UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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SEACOAST BANKING CORPORATION OF FLORIDA
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2016
Proxy Statement
2017
815 Colorado Avenue Stuart, |
NOTICE OF 2017 ANNUAL MEETING OF SHAREHOLDERS
Tuesday,Thursday, May 24, 201625, 2017
3:0030 p.m. Eastern Time
Seacoast Banking Corporation of Florida (“Seacoast”) will hold its 20162017 Annual Meeting of Shareholders at Vistathe Founder’s Room, Hawthorn Suites, 301 Lamberton Drive, West Palm Beach,Orlando Science Center, 777 E. Princeton Street, Orlando, Florida, 32803, on Tuesday,Thursday, May 24, 201625, 2017 at 3:0030 p.m. LocalEastern Time.
ITEMS OF BUSINESS
To vote on the following proposals:
1. | Election of Directors.To |
2. | Ratification of Appointment of Independent Auditor.To ratify the appointment of |
3. | Advisory (Non-binding) Vote on Compensation of Named Executive Officers.To |
4. | To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
RECORD DATE
You can vote if you were a shareholder of record on the close of business on March 23, 2017, with is the record date for the annual meeting. This Notice of the 2017 Annual Meeting of Shareholders and the accompanying proxy statement are sent by order of the Board of Directors.
|
Dennis S. Hudson, III | |
Chairman & Chief Executive Officer |
April 7, 20166, 2017
Table of Contents
TABLE OF
CONTENTS
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ii |
LOCATION OF THE | Inside Back Cover |
iii |
Date, Time and Place:Tuesday,Thursday, May 24, 2016,25, 2017, at 3:0030 P.M. Eastern Time at Vistathe Founder’s Room, Hawthorn Suites, 301 Lamberton Drive, West Palm Beach,OrlandoScience Center, 777 E. Princeton Street, Orlando, Florida 32803. The Annual Meeting shall be referred to herein as the “Meeting” or the “Annual Meeting.”
Street Name Holders:If your shares of Seacoast common stock are held in a bank, brokerage or other institutionalotherinstitutional account (which is commonly referred to as “street name”), you are a beneficial owner of these shares, (which is commonly referred to as “street name”). However,but you are not the record holder. If your shares are held in street name, you are invited to attend the Annual Meeting; however, to vote your shares in person at the meeting, you must request and obtain a power of attorney or other authority from the bank, broker or other nominee who holds your shares and bring it with you to submit with your ballot at the meeting. In addition, you may vote your shares before the meeting by phone or over the Internet by following the instructions set forth below or, if you received a voting instruction form from your brokerage firm, by mail by completing, signing and returning the form you received. Your voting instruction form will set forth whether Internet or telephone voting is available to you. Although most brokers and nominees offer telephone and Internet voting, availability and specific processes will depend on their voting arrangements. We encourage you to record your vote through the Internet if such process is available to you.
How to View Proxy Materials Online:Online
Important Notice Regarding the Availability of Proxy Materials for the 20162017 Shareholder Meeting
Our 20162017 Proxy Statement and the Annual Report on Form 10-K for the year ended December 31, 20152016 (referred to collectively herein as the “proxy materials”) are available online at:www.proxyvote.com or at www.seacoastbanking.com/GenPage.aspx?IID=100425&GKP=325642.
We have mailed to certain shareholders a notice of internet availability of proxy materials on or about April 7, 2016.6, 2017. This notice contains instructions on how to access and review the proxy materials on the internet. The notice also contains instructions on how to submit your proxy on the internet or by phone, or, if you prefer, to obtain a paper or email copy of the proxy materials.
You may vote common shares that you owned as of the close of business on March 23, 2016,2017, which is the record date for the meeting.Meeting.
Your vote is important. Whether or not you plan to attend the meeting,Meeting, we hope you will vote as soon as possible. Please review the instructions on each of your voting options described in this proxy statement, as well as in the notice you received in the mail. By voting prior to the meeting,Meeting, you will help ensure that we have a quorum and that your preferences will be expressed on the matters that are being considered. If you are able to attend the meeting,Meeting, you may vote your shares in person, even if you have previously voted by another means by revoking your proxy vote at any time prior to its exercise.exercise, pursuant to the procedures specified in “Revocation of Proxies.”
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You may vote by any of the following methods:
BY TELEPHONE:
You can vote by calling the number on your proxy card or voting instruction form, or provided on the website listed on your notice.
BY INTERNET:
You can vote online at www.proxyvote.com.
BY MAIL:
You also may vote your shares by requesting a paper proxy card and completing, signing and returning it by mail in the envelope provided.
IN PERSON:
You can vote in person at the annual meeting. If you hold your shares in street name, you must obtain a proxy form the record holder to vote in person.
BY TELEPHONE: You can vote by calling the number on your proxy card or voting instruction form, or provided on the website listed on your notice. | |
BY INTERNET: You can vote online atwww.proxyvote.com | |
BY MAIL: You also may vote your shares by requesting a paper proxy card and completing, signing and returning it by mail in the envelope provided. | |
IN PERSON: You can vote in person at the Annual Meeting. If you hold your shares in street name, you must obtain a proxy from the record holder in order to vote in person. |
For telephone and internet voting, you will need the 16-digit control number included in your notice, on your proxy card or in the voting instructions that accompanied your proxy materials.
For shares held in employee plans, we must receive your voting instructions no later than 11:59 p.m. Eastern Time on May 17, 201618, 2017 (the “cut-off date”) to be counted. Otherwise, you may vote up until 11:59 P.M. Eastern Time the day before the meeting date.
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PROXY SUMMARY |
Readers of previous Seacoast proxy statements will notice significant enhancements to this year’s proxy statement. Our objectives are to provide our existing and prospective shareholders, employees, customers, and other constituents with deeper insights into the transformation of our business, our near-term performance expectations, and how innovative approaches and perspectives on board and executive talent and the alignment between pay and performance are supporting our efforts to build a truly great company.
The Board of DirectorsOur balanced growth strategy, which is focused on organic growth and management view 2015 as an inflection pointcompleting value creating acquisitions in the implementation ofgrowing markets, is delivering value for our strategic vision for Seacoast. We delivered our best performance since the financial crisis of 2008 while continuing to invest in the future of the franchise, driving significant progress in the transformation of our company. Our success in executing on our strategy was buoyed by the tailwind of a strong Florida economy that added to our growth in customer households and across our products and services. These indicators suggest we are well-positioned for future success.shareholders.
In this section, we summarize 20152016 performance highlights and other information discussed latercontained elsewhere in this proxy statement. Please carefully review the information included throughout this proxy statement and as provided in the 20152016 Annual Report on Form 10-K before you vote.
20152016 Performance Highlights
Value Creation for our Shareholders
· | Seacoast continued |
Total return combines share price appreciation and dividends paid to show the total return to the shareholder expressed as an annualized percentage.
· | Seacoast’s industry leading performance is supported by five key themes: |
º | Our balanced growth strategy is working. We are meeting the needs of our |
º | We have a singular view of how we serve the customer, leveraging analytics to deepen and broaden relationships across all lines of business. |
º | We have a deep and talented management team and experienced Board that we believe is able to execute our strategy and deliver shareholder value. |
º | We have an enviable position in a strong Florida market. |
º | We are only in the early innings of our balanced growth strategy and have a clear roadmap to continue to create value. |
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· |
Revenues increased $35.3 million year over year to $177.4 million, reflecting significant franchise growth from $142.1 million in 2015. |
º | Net income |
º | Households we serve have grown to 95,591 from 66,826 in 2013, with Orlando households now representing nearly 22% of Seacoast’s overall households served, up from 3.9% in 2013. |
º | Loans climbed $723 million, or 34%, from year-ago levels, and adjusting for acquisitions, loan growth rose 18%, or $377 million. Our Accelerate commercial banking delivery platform, which we invested in four years ago, has become a significant part of our business. Also, we continue to maintain a very granular loan portfolio with modest commercial real estate exposure. |
º | Our adjusted efficiency ratio1 improved to 60.8% for fourth quarter 2016 |
Our balanced growth strategy combines outsized organic growth and select strategic M&A along with prudent risk management to deliver consistent results.
· |
o |
o | Deposit growth increased 19% organically, 95% including mergers and acquisitions |
o | Loan growth increased 34% organically, 115% including mergers and acquisitions |
o | Our focus on business banking has led to a 190% increase in business loans outstanding since the beginning of 2014 |
o | Our focus on deepening relationships with current customers has led to organic growth as well. Since the beginning of 2014: |
· | 240% increase in loan sales to current customers |
· | 107% increase in deposit accounts sold to current customers |
· | 85% increase in debit cards sold to current customers |
· Mergers and Acquisitions Highlights
o | BankFIRST acquired October 2014 |
· | IRR exceeded internal |
· | Household growth in acquired branches = +15% |
· | Customer growth highlights |
o | Avg Services = +29% |
o | Consumer Installment Loans = +88% |
1 Non-GAAP measure; refer to Appendix A – Information- Informtion Regarding Non-GAAP Financial MeasuresMeasures.
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o |
o |
o | Mobile Banking = +294% |
o | Grand Bank acquired July 2015 |
· | IRR exceeded internal target of 24% |
· | Household growth in |
· | Customer growth highlights |
o | Avg Services = +12% |
o | Debit Cards = +15% |
o | Mobile Banking = +70% |
o | Online Banking = +25% |
o | Floridian Financial Group acquired March 2016 |
· | Strengthened presence in Daytona and Orlando, along attractive I-4 Corridor |
· | Compelling financial metrics announced and |
· | Approximately 20% IRR |
· | Tangible book value dilution earn back of 4.2 years |
· | EPS accretion of $0.02 in |
· | Acquisition closed and converted in March 2016 |
o | BMO Harris Orlando Banking Operations acquired June 2016 |
· | Further strengthened franchise |
· | Compelling financial metrics announced and on track |
· | IRR in excess of 20% |
· | More than 6% accretive to 2016 EPS |
· | Acquisition closed and converted in June 2016 |
o | Full impact of cost savings were realized in Q4 2016 |
o | Looking ahead, we anticipate further gains upon the successful integration of |
· | Our conservative risk profile positions us well for sustainable value creation |
o | While the total loan portfolio has grown by 138% since 2011, the average loan size has decreased by 42% in the same time period. We operate a granular, diversified loan portfolio. |
o | The top 10 loan relationships represent 40% of total risk based capital, down by 35% since 2011 |
· | Our approach to Commercial Real Estate is very different than our Florida peers |
· | CRE loans as a percent of total capital remain relatively flat and intentionally below Florida peers, at 200% vs 271% for our peer group as of Q3 2016. |
Our methodical transformation continues with clearstrong evidence of success and significant implications.implications over time.
· | Digital connectivity and big data are disrupting all industries, including community banking, ushering in the age of the |
· | We recognized the implications early and, through efforts aimed at providing digital/electronic delivery to customers and through development of industry-leading technology and analytics, we have begun to drive growth and reduce costs. |
o | Today more than |
o | We continue to focus on driving routine transactions to lower cost channels and have made significant progress. We expect to process more routine transactions through non-branch channels (e.g. mobile, ATMs) than branch channels by the middle of 2017. Our ATMs and mobile app today process the equivalent servicing volume of 18 branches combined. |
o | Over |
o | More than |
o |
tangible results for shareholders. Since year-end 2012, |
The Florida Economy continues to provide tailwinds for our franchise.
· |
· |
· |
· | Florida is also among the |
· | Florida offers a diversified economy, with growth in |
OurWe have a skilled and engaged employee base, is a tremendous asset.with multiple awards over the past year.
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· | Our Digital Marketing Manager was recognized by Google as a success story and also recognized as one of |
· |
And our focus on customers is what makes us special.
· | 90 years of experience has firmly established our brand and allowed us to hone our convenience service model. |
· | Our customer satisfactions scores remain |
2 Forbes, September 4, 2012
· | Gallup indicates that “a customer who is fully engaged represents an average 23%premium in terms of share of wallet, profitability, revenue, and relationship growth compared with the average customer. In stark contrast, an actively disengaged customer represents a 13%discount in those same measures.” |
We are equipped with a unique business model that combines engaged employees and customers, a brand built through years of service to our customers and constituents, and technology that allows us to understand our customers and meet their wants and needs through the delivery channelthey choose. We have begun to grow revenues and bring down costs as a result, while continuing to invest in those areas that will transform our company, positioning us to meet the needs of not only today’s, but tomorrow’s, customers.
We recognize that we are early in this investment and transformation, and we have started to see the success this transformation can bring to our top and bottom line results. Shareholder return figures lead us to believe that you, our shareholders, also recognize our performance trends and the opportunity our strategic direction can provide. We look forward to continuing to serve our shareholders, customers and communities in 2016 and beyond.
3 Gallup Business Journal, July 22, 2014
Executive Compensation Program Highlights
The Compensation and Governance Committee (“CGC”) took a number of actions in 2015is committed to better alignaligning our compensation strategies with the needs of our evolving business strategy, our commitment to good governance and effective risk management practices, and our efforts to generate superior returns for our long-term shareholders. These actions enhanced and increased theTo this end, we emphasize pay-for-performance emphasis ofin our executive compensation programs and, ultimately, the alignment of management with shareholder interests. Significant value only will be realized if we exceed our long-term performance expectations and deliver meaningful value creation for our shareholders.
Seacoast CEO FY15 Total Direct Compensation vs. Core Bank Peer Composite CEOs
Our executive compensation strategy strongly aligns our CEO and other executives with long-term shareholder interests.
· | Base salary is the sole form of fixed compensation. For our CEO, base salary represents |
· |
· | All incentive |
· | The majority of our variable pay opportunity is delivered as performance-based stock that only can be earned if we attain or exceed minimal levels of acceptable financial or market-based goals, as approved by the CGC. |
· | Performance-based stock is our primary form of incentive compensation, ensuring that pay outcomes closely align with shareholder returns. |
1 Gallup Business Journal, July 22, 2014
Potential Program Changes forin 2016
· | Introduction of individual performance scorecards for all of our executives which, among other things, |
· |
Please refer to theCompensation Discussion and AnalysisandThe Executive Compensation Tablesin this proxy statement for additional details.
Summary of Voting Matters and Board Recommendations
Item | Proposal | Board Voting Recommendation | Vote Required |
1 | FOR ALL | Plurality vote* | |
2 | Ratification of Appointment of Crowe Horwath LLP as Independent Auditor for | FOR | Affirmative vote of a majority of votes cast |
3 | Advisory (Non-binding) Vote on Executive Compensation (Say on Pay) | FOR | Affirmative vote of a majority of votes cast |
* More fully described inProposal 1 - Election of Directors, Manner of Voting Proxies
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You are being asked to, among other things, re-elect fiveproposals, elect four Class IIIII directors of Seacoast. All of the nominees, except Alvaro Monserrat, are presently directors of Seacoast andSeacoast. All of the nominees also serve as members of the board of directors of Seacoast’s principal banking subsidiary, Seacoast National Bank (the “Bank”). Alvaro J. Monserrat has been nominated by Seacoast’s Board to replace T. Michael Crook, who intends to retire from the Company’s Board at the end of the Annual Meeting. If elected, each director nominee will serve a three year term expiring at the 20192020 Annual Meeting and until their successors have been elected and qualified. Detailed information about each nominee’s background, skills and expertise can be found inProposal I – Election of Directors.
Name | Age | Director Since | Current Occupation | Independent | No. of Other Public Boards |
Stephen E. Bohner | 64 | 2003 | President and owner of real estate company | ü | 0 |
Alvaro J. Monserrat | 48 | new | CEO of a leading digital workspace technology company | ü | 0 |
Julie H. Daum | 62 | 2013 | Senior director of national executive and board search firm | ü | 0 |
Dennis S. Hudson, III | 61 | 1984 | Chairman of Company and Bank | 2 |
Name | Age | Director Since | Current Occupation | Independent | No. of Other Public Boards |
Dennis J. Arczynski | 64 | 2013 | Risk management, corporate governance, regulatory affairs and banking consultant | ✔ | 0 |
Maryann Goebel | 65 | 2014 | Independent IT management consultant | ✔ | 0 |
Roger O. Goldman | 71 | 2012 | Lead director, American Express Bank FSB; President & managing partner, Berkshire Opportunity Fund | ✔ | 0 |
Dennis S. Hudson, Jr. | 88 | 1983 | Retired Chairman of Company and Bank | 0 | |
Thomas E. Rossin | 82 | 2004 | Practicing attorney and management chairman, St. John, Rossin & Burr, PLLC | ✔ | 0 |
Board and Governance Highlights
INFORMATION ABOUT OUR CURRENT BOARD COMMITTEE MEMBERSHIP AND 20152016 COMMITTEE MEETINGS
Director Name | Audit | Compensation & Governance | Enterprise Risk Management | Audit | Compensation & Governance | Enterprise Risk Management | Strategy & Innovation | |||
Dennis J. Arczynski(1) | X | X | (2) | X | X(2) | X | ||||
Stephen Bohner(1) | X | X | ||||||||
Jacqueline L. Bradley(1) | X | |||||||||
T. Michael Crook | X | X | ||||||||
H. Gilbert Culbreth, Jr.(1) | X | (2) | X(2) | |||||||
Julie H. Daum(1) | X | X | ||||||||
Christopher E. Fogal(1) | X | (2) | X(2) | |||||||
Maryann Goebel (1) | X | X | (3) | X | X | |||||
Roger O. Goldman(1) | ||||||||||
Dennis S. Hudson, Jr. | X | X | ||||||||
Dennis S. Hudson, III | X | |||||||||
Timothy S. Huval(1) | X | |||||||||
Herbert A. Lurie | X | |||||||||
Alvaro J. Monserrat | X | |||||||||
Thomas E. Rossin(1) | X | X | X(2) | |||||||
TOTAL MEETINGS HELD | 8 | 10 | 7 | 9 | 8 | 5 | 7 |
(1) | Independent Director |
(2) | Committee |
(3) |
Independent Lead Director who serves as an ex-officio (non-voting) member of all committees |
(4) | Chairman of the Board |
Director Attendance:All directors attended over 75 percent75% or more of the meetings of the board and boardBoard andBoard committees on which they served in 2015.2016.
Over the past four years, we have continually recruited new talent |
In addition, on March 23, 2016, we announced the selection of two new highly qualified individuals who we intend to appoint to our Board in 2016:
We expect to appoint Mr. Lurie asincrease diversity of thought and experience and to better align overall Board capability with our strategic focus. During this time, our Chairman/CEO and our Lead Independent Director have focused considerable attention on Board refreshment and we have added six new directors (seven should Alvaro Monserrat be elected at the Annual Meeting) with skill sets needed to help navigate the fast-changing environment impacting our business. As a director atresult, our April 2016 board meeting,overall Board composition has been significantly altered across a number of important aspects creating a vibrant Board culture and expect to appoint Mr. Huval as a director at a board meeting to be held after mid-year.unrelenting focus on creating shareholder value over the long term.
Below is a graphic illustration of the changes in our Board over the past three years and additions in 2016:four years:
Seacoast Board of Directors
Currently, our board has the following characteristics:
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Since 2013, we have managed the Board talent pipeline and:
· | added three women to our |
· | added expertise in the areas of regulatory matters, risk management, talent acquisition, corporate governance, credit management, strategic planning, investment banking and |
· | transitioned |
As a result,Should Alvaro Monserrat be elected at the Annual Meeting, we will have reduced the average tenure of our non-executive directors from 13.7 years to 10.19.5 years and decreased the average age by nearly 46.8 years.
Upon appointment of the two new Board members in 2016, we will:
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Our Board is committed to identifying, appointing and developing directors who reflect the diverse profiles of our existing and prospective customers, have experience and expertise aligned with our strategic objectives, and who can add significant value to itsthe Board’s efforts to oversee Seacoast on behalf of our shareholders. Constructing an effective Board and positioning it for success are key objectives for Seacoast. Under Mr.our Independent Lead Director Goldman’s guidance, we have made significant progress in expanding the experience of the Board. These outcomes have increased overall Board effectiveness while increasing its agility and the velocity of decision making, which are critical inputs in the governance process given the need to outpace our competitors.process. Under Mr. Goldman’s leadership, the Board is well-positioned to fulfill its duties to our shareholders and meet the evolving needs of Seacoast.
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Our Corporate Governance Framework
Board Independence | · · Our CEO is the only member of management who serves as a director. |
Board Refreshment & Diversity | · We seek a board that, considered as a group, will possess a diversity of experience, which may, at any one or more times, include differences with respect to personal, educational or professional experience, gender, ethnicity, national origin, geographic representation, community involvement and age. · We have a mix of new and longer tenured directors to help ensure fresh perspectives as well as continuity and experience. The average tenure of our non-management directors · |
Board Committees | · We have · The Audit Committee and CGC consist entirely of independent, non-management directors. · Chairs of the committees shape the agenda and information presented to their committees. |
Strong Independent Lead Director | · Our independent directors elect an independent lead director. · Our independent lead director chairs regularly scheduled executive sessions, without management present, at which directors can discuss management performance, succession planning, board · Our lead independent director strongly influences our strategy and direction, and facilitates our annual strategic planning sessions. |
Board Oversight of Strategy & Risk | · Our Board has ultimate oversight responsibility for strategy and risk management. · Our Board directly advises management on development and execution of the company’s strategy · The S&I Committee helps ensure that the strategic vision for the Company is fulfilled by challenging, proposing, reviewing, and monitoring strategic initiatives of the Company relating to M&A activity, capital allocation and planning, business model transformation, innovation, and shareholder relations. ·Through an integrated enterprise risk management process, key risks are reviewed and evaluated by the · The ERMC oversees the integration of risk management at Seacoast, monitors the risk framework and makes recommendations to the Board regarding the Company’s risk appetite. · The Audit Committee oversees the Company’s financial risk management process. · The CGC oversees risks and exposures related to the Company’s corporate governance, director succession planning, and compensation practices to ensure that they do not encourage imprudent or excessive risk-taking. · The CGC assists the Board with its leadership assessment and |
Accountability | · We have a plurality vote standard for the election of directors, with a director resignation policy for uncontested elections. · Each common share is entitled to one vote. · We have a process by which all shareholders may communicate with our Board, a Board committee or non-management directors as a group, or other individual directors. |
Director Stock Ownership | · A |
Succession Planning | · CEO and management succession planning is one of the Board’s highest priorities. Our Board ensures that appropriate attention is given to identifying and developing talented leaders. |
Board Effectiveness | · Our · The · The |
Open | · Our · Our directors have access to all management and employees on a confidential basis. · Our |
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CORPORATE GOVERNANCE AT SEACOAST |
Our goal is to maintain a corporate governance framework that supports an engaged, independent board with diverse perspectives and judgment that is committed to representing the long-term interests of our shareholders. We believe our directors should possess the highest personal and professional standards for ethics, integrity and values, as well as practical wisdom and mature judgment. Therefore, our Board, with the assistance of management and the CGC, regularly reviews our corporate governance principles and practices.
Corporate Governance Principles and Practices
Important elements of our corporate governance framework are our governance policies, which include:
· | our Corporate Governance Guidelines |
· | our Code of Conduct (applicable to all directors, officers and employees) |
· | our Code of Ethics for Financial Professionals (applicable to, |
· | charters for each of our Board Committees |
You may view these and other corporate governance documents at our investor relations website located atwww.seacoastbanking.com, www.SeacoastBanking.com, or request a copy, without charge, upon written request to Seacoast Banking Corporation of Florida, c/o Corporate Secretary, 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995.
Our governance principles provide that a substantial majority of our directors will meet the criteria for independence required by Nasdaq. |
The Company’s Common Stockcommon stock is listed on the Nasdaq Global Select Market (“Nasdaq”). Nasdaq requires that a majority of the Company’s directors be “independent,” as defined by the Nasdaq’sNasdaq rules. Generally, a director does not qualify as an independent director if the director (or, in some cases, a member of the director’s immediate family) has, or in the past three years had, certain relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board of Directors has determined that a majority of the Company’s directors are independent directors under the Nasdaq rules. The Company’s current independent directors are: Dennis J. Arczynski, Stephen E. Bohner, Jacqueline L. Bradley, H. Gilbert Culbreth, Jr., Julie H. Daum, Christopher E. Fogal, Maryann Goebel, Roger O. Goldman, Timothy S. Huval and Thomas E. Rossin.
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Board leadership is provided through: 1) a combined Chairman and CEO role, 2) a clearly defined and substantial lead independent director role, 3) active committees and committee chairs, and 4) talented directors who are committed and independent-minded. At this time, the Board believes this governance structure is appropriate and best serves the interests of our shareholders. |
Chairman and CEO Roles
The Board of Directors periodically assesses who should serve as Chairman and as Chief Executive Officer, and whether the offices should be combined or separate, with appropriate consideration of current facts and circumstances.
The Company’s current Chief Executive Officer, Dennis S. Hudson, III, also serves as the Chairman of the Board of Directors. He has held the post of Chief Executive Officer for the past 1819 years, Chairman for the past 1112 years, President for the eightnine years prior to being named Chairman, and has also served as Chief Executive Officer of the Bank for the past 2324 years. During this time, Mr. Hudson has led the Company through its growth from a local community bank to an institutionthe fourth largest Florida bank with nearly $4$4.7 billion in assets and 5349 full-service branches and five commercial banking centers in 15 counties today. In light of Mr. Hudson’s significant leadership tenure with the organization, his breadth of knowledge of the Company and his relationship with the institutional investor community, as well as the efficiencies, accountability, unified leadership and cohesive corporate culture that this structure provides, the Board of Directors believes it is appropriate that he serve as both Chief Executive Officer and Chairman.
Independent Lead Director
To further strengthen our corporate governance environment, our independent directors select a lead director from the independent directors if the positions of Chairman and Chief Executive Officer are held by the same person or if the Chairman of the Board is not an independent director. The role of our Lead Independent Director is described in our Corporate Governance Guidelines and in the table at the end of this section.
Our current Lead Independent Director is Mr. Roger Goldman. He has served in this capacity since 2012. Mr. Goldman’s experience includes a number of high profile leadership assignments at or on behalf of shareholders or other constituent groups at organizations significantly larger than Seacoast. The depth and breadth of his experience and his willingness and capacity to dedicate a significant portion of his time on behalf of the Board and our shareholders are key inputs in our transformative efforts. We aspire to be a significantly larger organization. Our ability to attain our aspirations depends heavily on our success in developing and implementing innovative products and services that are easily accessible, secure, and that make a meaningful difference to our customers. His vision for our future and his “operator” level understanding of the required strategies, investments, talent needs, capabilities, infrastructure and the associated risks provide our Board with an independent and objective perspective on management’s ability to succeed. Mr. Goldman’s services are in demand by companies or opportunities that are beyond Seacoast’s traditional competitive frame for director talent. The Board hopes our shareholders share our view that we are fortunate to have him serving in the capacity of our Lead Director.management.
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Mr. Goldman’s affiliation with Seacoast enhances our reputation within the industry, improves the performance and effectiveness of the Board, and enhances our exposure with the investment community. He is uniquely suited to lead the Board during the normal course of business and in its day-to-day interactions with and oversight of management.
In addition to Mr. Goldman’s efforts to ensure an effective and results-oriented Board, he engages on the Board’s behalf with management and employees across the Company. Frequent active, independent, and effective engagement provides the credible challenge necessary for theby Mr. Goldman aids our Board of Directors to makein making informed decisions on our business and risk strategies. He also is well-positioned to assess our executive and managerial talent, succession readiness plans, and leadership development efforts, which are key to our success. Finally, his accessibility and high level of visibility within the Company provides employees with ongoing opportunities to raise issues or concerns free from management’s direct influence. Mr. Goldman provides a wide array of highly valuable services to Seacoast. We believe the associated replacement costs if he were to step down from the Lead Independent Director role are significantly greater than whatthe costs that we would incur to engage the skill levels and experience necessarya replacement to replicate the services he provides to the Board and our shareholders.
Mr. Goldman devotes significant time to serving as our Lead Independent Director. While the structure of his role and scope of responsibilities are significantly greater than most other US companies, we view his contributions and level of commitment as material to the Company’s success and its ongoing safety and soundness.success. In order to induce Mr. Goldman to accept the role of Lead Independent Director and ensure that he is paid appropriately for his contributions and time, and aligned with shareholder interests, the Board of Directors approved a compensation package that is discussed below in the “Director Compensation” section under “Lead Independent Director Compensation and Agreement”.Agreement.”
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BOARD LEADERSHIP STRUCTURE - DEFINITION OF ROLES
Lead Independent Director Role | Chair/CEO Role | |
Full Board Meetings | ||
· Participates in Board meetings · Acts as Chairperson of the Board in situations where the Chairperson/ CEO is unable to serve in that capacity, including chairing meetings of the Board in the absence of the Chairperson/CEO | · Has the authority to request meetings of the Board of Directors and drafts the agenda for each meeting · Chairs board meetings and | |
Executive Session Responsibilities | ||
· Has the authority to call meetings of the · Chairs executive sessions of the non-management directors · Sets the agenda for executive sessions · Meets separately with the Chair/CEO after executive sessions to review the matters discussed during the executive sessions | · Receives full feedback from Lead Independent Director on the matters discussed in executive sessions and required follow-up | |
Board Communications Responsibilities | ||
· Facilitates communication among the · Serves as the principal, but non-exclusive, liaison and intermediary between the CEO and the Independent Directors regardingviews, concerns, and issues of the · Functions as a resource to the CEO on | · Communicates with all Directors on key issues and concerns outside of · Expected to inform the Lead Independent Director of all significant issues facing the Company | |
Board Agenda and Information Responsibilities | ||
· Collaborates with the Chair/CEO to set the · Seeks Board meeting agenda input from other Directors | · Drafts the Board | |
External Stakeholder Responsibilities | ||
· Reviews responses to direct shareholder communications with the Board · If requested by major shareholder or the CEO, is available for consultation and direct communication | · Represents the |
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Lead Independent Director Role | Chair/CEO Role | |
Strategy and Execution Responsibilities | ||
· Collaborates with the Board and the CEO to establish and support appropriate short term and long term strategies, objectives, goals, and programs that support sustainable growth and profitability. | · Leads the management team to establish and support the development of appropriate short term and long term · Leads the development of overall corporate and business unit objectives and · Develops and implements programs, and drives overall execution to achieve desired objectives and | |
Company Operations Responsibilities | ||
· Has no role in managing Company operations · Officers and employees report to the CEO, not to the Lead Independent Director | · Leads Company operations · Officers and employees report to the CEO |
Non-Management Executive Sessions
In order to give a significant voice to our non-management directors, our corporate governance guidelines provide for executive sessions of our non-management and independent directors. Our board believes this is an important governance practice that enables the |
Our non-management directors generally meet in executive session following each regularly scheduled boardBoard meeting. Our independent directors meet separately from the other directors in regularly scheduled executive sessions at least twice annually, and at such other times as may be deemed appropriate by the Company’s independent directors. Our Lead Independent Director presides at all executive sessions of the independent directors and non-management directors, and sets the agenda for such executive sessions. Any independent director may call an executive session of independent directors at any time. The independent directors met seveneight times in executive session in 2015. Interested parties, including the Company’s shareholders, may communicate directly with non-management directors by sending written communications to Non-Management Directors, c/o Corporate Secretary, Seacoast Banking Corporation of Florida, 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995.2016.
