WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
and
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 28, 2009
NOTICE is hereby given that the Annual Meeting of Shareholders of Weststar Financial Services Corporation (the “Company”) will be held as follows:
| | Place: | Renaissance Asheville Hotel |
| | Asheville, North Carolina 28801 |
The purposes of the meeting are:
| 1. | To elect four members of the Board of Directors for three-year terms. |
| 2. | To ratify the appointment of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for 2009. |
| 3. | To transact any other business that may properly come before the meeting. |
We have elected to furnish our proxy solicitation materials via U.S. mail and also to notify you of the availability of proxy materials on the Internet. You may access our Proxy Statement, Notice of Meeting and Annual Report at http://www.bankofasheville.com/noticeandaccess.
You are cordially invited to attend the meeting in person. However, even if you expect to attend the meeting, you are requested to complete, sign and date the enclosed appointment of proxy and return it in the envelope provided for that purpose to ensure that a quorum is present at the meeting. The giving of an appointment of proxy will not affect your right to revoke it or to attend the meeting and vote in person.
| By Order of the Board of Directors |
| |
| /s/ Randall C. Hall |
| |
| Randall C. Hall |
| Executive Vice President & Secretary |
March 23, 2009
WESTSTAR FINANCIAL SERVICES CORPORATION
79 Woodfin Place
Asheville, North Carolina 28801
(828) 252-1735
PROXY STATEMENT
Mailing Date: On or about March 23, 2009
ANNUAL MEETING OF SHAREHOLDERS
To Be Held
April 28, 2009
General
This Proxy Statement is furnished in connection with the solicitation of the enclosed appointment of proxy by the Board of Directors of Weststar Financial Services Corporation (the “Company”) for the 2009 Annual Meeting of Shareholders of the Company (the “Annual Meeting”) to be held at the Renaissance Asheville Hotel, One Thomas Wolfe Plaza, Asheville, North Carolina, at 3:00 p.m. on April 28, 2009, and any adjournments thereof.
Solicitation and Voting of Appointments of Proxy; Revocation
Persons named in the appointment of proxy as proxies to represent shareholders at the Annual Meeting are W. Edward Anderson, Randall C. Hall and Darryl J. Hart. Shares represented by each appointment of proxy, which is properly executed and returned, and not revoked, will be voted in accordance with the directions contained in the appointment of proxy. If no directions are given, each such appointment of proxy will be voted FOR the election of each of the four nominees for director named in Proposal 1 below and FOR Proposal 2. If, at or before the time of the Annual Meeting, any nominee named in Proposal 1 has become unavailable for any reason, the proxies will have the discretion to vote for a substitute nominee. On such other matters as may come before the meeting, the proxies will be authorized to vote shares represented by each appointment of proxy in accordance with their best judgment on such matters. An appointment of proxy may be revoked by the shareholder giving it at any time before it is exercised by filing with Randall C. Hall, Secretary of the Company, a written instrument revoking it or a duly executed appointment of proxy bearing a later date, or by attending the Annual Meeting and announcing his or her intention to vote in person.
Authorization to Vote on Adjournment and Other Matters
Unless the Secretary of the Company is instructed otherwise, by signing an appointment of proxy, shareholders will be authorizing the proxyholders to vote in their discretion regarding any procedural motions that may come before the Annual Meeting. For example, this authority could be used to adjourn the Annual Meeting if the Company believes it is desirable to do so.
Adjournment or other procedural matters could be used to obtain more time before a vote is taken in order to solicit additional appointments of proxy to establish a quorum or to provide additional information to shareholders. However, appointments of proxy voted against the Proposals will not be used to adjourn the Annual Meeting. The Company does not have any plans to adjourn the meeting at this time, but intends to do so, if needed, to promote shareholder interests.
Expenses of Solicitation
The Company will pay the cost of preparing, assembling and mailing this Proxy Statement and other proxy solicitation expenses. In addition to the use of the mails, appointments of proxy may be solicited in person or by telephone, without additional compensation, by the officers, directors and employees of the Company and its wholly-owned subsidiary, Bank of Asheville (the “Bank”).
Record Date
The close of business on February 27, 2009 has been fixed as the record date (the “Record Date”) for the determination of shareholders entitled to notice of and to vote at the Annual Meeting. Only those shareholders of record on that date will be eligible to vote on the Proposals described herein.
Voting Securities
The voting securities of the Company are the shares of its common stock, par value $1.00 per share, of which 9,000,000 shares are authorized, and preferred stock, no par value, of which 1,000,000 shares are authorized. At December 31, 2008, there were 2,125,747 shares of common stock and no shares of preferred stock outstanding. There were approximately 800 holders of record of the Company’s common stock on this date.
