Under Mr. Fine’s employment agreement, a “change in control” will occur if:
| ● | any person or group acting in concert, other than the executive or his affiliates or immediate family members, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors; |
| ● | the directors serving at the time the agreement was entered into or any successor to any such director (and any additional director) who after such time (i) was nominated or selected by a majority of the directors serving at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors, cease for any reason to constitute at least a majority of the Company’s Board of Directors; |
22
any person or group acting in concert, other than the executive or his affiliates or immediate family members, is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors;the directors serving at the time the agreement was entered into or any successor to any such director (and any additional director) who after such time (i) was nominated or selected by a majority of the directors serving at the time of his or her nomination or selection and (ii) who is not an “affiliate” or “associate” (as defined in Regulation 12B under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of any person who is the beneficial owner, directly or indirectly, of securities representing 50% or more of the combined voting power of the Company’s outstanding shares entitled to vote for the election of directors, cease for any reason to constitute at least a majority of the Company’s Board of Directors;
| ● | a sale of more than 50% of the Company’s assets (measured in terms of monetary value) is consummated; or |
| ● | any merger, consolidation or like business combination or reorganization of the Company is consummated that results in the occurrence of any event described above. |
a sale of more than 50% of the Company’s assets (measured in terms of monetary value) is consummated; or
any merger, consolidation or like business combination or reorganization of the Company is consummated that results in the occurrence of any event described above.
James A. Fine, Jr. and W. Morris Fine. The employment agreements of James A. Fine, Jr. and
W. Morris Fine are substantially identical to J. Allen Fine’s employment agreement, except that under their agreements,
following termination of employment due to death, disability or retirement, by the
following apply: | ● | Messrs. Fine, Jr. and Fine are eligible to receive retirement benefits under their agreements after age 50, rather than age 70; |
| ● | the minimum lump sum salary payment upon termination for disability or retirement shall be no less than $766,680 for each; |
| ● | the minimum lump sum bonus compensation payment upon termination for disability or retirement shall be no less than $1,030,000 for James A. Fine, Jr. and no less than $1,015,000 for W. Morris Fine; |
| ● | the minimum lump sum salary payment for termination without cause or by employee for “good reason” shall be no less than $1,277,800 for each; |
| ● | the minimum lump sum bonus compensation payment for termination without cause or by employee for “good reason” shall be no less than $1,716,665 for James A. Fine, Jr. and no less than $1,691,665 for W. Morris Fine; |
| ● | if James A. Fine, Jr. leaves the Company due to a “change in control,” he will receive a lump sum salary payment in an amount no less than $764,124 and a lump sum bonus payment in an amount no less than $1,026,565; |
| ● | if W. Morris Fine leaves the Company due to a “change in control,” he will receive a lump sum salary payment in an amount no less than $764,124 and a lump sum bonus payment in an amount no less than $1,011,615; and |
| ● | following termination of employment by the Company other than for “cause” or by the executive due to a material breach by the Company of the agreement (i.e., “good reason”) or because of a “change in control,” they are entitled to cause the Company to transfer to them any life insurance policies owned by the Company on their lives. |
Company other than for “cause,” or by the executive for “good reason” or because of a “change in control,” they are entitled to (i) continued participation in the Company’s health insurance plans by their dependent children at no expense until any such children are no longer dependent and (ii) cause the Company to transfer to them any life insurance policies owned by the Company on their lives.
Conditions to Receipt of Severance Benefits.
Under each named executive officer’s employment agreement, the Company’s obligations to provide the executive with the severance benefits described above are contingent on: | ● | The executive’s compliance with certain covenants with respect to confidential information; |
| ● | The executive’s compliance with a two-year non-competition covenant; and |
| ● | The executive’s compliance with a two-year non-solicitation covenant. |
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The executive’s execution of a standard release of claims;The executive’s compliance with a two-year non-competition covenant; and
The executive’s compliance with a two-year non-solicitation covenant.
