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SCHEDULE
14A INFORMATION
|
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Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Filed
by the Registrant [X]
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Filed
by a Party other than the Registrant [ ]
|
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Check
the appropriate box:
|
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|
[ ]
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Preliminary
Proxy Statement
|
[ ]
|
Confidential,
for Use of Commission
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[X]
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Definitive
Proxy Statement
|
Only
(as permitted by Rule 14a-6(e)(2))
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||||||
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[ ]
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Definitive
Additional Materials
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|||||||
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[ ]
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Soliciting
Material Pursuant to par 240.14a-11(c) or par.
240.14a-12
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|||||||
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MidSouth Bancorp,
Inc.
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(Name
of Registrant as Specified In Its Charter)
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Board of Directors of
MidSouth Bancorp, Inc.
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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|
[ ]
|
$125
per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or item
22(a)(2) of Schedule 14A.
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[ ]
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$500
per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
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[ ]
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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1)
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4)
|
Proposed
maximum aggregate value of transaction:
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5)
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Total
Fee Paid:
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[ ]
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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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1)
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Amount
Previously Paid:
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2)
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Form,
Schedule or Registration Statement No.:
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Party:
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Filed:
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MIDSOUTH
BANCORP, INC.
102
Versailles Boulevard
Versailles
Centre
Lafayette,
Louisiana 70501
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
Lafayette,
Louisiana
April
23, 2008
We will
hold our annual shareholders meeting on Wednesday, May 28, 2008, at 2:00 p.m.,
local time, at our corporate offices, 102 Versailles Blvd., Lafayette, Louisiana
70501, where we will vote upon:
1. The
election of directors.
2. Such
other matters as may properly come before the meeting or any
adjournments.
If you
are listed on our books as the holder of record of our common stock on March
31, 2008, you are
entitled to notice of and to vote at the meeting.
Your vote
is important regardless of the number of shares you own. WHETHER OR
NOT YOU PLAN TO COME TO THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE. YOUR PROXY MAY BE REVOKED BY NOTICE TO OUR SECRETARY AT ANY
TIME BEFORE IT IS VOTED.
BY ORDER
OF THE BOARD
OF
DIRECTORS
Karen L.
Hail
Secretary
-1-
MIDSOUTH
BANCORP, INC.
102
Versailles Boulevard
Versailles
Centre
Lafayette,
Louisiana 70501
PROXY
STATEMENT
This
Proxy Statement is being sent to our stockholders to solicit on behalf of our
Board proxies for use at our annual shareholders meeting to be held on
Wednesday, May 28, 2008, at the time and place shown in the accompanying notice
and at any adjournments thereof. This Statement is first being mailed
to shareholders on or about April 23, 2008.
Only
holders of our common stock ("stock") on our books at the close of business on
March 31, 2008, are entitled to notice of and to vote at the
Meeting. On that date we had outstanding 6,762,531 shares of stock,
each of which is entitled to one vote.
The
presence, in person or by proxy, of holders of a majority of our Stock is needed
to make up a quorum; if a quorum is present, directors are elected by
plurality. With respect to any other proposal, however, if the Board
has recommended it by a majority of our Continuing Directors, as defined in our
Articles of Incorporation, then, generally, the vote of a majority of the votes
cast is required to approve it, and if it is not so recommended, then the vote
of 80% of the Total Voting Power, as defined in the Articles, is required to
approve it. The Continuing Directors will appoint the Judge(s) of
Election, and all questions as to voter qualification, proxy validity and
accepting or rejecting votes will be decided by the Judge(s).
Abstentions
or broker non-votes will not have any effect on the election of
directors. On any other proposal, abstentions and broker non-votes
will be counted as votes not cast and will have no effect on any proposal that
needs a majority of votes cast to approve it and will have the effect of a vote
against any proposal that needs the vote of a percentage of the Total Voting
Power.
All
proxies received in the enclosed form will be voted as you specify and, unless
you specify to the contrary, will be voted for the election of the persons named
herein. We do not know of anything else to be presented at the
Meeting other than the election, but if anything else does come up the persons
named in the enclosed proxy will vote the shares covered by the proxy as
determined by the Board of Directors.
A proxy
may be revoked by you at any time before its exercise by filing with our
Secretary a written revocation or a duly executed proxy with a later date. If
you vote in person in a manner inconsistent with a proxy previously filed by
you, you will be deemed to have revoked the proxy as to the matters you voted on
in person.
The cost
of soliciting proxies will be borne by us. In addition to the mail,
proxies may be solicited by personal interview, telephone, telegraph, facsimile,
internet and e-mail. Banks, brokerage houses and other nominees or
fiduciaries may be asked to forward these materials to their principals and to
get authority to execute proxies, and we will, upon request, reimburse them for
their expenses in so acting.
-2-
ELECTION
OF DIRECTORS
Our
Articles provide for three classes of directors, with one class to be elected at
each annual meeting for a three-year term. At the Meeting, Class III
Directors will be elected to serve until the 2011 annual meeting.
Unless
you withhold authority, the persons named in the enclosed proxy will vote the
shares covered by the proxies received by them for the election of the four
Class III director nominees named below. If for some
reason we do not anticipate one or more nominees cannot be a
candidate at the Meeting, the shares will be voted in favor of such other
persons as the Board chooses. Directors will be elected by plurality
vote.
Other
than the Board, only shareholders who have complied with the procedures of
Article IV (H) of our Articles may nominate a person for election. To
do so, you must have given us written notice by December 27, 2007, of the
following:
(1) as to
each person whom you propose to nominate:
(a) his
or her name, age, business address, residence address, principal occupation or
employment,
(b) the
number of shares of our stock of which the person is the beneficial owner
and
(c) any
other information relating to the person that would be required to be disclosed
in solicitations of proxies for the election of directors by Regulation 14A
under the Securities Exchange Act of 1934; and
(2) as to
you:
(a) your
name and address
(b) the
number of shares of our Stock of which you are the beneficial owner
and
(c) a
description of any agreements, arrangements or relationships between you and
each person you want to nominate.
Two
inspectors, not affiliated with us, appointed by our Secretary, will determine
whether the notice provisions were met; if they determine that you have not
complied with Article IV(H), your nomination will be disregarded.
The
following table gives information as of March 31, 2008, about each director
nominee and each other director. Unless otherwise indicated, each
person has had the principal occupation shown for at least the past five years.
The Board recommends a vote FOR each of the nominees named therein.
-3-
Directors
Nominees for terms expire in 2011 (Class III Directors)
|
Name
|
Age
|
Principal
Occupation
|
Year
First Became Director
|
|||
|
James
R. Davis, Jr.
|
55 |
President,
Davis/Wade Financial Services, L.L.C.; Chairman of our Audit Committee and
our Lead Director
|
1991
|
|||
|
Karen
L. Hail
|
54 |
Our
Senior Executive Vice President and Chief Operating Officer of our
subsidiary MidSouth Bank, N.A.
|
1988
|
|||
|
Milton
B. Kidd, III, O.D.
|
59 |
Optometrist,
Kidd Vision Centers, Kidd and Associates, L.L.C.
|
1996
|
|||
|
R.
Glenn Pumpelly
|
49 |
President/
C.E.O. Pumpelly Oil Company, L.L.C.
|
2007
|
|||
Directors
whose terms to expire in 2009 (Class I Directors)
|
Name
|
Age
|
Principal
Occupation
|
Year
First Became Director
|
|||
|
C.R.
Cloutier
|
61 |
Our
President and C.E.O., and President of our subsidiary, MidSouth Bank,
N.A.
|
1984
|
|||
|
J.B.
Hargroder, M.D.
|
77 |
Physician,
retired; Vice Chairman of our Board
|
1984
|
|||
|
Timothy
J. Lemoine
|
57 |
Consultant
and Investor
|
2007
|
|||
|
William
M. Simmons
|
74 |
Investor
|
1984
|
|||
Director
whose terms to expire in 2010 (Class II Directors)
|
Name
|
Age
|
Principal
Occupation
|
Year
First Became Director
|
|||
|
Will
Charbonnet, Sr.
|
60 |
Our
Chairman of the Board; Treasurer and Managing Director of Crossroads
Catholic Bookstore (non-profit corporation); Controller of Philadelphia
Fresh Foods, L.L.C.
|
1984
|
|||
|
Clayton
Paul Hilliard
|
82 |
President
of Badger Oil Corporation, Badger Oil & Gas Ltd., Convexx Oil and Gas,
Inc., and Warlord Oil Corporation; Manager, Uniqard,
L.L.C.
|
1984
|
|||
|
Joseph
V. Tortorice, Jr.
|
58 |
CEO,
Deli Management, Inc.
|
2004
|
|||
-4-
Corporate
Governance
Shareholder, Board and Committee
Meetings.
During 2007 the Board had twelve meetings, and each director attended at least
75% of the total number of meetings held of the Board and committees of which he
or she was a member. While we encourage all Board members to come to
annual shareholder meetings, there is no formal policy as to their
attendance. It is a rare occasion, however, when all members are not
there.
Board
Independence. Each year, our Corporate Governance and
Nominating Committee reviews the relationships that each director has with us
and with other parties. Only those directors who do not have any
relationships that keep them from being independent within the meaning of
applicable American Stock Exchange (“AMEX”) rules and who the Committee finds
have no relationships that would interfere with the exercise of independent
judgment in carrying out their responsibilities are considered to be
“independent directors.” The Committee reviews a number of factors to evaluate
independence, including the directors’ relationships with us and our
competitors, suppliers and customers; their relationships with management and
other directors; the relationships their current and former employers have with
us; and the relationships between us and other companies of which they are
directors or executive officers. After evaluating these factors, the Board
determined that Messrs. Charbonnet, Davis, Hargroder, Hilliard, Kidd, Lemoine,
Pumpelly, Simmons and Tortorice are independent within the meaning of applicable
AMEX rules.
Shareholder
Communications. Shareholders may communicate directly with the
Board or the individual chairmen of committees by writing directly to them at P.
O. Box 3745, Lafayette, LA 70502. We will forward, and not
screen, any mail we receive that is directed to an individual, unless we believe
the communication may pose a security risk.
Code of
Ethics. The Board has adopted a Code of Ethics for our
directors, officers and employees to promote honest and ethical conduct, full
and accurate reporting, and compliance with laws as well as other
matters. A copy of the Code of Ethics is posted on the Corporate
Relations page of our website at www.midsouthbank.com.
The Board has an Audit Committee, an
Executive Committee, a Personnel Committee, and a Corporate Governance and
Nominating Committee.
The Audit
Committee members are Messrs. Davis, Charbonnet, Hilliard, and Kidd and held
nine meetings in 2007. It is responsible for carrying out the Audit
Committee Charter. The Executive Committee members members are
Messrs. Charbonnet, Cloutier, Hargroder, Pumpelly, and Tortorice and met eleven
times in 2007. Its duties include shareholder relations, Bank
examination and Securities and Exchange Commission (“SEC”)
reporting. The Personnel Committee members are Messrs. Charbonnet,
Davis, Hargroder, and Tortorice and met six times in 2007. It is
responsible for evaluating the performance and setting/approving the
compensation of our executive officers and administering our 2007 Omnibus
Incentive Compensation Plan. The Corporate Governance and Nominating
Committee members are Messrs. Charbonnet, Hargroder, Hilliard and Simmons and
met three times in 2007. It helps the Board to make determinations of director
independence, assess overall and individual Board performance and recommend
director candidates, including recommendations submitted by
shareholders.
