MIDSOUTH BANCORP, INC.

102 Versailles Boulevard

Versailles Centre

Lafayette, Louisiana 70501

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Lafayette, Louisiana

April 23, 201022, 2011

We will hold our annual shareholders meeting on Wednesday, May 26, 2010,25, 2011, at 1:00 p.m., local time, at our corporate offices, 102 Versailles Blvd.,Boulevard, Lafayette, Louisiana 70501, where we will vote upon:

 

Your vote is important. Whether or not you expect to attend the annual meeting, it is important that your shares be represented and voted at the meeting.

MIDSOUTH BANCORP, INC.

102 Versailles Boulevard

Versailles Centre

Lafayette, Louisiana 70501

PROXY STATEMENT

This Proxy Statement is being sent to our shareholders to solicit on behalf of our Board of Directors proxies for use at our annual shareholders meeting to be held on Wednesday, May 26, 2010,25, 2011, at 1:00 p.m. at our corporate offices, located at 102 Versailles Boulevard, Versailles Center, Lafayette, Louisiana and at any adjournments thereof.  Directions to the annual meeting may be obtained by calling Sally GaryShaleen B. Pellerin at (337) 593-3010.593-3011.  This Statement is first being mailed to shareholders on or about April 23, 2010.22, 2011.  As used in this Proxy Statement, the terms, “we,” “us,” “our” and the “Company” refer to MidSouth Bancorp, Inc., and the terms “MidSouth Bank” and the “Bank” refer to our wholly owned subsidiary, MidSouth Bank, N.A.

Only holders of our common stock as of close of business on March 31, 2010,2011, are entitled to notice of and to vote at the Meeting.  On that date we had outstanding 9,723,2689, 880,743 shares of stock, each of which is entitled to one vote.

The proposal to elect directors to serve as members of our Board of Directors requires the affirmative vote of a plurality of the shares of common stock present, in person, or represented by proxy at the Annual Meeting.  “Plurality” means that the individuals who receive the largest number of votes are elected as directors, up to the maximum number of directors to be chosen.  As a result, abstentions and broker non-votes will have no effect on this proposal.  Approval of our proposal to approve a non-binding resolution regarding the compensation of our named executive officers (the “Named Executive Officers” or “NEOs”) requires a majority of the votes cast at the Annual Meeting.  Accordingly, abstention and broker non-votenon-votes will not count as a vote in favor of or against this proposal.  The proposalproposals to amend our Artic lesArticles of Incorporation to increase our authorized common stock requires(1) eliminate the approvalability of Directors to vote by proxy at board meetings and (2) to modify the procedures for shareholder nominations of Directors both require the affirmative vote of a majority of the total number of shares that are present, at the Annual Meeting, in person or by proxy.  As a result, abstentions and broker non-votes will count as votes against such proposal.  either of these proposals.

Each of these proposals was unanimously recommended by our Board of Directors.  If any proposal comes before the Annual Meeting that has not been recommended by a majority of our “Continuing Directors,” as defined in our Amended and Restated Articles of Incorporation, (the “Articles of Incorporation”), then approval of any such

You may vote your shares by any one of the following methods:

 

 

 

If you vote by the Internet, you do not need to send in your proxy card or vote instruction form. The deadline for Internet voting will be 11:59 p.m., CentralEastern Time, on May 25, 2010.24, 2011.  If your shares are held in street name, and you wish to vote your shares at the Annual Meeting, you will need to contact your bank, broker or other nominee to obtain a legal proxy form that you must bring with you to the meeting to exchange for a ballot.

All proxies received in the enclosed form will be voted as you specify.  If you sign and return your proxy form but do not specify how to vote your shares, your shares will be voted for the election of the persons named herein that have been recommended by the Board of Directors for election, for the resolutionproposal to approve a non-binding advisory resolution on our compensation resolution and for the amendmenttwo amendments to our Articles of Incorporation.  We do not know of anything else to be presented at the Meeting other than the election of directors and the approval of the non-binding advisory resolution, and amendment to our Articles of Incorporation,other proposals described in this Proxy Statement, but if anything else does come up, the persons named in the enclosed proxy will vote the shares covered by the proxy as determined by the Board of Directors.

