Item 2. Proposal to Approve a Non-bindingNon-Binding Advisory Resolution on the Compensation of our Named Executive Officers
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are seeking advisory shareholder approval of the compensation of our Named Executive Officers as disclosed in this Proxy Statement, commonly known as a “say-on-pay” proposal. At the 20152016 Annual Meeting, our shareholders expressed their continued support of our executive compensation programs by approving the non-binding advisory vote on our executive compensation for 2014.2015. A majority of our shareholders previously expressed a preference for holding say-on-pay votes every year. Accordingly, we intend to hold annual say-on-pay votes.
“Resolved, that the shareholders hereby approve the compensation of our Named Executive Officers as reflected in the Proxy Statement for the Annual Meeting and as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables and all related material in the Proxy Statement.”
financial reporting; review of the annual report on Form 10-K; review of quarterly condensed consolidated financial statements included in periodic reports filed with the SEC; and the review of regulatory filings included in documents filed with the SEC, including out of pocket expenses.
AUDIT COMMITTEE REPORT
Our Audit Committee is composed of five non-employee directors. The Board has made a determination that each of the members of the Audit Committee satisfies the SEC and NYSE’s requirements as to independence, financial literacy and experience applicable to Audit Committee members, and that several members have accounting or related financial management expertise. The Board of Directors has determined that Mr. James R. Davis, Jr., Chairman of the Audit Committee is an audit committee financial expert as that term is defined under regulations of the SEC. The responsibilities of the Audit Committee are set forth in our Audit Committee Charter.
The Committee reviewed and discussed the audited financial statements with management including a discussion of the quality of the accounting principles, the reasonableness of significant judgments and the clarity of disclosures contained in the financial statements. The Committee also discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 16.1301. The Committee also received the written disclosures and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent auditors the independent auditors’ independence.
The Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Committee met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting.
Based on the reviews and discussions referred to above, the Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20152016 for filing with the SEC.
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| |
| |
| By the members of the Audit Committee: |
| |
| James R. Davis, Jr., Chairman |
| Will Charbonnet, Sr. |
| Clayton Paul Hilliard |
| Milton B. Kidd, III, O.D. Timothy J. Lemoine R. Glenn Pumpelly |
| R. Glenn Pumpelly |
| |
| |
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Item 4. Such other matters as may properly come before the Annual Meeting or any adjournments
The Board of Directors knows of no other matters to be brought before the shareholders at the Annual Meeting. If other matters are presented for a vote at the meeting, the proxy holders will vote shares represented by properly executed proxies as directed by the Board of Directors.
Corporate Governance
Shareholder, Board and Committee Meetings. The following chart details the composition of the Board and its committees and also includes the number of meetings held by each group in 2015.2016. For additional information on the committees, see “Standing Board Committees” below.
| | Director | Independent Director | Holding Company Board | Bank Board |
Committees of the Holding Company Board | Independent Director | Holding Company Board | Bank Board (2) |
Committees of the Holding Company Board (1) |
Audit | Comp | Exec |
Corp Gov & Nom | Audit | Comp | Exec |
Corp Gov & Nom |
Will Charbonnet Sr. | Yes | Chair | Member | Chair | Member | |
Leonard Q. Abington | Yes | Member | | Yes | Member | |
James R. Davis Jr. | Yes | Member | Chair | Member | Member | | Yes | Member | Chair | Member | Member | |
Jake Delhomme | Yes | Member | | Yes | Member | | Chair | Member |
Clayton Paul Hilliard(1) | Yes | Member | | Member | |
Milton B. Kidd III, O.D. | Yes | Member | | Yes | Member | |
Timothy J. Lemoine | Yes | Member | | Member | Yes | Member | |
R. Glenn Pumpelly | Yes | Member | Chair | Yes | Member | Chair |
William M. Simmons | Yes | Member | | Member | Yes | Member | | Member |
Joseph V. Tortorice, Jr. | Yes | Member | | Member | | Yes | Member | | Member |
C. R. Cloutier | No | Member | | Member | | No | Member | | Member | |
Total Members as of 12/31/2015 | 11 | 13(2) | 5 | 4 | 5 | |
Number of Meetings Held in 2015 | 11 | 8 | 10 | 5 | |
Troy M. Cloutier | | No | Member | | Member | |
Number of Meetings Held in 2016 | | Number of Meetings Held in 2016 | 12 | 11 | 9 | 11 | 4 |
(1) Clayton Paul Hilliard will not be standing for reelection and will be retiringWill Charbonnet, Sr. retired as a director atand Chairman of the Annual meeting.Board effective December 31, 2016 and until such time was Chairman of the Compensation and Executive Committees and a member of the Audit and Corporate Governance & Nominating Committees.
(2) Troy M. Cloutier and Andrew G. Hargroder, M.D. are membersis also a member of the Bank Board.
All directors attended at least 75% of the aggregate of the total number of meetings of the board of directors and the total number of meetings held by all committees of the board on which he served during 2015.2016. While we encourage all Board members to attend the annual shareholder meeting, there is no formal policy as to their attendance. All of our directors attended the 20152016 Annual Meeting.
Board Independence. Each year, our Corporate Governance and Nominating Committee review the relationships that each director has with us and with other parties. Only those directors who do not have any relationships that keep them from being independent within the meaning of applicable NYSE rules and who the Committee finds have no relationships that would interfere with the exercise
of independent judgment in carrying out their responsibilities are considered to be “independent directors.” The Committee reviews a number ofseveral factors to evaluate independence, including the directors’ relationships with us and our competitors, suppliers and customers;
the relationships with management and other directors; the relationships their current and former employers have with us; and the relationships between us and other companies of which they are directors or executive officers. After evaluating these factors, the Committee determined all of the current directors, other than Mr.Messrs. C. R. Cloutier and Troy Cloutier, who isare also an employee of the Bank,executive officers, are independent within the meaning of applicable NYSE and SEC rules.
Director Training. We are committed to education and training in essential “best practices” for community banking. We provide our directors with current regulatory expectations for the execution of their duties as directors of the Company and the Bank. Our directors have the opportunity to attend education programs provided by federal banking regulators, including the Office of the Comptroller of the Currency, as well as other educational sessions directed to the due and proper execution of their duties. Such educational training includes presentations to the full Board of Directors on issues such as cybersecurity, information security, and business continuity by Jonathan Neel, our in-house Information Security Officer as well as off-site certification programs including the Certified Community Bank Director designation (CCBD), which is a collaboration of and administered by the Independent Bankers Association of Texas (IBAT) and the SW Graduate School of Banking Foundation (SWGSB). Currently, over half of our Board members have obtained the CCBD designation. In addition, Board members take an active role in the monitoring and development of information security, cybersecurity strategy, and risk assessment programs at the Bank.
Leadership Structure and Risk Management. The Board believes that our leadership structure, with separate persons serving as our Chairman of the Board and President and Chief Executive Officer (“CEO”), of the Company, as well as a separate President and CEO of the Bank, is the optimum leadership structure for our Company.structure. We believe this structure recognizes the differences between the twovarious roles. Our Company President and CEO serves as a valuable advisor, business developer and leader for the Company; our Bank President and CEO is responsible for setting the strategic direction for the Company and the day-to-day leadership and performance of the Company, whileBank and for setting the strategic direction of the Bank; and our Chairman of the Board provides guidance to our CEOboth individuals and sets the agenda and presides over meetings of the full Board of Directors as well as all regularly scheduled Executive Sessions of non-management/independent 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 ensure that the Board is 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 Bank’s Special Assets Committee. In addition, the Chairman of the Company’s Audit Committee also chairs the Bank’s Risk Committee. The Bank’s Risk Committee assures that we 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.
Shareholder and Interested Party Communications. Shareholders and all interested parties may communicate directly with the Board, the Chairman of the Board or the individual chairmen of committees by writing to them at P.O. Box 3745, Lafayette, Louisiana 70502. We will forward, and not screen, any mail we receive that is directed to an individual, unless we believe the communication may pose a security risk.
Code of Ethics. The Board has adopted a Code of Ethics and Corporate Governance Principles for our directors, officers and employees to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters. Copies of both documents are posted on the Investor Relations page of our website at MidsouthBank.comM.idsouthBank.com. A printed copy of our Code of Ethics and Corporate Governance Principles are available to any shareholder that requests it in writing from our Corporate Secretary. In addition, should there be any waivers of or amendments to these documents, those waivers or amendments will be posted on our website.
