UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

SCHEDULE 14A

(Rule 14a-101)

 

INFORMATION REQUIRED IN PROXY STATEMENT

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. ____ )

 

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Filed by a Party other than the Registrant	☐

 

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☒	Definitive Proxy Statement.
☐	Definitive Additional Materials.
☐	Soliciting Material under § 240.14a-12.

 

 

SERVISFIRST BANCSHARES, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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SERVISFIRST BANCSHARES, INC.

2500 Woodcrest Place

Birmingham, Alabama 35209

 

March 5, 2019

 

Dear Fellow Stockholder:

 

You are cordially invited to attend the Annual Meeting of Stockholders of ServisFirst Bancshares, Inc. Our Annual Meeting will be held at the company’s corporate headquarters, located at 2500 Woodcrest Place, Birmingham, Alabama 35209, on April 17, 2019, at 9:00 a.m., Central Daylight Time.

 

The enclosed proxy materials describe the formal business to be transacted at the Annual Meeting, which includes a report on our operations. Many of our directors and officers will be present to answer any questions that you and other stockholders may have. Included in the materials is our Annual Report to Stockholders, which contains detailed information concerning our activities and operating performance including our Annual Report on Form 10- K for the year ended December 31, 2018.

 

The business to be conducted at the Annual Meeting consists of (1) the election of six directors; (2) an advisory vote on executive compensation; (3) the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the year ending December 31, 2019; and (4) such other business as may properly come before the Annual Meeting. Our board of directors unanimously recommends a vote “FOR” the election of the director nominees; “FOR” the “Say on Pay” advisory vote approving our executive compensation; and “FOR” the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the year ending December 31, 2019.

 

You may vote your shares by following your broker’s voting instructions, by submitting voting instructions by telephone or by Internet, by voting in person at the Annual Meeting or, if you requested to receive printed proxy materials, by completing and returning your proxy card. Instructions regarding the methods of voting are contained in the enclosed Proxy Statement and on the Notice of Internet Availability of Proxy Materials or proxy card.

 

On behalf of our board of directors, we request that you vote your shares now, even if you currently plan to attend the Annual Meeting. This will not prevent you from voting in person, but will assure that your vote is counted. Your vote is important.

 

The proxy materials are first being made available to stockholders on or about March 5, 2019.

 

 

 

	Sincerely,
	Thomas A. Broughton III
	Chairman, President and Chief Executive Officer

 

 

 

 

SERVISFIRST BANCSHARES, INC.

 

2500 Woodcrest Place

Birmingham, Alabama 35209

 

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 17, 2019

 

To Our Stockholders:

 

Notice is hereby given that our Annual Meeting of Stockholders will be held at the company’s corporate headquarters, located at 2500 Woodcrest Place, Birmingham, Alabama 35209, on Wednesday, April 17, 2019, at 9:00 a.m., Central Daylight Time, for the following purposes:

 

1.	to elect six nominees to serve on our board of directors until the next Annual Meeting of Stockholders and until their successors are duly elected and qualified, as set forth in the accompanying Proxy Statement;
2.	to conduct a “Say on Pay” advisory vote on our executive compensation;
3.	to ratify the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the year ending December 31, 2019; and
4.	to transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.

 

Our board of directors unanimously recommends a vote “FOR” the election of the director nominees, “FOR” the “Say on Pay” advisory vote approving our executive compensation, and “FOR” the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the year ending December 31, 2019. Our board of directors is not aware of any other business to come before the Annual Meeting. Directions to the Annual Meeting location at the company’s corporate headquarters, are available at www.edocumentview.com/SFBS.

 

Stockholders of record as of the close of business on February 22, 2019 are entitled to notice of, and to vote their shares in person or by proxy at, the Annual Meeting. The proxy materials are first being made available to stockholders on or about March 5, 2019.

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE STOCKHOLDER MEETING TO BE HELD APRIL 17, 2019:

 

Our Proxy Statement, form of proxy and 2018 Annual Report on Form 10-K are available at: www.edocumentview.com/SFBS.

 

YOUR VOTE IS IMPORTANT

 

IT IS IMPORTANT THAT YOU SUBMIT VOTING INSTRUCTIONS BY TELEPHONE OR BY INTERNET OR, IF YOU REQUESTED TO RECEIVE PRINTED PROXY MATERIALS, BY RETURNING YOUR PROXY CARD. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE VOTE BY TELEPHONE OR BY INTERNET, SUBMIT VOTING INSTRUCTIONS OR SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. STOCKHOLDERS OF RECORD WHO VOTE OVER THE TELEPHONE OR THE INTERNET, SUBMIT VOTING INSTRUCTIONS OR EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE ANNUAL MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.

 

 

	By Order of the Board of Directors,
	William M. Foshee
	Secretary and Chief Financial Officer

 

Birmingham, Alabama
March 5, 2019

 

 

 

Agenda and Voting Recommendations

 

1	Proposal 1: Election of Directors The board of directors unanimously recommends a vote FOR each director nominee. The six director nominees presented in this proposal are recommended for election to the board of directors. Additional information about each director and his or her qualifications may be found on page 1.

Committee Memberships

Name

Age

Director Since

Primary Occupation

Independent

AC

CC

CGNC

Thomas A. Broughton III

63

2007

Chairman, President and Chief Executive Officer of ServisFirst Bancshares, Inc. and ServisFirst Bank

J. Richard Cashio

61

2007

Retired Chief Executive Officer of TASSCO, LLC

✓

James J. Filler

75

2007

Retired Chief Executive Officer of Jefferson Iron & Metal Brokerage, Inc.

✓

Michael D. Fuller

65

2007

President of Double Oak Water Reclamation

✓

Hatton C. V. Smith

68

2007

President of National Accounts, Royal Cup Coffee

✓

Irma L. Tuder

57

2018

Manager of Tuder Investments, LLC

✓

AC: Audit Committee CC: Compensation Committee CGNC: Corporate Governance & Nominations Committee

Committee Chair      Committee Member       Financial Expert

 

 

2

Proposal 2: Advisory Vote on Executive Compensation

3

Proposal 3: Ratify Appointment of the Independent Registered Public Accounting Firm

The board of directors unanimously recommends a vote FOR the resolution.		The board of directors unanimously recommends a vote FOR the resolution.
Additional information about executive compensation may be found on page 15.		Additional information about the independent registered public accounting firm may be found on page 27.

 

 

 

 

TABLE OF CONTENTS

 

 

PROPOSAL 1: ELECTION OF DIRECTORS	1
CORPORATE GOVERNANCE	3
Governance Practices	4
Board Independence	6
The Role of Our Board of Directors	6
Board Committees and Their Functions	7
Certain Relationships and Related Transactions	11
Code of Conduct for Directors and Employees	11
Communications with the Board	12
DIRECTOR COMPENSATION	12
Director Compensation for Fiscal 2018	12
OWNERSHIP OF SERVISFIRST COMMON STOCK BY DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS	13
Section 16(a) Beneficial Ownership Reporting Compliance	14
PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION	15
EXECUTIVE COMPENSATION	15
Compensation Discussion and Analysis	15
Compensation Committee Report	21
Summary Compensation Table	22
Grants of Plan-Based Awards for Fiscal 2018	22
Outstanding Equity Awards at 2018 Fiscal Year-End	23
Option Exercises and Stock Vested for Fiscal 2018	23
Pension Benefits	24
Nonqualified Deferred Compensation Plans	24
Effect of Compensation Policies and Practices on Risk Management and Risk-Taking Incentives	24
Potential Payments Upon Termination or Change in Control	24
PROPOSAL 3: RATIFY APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	27
Independent Registered Public Accounting Firm Fees	27
Audit Committee Report	28
GENERAL INFORMATION	29
Other Business	29
Questions and Answers About the 2019 Annual Meeting and Voting	29
Stockholder Proposals	33
Solicitation of Proxies	33

 

 

Throughout this Proxy Statement, unless the context indicates otherwise, when we use the terms “the company,” “we,” “our” or “us,” we are referring to ServisFirst Bancshares, Inc. and its wholly-owned subsidiary, ServisFirst Bank (which we refer to as the “bank”). When we use the term “Annual Meeting,” we intend to include both the Annual Meeting to be held on the date and at the time and place identified above and any adjournment or postponement of such Annual Meeting.

 

PROPOSAL 1: ELECTION OF DIRECTORS

 

Under our bylaws, our board of directors consists of six directors unless a different number is fixed from time to time by resolution passed by a majority of our board of directors, which is the only means of fixing a different number. In October 2018, following the announcement of Mr. Stanley M. Brock’s resignation from our board effective December 31, 2018, our board voted to increase the size of the board to seven directors and appointed Irma L. Tuder to serve on our board, and the independent directors unanimously voted to appoint Thomas A. Broughton III, our President and Chief Executive Officer, to serve as chairman of our board effective January 1, 2019. At a regularly scheduled meeting of our board in January 2019 following the retirement of Mr. Brock, our board voted to decrease the size of the board to six directors. Six directors will be elected at the Annual Meeting to hold office until our 2020 Annual Meeting of Stockholders and until their successors are elected and have qualified.

 

Our board has nominated the six persons named below, all of whom currently serve as directors, for election as directors at the 2019 Annual Meeting. Other than Ms. Tuder, who began serving as a director of the bank and the company on October 15, 2018, each of our director nominees has served as a director of the bank since its inception in 2005 and as a director of the company since our formation in 2007. Each of these nominees has consented to serve as a director, if re-elected. Unless otherwise instructed, the management proxies intend to vote the proxies received by them for the election of all six of these nominees. If any nominee identified below becomes unable to serve as a director before the Annual Meeting, the management proxies will vote the proxies received by them for the election of a substitute nominee selected by our board of directors.

 

Annual Election of Directors

 

The six nominees receiving the most votes cast in the election of directors by holders of shares of common stock present or represented by proxy and entitled to vote at the Annual Meeting will be elected to serve as directors of the company for the next year. As a result, although shares as to which the authority to vote is withheld will be counted, such “withhold” votes will have no effect on the outcome of the election of directors, except with respect to our director resignation policy.

 

Information regarding directors and director nominees and their ages as of the record date is as follows:

 

Committee Memberships

Name

Age

Director Since

Primary Occupation

Independent

AC

CC

CGNC

Thomas A. Broughton III

63

2007

Chairman, President and Chief Executive Officer of ServisFirst Bancshares, Inc. and ServisFirst Bank

J. Richard Cashio

61

2007

Retired Chief Executive Officer of TASSCO, LLC

X

[M]

[M]

[C][M]

James J. Filler

75

2007

Retired Chief Executive Officer of Jefferson Iron & Metal Brokerage, Inc.

X

[M]

Michael D. Fuller

65

2007

President of Double Oak Water Reclamation

X

[C][M]

[M]

Hatton C. V. Smith

68

2007

President of National Accounts, Royal Cup Coffee

X

[C][M]

Irma L. Tuder

57

2018

Manager of Tuder Investments, LLC

X

[FE][M]

[M]

 

AC: Audit Committee     CC: Compensation Committee     CGNC: Corporate Governance & Nominations Committee

 

[C] Committee Chair   [M] Committee Member   [FE] Financial Expert

 

 

The following summarizes the business experience and background of each of our nominees. Each of the director nominees also serves as a director of the bank, and Mr. Broughton also serves as a President and Chief Executive Officer of us and the bank.

 

Thomas A. Broughton III
Age: 63	Committees: None	Position: President, CEO and Chairman
Director Since: 2007	Bank Director Since: 2005

 

Mr. Broughton has served as our President and Chief Executive Officer and a director since 2007 and as President, Chief Executive Officer and a director of the bank since its inception in May 2005. Mr. Broughton was named Chairman of the Board of the Company and the bank effective January 1, 2019. Mr. Broughton has spent the entirety of his 30-year banking career in the Birmingham area. In 1985, Mr. Broughton was named President of the de novo First Commercial Bank. When First Commercial Bank was bought by Synovus Financial Corp. in 1992, Mr. Broughton continued as President and was named Chief Executive Officer of First Commercial Bank. In 1998, he became Regional Chief Executive Officer of Synovus Financial Corp., responsible for the Alabama and Florida markets. In 2001, Mr. Broughton’s Synovus region shifted, and he became Regional Chief Executive Officer for the markets of Alabama, Tennessee and parts of Georgia. He continued his work in this position until his retirement from Synovus in August 2004. Mr. Broughton’s experience in banking has afforded him opportunities to work in many areas of banking and has given him exposure to all bank functions. We believe that Mr. Broughton’s extensive experience in banking in Alabama and the Southeast, and, in particular, his success in building and growing new banks and developing new markets, makes him highly qualified to serve as a director.

 

J. Richard Cashio
Age: 61	Committees: Audit; Compensation; Corporate Governance and Nominations (Chair)	Position: Director
Director Since: 2007	Bank Director Since: 2005

 

Mr. Cashio has served as a director of the company since 2007 and as a director of the bank since its inception in May 2005. Mr. Cashio served as Chief Executive Officer of TASSCO, LLC from 2005 until his retirement in January 2014 and served as the Chief Executive Officer of Tricon Metals & Services, Inc. from 2000 until its sale in October 2008. He served in various other positions with Tricon Metals & Services, Inc. prior to 2000. We believe that Mr. Cashio’s experience as the chief executive officer of successful industrial enterprises allows him to offer our board both the benefit of his business experience and the perspectives of one of our target customer groups, making him highly qualified to serve as a director.

