SCHEDULE
14A
(Rule
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment
No. ___)
Filed by the Registrant
x
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))
x
Definitive
Proxy Statement
¨
Definitive
Additional Materials
¨
Soliciting
Material Pursuant to § 240 14a-12
FIRST
SOUTH BANCORP, INC.
(Name of
Registrant as Specified in Its Charter)
(Name of
Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
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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:
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(LOGO)
[First
South Bancorp, Inc.]
April 24,
2009
Dear
Fellow Stockholder:
You are
cordially invited to attend the Annual Meeting of Stockholders (the “Annual
Meeting”) of First South Bancorp, Inc. (the “Company”) to be held at the main
office of First South Bank (the “Bank”) located at 1311 Carolina Avenue,
Washington, North Carolina on Thursday, May 28, 2009, at 11:00 a.m., Eastern
Time.
We are
furnishing proxy materials to our stockholders on a publicly accessible Internet
website. You may read, print and download our Proxy Statement and our
2008 Annual Report at
http://www.cfpproxy.com/4205
. On
April 14, 2009 and April 24, 2009, we mailed our stockholders notices containing
instructions on how to access these materials and how to vote their
shares. The notices provide instructions on how you can request a
paper copy of these materials by mail, by telephone or by email. If
you requested your materials via email, the email contains voting instructions
and links to the materials on the publicly accessible Internet website listed
above.
You may
vote your shares by regular mail or in person at the Annual
Meeting. Instructions regarding methods of voting are contained in
the notices and on the enclosed Proxy Card.
The proxy
materials describe the formal business to be transacted at the Annual Meeting,
which includes a report on the operations of the Company. Directors
and officers of the Company and the Bank will be present to respond to any
questions that you and other stockholders may have. Also included in
the Internet website materials is our Annual Report on Form 10-K, as filed with
the Securities and Exchange Commission, which contains detailed information
concerning the activities and operating performance of the Company.
The
business to be conducted at the Annual Meeting consists of the election of two
directors and the ratification of the appointment of Turlington and Company,
L.L.P. as our independent registered public accounting firm for the year ending
December 31, 2009. The Board of Directors unanimously recommends a
vote “FOR” the election of the director nominees and “FOR” the ratification of
the appointment of Turlington and Company, L.L.P. as our independent registered
public accounting firm for the year ending December 31, 2009.
On behalf
of the Board of Directors, we urge you to vote now, even if you currently plan
to attend the Annual Meeting. Please sign, date and return the
accompanying Proxy Card as soon as possible. Your vote is important,
regardless of the number of shares you own. This will not prevent you
from voting in person but will assure that your vote is counted if you are
unable to attend the meeting. It will also help ensure that a quorum
is present for the conduct of business at the meeting.
On behalf
of the Board of Directors and all the employees of the Company and the Bank, I
wish to thank you for your continued support.
Sincerely,
/s/
Thomas A. Vann
Thomas
A. Vann
President
and
Chief
Executive Officer
FIRST
SOUTH BANCORP, INC.
1311
Carolina Avenue
Washington,
North Carolina 27889
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be Held on May 28, 2009
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders (the “Annual Meeting”) of
First South Bancorp, Inc. (the “Company”) will be held at the main office of
First South Bank (the “Bank”) located at 1311 Carolina Avenue, Washington, North
Carolina on Thursday, May 28, 2009, at 11:00 a.m., Eastern Time.
The
Annual Meeting is for the purpose of considering and acting upon the following
matters:
1. The
election of two directors to serve three-year terms;
2. The
ratification of Turlington and Company, L.L.P. as the Company’s independent
registered public accounting firm for the fiscal year ending December 31, 2009;
and
such
other matters as may properly come before the Annual Meeting, or any adjournment
thereof. The Board of Directors is not aware of any other business to
come before the Annual Meeting.
Any
action may be taken on any one of the foregoing proposals at the Annual Meeting
on the date specified above or on any date or dates to which, by original or
later adjournment, the Annual Meeting may be adjourned. Stockholders
of record at the close of business on April 6, 2009, are the stockholders
entitled to notice of and to vote at the Annual Meeting and any adjournment
thereof.
You are
requested to fill in and sign the enclosed Proxy Card which is solicited by the
Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the
Annual Meeting in person.
BY ORDER
OF THE BOARD OF DIRECTORS
/s/
William L. Wall
William
L. Wall
Secretary
Washington,
North Carolina
April 24,
2009
IMPORTANT: THE
PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER REQUESTS
FOR PROXIES IN ORDER TO ENSURE A QUORUM. YOU WILL RECEIVE A PROXY
CARD WITH A SELF-ADDRESSED ENVELOPE FOR YOUR CONVENIENCE. NO POSTAGE
WILL BE REQUIRED IF MAILED IN THE UNITED STATES.
OF
FIRST
SOUTH BANCORP, INC.
1311
Carolina Avenue
Washington,
North Carolina 27889
ANNUAL
MEETING OF STOCKHOLDERS
This
Proxy Statement is furnished to stockholders of First South Bancorp, Inc. (the
“Company”) in connection with the solicitation by the Board of Directors of the
Company (the “Board”) of proxies to be used at the Annual Meeting of
Stockholders (the “Annual Meeting”) which will be held at the main office of
First South Bank (the “Bank”) located at 1311 Carolina Avenue, Washington, North
Carolina on Thursday, May 28, 2009, at 11:00 a.m., Eastern Time, and at any
adjournment thereof. The accompanying Notice of Annual Meeting and proxy card
and this Proxy Statement are being released to stockholders on or about April
24, 2009.
VOTING
AND REVOCABILITY OF PROXIES
Stockholders
who execute proxies retain the right to revoke them at any time. Unless so
revoked, the shares represented by properly executed proxies will be voted at
the Annual Meeting and all adjournments thereof. Proxies may be revoked by
written notice to William L. Wall, Secretary of the Company, at the address
shown above, by filing a later-dated proxy prior to a vote being taken on a
particular proposal at the Annual Meeting or by attending the Annual Meeting and
voting in person. The presence of a stockholder at the Annual Meeting will not
in itself revoke such stockholder’s proxy.
Proxies
solicited by the Board of Directors of the Company will be voted in accordance
with the directions given therein.
Where no instructions are indicated,
proxies will be voted FOR the nominees for director set forth in this Proxy
Statement and for proposal 2.
The proxy confers discretionary authority
on the persons named therein to vote with respect to the election of any person
as a director where the nominee is unable to serve or for good cause will not
serve, and matters incident to the conduct of the Annual Meeting. If any other
business is presented at the Annual Meeting, proxies will be voted by those
named therein in accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as votes
cast. Shares held in “street name” which have been designated by brokers on
proxies as not voted will not be counted as votes cast. Proxies marked as
abstentions or as broker non-votes, however, will be treated as shares present
for purposes of determining whether a quorum is present.
VOTING SECURITIES AND SECURITY
OWNERSHIP
The
securities entitled to vote at the Annual Meeting consist of the Company’s
common stock, par value $.01 per share (the “Common Stock”). Stockholders of
record as of the close of business on April 6, 2009 (the “Record Date”) are
entitled to one vote for each share of Common Stock then held. As of April 6,
2009, there were 9,738,096 shares of Common Stock issued and outstanding. The
presence, in person or by proxy, of at least one-third of the total number of
shares of Common Stock outstanding and entitled to vote will be necessary to
constitute a quorum at the Annual Meeting.
As of
April 6, 2009, no stockholder known to management owned more than 5% of the
Company’s Common Stock. As of April 6, 2009, the beneficial ownership
of the Common Stock by each of the Company’s directors, and by directors and
executive officers as a group, was as follows:
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Shares
of Common Stock
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Beneficially
Owned as
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Percent
of
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of April 6, 2009 (1)
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Class (2)
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Directors
:
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Linley
H. Gibbs, Jr.
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158,794
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(3)
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1.63
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%
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Frederick
N. Holscher
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114,915
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(4)
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1.18
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Frederick
H. Howdy
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174,810
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1.80
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Charles
E. Parker, Jr.
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158,480
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(5)
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1.63
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H.D.
Reaves, Jr.
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1,016
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*
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Marshall
T. Singleton
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255,922
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(6)
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2.63
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Thomas
A. Vann
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444,817
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(7)
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4.57
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All
directors and executive officers of the Company as a group (14
persons)
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1,610,277
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(8)
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16.50
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*
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Amount
owned is less than 1% of the Company’s outstanding common
stock.
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(1)
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In
accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has or shares voting or investment power with
respect to such Common Stock. As used herein, “voting power” is
the power to vote or direct the voting of shares and “investment power” is
the power to dispose or direct the disposition of
shares. Except as otherwise noted, ownership is direct, and the
named individuals and group exercise sole voting and investment power over
the shares of the Common Stock.
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(2)
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Based
on a total of 9,738,096 shares of Common Stock outstanding as of April 6,
2009.
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(3)
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Includes
51,750 shares owned by a family
trust.
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(4)
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Includes
6,832 shares owned by Mr. Holscher’s
spouse.
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(5)
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Includes
225 shares owned by Mr. Parker’s
spouse.
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(6)
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Includes
7,512 shares owned by Mr. Singleton’s
spouse.
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(7)
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Includes
184,770 shares owned by Mr. Vann’s
spouse.
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(8)
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Includes
21,125 shares executive officers as a group have the right to acquire upon
the exercise of options exercisable within 60 days of April 6,
2009.
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PROPOSAL I — ELECTION OF
DIRECTORS
General
The Board
currently consists of seven members. The Company’s Articles of Incorporation
require that directors be divided into three classes, as nearly equal in number
as possible, with approximately one-third of the directors elected each
year. At the Annual Meeting, two directors will be elected for terms
expiring at the 2012 Annual Meeting. The Board has nominated
Frederick N. Holscher
and
Frederick H. Howdy
to
serve as directors for a three-year period. Both nominees are
currently members of the Board. Under Virginia law and the Company’s
Bylaws, directors are elected by a plurality of the votes present in person or
by proxy at a meeting at which a quorum is present. It is intended
that the persons named in the proxies solicited by the Board will vote for the
election of the named nominees. If any nominee is unable to serve,
the shares represented by all valid proxies will be voted for the election of
such substitute as the Board may recommend or the size of the Board may be
reduced to eliminate the vacancy. At this time, the Board knows of no
reason why any nominee might be unavailable to serve.
The
following table sets forth, for each nominee for director and continuing
director of the Company, his age, the year he first became a director of the
Company and the expiration of his term as a director. Each director
of the Company also is a member of the Board of Directors of the Bank. All of
the directors are independent under the current listing standards of the NASDAQ
Stock Market, except for Mr. Vann because he is an employee of the Company
and the Bank. In determining the independence of the directors, the
Board considered transactions, relationships or arrangements between the
Company, the Bank and its directors that are not required to be disclosed in
this proxy statement under the heading
“Transactions with Related
Persons.”
Name
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Age at
December 31,
2008
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Year first
Elected
as Director of
the Company
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Current Term
to Expire
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Position(s)
Held
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BOARD
NOMINEES FOR TERMS TO EXPIRE IN 2012
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Frederick
N. Holscher
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60
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1996
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2009
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Director
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Frederick
H. Howdy
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77
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1996
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2009
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Director
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DIRECTORS
CONTINUING IN OFFICE
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Linley
H. Gibbs, Jr.
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77
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1996
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2010
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Director
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Thomas
A. Vann
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59
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1996
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2010
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Director,
President and
Chief
Executive Officer
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Charles
E. Parker, Jr.
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72
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1996
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2011
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Director
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Marshall
T. Singleton
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69
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1996
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2011
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Director
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H.D.
Reaves, Jr.