Standing Board Committees. The Board has an Audit Committee, an Executive Committee, a Compensation Committee, and a Corporate Governance and Nominating Committee. Each of these committees operates pursuant to a charter. The charters are available on the Investor Relations page of our website at MidsouthBank.comM.idsouthBank.com. A printed copy of each document is also available to any shareholder that requests it in writing from our Corporate Secretary.
Audit Committee. The responsibilities of the Audit Committee are set forth in our Audit Committee Charter. The Board has determined that each of the Audit Committee members has the requisite expertise generally required of an audit committee member under NYSE’s requirements as to independence, financial literacy and experience applicable to Audit Committee members and that the Chairman of the Audit Committee, Mr. Davis, is an “audit committee financial expert” as defined in Item 407(d) (5) of SEC Regulation S-K.
Executive Committee. The responsibilities of the Executive Committee are set forth in our Executive Committee Charter. Its duties include shareholder relations, Bank examination and SEC reporting.compliance.
Compensation Committee. The responsibilities of the Compensation Committee are set forth in our Compensation Committee Charter. The board has made a determination that each of the members of the Compensation Committee satisfies the NYSE’s independence requirements for Compensation Committee members. It is responsible for evaluating the performance and approving the compensation of our executive officers and administering our 2007 Omnibus Incentive Compensation Plan.
Corporate Governance and Nominating Committee. The responsibilities of the Corporate Governance and Nominating Committee are set forth in our Corporate Governance and Nominating Committee Charter. It is responsible for making determinations of director independence, assessing overall and individual Board performance and recommending director candidates, including recommendations submitted by shareholders.
Director Nominations. It is the Corporate Governance and Nominating Committee’s policy that candidates for director have high personal and professional integrity, proven ability and judgment, and skills and expertise appropriate for serving the long-term interests of our shareholders. While we have not adopted a written diversity policy with respect to the composition of our Board, when selecting new, non-management candidates to serve on the Board, the Corporate Governance and Nominating Committee seeks directors with diverse experiences and perspectives. The committee considers, among other things, diverse backgrounds, professional experience, education and community involvement, as well as racial and gender diversity that would benefit the Board’s deliberations and decisions. The Committee’s process for identifying and evaluating nominees is as follows: (1) in the case of incumbent directors whose terms of office are set to expire, the Committee reviews their service, including the number of meetings attended, level of participation, quality of performance, and any related party transactions with us during the applicable time period; and (2) in the case of new director candidates, appropriate inquiries into their backgrounds and qualifications are made after considering the needs of the Board. The Committee meets to discuss and consider such candidate’s qualifications, including whether the nominee is independent within the meaning of NYSE rules, and then recommends a candidate to the Board. In seeking potential nominees, the Committee uses its and management’s network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm, although to date it has not done so.
The Committee will consider director candidates nominated by shareholders who follow the procedures set out in Article IV (H) of our Articles of Incorporation. In order toTo nominate a candidate for election as a director, pursuant to Article IV (H), unless otherwise required by law, the nominating shareholder individually, or together with a nominating shareholder group, must hold at least 3% of the total voting power of the Company’s securities that are entitled to be voted on the election of directors. In addition, such securities must have been held continuously for at least three years as of the date of the notice of such nomination and must continue to be held through the date of the subject election of directors. In addition, any shareholder or group that makes a nomination must confirm that he, she or they are not holding any of the Company’s securities with the purpose, or with the effect, of changing control of the Company. Further, any shareholder nominee for election as a director must also meet the objective criteria for “independence” of the NYSE.
Pursuant to Article IV (H), any such shareholder nomination delivered to the Company should include the following:
as to each person whom you propose to nominate:
| |
- | his or her name, age, business address, residence address, principal occupation or employment, |
| |
- | the number of shares of our stock of which the person is the beneficial owner, and |
| |
- | 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 Exchange Act; and |
as to the nominating shareholder or nominating shareholder group:
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- | the name of the shareholder making such nomination, or if a group, the name of each shareholder in such nominating group, |
| |
- | the business address, or if none, residence of the nominating shareholder or members of a nominating group, |
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- | the number of shares of our stock of which such shareholder or nominating group are the beneficial owner, |
| |
- | a statement that the nominee, if elected, consents to serve on the Board of Directors, |
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- | the disclosures regarding the director nominee that would be required by Schedule 14A under the Exchange Act, |
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- | a description of any agreements, arrangements or relationships between the nominating shareholder or nominating group giving the notice and the nominee, |
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- | a statement regarding whether the nominating shareholder or any member of the nominating group has been involved in any litigation adverse to the Company or any of its subsidiaries within the past ten years and, if so, a description of such litigation, and |
| |
- | a statement that, to the best of the nominating shareholder’s or nominating group’s knowledge, such nominee meets the Company’s director qualification standards then in effect. |
Shareholder nominations for election must be provided to the Company no earlier than 150 calendar days, and no later than 120 calendar days, before the anniversary of the date that we mailed our proxy materials for the prior year’s Annual Meeting, except that, if we did not hold an Annual Meeting during the prior year, or if the date of the meeting has changed by more than 30 days from the prior year (or if we are holding a special meeting or conducting an election of directors by written consent) then such nomination must be transmitted to us within a reasonable time before we mail proxy materials for such meeting.
An inspector, not affiliated with us and appointed by our Corporate Secretary, will determine whether the notice provisions described above were met. If they determine that you have not complied with Article IV (H), your nomination will be disregarded. The foregoing is only a summary of the shareholder nomination procedures included in Article IV (H) of our Articles of Incorporation, is not complete and is qualified in its entirety to the full text of Article IV (H). You are encouraged to read the full text of Article IV (H) prior to submitting any nomination for election as a director of the Company.
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.
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.
Shareholder Proposals. Eligible shareholders who want to present a proposal qualified for inclusion in our proxy materials for the 20172018 Annual Meeting must forward such proposal to our Secretary at the address listed on the first page of this Proxy Statement in time to arrive before December 14, 2016.12, 2017. Proxies may confer discretionary authority to vote on any matter for which we receive notice after February 26, 2017,25, 2018, without the matter being described in the Proxy Statement for our 20172018 Annual Meeting.
Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities and Exchange Act of 1934 requires our directors, executive officers and 10% shareholders to file with the SEC initial reports of ownership and reports of changes in ownership of our equity securities, and to furnish us with copies of all the reports they file. On the basis ofBased on reports and representation of our directors, executive officers, and greater than 10% shareholders, all required reports were filed timely during 2015.2016.
Compensation Committee Interlocks and Insider Participation. The Compensation Committee is composed entirely of independent directors. None of our executive officers has served on the board of directors or compensation committee (or other committee serving an equivalent function) of any other entity, whose executive officers served on our Board of Directors or Compensation Committee. None of the members of the Compensation Committee were an officer or other employee of our Company or any of our subsidiaries during 2015,2016, or is a former officer or other employee of our Company or any of our subsidiaries.
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SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
Security Ownership of Management
The following table shows as of March 31, 2016,30, 2017, the beneficial ownership of our common stock by each director, nominee, and each NEO, and by all directors, nominees, and Executive Officers as a group.
| |
Name |
Amount and Nature of Beneficial Ownership(1) |
Percent of Class |
Amount and Nature of Beneficial Ownership (1) |
Percent of Class |
Directors and Nominees: | | | | |
Will Charbonnet, Sr. | 199,609(1,2) | 1.76 | % | |
Leonard Q. Abington | 821,980(3) | 7.23 | % | 821,980 (2) | 7.21 | % |
C. R. Cloutier | 436,923(1,4) | 3.84 | % | 403,665 (1,3) | 3.54 | % |
Troy M. Cloutier | | 74,714 (1,4) | * |
|
James R. Davis, Jr. | 82,892(1,5) | * |
| 84,153 (1,5) | * |
|
Jake Delhomme | 31,650 (6) | * |
| 31,650 (1,6) | * |
|
Clayton Paul Hilliard | 178,870(7) | 1.57 | % | |
Milton B. Kidd, III, O.D. | 248,658(8) | 2.19 | % | 249,231 (7) | 2.19 | % |
Timothy J. Lemoine | 39,084(9) | * |
| 40,615 (8) | * |
|
R. Glenn Pumpelly | 90,473(1,10) | * |
| 90,473 (1,9) | * |
|
William M. Simmons | 239,217(11) | 2.10 | % | 240,861 (10) | 2.11 | % |
Joseph V. Tortorice, Jr. | 134,462(1,12) | 1.18 | % | 137,637 (1,11) | 1.21 | % |
Named Executive Officers: | | | | |
Jeffery L. Blum | 5,500 (13) | * |
| 9,856 (12) | * |
|
Troy M. Cloutier | 67,219(14) | * |
| |
James R. McLemore | 24,286(15) | * |
| 29,568 (13) | * |
|
All directors, nominees, and Executive Officers as a group (14 persons) | 2,646,762 | 23.27 | % | |
All directors, nominees, and Executive Officers as a group (12 persons) | | 2,261,588 | 19.84 | % |
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* Less than 1%.
