SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for use of the Commission only (as permitted by Rule 14a-6(e) (2))
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☒
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Definitive
Proxy Statement
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Definitive Additional Materials
Soliciting Material under Rule 14a-12
Bank of South Carolina Corporation
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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PROXY
MATERIAL OF
BANK
OF SOUTH CAROLINA CORPORATION
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD APRIL 13, 2021
Dear
Shareholder:
I
cordially invite you to attend the Annual Meeting of Shareholders of Bank of South Carolina Corporation, to be held on April 13,
2021 at 2:00 p.m. EST at 256 Meeting Street, Charleston, South Carolina 29401, for the following purposes:
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1.
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to
elect nineteen Directors to our Board of Directors to serve a one-year term;
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2.
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to approve the 2021
Stock Incentive Plan for Independent Directors;
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3.
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to ratify the appointment
of Elliott Davis, LLC as the Company’s independent registered public accounting firm for the year ended December 31,
2021;
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4.
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to transact such
other business as may properly come before the Annual Meeting or any adjournment of the meeting.
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The
Board of Directors set the close of business on February 25, 2021 as the record date to determine the Shareholders who are entitled
to vote at the Annual Meeting. Under rules of the Securities and Exchange Commission, we are providing access to our proxy materials
by sending you this full set of proxy materials, including a proxy card, and notifying you of the availability of our proxy materials
on the Internet.
Although
we would like each Shareholder to attend the Annual Meeting, we realize that for some of you this is not possible. Whether or
not you plan to attend the Annual Meeting, we encourage you to vote as soon as possible through the internet, by telephone or
by signing, dating and mailing your proxy card in the enclosed postage-paid envelope. Internet voting permits you to vote at your
convenience, 24 hours a day, seven days a week. For specific instructions on voting, please refer to the instructions on the enclosed
proxy card.
Our
2021 Proxy Statement and Annual Report for the year ended December 31, 2020 are available free of charge at http://www.banksc.com
and http://www.proxyvote.com.
Your
vote is very important, and I appreciate the time and consideration that I am sure you will give it.
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On behalf of the Board of
Directors,
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/s/ Richard W. Hutson,
Jr.
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Richard W. Hutson, Jr., Secretary
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March 5, 2021
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PROXY
STATEMENT
FOR
THE
ANNUAL MEETING OF SHAREHOLDERS
OF
BANK OF SOUTH CAROLINA CORPORATION
TO
BE HELD ON APRIL 13, 2021
PROXY
STATEMENT
The
Board of Directors of the Bank of South Carolina Corporation (the “Company”) are using this Proxy Statement to solicit
Proxies from its Shareholders for the 2021 Annual Meeting of Shareholders. The Company is making this Proxy Statement and the
enclosed form of Proxy available to its Shareholders on or about March 5, 2021.
The
information provided in this Proxy Statement contains important information for you to consider when deciding how to vote on the
matters brought before the meeting. The Board encourages you to read it carefully.
INFORMATION
ABOUT THE ANNUAL MEETING
Time
and Place of the Annual Meeting
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The Annual Meeting will be held
as follows:
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Date:
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April
13, 2021
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Time:
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2:00
p.m. Eastern Standard Time
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Place:
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The
Bank of South Carolina, 256 Meeting Street, Charleston, South Carolina
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Matters
to be Considered at the Annual Meeting
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At the meeting, you will be asked
to consider and vote upon the following proposals:
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Proposal 1:
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To elect
nineteen Directors of Bank of South Carolina Corporation to serve until the Company’s 2022 Annual Meeting of Shareholders;
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Proposal 2:
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To approve the 2021
Stock Incentive Plan for Independent Directors;
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Proposal 3:
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To ratify the appointment of Elliott Davis,
LLC as the Company’s independent registered public accounting firm for the year ended December 31, 2021;
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Proposal 4:
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To transact such
other business as may properly come before the meeting and any adjournment or postponement of the meeting.
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE SHAREHOLDERS’ MEETING TO BE HELD APRIL 13, 2021
This
Proxy Statement (providing important information for the Annual Meeting) and the Company’s Annual Report (which includes
its Annual Report on Form 10-K as filed with the Securities and Exchange Commission) accompany this Notice. The Proxy Statement
and 2020 Annual Report to Shareholders are available at http://www.banksc.com and at http://www.proxyvote.com.
Who
is Entitled to Vote?
The
Board of Directors of the Company has fixed the close of business on February 25, 2021, as the record date for Shareholders entitled
to notice of and to vote at the Annual Meeting of Shareholders. Only holders of record of Bank of South Carolina Corporation’s
Common Stock on that date are entitled to notice of and to vote at the Annual Meeting. Each Shareholder is entitled to one vote
for each share of Bank of South Carolina Corporation Common Stock that the Shareholder owns; provided, however, that the Shareholders
have cumulative voting rights for the election of Directors. The right to cumulate votes means that the Shareholders are entitled
to multiply the number of votes they are entitled to cast by the number of Directors for whom they are entitled to vote and cast
the product for a single candidate or distribute the product among two or more candidates. On February 11, 2021, there were approximately
5,520,469 shares of Bank of South Carolina Corporation’s Common Stock outstanding
and entitled to vote at the Annual Meeting.
How
Do I Vote?
If
you are the “record holder” of your shares, meaning that you own your shares in your own name and not through a bank,
broker or other nominee, you may vote in one of four ways.
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You may vote
over the internet. If you have internet access, you may vote your shares from any location in the world by following
the “Vote by Internet” instructions on the enclosed proxy card.
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2.
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You may vote
by telephone. You may vote your shares by following the “Vote by Telephone” instructions on the enclosed
proxy card.
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3.
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You may vote
by mail. You may vote by completing and signing the proxy card enclosed with this proxy statement and promptly mailing
it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it in the
United States.
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4.
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You may vote
in person. If you attend the Annual Meeting, you may vote by delivering your completed proxy card in person.
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How
Do I Vote at the Annual Meeting?
Proxies
are solicited to provide all Shareholders of record on the voting record date an opportunity to vote on matters scheduled for
the Annual Meeting and described in these materials. You are a Shareholder of record if your shares of the Company Common Stock
are held in your name. If you are a beneficial owner of the Company Common Stock held by a broker, bank or other nominee (i.e.,
in “street name”), please see the instructions in the following question.
Shares
of the Company Common Stock can only be voted if the Shareholder is present in person or by Proxy at the Annual Meeting. To ensure
your representation at the Annual Meeting, the Board recommends that you vote by Proxy even if you plan to attend the Annual Meeting.
You can always change your vote at the meeting if you are a Shareholder of record.
Voting
instructions are included in this material. Shares of the Company Common Stock represented by properly executed Proxies will be
voted by the individuals named on the Proxy, selected by the Board of Directors, in accordance with the Shareholder’s instructions.
Where properly executed Proxies are returned with no specific instructions as how to vote at the Annual Meeting, the persons named
in the Proxy will vote the shares “For” the proposals as recommended by the Board of Directors. If any other
matters are properly presented at the Annual Meeting for action, the persons named in the enclosed Proxy and acting thereunder
will have the discretion to vote on these matters in accordance with their best judgment.
As
a Shareholder of the Company Common Stock, you may receive more than one Proxy card depending on how your shares are held. For
example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In
this example, you will receive three separate Proxy cards to vote.
What
if My Shares Are Held in Street Name?
If
your shares are held in street name, you will need proof of ownership to be admitted to the Annual Meeting. A recent brokerage
statement or a letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares
of the Company Common Stock held in street name in person at the Annual Meeting, you will have to get a written Proxy in your
name from the broker, bank or other nominee who holds your shares.
The
solicitation of Proxies on behalf of the Board of Directors is conducted by Directors, officers and regular employees of the Company
and its wholly owned subsidiary, The Bank of South Carolina (the “Bank”), at no additional compensation over regular
salaries. The cost of printing and mailing of all Proxy materials has been paid by the Company. Brokers and others involved in
handling and forwarding the Proxy materials to their customers having beneficial interests in the stock of the Company registered
in the names of Nominees will be reimbursed for their reasonable expenses in doing so.
How
Many Shares Must Be Present to Hold the Meeting?
A
quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by Proxy, of
at least a majority of the shares of the Company Common Stock entitled to vote at the Annual Meeting as of the record date shall
constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
What
if a Quorum is Not Present at the Meeting?
If
a quorum is not present at the scheduled time of the meeting, a majority of the Shareholders present or represented by Proxy may
adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment
is taken, and no other notice will be given unless the meeting is adjourned for 30 days or more. An adjournment will have no effect
on the business that may be conducted at the meeting.
Will
Cumulative Voting Apply for the Election of Directors?
The
solicitation of Proxies on behalf of the Board of Directors includes a solicitation for discretionary authority to cumulate votes.
How
will votes be counted?
With
respect to all proposals, shares will not be voted in favor of the matter, and will not be counted as voting on the matter, if
they either (1) abstain from voting on a particular matter, or (2) are “broker non-votes.” Banks, brokers and other
nominees who do not receive instructions with respect to Proposals 1, 2, or 3 will not be allowed to vote these shares, and all
such shares will be “broker non-votes” rather than votes “for” or “against.” Accordingly,
abstentions and “broker non-votes” for a particular proposal will not be counted as votes cast to determine the outcome
of a particular proposal. With respect to Proposal 1, the election of Directors of the Company, cumulative voting will be allowed
and election will be by plurality of votes cast. With respect to Proposal 2 and 3, each proposal will be approved if more votes
are cast for the proposal than votes cast against.
May
I Revoke My Proxy?
Any
Shareholder executing a Proxy for the meeting on the Proxy Form provided may revoke the Proxy in writing delivered to the President
of the Company prior to the meeting or by attending the meeting and voting in person.
PROPOSAL
1: ELECTION OF DIRECTORS:
Our
by-laws provide for a Board of Directors consisting of not fewer than 15 individuals and not more than 25 individuals. The number
of Directors may be increased or decreased from time to time by majority vote of the Board of Directors or the Shareholders.
The
Board of Directors proposes that the nineteen nominees described below be elected for a new term expiring at the 2022 Annual Meeting
of Shareholders or until their respective successors are duly elected and qualified. Each nominee has agreed to serve if elected.
If any named nominee is unable to serve, the Board of Directors, upon the recommendation of the Nominating Committee, may select
different nominees for election as Directors.
The
name of each Nominee designated by the Board of Directors of the Company for election as a Director of the Company and certain
information provided by such Nominee to the Company are set forth in the table below. Hugh C. Lane, Jr, an Executive Officer,
Charles G. Lane, and William L. Hiott, Jr. served as initial Directors of the Bank from October 22, 1986, when the Bank’s
charter was issued until the first Annual Meeting of Shareholders on April 14, 1987, and were elected to serve a one-year term
at such Annual Meeting and subsequent Annual Meetings. The Shareholders elected Hugh C. Lane, Jr, an Executive Officer, Charles
G. Lane, and William L. Hiott, Jr to the Board of Directors of the Company upon its organization in 1995. The Shareholders elected
Alan I. Nussbaum, MD as a Director of the Company in 1999 and elected to serve one-year terms at subsequent Annual Meetings. The
Shareholders elected Dr. Linda J. Bradley McKee, CPA to the Board of Directors of the Company during 2002 and elected to serve
one-year terms at subsequent Annual Meetings. Graham M. Eubank, Jr., Richard W. Hutson, Jr. and Malcolm M. Rhodes, MD were elected
pursuant to the By-Laws of the Company on December 16, 2004, and were elected to serve one-year terms at subsequent Annual Meetings.
Fleetwood S. Hassell, an Executive Officer, was elected by the Shareholders in 2006, and elected to serve one-year terms at subsequent
Annual Meetings. Glen B. Haynes, DVM was elected by the Shareholders in 2007 and elected to serve one-year terms at subsequent
Annual Meetings. David W. Bunch was elected by the Shareholders in 2009 and elected to serve one-year terms at subsequent Annual
Meetings. Edmund Rhett, Jr. MD served as a Director from 1999-2018. Dr. Rhett rejoined the Board of Directors after being
elected by the shareholders in 2020. Sheryl G. Sharry was elected by the Shareholders in 2010, and elected to serve one-year
terms at subsequent Annual Meetings. Steve D. Swanson served on the Board from 2002 to 2007. Mr. Swanson rejoined the Board of
Directors after being elected by the shareholders in 2011, and was elected to serve one-year terms at subsequent Annual Meetings.
The Shareholders elected Douglas H. Sass, an Executive Officer, and Elizabeth M. Hagood to the Board of Directors in 2013, and
elected to serve one-year terms at subsequent Annual Meetings. Karen J. Phillips was elected to serve on the Board of Directors
by the Shareholders in 2017 and elected to serve one-year terms at subsequent Annual Meetings. The Shareholders elected Susanne
K. Boyd and Eugene H. Walpole, IV, Executive Officers, to the Board of Directors in 2018 and elected to serve one-year terms at
subsequent Annual Meetings.
