(4) | |
(3) | Other Compensation – - The Company provides the Named Executive Officers with other forms of compensation. The following is a listing of various types of other compensation that the Company has not used in the past three years, in the case of stock options, or ever otherwise, but may consider in the future to award its executives. We believe that including a listing of forms of compensation that we currently do not use is beneficial to investors as they compare our compensation elements to those of other organizations. |
|
| | | | | |
| Turner | McCabe | Queener | Carpenter | White |
Stock appreciation rights granted | None | None | None | None | None |
Stock options granted | None | None | None | None | None |
Supplemental retirement plans | NA | NA | NA | NA | NA |
Pension plan | NA | NA | NA | NA | NA |
Deferred compensation | NA | NA | NA | NA | NA |
Board fees | No | No | NA | NA | NA |
Group benefit package – - All Company associates, including the Named Executive Officers, participate in the Company's group benefit package which includes customary medical and dental benefits, group life, group disability, healthcare and dependent care reimbursement plans, 401k plan, etc. The Named Executive Officers receive no incremental employee benefits that are not offered to other Company associates, other than each Named Executive Officer an enhanced long-term disability policy that provides incremental coverage over the group policy maximums. The following is a summary of the expense the Company incurred during 2014, 2013,2017, 2016, and 20122015, to provide a 401k plan match to our Named Executive Officers and the cost of the enhanced long termlong-term disability policy.policy and long-term care insurance.
| | Turner | | | McCabe | | | Queener | | | Carpenter | | | White | |
2014 | | | | | | | | | | | | | | | |
401k match | | $ | 10,400 | | | $ | 10,400 | | | $ | 10,400 | | | $ | 10,400 | | | $ | 10,200 | |
Long-term disability policy | | | 12,250 | | | | 13,930 | | | | 10,370 | | | | 7,040 | | | | 4,800 | |
Long-term care insurance | | | 1,265 | | | | 1,560 | | | | 1,740 | | | | 1,130 | | | | 2,245 | |
| | | | | | | | | | | | | | | | | | | | |
2013 | | | | | | | | | | | | | | | | | | | | |
401k match | | $ | 10,200 | | | $ | 10,200 | | | $ | 10,200 | | | $ | 10,200 | | | $ | 10,200 | |
Long-term disability policy | | $ | 8,880 | | | $ | 9,340 | | | $ | 7,660 | | | $ | 5,380 | | | $ | 4,510 | |
Long-term care insurance | | $ | 1,050 | | | $ | 1,300 | | | $ | 1,450 | | | $ | 950 | | | $ | 2,250 | |
| | | | | | | | | | | | | | | | | | | | |
2012 | | | | | | | | | | | | | | | | | | | | |
401k match | | $ | 10,000 | | | $ | 10,000 | | | $ | 10,000 | | | $ | 10,000 | | | $ | 10,000 | |
Long-term disability policy | | $ | 7,103 | | | $ | 8,193 | | | $ | 4,527 | | | $ | 4,091 | | | $ | 2,310 | |
| | | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
| Turner | McCabe | Queener | Carpenter | White |
2017 | | | | | |
401k match | $ | 10,800 |
| $ | 10,800 |
| $ | 10,800 |
| $ | 10,800 |
| $ | 10,800 |
|
Long-term disability policy | 12,794 |
| 11,672 |
| 12,679 |
| 9,230 |
| 6,186 |
|
Life insurance | 3,563 |
| 6,858 |
| 3,563 |
| 2,322 |
| 6,858 |
|
| | | | | |
2016 | | | | | |
401k match | $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
|
Long-term disability policy | 13,578 |
| 12,456 |
| 12,053 |
| 8,710 |
| 5,806 |
|
Long-term care insurance | 1,583 |
| 1,951 |
| 2,178 |
| 1,413 |
| 2,245 |
|
Life insurance | 3,740 |
| 5,310 |
| 1,067 |
| — |
| — |
|
| | | | | |
2015 | | | | | |
401k match | $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
| $ | 10,600 |
|
Long-term disability policy | 13,034 |
| 14,712 |
| 11,174 |
| 10,600 |
| 5,285 |
|
Long-term care insurance | 1,264 |
| 1,559 |
| 1,740 |
| 1,129 |
| 2,245 |
|
Paid time off – - Each Named Executive Officer receives an allotment of 30 days for paid time off each year (excluding holidays). The Company does not provide sick leave for any associate, including the Named Executive Officers. Additionally, associates, including the Named Executive Officers, are not permitted to carryover unused paid time off into a subsequent fiscal year.
Other Executive perquisites –- The Company provided the following perquisites to the Named Executive Officers in 2014:2017:
|
| | | | | |
| Turner | McCabe | Queener | Carpenter | White |
Company provided vehicles | No | No | No | No | No |
Automobile allowance | $13,200 / year | $13,200 / year | $13,200 /year | No | No |
Parking allowances | No | No | No | No | No |
Personal tax return fees | $1,900 | $2,500 | $600 | $675 | No |
Health club membership | No | No | No | No | No |
Country club membership | No | No | No | No | No |
Corporate aircraft (a) | $30,950 | $35,000 | $14,622 | $— | No |
| |
(a) | In 2017, the Company (through a wholly owned subsidiary) acquired an aircraft to be used primarily for corporate purposes. The board of directors also authorized personal use of the aircraft by Messrs. Turner, McCabe, Queener and Carpenter. In 2017, each of these executives was permitted to use the corporate aircraft for personal travel in amounts not to exceed $35,000 for Messrs. Turner and McCabe, $15,000 for Mr. Queener and $7,500 for Mr. Carpenter. The Company’s policy is that when considering the amount of executive compensation awarded for personal aircraft use the Company will include the average hourly costs of fuel, warranty programs, repairs and maintenance, landing and parking fees, crew expenses, and supplies. Fixed costs that would be incurred in any event to operate the aircraft, such as aircraft purchase costs, aircraft management fees, flight crew salaries and training, and aircraft insurance are not included in the incremental cost. Nor were costs for repositioning the aircraft in 2017, however the Company will assess repositioning costs to the executives in 2018. For executive compensation purposes, for 2017, Mr. Turner’s calculated charges for personal usage were $11,420, Mr. McCabe’s charges were $14,933, Mr. Queener’s charges were $10,022 and Mr. Carpenter’s charges were $0. Any unused charges for personal usage are forfeited by the executive. For tax purposes, income for personal use is imputed based on a multiple of the Standard Industry Fare Level rates. Messrs. Turner, McCabe, Queener and Carpenter are each responsible for any taxes in connection with his personal use of the corporate aircraft and are not reimbursed for these taxes. |
| | Turner | | | McCabe | | | Queener | | | Carpenter | | | White | |
Company provided vehicles | | NA | | | NA | | | NA | | | NA | | | NA | |
Automobile allowance | | $13,200 / year | | | $13,200 / year | | | $13,200 / year | | | No | | | No | |
Parking allowances | | No | | | No | | | No | | | No | | | No | |
Personal tax return fees | | $1,900 | | | $2,500 | | | $600 | | | $675 | | | No | |
Health club membership | | No | | | No | | | No | | | No | | | No | |
Country club membership | | No | | | No | | | No | | | No | | | No | |
Corporate aircraft | | NA | | | NA | | | NA | | | NA | | | NA | |
Grants of Plan-Based Awards in 20142017
The following table provides information about plan-based awards granted to the Named Executive Officers during 2014.2017.
GRANTS OF PLAN-BASED AWARDS IN 20142017
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | Estimated Possible Payouts Under | Estimated Future Payouts Under | | | | |
| | Non-Equity Incentive Plan | Equity Incentive Plan | | | | |
| | Awards (1) | Awards (2) | | | | |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
Name and Principal Position | Grant date | Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Stock Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/share) | Grant Date Fair Value of Stock and Option Awards (3) |
M. Terry Turner | | | | | | | | | | | |
President and Chief | 1/25/2017 | — |
| — |
| — |
| — |
| 27,134 |
| 40,882 |
| — |
| — |
| — |
| $ | 1,545,592 |
|
Executive Officer | NA | — |
| $ | 908,000 |
| $ | 1,135,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | | | | |
Robert A. McCabe, Jr. | | | | | | | | | | | |
Chairman of the | 1/25/2017 | — |
| — |
| — |
| — |
| 25,759 |
| 38,827 |
| — |
| — |
| — |
| $ | 1,467,270 |
|
Board | NA | — |
| $ | 862,000 |
| $ | 1,077,500 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | | | | |
Hugh M. Queener | | | | | | | | | | | |
Chief Administrative | 1/21/2016 | — |
| — |
| — |
| — |
| 7,597 |
| 11,505 |
| — |
| — |
| — |
| $ | 432,736 |
|
Officer | NA | — |
| $ | 337,500 |
| $ | 421,875 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | | | | |
Harold R. Carpenter | | | | | | | | | | | |
Chief Financial | 1/25/2017 | — |
| — |
| — |
| — |
| 7,706 |
| 11,613 |
| — |
| — |
| — |
| $ | 438,945 |
|
Officer | NA | — |
| $ | 337,500 |
| $ | 421,875 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | | | | |
J. Harvey White | | | | | | | | | | | |
Chief Credit Officer | 1/25/2017 | — |
| — |
| — |
| — |
| 4,341 |
| 6,512 |
| — |
| — |
| — |
| $ | 247,270 |
|
| NA | — |
| $ | 197,400 |
| $ | 246,750 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | Estimated Possible Payouts Under | Estimated Future Payouts Under | | | | |
| | Non-Equity Incentive Plan | Equity Incentive Plan | | | | |
| | Awards (1) | Awards (2) | | | | |
(a) | (b) | (c) | | | (d) | | | (e) | (f) | | | (g) | | | (h) | (i) | (j) | (k) | (l) |
Name and Principal Position | Grant date | Threshold | | | Target | | | Maximum | Threshold | | | Target | | | Maximum | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Stock Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/share) | Grant Date Fair Value of Stock and Option Awards (3) |
| | | | | | | | | | | | | | | | | | | |
M. Terry Turner | | | | | | | | | | | | | | | | | | | |
President and Chief | 1/22/2014 | | — | | | | — | | | | — | | — | | | | 21,942 | | | | 38,405 | — | — | — | $ | 757,000 |
Executive Officer | NA | | — | | | $ | 667,000 | | | $ | 834,000 | | — | | | | — | | | | — | — | — | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert A. McCabe, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | |
Chairman of the | 1/11/2013 | | — | | | | — | | | | — | | — | | | | 20,811 | | | | 36,434 | — | — | — | $ | 718,000 |
Board | NA | | — | | | $ | 633,000 | | | $ | 791,000 | | — | | | | — | | | | — | — | — | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Hugh M. Queener | | | | | | | | | | | | | | | | | | | | | | | | | | |
Chief Administrative | 1/11/2013 | | — | | | | — | | | | — | | — | | | | 5,217 | | | | 9,130 | — | — | — | $ | 180,000 |
Officer | NA | | — | | | $ | 245,000 | | | $ | 306,000 | | — | | | | — | | | | — | — | — | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Harold R. Carpenter | 1/11/2013 | | — | | | | — | | | | — | | — | | | | 5,217 | | | | 9,130 | — | — | — | $ | 180,000 |
Chief Financial Officer | NA | | — | | | $ | 245,000 | | | $ | 306,000 | | — | | | | — | | | | — | — | — | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
J. Harvey White | 1/11/2013 | | — | | | | — | | | | — | | — | | | | 5,217 | | | | 9,130 | — | — | — | $ | 180,000 |
Chief Credit Officer | NA | | — | | | $ | 170,000 | | | $ | 213,000 | | — | | | | — | | | | — | — | — | — | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
(1) | This column shows separately the possible payouts to the Named Executive Officers under the 2014 Annual Cash Incentive Plan2017 AIP assuming target and maximum levels of performance. Actual amounts paid in January 20152018 to the Named Executive Officers under the 2014 Annual Incentive Plan2017 AIP are reflected in the Summary Compensation Table above under the column "Non-Equity Incentive Plan Compensation." Pursuant to the terms of the 2017 AIP, the Human Resources and Compensation Committee has the authority to increase or decrease the amount paid to the Named Executive Officer under the plan by up to 10%. The amounts paid to the Named Executive Officers under the 2017 AIP as disclosed in the 2017 Summary Compensation Table above included the full amount of this discretionary upward adjustment. |
| |
(2) | Reflects performance-based restricted stock units. Restricted stock units that are earned are settled in a like number of restricted shares. The number of restricted stockthese performance units that could be earned is determined based on the Company's fully diluted earnings per shareReturn on Average Tangible Assets in 20132017, 2018, and 2019 (exclusive of certain charges such as gains or losses on sales of investment securities, merger related expenses, FHLB debt extinguishment expense, expenses associated with changes in law or GAAP or other unusual items). All restricted, with 33% of the total award earned per year based on the Company's performance so long as the recipient remains employed by the Company for a one-year period following the end of each applicable annual performance period. For each tranche, shares of Common Stock are not expected to be issued to the Named Executive Officers, if any, uponin settlement of the restricted stock units are subject to further vesting restrictions including forfeiture restrictions that lapse in equal 50% increments onuntil February 28, 20182022 and February 28, 2019 (each a "Vesting Date"); provided, that suchthen only if the Named Executive Officer is employed by the Company on the Vesting Datethat date (unless the Named Executive Officer's failure to be employed as of the date is the result of death, retirement or disability in which case the forfeiture restrictions will lapse upon the employee's termination resulting therefrom)therefrom or in the case of retirement the original settlement date) and the ratio of Pinnacle Bank's nonperforming assets to the sum of Pinnacle Bank's loans and other real estate ("Company’s NPA Ratio") in each caseratio as of December 31, of the fiscal year ending immediately prior to each Vesting Date2021 is less than a predetermined NPA Ratioratio established by the Committee.Human Resources and Compensation Committee at the time of grant. |
| |
(3) | Amounts in this column reflect the aggregate grant date fair value of the performance-based restricted stock unit awards granted in 2014.2017 to the Named Executive Officers. To calculate the grant date fair value of the performance-based restricted stock unit awards, the Company multiplied the discounted closing price of the Company's Common Stock on the date of grant by the number of the performance-based restricted stock units that could be settled in restricted sharesearned at target level performance. The grant date fair value of the performance-based restricted stock units was calculated based on the probable outcome of the performance result (i.e., target level of performance) for each of the performance periods excluding the effect estimated for forfeitures. In accordance with the requirements of Accounting Standards Codification Topic 718, a discount for illiquidity was used to estimate the fair value of the units due to the fact that each tranche of the award is subject to a mandatory post-vest holding period that ends on February 28, 2022. |
Outstanding Equity Awards at 20142017 Fiscal Year End
The following table summarizes information with respect to equity award holdings by the Named Executive Officers as of December 31, 2014.2017.
