SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934.
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
CORNERSTONE BANCORP
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No Fee Required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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CORNERSTONE BANCORP
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the 2009 Annual Meeting of the Shareholders of
Cornerstone Bancorp will be held at the offices of Cornerstone National Bank,
1670 East Main Street, Easley, South Carolina, on Tuesday, May 12, 2009, at 4:00
p.m., for the following purposes:
(1) To elect four directors to each serve a three year term and one
director to serve a one year term;
(2) To act upon other such matters as may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 25, 2009,
are entitled to notice of and to vote at the meeting. In order that the meeting
can be held, and a maximum number of shares can be voted, whether or not you
plan to be present at the meeting in person, please fill in, date, sign and
promptly return the enclosed form of proxy.
Returning the signed proxy will not prevent a record owner of shares
from voting in person at the meeting.
Included is the Company's 2009 Proxy Statement. Also included is the
Company's 2008 Annual Report to Shareholders.
By Order of the Board of Directors
April 8, 2009 J. Rodger Anthony
President and Chief Executive Officer
CORNERSTONE BANCORP
1670 East Main Street
Easley, South Carolina 29640
(864) 306-1444
PROXY STATEMENT
We are providing this proxy statement in connection with the
solicitation of proxies by the Board of Directors of Cornerstone Bancorp for use
at the Annual Meeting of Shareholders to be held at 4:00 p.m. on Tuesday, May
12, 2009, at the offices of Cornerstone National Bank, 1670 East Main Street,
Easley, South Carolina. Throughout this Proxy Statement, we use terms such as
"we," "us," "our" and "our Company" to refer to Cornerstone Bancorp and terms
such as "you" and "your" to refer to our shareholders.
A Notice of Annual Meeting is attached to this Proxy Statement, and a
form of proxy is enclosed. We first began mailing this proxy statement to our
shareholders on or about April 8, 2009. We are paying the costs of this
solicitation. The only method of solicitation we plan to use, other than this
proxy statement, is personal contact, including contact by telephone or other
electronic means, by our directors and regular employees who will not be
specially compensated for their efforts.
ANNUAL REPORT
The Annual Report to Shareholders covering our fiscal year ended
December 31, 2008, including financial statements, is enclosed. Such Annual
Report to Shareholders does not form any part of the material for the
solicitation of proxies.
VOTING PROCEDURES
Voting
If you hold your shares of record in your own name you can vote your
shares by marking the enclosed proxy form, dating it, signing it, and returning
it to us in the enclosed postage-paid envelope. If you are a shareholder of
record, you can also attend the Annual Meeting and vote in person. If you hold
your shares in street name with a broker or other nominee you can direct their
vote by submitting voting instructions to the broker or nominee in accordance
with the procedure on the voting card provided by the broker or nominee. If you
hold your shares in street name you may attend the Annual Meeting, but you may
not vote in person without a proxy appointment from a shareholder of record.
Revocation of Proxy
If you are a record shareholder and execute and deliver a proxy, you
have the right to revoke it at any time before it is voted. You may revoke the
proxy by delivering to Jennifer M. Champagne, Chief Financial Officer,
Cornerstone Bancorp, 1670 East Main Street, Easley, South Carolina 29640, or by
mailing to Ms. Champagne at Post Office Box 428, Easley, South Carolina 29641,
an instrument which by its terms revokes the proxy. You may also revoke the
proxy by delivering or mailing to us a duly executed proxy bearing a later date.
Written notice of revocation of a proxy or delivery of a later dated proxy will
be effective when we receive it. Your attendance at the Annual Meeting will not
in itself constitute revocation of a proxy. However, if you are a record
shareholder and you desire to do so, you may attend the meeting and vote in
person in which case the proxy will not be used. If you hold your shares in
street name with a broker or other nominee you may change or revoke your proxy
instructions by submitting new voting instructions to the broker or other
nominee.
Quorum and Voting
At the close of business on March 25, 2009, there were outstanding
1,991,565 shares of our common stock (no par value). Each share outstanding will
be entitled to one vote upon each matter submitted at the meeting. You are only
entitled to notice of and to vote at the meeting if you were a stockholder of
record at the close of business on March 25, 2009 (the "Record Date").
A majority of the shares entitled to be voted at the annual meeting
constitutes a quorum. If a share is represented for any purpose at the annual
meeting by the presence of the registered owner or a person holding a valid
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proxy for the registered owner, it is deemed to be present for purposes of
establishing a quorum. Therefore, valid proxies which are marked "Abstain" or
"Withhold" and shares that are not voted, including proxies submitted by brokers
that are the record owners of shares (so-called "broker non-votes"), will be
included in determining the number of votes present or represented at the annual
meeting. If a quorum is not present or represented at the meeting, shareholders
entitled to vote, present in person or represented by proxy, have the power to
adjourn the meeting from time to time. If the meeting is to be reconvened within
thirty days, no notice of the reconvened meeting will be given other than an
announcement at the adjourned meeting. If the meeting is to be adjourned for
thirty days or more, notice of the reconvened meeting will be given as provided
in the Bylaws. At any reconvened meeting at which a quorum is present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed.