Death Benefit Plan Agreements
J. Allen Fine is party to an Amended and Restated Death Benefit Plan Agreement with the Company. The Death Benefit Plan Agreement provides that in the event of his death while employed by the Company, a lump sum amount equal to three times the
sumhighest rate of
his then-current base salary
paid at any time, plus
three times the average of
histhe three highest years of annual bonus compensation
for the past three fiscal years,paid to him at any time, be paid within 60 days of his death to the beneficiaries designated by Mr. Fine under this agreement.
James A. Fine, Jr. and W. Morris Fine
also are
also each party to
aan Amended and Restated Death Benefit Plan Agreement. Their Death Benefit Plan Agreements provide that in the event of
theirthe executive’s death while employed by the Company, a lump sum amount equal to three times the
sumhighest rate of
their then-current base salary
but in no event less than $766,680 for each executive,paid at any time, plus
three times the average of
each executive’sthe three highest years of annual bonus compensation
for the past three fiscal years, but in no event less than $1,030,000 for James A. Fine, Jr., and no less than $1,015,000 for W. Morris Fine,paid to him at any time, be paid within 60 days of
theirhis individual death to a beneficiary designated by the executive. Additionally, under each executive’s Death Benefit Plan Agreement, the respective designated beneficiary of
each of Messrs. Fine and Finethe executive would also be paid a lump sum amount equal to $2,000,000,
reduced by the following amounts:
(a)
| ● | reduced by the following amounts: |
| (a) | an amount equal to three times the then-currenthighest rate of base salary but in no event less than $766,680 for each executive;he has received any time; |
(b)
| (b) | an amount equal to three times the average bonus compensation duringof the preceding three fiscal years but in no event less than $1,030,000 for James A. Fine, Jr. and no less than $1,015,000 for W. Morris Fine;highest annual bonuses paid to him at any time; |
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| (c)
| the cost of continued participation in the Company’s health insurance plans by the executive’s wife until her death; and |
| (d)
| the cost of continued participation in the Company’s health insurance plans by the executive’s dependent children until any such children are no longer dependent; and |
| ● | increased by the amounts accrued on the Company’s books as of the date of death for the payments described in items (a) through (d) above. |
increased by the amounts accrued on the Company’s books as of the date of death for the payments described in items (a) through (d) above.
Grants of Plan-Based Awards in
20212023
There were no grants of
plan basedplan-based awards to the named executive officers in the fiscal year ended December 31,
2021.2023.
Outstanding Equity Awards at
20212023 Fiscal Year-End
There were no outstanding equity awards to the named executive officers as of December 31,
2021.20212023.
2023 Option Exercises and Stock Vested
There was no exercise of options or SARs or vesting of shares of Common Stock held by the named executive officers in fiscal
2021.2023.
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Proposal 2 – Advisory Vote to Approve ExecutivePAY VERSUS PERFORMANCEAs required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation and certain financial performance measures of the Company. The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the Compensation
This Proposal 2 enables Committee view the link between the Company’s shareholders to cast a non-binding, advisory vote to approve theperformance and compensation offor the named executive officers as disclosedofficers.
