UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.           )

 

 

 

 

 

SOUTH STATE CORPORATION

520 Gervais Street

Columbia, South Carolina 29201

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held April 21,  2016

TO THE SHAREHOLDERS:

Notice is hereby given that the Annual Meeting of the Shareholders (the “Annual Meeting”) of South State Corporation, a South Carolina corporation (the “Company”), will be held at the Company’s headquarters in the Orangeburg Conference Room on the second floor, 520 Gervais Street, Columbia, South Carolina at 2:00 p.m., on April 21,  2016, for the following purposes: 

Only record holders of Common Stock of the Company at the close of business on February 19,  2016, are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof.

You are cordially invited and urged to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting in person, you are requested to promptly vote by telephone, internet, or by mail on the proposals presented, following the instructions on the Proxy Card for whichever voting method you prefer. If you vote by mail, please complete, date, sign, and promptly return the enclosed proxy in the enclosed self-addressed, postage-paid envelope. If you need assistance in completing your proxy, please call the Company at 800-277-2175. If you are a  record shareholder, attend the meeting, and desire to revoke your proxy 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.

By Order of the Board of Directors

 

William C. Bochette, III

Secretary

Columbia, South Carolina

March 4,  2016

 

 

SOUTH STATE CORPORATION

520 Gervais Street

Columbia, South Carolina 29201

 

PROXY STATEMENT

FOR THE ANNUAL MEETING OF SHAREHOLDERS

to be Held April 21, 2016

This Proxy Statement is furnished to shareholders of South State Corporation, a South Carolina corporation (herein, unless the context otherwise requires, together with its subsidiaries, the “Company”), in connection with the solicitation of proxies by the Company’s Board of Directors for use at the Annual Meeting of Shareholders to be held at the Company’s headquarters in the Orangeburg Conference Room on the second floor, 520 Gervais Street, Columbia, South Carolina at 2:00 p.m., on April 21, 2016 or any adjournment thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Directions to the Company’s headquarters may be obtained by contacting Tanya Washington at 803-231-5037.

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 may also request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the common stock, par value $2.50 per share (the “Common Stock”), of the Company held of record by such persons, and the Company 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 11, 2016.

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, 2015 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 19, 2016 (the “Record Date”), the Company had issued and outstanding 24,181,602 shares of Common Stock, which were held of record by approximately 14,800 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, including the proposal to ratify, as an advisory, non-binding vote, the appointment of Dixon Hughes Goodman LLP, Certified Public Accountants, as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2016 (Proposal No. 2), 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 Proposal No. 1 to elect directors to be a routine matter, 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 the election of directors is counted.  If you do not give your bank or broker voting instructions with respect to Proposal No. 1 to elect directors, your bank or broker may not vote on this matter.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE SHAREHOLDER MEETING TO BE HELD ON APRIL 21, 2016

This Proxy Statement and the Company’s 2015 Annual Report to Shareholders (which includes its 2015 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:

 

In each case where the shareholder has appropriately specified how the proxy is to be voted, it will be voted in accordance with his or her specifications.  As to any other matter of business that may be brought before the Annual Meeting, a vote may be cast pursuant to the accompanying proxy in accordance with the best judgment of the persons voting the same. However, the Board of Directors does not know of any such other business.

SHAREHOLDER PROPOSALS AND COMMUNICATIONS

Any shareholder of the Company desiring to include a proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the Exchange Act) in the Company’s 2017 proxy statement for action at the 2017 Annual Meeting of Shareholders must deliver the proposal to the executive offices of the Company no later than November 5, 2016, unless

the date of the 2016 Annual Meeting of Stockholders is more than 30 days before or after April 21, 2017, in which case the proposal must be received a reasonable time before we begin to print and send our proxy materials.  Only proper proposals that are timely received and in compliance with Rule 14a-8 will be included in the Company’s 2017 proxy statement.