Voting Procedures; Quorum; Votes Required for Approval
Each shareholder is entitled to one vote for each share held of record on the Record Date on each director to be elected and on each other matter submitted for voting. In accordance with North Carolina law, shareholders will not be entitled to vote cumulatively in the election of directors at the Annual Meeting.
A majority of the shares of the Company’s common stock issued and outstanding on the Record Date must be present in person or by proxy to constitute a quorum for the conduct of business at the Annual Meeting.
Assuming a quorum is present, in the case of Proposal 1 below, the four nominees receiving the greatest number of votes shall be elected.
In the case of Proposal 2, for such proposal to be approved, the proposal must be approved by a majority of the shares actually voted on such proposal. Abstentions and broker non-votes will have no effect.
Ownership of Voting Securities
As of December 31, 2008, no shareholder known to management owned more than 5% of the Company’s common stock, except those listed below.
NAME AND ADDRESS OF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP | PERCENT OF CLASS |
Jacob O. Kamm, II Bay Village, OH | 205,871(1) | 9.68% |
Oberalpen Capital, Ltd. Bay Village, OH | 189,765 | 8.93% |
___________________
(1) Includes 189,765 shares owned of record by Oberalpen Capital, Ltd., Bay Village, OH, which Mr. Kamm may be deemed to own beneficially as principal of Oberalpen Capital, Ltd.
As of December 31, 2008, the beneficial ownership of the Company’s common stock, by directors and executive officers individually, and by directors and executive officers as a group, was as follows:
NAME AND ADDRESS OF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)(2) | PERCENT OF CLASS(3) |
W. Edward Anderson Asheville, NC | 92,193 | 4.32 |
M. David Cogburn, M.D. Asheville, NC | 55,102(4) | 2.59 |
Steven D. Cogburn Asheville, NC | 7,520(5) | 0.35 |
G. Gordon Greenwood Asheville, NC | 97,348 | 4.43 |
Patricia P. Grimes Asheville, NC | 3,748 | 0.18 |
Randall C. Hall Asheville, NC | 51,309 | 2.39 |
Darryl J. Hart Asheville, NC | 35,407 | 1.66 |
Carol L. King Asheville, NC | 45,705(6) | 2.14 |
NAME AND ADDRESS OF BENEFICIAL OWNER | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(1)(2) | PERCENT OF CLASS(3) |
Stephen L. Pignatiello Asheville, NC | 45,088(7) | 2.11 |
Laura A. Webb Asheville, NC | 29,936(8) | 1.41 |
David N. Wilcox Asheville, NC | 43,510 | 2.03 |
All Directors and Executive Officers as a Group (11 persons) | 506,866 | 21.60 |
_____________
(1) Except as otherwise noted, to the best knowledge of the Company’s management, the above individuals and group exercise sole voting and investment power with respect to all shares shown as beneficially owned other than the following shares as to which such powers are shared: Dr. Cogburn – 236 shares; and Ms. Webb – 2,350 shares.
(2) Included in the beneficial ownership tabulations are the following options to purchase shares of common stock of the Company: Mr. Anderson – 14,523 shares; Dr. Cogburn – 10,975 shares; Mr. Greenwood – 78,407 shares; Mr. Hall – 31,666 shares; Mr. Hart – 20,385 shares; Ms. King – 20,385 shares; Mr. Pignatiello – 20,385 shares; Ms. Webb – 10,975 shares; and Mr. Wilcox – 20,385 shares.
(3) The calculation of the percentage of class beneficially owned by each individual and the group is based on a total of 2,125,747 shares of common stock outstanding as of December 31, 2008 and the number of options capable of being exercised by each person or the group before March 1, 2009.
(4) Includes 236 shares owned by Dr. Cogburn’s spouse and 570 shares held as custodian for minor children.
(5) Includes 570 shares owned by Mr. Cogburn as custodian for minor children.
(6) Includes 260 shares held by Ms. King as custodian for a minor child.
(7) Includes 14,560 shares held by Mr. Pignatiello as custodian for minor children.
(8) Includes 2,350 shares owned by Ms. Webb’s spouse.
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and executive officers of the Company are required by federal law to file reports with the Securities and Exchange Commission (“SEC”) regarding the amount of and changes in their beneficial ownership of the Company’s common stock. To the best knowledge of the management of the Company based upon information supplied to the Company by the directors and executive officers, all required reports of directors and executive officers of the Company have been timely filed.
