NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS
| Date and Time April 28, 2021 2:00 p.m., Eastern daylight time | 
| Place Reunion Resort Grand Ballroom E 7593 Gathering Drive Kissimmee, Florida 34747 |
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Matters to be Voted on: |
● Electing the 16 directors named in the proxy statement |
● Approving our executive compensation (an advisory, non-binding “Say on Pay” resolution) |
● Ratifying the appointment of our independent registered public accounting firm for 2021 |
● Any other business that may properly come before our annual meeting |
Record date:
We have set the close of business on February 26, 2021 as the record date for our annual meeting. SouthState shareholders as of the close of business on February 26, 2021 will be entitled to vote at our annual meeting and any adjournments or postponements of the meeting.
Your vote is very important:
Please submit your proxy please callas soon as possible by the CompanyInternet, telephone, or mail. Submitting your proxy by one of these methods will ensure your representation at 800-277-2175. Ifthe annual meeting regardless of whether you are a record shareholder, attend the meeting,meeting.
Please refer to pages 57 and desire58 of this proxy statement for additional information on how to revokevote your proxyshares and vote in person, you may do so. In any event, a proxy may be revoked by a record shareholder at any time before it is exercised.attend our annual meeting.
By Orderorder of the Board of Directors,
William C. Bochette, III
Beth S. DeSimone
General Counsel and Corporate Secretary
Columbia, South Carolina
March 7, 20188, 2021
SOUTH STATE CORPORATION
520 Gervais Street
Columbia, South Carolina 29201
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
Important notice regarding the availability of proxy materials for the annual meeting of shareholders to be Heldheld on April 19, 201828, 2021:
ThisOur 2021 Proxy Statement is furnishedand 2020 Annual Report to shareholders are available at www.proxyvote.com.
Our Recent Merger of Equals Transaction:
On June 7, 2020, we completed our merger of equals transaction with CenterState Bank Corporation (“CenterState”), a Florida corporation, pursuant to the Agreement and Plan of Merger, dated as of January 25, 2020 (the “Merger Agreement”). Under the Merger Agreement, CenterState merged with and into SouthState, with SouthState as the surviving corporation (the “Merger”).
Unless the context indicates otherwise, all references to the “Company,” “SouthState,” “we,” “us” and “our” in this Proxy Statement refer to South State Corporation, a South Carolina corporation (herein, unless the context otherwise requires, together with its subsidiaries, including South State Bank, National Association (the “Bank”). However, if the “Company”discussion relates to a period before the Merger, the references to SouthState, together with its subsidiaries, mean the Company and South State Bank (“SouthState Bank”),.
Our key corporate governance policies include:
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An annually elected Board, with directors serving one-year terms |
A majority independent Board, with entirely independent Audit, Compensation, Governance and Nominating, and Risk Committees |
Separate roles of Chief Executive Officer and Executive Chairman |
Lead Independent Director with clearly defined responsibilities |
Executive sessions of independent directors at regularly scheduled Board meetings |
Board review and oversight of current and potential risks facing the Company and its business |
Annual Board self-assessment guided by Lead Independent Director and the Governance and Nominating Committee and annual Board committee performance evaluations coordinated by each committee |
Ongoing required director education |
Stock ownership requirements for directors and executive officers and insider trading guidelines |
Directors, officer and employees are prohibited from engaging in hedging or pledging transactions |
No poison pill |
Shareholders owning 10% or more of the Company’s common stock can call a special meeting of shareholders |
Mandatory director retirement age of 72 years, subject to certain exceptions |
Code of Ethics applicable to all directors, officers and employees |
Whistleblower Policy providing a confidential mechanism to report concerns regarding accounting, internal controls, auditing matters, securities law compliance, or any provision of federal law relating to fraud against shareholders |
Additional Corporate Governance Information
More information about our corporate governance practices, documents and policies can be found on our website at https://www.southstatebank.com/ under the 2018 Annual MeetingCorporate Governance tab of Shareholders to be held at the Company’s headquarters inCorporate Overview section under “Investor Relations”, including our: (i) Corporate Governance Guidelines; (ii) Code of Ethics; and (iii) the Orangeburg Conference Room oncharters of each of our Board committees. The Bylaws of the second floor, 520 Gervais Street, Columbia, South Carolina at 2:00 p.m., on April 19, 2018 or any adjournment thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. DirectionsCompany were filed as Exhibit 4.6 to the Company’s headquartersForm 8-K filed with the Securities and Exchange Commission on November 30, 2020. We will disclose any future amendments to these documents on our website as promptly as practicable, as and to the extent required under The NASDAQ Stock Market listing standards and applicable SEC rules.
This information is also available in print, free of charge, upon written request addressed to our Corporate Secretary at 1101 First Street South, Winter Haven, Florida 33880. Neither our website nor any of the documents noted above or available therein are incorporated by reference to this proxy statement.
Internet Availability of Proxy Materials
We mailed or emailed to most of our shareholders a Notice of Internet Availability of our proxy materials with instructions on how to access our proxy materials online and how to vote. If you are a registered holder and would like to change the method of delivery of your proxy materials, please contact our transfer agent, Computershare, P.O. Box 505000, Louisville, Kentucky 40233-5000; Toll free: (800) 568-3476; Foreign (781) 575-2879; or at www.computershare.com/investor. You may be obtaineddo the same as a beneficial owner by contacting Ebony Strudwickthe bank, broker, or other nominee where your shares are held.
Proxy Statement Availability
We are providing or making available this proxy statement to solicit your proxy to vote on the matters presented at 803-231-5037.our annual meeting. We commenced providing and making available this proxy statement on March 15, 2021. Our Board requests that you submit your proxy by the Internet, telephone, or mail so that your shares will be represented and voted at our annual meeting.
We will pay the cost of solicitation of proxies. Solicitation of proxies may be made in person or by mail, telephone or other means by directors, officers and regular employees of the Company. The Company without receiving additional compensation. We may also request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of theour common stock par value $2.50 per share (the “Common Stock”), of the Company held of record by such persons, and the Companywe will reimburse the reasonable forwarding expenses. The cost of solicitation of proxies will be paid by the Company. This Proxy Statement was first mailed to shareholders on or about March 9, 2018.
The Company’s principal executive offices are located at 520 Gervais Street, Columbia, South Carolina 29201. The Company’s mailing address is P.O. Box 1030, Columbia, South Carolina 29202, and its telephone number is 800-277-2175.
ANNUAL REPORT
The Annual Report to Shareholders (which includes the Company’s Annual Report on Form 10-K containing, among other things, the Company’s fiscal year ended December 31, 2017 financial statements) accompanies this proxy statement. Such Annual Report to Shareholders does not form any part of the material for the solicitation of proxies.
REVOCATION OF PROXY
Any record shareholder returning the accompanying proxy may revoke such proxy at any time prior to its exercise (a) by giving written notice to the Company of such revocation, (b) by voting in person at the meeting, or (c) by executing and delivering to the Company a later dated proxy. Attendance at the Annual Meeting will not in itself constitute revocation of a proxy. Any written notice or proxy revoking a proxy should be sent to South State Corporation, P.O. Box 1030, Columbia, South Carolina 29202, Attention: William C. Bochette, III. Written notice of revocation or delivery of a later dated proxy will be effective upon receipt thereof by the Company.
QUORUM AND VOTING
The Company’s only voting security is its Common Stock, each share of which entitles the holder thereof to one vote on each matter to come before the Annual Meeting. At the close of business on February 16, 2018 (the “Record Date”), the Company had issued and outstanding 36,785,071 shares of Common Stock, which were held of record by approximately 28,300 persons. Only shareholders of record at the close of business on the Record Date are entitled to notice of and to vote on matters that come before the Annual Meeting. Notwithstanding the Record Date specified above, the Company’s stock transfer books will not be closed and shares of the Common Stock may be transferred subsequent to the Record Date. However, all votes must be cast in the names of holders of record on the Record Date.
The presence in person or by proxy of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. If a share is represented for any purpose at the Annual Meeting by the presence of the registered owner or a person holding a valid proxy for the registered owner, it is deemed to be present for the purposes of establishing a quorum. Therefore, valid proxies which are marked “Abstain” or “Withhold” or as to which no vote is marked, including proxies submitted by brokers who are the record owners of shares but who lack the power to vote such shares (so‑called “broker non-votes”), will be included in determining the number of votes present or represented at the Annual Meeting. If a quorum is not present or represented at the Annual Meeting, the shareholders entitled to vote, present in person or represented by proxy, have the power to adjourn the Annual Meeting from time to time until a quorum is present or represented. If any such adjournment is for a period of less than 30 days, no notice, other than an announcement at the Annual Meeting, is required to be given of the adjournment. If the adjournment is for 30 days or more, notice of the adjourned Annual Meeting will be given in accordance with the
Company’s Bylaws. Directors, officers and regular employees of the Company may solicit proxies for the reconvened Annual Meeting in person or by mail, telephone or other means. At any such reconvened Annual Meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the Annual Meeting as originally noticed. Once a quorum has been established, it will not be destroyed by the departure of shares prior to the adjournment of the Annual Meeting.
Provided a quorum is established at the Annual Meeting, directors will be elected by a majority of the votes cast at the Annual Meeting. Shareholders of the Company do not have cumulative voting rights.
All other matters to be considered and acted upon at the Annual Meeting require that the number of shares of Common Stock voted in favor of the matter exceed the number of shares of Common Stock voted against the matter, provided a quorum has been established. Abstentions, broker non-votes and the failure to return a signed proxy will have no effect on the outcome of such matters.
Brokers are members of the New York Stock Exchange (the “NYSE”) which allows its member-brokers to vote shares held by them for their customers on matters the NYSE determines are routine, even though the brokers have not received voting instructions from their customers. If the NYSE does not consider a matter routine, then your broker is prohibited from voting your shares on the matter unless you have given voting instructions on that matter to your broker. Because the NYSE does not consider Proposals No. 1 and 2 to be routine matters, it is important that you provide instructions to your bank or broker if your shares are held in street name so that your vote with respect to each of these matters is counted. If you do not give your bank or broker voting instructions with respect to Proposals No. 1 and 2, your bank or broker may not vote on these matters.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDER MEETING TO BE HELD ON April 19, 2018
This Proxy Statement and the Company’s 2017 Annual Report to Shareholders (which includes its 2017 Annual Report on Form 10-K) are available at http://www.envisionreports.com/SSB.
ACTIONS TO BE TAKEN BY THE PROXIES
Each proxy, unless the shareholder otherwise specifies therein, will be voted according to the recommendations of the Board of Directors as follows:
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Proposal One:ivSOUTHSTATE
| FOR the election of the persons named in this Proxy Statement as the Board of Directors’ nominees for election to the Board of Directors; and
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Charles W. McPherson | Age: 73 | Director since: 2020 |
| Retired, President and Chief Executive Officer. For Officer, SunTrust Bank, Mid-Florida | Mr. Roquemore, includes 9,426 shares owned by Patten Seed Company,McPherson was appointed to our Board of which Mr. RoquemoreDirectors on June 7, 2020 in connection with the Merger, and he serves as our lead independent director. He is a 29% ownerretired executive with 38 years of experience as a senior level banking executive in Central Florida. Mr. McPherson served as Chairman, President and management affiliate. ForChief Executive Officer of SunTrust Bank, Mid-Florida, a $1.5 billion bank with 26 branches in Central Florida between 1988 and 2008. Previously, he was the President and Chief Executive Officer of Sun First National Bank of Polk County (1986 - 1988); Group President of Sun First National Bank of Polk County (1984 - 1986); President and Chief Executive Officer of Flagship State Bank of Polk County (1979 - 1984); and Executive Vice President of Flagship Bank of Okeechobee (1974 - 1979). Mr. Burns, includes 2,137 shares owned by J.E. Burns Holdings, Inc.,McPherson also served as chairman and director for each of whichSun First National Bank of Polk County (1986 to 1988) and Flagship State Bank of Polk County Board of Directors (1979 to 1984). Mr. Burns is an 86% ownerMcPherson’s extensive experience provides our Board with in-depth insight from both the perspective of our industry and hasits evolution, as well as from the ability to direct the voting and dispositionperspective of the shares.primary markets that we serve. Other U.S.-Listed Company Boards: CenterState (2012 to 2020) |
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G. Ruffner Page, Jr. | Age: 62 | Director since: 2020 |
| President, McWane, Inc. | Mr. Page was appointed to our Board of Directors on June 7, 2020 in connection with the Merger. He is the President of McWane, Inc., a company involved in the manufacture of pipes, valves, water fittings, fire extinguishers and propane tanks and in various technology industries, since 1999. Mr. Page previously served as Executive Vice President of National Bank of Commerce, a subsidiary of Alabama National Bancorporation, from 1989 until 1994, after which time he accepted employment at McWane, Inc. Mr. Page also served as a director for Alabama National BanCorporation Board of Directors (1995 to 2008). Mr. Page’s experience as the President of one of the largest privately-owned manufacturing companies in the U.S. and understanding of banking as a former financial institution executive provides our Board with valuable strategic insights as we continue to evolve into a leading Southeast regional community bank. Other U.S.-Listed Company Boards: CenterState (2019 to 2020); National Commerce Corporation (Lead Independent Director) (2010-2019); and Alabama National Bancorporation (1996 to 2008). |
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Ernest S. Pinner | Age: 73 | Director since: 2020 |
| Retired, Chief Executive Officer, CenterState Bank Corporation and CenterState Bank, N.A. | Mr. Pinner was appointed to our Board of Directors on June 7, 2020 in connection with the Merger. He previously served as the Chairman of the board of directors of CenterState from January 1, 2020 until the Merger, and as Executive Chairman of the board of directors of CenterState from July 2015 until January 1, 2020. Before that, he served as President and Chief Executive Officer of CenterState. Mr. Pinner has been actively involved in the banking business in Central Florida over the past 50 years. Mr. Pinner was also the Chairman of CenterState’s subsidiary bank. He was the founding President and Chief Executive Officer of CenterState Bank, N.A., which was acquired by CenterState in 2002. He also served as a director for CenterState Bank MidFlorida, N.A which was acquired by CenterState in 2006. Before joining CenterState in 1999, he had a lengthy career with First Union Bank and was the area President and Senior Vice President of First Union National Bank between 1986 and 1999. Mr. Pinner brings to our Board a lifetime of banking experience at all levels of a financial institution (both regional and community banking). Other U.S.-Listed Company Boards: CenterState (Chair) (2002-2020) |
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6 SOUTHSTATE | | Includes unvested shares of restricted stock, as to which the executive officers and directors have full voting privileges. The shares are as follows: Mrs. Brooks, 1,396 shares; Mr. Burns, 1,645 shares; Mr. Hill, 15,246 shares; Mr. Horger, 1,603 shares; Mr. Pollok, 13,155 shares; and all directors and executive officers as a group, 36,145 shares.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS
The ArticlesTable of Incorporation of the Company provide for a maximum of twenty directors; to be divided into three classes with each director serving a three-year term, with the classes as equal in number as possible. The Board of Directors has currently established the number of directors at fifteen.
John C. Pollok, Cynthia A. Hartley, Thomas E. Suggs, Kevin P. Walker, James C. Cherry, and Jean E. Davis, all of whom currently are directors of the Company and whose terms expire at the Annual Meeting, have been nominated by the Board of Directors for re-election by the shareholders. If re-elected, Ms. Hartley and Messrs. Pollok, Suggs and Walker will serve as directors of the Company for a three-year term, expiring at the 2021 Annual Meeting of Shareholders of the Company.
James C. Cherry and Jean E. Davis were appointed to the Board of Directors effective December 1, 2017. Under South Carolina law, Mr. Cherry’s and Ms. Davis’ terms expire at the Annual Meeting, and we ask that you re-elect Mr. Cherry and Ms. Davis to our Board of Directors. If re-elected, Mr. Cherry and Ms. Davis will each serve as director of the Company for a two-year term, expiring at the 2020 Annual Meeting of Shareholders of the Company.
Under our current Bylaws, in the event that a director attains age 72 during his or her term of office, he or she shall serve only until the next shareholders’ meeting after his or her 72nd birthday.
The Board of Directors unanimously recommends that shareholders vote “FOR” the director nominees.
ContentsThe table below sets forth for each director his or her name, age, when first elected and current term expiration, business experience for at least the past five years, and the qualifications that led to the conclusion that the individual should serve as a director.
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| | | | First | | Current | | Nominee | | | |
| | | | Elected | | Term | | for New | | Business Experience for the Past Five Years and | |
Name | | Age | | Director | | Expires | | Term | | Director Qualifications | |
Robert R. Horger Chairman South State Bank Employee | | 67 | | 1991 | | 2019 | | | | Mr. Horger has served as Chairman of the Company and its wholly-owned banking subsidiary, South State Bank (sometimes also referred to herein as the “Bank”), since 1998. He also has served as Vice Chairman of the Company and the Bank, from 1994 to 1998. Mr. Horger has been an attorney with Horger, Barnwell and Reid in Orangeburg, South Carolina, since 1975. During his tenure as Chairman, Mr. Horger has developed knowledge of the Company’s business, history, organization, and executive management which, together with his personal understanding of many of the markets that we serve, has enhanced his ability to lead the Board of Directors through the current challenging business environment for all financial institutions. Mr. Horger’s legal training and experience enhance his ability to understand the Company’s regulatory framework. | |
Robert R. Hill, Jr. Chief Executive Officer South State Bank Employee | | 51 | | 1996 | | 2020 | | | | Mr. Hill has served as Chief Executive Officer of the Company since July 26, 2013. Prior to that time, Mr. Hill served as President and Chief Executive Officer of the Company from November 6, 2004 to July 26, 2013. Prior to that time, Mr. Hill served as President and Chief Operating Officer of South State Bank, from 1999 to November 6, 2004. Mr. Hill joined the Company in 1995. He was appointed to serve on the Federal Reserve Board of Directors in December 2010. Mr. Hill brings to the board an intimate understanding of the Company’s business and organization, as well as substantial leadership ability, banking industry expertise, and management experience. | |
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| | | | First | | Current | | Nominee | | | |
| | | | Elected | | Term | | for New | | Business Experience for the Past Five Years and | |
Name | | Age | | Director | | Expires | | Term | | Director Qualifications | |
John C. Pollok Chief Financial Officer & Chief Operating Officer South State Bank Employee | | 52 | | 2012 | | 2018 | | ● | | Mr. Pollok has served as Chief Financial Officer and Chief Operating Officer of the Company since March 21, 2012. Mr. Pollok previously served as the Chief Operating Officer of the Company and the Bank from January 4, 2010 until March 21, 2012. Prior to that time, Mr. Pollok served as the Chief Financial Officer and Chief Operating Officer of the Company and the Bank from February 15, 2007 until January 3, 2010. Mr. Pollok brings to the board an overall institutional knowledge of the Company’s business, banking industry expertise, and leadership experience. | |
Jimmy E. Addison | | 57 | | 2007 | | 2019 | | | | Mr. Addison has served as Chief Executive Officer of SCANA Corporation, the holding company of South Carolina Electric and Gas Company and other utility-related concerns since January 1, 2018. He previously served as Chief Financial Officer from 2006 through 2017 and as President of SCANA Energy from 2014 through 2017. He also serves as a member of the board (past president) for the Business Partnership Foundation of the Darla Moore School of Business at the University of South Carolina. Mr. Addison is also a licensed CPA and previously worked for an international accounting firm. His leadership experience, knowledge of financial reporting requirements of public companies, and business and personal ties to many of the Bank’s market areas enhance his ability to contribute as a director. | |
Paula Harper Bethea Vice Chairman | | 62 | | 2013 | | 2020 | | | | Mrs. Bethea has served as Vice-Chairman of the Board of Directors of the Company and the Bank since 2013. Mrs. Bethea is currently President of Strategic Synergies LLC and President of Dillon Property Holdings LLC. Mrs. Bethea was formerly the Executive Director of the South Carolina Education Lottery and was one of nine South Carolinians chosen in 2001 to establish the Lottery. Prior to this position, Mrs. Bethea was with the McNair Law Firm from 2006 to 2009 where she served as Director of External Relations. Mrs. Bethea served on the board of directors of former First Financial Holdings, Inc. of Charleston, South Carolina (“FFHI”) from 1996 until FFHI merged with the Company in 2013. Her business and personal experience in certain of the communities that the Bank serves provides her with an appreciation of markets that we serve, and her leadership experiences provide her with insights regarding organizational behavior and management. | |
James C. Cherry | | 67 | | 2017 | | 2018 | | ● | | Mr. Cherry served as the Chief Executive Officer and as a director of the Park Sterling Corporation from its formation in 2010 until November 2017. Mr. Cherry has served as a consultant to the Bank since November 2017. He retired as the Chief Executive Officer for the Mid-Atlantic Banking Region at Wachovia Corporation in 2006, and previously served as President of Virginia Banking, Head of Trust and Investment Management, and in various positions in North Carolina and Virginia banking including Regional Executive, Area Executive, City Executive, Corporate Banking and Loan Administration Manager, and Retail Banking Branch Manager for Wachovia. Mr. Cherry was formerly Chairman of the Virginia Bankers Association. He is currently a director of Armada Hoffler Properties Inc., a Virginia-based publicly traded real estate company. Mr. Cherry’s extensive experience in commercial and retail banking operations, credit administration, product management and merger integration at Wachovia, which was focused in the Carolinas and Virginia, provides the Board of Directors with significant expertise important to the oversight of the Company and expansion into its target markets. | |
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| | | | First | | Current | | Nominee | | | |
| | | | Elected | | Term | | for New | | Business Experience for the Past Five Years and | |
Name | | Age | | Director | | Expires | | Term | | Director Qualifications | |
Jean E. Davis | | 62 | | 2017 | | 2018 | | ● | | Ms. Davis, former Park Sterling Corporation Board member, retired as the head of Operations, Technology and e-Commerce of Wachovia Corporation in 2006. She previously served as the Head of Operations and Technology, Head of Human Resources, Head of Retail Banking, and in several office executive, regional executive and corporate banking roles for Wachovia. She is currently a member of the Board of Safe Alliance, Charlotte, NC and of the Charlotte Latin School. Ms. Davis brings extensive knowledge of bank operations and technology, as well as human resources, to the Board of Directors, both of which are important to the Company’s long-term success. In addition, she brings a strong background in retail banking, merger due diligence and merger integration experience. | |
Martin B. Davis | | 54 | | 2016 | | 2020 | | | | Mr. Davis is executive vice president of Southern Company Services and chief information officer of Southern Company. Mr. Davis has spent nearly 30 years leading complex technology organizations in highly regulated environments. Mr. Davis serves on the American Heart Association’s Mid-Atlantic region board of directors. Mr. Davis served on the board of trustees at Winston-Salem State University. He has been recognized as one of the “50 Most Important African-Americans in Technology” by U.S. Black Engineers & Information Technology magazine and one of the “75 Most Powerful African-Americans in Corporate America” by Black Enterprise. Mr. Davis’ technology-related experience provides him with useful insight regarding this area of increasing strategic importance to bank marketing and operations. | |
Robert H. Demere, Jr. | | 69 | | 2012 | | 2019 | | | | Mr. Demere serves as President, Chief Executive Officer and director of Colonial Group, Inc., a petroleum marketing company located in Savannah, Georgia. Mr. Demere has been employed by Colonial Group, Inc. since 1974. As President of Colonial Group, Inc., Mr. Demere has attained valuable experience in raising equity in the capital markets. Prior to working for Colonial, Mr. Demere worked as a stockbroker for Robinson-Humphrey Company. Mr. Demere served on the board of directors of Savannah Bancorp Inc. from 1989 until its acquisition by the Company in 2012. His business and personal experience in certain of the communities that the Bank serves also provides him with an appreciation of and useful insight regarding certain markets that we serve. | |
Cynthia A. Hartley | | 69 | | 2011 | | 2018 | | ● | | Mrs. Hartley retired in 2011 as Senior Vice President of Human Resources with Sonoco Products Company in Hartsville, South Carolina. Mrs. Hartley served as the Chairman of the Board of Trustees for Coker College in Hartsville, South Carolina. Mrs. Hartley was first elected to the Board of Directors of the Company in May of 2011. Her leadership experience, knowledge of human resource matters, and business and personal ties with many of the Bank’s market areas enhance her ability to contribute as a director. | |
Thomas J. Johnson | | 67 | | 2013 | | 2020 | | | | Mr. Johnson is President, Chief Executive Officer, and Owner of F&J Associates, a company that owns and operates automobile dealerships in the southeastern United States and the U.S. Virgin Islands. He serves on the Board of Directors of the South Carolina Automobile Dealers Association, the Board of Visitors of the Coastal Carolina University School of Business and the South Carolina Business Resources Board. Mr. Johnson served on the board of directors of FFHI from 1998 until FFHI merged with the Company in 2013. Mr. Johnson’s extensive business experience and knowledge of markets that we serve enhance his ability to contribute as a director. | |
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| | | | First | | Current | | Nominee | | | |
| | | | Elected | | Term | | for New | | Business Experience for the Past Five Years and | |
Name | | Age | | Director | | Expires | | Term | | Director Qualifications | |
Grey B. Murray | | 52 | | 2017 | | 2019 | | | | Mr. Murray, former Georgia Bank & Trust board member, serves as President of United Brokerage Company, Inc., headquartered in Augusta, Georgia. Mr. Murray also serves as a Commissioner on the Augusta Aviation Commission and is a graduate of Leadership Georgia. An active member of the community, Mr. Murray has served on the board of directors of the American Heart Association, University Health Care Foundation, Augusta Country Club, Secession Golf Club, St. Paul’s Building Authority, Exchange Club of Augusta, Georgia Movers Association, and Augusta Preparatory Day School (past Chairman of the Board). Mr. Murray’s extensive business experience and knowledge of markets that we serve enhance his ability to contribute as a director. | |
James W. Roquemore | | 63 | | 1994 | | 2019 | | | | Mr. Roquemore serves as Chief Executive Officer of Patten Seed Company, Inc. of Lakeland, Georgia, and General Manager of Super-Sod/Carolina, a company that produces and markets turf, grass, sod and seed, since 1997. As the chief executive officer of a company, Mr. Roquemore has experience with management, marketing, operations, and human resource matters. His business and personal experience in the communities that the Bank serves also provides him with an appreciation of markets that we serve. Moreover, during his tenure as a director he has developed knowledge of the Company’s business, history, organization, and executive management which, together with the relationships that he has developed, enhance his leadership and consensus-building ability. | |
Thomas E. Suggs | | 68 | | 2001 | | 2018 | | ● | | Mr. Suggs has served as President and Chief Executive Officer of HUB Carolinas, a region of HUB International, the eighth largest insurance broker in the world, since August 2016. Mr. Suggs was the President and Chief Executive Officer of Keenan & Suggs, Inc., an insurance brokerage and consulting firm, before it was acquired by HUB international in August 2016. Mr. Suggs has over 21 years of experience in the insurance industry and 25 years of banking experience. As the chief executive officer of the region, Mr. Suggs has experience with management, marketing, operations, and human resource matters, and his experience with the banking industry also provides him with certain insights. His business and personal experience in communities that the Bank serves also provides him with an appreciation of markets that we serve. | |
Kevin P. Walker | | 67 | | 2010 | | 2018 | | ● | | Mr. Walker, CPA/ABV, CFE, is a founding partner of GreerWalker LLP with offices in Charlotte, North Carolina and Greenville, South Carolina. GreerWalker LLP is the largest certified public accounting firm founded and headquartered in Charlotte and currently employs approximately 115 people. Mr. Walker is also a member of the American Institute of Certified Public Accountants, the North Carolina Association of Certified Public Accountants, the Financial Consulting Group, the Association of Certified Fraud Examiners, and the American Arbitration Association Panel of Arbitrators. Mr. Walker was first elected to the Board of Directors of the Company in October 2010. Mr. Walker’s leadership experience, accounting knowledge and business and personal experience in certain of the Company’s markets enhance his ability to contribute as a director. | |
FAMILY RELATIONSHIPS
There are no family relationships among any of the directors and executive officers of the Company.