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71
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1996
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2011
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Director
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Set forth
below is information concerning the Company’s directors. Unless
otherwise stated, all directors have held the positions indicated for at least
the past five years.
Frederick N. Holscher
is a
partner with the Washington, North Carolina law firm of Rodman, Holscher,
Francisco & Peck, P.A. and has been with the firm since 1973. He has been a
director of the Bank since 1985.
Frederick H. Howdy
is
President of Drs. Freshwater and Howdy P.A., a dental health care corporation of
North Carolina. Prior to that, he was a dentist in Washington, North
Carolina for 36 years. He has been a director of the Bank since
1975.
Linley H. Gibbs, Jr.
has been
retired since 1992. Prior to his retirement, Mr. Gibbs served as a
general manager with Hamilton Beach, an appliance manufacturing company in
Washington, North Carolina. He has been a director of the Bank since
1985.
Thomas A. Vann
serves as
President and Chief Executive Officer of the Company and the Bank. He
joined the Bank in 1972 as Assistant Manager. Mr. Vann was promoted
to a number of positions prior to becoming President of the Bank in 1977 and
Chief Executive Officer in 2000. He has been a director of the Bank since
1979.
Charles E. Parker, Jr.
is
Senior Vice President of the Robinson and Stith Insurance Agency in New Bern,
North Carolina. He joined the agency in 1989. He has been a director
of the Bank since 1971.
Marshall T. Singleton
has been
a co-owner of B.E. Singleton & Sons since 1960, a highway construction firm
in Washington, North Carolina. He has been a director of the Bank since
1990.
H.D. Reaves, Jr.
was employed
with Home Federal Savings and Loan Association, Fayetteville, North Carolina,
from 1962 to November 1999 and served as Home Federal’s President and Chief
Executive Officer from 1992 to 1999. He has been a director of the Bank since
1999.
The
Board of Directors recommends that stockholders vote “FOR” the nominees for
director of the Company for the terms indicated.
Executive
Officers Who Are Not Directors
The
following sets forth information with respect to executive officers who do not
serve on the Board of Directors.
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Age
at
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December
31,
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Name
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2008
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Title (1)
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William
L. Wall
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62
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Executive
Vice President, Chief Financial Officer and
Secretary
of the Company and the Bank
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J.
Randy Woodson
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47
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Executive
Vice President and Chief Operating Officer
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Paul
S. Jaber
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52
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Executive
Vice President of Mortgage Lending
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John
F. Nicholson, Jr.
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57
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Executive
Vice President of Credit Administration and
Chief
Credit Officer
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Mary
R. Boyd
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58
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Executive
Vice President of Loan Servicing
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Sherry
L. Correll
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54
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Executive
Vice President of Bank Operations
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Kristie
W. Hawkins
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43
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Treasurer
and Controller of the Company and the
Bank
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(1)
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All
positions are with the Bank unless indicated
otherwise.
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William L. Wall
joined the
Bank in 1993 and currently serves as Executive Vice President, Chief Financial
Officer and Secretary of the Company and the Bank. Prior to joining
the Bank, Mr. Wall served as Senior Vice President, Treasurer and Chief
Financial Officer of Pioneer Savings Bank in Rocky Mount, North
Carolina.
J. Randy Woodson
joined the
Bank in 2008 and currently serves as Executive Vice President and Chief
Operating Officer. Prior to joining the Bank, Mr. Woodson was
employed with Crestar Bank from 1984 to 1998 in various commercial loan
capacities. Mr. Woodson joined Valley Bank of Roanoke, Virginia in
1998 as Senior Loan Officer and served as Chief Lending Officer from 2000 to
2005 and most recently served with Valley Bank as Executive Vice President and
Chief Operating Officer from 2005 to 2007.
Paul S. Jaber
joined the Bank
in 2002 and currently serves as Executive Vice President of Mortgage
Operations. Prior to joining the Bank, Mr. Jaber served as Senior
Vice President of Mortgage Lending of Triangle Bank in Raleigh, North Carolina
from 1999 to 2001, and as Senior Vice President of Mortgage Lending of United
Federal Savings Bank of Rocky Mount, North Carolina from 1979 to
1999.
John F. Nicholson, Jr.,
joined
the Bank in 2006 as Senior Vice President and Credit Risk Manager and became
Executive Vice President and Chief Credit Officer in 2008. Prior to
joining the Bank, Mr. Nicholson served as a Senior Business Intermediary from
2001 to 2006 with C. J. Harris & Company. Prior to that, Mr. Nicholson had
twenty three years banking experience in various credit administration
capacities with Wachovia Bank and United Carolina Bank. Most recently he served
as Senior Vice President and Senior Credit Administrator with United Carolina
Bank in Raleigh, North Carolina.
Mary R. Boyd
joined the Bank in 1983 and currently serves as Executive Vice
President of Loan Servicing.
Sherry L. Correll
joined the
Bank in 1985 and currently serves as Executive Vice President of Bank
Operations. Prior to 2008, she served as Executive Vice President of
Deposit Operations.
Kristie W. Hawkins
joined the
Bank in 1982. Prior to her current position of Controller and
Treasurer, she served as the Bank’s Assistant Treasurer and Assistant Secretary
as well as accounting department supervisor.
Committees
of the Board of Directors
The Board
meets monthly and may have additional special meetings. During the
year ended December 31, 2008, the Board met 12 times. No director
attended fewer than 75% in the aggregate of the total number of Company Board of
Directors meetings held during the year ended December 31, 2008 and the total
number of meetings held by committees on which he served during such fiscal
year.
The
Company has a separately designated Audit Committee established in accordance
with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee
consists of Directors Parker, Reaves and Singleton, who currently serves as
Chairperson. The members of the Audit Committee are “independent,” as
“independent” is defined in Rule 4200(a)(15) of the National Association of
Securities Dealers (“NASD”) listing standards. The function of the Audit
Committee is to examine and approve the audit report prepared by the independent
auditors of the Company, to select the independent auditors to be engaged by the
Company and to review and approve audit policies. The Company’s Board of
Directors has determined that one member of the Audit Committee, H.D. Reaves,
Jr., qualifies as an “audit committee financial expert” as defined in Item
407(d)(5)(ii) of Regulation S-K promulgated by the Securities and Exchange
Commission. Director Reaves is “independent,” as such term is defined in Rule
4200(a)(15) of the NASD listing standards. The Board has adopted a written
charter for the Audit Committee. A copy of the Audit Committee Charter is
available on the Company’s Internet website located at
www.firstsouthnc.com
. The
Audit Committee met 5 times during the year ended December 31,
2008.
The
Board’s Executive Committee consists of Directors Gibbs, Howdy, Vann and
Holscher, who currently serves as Chairperson. The Executive
Committee is authorized, between meetings of the Board, to perform all duties
and exercise all authority of the Board, except those duties and authorities
delegated to other committees of the Board, and its primary function is to
consider matters that require immediate attention. The Executive Committee met
11 times during the year ended December 31, 2008.
The Board
has a Nominating Committee currently consisting of Directors Parker, Singleton
and Gibbs, who currently serves as Chairperson. The Nominating Committee
nominates persons for election as directors at the Company’s Annual Meeting. The
members of the Nominating Committee are “independent directors” as defined in
NASDAQ listing standards. The Board has adopted a Charter for the Nominating
Committee. The Nominating Committee Charter is available on the
Company’s Internet website located at
www.firstsouthnc.com
. The
Nominating Committee met once during the year ended December 31,
2008.
In its
deliberations, the Nominating Committee considers the candidate’s personal and
professional integrity, knowledge of the banking business and involvement in
community, business and civic affairs, and also considers whether the candidate
would provide for adequate representation of the Bank’s market area. Any nominee
for director made by the Nominating Committee must be highly qualified with
regard to some or all the attributes listed in the preceding sentence. In
searching for qualified director candidates to fill vacancies, the Nominating
Committee solicits the Company’s then current directors for the names of
potential qualified candidates. Moreover, the Nominating Committee may ask the
Company’s directors to pursue their own business contacts for the names of
potentially qualified candidates. The Nominating Committee would then consider
the potential pool of director candidates, select the top candidate based on the
candidates’ qualifications and the Board’s needs, and conduct a thorough
investigation of the proposed candidate’s background to ensure there is no past
history that would cause the candidate not to be qualified to serve as a
director of the Company. The Nominating Committee will consider director
candidates recommended by stockholders. Any stockholder wishing to recommend a
candidate for consideration by the Nominating Committee as a possible director
nominee for election at an upcoming annual meeting of stockholders must provide
written notice to the Nominating Committee of such stockholder’s recommendation
of a director nominee no later than December 31 of the year preceding the annual
meeting of stockholders. Notice should be provided to: Corporate Secretary,
First South Bancorp, Inc., 1311 Carolina Avenue, Washington, North Carolina
27889. In the event a stockholder has submitted a proposed nominee, the
Nominating Committee would consider the proposed nominee, along with any other
proposed nominees recommended by individual directors, in the same manner in
which the Nominating Committee would evaluate nominees for director recommended
by directors.
The Board
has a Compensation Committee currently consisting of Directors Gibbs, Holscher
and Howdy. The Compensation Committee develops the broad outline of the
compensation program and monitors the success of the program in achieving the
objectives of the Company’s compensation philosophy. The Compensation Committee
is also responsible for the administration of all compensation programs and
policies, including the administration of both cash and stock-based incentive
programs.
The
Compensation Committee operates under a written charter that establishes the
Compensation Committee’s responsibilities. The Compensation Committee and the
Board of Directors review the Charter periodically to ensure that the scope of
the Charter is consistent with the Compensation Committee’s expected role. Under
the Charter, the Compensation Committee is charged with general responsibility
for the oversight and administration of our compensation program. The Charter
vests in the Compensation Committee principal responsibility for determining the
compensation of the Chief Executive Officer based on the Compensation
Committee’s evaluation of his performance. The Charter also authorizes the
Compensation Committee to engage consultants and other professionals without
management approval to the extent deemed necessary to discharge its
responsibilities. The Compensation Committee Charter is available on the
Company’s Internet website located at
www.firstsouthnc.com
. The
Compensation Committee met three times during the year ended December 31, 2008,
including one executive session attended by Committee members only.
Board
Policies
Regarding Communications with the Board of Directors and Attendance at Annual
Meetings
The Board
maintains a process for stockholders to communicate with the Board. Stockholders
wishing to communicate with the Board of Directors should send any communication
to William L. Wall, Secretary, First South Bancorp, Inc., 1311 Carolina Avenue,
Washington, North Carolina 27889. Any such communication must state the number
of shares beneficially owned by the stockholder making the communication. Mr.
Wall will forward such communication to the full Board or to any individual
director or directors to whom the communication is directed unless the
communication is unduly hostile, threatening, illegal or similarly
inappropriate, in which case he has the authority to discard the communication
or take other appropriate action regarding the communication.
The
Company’s policy is to strongly encourage Board member attendance at annual
meetings of stockholders. All seven of the Company’s directors
attended the Company’s 2008 annual meeting of stockholders.
COMPENSATION DISCUSSION AND ANALYSIS
This
Compensation Discussion and Analysis explains the Company’s compensation
philosophy, policies and practices with respect to the chief executive officer,
chief financial officer, and the other three most highly-compensated executive
officers, which are collectively referred to as the “named executive
officers.”
The
Objectives of the Executive Compensation Program
The
Company’s compensation philosophy for named executive officers is founded upon
the premise that its success depends, in a large part on the dedication,
commitment and performance of the individuals placed in key management positions
to drive the overall performance of the Company. In order to attract
and retain executives with the ability and the experience necessary to lead and
deliver strong performance to its shareholders, the Company strives to provide a
total compensation package that is competitive with its peers.