If a quorum is present at the Annual Meeting, directors will be elected
by a plurality of the votes cast by shares present and entitled to vote at the
annual meeting. "Plurality" means that, if there were more nominees than
positions to be filled, the individuals who receive the largest number of votes
cast for the positions to be filled will be elected as directors. Because the
number of nominees for election at the 2009 Annual Meeting is the same as the
number of positions to be filled, we expect that all five of the Board of
Directors' nominees will be elected. Cumulative voting is not permitted. Votes
that are withheld or that are not voted in the election of directors will have
no effect on the outcome of election of directors. If a quorum is present, all
other matters that may be considered and acted upon at the Annual Meeting will
be approved if the number of shares of Common Stock voted in favor of the matter
exceeds the number of shares of Common Stock voted against the matter.
Actions to be taken by the Proxies
The persons named as proxies were selected by our Board of Directors.
When the form of proxy enclosed is properly executed and returned, the shares
that it represents will be voted at the meeting. Unless the record shareholder
specifies otherwise, each proxy will be voted "FOR" the election of the persons
named in this Proxy Statement as the Board of Directors' nominees for election
to the Board of Directors. In each case where the record shareholder has
appropriately specified how the proxy is to be voted, it will be voted in
accordance with such specifications. Our Board of Directors is not aware of any
other matters that may be presented for action at the Annual Meeting of
Shareholders, but if other matters do properly come before the meeting, the
persons named in the proxy intend to vote on such matters in accordance with
their best judgment.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Five Percent Beneficial Owners
The following table shows information as of December 31, 2008 about
persons other than our directors and executive officers who are known to us to
own beneficially more than five percent of our outstanding common stock.
Amount and Nature of Percent of
Name and Address Beneficial Ownership Class
- ---------------------------------- -------------------- -----------
Estate of T. Edward Childress, III 194,447(1) 9.76%
100 McAlister Lake Drive
Easley, South Carolina 29642
Janice E. Childress 197,989(2) 9.92%
100 McAlister Lake Drive
Easley, South Carolina 29642
(1) Includes currently exercisable options to purchase 3,682 shares.
(2) Includes 194,447 shares beneficially owned by the Estate of T. Edward
Childress, III (including 3,682 shares subject to currently exercisable
options), of which Mrs. Childress is the personal representative, and 3,542
shares held by a trust of which she is the trustee.
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Management
The number of shares owned and the percentage of outstanding common
stock such number represents at March 31, 2009, for all of our directors,
nominees and the executive officers named in the Summary Compensation Table and
for all persons who are currently beneficial owners of 5% or more of our common
stock is set forth below.
Name of Beneficial Owner Amount and Nature of % of Class
(and Address of 5% Owners) Beneficial Ownership
- ------------------------------------------- -------------------- -----------
J. Rodger Anthony (1) 90,180 4.31%
Walter L. Brooks (2) 27,145 1.30
Jennifer M. Champagne(3) 8,797 .42
J. Bruce Gaston (4) 50,750 2.42
Susan S. Jolly (5) 19,155 .91
S. Ervin Hendricks, Jr. (6) 61,999 2.96
Joe E. Hooper(7) 74,081 3.54
Robert R. Spearman (8) 17,392 .83
John M. Warren, Jr., M.D. (9) 34,271 1.64
George I. Wike, Jr. (10) 189,714 9.06
P. O. Box 98
Tigerville, South Carolina
Janice E. Childress (11) 197,989 9.92
100 McAlister Lake Drive
Easley, South Carolina 29642
All directors and executive -------
officers as a group (11 persons) (12) 771,473 36.84%
=======
- --------------------
Except as otherwise indicated, to the knowledge of management, all shares are
owned directly with sole voting power.
(1) Includes 6,251 shares owned by Mr. Anthony's spouse; and 17,071 shares
subject to currently exercisable options.
(2) Includes 11,277 shares owned by a partnership in which Mr. Brooks is a
partner; 3,083 shares owned by Mr. Brooks' spouse; and 12,078 shares
subject to currently exercisable options.
(3) Includes 5,760 shares subject to currently exercisable options.
(4) Includes 12,078 shares subject to currently exercisable options.
(5) Includes 4,569 shares owned by Ms. Jolly's spouse; and 5,760 shares
subject to currently exercisable options.
(6) Includes 12,078 shares subject to currently exercisable options.
(7) Includes 12,078 shares subject to currently exercisable options.
(8) Includes 12,078 shares subject to currently exercisable options.
(9) Includes 4,992 shares subject to currently exercisable options.
(10) Includes 40,851 shares owned by Mr. Wike's spouse; and 4,992 shares
subject to currently exercisable options.
