INFORMATION ABOUT THE ANNUAL MEETING
Date, Time and Place of Annual Meeting
Our annual meeting of stockholders will be held as follows:
Date: Thursday,Friday, November 6, 200819, 2010
Time: 1:00 p.m., Central Time
Place: Days Inn, 300 East 19th Street, Mountain Grove, Missouri 65711
Matters to Be Considered at the Annual Meeting
At the meeting, you will be asked to consider and vote upon the following proposal:
Proposal 1: The election of two directors to serve until the 20112013 annual meeting of stockholders.
We also will transact any other business that may properly come before the annual meeting. As of the date of this proxy statement, we are not aware of any other business to be presented for consideration at the annual meeting other than the matters described in this proxy statement.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on November 19, 2010
Our Proxy Statement and Annual Report to Stockholders are available at www.fhsb.com. The following materials are available for review:
• | Annual Report to Stockholders. |
Directions to attend the annual meeting, where you may vote in person, can be found online at ww.fhsb.com.
Who is Entitled to Vote?
You may vote at the annual meeting if you were the record owner of shares of our common stock at the close of business on September 19, 2008,8, 2010, which has been set as the record date. At the close of business on the record date, there were 1,550,815 outstanding shares of our common stock, par value of $.01 per share. You are entitled to one vote for each share of First Bancshares common stock you own, unless you own more than 10% of First Bancshares’s outstanding
shares. As provided in our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10% of First Bancshares’ outstanding shares are not entitled to any vote in respect of the shares held in excess of the 10% limit.
How Do I Vote at the Annual Meeting?
Proxies are solicited to provide all stockholders of record on the voting record date an opportunity to vote on matters scheduled for the annual meeting and described in these materials. You are a stockholder of record if your shares of First Bancshares’s common stock are held in your name. If you are a beneficial owner of First Bancshares common
stock held by a broker, bank or other nominee (i.e., in “street name”), please see the instructions in the following question.
Shares of First Bancshares’s common stock can only be voted if the stockholder is present in person or by proxy at the annual meeting. To ensure your representation at the annual meeting, we recommend you vote by proxy even if you plan to attend the annual meeting. You can always change your vote at the meeting if you are a stockholder of record.
Voting instructions are included on your proxy card. This year, stockholders may vote by returning the proxy card by mail or by following the instructions on the proxy card for voting by telephone or over the Internet. Shares of First Bancshares’s common stock represented by properly executed proxies will be voted by the individuals named on the proxy card in accordance with the stockholder’s instructions. Where properly executed proxies are returned to us with no specific instruction as how to vote at the annual meeting, the persons named in the proxy will vote the shares “FOR” the election of each of our director nominees. If any other matters are properly presented at the annual meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on these matters in accordance with their best judgment. We do not currently expect that any other matters will be properly presented for action at the annual meeting.
You may receive more than one proxy card depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In this case, you will receive three separate proxy cards to vote.
What if My Shares Are Held in Street Name?
If you are the beneficial owner of shares held in street name by a broker, your broker, as the record holder of the shares, is required to vote the shares in accordance with your instructions. If you do not give instructions to your broker, your broker may nevertheless vote the shares with respect to discretionary items, but will not be permitted to vote your shares with respect to non-discretionary items, pursuant to current industry practice. In the case of non-discretionary items, shares not voted are treated as “broker non-votes.” The proposal to elect directors described in this Proxy Statement is considered a discretionarynon-discretionary item under the rules governing brokers that are members of The Nasdaqthe New York Stock Market LLC (“Nasdaq”).Exchange; therefore, you must provide instructions to your broker in order to have your shares voted in the election of directors.
If your shares are held in street name, you will need proof of ownership to be admitted to the annual meeting. A recent brokerage statement or letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of common stock held in street name in person at the annual meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.
How Will My Shares of Common Stock Held in the Employee Stock Ownership and 401(k) Plan Be Voted?