Elements
Used to Implement Our Compensation
Objectives
The
following compensation elements are combined for each named executive officer in
a manner to optimize the executive’s contribution to the Company:
• Base
Salary
• Short-term
Bonus Plan
• Long-term
Equity Incentive Plan
• Supplemental
Income Agreements
• Employment
and Change-in-Control Protective Agreements
Base Salary.
The
Base Salary program is designed to provide a competitive base salary to
management and employees. The salary levels of all employees,
including executive officers, are set to reflect the duties and levels of
responsibilities inherent in the position and the competitive conditions in the
banking business in our market area. Comparative salaries paid by peer financial
institutions are considered in establishing the salary for a given position. The
Compensation Committee utilizes surveys prepared by trade groups and other
independent sources of salaries paid to executive officers of other bank holding
companies, non-diversified banks and other financial institutions similar in
size, market capitalization and other characteristics. Base salaries for
executive officers are reviewed annually by the Compensation Committee, taking
into account the competitive level of pay as reflected in the surveys consulted.
See “
–
Peer Group
Analysis
”. In setting base salaries, the Compensation
Committee also considers a number of factors relating to the particular
executives, including individual performance, job responsibilities, level of
experience, ability and knowledge of the position and complexity of the
Company’s operations. These factors are considered subjectively and none of the
factors are accorded a specific weight. See “
Executive Compensation – Summary
Compensation Table
” for salaries paid to named executive officers in
2008.
Short-Term Bonus
Plan.
The short-term bonus program is a cash-based plan that
is designed to reward the attainment of annual company-wide financial objectives
at specified levels and individual performance relative to the specific tasks an
officer is expected to accomplish during the year. The Compensation Committee,
in connection with its annual performance review of the named executive
officers, considers making discretionary bonus awards under this program. See
“
Executive Compensation –
Summary Compensation Table
” for the bonuses paid to named executive
officers in 2008.
Long-Term Equity Incentive
Compensation Program.
The long-term incentive compensation
plan is based on the granting of stock options to the named executive officers.
The Compensation Committee believes that stock options help retain high level
executives and ties the compensation of those executives to the creation of
long-term value for our stockholders. By increasing the equity holdings of the
management team, they are provided with a continuing stake in the Company’s
long-term success. The Compensation Committee believes that stock options are an
important element of the overall compensation philosophy, as they provide named
executive officers with incentives linked to the performance of our common
stock. The amount and terms of our stock option grants are based on a number of
factors including awards made to those holding comparable positions in our peer
group, tax and accounting treatment of stock options and the performance of the
executive receiving a stock option grant. See “
Executive Compensation – Grants of
Plan Based Awards
” for a list of the stock option grants made to our
named executive officers in 2008.
Supplemental
Income Agreements.
The Company has entered into supplemental
income agreements with the chief executive officer and the chief financial
officer to provide these executives with supplemental retirement
benefits. These arrangements are typical amongst our peers and are
utilized as a retention tool. See “
Executive Compensation—Pension
Benefits
” for a detailed description of the supplemental income
agreements.
Employment and Change-in-Control
Protective Agreements.
The Compensation Committee recognizes
that an important consideration in its ability to attract and retain key
personnel is the ability to minimize the impact on management of the possible
disruption associated with our analysis of strategic opportunities. Accordingly,
the Compensation Committee believes that it is in the Company’s best interests
to provide key personnel with reasonable financial arrangements in the event of
termination of employment following a change in control or involuntary
termination of employment for reasons other than cause. Therefore, we
currently maintain an employment agreement with the chief executive officer and
change-in-control protective agreements with the other named executive officers,
except for Mr. Nicholson. See “
Executive Compensation—Potential
Post-Termination and Change in Control Benefits
” for a discussion of
these benefits and estimated payments under the agreements.
Role
of Compensation Committee
The
Compensation Committee is responsible for establishing and administering
policies governing the compensation for named executive officers. The
Compensation Committee operates under a written charter that establishes the
Committee’s responsibilities. The Committee and the Board of Directors review
the charter annually to ensure the scope of the charter is consistent with the
Committee’s expected role.
The
Compensation Committee meets outside the presence of all executive officers,
including the named executive officers, to consider appropriate compensation for
the chief executive officer. The Compensation Committee analyzes the chief
executive officer’s performance annually and determines his base salary, annual
performance bonus payments and any stock option grants based on its assessment
of his performance. The Committee also takes into consideration the
recommendations of the chief executive officer when determining the payments to
be made to our other named executive officers under our discretionary bonus plan
and stock option plan.
During
2008, the Compensation Committee met three times, including one executive
session attended by Committee members only. The members of the
Compensation Committee are: Linley H. Gibbs, Jr., Frederick N. Holscher and
Frederick H. Howdy.
Role
of Management
The chief
executive officer reviews each other named executive officer's performance
annually, and based upon guidelines established by the Compensation Committee,
determines the appropriate base salary for each named executive officer. The
chief executive officer also makes recommendations to the Compensation Committee
with respect to annual discretionary bonus payments and the grants of
stock-based compensation awards for each named executive officer, excluding
himself.
Peer
Group Analysis
The
Compensation Committee benchmarks base salary and target incentive levels and
practices, as well as the Company’s performance results primarily in relation to
a peer group analysis. As a participant in the annual compensation
survey conducted by the North Carolina Bankers Association, the Committee
utilizes the survey data gathered by the North Carolina Bankers Association to
establish our peer group. The institutions that participate in the
North Carolina Bankers Association survey are the same institutions that we
compete with for executive talent. The companies in our peer group
are reviewed as needed in order to add or remove companies to ensure that our
peer group comparisons are meaningful.
For each
named executive officer, we consider the relevance of the peer group survey
data, as well as:
|
•
|
The
business need for the executive officer's
skills;
|
|
•
|
The
contributions that the executive officer has made or will make to the
Company’s success;
|
|
•
|
The
transferability of the executive officer's managerial skills to other
potential employers; and
|
|
•
|
The
relevance of the executive officer's experience to other potential
employers.
|
Tax
and Accounting Considerations
In
consultation with the Company’s tax and accounting advisors, the Compensation
Committee evaluates the tax and accounting treatment of each compensation
program at the time of adoption, and on an annual basis to ensure a complete
understanding of the financial impact of each program. The analysis includes a
detailed review of recently adopted and pending changes in tax and accounting
requirements. As part of the review, the Committee considers modifications
and/or alternatives to existing programs to take advantage of favorable changes
in the tax or accounting environment or to avoid adverse
consequences.
Retirement
Benefits; Employee Welfare Benefits
The Bank
has a defined contribution 401(k) plan for eligible employees. The plan is
intended to provide employees increased retirement security on a tax advantaged
basis. The Bank matches 100% of employee contributions, with a maximum matching
contribution of up to 5% of the employee’s salary. The Bank’s contribution vests
over a 6-year graded vesting schedule. In addition to the 401(k) Plan, employees
are provided with coverage under medical, life insurance and disability plans on
terms consistent with industry practice. Other coverage such as dental, cancer,
and intensive care insurance is available to employees on a voluntary basis.
Employees are provided with access to a flexible spending plan to pay their
share of the cost of such coverage on a pre-tax basis.
Perquisites
The named
executive officers are provided perquisites that further their ability to
promote the Company’s business interests in our markets and to reflect
competitive practices for similarly-situated officers employed by our peers.
These perquisites are reviewed periodically and adjustments to them are made as
necessary.
Stock
Compensation Grant and Award Practices
The
Compensation Committee considers whether to make stock option grants and/or
award other forms of equity on an annual basis, typically in conjunction with
the annual performance reviews of the named executive officers. However, grants
or awards may be made at other times during the year based on specific
circumstances such as a new hire, a specific contractual commitment or a change
in position or responsibility. The Committee considers the recommendations of
our chief executive officer and our other named executive officers with respect
to awards contemplated for their subordinates. The Compensation Committee
recommends stock option grants to the Board of Directors. The Board then
approves the Committee’s recommendations and the option grants are normally
effective as of the specific day of the month on which the grants were approved
by the Board.
As a
general matter, the Compensation Committee’s process is independent of any
consideration of the timing of the release of material nonpublic information,
including with respect to the determination of grant dates or the stock option
exercise prices. Similarly, the Company has never timed the release of material
nonpublic information with the purpose or intent to affect the value of
executive compensation. In general, the release of such information reflects
long-established timetables for the disclosure of material nonpublic information
such as earnings reports or, with respect to other events reportable under
federal securities laws, the applicable requirements of such laws with respect
to timing of disclosure.
The
exercise price for stock option grants is based solely by reference to the
applicable provisions of our stock based compensation plans. Under the current
equity incentive plan, the exercise price of a stock option is equal
to the closing sales price of the Company’s common stock on the NASDAQ Global
Select Market as of the effective date of the stock option
grant.
Stock
Ownership Requirements
The
Company
has
not adopted formal stock ownership requirements for the named executive officers
and members of the Board of Directors. As a practical matter, the named
executive officers and directors hold significant interests in the Company’s
common stock, which they have accumulated through individual purchases and
participation in stock compensation programs. See the “
Voting Securities and Security
Ownership
” section in this Proxy Statement.
Compensation
for the Named Executive Officers in 2008
Chief Executive Officer
Compensation.
In determining Mr. Vann’s compensation, the
Compensation Committee conducted a performance appraisal that reviewed Mr.
Vann’s financial, strategic and operational achievements. In its
review, the Committee considered Mr. Vann’s personal leadership and
accomplishments, in connection with the Company’s overall performance and
success in meeting strategic objectives. These factors were
considered in conjunction with the Company’s financial results in relation to
the established Business Plan, and achieving certain annual performance goals,
including, but not limited to satisfactory results of regulatory examinations,
Sarbanes-Oxley internal control compliance and independent audits.
The
Compensation Committee’s assessment of Mr. Vann’s overall performance during
2008 concluded that he achieved all defined strategic and operational
objectives. The Committee believes Mr. Vann’s compensation is
consistent with its objective to reward, align, motivate and challenge Mr. Vann
to continue to lead the Company successfully; however, Mr. Vann voluntarily
declined to accept a 2008 bonus, and requested that his 2009 base salary remain
the same as his 2008 salary base. See “
Executive Compensation—Employment
Agreements
” for Mr. Vann’s current base salary.
Compensation for Named Executive
Officers.
In determining compensation for Messrs. Wall,
Woodson, Jaber and Nicholson, the Compensation Committee reviewed the 2008
performance appraisals presented by the chief executive officer and the salary
and bonus recommendations. In December 2008, the Compensation
Committee accepted the recommendations as presented. Mr. Nicholson’s 2009 base
salary was increased by 3.92% to $132,500, effective January 1, 2009. The 2009
base salaries for Messrs. Wall, Woodson, and Jaber will remain the same as their
2008 base salaries. The Board of Directors awarded Messrs. Wall, Woodson, Jaber
and Nicholson a 2008 cash bonus of $12,000, $25,000, $8,500 and $18,000,
respectively. The Board of Directors also renewed each of the change in control
protective agreements for Messrs. Wall, Woodson, and Jaber for an additional
year. In terms of equity incentive compensation, the Compensation Committee
rewarded Messrs. Woodson and Nicholson for achieving certain job-related goals
by granting stock options to each of these executives. See
“Executive Compensation—Grants of
Plan-Based Awards”
for information on these grants. The
Compensation Committee believes that the compensation for other named executive
officers is consistent with its compensation objectives.
Summary
Compensation Table
The
following information is furnished for all individuals serving as the principal
executive officer or principal financial officer of the Company, the other most
highly compensated executive officers of the Company who received total
compensation of $100,000 or more during the year ended December 31,
2008.
