since 2018 | 53 | 2 | Background: Mr. Suggs has served as president of Toyota Mississippi since January 2018. In this role, he is responsible for all manufacturing and administration functions of Toyota’s Blue Springs, Mississippi, plant which produces the Toyota Corolla. Prior to this position, Mr. Suggs was vice president of manufacturing and administration at the Mississippi vehicle assembly plant. Prior to joining Toyota in 2014, Mr. Suggs served as director of strategy, administration and human resources at Nissan’s North American headquarters in Franklin, Tennessee, where he directed production quality at the company’s manufacturing and assembly plant in Canton, Mississippi. Before joining Nissan, Mr. Suggs worked for Toyota as team leader at its assembly plant in Princeton, Indiana, where, among things, he was named general manager of quality planning in 2008. In this leadership role, Mr. Suggs oversaw professional development, vehicle quality and manufacturing quality for current and new model production. Prior to joining the automotive industry, Mr. Suggs served eight years in the United States Army. Experience/Qualifications/Skills: An automobile manufacturing plant is a complex operation, and the successful management of such an operation requires expertise in manufacturing technology, production quality and corporate leadership, among other things. We believe the skills that Mr. Suggs has acquired in overseeing manufacturing operations at Toyota’s plant in Mississippi will be very beneficial to the oversight of the Bank’s operations. |
Marshall H. Dickerson Director since 1996 | 70 | 3 | Background: Mr. Dickerson is retired. Prior to his retirement, he was the owner and manager of Dickerson Furniture Company, a company engaged in retail home furnishings sales until its closing in 2012. Experience/Qualifications/Skills: Mr. Dickerson owned and operated his own business for over 33 years. As a former small business owner, he understands the capital needs and other challenges that many of our small business customers face on a daily basis; he also understands the services that a small business owner requires from its banking relationship. We believe that Mr. Dickerson’s insights on these topics help us tailor our products, as well as our customer service operations, to meet the needs of this important segment of our business. |
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| Name | Age | Class | Background, Qualifications and Skills |
R. Rick Hart Director since 2007 | 70 | 3 | Background: Mr. Hart has served as Chairman of our Middle Tennessee Division since September 2018. Prior to this role, he was an Executive Vice President of the Company and President of the Northern Region of the Bank since October 2012. He served as the President of the Tennessee Division and Middle Tennessee Division of the Bank from July 2007 until October 2012. Prior to our acquisition of Capital, Mr. Hart served as chairman, president and chief executive officer of Capital Bank & Trust Company, in Nashville, Tennessee. Mr. Hart was appointed a director of the Company upon the completion of our acquisition of Capital in July 2007. Experience/Qualifications/Skills: Mr. Hart brings the experience of a Nashville banker to the board, helping to formulate our plans for the Nashville market. Along with Messrs. McGraw and Waycaster, Mr. Hart serves as a liaison between the board and our employees, keeping the board abreast of employee concerns and morale. |
Richard L. Heyer, Jr. Director since 2002 | 62 | 3 | Background: Dr. Heyer has served as a physician and partner of Tupelo Anesthesia Group, P.A. since 1989. In addition, Dr. Heyer is President and co-owner of TAG Billing, LLC, a medical billing service provider in the medical industry. Experience/Qualifications/Skills: Dr. Heyer’s experience in the medical industry brings a unique perspective to the challenges and opportunities that our board faces. Dr. Heyer’s background and experience is important in the formulation of board policy. Dr. Heyer is a business owner in the medical industry and adds this perspective to board discussions. |
Michael D. Shmerling Director since 2007 | 63 | 3 | Background: Mr. Shmerling has served as chairman of Choice Food Group, Inc., a manufacturer and distributor of food products, since July 2007 and chairman of Clearbrook Holdings Corp. (formerly XMI Holdings Inc.) since 1999. Mr. Shmerling previously served as a senior advisor to Kroll, Inc., a risk consulting company, from August 2005 to June 2007 and an executive vice president of Kroll, Inc. from August 2000 to June 2005. Effective as of May 2001, he also served as Chief Operating Officer of Kroll. Mr. Shmerling was appointed a director of the Company upon the completion of our acquisition of Capital in July 2007. Mr. Shmerling is also a director for Healthstream, Inc., a publicly-traded company. Experience/Qualifications/Skills: Mr. Shmerling’s business and philanthropic endeavors in the Nashville market provide us with opportunities to create new business relationships and grow market share in this key area. In addition, his 39-year professional history as a licensed CPA (now inactive) in public and private practice provides the board with a broad range of financial knowledge and business acumen. Mr. Shmerling is experienced in assessing and mitigating risk and formulating policies designed to minimize risk exposure. In addition, his experience as an officer and director of publicly-traded companies gives the board another resource for issues specific to publicly-traded companies in the areas of financial reporting and corporate governance. |
DIRECTOR COMPENSATION
In additionBelow is a description of the compensation we pay to our non-employee directors and the individuals discussed aboveprocess we use to determine compensation. Directors who are also our employees, Messrs. McGraw, Waycaster and Hart, do not receive additional compensation for services rendered as directors; specific information about the compensation we paid to Messrs. McGraw, Waycaster and Hart for 2018 may be found below under the heading “Compensation Tables.”
Each year, our independent compensation consultant, Pearl Meyer & Partners, LLC, or “Pearl Meyer,” provides the compensation committee with information about peer group compensation practices and recommendations for our non-employee director compensation for the upcoming fiscal year. The compensation committee then recommends
to our full board the non-employee director compensation for the upcoming year. At its December meeting, the board reviews the committee’s recommendations and ordinarily ratifies the recommended compensation. Any modifications are implemented after our annual meeting.
Compensation for our non-employee directors is generally set at a level that is at or near the median of the compensation paid to directors in our compensation peer group using information obtained from Pearl Meyer about the practices of companies in the group. More information about our compensation peer group can be found in the “Features and Objectives of Our 2018 Compensation Program” section of the CD&A section below under the heading “Independent DirectorsPeer Groups.” As a matter of policy, each of our non-employee directors receives an annual stock award with the same value. Annual cash retainers are the same, with the exception of our lead director and the chairs of our audit, executive, compensation, nominating and loan committees. Meeting fees are the same for committee members, but chairs may receive an additional amount. We do not pay special or strategic compensation (such as for the completion of a merger), make “one-time” payments, provide tax gross ups, negotiate additional fees or payments for individual directors or “benchmark” compensation to our compensation peer group.
The table below includes information about all of the Bank employscompensation that was paid to our non-employee directors for services they rendered during our fiscal year ended December 31, 2018.
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| 2018 DIRECTOR COMPENSATION |
| Name | | Fees Earned or Paid in Cash | | Stock Awards | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | All Other Compensation | | Total |
| A | | B | | C | | D | | E | | F |
George H. Booth, II(1) | | $ | 17,542 |
| | $ | — |
| | $ | 861 |
| | $ | 2,100 |
| | $ | 20,503 |
|
Frank B. Brooks(1) | | 20,167 |
| | — |
| | 780 |
| | 2,982 |
| | 23,929 |
|
Hollis C. Cheek(1) | | 23,167 |
| | 46,288 |
| | — |
| | 317 |
| | 69,772 |
|
| Donald Clark, Jr. | | 39,500 |
| | 46,288 |
| | 133 |
| | 686 |
| | 86,607 |
|
| John M. Creekmore | | 66,500 |
| | 46,288 |
| | 2,649 |
| | 7,967 |
| | 123,404 |
|
| Albert J. Dale, III | | 67,250 |
| | 46,288 |
| | 599 |
| | 7,277 |
| | 121,414 |
|
| Jill V. Deer | | 53,750 |
| | 46,288 |
| | — |
| | 738 |
| | 100,776 |
|
| Marshall H. Dickerson | | 69,250 |
| | 46,288 |
| | — |
| | 8,732 |
| | 124,270 |
|
| Connie L. Engel | | 16,667 |
| | 23,345 |
| | — |
| | 108 |
| | 40,120 |
|
| John T. Foy | | 63,000 |
| | 46,288 |
| | — |
| | 8,732 |
| | 118,020 |
|
| Richard L. Heyer, Jr. | | 46,500 |
| | 46,288 |
| | 1,846 |
| | 738 |
| | 95,372 |
|
| Neal A. Holland, Jr. | | 73,375 |
| | 46,288 |
| | — |
| | 738 |
| | 120,401 |
|
| J. Niles McNeel | | 50,250 |
| | 46,288 |
| | — |
| | 8,732 |
| | 105,270 |
|
Hugh S. Potts, Jr.(1) | | 15,417 |
| | 46,288 |
| | 123 |
| | 2,982 |
| | 64,810 |
|
Fred F. Sharpe(1) | | 21,667 |
| | 46,288 |
| | 12 |
| | 317 |
| | 68,284 |
|
| Michael D. Shmerling | | 58,750 |
| | 46,288 |
| | — |
| | 8,042 |
| | 113,080 |
|
| Sean M. Suggs | | 21,417 |
| | 35,029 |
| | — |
| | 314 |
| | 56,760 |
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| (1) | Effective as of the 2018 annual meeting, Messrs. Booth and Brooks retired from our board, and Messrs. Potts, Cheek, and Sharpe ceased to serve on our board. The table above includes compensation paid for service on our board during 2018. Messrs. Potts, Cheek and Sharpe continued to serve on the Bank's board of directors and were compensated; therefore, the table does not include compensation for service on the Bank's board. |
Compensation reported in the table above represents both cash payments and the value of other forms of payments and benefits as follows:
Column B - Fees Earned or Paid in Cash.Amounts in this column reflect the retainers and meeting fees we paid to our non-employee directors, which may be voluntarily deferred under our Deferred Stock Unit Plan or Directors’ Deferred Fee Plan, which are described below.
We paid the following individuals who are related persons:retainers, prorated in the form of equal monthly payments:
All directors received a retainer the amount of $35,000;
Our lead director received an additional retainer in the amount of $12,000;
The sonchair of R. Rick Hart,the audit committee received an additional retainer in the amount of $6,000; and
The chairs of the executive, officercompensation, nominating and loan committees each received an additional retainer in the amount of $3,000.
We also paid the following meeting fees:
Chairs who do not receive an additional retainer receive $750 for each meeting chaired; and
Members receive $500 for each meeting they attend.
Each of our non-employee directors who serves on one of our state bank boards was paid a $500 fee quarterly or when the board meets, a $125 fee in each month during which a meeting was not held, and a $200 fee for attendance at state bank board committee meetings.
Column C - Stock Awards.On April 24, 2018, each director, is a Senior Vice Presidentwith the exception of Mr. Suggs and Commercial Relationship Officer of the Bank. Mr. Hart’s son was an employee of Capital prior to the merger and continues to work in the same capacity at a branch located in Nashville, Tennessee. In 2015, his total cash compensation was $175,618, and heMs. Engel, received a grant of 450 shares of time-based restricted stock whichaward of 1,010 shares of our common stock that will fully vest at the 2019 annual meeting. Mr. Suggs and Ms. Engel, who were appointed to our board in 2018.
The son of Hugh S. Potts, Jr. is an Executive Vice PresidentMay 2018 and the Chief Investment Officer of the Bank. Mr. Potts’s son was an employee of First M&F prior to the merger and continues to work in a similar capacity with the Company. In 2015, his total cash compensation was $224,129, and heSeptember 2018, respectively, received a grant of 250 shares ofprorated time-based restricted stock awards that also will vest at the 2019 annual meeting. Column C reports the aggregate fair value of these awards, determined as of the date of award, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation.” Dividends payable on restricted stock awards are not included in our fair value determination. Please refer to Note 14, “Employee Benefit and Deferred Compensation Plans,” in the Notes to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the year ended December 31, 2018 for details regarding the assumptions used to derive the fair value of our restricted stock.
Column D - Changes in Pension Value and Nonqualified Deferred Compensation Earnings.Amounts in this column report above-market earnings on amounts deferred under the Directors’ Deferred Fee Plan. Interest earned on deferred amounts is considered above-market only if the interest rate exceeded 120% of the applicable federal long-term rate, with compounding, as prescribed by the Internal Revenue Service. With the exception of Mr. Potts, who is a participant in a legacy pension plan, our non-employee directors do not participate in a pension plan or similar arrangement. The legacy plan in which will fully vestMr. Potts is a participant ceased to accrue benefits in 2008. Column D does not include the change in the actuarial present value of his accumulated benefit in this plan which was $(68,263) as of December 31, 2018.
Column E - All Other Compensation.Cash dividends paid on restricted stock awards are included in this column. The remaining amounts in this column reflect the value of other benefits we provide to our non-employee directors, which consist of the following:
Non-employee directors and their eligible dependents may elect to enroll in our medical and dental plans and pay full premiums for the coverage. Based on historical practice, we deduct a portion of the premiums from the cash payments we make to our electing directors, and a portion of the premiums are treated as imputed income that is applied to the cost of the premiums and reported as taxable income. Amounts in Column E represent the portion of the premium that we treat as imputed income.
We provide term life and accidental death and dismemberment insurance coverage to each director with a face amount of $10,000, at a cost of $25.
The Bank maintains two types of deferred compensation plans in which our non-employee directors may participate: the Deferred Stock Unit Plan, the “DSU Plan”, and the Director’s Deferred Fee Plan. Under the DSU Plan, deferred amounts are credited to a bookkeeping account that is deemed invested in units representing shares of our common stock and credited with dividend equivalent units when we pay cash dividends. Units are allocated based on a quarterly average market price. Under the Directors’ Deferred Fee Plan, deferred retainer and fees are notionally invested in investment alternatives substantially similar to those offered under our 401(k) plan or in the Moody’s Composite Yield on Seasoned Corporate Bonds, which was 3.94% in 2018.
Neither Benefits under either plan are payable when a director ceases to serve as a member of our board and may be paid in a lump sum or installments. Under the foregoing employees is an “executive officer” as that term is definedDSU Plan, benefits are paid in Rule 3b-7the form of shares of our common stock; under the Exchange Act.Deferred Fee Plan, benefits are paid in cash.
Policies and Procedures to Review, Approve and Ratify Related Person Transactions
We expect our directors, officers and employees to act and make decisions that are in our best interests and encourage them to avoid situations which present a conflict between our interests and their own personal interests. Under our code of ethics, our directors, officers and employees are prohibited from taking any action that may make it difficult for them to perform their duties, responsibilities and services to us in an objective and fair manner. A copy of our Code of Ethics is available at www.renasant.com by clicking on “Corporate Overview” under the “Investor Relations” tab, then clicking on “Governance Documents” and then “Code of Ethics.”
