DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
GREEN BANKSHARES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its
filing. |
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March 29, 2010
Dear Shareholder:
We invite you to attend the Annual Meeting of Shareholders (the Annual Meeting) of Green
Bankshares, Inc. (the Company) to be held at the General Morgan Inn, 111 North Main Street,
Greeneville, Tennessee, on Friday, April 30, 2010, at 11:00 a.m., local time.
The Annual Meeting has been called for the election of directors, the ratification of the
appointment of the Companys auditors, the approval of the compensation of certain of the Companys
executive officers, consideration of two shareholder proposals, if properly presented at the Annual
Meeting and to transact such other business as may properly come before the Annual Meeting or any
adjournments thereof. Enclosed is a proxy statement, a proxy card and the Companys Annual Report
to Shareholders for the 2009 fiscal year. Directors and officers of the Company as well as
representatives of Dixon Hughes PLLC, the Companys independent registered public accounting firm
for the 2009 fiscal year, will be present to respond to any appropriate questions shareholders may
have.
Your vote is important, regardless of the number of shares you own. On behalf of the
Board of Directors, we urge you to sign, date and return the enclosed proxy card as soon as
possible, even if you currently plan to attend the Annual Meeting. We also offer telephone and
Internet voting, as more particularly described in the attached proxy statement. Voting by
telephone, on the Internet or by returning a proxy card in the mail will not prevent you from
voting in person at the Annual Meeting, but will assure that your vote is counted if you are unable
to attend the Annual Meeting.
Thank you for your cooperation and your continuing support.
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Sincerely,
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/s/ Robert K. Leonard
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Robert K. Leonard |
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Lead Director |
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GREEN BANKSHARES, INC.
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
(423) 639-5111
Notice of Annual Meeting of Shareholders
To Be Held on April 30, 2010
Notice is hereby given that the 2010 Annual Meeting of Shareholders (the Annual Meeting) of
Green Bankshares, Inc. (the Company) will be held on Friday, April 30, 2010, at 11:00 a.m., local
time, at the General Morgan Inn, 111 North Main Street, Greeneville, Tennessee 37743.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon the following matters:
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elect three persons to serve as directors of the Company, each for a three-year
term, and one person to serve as a director of the Company for a two-year term, those
persons to serve until the end of their respective terms and until their respective
successors are duly elected and qualified; |
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consider and vote upon a proposal to approve the compensation of the Companys
named executive officers as disclosed in the proxy statement that accompanies this
notice; |
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consider and vote upon a proposal to ratify the appointment of Dixon Hughes
PLLC as the Companys independent registered public accounting firm for 2010; |
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consider and vote upon a shareholder proposal regarding majority election of
directors if properly presented at the Annual Meeting; |
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consider and vote upon a shareholder proposal regarding annual election of
directors if properly presented at the Annual Meeting; and |
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transact such other business as may be properly come before the Annual Meeting
or any adjournment thereof. |
NOTE: Although the Board of Directors is not aware of any other business to come before the
Annual Meeting, the proxies have been authorized to vote upon such other business as may
properly come before the Annual Meeting of Shareholders.
Any action may be taken on any one of the foregoing proposals at the Annual Meeting on the
date specified above or on any date or dates to which, by original or later adjournments, the
Annual Meeting may be adjourned. Shareholders of record at the close of business on March 19,
2010, will be entitled to vote at the Annual Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which is solicited by the
Board of Directors and to mail it promptly in the enclosed envelope or vote by telephone or over
the Internet as described in the attached proxy statement. The proxy will not be used if you
attend and choose to vote in person at the Annual Meeting.
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BY ORDER OF THE BOARD OF DIRECTORS
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/s/ James E. Adams
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James E. Adams |
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Corporate Secretary |
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Greeneville, Tennessee
March 29, 2010
It is important that proxies be returned promptly. Therefore, whether or not you plan to be
present in person at the Annual Meeting, please sign, date, and complete the enclosed proxy card
and return it in the enclosed envelope. No postage is required if mailed in the United States.
Alternatively, you can vote by telephone or on the Internet, as more particularly described in the
attached proxy statement. Should you subsequently desire to revoke your proxy, you may do so as
provided in the attached proxy statement before it is voted at the Annual Meeting.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy Materials for the
Annual Stockholder Meeting to be Held on April 30, 2010
Pursuant to rules promulgated by the Securities and Exchange Commission, we have provided
access to these proxy statement materials (which includes this proxy statement, a proxy card and
our 2009 Annual Report) both by sending you this full set of proxy statement materials, including a
proxy card, and by notifying you of the availability of such materials on the Internet.
This proxy statement, the Companys 2009 Annual Report and a proxy card are available at
www.snl.com/IRWebLinkX/GenPage.aspx?IID=1019938&gkp=1073743297.
The Annual Meeting of Shareholders will be held April 30, 2010 at 11:00 a.m. local time at the
General Morgan Inn, 111 North Main Street, Greeneville, Tennessee. In order to obtain directions to
attend the Annual Meeting of Shareholders, please call James E. Adams, our Corporate Secretary, at
(423) 278-3050.
The Proposals to be voted upon at the Annual Meeting of Shareholders, all of which are more
completely set forth in this proxy statement, are as follows:
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elect three persons to serve as directors of the Company, each for a three-year
term, and one person to serve as a director of the Company for a two-year term, those
persons to serve until the end of their respective terms and until their respective
successors are duly elected and qualified; |
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consider and vote upon a proposal to approve the compensation of the Companys
named executive officers as disclosed in the proxy statement that accompanies this
notice; |
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consider and vote upon a proposal to ratify the appointment of Dixon Hughes
PLLC as the Companys independent registered public accounting firm for 2010; |
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consider and vote upon a shareholder proposal regarding majority election of
directors if properly presented at the Annual Meeting; |
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consider and vote upon a shareholder proposal regarding annual election of
directors if properly presented at the Annual Meeting; and |
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transact such other business as may be properly come before the Annual Meeting
or any adjournment thereof. |
Our Board of Directors recommends that you vote FOR the approval of Proposals 1, 2, and 3
and AGAINST Proposals 4 and 5.
PROXY STATEMENT
of
GREEN BANKSHARES, INC.
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
(423) 639-5111
2010 ANNUAL MEETING OF SHAREHOLDERS
April 30, 2010
General
This document is being furnished to Green Bankshares, Inc. (the Company) shareholders in
connection with the solicitation of proxies by the Companys board of directors to be used at the
2010 Annual Meeting of Shareholders of the Company (the Annual Meeting), to be held on April 30,
2010, at 11:00 a.m., local time, at the General Morgan Inn, 111 North Main Street, Greeneville,
Tennessee 37743. The accompanying Notice of Annual Meeting and form of proxy card and this Proxy
Statement are first being mailed to shareholders on or about March 29, 2010.
The Companys board of directors has fixed the close of business on March 19, 2010, as the
record date for determining the holders of shares of the Companys common stock entitled to receive
notice of and to vote at the Annual Meeting. Only holders of record of shares of the Companys
common stock at the close of business on that date will be entitled to vote at the Annual Meeting
and at any adjournment or postponement of that meeting. At the close of business on the record
date, there were 13,176,036 shares of the Companys common stock outstanding, held by approximately
2,900 holders of record. Each Company common shareholder will be entitled to one vote for each
share held of record as of the close of business on March 19, 2009, upon each matter properly
submitted at the Annual Meeting and at any adjournment or postponement of that meeting. Holders of
shares of the Companys Series A Fixed Rate Cumulative Preferred Stock (the Series A Preferred
Stock) will not be entitled to vote on any of the proposals to be considered at the Annual
Meeting.
Matters to be Considered
At this Annual Meeting, holders of the Companys common stock will be asked to:
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elect three persons to serve as directors of the Company, each for a three-year
term, and one person to serve as a director of the Company for a two-year term, those
persons to serve until the end of their respective terms and until their respective
successors are duly elected and qualified; |
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consider and vote upon a proposal to approve the compensation of the Companys named
executive officers as disclosed in this proxy statement; |
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consider and vote upon a proposal to ratify the appointment of Dixon Hughes PLLC as
the Companys independent registered public accounting firm for 2010; |
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consider and vote upon a shareholder proposal regarding majority election of
directors if properly presented at the Annual Meeting; |
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consider and vote upon a shareholder proposal regarding annual election of directors
if properly presented at the Annual Meeting; and |
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transact such other business as may properly come before the Annual Meeting or any
adjournments thereof. |
1
Proxies
Each copy of this document mailed to Company common shareholders is accompanied by a proxy
card with instructions for voting by mail, by telephone or on the Internet. If voting by mail, you
should complete and return the proxy card accompanying this document to ensure that your vote is
counted at the Annual Meeting, or at any adjournment or postponement of the Annual Meeting,
regardless of whether you plan to attend the Annual Meeting. You may also vote your shares by
telephone or on the Internet. Information and applicable deadlines for voting by telephone or on
the Internet are set forth in the enclosed proxy card instructions.
The presence of a shareholder at the Annual Meeting will not automatically revoke that
shareholders proxy. However, a shareholder may revoke a proxy at any time prior to its exercise
by:
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submitting a written revocation prior to the meeting to James E. Adams, Corporate
Secretary, Green Bankshares, Inc., 100 North Main Street, Greeneville, Tennessee
37743-4992; |
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submitting another proxy by mail, internet or telephone that is dated later than the
original proxy; or |
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attending the Annual Meeting and voting in person. |
If your shares are held by a broker or bank, you must follow the instructions on the form you
receive from your broker or bank with respect to changing or revoking your proxy.
The shares represented by any proxy card that is properly executed and received by the Company
in time to be voted at the Annual Meeting will be voted in accordance with the instructions that
are marked on the proxy card. If you execute your proxy card but do not provide the Company with
any instructions, your shares will be voted as follows:
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FOR the election of three persons to serve as directors of the Company, each for a
three-year term, and one person to serve as a director of the Company for a two-year
term, those persons to serve until the end of their respective terms and until their
respective successors are duly elected and qualified; |
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FOR approval of the compensation of the Companys named executive officers as
disclosed in this proxy statement; and |
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FOR ratification of the appointment of Dixon Hughes PLLC as the Companys
independent registered public accounting firm for 2010. |
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AGAINST the shareholder proposal regarding majority election of directors if
properly presented at the Annual Meeting; |
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AGAINST the shareholder proposal regarding annual election of directors if properly
presented at the Annual Meeting; and |
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In the best judgment of the persons appointed as proxies as to all other matters
properly brought before the Annual Meeting. |
Proxies that are returned to us where brokers have received instructions to vote on one or
more proposals but do not vote on other proposal(s) are referred to as broker non-votes with
respect to the proposal(s) not voted upon. Broker non-votes are included in determining the
presence of a quorum.
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Vote Required
In order to have a lawful meeting, a quorum of shareholders must be present at the Annual
Meeting. The presence, in person or by proxy, of the holders of a majority of the outstanding
shares of the Companys common stock outstanding, as of the record date, will constitute a quorum
at the Annual Meeting. A shareholder will be deemed to be present if the shareholder either attends
the Annual Meeting or submits a properly executed proxy card that is received at or prior to the
Annual Meeting (and not revoked). Under the laws of Tennessee, the Companys state of
incorporation, abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum, but are not counted as votes cast at the meeting.
In prior years, brokers and other nominees had discretionary voting power with respect to the
election of directors, but beginning this year, brokers and other nominees no longer have authority
to vote your shares in the election of directors. Accordingly, it is particularly important that
you provide voting instructions to your broker or other nominee so that your shares may be voted in
the election of directors.
Effect of Abstentions and Broker Non-Votes. If your shares are treated as a broker non-vote or
abstention, your shares will be counted in the number of shares represented for purposes of
determining whether a quorum is present. However, broker non-votes and abstentions will not be
included in vote totals (neither for nor against) and therefore will not affect the outcome of the
vote on any of Proposals 1-5.
The affirmative vote of a plurality of the votes cast by the shareholders entitled to vote at
the Annual Meeting is required for the election of directors. A properly executed proxy marked
Withhold Authority with respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although it will be counted in determining whether
there is a quorum. Therefore, so long as a quorum is present, withholding authority will have no
effect on whether one, or more, director is elected.
If a quorum exists, approval of the ratification of the appointment of Dixon-Hughes as the
Companys independent registered public accounting firm for 2010, approval of each of the
shareholder proposals, if properly presented at the Annual Meeting and approval of the compensation
of the Companys named executive officers, as disclosed in this proxy statement, requires that the
number of votes cast, in person or by proxy, at the Companys Annual Meeting in favor of the
proposal exceed the number of votes cast, in person or by proxy, against the proposal. Abstentions
and broker non-votes are not counted as votes cast and thus have no impact on the proposal to
approve ratification of the appointment of Dixon-Hughes as the Companys independent registered
public accounting firm for 2010, approval of each of the shareholder proposals and approval of the
compensation of the Companys named executive officers, as disclosed in this proxy statement,
because the vote required to approve these proposals is not based upon the Companys outstanding
shares, but only on those shares present and voting.
Solicitation of Proxies
In addition to solicitation by mail, directors, officers and employees of the Company may
solicit proxies for the Annual Meeting from Company shareholders personally or by telephone and
other electronic means without additional remuneration for soliciting such proxies. We also will
provide persons, firms, banks and corporations holding shares in their names or in the names of
nominees, which in either case are beneficially owned by others, proxy material for transmittal to
such beneficial owners and will reimburse such record owners for their expenses in taking such
actions.
Internet Availability of Proxy Materials
This proxy statement, proxy card and accompanying proxy materials are available at the
following website: www.snl.com/IRWebLinkX/GenPage.aspx?IID=1019938&gkp=1073743297.
3
PROPOSAL 1 ELECTION OF DIRECTORS
The Companys Board of Directors is currently comprised of 12 members. The Companys Amended
and Restated Charter requires that directors be divided into three classes, as nearly equal in
number as possible, and that the members of each class serve for a term of three years and until
their successors are elected and qualified, with one-third of the directors elected each year. The
Companys nominating committee has nominated for election as directors Robert K. Leonard, Bill
Mooningham and Kenneth R. Vaught, each of whom is currently a member of the Board of Directors, to
serve for a term of three years and until their respective successor is duly elected and qualified.
On October 27, 2009, the Board of Directors appointed Bill Mooningham as a director of the Company
and GreenBank, the Companys wholly owned subsidiary (the Bank). On March 16, 2010, the Board of
Directors announced that effective March 31, 2010, Stephen M. Rownd will assume the position of
Chairman of the Board and Chief Executive Officer of the Company upon the previously announced
retirement of R. Stan Puckett effective as of March 31, 2010. Under Tennessee law, the term of a
director appointed during an interim period expires at the next shareholders meeting at which
directors are elected, meaning that a director appointed in an interim period must stand for
election at that meeting. The Nominating Committee has nominated Mr. Rownd for election as a
Director to serve for a term of two years and until his successor is elected and qualified.
Tennessee law and the Companys Amended and Restated Charter requires that each group of directors
be as nearly equal in number as possible and that directors are elected by a plurality of the votes
cast at an election. Each of Messers Leonards, Vaughts, Mooninghams and Rownds current terms
will expire at the Annual Meeting. Each director has consented to serve as a director if elected.
It is intended that the persons named in the proxies solicited by the Board of Directors will
vote for the election of each of the nominees. If any nominee is unable to serve or for good cause
will not serve, the shares represented by all properly executed proxies which have not been revoked
will be voted for the election of a substitute nominee as the Board of Directors may recommend. In
the alternative, the Board of Directors may, in its discretion, reduce its size to eliminate the
vacancy. At this time, the Board of Directors knows of no reason why any nominee might be unable
or unwilling to serve.
The Companys Board of Directors has determined that each of the following directors is an
independent director within the meaning of Marketplace Rule 5605(a)(2) of the Nasdaq Stock
Market, LLC:
Martha M. Bachman;
Bruce Campbell;
W.T. Daniels;
Robert K. Leonard;
Samuel E. Lynch;
Bill Mooningham;
John Tolsma; and
Charles H. Whitfield, Jr.
4
The Companys Board of Directors has established procedures for the Companys shareholders to
communicate with members of the Board of Directors. Shareholders can communicate with any of the
Companys directors, including the chairperson of any of the committees of the Board of Directors,
by writing to a director c/o Green Bankshares, Inc., 100 North Main Street, P.O. Box 1120,
Greeneville, Tennessee 37743.
The Company encourages the members of the Board of Directors to attend the annual meeting of
shareholders. All of the Companys directors attended the Annual Meeting of Shareholders held in
2009.
The Board of Directors recommends a vote FOR election as directors of all the nominees
listed below.
The following table sets forth certain information with respect to each of the Companys
current directors whose term of office as a director will or, assuming re-election, is expected to
continue after the Annual Meeting. The information describing the current position and prior
business experience of each of the nominees and continuing directors below contains information
regarding the persons service as a director, business experience, public reporting company
director positions held currently or at any time during the last five years and the experiences,
qualifications, attributes or skills that caused the Board of Directors to determine that the
person should serve as a director for the Company. Each of the Companys directors also currently
serves as a director of the Bank, the wholly owned subsidiary of the Company. There are no
arrangements or understandings between the Company and any director pursuant to which such person
has been selected as a director or nominee for director of the Company, and no director or nominee
is related to any other director, nominee or executive officer by blood, marriage or adoption.
Mr. Mayberrys term as a director will expire at the Annual Meeting and he is not seeking
re-election to the Board. The Board currently expects that it will reduce the size of the board by
one member upon the expiration of Mr. Mayberrys term.
BOARD NOMINEES FOR ELECTION
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and Directors Qualifications |
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Robert K. Leonard
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42 |
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2005 |
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2010 |
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Mr. Leonard has been
Chairman of the Audit
Committee since 2007 and
was appointed as Lead
Director of the Company in
2009. Since 1993 he has
been President of LMR
Plastics, a non-public
company, which provides
custom plastic injection
moldings to the majority of
the Global 1000 companies.
He is a Certified Public
Accountant with prior
experience in the Financial
Institutions Practice of
KPMG Peat Marwick. Mr.
Leonard has extensive
experience in financial and
accounting matters,
including having served as
a certified public
accountant with KPMG Peat
Marwick. He also has
experience as the president
of a successful
manufacturing company. His
background in accounting
and financial matters helps
him fill the role of
financial expert on the
Companys Audit Committee. |
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Kenneth R. Vaught
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45 |
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2002 |
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2010 |
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Director, President and
Chief Operating Officer of
the Company and the Bank
since 2002. Previously
served as Senior Vice
President and Regional
Executive for the Banks
Blount and Knox County,
Tennessee offices from 1998
to 2002. Mr. Vaught began
his banking career in 1987.