The
Board of Directors believes that it is necessary for each one of our Directors to possess many qualities and skills to fulfill
his or her role successfully. When searching for new candidates, the Nominating Committee considers the evolving needs of the
Board of Directors and searches for candidates that fill any current or anticipated future gap. The Board of Directors also believes
that all Directors must possess a considerable amount of business management (such as experience as a Chief Executive Officer
or Chief Financial Officer) and educational experience. The Nominating Committee first considers management experience and then
considers issues of judgment, background, stature, conflicts of interest, integrity, ethics, and commitment to the goal of maximizing
Shareholder value when considering Director candidates. The Nominating Committee focuses on issues of diversity, such as diversity
in gender, race and national origin, education, professional experience and differences in viewpoints and skills. The Nominating
Committee does not have a formal policy with respect to diversity; however, the Board of Directors and the Nominating Committee
believe that it is essential that the Board Members represent diverse viewpoints. In considering candidates for the Board of Directors,
the Nominating Committee considers the entirety of each candidate’s credentials in the context of these standards. With
respect to the nomination of continuing Directors for re-election, the individual’s contributions to the Board are also
considered.
Certain
information with respect to each of the nominees is set forth below, including his or her principal occupation, qualifications,
and directorships during the past five years. The Nominating Committee, whose goal is to assemble a Board that operates cohesively,
encourages candid communication and discussion, and focuses on activities that help us maximize Shareholder value, recommends
each of the nominees to the Board of Directors. The Nominating Committee also looks at the individual strengths of Directors,
his or her ability to contribute to the Board, and whether his or her skills and experience complement those of the other Directors.
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR ALL” OF THE NOMINEES.
Executive
Officer Directors
Susanne K. Boyd
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Age 44
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First elected to the Board
2018
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Ms.
Boyd has been with the Bank since 1997 and has served as the Courier Teller, Check Card Specialist, Electronic Banking Officer,
Information Security Officer, Assistant Vice President, Vice President, and Senior Vice President of Operations and Technology.
She has served as the Chief Operating Officer for the Bank and the Corporation since November 2015 and was named Executive Vice
President for the Bank and Corporation in December 2017. Ms. Boyd is a graduate of College of Charleston, South Carolina Bankers
School and Georgia Bankers Association Southern Operations and Technology School. She has received training in Information Security,
Administration of the Bank’s core system, Internet Banking Compliance and Cyber Crime and is a Certified Regulatory Vendor
Program Manager. Ms. Boyd has served on the South Carolina Bankers Association Operations Committee and has been a member of the
InfraGard South Carolina Chapter. Ms. Boyd serves on the Executive/Long-Range Planning Committee and Asset Liability/Investment
Committee.
The
Nominating Committee recommends the re-election of Ms. Boyd to the Board of Directors given her broad and unique experience in
banking, in-depth knowledge of the technology and its risks related to banks, and continued commitment to the success of the Company.
Fleetwood S. Hassell
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Age 61
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First elected to the Board
2006
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Mr.
Hassell has been with the Bank since its organization in 1986. During his career of over thirty five years in banking, Mr. Hassell
has held the position of Assistant Vice President, Vice President, Senior Vice President, Executive Vice President, Senior Lender,
and now, President/Chief Executive Officer. Born and raised in Charleston, SC, Mr. Hassell earned a BS and MBA from the University
of South Carolina School of Business. He was elected to the Board of Directors of the Bank and the Company in 2006. Mr. Hassell
serves as an Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mr. Hassell previously
served on the boards of the South Carolina State Board of Financial Institutions and the Association of the Blind and Visually
Impaired. Currently, he serves on the Board of the Trident United Way (Past Chairman), The College of Charleston Foundation
Board, and the South Carolina Bankers Association. Mr. Hassell serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment
Committee, Community Reinvestment Act Committee, and Loan Committee.
Given
Mr. Hassell’s experience in banking, his strong background in commercial lending and business development and his current
participation and contributions made to the Board of Directors and its committees, the Nominating Committee recommends his re-election
to the Board.
Hugh C. Lane, Jr.
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Age 72
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First elected to the Board
1995
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Mr.
Lane, brother of Charles G. Lane, organized the Bank in 1986, where he served as President/Chief Executive Officer of the Bank
from 1986 until 2012. He served as Chairman of the Board of Directors of the Bank since its organization in 1986, and Chairman
of the Board of Directors of the Company since its organization in 1995. Mr. Lane was born in Charleston, SC. He earned a BA in
economics from the University of Pennsylvania. Mr. Lane began his banking career at Citizens and Southern National Bank of Georgia
in Atlanta. His banking career also included working in the Bond, Leasing, and International Departments at the Chemical Bank
in New York; City Executive of Citizens and Southern National Bank in Sumter South Carolina; and Executive Vice President, heading
the Citizens and Southern National Bank’s Southern Region. Mr. Lane also served on the Board of Directors of Citizens and
Southern National Bank of South Carolina for 14 years. Mr. Lane formerly served as an Administrator and Trustee of the Bank of
South Carolina Employee Stock Ownership Plan and Trust. In addition to his responsibilities at The Bank of South Carolina, Mr.
Lane is the former Chairman of the Charleston County Conservation Board, former Vice Chairman of the Baruch Foundation, and is
currently the Treasurer of Board of Trustees of Ashley Hall School. He has been the recipient of Honorary Doctorates from Charleston
Southern University, The Citadel, and Wofford College. He has also received the “Distinguished Citizen Award” from
Wofford College National Alumni Council, the Avery Citizenship Award for outstanding community service, the Joseph P. Riley Leadership
Award, and the Order of the Palmetto presented by the Governor of South Carolina. In 2015, Mr. Lane was inducted into the South
Carolina Business Hall of Fame. Mr. Lane serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee,
Community Reinvestment Act Committee, and Loan Committee.
The
Nominating Committee recommends the re-election of Mr. Lane to the Board of Directors based on his unique and valuable perspective
relevant to our Bank’s business and financial performance and strong commitment to the local community. In addition, the
Committee considered his current contribution to the Board and his continued devotion to serving the Shareholders of the Company.
Douglas H. Sass
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Age 63
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First Elected to the Board
2013
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Mr.
Sass joined the Bank in January 1994. He has over thirty five years of experience in banking and oversaw the implementation of
the Bank’s Real Estate Appraisal Review Program. He has served in various officer level positions at the Bank, including
Security Officer, Appraisal Officer, and CRA Officer before becoming Executive Vice President and Senior Lender in April 2012.
Additionally, he oversees the Bank’s Loan Department, Credit Department, and Mortgage Department. Mr. Sass serves as an
Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mr. Sass is a native of Charleston
and a graduate of The Citadel with a degree in Business Administration. He is a graduate of the South Carolina Bankers School and The Graduate School of Bank Management at the University of Virginia. Mr. Sass currently
serves as President of The Charleston Museum Board of Trustees, is on the Board of the Regents Tri-County Family Ministries, and
is active in various civic organizations. Mr. Sass serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment
Committee, Community Reinvestment Act Committee, and Loan Committee.
Based
on Mr. Sass’s experience in banking, appraising, his robust background in commercial lending and business development, and
his continued devotion to the success of the Company, the Nominating Committee recommends his re-election to the Board.
Eugene H. Walpole, IV
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Age 35
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First elected to the Board
2018
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Mr.
Walpole joined the Bank in September 2012. Since that time, he has served as an Assistant Vice President, Vice President, and
Senior Vice President in the role of Risk Management Officer. In March 2016, Mr. Walpole was named Chief Financial Officer of
the Bank and Corporation and, in December 2017, was named Executive Vice President of the Bank and Corporation. Mr. Walpole also
serves as Administrator and Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Prior to joining the
Bank, Mr. Walpole spent four years performing financial statement audits, regulatory filing reviews, and Sarbanes-Oxley 404 compliance
testing for publicly traded and privately held financial institutions. Mr. Walpole is a Charleston native and graduate of Presbyterian
College, University of South Carolina, and South Carolina Bankers School. He holds the designations of Certified Public Accountant,
Certified Financial Services Auditor, and a Certification in Risk Management Assurance. Mr. Walpole previously served on the Board
of the Lowcountry Land Trust and currently serves on the Coastal Conservation Association of South Carolina Board. Mr. Walpole
serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee, Community Reinvestment Act Committee,
and Loan Committee.
The
Nominating Committee recommends the re-election of Mr. Walpole to the Board of Directors given his experience in banking, in-depth
knowledge of the financials of the Company, commitment to the local community, and continued devotion to the success of the Company.
Non-Employee
Directors and Nominee
David W. Bunch
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Age 70
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First elected to the Board
2009
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Mr.
Bunch has been a member of the Board of Directors of the Bank and the Company since 2009. He was born in Charleston, South Carolina
and graduated from Clemson University. He has been employed by XO Bunch Organizations since 1973, serving as President, Hughes
Motors, Inc.; Vice-President, Bunch Leasing Co.; Vice-President, Florence Truck Center, Inc.; Partner, Bunch Truck & Equipment,
LLC; Partner, Bunch & Sons-Real Estate; Managing member, Wando Properties, LLC; and President, Double D Leasing Co., Inc.
In addition to serving on the Board of Directors of the Bank and Company, Mr. Bunch serves as Chairman of the Loan Committee and
Community Reinvestment Act Committee.
The
Nominating Committee recommends the re-election of David Bunch to the Board of Directors based on his valuable knowledge of business
and his participation on the Loan, Community Reinvestment Act, and Audit & Compliance Committees.
Graham M. Eubank, Jr.
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Age 53
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First elected to the Board
2005
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Mr.
Eubank has been a member of the Board of Directors of the Bank and the Company since 2005. He was born in Fayetteville, North
Carolina and raised in Charleston, South Carolina. He received a BS in Management from Clemson University. He is also a graduate
of the National Automobile Dealers Association Dealer Candidate Academy. In 1992, Mr. Eubank began working with his family’s
business, Palmetto Ford, Inc., where he has held various positions including New Car Sales Manager, Used Car Sales Manager and
Parts and Service Director. Currently Mr. Eubank is President and CEO of the Palmetto Car and Truck Group which is comprised of
Ford, Lincoln, Mama’s Used Cars and Quick Lane Auto and Tire Center. In addition to serving on the Board of Directors of
the Bank and the Company, Mr. Eubank currently serves on the Nominating Committee and is the Chairman of the Compensation Committee.
As
a local business owner, Mr. Eubank provides an important perspective on economic issues relevant to our community and company,
which is why the Nominating Committee recommends Mr. Eubank for re-election to the Board of Directors.
Elizabeth M. Hagood
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Age 59
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First elected to the Board
2013
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Mrs.
Hagood is the former Executive Director of the Lowcountry Land Trust. Mrs. Hagood grew up in Charlotte, NC and graduated from
Davidson College and the Darden School of Business at the University of Virginia. Mrs. Hagood currently serves on the Boards of
the Preservation Society of Charleston, Conservation Loan Fund of the Coastal Community Foundation, Open Space Institute Advisory
Board, and the Charleston County Greenbelt Advisory Board. In addition to serving on the Board of Directors of the Bank and Company,
Ms. Hagood serves on the Loan Committee, Community Reinvestment Act Committee, and the Nominating Committee.
Her
education, distinct perspective on social responsibility and diversity, experience on various committees within the organization,
and continued service to the Charleston community through her leadership roles in various organizations, led the Nominating Committee
to recommend Mrs. Hagood for re-election to the Board of Directors.
Glen B. Haynes, DVM
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Age 66
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First elected to the Board
2007
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Dr.
Haynes has been a member of the Board of Directors of the Bank and the Company since 2007. He was born in Charlottesville, Virginia
and has lived in Summerville, South Carolina for 33 years. He graduated from Virginia Tech with a BS in Biology. He received a
DVM from the University of Georgia. In addition to serving on the Board of Directors of the Bank and the Company, Dr. Haynes has
served as former President of the Summerville Rotary Club, President of Frances Willis SPCA, Chairman of the South Carolina Board
of Veterinary Medical Examiners, and former President of Trident Veterinary Medical Association. Dr. Haynes is a member of the
American Veterinary Medical Association and a member of St. Paul’s Anglican Church where he has served on the vestry. Currently,
Dr. Haynes is Chairman of the Frances Willis SPCA Endowment Board and is a construction volunteer for Habitat for Humanity. In
addition to serving on the Board of Directors of the Bank and Company, Dr. Haynes serves on the Loan Committee, Community Reinvestment
Act Committee, and is the Chairman of the Nominating Committee.
In
recommending Dr. Haynes for re-election to the Board of Directors, the Nominating Committee considered this experience as well
as his strong ties to the Summerville community and his work ethic demonstrated in having run his own practice.
William L. Hiott, Jr.
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Age 76
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First elected to the Board
1995
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Mr.