The entire board of directors is responsible for reviewing and approving or ratifying all material transactions between us and our subsidiaries with any related person. To identify related person transactions, each year we require our directors and officers to complete Director and Officer Questionnaires identifying any transactions with us in which the officer or director or their immediate family members have an interest. When the board reviews, approves or ratifies related person transactions, the director associated with the matter must abstain from voting and, typically, is not present while discussions and deliberations are held. Related persons include any of our directors or executive officers, their immediate family members and businesses with which they are associated. The types of transactions that must be reviewed and approved include extensions of credit and other business relationships.
We review related person transactions due to the potential for a conflict of interest. A conflict of interest occurs when an individual’s private interest interferes, or appears to interfere, in any way with our interests. Our Code of Ethics requires all directors, officers and employees who may have a potential or apparent conflict of interest to immediately notify the chairman of the audit committee. Other than our Code of Ethics, our related person transaction policy is not in writing.
Also, we have adopted written policies to comply with regulatory requirements and restrictions applicable to us, including Sections 23A and 23B of the Federal Reserve Act (which govern certain transactions by the Bank with its affiliates) and the Federal Reserve’s Regulation O (which governs certain loans by the Bank to its executive officers, directors and principal shareholders).
Legal Proceedings Involving a Director or Executive Officer and the Company or the Bank
We are not aware of any current legal proceedings involving any of our directors or executive officers and either the Bank or us.
The names, ages (as of the annual meeting), positions and business experience of our principal executive officers, except for Messrs. McGraw, Hart and Hart,Waycaster, are listed below. Because they are also members of our board, information about Messrs. McGraw and Hart appeared earlierthese individuals appears above in the section entitled “Board of DirectorsMembers and Compensation” section under the heading “CurrentMembers of the Board of Directors.” All of our executive officers are appointed annually by our board and serve at the discretion of the board except for our “named executive officers” –officers,” who are Messrs. McGraw, Waycaster, Chapman, Hart, Chapman, Waycaster, RossCochran and Dorminey –Morgan, as well as Mr. Jeanfreau, each of whom is party to an employment agreement.
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| Name | Age | Position |
| Tracey Morant Adams | 53 | Our Executive Vice President and a Senior Executive Vice President of the Bank since April 2018. Ms. Adams has served as the Bank's Chief Community Development and Corporate Social Responsibility Officer since November 2016. Ms. Adams served as Senior Vice President of Small Business and Community Development from November 2013 until November 2016. Prior to joining the Bank in November 2013, Ms. Adams was Executive Director of Economic Development for The City of Birmingham, leading economic and community development projects. |
| Kevin D. Chapman | 4043 | Our Executive Vice President since January 2011, and Chief Financial Officer since October 2011.2011 and Chief Operating Officer since May 2018. Mr. Chapman served as our Corporate Controller from May 2006 until October 2011. He has served as Senior Executive Vice President of the Bank since January 2011, and Chief Financial Officer of the Bank since October 2011.2011 and Chief Operating Officer of the Bank since May 2018. Since May 2018, he has also served as a director of the Bank. Mr. Chapman served as Chief Strategy Officer of the Bank from January 2011 until October 2011. He was a Senior Vice President of the Bank from January 2005 until July 2006, at which time he became an Executive Vice President and the Bank’s Chief Accounting Officer. |
| J. Scott Cochran | 5255 | Our Executive Vice President since April 20072007; he has served as Chief Community and Business Banking Officer since July 2017 and President of the Western Region of the Bank since October 2012. Mr. Cochran served as President of the Mississippi Division of the Bank from April 2007 to October 2012; he served as Administrative Officer of the Bank’s Corporate Banking Division from March 2005 to April 2007. Prior to March 2005, he served as Senior Commercial Lending Officer of the Bank.
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| Stephen M. Corban | 6063 | Our Executive Vice President and General Counsel since July 2003; he has also served as Senior Executive Vice President and General Counsel of the Bank since July 2003. |
O. Leonard Dorminey | 63 | Our Executive Vice President since July 1, 2015 and President of the Eastern Region of the Bank since July, 1, 2015. Prior to our acquisition of Heritage Financial Group, Inc. in July, 2015 Mr. Dorminey served as Chief Executive Office of both Heritage Financial and HeritageBank of the South.January 2006. |
| James W. Gray | 5962 | Our Executive Vice President since February 2003; he has also served as Senior Executive Vice President of the Bank since June 2005. Mr. Gray has served as Chief Revenue Officer of the Bank since October 2012. He served as Chief Information Officer of the Bank from March 2006 to October 2012, and was Strategic Planning Director from January 2001 until March 2006. Prior to January 2001, he served as the Bank’s Chief Operations Officer. |
| Mark W. Jeanfreau | 44 | Our Executive Vice President since September 2017; he has also served as Senior Executive Vice President and Governance Counsel of the Bank over the same period. Prior to joining us and the Bank, Mr. Jeanfreau was a partner in the law firm of Phelps Dunbar LLP, specializing in corporate governance, securities laws and mergers and acquisitions. |
| Stuart R. Johnson | 6265 | Our Executive Vice President since February 2003; from April 2013 until January 2015 he served as Treasurer. From April 1996 until March 2013, he served (with Mr. Chapman after January 2012)October 2011) as our Chief Financial Officer. Mr. Johnson has served as Senior Executive Vice President of the Bank since June 2005 and as Cashier and Chief Financial Officer of the Bank from April 1996 until January 2015, serving together with Mr. Chapman as Chief Financial Officer of the Bank from 2012 to 2015. |
Michael D. Ross |
| 51 | |
| Name | Age | Position |
| David L. Meredith | 52 | Our Executive Vice President since September 2007;January 2018; he has also served as the Bank's Chief Credit Officer over the same period. From August 2015 until January 2018, Mr. Meredith served as Senior Executive Vice President and Co-Chief Credit Officer of the Central Region since JulyBank. From October 2013 until August 2015, he was Executive Vice President and Chief Credit Officer for the Western Division of 2015the Bank. Mr. Meredith was Executive Vice President and Senior Credit Officer from January 2010 until October 2013. |
| Bartow Morgan, Jr. | 46 | Our Executive Vice President and the Bank’s Chief Commercial Banking Officer since September 2018. He has also served as a director of the Bank since July 2014. HeSeptember 2018. Prior to our acquisition of Brand, Mr. Morgan served as Presidentthe chief executive officer and a director of the Eastern Region of the Bank from October 2012 to July 2015. From September 2007 until October 2012 he served as President of the Alabama Division of the Bank. |
C. Mitchell Waycaster | 57 | Our President and Chief Operating OfficerBrand since January 2016. Prior to being elected President, Mr. Waycaster served as our Executive Vice President since February 2003 and the Senior Executive Vice President since June 2005. He served as Chief Administrative Officer of the Bank from April 2007 to January 2016. Mr. Waycaster served as President of the Mississippi Division of Renasant Bank from January 2005 to April 2007; previously Mr. Waycaster served as Executive Vice President and Director of Retail Banking of the Bank from 2000 until December 2004.2002.
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| W. Mark Williams | 5356 | Our Executive Vice President since July 2011; he has also served as Senior Executive Vice President and Chief Banking Systems Officer of the Bank since July 2014. Mr. Williams served as Senior Executive Vice President and Chief Information Officer of the Bank from October 2012 until July 2013. From July 2011 to October 2012 he served as President of the Georgia Division of the Bank. Mr. Williams served as the Bank’s Director of Credit Administration from March 2008 to July 2011. Prior to 2008 he served as the Bank’s Community Bank Performance Lending Support Officer. |
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Name | Age | Position |
| Mary John Witt | 5659 | Our Executive Vice President and the Bank’s Senior Executive Vice President and Chief Risk Officer since April 2014. Ms. Witt served as Executive Vice President and Chief Risk Officer of the Bank from March 2006 to April 2014. Prior to 2006 Ms. Witt was an internal auditor serving as Internal Audit Manager from August 1999 until March 2006. |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis is intended to provide detailed information about the Company’s executive compensation objectives and program, which are applicable to our |
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| COMPENSATION DISCUSSION AND ANALYSIS |
The named executive officers, (ouror “named executives”). For 2015,executives,” whose compensation is administered by the compensation committee and determined under our named executives were:executive compensation program are:
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| Named Executive | Title |
| E. Robinson McGraw | Executive Chairman |
| C. Mitchell Waycaster | President and Chief Executive Officer |
| Kevin D. Chapman | Chief Financial and Operating Officer |
C. Mitchell Waycaster | Executive Vice President |
Michael D. Ross | Executive Vice President |
| R. Rick Hart | Executive Vice President |
O. Leonard DormineyJ. Scott Cochran | Executive Vice President |
| Bartow Morgan, Jr. | Executive Vice President |
On January 19, 2016, our board elected Mr. Waycaster to serve as President and Chief Operating Officer of the Company and the Bank. Since that date, Mr. McGraw has served as Chief Executive Officer of the Company and the Bank, and he remains our principal executive officer.
COMPENSATION OVERVIEW
For 2015, our executive compensation program was intended to accomplish two objectives: (1) to provide significant compensation opportunities that are targeted to recognize superior performance and reward the delivery of shareholder value; and (2) to remain competitive by providing compensation at or near the median of our peer group.
Mr. Dorminey commencedMorgan began his employment with usRenasant as of JulySeptember 1, 2015,2018, when we completed our acquisition of Heritage; previously,Brand. His compensation for 2018 was determined under the terms of an employment agreement with Renasant that we negotiated with him as part of the Brand acquisition. The compensation committee reviewed Mr. Dorminey served asMorgan’s employment agreement, including his compensation, before the PresidentBrand acquisition was completed and Chief Executive Officer of Heritage.his employment agreement was signed. We do not consider Mr. Dorminey’sMorgan’s compensation is notto be part of our executive compensation program since his compensation was determined under the terms of his employment agreement with Heritage, whichfor 2018, and we assumed. Mr. Dorminey's compensation ishave not described Mr. Morgan’s compensation in this CD&A. More informationMr. Morgan’s compensation in 2018 is described below under the heading “Compensation Tables.”
SAY-ON-PAY
At our 2018 annual meeting, approximately 33.7 million votes (or about 95.6% of all votes cast) were cast in favor of our non-binding resolution approving the compensation paid to Mr. Dorminey mayour named executive officers during 2017. The compensation committee considered this vote to be found inan endorsement of our compensation program, including our balance between cash and equity and between performance and non-performance-based compensation. At our 2019 annual meeting, shareholders are being asked to adopt a non-binding resolution approving the 2015 Summary Compensation Table and under the section “Payments and Rights on Termination or Change in Control.”
Elements of Compensation
The table below provides a brief summary of the elements of compensation paid or provided to our named executive officers in 2018, as discussed in more detail below in the “Proposals” section under the heading “Proposal 3 - Advisory Vote on Executive Compensation.”
CHANGES TO OUR PERFORMANCE INCENTIVES
Effective in 2018, we substantially modified our performance-based incentives, whether payable in cash or Renasant stock. Our changes are intended to strengthen the financial alignment of our executives in 2015.and shareholders by increasing the number and type of measures we use to evaluate and reward the performance of our executives, by measuring our performance against the performance of our peer group, and by measuring performance that is sustained over a longer term. More specifically:
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ELEMENT | OBJECTIVES AND KEY FEATURES |
Base Salary | Objective
Provide base salaries that reflect job responsibilities and experience and to provide competitive fixed compensation that balances other performance-based compensation elements
Key Features
Ÿ Fixed amount
Ÿ Payable in cash
Ÿ Reviewed and subject to adjustment annually
Modification of Annual Cash Incentives |
Annual Cash Bonus | Objective
ProvideChange:
| The compensation committee added return on average tangible common equity, ROTCE, relative to a short-term cash incentive,performance peer group (discussed below) as a performance measure; earnings per share, EPS, and net revenue per share, NRPS, each measured on an absolute basis, were retained as performance metrics. |
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| Purpose: | ROTCE measures how effectively we have deployed our capital; it is intended to measure the amountprofitable use of which is directly linkedcapital as we grow. ROTCE complements our historical measures, EPS and NRPS, since the historical measures do not always correlate to the deliveryincreases in equity. Using a performance peer group permits us to compare our returns to those of shareholder valueKey Features
Ÿ Variable compensation,companies with payouts based on the attainment of specified performance measures
Ÿ Payable in cash
Ÿ Made under the terms of our Performance Based Rewards Plan (“PBRP”)
similar characteristics. |
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ELEMENT | OBJECTIVES AND KEY FEATURES |
Modification of Equity IncentiveIncentives |
| Objective
Provide an equity-based incentive, the amount of whichChanges:
| Ÿ | The performance cycle was increased from one year to three years. |
| | Ÿ | ROTCE, return on average tangible assets, or ROTA, and total shareholder return, or TSR, replaced performance metrics used in previous years. |
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| | Ÿ | Performance is directly linkedmeasured relative to the deliveryperformance of shareholder valuea peer group. |
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| Purposes: | Ÿ | A longer performance cycle is designed to focus on and reward longer term performance and more closely align our practices with those of our peers. |
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| | Ÿ | The new measures broaden the measures we use to determine success and are more consistent with the longer cycle. |
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Key Features |
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| Performance Peer Group |
| Change: | | A "performance peer group" was identified and used to determine relative performance. |
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| Purposes: | Ÿ | Relative performance permits us to directly compare our performance to those of our peers and more closely align our practices with those of our peers |
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| | Ÿ | Relative performance mitigates against compensation fluctuations based on our absolute performance, such as aquisitions. |
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FEATURES AND OBJECTIVES OF OUR 2018 COMPENSATION PROGRAM
Compensation Opportunities. The following table summarizes the fixed and variable compensation opportunities that we provided in 2018:
Ÿ Restricted stock awards, the amount |
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| Fixed Compensation | | |
| Features | | Objectives |
| Base Salary | Determined annually, based on analysis of which is contingentindividual performance, internal pay equity, and peer group practices | | To provide a source of stable or fixed income based on theskills and competencies |
| Variable Compensation | | |
| Features | | Objectives |
| Cash Awards | Annual cash payments under our Performance Based Rewards Plan, "PBRP," based on attainment of specified performance measures during a 12-monthat threshold, target or superior levels | Ÿ | To reward short-term Company-wide performance cycle |
| Performance-Based Equity Awards | Payouts based on three performance measures at threshold, target or superior levels | ŸSettled in | To reward long-term Company-wide performance |
| | Ÿ | To align the form of common stockŸ Made under the termsfinancial interests of our 2011 Long-Term Incentive Compensation Plan (“LTIP”)
NEOs with our shareholders by increasing stock ownership |
Executive Perquisites and BenefitsTime-Based Equity Awards | Objective
Provide limited perquisites customarily found inFixed service period
| Ÿ | To serve as a retention device |
| | Ÿ | To align the financial services industry and voluntary savings opportunitiesKey Features
Ÿ Deferred compensation plan, under which voluntary deferrals are notionally invested in mutual funds
Ÿ Deferred stock unit plan, under which voluntary deferrals are notionally invested in units, each representing a shareinterests of our commonnamed executives with our shareholders by increasing stock
Ÿ Standard perquisites including car allowances and country club dues
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Group Benefits | Objective
Provide standard, broad-based benefit plans that are consistent and competitive with those provided by our peer group
Key Features
Broad-based group benefit plans, including medical, dental and vision plans, long-term disability coverage, life insurance, and 401(k) plan, including company matching and additional contributions
ownership |
More information about each elementAmounts of our executive compensation follows in this CD&A; the value of each element of compensation may be found in theFixed and Variable Compensation. 2015 Summary Compensation Table.