PROPOSAL 1: ELECTION OF DIRECTORS
The bylaws of the Company provide that its Board of Directors shall consist of between eight (8) and twelve (12) members, as determined by the Board of Directors or the shareholders, and, if there are nine (9) or more directors, that they shall be classified into three groups with staggered terms of three (3) years in as equal numbers as possible. The Board of Directors has set the number of directors of the Company at ten (10). The following directors whose terms expire at the Annual Meeting have been renominated to three-year terms by the Nominating Committee of the Board of Directors:
| | Position | Director | Principal Occupation |
| Name and Age | Held | Since | and Business Experience During Last Five Years |
| | | | |
M. David Cogburn, M.D. (53) | Director | 1999 | President, Carolina Mountain Dermatology, P.A., Arden, NC |
| | | | |
Steven D. Cogburn (52) | Director | 2003 | Clerk of Superior Court Buncombe County, Asheville, NC |
| | | | |
Stephen L. Pignatiello (49) | Director | 1997 | President , P. Comms International, LLC, Asheville, NC (Wine Importer; President, Wire Connection Corp. |
| | | | |
Laura A. Webb (49) | Director | 1999 | President, Webb Investment Services, Inc., Asheville, NC; Chairman of the Board, R. Stanford Webb Agency, Asheville, NC |
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” EACH OF THE FOUR NOMINEES FOR DIRECTOR OF THE COMPANY FOR TERMS OF THREE YEARS.
Incumbent Directors
The Company’s Board of Directors includes the following directors whose terms will continue after the Annual Meeting. Each of the four nominees listed above and the incumbent directors listed below also serve as directors of the Bank.
| | Director | Term | Principal Occupation |
| Name and Age | Since | Expires | and Business Experience During the Past Five Years |
| | | | |
W. Edward Anderson (69) | 1997 | 2010 | Retired Plant Manager, Continental Teves, Asheville, NC |
| | | | |
Patricia P. Grimes (56) | 2003 | 2011 | President/General Manager, Harry’s Cadillac Pontiac GMC Truck Co., Asheville, NC |
| | | | |
G. Gordon Greenwood (62) | 2000 | 2010 | President and Chief Executive Officer of the Company and the Bank, 2000-Present |
| | | | |
| | | | |
| | Director | Term | Principal Occupation |
| Name and Age | Since | Expires | and Business Experience During the Past Five Years |
| | | | |
Darryl J. Hart (47) | 1997 | 2010 | Vice President and General Manager, Hart Funeral Services, Inc., Asheville, NC |
| | | | |
Carol L.King (63) | 1997 | 2011 | CPA and President, Carol L. King & Associates, P.A. Asheville, NC |
| | | | |
David N. Wilcox (48) | 1997 | 2011 | Financial Consultant, Hilliard Lyons, Inc., Asheville, NC Partner, Reservation Management Services, Asheville, NC, 1990-Present; Vice President, Wilcox Travel Agency, Inc., Asheville, NC 1984-2004 |
Director Independence
With the exception of Mr. Greenwood, each member of the Company’s Board of Directors is “independent” as defined by Nasdaq listing standards and the regulations promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”). In making this determination, the Board considered all insider transactions with directors for the provision of goods or services to the Company. All such transactions were conducted at arm’s length upon terms no less favorable than those that would be available from an independent third party.
Director Relationships
One family relationship on the Board of Directors exists. M. David Cogburn, M.D. and Steven D. Cogburn are brothers.
No director is a director of any other corporation with a class of securities registered pursuant to Section 12 of the Exchange Act or subject to the requirements of Section 15(d) of the Exchange Act, or any company registered as an investment company under the Investment Company Act of 1940.
Meetings and Committees of the Board of Directors
The Company’s Board of Directors held twelve (12) regular meetings in 2008. All directors attended 75% or more of the aggregate number of meetings of the Board of Directors and any committees on which he or she served with the exception of Steven D. Cogburn and Darryl J. Hart. The Board of Directors intends to meet monthly in 2009.
It is the policy of the Company that directors attend each annual meeting and any special meetings of the Company’s shareholders. Nine (9) of the Company’s ten (10) directors attended the 2008 Annual Meeting of Shareholders.
The Board of Directors has appointed several standing committees including an Audit Committee, Compensation/Nominating Committee and Executive Committee. During 2008, the Audit Committee met five (5) times, the Compensation/Nominating Committee met once and the Executive Committee met once. These committees intend to continue to meet as needed during 2009.
