UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by the registrant ⌧
Filed by a party other than the registrant £
Check the appropriate box:
£ | Preliminary proxy statement |
£ | Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2)) |
⌧ | Definitive proxy statement |
£ | Definitive additional materials |
£ | Soliciting material pursuant to |
MID-SOUTHERN BANCORP, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of filing fee (Check the appropriate box):
⌧ | No fee required. |
£ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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(1) | Title of each class of securities to which transaction applies: |
| N/A |
(2) | Aggregate number of securities to which transactions applies: |
| N/A |
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: |
| N/A |
(4) | Proposed maximum aggregate value of transaction: |
| N/A |
(5) | Total fee paid: |
| N/A |
£ | Fee paid previously with preliminary materials: |
| N/A |
£ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
(1) | Amount previously |
| N/A |
(2) | Form, schedule or registration statement no.: |
| N/A |
(3) | Filing party: |
| N/A |
(4) | Date filed: |
| N/A |
April 26, 2021
Dear Stockholder:
You are cordially invited to attend the specialannual meeting of stockholders of Mid-Southern Bancorp, Inc., to be held at the main office of Mid-Southern Savings Bank, FSB, located at 300 N. Water Street, Salem, Indiana, on Wednesday, September 25, 2019May 26, 2021, at 2:1:00 p.m., localEastern time.
The Notice of an equity incentive plan, which we believe will promote the long-term growth and profitabilityAnnual Meeting of Mid-Southern Bancorp, Inc. The notice of special meeting of stockholdersStockholders and proxy statement appearing on the following pages describe the formal business to be transacted at the meeting. During the meeting, we also will report on our operations. Directors and officers of Mid-Southern Bancorp, Inc. will be present to respond to relevantany questions of stockholders.
It is important that your shares are represented at this meeting, whether or not you attend the meeting in person and regardless of the number of shares you own. To make sure your shares are represented, we urge you to promptly vote. You may vote your shares via the Internet or a toll-free telephone number, or by completing and mailing the enclosed proxy card. This will not prevent you from voting in person at the meeting, but will assure that your vote is counted if you are unable to attend.
We look forward to seeing you at the meeting.
| Sincerely, |
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| /s/ Dana J. Dunbar |
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| Dana J. Dunbar |
| Chairman of the Board |
MID-SOUTHERN BANCORP, INC.
300 N. WATER STREET
(812) 883-2639
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS | |
Notice is hereby given that the special2021 annual meeting of stockholders of Mid-Southern Bancorp, Inc. will be held at the main office of Mid-Southern Savings Bank, FSB, located at 300 N. Water Street, Salem, Indiana, on Wednesday, September 25, 2019,May 26, 2021, at 2:1:00 p.m., local time,Eastern time.
A proxy card and a proxy statement for the following purposes:
Proposal 1.The election of two directors to each serve for a three-year term; and
Proposal | The ratification of the |
We will also consider and act upon such other matters as may properly come before the meeting or any adjournments or postponements thereof. As of the date of this notice, we are not aware of any other business to come before the specialannual meeting.
The Board of Directors has fixed the close of business on August 7, 2019April 9, 2021 as the record date for the specialannual meeting. This means that stockholders of record at the close of business on that date are entitled to receive notice of and to vote at the meeting and any adjournmentsadjournment thereof. To ensure that your shares are represented at the meeting, please take the time to vote by submitting your vote via the Internet or telephone, or by signing, dating and mailing the enclosed proxy card which is solicited on behalf of the Board of Directors. The proxy will not be used if you attend and vote at the specialannual meeting in person. Regardless of the number of shares you own, your vote is very important. Please act today.
| BY ORDER OF THE BOARD OF DIRECTORS |
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| /s/ ERICA B. SCHMIDT |
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| ERICA B. SCHMIDT |
| SECRETARY |
Salem, Indiana
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 26, 2021.
Our proxy statement, proxy card and self-addressed envelope2020 Annual Report to Stockholders are enclosed for your convenience. No postage is necessary if mailedavailable at www.edocumentview.com/MSVB. Directions to attend the annual meeting, where you may vote in person, can be found online at https://www.mid-southern.com/about-us/investor-relations/.
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IMPORTANT: Voting promptly will save us the expense of further requests for proxies in order to ensure a quorum. You may vote via the Internet or by telephone. Alternatively, a proxy card and self-addressed envelope are enclosed for your convenience. No postage is necessary if mailed in the United States. | |
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PROXY STATEMENT OF | |
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ANNUAL MEETING OF STOCKHOLDERS | |
The Board of Directors of Mid-Southern Bancorp, Inc. is using this proxy statement to solicit proxies from our stockholders for use at our special2021 annual meeting of stockholders. The meeting will be held at the main office of Mid-Southern Savings Bank, FSB, located at 300 N. Water Street, Salem, Indiana, on Wednesday, May 26, 2021, at 1:00 p.m., Eastern time. We are first mailing the accompanying notice of annual meeting of stockholders and this proxy statement and the enclosed form of proxy to our stockholders on or about August 12, 2019.
The information provided in this proxy statement relates to Mid-Southern Bancorp, Inc. and its wholly-owned subsidiary, Mid-Southern Savings Bank, FSB. Mid-Southern Bancorp, Inc. may also be referred to as “Mid-Southern” or the “Company” and Mid-Southern Savings Bank, FSB may also be referred to as “Mid-Southern Savings Bank” or the “Bank.” References to “we,” “us” and “our” refer to Mid-Southern and, as the context requires, Mid-Southern Savings Bank.
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INFORMATION ABOUT THE ANNUAL MEETING | |
Time and Place of the SpecialAnnual Meeting
Our specialannual meeting will be held as follows:
Date:Wednesday, September 25, 2019
Time: 1:00 p.m., Eastern time
Place: Mid-Southern Savings Bank, FSB 300 N. Water Street, Salem, Indiana
Matters to Be Considered at the SpecialAnnual Meeting
At the meeting, you will be asked to consider and vote upon the following proposals:
Proposal 1. | The election of two directors to each serve for a three-year term; and |
Proposal 2. | The ratification of the |
We will also will transact any other business that may properly come before the specialannual meeting. As of the date of this proxy statement, we are not aware of any other business to be presented for consideration at the specialannual meeting other than the matters described in this proxy statement.
Who is Entitled to Vote?
We have fixed the close of business on August 7, 2019April 9, 2021 as the record date for stockholders entitled to receive notice of and to vote at our specialannual meeting. Only holders of record of Mid-Southern’s common stock on that date are entitled to receive notice of and to vote at the specialannual meeting. You are entitled to one vote for each share of Mid-Southern’s common stock you own, unless you own more than 10 percent of Mid-Southern’s outstanding shares. As provided in our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10 percent of Mid-Southern’s outstanding shares are not entitled to any vote in respect of the shares held in excess of the 10 percent
How Do I Vote at the SpecialAnnual Meeting?
Proxies are solicited to provide all stockholders of record on the voting record date an opportunity to vote on matters scheduled for the specialannual meeting and described in these materials. You are a stockholder of record if your shares of Mid-Southern common stock are held in your name. If you are a beneficial owner of Mid-Southern common stock held by a broker, bank or other nominee (i.e.(i.e., in “street name”), please see the instructions in the following question.
Shares of Mid-Southern common stock can only be voted if the stockholder is present in person or by proxy at the specialannual meeting. To ensure your representation at the specialannual meeting, we recommend you vote by proxy even if you plan to attend the specialannual meeting. You can vote by telephone, the Internet or by mail by following the instructions on the proxy card. You can always change your vote at the meeting if you are a stockholder of record.
Stockholders may vote by proxy via the Internet or a toll-free telephone number, or by mailing a proxy card. Voting instructions are included on your proxy card. Shares of Mid-Southern common stock represented by properly executed proxies will be voted by the individuals named on the proxy card in accordance with the stockholder’s instructions. Where properly executed proxies are returned to us with no specific instruction as how to vote at the specialannual meeting, the persons named in the proxy will vote the shares FOR approvalelection of each of our director nominees and FOR ratification of the Mid-Southern Bancorp, Inc. 2019 Equity Incentive Plan and FOR the adjournmentselection of the special meeting, if necessary, to solicit additional proxies, in the event there are not sufficient votes at the time of the special meeting to approve the Equity Incentive Plan.BKD, LLP as our independent registered public accounting firm for 2021. If any other matters are properly presented at the specialannual meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on these matters in accordance with their best judgment. We do not currently expect that any other matters will be properly presented for action at the specialannual meeting.