| |
(1) | Stock held by our Directors’ Deferred Compensation Plan & Trust (the “DDCP”) is beneficially owned by its Plan Administrator, our Executive Committee, the members of which could be deemed to share beneficial ownership of all Stock held in the DDCP (356,969(281,463 shares or 3.14%2.47% as of March 31, 2016)30, 2017). For each director, the table includes the number of shares held for his or her account only, while the group figure includes all shares held in the DDCP. Stock held by our Employee Stock Ownership Plan (the “ESOP”) is not included in the table, except that shares allocated to an individual’s account are included as beneficially owned by that individual. Shares which may be acquired by exercise of options currently exercisable or that will become exercisable within 60 days of March 31, 201630, 2017 (“Current Options”) are deemed outstanding for purposes of computing the percentage of outstanding Common Stock owned by persons beneficially owning such shares and by all directors and Executive Officers as a group but are not otherwise deemed to be outstanding. |
| |
(2) | Includes 5,556 shares of common stock into which the 1,000 shares of Series C Preferred Stock that are beneficially owned by Mr. Charbonnet may be converted into and 23,792 shares as to which he shares voting and investment power. |
| |
(3)
| Includes 45,307 shares as to which Mr. Abington shares voting and investment power, including 19,179 shares of common stock into which the 3,452 shares of Series C Preferred Stock may be converted into and 327,382 shares of common stock into which the 58,924 shares of Series C Preferred Stock that are beneficially owned by Mr. Abington may be converted into. |
| |
(4)(3)
| Mr. C. R. Cloutier and his wife, Brenda Cloutier, have pledged 41,000 shares to Whitney Bank securing a loan in the amount of $281,591 with a balance of $247,218 for their daughter’s daycare business. Additionally, Mr. and Mrs. Cloutier have pledged 16,979 shares to First National Banker’s Bank to secure a personal loan in the amount of $130,000 with a balance of $32,114. In addition, includes 75,248Includes 59,448 shares as to which he shares voting and investment power and 28,34035,425 shares issuable upon the exercise of Current Options. |
(4) Includes 43,139 shares as to which he shares voting and investment power. Additionally, he has 19,943 shares issuable upon the exercise of Current Options.
| |
(5) | Mr. Davis has pledged 27,375 shares to Fidelity Homestead SavingsTri Parish Bank as partial security on a $250,000$500,000 line of credit with a balance of $247,000. The same shares are partial security and pledged to Tri Parish Bank for a $140,000 loan with an outstanding balance of $140,000.$400,000. |
| |
(6) | Includes 31,650 shares as to which he shares voting and investment power. |
| |
(7) | Mr. Hilliard has pledged 43,672 shares to MidSouth Bank as partial security on a $1,000,000 line of credit with a balance of $270,000. In addition, includes 2,581 shares as to which he shares voting and investment power. |
| |
(8)
| Includes 900 shares of common stock into which the 162 shares of Series C Preferred Stock that are beneficially owned by Dr. Kidd may be converted into and 47,828into. |
| |
(8) | Includes 18,532 shares as to which he shares voting and investment power. |
| |
(9) | Includes 18,532 shares as to which he shares voting and investment power. |
| |
(10)
| Includes 90,473 shares as to which he shares voting and investment power. |
| |
(11)(10) Includes 4,650 shares as to which he shares voting and investment power. | Includes 4,650 shares as to which he shares voting and investment power. |
| |
(12)
| Includes 5,556 shares of common stock into which the 1,000 shares of Series C Preferred Stock he shares voting and investment power may be converted into and 111,805 shares as to which he shares voting and investment power. |
| |
(13)
| Includes 3,500 shares issuable upon the exercise of Current Options. |
| |
(14)
| Includes 41,976 shares as to which he shares voting and investment power. Additionally, he has 14, 854 shares issuable upon the exercise of Current Options. |
| |
(15)
| Includes 17,024 shares issuable upon the exercise of Current Options. |
(11) Includes 5,556 shares of common stock into which the 1,000 shares of Series C Preferred Stock he shares voting and investment power may be converted into and 111,805 shares as to which he shares voting and investment power.
(12) Includes 7,000 shares issuable upon the exercise of Current Options.
(13) Includes 21,280 shares issuable upon the exercise of Current Options.
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18
The following table shows the number of shares in the Directors Deferred Compensation Plan and Trust (“DDCP”) and the Employee Stock Ownership Plan (“ESOP”), and the number of shares subject to Current Options that have been included in the above ownership table (see footnote 1 above).
| |
Name | DDCP | ESOP |
Current Options | DDCP | ESOP |
Current Options |
Directors and Nominees: | | |
Leonard Q. Abington | -- | -- |
Will Charbonnet, Sr. | 58,815 | -- | |
C. R. Cloutier | 71,613 | 41,222 | 28,340 | 73,555 | 43,799 | 35,425 |
Troy M. Cloutier | | -- | 9,631 | 19,943 |
James R. Davis, Jr. | 46,519 | -- | 47,780 | -- |
Jake Delhomme | -- | -- |
Clayton Paul Hilliard | 26,763 | -- | |
Milton B. Kidd, III, O.D. | 21,115 | -- | 21,688 | -- |
Timothy J. Lemoine | 8,477 | -- | 8,708 | -- |
R. Glenn Pumpelly | -- | -- |
William M. Simmons | 60,627 | -- | 62,271 | -- |
Joseph V. Tortorice, Jr. | 17,101 | -- | 20,276 | -- |
Named Executive Officers: | | |
Jeffery L. Blum | -- | 3,500 | -- | 856 | 7,000 |
Troy M. Cloutier | -- | 8,389 | 14,854 | |
James R. McLemore | -- | 3,069 | 17,024 | -- | 4,095 | 21,280 |
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_______________________20
Security Ownership of Certain Beneficial Owners
The following lists the only persons, other than our director Mr. Abington shown in the prior table, known to us as of March 31, 201630, 2017 to beneficially own more than five percent of our stock.
|
| | | | |
|
Common Stock Beneficially Owned as of Record Date |
Name and Address Of Beneficial Owner |
Amount |
Percent of Class(1) |
MidSouth Bancorp, Inc., Employee Stock Ownership Plan, ESOP Trustees and ESOP Administrative Committee(2) P. O. Box 3745 Lafayette, LA 70502
|
720,552 |
6.34% |
DePrince Race & Zollo Inc. 250 S Park Ave Ste 250 Winter Park, FL 32789
|
598,085(3) |
5.26% |
|
| | |
|
Common Stock Beneficially Owned as of Record Date |
Name and Address Of Beneficial Owner |
Amount |
Percent of Class (1) |
Jacobs Asset Management, LLC 11 E. 26th St., Ste. 1900 New York, NY 10010 |
806,631 (2) |
7.07% |
MidSouth Bancorp, Inc., Employee Stock Ownership Plan, ESOP Trustees and ESOP Administrative Committee (3) P. O. Box 3745 Lafayette, LA 70502 |
740,360 |
6.49% |
DePrince Race & Zollo Inc. 250 S. Park Ave., Ste. 250 Winter Park, FL 32789 |
630,793 (4) |
5.53% |
(1) Based on 11,373,39911,401,604 shares outstanding as of March 31, 2016.30, 2017.
(2) As reported on Schedule 13F, Jacobs Asset Management, LLC has shared voting power and shared dispositive power with respect to the shares.