The composition of each of the committees of the Board of Directors is as follows:
| Audit Committee | Compensation/Nominating
Committee | Executive Committee |
| | | |
W. Edward Anderson M. David Cogburn, M.D. Patricia P. Grimes Darryl J. Hart Carol L. King Laura A. Webb | W. Edward Anderson M. David Cogburn, M.D. G. Gordon Greenwood* Carol L. King Stephen L. Pignatiello David N. Wilcox | W. Edward Anderson M. David Cogburn, M.D. G. Gordon Greenwood Carol L. King Stephen L. Pignatiello David N. Wilcox |
| | | |
| * Non-voting advisory member | | |
Compensation/Nominating Committee
The Company’s standing Compensation/Nominating Committee fulfills the duties of the Nominating Committee. The duties of the Nominating Committee are: (i) to assist the Board, on an annual basis, by identifying individuals qualified to become Board members, and to recommend to the Board the director nominees for the next annual meeting of shareholders; (ii) to assist the Board in the event of any vacancy on the Board by identifying individuals qualified to become Board members, and to recommend to the Board qualified individuals to fill any such vacancy; and (iii) to recommend to the Board, on an annual basis, director nominees for each committee of the Board.
The Company is not a member of any securities exchange; however, the committee members are “independent” as defined by Nasdaq listing standards. The bylaws of the Company state that candidates may be nominated for election to the Board of Directors by the Nominating Committee or by any shareholder of the Company’s common stock. It is the policy of the Nominating Committee to consider all shareholder nominations. Shareholder nominations must be submitted to the Nominating Committee in writing on or before September 30th of the year preceding the Annual Meeting at which the nominee would stand for election to the Board of Directors and must be accompanied by each nominee’s written consent to serve as a director of the Company if elected. The bylaws of the Company require that all nominees for director, including shareholder nominees, have business, economic or residential ties to the Company’s market area and have owned at least 1,000 shares of the Company’s common stock for a period of twelve (12) months preceding the date of the nomination. In evaluating nominees for director, the Nominating Committee values community involvement and experience in finance or banking including prior service as an officer or director of an entity engaged in the financial services business, although such experience is not a prerequisite for nomination. The Board of Directors has adopted a formal written Nominating Committee Charter, which is available at www.bankofasheville.com.
The Board of Directors has also adopted a Compensation Committee charter that sets forth the powers and responsibilities of the committee. The Compensation Committee charter is available at www.bankofasheville.com.
In order to determine the elements and levels of the Company’s director compensation and to gain an understanding of any trends impacting director compensation generally, the committee periodically gathers information on director compensation, including fees, stock options, and other benefits, from similarly situated financial institutions. This information is typically gathered by the President and Chief Executive Officer at the request of the committee. The committee weighs this information and reviews the Company’s overall performance and makes recommendations regarding director compensation to the full board.
In order to assist it in determining the elements and levels of executive compensation, the committee obtains executive salary range data from an independent third party salary administration consulting firm. The committee assesses this information along with the Company’s performance in determining executive compensation. The committee does not otherwise delegate authority in connection with setting director and executive compensation. This consulting firm also assists the committee in designing and administering a non-equity incentive plan for executive officers, which plan is described more fully on page 13.
Report of Audit Committee
The Company has a standing Audit Committee. The Audit Committee is responsible for receiving and reviewing the annual audit report of the Company’s independent auditors and reports of examinations by bank regulatory agencies, and helps formulate, implement, and review the internal audit programs of the Company and the Bank. The Audit Committee assesses the performance and independence of the Company’s independent auditors and recommends their appointment and retention. The Audit Committee has in place pre-approval policies and procedures that involve assessment of the performance and independence of the Company’s independent auditors, evaluation of any conflicts of interest that may impair the independence of the independent auditors and pre-approval of an engagement letter that outlines all services to be rendered by the independent auditors. All audit, non-audit and tax services rendered by the Company’s independent auditors were subject to pre-approval by the Audit Committee and no such pre-approvals were waived.
During the course of its examination of the Company’s audit process in 2008, the Audit Committee reviewed and discussed the audited financial statements with management. The Audit Committee also discussed with the independent auditors, Dixon Hughes PLLC, all matters required to be discussed by the Statement of Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T. Furthermore, the Audit Committee received from Dixon Hughes PLLC disclosures regarding their independence required by the Independence Standards Board Standard No. 1, as amended and discussed with Dixon Hughes PLLC their independence.
Based on the review and discussions above, the Audit Committee: (i) recommended to the Board that the audited financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2008 for filing with the SEC; and (ii) recommended that shareholders ratify the appointment of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for 2009.
The Audit Committee has a written charter, which is reviewed by the committee for adequacy on an annual basis. A copy of the Audit Committee Charter is available at www.bankofasheville.com.