(11) Includes 194,447 shares beneficially owned by the Estate of T. Edward
Childress, III (including 3,682 shares subject to currently
exercisable options), of which Mrs. Childress is the personal
representative, and 3,542 shares held by a trust of which she is the
trustee.
(12) Includes 102,647 shares subject to currently exercisable options.
ELECTION OF DIRECTORS
At the Annual Meeting, four directors have been nominated for election
to hold office for terms of three years, their terms expiring at the 2012 Annual
Meeting of Shareholders. Our directors serve until the end of their terms or
until their successors are duly elected and qualified. The Board has nominated
Joe E. Hooper, Robert R. Spearman, John M. Warren, Jr., M. D. and George I.
Wike, Jr. to each serve a three year term. The Board has nominated Janice E.
Childress to fill the vacancy created by the death of our former Chairman, T.
Edward Childress, III. Mrs. Childress has been nominated to serve a one year
term. Each nominee is currently one of our directors. Any other nominations must
be made in writing and given to our Secretary in accordance with the procedures
set forth below under "Governance Matters - Director Nomination Process."
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The persons named in the enclosed form of proxy intend to vote for the
election as directors of Messrs. Hooper, Spearman, Warren and Wike, and Mrs.
Childress. Unless a contrary specification is indicated, the enclosed form of
proxy will be voted FOR such nominees. In the event that any such nominee is not
available by reason of any unforeseen contingency, the persons acting under the
proxy intend to vote for the election, in his stead, of such other person as our
Board of Directors may recommend. Our Board of Directors has no reason to
believe that any of the nominees will be unable or unwilling to serve if
elected.
MANAGEMENT OF THE COMPANY
Directors
The table below shows, as to each director and nominee, his or her
name, age, positions held with us and principal occupation for the past five
years and the period during which he has served as one of our directors.
Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
Nominees for the Board of Directors whose terms of office will continue until our
Annual Meeting of Shareholders in 2012
Joe E. Hooper 70 President, Pride Mechanical and Fabrication 1999
Company, Inc.
Robert R. Spearman 69 Real estate agent, retired surveyor. 1999
John M. Warren, Jr., M.D. 59 Physician, Easley OB-GYN Associates, P.A. 1999
George I. Wike, Jr. 64 Investor; retired Optometrist. 1999
Nominee for the Board of Directors whose term of
office will continue until our Annual Meeting of Shareholders in 2010
Janice E. Childress 45 Real estate investor. -
Directors whose terms of office will continue until our Annual Meeting of Shareholders in 2011
Jennifer M. Champagne 41 Our Senior Vice President and Chief Financial 2006
Officer since October 2002; Senior Manager,
Elliott Davis, LLC (registered public accounting
firm) from August 2000 to October 2002; certified
public accountant.
Susan S. Jolly 49 Senior Vice President and Senior Lender of our 2008
Bank since 1999; Vice President and Commercial
Lender, Carolina First Bank 1998-1999; Vice
President and Commercial Lender First National
Bank of Pickens County 1991-1998.
J. Bruce Gaston 52 Certified Public Accountant. 1999
S. Ervin Hendricks, Jr. 66 President and Co-owner, Nu-Life Environmental, 1999
Inc., Easley, SC; President and Owner of Advance
Machine Works since 1995.
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Name Age Principal Occupation Director Since
- ---- --- -------------------- --------------
Directors whose terms of office will continue until our Annual Meeting of Shareholders in 2010
J. Rodger Anthony 63 Our President and Chief Executive Officer since 1999
1999; Chairman and Chief Executive Officer of the
Bank since 1999; Chief Executive Officer, First
National Bank of Pickens County, Easley, SC, 1996
to 1998.
Walter L. Brooks 81 President, G&B Enterprises (real estate ownership) 1999
and Pullet Growing.
None of our principal executive officers nor any director nominees are
related by blood, marriage or adoption in the degree of first cousin or closer.
Executive Officers
J. Rodger Anthony is our President and Chief Executive Officer,
Jennifer M. Champagne is our Senior Vice President and Chief Financial Officer,
and Susan S. Jolly is our Corporate Secretary and Senior Vice President and
Senior Lender for Cornerstone National Bank. The age and business experience of
Mr. Anthony, Ms. Champagne and Ms. Jolly are set forth in the table above.
GOVERNANCE MATTERS
Director Independence
Our Board of Directors has determined that none of Mrs. Childress nor
Messrs. Brooks, Hooper, Spearman, Warren, Wike, Gaston or Hendricks has a
relationship which, in the opinion of our Board of Directors, would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director, and that each such director is independent as defined in The
Nasdaq Stock Market Marketplace Rules, as modified or supplemented (the "Nasdaq
Rules"). As disclosed under "Certain Relationships and Related Transactions"
some of our independent directors and some of their affiliates have loan and
deposit relationships with our Bank. These relationships are not considered by
our Board to compromise their independence.