Under our Bylaws, shareholder proposals not intended for inclusion in the Company’s 2017 proxy statement pursuant to Rule 14a-8 but intended to be raised at the 2017 Annual Meeting of Shareholders, including nominations for election of director(s) other than the Board’s nominees, must be received no earlier than 120 days and no later than 90 days prior to the first anniversary of the 2016 Annual Meeting of Shareholders and must comply with the procedural, informational and other requirements outlined in our Bylaws. To be timely for the 2017 Annual Meeting of Shareholders, a shareholder proposal must be delivered to the Secretary of the Company, P.O. Box 1030, Columbia, South Carolina 29202, no earlier than December 22, 2016 and no later than January 21, 2017.

The Company does not have a formal process by which shareholders may communicate with the Board of Directors. Historically, however, the chairman of the Board or the Governance Committee has undertaken responsibility for responding to questions and concerns expressed by shareholders.  In the view of the Board of Directors, this approach has been sufficient to ensure that questions and concerns raised by shareholders are adequately addressed.  Any shareholder desiring to communicate with the Board may do so by writing to the Secretary of the Company at P.O. Box 1030, Columbia, South Carolina 29202.

BENEFICIAL OWNERSHIP OF CERTAIN PARTIES

The following table sets forth the number and percentage of outstanding shares that exceed 5% beneficial ownership (determined in accordance with Rule 13d‑3 under the Securities Exchange Act of 1934) by any single person or group, as known by the Company:

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of February 19, 2016, the number and percentage of outstanding shares of Common Stock beneficially owned by (i) each director and nominee for director of the Company, (ii) each executive officer named in the Summary Compensation Table, and (iii) all executive officers and directors of the Company as a

group. Unless otherwise indicated, the mailing address for each beneficial owner is care of South State Corporation, P.O. Box 1030, Columbia, South Carolina 29202.

PROPOSAL NO. 1:

ELECTION OF DIRECTORS

The Articles 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 nineteen.  

PROPOSAL 1: Robert R. Horger, Jimmy E. Addison, Robert H. Demere, Jr., James W. Roquemore, Richard W. Salmons, Jr.,  B. Ed Shelley, Jr., and John W. Williamson, III 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, Messrs.  Horger, Addison, Demere, Roquemore, Salmons, Shelley and Williamson will serve as directors of the Company for a three-year term, expiring at the 2019 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. As a result, M. Oswald Fogle would retire effective as of our 2017 Annual Meeting of Shareholders.

The Board of Directors unanimously recommends that shareholders vote “FOR” the director nominees.

The 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.

 

 

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 2015, the Board of Directors of the Company held eight meetings. All directors attended at least 80% 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; however, such attendance has always been strongly encouraged.  All of the directors attended the 2015Annual 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, risk, and wealth management and trust committees. The composition and frequency of meetings for these committees during 2015 were as follows:

 

Note:  All directors other than Robert R. Horger, Robert R. Hill, Jr., and John C. Pollok meet the independence requirements of The NASDAQ Stock Market. Therefore, under these requirements, a majority of the members of the Company’s Board of Directors is independent.

The functions of these committees are as follows:

Executive Committee—The Board of Directors of the Company may, by resolution adopted by a majority of its members, delegate to the executive committee the power, with certain exceptions, to exercise the authority of the 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 independent directors who are recommended by the Chairman 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 found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Governance Committee—The Board of Directors has determined that all members of the Governance 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 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 Governance Committee has not established any specific, minimum qualifications that must be met for a person to be nominated to serve as a director, and the Governance Committee has not identified any specific qualities or skills that it believes are necessary to be nominated as a director. The Governance Committee charter provides that potential candidates for the Board are to be reviewed by the Governance Committee and that candidates are selected based on a number of criteria, including a proposed nominee’s independence, age, skills, occupation, diversity, experience and any other factors beneficial to the Company in the context of the needs of the Board. The Governance Committee has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees. In determining whether to recommend a director nominee, Governance Committee members consider and discuss diversity, among other factors, with a view toward the needs of the Board of Directors as a whole. The Governance Committee members generally conceptualize diversity expansively to include, without limitation, concepts such as race, gender, national origin, differences of viewpoint, professional experience, education, skill and other qualities or attributes that contribute to Board heterogeneity when identifying and recommending director nominees. The Governance Committee believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the Committee’s goal of creating a Board of Directors that best serves the needs of the Company and the interest of its shareholders.