The Audit Committee members are “independent” and “financially literate” as defined by the Nasdaq listing standards. The Board of Directors has determined that Carol L. King, CPA, a member of the Audit Committee, meets the SEC requirements for qualification as an “audit committee financial expert.” An audit committee financial expert is defined as a person who has the following attributes: (i) an understanding of generally accepted accounting principles and financial statements; (ii) the ability to assess the general application of generally accepted accounting principles in connection with the accounting for estimates, accruals and reserves; (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth andlevel of complexity of issues that can reasonably be expected to be raised in the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities; (iv) an understanding of internal controls and procedures for financial reporting; and (v) an understanding of audit committee functions.
Audit Fees
The aggregate fees billed by Dixon Hughes PLLC for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2008 and for the review of the financial statements included in the Company’s quarterly reports on Form 10-QSB during the fiscal year ended December 31, 2008 were $70,799. The aggregate fees billed by Dixon Hughes PLLC for professional services rendered for the audit of the Company’s annual financial statements for the fiscal year ended December 31, 2007 and for the review of the financial statements included in the Company’s quarterly reports on Form 10-QSB during the fiscal year ended December 31, 2007 were $64,000.
Audit-Related Fees
The aggregate fees billed by Dixon Hughes PLLC for assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements, but which are not included in audit fees disclosed above, were $5,153 and $1,200 for the fiscal years ended December 31, 2008 and 2007, respectively.
Tax Fees
The aggregate fees billed by Dixon Hughes PLLC for tax compliance, tax advice and tax planning during the fiscal years ended December 31, 2008 and 2007 were $12,562 and $9,010, respectively.
All Other Fees
There were no additional fees billed by Dixon Hughes PLLC during the fiscal year ended December 31, 2008 or the fiscal year ended December 31, 2007.
This report is submitted by the Audit Committee: W. Edward Anderson, M. David Cogburn, M.D., Patricia P. Grimes, Darryl J. Hart, Carol L. King and Laura A. Webb.
Director Compensation
Directors received compensation of $300 for every meeting attended during the fiscal year ended December 31, 2008 and an annual retainer of $2,000. Mr. Greenwood does not receive the $2,000 annual retainer and does not receive the per-meeting fee.
The shareholders of the Company approved the Weststar Financial Services Corporation 2001 Nonqualified Stock Option Plan (the “2001 Nonqualified Option Plan”) at the 2001 Annual Meeting of shareholders pursuant to which options on 82,584 shares (as adjusted) of the Company’s common stock were made available for issuance to members of the Company’s Board of Directors. During 2001, options to purchase up to 82,584 shares (as adjusted) of the Company’s common stock were granted under the 2001 Nonqualified Option Plan, all of which have either been exercised or currently remain outstanding. No options were granted under the 2001 Nonqualified Option Plan during the fiscal year ended December 31, 2008.
The shareholders of the Company approved the Weststar Financial Services Corporation 2007 Nonstatutory Stock Option Plan (the “2007 Nonstatutory Option Plan”) at the 2007 Annual Meeting of shareholders pursuant to which options on 50,000 shares (as adjusted) of the Company’s common stock were made available for issuance to members of the Company’s Board of Directors. No options were granted under the 2007 Nonstatutory Option Plan during the fiscal year ended December 31, 2008.
The following table presents a summary of all compensation paid by the Company to its directors for their service as such during the fiscal year ended December 31, 2008.
DIRECTOR COMPENSATION TABLE
| | Fees Earned | | | | |
| | Or | Stock | Option | All Other | |
| Name | Paid in Cash | Awards | Awards | Compensation | Total |
| | | | | | |
| W. Edward Anderson | $8,600 | -- | -- | -- | $8,600 |
| M. David Cogburn, M.D. | 5,300 | -- | -- | -- | 5,300 |
| Stephen D. Cogburn | 8,000 | -- | -- | -- | 8,000 |
| G. Gordon Greenwood | -- | -- | -- | -- | --(1) |
| Patricia P. Grimes | 6,200 | -- | -- | -- | 6,200 |
| Darryl J. Hart | 7,700 | -- | -- | -- | 7,700 |
| Carol L. King | 9,800 | -- | -- | -- | 9,800 |
| Stephen L. Pignatiello | 7,400 | -- | -- | -- | 7,400 |
| Laura A. Webb | 6,500 | -- | -- | -- | 6,500 |
| David N. Wilcox | 8,600 | -- | -- | -- | 8,600 |
| (1) | Compensation paid to Mr. Greenwood in connection with his service as President and Chief Executive Officer of the Company and the Bank is presented in the Summary Compensation Table on page 13. |
Indebtedness of and Transactions with Management
The Bank has had, and expects to have in the future, transactions in the ordinary course of business with certain of its current directors, nominees for director, executive officers and their associates. All loans included in such transactions were made on substantially the same terms, including interest rates, repayment terms and collateral, as those prevailing at the time such loans were made for comparable transactions with other persons, and do not involve more than the normal risk of collectibility or present other unfavorable features.
