UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy Statement Pursuant
to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Definitive
Proxy Statement
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Definitive Additional Materials
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Soliciting
Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Independence Bancshares, Inc.
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(Name of
Registrant as Specified in Its Charter)
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_________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of filing fee (Check the appropriate
box):
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☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
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INDEPENDENCE BANCSHARES,
INC.
500 East Washington Street
Greenville, South Carolina
29601
Notice of Annual Meeting of
Shareholders
Dear Fellow
Shareholder:
We cordially invite you to
attend the 2016 Annual Meeting of Shareholders of Independence Bancshares, Inc.
(the “Company”), the holding company for Independence National Bank (the
“Bank”). At the meeting, we will report on our performance and answer your
questions. We hope that you can attend the meeting and reception and look
forward to seeing you there.
This letter serves as your
official notice that we will hold the meeting on November 16, 2016, at the
office of our corporate counsel, Nelson Mullins Riley & Scarborough LLP, 104
South Main Street, Suite 900, Greenville, South Carolina at 9:00 a.m. for the
following purposes:
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1.
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To elect six nominees to serve on our board of directors;
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2.
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To approve the compensation of our
named executive officers (this is a non-binding advisory vote)
(“say-on-pay”);
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3.
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To ratify the
appointment of Elliott Davis Decosimo, LLC as our independent registered
public accounting firm for the year ended December 31, 2016;
and
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4.
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To transact any other
business that may properly come before the meeting or any adjournment of
the meeting.
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Shareholders of record of our
common stock or our convertible preferred stock, Series A at the close of
business on September 27, 2016 are entitled to be present and to vote at the
annual meeting. A complete list of these shareholders will be available at the
Company’s offices prior to the meeting. If your shares are held in “street
name,” you will need to obtain a proxy form from the institution that holds your
shares in order to vote at the meeting.
Please use this opportunity to
take part in the affairs of your Company by voting on the business to come
before this meeting. Even if you plan to attend the meeting, we encourage you to
complete and return the enclosed proxy to us as promptly as possible.
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By
order of the board of directors,
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Robert B.
Willumstad
Chairman of the
Board
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Greenville, South
Carolina
October 12, 2016
INDEPENDENCE BANCSHARES,
INC.
500 East Washington Street
Greenville, South Carolina
29601
Proxy Statement for
Annual Meeting of
Shareholders to be Held on November 16, 2016
Our board of directors is
soliciting proxies for the 2016 Annual Meeting of Shareholders. This proxy
statement contains important information for you to consider when deciding how
to vote on the matters brought before the meeting. We encourage you to read it
carefully.
We are paying for the costs of
preparing and mailing the proxy materials and of reimbursing brokers and others
for their expenses of forwarding copies of the proxy materials to our
shareholders. Our officers and employees may assist in soliciting proxies. We
are distributing this proxy statement on or about October 12, 2016.
Voting
Information
The board of directors set
September 27, 2016 as the record date for the meeting. Shareholders of record of
our common stock or our convertible preferred stock, Series A (“Series A
preferred stock”) at the close of business on that date are entitled to be
present and to vote at the annual meeting.
As of the record date, we had
20,502,760 shares of common stock outstanding, which were held by approximately
580 shareholders of record, and 8,425 shares of Series A preferred stock
outstanding, which were held by 11 shareholders of record. Each share of common
stock entitles the holder to one vote on all matters voted on at the meeting,
resulting in an aggregate of 20,502,760 votes of common stock eligible to be
cast on all matters voted on at the meeting. Each share of Series A preferred
stock entitles the holder to 1,250 votes on all matters voted on at the meeting,
which is the number of whole shares of common stock into which each share of
Series A preferred stock is convertible, resulting in an aggregate of 10,531,250
votes of Series A preferred stock eligible to be cast on all matters voted on at
the meeting. The Series A preferred stock votes together with the common stock
as a single class on any matter that is presented to the shareholders of the
Company for their action or consideration at any meeting of shareholders (or by
written consent of shareholders in lieu of a meeting), except for any matters
that significantly and adversely affect the rights, preferences, privileges or
voting powers of the Series A preferred stock. All of the eligible shares of
common stock and Series A preferred stock will vote as a single class on all
matters presented at the annual meeting, and we refer to the common stock and
Series A preferred stock collectively in this proxy statement as the “Voting
Shares.”
If your shares are held in
your name, you may vote by selecting one of the following options:
Vote by Proxy:
If you choose to vote by proxy,
simply mark your common stock or Series A preferred stock proxy card, as
applicable, date, and sign it, and return it in the postage-paid envelope
provided. If you receive more than one proxy card, it means that you have
multiple accounts at the transfer agent. Please sign and return all proxy cards
to be certain that all your shares are voted.
Vote by Internet.
To vote by Internet, please go to
www.investorvote.com/IEBS
and follow the steps outlined on the
website.
Vote by Phone.
You may also vote by telephone by
calling, toll-free, 1-800-652-VOTE (8683) within the United States, U.S.
territories, and Canada on a touch-tone phone.
Vote in Person:
You may choose to vote in person
at the meeting. We will distribute written ballots to any shareholder of record
who wishes to vote at the meeting.
1
Many of our shareholders hold
their shares through a stockbroker, bank, or other nominee rather than directly
in their own name. If you hold our shares in a stock brokerage account or by a
bank or other nominee, you are considered the
beneficial owner
of shares held in street name, and these
materials are being forwarded to you by your broker, bank or other nominee,
which is considered the
shareholder of record
with
respect to those shares. As the
beneficial owner
, you have
the right to direct your broker, bank or other nominee how to vote and are also
invited to attend the meeting. However, since you are not the
shareholder of record
, you may not vote these shares in person at the
meeting unless you obtain a signed proxy from the
shareholder of record
giving you the right to vote the shares. Your
broker, bank or other nominee has enclosed or provided a voting instruction card
for you to use to direct your broker, bank or other nominee how to vote these
shares.
Your brokerage firm may vote
your shares under certain circumstances. Brokerage firms have authority under
stock exchange rules to vote their customers’ shares on certain “routine”
matters. We expect that brokers will be allowed to exercise discretionary
authority for beneficial owners who have not provided voting instructions ONLY
with respect to the ratification of the appointment of our independent
registered public accounting firm, but not with respect to any of the other
proposals to be voted on at the annual meeting. If you hold your shares in
street name, it is critical that you cast your vote so your shares may be voted
on all other proposals.
When a brokerage firm votes
its customers’ unvoted shares on routine matters, these shares are counted for
purposes of establishing a quorum to conduct business at the meeting. If a
brokerage firm indicates on a proxy that it does not have discretionary
authority to vote certain shares on a particular matter, then those shares will
be treated as “broker non-votes.”
The presence in person or by
proxy of the holders of a majority of the Voting Shares entitled to vote at the
meeting will constitute a quorum. We will count abstentions and broker non-votes
in determining whether a quorum exists. Once a quorum has been established, it
will not be destroyed by the departure of shares prior to the adjournment of the
meeting.
If a quorum is not present or
represented at the meeting, the shareholders entitled to vote, present in person
or represented by proxy, have the power to adjourn the meeting from time to time
until a quorum is present or represented at the meeting. If any such adjournment
is for a period of less than 30 days, no notice, other than an announcement at
the meeting, will be given of the adjournment. If the adjournment is for 30 days
or more, notice of the adjourned meeting will be given in accordance with our
bylaws. If the meeting is adjourned to a different date, time, or place, notice
need not be given of the new date, time, or place if the new date, time, and
place are announced at the meeting before adjournment. If a new record date for
the adjourned meeting is or must be fixed because the meeting is adjourned to a
date more than 120 days after the date of the meeting, notice of the adjourned
meeting must be given to persons who are shareholders as of the new record date.
Directors, officers, and regular employees of the Company may solicit proxies
for the reconvened meeting in person or by mail, telephone, or other means. At
any such reconvened meeting at which a quorum is present or represented, any
business may be transacted that might have been transacted at the meeting as
originally noticed.
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If a quorum is
present at the meeting:
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The directors will be
elected by a plurality of the votes cast at the meeting, which means that
the nominees receiving the highest number of votes will be elected as
directors up to the maximum number of directors to be elected at the
meeting.
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The say-on-pay proposal
will be approved if the number of votes cast in favor of the matter
exceeds the number of votes cast against the matter.
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The appointment of our
independent registered public accounting firm will be ratified if the
number of votes cast at the meeting in favor of the matter exceeds the
number of votes cast against the matter.
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2
As of the record date, our
directors and executive officers owned or are deemed to control approximately
30.14% of our outstanding Voting Shares, and they have indicated that they
intend to vote their shares “FOR” the election to the board of directors of all
nominees listed below under “Election of Directors”, “FOR” the approval of the
say-on-pay proposal, and “FOR” the ratification of Elliott Davis Decosimo, LLC
as our independent registered public accounting firm for 2016.
When you sign the proxy card,
you appoint Robert B. Willumstad and H. Neel Hipp, Jr. as your representatives
at the meeting. Mr. Willumstad and Mr. Hipp will vote your proxy as you have
instructed them on the proxy card. If you submit a proxy but do not specify how
you would like it to be voted, Mr. Willumstad and Mr. Hipp will vote your proxy
“FOR” the election to the board of directors of all nominees listed below under
“Election of Directors”, “FOR” the approval of the say-on-pay proposal, and
“FOR” the ratification of Elliott Davis Decosimo, LLC as our independent
registered public accounting firm for 2016. We are not aware of any other
matters to be considered at the meeting. However, if any other matters come
before the meeting, Mr. Willumstad and Mr. Hipp will vote your proxy on such
matters in accordance with their judgment.
You may revoke your proxy and
change your vote at any time before the polls close at the meeting. You may do
this by signing and delivering another proxy with a later date or by voting in
person at the meeting.
Abstentions or a shareholder
of record’s failure to vote at the meeting or otherwise to execute and return a
proxy card will have no effect on the outcome of the proposals. Broker non-votes
will also have no effect on the outcome of the proposals.
Important Notice of
Internet Availability.