THE BOARD OF DIRECTORS AND COMMITTEES
During 2017, the Board of Directors of the Company held seven meetings. All directors attended at least 85% of the aggregate of (a) the total number of meetings of the Board of Directors held during the period for which he or she served as a director, and (b) the total number of meetings held by all committees of the Board of Directors of the Company on which he or she served.
There is no formal policy regarding attendance at annual shareholder meetings; although such attendance has always been strongly encouraged. All of the directors attended the 2017 Annual Shareholders Meeting.
The Board of Directors has adopted a Code of Ethics that is applicable to, among other persons, the Company’s chief executive officer, chief financial officer, principal accounting officer and all managers reporting to these individuals who are responsible for accounting and financial reporting. The Code of Ethics is located on the Company’s website at https://www.southstatebank.com/ under Investor Relations. We will disclose any future amendments to, or waivers from, provisions of these ethics policies and standards on our website promptly as practicable, as and to the extent required under NASDAQ Stock Market listing standards and applicable SEC rules.
The Board of Directors of the Company maintains executive, audit, compensation, governance, and risk committees. The composition and frequency of meetings for these committees during 2017 were as follows:
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| proposal 1: electing directors |
John C. Pollok | Age: 55 | | | | | | | | | | | Director since: 2012 |
| Senior Executive Vice President, SouthState and the Bank | Mr. Pollok was appointed to serve as a Senior Executive Vice President of the Company on June 7, 2020 in connection with the Merger. Before that, Mr. Pollok served as our Chief Financial Officer from March 21, 2012 until the completion of the Merger on June 7, 2020. Before that, he served as our Chief Operating Officer from February 15, 2007 until July 19, 2018. Mr. Pollok also previously served as Chief Operating Officer of SouthState Bank from February 15, 2007 until March 21, 2012. Before that, he served as our Chief Financial Officer from February 15, 2007 until January 3, 2010. Mr. Pollok brings to our Board an overall institutional knowledge of our business, banking industry expertise, and leadership experience. |
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William K. Pou, Jr. | Age: 64 | Director since: 2020 |
| Chairman and Chief Executive Officer, W.S. Badcock Corporation | Mr. Pou was appointed to our Board of Directors on June 7, 2020 in connection with the Merger. He is the Chairman of the board, Executive Vice President and Chairman of the Compliance Committee of W.S. Badcock Corporation (dba Badcock Home Furniture & More), where he is responsible for the retail operations of over 373 stores in eight states throughout the Southeastern United States. Mr. Pou has spent his entire adult life with this organization and has been involved in all aspects of its operations including the consumer credit division as well as personally owning and operating several stores between 1979 and 1998 as an independent dealer. He was also a founding director of the First National Bank of Polk County in 1992, one of the initial three banks which were merged together to form CenterState Bank. Mr. Pou brings to our Board more than 30 years of experience and insight in consumer credit and collections, as well as experience and knowledge in operating multi-unit, multi-state operations. Mr. Pou is active in the community, currently serving as a trustee of the board of trustees for Florida Southern College Board (Lakeland, Florida) and Lakeland Regional Health. Other U.S.-Listed Company Boards: CenterState (2012 to 2020) |
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David G. Salyers | Age: 62 | Director since: 2020 |
| Retired, Executive responsible for Growth and Hospitality, Chick-fil-A, Inc. | Mr. Salyers was appointed to our Board of Directors on June 7, 2020 in connection with the Merger. He is retired as the executive responsible for growth and hospitality for Chick-fil-A, Inc., the Atlanta based fast food restaurant chain, where he spent his entire 37-year career. From 2019 to 2020, Mr. Salyers served on the Board of Directors of Live Oak Banking Company. He also is active in community activities and has been involved in venture capital partnerships and technology ventures, as well as serves on various boards of several start up organizations. Mr. Salyers was hired recently by the University of Georgia to be the Inaugural Start Up Mentor-In-Residence. Mr. Salyers is the author of the book, “Remarkable!” on company culture. Mr. Salyers’ experience in operating a national service-oriented business and leadership development is considered a valuable asset to our Board as we continue to evolve into a leading Southeast regional community bank with a focus on our customer and employees and developing a distinctive and welcoming culture. | Other U.S.-Listed Company Boards: CenterState (2017 to 2020) and Live Oak Bankshares Inc. (2019 to 2020). |
| | Independent
Under
NASDAQ
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| | Executive
| | Audit
| | Compensation
| | Governance
| | Risk
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Name
| 2021 PROXY STATEMENT 7 |
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Joshua A. Snively | Age: 56 | (8 meetings)
| | (9 meetings)
| | (6 meetings)
| | (4 meetings)
| | (5 meetings)
| Director since: 2020 |
Robert R. Horger
| President, ADM Global Citrus Platform; President, Florida Chemical Company, LLC | No
| | ● Chair
| | | | | | | | | |
Robert R. Hill, Jr.
| | No
| | ●
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John C. Pollok
| | No
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Jimmy E. Addison
| | Yes
| | ●
| | | | | | ● Chair
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Paula Harper Bethea
| | Yes
| | ●
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James C. Cherry (1)
| | No
| | ●
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Jean E. Davis (1)
| | Yes
| | | | | | ●
| | ●
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Martin B. Davis
| | Yes
| | | | ●
| | | | | | ● Chair
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Robert H. Demere Jr.
| | Yes
| | | | ●
| | | | | | ●
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Cynthia A. Hartley
| | Yes
| | | | | | ● Chair
| | ●
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Thomas J. Johnson
| | Yes
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| | ●
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Grey B. Murray
| | Yes
| | | | ●
| | | | | | ●
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James W. Roquemore
| | Yes
| | ●
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Thomas E. Suggs
| | Yes
| | ●
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Kevin P. Walker
| | Yes
| | | | ● Chair
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| (1)
| | James C. CherryMr. Snively was appointed to our Board of Directors on June 7, 2020 in connection with the Merger. He is President of ADM Global Citrus Platform and Jean E. Davis were appointed toPresident of Florida Chemical Company, LLC. ADM acquired Florida Chemical from Flotek Industries, Inc. (Flotek) in March 2019. ADM (NYSE: ADM) is a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company. Mr. Snively currently serves on the Board of Directors on December 1, 2017 effective with the consummation of the mergerCitrus Development and Research Foundation. Prior to the acquisition, Mr. Snively was Executive Vice President of Operations for Flotek and President of its wholly owned subsidiary, Florida Chemical Company, Inc. Mr. Snively has been with Park Sterling Corporation.Florida Chemical since 1995 and was instrumental in transforming the company from a family-owned and operated business to a professionally managed operation with an independent board of directors. Prior to joining Florida Chemical, Mr. Snively was Vice President of Commercial Agriculture Finance at SunTrust Bank and was a commercial lender for Farm Credit of Central Florida. He graduated with a B.S. in Finance and Citrus Management from Florida Southern College. Mr. Snively’s commercial finance experience and his understanding of family owned businesses provides valuable insight our Board as we continue to develop our lending strategy and policy.
Other U.S.-Listed Company Boards: CenterState (2012 to 2020) |
| (2)
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Kevin P. Walker | All directors other than Robert R. Horger, Robert R. Hill, Jr., John C. PollokAge: 70
| Director since: 2010 |
| CPA and James C. Cherry meetFounding Partner, GreerWalker LLP | Mr. Walker, CPA/ABV, CFE, is a founding partner of GreerWalker LLP in Charlotte, North Carolina. GreerWalker LLP is the independence requirements of The NASDAQ Stock Market. Therefore, under these requirements,largest certified public accounting firm founded and headquartered in Charlotte and currently employs approximately 125 people. Mr. Walker is also a majoritymember of the membersAmerican Institute of Certified Public Accountants, the Company’sNorth Carolina Association of Certified Public Accountants, the Financial Consulting Group, the Association of Certified Fraud Examiners, and the American Arbitration Association Panel of Arbitrators. Mr. Walker’s leadership experience, accounting knowledge and business and personal experience in certain of our markets provides our Board of Directors is independent. The functions of these committees arewith useful insight and enhance his ability to contribute as follows:a director. |
Executive Committee—The Board of Directors
Identifying and Evaluating Director Candidates
As required by the terms of the Company may,Merger Agreement and bylaw amendments approved by resolution adopted byshareholder vote in connection with the Merger, for a majority of its members, delegate tothree year period from the executive committeedate the power, with certain exceptions, to exercise the authority of theMerger is completed, our Board of Directors in the management of the affairs and property of the Company. The Executive Committee has the authority to recommend and approve new policies and to review and approve present policies or policy updates and changes. The Executive Committee charter can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
Audit Committee—The Board of Directors has determined that all members of the Audit Committee are independent directors under the independence requirements of The NASDAQ Stock Market. The Board of Directors has also determined that Kevin P. Walker is an “Audit Committee financial expert” for purposes of the rules and regulations of the SEC adopted pursuant to the Sarbanes‑Oxley Act of 2002. The primary function of the Audit Committee is to assist the Board of Directors of the Company in overseeing (i) the
Company’s accounting and financial reporting processes generally, (ii) the audits of the Company’s financial statements and (iii) the Company’s systems of internal controls regarding finance and accounting. In such role, the Audit Committee reviews the qualifications, performance, effectiveness and independence of the Company’s independent accountants and has the authority to appoint, evaluate and, where appropriate, replace the Company’s independent accountants. The Audit Committee also oversees the Company’s internal audit department and consults with management regarding the internal audit process and the effectiveness and reliability of the Company’s internal accounting controls. The Board of Directors has adopted a charter for the Audit Committee, a copy of which is located on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
Compensation Committee—The Board of Directors has determined that all members of the Compensation Committee are independent directors under the independence requirements of The NASDAQ Stock Market applicable to directors who do not serve on the Audit Committee. The Compensation Committee, among other functions, has overall responsibility for evaluating, and approving or recommending to the Board for approval, the director and officer compensation plans, policies and programs of the Company. The full Board of Directors is then responsible for approving or disapproving compensation paid to the CEO and each of the other executive officers of the Company. The committee, which currently consists of five independent directors, is required to be made up of no fewer than three independentsixteen directors, whohalf of which are recommendeddesignated by SouthState and half of which are to be designated by CenterState, with Mr. Hill being the Executive Chairman, Mr. Corbett the Chief Executive Officer, and Mr. McPherson the Lead Independent Director. The bylaw amendments also designated a Legacy SouthState Nominating Committee and a Legacy CenterState Nominating Committee to consider any replacement directors in the event one of the Board of Directors and approved by the Board. The Compensation Committee’s processes and procedures for considering and determining executive compensation are described below under “Compensation Discussion and Analysis.” The Compensation Committee charter can be foundcurrent directors serving on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
Governance Committee—The Board of Directors has determinedis not able to serve, so that all membersBoard make-up remains compliant with the shareholder-approved provisions of the Governance CommitteeMerger Agreement. The directors nominated to stand for election at the annual meeting are independentthose named as part of the Merger and are eligible to stand for election as directors underfor three years after the independence requirementsMerger, or until the 2024 annual meeting of shareholders. Those directors that are over 72 years of age that were part of the original designation of directors are exempt from the mandatory retirement age of 72 as set forth in the bylaws until the three year term of service has been fulfilled.
The NASDAQ Stock Market applicablearrangements described above were meant to provide equity to each side in the Merger; however, we believe that this board membership structure as provided in our governance documents, which includes legacy directors who do not servewith diverse backgrounds, viewpoints and expertise, an experienced Lead Independent Director and a strong leadership team, provides effective leadership from which our shareholders will benefit.
To carry out its responsibilities and set the appropriate tone at the top, our Board focuses on the Audit Committee. Thecharacter, integrity, and qualifications of its members, and its leadership structure and composition. While the Governance Committee identifies and recommends individuals qualified to become Board members, reviews the corporate governance practices employed by the Company and recommends changes thereto, and assists the Board in its periodic review of the Board’s performance. The Governance Committee charter can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
The Governance Committee acts as the nominating committee for the purpose of recommending to the Board of Directors nominees for election to the Board. The GovernanceNominating Committee has not established any specific, minimum qualifications that must be met for a person to be nominated to serve as a director, andit does consider many factors, including the Governance Committee has not identified any specific qualities or skills that itfollowing:
Director Independence
The Nasdaq Stock Market (“Nasdaq”) listing standards require a whole, create a strong, well-balanced Board. The experiences and qualificationsmajority of our directors are foundand each member of our Audit Committee, Compensation Committee, and Governance and Nominating Committee to be independent. The Federal Reserve Board’s Enhanced Prudential Standards require the chair of our Risk Committee to be independent. In addition, our Corporate Governance Guidelines require a majority of our directors to be independent. Our Board considers directors or director nominees “independent” if they meet the criteria for independence in the table on pages 5-8.Nasdaq listing standards.
TheOn a quarterly basis, the Governance and Nominating Committee will consider evaluates the relevant relationships between each director/director nominees identified by itsnominee (and his or her immediate family members other directors, officers and employees of the Companyaffiliates) and other persons, including shareholders of the Company. The Governance and Nominating Committee will consider nominees for director recommended by a shareholder if the shareholder provides the committee with the information described in Paragraph 7 under the caption “Committee Authorityalso annually evaluates and Responsibilities” of the Governance Committee’s charter.
The required information regarding a director nominee is also discussed in general terms within the first paragraph of the “Shareholder Proposals and Communications” section on page 2 of this proxy statement.
Risk Committee—The Risk Committee of the Board of Directors of the Company provides assistancecertifies to the Board those directors that are considered independent under the Nasdaq listing standards. As a part of Directorsthis evaluation process, the Governance and Nominating Committee considers, in fulfilling its responsibilityaddition to such other factors as it may deem appropriate, each director’s occupation, personal and affiliate transactions with the Company and its shareholders by striving to identify, assess,subsidiaries, and monitor key business risksother relevant direct and indirect relationships with the Company that may impact the Company’s operations and results. The charter for this committee can be found at https://www.southstatebank.com/ under Investors Relations.affect independence.
While the Risk Committee oversees and reviews the Company’s risk functions to monitor key business risks, management is ultimately responsible for designing, implementing, and maintaining an effective risk management program to identify, plan for, and respondPursuant to the Company’s material risks. The Risk Committee charter acknowledges that the Audit Committee ofannual certification process, the Board is primarily responsible for certain risks, including accounting and financial reporting. Althoughaffirmatively determined that all the Risk Committee does not have primary responsibility forfollowing directors/director nominees are independent under the risks which are subject toNasdaq listing standards:
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· Jean E. Davis | · G. Ruffner Page, Jr. |
· Martin B. Davis | · William K. Pou, Jr. |
· Robert H. Demere, Jr. | · David G. Salyers |
· Cynthia A. Hartley | · Joshua A. Snively |
· Charles W. McPherson | · Kevin P. Walker |
In addition, the jurisdictionBoard determined that each member of the Audit, Committee, itCompensation, Governance and Nominating, and Risk Committees is anticipatedindependent in accordance with the Nasdaq listing requirements, the Federal Reserve Board’s Enhanced Prudential Standards, the Company’s Corporate Governance Standards and/or applicable law, as applicable. Messrs Corbett, Hill, Holcomb, Horger, Pinner and Pollok are not considered independent due to the current or former employment by our Company or an acquired company.
In making its independence determinations, our Board considered the following ordinary course, non-preferential relationships that existed during the preceding three years and those transactions reported under “Related Person and Certain Other Transactions” on occasion certain results from audit functions will be reviewed bypage 20, and determined that none of the Risk Committee.relationships constituted a material relationship between the director/director nominee and our company:
| ● | Our company or its subsidiaries provided ordinary course financial products and services to our directors/director nominees, some of their immediate family members, and entities affiliated with some of them or their immediate family members. In each case, the fees we received for these products and services were below the thresholds of the Nasdaq listing standards. |
| ● | Our company or its subsidiaries purchased products or services in the ordinary course from entities where some of our directors/director nominees are executive officers or employees or their immediate family members serve or served in the past three years as executive officers. In each case, the fees paid to each of these entities were below the thresholds of the Nasdaq listing standards. |
Independent Board Leadership
Code of Ethics—The Board of Directorsis led by Mr. Hill, our Executive Chairman. Pursuant to our Bylaws and Corporate Governance Guidelines, the Executive Chairman also serves as an officer of the Company, andis elected by the Board, of Directorspresides over each Board meeting and performs such other duties as may be incident to the office of the bank have adopted a Code of Ethics to provide ethical guidelines for the activities of agents, attorneys, directors, officers, and employeesExecutive Chairman. The Board is aware of the Company and its subsidiaries. The Codepotential issues that may arise when an insider chairs the board of Ethics will promote, train, and encourage adherence in business and personal affairs to a high ethical standard and will also help to maintain the Company as an institution that serves the public with honesty, integrity and fair-dealing. The Code of Ethics is designed to comply with the Sarbanes-Oxley Act of 2002, and certain other laws that provide guidelines in connection with possible breaches of fiduciary duty, dishonest efforts to undermine financial institution transactions and the intent to corrupt or reward a Company employee or other Company representative. A copycompany, but believes these concerns are mitigated by existing safeguards, including:
| ● | regular reviews of the Board’s leadership structure and governance practices; |
| ● | the separate roles of Chief Executive Officer and Executive Chairman; |
| ● | the designation of a Lead Independent Director with clearly defined authority, duties and responsibilities; |
| ● | the fact that the independent directors regularly meet in executive session without the presence of management or other non-independent directors; |
| ● | the highly regulated nature of the Company’s operations; |
| ● | the fact that the Board is comprised of experienced and skilled directors, the majority of whom are independent; and |
| ● | the fact that the Board’s Audit, Governance and Nominating, Compensation and Risk Committees consist entirely of independent directors. |
In view of the Code of Ethics can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
Board of Directors’ Corporate Governance Guidelines—The Board of Directors of the Company and the Board of Directors of the bank have each adopted certain guidelines governing the qualifications, conduct and operation of the Board. Among other things, these guidelines outline the duties andBoard’s extensive oversight responsibilities, of each director, and establish certain minimum requirements for director training. Each director is required to read, review and sign the corporate governance guidelines on an annual basis. A copy of these guidelines can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
Board Leadership Structure and Role in Risk Oversight
We are focused on the Company’s corporate governance practices and value independent Board oversight as an essential component of strong corporate performance to enhance shareholder value. Our commitment to independent oversight is demonstrated by the fact that over 73% of all of our directors are independent. In addition, all of the members of our Board’s Audit, Compensation, Risk and Governance Committees are deemed independent based on a Board evaluation.
See the discussion entitled Certain Relationships and Related Transactions on page 47 for additional information concerning Board independence.
Our Board believes thatwe believe it is preferable for Mr. Horgerbeneficial to have separate individuals serve asin the roles of Executive Chairman of the Board because of his strong institutional knowledge of the Company’s business, history, industry, markets, organization and executive management gained in his 20 years of experience in a leadership position on the Board.Chief Executive Officer. We believe it is the Chief Executive Officer’s responsibility to manage the Company
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| 2021 PROXY STATEMENT 11 |
The full Board focuses on the risks that it believes to be the most significant facing the Company and our general risk management strategy. The full Board also seeks to ensure that risks undertaken by the Company are consistent with the Board’s approved risk appetite and risk management strategies. Through the oversight of the Company’s results compared to the Board-approved Strategic Plan and budget, the Board assesses whether management is implementing the Company’s strategy constituent with its core principles of soundness, profitability and growth and its other strategic priorities. While the Board oversees our risk management, management is responsible for the day-to-day risk management processes. We believe this division of responsibility is the most effective approach for addressing the risks facing our Company and that the Board’s leadership structure supports this approach.
PROPOSAL NO. 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATIONRisk Governance Structure
Risk is inherent in all of our business activities. As a result, we have developed a comprehensive approach to risk management by adopting a Risk Appetite Statement and a Risk Framework supporting the Risk Appetite Statement.
The SecuritiesRisk Appetite Statement defines the aggregate levels and Exchange Commission rulestypes of risk our Board and management believe appropriate to achieve our company’s strategic objectives and business plan.
The Risk Framework sets forth clear roles, responsibilities, and accountability for the management of risk and describes how our Board oversees the monitoring of our risk appetite through the assessment of key risk indicators and performance factors. It outlines the seven types of risk that our company faces: compliance risk, credit risk, operational risk (specifically including cybersecurity risk and model risk), interest rate risk, liquidity risk, market risk, reputation risk, strategic risk and risks associated with the Bank’s correspondent, mortgage, factoring (Corporate Billing) and wealth lines of business. The Risk Framework describes components of our risk management approach, including the adoption of the three lines of defense risk model and the implementation of a culture of managing risk through our risk management processes, with a focus on the role of all employees in managing risk. It also outlines our risk management governance structure, including the roles of our Board, management, lines of business, independent risk management, and internal audit within the governance structure.
On a quarterly basis, we evaluate the existing risks facing the Company against the Risk Appetite Statement to ensure that actual operations of the Company align within the Company’s risk appetite. The Risk Appetite Statement and Risk Framework are reviewed and approved by the Board annually. Independent Board oversight of our the Risk Appetite Statement and Risk Framework and independent assessment by the Board of our risk profile against our Risk Appetite and Framework on a quarterly basis enable us to better serve our customers, deliver long-term value for our shareholders, and achieve our strategic objectives.
Our Chief Risk Officer, the company’s senior-most risk manager, has a dual reporting structure, reporting both to the President of the Company and to the Board Risk Committee. This governance structure is designed to complement our Board’s commitment to maintaining an objective, independent Board and committee leadership structure.
Board Oversight of Cybersecurity Risk
Our Board recognizes the importance of protecting the data provided by the Company’s customers, clients, and employees and devotes significant time and attention to overseeing the strategies the Company employs to protect our data and systems and to mitigate against cybersecurity risk.