(3) The Administrative Committee directs the Trustees how to vote the approximate 114,067 unallocated shares in the ESOP as of December 31, 2016. Voting rights of the shares allocated to ESOP participants’ accounts are passed through to them. The Trustees have investment power with respect to the ESOP’s assets, but must exercise it in accordance with an investment policy established by the Administrative Committee. The Trustees are Irving Boudreaux, Regional President, Stephanie Burge, Financial Reporting Accountant, and Susan Benoit, Bank Officer. The Administrative Committee consists of the following three Bank Officers: Brenda Thibeaux, Monique Bradberry, and Susan Haydel.
(3)(4) As reported on Schedule 13F, DePrince Race & Zollo Inc., has shared voting power and shared dispositive power with respect to the shares.
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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 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. Pursuant to this policy, the Audit Committee (or with respect to compensation matters, the Compensation Committee) will review and, if appropriate, approve any transaction in which the Company is or will be a party of and in which 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.
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21
COMPENSATION DISCUSSION AND ANALYSIS
The following Compensation Discussion and Analysis (“CD&A”) may contain statements regarding current and future individual and Company performance targets and/or goals. We have disclosed this information in the limited context of our compensation programs; therefore, these statements should not be interpreted to be management’s expectations or estimates of results or other guidance. We specifically caution investors not to apply such statements to other contexts.
Executive Summary
We have prepared this CD&A to assist you in understanding our compensation programs. It is intended to explain the philosophy underlying our compensation strategy and the fundamental elements of the compensation we paid to our Chief Executive Officer, Chief Financial Officer, and other individuals included in the Summary Compensation Table for 20152016 (collectively, the “NEOs”). Our compensation programs have been designed to reward performance in order to align the NEO’s interests with that of our shareholders. Given our operation in the highly-regulated banking industry, our compensation programs must also comply with the executive compensation disclosures outlined by federal agencies that oversee our operations, including the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. In recent years, such regulations have provided us with less flexibility in establishing our compensation programs than what others in the general industry may experience.
Our financial performance over the past several years has been impacted by the disruptions in the national economy and the resulting financial uncertainty that affected the banking industry. The recent sharp decline in energy prices added additional pressure on the market value of our common stock in 2015. MidSouth Bank began as an energy lender during the oil downturn of the 80’s and we have a strong thirty year track record of lending to this industry. We have seen many ups and downs in the oil and gas industry over the years, and continue to communicate with our customers who provide valuable insight on the present energy cycle. In the fourth quarter of 2014, as a prudent risk management strategy, we established a special reserve for potential future energy loan losses. At December 31, 2015, the energy-related reserve totaled $6.8 million or approximately 2.6% of energy related loans. Our energy-related net charge-offs totaled $1.6 million for 2015. We will continue to monitor credit exposure within the oil and gas portfolio and we will also continue to apply conservative underwriting practices that have served us well over our thirty year history.
Highlights for 20152016 include:
Our earnings available to common shareholders decreased $8.1totaled $6.6 million, from $18.4a $3.7 million at December 31, 2014 todecrease from $10.3 million at December 31, 2015. The decrease resulted primarily from an $8.3a $4.2 million decrease in revenues, a $2.2 million increase in dividends paid on our Series B preferred stock and an increase of $1.4 million of noninterest expense. These reductions to earnings were partially offset by a $3.3 million decrease in the provision for loan losses. Additionally, 2014 net earnings included $3.0 million of executive officer life insurance proceeds. Pre-tax, pre-provision earningslosses and a $726,000 decrease in income tax expense.
Consolidated assets totaled $29.5 million in 2015$1.9 billion at December 31, 2016 and 2015. Net loans totaled $1.3 billion at December 31, 2016 compared to $32.1 million in 2014.
Total loans decreased $20.8 million, or 1.62%, for the year ended$1.2 billion at December 31, 2015. The decrease in the loan portfolio during 2015 occurred primarily in the commercial and industrial and consumer loan portfolios.
Our stable core deposit base, which excludes time deposits, grew $47.3 million to end the yearremained constant at $1.4 billion and accounted for 89.1% of deposits at December 31, 2016 and 2015. Core deposits accounted for 90.4% and 89.1% of total deposits, respectively.
Our coreThe FTE net interest margin decreased 1914 basis points, from 4.39% in 2014 to 4.20% in 2015. The reported FTE net interest margin, including purchase accounting adjustments, decreased 29 basis points, from 4.63% for the year ended December 31, 2014 to 4.34% for the year ended December 31, 2015.2015 to 4.20% for the year ended December 31, 2016.
Our capital levels remain strong with Tier 1 leverage capital of 10.10%10.11% at December 31, 2015.2016. Tier 1 risk-based capital and total risk-based capital ratios were 13.25%13.02% and 14.50%14.28%, respectively. Tier 1 common equity to total risk-weighted assets at December 31, 20152016 was 8.91%8.81%.
We will continue our focus on growth in core revenues, loan production and stable core margins to support our strong balance sheet foundation in 2016. This solid foundation strengthened by strategic objectives for revenue enhancement and expense reduction combined with progress made in 2015 formed an important basis for the Compensation Committee’s (the “Committee”) executive compensation decisions.
Overview of Elements of Compensation
Historically we have used the following elements as part of our compensation program for our executive officers:
Base Salary – Fixed base pay reflective of each officer’s position, individual performance, experience, and expertise. While not at risk like incentive compensation, increases in base salary increases are also based on aligning our NEOs with peers of our asset size as well as tied to our performance.
Annual Incentives – Generally cash awards based upon the achievement of defined performance targets under the Company’s 20152016 Annual Incentive Compensation Plan (the “AICP”).
Equity-based Awards – Equity incentive awards under our 2007 Omnibus Incentive Plan to encourage and reward long-term performance and retention.
Discretionary Bonus Awards – Payment of discretionary bonuses provides flexibility to reward levels of performance that might not otherwise be reflected in other established incentive awards.
Retirement Benefits – Includes the Employee Stock Ownership Plan (the “ESOP”), 401(k) retirement plan, and, with respect to Mr. C. R. Cloutier, the Executive Indexed Salary Continuation Agreement (the “EISCP”) and MidSouth Bank Officers’ Supplemental Deferred Compensation Plan (the “OSDCP”).
Other Compensation – Certain executives also receive additional benefits and perquisites such as split dollar life insurance, supplemental term life insurance, supplemental disability insurance, company car, cell phone, Board of Director fees, and club memberships.
In establishing the 20152016 compensation program, base salary and annual incentives comprised the largest part of potential total compensation payable to the executive officers. In determining annual compensation, we consider a number ofseveral factors, including our goals for the upcoming year and how the various elements can be used to help achieve such goals in a prudent manner, the total compensation paid in the prior year, and the elements utilized for such compensation. In addition, regulatory restrictions on the ability to utilize certain elements also impacted our decisions.
Objectives of Our Compensation Programs
Our culture continues to strive for performance while prudently managing risks. We believe it is in the best interest of our shareholders and the Company to provide competitive compensation to attract and retain the most qualified executive officers with demonstrated leadership abilities that will secure our future. The Compensation Committee (the “Committee”) has the responsibility for continually monitoring the compensation paid to our NEOs as well as other executive employees. The Committee believes that compensation of our executive officers should encourage creation of shareholder value and achievement of strategic corporate objectives, while proactively managing risks associated with all such compensation programs impacting the Company, its subsidiaries, and its shareholders. Specifically, the Committee is committed to ensuring that the total compensation package for our executive officers will serve to:
attract, retain, and motivate outstanding executive officers who add value to us based on individual and team contributions;
provide a competitive salary structure and asset size in all markets where we operate;
align the executive officers’ interests with the long-term interests of our shareholders to enhance shareholder value; and
ensure that compensation programs do not encourage excessive risk taking or pose a threat to the safety and soundness of the organization.
Process for Determining Executive Officer Compensation
The Committee annually reviews and recommends the levels,compensation level, performance goals, and strategic objectives for the CEO to our Board which hasfor final approval of the CEO’s compensation.approval. The Board also has the authority at all times to make decisions to withhold incentive compensation awards, earned or unearned, in the event of unforeseen occurrences that could threaten the financial viability of the organization and its shareholders. The Committee consults with the CEO on the compensation levels of the other executive officers. Based on these discussions, the Committee, along with the CEO, recommends the compensation levels for the other NEOs to the Board. The Committee has the authority to retain separate advisors, including a compensation consultant, to assist the Committee in carrying out its responsibilities. In 2015,2016, the Committee did not engage any compensation consultants or other third party consultants.