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($)
|
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings(1)
($)
|
|
|
All
Other
Compensation
(2)(3)
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
A. Vann
|
|
2008
|
|
$
|
465,000
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
116,089
|
|
|
$
|
52,093
|
|
|
$
|
633,182
|
|
President
and Chief Executive Officer
|
|
2007
|
|
|
465,000
|
|
|
|
290,000
|
|
|
|
–
|
|
|
|
106,729
|
|
|
|
52,081
|
|
|
|
913,810
|
|
of
the Company and the Bank
|
|
2006
|
|
|
415,000
|
|
|
|
260,000
|
|
|
|
–
|
|
|
|
90,777
|
|
|
|
48,603
|
|
|
|
814,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William
L. Wall
|
|
2008
|
|
|
135,000
|
|
|
|
12,000
|
|
|
|
6,859
|
(4)
|
|
|
10,051
|
|
|
|
7,926
|
|
|
|
171,836
|
|
Executive
Vice President-Chief
|
|
2007
|
|
|
125,000
|
|
|
|
22,000
|
|
|
|
3,483
|
|
|
|
9,307
|
|
|
|
7,926
|
|
|
|
167,716
|
|
Financial
Officer and Secretary of the
|
|
2006
|
|
|
118,000
|
|
|
|
20,000
|
|
|
|
1,742
|
|
|
|
8,618
|
|
|
|
7,476
|
|
|
|
155,836
|
|
Company
and the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Randy Woodson
|
|
2008
|
|
|
175,000
|
|
|
|
25,000
|
|
|
|
4,864
|
(5)
|
|
|
–
|
|
|
|
6,071
|
|
|
|
210,935
|
|
Executive
Vice President-Chief
|
|
2007
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Operating
Officer of the Bank
|
|
2006
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
S. Jaber
|
|
2008
|
|
|
137,000
|
|
|
|
8,500
|
|
|
|
512
|
(6)
|
|
|
–
|
|
|
|
4,577
|
|
|
|
150,589
|
|
Executive
Vice President-Mortgage
|
|
2007
|
|
|
132,000
|
|
|
|
12,500
|
|
|
|
1,735
|
|
|
|
–
|
|
|
|
7,809
|
|
|
|
154,044
|
|
Operations
of the Bank
|
|
2006
|
|
|
127,000
|
|
|
|
15,000
|
|
|
|
1,735
|
|
|
|
–
|
|
|
|
6,124
|
|
|
|
149,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
F. Nicholson, Jr.
|
|
2008
|
|
|
127,500
|
|
|
|
18,000
|
|
|
|
2,343
|
(7)
|
|
|
–
|
|
|
|
6,367
|
|
|
|
154,210
|
|
Executive
Vice President – Credit
|
|
2007
|
|
|
93,500
|
|
|
|
2,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
5,314
|
|
|
|
100,814
|
|
Administration
and Chief Credit
|
|
2006
|
|
|
38,333
|
|
|
|
750
|
|
|
|
–
|
|
|
|
–
|
|
|
|
819
|
|
|
|
39,902
|
|
Officer
of the Bank
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry
W. Mallard (9)
|
|
2008
|
|
|
138,831
|
|
|
|
–
|
|
|
|
6,261
|
(8)
|
|
|
–
|
|
|
|
7,374
|
|
|
|
152,466
|
|
Executive
Vice President-Chief
|
|
2007
|
|
|
183,750
|
|
|
|
27,500
|
|
|
|
23,227
|
|
|
|
–
|
|
|
|
11,170
|
|
|
|
245,647
|
|
Operating
Officer of the Bank
|
|
2006
|
|
|
156,969
|
|
|
|
24,000
|
|
|
|
29,327
|
|
|
|
–
|
|
|
|
9,660
|
|
|
|
219,956
|
|
(1)
|
Represents
the aggregate change in the present value of the accumulated benefits
under the Bank’s deferred compensation arrangements. See “
Executive Compensation –
Pension Benefits
” and Note 7 to the Notes to the Consolidated
Financial Statements contained in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2008, for a discussion of the deferred
compensation arrangements.
|
(2)
|
Executive
officers of the Company and the Bank receive indirect compensation in the
form of certain perquisites and other personal benefits. The
amount of such benefits received by any named executive officer in fiscal
2008 did not exceed $10,000.
|
(3)
|
For
all the named executive officers, except Mr. Vann, the amount shown
consists of matching contributions under the Bank’s 401(k) Plan and life
insurance premiums. For Mr. Vann, the amount shown for 2008
includes $9,717 in matching contributions under the Bank’s 401(k) Plan,
$41,800 in Board of Directors and committee fees and $576 in life
insurance premiums.
|
(4)
|
Reflects
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) in 2008, based upon a fair value of $3.07 and
$6.97 for options granted in 2007 and 2006, respectively, using the
Black-Scholes option pricing model. See Note 8 to Consolidated
Financial Statements contained in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2008 for a discussion
of the option grants and
assumptions.
|
(5)
|
Reflects
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) in 2008, based upon a fair value of $2.60 and
$2.52, respectively, for options granted in 2008 using the Black-Scholes
option pricing model. See Note 8 to Consolidated Financial
Statements contained in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2008 for a discussion of the option
grants and assumptions.
|
(6)
|
Reflects
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) in 2008, based upon a fair value of $3.07 for
options granted in 2007 using the Black-Scholes option pricing model. See
Note 8 to Consolidated Financial Statements contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008
for a discussion of the option grants and
assumptions.
|
(7)
|
Reflects
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) in 2008, based upon a fair value of $2.01 for
options granted in 2008 using the Black-Scholes option pricing
model. See Note 8 to Consolidated Financial Statements
contained in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2008 for a discussion of the option grants and
assumptions.
|
(8)
|
Reflects
the dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123(R) in 2008, based upon a fair value of $4.52 and
$7.34, respectively, for options granted in 2006 using the Black-Scholes
option pricing model. See Note 8 to Consolidated Financial Statements
contained in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007 for a discussion of the option grants and
assumptions.
|
(9)
|
Mr.
Mallard resigned on September 4, 2008. Compensation table reflects salary
from January 1, 2008 through September 4,
2008.
|
Grants
of Plan-Based Awards
The
following table provides information concerning all award grants made to the
Company’s named executive officers in the 2008 fiscal year.
Name
|
|
Grant Date
|
|
All Other
Option Awards:
Number
of Securities
Underlying
Options (#)
|
|
|
Exercise or
Base Price of
Option
Awards
($/Share)
|
|
|
Grant Date
Fair Value
of Stock
and Option
Awards (3)
|
|
J.
Randall Woodson
|
|
1/24/08
|
|
|
7,500
|
(1)
|
|
$
|
21.41
|
|
|
$
|
18,900
|
|
J.
Randall Woodson
|
|
9/30/08
|
|
|
5,000
|
(2)
|
|
|
17.27
|
|
|
|
13,013
|
|
John
F. Nicholson, Jr.
|
|
5/31/08
|
|
|
6,000
|
(2)
|
|
|
19.26
|
|
|
|
12,050
|
|
(1)
|
The
options vest at the rate of 20% on each of the first five anniversaries
following the date of grant. The options are forfeited in the
event employment is terminated for cause or if an optionee resigns from
employment and within 12 months thereafter becomes an employee,
consultant, director or 10% or greater stockholder of a company that
offers competing products within 50 miles of where any Company, Bank or
affiliate is doing business. Each option has a 10-year
term.
|
(2)
|
The
options vest at the rate of 33 1/3% on each of the first three
anniversaries following the date of grant. The options are
forfeited in the event employment is terminated for cause or if an
optionee resigns from employment and within 12 months thereafter becomes
an employee, consultant, director or 10% or greater stockholder of a
company that offers competing products within 50 miles of where any
Company, Bank or affiliate is doing business. Each option has a
10-year term.
|
(3)
|
The
grant date fair value of each option award in the table is computed in
accordance with FAS 123R. The fair value of each option
granted to Messrs. Woodson and Nicholson during 2008 was $2.52,
$2.60 and $2.01, respectively, using the Black-Scholes option pricing
model. See Note 8 of “Notes to Consolidated Financial
Statements” contained in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2008/
|
Employment
Agreement
. The Company and the Bank maintain an employment
agreement with Thomas A. Vann, pursuant to which Mr. Vann serves as President of
the Bank and President of the Company. The employment agreement provides for a
term of thirty-six months. On each anniversary date of the employment agreement,
the term of Mr. Vann’s employment is automatically extended for an additional
one-year period beyond the then effective expiration date, unless the Company
and the Bank or Mr. Vann gives notice not later than 90 days prior to the
anniversary date of an intention that the employment agreement not be extended
beyond its then current term. The current annual base salary under
Mr. Vann’s employment agreement is $465,000. The employment agreement provides
that Mr. Vann’s salary is reviewed at least annually. In addition to base
salary, the employment agreement provides for among other things the inclusion
in any discretionary bonus plans, retirement and medical plans,
customary fringe benefits, vacation and sick leave. The employment
agreement also provides Mr. Vann with certain benefits and payments upon
termination of employment. See “—
Potential Post-Termination and
Change in Control Benefits
—
Employment
Agreement
.”
The
employment agreement further provides that to the maximum extent permitted under
applicable law, during the term of the employment agreement and for a period of
six years thereafter, the Company shall indemnify Mr. Vann against and hold him
harmless from any costs, liabilities, losses and exposures to the fullest extent
and on the most favorable terms and conditions that similar indemnification is
offered to any director or officer of the Company or any affiliate thereof. In
addition, during the term of the employment agreement and for a period of six
years thereafter, the Company shall cause Mr. Vann to be covered by and named as
an insured under any policy or contract of insurance obtained by either the
Company or the Bank to insure directors and officers against personal liability
for acts or omissions in connection with service as an officer or director of
the Company or any of its affiliates or service in other capacities at its
request. In the event that Mr. Vann prevails over the Company and the Bank, or
obtains a written settlement, in a legal dispute as to the employment agreement,
he will be reimbursed for his legal and other expenses related to the
dispute.
Change-in-Control Protective
Agreements.
The Company and the Bank currently maintain
change-in-control protective agreements with William L. Wall, J. Randall Woodson
and Paul S. Jaber, (individually, the “executive” and collectively, the
“executives”). The protective agreements for Messrs. Wall, Woodson and
Jaber terminate upon the earlier of (a) 12 months from the effective date of the
agreement, or (b) the date on which the executive terminates employment with the
Bank, provided that the rights under the protective agreements will continue
following termination of employment if the applicable protective agreement was
in effect at the date of the change in control. On each anniversary date of the
effective date of the protective agreement, the term of the protective agreement
may be extended for an additional one-year period beyond the then effective
expiration date, upon a determination by the Board of Directors that the
performance of the executive has met the required performance standards and that
such protective agreement should be extended. The protective agreements provide
Messrs. Wall, Woodson and Jaber with certain benefits and payments upon
termination of employment in connection with a “change in control” (as defined
in the agreements). See “—
Potential Post-Termination and
Change in Control Benefits – Change in Control Protective
Agreements
.”
Outstanding
Equity Awards at Fiscal Year-End
The
following table provides information concerning unexercised options and stock
awards that have not vested for each named executive officer outstanding as of
December 31, 2008.