You may receive more than one proxy card depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In this case, you will receive three separate proxy cards to vote.
What if My Shares Are Held in Street Name?
If you are the beneficial owner of shares held in “street name” by a broker, your broker,bank or other nominee (“nominee”), the nominee, as the record holder of the shares, is required to vote the shares in accordance with your instructions. If your common stock is held in street name, you will receive instructions from your broker that you must follow in order to have your shares voted. Your broker may allow you to deliver your voting instructions via telephone or the Internet. Please see the instruction form that accompanies this proxy statement. If you do not give instructions to your broker, your brokerthe nominee, the nominee may nevertheless vote the shares with respect to discretionary items, but will not be permitted to vote your shares with respect to non-discretionary items, pursuant to current industry practice. In the case of non-discretionary items, the shares not voted will be treated as “broker non-votes.” The proposal to approve the Equity Incentive Planelect directors is considered a non-discretionary item;item under the rules governing brokers that are members of the New York Stock Exchange; therefore, you must provide instructions to your brokerthe nominee in order to have your shares voted onin the election of directors. Please see the instruction form that accompanies this proposal.
If your shares are held in street name, you will need proof of ownership to be admitted to the specialannual meeting. A recent brokerage statement or letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of common stock held in street name in person at the specialannual meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.
How Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be Voted?
We maintain the Mid-Southern Savings Bank, FSB Employee Stock Ownership Plan (“ESOP”) for the benefit of our employees. Each participant may instruct the trustee how to vote the shares of Mid-Southern common stock allocated to his or her account under the ESOP by completing the voting instruction sheet distributed by the trustee. If a participant properly executes the voting instruction sheet, the trustee is required to vote the participant’s shares in accordance with the participant’s instructions. Unallocated shares of Mid-Southern common stock held in the ESOP and allocated shares for which proper voting instructions are not received will be voted by the trustee in the same proportion as shares for
How Many Shares Must Be Present to Hold the Meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of at least a majority of the shares of Mid-Southern common stock entitled to vote at the specialannual meeting as of the record date will constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
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What if a Quorum Is Not Present at the Meeting?
If a quorum is not present at the scheduled time of the meeting, a majority of the stockholders present or represented by proxy may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more, or if a new record date is set. An adjournment will have no effect on the business that may be conducted at the meeting.
Vote Required to Approve Proposal 1: ApprovalElection of the 2019 Equity Incentive Plan
Directors are elected by a majorityplurality of the votes cast, in person or by proxy, at the special meeting. Any stockholder represented in personannual meeting by holders of Mid-Southern common stock. Accordingly, the two nominees for election as directors who receive the highest number of votes actually cast will be elected. In accordance with our Articles of Incorporation, stockholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or by proxy atwithheld from the meetingnominees. Votes that are withheld and entitled to vote on the subject matter may elect to abstain from voting on this proposal. If so, such abstention will not be counted as a vote cast on the proposal and, therefore,broker non-votes will have no effect on the outcome of the vote onelection because the proposal. Provided there is a quorumnominees receiving the greatest number of stockholders present in person or by proxy, stockholders not attending the meeting, in person or by proxy,votes will also have no effect on the outcome of this proposal. Broker non-votes do not constitute votes cast and will have no effect on the outcome of the proposal. be elected. Our Board of Directors unanimously recommends that you vote FOR approvalthe election of the 2019 Equity Incentive Plan.
Vote Required to Approve Proposal 2: AdjournmentRatification of the Special Meeting, if Necessary, to Solicit Additional Proxies
Ratification of the adjournmentappointment of BKD, LLP as our independent registered public accounting firm for the special meetingfiscal year ending December 31, 2021 requires the affirmative vote of athe majority of the votesshares cast, in person or by proxy, at the specialannual meeting to authorize the Boardby holders of Directors to adjourn, postpone or continue the special meeting.Mid-Southern common stock. Abstentions and broker non-votes will have no effect on the outcome of the voting on this proposal. Our Board of Directors unanimously recommends that you vote FOR adjournmentthe ratification of the special meeting, if necessary, to solicit additional proxies.
May I Revoke My Proxy?
You may revoke your proxy before it is voted by:
| ● | submitting a new proxy with a later date; |
| ● | notifying the Secretary of Mid-Southern in writing before the annual meeting that you have revoked your proxy; or |
| ● | voting in person at the annual meeting. |
If you plan to attend the specialannual meeting and wish to vote in person, we will give you a ballot at the specialannual meeting. However, if your shares are held in street name, you must bring a validly executed proxy from the nominee indicating that you have the right to vote your shares.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | |
The following table sets forth, as of August 7, 2019,April 9, 2021, the voting record date, information regarding share ownership of:
| ● | those persons or entities (or groups of affiliated person or entities) known by management to beneficially own more than five percent of Mid-Southern’s common stock other than directors and executive officers; |
| ● | each director and director nominee of Mid-Southern; |
| ● | each executive officer of Mid-Southern named in the Summary Compensation Table appearing under “Executive Compensation” below; and |
| ● | all current directors and executive officers of Mid-Southern as a group. |
Persons and groups who beneficially own in excess of five percent of Mid-Southern’s common stock are required to file with the Securities and Exchange Commission (“SEC”), and provide a copy to us, reports disclosing their ownership under the Securities Exchange Act of 1934, as amended (“Securities Exchange Act”). To our knowledge, no other person or entity, other than those set forth below, beneficially owned more than five percent of the outstanding shares of Mid-Southern’s common stock as of the close of business on the voting record date.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power. In addition, in computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding options that are currently exercisable or exercisable within 60 days after the voting record date are included in the number of shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person’s percentage ownership. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
As of the voting record date, there were 3,565,1963,172,730 shares of Mid-Southern common stock outstanding.