-5-
It is the Corporate Governance and
Nominating Committee’s policy that candidates for director have the highest
personal and professional integrity, have demonstrated exceptional ability and
judgment, and have skills and expertise appropriate for serving the long-term
interest of our shareholders. The Committee’s process for identifying
and evaluating nominees is as follows: (1) in the case of incumbent
directors whose terms of office are set to expire, the Committee reviews their
overall service during their terms, including the number of meetings attended,
level of participation, quality of performance, and any related party
transactions with us during the applicable time period; and (2) in the case of
new director candidates, appropriate inquiries into their backgrounds and
qualifications are made after considering the function and needs of the
Board. The Committee meets to discuss and consider such candidates’
qualifications, including whether the nominee is independent within the meaning
of AMEX rules, and then selects a candidate for recommendation to the Board. In
seeking potential nominees, the Committee uses its and management’s network of
contacts to compile a list of potential candidates, but may also engage, if it
deems appropriate, a professional search firm, although to date it has not done
so.
The Committee will consider director
candidates recommended by shareholders who follow the procedures set out in
Article IV (H) of our Articles described elsewhere. It does not
intend to alter the manner in which it evaluates candidates, including the
criteria set forth above, based on whether the candidate was recommended by a
shareholder or otherwise.
Eligible shareholders who want to
present a proposal qualified for inclusion in our proxy materials for the 2009
annual meeting must forward such proposal to our Secretary at the address listed
on the first page of this Proxy Statement in time to arrive before December 25,
2008.
The Securities and Exchange Act of 1934
and applicable SEC regulations require our directors, executive officers and ten
percent shareholders to file with the SEC initial reports of ownership and
reports of changes in ownership of our equity securities, and to furnish us with
copies of all the reports they file. To our knowledge, based on a
review of reports given us, all required reports were filed timely.
___________________
-6-
SECURITY
OWNERSHIP OF MANAGEMENT
AND
CERTAIN BENEFICIAL OWNERS
Security
Ownership of Management
The
following table shows as of March 31, 2008, the beneficial ownership of our
Stock by each director and nominee, by each executive officer named in the
Summary of Executive Compensation Table below, and by all directors and
executive officers as a group. Unless otherwise indicated, the Stock
is held with sole voting and investment power.
|
Name
|
Amount
and Nature of Beneficial Ownership(1)
|
Percent
of Class
|
||||||
|
Will
G. Charbonnet, Sr.
|
161,345 | (1,2) | 2.39 | % | ||||
|
C.
R. Cloutier
|
404,278 | (1,3) | 5.96 | % | ||||
|
James
R. Davis, Jr.
|
75,365 | (4) | 1.11 | % | ||||
|
Karen
L. Hail
|
106,255 | (5) | 1.57 | % | ||||
|
J.
B. Hargroder, M.D.
|
457,502 | (1,6) | 6.77 | % | ||||
|
Clayton
Paul Hilliard
|
250,987 | (7) | 3.71 | % | ||||
|
Milton
B. Kidd, III, O.D.
|
241,942 | 3.58 | % | |||||
|
Timothy
J. Lemoine
|
24,875 | (8) | .37 | % | ||||
|
R.
Glenn Pumpelly
|
15,779 | .23 | % | |||||
|
William
M. Simmons
|
215,211 | (9) | 3.18 | % | ||||
|
Joseph
V. Tortorice, Jr.
|
86,607 | 1.28 | % | |||||
|
J.
Eustis Corrigan, Jr.
|
9,871 | (10) | .15 | % | ||||
|
Donald
R. Landry
|
106,068 | (11) | 1.57 | % | ||||
|
A.
Dwight Utz
|
16,586 | (12) | .24 | % | ||||
|
All
directors and executive officers as a group (17 persons)
|
2,222,111 | 32.64 | % | |||||
_______________
|
(1)
|
Stock
held by our Directors' Deferred Compensation Trust (the “Trust”)
is beneficially owned by its Plan Administrator, our Executive
Committee, the members of which could be deemed to share beneficial
ownership of all Stock held in the Trust (347,361 shares or 5.14% as of
March 31, 2008). For each director, the table includes the
number of shares held for his or her account only, while the group figure
includes all shares held in the Trust. Stock held by our
Employee Ownership Plan (the “ESOP”) is not included in the table, except
that shares allocated to an individual's account are included as
beneficially owned by that individual. Shares which may be
acquired by exercise of currently exercisable options (“Current Options”)
are deemed outstanding for purposes of computing the percentage of
outstanding Stock owned by persons beneficially owning such shares and by
all directors and executive officers as a group but are not otherwise
deemed to be outstanding.
|
|
(2)
|
Includes
47,826 shares as to which he shares voting and investment
power.
|
|
(3)
|
Includes
227,927 shares as to which he shares voting and investment
power. Mr. Cloutier's address is P. O. Box 3745, Lafayette,
Louisiana 70502.
|
|
(4)
|
Includes
8,998 shares as to which he shares voting and investment
power.
|
-7-
|
(5)
|
Includes
1,244 shares as to which she shares voting and investment
power.
|
|
(6)
|
Includes
404,477 shares as to which he shares voting and investment
power. Dr. Hargroder's address is P. O. Box 1049, Jennings,
Louisiana 70546.
|
|
(7)
|
Includes
131,303 shares as to which he shares voting and investment
power.
|
|
(8)
|
Includes
20,539 shares as to which he shares voting and investment
power.
|
|
(9)
|
Includes
6,092 shares as to which he shares voting and investment
power.
|
|
(10)
|
Includes
5,719 shares as to which he shares voting and investment
power.
|
|
(11)
|
Includes
51,468 shares as to which he shares voting and investment
power.
|
|
(12)
|
Includes
1,555 shares as to which he shares voting and investment
power.
|
_______________________
-8-
The
following table shows the number of shares in the Trust and ESOP, and the number
of shares subject to Current Options, that have been included in the above
Ownership Table.
|
Name
|
Trust
|
ESOP
|
Current
Options
|
|||||||||
|
Will
G. Charbonnet, Sr.
|
49,307 | -- | -- | |||||||||
|
C.
R. Cloutier
|
60,040 | 40,238 | 24,816 | |||||||||
|
James
R. Davis, Jr.
|
38,994 | -- | -- | |||||||||
|
Karen
L. Hail
|
38,507 | 53,477 | -- | |||||||||
|
J.
B. Hargroder, M.D.
|
53,025 | -- | -- | |||||||||
|
Clayton
Paul Hilliard
|
22,425 | -- | -- | |||||||||
|
Milton
B. Kidd, III, O.D.
|
17,687 | -- | -- | |||||||||
|
Timothy
J. Lemoine
|
4,336 | -- | -- | |||||||||
|
R.
Glenn Pumpelly
|
-- | -- | -- | |||||||||
|
William
M. Simmons
|
50,826 | -- | -- | |||||||||
|
Joseph
V. Tortorice, Jr.
|
622 | -- | -- | |||||||||
|
J.
Eustis Corrigan, Jr.
|
-- | -- | 19,688 | |||||||||
|
Donald
R. Landry
|
-- | 25,507 | -- | |||||||||
|
A.
Dwight Utz
|
-- | 2,399 | 12,813 | |||||||||
Security
Ownership of Certain Beneficial Owners
The
following lists as of March 31, 2008, the only persons other than the persons
listed in the table above known to us to beneficially own more than five percent
of our Stock.
|
Name
and Address of Beneficial Owner
|
Shares
Beneficially Owned
|
Percent
of Class
|
||||||
|
MidSouth
Bancorp, Inc., Employee Stock Ownership Plan,
ESOP
Trustees and ESOP Administrative Committee
P.
O. Box 3745, Lafayette, LA 70502
|
530,462 | (1) | 7.84 | % | ||||
|
MidSouth Bancorp, Inc.,
(2)
Directors
Deferred Compensation Plan,
Executive
Committee
P.
O. Box 3745, Lafayette, LA 70502
|
347,361 | 5.14 | % | |||||
___________________
|
(1)
|
The
Administrative Committee directs the Trustees how to vote the
approximately 4,966 unallocated shares in the ESOP as of March 31,
2008. Voting rights of the shares allocated to ESOP
participants' accounts are passed through to them. The Trustees
have investment power with respect to the ESOP's assets, but must exercise
it in accordance with an investment policy established by the
Administrative Committee. The Trustees are Donald R. Landry, an executive
officer, and Katherine Gardner and Brenda Jordan, two Bank
employees. The Administrative Committee consists of
employees Polly Leonard and Felicia Savoie and Teri S.
Stelly.
|
|
(2)
|
See
Note (1) to the Table of Security Ownership of
Management.
|
_________________________
-9-
Certain
Transactions
Directors,
nominees and executive officers and their associates have been customers of, and
have borrowed from, our bank subsidiaries in the ordinary course of business,
and such transactions are expected to continue in the future. In the
opinion of management, our loan policy is less favorable to those persons than
to other customers.
C. R.
Cloutier and his wife, Brenda Cloutier have pledged 15,000 shares of our Stock
to Whitney Bank securing a loan in the amount of $284,000 for their daughter's
daycare business. Additionally, Mr. and Mrs. Cloutier have pledged
6,979 shares of our Stock to First National Banker's Bank to secure a personal
loan in the amount of $140,000.
James R.
Davis has pledged 27,355 shares of our Stock to Capital One
Investments to secure a $250,000 line of credit.
C. P.
Hilliard has pledged 43,572 shares of our Stock to MidSouth Bank as partial
security on a $1,000,000 line of credit with a balance outstanding of
$296,423.
_________________________
-10-
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
The
following Compensation Discussion and Analysis may contain statements regarding
future individual and company performance targets or goals. We have
disclosed these targets or goals in the limited context of the Company’s
compensation programs; and, therefore, you should not take these statements to
be statements of management’s expectations or estimates of results or other
guidance. We specifically caution investors not to apply such
statements to other contexts.
This
Compensation Discussion and Analysis provides insight into the Company’s
executive compensation programs. It explains the philosophy
underlying our compensation strategy and the fundamental elements of
compensation paid to our Chief Executive Officer, Chief Financial Officer, and
other individuals included in the Summary Compensation Table (“Named Executive
Officers”). Specifically, this Compensation Discussion and Analysis
addresses the following:
|
·
|
Objectives
of our compensation programs;
|
|
·
|
What
our compensation programs are designed to
reward;
|
|
·
|
Elements
of compensation provided to our executive
officers;
|
|
|
The
purpose of each element of
compensation
|
|
|
Why
we elect to pay each element of
compensation
|
|
|
How
each element of compensation was determined by the
Committee
|
|
|
How
each element and our decisions regarding its payment relate to our
goals
|
|
·
|
Process
for determining executive officer compensation;
and
|
|
·
|
Other
important compensation policies affecting our executive
officers.
|
During
2007, the Company began a restructuring process to meet the demands and changes
of the business brought on by the rapid growth and increase in size of the
Company. The restructuring process impacted the implementation of
changes in Named Executive Officer compensation during 2007, as well as the
allocation of various compensation elements to these employees during the past
year. Throughout this document we highlight the specific impact of
this process as we discuss the Company’s executive compensation elements and
programs.
The
Personnel Committee of the Board of Directors (“Committee”) administers our
executive compensation programs. During 2007, the Committee consisted
of Will Charbonnet, Sr. (Chairman), James R. Davis, Jr., J. B. Hargroder, M.D.,
and Joseph V. Tortorice, Jr. The members of the Committee all qualify
as independent, outside members of the Board of Directors in accordance with the
requirements of the American Stock Exchange (AMEX), current SEC regulations, and
section 162(m) of the Internal Revenue Code.