You have the right to change and revoke your proxy at any time before the Annual Meeting.  If you hold your shares in your name, you may contact our Corporate Secretary and request that another proxy card be sent to you. Alternatively, you may use the Internet to re-vote your shares, even if you mailed your proxy card or previously voted using the Internet.  The latest-dated, properly completed proxy that you submit, whether through the Internet or by mail will count as your vote.  Please note that if you re-vote your shares by mail, your re-vote will not be effective unless it is received by our Corporate Secretary at the address specified herein prior to the Annual Meeting. If your shares are held in street name, you must contact your broker or other nominee and follow its procedures for changing your vo te.vote.

The cost of soliciting proxies will be borne by us.  In addition to the mail, proxies may be solicited by our directors and officers through personal interview, telephone, telegraph, facsimile, Internetinternet and e-mail.  Banks, brokerage houses and other nominees or fiduciaries may be asked to forward these materials to their principals and to get authority to execute proxies, and we will, upon request, reimburse them for their expenses in so acting.

ANNUAL MEETING BUSINESS

Item 1.  Election of Directors

Our Articles of Incorporation provide for three classes of directors, with one class to be elected at each annual meeting for a three-year term.  At the Annual Meeting, threefour  Class IIIII Directors will be elected to serve until the 2013 annual meeting2014 Annual Meeting or their earlier resignation, removal or death and until their successors are elected and qualified.

Unless you withhold authority, the persons named in the enclosed proxy will vote the shares covered by the proxies received by them for the re-electionelection of the threefour Class IIIII director nominees named below.below that have been nominated and recommended by the Board.  The Board of Directors has no reason to believe that any of the persons nominated and recommended by the Board is not available or will not serve if elected.  If for someany reason one or morea nominee becomes unavailable for election, the Board of Directors may designate substitute nominees, refusein which event the shares represented by proxies returned to stand for re-election at the Annual Meeting, the sharesus will be voted in favor offor such other persons assubstitute nominees, unless an instruction to the Board chooses.contrary is indicated on the proxy.

Other than the Board of Directors, only shareholders who have complied with the procedures of Article IV (H) of our Articles of Incorporation may nominate a person for election.  ToUnder the current provisions set forth in Article IV(H), to do so you must have given us written notice by the applicable date, of the following:

(1) as to each person whom you propose to nominate:

(a) his or her name, age, business address, residence address, principal occupation or employment,

(b) the number of shares of our stock of which the person is the beneficial owner, and

(c) any other information relating to the person that would be required to be disclosed in solicitations of proxies for the election of directors by Regulation 14A under the Securities Exchange Act of 1934; and

(2) as to you:

(a) your name and address,

(b) the number of shares of our stock of which you are the beneficial owner, and

The following table gives information as of March 31, 2010,2011, about each person nominated by the Board for election as a director nominee and each other current director whose term will continue after the Annual Meeting, including information regarding why we believe such person should serve as a director of the Company.  Unless otherwise indicated, each person has had the principal occupation shown for at least the past five years.

Item 2.  Proposal to Approve a Non-binding Advisory Resolution on the Compensation of our Named Executive Officers

As a result of our participation in the Capital Purchase Program (the “CPP”) of the U.S.United States Department of the Treasury’s (the “Treasury”) Troubled Asset Relief Program (“TARP”) we are subject to the provisions of the Emergency Economic Stabilization Act of 2008 (“EESA”), which was recently amended by the American Recovery and Reinvestment Act of 2009 (“ARRA”) to provide additional executive compensation requirements.

Per the additional requirements defined by the ARRA, we submit to our shareholders a non-binding resolution to approve the compensation of our named executive officers (the “Named Executive Officers” or “NEOs”),NEOs, as disclosed in this Proxy Statement, including the Compensation Discussion and Analysis (“CD&A”), the executive compensation tables and the other related disclosure.  Shareholders are encouraged to carefully review the executive compensation sections of this Proxy Statement outlining the Company’s executive compensation program.  Accordingly, the Board of Directors hereby submits for shareholder consideration, the resolution set forth below, commonly known as a “say-on-pay proposal,”proposal”:

The Board of Directors believes that the Company’s compensation policies and procedures are centered on a pay-for-performance culture and are strongly aligned with the long-term interests of shareholders, and, accordingly, recommends a vote in favor of this resolution.