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Name |
| Number of Shares |
| Percent of Shares |
|
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Beneficial Owners of More Than 5% | | | | | |
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Mid-Southern Savings Bank, FSB ESOP (2) 300 N. Water Street Salem, Indiana 47167 | | 204,526 | | 6.45 | |
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MFP Partners, L.P., MFP Investors LLC, Michael F. Price 909 Third Avenue, 33rd Floor New York, New York 10022 | | 168,485 (3) | | 5.31 | |
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Directors | | | | | |
| | | | | |
Larry R. Bailey | | 12,124 | | * | |
Dana J. Dunbar | | 21,247 (4) | | * | |
Trent L. Fisher | | 42,509 (5) | | 1.34 | |
Eric A. Koch | | 60,268 (6) | | 1.90 | |
Charles W. Lamb | | 20,172 (7) | | * | |
Kermit A. Lamb | | 18,427 (8) | | * | |
Brent A. Rosenbaum | | 19,459 | | * | |
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Executive Officers | | | | | |
| | | | | |
Alexander G. Babey** | | 34,346 (9) | | 1.08 | |
Frank (Buzz) M. Benson III | | 29,390 (10) | | * | |
Erica B. Schmidt | | 8,058 (11) | | * | |
Robert W. DeRossett | | 250 | | * | |
| | | | | |
All executive officers and directors as a group (11 persons) | | 266,250 | | 8.39 | |
| Number of Shares | Percent of Shares | |||
| Name | Beneficially Owned | Outstanding | ||
| Beneficial Owners of More Than 5% | ||||
Mid-Southern Savings Bank, FSB ESOP (1) 300 N. Water Street Salem, Indiana 47167 | 204,789 | 5.74% | ||
| Directors | ||||
| Larry R. Bailey | 2,234 | * | ||
| Dana J. Dunbar | 10,234 (2) | * | ||
| Trent L. Fisher | 33,519 (3) | * | ||
| Eric A. Koch | 45,310 (4) | 1.27 | ||
| Charles W. Lamb | 5,518 (5) | * | ||
| Kermit A. Lamb | 7,427 (6) | * | ||
| Brent A. Rosenbaum | 10,469 | * | ||
| Executive Officers | ||||
| Alexander G. Babey** | 23,346 (7) | * | ||
| Frank (Buzz) M. Benson III | 23,050 (8) | * | ||
| Erica B. Schmidt | 1,468 (9) | * | ||
| All executive officers and directors as a group (10 persons) | 162,575 | 4.56% |
* | Less than 1% of shares outstanding. |
** | Also a director of |
| (1) | Shares of restricted stock, as to which the holders have voting power but not investment power, are included as follows: Mr. Bailey, 4,000 shares; Mr. Dunbar, 5,122 shares; Mr. Fisher, 3,100 shares; Mr. Koch, 1,600 shares; Mr. C. Lamb, 1,000 shares; Mr. K. Lamb, 5,110 shares; Mr. Rosenbaum, 3,100 shares; Mr. Babey, 5,110 shares; Mr. Benson, 200 shares; Ms. Schmidt, 400 shares; Mr. DeRossett, 200 shares and all executive officers and directors as a group, 28,942 shares. The amounts shown also include the following number of shares which the indicated individuals have the right to acquire within 60 days of the voting record date through the exercise of stock options: Mr. Bailey, 3,890 shares; Mr. Dunbar, 3,142 shares; Mr. Fisher, 4,490 shares; Mr. C. Lamb, 10,154 shares; Mr. K. Lamb, 3,150 shares; Mr. Rosenbaum, 4,490 shares; Mr. Babey, 3,150 shares; Mr. Benson, 5,090 shares; Ms. Schmidt, 5,324 shares; and all executive officers and directors as a group, 42,880 shares. |
| (2) | The ESOP has sole voting power with respect to |
On a Schedule 13G filed with the Securities and Exchange Commission on February 16, 2021, each of MFP Partners, L.P., MFP Investors LLC, and Michael F. Price reported shared dispositive and voting power with respect to 168,485 shares of our common stock. |
| (4) | Includes 10,000 shares held jointly with his spouse. |
Includes 2,346 shares held jointly with his spouse and 10,000 shares owned by his spouse. |
Includes |
Includes |
Includes 20,000 shares held in an IRA. |
Includes 1,000 shares held jointly with her |
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PROPOSAL 1 – ELECTION OF DIRECTORS |
Our Board of Directors unanimously adopted, subjectcurrently consists of eight members; the Board has decreased the number to stockholder approval,seven members effective upon the Mid-Southern Bancorp, Inc. 2019 Equity Incentive Plan (referred to herein aselection of directors at the “Equity Incentive Plan” or “plan”). The purposes2021 annual meeting and the retirement of Charles W. Lamb from the Board. In accordance with our Articles of Incorporation, the Board is divided into three classes with approximately one-third of the plan are: (1) to promote the long-term growthdirectors elected each year. The table below sets forth information regarding each nominee for director. The Corporate Governance and profitability of Mid-Southern; (2) to attract and retain individuals of outstanding competence; and (3) to provide participants with incentives that are closely linked to the interests of all stockholders of Mid-Southern. The shares to be available for award under the Equity Incentive Plan are in addition to those available for award under the plan adopted by Mid-Southern Savings Bank on July 27, 2010, and approved by stockholders. This plan, which was assumed by Mid-Southern in connection with the mutual holding company to stock holding company conversion, is described in more detail below under, “Equity Compensation Plan Information.”
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
| (a) | (b) | (c) | ||||
| Equity compensation plans approved | ||||||
| by security holders: | 2,808 | $5.97 | 121,937 | |||
| Equity compensation plans not | ||||||
| approved by security holders: | -- | N/A | -- | |||
| Total | 2,808 | 121,937 |
The Board of Directors recommends that stockholdersa vote FOR approvalthe election of Kermit A. Lamb and Brent A. Rosenbaum.
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| Age as of |
| Year First Elected or |
| Term to |
|
Name | | December 31, 2020 | | Appointed Director (1) | | Expire | |
| | | | | | | |
Board Nominees | | ||||||
| | ||||||
Kermit A. Lamb | | 72 | | 2013 | | 2024 (2) | |
Brent A. Rosenbaum | | 60 | | 2014 | | 2024 (2) | |
| | | | | | | |
Directors Continuing in Office | | ||||||
| | ||||||
Larry R. Bailey | | 58 | | 2013 | | 2023 | |
Alexander G. Babey | | 52 | | 2016 | | 2023 | |
Dana J. Dunbar | | 71 | | 2004 | | 2023 | |
Trent L. Fisher | | 61 | | 2005 | | 2022 | |
Eric A. Koch | | 56 | | 2019 | | 2022 | |
(1)For years prior to 2020, includes service on the Board of Directors of Mid-Southern Savings Bank.
(2)Assuming reelection.
Information Regarding Nominees for Election. Set forth below is the present principal occupation and other business experience during the last five years of each nominee for election, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director of Mid-Southern.
Kermit A. Lamb is a retired banker. Mr. Lamb was the President and Chief Executive Officer of Mid-Southern Bancorp, Inc. 2019 Equity Incentive Plan.
Brent A. Rosenbaum is a farmer and Partner/Farmer of Rosenbaum Farms LLC. Mr. Rosenbaum is a successful local business owner and is familiar with our market area, particularly the agricultural business.
Information Regarding Incumbent Directors. Set forth below is the present principal occupation and other business experience during at least the last five years of each director continuing in office, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director of Mid-Southern.
Alexander G. Babey has been President and Chief Executive Officer of Mid-Southern since its formation in January 2018 and the President and Chief Executive Officer of Mid-Southern Savings Bank since October 2016. Prior to that, he was Executive Vice President and Chief Credit Officer from December 2013 until October 2016. He was a credit
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administration consultant from June 2013 until December 2013, having served as Executive Vice President and Senior Loan Officer of The BANK-Oldham County from May 2005 until its acquisition in May 2013. Mr. Babey brings a wealth of banking knowledge to our Board, with particular expertise in lending and experience at both large regional and community banks.
Larry R. Bailey has been President of Indiana University Health Paoli since May 2010. Mr. Bailey is a Certified Public Accountant (Inactive) and also has a Master of Business Administration degree. Mr. Bailey has experience working at a CPA firm and he has previously held the position of Chief Financial Officer of a hospital. He is a board member of the Boys & Girls Clubs of Bloomington. Mr. Bailey’s accounting qualification and experience augments the Board’s financial expertise.
Dana J. Dunbar has served as the Chairman of the Board of Mid-Southern since its formation in January 2018, and Mid-Southern Savings Bank since 2013 and has served on the Board of Directors since 2003. Mr. Dunbar is the owner of Dunbar & Co. Insurance LLC, President of D&P Foods, Inc. (Arby’s franchises) and Managing Director and Corporate Secretary of Burton & Dunbar Development Corporation. He possesses expertise in the insurance, real estate development and retail food industries. Mr. Dunbar has also served as a director of various banks for 42 years.
Trent L. Fisher is a retired Doctor of Veterinary Medicine. He owned Salem Veterinary Service, Inc. from 1989 until 2018. He served as a trustee of his church. Dr. Fisher is familiar with our market area and was a successful local business owner for many years.
Eric A. Koch is an attorney in private practice with Koch McAuley & Bailey P.C., and is President of Indiana Title Insurance Co., a title insurance agency. He served as a member of the Indiana House of Representatives from 2002-2016 and has served as a member of the Indiana State Senate from 2016 to the present. Mr. Koch is a graduate of Georgetown University, where he earned a degree in business administration, and received his law degree from Indiana University School of Law. He has extensive professional experience in the fields of healthcare, real estate, and agriculture. Mr. Koch is a Certified Community Bank Director. He knows our market area well and brings 31 years of legal experience to our Board.
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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS | |
Board of Directors
The Boards of Directors of Mid-Southern and Mid-Southern Savings Bank conduct their business through Board and committee meetings. During the event thereyear ended December 31, 2020, the Mid-Southern Board of Directors held 13 meetings and the Bank Board of Directors held 12 meetings. No director attended fewer than 75% of the total meetings of the Boards and committees on which he served during this period.
Committees and Committee Charters
The Mid-Southern Board of Directors has standing Audit, Compensation, and Corporate Governance and Nominating committees, and has adopted written charters for each of these committees. Copies of these charters are not sufficient votesavailable on our website at https://www.mid-southern.com/about-us/investor-relations/.