2023 | | | 731,233 | | | 731,233 | | | 654,602 | | | 654,602 | | | 124.27 | | | 21,685,900 |
2022 | | | 1,616,073 | | | 1,616,073 | | | 1,538,705 | | | 1,538,705 | | | 108.78 | | | 23,903,000 |
2021 | | | 1,558,657 | | | 1,558,657 | | | 1,492,167 | | | 1,492,167 | | | 140.95 | | | 67,020,300 |
(1)
| For each year, reflects the total compensation amount reported for J. Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, in the “Total” column of the Summary Compensation Table that appears on page 22. |
(2)
| For each year, reflects the amount of “compensation actually paid” to Allen Fine, Chief Executive Officer and Chairman of the Board of the Company, as computed in accordance with Item 402(v) of Regulation S-K. No equity awards have been granted to J. Allen Fine during the years covered by the table above, nor did he hold any outstanding equity awards during such years, and, as a result, no adjustments were made to J. Allen Fine’s total compensation as reported in the Summary Compensation Table. |
(3)
| For each year, reflects the average of the total compensation amounts reported for our other named executive officers as a group (excluding J. Allen Fine) in the “Total” column of the Summary Compensation Table that appears on page 22. The names of each of the other named executive officers included for purposes of calculating the average amount for each year are: James A. Fine, Jr., President, Chief Financial Officer and Treasurer, and W. Morris Fine, Executive Vice President and Secretary. |
(4)
| For each year, reflects the average of the amounts of “compensation actually paid” to the other named executive officers as a group (excluding J. Allen Fine), as computed in accordance with Item 402(v) of Regulation S-K. The names of each of the other named executive officers included for purposes of calculating the average amount for each year are: James A. Fine, Jr., President, Chief Financial Officer and Treasurer, and W. Morris Fine, Executive Vice President and Secretary. No equity awards have been granted to James A. Fine, Jr. or W. Morris Fine during the years covered by the table above, nor did they hold any outstanding equity awards during such years, and, as a result, no adjustments were made to total compensation as reported in the Summary Compensation Table. |
(5)
| Cumulative “Total Shareholder Return” (“Company TSR”) is calculated by dividing the sum of (i) the difference between the share price of Common Stock at the end and the beginning of the measurement period and (ii) the cumulative amount of dividends paid on shares of Common Stock for the measurement period, assuming dividend reinvestment, by the share price of Common Stock at the beginning of the measurement period. Each amount assumes that $100 was invested in Common Stock on December 31, 2020, and that dividends were reinvested for additional shares. |
(6)
| Reflects the dollar amount of net income reported in the Company’s audited financial statements for the applicable year. |
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Analysis of the Information Presented in this Proxy Statement inthe Pay Versus Performance Table
In accordance with
Item 402(v) of Regulation S-K, we are providing the
rulesfollowing descriptions of the
SEC.relationships between information presented in the Pay Versus Performance table.
The
Compensation Committee believes thatfollowing graph compares, for each of 2023, 2022 and 2021, the
ultimate objective of an effective executive compensation program is to reward the accretion of stockholder value over the long-term. The Compensation Committee seeks to align the interests of our executives with those of our shareholders; retain executives with the skills, experience and vision to lead the Company; promote fairness, executive performance and long-term commitment“compensation actually paid” to the
Company; and maintain a compensation program that is affordable and administratively efficient. Please read the “Executive Compensation” section beginning on page 15 and “Corporate Governance—Board of Directors and Committees—Compensation Committee” section beginning on page 4 for additional details about our compensation programChief Executive Officer and the
compensation ofaverage “Compensation Actually Paid” to our
executive officers, including the compensation of ourother named executive officers for
fiscal 2021.We are asking our shareholderseach of those years to indicate their support for ourthe Company TSR. The Compensation Committee does not consider Company TSR as a general matter when designing the Company’s executive compensation program asprogram. As described in this Proxy Statement. This Proposal 2 givesmore detail under “Executive Compensation—Narrative Discussion of Executive Compensation” above, the Compensation Committee does review stock performance when making compensation decisions but focuses on building long term shareholder value while at the same time acknowledging the cyclical nature of the Company’s business.
The following graph compares, for each of 2023, 2022 and 2021, the “compensation actually paid” to the Chief Executive Officer, and the average “Compensation Actually Paid” to our
shareholders the opportunity to express their views on the compensation of our named executive officers. This vote is not intended to address any specific term of compensation, but rather the overall compensation of ourother named executive officers
as disclosed in this Proxy Statement. Accordingly, we are asking our shareholders to vote “FOR” the following resolution at the annual meeting:“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Proxy Statement for the 2022 Annual Meetingeach of Shareholders pursuant to the SEC’s compensation disclosure rules, including the executive compensation tables, narrative discussion and any related materials, is hereby APPROVED.”