The
proxy statement and 2015 Annual Report on Form 10-K are available to the public
for viewing on the internet at
http://www.edocumentview.com/IEBS
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In addition, the above items
and other Securities and Exchange Commission (“SEC”) filings are also available
to the public on the SEC’s website on the internet at
www.sec.gov
. Upon written
or oral request by any shareholder, we will deliver a copy of our Annual Report
on Form 10-K. In addition, upon written or oral request, we will promptly
deliver a copy of this proxy statement to our shareholders at a shared address
to which a single copy of the document was delivered. Alternatively, if you are
sharing an address with other shareholders and are receiving multiple copies of
our Annual Report on Form 10-K or this proxy statement, you may request a single
copy be sent to your shared address, if you prefer. Please contact us at
Independence Bancshares, Inc., Attention: Martha L. Long, 500 East Washington
Street, Greenville, South Carolina 29601, or (864) 672-1776 for any such
request.
3
PROPOSAL NO.
1:
ELECTION OF DIRECTORS
Our board of directors will
submit to the shareholders for their vote at the meeting a slate of directors
comprised of the following six nominees, all currently directors of the Company.
The nominees are:
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Russell Echlov
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Lawrence R. Miller
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H.
Neel Hipp, Jr.
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Keith Stock
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Adam
G. Hurwich
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Robert B. Willumstad
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Shareholders will elect our
nominees as directors at the meeting to serve a one-year term, expiring at the
2017 annual meeting of shareholders. The directors will be elected by a
plurality of the votes cast by holders of the Voting Shares present or
represented by proxy at the meeting. This means that the nominees receiving the
highest number of votes will be elected as directors up to the maximum number of
directors to be elected at the meeting.
The board of directors
recommends that you vote “FOR” each of the nominees listed above as
directors.
If you submit a proxy but do
not specify how you would like it to be voted, Mr. Willumstad and Mr. Hipp will
vote your proxy to elect the nominees. If any of these nominees is unable or
fails to accept nomination or election (which we do not anticipate), Mr.
Willumstad and Mr. Hipp will vote instead for a replacement to be recommended by
the board of directors, assuming that a replacement is recommended by the board
of directors and that the board of directors does not elect to have less than
six directors, unless you specifically instruct otherwise in the
proxy.
DIRECTOR
NOMINEES
Set forth below is certain
information about the nominees including their age and the year in which they
first became a director of the Company, their business experience for at least
the past five years, the names of other publicly-held companies where they
currently serve as a director or served as a director during the past five
years, and additional information about the specific experience, qualifications,
attributes, or skills that led to the board’s conclusion that such person should
serve as a director for the Company.
Russell
Echlov
, 41, has served as a
director of the Company since May 2015. He was appointed to the board as a
representative of RMB Capital Management, LLC, the investment adviser to certain
private funds whose strategy focuses on the banking and financial services
sectors (“Mendon Capital Strategy”) and which invested in the Company’s 2015
private offering of Series A preferred stock. Mr. Echlov has served as an
assistant portfolio manager with RMB Capital Management, LLC focused on Mendon
Capital Strategy since April 2014. Prior to that time, he was employed as an
investment advisor for Spring Hill Capital, LLC from 2010 until January 2014. He
is an experienced institutional investor with knowledge of banking and financial
services and is a graduate of Dartmouth College. Mr. Echlov’s extensive
experience as an institutional investor in banks and other financial
institutions led the board to conclude that he should serve as a director of the
Company.
H. Neel Hipp,
Jr.
,
65, has served as a director of the Company since
2004 and as a director of the Bank since its organization in 2005. He currently
serves as chairman of the board of directors of the Bank. Mr. Hipp is the former
vice president of Liberty Corporation and former chairman of Liberty Life
Insurance Company with over 29 years of experience with the Liberty companies.
He is the current owner of Hipp Investments, LLC, which he founded in 1998. Mr.
Hipp was a founder and a director of Greenville Financial Corporation and
Greenville National Bank. He received his B.A. in economics from Furman
University, his M.B.A. from the University of North Carolina, Chapel Hill, and
he also attended the Harvard Business School Program for Management Development.
Mr. Hipp is actively involved in the community. He currently serves as a trustee
of Wofford College, on the board of the Aircraft Owners and Pilots Association
of Frederick, Maryland. Mr. Hipp was appointed chairman of the South Carolina
Aeronautics Commission in 2006 by Governor Sanford. He has served as a member of
the South Carolina Chamber of Commerce, the Greenville Downtown
Airport
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Commission (chair), the
Greenville County United Way, the board of the South Carolina Historical Society
and the Furman University board of trustees. Mr. Hipp’s extensive business
experience in a regulated industry, his past experience in the banking industry,
including service as a bank director, as well as his ties to the Greenville
community led the board to conclude that he should serve as a
director.
Adam G.
Hurwich
, 55, has served as a
director of the Company since May 2015. He was appointed to the board as a
representative of Ulysses Management LLC, the investment manager for Ulysses
Partners, L.P. and Ulysses Offshore Fund, Ltd., which together invested in the
Company’s 2015 private offering of Series A preferred stock. Mr. Hurwich has
served as a portfolio manager at Ulysses Management LLC since January 2010. He
has also served as a director of First Security Group, Inc. and FSGBank,
National Association, from June 2013 to October 2015, when First Security Group
merged with and into Atlantic Capital Bancshares, Inc. Mr. Hurwich has served as
a director of Atlantic Capital Bancshares, Inc. and Atlantic Capital Bank since
November 2015. Mr. Hurwich has worked over a period spanning almost a decade in
various advisory committees to the Financial Accounting Standards Board – the
last of which, the Financial Accounting Standards Advisory Council, he completed
in December 2015. He is an experienced institutional investor with knowledge of
banking and financial services. Mr. Hurwich received his A.B. from Harvard
College in 1987 and his M.B.A. from Yale University in 1989. Mr. Hurwich’s
extensive experience as an institutional investor, as well as a director of
another financial institution, led the board to conclude that he should serve as
a director of the Company.
Lawrence R.
Miller
, 69, the Company’s
interim chief executive officer and the Bank’s president and chief executive
officer, has served as a director of the Company from October 2004 to May 2013
and since October 2015. He has also served as a director of the Bank since its
organization in 2005. Mr. Miller served as the Company’s and the Bank’s chief
executive officer from organization until December 31, 2012, when he stepped
down as the Company’s chief executive officer but continued to serve as the
Bank’s chief executive officer. In October 2015, the Company’s board of
directors appointed him as the Company’s interim chief executive officer. Mr.
Miller has over 45 years of banking experience, having held various positions in
the banking industry since November 1971. From 1995 until March 2004, he served
as market chief executive officer for SouthTrust Bank, where he successfully
opened seven offices in 10 years. He has lived in Upstate South Carolina for
over 45 years and has been actively involved in the community and its future
planning. He has served as a trustee for the College of Charleston for thirteen
years for which he chaired both the Audit and Finance Committees; and is past
board chairman of Christ School, Arden, North Carolina for which he served as a
trustee for ten years. Mr. Miller is a member of the South Carolina Bankers
Association Council and a former board member of the South Carolina Bankers
Association. He has served on both the economic development board of the
Greenville Chamber of Commerce and the board of directors of the Greer Chamber
of Commerce. Mr. Miller graduated from Newberry College, from the School of
Banking of the South at Louisiana State University, and from the National
Commercial Lending Graduate School at the University of Oklahoma. Mr. Miller’s
extensive knowledge of the Bank and the Company as well as his ties to the
Greenville community led the board to conclude that he should serve as a
director of the Company.
Keith
Stock
, 64, has served as a
director of the Company since May 2013. Since 2011, he has served as the
chairman and chief executive officer of First Financial Investors, Inc. and
senior executive advisor with The Brookside Group family-owned investment
offices. Since 2014, Mr. Stock has served as chairman, and was previously a
member of the executive office, of Clarien Bank Limited. He also served as
chairman and chief executive officer of Clarien Group Limited, the bank holding
company. Since 2014, he has been a director of Sun Bancorp, Inc. and Sun
National Bank. Mr. Stock is a registered securities professional with Sword
Securities, LLC. Since 2016, Mr. Stock has served as president, chief executive
officer, treasurer and director of National Property REIT Corp. as well as
executive officer of certain of its subsidiaries. From 2009 until 2011, Mr.
Stock served as chief strategy officer and member of the Office of the CEO at
TIAA-CREF. From 2004 until May 2008, he served as president of MasterCard
Advisors, LLC and as a member of the MasterCard Worldwide Operating Committee
and Management Council. Prior to that, Mr. Stock served as chairman and chief
executive officer of St. Louis Bank, FSB, chairman and president of Treasury
Bank Ltd., and as a director of Severn Bancorp, Inc. He has held
5
global management roles with AT Kearney,
Capgemini, Ernst & Young and McKinsey & Company after beginning his
career with BNY Mellon. He is a director of the Foreign Policy Association, a
member of the Economic Club of New York, a member of the Governing Council of
the Bermuda Stock Exchange and the Advisory Board of the Institute for Ethical
Leadership at Rutgers University Business School. He is a graduate of Princeton
University and received his MBA from The University of Pennsylvania Wharton
School. Mr. Stock’s prior service as an executive officer and director of other
banks, as well as his extensive payments services experience with MasterCard,
led the board to conclude that he should serve as a director as the Company
implements the expansion of its business model.
Robert B.
Willumstad
, 71, has served as
chairman of the Board of the Company since May 2013. He has over 35 years of
experience in the banking and financial services industry, and he presently
serves as a partner with Brysam Global Partners, a specialty private equity firm
that focuses in financial services, which he co-founded in 2005. Mr. Willumstad
also previously served as the chairman, and briefly as chief executive officer,
of American International Group until 2008. Prior to that, he held positions as
president and chief operating officer, as well as a director, at Citigroup. Mr.
Willumstad also served for over 20 years with Chemical Bank in various
capacities of operations, retail banking and computer systems. Mr. Willumstad’s
extensive banking and financial services experience led the board to conclude
that he should serve as a director and as chairman of the board of
directors.
The board of directors
unanimously recommends a vote “FOR” each of these nominees.
EXECUTIVE
OFFICERS
Other than Mr. Miller, for
which disclosure was provided above, additional information is set forth below
regarding other officers of our Company and our Bank:
Martha L.