Peer Group
One of the objectives ofIn 2018, our executive compensation program iscontinued to remain competitivefocus on the alignment of the financial interests of our executives with those of our peer group. We believe that: (1)shareholders, by tying a significant amount of each executive’s compensation to the short- and long-term performance of the Company. For our chief executive officer, the committee limits fixed compensation or base salary to not more than 35% of total compensation, with the remainder delivered in the form of variable compensation (compensation that is tied to the performance of the Company
or the value of our stock); for our executives other than the chief executive officer, the committee limits fixed compensation to not more than 50% of total compensation, with the remainder delivered as variable compensation.
The charts below illustrate the 2018 total compensation mix (fixed and executivevariable) for Mr. Waycaster and broad-based benefit plans shouldthe average for our other named executives, excluding Mr. Morgan, assuming target levels of performance.
nFixed - Base Salary
nVariable - Time-based Equity
nVariable - Performance-based Equity
nVariable - Performance-based Cash
Employment Agreements. We have entered into employment agreements with each of our named executives. The agreements are primarily intended to promote retention, impose standard covenants that protect our property and business and ensure that the compensation for each of our named executives remains relatively consistent. More information about the terms of our currently effective employment agreements can be found below in the “Compensation Tables”section under the heading “Payments and Rights on Termination and Change in Control.”
We amended our employment agreements with Messrs. McGraw and Hart, to reflect Mr. McGraw’s transition to our Executive Chairman and Mr. Hart’s transition to the Chairman of our Middle Tennessee division. In consideration of these transitions, Messrs. McGraw and Hart each agreed to base salary reductions and to the modification or reduction of certain other benefits. These modifications and reductions are described more fully below under the heading “Compensation Decisions Made for 2018” and in the“Compensation Tables”section under the heading “Payments and Rights on Termination and Change in Control.”
Peer Groups. For 2018, we used a “compensation peer group” to evaluate whether our total compensation remains competitive and is generally be in line“in line” with other opportunities that may be available to the members of our executive team;team, and (2) individual and aggregate compensation should be provided at appropriate levels, whichfor the first time we believeused a “performance peer group” to be at or nearevaluate relative performance for our incentive payouts, as explained above under the median of our peer group. Each yearheading “Changes to Our Performance Incentives.” In each case, the committee was advised by our independent compensation consultant, Pearl Meyer & Partners, LLC, or “Pearl Meyer,” provides us with comparisons and analysis of the levels ofMeyer.
Our compensation provided in our peer group. Although the committee relies on peer group analysis asconsists of financial institutions that are located in the south and southeast regions and that service communities similar in size to those we service. We use these parameters to avoid a guide when making its determinations,bias towards higher compensation levels that predominate in financial centers and larger metropolitan areas. The compensation committee approved the specific compensation decisions we make for each of our named executives are contingent upon a number of factors, both subjective and objective, only one of which is peer information.
For determining our 2015 peer group Pearl Meyer recommended thatin the group be modified to consistfall of companies with2017, when it began the process of determining 2018 compensation levels. The 20 institutions selected had the following characteristics:characteristics when the compensation peer group was determined:
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DemographicCharacteristics | | Range | | Median | Renasant Characteristics |
| Total assets | | $35.0 billion - $15$23.1 billion | | $6.310.9 billion | $10.0 billion |
| Market value of stock | | .4$0.7 billion - 2.5$5.6 billion | | 1.5$2.1 billion | $2.0 billion |
| Net income | | 24$50 million - 126$344 million | | 70$111 million | $96.0 million |
Pearl Meyer determined that 18 companies met these criteria,did not recommend any changes to the compensation peer group from the 2017 group, and they werethe compensation committee concurred in this recommendation. The financial institutions included in our compensation peer group for 2015:2018 were:
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BancFirst Corporation | Old NationalAmeris Bancorp |
Bank of the Ozarks, Inc. | Pinnacle Financial Partners, Inc. |
Capital Bank Financial Corp.BancFirst Corporation | Republic Bancorp, Inc. |
Capitol Federal Financial,BancorpSouth Bank (formerly, BancorpSouth, Inc.) | ServisFirst Bankshares, Inc. |
| Bank OZK (formerly, Bank of the Ozarks, Inc.) | Simmons First National Corporation |
City Holding Co.Capital Bank Financial Corp. | South State Corporation |
Community Trust Bancorp,FCB Financial Holdings, Inc. | Texas Capital Bancshares, Inc. |
| First Financial Bankshares, Inc. | Trustmark Corporation |
HomeBancShares,Home BancShares, Inc. (Conway, AR) | United Bankshares, Inc. |
| Iberiabank Corporation | United Community Banks, Inc. |
| Old National Bancorp | WesBanco, Inc. |
At-Risk CompensationOur performance peer group consists of more than 35 institutions, representing all U.S. publicly-traded financial institutions with assets between $10 billion and $20 billion. Because this peer group has no regional limitation and its members are selected solely on asset size, we can more accurately measure our performance against institutions possessing similar characteristics; these criteria also mitigate against the positive bias that would be created using some of the smaller institutions included in our compensation peer group.
Another objectiveEach of these peer groups may be adjusted in the future to reflect any changes to our characteristics (asset size, geographic footprint, etc.) to ensure that each peer group continues to be an effective tool to assist the committee in formulating a compensation package for our executives that fulfills the objectives of our compensation program.
Benefits and Perquisites. Our executive compensation program is to place a material portionfocuses on the delivery of each named executive’sappropriate levels of direct compensation, (base salary, cash bonuses,with the view that each of our named executives should be provided with basic perquisites and restricted stock) “at-risk,benefits and the opportunity to voluntarily save for retirement and other financial needs on a tax-deferred basis. Consistent with this focus, during 2018 our named executives had access to the following benefits and perquisites:
Insurance-type benefits that are generally available to all employees of the Company, including health care coverage and life and disability benefits, with some additional life insurance coverage for all officers of the Company.
A broad-based 401(k) plan, including Company matching and profit-sharing contributions.
Two voluntary executive savings plans, our Deferred Stock Unit Plan, or the DSU Plan, and our Executive Deferred Income Plan, or the Deferred Income Plan. Amounts deferred under the DSU Plan are notionally invested in our common stock; amounts deferred under the Deferred Income Plan may be notionally invested in investment options similar to those available under our 401(k) plan. With the exception of a contribution for the benefit of Mr. McGraw in 2018, we do not contribute to these arrangements.
Dues for memberships in professional and civic organizations, country club dues and car allowances.
More information about our benefit plans, including legacy arrangements under which benefits no longer accrue, can be found in the “Compensation Tables” with payment tiedsection under the headings “Pension and SERP Benefits” and “Non-Qualified Deferred Compensation.” Additional information about the types and value of the perquisites provided to performance measuresour named executives, including our contribution for Mr. McGraw, can be found in the 2018 Summary Compensation Table in the column “All Other Compensation.”
RISK MITIGATION PRACTICES AND COMPENSATION COMMITTEE PROCESS
Risk Management and Compensation Governance. The committee has adopted a number of policies and practices that are intended to correlate tostrengthen the actual deliveryrelationship between shareholder value and pay, avoid unsafe and unsound practices, mitigate risk, reduce the use of shareholder value. When our named executives perform at target levels, they have achieved anticipated budgeted resultsdiscretion and are paid at or near our peer group median. For performance that exceeds expectations, we provide compensation opportunities that are intended to exceedeliminate the median. Performance below anticipated resultspotential for unintended windfalls. Below is intended to provide compensation that is less than compensation available from our peers. For 2015, the portiona summary of direct compensation that is performance-based or at-risk, assuming performance at target levels, is:some of these policies and practices.
Commonly, “at-risk” compensation is considered compensation that is performance-based, which in the case of the Company would consist of cash payments under our PBRP and performance-based restricted stock awards under the LTIP. For our named executives, other than Mr. McGraw, the committee has divided at-risk opportunities between cash and common stock fairly equally (i.e., approximately 50% of our at-risk opportunities would be payable in the form of cash and approximately 50% would be settled in the form of common stock). This division generally reflects the allocation of at-risk compensation that predominates in our peer group. The at-risk opportunities for Mr. McGraw, who received an award of 12,000 shares of time-based restricted stock in addition to his performance-based award, would also be substantially equal if his time-based award were considered at-risk. The chart above illustrates the resulting allocation of Mr. McGraw’s at-risk opportunities when the time-based award is not considered at-risk. The committee considers its allocation of at-risk compensation to be appropriate in the case of Mr. McGraw, given his substantial beneficial ownership of our common stock. More information about Mr. McGraw’s beneficial ownership when
compared to his base salary may be found in this CD&A, under the heading “Mitigating Compensation Risk - Stock Ownership Guidelines.”
Mitigating Compensation Risk
During 2015, we used and adopted both formal and informal compensation governance procedures that we believe advance our program and objectives, further align the interests of our named executives with our shareholders and serve to discourage excessive risk taking:
Clawback Policies - We now have two clawback policies that are applicable to our performance-based compensation. For performance-based grants and awards made under our LTIP after January 1, 2011, if we are required to restate our financial results, any performance-based grant or award, whether or not vested, is subject to reduction, forfeiture or recovery if the grant or award would have been smaller under the restated results. The compensation committee administers this policy, which permits recovery from our named executives whether or not they engaged in conduct that materially contributed to the restatement. We also have adopted a supplemental policy that applies to performance-based compensation under the LTIP or PBRP in the event the Company is required to restate its financial results. Unless waived by the compensation committee, this policy applies to a named executive only if his intentional or unlawful conduct materially contributed to the restatement. The supplemental policy applies to compensation awarded on or after December 15, 2015, provided vesting or payment occurs within the 12-month period preceding the date the Company is required to prepare the restatement.
Limits on Performance-Based Incentives - The committee subjectively reviews the individual performance of each of our named executives, their duties and responsibilities and their contributions to our overall performance when compensation decisions for the fiscal year and payouts are determined. The committee may exercise “negative” discretion to ensure that compensation levels and the specific elements of compensation are not unduly excessive, regardless of the degree to which our financial performance exceeds the levels determined at the beginning of our fiscal year.
Stock Ownership Guidelines - On December 15, 2015, we adopted stock ownership requirements under which our executive officers are required to beneficially own common stock having a fair market value not less than:
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Chief Executive Officer | 200% of base salary |
Other Named Executive Officers | 150% of base salary |
The following table presents the fair market value of the holdings of each of our named executives as of January 1, 2016, reflected as a percentage of his base salary:
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| | Actual | Minimum Standard |
| Mr. McGraw | 710.00 | % | 200.00 | % |
| Mr. Waycaster | 475.00 | % | 150.00 | % |
| Mr. Chapman | 178.00 | % | 150.00 | % |
| Mr. Hart | 497.00 | % | 150.00 | % |
| Mr. Ross | 320.00 | % | 150.00 | % |
Anti-Hedging and Pledging Policy - We have adopted an anti-hedging and pledging policy under which our named executives (and our directors, officers and certain other employees) cannot enter into a transaction that has the effect of hedging the economic risks associated with the ownership of our common stock. If a named executive pledges common stock, those shares cannot be applied to satisfy the stock ownership guidelines.
Other Considerations
When it administers our executive compensation program, the compensation committee takes into account a number of additional factors, each of which is intended to ensure that our program is aligned with the interests of our shareholders. These factors include:
Performance Measures - When the committee makes awards under our PBRP and LTIP subject to performance measures, it intends that:
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◦ | Preservation of Tax Deduction - Performance-based equity compensation granted or awarded under our LTIP will be deductible under Section 162(m) of the Internal Revenue Code. Section 162(m) disallows the Company’s
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income tax deduction for aggregate compensation over $1 million paid in any fiscal year to a named executive. For this purpose, performance-based compensation, as determined under Section 162(m), is excluded from the calculation. With the exception of time-based restricted stock awards, grants and awards under our LTIP are intended to be performance-based as defined in Section 162(m).
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◦ | Effect of Acquisitions - Performance measures should not operate to reward our executives for one-time purchase gains resulting from mergers and acquisitions or penalize our executives for one-time nonrecurring charges incurred to complete a merger or acquisition. When determining payouts, the committee may use negative discretion to eliminate the effect of purchase gains or it may set performance measures at levels that take into account anticipated non-recurring charges.
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No Tax Gross Up Payments - With the exception of tax gross ups for Mr. McGraw, the committee does not intend to enter into agreements or approve payments that will, directly or indirectly, result in tax gross up payments. More information about the gross up payments for Mr. McGraw, which are required under the terms of his employment agreement, may be found in the 2015 Summary Compensation Table under the heading “All Other Compensation” and under the section “Payments and Rights on Termination and Change in Control”.
Making Restricted Stock Awards - Restricted stock is awarded to our named executives at meetings of our committee and board that are scheduled well in advance, without regard to whether the Company has recently announced, or intends to announce, material information to the public. We do this to avoid the inference that we have “timed” an award or manipulated the market. Awards may be made effective when ratified by our full board or may be effective prospectively, on a specified date.
Shareholder Advisory Vote
At our 2011 annual meeting, a majority of our shareholders recommended that a non-binding shareholder advisory vote on our executive compensation program occur every three years. The most recent vote occurred at our 2014 annual meeting. At this meeting, our shareholders adopted a non-binding resolution approving the compensation paid to our executive officers by a substantial margin. Approximately 17.1 million votes (or about 79.4% of all votes cast) were in favor of adopting this resolution; approximately 4.4 million votes were against the resolution; and there were also approximately 277,000 abstentions. The compensation committee and the board consider this vote to be an endorsement of our compensation philosophy, including our balance between cash and equity and between performance-based and non-performance-based compensation. The next non-binding shareholder advisory vote on our executive compensation program will be held in 2017, when we also expect to ask our shareholders to vote on the frequency of the non-binding shareholder advisory vote on executive compensation.