 

James J. Filler
Age: 75	Committees: Compensation	Position: Lead Independent Director
Director Since: 2007	Bank Director Since: 2005

 

Mr. Filler has served as a director of the company since 2007 and as a director of the bank since its inception in May 2005. In January 2019, following Mr. Broughton becoming chairman of our board of directors, Mr. Filler was appointed to serve as the board’s lead independent director. Mr. Filler has been a private investor since his retirement in 2006. Prior to his retirement, Mr. Filler spent 44 years in the metals recycling industry with Jefferson Iron & Metal, Inc. and Jefferson Iron & Metal Brokerage Co., Inc. We believe that Mr. Filler’s extensive business experience and strong ties to the Birmingham business community offer us valuable strategic insights and make him highly qualified to serve as a director.

 

 

Michael D. Fuller
Age: 65	Committees: Audit (Chair); Corporate Governance and Nominations	Position: Director
Director Since: 2007	Bank Director Since: 2005

 

Mr. Fuller has served as a director of the company since 2007 and as a director of the bank since its inception in May 2005. For over 20 years, Mr. Fuller has been a private investor in real estate investments. Prior to that time, Mr. Fuller played professional football for nine years. Mr. Fuller has served as President of Double Oak Water Reclamation, a private wastewater collection and treatment facility in Shelby County, Alabama, since 1998. We believe that Mr. Fuller’s experience in the real estate sector, which is a major focus of our business, as well as his overall business experience and community presence, make him highly qualified to serve as a director.

 

Hatton C. V. Smith
Age: 68	Committees: Compensation (Chair)	Position: Director
Director Since: 2007	Bank Director Since: 2005

 

Mr. Smith has served as a director of the company since 2007 and as a director of the bank since its inception in May 2005. Mr. Smith served as the Chief Executive Officer of Royal Cup Coffee from 1996 until 2014 and in various other positions with Royal Cup Coffee prior to 1996. He is involved in many different charities and served as Chair of the United Way and President of the Baptist Health System. We believe that Mr. Smith’s business experience, his strong roots in the greater Birmingham business and civic community, and his high profile and extensive community contacts make him highly qualified to serve as a director.

 

Irma L. Tuder
Age: 57	Committees: Audit; Corporate Governance and Nominations	Position: Director
Director Since: 2018	Bank Director Since: 2018

 

Ms. Tuder has served as a manager of Tuder Investments, LLC, a private investment firm, since its formation in November 2007. Ms. Tuder founded Analytical Services, Inc. (“ASI”) in 1992, and served as its Chief Executive Officer and Chair of its board of directors until its sale to Artic Slope Regional Corporation in 2007. During Ms. Tuder’s time with ASI, it became nationally recognized for providing management and technical solutions to federal government agencies, including the Department of Defense and NASA. Prior to founding ASI, Ms. Tuder was employed as a corporate controller and previously practiced as a certified public accountant. Ms. Tuder has over 30 years of experience in accounting, finance, business management and strategic planning and execution. Ms. Tuder currently serves on the Company’s Audit Committee and Corporate Governance and Nominations Committee. Ms. Tuder received a BBA in accountancy from the University of Notre Dame and an MBA from Troy University. She is a certified public accountant. Ms. Tuder has served on our Huntsville advisory board since its inception. Ms. Tuder also serves on the board of directors of HudsonAlpha Institute for Biotechnology and The University of Alabama in Huntsville Foundation, is a past chairperson of the Huntsville/Madison County Chamber of Commerce and the Alabama Science and Exhibit Commission and currently is the chairperson of the St. John Paul II Catholic High School Board of Trustees. We believe that Ms. Tuder’s experience as a CPA and controller, as the CEO of a successful company, as manager of a private investment firm and her history of community involvement in our Huntsville market and elsewhere, makes her highly qualified to serve as a director.

 

The Board of Directors Unanimously Recommends a Vote “FOR” the Election of Each of the Board Nominees Named Above.

 

 

CORPORATE GOVERNANCE

 

Our business is managed under the direction of our board of directors. The board has the legal responsibility for overseeing the affairs and performance of the company. The primary responsibility of the board is to exercise their business judgment in what they believe to be in the best interests of the company and its stockholders.

 

 

Governance Practices

 

Our board of directors believes that sound governance practices and policies provide an important framework to assist them in fulfilling their oversight duty. In March 2014, our board formally adopted the Corporate Governance Guidelines of ServisFirst Bancshares, Inc. (the “Governance Guidelines”), which include a number of the practices and policies under which our board has operated for some time, together with concepts suggested by various authorities in corporate governance and the requirements under the NASDAQ Global Select Market’s listed company rules and the Sarbanes-Oxley Act of 2002.

 

Each year, our board of directors reviews our Governance Guidelines and other governance documents and modifies them as it deems appropriate. These documents include the Governance Guidelines, the committee charters, our Code of Business Conduct and Ethics, our Related Party Transactions Policy and other key policies and practices. Copies of the currently effective charters for each board committee, the Code of Business Conduct and Ethics, the Governance Guidelines and certain other corporate governance policies are available on the company’s website at www.servisfirstbancshares.com under the “IR Menu” tab.

 

Some of the principal subjects covered by our Governance Guidelines comprise:

 

•

Director Qualifications, which include: a board candidate’s independence, experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries; his or her understanding of our business and the business environment in which we operate; and the candidate’s ability and willingness to devote adequate time and effort to board responsibilities, taking into account the candidate’s employment and other board commitments.

 

•

Responsibilities of Directors, which include: acting in the best interests of all stockholders; maintaining independence; developing and maintaining a sound understanding of our business and the industry in which we operate; preparing for and attending board and board committee meetings; and providing active, objective and constructive participation at those meetings.

 

•

Director Access to Management and, as Necessary and Appropriate, Independent Advisors, which covers: encouraging presentations to our board from the officers responsible for functional areas of our business and from outside consultants who are engaged to conduct periodic reviews of various aspects of our operations or the quality of certain of our assets, such as the bank’s loan portfolio.

 

•

Director Orientation and Continuing Education, such as: programs to familiarize directors with any changes to our business, strategic plans, and significant financial, accounting and risk management issues; our compliance programs and conflicts policies; our code of business conduct and ethics and our corporate governance guidelines. In addition, each director is expected to participate in continuing education programs relating to developments in our business and in corporate governance.

 

•

Regularly Scheduled Executive Sessions, without Management, will be held by our board, led by our Lead Independent Director, and by the Audit Committee, which meets separately with our independent auditors.

 

Director Resignation Policy

 

In October 2016, our board approved and adopted a Director Resignation Policy. This policy provides that, in an uncontested election, any director nominee who receives a greater number of “Withhold” votes than votes “For” his or her election shall promptly tender his or her resignation to the Chairman of our board following the certification of the election results. The company’s Corporate Governance and Nominations Committee (“CG&N Committee”) will consider the offer of resignation and recommend to the Board whether to accept or reject the resignation. Our board must then act on the recommendation within 90 days following certification of the election results following receipt of the recommendation. After the board makes a formal decision on the CG&N Committee’s recommendation, the company must publicly disclose the action on a Current Report on Form 8-K within four business days of the decision. If the board determines to take any action other than accepting such resignation, the Current Report must also include the board’s rationale supporting its decision. A copy of our Director Resignation Policy is available on our website www.servisfirstbancshares.com under the “IR Menu” tab.

 

 

Incentive Compensation Clawback Policy

 

Our board has approved and adopted a Clawback Policy for recovery of incentive compensation from the company’s current and former executive officers under certain circumstances. The Clawback Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”) and proposed Rule 10D-1. The Clawback Policy provides that, in the event the company is required to restate financial results due to material noncompliance with any financial reporting requirement under the securities laws, the board may adjust future compensation, cancel outstanding awards, seek recoupment of previous awards and take any other remedial and recovery action permitted by law, to recoup all or a portion of any incentive compensation approved, awarded or granted to an executive officer of the company after the date of adoption of the Clawback Policy and such award, vesting or payment occurred or was received during the three completed fiscal years immediately preceding the date on which the company is required to prepare the restatement. The Clawback Policy applies when the Compensation Committee has determined that the incentive compensation approved, awarded or granted was predicated upon the achievement of certain financial results that were the subject of the restatement and that a lesser amount of incentive compensation would have been approved, awarded or granted to the executive officer based upon the restated financial results. In each such instance, the company will seek to recoup the amounts by which an executive officer’s incentive compensation that was awarded, vested or paid during the three-year period referenced above exceeded the amounts that would have been awarded, vested or paid based on the restated financial results.

 

Stock Ownership of Board and Executives

 

Long-term stock ownership is deeply engrained in our culture and reflects our board’s strong commitment to the company’s success. We have reviewed the stock ownership policies of other financial institutions, the criteria identified by certain proxy advisory firms in determining whether a stock ownership policy is “rigorous” or “robust,” and the stock ownership of our directors and executive officers. We ultimately concluded not to adopt a formal stock ownership policy at this stage of the company’s existence primarily because the current ownership levels of our directors and, with one exception, our named executive officers far exceed the ownership requirements of even the most rigorous policies we reviewed. Using the market price and the number of shares of common stock beneficially owned as of December 31, 2018, each of our non-employee directors held common stock valued at over 50 times such director’s annual retainer, our Chief Executive Officer held common stock valued at over 65 times his annual base salary, and each of our other named executive officers, with the exception of Mr. Abbott, held common stock valued at over 35 times his annual base salary.

 

Our board annually reviews our Governance Guidelines and other governance documents and practices and modifies them as it deems appropriate. Although we will reconsider adopting stock ownership guidelines in the future, including in the event of board or management changes, we intend to operate the company in a way that we believe makes the most sense taking into account numerous factors.

 

Policy Against Hedging Activities

 

The company is dedicated to growing its business and enhancing stockholder value in an ethical way while being mindful of the need to avoid taking actions that pose undue risk or have the appearance of posing undue risk to the company. Our goal is to grow stockholder value in both the short term and in the longer term, and we expect our directors, officers and employees to have the same goals as the company. Consistent with these goals, our insider trading policy prohibits any of our directors, officers and employees from engaging in hedging activities involving the company’s securities, including short sales, puts, calls, collars, swaps, forward sale contracts, or other derivative securities based on the company’s securities.

 

Policy Against Pledging Activities

 

Our Insider Trading Policy prohibits our directors, officers and employees from pledging our securities as collateral for loans unless approved by our Insider Trading Compliance Officer. While being mindful of the need to avoid taking actions that pose undue risk or appear to pose undue risk to our company, we also appreciate that our situation may be unique. We are a public company that has, since the bank’s inception in 2005 and our formation in 2007, experienced a relative amount of success. As a result of this success, a significant portion of the wealth of some of our officers and employees resides in their ownership of our common stock. As detailed above, all of our directors and all but one of our executive officers own enough shares of common stock to far exceed the multiples of base salary or annual cash retainer typically required by stock ownership guidelines. Accordingly, we provide our Insider Trading Compliance Officer with the discretion to permit pledges in certain limited circumstances.

 

 

Board Independence

 

The cornerstone of our corporate governance program is an independent and qualified board of directors. The board has established guidelines consistent with the current listing standards of the NASDAQ Global Select Market for determining director independence. You can find these guidelines in our Governance Guidelines, which are posted on the company’s website at www.servisfirstbancshares.com under the “IR Menu” tab.

 

During its most recent review, our board considered transactions and relationships between each director or any member of a director’s immediate family and us and the bank. Our board also considered whether there were any transactions or relationships between our company and any entity of which a director or an immediate family member of a director is an executive officer, general partner or significant equity holder. The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that a director is independent. Independent directors must be free of any relationship with us or our management that may impair the director’s ability to make independent judgments.

 

Our CG&N Committee has determined in its business judgment that five of the company’s six directors are independent as defined in the applicable NASDAQ Global Select Market listing standards, and that each member is free of any relationships that would interfere with his individual exercise of independent judgment. Our independent directors are Messrs. Cashio, Filler, Fuller and Smith, and Ms. Tuder. Mr. Broughton is considered an inside director because of his employment as our President and Chief Executive Officer (see “Certain Relationships and Related Transactions” for a list of other relationships the board considered when determining independence).

 

The Role of Our Board of Directors

 

The members of our board also are members of the board of directors of the bank, which accounts for substantially all of our consolidated operating results. The members of our board keep informed about our business through discussions with senior management and other officers and managers of the company and the bank, by reviewing analyses and reports sent to them by management and outside consultants, and by participating in meetings of the board and meetings of those board committees on which they serve.

 

Board Leadership Structure

 

We believe that our stockholders are best served by a strong, independent board of directors with extensive business experience and strong ties to our markets. We believe that objective oversight of the performance of our management team is critical to effective corporate governance, and we believe our board provides such objective oversight.

 

As of January 2019, our board is led by a combination of Mr. Filler, who was appointed by our board to serve as Lead Independent Director following Mr. Brock’s retirement, and Mr. Broughton, our Chairman, President and CEO, supplemented by engaged, independent committee chairs and directors. Although we previously have kept separate the offices of chairman and CEO, our independent directors unanimously voted for Mr. Broughton to serve as the chairman of our board following Mr. Brock’s retirement.