OUTSTANDING EQUITY AWARDS AT 20142017 FISCAL YEAR END
| | Option Awards (1) | | Stock Awards | | |
(a) | | | | | | | | | | | | | | | | | | | |
(a) | | (b) | | | (c) | | | (d) | | | (e) | | (f) | | (g) | | | (h) | | | (i) | | | (j) | | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. Terry Turner | | | 31,171 | | | | — | | | | — | | | $ | 21.51 | | 1/19/2018 | | | 2,046 | | | $ | 80,899 | | | | 148,878 | | | $ | 5,886,636 | | 31,171 |
| — |
| — |
| $ | 21.51 |
| 1/19/2018 |
| 511 |
| $ | 33,879 |
| 197,207 |
| $ | 13,074,824 |
|
| | | 23,412 | | | | — | | | | — | | | $ | 31.25 | | 1/19/2017 | | | — | | | | — | | | | — | | | | — | | | | | | | |
| | | 23,866 | | | | — | | | | — | | | $ | 27.11 | | 3/17/2016 | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert A. McCabe, Jr. | | | 29,612 | | | | — | | | | — | | | $ | 21.51 | | 1/19/2018 | | | 693 | | | $ | 27,401 | | | | 125,389 | | | $ | 4,957,881 | | — |
| — |
| — |
| — |
| — |
| — |
| — |
| 177,115 |
| $ | 11,742,725 |
|
| | | 22,242 | | | | — | | | | — | | | $ | 31.25 | | 1/19/2017 | | | — | | | | — | | | | — | | | | — | | |
| | | 22,673 | | | | — | | | | — | | | $ | 27.11 | | 3/17/2016 | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Hugh M. Queener | | | 21,253 | | | | — | | | | — | | | $ | 21.51 | | 1/19/2018 | | | 1,395 | | | $ | 55,158 | | | | 47,232 | | | $ | 1,867,553 | | — |
| — |
| — |
| — |
| — |
| 349 |
| $ | 23,139 |
| 55,395 |
| $ | 3,672,689 |
|
| | | 11,706 | | | | — | | | | — | | | $ | 31.25 | | 1/19/2017 | | | — | | | | — | | | | — | | | | — | | | | | | | |
| | | 11,933 | | | | — | | | | — | | | $ | 27.11 | | 3/17/2016 | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Harold R. Carpenter | | | 17,711 | | | | — | | | | — | | | $ | 21.51 | | 1/19/2018 | | | 1,162 | | | $ | 45,945 | | | | 48,033 | | | $ | 1,899,225 | | — |
| — |
| — |
| — |
| — |
| 291 |
| $ | 19,293 |
| 56,305 |
| $ | 3,733,022 |
|
| | | 8,780 | | | | — | | | | — | | | $ | 31.25 | | 1/19/2017 | | | — | | | | — | | | | — | | | | — | | | | | | | |
| | | 9,189 | | | | — | | | | — | | | $ | 27.11 | | 3/17/2016 | | | — | | | | — | | | | — | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
J. Harvey White | | | — | | | | — | | | | — | | | | — | | — | | | — | | | | — | | | | 33,373 | | | $ | 1,319,568 | | — |
| — |
| — |
| — |
| — |
| — |
| — |
| 40,970 |
| $ | 2,716,311 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
(1) | All option awards vested in 20% increments annually during the first five years of the 10-year option term. The Company has not issued stock options to an executive officer or any other associate since 2008. |
| |
(2) | The following information details the status asAs of December 31, 2014 of the2017, unvested time-based restricted stock awards totaled 511 shares from Mr. Turner, 349 shares for the Named Executive OfficersMr. Queener and 291 shares for the last five years.Mr. Carpenter. These shares were granted in January of 2008 and vested on January 18, 2018. The HRCCHuman Resources and Compensation Committee ceased using time-based restricted stock awards for executive compensation purposes after the January 2008 award, and subsequent awards (with the exception of salary stock units) have been 100% performance-based. |
Grant Date | Turner | McCabe | Queener | Carpenter | White | Vesting criteria |
Unvested Stock Awards ��� Time Vesting Criteria (number of awards) |
1/19/08 award
-Shares vested and restrictions lapsed
-Shares forfeited
Unvested shares
| 5,114
3,068
—
2,046
| 4,858
4,165
—
693
| 3,487
2,092
—
1,395
| 2,906
1,744
—
1,162
| —
—
—
—
| Vests pro rata over ten years with the exception of Mr. McCabe which vests pro rata over seven years. |
| |
(3) | Market value is determined by multiplying the closing market price of the Company's common stock ($39.54)66.30) on December 31, 20142017 by the number of shares. With respect to unvested performance-based equity awards, represents the market value as of December 31, 20142017 of the number of shares issuable upon achievement of the thresholdmaximum performance goal. |
| |
(4) | The following information details the vesting status of the unvested performance-vestingperformance-based vesting restricted stock awards and unvested performance-vestingperformance-based vesting restricted stock unit awards as of December 31, 20142017 for the Named Executive OfficersOfficers: |
|
| |
Grant Date and Unvested Awards | Vesting criteria |
1/20/09 Award | The remaining unvested shares vest 50% per year so long as the Company was profitable for the last five years:fiscal year ending immediately preceding the vesting date. Of the remaining unvested shares, the restrictions on one half of these shares lapsed on January 20, 2018, given fiscal year 2017 was profitable and met the vesting criteria. The restrictions on the remaining 50% of the unvested shares are scheduled to lapse on January 20, 2019, provided fiscal year 2018 is profitable. |
Turner 3,618 |
McCabe - |
Queener 1,929 |
Carpenter 1,581 |
White - |
| |
8/16/11 Award | The restrictions on the remaining unvested shares are scheduled to lapse in 25% increments beginning on August 16, 2018 and each year thereafter for the next four years, so long as the Company is profitable for the fiscal year ending immediately preceding the vesting date. For 25% of the remaining unvested shares, the restrictions on these shares will lapse on August 16, 2018, given fiscal year 2017 was profitable and met the vesting criteria. |
Turner 6,878 |
McCabe - |
Queener 4,171 |
Carpenter 5,008 |
White - |
|
1/19/12 and 6/21/12 Awards | The restrictions associated with these shares began lapsing on February 28, 2014 and continued to lapse on a pro rata basis for the next four years thereafter as Pinnacle Bank achieved certain soundness thresholds as of the end of the fiscal year ending immediately prior to the annual vesting date. Pinnacle Bank achieved the applicable soundness threshold of a classified asset ratio of less than 35% as of December 31, 2017. As a result, all restrictions on the unvested shares as of December 31, 2017 will lapse concurrently with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. |
Turner 8,997 |
McCabe 8,482 |
Queener 2,739 |
Carpenter 3,052 |
White 2,569 |
| |
1/11/13 Award | The restrictions associated with these shares lapsed beginning on February 28, 2015 and on a pro rata basis for the following four years provided Pinnacle Bank achieved certain soundness thresholds as of the end of the fiscal year ending immediately prior to the annual vesting date. Of the remaining unvested shares, the restrictions on one half of these shares will lapse concurrently with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as Pinnacle Bank achieved the applicable soundness threshold of a classified asset ratio of less than 35% as of December 31, 2017. The restrictions on the remaining shares are scheduled to lapse on or about February 28, 2019 provided Pinnacle Bank achieves the required soundness threshold as of December 31, 2018. |
Turner 19,299 |
McCabe 18,246 |
Queener 5,594 |
Carpenter 5,594 |
White 5,594 |
| |
1/22/14 Award | The restrictions on these shares will lapse after the date the Company files its Annual Report on Form 10-K for the fiscal years ending December 31, 2017 and 2018 in 50% increments based on Pinnacle Bank's attainment of certain soundness targets as of December 31, 2017 and December 31, 2018, respectively. The soundness target as of December 31, 2017 was an NPA ratio of not more than 1.50%, which was achieved, thus restrictions on 50% of the unvested shares will lapse concurrently with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The restrictions on the remaining shares are scheduled to lapse on or about February 28, 2019 provided Pinnacle Bank achieves the required soundness threshold as of December 31, 2018. |
Turner 38,405 |
McCabe 36,434 |
Queener 9,130 |
Carpenter 9,130 |
White 9,130 |
| |
1/23/15 Award | The restrictions on these restricted shares will lapse as soon as practicable after filing of the Company's Annual Report on Form 10-K for the fiscal year ending December 31, 2019 upon Pinnacle Bank's attainment of a previously approved soundness target tied to Pinnacle Bank’s NPA ratio as of December 31, 2019 (and, in the case of one-third of the shares, assuming the executive remains employed by the Company until December 31, 2018). |
Turner 38,015 |
McCabe 36,058 |
Queener 9,259 |
Carpenter 9,259 |
White 9,259 |
| |
1/21/16 Award | Similar to the 2015 awards, represents performance-based restricted stock units granted on January 21, 2016 that may be earned at maximum level of performance. In order for the performance units to be earned, the Company is required to achieve certain ROATA thresholds in each year of the three year period ended December 31, 2018 (each year a performance period, thus 33% per year) and the NEO must remain an employee for one year after the achievement of the ROATA threshold (each year a service period). Moreover, before the units may be settled in shares of Common Stock, the Company must achieve a previously approved soundness target tied to Pinnacle Bank’s NPA ratio as of December 31, 2020. If this soundness ratio is achieved, the shares issued in settlement of the units would be issued following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2020. |
Turner 41,113 |
McCabe 39,068 |
Queener 11,068 |
Carpenter 11,068 |
White 7,906 |
| |
Grant Date | Turner | McCabe | Queener | Carpenter | White | Vesting criteria |
Unvested Stock Awards – Performance Vesting Criteria (number of awards) |
1/20/09 award -Shares vested and restrictions lapsed -Shares forfeited Unvested shares | 18,090 3,618 5,427 9,045 | 17,266 8,635 5,756 6,530 | 9,646 2,894 1,929 4,823 | 7,905 2,372 1,581 3,952 | — — — — | Vested 10% per year (or in the case of Mr. McCabe 16.66% per year) so long as the Company was profitable for the fiscal year ending immediately preceding the vesting date. Because the Company was not profitable for 2009 or 2010, the shares that would have vested based on the Company's performance for those years were forfeited. |
8/16/11 award -Shares vested and restrictions lapsed -Shares forfeited Unvested shares | 27,515 10,320 — 17,195 | 26,122 19,592 — 6,530 | 12,517 4,173 — 8,344 | 12,517 3,753 — 8,764 | 10,120 10,120 — — | Vests 20% on August 16, 2013 (the second anniversary date of the grant) and 10% per year thereafter (or in the case of Mr. McCabe 40% on August 16, 2013 and 20% over the next three years or in the case of Mr. White 67% on August 16, 2013 and 33% on August 16, 2014), so long as the Company was profitable for the fiscal year ending preceding the vesting date. |
1/19/12 and 6/21/12 awards -Shares vested and restrictions lapsed -Shares forfeited Unvested shares | 44,984 8,997 — 35,987 | 42,421 8,485 — 33,936 | 13,690 2,738 — 10,952 | 15,255 3,051 — 12,204 | 12,824 2,564 — 10,260 | The amounts represent an 83.5% conversion rate of two previously issued restricted share unit awards granted on January 19, 2012 and June 21, 2012. The restricted share unit awards vested and converted into restricted shares upon attainment of performance criteria for the period ended December 31, 2012. The conversion rate was based on the Company's fully diluted earnings per share of $1.15 for fiscal year 2012 which fell within a predetermined range of $1.13 to $1.26 per fully diluted share. The Committee had established these conversion rate ranges in January of 2012. As such, the restrictions associated with 20% of these shares began lapsing on February 28, 2014 and will lapse on a pro rata basis for the next four years thereafter provided the Company achieves certain soundness thresholds in each fiscal year prior to the annual vesting date. |
1/11/13 awards -Shares vested and restrictions lapsed -Shares forfeited Unvested shares | 48,246 — — 48,246 | 45,614 — — 45,614 | 13,983 — — 13,983 | 13,983 — — 13,983 | 13,983 — — 13,983 | The amounts represent a 100% conversion rate of restricted share unit awards granted on January 11, 2013. The restricted share unit awards vested and converted into restricted shares upon attainment of performance criteria for the period ended December 31, 2013. As such, the restrictions associated with 20% of these shares will lapse beginning on February 28, 2015 and pro rata for the next four years thereafter provided the Company achieves certain soundness thresholds in each fiscal year prior to the annual vesting date. |
1/22/14 awards -Shares vested and restrictions lapsed -Shares forfeited Unvested shares | 38,405 — — 38,405 | 36,434 — — 36,434 | 9,130 — — 9,130 | 9,130 — — 9,130 | 9,130 — — 9,130 | The amounts represent a 100% conversion rate of restricted share unit awards granted on January 22, 2014. One-third of these restricted share units will be settled with the issuance of restricted shares upon the filing of Pinnacle Financial's 2014 Annual Report on Form 10-K. The remaining restricted share units are eligible for conversion to restricted share awards based on the achievement of certain predetermined levels of earnings per share for each of the fiscal years ended December 31, 2015 and 2016, respectively. Upon conversion to restricted shares, the restrictions on these shares will lapse in 2018 and 2019 in 50% increments based on the attainment of certain soundness targets in fiscal 2017 and 2018, respectively. |
Total Unvested Stock and Stock Unit Awards | 148,878 | 125,389 | 47,232 | 48,033 | 33,373 | |
|
| |
Grant Date and Unvested Awards | Vesting criteria |
1/25/17 Award | Similar to the 2016 and 2015 awards, represents performance-based restricted stock units granted on January 25, 2017 that may be earned at maximum level of performance. In order for the performance units to be earned, the Company is required to achieve certain ROATA thresholds in each year of the three year period ended December 31, 2019 (each year a performance period, thus 33% per year) and the NEO must remain an employee for one year after the achievement of the ROATA threshold (each year a service period). Moreover, before the units may be settled in shares of Common Stock, the Company must achieve a previously approved soundness target tied to Pinnacle Bank’s NPA ratio as of December 31, 2021. If this soundness ratio is achieved, the shares issued in settlement of the units would be issued following the filing of the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2021. |
Turner 40,882 |
McCabe 38,827 |
Queener 11,505 |
Carpenter 11,613 |
White 6,512 |
The following table summarizes information for the Named Executive Officers concerning exercise of stock options and vesting of restricted stock units and performance-based vesting restricted stock units during the fiscal year ended December 31, 2017, including (i) the number of shares of stock underlying options exercised in fiscal 2017; (ii) the aggregate dollar value realized upon such exercises of stock options; (iii) the number of shares of stock received from the vesting of restricted stock units during fiscal 2017 and performance-based restricted stock units earned based on fiscal 2017 performance; and (iv) the aggregate dollar value realized upon the vesting of such restricted stock units and performance-based restricted stock units. For additional information see EXECUTIVE COMPENSATION-Compensation Discussion and Analysis-2017 Performance Plan Goals and Results-Long Term Incentive (LTI) Awards.
OPTION EXERCISES AND STOCK VESTED
| (a) | | | | | | |
| | Option Awards | | Stock Awards | | Option Awards | Stock Awards |
(a) | | (b) | | | (c) | | (d) | | | (e) | | (b) | (c) | (d) | (e) |
Name | | Number of Shares Acquired On Exercise (#) | | | Value Realized on Exercise ($) (2) | | Number of Shares Acquired On Vesting (#)(1) | | | Value Realized on Vesting ($)(2) | | Number of Shares Acquired On Exercise (#) | Value Realized on Exercise ($) (1) | Number of Shares Acquired On Vesting (#)(2) | Value Realized on Vesting ($)(1) |
M. Terry Turner | | 37,251 | | | $ | 634,698 | | 20,871 | | | $ | 729,137 | | 23,412 |
| 796,008 |
| 14,477 | 991,418 |
| | | | | | | | | | | | | | |
Robert A. McCabe, Jr. | | 19,715 | | | $ | 236,974 | | 24,392 | | | $ | 847,819 | | — |
| — |
| 10,220 | 721,021 |
| | | | | | | | | | | | | | |
Hugh M. Queener | | 29,156 | | | $ | 491,878 | | 8,224 | | | $ | 285,359 | | 21,253 |
| 969,987 |
| 5,914 | 401,894 |
| | | | | | | | | | | | | | |
Harold R. Carpenter | | 10,900 | | | $ | 178,164 | | 8,167 | | | $ | 284,418 | | 17,711 |
| 813,578 |
| 5,884 | 401,809 |
| | | | | | | | | | | | | | |
J. Harvey White | | — | | | $ | — | | 5,513 | | | $ | 195,395 | | — |
| — |
| 3,894 | 274,722 |
| | | | | | | | | | | | | | |
(1) | Includes restricted share awards issued prior to 2014 but which vested during 2014. Excludes restricted share units issued in 2013 which were settled for restricted shares in 2014 that continue to be subject to forfeiture. |
(2)(1) | "Value Realized on Exercise" represents the difference between the marketclosing sales price of the underlying securitiesCompany's common stock at exercise and the exercise or base price of the options. "Value Realized on Vesting" is determined by multiplying the number of shares of stock or units by the market valueclosing sales price of the underlying sharesCompany's common stock on the vesting date. |
| |
(2) | Includes restricted share awards (including restricted shares that were issued in settlement of performance-based vesting restricted share units) issued prior to 2017 but which vested during 2017. Excludes performance-based restricted share units issued in 2013-2015 which were settled in restricted shares in 2014-2016 that continue to be subject to forfeiture based on Pinnacle Bank attaining certain soundness thresholds at the end of future fiscal years and performance-based restricted share units issued in 2015-2017 for which the one-year service period and/or the soundness threshold related to such award has not yet been achieved or measured. |
Employment and Change of Control Agreements
The employment agreements that the Company has entered into with each of Messrs. Turner, McCabe, Queener and Carpenter are described in more detail below. These agreements automatically renew each year on January 1 unless the HRCCHuman Resources and Compensation Committee or the executive gives notice of non-renewal prior to November 30 of the preceding year, in which case the agreement terminates thirty days later.
The Company entered into a three-year employment contract with M. Terry Turner, President and Chief Executive Officer, on March 1, 2000; Robert A. McCabe, Jr., Chairman of the Board on August 1, 2000; Hugh M. Queener, Chief Administrative Officer, on August 1, 2000; and Harold R. Carpenter, Chief Financial Officer, on March 14, 2006. All four outstandingEach of these employment agreements werewas amended on January 1, 2008 to eliminate the automatic three year renewable clause in the agreement as well as incorporate the impact of IRS Code Section 409A into the agreement and were further amended in 2014 to provide each Named Executive Officer with six weeks of paid vacation and to make certain other immaterial changes. There were no other significant changes to the terms and conditions of the original agreement as a result of these amendments. The amended agreement automatically renews annually on January 1, unless any of the parties to the agreement gives notice of intent not to renew the agreement prior to November 30 of the preceding year in which case the agreement terminates thirty days later.
The employment agreements described above for Messrs. Turner, McCabe, Queener and Carpenter require the Company to make certain severance payments to the executives in the event that the Company terminates the employment of the executive without "cause" or the executive terminates his employment for "cause". The employment agreements also require the Company to make certain payments to the executives in the event that the executive becomes disabled. Under the terms of the employment agreements, if the Company terminates the executive without cause, it must pay the executive severance equal to three year's base salary. If the executive terminates his employment with the Company for cause, the Company must pay the executive a maximum of up to twelve months of base salary.
The employment agreements also contain provisions that if the Company terminates the executive without "cause" or the executive terminates his employment with the Company for "cause" within a year following a "change of control", the executive shall be entitled to a lump sum severance payment equal to three times the executive's then current base salary and target bonus, plus certain retirement benefits plus tax payments. Generally, this "change of control" provision is typically referred to as a "double trigger" such that (a) a change of control has to occur as defined in the employment agreements and (b) the executive has to terminate his employment for "cause", again as defined in the employment agreement, as follows:
(a) | A "change of control" generally means the acquisition by a person or group of 40% or more of the voting securities of the Company or the Bank; a change in the majority of the Board over a twelve-month period (unless the new directors were approved by a two-thirds majority of prior directors); a merger, consolidation or reorganization in which the Company's shareholders before the merger own 50% or less of the voting power after the merger; or the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party. |
(b) | Termination by the executive for "cause" generally means that immediately following the change of control, the executive no longer reports to the same supervisor he reported to prior to the change of control, a change in supervisory authority has occurred such that the associates that reported to the executive prior to the change of control no longer report to the executive, a material modification in the executive's job title or scope of responsibility has occurred, a change in office location of more than 25 miles from the executive's current office location or a material change in salary, bonus opportunity or other benefit has occurred. |
Also and in the event of a change of control, the executive will receive three years of Company-provided health plan benefits subsequent to his termination. In addition, the executive will be indemnifiedvoluntary termination for “cause” or involuntary termination by the Company without “cause,” each as defined in the employment agreements.