At the 20152016 Annual Meeting, the shareholders approved the 20142015 compensation of our NEOs with 97%92% of the votes cast. After considering this substantial level of approval as well as the Company’s financial and operational performance over the past several years, the Committee determined that the executive compensation program was working as intended and did not make any significant changes to the program for 2015.2016 other than with respect to Mr. C.R. Cloutier who entered an Employment Agreement in connection with the transition of his roles and responsibilities as discussed further below.
In connection with establishing the 20152016 compensation program, the salaries of the NEOs were reviewed to help the Committee determine if our compensation arrangements were competitive in order to meet our goal of attracting, retaining and motivating our executive officers. The Committee reviewed limited publicly available data on SNL Financial from a few banks of similar asset size in Texas, Louisiana and Alabama. The committee also considered salary administration information prepared by regional resources including Independent Bankers Association of Texas, Louisiana Bankers Association, and Texas Bankers Association as well as McLagan whose reports were tailored to financial institutions in the $1 to $3 billion asset size range and within similar geographic locations as the Company. The Committee did not use this data to benchmark the total compensation, or any individual element thereof. While the Committee recognized the benefit of using this data to gauge the competitiveness of the Company’s compensation programs, the Committee recognizedconcluded that each financial institution is unique and that significant differences between institutions in regard toregarding executive compensation practices exist.
Overview of 20152016 Performance and Compensation
Base Salary. We believe it is necessary and prudent to pay a portion of total compensation in the form of a competitive fixed base salary. We believe the payment of a fixed base salary to our executive officers helps maintain productivity by providing a guaranteed and dependable base amount of income. In addition, we believe utilizing base salary as a large portion of the total potential compensation helps mitigate risks as the executives do not have to meet certain operational incentives in order to receive the payments.
It is our goal to set specific base salary levels which appropriately reflect the role and responsibility of the executive officer. During this process the Committee considers the abilities, qualifications, accomplishments, and prior work experience of the individual as well as the overall competitiveness of the compensation package when determining the final recommendation to the Board, including whether or not any changes to annual base salary should be made from the prior year. Salary changes from 2014 to 2015 are shown inThe Committee approved the table below.following 2016 NEO base salary amounts with an effective date of June 1, 2016.
| | Named Executive Officer |
2014 Base Salary | 2015 Base Salary |
2015 Base Salary | 2016 Base Salary |
C. R. Cloutier | $425,000 | $441,000 | $441,000 | $441,000 (1) |
James R. McLemore | $240,000 | $252,500 | $252,500 | $257,500 |
Troy M. Cloutier | $255,000 | $280,000 | $280,000 | $305,000 |
Jeffery L. Blum | $220,000 | $225,000 | $225,000 | $230,000 |
(1) Effective November 1, 2016, Mr. C. R. Cloutier’s salary was reduced to $355,000 in connection with his transition from Chief Executive Officer to Senior Executive Advisor of MidSouth Bank, N.A.
In recommending the increases in base salary for 20152016 set forth above, the Committee found that some of our NEOsMr. Troy Cloutier’s base salaries, Messrs. C.R. Cloutier and Troy Cloutier,salary fell below the midpoint range of executives with similar responsibilities at similarly sized financial institutions based on the Committee’s review of the information described above. The Committee felt these increases werethis increase was appropriate in orderefforts to bring the salaries of those individualshis salary more in line with the market rate for theirhis position and experience. For Messrs. McLemore and Blum, the Committee considered their added responsibilities and increased supervisory duties due to the death of our Former Chief Operating Officer in 2014 and the long term succession planning of the Company in determiningfelt that the raisesincreases, which were appropriate.in line with cost of living or slightly above and averaged between 2½-3%, were warranted.
Annual Incentives. We believe annual incentives are an important element of executive officers’ compensation because they provide additional incentive and motivation to the participants to lead us in achieving success. The AICP was designed to increase shareholder value by focusing the executive officers on our goals for the year and reward them for achievement of those goals. Payments under the AICP are based on a percentage of the participant’s base salary including 5% for achievement of goals at the threshold level and 10% for achievement of goals at the target level. At its discretion, the Committee may pay awards above the 10% of base salary level if results are above the target level.
Awards under the AICP are tied to the achievement of goals in up to three categories: overall Bank goals, regional/departmental goals, and/or individual goals. The intent is to provide a plan that is based on what we believe are industry best practices and to provide motivation for each officer to
achieve goals relative to overall Bank performance (thereby aligning their interests with those of our shareholders) and goals related to an officer’s specific job function. We believe the AICP also helps mitigate risks by providing each officer with three company-wide goals as opposed to a single goal. Having multiple goals helps ensure there is an appropriate balance of objectives, which otherwise could lead to performance inconsistencies within other areas of the organization.
For all NEOs, 100% of eligible award payout dollars under the 20152016 AICP were based on the achievement of our overall Company’s goals, which were improvements in net income (80% weighting), net core deposit growth (10% weighting), and net loan growth (10% weighting). The AICP specifies that the net income goal must be reached to approve the payout of incentive compensation under the plan.
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Performance Measure |
Threshold Level |
Target Level |
Net income | $18.67 9.8 million | $18.6710.9 million |
Net core deposit growth | $57.2654.0 million | $63.6360.0 million |
Net loan growth | $125.9368.1 million | $139.9275.7 million |
The Committee reviewed the Company’s 20152016 financial performance and determined that the Company had not achieved the target net income goal, which was defined as the forecasted 20152016 net income approved by the Board of Directors in January 2015;2016; therefore, there waswere no payoutpayouts in 20152016 under the AICP.
Equity-based Awards.
On August 17, 2015, awards of restricted stock were granted to the NEOs on a discretionary basis pursuant to our 2007 Omnibus Incentive Plan. The restricted stock awards include a three-year cliff vesting period from the date of grant and are nontransferable and subject to forfeiture until vested. TheNo equity-based awards were granted based on the Committee’s assessment of each officer’s individual performance in 2014, expected future contributions, and were distributed in a prorated manner proportionate2016 to a hierarchy of responsibilities of the NEOs. These equity-based awards are intended to retain executive officers and reward them for long-term stock price appreciation while providing some value to the recipient even if the stock price declines. They also serve to balance the riskier nature of stock options and provide a significant incentive to stay with the company.
Discretionary Bonuses. NoThe following discretionary bonuses were paid in 2015.2016 to NEOs for the recognition of the increased responsibilities and significant time commitment to Special Assets Committee in connection with the increase in classified assets in the Bank.
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Named Executive Officer |
Discretionary Bonus |
C. R. Cloutier | $10,000 |
James R. McLemore | $10,000 |
Troy M. Cloutier | $10,000 |
Jeffery L. Blum | $10,000 |
Retirement Benefits. Executive officers are eligible to participate in our 401(k) retirement plan, which is a Company-wide, tax-qualified retirement plan. The intent of this plan is to provide eligible employees with a tax-advantaged savings opportunity for retirement. We sponsor this plan to help employees 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. The 401(k)
plan allows for us to make a discretionary matching contribution. Matching contributions made to each participating NEO are included in the “All Other Compensation Table” below.
For 2015,2016, an EISCP wasand OSDCP were in place for Mr. C. R. Cloutier. The agreement providesagreements provide that upon the executive officer reaching normal retirement age, the executive officer can elect to receive paymentpayments of amounts as defined in the agreementagreements and presented under the “Nonqualified Deferred Compensation” section below.
To encourage ownership by all employees and therefore tie their interest to the interests of the shareholders, we established 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. Information with respect to contributions made to each NEO under the ESOP is included in the “All Other Compensation Table” below.
Other Compensation. Certain executives receive additional benefits and perquisites such as split dollar life insurance, supplemental term life insurance, supplemental disability insurance, company car, moving expenses, cell phone, Board of Director fees, and club memberships.
We maintain a split dollar life insurance arrangement with Mr. C. R. Cloutier. This arrangement provides benefits to the executive officer’s designated beneficiary in the event of the executive officer’s death.
We provideIn 2016, we provided Messrs. C. R. Cloutier, McLemore, T. Cloutier, and Blum with reimbursements for an individual supplemental term life insurance policy payable to a beneficiary of their choicechoice. We also provided Messrs. McLemore, T. Cloutier, and Blum with reimbursements for a supplemental long-term disability policy.
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 areis negotiated with the providers of such benefits and the executive officers contribute to the cost of the benefits.