Objectives
of Our Compensation Programs
The
Committee has the responsibility for continually monitoring the compensation
paid to our executive officers. The Committee believes that
compensation of our executive officers should encourage creation of stockholder
value and achievement of strategic corporate
objectives. Specifically, the Committee ensures the total
compensation package for our executive officers will serve to:
-11-
|
·
|
Attract,
retain, and motivate outstanding executive officers who add value to the
Company based on individual and team
contributions;
|
|
·
|
Provide
a competitive salary structure in all markets where we operate;
and
|
|
·
|
Align
the executive officers’ interests with the long-term interests of our
shareholders to incent them to enhance shareholder
value.
|
What
Our Compensation Programs Are Designed to Reward
Our
executive officers' compensation is designed to reward short term performance as
well as long term performance. Our policy is to provide a large
portion of compensation in cash, including an annual base salary, and an
opportunity to receive an annual incentive that is based on basic earnings per
share (EPS). We provide this to keep the executive officers focused
on current earnings and stability and to strongly align the executives with the
interests of our shareholders. We also view the annual incentive as a
long term performance vehicle because we examine performance measures including
credit quality, credit risk management, deposit growth, regulatory compliance,
return on equity, and growth in our assets and income when assessing incentive
grants to the executive officers. Credit quality, non accruals, and
charge offs are impacted by long term performance such that performance in the
current year affects these measures in future years.
Additionally,
we have historically provided additional compensation benefits through our 1997
Stock Incentive Plan and our Employee Stock Ownership Plan (ESOP), which keeps
the executive officers focused on our long term goals. On a going forward basis,
we will continue with our ESOP and will be providing equity compensation through
our shareholder approved 2007 Omnibus Incentive Plan.
Over the
last several years, our performance has been above average as compared to
similarly situated financial institutions, and the compensation programs are
designed to reward and promote the continuation of this
performance. We aim to provide a substantial portion of executive
officers compensation in the form of performance based compensation through the
annual incentive opportunity. Therefore, the increase in the
executive officers compensation over the past few years is based on this
exceptional performance.
Process
for Determining Executive Officer Compensation
• Role of the Committee and the
Executive Officers. The Committee along with the Board of Director’s
oversight and approval will annually review and approve goals and objectives
relating to compensation of the Chief Executive Officer. Based on
this evaluation, the Committee recommends the Chief Executive Officer’s
compensation level to the Board of Directors. The Committee also
consults with the Chief Executive Officer on the compensation levels of the
other executive officers. Based on these discussions, the Committee
will recommend, along with the Chief Executive Officer, the other executive
officers compensation levels to the Board of Directors.
Additionally,
the Committee periodically reviews our incentive plans and other equity based
plans. The Committee reviews, adopts, and submits to the Board of
Directors any proposed arrangement or plan and any amendment to an existing
arrangement or plan that provides or will provide benefits to the executive
officers collectively or to an individual executive officer. The
Committee has sole authority to retain and terminate a compensation consultant
or other advisor as the Committee sees appropriate.
-12-
• Role of the Compensation
Consultant. In making compensation decisions for 2007, the
Committee did not have a contractual arrangement with a compensation consultant
to advise in setting the amount or determining the form of compensation to the
executive officers.
At the
end of 2007, the Committee engaged Amalfi Consulting LLC (formerly the
Compensation Practice of Clark Consulting) to conduct an overall compensation
review of the Company’s top executive employees, including all of the five Named
Executive Officers presented in this proxy. The results of the
compensation review will be used on a going-forward basis in making compensation
decisions related to the top executive employees of the Company.
In
addition to the overall compensation review, Amalfi Consulting LLC assisted the
Company with the creation of plan documents related to executive compensation
programs and with the production of this proxy filing. Amalfi
Consulting LLC reported directly to the Committee on all projects conducted and
performed no other services for the Company in 2007.
• Benchmarking. To ensure the
competitiveness of our total compensation package, the Committee uses salary
survey information from several different nationally recognized surveys that
focus on our industry and region. Specifically, the Company used salary survey
information compiled by K G & Associates that included surveys from Watson
Wyatt and Mercer. This information was used to evaluate how
comparable institutions are paying their executive management. In
2007, K G & Associates conducted no other business with the
Company. Along with the data compiled by K G & Associates, the
Committee considered data from an additional compensation survey conducted by
Scheshunoff Management Services.
In using
survey data, we benchmark both base salary and annual incentive. Long
term incentives are not benchmarked because we feel that long term incentives
are not part of the basic compensation of the executive
officers. Long term incentives are viewed as an additional
opportunity for the executive officer based on the value of our stock
price.
Based on
our prior year earnings, the total cash compensation paid to the Named Executive
Officers, which includes base salary and annual incentive, is approximately at
the 75th
percentile of compensation market levels as reported by the
surveys.
As noted
earlier, at the end of 2007 the Committee, in coordination with Amalfi
Consulting LLC, conducted an overall review of the executive compensation
program. As part of this review, a peer group of 20 banks comparable
to MidSouth in terms of geographic location, asset size, growth and performance
was selected. We present the peer group in the table below. Values
reported in the table are as of year-end 2006.
-13-
Benchmarking
Peer Group
|
Total
Assets
|
Asset
Growth
|
ROAA
|
ROAE
|
|||||
|
2006Y
|
3
Yr
|
2006Y
|
2006Y
|
|||||
|
Company
Name
|
Ticker
|
City
|
State
|
($000)
|
(%)
|
(%)
|
(%)
|
|
|
1
|
First
M&F Corporation
|
FMFC
|
Kosciusko
|
MS
|
1,540,275
|
42.8%
|
0.94%
|
11.4%
|
|
2
|
Great
Florida Bank
|
GFLBA
|
Coral
Gables
|
FL
|
1,535,981
|
NA
|
0.57%
|
3.7%
|
|
3
|
ViewPoint
Financial Group (MHC)
|
VPFG
|
Plano
|
TX
|
1,529,760
|
16.5%
|
0.65%
|
6.8%
|
|
4
|
Southern
Community Financial Corporation
|
SCMF
|
Winston-Salem
|
NC
|
1,436,465
|
79.8%
|
0.31%
|
3.1%
|
|
5
|
BancTrust
Financial Group, Inc.
|
BTFG
|
Mobile
|
AL
|
1,353,406
|
25.7%
|
1.02%
|
9.7%
|
|
6
|
Encore
Bancshares, Inc.
|
EBTX
|
Houston
|
TX
|
1,336,843
|
0.8%
|
0.57%
|
8.3%
|
|
7
|
TIB
Financial Corp.
|
TIBB
|
Naples
|
FL
|
1,319,093
|
97.1%
|
0.76%
|
11.4%
|
|
8
|
MetroCorp
Bancshares, Inc.
|
MCBI
|
Houston
|
TX
|
1,268,434
|
46.3%
|
1.13%
|
13.6%
|
|
9
|
CenterState
Banks of Florida, Inc.
|
CSFL
|
Winter
Haven
|
FL
|
1,077,102
|
76.9%
|
0.86%
|
7.7%
|
|
10
|
Florida
Community Banks, Inc.
|
FLCM
|
Immokalee
|
FL
|
1,016,677
|
93.5%
|
2.31%
|
28.9%
|
|
11
|
Peoples
Financial Corporation
|
PFBX
|
Biloxi
|
MS
|
964,023
|
66.3%
|
1.40%
|
14.0%
|
|
12
|
Pulaski
Financial Corp.
|
PULB
|
Saint
Louis
|
MO
|
962,460
|
139.8%
|
1.14%
|
15.0%
|
|
13
|
Peoples
BancTrust Company, Inc.
|
PBTC
|
Selma
|
AL
|
910,705
|
17.0%
|
0.95%
|
9.5%
|
|
14
|
Nexity
Financial Corporation
|
NXTY
|
Birmingham
|
AL
|
891,022
|
70.5%
|
0.75%
|
9.8%
|
|
15
|
Bank
of Florida Corporation
|
BOFL
|
Naples
|
FL
|
883,102
|
296.7%
|
0.32%
|
2.3%
|
|
16
|
First
Federal Bancshares of Arkansas, Inc.
|
FFBH
|
Harrison
|
AR
|
852,475
|
23.4%
|
0.85%
|
9.4%
|
|
17
|
Federal
Trust Corporation
|
FDT
|
Sanford
|
FL
|
722,964
|
54.4%
|
0.46%
|
6.7%
|
|
18
|
United
Security Bancshares, Inc.
|
USBI
|
Thomasville
|
AL
|
646,296
|
13.9%
|
2.24%
|
16.1%
|
|
19
|
Auburn
National Bancorporation, Inc.
|
AUBN
|
Auburn
|
AL
|
635,126
|
7.6%
|
1.06%
|
14.7%
|
|
20
|
Sun
American Bancorp
|
SAMB
|
Boca
Raton
|
FL
|
503,883
|
435.5%
|
0.97%
|
5.1%
|
|
Average
|
1,069,305
|
84.4%
|
0.96%
|
10.4%
|
||||
|
50th
Percentile
|
990,350
|
54.4%
|
0.90%
|
9.6%
|
||||
|
MidSouth
Bancorp, Inc.
|
MSL
|
Lafayette
|
LA
|
805,022
|
86.0%
|
1.08%
|
14.7%
|
Although
we did not use the data from this review to assess or change compensation
programs for our Named Executive Officers during 2007, we plan to use the
information from the review to make decisions on a going-forward basis for
2008.
Elements
of Compensation
We have
determined that it is our and our shareholders’ best interest to provide
competitive compensation to attract and retain the most qualified executive
officers with demonstrated leadership abilities that will secure our
future. We do this by providing compensation that is tied to our
short and long term performance goals to motivate our executive officers to
attain these goals.
The
performance goals that we examine may include credit quality, credit risk
management, deposit growth, regulatory compliance, return on equity, and growth
in our assets and income.
We have
not made any material changes in individual compensation in 2007 compared to
2006. In addition, due to possible changes in roles and
responsibilities as a result of the restructuring, adjustments to base salary
salaries and other compensation elements have been postponed until
2008.
-14-
The
elements of compensation used during 2007 to compensate the executive officers
include:
|
·
|
Base
Salary;
|
|
·
|
Annual
Incentives;
|
|
·
|
Retirement
Benefits;
|
|
·
|
Health
and Insurance Plans;
|
|
·
|
Long
Term Equity Awards; and
|
|
·
|
Perquisites.
|
Below is
a discussion of each element of compensation listed above, including the purpose
of each element of compensation, why we elect to pay each element of
compensation, how each element of compensation was determined by the Committee,
and how each element and our decisions regarding the payment of each element
relate to our goals.
• Base Salary. Although we favor
the use of incentive compensation, we believe it is necessary and prudent to pay
a portion of total compensation in the form of a competitive fixed base
salary. We believe the payment of a fixed base salary to our
executive officers helps maintain productivity by minimizing anxiety that a
financial or industry slump could impair their personal and family
planning.
It is our
goal to set base salary to reflect the role and responsibility of the executive
officer over time and to comfortably meet the executive’s needs. Base
salary, although not directly connected to performance, is essential to compete
for talent and our failure to pay a competitive base salary could harm our
ability to recruit and retain management. Base salary was initially
determined by analyzing base salaries of comparable executives in the
marketplace and considering the abilities, qualifications, accomplishments,
prior work experience, and cost of living of the executive officer.
When
setting base salary levels, the Committee takes into account the total direct
cash compensation amount targeted for each executive. Essentially,
base salary is established by determining the amount of money in combination
with the anticipated amount of annual incentive that was necessary to attract
and retain top caliber executive officers.
Base
salary adjustments are generally considered annually in December on a
discretionary basis and take into account the executive officer’s individual
performance over the prior year, changes in the executive officer’s
responsibilities, our performance, and market levels of
compensation.
In
December of 2005 and 2006, the Committee recommended to the Board 2006 and 2007
base salary for the Chief Executive Officer and in consultation with the Chief
Executive Officer 2006 and 2007 base salary for the other executive officers
except for Mr. Corrigan’s 2006 base salary. Mr. Corrigan was hired
during 2006 and his base salary for 2006 was set by the Chief Executive Officer
and approved by the Committee upon his hire date.