Long
,
57, serves as the Company’s and the Bank’s chief
financial officer. Ms. Long began assisting the Bank with financial accounting
matters as an independent contractor beginning in June 2011, and in August 2012,
she was appointed as chief financial officer of the Bank. She was appointed as
chief financial officer of the Company in December 2013. Ms. Long has over 32
years of experience in various senior financial officer roles. Prior to her work
with the Bank, Ms. Long served in various accounting capacities, including most
recently working for her own CPA firm from 2009 through 2012. Prior to that, she
served as Senior Vice President for AIMCO, a publicly held real estate
investment trust from 1998 to 2009 in various financial capacities. She has also
served as Senior Vice President and Controller for two SEC-registered companies,
The First Savings Bank and Insignia Financial Group, Inc., an owner and operator
of multi-family housing facilities. Ms. Long is a graduate of Bob Jones
University with a degree in Accounting and is a certified public accountant in
South Carolina.
E. Fred
Moore
, 57, has served as the
executive vice president and chief credit officer of the Company and the Bank
since 2006. He previously served as a senior vice president of risk management
for First National Bank of the South in Spartanburg, South Carolina. He has over
32 years of experience in administrative banking and finance, including credit
administration and internal audit. Mr. Moore was previously employed with
American Federal as a senior credit analyst until November 2000, when he
resigned to join First National Bank of the South. He graduated from University
of South Carolina in 1982 where he received his B.A. in business
economics.
6
OTHER INFORMATION
RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
Family
Relationships
There are no family
relationships among our directors or executive officers.
Section 16(a) Beneficial
Ownership Reporting Compliance
Section 16(a) of the Exchange
Act requires the Company’s 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 on the Company’s review of these forms and
written representations from the officers and directors, the Company believes
that all Section 16(a) filing requirements were met during fiscal 2015, with the
following exceptions:
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Gordon A. Baird – filed
one late Form 4 (to report the vesting of certain derivative securities
upon the satisfaction of the applicable performance conditions);
and
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Robert B. Willumstad –
amended his original Form 3 (to include derivative securities erroneously
omitted from his original Form 3 filed in 2013) and filed one late Form 4
(to report the vesting of certain derivative securities upon the
satisfaction of the applicable performance
conditions).
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Transactions with Related
Persons
In September 2014, the Company
received a loan for $600,000 from a director of the Bank to assist in covering
outstanding commitments. The loan was secured by two pieces of real estate owned
by the Company with a combined book value of $1.1 million. The terms of this
note required monthly interest payments over the next 12 months at a rate of 7%
for the first six months and then at a rate of 8% until maturity. The balance of
the note, along with any unpaid accrued interest, was due at maturity in
September 2015. On March 18, 2015, one of the parcels of real estate was sold
and a payment was made on the loan so that the outstanding balance of the loan
was $149,774. The outstanding balance was paid in its entirety on September 3,
2015.
In July 2011, Gordon A. Baird,
the Company’s former chief executive officer, formed MPIB Holdings, LLC
(“MPIB”), a Delaware limited liability company, for the purpose of developing
the business and regulatory plans for a digital transaction services business.
Alvin G. Hageman, a former director of the Company, also invested in MPIB in
December 2011. On December 31, 2012, Mr. Baird was appointed Chief Executive
Officer and director of the Company, and Mr. Hageman became a director of the
Company in April 23, 2013. As previously disclosed, on May 14, 2015, the Company
entered into a license agreement with MPIB, pursuant to which the Company
received a non-exclusive, non-transferable, non-sublicensable, worldwide license
to use certain intellectual property of MPIB related to mobile payments and
digital transactions. On September 25, 2015, the Company suspended development
of its digital banking, payments and transaction services business, and in
conjunction with the suspension, the Company terminated the employment of the
employees who were primarily engaged in developing the digital banking, payments
and transaction services business, including Mr. Baird. Neither Mr. Baird nor
Mr. Hageman was nominated for re-election to the Company’s board of directors at
the 2015 annual shareholder’s meeting. On January 4, 2016, the Company and MPIB
amended and restated the license agreement (the “Amended and Restated License
Agreement”) pursuant to which MPIB agreed to make the license perpetual, subject
to termination rights of the parties set forth in the Amended and Restated
License Agreement, in exchange for the Company’s payment of an additional
license fee of $275,000. In addition, as previously disclosed, on April 27,
2015, the Company submitted a proposed asset purchase agreement between the
Company and MPIB to the Federal Reserve Bank of Richmond. The Company
subsequently withdrew this application to the agency and no longer intends to
enter into the asset purchase agreement or consummate the transaction
contemplated therein.
7
In addition, the Bank has had,
and expects to have in the future, loans and other banking transactions in the
ordinary course of business with directors (including our independent directors)
and executive officers of the Company and the Bank, including members of their
families or corporations, partnerships or other organizations in which such
officers or directors have a controlling interest. These loans are made on
substantially the same terms (including interest rates and collateral) as those
prevailing at the time for comparable transactions with unrelated parties. Such
loans do not involve more than the normal risks of repayment nor present other
unfavorable features.
Loans to individual directors
and officers must also comply with our Bank’s lending policies and statutory
lending limits, and directors with a personal interest in any loan application
are excluded from the consideration of the loan application.
The board of directors has
adopted and has adhered to a policy that all transactions between the Company or
the Bank and our shareholders, affiliates, officers, and directors are subject
to the approval of a majority of the independent and disinterested outside
directors and are conducted on terms no less favorable than could be obtained
from unaffiliated third parties on an arm’s length basis. In addition, the
Company is required to conduct an appropriate review of all related party
transactions for potential conflict of interest situations on an ongoing basis,
and all such transactions must be approved by the audit committee (or another
independent body of the board of directors). Any transaction or relationship
that is approved as required under this paragraph complies with the Company’s
Code of Business Conduct and Ethics, and such approval is not be regarded as a
waiver of the code. Any material transaction or relationship that could
reasonably be expected to give rise to a conflict of interest should be
discussed with the chairman of the audit committee if not previously approved as
described above.
In addition, the Company
annually requires each of its directors and executive officers to complete a
directors’ and officers’ questionnaire that elicits information about related
person transactions. The Company annually reviews all relationships and amounts
disclosed in the directors’ and officers’ questionnaires, and makes a formal
determination regarding each director’s independence as determined under the
rules of The NASDAQ Stock Market, the exchange that we selected in order to
determine whether our directors and committee members meet the independence
criteria of a national securities exchange, as required by Item 407(a) of
Regulation S-K.
In addition, the Bank is
subject to the provisions of Section 23A of the Federal Reserve Act, which
places limits on the amount of loans or extensions of credit to, or investments
in, or certain other transactions with, affiliates and on the amount of advances
to third parties collateralized by the securities or obligations of affiliates.
The Bank is also subject to the provisions of Section 23B of the Federal Reserve
Act which, among other things, prohibits an institution from engaging in certain
transactions with certain affiliates unless the transactions are on terms
substantially the same, or at least as favorable to such institution or its
subsidiaries, as those prevailing at the time for comparable transactions with
nonaffiliated companies.
Interest of Certain Persons
in Matters to be Acted Upon
No director, executive
officer, nominee for election as a director, associate of any director,
executive officer or nominee or any other person has any substantial interest,
direct or indirect, through security holdings or otherwise in the ratification
of the Company’s independent registered public accounting firm, which is not
shared by all other shareholders.
8
PROPOSAL NO.
2:
NON-BINDING ADVISORY
VOTE ON COMPENSATION OF
NAMED EXECUTIVE OFFICERS
(“SAY-ON-PAY”)
Pursuant to SEC rules, the
Company provides its shareholders with an opportunity to vote to approve, on an
advisory, nonbinding basis, the compensation of the Company’s named executive
officers (“say-on-pay”). The Company last provided its shareholders with an
advisory, nonbinding vote to approve the compensation of the Company’s named
executive officers at the 2013 annual shareholders’ meeting, at which time the
shareholders approved such executive compensation and also voted for the Company
to conduct a say-on-pay proposal every three years. As a result, this
non-binding advisory vote is included herein in accordance with the three-year
cycle approved by the Company’s shareholders.
The say-on-pay proposal gives
our shareholders the opportunity to endorse or not endorse the compensation we
pay to our named executive officers by voting to approve or not approve, on a
non-binding advisory basis, such compensation as described in this proxy
statement. This vote is advisory, which means that it is not binding on the
Company, the board or the compensation/nominating committee. Although the
say-on-pay vote is advisory and is not binding on our board, the
compensation/nominating committee will take into consideration the outcome of
the vote when making future executive compensation decisions. The vote on this
resolution is not intended to address any specific element of compensation, but
rather relates to the overall compensation of our named executive
officers.
The purpose of the Company’s
compensation policies and procedures is to attract and retain experienced and
highly qualified executives critical to our long-term success and enhancement of
shareholder value, while at the same time avoiding the encouragement of
unnecessary or excessive risk-taking. The board believes our compensation
policies and procedures achieve this objective. We encourage you to closely
review the “Executive Compensation and Other Information” included herein, as
well as the tabular summary compensation disclosure which follows it, for more
information on our named executive officers’ compensation.
Our board recommends that our
shareholders vote in favor of the following resolution:
“Resolved, that the
compensation of our company’s named executive officers, as disclosed pursuant to
the compensation disclosure rules of the SEC, including the “Executive
Compensation and Other Information”, the compensation tables and any related
material disclosed in this proxy statement, is hereby approved.”
The board unanimously
recommends a vote “FOR” the approval of this resolution related to the
compensation of our named executive officers.
9
PROPOSAL NO.
3:
RATIFICATION OF
APPOINTMENT
OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
On March 16, 2016, the audit
committee of the board of directors engaged Elliott Davis Decosimo, LLC as our
independent registered public accounting firm for the year ending December 31,
2016. Although we are not required to seek shareholder ratification in the
selection of our accountants, we believe obtaining shareholder ratification is
desirable. If the shareholders do not ratify the appointment of Elliott Davis
Decosimo, LLC, the audit committee will re-evaluate the engagement of our
independent auditors. Even if the shareholders do ratify the appointment, our
audit committee has the discretion to appoint a different independent registered
public accounting firm at any time during the year if the audit committee
believes that such a change would be in the best interest of us and our
shareholders. We expect that a representative of Elliott Davis Decosimo, LLC
will attend the meeting and will be available to respond to appropriate
questions from shareholders.