The Governance Committee has performed a review of the experience, qualifications, attributes and skills of the Board’s current membership, including the director nominees for election to the Board of Directors and the other members of the Board, and believes that the current members of the Board, including the director nominees, as a whole possess a variety of complementary skills and characteristics, including the following:

Each individual director has qualifications and skills that the Governance Committee believes, together as a whole, create a strong, well-balanced Board. The experiences and qualifications of our directors are found in the table on pages 6-10.

The Governance Committee will consider director nominees identified by its members, other directors, officers and employees of the Company and other persons, including shareholders of the Company. The Governance 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 Authority 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.

Wealth Management and Trust Committee—The primary purpose of the wealth management and trust committee is to monitor and oversee the wealth management and fiduciary activities of the bank, including the business, products, services, operations and financial performance and results of such activities.  The charter for this committee can be found at https://www.southstatebank.com/ under the Investor Relations.

Risk Committee—The Risk Committee of the Board of Directors of the Company provides assistance to the Board of Directors in fulfilling its responsibility to the Company and its shareholders by striving to identify, assess, and monitor key business risks 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.

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 respond to the Company’s material risks. The Risk Committee charter acknowledges that the Audit Committee of the Board is primarily responsible for certain risks, including accounting and financial reporting.  Although the Risk Committee does not have primary responsibility for the risks which are subject to the jurisdiction of the Audit Committee, it is anticipated that on occasion certain results from audit functions will be reviewed by the Risk Committee.

Code of Ethics—The Board of Directors of the Company and the Board of Directors of the bank have adopted a Code of Ethics to provide ethical guidelines for the activities of agents, attorneys, directors, officers, and employees of the Company and its subsidiaries.  The Code 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 copy 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 and 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, except for three directors (our Chief Executive Officer, our Chief Financial Officer and Chief Operating Officer, and our Chairman of the Board) 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 46 for additional information concerning Board independence.

Our Board believes that it is preferable for Mr. Horger to serve as 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.  We believe it is the Chief Executive Officer’s responsibility to manage the Company and the Chairman’s responsibility to guide the Board as the Board provides leadership to our executive management.  As directors continue to have more oversight responsibility than ever before, we believe it is beneficial to have separate individuals in the role of Chairman and Chief Executive Officer. Traditionally, the Company has maintained the separateness of the roles of the Chairman and the Chief Executive Officer.  In making its decision to continue to have a separate individual as Chairman, the Board considered the time and attention that Mr. Hill is required to devote to managing the day-to-day operations of the Company.  We believe that this Board leadership structure is appropriate in maximizing the effectiveness of Board oversight and in providing perspective to our business that is independent from executive management.

The Board of Directors oversees risk through the various Board standing committees, principally the Audit Committee and the Risk Committee, which report directly to the Board.  Our Audit Committee is primarily responsible for overseeing the Company’s accounting and financial reporting risk management processes on behalf of the full Board of Directors.  The Audit Committee focuses on financial reporting risk and oversight of the internal audit process.  It receives reports from management at least quarterly regarding the Company’s assessment of risks and the adequacy and effectiveness of internal control systems, and also reviews credit and market risk (including liquidity and interest rate risk), and operational risk (including compliance and legal risk).  Our Chief Credit Officer and Chief Financial Officer meet with the Audit Committee on a quarterly basis in executive sessions to discuss any potential risks or control issues involving management.  Our Chief Risk Officer and Director of Risk Management meets with the Risk Committee each quarter to identify, assess, and monitor key business risks that may impact the Company’s operations and results.

Each of the Board’s standing committees, as described above, is involved to varying extents in the following:

The full Board of Directors focuses on the risks that it believes to be the most significant facing the Company and the Company’s general risk management strategy. The full Board of Directors also seeks to ensure that risks undertaken by the Company are consistent with the Board of Directors’ approved risk management strategies. While the Board of Directors oversees the Company’s 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 our Board leadership structure supports this approach.