Generally, this "change of control" provision is typically referred to as a "double trigger" because (a) a change of control has to occur and (b) the executive has to terminate his employment for any excise tax due under Section 4999"cause" or be terminated by the Company without “cause.” As defined in the employment agreements, a "change of control" generally means the acquisition by a person or group of 40% or more of the Codevoting securities of an amount sufficient to place the executiveCompany or the Bank; a change in the same after-tax position asmajority of the executive would have been had no excise tax been imposed uponBoard over a twelve-month period (unless the new directors were approved by a two-thirds majority of prior directors); a merger, consolidation or incurredreorganization in which the Company's shareholders before the merger own 50% or paidless of the voting power after the merger; or the sale, transfer or assignment of all or substantially all of the assets of the Company and its subsidiaries to any third party.
For purposes of Messrs. Turner's, McCabe's, Queener's and Carpenter's employment agreements, the term "cause" for purposes of determining whether the Company or Pinnacle Bank has terminated the individual in a manner that does not require payment of the change of control or severance benefits means a material breach by the executive. The executive is also entitled to receive assistance from a qualified accounting firmindividual of his choice notemployment agreement that remains uncured after the expiration of thirty (30) days following delivery of written notice to exceed $2,500 per yearthe individual by the Company or Pinnacle Bank; the individual's arrest for, three years.charge in relation to (by criminal information, indictment or otherwise), or conviction of a crime involving breach of trust or moral turpitude; conduct by the individual that amounts to gross and willful insubordination or inattention to his duties and responsibilities under the employment agreement; or conduct by the individual that results in removal as an officer or executive of the Company or Pinnacle Bank pursuant to a written order by any regulatory agency with authority or jurisdiction over the Company or Pinnacle Bank.
For purposes of Messrs. Turner's, McCabe's, Queener's and Carpenter's employment agreements, the term "cause" for purposes of determining whether the individual has the ability to voluntarily terminate his employment and receive payment of the change of control or severance benefits means a material modification to the individual's job title(s) or position(s) of responsibility or the scope of his authority or responsibilities under the employment agreement without his written consent; an adverse change in supervision, including a requirement that the individual report to a person or entity different than the person or entity to whom he reported previously, which change in supervision is effected without the individual's written consent; an adverse change in overall supervisory authority which change in supervisory authority is effected without the individual's written consent; any change in the individual's office location such that the individual is required to report regularly to a location that is beyond a 25-mile radius from his office location at the time the employment agreement was entered into, which change in office location is effected without the individual's written consent; any material reduction in salary, bonus opportunity or other benefits provided for in the employment agreement from the level in effect immediately prior to such reduction; and any giving of notice of non-renewal of the employment agreement by the Human Resources Committee of the Board of Directors of the Company.
In September 2012, the Company entered into a change of control agreement with Mr. White providing Mr. White with certain benefits in the event that his employment is terminated within twelve months following a change of control (as defined in the agreement).
This agreement automatically renews each year on January 1 unless the Committee or Mr. White gives the other notice of intent to terminate the agreement prior to November 30 of the preceding year, in which case the agreement terminates thirty days later. Notwithstanding the foregoing, the change of control agreement may be terminated earlier in the event that prior to the earlier of a change of control or the Company entering into an agreement providing for a change of control, Mr. White shall cease to serve as the Chief Credit Officer/Chairman Knoxville, or the HRCCHuman Resources and Compensation Committee or the Company's Chief Executive Officer shall determine, in their sole discretion, that it is no longer appropriate to provide Mr. White with post-change of control benefits. This agreement was amended on November 20, 2012 to provide that the Company, or any successor to the Company upon a change of control, shall continue to make available to Mr. White following a change of control a life insurance benefit equal to two times his annual base salary not to exceed $500,000 at Mr. White's sole cost and expense for three years following the change of control; provided, that, if the Company's group life policy in effect as of the date of the amendment has then expired or terminated, the Company's, and any successor's, obligation to make the benefit available shall be only an obligation to use commercially reasonable efforts to make the benefit available.
Pursuant to the terms of the Mr. White's change of control agreement, as amended, if, within twelve (12) months following a "change of control" (as defined below), the Company or the Bank terminates Mr. White's employment without "cause" (as defined below) or Mr. White terminates his employment for "cause" (as defined below), the Company will be obligated to pay Mr. White a payment equal to two (2) times his then current base salary and target bonus amount on the last day of the month following the date of his termination. Furthermore, Mr. White and his immediate family will be entitled to continue to receive the health insurance plan benefits then in effect for employees of the Company and/or the Bank for a period of three years, including the Company-funded portion of the plan. In addition, Mr. White will also receive tax assistance, advice and filing preparation services from a qualified accounting firm of his choice for a period of three years at a cost to the Company and/or the Bank not to exceed $2,500.
For purposes of Mr. White's change of control agreement a "change of control" has the same definition as that term is defined in the employment agreements for Messrs. Turner, McCabe, Queener and Carpenter. For purposes of Mr. White's change of control agreement , "cause" for purposes of determining whether Mr. White has the ability to voluntarily terminate his employment and receive payment of the change of control benefits under the agreement, generally means that immediately following the change of control, a material modification in Mr. White's job title or scope of responsibility has occurred without his consent; Mr. White, without his consent, no longer reports directly to the individual serving as the chief executive officer of the publicly-held parent company of thePinnacle Bank; an adverse change in Mr. White's overall supervisory authority occurs without his consent; a change in Mr. White's office location of more than 25 miles from his office location immediately following the change of control is effected without his consent; a material change in Mr. White's salary, bonus opportunity or other benefits has occurred; or the change of control is not renewed prior to the expiration of the then current term.
For purposes of Mr. White's change of control agreement, "cause", for purposes of determining whether the Company or thePinnacle Bank has terminated Mr. White's employment in a manner that does not require the payment to Mr. White of the change of control benefits under the agreement means a material breach by Mr. White of the terms of the agreement that remains uncured after the expiration of thirty (30) days following delivery of written notice to Mr. White by the Company or thePinnacle Bank; conduct by Mr. White that amounts to fraud, dishonesty or willful misconduct in the performance of his duties and responsibilities; failure by Mr. White to perform his duties and responsibilities as an employee which remains uncured after the expiration of thirty (30) days following delivery of written notice to Mr. White by the Company or thePinnacle Bank; Mr. White's arrest for, his charge in relation to or conviction of a crime involving breach of trust or moral turpitude; conduct by Mr. White that amounts to gross and willful insubordination or inattention to his duties and responsibilities as an employee of the Company or the Bank; or conduct by Mr. White that results in his removal as an officer or executive of the Company or thePinnacle Bank pursuant to a written order by any regulatory agency with authority or jurisdiction over the Company or thePinnacle Bank.
Equity Awards
Furthermore, in the event of a change of control, any unvested restricted share awards (including restricted shares issued in settlement of performanceperformance-based vesting restricted share units), pursuant to the restricted share agreements with the executives noted above, would immediately vest. For the performance-based vesting restricted share units issued in 2014,2017. 2016 and 2015, the amount that would vest upon a change in control would be determined by the HRCCHuman Resources and Compensation Committee and would equal the greater of the target level payout and the amount that would have been expected to vest based on the Company's performance through the date the HRCCHuman Resources and Compensation Committee makes is determination. For the performanceperformance-based vesting restricted share units issued prior to 2014,2015, upon occurrence of a change in control as of December 31, 2014,2017, all of the restrictions applicable to the restricted shares issued in settlement of these performance units would vest.
Page - 55
Amounts Payable to Named Executive Officers Following Certain Termination Scenarios
The following is a tabular presentation of the amounts that would be owed the Named Executive Officers pursuant to the various events detailed above assuming the event occurred on December 31, 2014:2017.
| Employee disability (3) | | | Employee death (3) | | | Pinnacle terminates employment without cause | | | Employee terminates employment for cause | | | Pinnacle terminates Employee for cause or Employee terminates employment without cause or Employee retires | | | Pinnacle terminates Employee without cause or Employee terminates for cause, in each case within twelve months of a change of control | |
M.Terry Turner | | | | | | | | | | | | | | | | | | | | | | | |
Base salary | $ | 784,700 | | | $ | - | | | $ | 784,700 | | | $ | 784,700 | | | $ | - | | | $ | 784,700 | |
Targeted cash incentive payment | | - | | | | - | | | | - | | | | - | | | | - | | | | 666,995 | |
Total | | 784,700 | | | | - | | | | 784,700 | | | | 784,700 | | | | - | | | | 1,451,695 | |
Multiplier (in terms of years) | | x .5 | | | | x 0 | | | | x 3 | | | | x 1 | | | | x 0 | | | | x 3 | |
Aggregate cash payment | | 392,350 | | | | - | | | | 2,354,100 | | | | 784,700 | | | | - | | | | 4,355,085 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Health insurance - $800 per month | | - | | | | - | | | | 9,600 | | | | 2,400 | | | | - | | | | 28,800 | |
Tax assistance | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,500 | |
Intrinsic value of unvested stock options that immediately vest (1) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Value of unearned restricted shares and restricted stock units that immediately vest | | 5,967,535 | | | | 5,967,535 | | | | - | | | | - | | | | - | | | | 5,967,535 | |
Payment for excise tax and gross up (2) | | - | | | | - | | | | - | | | | - | | | | - | | | | 4,111,871 | |
| $ | 6,359,885 | | | $ | 5,967,535 | | | $ | 2,363,700 | | | $ | 787,100 | | | $ | - | | | $ | 14,470,791 | |
Robert A. McCabe, Jr. | | | | | | | | | | | | | | | | | | | | | | | |
Base salary | $ | 744,400 | | | $ | - | | | $ | 744,400 | | | $ | 744,400 | | | $ | - | | | $ | 744,400 | |
Targeted cash incentive payment | | - | | | | - | | | | - | | | | - | | | | - | | | | 632,740 | |
Total | | 744,400 | | | | - | | | | 744,400 | | | | 744,400 | | | | - | | | | 1,377,140 | |
Multiplier (in terms of years) | | x .5 | | | | x 0 | | | | x 3 | | | | x 1 | | | | x 0 | | | | x 3 | |
Aggregate cash payment | | 372,200 | | | | - | | | | 2,233,200 | | | | 744,400 | | | | - | | | | 4,131,420 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Health insurance - $800 per month | | - | | | | - | | | | 9,600 | | | | 2,400 | | | | - | | | | 28,800 | |
Tax assistance | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,500 | |
Intrinsic value of unvested stock options that immediately vest (1) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Value of unearned restricted shares and restricted stock units that immediately vest | | 4,985,282 | | | | 4,985,282 | | | | - | | | | - | | | | - | | | | 4,985,282 | |
Payment for excise tax and gross up (2) | | - | | | | - | | | | - | | | | - | | | | - | | | | 3,577,972 | |
| $ | 5,357,482 | | | $ | 4,985,282 | | | $ | 2,242,800 | | | $ | 746,800 | | | $ | - | | | $ | 12,730,974 | |
Hugh M. Queener | | | | | | | | | | | | | | | | | | | | | | | |
Base salary | $ | 376,700 | | | $ | - | | | $ | 376,700 | | | $ | 376,700 | | | $ | - | | | $ | 376,700 | |
Targeted cash incentive payment | | - | | | | - | | | | - | | | | - | | | | - | | | | 244,855 | |
Total | | 376,700 | | | | - | | | | 376,700 | | | | 376,700 | | | | - | | | | 621,555 | |
Multiplier (in terms of years) | | x .5 | | | | x 0 | | | | x 3 | | | | x 1 | | | | x 0 | | | | x 3 | |
Aggregate cash payment | | 188,350 | | | | - | | | | 1,130,100 | | | | 376,700 | | | | - | | | | 1,864,665 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Health insurance - $800 per month | | - | | | | - | | | | 9,600 | | | | 2,400 | | | | - | | | | 28,800 | |
Tax assistance | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,500 | |
Intrinsic value of unvested stock options that immediately vest (1) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Value of unearned restricted shares and restricted stock units that immediately vest | | 1,922,712 | | | | 1,922,712 | | | | - | | | | - | | | | - | | | | 1,922,712 | |
Payment for excise tax and gross up (2) | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,477,073 | |
| $ | 2,111,062 | | | $ | 1,922,712 | | | $ | 1,139,700 | | | $ | 379,100 | | | $ | - | | | $ | 5,300,750 | |
|
| | | | | | | | | | | | | | | | | | | | | |
| Employee disability (1) | Employee death(1) | Pinnacle terminates employment without cause | Employee terminates employment for cause | Pinnacle terminates employee for cause or Employee terminates employment without cause (2) | Employee retires(3) | Pinnacle terminates Employee without cause or Employee terminates for cause within twelve months of a change of control(4) |
| | | | | | | |
M. Terry Turner | | | | | | | |
Base Salary | $ | 908,000 |
| $ | — |
| $ | 908,000 |
| $ | 908,000 |
| $ | — |
| $ | — |
| $ | 908,000 |
|
Cash incentive payment | — |
| — |
| — |
| — |
| — |
| — |
| 952,263 |
|
Total | $ | 908,000 |
| $ | — |
| $ | 908,000 |
| $ | 908,000 |
| $ | — |
| $ | — |
| $ | 1,860,263 |
|
Multiplier (in terms of years) | x .5 |
| x - |
| x 3 |
| x 1 |
| x - |
| — |
| x 3 |
|
Aggregate cash payment | $ | 454,000 |
| $ | — |
| $ | 2,274,000 |
| $ | 908,000 |
| $ | — |
| $ | — |
| $ | 5,580,788 |
|
| | | | | | | |
Health insurance | — |
| — |
| 9,600 |
| 2,400 |
| — |
| — |
| 28,800 |
|
Tax assistance | — |
| — |
| — |
| — |
| — |
| — |
| 7,500 |
|
Value of unvested or unearned restricted shares and performance units that immediately vest | 13,108,703 |
| 13,108,703 |
| — |
| — |
| 2,588,882 |
| — |
| 13,108,703 |
|
Payment for excise tax and gross up (5) | — |
| — |
| — |
| — |
| — |
| — |
| 8,043,379 |
|
| $ | 13,562,703 |
| $ | 13,108,703 |
| $ | 2,733,600 |
| $ | 910,400 |
| $ | 2,588,882 |
| $ | — |
| $ | 26,769,171 |
|
| | | | | | | |
Robert A. McCabe, Jr. | | | | | | | |
Base Salary | $ | 862,000 |
| $ | — |
| $ | 862,000 |
| $ | 862,000 |
| $ | — |
| $ | — |
| $ | 862,000 |
|
Cash incentive payment | — |
| — |
| — |
| — |
| — |
| — |
| 904,892 |
|
Total | $ | 862,000 |
| $ | — |
| $ | 862,000 |
| $ | 862,000 |
| $ | — |
| $ | — |
| $ | 1,766,892 |
|
Multiplier (in terms of years) | x .5 |
| x - |
| x 3 |
| x 1 |
| x - |
| — |
| x 3 |
|
Aggregate cash payment | $ | 431,000 |
| $ | — |
| $ | 2,586,000 |
| 862,00 |
| $ | — |
| $ | — |
| $ | 5,300,676 |
|
| | | | | | | |
Health insurance | — |
| — |
| 9,600 |
| 2,400 |
| — |
| — |
| 28,800 |
|
Tax assistance | — |
| — |
| — |
| — |
| — |
| — |
| 7,500 |
|
Value of unvested or unearned restricted shares and performance units that immediately vest | 11,742,725 |
| 11,742,725 |
| — |
| — |
| 2,457,144 |
| 4,975,550 |
| 11,742,725 |
|
Payment for excise tax and gross up (5) | — |
| — |
| — |
| — |
| — |
| — |
| 6,010,128 |
|
| $ | 12,173,725 |
| $ | 11,742,725 |
| $ | 2,595,600 |
| $ | 864,400 |
| $ | 2,457,144 |
| $ | 4,975,550 |
| $ | 23,089,828 |
|
| | | | | | | |
Hugh M. Queener | | | | | | | |
Base Salary | $ | 450,000 |
| $ | — |
| $ | 450,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 450,000 |
|
Cash incentive payment | — |
| — |
| — |
| — |
| — |
| — |
| 354,377 |
|
Total | $ | 450,000 |
| $ | — |
| $ | 450,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 804,377 |
|
Multiplier (in terms of years) | x .5 |
| x - |
| x 3 |
| x 1 |
| x - |
| — |
| x 3 |
|
Aggregate cash payment | $ | 225,000 |
| $ | — |
| $ | 1,350,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 2,413,131 |
|
| | | | | | | |
Health insurance | — |
| — |
| 9,600 |
| 2,400 |
| — |
| — |
| 28,800 |
|
Tax assistance | — |
| — |
| — |
| — |
| — |
| — |
| 7,500 |
|
Value of unvested or unearned restricted shares and performance units that immediately vest | 3,695,827 |
| 3,695,827 |
| — |
| — |
| 653,784 |
| — |
| 3,695,827 |
|
Payment for excise tax and gross up (5) | — |
| — |
| — |
| — |
| — |
| — |
| 2,249,573 |
|
| $ | 3,920,827 |
| $ | 3,695,827 |
| $ | 1,359,600 |
| $ | 452,400 |
| $ | 653,784 |
| $ | — |
| $ | 8,394,831 |
|
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Pinnacle Financial Partners, Inc.