Severance Benefits Plan. The purpose of the Severance Benefits Plan is to provide temporary and short-term unemployment-type benefits to eligible employees whose employment is terminated under specific conditions described in the plan. The Committee adopted the plan to remain competitive with other financial institutions, many of which provide benefits similar tolike those provided under the Severance Benefits Plan. For additional information on payments to the NEOs that may be required under the Severance Benefits Plan, please see “Potential Payments upon Termination or Change-in-Control” below.
Employment Agreements. On October 19, 2016, the Company and the Bank, collectively “Midsouth”, entered an employment agreement with Mr. C. R. Cloutier. Pursuant to the terms of the employment agreement, Mr. Cloutier continued to serve as Chief Executive Officer of the Bank until November 1, 2016 and thereafter transitioned to the position of Senior Executive Advisor of the Bank. Mr. C.R. Cloutier continues his position as President and Chief Executive Officer of the Company.
The employment agreement provides that Mr. C.R. Cloutier will receive a minimum annual salary amount of $441,000 until November 1, 2016; $355,000 during the periods of November 1, 2016 through October 31, 2017; $355,000 during the periods of November 1, 2017 through October 31, 2018; $250,000 during the period of November 1, 2018 through October 31, 2019; and $250,000 during the period of November 1, 2019 through October 31, 2020, provided that MidSouth will not be obligated to pay any sum in excess of that which is allowed in accordance with any regulatory limitations. The term of the employment agreement expires on October 31, 2020.
The employment agreement with Mr. C.R. Cloutier further provides should the employment of Mr. Cloutier be terminated by MidSouth for any reason, with or without cause, MidSouth will be obligated to pay the annual amounts of salary as set out above, beginning six months after the termination date. Should Mr. Cloutier resign before the end of the term, for any reason, the obligation of MidSouth to pay any continuing compensation will end effective immediately on the date of resignation. Additionally, should Mr. C.R. Cloutier violate any restrictive covenant obligations, MidSouth’s obligation to continue payments shall end effective immediately upon the date of the breach. The Agreement provides restrictive covenant obligations that, among other things, prohibit Mr. Cloutier from competing with or soliciting customers from MidSouth within a designated area during the term of his employment and for two years thereafter. If there is a change in control (as defined in the employment agreement) of MidSouth resulting in the termination of Mr. C.R. Cloutier, MidSouth is required to accelerate payment of the entire remaining balance of the compensation obligation in one lump sum.
The Company currently has no activedoes not have employment agreements in place forwith any of theother NEOs. The Company’s Board will evaluate employment agreements as needed in the future.
Financial Restatement. We adhere to Section 304 of the Sarbanes-Oxley Act of 2002 which requires a Company’s chief executive officer and chief financial officer to give back certain incentive based or equity based compensation received in the event such company is required to restate its financial statements. We have also structured, with intention to modify as needed, our internal policies related to regulatory compliance guidelines in the event that recovery of erroneously awarded compensation would be necessary. In addition to the Sarbanes-Oxley Act of 2002, we anticipate additional claw back rules to be implemented pursuant to the Dodd-Frank Wall Street Reform and Recovery Act.
Stock Ownership Requirements. The Committee does not maintain a policy relating to stock ownership guidelines or requirements for our executive officers. The Committee does not believe it is necessary to impose such a policy on the executive officers. Currently, the NEOs as a group own 4.87%4.54% of our stock. If circumstances change, the Committee will review whether such a policy is appropriate for our executive officers.
Trading in the Company’s Stock Derivatives. As part of the Company’s Code of Ethics Policy, our Board of Directors and executive officers are prohibited from hedging their ownership of MidSouth Bancorpthe Company’s stock, including trading in publicly-traded options, puts, calls, or other derivative instruments related to MidSouth Bancorpthe Company’s stock or debt, as well as from engaging in short sales of the same. We are not aware that any of the executive officers have entered into these types of arrangements.
Tax Deductibility of the Named Executive Officers’ Incentive and Equity Compensation.
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1.0 million paid to a corporation’s CEO and its four other most highly compensated officers.
Tax and Accounting Implications. We consider the tax and accounting implications regarding the delivery of different forms of compensation. We believe that the most efficient form of compensation for the executive officers is cash; therefore, we place a greater emphasis on cash compensation over other forms (i.e., equity).
§409A Compliance. All compensation plans and other relevant documents were reviewed and modified as needed to comply with Internal Revenue Code - Section §409A requirements.
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COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management.
Based upon such review, the related discussions and such other matters deemed relevant and appropriate to the Committee, the Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement to be delivered to shareholders.
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| | Submitted by the Compensation Committee: |
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| | Will Charbonnet Sr.,Jake Delhomme, Chairman |
| | James R. Davis, Jr. |
| | R. Glenn Pumpelly |
| | Joseph V. Tortorice, Jr. |
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Summary Compensation Table
Table. The following table sets forth compensation earned from the Company for the fiscal years ended December 31, 2016, 2015 2014 and 2013,2014, by its NEOs.
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| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(3) | Option Awards ($) | Non-Equity Incentive Plan Comp ($) |
Change in Pension Value and Non- qualified Deferred Comp Earnings ($) | All Other Comp ($) (1) | Total ($) |
|
| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| C. R. Cloutier President & Chief Executive Officer | 2015 | 441,000 | - | 34,800 | - | - | - | 113,829 | 589,629 |
| 2014 | 425,000 | - | - | - | 38,250 | - | 110,917 | 574,167 |
| 2013 | 425,000 | - | - | - | - | - | 111,586 | 536,586 |
| James R. McLemore Senior Executive VP & Chief Financial Officer
| 2015 | 252,500 | - | 24,360 | - | - | - | 34,598 | 311,458 |
| 2014 | 240,000 | | - | - | 21,600 | - | 27,157 | 288,757 |
| 2013 | 240,000 | - | - | - | - | - | 25,076 | 265,076 |
| Troy M. Cloutier President, MidSouth Bank, N.A. & Chief Banking Officer | 2015 | 280,000 | - | 27,840 | - | - | - | 59,689 | 367,529 |
| 2014 | 255,000 | | - | - | 22,950 | - | 58,196 | 336,146 |
| 2013 | 255,000 | - | - | - | - | - | 52,673 | 307,673 |
| Jeffery L. Blum Senior Executive VP & Chief Credit Officer | 2015 | 225,000 | - | 20,880 | - | - | - | 43,209 | 289,089 |
| 2014 | 90,000 | 35,000 | - | 100,894(2) | 4,950 | - | 37,077 | 267,921 |
| 2013 | - | - | - | - | - | - | - | - |
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| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (3) | Non-Equity Incentive Plan Comp ($) |
Change in Pension Value and Non- qualified Deferred Comp Earnings ($) | All Other Comp ($) (4) | Total ($) |
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| (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
| C. R. Cloutier President & CEO | 2016 | 426,667 | 10,000 | - | - | - | - | 90,245 | 526,912 |
| 2015 | 441,000 | - | 34,800 | - | - | - | 113,829 | 589,629 |
| 2014 | 425,000 | - | - | - | 38,250 | - | 110,917 | 574,167 |
| James R. McLemore Senior Executive VP & Chief Financial Officer | 2016 | 255,417 | 10,000 | - | - | - | - | 39,771 | 305,188 |
| 2015 | 252,500 | - | 24,360 | - | - | - | 34,598 | 311,458 |
| 2014 | 240,000 | - | - | - | 21,600 | - | 27,157 | 288,757 |
| Troy M. Cloutier Chief Banking Officer | 2016 | 294,583 | 10,000 | - | - | - | - | 59,029 | 363,612 |
| 2015 | 280,000 | - | 27,840 | - | - | - | 59,689 | 367,529 |
| 2014 | 255.000 | - | - | - | 22,950 | - | 58,196 | 336,146 |
| Jeffery L. Blum Senior Executive VP & Chief Credit Officer | 2016 | 227,917 | 10,000 | - | - | - | - | 47,955 | 285,872 |
| 2015 | 225,000 | - | 20,880 | - | - | - | 43,209 | 289,089 |
| 2014 | 90,000 | 35,000 | - | 100,894 | 4,950 | - | 37,077 | 267,921 |
(1) All other 2015 compensation for NEOs includes the totalNEO salary increases had an effective date of benefit and perquisite amounts as listed in the table below.June 1, 2016.