Option
Awards
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
William
L. Wall
|
|
|
1,000
|
|
|
|
–
|
|
|
$
|
32.265
|
|
7/31/16
|
|
|
|
1,000
|
|
|
|
4,000
|
(1)
|
|
|
22.835
|
|
12/31/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Randall Woodson
|
|
|
–
|
|
|
|
7,500
|
(2)
|
|
|
21.41
|
|
1/24/18
|
|
|
|
–
|
|
|
|
5,000
|
(3)
|
|
|
17.27
|
|
9/30/18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul
S. Jaber
|
|
|
9,000
|
|
|
|
–
|
|
|
|
16.311
|
|
7/8/12
|
|
|
|
750
|
|
|
|
–
|
|
|
|
23.657
|
|
12/31/15
|
|
|
|
250
|
|
|
|
250
|
(4)
|
|
|
22.835
|
|
12/31/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
F. Nicholson, Jr.
|
|
|
–
|
|
|
|
6,000
|
(5)
|
|
|
19.26
|
|
5/31/18
|
(1)
|
2,000
options each vest on December 31, 2009 and 2010,
respectively.
|
(2)
|
1,500
options each vest on January 24, 2009, 2010, 2011, 2012 and 2013,
respectively.
|
(3)
|
1,667
options each vest on September 30, 2009 and 2010, respectively, and 1,666
options vest on September 30, 2011.
|
(4)
|
250
options vest on December 31, 2009.
|
(5)
|
2,000
options each vest on May 31, 2009, 2010 and 2011,
respectively.
|
Stock
Option Exercises
The
following table provides information concerning stock option exercises for each
named executive officer, on an aggregate basis, during 2008.
|
|
Option Awards
|
|
Name
|
|
Number of Shares
Acquired On
Exercise (#)
|
|
|
Value Realized
On Exercise (1) ($)
|
|
William
L. Wall
|
|
|
6,750
|
|
|
$
|
101,810
|
|
(1)
|
Calculated
based on the product of: (a) the number of shares acquired on exercise,
and (b) the difference between the market price of the underlying Common
Stock on the exercise date, determined based on the closing sale price on
the exercise date, and the exercise price of the
options.
|
Pension
Benefits
The
following table provides information with respect to each plan that provides for
payments or benefits in connection with the retirement of a named executive
officer. No payments were made during 2008.
Name
|
|
Plan
Name
|
|
Number
of
Years
Credited
Service
(#)
|
|
|
Present
Value
of
Accumulated
Benefit
($) (1)
|
|
Thomas
A. Vann
|
|
Supplemental
Income Agreement
|
|
|
19
|
|
|
$
|
130,301
|
|
|
|
Supplemental
Income Plan Agreement
|
|
|
14
|
|
|
|
618,387
|
|
|
|
Directors
Deferred Compensation Plan Agreement
|
|
|
14
|
|
|
|
264,366
|
|
|
|
Directors
Deferred Retirement Plan Agreement
|
|
|
14
|
|
|
|
74,712
|
|
|
|
Directors
Retirement Payment Agreement
|
|
|
24
|
|
|
|
343,773
|
|
William
L. Wall
|
|
Supplemental
Income Plan Agreement
|
|
|
13
|
|
|
|
135,695
|
|
(1)
|
The
accumulated benefits under the Bank’s deferred compensation arrangements
are calculated in accordance with Accounting Principles Board No. 12, as
amended by Statement of Financial Accounting Standards No. 106, using an
8.00% discount rate.
|
Supplemental Income
Agreement.
The Bank maintains a supplemental income agreement
for Mr. Vann for the purpose of providing him with a fixed retirement benefit
over a specified term. See “–
Potential Post-Termination and
Change in Control Benefits – Supplemental Income Agreement
” for a
discussion of the benefits provided under the supplemental income
agreement.
Supplemental Income Plan
Agreement.
The Bank maintains supplemental income plan
agreements for Messrs. Vann and Wall for the purpose of providing these
executives with a fixed retirement benefit over a specified term. See
“–
Potential Post Termination
and Change in Control Benefits – Supplemental Income Plan Agreements
” for
a discussion of the benefits provided under the supplemental income plan
agreements.
Directors Deferred Compensation Plan
Agreemen
ts. The Bank maintains directors’ deferred
compensation plan agreements for the benefit of Mr. Vann and certain other
directors. The plan agreements provide each director with a fixed
retirement benefit over a specified term. See “
Director Compensation– Directors’
Deferred Compensation Plan Agreements”
for a discussion of the benefits
provided under the directors’ deferred compensation plan
agreements.
Directors Deferred Retirement Plan
Agreements.
The Bank maintains directors’ deferred retirement plan
agreements for the benefit of Mr. Vann and certain other directors. The plan
agreements provide each director with a fixed retirement benefit over a
specified term. See “
Director
Compensation
—
Directors’
Deferred Retirement Plan Agreements”
for a discussion of the benefits
provided under the directors’ deferred retirement plan agreements.
Directors’ Retirement Payment
Agreements.
The Bank maintains directors’ retirement payment
agreements for the benefit of Mr. Vann and certain other
directors. The retirement payment agreements provide each director
with a fixed retirement benefit for a specified term. See “
Director Compensation
—
Directors’ Retirement Payment
Agreements”
for a discussion of the benefits provided under the
directors’ retirement payment agreements.
Potential
Post-Termination and Change in Control Benefits
As
described under our
“Compensation Discussion and
Analysis,”
we maintain certain arrangements with our named executive
officers that provide for termination and change in control benefits. The
information below describes and quantifies certain compensation that would
become payable under our existing plans and arrangements if a named executive
officer’s employment had terminated in connection with a change in control on
December 31, 2008, given the named executive officer’s compensation levels and,
if applicable, based on our stock price as of that date. These benefits are in
addition to benefits generally made available to our salaried employees, such as
accrued vacation and distributions from our tax-qualified
plans.
Employment
Agreement.
Under our employment agreement with Mr. Vann, if
the Company or the Bank terminates Mr. Vann’s employment without Just Cause (as
defined in the employment agreement), or if Mr. Vann terminates his employment
for “Good Reason,” (as defined in the employment agreement) Mr. Vann will be
entitled to a payment equal to his remaining base salary due under the agreement
plus an additional 12 month’s salary. The employment agreement further provides
that upon Mr. Vann’s termination of employment for any reason other than Just
Cause, he and his spouse shall continue to participate in the Bank’s group
health insurance program for the remainder of their respective lives. The Bank
will, subject to provisions of the employment agreement covering termination
without Just Cause or for Good Reason and termination in connection with a
change in control, fund the cost of such continuation coverage on the same terms
as the Bank funded the cost of coverage for Mr. Vann and his spouse immediately
prior to his termination of employment (
i.e.,
Mr. Vann will pay the
same dollar amount toward the premium costs as he paid immediately prior to his
termination of employment), and the Bank will fund the balance of such costs.
If, for any reason, Mr. Vann or his spouse cannot be continued under the Bank’s
group health insurance program, the Bank will reimburse Mr. Vann or his spouse
for the cost of any substitute coverage obtained by Mr. Vann or his spouse that
provides substantially similar benefits. Such reimbursement will be in an amount
determined by reference to the dollar amount paid by Mr. Vann immediately prior
to his termination of employment, with the remaining amount paid by the
Bank.
The
employment agreement also provides Mr. Vann (or his beneficiary) with benefits
in the event he becomes disabled or dies while the agreement is in effect. If
Mr. Vann becomes disabled and is unable to work due to his Disability (as
defined in the employment agreement), Mr. Vann will be entitled to a
continuation of his salary and benefits for any period during the term of the
agreement and prior to the establishment of his Disability during which he is
unable to work, or any period of Disability which is prior to his termination of
employment, provided that any benefits paid under the Bank’s long-term
disability plan will continue as provided under the plan. In the event of Mr.
Vann’s death during the term of the employment agreement, his estate (or
beneficiary) will be entitled to receive his base salary in effect at the time
of his death through the last day of the calendar month in which he died. In the
event Mr. Vann voluntarily terminates his employment or he is terminated for
Just Cause, he is entitled to receive only his compensation, vested rights and
benefits up to the date of termination of employment.
The
employment agreement also provides for a change in control severance benefit in
the event (i) Mr. Vann voluntarily terminates employment for any reason
within the 180-day period beginning on the date of a “change in control,” (as
defined in the employment agreement), (ii) Mr. Vann voluntarily terminates
employment within 90 days of an event that both occurs during the protected
period, which begins on the date six months before a change in control and ends
on the later of the second annual anniversary of the effective date of a change
in control or the expiration date of the employment agreement, including any
renewal terms and constitutes Good Reason (as defined on the employment
agreement), or (iii) the Company or Bank or their successor(s) in interest
terminate Mr. Vann’s employment without his written consent and for any reason
other than Just Cause during the protected period. In any such event, Mr. Vann
will be entitled to receive the following payments and benefits: (i) a cash
severance benefit equal to three times his average annual compensation over the
five most recently completed taxable years preceding the effective date of the
change in control; (ii) for the first 36 months of Mr. Vann’s (and spouse’s)
continued participation in the Bank’s health insurance program which the Bank
shall cover the entire cost of such continued participation; and (iii) for a
period of 36 months following Mr. Vann’s termination date, the Bank shall
continue his coverage under the Bank’s life, disability and other benefits that
Mr. Vann participated at his termination date.
Under the
terms of the employment agreement, Mr. Vann is also entitled to receive a tax
indemnification payment if the payments and benefits under his employment
agreement or any other payments trigger liability under the Internal Revenue
Code of 1986, as amended (the “Code”), as an excise tax constituting “excess
parachute” payments. Under applicable law, the excise tax is triggered by change
in control related payments which equal or exceed three times an
executive’s “base amount.” Base amount is defined as the average of an
executive’s Box 1 Form W-2 compensation for the five years preceding a change in
control. The excise tax equals 20% of the amount of the payment in excess of one
time the base amount. The employment agreement has been amended to
comply with the requirements of, and will be administered in accordance with
Section 409A of the Code. Payments and benefits provided under the
employment agreement are subject to certain restrictions imposed by Section
409A.
Change-in-Control Protective
Agreements.
The protective agreements for Messrs. Woodson and
Jaber provide the executives with change in control severance benefits in the
event that (i) the executives voluntarily terminate employment within 90 days
after an event that occurs during the Protected Period (as defined below) and
that constitutes “Good Reason,” or (ii) the Bank, the Company or their
successors terminate the Executive’s employment during the Protected Period for
any reason other than for Just Cause (as defined in the
agreements). Under such circumstances, Messrs. Woodson and Jaber
would be entitled to a payment equal to 1.0 times for Mr. Woodson and 1.5 times
for Mr. Jaber the executive’s annual base salary in effect six months before the
change in control occurred. In no event, however, can the severance
benefit under the protective agreements exceed the difference between (i) the
executive’s Section 280G Maximum (
i.e.,
2.99 times each
executive’s base amount), and (ii) the sum of any other parachute payments, that
the executive receives on account of the change in control. The
protected period is defined in the protective agreements as the period that
begins on the date that is six months before a change in control and ends on the
latter of the second anniversary of the change in control or the expiration date
of the applicable protective agreement. Under the terms of Mr. Wall’s
agreement, he will be entitled to a severance payment equal to 2.0 times his
base salary under the same circumstances as Messrs. Woodson and Jaber;
however, his payment will not be subject to the 280G Maximum, as his agreement
contains a tax indemnification provision.
The
protective agreements for Messrs. Woodson and Jaber provide that within ten
business days of a change in control, the Bank shall fund a trust in the amount
of the severance benefit under the protective agreement, that will be used to
pay amounts owed to the executive under the protective agreement. The amount to
be paid to Mr. Wall’s severance benefits will be paid within 10 days of the
event that triggers payment under his agreement. In the event that an executive
prevails over the Company or the Bank in a legal dispute as to his protective
agreement, he will be reimbursed for his legal and other expenses related
thereto.
In
addition, if Mr. Wall’s employment is terminated during the protected period
following a change in control for any reason other than Just Cause (as defined
in his agreement), Mr. Wall and his spouse will continue to participate in the
Bank’s group health insurance program for the remainder of their respective
lives. The Bank (or its successor) will fund the cost of such continuation
coverage on the same terms as the Bank funded the cost of coverage for the
executive and his spouse immediately prior to his termination of employment and
the Bank will fund the balance of such costs. If, for any reason, Mr. Wall or
his spouse cannot be continued under the Bank’s group health insurance program,
the Bank (or its successor) will reimburse Mr. Wall or his spouse for the cost
of any substitute coverage obtained by Mr. Wall or his spouse that provides
substantially similar benefits.