|
| | | | | | | | | | | | | | | | | | | | | |
| Employee disability (1) | Employee death(1) | Pinnacle terminates employment without cause | Employee terminates employment for cause | Pinnacle terminates employee for cause or Employee terminates employment without cause (2) | Employee retires(3) | Pinnacle terminates Employee without cause or Employee terminates for cause within twelve months of a change of control(4) |
| | | | | | | |
Harold R. Carpenter | | | | | | | |
Base Salary | $ | 450,000 |
| $ | — |
| $ | 450,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 450,000 |
|
Cash incentive payment | — |
| — |
| — |
| — |
| — |
| — |
| 354,377 |
|
Total | $ | 450,000 |
| $ | — |
| $ | 450,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 804,377 |
|
Multiplier (in terms of years) | x .5 |
| x - |
| x 3 |
| x 1 |
| x - |
| — |
| x 3 |
|
Aggregate cash payment | $ | 225,000 |
| $ | — |
| $ | 1,350,000 |
| $ | 450,000 |
| $ | — |
| $ | — |
| $ | 2,413,131 |
|
| | | | | | | |
Health insurance | — |
| — |
| 9,600 |
| 2,400 |
| — |
| — |
| 28,800 |
|
Tax assistance | — |
| — |
| — |
| — |
| — |
| — |
| 7,500 |
|
Value of unvested or unearned restricted shares and performance units that immediately vest | 3,752,315 |
| 3,752,315 |
| — |
| — |
| 653,784 |
| — |
| 3,752,315 |
|
Payment for excise tax and gross up (5) | — |
| — |
| — |
| — |
| — |
| — |
| 2,309,880 |
|
| $ | 3,977,315 |
| $ | 3,752,315 |
| $ | 1,359,600 |
| $ | 452,400 |
| $ | 653,784 |
| $ | — |
| $ | 8,511,625 |
|
| | | | | | | |
Joseph Harvey White | | | | | | | |
Base Salary | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 329,000 |
|
Cash incentive payment | — |
| — |
| — |
| — |
| — |
| — |
| 207,283 |
|
Total | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 536,283 |
|
Multiplier (in terms of years) | x .5 |
| x - |
| x 3 |
| x 1 |
| x - |
| — |
| x 2 |
|
Aggregate cash payment | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 1,072,566 |
|
| | | | | | | |
Health insurance - $800 per month | — |
| — |
| — |
| — |
| — |
| — |
| 28,800 |
|
Tax assistance | — |
| — |
| — |
| — |
| — |
| — |
| 2,500 |
|
Value of unvested or unearned restricted shares and performance units that immediately vest | — |
| 2,716,311 |
| — |
| — |
| 583,904 |
| 1,107,276 |
| 2,716,311 |
|
Payment for excise tax and gross up (5) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| $ | — |
| $ | 2,716,311 |
| $ | — |
| $ | — |
| $ | 583,904 |
| $ | 1,107,276 |
| $ | 3,820,177 |
|
| | | | | | | |
Page - 56
| Employee disability (3) | | | Employee death (3) | | | Pinnacle terminates employment without cause | | | Employee terminates employment for cause | | | Pinnacle terminates Employee for cause or Employee terminates employment without cause or Employee retires | | | Pinnacle terminates Employee without cause or Employee terminates for cause, in each case within twelve months of a change of control | |
Harold R. Carpenter | | | | | | | | | | | | | | | | | | | | | | | |
Base salary | $ | 376,700 | | | $ | - | | | $ | 376,700 | | | $ | 376,700 | | | $ | - | | | $ | 376,700 | |
Targeted cash incentive payment | | - | | | | - | | | | - | | | | - | | | | - | | | | 244,855 | |
Total | | 376,700 | | | | - | | | | 376,700 | | | | 376,700 | | | | - | | | | 621,555 | |
Multiplier (in terms of years) | | x .5 | | | | x 0 | | | | x 3 | | | | x 1 | | | | x 0 | | | | x 3 | |
Aggregate cash payment | | 188,350 | | | | - | | | | 1,130,100 | | | | 376,700 | | | | - | | | | 1,864,665 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Health insurance - $800 per month | | - | | | | - | | | | 9,600 | | | | 2,400 | | | | - | | | | 28,800 | |
Tax assistance | | - | | | | - | | | | - | | | | - | | | | - | | | | 7,500 | |
Intrinsic value of unvested stock options that immediately vest (1) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Value of unearned restricted shares and restricted stock units that immediately vest | | 1,945,170 | | | | 1,945,170 | | | | - | | | | - | | | | - | | | | 1,945,170 | |
Payment for excise tax and gross up (2) | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,496,048 | |
| $ | 2,133,520 | | | $ | 1,945,170 | | | $ | 1,139,700 | | | $ | 379,100 | | | $ | - | | | $ | 5,342,183 | |
J. Harvey White | | | | | | | | | | | | | | | | | | | | | | | |
Base salary | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 283,800 | |
Targeted cash incentive payment(4) | | - | | | | - | | | | - | | | | - | | | | - | | | | 113,520 | |
Total | | - | | | | - | | | | - | | | | - | | | | - | | | | 397,320 | |
Multiplier (in terms of years) | | x 0 | | | | x 0 | | | | x 0 | | | | x 0 | | | | x 0 | | | | x 2 | |
Aggregate cash payment | | - | | | | - | | | | - | | | | - | | | | - | | | | 794,640 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Health insurance - $800 per month | | - | | | | - | | | | - | | | | - | | | | - | | | | 28,800 | |
Tax assistance | | - | | | | - | | | | - | | | | - | | | | - | | | | 2,500 | |
Intrinsic value of unvested stock options that immediately vest (1) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
Value of unearned restricted shares and restricted stock units that immediately vest | | - | | | | 1,319,568 | | | | - | | | | - | | | | - | | | | 1,319,568 | |
Payment for excise tax and gross up (2) | | - | | | | - | | | | - | | | | - | | | | - | | | | - | |
| $ | - | | | $ | 1,319,568 | | | $ | - | | | $ | - | | | $ | - | | | $ | 2,145,508 | |
(1) | Vesting of stock option awards pursuant to a change of control may only occur upon the consent of the Human Resources and Compensation Committee. |
(2) | In determining the anticipated payment due the executive for excise tax and gross up pursuant to a termination by the Company of the employee without cause or a termination by the employee for cause in each case, within twelve months following a change of control, the Company has included in the calculation the anticipated value of the immediate vesting of previously unvested restricted share awards and restricted stock unit awards and stock option grants in addition to the cash payments and healthcare benefits noted above. As a result, the Company has computed the 20% excise tax obligation owed by Messrs. Turner, McCabe, Queener, and Carpenter in the event of a change of control to be approximately $3,282,000, $2,930,000, $1,260,000, and $1,277,000, respectively. As a result, the Company has assumed a combined personal income tax rate of 55% for each executive and has included the additional gross up amount which includes the anticipated excise tax obligation in the table above. The Company has not anticipated such excise tax or gross up payments for other terminating events as payments for such matters are generally not subject to section 280G of the Code. |
(3)(1) | The above amounts do not include benefits owed the Named Executive Officers or their estates pursuant to the Company's broad based group disability insurance policies or group life insurance policy. These benefits would be paid pursuant to these group polices which are provided to all employees of the Company. Additionally, and also not included in the above amounts, the Named Executive Officers and certain other Leadership Team members also participate in a supplemental group disability policy which provides incremental coverage (i.e., "gap coverage") for these individuals over the broad-based group disability coverage maximums. For each of the Named Executive Officers, with respect to unvested, time-based restricted share awards reflected in the amounts noted above, the total includes the value of all of such unvested awards. For each of the Named Executive Officers, with respect to unvested, performance-based restricted shares issued in settlement of previously earned performance-based vesting restricted stock units but for which the applicable soundness threshold measurement date has not yet occurred, includes the value of all of such shares. For each of the Named Executive Officers, with respect to performance-based vesting restricted stock units for which the performance period has been completed, but for which the related service period, if applicable, or soundness threshold measurement date has not occurred, includes the value of the performance-based vesting restricted share units earned for the completed performance period. For each of the Named Executive Officers, with respect to the performance-based vesting restricted stock units for which the performance period has not been completed, includes the value of such units that may be earned. In respect of those awards of performance-based vesting restricted stock units for which the performance period has not been completed, the amount of such units that shall vest upon the Named Executive Officer's death or disability would be determined by the Human Resources and Compensation Committee and would equal the greater of the target level payout and the amount that would have been expected to be earned based on the Company's performance through the date of the Named Executive Officer's death or disability. |
| |
(2) | For each of the Named Executive Officers, includes the value of performance-based vesting restricted share units at December 31, 2017 for awards granted in 2015, 2016 and 2017 at actual levels of payout for which the performance period and one-year service period has been completed. Upon termination in the applicable scenario, the associate is entitled to receive the number of units that they have earned for the performance periods that have been completed and for which the required service period has been satisfied. These units will be settled in shares of the Company's common stock only if the Company achieves the NPA ratio applicable to such awards at December 31, 2018 and 2019 in the caseof the 2015 awards, at December 31, 2020 in the case of the 2016 awards and at December 31, 2021 in the case of the 2017 awards. For Messrs. McCabe and White, in the event that either ofthem terminates their |
employment without cause, they would instead receive the amount set forth in the retirement column as such termination would be treated as a retirement since they are each retirement age eligible.
| |
(3) | For each of the Named Executive Officers, includes the value of performance-based vesting restricted share units at December 31, 2017 for awards granted in 2015, 2016 and 2017 at actual levels of payout for which the performance period has been completed. Upon retirement from the Company after reaching age 65, eligible associates are entitled to receive the number of units that they would have earned but for the fact that they had not yet completed any required service period or that they would have earned for the performance period during which they retired based on the Company's performance for that period against the performance criteria established at grant date prorated for the number of days they were employed during the performance period. These units that are earned will be settled in shares of the Company's common stock only if the Company achieves the NPA ratio applicable to such awards at December 31, 2018 and 2019 in the case of the 2015 awards, at December 31, 2020 in the case of the 2016 awards and at December 31, 2021 in the case of the 2017 awards. |
| |
(4) | For the performance-based vesting restricted share units issued in 2015, 2016 and 2017, the amount that would vest upon a change in control would be determined by the Human Resources and Compensation Committee and would equal the greater of the target level payout and the amount that would have been expected to be earned based on the Company's performance through the date the Human Resources and Compensation Committee makes is determination. The amounts presented in the table reflect the maximum level payout. |
| |
(5) | In determining the anticipated payment due the executive for excise tax and gross up pursuant to a termination by the Company of the employee without cause or a termination by the employee for cause in each case, within twelve months following a change of control, the Company has included in the calculation the anticipated value of the immediate vesting of previously unvested restricted share awards and restricted stock unit awards (including performance-based vesting restricted stock unit awards) in addition to the cash payments and healthcare benefits noted above. As a result, the Company has computed the 20% excise tax obligation owed by Messrs. Turner, McCabe, Queener, and Carpenter in the event of a change of control to be approximately $2,014,000, $1,889,000, $870,000, and $844,000, respectively. As a result, the Company has assumed a combined personal income tax rate of 55% for each executive and has included the additional gross up amount which includes the anticipated excise tax obligation in the table above. The Company has not anticipated such excise tax or gross up payments for other terminating events as payments for such matters are generally not subject to Section 280G of the Code. |
CEO Pay Ratio Disclosure
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information for the year ended December 31, 2017:
Pinnacle Financial Partners, Inc.
Page - 57
The median of the annual total compensation of all employees of our company (other than our CEO), was $64,943; and the annual total compensation of Mr. Turner, our President and Chief Executive Officer was $3,475,498.Based on this information, for 2017, the ratio of the annual total compensation of our President and Chief Executive Officer to the median of the annual total compensation of all employees is 54 to 1.
We completed the following steps to identify the median of the annual total compensation of all our employees and to determine the annual total compensation of our median employee and CEO:
As of December 31 2017, our employee population consisted of approximately 2,216 employees, including any full-time, part-time, temporary, or seasonal employees employed on that date. This total includes approximately 864 employees who joined our firm in June 2017 as a result of the BNC acquisition. For these employees we used the sum of the employee's W-2 compensation from BNC prior to the merger and the employee's W-2 compensation from Pinnacle Bank following the merger.
To find the median of the annual total compensation of our employees (other than our CEO), we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for fiscal 2017. In making this determination, we annualized compensation for full-time and part-time permanent employees who were employed on December 31, 2017, but did not work for us the entire year, including the BNC employees. No full-time equivalent adjustments were made for part-time employees.
We identified our median employee using this compensation measure and methodology, which was consistently applied to all our employees included in the calculation.
After identifying the median employee, we added together all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $65,943. With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2017 Summary Compensation Table appearing on page 46 of this proxy statement, which is also in accordance with the requirements of Item 402(c)(2)(x).
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists, as of February 18, 2015,20, 2018, the number of shares of Common Stock beneficially owned by (a) any person known to the Company who owns in excess of 5% of the outstanding shares of Common Stock, (b) each current director of the Company, (c) each Named Executive Officer listed in the Summary Compensation Table, and (d) all directors and executive officers, as a group. The information shown below is based upon information furnished to the Company by the named persons and the percentages are calculated based on shares outstanding as of February 18, 2015.20, 2018.
| | | Number of Shares Beneficially Owned | Number of Shares Beneficially Owned |
Name | Common Shares Beneficially Owned | Aggregate Stock Option Grants and Warrants Exercisable within l60 days of February 18, 2015 | Total | Percent of All Shares Owned | Common Shares Beneficially Owned | Aggregate Stock Option Grants Exercisable within 60 days of February 20, 2018 | Total | Percent of All Shares Owned |
Board of Directors (1): | | | | | | |
Sue G. Atkinson | 49,516 | - | 49,516 | 0.14% | |
H. Gordon Bone | 78,384 | 1,862 | 80,246 | 0.22% | |
Abney S. Boxley, III (3) | | 57,017 |
| — |
| 57,017 |
| [ ● ] |
Charles E. Brock (4) | | 45,046 |
| 12,333 |
| 57,379 |
| [ ● ] |
Renda J. Burkhart | | 4,726 |
| — |
| 4,726 |
| [ ● ] |
Gregory L. Burns | 30,721 | - | 30,721 | 0.09% | 33,098 |
| — |
| 33,098 |
| [ ● ] |
Colleen Conway-Welch | 37,240 | - | 37,240 | 0.10% | |
James C. Cope (2) | 87,399 | - | 87,399 | 0.24% | |
Richard D. Callicutt, II (5) | | 171,405 |
| — |
| 171,405 |
| [ ● ] |
Marty G. Dickens | | 20,062 |
| — |
| 20,062 |
| [ ● ] |
Thomas C. Farnsworth, III | | 19,623 |
| — |
| 19,623 |
| [ ● ] |
Joseph C. Galante | | 18,511 |
| — |
| 18,511 |
| [ ● ] |
Glenda Baskin Glover | 3,146 | - | 3,146 | 0.01% | 5,804 |
| — |
| 5,804 |
| [ ● ] |
William H. Huddleston, IV | 58,345 | - | 58,345 | 0.16% | |
David B. Ingram (6) | | 177,198 |
| — |
| 177,198 |
| [ ● ] |
Ed C. Loughry, Jr. | 133,545 | 10,000 | 143,545 | 0.37% | 136,916 |
| — |
| 136,916 |
| [ ● ] |
Robert A. McCabe, Jr. (2) | 623,774 | 74,527 | 698,301 | 1.74% | 597,654 |
| — |
| 597,654 |
| [ ● ] |
Hal N. Pennington | 15,240 | - | 15,240 | 0.04% | |
Ronald L. Samuels | | 46,794 |
| — |
| 46,794 |
| [ ● ] |
Gary L. Scott | 50,999 | - | 50,999 | 0.14% | 53,000 |
| — |
| 53,000 |
| [ ● ] |
Thomas R. Sloan (7) | | 156,260 |
| — |
| 156,260 |
| [ ● ] |
Reese L. Smith, III | 65,471 | - | 65,471 | 0.18% | 63,023 |
| — |
| 63,023 |
| [ ● ] |
G. Kennedy Thompson (8) | | 662 |
| — |
| 662 |
| [ ● ] |
M. Terry Turner (2) | 579,620 | 78,449 | 658,069 | 1.62% | 507,942 |
| — |
| 507,942 |
| [ ● ] |
| | | | | |
| |
Named Executive Officers (1): | | | | | |
| |
Hugh M. Queener (2) | 295,334 | 44,892 | 340,226 | 0.82% | 318,651 |
| — |
| 318,651 |
| [ ● ] |
Harold R. Carpenter (2) | 137,079 | 35,680 | 172,759 | 0.38% | 145,695 |
| — |
| 145,695 |
| [ ● ] |
J. Harvey White | 53,435 | - | 53,435 | 0.15% | 572,080 |
| — |
| 572,080 |
| [ ● ] |
| | | | | | |
All Directors and executive officers as a Group (16 persons) | 2,299,248 | 245,410 | 2,544,658 | 7.11% | |
All Directors and executive officers as a Group (21 persons) | | 3,151,167 |
| 12,333 |
| 3,163,500 |
| [ ● ] |
| | | | | | |
Persons known to Company who own more than 5% of outstanding shares of Company Common Stock: | | | | | Persons known to Company who own more than 5% of outstanding shares of Company Common Stock: |
| | | | | |
BlackRock, Inc. (3) | 2,812,216 | - | 2,812,216 | 7.85% | |
BlackRock, Inc. (9) | | | |
55 East 52nd Street | | | | | | |
New York, NY 10055 | | | | | 6,050,010 |
| — |
| 6,050,010 |
| [ ● ] |
| | | | | | |
The Vanguard Group, Inc. (4) | 2,223,250 | - | 2,223,250 | 6.21% | |
The Vanguard Group, Inc. (10) | | | |
100 Vanguard Blvd. | | | | | | |
Malvern, PA 19355 | | | | | 6,072,771 |
| — |
| 6,072,771 |
| [ ● ] |
| | | | | |
Dimensional Fund Advisors LP (5) | 2,151,167 | - | 2,151,167 | 6.01% | |
Palisades West, Building One | | | | | |
6300 Bee Cave Road | | | | | |
Austin, TX 78746 | | | | | |
| | | | | |
All Persons known to Company who own more than 5% of outstanding shares of Company Common Stock: | 7,186,633 | - | 7,186,633 | 20.07% | 12,122,781 |
| — |
| 12,122,781 |
| [ ● ] |
| |
(1) | EachExcept as otherwise indicated below, each person is the record owner of and has sole voting and investment power with respect to his or her shares. Additionally, the address for each person listed is 150 Third Avenue South, Suite 900, Nashville, Tennessee 37201. |
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(2) | As of February 18, 2015,15, 2018, the following individuals have pledged the following amounts of their common sharesCommon Stock beneficially owned to secure lines of credit or other indebtedness: Mr. Turner – 150,000- 144,647 shares; Mr. McCabe –149,140; Mr. Queener – 48,500 shares; Mr. Cope – 71,421 shares; Mr. Huddleston – 45,784 shares; Mr. Bone– 41,191- 47,500 shares; and Mr. Carpenter –- 11,208 shares. |
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(3) | Includes 13,087 shares owned by Boxley Family LLC, of which Mr. Boxley is a member and 5,521 shares owned by Mr. Boxley's children. |
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(4) | Includes 8,910 shares owned by TNUTMA, of which Mr. Brock's wife is the custodian. |
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(5) | Includes 1,749 shares owned by Mr. Callicutt's wife. |
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(6) | Mr. Ingram disclaims beneficial ownership of 143,099 shares of Common Stock held in trusts for the benefit of his children for which trusts Mr. Ingram's spouse is the trustee and 2,000 shares owned by Mr. Ingram's wife. |
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(7) | Includes 44,862 shares owned by Sloan Capital Company, LLC of which Mr. Sloan is a member and 3,141 shares owned by Mr. Sloan's wife. |
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(8) | Mr. Thompson is a Principal of Aquiline Capital Partners, LLC. Aquiline Capital Partners, LLC beneficially owned 2,555,594 shares as of February 20, 2018. |
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(9) | The beneficial ownership information is derived from a Schedule 13G filed by the reporting person with the Securities and Exchange Commission on January 23, 2015.29, 2018. |
(4) | |
(10) | The beneficial ownership information is derived from a Schedule 13G filed by the reporting person with the Securities and Exchange Commission on February 11, 2015.9, 2018. |
(5) | The beneficial ownership information is derived from a Schedule 13G filed by the reporting person with the Securities and Exchange Commission on February 5, 2015. |
Stock Ownership Guidelines
All of the Company's directors are encouraged to maintain a meaningful personal ownership of Common Stock in excess of minimum guidelines established by the Company's Corporate Governance Guidelines. Generally, the guidelines require that directors own shares with a value of approximately 300% of the average annual compensation paid to a Board member by the Company, provided that until such level is reached, the minimum level may be satisfied by the retention of ownership of all restricted shares granted that have vested, if any. For purposes of these beneficial ownership requirements, the average closing price for the last 15 day trading days of the preceding calendar year are used to determine market value. As of December 31, 20142017 such market value per share was $31.92.$66.79. The minimum guidelines must be satisfied exclusive of shares pledged or held in margin accounts with outstanding margin debt. All of the Company's directors are in compliance with the minimum ownership guidelines (including compliance exclusive of shares pledged).