-15-
Base
salary for 2006 and 2007 for each of the Named Executive Officers is as
follows:
|
2006
Base Salary
|
2007
Base
Salary
|
%
Increase
|
||||||||||
|
C.R.
Cloutier
|
$ | 196,000 | $ | 200,000 | 2.0 | % | ||||||
|
J.
Eustis Corrigan Jr.
|
$ | 165,000 | $ | 175,000 | 6.1 | % | ||||||
|
Karen
L. Hail
|
$ | 149,595 | $ | 157,000 | 5.0 | % | ||||||
|
Donald
R. Landry
|
$ | 139,552 | $ | 147,000 | 5.3 | % | ||||||
|
A.
Dwight Utz
|
$ | 98,348 | $ | 112,000 | 13.9 | % | ||||||
The 13.9%
increase for Mr. Utz reflects both an increase in job responsibility occurring
in 2007, and a market pay adjustment. The 6.1% increase for Mr.
Corrigan is based upon terms of his employment agreement associated with his
hire in 2006. Other increases reflect normal merit and market
adjustments.
As noted
earlier, due to the restructuring activities of the Company decisions on bases
salary adjustment for 2008 have not been determined. Once base salary
decisions have been made, the new salaries will be made effective retroactively
to January 1, 2008.
• Annual Incentives. Annual
incentives are provided to the executive officers through the Company’s
Incentive Compensation Plan (CICP).
Company’s
Incentive Compensation Plan (CICP)
Annual
incentives are primarily designed to reward increased shareholder value as well
as to focus the executive officers on our goals for a particular year and to
reward executive officers upon achievement of those goals. We believe
annual incentives are an important element of executive officers’ compensation
because they provide the incentive and motivation to lead us in achieving
success. The annual incentive under the CICP is tied to basic earnings per share
(EPS) and makes up a very significant part of the executive officer’s
compensation. If the executive officer is able to significantly
improve our performance then the executive officer will have a significant
increase in annual incentive for the year. If the performance is
below expectations then the executive officer will have a reduction in
compensation.
We use a
system of annual incentives to reward the executive officers quarterly based on
EPS. Before the beginning of each year, the Committee awards each
executive officer a specified number of phantom shares of our
stock. Annual incentive is determined quarterly equal to the number
of phantom shares times our basic EPS for the quarter. Sixty percent
of the amount determined is paid each quarter and the balance is paid at the end
of the year, provided we were profitable for the entire year. If we
are not profitable for the year (i.e., the fourth quarter results in a large
loss) then the balance that was held back will not be paid.
The
number of phantom shares granted each year is generally considered in December
on a discretionary basis and takes into account the executive officer’s
individual performance compared to the prior year, his or her importance to us,
and our overall financial performance. The granting of phantom shares
as the annual incentive in lieu of awarding cash bonuses is preferred by the
Committee.
-16-
In
December of 2006 and 2007, the Committee granted phantom shares for 2007 and
2008 to each of the Named Executive Officers. Phantom shares were
granted to the Named Executive Officers for 2007 and 2008 as
follows:
|
Phantom
Share Grants
|
||||||||||||||||
|
Named
Executive Officer
|
2007
|
2008
|
||||||||||||||
|
#
of Shares
|
Dollar
Value Earned(1)
|
#
of Shares
|
Dollar
Value Estimate(1)
|
|||||||||||||
|
C.R.
Cloutier
|
125,000 | $ | 173,750 | 131,250 | $ | 175,875 | ||||||||||
|
J.
Eustis Corrigan Jr.
|
37,500 | $ | 52,125 | 39,375 | $ | 52,763 | ||||||||||
|
Karen
L. Hail
|
62,500 | $ | 86,875 | 65,625 | $ | 87,938 | ||||||||||
|
Donald
R. Landry
|
45,000 | $ | 62,550 | 47,250 | $ | 63,315 | ||||||||||
|
A.
Dwight Utz
|
27,549 | $ | 38,293 | 28,926 | $ | 38,761 | ||||||||||
(1) Both
earned and estimated amounts based upon a 12/31/2007 basic undiluted EPS value
of $1.34. The share numbers were adjusted during 2007 to reflect a 5%
stock dividend on September 19, 2007. The number of shares for 2007
represents the amount of shares allocated at the beginning of the plan year. The
2008 numbers reflect the impact of the 5% stock dividend.
• Long Term Equity Awards.
Salary and annual incentives tend to reward shorter term goals; however, it is
important to focus on long term performance, which is why we have historically
granted stock options. A stock option only rewards the executive if
our stock price increases over a period of time. Due to the restructuring
activities of the Company, the Committee did not award stock options to any of
the Named Executive Officers in 2007. All long-term equity award
programs will be reviewed during 2008.
The
Company did make contributions to the ESOP in 2007 on behalf of the Named
Executive Officers. It is our belief that executive officers need to
have a significant interest tied to long term performance and increasing
shareholder value. We believe the best way to accomplish this is
through stock ownership of the Company. We encourage executive
officers to own stock and provide the following programs to encourage stock
ownership. We describe our employee stock ownership plan, our 1997 Stock
Incentive Plan, and our 2007 Omnibus Incentive Compensation Plan
below.
Employee Stock Ownership
Plan: To encourage ownership by all employees and therefore
tie their interest to the interests of the shareholders, we established an
employee stock ownership plan (“ESOP”) in 1986. The ESOP covers all
employees who meet minimum age and service requirements. We make annual
contributions to the ESOP in amounts as determined by the Board of
Directors.
1997 Stock Incentive
Plan: In addition to the ESOP, we have periodically granted
stock options to executive officers and other senior employees. Our
policy has been to grant stock options to executive officers to ensure that they
have options currently outstanding. To the extent that the executive
officer has unvested options outstanding, we feel that the executive officer is
tied to our long term performance and will only grant additional awards to the
extent that all awards are vested. We have historically granted to executive
officers stock options that vest 20% per year over a 5 year
period. During 2007, this equity-based incentive plan was replaced
with the shareholder approved omnibus incentive plan described
below.
2007 Omnibus Incentive
Plan: In 2007 we received shareholder approval for an Omnibus
Incentive Plan.
-17-
No equity
awards were made under this plan in 2007. This plan provides the
Company with flexibility in the design and implementation of long-term equity
award programs. Under this plan the Committee may award a variety of
forms of equity such as restricted stock, stock appreciation rights, and
performance shares. For details on the plan please refer to the
Company’s 2007 Proxy filed on May 30, 2007.
Stock
option grants always have an exercise price equal to our stock price at the time
they are awarded. We never engaged in the back-dating of stock
options nor have we retroactively modified our stock option awards.
We grant
stock options upon hire of an executive officer, upon exceptional achievement,
or to ensure that an executive officer has outstanding unvested
options. We did not provide any additional long term compensation
under the Stock Incentive Plan in 2007
We
believe that stock options are the preferable method of incenting and rewarding
long term performance because stock options provide incentive to increase
shareholder value and serve as a good retention vehicle for the Named Executive
Officers.
• Perquisites. The Company
provided the following perquisites in 2007 to certain executive
officers:
|
|
Company
car;
|
|
|
Moving
expenses;
|
|
|
Country
club membership;
|
|
|
Health
club membership;
|
|
|
Dinner
club membership; and
|
|
|
Supplemental
long-term disability and life
insurance.
|
The total
cost for all of these perquisites was approximately $38,000. We
provide further details on perquisites in a supplementary table following the
Summary Compensation Table in this document.
The Named
Executive Officers are all eligible to receive additional perquisites if the
Committee so determines. We view certain perquisites as beneficial to us as well
as compensation to the executive officers. For example, the club
memberships are regularly used in the general course of our business such as for
business meetings or entertaining. The Company cars are used
primarily for business purposes.
• Retirement Benefits. We do not
have a defined benefit pension plan. However, executive officers are
eligible to participate in our 401(k) retirement plan, which is a Company-wide,
tax-qualified retirement plan. The intent of this plan is to provide
all employees with a tax-advantaged savings opportunity for
retirement. We sponsor this plan to help employees in all levels of
the Company save and accumulate assets for use during their
retirement. As required, eligible pay under this plan is capped at
Internal Revenue Code (IRC) annual limits. We make annual matching
contributions to the 401(k) retirement plan on behalf of the executive
officers.
We have
entered into Executive Indexed Salary Continuation Agreements with Mr. Cloutier,
Ms. Hail, and Mr. Landry. The agreements provide that upon the
executive officer reaching normal retirement age the executive officer will
receive payment of amounts as defined in the agreement and presented in the
narrative of the Nonqualified
Deferred Compensation section of this document.
-18-
• Health and Insurance Plans.
The executive officers are eligible to participate in Company-sponsored benefit
plans on the same terms and conditions as those generally provided to salaried
employees. Basic health benefits, dental benefits, and similar
programs are provided to make certain that access to healthcare and income
protection is available to our employees and the employee’s family
members. The cost of Company-sponsored benefit plans are negotiated
with the providers of such benefits and the executive officers contribute to the
cost of the benefits.
The
Company maintains a split dollar insurance arrangement with Mr. Cloutier, Ms.
Hail and Mr. Landry. The arrangement provides benefits to the
executive officer’s designated beneficiary in the event of the executive
officer’s death.
Additionally,
we provide Mr. Cloutier, Ms. Hail and Mr. Landry with a supplemental Term Life
Insurance Policy payable to a beneficiary of their choice and a supplemental
long-term disability policy. We provide additional details on the
benefits provided under these policies in the Potential Payments Upon Termination
or Change in Control section.
• Compensation
Mix. The Company incorporates a significant portion of the
NEOs compensation in the form of annual incentives. As noted earlier,
the annual incentive plan is tied to earnings per share and provides a strong
link between executive compensation and shareholder interests. In
addition, when determining compensation levels the Committee takes into
consideration all the elements of compensation to arrive at a total compensation
amount.
In the
figures on the following page, we present the actual pay mix results during 2006
and 2007 for each of our NEOs. Because Mr. Corrigan was hired in
mid-2006, we only present his first complete year of employment at the
Company.
-19-
Other
Important Compensation Policies Affecting Executive Officers
• Financial
Restatement. Currently, the Committee does not have an
official policy governing retroactive modifications to any cash or equity based
incentive compensation paid to the executive officers where the payment of such
compensation was predicated upon the achievement of specified financial results
that were subsequently the subject of a restatement. However, we
adhere to Section 304 of the Sarbanes-Oxley Act of 2002 which requires that if a
company is forced to restate its financials the company’s Chief Executive
Officer and Chief Financial Officer must give back certain incentives based or
equity based compensation received.
We have
never retroactively modified incentives or equity based compensation for our
employees.
The
Incentive Compensation Plan pays out quarterly based on our EPS for each
quarter; however, only 60% of the value is paid out. The remaining
40% is held back until after year-end earnings have been
determined. If there is a decline in earnings for the year, amounts
held back may not be paid to the executive officers as the annual incentive is
based on our EPS.
-20-
• Stock Ownership
Requirements. The Committee does not maintain a policy
relating to stock ownership guidelines or requirements for our executive
officers. The Committee does not believe it is necessary to impose
such a policy on the executive officers. Currently, the Named
Executive Officers, as a group, hold a substantial portion of the Company’s
stock. If circumstances change, the Committee will review whether
such a policy is appropriate for its executive officers.
• Trading in the Company’s Stock
Derivatives. The Committee does not have a policy prohibiting
executive officers from purchasing or selling options on our stock, engaging in
short sales with respect to our stock, or trading in puts, calls,
straddles, equity swaps or other derivative securities that are directly linked
to our stock. We are not aware that any of the executive
officers have entered into these types of arrangements.
• Tax Deductibility of the Named
Executive Officers’ Incentive and Equity Compensation. Section
162(m) of the Internal Revenue Code generally disallows a tax deduction to
public companies for compensation over $1.0 million paid to a corporation’s
Chief Executive Officer and the four other most highly compensated executive
officers.