(2)Represents the grant date fair value of restricted stock granted on a discretionary one-time basis during 2015.
(3) Consists of shares of stock options granted on August 5, 2014 at a fair value on grant date (estimated using the Black-Scholes Option Pricing Model) of $5.77 for a five yearfive-year vesting period.
(3)(4) RepresentsAll other 2016 compensation for NEOs includes the grant date fair valuetotal of restricted stock granted on a discretionary one-time basis during 2015.benefit and perquisite amounts as listed in the table below.
All Other Compensation Table
Table. The following table sets forth all other compensation received from the Company in the form of benefits and perquisites for the fiscal year ended December 31, 2015,2016, by its NEOs.
| | Name | Auto Expense ($) | Board of Director Fees ($) | Cell Phone ($) | Club Member- ship ($) | EISCPCo. Contri- bution ($) | ESOP Co. Contri- bution ($) |
401(k) Co. Contribution ($) | Imputed Income- Split Dollar Life Ins ($) | Supple- mental Life Ins Premiums ($) | Divid- ends ($) |
Supple-mental Disability Ins Premiums ($) |
COBRA Reimburse-ment ($) | Moving Expense ($) | Total ($) | Auto Expense ($) | Board of Director Fees ($) | Cell Phone ($) | Club Member- ship ($) | ESOP Co. Contri- bution ($) |
401(k) Co. Contri-bution ($) | Imputed Income- Split Dollar Life Ins ($) | Supple- mental Life Ins Premiums ($) | Divid- ends ($) |
Supple-mental Disability Ins Premiums ($) | Total ($) |
C. R. Cloutier | 760 | 61,600 | 919 | 1,854 | 16,893 | 8,861 | 1,505 | 874 | 17,024 | 225 | 3,314 | n/a | 113,829 | 751 | 59,100 | 800 | 2,537 | 6,891 | 1,566 | 911 | 17,014 | 675 |
-- | 90,245 |
James R. McLemore | 3,952 | 4,700(1) | 1,800 | 5,489 | n/a | 8,861 | n/a | 4,138 | 158 | 5,500 | n/a | 34,598 | 3,974 | 8,800 (1) | 1,800 | 3,433 | 6,891 | -- | 4,507 | 473 | 9,893 | 39,771 |
Troy M. Cloutier | 2,637 | 37,500(2) | 1,800 | 2,072 | n/a | 8,861 | 1,479 | n/a | 813 | 180 | 4,347 | n/a | 59,689 | 2,138 | 38,700 (2) | 1,800 | 2,256 | 6,891 | 1,544 | -- | 813 | 540 | 4,347 | 59,029 |
Jeffery L. Blum | 3,983 | 26,300 (3) | 1,800 | 2,600 | n/a | - | 1,379 | n/a | 2,961 | 135 | 4,051 | n/a |
n/a | 43,209 | 4,000 | 22,500 (3) | 1,800 | 3,456 | 6,550 | 1,488 | -- | 2,961 | 405 | 4,795 | 47,955 |
(1) Mr. McLemore was appointed toserves on the MidSouth Bank, N.A. Special Assets Committee and BuildingFunds Management Committee and receives fees for his service on these committees. He formerly served on the Bank’s Building Committee.
(2) Mr. Troy Cloutier is a member of the MidSouth Bank, N.A. Board of Directors and receives fees for his service on the Board and the committees he serves. On January 1, 2017, he was appointed to the MidSouth Bancorp, Inc. Board of Directors and will receive fees for his service on the Board and the committees he serves.
(3) Mr. Blum is a member of the MidSouth Bank, N.A. Directors Loan Oversight Committee and Special Assets Committee and receives fees for his service on these committees. He formerly served on the Bank’s Directors Loan Committee.
Grants of Plan-Based Awards
Awards. The following table discloses the total number of non-equity incentive based plan awards granted for the 20152016 plan year and the payout opportunity for 2015.2016. No amounts were paid in 20152016 under the AICP. For additional information on the AICP, see “Compensation Discussion and Analysis” above. No option or restricted stock awards were granted to NEOs in 2015.2016.
| | Named Executive Officer | Plan Name | Grant Date Equity | Non-Equity Incentive Plan Opportunity for Most Recently Completed Fiscal Year | All Other Stock Awards (# of shares Units) (2) | Date Equity Fully Vests(3) | Grant Date Fair Value of Stock and Option Awards | Plan Name | Grant Date Equity | Non-Equity Incentive Plan Opportunity for Most Recently Completed Fiscal Year | All Other Stock Awards (# of shares Units) | Date Equity Fully Vests | Grant Date Fair Value of Stock and Option Awards |
Actual | Threshold | Target | Maximum | Actual | Threshold | Target | Maximum |
C. R. Cloutier | 2015 AICP | | - | $22,050 | $44,100 | (1) | | | 2016 AICP | | - |
| $22,050 |
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| $44,100 |
| (1) | |
| 2007 OICP | 8/17/15 | | 2,500 | 8/17/18 | 34,800 | |
James R. McLemore | 2015 AICP | | - | $12,625 | $25,250 | (1) | | | 2016 AICP | | - |
| $12,625 |
|
| $25,250 |
| (1) | |
| 2007 OICP | 8/17/15 | | 1,750 | 8/17/18 | 24,360 | |
Troy M. Cloutier | 2015 AICP | | - | $14,000 | $28,000 | (1) | | | 2016 AICP | | - |
| $14,000 |
|
| $28,000 |
| (1) | |
| 2007 OICP | 8/17/15 | | 2,000 | 8/17/18 | 27,840 | |
Jeffery L. Blum | 2015 AICP | | - | $11,250 | $22,500 | (1) | | | 2016 AICP | | - |
| $11,250 |
|
| $22,500 |
| (1) | |
| 2007 OICP | 8/17/15 | | 1,500 | 8/17/18 | 20,880 | |
(1) The Compensation Committee has the discretion to increase the payouts under the 20152016 AICP awards in the event thatif the performance measures exceeded the target levels after all qualifying conditions are met. Under the terms of the 20152016 AICP there is no cap on the discretionary amount that may be paid for performance in excess of target levels.
(2) Discretionary restricted stock awards in compliance with 2007 Omnibus Incentive Compensation Plan guidelines.
(3) Restricted stock awards are on a three-year cliff vesting period from the date of grant. Represents a single, time-vested grant award.
Outstanding Equity Awards at Fiscal Year-End
Year-End. The following table reflects each NEO’s outstanding equity awards at December 31, 2015. 2016.
| | | Option Awards | |
Stock Awards | Option Awards | |
Stock Awards |
Named Executive Officer | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) Date Equity Fully Vests(1) | Equity Incentive Plan Awards Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Options Vesting Date (1) | Number of Securities or Stock Units Not Vested (#) | Market Value of Shares or Stock Units Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights Not Vested | Stock Vesting Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards Number of Securities Underlying Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Options Vesting Date (1) | Number of Securities or Stock Units Not Vested (#) | Market Value of Shares or Stock Units Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Rights Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Rights Not Vested | Stock Vesting Date |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
C. R. Cloutier |
21,251 | 21,251 | - |
| $12.97 |
| 5/23/22 | 05/23/18 | 2,500 |
| $22,700 |
| - | 8/17/18 |
28,340 | 14,162 | - |
| $12.97 |
| 5/23/22 | 05/23/18 | 2,500 |
| $34,000 |
| - | 8/17/18 |
James R. McLemore | 12,768 | 8,512 | - |
| $12.97 |
| 5/23/22 | 5/23/17 | 1,750 |
| $15,890 |
| - | 8/17/18 | 17,024 | 4,256 | - |
| $12.97 |
| 5/23/22 | 5/23/17 | 1,750 |
| $23,800 |
| - | 8/17/18 |
Troy M. Cloutier | 9,765 | 10,178 | - |
| $12.97 |
| 5/23/22 | 5/23/17 | 2,000 |
| $18,160 |
| - | 8/17/18 | 14,854 | 5,089 | - |
| $12.97 |
| 5/23/22 | 5/23/17 | 2,000 |
| $27,200 |
| - | 8/17/18 |
Jeffery L. Blum | 3,500 | 14,000 | - |
| $18.99 |
| 8/5/24 | 8/5/19 | 1,500 |
| $13,620 |
| - | 8/17/18 | 7,000 | 10,500 | - |
| $18.99 |
| 8/5/24 | 8/5/19 | 1,500 |
| $20,400 |
| - | 8/17/18 |
(1) All options listed above vest at a rate of 20% annually over a five-year period from the date of grant, excluding Mr. C. R. Cloutier who has a six-year vesting period.