The Board of Directors also expects the Chief Executive Officer and all other Named Executive Officers to maintain a meaningful personal ownership in the Company in the form of Common Stock. The minimum Common Stock beneficial ownership levels for the Chief Executive Officer and the Chairman of the Board are a minimum of 400% of their annual cash salary in Company Common Stock. For purposes of this measurement, the average closing price of the Company's Common Stock for the last 15 trading days of the previous calendar year is used to determine the market value of each executive's holdings. Additionally, the Executive Committee established stock beneficial ownership levels of 300% of the annual cash salary for the Chief Administrative Officer; 200% of the annual cash salary for the Chief Financial Officer; and 150% of the annual cash salary for the Chief Credit Officer. All Named Executive Officers currently exceed the applicable minimum level of beneficial ownership (including compliance exclusive of shares pledged). Should an executive officer's ownership fall below the minimum beneficial ownership levels noted above, in order to transact an open market sale of their Company Common Stock, the officer would be required to seek the prior approval of the Board. All of the Company's executive officers are in compliance with the minimum ownership guidelines (including compliance exclusive of shares pledged).
Anti-Hedging Policy and Pledges of Shares of Common Stock
The Company has an anti-hedging policy that prohibits directors, officers or employees from engaging in short sales or hedging including purchases or sales of puts or calls, collars or other hedging on the Company's Common Stock, and such transactions violate its Insider Trading Policy and Code of Conduct. Directors and executive officers must certify compliance with the Insider Trading Policy and Code of Conduct annually.
The Company's Corporate Governance Guidelines were recently amended toalso state that pledging of shares of Company common stockCommon Stock was disfavored and executive officers should seek to minimize the amount of stock pledged over time. As noted above, shareshares of Common Stock pledged are not counted toward compliance with stock ownership guidelines by NEOsour Named Executive Officers and directors. The Nominating and Corporate Governance Committee shall taketakes into account compliance with the ownership guidelines in considering whether to re-nominate a director.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors and executive officers and persons who own beneficially more than 10% of the Company's outstanding Common Stock to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in their ownership of the Company Common Stock. Directors, executive officers and greater than 10% shareholders are required to furnish the Company with copies of the forms they file. To our knowledge, based solely on a review of the copies of these reports furnished to the Company during the year ended December 31, 2014,2017, or on written representations from certain reporting persons that no Forms 5 were required for those persons, all of the persons who were directors or executive officers of the Company during 2014,2017, complied with all applicable Section 16(a) filing requirements during 2014 except that Mr. White had one late filing filed on December 30, 2014 to report the witholding of shares for taxes for the vesting of certain restricted share awards.2017.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank has loan and deposit transactions in the ordinary course of business with directors and officers of the Company and the Bank and their affiliates, including members of their families, and corporations, partnerships or other organizations in which the directors and officers have a controlling interest. All these transactions were entered into on substantially the same terms (including price, interest rate and collateral) as those prevailing at the same time for comparable transactions with unrelated parties and did not involve more than the normal risk of collectability or present other unfavorable features to the Company or the Bank. None of such loans were disclosed as nonaccrual, past due, restructured or potential problems in the Company's Annual Report on Form 10-K for the year ended December 31, 2014.2017.
At the time of the Company’s acquisition of BNC, BNC had a long-standing relationship with a professional recruiting firm that provided it with professional level searches. The Company continued the relationship following its acquisition of BNC. The owner of this recruiting firm is married to Richard D. Callicutt II, a director of the Company and the Company’s and the Banks’ Chairman of the Carolinas and Virginia. Since the completion of the BNC merger, the Company has paid $135,600 in fees to the recruiting firm. The Company’s Audit Committee has reviewed the historical compensation paid to this firm by the Company following consummation of the BNC merger and has engaged in discussions with management regarding the candidates presented by this firm and hired by Pinnacle Bank and the fees paid to this firm in relation to fees paid to other similar search firms with whom the Company has worked. The Audit Committee has approved the continuation of the Company’s relationship with the recruiting service.
Pursuant to the Audit Committee Charter, the Audit Committee of the Board is responsible for reviewing and approving any transaction required to be described in this proxy statement pursuant to the rules and regulations of the Securities and Exchange Commission.
Human Resources and Compensation Committee Interlocks and Insider ParticipationREPORT OF THE AUDIT COMMITTEE
During 2014,The Audit Committee is comprised solely of independent directors, as defined under the Human ResourcesNasdaq Listing Rules and Compensationthe rules and regulations of the Securities and Exchange Commission, including Rule 10A-3 promulgated under the Exchange Act. The Audit Committee's responsibilities are set forth in a written charter that has been adopted by the Board, a copy of which is available by clicking on the "Governance Documents" link on the Company's website at www.pnfp.com. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis.
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors consistedDirectors. Management has primary responsibility for the financial statements and the reporting process, including the systems of Harold Gordon Bone, Ed C. Loughry, Jr, Hal Pennington, Gary L. Scott and Reese L. Smith III, none of whom has ever been an officer or employee of the Company, orinternal controls. In fulfilling its subsidiaries. No interlocking relationship existed during 2014 between any officer, member of our Board of Directors or the Human Resources and Compensation Committee and any officer, member of the Board of Directors or compensation committee (or committee performing similar functions) of any other company.
REPORT OF THE AUDIT COMMITTEE
The following is the Report ofoversight responsibilities, the Audit Committee, regardingamong other things, reviewed the Company's audited financial statements to be includedfor fiscal year 2017 with the Company’s management, including a discussion of the quality, not just the acceptability, of the accounting principles, underlying estimates and significant judgments used in the Company's Annual Report on Form 10-K:financial statements, the clarity of disclosures in the financial statements, the analysis of financial condition and results of operations, and the effectiveness of internal controls over financial reporting.
We have reviewedThe Audit Committee is directly responsible for the appointment, compensation, retention and discussed with management the Company's audited financial statements as of December 31, 2014 and 2013 and for eachoversight of the years in the three-year period ended December 31, 2014.
We have discussed with the Company'sCompany’s independent registered public accounting firm. The Audit Committee has reviewed with Crowe Horwath LLP, the Company’s current independent registered public accounting firm, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under auditing standards generally accepted in the United States, including the matters required to be discussed by Statement on Auditing Standards No. 16, as amended (AICPA Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.Board’s Auditing Standard No. 1301, Communications with Audit Committees.
We haveThe Audit Committee has received the written disclosures and the letter from the independent registered public accounting firmCrowe Horwath LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm'sCrowe Horwath LLP's communications with the audit committeeAudit Committee concerning independence, and havehas discussed with Crowe Horwath LLP their independence in relation to the Company The Audit Committee also considered whether Crowe Horwath LLP’s provision of non-audit services to the Company is compatible with Crowe Horwath LLP’s independence, and has concluded that such provision of services is compatible with Crowe Horwath LLP’s independence.
The Audit Committee discussed with the independent registered public accounting firmCompany’s internal auditors and Crowe Horwath LLP the Company's independence.overall scope and plans for their respective audits. The Committee met with the internal auditors and Crowe Horwath LLP, with and without management present, to discuss the results of their audits, their evaluations of the Company’s systems of internal controls and the overall quality and adequacy of the Company’s financial reporting. The Audit Committee discussed with management, the internal auditors and Crowe Horwath LLP the internal audit function’s organization, responsibilities, budget and staffing. Both the internal auditors and Crowe Horwath LLP have unrestricted access to the Audit Committee. The Audit Committee held eight meetings during fiscal year 2017.
Based on the reviews and discussions referred to above, we recommended to the Board of Directors that the audited financial statements referred to above be included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014.2017.
Gregory L. Burns, Chairman
Joseph Galante, Member
Glenda Baskin Glover, Member
William H. Huddleston,David Ingram, Member
Gary L. Scott,Thomas R. Sloan, Member
G. Kennedy Thompson, Member
The foregoing report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates this information by reference and shall not otherwise be deemed filed under such Acts.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of the Company has approved the appointment of KPMGengaged Crowe Horwath LLP ("Crowe") to serve as the Company's independent registered public accounting firm for the Company for the year endingended December 31, 2014. The Audit Committee considered the background, expertise2017 and experience of the audit team assigned to the Company and various other relevant matters, including the proposed fees for audit services. A representative of KPMG LLP will be present at the Meeting and will be given the opportunity to make a statement if he desires and will be available to respond to appropriate questions from shareholders.2016.
Audit Fees. During the years ended December 31, 20142017 and 2013,2016, the Company incurred the following fees for services performed by the independent registered public accounting firm:
|
| | | | | | |
| 2017 | 2016 |
Audit Fees (1) | $ | 1,845,000 |
| $ | 860,000 |
|
Audit-Related Fees (2) | 99,917 |
| 23,883 |
|
Tax Fees | 315,815 |
| 288,775 |
|
All Other Fees | — |
| — |
|
Total Fees | $ | 2,260,732 |
| $ | 1,172,658 |
|
| | 2014 | | | 2013 | |
Audit Fees (1) | | $ | 484,800 | | | $ | 446,750 | |
Audit-Related Fees | | | 20,000 | | | | 1,650 | |
Tax Fees | | | - | | | | - | |
All Other Fees | | | - | | | | - | |
Total Fees | | $ | 504,800 | | | $ | 448,400 | |
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(1) | Includes fees related to the annual independent audit of the Company's financial statements and reviews of the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, report on internal control over financial reporting, and required statutory filings. These fees also include fees for services in conjunction with our acquisitions and in connection with our public offering of common stock completed in January 2017. |
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(2) | Represents out-of-pocket fees reimbursed to Crowe. |
The Audit Committee also has adopted a formal policy concerning approval of audit and non-audit services to be provided by the independent auditor to the Company. The policy requires that all services KPMG LLP,performed by the Company's independent registered public accounting firm may provide tofor the Company, including audit services and permitted audit-related and non-audit services, be pre-approved by the Committee. The Committee approved all audit and non-audit services provided by KPMG LLPCrowe during fiscal 2014years 2017 and 20132016, respectively, prior to KPMG LLP performing such services.
The Audit Committee completed a review of the Company's independent registered public accounting firm for the fiscal year ending December 31, 2016. As a result of this review, on February 29, 2016, the Audit Committee notified KPMG of its decision to dismiss KPMG as the Company's independent registered public accounting firm, effective as of February 29, 2016. On February 29, 2016, based upon the recommendation and approval of the Audit Committee, the Company retained Crowe Horwath LLP as its independent registered public accounting firm for the fiscal year ending December 31, 2016.
Neither of KPMG's audit reports on the Company's consolidated financial statements for the fiscal years ended December 31, 2015 and 2014 contained an adverse opinion or a disclaimer of opinion, or a qualification or modification as to uncertainty, audit scope or accounting principles. Neither of KPMG's audit reports on the effectiveness of internal control over financial reporting as of December 31, 2015 and 2014 contained an adverse opinion or disclaimer of opinion, or a qualification or modification as to uncertainty, audit scope or accounting principles. During the Company's fiscal years ended December 31, 2015 and 2014, (i) there were no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure that, if not resolved to KPMG's satisfaction, would have caused KPMG to make reference to the subject matter in connection with its reports on the Company's consolidated financial statements for such years; and (ii) there were no reportable events, within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
During the Company's fiscal years ended December 31, 2015 and 2014, neither the Company, nor any party on behalf of the Company, consulted with Crowe with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of the audit opinion that might be rendered on the Company's consolidated financial statements, and no written report or oral advice was provided to the Company and none was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was subject to any disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K, respectively.
OTHER MATTERS
The Board of the Company knows of no other matters that may be brought before the Meeting. If, however, any matters other than those set forth in this proxy statement should properly come before the meeting, votes will be cast pursuant to the proxies in accordance with the best judgment of the proxy holders.
If you cannot be present in person, you are requested to vote and submit your proxy promptly. You may vote by toll-free telephone, by the Internet or, if you requested printed materials, by completing, dating, signing and returning the accompanying proxy card promptly in the envelope provided. No postage is required if mailed in the United States.
GENERAL INFORMATION
Annual Report.Report. The Company's 20142017 Annual Report being made available to shareholders with this proxy statement. The Annual Report is not a part of the proxy solicitation materials.
Additional Information. A copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2014,2017, excluding certain exhibits thereto, may be obtained without charge by writing to Pinnacle Financial Partners, Inc., Attn: Chief Financial Officer, 150 Third Avenue South, Suite 900, Nashville, Tennessee 37201. Also, the Company's Annual Report on Form 10-K and all quarterly reports on Form 10-Q for the year ended December 31, 20142017 can also be accessed via the "Investor Relations" section of the Company's website located at www.pnfp.com.
By Order of the Board of Directors,
Hugh M. Queener
Corporate Secretary
March [ ● ], 2018
, 2015
Appendix A
ARTICLES OF AMENDMENT TO
THE AMENDED AND RESTATED CHARTER OF
PINNACLE FINANCIAL PARTNERS, INC.
Pursuant to the provisions of Section 48-20-106 of the Tennessee Business Corporation Act, the undersigned corporation adopts the following Articles of Amendment (the “Articles of Amendment”) to its Amended and Restated Charter (the “Charter”):
1.The name of the corporation is Pinnacle Financial Partners, Inc. (the “Corporation”).
Page - 63
Appendix A
Proposed2.Paragraph (a) of “Article 2. Capital Stock” of the Charter is hereby deleted in its entirety and replaced with the following:
“Article 2. Capital Stock
(a) The total number of shares of capital stock which the Corporation is authorized to issue is one hundred ninety million (190,000,000) shares, divided into one hundred eighty million (180,000,000) shares of common stock, $1.00 par value (the “Common Stock”), and ten million (10,000,000) shares of preferred stock no par value (the “Preferred Stock”).”
3.These Articles of Amendment to the
Amended and Restated Charter
of
Pinnacle Financial Partners, Inc.
Additions are reflected with underlined text and deletions are reflected with text that has been struck through.
Article 7. Board of Directors
(a) The business and affairs of the corporation shall be managed were duly adopted by or under the direction of a Board of Directors. Prior to the annual meeting of shareholders in 2015, the directors of the corporation shall be divided into three classes: Class I, Class II and Class III. Each director elected prior to the annual meeting of shareholders in 2015 shall serve for the full term to which such director was elected. Following the expiration of the term of the Class III directors in 2015, the Class I directors in 2016 and the Class II directors in 2017, the directors in each such class shall be elected for a term expiring at the next annual meeting of shareholders and until their successors are elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office with or without cause. Commencing with the annual meeting of shareholders in 2017, the classification of the Board of Directors shall be eliminated, and all directors shall be elected at each annual meeting of shareholders for terms expiring at the next annual meeting of shareholders. Each director shall hold office for the term for which the director is elected or appointed and until the director's successor shall be elected and qualified, subject, however, to prior death, resignation, retirement, disqualification or removal from office with or without cause.