Audit Committee
The Audit Committee, consisting of Directors Bailey (Chairman), Fisher, C. Lamb and Koch assists the Board in fulfilling its oversight responsibilities by reviewing financial information provided to others, Mid-Southern’s auditing, accounting and financial reporting processes, and the systems of internal control and risk management processes. It also has the sole authority to appoint or replace our independent registered public accounting firm and oversees the activities of our internal audit functions. The Audit Committee believes it has fulfilled its responsibilities under its charter. Mid-Southern’s Audit Committee met 14 times during the year ended December 31, 2020 and Mid-Southern Savings Bank’s Audit Committee met 13 times during this period.
Each member of the Audit Committee is “independent,” in accordance with the requirements for companies quoted on The NASDAQ Stock Market (“NASDAQ”). The Board of Directors has determined that Mr. Bailey meets the definition of “audit committee financial expert,” as defined by the SEC.
Compensation Committee
The Compensation Committee, consisting of Directors Dunbar (Chairman), Bailey, Rosenbaum, Fisher and Koch, sets the policies and compensation levels for our directors, officers and employees, and ensures that compensation policies are administered fairly and consistently. All members of this committee are independent. The Compensation Committee met 4 times during the fiscal year ended December 31, 2020.
The Committee meets, outside of the presence of the President and Chief Executive Officer, to discuss his performance and make its determination of his compensation and benefits. The President and Chief Executive Officer makes recommendations to the Compensation Committee regarding the compensation of all other executive officers. The Committee considers the recommendations of the President and Chief Executive Officer and makes its determination of all other executive officers’ compensation and benefits.
Corporate Governance and Nominating Committee
The Corporate Governance and Nominating Committee consists of Directors Fisher (Chairman), Bailey and Koch. This committee identifies qualified candidates for nomination to the Board, oversees the membership and performance of Board committees, reviews the Board’s performance, and develops corporate governance standards for the Board. The Corporate Governance and Nominating Committee met 4 times during the fiscal year ended December 31, 2020.
The Corporate Governance and Nominating Committee meets annually to nominate directors for election at the timeannual meeting. Only those nominations made by the Committee or properly presented by stockholders will be voted upon at the meeting. In its deliberations for selecting candidates for nominees as director, the Committee considers the candidate’s knowledge of the special meetingbanking business and involvement in community, business and civic affairs, and also considers whether the candidate would provide adequate representation of our market area. Any nominee for director made by the Committee must be highly qualified with regard to approvesome or all of these attributes. These criteria as well as viewpoint, skill, race and national origin are considered to provide for diversity on our Board of Directors. These diversity factors are
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considered when the 2019 Equity Incentive Plan,Corporate Governance and Nominating Committee and Board are seeking to fill a vacancy or new seat on the Board.
In searching for qualified director candidates to fill vacancies on the Board, the Committee solicits the current directors for names of potentially qualified candidates. Additionally, the Committee may request that the directors pursue their own business contacts for the names of potentially qualified candidates. The Committee would then consider the potential pool of director candidates, select the top candidate based on the candidates’ qualifications and the Board’s needs, and conduct a thorough investigation of the proposed candidate’s background to ensure there is no past history that would cause the candidate not to be qualified to serve as a director of Mid-Southern. The Committee will consider director candidates recommended by our stockholders. If a stockholder has submitted a proposed nominee, the Committee would consider the proposed nominee, along with any other proposed nominees recommended by members of our Board of Directors, may propose to adjournin the special meeting tosame manner in which the Committee would evaluate its nominees for director. For a later date or dates in order to permit the solicitation of additional proxies. The time and placedescription of the adjournedproper procedure for stockholder nominations, see “Stockholder Proposals” in this proxy statement.
Corporate Governance
We are committed to establishing and maintaining high standards of corporate governance. The Corporate Governance and Nominating Committee is responsible for initiatives to comply with the provisions contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and NASDAQ rules governing corporate governance. Mid-Southern has adopted policies to govern the activities of both Mid-Southern and Mid-Southern Savings Bank, including a Corporate Governance Policy, an insider trading policy and a Code of Ethics. The Corporate Governance Policy covers such matters as the following:
| ● | the composition, responsibilities and operation of our Board of Directors; |
| ● | the establishment and operation of Board committees, including audit, nominating and corporate governance and compensation committees; |
| ● | convening executive sessions of independent directors; and |
| ● | our Board’s interaction with management and third parties. |
Code of Ethics. On April 18, 2018 the Board of Directors adopted a Code of Ethics for our directors, officers, including the senior financial officers, and other employees. The Code of Ethics requires individuals to maintain the highest standards of professional conduct. The Code of Ethics is available on our website at https://www.mid-southern.com/about-us/investor-relations/. The Company will post any waivers to the Code of Ethics to our website.
Communications with Directors. A stockholder may communicate with the Board of Directors or any individual director by mailing a communication to the Corporate Secretary, Mid-Southern Bancorp, Inc., 300 N. Water Street, Salem, Indiana 47167. The Corporate Secretary will forward such communication to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to not take any action with respect to the communication or take appropriate legal action regarding the communication.
Annual Meeting Attendance. Mid-Southern encourages, but does not require, its directors to attend annual meetings of stockholders. All directors attended the 2020 annual meeting willof stockholders.
Related-Party Transactions. Applicable law and regulations require that all loans or extensions of credit to executive officers, directors and their associates must be announcedmade in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons (unless the adjournmentloan or extension of credit is taken,made under a benefit program generally available to all employees and nodoes not give preference to any insider over any other notice will be given unlessemployee) and must not involve more than the meeting is adjourned for 30 daysnormal risk of repayment or more,present other unfavorable features. Mid-Southern Savings Bank has adopted a policy to this effect. At December 31, 2020, loans to all employees, officers and directors of the Bank totaled approximately $1.5 million, or if a new record date is set.
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and are not present while their own loans or loans of any immediate family members are discussed. Loans to executive officers and directors are made pursuant to Regulation O of the special meetingFederal Reserve Board. All loan approval and review procedures are governed by written policies.
Any transactions that would be required to be votedreported under this section of the proxy statement must be reviewed by our Audit Committee or another independent body of the Board of Directors. In addition, any transaction with a director is reviewed by and subject to approval of the members of the Board of Directors who are not directly involved in the proposed transaction to confirm that the transaction is on terms that are no more favorable than those that would be available to us from an unrelated third party through an arms-length transaction.
Director Independence. Our common stock is listed on The NASDAQ Capital Market. In accordance with NASDAQ rules, at least a majority of our directors must be independent directors. The Board has determined that six of our eight directors are independent, as defined by NASDAQ. Messrs. Bailey, Dunbar, Fisher, Koch, C. Lamb and Rosenbaum are independent. Mr. Babey is not independent because he is our President and Chief Executive Officer. Mr. K. Lamb is not considered independent because he has an immediate family member who is a Senior Vice President of the Bank.
Leadership Structure
Mid-Southern has separated the roles of Chairman and Chief Executive Officer. The Chairman, who is an independent director, leads the Board and presides at all Board meetings. The Board supports having an independent director in a Board leadership position and has had an independent Chairman for many years. Having an adjournment, if necessary, we have submitted this proposalindependent Chairman enables non-management directors to youraise issues and concerns for Board consideration without immediately involving management. The Chairman also serves as a separate matter for your consideration. In this proposal, we are asking youliaison between the Board and senior management.
Board Involvement in Risk Management Process
As part of its overall responsibility to authorizeoversee the holdermanagement, business and strategy of any proxy solicited byMid-Southern, one of the primary responsibilities of our Board of Directors is to voteoversee the amounts and types of risk taken by management in favorexecuting the corporate strategy, and to monitor our risk experience against the policies and procedures set to control those risks. The Board’s risk oversight function is carried out through its approval of adjourning the special meetingvarious policies and any later adjournments. If stockholders approve this adjournment proposal, we could adjourn the special meeting,procedures, such as our lending and any adjourned sessioninvestment policies; ratification or approval of investments and loans exceeding certain thresholds; and regular review of risk elements such as interest rate risk exposure, liquidity and problem assets. Some oversight functions are delegated to committees of the special meeting,Board, with such committees regularly reporting to use the additional time to solicit additional proxies in favorfull Board the results of approvaltheir oversight activities. For example, the Audit Committee is responsible for oversight of the 2019 Equity Incentive Plan, includingindependent registered public accounting firm and meets directly with the solicitationfirm at various times during the course of proxies from stockholders who have previously voted against the proposal. Amongyear. The Company’s compensation policies and practices are evaluated to ensure that they do not foster risk-taking above the level of risk associated with the Company’s business model.