Although the vote on this Proposal 2 regarding the compensation of our named executive officers is not binding, we value the opinions of our shareholders and will consider the result of the vote when determining future executive compensation arrangements.
Vote Required
The affirmative vote of a majority of the votes cast on the proposal is required to approve, on an advisory basis, the resolution approving the compensation paidthose years to our named executive officers. Abstentions and broker non-votes will not be countednet income as votes cast on the proposal.
The Board of Directors unanimously recommends that you vote “FOR” the advisory resolution approving the compensation paid toreported in our named executive officers.
Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee selected Dixon Hughes Goodman LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Dixon Hughes Goodman LLP served as our independent registered public accounting firm for the fiscal year ended December 31, 2021, and its representatives are expected to attend the Annual Meeting and to be available to respond to appropriate questions. They will have the opportunity to make a statement if they wish to do so.
Although shareholder ratification of the appointment of Dixon Hughes Goodman LLP as the Company’s independent registered public accounting firm is not required by law or the Company’s Bylaws, the Audit Committee has determined that, as a matter of corporate governance, the selection of the Company’s independent registered public accounting firm should be submitted to the shareholders for ratification. If the shareholders fail to ratify the selection, the Audit Committee will reconsider its selection of Dixon Hughes Goodman LLP for subsequent fiscal years. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
Vote Required
Approval of the ratification of the appointment of the independent registered public accounting firm will require the affirmative vote of a majority of the votes cast on the proposal. Abstentions and broker non-votes will not be counted as votes cast for the purpose of ratifying the selection of Dixon Hughes Goodman LLP.
The Board unanimously recommends that you vote “FOR” the proposal to ratify the appointment of Dixon Hughes Goodman LLP as the Company’s independent registered public accounting firm for fiscal 2022.
Audit and Non-Audit Fees
Aggregate fees for professional services rendered by our independent registered public accounting firm, Dixon Hughes Goodman LLP, for the years ended December 31, 2021 and 2020 are set forth below.
| | 2021 | | | 2020 | |
Audit Fees (1) | | $ | 391,360 | | | $ | 376,500 | |
Audit-Related Fees (2) | | | — | | | | 2,500 | |
Tax Fees (3) | | | 153,000 | | | | 130,000 | |
All Other Fees | | | — | | | | — | |
Total Fees | | $ | 544,360 | | | $ | 509,000 | |
(1) In 2021 and 2020, audit fees consisted of the audit of the financial statements, reviews of the quarterly financial statements, services rendered in connection with statutory and regulatory filings and services related to internal control over financial reporting.
(2) Audit-related fees consisted of fees related to compliance with regulatory and statutory filings.
(3) Tax fees consisted primarily of tax compliance services.
Audit and Non-Audit Services Pre-Approval Policy
The Audit Committee has adopted an Audit and Non-Audit Services Pre-Approval Policy for pre-approving all audit and permissible non-audit services provided by the independent registered public accounting firm.
Each year, the Audit Committee pre-approves independent registered public accounting firm services and associated fee ranges within the categories of Audit Services, Audit-Related Services, Tax Services and Other Services.
Throughout the year, circumstances may arise that require the engagement of the independent registered public accounting firm for additional services that were not contemplated by the existing pre-approval categories. In that case, the Audit and Non-Audit Services Pre-Approval Policy requires specific approval by the Audit Committee of such services before engaging the independent registered public accounting firm. To ensure the prompt handling of such matters, the Audit Committee has granted pre-approval authority to its Chairman. The Chairman reports any pre-approval decisions made at the next Audit Committee meeting.
During 2021 and 2020, none of the services provided to the Company by the independent registered public accounting firm under the categories Audit-Related Services and Tax Services described above were approved by the Audit Committee after such services were rendered pursuant to the de minimis exception established under SEC regulations.
AUDIT COMMITTEE REPORT
The Audit Committee is directly responsible for overseeing the accounting and financial reporting processes of the Company and appointing, retaining, compensating and overseeing the work of the independent registered public accounting firm. Management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. The independent registered public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America.