Loans made by the Bank to directors and executive officers are subject to the requirements of Regulation O of the Board of Governors of the Federal Reserve System. Regulation O requires, among other things, prior approval of the Board of Directors with any “interested director” not participating, dollar limitations on amounts of certain loans and prohibits any favorable treatment being extended to any director or executive officer in any of the Bank’s lending matters. To the best knowledge of the management of the Company and the Bank, Regulation O has been complied with in its entirety.
Executive Officers
Set forth below is certain information regarding the Company’s executive officers.
| | | Position with | |
| Name | Age | the Company | Business Experience |
| G. Gordon Greenwood | 62 | Director, President | President and Chief Executive Officer of the |
| | | and Chief Executive | Company and the Bank, 2000-Present |
| | | Officer | |
| | | | |
| Randall C. Hall | 43 | Executive Vice | Executive Vice President, Secretary, and Chief |
| | | President, | Financial Officer of the Company and the Bank, |
| | | Secretary, and Chief | 1997-Present |
| | | | |
| John R. Hamrick | 61 | Senior Loan Officer | Senior Vice President and Senior Loan Officer of the |
| | | | Bank, 2005-Present; Branch Administrator/Regional |
| | | | Manager, South Trust Bank, 1993-2005. |
Executive Compensation
The Bank has entered into employment agreements with G. Gordon Greenwood as its President and Chief Executive Officer, Randall C. Hall as its Executive Vice President and Chief Financial Officer and John R. Hamrick as its Senior Loan Officer. The employment agreements establish the duties and compensation of each of the officers and provide for the officers’ continued employment with the Bank. Mr. Greenwood’s employment agreement provides for an initial term of three (3) years with renewal on each anniversary thereafter for an additional one-year term unless there is an affirmative decision not to renew the contract by the Board of Directors or by Mr. Greenwood. Mr. Hall’s employment agreement originally provided for an initial term of two (2) years with renewal at the end of the initial term and on each anniversary thereafter for an additional one-year term provided there was an affirmative decision to renew by the Chief Executive Officer. Mr. Hamrick’s employment agreement originally provided for an initial term of one (1) year with renewal at the end of the initial term and on each anniversary thereafter for an additional one-year term provided there was an affirmative decision to renew by the Chief Executive Officer.
Each of the employment agreements provides for an annual base salary and for participation in other pension and profit-sharing retirement plans maintained by the Bank on behalf of its employees, as well as fringe benefits normally associated with the executives position or made available to all other employees. Annual salary increases are determined by the compensation committee and are based on past performance of the Company and data provided by an independent third party consulting firm. The agreements also provide for bonus compensation in addition to base salary compensation. Bonus compensation is paid pursuant to a non-equity incentive plan, which measures the Company’s actual performance against budget in three categories. These categories are (i) total loans outstanding; (ii) total deposits; and (iii) net income as a percentage of the budget. Under the incentive plan, the default amount is 12% of the executive’s prior year salary. The actual bonus paid can range up to a maximum of 125% of the default amount. For example, a salary of $100,000 would yield a default amount of $12,000. If the executive were to achieve 125% of budget goals, the incentive bonus payment would be 125% of the $12,000 default amount, or $15,000. The executive is eligible to receive a bonus of 50% of the default amount, or $6,000 in the example, in the event that at least 90% of the total budget goals are achieved. No bonus is payable in the event that at least 90% of budget goals are not achieved.
In addition to salary and bonus compensation, Mr. Greenwood’s employment agreement entitles him to receive a 10-year annuity of $40,000 per year beginning at age 65. The present value of the estimated liability associated with this annuity, which was $295,523 at December 31, 2008, was accrued over the vesting period defined in the agreement. This benefit is now fully vested. The related expense was $20,635 for the year ended December 31, 2008. The Bank is the owner and beneficiary of a life insurance policy on this key employee, which will be used to fund the Bank’s liability under the annuity. The total net cash surrender value of this policy at December 31, 2008 was $224,936.
Each of the employment agreements provides that the officer may be terminated for “cause” as that term is defined in each employment agreement, following which the Bank has no continuing obligation to compensate the officer under the terms of the contract. The employment agreements may also be terminated without “cause” prior to expiration of the applicable term. However, in the event that the Bank terminates an employment agreement without “cause” prior to expiration of the contract’s then current term, the officer is entitled to continue to receive compensation and other benefits through the then remaining term of the contract.