We recognize that different Board leadership structures may be appropriate for companies in different situations. We will continue to reexamine our corporate governance policies and leadership structures on an ongoing basis in an effort to ensure that they continue to meet the Company’s needs.

 

PROPOSAL NO. 2:

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Although the Company is not required to seek shareholder ratification of the selection of its accountants, the Company believes obtaining shareholder ratification is desirable. If the shareholders do not ratify the appointment of Dixon Hughes Goodman LLP, the Audit Committee will re-evaluate the engagement of the Company’s independent auditors. Even if the shareholders do ratify the appointment, the Audit Committee has the discretion to appoint a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interest of the Company and its shareholders.

The Board unanimously recommends that shareholders vote FOR the ratification of the appointment of Dixon Hughes Goodman LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016.

If a quorum is present, the number of shares of Common Stock voted in favor of this proposal must exceed the number of shares voted against it for approval of this proposal.

 

EXECUTIVE COMPENSATION 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion & Analysis explains our 2015 executive compensation programs and decisions with respect to our executive officers and, in particular, our Named Executive Officers, or which we sometimes refer to herein as our “NEOs”. In this discussion, we explain, among other things, our compensation philosophy and program, factors considered by the Compensation Committee in making compensation decisions and additional details about our compensation program and practices. The following discussion is organized into four parts:

 

 

Part 1 – Executive Summary

 

The Compensation Committee seeks to provide compensation arrangements for the Company’s executive officers that are designed to retain and attract talented executives who can perform at a high level and manage the Company in the shareholders’ best interest.  These compensation arrangements are intended to, among other things, align executive compensation with the performance of the Company, both on a short-term basis and long-term basis, through incentive compensation based primarily on the Company’s performance and secondarily on individual contributions.  Our Named Executive Officers for 2015 were:

 

   

When setting specific goals and objectives, the Compensation Committee considers the principles of Soundness, Profitability and Growth which are the cornerstone on which our culture is built.

 

We believe these principles have enabled the Company to be well positioned to take advantage of strategic growth opportunities, deliver outstanding returns to our shareholders, and become the largest bank holding company headquartered in South Carolina.

 

 

The Company believes that key 2015 measures of soundness, profitability and growth include the following:

 

Soundness

 

Profitability

 

* Operating EPS – Diluted and Return on average tangible equity are non-GAAP financial measures.  See page 37 in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 for the non-GAAP to GAAP reconciliation and other relevant information.

 

Growth

 

 

 

Returns are shown on a total return basis, assuming the reinvestment of dividends and a beginning stock index value of $100 per share.  The value of the Company’s stock as shown in the graph is based on published prices for transactions in the Company’s stock.

 

Total Return Performance

 

 

 

 

Key 2015 Compensation Decisions by the Compensation Committee

The Compensation Committee made the following key compensation decisions during 2015:

 

In summary, the Committee concluded that the 2015 performance-based compensation, together with 2015 base salary levels, were well aligned with the Company’s performance for the year. 

 

Part 2 – South State Executive Compensation Process

 

Compensation Philosophy

 

In 2015, the Compensation Committee reviewed and validated its compensation philosophy with the assistance of the Compensation Committee’s independent compensation consultant.  The purpose of the review was to ensure that compensation decisions made by the Compensation Committee and the Board of Directors were consistent with this philosophy. The fundamental philosophy of the Company’s compensation program is to offer competitive compensation opportunities for executive officers that (i) align compensation with the performance of the Company on both a short-term and long-term basis, and (ii) are based on both the Company’s performance and the individual’s contribution. The compensation structure is designed to retain and reward executive officers who are capable 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.

 

The Compensation Committee considers this philosophy as it develops its incentive plans. Cash incentives for 2015 were designed to reward executives for achieving annual financial and performance goals based on soundness and profitability. The performance objectives of the 2015 annual cash incentive plan reflect this focus.  Equity grants are designed to reward our NEOs for achievement of business objectives that benefit shareholders and support the retention of a talented management team over time.  The Committee has determined that the 60th percentile (or the 75th percentile for CFO/COO due to his dual role with the Company) for targeted total compensation is appropriate in light of the fact that four of the five NEOs do not participate in supplemental retirement benefit arrangements or certain other special benefits that are prevalent among financial institutions in our peer group.  The Company’s compensation peer group is explained on page 21.