In
connection with the compensation of our executive officers, the Committee is
aware of section 162(m) as it relates to deductibility of qualifying
compensation paid to executive officers. The Committee believes that
compensation to be paid in 2007 will not exceed the deductibility limitations on
non-excluded compensation to certain executive officers.
• Employment
Agreements. We have entered into employment agreements with
our Chief Executive Officer, Chief Operating Officer, and Chief Financial
Officer. We will enter into a new employment agreement with an
executive officer or a potential candidate only when it is essential to attract
or retain an exceptional employee. Any employment agreement with an
executive officer must be approved by the Board of Directors and should have as
short a term as possible and provide as few terms and conditions as are
necessary to accomplish its purpose.
All of
the employment agreements have trigger events that provide for the payment of
severance to the executive officer upon certain termination
events. We have included these trigger events in the employment
agreements to provide a safe harbor so that the executive officer can provide
services to us without being concerned about his/her
employment.
We do not
maintain a separate severance plan for our executive
officers. Severance benefits for our executive officers are limited
to those as set forth in the respective executive officer’s employment agreement
with us.
Set forth
below are the general terms and conditions of each of the employment
agreements. Each executive has the right to voluntarily terminate
his/her employment at any time.
___________________
-21-
General
C.R.
Cloutier - Chief Executive Officer
Karen
L. Hail - Chief Operating Officer
Each
employment agreement is a one-year written agreement and is automatically
extended for one year every year thereafter, unless written notice of
termination is given by any party to the agreement not later than 60 days before
the end of the year. Under Mr. Cloutier's and Ms. Hail's agreement,
each of them receive a minimum annual base salary, term life insurance in the
amount of four times annual base salary payable to a beneficiary of his or her
choice, disability insurance of not less than two-thirds of annual base salary,
an automobile furnished by the Company (including insurance, gasoline, and other
routine maintenance), membership at a health club, and membership at a dinner
club.
In the
event that we terminate Mr. Cloutier’s or Ms. Hail's employment or do not extend
the agreement, each will be entitled to severance pay equal to annual base
salary at the time of termination. We will not be obligated to pay
any severance pay in the event that he or she terminates voluntarily or is
removed by a regulatory body.
Upon a
change in control of the Company, Mr. Cloutier or Ms. Hail each has the right to
resign employment for Good Reason and receive as severance pay a sum equal to
annual base salary immediately prior to the change in control, payable in twelve
equal installments. Good Reason is deemed to occur upon one of the
following events:
|
|
(1)
|
a
reduction in the salary or benefits of the executive officer in effect
before the effective date of the change in control or within two years
after the effective date of the change in
control;
|
|
|
(2)
|
a
requirement that executive officer move his residence out of Lafayette,
Louisiana;
|
|
|
(3)
|
a
requirement that executive officer engage in excessive business travel
(i.e., travel of more than 75 miles from Lafayette, Louisiana for more
than an average of seven business days per month) as part of his job
duties; or
|
|
|
(4)
|
the
executive officer’s office is moved outside of the Lafayette
MSA.
|
None of
the executive officers is entitled to receive a Gross-Up payment in the event
that he or she is subject to section 280G excise tax pursuant to a change in
control of the Company.
J.
Eustis Corrigan, Jr. - Chief Financial Officer
Mr.
Corrigan’s employment agreement provides that he will receive a minimum annual
base salary and is eligible to receive all standard benefits provided by us to
other employees in positions comparable to his position. We are
required to reimburse him for his COBRA premiums being paid in connection with
his separation of employment from his previous employer until the date that he
becomes eligible to participate in our group health insurance
programs. In addition, Mr. Corrigan received an initial grant of
30,000 phantom shares under the Incentive Compensation Plan and 15,000 stock
options under our Stock Incentive Plan. These amounts have been
adjusted accordingly for the 5:4 stock split on October 24, 2006, and the 5%
stock dividend on September 19, 2007. We are required to provide him
with either a health club membership or a country club
membership. The agreement also provides for the reimbursement of
moving expenses incurred by Mr. Corrigan in moving from Texas to Lafayette and a
signing bonus of $10,000. Both the moving expense reimbursement and
signing bonus are earned over a three-year period beginning upon date of
hire.
-22-
Upon the
occurrence of a change in control of the Company during the first five years of
Mr. Corrigan’s employment, Mr. Corrigan shall receive a sum equal to two times
his annual base salary plus his prior year annual incentive payable in equal
installments over twenty-four months in the event that his employment is
involuntarily terminated by the Company.
• Tax and Accounting
Implications. We consider the tax and accounting implication
regarding the delivery of different forms of compensation. We believe
that the most efficient form of compensation for the executive officers is cash
and, therefore, place a greater emphasis on cash compensation over other forms
(i.e., equity).
COMPENSATION
COMMITTEE REPORT
The
Personnel Committee has reviewed and discussed the Compensation Discussion and
Analysis with management. Based upon such review, the related
discussions and such other matters deemed relevant and appropriate to the
Personnel Committee, the Personnel Committee has recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this
Proxy Statement to be delivered to shareholders.
Submitted by the Personnel
Committee:
Will Charbonnet Sr.,
Chairman
James R. Davis, Jr.
J. B. Hargroder, M.D.
Joseph V. Tortorice, Jr.
-23-
SUMMARY
COMPENSATION TABLE
The
Summary Compensation Table below displays the total compensation awarded to,
earned by or paid to the Named Executive Officers for 2006 and
2007. All amounts shown below are in dollars.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards(3)
($)
|
Non-Equity
Incentive Plan Compensation (4)
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings (5)
($)
|
All
Other Comp.(6)
($)
|
Total
($)
|
||||||||||||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||||||||||||||||
|
C.R.
Cloutier, President & Chief Executive Officer
|
|||||||||||||||||||||||||||||||||
|
2006
|
$ | 196,000 | $ | 0 | $ | 0 | $ | 10,069 | $ | 163,339 | $ | 0 | $ | 80,216 | $ | 449,624 | |||||||||||||||||
|
2007
|
$ | 199,833 | $ | 0 | $ | 0 | $ | 4,127 | $ | 173,750 | $ | 0 | $ | 85,133 | $ | 462,843 | |||||||||||||||||
|
J.
Eustis Corrigan Jr., EVP & Chief Financial Officer
|
|||||||||||||||||||||||||||||||||
|
2006
|
$ | 85,038 | (1) | $ | 3,333 | (2) | $ | 0 | $ | 13,108 | $ | 24,750 | $ | 0 | $ | 14,140 | $ | 140,369 | |||||||||||||||
|
2007
|
$ | 174,584 | $ | 3,333 | (2) | $ | 0 | $ | 24,650 | $ | 52,125 | $ | 0 | $ | 12,097 | $ | 266,789 | ||||||||||||||||
|
Karen
L. Hail, Senior Executive VP & Chief Operating Officer
|
|||||||||||||||||||||||||||||||||
|
2006
|
$ | 149,595 | $ | 0 | $ | 0 | $ | 4,833 | $ | 82,250 | $ | 0 | $ | 61,900 | $ | 298,578 | |||||||||||||||||
|
2007
|
$ | 156,709 | $ | 0 | $ | 0 | $ | 1,981 | $ | 86,875 | $ | 0 | $ | 67,995 | $ | 313,560 | |||||||||||||||||
|
Donald
R. Landry, Executive VP & Chief Lending Officer
|
|||||||||||||||||||||||||||||||||
|
2006
|
$ | 139,552 | $ | 0 | $ | 0 | $ | 4,028 | $ | 57,733 | $ | 0 | $ | 36,414 | $ | 237,727 | |||||||||||||||||
|
2007
|
$ | 146,708 | $ | 0 | $ | 0 | $ | 1,651 | $ | 62,550 | $ | 0 | $ | 35,513 | $ | 246,422 | |||||||||||||||||
|
A.
Dwight Utz, Senior VP & Retail Executive Manager
|
|||||||||||||||||||||||||||||||||
|
2006
|
$ | 98,348 | $ | 0 | $ | 0 | $ | 5,373 | $ | 44,346 | $ | 0 | $ | 10,172 | $ | 158,239 | |||||||||||||||||
|
2007
|
$ | 112,000 | $ | 0 | $ | 0 | $ | 1,942 | $ | 38,293 | $ | 0 | $ | 10,428 | $ | 162,663 | |||||||||||||||||
___________________
|
(1)
|
Mr.
Corrigan was hired effective June 12, 2006 with a base salary of
$165,000. Base salary above reflects amounts from beginning of
his employment through December 31,
2006
|
|
(2)
|
Mr.
Corrigan received a $10,000 signing bonus upon his hire in
2006. He will earn this bonus ratably over a three-year period
beginning on his hire date.
|
|
(3)
|
Reflects
compensation expense recognized for financial statement reporting purposes
for 2006 and 2007 computed in accordance with Statement of Financial
Accounting Standards No. 123 (revised 2004) Share Based Payment (“FAS
123R”), disregarding the estimate of forfeitures related to service-based
vesting conditions, with respect to awards granted in 2006 and in prior
years.
|
|
|
Assumptions
used in the calculation of this amount are included in footnote 11 to our
audited financial statements for 2006 included in our Annual Report on
Form 10-K filed with the Securities and Exchange Commission ("SEC"),
footnote 1 to our audited financial statements for 2004 included in the
Company’s Annual Report on Form 10-K filed with the SEC and footnote 12 to
the audited financial statements for 2003 included in our Annual Report on
Form 10-KSB filed with the SEC.
|
|
(4)
|
Amounts
paid out pursuant to our Incentive Compensation Plan for awards granted in
December 2005 for 2006 consist of phantom shares granted of 124,118 to Mr.
Cloutier, 62,500 to Ms. Hail, 43,870 to Mr. Landry, and 24,579 to Mr.
Utz. Grants of phantom shares for 2006 have been adjusted for
the 5:4 stock split on October 24, 2006. The phantom shares
paid out based on the basic undiluted earnings per share of $1.316 on
year-ending 12/31/2006. In 2006, Mr. Utz earned $12,000 per the
terms of a Supplemental Incentive Compensation plan based upon deposit and
loan goals. This was the last year of Mr. Utz’s participation in the
Supplemental Incentive Compensation
plan.
|
-24-
|
|
Pursuant
to Mr. Corrigan’s employment agreement, he was granted 37,500 phantom
shares upon his hire date, which has been adjusted for the 5:4 stock split
on October 24, 2006. Mr. Corrigan’s phantom shares paid out
based on a value of $0.66, the combined 3rd quarter and 4th quarter
earnings per share for the 2006 calendar
year.
|
|
|
Amounts
paid out pursuant to our Incentive Compensation Plan for awards granted in
December 2006 for 2007 consist of phantom shares granted of 129,664 to Mr.
Cloutier, 38,899 to Mr. Corrigan Jr., 64,832 to Ms. Hail, 46,679 to Mr.
Landry, and 28,577 to Mr. Utz. Phantom share amounts have been
adjusted from numbers awarded on December 31, 2006 to account for the 5%
stock dividend on September 19, 2007. The phantom shares paid
out $1.34, the basic undiluted earnings per share for the year-ending
12/31/2007.
|
|
(5)
|
The
Company does not provide pension benefits and there were no above market
earnings on deferred compensation in 2006 or
2007.
|
|
(6)
|
We
provide details on the amounts reported for “All Other Compensation” in
the supplementary table
below.
|
|
All
Other
|
C.R.
Cloutier,
President
& Chief Executive Officer
|
J.
Eustis Corrigan Jr., EVP & Chief Financial Officer
|
Karen
L. Hail,
Senior
Executive VP & Chief Operating Officer
|
Donald
R. Landry, Executive VP & Chief Lending Officer
|
A.