The
protective agreements for Messrs. Jaber and Wall have been amended to
comply with the requirements of, and will be administered in accordance with
Section 409A of the Code. Mr. Woodson’s protective agreement was
compliant with Section 409A when issued. Payments and benefits provided under
the protective agreements for Messrs. Woodson, Jaber and Wall are subject
to certain restrictions imposed by Section 409A.
Supplemental Income
Agreement.
The Bank maintains a supplemental income agreement
with Thomas A. Vann. Upon the earlier of Mr. Vann’s (i) attainment of
age 65, or (ii) the date of Mr. Vann’s retirement before age 65, but after
attaining age 55 and completing at least 10 years of service with the Bank, the
Bank shall pay Mr. Vann an amount equal to $31,356 annually for a period of 15
years.
In the
event of Mr. Vann’s death after becoming entitled to receive benefits under the
supplemental income agreement, but before any payments have been made, his
beneficiary shall receive all remaining payments. In the event of Mr.
Vann’s death prior to attaining age 65, the Bank will pay his beneficiary
$31,356 annually for 15 years. In the event of Mr. Vann’s termination
of employment by reason other than death, retirement upon attaining age 65, or
in the event of early retirement, Mr. Vann (or his beneficiary) shall be
entitled to receive, on the earlier of his attainment of age 65 and his death, a
percentage of his benefit. This percentage will be based on Mr.
Vann’s full years of service up to the date of his termination, beginning with
0% for less than 20 years of service, and increased in 5% increments (from 50%
to 100%) for every year of service thereafter, starting with 50% at 20 years of
service up to 100% for 29 years of service. In the event that Mr. Vann’s
employment terminates for any reason other than his death, or early retirement
prior to the time he is first entitled to receive payments under the agreement,
Mr. Vann shall be entitled to receive such percentages of his benefit, as
discussed above, when he reaches age 55 or on upon his death, whichever is
earlier. In the event that a termination of protected employment (as
defined in the agreements) occurs (i) on or before age 65 or early retirement
and (ii) following a “change in control” (as defined in the agreement), then Mr.
Vann shall be deemed to have retired as of early retirement date. Said amount
would be deposited in a grantor trust within 10 days of the change in control.
Mr. Vann is 100% vested in his Supplemental Income Agreement
benefit. The supplemental income agreement has been amended to comply
with the requirements of, and will be administered in accordance with Section
409A of the Code. Payments and benefits provided under the
supplemental income agreement are subject to certain restrictions imposed by
Section 409A.
Supplemental Income Plan
Agreements.
The Bank maintains supplemental income plan
agreements with Thomas A. Vann and William L. Wall. Pursuant to the terms of the
agreement with Mr. Vann, if Mr. Vann retires from employment with the Bank
either at or after the age of 65 or at or after age 55 with at least 10 years of
service with the Bank, the Bank will pay, in equal monthly installments, a
minimum sum of $40,000 per annum for a period of 15 years. This amount will
increase by 5% for each full year of service completed by Mr. Vann after
January 1, 1994. If Mr. Vann remains employed by the Bank until age 65, he
will receive an annual benefit equal to $106,132 which will be payable over 15
years. Mr. Vann is 100% vested in his supplemental income plan agreement
benefit. Mr. Vann’s supplemental income plan agreement has been amended to
comply with the requirements of, and will be administered in accordance with
Section 409A of the Code. Payments and benefits provided under the
supplemental income plan agreement are subject to certain restrictions imposed
by Section 409A.
Pursuant
to the terms of the Agreement with Mr. Wall, if Mr. Wall retires from employment
with the Bank either at or after the age of 65 or on such earlier date as the
Bank and Mr. Wall may agree, the Bank will pay Mr. Wall a sum of $20,000
per annum for a period of 15 years in equal monthly installments, amounting to
total payments of $300,000. Mr. Wall is 100% vested in his
supplemental income plan agreement. Mr. Wall’s supplemental income plan
agreement has been amended to comply with the requirements of, and will be
administered in accordance with Section 409A of the Code. Payments
and benefits provided under the supplemental income plan agreement are subject
to certain restrictions imposed by Section 409A.
In the
event of Mr. Vann’s or Mr. Wall’s death before age 65 or on their early
retirement date, the Bank will make payments to Mr. Vann’s or Mr. Wall’s
beneficiaries in the same manner as if he had retired. In the event that Mr.
Vann terminates his service for reasons other than (i) his retirement on his
early retirement date, (ii) a change in control, (iii) “termination of protected
employment” (as defined below), or (iv) his death, and the termination occurs
before he is entitled to receive payments, he will be entitled to receive a
percentage of his benefit upon his attainment of age 55 or prior to his death.
This percentage will be based on full years of service after January 1, 1994,
and increased in 10% increments (from 10% to 100%) for every year of service
after January 1994, starting with 10% at one year of service up to 100% for 10
years of service. Payments shall be made in equal monthly installments. In the
event that, prior to age 65 or his early retirement date, a “termination of
protected employment” occurs following a change in control, Mr. Vann shall be
deemed to have retired as of his early retirement date, and the early retirement
date shall be considered the date of the change in control. “Termination of
protected employment” generally refers to Mr. Vann’s termination of employment
without just cause, or the employee’s voluntary termination of employment for
certain events which have not been consented to in advance by him, including but
not limited to a material reduction in base compensation as in effect on the
date of a change in control, the failure of the Bank to maintain existing or
substantially similar employee benefit plans, the assignment of duties and
responsibilities which are other than those normally associated with his
position, a material reduction in his authority and responsibility, and the
failure to elect or re-elect him to the Board of Directors, if he has served on
the Board during the term of the agreement.
In the
event that Mr. Wall terminates his service for reasons other than (i) his
retirement on his early retirement date, (ii) in connection with the merger of
the Bank with or into another business entity or the sale of more than a
majority of the Bank’s assets to another entity, or (iii) his death, and the
termination occurs before he is entitled to receive payments, he shall be
entitled to receive a percentage of his benefit upon his attainment of age 58 or
prior death. This percentage will be based on full years of service
after November 1, 1994, and increased in 10% increments (from 10% to 100%) for
every year of service after November 1994, starting with 10% at one year of
service up to 100% for 10 years of service. Payments shall be made in equal
monthly installments. In the event Mr. Wall’s employment with the Bank is
terminated for any reason coincident with or within 24 months following a merger
of the Bank with or into another business entity or a sale of more than a
majority of the Bank’s assets to another entity, then Mr. Wall is deemed to have
retired as of his early retirement date and he is entitled to receive payments
of $20,000 per year for 15 years, and the early retirement date is deemed to be
the date the merger or asset sale was consummated.
Under the
terms of both the supplemental income agreements and supplemental income plan
agreements, payments will commence no later than the first day of the sixth
month following the month in which the executive is entitled to the benefit. In
addition, under Mr. Vann’s arrangements, in the event of a change in
control, a trust will be established to fund his benefit.
Other Retirement
Arrangements.
Mr. Vann also participates in a directors’
deferred compensation plan agreement, a directors’ retirement plan agreement and
a director’s deferred payment agreement. For a description of these
arrangements, see
“Director
Compensation.”
Stock Option Agreements.
Messrs.
Wall, Woodson and Jaber have received option grants under the First South
Bancorp, Inc. 1997 Stock Option Plan, as amended (the “1997 Plan”). Messrs.
Woodson and Nicholson have received option grants under the First South Bancorp,
Inc. 2008 Equity Incentive Plan (the “2008 Plan”). The 1997 Plan provides that,
in the event of a change in control of the Company or the Bank as defined in the
plan, or upon termination due to death, outstanding stock options automatically
vest and remain exercisable until the later of two years from the date of death
or disability or the expiration date of the stock options. The 2008 Plan
provides that, in the event of a change in control of the Company or the Bank as
defined in the plan, or upon termination due to death, outstanding stock options
automatically vest and remain exercisable until the expiration of the term of
the options. Presently, Messrs. Wall and Jaber have vested stock options.
Messrs. Wall, Woodson, Jaber and Nicholson also have unvested options
outstanding.
Potential
Post-Termination Benefits Tables
The
amount of compensation payable to each named executive officer upon the
occurrence of a termination event is shown below. The amounts shown assume that
such termination was effective as of December 31, 2008, and thus include
amounts earned through such time and are estimates of the amounts which would be
paid out to the executives upon their termination. The amounts shown relating to
unvested options are based on the fair market value of First South Bancorp
common stock on December 31, 2008 of $12.56. The actual amounts to be paid
out can only be determined at the time of such executive’s separation from First
South Bancorp, Inc. Non-forfeitable, fully vested amounts credited to the
accounts of the named executive officers under the Bank’s tax-qualified plans
and non-qualified deferred compensation plans and arrangements will be
distributed to the named executive officers in accordance with the terms of the
respective plans and are not set forth below.
The
following table provides the amount of compensation payable to Mr. Vann for each
situation listed below:
|
|
Payments Due Upon
|
|
Payment and Benefit
|
|
Termination
For Just Cause
|
|
|
Termination
Without Just
Cause/For
Good Reason
|
|
|
Change in Control
With Termination
of Employment
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
Base
salary
|
|
$
|
-
|
|
|
$
|
1,240,000
|
|
|
$
|
6,376,422
|
|
|
$
|
1,240,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Additional
salary
|
|
|
-
|
|
|
|
465,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Health
and welfare benefits
|
|
|
-
|
|
|
|
80,857
|
(1)
|
|
|
82,363
|
(2)
|
|
|
80,270
|
(3)
|
|
|
80,270
|
(3)
|
|
|
80,270
|
(3)
|
Section
280G tax gross-up
|
|
|
-
|
|
|
|
-
|
|
|
|
2,420,847
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
1,785,857
|
|
|
$
|
8,879,632
|
|
|
$
|
1,320,270
|
|
|
$
|
80,270
|
|
|
$
|
80,270
|
|
(1)
|
Based
on 32 months of full payment of insurance premiums (employer and employee)
and 18 years of payment of only the employer portion based on life
expectancy of 80 years.
|
(2)
|
Based
on 36 months of full payment of insurance premiums (employer and employee
portion) and 18 years of payment of only the employer portion based on a
life expectancy of 80 years.
|
(3)
|
Cost
of Mrs. Vann’s health coverage for 21 years assuming a life expectancy of
80 years.
|
The
following table provides the amount of compensation payable to Mr. Wall for each
situation listed below:
|
|
Payments Due Upon
|
Payment and
Benefit
|
|
Termination
For Just
Cause
|
|
|
Termination
Without
Just
Cause/For
Good
Reason
|
|
|
Change in
Control
With
Termination
of
Employment
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
Base
salary
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
270,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Health
and welfare benefits
|
|
|
-
|
|
|
|
-
|
|
|
|
68,802
|
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Value
of unvested stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
(2)
|
|
|
-
|
(2)
|
|
|
-
|
(2)
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
338,802
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
Cost
of Mr. Wall’s health coverage based on a life expectancy of 80
years.
|
(2)
|
At
December 31, 2008, there was no value in the unvested stock options since
the market value was less than the exercise price of such unvested
options.
|
The
following table provides the amount of compensation payable to Mr. Woodson for
each situation listed below.
|
|
Payments Due Upon
|
|
Payment and Benefit
|
|
Termination
For Just Cause
|
|
|
Termination
Without Just
Cause/For
Good Reason
|
|
|
Change in Control
With Termination
of Employment
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
Base
salary
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
175,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Value
of unvested stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
(1)
|
|
|
-
|
(1)
|
|
|
-
|
(1)
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
175,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
At
December 31, 2008, there was no value in the unvested stock options since
the market value was less than the exercise price of such unvested
options.
|
The
following table provides the amount of compensation payable to Mr. Jaber for
each situation listed below.
|
|
Payments Due Upon
|
|
Payment and Benefit
|
|
Termination
For Just Cause
|
|
|
Termination
Without Just
Cause/For
Good Reason
|
|
|
Change in Control
With Termination
of Employment
|
|
|
Disability
|
|
|
Death
|
|
|
Retirement
|
|
Base
salary
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
205,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Value
of unvested stock options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
(1)
|
|
|
-
|
(1)
|
|
|
-
|
(1)
|
|
|
-
|
|
Total
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
205,500
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(1)
|
December
31, 2008, there was no value in the unvested stock options since the
market value was less than the exercise price of such unvested
options.
|
Mr.