 

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. 

 

The Compensation Committee seeks to increase shareholder value by rewarding performance with cost-effective compensation and striving to attract and retain talented executives through adherence to the following compensation objectives:

 

 

 

 

 

 

 

 

The Compensation Committee is comprised of six independent directors and met six times in 2015. The Compensation Committee is supported in its work by the Director of Human Resources, her staff, and an executive compensation consultant, as described below.

 

The Compensation Committee may receive recommendations from the chairman of the Board of Directors with respect 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 NEOs 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.

 

The Compensation Committee reviews and approves the equity compensation of the NEOs annually. 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 the 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 2015 were consistent with its established philosophy.  The Compensation Committee seeks to provide compensation arrangements for executive officers that are designed to retain and attract and motivate talented executives who can perform at a high level and manage the company in the shareholders’ best interest.  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 2015.

 

Compensation Consultant

 

During 2015, the Compensation Committee engaged the services of McLagan, an Aon Hewitt company, to provide independent compensation consulting services with respect to the compensation of both directors and executive management of the Company. McLagan reports directly to the Compensation Committee. The Compensation Committee has the sole authority to hire consultants and set the engagements and the related fees of those consultants.

The following consulting services were provided to the Compensation Committee in 2015:

 

Compensation Committee’s Relationship with its Independent Compensation Consultant

 

The Compensation Committee considered the independence of McLagan in light of applicable SEC rules and NASDAQ listing standards. The Compensation Committee requested and received a report from McLagan addressing the independence of McLagan and its senior advisors. The following factors were considered: (1) services other than compensation consulting provided to us by McLagan; (2) fees paid by us as a percentage of McLagan's total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisors of McLagan and a member of the Compensation Committee; (5) any stock of the Company owned by the senior advisors of McLagan; and (6) any business or personal relationships between our executive officers and the senior advisors of McLagan. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan's senior advisors involved in the engagements did not raise any conflict of interest.

 

Compensation Benchmarking and Compensation Committee Functions

 

Each year, with assistance from McLagan, the Compensation Committee reviews the compensation practices of the Company's 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 executive 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. The Compensation Committee uses this data as a reference point, establishes competitive base salaries, and then addresses pay-for-performance (meritocracy) as discussed further in the sections below on cash incentives and long-term retention. Peer performance, market factors, Company performance and individual 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 Company and its shareholders to negotiate total compensation packages that deviate from regular compensation and incentive levels in order to attract and retain specific talent.

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 financial institutions within the group, or changes within the Company.  The 2015 compensation peer group was selected based on certain current market criteria, including the following:

 

The Compensation Committee reviewed a group of 25 peers with median assets, including pending acquisitions, of $8.4 billion (median actual assets of $7.4 billion), defined as of December 31, 2014. The specific members of this peer group are as follow:

 

When making compensation determinations for the Company’s NEOs, the Compensation Committee focuses on total compensation that is generally competitive with the 60th percentile of the market at target levels of performance and up to the 75th to 80th percentiles for superior performance. In their most recent assessment of our compensation program, McLagan determined that our 2014 NEO compensation was at the 63rd percentile of the peer group, with individuals ranging from the 40th to 88th percentiles. Our NEOs’ 2015 target compensation was positioned at the 61st percentile of the peer group, with individual positioning ranging from the 44th to 86th percentiles.

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.

 

 

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.  