COMPENSATION COMMITTEE PROCESS
Our compensation committee met two times in 2014, four times in 2015 and once in 2016 to set fiscal year 2015 compensation and to determine payouts. The following table illustrates the process our committee used to set and determine compensation for our 2015 fiscal year:
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Determining Base Salaries | Determining Performance-Based Bonuses/ Equity Awards | Other Compensation Actions |
Ÿ At
| Our Polices and Practices |
| Clawback Policies | We have two clawback policies that apply to all performance-based compensation. For awards made under our LTIP, if we are required to restate our financial results, performance-based restricted stock awards, including vested awards, will be subject to reduction, forfeiture or recovery if the endnumber of 2014, our CEO evaluated and recommended salaries forshares of common stock awarded would have been smaller based on the restated results. The LTIP policy permits recovery from our named executives other than himselfwhether or not they engaged in the conduct that materially contributes to the restatement. We maintain a separate clawback policy that applies to performance-based compensation awarded under either the PBRP and the LTIP. This policy applies to a named executive if his intentional or unlawful conduct materially contributed to a financial restatement, and its application may be waived in the discretion of the committee. |
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| Stock Ownership Guidelines | We have implemented stock ownership guidelines applicable to our executive officers. Under the updated guidelines, our executive officers are required to beneficially own common stock having a fair market value not less than: |
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| | | Chief Executive Officer | 300% of base salary | |
| | | Other Named Executive Officers | 200% of base salary | |
| | | All Other Executive Officers | 100% of base salary | |
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| | All shares directly or indirectly owned by an executive, including shares owned by immediate family members and shares held in our 401(k) plan, and stock units credited under the DSU Plan, are counted toward an executive’s stock ownership. Time-based restricted stock awards are also counted. Shares that an executive has pledged do not count toward the satisfaction of an executive’s minimum ownership requirements, nor do restricted stock awards that are subject to the satisfaction of performance conditions. |
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| | As of January 1, 2019 the stock ownership of each of our named executives substantially exceeded the share ownership amounts set forth in the guidelines: |
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| | | Executive | Common Stock Beneficially Owned (% of Base Salary) | |
| | | |
| | | Mr. McGraw | 1,018% | |
| | | Mr. Waycaster | 444% | |
| | | Mr. Chapman | 461% | |
| | | Mr. Hart | 512% | |
| | | Mr. Cochran | 483% | |
| | | Mr. Morgan | 2,115% | |
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| | Information about the stock ownership of our directors and named executives can be found in the “Stock Ownership” section below under the heading “Beneficial Ownership of Common Stock by Directors and Executive Officers.”
Ÿ The committee reviewed peer group information
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| Holding Period for LTIP Awards | As a condition of awards under our LTIP, our senior executive officers must hold “net shares” for a period of two years after vesting. This holding period is waived in the event of death or disability or upon the occurrence of a change in control. “Net shares” are shares delivered after vesting and the withholding for the payment of taxes. |
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| Double Trigger for Change in Control Benefits | All equity incentives awarded under our LTIP and our CEO’s recommendationschange in control agreements include a double-trigger feature. If a change in control of the Company occurs, an executive’s employment also must be terminated within two years of such change in order to accelerate vesting or trigger the payment of a benefit. |
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| Practices That We Prohibit or Discourage |
| Anti-Hedging; Pledging | We have implemented a hedging and recommended base salaries forpledging policy under which our named executives (and our directors, officers and certain other employees) cannot enter into a transaction that has the 2015 fiscal year
Ÿ The committee’s recommendations were ratified byeffect of hedging the non-employee memberseconomic risks associated with the ownership of our boardcommon stock. Although the policy does not completely prohibit pledging of directors
our common stock, we discourage the practice, and any stock that an executive pledges cannot be used to satisfy our stock ownership guidelines. |
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| Ÿ Management calculated performance levels using
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| Limits on the prior year’s performance measures and our 2015 fiscal year budget
Ÿ The committee reviewed budgeted results provided by management andUse of Discretion
| We limit the peer group compensation report provided by Pearl Meyer and: (1) setcommittee’s use of discretion with respect to outstanding equity awards: |
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| | Ÿ | Discretionary vesting of equity awards is not permitted under the LTIP. |
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| | Ÿ | In determining the amount of performance-based compensation for each named executive; (2) determinedthat has been earned, the committee may use only “negative discretion” to reduce the amount of performance-based compensation payable in the form of commonan award that it believes is excessive or does not accurately represent our performance. |
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| | Ÿ | We do not consider individual or subjective performance when determining bonuses or stock and cash; (3) determined performance measures and individual performance levelsawards for the 2015 fiscal year, adjusting performance levels for anticipated nonrecurring expenses related to our merger with Heritage; and (4) made time-based equity awards under the LTIP
Ÿ The committee’s recommendations were ratified by the non-employee members of the board of directors
Ÿ named executives.
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| No Gross Ups | The committee reviewed fiscal year performance, determined payoutsdoes not enter into agreements or approve payments that will, directly or indirectly, result in tax gross ups for change in control payments. Mr. McGraw’s and analyzed whether negative adjustments to payoutsMr. Hart’s employment agreements previously had a tax gross-up provision and a “best net” provision, respectively. These provisions were appropriate
Ÿ Final payouts were recommended and approved by the non-employee memberseliminated effective May 1, 2018.
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| Timing of Equity Awards | Equity awards are made at meetings of our committee and board of directors | Ÿ Withthat are scheduled well in advance, without regard to whether we have recently announced, or intend to announce, material information to the assistance of Pearl Meyer,public. We do this to avoid the committee reviewed and modifiedinference that we have “timed” an award or manipulated the composition of the peer group
Ÿ The committee compared aggregate compensation levels of peer group members to aggregate compensation levels of our named executives
Ÿ Our CEO recommended employment agreements for Messrs. Chapman, Waycaster and Ross; the committee approved the material terms of employment agreements for Messrs. Chapman, Waycaster and Ross, which weremarket. Awards may be made effective when ratified by our full board of directors
Ÿ With the assistance of Pearl Meyer, the committee reviewed and recommended changes to the compensation of non-employee directors, which were ratified by the board of directors
Ÿ The committee participated with the board in reviewing and adopting supplemental clawback and anti-hedging and pledging policies and stock ownership guidelines
or may be effective prospectively, on a specified date. |
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Compensation Consultant. For 2018, the committee retained Pearl Meyer to serve as its executive compensation adviser. The charter of the compensation committee requires the committee to consider whether its advisers are independent based on the factors set forth in the Nasdaq Listing Rules, and the committee has determined that Pearl Meyer was independent in 2018. Pearl Meyer works at the direction of the committee, and the decision to retain Pearl Meyer was at the sole discretion of the committee.
In connection with the committee’s 2018 compensation decisions:
In the fall of 2017, Pearl Meyer recommended that no change be made to the financial institutions included in our compensation peer group and provided a review and analysis of the compensation levels and programs of companies within the peer group.
At the end of 2017, Pearl Meyer provided advice with respect to the modification of our cash and equity incentives and recommended the characteristics of the financial institutions to be included in our performance peer group.
Pearl Meyer reviewed the compensation levels of our non-employee directors and recommended changes to the compensation levels.
No additional services were provided by Pearl Meyer to the committee or the Company. Information furnished by Pearl Meyer is one factor the committee uses when it makes decisions about compensation; other factors are described elsewhere in this CD&A.
Tax Considerations. Prior to 2018, compensation paid to our named executives in excess of $1 million was nondeductible, unless structured as “performance-based” compensation within the meaning of Section 162(m) of the Internal Revenue Code. We considered performance-based restricted stock awards under our LTIP as “performance-based” under Section 162(m), and we excluded the value of the awards from the determination of the $1 million limit. The performance-based exception to the $1 million limit was repealed under the Tax Cuts and Jobs Act, effective as of January 1, 2018. The compensation committee did not significantly modify its practices in 2018 in response to the law change, believing that our compensation program should be broadly structured to address Company’s objectives,
rather than to address the tax treatment of any individual item of compensation.
Management Involvement inIn Compensation Decisions
As summarized above, Mr. McGraw, our. Our chief executive officer is expected to regularly evaluatesevaluate and recommendsrecommend base salary adjustments.adjustments for our executive officers, other than himself. In addition, Mr. McGraw,he will, with the assistance of management, regularly providesprovide data and analysis about Company and individual performance to assistfor use by the committee in determining base salariessalary adjustments and potential payouts for our executives. Finally, the chief executive officer is expected to monitor our perquisites and monitorsbenefits to ensure that they remain competitive and consistent with the plans that are elementsgoals of our executive compensation program.
Mr. McGraw, our chief executive officer until May 1, 2018, fulfilled all of these responsibilities with respect to 2018 compensation. Although our named executives frequently attend meetings at the request of the compensation committee, during 20152018 a portion of each of the committee’s meetings was in executive session without management present. During these sessions the committee made its individual compensation decisions.
Compensation Consultant
TheMeetings and Decision-Making Process. For the purposes of setting fiscal year 2018 compensation and determining payouts under the PBRP and the LTIP for the 2018 fiscal year, our compensation committee has retainedmet three times in 2017, once in 2018 and once in 2019 (there were additional meetings in 2018 on other matters). The following table illustrates the firm Pearl Meyerdecision-making process used to serve as its executiveset and determine compensation adviser. The charter of the compensation committee requires the committee to determine and take into consideration whether its advisers are independent under the factors set forth in the Nasdaq Marketplace Rules related to compensation committee advisors. Under the rules, the committee has determined that Pearl Meyer is independent. Pearl Meyer works at the direction of the compensation committee, and the decision to retain Pearl Meyer was at the sole discretion of the committee. During 2015, Pearl Meyer recommended changes to the composition of the Company’s peer group and provided a review and analysis of the compensation levels and programs of companies within the group. For 2015, Pearl Meyer also provided information and recommendations to the compensation levels of our non-employee directors, compiled peer group compensation and performance data for the committee and recommended to the committee changes to our executive compensation program. Information provided by Pearl Meyer is one factor the committee uses when it makes decisions about compensation matters; other factors are described elsewhere in this CD&A.2018 fiscal year:
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Determining Base Salary Adjustments | Determining Performance-Based Compensation | Determining Strategic Compensation |
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| At the end of 2017, Mr. McGraw recommended salaries for executive officers other than himself. The committee reviewed peer group information provided by Pearl Meyer and the recommendations from Mr. McGraw and recommended base salary adjustments for 2018.
The committee’s recommendations were ratified by the non-employee members of our board of directors. | Ÿ
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Ÿ
Ÿ Ÿ ŸŸ Ÿ Ÿ Ÿ Ÿ
| The committee reviewed possible performance measures and selected for 2018 the performance measures described later in this CD&A.
Management recommended possible performance levels (threshold, target and superior) based on the committee's direction and Renasant’ s 2018 budget.
The committee reviewed performance levels provided by management and the peer group compensation report provided by Pearl Meyer and (1) set the amount of performance-based compensation for each executive officer; (2) determined the amount of performance-based compensation payable in the form of common stock and cash; and (3) determined performance measures and individual performance levels for the 2018 fiscal year.
The committee’s recommendations were ratified by the non-employee members of the board of directors.
In 2019, the committee reviewed 2018 fiscal year performance and determined and certified payouts. | Ÿ Ÿ Ÿ Ÿ Ÿ | At the end of 2017, the committee recommended time-based restricted stock awards to act as retention devices for executive officers who formed a key part of our succession planning.
The committee’s recommendations were ratified by the non-employee members of our board of directors. |
COMPENSATION DECISIONS MADE IN 2015FOR 2018
Employment Agreements
The compensation committee believes that employment agreements with each of our named executives are a necessary part of our executive compensation program, since these agreements operate as a retention device, fix compensation expectations, and ensure that personal concerns do not impede transactions that may be in the best interests of our shareholders, such as a sale of the Company.Previously, the Company entered into an employment agreement with Mr. McGraw, which was renewedBase Salary Adjustments. Base salary adjustments for aneach executive are dependent upon individual performance, current title or responsibilities, additional one-year term during 2015, extending the period during which he will be employed by the Company as its chief executive officeruntil December 31, 2017. The Company has also entered into an employment agreement with Mr. Hart, which was renewed during 2015, extending the term of Mr. Hart’s employment with the Company until December 31, 2017. In addition to these agreements, the compensation committee recommended,responsibilities assumed, peer group evaluation and our board of directors approved, new employment agreements for Messrs. Chapman, Waycaster and Ross, each of which is substantially identical. The material terms of these new agreements, which are effective January 1, 2016, are as follows:
Each has an initial term of two years, ending as of December 31, 2017, and is annually renewable thereafter;
Each provides for severance in the event of involuntary termination by the Company without cause, termination initiated by an executive on account of constructive termination or involuntary or constructive termination in connection with a change in control; and
Each includes covenants that prohibit the solicitation of our customers, depositors and employees, prohibit competition, and protect our confidential information and trade secrets.
Other material terms of our employment agreements with Messrs. McGraw, Chapman, Hart, Waycaster and Ross, including a description of the amounts payable under the agreements in the event of a termination of employment and change in control may be found under the section “Payments and Rights on Termination or Change in Control”.