Dwight Utz, Senior VP &
Retail
Executive Manager
|
|||||||||||||||||||||||||||||||||||
|
Compensation
|
2006
|
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
2007
|
2006
|
2007
|
||||||||||||||||||||||||||||||
|
Auto
Expense(1)
|
$ | 103 | $ | 169 | -- | -- | $ | 1,764 | $ | 1,487 | $ | 896 | $ | 731 | $ | 476 | $ | 493 | ||||||||||||||||||||||
|
Board
of Director Fees(2)
|
$ | 41,700 | $ | 47,100 | -- | -- | $ | 30,400 | $ | 37,750 | $ | 8,225 | $ | 7,125 | -- | -- | ||||||||||||||||||||||||
|
Cell
Phone/PDA
|
$ | 1,740 | $ | 1,960 | $ | 614 | $ | 1,149 | $ | 572 | $ | 572 | $ | 867 | $ | 1,115 | $ | 828 | $ | 1,076 | ||||||||||||||||||||
|
Club
Membership/Dues(3)
|
$ | 3,697 | $ | 2,980 | $ | 7,239 | $ | 3,830 | $ | 1,205 | $ | 1,205 | $ | 3,863 | $ | 4,489 | $ | 1,064 | $ | 1,197 | ||||||||||||||||||||
|
Employer
401K Contribution
|
$ | 1,371 | $ | 1,817 | $ | 0 | $ | 0 | $ | 1,371 | $ | 1,058 | $ | 1,005 | $ | 727 | $ | 858 | $ | 1,064 | ||||||||||||||||||||
|
Company
Contribution to Indexed Salary Continuation Plan Pre-Retirement Account
(4)
|
$ | 10,721 | $ | 10,880 | -- | -- | $ | 10,079 | $ | 10,274 | $ | 8,649 | $ | 8,841 | -- | -- | ||||||||||||||||||||||||
|
ESOP
Contributions
|
$ | 10,024 | $ | 9,136 | $ | 0 | $ | 3,990 | $ | 10,024 | $ | 9,136 | $ | 8,842 | $ | 8,407 | $ | 6,511 | $ | 6,098 | ||||||||||||||||||||
|
Excess
Life/COBRA Reimbursement(5)
|
-- | -- | $ | 3,659 | $ | 0 | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||||||
|
Housing/Relocation
(6)
|
-- | -- | $ | 2,628 | $ | 2,628 | -- | -- | -- | -- | -- | -- | ||||||||||||||||||||||||||||
|
Imputed
Income from Split-Dollar Life Insurance
|
$ | 660 | $ | 662 | -- | -- | $ | 587 | $ | 615 | $ | 466 | $ | 477 | -- | -- | ||||||||||||||||||||||||
|
Supplemental
Life Insurance
|
$ | 2,932 | $ | 3,161 | -- | -- | $ | 659 | $ | 659 | $ | 772 | $ | 772 | -- | -- | ||||||||||||||||||||||||
|
Supplemental
Long-Term Disability Insurance
|
$ | 6,768 | $ | 6,768 | -- | -- | $ | 4,739 | $ | 4,739 | $ | 2,329 | $ | 2,329 | -- | -- | ||||||||||||||||||||||||
|
Uniform
Allowance
|
$ | 500 | $ | 500 | $ | 0 | $ | 500 | $ | 500 | $ | 500 | $ | 500 | $ | 500 | $ | 435 | $ | 500 | ||||||||||||||||||||
|
Total
|
$ | 80,216 | $ | 85,133 | $ | 14,140 | $ | 12,097 | $ | 61,900 | $ | 67,995 | $ | 36,414 | $ | 35,513 | $ | 10,172 | $ | 10,428 | ||||||||||||||||||||
___________________
|
(1)
|
The
Company provides automobiles for Mr. Cloutier, Ms. Hail, Mr. Landry and
Mr. Utz. Amounts reported are reflective of the personal-use levels of
this perquisite.
|
|
(2)
|
Reflects
annual cash fees for serving on the Board. We provide further
details on the fees paid to directors in the Director Compensation section
of this proxy.
|
|
(3)
|
We
provide reimbursement for the annual expense of membership(s) per the
terms of each employee’s employment
agreement.
|
|
(4)
|
Reflects
the annual accrued benefit liability for the pre-retirement accounts under
the plan.
|
|
(5)
|
Provided
to Mr. Corrigan as a one-time payment under the terms of his employment
agreement.
|
|
(6)
|
The
relocation expenses provided to Mr. Corrigan were paid in 2006; however
under the terms of his employment agreement, the amount paid is earned on
an annual basis over a three-year period. Therefore, amounts
reported in this table and in the Supplementary Compensation Table are
prorated over the three years in which they are
earned.
|
___________________
-25-
GRANTS
OF PLAN BASED AWARDS
The
Grants of Plan Based Awards Table discloses the total number of non-equity
incentive based plan awards actually granted in 2007. There were no
grants of equity incentive plan awards during 2007. The Grants of
Plan Based Awards Table should be read in conjunction with the Summary
Compensation Table. The Summary Compensation Table reflects the
portion of stock option awards made in previous years recognized for financial
statement reporting purposes during 2007.
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
|||||||||||||
|
Name
|
Grant
Date
|
Non-Equity
Incentive Plan Awards: Number of Units or Other Rights(1) |
Threshold
($)
|
Target(2)
($)
|
Maximum
($)
|
|||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||
|
C.R.
Cloutier
|
12/31/2007
|
131,250 | $ | 0 | $ | 175,875 | ||||||||
|
J.
Eustis Corrigan, Jr.
|
12/31/2007
|
39,375 | $ | 0 | $ | 52,763 | ||||||||
|
Karen
L. Hail
|
12/31/2007
|
65,625 | $ | 0 | $ | 87,938 | ||||||||
|
Donald
R. Landry
|
12/31/2007
|
47,250 | $ | 0 | $ | 63,315 | ||||||||
|
A.
Dwight Utz
|
12/31/2007
|
28,926 | $ | 0 | $ | 38,761 | ||||||||
___________________
|
(1)
|
Amounts
granted pursuant to the Company’s Incentive Compensation Plan as described
in the Compensation
Discussion & Analysis. Grants determined and awarded
in December 2007 for the 2008 calendar
year.
|
|
(2)
|
Target
is based on the December 31, 2007 basic earnings per share of $1.34 times
the number of non-equity incentive plan awards granted for
2008.
|
___________________
-26-
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
The
Outstanding Equity Awards at Fiscal Year End Table reflects each Named Executive
Officer’s unexercised option award holdings at December 31, 2007 on an
individual award basis. There were no stock awards outstanding as of
December 31, 2007.
|
Options
Awards
|
||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options Exercisable
(#)
|
Number
of Securities Underlying Unexercised Options Unexercisable
(#)
|
Equity
Incentive Plan Awards Number of Securities Underlying Unexercised Unearned
Options
(#)
|
Options
Exercise Price
($)
|
Option
Expiration Date
|
Date
Grant Fully Vests(1)
|
||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|||||||||||||
|
C.R.
Cloutier
|
24,193 | 0 | 0 | $ | 7.77 |
02/28/2008
|
02/28/2003
|
|||||||||||
|
C.R.
Cloutier
|
24,814 | 0 | 0 | $ | 6.55 |
05/31/2012
|
05/31/2007
|
|||||||||||
|
J.
Eustis Corrigan Jr.
|
3,938 | 15,750 | 0 | $ | 22.48 |
06/21/2016
|
06/21/2011
|
|||||||||||
|
Karen
L. Hail
|
11,911 | 0 | 0 | $ | 6.55 |
05/31/2012
|
05/31/2007
|
|||||||||||
|
A.
Dwight Utz
|
9,925 | 0 | 0 | $ | 5.59 |
07/1/2011
|
07/1/2006
|
|||||||||||
|
A.
Dwight Utz
|
1,588 | 397 | 0 | $ | 8.62 |
02/10/2013
|
02/10/2008
|
|||||||||||
|
A.
Dwight Utz
|
541 | 361 | 0 | $ | 19.68 |
02/27/2014
|
02/27/2009
|
|||||||||||
___________________
|
(1)
|
All
options listed above vest at a rate of 20% per year over a five year
period from the date of grant.
|
___________________
-27-
OPTION
EXERCISES AND STOCK VESTED
The
Option Exercises and Stock Vested Table provides the stock options exercised by
each of the Named Executive Officers during 2007.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized upon Exercise ($)
|
Number
of Shares Acquired on Vesting
(#)
|
Value
Realized on Vesting
($)
|
||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
||||||||||||
|
C.R.
Cloutier
|
23,343 | $ | 535,022 | (1) | 0 | $ | 0 | |||||||||
|
J.
Eustis Corrigan Jr.
|
0 | $ | 0 | 0 | $ | 0 | ||||||||||
|
Karen
L. Hail
|
11,167 | $ | 215,858 | (2) | 0 | $ | 0 | |||||||||
|
Donald
R. Landry
|
3,970 | $ | 67,808 | (3) | 0 | $ | 0 | |||||||||
|
A.
Dwight Utz
|
0 | $ | 0 | 0 | $ | 0 | ||||||||||
___________________
(1) Reflects
the difference between $26.28, the closing price of the stock on 2/1/07, and
$3.36, the exercise price of the options.
(2) Reflects
the difference between $27.10, the closing price of the stock on 2/23/06, and
$7.77, the exercise price of the options.
(3) Reflects
the difference between $23.63, the closing price of the stock on 7/13/07, and
$6.55, the exercise price of the options.
___________________
-28-
PENSION
BENEFITS
The
Company does not provide pension benefits to the Named Executive
Officers. The Company has entered into an Executive Indexed Salary
Continuation Agreement with Mr. Cloutier, Ms. Hail and Mr.
Landry. The agreements provide benefits to the executive officers
upon reaching normal retirement age and are categorized as a nonqualified
deferred compensation benefit. We discuss the details of this
arrangement and present the amounts in the Nonqualified Deferred Compensation
section below.
NONQUALIFIED
DEFERRED COMPENSATION
The
Company provides Mr. Cloutier, Ms. Hail, and Mr. Landry with an Executive
Indexed Salary Continuation Agreement which establishes a Pre-Retirement
Account. Upon the executive officer reaching normal retirement age,
he or she will receive payment of the Pre-Retirement Account made in annual
installments over 10 years. The Pre-Retirement Account has been
established as a liability reserve account on our books for the benefit of the
executive officer. The account is increased or decreased each year by
an amount equal to the Index (annual earnings/loss for the year determined by
the aggregate annual after-tax income as if potential life insurance contracts
were purchased on the effective date of the agreement) less the cost of funds
expense for that year (sum of the amount of premiums set forth in the potential
life insurance contracts purchased on the effective date of the agreement, plus
the amount of any after-tax benefits paid to the executive officer plus the
amount of all previous years after-tax costs of funds expense and multiplying
the sum by the average after-tax cost of funds of the Company’s third quarter
call report for the year as filed with the Federal Reserve).
If the
executive officer voluntarily terminates or we terminate the executive officer
(not for cause) prior to normal retirement age, the executive officer will be
entitled to receive 20% times the number of full years he or she has served from
the date of the agreement (to a maximum of 100%) times the balance in the
Pre-Retirement Account (as described above). The benefit is payable
over 10 years in equal installments beginning on the date the executive officer
reaches normal retirement age.
If the
executive officer dies before having received the full balance of the
Pre-Retirement Account, the unpaid balance will be paid in a lump sum to the
executive officer’s designated beneficiary.
In the
event of a change of control of the Company and the executive officer’s
employment is terminated, the executive officer receives the benefits as
promised under the agreement upon attaining normal retirement age as if he/she
had been continuously employed by us through normal retirement
age. Please refer to the Potential Payments Upon Termination
or Change of Control section of this document for details of payouts
under various termination scenarios. The nonqualified deferred
compensation amounts deposited in the Pre-Retirement Accounts is included the
table which follows.