Our Articles of Incorporation currently include a provision in Subpart F of Article V, which allows a member of our Common Stock, $0.10 Par Value Per Share,Board of Directors to take action by proxy at a meeting of the Board of Directors or a meeting of any of its committees at which the director is not in attendance.  The Board of Directors recommend that this provision be deleted in its entirety in order to further strengthen the Company’s corporate governance practices and to also make the Articles of Incorporation reflect the practices of our Board of Directors.    

The current proxy language in Subpart F of our Articles of Incorporation is supported by Louisiana corporate law which allows for directors to vote at a meeting by proxy only if specifically authorized by a corporation’s articles of incorporation.  As a result, removing Subpart F of Article V from 10,000,000 Sharesour Articles of Incorporation will eliminate the ability of our directors to 30,000,000 Sharesvote by proxy at Board and Committee meetings in which they are not in attendance.

Our Board of Directors is requesting shareholder approvalencourages each of an amendmentits members to our Articles of Incorporation to increase our authorized number of shares of common stock from 10,000,000 shares to 30,000,000 shares.   This proposal would amend subpart A of Article III of the Articles of Incorporation to readattend and participate in its entiretyBoard and committee meetings as follows with respect to total shares of capital stock authorized:

As a result, unless the amendment is approved, the Board’s ability to make equity incentive grants to our officers and employees will be extremely limited, which could make it more difficult for us to recruit and retain personnel.  As a result, the Board of Directors has determined that the proposed amendment to remove Subpart F of Article V from the Articles of Incorporation is desirable and in itsthe Company’s and our shareholders’ best interest.

If the amendment is approved, we expect that the Board will lift the suspension it imposed on grants under the Incentive Plan and will issue awards to our officers and employees, although no awards have been made asApproval of the dateproposed amendments to Subpart F of Article V requires the affirmative vote of a majority of the total number of votes that are present (in person or by proxy) and entitled to vote on this Proxy Statement.  Other thanproposal at the anticipated grant of any such awards, shares of common stock currently reserved for issuance under our existing equity incentive plans and upon conversion of our outstanding warrants held by the Treasury, we currently do not have any plans or arrangements to issue additional shares of common stock.

 

Our CEO is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company, while our Chairman of the Board provides guidance to our CEO and sets the agenda and presides over meetings of the full Board of Directors.  We believe that the role of a separate Chairman, who is also an outside director, also helps enhance the independent oversight of management of the Company and helps to ensur eensure that the Board is fully engaged with the Company’s strategy and how well it is being implemented.

In addition to the roles outlined above, the Board takes an active role in overseeing the management, operations, risk and soundness of the Company.  The Chairman of the Board and the Audit Committee Chairman serve as voting members of the Special AssetAssets Committee.  In addition, the Chairman of the Company’s Audit Committee also chairs the Company’s Risk Committee.  The Risk Committee assures that the Company and the Bank maintain an effective system for identifying, measuring, monitoring, and controlling entity wide risk.  The Committee also provides for the oversight of the quality and integrity of accounting, financial reporting, risk management, and control practices of the Company.  We believe that such active Board participation strengthens the Company’s operations.

The Committee will consider director candidates recommendednominated by shareholders who follow the procedures set out in Article IV (H) of our Articles described under “Item 1.  Election of Directors” in this Proxy Statement.  ItStatement or as such Article IV (H) may be amended as described under Item 4.  The Committee will also consider director candidates recommended (but not nominated) by shareholders so long as such recommendations are received at least 120 days before the anniversary date that we mailed our proxy materials for the prior year’s annual meeting.  In the event the meeting is moved by more than 30 days from the anniversary of the prior year’s meeting, the Committee will set a new deadline for the receipt of recommendations following the announcement of the new annual meeting date.  The Corporate Governance and Nominating Committee does not intend to alter the manner in which it evaluates candidates, including the criteria set forth above, based on whether the candidate was nominated or recommended by a shareholder or otherwise.