Base Salary
The compensation committee reviews and recommends adjustments to base salary annually. Adjustments are based on a review of a variety of factors, including: the performance of each of our named executives; Company and Bank performance, and where appropriate, division or profit-center performance; each executive’s duties and level of responsibility; progress towards achieving our strategic goals; peer group compensation; and other more subjective factors. Based upon this review, thegoals. The committee recommended the following adjustments to base salary, effective as of January 1, 2015:2018:
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| 2015 BASE SALARY ADJUSTMENTS |
| Name | Base Salary (2015) | Base Salary (2014) | Percentage Increase |
| Mr. McGaw | $ | 700,000 |
| $ | 660,000 |
| 6.06 | % |
| Mr. Chapman | 330,000 |
| 300,000 |
| 10.00 |
|
| Mr. Hart | 475,000 |
| 455,000 |
| 4.40 |
|
| Mr. Waycaster | 360,000 |
| 340,000 |
| 5.88 |
|
| Mr. Ross | 360,000 |
| 340,000 |
| 5.88 |
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| 2018 BASE SALARY ADJUSTMENTS |
| | | Base Salary (2018) | | Base Salary (2017) | | % Change |
| Mr. McGraw | | $ | 840,000 |
| (1) | $ | 800,000 |
| | 5.0 | % |
| Mr. Waycaster | | 630,000 |
| | 510,000 |
| | 23.5 | % |
| Mr. Chapman | | 475,000 |
| | 425,000 |
| | 11.8 | % |
| Mr. Hart | | 508,000 |
| (2) | 508,000 |
| | — | % |
| Mr. Cochran | | 400,000 |
| | 375,000 |
| | 6.7 | % |
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| (1) | Mr. McGraw transitioned to our executive chairman effective May 1, 2018. At that time, his base salary was reduced to $504,000, a 40% reduction. |
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| (2) | Mr. Hart transitioned to the chairman of our Middle Tennessee division effective September 1, 2018. At that time, his base salary was reduced to $304,800, a 40% reduction. |
Increases reflected in the table above generally reflect amounts required to remain competitive, taking into consideration the sizeThe salary increase for Mr. Waycaster reflects his assumption of the Company and changesrole of chief executive officer in our peer group.May 2018, which was anticipated at the time Mr. Chapman’s increase for 2015, expressed as a percentage of hisWaycaster’s 2018 base salary substantially exceedswas determined. Salary increases provided to our other executive officers. Based upon the recommendation of Mr. McGrawfor Messrs. Chapman and after reviewing peer group information, the committee determined that the increase was necessaryCochran were intended to more closely align Mr. Chapman’s base salary with the median of our compensation peer group which is onefor similarly-situated executives and, in the case of the objectives ofMr. Chapman, to reflect his additional role as our executive compensation program.
27chief operating officer.
Annual Cash Bonus
We maintain an annualAwards. Annual cash bonus plan called theawards are made under our Performance Based Rewards Plan, or “PBRP.” The PBRP applieswhich we call the PBRP. Payments to regular, full-time employees and officers of the Company and the Bank. For officers and employees, other than our named executives, payments may be based on Company, Bank, region, division, profit-center or individual performance, including subjective criteria. Payments to Messrs. McGraw, Chapman and Waycasterother than Mr. Hart, are based entirely on CompanyCompany-wide performance, since theybecause our named executives possess the ability to directly influence corporate-level results. Payments to Messrs.Mr. Hart and Ross also consider regional performance, since each of these executiveshe has primary responsibility for one of our banking regions. The table below presents the portion of our PBRP awards
Awards for 2018 were based on companythree Company-wide performance measures:
Diluted earnings per share, or EPS, measured on an absolute basis;
Net revenue per share, or NRPS, measured on an absolute basis; and regional performance:
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| Name | Company-wide Performance | Regional Performance | Total |
| Mr. McGraw | 100.00 | % | — | % | 100.00 | % |
| Mr. Chapman | 100.00 | % | — | % | 100.00 | % |
| Mr. Waycaster | 100.00 | % | — | % | 100.00 | % |
| Mr. Hart | 50.00 | % | 50.00 | % | 100.00 | % |
| Mr. Ross | 50.00 | % | 50.00 | % | 100.00 | % |
The committee intendsselected EPS and NRPS as measures because it believes that opportunities for performance-based cash awards formEPS and revenue growth are directly correlated to the delivery of shareholder value, that the measures are appropriate given the annual cycle of the incentive and that absolute performance more accurately measures the delivery of value in the economic and interest rate environment existing in 2018. ROTCE was added because this measure indicates how profitably we used our capital as we grew during 2018; it is measured on a significant portionrelative basis so that the committee can compare our returns to those of each named executive’s direct compensation. The table below presents PBRP opportunities for 2015:
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| 2015 POTENTIAL PBRP PAYOUTS AS A PERCENTAGE OF BASE SALARY |
| | Threshold | Target | Superior |
| Mr. McGraw | 40 | % | 80 | % | 160 | % |
| Other Named Executives | 25 | % | 50 | % | 100 | % |
For all of our named executives, some or all of the 2015 awards under the PBRPMr. Hart, regional performance was based on two Company-widefive performance measures: diluted earnings per sharegrowth in net revenue; the ratio of noninterest expense to average assets; the ratio of net charge-offs to average loans; the ratio of loans 30-89 days past due to average loans; and net revenue per basic share.the ratio of nonperforming loans to average loans. The committee believes that these metrics accurately indicate the performance of the region Mr. Hart oversees.
Payouts under the PBRP are based upon the attainment of threshold, target or superior performance. Target performance levels for Company-wide measures are first derived from our budget, as approved by the board. The budgeted results are also compared with estimates obtained from investment analysts who regularly follow our performance, which provides assurance that targeted levels represent substantial goals. Target performance levels for Mr. Hart’s regional measures are derived from the budget for the applicable region. For Company-wide and regional
measures, threshold performance is set at approximately 5% below target, and superior performance is set at approximately 5% above target.
The committee believes that diluted earnings per share is more indicative of the overall performance of the Company and the delivery of shareholder value than either net revenue per share or ROTCE, and it weighted that measure moremost heavily. The table below indicates the weighting given to each measure and the specific threshold, target and superior performance levels designated by the committee:
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| 2015 COMPANY-WIDE PERFORMANCE MEASURES |
| Performance Measure | Weight | Threshold Performance | Target Performance | Superior Performance |
| Diluted earnings per share (“EPS”) | 60% | $ | 1.71 |
| $ | 1.81 |
| $ | 1.92 |
|
| Net revenue per share (“NRPS”) | 40% | $ | 9.00 |
| $ | 9.25 |
| $ | 9.52 |
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| 2018 COMPANY-WIDE PERFORMANCE MEASURES |
| Performance Measure | Weight | Threshold Performance | Target Performance | Superior Performance |
| | | Per share |
| Diluted earnings per share (EPS) | 50 | % | $ | 2.75 |
| $ | 2.89 |
| $ | 3.03 |
|
| Net revenue per share (NRPS) | 20 | % | 9.99 |
| 10.52 |
| 11.05 |
|
| | | Peer Percentile |
| Return on tangible common equity (ROTCE) | 30 | % | 25th |
| 50th |
| 75th |
|
These are the same Company-wide performance measures and weightings that the compensation committee used in 2014. The committee selected these measures again because growth in earnings per share driven by revenue growth has consistently shown a direct correlation to the delivery of shareholder value in the banking industry. Target performance levels are derived from the Company’s budget, withPotential payouts for threshold, performance set at approximately 5% below target and superior performance set at approximately 5% above target. are expressed as a percentage of each executive’s base salary; there are no payouts for performance below threshold. With the exception of Mr. Waycaster, whose potential payouts were increased to reflect that he would begin to serve as our chief executive officer in May 2018, and Mr. Chapman, whose potential payouts were increased to reflect his additional role as our chief operating officer, potential payouts were the same in 2018 and 2017.
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| 2018 POTENTIAL PBRP PAYOUTS AS A PERCENTAGE OF BASE SALARY |
| | Threshold | Target | Superior |
| Mr. McGraw | 40 | % | 80 | % | 160 | % |
| Mr. Waycaster | 40 | % | 80 | % | 160 | % |
| Mr. Chapman | 30 | % | 60 | % | 120 | % |
| Other named executives | 25 | % | 50 | % | 100 | % |
The specific processcommittee certified that for determining2018 our EPS, after excluding unusual or infrequently-occurring items as required under the PBRP, was $2.97, our NRPS was $10.41, and our ROTCE fell within the 69th percentile among the performance levels for fiscal year 2015peer group. Our EPS performance was as follows:
During fiscal year 2014, management preparedbetween the Company’s budget for fiscal year 2015. Estimated earnings per share and net revenue per share were calculated using budgeted results. These estimates were compared to consensus estimates for the Company, as published by financial analysts who follow the Company and similar financial institutions, to ensure that management’s projections were competitive.
The compensation committee reviewed the budget and adjusted budgeted results to exclude the effect of anticipated non-recurring items, such as one-time gains or expenses related to our acquisition of Heritage. Diluted earnings per share and net revenue per share were then calculated using the adjusted budget, representing the target performance level, which was adjusted (increased and decreased) to derive threshold and superior performance levels, our NRPS performance was between the threshold and target performance levels, and our ROTCE performance was between the target and superior performance levels. These outcomes resulted in the following payouts:
After our fiscal year ended, the committee reviewed the performance of the Company taking into consideration the actual expenses of our merger with Heritage. Because actual expenses were less than estimated expenses used to set the performance measures |
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| PBRP 2018 PAYOUTS | |
| Performance Measure | % of Award | 2018 Achieved | Mr. McGraw(1) | Mr. Waycaster | Mr. Chapman | Mr. Cochran |
| EPS | 50% | 102.77% of Target | $ | 387,877 |
| $ | 396,000 |
| $ | 223,928 |
| $ | 157,143 |
|
| NRPS | 20% | 98.95% of Target | 88,608 |
| 90,463 |
| 51,155 |
| 35,898 |
|
| ROTCE | 30% | 138.00% of Target | 260,653 |
| 266,112 |
| 150,480 |
| 105,600 |
|
| Total | 100% | | 737,138 |
| 752,575 |
| 425,563 |
| 298,641 |
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| | | | Mr. Hart(1) | | | |
| EPS | 25% | 102.77% of Target | $ | 87,504 |
| | | |
| NRPS | 10% | 98.95% of Target | 19,990 |
| | | |
| ROTCE | 15% | 138.00% of Target | 58,803 |
| | | |
| Regional Performance | 50% | 0.00% of Target(2) | — |
| | | |
| Total | 100% | | 166,297 |
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| (1) | For Messrs. McGraw and Hart, payouts reflect base salary adjustments made as of May 1, 2018 and September 1, 2018, respectively. |
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| (2) | Represents the percentage of the cumulative target award earned by Mr. Hart as the president of the Northern Region/Chairman of the Middle Tennessee division. |
at the beginning of the year, the committee used “negative” discretion to increase the performance measures for earnings per share, setting target performance at $1.87. This had the effect of reducing payouts for Company-wide performance. The committee recommended to our full board of directors payouts under the PBRP that were calculated as follows:
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| | 2015 RESULTS | PBRP 2015 PAYOUTS |
| Performance Measure | % of Award | 2015 Achieved Results | Award Level | Mr. McGraw | Mr. Chapman | Mr. Waycaster |
| EPS | 60% | $ | 1.88 |
| 100.53% of Target | $ | 355,961 |
| $ | 104,881 |
| $ | 114,416 |
|
| NRPS | 40% | $ | 9.92 |
| Superior | 465,231 |
| 137,077 |
| 149,538 |
|
| Total | 100% | | | $ | 821,192 |
| $ | 241,958 |
| $ | 263,954 |
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| | | | | | | |
| | | | | Mr. Hart | Mr. Ross | |
| EPS | 30% | $ | 1.88 |
| 100.53% of Target | $ | 75,482 |
| $ | 57,208 |
| |
| NRPS | 20% | $ | 9.92 |
| Superior | 98,654 |
| 74,769 |
| |
| Regional Performance | 50% | | | 75,501 |
| 89,505 |
| |
| Total | 100% | | | $ | 249,637 |
| $ | 221,482 |
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Equity Incentives
In 2011,Awards. For 2018, our shareholders approved the 2011 Long-Term Incentive Compensation Plan, or our “LTIP,” which replaced our previous equity incentive plan. Our named executives as well as other officers and employees, are eligible to receive option grants and restricted stock awards under the LTIP. Our primary equity incentive has been an annual award of performance-based restricted stock. Beginning in 2011, the committee has also made an annual time-based restricted stock award to Mr. McGraw, the purpose of which is to ensure his retention during the fiscal year and to recognize Mr. McGraw’s long service as our chief executive. For 2015 this time-based award was 12,000 shares of our common stock, which vested as of December 31, 2015.
For 2015, all performance-based awards under our LTIP were madereceived variable compensation in the form of restricted stock subject to the attainment ofawards under our LTIP. Each executive received performance-based and time-based awards, as follows: (1) a time-based award; (2) a performance-based award with a three-year performance measures duringcycle; and (3) a performance-based “transition” award with a one-year performance cyclecycle. Time- and performance-based awards generally cover a substantially equal number of shares, reflecting the completioncommittee's view that strategic compensation goals and performance-based compensation are equally important.
Time-Based Awards. Time-based awards serve as a retention device and as variable compensation that further ties the financial interests of a one-year service period. The performance measures were the same Company-wide performance measures used under the PBRP for the reasons described above. The relative weightings assignedour executives to the performance measures wereof the same as the weightings assigned under the PBRPCompany and our stock. The service or retention period for our time-based awards is generally three years, but for Messrs. McGraw Chapman and Waycaster, as described above. The committee has usedHart a one-year period was considered more appropriate given their change in status in 2018. The table below describes the time-based awards made to our named executive officers for 2018.
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| 2018 Time-Based Awards |
| Executive | Number of Shares |
| Award Date | Vesting Date |
Mr. McGraw(1) | 13,000 |
| January 1, 2018 | January 1, 2019 |
| Mr. Waycaster | 7,500 |
| January 1, 2018 | January 1, 2021 |
| Mr. Chapman | 5,000 |
| January 1, 2018 | January 1, 2021 |
Mr. Hart(1) | 2,933 |
| January 1, 2018 | January 1, 2019 |
| Mr. Cochran | 4,000 |
| January 1, 2018 | January 1, 2021 |
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| (1) | Awards for Messrs. McGraw and Hart were determined with reference to awards made to them in 2017, reduced to generally correspond to the 40% base salary reductions that occurred on May 1, 2018 and September 1, 2018, respectively. |
Performance-Based Awards With Three-Year Performance Cycle. For 2018, we increased the performance cycle applicable to our performance-based awards from one year to three years, permitting us to evaluate and reward longer-term performance. These awards will vest, if at all, on December 31, 2020. Payouts will be determined using three new Company-wide performance measures: (1) ROTCE, (2) return on average tangible assets, or ROTA, and (3) total shareholder return, or TSR, all measured relative to our performance peer group.
The committee’s use of ROTCE as a performance measure is discussed above under the “Annual Cash Awards” heading. ROTA was used as a performance measure because it indicates how effective our executives are in generating profits from our tangible assets. TSR, which measures the internal rate of return of all cash flows to shareholders over a specified period, was used because it measures the creation of long-term value for several years. our shareholders. By comparing ROTCE, ROTA and TSR to a performance peer group, our executives are rewarded only if our performance meets or exceeds the performance of our peers in these areas, regardless of whether these measures improve in an absolute sense.