We maintain an employee stock ownership and 401(k) plan (“ESOP”) for the benefit of our employees. If you participate in the ESOP,employee stock ownership and 401(k) plan, the proxy card represents a voting instruction to the trustees of the ESOPplan as to the number of shares in your plan account. If an ESOPa plan participant properly executes the proxy card, the ESOPemployee stock ownership and 401(k) plan trustees will vote the participant’s shares in accordance with the participant’s instructions. Unallocated shares of First Bancshares common stock held by the ESOPemployee stock ownership and 401(k) plan and allocated shares for which voting instructions are not received will be voted by trustees in the same proportion as shares for which the trustees have received voting instructions.
How Many Shares Must Be Present to Hold the Meeting?
A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of at least a majority of the shares of First Bancshares common stock entitled to vote at the annual meeting as of the record date will constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
What if a Quorum Is Not Present at the Meeting?
If a quorum is not present at the scheduled time of the annual meeting, a majority of the stockholders present or represented by proxy may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the meeting is adjourned for more than 90 days. An adjournment will have no effect on the business that may be conducted at the meeting.
Vote Required for Approval
Directors are elected by a plurality of the votes cast, in person or by proxy, at the annual meeting by holders of First Bancshares common stock. Accordingly, the two nominees for election as directors who receive the highest number of votes actually cast will be elected. Pursuant to our Articles of Incorporation, stockholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or withheld from each nominee. Instructions to withholdVotes that are withheld and broker non-votes will have no effect on the outcome of the election because the two nominees receiving the greatest number of votes for one or more directors will result in that nominee receiving fewer votes but will not count as a vote against the nominee.be elected. Our Board of Directors unanimously recommends that you vote “FOR” the election of each of its director nominees.
Voting and Revocation of Proxies
You may vote your shares in person by attending the annual meeting, or by mailing us your completed proxy or voting by telephone or over the Internet if you are unable or do not wish to attend. If a proxy card is submitted without instructions, the proxies will be voted “FOR” the director nominees.
You can revoke your proxy at any time before the vote is taken at the annual meeting by filing an instrument of revocation with Shannon Peterson, Secretary, First Bancshares, Inc., 142 East First Street, Mountain Grove, Missouri 65711. You may also revoke your proxy by filing a duly executed proxy bearing a later date, by entering a new vote by telephone or over the Internet or by appearing at the annual meeting in person, notifying the Secretary, and voting by ballot at the annual meeting. Any stockholder of record attending the annual meeting may vote in person whether or not a proxy has been previously given, but the mere presence (without notifying the Secretary) of a stockholder at the annual meeting will not constitute revocation of a previously given proxy.
If your shares are held in street name and you wish to change your voting instructions after you have returned your voting instruction form to your broker or bank, you must contact your broker or bank.
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 19, 2008,8, 2010, the voting record date, information regarding share ownership of:
| · | those persons or entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of First Bancshares’s common stock other than directors and executive officers; |
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| · | each director and director nominee of First Bancshares; |
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| · | each executive officer of First Bancshares or First Home Savings Bank named in the Summary Compensation Table appearing under “Executive Compensation” below (known as “named executive officers”); and |
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| · | all current directors and executive officers of First Bancshares and First Home Savings Bank as a group. |
Persons and groups who beneficially own in excess of five percent of First Bancshares’s common stock are required to file with the Securities and Exchange Commission (“SEC”), and provide a copy to us, reports disclosing their ownership pursuant to the Securities Exchange Act of 1934. To our knowledge, based on such filings, no other person or entity, other than those set forth below, beneficially owned more than five percent of the outstanding shares of First Bancshares’s common stock as of the close of business on September 19, 2008.8, 2010.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act 0fof 1934, a person is deemed to be the beneficial owner of any shares of