Mr. Vaughts extensive
banking experience and his
experience managing the day
to day operations of the
Companys business provide
the Board with knowledge
and insight into the
Companys operations. |
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Bill Mooningham
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63 |
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2009 |
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2010 |
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Mr. Mooningham is a
Certified Public Accountant
and currently serves as an
Adjunct Professor of
Accounting at Middle
Tennessee State University
since 2007. He retired from
Ernst & Young LLP, an
international public
accounting firm, in 2007
after serving 22 years, of
his 37 year career with
Ernst & Young, as an Audit
Partner in their assurance
practice. Mr. Mooningham
brings significant
financial and accounting
expertise to the Board,
reflecting his 37-year
career with Ernst & Young
LLP. |
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Stephen M. Rownd
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50 |
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2010 |
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2010 |
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Mr. Rownd served as
Executive Vice President
and Senior Commercial
Banker for Fifth Third Bank
of the Carolinas since
2008, responsible for
leading a new commercial
banking team focused on
middle market lending,
commercial real estate and
treasury services. Prior to
joining Fifth Third, Mr.
Rownd served as Executive
Vice President and Chief
Banking Officer of First
Charter Corporation from
2006 to 2008 and as
Executive Vice President
and Chief Risk Officer from
2004 to 2006 and Executive
Vice President and Chief
Credit Officer from 2000 to
2004. Mr. Rownds extensive
banking experience and the
experience he will have
managing the day to day
operations of the Companys
business as the Companys
and the Banks Chief
Executive Officer will
provide the Board with
knowledge and insight into
the Companys operations
and will make him a
valuable member of the
Board. |
5
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSED DIRECTOR NOMINEES.
DIRECTORS CONTINUING IN OFFICE
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Martha M. Bachman
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55 |
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2005 |
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2012 |
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Ms. Bachman began her
professional career in 1980
as an owner/co-owner of a
successful retail,
non-public company in
Northeast Tennessee which
was sold in 2007. She
currently provides
financial consulting to her
familys other personal
enterprises including
rental properties,
investments and other
holdings. Ms. Bachmans
family has been closely
affiliated with the Company
for over two generations
which provides a strong
historical connection
between the local community
and the Company. Ms.
Bachman has extensive
experience as a successful
business owner and also
provides the Board with
expertise in matters
relating to the retail
industry. |
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W.T. Daniels
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65 |
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1987 |
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2012 |
|
|
Since 1985 Mr. Daniels has
been President of The Dev.
Group, a non-public
property management and
development company in East
Tennessee. He is a
Community Leader and has
served as Chairman of the
Greeneville Light and Power
Board as well as serving
the local community as a
City Council Member for
over 20 years. Mr. Daniels
extensive experience in
real estate development and
his involvement in a number
of community activities in
the Companys market area
make him well qualified to
serve as a director. |
|
|
|
|
|
Charles H.
Whitfield, Jr.
|
|
|
52 |
|
|
|
2000 |
|
|
|
2012 |
|
|
Mr. Whitfield has served as
President and Chief
Executive Officer of
Laughlin Memorial Hospital,
a non-public company, for
the past 13 years of his 20
years experience in the
acute care hospital
profession. Mr. Whitfield
has extensive experience in
the health care industry
and provides valuable
insight into all matters
relating to changes
occurring in this industry. |
|
|
|
|
|
Bruce Campbell
|
|
|
58 |
|
|
|
2000 |
|
|
|
2011 |
|
|
Mr. Campbell has served as
Chairman, President and
Chief Executive Officer of
Forward Air Corporation, a
public company specializing
in logistics and
transportation, since 2007.
Prior to being elevated to
his current position, Mr.
Campbell served as
President and Chief
Executive Officer of the
Forward Air since 2003. He
has held a leadership role
with the Forward Air for
over 20 years. Mr. Campbell
is an experienced business
leader. His experience as
the chairman, president and
chief executive officer of
a registered public company
offers the Board management
experience, leadership
capabilities, financial
knowledge and business
acumen. |
|
|
|
|
|
Samuel E. Lynch
|
|
|
50 |
|
|
|
2008 |
|
|
|
2011 |
|
|
Dr. Lynch is founder of
BioMimetic and has been its
president, CEO and a
director since inception in
1999. BioMimetic is a
public biotechnology
company utilizing purified
recombinant human
platelet-derived growth
factor (rhPDGF-BB) in
combination with tissue
specific matrices as its
primary technology platform
for promotion of tissue
healing and regeneration.
He also served as chairman
of the board from inception
until August 2005. Dr.
Lynch has spent his career
in health care management,
product development, and
earlier in academic
medicine/dentistry,
including research and
patient care. He received
his Doctorate of Medical
Sciences and Specialty in
Periodontology from the
Harvard Medical and Dental
Schools, respectively, as
well as a Doctorate of
Dental Medicine from
Southern Illinois
University School of Dental
Medicine. He has published
and lectured extensively
worldwide and is a
co-inventor of BioMimetics
technologies. Dr. Lynchs
experience as the president
and chief executive officer
of a registered public
company offers the Board
management experience,
leadership capabilities,
financial knowledge and
business acumen. |
|
|
|
|
|
R. Stan Puckett
|
|
|
54 |
|
|
|
1989 |
|
|
|
2011 |
|
|
Mr. Puckett has been
Chairman of the Board and
Chief Executive Officer of
the Company and the Bank
since 2001. Mr. Pucketts
extensive banking
experience and his
experience as the Companys
and the Banks Chairman and
Chief Executive Officer
provide the Board with
knowledge and insight into
the Companys operations
and make him a valuable
member of the Board. |
|
|
|
|
|
John Tolsma
|
|
|
36 |
|
|
|
2004 |
|
|
|
2011 |
|
|
Chief Executive Officer,
Knowledge Launch, LLC. A
non-public educational
media company which creates
customized leadership and
development programs for
global companies and top
universities. It is a 2010
Blue Ribbon Award recipient
from the US Chamber of
Commerce. Tolsma earned
his JD from Harvard Law
School and his MBA from
Harvard Business School.
Mr. Tolsma has extensive
business experience as
chief executive officer of
an educational media
company and brings
excellent business acumen
and experience to the
Board. |
|
|
|
(a) |
|
Indicates year that director first served as a director of either the Company or the Bank. |
6
CORPORATE GOVERNANCE
Board Leadership Structure
The Board of Directors appointed the Companys Chief Executive Officer as Chairman because he
is the director most familiar with the Companys business and industry, and as a result is best
suited to effectively identify strategic priorities and lead the discussion and execution of
strategy. The Board of Directors believes that the combined position of Chairman and Chief
Executive Officer promotes a unified direction and leadership for the board of directors and gives
a single, clear focus for the chain of command for our organization, strategy and business plans.
The Board of Directors believes that the Companys current leadership structure with the combined
Chairman/Chief Executive Officer leadership role and a strong Lead Director enhances the
Chairman/Chief Executive Officers ability to provide insight and direction on important strategic
initiatives to both management and the independent directors and, at the same time, ensures that
the appropriate level of independent oversight is applied to all board decisions.
Boards Role in Risk Oversight
While the Board of Directors has the ultimate oversight responsibility for the risk management
process, various committees of the Board of Directors assist the Board of Directors in fulfilling
its oversight responsibilities in certain areas of risk. In particular, the Audit Committee focuses
on financial and enterprise risk exposures, including internal controls, and discusses with
management, the internal auditors, and the independent registered public accountants the Companys
policies with respect to risk assessment and risk management, including risks related to fraud,
liquidity, credit operations and regulatory compliance. The Audit Committee also assists the Board
in fulfilling its duties and oversight responsibilities relating to the Companys compliance and
ethics programs, including compliance with legal and regulatory requirements. The Compensation
Committee is responsible for considering the risks that may be implicated by the Companys
executive compensation programs and reviews those risks with the Companys senior risk officers.
Meetings and Committees of the Board of Directors
The Company conducts its business through meetings of the Board of Directors, which met 11
times during 2009. Directors of the Company also are directors of the Bank, the Board of which met
eight times in 2009. During 2009, each member of the Board of Directors of the Company and of the
Bank attended at least 75% or more of the aggregate of (a) the total number of meetings of the
Boards of Directors and (b) the total number of meetings held by all committees on which the
director served.
The Nominating/Governance Committee of the Company, consisting of Bruce Campbell, Robert K.
Leonard, Martha Bachman and Samuel E. Lynch, with Bruce Campbell serving as Chairman, is
responsible for selecting nominees for election as directors. Nominations may also be made by
shareholders, provided such nominations are made in writing and submitted to the Secretary of the
Company in accordance with the requirements of the Companys Amended and Restated Charter as
described below. The Nominating/Governance Committee has a written charter which sets out the
duties and responsibilities of the committee, a copy of which is available on the Investor
Relations section of the Companys website at www.greenbankusa.com. Each of the directors who
serve on the Nominating Committee is independent as that term is defined under Rule 5605(a)(2) f
the listing standards of the Nasdaq Stock Market, LLC. During 2009, the Nominating/Governance
Committee met four times.
Under the terms of the Companys Amended and Restated Charter, shareholders of record of the
Company both at the time of giving of notice and at the time of the annual meeting, may nominate
persons for election to the Companys Board of Directors. For such nominations to be properly
brought before an annual meeting, the shareholder must have given timely notice thereof in writing
to the secretary of the Company. To be timely, a shareholders notice shall be delivered to the
secretary at the Companys principal executive office no less than 40 days nor more than 60 days
prior to the scheduled date of such meeting; except that if notice of public disclosure of the
meeting is given fewer than 50 days prior to the meeting, such shareholders notice must be
delivered to the secretary of the Company not later than the close of business on the 10th day
following the day such notice was first mailed to the Company shareholders. In addition, each
notice submitted by a Company shareholder shall set forth as to such nominee all information
relating to that person that is required to be disclosed in solicitations of proxies for election
of directors, or as otherwise required, in each case pursuant to Regulation 14A of the Securities
Exchange Act of 1934 (Exchange Act), including that nominees written consent to be named in the
proxy statement as a
nominee and to serving as a director if elected. Also, the shareholder giving such notice and
the beneficial owner, if any, on whose behalf the nomination is submitted, shall include the name
and address of such shareholder as they appear on the Companys books and of such beneficial owner,
and the number of shares of each class of the Companys stock which are owned beneficially and of
record by such shareholder and such beneficial owner.
7
In the event that the number of directors to be elected to the Board of Directors at an annual
meeting is increased and there is no public announcement by the Company naming all of the nominees
for director or specifying the size of the increased board of directors at least 70 days prior to
the first anniversary of the prior years annual meeting, a shareholders notice required by the
Companys Amended and Restated Charter shall also be considered timely with respect to nominees for
any such new positions, if it shall be delivered to the Secretary of the Company at the Companys
principal executive offices not later than the close of business on the 10th day following the day
on which public announcement of such increase is first made by the Company.
The Companys Nominating/Governance Committee is responsible for (i) annually reviewing with
the board of directors the appropriate skills and characteristics required of members of the Board
of Directors, which, at a minimum, include professional integrity, sound judgment, and sufficient
time to devote to Board activities; (ii) annually reviewing and determining any specific qualities
or skills that one or more directors must possess; (iii) identifying individuals qualified to
become directors consistent with the criteria approved by the Board of Directors; (iv) evaluating
and considering director candidates proposed by management, any director or any shareholder; and
(v) recommending for selection by the board of directors, director nominees for the next annual
meeting of shareholders. The Board of Directors will then review and approve director nominees for
the annual meeting of shareholders.
Each potential director nominee is evaluated on the same basis regardless of whether he or she
is recommended by management, by a director or by a shareholder. The Board of Directors has not
adopted a policy with respect to minimum qualifications for directors nor has the Board of
Directors adopted a formal diversity policy for nominees. Rather, the Nominating/Governance
Committee annually reviews and determines the specific qualifications and skills that one or more
directors must possess in the context of the needs of the Board of Directors with respect to
experience, expertise and age. Each of the nominees for director to be elected at the Annual
Meeting was nominated and recommended by the Nominating/Governance Committee and approved by the
Board of Directors. In making recommendations for nominees to the Board of Directors, the Board of
Directors seeks to include directors who, when taken together with the other nominees and
continuing directors, will create a Board of Directors that offers a diversity of education,
professional experience, background, age, gender, perspective, viewpoints and skill. The Company
has not received director nominee recommendations from any shareholders for the terms commencing in
2010 and expiring in 2013. The Board of Directors will consider nominees recommended by
shareholders under the same criteria as nominees submitted by other parties, provided that such
recommendations comply with the notice, timing and other requirements provided for in the Companys
Amended and Restated Charter.
The Audit Committee of the Bank also serves as the Audit Committee for the Company and is a
separately-designated standing audit committee established in accordance with Section 3(a)(58)(A)
of the Exchange Act. The Audit Committee of the Bank consists of Messrs. Robert K. Leonard, Samuel
E. Lynch, Bill Mooningham, John Tolsma and Charles Whitfield, Jr. Each of the directors who serves
on the Audit Committee is independent of the Company, as the term independent is defined under
Rule 5605(a)(2) of the listing standards of the Nasdaq Stock Market, LLC and the standards
promulgated under the Sarbanes-Oxley Act of 2002, including Rule 10A-3 of the rules and regulations
promulgated under the Exchange Act. Mr. Robert K. Leonard served as the Chairman of the Audit
Committee, and the Companys Board of Directors has determined that he qualifies as an audit
committee financial expert as such term is defined by the SECs rules and regulations, and is
independent, as defined by the listing standards of the Nasdaq Stock Market, LLC and the SECs
rules and regulations. This committee meets at least quarterly to, among other things, (1) monitor
the accounting and financial reporting practices of the Company, and (2) determine whether the
Company has adequate administrative, operating and internal accounting control over financial
reporting. This committee met eight times during 2009 in its capacity as the Audit Committee for
the Company. A copy of the Audit Committee Report is set forth below. The Audit Committee has a
written charter which sets out the duties and responsibilities of the Audit Committee, a copy of
which is available on the Investor Relations section of the Companys website at
www.greenbankusa.com.
8
The Banks Compensation Committee also serves as the compensation committee for the Company.
The Compensation Committee consists of Martha Bachman, W.T. Daniels, Bruce Campbell, John Tolsma
and Charles Whitfield, Jr., with Mr. John Tolsma serving as Chairman. Each member of the
Compensation Committee is
independent within the meaning of the listing standards of the Nasdaq Stock Market, LLC. The
Compensation Committee meets periodically to evaluate the compensation and fringe benefits of the
directors, officers and employees of the Bank and the Company and recommend compensation changes to
the respective Boards of Directors. The Compensation Committee met four times during 2009. The
Compensation Committee has a written charter which sets out the duties and responsibilities of the
Compensation Committee, a copy of which is available on the Investor Relations section of the
Companys website at www.greenbankusa.com.
Additionally, because the Company is participating in the Capital Purchase Program (the CPP)
established by the U.S. Department of the Treasury (the Treasury) under the Emergency Economic
Stabilization Act of 2008 (EESA), the Compensation Committee has additional responsibilities
under the EESA as amended by the America Recovery and Reinvestment Act of 2009 (the ARRA) and the
rules, regulations and guidance issued thereunder including the interim final rule related to
compensation and governance issued by the Treasury on June 15, 2009 (the June 2009 IFR). Those
additional responsibilities include the following:
|
|
|
discussing, evaluating and reviewing, at least every six months, with the
Companys senior risk officers, the Companys senior executive officer compensation
plans and employee compensation plans and the risks these plans pose to the Company; |
|
|
|
identifying and limiting the features in the Companys senior executive officer
compensation plans that could lead the Companys senior executive officers to take
unnecessary and excessive risks that could threaten the value of the Company; |
|
|
|
identifying and limiting any features in the Companys employee compensation
plans that pose risks to the Company to ensure that the Company is not unnecessarily
exposed to risks, including any features in these senior executive officer compensation
plans or employee compensation plans that would encourage behavior focused on
short-term results rather than long-term value creation; |
|
|
|
discussing, evaluating and reviewing, at least every six months, the terms of
each Company employee compensation plan and identifying and eliminating the features in
these plans that could encourage the manipulation of reported earnings of the Company
to enhance the compensation of an employee; |
|
|
|
providing annually a narrative description of how the committee limited the
risk encouraging features in the senior executive officer compensation plans and
employee compensation plans; and |
|
|
|
certifying annually that the committee has completed its review of the senior
executive officer compensation plans and employee compensation plans required under the
EESA. |
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee during 2009 consisted of John Tolsma, Martha
Bachman, W.T. Daniels, Bruce Campbell and Charles Whitfield, Jr.
No member of the Compensation Committee of the Board of Directors of the Company during 2009
was ither (i) an officer or employee of the Company or any of its subsidiaries during the fiscal
year ended December 31, 2009, (ii) a former officer of the Company or any of its subsidiaries, or
(iii) an insider (i.e., director, officer, director or officer nominee, greater than 5%
shareholder, or immediate family member of the foregoing) of the Company or any of its subsidiaries
that engaged, or is currently engaging, in transactions with the Company or any subsidiary of the
Company that must be disclosed in this proxy statement under the rules and regulations of the SEC.
Except as set forth above, there are no relationships among the Companys executive officers,
members of its Compensation Committee or entities whose executives serve on the board of directors
or the Compensation Committee that require disclosure under applicable SEC rules or regulations.
Certain Transactions
The Company and its subsidiaries have had, and expect to have in the future, transactions in
the ordinary course of business with directors and executive officers and members of their
immediate families, as well as with principal shareholders. All loans and deposits included in such
transactions were made in the ordinary course of business on substantially the same terms,
including interest rates and collateral, in the case of loans, as those prevailing for comparable
transactions with non-affiliated persons. It is the belief of management that such loans neither
involved more than the normal risk of collectability nor presented other unfavorable features.
9
Review, Approval or Ratification of Transactions with Related Persons
The Company has followed the practice of having the full Board of Directors, or a committee of
disinterested directors, review and approve transactions in which a director has a material
interest. The Company has adopted a written Related Party Transactions Review and Approval Policy,
which is administered by the board of directors. The Policy covers related party transactions,
including any financial transaction, arrangement or relationship or any series of similar
transactions, arrangements or relationships, either currently proposed or since the beginning of
the last fiscal year in which the Company was or is to be a participant, involves an amount
exceeding $120,000 and in which a director, nominee for director, executive officer or immediate
family member of such person has or will have a direct or indirect material interest. The Board of
Directors determines whether or not related party transactions are fair and reasonable to the
Company and on terms no less favorable to the Company than those that would be available from
unaffiliated third parties. The Board of Directors also determines whether any related party
transaction in which a director has an interest impairs the directors independence. Approved
related party transactions are subject to on-going review by the Companys management on at least
an annual basis. Loans to directors and executive officers and their related interests made and
approved pursuant to the terms of Federal Reserve Board Regulation O are deemed approved under this
policy. Any such loans that become subject to specific disclosure in the Companys annual proxy
statement will be reviewed by the Audit Committee at that time.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys officers and
directors, and persons who own more than 10% of a registered class of the Companys equity
securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors
and greater-than-10% shareholders are required to furnish the Company with copies of all such
reports. Based solely on its review of copies of such reports received by it, or written
representations from certain reporting persons that no annual report of change in beneficial
ownership is required, the Company believes that, during and with respect to the year ended
December 31, 2009 all such filing requirements were timely satisfied.