 

The board believes that the company has been well served by Mr. Broughton’s leadership since the bank’s inception in 2005 and our formation in 2007. The board further believes that Mr. Broughton’s combined role as chairman and CEO will allow him to set the overall tone and direction for the company, maintain consistency in the internal and external communication of our strategic and business priorities, and have primary responsibility for managing our operations. The board also believes that a strong, effective Lead Independent Director, like Mr. Filler, an independent board, and independent committees provide the independent leadership necessary to balance the combined Chairman and CEO role and, with the formal and informal mechanisms we have in place to facilitate the work of the board and its committees, results in the board effectiveness and efficiency that our stockholders expect.

 

 

As Lead Independent Director, Mr. Filler presides at meetings of the board in the absence of the chairman, including regular and special meetings of the independent directors of the board. In addition, our three standing committees, which are described below under “Board Committees and Their Functions”, are composed exclusively of independent directors. We believe that this structure further reinforces the board’s role as an objective overseer of our business, operations and day-to-day management.

 

The Board’s Role in Risk Oversight

 

While our board is ultimately responsible for the management of risks inherent in our business, in our day-to-day operations senior management is responsible for instituting risk management practices that are consistent with our overall business strategy and risk tolerance. In addition, because our operations are conducted primarily through the bank, we maintain an asset-liability and investment committee at the bank level, consisting of four executive officers of the bank. This committee is charged with monitoring our liquidity and funds positions. The committee regularly reviews the rate sensitivity position on three-month, six-month and one-year time horizons; loans-to-deposits ratios; and average maturities for certain categories of liabilities. This committee reports to our board of directors at least quarterly, and otherwise as needed.

 

In addition, our audit committee assists the board in overseeing and monitoring management’s conduct of our financial reporting process and system of internal accounting and financial controls, and our compensation committee oversees the management of risks relating to executive and non-executive compensation.

 

Outside of formal meetings, which our board holds every month, our board and its committees have regular access to senior executives, including our Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, as well as our senior credit officers. We believe that this structure allows the board to maintain effective oversight over our risks and to ensure that our management personnel are following prudent and appropriate risk management practices.

 

Board Committees and Their Functions

 

Our board maintains three standing committees that are each composed entirely of independent directors. The governing charter for each of the three committees is available on our website www.servisfirstbancshares.com under the “IR Menu” tab.

 

Name(1)		Audit Committee		Compensation Committee		Corporate Governance & Nominations Committee
Irma L. Tuder
Michael D. Fuller
James J. Filler
J. Richard Cashio
Hatton C. V. Smith
Committee Chair        Committee Member    Financial Expert

 

⁽¹⁾ Mr. Broughton is not independent and therefore does not serve on any committee.            

 

 

Audit Committee

 

Number of meetings in 2018: 5

 

Functions:

 

•

Assists our board of directors in maintaining the integrity of our financial statements and of our financial reporting processes and systems of internal audit controls, as well as our compliance with legal and regulatory requirements;

 

•

Reviews the scope of independent audits and assesses the results;

 

•

Meets with management to consider the adequacy of the internal control over, and the objectivity of, financial reporting, and meets with our independent auditors and with appropriate financial personnel concerning these matters;

 

•

Selects, determines the compensation of, appoints and oversees our independent auditors, and evaluates their qualifications, performance and independence; and

 

•

Reviews and approves all related party transactions of the company.

 

Financial Expert:

 

Our board has unanimously determined that Ms. Tuder should be designated as an audit committee financial expert. This determination is based on Ms. Tuder’s substantial experience, including her 10-plus years leading a private investment firm and her 15-plus years chairing and serving as chief executive officer of ASI, as well as her experience as a corporate controller and certified public accountant.

 

Our board of directors has determined that each Audit Committee member meets the independence standards for Audit Committee membership under the rules of the Securities and Exchange Commission (“SEC”) and the rules of the NASDAQ Global Select Market.

 

Compensation Committee

 

Number of meetings in 2018: 8

 

Functions:

 

•

Annually reviews the performance and compensation of our Chief Executive Officer, who is not present during deliberations or voting with respect to his compensation;

 

•

Makes recommendations to the independent members of our board of directors with respect to the compensation of our Chief Executive Officer and all other executive officers of the company;

 

•

Makes determinations, either as a committee or together with the other independent directors, regarding the performance and compensation level of our Chief Executive Officer and our other named executive officers;

 

•

Establishes the compensation structure for our senior management and approves the compensation of our senior executives; and

 

•

Advises and reports to our board of directors at least annually, including with respect to the company’s incentive and equity-based compensation plans, and oversees the activities of the individuals and committees responsible for administering such plans.

 

 

The Compensation Committee has the authority, in its sole discretion, to appoint, engage, retain and terminate any compensation consultant, legal counsel or other advisor to assist in the performance of its duties, and the company is responsible for providing appropriate funding to the Compensation Committee for payment of reasonable compensation to any such advisor retained by the Compensation Committee. The Compensation Committee may delegate its authority with respect to the grant and administration of awards under the company’s equity compensation plans that do not involve “insiders” within the meaning of Section 16 of the Exchange Act or a “covered employee” under Section 162(m) of the Internal Revenue Code of 1986.

 

Our board of directors has determined that each Compensation Committee member is independent under the rules of the NASDAQ Global Select Market and an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986.

 

Corporate Governance and Nominations Committee

 

Number of meetings in 2018: 2

 

Functions:

 

•

Identifies individuals believed to be qualified to become board members, and selects or recommends to the board, the nominees to stand for election as directors;

 

•

Establishes the criteria for selecting candidates for nomination to our board, actively seeks candidates who meet those criteria and makes recommendations to our board of directors to fill vacancies on, or make additions to, our board or any committee of our board (see “Other Governance Practices” for a detailed discussion of qualification criteria);

 

•

Develops and recommends to our board standards to be applied in making determinations as to the absence of material relationships between the company and a director;

 

•

Establishes the procedures for the evaluation and oversight of our board and management; and

 

•

Monitors and recommends changes in the organization and procedures of the board, in the size of the board or any board committee and in our corporate governance policies, and monitors the company’s corporate governance structure.

 

The CG&N Committee considers candidates for director who are recommended by its members, by other board members, and by management. The CG&N Committee will consider stockholder nominees for election to our board that are timely recommended by stockholders provided that a complete description of the nominees’ qualifications, experience and background, together with a statement signed by each nominee in which he or she consents to act as a board member if elected, accompany the recommendations. The CG&N Committee will evaluate candidates recommended by stockholders using the same criteria as for other candidates recommended by its members, other members of the board, or management. No stockholder nominations or recommendations for director candidates were received for the 2019 Annual Meeting.

 

In evaluating nominees for director, the CG&N Committee believes that it is of primary importance to ensure that the board’s composition reflects a diversity of business experience and community leadership, as well as a demonstrated ability to promote the company’s strategic objectives and expand its presence, profile and customer base in its local markets. Additionally, our CG&N Committee Charter provides that the CG&N Committee, in selecting or recommending board candidates, shall consider factors it deems appropriate, which may include diversity. The members of the CG&N Committee and the board also take into account views on diversity that our stockholders may share with us.

 

Following the announcement of Mr. Brock’s resignation in September 2018, Mr. Broughton identified Ms. Tuder as a potential nominee, taking into account numerous factors, including her business experience and community leadership, skill, her engaged presence on our Huntsville, Alabama advisory board since its inception, and that Ms. Tuder may bring a different perspective as a female. In ultimately recommending Ms. Tuder as a candidate to serve on our board, the CG&N Committee considered these and other factors, and unanimously approved Ms. Tuder’s nomination to serve on our board.

 

Our board of directors has determined that each member of the CG&N Committee is independent under the standards of independence of the rules of the NASDAQ Global Select Market.

 

 

Advisory Boards

 

In addition to the boards of directors of the company and the bank, the bank also has a non-voting advisory board of directors in each of the Huntsville, Montgomery, Dothan and Mobile, Alabama, Pensacola, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee markets. These advisory directors represent a wide array of business experience and community involvement in the service areas where they live. As residents of these service areas, they are sensitive and responsive to the needs of our customers and potential customers. In addition, our directors and advisory directors bring substantial business and banking contacts to us. The bank has established the following regional advisory boards:

 

Atlanta Region		Charleston Region		Dothan Region
J. Paul Austin, III		Peter McKellar		Jerry Adams
Jeffrey B. Baker		Chris Mettler		Charles H. Chapman III
Ken Barber		Weesie Newton		Ronald DeVane
Michael A. Bowling		Skip Sawin		John Downs
Mike Casey		Daniel Vallini		Steve McCarroll
Paul Conley				Charles E. Owens
John Loud				William C. (Bill) Thompson
Zach Parker
Brent Reid
Doug Reider
Huntsville Region		Mobile Region		Montgomery Region
E. Wayne Bonner		Steve Crawford		Dr. John A. Jernigan
Dennis Bragg		Lowell Friedman		Ray B. Petty
Dr. Hoyt A. “Tres” Childs, III		Barry Gritter		Edward M. Stivers III
David Mathis		Dr. James M. Harrison, Jr.		G.L. Pete Taylor
David J. Slyman, Jr.		James Henderson		W. Ken Upchurch, III
Irma Tuder		Richard D. Inge		Alan E. Weil, Jr.
Sidney R. White		Kenneth S. Johnson
Danny J. Windham		John H. Lewis, Jr.
Thomas J. Young		Hunter Lyons
Nashville Region		Pensacola Region
Charles Robert Bone		Thomas M. Bizzell
Mary Margaret Bourbeau		Bo Carter
Joe Cashia		Leo Cyr
Ryan Chapman		Matt Durney
Todd Robinson		Dr. Mark S. Greskovich
		Ray Russenberger
		Sandy Sansing
		Roger Webb

 

Compensation Committee Interlocks and Insider Participation

 

The primary functions of the Compensation Committee are to evaluate and administer the compensation of our President and Chief Executive Officer and other executive officers and to review our general compensation programs. No member of this committee has served as an officer or employee of the company, the bank or any other subsidiary. In addition, none of our executive officers has served as a director or as a member of the Compensation Committee of a company which employs any of our directors. For further information, see “Compensation Discussion and Analysis” and “Board Committees and Their Functions.”

 

Director Attendance

 

Our board of directors held 12 meetings in 2018. Each director attended more than 75% of the aggregate of: (i) the number of meetings of the board of directors held during the period he or she served on the board; and (ii) the number of meetings of committees of the board of directors held during the period he or she served on such committees. While we do not have a formal policy regarding director attendance at our annual meetings, we generally expect our directors to attend if at all possible. Each director attended the 2018 Annual Meeting other than Mr. Smith and Ms. Tuder.

 

 

Certain Relationships and Related Transactions

 

We have not entered into any business transactions with related parties required to be disclosed under Rule 404(a) of Regulation S-K other than banking transactions in the ordinary course of our business with our directors and officers, as well as members of their families and corporations, partnerships or other organizations in which they have a controlling interest, and the two lease arrangements described below. Management recognizes that related party transactions can present unique risks and potential conflicts of interest (in appearance and in fact). Therefore, we maintain written policies around interactions with related parties which require that these transactions are entered into and maintained on the following terms:

 

•

in the case of banking transactions, each is on substantially the same terms, including price or interest rate, collateral and fees, as those prevailing at the time for comparable transactions with unrelated parties that are not expected to involve more than the normal risk of collectability or present other unfavorable features to the bank; and

 

•

in the case of any related party transactions, including banking transactions, each is approved by a majority of the directors who do not have an interest in the transaction.

 

A copy of our policy governing related party transactions is available on our website www.servisfirstbancshares.com under the “IR Menu” tab.

 

The aggregate amount of indebtedness from our directors and executive officers (including their affiliates) to the bank as of December 31, 2018 was approximately $5.4 million, which equaled 0.65% of our total equity capital as of that date. Related party transactions are made in the ordinary course of business, on substantially the same terms, including interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not related to us, and do not involve more than normal risk of collectability or present other features unfavorable to us. As of the date of this Proxy Statement, no related party loans were categorized as non-accrual, past due, restructured or potential problem loans. We anticipate making related party loans in the future to the same extent as we have in the past.

 

In addition to banking transactions made in the ordinary course of business, the company leased office space in its corporate headquarters to two separate related parties in 2018 pursuant to the terms of leases entered into 2017. Prior to entering into each such lease in 2017, the company obtained, and the board considered, a market reasonableness study, and the board, other than the related parties, approved such leases on terms consistent with the results of the market reasonableness study.

 

Pursuant to one such lease, the company leased approximately 662 square feet in its headquarters to Brock Investment Company, Ltd., a company controlled by Mr. Stanley M. Brock, the Chairman of the company during 2018. The term of such lease is for five years beginning in 2017, initially at $26.00 per square foot, subject to a 1.5% annual escalation, plus a utilities and overhead fee equal to 10% of the rental rate. The lease additionally includes a tenant improvement allowance of $75 per square foot. The approximate dollar value of the amount involved in the transaction, and the amount of the related person’s interest in the transaction, is estimated to be $147,150, approximately $97,500 of which is equal to the amount of all payments due under such lease on or after January 1, 2017, and $49,650, the aggregate amount of the tenant improvement allowance. The amount of the related person’s interest in the transaction is estimated to be approximately $72,500. Under the terms of the second lease, the company agreed to lease an office of approximately 120 square feet to Mr. Michael D. Fuller, a director of the company, on a month-to-month basis at $26.00 per square foot, subject to 1.5% annual escalations, plus a utilities and overhead fee equal to 10% of the rental rate.