The committee believes a one-year cycle is preferable to a longer term, such as three or five years, because the shorter cycle permits the committee to more accurately evaluate the Company’sthat ROTCE and ROTA equally measure overall performance, and discountso it weighted these measures equally. TSR was given a lesser weighting because this measure may be impacted by macroeconomic factors that are outside the volatility created by credit risk and interest rate risk, both of which are inherent in the banking industry. The shorter cycle also permits the committee to more accurately account for the effectscontrol of our recent acquisitions.
executives. The committee generally setstable below indicates the weighting given to each measure and the specific threshold, target and superior performance levels using peer group information, making adjustments fordesignated by the market value of our common stock. committee:
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| 2018 PERFORMANCE MEASURES - THREE-YEAR PERFORMANCE CYCLE |
| Performance Measure | Weight | Threshold Performance | Target Performance | Superior Performance |
| | Peer Percentile |
| Return on average tangible common equity | 40 | % | 25th | 50th | 75th |
| Return on average tangible assets | 40 | % | 25th | 50th | 75th |
| Total shareholder return | 20 | % | 25th | 50th | 75th |
The table below reflects the potential payouts, in shares, for threshold, target and superior performance; there is no payout for performance below threshold performance.
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| 2018 POTENTIAL LTIP PAYOUTS - THREE-YEAR PERFORMANCE CYCLE |
| | Threshold | Target | Superior |
Mr. McGraw(1) | 6,000 |
| 9,000 |
| 13,500 |
|
| Mr. Waycaster | 5,000 |
| 7,500 |
| 11,250 |
|
| Mr. Chapman | 3,333 |
| 5,000 |
| 7,500 |
|
Mr. Hart(1) | 1,600 |
| 2,400 |
| 3,600 |
|
| Mr. Cochran | 2,667 |
| 4,000 |
| 6,000 |
|
| |
| (1) | Awards for Messrs. McGraw and Hart were determined with reference to awards made to them in 2017, reduced to correspond to the 40% reduction in their base salaries that occurred during 2018. |
Transition Awards. To provide an orderly transition to our new three-year performance cycle, the committee also made performance-based awards with a one-year performance cycle. These “transition” awards use the following performance measures: ROTCE and ROTA, measured relative to our performance peer group, and EPS, measured on an absolute basis.
For the same reasons described above with respect to awards subject to our three-year performance cycle, the committee weighted ROTCE and ROTA equally. EPS, which was given a lesser weighting, was used instead of TSR because the committee determined that, over a one-year period, EPS was a better measure of the growth of shareholder value. The table below indicates the weighting given to each measure and the specific threshold, target and superior performance levels designated by the committee.
|
| | | | | | | | | | | |
| 2018 PERFORMANCE MEASURES - TRANSITION AWARDS |
| Performance Measure | Weight | Threshold Performance | Target Performance | Superior Performance |
| | | Peer Percentile |
| Return on average angible common equity | 40 | % | 25th |
| 50th |
| 75th |
|
| Return on average tangible assets | 40 | % | 25th |
| 50th |
| 75th |
|
| Diluted earnings per share | 20 | % | $ | 2.75 |
| $ | 2.89 |
| $ | 3.03 |
|
The table below reflects the potential payouts for 2015:our transition awards, in shares, for threshold, target and superior performance; there is no payout for performance below threshold performance.
|
| | | |
| 2015 POTENTIAL LTIP PAYOUTS (NUMBER OF SHARES) |
| | Threshold | Target | Superior |
| Mr. McGraw | 8,000 | 12,000 | 18,000 |
| Other Named Executives | 4,667 | 7,000 | 10,500 |
|
| | | | | | |
| 2018 POTENTIAL LTIP PAYOUTS - TRANSITION AWARDS |
| | Threshold | Target | Superior |
Mr. McGraw(1) | 7,333 |
| 11,000 |
| 16,500 |
|
| Mr. Waycaster | 5,000 |
| 7,500 |
| 11,250 |
|
| Mr. Chapman | 3,333 |
| 5,000 |
| 7,500 |
|
Mr. Hart(1) | 1,955 |
| 2,933 |
| 4,400 |
|
| Mr. Cochran | 2,667 |
| 4,000 |
| 6,000 |
|
| |
| (1) | Awards for Messrs. McGraw and Hart were determined with reference to awards made to them in 2017, reduced to correspond to the 40% reduction in their base salaries that occurred during 2018. |
The process used bycommittee certified that our ROTCE for 2018 fell within the committee to determine LTIP payouts, including its use of negative discretion, is described above. As a result of this process,69th percentile among the committee recommended toperformance peer group, our full board of directors payouts2018 ROTA fell within the 67th percentile among the performance peer group, and our EPS, after excluding unusual or infrequently-occurring events as required under the LTIP, that were calculated as follows:
|
| | | | | | | | | | | | | | | |
| 2015 LTIP PAYOUTS (NUMBER OF SHARES) |
| | RESULTS | PAYOUTS (#) |
| Performance Measure | % of Award | 2015 Achieved Results | Award Level | Mr. McGraw | Mr. Chapman | Mr. Hart | Mr. Waycaster | Mr. Ross |
| EPS | 60% | $ | 1.88 |
| 100.53% Target | 7,560 |
| 4,410 |
| 4,410 |
| 4,410 |
| 4,410 |
|
| NRPS | 40% | $ | 9.92 |
| Superior | 7,200 |
| 4,200 |
| 4,200 |
| 4,200 |
| 4,200 |
|
| Total | 100% | | | 14,760 |
| 8,610 |
| 8,610 |
| 8,610 |
| 8,610 |
|
Executive Benefits and Perquisites
Our executive compensation program focuses on delivering appropriate levels of direct compensation, consisting of base salary, bonus and equity incentives, with the view thatwas $2.97. For each of ROTCE, ROTA and EPS, our named executives should also be provided withperformance was between the opportunity to voluntarily save for retirement on a tax-deferred basis. Consistent with this focus, we provide access to voluntary savings opportunities through a broad-based tax-qualified 401(k) plantarget and two non-qualified deferred compensation arrangements, each of which permits our named executives to defer compensation and applicable taxes and earn a tax-deferred return on deferred amounts.superior performance levels. These plans are:
The Deferred Stock Unit Plan, oroutcomes resulted in the “DSU Plan,” under which our named executives may elect to defer base salary and bonus; the Company does not contribute to this plan. Amounts deferred are notionally investedfollowing payouts, in units, each representing a share of our common stock. Dividend equivalents are credited in respect of units, as and when cash dividends are paid on our common stock, and then notionally reinvested in units representing additional shares. The marketshares (the total dollar value of our common stockthese payouts is used to determine the number of units credited, whether attributable to deferrals or dividend equivalents. Units are distributed in the form of common stock following termination of employment.
The Executive Deferred Income Plan, under which our named executives may voluntarily defer base salary. The Company does not contribute to this plan, with the exception of an annual contribution for Mr. McGraw. Deferred amounts are credited to bookkeeping accounts and notionally invested in designated alternatives similar to those offered under our 401(k) plan, including an interest rate investment that is credited at 100% of the Moody’s Rate, which was a weighted average rate of 4.24% for 2015. An additional alternative, 130% of the Moody’s Rate, which was a weighted average interest rate of 5.51% for 2015, remains available for amounts deferred before 1989. Benefits are equal to each participant’s account balance and are paid upon termination of employment. For the beneficiaries of Messrs. McGraw and Waycaster, an additional preretirement death benefit may be payable.
Mr. Hart remains a participant in two supplemental executive retirement plans, or “SERPs,” which we assumed as a result of our merger with Capital. He has accrued and is vested in the full benefit payable under the SERPs, which is 15 equal annual installments in the aggregate amount of $155,000, subject to a 3% annual cost of living increase. Benefits are payable on Mr. Hart’s termination from employment for any reason, except involuntary termination for cause. Mr. McGraw and Mr. Waycaster participated in the Bank’s defined benefit pension plan, under which no additional benefits have been earned since December 31, 1996. The committee does not consider these accruals and benefits when it makes current year compensation decisions.
Perquisites comprise a small part of our total compensation package. The main perquisites we provided in 2015 were the payment of country club dues and an automobile allowance. Although these perquisites involve incidental personal value, we believe both are necessary to advance our business purposes and for us to remain competitive with our peer group.
More information about our deferred compensation plans, defined benefit pension plan and SERPs may be found under the sections “Pension and SERP Benefits” and “Non-Qualified Deferred Compensation”. Additional information about the types and value of the perquisites provided to our named executives may be foundlisted in the 2015 Summary Compensation Table underbelow in the heading “All Other CompensationStock Awards”. column):
|
| | | | | | | | | | | | | |
| 2018 LTIP PAYOUTS - TRANSITION AWARDS |
| | Results | Payouts |
| Performance Measure | % of Award |
| Award Level | Mr. McGraw |
| Mr. Waycaster |
| Mr. Chapman |
| Mr. Hart |
| Mr. Cochran |
|
| ROTCE | 40 | % | 138.00% of Target | 6,072 |
| 4,140 |
| 2,760 |
| 1,619 |
| 2,208 |
|
| ROTA | 40 | % | 134.00% of Target | 5,896 |
| 4,020 |
| 2,680 |
| 1,572 |
| 2,144 |
|
| EPS | 20 | % | 102.77% of Target | 2,829 |
| 1,929 |
| 1,286 |
| 755 |
| 1,029 |
|
| Total | 100 | % | | 14,797 |
| 10,089 |
| 6,726 |
| 3,946 |
| 5,381 |
|
Non-GAAP Financial Measures. ROTCE, ROTA and EPS (as adjusted) are non-GAAP financial measures, as defined in Regulation G promulgated by the SEC. For an explanation of how we calculate these measures from our audited financial statements, please see, as to EPS, the “Results of Operations - Net Income” section and, as to ROTA and ROTCE, the “Non-GAAP Financial Measures” section, each in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation, in our Annual Report on Form 10-K for the year ended December 31, 2018.
COMPENSATION COMMITTEE REPORT
The compensation committee reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based upon this review and discussion, the committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
Compensation Committee:
|
| | |
| Albert J. Dale, III, Chairman | | Frank B. Brooks |
| John M. Creekmore | |
| Richard L. Heyer, Jr. |
| Neal A. Holland, Jr. | |
| J. Niles McNeel, Vice Chairman | | |
February 26, 2016March 6, 2019
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the compensation committee during 20152018 were Frank B. Brooks (until his retirement as of the 2018 Annual Meeting of Shareholders), John M. Creekmore, Albert J. Dale, III, Richard L. Heyer, Jr., Neal A. Holland, Jr. and J. Niles McNeel. In 2015, noNo member of the compensation committee was an officer or employee of Renasant or any of our subsidiaries during 2018 or was formerly an officer of Renasant, and no member had any relationship, other than loan, deposit and financial services relationships with the Bank, requiring disclosure as a related person transaction under applicable SEC regulations. For a discussion of such loan and deposit relationships, please refer to the information in the “Corporate Governance and Board of Directors” section under the headings “Indebtedness of Directors and Executive Officers” and “Other Related Person Transactions” above. Additionally, in 2018 none of our executive officers served as a member of the compensation committee (or committee performing similar functions or, in the absence of any such committee, the entire board), of any other entity or served as a director of another entity, one of whose executive officers served on our compensation committee in 2018.