Hiott was with the Bank from its organization in 1986 until his retirement in 2011. He held various positions including the Executive
Vice President and Cashier of the Bank and the Executive Vice President and Treasurer of the Company. He has served on the Board
of Directors of the Bank since its organization in 1986 and the Company since its organization in 1995. He received a BS in Accounting
from Charleston Southern University and is a graduate of South Carolina Bankers School and the University of Wisconsin’s
Bank Administration Graduate School. In addition to serving on the Board of Directors of the Bank and Company, Mr. Hiott serves
on the Asset Liability/Investment Committee, Community Reinvestment Act Committee, Loan Committee, Audit & Compliance Committee,
Executive/Long-Range Planning Committee, and Compensation Committee.
The
Nominating Committee recommends Mr. Hiott for re-election to the Board of Directors based on his experience in banking, in-depth
knowledge of the financials of the Company, his strong commitment to the local community, and his current contributions to the Board
of Directors.
Richard W. Hutson, Jr.
|
Age 63
|
First elected to the Board
2005
|
Mr.
Hutson has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from The University of
the South. Mr. Hutson is the Manager of William M. Means Insurance Company. Mr. Hutson has served on the Boards of the South Carolina
Historical Society and the Historic Charleston Foundation. He has served as President of the South Carolina Historical Society.
Mr. Hutson serves on the Asset Liability/Investment Committee, Audit & Compliance Committee, and is the Secretary of the Board
of Directors, in addition to serving on the Board of Directors of the Bank and Company.
The
Nominating Committee recommends Mr. Hutson for re-election to the Board due to his business experience, commitment to the Bank
and Company and strong ties to the Charleston community.
Charles G. Lane
|
Age 66
|
First elected to the Board
1995
|
Mr.
Lane is the brother of Hugh C. Lane, Jr. and has been a member of the Board of Directors of the Bank since its organization in
1986, and a member of the Board of Directors of the Company since its organization in 1995. He has devoted nearly thirty years
to ensuring the success of the Company. He is a graduate of Clemson University. Mr. Lane is a Managing Member of Holcombe, Fair
and Lane, LLC - a commercial real estate company. He currently serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment
Committee, Loan Committee, and Community Reinvestment Act Committee.
Mr.
Lane’s expertise in the real estate market and the local community has been valuable to the Board in its decision-making
and is why the Nominating Committee recommends his re-election.
Linda J. Bradley McKee,
PhD, CPA
|
Age 70
|
First elected to the Board
2002
|
Linda
Bradley McKee is associate professor emeritus of taxation at the Graduate School of the College of Charleston (SC), and currently
teaches in their online program. She has fourteen years of experience in public accounting with local and national CPA firms.
She brings a unique background of twenty-five years in academia and real-life experiences in public accounting to the Board. Ms.
Bradley McKee has published numerous articles and is a member or former member of the American Accounting Association, the American
Institute of CPAs, the American Taxation Association, the Charleston Tax Roundtable, and the Charleston (SC) Estate Planning Council.
She was also the primary author of a book discussing estate and wealth-planning issues. Ms. Bradley McKee earned a Master of
Science in Accounting (emphasis in Tax) from Texas Tech University and a Ph.D. in Accounting (emphasis in Tax) from the University
of North Texas.
The
Board of Directors considers Dr. McKee the financial expert under applicable guidelines of the Securities and Exchange Commission.
She has an extensive background in accounting and taxation and has been an asset to the Board of Directors and the Audit &
Compliance Committee. For the above reasons, the Nominating Committee recommends Dr. McKee for re-election to the Board of Directors.
Alan I. Nussbaum, MD
|
Age 69
|
First elected to the Board
1999
|
Dr.
Nussbaum has been a member of the Board of Directors of the Bank since 1999. He received a BA from Johns Hopkins University and
a MD from Harvard Medical School. Dr. Nussbaum completed his internship and residency in Internal Medicine at Duke University
Medical Center. In addition, Dr. Nussbaum completed a Fellowship in Rheumatology and Immunology at the Medical University of South
Carolina and has practiced rheumatology in Charleston since 1982. Dr. Nussbaum serves as the Lead Director of the Bank and Company
and has held this position since 2011. He is the Chairman of the Executive/Long-Range Planning Committee and serves on the Asset
Liability/Investment Committee and Compensation Committee.
The
Nominating Committee recommends the re-election of Dr. Alan Nussbaum to the Board of Directors based on the commitment that he
has made to the Board of Directors, community involvement, and knowledge of the Company.
Karen J. Phillips
|
Age 60
|
First elected to the Board
2017
|
Mrs.
Phillips received a BA in Political Science from The University of the South and an MBA in Finance from The University of South
Carolina. She is a Certified Financial Planner and is President of Atlantic Coast Asset Management, Inc., a financial management
firm. She is a member of the Board of Directors of Kanuga Conferences, Inc., the past Chairman of the Board of Trustees of Ashley
Hall School, where she currently serves as a Trustee, and previous board member of Life Resources, Inc. In addition to serving
on the Board of Directors of the Bank and Company, Mrs. Phillips serves on the Audit & Compliance Committee, Nominating Committee,
Loan Committee, and Community Reinvestment Act Committee.
The
Nominating Committee recommends Mrs. Phillips for re-election due to her leadership within the community, financial expertise,
and unique perspective relevant to financial performance.
Edmund Rhett, Jr., MD
|
Age 72
|
First elected to the Board
1999-2018; Re-elected 2020
|
Dr.
Rhett was a member of the Board of Directors of the Bank from 1999-2018 and was re-elected in 2020. Dr. Rhett received a BA from
The University of the South and a MD from the Medical College of Georgia. He has a private gynecological practice, Rhett Women’s
Center. Dr. Rhett has been on the Board of Directors of the Canterbury House for over thirty years and has served as President
of its Board for nearly twenty years. Additionally, Dr. Rhett previously served as Chairman of the Nominating Committee and served
on the Executive/Long-Range Planning Committee. He currently serves as the Chairman of the Asset Liability/Investment Committee.
The
Nominating Committee recommends the election of Dr. Rhett to the Board of Directors, based on his commitment to the Bank, board
leadership, and community involvement.
Malcolm M. Rhodes, MD
|
Age 61
|
First elected to the Board
2005
|
Dr.
Rhodes has been a member of the Board of Directors of the Bank and Company since 2005. He received a BA from Duke University and
a MD from the Medical University of South Carolina. He is a Fellow of the American Board of Pediatrics and has been a partner at
Parkwood Pediatric Group since 1988. He is on the clinical faculty at MUSC and Bon-Secours St. Francis Hospitals. In addition
to serving on the Board of Directors of the Bank and the Company, Dr. Rhodes represents South Carolina on the Atlantic States
Marine Fisheries Commission and serves on the boards of the Carolina Gold Rice Foundation and the TriCounty Forestry Association.
He has served previously on the boards of Charleston Stage Company, Coastal Conservation Association and the Board of Trustees
at Ashley Hall School.
The
Nominating Committee recommends the re-election of Dr. Rhodes to the Board of Directors based on his knowledge of business including
running a medical practice and involvement with several local hospitals.
Sheryl G. Sharry
|
Age 66
|
First elected to the Board
2010
|
Mrs.
Sharry was with the Bank since its organization in 1986 until her retirement in 2016. She held various positions in the Bank,
including but not limited to Assistant Vice President – Operations Department, Vice President – Operations & Technology,
Senior Vice President – Operations & Technology, and Chief Financial Officer/Executive Vice President. Mrs. Sharry serves
as a Trustee of the Bank of South Carolina Employee Stock Ownership Plan and Trust. Mrs. Sharry became a member of the Board of
Directors of the Bank and Company in 2010. She is a graduate of the College of Charleston, South Carolina Bankers School, and
the School of Bank Investments and Financial Management. In addition to serving on the Board of Directors of the Bank and the
Company, Mrs. Sharry serves on the Executive/Long-Range Planning Committee, Asset Liability/Investment Committee, and is the Chairman
of the Audit & Compliance Committee.
The
Nominating Committee recommends Mrs. Sharry to re-election of the Board of Directors based on her strong background in operations
and technology of the Company, experience in banking, valuable knowledge of financial reporting and performance of the Company,
and continued devotion to the success of the Company.
Steve D. Swanson
|
Age 53
|
First elected to the Board
2002-2007; Re-elected 2011
|
Mr.
Swanson founded Automated Trading Desk, a pioneering electronic trading firm based in South Carolina. As President and CEO, Mr.
Swanson grew the business from pure proprietary trading to creating a fully automated market maker servicing the broker-dealer
community. After its acquisition by Citigroup in 2007, Mr. Swanson became responsible for global equity and option electronic
trading operations. Mr. Swanson serves on the Board of Trustees of the College of Charleston, the College of Charleston School
of Business Board, the Honors College Advisory Board, and formerly, he served on the Board of Trustees of South Carolina State
University. Mr. Swanson previously served on the Board of SnapCap, MedTrust Medical Transport, Trident United Way, and Charleston
Angel Partners. In addition to serving on the Board of Directors of the Bank and the Company, Mr. Swanson is the former Chairman
of the Audit & Compliance Committee and serves on the Executive/Long-Range Planning Committee.
Based
on Mr. Swanson’s extensive experience in both starting and running a business, valuable perspective on economic issues relevant
to our Company, professional perception on financial reporting, and his extensive community involvement, the Nominating Committee
recommends Mr. Swanson for re-election to the Board of Directors.
SECURITY
OWNERSHIP OF CERTAIN
BENEFICIAL
OWNERS AND MANAGEMENT
The
following tables set forth, as of December 31, 2020, information regarding share ownership of:
|
●
|
those persons or
entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of our
common stock;
|
|
●
|
each non-employee Director; and
|
|
●
|
each employee Director
|
Persons
and groups who beneficially own more than five percent of our common stock are required to file with the Securities and Exchange
Commission (“SEC”), and provide us, reports disclosing their ownership pursuant to the Securities Exchange Act of
1934 (“Exchange Act”). To the extent known to the Board of Directors, no other person or entity, other than those
set forth below, beneficially owned more than five percent of the outstanding shares our common stock as of the close of business
on December 31, 2020.
Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d(3) of the Exchange
Act, a person is deemed the beneficial owner of any shares of Common Stock if he or she has voting and/or investment power with
respect to those shares. Therefore, the tables below include shares owned by spouses, other immediate family members in trust,
shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership over which
shares the persons named in the table may possess voting and/or investment power.
The
table below shows the security ownership of certain beneficial owners of more than 5 percent of any class of Common Stock.
Title
of class
|
|
Name
and Address of Beneficial Owner
|
|
Amount
and Nature
of Beneficial Ownership
|
|
|
Percent
of Class
|
|
Common
Stock
|
|
Hugh
C. Lane, Jr.(1)
256 Meeting Street
Charleston, South Carolina 29401
|
|
|
816,902
|
(2)
|
|
|
14.80
|
%
|
Common Stock
|
|
The Bank of South
Carolina
Employee Stock Ownership
Plan and Trust (“the ESOP”)
256 Meeting Street
Charleston, South Carolina 29401
|
|
|
344,384
|
(3)
|
|
|
6.24
|
%
|
The
table below shows the security ownership of management, directors, and nominees.
Title
of class
|
|
Name
of Beneficial Owner
|
|
Amount
and Nature
of Beneficial Ownership
|
|
|
Percent
of Class
|
|
Executive Officers/Directors
|
Common
Stock
|
|
Hugh
C. Lane, Jr.(1)
|
|
|
816,902
|
(2)
|
|
|
14.80
|
%
|
Common Stock
|
|
Fleetwood S. Hassell(3)
|
|
|
124,316
|
(4)
|
|
|
2.25
|
%
|
Common Stock
|
|
Susanne K. Boyd
|
|
|
10,663
|
(4)
|
|
|
*
|
|
Common Stock
|
|
Douglas H. Sass(3)
|
|
|
44,238
|
(4)
|
|
|
*
|
|
Common Stock
|
|
Eugene H. Walpole,
IV(3)
|
|
|
12,896
|
(4)
|
|
|
*
|
|
Current Directors
|
Common Stock
|
|
David W. Bunch
|
|
|
2,620
|
|
|
|
*
|
|
Common Stock
|
|
Graham M. Eubank,
Jr.
|
|
|
1,041
|
|
|
|
*
|
|
Common Stock
|
|
Elizabeth M. Hagood
|
|
|
421
|
|
|
|
*
|
|
Common Stock
|
|
Glen B. Haynes,
DVM
|
|
|
8,173
|
|
|
|
*
|
|
Common Stock
|
|
William L. Hiott, Jr.
|
|
|
210,171
|
(4)
|
|
|
3.81
|
%
|
Common Stock
|
|
Richard W. Hutson,
Jr.
|
|
|
10,231
|
|
|
|
*
|
|
Common Stock
|
|
Charles G. Lane(1)
|
|
|
260,511
|
(4)
|
|
|
4.72
|
%
|
Common Stock
|
|
Dr. Linda J. Bradley McKee, CPA
|
|
|
2,855
|
|
|
|
*
|
|
Common Stock
|
|
Alan I. Nussbaum,
MD
|
|
|
4,302
|
|
|
|
*
|
|
Common Stock
|
|
Karen J. Phillips
|
|
|
6,624
|
(4)
|
|
|
*
|
|
Common Stock
|
|
Edmund Rhett, Jr.,
MD
|
|
|
7,554
|
|
|
|
*
|
|
Common Stock
|
|
Malcolm M. Rhodes,
MD
|
|
|
4,918
|
|
|
|
*
|
|
Common Stock
|
|
Sheryl G. Sharry
|
|
|
99,918
|
|
|
|
1.81
|
%
|
Common Stock
|
|
Steve D. Swanson
|
|
|
16,538
|
|
|
|
*
|
|
Total
|
|
|
|
|
1,638,471
|
|
|
|
29.68
|
%
|
|
*
|
Represents less
than 1%
|
|
|
|
|
(1)
|
To the extent known
to the Board, the emancipated children and grandchildren of Hugh C. Lane, Jr. and Charles G. Lane, collectively, have beneficial
ownership of 455,507 shares or 8.25% of the outstanding shares. As more fully described in the following footnotes, Hugh C.