 

 

Effective January 1, 2015, the CEO along with the NEOs received merit increase to base salary as a result of 2015 performance and to maintain competitiveness with peer group.  As a result, the CEO received a 3% increase to $721,000 and four of the other NEOs received increases ranging from 3.0% to 3.79%. In 2015, The Compensation Committee reviewed the competitiveness of NEO salaries against the 2015 peer group.  The CEO’s base salary was at the 57th percentile and the other NEOs ranged from the 34th and 84th percentiles of the peer group.  In addition, the total compensation at target incentive was in the 68th percentile for the CEO and other NEOs ranged from 42nd and 86th percentile of the peer group.  Furthermore, John Pollok performs the duties of both COO and CFO and has played a key role in driving the Company’s performance.  His salary was benchmarked against CFOs. However, because the Compensation Committee believes that his roles and responsibilities are broader and more strategic in nature than those associated with a CFO, the Compensation Committee believed that his compensation should be at or around the 75th percentile.

 

 

The 2015 Executive Performance Plan is composed of cash, restricted stock unit and stock option components. 

2015 Annual Incentive Plan

 

Cash incentive opportunities as a percentage of salary for each of the applicable NEOs and results under the 2015 Annual Incentive Plan are displayed below:

 

The primary objectives of the 2015 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, under the 2015 Annual Incentive Plan the Compensation Committee was allowed 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, which is defined as receiving a regulatory rating for asset quality of at least the previous year's rating or better. 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 operating earnings per share ("Operating EPS"). Since growth in Operating EPS is a key component in building shareholder value, this element is weighted at 75%.  Emphasis on this performance metric aligns the interests of the executive with those of the shareholder.  Operating 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 that the final Operating Earnings number and may exclude revenue or expenses that it deems to be non-recurring.  For 2015, the Company's diluted GAAP EPS was $4.11. 

Securities (gains) losses, net of tax, of $329,000 and branch consolidation and acquisition expenses, net of tax, of $4.6 million ($0.20 per share) were excluded in the calculation of Operating EPS, which was $4.31.

 

The goals and the actual results of the 2015 Executive Incentive Plan are outlined in the table below:

*  Asset Quality must receive a regulatory rating equal to or better than the previous year.

 

The 2015 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 2015, 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 2015 Annual Incentive Plan 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 composite regulatory rating that is at least as high as the Company’s most recent rating, and were limited to the amounts shown in the maximum column in the table above.  Both of the minimum performance triggers were achieved for 2015. 

2015 Long-Term Incentive Plan 

2015 Long-Term Incentive Plan opportunities as a percentage of salary for each of the NEOs are displayed below:

 

Long-Term Incentive Plan Performance-Based Goals and Annual Incentive Plan Performance-Based Goals

 

The restricted stock units (RSUs) granted in 2015 have performance-based goals that will be measured as of December 31, 2017 and include the following:

 

 

The RSUs will vest based upon the performance as outlined in the goals above during the three years ending December 31, 2017.  The grants are reported in the “Summary Compensation Table” on page 30 at target level, in accordance with SEC reporting rules.  RSUs are intended to meet the “qualified performance-based compensation” exception from the $1 million 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, 2017.

 

The Compensation Committee also granted Incentive Stock Options in 2016 under the 2015 Long-Term Incentive Plan at the maximum level in recognition of the NEO's 2015 individual contributions. Specifically, Mr. Hill received 10,113 stock options.  Other NEOs received between 2,443 and 5,910 stock options in recognition of their 2015 contributions.  See “Equity Grant Practices” caption.

 

Individual Performance-Based Goals

 

Under the 2015 Long-Term Incentive Plan, 25% of the value of the equity grants (at target levels) was determined based on non-formula based 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.

As discussed above, the Compensation Committee granted Incentive Stock Options in 2016 under the 2015 Long-Term Incentive Plan at the maximum level in recognition of the NEO's 2015 individual contributions. Specifically, Mr. Hill received 10,113 stock options.  Other NEOs received between 2,443 and 5,910 stock options in recognition of their 2015 contributions.  See “Equity Grant Practices” caption.

 

Results of 2013 Long-Term Incentive Plan Which Ended in 2015

 

On January 1, 2013, the Committee granted performance based RSU’s to the NEOs.  The vesting of 67% of these RSUs was dependent on achieving pre-determined levels of cumulative Operating EPS, with the remaining 33% vesting based on cumulative average operating ROCE.  Both objectives are measured over the three-year performance period from January 1, 2013 through December 31, 2015.