Meetings of the Board of Directors and Director Attendance at the Annual Meeting
of Shareholders
During the last full fiscal year, ending December 31, 2008, our Board
of Directors met seven times, including regular and special meetings. All of our
directors, except Mr. Brooks, whose absences were a result of illness, attended
at least 75% of the total number of meetings of the Board of Directors and
committees of which he or she was a member. We encourage, but do not require,
directors to attend the Annual Meeting of Shareholders. All directors, except
Mr. Brooks, attended the Annual Meeting of Shareholders in 2008. The members of
our Board of Directors are also members of the Board of Directors of the Bank.
Committees of the Board of Directors
Nominating Committee
Our Board of Directors does not have a separate nominating committee.
Rather, our entire Board of Directors acts as nominating committee. Based on our
size, the small geographic area in which we do business and the desirability of
directors' being a part of the communities we serve and familiar with our
customers, our Board of Directors does not believe we would derive any
significant benefit from a separate nominating committee. The members of our
Board of Directors are not all independent as defined in the Nasdaq Rules. We do
not have a Nominating Committee charter.
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Audit Committee
We have a separately-designated standing Audit Committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The
Audit Committee is responsible for seeing that audits of our Company are
conducted annually. An independent registered public accounting firm is employed
for that purpose by the Board of Directors upon recommendation of the Audit
Committee. Reports on these audits are reviewed by the Committee upon receipt
and a report thereon is made to the Board at its next meeting. The Audit
Committee is comprised of Messrs. Gaston, Hooper, Hendricks, Spearman and Wike,
each of whom is independent as defined in the Nasdaq Rules. The Audit Committee
met five times in 2008. The Audit Committee operates pursuant to a written
charter, a copy of which was attached to our 2007 Proxy Statement.
Human Resources Committee
The Human Resources Committee is responsible for recruiting senior
level management personnel as well as for recommending the compensation and
benefits of such persons. The Human Resources Committee reviews our compensation
policies and recommends to the Board the compensation levels and compensation
programs for executive officers and directors. The ultimate decisions about
compensation levels and compensation programs are made by our full Board, which
may accept or reject the recommendations of the Committee. The Human Resources
Committee may not delegate its authority to make recommendations to any other
person or persons. However, the Committee does delegate responsibility for
administering parts of our compensation programs to our Chief Financial Officer
and our Human Resources Department. Our Chief Executive Officer makes
recommendations relating to the elements and amounts of his compensation and
that of the other executive officers, as well as recommendations with respect to
the elements and amounts of director compensation. The Committee may take these
recommendations into consideration in its deliberations. Neither the Committee
nor management uses compensation consultants to determine or recommend the
amount or form of executive officer or director compensation. The Human
Resources Committee is comprised of Messrs. Wike, Warren and Brooks, each of
whom is independent as defined in the Nasdaq Rules. The Human Resources
Committee met once in 2008. The Human Resources Committee does not have a
charter.
Director Nomination Process
In recommending director candidates, the Board takes into consideration
such factors as it deems appropriate based on our current needs. These factors
may include diversity, age, skills such as understanding of banking and general
finance, decision-making ability, inter-personal skills, experience with
businesses and other organizations of comparable size, community activities and
relationships, and the interrelationship between the candidate's experience and
business background, and other Board members' experience and business
background, as well as the candidate's ability to devote the required time and
effort to serve on the Board.
The Board will consider for nomination by the Board director candidates
shareholders recommend if you comply with the following requirements. If you
wish to recommend a director candidate to the Board for consideration as a Board
of Directors' nominee, you must submit in writing to the Board the recommended
candidate's name, a brief resume setting forth the recommended candidate's
business and educational background and qualifications for service, and a
notarized consent signed by the recommended candidate stating the recommended
candidate's willingness to be nominated and to serve. This information must be
delivered to our Chairman at our address and must be received no later than
January 15 in any year for such person to be considered as a potential Board of
Directors' nominee at the Annual Meeting of Shareholders for that year. The
Board may request further information if it determines a potential candidate may
be an appropriate nominee. Director candidates you recommend that comply with
these requirements will receive the same consideration that the committee's
candidates receive.
Director candidates you recommend will not be considered for
recommendation by the Board as potential Board of Directors' nominees if your
recommendations are received later than January 15 in any year. A shareholder
may also personally nominate director candidates for election at the annual
meeting, but no person who is not already a director may be elected at an annual
meeting of shareholders unless that person is nominated in writing not less than
90 days prior to the meeting. Such nominations, other than those made by or on
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behalf of our existing management, must be made in writing and must be delivered
or mailed to our President, not less than 90 days prior to any meeting of
Shareholders called for the election of Directors. Such notification must
contain the following information to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b) the
principal occupation of each proposed nominee; (c) the total number of shares of
our capital stock that will be voted for each proposed nominee; (d) the name and
residence address of the notifying shareholder; and (e) the number of shares of
our capital stock owned by the notifying shareholder. The presiding officer of
the meeting may disregard nominations not made in accordance with these
requirements, and upon his instructions, the vote tellers shall disregard all
votes cast for each such nominee.