Lane, Jr., is the only one of the above who has a beneficial ownership interest in more than 5% percent of our common stock.
Hugh C. Lane, Jr., disclaims any beneficial interest in those shares in which other members of his family have a beneficial
interest other than those shares his wife owns directly and those for which he serves as Trustee or she serves as custodian
(as more fully described in the following footnote).
|
|
|
|
|
(2)
|
To the extent known
to the Board, Hugh C. Lane, Jr., Chairman of the Board of both the Bank and the Company, directly owns and has sole voting
and investment power with respect to 287,440 shares; as a Trustee for the Mills Bee Lane Memorial Foundation, he has shared
voting and investment power with respect to 13,084 shares; he is indirectly beneficial owner of 16,986 shares owned by his
wife and 48,032 shares owned by the ESOP in which he has a vested interest. Hugh C. Lane, Jr. disclaims any beneficial interest
in the 451,360 shares owned by extended family members. Hugh C. Lane, Jr., has had beneficial ownership of more than 5% of
our common stock since October 23, 1986.
|
|
|
|
|
(3)
|
The Trustees of
the Employee Stock Ownership Plan (“ESOP’), Fleetwood S. Hassell, President/Chief Executive Officer and Director
of the Bank and Company; Eugene H. Walpole, IV, Chief Financial Officer/Executive Vice President and Director of the Bank
and Company; Douglas H. Sass, Senior Lender/Executive Vice President and Director of the Bank and Company; and Sheryl G. Sharry,
Director of the Bank and Company disclaim beneficial ownership of the 344,384 shares owned by the ESOP with all shares allocated
to members of the Plan each of whom under the terms of the Plan has the right to direct the Trustees as to the manner in which
voting rights are to be exercised.
|
|
|
|
|
(4)
|
To
the extent known to the Board of Directors, each of the following Directors and nominees for election as Director (each
of whom directly owns and has sole voting and investment power of all shares beneficially owned by him or her except as
set forth in this footnote) indirectly owns the following number of shares: Fleetwood S. Hassell - an aggregate
of 59,515 shares owned by his wife; held by him as a co-Trustee with Charles G. Lane for the children of Hugh C. Lane,
Jr.; and shares owned by the ESOP in which he has a vested interest; Douglas H. Sass – an aggregate
of 23,308 shares owned by the ESOP in which he has a vested interest and held by his wife; William L. Hiott, Jr.
- an aggregate of 10,713 shares directly owned by his wife; Charles G. Lane - an aggregate of 65,384 shares
owned by his wife; held by him as a co-Trustee with Fleetwood S. Hassell for the children of Hugh C. Lane, Jr.; held by
him as a Trustee of Mills Bee Lane Memorial Foundation; and held by him as a Trustee of Holcombe Trust; Karen J.
Phillips – 3,649 shares owned by her husband; Edmund Rhett, Jr. MD – 1,005 shares owned
by his wife; Susanne K. Boyd – an aggregate of 8,091 shares owned by children and shares owned by
the ESOP in which she has a vested interest; Eugene H. Walpole, IV- 4,191 shares owned by the ESOP in which
he has a vested interest. All such indirectly owned shares are included in the totals of the number of shares set forth
in the above table and beneficially owned by the Directors.
|
No
Director or Executive Officer was involved in or has any pending legal proceedings related to bankruptcy, securities, or commodities
laws nor have any members been convicted in criminal proceedings in the past 10 years.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
AND
CORPORATE GOVERNANCE MATTERS
Introduction
The
Company’s Board of Directors conducts its business through Board meetings and through its committees. Hugh C. Lane, Jr.
presently serves as Chairman of the Board of Directors. The Board of Directors of the Company held six meetings (including all
regularly scheduled and special meetings) during the year ended December 31, 2020. No Directors attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees
of the Board of Directors on which they served.
Director
Independence
The
Board of Directors is comprised of a majority of independent Directors in compliance with SEC and National Association of Securities
Dealers Automated Quotations (“NASDAQ”) rules. All members of the Audit & Compliance Committee, the Compensation
Committee, and the Nominating Committee are independent pursuant to SEC and NASDAQ rules. The members of these committees do not
have any relationship to the Bank or Company that may interfere with the exercise of their independence from management. None
of the members of the Nominating Committee are current or former officers or employees of the Bank or Company. One member of the
Compensation Committee and Audit & Compliance Committee, William L. Hiott, Jr., retired from the Bank in April 2010. Two members
of the Executive/Long-Range Planning Committee, William L. Hiott, Jr. and Sheryl G. Sharry, retired from the Bank in April 2010
and 2016, respectively. All members of the Board of Directors are independent except Hugh C. Lane, Jr., Chairman of the Board,
Fleetwood S. Hassell, President/Chief Executive Officer, Douglas H. Sass, Senior Lender/Executive Vice President, Susanne K. Boyd,
Chief Operations Officer/Executive Vice President, Eugene H. Walpole, IV, Chief Financial Officer/Executive Vice President and
Charles G. Lane, brother of Hugh C. Lane, Jr.
Board
of Directors
Our
Board of Directors conducts its business through meetings and committees. Hugh C. Lane, Jr., presently serves as Chairman of the
Board. The Board of Directors of the Company held six meetings (including all regularly scheduled and special meetings) during
the year ended December 31, 2020.
Board
Leadership Structure
The
Board of Directors believes that Hugh C. Lane, Jr., is the best person to serve as Chairman because he is the Director most familiar
with our business and industry, and most capable of effectively identifying strategic priorities and leading the discussion and
execution of strategy.
Independent
Directors and management have different perspectives and roles in strategy development. Our independent Directors bring experience,
oversight and expertise from outside the company and industry, while Hugh C. Lane, Jr., brings company-specific experience and
expertise. The Board of Directors believe that the combined experience as Chairman and past President/Chief Executive Officer
promotes strategic development and executions, and facilitates information flow between management and the Board of Directors,
which are essential to effective governance.
One
of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for the
execution of strategy once it is developed. The Board believes the combined role of the Chairman and an independent Lead Director,
having the duties described below, is in the best interest of Shareholders as it provides the appropriate balance between strategy
development and independent oversight of management.
Lead
Director
The
Board of Directors selected Alan I. Nussbaum, MD, an independent director, to serve as the Lead Director of all meetings of the
non-management Directors held in executive session. Dr. Nussbaum has held this position since April 12, 2011. Non-management Directors
of the Board of Directors are required to meet on a regular scheduled basis without the presence of Directors that are not considered
independent (IM-5605-2 NASDAQ Corporate Governance Rules). The Lead Director chairs these sessions.
Risk
Management
The
Board of Directors has an active role, as a whole and at the committee level, in overseeing the management of our risks. The Board
of Directors regularly reviews information regarding our credit, liquidity, and operations, as well as the risks associated with
each. The Audit & Compliance Committee oversees the management of financial risks. The Nominating Committee manages risks
associated with the independence of the Board of Directors and potential conflicts of interest. The Board of Directors monitors
financial and independence risks and oversees the management of such risks through committee reports. In addition, the Audit &
Compliance Officer oversees internal controls.
Committees
and Committee Charters
The
Board of Directors of the Company has four standing committees: the Executive/Long-Range Planning Committee, the Compensation
Committee, the Nominating Committee, and the Audit & Compliance Committee. Each committee serves in a dual capacity as a committee
of the Company and the Bank.
The
following table lists the membership of the standing committees of the Board of Directors of the Company.
Director
|
Audit
& Compliance
|
Executive/Long-Range
Planning
|
Compensation
Committee
|
Nominating
Committee
|
Susanne K. Boyd
|
|
●
|
|
|
David W. Bunch
|
|
|
|
|
Graham M. Eubank, Jr
|
|
|
●
|
●
|
Elizabeth M. Hagood
|
|
|
|
●
|
Fleetwood S. Hassell
|
|
●
|
|
|
Glen B. Haynes, DVM
|
|
|
|
●
|
William L. Hiott, Jr.
|
●
|
●
|
●
|
|
Richard W. Hutson, Jr.
|
●
|
|
|
|
Charles G. Lane
|
|
●
|
|
|
Hugh C. Lane, Jr.
|
|
●
|
|
|
Dr. Linda J. Bradley McKee, PhD, CPA
|
●
|
|
|
|
Alan I. Nussbaum, MD
|
|
●
|
●
|
|
Karen J. Phillips
|
●
|
●
|
|
●
|
Edmund Rhett, Jr. MD
|
|
|
|
|
Malcolm M. Rhodes, MD
|
|
|
|
|
Douglas H. Sass
|
|
●
|
|
|
Sheryl G. Sharry
|
●
|
●
|
|
|
Steve D. Swanson
|
|
●
|
|
|
Eugene H. Walpole, IV
|
|
●
|
|
|
Audit
& Compliance Committee
The
Board of Directors appoints and approves the members of the Audit & Compliance Committee annually. The Audit & Compliance
Committee is to be comprised of not less than four members of the Board or such larger number as approved by the Board of Directors.
During 2020, the Audit & Compliance Committee held four meetings. Members are considered independent of the Company under
applicable rules and regulations, including Rule 4200(a)(15) of NASDAQ. The Board of Directors has determined that Linda J. Bradley
McKee, PhD, CPA, qualifies as a financial expert under the applicable guidelines of the Exchange Act.
The
Audit & Compliance Committee operates under a written Charter adopted by the Board of Directors which is renewed and reassessed
for adequacy on an annual basis. The Charter outlines the Committee’s responsibilities for overseeing the entire audit function
and appraising the effectiveness of internal and external audit efforts including reviewing our financial statements, evaluating
internal accounting controls, reviewing reports of regulatory authorities, and determining that all examinations required by law
are performed. The Board of Directors may amend the Charter at any time. The most recent Audit & Compliance Committee Charter
may be obtained at our Internet website http://www.banksc.com.
The
Audit & Compliance Committee recommends to the Board of Directors the appointment of the independent auditors for the next
fiscal year, reviews and approves the auditors’ audit plan, and reviews with the independent auditors the results of the
audit and management’s response.
Review
of the Company’s Audited Financial Statements for the Fiscal Year Ended December 31, 2020
Management
is responsible for our internal controls and the financial reporting process. The independent auditors are responsible for performing
an independent audit of our consolidated financial statements in accordance with accounting principles generally accepted in the
United States of America and issuing a report thereon. The Audit & Compliance Committee’s responsibility is to monitor
and oversee the process.
In
this context, the Audit & Compliance Committee has met and held discussions with management and Elliott Davis, LLC, our independent
auditors, in 2020. The Audit Committee has discussed with the independent auditors their independence from the Company and management.
The Audit & Compliance Committee also discussed with management, the internal auditors and the independent auditors
the quality and adequacy of our internal controls. The Audit & Compliance Committee reviewed the audit plans, audit scope
and identification of audit risks with the independent auditor.
The
Audit & Compliance Committee reviewed and discussed with the independent auditors all communications required by generally
accepted auditing standards, including those described in the PCAOB Auditing Standard 16, as modified or supplemented, “Communications
with Audit Committees,” and Rule 2-07 of Regulation S-K, promulgated by the SEC, and, with and without management present,
discussed and reviewed the results of the independent auditors’ examination of the financial statements. The Audit &
Compliance Committee also discussed the results of the internal audit examinations.
The
Audit & Compliance Committee reviewed and discussed the audited consolidated financial statements of the Company as of and
for the year ended December 31, 2020, with management and the independent auditors.