Committee Structure & Other Matters
Oversight is also provided through the extensive work of the Board’s committees – Audit;Audit Committee; Compensation and Governance Committee (“CGC”); and Enterprise Risk Management Committee (“ERMC”); and Strategy and Innovation (S&I) Committee – in key areas such as financial reporting, internal controls, compliance, corporate governance, succession planning, compensation programs, strategic planning and risk management. The Audit Committee and the CGC consist entirely of independent, non-management directors.
In addition, at the end of each year, the Board and each of its committees review a schedule of agenda topics to be considered in the coming year. Each Board and committee member may raise subjects that are not on the agenda at any meeting and suggest items for inclusion in future agendas.
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The Company believes that the foregoing structure, policies, and practices, when combined with the Company’s other governance policies and procedures, provide appropriate opportunities for oversight, discussion, evaluation of decisions and direction from the Board of Directors.
Shareholder Engagement and Board Responsiveness
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The company communicates with shareholders in a number of ways:
· | Discussing important business developments and answering shareholder questions at annual meetings; |
· | Holding conference calls regarding quarterly earnings and significant corporate developments; |
· | Through this proxy statement, chairman’s letters, news releases, website, participation in industry conferences, and other periodic events. |
The Company’s Corporate Governance Guidelines provide for a process by which shareholders may communicate with the Board, a Board committee or the non-management directors as a group, or other individual directors. Shareholders who wish to communicate with the Board of Directors, a Board committee, the Lead Independent Director, or any other directors or an individual director may do so by sending written communications addressed to the Board of Directors, of Seacoast Banking Corporation of Florida, a Board committee or such group of directors or individual director, c/o Corporate Secretary, Seacoast Banking Corporation of Florida, 815 Colorado Avenue, P.O. Box, 9012, Stuart, Florida 34995. All communications will be compiled by the Company’s Secretary and submitted to the Board of Directors, a committee of the Board of Directors or the appropriate group of directors or individual director, as appropriate, at the next regular meeting of the Board.
Shareholder Feedback/Results of Shareholder Advisory Vote on Executive Compensation
Since 2009 the Company has annually included in its proxy statement a separate advisory vote on the compensation paid to its executives, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related proxy disclosure, commonly known as a “say-on-pay” proposal. Independent surveys have shown that an annual vote is the preferred frequency of most institutional investors. Our say-on-pay proposals have received a high levelBoard also endorses an annual vote as we believe it gives shareholders an opportunity to voice their concerns with respect to executive compensation. Shareholder support of support from shareholders every year since 2009. At the 2015 Annual Meeting, 94.8 percent of shareholder votes cast on theour say-on-pay proposal were in favorat our 2016 annual meeting declined compared to prior years. (See “Outcome of our executive compensation program.2016 Say-On-Pay vote” in the table below.) Shareholder support of directors standing for re-election at the 2016 annual meeting also dropped compared to prior year. To better understand shareholder interests and concerns, we expanded our shareholder outreach in 2016, taking the following actions:
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· | Members of our Board and executive management team met in-person and by phone with shareholders representing a significant portion of Seacoast’s outstanding unaffiliated shares. |
· | In March 2016, the Company entered into an Observer Rights Agreement with one of our largest shareholder, Basswood Capital Management, L.L.C. (“Basswood”) and Matthew Lindenbaum, a principal of Basswood, pursuant to which we gave Mr. Lindenbaum the right to attend all meetings of our Board of Directors in a non-voting observer capacity, and to receive materials provided to board members, subject to certain exceptions. The agreement can be terminated by either party at any time, but remains in effect. Mr. Lindenbaum’s viewpoint on matters impacting institutional investors has been very insightful and beneficial to the Company. |
· | We have hosted visits with a number of large investors at our facilities in Stuart to provide them with a better understanding of the depth and talent of our management team, the execution of our balanced strategy and our progress in creating shareholder value. |
· | We hosted an Investor Day and webcast on February 22, 2017, where Seacoast’s management team provided a detailed update of the Company’s strategy and long-term vision. |
In these meetings, our shareholders expressed a wide range of viewpoints relating to our performance, compensation, governance and other matters. This engagement process was very informative and constructive.
Below are highlights of the feedback we have received from shareholders and our Board’s response:
What We Heard | Our Board’s Response |
Improve financial performance to deliver results expected from acquisitions | Delivered Promised Results.Achieved our 2016 earnings target of $1.00 fully diluted adjusted earnings per share1 (“EPS”) despite economic headwinds. Improved adjusted efficiency ratio1 by 12% year over year, and from 74.9% in fourth quarter of 2014 to 60.8% in the fourth quarter of 2016. |
Higher stock ownership by management and directors | Replacing Cash Bonuses with Equity.Replaced 2016 cash bonuses paid to executive officers for achievement of performance objectives with performance based and performance-contingent stock awards. All of our directors are paid a stock retainer; several participated in our recent capital raise. |
Reduce Board tenure and the risk of entrenchment | Three New Directors.In 2016, our Board appointed two new directors, Timothy S. Huval and Herbert Lurie, further enforcing its commitment to a balanced mix of new directors with fresh perspectives and, for continuity, seasoned, experienced directors with deep knowledge of the Company and its markets. In 2017, our Board has nominated another new Board member, Alvaro Monserrat, to replace a longer-tenured director. In addition, two long-tenured directors rotated off the CGC in 2016 and one short-tenured director was added, resulting in the majority of the CGC now comprised of short-tenured directors. |
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
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What We Heard | Our Board’s Response |
Concerns regarding our severance payments under Change-in-Control agreements and award agreements | Modifications to Existing Named Executive Officer (“NEO”) Change-in-Control (“CIC”) Agreements.In September 2016, we entered into new CIC agreements with our NEOs which: i) eliminate excise tax gross-up payments, and ii) do not provide benefits that are paid before a CIC closes or if the acquirer retains the executive. Since 2015, our equity award agreements require a CIC and job loss or failure of the acquirer to convert awards into new issuer awards before vesting occurs. |
Outcome of our 2016 Say-On-Pay vote | At our 2016 annual meeting of shareholders, our say-on-pay proposal received the support of 67.6% of the votes cast. In contrast, since 2009, our previous annual say-on-pay proposals received support of over 94% of the votes cast. Our CGC considered the vote in relation to: 1) the alignment of our compensation program with the long-term interests of our shareholders, 2) the evolution of our business strategy with emerging opportunities and in fulfilling customer demand for innovative products and services, and 3) the relationship between risk-taking and the incentive compensation provided to our executives. The CGC will continue to evaluate and refine our executive compensation plan to place greater emphasis on creating shareholder value, long-term performance and profitability based on emerging opportunities. |
Suggestion to better articulate our business strategy | We have redoubled our efforts in our quarterly communications with shareholders and investors, and our enhanced our investor outreach, to convey our balanced business strategy of: 1) organic growth, 2) accretive and thoughtful M&A, and 3) innovation and digitally-engaged distribution. We formed the S&I Committee to provide oversight of these efforts. |
The CompanyBoard and the CGC considered the results of the say-on-pay vote, feedback from large shareholders, and other factors in assessing Seacoast’s executive compensation programs. As further discussed in this proxy statement, these other factors include: 1) the alignment of our compensation program with the long-term interests of our shareholders, 2) the evolution of our business strategy with emerging opportunities and in fulfilling customer demand for innovative products and services, and 3) the relationship between risk-taking and the incentive compensation provided to our executives. After considering these factors, the CGC restructured our executive compensation plan to place greater emphasis on long-term performance and profitability based on emerging opportunities.
The Committee will continue to monitor best practices, future advisory votes on executive compensation and other shareholder feedback to guide it in evaluating the alignmentaddressing issues of the Company’s executive compensation program with the interests of the Company and its shareholders.importance to our investors.
Management Succession Planning and Development
Our Board understands that a strong succession framework reduces Company risk |
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The Board maintains oversight responsibility for succession planning for succession with respect to the position of CEO and monitoringmonitors and advising on management’sadvises management regarding succession planning for other executive officers. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession. The Board also has short-term contingency plans in place for emergency and unexpected occurrences, such as the sudden departure, death, or disability of theour CEO or other executive officers.
The CGC, working with the CEO, annually evaluates succession planning at the senior levels of management and reports the results of such evaluation to the Board, along with recommendations on management development and succession planning. The updated succession plan is reviewed and approved by the Board to ensure that competencies are in alignment with theour strategic plan. The annual review of the CEO succession planning process includes a review of specific individuals identified as active CEO succession candidates, and each of those individuals is reviewed with respect to progress in his or her current job position and progress toward meeting his or her defined leadership development plan. The Company’s CEO and senior management are similarly responsible for supporting “next generation” leadership development by: identifying core talent, skills and capabilities of future leaders within the Company; assessing the individuals against leadership capabilities; identifying talent and skill gaps and development needs; assisting with internal candidate development; and identifying significant external hirehiring needs.
The Board and individual Board members may meet with, advise and assist CEO succession candidates and become familiar with other senior and future leaders inwithin the Company. Directors are encouraged to become sufficiently familiar with the Company’s executive officers to be able to provide perspective on the experience, capabilities and performance of potential CEO candidates. The Board urges senior management, as well as other members of management who have future leadership potential within the Company, to attend and present at Board meetings so that each can be given appropriate exposure to the Board. The Board may contact and meet with any employee of the Company at any time, and are encouraged to make site visits, to meet with management, and to attend Company, industry and other events.
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Executive officers are appointed annually at the organizational meeting of the respective Boards of Directors of Seacoast and the Bank, following the annual meeting of Company shareholders, to serve until the next annual meeting and until successors are chosen and qualified.
Dennis S. Hudson, III
Age: 61 Education: MBA, Florida State University Tenure with Seacoast: 40 years | CURRENT ROLE: | |
Chairman and CEO of Seacoast and Bank | ||
SELECT PRIOR EXPERIENCE: | ||
· Chairman of Seacoast since July 2005 | ||
· CEO of Seacoast since June 1998 | ||
· Chairman and CEO of the Bank since 1992 | ||
· Director of Seacoast since 1984 | ||
· 40 years of banking experience with Seacoast | ||
OTHER AFFILIATIONS/CERTIFICATIONS: | ||
· Member of board of directors and audit committee of Chesapeake Utilities Corporation, Dover, DE | ||
· Board member, Miami Branch of Federal Reserve Bank of Atlanta from 2005 to 2010 | ||
· Independent director, PENN Capital Funds, a mutual fund group managed by PENN Capital Management | ||
· Served on boards of Martin County YMCA Foundation, Council on Aging, American Heart Association, and as Chairman of the Economic Council of Martin County |
Stephen A. Fowle
Age: 51 Education: MBA, Northwestern University Tenure with Seacoast: 2 years | CURRENT ROLE: EVP and former CFO of Seacoast and SELECT PRIOR EXPERIENCE: · CFO of WSFS Financial Corporation, a $4.9 billion publicly-traded financial institution in Wilmington, Delaware, from 2005 to March 2015 · CFO at Third Federal Savings and Loan Association of Cleveland, MHC, an $8+ billion multibank holding company of 15+ subsidiaries, from 2000 to 2004 OTHER AFFILIATIONS/CERTIFICATIONS: ·Member, Financial Executives International |
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Charles K. Cross, Jr.
Age: 59 | CURRENT ROLE: | |
EVP of Commercial Banking of Bank since July 2013 | ||
SELECT PRIOR EXPERIENCE: | ||
· Seacoast’s SVP & Commercial Market Executive for Palm Beach County from March 2012 to July 2013 | ||
· 30 years of banking experience and thorough knowledge of Palm Beach and Broward County markets | ||
· Market leader for EverBank in Palm Beach County, FL from August 2010 to March 2012 | ||
OTHER AFFILIATIONS/CERTIFICATIONS: | ||
· Chairman, District Board of Trustees of Palm Beach State College | ||
· Past board member of Florida Atlantic University College of Business Dean’s Council, Economic Council of Palm Beach County, West Palm Beach Chamber of Commerce, Business Development Board of Palm Beach County and Black Business Investment Corporation. |
David D. Houdeshell
Age: 56 | CURRENT ROLE: | |
EVP and Chief Risk Officer of Seacoast and Bank since May 2015 | ||
SELECT PRIOR EXPERIENCE: | ||
· EVP and Chief Credit Officer of Seacoast and Bank since June 2010 | ||
· EVP and Credit Administrative Executive for The South Financial Group in Greenville, SC for 3 years | ||
· Chief Credit Officer of Bombardier Capital, a financial services entity of a global transportation manufacturer, for 4 years | ||
OTHER AFFILIATIONS/CERTIFICATIONS: | ||
· Member of audit & compliance committee of Martin Health System, Stuart, FL | ||
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Charles M. Shaffer
Age: 43 | CURRENT ROLE: | |
EVP, CFO and Head of Strategy of Seacoast and Bank since March 15, 2017 | ||
SELECT PRIOR EXPERIENCE: | ||
· EVP and Community Banking Group of Bank from October 2013 to March 2017 | ||
· SVP and Controller of Bank from 2005 to 2013 | ||
· Diverse experience from multiple roles including strategy, corporate finance, traditional sales, and alternative sales platforms | ||
OTHER AFFILIATIONS/CERTIFICATIONS: | ||
· CPA licensed in Florida | ||
· Chartered Global Management Accountant | ||
· Board member, United Way of Martin County | ||
· Board member, Girl Scouts of Southeast Florida |
As of the Record Date, based on available information, all directors, director nominees and executive officers of Seacoast as a group (17(19 persons) beneficially owned approximately 1,066,7311,286,400 outstanding shares of Common Stock,common stock, constituting 2.8 percent3.2% of the total number of shares of Common Stockcommon stock outstanding at that date. In addition, as of the Record Date, various subsidiaries of Seacoast, as fiduciaries, custodians, and agents, had sole or shared voting power over 47,32649,621 outstanding shares, or 0.1 percent0.1% of the outstanding shares, of Seacoast Common Stock,common stock, including shares held as trustee or agent of various Seacoast employee benefit and stock purchase plans.
The CGC serves as the nominating committee of the Company. The Committeecommittee annually reviews and makes recommendations to the full Board of Directors regarding the composition and size of the Board of Directors and its committees, and if determined necessary, recommends potential candidates to the Board for nomination for election to the Board.Board by the Company’s shareholders. The CGC’s goal is to ensure that the Board of Directors consists of a diverse group of members with the proper expertise, skills, personal attributes and professional backgrounds who, individually and collectively, are appropriate to achieve the Company’s strategic vision and business objectives, and best serve the Company’s and shareholders’ long-term interests.
As part of the assessment process, the CGC evaluates whether the addition of a director or directors with particular attributes, experience, or skill sets could enhance the Board’s effectiveness. The CommitteeCGC identifies director candidates through business, civic and legal contacts, and may consult with other directors and senior officers.officers of the Company. The CommitteeCGC may also hire a search firm to assisthelp it to identify, evaluate and conduct due diligence on potential director candidates. Once a candidate has been identified, the CommitteeCGC confirms that the candidate meets the minimum qualifications for director nominees, and gathers information about the candidate through interviews, questionnaires, background checks, or any other means that the CommitteeCGC deems to be helpful in the evaluation process. Director candidates are interviewed by the Chairman of the CGC and at least one other member of the committee. Each member of the committee participates in the review and discussion of director candidates. Where appropriate, directors who are not on the CommitteeCGC are encouraged to meet with and evaluate the suitability of potential candidates. The CommitteeCGC then evaluates the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board in relation to the Company’s strategic goals, and recommends nominees to the Board. The full Board formally nominates candidates for director to be included in the slate of directors presented for shareholder vote based upon the recommendations of the CGC following this process.
Given the evolving needs and business strategy of the Company, the CGC believes that the Board of Directors as a whole should have diversity of thought and experience, which may, at any one or more times, include differences with respect to personal, educational or professional experience, gender, ethnicity, national origin, geographic representation, community involvement and age. However, the CGC does not assign specific weights to any particular criteria. Its goal is to identify nominees that, considered as a group, will possess the talents and characteristics necessary for the Board of Directors to fulfill its responsibilities.responsibilities and advance our strategic mission. In addition, each director must have the qualifications if any, set forth in the Company’s Bylaws, as well as the personal characteristics and core competencies described below as our Director Eligibility Guidelines:
Director Eligibility Guidelines | ||
Personal Characteristics | Core Competencies | |
· the highest ethical character · a personal and professional reputation consistent with · the ability to exercise sound business judgment · a willingness to listen to differing points of view and work in a mutually respectful manner · the absence of any real or perceived conflict of interest that would impair the director’s ability to act in the interest of shareholders | · substantial business or professional experience and be able to offer meaningful advice and guidance to the Company’s management based on that experience · professional achievement through service as a principal executive of a major company, partner in a law or accounting firm, successful entrepreneur, a prominent academic or similar position of significant responsibility |
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The CommitteeCGC also considers numerous other qualities, skills and characteristics when evaluating director nominees, such as:as a candidate’s:
· |
· | leadership experience with public companies or other major organizations, as well as civic and community relationships; |
· | availability and commitment to carry out the responsibilities as a director; |
· | knowledge, experience and skills that enhance the mix of the Board’s core competencies and provide a different perspective; and |
· | qualification as an independent director. |
In addition to nominations by the Committee,CGC, any Company shareholder entitled to vote generally on the election of directors may recommend a candidate for nomination as a director by providing advance notice of such proposed nomination to the Corporate Secretary at the Company’s principal offices. The written submission must comply with the applicable provision in the Company’s Articles of Incorporation. To be considered, recommendations with respect to an election of directors to be held at an annual meeting must be received not less than 60 days nor more than 90 days prior to the anniversary of the Company’s last annual meeting of shareholders (or, if the date of the annual meeting is changed by more than 20 days from such anniversary date, within 10 days after the date that the Company mails or otherwise gives notice of the date of the annual meeting to shareholders), and recommendations with respect to an election of directors to be held at a special meeting called for that purpose must be received by the 10th day following the date on which notice of the special meeting was first mailed to shareholders. Recommendations meeting these requirements will be brought to the attention of the Company’s CGC. Candidates for director recommended by shareholders in compliance with these provisions and who satisfy the Director Eligibility Guidelines will be afforded the same consideration as candidates for director identified by Company directors, executive officers or search firms, if any, employed by the Company. In 2015, there were2016, no shareholder nominee recommendations were received.
Annually, our |
Element | Description |
Corporate Governance Review and Investor Feedback | The |
Annual Board & Committee Self-Evaluations | The Board and committee evaluations for |
Summary and Review | |
Actions | As a result of the Board evaluation process, the Board conducted a rigorous search and assessment of experienced potential new director |
BOARD MEETINGS AND BOARD COMMITTEES
Board Meetings and Board Committees
The Board of Directors held fiveeight regular meetings and two special meetings and one joint strategic planning meeting with the Bank’s board of directors during 2015.2016. All of the directors attended at least 75 percent75% of the total number of meetings of the Board of Directors and committees on which they served.
NineTen of the 1412 then-incumbent Directors attended the Company’s 20152016 annual shareholders’ meeting. The Company encourages all of its directors to attend its shareholders’ meetings but understands that situations may arise that prevent such attendance.
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The Company’s Board of Directors has threefour standing permanent committees: the Audit Committee, the CGC,Compensation and Governance Committee, the Enterprise Risk Management Committee, and the Strategy and Innovation Committee. These committees serve the same functions for the Company and the Bank. The current composition of each Company committee is set forth in the table underProxy Summary - Board and Governance HighlightsHighlights..
Each committee has a charter specifying such committee’s responsibilities and duties. The Company hereby certifies that the CGC charter, which also details the Company’s nomination process, is reviewed annually. The Company also certifies that the Audit Committee charter isand CGC charters are reviewed annually. These charters are available on the Company’s website at www.seacoastbanking.comwww.SeacoastBanking.com or upon written request to c/o Corporate Secretary, Seacoast Banking Corporation of Florida, 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995.request.
Audit Committee
Members: | Christopher E. Fogal (Chair), Dennis J. Arczynski and Maryann Goebel Comprised of members who have not participated in the preparation of the financial statements of the Company or any current subsidiary at any time during the last three fiscal years. | |
As set forth in the Audit Committee charter, as adopted by the full Board of Directors, this committee: | ||
Responsibilities: | · · · | · · ·
Directors. |
# of Meetings: | This committee held | |
Independence: | Our Board has determined that each member of the committee is independent under Nasdaq and SEC rules. Our Board has also determined that Mr. Fogal is an “audit committee financial expert” as defined by Item 407 of Regulation S-K. |
Compensation and Governance Committee (“CGC”)
Members: |
| |
As set forth in | ||
Responsibilities: | · determines the compensation of the Company’s and the Bank’s key executive officers; · oversees the preparation of a “compensation discussion and analysis” on executive compensation and an annual compensation committee report which is included herein under “Compensation and Governance Committee Report”; · administers the provisions of the Company’s incentive compensation plans and other employee benefits plans; · identifies and recommends to the Board qualified individuals to serve as members of the boards of directors of the Company and/or the Bank; | · · takes a leadership role in shaping corporate governance policies and practices, including recommending to the Board of Directors the corporate governance guidelines applicable to Seacoast and monitoring Seacoast’s compliance with these policies and guidelines; and · makes recommendations to the Board of Directors concerning management development and succession planning activities at the senior levels of management, including an appropriate successor in the event of the unexpected death, incapacity or resignation of the CEO.
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The CGC has the resources and authority to discharge its responsibilities, including authority to retain and terminate any compensation consulting firms, director search firms, independent legal counsel and other compensation advisers used to assist in carrying out its responsibilities. The CGC may delegate to a subcommittee consisting of two or more members, to the extent permitted by applicable law, such of its duties and responsibilities as it deems appropriate and advisable. | ||
# of Meetings: | This committee held | |
Independence: | Our Board of Directors has determined that each member of the committee is independent under Nasdaq and SEC rules. | |
CGC Interlocks and Insider Participation: | None of the |
Enterprise Risk Management Committee (“ERMC”)
Members: | Dennis J. Arczynski (Chair), Stephen E. Bohner, T. Michael Crook, Maryann Goebel, Dennis S. Hudson, Jr. and Thomas E. Rossin | |
As set forth in | ||
Responsibilities: | ·monitors the risk framework to assist the ·evaluates strategic opportunities ·provides oversight of the risk management monitoring and reporting functions | ·reviews key management, systems, processes and decisions, and assesses the integrity and adequacy of the risk management function ·makes recommendations to the Board regarding the Company’s risk appetite, limits and policies and reviewing the strategic plan to help ensure it aligns with the Board-approved risk appetite; and ·recommends to the Board the capital policy consistent with the Company’s risk appetite and |
# of Meetings: | This committee held five meetings in 2016. |
Strategy and Innovation (“S&I”) Committee
Members: | Thomas E. Rossin (Chair), Dennis J. Arczynski, Dennis S. Hudson, III, Timothy S. Huval and Herbert A. Lurie | |
As set forth in the S&I Committee charter, and as adopted and approved by the full Board of Directors, this committee: | ||
Responsibilities:
| · supports, sources and/or challenges M&A activities related to banks and non-bank entities as pertinent to the Company’s stated strategic objectives; · supports, sources and/or challenges business model transformation activities including investments in technology and/or partners; · reviews capital allocations and planning to ensure an acceptable return on capital while ensuring timely exits from businesses that do not provide an acceptable return or have limited growth prospects; | · ensures that the Company actively promotes and rewards a culture of innovation in a manner that benefits customers and shareholders; · ensures that appropriate strategic metrics and modeling capabilities are used in order to assess the strength of existing strategies and potential investments, aligned with the Company’s stated strategic objectives; and · ensures that management is effectively and consistently communicating with shareholders in a manner that is consistent with the Company’s broader strategic vision. |
# of Meetings: | This committee held seven meetings in |
The Board’s Role in Strategy and Risk Oversight
The Board of Directors actively reviews our long term strategy and the plans and programs that management develops to implement our strategy. While the Board meets formally at least once every year to consider overall long term strategy, it generally reviews various elements of strategy, and our progress towards implementation, at every regular meeting. Under the leadership of Lead Independent Director Goldman, our directors are active in our strategic planning process and exercise robust oversight of and challengechallenges to both strategystrategies and implementation.our implementation of the strategies.
The Board believes that strategic risk is an exceptionally important risk element among a number of risks that the Company faces and works to ensure that this risk is appropriately managed in the context of the rapidly changing environment in which the Company and its customers operate. The Board does not believe this risk can be delegated and the Board as a whole regularly spends a significant amount of its time engaged with management and in executive session discussing our long term strategy, the effectiveness of our plans to implement such strategy, and our progress against those plans.
The Board believes that an integral part of managing strategic risk is the appointment of a strong lead director to: i) regularly engage with the CEO on an ongoing basis, ii) interact from time to time with other key members of management and other leaders throughout the Company to examine alignment around our chosen long-term strategy, and iii) ensure that the Board’s views are considered as our strategy evolves. The Board strongly believes that having an active and engaged lead director better ensures that the Board as a whole can serve as a credible challenge to management’s plans and programs and increases transparency into the fast-paced changes management is implementing.
The Board’s committees also work to ensure that we have the right alignment to support our long-term strategic direction including: (i) an active boardBoard recruitment process focused on developing or acquiring the skill, experience and attributes of both individuals and the boardBoard as a whole needed to support our strategy, (ii) ensuring an appropriate link is established between our compensation design and our long-term strategy to encourage and reward the achievement of our long-term goals and protect shareholder value by discouraging excessive risk, and (iii) ensuring that our risk management structure can effectively manage the inherent risks that underlie our strategy.
Moreover, the Board has decided that an integral part of managing strategic risk is the appointment of a strong lead director to: i) regularly engage with the CEO on an ongoing basis, ii) interact from time to time with other key members of the management and other leaders throughout the Company to examine alignment around our chosen long-term strategy, and iii) ensure that the Board’s views are considered as our strategy is further evolved through time. The Board strongly believes having an active and engaged lead director better ensures that the Board as a whole can serve as a credible challenge to management’s plans and programs and increases transparency into the fast-paced changes management is implementing.
Other types of risks that the Company faces include:
· | macro-economic risks, such as inflation, reductions in economic growth, or recession; |
· | political or regulatory risks, such as restriction on access to markets; |
· | event risks, such as natural disasters; and |
· | business specific risks related to financial reporting, credit, asset/liability management, market, operational execution (corporate governance, legal and regulatory compliance), and reputation. |
Our Enterprise Risk Management CommitteeERMC regularly accesses our overall risk profile and oversees our risk management programs which are implemented by our chief risk officer.
The Audit Committee is currently comprised of three directors, Christopher E. Fogal (Chair), Dennis J. Arczynski and Maryann Goebel.
The purpose of the Audit Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of Seacoast Banking Corporation of Florida (the “Company”) in its general oversight of the Company’s accounting, auditing and financial reporting practices. Management is primarily responsible for the Company’s financial statements, systems of internal controls and compliance with applicable legal and regulatory requirements. The Company’s independent registered public accounting firm, Crowe Horwath LLP, for the year ended December 31, 20152016 is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion (pursuant to Section 404 of the Sarbanes-Oxley Act of 2002) on the effectiveness of internal control over financial reporting.
The members of the Committee are not professional auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm, nor can the Committee certify that the Company’s registered public accounting firm is “independent” under applicable rules. The Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the independent registered public accounting firm on the basis of the information it receives, discussions with management and the independent registered public accounting firm, and the experience of the Committee’s members in business, financial and accounting matters. To carry out its responsibilities, the Committee held eightnine meetings in 2015.2016.
In the performance of its oversight responsibilities, the Committee has reviewed and discussed with management and Crowe Horwath LLP the audited financial statements of the Company for the year ended December 31, 2015.2016. Management represented to the Committee that all financial statements were prepared in accordance with accounting principles generally accepted in the United States and that these statements fairly present the financial condition and results of operations of the Company at the dates and for the periods described. The Committee has relied upon this representation without any independent verification, except for the work of Crowe Horwath LLP. The Committee also discussed these statements with Crowe Horwath LLP, both with and without management present, and has relied upon their reported opinion on these financial statements. The Committee’s review included discussion with Crowe Horwath LLP of the matters required to be discussed under Public Company Accounting Oversight Board standards.
With respect to the Company’s independent registered public accounting firm, the Committee, among other things, discussed with Crowe Horwath LLP matters relating to its independence and received from Crowe Horwath LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Committee concerning independence.
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On the basis of these reviews and discussions, and subject to the limitations of its role, the Committee recommended that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015,2016, for filing with the Securities and Exchange Commission.
The Audit Committee:
Christopher E. Fogal, Chairman
Dennis J. Arczynski
Maryann Goebel
March 22, 201614, 2017
OWNERSHIP OF OUR COMMON STOCK SHARES
The tables below provide information regarding the beneficial ownership of our Common Stockcommon stock as of March 23, 2016 (thethe Record Date)Date by:
· | each of the Company’s directors; |
· | each of the executive officers named in the Summary Compensation Table; |
· | all current directors and executive officers as a group; and |
· | each beneficial owner of more than 5%. |
As of March 23, 2016, 37,916,985the Record Date, 40,729,656 shares of Common Stockcommon stock were outstanding. Beneficial ownership is determined in accordance with SEC rules and regulations. Unless otherwise indicated, and subject to community property laws where applicable, the Company believes that each of the shareholders named in the tables below has sole voting and investment power with respect to the shares indicated as beneficially owned. Some of the information in the tables is based on information included in filings made by the beneficial owners with the SEC.
Principal Shareholders (5% Owners Exclusive of Directors and Officers)
The following table sets forth information regarding the number and percentage of shares of Common Stockcommon stock held by all persons and entities known by the Company to beneficially own 5% or more of the Company’s outstanding Common Stock.common stock. The information regarding beneficial ownership of Common Stockcommon stock by the entityentities identified below isare included in reliance on a reportreports filed by the entityentities with the SEC, except that the ownership percentage is based uponon the Company’s calculations made in reliance upon the number of shares reported to be beneficially owned by the entity in such report and the number of shares of common stock outstanding on March 23, 2016.calculations.