common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power. In addition, in computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding options that are currently exercisable or exercisable within 60 days after September 19, 20088, 2010 are included in the number of shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person’s percentage ownership. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
| | Number of Shares Beneficially Owned (1) | | Percent of Common Stock Outstanding |
| | | | |
Beneficial Owners of More Than 5% |
| | | | |
Jeffrey L. Gendell (2) Tontine Financial Partners, L.P. Tontine Management, L.L.C. 55 Railroad Avenue, 3rd Floor Greenwich, Connecticut 06830 | | 108,880 | | 7.02% |
| | | | |
Richard T. Gregg and Jenny D. Gregg (3) | | 143,744 | | 9.27% |
2155 West Koryton Drive | | | | |
Nixa, Missouri 65714 | | | | |
| | | | |
Mark E. Gardner (4) 1414 East Primrose, Suite 100 Springfield, Missouri 65804 | | 47,485 | | 5.45% |
Directors | | | | |
| | | | |
D. Mitch Ashlock | | 1,500 | | 0.10% |
R.J. Breidenthal, Jr. | | 6,000 (5) | | 0.39% |
Harold F. Glass | | 45,649 (6) | | 2.94% |
Billy E. Hixon | | 800 | | 1.05% |
John G. Moody | | 8,100 (7) | | 0.52% |
| | | | |
Named Executive Officers | | | | |
| | | | |
Thomas M. Sutherland* | | 7,108 (8) | | 0.46% |
Lannie E. Crawford | | -- | | -- |
Dale W. Keenan | | 3,702 (9) | | 0.24% |
Ronald J. Walters | | 3,000 | | 0.19% |
| | | | |
All Executive Officers and Directors as a Group (9 Persons) | | 75,859 | | 4.87% |
| | Number of Shares Beneficially Owned (1) | | | Percent of Common Stock Outstanding | |
| | | | | | |
Beneficial Owners of More Than 5% | |
| | | | | | |
Jeffrey L. Gendell (2) Tontine Financial Partners, L.P. Tontine Management, L.L.C. 55 Railroad Avenue, 3rd Floor Greenwich, Connecticut 06830 | | | 108,880 | | | | 7.02% | |
| | | | | | | | |
Directors | | | | | | | | |
| | | | | | | | |
D. Mitch Ashlock | | | 1,500 | | | | 0.10 | |
Harold F. Glass | | | 45,649 | | | | 2.94 | |
Billy E. Hixon | | | 400 | | | | 0.03 | |
John G. Moody | | | 8,100 | | | | 0.52 | |
Thomas M. Sutherland (3) | | | 2,755 | | | | 0.18 | |
| | | | | | | | |
Named Executive Officers | | | | | | | | |
| | | | | | | | |
Daniel P. Katzfey (4) | | | 6,000 | | | | 0.39 | |
Ronald J. Walters | | | 1,000 | | | | 0.06 | |
| | | | | | | | |
All Executive Officers and Directors as a Group (Nine persons) | | | 68,516 | | | | 4.39 | |
| (Footnotes on following page) |
| * Mr. Sutherland is also a director. |
(1) | The amounts shown include the following number of shares which the indicated individuals have the right to acquire within 60 days of the close of business on September 19, 20088, 2010 through the exercise of stock options granted pursuant to our stock option plan: Mr. Hixon, 400800 shares; Mr. Sutherland, 400800 shares; Mr. Katzfey, 6,000Keenan, 3,000 shares; and Mr. Walters, 1,0003,000 shares. |
(2) | Based on information disclosed in a Schedule 13D/A, dated September 10, 2003. According to this filing, Tontine Management, L.L.C., the general partner of Tontine Financial Partners, L.P., has the power to direct the affairs of Tontine Financial Partners, L.P., including decisions respecting the receipt of dividends from, and the disposition of the proceeds from the sale of, the shares. Mr. Gendell is the managing member of Tontine Management, L.L.C., and in that capacity directs its operations. Accordingly, Tontine Management, L.L.C., Tontine Financial Partners, L.P. and Mr. Gendell have shared voting and dispositive power with respect to the shares reported. |
(3) | Based on information disclosed in a Schedule 13D/A, dated October 2, 2008. According to this filing, Mr. and Mrs. Gregg have shared voting and dispositive power with respect to the shares reported. |
(4) | Based on information disclosed in a Schedule 13D, dated January 8, 2010. According to this filing, Mr. Gardner has sole voting and dispositive power with respect to 37,000 shares and shared voting and dispositive power with respect to 47,485 shares. |
(5) | Held jointly with his children. |
(6) | Of these shares, 37,249 have been pledged. |
(7) | Includes 1,3555,100 shares held directly and 1000jointly with his wife. |
(8) | Includes 1,006 shares held in his wife’s individual retirement account. |
(4)(9) | Mr. Katzfey is also a director of First Bancshares.Includes 702 shares held in the Company’s 401(k) Plan. |
PROPOSAL 1 - ELECTION OF DIRECTORS
Our Board of Directors consists of six members and is divided into three classes. One-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. The Nominating Committee of the Board of Directors selects nominees for election as directors. Both of our nominees currently serve as directors. Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors
to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected.