Based
on the above-mentioned review and discussion with management and the independent auditors, the Audit & Compliance Committee
recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in its Annual
Report on Form 10-K for the year ended December 31, 2020, for filing with the SEC. During 2020, the Committee appointed Elliott
Davis, LLC as our independent auditors for the year ending December 31, 2020.
Sheryl
G. Sharry, Chairman
Richard
W. Hutson, Jr.
William
L. Hiott, Jr.
Dr.
Linda J. Bradley McKee, CPA
Karen
J. Phillips
Executive/Long-Range
Planning Committee
The
Executive/Long-Range Planning Committee consists of our President/Chief Executive Officer, Chairman, Senior Lender/Executive Vice
President, Chief Operating Officer/Executive Vice President, Chief Financial Officer/Executive Vice President and six designated
Directors. Alan I. Nussbaum, MD, an independent Director, serves as Chairman of the Committee. During 2020, the Executive/Long-Range
Planning Committee held two meetings. In addition to long-range and strategic planning, the principal function of the Committee
is to exercise all authority of the Board of Directors in the management and affairs of the Company and the Bank. In addition,
the Committee acts on behalf of the entire Board of Directors between the regular Board meetings.
Compensation
Committee
The
Compensation Committee consists of three independent Directors appointed by the Board of Directors to assist the Board in fulfilling
its oversight responsibilities. The Committee also functions as the Compensation Committee of the Bank. The duties and responsibilities
of the Compensation Committee are as follows:
|
●
|
to review and approve
compensation of the Executive Officers in light of our goals and objectives (Executive Officers may not be present during
voting or deliberations on their compensation), including under the Stock Incentive Plan;
|
|
●
|
to oversee regulatory
compliance and risk management with respect to compensation matters;
|
|
●
|
to make regular
reports to the Board of Directors;
|
|
●
|
to review and approve
the Report of Compensation for inclusion in our annual Proxy Statement, in accordance with applicable rules and regulations;
|
|
●
|
to review and approve
the Compensation Discussion and Analysis of the Company’s annual Proxy Statement, and recommend to management that it
be included in the annual Proxy Statement; and
|
|
●
|
to perform any other
duties or responsibilities expressly delegated to the Committee by the Board of Directors from time to time.
|
The
Compensation Committee’s policies and procedures for decisions did not change since the positive advisory vote by the shareholders
on the compensation of the most highly compensated Executive Officers at the Annual Meeting held April 9, 2019.
The
Board of Directors has determined that each of the Directors serving on our Compensation Committee is independent and satisfies
other requirements imposed by:
|
●
|
NASDAQ;
|
|
●
|
The Exchange Act and the rules and regulations
of the SEC under the Exchange Act; and
|
|
●
|
Any other laws, rules or regulations applicable
to us.
|
The
Compensation Committee has sole discretion to hire, retain, terminate and approve fees and other retention terms of independent
legal, accounting or other advisors (including compensation consultants) as it deems appropriate without management or Board approval.
In doing so, the Compensation Committee shall comply with all applicable rules of the SEC or NASDAQ. The Committee met twice during
2020 and did not consult independent legal counsel or compensation consultants. The most recent Compensation Committee charter
may be obtained at our website http://www.banksc.com.
Nominating
Committee
The
Nominating Committee consists of four independent Directors. The function of the Nominating Committee is to recommend a slate
of proposed Directors to the Board of Directors. The Nominating Committee has adopted a written Charter. A copy of this Charter
may be obtained at our website http://www.banksc.com. The Nominating Committee met once time during 2020.
Nominations,
other than those made by the Nominating Committee, may be made in writing and delivered or mailed to the President/Chief Executive
Officer of the Company not less than 14 days or no more than 50 days prior to any meeting of Shareholders calling for election
of Directors; provided however, that if less than 21 days’ notice of the meeting is given to Shareholders, such nomination
shall be mailed or delivered to the President/Chief Executive Officer of the Company not later than the close of business on the
7th day following the day on which the Notice of Meeting was mailed. Nominations not made according to these procedures
will be disregarded.
The
Nominating Committee has a policy with regard to consideration of any Director candidates recommended by Shareholders and that
policy is to consider any and all such recommendations. The Nominating Committee has adopted specific minimum qualifications which
the Nominating Committee believes must be met by a nominee for a position on our Board of Directors. The qualifications include:
|
●
|
nominee must be
recognized as successful in such nominee’s business or community efforts;
|
|
●
|
have a recognized
reputation for honesty and integrity;
|
|
●
|
have demonstrated
a commitment to the community in which we operate;
|
|
●
|
have demonstrated
in meetings with the Nominating Committee a commitment to the best interest of the Company, its subsidiary Bank, and their
officers, Directors, employees and Shareholders
|
The
Nominating Committee’s process for identifying and evaluating nominees for Director, including nominees recommended by Shareholders,
is to investigate whether or not such nominee meets the specific minimum qualifications adopted as a policy by the Committee through
contacts the members have in their community. There are no differences in the manner in which the Committee evaluates nominees
for Director whether the nominee is recommended by a committee member or a Shareholder.
We
do not utilize or pay a fee to any third party (compensation consultant) to evaluate nominees for Director.
Code
of Business Conduct and Ethics
We
expect all of our employees to conduct themselves honestly and ethically. Our Board of Directors has adopted a Code of Ethics
that applies to all employees. The Code of Ethics requires the officers, employees, and Directors to maintain the highest standards
of professional ethical conduct. The Code includes guidelines relating to the ethical handling of actual or potential conflicts
of interest, compliance with laws, accurate financial reporting and procedures for promoting compliance with, and reporting violations
of the Code. The Code of Ethics may be obtained at our website http://www.banksc.com.
Shareholder
Communication with the Board of Directors
The
Board of Directors has adopted a process by which Shareholders may communicate with them. Shareholders may send a written communication
to Fleetwood S. Hassell, President/Chief Executive Officer, Bank of South Carolina Corporation, 256 Meeting Street, Charleston,
South Carolina 29401, or email such communication to Fleetwood S. Hassell, President/Chief Executive Officer, at fhassell@banksc.com.
A Shareholder is free to address any communication to any Director at the address of the Bank of South Carolina. Any communication
from a Shareholder received by the President/Chief Executive Officer shall be sent to all members of the Executive Committee and,
if any member of the Executive Committee so directs, will be sent to all members of the Board of Directors.
In
addition, any Shareholder or interested party who has any concerns or complaints relating to accounting, internal accounting controls
or auditing matters, may contact the Audit & Compliance Committee by writing to one or both of the following addresses:
Bank
of South Carolina Corporation Audit & Compliance Committee
c/o
Sheryl G. Sharry, Chairman
Bank
of South Carolina Corporation
1550
Kentwood Circle
Charleston,
SC 29412
ssharry@banksc.com
Related Party Transactions
Sass, Herrin and Associates, Inc. an appraisal
firm, is on our list of approved appraisal companies. Herbert R. Sass, III, MAI, SRA, fifty percent owner of Sass, Herrin and Associates,
Inc., is the brother of Douglas H. Sass, Executive Vice President. We do not have any other existing continuing contractual relationships
with any Director, nominee for election as Director or Executive Officer, or any Shareholder owning, directly or indirectly, more
than 5% of the shares of our common stock, or any associate of the foregoing persons. Related party transactions have been and
will continue to be made as any other ordinary business transaction using substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with other persons. These transactions did not and
will not involve more than the normal risk of collectability or present any other unfavorable features.
DIRECTOR COMPENSATION
The following table sets forth the information
regarding the compensation earned by each Director who served on the Board of Directors during the year ended December 31, 2020.
Our officers other than the Secretary do not receive payment for their participation on the Board of Directors or its Committees.
Transactions and Relations with Directors,
Executive Officers, and their Associates and Affiliates of Directors
Name
|
|
Fees Earned or
Paid In Cash
|
|
Susanne K. Boyd
|
|
|
—
|
|
David W. Bunch
|
|
$
|
8,300
|
|
Graham M. Eubank, Jr.
|
|
$
|
6,475
|
|
Elizabeth M. Hagood
|
|
$
|
7,850
|
|
Fleetwood S. Hassell
|
|
|
—
|
|
Glen B. Haynes, DVM
|
|
$
|
8,475
|
|
William L. Hiott, Jr.
|
|
$
|
10,500
|
|
Richard W. Hutson, Jr.
|
|
$
|
6,000
|
|
Charles G. Lane
|
|
$
|
9,100
|
|
Hugh C. Lane, Jr.
|
|
|
—
|
|
Dr. Linda J. Bradley McKee, CPA
|
|
$
|
7,100
|
|
Alan I. Nussbaum, MD
|
|
$
|
7,500
|
|
Karen J. Phillips
|
|
$
|
10,100
|
|
Edmund Rhett, Jr. MD
|
|
$
|
5,025
|
|
Malcolm M. Rhodes, MD
|
|
$
|
6,300
|
|
Douglas H. Sass
|
|
|
—
|
|
Sheryl G. Sharry
|
|
$
|
8,100
|
|
Steve D. Swanson
|
|
$
|
6,700
|
|
Eugene H. Walpole, IV
|
|
|
—
|
|
Non-Executive-Officer Directors of the
Company received $200.00 for each meeting of the Board of Directors of the Company attended. Non-Executive-Officer Directors of
the Bank received $425.00 for each meeting of the Board of Directors of the Bank attended. Directors of the Company and the Bank
also receive $200 for each Company or Bank board committee meeting attended.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange
Act of 1934 requires our Directors, Executive Officers and persons who own beneficially more than 10% of our outstanding common
stock to file with the SEC initial reports of ownership and reports of changes in their ownership of our common stock. Directors,
Executive Officers and greater than 10% Shareholders are required by SEC regulations to furnish us with copies of the forms they
file. To our knowledge, no person beneficially owned more than 10% of our common stock during 2020. During the fiscal year ended
December 31, 2020, two directors filed untimely Forms 4. William L. Hiott, Jr. and Charles G. Lane, each filed one untimely Form
4 for one transaction. Based solely on a review of the copies of such reports furnished to us, during the fiscal year ended December
2020, all other Directors and Executive Officers complied with all applicable Section 16(a) filing requirements.
Executive
Compensation-Compensation Discussion and Analysis
This section discusses our compensation
program, including how it relates to the Executive Officers named in the compensation tables which follow in this section. The
Executive Officers of the Company and the Bank consist of:
|
●
|
Susanne K. Boyd, Chief Operating Officer/Executive Vice President, Director
|
|
●
|
Fleetwood S. Hassell, President/Chief Executive Officer, Director
|
|
●
|
Hugh C. Lane, Jr., Chairman, Director
|
|
●
|
Douglas H. Sass, Senior Lender/Executive Vice President, Director
|
|
●
|
Eugene. H. Walpole, IV, Chief Financial Officer/Executive Vice President, Director
|
Set forth below is an analysis of the objectives
of our compensation program, the material compensation policy made under this program and the material factors that the Compensation
Committee considers in making those decisions.
Overview of Compensation Program
The Compensation Committee of the Board
of Directors, which consists solely of independent Directors, has the responsibility for developing, implementing, and monitoring
adherence to our compensation philosophies and program. Our compensation program is based upon the following philosophies:
|
●
|
preserve the financial strength, safety and soundness of the Company and the Bank;
|
|
●
|
reward and retain key personnel by compensating them in the midpoint salary ranges at comparable financial institutions and making them eligible for the Employee Stock Ownership Plan and Trust (“ESOP”) and the Stock Incentive Plans; and
|
|
●
|
focus management on maximizing earnings while managing risk by maintaining high asset quality, managing interest rate risk within Board guidelines, emphasizing cost control, and maintaining appropriate levels of capital.
|
Our primary forms of compensation for Executive
Officers include base salary, the ESOP, and the 2010 Omnibus Stock Incentive Plans and 2020 Stock Incentive Plan.
Base Salary
The Compensation Committee sets the base
salary for the five Executive Officers. The Committee’s objectives are:
|
●
|
to encourage the achievement of our long-range objectives by providing compensation that reflects the performance of the individual and the achievement of our objectives. The level of compensation shall be reasonable based upon our goals and objectives, normal and customary levels of compensation within the banking industry (taking into consideration geographic and competitive factors), our asset quality, capital level, operations and profitability, and the duties performed and responsibilities held by the individual.
|
|
●
|
to establish compensation guidelines that will attract and retain qualified personnel through an overall level of compensation opportunity that is competitive within the banking industry.
|
As a smaller reporting company, defined
by Item 10(f), the following table sets forth all remuneration paid during the years ended December 31, 2020, 2019, and 2018, by
the Bank to the Chairman of the Board of Directors and the two most highly compensated Executive officers of the Company and the
Bank for their services in all capacities. Such Executive Officers receive no compensation from the Company as Executive Officers
or as Directors or in any other capacity. We did not issue any stock awards to our Executive Officers during the years ended December
31, 2020, 2019, and 2018. All Executive Officers received 10,000 stock option grants during the year ended December 31, 2020. No
options were granted to any Executive Officer during the years ended December 31, 2019 and 2018. Additionally, there was no non-equity
incentive plan compensation or nonqualified deferred compensation earnings given during the years ended December 31, 2020, 2019,
and 2018.