As party of the Risk Committee’s responsibility for monitoring key business and regulatory risks, the Risk Committee reviews presentations and reports at each meeting on the Company’s cybersecurity program and its efforts to mitigate cyber risks. These presentations and reports address topics such as the threat environment and vulnerability assessments, results of penetration testing, results of key cyber risk indicators and performance metrics, and the Company’s ongoing efforts to identify, prevent, detect, and respond to internal and external critical threats. The Risk Committee also reviews reports on the Company’s efforts to provide ongoing employee training on responsible information security, data security, and cybersecurity practices and how to protect data against cyber threats through employee-targeted campaigns and materials. The Audit Committee reviews reports of the Company’s internal Audit Department’s periodic audits of our information security, data security, and cybersecurity program. On an annual basis, the Board approves the Company’s Information Security Policy and Program which provides a layered approach to cybersecurity, and includes administrative, technical, and physical safeguards designed to protect the security, confidentiality, and integrity of customer information in accordance with applicable law.
Board Oversight of ESG Risk
The Board recognizes the importance of responding to existing and emerging risks relating to governance, social and environmental changes. The Governance and Nominating Committee has been given responsibility for overseeing current and emerging environmental, corporate social responsibility, and governance matters that are relevant to the business, operations or public image of the Company or that are otherwise pertinent to the Company and its shareholders, employees, customers and parties with whom it does business. Recognizing the particular importance of attracting and retaining a diverse and talented workforce, the Company has established a Board-level Culture Committee, which focuses on the Company’s human capital management initiatives, including its diversity and inclusion initiatives and talent attraction, motivation and retention. The Company has named a Director of Social Responsibility to lead its diversity and community development efforts, who reports directly to our CEO and provides regular reports to the Culture Committee.
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| 2021 PROXY STATEMENT 17 |
RELATED PERSON AND CERTAIN OTHER TRANSACTIONS
The Bank has loan and deposit relationships with some of the directors of the Company and the Bank and loan, deposit, and fee-for-service relationships with some of the companies with which the directors are associated, as well as with some members of the immediate families of the directors. (The terms “members of the immediate families” or “immediate family members” for purposes of this section includes each person’s spouse, parent, stepparent, children, stepchild, sibling, mother and father-in-law, sons and daughters-in-law, and brothers and sisters-in-law, and any person sharing the same household of such person.) Such loan, deposit, or fee relationships were made in the ordinary course of business, were made on substantially the same terms, including interest rates, collateral and fee pricing, as those prevailing at the time for comparable transactions with other persons not related to the lender, and did not, at the time they were made, involve more than the normal risk of collectability or present other unfavorable features.
Robert R. Horger, our former Chairman of the Board and a current director, is a partner in the law firm of Horger, Barnwell & McCurry, L.L.P., which we engaged, among other law firms, as counsel during 2020 and may engage during the current fiscal year. In 2020, we and Mr. Horger were involved in non-material related party transactions in that we made payments totaling approximately $8,747 to Horger, Barnwell & McCurry, L.L.P. This amount did not exceed 5% of the law firm’s gross revenue.
Thomas E. Suggs, a former director who resigned from the Board in connection with the Merger on June 7, 2020, has served as President and Chief Executive Officer of HUB Carolinas, a region of HUB International, an insurance brokerage and consulting firm that we have used since 2011 and will continue to use during the current fiscal year as an insurance broker for certain policies. Mr. Suggs was previously the President and Chief Executive Officer, and a majority owner, of Keenan & Suggs, Inc., an insurance broker and consulting firm that we also used for certain policies, before it was acquired by HUB International, the seventh largest brokerage in the world, in August 2016. In 2020, we made insurance premium payments directly to either HUB International, as our insurance placement agent, or insurance carriers. Commissions earned on these policies were well below 5% of HUB International’s total gross revenue for 2020.
Our Code of Ethics contains written requirements for reviewing transactions between us and our directors and executive officers, their immediate family members, and entities with which they have a position or relationship. These requirements are intended to determine whether any such related person transaction impairs the independence of a director or presents a conflict of interest on the part of a director or executive officer. The Code also requires the Bank to comply with Regulation O, which requires extensions of credit to executive officers, directors, certain principal shareholders, and their related interests to (i) be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) not involve more than the normal risk of repayment or present other unfavorable features. Our corporate ethics officer monitors Company compliance with the Code of Ethics and sends periodic reports on such compliance to the Board’s Audit Committee and the Incentive Compensation Committee.
PROPOSAL 2: APPROVING OUR EXECUTIVE COMPENSATION (AN ADVISORY, NON-BINDING “SAY ON PAY” RESOLUTION)
Proposal 2 asks shareholders withto approve, on an advisory basis, our 2020executive compensation program. At the 2020 annual meeting of shareholders, 85.37% of the votes cash on the Say on Pay proposal were cast in support of our 2019 compensation of our Named Executive Officers. We believe that offering our shareholders the opportunity to vote on NEO compensation on an annual basis reinforces our commitment to the feedback of our shareholders.
In connection with the Merger, we brought together an executive leadership team with the appropriate strategic vision and experience to guide the Company as it grows into a Southeast regional institution and completed a large, complex integration effort in the midst of the COVID-19 pandemic. Executive compensation paid for 2020 reflects the arrangements that were in place under legacy SouthState and CenterState agreements, as well as payments that were made pursuant to contractual commitments in connection with the Merger, which were designed to incent the executives to successfully merge the institution and complete the integration on time, achieving the merger cost savings and other goals.
Effective January 2021, the Compensation Committee of the Board has approved a performance-based executive compensation program applicable to each of our Named Executive Officers (“NEO”), including the CEO, which is designed to reflect our guiding principles of soundness, profitability and growth, and to align our executive compensation with shareholder return based on our overall profitability on both a short-term and long-term basis, while including metrics that will discourage our NEOs from pursuing strategies that would expose the Company to excessive risk.
In making a decision on whether to approve on a non-binding, advisory basis,our pay practices for our NEOs, we ask that you consider the compensationdescription of our named executives officers as disclosedexecutive compensation program provided in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.
As described in greater detail under the heading “Compensation Discussion and Analysis,” the Company seeks to align the interests of our named executive officers with the interests of our shareholders. The Company’s compensation programs are designed to reward our named executive officers for the achievement of strategic and operational goalstables and the achievement of increased shareholder value, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. The Company believes its compensation policies and procedures are competitive, focused on pay for performance principles and strongly aligned with the interest of the Company’s shareholders. The Company also believes that both it and its shareholders benefit from responsive corporate governance policies and constructive and consistent dialogue. The proposal described below, commonly known as a “Say-on-Pay” proposal, gives you as a shareholder the opportunity to express your views regarding the compensation of the named executive officers by voting to approve or not approve such compensation as described in this Proxy Statement.
accompanying narratives. This vote is advisory, which means that it is not binding on the Company, the Board of Directors or the Compensation Committee. The vote on this resolution is not intended to address any specific elementitem of compensation, but rather relates to the overall compensation of our named executive officers, asNEOs and the philosophy, policies and practices described in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.
The Board of Directors asksstatement. Accordingly, we are asking our shareholders to vote in favor of“FOR” the following resolution atresolution:
“Resolved, that the Annual Meeting:
“RESOLVED, thatshareholders approve the compensation paid to the Company’s named executive officers,SouthState’s NEOs, as discloseddescribed in the Company’s Proxy Statement for the 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and anythe related material disclosednarrative disclosures in the proxy statement,Company’s 2021 Proxy Statement.”
Your vote on this proposal, which is hereby APPROVED.”
The Board of Directors unanimously recommends that shareholders vote FOR the approvalrequired by Section 14A of the resolution relatedExchange Act, is “advisory” and will serve as a non-binding recommendation to the Board. The Compensation Committee will seriously consider the outcome of this vote when determining future executive compensation of named executive officers.arrangements.
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| Our Board unanimously recommends a vote “for” approving our executive compensation (an advisory, non-binding “Say on Pay” resolution) (Proposal 2). |
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| 2021 PROXY STATEMENT 25 |
13
Table of Contents
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Compensation Discussion and Analysis | ·
| | Diluted earnings per common share (EPS), in accordance with generally accepted accounting principles (GAAP), decreased 29.9% to $2.93 per share in 2017 from $4.18 per share in 2016. This decline was driven to a significant extent by a reduction in the value of net deferred tax assets by $26.6 million, or $0.83 per diluted share, in the fourth quarter of 2017 as a result of the recently enacted Tax Cuts and Jobs Act.
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| | Adjusted EPS—Diluted* (non-GAAP) increased 6.8% to $4.85 per share in 2017 from $4.55 per share in 2016. We believe that it is important to examine the results of our performance on an adjusted basis as well as a GAAP basis due to certain expense items that impact our GAAP financials. Adjusted performance results give insight into how performance on our core ongoing business changes from year to year by excluding certain items. For example, in 2017, the Company incurred securities gains of $445,000, net of tax; merger and branch consolidation expense of $31.5 million, net of tax; and net deferred tax revaluation of $26.6 million. In 2016, the Company incurred certain expense items relative to ongoing branch consolidation, early termination of our loss share agreements with the FDIC, and expenses related to the merger with Southeastern Bank Financial Corporation. These expenses totaled $8.9 million, net of tax, or $0.37 per diluted share in 2016.
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| o
| | As highlighted above, there were a number of differences between our reported (GAAP) and adjusted (non-GAAP) financials for fiscal year 2017 as shown below in the chart on the following page:
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| §
| | Return on average assets (GAAP) totaled 0.77% in 2017 compared to 1.16% in 2016. Adjusted return on average assets* (non-GAAP) totaled 1.28% in 2017 compared to 1.26% in 2016.
|
| §
| | Adjusted return on average tangible equity* (non-GAAP) decreased to 15.49% in 2017 from 15.94% in 2016.
|
| ·
| | Our performance in 2017 on return on average assets and return on average tangible equity continues to be strong relative to our peers, in spite of the fact that both represent a slight decrease from our 2016 performance. The following chart illustrates that performance relative to our peers.
|
*Adjusted EPS—Diluted, Return on Average Tangible Equity, Core Return on Average Assets
further throughout this disclosure, the Merger required us to put in place a number of unique arrangements to comply with existing contractual obligations and Return on Average Tangible Equityto promote and incentivize a smooth transition and integration, which arrangements are non-GAAP financial measures. See page 40 innot reflective of our normal ordinary-course compensation program. While the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for the non-GAAPprogram provides a variety of compensation elements designed to GAAP reconciliationprovide a comprehensive and competitive pay package, a meaningful portion of total compensation is typically variable and tied to future shareholder return, thereby rewarding our NEOs and other relevant information.
Growth
| ·
| | Non-acquired loan growth in all categories totaled $1.25 billion, or 23.9%, in 2017.
|
| ·
| | Organic core deposit growth was 7.5% during 2017; organic demand deposit growth was $64.9 million in 2017.
|
| ·
| | These two mergers resulted in total assets growing by $5.6 billion, or 62.5%, to $14.5 billion at December 31, 2017.
|
| ·
| | Shareholder value returns were less than those of the Southeast Bank Index and less than those of the NASDAQ Composite Index for the five-year period (as shown in the following chart):
|
Returnsexecutives for pursuing strategies that are shown on a total return basis, assumingexpected to maximize shareholder value over time without exposure to excessive risk. Our Compensation Committee has the reinvestment of dividendsprimary responsibility for approving our compensation strategy and a beginning stock index value of $100 per share. The value ofphilosophy, and the Company’s stock as shown in the graph is based on published prices for transactions in the Company’s stock.
Total Return Performance
| | | | | | | | | | | | | |
| | Period Ending | |
Index | | 12/31/2012 | | 12/31/2013 | | 12/31/2014 | | 12/31/2015 | | 12/31/2016 | | 12/31/2017 | |
South State Corporation | | 100.00 | | 167.92 | | 171.72 | | 186.67 | | 230.79 | | 233.67 | |
NASDAQ Composite Index | | 100.00 | | 140.12 | | 160.78 | | 171.97 | | 187.22 | | 242.71 | |
SNL Southeast Bank Index | | 100.00 | | 135.52 | | 152.63 | | 150.24 | | 199.45 | | 246.72 | |
Key 2017 Compensation Decisions by the Compensation Committeecompensation programs applicable to our NEOs.
The Compensation Committee made the following key compensation decisions during 2017:
| ·
| | Continued the Executive Incentive Plan with goals and opportunity levels that reflected South State’s size in 2017. This plan has both short-term and long-term components designed to align incentive compensation with the strategic focus of the Company.
|
| o
| | Continued the Long-Term Incentive Plan with three-year performance vesting conditions that are intended to provide alignment with increased shareholder value and long-term performance. The 2017-2019 goals for restricted stock units (which we refer to as “RSUs”) were split between cumulative adjusted EPS growth (67%) and adjusted return on average tangible equity (“ROATE”) (33%).
|
| o
| | Maintained a short-term annual cash bonus component based on annual financial and performance goals and objectives.
|
| o
| | Maintained a stock option component that rewards executives for individual performance with stock option grants. Beginning in 2018, stock options will no longer be awarded as part of the long-term incentive plan. All long-term incentive will be in the form of three-year performance based RSUs.
|
| o
| | In addition to the performance goals referenced above, the following specified minimum “performance triggers,” which were intended to encourage soundness, must also be achieved for the annual cash bonus to be earned and the RSUs to vest based on 2017 performance:
|
| §
| | Aggregate net income must be sufficient to cover aggregate dividends; and
|
| §
| | The Bank must receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that is not lower than the Bank’s most regulatory rating for asset quality prior to December 31, 2015.
|
| ·
| | Increased the base salaries for each of our NEOs by 2.75% for 2017 with the exception of Renee R. Brooks, the Company’s Chief Administrative Officer, whose salary was increased by 3.56% due to responsibility, performance and to better align her compensation with the other NEOs.
|
| ·
| | Focused on performance-based compensation and, therefore, variable compensation opportunities that are subject to attaining specific performance metrics. Consistent with the Compensation Committee’s compensation philosophy, a significant portion of NEO total compensation is in the form of incentive, or “at-risk” compensation, which will vary annually based on the performance of the Company. The chart below shows the average pay mix for the Chief Executive Officer (often referred to in this Proxy Statement as the “CEO”) and the average of our other NEOs compared to recent peer practices.
|
| ·
| | Awarded NEOs cash incentives at maximum level based on results for the year as set forth under the annual cash bonus component of the 2017 Executive Incentive Plan.
|
In summary, the Committee concluded that the 2017 performance-based compensation, together with 2017 base salary levels, were well aligned with the Company’s performanceannually reviews and the individual’s contribution for the year.
Part 2—South State Executive Compensation Process
Compensation Philosophy
In 2017, the Compensation Committee reviewed and validatedvalidates its compensation philosophy with the assistance of the Compensation Committee’s independent compensation consultant. The purpose of the review wasis to ensure that compensation decisions made by the Compensation Committee and the Board of Directors wereare consistent with this philosophy. The fundamental philosophy of the Company’sour compensation program is to offer competitive compensation opportunities for executive officers that:
When setting compensation, the Compensation Committee considers various factors that (i) alignindicate successful management, including:
| ● | Company, line of business and individual performance (both financial and non-financial) |
| ● | Adherence to sound risk management policies |
| ● | Year over year performance |
| ● | Performance as compared to competitor peer group |
| ● | Promotion of the core values of the Company |
Our CEO works closely with the Compensation Committee in establishing executive compensation withand overall bonus and incentive payments. The CEO evaluates the performance of the Company on both a short-termother senior executives, and, long-term basis, and (ii) are based on boththese performance evaluations, market compensation surveys, and other data, he makes compensation recommendations, including with respect to incentive compensation payments, to the Company’sCompensation Committee and shares with its members the basis for his recommendations. The Compensation Committee, at its discretion, may accept, approve, reject or modify the CEO’s recommendation. With respect to the compensation of the CEO, evaluates the CEO’s performance and determines his compensation without the individual’s contribution.CEO present, taking into consideration the recommendations of the Executive Chair.
Taking these factors into consideration, the Compensation Committee exercises its discretion and authority granted by the Board to determine the appropriate compensation for the CEO and each NEO and to recommend the CEO compensation to the full Board for approval. The Compensation Committee continues to assess our pay practices to balance risks with our commitment to link NEO pay to our performance while maintaining executive compensation structure is designed to retainprograms that are market competitive and rewardshareholder aligned.
b. Compensation Risk Management Features
Our Compensation Committee believes that the design and governance of our executive officers who are capablecompensation program encourage executive performance consistent with the highest standards of leading the Company in achieving its business objectives. The philosophy is to also consider applicable rules and regulations and current peer group compensation in determining compensation levels.risk management.
i. Pay Practices
The Compensation Committee considers this philosophy as it develops its incentive plans. Cash incentives for 2017 were designed to reward executives for achieving annual financialhas implemented pay and performance goals based on soundnessgovernance practices that reinforce our principles, support sound risk management and profitability. The performance objectives of the 2017 annual cash incentive plan reflect this focus. Equity grants are designed to rewardalign with our NEOs for achievement of business objectives that benefit shareholders and support the retention of a talented management team over time. When making compensation determinations for the Company’s NEOs, the Compensation Committee considers many factors, including peer data and individual roles, responsibilities, tenure, and performance, to set NEO pay levels. The Company’s compensation peer group is explained on page 22.
Role of the Compensation Committee
The Compensation Committee is responsible for the design, implementation and administration of the compensation programs for the executive officers and directors of the Company. The Compensation Committee keeps the full Board of Directors apprised of the decisions and activities of the Compensation Committee. When appropriate, the Compensation Committee makes recommendations to the Board of Directors on items that require approval by the full Board of Directors.
shareholders:
|
Pay Practices |
The Company’s compensation programs are designed to reward NEOs✓Pay for Performance: We apply a framework based on key standards that reflect the Company’s culture, including its strategic focus on soundness, profitability and growth as well as its emphasis on ethics, executiongoals to drive short-term and long-term shareholder value.
✓Annual Say On Pay Vote: We conduct an annual Say On Pay vote, and over the past three years, over 84% of strategic goals, the ability to inspireour shareholders approved our executive compensation program. ✓Stock Ownership Guidelines: We maintain strict stock ownership requirements for our Executive Leadership and motivate,Directors. ✓Strong Pledging and sound corporate governance.Hedging Prohibitions: Executive Leadership and Directors are prohibited from pledging or hedging/speculative trading in shares of SouthState stock. |
| ·
| | The✓Independent Compensation Committee’s philosophy is to provide competitiveConsultant: We engage an independent compensation to attract and retain key management to ensure a balance of soundness, profitability and growth while providing long-term value for the shareholders of the Company.
|
| ·
| | The Compensation Committee seeks to reward executives consistent with the Company’s culture of being a meritocracy in regard to compensation for all employees.
|
| ·
| | The Compensation Committee annually reviews and approves corporate goals and objectives utilized in either annual cash or long-term incentive plans.
|
| ·
| | The Compensation Committee evaluates and recommends to the Board of Directors for its approval, when not delegatedconsultant who reports directly to the Compensation Committee,Committee.
✓Clawback Policy: Our clawback policy allows us to reduce incentive compensation that would otherwise be payable in connection with nonperforming assets. ✓Responsible Equity Grant Practices: We use the director and executive officer compensation plans, policies and programsaverage of the Company. |
| ·
| | The Compensation Committee reviews and considersclosing price of our common stock for the results of any shareholder advisory vote on executive compensation and takes into consideration the result of such advisory votes in relation to the Company’s executive compensation policies and procedures.
|
| ·
| | The Compensation Committee annually reviews the incentive compensation arrangements to ensure that they are appropriate to the business plans of the Company and reviews the risks arising from such incentive planspreceding month to determine any material adverse impact to the Company.number of PSU or RSU awards, but recognize the expense of all share-based awards in our income statement over the award’s minimum required service period.
⌧No Excise Tax Gross-Ups:For new change in control agreements, we will not provide gross-up payments for excise taxes. ⌧No Single Trigger Contracts: For new change in control agreements, we will not provide single trigger severance payments. ⌧Severance Based upon Cash Compensation: Going forward, we will provide severance that is based only on cash compensation. ⌧No Repricing: We do not allow for repricing of stock options without our shareholders’ consent. |
|
ii. Impact of Compensation Practices on Risk Management
The Company’s incentive governance process includes a framework for developing new incentive compensation policies and procedures and a robust risk review process that is designed to comply with applicable law. The Compensation Committee is comprised of five independent directors and met six times in 2017. Thehas ultimate authority regarding all incentive plans. An Incentive Compensation Committee is supported in its work byat the Director of Human Resources, supporting staff,management level reviews and an executive compensation consultant, as described below.
The Compensation Committee may receive recommendations from the chairman of the Board of Directors with respectapproves annual incentive plans or changes to the CEO’s performance in light of goals and objectives relevant to the compensation of our CEO. The CEO reviews the performance of the other NEOsincentive plans. Incentive Plans are reviewed with the Compensation Committee and makes recommendations to the Compensation Committee about the total compensation of the other NEOs. The CEO does not participate in, and is not present during, deliberations or approvals by the Compensation Committee or the Board of Directors with respect to his own compensation.
on an annual basis. The Compensation Committee reviews and approves any material changes to incentive plans The Incentive Compensation Committee is also responsible for reviewing the equityannual risk review process of incentive plans and monitors business line compliance with the approved incentive plans. Annual incentive plan risk assessments are reviewed and approved by the Compensation Committee annually. For additional information, please see the discussion captioned “Compensation Risk Management Policies and Practices” on page 18.
We believe that our layered compensation governance approach, which includes offering a mix of fixed and variable compensation, completing scheduled incentive plan risk review assessments, setting appropriate performance metrics that reward performance without encouraging excessive risk, and monitoring incentive plan awards, allows us to effectively mitigate excessive risk. The Chief Risk Officer presented the NEOs annually. 2021 incentive plan and risk review analysis for 2021 plans to the Compensation Committee, and based on its deliberations, the Compensation Committee concluded that our compensation and incentive plans and practices for 2020 and 2021 do not create risks that are likely to have a material adverse effect or would cause plan participants to take unnecessary risks.
c. Role of Compensation Consultant
The Compensation Committee makes decisions based on the Company’s philosophy of providing a competitive base salary (relative to the peer group) complemented with significant performance-based incentives. After reviewing all of theengages an independent compensation arrangements discussed below, along with corporate and individual performance, the Compensation Committee believes that the measurement tools, compensation levels and the design of the Company’s executive compensation program are appropriate and motivate the NEOs to lead the Company in the best interests of its shareholders.
The primary goals of the Compensation Committee in 2017 were consistent with its established philosophy. The Compensation Committee seeksconsultant to provide compensation arrangements for executive officers that are designed to retain, attract,market reference perspective and motivate talented executives who can perform at a high level and manage the company in the shareholders’ best interest.serve as an advisor. The NEO compensation arrangements are designed to align compensation with the performance of the Company both on a short-term and long-term basis and are based both on the Company’s performance and the individual’s contribution. The Compensation Committee considered the Company’s financial performance throughout its decision-making process in 2017.
Compensation Consultant
During 2017, the Compensation Committee engaged the services of McLagan, an Aon Hewitt company, to provide independent compensation consulting services for both directorsconsultant serves at the request of, and executive management of the Company. McLagan reports directly to, the
For a discussion of the employment agreements in effect for the NEOs, please see the sections caption “New Employment and Non-Competition Agreements in Effect as of June 7, 2020” beginning on page 51.
5. Other compensation topics
a. Competitor Groups
Peer Benchmarking.Each year, with assistance from McLagan, the Compensation Committee reviews the compensation practices of the Company’sour peers in order to assess the competitiveness of the compensation arrangements of our NEOs. Although benchmarking is an active tool used to measure compensation structures among peers, it is only one of the tools used by the Compensation Committee to determine total compensation. Benchmarking is used by the Compensation Committee primarily to ascertain competitive total compensation levels (including base salary, equity awards, cash incentives, etc.) with comparable institutions. Using thisIn addition to peer pay data, as a reference point, the Compensation Committee addresses pay-for-performance (meritocracy) as discussed further in the sections below on cash incentives and long-term retention. Peer performance,we also assess other market factors, Company performance and personal performance are all factors that the Compensation Committee considers when establishing total compensation, including incentives. This practice is in line with the Company’s meritocracy philosophy of pay. The Compensation Committee, at its discretion, may determine that it is in the best interest of the Companyperformance, individual roles, tenure and performance to negotiate total compensation packages that deviate from regular compensation and incentive levels in order to attract and retain specific talent.set NEO pay levels.