The board unanimously
recommends a vote “FOR” the ratification of the appointment of Elliott Davis
Decosimo, LLC as our independent registered public accounting firm for the year
ending December 31, 2016.
If a quorum exists, the
proposal will be approved if the number of votes cast at the meeting in favor of
the matter exceeds the number of votes cast against the matter. Abstentions,
broker non-votes, and the failure to return a signed proxy will have no effect
on the outcome of the vote on this matter.
10
CORPORATE
GOVERNANCE
Meeting Attendance by the
Board of Directors
During 2015, the board of
directors of the Company held seven meetings. Each of the current directors
attended at least 75% of the aggregate of such board meetings and the meetings
of each committee on which they served for the periods during which they served,
with the exception of Mr. Stock, who attended approximately 71% of such
meetings.
There is no formal policy
regarding attendance at annual shareholder meetings; however, such attendance
has always been strongly encouraged. All of the directors attended the 2015
Annual Shareholders Meeting.
Director Independence,
Board Leadership Structure and Role in Risk Oversight
We are focused on the
Company’s corporate governance practices and value independent board oversight
as an important component of corporate performance to enhance shareholder value,
and we apply the independence criteria set forth in the corporate governance
listing standards of The NASDAQ Stock Market, the exchange that we selected in
order to determine whether our directors and committee members meet the
independence criteria of a national securities exchange, as required by Item
407(a) of Regulation S-K.. Based on NASDAQ Rule 5605(a)(2), the board of
directors has determined that Mr. Echlov, Mr. Hipp, Mr. Hurwich, Mr. Stock, and
Mr. Willumstad are “independent” directors.
We believe it is the chief
executive officer’s responsibility to manage the day to day operations of the
Company and the chairman’s responsibility to lead the board. In making the
decision for these roles to be separate, we believe it is beneficial to have a
chairman whose sole job is leading the board and providing oversight to
management. Additionally, the board considered the time required of Mr. Miller
to devote as interim chief executive officer of the Company and chief executive
officer of the Bank. By separating the chairman and chief executive officer
roles, Mr. Miller is able to focus his attention on leading and managing the
Company and the Bank. This also ensures there is no duplication of effort
between the chief executive officer and the chairman. The board believes that
separating the chairman and chief executive officer positions is the right
corporate governance structure for the Company because it most effectively
utilizes Mr. Willumstad’s and Mr. Miller’s experience and knowledge regarding
the Company and the financial services industry, including by allowing them to
lead and participate in, respectively, board discussions regarding the Company’s
business and strategy. We also believe this structure provides strong leadership
for the board, while also positioning the chief executive officer as the leader
of the Company in the eyes of our board, employees, customers, and other
stakeholders.
Our board is active in the
oversight of risk. Our risk oversight function is administered through our
various board committees as discussed below. Our executive management team,
which supervises the day-to-day risk management responsibilities, reports
directly to both the board as a whole and to board committees.
Our audit committee is
primarily responsible for overseeing the Company’s risk management processes on
behalf of the full board of directors. The audit committee focuses on financial
reporting risk and oversight of the internal audit process. It receives reports
from management at least quarterly regarding the Company’s assessment of risks
and the adequacy and effectiveness of internal control systems, as well as
reviewing credit and market risk (including liquidity and interest rate risk),
and operational risk (including compliance and legal risk). Strategic and
reputation risk are also regularly considered by the audit committee. The audit
committee also receives reports from management addressing the most serious
risks impacting the day-to-day operations of the Company. Our independent
registered public accounting firm directly reports to the audit committee and
meets with the audit committee on a quarterly basis in executive sessions to
discuss any potential risk or control issues involving management. The audit
committee reports regularly to the full board of directors, which also considers
the Company’s entire risk profile. The full board of directors focuses on the
most significant risks facing the Company and the Company’s general risk
management strategy, and also ensures that risks
11
undertaken by the Company are
consistent with the board of directors’ approval for risk. While the board of
directors oversees the Company’s risk management, management is responsible for
the day-to-day risk management processes. We believe this division of
responsibility is the most effective approach for addressing the risks facing
our Company and that our board leadership structure supports this
approach.
We believe that board
leadership structures should be adjusted to the needs of the Company based on
its circumstances. We examine our corporate governance policies and leadership
structures on an ongoing basis to ensure that they continue to address the
Company’s needs.
Committees of the Board of
Directors
The Company’s board of
directors has appointed a number of committees, including an audit committee and
a compensation/nominating committee.
Audit Committee.
The audit committee is currently
composed of Mr. Hipp and Mr. Stock. Each of these members is considered
“independent” under NASDAQ Rule 5605(c)(2). The board of directors has
determined that Mr. Stock is an “audit committee financial expert” as defined in
Item 407(d)(5) of the SEC’s Regulation S-K. The audit committee met four times
in 2015.
The audit committee functions
are set forth in its charter, a copy of which was included as Appendix B to the
Company’s proxy statement for the 2014 annual shareholders’ meeting. Under the
terms of the charter, the audit committee has the responsibility of reviewing
financial statements, evaluating internal accounting controls, reviewing reports
of regulatory authorities, and determining that all audits and examinations
required by law are performed, among other things. The committee recommends to
the board the appointment of the independent auditors for the next fiscal year,
reviews and approves the auditor’s audit plans, and reviews with the independent
auditors the results of the audit and management’s responses. The audit
committee is responsible for overseeing the entire audit function and appraising
the effectiveness of internal and external audit efforts. The audit committee
reports its findings to the board of directors.
The audit committee charter
requires that the audit committee be comprised of at least three directors, each
of whom must be independent under NASDAQ rules. The board of directors believes
that audit committee membership is an important role with a great deal of
responsibility. As such, the board of directors is carefully considering
acceptable candidates to fill the open seat on the audit committee. As of the
date hereof, the board is still searching for an acceptable candidate and,
therefore, has not appointed a third director to the audit committee.
Compensation/Nominating
Committee.
Our current
compensation/nominating committee is composed of Mr. Willumstad and Mr. Hipp.
The compensation/nominating committee met six times in 2015.
The compensation/nominating
committee functions are set forth in its charter, a copy of which was included
as Appendix C to the Company’s proxy statement for the 2014 annual shareholders’
meeting. The charter requires that the compensation/nomination committee be
comprised of not less than three directors, each of whom must be independent
under NASDAQ rules, including the additional independence requirements specific
to compensation committee membership, a “non-employee director” within the
meaning of Rule 16b-3 issued by the SEC, and an “outside director” within the
meaning of Section 162(m) of the Code. Because of few number of independent
directors, the committee has functioned with only two members, but the board of
directors is carefully considering acceptable candidates to ensure the
compensation/nominating committee is in compliance with the charter. The board
of directors believes that compensation/nominating membership is an important
role with a great deal of responsibility. As such, the board of directors is
carefully considering acceptable candidates to fill the open seat on the
compensation/nominating committee. As of the date hereof, the board is still
searching for an acceptable candidate and, therefore, has not appointed a third
director to the compensation/nominating committee.
12
The compensation/nominating
committee has the responsibility of approving the compensation plan for the
entire Bank and specific compensation for all executive officers. The
compensation/nominating committee reviews all benefit plans and annually reviews
the performance of the chief executive officer. The compensation/ nominating
committee fixed and approved the 2015 compensation paid to Mr. Baird, the
Company’s former chief executive officer, and to Mr. Miller, our interim chief
executive and the president and chief executive officer of the Bank. In
addition, with input from our chief executive officer, the
compensation/nominating committee fixed and approved the compensation paid to
the other executive officers during 2015. The Company’s compensation programs
have been established with the primary objectives of providing pay levels and
incentive opportunities that are competitive and reflect the performance of the
Company. The primary components of 2015 compensation for the executive officers
included base salary, equity awards, and health and disability insurance
coverage. The base salary parameters were established through comparisons with
organizations of similar size and complexity to the Company. Base salary
parameters also considered current economic conditions. Compensation levels were
set with the objective of establishing executive officer base salaries that,
when considered as a part of total compensation, were adequate and competitive
with our peer group, based on asset size. The compensation committee must also
meet at least semi-annually to discuss and evaluate employee compensation plans
in light of an assessment of any risk posed to the Company from such
plans.
In addition to matters related
to compensation, the compensation/nominating committee is also responsible for
recommending nominees for election to the board. The compensation/nominating
committee considers whether to recommend to the board the nomination of those
directors for re-election for another term of service as well as whether to
recommend to the board the nomination of persons to serve as directors whose
nominations have been recommended by shareholders.
Any shareholder may recommend
the nomination of any person to serve on the board. Our bylaws require a
shareholder to submit the name of the person to our secretary in writing no
later than (i) with respect to an election to be held at an annual meeting of
shareholders, 90 days in advance of such meeting; and (ii) with respect to an
election to be held at a special meeting of shareholders for the election of
directors, no more than seven days after notice of the special meeting is given
to shareholders. Each notice must set forth: (i) the name and address of the
shareholder who intends to make the nomination and of the person or persons to
be nominated; (ii) a representation that the shareholder is a holder of record
of stock of the Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (iii) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (iv) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be nominated, by the
board of directors; and (v) the consent of each nominee to serve as a director
of the Company if so elected. The chairman of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure.
In evaluating such
recommendations, the compensation/nominating committee uses a variety of
criteria to evaluate the qualifications and skills necessary for members of our
board, including, among other things, business experience, diversity, and
personal skills in technology, finance, marketing, international business,
financial reporting and other areas that are expected to contribute to an
effective board. Under these criteria, members of the board should have high
professional and personal ethics and values, consistent with our longstanding
values and standards. They should also have broad experience at the
policy-making level in business, government, education, technology, or public
interest. They should be committed to enhancing shareholder value and should
have sufficient time to carry out their duties and to provide insight and
practical wisdom based on experience. Their service on other boards of public
companies should be limited to a number that permits them, given their
individual circumstances, to perform responsibly all director duties. Each
director must represent the interest of our shareholders.