Summary Compensation Table
|
Name and Principal Position
|
|
Year
|
|
|
Salary(1)
|
|
|
Bonus
|
|
|
All Other
Compensation(2)
|
|
|
Total
|
|
Hugh C. Lane, Jr.
|
|
|
2020
|
|
|
$
|
305,000
|
|
|
$
|
20,250
|
|
|
$
|
25,330
|
|
|
$
|
350,580
|
|
Chairman
|
|
|
2019
|
|
|
$
|
290,000
|
|
|
$
|
20,400
|
|
|
$
|
27,338
|
|
|
$
|
337,738
|
|
|
|
|
2018
|
|
|
$
|
270,000
|
|
|
$
|
25,300
|
|
|
$
|
22,450
|
|
|
$
|
317,750
|
|
Fleetwood S. Hassell
|
|
|
2020
|
|
|
$
|
301,313
|
|
|
$
|
20,250
|
|
|
$
|
25,330
|
|
|
$
|
346,893
|
|
President/Chief Executive Officer
|
|
|
2019
|
|
|
$
|
286,313
|
|
|
$
|
20,400
|
|
|
$
|
27,338
|
|
|
$
|
334,051
|
|
|
|
|
2018
|
|
|
$
|
266,338
|
|
|
$
|
25,300
|
|
|
$
|
22,450
|
|
|
$
|
314,088
|
|
Douglas H. Sass
|
|
|
2020
|
|
|
$
|
220,708
|
|
|
$
|
20,250
|
|
|
$
|
21,416
|
|
|
$
|
262,374
|
|
Senior Lender/Executive Vice President
|
|
|
2019
|
|
|
$
|
210,708
|
|
|
$
|
20,400
|
|
|
$
|
21,995
|
|
|
$
|
253,103
|
|
|
|
|
2018
|
|
|
$
|
186,706
|
|
|
$
|
20,300
|
|
|
$
|
16,899
|
|
|
$
|
223,905
|
|
|
1)
|
The Compensation Committee, consisting of Graham M. Eubank, Jr., Alan I. Nussbaum, and William L. Hiott, Jr., compares salaries for similar positions at similar sized banks within South Carolina as well as the overall bank and individual performance. Once the Compensation Committee establishes the salary levels, the salaries are recommended to the Board of Directors for approval. (See “Compensation Committee” for further discussion.) The Compensation Committee recommended and the Board of Directors approved a $15,000 increase in salary for the Chairman of the Board, an $15,000 increase in the salary of the President/Chief Executive Officer and a $10,000 increase in salary for the Senior Lender/Executive Vice President for the year ended December 31, 2020. The Compensation Committee recommended and the Board of Directors approved a $20,000 increase in salary for the Chairman of the Board, an $19,975 increase in the salary of the President/Chief Executive Officer and a $14,002 increase in salary for the Senior Lender/Executive Vice President for the year ended December 31, 2019. The Board of Directors approved this recommendation on December 5, 2018. The Board of Directors approved an additional merit increase of $10,000 for the Senior Lender/ Executive Vice President on July 25, 2019. The Compensation Committee recommended and the Board of Directors approved a $20,000 increase in salary for the Chairman of the Board, an $18,581 increase in the salary of the President/Chief Executive Officer and a $13,126 increase in salary for the Senior Lender/Executive Vice President for the year ended December 31, 2018.
|
|
2)
|
On November 2, 1989, the Bank adopted an ESOP to provide retirement benefits to eligible employees for long and faithful service. The other compensation represents the amount contributed to the Bank’s ESOP. (See table and discussion below for other compensation.)
|
The median salary for all employees other
than the Executive Officers was $63,870.
Employee Stock Ownership Plan and
Trust Agreement
Fleetwood S. Hassell, Douglas H. Sass,
Sheryl G. Sharry, and Eugene H. Walpole, IV currently serve as Plan Administrators and as Trustees for the ESOP. Any employee of
the Bank is eligible to become a participant in the ESOP upon reaching 21 years of age and credited with one-year of service (1,000
hours of service). The employee may enter the Plan on the January 1st that occurs nearest the date on which the employee
first satisfies the age and service requirements described above. No contributions by employees are permitted. The amount and time
of contributions to the Plan are at the sole discretion of the Board of Directors. The contribution for all participants is based
solely on each participant’s respective regular or base salary and wages paid by the Bank including commissions, bonuses,
and overtime, if any.
The Board of Directors approved the contribution
of $540,000 to the ESOP for the fiscal year ended December 31, 2020. The contribution was made during 2020.
A participant becomes vested in the ESOP
based upon the employee’s credited years of service. The vesting schedule is as follows:
|
●
|
1 Year of Service
|
0% Vested
|
|
●
|
2 Years of Service
|
25% Vested
|
|
●
|
3 Years of Service
|
50% Vested
|
|
●
|
4 Years of Service
|
75% Vested
|
|
●
|
5 Years of Service
|
100% Vested
|
The Plan became effective as of January
1, 1989, was amended effective January 1, 2007, and approved by the Board of Directors on January 18, 2007. This amendment was
made to comply with the Pension Protection Act of 2006. Periodically the Internal Revenue Service (“IRS”) requires
a restatement of a qualified retirement plan to ensure that the plan document includes provisions required by legislative and regulatory
changes made since the last restatement. There have been no substantive changes to the plan. The Board of Directors approved a
restated plan, on January 26, 2012 (incorporated as Exhibit 10.5 in the 2011 10-K). The Plan was submitted to the IRS for approval
and a determination letter was issued September 26, 2013, stating that the plan satisfies the requirements of Code Section 4975(e)(7).
On January 26, 2017, the Board of Directors approved a restated plan (incorporated as Exhibit 10.6 in the 2016 10-K). The Plan
was submitted to the IRS for approval and a determination letter was issued November 17, 2017, stating that the plan satisfies
the requirements of Code Section 4975(e)(7).
The Plan currently owns 344,384 shares
or 6.24% of our common stock outstanding.
The following table sets forth details
of “All Other Compensation” as presented above in the Summary Compensation Table.
Name
|
|
Employee Stock
Ownership Plan
|
|
|
Total
|
|
Hugh C. Lane, Jr.
|
|
$
|
25,330
|
|
|
$
|
25,330
|
|
Fleetwood S. Hassell
|
|
$
|
25,330
|
|
|
$
|
25,330
|
|
Douglas H. Sass
|
|
$
|
21,416
|
|
|
$
|
21,416
|
|
Stock Incentive Plans
The Shareholders approved the 2010 Omnibus
Stock Incentive Plan on April 13, 2010. Under this Plan, any employee of the Company or the Bank is eligible to participate in
the Plan if the Executive Committee, in its sole discretion, determines that such a person has contributed or can be expected to
contribute to the profits or growth of the Company or the Bank. No member of the Committee may participate in this Plan during
the time that their participation would prevent the Committee from being “disinterested” for purposes of the Securities
and Exchange Commission Rule 16b-3. This plan expired on April 14, 2020. The remaining outstanding options granted under this plan
can still be exercised in accordance with the plan.
The Shareholders approved the 2020 Stock
Incentive Plan on April 14, 2020. Under this Plan, any employee of the Company or the Bank is eligible to participate in the Plan
if the Executive Committee, in its sole discretion, determines that such a person has contributed or can be expected to contribute
to the profits or growth of the Company or the Bank. No member of the Committee may participate in this Plan during the time that
their participation would prevent the Committee from being “disinterested” for purposes of the Securities and Exchange
Commission Rule 16b-3. This plan expires on February 27, 2030. Options granted before that date shall remain valid in accordance
with their terms. The Executive/ Long-Range Planning Committee will obtain approval from the Compensation Committee for all stock options granted to Executive
Officers.
The following information with respect to the outstanding equity
awards as of December 31, 2020, is presented for the named Executive Officers with additional discussion below.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2020
|
OPTION AWARDS
|
|
|
|
|
STOCK AWARDS
|
|
Name
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
|
|
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)
|
|
|
Option Exercise Price ($)
|
|
|
Option Expiration Date
|
|
|
Number of Shares of Units of Stock That Have Not Vested (#)
|
|
|
Market Value of Shares or Units of Stock That Have Not Vested ($)
|
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
|
|
Equity Incentive Plan Awards: Market or Payout Value or Unearned Shares, Units or Other Rights That Have Not Vested (#)
|
|
Hugh C. Lane, Jr.
|
|
|
—
|
|
|
|
10,000
|
|
|
|
—
|
|
|
$
|
16.73
|
|
|
|
April 15, 2030
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Fleetwood S. Hassell
|
|
|
—
|
|
|
|
10,000
|
|
|
|
—
|
|
|
$
|
15.21
|
|
|
|
April 15, 2030
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Douglas H. Sass
|
|
|
—
|
|
|
|
1,210
|
|
|
|
—
|
|
|
$
|
9.18
|
|
|
|
June 28, 2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
10,000
|
|
|
|
—
|
|
|
$
|
15.21
|
|
|
|
April 15, 2030
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
In the event of a prospective reorganization,
consolidation or sale of substantially all of the assets or any other form of corporate reorganization in which the Company would
not be the surviving entity or in the event of the acquisition, directly or indirectly, of the beneficial ownership of 24% of our
common stock or the making, orally or in writing, of a tender offer for, or any request or invitation for tender of, or any advertisement
making or inviting tenders of our stock by any person, all options in effect at that time would accelerate so that all options
would become immediately exercisable and could be exercised within one-year immediately following the date of acceleration but
not thereafter.
In the case of termination of employment
of an option holder other than involuntary termination without just cause, retirement, death or legal disability, the option holder
may exercise the option only with respect to those shares of common stock as to which he or she has become vested. The option holder
may exercise the option with respect to such shares no more than 30 days after the date of termination of employment (but in any
event prior to the expiration date).
In the event that the option holder’s
employment is terminated without just cause, the option shall become fully vested and fully exercisable as of the date of his or
her termination without regard to the five year vesting schedule. The option holder may exercise the option following an involuntary
termination without just cause until the expiration date of the option.
In the event the option holder remains
in the continuous employment of the Company or any subsidiary from the date of the grant until the option holder’s retirement,
the option shall become fully vested and fully exercisable as of the date of his or her retirement without regard to the five year
schedule. The option holder may exercise the option following his or her retirement until the expiration date.
In the event the option holder remains
in the continuous employment of the Company or a subsidiary from the date of the grant until his or her death, the option shall
become fully vested and fully exercisable as of the date of death without regard to the five year vesting schedule. The person
or persons entitled to exercise the option following the option holder’s death may exercise the option until the expiration
date.
In the event the option holder remains
in the continuous employment of the Company or any subsidiary from the date of the grant until the date of his or her legal disability,
the option shall become fully vested and fully exercisable as of the date of his or her termination of employment on account of
his or her legal disability without regard to the five year vesting schedule. The option holder may exercise the option following
such termination of employment until the expiration date.
The 2010 and 2020 Stock Incentive Plans
provides for adjustment in the number of shares of common stock authorized under the Plan or granted to an employee to protect
against dilution in the event of changes in the Company’s capitalization, including stock splits and dividends.
As shown below Fleetwood S. Hassell, President/Chief Executive
Officer exercised options to purchase 2,420 shares at $8.61 on June 23,2020. The price per share on the date of exercise was $17.20.
Douglas H. Sass exercised options to purchase 1,210 shares at $8.61 and 1,210 shares at $9.18 on June 23, 2020 and October 15,2020,
respectively. The price per share on the date of exercise was $17.20 and $16.40, respectively.