(a) The Board of Directors shall be divided into three (3) classes, Class I, Class II and Class III, which shall be as nearly equal in number as possible. Each director in Class I shall be elected to an initial term of one (1) year, each director in Class II shall be elected to an initial term of two (2) years, each director in Class III shall be elected to an initial term of three (3) years, and each director shall serve until the election and qualification of his or her successor or until his or her earlier resignation, death or removal from office. Upon the expiration of the initial termsCorporation on January 16, 2018 and by the requisite vote of office for each Classthe shareholders of directors, the directors of each Class shall be elected for terms of three (3) years, to serve until the election and qualification of their successors orCorporation on April 17, 2018. until their earlier resignation, death or removal from office.
4.These Articles of Amendment shall be effective when filed with the Tennessee Secretary of State.
IN WITNESS WHEREOF, the undersigned has executed these Articles of Amendment this ____ day of April, 2018.
PINNACLE FINANCIAL PARTNERS, INC.
By:__________________________________
Name: Harold R. Carpenter
Title: Executive Vice President and Chief Financial Officer
Appendix B
PINNACLE FINANCIAL PARTNERS, INC.
2018 OMNIBUS EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE
This plan shall be known as the "Pinnacle Financial Partners, Inc. 2018 Omnibus Equity Incentive Plan" (the "Plan"). The purpose of the Plan is to promote the interests of Pinnacle Financial Partners, Inc.
Appendix A Page - 1
Appendix B, a Tennessee corporation (the "Company"), and its shareholders by (i) attracting and retaining Associates and Directors of the Company and its Subsidiaries and Affiliates; (ii) motivating such individuals by means of performance-related incentives to achieve long-range performance goals, (iii) enabling such individuals to participate in the long-term growth and financial success of the Company, (iv) encouraging ownership of stock in the Company by such individuals, and (v) linking their compensation to the long-term interests of the Company and its shareholders.
Proposed Amendments to the
Amended and Restated Charter
of
Pinnacle Financial Partners, Inc.SECTION 2. DEFINITIONS
Additions are reflected with underlined text and deletions are reflected with text that has been struck through.As used in the Plan, the following terms shall have the meanings set forth below:
Article 7.(a) "AFFILIATE" shall mean (i) any entity that, directly or indirectly, is controlled by the Company, (ii) any entity in which the Company has a significant equity interest, (iii) an affiliate of the Company, as defined in Rule 12b-2 promulgated under Section 12 of the Exchange Act, and (iv) any entity in which the Company or its Subsidiaries own at least twenty percent (20%) of the combined voting power of the entity's outstanding voting securities, in each case as designated by the Board of Directorsas being a participating employer in the Plan.
(b) Unless two-thirds (2/3)"ASSOCIATE" shall mean a current or prospective officer or employee of the directors thenCompany or of any Subsidiary or Affiliate.
(c) "AWARD" shall mean any Option, Stock Appreciation Right, Restricted Share Award, Restricted Share Unit, Performance Unit Award, Performance Share Award, Performance Award, Other Stock-Based Award or other award granted under the Plan, whether singly, in officecombination or in tandem, to a Participant by the Committee (or the Board) pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee (or the Board) may establish.
(d) "BANK" shall approve the proposed change, this Article 7mean Pinnacle Bank.
(e) "AWARD AGREEMENT" shall mean any agreement, contract or other instrument or document evidencing any Award, which may be amendedin writing or rescinded onlyvia an electronic mail or web-based transmission or portal, and which may, but need not, be executed or acknowledged by the affirmative voteapplicable Participant.
(f) "BOARD" shall mean the board of directors of the holders of at least two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote in an election of directors, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.Company.
Article 8. Bylaws; Number of Directors
(a) Except(g) "CAUSE" shall have the same meaning as provided in paragraph (b)any employment agreement between the Participant and the Company or any Affiliate on the date of this Article 8,Termination of Service, or if no such definition or employment agreement exists, "Cause" shall mean conduct amounting to (1) fraud or dishonesty against the Company or any Affiliate; (2) the Participant's willful misconduct, repeated refusal to follow the reasonable directions of the Board or knowing violation of Directors shall havelaw in the right to adopt, amend or repeal the bylawscourse of performance of the Corporation byduties of Participant's service with the affirmative voteCompany or any Affiliate; (3) repeated absences from work without a reasonable excuse; (4) repeated intoxication with alcohol or drugs while on the Company's or any Affiliate's premises during regular business hours; (5) a conviction or plea of guilty or NOLO CONTENDERE to a majorityfelony or a crime involving dishonesty; or (6) a breach or violation of all directors then in office,the terms of any agreement to which Participant and the shareholdersCompany or any Affiliate are party.
(h) "CHANGE IN CONTROL" shall have such right by the affirmative vote of a majoritymean any one of the issued and outstanding sharesfollowing events which may occur after the date the Award is granted:
(1) the acquisition by any person or persons acting in concert of the Corporation entitled to
vote in an electionthen outstanding voting securities of directors.either the Bank or the Company, if, after the transaction, the acquiring person (or persons) owns, controls or holds
(b) Notwithstanding paragraph (a)with power to vote forty percent (40%) or more of this Article 8, any amendmentclass of voting securities of either the bylaws of the Corporation establishing or changing the number of directors within the range provided for in
the bylaws, or establishing or changing the range itself, shall require the affirmative vote of two-thirds (2/3) of all directors then in officeBank or the affirmative vote ofCompany, as the holders of two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote in an election of directors, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.case may be;
Article 9. Removal(2) within any twelve-month period the persons who were directors of Directors
(a) The entire Board of Directorseither the Bank or any individual director may be removed without cause, at any shareholders' meeting with respect to which noticethe Company immediately before the beginning of such purpose has been given, only by the affirmative vote of the holders of at least two-thirds (2/3)a majority of the issued and outstanding shares of the Corporation entitledtwelve-month period (the "Incumbent Directors") shall cease to vote in an election of directors.
(b) The entire Board of Directors or any individual director may be removed with cause upon the affirmative vote of two-thirdsa majority of all directors then in office or, at any shareholders' meeting with respect to which notice of such purpose has been given, by the affirmative vote of the holders ofconstitute at least a majority of the issued and outstanding sharessuch board of directors; provided that any director who was not a director as of the Corporationbeginning of such twelve-month period shall be deemed to be an Incumbent Director if that director was elected to such board of directors by, or on the recommendation of or with the approval of, at least two-thirds of the directors who then qualified as Incumbent Directors; and provided further that no director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors shall be deemed to be an Incumbent Director;
(3) a reorganization, merger or consolidation, with respect to which persons who were the shareholders of either the Bank or the Company, as the case may be, immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than fifty percent (50%) of the combined voting power entitled to vote in anthe election of directors.
(c) For purposes of this Article 9, a director of the Corporation may be removed for cause if (i) the director has been convicted of a felony; (ii) any bank regulatory authority having jurisdiction over the Corporation requests or demands the removal; or (iii) at least two-thirds (2/3) of the directors of the Corporationreorganized, merged or consolidated company's then in office, excluding the director to be removed, determine that the director's conduct has been inimical to the best interests of the Corporation.outstanding voting securities; or
(d) Unless two-thirds (2/3)(4) the sale, transfer or assignment of the directors then in office shall approve the proposed change, this Article 9 may be amended or rescinded only by the affirmative vote of the holders of at least two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote in an election of directors, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.
Article 10. Liability of Directors
(a) A director of the Corporation shall not be personally liable to the Corporation or its shareholders for monetary damages, for breach of any duty as a director, except for liability for:
(i)a breach of the director's duty of loyalty to the Corporation or itsshareholders;
(ii)acts or omissions not in good faith or which involve intentionalmisconduct or a knowing violation of law; or
(iii)the types of liability set forth in Section 48-18-304 of the TennesseeBusiness Corporation Act dealing with unlawful distributions of corporateassets to shareholders; or
(b) Any repeal or modification of this Article by the shareholders of the Corporation shall be prospective only and shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
(c) Unless two-thirds (2/3) of the directors then in office shall approve the proposed change, this Article 10 may be amended or rescinded only by the affirmative vote of the holders of at least two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote thereon, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.
Article 13. Approval of Business TransactionsReserved.
(a) In any case in which the Tennessee Business Corporation Act or other applicable law requires shareholder approval of any merger or share exchange of the Corporation with or into any other corporation, or any sale, lease, exchange or other disposition of substantially all of the assets of the Corporation to any other corporation, person or other entity, shall require either:
(i)the affirmative vote of two-thirds (2/3) of the directors of the Corporationthen in office and the affirmative vote of a majority of the issued andoutstanding shares of the corporation entitled to vote; or
(ii)the affirmative vote of a majority of the directors of the Corporation thenin office and the affirmative vote of the holders of at least two-thirds (2/3)of the issued and outstanding shares of the Corporation entitled to vote.
(b) The Board of Directors shall have the power to determine for the purposes of this Article 13, on the basis of information known to the Corporation, whether any sale, lease or exchange or other disposition of part of the assets of the Corporation involves substantially all of the assets of the Corporation.
(c) Unless two-thirds (2/3) of the directors then in office shall approve the proposed change, this Article 13 may be amended or rescinded only by the affirmative vote of the holders of at least two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote thereon, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.
Article 14. Factors Considered in Business Transactions
(a) The Board of Directors, when evaluating any offer of another party (i) to make a tender offer or exchange offer for any equity security of the Corporation, (ii) to merge or consolidate any other corporation with the Corporation, or (iii) to purchase or otherwise acquire all or substantially all of the assets of the Corporation, shall, in determining what is in the best
interests of the Corporation and its shareholders, give due consideration to all relevant factors, including without limitation: (A) the short-term and long-term social and economic effects on the employees, customers, shareholders and other constituents of the CorporationCompany and its subsidiaries and onto any third party.
Notwithstanding the communities within whichforegoing, (i) unless otherwise provided in an applicable Award Agreement, solely for purposes of determining the Corporation and its subsidiaries operate (it being understood thattiming of any subsidiary bankpayment pursuant to any Award constituting a “deferral of compensation” subject to Section 409A of the Corporation is charged with providing support to and being involvedCode, a Change in Control shall mean a “change in the communities it serves);ownership of the Company,” a “change in the effective control of the Company,” or a “change in the ownership of a substantial portion of the assets of the Company” as such terms are defined in Section 1.409A-3(i)(5) of the U.S. Treasury Regulations, and (B)(ii) no Award Agreement shall define a Change in Control in such a manner that a Change in Control would be deemed to occur prior to the consideration being offeredactual consummation of the event or transaction that results in a change of control of the Company (e.g., upon the announcement, commencement, or stockholder approval of any event or transaction that, if completed, would result in a change in control of the Company).
(i) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to time.
(j) "COMMITTEE" shall mean a committee of the Board composed solely of not less than two Non-Employee Directors, each of whom shall be a "Non-Employee Director" for purposes of Exchange Act Section 16 and Rule 16b-3 thereunder.
(k) "DIRECTOR" shall mean a member of the Board.
(l) "DISABILITY" shall the same meaning as provided in the long-term disability plan or policy maintained or, if applicable, most recently maintained, by the other party in relation toCompany or any Affiliate for the then-current valueParticipant. If no long-term disability plan or policy was ever maintained on behalf of the CorporationParticipant, Disability shall mean that condition described in Code Section 22(e)(3), as amended from time to time. In the event of a freely negotiated transaction and in relation todispute, the determination of Disability shall be made by the Board and shall be supported by advice of Directors' then-estimate ofa physician competent in the future value of the Corporation as an independent entity.area to which such Disability relates.
(b) Unless two-thirds (2/3)(m) “EFFECTIVE DATE” shall have the meaning given thereto in Section 16.1 of the directors then in office shall approve the proposed change, this Article 14 may be amended or rescinded only by the affirmative vote of the holders of at least two-thirds (2/3) of the issued and outstanding shares of the Corporation entitled to vote thereon, at any regular or special meeting of the shareholders, and notice of the proposed change must be contained in the notice of the meeting.
Appendix CPlan.
Proposed Amendment(n) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended from time to the
Amended and Restated Charter
of
Pinnacle Financial Partners, Inc.time.
Additions are reflected with underlined text and deletions are reflected with text that has been struck through.
Article 7. Board of Directors
(b)Each nominee for director shall be elected by the affirmative vote of a majority of the votes cast(o) "FAIR MARKET VALUE" with respect to the director at any meetingShares, shall mean, for purposes of shareholders for the electiona grant of directors at which a quorum is present, provided that if,an Award as of (a)any date, (i) the expirationclosing sales price of the time fixed under Section 3.9 ofShares on the Corporation's Bylaws (orNasdaq Stock Market's National Market System, or any successor provision) for advance notice of nomination of a director by a shareholderother such exchange on which the Shares are traded, on such date, or (b) in the absence of reported sales on such date, the closing sales price on the immediately preceding date on which sales were reported or (ii) in the event there is no public market for the Shares on such date, the fair market value as determined, in good faith, by the Committee in its sole discretion, and for purposes of a sale of a Share as of any date, the actual sales price on that date.
(p) "INCENTIVE STOCK OPTION" shall mean an option to purchase Shares from the Company that is granted under Section 6 of the Plan and that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
(q) "NON-QUALIFIED STOCK OPTION" shall mean an option to purchase Shares from the Company that is granted under Sections 6 or 10 of the Plan and is not intended to be an Incentive Stock Option.
(r) "NON-EMPLOYEE DIRECTOR" shall mean a member of the Board who is not an Associate of the Company or any Subsidiary or Affiliate.
(s) "OPTION" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
(t) "OPTION PRICE" shall mean the purchase price payable to purchase one Share upon the exercise of an Option.
(u) "OTHER STOCK-BASED AWARD" shall mean any Award granted under Sections 9 or 10 of the Plan.
(v) "OUTSIDE DIRECTOR" means, with respect to the grant of an Award, a member of the Board then serving on the Committee.
(w) "PARTICIPANT" shall mean any Associate, Director or other person who receives an Award under the Plan.
(x) "PERFORMANCE AWARD" shall mean any Award granted under Section 8 of the Plan.
(y) "PERFORMANCE SHARE" shall mean any Share granted under Section 8 of the Plan.
(z) "PERFORMANCE UNIT" shall mean a right to receive a designated dollar value or number of shares which is contingent on the achievement of certain performance goals during a specified performance period each as set forth in an Award Agreement.
(aa) "PERSON" shall mean any individual, corporation, partnership, limited liability company, associate, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
(bb) "RESTRICTED SHARE" shall mean any Share granted under Sections 7 or 10 of the Plan.
(cc) "RESTRICTED SHARE UNIT" shall mean any unit granted under Sections 7 or 10 of the Plan.
(dd) "RETIREMENT" shall mean, unless otherwise defined in the applicable Award Agreement, retirement of a Participant from the employ or service of the Company or any of its Subsidiaries or Affiliates in accordance with the terms of the applicable Company retirement plan or, if a Participant is not covered by any such provision, a date that is fourteen (14) days in advance of the date the Corporation files its definitive proxy statement for the applicable meeting of shareholders at which directors are to be elected (regardless of whetherplan, retirement on or not thereafter revised or supplemented) withafter such Participant's 65th birthday.
(ee) "SEC" shall mean the Securities and Exchange Commission or any successor thereto.
(ff) "SECTION 16" shall mean Section 16 of the Exchange Act and the rules promulgated thereunder and any successor provision thereto as in effect from time to time.
(gg) "SHARES" shall mean shares of the common stock, $0.01 par value, of the Company.
(hh) "STOCK APPRECIATION RIGHT” or “SAR" shall mean a stock appreciation right granted under Sections 6 or 10 of the Plan that entitles the holder to receive, with respect to each Share encompassed by the exercise of such SAR, the amount, in cash or Shares (or a combination thereof), determined by the Committee and specified in an Award Agreement. In the absence of such a determination, the holder shall be entitled to receive, with respect to each Share encompassed by the exercise of such SAR, the excess of the Fair Market Value of a Share on the date of exercise over the Fair Market Value of a Share on the date of grant.
(ii) "SUBSIDIARY" shall mean any Person (other than the Company) of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company.
(jj) "SUBSTITUTE AWARDS" shall mean Awards granted solely in assumption of, or in substitution for, outstanding awards previously granted by a Person acquired (directly or indirectly) by the Company or with which the Company combines or any Subsidiary of such Person.
(kk) "TANDEM SAR" shall mean an SAR that is granted under Sections 6 or 10 of the Plan in relation to a particular Option and that can be exercised only upon the surrender to the Company, unexercised, of that portion of the Option to which the SAR relates.
(ll) "TERMINATION OF SERVICE" shall mean the termination of the service relationship, whether employment or otherwise, between a Participant and the Company and any Subsidiary or Affiliate of the Company, regardless of the fact that severance or similar payments are made to the Participant for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability or Retirement. The Committee shall, in its absolute discretion, determine the effect of all matters and questions relating to a Termination of Service, including, but not by way of limitation, the question of whether a leave of absence constitutes a Termination of Service, or whether a Termination of Service is for Cause. Unless otherwise provided in an applicable Award Agreement, with respect to Awards constituting a “deferral of compensation” subject to Section 409A of the Code, a “Termination of Service” shall have occurred only if the event constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the U.S. Treasury Regulations.
SECTION 3. ADMINISTRATION
3.1 Authority of Committee. The Plan shall be administered by the Committee, which shall be appointed by and serve at the pleasure of the Board; provided, however, with respect to Awards to Outside Directors, all references in the Plan to the Committee shall be deemed to be references to the Board.
Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority in its discretion to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of nominees exceedsShares to be covered by, or with respect to which payments, rights or other matters are to be calculated in connection with Awards; (iv) determine the timing, terms and conditions of any Award; (v) accelerate the time at which all or any part of an Award may be settled or exercised; (vi) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited or suspended; (vii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (viii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (ix) except to the extent prohibited by Section 6.2, amend or modify the terms of any Award at or after grant with the consent of the holder of the Award; (x) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (xi) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan, subject to the exclusive authority of the Board under Section 14 hereunder to amend or terminate the Plan. Notwithstanding the provisions of Section 6.2 hereof and except as permitted by the provisions of Section 4.2 and Section 14 hereof, the Committee shall not have the power to (i) amend the terms of previously granted Options or SARs to reduce the Option Price or Grant Price, as applicable, of such Options or SARs, or (ii) cancel such Options or SARs in exchange for cash, other Awards, Options or SARs with a lower Option Price or Grant Price, as applicable, than the cancelled Options or SARs.
3.2 Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Subsidiary or Affiliate, any Participant and any holder or beneficiary of any Award.
3.3 Action by the Committee. The Committee shall select one of its members as its Chairperson and shall hold its meetings at such times and places and in such manner as it may determine. A majority of its members shall constitute a quorum. All determinations of the Committee shall be made by not less than a majority of its members. Any decision or determination reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made by a majority vote at a meeting duly called and held. The Committee may appoint a Secretary and may make such rules and regulations for the conduct of its business as it shall deem advisable.
3.4 Delegation. Subject to the terms of the Plan and applicable law, the Committee may delegate to one or more officers or managers of the Company or of any Subsidiary or Affiliate, or to a committee of such officers or managers, the authority, subject to such terms and limitations as the Committee shall determine, to grant Awards to, or to cancel, modify or waive rights with respect to, or to alter, discontinue, suspend or terminate Awards held by Participants who are not officers or directors of the Company for purposes of Section 16 or who are otherwise not subject to such section.
3.5 No Liability. No member of the Board or Committee shall be liable for any action taken or determination made in good faith with respect to the Plan or any Award granted hereunder.
SECTION 4. SHARES AVAILABLE FOR AWARDS
4.1 Shares Available.
(a)Subject to the remaining provisions of this Section 4.1 and the provisions of Section 4.2 hereof, the stock to be subject to Awards under the Plan shall be the Shares of the Company and the maximum number of Shares with respect to which Awards may be granted under the Plan (the “Share Reserve”) shall be 1,669,883 (of which, not more than 1,250,000 Shares shall be eligible to be subject to Incentive Stock Options), which includes 1,200,000 newly authorized shares and 469,883 shares which were authorized to be issued under the Pinnacle Financial Partners, Inc. 2014 Amended and Restated Equity Incentive Plan (the "2014 Plan") but were not issued under the 2014 Plan as of February 19, 2018. After the Effective Date set forth in Section 16.1, no new awards will be made under the 2014 Plan.
(b)Notwithstanding the foregoing and subject to adjustment as provided in Section 4.2, the Share Reserve shall be (i) decreased by the number of positions onShares issued under the Board2014 Plan between February 19, 2018 and the Effective Date (as set forth in Section 16.1) and (ii) increased by the number of DirectorsShares with respect to which Options or other Awards were granted under the 2014 Plan but which, after February 19, 2018, terminate, expire unexercised or are settled for cash, forfeited or cancelled without the delivery of Shares under the terms of the 2014 Plan (including in connection with the payout of any withholding taxes associated with the vesting or settlement of awards granted under the 2014 Plan).
(c)If, after the Effective Date of the Plan, any Shares covered by an Award granted under this Plan, or to which such an Award relates, are forfeited, or if such an Award is settled for cash or otherwise terminates, expires unexercised or is canceled without the delivery of Shares, then the Shares covered by such Award, or to which such Award relates, or the number of Shares otherwise counted against the aggregate number of Shares with respect to which Awards may be filledgranted, to the extent of any such settlement, forfeiture, termination, expiration or cancellation, shall again become Shares with respect to which Awards may be granted. In the event that any Option or other Award granted hereunder is exercised through the delivery of Shares or in the event that withholding tax liabilities arising from such Award are satisfied by election at the meeting,withholding of Shares by the directorsCompany, the number of Shares available for Awards under the Plan shall be electedincreased by the number of Shares so surrendered or withheld.
(d)Substitute Awards shall not reduce the Shares authorized for grant under the Plan, nor shall Shares subject to a pluralitySubstitute Award again be available for Awards under the Plan to the extent of any forfeiture, expiration or cash settlement as provided in paragraph (b) above. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the votes cast in personentities party to such acquisition or by proxy atcombination) may be used for Awards under the meeting at which a quorum is present. For purposes of this Article 7, a majorityPlan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the votes cast meanspre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Associates or Directors prior to such acquisition or combination.
4.2 Adjustments. In the event that any extraordinary dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares then the Committee shall in an equitable and proportionate manner (and, as applicable, in such manner as is consistent with Sections 409A and 422 of the Code and the regulations thereunder)): (i) adjust (1) the aggregate number of Shares or other securities of the Company (or number and kind of other securities or property) with respect to which Awards may be granted under the Plan; (2) the number of Shares or other securities of the Company (or number and kind of other securities or property) subject to outstanding Awards under the Plan; and (3) the grant or exercise price with respect to any Award under the Plan, provided that the number of shares voted "for"subject to any Award shall always be a nomineewhole number; (ii) provide
for an equivalent award in respect of securities of the surviving entity of any merger, consolidation or other transaction or event having a similar effect; or (iii) make provision for a cash payment to the holder of an outstanding Award.
4.3 Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of issued Shares which have been reacquired by the Company.
SECTION 5. ELIGIBILITY
Any Associate or Director shall be eligible to be designated a Participant; provided, however, that Outside Directors shall only be eligible to receive Awards granted consistent with Section 10.
SECTION 6. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
6.1 Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Options and SARs shall be granted, the number of Shares, if any, subject to each Award, the Option Price of an Option or the price at which an SAR shall be granted (the "Grant Price") and the conditions and limitations applicable to the exercise of each Option and SAR. An Option may be granted with or without a Tandem SAR. An SAR may be granted with or without a related Option. The Committee shall have the authority to grant Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of Options. In the case of Incentive Stock Options or Tandem SARs related to such Options, the terms and conditions of such grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the Code, as from time to time amended, and any regulations implementing such statute. A person who has been granted an Option or SAR under this Plan may be granted additional Options or SARs under the Plan if the Committee shall so determine; provided, however, that to the extent the aggregate Fair Market Value (determined at the time the Incentive Stock Option or Tandem SAR related thereto is granted) of the Shares with respect to which all Incentive Stock Options or Tandem SARs related to such Option are exercisable for the first time by an Associate during any calendar year (under all plans of the Company described in subsection (d) of Section 422 of the Code) exceeds $100,000, such Options shall be treated as Non-Qualified Stock Options.
6.2 Price. The Committee in its sole discretion shall establish the Option Price at the time each Option is granted, which price shall be set forth in an Award Agreement. Except in the case of Substitute Awards, the Option Price of an Option may not be less than 100% of the Fair Market Value of the Shares with respect to which the Option is granted on the date of grant of such Option.
The Committee in its sole discretion shall establish the Grant Price at the time each SAR is granted, which price shall be set forth in an Award Agreement. Except in the case of Substitute Awards, the Grant Price of an SAR may not be less than 100% of the Fair Market Value of the Shares with respect to which the SAR is granted on the date of grant of such SAR.
6.3 Term. Subject to the Committee's authority under Section 3.1 and the provisions of Section 6.5, each Option and SAR and all rights and obligations thereunder shall expire on the date determined by the Committee and specified in the Award Agreement. The Committee shall be under no duty to provide terms of like duration for Options or SARs granted under the Plan. Subject to the following sentence, no Option or SAR shall be exercisable after the expiration of ten (10) years from the date such Option or SAR was granted. An Award Agreement may provide, or be amended to provide, that the period of time over which an Option or SAR, other than an Incentive Stock Option, may be exercised shall be automatically extended if on the scheduled expiration of such Award, the Participant’s exercise of such Award would violate applicable securities law; provided, that during the extended exercise period, the Option or SAR may be exercised only to the extent such Award was exercisable in accordance with its terms immediately prior to such scheduled expiration date, and such extended exercise period shall end not later than thirty (30) days after the exercise of such Option or SAR first would no longer violate such laws.
6.4 Exercise.
(a) Each Option and SAR shall be exercisable at such times and subject to such terms and conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement or thereafter. The Committee shall have full and complete authority to determine, subject to Section 6.5 herein, whether an Option or SAR will be exercisable in full at any time or from time to time during the term of the Option or SAR, or to provide for the exercise thereof in such installments, upon the occurrence of such events and at such times during the term of the Option or SAR as the Committee may determine.
(b) The Committee may impose such conditions with respect to the exercise of Options or SARs, including without limitation, any relating to the application of federal, state or foreign securities laws or the Code, as it may deem necessary or
advisable. The exercise of any Option granted hereunder shall be effective only at such time as the purchase of Shares pursuant to such exercise will not violate any state or federal securities or other laws.
(c) An Option, or SAR exercisable for Shares, may be exercised in whole or in part at any time, with respect to whole Shares only, within the period permitted thereunder for the exercise thereof, and shall be exercised by written notice of intent to exercise the Option or SAR, delivered to the Company at its principal office, and payment in full to the Company at the direction of the Committee of the amount of the Option Price, in the case of an Option, for the number of Shares with respect to which the Option is then being exercised. A Tandem SAR may be exercised only to the extent that the related Option is exercisable and only when the Fair Market Value exceeds the Option Price of the related Option. The exercise of either an Option or Tandem SAR shall result in the termination of the other to the extent of the number of Shares with respect to which either the Option or Tandem SAR is exercised.
(d) Payment of the Option Price shall be made in cash or cash equivalents, or, at the discretion of the Committee, (i) in whole Shares valued at the Fair Market Value of such Shares on the date of exercise (or next succeeding trading date, if the date of exercise is not a trading date), together with any applicable withholding taxes, or (ii) by a combination of such cash (or cash equivalents) and such Shares.
Subject to applicable securities laws and at the sole discretion of the Company (which may be granted or retracted at any time), an Option may also be exercised (i) by delivering a notice of exercise of the Option and simultaneously selling the Shares thereby acquired, pursuant to a brokerage or similar agreement approved in advance by proper officers of the Company, using the proceeds of such sale as payment of the Option Price, together with any applicable withholding taxes, or (ii)by the Company withholding from the Participant sufficient Shares having an aggregate Fair Market Value at the time of exercise equal to the total Option Price of such underlying Award and any applicable withholding taxes. Until the Participant has been issued the Shares subject to such exercise, he or she shall possess no rights as a shareholder with respect to such Shares.
(e) A SAR may be exercised in whole or in part at any time after such SAR has become exercisable in accordance with the terms of the applicable Award Agreement; provided, however, that no partial exercise of a SAR exercisable for cash shall result in the cash payment to the Participant of less than $250. The partial exercise of a SAR shall not cause the expiration, termination or cancellation of the remaining portion thereof. Upon the partial exercise of a SAR, the Award Agreement evidencing such SAR, marked with such notations as the Committee may deem appropriate to evidence such partial exercise, shall be returned to the Participant exercising such SAR, together with the payment described in Section 6.4(c) or 6.4(f) hereof, as the case may be.
(f) The exercise of a SAR exercisable for cash shall entitle a Participant to a cash payment, for each such SAR exercised, equal to an amount determined by the Committee and as set forth in an Award Agreement. Unless otherwise determined by the Committee and set forth in an Award Agreement, the exercise of a SAR exercisable for cash shall entitle a Participant to a cash payment, for each such SAR exercised, equal to an amount equal to the excess of (i) the Fair Market Value of a Share on the exercise date over (ii) the Grant Price of the SAR as reflected in the applicable Award Agreement. All payments under this Section 6.4(f) shall be made as soon as practicable, but in no event later than ten (10) business days, after the effective date of the exercise of the SAR.
(g) Notwithstanding the foregoing, an Award Agreement may provide, or be amended to provide, that if on the last day of the term of an Option or SAR the Fair Market Value of one Share exceeds the Option Price (or Grant Price, if applicable) per Share, the Participant has not exercised the Award and the Award has not expired, the Award shall be deemed to have been exercised by the Participant on such day with any Option payment made by withholding Shares otherwise issuable in connection with the exercise of the Option. In such event, the Company shall deliver to the Participant the number of Shares for which the Option or SAR was deemed exercised, less the number of Shares required to be withheld for the payment of the total Option Price and required withholding taxes.
(h) A fractional Share shall not be deliverable upon the exercise of a SAR but a cash payment will be made in lieu thereof.
6.5 Ten Percent Stock Rule. Notwithstanding any other provisions in the Plan, if at the time an Option or SAR is otherwise to be granted pursuant to the Plan the Participant owns directly or indirectly (within the meaning of Section 424(d) of the Code) Shares of the Company possessing more than ten percent (10%) of the total combined voting power of all classes of Stock of the Company or its parent or any Subsidiary or Affiliate (within the meaning of Section 422(b)(6) of the Code), then any Incentive Stock Option or Tandem SAR to be granted to such Participant pursuant to the Plan shall satisfy the requirement of Section 422(c)(5) of the Code, and the Option Price shall be not less than 110% of the Fair Market Value of the Shares of the
Company, and such Option by its terms shall not be exercisable after the expiration of five (5) years from the date such Option is granted.
SECTION 7. RESTRICTED SHARES AND RESTRICTED SHARE UNITS
7.1 Grant.
(a) Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Restricted Shares and Restricted Share Units shall be granted, the number of Restricted Shares and/or the number of Restricted Share Units to be granted to each Participant, the duration of the period during which, and the conditions under which, the Restricted Shares and Restricted Share Units may be forfeited to the Company, and the other terms and conditions of such Awards. The Restricted Share and Restricted Share Unit Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time approve, which agreements shall comply with and be subject to the terms and conditions provided hereunder and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan.
(b) Each Restricted Share and Restricted Share Unit Award made under the Plan shall be for such number of Shares as shall be determined by the Committee and set forth in the Award Agreement containing the terms of such Restricted Share or Restricted Share Unit Award. Such agreement shall set forth a period of time during which the grantee must remain in the continuous employment of the Company or a Subsidiary or Affiliate in order for the forfeiture and transfer restrictions to lapse. If the Committee so determines, the restrictions may lapse during such restricted period in installments with respect to specified portions of the Shares covered by the Restricted Share or Restricted Share Unit Award. The Award Agreement may also, in the discretion of the Committee, set forth performance or other conditions, including any of those identified in Section 11, that will subject the Shares to forfeiture and transfer restrictions. The Committee may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding Restricted Share and Restricted Share Unit Awards
7.2 Delivery of Shares and Transfer Restrictions. A Restricted Share Award may be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company or any custodian appointed by the Company for the account of the grantee subject to the terms and conditions of the Plan. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Shares. The grantee shall have such rights with respect to the Restricted Shares as the Committee may determine in its discretion, subject to the following restrictions: (i) the grantee shall not be entitled to delivery of the stock certificate until the expiration of the restricted period and the fulfillment of any other restrictive conditions set forth in the Award Agreement with respect to such Shares; (ii) none of the Shares may be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of during such restricted period or until after the fulfillment of any such other restrictive conditions; (iii) the Committee shall determine whether and under what conditions during the restricted period the grantee shall have the right to vote such shares voted "against"or to receive dividends, or whether such dividends on Restricted Shares shall be held in escrow; and (iv) except as determined by the Committee at or after grant, all of the Shares (and any escrowed dividends) shall be forfeited and all rights of the grantee to such shares (and any escrowed dividends) shall terminate, without further obligation on the part of the Company, upon a Termination of Service and unless any other restrictive conditions relating to the Restricted Share award are met. Any share, any other securities of the Company and any other property (except for cash dividends, which shall be subject to such restrictions as the Committee may determine in its discretion) distributed with respect to the Shares subject to Restricted Share Awards shall be subject to the same restrictions, terms and conditions as such Restricted Shares. Notwithstanding the foregoing, upon a Termination of Service the Company will recoup, recapture, recover or set off (out of amounts otherwise payable or paid to a grantee) or otherwise require the repayment of the amount of all dividends previously paid to such grantee on Restricted Shares forfeited upon such Termination of Service.
7.3 Termination of Restrictions. At the end of the restricted period and provided that nominee; abstentionsany other restrictive conditions of the Restricted Share Award are met, or at such earlier time as otherwise determined by the Committee, all restrictions set forth in the Award Agreement relating to the Restricted Share Award or in the Plan shall lapse as to the Restricted Shares subject thereto, and broker non-votesa stock certificate for the appropriate number of Shares, free of the restrictions and restricted stock legend, shall be delivered to the Participant or the Participant's beneficiary or estate, as the case may be, or the appropriate book-entry registration shall be made. Except as otherwise determined by the Committee at or after grant, (i) Restricted Shares may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of and (ii) all Restricted Shares and all rights of the grantee to such Restricted Shares shall terminate, without further obligation on the part of the Company, upon a Termination of Service and unless any other restrictive conditions relating to the Restricted Share Award are met.