Audit Committee Report
The following Audit Committee Report shall not be deemed filed or incorporated by reference
into any other document, including the Companys filings under the Securities Act of 1933 or the
Exchange Act, except to the extent the Company specifically incorporates this Report into any such
filing by reference.
The Board of Directors of the Company has appointed an Audit Committee, consisting of five
independent directors, which assists the board of directors in fulfilling its responsibility for
oversight of the quality and integrity of the accounting, auditing and financial reporting
practices of the Company.
In discharging its oversight responsibility as to the audit process, the Audit Committee
obtained from the Companys independent registered public accounting firm the written disclosures
and the letter from the independent registered public accounting firm required by applicable
requirements of the Public Company Accounting Oversight Board regarding the independent registered
public accounting firms communications with the Audit Committee concerning independence, and has
discussed with the independent registered public accounting firm the independent registered public
accounting firms independence and satisfied itself as to the independent registered public
accounting firms independence. The Audit Committee also discussed with management, the internal
auditors and the independent registered public accounting firm the quality and adequacy of the
Companys internal control over financial reporting and the internal audit functions organization,
responsibilities, budget and staffing. The Audit Committee reviewed with both the independent
registered public accounting firm and the internal auditors their audit plans, audit scope, and
identification of audit risks.
The Audit Committee reviewed and discussed with the independent registered public accounting
firm all matters required by generally accepted auditing standards, including those matters
described in Statement on Auditing Standards No. 61, as amended, (AICPA, Professional Standards,
Vol. 1 AU Section 380) as adopted by the Public Company Accounting Oversight Board in Rule 3200T,
and, with and without management present, discussed and reviewed the results of the independent
registered public accounting firms examination of the financial statements. The Audit Committee
also discussed the results of the internal audit examinations.
10
The Audit Committee reviewed and discussed the audited financial statements of the Company as
of and for the fiscal year ended December 31, 2009, with management and the independent registered
public accounting firm. Management has the responsibility for the preparation of the Companys
financial statements, and the independent registered public accounting firm has the responsibility
for the examination of those statements and expressing an opinion on the conformity of those
audited financial statements with accounting principles generally accepted in the United States of
America. The Audit Committee held eight meetings during 2009.
Based on the above-mentioned review and discussions with management and the registered public
accounting firm, the Audit Committee recommended to the Board of Directors that the Companys
audited financial statements be included in the Companys Annual Report on Form 10-K for the fiscal
year ended December 31, 2009, for filing with the Securities and Exchange Commission.
Robert K. Leonard, Chairman
Samuel E. Lynch
Bill Mooningham
John Tolsma
Charles H. Whitfield, Jr.
Code of Conduct
The Company maintains a code of conduct that is applicable to all of the Companys directors
and employees, including its principal executive officer and its senior financial officers. This
code, which requires continued observance of high ethical standards such as honesty, integrity and
compliance with law in the conduct of the Companys business, is available for public access under
the Investor Relations section of the Companys website at www.greenbankusa.com. The Company
intends to make any legally required disclosure of any amendments to, or waivers from, the code of
conduct with respect to its directors and executive officers in accordance with the rules and
regulations of the SEC and the Nasdaq Stock Market, LLC. If such disclosure is made on the
Companys website, it will be located on the Investor Relations section of the website at
www.greenbankusa.com.
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee of the Companys Board, which also serves as the Compensation
Committee of the Bank, is presently comprised of five members of the Board of Directors and is
responsible for developing and making recommendations to the full Board of Directors concerning
compensation paid to all NEOs (as defined below). The Compensation Committee is further responsible
for administering all aspects of the Companys executive compensation program.
Each member of the Compensation Committee is independent within the meaning of the listing
standards of the Nasdaq Stock Market, LLC and is appointed annually. Members of the Compensation
Committee consist of Martha Bachman, W.T. Daniels, Bruce Campbell, John Tolsma and Charles
Whitfield, Jr., with Mr. John Tolsma serving as Chairman. The Compensation Committee meets
periodically to evaluate the compensation and fringe benefits of the directors, officers and
employees of the Bank and the Company and recommend compensation changes to the respective boards
of directors when applicable.
The Compensation Committee has a written charter which sets out the duties and
responsibilities of the Compensation Committee, a copy of which is available on the Investor
Relations section of the Companys website at www.greenbankusa.com.
The Compensation Committee is involved in setting compensation philosophy and strategy for the
NEOs of the Company and further reviewing the risk elements of all incentive compensation plans, if
any, for both NEOs and the Companys other executive officers.
11
EXECUTIVE COMPENSATION
We appreciate the opportunity to share this Compensation Discussion and Analysis (CD&A) with
our shareholders, understanding that investors have a strong interest in executive compensation,
with a specific focus on our Named Executive Officers (NEOs). The NEOs for 2009 included our CEO,
CFO, and the three other most-highly compensated executive officers:
R. Stan Puckett, Chairman and Chief Executive Officer,
Kenneth R. Vaught, President and Chief Operating Officer,
James E. Adams, Executive Vice President and Chief Financial Officer,
Steve L. Droke, Senior Vice President and Chief Credit Officer, and
William C. Adams, Jr., Senior Vice President and Chief Information Officer.
This section discusses, with respect to the compensation paid to our NEOs:
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|
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Our compensation process and Compensation Committee procedures. |
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Our executive compensation programs. |
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The objectives of our executive compensation programs. |
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|
Our recent decisions regarding compensation. |
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|
|
Legislation and regulations related to compensation, including legislation and
regulations applicable to financial institutions or their holding companies that are
participants in the CPP. |
Overall Compensation Philosophy and Objectives
The Compensation Committee has designed a compensation framework that it believes drives
financial performance and links executive compensation with the creation of shareholder value. The
principles of this framework include:
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Pay should be competitive with the market. |
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A substantial portion of pay should align with performance. |
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|
A substantial portion of pay should be at risk to align with risk taken by our
shareholders. |
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Compensation must comply with legal and regulatory limits. |
The Compensation Committee designs our compensation programs in an effort to accomplish the
following objectives:
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|
|
Attract talented and experienced executives. |
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|
Retain the executive management required to lead us. |
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|
Encourage improvement in individual and business performance. |
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Recognize the importance of improving shareholder value. |
Executive Compensation Determinations and Committee Procedures
The Compensation Committee of the Board, which we refer to in this section as the Committee,
makes decisions regarding the compensation of our executives. Specifically, the Committee has
strategic and administrative responsibility for a broad range of issues. These include ensuring
that we compensate key management employees effectively and in a manner consistent with our stated
compensation strategy and the requirements of any applicable regulatory limitations. The Committee
also oversees the administration of executive compensation plans, including the design, performance
measures, and award opportunities for the executive incentive programs, and certain employee
benefits. The Board appoints each member of the Committee and has determined that each is an
independent director.
12
The Committee reviews executive officer compensation at least annually to ensure that senior
management compensation is consistent with our compensation philosophies, highlighted above,
Company and personal performance, changes in market practices, and changes in an individuals
responsibilities. At the Committees first regular meeting each year, the Committee makes a more
specific review which focuses on performance and awards for the most recently-completed fiscal
year. This review considers corporate and individual performance, changes in an NEOs
responsibilities, data regarding peer practices, and other factors.
To assist in its efforts to meet the objectives outlined above, the Committee has utilized the
services of both Blanchard Chase and Pearl Meyer nationally known executive compensation and
benefits consulting firms, to advise it on a regular basis on the executive compensation and
benefit programs. The Committee engaged the consultants to provide general executive compensation
consulting services and to respond to any Committee members questions. In addition, the
consultants perform special executive compensation educational projects and consulting services
from time to time as directed by the Committee. The consultant reports to the Committee Chairman.
Pursuant to the Committees charter, the Committee has the power to hire and fire such consultant
and engage other advisors.
The Committee reviews and approves in advance the amount of each element of total compensation
paid to all NEOs. The consultant supports such reviews by providing data regarding market practices
and making specific recommendations for changes to plan designs and policies consistent with our
philosophies and objectives highlighted above and described in more detail below. The CEO, along
with the President and Chief Operating Officer, recommend the compensation of the other NEOs to the
Committee and the Committee annually reviews these recommendations for acceptance or modification.
Upon satisfactory completion of the independent review by the Committee, the compensation packages
may, or may not, be approved as submitted for the other NEOs.
The Committee has, over the last two years, among other things, taken the following actions:
|
1. |
|
Oversaw a comprehensive review of all company incentive plans. This review is
described in greater detail under the caption, 2009 Incentive Compensation Pay for
Performance Review in the Compensation Committee Report which follows this CD&A. |
|
2. |
|
Revised the form of compensation for NEOs and the Companys other executive
officers in order to comply with regulatory requirements applicable to participants in
the CPP. Specific changes for these individuals included: |
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the elimination of bonuses and other incentive and retention
compensation for certain employees during the period that the Company has an
outstanding obligation to the Treasury under the CPP (the TARP Period) |
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the elimination of golden parachute payments and other severance
payments for certain employees during the TARP Period; and |
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the elimination of tax gross ups for certain employees during the TARP period. |
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3. |
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Adopted, and then later strengthened, a clawback policy covering incentive
compensation paid to NEOs and the Companys next twenty most highly-compensated
employees. |
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4. |
|
Eliminated company sponsored country club memberships in mid 2009. Business
expenses incurred are reimbursed subject to expense reimbursement policies. |
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5. |
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Established share ownership and retention guidelines for executive officers and
directors. |
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6. |
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Made no cash incentive payments to any NEO based on our 2008 performance and
made no cash incentive payments to any NEO or other executive officer based upon our
2009 performance. |
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7. |
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In 2009, implemented strong controls on compensation company-wide, including
the elimination of annual merit-based salary increases for 2009 for all NEOs and other
executive officers. |
Separately, our Board took the following actions in 2009 to improve our corporate governance:
|
1. |
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Designated a Lead Director; |
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2. |
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Adopted a Company-wide policy prohibiting luxury expenditures; and |
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3. |
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Adopted a non-binding shareholder say-on-pay policy. |
13
As discussed elsewhere in this Proxy Statement, recent legislation and regulation likely will
be a determining factor in the future regarding the compensation of our NEOs and other executive
officers for at least as long as the Company is a participant in the CPP. Consequently our
executive compensation program, as a result of the new legislation and regulation, has undergone
change and prior actions of the Committee may not be predictive of future action.
Effect of the Emergency Economic Stabilization Act of 2008 and American Recovery and Reinvestment
Act of 2009
On October 14, 2008, the Treasury announced the creation of the CPP, a program under EESA
pursuant to which the Treasury would make preferred stock investments in participating financial
institutions.
We participated in the CPP in 2008 by selling preferred stock and common stock purchase
warrants to the Treasury on December 23, 2008. As a result, we became subject to certain executive
compensation requirements under EESA, Treasury regulations, and the contract pursuant to which we
sold such preferred stock. The compensation requirements were modified and strengthened in
February 2009 with the passage of the American Recovery and Reinvestment Act of 2009 (ARRA) and
again in June 2009 when Treasury issued regulations implementing various provisions of EESA, as
modified by ARRA (the June 2009 IFR). As described in more detail below, these requirements apply
to the NEOs as well as, depending on the particular limitation, the Companys five most
highly-compensated employees, the Companys five next most highly-compensated employees after the
NEOs and the Companys twenty next most highly-compensated employees after the NEOs. Throughout
this proxy statement, we refer to EESA to mean EESA as amended by ARRA and as implemented by the
June 2009 IFR.
We believe that our compensation programs and agreements with our employees fully comply with
the requirements of EESA. Those requirements are:
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Prohibition on Certain Types of Compensation. EESA prohibits us from providing
incentive compensation arrangements that encourage our NEOs to take unnecessary and
excessive risks that threaten the value of the financial institution. It also prohibits
us from implementing any compensation plan that would encourage manipulation of the
reported earnings in order to enhance the compensation of any of its employees. |
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Risk Review. EESA requires the Committee to meet with our senior risk officers at
least semiannually to discuss and evaluate employee compensation plans in light of an
assessment of any risk to us posed by such plans. The review is intended to better
inform the Committee of the risks posed by the plans and ways to limit such risks. The
Committee has performed this review, and its conclusions are included in its report
which appears at the end of this CD&A. Specifically, the Committees report includes
its certifications that the plans do not encourage our NEOs to take unnecessary and
excessive risks that threaten the value of our Company, and that the plans do not
encourage manipulation of the reported earnings in order to enhance the compensation of
any of our employees. |
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Bonus Prohibition. EESA prohibits the payment of any bonus, retention award, or
incentive compensation to our five most highly-compensated employees. The prohibition
includes several limited exceptions, including payments under enforceable agreements
that were in existence as of February 11, 2009 and limited amounts of long-term
restricted stock, discussed below, but prohibits cash incentive payments of the type
the Company has previously paid to the Companys NEOs and other executive officers
based on annual performance. We have performed an extensive review of our compensation
arrangements and have complied with all requirements of EESA for 2009. |
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Limited Amount of Long Term Restricted Stock Excluded from Bonus Prohibition. EESA
permits us to pay a limited amount of long-term restricted stock to our five most
highly-compensated employees without such compensation qualifying as a prohibited
bonus, or incentive or retention award. The amount is limited to one-third of the total
annual compensation of the employee. EESA requires such stock to have a minimum 2-year
vesting requirement, and to not be transferable by the employee until the Company has
repaid specified percentages of its obligations under the CPP. |
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Golden Parachutes. EESA prohibits any severance payment to any NEO or any of the
next five most highly-compensated employees upon termination of employment for any
reason as well as any change in control payment. EESA provides an exception for amounts
paid for services performed or benefits accrued. Under EESA, a payment, or a right to
payment, generally will be treated as a payment for
services performed or benefits accrued only if the payment would be made regardless of
whether the employee departs or the change in control event occurs, or if payment is due
upon departure of the employee, regardless of whether the departure is voluntary or
involuntary. EESA also provides exceptions for certain payments made under benefits
plans or deferred compensation plans. |
14
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Clawback. EESA requires us to recover any bonus or other incentive payment paid to
any of our NEOs or the next twenty most highly-compensated employees on the basis of
materially inaccurate financial statements or any other materially inaccurate
performance metric or criteria. Prior to ESSA, we already had a similar policy in
place, but strengthened it to conform to the details of EESA. |
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Limit on Tax Deduction. When we entered into the agreement with the Treasury on
December 23, 2008, we contractually agreed to abide by a provision of EESA and the
Treasurys regulations which limits our tax deduction for compensation paid to $500,000
annually and eliminates the exclusion from this $500,000 limit for performance-based
compensation. This provision amended the Internal Revenue Code by adding a new Section
162(m)(5), which imposes a $500,000 deduction limit. |
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Shareholder Say-on-Pay Vote Required. EESA requires us to include a non-binding
shareholder vote to approve the compensation of executives as disclosed in the
Companys proxy statement. We have included a say-on-pay proposal as Proposal 2 in
this Proxy Statement. |
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Policy on Luxury Expenditures. EESA required us to implement a company-wide policy
regarding excessive or luxury expenditures, including excessive expenditures on
entertainment or events, office and facility renovations, aviation or other
transportation services. Our Board of Directors adopted this policy effective June 18,
2009. |
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Reporting and Certification. EESA requires our CEO and CFO to provide a written
certification of compliance with the executive compensation restrictions in EESA in our
annual report. EESA also requires certain disclosures and certifications by the
Committee, which it makes in its report which is provided at the end of this CD&A. |
Other Regulation
On October 22, 2009, the Federal Reserve issued proposed guidance on incentive compensation.
The guidance includes three principles:
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Incentive compensation arrangements should balance risk and financial results
in a manner that does not provide employees incentives to take excessive risks on
behalf of the banking organization. |
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A banking organizations risk-management processes and internal controls should
reinforce and support the development and maintenance of balanced incentive
compensation arrangements. |
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Banking organizations should have strong and effective corporate governance to
help ensure sound compensation practices. |
The guidance was immediately effective under the Federal Reserves power to regulate the
safety and soundness of financial institutions. The Federal Reserve will apply the guidance to all
U.S. financial institutions. We expect to better understand how this guidance will affect us in the
coming months.
Decisions Regarding Composition of Total Compensation
Total direct compensation for each NEO is a mix of cash and long-term incentives.
Historically, total cash compensation included salary and an annual cash incentive award. However,
EESA prohibits the Company from paying an annual cash incentive to our top five most
highly-compensated employees. Our implementation of EESA requirements while maintaining a
competitive balance has resulted in guaranteed pay constituting a larger percentage of total
compensation. Historically, long-term incentives included restricted stock, stock options and stock
appreciation rights. However, EESA prohibits stock options and stock appreciation rights and limits
the amount of restricted stock that the Company may issue to the Companys top five most
highly-compensated employees to one-third of total compensation. Salary is the only portion of
compensation that is not at risk. Historically, we attempted to provide a portion of total direct
compensation paid to our NEOs as non-cash and to tie total direct compensation to our performance.
We did this so that shareholder returns, along with corporate, business unit and individual
performance, both short and long-term, impact executive pay. The Committee has historically used
long-term restricted stock, stock options and stock appreciation rights to motivate executives to
align the
executives interests with shareholders interests and to focus on the long-term performance
of the business. This element of compensation is limited during the TARP Period for the Companys
five most highly-compensated employees as described above by the prohibitions under EESA. The
Companys emphasis on compensation elements other than salary has historically subjected its
executives to downside risk related to the Companys performance, and this has significantly
affected (both positively and negatively depending on the Companys performance) their overall
compensation.
15
Effect of EESA on Components of Executive Compensation
EESA affects the relative proportion of different types of compensation that we may pay to the
NEOs and our other executive officers. The proportion of salary to total direct compensation will
increase as a result of the elimination of the annual cash incentive and the limits on the amount
of restricted stock that may be granted. The impact of EESA for our five most highly-compensated
employees is summarized below:
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Compensation Element |
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Prior to EESA |
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After EESA |
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Salary
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Cash only
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Cash
Salary in the form
of long-term
restricted stock |
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Annual Incentive
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Cash
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Not allowed |
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Long-term Incentive
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Stock options
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Not allowed |
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Stock appreciation rights
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Not allowed |
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Restricted stock
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Restricted stock
limited to one-third
of total
compensation and
subject to vesting
and transferability
limitations |
Corporate and Individual Performance Measures
For our NEOs, we tie compensation to corporate performance, peer group comparisons and
individual performance. The Committee considers individual performance, long-term potential, and
the other individual factors when determining the size of long-term incentive compensation grants.