Name of Beneficial Owner | Amount and Nature of Beneficial | Percentage of
Shares | ||||||
Basswood Capital Management, LLC | ||||||||
645 Madison Avenue, | 6.2% | |||||||
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BlackRock, Inc. | ||||||||
55 East 52nd Street | 7.1% | |||||||
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1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
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(1) | According to a Schedule 13D/A filed jointly by Basswood Capital Management, LLC, Matthew Lindenbaum, Bennett Lindenbaum, and their affiliates on |
Reporting Person | # of Shares | |||
Basswood Capital Management, LLC | ||||
Basswood Partners, LLC | ||||
Basswood Enhanced Long Short GP, LLC | ||||
Basswood Financial Fund, LP | ||||
Basswood Financial Fund, Inc. | ||||
Basswood Financial Long Only Fund, LP | ||||
Basswood Enhanced Long Short Fund, LP | ||||
Basswood Opportunity Partners, LP | ||||
Basswood Opportunity Fund, Inc. | 162,564 | |||
Matthew Lindenbaum | ||||
Bennett Lindenbaum |
(2) | According to a Schedule |
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Ownership of Directors and Executive Officers
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage | ||
Dennis J. Arczynski | 39,327(1) | * | ||
Stephen E. Bohner | 48,965(2) | * | ||
Jacqueline L. Bradley | 6,463(3) | * | ||
T. Michael Crook | 71,800(4) | * | ||
H. Gilbert Culbreth, Jr. | 63,149(5) | * | ||
Julie H. Daum | 27,344(6) | * | ||
Christopher E. Fogal | 26,584(7) | * | ||
Maryann Goebel | 9,222(8) | * | ||
Roger O. Goldman | 193,292(9) | * | ||
Dennis S. Hudson, Jr. | 321,206(10) | * | ||
Dennis S. Hudson, III | 391,991(11) | 1.0% | ||
Thomas E. Rossin | 15,888(12) | * | ||
Charles K. Cross, Jr. | 22,885(13) | * | ||
Stephen A. Fowle | 16,855(14) | * | ||
William R. Hahl | 25,905(15) | * | ||
David D. Houdeshell | 26,415(16) | * | ||
Charles M. Shaffer | 23,123(17) | * | ||
All directors and executive officers as a group (20 persons) | 1,066,731 | 2.8% |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percentage | ||||||
Dennis J. Arczynski | 44,819(1) | X | ||||||
Stephen E. Bohner | 54,452(2) | X | ||||||
Jacqueline L. Bradley | 16,954(3) | X | ||||||
T. Michael Crook | 85,566(4) | X | ||||||
H. Gilbert Culbreth, Jr. | 68,054(5) | X | ||||||
Julie H. Daum | 45,839(6) | X | ||||||
Christopher E. Fogal | 31,075(7) | X | ||||||
Maryann Goebel | 19,563(8) | X | ||||||
Roger O. Goldman | 264,955(9) | X | ||||||
Dennis S. Hudson, Jr. | 323,555(10) | X | ||||||
Dennis S. Hudson, III | 409,813(11) | 1.0% | ||||||
Timothy S. Huval | 1,255(12) | X | ||||||
Herbert A. Lurie | 28,819(13) | X | ||||||
Alvaro J. Monserrat | 5,142 | X | ||||||
Thomas E. Rossin | 18,237(14) | X | ||||||
Charles K. Cross, Jr. | 33,780(15) | X | ||||||
Stephen A. Fowle | 35,096(16) | X | ||||||
David D. Houdeshell | 34,297(17) | X | ||||||
Charles M. Shaffer | 34,304(18) | X | ||||||
All directors and executive officers as a group (19 persons) | 1,148,923 | 2.8% |
*X Less than 1%
(1) | Includes 1,672 shares held in a limited liability company, as to which shares Mr. Arczynski has sole voting and investment power. Also includes 9,110 shares held jointly with his wife, as to which shares Mr. Arczynski may be deemed to share both voting and investment power. Also includes |
(2) | Includes |
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(3) | Includes |
(4) | Includes 17,800 shares held jointly with Mr. Crook’s wife and 2,800 shares held by Mr. Crook’s wife, as to which shares Mr. Crook may be deemed to share both voting and investment power. Also includes |
(5) | Includes 10,000 shares held in an IRA, 26,000 shares held in a family limited liability company, and 8,200 shares held in a family sub-S corporation, as to which shares Mr. Culbreth has sole voting and investment power. Also includes 1,000 shares held jointly with Mr. Culbreth’s children and 10,328 shares held jointly with his wife, as to which shares Mr. Culbreth may be deemed to share both voting and investment power. Also includes |
(6) | Includes |
(7) | Includes 4,490 shares held jointly with Mr. Fogal’s wife and 738 shares held by Mr. Fogal’s wife, as to which shares Mr. Fogal may be deemed to share both voting and investment power. Also includes |
(8) | Includes |
(9) | Includes |
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(10) | Includes 224,356 shares held by Sherwood Partners, Ltd., a family limited partnership (“Sherwood Partners”), of which Mr. Hudson and his son, Dennis S. Hudson, III, are general partners, and Mr. Hudson and his children are limited partners. Mr. Hudson may be deemed to share voting and investment power with respect to such shares, but disclaims beneficial ownership, except to the extent of his 1.0% interest in Sherwood Partners. Also includes |
(11) | Includes 224,356 shares held by Sherwood Partners, of which Mr. Hudson and his father, Dennis S. Hudson, Jr., are general partners. Mr. Hudson may be deemed to share voting and investment power with respect to such shares with the other general partners, but disclaims beneficial ownership, except to the extent of his |
(12) | Includes 1,175 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Huval has no voting or dispositive power. |
(13) | Includes 3,258 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Lurie has no voting or dispositive power. |
(14) | Includes 200 shares held by Mr. Rossin’s wife, as to which shares Mr. Rossin may be deemed to share both voting and investment power and as to which Mr. Rossin disclaims beneficial ownership. Also includes |
Includes |
Includes |
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Includes |
COMPENSATION DISCUSSION & ANALYSIS
2016 Performance Considerations
The attainment of adjusted EPS1 of $1.00 set the stage for the CGC’s qualitative assessment of management’s performance and the resulting pay actions for 2016. The assessment process included scorecards that identified shared and individual goals for the year. The CGC relied on scorecards for each of our NEOs as performance guidelines in arriving at pay decisions for our named executive officers (“NEOs”) in 2016. Based on the CGC’s assessment of our adjusted EPS1 performance and in the areas of operations, technology, innovation, risk, talent, and business transformation, our NEO’s received a rating of “exceeds” expectations.
· | Cumulative base salaries for our NEOs increased year-over-year by 4%. |
· | Cumulative bonus equivalent cash values for our NEOs increased year-over-year by 44%. |
· | Our NEOs, other than our CEO, received awards of Performance-contingent Restricted Stock Units (“PRSUs”) in April 2017 for performance in 2016. These awards were issued in lieu of cash bonuses and will be earned over three years upon the satisfaction of service and risk conditions. Proxy rules require disclosure of PRSU award values in the 2018 Summary Compensation Table. |
· | Our CEO received a performance-based equity award in April 2017 for performance in 2016. The CGC increased the target value of the CEO’s performance-based equity award in lieu of a cash bonus or PRSU award for 2016 performance. |
· | Each continuing NEO received a bonus cash equivalent value that will be used to estimate the value of change-in-control (“CIC”) severance benefits that otherwise would be unfairly reduced for a zero bonus value in an “exceeds” performance year. |
· | The CGC approved changes effective with our 2017 equity program in response to shareholders and to enhance and advance incentive governance and the sensitivity between incentives and risk. |
· | As a group, the year-over-year change in 2016 NEO Total Direct Compensation (“TDC”), representing base salary and the target award values of performance-based equity granted in February 2016, and as disclosed in our 2016 Summary Compensation Table, declined by 17%. The negative trajectory in 2016 NEO TDC is solely a function of proxy disclosure rules rather than the CGC’s assessment of NEO performance. |
1 | Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures. |
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COMPENSATION DISCUSSION & ANALYSIS
2015 Performance Considerations
Seacoast continued its momentum in driving performance upward, through accelerated execution of our strategy. This momentum has delivered outsized results for shareholders.
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Each year the CGC assesses management’s performance across a variety of financial and non-financial measures. In addition to financial measures, the CGC assesses our performance in terms of the safety and soundness of the Bank using risk metrics that are important to our regulators and the investment community, the development and execution of our strategic plan, progress against long-term goals, and the capabilities and contributions of our management and other key employees. Based on the CGC’s performance assessment, FY15 is viewed as a year in which the Bank exceeded expectations. This “exceeds” rating is the primary influencing factor in the CGC’s pay decisions described herein for our named executive officers.
Starting with the FY16, performance will be assessed using a new scorecard process. Financial performance will be assessed in terms of our actual earnings per share (“EPS”) as compared to our $1.00 EPS goal. This EPS component is weighted 80%. The remaining 20% is based on individual goals tied to non-financial metrics that are important to our ability to drive earnings growth and margin expansion.
Our 2015 Named Executive Officers
Our named executive officers represent one-half of Seacoast’s Executive Management Group (“EMG”). The EMG serves as our senior leadership team. In general, the pay considerations and decisions described for our named executive officers are applicable to the all the EMG. For 2015, our named executive officers are as follows:
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Our Executive Compensation Design Priorities and Prohibitions
GoodThe CGC is committed to establishing and maintaining an executive compensation philosophy that allows us to attain our business and talent objectives, is transparent, reflects a high standard of corporate governance, ensures that our incentive programs are sensitive to risk, and above all else, promotes and protects the interests of Seacoast’sour shareholders. The CGC accomplishes these objectives by continuously assessing our executive compensation program is of paramount importanceand adhering to the CGC. Over the past few years, the CGC has modified our programs to better align with business needs, emerging governance practices, shareholder expectations,following set of Design Priorities and risk considerations. Highlights of these efforts are summarized in the following table, which identifies our design priorities and prohibitions.Prohibitions.
Design Priorities (what we do) |
✓ |
✓ Maintain executive stock ownership requirements, post-settlement holding periods or mandatory deferral of performance-based awards. |
✓ |
✓ |
✓ |
✓ Engages with shareholders on their concerns or priorities for our director and executive compensation programs. |
Design Prohibitions (what we don’t do) |
✓
✓
✓
✓ ✓ |
Summary of Compensation Decisions in 20152016
Total Direct Compensation” or “TDC” meansFor planning purposes, the CGC focuses on the sum of base salary non-equitypaid during the performance year and the values it considers and approves for cash bonus (exceptvalue and the new performance-based equity award earned for the performance year but approved in a subsequent year. We refer to this planning value as Total Direct Compensation or “TDC”. TDC provides a different perspective on pay than is provided by SCTP, which reflects the values shown in the summary compensation table less all other compensation. The CGC considered TDC in its decision process when determining the value of the total incentive award value to approve in 2017 for 2016 performance.
The following chart illustrates the relative emphasis of each pay element in relation to TDC, as disclosed in our 2016 Summary Compensation Table (“SCT”). Base salary represents the sole component of TDC that is not “at risk” for performance. The percentage of TDC “at risk” would have increased in relation to fixed pay if our NEO’s received cash bonuses not linkedfor 2016 performance rather than PRSUs.
2016 NEO Mix of Total Direct Compensation
In general, the CGC typically structures NEO pay so that at least one-half of TDC is structured as “at risk” incentive pay. The incentive pay portion of TDC is allocated to performance)cash bonus and performance-based equity using target weightings of 25% to 35% and 65% to 75%, respectively. The value allocated to performance-based equity is further allocated into PSUs and options using target weightings of 65% and 35%, respectively. The CGC relies on this structure to ensure that both short-term and long-term incentive awards are fully reflective of performance for the year in which cash bonuses are earned and new target award values are determined and that performance-based equity serves as our primary form of incentive compensation. For 2016, the weightings used to allocate total incentive award values represented a departure from this philosophy given that 100% of each NEO’s total incentive was granted as performance-contingent and or performance-based equity for 2016 performance.
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The CGC approved PRSU awards in lieu of cash bonuses for 2016 performance for three reasons:
· | increase the level of Seacoast stock ownership among our NEOs in response to shareholder concerns |
· | reinforce the holding power (retention) of our equity compensation program during a critical time in our corporate history, and |
· | maintain and reinforce the sensitivity between incentives and risk for those most accountable for our success and the safety and soundness of the Company. |
PRSU target award values were developed for each of our continuing NEOs using the total incentive methodology described previously. This effort was led by our CEO, who is responsible for developing pay proposals for the management team, which are then presented to the CGC for consideration. The first step in the process involved the CEO’s assessment of each recipient’s performance, as defined by their contributions in helping Seacoast attain the goal of adjusted EPS1 of $1.00 and in terms of individual goals defined on their scorecards.
Our CEO then developed total incentive compensation proposals for each of our continuing NEOs, relying on input from the CGC and to a lesser extent our Chief Human Resources Officer. In developing pay proposals for the NEOs, our CEO considered a number of factors, including: performance; the target value of past total incentive awards; the potential of each executive; flight risk and succession readiness; the holding power (retention) of prior equity awards, including performance-based equity awards granted in April 2017; relative internal value considerations; and market competitiveness. The total incentive values were then allocated to a bonus equivalent cash value and the target award values of performance-based equity.
Bonus equivalent cash values were converted into target PRSU values using an equity value adjustment factor of 1.4. The CEO and the CGC, with input from its consultant, relied on the equity adjustment factor to balance the different risk profiles of unrestricted cash and a restricted stock-settled award subject to service and risk conditions over a multi-year vesting period. The CEO, working in concert with the CGC, evaluated equity value adjustment factors from 1.2 to 1.5 times the bonus equivalent cash value. Based on input from the CEO and the CGC’s consultant, the CGC approved an equity value adjustment factor of 1.4 and an equity structure featuring three-year ratable vesting conditions tied to continuing service and Seacoast’s ongoing compliance with its Tier 1 Regulatory Capital requirement.
The following table summarizes the CGC’s actions in regards to 2016 bonus cash equivalent values, how it compared to 2015 cash bonuses, and the target value of stockPRSU awards issued in April 2017 for 2016 performance.
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
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Cash Equivalent Bonus Values & Target PRSU Award Values for 2016
Named Executive Officer | 2015 Cash Bonus (a) | 2016 Bonus Equivalent Cash (b) | % Change (c = b / a - 1) | 2016 Target PRSU Award Value (d = c x 1.4)(1) | ||||||||||||
Dennis S. Hudson, III | $ | 100,000 | $ | 140,000 | 40 | % | 0 | (2) | ||||||||
Charles K. Cross, Jr. | $ | 125,000 | $ | 150,000 | 20 | % | $ | 210,000 | ||||||||
David D. Houdeshell | $ | 75,000 | $ | 100,000 | 33 | % | $ | 140,000 | ||||||||
Charles M. Shaffer | $ | 100,000 | $ | 185,000 | 85 | % | $ | 259,000 | ||||||||
NEOs as a Group | 44 | % |
(1) | The 2016 Target PRSU Award Values reflects the planning values approved by the CGC, which will differ from the accounting values disclosed in next year’s Summary Compensation Table and Grants of Plan-based Awards Table pursuant to the proxy disclosure rules. |
(2) | Our CEO did not receive a PRSU award. Instead, the CGC increased the target value of the performance-based equity award he received in April 2017. |
The remaining portion of each NEO’s total incentive award was granted during FY15, as disclosedperformance-based equity awards in April 2017 for 2016 performance. Seacoast will disclose details of these awards in next year’s proxy statement. The CGC applied the Summary Compensation Table. TDC excludes “All Other Compensation”. Mr. Fowle’s TDC includessame methodology as used by our CEO to determine the target value of his sign-onperformance-based equity award. The value of this award reflects the “buy-out” value of unvested equity awards Mr. Fowle forfeited upon leaving his prior employer to join Seacoast. Mr. Hahl was paid under a transition agreement and as such his pay data are not identifiedgranted in the chart.April 2017 for 2016 performance.
FY15 Total Direct Compensation for Seacoast’s Named Executive Officers
Base SalarySalary.. All of our named-executive officers receive a base salary that appropriately reflectsthe CGC’s assessment of the individual’sNEO’s skills and value to Seacoast, which positions paySeacoast. This process generally results in base salaries that are within a competitive range of market practices.range. The CGC reviews base salaries annually. In general, we onlyIt is the CGC’s philosophy to increase base salaries in response to reflect an increaseincreases in the size, scope or complexity of an executive’s job.
Total Incentive. All executives are eligiblejob, in connection with a promotion or other forms of recognition that appropriately reflect value considerations, or to receive an awardmaintain the desired level of internal relative value. 2016 annualized base salary actions for their contributions to our success. The CGC assesses each executive’s performance at the end of each year. The performance assessment process includes the CGC’s assessment of the performance of our CEO and the CEO’s assessment of our other named executive officers. Based on this process andofficers are summarized in the CGC’s independently formed views of enterprise and individual performance, the CGC approves the total award for each executive. The total award is delivered in two parts. The first part is a cash bonus that is paid as soon as administratively feasible. The second part is delivered as performance-based stock, representing a target opportunity to earn shares of our common stock for future performance. Given our strong pay-for-performance philosophy, we deliver a significant portion of pay as performance-based stock awards. These awards typically are earned over four or more years based on predefined performance and services considerations.following table.
2016 Annualized Base Salary Actions
Named Executive Officer | 2015 | 2016 | % Change | |||||||||
Dennis S. Hudson, III | $ | 550,000 | $ | 550,000 | 0 | % | ||||||
Steven A. Fowle | $ | 330,000 | $ | 330,000 | 0 | % | ||||||
Charles K. Cross, Jr. | $ | 275,000 | $ | 300,000 | 9 | % | ||||||
David D. Houdeshell | $ | 265,000 | $ | 265,000 | 0 | % | ||||||
Charles M. Shaffer | $ | 250,000 | $ | 300,000 | 20 | % | ||||||
NEOs as a Group | 4 | % |
Seacoast’s FY15 Incentive Pay for its CEO vs. Peer Composite Practices
Performance-based stock consistsMr. Cross and Mr. Shaffer received base salary adjustments in 2016 given the impact of PSUstheir respective businesses on our performance, organic growth and Performance Options. The CGC, at a minimum, approves cashthe expansion of their businesses in response to recent acquisitions, their leadership, and performance-based stock awards that represent 35% and 65% of the total incentive award value (greater emphasis on stock for our CEO). While the mixmaturation of our incentiveexecutive compensation is atypical for our industry,philosophy and the CGC believes it is in the best interests of shareholders.underlying strategies.
Design Highlights2016 Total Incentives.The following table identifies the various forms of Equity Awards Issuedincentive compensationthat the CGC approved for our NEOs during 2016 or in FY15
Performance Share Unit (“PSU”) Awardsconnection with 2016 performance, excluding the target value of performance-based equity granted in April 2017 that will be disclosed in our 2018 proxy statement.
Named Executive Officer | Cash Bonus (a) | Target Value of PSUs granted in Feb 2016 (b) | Target Value of Options granted in Feb. 2016 (c) | Target Value of PRSUs granted in Apr. 2017 (d) | Cumulative 2016 Total Incentive Value (e=a+b+c+d) | |||||||||||||||
Dennis S. Hudson, III | $ | 0 | $ | 357,489 | $ | 175,881 | $ | 0 | $ | 533,370 | ||||||||||
Steven A. Fowle | $ | 0 | $ | 97,486 | $ | 47,968 | $ | 0 | $ | 145,454 | ||||||||||
Charles K. Cross, Jr. | $ | 0 | $ | 168,992 | $ | 83,144 | $ | 210,000 | $ | 462,136 | ||||||||||
David D. Houdeshell | $ | 0 | $ | 90,995 | $ | 44,769 | $ | 140,000 | $ | 275,764 | ||||||||||
Charles M. Shaffer | $ | 0 | $ | 146,244 | $ | 71,952 | $ | 259,000 | $ | 477,196 |
Seacoast’s equity strategy has continued to evolve since the financial crisis. For each of the past three years, the CGC took action to accelerate the acquisition of our stock by our senior leadership team and other key contributors across the Company upon the attainment of performance and risk-based goals. These actions increased the alignment of equity recipients with shareholder interests, revitalized our retention strategies, and elevated our visibility and appeal as an employer of choice for highly skilled talent. The following tables summarize the evolution and emphasis of our equity strategies since 2014.
Evolution of Seacoast’s Performance-based Equity Strategies, 2013-2016
Grant Cycle | Equity | Payout Range / Option Vesting Period | Performance Objective(s) |
2013 (Jun) | PSUs | · 3-year Performance Period · Payout as % of | · Cumulative Earnings |
Options | · 3-year ratable vesting | · Stock | |
2015 (Jan) | PSUs | · 4-year Performance Period with catch-up · Payout as % of | · Cumulative Earnings · Return · Tier 1 Capital Compliance |
Options | · 4-year monthly vesting, starting when stock price closes above exercise price by 120% | · Stock Price Appreciation · Tier 1 Capital Compliance | |
2016 (Feb) | PSUs | · 4-year Performance Period with catch-up · Payout as % of Target 0-175% | · Cumulative Earnings · Return · Tier 1 Capital Compliance |
Options | · 4-year monthly vesting, starting when stock price closes above exercise price of 120% | · Stock Price Appreciation · Tier 1 Capital Compliance |
In 2016, the CGC approved two forms of stock-based long-term incentive awards in connection with Seacoast’s incentive compensation strategy for our named executives. Collectively, we refer to each award type as “performance-based equity.”
2016 Performance Stock Unit (“PSU”) Awards
2016 PSUs represent stock-settled incentive awards where payout can vary from 0% to 175% of the target number of shares granted based on our cumulative four-year earnings and average return on average tangible common equity. For each of the past two award cycles, the CC approved cumulative earnings goals that require escalating levels of double digit growth at threshold, goal and maximum performance levels. The CGC also approved a return on tangible common equity goal that is set above our cost of capital for 2016. The return goal will modify the performance score that is generated by our cumulative earnings by up to +/- 25%, resulting in a long-term incentive opportunity that reflects earnings and return. The CGC selected earnings and return as metrics for our PSU program given the influence they exert on stock price over sustained periods of time. PSU awards also include a “catch-up” provision that allows for a reduced payout after the end of year four if our year five performance equals or exceeds the original four-year goal. This feature reduces the motivation for our executives to take excessive or inappropriate risks by extending the performance period during slower economic periods that could adversely affect our growth expectations and our ability to retain our executives.
2016 Performance Stock Options (“Options”)
Options allow recipients to purchase shares of our common stock in the future at a predetermined price. In order to ensure that our shareholders receive an appropriate return before management can exercise its vested stock options, the awards are issued with a stock price performance hurdle equal to 120% of the grant date closing price of the underlying shares. Once the stock price hurdle is attained for a specified number of days, restrictions start to lapse on stock options at a rate of 1/48 per month for four years. As is the case with PSUs, the CGC relies on an extended vesting period to provide holding power. The CGC relies on Options to reward management for value creation, which is of paramount importance to our shareholders. We issue Options to our executives given the simplicity and transparency of this type of award structure. In recognition that Options could be perceived as motivating the recipient to take excessive risks, the CGC manages the target value of the awards so that they represent significantly less award opportunity than might be realized from PSU awards.
Other Considerations Involving 2016 Equity Awards
As is the case with PRSUs, employees must meet service, performance or market, and a risked-based condition (e.g., Tier 1 Regulatory Capital) in order to receive their performance-based equity awards. The CGC relies on compliance with our Tier 1 Regulatory Capital requirement since it relates our equity capital to our total risk weighted assets, determining our level of capital adequacy. Our NEOs are also subject to stock ownership requirements and holding periods in connection with stock-settled incentive awards. In addition, we will be introducing a mandatory deferral on PSUs starting with the 2017 grant cycle.
Performance Stock Options (“Performance Options”)
Time-Based Restricted Stock Units
Given our strong pay-for-performance orientation, we no longer granttypically limit the use of time-based restricted stock awards tofor our top executives as part of our regular performance-based stock incentive strategy. However, the CGC will consider these types of awards in connection withto offers of employment, or to enhance holding power (retention) of our stock incentive strategy, as wasor in special situations that are evaluated on a case-by-case basis at the case with Mr. Fowle.discretion of the CGC.
Overview of Executive Compensation
Compensation Philosophy and Objectives
Our Board of directors views equity compensation as the foundation of our performance, talent and incentive strategies. We consider arely on equity compensation to motivate recipients to create significant wealth for themselves and our shareholders. Our stock price performance over the past few years has reinforced the attractiveness of equity compensation to our associates, as evidenced by the number of factorsour executives and middle managers who elected to receive PRSUs in developing Seacoast’slieu of all or in connection with reduced cash bonuses for 2016 performance. Associate participation levels also are increasing in our Employee Stock Purchase Plan. Seacoast provides multiple paths to associate stock ownership. All of these paths lead to higher engagement scores and a unique and differentiating associate and customer experience. The CGC intends to continue to rely on significant performance-based stock awards for our CEO, NEOs and other key associates given the benefits of executive and associate stock ownership for our shareholders.
In terms of the broader aspects of our executive compensation program. These factors include:program, we consider: 1) the alignment of our compensation program with the long-term interests of our shareholders, 2) the desire to structure pay for performancein ways that promotes the evolution of our business strategy in light ofresponse to emerging opportunities and in fulfillment of customer demand for innovative products and services, and 3) the relationship between risk-taking and incentive compensation provided to our executives.
Specifically, we have identified the following key objectives for Seacoast’sSpecific Objectives of our executive compensation program:program include:
· | Attract and Retain Talented Executives |
· | Establish clear and enterprise-wide expectations for growth, return and risk |
· |
· |
· | Encourage Entrepreneurial Thinking |
· | Discourage Taking Excessive Risk |
Our business and talent strategies dictate that we seek to hire and retain entrepreneurial-minded executives who are focused on value creation, share our values and commitment to effective risk management, and possess the skills required to support our business strategies and to attain our goals and objectives.
Moreover, we have designed our compensation programs with the intent to align pay with performance. Our goals are to motivate and reward high performance levels, enhancingas well as enhance morale and associate engagement in order to drive superior customer service.
We view internal equity, performance and value considerations as key inputs to managing executive pay. We also consider job-based considerations, including the potential sources of executive talent, business disruption costs that could result from undesired turnover, and talent replacement costs to hire or promote individuals into vacated roles. Individual considerations include performance assessments guided by corporate and individual scorecards, the potential of each executive to move into expanded roles or take on additional leadership responsibilities, and commitment toservice within our values, policies and procedures.
We view market pay data as an additional input in the executive compensation oversight and planning processes. Peer group selection is an important element in this process. We believe that Seacoast’s complex business model requires us to identify, attract and retain talent outside of our traditional markets and industry. We view compensation as an important tool in our efforts to attain our business and talent objectives and, ultimately, to create wealth for shareholders.
In early 2015, the CGC changed the compensation program for Seacoast’s executive officers. The changes resulted in a pay program that emphasizes the Company’s long-term performance and profitability, promotes entrepreneurial thinking and aligns management with shareholder interests. To accomplish these objectives, in January 2015, the CGC engaged Grant Thornton, a nationally known independent consulting firm, to assist in refining its executive compensation program and in the construction of a new peer group. Details are described below under “Role of the Compensation Consultant” and “Benchmarking and Comparator Group”.
The design of our executive compensation program supports our business objectives and aligns closely with shareholder interests. We also are cognizant ofdefined risk considerations, balancing significant upside earnings potential with measures of safety and soundness. The program serves the best interests of our shareholders by providing the management team with a strong performance-based incentive to grow our earnings and deliver returns that equal or exceed our cost of capital. The program helps the Bank attract and retain talented executives who are critical to our ability to create value for our shareholders.parameters.
Determining Executive Compensation
Role of the CGC
The CGC is responsible for establishing our compensation philosophy and for overseeing our executive compensation policies and programs generally. As part of this responsibility, the CGC:
· | regularly |
· | approves our executive compensation programs, including construction of our peer group, issuance of equity awards, and certification of results; |
· | evaluates the performance of the CEO and determines the CEO’s compensation; |
· | reviews the performance of other members of executive management and approves their compensation based on recommendations made by the CEO; and |
· | assesses our incentive strategies from a risk perspective, ensuring that earnings opportunities strike the right balance between risk and reward and that our executives are not motivated to take excessive risks. |
The CGC reviews executive officer compensation to ensure that such compensation supports the business and talent needs of our business and is fully aligned with our compensation philosophies, Company and personal performance, changes in market practices and changes in individual responsibilities.
Role and Independence of the Compensation Consultant
From time to time, the CGC has engaged independent compensation consultants and advisors. In general, these consultants and advisors have provided compensation benchmarking and analytical data and have rendered advice to the CGC regarding all aspects of the committee’s compensation decisions. The CGC has direct accessendeavors to consultantsadhere to effective governance practices and control over their engagement.
In January 2015,principles. As such, our Committee is comprised solely of independent directors. The CGC pursuant to its Charter oversees executive compensation and talented-related considerations, such as succession planning, and our efforts in creating a diverse and inclusive high performance workforce capable of feeding our leadership needs across the CGC engagedCompany. The Committee met eight times in 2016. The Committee retained Grant Thornton in 2015 and 2016 to conduct a reviewserve as its independent consultant. Grant Thornton attended CGC meetings, including executive sessions, and provided information and advice independent of the compensation of the Company’s executive officersmanagement and, assist in the construction of a more appropriate peer group in light of Seacoast’s evolving business strategy. Atat the direction of the CGC Chairperson, assisted management with various activities that support Seacoast’s executive compensation program. Grant Thornton worked with management to develop pay data reflective of the CGC’s views of the types of organizations and industries from which we can reasonably expect to compete for talent. Grant Thornton also provided insight with respect to the methodology used by proxy advisory firms, performance and other characteristics of the companies considered.
In addition, Grant Thornton was engaged todid not provide assistance with development of a long-term equity-based incentive program for executive officers and key managers. After numerous discussions with the CGC, Grant Thornton recommended the structure of the FY15 LTE Program, which was approved by the CGC in January 2015.
In March 2015 and again in March 2016, the CGC evaluated the independence of Grant Thornton in light of SEC rules and Nasdaq listing standards, which require consideration of the following factors:
Seacoast. The CGC discussed these considerations pursuant to SEC and NASDAQ rules and concluded that the engagement of Grant Thornton and the services it provided to the CGC by Grant Thornton did not raise any conflict of interest.