2020 OPTION EXERCISES AND STOCK VESTED
|
|
|
OPTION AWARDS
|
|
|
STOCK AWARDS
|
|
Name
|
|
Number of Shares Acquired on Exercise(#)
|
|
|
Value
Realized on Exercise
($)
|
|
|
Number of Shares Acquired on Vesting (#)
|
|
|
Value
Realized on Vesting
($)
|
|
Hugh C. Lane, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Fleetwood S. Hassell
|
|
|
2,420
|
|
|
$
|
20,546
|
|
|
|
—
|
|
|
|
—
|
|
Douglas H. Sass
|
|
|
2,420
|
|
|
$
|
19,009
|
|
|
|
—
|
|
|
|
—
|
|
Equity Compensation Plan Information
The following table summarizes the total outstanding options
and the weighted-average exercise price of the Company’s equity compensation Plan as of December 31, 2020:
Plan Category
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options Warrants and Rights
|
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans(1)
|
|
2010 Omnibus Stock Incentive Plan approved by Shareholders(2) (3)
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
2020 Stock Incentive Plan approved by Shareholders
|
|
|
145,750
|
|
|
$
|
15.99
|
|
|
|
154,250
|
|
Total
|
|
|
145,750
|
|
|
$
|
15.99
|
|
|
|
154,250
|
|
(1)
|
In accordance with the 2010 Omnibus Stock Incentive Plan, options are no longer granted under this Plan. This Plan expired April 14, 2020. Options granted before this date shall remain valid in accordance with their terms.
|
(2)
|
The number of securities to be issued upon exercise of the outstanding options represents the total outstanding options under the 2010 Omnibus Stock Incentive Plan. As per the agreement, the above options shall remain valid in accordance with their terms.
|
(3)
|
The 2010 Omnibus Stock Incentive Plan was approved by the Shareholders at the 2010 Annual Meeting. There were 363,000 shares reserved under this Plan. All shares have been adjusted to reflect two 10% stock dividends declared August 27, 2015 and April 10, 2018.
|
During the fiscal year ended December 31,
2020, we had no plans or arrangements pursuant to which any Executive Officer, Director or principal Shareholder received contingent
remuneration or personal benefits other than the contingent remuneration and life, disability, dental and health insurance benefits.
Life, disability, dental and health insurance benefits are available for all employees of the Bank who work at least 30 hours a
week. Benefit programs provided to Executive Officers, officers and employees are listed in the table below.
Benefit Plan
|
Executive Officers
|
Officers
|
Full Time Employees
|
Employee Stock Ownership Plan
|
x
|
x
|
x
|
Medical and Dental Plans
|
x
|
x
|
x
|
Life and Disability Plans
|
x
|
x
|
x
|
Stock Option Plans
|
x
|
x
|
x
|
We do not have an employment agreement
with any officer or employee. We currently believe that the named Executive Officers receive sufficient compensation that employment
agreements are not necessary to induce them to remain with the Company. In addition, we do not have any agreement with the Company’s
Executive Officers that provide for cash severance payments upon termination of employment or in connection with a change in control.
Although there is inherent risk in the
business of banking, we do not believe that any of our compensation policies and practices provide incentives to our employees
to take risks that are reasonably likely to have a material adverse effect on us. We believe that our compensation policies
and practices are consistent with those of similar bank holding companies and their banking subsidiaries and are intended to encourage
and reward performance that is consistent with safe and sound practices in the industry.
PROPOSAL 2: TO APPROVE OF THE 2021 STOCK INCENTIVE PLAN FOR INDEPENDENT DIRECTORS
On February 25, 2021, the Board of Directors approved the 2021 Stock Incentive Plan for Independent Directors ("Stock Incentive Plan"),
subject to shareholder approval at the 2021 Annual Meeting authorizing the issuance of no more than 150,000 total shares of the Company
Common Stock. Shareholder approval of the Stock Incentive Plan is being sought in order to satisfy shareholder approval requirements of
NASDAQ. The Board of Directors recommends that shareholders vote in favor of the Stock Incentive Plan.
Approval of the Stock
Incentive Plan Will Facilitate the Attraction, Retention and Motivation of Talented Independent Directors Critical to the Company’s
Success
The
Stock Incentive Plan is the sole plan for providing equity incentive compensation to eligible Independent Directors. The
Board of Directors believes that the Stock Incentive Plan is in the best interest of shareholders and the Company, as equity
awards granted under the plan help to attract, motivate, and retain Independent Directors and align Independent Director
and shareholder interests. The following summary of major features of the Stock Incentive Plan is qualified in its entirety
by reference to the actual text of the Plan, set forth in Exhibit A.
The Stock Incentive
Plan contains a number of provisions that the Board believes are consistent with the interest of shareholders and sound corporate
governance practices:
|
●
|
Limitation on Shares Issued Assuming
the passage of the Stock Incentive Plan, no more than 150,000 total shares of Company Common Stock will be authorized for
issuance.
|
|
●
|
No Discounted Stock Options All
stock options must have an exercise price equal to or greater than 100% of the fair market value on Company Common Stock on
the date of grant.
|
|
●
|
Shareholder Approval The
Compensation Committee may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective
until shareholder approval is obtained. In no event will there be any amendment changing the option price, decreasing
the option price after the grant of an option, increasing the period of the option or increasing the aggregate shares available
for option except upon compliance with the above requirements.
|
|
●
|
Vesting Options
will vest with respect to twenty percent (20%) of the shares subject to the option on the first anniversary of the date of
the grant and with respect to an additional twenty percent (20%) of the shares subject to the option on each subsequent anniversary
of the date of grant so that the option shall be fully vested and fully exercisable on the fifth anniversary of the date of
grant. The right to exercise each such twenty percent (20%) increment of any option will be cumulative and will
not expire until the tenth anniversary of the date of grant.
|
|
●
|
Forfeitures If
an option is terminated, in whole or in part, for any reason other than its exercise, the number of shares of Company Common
Stock allocated to the option or portion thereof may be reallocated to other options to be granted under the plan.
|
|
●
|
Transferability Any
option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the option must be transferred to the same person or persons, entity or entities. During
the lifetime of a participant to whom an option is granted, the option may be exercised only by the participant. No
right or interest of a participant in any option shall be liable for, or subject to, any lien, obligation or liability of
such participant.
|
Summary of the Stock
Incentive Plan
Eligible
Participants Any Independent Director of the Company is eligible to participate in the Plan if the Compensation Committee, in its sole discretion,
determines that such person has contributed or can be expected to contribute to the profits or growth of the Company or subsidiary. A
Director of the Company who is an employee of the Company or subsidiary may not be granted options under this plan.
Administration The
Stock Incentive Plan will be administered by the Compensation Committee of the Board of Directors.
Available Shares
and Limitations If approved, the proposed stock incentive plan will set aside 150,000 shares of the currently
authorized but unissued and unreserved 6,181,065 shares of no par value Common Stock for options to be granted to eligible
Independent Directors of the Company.
Stock Options Options
under the Stock Incentive Plan will be granted by the Compensation Committee to eligible Independent Directors and will be
vested with respect to twenty percent (20%) of the shares subject to the option on the first anniversary of the date of the
grant and with respect to an additional twenty percent (20%) of the shares subject to the option on each subsequent
anniversary of the date of the grant so that the option shall be fully vested and fully exercisable on the fifth anniversary
of the date of grant. The right to exercise each such twenty percent (20%) increment of any option will be
cumulative and will not expire until the tenth anniversary of the date of the grant.
The
option price would be the fair market value on the date of the grant (determined as of the day preceding the date of exercise
which is not less than the option price).
The
Stock Incentive Plan would provide for adjustment in the number of shares of Common Stock authorized under the Plan or granted
to an optionee to protect against dilution in the event of changes in the Bank’s capitalization, including stock splits
and dividends.
Reorganization
If all or any portion of the Option is exercised subsequent to any stock dividend, split up, recapitalization, combination
or exchange of shares, merger, consolidation, acquisition of property or stock, separation, reorganization, or a transaction to
which Section 424 of the Internal Revenue Code applies, or other similar change or transaction of or by BKSC, as a result of which
shares of any class shall be issued in respect of outstanding shares of the class covered by the Option or shares of the class
covered by the Option shall be changed into the same or a different number of shares of the same or another class or classes,
the person or persons so exercising such an Option shall receive, for the aggregate option price payable upon such exercise of
the Option, the aggregate number and class of shares equal to the number and class of shares the Optionee would have had on the
date of exercise had the shares been purchased for the same aggregate price at the date the Option was granted and had not been
disposed of, taking into consideration any such stock dividend, split up, recapitalization, combination or exchange of shares,
merger, consolidation, acquisition of property or stock, separation, reorganization or other similar change or transaction; provided,
however, that no fractional share shall be issued upon any such exercise and the aggregate price paid shall be appropriately reduced
on account of any fractional share not issued.
The
Board OF DIRECTORS recommends that the Shareholders vote “FOR” the APPROVAL OF 2021 Stock incentive plan FOR INDEPENDENT DIRECTORS.
PROPOSAL 3: TO RATIFY THE APPOINTMENT
OF ELLIOTT DAVIS, LLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDED DECEMBER 31, 2021.
The Audit & Compliance Committee of
the Board of Directors has appointed Elliott Davis, LLC as our independent accounting firm for the year ended December 31, 2021,
and that appointment is being submitted to Shareholders for ratification. The appointment of Elliott Davis, LLC as independent
public accountants was approved by the Audit & Compliance Committee of the Board of Directors and ratified by the Shareholders
at the 2020 Annual Shareholders’ Meeting. At the 2021 Annual Shareholders’ Meeting the following resolution will be
subject to ratification by a simple majority vote of shares represented at the meeting:
RESOLVED, that the selection
of Elliott Davis, LLC as the independent certified public accountants of Bank of South Carolina Corporation (the “Company”)
and its sole subsidiary, The Bank of South Carolina (the “Bank”), for the fiscal year ending December 31, 2021, is
hereby ratified.
If ratification is not achieved, the selection
of an independent certified public accountant will be reconsidered and made by the Board of Directors. Even if selection is ratified,
the Board of Directors reserves the right to, and in its discretion may, direct the appointment of any other independent certified
public accounting firm at any time if the Board of Directors decides that such a change would be in the best interests of the Company
and our Shareholders.
Auditing and Related Fees
The services
provided by Elliott Davis, LLC include the audit of the financial statements of the Company. These services have been furnished
at customary rates and terms. There are no existing direct or indirect agreements or understandings that fix a limit on current
or future fees for these audit services.
Elliott Davis, LLC assisted in the preparation
of the Company’s and Bank’s tax returns for the fiscal years ending December 31, 2020 and 2019. These non-audit services
were routine in nature and did not compose more than 25% of the total fees paid to Elliott Davis, LLC in 2020 or 2019.
A representative of Elliott Davis, LLC
is expected to attend the Annual Meeting of Shareholders with the opportunity to make a statement, if desired, and is expected
to be available to respond to appropriate questions.
Before the independent certified public
accountants of the Company and the Bank are engaged to render non-audit services for the Company or the Bank, each engagement is
approved by the Audit & Compliance Committee. All of the audit and tax services provided by Elliott Davis, LLC for the fiscal
year ending December 31, 2020 and 2019 were preapproved by the Audit & Compliance Committee.
|
|
2020
|
|
|
2019
|
|
Audit fees
|
|
$
|
62,300
|
|
|
$
|
81,200
|
|
Audit related fees
|
|
|
21,000
|
|
|
|
19,200
|
|
Total audit and related fees
|
|
|
83,300
|
|
|
|
100,400
|
|
Tax fees
|
|
|
13,875
|
|
|
|
11,550
|
|
Total fees
|
|
$
|
97,175
|
|
|
$
|
111,950
|
|
THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ELLIOTT DAVIS, LLC AS THE COMPANY’S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021.
PROPOSAL 4: TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING AND ANY ADJOURNMENT OR POSTPONEMENT OF THE MEETING.
We are not aware of any matters to come
before the meeting that will require the vote of Shareholders other than those matters indicated in the Notice of Meeting and this
Proxy Statement.
However, if any other matter calling for
Shareholder action should properly come before the meeting or any adjournments thereof, those persons named as Proxies in the enclosed
Proxy Form will vote thereon according to their best judgment.
PENDING LITIGATION
In the opinion of Management, there are
no legal proceedings pending other than routine litigation incidental to our business involving amounts which are not material
to the financial condition of the Company or the Bank.
ANNUAL REPORT
The Annual Report for the fiscal year ended
December 31, 2020, filed with the Securities and Exchange Commission on Form 10-K, is mailed herewith to all Shareholders.