Shareholder Communications with the Board of Directors
If you wish to send communications to the Board of Directors you should
mail them addressed to the intended recipient by name or position in care of:
Jennifer M. Champagne, Senior Vice President and Chief Financial Officer,
Cornerstone Bancorp, 1670 East Main Street, Easley, South Carolina 29640. Upon
receipt of any such communications, Ms. Champagne will determine the identity of
the intended recipient and whether the communication is an appropriate
shareholder communication. Ms. Champagne will send all appropriate shareholder
communications to the intended recipient. An "appropriate shareholder
communication" is a communication from a person claiming to be a shareholder in
the communication the subject of which relates solely to the sender's interest
as a shareholder and not to any other personal or business interest.
In the case of communications addressed to the Board of Directors, Ms.
Champagne will send appropriate shareholder communications to the Chairman of
the Board. In the case of communications addressed to the independent or outside
directors, Ms. Champagne will send appropriate shareholder communications to the
Chairman of the Audit Committee. In the case of communications addressed to
committees of the board, Ms. Champagne will send appropriate shareholder
communications to the Chairman of such committee.
MANAGEMENT COMPENSATION
Processes and Procedures for Determination of Executive Officer Compensation
As noted above under "Management - Committees of the Board of Directors
- - Human Resources Committee," our Board of Directors sets executive officer
compensation based on recommendations of our Human Resources Committee. We have
historically followed an informal policy of providing our executive officers
with a total compensation package consisting of salary, bonuses, insurance and
other benefits, and stock options. The committee's objectives in recommending
executive compensation are:
o to set salaries and benefits and, from time to time, award
options, at competitive levels designed to encourage our
executive officers to perform at their highest levels in order to
increase earnings and value to shareholders;
o where appropriate, to award discretionary bonuses and increase
salaries to reward our executive officers for performance; and
o to retain our key executives.
Compensation is designed to reward our individual executive officers
both for their personal performance and for performance of our Company with
respect to growth in assets and earnings, expansion and increases in shareholder
value. Although the Committee sets advance corporate goals which must be met for
our executive officers to receive bonus compensation, it has historically
assessed personal performance on a case by case basis rather than recommending
specific advance goals for personal performance. The committee makes its
recommendations about allocations between long-term and current compensation,
allocations between cash and non-cash compensation, and allocations among
various forms of compensation, in its discretion based on its subjective
assessment of how these allocations will best meet our overall compensation
goals outlined above.
Components of Executive Compensation
During 2008, executive compensation consisted primarily of three key
components: base salary, board fees, and stock options. We did not award
discretionary bonuses for the year ended December 31, 2008. We provide various
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additional benefits to executive officers, including health, life and disability
plans, and a SIMPLE Individual Retirement Plan, all of which we provide on the
same basis to all of our employees. We also provide a split dollar life
insurance benefit and very limited perquisites to our executive officers. For
2008, base salary comprised approximately 82% of total executive officer
compensation, board fees comprised approximately 6% of total executive officer
compensation, option awards comprised approximately 8% of total executive
officer compensation, plan benefits comprised approximately 3% of total
executive officer compensation, and perquisites comprised less than 1 percent of
total executive officer compensation. The Board of Directors based its decision
to allocate executive officer compensation in this manner on its subjective
assessment of how such allocation would meet our goals of remaining competitive
and of linking compensation to our corporate performance and individual
executive officer performance.
Factors Considered in Setting Compensation
Use of Market Surveys and Peer Group Data
To remain competitive in the executive workforce marketplace, we
believe it is important to consider comparative market information about
compensation paid to executive officers of other financial institutions in our
Upstate South Carolina market area. We want to be able to attract and retain
highly skilled and talented executive officers who have the ability to carry out
our short- and long-term goals. To do so, we must be able to compensate them at
levels that are competitive with compensation offered by other financial
institutions in our business and geographic marketplace that seek similarly
skilled and talented executives. However, although we consider such information
in making our decisions about compensation, we do not attempt to maintain a
certain target percentile within a peer group or otherwise rely on that
information to determine executive compensation. The informal market survey
information we have considered in recent years is derived from proxy statements
of five other publicly held financial institutions in our area.
Other Factors Considered
In addition to considering informal market comparisons, in setting
compensation we consider each executive's knowledge and experience, skills,
scope of authority and responsibilities, job performance and tenure with us as
an executive officer, as well as our perception of the fairness of the
compensation paid to each executive in relation to what we pay our other
executive officers. The Human Resources Committee and our Board also consider
recommendations from our Chief Executive Officer in setting his compensation and
compensation for the other executive officers.
We review our compensation program and levels of compensation paid to
all of our executive officers annually and make adjustments based on the
foregoing factors as well as other subjective factors.