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Benchmarking and Comparator Group
We last updatedThe CGC relies on market pay data and related research to inform its decision on the construction and expected outcomes of our director and executive compensation peer group in 2012.programs. In light of significant changes in the Company and the banking industry since 2012, the CGC decided a fresh look at our compensation peer group was necessary. In considering the new peer group construction, the CGC recognizedrecognizes that for Seacoast to attract and retain the appropriate executive talent needed to achieve its business and talent objectives, its competitorscompetes for executive talent would extend beyondagainst a wide variety of financial services organizations and companies in other industries that rely on or want to acquire the traditionalskill sets that our executives offer. As a result, the CGC relies substantially on information developed from a size-appropriate, high-performing core bank industry compensation peer group. To develop appropriate levelsgroup in its decision process. It also considers, to a lesser extent, the pay strategies employed by large, most admired or innovative financial services companies, and high-performing customer service and technology companies. In terms of market intelligence on bothassessing the value of pay opportunities and how executives are paid (“pay practices”), the CGC directed Grant Thornton to work with management to develop pay data reflectiveeffect of the CGC’s views of the types of organizations and industries from whichdecisions on how we could reasonably expect to compete for talent.
In May 2015, the CGC determined that the bank’s competitive frame for talent consists of high performing banks of similar size (generally from one-half to two and a half times Seacoast’s asset base), highly regarded regional banks previously identified by the Board, and for fiscal 2015 the J.D Powers Report on the Best Regional Banks.
The CGC concluded that in addition to high performing banks of similar size, it should also consider, as a secondaryposition pay vis-à-vis market, reference, the pay practices at high performing companies (financial and general industry) employing similar types of talent. The CGC does not specially consider these companies as a source of information on the value of executive compensation opportunities. Instead, the CGC focuseswe rely exclusively on pay practices, as traditional pay philosophies employed by community banks and peers do not fully align withperformance data developed using our needs or performance expectations.
Consequently, in July 2015, with assistance from Grant Thornton, the CGC selected two distinct comparator groups for informing the CGC’s judgement for executivecore bank industry compensation matters:
In its consideration of market data, the CGC gives primary weight to the Core Bank Peer Group, which was selected from 140 publicly traded U.S. banks of similar size (based on revenue, assets and market cap), arrayed from high to low on the basis of 3-year and 10-year total shareholder return, with further consideration given to their previous inclusion in the Company’s or ISS’ peer group for Seacoast,or, as needed, from the McLagan Regional Bank Survey (“McLagan Survey”), their pay philosophy and previous participationSurvey.
The 2016 peer group is unchanged from the 2015 peer group, except that Bridge Capital Holdings, which was acquired by Western Alliance, a bank with $16.7 billion in the U.S. Department of the Treasury’s Capital Purchase Program.assets, was removed. Our Core Bank Peer Group is now comprised of:
1. Ameris Bancorp (ABCB) | 11. |
2. BNC Bancorp (BNCN) | 12. |
3. | 13. |
4. | 14. |
5. | 15. |
6. | 16. |
7. | 17. |
8. | |
18. Tompkins Financial (TMP) | |
9. German American Bancorp (GABC) | 19. |
10. |
The comparator group we use to develop additional insights on pay practices that might be helpful to Seacoast includes: i) most admired banks regardless of size that produce the results Seacoast’s expects in the future, ii) companies from perimeter industries providing credit cards, data mining services, alternative payment processing, and other specialty services that might reflect our current or future business needs and for which banking industry compensation surveys might not necessarily include, and iii) high-performing customer service and technology companies providing innovative customer service experiences or differentiating, value-adding products and services that drive significant growth in competitive markets. The CGC takes the position that no one industry or company has developed a perfect executive compensation program. For this reason, it assesses pay practices among a diverse group of companies and industries, identifying pay practices or innovative concepts that should be considered given the ongoing evolution of our business and talent needs.
The CGC does not identify a specific target level or percentile of base salary, incentive cash, or the target value of stock-based awards for our named executive officers. Instead, pay outcomes, which include the target value of stock awards to be earned for future performance, primarilyinitially are determined by internal performance considerations. The CGC’s process considers the performance of the Bank, each line of business or function, and the contributions and leadership of each executive.talent considerations. The CGC then considers prior performance and the associated payout outcomes as part of the decision making process. At the end of the process, the CGC validatescompares its initial thinking by comparing planned TDCon NEO pay actions against market pay levels. In yearsMarket assessments serve as key points of reference and validation in the CGC’s process. Ensuring that are pay is appropriate positioned appropriately vis-à-vis those organization against which we compete for talent, customers, and investors. Pay for our NEOs always will be sensitive to performance exceeds expectations, theand risk considerations. The CGC expects to set TDCthat for our named executive officers at or above the median of our Core Bank Peers. In years that our performance is below expectations, the CGC expects to set TDC set below the median of Core Bank Peers. For FY15, TDC for our CEO approximated the market 50th percentile. For our other named executive officers, exclusive of Fowle and Hahl, TDC positionsreasons NEO pay over-time will fluctuate within the market 50th and 75th percentiles. For FY16, TDC will be significantly less than FY15 if we do not attain our EPS performance goal. As a result, the competitiveness of FY16 TDC could be significantly less than the target positioning attained for FY15 performance.
The CGC believes that its approach to setting the value of pay opportunities for our named executive officers and other members of management is in the best interests of our shareholders. Our decision to include a wide array of data points and benchmarks provides a more accurate representation of potential sources and destinations of talent given the dynamic nature of business. If the CGC limited its viewan appropriate range of market pay practices to similarly sized banks, then our ability to attract high performing executives with the skills in demand by much larger organizations would be impaired. This is evident given our recent success in hiring and retaining high performing executives who have worked for larger companies such as Bank of America Corporation, Citrix Systems, Inc., GE Capital and VISA Inc. In addition, the CGC’s ability to “right size” pay based on performance, talent, and risk considerations is key to our talent management strategies and our pay-for-performance philosophy, which we view as innovative and effective in aligning our executives with long-term shareholder interests. The strong pay-for-performance orientation of our executive compensation program and the CGC’s involvement and oversight of the process ensure that the value of pay realized by our executives is appropriate in relation to the overall value realized by our shareholders. Starting in fiscal 2015, the CGC assesses the realizable value of pay in relation to shareholder gains using various stock prices to ensure our strategies and programs work as intended and that shareholders are the primary beneficiaries of management’s success.levels.
Executive Compensation Framework Highlights
PEER GROUP: | ||
Our business model requires us to compete with these groups for executive talent in order to achieve our business objectives related to growth, innovation and profitability. | ||
BASE SALARY, | ||
· No specific target level or percentile of pay relative to comparable positions · Pay decisions reflect the performance of the Company and each executive in relation to prior year pay and performance, planning considerations, and pay relationship to market pay levels and pay practices of peer group · Competitiveness will vary based on performance in terms of the calibration of total incentive awards and amounts ultimately earned from our long-term stock incentive program | · Improve pay for performance linkage · Align pay with overall value of each individual to Seacoast | |
CASH BONUS: | ||
Performance scorecards serve as the basis for cash bonuses and the target value of performance-based long-term incentive/equity awards | Establish clear expectations for individual goals as well as link with enterprise-wide growth, return and risk management objectives | |
EQUITY: | ||
· Simple, performance-based, shareholder-friendly structure with 2 components, PSUs and stock options, both with a long-term emphasis, but weighted more heavily with PSUs · Meaningful stock-based award opportunities “right-sized” for company and individual performance considerations and needs · Approximately 50% or more of TDC for our named executive officers delivered as performance-based pay. · Annual award cycles · 4-year PSU performance period, with an opportunity for reduced awards after five years · Risk considerations serve as an additional vesting requirement on both PSUs and Performance Options | ·
· Performance Options first require that shareholders receive a meaningful return before option begins to vest |
· |
· Aligns more closely with the shareholder interests | |
· Continuously recalibrate performance expectations and promote consistent improvement · Enhance retention of management team | ||
· Enhance long-term performance accountability · Improves retention · Augment alignment with shareholder interests · | ||
Provide executives with an economic incentive to deliver sustainable results within a risk appropriate framework |
Please note that 2016 was the first year in which the CGC relied on PRSU awards to motivate and retain our NEOs. For this reason, PRSUs are not identified or discussed in the preceding table.
20152016 Executive Compensation Actions
2015 Company Business ObjectivesEach year the CEO makes a qualitative assessment of NEO performance and the CGC makes a qualitative assessment of CEO performance. The assessment process relies on scorecards that are approved at the start of each year, establishing performance guidelines against which results are compared at the end of the year. Performance ratings are then developed for each NEO, which are used to inform the CGC’s decision regarding pay actions for the corresponding year’s performance. Despite refinements to various aspects of our executive compensation philosophy and the underlying strategies for 2016, the performance assessment process did not change.
Seacoast’s strategic architecture in 2015 focusedThe CGC and our CEO rely on three core principles of: 1) control through effective riskqualitative assessments of the performance of our NEOs and other members of senior management team given our accelerated growth, the rapid evolution of business, and regulatory compliance, 2) profit through expense management, revenue enhancementthe changing demands on our executives. The CGC believes that qualitative assessments of NEO performance for the purpose of compensation, development and balance sheet management, and 3) growth through new customer acquisition and engagement, innovation, and market expansion.advancement continue to serve the best interests of our shareholders.
To gauge our success over time, we usedThe culmination of the following financial measurements, which we believeCGC’s activities in regards to CEO and NEO performance and pay are important factors to improving shareholder value:
By executing our strategic initiatives that support our core principles,Seacoast made significant progressreflected in the following areas in 2015:tables.
Our other achievements in 2015 include:
4Non-GAAP measure; refer to Appendix A – Information Regarding Non-GAAP Financial Measures
Compensation Paid to Our CEOChief Executive Officer in 2016
Dennis. S. Hudson, III, Chairman of the Board and Chief Executive Officer
Key Influences in the CGC’s Decision Process | |
· · · Adjusted return on tangible common equity1for 4Q16 of 13.1%, representing a 480 basis point improvement from 4Q15 of 8.3% · Enhanced executive talent and performance management system to drive improved accountability and performance by executive management ·Strong credit quality and appropriate risk management · · Successful integration of Floridian and Orlando BMO franchises ·Attainment of growth and strategic initiatives measured by household growth, accretive acquisitions, increased percentages of new accounts and loans originated through alternative channels, and a lower fixed cost structure · · Associate engagement and enterprise-wide alignment with the business strategy · | · · · Performance-based · Performance Option · All Other Compensation of · Bonus equivalent cash value of $140,000 to be used as an input in our CIC calculations. |
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
Compensation Paid to Our Other Named Executive Officers in 2016
Charles K. Cross, Jr., Executive Vice President, Commercial Banking Group
Key Influences in the CGC’s Decision Process | |
·
· · · · Contributions to enterprise-wide business transformation efforts
· Development and · Development and successful implementation of talent and staffing initiatives · Enhanced and advanced customer engagement scores | · Annualized Base Salary · · Performance-based · Performance Option · All Other Compensation of · Bonus Equivalent Cash Value of $150,000 to be used as an input in our CIC calculations |
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
David D. Houdeshell, Executive Vice President, Chief Risk Officer
Key Influences in the CGC’s Decision Process | |
· · · · · · · · · | · · · Performance-based · Performance Option · All Other Compensation of · Bonus Equivalent Cash Value of $100,000 to be used as an input in our CIC calculations |
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
Charles M. Shaffer, Executive Vice President, Community Banking Group
Key Influences in the CGC’s Decision Process | |
· · Adjusted Net Income1 of $37.5 million compared to $25.3 million in 2015 · Adjusted return on tangible common equity1for 4Q16 of 13.1%, representing a 480 basis point improvement from 4Q15 of 8.3% · Double digit growth in consumer and small business commitments · · · ·
| · Annualized Base Salary · · Performance-based · Performance Option · All Other Compensation of · Bonus Equivalent Cash Value of $185,000 to be used as an input in our CIC calculations |
The Company did not set individual goals for fiscal year 2015 for either William R. Hahl or Stephen A. Fowle. Mr. Hahl was replaced by Mr. Fowle, as Executive Vice President, and& Chief Financial Officer on April 3, 2015. Because
The CGC took separate actions for Mr. Fowle joinedgiven his departure from the Company afteron March 31, 2017. Details are provided in the completion of the Company’s goal-setting process, his performance was based on his achievement of the following:
Mr. Fowle’s compensation was determined pursuant to the terms of his offer letter. Mr. Hahl’s compensation was determined pursuant to the terms of his transition agreement described undersection below entitled “Transition Agreement with Former CFO”.
1 Non-GAAP measure; refer to Appendix A - Informtion Regarding Non-GAAP Financial Measures.
Other Elements of the 20152016 Compensation Program for Executive Officers
Change in Control Benefits
We provide change in control benefits to the named executive officers to encourage them to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being in the face of a potential change in control of the Company.TheseCompany. These agreements are described under “Employment and Change in Control Agreements”, and detailed information is provided under “2015“2016 Other Potential Post-Employment Payments.”
In the event that our NEOs qualify for change-in-control severance benefits, a portion of the payments they might receive are a function of highest paid bonus or average bonus paid for the three-year period preceding the year in which a change-in-control (“CIC”) occurs. While issuing PRSUs in lieu of cash bonuses, or in the case of our CEO increasing the value of his performance-based equity award, creates multiple potential benefits, the CGC recognized that it also disadvantaged our NEOs if a CIC occurs. Specifically, as none of our NEOs received a cash bonus for 2016 performance, under the terms of their agreements their highest paid or average bonus paid for the purpose of CIC severance benefits will reflect a zero value for a performance year in which a high value bonus otherwise would have been paid.
In response to the unintended negative consequence created by granting PRSUs in lieu of cash bonuses for 2016 performance or in the case of our CEO increasing the target value of his performance-based equity award, the CGC approved the same bonus cash equivalent values that it relied on in determining the value of PRSU awards. An analysis of the impact of a zero cash bonus and the bonus equivalent cash value for each of our continuing NEOs appears in the following table.
Cash Bonus CIC Severance Input Analysis, 2014-2016
Per Agreement: | D. Hudson | C. Cross | D. Houdeshell | C. Shaffer | ||||||||||||
2014 Cash Bonus | $ | 0 | $ | 80,000 | $ | 35,000 | $ | 48,100 | ||||||||
2015 Cash Bonus | $ | 100,000 | $ | 125,000 | $ | 75,000 | $ | 100,000 | ||||||||
2016 Cash Bonus | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
CIC Severance Input | $ | 100,000 | $ | 68,333 | $ | 36,667 | $ | 49,367 |
Per CGC Directive: | D. Hudson | C. Cross | D. Houdeshell | C. Shaffer | ||||||||||||
2016 Cash Equivalent Bonus | $ | 140,000 | $ | 150,000 | $ | 100,000 | $ | 185,000 | ||||||||
Modified CIC Severance Input | $ | 140,000 | $ | 118,333 | $ | 70,000 | $ | 111,033 |
CIC severance benefits attributable to cash bonus for Mr. Hudson reflect the highest value payment he receives during the three-years prior to a transaction. CIC severance benefits attributable to cash bonuses for our other continuing NEOs reflect the value of average cash bonus they receive during the three-years prior to a transaction. A CIC and job loss must occur within a stated period of time before our executives will be eligible to receive CIC severance benefits.
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Retirement and Employee Welfare Benefits
We sponsor a retirement savings plan for employees of the Company and its affiliates (the “Retirement Savings Plan”) and a nonqualified deferred compensation plan for certain executive officers (the “Executive Deferred Compensation Plan”). We offer these plans, and make contributions to them, to provide employees with tax-advantaged savings vehicles and to encourage them to save money for their retirement.
The Executive Deferred Compensation Plan is described under “Executive Compensation–Nonqualified Deferred Compensation.”
In addition to our retirement programs, we provide employees with welfare benefits, including hospitalization, major medical, disability and group life insurance plans and paid vacation. We also maintain a Section 125 cafeteria plan that allows our employees to set aside pre-tax dollars to pay for certain benefits. All of the full-time employees of the Company and the Bank, including the named executive officers, are eligible to participate in the Retirement Savings Plan and our welfare plans, subject to the terms of those plans.
The Bank provides supplemental disability insurance to certain members of executive management, including the named executive officers, in excess of the maximum benefit of $10,000 per month provided under the group plan for all employees. The supplemental insurance provides a benefit up to 70% of the executive’s monthly pre-disability income based on the executive’s base salary and annual incentive compensation. Coverage can be converted and maintained by the individual participant after employment ends. The benefit may be reduced by income from other sources, and a partial benefit is paid if a disabled participant is able to work on a part-time basis. In 2014,2016, the Company paid a total of $9,688$4,917 for supplemental disability insurance for the named executive officers.
The retirement and employee welfare benefits paid by the Company for the named executive officers that are required to be disclosed in this proxy statement are included below in the “Summary Compensation Table,” the “Components of All Other Compensation,” and the “Nonqualified Deferred Compensation Table,” and are described in the footnotes thereto.
Executive Perquisites
We do not consider perquisites to be a significant element of our compensation program. However, we believe they are important and effective for attracting and retaining certain executive talent. We do not provide tax reimbursements, or “gross-ups,” on perquisites. For additional details regarding the executive perquisites, see below the “Summary Compensation Table” and the “Components of All Other Compensation.”
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Risk Analysis of Executive Compensation
In 2015,2016, the CGC and our head of human resourcesChief Human Resources Officer conducted a risk assessment of our compensation plans and programs to determine whether our incentive compensation programs are reasonably likely to have a material adverse effect on the Company. This risk assessment consisted of a review of cash and equity compensation provided to our employees, with a focus on incentive compensation plans which provide variable compensation to employees based upon performance of the Company, one of its subsidiaries or business units, or the individual employee. The incentive plans are designed to provide a strong link between performance and pay.
In light of the review, the Company concluded that the compensation programs are designed with the appropriate balance of risk and reward in relation to our overall business strategy and do not create risk that is reasonably likely to have a material adverse effect on the Company. The Company also concluded that risks can be effectively monitored and managed. The CGC will continue to consider compensation risk implications when making decisions regarding our compensation programs.
Risk Analysis of Retail Sales Incentive Plans
Seacoast initiated a proactive review of our retail sales incentive plans in May 2016. Management, including our Chief Risk Officer, Chief Human Resources Officer, and head of Community Banking, initiated this effort in connection with our ongoing enterprise-wide business transformation efforts. After speaking to a number of third party firms, Seacoast engaged McLagan Partners (“McLagan”), to lead the effort. We asked McLagan to provide an independent assessment of the alignment of our retail sales incentive plans with industry best practices and our business and customer strategies. We also asked McLagan to identify and recommend action in regards to any potential points of concern that could motivate our incentive eligible associates to engage in inappropriate, unsafe or unsound sales practice.
McLagan presented its findings and recommendations to management in August 2016. Management reviewed McLagan’s work and, in response, developed a Phase I implementation Plan that is currently underway. Our Phase I Implementation Plan is resulting in modifications to our plans and how we oversee and manage incentive-related risks. One example is the formation of our Incentive Oversight Committee (“IOC”), which we established in the Fall of 2016. Our senior leaders, including those identified above, serve on the IOC. The IOC benefits Seacoast by providing centralized oversight of our retail sales incentive plans and other incentive plans. The IOC also ensures that we are making satisfactory progress on our Phase I Implementation activities, which we intend to expand in the future. The expanded effort will encompass other incentive eligible associates in different areas of the Company. It also will enhance and advance the existing controls and governance of our incentive plans, along with the supporting training and performance management processes.
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We have adopted a Compensation Recoupment Policy to recover, to the extent practicable and appropriate, incentive compensation from any executive officer when:
· | the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results that were subsequently the subject of a restatement, regardless of whether the executive engaged in misconduct or otherwise contributed to the requirement for the restatement; and |
· | a lower payment or award would have been made to the executive officer based upon the restated financial results. |
The policy is available on our website atwww.seacoastbanking.com. www.SeacoastBanking.com. The policy, as written, anticipates the final rules implementing the clawback provision of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, but will be amended, if necessary, when final regulations are issued by the SEC.
The Company has adopted a hedging and pledging policy. The policy prohibits our employees, including our executive officers and directors, from purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of our stock, including exchange funds, prepaid variable forward contracts, equity swaps, puts, calls, collars, forwards or short sales.
In addition, directors and executive officers are required to obtain advance approval of any pledging of Company shares as collateral for loans, including holding Company shares in margin accounts. The policy also limits pledging to reasonable purposes (as defined in the policy) and limits the value of the securities pledged in connection with a loan or other indebtedness to $250,000.
The Board has established stock ownership guidelines for its officers and directors, as described below:
Holding Requirement | |||
Individual/Group | Stock Ownership Target | ||
Before Ownership Target Met | After Ownership Target Met | ||
Chief Executive Officer | 5 times annual base salary | 75% of net shares until target number of shares is met | 50% of net shares held for one year after vesting/ exercise |
Other Senior Executive Officers | 3 times annual base salary | ||
Non-Employee Directors | 3 times annual retainer |
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Our executive compensation program is designed to allow a participant to earn targeted ownership over a reasonable period, usually within four years, provided individual and Company targets are achieved and provided the participant fully participates in the program. “Net Shares” means shares of stock in excess of those sold or withheld to satisfy the minimum tax liability upon vesting or conversion. Except for CEO Dennis S. Hudson, III and CFO Stephen A. Fowle have met the stock ownership guidelines. The other named executive officers, two of whom have been in senior executive officer positions for less than four years, have not yet met the established stock ownership guidelines, since no equity awards were made in 2008, 2009, 2010 and 2012.guidelines.
Code Section 162(m) generally establishes, with certain exceptions, a $1 million deduction limit for all publicly held companies on compensation paid to an executive officer in any year. The CGC gives strong consideration to the deductibility of compensation in making its compensation decisions for executive officers, balancing the goal of maintaining a compensation program which will enable the Company to attract and retain qualified executives with the goal of creating long-term shareholder value.Thevalue. The CGC reserves the right to pay executives’ compensation that is not deductible under Section 162(m).
The CGC met in March 2017 and approved a number of changes to our equity incentive strategy, starting with this year’s grant cycle. These changes were made in direct response to shareholder feedback and to ensure that our performance-based equity strategies continue to support our governance and risk management efforts. Specifically:
Impetus for Change | Design Changes |
Shareholder feedback that our executives needs to own more shares of Seacoast stock | · PRSUs were granted in lieu of cash bonuses for 2016 performance · Performance period for new PSU awards reduced from four years to three years, accelerating the rate at which our executives accumulate shares of Seacoast stock if we perform · Vesting period for new Option awards reduced from four years to three years, accelerating the rate at which our executives have the right to exercise their options and receive shares of our common stock |
Shareholder feedback that Seacoast needs to perform at levels that equal or exceed the industry | · PSU metrics changed from cumulative earnings with a modifier based on Return on Tangible Common Equity (“ROTCE”) to three-year compound annualized growth in EPS and average return on equity, which our shareholders views as key indicators of our performance · Option performance feature modified so that the stock price vesting hurdle used for prior awards is replaced by a premium option feature for new awards whereby the exercise price of the option is set above the face value of the closing stock price on the date of grant, placing shareholders in front of management for value realized through stock price appreciation |
Governance Considerations | · Reduced PSU performance period, allowing for direct and relevant pay and performance comparisons with industry competitors and alternative investments that share our risk profile · Increased the transparency of our PSU program and performance goals by replacing a single type of PSU award with two types of PSU awards. Starting with PSUs granted in April 2017, one type of PSU will be earned for compound annualized growth in EPS and one type of PSU will be earned for average return on equity. |
Risk-Considerations | · Implemented a mandatory deferral feature on new PSU awards so that settlement of 50% of any shares earned for performance will be delayed for an additional 12 months · Maintained the 12-month stock holding requirement on 50% of the net shares received upon the exercise of options · Maintained service and risk-based vesting requirements on all new performance-contingent and performance-based equity awards and options · Continue to grant options with a target value significantly less than the target value of PSU awards and, in most years, and total incentive award values |
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COMPENSATION AND GOVERNANCE |
The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation and Benefits Committee recommended to the board of directors, and the board of directors approved, that the Compensation Discussion and Analysis be included in this proxy statement.
This report shall not be deemed to be “soliciting material” or to be “filed” with the Securities Exchange Commission, nor shall this report be incorporated by reference by any general statement incorporating by reference this 20162017 Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such Acts.
Compensation and Governance Committee: | ||
H. Gilbert Culbreth, Jr., Chair | ||
Julie H. Daum | ||
Maryann Goebel |
20152016 SUMMARY COMPENSATION TABLE
The table below sets forth the elements that comprise total compensation for the named executive officers of the Company for the periods indicated.
Name and Principal Position | Year | Salary ($) (1) | Bonus ($) | Stock Awards ($) (2) | Option Awards ($) (2) | Non-Equity Incentive Plan Com- pensation ($) | All Other Compen- sation ($) (3) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock | Option | Incentive Plan | All Other | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name and Principal | Salary | Bonus | Awards | Awards | Compensation | Compensation | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Position | Year | ($)(1) | ($)(2) | ($)(3) | ($)(3) | ($) | ($)(4) | ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dennis S. Hudson, III | 2015 | $ | 537,852 | $ | 100,000 | $ | 454,049 | $ | 39,773 | — | $ | 42,434 | $ | 1,174,108 | 2016 | 550,000 | — | 357,489 | 175,881 | — | 33,530 | 1,116,900 | ||||||||||||||||||||||||||||||||||||||
Chairman & CEO of | 2014 | 500,000 | — | 264 | 111,168 | — | 24,669 | 636,101 | 2015 | 537,852 | 100,000 | 454,049 | 39,773 | — | 42,434 | 1,174,108 | ||||||||||||||||||||||||||||||||||||||||||||
Seacoast and Bank | 2013 | 500,000 | 138 | (4) | 471,429 | 46,972 | — | 26,151 | 1,044,690 | 2014 | 500,000 | — | 264 | 111,168 | — | 24,669 | 636,101 | |||||||||||||||||||||||||||||||||||||||||||
Stephen A. Fowle(5) | 2015 | 243,903 | 150,000 | (6) | 757,998 | — | 93,216 | 1,245,117 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP & CFO of Seacoast and Bank | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephen A. Fowle | 2016 | 330,000 | — | 97,486 | 47,968 | — | 2,750 | 478,204 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP & CFO of Seacoast | 2015 | 243,903 | 150,000 | (5) | 757,998 | — | — | 93,216 | 1,245,117 | |||||||||||||||||||||||||||||||||||||||||||||||||||
and Bank | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Charles K. Cross, Jr. | 2015 | 273,333 | 125,000 | 249,443 | 21,850 | — | 29,285 | 698,911 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP, Commercial Banking of Bank | 2014 | 257,500 | 80,000 | (7) | 128,956 | 55,584 | — | 28,051 | 550,091 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Charles K. Cross, Jr. | 2016 | 293,750 | — | 168,992 | 83,144 | — | 23,165 | 569,051 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP, Commercial Banking | 2015 | 273,333 | 125,000 | 249,443 | 21,850 | — | 29,285 | 698,911 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
of Bank | 2014 | 257,500 | 80,000 | 128,956 | 55,584 | — | 28,051 | 550,091 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
David D. Houdeshell | 2015 | 262,500 | 75,000 | 163,559 | 14,327 | — | 17,911 | 533,297 | 2016 | 265,000 | — | 90,995 | 44,769 | — | 11,141 | 411,905 | ||||||||||||||||||||||||||||||||||||||||||||
EVP & Chief Risk Officer of | 2014 | 250,000 | 35,000 | (7) | 264 | 55,584 | — | 15,227 | 356,075 | 2015 | 262,500 | 75,000 | 163,559 | 14,327 | — | 17,911 | 533,297 | |||||||||||||||||||||||||||||||||||||||||||
Seacoast and Bank | 2013 | 250,000 | — | 196,429 | 10,169 | — | 12,913 | 469,511 | 2014 | 250,000 | 35,000 | 264 | 55,584 | — | 15,227 | 356,075 | ||||||||||||||||||||||||||||||||||||||||||||
Charles M. Shaffer | 2015 | 248,333 | 100,000 | 204,606 | 17,923 | — | 22,218 | 593,080 | 2016 | 287,499 | — | 146,244 | 71,952 | — | 19,901 | 525,596 | ||||||||||||||||||||||||||||||||||||||||||||
EVP, Community Banking of Bank | 2014 | 220,000 | 48,100 | (7) | 116,634 | 55,584 | — | 24,550 | 464,868 | |||||||||||||||||||||||||||||||||||||||||||||||||||
William R. Hahl(5) | 2015 | 310,000 | — | — | — | — | 23,872 | 333,872 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Former CFO, Current EVP of Seacoast and Bank | 2014 | 310,000 | — | 264 | — | — | 27,723 | 337,987 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2013 | 310,000 | — | 243,571 | 12,106 | — | 23,392 | 589,069 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP, Community Banking | 2015 | 248,333 | 100,000 | 204,606 | 17,923 | — | 22,218 | 593,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
of Bank | 2014 | 220,000 | 48,100 | 116,634 | 55,584 | — | 24,550 | 464,868 |
(1) | A portion of executive’s base salary included in this number may have been deferred into the Company’s Executive Deferred Compensation Plan (“EDCP”), the amounts of which are disclosed in the Nonqualified Deferred Compensation Table for the applicable year. Executive officers who are also directors do not receive any additional compensation for services provided as a director. |
Cash bonuses earned for FY16 performance were replaced with performance-based stock awards for our CEO and with restricted stock units for our other executive officers, each of which were granted in 2017 and, pursuant to proxy rules, are not reported in 2016 compensation. |
Represents the aggregate grant date fair value as of the respective grant date for each award calculated in accordance with FASB ASC Topic 718. The assumptions made in valuing stock awards reported in this column are discussed in Note J to the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, |
65 |
Name | Target Value In Table Above | Maximum Value | ||||||
Dennis S. Hudson, III | $ | 454,049 | $ | 681,073 | ||||
Stephen A. Fowle | — | — | ||||||
Charles K. Cross, Jr. | 249,443 | 374,164 | ||||||
David D. Houdeshell | 163,559 | 245,338 | ||||||
Charles M. Shaffer | 204,606 | 306,909 | ||||||
William R. Hahl | — | — |
Each of our executive officers received PSUs. With respect to the PSU awards, the grant date fair value included in the table assumes that target performance is achieved. The maximum value for each executive as of the grant date, assuming the highest level of performance will be achieved, is:
Name | Target Value In Table Above | Maximum Value | ||||||
Dennis S. Hudson, III | $ | 357,489 | $ | 625,611 | ||||
Stephen A. Fowle | $ | 97,486 | $ | 170,608 | ||||
Charles K. Cross, Jr. | $ | 168,992 | $ | 295,733 | ||||
David D. Houdeshell | $ | 90,995 | $ | 159,241 | ||||
Charles M. Shaffer | $ | 146,244 | $ | 255,927 |
Additional information regarding other compensation is provided in |
(5) |
Cash incentive award guaranteed in offer letter dated February 10, 2015. |
20152016 COMPONENTS OF ALL OTHER COMPENSATION
Company Paid | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions | Company Paid | |||||||||||||||||||||||||||||||||||||||||||||||||||
Company Paid Contributions to Retirement Savings Plan | Company Paid Contributions to Executive | Premium on Supple- | to Retirement | Contributions | Car | Cell Phone | Other | |||||||||||||||||||||||||||||||||||||||||||||
Name | Match | Discretionary Contribution | Deferred Compensation Plan(1) | mental Disability Insurance | Excess Life Insurance Benefit | Perquisites | Total | Savings Plan | to EDCP(1) | Allowance | Allowance | Perquisites | Total | |||||||||||||||||||||||||||||||||||||||
Dennis. S. Hudson, III | $ | 12,493 | $ | 2,650 | $ | 13,625 | $ | 1,102 | $ | 3,564 | $ | 9,000 | (2) | $ | 42,434 | $ | 16,097 | $ | 8,433 | $ | 9,000 | — | — | $ | 33,530 | |||||||||||||||||||||||||||
Stephen A. Fowle | — | 2,650 | — | 255 | 311 | 90,000 | (3) | 93,216 | $ | 2,750 | — | — | — | — | $ | 2,750 | ||||||||||||||||||||||||||||||||||||
Charles K. Cross, Jr. | 11,653 | 2,650 | — | 925 | 2,322 | 11,735 | (4) | 29,285 | $ | 11,430 | — | $ | 9,000 | 540 | 2,194 | (2) | $ | 23,165 | ||||||||||||||||||||||||||||||||||
David D. Houdeshell | 11,508 | 2,650 | — | 891 | 2,322 | 540 | (5) | 17,911 | $ | 10,600 | — | — | 540 | — | $ | 11,141 | ||||||||||||||||||||||||||||||||||||
Charles M. Shaffer | 9,156 | 2,650 | — | 872 | 540 | 9,000 | (2) | 22,218 | $ | 9,150 | $ | 1,750 | $ | 9,000 | — | — | $ | 19,901 | ||||||||||||||||||||||||||||||||||
William R. Hahl | 11,700 | 2,650 | 1,550 | 1,114 | 6,858 | — | 23,872 |
(1) | Earned in reporting year, but contributed in following year. Also reported in the “Nonqualified Deferred Compensation Table.” |
(2) |
Includes |
20152016 GRANTS OF PLAN-BASED AWARDS
The following table sets forth certain information concerning plan-based awards granted during 20152016 to the named executive officers.
Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities | Exercise or Base Price of | Grant Date Fair Value of Stock and | ||||||||||||||||||||||||||
Grant | Thres hold | Target | Maxi- mum | Stock or Units | Underlying Options | Option Awards | Option Awards(1) | |||||||||||||||||||||||
Name | Date | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||||
Dennis S. Hudson, III | 1/29/2015 | 17,975 | 35,950 | 53,925 | — | $ | 454,049 | |||||||||||||||||||||||
1/29/2015 | 17,975 | (3) | $ | 12.63 | 39,773 | |||||||||||||||||||||||||
Stephen A. Fowle | 5/12/2015 | — | — | �� | — | 51,078 | (2) | — | — | $ | 757,998 | |||||||||||||||||||
Charles K. Cross, Jr. | 1/29/2015 | 9,875 | 19,750 | 29,625 | — | $ | 249,442 | |||||||||||||||||||||||
1/29/2015 | 9,875 | (3) | $ | 12.63 | 21,850 | |||||||||||||||||||||||||
David D. Houdeshell | 1/29/2015 | 6,475 | 12,950 | 19,425 | — | $ | 163,558 | |||||||||||||||||||||||
1/29/2015 | 6,475 | (3) | $ | 12.63 | 14,327 | |||||||||||||||||||||||||
Charles M. Shaffer | 1/29/2015 | 8,100 | 16,200 | 24,300 | — | $ | 204,606 | |||||||||||||||||||||||
1/29/2015 | 8,100 | (3) | $ | 12.63 | 17,923 | |||||||||||||||||||||||||
William R. Hahl | — | — | — | — | — | — | — | — |
All Other | All Other | |||||||||||||||||||||||||||||
Stock | Option | |||||||||||||||||||||||||||||
Awards: | Awards: | Grant Date | ||||||||||||||||||||||||||||
Estimated Future Payouts | Number | Number of | Exercise or | Fair Value | ||||||||||||||||||||||||||
Under Equity Incentive | of Shares | Securities | Base Price | of Stock | ||||||||||||||||||||||||||
Plan Awards | of Stock | Underlying | of Option | and Option | ||||||||||||||||||||||||||
Grant | Threshold | Target | Maximum | or Units | Options | Awards | Awards(1) | |||||||||||||||||||||||
Name | Date | (#) | (#) | (#) | (#) | (#) | ($/Sh) | ($) | ||||||||||||||||||||||
Dennis S. Hudson, III | 2/29/2016 | 12,061 | 24,122 | 42,214 | — | 357,489 | ||||||||||||||||||||||||
2/29/2016 | 51,956 | (2) | 14.82 | |||||||||||||||||||||||||||
Stephen A. Fowle | 2/29/2016 | 3,289 | 6,578 | 11,512 | — | — | 97,486 | |||||||||||||||||||||||
2/29/2016 | 14,170 | (2) | 14.82 | |||||||||||||||||||||||||||
Charles K. Cross, Jr. | 2/29/2016 | 5,702 | 11,403 | 19,955 | — | — | 168,992 | |||||||||||||||||||||||
2/29/2016 | 24,561 | (2) | 14.82 | |||||||||||||||||||||||||||
David D. Houdeshell | 2/29/2016 | 3,070 | 6,140 | 10,745 | — | — | 90,995 | |||||||||||||||||||||||
2/29/2016 | 13,225 | (2) | 14.82 | |||||||||||||||||||||||||||
Charles M. Shaffer | 2/29/2016 | 4,934 | 9,868 | 17,269 | — | — | 146,244 | |||||||||||||||||||||||
2/29/2016 | 21,255 | (2) | 14.82 |
(1) | Represents the aggregate grant date fair value as of the respective grant date for each award, calculated in accordance with FASB ASC Topic 718. The assumptions made in valuing stock awards reported in this column are discussed in Note J to the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, |
(2) |
67 |
Employment and Change in Control Agreements
The Company and the Bank currently maintain employment and change in control agreements with certain of the Company’s executive officers, the terms of which are described in more detail below.
Employment Agreement with Mr. Hudson
In December 18, 2014, the Company and the Bank entered into an employment agreement with Dennis S. Hudson, III. The new employment agreement replaced the previous employment agreement between Mr. Hudson and Seacoast and the Bank dated January 18, 1994, as amended December 31, 2008, and the change of control agreement between these parties dated December 24, 2003.
The new employment agreement has an initial term of three (3) years. Under the agreement, Mr. Hudson receives a minimum base salary of $500,000 per year, medical, long-term disability and life insurance in accordance with the Bank’s insurance plans for senior management, as well as a car allowance and any other perquisites that are approved by the Board. Mr. Hudson may also receive other compensation including bonuses, and he will be entitled to participate in all current and future employee benefit plans and arrangements in which senior management of the Bank may participate. In addition, the agreement contains certain non-competition, non-disclosure and non-solicitation covenants.
Under the agreement, if Mr. Hudson is terminated for “cause”, or resigns without “good reason,” as defined in the agreement, he will receive payment of his base salary and unused vacation through the date of termination, and any unreimbursed expenses (collectively, the “Accumulated Obligations”). The employment agreement also contains provisions for termination upon Mr. Hudson’s death or permanent disability.
The agreement also provides for termination upon the occurrence of a change in control. If Mr. Hudson resigns for “good reason” or is terminated “without cause” prior to a change in control, he will receive: 1) the Accumulated Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) two times his base salary in effect on the date of separation, b) two times a bonus equal to the highest bonus earned by the Executive for the previous three full fiscal years (“Cash Bonus”), and c) continuing group medical, dental, vision and prescription drug plan benefits (“Continuing Benefits”) for two years. If Mr. Hudson resigns for “good reason” or is terminated “without cause”, within twelve months following a change in control (as defined in the agreement), he will receive: 1) the Accumulated Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) three times his base salary in effect on the date of separation, b) three times the Cash Bonus; and c) Continuing Benefits for 36 months.
In addition, under the agreement, Mr. Hudson is subject to the Company’s policies applicable to executives generally, including its policies relating to claw-back of compensation.
For a further discussion of the payments and benefits to which Mr. Hudson would be entitled upon termination of his employment see “2015 Other Potential Post-Employment Payments.”
68 |
Change in Control AgreementsAgreement with Chief Financial Officer
The Company entered into a change in control employment agreement with Stephen A. Fowle (referred to here as the “Executive”) on August 6, 2015, as previously agreed to in his offer letter dated February 10, 2015. This agreement terminated with Mr. Fowle’s departure from the Company on March 31, 2017. The change in control agreement has an initial term of one year and provides for automatic one-year extensions unless expressly not renewed. A change in control, as defined in the agreement, must occur during the period (the “Change in Control Period”) to trigger the agreement.
The agreement provides that, once a change in control has occurred, the Executive and the Company agree to continue, for the Change in Control Period, the Executive’s employment in the same position as held in the 120 day period prior to the change in control. If the Executive is terminated for “cause” or resigns without “good reason,” as defined in the agreement, the Executive will receive payment of his base salary and unused vacation through the date of termination; and any previously accrued and deferred compensation (collectively, the “Accrued Obligations”). If the Executive resigns for “good reason” or is terminated “without cause,” the Executive will receive: 1) the Accrued Obligations; 2) a bonus equal to the highest bonus earned by the Executive for the previous three full fiscal years (“Highest Bonus”) multiplied by a fraction (the numerator of which is the number of days between January 1 and the Executive’s date of termination and the denominator of which is 365); 3) an amount equal to the Executive’s annual base salary in effect on the date of termination, plus the Highest Bonus; and 4) health and other welfare benefits, as defined in the agreement, for one year following termination. In addition, all unvested stock options to acquire stock of the Company and all awards of restricted stock of the Company held by Executive as of the date of termination shall be immediately and fully vested as of the date of termination and, in the case of stock options, shall be fully exercisable as of the date of termination and shall remain exercisable for the period of time set forth in the applicable option agreement. The Executive is required to execute a release of claims as a condition to receipt of severance under the CIC Agreement.
Change in Control Agreements with Other Named Executive Officers
The Company entered into a change in control employment agreement with William R. Hahl on December 24, 2003, and similar change in control agreements with Messrs. Cross, Houdeshell and Shaffer (each referred to here as the “Executive” or by name) on September 21, 2016. The CIC agreement with each Executive supersedes the previous change in control agreement between each Executive and the Company dated October 28, 2014. The new agreement: 1) eliminates the excise tax gross-up payment contained in the 2014 agreements and ii) does not provide benefits that are paid before a change in control agreements havecloses or if the acquirer retains the executive.
Each agreement has an initial term of two years for Mr. Hahl and one year for each of the other executive officers, and provideprovides for automatic one-year extensions unless expressly not renewed. A change in control, as defined in the agreement, must occur during these periodsthe period (the “Change in Control Period”) to trigger the agreement.
The change in control employment agreements provideagreement provides that, once a change in control has occurred, the executiveCompany agrees to continue the employment of the Executive subject to the contract (the “Subject Executive”) andfor a one-year period, in a comparable position as the Company agree to continue, for the Change in Control Period, the Subject Executive’s employment in the same position asExecutive held in the 120-day period prior to the change in control.control, and with the same annual base pay and target bonus opportunity. If the Subject Executive is terminated for “cause”“without cause” or resigns “without goodfor “good reason,” as defined in the agreement, during the Subject Executive will receive payment ofone-year period following a change in control, the Subject Executive’s base salary and unused vacation through the date of termination; and any previously accrued and deferred compensation (the “Accrued Obligations”).
If the Subject Executive resigns for “good reason” or is terminated “without cause,” or resigns for any reason during a 30-day period specified in the contract, the Subject Executive will receive:
· | cash severance equal to a multiple (two times, for Messrs. Cross and Shaffer, and one times for Mr. Houdeshell) of the sum of (i) Executive’s Annual Base Salary at the rate in effect on the date of termination, and (ii) the Executive’s average annual performance bonus for the last three full fiscal years prior to the date of termination (“Executive’s Average Annual Performance Bonus”); |
· | a prorated final year bonus, based on the Executive’s Average Annual Performance Bonus; and |
· | health and other welfare benefits, as defined in the agreement, for |
In addition, all unvested stock optionsThe Executive is required to acquire stockexecute a release of claims as a condition to receipt of severance under the CIC Agreement and is subject to protective covenants prohibiting the disclosure and use of the Company’s confidential information and, during the one-year period following a termination by the company any reason other than for death or disability, or by the Executive for Good Reason, protective covenants regarding non-competition, non-solicitation of protected customers; non-solicitation of employees, and non-disparagement of the Company and all awards of restricted stock of the Company held by Subject Executive as of the date of termination shall be immediately and fully vested as of the date of termination and, in the case of stock options, shall be fully exercisable as of the date of termination.or its directors, officers, employees or affiliates.
Transition Agreement with Former CFO
On May 12, 2015,February 3, 2017, the Company approved andBank entered into a transition agreementTransition Agreement with William R. Hahl (the “Transition Agreement”)Stephen A. Fowle which became effective on February 10, 2017, related to his decision to stepdown as CFO.CFO and his termination of employment with the Company on March 31, 2017. The agreement provides that Mr. Fowle will be entitled to certain severance benefits upon the execution of a mutual release of claims against the Bank and its affiliates. The release of claims was signed on March 30, 2017 and becomes became effective on March 31, 2017. Pursuant to the terms of the Transition Agreement, Mr. Hahl’sFowle will be entitled to receive a payment in the amount of $165,000 no later than 15 days following the effective date of the release. Mr. Fowle will be entitled to receive an additional payment in the amount of $82,500 on October 1, 2017 in the event Mr. Fowle has not obtained new employment. Subject to certain exceptions, Mr. Fowle will not be entitled to such additional payment in the event he has obtained new employment on or before such date. The Bank will terminate with the Company at the earliermake a lump sum payment to Mr. Fowle equal to 18 months of (1) December 31, 2016, (ii) the date whichcertain COBRA insurance premiums. In addition, certain of Mr. Hahl resigns from the Company prior to December 31, 2016, or (iii) the date on which Mr. Hahl’s employment is terminated by the Company (the “Termination Date”). Pursuant to theFowle’s unvested and outstanding shares of restricted stock will vest and certain unvested and outstanding performance options will vest and become exercisable. The Transition Agreement requires Mr. Fowle be subject to certain restrictive covenants, which include non-solicitation of Bank customers and employees, and non-disclosure of confidential and proprietary information about the Company has agreed to (1) continue to pay Mr. Hahl his current base salary until the Termination DateBank, its employees, customers and (2) fully vest Mr. Hahl’s unvested stock awards on December 31, 2016.clients.
For a further discussion of the benefits and payments provided for under these agreements see “2015“2016 Other Potential Post-Employment Payments.”
71 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END 20152016
The following table sets forth certain information concerning outstanding equity awards as of December 31, 20152016 granted to the named executive officers. This table includes the number of shares of Common Stockcommon stock covered by both exercisable options, non-exercisable options or stock appreciation rights (“SARs”), and unexercised unearned options or SARs awarded under an equity incentive plan that were outstanding as of December 31, 2015.2016. Also reported are restricted stock units and restricted stock awards, and their market value, that had not vested as of December 31, 2015.2016.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Option (#) Unexercisable | Option Exer- cise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (1) (#) | Market Value of Shares or Units of Stock That Have Not Vested (2) ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested (2) ($) | ||||||||||||||||||||||
D. Hudson, III | 5,520 | (3) | — | $ | $133.60 | 05/16/2016 | ||||||||||||||||||||||||
14,627 | (4) | — | 111.10 | 04/02/2017 | ||||||||||||||||||||||||||
7,760 | 11,640 | (5) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||
16,666 | 33,334 | (6) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||
2,246 | 15,728 | (7) | 12.63 | 01/29/2023 | ||||||||||||||||||||||||||
19,868 | (8) | $297,623 | ||||||||||||||||||||||||||||
64,180 | (9) | 961,416 | ||||||||||||||||||||||||||||
35,950 | (10) | $538,531 | ||||||||||||||||||||||||||||
S. Fowle | 51,078 | (11) | $765,148 | |||||||||||||||||||||||||||
C. Cross, Jr. | 960 | 1,440 | (5) | $ | $11.00 | 06/28/2023 | ||||||||||||||||||||||||
8,333 | 16,667 | (6) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||
1,234 | 8,641 | (7) | 12.63 | 01/29/2023 | ||||||||||||||||||||||||||
1,464 | (12) | $21,931 | ||||||||||||||||||||||||||||
26,801 | (9) | 401,479 | ||||||||||||||||||||||||||||
19,750 | (10) | $295,855 | ||||||||||||||||||||||||||||
D. Houdeshell | 1,680 | 2,520 | (5) | $ | $11.00 | 06/28/2023 | ||||||||||||||||||||||||
8,333 | 16,667 | (6) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||
809 | 5,666 | (7) | 12.63 | 01/29/2023 | ||||||||||||||||||||||||||
5,564 | (8) | $83,349 | ||||||||||||||||||||||||||||
26,742 | (9) | 400,595 | ||||||||||||||||||||||||||||
12,950 | (10) | $193,991 |
OPTION AWARDS | ||||||||||||||||||||||||||||||||
Equity incentive plan | Equity incentive plan awards: | |||||||||||||||||||||||||||||||
Market Value of | awards: number of | market or payout value of | ||||||||||||||||||||||||||||||
Number of Securities | Number of Securities | Option | Option | Number of Shares or | Shares or Units of | unearned shares, units or | unearned shares, units or | |||||||||||||||||||||||||
Name | Underlying Unexercised Option (#) Exercisable | Underlying Unexercised Option (#) Unexercisable | Exercise Price ($) | Expiration Date | Units of Stock That Have Not Vested(1) (#) | Stock That Have Not Vested(2) ($) | other rights that have not Vested (#) | other rights that have not Vested(2)($) | ||||||||||||||||||||||||
14,627 | (3) | — | 111.10 | 04/02/2017 | ||||||||||||||||||||||||||||
11,640 | 7,760 | (4) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||||
33,333 | 16,667 | (5) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||||
Dennis S. Hudson, III | 6,755 | 11,220 | (6) | 12.63 | 01/29/2023 | |||||||||||||||||||||||||||
1,102 | 50,854 | (7) | 14.82 | 02/29/2024 | ||||||||||||||||||||||||||||
42,786 | (8) | 943,859 | ||||||||||||||||||||||||||||||
35,950 | (9) | 793,057 | ||||||||||||||||||||||||||||||
24,122 | 532,131 | |||||||||||||||||||||||||||||||
Stephen A. Fowle | 305 | 13,865 | (7) | 14.82 | 02/29/2024 | |||||||||||||||||||||||||||
34,223 | (11) | 754,959 | ||||||||||||||||||||||||||||||
6,578 | (10) | 145,111 | ||||||||||||||||||||||||||||||
1,440 | 960 | (4) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||||
16,667 | 8,333 | (5) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||||
Charles K. Cross Jr. | 3,725 | 6,150 | (6) | 12.63 | 01/29/2023 | |||||||||||||||||||||||||||
544 | 24,017 | (7) | 14.82 | 02/29/2024 | ||||||||||||||||||||||||||||
976 | (12) | 21,531 | 19,750 | (9) | 435,685 | |||||||||||||||||||||||||||
17,866 | (8) | 394,124 | 11,403 | (10) | 251,550 | |||||||||||||||||||||||||||
2,520 | 1,680 | (4) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||||
16,667 | 8,333 | (5) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||||
2,455 | 4,020 | (6) | 12.63 | 01/29/2023 | ||||||||||||||||||||||||||||
David D. Houdshell | 300 | 12,925 | (7) | 14.82 | 02/29/2024 | |||||||||||||||||||||||||||
17,829 | (8) | 393,308 | ||||||||||||||||||||||||||||||
12,950 | (9) | 285,677 | ||||||||||||||||||||||||||||||
6,140 | (10) | 135,448 | ||||||||||||||||||||||||||||||
993 | (3) | — | 111.10 | 04/02/2017 | ||||||||||||||||||||||||||||
1,440 | 960 | (4) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||||
16,667 | 8,333 | (5) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||||
Charles M. Shaffer | 3,060 | 5,040 | (6) | 12.63 | 01/29/2023 | |||||||||||||||||||||||||||
481 | 20,774 | (7) | 14.82 | 02/29/2024 | ||||||||||||||||||||||||||||
16,333 | (8) | 360,306 | ||||||||||||||||||||||||||||||
16,200 | (9) | 357,372 | ||||||||||||||||||||||||||||||
9,868 | (10) | 217,688 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Option (#) Unexercisable | Option Exer- cise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (1) (#) | Market Value of Shares or Units of Stock That Have Not Vested (2) ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested (2) ($) | ||||||||||||||||||||||
C. Shaffer | 993 | (4) | — | $111.10 | 04/02/2017 | |||||||||||||||||||||||||
960 | 1,440 | (5) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||
8,333 | 16,667 | (6) | 10.54 | 04/29/2024 | ||||||||||||||||||||||||||
1,012 | 7,088 | (7) | 12.63 | 01/29/2023 | ||||||||||||||||||||||||||
2,120 | (8) | $31,758 | ||||||||||||||||||||||||||||
24,504 | (9) | 367,070 | ||||||||||||||||||||||||||||
16,200 | (10) | $242,676 | ||||||||||||||||||||||||||||
W. Hahl | 1,470 | (3) | — | $133.60 | 05/16/2016 | |||||||||||||||||||||||||
3,909 | (4) | — | 111.10 | 04/02/2017 | ||||||||||||||||||||||||||
2,000 | 3,000 | (5) | 11.00 | 06/28/2023 | ||||||||||||||||||||||||||
12,318 | (8) | $184,524 | ||||||||||||||||||||||||||||
33,159 | (9) | 496,722 |
(1) |
(2) | For the purposes of this table, the market value is determined using the closing price of the Company’s |
(3) |
Represents fully-vested stock-settled stock appreciation rights granted to the named executive officer on April 2, 2007. |
Represents option to purchase |
Represents option to purchase |
Represents option to purchase |
Represents |
Represents performance-vesting restricted stock units granted on January 29, 2015, representing the named executive officer’s right to earn, on a one-for-one basis, shares of |
(10) | Represents performance-vesting restricted stock units granted on February 29, 2016, representing the named executive officer’s right to earn, on a one-for-one basis, shares of common stock, subject to performance requirements over a period ending December 31, 2019. The awards are more fully described above under |
(11) | Represents time-vested restricted stock award of |
73 |
(12) | Represents time-vested restricted stock award of |
20152016 OPTION EXERCISES AND STOCK VESTED
The following table reports the exercise of stock options, and vesting of stock awards or similar instruments during 2015, granted to the named executive officers and the value of the gains realized on vesting. No stock options were exercised in 2015.2016.
Stock Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||
Dennis S. Hudson, III | — | — | 41,261 | $ | 793,195 | |||||||||||
Stephen A. Fowle | — | — | 16,885 | $ | 254,964 | |||||||||||
Charles K. Cross, Jr. | 488 | $6,881 | 9,420 | $ | 204,843 | |||||||||||
David Houdeshell | — | — | ||||||||||||||
David D. Houdeshell | 14,477 | $ | 286,591 | |||||||||||||
Charles M. Shaffer | — | — | 10,286 | $ | 214,422 | |||||||||||
William R. Hahl | — | — |
20152016 NONQUALIFIED DEFERRED COMPENSATION
The following table discloses, for each of the named executive officers, contributions, earnings and balances during 20152016 under the Executive Deferred Compensation Plan, described below.
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | |||||||||||||||
Dennis S. Hudson, III | $5,469 | $13,625 | $(3,056 | ) | — | $717,367 | (3) | |||||||||||||
Stephen A. Fowle | — | — | — | — | — | |||||||||||||||
Charles K. Cross, Jr.(4) | — | — | — | — | — | |||||||||||||||
David Houdeshell(4) | — | — | — | — | — | |||||||||||||||
Charles M. Shaffer | 2,573 | — | — | — | 2,573 | |||||||||||||||
William. R. Hahl | — | 1,550 | 7,039 | — | 518,810 | (5) |
Executive | Registrant | Aggregate | Aggregate | Aggregate | ||||||||||||||||
contributions | Contributions | Earnings in | Withdrawals/ | Balance at | ||||||||||||||||
in Last Fiscal | in Last Fiscal | Last Fiscal | Distributions | Last Fiscal | ||||||||||||||||
Name | Year ($) | Year ($)(1) | Year ($)(2) | ($) | Year End ($) | |||||||||||||||
Dennis. S. Hudson, III | 5,590 | 8,433 | 109,180 | — | 840,570 | (3) | ||||||||||||||
Stephen A. Fowle(4) | — | — | — | — | — | |||||||||||||||
Charles K. Cross, Jr.(4) | — | — | — | — | — | |||||||||||||||
David D. Houdeshell(4) | — | — | — | — | — | |||||||||||||||
Charles M. Shaffer | 5,930 | 1,750 | 744 | — | 10,997 |
(1) | Total amount included in the All Other Compensation column of the Summary Compensation Table. This amount was contributable in |
(2) | None of the earnings or dividends paid under the Executive Deferred Compensation Plan are above-market or preferential. |
(3) | Includes |
(4) | Messrs. Fowle, Cross, and Houdeshell were not participants in the Executive Deferred Compensation Plan in |
Executive Deferred Compensation Plan
The Bank’s Executive Deferred Compensation Plan is designed to permit a select group of management and highly compensated employees, including threetwo of the current named executive officers (Messrs. Hudson Shaffer and Hahl)Shaffer), to elect to defer a portion of their compensation until their separation from service with the Company, and to receive matching and other Company contributions that are precluded under the Company’s Retirement Savings Plan as a result of limitations imposed under ERISA.
The Executive Deferred Compensation Plan was amended and restated in 2007 to reflect changes arising from requirements under Code Section 409A and the underlying final regulations. As a result, each participant account is separated into sub-accounts to reflect:
· | contributions and investment gains or losses that were earned and vested on or before December 31, 2004, and any subsequent investment gains or losses thereon (the “Grandfathered Benefits”); and |
· | contributions and earnings that were earned and vested after December 31, 2004 (the “Non-Grandfathered Benefits”). |
A participant’s elective deferrals to the Executive Deferred Compensation Plan are immediately vested. The Company contributions to the Executive Deferred Compensation Plan vest at the rate of 25 percent for each year of service the participant has accrued under the Retirement Savings Plan, with full vesting after four years of service. If a participant would become immediately vested in his Company contributions under the Retirement Savings Plan for any reason (such as death, disability, or retirement on or after age 55), then he would also become immediately vested in his account balance held in the Executive Deferred Compensation Plan.
Each participant directs how his account in the Executive Deferred Compensation Plan is invested among the available investment vehicle options. The plan’s investment options are reviewed and selected annually by a committee appointed by the Board of Directors of the Company to administer the plan. The plan committee may appoint other persons or entities to assist it in its functions. No earnings or dividends paid under the Executive Deferred Compensation Plan are above-market or preferential.
75 |
All amounts paid under the plan are paid in cash from the general assets of the Company, either directly by the Company or via a “rabbi trust” the Company has established in connection with the plan. Nothing contained in the plan creates a trust or fiduciary relationship of any kind between the Company and a participant, beneficiary or other person having a claim to payments under the plan. A participant or beneficiary does not have an interest in his plan account that is greater than that of an unsecured creditor.
Upon a participant’s separation from service with the Company, he will receive the balance of his account in cash in one of the following three forms specified by the participant at the time of initial deferral election, or a subsequent permitted amendment:
· | a lump sum; |
· | monthly installments over a period not to exceed five years; or |
· | a combination of an initial lump sum of a specified dollar amount and the remainder in monthly installments over a period not to exceed five (5) years. |
A participant may change his existing distribution election relating to Non-Grandfathered Benefits only in very limited circumstances. Upon death of the participant, any balance in his account will be paid in a lump sum to his designated beneficiary or to his estate.
2015 other potential post-employment payments2016 OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS
The following table quantifies, for each of the named executive officers, the potential post-employment payments under the provisions and agreements described above under “Employment and Change in Control Agreements,” assuming that the triggering event occurred on December 31, 2015.2016. The closing market price of the Company’s common stock on that date was $14.98$22.06 per share. None of the named executive officers would be eligible for any of these payments if they were terminated for cause.