Hedging and Pledging Policies
The Company has a stock trading policy that, among other things, approvalprohibits all of our employees (including executive officers) and directors from engaging in speculative trading in the Company’s shares, which prohibition includes any arrangement by which a shareholder or option holder changes his or her economic exposure to changes in the price of the adjournment proposal could mean that, even if proxies representingstock. Prohibited arrangements include buying standardized put or call options, writing put or call options, selling stock short, buying or selling securities convertible into other securities, or merely engaging in a sufficient number of votes againstprivate arrangement where the proposal to approve the 2019 Equity Incentive Plan have been received, we could adjourn the special meeting without a vote and seek to convince the holders of those shares to change their votes to votes in favorvalue of the plan.
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| |
DIRECTORS’ COMPENSATION | |
The following table shows the compensation paid to our directors for 2018,2020 and 2019, with the exception of Alexander G. Babey, a director and our President and Chief Executive Officer, whose compensation is included in the section entitled “Executive Compensation.” The directors diddo not receive any stock or option awards, nor do they have any non-equity incentive plan compensation, change in pension value or non-qualified deferred compensation earnings; therefore, these columns have been omitted from the table below.
| | |
| Fees earned or |
| Stock awards |
| Option awards |
| All other |
|
|
|
Name | | Year | | paid in cash ($) | | ($)(1)(2)(4) | | ($)(1)(3)(4) | | ($) | | Total ($) | |
| | | | | | | | | | | | | |
Larry R. Bailey | | 2020 | | 24,400 | | 29,480 | | -- | | -- | | 53,880 | |
| | 2019 | | 24,200 | | 53,360 | | 31,412 | | -- | | 108,972 | |
| | | | | | | | | | | | | |
Dana J. Dunbar | | 2020 | | 33,550 | | 29,480 | | -- | | 1,250 (5) | | 64,280 | |
| | 2019 | | 32,300 | | 78,319 | | 25,368 | | 1,000 (5) | | 136,987 | |
| | | | | | | | | | | | | |
Trent L. Fisher | | 2020 | | 22,100 | | 29,480 | | -- | | -- | | 51,580 | |
| | 2019 | | 21,500 | | 33,350 | | 36,257 | | -- | | 91,107 | |
| | | | | | | | | | �� | | | |
Eric A. Koch | | 2020 | | 22,000 | | 29,480 | | -- | | -- | | 51,480 | |
| | 2019 | | 19,600 | | -- | | -- | | -- | | 19,600 | |
| | | | | | | | | | | | | |
Charles W. Lamb | | 2020 | | 19,800 | | 29,480 | | -- | | -- | | 49,280 | |
| | 2019 | | 19,200 | | 33,350 | | 32,797 | | -- | | 85,347 | |
| | | | | | | | | | | | | |
Kermit A. Lamb | | 2020 | | 25,000 | | 29,480 | | -- | | 1,000 (5) | | 55,480 | |
| | 2019 | | 23,800 | | 78,039 | | 25,436 | | 800 (5) | | 128,075 | |
| | | | | | | | | | | | | |
Brent A. Rosenbaum | | 2020 | | 22,000 | | 29,480 | | -- | | -- | | 51,480 | |
| | 2019 | | 21,500 | | 33,350 | | 36,254 | | -- | | 91,104 | |
Name | Fees earned or paid in cash ($) | All other compensation ($) | Total ($) | |||
| Paul G. Allemeier | 22,500 | -- | 22,500 | |||
| Larry R. Bailey | 25,500 | -- | 25,500 | |||
| Dana J. Dunbar | 33,100 | 750 (1) | 33,850 | |||
| Trent L. Fisher | 22,650 | -- | 22,650 | |||
| Eric A. Koch (2) | -- | -- | -- | |||
| Charles W. Lamb | 20,400 | -- | 20,400 | |||
| Kermit A. Lamb | 24,900 | 17,388 (3) | 42,288 | |||
| Brent A. Rosenbaum | 21,500 | -- | 21,500 |
(1) | Represents the aggregate grant date fair value of awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation – Stock Compensation” (“FASB ASC Topic 718”). For a discussion of valuation assumptions, see Note 14 of the Notes to Consolidated Financial Statements in Mid-Southern’s Annual Report on Form 10-K for the year ended December 31, 2020. |
| Consists of awards of restricted stock made on December 18, 2019, 20% of which vested immediately and 80% of which vest in equal installments of 20% per year beginning on December 18, 2020, in the following amounts: Mr. Bailey, 4,000 shares; Mr. Dunbar, 5,871 shares; Mr. Fisher, 2,500 shares; Mr. K. Lamb, 5,850 shares; and Mr. Rosenbaum, 2,500 shares. For Mr. C. Lamb, consists of an award of 2,500 shares of restricted stock made on December 18, 2019, 50% of which vested immediately and the remaining 50% which vested on December 18, 2020. Also, consists of awards of restricted stock made on December 16, 2020, 20% of which vested immediately and 80% of which vest in equal installments of 20% per year beginning on December 16, 2021, in the following amounts: Mr. Bailey, 2,000 shares; Mr. Dunbar, 2,000 shares; Mr. Fisher, 2,000 shares; Mr. E. Koch, 2,000 shares; Mr. K. Lamb, 2,000 shares; and Mr. Rosenbaum, 2,000 shares. For Mr. C. Lamb, consists of an award of 2,000 shares of restricted stock made on December 16, 2020, 50% of which vested immediately and the remaining 50% of which vested on March 31, 2021. The directors had the following amounts of unvested restricted stock on December 31, 2020: Mr. Bailey, 4,000 shares; Mr. Dunbar, 5,122 shares; Mr. Fisher, 3,100 shares; Mr. Koch, 1,600 shares; Mr. C. Lamb, 1,000 shares; Mr. K. Lamb, 5,110 shares; and Mr. Rosenbaum, 3,100 shares. Also consists of dividends paid on unvested shares in the following amounts: Mr. Bailey, $64; Mr. Dunbar, $94; Mr. Fisher, $40; Mr. C. Lamb, $100; Mr. K. Lamb, $94; and Mr. Rosenbaum, $40. |
| (3) | Consists of awards of options to purchase common stock made on December 18, 2019, 20% of which vested immediately and 80% of which vest in equal installments of 20% per year beginning on December 18, 2020, in the following amounts: Mr. Bailey, 9,725 shares; Mr. Dunbar, 7,854 shares; Mr. Fisher, 11,225 shares; Mr. K. Lamb, 7,875 shares; and Mr. Rosenbaum, 11,224 shares. For Mr. C. Lamb, consists of an award of option to purchase 10,154 shares of common stock made on December 18, 2019, 50% of which vested immediately and the remaining 50% which vested on December 18, 2020. |
| (4) | The 2019 equity awards presented in the 2020 proxy statement represented the value of the awards that vested during 2019. The amounts above reflect the value of the aggregate awards granted during 2019. |
| (5) | Consists of fees paid for service on the Board of Directors of Mid-Southern Investments, Inc., a subsidiary of the Bank. |
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Mid-Southern does not compensate the members of its Board of Directors for service on the Board or committees; all fees are paid by Mid-Southern Savings Bank for service to the Bank. All non-employee directors of Mid-Southern Savings Bank with the exception of the Chairman receive a monthly retainer of $800, a fee of $600 per month for each Board meeting attended and a fee of $300 per meeting for any special Board meeting. The Chairman of the Board receives a monthly retainer of $1,000, a fee of $800 per month for each Board meeting attended and a fee of $400 per meeting for any special, or other Board meeting. Non-employee directors serving on the Bank’s Loan and Audit
Directors are provided or reimbursed for travel and lodging and other customary out-of-pocket expenses incurred in attending out-of-town Board and committee meetings, industry conferences and continuing education seminars. Mid-Southern Savings Bank also pays the premiums on directors’ and officers’ liability insurance.