In
addition to the deferred compensation provided under the Executive Indexed
Salary Continuation Agreement, we provide a Director’s Deferred Compensation
Plan to all Company directors, including Named Executive Officers serving on our
Board. Mr. Cloutier and Ms. Hail are the only Named Executive
Officers with a balance in this deferred compensation plan. We
provide details on this plan within the Compensation of Directors
section of this proxy.
-29-
The
Nonqualified Deferred Compensation Table reflects the activity during the 2007
calendar year for each of the Named Executive Officers eligible for the
Company’s deferred compensation benefits.
Nonqualified
Deferred Compensation
|
Name
|
Type
of Nonqualified Compensation Plan(1),
(2)
|
Executive
Contributions in Last Fiscal Year ($)
|
Registrant
Contributions in Last Fiscal Year ($)
|
Aggregate
Earnings in Last Fiscal Year
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance at Last Fiscal Year
($)
|
|||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
||||||||||||||||
|
C.R.
Cloutier
|
DDCP
|
$ | 0 | $ | 0 | $ | -257,327 | $ | 0 | $ | 1,394,129 | ||||||||||
|
C.R.
Cloutier
|
EISCP
|
$ | 0 | $ | 10,880 | $ | 0 | $ | 0 | $ | 60,502 | ||||||||||
|
Karen
L. Hail
|
DDCP
|
$ | 0 | $ | 0 | $ | -165,034 | $ | 0 | $ | 894,133 | ||||||||||
|
Karen
L. Hail
|
EISCP
|
$ | 0 | $ | 10,274 | $ | 0 | $ | 0 | $ | 48,972 | ||||||||||
|
Donald
R. Landry
|
EISCP
|
$ | 0 | $ | 8,841 | $ | 0 | $ | 0 | $ | 41,395 | ||||||||||
___________________
|
(1)
|
DDCP
is the Director’s Deferred Compensation Plan. Deferred
Compensation Plan is invested in MidSouth common stock. On January 1, 2007
stock price was $29.22 per share. On December 31, 2007 stock price
declined to $23.22 per share resulting in a loss of earnings and a decline
in the aggregate balance in these deferred accounts during
2007. Dividends paid on the common stock are credited to each
account and are used to purchase additional shares of common
stock.
|
|
(2)
|
EISCP
is the Executive Indexed Salary Continuation Plan. The amounts
presented reflect contributions or subtractions from the balances held in
the pre-retirement accounts associated with the plan. There are
no credited earnings applied to the balances held in these pre-retirement
accounts. We also present the amounts contributed to these
plans in the supplemental table on All Other Compensation provided in the
footnotes to the Summary Compensation
Table.
|
___________________
-30-
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
This
section discusses the incremental compensation that would be payable by the
Company to each Named Executive Officer in the event of his or her termination
of employment under various scenarios (“termination events”) including voluntary
resignation, involuntary termination, termination without cause or for Good
Reason in connection with a change in control, termination in the event of
disability, termination in the event of death, and termination in the event of
retirement. In accordance with applicable SEC rules, the following
discussion assumes:
(i) that
the termination event in question occurred on December 31, 2007;
and
(ii) with
respect to calculations based on our stock price, we used $23.22, which was the
reported closing price of one share of the Company’s common stock on December
31, 2007, the last business day of 2007.
Pursuant
to applicable SEC rules, the analysis contained in this section does not
consider or include payments made to a Named Executive Officer with respect to
contracts, agreements, plans or arrangements to the extent they do not
discriminate in scope, terms or operation, in favor of executive officers of the
Company and that are available generally to all salaried employees, such as the
Company’s 401(k) Plan. The actual amounts that would be paid upon a
Named Executive Officer’s termination of employment can only be determined at
the time of such executive officer’s termination. Due to the number
of factors that affect the nature and amount of any compensation or benefits
provided upon the termination events, any actual amounts paid or distributed may
be higher or lower than reported below. Factors that could affect
these amounts include the timing during the year of any such event and our stock
price.
All
outstanding stock options granted pursuant to the 1997 Stock Incentive Plan
automatically become fully exercisable upon a change in control of the Company,
as defined in the plan document. Upon termination for cause, all
executives forfeit any balances in pre-retirement accounts and any cash
severance payments. We present details for the other termination
scenarios below.
C.R.
Cloutier
Upon
voluntary resignation, Mr. Cloutier receives the balance in his pre-retirement
account paid out in equal annual installments over a ten-year period beginning
at the age of 65. The value presented in the table is the present
value of this benefit.
Mr.
Cloutier will receive a lump sum equal to one times base salary in the event of
involuntary termination without cause. In addition to the cash
severance, Mr. Cloutier receives the balance in his pre-retirement account paid
out in equal annual installments over a ten-year period beginning at the age of
65. The value presented in the table is the present value of this
benefit.
In the
event of termination without cause or for good reason in connection with a
change-in-control, Mr. Cloutier will receive one times base salary payable in
equal installments over 12 months. He will also receive the benefit
specified under the terms of his Executive Indexed Salary Continuation Plan as
if he had been continuously employed until his normal retirement age of
65. The value presented in the table is the present value of this
benefit.
-31-
Upon
death, Mr. Cloutier’s beneficiaries will receive the benefit as defined under
his supplemental life insurance policy and 80% of the death benefit of the whole
life policy associated with the Executive Indexed Salary Continuation
Plan. In addition, his beneficiaries will receive a lump-sum payment
of the unpaid accrued benefit balance in his pre-retirement account associated
with the Executive Indexed Salary Continuation Plan.
Upon
long-term disability, Mr. Cloutier will receive the benefit presented in the
table as specified under his supplemental long-term disability
policy. Mr. Cloutier also receives the balance in his pre-retirement
account paid out in equal annual installments over a ten-year period beginning
at the age of 65. The value presented in the table is the present
value of this benefit.
Karen
L. Hail
Upon
voluntary resignation, Ms. Hail receives the balance in her pre-retirement
account paid out in equal annual installments over a ten-year period beginning
at the age of 65. The value presented in the table is the present
value of this benefit.
Ms. Hail
will receive a lump sum equal to one times base salary in the event of
involuntary termination. In addition to the cash severance, Ms. Hail
receives the balance in her pre-retirement account paid out in equal annual
installments over a ten-year period beginning at the age of 65.
In the
event of termination without cause or for good reason in connection with a
change-in-control, Ms. Hail will receive on times base salary payable in equal
installments over 12 months. She will also receive the benefit
specified under the terms of her Executive Indexed Salary Continuation Plan as
if she had been continuously employed until her normal retirement age of
65. The value presented in the table is the present value of this
benefit.
Upon
death, Ms. Hail’s beneficiaries will receive the benefit as defined under her
supplemental life insurance policy and 80% of the death benefit of the whole
life policy associated with the Executive Indexed Salary Continuation
Plan. In addition, her beneficiaries will receive a lump-sum payment
of the unpaid accrued benefit balance in her pre-retirement account associated
with the Executive Indexed Salary Continuation Plan.
Upon
long-term disability, Ms. Hail will receive the benefit presented in the table
as specified under her supplemental long-term disability policy. Ms.
Hail also receives the balance in her pre-retirement account paid out in equal
annual installments over a ten-year period beginning at the age of
65. The value presented in the table is the present value of this
benefit.
J.
Eustis Corrigan, Jr.
In the
event of a termination without cause or for good reason, in connection with a
change-in-control, Mr. Corrigan will receive two times the total of base salary
payable and incentives earned in the prior year under the Company’s annual
incentive plan. The payments will be made in equal installments over
24 months.
-32-
In
addition, per the terms of the Stock Incentive Plan, all unvested options will
immediately vest and become exercisable in connection with a
change-in-control. Mr. Corrigan is not eligible for any other forms
of compensation.
Donald
R. Landry
We are
not contractually obligated to provide Mr. Landry with a cash severance payment
upon termination.
Upon
voluntary resignation or involuntary termination without cause, Mr. Landry
receives the balance in his pre-retirement account paid out in equal annual
installments over a ten-year period beginning at the age of 65. The
value presented in the table is the present value of this benefit.
In the
event of termination without cause or for good reason in connection with a
change-in-control, Mr. Landry will receive the benefit specified under the terms
of his Executive Indexed Salary Continuation Plan as if he had been continuously
employed until his normal retirement age of 65. The value presented
in the table is the present value of this benefit.
Upon
death, Mr. Landry’s beneficiaries will receive the benefit as defined under his
supplemental life insurance policy and 80% of the death benefit of the whole
life policy associated with the Executive Indexed Salary Continuation
Plan. In addition, his beneficiaries will receive a lump-sum payment
of the unpaid accrued benefit balance in his pre-retirement account associated
with the Executive Indexed Salary Continuation Plan.
Upon
long-term disability, Mr. Landry will receive the benefit presented in the table
as specified under his supplemental long-term disability policy. Mr.
Landry also receives the balance in his pre-retirement account paid out in equal
annual installments over a ten-year period beginning at the age of
65. The value presented in the table is the present value of this
benefit.
A.
Dwight Utz
We are
not contractually obligated to provide Mr. Utz with a severance payment upon
termination; however, he will receive benefits under the Company’s Stock
Incentive Plan in the event of a change in control (no termination requirement
applies). Per the terms of the Stock Incentive Plan, all unvested
options will immediately vest and become exercisable in connection with a
change-in-control. There is no termination requirement placed upon
the acceleration of the vesting.
-33-
The table
below indicates the amount of compensation payable to each Named Executive
Officer, including cash severance, insurance benefits, indexed salary
continuation benefits, and stock option awards, as applicable upon different
termination events. The amounts shown assume a termination date of
December 31, 2007 and present total amounts for each scenario.
Potential Payments Upon Termination or Change-in-Control
|
Compensation
and/or Benefits Payable Upon Termination
|
Early
Retirement/ Voluntary Resignation
|
Involuntary
Termination for Cause
|
Involuntary
Termination without Cause
|
Termination
in Connection with a Change in Control (without Cause or for Good
Reason)
|
Termination
in the Event of Disability
|
Termination
in the Event of Death
|
||||||||||||||||||
|
C.R.
Cloutier
|
||||||||||||||||||||||||
|
Cash
Severance
|
$ | 0 | $ | 0 | $ | 200,000 | $ | 200,000 | $ | 0 | $ | 0 | ||||||||||||
|
Supplemental
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 400,000 | ||||||||||||
|
Supplemental
Long-Term Disability(1)
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 190,227 | $ | 0 | ||||||||||||
|
Executive
Indexed Salary Continuation(1)
|
$ | 37,795 | $ | 0 | $ | 37,795 | $ | 66,821 | $ | 37,795 | $ | 60,502 | ||||||||||||
|
Split-Dollar
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 505,628 | ||||||||||||
|
Intrinsic
Value of Unvested Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
|
TOTAL
|
$ | 37,795 | $ | 0 | $ | 237,795 | $ | 266,821 | $ | 228,022 | $ | 966,130 | ||||||||||||
|
J.