SHAREHOLDER PROPOSALS FOR THE 2021 ANNUAL
SHAREHOLDERS’ MEETING
Shareholder proposals, if any, for inclusion
in the Proxy Statement relating to the 2022 Annual Shareholders’ meeting, must be addressed to and received in the office
of the President/Chief Executive Officer no later than December 1, 2021. To ensure prompt receipt by the Company, the proposal
should be sent certified mail, return receipt requested.
|
By Order of the Board of Directors
|
|
|
|
|
/s/Richard W. Hutson, Jr.
|
|
|
Richard W. Hutson, Jr., Secretary
|
|
|
March 5, 2021
|
|
EXHIBIT A
BANK OF SOUTH CAROLINA CORPORATION
2021 STOCK INCENTIVE PLAN
FOR INDEPENDENT DIRECTORS
BANK
OF SOUTH CAROLINA CORPORATION
2021
STOCK INCENTIVE PLAN FOR INDEPENDENT DIRECTORS
Article
I
DEFINITIONS
|
1.01
|
Agreement means a written agreement (including any amendment or supplement thereto) between
BKSC and a Participant specifying the terms and conditions of an award of an Option granted to such Participant.
|
|
1.02
|
Code means the Internal Revenue Code of 1986, as amended.
|
|
1.03
|
Board means the Board of Directors of BKSC.
|
|
1.04
|
Committee means the Compensation Committee of the Board.
|
|
1.05
|
Date of Exercise means the date that the Option price is received by BKSC.
|
|
1.06
|
Fair Market Value means, on any given date, the closing price of BKSC Common Stock as reported
on the Nasdaq Capital Market. If BKSC Common Stock was not traded on the Nasdaq Capital Market on such date, then Fair Market
Value is determined with reference to the next preceding day that BKSC Common Stock was so traded.
|
|
1.07
|
Independent Director means a person serving as a member of the Board of Directors of BKSC
who is not an employee of BKSC or a Subsidiary.
|
|
1.08
|
Legal Disability means that a Participant is permanently and totally disabled within the
meaning of Code section 22(e)(3).
|
|
1.09
|
Plan means the Bank of South Carolina Corporation 2021 Stock Incentive Plan for Independent
Directors.
|
|
1.10
|
BKSC means Bank of South Carolina Corporation.
|
|
1.11
|
BKSC Common Stock means the Common Stock, no par value, of BKSC.
|
|
1.12
|
Option means a stock option that entitles the holder to purchase from BKSC a stated number
of shares of BKSC Common Stock at the price set forth in an Agreement.
|
|
1.13
|
Participant means an Independent Director, who satisfies the requirements of Article IV
and is selected by the Committee to receive an Option.
|
|
1.14
|
Subsidiary means a “subsidiary corporation” within the meaning of Code Section
424.
|
Article
II
PURPOSES
The Plan is intended to assist BKSC
in recruiting and retaining Independent Directors with ability and initiative by enabling Independent Directors to participate
in its future success and to align their interests with those of BKSC and its shareholders. The proceeds received by BKSC
from the sale of BKSC Common Stock pursuant to this Plan shall be used for general corporate purposes.
Article
III
ADMINISTRATION
The Plan shall be administered by the
Committee. The Committee shall have authority to grant Options upon such terms (not inconsistent with the provisions of this Plan)
as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the
exercisability of all of any part of an Option. Notwithstanding any such condition, the Committee may, in its discretion, accelerate
the time at which any Option may be exercised. In addition, the Committee shall have complete authority to interpret all provisions
of this Plan; to prescribe the form of Agreements; to adopt, amend and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant
in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee.
Any decision made, or action taken, by the Committee or in connection with the administration of this Plan shall be final and conclusive.
No member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement or Option.
All expenses of administering this Plan shall be borne by BKSC.
Article
IV
ELIGIBILITY
|
4.01
|
General. Any Independent Director of BKSC is eligible to participate in this Plan if the
Committee, in its sole discretion, determines that such person has contributed or can be expected to contribute to the profits
or growth of BKSC or a Subsidiary. Any such Independent Director may be granted Options. A Director of BKSC who is an employee
of BKSC or a Subsidiary may not be granted Options under this Plan.
|
|
4.02
|
Grants. The Committee will designate individuals to whom Options are to be granted and will
specify the number of shares of BKSC Common Stock subject to each award or grant. All Options granted under this Plan shall be
evidenced by Agreements which shall be subject to the applicable provisions of this Plan and to such other provisions as the Committee
may adopt. Options will have a five-year vesting period, such that the Participant may exercise the Option for twenty (20%) percent
of the shares subject to the Option on or after each of the first five anniversaries of the date of grant and until the end of
the term of the Option or its earlier expiration or forfeiture. Upon the termination of a Participant’s service as a member
of the Board, all unvested Options shall immediately become exercisable.
|
Article
V
STOCK SUBJECT TO PLAN
|
5.01
|
Source of Shares. Upon the exercise of an Option, BKSC may deliver to the Participant authorized
but unissued BKSC Common Stock.
|
|
5.02
|
Maximum Number of Shares. The maximum aggregate number of shares of BKSC Common Stock that
may be issued pursuant to the exercise of Options is One Hundred Fifty Thousand subject to increases and adjustments as provided
in this Article V and Article XI.
|
|
5.03
|
Forfeitures, etc. If an Option is terminated, in whole or in part, for any reason other
than its exercise, the number of shares of BKSC Common Stock allocated to the Option or portion thereof may be reallocated to other
Options to be granted under this Plan.
|
Article
VI
OPTION PRICE
The price per share for BKSC Common
Stock purchased on the exercise of an Option shall be determined by the Committee on the date of grant. The price per share for
BKSC Common Stock purchased on the exercise of any Option shall not be less than one hundred percent (100%) of the Fair Market
Value on the date the Option is granted.
Article
VII
EXERCISE OF OPTIONS
|
7.01
|
Maximum Option Period. The maximum period in which an Option may be exercised shall be determined
by the Committee on the date of grant except that no Option that is an Incentive Stock Option shall be exercisable after the expiration
of ten years from the date the Option was granted. The terms of any Option may provide that it is exercisable for a period less
than such maximum period.
|
|
7.02
|
Nontransferability. Any Option granted under this Plan shall be nontransferable except by
will or by the laws of descent and distribution. In the event of any such transfer, the Option must be transferred to the same
person or persons or entity or entities. During the lifetime of a Participant to whom an Option is granted, the Option may be exercised
only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation
or liability of such Participant.
|
Article
VIII
METHOD OF EXERCISE
|
8.01
|
Exercise. An Option granted under this Plan shall be deemed to have been exercised on the
Date of Exercise. Subject to the provisions of Articles VII and X, an Option may be exercised, in whole or in part, from time to
time and at such times and in compliance with such requirements as the Committee shall determine. An Option granted under this
Plan may be exercised with respect to any number of whole shares less than the full number of whole shares for which the Option
could be exercised. Subject to the vesting provisions of Section 4.02, a partial exercise of an Option shall not affect the right
to exercise the Option from time to time in accordance with this Plan and the applicable Agreement with respect to remaining shares
subject to the Option.
|
|
8.02
|
Payment. Unless otherwise provided by the Agreement, payment of the Option price shall be
made by Cashier’s Check.
|
|
8.03
|
Shareholder Rights. No Participant shall have any rights as a stockholder with respect to
shares subject to an Option until the shares have been issued (in certificate or book entry form, as applicable) in compliance
with the terms of this Plan and applicable law.
|
Article
IX
ADJUSTMENT UPON CHANGE IN BKSC COMMON STOCK
If all or any portion of the Option
is exercised subsequent to any stock dividend, split up, recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reorganization, or a transaction to which Section 424 of the Internal Revenue Code
applies, or other similar change or transaction of or by BKSC, as a result of which shares of any class shall be issued in respect
of outstanding shares of the class covered by the Option or shares of the class covered by the Option shall be changed into the
same or a different number of shares of the same or another class or classes, the person or persons so exercising such an Option
shall receive, for the aggregate option price payable upon such exercise of the Option, the aggregate number and class of shares
equal to the number and class of shares the Optionee would have had on the date of exercise had the shares been purchased for the
same aggregate price at the date the Option was granted and had not been disposed of, taking into consideration any such stock
dividend, split up, recapitalization, combination or exchange of shares, merger, consolidation, acquisition of property or stock,
separation, reorganization or other similar change or transaction; provided, however, that no fractional share shall be
issued upon any such exercise and the aggregate price paid shall be appropriately reduced on account of any fractional share not
issued.
Article
X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No option shall be exercisable and no
BKSC Common Stock shall be issued under this Plan except in compliance with all applicable federal and state laws and regulations
(including, without limitation, withholding tax requirements) and the rules of any domestic stock exchanges on which BKSC’s
shares may be listed. BKSC shall have the right to rely on an opinion of its counsel as to such compliance. Any share certificate
issued to evidence BKSC Common Stock for which an Option is exercised may bear such legends and statements as the Committee may
deem advisable to assure compliance with federal and state laws and regulations. No Option shall be exercisable and no BKSC Common
Stock shall be issued under this Plan until BKSC has obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.
Article
XI
GENERAL PROVISIONS
|
11.01
|
Effect on Service. Neither the adoption of this Plan, its operation nor any documents describing
or referring to this Plan (or any part thereof) shall confer upon any Independent Director any right to continue as a Director
of BKSC.
|
|
11.02
|
Rules of Construction. Headings are given to the articles and sections of this Plan solely
as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall be construed
to refer to any amendment to or successor of such provision of law.
|
Article
XII
AMENDMENT
The Board may amend or terminate this
Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if (i)
the amendment increases the aggregate number of shares of BKSC Common Stock that may be issued under the Plan or (ii) the amendment
changes the class of individuals eligible to become Participants. No amendment shall, without a Participant’s consent, adversely
affect any rights of such Participant under any Option outstanding at the time such amendment is made.
Article
XIII
DURATION OF PLAN
No Option may be granted under this
Plan after February 25, 2031. Options granted before that date shall remain valid in accordance with their terms.
Article
XIV
EFFECTIVE DATE OF PLAN
Options may be granted under this Plan
upon its adoption by the Board, provided that no Option will be effective unless this Plan is approved by shareholders holding
a majority of BKSC’s outstanding voting stock, voting either in person or by proxy at a duly held shareholder’s meeting
within twelve months of such adoption. The amount of shares to be reserved under this plan will not exceed 150,000.
|
|
BANK
OF SOUTH CAROLINA CORPORATION
256 MEETING STREET
CHARLESTON, SC 29401
|
VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time
on April 12, 2021 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions
to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future
proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on April 12, 2021 for shares held
in a Plan. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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D33087-P49941
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KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS PORTION ONLY
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BANK
OF SOUTH CAROLINA CORPORATION
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For
All
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Withhold
All
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For
All
Except
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To withhold
authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line
below.
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The
Board of Directors recommends a vote FOR ALL on the following proposal:
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1.
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TO ELECT
19 DIRECTORS: To hold office until the next annual meeting.
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☐
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☐
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☐
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01) Susanne K. Boyd
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11) Dr. Linda J. Bradley McKee, CPA
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02) David W. Bunch
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12) Alan I.
Nussbaum, MD
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03) Graham M. Eubank,
Jr.
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13) Karen
J. Phillips
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04) Elizabeth M. Hagood
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14) Edmund
Rhett, Jr., MD
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05) Fleetwood S. Hassell
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15) Malcolm
M. Rhodes, MD
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06) Glen B. Haynes, DVM
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16) Douglas
H. Sass
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07) William L. Hiott,
Jr.
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17) Sheryl
G. Sharry
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08) Richard W. Hutson,
Jr.
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18) Steve
D. Swanson
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09) Charles G. Lane
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19) Eugene
H. Walpole, IV
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10) Hugh C. Lane, Jr.
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The Board of Directors recommends a vote FOR the following proposals:
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For
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Against
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Abstain
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2.
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To approve the 2021 Stock Incentive Plan for Independent Directors.
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☐
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☐
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☐
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3.
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To ratify the appointment of Elliott Davis, LLC as the Company’s independent
registered public accounting firm for the year ending December 31, 2021.
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☐
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☐
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4.
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To transact such other business as may properly come
before the meeting.
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The undersigned hereby acknowledges receipt of the
Company’s 2020 Annual Report on Form 10-K as filed with the Securities and Exchange Commission and the accompanying
Notice of Meeting and Proxy Statement and hereby revokes any Proxy or Proxies heretofore given.
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Please date and sign exactly
as name appears hereon. Executors, Administrators, Trustees, etc., must so indicate when signing. If shares are held jointly,
both owners should sign.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
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The
Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com
and also at www.banksc.com
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E91305-P33906
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BANK
OF SOUTH CAROLINA CORPORATION
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL
MEETING OF SHAREHOLDERS
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KNOW
ALL PERSONS BY THESE PRESENTS THAT I, the undersigned Shareholder of Bank of South Carolina
Corporation (the “Company”) do hereby appoint Glen B. Haynes, DVM, Sheryl G.
Sharry, and Elizabeth M. Hagood, (no officer or employee of the Company or any subsidiary
may be appointed), or any one of them, with full power to act alone, my true and lawful
attorney(s) with full power of substitution, to vote on behalf of the undersigned all
shares of common stock of the Company which the undersigned would be entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at The Bank of South
Carolina, 256 Meeting Street, Charleston, South Carolina on Tuesday, April 13, 2021 at
2:00 p.m., or at any adjournments or postponements thereof, with all the powers the undersigned
would possess if personally present upon the matters stated on the reverse side.
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Each
properly executed Proxy will be voted in accordance with specifications made hereon. If no specification is made, the shares represented
by this Proxy will be voted “FOR ALL” on Proposal 1 and “FOR” Proposals 2 and 3. If any other matters properly
come before the meeting, or if cumulative voting is required, the person named in this proxy will vote.
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Please
date and sign exactly as name appears hereon. Executors, Administrators, Trustees, etc., must so indicate when signing. If shares
are held jointly, both owners should sign.
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CONTINUE
AND SIGN ON THE REVERSE SIDE
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Bank of South Carolina (NASDAQ:BKSC)
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