 

Target performance over the three-year period represented 81.0% growth in cumulative operating EPS and 10.0% cumulative average operating ROCE.  Actual performance represented 150.6% growth in cumulative operating EPS, which was greater than maximum performance under the plan, and cumulative average ROCE was 10.38%, which was between target and maximum performance under the plan.  As a result, 97.4% of RSUs vested on January 20, 2016.  The RSUs that have been earned and have vested are shown in the Option Exercises and Stock Vested table on page 33.

 

 

Part 4 – Other Aspects of South State’s Executive Compensation Program

 

Benefits

 

During 2015, the Company 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.  These plans consist of the following:

 

Employees’ Pension Plan – The NEOs are participants in a non-contributory defined pension plan which covers substantially all employees of the Company hired before January 1, 2006. Pension benefits are paid based upon age of the employee and years of service with the Company. The Plan was frozen in July 2009, and no further benefits are being accrued.  See the Pension Benefits table and the accompanying footnotes and narrative for more information.

 

Retirement Savings Plan – 401(k) – Each of the NEOs are participants in a defined contribution plan which in 2015 permitted 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. The Company matched 100% up to 6% of participants’ deferrals (4% Safe Harbour, 1% discretionary and an additional 1% discretionary at year-end).  

See the table in footnote 7 of the Summary Compensation Table.

 

Health Care – The NEOs are eligible to receive medical and dental coverage that is provided to all eligible employees.

 

Other Welfare Benefits  – The NEOs receive sick leave, vacation and other benefits available to all eligible employees of the Company.

 

The employee benefits for the NEOs discussed in the subsection above are determined by the same criteria applicable to all Company employees.  These benefits help keep the Company competitive in attracting and retaining employees.  The Company believes that its employee benefits are generally competitive with benefits provided by the Peer Group and consistent with industry standards.

 

Supplemental Executive Retirement Plan – The Company provides a non-qualified supplemental executive retirement plan (a “SERP”) for Mr. Windley, and certain other executives who are not NEOs. The Company elects to offer this type of incentive as a way to retain executives over the long term and to provide a partial offset to shortfalls in the percentage of income provided for retirement by its qualified retirement plans.

 

In 2009, the Company made restricted stock grants that vest ratably and that become 100% vested at age 60 for Messrs.’ Hill and Pollok and at age 65 for Mr. Burns. The use of these Long-Term Equity Grants helps to insure the executives’ focus is on the long-term interests of the shareholders and motivates retention over a long-term period.

 

Deferred Compensation Plan   We make available to selected members of our senior management group, including all NEOs and/or other selected employees who are highly compensated, the opportunity to elect to defer current compensation for retirement income or other future financial needs.  The plan is a nonqualified deferred compensation plan that is designed to be exempt from certain ERISA requirements as a plan that covers a select group of management and certain other highly compensated employees.  Each year participants can choose to have their compensation for the upcoming year reduced by a certain whole percentage amount ranging between 5% and 80% or by a specific dollar amount (in all cases, subject to a minimum value established by the Company).  In addition, the Company may make matching or partially–matching contributions for participant deferrals.  The Company may also make discretionary contributions for any or all participant(s).   Both of these types of employer contributions would be subject to certain vesting requirements.  There are also forfeiture provisions, which can result from unvested amounts existing at terminations or from materially incorrect earnings that are subsequently adjusted or corrected.  Deferrals may be held by a trustee in a grantor (rabbi) trust and may be invested in funds that mirror deemed investments selected by the participants and offered pursuant to the plan. Such a trust would not isolate assets for the benefit of the participants.  Consequently, distributions made under the plan will be made from the general assets of the bank which could be subject to claims of its creditors.   Amounts deferred under the plan will generally be subject to income taxes payable by the participant in the year in which received (end of the deferral period), but these deferred amounts are subject to employment taxes in the year of deferral.  In 2015, Mr. Hill and Mr. Windley elected to participate.  No employer contributions have been made to this plan in 2015 or in the past.