Nicholson does not maintain a Change in Control Protective Agreement with the
Company and is not entitled to any benefits (other than those provided under the
Bank’s tax-qualified plans) in the event of termination for Just Cause,
termination without Just Cause or for Good Reason, termination in connection
with a change in control or termination of employment as a result of death,
disability or retirement.
COMPENSATION
COMMITTEE REPORT
The
Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis that is required by the rules established
by the Securities and Exchange Commission. Based on such reviews and
discussions, the Compensation Committee recommended to the board of directors
that the Compensation Discussion and Analysis be included in the Company’s
Annual Report on Form 10-K and Proxy Statement on Schedule 14A for the year
ended December 31, 2008. See
“Compensation Discussion and
Analysis.”
The
Compensation Committee of the Board of Directors
of First
South Bancorp, Inc.
Linley H.
Gibbs, Jr.
Frederick
N. Holscher
Frederick
H. Howdy
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The
members of the Compensation Committee of the Company’s Board of Directors during
the year ended December 31, 2008 were Linley H. Gibbs, Jr., Frederick N.
Holscher and Frederick H. Howdy. None of such individuals was an
officer or employee of the Company or the Bank during the year
ended December 31, 2008, was formerly an officer of the Company or
the Bank or had any relationship involving a transaction with the Company
required to be disclosed by the Company under Item 13 of the Company’s
Annual Report on Form 10-K.
During
the year ended December 31, 2008:
|
•
|
No
executive officer of the Company or the Bank served as a member of the
compensation committee of another entity, one of whose executive officers
served on the Compensation Committee of the Company or the
Bank;
|
|
•
|
No
executive officer of the Company or the Bank served as a director of
another entity, one of whose executive officers served on the Compensation
Committee of the Company or the Bank; and
|
|
•
|
No
executive officer of the Company or the Bank served as a member of the
compensation committee of another entity, one of whose executive officers
served as a director of the Company or the
Bank.
|
The
following table provides the compensation received by individuals who served as
non-employee directors of the Company during the 2008 fiscal
year. This table excludes perquisites, which did not exceed $10,000
in the aggregate for each director.
Name
|
|
Fees Earned or
Paid in Cash ($)
|
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings (1)
|
|
|
Total ($)
|
|
Linley
H. Gibbs, Jr.
|
|
$
|
55,400
|
|
|
$
|
4,889
|
|
|
$
|
60,289
|
|
Frederick
N. Holscher
|
|
|
56,800
|
|
|
|
40,365
|
|
|
|
97,165
|
|
Frederick
H. Howdy
|
|
|
55,000
|
|
|
|
4,889
|
|
|
|
59,889
|
|
Charles
E. Parker, Jr.
|
|
|
47,000
|
|
|
|
39,707
|
|
|
|
86,707
|
|
H.D.
Reaves, Jr.
|
|
|
35,000
|
|
|
|
14,247
|
|
|
|
49,247
|
|
Marshall
T. Singleton
|
|
|
47,400
|
|
|
|
21,104
|
|
|
|
68,504
|
|
(1)
|
The
accumulated benefits under the Bank’s deferred compensation arrangements
are calculated in accordance with Accounting Principles Board No. 12, as
amended by Statement of Financial Accounting Standards No. 106, using a
8.00% discount rate.
|
Fees.
Through
December 31, 2008, each member of the Bank’s Board of Directors received a fee
of $2,750 for each regular and special Board meeting attended and $400 for each
Board committee meeting attended.
No fees are paid for
attendance at meetings of the Company’s Board. Directors also participate in
certain benefit plans of the Company and the Bank, as described
below.
Directors
are eligible to receive awards under the Company’s 2008 Equity Incentive Plan.
During the year ended December 31, 2008, no awards were made to directors under
the 2008 Plan.
Directors’ Deferred Compensation
Plan Agreements.
The Bank maintains a directors’ deferred
compensation plan agreement with directors Howdy, Gibbs, Parker, Singleton,
Holscher and Vann. Pursuant to the terms of the agreements, the participating
directors agreed to defer the receipt of their directors’ fees in the amount of
$350 per month, beginning on January 1, 1994 and ending on December 29,
1998. In exchange for the agreement to defer fees, the directors
receive certain retirement benefits (described below). Upon the later
to occur of their 65th birthday and January 1, 1999, the Bank shall pay each
Director 120 equal monthly payments of the following amounts: Mr. Parker—$1,533;
Mr. Singleton—$1,975; Mr. Holscher—$4,088; and Mr. Vann—$4,818. The
total payments to be made under the Agreement to Messrs. Parker, Singleton,
Holscher and Vann will be $183,960, $237,000, $490,560 and $578,160,
respectively. During the year ended December 31, 2008 the company
accrued $3,785, $8,783, $17,922 and $19,583 for the benefit of Directors Parker,
Singleton, Holscher and Vann, respectively, pursuant to agreements with such
Directors. In 2008, Messrs. Parker and Singleton received payments under the
agreements in the amount of $18,396 and $23,700, respectively.
In the
event of a director’s death after becoming entitled to receive a benefit but
before all of the payments have been made, the Bank shall make the remaining
payments to the director’s beneficiary. Similarly, in the event of a
director’s death while serving as a director but before the qualifying date, the
Bank will pay the Deferred Amount per month for 120 months to the director’s
beneficiary. In the event that a director voluntarily
resigns after January 1, 1996 but before the qualifying date, then
the director will receive a percentage of the monthly
benefit. This percentage varies among the different agreements, but
is generally determined by a formula based on the director’s full years of
service after January 1, 1994. The benefits generally vest over a
period of five to ten years under the different agreements. All
agreements were fully vested at December 31, 2008. Under the
agreements, if the directors had resigned on December 31, 2008,
Messrs. Holscher and Vann would begin to receive 120 monthly payments of
$4,088 and $4,818, respectively, commencing in January 2009. In the
event that the director’s service is terminated on or before the qualifying date
for a reason other than death or voluntary resignation, then he shall be paid
the vested monthly benefit, and the qualifying date shall be deemed to be the
date of the director’s termination of service. The deferred compensation plan
agreements for Messrs. Holscher and Vann have been amended to comply with
the requirements of, and will be administered in accordance with Section 409A of
the Code. Payments and benefits provided under the deferred
compensation plan agreements for Messrs. Holscher and Vann are subject to
certain restrictions imposed by Section 409A.
Directors’ Deferred Retirement Plan
Agreements.
The Bank maintains a directors’ deferred
retirement plan agreement with directors Howdy, Parker, Singleton, Holscher,
Gibbs and Vann. Under the terms of the retirement plan agreement, the
Bank will pay a director (or his beneficiary in the event of his death) a
monthly amount for a period of 120 months beginning upon the director’s
retirement plan qualifying date, which is defined as the later to occur of the
director’s 70th birthday or January 1, 1999. Under the retirement
plan agreement, upon attainment of age 70, Messrs. Howdy, Gibbs, Parker,
Singleton, Holscher and Vann each would receive 120 monthly payments of $2,000
for a total of $240,000 for each individual. During the year ended
December 31, 2008, the Company accrued $4,889, $4,889, $11,077, $12,321, $5,960
and $5,534 under the retirement plan for the benefit of directors Howdy, Gibbs,
Parker, Singleton, Holscher and Vann, respectively. In 2008, Messrs.
Gibbs, Howdy and Parker each received payments under the agreement in the amount
of $24,000.
The
benefits under retirement plan agreements generally vest over a period of five
to ten years under the different agreements. All participants became
100% vested in their benefits as of December 31, 2007. In the event
that on or before the retirement plan qualifying date the director’s service is
terminated for any reason within 24 months following a change in control, the
Bank will pay the director the monthly benefit for a period of 120
months. The retirement plan agreements for
Messrs. Holscher, Singleton and Vann have been amended to comply with the
requirements of, and will be administered in accordance with Section 409A of the
Code. Payments and benefits provided under the retirement plan
agreements for Messrs. Holscher, Singleton and Vann are subject to certain
restrictions imposed by Section 409A.
Directors’ Deferred Payment
Agreements.
The Bank maintains a deferred compensation payment
agreement with directors Howdy, Gibbs, Parker, Holscher and
Vann. Under the terms of each payment agreement, the directors
deferred receipt of directors fees in an amount equivalent to $291.66 per month
over a six-year period. In addition, Mr. Vann agreed to defer receipt
of his director’s fees in the amount of $220.35 per month from September 1, 1995
until December 31, 2005. In exchange for the agreement to defer
receipt of director’s fees, the directors will receive, upon the earlier of the
director’s 65th birthday or termination of service as a director for any reason
on or after attaining age 55, a certain amount per month for a period of 120
months. Under the payment agreements, upon the earlier to occur of
attainment of age 65 or termination of service after attainment of age 55,
Messrs. Parker, Holscher and Vann would receive 120 monthly payments of $2,748,
$3,628 and $8,256, respectively. The total payments to be made under
the agreement to Messrs. Parker, Holscher and Vann will be $329,760, $435,360
and $990,720, respectively. During the year ended December 31, 2008,
the Company accrued $9,348, $16,483 and $31,252 under the payment agreements for
the benefit of Directors Parker, Holscher and Vann, respectively.
In the
event of a director’s death after becoming entitled to receive monthly payments
but before all payments have been made, the Bank will pay all remaining amounts
to the director’s beneficiary. Similarly, in the event of the director’s death
prior to the commencement of his monthly payments, the Bank will pay a monthly
amount for 120 months to the director’s beneficiary. In the event that prior to
the commencement of the monthly payments a director’s service is terminated for
any reason other than death, then the director will be entitled to begin
receiving his Payments (beginning on a date to be determined by the Bank, but
not later than the first day of the sixth month following the month in which the
director’s 55th birthday, or if earlier, death, occurs). The deferred
payment agreements for Messrs. Holscher and Vann have been amended to
comply with the requirements of, and will be administered in accordance with
Section 409A of the Code. Payments and benefits provided under the
deferred payment agreements for Messrs. Holscher and Vann are
subject to certain restrictions imposed by Section 409A.
Deferred Compensation
Agreement.
In connection with the acquisition of Home Federal
Savings & Loan Association (“Home Federal”) in 1999, the Bank assumed the
obligations of Home Federal under a deferred compensation agreement with
Director Reaves. Under the terms of this agreement, Mr. Reaves
deferred receipt of directors’ fees in the amount of $450 per month over a
five-year period. In exchange for the agreement to defer receipt of
these salary payments, Mr. Reaves will receive upon his 65th birthday a payment
of $1,615 per month for a period of 120 months. The total payments to
be made under the agreement to Mr. Reaves will be $193,800. During
the year ended December 31, 2008, the Company accrued $14,247 under the
agreement for the benefit of Director Reaves. In 2008, Mr. Reaves
received payments under the agreement in the amount of $19,380.