20152018 SUMMARY COMPENSATION TABLE
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Changes in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation | Total |
| A | B | C | D | E | F | G | H | I | J |
E. Robinson McGraw Principal Executive Officer | 2015 | $ | 700,000 |
| $ | — |
| $ | 694,320 |
| $ | — |
| $ | 821,192 |
| $ | 224,091 |
| $ | 91,171 |
| $ | 2,530,774 |
|
| 2014 | 660,000 |
| — |
| 755,040 |
| — |
| 780,166 |
| 117,398 |
| 89,373 |
| 2,401,977 |
|
| 2013 | 600,000 |
| — |
| 382,800 |
| 67,050 |
| 837,577 |
| 23,134 |
| 84,813 |
| 1,995,374 |
|
Kevin D. Chapman Principal Financial Officer | 2015 | 330,000 |
| — |
| 202,510 |
| — |
| 241,958 |
| — |
| 53,460 |
| 827,928 |
|
| 2014 | 300,000 |
| — |
| 220,220 |
| — |
| 221,783 |
| — |
| 39,530 |
| 781,533 |
|
| 2013 | 280,000 |
| — |
| 62,205 |
| 16,763 |
| 223,538 |
| 431 |
| 35,501 |
| 618,438 |
|
R. Rick Hart Executive Vice President | 2015 | 475,000 |
| — |
| 202,510 |
| — |
| 269,237 |
| 119,236 |
| 58,527 |
| 1,124,510 |
|
| 2014 | 455,000 |
| — |
| 220,220 |
| — |
| 318,116 |
| 119,262 |
| 55,713 |
| 1,168,311 |
|
| 2013 | 433,300 |
| — |
| 109,098 |
| 22,350 |
| 262,368 |
| 259,363 |
| 53,392 |
| 1,139,871 |
|
C. Mitchell Waycaster Executive Vice President | 2015 | 360,000 |
| — |
| 202,510 |
| — |
| 263,954 |
| 26,080 |
| 57,581 |
| 910,125 |
|
| 2014 | 340,000 |
| — |
| 220,220 |
| — |
| 251,407 |
| 35,239 |
| 52,867 |
| 899,733 |
|
| 2013 | 320,000 |
| — |
| 109,098 |
| 22,350 |
| 255,539 |
| 15,305 |
| 44,106 |
| 766,398 |
|
Michael D. Ross Executive Vice President | 2015 | 360,000 |
| — |
| 202,510 |
| — |
| 241,482 |
| — |
| 58,049 |
| 862,041 |
|
| 2014 | 340,000 |
| — |
| 220,220 |
| — |
| 244,734 |
| — |
| 53,525 |
| 858,479 |
|
| 2013 | 320,000 |
| — |
| 109,098 |
| 22,350 |
| 206,199 |
| — |
| 51,734 |
| 709,381 |
|
O. Leonard Dorminey Executive Vice President | 2015 | 213,285 |
| — |
| 1,141,000 |
| — |
| 210,000 |
| — |
| 1,438,554 |
| 3,002,839 |
|
| 2014 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| 2013 | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive
Plan Compensation | Changes in Pension Value and Non-qualified Deferred Compensation Earnings | All Other Compensation | Total |
| A | B | C | D | E | F | G | H | I | J |
E. Robinson McGraw(1) Principal Executive Officer | 2018 | $ | 617,077 |
| $ | — |
| $ | 1,349,370 |
| $ | — |
| $ | 737,138 |
| $ | 69,189 |
| $ | 102,610 |
| $ | 2,875,384 |
|
| 2017 | 800,000 |
| — |
| 1,266,600 |
| — |
| 728,700 |
| 133,464 |
| 109,499 |
| 3,038,263 |
|
| 2016 | 750,000 |
| — |
| 746,880 |
| — |
| 449,521 |
| 12,376 |
| 91,946 |
| 2,050,723 |
|
C. Mitchell Waycaster(1) Principal Executive Officer | 2018 | 630,000 |
| — |
| 920,025 |
|
|
| 752,575 |
| 44,000 |
| 80,435 |
| 2,427,035 |
|
| 2017 | 510,000 |
| — |
| 422,200 |
| — |
| 348,410 |
| 28,525 |
| 75,898 |
| 1,385,033 |
|
| 2016 | 450,000 |
| — |
| 217,840 |
| — |
| 165,531 |
| 1,105 |
| 58,502 |
| 892,978 |
|
Kevin D. Chapman Principal Financial Officer | 2018 | 475,000 |
| — |
| 613,350 |
| — |
| 425,563 |
| 206 |
| 73,070 |
| 1,587,189 |
|
| 2017 | 425,000 |
| — |
| 846,560 |
| — |
| 238,886 |
| 190 |
| 72,030 |
| 1,582,666 |
|
| 2016 | 375,000 |
| — |
| 217,840 |
| — |
| 140,504 |
| — |
| 54,290 |
| 787,634 |
|
R. Rick Hart Executive Vice President | 2018 | 445,477 |
| — |
| 337,997 |
| — |
| 166,297 |
| 100,009 |
| 73,586 |
| 1,123,366 |
|
| 2017 | 508,000 |
| — |
| 337,760 |
| — |
| 201,487 |
| 106,466 |
| 79,685 |
| 1,233,398 |
|
| 2016 | 496,000 |
| — |
| 217,840 |
| — |
| 158,392 |
| 117,307 |
| 57,292 |
| 1,046,831 |
|
J. Scott Cochran(2) Executive Vice President | 2018 | 400,000 |
| — |
| 490,680 |
| — |
| 298,641 |
| 422 |
| 68,548 |
| 1,258,291 |
|
| 2017 | 375,000 |
| — |
| 337,760 |
| — |
| 236,772 |
| 594 |
| 71,398 |
| 1,021,524 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bartow Morgan, Jr.(3) Executive Vice President | 2018 | 147,115 |
| 130,950 |
| — |
| — |
| — |
| — |
| 2,547,100 |
| 2,825,165 |
|
| | | | | | | | | |
| | | | | | | | | |
General
The 2015 | |
| (1) | Mr. McGraw served as our chief executive officer, and principal executive officer, from January 2018 through April 2018. Mr. Waycaster served as our chief executive officer, and principal executive officer, from May 1, 2018 through the end of 2018. |
| |
| (2) | Mr. Cochran became a named executive in 2017. SEC rules permit us to omit compensation information for years prior to the individual becoming a named executive officer. |
| |
| (3) | Mr. Morgan became a named executive officer in 2018 in connection with our acquisition of Brand. As part of the acquisition, Mr. Morgan and Brand negotiated and entered into an agreement providing for the termination and disposition of certain benefits and perquisites provided to him by Brand, including the payout of designated amounts. We agreed to make the payments if not completed by Brand prior to the acquisition. Because these payments relate to services performed by Mr. Morgan for Brand, they are not reflected in the 2018 Summary Compensation Table above or described elsewhere in this proxy statement. Details about these payments may be found in the proxy statement/prospectus relating to the Brand acquisition that we filed with the SEC on June 27, 2018. |
General. The 2018 Summary Compensation Table above includes information about the compensation earned by our Principal Executive Officer, Principal Financial Officer,principal executive officers, principal financial officer and the fourthree other most highly compensated officers of the Company and the Bank for services that they rendered during fiscal years ending December 31, 2015, 2014,2018, 2017 and 2013. Applicable rules require only the inclusion of the three highest paid officers. We have included Mr. Dorminey2016 (except as one of our named executives solely as a result of one-time compensation paid to him as a result of our merger with Heritage, which was completed on July 1, 2015. One that date, Mr. Dorminey became an employee of the Company, serving as the Company’s Executive Vice PresidentMessrs. Cochran and President of the Bank's Eastern Region. The 2015 Summary Compensation Table above and the tables that follow report amounts we paid to Mr. Dorminey under the terms on his employment agreement with Heritage, which we assumed, and amounts in the nature of compensation we paid to him as a result of our merger with Heritage.
Morgan). The compensation included in the table represents both cash payments and the value of other forms of payments, as follows:
Column C “Salary”- Salary –- Amounts included in this column represent the base salary earned by our named executives in 2015, 2014,2018, 2017 and 2013,2016, some of which may have been voluntarily deferred under our 401(k) plan or our two non-qualified deferred compensation plans, the Deferred Income Plan and Deferred Stock Unitthe DSU Plan.
Column D “Bonus”- Bonus- Amounts in this column report cash bonuses paid on a discretionary basis; discretionarybasis. Discretionary bonuses were not a component of our compensation program during 2015, 20142018, 2017 or 2013.2016. Mr. Morgan received a prorated bonus for his service after our acquisition of Brand. We consider this a discretionary bonus because it was not made using the performance measures applicable during 2018 under our PBRP.
ColumnColumns E“ and F - Stock Awards”and Column F, “Option Awards”Awards; Option Awards - Amounts in these columns includerepresent the value of non-cash compensation granted or awarded under our LTIP, some of which ismay be performance-based andor time-based. Performance-based awards may or may not be receivedearned by any executive, depending upon the achievement of performance objectives. Options were not a component of our performance-based compensation during 20142018, 2017 or 2015.2016.
Column G “Non-Equity- Non-Equity Incentive Plan Compensation” -Compensation - Amounts in this column represent cash bonuses paid under our Performance Based Rewards PlanPBRP based upon the achievement of performance goals.measures. Some of these amounts may have been voluntaryvoluntarily deferred under our 401(k) plan, Deferred Stock UnitIncome Plan or DSU Plan. For Mr. Dorminey, the bonus was determined in accordance with the terms of his employment agreement.
Column H “Changes- Changes in Pension Value and Non-qualified Deferred Compensation Earnings” -Earnings - Amounts in this column represent (1) changes in the actuarial value of benefits accrued under our tax-qualified pension plan and Mr. Hart’s non-qualified SERPsupplemental executive retirement plans, or SERPs, and (2) any above marketabove-market earnings credited under our Deferred Income Plan.
Column I “All- All Other Compensation” -Compensation - Amounts in this column represent the value of other compensation we pay or provide to our named executives, such as car allowances and membership dues.
Restricted Stock Awards
Awards. Amounts reported in the Column E, labeled ““Stock Awards,” represents” represent the value of restricted stock awards madeawarded under our LTIP, which include annual performance-based restricted stock awards made to our named executives other than Mr. Dormineyincluding performance and time-based restricted stock awards made to Mr. McGraw and Mr. Dorminey. More information about the terms of the award we made to Mr. Dorminey may be found under the section “Payments and Rights on Termination or Change in Control”.
awards. The dollar amounts in the table above reflect the aggregate fair value of the awards, determined as of the date of award, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Stock Compensation” (“Topic 718”).Compensation,” referred to as “Topic 718.” Dividends payable on restricted stock awards are not included in our fair value determination. For performance-based awards, amounts included in Column Ethis column reflect the probable outcome of the performance conditions determined as of the date of award, which we consider to be the target award, consistent with our estimate of the aggregate compensation cost to be recognized over the applicable service period as of the award date under Topic 718. As permitted under the guidance in Topic 718, excluding forfeitures.the Company has elected to account for forfeitures in compensation cost when they occur. The fair value of the performance awards on the award date, assuming that superior performance was achieved, rather than target performance as reported in the table, was $1,226,700, $920,025, $613,350, $327,120, and $490,680 for Messrs. McGraw, Waycaster, Chapman, Hart and Cochran, respectively. Mr. Morgan was not eligible to receive a restricted stock award in 2018. Please refer to Note N,14, “Employee Benefit and Deferred Compensation Plans,” in the Notes to Consolidated Financial Statements in Item 8, “FinancialFinancial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 20152018 for details regarding the assumptions we used to determine the fair value of our restricted stock awards.
The number of target shares that corresponds to the value of our performance-based restricted awards included in Column E in the table above is also listed in the table entitled “Grants of Plan-Based Awards” whichtable that follows. Further information about why LTIP awards are made, the relationship of LTIP awards to other compensation components, the differences between performance and time-based awards and among performance-based awards, the specific performance goalsmeasures designated by the compensation committee over the applicable performance cycle, and potential shares receivable for threshold, target and maximum values maysuperior performance can be found in the CD&A.
Option Grants
Column F, &A, under the heading ““Option Awards,Compensation Decisions Made in 2018,” represents the value of options granted under our LTIP, if any. The dollar amount reflects the aggregate fair value of options granted, determined as of the date of grant, calculated in accordance with Topic 718. Please refer to Note N, “Employee Benefit and Deferred Compensation Plans,” in the Notes to Consolidated Financial Statements in Item 8, “Financial Statementsparagraph labeled“Equity Awards.” The Option Exercises and Supplementary Data,”Vested Restricted Stock table below sets forth the actual number of our Annual Report on Form 10-K forshares of restricted stock received upon vesting at the year ended December 31, 2015 for details regarding the assumptions we used to derive the fair valueend of our option grants. Options were not granted in 2014 and 2015.2018.
Bonuses
With the exception of Mr. Dorminey, theCash Bonuses. The amounts listed in Column G, labeled ““Non-Equity Incentive Plan Compensation,”” reflect annual cash bonuses earned and paid under the PBRP, all of which are subject to the attainment of performance goals.measures. More information about why annual cash bonuses are made, the relationship of annual cash bonuses to other compensation components, the specific performance goals designated by the compensation committee, and potential amounts payable for threshold, target and superior performance maycan be found in the CD&A, under the heading ““Annual Cash Bonus,” in the section “Compensation Decisions Made in 2015”.2018,”in the paragraph labeled“Annual Cash Awards.” A prorated bonus was paid to Mr. Morgan for services he rendered in 2018 after our acquisition of Brand. Because his bonus was not determined using the performance measures applicable under the PBRP, we consider Mr. Morgan’s bonus to be a discretionary bonus and included the amount in Column D.
Changes in Pension Value and Non-qualified Deferred Compensation Earnings. Amounts reported in Column H, labeled “Changes in Pension Value and Non-qualified Deferred Compensation Earnings,
Column H, “Changes in Pension Value and Non-qualified Deferred Compensation Earnings,” reflects amounts that are considered above market reflect above-market earnings on deferrals credited to our Deferred Income Plan and the year-over-year change in the actuarial present value of accumulated benefits under our pension plan and Mr. Hart’s SERPs. Earnings are considered “above market”“above-market” only if the creditingcredited interest rate exceeded 120% of the applicable federal long-term rate, with compounding, as prescribed by the Internal Revenue Service. For 2015, these amounts are2018, the aggregate amount in Column H is made up as follows:
| | | 2015 ABOVE MARKET INTEREST AND ACCRUALS | |
| 2018 ABOVE-MARKET EARNINGS AND ACCRUALS | | 2018 ABOVE-MARKET EARNINGS AND ACCRUALS |
| Name | Above Market Interest | Pension Plan Accruals | SERP Accruals | Above-market Earnings | Pension Plan Accruals | SERP Accruals |
| Mr. McGraw | $ | 10,079 |
| $ | 214,012 |
| $ | — |
| $ | 5,916 |
| $ | 63,273 |
| $ | — |
|
| Mr. Waycaster | | 393 |
| 43,607 |
| — |
|
| Mr. Chapman | — |
| — |
| — |
| 206 |
| — |
| — |
|
| Mr. Hart | 10,332 |
| — |
| 108,904 |
| 2,450 |
| — |
| 97,559 |
|
| Mr. Waycaster | 879 |
| 25,201 |
| — |
| |
| Mr. Ross | — |
| — |
| — |
| |
| Mr. Dorminey | — |
| — |
| — |
| |
| Mr. Cochran | | 422 |
| — |
| — |
|
All Other Compensation
Compensation.In addition to the amounts described above, we provide or pay one or morecertain additional amounts for the benefit of the following for our named executives, the value of which is included in Column I, labeled “All Other CompensationCompensation.”: These amounts include contributions to our 401(k) plan;plan, group term life and disability insurance premiums;premiums, dividends on restricted stock awards;awards, automobile allowances;allowances, dues for memberships in professional and civic organizations and country club dues. Mr. McGraw, our chief executive officer, also receives a contribution to our Deferred Income Plan and a tax gross upgross-up based on the value of his automobile allowance, both of which are contractual payments. The “Insurance Premiums” column below reflects a $2,537,238 payment we made to Mr. Morgan under the terms of the agreement entered into by Mr. Morgan and Brand as a part of the Brand acquisition. The payment represents aggregate premium payments under hison individual policies of life insurance owned by Mr. Morgan due for periods after our acquisition of Brand. The premium payment obligation was part of Mr. Morgan’s employment agreement. agreement with Brand; we decided to settle the obligation since we do not provide or support individual life insurance policies as an executive benefit.