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| |
EXECUTIVE COMPENSATION | |
Summary Compensation Table
The following table shows information regarding compensation earned during the fiscal years ended December 31, 20182020 and 20172019 by our named executive officers: (1) Alexander G. Babey, our principal executive officer; and (2) our two other most highly compensated executive officers, who are Frank (Buzz) M. Benson III and Erica B. Schmidt.
| | | | | | | | | | | | | | | |
| | | | | | | | Stock | | Option | | All other | | | |
Name and Principal Position |
| Year |
| Salary ($) |
| Bonus ($) |
| ($)(1)(2) |
| ($)(1)(2) |
| ($)(3) |
| Total ($) | |
| | | | | | | | | | | | | | | |
Alexander G. Babey | | 2020 | | 182,882 | | 275 | | 29,480 | | -- | | 18,263 | | 230,900 | |
President and | | 2019 | | 166,268 | | 500 | | 78,039 | | 25,436 | | 18,091 | | 288,334 | |
| | | | | | | | | | | | | | | |
Frank (Buzz) M. Benson III | | 2020 | | 155,592 | | 275 | | 3,685 | | -- | | 7,033 | | 166,585 | |
Executive Vice President and Senior Loan Officer | | 2019 | | 146,960 | | 500 | | 13,340 | | 41,102 | | 6,841 | | 208,743 | |
| | | | | | | | | | | | | | | |
Erica B. Schmidt | | 2020 | | 109,438 | | 275 | | 7,370 | | -- | | 4,943 | | 122,026 | |
Executive Vice President, Bank Chief Financial Officer, Treasurer and Secretary | | 2019 | | 98,295 | | 500 | | 13,340 | | 41,102 | | 4,569 | | 157,806 | |
| | | | | | | | | | | | | | | |
Name and Principal Position | Year | Salary ($) | Bonus ($) | All other compensation ($)(1) | Total ($) | |||||
| Alexander G. Babey | 2018 | 163,683 | 25,275 | 20,727 | 209,685 | |||||
| President and | 2017 | 159,642 | 12,775 | 26,618 | 199,035 | |||||
| Chief Executive Officer | ||||||||||
| Frank (Buzz) M. Benson III | 2018 | 147,547 | 10,275 | 8,526 | 166,348 | |||||
| Executive Vice President and | 2017 | 147,222 | 10,275 | 15,044 | 172,541 | |||||
| Senior Loan Officer | ||||||||||
| Erica B. Schmidt | 2018 | 104,633 | 20,275 | 6,736 | 131,674 | |||||
| Executive Vice President, Chief | 2017 | 102,103 | 10,275 | 10,733 | 133,111 | |||||
| Financial Officer, Treasurer and | ||||||||||
| Secretary | ||||||||||
| (1) | Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 14 of the Notes to Consolidated Financial Statements in Mid-Southern’s Annual Report on Form 10-K for the year ended December 31, 2020. |
| (2) | The 2019 equity awards presented in the 2020 proxy statement represented the value of the awards that vested during 2019. The amounts above reflect the value of the aggregate awards granted during 2019. |
| (3) | Consists of the following: |
| | 401(k) matching | | Life insurance | | Car allowance | | |
|
Name |
| contribution ($) |
| ($) |
| ($) |
| Total ($) | |
Alexander G. Babey | | 8,242 | | 21 | | 10,000 | | 18,263 | |
Frank (Buzz) M. Benson III | | 7,014 | | 19 | | -- | | 7,033 | |
Erica B. Schmidt | | 4,930 | | 12 | | -- | | 4,943 | |
Name | 401(k) matching contribution ($) | Life insurance ($) | Car allowance ($) | Total ($) | ||||
| Alexander G. Babey | 10,653 | 74 | 10,000 | 20,727 | ||||
| Frank (Buzz) M. Benson III | 8,459 | 67 | -- | 8,526 | ||||
| Erica B. Schmidt | 6,691 | 45 | -- | 6,736 |
Employment and Severance Agreements
Employment Agreements. Mid-Southern Savings Bank entered into a two-year employment agreement with Mr. Benson on May 29, 2014 and a revised three-year employment agreement with Mr. Babey on October 1, 2016.January 28, 2021. Following the initial termsterm of Mr. Benson’s employment agreement, the employment agreements, the termsterm may be extended by the board for an additional 12-month period unless a termination notice is given by either Mid-Southern Savings Bank or Mr. Benson. Following the executive.initial term of Mr. Babey’s employment agreement, the term may be extended by the board for an additional 36-month period unless a termination notice is given by either Mid-Southern Savings Bank or Mr. Babey. The employment agreements are terminable by Mid-Southern Savings Bank for cause at any time and upon the occurrence of events specified by federal regulations. Under these agreements, the current base salary for Messrs. Babey and Benson is $166,380$169,708 and $149,741,$152,735, respectively, which amounts are paid by Mid-Southern Savings Bank and may be increased at the discretion of the Board of Directors. The agreements state that the executives are entitled to participate in all benefit plans and arrangements generally available to employees of Mid-Southern Savings Bank and in any supplementary benefits provided to Mid-Southern Savings Bank’s senior executives. Mr. Babey’s agreement also provides him with a $10,000 annual car allowance. The agreements also provide that compensation may be paid in the event of a change in control, as described below under “Potential Payments Upon Termination or Change in Control.”
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Change in Control Severance Agreement.We entered into a change in control severance agreement with Ms. Schmidt on December 20, 2017. The agreement has a term of one year and will be extended for one year on each anniversary date, provided that the Board of Directors of Mid-Southern Savings Bank has not given Ms. Schmidt notice of non-renewal. The agreement also provides that compensation may be paid to Ms. Schmidt in the event of a change in control, as described below under “Potential Payments Upon Termination or Change in Control.”
Outstanding Equity Awards
The following information with respect to outstanding equity awards as of December 31, 20182020 is presented for the named executive officers. The named executive officers did not have any equity incentive plan awards or stock awards outstanding as of December 31, 2018.
| | | | | | | | | | | | | | | | |||
| | Option Awards (1) | | Stock Awards (1) |
| |||||||||||||
| | | | | | | | | | | | | | Market | | |||
| | | | Number of | | Number of | | | | | | Number of | | Value of | | |||
| | | | Securities | | Securities | | | | | | Shares or | | Shares or | | |||
| | | | Underlying | | Underlying | | Option | | | | Units of | | Units of | | |||
| | | | Unexercised | | Unexercised | | Exercise | | Option | | Stock That | | Stock That | | |||
| | Grant | | Options (#) | | Options (#) | | Price | | Expira- | | Have Not | | Have Not | | |||
Name |
| Date |
| Exercisable |
| Unexercisable |
| ($) |
| tion Date |
| Vested (#) |
| Vested ($) | | |||
| | | | | | | | | | | | | | | | |||
Alexander G. Babey | | 12/18/19 | | 3,150 | | 4,725 | | 13.34 | | 12/18/29 | | 3,510 | | 50,579 | | |||
| | 12/16/20 | | -- | | -- | | -- | | -- | | 1,600 | | 23,056 | | |||
| | | | | | | | | | | | | | | | |||
Frank (Buzz) M. | | 12/18/19 | | 5,090 | | 7,635 | | 13.34 | | 12/18/29 | | -- | | -- | | |||
| | 12/16/20 | | -- | | -- | | -- | | -- | | 200 | | 2,882 | | |||
| | | | | | | | | | | | | | | | |||
Erica B. Schmidt | | 07/11/18 | | 234 | | -- | | 5.14 | | 04/26/21 | | -- | | -- | | |||
| | 12/18/19 | | 5,090 | | 7,635 | | 13.34 | | 12/18/29 | | -- | | -- | | |||
| | 12/16/20 | | -- | | -- | | -- | | -- | | 400 | | 5,764 | | |||
| | | | | | | | | | | | | | | | |||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||
| Alexander G. Babey | -- | -- | -- | -- | -- | |||||
| Frank (Buzz) M. Benson III | -- | -- | -- | -- | -- | |||||
| Erica B. Schmidt | 07/11/18 | 234 | -- | 5.16 | 04/26/21 |
| (1) |
Potential Payments Upon Termination or Change in Control
Employment Agreements. We have entered into agreements with the named executive officers that provide for potential payments upon a change in control. Mr. Babey’s employment agreement provides for a change in control payment if he terminates his own employment within 60 to 90 days following a change in control, or if his employment is terminated within two years following a change in control either by the successor to Mid-Southern Savings Bank or by Mr. Babey for good reason. The payment, which must be made within 30 days following the termination of employment, will have a value equal to two times the average of Mr. Babey’s taxable compensation includible in taxable income for the five years preceding the change in control. Mr. Benson’s employment agreement provides that he will receive a one-time change in control bonus if he remains continuously employed by Mid-Southern Savings Bank through the closing of the change in control event. His bonus, which will have a value equal to two times his then-current base salary, must be paid within 74 days after the end of the year in which the closing of the change in control occurs.