Timing of Executive Compensation Decisions
Annual salary reviews and adjustments and bonus and option awards are
routinely made in December of each year for the following year. The Committee's
recommendations are presented and ratified at the next regularly scheduled Board
meeting. Compensation determinations may also be made at other times during the
year in the case of newly hired executives or promotions of existing employees
that could not be deferred until the next annual meeting. We do not time any
form of compensation award, including equity-based awards, to coincide with the
release of material non-public information. Equity-based awards are generally
effective on the first business day of the new year.
Base Salaries and Bonuses
We believe it is appropriate to set base salaries at a reasonable level
that will provide our executives with a predictable income base on which to
structure their personal budgets. As noted above, in setting salaries, the Human
Resources Committee reviews market data about salaries paid to executives of
other financial institutions in our market area. The Committee also takes into
consideration the overall condition of our Company, its level of success in
recent years and its goals and budget for the current year. The Board then makes
a subjective determination of the salary level for each executive officer.
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The Committee recommends discretionary bonuses, as appropriate, for all
employees taking into account our overall success, increase in market share,
performance relative to budget and the individual executive's contribution to
our success.
The Board set total salaries for our executives in 2008 approximately
9% higher than annualized 2007 levels reflecting the executives' increased
responsibility for a growing company operating in a more complex environment,
coupled with the demonstrated ability of the executives to deliver a high level
of success. No discretionary bonuses were awarded for 2008 performance.
Stock Options
Our Board also sets stock option awards at levels believed to be
competitive with other financial institutions and other companies of similar
size in our market area and to advance our goal of retaining key executives, as
well as levels believed to appropriately align the interests of management with
the interests of shareholders. Since options are granted with exercise prices
set at fair market value of our common stock on the date of grant, executives
can only benefit from the options if the price of our stock increases. We
believe the costs to our Company of granting options as opposed to paying
additional cash compensation, both in terms of the impact on earnings under the
new accounting rules for options and potential dilution of the outstanding
common stock, are far-outweighed by the benefits provided to us in terms of
providing incentives to our executive officers to increase earnings and
shareholder value. We do not award options every year. In awarding options, we
assess how they fit with the overall mix of compensation, and the extent to
which granting them in a given year will enhance our goals of providing our
employees appropriate incentives to meet our long-range goals.
Stock options awarded to our executive officers in 2008 were at levels
believed by our Board to be appropriate to keeping the interests of the
executives aligned with those of the shareholders. The total number of options
held by our executives is small.
Other Benefits
We provide our executive officers with the same health, life and long
term disability insurance benefits provided to all other employees, and we make
contributions to our Simple IRA plan on their behalf on the same basis as
contributions are made for all other employees. We provide our Chief Executive
Officer with an automobile for business use. The automobile belongs to us and
our executive officer reimburses us for any personal use.
All of the foregoing other elements of compensation awarded to our
executives in 2008 were set at levels believed to be competitive with other
financial institutions in South Carolina.
Employment Agreements and Split Dollar Life Insurance
We have entered into change of control agreements with Mr. Anthony, Ms.
Champagne and Ms. Jolly. These agreements are described under - "Change of
Control Agreements." As discussed in that section, the agreements provide, among
other things, for payments to our executive officers upon termination of their
employment after a change of control. The events set forth as triggering events
for the payments were selected because they are events similar to those provided
for in many employment agreements for executive officers of financial
institutions throughout South Carolina. It has become increasingly common in
South Carolina for community financial institutions to provide for such payments
under such conditions. We believe these types of arrangements are an important
factor in attracting and retaining our executive officers by assuring them
financial and employment status protections in the event control of our Company
changes. We believe such assurances of financial and employment protections help
free executives from personal concerns over their futures, and, thereby, can
help to align their interests more closely with those of shareholders in
negotiating transactions that could result in a change of control.
We have also entered into agreements relating to split dollar life
insurance with each of Mr. Anthony, Ms. Champagne and Ms. Jolly. These
agreements are described under - "Split Dollar Life Insurance." These agreements
provide benefits to us and to the executives' beneficiaries upon their deaths.
We believe this type of agreement is an important factor in retaining our
executive officers because they are required to be employed by us at death or
disability, or remain employed by us until retirement, for their beneficiaries
to receive benefits under the policies without having to make payments for such
benefits.
9
Security Ownership Guidelines and Hedging
We do not have any formal security ownership guidelines for our
executive officers or any policies regarding our executive officers' hedging the
economic risk of ownership of our shares.
Executive Officer Compensation
Summary Compensation Table
The following table sets forth information about compensation paid to,
awarded to or earned by our President and Chief Executive Officer, our Senior
Vice President and Chief Financial Officer, and our Senior Vice President and
Senior Lender for the year ended December 31, 2008.