Among the elements of individual performance considered by the Committee are leadership, talent
management, risk management, and individual contributions to our improvement in financial
performance, including growing the business, efficiency and productivity.
Market Competitiveness
To ensure that we continue to offer competitive total compensation to our NEOs, annually the
Committee reviews the marketplace in which we compete directly for executive talent utilizing a
select group of historically high performing banks. From this review, we generally target total
compensationsalary, short-term incentives, long-term incentives, and benefitsat peer median,
with minor deviations to reflect individual circumstances. Each such element of total compensation
is benchmarked separately, as is total compensation. As a result of the turmoil in the financial
services industry, and the compensation limitations applicable to financial institutions
participating in the CPP, it has become difficult to obtain timely and meaningful peer information,
although we have increased our efforts to obtain such information through regular discussions with
our compensation consultants.
The Committee chose these companies based on generally similar attributes of size, number of
employees, product offerings, and geographic scope. In setting 2009 compensation, our peer group
remained unchanged and consisted of the following companies: Capital City Bank Group, Inc, First
Bancorp, Pinnacle Financial Partners, Inc, Renasant Corporation and SCBT Financial Corporation.
We believe that our market review assists us in making executive compensation decisions that
are consistent with our objectives, especially those of attracting, retaining and motivating our
executive officers. Also, because the current marketplace is the most relevant, when making annual
executive compensation decisions, the Committee does not take into account an individuals
accumulated value from past compensation grants.
16
Executive Compensation Program Overview
Our executive compensation program has historically consisted of four parts:
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Short-Term (Annual) Cash Incentives. |
1. Salary
We pay salaries to attract and retain talented executives. The level of salaries we pay
depends mostly on each executives experience, duties, and scope of responsibility. We target the
level of salary at peer median to be competitive. Salary affects the level of benefits, such as the
amount of pension benefits and the potential payment under our change in control agreements,
discussed below. Salary also affects the amount of restricted stock that we may award to our top
five most highly-compensated employees under EESA limitations.
The Committee has historically determined annual increases to NEOs base salaries in January or
February after reviewing the Companys performance for the prior fiscal year and after considering
an individuals performance and/or changed responsibilities. For 2009, the Committee eliminated
base salary increases for all of our NEOs. The decision to eliminate base salary increases was
based on the Companys poor financial results for the 2008 and 2009 performance period.
2. Short-Term (Annual) Incentives
The Company has utilized short-term annual cash incentive payments historically to reward the
achievement of annual performance goals, including Return on Assets, Return on Equity, Earnings Per
Share and Stock Price performance. The short-term annual incentives were designed to:
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Support our strategic business objectives. |
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Promote the attainment of specific financial goals. |
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Reward achievement of specific performance objectives. |
EESA prohibited us from paying short-term cash incentives to our five-most highly-compensated
employees during the TARP Period, and accordingly the Company did not adopt an annual cash
incentive plan for the NEOs in 2009.
3. Long-Term Incentives
We attempt to reward effective long-term management decision-making through our long-term
incentives. These incentives focus attention on long-range objectives and future returns to
shareholders.
In 2009, we made grants of restricted stock at our February 22, 2009 Committee meeting to
certain of our executive officers that were not our NEOs. In 2009, we did not award any equity
awards to its NEOs. Historically, the February meeting is when the grant decisions have been made
each year. EESA will continue to limit the form and amount of restricted stock we can pay to our
five most highly-compensated employees in 2010.
We have historically utilized a combination of time-based vesting restricted stock and stock
options to incentivize our NEOs to achieve long-term success. Restricted stock, like stock options,
aligns compensation with shareholder return since the executive receives a benefit to the extent
the Companys stock price appreciates. Unlike stock options though, restricted stock always has
value unless our stock price falls to zero. Restricted stock does provide less leverage to
corporate performance than stock options, which is an advantage in terms of risk, and may limit an
executives incentive to engage in unnecessary or excessively risky behavior.
17
EESA permits long-term restricted stock, but only to the extent the value of the stock does
not exceed one-third of the total amount of annual compensation of the employee receiving the
stock. To comply with EESA, such grants must also have a minimum service requirement of at least
two years and may not be transferable until after we repay specified percentages of our CPP-related
obligations.
For 2010, the Committee has not made any long-term incentive awards to the NEOs or our other
executive officers
4. Benefits
A. 401(k) Plan and 401(k) Excess Plan Contributions
We offer a qualified 401(k) Plan and a nonqualified 401(k) Deferred Compensation Plan to
provide tax-advantaged savings vehicles. We have historically made contributions to the 401(k) Plan
to encourage employees to save money for their retirement. These plans enhance the range of
benefits we offer to executives and enhance our ability to attract and retain employees.
Under the terms of the Green Bankshares, Inc. 401(k) Profit Sharing Plan, employees may defer
from 1% to 20% of their eligible pay. Historically the Company participated in the Safe Harbor
Rule which guaranteed a 3% of eligible compensation contribution. Additionally, the Company would
also historically provide a discretionary 3% contribution. All contributions are deposited into
investment funds, including company stock, based on Plan participants directions.
In July 2009, the Company contributions were suspended due to poor Company performance.
B. Perquisites and Other Benefits
We eliminated company sponsored country club memberships during 2009.
C. Post-Termination Compensation
Retirement Plans. We maintain both qualified and nonqualified retirement plans that we have
designed to work together to provide retirement pay to certain of our senior executives. We pay the
entire administrative costs for the 401(k) Plan and the Deferred Compensation Plan, each of which
encourage participants to set aside part of their current earnings to provide for their retirement.
All of the nonqualified deferred compensation plans are considered our unfunded general
contractual obligations and are subject to the claims of our creditors. If we were ever to become
insolvent, participants would be considered our general unsecured creditors. This status with
respect to these benefits should help ensure that the interests of the officer-participants are
aligned with our long-term interests of those of our shareholders.
Employment Agreements/Change in Control Agreements. We had previously entered into Employment
Agreements, which include a change in control provision, with both the Chief Executive Officer and
the President and Chief Operating Officer. The agreements were initially for a three year period
with an annual automatic renewal unless either party notifies the other of a termination at least
90 days prior to the end of the then current term. These Employment Agreements include provisions
which provide for payment to the executive if his employment is terminated either without cause by
the Company, or with good reason by the executive. The amount of the payment is determined by
whether we or the executive terminates the agreement and whether the termination occurs before or
after a change in control. As discussed below, the Employment Agreements are subject to regulations
under the EESA provisions which prohibit golden parachute payments that eliminate these
termination payment obligations during the TARP Period.
18
Additionally, the Company had entered into Change in Control Agreements with selected members
of senior management, including each of the NEOs other than the Chief Executive Officer and
President and Chief Operating Officer. The Change in Control Agreements were entered into as a
function of the consolidation occurring in the financial services industry and to avoid having our
executives distracted by a rumored, or actual, change in control. If a change in control were to
occur, we want our executives to be focused on the business and the interests of the shareholders.
We believe that it is important that our executives react neutrally to a potential change in
control and not be influenced by personal financial concerns. The Board believes that our Change in
Control Agreements
and the change in control provisions of the Employment Agreements described above are
consistent with market practices and assist us in retaining our executive talent. The level of
benefits have been set at either 1.99 times or 2.99 times the participating executives base amount
within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the Code),
and would be payable in a lump sum six months following the executive officers termination without
cause or for a good reason if the executive is terminated within eighteen months of a change in
control. We believe this structure is common and necessary to remain competitive within the banking
industry as a whole and, more specifically, with our peer group. In establishing the multiples of
base salary and bonus that a terminated NEO would be entitled to receive following his or her
termination after a change in control, the Committee considered the need to be able to
competitively recruit and retain talented executive officers who often times seek protection
against the possibility that they might be terminated without cause or be forced to resign without
cause, particularly following a change of control. When establishing the multiples, the Committee
also sought to provide benefits at a level that it believed would provide appropriate compensation
for the NEO in the event of consummating a transaction that, although possibly detrimental to the
individuals employment prospects with the resulting company, would be beneficial to the Companys
shareholders.
The Committee believes that the protections afforded in Employment Agreements and Change in
Control Agreements are reasonable and are an important element in retaining the Companys NEOs and
certain other members of senior management.
In connection with the Companys sale of preferred stock to the Treasury in connection with
the CPP, each of our NEOs executed letter agreements with the Company in 2008 in which each officer
agreed that (i) the Company is prohibited from paying any golden parachute payment (as originally
defined in Section 111(b)(2)(c) of the EESA) to the officer during any period that the executive is
a senior executive officer of the Company and the Treasury holds any equity or debt securities of
the Company issued in the CPP; (ii) any bonus or incentive compensation paid to the named executive
officer during any period that the officer is a senior executive officer of the Company and the
Treasury holds any equity or debt securities of the Company issued in the CPP is subject to
recovery or clawback by the Company if the payments were based on materially inaccurate financial
statements or performance metric criteria; and (iii) each of the Companys benefit plans were
amended with respect to the named executive officer to the extent necessary to give effect to the
limitations described above in this paragraph. As described above, the ARRA and the June 2009 IFR
imposed additional restrictions and limits concerning executive compensation of companies that
participated in the CPP, including a provision prohibiting any payment to any named executive
officer for departure from a company for any reason, except for payments for services performed or
benefits accrued. In December 2009, the Committee requested, and subsequently received, additional
letter agreements from each of the NEOs acknowledging the additional limitations on the
individuals compensation imposed under EESA, as modified by the ARRA and the June 2009 IFR during
the TARP Period. Regulations or guidance by the Treasury with respect to future additional
restrictions may require the Company to seek additional modifications to the agreements that it has
entered into with its NEOs and certain other highly-compensated employees.
Both the Chief Executive Officer and the President and Chief Operating Officer have entered
into Non-competition Agreements with the Company. In consideration for entering into these
agreements, the Company has provided certain deferred compensation benefits which have been funded
by individual insurance policies. The benefits payable to both individuals range from 7 to 10 years
based upon certain events occurring such as age, retirement, disability or death and are described
in more detail below. If either of these individuals are terminated for cause, then the Company
will be released from its obligation.
19
Share Ownership and Share Retention Guidelines. Although our directors and executive officers
already have a significant equity stake in our company (as reflected in the beneficial ownership
information contained in this Proxy Statement), we have adopted a share ownership and retention
policy for directors and for senior management to formalize these important principles of share
ownership and share retention. We require our NEOs to own Company common stock worth at least 1.5
times their 2006 annual cash salary in order to be eligible to participate in the long-term
incentive program in 2010 and beyond. We allow these officers five years to meet this ownership
requirement, measured from the later of the date we adopted this policy in February 2006 or the
date they became subject to the policy. We count unvested restricted stock and our common stock or
its equivalent held in the 401(k) Plan and shares held in nonqualified plans in determining
compliance with these guidelines.
We require non-employee members of our Board to accumulate and own a multiple of four times
their average annual base retainer fee, determined over the four previous years base retainer fees
received, in our common stock. New Directors are required to receive their annual retainer fee in
equivalent shares of Company stock until they fulfill the ownership requirements. We count
restricted stock towards this requirement. We allow members of the Board five years in which to
meet this requirement, measured from the later of the date we adopted this policy or from their
election to the Board.
Compensation For New Chief Executive Officer
In connection with Mr. Rownds appointment as the Companys and the Banks Chief Executive
Officer, the Company entered into an offer letter (the Offer Letter) with Mr. Rownd on March 15,
2010. Pursuant to the Offer Letter, based upon the advice and counsel of the Compensation
Committees independent compensation consultant, Pear Meyers, Mr. Rownd will be entitled to an
initial annual base salary of $400,000. In addition, on his first day of employment, Mr. Rownd will
be granted restricted stock in an amount equal to $200,000 of the Companys common stock on the
date of grant, subject to the restrictions and limitations of the EESA, as amended by the ARRA and
as implemented by the June 2009 IFR. In accordance with the restrictions under the EESA, including
the June 2009 IFR, the restricted stock grant will have a minimum service requirement of at least
two years and will not be transferable until after the Company repays specified percentages of its
obligations to the Treasury under the CPP. In addition, Mr. Rownd will be eligible to participate,
subject to limitations and restrictions in the EESA and the June 2009 IFR, in the Companys health
insurance, 401(k) retirement plan and other broad-based benefit programs.
The Offer Letter also provides that Mr. Rownd will be entitled to a relocation package, which
the Board has approved to consist of customary closing costs on the sale of his existing house and
the purchase of a new house, realtor commission, moving expenses not to exceed $25,000, temporary
housing expenses for a period not to exceed six months and not to exceed $1,500 per month and
periodic travel expense not to exceed $3,500.
Tax Considerations
We consider the tax treatment of various forms of compensation and the potential for excise
taxes to be imposed on our NEOs which might have the effect of frustrating the purpose of such
compensation. We consider several provisions of the Internal Revenue Code.
Section 162(m). Prior to amendments enacted by EESA, Section 162(m) provided that we may not
deduct for federal income tax purposes compensation expense we incur in excess of $1 million for
any year for our CEO, CFO and the three other highest paid executive officers at the end of such
year. Although this limitation was previously in effect, it did not apply to any of our covered
employees due to their compensation levels.
Effect of EESA on Section 162(m). Beginning in 2008, as a result of our participation in the
CPP, we became subject to certain executive compensation requirements under EESA. Among those was
our agreement to not deduct for federal income tax purposes compensation paid to any NEO in excess
of $500,000. In addition, we are prohibited from deducting certain performance based compensation
we pay under shareholder approved plans. Due to existing compensation levels, this change is not
expected to have an impact on the Company in 2010.
Section 409A. Section 409A generally governs the form and timing of nonqualified deferred
compensation payments. Section 409A imposes sanctions on participants in nonqualified deferred
compensation plans that fail to comply with Section 409A rules, including accelerated income
inclusion, an additional 20% income tax (in addition
to ordinary income tax) and an interest penalty. We had previously amended our nonqualified
deferred compensation plans to comply with Section 409A or to qualify for an exemption from Section
409A.
20
Compensation Committee Report
Compensation Discussion and Analysis
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis
included in this Proxy Statement with management. Based on such review and discussion, the
Compensation Committee recommended to the Board of Directors that the Compensation Discussion and
Analysis be included in this Proxy Statement for filing with the Securities and Exchange
Commission.
Risk Review
The Committee has also reviewed the Companys review of the risks implicated by both the
incentive plans in which our NEOs, who we sometimes refer to as our senior executive offices or
SEOs participate, and all other compensation plans, including those in which SEOs do not
participate.
2009 Incentive Compensation Pay For Performance Review
On June 15, 2009, the Treasury published the June 2009 IFR that applies additional risk review
requirements to companies that participated in the CPP and which have outstanding obligations to
the Treasury under the CPP. In recognition of those requirements, the Company commenced a broad
review of its incentive plans. This review analyzed each plan on two dimensionscompensation risk
and business risk.
2009 Risk Review
Building on the 2009 review, the Committee met with the chief risk officers and discussed and
reviewed all of the Companys compensation plans. No changes had been made to the plans previously
reviewed.
Most revenue generating employees participate in a functional incentive plan. We use these
plans to link employee compensation to the successful achievement of their business objectives. We
try to structure these plans to drive behaviors that directly affect revenue or productivity.
While our plans have many common features and plan terms, they generally fall into one of two
categories: commission plans or incentive plans. Commission plans pay based on production less a
monthly draw. Incentive plans pay based on formulas tied to new sales and revenue growth above a
threshold with appropriate risk measures designed to include asset quality characteristics.
During 2009, the Committee reviewed each of our incentive plans including: 1) The
Executive/Senior Management Bonus Plan which was suspended in 2009 due to poor financial
performance; 2) The Commercial/Retail Relationship Officer Bonus Plan which was suspended in 2009
due to poor financial performance; 3) The Teller Incentive Plan which is based upon new deposit
account openings and does not pose a material risk to the Company; 4) The Branch Manager Incentive
Plan which is based upon overall branch performance and does not pose a material risk to the
Company and 5) The GreenWealth Compensation Plan which is primarily a commissioned based plan for
the sale of annuity products through a third party and was deemed not to pose a material risk.
The review of our functional incentive plans, through a risk lens, was intense during the last
half of 2009 and will continue into 2010. We have made good progress in strengthening the balance
between safety and soundness of the Company, risk management, and incentive compensation. We will
continue to approach our work by applying the following principles:
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Balance incentive compensation arrangements with our financial results. We will
review our incentive plans regularly to ensure that they do not provide incentives to
take excessive and unnecessary risks. |
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Use risk-management processes and internal controls to reinforce and support
the development and maintenance of our incentive compensation arrangements. |
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Reinforce our compensation practices with strong corporate governance. |
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Use performance measures that include or adjust for risk. |
21
Future Reviews
On an ongoing basis, at least every six months, and for so long as we have any obligations
outstanding to the Treasury under CPP, the Committee will discuss, evaluate, and review with the
chief risk officer(s) the employee compensation plans in light of the risks posed to the Company by
such plans and how to limit such risks, specifically to ensure that:
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the senior executive officer compensation plans do not encourage employees to
take unnecessary and excessive risks that threaten the value of the Company, |
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the employee compensation plans do not encourage the manipulation of the
Companys reported earnings to enhance the compensation of any of the Companys
employees, and |
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to identify and eliminate the features in these plans that could encourage the
manipulation of reported earnings of the Company to enhance the compensation of any
employee. |
The Committee will discuss, evaluate and review with the chief risk officers features in the
Companys senior executive officers compensation plans that could lead senior executive officers to
take unnecessary and excessive risks and the features in the employee compensation plans that pose
risks to the Company, including any features in the senior executive officer compensation plans and
the employee compensation plans that would encourage behavior focused on short-term results and not
on long-term value creation. The Committee is required to limit these features to ensure that the
senior executive officers are not encouraged to take risks that are unnecessary or excessive and
that the Company is not unnecessarily exposed to risks.
Conclusions of 2009 Risk Review
As a result of the work performed, based upon the Committees review, the Committee is able to
certify that:
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1. |
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The Committee has discussed, evaluated and reviewed with the chief risk
officers the senior executive officer compensation plans to ensure that these plans do
not encourage senior executive officers to take unnecessary and excessive risks that
threaten the value of the Company; |
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2. |
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The Committee has discussed, evaluated and reviewed with the chief risk
officers the employee compensation plans in light of the risks posed to the Company by
these plans and how to limit such risks; and |
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3. |
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The Committee has discussed, evaluated and reviewed the employee compensation
plans to ensure that these plans do not encourage the manipulation of reported earnings
of the Company to enhance the compensation of any employee. |
Submitted by the Compensation Committee of the Board of Directors.
John Tolsma, Chairman
Martha Bachman
Bruce Campbell
W.T. Daniels
Charles Whitfield, Jr.