Proxies may confer discretionary authority to vote on any matter for which we receive notice after March 9, 2011,2012, without the matter being described in the Proxy Statement for our 20112012 Annual Meeting.

 

 

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SECURITY OWNERSHIP OF MANAGEMENT

AND CERTAIN BENEFICIAL OWNERS

The following table shows as of March 31, 2010,2011, the beneficial ownership of our common stock by each director, and nominee, byand each executive officer named in the Summary of Executive Compensation Table below, and by all directors, nominees, and executive officers as a group.  Unless otherwise indicated, the stock is held with sole voting and investment power.

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The following lists the only persons known to us as of March 31, 2010, the only persons other than the persons listed in the table above known to us2011 to beneficially own more than five percent of our Stock.

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Certain Relationships and Related Transactions

Directors, nominees, executive officers and their associates have been customers of, and have borrowed from MidSouth Bank in the ordinary course of business, and such transactions are expected to continue in the future.  Any loans or other extensions of credit made by the Bank to such individuals were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated third parties and did not involve more than the normal risk of collectability or present other unfavorable features.

We do not have adopted a formal policy with respect to the approval of related party transactions, other than our policies with respect to the approval of loans made to directors and executive officers.  However, it is expected that an appropriate committee ofPursuant to this policy, the board that is comprised of independent directorsAudit Committee (or with respect to compensation matters, the Personnel Committee) will review and, if appropriate, approve any transaction in which the Company is or will be a party and the amount exceeds $120,000, and in which any of the Company’s directors, executive officers or significant shareholders had, has or will have a material interest.  Such transactions will only be approved if they are deemed to be in the best interest of the Company and its shareholders.

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and AnalysisCD&A is intended to assist you in understanding our compensation programs.  It is intended to explain the philosophy underlying our compensation strategy and the fundamental elements of compensation paid to our Chief Executive Officer, Chief Financial Officer, and other individuals included in the Summary Compensation Table (Named Executive Officers or “NEOs”) for 2009.  2010.   It is the intent of the Company to comply with all regulations related to executive compensation disclosures outlined by federal agencies including, but not limited to, the SEC, Federal Reserve, Office of the Comptroller of the Currency,  and the Federal Deposit Insurance Corporation (“FDIC”).

The Personnel Committee of the Board of Directors (the “Personnel Committee”“Committee”) has the responsibility for continually monitoring the compensation paid to our Named Executive Officers (“NEOs”)NEOs as well as other executive employees.  The Personnel Committee believes that compensation of our executive officers should encourage creation of shareholderstockholder value and achievement of strategic corporate objectives.objectives, while proactively managing risks associated with all such compensation programs impacting the Company, its subsidiaries and its shareholders.  Specifically, the Personnel Committee is committed to ensuring that the total compensation package for our executive officers will serve to:

 

In January 2009, the Company received $20 millionissued 20,000 shares of Series A preferred stock (“the Securities”) associated with its participation in capitalthe Treasury’s CPP under the CPP.TARP, which was established by the Treasury pursuant to the EESA.  The CPPCCP imposes restrictions on executive compensation, which are detailed further in the narrative.  We were required to make certain changes to executive compensation arrangements as necessary to comply with the provisions of the EESA.  These restrictions and prohibitions apply to various officers, as discussed in greater detail below.

 

employees with a tax-advantaged savings opportunity for retirement.  We sponsor this plan to help employees in all levels save and accumulate assets for use during their retirement.  As required, eligible pay under this plan is capped at annual limits defined under the Internal Revenue Code (“IRC”) annual limits.Code.  No matching contributions were made in 2009.2010.

To encourage ownership by all employees and therefore tie their interest to the interests of the shareholders, we established an employee stock ownership plan (“ESOP”)the ESOP in 1986.  The ESOP covers all employees who meet minimum age and service requirements. Amounts of annual contributions to the ESOP are determined on a discretionary basis by the Board. We made contributionsContributions to the NEOs ESOP accounts during 2009 (see footnote sixin 2010 included those made to the Summary Compensation Table).NEO accounts.