Name Year Salary Bonus Option All Total
and ($) ($) Awards Other ($)
Principal ($)(1) Compen-
Position sation
($)(2)
---- -------- -------- -------- -------- --------
J. Rodger Anthony ................ 2008 $182,500 $ - $ 14,037 $ 20,064 $216,601
President and Chief .............. 2007 $165,000 $ 29,914 $ 5,595 $ 16,243 $216,752
Executive Officer
Jennifer M. Champagne ............ 2008 $124,000 $ - $ 14,037 $ 15,229 $153,266
Senior Vice President ............ 2007 $115,000 $ 20,849 $ 4,276 $ 13,722 $153,847
and Chief Financial
Officer
Susan S. Jolly ................... 2008 $123,000 $ - $ 14,037 $ 14,696 $151,733
Senior Vice President ............ 2007 $114,000 $ 20,668 $ 4,276 $ 14,173 $153,117
and Senior Lender
(1) The assumptions made in valuation of option awards are set forth in
Note 1 to the Company's audited financial statements for the year ended
December 31, 2008, which are included in our Form 10-K for the year
ended December 31, 2008 and in our 2008 Annual Report to Shareholders.
The amounts shown in this column are the dollar amounts recognized for
financial statement reporting purposes with respect to the fiscal year
in accordance with SFAS No. 123(R), and do not represent dollar amounts
payable to the executives. The exercise price of these options was the
fair market value of our common stock on the date of grant. The options
vest in 20% increments over five years and are exercisable for a period
of ten years.
(2) Includes our 2008 contributions to the Bank's SIMPLE IRA, directors'
fees and imputed premiums for split dollar life insurance policies.
Perquisites were less than $10,000 for each executive officer named
above. Does not include medical, disability or life insurance premiums
paid pursuant to plans that do not discriminate in favor of our
executive officers and that are available generally to all salaried
employees. Also does not include any compensation related to business
use of a bank-owned automobile by Mr. Anthony because we believe such
use is directly and integrally related to performance of his duties.
10
Outstanding Equity Awards at 2008 Fiscal Year-End
The following table sets forth information about options outstanding
for our President and Chief Executive Officer, our Senior Vice President and
Chief Financial Officer, and our Senior Vice President and Senior Lender, at
December 31, 2008. We have not granted any other equity-based awards.
Number Number of
Of Securities Securities
Underlying Underlying
Unexercised Unexercised Option Option
Options (#) Options (#) Exercise Expiration
Name Exercisable Unexercisable(1) Price ($) Date
---- ----------- -------------- --------- ----
J. Rodger Anthony 7,086 - 5.65 12/15/2009
3,512 - 8.54 4/9/2014
3,193 - 9.76 1/4/2015
1,162 1,742 11.15 1/4/2016
528 2,112 14.55 1/2/2017
2,400 12.50 1/2/2018
-----
-
15,481 6,254
====== =====
Jennifer M. Champagne 1,757 - 8.54 4/9/2014
1,597 - 9.76 1/4/2015
581 871 11.15 1/4/2016
528 2,112 14.55 1/2/2017
- 2,400 12.50 1/2/2018
----- -----
4,463 5,383
===== =====
Susan S. Jolly 1,757 - 8.54 4/9/2014
1,597 - 9.76 1/4/2015
581 871 11.15 1/4/2016
528 2,112 14.55 1/2/2017
- 2,400 12.50 1/2/2018
----- -----
4,463 5,383
===== =====
(1) These options vest in 20% increments over five years, beginning in January
of the year following the grant date. The grant dates for the options were
ten years prior to the expiration dates shown above.
2003 Stock Option Plan
In 2003 our shareholders approved a stock option plan for the benefit
of our employees and directors (the "2003 Plan"). The 2003 Plan reserved 125,000
shares of common stock for issuance upon exercise of options. During 2008,
options to purchase 19,200 shares of common stock were granted under the 2003
Plan. These options vest over a five year period and are exercisable for a
period of ten years at the estimated fair market value on the date of grant,
which was $12.50 per share. During 2008, 2,400 of the options granted in 2008
were forfeited. The Board of Directors declared 10% stock dividends in May 2007,
2006, 2005 and 2004, which increased the number of shares reserved for issuance
under the 2003 Plan to 183,012. Stock dividends also increased the number of
shares subject to then outstanding options, net of exercises, under the 2003
Plan. The total number of options outstanding at December 31, 2008 was 131,812,
and the weighted average exercise price was $9.46 per share. Currently
exercisable options outstanding at December 31, 2008 totaled 89,947, and were
exercisable at a weighted average exercise price of $7.86 per share.
11
Change of Control Agreements
We have entered into Change of Control Agreements with J. Rodger
Anthony, our President and Chief Executive Officer, Jennifer M. Champagne, our
Senior Vice President and Chief Financial Officer, and Susan S. Jolly, our
Senior Vice President and Senior Lender (each referred to as an "Executive").
The agreements automatically renew each year unless, 30 days prior to an annual
anniversary date, we give notice that the agreements will not renew.