22
2009 SUMMARY COMPENSATION TABLE
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Change in |
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Pension Value |
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and |
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Non-Equity |
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Nonqualified |
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|
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Stock |
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|
Option |
|
|
Incentive Plan |
|
|
Deferred |
|
|
All Other |
|
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|
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Name and |
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|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Compensation |
|
|
Compensation |
|
|
Total |
|
Principal Position |
|
Year |
|
|
($) |
|
|
($) |
|
|
(1)($) |
|
|
(2)($) |
|
|
($) |
|
|
Earnings (4)($) |
|
|
(5)($) |
|
|
($) |
|
|
|
|
|
|
R. Stan Puckett |
|
|
2009 |
|
|
$ |
325,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
133,933 |
|
|
$ |
458,933 |
|
Chairman of the Board |
|
|
2008 |
|
|
|
325,000 |
|
|
|
|
|
|
|
42,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
139,749 |
|
|
|
507,325 |
|
and Chief Executive |
|
|
2007 |
|
|
|
278,250 |
|
|
|
|
|
|
|
|
|
|
|
102,303 |
|
|
|
134,048 |
(3) |
|
|
2,195 |
|
|
|
131,573 |
|
|
|
648,369 |
|
Officer of the Company
and the
Bank (CEO) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth R. Vaught |
|
|
2009 |
|
|
$ |
267,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
106,439 |
|
|
$ |
373,439 |
|
Director, President and |
|
|
2008 |
|
|
|
267,000 |
|
|
|
|
|
|
|
42,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,792 |
|
|
|
416,368 |
|
Chief Operating Officer |
|
|
2007 |
|
|
|
237,000 |
|
|
|
|
|
|
|
|
|
|
|
113,670 |
|
|
|
112,106 |
(3) |
|
|
513 |
|
|
|
98,170 |
|
|
|
561,459 |
|
of the Company and the
Bank (COO) |
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Adams |
|
|
2009 |
|
|
$ |
228,000 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
15,618 |
|
|
$ |
243,618 |
|
Executive Vice President, |
|
|
2008 |
|
|
|
228,000 |
|
|
|
|
|
|
|
40,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,079 |
|
|
|
293,087 |
|
Chief Financial Officer |
|
|
2007 |
|
|
|
200,000 |
|
|
|
|
|
|
|
|
|
|
|
36,033 |
|
|
|
72,000 |
(3) |
|
|
|
|
|
|
23,835 |
|
|
|
331,868 |
|
and Secretary of the
Company and the Bank
(CFO) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve L. Droke |
|
|
2009 |
|
|
$ |
188,043 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
6,942 |
|
|
$ |
194,985 |
|
Senior Vice President |
|
|
2008 |
|
|
|
183,325 |
|
|
|
|
|
|
|
32,154 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,329 |
|
|
|
233,808 |
|
and Chief Credit Officer |
|
|
2007 |
|
|
|
160,813 |
|
|
|
|
|
|
|
|
|
|
|
30,352 |
|
|
|
36,400 |
(3) |
|
|
|
|
|
|
17,094 |
|
|
|
244,659 |
|
of the Bank (CCO) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Adams, Jr. |
|
|
2009 |
|
|
$ |
172,682 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
5,650 |
|
|
$ |
178,332 |
|
Senior Vice President |
|
|
2008 |
|
|
|
172,682 |
|
|
|
|
|
|
|
30,288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,135 |
|
|
|
216,105 |
|
and Chief Information |
|
|
2007 |
|
|
|
151,475 |
|
|
|
|
|
|
|
|
|
|
|
28,586 |
|
|
|
36,450 |
(3) |
|
|
|
|
|
|
11,900 |
|
|
|
228,411 |
|
Officer of the Bank (CIO) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
(1) |
|
The value of these awards is determined by multiplying the number of restricted shares
granted by the stocks closing price on the grant date. These restricted shares were issued
in the first quarter of 2008 based upon 2007 performance. |
|
(2) |
|
The assumptions used in valuing these options awards are detailed in Note 13 Stock-Based
Compensation to the Companys consolidated financial statements included in the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed with the
Securities and Exchange Commission on February 25, 2010. These valuations were calculated
with respect to the grant date fair value of these awards under Accounting Standards
Codification (ASC) 718. |
|
(3) |
|
Payment for 2007 performance paid in January 2008. |
|
(4) |
|
The amount in the column captioned Change in Pension Value and Nonqualified Deferred
Compensation Earnings is the deemed above-market interest earned on deferred compensation
based upon 120% of the Long Term Annual Applicable Federal Rate (AFR) published by the
Internal Revenue Service in May 2006 (6.02%). The Companys interest rate for 2009 was 4.00%,
0.00% in 2008 and 6.72% in 2007. Please see Note 9 Benefit Plans to the Companys
consolidated financial statements included in the Companys Annual Report on Form 10-K for the
fiscal year ended December 31, 2009, filed with the Securities and Exchange Commission on
February 25, 2010. No earnings were credited for the year ending December 31, 2008 because
the Company had a negative Return on Shareholders Equity for 2008. |
23
|
|
|
(5) |
|
The amounts shown as All Other Compensation for 2009, 2008 and 2007 include the following: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued under |
|
|
|
|
|
|
|
|
|
|
Health and Life |
|
|
|
|
|
|
Directors Fees |
|
|
Non-Compete |
|
|
Company 401(k) |
|
|
Company Car |
|
|
Insurance Paid |
|
|
Country Club |
|
Name |
|
Paid or Earned |
|
|
Agreement |
|
|
Contribution |
|
|
Allowance |
|
|
by the Company |
|
|
Dues |
|
2009
|
R. Stan Puckett |
|
$ |
19,800 |
|
|
$ |
101,301 |
|
|
$ |
4,288 |
|
|
$ |
|
|
|
$ |
2,905 |
|
|
$ |
5,639 |
|
Kenneth R. Vaught |
|
|
19,800 |
|
|
|
78,824 |
|
|
|
4,288 |
|
|
|
|
|
|
|
1,455 |
|
|
|
2,072 |
|
James E. Adams |
|
|
|
|
|
|
|
|
|
|
3,990 |
|
|
|
9,000 |
|
|
|
|
|
|
|
2,628 |
|
Steve L. Droke |
|
|
|
|
|
|
|
|
|
|
3,291 |
|
|
|
|
|
|
|
1,023 |
|
|
|
2,628 |
|
William C. Adams |
|
|
|
|
|
|
|
|
|
|
3,022 |
|
|
|
|
|
|
|
|
|
|
|
2,628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
R. Stan Puckett |
|
|
20,400 |
|
|
|
94,942 |
|
|
|
13,800 |
|
|
|
|
|
|
|
2,942 |
|
|
|
7,665 |
|
Kenneth R. Vaught |
|
|
20,400 |
|
|
|
68,609 |
|
|
|
13,800 |
|
|
|
|
|
|
|
1,455 |
|
|
|
2,528 |
|
James E. Adams |
|
|
|
|
|
|
|
|
|
|
13,680 |
|
|
|
8,625 |
|
|
|
|
|
|
|
2,774 |
|
Steve L. Droke |
|
|
|
|
|
|
|
|
|
|
10,100 |
|
|
|
|
|
|
|
5,455 |
|
|
|
2,774 |
|
William C. Adams |
|
|
|
|
|
|
|
|
|
|
10,361 |
|
|
|
|
|
|
|
|
|
|
|
2,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
R. Stan Puckett |
|
|
17,800 |
|
|
|
88,983 |
|
|
|
13,500 |
|
|
|
|
|
|
|
3,216 |
|
|
|
8,074 |
|
Kenneth R. Vaught |
|
|
17,800 |
|
|
|
62,379 |
|
|
|
13,500 |
|
|
|
|
|
|
|
1,525 |
|
|
|
2,966 |
|
James E. Adams |
|
|
|
|
|
|
|
|
|
|
11,593 |
|
|
|
9,375 |
|
|
|
|
|
|
|
2,867 |
|
Steve L. Droke |
|
|
|
|
|
|
|
|
|
|
9,590 |
|
|
|
|
|
|
|
4,637 |
|
|
|
2,867 |
|
William C. Adams |
|
|
|
|
|
|
|
|
|
|
9,033 |
|
|
|
|
|
|
|
|
|
|
|
2,867 |
|
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2009
There were no grants of plan based awards during the fiscal year 2009.
OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR END
The following table sets forth certain information with respect to outstanding equity awards at
December 31, 2009:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Incentive Plan |
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan |
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Market or |
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Payout Value |
|
|
|
Number |
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unearned |
|
|
of Unearned |
|
|
|
of |
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
Market Value |
|
|
Shares, Units |
|
|
Shares, Units |
|
|
|
Securities |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Shares or |
|
|
of Shares or |
|
|
or Other |
|
|
or Other |
|
|
|
Underlying |
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
|
|
|
|
Units of Stock |
|
|
Units of Stock |
|
|
Rights That |
|
|
Rights That |
|
|
|
Unexercised |
|
|
Options(#) |
|
|
Unearned |
|
|
Exercise |
|
|
Option |
|
|
That Have |
|
|
That Have |
|
|
Have Not |
|
|
Have Not |
|
|
|
Options(#) |
|
|
Unexercisable |
|
|
Options |
|
|
Price |
|
|
Expiration |
|
|
Not Vested |
|
|
Not Vested |
|
|
Vested |
|
|
Vested |
|
Name |
|
Exercisable |
|
|
(1) |
|
|
(#) |
|
|
($) |
|
|
Date |
|
|
(#) (4) |
|
|
($) (5) |
|
|
(#) |
|
|
($) |
|
R. Stan Puckett |
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
$ |
13.86 |
|
|
|
12/31/10 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
|
15.09 |
|
|
|
12/31/11 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
|
16.41 |
|
|
|
01/13/13 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
|
19.97 |
|
|
|
01/09/14 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,000 |
|
|
|
|
|
|
|
|
|
|
|
26.89 |
|
|
|
01/25/15 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,400 |
|
|
|
3,600 |
|
|
|
|
|
|
|
28.90 |
|
|
|
02/21/16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600 |
|
|
|
5,400 |
|
|
|
|
|
|
|
34.63 |
|
|
|
03/19/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,600 |
|
|
|
5,400 |
(3) |
|
|
|
|
|
|
34.63 |
|
|
|
03/19/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,057 |
|
|
$ |
7,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,057 |
(6) |
|
|
|
|
|
|
16.56 |
|
|
|
01/14/13 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth R. Vaught |
|
|
1,455 |
|
|
|
|
|
|
|
|
|
|
|
32.00 |
|
|
|
12/31/10 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
23.99 |
|
|
|
12/31/14 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000 |
|
|
|
2,000 |
|
|
|
|
|
|
|
26.89 |
|
|
|
12/31/15 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000 |
|
|
|
4,000 |
|
|
|
|
|
|
|
28.90 |
|
|
|
02/17/16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
6,000 |
|
|
|
|
|
|
|
34.63 |
|
|
|
03/19/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,000 |
|
|
|
6,000 |
(3) |
|
|
|
|
|
|
34.63 |
|
|
|
03/19/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,057 |
|
|
|
7,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,057 |
(6) |
|
|
|
|
|
|
16.56 |
|
|
|
01/14/13 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Adams |
|
|
1,800 |
|
|
|
1,200 |
|
|
|
|
|
|
|
28.90 |
|
|
|
2/21/16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,200 |
|
|
|
1,800 |
|
|
|
|
|
|
|
36.32 |
|
|
|
2/20/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,647 |
|
|
|
5,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,647 |
|
|
|
|
|
|
|
19.44 |
|
|
|
02/27/13 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve L. Droke |
|
|
2,800 |
|
|
|
|
|
|
|
|
|
|
|
32.00 |
|
|
|
12/31/10 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
590 |
|
|
|
|
|
|
|
|
|
|
|
19.00 |
|
|
|
01/10/13 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,947 |
|
|
|
|
|
|
|
|
|
|
|
23.21 |
|
|
|
01/09/14 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,208 |
|
|
|
552 |
|
|
|
|
|
|
|
26.89 |
|
|
|
01/25/15 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,981 |
|
|
|
1,321 |
|
|
|
|
|
|
|
28.90 |
|
|
|
02/21/16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,010 |
|
|
|
1,517 |
|
|
|
|
|
|
|
36.32 |
|
|
|
02/20/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,324 |
|
|
|
4,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,324 |
(6) |
|
|
|
|
|
|
19.44 |
|
|
|
02/27/13 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Adams |
|
|
2,450 |
|
|
|
|
|
|
|
|
|
|
|
32.00 |
|
|
|
12/31/10 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,579 |
|
|
|
|
|
|
|
|
|
|
|
16.00 |
|
|
|
12/31/11 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,579 |
|
|
|
|
|
|
|
|
|
|
|
19.00 |
|
|
|
12/31/13 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,579 |
|
|
|
|
|
|
|
|
|
|
|
23.21 |
|
|
|
01/10/14 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,812 |
|
|
|
453 |
|
|
|
|
|
|
|
26.89 |
|
|
|
01/09/15 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,883 |
|
|
|
1,256 |
|
|
|
|
|
|
|
28.90 |
|
|
|
01/25/16 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
952 |
|
|
|
1,428 |
|
|
|
|
|
|
|
36.32 |
|
|
|
02/21/17 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,247 |
|
|
|
4,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,247 |
(6) |
|
|
|
|
|
|
19.44 |
|
|
|
02/27/13 |
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24
|
|
|
(1) |
|
Options or cash-settled stock appreciation rights become exercisable in five equal annual
installments beginning on the first anniversary of date of grant. |
|
(2) |
|
The expiration date of each option or cash-settled stock appreciation right occurs ten years
after the date of grant for each option. |
|
(3) |
|
Cash-settled stock appreciation rights. These cash-settled stock appreciation rights vest in
tandem with the stock options they were granted with and can only be exercised if the market
price of the Companys stock is greater than the issue price of the stock appreciation right
on the date of exercise of the option. |
|
(4) |
|
These are restricted stock awards that become vested in five equal annual installments
beginning on the first anniversary of the date of grant. |
|
(5) |
|
Market value is determined by multiplying the closing market price of the Companys common
stock on December 31, 2009 by the number of shares. |
|
(6) |
|
Cash-settled stock appreciation rights. The annual vested potion of these cash-settled stock
appreciation rights expire if not exercised with the vesting of the restricted stock awards
they are linked to and expire in five years from grant date. These cash-settled stock
appreciation rights can only be exercised if the market price of the Companys stock is
greater than the issue price of the stock appreciation right on the date of vesting. |
OPTIONS EXERCISED AND STOCK VESTED TABLE FOR FISCAL 2009
The following table sets forth certain information with respect to restricted shares that
vested and the value realized on these shares as of the vesting date for the Named Executive
Officers in fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of Shares |
|
|
Value Realized |
|
|
Number of Shares |
|
|
Value Realized |
|
|
|
Acquired on Exercise |
|
|
on Exercise |
|
|
Acquired on Vesting |
|
|
on Vesting |
|
Name |
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R. Stan Puckett |
|
|
|
|
|
$ |
|
|
|
|
514 |
|
|
$ |
5,243 |
|
Kenneth R. Vaught |
|
|
|
|
|
$ |
|
|
|
|
514 |
|
|
$ |
5,243 |
|
James E. Adams |
|
|
|
|
|
$ |
|
|
|
|
411 |
|
|
$ |
2,939 |
|
Steve L. Droke |
|
|
|
|
|
$ |
|
|
|
|
330 |
|
|
$ |
2,360 |
|
William C. Adams |
|
|
|
|
|
$ |
|
|
|
|
311 |
|
|
$ |
2,224 |
|
|
|
|
(1) |
|
Equals the product of the number of shares vesting and the closing price for the Companys
common stock on the vesting date. |
PENSION BENEFITS
The Company has entered into non-compete agreements with each of Messrs. Puckett and Vaught,
pursuant to which the Company has agreed to provide certain retirement benefits to each of these
officers. Information regarding potential payments pursuant to these agreements is set forth
below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present |
|
|
|
|
|
|
|
|
Number of |
|
|
Value of |
|
|
Payments |
|
|
|
|
|
Years Credited |
|
|
Accumulated |
|
|
During Last |
|
|
|
|
|
Service |
|
|
Benefit |
|
|
Fiscal Year |
|
Name |
|
Plan Name |
|
(#) |
|
|
($) |
|
|
($) |
|
R. Stan Puckett |
|
Non-Compete Agreement |
|
|
6 |
|
|
$ |
520,043 |
|
|
$ |
|
|
Kenneth R. Vaught |
|
Non-Compete Agreement |
|
|
5 |
|
|
|
347,656 |
|
|
|
|
|
Pursuant to Mr. Pucketts non-compete agreement, he has agreed not to, among other things,
during the term of his employment or following termination of his employment until his sixtieth
(60th) birthday, engage in the business of banking in any county of any state in which the Company
has an office or branch at the time of his termination. In consideration for this agreement, the
Company has agreed to pay Mr. Puckett a deferred compensation benefit for a period of seven years
following the termination of his employment, or upon his sixtieth (60th) birthday if Mr. Puckett is
still employed with the Company on such date. If Mr. Puckett dies before age 54 while still
employed by the Company, the benefit will be paid to his beneficiary as if he had retired on his
fifty-fourth (54th) birthday. Mr. Pucketts non-compete agreement also provides for the payment of
benefits for seven years following a change in control of the Company or Mr. Puckett becoming
disabled. The Company accrued $101,301 for the payment of the benefit under this agreement in 2009.
25
Pursuant to Mr. Vaughts non-compete agreement, he has agreed that, in exchange for his
receipt of a deferred compensation benefit, that during the term of his employment or following his
termination by the Company without cause or his voluntary resignation, until his forty-six (46th)
birthday, he would not either directly or indirectly engage in the business of banking, or any
other business in which the Company directly or indirectly
engages during the term of his employment with the Company in any county of any state in which
the Company has an office or branch at the time of his termination.
In consideration of his agreement not to compete, the Company agreed to pay to Mr. Vaught,
upon his reaching age 50, deferred compensation benefits for a period of 10 years following the
termination of his employment or upon his fiftieth (50th) birthday if still employed by the Company
at that date. If Mr. Vaught dies before age 50 while still employed by the Company, the benefits
will be paid to his beneficiary beginning on August 1, 2014. If he dies after his fiftieth (50th)
birthday while still employed by the Company, the benefit payments will commence within ninety days
following his death. The agreement also provides that Mr. Vaught can defer receipt of these
payments until age 60 if he is still employed by the Company at age 50. Mr. Vaughts non-compete
agreement also provides for the payment of benefits for ten years following a change in control.
The Company accrued $78,824 for the payment of the benefit under this agreement in 2009.