 

Code of Conduct for Directors and Employees

 

Our board of directors has adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors. The Code of Business Conduct and Ethics covers compliance with law; fair and honest dealings with us, with competitors and with others; fair and honest disclosure to the public; and procedures for compliance with the Code of Business Conduct and Ethics. A copy of our Code of Business Conduct and Ethics is, and any amendment to or waiver from a provision of our Code of Business Conduct and Ethics will be, available free of charge on our website at www.servisfirstbancshares.com under the “IR Menu” tab.

 

 

Communications with the Board

 

You may contact any of our independent directors, individually or as a group, by writing to them c/o William M. Foshee, Chief Financial Officer, ServisFirst Bancshares, Inc., 2500 Woodcrest Place, Birmingham, Alabama 35209. Mr. Foshee will review and forward to the appropriate directors copies of all such correspondence that, in the opinion of Mr. Foshee, deals with the functions of the board of directors or its committees or that he otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing matters will be brought promptly to the attention of the Chairman of the audit committee and will be handled in accordance with procedures established by the audit committee.

 

 

DIRECTOR COMPENSATION

 

We believe our current board composition is unique. Each of our directors has been a member of our board since our formation in 2007 and a member of the board of the bank since its inception in 2005, other than Ms. Tuder, who was appointed to our and the bank’s board in October 2018 following the announcement of Mr. Brock’s pending retirement. As of February 22, 2019, our five non-employee directors beneficially owned, collectively, approximately 4.9% of our outstanding common stock. As a result of the substantial ownership of our common stock by each of our directors, we did not grant any stock options or other equity-based incentive compensation for our directors in 2018, other than Ms. Tuder, who received an option to acquire 25,000 shares of our common stock at an exercise price of $35.65 per share when she joined our board, which vests 100% on October 15, 2023. We seek to structure director compensation to attract and retain qualified non-employee directors and to further align the interests of directors with the interests of our stockholders. The Compensation Committee periodically reviews non-employee director compensation trends and makes recommendations to the board on compensation for our non-employee directors.

 

Annual Retainers and Meeting Fees

 

In 2018, directors each received an annual cash retainer of $15,000, except that our chairman of the board received a $20,000 annual retainer, and our audit committee chairman received a $20,000 annual retainer. Directors are paid $600 for each board meeting or board event attended, $500 for each committee meeting attended, and $250 for each committee meeting attended that occurs on the same day as a full board meeting. Mr. Broughton is a named executive officer, and his compensation is reflected in the Summary Compensation Table.

 

Effective for 2019, each director will receive an annual cash retainer of $30,000, except that our Lead Independent Director and our audit committee chairman will receive a $35,000 cash retainer.

 

Director Compensation for Fiscal 2018

 

The following table sets forth information regarding the compensation of our non-employee directors for the year ended December 31, 2018.

 

Name (a)		Fees earned or paid in cash (b)				Option Awards (d)				Total (h)
		($)				($)				($)
Stanley M. Brock, Chairman of the Board(1)			30,200				0				30,200
Michael D. Fuller			30,450				0				30,450
James J. Filler			23,100				0				23,100
J. Richard Cashio			27,050				0				27,050
Hatton C. V. Smith			23,950				0				23,950
Irma L. Tuder(2)			17,300				345,000	(3)			362,300

 

(1)		Mr. Brock retired from the Board effective December 31, 2018.
(2)		Ms. Tuder was appointed to the board and audit committee on October 15, 2018 and to the corporate governance and nominations committee on January 22, 2019.
(3)		The amount in this column reflects the aggregate grant date fair value under FASB ASC Topic 718 of an award granted during fiscal year 2018. Ms. Tuder was granted the option to purchase 25,000 shares of our common stock at an exercise price of $35.65, with a grant date fair value of $13.80 per share.

 

 

OWNERSHIP OF SERVISFIRST COMMON STOCK BY DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS

 

The following table sets forth the beneficial ownership of our common stock as of February 22, 2019 by: (i) each of our directors; (ii) our named executive officers; (iii) all of our directors and our executive officers as a group; and (iv) each stockholder known by us to beneficially own more than 5% of our common stock. Except as otherwise indicated, each person listed below has sole voting and investment power with respect to all shares shown to be beneficially owned by him except to the extent that such power is shared by a spouse under applicable law. The information provided in the table is based on our records, information filed with the SEC and information provided to the company.

 

Name and Address of Beneficial Owner(1)		Amount and Nature of Beneficial Ownership				Percentage of Outstanding Common Stock (%)(2)
Five Percent Stockholders
Blackrock, Inc.(3)			6,828,128	(4)			12.8	%(4)
55 East 52nd Street
New York, NY 10055
The Vanguard Group(5)			4,649,930	(4)			8.72	%(4)
100 Vanguard Blvd. Malvern, PA 19355
Directors and Executive Officers
Thomas A. Broughton III			1,082,080	(6)			2.01	%
Stanley M. Brock(7)			874,322				1.62	%
Irma L. Tuder			62,696	(8)			*	%
Michael D. Fuller			1,291,632	(9)			2.40	%
James J. Filler			1,361,152	(10)			2.53	%
J. Richard Cashio			712,572	(11)			1.32	%
Hatton C. V. Smith			435,994	(12)			*
William M. Foshee			353,930	(13)			*
Clarence C. Pouncey III			719,116	(14)			1.34	%
Rodney E. Rushing			406,063	(15)			*
Henry F. Abbott			4,892	(16)			*
All directors and executive officers as a group (10 persons)			6,459,777	(17)			13.56	%

___________________

 

	*	Indicates ownership of less than 1% of outstanding common stock.
	(1)	The address for all directors and executive officers is 2500 Woodcrest Place, Birmingham, Alabama 35209.
	(2)	Except as otherwise noted herein, the percentage is determined on the basis of 53,475,208 shares of our common stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3 promulgated under the Exchange Act. Under Rule 13d-3, a person is deemed to be a beneficial owner of any security owned by certain family members and any security of which that person has the right to acquire beneficial ownership within 60 days, including, without limitation, shares of our common stock subject to currently exercisable options.
	(3)	In a Schedule 13G/A filed January 31, 2019, Blackrock, Inc. reported having sole power to vote or to direct the vote of 6,720,831 shares of common stock, shared power to vote or direct the vote of zero shares of common stock, sole power to dispose or direct the disposition of 6,828,128 shares of common stock and shared power to dispose or to direct the disposition of zero shares of common stock. All information in this footnote was obtained from the Schedule 13G/A filed by Blackrock, Inc.
	(4)	Reflects shares reported on Schedule 13G/A as beneficially owned as of December 31, 2018.
	(5)	In a Schedule 13G/A filed February 11, 2019, The Vanguard Group reported having sole power to vote or direct the vote of 96,060 shares of common stock, shared power to vote or direct to vote 5,696 shares of common stock, sole power to dispose or direct the disposition of 4,552,692 shares of common stock and shared power to dispose or to direct the disposition of 97,238 shares of common stock. All information in this footnote was obtained from the Schedule 13G/A filed by The Vanguard Group.

 

 

	(6)	Includes 54,540 shares of common stock owned by his spouse and 14,290 shares of common stock owned by his two stepchildren. Includes an option granted to Mr. Broughton on November 28, 2011 to purchase 10,000 shares of common stock for $5.00 per share which vested 100% after five years. Includes an option granted to Mr. Broughton on June 15, 2015 to purchase 13,000 shares of common stock for $18.57 per share which vested 100% after three years. Does not include an option granted to Mr. Broughton on January 20, 2015 to purchase 20,000 shares of common stock for $15.085 per share which vests 100% after five years. Does not include 366,000 shares of common stock owned by TAB2, LLC, a limited liability company. Mr. Broughton no longer has a reportable beneficial interest in shares of common stock owned by TAB2, LLC. Mr. Broughton disclaims beneficial ownership of common stock held by his spouse, his two stepchildren and TAB2, LLC. Mr. Broughton has pledged 27,000 shares to Business First Bank, Baton Rouge, as security for a line of credit.
	(7)	Mr. Brock retired from our board of directors effective December 31, 2018.
	(8)	Includes 38,696 shares of common stock held by Tuder Family, LLC, a limited liability company. Ms. Tuder disclaims beneficial ownership of the common stock held by Tuder Family, LLC except to the extent of her pecuniary interest therein. Does not include an  option granted to Ms. Tuder on October 15, 2018 to purchase 25,000 shares of common stock for $35.65 per share which vests 100% after five years.
	(9)	Includes an option granted to Mr. Fuller on June 15, 2015 to purchase 13,000 shares of common stock for $18.57 per share which vested 100% after three years. Includes 88,640 shares of common stock held by Mr. Fuller’s spouse, and 789,936 shares of common stock held by Tyrol, Inc., which is owned by Mr. Fuller’s adult children. Mr. Fuller disclaims beneficial ownership of common stock held by his spouse and Tyrol, Inc. Mr. Fuller has pledged 364,372 shares to ServisFirst Bank.
	(10)	Includes an option granted to Mr. Filler on November 28, 2011 to purchase 20,000 shares of common stock for $5.00 per share which vested 100% after five years.
	(11)	Includes an option granted to Mr. Cashio on June 15, 2015 to purchase 13,000 shares of common stock for $18.57 per share which vested 100% after three years. Does not include 28,752 shares owned by Mr. Cashio’s adult daughter. Includes 184,000 shares of common stock held by Mr. Cashio’s spouse. Mr. Cashio disclaims beneficial ownership of all shares not directly owned by him.
	(12)	Includes an option granted to Mr. Smith on November 28, 2011 to purchase 60,000 shares of common stock for $5.00 per share which vested 100% after five years. Includes an option granted to Mr. Smith on June 15, 2015 to purchase 13,000 shares of common stock for $18.57 per share which vested 100% after three years. Mr. Smith has pledged 96,999 shares to ServisFirst Bank, as security for a line of credit.
	(13)	Includes 24,000 share held by Mr. Foshee’s spouse. Mr. Foshee disclaims beneficial ownership of such shares. Mr. Foshee has pledged 34,000 shares to Lincoln Financial and 93,000 shares to Morgan Stanley.
	(14)	Includes 19,114 shares of common stock beneficially owned by Mr. Pouncey’s wife through a limited liability company, and 6,000 shares of common stock owned by the Pouncey Education Trust. Members of Mr. Pouncey’s immediate family are among the beneficiaries of the trust and the reporting person is trustee of the trust. Mr. Pouncey disclaims beneficial ownership of the common stock held by the trust except to the extent of his pecuniary interest therein.
	(15)	Does not include an option to purchase 15,000 shares of common stock for $6.915 per share granted on February 10, 2014, which vests 100% on February 10, 2021. Mr. Rushing has pledged 63,500 shares to Regions Bank, as security for a loan.
	(16)	Includes 600 shares of restricted stock, which vest 100% on the fifth anniversary of their grant date, February 20, 2023. Does not include an option granted to Mr. Abbott on January 25, 2016 to purchase 2,000 shares of common stock for $19.155 per share which vests 100% after five years.
	(17)	Includes 142,000 shares obtainable within 60 days pursuant to the exercise of outstanding options or warrants.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires the Company’s Section 16 officers, directors and persons who own more than 10% of the Company’s common stock to file reports of ownership and changes in ownership with the SEC.

 

Based solely upon information made available to us, we believe that each filing required to be made pursuant to Section 16(a) of the Exchange Act was timely filed by our Section 16 officers and directors and the beneficial owners of more than 10% of our common stock, except for the following filings: (i) Mr. Harrison Morris had a late Form 4 filing on March 2, 2018 with respect to the disposition of 4,700 shares of common stock of the Company that occurred on February 27, 2018; (ii) Mr. Bradford Vieira had a late Form 4 filing on April 23, 2018 with respect to the grant of 250 shares of restricted stock that occurred on February 20, 2018; (iii) Mr. Hal Clemmer had a late Form 4 filing on May 6, 2018 with respect to the grant of 5,000 shares of restricted stock that occurred on May 8, 2017 and 1,000 shares of restricted stock that occurred on February 20, 2018; and (iv) Mr. Stanley M. Brock had a late Form 4 filing on October 12, 2018 with respect to the exercise of an option to acquire 13,000 shares of common stock of the Company that occurred on October 5, 2018.

 

 

PROPOSAL 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION

 

As required under Section 14A of the Exchange Act, we provide our stockholders with an annual advisory vote on the compensation of our named executive officers. In 2017, our stockholders approved an annual advisory vote. At the 2018 Annual Meeting, approximately 98% of the votes cast (which excludes broker non-votes) were in approval of our executive compensation program.