The Compensation Committee reviews the composition of the peer group annually, at a minimum, and may change it as a result of mergers, changes to banks within the group, or changes within the Company. The 2017 compensationFor 2020, the Company elected to maintain the 2019 peer group, was selected basedwith three peers excluded due to acquisition. The criteria used to select the 2019 peer group were as follows:
●bank’s total year-end assets from $9.5 billion to $22.5 billion
●no thrifts;
●bank must have branch locations;
●bank’s Return on certain current market criteria, including the following:Average Equity and ROAA must exceed 0%
●bank’s 3-year asset growth must be greater than 10%
●commercial loan portfolio less than 85% of total loan portfolio.
| | | | | | | | | |
Company Name | ·
| Ticker | National banks with total assets from $8.5 billion to $20.0 billion, after planned acquisitions;
|
Region | ·
| Total Assets MRQ | Bank must have branch locations;
|
| ·
| | Return on average assets and return on average equity greater than 0%;
|
| ·
| | Satisfactory Performance Measures (positive profitability, three-year asset growth greater than 12.5%); and
|
| ·
| ($000)(1) | Commercial loan portfolio less than 85%
|
Pinnacle Financial Partners(2) | | VLY | | TN | | Southeast | | 25,031,044 | |
UMB Financial Corp.(2) | | UMBF | | MO | | Midwest | | 23,351,119 | |
Bank OZK | | OZK | | AR | | Southwest | | 22,388,030 | |
Fulton Financial Corp. | | FULT | | PA | | Middle Atlantic | | 20,682,152 | |
Old National Bancorp | | ONB | | IN | | Midwest | | 19,728,435 | |
United Bankshares, Inc. | | UBSI | | WV | | Middle Atlantic | | 19,252,435 | |
BancorpSouth Bank | | BXS | | MS | | Southeast | | 19,048,057 | |
Simmons First National Corp | | SFNC | | AR | | Southwest | | 18,036,236 | |
Bank of total loan portfolio.Hawaii |
The Compensation Committee reviewed a group of 28 peers with median assets, including pending acquisitions, of $12.5 billion (median actual assets of $10.3 billion), defined as of December 31, 2016. The specific members of this peer group are as follows:
| BOH | | HI | | Mountain Pacific | | 17,143,974 | |
Cathay General Bancorp | | CATY | | CA | | Mountain Pacific | | 16,784,737 | |
First Midwest Bancorp, Inc. | | FMBI | | IL | | Midwest | | 16,765,528 | |
Home BancShares, Inc. | | HOMB | | AR | | Southwest | | 15,302,438 | |
First Interstate BancSystem | | FIBK | | MA | | Northeast | | 14,155,016 | |
Berkshire Hills Bancorp, Inc. | | BHLB | | MA | | Northeast | | 13,819,366 | |
Trustmark Corp.(3) | | TRMK | | MS | | Southeast | | 13,286,460 | |
Renasant Corporation | | RNST | | MS | | Southeast | | 13,400,510 | |
United Community Banks, Inc. | | UCBI | | GA | | Southeast | | 12,831,503 | |
WesBanco, Inc. | | WSBC | | WV | | Middle Atlantic | | 12,458,632 | |
Glacier Bancorp Inc. | | GBCI | | MT | | Midwest | | 12,441,827 | |
Heartland Financial USA Inc. | | HTLF | | IA | | Midwest | | 12,136,408 | |
Banner Corp. | | BANR | | WA | | Mountain Pacific | | 11,871,317 | |
Community Bank System Inc. | | CBU | | NY | | Northeast | | 11,243,452 | |
Banc of California, Inc. (BANC) | FCB Financial Holdings, Inc. (FCB)
| Old National Bancorp (ONB)
|
BancorpSouth Inc. (BXS)
| First Merchants Corp. (FRME)
| Pinnacle Financial Partners (PNFP)
|
Bank of Hawaii Corp. (BOH)
| First Midwest Bankcorp Inc. (FMBI)
| Renasant Corp. (RNST)
|
Bank of the Ozarks Inc. (OZRK)
| First Interstate BancSys. (FIBK)
| Simmons First National Corp. (SFNC)
|
Banner Corp. (BANR)
| Glacier Bancorp Inc. (GBCI)
| Trustmark Corp. (TRMK)
|
Berkshire Hills Bancorp (BHLB)
| Heartland Fin’l USA (HTLF)
| United Bankshares Inc. (UBSI)
|
Capital Bank Finl Corp (CBF)
| Hilltop Holdings Inc. (HTH)
| United Community Banks Inc. (UCBI)
|
Cathay General BankCorp (CATY)
| Home BancShares Inc. (HOMB)
| WesBanco Inc. (WSBC)
|
Chemical Financial Corp. (CHFC)
| MB Financial Inc. (MBFI)
| |
Community Bank System (CBU)
| NBT Bancorp Inc. (NBTB)BANC
| | CA | | Mountain Pacific | | 10,630,067 | |
Part 3—Components of Executive Compensation
The following table summarizes the components of compensation paid or awarded to our Named Executive Officers who appear in the “Summary Compensation Table” below.
25th Percentile | | | | | | |
Compensation Component
| | What the Component Rewards12,645,068
| | Key Features
| |
Base Salary
| | Reflects the scope of leadership and responsibility, individual achievement toward the objectives of their respective position and their relative value in the industry.
| | The Compensation Committee approved increases for the CEO and the four other NEOs in January 2017 to make them competitive with the market as determined by the compensation peer group. Actual positioning within the peer group reflects each executive’s performance, among other things.
| |
Performance-Based Annual Cash Incentive
| | Focuses executives on achieving annual financial and performance goals and objectives based on Soundness and Profitability.
| | The opportunity for performance-based annual cash incentive compensation was based upon financial and performance goals and objectives. The Compensation Committee established the weighting for the performance goals with 25% based on soundness and 75% based on profitability with each goal having threshold, target and maximum levels. Performance goals for 2017 were achieved at 100% of maximum levels.
| |
2017 Long-Term Incentive Plan50th—75% Restricted Stock Units and 25% Stock Options Percentile
| | Rewards the achievement of superior three-year cumulative operating EPS growth (67%) and operating return on tangible equity performance (33%).
| | The 2017 Long-Term Incentive Plan consists of 75% RSU grants and 25% Stock Options at target performance levels. The RSU awards are designed to measure relative performance over three-year cycles. Each year begins a new three-year cycle. RSUs are both performance and time (three years) vested.
Stock Options are granted based upon both corporate and individual performance objectives that are non-formulaic. Beginning in 2018, stock options will not be a part of the long-term incentive plan. The full amount of 2018 long-term incentive plan will be in the form of three-year performance based RSUs and remain formulaic.
| |
Benefits and Perquisites
| | Helps keep the Company competitive in attracting and retaining employees.
| | The Compensation Committee believes that its employee benefits are generally in line with benefits provided by the Company’s peer group and consistent with industry standards.
| |
The key elements of compensation for the NEOs are base salary, annual and long-term incentives, and benefits, which are discussed below in greater detail.
| ·
| | Base Salary—Base salaries are determined based on historical and anticipated individual contribution and performance toward accomplishing the Company’s stated objectives. Base salaries are also reviewed in the context of comparability with the key executives of the Company’s peer group. We believe that the annual base salary levels for the NEOs helps us to retain qualified executives and provides income stability that lessens potential pressures for the NEOs to take risks to achieve performance measures under incentive compensation arrangements.Effective January 1, 2017, the CEO, along with the other NEOs, received a merit increase to base salary as a reflection of 2016 performance and to maintain competitiveness with peer group. As a result, the CEO and each of the other four NEOs received a 2.75% base salary increase with the exception of Renee R. Brooks, the Company’s Chief Administrative Officer, whose salary was increased by 3.56% due to responsibility, performance and to better align her compensation with the other NEOs.
|
| ·
| | 2017 Executive Performance Plan—In 2017, the Executive Performance Plan was approved to include both an Annual Incentive Plan (Cash) and the three-year Long-Term Incentive Plan. The Executive Performance Plan is designed to establish reasonable goals and objectives measured on an annual basis as well as to develop long-term goals that align the interests of the NEOs with those of the Company’s shareholders. The purposes of the Executive Performance Plan include (1) aligning executive compensation with the Company’s performance, (2) attracting and retaining key officers and employees of outstanding ability, (3) strengthening the Company’s capability to develop, maintain, and direct a competent management team, (4) providing an effective means for selected key officers and employees to acquire and maintain ownership of Company stock, and (5) providing incentive compensation opportunities competitive with those of other major corporations.
|
The 2017 Executive Performance Plan was composed of cash, RSUs and stock option components.
| ·
| | 2017 Annual Incentive Plan (Cash): At target performance levels, the 2017 Executive Performance Plan was weighted 50% in the form of an annual cash incentive bonus under the 2017 Annual Incentive Plan. The amount of cash that may be earned was based upon financial and regulatory performance goals/objectives for 2017.
|
| ·
| | 2017 Long-Term Incentive Plan (Equity): At target performance levels, the 2017 Executive Performance Plan was weighted 50% in the form of equity. The equity component was made up of both RSUs and stock options as follows:
|
| a.
| | Restricted Stock Units: Of the equity granted, at target performance levels 75% may be earned in the form of RSUs. All of the RSUs vest based upon achievement of three-year performance goals. RSUs are subject to both performance and time vesting conditions (three years).
|
| b.
| | Stock Options: The remaining 25% of the equity that would be granted at target performance levels was structured to be earned in the form of stock options. Stock options were granted based upon the achievement of individual performance objectives. Stock options vest ratably (25% per year) over four years. Beginning in 2018, stock options will not be a part of the long-term incentive plan. The full amount of the 2018 long-term incentive plan will be in the form of three-year performance based RSUs and remain formulaic.
|
2017 Annual Incentive Plan
Cash incentive opportunities as a percentage of salary for each of the applicable NEOs and results under the 2017 Annual Incentive Plan are displayed below:
| | | | | | | | | | | |
| | | | Total Opportunity as a
% of Salary (Cash) | | | |
Name | | Position | | Thresh | | Target | | Max | | Actual
Earned | |
Robert R. Hill, Jr. | | Chief Executive Officer of South State Corporation | | 55 | % | 110 | % | 165 | % | 165 | % |
John C. Pollok | | Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer | | 45 | % | 90 | % | 135 | % | 135 | % |
John F. Windley | | Chief Banking Officer, President and Chief Executive Officer of South State Bank | | 30 | % | 60 | % | 90 | % | 90 | % |
Joseph E. Burns | | Senior Executive Vice President and Chief Credit Officer | | 30 | % | 60 | % | 90 | % | 90 | % |
Renee R. Brooks | | Senior Executive Vice President and Chief Administrative Officer | | 30 | % | 60 | % | 90 | % | 90 | % |
The primary objectives of the 2017 Annual Incentive Plan were to enhance shareholder value by focusing on operating earnings, growth, and soundness. Accordingly, subject to the conditions and limits described below, the Compensation Committee was allowed under the 2017 Annual Incentive Plan to determine the actual cash bonus amounts based on the following performance goals, weighted 25% for soundness and 75% for profitability.
| ·
| | Soundness: This component was based on achieving the specified asset quality test. Specifically, the Bank was required to receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 31, 2015.We believe it is important to include a measurement of soundness in our annual incentive plan in order to ensure that soundness is not sacrificed at the expense of growth or profitability, and that appropriate focus is placed on continuing to improve credit-related issues.
|
| ·
| | Profitability: This measure was based on adjusted earnings per share (“Adjusted EPS”). Since growth in Adjusted EPS is a key component in building shareholder value, this element was weighted at 75% of the total cash incentive opportunity. Emphasis on this performance metric aligns the interests of the executive with those of the shareholder. Adjusted Earnings is a non-GAAP measure which excludes the after-tax effect of gains on acquisitions, OTTI (Other Than Temporarily Impaired Items), and merger and branding-related expense. Ultimately, the Compensation Committee determined the final Adjusted Earnings performance used in calculating incentive results, and exercised its authority to exclude certain revenue or expenses that it deemed to not reflect core earnings. For 2017, the Company’s diluted GAAP EPS was $2.93. The calculated Adjusted EPS used in connection with the annual incentive plan was $4.85, which excluded the after-tax impact of $445,000 in securities gains, $26.6 million in deferred tax asset revaluation and $31.5 million in branch consolidation and acquisition expense.
|
The goals and the actual results of the 2017 Executive Incentive Plan are outlined in the table below:
| | | | | |
| 15,302,438 | Soundness (25%)
| | Profitability (75%)
| |
| | 2017 Asset Quality
| | 2017 Operating EPS
| |
Threshold
| | See Below*
| | 4.23
| |
Target75th Percentile
| | | | 4.46
| |
Maximum
| | | | 4.7019,149,278
| |
ActualSouthState
| | AchievedSSB
| | 4.85SC
| | Southeast | | 16,676,328 | |
*The Bank was required to receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 31, 2015.
The 2017 Annual Incentive Plan was implemented under the 2012 Omnibus Stock and Performance Plan, which allows the Compensation Committee to structure awards to “covered employees” to meet the “qualified performance-based compensation” exception under Section 162(m) of the internal revenue code (the “tax code”). For 2017, the Compensation Committee approved an aggregate incentive pool under the Annual Incentive Plan equal to 15% of pre-tax net income, and set maximum incentive pool allotments for each of the participants. In addition, incentive payments under the 2017 Annual Incentive Plan were limited to the amounts shown in the maximum column in the table above and were subject to the following “minimum performance triggers”: a) net income sufficient to fully cover the cash dividends paid to the Company’s shareholders, and b) a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 21, 2015.
2017 Long-Term Incentive Plan
2017 Long-Term Incentive Plan opportunities as a percentage of salary for each of the NEOs are displayed below:
| | | | | | | | | | | | | | | |
| | | | Restricted Stock Units as a % of Salary | | Stock Options
as a % of Salary | |
Name | | Position | | Thresh | | Target | | Max | | Thresh | | Target | | Max | |
Robert R. Hill, Jr. | | Chief Executive Officer of South State Corporation | | 41.25 | % | 82.5 | % | 123.75 | % | 13.75 | % | 27.50 | % | 41.25 | % |
John C. Pollok | | Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer | | 33.75 | % | 67.5 | % | 101.25 | % | 11.25 | % | 22.50 | % | 33.75 | % |
John F. Windley | | Chief Banking Officer, President and Chief Executive Officer of South State Bank | | 22.5 | % | 45.0 | % | 67.5 | % | 7.5 | % | 15.0 | % | 22.5 | % |
Joseph E. Burns | | Senior Executive Vice President and Chief Credit Officer | | 22.5 | % | 45.0 | % | 67.5 | % | 7.5 | % | 15.0 | % | 22.5 | % |
Renee R. Brooks | | Senior Executive Vice President and Chief Administrative Officer | | 22.5 | % | 45.0 | % | 67.5 | % | 7.5 | % | 15.0 | % | 22.5 | % |
Long-Term Incentive Plan Performance Goals
The RSUs granted in 2017 vest based on the attainment of the following pre-established performance goals over the three-year period ending December 31, 2019:
Percent Rank | | | |
Performance Goal
| | Goal Weighting
(% of RSU Target Award)
|
3-Year Cumulative Adjusted EPS Growth
| | 67%48%
| |
| (1) | As of April 1, 2019, when SouthState’s Compensation Committee selected the peer group. |
| (2) | Excepted from the year-end asset size criteria. |
| (3) | Excluded from 3-year asset growth criteria |
deduction limitation of Section 162(m) of the tax code. Vesting of the RSUs is subject to achievement of the minimum “performance triggers” as of December 31, 2019.
Individual Performance-Based Goals
Under the 2017 Long-Term Incentive Plan, 25% of the value of the equity grants (at target levels) was determined based on non-formulaic individual performance objectives for the stock option component. The individual performance objectives were based on implementation of actions to achieve long-term growth and profitability such as completion and successful integration of acquisitions, improvement in credit practices and measurements and other practices related to risk management, team building, and leadership development, succession planning and continuing to build upon Company culture.
The Compensation Committee granted Incentive Stock Options in 2018 under the 2017 Long-Term Incentive Plan at the maximum level in recognition of our NEOs’ 2017 individual contributions. Specifically, Mr. Hill received 11,565 stock options, while the other NEOs received between 2,294 and 6,759 stock options in recognition of their 2017 contributions. The contributions included the closing of two successful acquisitions of Southeastern Bank Financial Corporation and Park Sterling Corporation in 2017. These two acquisitions resulted in the growth of company from $8.9 billion in assets to $14.5 billion in assets. As required by SEC disclosure rules, the stock options granted in 2018 will be reported in the compensation tables included in our 2019 proxy statement, in spite of the fact that we consider them to be part of our 2017 executive compensation plan. In addition, as noted above, stock options are not a component in the 2018 Long-Term Incentive Plan as the full amount of the 2018 Long-Term Incentive Plan will be in the form of RSUs and remain formulaic.
Results of 2015 Long-Term Incentive Plan Which Ended in 2017
On January 1, 2015, the Compensation Committee granted performance-vesting RSUs to each of our NEOs. The vesting of 67% of these RSUs was dependent on achieving pre-determined levels of cumulative Adjusted EPS, with the remaining 33% vesting based on cumulative average adjusted ROATE. Both objectives are measured over the three-year performance period from January 1, 2015 through December 31, 2017.
Target performance over the three-year period represented 52.3% growth in cumulative adjusted EPS and 14.0% cumulative average adjusted ROATE. Actual performance represented 65.6% growth in cumulative adjusted EPS, which was less than maximum performance under the plan, and cumulative average ROATE was 16.05%, which was above the maximum performance guidelines under the plan. As a result, the RSUs granted as part of the 2015 plan vested at 96.7% of maximum on December 31, 2017. The RSUs that have been earned and have vested are shown in the Option Exercises and Stock Vested table on page 34.
Part 4—Other Aspects of South State’s Executive Compensation Program
Benefits
b. | Retirement, Health and Welfare Benefits and Perquisites |
During 2017, the Company2020, we maintained various employee benefit plans that constitute a portion of the total compensation package available to the NEOs and all eligible employees of the Company.SouthState. These plans consistconsisted of the following:
| ● | Retirement Savings Plan 401(k).Each of SouthState and CenterState maintained defined contribution plans which in 2020, in each case, permitted its respective legacy employees to contribute a portion of their compensation, on a tax-deferred basis, up to certain IRS compensation deferral amount limits applicable to a tax-qualified retirement plan. While legacy CenterState employees began contributing to the SouthState plan effective as of the Merger date, both 401(k) plans remained in place through December 31, 2020, when we merged the two plans into the SouthState plan and transferred balances in the CenterState 401(k) plan to the SouthState 401(k) plan. As of December 31, 2020, each NEO participated in the SouthState 401(k) plan. We matched 100% up to 4% of participants’ deferrals. See the table in footnote of the Summary Compensation Table. |
| ● | Health and Dental Care.SouthState and CenterState offered health and dental coverage to its employees, and both plans were continued through December 31, 2020. As of January 1, 2021, SouthState offered one health and dental insurance program to all employees. The NEOs are eligible to receive medical and dental coverage that is provided to all eligible employees in accordance with pre-Merger enrollment. |
For purposes of the employment agreements in effect with the stock ownership guidelines. As ofNEOs, the end of our fiscal year, all NEOs have exceeded their required ownership levels. Beneficially owned shares include shares held by a named executive officer, directly or indirectly,terms “good reason”, “cause”, “disability” and unvested shares of restricted stock,“change in control” are defined in the applicable NEO’s employment agreement, filed with the SEC as to which the executive officers have full voting privileges, but exclude vested and unexercised stock options. Until the stock ownership guidelines are achieved, the sale of shares of the Company’s common stock is restricted.follows:
| |
| |
NEO | Form |
John C. Corbett | Exhibit 10.4 to CenterState’s Form 8-K filed July 14, 2010 Exhibit 10.35 of CenterState’s 10-K filed February 27, 2020 |
Robert R. Hill, Jr. | Exhibit 10.29 to the Company’s 10-K filed February 21, 2020 |
William E. Matthews V | Exhibit 10.2 of CenterState’s Form 8-K filed November 26, 2018 |
Renee R. Brooks | Exhibit 10.31 to the Company’s 10-K filed February 21, 2020 |
Greg A. Lapointe | Exhibit 10.32 to the Company’s 10-K/A filed March 6, 2020 |
John S. Goettee | Exhibit 10.32 to the Company’s 10-K/A filed March 6, 2020 |
John C. Pollok | Exhibit 10.30 to the Company’s 10-K filed February 21, 2020 |
Equity Grant Practices
To address volatility concerns, the 30-day moving average of the Company’s stock was utilized to determine the number of RSUs to be issued under the Executive Performance Plan for 2017. The 30-day average is defined as the 30 trading days immediately preceding the last business day of the prior month. Stock option values were determined based upon Black Scholes Valuation methodology as of the last day of the preceding quarter. This value was divided into the dollar amount of options that an executive was to receive to quantify the number of options granted to an executive. The calculated number of stock options is issued with an exercise price equal to the stock price on the date of the grant.
Employment and Non-Competition Agreements
The purpose of theseour NEO employment agreements is to attract and retain highly qualified executive officers, recognizing that termination and change in control protections are commonly provided at comparable financial institutions with which we compete for executive talent. In addition, the Compensation Committee believes change in control protections enhance the impartiality and objectivity of the NEOs in the event of a change in control transaction and better ensure that shareholder interests are protected. Finally, these agreements include non-competition provisionsThe Compensation Committee is committed to providing change in control protections that further protectreflect good governance practices, do not present windfalls to the company should the NEO elect to pursue other employment opportunities. Each of our NEOs has an employment agreement. The agreements provide for the following:Company’s executives and are in line with market practice.
a. | ·New Employment and Non-Competition Agreements Effective as of June 7, 2020
|
In connection with the Merger, we entered into or amended and restated employment agreements with Ms. Brooks and Messrs. Hill, Pollok, Lapointe and Goettee, in each case setting forth the terms of such NEO’s employment following the Merger (the “effective time”). The employment agreement with Mr. Hill is for an initial term beginning June 7, 2020 until December 31st of the fifth full calendar year following the effective time, and the employment agreements with Ms. Brooks and Messrs. Lapointe and Goettee are for an initial term of three years following the June 7, 2020 effective time, subject to extension for an additional year on December 31st of the fourth full calendar year following the effective time (in the case of Mr. Hill) or on the first anniversary of the effective time (in the case of Ms. Brooks and Messrs. Lapointe and Goettee), unless either party provides notice of non-renewal before such anniversary date. Mr. Pollok’s employment agreement provides that he will serve as an employee until July 5, 2021 and thereafter will serve as a consultant until December 31, 2024.
The employment agreements also include Pay to Lead Awards and Pay to Integrate Awards, as well as contractual change in control payments with respect to Messrs. Hill and Pollok, all as more fully discussed on page 37 under the caption “Our 2020 Executive Compensation - Merger Synergy Awards”.
| ● | Term of Employment. The employment agreements provide for Messrs. Hill, Pollok, Windley,the following severance payments and Burns and Mrs. Brooks havebenefits in the event an NEO’s employment is terminated without cause or the NEO resigns for good reason, prior to or following a term of employment of three years fromchange in control. The change in control severance protections provided under the effective dateagreements were designed with the help of the agreement. On each anniversary dateCompensation Committee’s compensation consultant to reflect prevailing market practice within the context of the effective dateMerger. In the case of the agreement, the term of the agreement is automatically extended for an additional year unless at least 60 days prior to the anniversary date either party gives the other party written notice of non-renewal.
|
| ·
| | Reimbursement of Expenses.Messrs. The Company will reimburse the executive all reasonable travelHill and other business related expenses incurred in performing duties under the agreement.
|
| ·
| | Vacation and Sick Leave. The Company will provide vacation and sick leave to the executive in accordance with policies and procedures established from time to time.
|
| ·
| | Employee Benefit Plans. The executive is entitled to participate in the employee benefit plans presently in effect or as these plans may be modified or added from time to time.
|
| ·
| | Incentive Bonus Plans. The executive is entitled to participate in the incentive bonus plans, applicable to his or her employment position, in accordance with policies and procedures established from time to time.
|
| ·
| | Fringe Benefits. The Company will reimburse the executive for the cost of attending required meetings and conventions and will cover membership dues to an approved country club. In addition, Mr. Hill, Mr. Pollok, Mr. Windley, Mr. Burns and Mrs. Brooks are provided the use of a Company-owned automobile or car allowance.
|
| ·
| | Termination of Employment. See the discussion below entitled “Potential Payments upon Termination or Change in Control” for a description of the payments that may be due to each executive upon termination of employment.
|
| ·
| | Non-compete. The period of non-compete for the executive runs during the period of employment and for a designated period of time following termination of employment. If the executive is found to violate the covenants contained in the agreement, the non-compete period will be extended for a period equal to the amount of time the executive is found to have been in non-compliance. If Mr. Hill is terminated for cause according to his agreement, the non-compete period is abbreviated and ends 12 months after the date of termination.
|
See the discussion entitled “Potential Payments upon Termination or Change in Control,” which provides the amount of compensation each executive would receive under various termination events based upon the employment agreements.
Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Service Code limits the Company’s ability to deduct certain compensation in excess of $1 million paid to the Company’s Chief Executive Officer and to certain other executives (excluding the company’s Chief Financial Officer). For 2017 and prior years, this limitation did not apply to compensation that qualified under applicable regulations as “performance-based.” In line with this, the Company has aimed to design and approve the performance-based compensation paid to its NEOs so that such compensation would satisfy the requirements for deductibility under Section 162(m). For 2017 and prior years, the Compensation Committee considered Section 162(m) when making compensation decisions. However, other considerations, such as providing the Company’s NEOs with competitive and adequate incentives to remain with the Company and increase the Company’s business operations, financial performance and prospects, as well as rewarding extraordinary contributions, also significantly factored into the Committee’s decisions.
In December 2017, the Tax Cuts and Jobs Act was enacted. Under the Tax Cuts and Jobs Act, the qualified performance-based compensation exception to Section 162(m) that generally provided for the continued deductibility of performance-based compensation was repealed, effective for tax years commencing on or after January 1, 2018. Accordingly, commencing with our fiscal year ending December 31, 2018, compensation to our Named Executive Officers in excess of $1,000,000 not awarded prior to November 2, 2017 will generally not be deductible. Performance-based compensation awarded to our Named Executive Officers for periods prior to November 2, 2017, such as our performance-based RSUs granted in 2017 and prior years that have not yet been settled into shares of Common Stock, are expected to continue to qualify for the performance-based compensation exemption under Section 162(m). The United States Treasury has not yet issued any guidance on any limitations on the continued deductibility of these awards. Accordingly, the future deductibility of these grandfathered awards cannot be guaranteed.
Risk Assessment of Compensation Programs
As part of an annual practice, the Compensation Committee reviewed and discussed a compensation risk assessment performed by the Company’s Incentive Risk Committee. The Incentive Risk Committee is chaired by the Chief Risk Officer and composed of representatives from Risk, Compliance, Audit, Accounting, and Human Resources. This risk assessment process included a review of the design and operation of the Company’s eleven incentive compensation programs. It also identified and evaluated situations or compensation elements that could raise material risks. The Incentive Risk Committee met in 2017 and then presented the findings of the review to the Compensation Committee at its October 2017 meeting. Based on the Incentive Risk Committee’s findings and the Compensation Committee’s deliberations, the Compensation Committee concluded that the Company’s compensation policies and practices do not create risks that are likely to have a material adverse effect that would cause plan participants to take unnecessary risks.
Transactions in Company Securities
In general, SEC rules prohibit uncovered short sales of shares of the Company’s common stock by its executive officers, including the NEOs. Accordingly, the Company’s insider trading policy prohibits short sales of shares of the Company’s common stock by its executive officers, including the NEOs, and discourages all employees from engaging in any hedging transactions relating to the Company’s common stock. The policy also requires all affiliates and insiders to consult with the Company’s Treasurer or Chief Executive Officer if they intend to engage in any hedging transactions involving the Company’s common stock. In 2017, no executive officer consulted with the Company’s Treasurer or Chief Executive Officer regarding hedging transactions.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402 (b) of Regulation S-K with management and, based on such review and discussions, has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference into the Company’s 2017 Annual Report on Form 10-K.
This report is provided by the following independent directors, who comprise the Compensation Committee:
Cynthia A. Hartley, Chair
Paula Harper Bethea
Jean E. Davis
Thomas J. Johnson
James W. Roquemore
SUMMARY COMPENSATION TABLE
The following table summarizes for the fiscal years ended December 31, 2017, 2016 and 2015, the current and long-term compensation for the Chief Executive Officer, the Chief Financial Officer and the three most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer. Each component of compensation is discussed in further detail in the footnotes following the table.
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Salary ($) | | Bonus ($) | | Stock
Awards ($) | | Option
Awards ($) | | Non-Equity
Incentive Plan
Compensation ($) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) | | All Other
Compensation ($) | | | | |
Name and Principal Position | | Year | | (1) | | | | (2) | | (3) | | (4) | | (5) | | (6) | | Total ($) | |
Robert R. Hill, Jr. | | 2017 | | $ | 761,201 | | $ | — | | $ | 635,455 | | $ | 320,471 | | $ | 1,255,982 | | $ | 36,685 | | $ | 45,604 | | $ | 3,055,398 | |
Chief Executive Officer of South State | | 2016 | | | 740,825 | | | — | | | 637,130 | | | 253,300 | | | 1,222,366 | | | 13,583 | | | 56,578 | | | 2,923,782 | |
Corporation | | 2015 | | | 721,000 | | | — | | | 637,212 | | | 260,119 | | | 1,189,650 | | | 2,268 | | | 60,948 | | | 2,871,197 | |
John C. Pollok | | 2017 | | | 543,715 | | | — | | | 371,368 | | | 187,296 | | | 734,015 | | | 33,998 | | | 41,937 | | | 1,912,329 | |
Senior Executive Vice President, | | 2016 | | | 529,163 | | | — | | | 372,307 | | | 148,028 | | | 714,370 | | | 12,487 | | | 41,937 | | | 1,818,292 | |
Chief Financial Officer and Chief Operating Officer | | 2015 | | | 515,000 | | | — | | | 372,371 | | | 152,025 | | | 695,250 | | | 2,556 | | | 48,101 | | | 1,785,303 | |
John F. Windley | | 2017 | | | 364,289 | | | — | | | 165,926 | | | 83,664 | | | 327,860 | | | 34,324 | | | 19,613 | | | 995,676 | |
Chief Banking Officer, President and | | 2016 | | | 354,539 | | | — | | | 166,297 | | | 66,124 | | | 319,085 | | | 54,123 | | | 24,215 | | | 984,383 | |
Chief Executive Officer of South State Bank | | 2015 | | | 345,050 | | | — | | | 166,368 | | | 67,902 | | | 310,545 | | | 108,502 | | | 27,220 | | | 1,025,587 | |
Joseph E. Burns | | 2017 | | | 339,751 | | | — | | | 154,751 | | | 78,025 | | | 305,776 | | | 25,585 | | | 21,898 | | | 925,786 | |
Senior Executive Vice President | | 2016 | | | 330,658 | | | — | | | 155,100 | | | 61,666 | | | 297,592 | | | 13,032 | | | 42,598 | | | 900,646 | |
and Chief Credit Officer | | 2015 | | | 321,808 | | | — | | | 155,132 | | | 62,843 | | | 289,627 | | | 8,849 | | | 47,410 | | | 885,669 | |
Renee R. Brooks | | 2017 | | | 339,751 | | | — | | | 154,751 | | | 77,422 | | | 305,776 | | | 8,693 | | | 22,125 | | | 908,518 | |
Senior Executive Vice President | | 2016 | | | 328,081 | | | — | | | 153,915 | | | 61,190 | | | 295,273 | | | 3,019 | | | 22,086 | | | 863,564 | |
and Chief Administrative Officer | | 2015 | | | 319,300 | | | — | | | 153,906 | | | 62,843 | | | 287,370 | | | 498 | | | 22,904 | | | 846,821 | |
| (1)
| | Consists of total salary compensation, including all amounts that have been deferred at the officers’ election. During 2017, 2016 and 2015, Mr. Hill deferred $52,083, $226,364 and $105,188, respectively, and Mr. Windley deferred $28,963, $24,790 and $23,147 respectively, into the deferred compensation plan (see description of plan on page 35).
|
| (2)
| | Beginning in 2013, the Company awarded performance-based RSUs to its executive officers. These grants are both performance and time vested over a three-year performance period. The Company communicates threshold, target, and maximum performance RSU awards and performance targets to the executives at the beginning of a performance period. The value of the RSU grants shown above equals the grant date fair value in accordance with FASB ASC Topic 718. See discussion of assumptions used in the valuation of the stock awards in Note 19, “Share‑based Compensation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
|
| (3)
| | The value of the stock option awards shown above equals the grant date fair value in accordance with FASB ASC Topic 718. See discussion of assumptions used in the valuation of the stock awards in Note 19, “Share‑based Compensation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
|
| (4)
| | Reflects the dollar value of all amounts earned during the fiscal year pursuant the performance based non-equity incentive plans.
|
| (5)
| | Includes the change in pension value to the NEOs with the exception of Mr. Windley. In 2017, Mr. Windley’s amount includes the change in pension value in addition to the SERP accrual of $48,077. It also includes the portion of income earned during the fiscal year in the nonqualified deferred compensation plan exceeding 120% of the applicable long-term federal rate (“AFR”). During 2016, nonqualified deferred compensation plan balances experienced an unrealized gain/loss; however, there was no income exceeding 120% of the AFR.
|
| (6)
| | The following table provides all other compensation:
|
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Matching Contributions to 401k Retirement Savings Plan | | Life Insurance
and
Long-term
Disability
Premium | | Dividends on
Unvested
Restricted
Stock | | Memberships | | Imputed
Taxable
Value of
Vehicles | | Other
Cash | | Total | |
Robert R. Hill, Jr. | | $ | 16,200 | | $ | 1,620 | | $ | 22,403 | | $ | 2,376 | | $ | 2,105 | | $ | 900 | | $ | 45,604 | |
John C. Pollok | | | 16,200 | | | 1,620 | | | 19,581 | | | — | | | 3,636 | | | 900 | | | 41,937 | |
John F. Windley | | | 16,200 | | | 1,620 | | | — | | | — | | | 1,193 | | | 600 | | | 19,613 | |
Joseph E. Burns | | | 16,200 | | | 1,620 | | | 3,478 | | | — | | | — | | | 600 | | | 21,898 | |
Renee R. Brooks | | | 16,200 | | | 1,620 | | | 1,843 | | | — | | | 2,462 | | | — | | | 22,125 | |
GRANTS OF PLAN BASED AWARDS
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | All Other | | All Other | | | | | |
| | | | | | | | | | | | | | | | | | Stock | | Options | | Exercise | | Grant Date | |
| | | | | | Estimated Possible Payouts | | Estimated Possible Payouts | | Awards: | | Awards: | | or Base | | Fair Value | |
| | | | | | Under Non-Equity Incentive | | Under Equity Incentive | | Number of | | Number of | | Price of | | of Stock | |
| | | | | | Plan Awards | | Plan Awards | | Shares of | | Securities | | Options | | and | |
| | | | Approval | | (1) | | (2) | | Stock or | | Underlying | | Awards | | Options | |
| | Grant | | of Award | | Thres- | | | | | | Thres- | | | | Maxi- | | Units (#) | | Options (#) | | ($/Sh) | | Awards ($) | |
Name | | Date | | Date | | hold ($) | | Target ($) | | Maximum ($) | | hold (#) | | Target (#) | | mum (#) | | | | (3) | | (4) | | (5) | |
Robert R. Hill, Jr. | | 1/25/17 | | 1/25/17 | | | | | | | | | | | | | | — | | 9,036 | | $ 91.35 | | $ 320,471 | |
| | 3/15/17 | | 3/15/17 | | | | | | | | 3,554 | | 7,108 | | 10,663 | | | | | | | | 635,455 | |
| | n/a | | n/a | | 418,661 | | 837,321 | | 1,255,982 | | | | | | | | | | | | | | | |
John C. Pollok | | 1/25/17 | | 1/25/17 | | | | | | | | | | | | | | — | | 5,281 | | 91.35 | | 187,296 | |
| | 3/15/17 | | 3/15/17 | | | | | | | | 2,077 | | 4,154 | | 6,232 | | | | | | | | 371,368 | |
| | n/a | | n/a | | 244,672 | | 489,344 | | 734,015 | | | | | | | | | | | | | | | |
John F. Windley | | 1/25/17 | | 1/25/17 | | | | | | | | | | | | | | — | | 2,359 | | 91.35 | | 83,664 | |
| | 3/15/17 | | 3/15/17 | | | | | | | | 928 | | 1,856 | | 2,784 | | | | | | | | 165,926 | |
| | n/a | | n/a | | 109,287 | | 218,573 | | 327,860 | | | | | | | | | | | | | | | |
Joseph E. Burns | | 1/25/17 | | 1/25/17 | | | | | | | | | | | | | | — | | 2,200 | | 91.35 | | 78,025 | |
| | 3/15/17 | | 3/15/17 | | | | | | | | 865 | | 1,731 | | 2,596 | | | | | | | | 154,751 | |
| | n/a | | n/a | | 101,925 | | 203,851 | | 305,776 | | | | | | | | | | | | | | | |
Renee R. Brooks | | 1/25/17 | | 1/25/17 | | | | | | | | | | | | | | — | | 2,183 | | 91.35 | | 77,422 | |
| | 3/15/17 | | 3/15/17 | | | | | | | | 865 | | 1,731 | | 2,596 | | | | | | | | 154,751 | |
| | n/a | | n/a | | 101,925 | | 203,851 | | 305,776 | | | | | | | | | | | | | | | |
| (1)
| | These amounts represent ranges of the possible performance‑based cash bonuses that could have been paid in 2018 based on 2017 results pursuant to the Executive Incentive Plan. The actual bonuses paid are displayed under the Non-Equity Incentive Plan Compensation column within the Summary Compensation Table. The threshold amount is currently 55.0% for Mr. Hill, 45.0% for Mr. Pollok, and 30.0% for all other NEOs, as this is the minimum payout that can occur under the program. The incentive target level is determined as the aggregate dollar amount derived from the executive officers’ target bonuses expressed as a percent of annual salary. This target percentage is currently 110.0% for Mr. Hill, 90.0% for Mr. Pollok, and 60.0% for all other NEOs. The maximum incentive is 165.0% for Mr. Hill, 135.0% for Mr. Pollok, and 90.0% for all other NEOs. The 2017 Executive Incentive Plan is further described in the Compensation Discussion and Analysis section of this Proxy Statement.
|
| (2)
| | These amounts represent ranges of the possible payouts, denominated in the number of shares of common stock, under performance-based RSUs granted in 2017 with respect to the three-year performance period (2017-2019) under the 2017 Long-Term Incentive Plan. The 2017 Long-Term Incentive Plan is further explained in the Compensation Discussion and Analysis section of this Proxy Statement. The fair value of the performance-based RSUs was estimated at the target performance level and was issued on March 15, 2017 at $89.40 per share.
|
| (3)
| | All stock option awards are granted based upon achievement of individual performance goals. Stock options vest ratably (25% per year) over four years.
|
| (4)
| | The exercise or base price of options and stock awards is established as the closing market price of the Company’s Common Stock on the grant date of January 25, 2017.
|
| (5)
| | This amount represents the fair market value of all RSUs and option awards made during the fiscal year 2017. The fair market value for RSUs reflects the target value of performance-based RSUs granted in 2017. The fair value of options is estimated at the date of grant using the Black‑Scholes option pricing model. The fair value for the options issued on January 25, 2017 was $35.47 per share. The following assumptions were used in valuing options issued:
|
| | | |
| | Assumptions
| |
| | January 25, 2017
| |
Dividend yield
| | 1.40 | %
|
Expected life
| | 8.5 years
| |
Expected volatility
| | 37 | %
|
Risk-free interest rate
| | 2.43 | %
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | |
Name | | Number of
Securities
Underlying
Unexercised
Options (#)Exercisable
(1) | | Number of
Securities
Underlying
Unexercised
Options (#)Unexercisable
(1) | | Equity
Incentive
Plan Awards
Number of
Securities
Underlying
Unexercised
Unearned
Options (#) | | Options
Exercise
Price
($) | | Options
Expiration
Date | | Number of
Shares or
Units of
Stock That
Have Not
Vested (#)
(2) (8) | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
(3) | | Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#) | | Equity
Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested ($) | |
Robert R. Hill, Jr. | | 6,249 | | — | | | | | 32.46 | | 1/27/2021 | | 15,246 | | $ | 1,328,689 | | 25,174 | | $ | 2,193,914 | |
| | 5,936 | | — | | | | | 31.75 | | 1/26/2022 | | | | | | | | | | | |
| | 7,534 | | — | | | | | 41.45 | | 1/24/2023 | | | | | | | | | | | |
| | 5,435 | | 1,812 | (4) | | | | 66.32 | | 1/22/2024 | | | | | | | | | | | |
| | 5,219 | | 5,220 | (5) | | | | 61.42 | | 1/21/2025 | | | | | | | | | | | |
| | 2,528 | | 7,585 | (6) | | | | 63.54 | | 1/20/2026 | | | | | | | | | | | |
| | — | | 9,036 | (7) | | | | 91.35 | | 1/25/2027 | | | | | | | | | | | |
John C. Pollok | | 5,246 | | — | | | | | 27.57 | | 1/22/2019 | | 13,155 | | $ | 1,146,458 | | 14,712 | | $ | 1,282,151 | |
| | 5,425 | | — | | | | | 31.10 | | 1/21/2020 | | | | | | | | | | | |
| | 4,023 | | — | | | | | 35.20 | | 2/15/2020 | | | | | | | | | | | |
| | 4,848 | | — | | | | | 32.46 | | 1/27/2021 | | | | | | | | | | | |
| | 5,667 | | — | | | | | 31.75 | | 1/26/2022 | | | | | | | | | | | |
| | 4,633 | | — | | | | | 41.45 | | 1/24/2023 | | | | | | | | | | | |
| | 3,366 | | 1,122 | (4) | | | | 66.32 | | 1/22/2024 | | | | | | | | | | | |
| | 3,050 | | 3,051 | (5) | | | | 61.42 | | 1/21/2025 | | | | | | | | | | | |
| | 1,477 | | 4,433 | (6) | | | | 63.54 | | 1/20/2026 | | | | | | | | | | | |
| | — | | 5,281 | (7) | | | | 91.35 | | 1/25/2027 | | | | | | | | | | | |
John F. Windley | | 3,304 | | — | | | | | 27.57 | | 1/22/2019 | | - | | $ | - | | 6,572 | | $ | 572,750 | |
| | 3,417 | | — | | | | | 31.10 | | 1/21/2020 | | | | | | | | | | | |
| | 2,818 | | — | | | | | 35.20 | | 2/15/2020 | | | | | | | | | | | |
| | 3,054 | | — | | | | | 32.46 | | 1/27/2021 | | | | | | | | | | | |
| | 4,130 | | — | | | | | 31.75 | | 1/26/2022 | | | | | | | | | | | |
| | 3,305 | | — | | | | | 41.45 | | 1/24/2023 | | | | | | | | | | | |
| | 1,729 | | 577 | (4) | | | | 66.32 | | 1/22/2024 | | | | | | | | | | | |
| | 1,362 | | 1,363 | (5) | | | | 61.42 | | 1/21/2025 | | | | | | | | | | | |
| | 660 | | 1,980 | (6) | | | | 63.54 | | 1/20/2026 | | | | | | | | | | | |
| | — | | 2,359 | (7) | | | | 91.35 | | 1/25/2027 | | | | | | | | | | | |
Joseph E. Burns | | 730 | | — | | | | | 27.57 | | 1/22/2019 | | 1,654 | | $ | 144,146 | | 6,129 | | $ | 534,142 | |
| | 3,020 | | — | | | | | 31.10 | | 1/21/2020 | | | | | | | | | | | |
| | 2,274 | | — | | | | | 35.20 | | 2/15/2020 | | | | | | | | | | | |
| | 2,698 | | — | | | | | 32.46 | | 1/27/2021 | | | | | | | | | | | |
| | 3,740 | | — | | | | | 31.75 | | 1/26/2022 | | | | | | | | | | | |
| | 3,185 | | — | | | | | 41.45 | | 1/24/2023 | | | | | | | | | | | |
| | 1,600 | | 534 | (4) | | | | 66.32 | | 1/22/2024 | | | | | | | | | | | |
| | 1,261 | | 1,261 | (5) | | | | 61.42 | | 1/21/2025 | | | | | | | | | | | |
| | 615 | | 1,847 | (6) | | | | 63.54 | | 1/20/2026 | | | | | | | | | | | |
| | — | | 2,200 | (7) | | | | 91.35 | | 1/25/2027 | | | | | | | | | | | |
Renee R. Brooks | | 1,223 | | — | | | | | 41.45 | | 1/24/2023 | | 1,396 | | $ | 121,661 | | 6,101 | | $ | 531,702 | |
| | 999 | | 334 | (4) | | | | 66.32 | | 1/22/2024 | | | | | | | | | | | |
| | 1,261 | | 1,261 | (5) | | | | 61.42 | | 1/21/2025 | | | | | | | | | | | |
| | 610 | | 1,833 | (6) | | | | 63.54 | | 1/20/2026 | | | | | | | | | | | |
| | — | | 2,183 | (7) | | | | 91.35 | | 1/25/2027 | | | | | | | | | | | |
All options listed above vest at a rate of 25% per year over the first four years of a 10-year option term.
| (1)
| | Figures shown represent the total number of shares subject to unexercised options held by the NEOs at year-end 2017. Also displayed is the number of shares subject to options that were exercisable (vested) and unexercisable (unvested) at year-end 2017. The number of options granted and the options exercise price have been adjusted to reflect all applicable stock dividends.
|
| (2)
| | The number of shares of restricted stock granted has been adjusted to reflect all applicable stock dividends.
|
| (3)
| | Market value is based on a closing price of $87.15 as of December 29, 2017, the last business day of the fiscal year.
|
| (4)
| | Option awards vest at a rate of 25% per year with remaining a vesting date of January 22, 2018.
|
| (5)
| | Option awards vest at a rate of 25% per year with remaining vesting dates of January 21, 2018 and January 21, 2019.
|
| (6)
| | Option awards vest at a rate of 25% per year with remaining vesting dates of January 20, 2018, January 20, 2019 and January 20, 2020.
|
| (7)
| | Option awards vest at a rate of 25% per year with remaining vesting dates of January 25, 2018, January 25, 2019, January 25, 2020 and January 25, 2021.
|
| (8)
| | The stock awards that have not vested comprisecertain accrued benefits, the following grantspayments and vesting periods: the September 18, 2008 grantbenefits: (a) a cash payment equal to Mrs. Brooks cliff vests 100% in year ten; and the January 22, 2009 grants to Mr. Hill, Mr. Pollok and Mr. Burns vest on December 31 of each year with final vesting at the end of the month in which the executive reaches his retirement age of 60 years old for Mr. Hill and Mr. Pollok and age 65 years old for Mr. Burns.
|
OPTION EXERCISES AND STOCK VESTED
| | | | | | | | | | | |
| | Option Awards | | Stock Awards | |
Name | | Number of Shares
Acquired on Exercise (#) | | Value Realized On
Exercise ($)
(1) | | Number of Shares
Acquired on Vesting (#)
(2) | | Value Realized On
Vesting ($)
(3) | |
Robert R. Hill, Jr. | | 22,723 | | $ | 1,287,389 | | 24,099 | | $ | 2,119,144 | |
John C. Pollok | | 3,364 | | | 205,036 | | 15,022 | | | 1,320,799 | |
John F. Windley | | 3,135 | | | 176,187 | | 7,403 | | | 653,470 | |
Joseph E. Burns | | 4,866 | | | 266,505 | | 8,014 | | | 706,416 | |
Renee R. Brooks | | — | | | — | | 4,706 | | | 413,198 | |
| (1)
| | Value realized is based on the difference between the closing price on the date of exercise and the options exercise price.
|
| (2)
| | Reflects the vested shares that were received pursuant to the stock-based benefit plan by each NEO that ina multiple (in the case of these awards vest on December 31(i) a termination of each year with final vesting atMr. Hill’s employment prior to a change in control, two times, or (ii) a termination of Mr. Pollok’s employment prior to his transition to a consulting role, or Mr. Hill’s termination of employment within twelve months following a change in control that occurs after the end of the month in which Mr. Hilleffective time, two and Mr. Pollok reach their retirement age of 60 years old and age 65 years old for Mr. Burns. As described in further detail under “2017 Long-Term Incentive Plan—Results of 2015 Long-Term Incentive Plan Which Ended in 2017” beginning on page 26, also reflects performance-based RSUs that were granted by the Company in January 2015 and which have been earned by the NEOs and vested on December 31, 2017.
|
| (3)
| | Value realized is based on the market value of the underlying shares on the vesting date.
|
PENSION BENEFITS
| | | | | | | | | | | |
| | | | Number
of Years
Credited
Service (#) | | Present
Value of
Accumulated
Benefits ($) | | Payments
During Last | |
Name | | Plan Name | | (1) | | (2) | | Fiscal Year ($) | |
Robert R. Hill, Jr. | | Defined Benefit Pension Plan | | 16 | | $ | 252,479 | | $ | — | |
John C. Pollok | | Defined Benefit Pension Plan | | 16 | | | 240,685 | | | — | |
John F. Windley | | Defined Benefit Pension Plan | | 10 | | | 185,644 | | | — | |
| | Supplemental Executive Retirement Plan | | 11 | | | 552,462 | | | — | |
Joseph E. Burns | | Defined Benefit Pension Plan | | 11 | | | 267,371 | | | — | |
Renee R. Brooks | | Defined Benefit Pension Plan | | 16 | | | 54,487 | | | — | |
| (1)
| | Number of years credited service for the Defined Benefit Pension Plan equals the actual years of service for each NEO. Mr. Windley entered into the SERP on July 1, 2006 and his number of years credited service began on that date.
|
| (2)
| | Pension plan amounts reflect the present value of the accumulated benefit at December 31, 2017. See Note 18 of the Company’s financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for the assumptions used for the defined benefit plan. SERP amounts represent the current aggregate liability carried on the Company’s books for each of the NEOs.
|
The Defined Benefit Pension Plan is described in Compensation Discussion and Analysis—Employee & Executive Benefits—Employee’s Pension Plan.