The Board of Directors recommends a vote “FOR” the election of Thomas M. SutherlandBilly E. Hixon and D. Mitch Ashlock.John G. Moody.
The following table provides information regarding the nominees forName | | Age as of June 30, 2010 | | Year First Appointed Director | | Year Term Expires |
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BOARD NOMINEES |
| | | | | | |
Billy E. Hixon | | 62 | | 2005 | | 2013 (1) |
John G. Moody | | 58 | | 1993 | | 2013 (1) |
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DIRECTORS CONTINUING IN OFFICE |
| | | | | | |
Thomas M. Sutherland | | 58 | | 2004 | | 2011 |
D. Mitch Ashlock | | 53 | | 2006 | | 2011 |
Harold F. Glass | | 68 | | 1978 (2) | | 2012 |
R.J. Breidenthal, Jr. | | 62 | | 2008 | | 2012 |
_________
(1) Assuming election at the meetingannual meeting.
(2) Includes prior service on the Board of Directors of First Home Savings Bank.
Set forth below is the principal occupation of each nominee for director and each director continuing in office. Unlessoffice, as well as a brief description of the qualifications, attributes, skills and areas of expertise of each nominee or director that makes the director uniquely qualified to serve on First Bancshares’ Board of Directors. All nominees and directors have held their present positions for at least five years unless otherwise indicated, the principal occupation listed for each person below has been his occupation for the past five years.indicated.
| | | | | | Year First Appointed Director (2) | | |
| | | | | | | | |
BOARD NOMINEES |
| | | | | | | | |
Thomas M. Sutherland (3) | | 57 | | One of the owners and operators of the Sutherlands Home Improvement Centers group of stores | | 2004 | | 2011 (4) |
| | | | | | | | |
D. Mitch Ashlock | | 51 | | President and Chief Executive Officer of First Federal of Olathe Bancorp, Inc. and First Federal Savings and Loan Association of Olathe | | 2006 | | 2011 (4) |
| | | | | | | | |
DIRECTORS CONTINUING IN OFFICE |
| | | | | | | | |
Harold F. Glass | | 67 | | Partner of Millington, Glass & Love, a law firm located in Springfield, Missouri | | 1978 | | 2009 |
| | | | | | | | |
Daniel P. Katzfey | | 46 | | President and Chief Executive Officer of First Bancshares and First Home Savings Bank (5) | | 2007 | | 2009 |
| | | | | | | | |
Billy E. Hixon | | 61 | | Retired partner from regional CPA firm of BKD, LLP | | 2005 | | 2010 |
| | | | | | | | |
John G. Moody | | 56 | | Judge of the 44th Missouri Judicial Circuit | | 1993 | | 2010 |
_________ | | | | | | | | |
Billy E. Hixon is a retired partner from regional CPA firm of BKD, LLP. Mr. Hixon brings over 31 years of public accounting experience to the Board of Directors. Mr. Hixon serves as the Audit Committee Financial Expert and is also knowledgeable on taxation. He is also very familiar with the community we serve.(2) | Includes prior service on the Board of Directors of First Home Savings Bank. |
(3) | Mr. Sutherland serves as Chairman of the Board of Directors of First Bancshares and First Home Savings Bank. |
(4) | Assuming election at the annual meeting. |
(5) | Prior to his appointment as President and Chief Executive Officer, Mr. Katzfey served as Executive Vice President and Chief Lending Officer from September 2006 until December 2006. From February 2004 until September 2006, he served as Executive Vice President and Commercial Lender for Village Bank, Springfield, Missouri, and from May 2001 until February 2004, he was the Senior Loan Officer, Loan Review Officer, Compliance Officer, Internal Auditor, Security Officer and Willard Branch Manager at Sun Security Bank (formerly Citizens Home Bank), Greenfield, Missouri. |
In addition to our six directors, R.J. Breidenthal has served as an advisory director since December 2006. Mr. Breidenthal does not own any shares of First Bancshares common stock as of September 19, 2008.