Name | Term (in years) (#) | Cash Severance ($) | Value of Other Annual Benefits ($) | Total Value of Outstanding Stock Awards that Immediately Vest ($) | In-the-Money Value of Outstanding Stock Option Awards or SARs that Immediately Vest ($) | Total Value of Benefit ($) | ||||||||||||||||||
Dennis S. Hudson, III | ||||||||||||||||||||||||
Upon Termination without Cause or Resignation for Good Reason(1) | 2 | (2) | $1,300,000 | $27,789 | — | — | $1,327,789 | |||||||||||||||||
Upon Death or Disability(1) | 2 | (2) | 1,300,000 | 27,789 | $1,797,570 | (3) | $231,291 | (3) | 3,356,650 | |||||||||||||||
Upon Termination Following a Change-in-Control(1) | 3 | 1,950,000 | 41,683 | 1,797,570 | (3) | 231,291 | (3) | 4,020,544 | ||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 1,797,570 | (3) | 231,291 | (3) | 2,028,861 | ||||||||||||||||
Stephen A. Fowle | ||||||||||||||||||||||||
Upon Death, Disability | — | — | — | $765,148 | (3) | — | $765,148 | |||||||||||||||||
Upon Termination Following a Change-in-Control(4) | 1 | $480,000 | $14,181 | 765,148 | — | 1,259,329 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 765,148 | — | 765,148 | ||||||||||||||||||
Charles K. Cross, Jr. | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | $719,265 | (3) | $100,038 | (3) | $819,303 | ||||||||||||||||
Upon Termination Following a Change-in-Control(4) | 1 | $400,000 | $31,975 | 719,265 | 100,038 | 1,251,278 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 719,265 | 100,038 | 819,303 | ||||||||||||||||||
David D. Houdeshell | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | $677,935 | (3) | $97,345 | (3) | $775,280 | ||||||||||||||||
Upon Termination Following a Change-in-Control(4) | 1 | $340,000 | $28,195 | 677,935 | 97,345 | 1,143,475 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 677,935 | 97,345 | 775,280 |
Term (in | Value of Other Annual | Total Value of Outstanding Stock | In-the-Money Value of Outstanding Stock Option | Total Value of | ||||||||||||||||||||
Name | years) (#) | Cash Severance ($) | Benefits ($) | Awards that Immediately Vest ($) | Awards or SARs that Immediately Vest ($) | Benefit ($) | ||||||||||||||||||
Dennis S. Hudson, III | ||||||||||||||||||||||||
Upon Termination without Cause or with Resignation for Good Reason(1) | 2 | (2) | 1,300,000 | 4,240 | — | — | 1,304,240 | |||||||||||||||||
Upon Death or Disability(1) | 2 | (2) | 1,100,000 | 4,240 | 2,269,070 | (3) | 751,817 | (3) | 4,125,127 | |||||||||||||||
Upon Termination Following a Change-in-Control(1) | 3 | 1,950,000 | 6,360 | 2,269,070 | (3) | 751,817 | (3) | 4,977,247 | ||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 2,269,070 | (3) | 751,817 | (3) | 3,020,887 | ||||||||||||||||
Upon Change-in-Control where Award assumed by surviving entity | — | — | — | 943,881 | (3) | 277,830 | (3) | 1,221,711 | ||||||||||||||||
Stephen A. Fowle | ||||||||||||||||||||||||
Upon Termination without Cause or with Resignation(4) | — | 397,000 | 2,120 | 754,959 | 100,383 | 1,254,462 | ||||||||||||||||||
Upon Death or Disability | — | — | — | 900,070 | (3) | 100,383 | (3) | 1,000,453 | ||||||||||||||||
Upon Termination Following a Change-in-Control(5) | 1 | 630,000 | 2,120 | 900,070 | 100,383 | 1,632,573 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 900,070 | (3) | 100,383 | (3) | 1,000,453 | ||||||||||||||||
Upon Change-in-Control where Award assumed by surviving entity | — | — | — | 754,959 | (3) | — | (3) | 754,959 | ||||||||||||||||
Charles K. Cross Jr. | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | 1,102,956 | (3) | 338,491 | (3) | 1,441,447 | ||||||||||||||||
Upon Termination Following a Change-in-Control(6) | 2 | 805,000 | 3,038 | 1,102,956 | 338,491 | 2,249,485 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 1,102,956 | (3) | 338,491 | (3) | 1,441,447 | ||||||||||||||||
Upon Change-in-Control where Award assumed by surviving entity | — | — | — | 415,722 | (3) | 106,614 | (3) | 522,336 | ||||||||||||||||
David D. Houdshell | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | 814,433 | (3) | 246,063 | (3) | 1,060,496 | ||||||||||||||||
Upon Termination Following a Change-in-Control(6) | 1 | 338,333 | 1,991 | 814,433 | 246,063 | 1,400,820 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 814,433 | (3) | 246,063 | (3) | 1,060,496 | ||||||||||||||||
Upon Change-in-Control where Award assumed by surviving entity | — | — | — | 393,308 | (3) | 114,577 | (3) | 507,885 | ||||||||||||||||
Charles M. Shaffer | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | 935,476 | (3) | 304,545 | (3) | 1,240,021 | ||||||||||||||||
Upon Termination Following a Change-in-Control(6) | 2 | 658,100 | 2,958 | 935,476 | 304,545 | 1,901,079 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 935,476 | (3) | 304,545 | (3) | 1,240,021 | ||||||||||||||||
Upon Change-in-Control where Award assumed by surviving entity | — | — | — | 360,416 | (3) | 106,614 | (3) | 467,030 |
Name | Term (in years) (#) | Cash Severance ($) | Value of Other Annual Benefits ($) | Total Value of Outstanding Stock Awards that Immediately Vest ($) | In-the-Money Value of Outstanding Stock Option Awards or SARs that Immediately Vest ($) | Total Value of Benefit ($) | ||||||||||||||||||
Charles M. Shaffer | ||||||||||||||||||||||||
Upon Death or Disability | — | — | — | $641,504 | (3) | $96,388 | (3) | $737,892 | ||||||||||||||||
Upon Termination Following a Change-in-Control(4) | 1 | $350,000 | $28,382 | 641,504 | 96,388 | 1,116,273 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 641,504 | 96,388 | 737,892 | ||||||||||||||||||
William R. Hahl | ||||||||||||||||||||||||
Upon Death, Disability | — | — | — | $217,683 | (3) | $11,940 | (3) | $229,623 | ||||||||||||||||
Upon Termination Following a Change-in-Control(4) | 2 | $620,000 | $71,177 | 217,683 | 11,940 | 920,800 | ||||||||||||||||||
Upon Change-in-Control without Termination | — | — | — | 217,683 | 11,940 | 229,623 |
(1) | As provided for in Mr. Hudson’s employment agreement, the Bank would continue to pay to Mr. Hudson or his estate or beneficiaries his annual base salary, including any other cash compensation to which he would be entitled at termination date, for the period indicated under Term. In addition, the Bank would continue to pay the insurance premium for Mr. Hudson, his spouse and eligible dependents for continued participation in any group medical, dental, vision and/or prescription drug plan benefits (including any excess COBRA cost of coverage) for the term indicated or until his earlier death. In the case of termination without cause or resignation for good reason, Mr. Hudson’s severance for the Term also would include an amount equal to his highest annual bonus for the previous three full fiscal years. In the case of termination without cause or resignation for good reason within twelve months following a change in control, severance payments would be made in a lump sum. |
(2) | The initial term of agreement is three years, but benefits under the agreement are paid for the Term as indicated in the table. |
(3) | As provided for in the award document. Starting with awards granted in January 2015, there is no vesting of equity |
(4) | As provided for in the |
(5) | As provided for change in control agreement, the Company shall pay the executive officer in a lump sum in cash within thirty (30) days after the date of termination the aggregate of the: (i) base salary through the termination date to the extent not paid (assumed already paid in table above), (ii) annual bonus (prorated in the event that the executive was not employed by the Company for the whole of such fiscal year), and (iii) annual base salary and annual bonus, multiplied by the Term as indicated in the table. Annual base salary is equal to 12 times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the executive officer by the Company in the 12-month period immediately preceding the month in which the triggering event occurs. Annual bonus is equal to the executive officer’s highest annual bonus for the last three full fiscal years prior to the triggering event. All unvested stock options and restricted stock of the Company held by the executive officer shall immediately and fully vest on termination. In addition, |
(6) | As provided for in the respective change in control agreement, the Company shall pay the executive officer in a lump sum in cash within thirty (30) days after the date of termination the aggregate of the: (i) base salary through the termination date to the extent not paid (assumed already paid in table above), (ii) annual bonus (prorated in the event that theexecutive was not employed by the Company for the whole of such fiscal year), and (iii) annual base salary and annual bonus, multiplied by the Term as indicated in the table. Annual base salary is equal to 12 times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the executive officer by the Company in the 12-month period immediately preceding the month in which the triggering event occurs. Annual bonus is equal to the executive officer’s average annual bonus for the last three full fiscal years prior to the triggering event. All unvested stock options and restricted stock of the Company held by the executive officer shall immediately and fully vest on termination. In addition, the Company will pay or provide to the executive officer or eligible dependents “Welfare Benefits”, for a period of 18 months for Messrs. Cross and Shaffer and 1 year for Mr. Houdeshell. “Welfare Benefits” include similar medical, prescription, dental, and vision insurance plans benefits paid by the Company prior to the change in control. If the executive officer’s employment is terminated by reason of death, disability, retirement or for cause within the term indicated following a change in control, no further payment is owed to the executive except for accrued obligations, such as earned but unpaid salary and bonus. |
ELECTION OF DIRECTORS
Seacoast views talent as our primary competitive advantage. Our talent focus starts with our non-employee directors, the individuals appointed to act on behalf of shareholders by overseeing critical aspects of our business strategy, operations, risk management and governance efforts. Our belief is that superior talent in the board room will generate exceptional levels of customer service, financial performance and, ultimately, superior shareholder returns compared to alternative investments. To this end, the Board is committed to identifying the best available talent to make meaningful contributions to our business and fully execute theirits duties and responsibilities on behalf of shareholders. The profile of our Board continues to evolve in response to the needs of a dynamic and growing organization. Our Board of Directors led by our Lead Director, is expected to playplays a meaningful role in helping Seacoast develop, test and implement our business, risk management, talent and reward strategies. The Board’s activities are focused on representing our shareholders in ways that position Seacoast to create significant value for customers, employees and our shareholders within a risk appropriate framework.
As of the date of this proxy statement, Seacoast’s Board of Directors consists of twelvefourteen members divided into three classes, serving staggered three year terms as provided in our Articles of Incorporation.
The Annual Meeting is being held to, among other things, re-elect fiveelect four Class IIIII directors of Seacoast, each of whom has been nominated by the Compensation and Governance Committee (“CGC”)CGC of the Board of Directors. All of the nominees, except Alvaro J. Monserrat, are presently directors of Seacoast andSeacoast. All of the nominees also serve as members of the Board of Directors of Seacoast National Bank (the “Bank”). The members of the Boards of Directors of the Bank and the Company are the same except for Dale M. Hudson and Alvaro J. Monserrat, who isare currently a directordirectors of the Bank only. If elected, each Class IIIII director nominee will serve a three year term expiring at the 20192020 Annual Meeting and until their successors have been elected and qualified.
On January 31, 2017, the Board of Directors, following the recommendation of the CGC, nominated Alvaro J. Monserrat to stand for election at the Annual Meeting, replacing T. Michael Crook who intends to retire from the Company’s Board as of the Annual Meeting. Mr. Crook will remain on the board of directors of the Bank. Mr. Monserrat has served as a director of the Bank since January 2017.
Currently, the Board of Directors is classified as follows:
Class | Term | |
Class I | Term Expires at the 2018Annual Meeting | Jacqueline L. Bradley H. Gilbert Culbreth, Jr. Christopher E. Fogal Timothy S. Huval Herbert A. Lurie |
Class II | Term Expires at the | Dennis J. Arczynski Maryann Goebel Roger O. Goldman Dennis S. Hudson, Jr. Thomas E. Rossin |
Class III | Term Expires at the 2017Annual Meeting | Stephen E. Bohner T. Michael Julie H. Daum Dennis S. Hudson, III |
*Will be replaced by Alvaro J. Monserrat, if elected at the Annual Meeting.
All shares represented by valid proxies, and not revoked before they are exercised, will be voted in the manner specified therein. If a valid proxy is submitted but no vote is specified, the proxy will be votedFOR the election of each of the fivefour nominees for election as directors. Please note that banks and brokers that do not receive voting instructions from their clients are not able to vote their client’s shares in the election of directors. Although all nominees are expected to serve if elected, if any nominee is unable to serve, then the persons designated as proxies will vote for the remaining nominees and for such replacements, if any, as may be nominated by the CGC. Proxies cannot be voted for a greater number of persons than the number of nominees specified herein (five(four persons). Cumulative voting is not permitted.
The affirmative vote of the holders of shares of Common Stockcommon stock representing a plurality of the votes cast at the Annual Meeting at which a quorum is present is required for the election of the directors listed below. However, to provide shareholders with a meaningful role in uncontested director elections, which is the case for the election of the director nominees listed below, our Corporate Governance Guidelines provide that if any director nominee receives a greater number of votes “withheld” for his or her election than votes “for” such election, then the director will promptly tender his or her resignation to the Board following certification of the shareholder vote, with such resignation to be effective upon acceptance by the Board of Directors. The CGC would then review and make a recommendation to the Board of Directors as to whether the Board should accept the resignation, and the Board would ultimately decide whether to accept the resignation. The Company will disclose its decision-making process regarding theany resignation in a Form 8-K furnished tofiled with the SEC. In contested elections, the required vote would be a plurality of votes cast and the resignation policy would not apply. Further details of this policy and the corresponding procedures are set forth in our Corporate Governance Guidelines, available on our website at www.seacoastbanking.com.www.SeacoastBanking.com.
The fivefour nominees have been nominated by Seacoast'sSeacoast’s Compensation and Governance Committee, and the Board of Directors unanimously recommends a vote “FOR”“FOR” the election of all fivefour nominees listed below.
Nominees to be Re-Electedfor Election at the Annual Meeting
Stephen E. Bohner, age 64, is a member of the Enterprise Risk Management Committee, chairman of the Bank’s Directors Credit Risk Committee and has been a director of Seacoast since 2003. Mr. Bohner has been president and owner of Premier Realty Group, a real estate company located in Sewall’s Point, Florida, specializing in the sale of luxury homes, since 1987. |
In addition to his 39 years of experience in real estate, Mr. Bohner is actively involved in several professional and community organizations, having served as president of the Greater Martin County Association of Realtors and The Pine School. He was awarded the Realtor Association’s Distinguished Service Award in 2001, and has served on numerous professional standards’ panels in arbitration hearings and chaired the Realtors Association’s grievance committee. Mr. Bohner is a graduate of Vanderbilt University with dual degrees in Business and Economics.
In making the determination that Mr. Bohner should be a nominee for director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his business leadership and expertise in real estate, which provides the Board of Directors with valuable insight related to local real estate markets in which the Bank’s customers are located and helps the Board make critical judgments regarding the Bank’s lending activities since such judgments rely upon the proper valuation of real estate; |
· | his business leadership and entrepreneurial and management skills developed over the past 39 years; |
· | his stature in the local community garnered from his years of professional and community involvement; and |
· | his experience with the Company. |
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Julie H. Daum, age 62, is a member of the Compensation and Governance Committee and has been a director of Seacoast since 2013. Ms. Daum has been a senior director of Spencer Stuart, a privately-held global executive search firm, since 1993. As co-head of the North American Board and CEO Practice at Spencer Stuart, she has helped place over 1,000 directors on corporate boards, including the boards of Coach, Delta Air Lines, American Express, CVS Caremark, General Motors and Amazon. |
Prior to her work at Spencer Stuart, Ms. Daum was the executive director of the corporate board resource at Catalyst, where she managed all board of directors’ activities and worked with companies to identify qualified women for their boards. A widely renowned expert on corporate governance topics, Ms. Daum was recognized by the National Association of Corporate Directors (“NACD”) as one of the top 100 most influential leaders in corporate governance in 2013. Ms. Daum also advises corporate boards on succession planning for themselves and their CEOs, as well as best practices and governance issues. Each year, Ms. Daum develops the Spencer Stuart Board Index, a publication detailing trends at national boardrooms. She also co-founded and developed a program for board members entitled “Fresh Insights and Best Practices for Directors” at the Wharton School of the University of Pennsylvania, where she earned her MBA.
In making the determination that Ms. Daum should be a nominee for director of Seacoast, the CGC considered these qualifications and her qualification as an independent director, as well as:
· | her expertise in recruiting, human resources and corporate governance, which provides valuable insights to help the Board make key decisions on director talent and governance matters; |
· | her associations in the Florida market and her understanding of public, private and not-for-profit boards which is useful for the Board’s consideration of alternative practices; |
· | her stature in the corporate governance community garnered from her years of professional involvement; and |
· | her ability to serve as a mentor and catalyst to bring more women into senior leadership positions with the Company. |
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Dennis S. Hudson, III, age 61, serves as Chairman of the Boardand has been a director of Seacoast since 1984. Mr. Hudson was named Chairman of Seacoast in July 2005, and has served as Chief Executive Officer of the Company since June 1998. Mr. Hudson has also served as Chairman and Chief Executive Officer of the Bank since 1992. He was President of Seacoast from June 1998 to July 2005, after serving in various positions with the Company and the Bank since 1978. |
Mr. Hudson also serves on the board of directors, the audit committee and the compensation committee of Chesapeake Utilities Corporation (ticker: CPK), a public gas and electric utilities company headquartered in Dover, Delaware. Prior to that time, he served as a member of the board of directors of FPU. In November 2015, Mr. Hudson was appointed as an independent director to PENN Capital Funds, a mutual fund group managed by PENN Capital Management. From 2005 through 2010, he also served as a member of the board of directors of the Miami Branch of the Federal Reserve Bank of Atlanta.
Mr. Hudson is actively involved in the community, having served on the boards of the Martin County YMCA Foundation, Council on Aging, The Pine School, the Job Training Center, American Heart Association, Martin County United Way, the Historical Society of Martin County and as chairman of the board of the Economic Council of Martin County, on which he still serves. He has been recognized for his achievements with several awards including the Florida Senate Medallion of Excellence Award presented by Florida Senator Ken Pruitt in 2001. Mr. Hudson is a graduate of Florida State University with a Bachelor’s degree in Finance, and a Master’s degree in Business Administration.
In making the determination that Mr. Hudson should be a nominee for director of Seacoast, the CGC considered these qualifications, as well as:
· | his significant experience in the financial services industry and the organization, including his service as Chairman and Chief Executive Officer of the Company, which provides a unique understanding of our operations; |
· | his knowledge and relationships with the institutional investor community, including the Company’s past and present institutional investors; |
· | his service on other public company boards, which provides insight regarding general public company operations, policies, internal controls and corporate governance, which is useful and applicable to Seacoast; and |
· | his stature in the local community, including through service on the boards of the non-profit organizations discussed above. |
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Alvaro J. Monserrat, age 48, was elected as a director of the Bank in January 2017 and is a member of the Strategy and Innovation Committee. Mr. Monserrat became CEO of RES Software, a leading digital workspace technology company in April 2015, after serving as Citrix Systems’ senior vice president of worldwide sales & service from July 2008 to 2015. Mr. Monserrat’s career spans more than 25 years in large companies and entrepreneurial ventures within enterprise software, mobility, cloud, networking and business strategy. |
At Citrix, Monserrat was part of the executive leadership team that grew the company from hundreds of millions to more than $3 billion in revenue by 2014, and was instrumental in crafting the strategy that helped Citrix grow from a single-product company to a multi-product industry leader. Prior to joining Citrix, Mr. Monserrat was a principal in Innovex Group (acquired by Citrix) and received numerous awards including Microsoft’s Best E-Commerce Solution and Best Small Business Solution Awards. In addition, Mr. Monserrat has served on the board of advisors for Virsto and Whiptail (2010 to 2013), the national partner board of the Leukemia and Lymphoma Society (2008-2009) and on the board of the Children’s Harbor Society. Mr. Monserrat holds a Masters of Business Administration degree from the University of Texas at Austin and a Bachelor of Science degree in Computer Science from the University of Miami.
In making the determination that Mr. Monserrat should be a nominee for director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his entrepreneurial vision, innovation and resourcefulness in taking an initiative from concept to a successful money-making enterprise, which is applicable to our changing business model; |
· | his abilities as a change leader in transforming and infusing existing business models with multi-directional and diversified routes to market, delivering rapid growth, which provides insights for our effective management of Seacoast’s growth and transformation; |
· | his experience and acumen in building, restructuring and motivating teams to produce high-performing units; and |
· | his global view of markets and competitors combined with his knowledge of technology and go-to-market execution which provides constructive oversight in these areas. |
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Directors Whose Terms Extend Beyond the Annual Meeting
Dennis J. Arczynski,
Mr. Arczynski has been a risk management, corporate governance, regulatory affairs and banking consultant since 2007. He previously served for 33 years in various managerial and examiner positions in the U.S. Office of the Comptroller of the Currency’s (the “OCC”) headquarters in Washington, D.C. and in several other OCC districts until 2007. |
As a National Bank Examiner with the OCC, Mr. Arczynski was responsible for the supervision and examination of the largest and most complex mid-size banks, community banks and trust companies; provided guidance to banks in all facets of commercial banking and fiduciary operations including international activities; performed risk assessment and conducted BSA/AML reviews and examinations of internationally active banks; and developed formal enforcement actions and corrective action plans for struggling and deficient institutions. Mr. Arczynski’s other positions of responsibility with the OCC includedwere Assistant Director for Trust Operations, Special Assistant to the Senior Deputy Comptroller (FFIEC Liaison), Associate Director for Financial Management (Financial Systems and Review) and Field Office Manager (Miami Field Office). His duties included the formation of national policies and programs, development of OCC supervisory initiatives, establishment of interagency relations, drafting regulations and writing OCC examiner handbooks. Mr. Arczynski received his Bachelor’s degree from University of Maryland in Finance and his MastersMaster’s degree from Johns Hopkins University.
In making the determination that Mr. Arczynski should beremain a nominee for director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his knowledge of the most effective management practices of the largest and most complex mid-size banks; |
· | his expertise in all facets of commercial banking and fiduciary operations, including risk assessment and BSA/AML; |
· | his risk management, corporate governance, and regulatory background specific to the financial services industry; and |
· | his public service which provides the Board of Directors with an alternative perspective in the areas of government relations and regulatory matters that impact the Company. |
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Ms. Bradley served as a director of BankFIRST from April 2005 until BANKshares was acquired by Seacoast on October 1, 2014. During her tenure at BankFIRST, she served on BankFIRST’s Special Assets Committee and Audit |
Ms. Bradley served on the finance committee for the Central Florida Expressway Authority from 2012 to 2013 and on the board of directors of the Greater Orlando Aviation Authority from 2000 to 2009. She is also a member of the board of directors of the Boys & Girls Club of Central Florida (since 1998), serving as chairperson in 2002 and 2003, and a member of the boards of the Studio Museum in Harlem (since 2006) and The Lawrenceville School in Lawrenceville, New Jersey (since 2008). Ms. Bradley provides support to charities throughout the Central Florida community, and has served on the boards of the Florida Arts Council (2003-2008) and the Cornell Museum of Fine Arts. Ms. Bradley has had a 20 year career in financial services, including seven years with SunTrust Bank in Central Florida, culminating in her last position as senior vice president leading its Private Client Group (1999-2002). Her previous experience also includes eight years as vice president with Moody’s Investors Services and 3 years providing consulting services for McKinsey Management Consultants and Touché Ross. Ms. Bradley received her Bachelor of Arts degree in Economics and Political Science from Yale College, and her Master’s degree in Business Administration from Columbia University Graduate School of Business with a concentration in Finance and Marketing.
Ms. Bradley’s appointment to the Board of Directors is pursuant to the Merger Agreement under which BANKshares merged with and into Seacoast. Pursuant to the Merger Agreement, Seacoast was required to appoint one former BANKshares’ director to our Board of Directors.
In making the determination that Ms. Bradley should remain a director of Seacoast, the CGC considered these qualifications and her qualification as an independent director, as well as:
· | her diversity of management experience in the financial services industry; |
· | her knowledge of, and stature and philanthropic service to, the Central Florida market, which is valuable in understanding the customer segments in this market; and |
· | her ability to provide guidance to the Board of Directors regarding accounting and financial matters. |
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H. Gilbert Culbreth, Jr., age 71, is chairman of the Company’s Compensation and Governance Committee and has been a director of Seacoast since 2008. Mr. Culbreth has been chief executive officer and owner of Gilbert Chevrolet Company, Inc., a car dealership located in Okeechobee, Florida, for over 40 years. He also owns and manages Gilbert Ford, another car dealership in Okeechobee, Florida. Mr. Culbreth was previously a member of Big Lake Financial Corporation’s (“Big Lake”) board of directors for 10 years prior to the acquisition of Big Lake by Seacoast in April 2006, and has served on the Bank’s board of directors since the acquisition. |
In addition, Mr. Culbreth is president of several other family businesses, including: Culbreth Realty, Inc. (a real estate brokerage company), Parrott Investments, Inc. (a holding company for two other businesses), Gilbert Cattle Co., LLC (a cattle operation), Grace Marine (a watercraft sales company), Gilbert Aviation Inc. (an aircraft sales and service company), Gilbert Oil Company, LLC and Gilbert Trucking, Inc. Mr. Culbreth is a former director of the Florida Council on Economic Education, the Okeechobee County Board of Realtors, the Okeechobee Economic Council, and the United Way of Okeechobee and is a member of the Masonic Lodge.
In making the determination that Mr. Culbreth should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his diversity of business experience for more than 40 years in the Okeechobee, Florida market, which is valuable in understanding the customer segments in this market; |
· | his entrepreneurial and management skills; |
· | his stature in and knowledge of the local community; and |
· | his experience with the Company. |
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Christopher E. Fogal, age 65, is chairman of the Company’s Audit Committee and has been a director of Seacoast since 1997. Mr. Fogal is a certified public accountant and a partner with the public accounting firm of Carr, Riggs & Ingram, LLC (“Carr Riggs”), a top 25 firm that is the second largest super-regional in the southeastern U.S. He was previously a principal with the public accounting firm of Proctor, Crook, Crowder & Fogal, P.A. (“Proctor Crook”), a BDO affiliate firm, located in Stuart, Florida, from 2009 to January 31, 2017 when the firm merged with Carr Riggs. |
Mr. Fogal was the managing partner of Fogal & Associates from 1979 until the firm merged with Proctor Crook in 2009. He also served on the board of directors of Port St. Lucie National Bank until it was acquired by Seacoast in 1996. Currently, Mr. Fogal is treasurer of the St. Lucie County Economic Development Council. He has also served as past chairman of the Treasure Coast Private Industry Council and past president of the St. Lucie County Chamber of Commerce, and is active in a number of professional organizations including the American Institute of Certified Public Accountants and the Florida Institute of Certified Public Accountants.
In making the determination that Mr. Fogal should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his accounting expertise as a Certified Public Accountant (“CPA”) for over 40 years, including audits of public companies regulated by the SEC, which provides the Board of Directors with guidance related to internal controls and financial and accounting matters; |
· | his business, management and decision-making skills, including his experience as managing partner of an accounting firm for 30+ years; |
· | his stature and knowledge of the local community; and |
· | his experience with the Company. |
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Maryann Goebel, age 66, is a member of the Company’s Audit Committee, Compensation and Governance Committee, and Enterprise Risk Management Committee, and has been a director of Seacoast since February 2014.
Ms. Goebel has been an independent IT management consultant since 2012. She |
In her 40+ year career, Ms. Goebel has shaped the strategic direction of information technology for major corporations around the world, serving in the critical role of chief information officer for: DHL Express from 2006 to 2009; General Motors North America from 2003 to 2006; General Motors Europe from 1999 to 2001; General Motors Truck Group from 1997 to 1999; Bell Atlantic NYNEX Mobile (now Verizon Mobile) from 1995 to 1997; and Frito-Lay from 2001 to 2002. She has also held senior IT leadership positions at Texas Instruments, Inc., Aérospatiale Helicopter Corporation, and the Southland Corporation, among others. Ms. Goebel received the “100 Leading Women in the North American Auto Industry” award in 2005. She also received an award for outstanding professional achievement from her alma mater, Worcester Polytechnic Institute, where she earned a Bachelor of Science degree in mathematics.mathematics and currently serves on their Arts and Sciences Advisory Board.
In making the determination that Ms. Goebel should beremain a nominee for director of Seacoast, the CGC considered these qualifications and her qualification as an independent director, as well as:
· | her knowledge of complex information technology environments and focus on innovation; |
· | her expertise in strategizing and implementing best-practice processes, tools and structure that are essential to supporting a superior customer experience; |
· | her extensive experience in aligning IT objectives with corporate priorities; and |
· | her leadership and ability to help transform Seacoast into an organization that uses technology to deliver state-of-the-art customer services. |
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Roger O. Goldman,
Mr. Goldman In addition, Mr. Goldman is |
In addition, Mr. Goldman is President and managing partner of Berkshire Opportunity Fund, which he founded in 2008 to provide financing and mentoring for small businesses in the Northeast. From 2009 to 2010, Mr. Goldman served as temporary volunteer CEO for 1Berkshire to create a powerful economic development engine for the Berkshires by integrating the work of four primary economic development agencies and raising larger and more sustainable funding. From 1997 to 2000, Mr. Goldman was president and chief executive officer of Global Sourcing Services, LLC, a start-up venture specializing in outsourced marketing services and account acquisition and customer retention programs, which he grew to a substantial size before it was sold.
5 AEBFSB has entered into various consent orders with each of the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau regarding certain compliance related matters that AEBFSB should resolve. AEBFSB also paid certain civil money penalties, provided remuneration to certain customers and agreed to make certain enhancements to its compliance and vendor oversight programs.
Mr. Goldman’s extensive banking experience also includes management positions at Citicorp from 1969 to 1983; service as president and chief executive officer of Redwood Bank, a community bank in San Francisco, California, from 1983 to 1986; executive vice president and senior operating officer of Coreast Savings Bank from 1989 to 1991; and executive vice president in charge of the community banking group of NatWest Bancorp (with $31 billion in assets) from 1991 to 1996 where he was responsible for managing all consumer and small business activities. In addition, he previously served on the boards of several public and private corporations, including Minyanville (a new media company), Cyota (an Internet security company), and American Express Centurion Bank, where he also served as a member of the audit committee. He is Chairman Emeritus of the Lighthouse International, a charitable foundation for the visually impaired which is headquartered in New York, and is the former Chairman of the Juvenile Diabetes Research Foundation. Mr. Goldman received his Bachelor’s degree from New York University in Marketing and his Juris Doctorate from the Washington College of Law at American University. He is an emeritus member of the New Jersey bar and former member of the Washington D.C. bar.
In making the determination that Mr. Goldman should beremain a nominee for director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his diversity of leadership experience in the financial services industry, particularly with respect to his retail banking and consumer and small business lending background; |
· | his marketing and risk management expertise; |
· | his legal background and knowledge of corporate governance matters; |
· | his considerable insights and perspectives garnered from years of service on public, private and not-for-profit |
· | the improved performance and effectiveness of the Board under his leadership as Lead Independent Director. |
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Dennis S. Hudson, Jr.,
Mr. Hudson retired in June 1998 after a 48-year career with the Company and Bank. He served as Chairman of the Board of Seacoast from 1990 to June 1998. Prior thereto, he served as Chief Executive Officer of Seacoast from 1983 until 1992, President of Seacoast from 1983 until 1990 and Chairman of the Bank from 1969 until 1992. Mr. Hudson also served on the board of the Miami Branch of the Federal Reserve Bank of Atlanta from 1983 to 1985. Active in the community and with charitable organizations, he has served as chairman of the American Red Cross of Martin County, president of the Stuart Rotary, and as a director of Hospice of Martin County. In making the determination that Mr. Hudson should remain a director of Seacoast, the CGC considered these qualifications, as well as: |
Mr. Hudson also served on the board of the Miami Branch of the Federal Reserve Bank of Atlanta from 1983 to 1985. Active in the community and with charitable organizations, he has served as chairman of the American Red Cross of Martin County, president of the Stuart Rotary, and as a director of Hospice of Martin County.