In the
event of Mr. Reaves’ death after becoming entitled to receive monthly payments
but before all payments have been made, the Bank will pay all remaining amounts
to his beneficiary. Similarly, in the event of Mr. Reaves’ death
prior to the commencement of his monthly payments, the Bank will pay a monthly
amount for 120 months to his beneficiary.
TRANSACTIONS WITH RELATED PERSONS
The Bank
offers loans to its directors and executive officers. At December 31,
2008, the Bank’s loans to directors and executive officers totaled $1.4 million,
or 1.6% of the Company’s stockholders’ equity at that date. All loans
to the Company’s and the Bank’s directors and executive officers and members of
their immediate families and corporations or organizations of which a director
or executive officer is an executive officer, partner or 10% owner were made in
the ordinary course of business on the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and do not involve more than the normal risk of collectibility or
present other unfavorable features.
The
Company does not have a comprehensive written policy for the review, approval or
ratification of certain transactions with related persons. However,
in accordance with banking regulations, the Board of Directors reviews all loans
made to a director or executive officer, and any such loan must be approved in
advance by a majority of the disinterested members of the Board of
Directors. Additionally, any transaction with a related person must
be approved by the Audit Committee.
RELATIONSHIP WITH INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Turlington
and Company, L.L.P. (“Turlington”) has served as the Company’s independent
auditors to audit the Company’s three most recent fiscal year ends and has been
appointed by the Company’s Audit Committee to be the independent registered
public accounting firm for the 2009 fiscal year, subject to ratification by
stockholders, see
“Proposal
II
—
Ratification of
Independent Registered Public Accounting Firm,”
below.
PROPOSAL
II – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee of the Board of Directors has appointed Turlington and Company, L.L.P.
to be the Company’s independent registered public accounting firm for the year
ending December 31, 2009, subject to ratification by stockholders. A
representative of Turlington is expected to be present at the annual meeting to
respond to appropriate questions from stockholders and will have the opportunity
to make a statement should he or she desire to do so.
If the
ratification of the appointment of the independent registered public accounting
firm is not approved by a majority of the votes cast by stockholders at the
annual meeting, other independent registered public accounting firms may be
considered by the Audit Committee of the Board of Directors.
The
Board of Directors recommends that stockholders vote “FOR” the ratification of
the appointment of Turlington and Company, L.L.P. as the Company’s independent
registered public accounting firm.
REPORT
OF THE AUDIT COMMITTEE
As
detailed in the Audit Committee Charter, the role of the Audit Committee of the
Board (the “Audit Committee”) is to assist the Board in fulfilling its oversight
responsibilities regarding the following:
|
1.
|
The
review of the Company’s financial statements, including matters relating
to its internal controls;
|
|
2.
|
The
qualification and independence of the Company’s independent
auditors;
|
|
3.
|
The
performance of the Company’s internal auditors and the independent
auditors; and
|
|
4.
|
The
Company’s compliance with legal and regulatory
requirements.
|
Management
is responsible for the preparation and presentation of the Company’s financial
statements and its overall financial reporting process, and with the assistance
of the Company’s internal auditors, for maintaining appropriate internal
controls and procedures that provide for compliance with accounting standards
and applicable laws. The independent auditors are responsible for
planning and carrying out a proper audit of the Company’s financial statements,
expressing an opinion as to their conformity with generally accepted accounting
principles and annually auditing management’s assessment of the effectiveness of
internal control over financial reporting. Members of the Audit
Committee are not professionally engaged in the practice of auditing and
accounting and are not full-time employees of the Company.
In the
performance of its oversight function, the Audit Committee, among other things,
reviewed and discussed the audited financial statements with management and the
independent auditors have confirmed to the Audit Committee that the financial
statements were prepared in accordance with generally accepted accounting
principles. The Audit Committee has also discussed with the
independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 114,
Communication with Those Charged
with Governance
, as currently in effect. In addition, the
Audit Committee has received the written disclosures and the letter from the
independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent auditor’s communication
with the Audit Committee concerning independence, has considered whether the
provisions of non-audit services by the independent auditors to the Company is
compatible with maintaining the auditor’s independence, and has discussed with
the auditors the auditor’s independence.
Based
upon the review and discussions in this report, and subject to the limitations
on the role and responsibilities of the Audit Committee referred to above and in
the Audit Committee’s charter, the Audit Committee recommended to the Board that
the audited financial statements for the fiscal year ended December 31, 2008 be
included in the Company’s Annual Report on Form 10-K for the year ended December
31, 2008, filed with the Securities and Exchange Commission.
Members
of the Audit Committee
Marshall
T. Singleton, Chairman
Charles
E. Parker, Jr.
H. D.
Reaves, Jr.
AUDIT AND OTHER FEES PAID TO INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The
following information is provided regarding fees billed by the Company’s
independent registered public accounting firms for the fiscal years ended
December 31, 2008 and 2007. Audit, audit-related and tax fees were
billed by Turlington as follows:
Audit
Fees
The
aggregate fees billed by Turlington for the audit of the Company’s annual
consolidated financial statements, Sarbanes Oxley Act Section 404 attestation
services and for the reviews of the financial statements included in the
Company’s Quarterly Reports on Form 10-Q were $121,100 for the fiscal year ended
December 31, 2008 and $115,300 for the fiscal year ended December 31,
2007.
Audit-Related
Fees
The
aggregate fees billed by Turlington for audit-related services relating to the
employee benefit plan audit were $18,750 for the fiscal year ended December 31,
2008 and $17,850 for the fiscal year ended December 31, 2007.
Tax
Fees
The
aggregate fees billed by Turlington for tax services for the fiscal years ended
December 31, 2008 and 2007 were $18,400 and $17,500, respectively, relating to
preparation of federal and state income tax returns and the review of accrued
and deferred income taxes.
All
Other Fees
No fees
were billed by the Company’s independent auditor for services not included above
for the fiscal years ended December 31, 2008 and 2007.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Pursuant
to regulations promulgated under the Exchange Act, the Company’s officers and
directors and all persons who own more than 10% of the Common Stock (“Reporting
Persons”) are required to file reports detailing their ownership and changes of
ownership in the Common Stock and to furnish the Company with copies of all such
ownership reports that are filed. Based solely on the Company’s
review of the copies of such ownership reports which it has received in the past
fiscal year or with respect to the past fiscal year, or written representations
that no annual report of changes in beneficial ownership were required, the
Company believes that during fiscal year 2008 all Reporting Persons have
complied with these reporting requirements.
The Board
of Directors is not aware of any business to come before the Annual Meeting
other than those matters described above in this proxy statement and matters
incident to the conduct of the Annual Meeting. However, if any other
matters should properly come before the Annual Meeting, it is intended that
proxies in the accompanying form will be voted in respect thereof in accordance
with the determination of a majority of the Board of Directors.
The cost
of soliciting proxies will be borne by the Company. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by
mail, directors, officers and regular employees of the Company may solicit
proxies personally, or by email, facsimile or telephone without receiving
additional compensation.
The
Company’s 2008 Annual Report to Stockholders, including financial statements, is
available to all stockholders on a publicly accessible Internet website at
http://www.cfpproxy.com/4205
. Any
stockholder may request a paper copy of the 2008 Annual Report to Stockholders
by calling the toll-free number 800-951-2405; visiting the website
http://www.cfpproxy.com/4205
;
or by writing to the Secretary of the Company. Such Annual Report is
not to be treated as a part of the proxy solicitation material or as having been
incorporated herein by reference.
For
consideration at the 2009 Annual Meeting, a stockholder proposal must be
delivered or mailed to the Company’s Secretary no later than April 28,
2009. In order to be eligible for inclusion in the proxy materials of
the Company for the 2010 Annual Meeting of Stockholders, any stockholder
proposal to take action at such meeting must be received at the Company’s
executive offices at 1311 Carolina Avenue, Washington, North Carolina 27889 by
no later than December 24, 2009. Any such proposals shall be subject
to the requirements of the proxy rules adopted under the Exchange
Act.
ANNUAL REPORT ON FORM 10-K
A
copy of the Company’s Annual Report on Form 10-K (without exhibits) for the year
ended December 31, 2008, as filed with the Securities and Exchange Commission,
will be furnished without charge to stockholders as of the record
date upon written request to Corporate Secretary, First South Bancorp, Inc.,
1311 Carolina Avenue, Washington, North Carolina 27889. The Company’s
Annual Report on Form 10-K is available on a publicly accessible Internet
website at
http://www.cfpproxy.com/4205
.
BY ORDER
OF THE BOARD OF DIRECTORS
/s/
William L. Wall
William
L. Wall
Secretary
April 24,
2009
Washington,
North Carolina
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PLEASE MARK
VOTES
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REVOCABLE
PROXY
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AS IN THIS
EXAMPLE
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FIRST SOUTH BANCORP,
INC.
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WITH-
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FOR
ALL
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FOR
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HOLD
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EXCEPT
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ANNUAL MEETING OF
STOCKHOLDERS
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1.
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The
election as directors of the nominees
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o
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May 28,
2009
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listed
below (except as marked to the
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contrary
below):
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The
undersigned hereby appoints Linley H. Gibbs, Jr., Charles E. Parker, Jr.
and Marshall T. Singleton, or any of them, with full powers of
substitution, to act as attorneys and proxies for the undersigned, to vote
all shares of the common stock of First South Bancorp, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Stockholders, to
be held at the main office of First South Bank (the “Bank”) located at
1311 Carolina Avenue, Washington, North Carolina, on Thursday, May 28,
2009, at 11:00 a.m. (the “Annual Meeting”), and at any and all
adjournments thereof, as follows:
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INSTRUCTION: To
withhold authority to vote for any individual nominee, mark
”
For
All Except” and write that nominee’s name in the space provided
below.
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2.
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The
ratification of the appointment of Turlington and Company, L.L.P. as the
independent registered public accounting firm of First South Bancorp, Inc.
for the fiscal year ending December 31, 2009.
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FOR
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AGAINST
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ABSTAIN
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o
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The
Board of Directors recommends a vote “FOR” the nominees and “FOR” the
other proposals stated.
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THIS
PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE LISTED NOMINEES AND FOR THE OTHER
PROPOSALS STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE
ANNUAL MEETING, INCLUDING MATTERS RELATING TO THE CONDUCT OF THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN
ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF
NO
OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL
MEETING.
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Please
be sure to sign and date
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Date
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this
Proxy in the box below.
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Stockholder
sign above----------- Co-holder (if any) sign above
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Detach above card, sign, date
and mail in postage paid envelope provided
FIRST SOUTH BANCORP,
INC.
Washington
, North
Carolina
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THIS PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS.
Should the above signed be present and elect to vote at the Annual Meeting
or at any adjournment thereof, then the power of said attorneys and prior
proxies shall be deemed terminated and of no further force and effect. The
above signed may also revoke his or her proxy by filing a subsequent proxy
or notifying the Secretary of the Company of his or her decision to
terminate his or her proxy.
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting, a Proxy Statement
dated April 24, 2009 and an Annual Report to Stockholders.
Please sign exactly as your name appears on the enclosed card. When
signing as attorney, executor, administrator, trustee or guardian, please
give your full title. Corporation proxies should be signed in corporate
name by an authorized officer. If shares are held jointly, each
holder should sign.
PLEASE COMPLETE, DATE, SIGN AND
MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
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IF
YOUR ADDRESS HAS CHANGED,
PLEASE
CORRECT THE ADDRESS IN
THE
SPACE PROVIDED BELOW AND
RETURN
THIS PORTION WITH THE
PROXY
IN THE ENVELOPE PROVIDED.
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Stockholder
Control Number
First South Bancorp (NASDAQ:FSBK)
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