Supplemental Executive Retirement Plan
As of December 31, 2017, the SERP agreement of Mr. Windley provided for a supplemental executive retirement benefit payout under one of five scenarios: normal retirement, early termination, disability, and change in control or early retirement benefit.
Normal and Early Retirement Benefit
The following table provides the normal retirement age, reduced benefit retirement age (if applicable), base benefit amount, and payout period:
| | | | | | | | | | |
Name | | Normal
Retirement
Age | | Early
Retirement
Age | | Base
Benefit
Amount | | Payout Period
in Years | |
John F. Windley | | 65 | | n/a | | $ | 50,000 | | 15 | |
The exact amount of benefits would be generally determined by reference to the number of calendar years after 2002 in which the Company satisfied specified performance measures, namely that the Company’s net income after taxes and its total assets grew in the aggregate by an amount that would at least equal to annualized growth of 6% and 7%, respectively. If the named executive officer had retired at normal retirement age as of December 31, 2017, he would have been entitled to 100% of his maximum annual retirement benefit based on this performance measure. A smaller annual benefit, payable over the 15-year period after the executive attains his normal retirement age, will become payable if his employment is terminated prior to attaining retirement age for any reason other than death or for cause.
Benefit at Death
If the executive dies, the Company will be required to pay his beneficiary a lump sum death benefit of $250,000 plus annual payments as presented below:
| | | | | | | | | | |
Name | | Normal
Retirement
Age | | Early
Retirement
Age | | Base
Benefit
Amount | | Payout Period
in Years | |
John F. Windley | | 65 | | n/a | | $ | 50,000 | | 10 | |
Noncompetition
Mr. Windley will forfeit his retirement benefits under the SERP if he competes with the Company during the 18 months following termination of his employment.
The Company’s obligations under the agreements are general unsecured obligations of the Company, although the agreements require the Company to establish a grantor (“rabbi”) trust for such benefits following a change in control.
DEFERRED COMPENSATION PLAN
The Company has adopted a deferred compensation plan in which selected members of senior management, including executive officers, and/or other highly compensated employees, have the opportunity to elect to defer current compensation for retirement income or other future financial needs. Only eligible employees, as approved by the Compensation Committee, may participate in the plan. Each year participants can choose to have portions of their compensation for the upcoming year deferred by a certain whole percentage amount ranging between 5% and 100%. Deferrals are recorded in a bookkeeping account which is adjusted to reflect hypothetical investment earnings and losses of investment funds selected by the plan participant among those offered pursuant to the plan. Payments made under the plan will be made from the general assets of the Company, and will be subject to claims of its creditors. Amounts payable under the plan are payable at the future times (or over the periods) designated by plan participants upon their enrollment in the plan and their annual renewal of enrollment.
The investment options available to an executive under the deferred compensation plan are listed below along with their annual rate of return for the calendar year ended December 31, 2017, 2016 and 2015, as reported by the administrator of the deferred compensation plan. The rates assume that 100% of the participant’s contribution was deferred as of the first business day of 2017.
| | | | | | | |
| | Rates of Return | |
Name of Fund | | 2017 | | 2016 | | 2015 | |
Vanguard Selected Value | | 19.51 | % | 16.34 | % | 0.61 | % |
Metropolitan West Total Return | | 3.43 | % | 2.47 | % | 0.61 | % |
Federated Treasury Obligations | | 0.73 | % | 0.19 | % | 0.61 | % |
Vanguard Prime Money Market | | N/A | | N/A | | 0.05 | % |
Harbor Bond | | N/A | | N/A | | 0.23 | % |
Columbia Dividend Income | | 20.74 | % | 13.47 | % | 0.61 | % |
Mainstay Large Cap Growth | | 32.39 | % | (2.28) | % | 6.17 | % |
Goldman Sach MC Value | | N/A | | N/A | | (9.46) | % |
T. Rowe Price Mid Cap Growth | | 24.86 | % | 6.30 | % | 6.56 | % |
Diamond Hill SC | | 10.62 | % | 14.10 | % | (3.73) | % |
Columbia Acorn USA | | N/A | | N/A | | (1.36) | % |
Amer Fds EuroPacific R5 | | 31.09 | % | 1.00 | % | (0.53) | % |
T. Rowe Price New Horizons | | 31.49 | % | 7.79 | % | 4.50 | % |
Templeton Global Bond | | 2.62 | % | 6.61 | % | (4.03) | % |
PIMCO Commodity Real Return | | 2.70 | % | 14.54 | % | (25.70) | % |
Vanguard REIT Index | | 4.94 | % | 8.50 | % | 2.39 | % |
Vanguard Short-Term Bond | | 2.13 | % | 2.83 | % | 1.13 | % |
Vanguard Index 500 Adm | | 21.79 | % | 11.93 | % | 1.36 | % |
Principal High Yield | | 8.14 | % | 15.05 | % | (2.81) | % |
The table below summarizes the amounts in each named executive officer’s deferred compensation savings plan:
| | | | | | | | | | | | | | | | |
Name | | Executive Contributions
in Last FY ($)
(1) | | Registrant Contributions
in Last FY
($) | | Aggregate Earnings
in Last FY ($)
(2) | | Aggregate
Withdrawals/
Distributions ($) | | Aggregate Balance
at Last FYE ($) | |
Robert R. Hill, Jr. | | $ | 52,083 | | $ | — | | $ | — | | $ | — | | $ | 1,310,544 | |
John F. Windley | | | 28,963 | | | — | | | — | | | — | | | 299,327 | |
Joseph E. Burns | | | — | | | — | | | — | | | — | | | 18,162 | |
| (1)
| | Includes the total compensation to the above NEOs for which payment was deferred in 2017. These amounts also comprise part of the amounts in the Salary column of the Summary Compensation Table.
|
| (2)
| | Includes total loss in 2017 on the aggregate balance inone-half times) the NEO’s deferred compensation plan.
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The Company has entered into certain agreements and maintains certain plans that will require the Company to provide compensation to named executive officers of the Company in the event of a termination of employment or a change in control of the Company.
The amounts of total compensation payable to each named executive officer upon voluntary termination without good reason, voluntary termination for good reason, termination by Company without cause, termination by Company for cause, normal retirement, early retirement, termination due to disability, termination due to death, and termination associated with a change in control are shown in the tables below. The amounts assume that such termination was effective as of December 31, 2017 (the last day of the fiscal year), and thus include amounts earned through such time and are estimates of the amounts that would have been paid out to the executives upon their termination as of such date. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.
For purposes of each named executive officer’s employment agreement, the terms “good reason”, “cause”, “disability”, “change of control” and “total compensation” are defined below:
| (a)
| | “Good Reason” means, without Employee’s written consent, the occurrence of any of the following circumstances unless such circumstances are fully corrected within 30 days after Employee notifies the Company in writing of the existence of such circumstances as hereinafter provided:
|
| | |
| i.
| the assignment to Employee of any duties, functions or responsibilities other than those contemplated by the employment agreement or materially inconsistent with the position with the Company that Employee held immediately prior to the assignment of such duties or responsibilities or any adverse alteration in the nature or status of Employee’s responsibilities or the condition of Employee’s employment from those contemplated in the employment agreement;
|
| ii.
| a reduction by the Company in Employee’s total compensation or as it may be increased from time to time, except for across-the-board salary reductions similarly affecting all management personnel of the Company;
|
| iii.
| the relocation of the Company’s headquarters to a location more than fifty miles from its current location in Columbia, South Carolina, or the Company’s requiring Employee to be based anywhere other than the Company’s offices at such location, except for required travel on Company business;
|
| iv.
| the failure by the Company to pay Employee any portion of Employee’s compensation within the time guidelines established pursuant to standard Company policies, or any other material breach by the Company of any other material provision of the employment agreement; or
|
| v.
| the giving of notice by the Company of non-renewal of the employment agreement.
|
| (b)
| | “Cause” generally means: (A) the repeated failure of Employee to perform his responsibilities and duties; (B) the commission of an act by Employee constituting dishonesty or fraud against the Company or the Bank; (C) being charged with a felony; (D) habitual absenteeism; (E) Employee is determined to have been on the job while under the influence of alcohol, unauthorized or illegal drugs, prescription drugs that have not been prescribed for the Employee, or other substances that have the potential to impair the Employee’s judgment or performance; (F) the commission of an act by Employee involving gross negligence or moral turpitude that brings the Company or any of its affiliates into public disrepute or disgrace or causes material harm to the customer relations, operations or business prospects of the Company or its affiliates; (G) bringing firearms or weapons into the workplace; (H) the Employee’s failure to comply with policies, standards, and regulations of Company; (I) the Employee’s engagement in conduct which is in material contravention of any federal, state or local law or ordinance other than a minor offense which does not reflect or impact upon the Employer or Bank; (J) the Employee’s engagement in conduct which is unbecoming to or inconsistent with the duties and responsibilities of a member of management of the Employer; or (K) the Employee engaging in sexual or other form of illegal harassment.
|
| (c)
| | “Disability” means disability suffered by Employee for a continuous period of at least three months or any impairment of mind or body that is likely to result in a disability of Employee for more than six months during any twelve-month period.
|
| (d)
| | “Change of Control” means the occurrence of one of the following:
|
| | |
| i.
| A change in ownership of the Company occurs on the date that any one person, or more than one person acting as a group (as determined in Paragraph (i)(5)(v)(B) of Treasury Regulation Section 1.409A-3), acquires ownership of more than 50% of the total fair market value or total voting power of the Company or Bank other than (A) with respect to the Bank, the Company (B) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, (C) employee or a group of persons including Employee, and (D) an underwriter or group of underwriters owning shares of common voting stock in connection with a bona fide public offering of such shares and the sale of such shares to the public;
|
| ii.
| A change in the effective control of the Company occurs on the date that (a) a person, or more than one person acting as a group (as determined in Paragraph (i)(5)(v)(B) of Treasury Regulation Section 1.409A-3), acquires ownership (or having acquired during the 12-month period ending on the date of his most recent acquisition) of 30% or more of the total voting power of the stock of the Company or Bank, ordefined below); (b) a majority of the members of the Company’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Company’s board of directors prior to the date of appointment or election, provided that the Company is a corporation for which there is no majority shareholder.
|
| iii.
| A change in the ownership of a substantial portion of the Company’s assets occurs on the date that any one person, or more than one person acting as a group (as determined in Paragraph (i)(5)(v)(B) of Treasury Regulation Section 1.409A‑3), acquires (or having acquired during the 12-month period ending on the date of his most recent acquisition) assets from the Company that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition. For purposes of this provision, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
|
This definition of Change in Control is intended to fully comply with the definition of a change in control event as set forth in Treasury Regulation Section 1.409A-3(i)(5).
| (a)
| | “Total Compensation” for each named executive officer includes the employee’s base salary, the greater of the employee’sprorated annual bonus for the fiscal year precedingof termination based on actual performance (in the yearcase of Mr. Pollok, only if termination occurs in which2020); (c) payment in full of the executive’s employment terminates orPay to Integrate Award, to the averageextent not previously paid; (d) immediate vesting of the Pay to Lead Award, to the extent not previously vested; and (e) immediate vesting of any outstanding equity awards granted following January 25, 2020, with performance-based awards remaining subject to applicable performance metrics. If Mr. Pollok’s services are terminated during his consulting term, in lieu of the above cash payment, he would be entitled to a cash payment equal to all unpaid consulting fees that would have been paid had he continued providing services until December 31, 2024. The term “total compensation” means the sum of the NEO’s base salary, annual bonus for(based on the five yearsgreatest of the NEO’s target bonus, actual bonus paid in respect of the fiscal year preceding the year of termination and the amountaverage annual bonus for the Company contributes annually towardthree fiscal years preceding the employee’syear of termination) and annual health, medical, dental and vision insurance premiums (and, in the case of Mr. Hill, fringe benefits).
|
| ● | In the case of Ms. Brooks and Messrs. Lapointe and Goettee, the following payments and benefits: (a) a cash payment equal to the sum of the NEO’s base salary plus target annual bonus opportunity; (b) continued employer-paid medical and dental insurance premiums. Forpremiums for twelve months; (c) payment in full of the Pay to Integrate Award, to the extent not previously paid; and (d) immediate vesting of the Pay to Lead Award, to the extent not previously vested. However, if such termination occurred within twelve months following a change in control that occurs after the effective time, in lieu of the cash payment described in the immediately preceding sentence, such NEOs would be entitled to a cash payment equal to the sum of 2.5 times (in the case of Ms. Brooks and Mr. Hill, total compensation also includesLapointe) or two times (in the value associated withcase of Mr. Goettee) the personal usesum of a company-owned automobile and reimbursement for country club dues and other such dues and fees as may be approved by the board.NEO’s base salary plus the highest annual bonus earned in the three years immediately preceding the year in which the change in control occurs. |
| |
| |
| 2021 PROXY STATEMENT 51 |
The following table outlines certain differences between each agreement for Messrs. Hill, Pollok, Windley, Burns, and Mrs. Brooks:
Table of Contents
| | | | | |
NameExecutive Compensation
| | Change in
Control Payout
Multiple
| | Non-Compete
Period
(Months)
| |
Robert R. Hill, Jr.
| | .99 times
| | 24 | |
John C. Pollok
| | 2.5 times
| | 24 | |
John F. Windley
| | 2 times
| | 18 | |
Joseph E. Burns
| | 2 times
| | 12 | |
Renee R. Brooks
| | 2 times
| | 12 | |
Mr. Hill
If an NEO’s employment is the only NEO entitled to receive compensation for his noncompete agreement with the Company. His noncompete agreement is set for a 24 month period starting on the termination date. Heterminated by reason of death or disability, he or she would be entitled to substantially the same payments and benefits as would be payable upon a termination without cause or for good reason, excluding the cash severance payment. In the case of Ms. Brooks and Messrs. Lapointe and Goettee, such NEO would not be entitled to the employer-paid medical and dental benefits described above in the case of disability, but his or her family would be entitled to such benefits for twelve months following death.
If the services of Mr. Hill or Mr. Pollok are terminated by reason of retirement after age 55 and ten years of service to the Company, the applicable NEO would be entitled to full vesting of outstanding equity awards granted following the effective time, with performance-based awards remaining subject to applicable performance metrics, and to a prorated annual bonus for the year of retirement (in the case of Mr. Pollok, payment of a prorated annual bonus is only available if retirement occurs in 2020) based on actual performance. A termination of Mr. Hill’s employment on or following the expiration of the term of his employment agreement and the termination of Mr. Pollok’s services at the end of his consulting term would each be treated as a retirement for purposes of the employment agreements.
In consideration for the foregoing payments and benefits payable upon a termination of employment without cause or by the NEO for good reason (and, in the case of Messrs. Hill and Pollok, benefits payable upon termination due to death, disability or retirement), each of the NEOs is required to execute a release of claims. In addition, the employment agreements contain restrictive covenants concerning nondisclosure of confidential information at any time following a termination of employment, mutual non-disparagement of either party at any time following a termination of employment (in the case of Ms. Brooks and Messrs. Lapointe and Goettee), non-competition (for a period of two years in the case of Messrs. Hill and Pollok and one year in the case of Ms. Brooks and Messrs. Lapointe and Goettee) and non-solicitation of customers and employees for a period of two years following termination of employment. The severance benefits (and, in the case of Messrs. Hill and Pollok, the retirement benefits) described above are also contingent on the NEO’s compliance with the restrictive covenants.
b. | CenterState Employment and Non-Competition Agreements assumed at Merger |
Prior to the Merger, CenterState was party to existing employment agreements with Messrs. Corbett and Matthews which provided for payments in connection with a termination of employment or change in control of CenterState.
The completion of the Merger constituted a change in control under Mr. Corbett’s employment agreement dated as of July 13, 2010. This agreement provides that he would receive, in lieu of any other regular severance entitlement, a “single-trigger” lump-sum cash payment equal to three times the highest annual compensation as reported on his Form W-2 over the three-year period immediately preceding the year in which the change in control occurs, and an additional payment to account for any excise tax payable under Sections 280G and 4999 of the Internal Revenue Code (including any associated taxes thereon).
In connection with the Merger, Mr. Corbett voluntarily agreed to waive the required “single-trigger” change in control payment under his employment agreement. Mr. Corbett and CenterState believed the waiver would be in the best interests of CenterState’s shareholders at the time of the Merger to avoid the single-trigger payment in light of Mr. Corbett’s continued role as CEO of the combined company. In order to comply with applicable tax requirements and in consideration of the waiver, Mr. Corbett and the Company agreed to a “double trigger” termination structure such that in the event his employment with the Company is terminated by the Company without “cause” or if he resigns for “good reason” prior to the third anniversary of the closing of the Merger (or if there is a subsequent change in control of the Company during the employment term), he will be entitled to receive a lump sum cash payment equal to (i) the amount of the change in control payment that would have been payable under the terms of his Total Compensation package, as definedexisting agreement with CenterState (which amounts are described above) plus (ii) to comply with applicable tax requirements, an additional 25% of such change in control payment.
Going forward, and based upon external feedback and shareholder preference, the Company has not and will continue to not enter into agreements that calculate severance or change in control payments on a basis other than a multiple of cash compensation.
The employment agreement entered into with Mr. Matthews provides that if his employment is terminated by CenterState Bank without “cause” or he resigns for “good reason” without regard to a change in control, he would receive a lump-sum cash payment equal to one and one-half times the sum of (x) base salary, and (y) the target bonus earned for the year immediately preceding the year of termination; provided, that if such termination occurred within twelve months following a change in control, in lieu of the cash payment described in the Total Compensation definition (Item (e)) above, paidimmediately preceding sentence, he would be entitled to a cash payment equal to the sum of 2.5 times the sum of his base salary plus the highest annual bonus earned in two equal lump sums, the firstthree years immediately preceding the year in which the change in control occurs. Mr. Matthews will also be entitled to receive continued medical and dental insurance coverage at timeCenterState’s cost for the executive and his or her dependents for a period up to the end of the employment term under the employment agreement. In addition, Mr. Matthews’s employment agreement includes Mr. Matthews’ covenant not to (i) solicit customers, accept the business of customers or sell customers a product or service of any other financial institution or (ii) compete with the Company in Alabama or metropolitan statistical areas of Atlanta, Jacksonville, Orlando or Tampa, for a period of 24 months following his separation of service (or 18 months in the situation of an involuntary termination and the secondwithout cause or a voluntary termination with good reason). Mr. Matthews’s employment agreement was initially for a 3-year term, with a one-year automatic renewal beginning on the first anniversary of termination. Should he violate any of the covenants listed in the noncompetition agreement no payments that are still due will be paid and the Company has the right to secure an injunction for damages to recover any previous payments made under the agreement.
On January 22, 2009, the Company established an equity based retirement benefit represented by grants of restricted stock to Messrs. Hill, Pollok and Burns.thereafter. The grants were intended to provide similar economic benefit to the executives and more closely align the interests of these executives with the long-term profitability of the Bank, the Company and its shareholders. Each restricted stock grant vests on December 31 of each year with final vesting at the end of the month in which the executive reaches his retirement age of 60 years old. Mr. Hill was granted 30,780 shares of restricted stock with final vesting on October 31, 2026. Mr. Pollok was granted 28,265 shares of restricted stock with final vesting on October 31, 2025. Mr. Burns was granted 10,555 shares of restricted stock with final vesting on August 31, 2019. The fair value per share of the stock granted was $27.57 on January 22, 2009.
The Company has individual SERP agreements established on or about November 1, 2006 and amended on December 31, 2008, by and between the Bank and John F. Windley and certain other executives. Although benefits under the SERP arrangements are defined for retirement and early retirement, we doMerger did not present these payout estimates in the following tables. None of the named executive officers would be eligible to receive such payments due to the age of the officers on December 31, 2017. The earliest a retirement benefit could be provided to any of the current named executive officers—currently Mr. Windley—would be in 2018.
The following tables provide the potential payments upon termination for all relevant scenarios as of December 31, 2017.
Robert R. Hill, Jr.
The following table describes the potential payments upon termination for various reasons for Robert R. Hill, Jr., the Company’s Chief Executive Officer.
| | | | | | | | | | | | | | | | | | | | | | | |
Compensation and/or Benefits | | Voluntary
Termination by
Employee
Without Good Reason | | Voluntary
Termination by
Employee for
Good Reason
(not CIC
related) | | Involuntary
Termination
by Company
w/out Cause | | Involuntary Termination by Company For Cause | | Termination
in the Event
of Disability | | Termination
in the Event
of Death | | Qualifying
Termination Following a
Change in
Control | | |
Payable upon Termination | | (1) | | (2) | | (2) | | (3) | | (4) | | (5) | | (6) | | |
Robert R. Hill, Jr. | | | | | | | | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | $ | — | | $ | 2,027,821 | | $ | 2,027,821 | | $ | — | | $ | 2,027,821 | | $ | 2,027,821 | | $ | 2,007,543 | | |
Noncompete Payments | | | 4,055,643 | | | 4,055,643 | | | 4,055,643 | | | — | | | — | | | — | | | 4,055,643 | | |
Intrinsic Value of Unvested Stock Options | | | — | | | — | | | — | | | — | | | 351,136 | | | 351,136 | | | 351,136 | | |
Intrinsic Value of Unvested Restricted Stock/Units | | | — | | | — | | | — | | | — | | | — | | | 2,163,412 | | | 2,163,412 | | |
Benefits & Perquisites | | | | | | | | | | | | | | | | | | | | | | | |
Equity Based Retirement Benefit (7) | | | — | | | — | | | — | | | — | | | 1,328,689 | | | 1,328,689 | | | 1,328,689 | | |
Medical & Dental Insurance | | | — | | | 8,263 | | | 8,263 | | | — | | | 8,263 | | | — | | | — | | |
Company Car and Club Dues | | | — | | | 2,376 | | | 2,376 | | | — | | | — | | | — | | | — | | |
Tax Gross Up (8) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | |
Total Benefit | | $ | 4,055,643 | | $ | 6,094,103 | | $ | 6,094,103 | | $ | — | | $ | 3,715,909 | | $ | 5,871,058 | | $ | 9,906,423 | | |
| (1)
| | The Executive is entitled to Base Salary through the date of termination and payment of Total Compensation for noncompetition for two years. Total compensation consists of base salary, the greater of the average prior five year bonuses or the last year prior bonus, annual medical and dental benefits, and club memberships, auto allowance, and the expense of attending conferences/meetings in the past twelve months.
|
| (2)
| | The Company shall continue to pay to the Executive his Total Compensation for a period of twelve months in accordance with the Company’s customary payroll practices. In addition, the Company shall continue to provide medical, dental, and other benefits for a twelve-month period on the same basis as in effect at the time of termination as well as payment for noncompetition.
|
| (3)
| | The Company shall have no further obligation to the Executive. The noncompetition agreement will be in force for a period of twelve months with no payments due to the Executive.
|
| (4)
| | The Company will pay to the Executive an amount equal to twelve months’ Total Compensation in a lump sum, and will continue medical and dental benefits for a twelve-month period on the same basis as in effect on the date of Disability. Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Vesting of Performance RSUs is not accelerated upon termination in the event of disability. Rather, awards vest as scheduled after the performance period on a pro-rata basis, based on the percentage of the performance period for which the participant was employed.
|
| (5)
| | The Company will pay to the beneficiary of the Executive an amount equal to twelve months’ Total Compensation in a lump sum. Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended.
|
| (6)
| | Following termination, the Company (or its successors) shall pay in one lump sum to the Executive, or his beneficiary in the event of his subsequent death, an amount equal to 0.99 times Executive’s Total Compensation (Change in Control Payment) in effect at the date of termination of employment. In addition, the Executive will also be paid under his noncompetition agreement.
|
Upon a Change in Control, with or without termination, Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended. The value of Option Awards is based on the difference between the current market price as of December 31, 2017 and the exercise price for options in-the-money (i.e., options with an exercise price below the current market price). The value of Restricted Stock Awards and RSUs is based on the market price of $87.15 as of December 31, 2017.
(7)Mr. Hill’s SERP was replaced in January 2009 with a grant of restricted stock which is intended to provide similar economic benefit to Mr. Hill and more closely align his interests with the long-term profitability of the Company and its shareholders.