Under the employment agreements, a “change in control” is deemed to occur if, at any time during the term of the agreement: (1) a person other than Mid-Southern or Mid-Southern Savings Bank becomes the beneficial owner of securities of Mid-Southern or Mid-Southern Savings Bank representing 50% or more of the combined voting power of Mid-Southern Savings Bank’s then outstanding securities; (2) during any period of two consecutive years, the incumbent
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or to adopt a plan of liquidation. If Mr. Babey or Mr. Benson had experienced a change ofin control combined with a termination of employment on December 31, 2018,2020, Mr. Babey would have received a lump sum payment of $328,165$339,348 and Mr. Benson would have received a lump sum payment of $290,758.
Severance Agreement. Ms. Schmidt’s severance agreement provides that if, within the 12 months following a change in control, Ms. Schmidt experiences an involuntary termination, Mid-Southern and Mid-Southern Savings Bank will pay to her, within 25 days after the date of termination, a lump sum cash payment equal to 150% of her annual base salary. Ms. Schmidt’s change in control severance agreement defines “change in control” similarly to the employment agreements of Mr. Babey and Mr. Benson. If Ms. Schmidt had experienced a change ofin control combined with a termination of employment on December 31, 2018,2020, she would have received a lump sum payment of $152,570.$148,288.
Equity Awards. The 2010 and 2019 Equity Incentive Plans provide that in connection with a change in control, all unexercisable options will become fully exercisable and all unvested awards of restricted stock will vest in full. If a change in control had occurred as of December 31, 2020, the value of acceleration of exercisability and vesting would have been as follows: for Mr. Babey, $78,691; for Mr. Benson, $11,051; and for Ms. Schmidt, $13,933.
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| |
AUDIT COMMITTEE MATTERS | |
Audit Committee Report
The Audit Committee reports as follows with respect to Mid-Southern’s audited financial statements for the year ended December 31, 2020:
| ● | The Audit Committee has completed its review and discussion of the 2020 audited financial statements with management; |
| ● | The Audit Committee has discussed with the independent registered public accounting firm (Monroe Shine & Co., Inc.) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard 1301, Communications with Audit Committees; |
| ● | The Audit Committee has received written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence; and |
| ● | The Audit Committee has, based on its review and discussions with management of the 2020 audited financial statements and discussions with the independent registered public accounting firm, recommended to the Board of Directors, and the Board of Directors has approved, that Mid-Southern’s audited financial statements for the year ended December 31, 2020 be included in its Annual Report on Form 10-K. |
Submitted by the Audit Committee of the Board of Directors:
Larry R. BaileyCharles W. Lamb
Trent L. FisherEric A. Koch
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.
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| |
PROPOSAL 2 – RATIFICATION OF APPOINTMENT OF | |
The Audit Committee conducted a competitive review of independent registered public accounting firms in 2021 to perform the audit of our financial statements as of and for the year ending December 31, 2021. After careful consideration, the Audit Committee chose not to renew the engagement of Monroe Shine & Co., Inc. (“Monroe Shine”), following the filing of the Company’s Annual Report on Form 10-K in March 2021.
The audit report of Monroe Shine on the Company’s consolidated financial statements as of and for the fiscal years ended December 31, 2020 and 2019 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended December 31, 2020 and 2019, and through March 26, 2021 there were (i) no disagreements with Monroe Shine on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which, if not resolved to the satisfaction of Monroe Shine, would have caused Monroe Shine to make reference to the subject matter in its reports and (ii) no reportable events as described in Item 304(a)(1)(v) of Regulation S-K.
On January 22, 2021, the Audit Committee approved the engagement of BKD, LLP (“BKD”) as the Company’s new independent registered public accounting firm for the year ending December 31, 2021, subject to execution of an engagement letter. BKD signed an engagement letter with the Company on March 26, 2021, and therefore the engagement of BKD is effective as of March 26, 2021.
During the fiscal years ended December 31, 2020 and 2019, and through March 26, 2021, the Company did not consult with BKD with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might have been rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided by BKD to the Company that BKD concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matters that were either the subject of a disagreement (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).
The appointment of BKD is being submitted to stockholders for ratification. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the appointment of BKD to our stockholders for ratification as a matter of good corporate practice. If the appointment is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the appointment is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Mid-Southern and its stockholders. Monroe Shine & Co., Inc. served as our independent registered public accounting firm for the year ended December 31, 2020 and a representative of the firm will be present at the annual meeting to respond to stockholders’ questions and will have the opportunity to make a statement if he or she so desires. A representative of BKD is not expected to be present at the 2021 annual meeting.
The Board of Directors unanimously recommends that you vote FOR the ratification of the appointment of BKD, LLP as our independent registered public accounting firm.
The following table sets forth the aggregate fees billed, or expected to be billed, to us by Monroe Shine & Co., Inc. for professional services rendered for the fiscal years ended December 31, 2020 and 2019.
| | Year Ended |
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| 2020 |
| 2019 | |
Audit Fees (1) | | $94,000 | | $96,400 | |
Audit-Related Fees (2) | | 7,930 | | 47,290 | |
Tax Fees (3) | | 13,960 | | 10,735 | |
All Other Fees | | -- | | -- | |
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| (1) | Includes fees for the audit of the consolidated financial statements and review of interim financial information contained in the quarterly reports on Form 10-Q and other regulatory reporting. Also includes fees for services associated with SEC registration statements or other documents filed in connection with securities offerings including comfort letters and assistance with review of documents filed with the SEC. |
| (2) | Includes fees billed for attestation and related services traditionally performed by the auditor, including attestation services not required by statute or regulation and consultation concerning financial accounting, reporting and regulatory standards. |
| (3) | Includes fees billed for tax compliance services, including preparation of federal and state income tax returns, preparation of personal property tax returns, and tax payment and planning advice. |
The Audit Committee will establish general guidelines for the permissible scope and nature of any permitted non-audit services to be provided by the independent registered public accounting firm in connection with the Committee’s annual review of its charter. Pre-approval may be granted by action of the full Audit Committee or by delegated authority to one or more members of the Audit Committee. If this authority is delegated, all approved non-audit services will be presented to the Audit Committee at its next meeting. In considering non-audit services, the Audit Committee or its delegate will consider various factors, including but not limited to, whether it would be beneficial to have the service provided by the independent registered public accounting firm and whether the service could compromise the independence of the independent registered public accounting firm. For the year ended December 31, 2020, the Audit Committee approved all of the services provided by Monroe Shine & Co., Inc. that were designated as audit-related fees, tax fees and all other fees as set forth in the table above.
The Audit Committee of the Board of Directors determined that all of the services performed by Monroe Shine & Co., Inc. in fiscal year 2020 were not incompatible with Monroe Shine & Co., Inc. maintaining its independence.
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MISCELLANEOUS | |
The Board of Directors is not aware of any business to come before the specialannual meeting other than those matters described in this proxy statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies.
We will paybear the cost of soliciting proxies. We have engaged Regan & Associates, Inc, to assist in the distribution and solicitation of proxies, and will reimburse brokerage firms and other custodians, nominees and fiduciaries for a fee of $5,000 (including out-of-pocket expenses). Regan & Associates, Inc. will assist with fulfillment of the broker-dealer search notification requirement, ensure actual delivery ofreasonable expenses incurred by them in sending proxy materials to the beneficial owners of Mid-Southern’s common stock. In addition to solicitations via the Internet and solicit proxies from both street name and registered stockholders. Ourby mail, our directors, officers and regular employees may also supplement the proxy solicitor’s solicitation ofsolicit proxies personally electronically or by telecopier or telephone without additional compensation. We will also reimburse brokers and other nominees for their expenses in sending these
Mid-Southern’s 2020 Annual Report to Stockholders, including financial statements, has been mailed to all stockholders of record as of the close of business on April 9, 2021. Any stockholder who has not received a copy of the Annual Report may obtain a copy by writing to us or by accessing our proxy materials to you and obtaining your voting instructions.