 

Our Compensation Committee reviewed the results of the advisory vote and did not implement any significant changes to our executive compensation as a result of the say-on-pay advisory vote. The Compensation Committee recognizes that effective practices evolve, and the committee will continue to consider changes as needed to keep our executive compensation program competitive and tightly linked to performance. See “Compensation Discussion and Analysis” for a detailed discussion of our executive compensation practices, philosophy and objectives.

 

Consistent with our stockholders’ preference and prevailing demand, we expect to hold an advisory vote on executive compensation every year. This year, we are asking stockholders to approve the following resolution:

 

RESOLVED, that the compensation paid to the company’s named executive officers as disclosed in the Proxy Statement for the 2019 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.

 

The advisory vote will not be binding on the Compensation Committee or the board of directors. However, they will carefully consider the outcome of the vote and take into consideration any specific concerns raised by investors when determining future compensation arrangements.

 

The Board of Directors Unanimously Recommends a Vote “FOR” the Resolution Approving the Compensation Paid to Our Named Executive Officers.

 

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis (CD&A)

 

This CD&A describes our executive compensation objectives and philosophy. It also describes our compensation program and reviews the compensation outcomes for fiscal 2018. Our “named executive officers” in 2018 were:

 

	•	Thomas A. Broughton III, President and Chief Executive Officer
	•	Clarence C. Pouncey III, Executive Vice President and Chief Operating Officer
	•	William M. Foshee, Executive Vice President and Chief Financial Officer
	•	Rodney E. Rushing, Executive Vice President and Executive for Correspondent Banking
	•	Henry F. Abbott, Senior Vice President and Chief Credit Officer

 

We are a bank holding company headquartered in Birmingham, Alabama. Our bank, founded in 2005, provides commercial banking services through 20 full-service banking offices located in Alabama, Georgia, South Carolina, Tennessee and Florida and a loan production office in Fort Walton, Florida. We operate our bank using a simple business model based on organic loan and deposit growth, generated through high quality customer service, delivered by a team of experienced bankers focused on developing and maintaining long-term banking relationships with our target customers. Our strategy focuses on operating a limited and efficient branch network with sizable aggregate balances of total loans and deposits housed in each branch office. We strive to translate this business model and strategy into higher profits for our stockholders.

 

Our compensation program is intended to incentivize our named executive officers to pursue strategies and actions that promote both annual and longer-term value to stockholders, consistent with the intention of our business model. We have experienced accelerated growth and change in recent years—during the last five years, we have taken the company public through our initial public offering, increased our geographic footprint to include branch offices in South Carolina, Tennessee and Georgia, effectuated a 3-for-1 stock dividend and a 2-for-1 stock dividend and instituted a quarterly cash dividend while increasing our net income from approximately $52.4 million in 2014 to approximately $137 million in 2018 —and we believe our compensation processes have been designed to permit us to attract and retain the highly skilled executive and management staff who have been instrumental to our past successes and who will be key to our future.

 

 

Each of our five named executive officers also holds the same position with the bank. All of such officers remain employees of the bank for payroll and tax purposes. The board of directors of the bank also has a compensation committee. At the time we became a bank holding company, our board of directors appointed a separate Compensation Committee, consisting of the same individuals as the compensation committee of the bank, with the authority to determine the compensation of our Chief Executive Officer and, either independently or with other independent directors of the board, the compensation of our other executive officers, and to further administer any equity or other incentive plans. Because our officers, including Messrs. Broughton, Pouncey, Foshee, Rushing and Abbott, remain employees of the bank for payroll and tax purposes, their compensation is set by the compensation committee of the bank as a technical matter. However, such compensation is then approved by the bank’s board of directors and by our board of directors. Because both compensation committees consist of the same persons, as do both boards of directors, references herein to “our” or “the” Compensation Committee will be deemed to refer to our Compensation Committee and/or the bank’s compensation committee, as applicable. No executive officers of the company make any recommendations to the Compensation Committee or participate in any way regarding the compensation of other executive officers, other than the President and Chief Executive Officer, Mr. Broughton. The Compensation Committee consults with Mr. Broughton to gain a better insight into the performance of the executive team as a basis for the Compensation Committee’s determinations regarding executive compensation. While the Compensation Committee consults with Mr. Broughton, the Compensation Committee makes its decisions independently.

 

Compensation Philosophy and Objectives

 

In order to recruit, retain and appropriately incentivize the most qualified and competent individuals as executive officers, we strive to maintain a compensation program that not only is competitive in our market but that also provides our Compensation Committee with the flexibility to determine incentive compensation using a common sense approach. Our Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by us and the bank, and which aligns executives’ interests with those of our stockholders by rewarding performance, with the ultimate objective of improving stockholder value.

 

Our board and Compensation Committee have found that people do what you incentivize them to do. We believe that it is of paramount importance to be careful when setting absolute incentive compensation goals. Instead, our Compensation Committee is thoughtful about the objective performance measures it uses to incentivize executive officers and, when determining the incentive compensation of each executive, our Compensation Committee considers all available information, including the company’s overall performance.

 

The Compensation Committee believes that executive compensation packages should include cash, annual short-term cash incentives and, when appropriate, long-term equity based incentives that reward performance as measured against established company, business unit and individual goals. These goals may include any number of criteria and may be unique to the particular executive officer based upon his or her duties, but the criteria typically include net income, asset growth and deposit growth and contain a credit quality component, in addition to considering such executive officer’s personal production. Above all, though, the Compensation Committee endeavors to use a common sense approach when determining incentive compensation and establishing incentive goals. To our Compensation Committee, a “common sense approach” means maintaining a compensation program that adapts to the circumstances and performance of each executive officer, considers the performance in the area of responsibility of such officer, including the achievement of established performance measures, and takes into account the company’s overall performance.

 

Additionally, the Compensation Committee believes that we should offer competitive benefit plans, including health insurance and a 401(k) plan. We also have entered into change in control agreements that apply to particular circumstances where we believe it is important to ensure the retention of certain key executives during the critical period immediately preceding a change in control, if and when applicable.

 

 

The Compensation Committee evaluates both performance and compensation to ensure that we maintain our ability to attract, retain and properly incentivize superior employees in key positions and that compensation provided to the named executive officers and other officers remains competitive relative to the compensation paid to similarly situated executives of our peers. Although our Compensation Committee has not designated a specific peer group for this purpose, it relies on general information about similarly sized financial institutions in similar markets. In addition, the Compensation Committee retains compensation consultants from time to time in order to obtain detailed comparisons of our executive compensation as compared to our similarly sized competitors. The Compensation Committee did not retain a compensation consultant during 2018, but it plans to consider retaining compensation consultants again in future years.

 

All of our named executive officers received stock options or restricted stock awards and were encouraged to purchase our stock when they joined the company, other than Mr. Abbott, who received restricted stock awards in connection with his promotion to Chief Credit Officer. We want each of our executive officers to think like a stockholder, which means we want all of our executive officers to be substantial stockholders so that their interests are aligned with those of our other stockholders.

 

The fundamental purpose of our executive compensation program is to assist us in achieving our financial and operating performance objectives. Specifically, our compensation program has two basic objectives:

 

	•	to attract, retain and motivate our executive officers by fairly compensating them, which includes rewarding executives upon the achievement of measurable company, business unit and individual performance goals; and
	•	to align each executive’s interests with the creation of stockholder value—that is, we want our executives to be “long our stock” rather than “long a paycheck.”

 

Elements of our Compensation Program

 

Base salary: This element is intended to directly reflect an executive’s job responsibilities and his or her value to us. We also use this element to attract and retain our executives and, to some extent, acknowledge each executive’s individual efforts in furthering our strategic goals.

 

Annual short-term cash incentives: This annual cash incentive is one of the performance-based elements of our compensation. It is intended to motivate our executives and to provide a current reward for short-term (annual) measurable performance.

 

Equity-based incentives: The grant of stock options and/or other equity-based incentive compensation is the method we use to align the interests of our named executive officers with the interests of our stockholders, which is another element of performance-based compensation.

 

Perquisites and benefits: These benefits and plans are intended to attract and retain qualified executives, by ensuring that our compensation program is competitive and provides an adequate opportunity for retirement savings. We believe that, to a limited degree, these programs tend to reward long-term service or loyalty to us.

 

Change in control agreements: These agreements, or comparable provisions in an employment or similar agreement, provide a form of severance payable in the event we are the subject of a change in control. They are primarily intended to align the interests of our executives with our stockholders by providing for a secure financial transition in the event of termination in connection with a change in control.

 

General Compensation Policies

 

To reward both short- and long-term performance in the compensation program and in furtherance of our compensation objectives noted above, our executive officer compensation philosophy includes the following principles:

 

 

Compensation should be related to performance. The Compensation Committee believes that a significant portion of an executive officer’s compensation should be tied not only to individual performance, but also the company’s performance measured against both financial and non-financial goals and objectives.

 

Incentive compensation should represent a portion of an executive officer’s total compensation. The Compensation Committee is committed to providing competitive compensation that reflects our performance and that of the individual officer or employee.

 

Compensation levels should be competitive. The Compensation Committee reviews available data to ensure that our compensation is competitive with that provided by other comparable companies. The Compensation Committee believes that competitive compensation enhances our ability to attract and retain executive officers.

 

Incentive compensation should balance short-term and long-term performance. The Compensation Committee seeks to achieve a balance between encouraging strong short-term annual results and ensuring our long-term viability and success. To reinforce the importance of balancing these perspectives, executive officers generally will be provided both short- and long-term incentives. Prior to 2009, we provided our executive officers, non-employee directors and employees with the means to become stockholders and to share accretion in value with our external stockholders through our 2005 Amended and Restated Stock Incentive Plan. In 2009, we continued that process through the adoption and approval by our stockholders of our 2009 Stock Incentive Plan, which was amended and restated in 2014. The Compensation Committee does not make automatic equity grants each fiscal year, preferring instead to utilize such grants on an as-needed basis to provide additional long-term incentives. Such long-term equity incentives historically have not vested immediately, but rather require the officers and directors who receive such grants to earn them over a period of years with the company.

 

The Compensation Committee does not use a specific formula to determine the amount allocated to each element of compensation. Instead, the Compensation Committee analyzes the total compensation paid to each executive and makes individual compensation decisions as to the mixture between base salary, annual short-term cash incentives and equity-based incentives. To date, in determining the amount or mixture of compensation to be paid to any executive, the Compensation Committee has not considered any severance payment to be paid under an employment agreement or change in control agreement or any equity-based incentives previously awarded. Further, because of the significant stock ownership of all but one of our named executive officers, the Compensation Committee has not adopted any specific stock ownership or holding guidelines that would affect such determinations.

 

For fiscal year 2018, an average of 43.62% of our named executive officers’ compensation was in annual short-term cash incentives which, as described below, are largely performance-based awards. None of our named executive officers’ compensation was in long-term equity-based incentives or stock options for fiscal year 2018. The following table illustrates the percentage of each named executive officer’s total compensation, as reported in the “Summary Compensation Table” below, related to base salary, annual short-term cash incentives and long-term equity-based incentives:

 

		Percentage of Total Compensation (Fiscal Year 2018)
Named Executive Officer		Annual Base Salary				Annual Short Term Cash Incentives				Equity-Based Incentives				Perquisites and Benefits
Thomas A. Broughton III, Principal Executive Officer (“PEO”)			36.19	%			59.05	%			0	%			4.75	%
William M. Foshee, Principal Financial Officer (“PFO”)			58.85	%			35.31	%			0	%			5.84	%
Clarence C. Pouncey III			58.78	%			35.42	%			0	%			5.81	%
Rodney E. Rushing			58.38	%			35.19	%			0	%			6.43	%
Henry F. Abbott			66.94	%			14.31	%			9.46	%			9.30	%

 

 

Chief Executive Officer Compensation

 

The compensation of Thomas A. Broughton III, our President and Chief Executive Officer, is discussed throughout the following paragraphs. The Compensation Committee establishes Mr. Broughton’s compensation package each year with the intent of providing compensation designed to retain Mr. Broughton’s services and motivate him to perform to the best of his abilities. Mr. Broughton’s 2018 base salary and incentive compensation reflect the Compensation Committee’s and our board’s determination of the total compensation package necessary to meet this objective.

 

Chief Executive Officer Pay Ratio

 

Rules adopted by the SEC following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act require us to provide a reasonable estimate of the ratio of the annual total compensation of our Chief Executive Officer to the median annual total compensation of our employees. As a result of a significant change in our employee population in 2018, we re-identified our median employee using the same methodologies and assumptions used in identifying the median employee in 2017, by comparing all salary, matching contributions to our 401(k) plan, annual incentive compensation, long-term incentive awards vested in 2018 and the Company’s payment of insurance premiums and provision of other perquisites, as reported to the Internal Revenue Service on Form W-2 for 2018 for all of our employees (excluding our Chief Executive Officer) as of December 31, 2018. As further detailed in the paragraphs and Summary Compensation Table below, Mr. Broughton’s total annual compensation in fiscal 2018 was $1,312,366. The company has determined that the median annual compensation for all company employees, excluding Mr. Broughton, as of the same date was approximately $79,243. Accordingly, we believe that the ratio of the annual total compensation of Mr. Broughton, our Chief Executive Officer, to the median of the annual total compensation of all our employees in 2018 was 16.56 to 1.