(8)Per Mr. Hill’s Employment Agreement dated December 31, 2008, in the event of a Change in Control, Mr. Hill is entitled to receive an additional payment (a “Gross-Up Payment”) in an amount equal to the federal, state and local income and excise tax imposed by Section 4999 of the Internal Revenue Code. The Company believes that the structure and timing of Mr. Hill’s payments upontrigger a change in control under Mr. Matthews’ employment agreement.
The employment agreements with Mr. Corbett (as amended as described above) and Mr. Matthews were assumed by the Company as of December 31, 2017 would not have caused the payments or distributions to be subject to the excise tax imposed by Section 4999closing of the Internal Revenue Code.Merger.
John C. Pollok
The following table describes the potential payments upon termination for various reasons for John C. Pollok, the Company’s Chief Financial Officer and Chief Operating Officer.
| | | | | | | | | | | | | | | | | | | |
Compensation and/or Benefits Payable | | Voluntary
Termination by
Employee
Without Good Reason | | Involuntary
Termination
by Company
w/out Cause | | Involuntary
Termination
by Company
For Cause | | Termination
in the Event
of Disability | | Termination
in the Event
of Death | | Qualifying
Termination Following a
Change in
Control | |
Upon Termination | | (1) | | (2) | | (1) | | (3) | | (4) | | (5) | |
John C. Pollok | | | | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | | | | | |
Cash Severance | | $ | — | | $ | 271,858 | | $ | — | | $ | — | | $ | — | | $ | 3,213,482 | |
Intrinsic Value of Unvested Stock Options | | | — | | | — | | | — | | | 206,537 | | | 206,537 | | | 206,537 | |
Intrinsic Value of Unvested Restricted Stock/Units | | | — | | | — | | | — | | | — | | | 1,329,560 | | | 1,329,560 | |
Benefits & Perquisites | | | | | | | | | | | | | | | | | | | |
Equity Based Retirement Benefit (7) | | | — | | | — | | | — | | | 1,146,371 | | | 1,146,371 | | | 1,146,371 | |
Medical & Dental Insurance | | | — | | | 3,831 | | | — | | | — | | | — | | | — | |
Tax Gross Up (6) | | | — | | | — | | | — | | | — | | | — | | | 2,501,601 | |
Total Benefit | | $ | — | | $ | 275,689 | | $ | — | | $ | 1,352,908 | | $ | 2,682,468 | | $ | 8,397,551 | |
| |
| (1)
|
52 SOUTHSTATE | | The Company shall have no further obligation to the Executive. A noncompetition agreement will be in force for a period of 24 months with no payment due to the Executive.
|
| (2)
| | The Company shall pay to the Executive his Base Salary for six months following his termination through customary payroll practices. The Company shall also contribute to Executive’s COBRA premium by paying the same monthly amount for health and dental insurance coverage as it would if he were an active employee for a period of six months.
|
| (3)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Vesting of Performance RSUs is not accelerated upon termination in the event of disability. Rather, awards vest as scheduled after the performance period on a pro-rata basis, based on the percentage of the performance period for which the participant was employed.
|
| (4)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended.
|
| (5)
| | The Company (or its successors) shall pay the Executive, or his beneficiary in the event of his subsequent death, an amount equal to two and one-half times Executive’s Total Compensation (Change in Control Payment) in effect at the date of termination of employment. Two equal payments shall be made, each consisting of one-half the total Change in Control Payment with the first payment to be made immediately upon cessation of employment and the second to be made exactly one year later.
|
Upon a Change in Control, with or without termination, Option Awards and Restricted Stock Awards will be fully accelerated based on 100%
Table of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended. The value of Option Awards is based on the difference between the current market price as of December 31, 2017 and the exercise price for options in‑the-money (i.e., options with an exercise price below the current market price). The value of Restricted Stock Awards and RSUs is based on the market price of $87.15 as of December 31, 2017.Contents
| |
| (6)
| | Per Mr. Pollok’s Employment Agreement dated December 31, 2008, in the event of a Change in Control, Mr. Pollok is entitled to receive an additional payment (a “Gross-Up Payment”) in an amount equal to the federal, state and local income and excise tax imposed by Section 4999 of the Internal Revenue Code. The Company believes that the structure and timing of Mr. Pollok’s payments upon a change in control as of December 31, 2017 would have caused the payments or distributions to be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code. The amount included here is the payment which he would receive from the Company on an after-tax basis equal to the federal, state and local income and excise tax imposed.CEO Pay Ratio
|
| (7)
| | Mr. Pollok’s SERP was replaced in January 2009 with a grant of restricted stock which is intended to provide similar economic benefit to Mr. Pollok and more closely align his interests with the long-term profitability of the Company and its shareholders.
|
John F. WindleyCEO PAY RATIO
The following table describesBelow is: the potential payments upon termination for various reasons for John F. Windley,(i) 2020 annual total compensation of Mr. Corbett, our CEO; (ii) the President, Chief Executive Officer and Chief Banking Officer of the Bank.
| | | | | | | | | | | | | | | | | | | |
Compensation and/or Benefits Payable | | Voluntary
Termination by
Employee
Without Good Reason | | Involuntary
Termination
by Company
w/out Cause | | Involuntary Termination by Company For Cause | | Termination
in the Event
of Disability | | Termination
in the Event
of Death | | Qualifying
Termination Following a
Change in
Control | |
Upon Termination | | (1) | | (2) | | (1) | | (3) | | (4) | | (5) (6) | |
John F. Windley | | | | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | | | | | |
Cash Severance | | $ | — | | $ | 182,145 | | $ | — | | $ | — | | $ | — | | $ | 1,398,740 | |
Intrinsic Value of Unvested Stock Options | | | — | | | — | | | — | | | 93,837 | | | 93,837 | | | 93,837 | |
Intrinsic Value of Unvested Restricted Stock/Units | | | — | | | — | | | — | | | — | | | 593,840 | | | 593,840 | |
Benefits & Perquisites | | | | | | | | | | | | | | | | | | | |
Supplemental Non-Qualified Pension (7) | | | 597,142 | | | 597,142 | | | — | | | 597,491 | | | 707,736 | | | 621,028 | |
Medical & Dental Insurance | | | — | | | 3,610 | | | — | | | — | | | — | | | — | |
Total Benefit | | $ | 597,142 | | $ | 782,897 | | $ | — | | $ | 691,328 | | $ | 1,395,413 | | $ | 2,707,445 | |
| (1)
| | The Company shall have no further obligation to the Executive, other than the vested portion of the Supplemental Non-Qualified Pension in the case of voluntary termination by the employee without Good Reason. A noncompetition agreement will be in force for a period of eighteen months with no payment due to the Executive.
|
| (2)
| | The Company shall pay to the Executive his Base Salary for six months following his termination through customary payroll practices. The Company shall also contribute to Executive’s COBRA premium by paying the same monthly amount for health and dental insurance coverage as it would if he were an active employee for a period of 6 months.
|
| (3)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest pro-rata, the numerator of which shall be the number of whole months during the performance period that the Participant was employed by the Company, and the denominator of which shall be the total number of months in the performance period.
|
| (4)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Vesting of Performance RSUs is not accelerated upon termination in the event of disability. Rather, awards vest as scheduled after the performance period on a pro-rata basis, based on the percentage of the performance period for which the participant was employed.
|
| (5)
| | The Company (or its successors) shall pay the Executive, or his beneficiary in the event of his subsequent death, an amount equal to two times Executive’s Total Compensation (Change in Control Payment) in effect at the date of termination of employment. Two equal payments shall be made, each consisting of one-half the total Change in Control Payment with the first payment to be made immediately upon cessation of employment and the second to be made exactly one year later.
|
Upon a Change in Control, with or without termination, Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended. The value of Option Awards is based on the difference between the current market price as of December 31, 2017 and the exercise price for options in‑the-money (i.e., options with an exercise price below the current market price). The value of Restricted Stock Awards and RSUs is based on the market price of $87.15 as of December 31, 2017.
| (6)
| | The benefit shall be reduced to the extent necessary to cause the aggregate present value of all payments in the nature of compensation to the Executive not to exceed 2.99 times the base amount as defined per Code §280G. As of December 31, 2017, no such reduction in benefit would have been necessary for Mr. Windley.
|
| (7)
| | The amounts payable under the Supplemental Non-Qualified Pension are in accordance with a SERP that is generally targeted to pay $50,000 annually for fifteen years to Mr. Windley at his normal retirement date. No payment is due if Mr. Windley is involuntarily terminated by the Company for Cause. The following table provides the assumptions used to calculate the total benefit
|
under each termination or retirement scenario. In the table on the prior page, we presented the present values of all benefits using a 2.00% discount rate (120% of mid-term semi-annual AFR as of December 2017):
|
| | | | | | | | | | |
| | | | Annual | | Total | | |
Scenario | | Payment Term | | Benefit | | Benefit | | Explanation of Calculation |
Voluntary Termination by Employee
Without Good Reason | | 15 years payable at normal retirement age | | $ | 38,461 | | $ | 576,922 | | 80% of $48,077, the present value of $50,000 (annual benefit) discounted using a 4% annual rate from normal retirement age times payment term. |
Termination by Company Without Cause | | 15 years payable at normal retirement age | | $ | 38,461 | | $ | 576,922 | | 80% of $48,077, the present value of $50,000 (annual benefit) discounted using a 4% annual rate from normal retirement age times payment term. |
Termination Due to Disability | | 15 years payable at normal retirement age | | $ | 48,077 | | $ | 721,153 | | Present value at 12/31/17 of $50,000 annual benefit discounted using a 4% annual rate from normal retirement age. |
Termination Due to Death | | 10 years payable at time of death + lump
sum of $250,000 | | $ | 50,000 | | $ | 750,000 | | The annual benefit times payment term plus additional lump sum of $250,000. |
Termination Associated with a Change in
Control | | 15 years payable at normal retirement age | | $ | 50,000 | | $ | 750,000 | | The annual benefit of $50,000 times the payment terms. |
Joseph E. Burns
The following table describes the potential payments upon termination for various reasons for Joseph E. Burns, the Company’s Chief Credit Officer.
| | | | | | | | | | | | | | | | | | | |
Compensation and/or Benefits Payable | | Voluntary
Termination by
Employee
Without Good Reason | | Involuntary
Termination
by Company
w/out Cause | | Involuntary Termination by Company For Cause | | Termination
in the Event
of Disability | | Termination
in the Event
of Death | | Qualifying
Termination Following a
Change in
Control | |
Upon Termination | | (1) | | (2) | | (1) | | (3) | | (4) | | (5) (6) | |
Joseph E. Burns | | | | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | | | | | |
Cash Severance | | $ | — | | $ | 169,876 | | $ | — | | $ | — | | $ | — | | $ | 1,305,495 | |
Intrinsic Value of Unvested Stock Options | | | — | | | — | | | — | | | 87,176 | | | 87,176 | | | 87,176 | |
Intrinsic Value of Unvested Restricted Stock/Units | | | — | | | — | | | — | | | — | | | 553,054 | | | 553,054 | |
Benefits & Perquisites | | | | | | | | | | | | | | | | | | | |
Supplemental Non-Qualified Pension (7) | | | — | | | — | | | — | | | 143,362 | | | 143,362 | | | 143,362 | |
Medical & Dental Insurance | | | — | | | 3,610 | | | — | | | — | | | — | | | — | |
Total Benefit | | $ | — | | $ | 173,486 | | $ | — | | $ | 230,538 | | $ | 783,592 | | $ | 2,089,087 | |
| (1)
| | The Company shall have no further obligation to the Executive. A noncompetition agreement will be in force for a period of twelve months with no payment due to the Executive.
|
| (2)
| | The Company shall pay to the Executive his Base Salary for six months following his termination through customary payroll practices. The Company shall also contribute to Executive’s COBRA premium by paying the same monthly amount for health and dental insurance coverage as it would if he were an active employee for a period of six months.
|
| (3)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Vesting of Performance RSUs is not accelerated upon termination in the event of disability. Rather, awards vest as scheduled after the performance period on a pro-rata basis, based on the percentage of the performance period for which the participant was employed.
|
| (4)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended.
|
| (5)
| | The Company (or its successors) shall pay the Executive, or his beneficiary in the event of his subsequent death, an amount equal to two times Executive’s Total Compensation (Change in Control Payment) in effect at the date of termination of employment. Two equal payments shall be made, each consisting of one-half the total Change in Control Payment with the first payment to be made immediately upon cessation of employment and the second to be made exactly one year later.
|
Upon a Change in Control, with or without termination, Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended. The value of Option Awards is based on the difference between the current market price as of December 31, 2017 and the exercise price for options
in‑the-money (i.e., options with an exercise price below the current market price). The value of Restricted Stock Awards and RSUs is based on the market price of $87.15 as of December 31, 2017.
| (6)
| | The benefit shall be reduced to the extent necessary to cause the aggregate present value of all payments in the nature of compensation to the executive not to exceed 2.99 times the base amount as defined per Code §280G. As of December 31, 2017, no such reduction in benefit would have been necessary for Mr. Burns.
|
| (7)
| | Mr. Burns’ SERP was replaced in January 2009 with a grant of restricted stock which is intended to provide similar economic benefit to Mr. Burns and more closely align his interests with the long-term profitability of the Company and its shareholders.
|
Renee R. Brooks
The following table describes the potential payments upon termination for various reasons for Renee R. Brooks, the Company’s Chief Administrative Officer.
| | | | | | | | | | | | | | | | | | | |
Compensation and/or Benefits Payable | | Voluntary
Termination by
Employee
Without Good Reason | | Involuntary Termination by Company w/out Cause | | Involuntary Termination by Company For Cause | | Termination in the Event of Disability | | Termination in the Event of Death | | Qualifying Termination Following a Change in Control | |
Upon Termination | | (1) | | (2) | | (1) | | (3) | | (4) | | (5) (6) | |
Renee R. Brooks | | | | | | | | | | | | | | | | | | | |
Compensation | | | | | | | | | | | | | | | | | | | |
Cash Severance | | $ | — | | $ | 339,751 | | $ | — | | $ | — | | $ | — | | $ | 1,113,768 | |
Intrinsic Value of Unvested Stock Options | | | — | | | — | | | — | | | 82,680 | | | 82,680 | | | 82,680 | |
Intrinsic Value of Unvested Restricted Stock/Units | | | — | | | — | | | — | | | 121,661 | | | 661,294 | | | 661,294 | |
Benefits & Perquisites | | | | | | | | | | | | | | | | | | | |
Medical & Dental Insurance | | | — | | | 13,219 | | | — | | | — | | | — | | | — | |
Total Benefit | | $ | — | | $ | 352,970 | | $ | — | | $ | 204,341 | | $ | 743,974 | | $ | 1,857,742 | |
| (1)
| | The Company shall have no further obligation to the Executive. A noncompetition agreement will be in force for a period of 12 months with no payment due to the Executive.
|
| (2)
| | The Company shall pay to the Executive her Base Salary for 12 months following her termination through customary payroll practices. The Company shall also contribute to Executive’s COBRA premium by paying the same monthly amount for health and dental insurance coverage as it would if she were an active employee for a period of 12 months.
|
| (3)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Vesting of Performance RSUs is not accelerated upon termination in the event of disability. Rather, awards vest as scheduled after the performance period on a pro-rata basis, based on the percentage of the performance period for which the participant was employed.
|
| (4)
| | Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended.
|
| (5)
| | The Company (or its successors) shall pay the Executive, or his beneficiary in the event of his subsequent death, an amount equal to two times Executive’s Total Compensation (Change in Control Payment) in effect at the date of termination of employment. Two equal payments shall be made, each consisting of one-half the total Change in Control Payment with the first payment to be made immediately upon cessation of employment and the second to be made exactly one year later.
|
Upon a Change in Control, with or without termination, Option Awards and Restricted Stock Awards will be fully accelerated based on 100% of remaining non-vested shares. Performance RSUs will vest at 100% of the Target level performance (included in the value above) or, if greater, based on actual performance through the end of the most recent quarter ended. The value of Option Awards is based on the difference between the current market price as of December 31, 2017 and the exercise price for options in‑the-money (i.e., options with an exercise price below the current market price). The value of Restricted Stock Awards and RSUs is based on the market price of $87.15 as of December 31, 2017.
| (6)
| | The benefit shall be reduced to the extent necessary to cause the aggregate present value of all payments in the nature of compensation to the executive not to exceed 2.99 times the base amount as defined per Code §280G. As a result of this benefit limit, the cash severance level was reduced from $1,291,054 to $1,113,768.
|
CEO Pay Ratio
As required by Item 402(u) of Regulation S-K, as of December 31, 2017, the pay ratio for2020 annual total compensation of our Chief Executive Officer tomedian employee; (iii) the medianratio of the annual total compensation of all employees was 63 to 1. For the period ending December 31, 2017, the median of the annual total compensation of all employees of our Company, with the exception of Robert R. Hill, Jr., our CEO was $48,389, and the annual total compensation of Mr. Hill was $3,055,398.
We completed the following steps to identify the median of the annual total compensation of all our employees and to determine the annual total compensationthat of our median employeeemployee; and CEO:(iv) the methodology we used to calculate our CEO pay ratio.
| |
| |
CEO Pay Ratio | 1.
|
CEO Annual Total Compensation | $3,598,014 (1) |
Median Employee Annual Total Compensation | As of October 13, 2017, our employee population consisted of approximately 2,294 individuals, including any full-time, part-time, temporary, or seasonal employees employed on that date, as well as employees who joined the organization through the acquisition of Southeastern Bank Financial Corporation. This date was selected because it aligned with a payroll cycle and allowed us$61,014
|
CEO to identify employees in a reasonably efficient manner.Median Employee Pay Ratio | 59:1 |
| (1) | 2.
| | To findDetermined based on the median of the annual total compensation of all our employees (other than our CEO), we used wages from our payroll recordspaid to Mr. Corbett as reported to the Internal Revenue Service on Form W-2 for fiscal 2017. In making this determination, we annualized the compensation of full-time and part-time permanent employees who were employed on October 13, 2017, but did not work for us for the entire year. No full-time equivalent adjustments were made for part time employees.
|
| 3.
| | We identified our median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation.
Summary Compensation Table, annualized as described below to reflect a full year of service with SouthState. |
| 4.
| | After identifying the median employee, we added together all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual
Methodology CEO Annual Total Compensation. Because Mr. Corbett became our CEO in connection with the Merger, his total compensation of $48,389. |
Total compensation for Mr. Hill represents the amount reported in the “Total” column of our 2017 Summary Compensation Table and includes salary, restricted stock grants, option awards, non-equity incentive compensation, nonqualified deferred compensation and other compensation.
DIRECTOR COMPENSATION
The Company uses a combination of cash and stock‑included in this Proxy Statement is calculated based compensation to attract and retain qualified persons to serve on the Board of Directors. Directors are subject to a minimum share ownership requirement. Each director is required to directly own $125,000 of the Company’s stock by the end of the third anniversary of the first election to the board of directors, and $250,000 of the Company’s stock by the end of the sixth anniversary of the first election to the Board of Directors. Director compensation is recommended by the Compensation Committee after discussion with the compensation consultant and is approved by the Board of Directors, and is intended to provide an appropriate level of compensation to attract and retain qualified directors and is competitive with that of comparable financial institutions.
For the fiscal year ended December 31, 2017, non-employee directors ofpayments from the Company were paid $1,000 per regularly scheduled board meeting attended. The Company pays a quarterly cash retainer fee to each director. Directors who are also officers employed by the Company or the Bank do not receive fees or any other separate cash compensation for serving as a director. Members of the committees are paid additional compensation of $500, for each regularly scheduled meeting attended. The chair of the Audit, Compensation, Governance, and Risk Committees received $1,000 per committee meeting attended in lieu of the corresponding amounts above. For special meetings, the director is paid at the same rates above, except for those attended via telephone, which are paid at one-half the regular rate.
In May 2017, the Company awarded to each non-employee director serving at the time 435 shares of restricted stock except for 492 shares awarded to Jimmy Addison, Martin B. Davis, Cynthia A. Hartley, and Kevin P. Walker, who serve as the chair of the Governance, Risk, Compensation, and Audit Committees, respectively. These awards were granted following the Company’s 2017 Annual Shareholders Meeting and vest 25% per quarter over a period of one year from the date of grant. TheMerger through December 31, 2020. Therefore, we annualized his total compensation to provide a more complete approximation of his total compensation for the year by calculating the sum of Mr. Corbett’s (i) post-Merger base salary paid by the Company, intends(ii) full annual cash incentive awarded by the Company for 2020, (iii) long-term equity RSU awards granted by CenterState in May 2020 prior to grant restricted stock awards annuallythe Merger which were converted to its non-employee directors in similar amounts and terms following the Annual Shareholders Meeting, under the authorization of the 2018 stock incentive plan.
Robert R. Horger, who serves as chairman of the BoardRSUs of the Company currently receives $130,317 annually for serving in that capacity. In addition, in January 2017,at Merger, and (iv) all other compensation reportable pursuant to Item 402(c)(2) paid by the Company and CenterState in 2020. We believe that annualizing Mr. Corbett’s post-Merger base salary and adding the equity compensation granted to Mr. Horger 373 sharesby CenterState (because he did not receive any additional equity in connection with the Merger) reflects the truest depiction of restricted stock valued at $87.30 per share at the date of grant and 963 stock options at an exercise price per share of $87.30. The restricted stock cliff vests 100% at the end of four yearsboth his total compensation and the stock options become exercisable in four equal annual installments overratio of that compensation to our median employee.
Median Employee. As permitted by SEC rules, we are using the four-year period following the date of grant.
The following table sets forth the fees and all other forms of compensation paid to Chairman Horger and the Company’s directors in 2017. Each component of compensation is discussed in further detailsame median employee we identified in the footnotes following“Pay Ratio Disclosure” section of our 2020 Annual Meeting Proxy Statement and are omitting approximately 2,720 CenterState employees that became employees of the table.Company as a result of the Merger. We believe that, other than as a result of the Merger, there has been no change to our employee population or employee compensation arrangements that we believe would result in a significant change to our pay ratio disclosure in this proxy statement. For purposes of identifying our median employee, we examined our employee population, excluding our CEO, as of December 31, 2019, as identified in the “Chief Executive Officer Pay Ratio” section of our 2020 Annual Meeting Proxy Statement. In making that determination and in using the same median employee for this Proxy Statement, we annualized the compensation of full-time and part-time permanent employees who were employed on December 31, 2019. The median employee was determined by reviewing wages, tips and other compensation on payroll records for our employee population, as reported to the IRS on Form W-2. In determining to use the same median employee, we considered a small increase in the total number of our employees (both higher and lower compensated), and concluded that this change would not result in a significant change to our pay ratio disclosure.