 

See the discussion entitled Deferred Compensation Plan for additional information.

 

Perquisites – The Company also provides limited perquisites to NEOs that are not available to all employees. Some examples of these include Company-owned automobiles, automobile allowances and club and membership dues. The values of these items are presented in the Summary Compensation Table under the heading All Other Compensation. The value attributable to any personal use of Company-owned automobiles is considered compensation to the executive and represents the aggregate incremental cost to the Company associated with that personal use. The Company and the Board of Directors believe that the use of each of these perquisites is helpful for the proper performance of the NEOs’ duties.

 

Role of Shareholder Say on Pay Vote

 

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we held a triennial advisory vote on the compensation of our executive officers (the "Say on Pay Proposal") at our 2014 annual shareholders meeting.  At the 2014 annual shareholders meeting, 83.49% of the votes cast on the Say on Pay proposal were cast in support of the compensation of the Company’s named executive officers. A majority of the votes cast by our shareholders at the Company's 2011 annual meeting were in favor of holding this vote on a triennial frequency.  Based on the results of this advisory vote, the Board of Directors for the Company elected a triennial frequency to conduct an advisory vote on compensation of the Company’s named executive officers.

 

While the 2014 shareholder vote reflected strong support for our executive compensation programs, the Compensation Committee, Board of Directors and executive management will continue to evaluate compensation programs each year to ensure the plans continue to align the interest of the executives with those of the Company's shareholders and to strengthen the linkage of pay to performance.

 

Clawback Policy

 

The Compensation Committee is committed to adopting a formal clawback provision for adjustment or recovery of incentive awards or payments in the event the performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment.  The Compensation Committee intends to fully comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding this issue once rulemaking has been completed with respect to these provisions.  Until formal guidance is available, the Compensation Committee will seek to address any situation that may arise and determine the proper and appropriate course of action in fairness to shareholders and NEO award recipients.

 

Share Ownership Guidelines

 

The Company’s stock ownership guidelines call for NEOs to own equity representing a multiple of their salary and to retain this equity throughout their tenure with the Company. The specific share ownership guidelines are:

 

The Company’s NEOs have five years from being named a NEO to comply with the stock ownership guidelines.  As of 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, and unvested shares of restricted stock, 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.

 

Equity Grant Practices

 

To address volatility concerns, the 30-day moving average of the Company’s stock was utilized to determine the number of restricted stock shares and restricted stock units to be issued under the Executive Performance Plan for 2015.  The 30-day average is defined as the last 30 trading days 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 shares or 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 these 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 provisions that further protect 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:

 

 

 

 

 

 

 

 

 

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.

 

162(m) Tax Considerations

 

Internal Revenue Service Code Section 162(m) and related regulations disallow a tax deduction to public corporations for annual compensation, other than performance-based compensation, over $1 million paid to a chief executive officer or to any of the other three most highly compensated NEOs (excluding the company’s Chief Financial Officer).  The Compensation Committee considers the impact of those regulations in connection with its decisions regarding the compensation of our NEOs.   The 2015 RSU awards and the 2015 Annual Incentive Plan described above are intended to qualify for the “qualified performance-based compensation” exemption from the $1 million deduction limitation of Section 162(m).

 

The Compensation Committee monitors, and will continue to monitor, the effect of Section 162(m) on the deductibility of NEO compensation.  The Compensation Committee weighs the benefits of deductibility with the other objectives of the Company's executive compensation program and, accordingly, may from time to time approve compensation that is not fully deductible under Section 162(m). In addition, due to the complexity of the 162(m) regulations, elements of compensation that the Company believes are deductible may ultimately not be deductible.

 

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 Director of Risk Management 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 2015 and then presented the findings of the review to the Compensation Committee at its October 2015 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 2015, 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 2015 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

M. Oswald Fogle

Alton C. Phillips

James W. Roquemore

B. Ed. Shelley, Jr.

SUMMARY COMPENSATION TABLE

The following table summarizes for the fiscal years ended December 31, 2015, 2014 and 2013, 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. 

 

 

GRANTS OF PLAN BASED AWARDS