7.4 Payment of Restricted Share Units. Each Restricted Share Unit shall have a value equal to the Fair Market Value of a Share. Restricted Share Units shall be paid in cash, Shares, other securities or other property, as determined in the sole discretion of the Committee, upon the lapse of the restrictions applicable thereto, or otherwise in accordance with the applicable Award Agreement. In addition to the provisions of Section 15.2, the Committee may determine in its discretion that a Participant shall be credited with dividend equivalents on any Restricted Share Units issued to a Participant at the time of any payment of dividends to shareholders on Shares. The amount of any such dividend equivalents, if any, shall equal the amount that would have been payable to the Participant as a shareholder in respect of a number of Shares equal to the number of Restricted Share Units then issued to the Participant for which the Committee has determined the Participant should receive such dividend equivalents. Any such dividend equivalents, if any, shall be credited to the Participant’s account as of the date on which such dividend would have been payable and may, in the Committee’s discretion, be converted into additional Restricted Share Units based upon the Fair Market Value of a Share on the date of such crediting. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both as determined by the Committee. No dividend equivalents shall be paid in respect of Restricted Share Units that are not yet vested. Accordingly, prior to the distribution thereof, any dividend equivalents not yet paid to a Participant shall be subject to the same conditions and restrictions as the Restricted Share Units on which the dividend equivalents have been credited and in the event that dividend equivalents are credited on Restricted Share Units that a Participant subsequently forfeits, the dividend equivalents on such Restricted Share Units shall also be forfeited. Except as otherwise determined by the Committee at or after grant, (i) Restricted Share Units may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of and (ii) all Restricted Share Units and all rights of the grantee to such Restricted Share Units shall terminate, without further obligation on the part of the Company, upon a Termination of Service and unless any other restrictive conditions relating to the Restricted Share Unit Award are met.
SECTION 8. PERFORMANCE AWARDS
8.1 Grant. The Committee shall have sole and complete authority to determine the Participants who shall receive a Performance Award, which shall consist of a right that is (i) denominated in cash or Shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine. Performance Awards shall include, but are not limited to, Performance Shares and Performance Units.
8.2 Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Award, and may amend specific provisions of the Performance Award; provided, however, that such amendment may not adversely affect existing Performance Awards made within a performance period commencing prior to implementation of the amendment.
8.3 Payment of Performance Awards. Performance Awards may be paid in a lump sum or in installments following the close of the performance period or, in accordance with the procedures established by the Committee, on a deferred basis. A Participant's rights to any Performance Award may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered or disposed of in any manner, except by will or the laws of descent and distribution, and/or except as the Committee may determine at or after grant.
8.4 Performance Shares.
(a) Associates and Directors shall be eligible to receive Performance Share Awards. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom Performance Share Awards shall be granted, the number of Performance Shares to be granted to each Participant, the performance targets and goals to be satisfied, the duration of the period during which, and the conditions under which, the Performance Shares may be forfeited to the Company, and the other terms and conditions of such Awards. The Performance Share Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time approve, which agreements shall comply with and be subject to the terms and conditions provided hereunder and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan.
(b) Each Performance Share Award made under the Plan shall be for such number of Shares as shall be determined by the Committee and set forth in the Award Agreement containing the terms of such Performance Share Award.
8.5 Performance Units. Associates and Directors shall be eligible to receive Performance Unit Awards. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Participants to whom
Performance Units shall be granted. Performance Units shall consist of a right that is (i) denominated in cash or shares, (ii) valued, as determined by the Committee, in accordance with the achievement of such performance goals during such performance periods as the Committee shall establish, and (iii) payable at such time and in such form as the Committee shall determine. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Unit Award and the amount and kind of any payment or transfer to be made pursuant to any Performance Unit Award. The Performance Unit Awards shall be evidenced by Award Agreements in such form as the Committee shall from time to time approve, which agreements shall comply with and be subject to the terms and conditions provided hereunder and any additional terms and conditions established by the Committee that are consistent with the terms of the Plan. The applicable Award Agreement shall set forth (i) the dollar value of Performance Units granted to the Participant; (ii) the performance period and performance goals with respect to each such Award; and (iii) any other terms and conditions as the Committee determines in its sole and absolute discretion.
SECTION 9. OTHER STOCK-BASED AWARDS
The Committee shall have the authority to determine the Participants who shall receive an Other Stock-Based Award, which shall consist of any right that is (i) not an Award described in Sections 6, 7 or 8 above and (ii) an Award of Shares or an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of any such Other Stock-Based Award.
SECTION 10. NON-EMPLOYEE DIRECTOR AND OUTSIDE DIRECTOR AWARDS
10.1 The Board may provide that all or a portion of a Non-Employee Director's annual retainer, meeting fees and/or other awards or compensation as determined by the Board, be payable (either automatically or at the election of a Non-Employee Director) in the form of Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Shares, Performance Units and/or Other Stock-Based Awards, including unrestricted Shares. The Board shall determine the terms and conditions of any such Awards, including the terms and conditions which shall apply upon a termination of the Non-Employee Director's service as a member of the Board, and shall have full power and authority in its discretion to administer such Awards, subject to the terms of the Plan and applicable law.
10.2 The Board may also grant Awards to Outside Directors pursuant to the terms of the Plan, including any Award described in Sections 6, 7, 8 and 9 above. With respect to such Awards, all references in the Plan to the Committee shall be deemed to be references to the Board.
10.3 Notwithstanding anything in this Plan to the contrary, the maximum number of Shares subject to Awards granted during a calendar year to any Non-Employee Director, taken together with any cash fees paid to such Non-Employee Director during such calendar year, shall not exceed $750,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes and excluding, for this purpose, the value of any dividends or dividend equivalents paid in accordance with Section 15.2 on certain Awards).
SECTION 11. PROVISIONS APPLICABLE TO COVERED OFFICERS AND PERFORMANCE AWARDS
11.1The Committee may grant Performance Awards to Participants based upon the attainment of performance targets related to one or more performance goals selected by the Committee including from among the goals specified below:
(a) earnings or book value per Share;
(b) net income;
(c) return on equity, assets, capital, capital employed or investment, including after excluding the effects of intangible assets;
(d) earnings before interest, taxes, depreciation and/or amortization;
(e) operating income or profit;
(f) operating efficiencies;
(g) asset quality ratios such as the ratio of criticized/classified assets to capital, the ratio of classified assets to capital and the allowance for loan losses, the ratio of nonperforming loans and/or past due loans greater than 90 days and non-accrual loans to total loans, the ratio of non-accrual loans to total loans, the ratio of net charge-offs to average loans, the ratio of non-performing assets to total loans plus other real estate owned or the ratio of nonperforming assets and potential problem loans to Tier 1 risk-based capital plus the allowance for loan losses, or other similar asset quality measures;
(h) allowance for loan losses;
(i) net interest income, net interest spread, net interest margin, after tax operating income and after tax operating income before preferred stock dividends;
(j) cash flow(s);
(k) total revenues or revenues per employee or per share of capital stock;
(l) stock price or total shareholder return;
(m) growth in deposits;
(n) dividends; or
(o) strategic business objectives, consisting of one or more objectives based on meeting specified cost targets, soundness targets, business expansion goals and goals relating to acquisitions or divestitures; or any combination thereof. Each goal may be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons based on internal targets, the past performance of the Company or any Subsidiary, Affiliates operating unit or division of the Company and/or the past or current performance of other companies, and in the case of earnings-based measures, may use or employ comparisons relating to capital, shareholders' equity and/or Shares outstanding, or to assets or net assets. The Committee may provide for the exclusion of charges or revenue related to events or occurrences which the Committee determines should appropriately be excluded, including (a) restructurings, mergers and acquisitions, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) events either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, (c) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles, or (d) such other similar matters as may be determined by the Committee. The Committee may, at its discretion, waive all or any part of the restrictions applicable to any or all outstanding Performance Awards, including Performance Share Awards and Performance Unit Awards.
SECTION 12. TERMINATION OF EMPLOYMENT
The Committee shall have the full power and authority to determine the terms and conditions that shall apply to any Award upon a Termination of Service, and may provide such terms and conditions in the Award Agreement or in such rules and regulations as it may prescribe.
SECTION 13. CHANGE IN CONTROL
Upon a Change in Control (but only if and to the extent so determined by the Committee at or after grant (subject to any right of approval expressly reserved by the Committee at the time of such determination)), all outstanding Awards shall vest, become immediately exercisable or payable or have all restrictions lifted.
SECTION 14. AMENDMENT AND TERMINATION; RECOUPMENT
14.1 Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or termination shall be made without shareholder approval if such approval is necessary to comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to comply.
14.2 Amendments to Awards. Subject to the restrictions of Sections 3.1 and 6.2, the Committee may waive any conditions or rights under, amend any terms of or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would adversely affect the rights of any Participant or any holder of any Award theretofore granted shall not to that extent be effective without the consent of the affected Participant, holder.
14.3 Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the Company, any Subsidiary or Affiliate, or the financial statements of the Company or any Subsidiary or Affiliate, or of changes in applicable laws, regulations or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
14.4 Recoupment of Awards. Any Award granted pursuant to this Plan shall be subject to mandatory recoupment by the Participant to the Company (i) to the extent set forth in any Award Agreement or (ii) to the extent that such Participant is, or in the future becomes, subject to (a) any “clawback” or recoupment policy adopted by the Company or any Affiliate thereof to comply with the requirements of any applicable laws, rules or regulations, including pursuant to final rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, or otherwise, or (b) any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws, including the Sarbanes-Oxley Act of 2002.
SECTION 15. GENERAL PROVISIONS
15.1 Limited Transferability of Awards. Except as otherwise provided in the Plan, no Award shall be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant, except (i) by will or the laws of descent and distribution, (ii) to a Permitted Transferee and/or (iii) as may be provided by the Committee in its discretion, at or after grant, in the Award Agreement; provided, however, that an Incentive Stock Option shall not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant except by will or the laws of descent and distribution. No transfer of an Award by will or by laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and an authenticated copy of the will and/or such other evidence as the Committee may deem necessary or appropriate to establish the validity of the transfer. A Permitted Transferee may not transfer an Award other than by will or the laws of descent and distribution. For purposes of this Plan, "Permitted Transferee" means the Participant's Immediate Family, a Permitted Trust or a partnership (or other entity) of which the Participant's Immediate Family constitute substantially all of the partners or members, other than charitable and other organizations described in Section 501(c)(3) of the Code. For purposes of this Plan, "Immediate Family" means the Participant's children and grandchildren, including adopted children and grandchildren, stepchildren, parents, stepparents, grandparents, spouse, siblings (including half brothers and sisters), father-in-law, mother-in-law, daughters-in-law and sons-in-law.
For purposes of this Plan, a "Permitted Trust" means a trust solely for the benefit of the Participant, the Participant's Immediate Family or one or more charitable or other organizations described in Section 501(c)(3) of the Code.
15.2 Dividend Equivalents. In the sole and complete discretion of the Committee, an Award may provide the Participant with dividends or dividend equivalents, payable in cash, Shares, other securities or other property on a current or deferred basis. All dividend or dividend equivalents which are not paid currently may, at the Committee’s discretion, be placed into escrow, with or without interest, accrue interest, be reinvested into additional Shares, or in the case of dividends or dividend equivalents credited in connection with Performance Awards, be credited as additional Performance Awards and paid to the Participant if and when, and to the extent that, payment is made pursuant to such Award; provided, that no dividends or dividend equivalents shall be paid with respect to Options or SARs except in connection with an adjustment pursuant to Section 4.2 hereof. The total number of Shares available for grant under Section 4 shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as Performance Awards.
15.3 No Rights to Awards. No Person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards. The terms and conditions of Awards need not be the same with respect to each Participant.
15.4 Share Certificates. All certificates for Shares or other securities of the Company or any Subsidiary or Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the SEC or any state securities commission or regulatory authority, any stock exchange or other market upon which such Shares or other
securities are then listed, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
15.5 Withholding. A Participant may be required to pay to the Company or any Subsidiary or Affiliate and the Company or any Subsidiary or Affiliate shall have the right and is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan, or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding or other taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. Taxes, if withheld, will be withheld at no more than the maximum statutory rate or such other rate as would be required to avoid adverse accounting treatment to the Company. The Committee may provide for additional cash payments to holders of Options to defray or offset any tax arising from the grant, vesting, exercise or payment of any Award.
15.6 Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement that shall be delivered to the Participant and may specify the terms and conditions of the Award and any rules applicable thereto. In the event of a conflict between the terms of the Plan and any Award Agreement, the terms of the Plan shall prevail.
15.7 No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting or continuing in effect other compensation arrangements, which may, but need not, provide for the grant of Options, SARs, Restricted Shares, Restricted Share Units, Performance Shares, Performance Units, Other Stock-Based Awards or other types of Awards provided for hereunder.
15.8 No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Subsidiary or Affiliate. Further, the Company or a Subsidiary or Affiliate may at any time dismiss a Participant from employment, free from any liability or any claim under the Plan, unless otherwise expressly provided in an Award Agreement.
15.9 Compliance with Section 409A of the Code. Notwithstanding any other provisions of the Plan or any Award Agreements thereunder, it is intended that the provisions of the Plan and such Award Agreements comply with Section 409A of the Code, and that no Award shall be granted, deferred, accelerated, extended, paid out or modified under this Plan, or any Award Agreement interpreted, in a manner that would result in the imposition of an additional tax under Section 409A of the Code upon a Participant. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code. In the event that it is reasonably determined by the Board or Committee that, as a result of Section 409A of the Code, payments in respect of any Award under the Plan may not be made at the time contemplated by the terms of the Plan or the relevant Award agreement, as the case may be, without causing the Participant holding such Award to be subject to taxation under Section 409A of the Code, the Company will make such payment on the first day that would not result in the Participant incurring any tax liability under Section 409A of the Code; which, if the Participant is a “specified employee” within the meaning of the Section 409A, shall be the first day following the six-month period beginning on the date of Participant’s Termination of Service. Unless otherwise provided in an Award Agreement or other document governing the issuance of such Award, payment of any Performance Award intended to qualify as a “short term deferral” within the meaning of Section 1.409A-1(b)(4)(i) of the U.S. Treasury Regulations shall be made between the first day following the close of the applicable Performance Period and the last day of the “applicable 2 ½ month period” as defined therein. Notwithstanding the foregoing, each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on him or her, or in respect of any payment or benefit delivered in connection with the Plan (including any taxes and penalties under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold any Participant harmless from any or all such taxes or penalties.
15.10 No Rights as Shareholder. Subject to the provisions of the Plan and the applicable Award Agreement, no Participant or holder or beneficiary of any Award shall have any rights as a shareholder with respect to any Shares to be distributed under the Plan until such person has become a holder of such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Shares hereunder, the applicable Award Agreement shall specify if and to what extent the Participant shall not be entitled to the rights of a shareholder in respect of such Restricted Shares.
15.11 Governing Law. The validity, construction and effect of the Plan and any rules and regulations relating to the Plan and any Award Agreement shall be determined in accordance with the laws of the State of Tennessee without giving effect to conflicts of laws principles.
15.12 Severability. If any provision of the Plan or any Award is, or becomes, or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
15.13 Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance or transfer of such Shares or such other consideration might violate any applicable law or regulation (including applicable non-U.S. laws or regulations) or entitle the Company to recover the same under Exchange Act Section 16(b), and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.
15.14 No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary or Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Subsidiary or Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Subsidiary or Affiliate.
15.15 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.
15.16 Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to be votes cast for purposesthe construction or interpretation of tabulating the vote.Plan or any provision thereof.
SECTION 16. TERM OF THE PLAN
16.1 Effective Date. The Plan shall be effective as of April 17, 2018 provided it has been approved by the Board and by the Company's shareholders.
16.2 Expiration Date. No new Awards shall be granted under the Plan after April 17, 2028. Unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue or terminate any such Award or to waive any conditions or rights under any such Award shall, continue after April 17, 2028.
PINNACLE FINANCIAL PARTNERS, INC.
By:
Name: M. Terry Turner
Title: President and Chief Executive Officer
PINNACLE FINANCIAL PARTNERS, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 21, 201517, 2018
The undersigned hereby appoints Robert A. McCabe, Jr. or M. Terry Turner or either of them, as Proxies, each with the power to appoint his substitute, and hereby authorizes them or either of them to represent and to vote, as designated below, all of the Common Stock of Pinnacle Financial Partners, Inc. (the “Company”), which the undersigned would be entitled to vote if personally present at the 20152018 Annual Meeting of Shareholders to be held in our offices on the eighth floor of the Pinnacle at Symphony Place at 150 Third Avenue South, Nashville, Tennessee 37201 and at any adjournments of the annual meeting, upon the proposals described in the accompanying Notice of the Annual Meeting and the Proxy Statement relating to the 20152018 Annual Meeting, receipt of which are hereby acknowledged.
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE SHAREHOLDERS VOTE "FOR"“FOR” PROPOSALS 1 THROUGH 6.5.
PROPOSAL #1: To elect the three (3)seventeen persons listed below to serve as Class III Directors of Pinnacle Financial Partners, Inc.directors, for a one-year term if Proposal #2 is approved, or a three-year term if Proposal #2 is not approved:of one year and until the due election and qualification of their successors:
Class III Directors:
Colleen Conway-Welch Ed. C. Loughry, Jr. M. Terry Turner
|
| | |
Abney S. Boxley, III | Charles E. Brock | Renda J. Burkhart |
Gregory L. Burns | Richard D. Callicutt, II | Marty G. Dickens |
Thomas C. Farnsworth, III | Joseph C. Galante | Glenda Baskin Glover |
David B. Ingram | Robert A. McCabe, Jr. | Ronald L. Samuels |
Gary L. Scott | Reese L. Smith, III | Thomas R. Sloan |
G. Kennedy Thompson | M. Terry Turner | |
| | |
[ ] FOR all[ ] WITHHOLD on all [ ] FOR ALL EXCEPT ] FOR all | [ ] AGAINST all | [ ] FOR ALL EXCEPT |
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION TO THE CONTRARY IS INDICATED, IT WILL BE VOTED FOR EACH OF THE DIRECTOR NOMINEES AND FOR PROPOSALS #1, #2, #3, #4 #5 AND #6#5