The employment agreements also provide “change in control” benefits for each of the officers. Under the terms of the “change in control” provisions, should the Bank terminate the employment other than for cause or disability within 24 months after a “change in control” or should the officer terminate his employment within such 24 month period because his compensation, benefits or responsibilities have been reduced, or his workplace location is moved outside of Asheville, North Carolina, then he shall receive a lump sum equal to two hundred ninety-nine percent (299%) of his “base amount” as such term is defined in Section 280G of the Internal Revenue Code of 1986. For purposes of the employment agreements, a “change in control” shall be deemed to have occurred upon (i) any person becoming the beneficial owner or otherwise acquiring control, directly or indirectly, of securities of the Bank representing thirty-five percent (35%) or more of the voting power of such entity’s then outstanding securities; (ii) the acquisition by any person in any manner of the ability to elect, or to control the election of, a majority of the directors of the Bank; (iii) the merger of the Bank into another entity or the merger of any entity into the Bank without such entity being the survivor; or (iv) the acquisition of substantially all of the assets of the Bank by another corporation (Mr. Greenwood’s employment also includes within the definition of “change in control” any such events pertaining to the Company). As of December 31, 2008, the value of the lump sum payments that would have been payable to Messrs. Greenwood, Hall and Hamrick upon the occurrence of a “change in control” followed by a termination event would have been $534,921, $397,120 and $341,798, respectively.
The following table shows all cash and non-cash compensation paid to or received or deferred by G. Gordon Greenwood, Randall C. Hall and John R. Hamrick for services rendered in all capacities during the fiscal years ended December 31, 2008, 2007, and 2006. No other executive officer of the Company received compensation during 2008 that exceeded $100,000.
SUMMARY COMPENSATION TABLE
| | | | | | Non-Equity | | |
| Name and | | | | Option | Incentive Plan | All Other | |
| Principal Position | Year | Salary | Bonus | Awards | Compensation | Compensation(1) | Total |
| | | | | | | | |
| G. Gordon Greenwood | 2008 | $180,040 | -- | -- | $15,697 | $18,961 | $214,698 |
| President and Chief | 2007 | 170,456 | -- | -- | 19,560 | 18,261 | 208,277 |
| Executive Officer | 2006 | 168,276 | -- | -- | 20,688 | 18,730 | 207,694 |
| | | | | | | | |
| Randall C. Hall | 2008 | $143,880 | -- | -- | $12,132 | $16,298 | $172,310 |
| Executive Vice President, | 2007 | 130,227 | -- | -- | 14,100 | 15,311 | 159,638 |
| Chief Financial Officer | 2006 | 118,405 | -- | -- | 14,761 | 14,395 | 147,561 |
| And Secretary | | | | | | | |
| | | | | | | | |
| John R. Hamrick | 2008 | $109,940 | -- | -- | $10,240 | $13,892 | $134,072 |
| Senior Loan Officer | 2007 | 103,314 | -- | -- | 9,880 | 13,320 | 126,514 |
| | | | | | | | |
(1) Includes 401(k) contributions and the dollar value of premiums paid on behalf of the named officers for group term life, health and dental insurance.
Stock Options
At the Company’s 2001 Annual Meeting, the shareholders approved the adoption of the Weststar Financial Services Corporation 2001 Incentive Stock Option Plan, which provides for the issuance of incentive stock options to purchase up to 110,982 shares (as adjusted) of the Company’s common stock. There were no grants of incentive stock options during the fiscal year ended December 31, 2008.
At the Company’s 2007 Annual Meeting, the shareholders approved the adoption of the Weststar Financial Services Corporation 2007 Incentive Stock Option Plan, which provides for the issuance of incentive stock options to purchase up to 75,000 (as adjusted) shares of the Company’s common stock. There were no grants of incentive stock options during the fiscal year ended December 31, 2008.
The following table sets forth information regarding equity awards granted to the named executive officers that remained outstanding as of December 31, 2008.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | | Equity Incentive | | |
| | | | Plan Awards: | | |
| | No. of Securities | | No. of Securities | | |
| | Underlying | No. of Securities | Underlying | | |
| | Unexercised | Underlying | Unexercised | Option | Option |
| | Options | Options | Unearned | Exercise | Expiration |
| Name | Exercisable | Unexercisable | Options | Price | Date |
| | | | | | |
| G. Gordon Greenwood | 78,407 | -0- | -0- | $3.26 | June 20, 2011 |
| Randall C. Hall | 27,066 | -0- | -0- | $3.26 | June 20, 2011 |
| John R. Hamrick | -0- | -0- | -0- | -- | -- |
Mr. Hall was the only executive officer that exercised stock options during the fiscal year ended December 31, 2008. Mr. Hall exercised stock options covering 4,600 shares of the Company’s common stock on August 12, 2008 at an exercise price of $3.26 per share. The following table summarizes this information in tabular format.