26
NONQUALIFIED DEFERRED COMPENSATION TABLE FOR FISCAL 2009
The following table sets forth certain information with respect to deferrals made by the
Companys Named Executive Officers pursuant to the Companys nonqualified deferred compensation
plan described below, the earnings thereon and the aggregate balance at December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
|
Registrant |
|
|
Aggregate |
|
|
Aggregate |
|
|
Aggregate |
|
|
|
Contributions in |
|
|
Contributions in |
|
|
Earnings in |
|
|
Withdrawals/ |
|
|
Balance at |
|
|
|
Last FY(1) |
|
|
Last FY (1) |
|
|
Last FY (1) |
|
|
Distributions |
|
|
Last FYE |
|
Name |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
R. Stan Puckett (2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
13,546 |
|
|
$ |
|
|
|
$ |
347,110 |
|
|
|
|
|
|
Kenneth R. Vaught |
|
|
12,000 |
|
|
|
|
|
|
|
3,911 |
|
|
|
|
|
|
|
108,074 |
|
|
|
|
|
|
James E. Adams |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steve L. Droke |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Adams |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
All amounts reported in the columns titled Executive Contributions in Last FY, Registrant
Contributions in Last FY and Aggregate Earnings in Last FY are also reported as
compensation to such named executive officer in the Summary Compensation Table on page 23. |
|
(2) |
|
Mr. Puckett did not defer any compensation for the year ending December 31, 2009. |
During 2009, 2008 and 2007, the Bank maintained a deferred compensation plan (the Original
Plan) pursuant to which the Chief Executive Officer and the President and Chief Operating Officer
could elect to defer receipt of a portion of their salaries by entering into deferred salary
agreements with the Bank. In addition to the salary deferral, the agreements also provided for
payment of benefits under certain events of disability, early retirement, termination of employment
or death. The Bank is the beneficiary of life insurance acquired with respect to officers
participating in the Original Plan. During 2006, the Company began using a formula which provides
an annual earnings crediting rate based upon 75% of the Companys return on average stockholders
equity on balances in the plan, until the officer is separated from service, and, thereafter at an
earnings crediting rate of 56.25% of the Companys return on average stockholders equity for the
year then ending. For the year ended December 31, 2008, the Companys Return on Average Equity was
(1.64%) and no earnings were credited. During 2009 the Company modified the annual earning
crediting rate formula as follows: The annual crediting rate will be 100% of the annual return on
stockholders equity with a 4% floor and a 12% ceiling, for the year then ended, on balances in the
Plan until the director experiences a separation from services, and, thereafter, at a earnings
crediting rate based on 75% of the Companys return on average stockholders equity for the year
then ending with a 3% floor and a 9% ceiling.
On September 20, 2004, the Company approved a separate deferred compensation plan for
nonemployee directors (the Nonemployee Plan) which, effective July 1, 2004, enabled nonemployee
directors to defer additional board and committee meeting fees, beyond those being deferred under
the Original Plan, into certain investment vehicles, including a deemed investment in the
Companys common stock. Mrs. Bachman and former director Mr. Bachman are currently the only
participants in the Nonemployee Plan. Mrs. Bachman deferred $1,050 of her director fees for 2009
into the Nonemployee Plan and had an increase of value of $10,298 on her account during 2009. On
December 13, 2004, the Company amended and restated the Nonemployee Plan for the principal purpose
of ensuring that it complies with The American Jobs Creation Act of 2004. On December 16, 2005, the
Company approved additional changes to its Nonemployee Plan effective January 1, 2005, which
further facilitate compliance with Section 409A of the Code.
On December 31, 2007, the Company entered into an employment agreement with each of R. Stan
Puckett and Kenneth R. Vaught, the Companys chief executive officer and president, respectively
(the Employment Agreements), which agreements replaced the existing employment agreements with
each of these individuals. Pursuant to the terms of the Employment Agreements, the Company agreed
to employ Mr. Puckett and Mr. Vaught as the chief executive officer and president, respectively, of
the Company for a three-year term ending December 31, 2010. Pursuant to the terms of the
Employment Agreements, each employees term may be extended for additional three-year periods if
the Company or the employee fails to notify the other of an intent to terminate the Employment
Agreement upon not less than 90 days notice prior to the end of the then current term. Under the
terms of the Employment Agreements, Mr. Puckett and Mr. Vaught will be entitled to a beginning base
salary of $278,250 and $237,000, respectively, as well as director fees for service on the
Companys and its subsidiaries boards of directors, life insurance, participation in
Company-sponsored benefit plans, including equity-based plans and cash incentive plans, and other
fringe benefits.
27
The Company may terminate Mr. Pucketts or Mr. Vaughts employment immediately for cause, in
which event the Company shall have no further obligations to pay Mr. Puckett or Mr. Vaught, as the
case may be, for his services, except for any accrued and unpaid salary through the termination
date. The Company may also terminate the employment of Mr. Puckett or Mr. Vaught, as the case may
be, without cause, in which case the Company shall pay to Mr. Puckett or Mr. Vaught, not earlier
than six (6) months following the date of termination, a lump sum payment equal to the sum of one
year of such employees base salary plus an amount that is the average of the employees previous
two years bonus. The Company is prohibited by the terms of EESA, including the June 2009 IFR,
from paying this payment to the executives for as long as the Company has an obligation outstanding
under the CPP to the Treasury. Mr. Puckett or Mr. Vaught may each also terminate his employment
under the Employment Agreements voluntarily on not less than 60 days notice.
Cause is defined in the Employment Agreements to include (i) permanent disability of the
executive; (ii) death of the executive; (iii) material breach of the Employment Agreement by the
executive; (iv) failure of the executive to perform his duties in a manner that the Company
requires; (v) an act of gross negligence by the executive that causes harm to the Company; (vi) the
executives conviction of, or pleading guilty (including a plea of nole contendere) to, a criminal
act which is a felony or which is a misdemeanor involving moral turpitude; (vii) excessive
absenteeism by the executive; and (viii) any misrepresentation or breach of the covenants and
warranties contained in the Employment Agreement by the executive.
Under the terms of the Employment Agreements, if within 18 months following a change in
control the Company or its successor terminates Mr. Puckett or Mr. Vaught, as the case may be,
without cause or Mr. Puckett or Mr. Vaught voluntarily resigns following a change in position, a
reduction in title or a significant reduction in the duties which he is to perform for the Company
or its successor, then the Company or its successor shall pay to Mr. Puckett or Mr. Vaught, as the
case may be, a lump sum payment equal to 2.99 times Mr. Pucketts or Mr. Vaughts annual base
salary and bonus for the year immediately preceding termination. This payment shall be made no
earlier than six months following the date of termination. If payments to Mr. Puckett or Mr.
Vaught following a change in control would create an excise tax for the employee under the excess
parachute rules of Section 4999 of the Code, the Company is required to pay to the employee the
amount of such excise tax and all federal and state income or other taxes with respect to any such
additional amounts (the Gross-Up Amount) and such additional amount as is necessary to offset any
tax liability of the employee as a result of the Gross-Up Amount.
A Change in Control is defined in the Employment Agreements to include a change in the
ownership of the Company, a change in the effective control of the Company or a change in the
ownership of a substantial portion of the assets of the Company as provided under Section 409A of
the Code and any Internal Revenue Service guidance and regulations issued in connection with
Section 409A of the Code.
The Company is prohibited from paying Mr. Puckett or Mr. Vaught his change in control payment
under his employment agreement for so long as the Company has an obligation outstanding under the
CPP to the Treasury.
28
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION PROGRAM
AND PROCEDURES
The Company believes that the compensation for the Named Executive Officers, as described in
the compensation discussion and analysis above, is based on a pay-for-performance culture and is
strongly aligned with the long-term interests of the Companys shareholders. The Company believes
that its culture focuses executives on prudent risk management and appropriately rewards them for
performance.
The Company also believes that both the Company and its shareholders benefit from responsive
corporate governance policies and consistent dialogue.
The Company also believes that the extensive disclosure of compensation information provided
in this proxy statement provides the Companys shareholders the information they need to make an
informed decision as they weigh the pay of the Named Executive Officers in relation to the
Companys performance.
This Say-on-Pay proposal gives you as a shareholder the opportunity to endorse or not
endorse the compensation the Company paid to its Named Executive Officers in 2009 through the
following resolution:
RESOLVED, that the shareholders of Green Bankshares, Inc. approve the compensation of the
named executive officers of Green Bankshares, Inc. set forth in the Summary Compensation Table of
this proxy statement as described in Compensation Discussion and Analysis and the tabular
disclosure regarding named executive officer compensation in this proxy statement for its 2010
Annual Meeting.
Because your vote is advisory, it will not be binding upon the Board. However, the
Compensation Committee will take into account the outcome of the vote when considering future
executive compensation arrangements.
This proposal is provided as required pursuant to Section 111(e)(1) of the EESA based on the
Companys participation in the CPP.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THIS PROPOSAL.
29
PROPOSAL 3 RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
It is anticipated that the Audit Committee of the Companys board of directors will appoint
Dixon Hughes PLLC (Dixon Hughes) as the Companys independent registered public accounting firm
for 2010 at its next upcoming meeting, subject to ratification by the Companys shareholders. The
decision of the Audit Committee will be based on a review of the qualifications, independence, past
performance and quality controls of the independent registered public accounting firm. The decision
will take into account the proposed audit scope, staffing and approach, including coordination of
the independent registered public accounting firms efforts with the Companys outsourced internal
audit function, as well as audit fees for the coming year. Dixon Hughes is considered to be well
qualified.
In view of the difficulty and expense involved in changing auditors on short notice, should
the shareholders not ratify the selection of Dixon Hughes, it is contemplated that the appointment
of Dixon Hughes for the fiscal year ending December 31, 2010, will be permitted to stand unless the
board of directors finds compelling reasons for making a change. Disapproval by the shareholders
will be considered a recommendation that the board select a different independent registered public
accounting firm for the following year. In order for the proposal to ratify the appointment of
Dixon Hughes as the Companys independent registered public accounting firm, the number of shares
voted in favor of the proposal must exceed the number of shares voted against the proposal.
Representatives of Dixon Hughes are expected to be present at the Annual Meeting and will be
given the opportunity to make a statement, if they desire, and to respond to appropriate questions.
During the years ended December 31, 2009 and December 31, 2008, the Company incurred
(including those billed or expected to be billed) the following principal independent auditor fees
from Dixon Hughes:
|
|
|
|
|
|
|
|
|
|
|
2009 |
|
|
2008 |
|
Audit Fees(a) |
|
$ |
328,525 |
|
|
$ |
347,000 |
|
Audit-Related Fees(b) |
|
|
36,550 |
|
|
|
26,600 |
|
Tax Fees(c) |
|
|
31,000 |
|
|
|
29,500 |
|
All Other Fees(d) |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes fees related to the annual independent audit of the Companys consolidated financial
statements and reviews of the Companys annual report on Form 10-K, review of the Companys
interim financial statements, issuance of consents, Federal Deposit Insurance Corporation
Improvement Act (FDICIA) attest services, Sarbanes-Oxley Section 404 attest services, review
of registration statements and quarterly reports on Form 10-Q. |
|
(b) |
|
Fees incurred were for (a) general accounting matters and related consultations and an
employee benefit plan audit. The Audit Committee has considered whether the provision of these
services is compatible with maintaining the independence of Dixon Hughes. |
|
(c) |
|
Fees incurred were for income tax return preparation and compliance services. The Audit
Committee has considered whether the provision of these services is compatible with
maintaining the independence of Dixon Hughes. |
|
(d) |
|
There were no additional fees billed to the Company by Dixon Hughes for 2009 and 2008. |
The Audit Committee has adopted a formal policy concerning approval of audit and non-audit
services to be provided by the Companys independent auditor. The policy requires that all services
provided by the independent auditor, including audit services and permitted audit-related and
non-audit services, be pre-approved by the Audit Committee. The Audit Committee approved all audit
and non-audit services provided by the Companys independent auditor during 2009.
THE COMPANYS BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED APPOINTMENT OF DIXON HUGHES AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM IS IN THE BEST INTERESTS OF THE COMPANY AND
ITS SHAREHOLDERS, HAS UNANIMOUSLY APPROVED ADOPTION OF THIS PROPOSAL AND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THIS PROPOSAL.
30
PROPOSAL 4 TO CONSIDER AND VOTE UPON THE SHAREHOLDER PROPOSAL REGARDING
MAJORITY ELECTION OF DIRECTORS
Frank Coleman Inman, 600 Cherry Drive, #3, Eugene, Oregon 97401, owning more than $2,000 of
the Companys Common Stock, has informed us that he intends to submit the following shareholder
proposal at the Annual Meeting. The Board of Directors recommends voting AGAINST this proposal if
it is properly presented at the Annual Meeting. Unless otherwise specified, proxies will be voted
AGAINST the proposal if it is properly presented at the Annual Meeting.
Stockholder Proposal Regarding Majority Election of Directors
Resolved: The shareholders request that our Board establish a rule (firmly specified in our
charter or bylaws if feasible) that our director nominees must each receive support from at least
fifty percent of share votes cast to obtain a seat on our board of directors. Shareholders will be
provided in the proxy materials with the director nominee names, SEC-required declarations,
biographical sketches, and photographs.
Stockholders Statement Supporting Item
In typical corporate board elections, stockholders have only one director nominee option for
each open board position. Any shareholder(s) can withhold votes for any or all nominees, but
lacking the need for a majority of share votes cast, the election results remain preordained.
In most years (because of our typically uncontested elections), only one stockholder need
vote only one share for a board nominated director to ensure that directors election. This is
clearly sub-optimal, and raises accountability and control issues for many shareholders. We can do
better!
Director priorities other than maximizing shareholder wealth have often contributed to
corporations underperforming. While the merger with Civitas in May 2007 gained GreenBank a
footprint in a prestigious area, how many pre-merger Green Bankshares stockholders would vote in
favor again? Our stock price dramatically fell (more than that of most similar sized banks) from
the time of pre-merger announcement to post-merger wrap-up.
Hopefully, we will be the smaller bank in any future merger, since smaller bank stockholders
are more likely to grow wealthier, i.e. Civitas stockholders.
The Corporate Library credits corporate governance best practices, (which includes majority
voting for directors) with adding an average of 5% to a firms value. Majority voting is
recommended by nearly all corporate governance experts; forms have been successfully implemented
by a large and growing number of corporations, including U.S. Bancorp, Lockheed Martin, Best Buy
Co., and Bank of America.
Last year, the first year on the ballot, this proposal earned 42% support, a strong showing.
Providing positive, practical, and meaningful director elections for stockholders may increase our
Green Bankshares stock price, via more stockholder control of our GreenBank investments and more
interest from large, sophisticated investors who demand best practices. Corporate governance may
improve most via better board elections, and this practical solution makes sense for the vast
majority of Green Bankshares stockholders.
Please vote FOR this pro-stockholder proposal.
31
The Companys Board of Directors Statement OPPOSING this Proposal.
The Board of Directors believes that adherence to sound corporate governance policies and
practices is important to ensuring that the Company is governed and managed with the highest
standards of responsibility, ethics and integrity and in the best interests of its shareholders.
After careful consideration, the Board of Directors has determined that implementing the majority
vote standard advanced in this shareholder proposal would not enhance shareholder value and would
not be in the best interests of the Company and its shareholders. The Board of Directors believes
the plurality vote standard continues to be the best standard for electing directors. Accordingly,
the Board of Directors believes a change in the standard is unnecessary and could in fact lead to
unintended and undesirable consequences. Further, the Board of Directors believes the current
system provides shareholders a meaningful and important role in the election of directors.
Therefore, the Board of Directors recommends a vote against this proposal.
The Companys current director election policies are provided for under its Bylaws and
Charter. The Companys Bylaws provide that directors are elected under a plurality vote standard,
meaning nominees who receive the most affirmative votes will be elected to the Board of Directors.
The plurality voting standard for the election of directors is the predominant voting standard used
by publicly traded companies. It is the default standard under Tennessee law and is known and
understood by shareholders. The plurality voting standard yields a voting result that is certain
and delivers election results in a simple, efficient and transparent manner. The Board of Directors
believes that the plurality standard provides a reliable mechanism for electing an independent
Board of Directors that is committed to delivering long-term shareholder value. Moving to a
majority voting standard particularly now that brokers are not permitted to vote on director
candidates without specific instructions from beneficial owners, could jeopardize the simplicity,
certainty and efficiency of the current plurality system. Combining a majority vote standard with
the loss of broker discretion on director elections could result in the situation where one or more
directors may not receive a majority approval, creating uncertainty in voting results and an
increased likelihood of a failed election.
The Company has a strong corporate governance process designed to identify and propose
director nominees who will best serve the interests of the Company and its shareholders. The Board
of Directors maintains a Nominating/Governance Committee that is composed entirely of independent
directors, and all of the members of the Board of Directors, other than Messrs. Puckett, Vaught,
Rownd and Mayberry (who is retiring from the Board at the Annual Meeting), are independent. In
addition, the Companys Corporate Governance Guidelines require that an independent director serve
as the Boards Lead Director if the Companys Chief Executive Officer is also the Chairman on the
Board. The Nominating/Governance Committee applies a robust set of criteria in identifying
director nominees and has established procedures to consider and evaluate persons recommended by
shareholders under the same criteria as nominees submitted by the Nominating/Governance Committee.
As a result of these practices, the Company has consistently elected, by a plurality, highly
qualified directors from diverse business backgrounds with significant business contacts in the
Companys target market, substantially all of whom have been independent within the standards
adopted by the Nasdaq Stock Market. In fact, the Companys shareholders have a history of electing
directors by a substantial majority of the votes cast.
The Board of Directors believes that the proponents characterization of the plurality voting
process in particular the suggestion that a director may be elected by receiving only a single
affirmative vote is highly theoretical and not supported by historic results. Over the past five
years at each annual meeting, every director nominee has received the affirmative vote of more than
70% of the shares voting at each meeting. Adopting the proposal to depart from the Companys
plurality voting requirement would have had no effect on the outcome of our election process during
this five-year period.
The Board of Directors believes that the proposal also has the disadvantage of not addressing
the unknown and potentially negative consequences of instituting a majority vote system at this
time. It does not address what would occur if no candidate receives the requisite majority vote.
The proposal does not address how or when the Company would fill any vacancy resulting from a
resignation of a director who did not receive the requisite majority vote. Such vacancies could be
disruptive and interfere with the functioning of the Board of Directors. Also, any vacancies could
leave the Company unable to meet Nasdaq Stock Market listing requirements relating to the
independence and financial literacy of directors, or requirements of the Securities and Exchange
Commission (SEC) relating to audit committee financial experts.
32
Even if the proposal were adopted and at a future election enough shareholder votes were
withheld to prevent a director from receiving a majority vote, the Board of Directors believes that
the best interest of the Companys shareholders would not be served. For example, if withheld votes
aggregated just over 50% of the votes cast, a director receiving just under a majority of the votes
cast would not be elected. Similarly, if there were more candidates nominated than the number of
open board seats, the shareholder votes could be spread in such a way that no nominee receives a
majority of the votes cast. In either case, the nominee director preferred by the shareholders
would not be elected and the result is less desirable than the current system of electing directors
by a plurality vote.