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned
or Paid in
Cash ($) (1) | | Stock
Awards ($) (2) | | Option
Awards (3) | | Non-Equity
Incentive Plan
Compensation ($) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($) (4) | | All Other
Compensation ($) (5) | | Total ($) | |
Robert R. Horger (6) | | $ | 130,317 | | $ | 32,563 | | $ | 32,569 | | $ | — | | $ | — | | $ | 10,865 | | $ | 206,314 | |
Jimmy E. Addison | | | 44,750 | | | 43,271 | | | — | | | — | | | — | | | 420 | | | 88,441 | |
Paula Harper Bethea | | | 37,000 | | | 38,258 | | | — | | | — | | | — | | | 372 | | | 75,630 | |
James C. Cherry (7) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Jean E. Davis (7) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Martin B. Davis | | | 44,875 | | | 43,271 | | | — | | | — | | | — | | | 398 | | | 88,544 | |
Robert H. Demere Jr. | | | 36,500 | | | 38,258 | | | — | | | — | | | — | | | 372 | | | 75,130 | |
M. Oswald Fogle (8) | | | 15,625 | | | — | | | — | | | — | | | — | | | 55 | | | 15,680 | |
Cynthia A. Hartley | | | 46,250 | | | 43,271 | | | — | | | — | | | — | | | 420 | | | 89,941 | |
Thomas J. Johnson | | | 34,750 | | | 38,258 | | | — | | | — | | | — | | | 372 | | | 73,380 | |
Grey B. Murray | | | 37,000 | | | 74,798 | | | — | | | — | | | — | | | 653 | | | 112,451 | |
James W. Roquemore | | | 37,000 | | | 38,258 | | | — | | | — | | | — | | | 372 | | | 75,630 | |
Thomas E. Suggs | | | 36,250 | | | 38,258 | | | — | | | — | | | — | | | 372 | | | 74,880 | |
Kevin P. Walker | | | 50,000 | | | 43,271 | | | — | | | — | | | — | | | 420 | | | 93,691 | |
THE PAY RATIO IDENTIFIED ABOVE IS A REASONABLE ESTIMATE CALCULATED IN A MANNER CONSISTENT WITH SEC RULES. PAY RATIOS THAT ARE REPORTED BY OUR PEERS MAY NOT BE DIRECTLY COMPARABLE TO OURS BECAUSE OF DIFFERENCES IN THE COMPOSITION OF EACH COMPANY’S WORKFORCE, AS WELL AS THE ASSUMPTIONS AND METHODOLOGIES USED IN CALCULATING THE PAY RATIO, AS PERMITTED BY SEC RULES.
| |
| (1)
|
| | Includes total compensation earned through salary (Chairman Horger only), Board fees, retainers and committee fees, whether paid or deferred. Refer to the Board of Directors and Committees section of this proxy statement for more information regarding committee membership and fees.
|
| (2)
| | From time to time, the Company has awarded shares of restricted stock to its directors. All shares of restricted stock awarded to the non-employee directors during 2017 vest at 25% per calendar quarter over a period of four quarters. Each director generally has the right to vote restricted shares and to receive dividends paid on the shares prior to vesting. The market value of the shares is
|
determined by the closing market price of the Company’s common stock on the date of the grant ($87.30 on the date of grant for Chairman Horger, $91.35 on the date of grant for Mr. Murray, and $87.95 on the date of grant for all of the other directors). The value of restricted stock grants shown above equals the grant date fair value in accordance with FASB ASC Topic 718.
|
| (3)
| | These totals reflect the dollar amount of the grant date fair value of the option award, in accordance with FASB ASC Topic 718. The valuation assumptions for the Black‑Scholes model used to value these option awards is found on page 32. The Black‑Scholes price for the option awards granted to Mr. Horger on January 3, 2017 was $33.82 per option. The Board of Directors’ total aggregate amount of stock options outstanding at December 31, 2017 was 17,993.
|
| (4)
| | During 2017, nonqualified deferred compensation plan balances experienced an unrealized gain/loss; however, there was no income exceeding 120% of the applicable long-term federal rate (“AFR”).
|
| (5)
| | Includes a $1.32 dividend ($0.33 for first quarter, $0.33 for second quarter, $0.33 for third quarter, and $0.33 for fourth quarter) on all unvested restricted stock grants outstanding at the time of the dividend. For Chairman Horger the amount includes an employer matching contribution to an employee savings plan and also life insurance premiums.
|
| (6)
| | In October 2017, the Compensation Committee recommended that the Board of Directors increase the base compensation of Chairman Horger by 2.75% effective January 1, 2018.
|
| (7)
| | James C. Cherry and Jean E. Davis joined the Board of Directors in December 2017.
|
| (8)
| | M. Oswald Fogle retired effective as of the 2017 Annual Meeting.2021 PROXY STATEMENT 53
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Table of Contents
Proposal 3: RATIFYING THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021 | |
PROPOSAL 3: RATIFYING THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021
| |
| Our Board recommends a vote “for” ratifying the appointment of our independent registered public accounting firm for 2021 (Proposal 3). |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSOur Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm.
The Bank has loan and deposit relationships with someCommittee engages in an annual evaluation of the directorsindependent registered public accounting firm. It considers, in particular, whether the retention of the firm is in the best interests of our Company and its shareholders, taking into account the firm’s quality of service, the firm’s institutional knowledge and experience, our Company’s operations and businesses, the firm’s sufficiency of resources, the quality of the communication and interaction with the firm, and the firm’s independence, objectivity, and professional skepticism. The Committee also considers the advisability and potential impact of selecting a different independent registered public accounting firm.
After assessing the qualifications, performance, and independence of Dixon Hughes Goodman LLP, Certified Public Accountants (Dixon Hughes), which has served as our company’s independent registered public accounting firm since 2007, the Committee believes that retaining Dixon Hughes is in the best interests of our Company. The Committee has appointed Dixon Hughes as our independent registered public accounting firm to audit the 2020 consolidated financial statements of the Company and its subsidiaries. Although it is not required to do so, our Board is asking shareholders to ratify Dixon Hughes’s appointment. If our shareholders do not ratify Dixon Hughes’s appointment, the BankCommittee will consider changing our independent registered public accounting firm for 2021. Whether or not shareholders ratify Dixon Hughes’s appointment, the Committee may appoint a different independent registered public accounting firm at any time if it determines that such a change is appropriate.
Dixon Hughes has advised the Committee that it is an independent accounting firm with respect to our company and loan, deposit, and fee-for-service relationshipsits affiliates in accordance with somethe requirements of the companiesSEC and the Public Company Accounting Oversight Board.
Representatives of Dixon Hughes are expected to be present at our annual meeting, will have an opportunity to make a statement if they choose, and are expected to be available to respond to appropriate shareholder questions.
Dixon Hughes’s 2020 and 2019 fees.Dixon Hughes’s aggregate fees for professional services rendered in or provided for 2020 and 2019, as applicable, were:
| | | | | | |
| | | 2020 | | | 2019 |
| | | ($) |
Audit Fees | | | 1,688,650 | | | 948,175 |
Audit-Related Fees | | | 97,440 | | | 62,616 |
Tax Fees | | | — | | | — |
All Other Fees | | | — | | | — |
Total Fees | | | 1,786,090 | | | 1,010,791 |
Audit fees.Audit fees relate to the integrated audit of our consolidated financial statements, and internal control over financial reporting, including disclosures presented in the footnotes to our company’s financial statements (for example, regulatory capital, among other disclosures). Audit fees also relate to the audit of domestic and international statutory and subsidiary financial statements, the review of our interim consolidated financial statements, the issuance of comfort letters and SEC consents, and services provided in connection with whichcertain agreed-upon procedures and other attestation reports. Audit fees are those billed or expected to be billed for audit services related to each fiscal year.
Audit-related fees.Audit-related fees cover other audit and attest services, services provided in connection with certain agreed-upon procedures and other attestation reports, financial accounting, reporting and compliance matters, benefit plan audits, and risk and control reviews. Fees for audit-related services are those billed or expected to be billed for services rendered during each fiscal year.
Tax fees.Tax fees cover tax compliance, advisory, and planning services and are those billed or expected to be billed for services rendered during each fiscal year.
All other fees.During 2020 and 2019, All Other Fees consisted primarily of amounts billed or expected to be billed for the directors are associated, as well ascompany’s engagement of Dixon Hughes to provide guidance in connection with someregulatory commitments.
Table of Contents
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| Proposal 3: RATIFYING THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2021 |
Audit committee Pre-Approval Policies and Procedures
Our Audit Committee annually pre-approves a list of services that Dixon Hughes may provide without obtaining the Committee’s engagement-specific pre-approval and sets pre-approved fee levels for such services. The pre-approved list of services consists of audit services, audit-related services, tax services, and all other services. All requests or applications for Dixon Hughes services must be submitted to members of our corporate audit function or tax function to determine if they are included within the immediate familiesCommittee’s pre-approved list of services. The Committee or the directors. (The term “membersCommittee chair must specifically approve any type of service that has not been pre-approved. The Committee or the immediate families” for purposes of this paragraph includes each person’s spouse, parents, children, siblings, mother and father-in-law, sons and daughters-in-law, and brothers and sisters-in-law.) Such loan, deposit, or fee relationships were made inCommittee chair must also approve any proposed service that has been pre-approved but has fees that will exceed the ordinary course of business, were made on substantiallypre-approved level. All pre-approvals by the same terms, including interest rates, collateral and fee pricing as those prevailing at the time for comparable transactions with other persons not relatedCommittee chair must be presented to the lender,full Committee at its next meeting. The Committee or the Committee chair pre-approved all of Dixon Hughes’s 2020 fees and did not, at the time they were made, involve more than the normal riskservices.
AUDIT COMMITTEE REPORT
Our Audit Committee is composed of collectability or present other unfavorable features.
Robert R. Horger, Chairman of thefour Board of the Company, is a partner in the law firm of Horger, Barnwell & Reid, L.L.P., which the Company, engaged, among other law firms, as counsel during 2017 and may engage during the current fiscal year. In 2017, the Company and Mr. Horger were involved in non-material related party transactions inmembers. Our Board has determined that the Company made payments totaling approximately $7,338 to Horger, Barnwell & Reid, and L.L.P. This amount did not exceed either $200,000 or 5% of the law firm’s gross revenue.
Thomas E. Suggs, a director, has served as President and Chief Executive Officer of HUB Carolinas, a region of HUB International, an insurance brokerage and consulting firm that the Company has used since 2011 and will continue to use during the current fiscal year as an insurance broker for certain policies. Mr. Suggs was previously the President and Chief Executive Officer, and a majority owner, of Keenan & Suggs, Inc., an insurance broker and consulting firm that the Company also used for certain policies, before it was acquired by HUB International, the 7th largest brokerage in the world, in August 2016. In 2017, the Company made insurance premium payments directly to either HUB International, as the Company’s insurance placement agent, or insurance carriers. Commissions earned on these policies were well below 5% of HUB International’s total gross revenue for 2017, which is a key measure under NASDAQ’s independence requirements.
The Company has adopted a Conflict of Interest/Code of Ethics Policy that contains written procedures for reviewing transactions between the Company and its directors and executive officers, their immediate familyall Committee members and entities with which they have a position or relationship. These procedures are intended to determine whether any such related person transaction impairs the independence of a director or presents a conflict of interest on the part of a director or executive officer. This policy also requires the Bank to comply with Regulation O, which contains restrictions on extensions of credit to executive officers, directors, certain principal shareholders, and their related interests. Such extensions of credit (i) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties and (ii) must not involve more than the normal risk of repayment or present other unfavorable features. The Conflict of Interest/Code of Ethics policy is located on the Company’s website at https://www.southstatebank.com/ under Investor Relations.
The Company annually requires each of its directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related person transactions. The Company’s Governance Committee, which consists entirely of independent directors, annually reviews all relationships and amounts disclosed in the directors’ and officers’ questionnaires, and the Board of Directors makes a formal determination regarding each director’s independence under The NASDAQ Stock Market listing standards and applicable SEC rules.
In addition,rules and regulations. Our Board has also determined that the Bank is subject to the provisions of Section 23AChair of the Federal Reserve Act, which places limits onCommittee, Mr. Walker, and Mr. McPherson qualify as “audit committee financial experts” as defined by SEC rules. The Committee’s responsibilities are stated in a written charter adopted by our Board.
Management is responsible for preparing and the amount of loans or extensions of credit to, or investments in, or certain other transactions with, affiliates and on the amount of advances to third parties collateralized by the securities or obligations of affiliates. The Bank is also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibits an institution from engaging in certain transactions with certain affiliates unless the transactions are on terms substantially the same, or at least as favorable to such institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.
In addition to the annual review, the Company has appointed a corporate ethics officer to implement and monitor compliance with the Conflict of Interest/Code of Ethics Policy. The corporate ethics officer reports to the Company’s general auditor who passes this information to the board’s Audit Committee and Chief Executive Officer quarterly and also advises the Company’s executive committee and managementoverall reporting process with respect to potential conflictsour company’s consolidated financial statements, and, with the assistance of interest. The related party transactions described above were approved byour company’s internal corporate auditors, for establishing, maintaining, and assessing the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by Section 16(a)effectiveness of the Securities Exchange Act of 1934, the Company’s directors and executive officers are required to report periodically their ownership of the Company’s stock and any changes in ownership to the SEC. Based on written representations made by these affiliates to the Company and a review of the Forms 3, 4 and 5, it appears that all such reports for these persons were filed timely in 2017, except for (i) one late Form 4 filing relating to 98 shares of common stock sold by Joseph E. Burns, Chief Credit Officer, on August 11, 2017, pursuant to which the related Form 4 was inadvertently not reported until August 17, 2017; and (ii) one late Form 4 filing relating to the acquisition of 4,866 shares of common stock pursuant to the exercise of stock options, and the disposition of 1,712 shares of common stock to satisfy related withholding taxes, by Mr. Burns on June 5, 2017, pursuant to which such transactions were inadvertently not reported until February 23, 2018 on an amended Form 5.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointedour internal control over financial reporting. Dixon Hughes Goodman LLP certified public accountants, as the independent registered public accounting firm for the Company and the Bank for the current fiscal year ending December 31, 2018, subject to ratification by the Company’s shareholders. Dixon Hughes Goodman LLP has advised the Company that neither the firm nor any of its partners has any direct or material interest in the Company and its subsidiary except as independent registered auditors and certified public accountants of the Company. Representatives of Dixon Hughes Goodman LLP are expected to be at the Annual Meeting, will have the opportunity to make a statement if they desire, and will be available to respond to appropriate questions.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company’s financial reporting process, including internal controls, on behalf of the Board of Directors. The committee is composed of four directors of the Company, each of whom is independent as defined by the rules of The NASDAQ Stock Market applicable to directors who serve on the Audit Committee. The Audit Committee operates under an Audit Committee charter that complies with the requirements regarding Audit Committees established by the Sarbanes‑Oxley Act of 2002 and the rules and regulations of the SEC and The NASDAQ Stock Market.
Management has the primary responsibility for the Company’s financial statements, internal controls, and financial reporting. The(Dixon Hughes), our Company’s independent registered public accounting firm, is responsible for expressingplanning and conducting an opinion onindependent audit of our Company’s consolidated financial statements in accordance with the conformitystandards of the Company’s audited financial statements to generally accepted accounting principles and the conformity of the Company with maintaining internal controls over financial reporting as specified by the Sarbanes‑Oxley Act of 2002.
In the context of its responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the December 31, 2017 audited financial statements. The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the auditors with the Audit Committee under the rules adopted by theUnited States Public Company Accounting Oversight Board (the “PCAOB”).(PCAOB) and for expressing an opinion as to the conformity of these financial statements with accounting principles generally accepted in the United States of America and as to the effectiveness of our internal controls over financial reporting. The Committee’s responsibility is to monitor and oversee these processes.
The Committee annually evaluates Dixon Hughes’s qualifications, performance, and independence. The Committee also oversees the performance of the corporate audit function managed by our Chief Audit Executive. The Committee has reviewed and discussed with management and with Dixon Hughes our company’s audited financial statements for the year ended December 31, 2020, management’s assessment of the effectiveness of our company’s internal control over financial reporting, and Dixon Hughes’s evaluation of our company’s internal control over financial reporting. In addition, the Audit Committee has received fromdiscussed with Dixon Hughes the matters that independent registered public accounting firmfirms must communicate to audit committees under applicable PCAOB standards.
The Committee has also discussed and confirmed with Dixon Hughes its independence from our Company and received the written disclosures and a letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’saccountant’s communications with the Audit Committee concerning independenceindependence. The Committee has evaluated and discussed with them their independence fromconcluded the Company and its management. The Audit Committee also has considered whether the independent registered public accounting firm’s provision of non-audit services as set forth in the section entitled Audit and Other Fees below, is compatible with the auditor’sprovided by Dixon Hughes to our company do not impair Dixon Hughes’s independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to theour Board of Directors that the audited financial statements be included in the Company’s Annual Report on SEC Form 10-K for the year ended December 31, 2017 for filing with2020 and the SEC.
Thisrelated footnotes be included in our Company’s annual report is provided by the following independent directors, who comprise the Audit Committee:
| | |
Kevin P. Walker, Chairman
| Martin B. Davis
| Robert H. Demere Jr.
|
Grey B. Murray
| | |
AUDIT AND OTHER FEES
The Audit Committee selected Dixon Hughes Goodman LLP as the Company’s Independent Registered Public Accounting Firm for the year ended December 31, 2017. Fees for professional services provided for the respective fiscal years ended December 31 are set forth below:
| | | | | | | |
| | 2017 | | 2016 | |
Audit fees(1) | | $ | 957,530 | | $ | 750,982 | |
Audit related fees(2) | | | 62,220 | | | 92,970 | |
Total Audit Fees | | $ | 1,019,750 | | $ | 843,952 | |
| (1)
| | All fees related to the financial statement audit, required quarterly reviews of interim financial information, audit of internal controls over financial reporting, and attesting to internal control over financial reporting in accordance with the Federal Deposit Insurance Corporation Improvement Act of 1991.
|
| (2)
| | Audit‑related fees are for services rendered in connection with audits of the Company’s employee benefit plans, the audit of the Company’s broker dealer subsidiary, and reports on compliance with mortgage servicing related standards.
|
Pre-Approval Policy
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. Under the policy, and in accordance with the Sarbanes‑Oxley Act of 2002, the Audit Committee may delegate pre-approval authority to one or more of its members. However, any member to whom such authority is delegated is required to report on any pre-approval decisions to the Audit Committee at its next scheduled meeting. The Audit Committee pre-approved all services provided by Dixon Hughes Goodman LLP during 2017. None of the services were performed by individuals who were not employees of the independent registered public accounting firm.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will mail to shareholders who request them, these proxy materials and/or a copy of its Annual Report on Form 10-K for the year ended December 31, 2017, filed with2020.
This report is provided by the SEC. Further inquiries regardingundersigned directors, who serve on the Annual ReportAudit Committee as of the date of this Proxy Statement and who served on Form 10-K shouldthe Audit Committee during 2020. Robert H. Demere, Jr. and Grey B. Murray, each of whom were independent directors, also served on the Audit Committee during 2020, but Mr. Murray ceased to be directed to: South State Corporation, P.O. Box 1030, Columbia, South Carolina 29202, Attention: John C. Pollok, Chief Financial Officer and Chief Operating Officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No current or former officer, and no othera member of the CompensationBoard of Directors and the Audit Committee has directly or indirectly entered into any transactionson June 7, 2020 in connection with the Merger. Mr. Demere remained on the Board of Directors but ceased to be a member of the Audit Committee on June 7, 2020 in connection with the Merger.
| |
| Submitted by the Audit Committee of the Board: |
| |
| Kevin P. Walker, Chair |
| Martin Bernard Davis |
| Charles W. McPherson |
| William Knox Pou Jr. |
| |
| |
| 2021 PROXY STATEMENT 55 |
VOTING AND OTHER INFORMATION
Who Can Vote.Only holders of record at the close of business on February 26, 2021 (the record date) will be entitled to notice of and to vote at our annual meeting. As of February 26, 2021, the following shares were outstanding and entitled to vote:
| | | |
Shares | | | Number of shares |
| | | outstanding |
| |
| and entitled to vote |
Common Stock | | | 71,032,735 |
Each share of our common stock is entitled to one vote.
Voting Information for Registered Holders.If anyyou are a registered holder, meaning that you hold our shares directly (not through a bank, broker, or other matters are properly broughtnominee), you may vote in person at our annual meeting or by submitting your proxy by:
| |
| Internet | going to www.proxyvote.com and following the online instructions. You will need information from your Notice of Internet Availability or proxy card, as applicable, to submit your proxy |
| Phone | calling the phone number located on the top of your proxy card and following the voice prompts. You will need information from your proxy card to submit your proxy |
| Mail | (if you received your proxy materials by mail): marking your vote on your proxy card, signing your name exactly as it appears on your proxy card, dating your proxy card, and returning it in the envelope provided |
To be counted, your proxy must be received before the Annual Meeting, however, it is the intention of the persons named in the accompanyingpolls close at our annual meeting. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted according to your voting instructions. If you properly submit a proxy to vote such proxywithout giving specific voting instructions, your shares will be voted in accordance with their best judgment.our Board’s recommendations. If other matters properly come before our annual meeting, the proxies will vote on these matters.
You may revoke your proxy and change your vote at any time before the voting polls close at our annual meeting by submitting a properly executed proxy of a later date, a written notice of revocation (of your previously executed proxy) sent to our Corporate Secretary, or a vote cast in person at our annual meeting (however, attending the meeting without voting will not revoke a proxy).
Voting Information for Beneficial Owners.If you are a beneficial owner, meaning that you hold our stock in the name of a bank, broker, or other nominee (commonly referred to as holding shares in “street name”), you should have received these proxy materials from your bank, broker, or other nominee by mail or email with information on how to submit your voting instructions, including by:
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| Internet | going to www.proxyvote.com and following the online instructions |
| Phone | calling the phone number located on the top of your voting instruction form (VIF) and following the voice prompts |
| Mail | (if you received your proxy materials by mail): marking your vote on your VIF, signing your name (exactly as it appears on the VIF), and dating, and returning your VIF in the envelope provided |
Voting by telephone and the Internet ends at 11:59 p.m. Eastern time on April 27, 2021. As a beneficial owner, if you do not provide voting instructions to your bank, broker, or other nominee, your shares will be treated as a “broker non-vote” with respect to Proposals 1 and 2, and may be voted in the discretion of your bank, broker, or other nominee solely on Proposal 3 as described under “Votes Required” below. To change any of your previously provided voting instructions, or if you have questions about voting your shares, please contact your bank, broker, or other nominee directly.
You may revoke any voting instructions you provided by following the specific directions from your bank, broker, or other nominee to change or revoke any voting instructions you have already provided. Alternatively, you may vote your shares by ballot at the annual meeting if you obtain a legal proxy from your bank, broker, or other nominee and present it at the annual meeting.
Employee Voting.If you participate in Company’s 401(k) Plan or the Company’s Deferred Compensation Plan, (collectively, the Plan), and your Plan account has investments in shares of our common stock, you must provide voting instructions to the Plan trustee (the Trustee) (by the Internet, telephone, or proxy card) for your shares to be voted according to your instructions. Your shares cannot be voted unless you provide voting instructions to the Trustee. Your voting instructions to the Trustee will be held in strict confidence. The deadline to provide voting instructions for shares held in the Plan is April 25, 2021, at 11:59 p.m., Eastern time. If you are an employee and you hold shares in multiple accounts, you may receive one proxy card covering all the shares in your accounts. If you receive one
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| 2021 PROXY STATEMENT 57 |
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proxy card covering all the shares in your accounts, you must provide voting instructions by April 25, 2021, at 11:59 p.m., Eastern time, to vote all your shares. After the applicable deadline, you will not be able to submit voting instructions or change prior voting instructions for any shares.
Shares Required to Hold our Annual Meeting.In order to hold our annual meeting, a quorum representing holders of a majority of the voting power of our common stock must be present in person or represented by proxy. We intend to include as present: shares present in person but not voting; shares for which we have received proxies but for which holders have abstained from voting; and shares represented by proxies returned by a bank, broker, or other nominee holding the shares.
Votes Required
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| | | | | | | | | Effect of |
| | | | | | Effect of | | | broker non- |
Proposals for your vote |
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| Votes required |
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| abstentions | | | votes |
Proposal 1: Electing Directors | | | Plurality of votes cast | | | No effect | | | No effect |
Proposal 2: Approving Our Executive Compensation (an Advisory, Non-binding “Say on Pay” Resolution) | | | Votes cast in favor exceed votes cast against | | | No effect | | | No effect |
Proposal 3: Ratifying the Appointment of Our Independent Registered Public Accounting Firm for 2021 | | | Votes cast in favor exceed the votes cast against | | | No effect | | | Brokers have discretion to vote |
| ● | Proposal 1: Electing Directors. |
| ● | Other Proposals.Approval of Proposals 2 and 3 requires the votes cast in favor of each such proposal to exceed the votes cast against the proposal. Abstentions from voting and broker non-votes (excluding Proposal 3, for which brokers have discretion to vote) are not treated as votes cast and are not counted in determining the outcome of any of these proposals. |
Eliminating Duplicative Proxy Materials through “Householding.”We deliver a single proxy statement and annual report with separate proxy cards, or separate Notices of Internet Availability, to multiple registered holders who share an address, unless we receive other instructions. If (i) you and another registered holder share an address and each receive paper copies of our proxy materials and wish to receive only one paper copy or (ii) you share an address with another registered holder, received a single set of our proxy materials, and would like to receive separate copies, you may request a change in delivery preferences by contacting our transfer agent, Computershare, P.O. Box 505000, Louisville, KY 40233-5000; toll-free 800-568-3476; Foreign (781) 575-2879; or www.computershare.com/investor.
If you are a beneficial owner and receive multiple copies of our proxy materials and you would like to receive only one copy, or if you and another shareholder receive only one copy and would like to receive multiple copies, contact your bank, broker, or other nominee.
Attending our Annual Meeting.All holders of our common stock as of the record date (February 26, 2021) and persons holding valid proxies from such shareholders are invited to attend our annual meeting. To gain entrance to the meeting, you must present valid, government-issued photo identification and the following:
Registered Holders
Beneficial Owners
| ● | a letter from your bank or broker or a brokerage statement evidencing ownership of shares of SouthState stock as of the record date |
Persons Holding Valid Proxies (one of the following):
| ● | a proxy from a registered holder—a written legal proxy granted to you and signed by the registered holder; or |
| ● | a proxy from a beneficial owner—a written legal proxy granted by the brokerage firm or bank holding the shares to the beneficial owner, in assignable form, and a written legal proxy granted by the beneficial owner to you, together with a brokerage or bank statement or Notice of Internet Availability showing the beneficial owner’s shares |
If you are a beneficial owner and you would like to vote in person at the meeting, you must also present a written legal proxy from the broker, bank, or other nominee.