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | Stock Awards |
| | | | | |
| | Number of | Value | Number of | Value |
| | Shares Acquired | Realized | Shares Acquired | Realized |
| Name | on Exercise | on Exercise | on Vesting | on Vesting |
| | | | | |
| G. Gordon Greenwood | -- | -- | -- | -- |
| Randall C. Hall | | | -- | -- |
| John R. Hamrick | -- | -- | -- | -- |
401(k) Savings Plan
The Company has no employees who are not also employees of the Bank. Hence, the 401(k) Savings Plan of the Bank covers all employees of the Company. In 1998, the Bank adopted a tax-qualified savings plan (the “Savings Plan”), which covers all current full-time employees and any new full-time employees who have completed 1,000 hours of service for the employer. Under the savings plan, a participating employee may contribute up to $15,500 of his or her base salary on a tax-deferred basis through salary reduction as permitted under Section 401(k) of the Internal Revenue Code of 1986 (the “Code”), as amended. The Bank makes a minimum contribution equal to 3% of the participating employee’s pre-tax base salary with additional matching contributions equal to 50% of amounts over the initial 3% of pre-tax base salary contributed by the employee. The Bank’s total contribution is capped at 4% of the employee’s pre-tax base salary.
A participant’s contributions and the Bank’s matching contributions under the savings plan are held in trust accounts for the benefit of participants. A participant is at all times 100% vested with respect to his or her own contributions under the savings plan, and becomes 100% vested in the account for the Bank’s matching contributions after completing five years of service with the employer. The value of a participant’s accounts under the savings plan becomes payable to him or her in full upon retirement, total or permanent disability or termination of employment for any reason, or becomes payable to a designated beneficiary upon a participant’s death. The savings plan also contains provisions for withdrawals in the event of certain hardships. A participant’s contributions, vested matching and profit sharing contributions of the employer, and any income accrued on such contributions, are not subject to federal or state taxes until such time as they are withdrawn by the participant.
PROPOSAL 2: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed the firm of Dixon Hughes PLLC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2009. A representative of Dixon Hughes PLLC is expected to be present at the Annual Meeting and available to respond to appropriate questions, and will have the opportunity to make a statement if he or she desires to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” RATIFICATION OF DIXON HUGHES PLLC AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2009.
OTHER MATTERS
The Board of Directors knows of no other business that will be brought before the Annual Meeting. Should other matters properly come before the meeting, the proxies will be authorized to vote shares represented by each appointment of proxy in accordance with their best judgment on such matters.
PROPOSALS FOR 2010 ANNUAL MEETING
It is anticipated that the 2010 Annual Meeting will be held on a date during April 2010. Any Proposal of a shareholder which is intended to be presented at the 2010 Annual Meeting must be received by the Company at its main office in Asheville, North Carolina no later than November 20, 2010, in order that such proposal be timely received for inclusion in the proxy statement and appointment of proxy to be issued in connection with that meeting. If a proposal for the 2010 Annual Meeting is not expected to be included in the proxy statement for that meeting, the proposal must be received by the Company by February 11, 2010 for it to be timely received for consideration. The Company will use its discretionary authority for any proposals received thereafter.
INTERNET AND ELECTRONIC AVAILABILITY OF PROXY MATERIALS
As required by the SEC, the Company has furnished a Notice of Internet Availability of Proxy Materials to all shareholders and all shareholders will have the ability to access this Proxy Statement and the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008 as filled with the SEC, by logging on at http://www.bankofasheville.com/noticeandaccess.
SHAREHOLDER COMMUNICATIONS
The Company does not currently have a formal policy regarding shareholder communications with the Board of Directors, however, any shareholder may submit written communications to Randall C. Hall, Corporate Secretary, Weststar Financial Services Corporation, 79 Woodfin Place, Asheville, North Carolina 28801 whereupon such communications will be forwarded to the Board of Directors if addressed to the Board of Directors as a group or to the individual director or directors addressed.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY’S 2008 ANNUAL REPORT ON FORM 10-K IS ATTACHED TO THIS PROXY STATEMENT. REQUESTS FOR ADDITIONAL COPIES SHOULD BE DIRECTED TO RANDALL C. HALL, CORPORATE SECRETARY, WESTSTAR FINANCIAL SERVICES CORPORATION, 79 WOODFIN PLACE, ASHEVILLE, NORTH CAROLINA 28801.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY AND RETURN TO WESTSTAR FINANCIAL SERVICES CORPORATION.