 

Annual Base Salary

 

The Compensation Committee endeavors to establish base salary levels for executives that are consistent and competitive with those provided for similarly situated executives of other similar financial institutions, taking into account each executive’s areas and level of responsibility.

 

For the year ended December 31, 2018, the Compensation Committee increased the base salaries of our named executive officers, other than Mr. Abbott, who was promoted to his current position in 2018, as follows:

 

•	CEO: To $475,000 from $425,000, an increase of 11.76%;
•	CFO: To $280,000 from $270,000, an increase of 3.70%;
•	COO: To $312,000 from $300,000, an increase of 4.00%; and
•	Executive for Correspondent Banking: To $297,000 from $286,000, an increase of 3.85%.

 

None of our named executive officers have employment agreements, although two of our named executive officers have change in control agreements. See “Potential Payments Upon Termination or Change in Control” below for a more detailed discussion.

 

Annual Short-Term Cash Incentive Compensation

 

For the year ended December 31, 2018, the Compensation Committee relied on various performance measurements for determining executive officer cash incentive compensation for the named executive officers which included, among other factors, our net income, loan growth and asset quality. Each of the performance measurements was applied and determined at the discretion of the Compensation Committee. The potential award level for Mr. Broughton is purely discretionary, but the potential cash award level for each of our other named executive officers is generally limited to 50% of their respective base salaries. The Compensation Committee also has discretionary authority to establish “stretch” performance goals for individual officers, potentially allowing for cash incentive compensation in excess of 50% of an officer’s base salary. In 2018, the Committee established such “stretch” goals for Messrs. Foshee, Pouncey and Rushing, meaning that each of such officers had the opportunity to earn cash incentive compensation of 60% or more of their respective base salaries. Mr. Abbott has “stretch” performance goals that would potentially allow for cash incentive compensation of 30% of his base salary. We do not have any contractual obligations to provide the opportunity to earn specified levels of cash incentive compensation or to limit cash incentive compensation to a specified percentage, and thus such determination is entirely within the discretion of the Compensation Committee. The Compensation Committee makes a determination of awards based on the information available to it at the time the award is made. As discussed in more detail in “Corporate Governance—Other Governance Practices—Incentive Compensation Clawback Policy,” our board adopted a Clawback Policy to recover awards or payments if the relevant company performance measures upon which they are based are restated in a manner that would reduce the size of an award or payment.

 

 

Although the achievement of any of the specific and objective numerical targets set by the Compensation Committee does not alone ensure an incentive compensation award, the Compensation Committee believed that, based upon our overall performance and the specific individual performance levels of our named executive officers, it was appropriate to provide significant cash incentive bonuses to all of our named executive officers for 2018. Accordingly, for the year ended December 31, 2018 and based upon the attainment of the specific objective numerical targets, our overall performance and such officers’ individual performance for 2018, the Compensation Committee awarded the cash incentive compensation set forth in the table below.

 

The table below details, for each named executive officer, the range of cash incentive compensation each was eligible to earn (expressed as a percentage of base salary), cash incentive compensation paid as a percentage of base salary and cash incentive compensation paid for 2018 performance.

 

Name		2018 Incentive Range (%)		2018 Incentive as a Percentage of Base Salary (%)				2018 Incentive Paid ($)
Thomas A. Broughton III		None			163.16	%			$775,000
William M. Foshee		0%-60%			60.00	%			$168,000
Clarence C. Pouncey III		0%-60%			60.26	%			$188,000
Rodney E. Rushing		0%-60%			60.27	%			$179,000
Henry F. Abbott		0%-30%			21.37	%			$37,406

 

Equity-Based Incentive Compensation

 

In general, we have granted stock options to our executive officers only in connection with their initial hiring, but with vesting schedules designed to enhance their retention and align their interests with those of our stockholders. These stock options generally vest within seven years from their date of grant, with many grants not beginning to vest until three years following their date of grant. However, in recognition of the contributions made by our Chief Executive Officer, Mr. Broughton has received both stock options and restricted stock awards from time to time. Mr. Foshee, our Chief Financial Officer, has also received additional stock option grants since his initial hiring. Additionally, Mr. Abbott received a grant of restricted stock in 2018 in connection with his promotion to Chief Credit Officer. With the exception of Mr. Abbott, none of our named executive officers received grants of stock-based awards during the year ended December 31, 2018. See “Executive Compensation — Outstanding Equity Awards at Fiscal Year-End” for a detailed description of the vesting schedules of each of the options and restricted stock awards granted to the named executive officers that were outstanding at December 31, 2018.

 

Our Stock Incentive Plans allow for the accelerated vesting of equity awards in the event of a change in control. In general, under these Plans a “change in control” means a reorganization, merger or consolidation of the company or the bank with or into another entity where our stockholders before the transaction own less than 50% of our combined voting power after the transaction, a sale of all or substantially all of our assets or a purchase of more than 50% of the combined voting power of our outstanding capital stock in a single transaction or a series of related transactions by one “person” (as that term is used in Section 13(d) of the Exchange Act) or more than one person acting in concert.

 

 

Severance and Change in Control

 

We do not have an employment or other agreement with Messrs. Broughton, Rushing or Abbott that would require us to pay them severance payments upon termination of employment. We have entered into change in control agreements with Mr. Foshee and Mr. Pouncey. See “Executive Compensation — Potential Payments Upon Termination or Change in Control” for more information.

 

Key Policies and Supplemental Information

 

Director Resignation Policy: In the event that, in an uncontested election, a director receives more “Withhold” votes than votes “For” his or her election, such director shall promptly tender his or her resignation to the Chairman of our board. The company’s CG&N Committee will then consider the offer of resignation and make a recommendation to our board which, in turn, must act on the recommendation.

 

Robust Clawback Policy: In the event the company is required to restate financial results, the Compensation Committee may adjust future compensation, cancel outstanding stock or performance-based awards, or seek recoupment of previous awards from company officers.

 

Significant Executive Investment in Company Stock: Long-term stock ownership is deeply engrained in our culture, and it reflects our board’s strong commitment to the company’s success. For more information, see “Corporate Governance—Other Governance Practices—Stock Ownership of Board and Executives.”

 

Restrictions on Hedging or Pledging Company Stock: Executive officers and directors of the company are not permitted to use options, contracts or other arrangements to hedge their holdings of company stock. They also are prohibited from pledging company stock as security for loans without approval from our Insider Trading Compliance Officer.

 

Compensation Committee Report

 

The Compensation Committee of the board of directors of ServisFirst Bancshares, Inc. has reviewed and discussed the Compensation Discussion and Analysis for the company for the year ended December 31, 2018 with management. In reliance on the reviews and discussions with management, the Compensation Committee recommended to the board of directors, and the board of directors has approved, that the Compensation Discussion and Analysis be included in the required company filings with the SEC, including the Proxy Statement for the 2019 Annual Meeting of Stockholders.

 

The Compensation Committee Report shall not be deemed incorporated by reference in any document previously or subsequently filed with the SEC that incorporates by reference all or any portion of this Proxy Statement.

 

Submitted by the Compensation Committee:

 

Hatton C.V. Smith, Chairman

J. Richard Cashio
James J. Filler

 

 

Summary Compensation Table

 

The following table sets forth the aggregate compensation paid by us or the bank to our named executive officers:

 

Name and Principal Position Held (a)		Year (b)		Salary (c)		Bonus (d)		Stock Awards (e)		Option Awards (f)		Non-Equity Incentive Plan Comp (g)		Change in Pension Value and Non- Qualified Deferred Compensation Earnings (h)		All Other Compensation (i)				Total (j)
				($)		($)		($)		($)		($)		($)		($)				($)
Thomas A. Broughton III		2018		475,000		775,000		-		-		-		-			62,366	(1)		1,312,366
President and Chief		2017		425,000		625,000		-		-		-		-			61,113			1,111,113
Executive Officer		2016		400,000		500,000		-		-		-		-			61,076			961,076
Clarence C. Pouncey III		2018		312,000		188,000		-		-		-		-			27,793	(2)		527,793
EVP and Chief		2017		300,000		180,000		-		-		-		-			27,177			507,177
Operating Officer		2016		286,000		180,000		-		-		-		-			26,517			492,517
William M. Foshee		2018		280,000		168,000		-		-		-		-			30,835	(3)		478,835
EVP and Chief		2017		270,000		155,000		-		-		-		-			29,510			454,510
Financial Officer		2016		255,000		165,000		-		-		-		-			29,510			449,510
Rodney E. Rushing		2018		297,000		179,000		-		-		-		-			32,719	(4)		508,719
EVP and Executive for		2017		286,000		172,000											33,361			491,361
Correspondent Banking		2016		273,000		164,000		-		-		-		-			33,274			470,274
Henry F. Abbott		2018		175,000		37,406		24,726(5)		-		-		-			24,305	(6)		261,437
SVP and Chief Credit
Officer

___________________

 

	(1)	All Other Compensation for 2018 includes car allowance ($9,000), director’s fees ($22,200), country club allowance ($8,180), healthcare premiums ($10,431), matching contributions to 401(k) plan ($11,200) and group life and long-term disability insurance premiums ($1,355). Mr. Broughton’s spouse travels with him on business trips using the company aircraft from time to time. The company has determined that Mrs. Broughton’s travel results in no additional incremental cost to the company.
	(2)	All Other Compensation for 2018 includes car allowance ($9,000), country club allowance ($8,158), group life and long-term disability insurance premiums ($1,355) and healthcare premiums ($9,280).
	(3)	All Other Compensation for 2018 includes car allowance ($9,000), matching contributions to 401(k) plan ($11,200), healthcare premiums ($9,280) and group life and long-term disability insurance premiums ($1,355).
	(4)	All Other Compensation for 2018 includes car allowance ($9,000), healthcare premiums ($9,663), matching contributions to 401(k) plan ($11,000), group life and long-term disability insurance premiums ($1,376) and club dues ($1,680).
	(5)	Represents the grant date fair value of the grants of restricted stock under our 2009 Amended and Restated Stock Incentive Plan in accordance with FASB ASC Topic 718 of awards made during the applicable year. A grant of 600 shares of restricted stock was made to Mr. Abbott on  February 20, 2018 and was based on a grant date fair value of $41.21 per share, the closing price of our common stock on the date of grant, with a total fair value of $24,726. Please refer to Note 12 (Employee and Director Benefits) in our 2018 Annual Report on Form 10-K for a discussion of the assumptions used to calculate this amount.
	(6)	All Other Compensation for 2018 includes car allowance ($5,400), healthcare premiums ($10,431), matching contributions to 401(k) plan ($7,525) and group life and long-term disability insurance premiums ($949).

 

Grants of Plan-Based Awards for Fiscal 2018

 

The table below sets forth information regarding grants of plan-based awards made to our named executive officers during 2018.

 

Name (a)		Grant Date (b)		All Other Stock Awards: Number of Shares of Stock or Units (#) (i)		All Other Option Awards: Number of Securities Underlying Options (#) (j)		Exercise or Base Price of Option Awards ($/Sh) (k)		Grant Date Fair Value of Stock and Option Awards ($) (j)
Thomas A. Broughton III (PEO)		-		-		-		-		-
William M. Foshee (PFO)		-		-		-		-		-
Clarence C. Pouncey III		-		-		-		-		-
Rodney E. Rushing		-		-		-		-		-
Henry F. Abbott		02/20/2018		600(1)		-		-		24,726

___________________

 

(1)	Restricted stock award that vests 100% on February 20, 2023, the fifth anniversary of the grant date. Restricted shares are subject to restrictions on transferability and risk of forfeiture.

 

 

Outstanding Equity Awards at 2018 Fiscal Year-End

 

The below table details all outstanding equity awards as of December 31, 2018. All equity awards identified below were granted under our 2009 Amended and Restated Stock Incentive Plan.

 

		Option Awards											Stock Awards
Name (a)		Number of securities underlying unexercised options (#) Exercisable (b)		Number of Securities underlying unexercised options (#) Unexercisable (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)			Option exercise price ($) (e)		Option expiration date (f)		Number of Shares or Units of Stock That Have Not Vested (#) (g)		Market Value of Shares or Units of Stock That Have Not Vested ($) (h)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
Thomas A. Broughton III (CEO) (1)		10,000 - 13,000		- 20,000 -		- - -		$ $ $	5.00 15.085   18.57		11/28/2021 01/20/2025 06/15/2023		-		-		-		-
William M. Foshee (CFO)		-		-		-			-		-		-		-		-		-
Clarence C. Pouncey III		-		-		-			-		-		-		-		-		-
Rodney E. Rushing (2)		-		15,000		-		$	6.915		02/10/2024		-		-		-		-
Henry F. Abbott (3)		-		2,000		-		$	19.155		01/25/2026		600		19,122		-		-

___________________

 

	(1)	The option to purchase 60,000 shares at $5.00 per share granted to Mr. Broughton on November 28, 2011 vested 100% on November 28, 2016. Mr. Broughton has since exercised his option to acquire 50,000 of such shares. The option to purchase 20,000 shares at $15.085 per share granted to Mr. Broughton on January 20, 2015 vests 100% on January 20, 2020. The option to purchase 13,000 shares at $18.57 granted to Mr. Broughton on June 15, 2015 vested 100% on June 15, 2018. Share numbers and exercise price reflect 3-for-1 stock split that occurred on July 16, 2014 and 2-for-1 stock split that occurred on December 20, 2016.
	(2)	The option to purchase 15,000 shares at $6.915 per share granted to Mr. Rushing on February 10, 2014 vests 100% on February 10, 2021. Share numbers and exercise price reflect 3-for-1 stock split that occurred on July 16, 2014 and 2-for-1 stock split that occurred on December 20, 2016.
	(3)	The option to purchase 2,000 shares at $19.155 per share granted to Mr. Abbott on January 26, 2016 vests 100% on January 26, 2021. The award of 600 shares of restricted stock made to Mr. Abbott on February 20, 2018 vests 100% on February 20, 2023. Share numbers and exercise price reflect 3-for-1 stock split that occurred on July 16, 2014 and 2-for-1 stock split that occurred on December 20, 2016. The market value of this restricted stock award is based on $31.87 per share, the closing price of our common stock on December 31, 2018.