Further, because under a majority voting standard the standard for director election is a
majority of the votes cast, a single-issue activist would need to mobilize only a minority of the
Companys shareholders to achieve AGAINST votes from a majority of the votes cast. Consequently,
a minority of the Companys shares outstanding could act to defeat a directors election. The Board
of Directors believes it is unlikely shareholders generally want the consequences of a single-issue
message to be the actual failure to elect a particular director or group of directors, especially
given that the current plurality vote standard allows shareholders to nonetheless register
dissatisfaction by means of a withhold vote for one or more directors. Further, such vote-no
campaigns against the election of one or more of the Board of Directors director nominees could
force the Company to employ a proactive telephone solicitation, a second mailing or other
strategies to obtain the required votes. The result would be increased spending for routine
elections, which is not the best expenditure of the Companys resources.
The Companys current voting and corporate governance structure, under which shareholders may
still express dissatisfaction with the Board of Directors by withholding votes for certain
directors or proposing nominees, allows the Company to maintain a stable Board of Directors while
evaluating an appropriate response to shareholder dissatisfaction. Consideration of all relevant
factors on a case-by-case basis, rather than the uncertainty that would result from the
implementation of a majority voting standard, gives the Board of Directors flexibility and enables
it to avoid undesirable and disruptive governance consequences. The Board of Directors believes
that the proponents concerns must be balanced with the significant benefits associated with
retaining Board of Directors members who have tremendous institutional knowledge of the Companys
operations, its industry and its market areas.
The Companys Board of Directors and the Nominating/Governance Committee have carefully
considered the arguments in favor of and against this shareholder proposal. The Board of Directors
believes that the Companys current standard and policies continue to promote the best interests of
the Companys shareholders and believe that the vote of the shareholders on this same proposal at
the 2009 Annual Meeting of Shareholders, at which shareholders owning only just over 26% of the
total outstanding shares entitled to vote at that meeting voted in favor of the proposal, supports
the directors beliefs that the current standard promotes the best interests of the Companys
shareholders.
FOR ALL THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
33
PROPOSAL 5 TO CONSIDER AND VOTE UPON THE SHAREHOLDER PROPOSAL REGARDING
ANNUAL ELECTION OF EACH DIRECTOR
Andrea Estelle Inman, 600 Cherry Drive, #3, Eugene, Oregon 97401, owning more than $2,000 of
the Companys Common Stock, has informed us that Ms. Inmans husband, on her behalf, intends to
submit the following shareholder proposal at the Annual Meeting. The Board of Directors recommends
voting AGAINST this proposal if it is properly presented at the Annual Meeting. Unless otherwise
specified, proxies will be voted AGAINST the proposal if it is properly presented at the Annual
Meeting.
Stockholder Proposal Regarding Annual Election of Directors
Resolved: The shareholders recommend that all of our director nominees must be elected
annually to obtain a seat on our board of directors; this includes eliminating any charter
specifications or by-laws that may hinder annual elections. Shareholders will be provided in the
proxy materials with the director nominee names, SEC-required declarations, biographical sketches,
and photographs.
Stockholders Statement Supporting Item
Currently, Green Bankshares stockholders only have the opportunity to vote upon roughly 1/3 of
our directors in each annual election, raising accountability and control issues for many
shareholders. In the vast majority of corporate board elections, stockholders have the opportunity
to vote annually regarding all director nominees for the open board positions. Annual elections for
all directors have been the standard in corporate governance for many years.
Arguments for annual elections for all directors are many:
|
1. |
|
All directors receive feedback every year from stockholders, the owners. |
|
|
2. |
|
Directors become more accountable to stockholders, since they are
slightly easier to replace if our bank underperforms. |
|
3. |
|
Since our elections are typically uncontested, election results should remain
the same if our bank performs well. |
|
4. |
|
The likelihood of a larger bank offering the owners of Green Bankshares a high
premium for our stock increases, maximizing shareholder wealth. |
|
5. |
|
Staggered elections are arguably more about director control (avoiding being
profitably taken over) than about maximizing stockholder wealth. |
|
6. |
|
Since an increasing number of sophisticated investors and mutual funds invest
in firms with corporate governance best practices, adopting annual director elections
should help boost stock price. |
Annual elections for all directors may increase our Green Bankshares stock price, via more
stockholder control of our GreenBank investments. The Corporate Library credits corporate
governance best practices (which includes annual elections for all directors) with adding an
average of 5% to a firms value,
Last year, the first year on the ballot, this proposal earned 43% support, a strong showing.
Corporate governance may improve most via better board elections, and this standard practical
solution makes sense. for nearly all Green Bankshares stockholders.
Please vote in favor of this positive stockholder proposal.
34
The Companys Board of Directors Statement OPPOSING This Proposal
The Nominating/Governance Committee of the Companys Board of Directors, which is composed
entirely of independent directors, regularly considers and evaluates a broad range of corporate
governance issues affecting the Company, including whether to maintain the Companys classified
Board structure. For the reasons set forth below and based on the recommendation of the
Nominating/Governance Committee, the Companys Board of Directors has determined that it is in the
best interests of the Company and its shareholders to maintain the Companys current classified
Board structure.
Accountability to Shareholders. The Board of Directors disagrees with the argument advanced
by the proponent that a classified Board of Directors minimizes accountability. Each director is
required to uphold his or her fiduciary duties to the Companys shareholders and the Company.
Company directors are not less accountable to the shareholders or the Company because they are not
re-elected every year. Accountability depends on the selection of responsible and experienced
individuals, not on whether they serve terms of one year or three years. Except for the
recessionary environment in 2008, the Company has had consistently strong short- and long-term
results, demonstrating the commitment of our directors to achieving the Companys goals.
The Companys directors believe that they are no less attentive to shareholder concerns as a
result of having been elected to three-year terms. In addition, since approximately one-third of
directors stand for election each year, shareholders have the opportunity on an annual basis to
express dissatisfaction with the Board of Directors or management by replacing, or withholding
votes from, any director standing for election that year.
Enhances the Independence of the Board. The Board of Directors believes that electing
directors to three-year terms, rather than one-year terms, enhances the independence of
non-employee directors by providing them with a longer assured term of office, thereby insulating
them against pressures from management or from special interest groups who might have an agenda
contrary to the long-term interests of all shareholders. The Companys current classified Board
structure permits its directors to act independently and on behalf of shareholders without worrying
whether they will be re-nominated by the other members of the Board of Directors each year. The
freedom to focus on the long-term interests of the Company instead of on the re-nomination process
leads to greater independence and better governance.
Stability and Continuity. The classified Board structure is designed to provide stability,
enhance long-term planning and ensure that, at any given time, there are directors serving on the
Companys Board of Directors who are familiar with the Company, its business, its target markets
and its strategic goals. The classified Board structure also provides flexibility by requiring the
annual election of one-third of the directors and a majority of the directors over a two-year
period. We believe that experienced directors who are knowledgeable about the Companys business
environment are a valuable resource and are better positioned to make decisions that are in the
best interests of the Company and its shareholders. Staggered terms give the Companys new
directors an opportunity to gain knowledge about the Companys business from its continuing
directors. If all directors were elected annually, the Board of Directors could be composed
entirely of directors who were unfamiliar with the Company, the banking environment and the
Companys business strategies. This could jeopardize the Companys long-term strategies and growth
plans.
A classified Board of Directors also assists the Company in attracting and retaining highly
qualified directors who are willing to commit the time and resources necessary to understand the
Company, its operations and its competitive environment. We believe that agreeing to serve a
three-year term demonstrates a nominees commitment to the Company over the long-term. Given the
current corporate governance climate, in which many qualified individuals are increasingly
reluctant to serve on public boards, the Company could also be placed at a competitive disadvantage
in recruiting qualified director candidates if their Board service could potentially be only for a
one-year period.
35
Protection against Certain Takeovers. A classified Board of Directors reduces the Companys
vulnerability to unfriendly or unsolicited takeover tactics that may not be in the best interests
of the Companys shareholders. A classified Board structure encourages such third parties to
negotiate at arms length with the Board of Directors. Because only one-third of the Companys
directors are elected at any annual meeting of shareholders, at least two annual meetings would be
required to effect a change in control of the Companys Board of Directors, giving the directors
the time and leverage necessary to evaluate the adequacy and fairness of any takeover proposal,
consider alternative proposals, and to ultimately negotiate the best result for all shareholders.
Absent a classified
Board of Directors, a potential acquirer could unilaterally gain control of the Company by
acquiring or obtaining voting control over a sufficient number of shares of the Companys Common
Stock to replace the entire Board of Directors with its own nominees at a single annual meeting,
and without paying a fair value to the Companys other shareholders. Having a classified Board of
Directors does not prevent unsolicited takeover attempts, but it empowers the incumbent Board of
Directors to negotiate terms to maximize the value of the transaction to all Company shareholders.
Recommendation Only. The Companys shareholders should be aware that this shareholder
proposal is simply a request that the Board of Directors take the actions stated in the proposal.
Approval of this proposal may not result in the requested action being taken by the Companys Board
of Directors and, therefore, its approval would not necessarily effectuate the declassification of
the Companys Board of Directors. Under Tennessee law, to change the structure of the Companys
Board of Directors, the Companys shareholders must approve an actual amendment to the Companys
Charter.
The Companys Board of Directors and the Nominating/Governance Committee have carefully
considered the arguments in favor of and against this shareholder proposal. The Board of Directors
believes that the Companys current standard and policies continue to promote the best interests of
the Companys shareholders and believe that the vote of the shareholders on this same proposal at
the 2009 Annual Meeting of Shareholders, at which shareholders owning only just over 27% of the
total outstanding shares entitled to vote at that meeting voted in favor of the proposal, supports
the directors beliefs that the current classified board structure promotes the best interests of
the Companys shareholders.
FOR ALL THESE REASONS, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST THIS
PROPOSAL.
36
DIRECTOR COMPENSATION TABLE
The table below summarizes the compensation paid by the Company to directors for the fiscal
year ended December 31, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
|
Option |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
|
|
Paid in Cash |
|
|
Stock Awards |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
Name |
|
($) |
|
|
($) (1)(2) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Martha M. Bachman |
|
$ |
40,050 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
40,050 |
|
Bruce Campbell |
|
|
28,050 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,050 |
|
W.T. Daniels |
|
|
41,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,700 |
|
Robert K. Leonard |
|
|
26,450 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,447 |
|
Samuel E. Lynch |
|
|
18,500 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,497 |
|
Ronald E. Mayberry |
|
|
9,800 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,440 |
(3) |
|
|
195,237 |
|
Bill Mooningham(4) |
|
|
4,325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,325 |
|
John Tolsma |
|
|
25,050 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,047 |
|
Charles H.
Whitfield, Jr. |
|
|
27,500 |
|
|
|
9,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,497 |
|
|
|
|
(1) |
|
Non-employee directors, plus employee director Mr. Mayberry, received 1,412 shares of
restricted stock on February 19, 2009 for the $10,000 portion of their annual $15,000 retainer
for 2009. All restrictions on these shares were released February 19, 2010. |
|
(2) |
|
The amounts in column captioned Stock Awards reflects the dollar value of these awards by
multiplying the number of restricted shares granted by the stocks closing price on the grant
date. |
|
(3) |
|
His base salary of $172,000 and his 2008 bonus of $3,440 which was paid in January of 2009.
Mr. Mayberrys term as a director will expire at the Annual Meeting. |
|
(4) |
|
Elected to the Board on October 27, 2009. |
Directors of the Company meet as a board on a regular scheduled basis, or more often as
needed, to address matters relating to the operation and direction of the Company.
Directors of the Company are also directors of the Bank. The Bank compensates members of its
board of directors for all regular and special meetings. Directors of the Bank received $600 for
each regular monthly and specially-called board meeting attended in 2009, plus payment of such fee
for up to two absences during a year. The Banks board of directors met eight times in 2009. Each
Bank director also received, in 2009, an annual retainer fee of $15,000, of which $10,000 was
available in the form of restricted stock awards or cash and $5,000 payable in equal quarterly cash
amounts of $1,250. Members of the Executive Committee of the Banks board of directors also
received $450 for each twice-monthly meeting of the Executive Committee attended, and Messrs.
Martha Bachman and W.T. Daniels, the two permanent members of the Committee, received an annual
retainer of $1,500. During 2009, members of the Companys Audit Committee received $450 per each
quarterly meeting and specially-called meetings, as well as an annual retainer fee of $1,500 paid
in equal quarterly amounts. In addition, the Chairman of the Audit Committee received an annual
retainer of $6,000. During 2009, members of the Companys Compensation Committee received $300 per
each meeting and specially-called meetings, as well as an annual retainer fee of $1,500 paid in
equal quarterly amounts. In addition, the Chairman of the Compensation Committee received an
annual retainer of $2,500. Compensation for all other committee meetings was $300 per meeting
during 2009.
During 2009, pursuant to the Original Plan, all directors could elect to defer receipt of a
portion of their fees by entering into deferred fee agreements with the Bank. In addition to the
fee deferral, the agreements also provided for payment of benefits under certain events of
disability, early retirement, termination of employment or death. The Bank is the beneficiary of
life insurance acquired with respect to directors participating in the Original Plan. During 2006,
the Company began using a formula which provides an annual earnings crediting rate based upon 75%
of the Companys return on average stockholders equity on balances in the plan, until the Director
is separated from service, and, thereafter at an earnings crediting rate of 56.25% of the Companys
return on average stockholders equity for the year ending. During 2009, the Company modified the
annual earning crediting rate formula as follows: The annual crediting rate will be 100% of the
annual return on stockholders equity with a 4% floor and a 12% ceiling, for the year then ended,
on balances in the Plan until the director experiences a separation from services, and, thereafter,
at a earnings crediting rate based on 75% of the Companys return on average stockholders equity
for the year then ending with a 3% floor and a 9% ceiling.
37
Security Ownership of Certain Beneficial Owners and Management
Persons and groups beneficially owning more than 5% of the Common Stock are required under
federal securities laws to file certain reports with the SEC detailing their ownership. The
following table sets forth the amount and percentage of the Common Stock beneficially owned by any
person or group of persons known to the Company to be a beneficial owner of more than 5% of the
common stock as of the record date.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of |
|
|
Percent of Common |
|
Name and Address of Beneficial Owner |
|
Beneficial Ownership (a) |
|
|
Stock Outstanding |
|
|
|
|
|
|
|
|
|
|
Scott M. Niswonger |
|
|
1,309,330 |
(b) |
|
|
9.94 |
% |
P.O. Box 938
Greeneville, TN 37744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Columbia Wagner Assets Management, L.P. |
|
|
1,134,706 |
(c) |
|
|
8.61 |
% |
227 West Monroe Street, Suite 3000
Chicago, IL 60606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phil M. Bachman |
|
|
892,601 |
(d) |
|
|
6.77 |
% |
Martha Bachman
100 N. Main Street, P.O. Box 1120
Greeneville, Tennessee 37743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP |
|
|
755,309 |
(e) |
|
|
5.73 |
% |
6300 Bee Cave Road, Building One
Austin, TX 78746 |
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
For purposes of this table, an individual or entity is considered to beneficially own any
share of Common Stock which he, she or it directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise, has or shares: (1) voting power, which
includes the power to vote, or to direct the voting of, such security; and/or (2) investment
power, which includes the power to dispose, or to direct the disposition of, such security. In
addition, an individual or entity is deemed to be the beneficial owner of any share of Common
Stock of which he, she or it has the right to acquire voting or investment power within 60
days of the record date. |
|
(b) |
|
Based upon information set forth in a Schedule 13D/A, filed with the SEC on November 9, 2009
by Mr. Niswonger, who has sole voting and dispositive power with respect to 1,309,330 shares. |
|
(c) |
|
Based solely on the information contained in a Schedule 13G filed by Columbia Wagner Asset
Management, L.P. with the SEC on February 9, 2010, as of December 31, 2009. |
|
(d) |
|
Martha Bachman is a director and the wife of retired director Phil Bachman. Includes 200,738
shares of common stock held directly or indirectly by Martha Bachman, 673,697 shares owned by
Phil Bachman individually and 18,166 shares owned by Mr. and Mrs. Bachman jointly. |
|
(e) |
|
Based solely on the information contained in a Schedule 13G filed by Dimensional Fund
Advisors, L.P. with the SEC on February 8, 2010, as of December 31, 2009. |
38
The following table sets forth, as of the record date, certain information known to the
Company as to Common Stock beneficially owned by each director and Named Executive Officer of the
Company and by all directors and executive officers of the Company as a group. The address for
each of our directors and executive officers listed below is c/o Green Bankshares, Inc., 100 North
Main Street, P.O. Box 1120, Greeneville, Tennessee 37743. As of the record date, there were
13,176,036 shares of the Companys stock outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Shares Beneficially Owned |
|
|
|
Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares |
|
|
Shares |
|
|
|
|
|
|
Percent of |
|
|
|
Beneficially |
|
|
Acquirable in |
|
|
|
|
|
|
Common Stock |
|
Name and Position |
|
Owned(a)(b) |
|
|
60 Days (c) |
|
|
Total |
|
|
Outstanding |
|
R. Stan Puckett, Chairman
of the Board and Chief
Executive Officer |
|
|
122,220 |
|
|
|
55,800 |
(d) |
|
|
178,020 |
|
|
|
1.35 |
% |
Martha Bachman, Director |
|
|
892,601 |
(e)(g) |
|
|
|
|
|
|
892,601 |
|
|
|
6.77 |
% |
Bruce Campbell, Director |
|
|
10,176 |
|
|
|
|
|
|
|
10,176 |
|
|
|
* |
|
W.T. Daniels, Director |
|
|
13,633 |
|
|
|
|
|
|
|
13,633 |
|
|
|
* |
|
Robert K. Leonard, Director |
|
|
93,498 |
(f)(g) |
|
|
|
|
|
|
93,498 |
|
|
|
* |
|
Samuel Lynch, Director |
|
|
3,658 |
|
|
|
|
|
|
|
3,658 |
|
|
|
* |
|
Bill Mooningham, Director |
|
|
1,637 |
|
|
|
|
|
|
|
1,637 |
|
|
|
* |
|
John Tolsma, Director |
|
|
8,796 |
|
|
|
|
|
|
|
8,796 |
|
|
|
* |
|
Charles H. Whitfield, Jr.,
Director |
|
|
14,288 |
|
|
|
|
|
|
|
14,288 |
|
|
|
* |
|
Kenneth R. Vaught,
Director, President and
Chief Operating Officer |
|
|
39,139 |
|
|
|
35,455 |
|
|
|
74,594 |
|
|
|
* |
|
Ronald E. Mayberry,
Director, Regional
Executive, Sumner County |
|
|
66,606 |
|
|
|
20,487 |
|
|
|
87,093 |
|
|
|
* |
|
James E. Adams, Executive
Vice President, Chief
Financial Officer and
Secretary |
|
|
24,404 |
|
|
|
4,200 |
|
|
|
28,604 |
|
|
|
* |
|
William C. Adams, Senior
Vice President and Chief
Information Officer |
|
|
30,870 |
(g) |
|
|
16,391 |
|
|
|
47,261 |
|
|
|
* |
|
Steve L. Droke, Senior
Vice President and Chief
Credit Officer |
|
|
17,969 |
|
|
|
13,254 |
|
|
|
31,223 |
|
|
|
* |
|
|
|
|
|
|
All directors and
executive officers as a
group (16 persons) |
|
|
1,371,393 |
|
|
|
171,075 |
|
|
|
1,542,468 |
|
|
|
11.56 |
% |
|
|
|
* |
|
Less than 1% of the outstanding Common Stock. |
|
(a) |
|
For the definition of beneficially owned, see Note (a) to the preceding table. |
|
(b) |
|
Includes shares owned directly by directors and executive officers of the Company as well as
shares held by their spouses and children, trust of which certain directors are trustees and
corporations in which certain directors own a controlling interest. |
|
(c) |
|
Represents options to purchase Common Stock which are exercisable within 60 days of the
record date. |
|
(d) |
|
Includes options to acquire 36,000 shares of Common Stock currently exercisable (or
exercisable within 60 days of the record date) by Mr. Puckett at an exercise price equal to
150% of the book value of the Common Stock at the date of grant (a weighted average price of
approximately $16.27 per share) and options to acquire 19,800 shares of Common Stock currently
exercisable (or exercisable within 60 days of the record date) by Mr. Puckett at an exercise
price equal to the fair market value at the date of grant (a weighted average price of
approximately $29.03 per share). |
|
(e) |
|
Martha Bachman is a director and the wife of retired director Phil Bachman. Includes 200,738
shares of common stock held directly or indirectly by Martha Bachman, 673,697 shares owned by
Phil Bachman individually and 18,166 shares owned by Mr. and Mrs. Bachman jointly. |
|
(f) |
|
Includes 41,197 shares of common stock in a limited partnership of which Mr. Leonard is a
limited partner. Mr. Leonard disclaims beneficial ownership of 32,216 of these shares. Also
includes 504 shares of common stock in a limited liability company in which Mr. Leonard has an
interest. Mr. Leonard disclaims beneficial ownership of 363 of these shares. |
|
(g) |
|
As of March 19, 2010, the following individuals have pledged the following amounts of their
common shares beneficially owned to secure lines of credits or other indebtedness: Martha
Bachman and retired director Phil Bachman 372,899 shares; Robert Leonard 15,000 shares
held in a limited liability partnership; and William C. Adams 5,000 shares. |
39
Executive Officers of Green Bankshares, Inc.