Eustis Corrigan Jr.
|
||||||||||||||||||||||||
|
Cash
Severance
|
$ | 0 | $ | 0 | $ | 0 | $ | 399,500 | $ | 0 | $ | 0 | ||||||||||||
|
Intrinsic
Value of Unvested Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 11,655 | $ | 0 | $ | 0 | ||||||||||||
|
TOTAL
|
$ | 0 | $ | 0 | $ | 0 | $ | 411,155 | $ | 0 | $ | 0 | ||||||||||||
|
Karen
L. Hail
|
||||||||||||||||||||||||
|
Cash
Severance
|
$ | 0 | $ | 0 | $ | 157,000 | $ | 157,000 | $ | 0 | $ | 0 | ||||||||||||
|
Supplemental
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 500,000 | ||||||||||||
|
Supplemental
Long-Term Disability(1)
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 711,809 | $ | 0 | ||||||||||||
|
Executive
Indexed Salary Continuation(1)
|
$ | 21,226 | $ | 0 | $ | 21,226 | $ | 76,570 | $ | 21,226 | $ | 48,972 | ||||||||||||
|
Split-Dollar
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 675,922 | ||||||||||||
|
Intrinsic
Value of Unvested Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
|
TOTAL
|
$ | 21,226 | $ | 0 | $ | 178,226 | $ | 233,571 | $ | 733,035 | $ | 1,224,894 | ||||||||||||
|
Donald
R. Landry
|
||||||||||||||||||||||||
|
Cash
Severance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
|
Supplemental
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 500,000 | ||||||||||||
|
Supplemental
Long-Term Disability(1)
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 761,054 | $ | 0 | ||||||||||||
|
Executive
Indexed Salary Continuation(1)
|
$ | 15,607 | $ | 0 | $ | 15,607 | $ | 76,393 | $ | 15,607 | $ | 41,395 | ||||||||||||
|
Split-Dollar
Life Insurance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 644,119 | ||||||||||||
|
Intrinsic
Value of Unvested Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
|
TOTAL
|
$ | 15,607 | $ | 0 | $ | 15,607 | $ | 76,393 | $ | 776,661 | $ | 1,185,514 | ||||||||||||
|
A.
Dwight Utz
|
||||||||||||||||||||||||
|
Cash
Severance
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||
|
Intrinsic
Value of Unvested Stock Options
|
$ | 0 | $ | 0 | $ | 0 | $ | 7,073 | $ | 0 | $ | 0 | ||||||||||||
|
TOTAL
|
$ | 0 | $ | 0 | $ | 0 | $ | 7,073 | $ | 0 | $ | 0 | ||||||||||||
___________________
1) Present value of benefit calculated
based on a discount of 5.68%, which is 120% of the annually compounded long-term
Applicable Federal Rate (AFR) as of 12/31/2007.
___________________
-34-
COMPENSATION
OF DIRECTORS
A
majority of our Directors are also Directors of MidSouth Bank,
N.A. Directors are entitled to fees of $750 per month for Board
service and $250 per month for MidSouth Bank Board service. The
Chairman receives an additional $900 per month, the Vice Chairman an additional
$450 per month, and the Audit Committee Chairman an additional $800 per month.
Each Director of the Board also receives $500 for each regular meeting and $500
for each special meeting of the Board of the Company, $200 for the first hour,
and $100 per hour for each additional hour of each committee meeting of the
Board. Each Director also receives $500 for each regular
meeting, $500 for each special meeting of the Board of MidSouth Bank, $200 for
the first hour, and $100 per hour for each additional hour of each committee
meeting. Directors receive meeting fees only for meetings they
attend.
In 1997,
Directors who were not employees were given options to buy up to 20,736 shares
of stock at $3.53 per share, the fair market value on the date of grant, all of
which have been exercised. Stephen C. May, a more recent addition to
the Board, was granted options in 2002 to purchase up to 12,904 shares of common
stock at $6.55 per share, the fair market value on the date of grant,
exercisable in annual 20% increments beginning in 2003.
Director’s
Deferred Compensation Plan
We have a
Deferred Compensation Plan for members of the Board of Directors, administered
by the Executive Committee of the Board of Directors. To
participate in the Plan, the Director executes a Deferral Authorization form in
which the Director agrees to defer all or a specified percentage of his/her fees
payable for the services as a member of the Board of Directors or a
participating subsidiary. As of the last day of each calendar month, fees
deferred are credited to the account and are used to purchase MidSouth Bank
common stock. Dividends paid on the common stock are credited to each
account and are used to purchase additional shares of common
stock. Amounts in each Director’s account are distributed in a single
lump sum either (i) 60 days after the later of the Director ceasing to be a
member of the Board of Directors, or the Director attaining age 65 or (ii) in
the sole discretion of the Board of Directors not earlier than one year after
(i) reasonable conditions as established by the Board are satisfied, the
Director ceases to be a member of the Board of Directors, and the Director
requests payment.
The
following Director Compensation Table displays the total compensation awarded
to, earned by or paid to Directors for the fiscal year ending December 31,
2007. Directors who are also Named Executive Officers are not
included in the table below. Compensation paid to Named Executive
Officers serving as Directors is presented in the supplementary table which
details the “All Other Compensation” amounts included in the Summary Compensation
Table. All amounts shown below are in dollars.
-35-
Directors Compensation
|
Name
|
Fees
Earned or Paid in Cash
($)
|
Stock
Awards
($)
|
Option
Awards(1)
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
All
Other Compensation (2)
($)
|
Total
($)
|
|||||||||||||||||||||
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||||||||
|
Will
Charbonnet, Sr.
|
$ | 52,050 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 52,050 | ||||||||||||||
|
James
R. Davis, Jr.
|
$ | 35,850 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 35,850 | ||||||||||||||
|
J.B.
Hargroder, M.D.
(3)
|
$ | 50,800 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 50,800 | ||||||||||||||
|
Clayton
Paul Hilliard
|
$ | 26,450 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 26,450 | ||||||||||||||
|
Milton
B. Kidd, III, O.D.
|
$ | 25,850 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 25,850 | ||||||||||||||
|
Timothy
J. Lemoine
|
$ | 29,550 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 29,550 | ||||||||||||||
|
Stephen
C. May
|
$ | 24,650 | $ | 0 | $ | 2,146 | $ | 0 | $ | 0 | $ | 0 | $ | 26,796 | ||||||||||||||
|
R.
Glenn Pumpelly
|
$ | 29,250 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 29,250 | ||||||||||||||
|
William
M. Simmons (3)
|
$ | 41,750 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 41,750 | ||||||||||||||
|
Joseph
V. Tortorice, Jr.
(3)
|
$ | 22,150 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 22,150 | ||||||||||||||
___________________
|
(1)
|
Reflects
compensation expense recognized for financial statement reporting purposes
for 2007 computed in accordance with Statement of Financial Accounting
Standards No. 123 (revised 2004) Share Based Payment (“FAS 123R”),
disregarding the estimate of forfeitures related to service-based vesting
conditions, with respect to awards granted in
2002.
|
|
|
Assumptions
used in the calculation of this amount are included in footnote 1 to our
audited financial statements for 2004 included in our Annual Report on
Form 10-K filed with the SEC.
|
|
(2)
|
Certain
Directors receive perquisites such as travel reimbursement; however, the
aggregate amount of such compensation is less than $10,000 and therefore
is not reported.
|
|
(3)
|
Includes
Director fees paid by MidSouth Bank
-Texas.
|
___________________
-36-
Shareholder
Return Performance Graph
The following graph, which was prepared
by SNL Securities LC (“SNL”), compares the cumulative total return on our Stock
over a period beginning December 31, 2002 with (i) the cumulative total return
on the stocks included in the Russell 3000 and (ii) the cumulative total return
on the stocks included in the SNL $250M-$500M and the SNL $500M-$1B Bank
Index. All of these cumulative returns are computed assuming the
quarterly reinvestment of dividends paid during the applicable
period.
MidSouth
Bancorp, Inc.
|
Period
Ending
|
||||||||||||||||||||
|
Index
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
|||||||||||||||
|
MidSouth
Bancorp, Inc.
|
100.00 | 202.76 | 219.30 | 243.85 | 355.19 | |||||||||||||||
|
Russell
3000
|
100.00 | 131.06 | 146.71 | 155.69 | 180.16 | |||||||||||||||
|
SNL
Bank $250M-$500M Index
|
100.00 | 144.49 | 163.99 | 174.11 | 181.92 | |||||||||||||||
|
SNL
Bank $500M-$1B Index
|
100.00 | 144.19 | 163.41 | 170.41 | 193.81 | |||||||||||||||
Our Stock
is traded on the AMEX under the “MSL” ticker symbol. The stock price
information shown above is not necessarily indicative of future price
performance. Information used was obtained by SNL from sources
believed to be reliable. We are not responsible for any errors or
omissions in such information.
-37-
AUDIT
COMMITTEE REPORT
Our Audit Committee is composed of four
non-employee directors. The Board has made a determination that its
members satisfy AMEX’s requirements as to independence, financial literacy and
experience. The Board has also determined that it is not clear whether any
member of the Committee is a “Financial Expert” within the meaning of SEC Rules,
but the Board does not feel a Financial Expert necessary in view of the overall
financial sophistication of Committee members. The responsibilities of the
Committee are set forth in our Audit Committee Charter.
The Committee reviewed and discussed
the audited financial statements with management including a discussion of the
quality of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures contained in the financial
statements. The Committee also discussed with the independent
auditors the matters required to be discussed by SAS 61 (Codification of
Statements on Auditing Standards, AU Section 380). The Committee also
received the written disclosures and the letter from the independent auditors
required by Independent Standards Board Standard No. 1 (Independent Standards
Board Standard No. 1, Independence Discussions with Audit Committees), has
discussed with the independent auditors the independent auditors’ independence
and has considered the compatibility of non-audit services with the auditors’
independence.
The
Committee discussed with our internal and independent auditors the overall scope
and plans for their respective audits. The Committee met with the
internal and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of our internal
controls, and the overall quality of our financial reporting.
Based on the reviews and discussions
referred to above, the Committee recommended to the Board that the audited
financial statements be included in our Annual Report on Form 10-K for the year
ended December 31, 2007 for filing with the SEC.
By the members of the Audit
Committee:
James R. Davis, Jr.
Will Charbonnet, Sr.
Clayton Paul Hilliard
Milton B. Kidd, III, O.D.
-38-
RELATIONSHIP
WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Principal
Accountant
The Audit
Committee of the Board of Directors has appointed the firm of Porter, Keadle
Moore, LLP independent certified public accountants, to serve as our principal
auditors and to perform the audit of the financial statements for the fiscal
year ending December 31, 2008.
Representatives
of Porter, Keadle Moore, LLP will be present at the meeting, will have an
opportunity to make a statement if they so desire, and will be available to
respond to appropriate shareholder questions.
Fees
and Services
During
the period covering the fiscal years ended December 31, 2007 and 2006, Porter
Keadle Moore, LLP performed the following professional services:
|
Description
|
2007
|
2006
|
||||||
|
Audit
Fees
|
$ | 254,778 | 257,092 | |||||
|
Audit-Related
Fees
|
$ | - | - | |||||
|
Tax
Fees
|
$ | - | - | |||||
|
All
Other Fees
|
$ | - | - | |||||
Audit
Fees. This category includes aggregate fees billed for professional
services rendered by Porter Keadle Moore, LLP for the audit of the Company’s
annual consolidated financial statements for the years ended December 31, 2007
and 2006, including the audit of internal control over financial reporting;
review of the annual report on Form 10-K and review of quarterly condensed
consolidated financial statements included in periodic reports filed with the
SEC, including out of pocket expenses.
Pre-Approval
Policy
The Audit
Committee’s policy is to pre-approve all audit and permissible non-audit
services provided by the independent auditors. These services may
include audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to the particular service or category of
services and is generally subject to a specific budget. The
independent auditors and management are required to periodically report to the
Audit Committee regarding the extent of services provided by the independent
auditors in accordance with this pre-approval, and the fees for services
performed to date. The Audit Committee may also pre-approve
particular services on a case-by-case basis.
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ANY
SHAREHOLDER MAY BY WRITTEN REQUEST OBTAIN WITHOUT CHARGE A COPY OF OUR ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2007, WITHOUT
EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO SALLY D. GARY, INVESTOR
RELATIONS, P. O. BOX 3745, LAFAYETTE, LOUISIANA 70502.
By
Order of the Board of Directors
Karen L.
Hail
Secretary
Lafayette, Louisiana
April 23,
2008
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