 

Option Exercises and Stock Vested for Fiscal 2018

 

The following table sets forth information regarding option exercises by and restricted stock vesting for our named executive officers during 2018:

 

		Option Awards								Stock Awards
Name (a)		Number of Shares Acquired on Exercise (#)  (b)				Value Realized on Exercise ($)   (c)				Number of Shares Acquired on Vesting (#)  (d)				Value Realized on Vesting ($)  (e)
Thomas A. Broughton III(1)			30,000			$	1,004,000				-				-
William M. Foshee(2)			60,000			$	1,646,775				-				-
Clarence C. Pouncey III			-				-				-				-
Rodney E. Rushing(3)			37,500			$	1,403,250				-				-
Henry F. Abbott			-				-				-				-

___________________

 

(1)		Mr. Broughton exercised options for 10,000 shares at a price of $5.00 per share and for 20,000 shares at a price of $5.00 per share. Based upon a value of $42.42 per share, the closing price of the company’s common stock on the date of exercise of 10,000 shares, the value realized by Mr. Broughton on the exercise of such options was $374,200. Based upon a value of $36.49 per share, the closing price of the company’s common stock on the date of exercise of 20,000 shares, the value realized by Mr. Broughton on the exercise of such options was $629,800.
(2)		Mr. Foshee exercised options for 45,000 shares at a price of $4.165 per share and for 15,000 shares at a price of $5.00 per share. Based upon a value of $31.82 per share, the closing price of the company’s common stock on the date of each such exercise of shares, the value realized by Mr. Foshee on the exercise of such options was $1,646,775.
(3)		Mr. Rushing exercised options for 37,500 shares at a price of $5.00 per share. Based upon a value of $42.42 per share, the closing price of the company’s common stock on the date of such exercise, the value realized by Mr. Rushing on the exercise of such option was $1,403,250.

 

 

Pension Benefits

 

The company does not maintain any benefit plan that provides for payments or other benefits at, following or in connection with retirement, other than the company’s 401(k) plan.

 

Nonqualified Deferred Compensation Plans

 

The company does not maintain any defined contribution or other plans that provide for the deferral of compensation on a basis that is not tax-qualified.

 

Effect of Compensation Policies and Practices on Risk Management and Risk-Taking Incentives

 

There is inherent risk in the business of banking. However, we do not believe that any of our compensation policies and practices provide incentives to our employees to take risks that are reasonably likely to have a material adverse effect on us. We believe that our compensation policies and practices are consistent with those of similar bank holding companies and their banking subsidiaries and are intended to encourage and reward performance that is consistent with sound practice in the industry.

 

Potential Payments Upon Termination or Change in Control

 

Change in Control Agreements

 

We have two change in control severance agreements with named executive officers, William M. Foshee and Clarence C. Pouncey III. Each of these change in control agreements was originally entered into with the bank in 2005, but each has been amended and restated to apply to a change in control of the company as well as the bank.

 

Messrs. Foshee and Pouncey’s agreements generally provide for a lump sum payment (equal to two times annual base salary for Mr. Foshee and one times annual base salary for Mr. Pouncey) in the event of the termination of their respective employment by the bank or the company, other than for “cause” or upon death, disability or attainment of normal retirement date, or by the employee in certain specific instances, in each case if such termination occurs within 24 months after a change in control. These agreements are not employment agreements and do not guarantee employment for any term or period; they only apply if a change in control occurs. The size of each benefit was set through arm’s-length negotiations with each individual upon his employment and consistent with general industry standards. Each of these agreements was approved by the board of directors of the bank and the company.

 

The term “change in control” is defined in these change in control agreements as any of the following events:

 

•	a merger, consolidation or other corporate reorganization (other than a holding company reorganization) involving either the company or the bank in which we do not survive, or if we survive, our stockholders before such transaction do not own more than 50% of, respectively, (i) the common stock of the surviving entity, and (ii) the combined voting power of any other outstanding securities entitled to vote on the election of directors of the surviving entity;

 

•	the acquisition, other than from us, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership of 50% or more of either the then outstanding shares of our common stock or the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors; provided, however, that neither of the following shall constitute a change in control: (i) any acquisition by us, by any of our subsidiaries, or by any employee benefit plan (or related trust) of us or our subsidiaries, or (ii) any acquisition by any corporation, entity, or group, if, following such acquisition, more than 50% of the then-outstanding voting rights of such corporation, entity or group are owned, directly or indirectly, by all or substantially all of the persons who were the owners of our common stock immediately prior to such acquisition;
•	individuals who, as of the effective date of the change in control agreement, constituted our board of directors cease for any reason to constitute at least a majority of our board of directors, except as otherwise provided in the agreement; or
•	approval by our stockholders of: (i) our or the bank’s complete liquidation or dissolution, or (ii) the sale or other disposition of all or substantially all our assets, other than to an entity with respect to which immediately following such sale or other disposition, more than 50% of, respectively, the then-outstanding shares of common stock of such corporation and the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of our outstanding common stock and our outstanding voting securities immediately prior to such sale or other disposition, in substantially the same proportions as their ownership, immediately prior to such sale or disposition, of our outstanding common stock and our outstanding securities, as the case may be.

 

Notwithstanding the foregoing, if Section 409A of the Internal Revenue Code would apply to any payment or right arising under the change in control agreements as a result of a change in control as described above, then with respect to such right or payment the only events that would constitute a change in control will be deemed to be those events that would constitute a change in the ownership or effective control of the company, or in the ownership of a substantial portion of the assets of the company in accordance with Section 409A.

 

The change in control payments are due in the event that we terminate Mr. Foshee or Mr. Pouncey without “cause” (as defined in the change in control agreement) any time within two years after a change in control. In addition, the change in control payment is triggered in the event that Mr. Foshee or Mr. Pouncey terminates his employment any time within two years after a change in control for any of the following reasons: (i) he is assigned to duties or responsibilities that are materially inconsistent with his position, duties, responsibilities or status immediately preceding such change in control, or a change in his reporting responsibilities or titles in effect at such time resulting in a reduction of his responsibilities or position; (ii) the reduction of his base salary or, to the extent such has been established by the board of directors or its Compensation Committee, target bonus (including any deferred portions thereof) or substantial reduction in his level of benefits or supplemental compensation from those in effect immediately preceding such change in control; or (iii) his transfer to a location requiring a change in residence or a material increase in the amount of travel normally required of him in connection with his employment.

 

In addition to the cash payments set forth in the change in control agreements, any stock options and restricted stock awards granted to the affected employee will immediately vest upon a change in control.

 

 

Estimated Payments upon a Termination or Change in Control

 

Under the agreements, Mr. Foshee is entitled to a change in control payment equal to two times his annual base salary at the time of the change in control and Mr. Pouncey is entitled to a change in control payment equal to one times his annual base salary at the time of the change in control. Assuming that we had a change in control as of December 31, 2018, as defined in both the change in control agreements above, and assuming further that each of the requisite triggering events had occurred as of such date, we estimate that the following officers would receive the following benefits in a lump sum payment within 30 days of their respective termination:

 

		Pouncey				Foshee
Cash Payment		$	312,000			$	560,000

 

Furthermore, assuming we had a change in control as of December 31, 2018, as defined in either of our stock incentive plans, and further assuming that the value of the stock as of that date was $31.87 per share (the closing price on such date), then each of the named executive officers would become immediately vested in their unvested stock options as of such date. The following table contains a schedule of unvested stock options that would vest upon a change in control and the value of such unvested options based upon the difference between $31.87 per share and their respective exercise prices per share:

 

Name		Shares Represented by Unvested Options (#)				Value of Unvested Options ($)
Broughton			20,000			$	335,700
Pouncey			-				-
Foshee			-				-
Rushing			15,000			$	374,325
Abbott			2,000			$	25,430

 

Additionally, in the event Mr. Abbott’s employment was terminated as of December 31, 2018 due to a change in control, all unvested shares of restricted stock held by Mr. Abbott would become immediately vested. Mr. Abbott held 600 shares of restricted stock as of December 31, 2018, with a value of $19,122 as of such date.

 

 

 

PROPOSAL 3: RATIFY APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Independent Registered Public Accounting Firm Fees

 

Subject to the ratification by our stockholders, our board of directors intends to engage Dixon Hughes Goodman LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.

 

The submission of this matter for ratification by stockholders is not legally required; however, our board of directors believes that such submission is consistent with best practices in corporate governance and affords stockholders an opportunity to provide direct feedback to the directors on an important issue of corporate governance. A majority of the total votes cast at the Annual Meeting, either in person or by proxy, will be required for the ratification of the appointment of the independent registered public accounting firm. If our stockholders do not ratify the selection of Dixon Hughes Goodman LLP, the appointment of the independent registered public accounting firm will be reconsidered by the Audit Committee and the board of directors.

 

The Board of Directors Unanimously Recommends a Vote “FOR” the Ratification of Dixon Hughes Goodman LLP as our Independent Registered Public Accounting Firm for the Year Ending December 31, 2019.

 

Independent Registered Public Accounting Firm

 

Our consolidated balance sheet as of December 31, 2018, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year ended December 31, 2018 have been audited by Dixon Hughes Goodman LLP, our independent registered public accounting firm, as stated in their report appearing in our 2018 Annual Report on Form 10-K. Dixon Hughes Goodman LLP was initially engaged as our independent registered public accounting firm on June 18, 2014. Representatives of Dixon Hughes Goodman LLP are expected to be in attendance at our Annual Meeting, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.

 

Audit and Non-Audit Services Pre-Approval Policy

 

The Audit Committee’s charter provides that the Audit Committee must pre-approve services to be performed by our independent registered public accounting firm. In accordance with that requirement, the Audit Committee pre-approved the engagement of Dixon Hughes Goodman LLP pursuant to which it provided the audit and audit-related services described below for the fiscal year ended December 31, 2018. One hundred percent of the fees set forth below were pre-approved by the Audit Committee.

 

Dixon Hughes Goodman LLP

 

		2018				2017
(1) Audit fees		$	444,100	(1)		$	403,452	(1)
(2) Audit-related fees		$	110,000	(2)		$	95,500	(2)
(3) Tax fees		$	30,660	(3)		$	30,000	(3)
(4) All other fees		$	3,525	(4)		$	64,148	(4)

___________________

 

(1)

Consists of fees incurred in connection with the audit of the company’s financial statements, the review of quarterly financial statements, and SEC filings.

 

(2)

Consists of fees incurred in connection with the audit of the company’s FHA lending program, 401(k) plan, real estate investment trusts and certain Tennessee public fund pledging.

 

(3)

Consists of fees incurred in connection with tax return filings for the year ended December 31, 2018 and 2017, respectively, and review of treatment for real estate investment trust dividends in 2017.

 

(4)

In 2018, consists of fees incurred in connection with research and consultation related to new accounting pronouncements, Alabama tax withholdings, and creation of special purpose entities to be used to carry out hedging activities. In 2017, consists of fees incurred in connection with an assessment of operations process and workflow, a cost segregation study of the company’s new headquarters building in Birmingham, Alabama and agreed upon procedures performed for a special project related to a certain client.

 

 

Audit Committee Report

 

The Audit Committee of the board of directors of ServisFirst Bancshares, Inc. has reviewed and discussed the audited consolidated financial statements of the company and its subsidiary, ServisFirst Bank, with management of the company and Dixon Hughes Goodman LLP, independent registered public accountants for the company for the year ended December 31, 2018. Management represented to the Audit Committee that the company’s audited consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles.

 

The Audit Committee has discussed with Dixon Hughes Goodman LLP the matters required to be discussed by PCAOB Auditing Standard No. 1301, “Communications with Audit Committees.” The Audit Committee has received the written disclosures and confirming letter from Dixon Hughes Goodman LLP required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” and, in compliance with PCAOB Rule 3520, has discussed with Dixon Hughes Goodman LLP their independence from the company.

 

Based on these reviews and discussions with management of the company and Dixon Hughes Goodman LLP referred to above, the Audit Committee has recommended to our board of directors that the audited consolidated financial statements of the company and its subsidiaries for the fiscal year ended December 31, 2018 be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2018.

 

This Audit Committee Report shall not be deemed incorporated by reference in any document previously or subsequently filed with the SEC that incorporates by reference all or any portion of this Proxy Statement.