13
The compensation/nominating
committee uses a variety of methods for identifying and evaluating nominees for
director. They regularly assess the appropriate size of the board, the diversity
of the board, and whether any vacancies are expected due to retirement or
otherwise. The compensation/nominating committee has adopted a corporate
governance policy that, among other things, addresses the consideration of
diversity in identifying director nominees. In determining whether to recommend
a director nominee, compensation/ nominating committee members consider and
discuss diversity, among other factors, with a view toward the needs of the
board of directors as a whole. The compensation/nominating committee members
generally conceptualize diversity expansively to include, without limitation,
concepts such as differences of viewpoint, professional experience, education,
skill, race, gender, national origin, and other qualities or attributes that
contribute to board heterogeneity, when identifying and recommending director
nominees. The compensation/ nominating committee believes that the inclusion of
diversity as one of many factors considered in selecting director nominees is
consistent with the committee’s goal of creating a board of directors that best
serves the needs of the Company and the interest of its shareholders. If
vacancies are anticipated, or otherwise arise, the compensation/nominating
committee considers various potential candidates for director. Candidates may
come to their attention through current members of the board, shareholders, or
other persons. These candidates are evaluated at regular or special meetings of
the board, and may be considered at any point during the year. The
compensation/nominating committee considers properly submitted shareholder
recommendations for candidates. In evaluating such recommendations, the
compensation/nominating committee uses the qualifications and standards
discussed above and seeks to achieve a balance of knowledge, experience and
capability on the board. The Company does not pay a third party to assist in
identifying and evaluating candidates.
Report of the Audit
Committee of the Board
The report of the audit
committee shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates the information contained in
the report by reference, and shall not be deemed filed under such
acts.
The audit committee reviewed
and discussed with management the audited financial statements. The audit
committee discussed with the independent auditors the matters required to be
discussed by the Statement on Auditing Standards No. 61. The audit committee
received from the independent auditors the written disclosures and letters
required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant’s communications with the audit
committee concerning independence and has discussed with the independent
auditors, the independent auditors’ independence from the Company and its
management. In reliance on the reviews and discussions referred to above, the
audit committee recommended to our board of directors that the audited financial
statements be included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2015 for filing with the SEC.
The report of the audit
committee is included herein at the direction of its current members, Mr. Hipp
and Mr. Stock.
Shareholder Communications
with the Board
Our board of directors has
implemented a process for shareholders of the Company to send communications to
the board. Any shareholder desiring to communicate with the board, or with
specific individual directors, may do so by writing to the secretary of the
Company, at Independence Bancshares, Inc., 500 East Washington Street,
Greenville, South Carolina 29601. The secretary has been instructed by the board
to promptly forward all such communications to the addressees indicated
thereon.
14
EXECUTIVE COMPENSATION
AND OTHER INFORMATION
Summary Compensation
Table
The following table summarizes
the compensation paid to or earned by each of the named executive officers for
the years ended December 31, 2015 and December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
All Other
|
|
|
|
|
Name and
Position
|
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Compensation
|
|
Total
|
|
Lawrence R.
Miller
(1)
|
|
2015
|
|
$
|
179,655
|
|
$
|
—
|
|
$
|
—
|
|
$
|
21,250
|
(3)(4)
|
|
$
|
200,905
|
|
Interim Chief
Executive Officer
|
|
2014
|
|
$
|
177,000
|
|
$
|
9,500
|
|
$
|
6,750
|
|
$
|
21,408
|
(3)(4)
|
|
$
|
214,658
|
|
of
the Company and President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Officer of the Bank; Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gordon A. Baird
(2)
|
|
2015
|
|
$
|
325,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
3,015
|
(4)
|
|
$
|
328,015
|
|
Chief Executive
Officer of the
|
|
2014
|
|
$
|
360,000
|
|
$
|
—
|
|
$
|
162,653
|
|
$
|
4,524
|
(4)
|
|
$
|
527,177
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha L. Long
|
|
2015
|
|
$
|
205,800
|
|
$
|
—
|
|
$
|
—
|
|
$
|
7,266
|
(4)
|
|
$
|
213,066
|
|
Chief Financial
Officer of the
|
|
2014
|
|
$
|
204,000
|
|
$
|
9,500
|
|
$
|
14,175
|
|
$
|
8,189
|
(4)
|
|
$
|
235,864
|
|
Company
and the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.
Fred Moore
|
|
2015
|
|
$
|
131,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
6,567
|
(4)
|
|
$
|
137,567
|
|
Executive Vice
President, Chief Credit
|
|
2014
|
|
$
|
129,000
|
|
$
|
9,500
|
|
$
|
14,175
|
|
$
|
5,688
|
(4)
|
|
$
|
144,188
|
|
Officer
of the Company and the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
____________________
|
(1)
|
|
Mr. Miller was appointed as the Company’s
interim chief executive officer on October 4, 2015.
|
|
(2)
|
|
Mr. Baird served as the Company’s chief
executive officer until September 25, 2015.
|
|
(3)
|
|
Includes 401(k) matching contributions,
excess premiums for life insurance at two times salary and premiums for
long-term and short-term disability insurance policies. All of these
benefits are provided to all full-time Bank employees on a
non-discriminatory basis.
|
|
(4)
|
|
Includes membership dues paid to country
clubs, vehicle expenses, and premiums paid on additional life
insurance.
|
Employment
Agreements
Lawrence R.
Miller
We entered into an employment
agreement with Lawrence R. Miller on December 10, 2008, for an initial one-year
term, annually renewing thereafter, pursuant to which he served as the president
and the chief executive officer of the Company and the Bank. On December 31,
2012, the Company, the Bank and Mr. Miller entered into an amendment to his
employment agreement solely to remove references to his position as the
Company’s president and chief executive officer. On October 4, 2015, the
Company’s board of directors appointed Mr. Miller as the Company’s interim chief
executive officer, but his employment agreement was not amended to that effect.
As of September 30, 2016, Mr. Miller receives an annual salary of $177,000, plus
a portion of his yearly medical insurance premium. He is eligible to receive an
annual increase in his salary as determined by the board of directors. He is
eligible to receive an annual bonus of up to 50% of his annual salary if the
Bank achieves certain performance levels to be determined from time to time by
the board of directors. He is also eligible to participate in any management
incentive program of the Bank or any long-term equity incentive program and is
eligible for grants of stock options and other awards thereunder. As of the date
hereof, Mr. Miller has been granted options to purchase a total of 92,885 shares
of common stock. These options were granted in 2005, 2007, 2008 and 2013 under
our 2005 Incentive Plan, with each grant vesting over a three-year period
beginning on the date of grant. All options have a term of 10 years.
Additionally, Mr. Miller participates in the Bank’s retirement, welfare, and
other benefit programs and is entitled to a life insurance policy and an
accident liability policy and reimbursement for automobile expenses, club dues,
and travel and business expenses.
15
Mr. Miller’s employment
agreement also provides that during his employment and for a period of 12 months
following termination, he may not (a) compete with the Company, the Bank, or any
of its affiliates by, directly or indirectly, forming, serving as an organizer,
director or officer of, or consultant to, or acquiring or maintaining more than
1% passive investment in, a depository financial institution or holding company
thereof if such depository institution or holding company has one or more
offices or branches within a radius of 30 miles from the main office of the
Company or any branch office of the Company, (b) solicit customers of the Bank
with which he has had material contact for the purpose of providing financial
services, or (c) solicit employees of the Bank for employment. If we terminate
the employment agreement for Mr. Miller without cause, he will be entitled to
severance in an amount equal to his then current monthly base salary multiplied
by 12, excluding any bonus. If, following a change in control of the Company,
Mr. Miller terminates his employment for good cause as that term is defined in
the employment agreement, he will be entitled to severance compensation of his
then current monthly salary multiplied by 24, plus accrued bonus, and all
outstanding options and incentives will vest immediately, and for a period of
two years, we would continue his medical, life, disability, and other
benefits.
Martha L.
Long
We entered into a change in
control agreement with Martha L. Long on December 19, 2014, for an initial
one-year term, which was renewed on December 19, 2015 and annually renewing
thereafter unless the Company delivers a notice of termination at least thirty
days prior to the beginning of the renewal period. Upon the termination of Ms.
Long’s employment by (i) the Executive for Good Reason upon delivery of a Notice
of Termination to the Employer, or (ii) the Employer other than for Cause, in
each case simultaneously with or within one year after the occurrence of a
Change in Control, the Employer shall pay the Ms. Long (or in the event of her
death during the term of this Agreement, her estate) in cash within 60 days of
the date of termination, severance compensation in an amount equal to her then
current monthly base salary multiplied by twelve, plus any bonus earned through
the date of termination but unpaid as of the date of termination. In addition,
Ms. Long and her covered dependents may continue participation, in accordance
with the terms of the applicable benefits plans, in the Employer’s group health
plan pursuant to plan continuation rules under COBRA. If Ms. Long elects COBRA
coverage for group health coverage, then for the first twelve months of COBRA
coverage she will only be obligated to pay the portion of the full COBRA cost of
the coverage equal to an active employee’s share of premiums for coverage for
the respective plan year of coverage and the Company’s share of such premiums
shall be treated as taxable income to her, and thereafter she will be required
to pay the full COBRA cost of the coverage.
16
Outstanding Equity Awards
at Fiscal Year-End
The following table sets forth
information concerning equity awards that were outstanding to our named
executive officers at December 31, 2015.
|
|
|
Option
Awards
|
|
|
|
Number of Securities
|
|
Option
|
|
Option
|
|
|
|
|
|
|
Underlying
|
|
Exercise
|
|
Expiration
|
|
Grant-date
|
|
|
|
Unexercised
Options
|
|
Price
|
|
Date
|
|
Fair
Value
|
|
|
|
Exercisable
|
|
Unexercisable
|
|
(per share)
|
|
|
|
|
|
|
Gordon A. Baird
|
|
375,000
|
|
|
—
|
|
|
|
$
|
0.80
|
|
|
12/31/2022
|
|
$
|
300,000
|
|
|
|
1,125,000
|
|
|
—
|
|
|
|
$
|
0.80
|
|
|
05/16/2023
|
|
$
|
900,000
|
|
Martha L. Long
|
|
28,000
|
|
|
12,000
|
|
|
|
$
|
0.80
|
|
|
07/16/2023
|
|
$
|
32,000
|
|
|
|
7,500
|
|
|
—
|
|
|
|
$
|
1.59
|
|
|
02/05/2014
|
|
$
|
11,925
|
|
Lawrence R. Miller
|
|
15,000
|
|
|
—
|
|
|
|
$
|
10.00
|
|
|
07/26/2015
|
|
$
|
61,650
|
|
|
|
13,500
|
|
|
—
|
|
|
|
$
|
10.00
|
|
|
04/11/2017
|
|
$
|
57,375
|
|
|
|
14,385
|
|
|
—
|
|
|
|
$
|
10.50
|
|
|
01/23/2018
|
|
$
|
57,396
|
|
|
|
35,000
|
|
|
15,000
|
|
|
|
$
|
0.80
|
|
|
07/16/2023
|
|
$
|
40,000
|
|
E.