In making the determination that Mr. Hudson should be a nominee for director of Seacoast, the CGC considered these qualifications, as well as:
· | his significant experience in the financial services industry and the organization, including his prior service as Chief Executive Officer of the Company, which provides a unique understanding of our operations; |
· | his tenure as director that spans a full range of banking and economic cycles affecting the Company; and |
· | his stature in the local community, including the leadership positions with the community organizations discussed above. |
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Timothy Huval, age 50, is a member of the Strategy & Innovation Committee and has been a director of Seacoast since July 2016. Mr. Huval is the Chief Human Resources Officer of Humana Inc., a leading health and well-being company, where he is responsible for all aspects of human resources and business services. He also serves as a member of the management team that is bringing about a cultural transformation at Humana focused on integrating its core values enterprise-wide. |
Prior to joining Humana in January 2013, Mr. Huval served in multiple senior-level roles at Bank of America (BOA). Handpicked to solve critical business challenges at BOA, his roles included consumer service and operations executive (2011-2012), home loan servicing executive (2010-2011), chief operations officer and Delaware market president (2007-2010), human resources executive (2006-2007) and chief information officer for Global Wealth & Investment Management. He also served as chair of BOA’s Consumer Banking, Business Banking and Enterprise Client Coverage Diversity & Inclusion Business Council. Mr. Huval has also been involved with various non-profit and community boards, including Family and Children’s Place in Louisville, Delaware United Way, Peninsula Alliance for Economic Development, and Youth Homes, Charlotte, NC. Mr. Huval earned a Master’s degree in public administration from Brigham Young University, a Bachelor’s degree in marketing from Weber State and an associate degree in business management from Salt Lake Community College. He was also awarded an honorary doctorate in Humane Letters from Salt Lake Community College.
In making the determination that Mr. Huval should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his diverse background in human resources, information technology, consumer banking, and operational management, which provides a unique and holistic perspective; |
· | his experience in cultural transformation and integration of corporate values deep in the organization and business model, which is applicable to Seacoast’s rapidly changing business model; |
· | his understanding of technology as a platform for creating efficiencies and optimizing resources; and |
· | his significant experience in the financial services industry. |
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Herbert Lurie, age 56, is a member of the Strategy & Innovation Committee and has been a director of Seacoast since April 2016. Mr. Lurie was Senior Managing Director and Chairman of the Financial Institutions Group of Guggenheim Securities from June 2011 to April 2016, and is now a senior advisor at the firm. Previously, he led the Global Financial Institutions Group at Merrill Lynch, which he helped found, and was a member of Merrill Lynch’s Global Investment Banking Management Committee. |
Mr. Lurie has advised on numerous financial institution transactions world-wide, including Bank One Corp.’s merger with First Chicago Corp., and NationsBank Corp.’s merger with BankAmerica Corp. to form Bank of America. He began his Wall Street career as an M&A and securities attorney at Simpson Thacher & Bartlett LLP. Mr. Lurie also has also served on a number of philanthropic and corporate boards, including as Vice Chairman of the Board of the United States Equestrian Team, a Trustee of Princeton’s Eden Autism Institute and The Seeing Eye. Mr. Lurie holds a JD from the University of California at Berkeley, an MA in Clinical Psychology from Columbia University, and a dual BS in Finance and Economics from the University at Albany.
In making the determination that Mr. Lurie should remain a director of Seacoast, the CGC considered these qualifications, as well as:
· | his expertise and unique insights in evaluating M&A and other strategic opportunities, which is useful in promoting Seacoast’s balanced growth strategy; |
· | his “rainmaking” ability with respect to fostering strategically beneficial relationships; |
· | his knowledge and perspective on the interests of various investor groups, which is insightful in considering the interests of all shareholders; and |
· | his extensive experience and stature in the investment banking community. |
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Thomas E. Rossin,
Mr. Rossin |
Mr. Rossin founded Flagler National Bank in 1974, serving as president, chief executive officer and director and growing it to the largest independent bank in Palm Beach County with over $1 billion in assets. Forming The Flagler Bank Corporation, the holding company for Flagler National Bank, in 1983 and serving as president, chief executive officer and director, he took it public in 1984 and facilitated the acquisition of three financial institutions, until both Flagler National Bank and the holding company were sold in 1993 to SunTrust Bank. Prior thereto, Mr. Rossin was vice chairman and director of First Bancshares of Florida, Inc. after consolidating four banks under one charter, including First National Bank in Riviera Beach at which he served as president and chief executive officer. He has served as past president of the Community Bankers Association of Florida and Palm Beach County Bankers Association, and is currently a member of the Palm Beach County Bar Association, American Bar Association and the Florida Bar Association. In March 2014, Mr. Rossin received the Exemplary Elected Official Award from the Forum Club of the Palm Beaches.
In making the determination that Mr. Rossin should beremain a nominee for director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his legal background and, in particular, his knowledge of legal issues related to financial institutions and underlying corporate governance matters; |
· | his public service which, combined with his legal background, provides the Board of Directors with knowledge in the areas of government relations and regulatory matters that impact the Company; |
· | his significant experience in the financial services industry; |
Directors Whose Terms Extend Beyond the Annual Meeting
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In addition to his 38 years of experience in real estate, Mr. Bohner is actively involved in several professional and community organizations, having served as president of the Greater Martin County Association of Realtors and The Pine School. He was awarded the Realtor Association’s Distinguished Service Award in 2001, and has served on numerous professional standards’ panels in arbitration hearings and chaired the Realtors Association’s grievance committee. Mr. Bohner is a graduate of Vanderbilt University with dual degrees in Business and Economics.
In making the determination that Mr. Bohner should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
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Ms. Bradley served on the finance committee for the Central Florida Expressway Authority from 2012 to 2013 and on the board of directors of the Greater Orlando Aviation Authority from 2000 to 2009. She is also a member of the board of directors of the Boys & Girls Club of Central Florida (since 1998), serving as chairperson in 2002 and 2003, and a member of the boards of the Studio Museum in Harlem (since 2006) and The Lawrenceville School in Lawrenceville, New Jersey (since 2008). Ms. Bradley provides support to charities throughout the Central Florida community, and has served on the boards of the Florida Arts Council (2003-2008) and the Cornell Museum of Fine Arts. Ms. Bradley has had a 20-year career in financial services, including seven years with SunTrust Bank in Central Florida, culminating in her last position as senior vice president leading its Private Client Group (1999-2002). Her previous experience also includes eight years as vice president with Moody’s Investors Services and 3 years providing consulting services for McKinsey Management Consultants and Touché Ross. Ms. Bradley received her Bachelor of Arts degree in Economics and Political Science from Yale College, and her Master’s degree in Business Administration from Columbia University Graduate School of Business with a concentration in Finance and Marketing.
Ms. Bradley’s appointment to the Board of Directors is pursuant to the Merger Agreement under which BANKshares merged with and into Seacoast. Pursuant to the Merger Agreement, Seacoast was required to appoint one former BANKshares’ director to our Board of Directors.
In making the determination that Ms. Bradley should remain a director of Seacoast, the CGC considered these qualifications and her qualification as an independent director, as well as:
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Mr. Crook is also active in the community, having previously served as director and president of the Economic Council and Stuart Kiwanis Club, former director and chairman of the audit committee of Scripps Florida Funding Corp. and Stuart/Martin County Chamber of Commerce, and past chairman of the Indian River Community College Accounting Advisory Committee. Mr. Crook’s professional affiliations include the American Institute of Certified Public Accountants, the Management Advisory Services Division of the American Institute of Certified Public Accountants, and the local legislative contact for the Florida Institute of Certified Public Accountants.
In making the determination that Mr. Crook should remain a director of Seacoast, the CGC considered these qualifications, as well as:
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In addition, Mr. Culbreth is president of several other family businesses, including: Culbreth Realty, Inc. (a real estate brokerage company), Parrott Investments, Inc. (a holding company for two other businesses), Gilbert Cattle Co., LLC (a cattle operation), Grace Marine (a watercraft sales company), Gilbert Aviation Inc. (an aircraft sales and service company), Gilbert Oil Company, LLC and Gilbert Trucking, Inc. Mr. Culbreth is a former director of the Florida Council on Economic Education, the Okeechobee County Board of Realtors, the Okeechobee Economic Council, and the United Way of Okeechobee and is a member of the Masonic Lodge.
In making the determination that Mr. Culbreth should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
· | his experience with the Company. |
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Prior to her work at Spencer Stuart, Ms. Daum was the executive director of the corporate board resource at Catalyst, where she managed all board of directors’ activities and worked with companies to identify qualified women for their boards. A widely renowned expert on corporate governance topics, Ms. Daum was recognized by the National Association of Corporate Directors (“NACD”) as one of the top 100 most influential leaders in corporate governance in 2013. Ms. Daum also advises corporate boards on succession planning for themselves and their CEOs, as well as best practices and governance issues. Each year, Ms. Daum develops the Spencer Stuart Board Index, a publication detailing trends at national boardrooms. She also co-founded and developed a program for board members entitled “Fresh Insights and Best Practices for Directors” at the Wharton School of the University of Pennsylvania, where she earned her MBA.
In making the determination that Ms. Daum should remain a director of Seacoast, the CGC considered these qualifications and her qualification as an independent director, as well as:
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Mr. Fogal served on the board of directors of Port St. Lucie National Bank until it was acquired by Seacoast in 1996. Currently, Mr. Fogal is treasurer of the St. Lucie County Economic Development Council. He has also served as past chairman of the Treasure Coast Private Industry Council and past president of the St. Lucie County Chamber of Commerce, and is active in a number of professional organizations including the American Institute of Certified Public Accountants and the Florida Institute of Certified Public Accountants.
In making the determination that Mr. Fogal should remain a director of Seacoast, the CGC considered these qualifications and his qualification as an independent director, as well as:
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Mr. Hudson also serves on the board of directors and the audit committee of Chesapeake Utilities Corporation (ticker: CPK), a public gas and electric utilities company headquartered in Dover, Delaware, which merged with Florida Public Utilities Company (“FPU”) in 2009. Prior to that time, he served as a member of the board of directors of FPU. In November 2015, Mr. Hudson was appointed as an independent director to PENN Capital Funds, a mutual fund group managed by PENN Capital Management. He was also a member of the board of directors of the Miami Branch of the Federal Reserve Bank of Atlanta from 2005 through 2010.
Mr. Hudson is actively involved in the community, having served on the boards of the Martin County YMCA Foundation, Council on Aging, The Pine School, the Job Training Center, American Heart Association, Martin County United Way, the Historical Society of Martin County and as chairman of the board of the Economic Council of Martin County, on which he still serves. He has been recognized for his achievements with several awards including the Florida Senate Medallion of Excellence Award presented by Florida Senator Ken Pruitt in 2001. Mr. Hudson is a graduate of Florida State University with dual degrees in Finance and Accounting, and a Master’s degree in Business Administration.
In making the determination that Mr. Hudson should remain a director of Seacoast, the CGC considered these qualifications, as well as:
Candidates Selected for Future Appointment as Directors
DIRECTOR COMPENSATION |
On March 23, 2016,
Decisions regarding our non-employee director compensation program are approved by our full board of directors based on recommendations from the Company announcedCGC. In making its recommendations, the selectionCGC considers the director compensation practices of two new highly qualified individuals who we intendpeer companies and whether such recommendations align with the interests of our shareholders with respect to appoint to our Board in 2016. We expect to appoint Mr. Herbert Lurie to the Board at our April 2016 board meeting,total compensation and expect to appoint Mr. Timothy Huval at a board meeting to be held after mid-year 2016.
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Mr. Huval earned a master’s degree in public administration from Brigham Young University, a bachelor’s degree in marketing from Weber State and an associate degree in business management from Salt Lake Community College. He was also awarded an honorary doctorate in Humane Letters from Salt Lake Community College.
each element thereof. Our compensation program for non-employee directors is designed to achieve the following goals:to:
· |
· |
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At the direction of the CGC, in January 2017, Grant Thornton analyzed the competitive position of Seacoast’s average director pay against the Core Bank Peer Group used for executive compensation purposes (see “Benchmarking and Comparator Group” for information about the peer group), including how each element of director compensation compares to the group. Grant Thornton’s analysis showed that Seacoast’s average total compensation for non-employee directors was above the peer group median, but was more heavily weighted in equity compensation.
Non-Employee Director Compensation Structure
Annual Retainer paid to All Non-employee Directors of the Company or the Bank: | ||||||||
Cash(1) | $ | 37,500 | $ | 37,500 | ||||
Stock Award(2) | $ | 37,500 | $ | 37,500 | ||||
Annual Committee Chair Retainer (except Audit Committee)(3) | $ | 10,000 | ||||||
Annual Audit Committee Chair Retainer | $ | 15,000 | ||||||
Annual Committee Chair Retainer for CGC and Bank Committees | $ | 10,000 | ||||||
Annual Committee Chair Retainer for Audit & ERMC Committees | $ | 15,000 | ||||||
Annual Committee Chair Retainer for S&I Committee | $ | 25,000 |
(1) | ||
(2) |
All cash retainers are paid in quarterly installments. DirectorsTo further align directors’ interests with long-term shareholder interests, directors may elect to receivereceive: 1) all or a portion of their annual cash compensationretainer in Company common stock, and 2) up to a maximum of 30% of their annual cash retainer in the form of non-qualified options to purchase shares of Company common stock.stock (a new element added in 2016). Retainers are pro-rated for directors who join or leave the Board or have a change in Board role during a quarterly period.
There were no changes to director compensation for fiscal year 2015 compared to 2014. However, as noted above, beginning in 2016, directors may elect to receive up to a maximum of 30% of their annual cash retainer in the form of non-qualified options to purchase shares of Company common stock.
Non-employee directors are also reimbursed for their travel, lodging and related expenses incurred in connection with attending board,Board, committee and shareholders meetings and other designated Company events. Executive officers who are also directors do not receive any compensation for services provided as a director.
Lead Independent Director Compensation & Agreement
The Board appointed Roger Goldman as independent lead directorLead Independent Director in November 2012. Mr. Goldman’s compensation reflects the additional time commitment for this role compared to other non-employee directors, the enhanced credibility with the investment community his affiliation with Seacoast provides the Company, and the improved performance and effectiveness of the Board under his leadership. His significant role is more fully described under the section entitled “Board Leadership Structure”.
On March 1, 2014, the Company entered into a three-year agreement with Lead Independent Director Goldman which automatically renews for successive three-year terms on the first day of each month following the effective date. Under the agreement, Lead Independent Director Goldman receives an additional annual retainer of $275,000 for his service as Lead Independent Director, paid in a combination of cash, restricted stock and other stock-based awards as mutually agreed by the Company and the Lead Independent Director. Upon signing of the agreement, he also received a stock option to purchase 200,000 shares of Seacoast Common Stockcommon stock at an exercise price equal to the fair market value of the stock on the grant date ($10.78). The stock option vestsvested on a pro rata monthly basis frombeginning on March 1, 2014 to February 28, 2017. The stock option may become vested and exercisable as to one-half of the then-unvested shares in the event of Lead Director Goldman’s death or disability. The option will becomebecame fully vested and exercisable upon the earliest of (i) the occurrence of a change in control (as defined in the agreement), or (ii) the termination of Lead Director Goldman’s continuous service, or status as Lead Director, by the Company for any reason (including any situation in which he is not re-elected to the Company’s Board or as Lead Director).on February 28, 2017. In addition, under the agreement, Lead Independent Director Goldman receives a $20,000 annual housing allowance, is provided with office space in a Company-owned facility, and is reimbursed for company-related travel expenses, reasonable customer or staff entertainment expenses and extraordinary use of his office staff.
Director Stock Ownership Policy
To align the interests of our directors and shareholders, our Board of Directors believes that directors should hold a significant financial stake in Seacoast. Consequently, our Corporate Governance Guidelines require that directors own Seacoast stock equal in value to a minimum of three times their base annual retainer.retainer within four years of joining the Board. Each director must retain 75 percent75% of thetheir shares from their retainer until reaching the minimum share ownership requirement, and after the ownership target is met, must retain at least 50 percent50% of the shares for one year. All of our directors own more than the minimum stock requirement, except for our three newest directors who have been on the Board for two years or less, and are on track to be compliant with our policy within the prescribed time frame.
96 |
The table below sets forth the total compensation paid to Board members who are not employees of the Company orof the Bank for fiscal year 2015.2016.
20152016 DIRECTOR COMPENSATION TABLE
Director | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||
Dennis J. Arczynski | $47,500 | $37,515 | — | — | $85,015 | |||||||||||||||
Stephen E. Bohner | 47,500 | 37,515 | — | — | 85,015 | |||||||||||||||
Jacqueline L. Bradley(3) | 37,500 | 37,515 | — | — | 75,015 | |||||||||||||||
T. Michael Crook | 37,500 | (4) | 37,515 | — | — | 75,015 | ||||||||||||||
H. Gilbert Culbreth, Jr. | 47,500 | 37,515 | — | — | 85,015 | |||||||||||||||
Julie H. Daum | 37,500 | (4) | 37,515 | — | — | 75,015 | ||||||||||||||
Christopher E. Fogal | 62,500 | 37,515 | — | — | 100,015 | |||||||||||||||
Maryann Goebel | 37,500 | 37,515 | — | — | 75,015 | |||||||||||||||
Roger O. Goldman | 312,500 | (4) | 37,515 | — | $20,000 | (5) | 370,015 | |||||||||||||
Robert B. Goldstein(6) | 35,625 | 37,515 | — | — | 85,015 | |||||||||||||||
Dale M. Hudson(7) | 37,500 | 37,515 | — | — | 75,015 | |||||||||||||||
Dennis S. Hudson, Jr. | 37,500 | 37,515 | — | — | 75,015 | |||||||||||||||
Thomas E. Rossin | 47,500 | 37,515 | — | — | 85,015 | |||||||||||||||
Edwin E. Walpole, III | 37,500 | (3) | 37,515 | — | — | 75,015 |
Director | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | All Other Compensation ($) | Total ($) | |||||||||||||||
Dennis J. Arczynski | 52,500 | (3)(4) | 37,514 | — | — | 90,014 | ||||||||||||||
Stephen E. Bohner | 47,500 | (3)(5) | 37,514 | — | — | 85,014 | ||||||||||||||
Jacqueline L. Bradley | 45,000 | (3)(6) | 37,514 | — | — | 82,514 | ||||||||||||||
T. Michael Crook | 37,500 | (3)(7) | 37,514 | — | — | 75,014 | ||||||||||||||
H. Gilbert Culbreth, Jr. | 47,500 | (8) | 37,514 | — | — | 85,014 | ||||||||||||||
Julie H. Daum | 37,500 | (3)(7) | 37,514 | — | — | 75,014 | ||||||||||||||
Christopher E. Fogal | 55,000 | (3)(9) | 37,514 | — | — | 92,514 | ||||||||||||||
Maryann Goebel | 37,500 | (3) | 37,514 | — | — | 75,014 | ||||||||||||||
Roger O. Goldman | 312,500 | (3)(7)(10) | 37,514 | — | 20,000 | (11) | 370,014 | |||||||||||||
Dennis S. Hudson, Jr. | 37,500 | 37,514 | — | — | 75,014 | |||||||||||||||
Timothy S. Huval(11) | 18,750 | (7) | 18,765 | — | — | 37,515 | ||||||||||||||
Herbert Lurie(11) | 28,125 | (3)(7) | 28,139 | — | 13,155 | (13) | 69,419 | |||||||||||||
Thomas E. Rossin | 58,750 | (14) | 37,514 | — | — | 96,264 |
(1) | Certain directors elected to take a portion of their cash compensation in the form of non-qualified options to purchase shares of Company common stock. A breakdown of the |
Name | Retainer for Service as Director ($) | Retainer for Service as Lead Director ($) | Chair Fees ($) | Total Fees Earned or Paid in Cash ($) | ||||||||||||
Dennis J. Arczynski | $37,500 | — | $10,000 | $47,500 | ||||||||||||
Stephen E. Bohner | 37,500 | — | 10,000 | 47,500 | ||||||||||||
Jacqueline L. Bradley | 37,500 | — | — | 37,500 | ||||||||||||
T. Michael Crook | 37,500 | — | — | 37,500 | ||||||||||||
H. Gilbert Culbreth, Jr. | 37,500 | — | 10,000 | 47,500 | ||||||||||||
Julie H. Daum | 37,500 | — | — | 37,500 | ||||||||||||
Christopher E. Fogal | 37,500 | — | 25,000 | (A) | 62,500 | |||||||||||
Maryann Goebel | 37,500 | — | — | 37,500 | ||||||||||||
Roger O. Goldman | 37,500 | $275,000 | — | 312,500 | ||||||||||||
Robert B. Goldstein | 28,125 | — | 7,500 | 35,625 | ||||||||||||
Dale M. Hudson | 37,500 | — | — | 37,500 | ||||||||||||
Dennis S. Hudson, Jr. | 37,500 | — | — | 37,500 | ||||||||||||
Thomas E. Rossin | 37,500 | — | 10,000 | 47,500 | ||||||||||||
Edwin E. Walpole, III | 37,500 | — | — | 37,500 |
(2) | A breakdown of the stock awards made to each director in |
(3) | Certain directors elected to take a portion of their 2016 cash compensation in the form of stock option awards. As of December 31, 2016, all of the stock option awards described below in the table entitled “Stock Awards Granted to Directors in 2016” were outstanding, as well as 190,000 shares of the stock option held by Mr. Goldman described under “Lead Independent Director Agreement” above. |
(5) | Includes $10,000 for his service as Chair of the Bank’s |
Includes $10,000 for her service as Chair of the Bank’s Wealth Committee. |
(7) | The table below shows the cash amounts that the directors deferred into the Directors’ Deferred Compensation Plan (“DDCP”) described below in |
Director | Cash Deferred into the DDCP Stock Account in 2015 ($) | Seacoast Shares held in DDCP Equity Deferral Account (#) | Seacoast Shares held in DDCP Stock Account as of Record Date (#) | Cash Deferred into DDCP Stock Account in 2016 ($) | Shares held in DDCP Stock Account as of Record Date (#) | Shares held in DDCP Equity Deferral Account (#) | Total Shares held in DDCP (#) | |||||||||||||||||||||
Dennis J. Arczynski | — | 5,949 | 16,177 | — | 16,178 | 8,298 | 24,476 | |||||||||||||||||||||
Stephen E. Bohner | — | 5,949 | 7,404 | — | 9,970 | 8,298 | 18,268 | |||||||||||||||||||||
Jacqueline L. Bradley | — | 3,184 | — | — | — | 5,533 | 5,533 | |||||||||||||||||||||
T. Michael Crook | $37,500 | 5,949 | 32,459 | 21,250 | 17,800 | 8,298 | 26,098 | |||||||||||||||||||||
H. Gilbert Culbreth, Jr. | — | 5,949 | — | — | 414 | 8,298 | 8,712 | |||||||||||||||||||||
Julie H. Daum | 37,5000 | 5,949 | 3,057 | 26,251 | 4,561 | 8,298 | 12,859 | |||||||||||||||||||||
Christopher E. Fogal | — | 5,949 | 627 | — | 627 | 8,298 | 8,925 | |||||||||||||||||||||
Maryann Goebel | — | 5,653 | — | — | — | 8,002 | 8,002 | |||||||||||||||||||||
Roger O. Goldman | 37,500 | 5,949 | 29,959 | 26,250 | 31,464 | 8,298 | 39,762 | |||||||||||||||||||||
Robert B. Goldstein | — | — | — | |||||||||||||||||||||||||
Dale M. Hudson | — | 5,949 | — | |||||||||||||||||||||||||
Dennis S. Hudson, Jr. | — | 5,949 | — | — | — | 8,298 | 8,298 | |||||||||||||||||||||
Timothy S. Huval | — | — | 1,175 | 1,175 | ||||||||||||||||||||||||
Herbert Lurie | 19,688 | 1,496 | 1,762 | 3,258 | ||||||||||||||||||||||||
Thomas E. Rossin | — | 5,949 | — | — | — | 8,298 | 8,298 | |||||||||||||||||||||
Edwin E. Walpole, III | 18,750 | 2,975 | 2,934 |
(9) | Includes $15,000 for his service as Chair of the Audit Committee. |
(10) | Includes $275,000 for his service as Lead Independent Director. |
(11) | Housing allowance. |
(13) | Reimbursement by the Company of medical insurance premiums. |
(14) | Includes $21,250 for his service as Chair of the |
Director | Grant Date | Shares Received (#) | Per Share Value ($) | Total Value ($) | ||||||||||
Goldstein | 1/2/2015 | 172 | $13.75 | $2,365 | ||||||||||
3/31/2015 | 166 | 14.27 | 2,368 | |||||||||||
7/1/15 | 148 | 15.96 | 2,362 |
stock awardsSTOCK AWARDS & Options GRANTed to directors in 2015OPTIONS GRANTED TO DIRECTORS IN 2016
The following table sets forth certain information concerning stock awards and options granted to directors during 2015.2016. As of December 31, 2016, all stock awards granted to directors were fully vested, and all of the option awards listed below were outstanding, as well as 190,000 shares underlying the stock option held by Mr. Goldman described under “Lead Independent Director Agreement” above.
Name | Grant Date | Stock Awards (#) | Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(1) ($) | |||||||||||||
Dennis J. Arczynski | 7/21/15 | 2,391 | (2) | — | — | $37,515 | ||||||||||||
Stephen E. Bohner | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
T. Michael Crook | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Jacqueline L. Bradley | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
H. Gilbert Culbreth, Jr. | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Julie H. Daum | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Christopher E. Fogal | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Maryann Goebel | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Roger O. Goldman | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Robert B. Goldstein | 1/2/15 | 172 | — | — | 2,365 | |||||||||||||
3/31/15 | 166 | — | — | 2,368 | ||||||||||||||
7/1/15 | 148 | — | — | 2,362 | ||||||||||||||
7/21/15 | 2,391 | (3) | — | — | 37,515 | |||||||||||||
Dale M. Hudson | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Dennis S. Hudson, Jr. | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Thomas E. Rossin | 7/21/15 | 2,391 | (2) | — | — | 37,515 | ||||||||||||
Edwin E. Walpole, III | 7/21/15 | 2,391 | (4) | — | — | 37,515 |
Name | Grant Date | Stock Awards(1) (#) | Option Awards: Number of Securities Underlying Options(2) (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(3)($) | |||||||||||||
Dennis J. Arczynski | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Stephen E. Bohner | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Jacqueline L. Bradley | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 2,279 | 14.39 | 7,498 | ||||||||||||||
T. Michael Crook | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
H. Gilbert Culbreth, Jr. | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
Julie H. Daum | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Christopher E. Fogal | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Maryann Goebel | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Roger O. Goldman | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
2/3/2016 | — | 3,419 | 14.39 | 11,249 | ||||||||||||||
Dennis S. Hudson, Jr. | 7/26/2016 | 2,349 | — | — | 37,514 | |||||||||||||
Timothy S. Huval | 7/26/2016 | 1,175 | — | — | 18,765 | |||||||||||||
Herbert Lurie | 7/26/2016 | 2,349 | — | — | 28,139 | |||||||||||||
4/19/2016 | — | 2,244 | 16,47 | 8,437 | ||||||||||||||
Thomas E. Rossin | 7/26/2016 | 2,349 | — | — | 37,514 |
(1) | All of the shares were deferred into the Company’s Directors’ Deferred Compensation Plan described below. |
Purchased with cash compensation and valued using Black Scholes model at $3.29 per share for all option awards, except Mr. Lurie’s which was valued at $3.76 per share. |
(3) | Represents the aggregate grant date fair value as of the respective grant date for each award, calculated in accordance with FASB ASC Topic 718. The assumptions made in valuing stock awards reported in this column are discussed in Note J to the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, |
Directors’ Deferred Compensation Plan
The Company has a Directors’ Deferred Compensation Plan (“DDCP”) to allow each non-employee director of the Company and the Bank to defer receipt of his director compensation, both cash and equity, until his separation from service with the Company. Each participant account is separated into sub-accounts for cash deferrals (“Cash Deferral Account”) and equity deferrals (“Equity Deferral Account”). Each participant directs how his Cash Deferral Account in the DDCP is invested among the available investment vehicle options, including a Company stock fund (“Stock Account”). The plan’s investment options are reviewed and selected annually by a Committee appointed by the Board of Directors of the Company to administer the plan. No earnings or dividends paid under the DDCP are above-market or preferential.
All amounts paid under the plan are paid in cash from the general assets of the Company, either directly by the Company or via a “rabbi trust” the Company has established in connection with the plan. Nothing contained in the plan creates a trust or fiduciary relationship of any kind between the Company and a participant, beneficiary or other person having a claim to payments under the plan. A participant or beneficiary does not have an interest in his plan account that is greater than that of an unsecured creditor.
Upon a participant’s separation from service, the participant will receive the balance of his Stock Accountand/Account and/or Equity Deferral Account in shares of Company Common Stockcommon stock and the balance of his other plan accounts in cash in one of the following three forms specified by the participant at the time of initial deferral election: i) a lump sum; ii) monthly installments over a period not to exceed five years; or iii) a combination of an initial lump sum of a specified dollar amount and the remainder in monthly installments over a period not to exceed five years.
Upon death of a participant, any balance in his account shall be paid in a lump sum to his designated beneficiary or to his estate.
101 |
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Audit Committee, acting pursuant to authority delegated to it by the Board of Directors, appointed Crowe Horwath LLP, an independent registered certified public accounting firm and the Company’s independent auditor for the fiscal year ending December 31, 2015,2016, to serve as the Company’s independent auditor for the fiscal year ending December 31, 2016.2017. Although it is not required to do so, the Board of Directors is submitting the Audit Committee’s appointment of Crowe Horwath LLP for ratification by the Company’s shareholders in order to ascertain the views of the shareholders regarding such appointment and as a matter of good corporate practice. If the shareholders should not ratify the appointment of Crowe Horwath LLP, the Audit Committee will reconsider the appointment.
Representatives of Crowe Horwath LLP will be present at the Annual Meeting and will be given the opportunity to make a statement on behalf of the firm, if they so desire, and will also be available to respond to appropriate questions from shareholders.
All shares represented by valid proxies received pursuant to this solicitation and not revoked before they are exercised will be voted in the manner specified therein. If no specification is made, the proxies will be voted for the ratification of the appointment of Crowe Horwath LLP for the fiscal year ending December 31, 2016.2017.
Ratification of this proposal requires approval by the affirmative vote of a majority of votes cast at the Annual Meeting.
The Board of Directors unanimously recommends a vote "“FOR"” Proposal 2.
RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Crowe Horwath LLP’s report on Seacoast’s consolidated financial statements for the fiscal year ended December 31, 20152016 did not contain an adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles. Crowe Horwath LLP’s report on Seacoast’s internal control over financial reporting expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2015.2016. Crowe Horwath LLP has advised Seacoast that neither the firm nor any of its partners has any direct or material interest in Seacoast and its subsidiaries except as auditors and independent certified public accountants of Seacoast and its subsidiaries.