John G. Moody is a jurist. Mr. Moody provides the Board with legal expertise, in particular with respect to interpretation of laws and regulations, and Missouri law. In addition, Mr. Moody has a great deal of business experience, gained through his legal practice, and in his capacity as an employee of the State of Missouri. He is also very familiar with the Bank’s market areas.
Thomas M. Sutherland is our Chairman and Chief Executive Officer, positions he has held since 2005 and November 2008, respectively. Mr. Sutherland also serves as Vice Chairman of Commercial Bank, Parsons, Kansas, and as director of Kansas State Bank and Ottawa Bancshares, Inc., Ottawa, Kansas. In addition to banking activities, he is an owner and operator of a group of Sutherlands retail lumber and home improvement stores. Mr. Sutherland brings his extensive experience in business and management, as well as his knowledge of real estate and the Bank’s market area, to the Board.
D. Mitch Ashlock is President and Chief Executive Officer of First Federal of Olathe Bancorp, Inc. and First Federal Savings and Loan Association of Olathe. Mr. Ashlock’s experience in the banking industry is a benefit to the Board of Directors.
Harold F. Glass is a partner of Millington, Glass & Love, a law firm located in Springfield, Missouri. Mr. Glass provides the Board with legal expertise, in particular in the areas of real estate, corporate and Missouri law, and serves as our legal counsel.
R.J. Breidenthal, Jr. is a director of Security Bank of Kansas City, Kansas City, Kansas. He is the first cousin of Thomas M. Sutherland, our Chairman and Chief Executive Officer. Mr. Breidenthal brings extensive bank experience to the Board, having formerly served as the President of Security Bank, Kaw Valley Bancshares, and First Community Bancshares, all in Kansas City, Kansas.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE MATTERS
Board of Directors
The Boards of Directors of First Bancshares and First Home Savings Bank conduct their business through Board and committee meetings. The Boards of Directors meet monthly and hold additional special meetings as needed. During the fiscal year ended June 30, 2008,2010, the Board of Directors of First Bancshares held eleven12 meetings and the Board of Directors of First Home Savings Bank held eleven12 meetings. No director of First Bancshares or First Home Savings Bank attended fewer than 75% of the total meetings of the Boards of Directors and committee meetings on which he served during this period.
Committees and Committee Charters
The Board of Directors of First Bancshares has standing Executive, Audit, Compensation and Nominating Committees, and has adopted written charters for each of these committees except the Executive Committee. Although copiesCopies of our Audit, Compensation and Nominating Committee charters are not available on our website they are attached to our annual meeting proxy statement at least once every three years or when the charter has been materially amended. Stockholders may also obtain copies of these charters from the Corporate Secretary, First Bancshares Inc., P.O. Box 777, Mountain Grove, Missouri 65711.www.fhsb.com.