Fred Moore
|
|
21,000
|
|
|
9,000
|
|
|
|
$
|
0.80
|
|
|
07/16/2023
|
|
$
|
24,000
|
With respect to the 1,125,000
options granted to Mr. Baird on May 16, 2013, 187,500 options were to vest every
six months beginning on June 30, 2013, provided that certain regulatory
restrictions at the Company were terminated. These restrictions were terminated
in 2014. As of December 31, 2015 and 2014, 1,125,000 and 750,000, respectively,
were vested. The 375,000 options granted to Mr. Baird on December 31, 2012 were
immediately vested on the grant date.
Ten percent of the options
granted to each of Ms. Long, Mr. Miller, and Mr. Moore on July 16, 2013 were to
immediately vest on the grant date, with the remaining 90% subject to
incremental vesting over a 3-year period (30% to vest annually on the first
three anniversaries of the grant date) provided, in each case, that the Consent
Order with the OCC had been removed. The Consent Order was removed on June 5,
2014. Since the lifting of the Consent Order, 70% of these options has now
vested for each officer.
The options previously granted
to Mr. Miller vested at a rate of 33% each year on the first three anniversaries
of the date of grant.
In addition to the awards
described in the table above, as an organizer, Lawrence R. Miller received a
warrant to purchase one share of common stock at a purchase price of $10.00 per
share for every share he purchased, up to a maximum of 25,000 warrants, in our
initial public offering as compensation for the risks taken in forming the Bank,
including his personal guarantees of the original line of credit. Mr. Miller
purchased 12,500 shares in our initial public offering and so received, and
continues to hold, 12,500 warrants. The warrants were exercisable until May 16,
2015 and were therefore deemed expired. These warrants were not granted as
compensation for services as an executive officer and so were not deemed to be
equity awards for the purpose of the Outstanding Equity Awards at Fiscal Year
End table.
Director
Compensation
In 2015, we paid Mr.
Willumstad an annual retainer of $130,000 as the chairman of the board. Mr.
Willumstad agreed to defer $40,000 as a result of the Company suspending further
development of its digital banking, payments, and transaction services business.
This deferral is included in the payables of the Company. No other directors
received any form of compensation.
17
In
conjunction with the opening of the Bank in 2005, each director in office at
that time, as well as the Bank’s organizer, received a warrant to purchase one
share of common stock at a purchase price of $10.00 per share for every share of
our common stock purchased by that individual, up to a maximum of 25,000 shares.
In total, we granted our initial directors and the Bank’s organizer warrants to
purchase 312,500 shares of common stock exercisable until May 16, 2015. At
December 31, 2015, no warrants remained outstanding as the warrants were not
exercised by May 2015 and were deemed expired.
Equity Based Compensation
Plan Information
The
following table sets forth equity based compensation plan information at
December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
Number of
securities
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available
for
|
|
|
|
to be issued
|
|
Weighted-average
|
|
future issuance
under
|
|
|
|
upon exercise of
|
|
exercise price of
|
|
equity
compensation
|
|
|
|
outstanding options,
|
|
outstanding options,
|
|
plans (c)
|
|
|
|
warrants and rights
|
|
warrants and rights
|
|
(excluding
securities
|
|
Plan Category
|
|
|
(a)
|
|
(b)
|
|
reflected in
column(a))
|
|
Equity compensation plans approved by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
security
holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
Incentive Plan
(1)
|
|
|
2,323,505
|
|
|
|
$
|
1.20
|
|
|
|
143,215
|
|
|
2013 Incentive Plan
(2)
|
|
|
778,750
|
|
|
|
$
|
1.11
|
|
|
|
2,542,720
|
|
|
Equity compensation plans not approved
by
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
security
holders
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
|
|
3,102,255
|
|
|
|
$
|
1.18
|
|
|
|
2,685,935
|
|
____________________
|
(1)
|
At our annual meeting
of shareholders held on May 16, 2006, our shareholders approved the 2005
Incentive Plan. The 260,626 of shares of common stock initially available
for issuance under the 2005 Incentive Plan automatically increased to
2,466,720 shares on December 31, 2012, such that the number of shares
available for issuance continued to equal 12.5% of our total outstanding
shares. In February 2013, the board of directors adopted Amendment No. 2
to the 2005 Incentive Plan to provide that the maximum number of shares
that may be issued thereunder shall be 2,466,720 and to eliminate the
evergreen provision.
|
|
|
|
(2)
|
At our annual meeting
of shareholders held on May 15, 2013, our shareholders approved the 2013
Incentive Plan. The 2,466,720 shares of common stock initially available
for issuance under the 2013 Incentive Plan automatically increased to
2,658,970 shares on August 1, 2013, such that the number of shares
available for issuance (plus the 2,466,720 shares reserved for issuance
under the 2005 Incentive Plan) continued to equal 20% of our total
outstanding shares on an as-diluted basis.
|
18
Security Ownership of
Certain Beneficial Owners and Management
The
following tables set forth information known to the Company with respect to
beneficial ownership of the Company’s common stock as of September 27, 2016 for
(i) each current director of the Company and director nominee, (ii) each of the
Company’s named executive officers, (iii) each holder of 5.0% or greater of the
Company’s common stock, and (iv) all of the Company’s directors and executive
officers as a group. Unless otherwise indicated, the mailing address for each
beneficial owner is care of Independence Bancshares, Inc., 500 East Washington
St., Greenville, South Carolina 29601.
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
Options and
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
Warrants for
|
|
Issuable Upon
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
of Series A
|
|
|
|
|
|
|
|
Common
|
|
within
|
|
Preferred
|
|
|
|
|
|
|
|
Shares
|
|
60 Days of
|
|
Shares
|
|
|
|
Percentage
of
|
|
|
|
Beneficially
|
|
September 27,
|
|
Beneficially
|
|
|
|
Beneficial
|
|
Name
|
|
|
Owned
(1)
|
|
2016
|
|
Owned
(2)
|
|
Total
|
|
Ownership
(3)
|
|
Directors of the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Echlov
|
|
—
|
|
|
|
—
|
|
|
3,062,000
|
(5)
|
|
3,062,000
|
|
9.87%
|
|
H.
Neel Hipp, Jr.
|
|
331,500
|
|
|
|
20,000
|
|
|
—
|
|
|
351,500
|
|
1.13%
|
|
Adam G. Hurwich
|
|
—
|
|
|
|
—
|
|
|
3,062,500
|
(7)
|
|
3,062,500
|
|
9.87%
|
|
Lawrence R. Miller
|
|
93,750
|
|
|
|
80,385
|
|
|
—
|
|
|
174,135
|
|
0.56%
|
|
Keith Stock
|
|
125,000
|
(8)
|
|
|
20,000
|
|
|
125,000
|
(9)
|
|
270,000
|
|
0.87%
|
|
Robert B. Willumstad
|
|
1,250,000
|
|
|
|
762,500
|
|
|
312,500
|
|
|
2,325,000
|
|
7.49%
|
|
|
|
Named
Executive Officers (Non-Directors)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martha L. Long
|
|
62,500
|
|
|
|
47,500
|
|
|
—
|
|
|
110,000
|
|
0.35%
|
|
E. Fred Moore
|
|
4,125
|
|
|
|
|
|
|
—
|
|
|
4,125
|
|
0.01%
|
|
|
|
Other Holders of 5% or Greater
of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company’s Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aequitas Capital Opportunities
Fund, LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5300 Meadows Road, Suite
400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lake Oswego, OR 97035
|
|
—
|
|
|
|
—
|
|
|
3,062,500
|
(10)
|
|
3,062,500
|
|
9.87%
|
|
Huntington Partners, LLLP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
S. Wacker Drive, Suite 2675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago, IL 60606
|
|
1,875,000
|
|
|
|
—
|
|
|
—
|
|
|
1,875,000
|
|
6.04%
|
|
Iron Road Multi-Strategy Fund
LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115 S. LaSalle, 34th
Floor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago, IL 60603
|
|
—
|
|
|
|
—
|
|
|
312,500
|
(11)
|
|
312,500
|
|
1.01%
|
|
Mendon Capital Master Fund Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115
S. LaSalle, 34th Floor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago, IL 60603
|
|
—
|
|
|
|
—
|
|
|
2,387,500
|
(12)
|
|
2,387,500
|
|
7.69%
|
|
Mendon Capital QP LP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115 S. LaSalle, 34th
Floor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago, IL 60603
|
|
—
|
|
|
|
—
|
|
|
362,500
|
(13)
|
|
362,500
|
|
1.17%
|
|
Ulysses Offshore Fund, Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c/o
Ulysses Management LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One
Rockefeller Plaza
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New
York, New York 10020
|
|
—
|
|
|
|
—
|
|
|
375,000
|
(14)
|
|
375,000
|
|
1.21%
|
|
Ulysses Partners, L.P.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
c/o Ulysses Management
LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Rockefeller Plaza
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New York, New York 10020
|
|
—
|
|
|
|
—
|
|
|
2,687,500
|
(14)
|
|
2,687,500
|
|
8.66%
|
19
|
|
|
|
|
|
|
|
|
|
Shares of
|
|
|
|
|
|
|
|
|
|
|
|
|
Options and
|
|
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
for
|
|
Issuable Upon
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
|
|
Conversion
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable
|
|
of Series A
|
|
|
|
|
|
|
|
|
|
Common
|
|
within
|
|
Preferred
|
|
|
|
|
|
|
|
|
|
Shares
|
|
60 Days of
|
|
Shares
|
|
|
|
Percentage of
|
|
|
|
Beneficially
|
|
September
27,
|
|
Beneficially
|
|
|
|
Beneficial
|
|
Name
|
|
|
Owned
(1)
|
|
2016
|
|
Owned
(2)
|
|
Total
|
|
Ownership
(3)
|
|
Steven D. Hovde
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
968 Williamsburg Park
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barrington, IL 60010
|
|
1,250,000
|
|
|
|
—
|
|
|
|
—
|
|
|
1,250,000
|
|
|
4.03%
|
|
|
Gordon A. Baird
|
|
1,072,250
|
(4)
|
|
|
1,500,000
|
|
|
|
—
|
|
|
2,572,250
|
|
|
7.91%
|
|
|
Alvin G. Hageman
|
|
1,390,250
|
(6)
|
|
|
37,500
|
|
|
|
156,250
|
|
|
1,584,000
|
|
|
9.48%
|
|
|
All directors and executive officers of the
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company as a group (8
persons)
|
|
1,862,750
|
|
|
|
930,385
|
|
|
|
6,250,000
|
|
|
9,043,135
|
|
|
30.14%
|
|
____________________
|
(1)
|
Includes
shares for which the named person has sole voting and investment power,
has shared voting and investment power with a spouse, or holds in an IRA
or other retirement plan program, unless otherwise indicated in these
footnotes.