|
|
|
|
|
|
|
Name |
|
Age |
|
Title |
R, Stan Puckett
|
|
|
54 |
|
|
Chairman of the Board and Chief Executive Officer |
Stephen M. Rownd
|
|
|
50 |
|
|
Proposed Chairman of the Board and Chief Executive Officer (1) |
Kenneth R. Vaught
|
|
|
45 |
|
|
President and Chief Operating Officer |
James E. Adams
|
|
|
65 |
|
|
Executive Vice President, Chief Financial Officer and Secretary |
Steve L. Droke
|
|
|
60 |
|
|
Senior Vice President and Chief Credit Officer |
William C. Adams, Jr.
|
|
|
54 |
|
|
Senior Vice President and Chief Information Officer |
Steve D. Ottinger
|
|
|
60 |
|
|
Senior Vice President and Chief Human Resources Officer |
G. Frank Snyder
|
|
|
50 |
|
|
Senior Vice President and Retail Banking Manager |
|
|
|
(1) |
|
Its expected that Mr. Rownd employment as Chief Executive Officer and service as
Chairman of the Board will begin on March 31, 2010. |
R. Stan Puckett currently serves as Chairman of the Board of Directors and Chief Executive
Officer of the Company and the Bank. He has served as Chief Executive Officer of the Bank since
February 1989. Mr. Puckett had previously announced in 2009 that he would be retiring from the
Company effective March 31, 2010. He is a graduate of Bristol University with a degree in business
administration. He served as President of First American National Bank of Johnson City, Tennessee
from December 1987 to February 1989 and as its Vice President from June 1986 to December 1987. He
was Assistant Vice President of First Union National Bank in Asheville, North Carolina from
September 1983 to June 1986 and served as commercial loan officer of Signet Bank in Bristol,
Virginia from September 1977 to June 1983.
Stephen M. Rownd will assume the position of Chief Executive Officer and Chairman of the Board
of Directors effective on March 31, 2010. Prior to joining the Company, Mr. Rownd was Executive
Vice President and Senior Commercial Banker for Fifth Third Bank of the Carolinas since 2008. He
joined Fifth Third Bank of the Carolinas in 2008 through the acquisition of First Charter
Corporation where he had served as Executive Vice President and Chief Banking Officer from 2006 to
2008 and prior to that appointment had served as Executive Vice President and Chief Risk Officer
from 2004 to 2006 and Executive Vice President and Chief Credit Officer from 2000 to 2004. Mr.
Rownd began his banking career in 1982 with Barnett Banks Inc. of Florida. He graduated from
Haverford College in Haverford, Pennsylvania in 1981.
Kenneth R. Vaught currently serves as President and Chief Operating Officer of the Company and
the Bank and has held these positions since June 2002. He also was elected to the Companys board
of directors on that date. Previously, he served as Senior Vice-President and Regional Executive
for the Banks Blount and Knox County, Tennessee offices. Prior to joining the Company, Mr. Vaught
began his banking career in 1987 as a Management Trainee with Hamilton Bank (SunTrust affiliate) in
Johnson City, Tennessee. He later joined First Tennessee Bank in 1989 as a Commercial Loan Officer.
In 1991, he was promoted to Vice President and transferred to First Tennessee Bank, Maryville,
Tennessee. He left First Tennessee Bank in 1998 as Senior Vice President and Commercial Banking
Manager to join what was then Greene County Bank. He is a graduate of East Tennessee State
University with a degree in Finance.
James E. Adams joined the Company in December 2005 and assumed the role of Senior Vice
President, Chief Financial Officer and Assistant Secretary. He was promoted to Executive Vice
President in 2007. Prior to the Company, Mr. Adams served as Executive Vice President and Chief
Financial Officer of Rurban Financial Corporation from 2003 to 2005. Prior to that, he was retired
after having served as Executive Vice President and Chief Financial Officer of Integra Bank
Corporation from 1999 through 2002; and Executive Vice President and Chief Financial Officer of
MainStreet Financial Corporation from 1994 to 1999. He has held executive management positions at
several multi-billion dollar bank holding companies, which have subsequently been acquired, since
1978. Mr. Adams began his career in 1970 as a Certified Public Accountant upon graduation from
Michigan State University and subsequently began his banking career in 1974. He has co-authored
two books used throughout the financial services industry and was appointed to serve a three year
term on the Finance and Accounting Commission of the Bank Administration Institute in the mid 80s.
40
Steve L. Droke has served as Senior Vice President and Chief Credit Officer of the Bank since
July 1997, with responsibilities for risk management including Credit Policy development and
implementation and oversight of
Compliance and Loan Operations. Prior to joining the Bank, he was Senior Vice President and
Senior Credit Officer with First American Corporation. His 32-year banking career includes a varied
background in bank management, risk management, and lending. Mr. Droke is a graduate of East
Tennessee State University with a B.S. in Finance, the Graduate School of Retail Bank Management at
the University of Virginia, and the Graduate School of Commercial Bank Lending at the University of
Oklahoma. He is a member of Tennessee Bankers Association.
William C. Adams, Jr. has served as Senior Vice President and Chief Information Officer of the
Bank since 1998, with responsibilities for oversight of the information technology and operations
functions. Prior to joining the Bank he served as CEO of Premier Bank of East Tennessee from 1991
to 1998. Prior to that he was Senior Regional Lender for First American Bank (subsequently Regions
Bank) in Maryville, Tennessee and Commercial Lender for Third National Bank (subsequently SunTrust)
in Nashville, Tennessee. Early in his 28-year banking career he served as Installations Coordinator
for a major national financial services software provider, where he oversaw or participated in over
50 community bank software installations and conversions nationwide. He is a graduate of the
University of Tennessee.
Steve D. Ottinger joined the Bank in October of 1975. He currently serves as Senior Vice
President and Chief Human Resources Officer, with responsibilities for training, certain areas of
risk management and compliance, customer privacy, and customer information security. Prior to
joining the Bank, Mr. Ottinger spent five years in city government as Director of Parks and
Recreation for the town of Greeneville, Tennessee. His experience includes both retail banking and
operations. Throughout his career he has been very involved in community activities having served
in leadership capacities in many non-profit organizations and that continues. He is a member of the
Society for Human Resource Management, a graduate of The Tennessee School of Banking, and holds a
Bachelors of Business Administration with an emphasis in Human Resources from East Tennessee State
University.
G. Frank Snyder joined the Bank in 1995 and currently serves as Senior Vice President and
Retail Banking Manager. Prior to be appointed to his current position, he had served in various
capacities of increasing responsibility including loan officer, branch manager, electronic banking
manager and regional executive. Before entering the financial services industry, Mr. Snyder served
for 10 years in the not-for-profit industry in leadership capacities with the United Way and the
YMCA organizations. He is a graduate of the University of Tennessee with a degree in education.
FUTURE SHAREHOLDER PROPOSALS
If a shareholder wishes to have a proposal included in the Companys proxy statement for the
Companys 2011 Annual Meeting of Shareholders, that proposal must be received by the Company at its
executive offices in Greeneville, Tennessee by November 30, 2010. If a shareholder wishes to
present a proposal at the Companys 2011 annual meeting of shareholders and the proposal is not
intended to be included in the Companys proxy statement relating to that meeting, the shareholder
must give advance notice to the Company prior to the deadline for such meeting determined in
accordance with the Companys Amended and Restated Charter (the Charter Deadline). Under the
Companys Amended and Restated Charter, in order to be deemed properly presented, notice must be
delivered to the Companys Secretary at the Companys principal executive offices no less than
forty (40) nor more than sixty (60) days prior to the scheduled date of the meeting at which such
matter is to be acted upon; provided, however, that if notice or public disclosure of such meeting
is given fewer than fifty (50) days before the meeting, notice by the shareholder must be delivered
to the Company not later than the close of business on the tenth (10th) day following the day on
which notice of the meeting was mailed to shareholders. If a shareholder gives notice of such a
proposal after the Charter Deadline, the shareholder will not be permitted to present the proposal
to the shareholders for a vote at the meeting.
The SEC rules also establish a different deadline for submission of shareholder proposals that
are not intended to be included in the Companys proxy statement with respect to discretionary
voting (the Discretionary Voting Deadline). This deadline for the 2011 annual meeting of
shareholders is February 12, 2011. If a shareholder gives notice of a proposal after this deadline,
the persons named as proxies in the proxy statement for the 2011 annual meeting will be allowed to
use their discretionary voting authority to vote against the shareholder proposal when, and if, the proposal is raised at the 2011 annual meeting.
Because the Charter Deadline is not capable of being determined until the Company gives notice of,
or publicly announces, the date for the 2011 annual meeting of shareholders, it is possible that
the Charter Deadline may occur after the Discretionary Voting Deadline, in which case a proposal
received after the Discretionary Voting Deadline but before the Charter Deadline would be eligible
to be presented at the 2011 annual meeting of shareholders and the Company believes that the
persons named as proxies in the proxy statement would be allowed to use the discretionary authority
granted
by the proxy card to vote against the proposal at the meeting without including any
disclosures of the proposal in the proxy statement relating to the meeting.
41
The enclosed proxy card grants proxy holders discretionary authority to vote on any matter
properly brought before the Annual Meeting, including any shareholder proposals received between
the date of this proxy statement and the Charter Deadline for the Annual Meeting, which is April 8,
2010.
Shareholder proposals should be addressed to Secretary, Green Bankshares, Inc., 100 North Main
Street, P.O. Box 1120, Greeneville, Tennessee 37743 and must comply with the provisions of the
Companys Amended and Restated Charter. Nothing in this paragraph shall be deemed to require the
Company to include in its proxy statement and form of proxy relating to the Companys 2010 Annual
Meeting of Shareholders any shareholder proposal that does not satisfy the requirements for
inclusion as established by the SEC at the time of receipt.
OTHER MATTERS
As of the date of this document, the Companys board of directors is not aware of any matters
that will be presented for consideration at the Companys Annual Meeting other than Proposal 4 and
Proposal 5 described in this proxy statement. If any other matters come before either of the
meetings or any adjournments or postponements of the meeting and are voted upon, the enclosed proxy
will confer discretionary authority on the individuals named as proxies to vote the shares
represented by the proxy as to any other matters. The individuals named as proxies intend to vote
in accordance with their best judgment as to any other matters.
The Companys 2009 Annual Report to Shareholders (the Annual Report), including financial
statements, is being mailed with this Proxy Statement to all persons who were shareholders of
record as of the close of business on the record date. Any shareholder who does not receive a copy
of the Annual Report may obtain a copy by writing to the Secretary of the Company. The Annual
Report is not to be treated as a part of this proxy solicitation material or as having been
incorporated herein by reference.
|
|
|
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
/s/ James E. Adams
|
|
|
James E. Adams |
|
|
Corporate Secretary |
|
|
Greeneville, Tennessee
March 29, 2010
ANNUAL REPORT ON FORM 10-K
A copy of the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as
filed with the Securities and Exchange Commission will be furnished without charge to persons who
were shareholders as of the record date upon written request to the Secretary, Green Bankshares,
Inc., 100 North Main Street, P.O. Box 1120, Greeneville, Tennessee 37743 or by calling (423)
639-5111.
42
Form of Proxy
GREEN BANKSHARES, INC.
100 North Main Street
P.O. Box 1120
Greeneville, Tennessee 37743
REVOCABLE PROXY FOR THE ANNUAL MEETING
OF SHAREHOLDERS
April 30, 2010
You can vote in one of three ways: 1) By Mail, 2) By Internet, 3) By Telephone.
See the reverse side of this sheet for instructions.
IF YOU ARE NOT VOTING BY INTERNET OR TELEPHONE, COMPLETE BOTH SIDES OF PROXY CARD,
DETACH AND RETURN IN THE ENCLOSED ENVELOPE TO:
Illinois Stock Transfer Co.
209 West Jackson Boulevard, Suite 903, Chicago, Illinois 60606
The undersigned hereby constitutes and appoints Glen Allen and James E. Adams, and each of
them, the proxies of the undersigned, with full power of substitution, to attend the Annual Meeting
of Shareholders of Green Bankshares, Inc. (the Company) to be held at the General Morgan Inn,
111 North Main Street, Greeneville, Tennessee on Friday, April 30, 2010 at 11:00 a.m., local time,
and at any adjournments thereof, and to vote all the shares of stock of the Company which the
undersigned may be entitled to vote, upon the following matters.
Proxy Solicited by and on behalf of the Board of Directors for the Annual Meeting of
Shareholders to be held on Friday, April 30, 2010.
The Companys Board of Directors recommends a vote FOR each of the Proposals 1, 2 and 3.
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The election of the following directors: |
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WITHHOLD |
For terms to expire in 2013 |
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AUTHORITY |
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01 Robert K. Leonard |
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02 Kenneth R. Vaught |
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03 Bill Mooningham |
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For term to expire in 2012 |
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04 Stephen M. Rownd |
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Approval of the compensation of the Companys named executive officers as disclosed in the
proxy statement for the Annual Meeting of Shareholders. |
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FOR o
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AGAINST o
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ABSTAIN o
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Ratification of the appointment of Dixon Hughes PLLC as the Companys independent registered
public accounting firm for 2010. |
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FOR o
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AGAINST o
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ABSTAIN o
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The Companys Board of Directors recommends a vote AGAINST Proposals 4 and 5.
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Shareholder proposal regarding majority election of directors. |
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FOR o
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AGAINST o
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ABSTAIN o
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5. Shareholder proposal regarding annual election of directors.
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FOR o
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AGAINST o
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ABSTAIN o
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Your shares will be voted in accordance with your instructions. If no choice is specified, shares
will be voted FOR PROPOSALS 1, 2 and 3 and AGAINST Proposals 4 and 5.
In their discretion, the proxies are authorized to vote upon such other business as may properly
come before the Annual Meeting of Shareholders.
Form of Proxy
TO VOTE BY INTERNET
Your Internet vote is quick, confidential and your vote is immediately submitted. Just follow these
easy steps:
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Read the accompanying Proxy Statement. |
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Visit our Internet voting site at www.ilstk.com, click on the I am a Shareholder,
select the Internet Voting tab, enter your Voter Control Number and the last four digits
of your Tax Identification Number that is associated with the account you are voting in the
designated fields. Your Voter Control Number is shown above. |
Please note that all votes cast by Internet must be completed and submitted prior to Wednesday,
April 28, 2010, at 11:59 p.m. Central Time.
Your Internet vote authorizes the named proxies to vote your shares to the same extent as if you
marked, signed, dated and returned the proxy card.
This is a secured web page site. Your software and/or Internet provider must be enabled to
access this site. Please call your software or Internet provider for further information if needed.
If you vote By Internet, Please Do Not Return Your Proxy Card By Mail
TO VOTE BY TELEPHONE
Your telephone vote is quick, confidential and immediate. Just follow these easy steps:
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Read the accompanying Proxy Statement. |
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Using a Touch-Tone telephone, call Toll Free 1-800-555-8140 and follow the
instructions. |
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When asked for your Voter Control Number, enter the number printed above. |
Please note that all votes cast by Internet must be completed and submitted prior to Wednesday,
April 28, 2010, at 11:59 p.m. Central Time.
Your telephone vote authorizes the named proxies to vote your shares to the same extent as if you
marked, signed, dated and returned the proxy card.
If you vote By Telephone, Please Do Not Return Your Proxy Card By Mail
TO VOTE BY MAIL
To vote by mail, complete both sides, sign and date the proxy card below. Detach the card
below and return it in the envelope provided.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice of Annual
Meeting of the Shareholders and Proxy Statement and the Annual Report to Shareholders for the
fiscal year ended December 31, 2009, and hereby revokes any proxy heretofore given. This proxy may
be revoked at any time before its exercise.
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Date: |
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Signature: |
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Signature: |
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Please mark, date and sign as your name appears herein and return in the enclosed envelope. If
acting as executor, administrator, trustee, guardian, etc. you should so indicate when signing. If
the signor is a corporation, please sign the full name by duly appointed officer. If a
partnership, please sign in partnership name by authorized person. If shares are held jointly,
each shareholder named should sign.