The independent registered public accounting firm provided the Audit Committee with the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent registered public accounting firm any relationships that may have an impact on its objectivity and independence. Finally, the Audit Committee considered whether the independent registered public accounting firm’s performance of services, other than audit services, is compatible with maintaining the independence of the independent registered public accounting firm.
The Audit Committee discussed and reviewed with management and the independent registered public accounting firm the audited financial statements for each year. The Company does not use net income alone as ofa performance measure in the overall executive compensation program. However, the Compensation Committee considers net income among other metrics when determining annual salary adjustments and for the year ended December 31, 2021. The Audit Committee discussed with the independent registered public accounting firm those matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (United States), including Auditing Standard No. 1301, “Communications with Audit Committees,” and the SEC. The Audit Committee reviewed with the independent registered public accounting firm its audit plans, audit scope and identification of audit risks.discretionary incentive bonuses.
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Based on the reviews and discussion referenced above, the Audit Committee recommended to the Board of Directors that the audited financial statements of the Company be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for filing with the SEC.
Submitted by the Audit Committee of the Board of Directors:
Elton C. Parker, Jr., Chairman
Tammy F. Coley
David L. Francis
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors recognizes that related party transactions present a heightened risk of conflicts of interest, or the perception of conflicts of interest, and has adopted a written policy to be followed in connection with all related party transactions involving the Company. Pursuant to the policy, all related party transactions must be approved by either (1) a majority of the disinterested members of the Audit Committee of the Board of Directors or (2) a majority of independent and disinterested members of the Board of Directors. In either case, a related party transaction may not be approved by a single director. For purposes of the policy, the term “related party transaction” is defined as any transaction that is required to be disclosed in the Company’s proxy statements or other filings with the SEC pursuant to Item 404 of Regulation S-K. Loans or guaranties to directors and executive officers are prohibited.
There were no reportable related person transactions during fiscal
20202022 and
2021.2023.
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SHAREHOLDER PROPOSALS FOR
20232024 ANNUAL MEETING
Shareholders who, in accordance with Rule 14a-8 of the Exchange Act, wish to present proposals for inclusion in the proxy materials to be distributed in connection with the
20232025 Annual Meeting of Shareholders must submit their proposals so that they are received at the Company’s principal executive offices no later than December
12, 2022.13, 2024. Pursuant to SEC rules, submitting a proposal does not guarantee that it will be included in the proxy materials.
In accordance with the Company’s Bylaws, in order to be properly brought before the
20232025 Annual Meeting of Shareholders, a shareholder’s notice of a matter the shareholder wishes to present (other than a matter brought pursuant to Rule 14a-8 of the Exchange Act), or the person or persons the shareholder wishes to nominate as a director, must be delivered to the Corporate Secretary of the Company at its principal executive offices no earlier than the close of business on January
18, 202315, 2025 and no later than the close of business on February
17, 2023.14, 2025. To be in proper form, such shareholder’s notice must include the specified information concerning the proposal or nominee as described in the Company’s Bylaws. The Company or the presiding officer at the annual meeting of shareholders may refuse to accept any such proposal that is not in proper form or submitted in compliance with the procedures specified in the Company’s Bylaws.
Shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees in accordance with Rule 14a-19 under the Exchange Act must provide written notice that sets forth the information required by the Company’s Bylaws and Rule 14a-19(b), which notice must be delivered to the Secretary of the Company within the applicable timeframes set forth in the Company’s Bylaws described above. The Company or the chair of the meeting at the annual meeting of shareholders may refuse to accept any such proposal that is not in proper form or submitted in compliance with the procedures specified in the Company’s Bylaws or Rule 14a-19, as applicable.
| | | BY ORDER OF THE BOARD OF DIRECTORS: |
| | | |
| |
| | W. Morris Fine, Secretary |
| | | April 11, 202212, 2024 |
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