|
|
|
|
(2)
|
Each share
of Series A preferred stock is convertible, at the holder’s option, into
1,250 shares of our common stock. The Series A preferred stock is also
automatically converted upon the satisfaction of certain
conditions.
|
|
|
|
(3)
|
For each
individual, this percentage is determined by assuming the named person
converts all shares of Series A preferred stock which he or she
beneficially owns and exercises all options and warrants which he or she
has the right to acquire within 60 days, but that no other persons convert
any shares of Series A preferred stock or exercise any options or
warrants. For the directors and executive officers as a group, this
percentage is determined by assuming that each director and executive
officer converts all shares of Series A preferred stock which he or she
beneficially owns and exercises all options and warrants which he or she
has the right to acquire within 60 days, but that no other persons convert
any shares of Series A preferred stock or exercise any options or
warrants. The calculations are based on 20,502,760 shares of common stock
outstanding on September 27, 2016.
|
|
|
|
(4)
|
Consists
of 900,000 shares of common stock held by Baird Hageman & Co. Series
1, LLC and 172,250 shares of common stock individually owned by Gordon A.
Baird. Mr. Baird and Alvin G. Hageman are the members of the board of
managers of Baird Hageman & Co., LLC and therefore share voting and
investment power over the shares. The foregoing is not an admission by Mr.
Baird that he is the beneficial owner of the shares held by Baird Hageman
& Co., LLC. The address of Baird Hageman & Co., LLC is c/o Baird
Hageman & Co., LLC, 33 Christie Hill Road, Darien, CT
06820.
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|
|
|
(5)
|
Consists
of 1,910 shares of Series A preferred stock, which are convertible into
2,387,500 shares of common stock, held by Mendon Capital Master Fund Ltd.
and 290 shares of Series A preferred stock, which are convertible into
362,500 shares of common stock, owned by Mendon Capital QP LP. Mr. Echlov
is an assistant portfolio manager with RMB Capital Management, LLC, an
affiliate of Mendon Capital Master Fund Ltd. and Mendon Capital QP LP.
Accordingly, Mr. Echlov may be deemed to be the beneficial owner of shares
of Series A preferred stock held by Mendon Capital Master Fund Ltd. and
Mendon Capital QP LP.
|
|
|
|
(6)
|
Consists
of 900,000 shares of common stock held by Baird Hageman & Co. Series
1, LLC and 490,250 shares of common stock individually owned by The
Hageman 2013 Grantor Trust. Mr. Hageman and Gordon A. Baird are the
members of the board of managers of Baird Hageman & Co., LLC and
therefore share voting and investment power over the shares. The foregoing
is not an admission by Mr. Hageman that he is the beneficial owner of the
shares held by Baird Hageman & Co., LLC. The address of Baird Hageman
& Co., LLC is c/o Baird Hageman & Co., LLC, 33 Christie Hill Road,
Darien, CT 06820.
|
|
|
|
(7)
|
Consists
of 300 shares of Series A preferred stock, which are convertible into
375,000 shares of common stock, held by Ulysses Offshore Fund, Ltd. and
2,150 shares of Series A preferred stock, which are convertible into
2,687,500 shares of common stock, owned by Ulysses Partners, L.P. Mr.
Hurwich is a
|
20
|
|
portfolio
manager with Ulysses Management LLC, the investment manager of Ulysses
Offshore Fund, Ltd. and Ulysses Partners, L.P. Accordingly, Mr. Hurwich
may be deemed to be the beneficial owner of shares of Series A preferred
stock held by Ulysses Offshore Fund, Ltd. and Ulysses Partners,
L.P.
|
|
|
|
(8)
|
Consists
of 125,000 shares of common stock held by First Financial Partners Fund
II, LP. Mr. Stock serves as general partner for FFP Affiliates II, LP,
which in turn serves as the general partner of First Financial Partners
Fund II, LP. Its address is One Stamford Forum, 201 Tresser Blvd.,
Stamford, CT 06901.
|
|
|
|
(9)
|
Consists
of 100 shares of Series A preferred stock, which are convertible into
125,000 shares of common stock, held by First Financial Partners Fund II,
LP. As noted above, Mr. Stock serves as general partner for FFP Affiliates
II, LP, which in turn serves as the general partner of First Financial
Partners Fund II, LP.
|
|
|
|
(10)
|
The
general partner of Aequitas Capital Opportunities Fund, LP, is Aequitas
Capital Opportunities GP, LLC (“ACOF GP”), and its investment advisor is
Aequitas Investment Management, LLC (“AIM”). Both ACOF GP and AIM are
subsidiaries of Aequitas Capital Management, Inc. (“ACM”). Each of ACOF
GP, AIM and ACM may be deemed to be beneficial owners of the 2,450 shares
of Series A preferred stock, which are convertible into 3,062,500 shares
of common stock, held directly by Aequitas Capital Opportunities Fund, LP.
The principal address of each of the above entities is 5300 Meadows Road,
Suite 400, Lake Oswego, Oregon 97035.
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|
|
|
(11)
|
The
general partner of Iron Road Multi-Strategy Fund LP is Iron Road Capital
Partners LLC and its investment adviser is RMB Capital Management LLC
(“RMB Capital Management”). Iron Road Capital Partners LLC is owned by RMB
Capital Management. RMB Capital Management is wholly-owned by RMB Capital
Holdings LLC (“RMB Holdings”). Each of the foregoing may be deemed to be
beneficial owners of the 250 shares of Series A preferred stock, which are
convertible into 312,500 shares of common stock, held directly by Iron
Road Multi-Strategy Fund LP. The principal address of each of the above
entities is 115 S. LaSalle, 34th Floor, Chicago, IL 60603.
|
|
|
|
(12)
|
Mendon
Capital Master Fund Ltd. is owned by Mendon Capital LLC and Mendon Capital
Ltd., and is managed by RMB Mendon Managers LLC and subadvised by RMB
Capital Management. RMB Mendon Managers LLC is owned by Mendon Capital
Advisers Corp. (“MCA”) and RMB Capital Management. RMB Capital Management
is wholly-owned by RMB Capital Holdings LLC. Each of the foregoing may be
deemed to be beneficial owners of the 1,910 shares of Series A preferred
stock, which are convertible into 2,387,500 shares of common stock, held
directly by Mendon Capital Master Fund Ltd. The principal address of each
of the above entities is 115 S. LaSalle, 34th Floor, Chicago, IL 60603,
except that MCA is located at 150 Allens Creek Road, Rochester, NY
14618.
|
|
|
|
(13)
|
Mendon
Capital QP LP (“MCQP”) is owned by Mendon Capital QP Ltd., and is managed
by RMB Mendon Managers LLC and subadvised by RMB Capital Management. RMB
Mendon Managers LLC is owned by MCA and RMB Capital Management. RMB
Capital Management is wholly-owned by RMB Capital Holdings LLC. Each of
the foregoing may be deemed to be beneficial owners of the 290 shares of
Series A preferred stock, which are convertible into 362,500 shares of
common stock, held directly by MCQP. The principal address of each of the
above entities is 115 S. LaSalle, 34th Floor, Chicago, IL 60603, except
that MCA is located at 150 Allens Creek Road, Rochester, NY
14618.
|
|
|
|
(14)
|
Ulysses
Management LLC, a Delaware limited liability company (“Ulysses
Management”), in its capacity as investment manager, may be deemed to
share voting and investment power over the shares beneficially owned by
Ulysses Partners, L.P., a Delaware limited partnership (“Ulysses
Partners”) and Ulysses Offshore Fund, Ltd., an exempted company
incorporated and existing under the laws of the Cayman Islands (“Ulysses
Offshore,” and collectively with Ulysses Partners, the “Ulysses
Purchasers”). Joshua Nash LLC, a Delaware limited liability company (“Nash
LLC”), as the managing general partner of Ulysses Partners, may be deemed
to share voting and investment power over the shares beneficially owned by
Ulysses Partners; and Joshua Nash, who is a United States citizen (“Mr.
Nash”), as an executive of Ulysses Management, the sole member of Nash LLC
and the President of Ulysses Offshore, may be deemed to share voting and
investment power over the shares beneficially owned by each of Ulysses
Management, Ulysses Partners and Ulysses Offshore. The address of each
Ulysses Management affiliate is c/o Ulysses Management LLC, One
Rockefeller Plaza, New York, New York 10020.
|
21
AUDIT FEES
Elliott Davis Decosimo, LLC was our auditor during the fiscal year ended
December 31, 2015. The following table shows the fees that we paid for services
performed in fiscal years ended December 31, 2015 and 2014:
|
|
|
Years Ended December 31,
|
|
|
|
2015
|
|
2014
|
|
Audit Fees
|
|
$
|
90,140
|
|
$
|
101,600
|
|
Audit-Related Fees
|
|
|
21,400
|
|
|
18,360
|
|
Tax
Fees
|
|
|
11,330
|
|
|
14,090
|
|
All
Other Fees
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
122,870
|
|
$
|
134,050
|
Audit Fees
This
category includes the aggregate fees billed for professional services rendered
by the independent auditors during the Company’s 2015 and 2014 fiscal years for
the audit of the Company’s consolidated annual financial statements and
quarterly reports on Form 10-Q.