A copy of Mid-Southern’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the SEC, will be furnished without charge to stockholders of record as of April 9, 2021 upon written request to Erica B. Schmidt, Secretary, Mid-Southern Bancorp, Inc., 300 N. Water Street, Salem, Indiana 47167.
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STOCKHOLDER PROPOSALS |
If a stockholder wishes to submit a proposal for possible inclusion in our annual meeting to be held in 2020 must be received by us no later than November 23, 2019 to be considered for inclusion in the proxy materialsstatement and form of proxy relating to that meeting. Any such proposals shallfor our 2022 annual meeting, the proposal must comply with Rule 14a-8 under the Exchange Act, and must be subjectsubmitted to the requirementsSecretary, Mid-Southern Bancorp, Inc., 300 N. Water Street Salem, Indiana 47167. The Secretary must receive your proposal on or before the close of the proxy rules adopted under the Securities Exchange Act.
In addition, our Bylaws provide that in order forestablish advance notice procedures as to (1) business to be brought before an annual or special meeting of stockholders other than by or at the annual meetingdirection of our Board of Directors, and (2) the nomination, other than by or a nomination toat the direction of our Board of Directors, of candidates for election as directors. To be made, a stockholdertimely, such advance notice must deliver notice toset forth the Secretary not less than 90 days prior toinformation required under the dateBylaws and be received at the principal office of the annual meeting; provided thatcorporation (a) if less than 100 days’ notice of the annual meeting is given to stockholders, suchbe held on a day which is not more than 30 days in advance of the anniversary of the previous year's annual meeting or not later than 60 days after the anniversary of the previous year's annual meeting, notice must be deliveredreceived not later than the close of business on the tenth90th day following(i.e., February 25, 2022) nor earlier than the close of business on the 120th day on which notice(i.e., January 26, 2022) in advance of the anniversary of the previous year's annual meeting; or (b) with respect to any other annual meeting was mailed to stockholders. Theof stockholders, notice must statebe received no earlier than the stockholder’s name, address and numberclose of shares of Mid-Southern common stock held, and briefly discussbusiness on the business to be brought120th day before the annual meeting and not later than the reasons for conducting suchclose of business aton the later of: (1) the 90th day before the annual meeting and any interest(2) the close of business on the 10th day following the first date on which public disclosure of the stockholder indate of the proposal.
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| BY ORDER OF THE BOARD OF DIRECTORS |
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| /s/ ERICA B. SCHMIDT |
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| ERICA B. SCHMIDT SECRETARY |
Salem, Indiana
April 26, 2021
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Mid-Southern Bancorp, Inc.
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Your vote matters - here's how to vote! You may vote online or by phone instead of mailing this card. | ||
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. [X] | Votes submitted electronically must be received by 1:00 a.m., Eastern Time, on May 26, 2021. Online Go to www.investorvote.com/MSVB or scan the QR code - login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada Save paper, time and money! Sign up for electronic delivery at www.investorvote.com/MSVB | |
2021 Annual Meeting Proxy Card | ||
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IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. |
A Proposals — The Board of Directors recommends a vote FOR Proposals 1 all the nominees listed and FOR Proposal 2.
1. The election as director of the nominees listed below: | |||||
For a Three-Year Term: | | | |||
For Withhold | For Withhold | | | ||
01 – Kermit A. Lamb | [ ] [ ] | 02 – Brent A. Rosenbaum | [ ] [ ] | | |
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For Against Abstain | |||
2. Ratification of the | [ ] [ ] [ ] | ||
Mid-Southern Bancorp, Inc. | |||
accounting firm for the year ending December 31, 2021. | |||
B Authorized Signatures — This section must be completed for your vote to count. Please datebe counted — Date and sign below
Please sign exactly as name(s)your name appears hereon. Joint owners should each sign.on the enclosed card. When signing as attorney, executor, administrator, corporate officer, trustee guardian, or custodian,guardian, please give full title.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||
Important notice regarding the Internet availability of proxy materials for the SpecialAnnual Meeting of Stockholders.
The material is available at: www.edocumentview.com/MSVB
Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.investorvote.com/MSVB |
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. |
Mid-Southern Bancorp, Inc. — Revocable Proxy
2021 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for SpecialAnnual Meeting - September 25, 2019
The undersigned hereby appoints the official Proxy Committee of Mid-Southern Bancorp, Inc., Salem, Indiana ("Company"), consisting of the Board of Directors,Alexander G. Babey, Trent L. Fisher and Eric A. Koch, with full powers of substitution, to act as attorneys and proxies for the undersigned, to vote all shares of common stock of the Company which the undersigned is entitled to vote at the SpecialAnnual Meeting of Stockholders, to be held at the main office of Mid-Southern Savings Bank, FSB, located at 300 N. Water Street, Salem, Indiana, on Wednesday, September 25, 2019May 26, 2021 at 2:1:00 p.m., local time,Eastern Time, and at any and all adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Should the undersigned be present and elect to vote at the SpecialAnnual Meeting or at any adjournment thereof and after notification to the Secretary of the Company at the SpecialAnnual Meeting of the stockholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the execution of this proxy, of the Notice of SpecailAnnual Meeting of Stockholders, and a Proxy Statement for the Special Meeting.
IF VOTING BY MAIL, PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(ItemsContinued, and to be voted appearmarked, dated and signed, on reversethe other side)
C Non-Voting Items
Change of Address - Please print new address below. | Comments - Please print your comments below. | Meeting Attendance | |||
Mark box to the right if you plan to attend the Annual Meeting. | [ ] | ||||
Mid-Southern Bancorp, Inc.
| |||
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. [X] | ||
2021 Annual Meeting Proxy Card | ||
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. |
A Proposals — The Board of Directors recommends a vote FOR Proposals 1 all the nominees listed and FOR Proposal 2.
1. The election as director of the nominees listed below: | |||||
For a Three-Year Term: | |||||
For Withhold | For Withhold | | | ||
01 – Kermit A. Lamb | [ ] [ ] | 02 – Brent A. Rosenbaum | [ ] [ ] | | |
For Against Abstain | |||
2. Ratification of the | [ ] [ ] [ ] | ||
Mid-Southern Bancorp, Inc. | |||
accounting firm for the year ending December 31, 2021 | |||
B Authorized Signatures — This section must be completed for your vote count. Please dateto be counted — Date and sign below.
Please sign exactly as name(s)your name appears hereon. Joint owners should each sign.on the enclosed card. When signing as attorney, executor, administrator, corporate officer, trustee guardian, or custodian,guardian, please give full title.
Date (mm/dd/yyyy) — Please print date below. | Signature 1 — Please keep signature within the box. | Signature 2 — Please keep signature within the box. | ||||
Important notice regarding the Internet availability of proxy materials for the SpecialAnnual Meeting of Stockholders.
The material is available at: www.edocumentview.com/MSVB
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Mid-Southern Bancorp, Inc. — Revocable Proxy
2021 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for SpecialAnnual Meeting - September 25, 2019
The undersigned hereby appoints the official Proxy Committee of Mid-Southern Bancorp, Inc., Salem, Indiana ("Company"), consisting of the Board of Directors,Alexander G. Babey, Trent L. Fisher and Eric A. Koch, with full powers of substitution, to act as attorneys and proxies for the undersigned, to vote all shares of common stock of the Company which the undersigned is entitled to vote at the SpecialAnnual Meeting of Stockholders, to be held at the main office of Mid-Southern Savings Bank, FSB, located at 300 N. Water Street, Salem, Indiana, on Wednesday, September 25, 2019May 26, 2021 at 2:1:00 p.m., localEastern Time, and at any and all adjournments thereof.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
Should the undersigned be present and elect to vote at the SpecialAnnual Meeting or at any adjournment thereof and after notification to the Secretary of the Company at the SpecialAnnual Meeting of the stockholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from the Company, prior to the execution of this proxy, of the Notice of SpecialAnnual Meeting of Stockholders, and a Proxy Statement for the Special Meeting.
IF VOTING BY MAIL, PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
(ItemsContinued, and to be voted appearmarked, dated and signed, on reversethe other side)