Executive Committee
The Executive Committee consists of Messrs. Sutherland, Glass and Moody.Hixon. The Executive Committee meets for the purpose of acting as our long range planning committee and taking any and all actions it deems necessary or appropriate between regular meetings of the Board of Directors. This Committee did not meetmet 12 times during the year ended June 30, 2008.2010.
Audit Committee
The Audit Committee consists of Messrs. Sutherland,Ashlock, Moody and Hixon. This Committee meets for the purpose of reviewing our audit procedures and the report and performance of our independent auditor, and taking such other actions
as are deemed necessary or appropriate by the Committee. The Audit Committee has a charter which specifies its obligations and the Committee believes it has fulfilled its responsibilities under the charter. Each member of the Audit Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq. The Board of Directors has determined that Billy E. Hixon meets the definition of “audit committee financial expert,” as defined by the SEC. This Committee met fiveseven times during the year ended June 30, 2008.2010.
Compensation Committee
Messrs. Glass and Ashlock are the members of the Compensation Committee. Each member of the Committee is independent in accordance with the requirements for companies listed on Nasdaq. The Compensation Committee has a charter which specifies its obligations and the Committee believes it has fulfilled its responsibilities under the charter. The Compensation Committee met two timesdid not meet during the fiscal year ended June 30, 2008.2010 because increases in executive compensation were not contemplated.
The Compensation Committee’s primary purpose is to oversee our compensation policies and their specific application to our Chief Executive Officer, President, Senior Lender and Chief Financial Officer. The Committee is also responsible for reviewing the goals and objectives of our compensation plans, and administering these plans. The Committee evaluates on an annual basis the performance of our Chief Executive Officer, President, Senior Lender and Chief Financial Officer and makes compensation recommendations to the full Board of Directors. In addition, the Compensation Committee reviews the Chief Executive Officer’s evaluation of executive management and compensation recommendations. The Committee is also responsible for reviewing director compensation. The Compensation Committee has the authority to retain compensation consultants to assist in the evaluation of the compensation of the directors, Chief Executive Officer, President, Senior Lender and Chief Financial Officer or other experts deemed necessary by the Committee.
Nominating Committee
The Board of Directors also has a Nominating Committee, currently consisting of Messrs.directors Ashlock, Breidenthal, Hixon, Moody Hixon, Ashlock,and Glass, and Sutherland, for selecting the nominees for election as directors. Each member of the Committee is independent in accordance with the requirements for companies listed on Nasdaq. The Nominating Committee met one timeonce during the year ended June 30, 2008.2010.
Only those nominations made by the Committee or properly presented by stockholders will be voted upon at the annual meeting. In its deliberations for selecting candidates for nominees as director, the Nominating Committee considers the candidate’s 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 First Home Savings Bank’s market area. Any nominee for director made by theaffairs. The Committee must be highly qualified with regard to some or all these attributes.does not specifically consider diversity. In searching for qualified director candidates to fill vacancies in the Board of Directors, the Committee solicits its current Board of Directors for names of potentially qualified candidates. Additionally, the Committee may request that members of the Board of Directors pursue their own business contacts for the names of potentially qualified candidates. The Committee would then consider the potential pool of director candidates, select the candidate the Committee believes best meets the then-current needs of the Board of Directors, 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 First Bancshares. The Committee will consider director candidates recommended by our stockholders. If a stockholder submits a proposed nominee, the Committee would consider the proposed nominee, along with any other proposed nominees recommended by members of the Board of Directors, in the same manner in which the Committee would evaluate its nominees for director. For a description of the proper procedure for stockholder nominations, see “Stockholder Proposals” in this Proxy Statement.
Corporate Governance
We are committed to establishing and maintaining high standards of corporate governance. The Board of Directors is cognizant of its responsibility to comply with the provisions contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and Nasdaq rules regarding corporate governance. The Board of Directors and its committees will continue to evaluate and improve our corporate governance principles and policies as necessary and as required.