Audit-Related Fees
This
category includes the aggregate fees billed for non-audit services, exclusive of
the fees disclosed relating to audit fees, during the fiscal years ended
December 31, 2015 and 2014. These services principally include the assistance
for various filings with the SEC and consultations regarding accounting and
disclosure matters.
Tax Fees
This
category includes the aggregate fees billed for tax services rendered in the
preparation of federal and state income tax returns for the Company and its
subsidiaries and consultations regarding tax and disclosure matters.
Oversight of Accountants;
Pre-Approval of Accounting Fees
Under the provisions of its charter, the audit committee is responsible
for the retention, compensation, and oversight of the work of the independent
auditors. The charter provides that the audit committee must pre-approve the
fees paid for the audit. The audit committee may delegate approval of non-audit
services and fees to one or more designated audit committee members. The
designated committee member is required to report such pre-approval decisions to
the full audit committee at the next scheduled meeting. The policy specifically
prohibits certain non-audit services that are prohibited by securities laws from
being provided by an independent auditor. All of the accounting services and
fees reflected in the table above were reviewed and approved by the audit
committee, and none of the services were performed by individuals who were not
employees of the independent auditor.
SHAREHOLDER PROPOSALS FOR
THE 2017 ANNUAL MEETING OF SHAREHOLDERS
If
shareholders wish a proposal to be included in our proxy statement and form of
proxy relating to the 2017 annual meeting of shareholders, they must deliver a
written copy of their proposal to our principal executive offices no later than
May 26, 2017. To ensure prompt receipt by the Company, the proposal should be
sent certified mail, return receipt requested. Proposals must comply with our
bylaws relating to shareholder proposals in order to be included in our proxy
materials.
22
It
is our policy that any shareholder proposal to be made at an annual meeting, but
which is not requested to be included in our proxy materials, must be delivered
to the secretary of the Company between 30 and 60 days prior to the annual
meeting; provided, however, that if less than 31 days’ notice of the meeting is
given to shareholders, the notice must be delivered within 10 days following the
day on which notice of the meeting was mailed to shareholders.
FORWARD LOOKING
STATEMENTS
Statements contained in this proxy statement that are not purely
historical are forward-looking statements, including, but not limited to,
statements regarding our expectations, hopes, beliefs, intentions or strategies
regarding the future. Actual results could differ materially from those
projected in any forward-looking statements as a result of a number of factors,
including, without limitation, those described in this proxy statement. The
forward-looking statements are made as of the date of this proxy statement and
we undertake no obligation to update or revise the forward-looking statements,
or to update the reasons why actual results could differ materially from those
projected in the forward-looking statements.
We
caution you not to place undue reliance on any forward-looking statements made
by, or on behalf us in this proxy statement or in any of our filings with the
SEC or otherwise. Additional information with respect to factors that may cause
the results to differ materially from those contemplated by forward-looking
statements is included in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2015 and in our other current and subsequent filings with the
SEC.
WHERE YOU CAN FIND MORE
INFORMATION
We
file annual, quarterly and current reports, proxy statements and other
information with the SEC. Our filings with the SEC are available to the public
on the Internet at the SEC’s website at
www.sec.gov.
You may also
read and copy any document that we file with the SEC at its public reference
room at 100 F Street, NE, Washington D.C. 20549. Please call the SEC at (800)
SEC-0330 for further information on the public reference room and their copy
charges.
Important Notice of Internet Availability.
The proxy statement and 2015 Annual Report on Form
10-K are available to the public for viewing on the internet at
http://www.edocumentview.com/IEBS
.
23
PROXY SOLICITED FOR THE ANNUAL MEETING OF
SHAREHOLDERS
OF INDEPENDENCE BANCSHARES, INC.
TO BE HELD ON NOVEMBER 16, 2016
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS.
The undersigned hereby constitutes and appoints
Robert B. Willumstad and H. Neel Hipp, Jr., and each of them, his or her true
and lawful agents and proxies with full power of substitution in each, to
represent and vote, as indicated below, all of the shares of common stock of
Independence Bancshares, Inc. that the undersigned would be entitled to vote at
the Annual Meeting of Shareholders to be held at
the office
of our corporate counsel
, Nelson Mullins Riley &
Scarborough LLP, 104 South Main Street, Suite 900, Greenville, South Carolina,
on November 16, 2016 at 9:00 a.m. local time, and at any postponement or
adjournment, upon the matters described in the accompanying Notice of Annual
Meeting of Shareholders, receipt of which is acknowledged. These proxies are
directed to vote on the matters described in the Notice of Annual Meeting of
Shareholders and Proxy Statement as follows:
This proxy, when properly executed, will be voted in
the manner directed herein by the undersigned shareholder(s).
If no direction is made, this proxy will be voted “FOR” Proposals 1 and
2.
This proxy also delegates discretionary authority to
the proxies to vote with respect to any other business which may properly come
before the meeting or any adjournment or postponement thereof. The undersigned
also hereby ratifies all that the attorneys and proxies may do by virtue hereof
and hereby confirms that this proxy shall be valid and may be vested whether or
not the shareholder’s name is signed as set forth below or a seal is affixed or
the description, authority or capacity of the person signing is given or other
defect of signature exists.
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|
1.
|
PROPOSAL ONE to elect six nominees
to serve on our board of directors.
|
|
Russell Echlov
|
Adam G. Hurwich
|
Keith Stock
|
|
H. Neel Hipp, Jr.
|
Lawrence R. Miller
|
Robert B.
Willumstad
|
|
☐
|
|
FOR all nominees
listed (except
as marked to
the contrary)
|
|
☐
|
|
WITHHOLD AUTHORITY
to vote for
all nominees
|
(INSTRUCTION: To withhold authority to vote for any
individual nominee(s), write that nominee’s name(s) in the space provided
below.)
|
|
|
|
|
|
|
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2.
|
PROPOSAL TWO to approve the
compensation of our named executive officers (this is a non-binding
advisory vote) (“say-on-pay”).
|
|
☐
FOR
|
☐
AGAINST
|
☐
ABSTAIN
|
|
|
3.
|
PROPOSAL THREE to ratify the
appointment of Elliott Davis Decosimo, LLC as our independent registered
public accounting firm for the year ended December 31, 2016.
|
|
☐
FOR
|
☐
AGAINST
|
☐
ABSTAIN
|
|
|
4.
|
At their discretion upon such
other matters as may properly come before the meeting.
|
|
Dated:
|
|
,
2016
|
|
Dated:
|
|
,
2016
|
|
|
|
|
|
|
|
|
|
Signature of Shareholder(s)
|
|
|
Signature of Shareholder(s)
|
|
|
|
|
|
|
|
|
|
|
Please print name clearly
|
|
|
Please print name clearly
|
|
Please sign exactly as name or
names appear on your stock certificate. Where more than one owner is shown on
your stock certificate, each owner should sign. Persons signing in a fiduciary
or representative capacity shall give full title. If a corporation, please sign
in full corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.
PROXY SOLICITED FOR THE
ANNUAL MEETING OF SHAREHOLDERS
OF INDEPENDENCE BANCSHARES, INC.
TO BE HELD ON NOVEMBER 16,
2016
THIS PROXY IS SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby
constitutes and appoints Robert B. Willumstad and H. Neel Hipp, Jr., and each of
them, his or her true and lawful agents and proxies with full power of
substitution in each, to represent and vote, as indicated below, all of the
shares of convertible preferred stock, Series A of Independence Bancshares, Inc.
that the undersigned would be entitled to vote at the Annual Meeting of
Shareholders to be held at Nelson Mullins Riley & Scarborough LLP, 104 South
Main Street, Greenville, South Carolina, on November 16, 2016 at 9:00 a.m. local
time, and at any postponement or adjournment, upon the matters described in the
accompanying Notice of Annual Meeting of Shareholders, receipt of which is
acknowledged. These proxies are directed to vote on the matters described in the
Notice of Annual Meeting of Shareholders and Proxy Statement as follows:
This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned
shareholder(s).
If no direction is
made, this proxy will be voted “FOR” Proposals 1 and 2.
This proxy also delegates discretionary authority
to the proxies to vote with respect to any other business which may properly
come before the meeting or any adjournment or postponement thereof. The
undersigned also hereby ratifies all that the attorneys and proxies may do by
virtue hereof and hereby confirms that this proxy shall be valid and may be
vested whether or not the shareholder’s name is signed as set forth below or a
seal is affixed or the description, authority or capacity of the person signing
is given or other defect of signature exists.
|
|
1.
|
PROPOSAL ONE to elect six nominees
to serve on our board of directors.
|
|
Russell Echlov
|
Adam G. Hurwich
|
Keith Stock
|
|
H. Neel Hipp, Jr.
|
Lawrence R. Miller
|
Robert B.
Willumstad
|
|
☐
|
|
FOR all nominees
listed (except
as marked to
the contrary)
|
|
☐
|
|
WITHHOLD AUTHORITY
to vote for
all nominees
|
(INSTRUCTION: To withhold authority to vote for any
individual nominee(s), write that nominee’s name(s) in the space provided
below.)
|
|
|
|
|
|
|
|
|
|
2.
|
PROPOSAL TWO to approve the
compensation of our named executive officers (this is a non-binding
advisory vote) (“say-on-pay”).
|
|
☐
FOR
|
☐
AGAINST
|
☐
ABSTAIN
|
|
|
3.
|
PROPOSAL THREE to ratify the
appointment of Elliott Davis Decosimo, LLC as our independent registered
public accounting firm for the year ended December 31, 2016.
|
|
☐
FOR
|
☐
AGAINST
|
☐
ABSTAIN
|
|
|
4.
|
At their discretion upon such
other matters as may properly come before the meeting.
|
|
Dated:
|
|
,
2016
|
|
Dated:
|
|
,
2016
|
|
|
|
|
|
|
|
|
|
Signature of Shareholder(s)
|
|
|
Signature of Shareholder(s)
|
|
|
|
|
|
|
|
|
|
|
Please print name clearly
|
|
|
Please print name clearly
|
|
Please sign exactly as name or
names appear on your stock certificate. Where more than one owner is shown on
your stock certificate, each owner should sign. Persons signing in a fiduciary
or representative capacity shall give full title. If a corporation, please sign
in full corporate name by authorized officer. If a partnership, please sign in
partnership name by authorized person.