(2) Market value is calculated based on closing price of $9.08$13.60 on December 31, 2015.2016.
Option Exercises
The following table shows the number ofExercises. No stock options that were exercised by Mr. Troy Cloutier in 2015. No other NEO exercised stock options in 2015.
|
| | | | | | |
| |
Option Awards
|
Named
Executive
Officer
| Grant
Date
|
# of Shares Acquired on Exercise
| Date
of Exercise
| Stock Price on Date of Exercise | Strike Price
of Option
| Value Realized on Exercise |
Troy M. Cloutier | 5/23/12
5/23/12
| 4,000
1,500
| 2/25/15
5/19/15
| $14.59
$14.07
| $12.97
$12.97
| $6,480
$1,650
|
Pension BenefitsNEOs during 2016.
Pension Benefits. The EISCP and OSDCP with Mr. C. R. Cloutier isare considered a defined contribution planplans and isare reported below under the “Nonqualified Deferred Compensation Table.”
Nonqualified Deferred Compensation Table
Table. The following table reflects the activity during the 20152016 calendar year for Mr. C. R. Cloutier under our deferred compensation benefit plans. No other NEO is currently participating under our deferred compensation benefit plans.
| | Named Executive Officer | Plan Name(1) | Executive Contributions |
Employer Contributions in Last Fiscal Year | Aggregate Gain/Loss In Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance At End of Last Fiscal Year | Plan Name (1) | Executive Contributions |
Employer Contributions in Last Fiscal Year | Aggregate Gain/Loss In Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at end of Last Fiscal Year |
C. R. Cloutier | DDCP | - | ($550,358) | - | $650,246 | DDCP | - |
| $350,102 |
| - |
|
| $1,000,348 |
|
| EISCP | - | $16,893 | - | $198,684 | EISCP | - | - |
|
| ($60,416 | ) |
| $138,267 |
|
| | OSDCP | - | - |
|
| $42,974 |
|
| $42,974 |
|
(1) The DDCP is invested in our common stock. Earnings (losses) are based on the increase (decrease) in stock price during the year. Dividends paid on the common stock are credited to each account and are used to purchase additional
shares of common stock. For the EISCP and OSDCP, the amounts presented reflect contributions to the balances held in the pre-retirement accounts associated with the plan.
We provide Mr. C. R. Cloutier with an EISCP and OSDCP, which establishes aestablish pre-retirement account.accounts. Upon Mr. C. R. Cloutier reaching normal retirement age, he may elect to receive payment as designated by the accrued amounts within the account. The payments are required to be disbursed in the form of annual cash installments over 10 years. At the present time, Mr. C. R. Cloutier has elected not to begin to receive payments under the EISCP or the OSDCP, although he has reached the normal retirement age, as defined in the agreement. This account wasThese accounts were established as a liability reserve accountaccounts on our balance sheet for the benefit of the executive officer. The account isaccounts are increased or decreased each year by an amount equal to the index (annual earnings/loss for the year determined by the aggregate annual after-tax income as if potential life insurance contracts were purchased on the effective date of the agreement) less the cost of funds expense for that year (sum of the amount of premiums set forth in the potential life insurance contracts purchased on the effective date of the agreement, plus the amount of any after-tax benefits paid to the executive officer plus the amount of all previous years after-tax costs of funds expense and multiplying the sum by the average after-tax cost of funds of our third quarter report for the fiscal year as filed with the Federal Reserve).
Potential Payments upon Termination or Change-In-Control
Change-In-Control. The discussion and tables below reflect the estimated amount of compensation that Mr. C. R. Cloutier would be entitled to in the event of termination of his employment. The amounts shown assume a termination date of December 31, 2015.2016. Amounts do not include compensation and benefits available to all of the Company’s general employees on a non-discriminatory basis.
| | Compensation and/or Benefits Payable Upon Termination (1) | Early Retirement/ Voluntary Resignation | Involuntary Termination for Cause | Involuntary Termination Without Cause | Termination in Connection with a Change-in-Control (Without Cause or for Good Reason) | Termination in the Event of Disability | Termination in the Event of Death | Early Retirement/ Voluntary Resignation | Involuntary Termination for Cause | Involuntary Termination Without Cause | Termination in Connection with a Change-in-Control (Without Cause or for Good Reason) | Termination in the Event of Disability | Termination in the Event of Death |
C. R. Cloutier | | | | | | |
Supplemental Life Insurance Death Benefit | - |
| - | - |
| - |
| - |
|
| $850,000 |
| - |
| - |
| - |
| - |
| - |
| - |
|
Supplemental Long-Term Disability Benefit | - |
| - | - |
| - |
|
| $87,600 |
| - |
| - |
| - |
| - |
| - |
| - |
| - |
|
Executive Indexed Salary Continuation Benefit |
| $198,684 |
| - |
| $198,684 |
|
| $198,684 |
|
| $198,684 |
|
| $198,684 |
|
| $138,267 |
| - |
|
| $138,267 |
|
| $138,267 |
|
| $138,267 |
|
| $138,267 |
|
Officers’ Supplemental Deferred Compensation Plan | |
| $55,000 |
| - |
|
| $55,000 |
|
| $55,000 |
|
| $55,000 |
|
| $55,000 |
|
Split-Dollar Life Insurance | - |
| - | - |
| - |
| - |
|
| $341,439 |
| - |
| - |
| - |
| - |
| - |
|
| $322,902 |
|
Severance Benefits Plan(2) | - |
| - | - |
|
| $441,000 |
| - |
| - |
| |
Accelerated Equity Awards(3) |
| $22,700 |
| - | - |
|
| $22,700 |
|
| $22,700 |
|
| $22,700 |
| |
Severance (2) | | - |
| $1,150,833(3) |
| $1,150,833(3) |
| $1,150,833(4) |
| $1,150,833(5) |
| - |
|
Accelerated Restricted Stock (6) | |
| $34,000 |
| - |
| - |
|
| $34,000 |
|
| $34,000 |
|
| $34,000 |
|
Accelerated Stock Options (7) | |
| $8,922 |
| - |
| - |
|
| $8,922 |
|
| $8,922 |
|
| $8,922 |
|
Total |
| $221,384 |
| - |
| $198,684 |
|
| $662,384 |
|
| $308,984 |
|
| $1,412,823 |
|
| $236,189 |
|
| $1,150,833 |
| 1,3244,100 |
|
| $1,387,022 |
|
| $1,387,022 |
|
| $559,091 |
|
Upon voluntary resignation, Mr. C. R. Cloutier receives the balancebalances in his pre-retirement accountaccounts under the EISCP and OSDCP paid out in equal annual installments over a ten-year period commencing on the first day of the calendar month following Retirement Date.
Upon involuntary termination without cause, Mr. C. R. Cloutier receives the balancebalances in his pre-retirement accountaccounts under the EISCP and OSDCP paid out in equal annual installments over a ten-year period commencing on the first day of the calendar month following Retirement Date.
Upon long-term disability, Mr. C. R. Cloutier will receive the annual benefit presented in the table as specified under his supplemental long-term disability policy. Mr. C. R. Cloutier also receives the balancebalances in his pre-retirement accountaccounts under the EISCP and OSDCP paid out in equal annual installments over a ten-year period commencing on the first day of the calendar month following Retirement Date.
Upon death, Mr. C. R. Cloutier’s beneficiaries will receive the benefit as defined under his supplemental life insurance policy. In addition, his beneficiaries will receive a lump-sum payment of the unpaid accrued benefit balance in his pre-retirement accountaccounts associated with the EISCP and OSDCP as well as the benefit amount equal to 80% of the net at risk insurance portion of the proceeds of the whole life policy associated with his split-dollar life insurance plan.
Under the terms of 2007 Omnibus Incentive Plan, all outstanding equity awards fully vest and become fully exercisable upon a change-in-control.
The discussion and tables below reflect the estimated amount of compensation that the NEOs, other than Mr. C. R. Cloutier, would be entitled to in the event of termination of their employment. The amounts shown assume a termination date of December 31, 2015.2016. Amounts do not include compensation and benefits available to all of the Company’s general employees on a non-discriminatory basis.