Director Independence. First Bancshares’s common stock is listed on the Nasdaq Global Market. In accordance with Nasdaq requirements, at least a majority of First Bancshares’s directors must be independent directors.
The Board of Directors has determined that five of its six directors are independent, as defined by Nasdaq. Directors Ashlock, Breidenthal, Hixon, Moody Glass and SutherlandGlass are all independent. Only Daniel P. Katzfey, who is our President
Leadership Structure. The positions of Chairman of the Board and Chief Executive Officer are held by the same person; however, a separate individual serves as our President. We do not have a lead independent director. The Board believes this structure is appropriate for First Bancshares because of the current Chairman’s level of experience in managing large business, while allowing the President to focus on the day-to-day business of First Home Savings Bank.
Board Involvement in Risk Management Process. Risk management is the responsibility of management and risk oversight is the responsibility of the Board. The Board administers its risk oversight function principally through the division of responsibility within its committee structure, with each board committee being responsible for overseeing risk within its area of responsibility. Significant risk oversight matters considered by the committees are reported to and considered by the Board. Some significant risk oversight matters are reported directly to the Board, including matters not independent.falling within the area of responsibility of any committee. Types of risk with the potential to adversely affect First Bancshares include credit, interest rate, liquidity, compliance risks, and risks relating to our operations and reputation.
Directors keep themselves informed of the activities and condition of First Bancshares and of the risk environment in which it operates by regularly attending Board and assigned Board committee meetings, and by review of meeting materials, auditors’ findings and recommendations, and supervisory communications. Directors stay abreast of general industry trends and any statutory and regulatory developments pertinent to First Bancshares and First Home Savings Bank by periodic briefings by senior management, counsel, auditors or other consultants, and by more formal director education.
The Board ensures that all significant risk-taking activities are covered by written policies that are communicated to appropriate employees. The policies are formulated to further our business plan in a manner consistent with safe and sound practices. The Board ensures that all such policies are monitored by senior management to make certain that they conform with changes in laws and regulations, economic conditions, and First Bancshares’ and the Bank’s circumstances. The policies are implemented by senior management who develop and maintain procedures, including a system of internal controls, designed to foster sound practices, to comply with laws and regulations, and to protect First Bancshares against external crimes and internal fraud and abuse.
Management regularly provides the Board and its various committees with a significant amount of information regarding a wide variety of matters affecting First Bancshares. This includes senior management reports to the Board. These reports present information in a form meaningful to members of the Board, who recognize that the level of detail and frequency of individual senior management reports will vary with the nature of risk under consideration and First Bancshares’ and the Bank’s unique circumstances. Matters presented to the Board and Board committees generally include information with respect to risk. The Board and Board committees consider the risk aspects of such information and often request additional information with respect to issues that may involve risk to First Bancshares. The Board and Board committees also raise risk issues on their own initiative.
The Board has established a mechanism for independent third party review and testing of compliance with policies and procedures, applicable laws and regulations, and the accuracy of information provided by senior management. This is accomplished, for example, by an outside firm functioning as internal auditor, and the compliance officer and the chief credit officer reporting directly to the Audit Committee. In addition, an external audit is performed. The Audit Committee reviews the auditors’ findings with senior management and monitors senior management’s efforts to resolve any identified issues and recommendations. The Audit Committee provides regular reports of its activities to the Board.
The Board also reviews reports of inspection and examination or other supervisory activity, and any other material correspondence received from First Bancshares’ regulators. Findings and recommendations, if any, are carefully reviewed, and progress in addressing such matters is routinely monitored.
Code of Ethics. On August 25, 2004, the Board of Directors adopted the Officer and Director Code of Ethics. The Code is applicable to each of First Bancshares’s directors and officers, including the principal executive officer and senior financial officers, and requires individuals to maintain the highest standards of professional conduct. The Code was included as Exhibit 14 to First Bancshares’s Form 10-KSB for the year ended June 30, 2006. A copy of the Code of
Ethics is available upon request by contacting the Corporate Secretary, First Bancshares, Inc., P.O. Box 777, Mountain Grove, Missouri 65711.