We maintain split dollar insurance arrangements with Mr. Cloutier and will continue to accrue for post-retirement and death benefits for Mr. Landry and Ms. Hail, and Mr. Landry.as they are  the insured on the individual policies.  Each arrangement provides benefits to the executive officer’s designated beneficiary in the event of the executive officer’s death.  Due to his resignation, Mr. Landry is no longer eligible for this arrangement.

We provide Mr. Cloutier Ms. Hail and Mr. LandryNichols with areimbursements for an individual supplemental Term Life Insurance Policy payable to a beneficiary of their choice and a supplemental long-term disability policy.  Due to his resignation, Mr. Landry isand Ms. Hail no longer eligiblebeing active employees of the Bank, the Company has discontinued reimbursements for this arrangement.premiums on their respective supplemental term life policies and long-term disability policies.

 

We view certain perquisites as beneficial to us as well as compensation to the executive officers.  For example, the club memberships are regularly used in the general course of our business such as for business meetings or entertaining.  Company cars are used primarily for business purposes.

The executive officers are eligible to participate in benefit plans sponsored by us on the same terms and conditions as those generally provided to salaried employees. Basic health benefits, dental benefits, and similar programs are provided to make certain that access to healthcare and income protection is available to our employees and the employee’s family members.  The cost of our benefit plans are negotiated with the providers of such benefits and the executive officers contribute to the cost of the benefits.

For purposes of these restrictions, “Senior Executive Officers” or “SEOs”SEOs are defined under the applicable SEC rules as (1) the principal executive officer (“PEO”)(PEO), (2) the principal financial officer (“PFO”)(PFO), (3) the three most highly compensated executive officers other than the PEO and PFO, (4) any additional employees serving in the role of PEO or PFO and (5)5) two additional individuals who would have been included but for the fact they were not serving as officers at the end of the last fiscal year. The Company has determined the following Named Executive Officersnamed executive officers of the Company constitute “SEOs”:SEOs:  Mr. Cloutier, Ms. Hail, Mr. Landry, Mr. McLemore, Ms. Stelly, Mr. Corrigan, and Mr. Utz,Nichols, and they are the same group of executives included in the Company’s defi nitiondefinition of Named Executive Officers.NEOs.

As the Personnel Committee reviews the Company’s compensation arrangements going forward, it will continue to take into account, and the Company will comply with, the restrictions set forth in EESA and ARRA and related regulations, as they are promulgated.

 

Each of the NEOs has signed a compensation modification agreement that specifies any awards made under the CICPAICP plan are subject to “clawback,”clawback or repayment, to the Company should the bonus be paid on statements of earnings, gains, officer statements, loan criteria, or any other criteria that are later proven to be materially inaccurate regardless of whether or not the Companycompany or the officer is “at fault.”  As new plans are adopted, clawback provisions would be outlined within any such formal plan document.

PERSONNEL COMMITTEE REPORT

The Personnel Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) or SEC Regulation S-K with management.  Based upon such review, the related discussions and such other matters deemed relevant and appropriate to the Committee, the Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement to be delivered to shareholders.

RISK COMMITTEE REPORT

 

The Risk Committee hereby certifies that it has reviewed the senior executive officer (as defined in U.S. Treasury regulations) (“SEO”) compensation arrangements as well as other employee compensation arrangements, to the extent applicable, and has made reasonable efforts to ensure that such arrangements do not encourage SEOs or other employees to take unnecessary and excessive risks that threaten the value of MidSouth Bancorp, Inc.  The nature of the SEOs compensation arrangements and other employee compensation measures reviewed, including equity based compensation, non-equity compensation tied to earnings, salary and the employee stock ownership program contributions appear reasonably tied with the positive long-term performance and value of the company and do not appear to create risks that are reasonably like lylikely to have an adverse effect on the company nor to encourage manipulation of reported earnings to enhance the compensation of any employee.  It also appears that none of the compensation aggregates reviewed is near the deduction limit, for federal income tax purposes, for compensation for covered SEOs.

 

The following table sets forth compensation received from the Company for the fiscal year ended December 31, 2009,2010, by the Company’sits NEOs.