 

Submitted by the Audit Committee:

Michael D. Fuller, Chairman
J. Richard Cashio
Irma L. Tuder

 

 

 

 

 

 

 

GENERAL INFORMATION

 

Other Business

 

As of the date of this Proxy Statement, the board of directors does not know of any other business to be presented for consideration or action at the Annual Meeting, other than that stated in the notice of the Annual Meeting. If other matters properly come before the Annual Meeting, the persons named in the accompanying form of proxy will vote thereon in their best judgment.

 

Questions and Answers About the 2019 Annual Meeting and Voting

 

What is a proxy?

 

It is your legal designation of another person to vote the stock you own. The person so designated is called a proxy. If you designate someone as your proxy in a written document, that document is called a proxy or a proxy card. We have designated Thomas A. Broughton III and William M. Foshee (the “management proxies”) as proxies for the 2019 Annual Meeting of Stockholders.

 

What are the purposes of the Annual Meeting?

 

At the Annual Meeting, stockholders will vote on: (1) the election of six directors; (2) an advisory vote on our executive compensation; (3) the ratification of Dixon Hughes Goodman LLP as our independent public accounting firm for the year ending December 31, 2019; and (4) such other business as may properly come before the Annual Meeting. Our board of directors is not aware of any matters that will be brought before the Annual Meeting, other than procedural matters, that are not listed above. However, if any other matters properly come before the Annual Meeting, the individuals named on the proxy card, or their substitutes, will be authorized to vote on those matters in their own judgment.

 

How do I receive a printed copy of proxy materials?

 

To request a printed copy of the proxy materials, please call 1-866-641-4276, visit www.investorvote.com/SFBS or email investorvote@computershare.com with “Proxy Materials ServisFirst Bancshares, Inc.” in the subject line. To make your request, you will need the 15-digit control number printed on your Notice of Internet Availability of Proxy Materials or proxy card.

 

Who is entitled to vote?

 

Stockholders of record at the close of business on February 22, 2019, the record date for the Annual Meeting, are entitled to receive notice of the Annual Meeting and to vote shares of common stock held as of the record date at the Annual Meeting. As of the record date, 53,475,208 shares of our common stock were outstanding and entitled to vote. Each outstanding share of common stock entitles its holder to cast one vote on each matter to be voted upon. There are no cumulative voting rights.

 

How do I vote?

 

If you hold your shares in a brokerage account in your broker’s or another nominee’s name (held in “street name”), you are a beneficial owner and you should follow the voting directions provided by your broker or nominee:

 

•

You may complete and mail a voting instruction form to your broker or nominee.

 

•

If your broker allows, you may submit voting instructions by telephone or the Internet.

 

 

•

You may use a mobile device, scanning the QR barcode on your voter instruction form or Notice of Internet Availability of Proxy Materials and following the prompts that appear on your mobile device.

 

•

You may cast your vote in person at the 2019 Annual Meeting, but you must request a legal proxy from your broker or nominee and bring it to the Annual Meeting.

 

If you hold your shares in your own name as a holder of record with our transfer agent, Computershare, you are a “stockholder of record” and may vote using any of the following methods:

 

•

By going to the website www.investorvote.com/SFBS and following the instructions for Internet voting on the proxy card or Notice of Internet Availability of Proxy Materials that you received in the mail. You will need the 15-digit control number printed therein. You may also access instructions for telephone voting on the website.

 

•

By using your mobile device to scan the QR barcode on your proxy card or Notice of Internet Availability of Proxy Materials and following the prompts that appear on your mobile device.

 

•

If you received a printed copy of the proxy materials, by completing and mailing your proxy card in the prepaid return envelope, or if you reside in the United States or Canada, by dialing 1-800-652-8683 and following the instructions for telephone voting provided by the recorded message at that number. You will need your 15-digit control number printed on your proxy card.

 

•

By casting your vote in person at the 2019 Annual Meeting.

 

If you invest in our common stock through the company stock fund in the ServisFirst Bank 401(k) Profit Sharing Plan and Trust, you will receive instructions for submitting your voting directions from the 401(k) plan’s administrator, Lincoln Financial. The 401(k) plan’s trustees will vote shares held by the 401(k) plan in accordance with the tabulation. Any shares for which the trustees do not received timely voting directions will be voted by the trustees in proportion to the shares for which directions were actually received. To allow the trustees sufficient time to process voting directions, the voting deadline for 401(k) plan participants is 5:00 p.m., Central Time, on April 12, 2019.

 

What if I change my mind after I vote my shares?

 

You can revoke or change your proxy at any time before it is voted at the 2019 Annual Meeting.

 

If you hold your shares in a brokerage account in your broker’s or another nominee’s name (“street name”), you may revoke or change your vote:

 

•

Via telephone or Internet, using the voting directions provided by your broker or nominee; or

 

•

By casting your vote in person at the 2019 Annual Meeting, but you must present a legal proxy at the Annual Meeting.

 

If you are a registered stockholder, you may revoke or change your vote by:

 

•

Voting by telephone or the Internet, using the voting directions provided on the proxy card or Notice of Internet Availability of Proxy Materials that you received in the mail;

 

•

Notifying our Secretary, William M. Foshee, in writing;

 

•

Sending another executed proxy card dated later than the first proxy card; or

 

•

Voting in person at the 2019 Annual Meeting. Attendance at the Annual Meeting will not revoke any proxy you have previously granted unless you specifically so request.

 

If you invest in our common stock through the company stock fund in the ServisFirst Bank 401(k) Profit Sharing Plan and Trust, you may revoke or change your vote by following the instructions provided by the 401(k) plan’s administrator, Lincoln Financial. To allow the trustees sufficient time to process voting directions, the deadline for 401(k) plan participants to revoke or change their voting directions is 5:00 p.m., Central Time, on April 12, 2019.

 

 

How many shares must be present to hold the 2019 Annual Meeting?

 

More than one-half of the company’s outstanding common stock as of the record date must be represented at the 2019 Annual Meeting in person or by proxy in order to hold the Annual Meeting. This is called a quorum. We will count your shares as present at the Annual Meeting if you:

 

•

Are present and vote in person at the Annual Meeting;

 

•

Have properly submitted a proxy card or a voter instruction form, or voted by telephone or the Internet on a timely basis; or

 

•

Hold your shares through a broker or otherwise in street name, and your broker uses its discretionary authority to vote your shares on Proposal Number 3.

 

As of the record date, 53,475,208 shares of our common stock, $0.001 par value per share, held by 532 stockholders of record, were issued and outstanding. Proxies received but marked as abstentions will be included in the calculation of the number of shares considered to be present at the Annual Meeting.

 

How many votes are needed to approve each item?

 

Directors are elected by a plurality of the votes cast. A “plurality vote” means that the winning candidate only needs to get more votes than a competing candidate. If a director runs unopposed, he or she only needs one vote to be elected. However, if any nominee for director receives a greater number of “withhold” votes than votes “for” such election, our director resignation policy requires that such person must promptly tender his or her resignation to the Chairman of our board following certification of the Annual Meeting results.

 

Any other matter that may properly come before the Annual Meeting must be approved by the affirmative vote of a majority of the shares entitled to vote that are present or represented by proxy at the Annual Meeting.

 

What is the effect of an “abstain” vote or a “broker non-vote” on the proposals?

 

Under the General Corporation Law of the State of Delaware, an abstention from voting on any proposal will have the same legal effect as an “against” vote, except election of directors, where an abstention has no effect under plurality voting.

 

A “broker non-vote” occurs if your shares are not registered in your name (that is, you hold your shares in “street name”) and you do not provide the record holder of your shares (usually a bank, broker or other nominee) with voting instructions on any matter as to which a broker may not vote without instructions from you, but the broker nevertheless provides a proxy for your shares. Shares as to which a “broker non-vote” occurs are considered present for purposes of determining whether a quorum exists, but are not considered votes cast or shares entitled to vote with respect to a voting matter. The election of directors and the advisory vote on executive compensation are considered “non-routine” matters on which a broker may not vote without your instructions. However, the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm is a “routine” matter, and brokers who do not receive instructions from you on how to vote on that matter generally may vote on that matter in their discretion.

 

 

Why did I receive a “Notice Regarding the Availability of Proxy Materials” but no proxy materials?

 

We distribute our proxy materials to stockholders via the Internet under the “Notice and Access” approach permitted by the rules of the SEC. This approach conserves natural resources and reduces our distribution costs, while providing a timely and convenient method of accessing the materials and voting. On or about March 5, 2019, we mailed a “Notice Regarding the Availability of Proxy Materials” to stockholders, containing instructions on how to access the proxy materials on the Internet.

 

What are the Board’s recommendations?

 

Our board of directors unanimously recommends that stockholders vote your shares: (1) “FOR” the election of the six nominees for the board of directors, as more fully described in Proposal 1; (2) “FOR” the proposal regarding an advisory vote on executive compensation, as more fully described in Proposal 2; and (3) “FOR” the ratification of Dixon Hughes Goodman LLP as our independent registered public accounting firm for 2019, as more fully described in Proposal 3.

 

If you timely submit voting instructions by telephone or by Internet, or if your proxy card is properly executed and received in time for voting, and not revoked, your shares will be voted in accordance with your instructions. In the absence of any instructions or directions to the contrary on any proposal on a proxy card, the management proxies will vote all shares of common stock for which such proxy cards have been received “for” Proposals 1, 2 and 3.

 

Our board of directors does not know of any matters other than the above proposals that may be brought before the Annual Meeting. If any other matters should come before the Annual Meeting, the management proxies will have discretionary authority to vote all proxies not marked to the contrary with respect to such matters in accordance with their best judgment.

 

In particular, the management proxies will have discretionary authority to vote with respect to the following matters that may come before the Annual Meeting: (i) approval of the minutes of the prior meeting if such approval does not amount to ratification of the action or actions taken at that meeting; (ii) any proposal omitted from the Proxy Statement and form of proxy pursuant to Rules 14a-8 and 14a-9 under the Exchange Act; and (iii) matters incident to the conduct of the Annual Meeting. In connection with such matters, the management proxies will vote in accordance with their best judgment.

 

Who pays for this proxy solicitation?

 

We do. We will pay all costs in connection with the meeting, including the cost of preparing, assembling and, as applicable, mailing the Notice of the Annual Meeting, Proxy Statement, proxy card and our Annual Report to Stockholders for the year ended December 31, 2018, as well as handling and tabulating the proxies returned. In addition, proxies may be solicited by directors, officers and regular employees of the company, without additional compensation, in person, by phone or by other electronic means. We will reimburse brokerage houses and other nominees for their expenses in forwarding proxy materials to beneficial owners of our common stock.

 

Who can help answer your questions?

 

If you have questions about the Annual Meeting, you should contact our Secretary, William M. Foshee, 2500 Woodcrest Place, Birmingham, Alabama 35209, telephone (205) 949-0307.

 

Annual Report on Form 10-K

 

On written request, we will provide, without charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2018 (including a list briefly describing the exhibits thereto), as filed with the SEC (including any amendments filed with the SEC), to any record holder or beneficial owner of our common stock as of the close of business on February 22, 2019, the record date, or to any person who subsequently becomes such a record holder or beneficial owner. Requests should be directed to the attention of our Secretary at the address set forth above.

 

 

Stockholder Proposals

 

Under Exchange Act Rule 14a-8, any stockholder desiring to submit a proposal for inclusion in our proxy materials for our 2020 Annual Meeting of Stockholders must provide the company with a written copy of that proposal by no later than November 6, 2019, which is 120 days before the first anniversary of the date on which the company’s proxy materials for the 2019 Annual Meeting were first made available to stockholders. However, if the date of our Annual Meeting in 2020 changes by more than 30 days from the date of our 2019 Annual Meeting, then the deadline would be a reasonable time before we begin distributing our proxy materials for our 2020 Annual Meeting. Matters pertaining to such proposals, including the number and length thereof, eligibility of persons entitled to have such proposals included and other aspects are governed by the Exchange Act and the rules of the SEC thereunder and other laws and regulations, to which interested stockholders should refer.

 

If a stockholder desires to bring other business before the 2020 Annual Meeting without including such proposal in the company’s proxy statement, the stockholder must notify the company in writing on or before January 20, 2020.

 

Our CG&N Committee will consider nominees for election to our board of directors. See “Corporate Governance—Board Committees and Their Functions—Corporate Governance and Nominations Committee” for details to be included in any such nomination. Nominations should be submitted in a timely manner in care of our Chief Financial Officer.

 

Solicitation of Proxies

 

Our board of directors solicits the accompanying proxy for use at our Annual Meeting of Stockholders to be held on Wednesday, April 17, 2019, at 9:00 a.m., Central Daylight Time, at 2500 Woodcrest Place, Birmingham, Alabama 35209. The Notice of Annual Meeting of Stockholders and this Proxy Statement are being made available on or about March 5, 2019 to our stockholders of record as of the close of business on February 22, 2019, the record date for the Annual Meeting.

 

Our corporate headquarters is located at 2500 Woodcrest Place, Birmingham, Alabama 35209 and our toll free telephone number is (866) 317-0810.

 

 

	By Order of the Board of Directors
	SERVISFIRST BANCSHARES, INC.
	William M. Foshee
	Secretary and Chief Financial Officer

 

Birmingham, Alabama
March 5, 2019