Stockholder Communication With the Board of Directors. The Board of Directors maintains a process for stockholders to communicate with the Board of Directors. A stockholder may communicate with the Board of Directors or any individual director by mailing a written communication to the Corporate Secretary, First Bancshares, Inc., P.O. Box 777, Mountain Grove, Missouri 65711. The Corporate Secretary will forward such communication to the full Board of Directors 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 the Corporate Secretary has the authority to discard the communication or take appropriate legal action regarding the communication.
Annual Meeting Attendance by Directors. All directors are requested to attend our annual meetings of stockholders. All directors except Director Ashlock attended the 20072009 annual meeting of stockholders.stockholders, except for Director Moody.
Related Party Transactions
First Home Savings Bank, like many financial institutions, has followed a policy of granting loans to its officers, directors and employees on the security of their primary residences and also makes consumer loans to these persons. These loans are made in accordance with all applicable federal requirements. At June 30, 2008,2010, loans to directors and executive officers, including immediate family members, totaled $223,000.$125,982. These loans (1) were made in the ordinary course of business, (2) were made on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the time for comparable transactions with First Home Savings Bank’s other customers and (3) did not involve more than the normal risk of collectibility or present other unfavorable features when made.
Mr. Harold F. Glass, a director of First Bancshares, is a partner with the law firm of Millington, Glass & Love, which serves as legal counsel for First Bancshares, First Home Savings Bank and its subsidiary. In this capacity, Millington, Glass & Love was paid $55,682$86,660 in fees and expense reimbursement during the year ended June 30, 2008.2010. Of these fees and expense reimbursements, Mr. Glass’s interest was approximately $18,560.$28,900. These services were rendered on terms no less favorable to First Bancshares and First Home Savings Bank than those with unaffiliated third parties.
Mr. Thomas Sutherland, a director and Chairman and Chief Executive Officer of First Bancshares, holds both executive and ownership positions in a number of entities involved in the sale of lumber and hardware, including related services. During the year ended June 30, 2010, First Home Savings Bank purchased goods and contracted for services from four of these related entities, which totaled approximately $9,000.
Directors’ Compensation
The following table shows the compensation paid to our non-employee directors for the year ended June 30, 2008.2010. Compensation paid to Daniel P. Katzfey,Thomas M. Sutherland, our PresidentChairman and Chief Executive Officer is included in the section entitled “Executive Compensation.” The directors did not havereceive any stock or option awards, outstanding, nor did they receive any non-equity plan compensation or non-qualified deferred compensation earnings.
| | Fees Earned or Paid in Cash ($) | | | | All Other Compensation ($) | | | | Fees Earned or | | All Other Compensation ($) | | |
| | | | | | | | | | | | | | |
D. Mitch Ashlock | | 10,050 | | - | | - | | 10,050 | | 14,100 | | -- | | 14,100 |
R.J. Breidenthal, Jr. | | | 11,800 | | -- | | 11,800 |
Harold F. Glass | | 8,550 | | - | | 7,032 (2) | | 15,582 | | 13,750 | | 4,628 (1) | | 18,378 |
Billy E. Hixon | | 10,425 | | 900 | | - | | 11,325 | | 14,900 | | -- | | 14,900 |
John G. Moody | | 10,425 | | - | | - | | 10,425 | | 10,400 | | -- | | 10,400 |
Thomas M. Sutherland | | 9,800 | | 900 | | - | | 10,700 | |
Members of First Bancshares’s Board of Directors do not receive any fees. Members of First Home Savings Bank’s Board of Directors currently receive a monthly retainer of $400 and a board attendance fee of $700$450 per Board of Directors meeting, and Director Glass receives an additional $200 per meeting for legal fees.meeting. Directors receive a fee of $250$350 for attendance at Executive Committee Meetings, and $250 for