Below is specific information about the other compensation paid to each of our named executives:
| | | OTHER COMPENSATION PAID IN 2015 | |
| COMPONENTS OF OTHER COMPENSATION PAID IN 2018 | | COMPONENTS OF OTHER COMPENSATION PAID IN 2018 |
Name |
Plan Contributions |
Insurance Premiums | Restricted Stock Dividends |
Automobile Allowance | Country Club Dues | Deferred Income Contribution |
Gross Up | Cancellation of Heritage Options |
Total |
Plan Contributions |
Insurance Premiums | Restricted Stock Dividends |
Automobile Allowance | Professional and Civic Organizational/Country Club Dues | Deferred Income Contribution |
Gross Up |
Total |
| Mr. McGraw | $ | 31,175 |
| $ | 1,651 |
| $ | 16,320 |
| $ | 15,600 |
| $ | 6,758 |
| $ | 5,458 |
| $ | 14,209 |
| — |
| $ | 91,171 |
| $ | 31,640 |
| $ | 1,879 |
| $ | 25,170 |
| $ | 15,600 |
| $ | 10,053 |
| $ | 5,458 |
| $ | 12,810 |
| $ | 102,610 |
|
| Mr. Waycaster | | 31,640 |
| 8,887 |
| 20,855 |
| 12,000 |
| 7,053 |
| — |
| — |
| 80,435 |
|
| Mr. Chapman | 31,175 |
| 1,560 |
| 4,760 |
| 12,000 |
| 3,965 |
| — |
| — |
| — |
| 53,460 |
| 31,640 |
| 1,950 |
| 23,220 |
| 12,000 |
| 4,260 |
| — |
| — |
| 73,070 |
|
| Mr. Hart | 31,175 |
| 9,588 |
| 4,760 |
| 3,401 |
| 9,603 |
| — |
| — |
| — |
| 58,527 |
| 31,640 |
| 13,949 |
| 6,397 |
| 12,000 |
| 9,600 |
| — |
| — |
| 73,586 |
|
| Mr. Waycaster | 31,175 |
| 5,681 |
| 4,760 |
| 12,000 |
| 3,965 |
| — |
| — |
| — |
| 57,581 |
| |
| Mr. Ross | 31,175 |
| 3,274 |
| 4,760 |
| 12,000 |
| 6,840 |
| — |
| — |
| — |
| 58,049 |
| |
| Mr. Dorminey | — |
| 2,481 |
| 5,950 |
| 6,000 |
| 4,834 |
| — |
| — |
| 1,419,289 |
| 1,438,554 |
| |
| Mr. Cochran | | 31,640 |
| 4,165 |
| 13,690 |
| 12,000 |
| 7,053 |
| — |
| — |
| 68,548 |
|
| Mr. Morgan | | 4,154 |
| 2,537,891 |
| — |
| 4,000 |
| 1,055 |
| — |
| — |
| 2,547,100 |
|
For Mr. Dorminey, the amount in Column I, “All Other Compensation,” represents the aggregate value of perquisites we provided to Mr. Dorminey under his employment agreement and consideration in the nature of compensation paid in respect of the cancellation of his Heritage stock options on the completion of our merger with Heritage.
GRANTS OF PLAN-BASED AWARDS
The following table provides information on the performance-based incentive awards made to the named executives for 2018.
| | | 2015 PLAN-BASED AWARDS | |
2018 PLAN-BASED AWARDS(1) | | 2018 PLAN-BASED AWARDS(1) |
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan (PBRP) | Estimated Possible Payouts Under Equity Incentive Plan (LTIP) | | | Estimated Possible Payouts Under Non-Equity Incentive Plan (PBRP) | Estimated Possible Payouts Under Equity Incentive Plan (LTIP) | |
| Name | Grant Date | Date of Compensation Committee Action | Threshold ($) | Target ($) | Superior ($) | Threshold (#) | Target (#) | Superior (#) | Grant Date Fair Value of Stock and Option Awards ($) | Grant Date | Date of Compensation Committee Action | Threshold ($) | Target ($) | Superior ($) | Threshold (#) | Target (#) | | Superior (#) | Grant Date Fair Value of Stock and Option Awards ($) |
| A | B | C | D | E | F | G | H | I | J | B | C | D | E | F | G | H | | I | J |
| Mr. McGraw | 1/1/2015 | 12/9/2014 | 280,000 |
| 560,000 |
| 1,120,000 |
| 8,000 |
| 12,000 |
| 18,000 |
| 347,160 |
| 1/1/2018 | 12/13/2017 | 246,831 |
| 493,662 |
| 987,323 |
| 7,333 |
| 11,000 |
| (2) | 16,500 |
| 449,790 |
|
| | 1/1/2015 | 12/9/2014 | | 12,000 |
| | 347,160 |
| 1/1/2018 | 12/13/2017 | | 6,000 |
| 9,000 |
| (3) | 13,500 |
| 368,010 |
|
| | | 1/1/2018 | 12/13/2017 | | | 13,000 |
| (4) | | 531,570 |
|
| Mr. Waycaster | | 1/1/2018 | 12/13/2017 | 252,000 |
| 504,000 |
| 1,008,000 |
| 5,000 |
| 7,500 |
| (2) | 11,250 |
| 306,675 |
|
| | | 1/1/2018 | 12/13/2017 | | 5,000 |
| 7,500 |
| (3) | 11,250 |
| 306,675 |
|
| | | 1/1/2018 | 12/13/2017 | | | 7,500 |
| (4) | | 306,675 |
|
| Mr. Chapman | 1/1/2015 | 12/9/2014 | 82,500 |
| 165,000 |
| 330,000 |
| 4,667 |
| 7,000 |
| 10,500 |
| 202,510 |
| 1/1/2018 | 12/13/2017 | 142,500 |
| 285,000 |
| 570,000 |
| 3,333 |
| 5,000 |
| (2) | 7,500 |
| 204,450 |
|
| | | 1/1/2018 | 12/13/2017 | | 3,333 |
| 5,000 |
| (3) | 7,500 |
| 204,450 |
|
| | | 1/1/2018 | 12/13/2017 | | | 5,000 |
| (4) | | 204,450 |
|
| Mr. Hart | 1/1/2015 | 12/9/2014 | 118,750 |
| 237,500 |
| 475,000 |
| 4,667 |
| 7,000 |
| 10,500 |
| 202,510 |
| 1/1/2018 | 12/13/2017 | 111,369 |
| 222,739 |
| 445,477 |
| 1,955 |
| 2,933 |
| (2) | 4,400 |
| 119,930 |
|
| Mr. Waycaster | 1/1/2015 | 12/9/2014 | 90,000 |
| 180,000 |
| 360,000 |
| 4,667 |
| 7,000 |
| 10,500 |
| 202,510 |
| |
| Mr. Ross | 1/1/2015 | 12/9/2014 | 90,000 |
| 180,000 |
| 360,000 |
| 4,667 |
| 7,000 |
| 10,500 |
| 202,510 |
| |
| Mr. Dorminey | 7/1/2015 | N/A | — |
| — |
| — |
| — |
| 35,000 |
| — |
| 1,141,000 |
| |
| | | 1/1/2018 | 12/13/2017 | | 1,600 |
| 2,400 |
| (3) | 3,600 |
| 98,136 |
|
| | | 1/1/2018 | 12/13/2017 | | | 2,933 |
| (4) | | 119,930 |
|
| Mr. Cochran | | 1/1/2018 | 12/13/2017 | 100,000 |
| 200,000 |
| 400,000 |
| 2,667 |
| 4,000 |
| (2) | 6,000 |
| 163,560 |
|
| | | 1/1/2018 | 12/13/2017 | | 2,667 |
| 4,000 |
| (3) | 6,000 |
| 163,560 |
|
| | | 1/1/2018 | 12/13/2017 | | | 4,000 |
| (4) | | 163,560 |
|
| |
| (1) | Mr. Morgan was not eligible to receive a plan-based award in 2018. |
| |
| (2) | Represents shares subject to the performance measures discussed in the CD&A above and a one-year performance cycle. |
| |
| (3) | Represents shares subject to the performance measures discussed in the CD&A above and a three-year performance cycle. |
| |
| (4) | Represents shares subject to time-based vesting. Mr. McGraw’s and Mr. Hart’s awards are subject to a one-year service vesting period, while the remaining time-based awards are subject to a three-year service vesting period. |
We presently maintain two performance-based incentive plans: the PBRP, which is our annual cash bonus plan, calledand the “PBRP,” andLTIP, which is our equity incentive plan, calledplan. For payments and awards under the “LTIP.” OurPBRP and LTIP that are intended to be performance-based, our compensation committee sets targeted payout levels, for each of these plans, reflecting the attainment of threshold, target and superior performance levels. In the table above, Columns D, E and F in the table above represent potential cash payouts at each level under the PBRP.PBRP on the first day of our fiscal year (the first day of the performance cycle); Columns G, H, and I in the table above represent potential payouts under the LTIP at each level which are madeexpressed in the form of shares of our common stock. For 2015,stock; Column J reflects the committee also awarded to Mr. McGraw a time-based restricted stock award subject to a one-year service perioddate fair value at the target level, which we consider the probable outcome, determined in the amount of 12,000 shares, which is not subject to performance
goals and is listed in Column H in the table above. Mr. Dorminey received a time-based inducement and retention award which is reported in Column H above; this award was made under the terms of his employment agreement, rather than under our LTIP.accordance with Topic 718. More information about the performance goalsmeasures and the factors the compensation committee uses to set threshold, target and superior performance levels and the reason for the time-based award is included in the CD&A. More information about the specific terms of Mr. Dorminey's restricted stock award may be found under the section “Payments and Rights on Termination or Change in Control”.
OUTSTANDING EQUITY AWARDS AS OF DECEMBER 31, 20152018
|
| | | | | | | | |
| OPTION AWARDS |
Name | Number of Securities Underlying Options | | |
| Exercisable | Unexercisable(1) | Option Exercise Price | Option Expiration Date |
| A | B | C | D | E |
| Mr. McGraw | 22,500 |
| — |
| $ | 17.63 |
| 12/31/2017 |
| 22,500 |
| — |
| 17.03 |
| 12/31/2018 |
| 22,500 |
| — |
| 14.22 |
| 01/18/2020 |
| 30,000 |
| — |
| 16.91 |
| 01/17/2021 |
| 30,000 |
| — |
| 14.96 |
| 1/16/2022 |
| 10,000 |
| 5,000 |
| 19.14 |
| 12/31/2022 |
| Mr. Chapman | 3,000 |
| — |
| 17.63 |
| 12/31/2017 |
| 5,000 |
| — |
| 17.03 |
| 12/31/2018 |
| 5,000 |
| — |
| 14.22 |
| 01/18/2020 |
| 7,500 |
| — |
| 16.91 |
| 1/17/2021 |
| 7,500 |
| — |
| 14.96 |
| 1/16/2022 |
| 2,500 |
| 1,250 |
| 19.14 |
| 12/31/2022 |
| Mr. Hart | 13,924 |
| — |
| 15.21 |
| 5/30/2016 |
| 7,500 |
| — |
| 17.63 |
| 12/31/2017 |
| 7,500 |
| — |
| 17.03 |
| 12/31/2018 |
| 7,500 |
| — |
| 14.22 |
| 1/18/2020 |
| 10,000 |
| — |
| 16.91 |
| 1/17/2021 |
| 10,000 |
| — |
| 14.96 |
| 1/16/2022 |
| 3,333 |
| 1,667 |
| 19.14 |
| 12/31/2022 |
| Mr. Waycaster | 7,500 |
| — |
| 30.63 |
| 12/31/2016 |
| 3,333 |
| 1,667 |
| 19.14 |
| 12/31/2022 |
| Mr. Ross | 10,000 |
| — |
| 14.96 |
| 1/16/2022 |
| 3,333 |
| 1,667 |
| 19.14 |
| 12/31/2022 |
|
| | | | | | | | |
| OUTSTANDING STOCK AWARDS |
| Name | Number of Securities that have not Vested (#) | Market Value of Securities that have not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Securities that have not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Securities that have not Vested ($) |
| A | B | C | D | E |
| Mr. McGraw | 13,000 |
| 392,340 |
| 9,000 |
| 271,620 |
|
| Mr. Waycaster | 16,000 |
| 482,880 |
| 7,500 |
| 226,350 |
|
| Mr. Chapman | 20,500 |
| 618,690 |
| 5,000 |
| 150,900 |
|
| Mr. Hart | 2,933 |
| 88,518 |
| 2,400 |
| 72,432 |
|
| Mr. Cochran | 11,500 |
| 347,070 |
| 4,000 |
| 120,720 |
|
(1)Stock Awards. These optionsColumns B and C reflect all of our outstanding time-based awards, including those that vested on January 1, 2016.
General
Under our LTIP, we may grant or award options and restricted stock. All2019. The value of the performance-based restricted stock we have awarded to our named executives is subject to a one-year performance cycle under which the number of shares to be awarded, if any, is finally determined and vested at the end of each fiscal year. All of the time-based restricted stock we have awarded to Mr. McGraw is subject to a one-year service period. As a result, these awards are not considered “outstanding” atis based on the end of a fiscal year, and they are not included in the table above. The options we have granted are time-based and vest pro rata over a three-year service period, except that vesting is accelerated in the event of a change in control. More information about the time-based restricted stock award we made to Mr. Dorminey, which is not included in the table above because it was awarded pursuant to Mr. Dorminey’s employment agreement and not under our LTIP, may be found under the section “Payments and Rights on Termination or Change in Control”.
Unexercised Options
The table above includes information about the unexercised options held by our named executives at the end of our 2015 fiscal year. All of the options were granted under the terms of our current LTIP or its predecessor, except for 13,924 options granted to Mr. Hart that we assumed in connection with our acquisition of Capital. The exercise price of each option is the fairper share market value of our common stock on December 31, 2018, which was $30.18 per share. Columns D and E in the datetable above include information about our performance-based awards, excluding those that vested on December 31, 2018, which are included in the table that follows. The value of grant, which is reflected in Column D. “Fairour performance-based awards was determined using the per share market value” means the closing sales price of
a sharevalue of our common stock on December 31, 2018, $30.18 per share, and the number of shares equal to a target award or the number of shares actually vested as quoted onof January 1, 2019, as applicable. More information about our time and performance-based restricted stock awards, including their respective vesting dates, can be found in the Nasdaq Global Select Market onCD&A under the business day immediately precedingheading “Compensation Decisions made in 2018,”paragraph labeled “Equity Incentives.”
Unexercised Options. There were no unexercised stock options held by our named executives as of the grant date.end of 2018.
OPTION EXERCISES AND VESTED RESTRICTED STOCK
| | | OPTION EXERCISES AND STOCK VESTED DURING 2015 | |
| OPTION EXERCISES AND STOCK VESTED DURING 2018 | | OPTION EXERCISES AND STOCK VESTED DURING 2018 |
| | Options Exercised | Restricted Stock Vested | Options Grants | Restricted Stock Awards |
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| A | B | C | D | E | B | C | D | E |
| Mr. McGraw | 45,000 |
| 312,225 |
| 26,760 |
| 920,812 |
| — |
| — |
| 29,797 |
| 1,059,911 |
|
| Mr. Waycaster | | — |
| — |
| 10,089 |
| 304,473 |
|
| Mr. Chapman | 3,000 |
| 13,905 |
| 8,610 |
| 296,270 |
| — |
| — |
| 10,726 |
| 383,902 |
|
| Mr. Hart | — |
| — |
| 8,610 |
| 296,270 |
| — |
| — |
| 3,946 |
| 119,080 |
|
| Mr. Waycaster | 27,500 |
| 409,475 |
| 8,610 |
| 296,270 |
| |
| Mr. Ross | 10,000 |
| 181,200 |
| 8,610 |
| 296,270 |
| |
| Mr. Dorminey | — |
| — |
| 8,750 |
| 301,088 |
| |
| Mr. Cochran | | — |
| — |
| 5,381 |
| 162,386 |
|