102 |
Independent Registered Public Accounting Firm’s Fees
The following table shows the fees paid or accrued by the Company for the audit and other services for the fiscal years ended December 31, 20152016 and 2014,2015, including expenses:
2015 | 2014 | |||||||
Audit Fees(1) | $ | 495,000 | $ | 472,000 | ||||
Audit-Related Fees (2) | $ | 108,750 | $ | 29,500 | ||||
Tax Fees | $ | — | $ | — | ||||
All Other Fees(3) | $ | 35,200 | $ | 23,400 |
2016 | 2015 | |||||||
Audit Fees(1) | $ | 548,591 | $ | 495,000 | ||||
Audit-Related Fees(2) | $ | 53,500 | $ | 108,750 | ||||
Tax Fees | $ | 12,000 | $ | — | ||||
All Other Fees(3) | $ | 10,087 | $ | 35,200 |
(1) | Includes the aggregate fees |
(2) | Includes the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements and are not reported under “Audit Fees.” These services primarily relate to audits of the Company’s compliance with certain requirements applicable to the U.S. Department of Housing and Urban Development (HUD) assisted programs, and related attestation reporting |
(3) | Includes the aggregate fees for professional services and expenses rendered |
Under the Audit Committee’s Charter, the Audit Committee is required to approve in advance the terms of all audit services provided to the Company as well as all permissible audit-related and non-audit services to be provided by the independent auditors. All services set forth above under the captions “Audit Fees”, “Audit-Related Fees”, “Tax Fees”, and “All Other Fees” were approved by the Company’s Audit Committee pursuant to SEC Regulation S-X Rule 2-.01(c)(7)(i).
ADVISORY (NON-BINDING) VOTE ON COMPENSATION OF
OF NAMED EXECUTIVE OFFICERS
In accordance with the Exchange Act, we are required to include in this Proxy Statement and present at the Annual Meeting a non-binding shareholder vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation rules of the SEC. This Proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the compensation of the Company’s named executive officers as disclosed in this Proxy Statement. The Proposal will be presented at the Annual Meeting in the form of the following resolution:
RESOLVED, that the holders of Common Stockcommon stock of the Company approve the compensation of the Company’s named executive officers as disclosed in the Compensation Discussion and Analysis, the compensation tables and related material in the Company’s Proxy Statement for the 2017 Annual Meeting.
This advisory vote will not be binding on the Company’s Board of Directors and may not be construed as overruling a decision by the Board of Directors or creating or implying any additional fiduciary duty on the Board of Directors, nor will it affect any compensation paid or awarded to any executive. The CGC and the Board of Directors will take into account the outcome of the vote when considering future executive compensation arrangements.
The purpose of our compensation policies and procedures is to attract and retain experienced, qualified talent critical to our long-term success and enhancement of shareholder value. Seacoast’s Board of Directors believes that our compensation policies and procedures achieve this objective.
This Proposal 3 requires approval by the affirmative vote of a majority of votes cast at the Annual Meeting.
The Board of Directors unanimously recommends a vote “FOR” Proposal 3.
Certain Transactions and Business Relationships
Certain Transactions and Business Relationships |
RELATED PARTY TRANSACTIONS |
The Board of Directors recognizes that related party transactions present a heightened risk of conflicts of interest and/or improper valuation (or the perception thereof) and therefore has adopted a Related Party Transaction Policy to guide the Company in connection with all related party transactions. The policy is available on the Company’s website at www.seacoastbanking.com. The Company defines a related party as:
· | any employee, officer, director or director nominee of the Company and/or its subsidiaries; |
· | a shareholder (or group of affiliated shareholders) beneficially owning in excess of 5% of the Company (or its controlled affiliates); |
· | a shareholder (or group of affiliated shareholders) with the right to designate a director or board observer to the Board of Directors of the Company and/or any of its subsidiaries; |
· | an immediate family member of any of the foregoing; and |
· | an entity which is owned or controlled by someone listed above, or an entity in which someone listed above has a substantial ownership interest or control of such entity. |
The policy requires the Audit Committee or a majority of disinterested members of the Board to approve or ratify a transaction between the Company and any related party (including any transactions requiring disclosure under Item 404 of Regulation S-K under the Securities Exchange Act of 1934), other than:
· | transactions available on similar terms to all employees or customers generally; |
· | transactions involving less than $25,000 when aggregated with all similar transactions; and |
· | loans made by the Bank in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as, and following credit underwriting procedures that are not less stringent than, those prevailing at the time for comparable loans with parties not related to the lender, and not involving more than the normal risk of repayment or presenting other unfavorable features, and in compliance with applicable law, including the Sarbanes Oxley Act of 2002 and Regulation O of the Board of Governors of the Federal Reserve System. |
The Audit Committee is currently comprised of three directors, Christopher E. Fogal (Chair), Dennis J. Arczynski and Maryann Goebel. None of the current Audit Committee members is or has been an officer or employee of Seacoast or its subsidiaries and each is independent.
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Director T. Michael Crook’s brother-in-law is a minority, non-controlling interest in Mayfair Plaza, which leases to the Bank 21,245 square feet of space adjacent to the Seacoast National Center in Stuart, Florida, pursuant to a lease agreement which expires in May 2016.
The Bank paid rent of approximately $283,910 on this property in 2015, of which Mr. Crook’s brother-in-law’s individual interest was $48,265. Seacoast believes the terms of this lease are commercially reasonableCompany enters into commercial dealings with certain related persons that it considers arms-length and comparable to rental terms negotiated at arm’s lengthdealings between unrelated parties for similar property in Stuart.parties. Each such dealing is described below:
· | Director T. Michael Crook’s brother-in-law has a minority, non-controlling interest in Mayfair Plaza, which leases to the Bank 21,245 square feet of space adjacent to the Seacoast National Center in Stuart, Florida, pursuant to a lease agreement which expires in May 2017. The Bank paid rent of approximately $295,215 on this property in 2016, of which Mr. Crook’s brother-in-law’s individual interest was approximately $50,187. |
· | Director Timothy S. Huval is employed as Chief Human Resources Officer of Humana, Inc., a leading health and well-being company that provides group vision insurance to Seacoast. In 2016, Seacoast paid Humana approximately $69,243 in premiums. We believe Mr. Huval has no material direct or indirect interest in such arrangement. |
· | Director Herbert A. Lurie is a senior advisor of Guggenheim Securities that provides financial advisory services to Seacoast. In his capacity as senior advisor to the firm, Mr. Lurie may receive customary fees that are based in part on fees paid to Guggenheim Securities, depending on Mr. Lurie’s role in securing, working and dispatching the matter. In 2016, Seacoast paid Guggenheim Securities $83,333 for advisory services. |
Director H. Gilbert Culbreth, Jr. is a controlling shareholder of Gilbert Ford, LLC and Gilbert Chevrolet. Gilbert Ford furnished two new vehicles to the Bank in 2015 in exchange for payments totaling $43,317. Gilbert Chevrolet furnished one new vehicle to the Bank in 2015 in exchange for payments totaling $43,023.
The Audit Committee has approved the acquisitioneach of these goods and services. Seacoast believes the goods and services were commercially reasonable and comparable to similar transactions negotiated at arm’s length between unrelated parties.transactions.
Several of Seacoast’s directors, executive officers and their affiliates, including corporations and firms of which they are directors or officers or in which they and/or their families have an ownership interest, are customers of Seacoast and its subsidiaries. These persons, corporations and firms have had transactions in the ordinary course of business with Seacoast and its subsidiaries, including borrowings, all of which, in the opinion of Seacoast’s management and in accordance with the Bank’s written loan policy, were on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated persons and did not involve more than the normal risk of collectability or present other unfavorable features. Seacoast and its subsidiaries expect to have such transactions on similar terms with their directors, executive officers, and their affiliates in the future.
As a federally insured bank, the Bank is subject to Regulation O, which governs loans to “insiders”, defined as any executive officer, director or principal shareholder of the Company or the Bank, and their related interests. Regulation O limits loans to insiders and requires that the terms and conditions of credits granted to insiders are substantially the same as those extended to other customers of the Bank. The Bank’s written loan policy requires compliance with the provisions of Regulation O.
The aggregate amount of loans outstanding by the Bank to directors, executive officers, and related parties of Seacoast or the Bank as of December 31, 2015,2016, was approximately $4,008,385,$2,115,286, which represented approximately 1.3 percent0.49% of Seacoast’s consolidated shareholders’ equity on that date. These loans were made in the ordinary course of business and they did not involve more than the normal risk of collectability or present other unfavorable features.
CERTAIN FAMILY RELATIONSHIPS |
Certain members of the Company’s Board of Directors and management are related. Director Dennis S. Hudson, Jr. and’s brother, Dale M. Hudson, are brothers.serves on the Bank’s board of directors. Dennis S. Hudson, III, the Company’s Chairman and Chief Executive Officer, is the son of Dennis S. Hudson, Jr. and the nephew of Dale M. Hudson. Dale Hudson serves on the Bank board of directors, but resigned from Seacoast’s Board at the last annual meeting on May 26, 2015. As an executive officer, Dennis S. Hudson, III’s compensation is approved by the CGC, which is comprised solely of independent directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended requires the Company’s directors and executive officers, and persons who beneficially own more than 10 percent10% of the Company’s Common Stock,common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of Common Stockcommon stock and other equity securities of the Company. Directors, executive officers and persons beneficially owning more than 10 percent10% of the Company’s Common Stockcommon stock are required to furnish the Company with copies of all Section 16(a) reports they file. Based on the Company’s review of such reports and written representations from the reporting persons, the Company believes that, during and with respect to fiscal year 2015,2016, all filing requirements applicable to its directors, executive officers and beneficial owners of more than 10 percent10% of its Common Stockcommon stock were complied with in a timely manner, except for:
· | The Form 4 for |
· | The Form 4 for Stephen E. Bohner filed with the SEC on April 11, 2016 which reported the sale of four shares of common stock on March 18, 2016. The Company believes that the Form 4 filed on February 17, 2017 reflects Mr. Bohner’s current holdings. |
· | The Form 4 for Julie H. Daum filed with the SEC on May 23, 2016 which reported the purchase of 5,000 shares of common stock on May 4, 2016. The Company believes that the Form 4 filed on February 17, 2017 reflects Ms. Daum’s current holdings. |
· | The Form 4 for Maryann Goebel filed with the SEC on June 2, 2016 which reported the purchase of 5,850 shares of common stock on May 25, 2016. The Company believes that the Form 4 filed on February 8, 2017 reflects Ms. Goebel’s current holdings. |
PRINCIPAL OFFICES |
The principal executive offices of Seacoast are located at 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995, and its telephone number is (772) 287-4000.
107 |
AVAILABILITY OF FORM 10-K |
Upon the written request of any person whose proxy is solicited by this Proxy Statement, Seacoast will furnish to such person without charge (other than for exhibits) a copy of Seacoast’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015,2016, including financial statements and schedules thereto, as filed with the SEC. Requests may be made to Seacoast Banking Corporation of Florida, c/o Corporate Secretary, P.O. Box 9012, Stuart, Florida 34995.
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The Board of Directors of the Company is soliciting proxies to be voted at the Annual Meeting. The Company will bear the cost of preparing, printing and mailing the proxy materials and soliciting proxies for the Annual Meeting. In addition to the solicitation of shareholders of record by mail, telephone, electronic mail, facsimile or personal contact, Seacoast will be contacting brokers, dealers, banks, and/or voting trustees or their nominees who can be identified as record holders of Common Stock;the Company’s common stock; such holders, after inquiry by Seacoast, will provide information concerning quantities of proxy materials needed to supply such information to beneficial owners, and Seacoast will reimburse them for the reasonable expense of mailing proxy materials. Seacoast may retain other unaffiliated third parties to solicit proxies and pay the reasonable expenses and charges of such third parties for their services.
NOTICE OF BUSINESS TO COME BEFORE THE MEETING |
Management of Seacoast does not know of any matters to be brought before the annual meetingAnnual Meeting other than those described above. If any other matters properly come before the annual meeting,Annual Meeting, the persons designated as proxies will vote on such matters in accordance with their best judgment.
Shareholder Proposals for 20172018
SHAREHOLDER |
To be considered for inclusion in the Company’s proxy statement and proxy card for the 20172018 Annual Meeting of Shareholders, a shareholder proposal must be received at the Company’s principal executive offices no later than December 8, 2016,7, 2017, which is 120 calendar days before the one-year anniversary of the date on which the Company first mailed this Proxy Statement.
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SHAREHOLDER PROPOSALS FOR PRESENTATION AT |
If you do not wish to submit a proposal for inclusion in next year’s proxy materials, but instead wish to present it directly at the 20172018 Annual Meeting of Shareholders, you must give timely written notice of the proposal to the Company’s Secretary.Secretary pursuant to the Company’s advance notice provisions. To be timely, the notice (including a notice recommending a director candidate) must be delivered to the Company’s principal executive offices no fewer than 60 nor more than 90 days before the one-year anniversary of the date of the Annual Meeting. To be timely, the written notice (including a notice recommending a director candidate) must be received no earlier than February 23, 201724, 2018 and no later than March 25, 2017.26, 2018. The notice must describe your proposal in reasonable detail and provide certain other information required by the Company’s Articles of Incorporation. A copy of the Company’s Articles of Incorporation is available upon request from the Company’s Secretary.
Voting at Annual Meeting
Shares represented by valid proxies and voting instruction forms that are received on time will be voted as specified. If you sign and return your proxy card or voting instruction form but do not provide voting instructions, your shares represented by the proxy will be voted as recommended by our Board of Directors as indicated below:
Proposal | Board Recommendation | |
1 | Election of Directors | FOR ALL |
2 | Ratification of Auditor | FOR |
3 | Advisory Vote on Executive Compensation | FOR |
If any other matters are properly presented at the Annual Meeting for action, the persons named and acting as proxy will have the discretion to vote for you 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.
Each share of common sharestock is entitled to one vote on each matter properly brought before the meeting.
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Record Date
You may vote all common shares that you owned as of the close of business on March 23, 2016,2017, which is the record date for the meeting.
Forms of Ownership of Shares
If you receive more than one proxy card or notice, it means you have multiple holdings.
You may own common shares in one or more ways, including:
· | Directly in your name as the shareholder of record (which may be held individually, jointly, or another title), including shares purchased through Seacoast’s Dividend Reinvestment and Stock Purchase Plan or restricted stock awards issued to employees under our long-term incentive plans; |
· | Indirectly through a bank, broker or other nominee in “street name”; |
· | Indirectly through Seacoast’s Retirement Savings Plan or Employee Stock Purchase Plan. |
If your shares of common stock are registered directly in your name, we are sending the proxy materials directly to you. If you hold our shares in street name, your bank, broker or other nominee is sending proxy materials to you and you must direct them how to vote on your behalf by completing the voting instruction form that accompanies your proxy materials or by following the instructions in the notice you received.
If you are a participant in Seacoast’s Dividend Reinvestment and Stock Purchase Plan, follow the instructions on the Notice or proxy card to provide voting instructions to the Trustee. Shares held in your plan account will be combined and voted at the Annual Meeting in the same manner in which you voted those shares registered in your own name either by proxy or in person.
If you are a participant in Seacoast’s Retirement Savings Plan or Employee Stock Purchase Plan, your voting instructions must be received by May 17, 201618, 2017 (the “cut-off date”) to allow sufficient time for the trustees to vote. When your voting instructions are received by the cut-off date, your shares in these plans will be voted as directed by you. For the shares in your account in Seacoast’s Retirement Savings Plan, if you do not submit your voting instructions by following the instructions on the Notice or proxy card, then the trustee of the Retirement Savings Plan will vote, or not vote, in its sole discretion, the shares of Common Stockcommon stock in your account. For shares held in your account in the Employee Stock Purchase Plan, your shares will not be voted if you do not give voting instructions as to such shares by proxy.
Please follow the instructions on each notice or proxy card to ensure that all of your shares are voted.
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Street Name Holders
If you are a beneficial owner and a broker, bank or other nominee is the record holder (which is commonly referred to as “street name”), then you received the notice of the Annual Meeting or proxy materials from the record holder. You have the right to direct your broker or nominee how to vote your shares, and such broker or other nominee is required to vote the shares in accordance with your instructions. Your broker or nominee should have given you instructions for you to provide direction on how to vote your shares. It will then be the record holder’s responsibility to vote your shares for you in the manner you direct. Generally, brokers and other record holders may vote on discretionary or routine matters, but cannot vote on non-routine or non-discretionary matters unless they have received voting instructions from street name holder. We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be brought before the Annual Meeting.
If your shares are held in street name, you are invited to attend the Annual Meeting; however, you may not vote your shares of Common Stockcommon stock held in street name in person at the Annual Meeting unless you request and obtain a power of attorney or other authority from your broker or other nominee who holds your shares and bring it to the Annual Meeting. Even if you plan to attend the Annual Meeting, we ask that you vote in advance of the Annual Meeting in case your plans change.
Effect of not Casting Your Vote
If you hold your shares in street name, you have the right to direct your broker or nominee how to vote your shares, and such broker or other nominee is required to vote the shares in accordance with your instructions. Your broker or nominee should have given you instructions for you to provide direction on how to vote your shares. It is then the record holder’s responsibility to vote your shares for you in the manner you direct.
Under the rules of various securities exchanges, brokers and other record holders may generally vote on discretionary or routine matters, but cannot vote on non-routine or non-discretionary matters, such as the election of directors, unless they have received voting instructions from the person for whom they are holding shares. Proposals 1 and 3 are considered non-routine matters, and cannot be voted on by your broker without your instructions. We therefore encourage you to provide directions to your broker as to how you want your shares voted on all matters to be voted on at the meeting.
Revocation of Proxies
If your shares of common stock are registered directly in your name, you may revoke your proxy and change your vote at any time before the polls close at the Annual Meeting. You may do this by:
· | timely submitting another proxy via the telephone or internet; |
· | delivering to Seacoast a written notice bearing a date later than the date of the proxy card, stating that you revoke the proxy, with such written notice to be sent to: 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995, Attention: Corporate Secretary; |
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· | signing and delivering to Seacoast a proxy card relating to the same shares and bearing a later date; or |
· | attending the meeting and voting in person by written ballot, although attendance at the meeting will not, by itself, revoke a proxy. |
Also, please note that if you have voted through your broker, bank or other nominee and you wish to change your vote, you must follow the instructions received from such entity to change your vote.
Quorum and Required Vote
To hold a vote on any proposal, a quorum must be present in person or by proxy at the annual meeting.Annual Meeting. A quorum is a majority of the total votes entitled to be cast by the holders of the outstanding shares of common stock as of the close of business on the record date.
In determining whether a quorum exists at the Annual Meeting for purposes of all matters to be voted on, all votes “for” or “against,” as well as all abstentions and broker non-votes, will be counted. A “broker non-vote” occurs when a nominee does not have discretionary voting power with respect to that proposal and has not received instructions from the beneficial owner.
On the Record Date, there were 37,916,98540,729,656 shares of Common Stockcommon stock issued, outstanding and entitled to be voted, which were held by approximately 2,0732,318 holders of record. Therefore, at least 18,958,49320,364,829 shares need to be present at the Annual Meeting or represented by proxy in order for a quorum to exist.
If a quorum is not present at the scheduled time of the annual meeting,Annual Meeting, a majority of the shareholders present or represented by proxy may adjourn the Annual Meeting until a quorum is present. The time and place of the adjourned annual meetingAnnual Meeting will be announced at the time of the adjournment, if any, and no other notice will be given. An adjournment will have no effect on the business that may be conducted at the annual meeting.Annual Meeting. If the annual meetingAnnual Meeting is adjourned more than 120 days after the date fixed for the original annual meeting,Annual Meeting, the Board of Directors must fix a new record date to determine the shareholders entitled to vote at the adjourned annual meeting.Annual Meeting.
To elect directors and adopt the other proposals at the 2016 annual meeting,2017 Annual Meeting, the following votes are required:
Proposal | Vote Required | Do abstentions count cast? | Is broker voting allowed? | ||
1 | Election of Directors | Plurality vote(1) | No | No | |
2 | Ratification of Auditor | Affirmative vote of amajority of votes cast | No | Yes | |
3 | Advisory (Non-binding) Voteon Executive Compensation | Affirmative vote of amajority of votes cast | No | ||
No |
(1) | Under our Bylaws, all elections of directors are decided by plurality vote. However, notwithstanding the plurality standard, in an uncontested election for directors, which is the case for the election under Proposal 1, our Corporate Governance Guidelines provide that if any director nominee receives a greater number of votes “withheld” from his or her election than votes “for” such election, then the director will promptly tender his or her resignation to the Board following certification of the shareholder vote, with such resignation to be effective upon acceptance by the Board of Directors. The CGC would then review and make a recommendation to the Board of Directors as to whether the Board should accept the resignation, and the Board would ultimately decide whether to accept the resignation. The Company will disclose its decision-making process regarding the resignation in a Form 8-K furnished to the SEC. In contested elections, the required vote would be a plurality of votes cast and the resignation policy would not apply. Full details of this policy are set forth in our Corporate Governance Guidelines, available on our website at www.seacoastbanking.com. |
Cumulative voting is not permitted.Abstentionspermitted. Abstentions and broker non-votes, if any, will not be counted for purposes of determining whether any of the proposals have received sufficient votes for approval, but will count for purposes of determining whether or not a quorum is present. So long as a quorum is present, abstentions and broker non-votes will have no effect on any of the matters presented for a vote at the Annual Meeting.
Multiple Shareholders Sharing the Same Address
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The SEC permits delivery of one copy of the proxy materials to shareholders who have the same address and last name under a procedure referred to as “householding”. We do not utilize householding for our shareholders of record. However, if you hold your shares through a broker, bank or other nominee, you may receive only one copy of the notice and, as applicable, any additional proxy materials that are delivered.
If you receive a single set of proxy materials as a result of householding, and you would like to have separate copies of proxy materials mailed to you in the future, please contact your broker, bank or other nominee. However, if you want to receive a paper proxy or notice or other proxy materials for purposes of this year’s annual meeting,Annual Meeting, follow the instructions included in the notice that was sent to you.
* * * *
You can find the directions to our annual meetingAnnual Meeting on the inside back cover of this proxy statement. Whether or not you plan to attend the meeting, we hope you will vote as soon as possible. You may vote over the internet, as well as by telephone. You also may vote your shares by requesting a paper proxy card and completing, signing and returning it by mail. Please review the instructions on each of your voting options described in this proxy statement, as well as in the notice you received in the mail.
DENNIS S. HUDSON III | |
Chairman & Chief Executive Officer | |
April 6, 2017 |
April 7, 2016
APPENDIX A |
INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES |
This proxy statementletter contains financial information determined by methods other than Generally Accepted Accounting Principles ("GAAP"(“GAAP”). Management uses these non-GAAP financial measures in its analysis of the Company'sCompany’s performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company'sCompany’s performance. The Company believes the non-GAAP measures enhance investors'investors’ understanding of the Company'sCompany’s business and performance.performance and if not provided would be requested by the investor community. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently.
The Company provides reconciliations between GAAP and these non-GAAP measures, and these measuresmeasures. These disclosures should not be considered an alternative to GAAP. For 2015 and 2014, by quarter and for total year, reconciliations of net income and adjusted net income are provided on page 74 of our Annual Report on Form 10-K forCertain prior period amounts have been revised to conform to the year ended December 31, 2015.current period presentation.
(Dollars in thousands except per share data) | 2016 | 2015 | 2014 | 2013 | ||||||||||||
Net Income | $ | 29,202 | $ | 22,141 | $ | 5,696 | $ | 47,916 | ||||||||
Security gains | (368 | ) | (161 | ) | (469 | ) | (419 | ) | ||||||||
BOLI income (benefits upon death) | (464 | ) | 0 | 0 | 0 | |||||||||||
Bargain purchase gain | 0 | (416 | ) | 0 | 0 | |||||||||||
Severance | 1,222 | 898 | 1,199 | 67 | ||||||||||||
Merger related charges | 8,673 | 3,775 | 4,544 | 0 | ||||||||||||
Branch closure charges and costs related to expense initiatives | 2,490 | 0 | 4,261 | 0 | ||||||||||||
Early redemption cost for FHLB advances | 1,777 | 0 | 0 | 0 | ||||||||||||
Other | 0 | 281 | 26 | (1,315 | ) | |||||||||||
Brand Refresh | 0 | 0 | 697 | 0 | ||||||||||||
Stock compensation expense and other incentive costs related to improved outlook | 0 | 0 | 1,213 | 0 | ||||||||||||
Reversal of deferred tax asset valuation allowance | 0 | 0 | 0 | (42,993 | ) | |||||||||||
Tax effect of adjustments | (5,077 | ) | (1,651 | ) | (4,734 | ) | 673 | |||||||||
Adjusted net income | $ | 37,455 | $ | 24,867 | $ | 12,433 | $ | 3,929 | ||||||||
Average shares outstanding (000) | 37,508 | 33,744 | 27,717 | 19,650 | ||||||||||||
Adjusted Earnings per Diluted Share | $ | 1.00 | $ | 0.74 | $ | 0.45 | $ | 0.20 |
A-1 |
A-2 |
Fourth Quarter | Fourth Quarter | Fourth Quarter | ||||||||||
(Dollars in thousands except per share data) | 2016 | 2015 | 2014 | |||||||||
Net Income | $ | 10,771 | $ | 6,036 | $ | (1,517 | ) | |||||
Security gains | (7 | ) | (1 | ) | (108 | ) | ||||||
Bargain purchase gain | 0 | (416 | ) | 0 | ||||||||
Total Adjustments to Revenue | (7 | ) | (417 | ) | (108 | ) | ||||||
Severance | 165 | 187 | 478 | |||||||||
Merger related charges | 559 | 1,043 | 2,723 | |||||||||
Branch closure charges and costs related to expense initiatives | 0 | 0 | 4,261 | |||||||||
Brand Refresh | 0 | 0 | 697 | |||||||||
Miscellaneous losses | 0 | 48 | 119 | |||||||||
Stock compensation expense and other incentive costs related to improved outlook | 0 | 0 | 1,213 | |||||||||
Total Adjustments to Noninterest Expense | 724 | 1,278 | 9,491 | |||||||||
Effective tax rate on adjustments | (152 | ) | (328 | ) | (3,753 | ) | ||||||
Adjusted Net Income | $ | 11,336 | $ | 6,569 | $ | 4,113 | ||||||
Earnings per diluted share, as reported | $ | 0.28 | $ | 0.18 | $ | (0.05 | ) | |||||
Adjusted Earnings per Diluted Share | $ | 0.30 | $ | 0.19 | $ | 0.12 | ||||||
Average shares outstanding (000) | 38,252 | 34,395 | 33,124 | |||||||||
Revenue | $ | 47,354 | $ | 37,299 | $ | 31,982 | ||||||
Total Adjustments to Revenue | (7 | ) | (417 | ) | (108 | ) | ||||||
Adjusted Revenue | $ | 47,347 | $ | 36,882 | $ | 31,874 | ||||||
Noninterest Expense | $ | 30,297 | $ | 27,169 | $ | 34,011 | ||||||
Total Adjustments to Noninterest Expense | 724 | 1,278 | 9,491 | |||||||||
Adjusted Noninterest Expense | $ | 29,573 | $ | 25,891 | $ | 24,520 |
A-3 |
Fourth Quarter | Fourth Quarter | Fourth Quarter | ||||||||||
(Dollars in thousands except per share data) | 2016 | 2015 | 2014 | |||||||||
Adjusted Noninterest Expense | $ | 29,573 | $ | 25,891 | $ | 24,520 | ||||||
Foreclosed property expense & amortization of intangible | (641 | ) | (324 | ) | (528 | ) | ||||||
Net Adjusted Noninterest Expense | $ | 28,932 | $ | 25,567 | $ | 23,992 | ||||||
Adjusted Revenue | $ | 47,347 | $ | 36,882 | $ | 31,874 | ||||||
Impact of FTE adjustment | 204 | 117 | 150 | |||||||||
Adjusted Revenue on a fully taxable equivalent basis | $ | 47,551 | $ | 36,999 | $ | 32,024 | ||||||
Adjusted Efficiency Ratio | 60.8 | % | 69.1 | % | 74.9 | % | ||||||
Average assets | $ | 4,572,188 | $ | 3,463,277 | $ | 3,037,061 | ||||||
Return on Average Assets (ROA) | 0.94 | % | 0.69 | % | -0.20 | % | ||||||
Impact of adjustments for Adjusted Net Income | 0.05 | % | 0.06 | % | 0.74 | % | ||||||
Adjusted ROA | 0.99 | % | 0.75 | % | 0.54 | % | ||||||
Average Shareholders' Equity | $ | 437,077 | $ | 353,392 | $ | 319,233 | ||||||
Less average goodwill and intangible assets | (79,620 | ) | (34,457 | ) | (33,803 | ) | ||||||
Average Tangible Equity | $ | 357,457 | $ | 318,935 | $ | 285,430 | ||||||
Return on Average Shareholders' Equity | 9.8 | % | 6.8 | % | -1.9 | % | ||||||
Impact of removing average intangible assets and related amortization | 2.7 | % | 1.1 | % | 0.2 | % | ||||||
Return on Average Tangible Common Equity (ROTCE) | 12.5 | % | 7.8 | % | -1.7 | % | ||||||
Impact of adjustments for Adjusted Net Income | 0.6 | % | 0.7 | % | 7.8 | % | ||||||
Adjusted Return on Average Tangible Common Equity | 13.1 | % | 8.5 | % | 6.1 | % |
A-4 |
LOCATION OF THE |
Our annual meeting2017 Annual Meeting will be held at Hawthorn Suites’ Vistathe Founder’s Room, at 301 Lamberton Drive, West Palm Beach, Florida.Orlando Science Center.
Please use the address below for directions to the Orlando Science Center:
777 E Princeton St, Orlando, FL 32803
Taking Florida’s Turnpike
· | Exit 259 to merge onto I-4 East |
· | Turn right onto Princeton St. from the exit ramp. |
· | Orlando Science Center will be on the left hand side with the OSC Parking Garage on the right hand side. |
· | Turn right at the traffic light into the parking garage. |
· | Park closest to the 2nd ramp of the garage and use the pedestrian walk way to enter into Orlando Science Center |
Directions To The Orlando Science Center From I-4
· | Exit I-4 at Princeton St. (Exit 85) |
· | If traveling eastbound on I-4 turn right onto Princeton St. from the exit ramp. |
· | If traveling westbound on I-4 turn left onto Princeton St. from the exit ramp. You will then be going east on Princeton St. |
· | Orlando Science Center will be on the left hand side with the OSC Parking Garage on the right hand side. |
· | Turn right at the traffic light into the parking garage. |
· | Park closest to the 2nd ramp of the garage and use the pedestrian walk way to enter into Orlando Science Center |
Arriving by Car Service or Taxi:
If arriving by a car or taxi: Take I-95 to Exit 71 onto Palm Beach Lakes Blvd. Head East for approximately 0.25 milesservice, please direct drop off on level 2 of the parking garage and turn right at BP Service Stationcross into Executive Center Drive. Go 0.25 miles. The hotel is on your right.the building by the pedestrian walkway.