The agreements provide that, if there is a "change of control" of our
Company within five years of the date of the agreements, the Executive will be
entitled to a lump sum payment equal to a multiple of his annual salary in
effect at the date of termination. For Mr. Anthony, this multiple is three times
his annual salary then in effect; and for each of Ms. Champagne and Ms. Jolly,
this multiple is one and one-half times her annual salary then in effect. If,
however, the amount of any such lump-sum payment, plus any other amount treated
as a parachute payment under Section 280G of the Internal Revenue Code equals or
exceeds three times the base amount described in Section 280G of the Internal
Revenue Code, then the amount due under the agreements will be adjusted to have
a value for purposes of Section 280G of three times the base amount less $100.
The executive will also be entitled to any vested benefits under any retirement
or benefit plan.
Any amounts paid pursuant to the agreements will be deemed severance
pay, and the Executive will not be under any duty to mitigate damages and no
income received by the Executive thereafter will reduce the amount we owe the
Executive.
A "change of control" is deemed to occur under the agreements if
either (i) voting control of more than 50% of the common stock of our Company is
acquired, directly or indirectly, by any person or group acting in concert, (ii)
we are merged with or into any other entity and we are not the surviving entity
of the merger, unless our shareholders immediately prior to the merger continue
to own more than 50% of the voting power of the stock of the surviving company,
(iii) voting control of more than 50% of the common stock of any of our
subsidiaries by which Executive is principally employed is acquired, directly or
indirectly, by any person or group acting in concert, or (iv) any of our
subsidiaries by which Executive is principally employed is merged with or into
another entity which is not also our subsidiary and such subsidiary is not the
surviving entity of the merger, unless immediately after the merger our Company
owns more than 50% of the voting power of the surviving company.
The foregoing is merely a summary of the Change of Control Agreements
and is not intended to create any rights in any person, and is qualified in its
entirety by reference to such agreements, which are filed with the Securities
and Exchange Commission.
Split Dollar Life Insurance
We have purchased split dollar life insurance policies covering Mr.
Anthony, Ms. Champagne and Ms. Jolly, and entered into agreements with each of
them relating to these policies. We own these life insurance policies and paid
for them in full when we purchased them in 2004. The agreements provide that
death proceeds under the policies will be divided between us and the respective
beneficiaries of Mr. Anthony, Ms. Champagne and Ms. Jolly. If, at the time of
death, Mr. Anthony is either employed by us, retired from employment with us, or
has been terminated from employment with us as a result of disability before age
sixty-five, his beneficiary will receive the total death proceeds under the
policy, less the policy surrender value, we will receive the remainder of the
proceeds (which will be at least the surrender value), and we and his
beneficiary will share any interest due on the death proceeds on a pro rata
basis. If, at the time of death, Ms. Champagne or Ms. Jolly is currently
employed by us, retired from employment with us, or has been terminated from
employment with us as a result of disability before age sixty-five, her
beneficiary will be entitled to an amount equal to two times her final base
salary if the death occurs on or before the insured's sixty-fifth birthday or
one and one-half times her final base salary if the death occurs after the
insured's sixty-fifth birthday, we will receive the remainder of the proceeds
(which will be at least the policy surrender value), and we and her beneficiary
will share any interest due on the death proceeds on a pro rata basis. The
executive's interest fully vests upon completion of five years continuous
service, or immediately upon a change of control. Mr. Anthony, Ms. Champagne and
Ms. Jolly are already fully vested.
12
COMPENSATION OF DIRECTORS
Directors are not paid for service as our directors. However, our
directors also serve as directors of our Bank and receive fees for meetings of
the Bank Board of Directors and committee meetings of the Bank Board. Our Bank
paid directors $900 per board meeting in 2008. Non-management Directors were
also paid $100 for each committee meeting attended in person and $25 for each
committee meeting attended by telephone. Total director fees were $130,450 in
2008. See also "Organizers Stock Options" below for information about stock
options granted to our original directors. In December 2009, our Bank increased
director fees to be paid for 2009 to $1,000 per meeting, with the exception of
the chairman who is paid $1,100 per meeting, and approved the grant, as of
January 12, 2009, of options to purchase 1,200 shares of our common stock to
each of our non-management directors. Information about fees paid and options
awarded to Mr. Anthony, Ms. Champagne and Ms. Jolly is included in the "Option
Awards" and "All Other Compensation" columns of the Summary Compensation Table.
2008 Director Compensation
Fees Earned Option
or Paid in Awards
Name Cash ($) ($)(1)(2) Total ($)
---- -------- --------- ---------
Walter L. Brooks $ 7,850 $ 919 $ 8,769
T. Edward Childress, III* 11,500 $ 919 12,419
J. Bruce Gaston 14,050 $ 919 14,969
S. Ervin Hendricks, Jr. 11,700 $ 919 12,619
Joe E. Hooper 14,125 $ 919 15,044
Robert R. Spearman 14,725 $ 919 15,644
John M. Warren, Jr., M.D. 10,900 $ 919 11,819
George I. Wike, Jr. 11,400 $ 919 12,319
*Died December, 2008.
(1) The amounts shown in this column are the dollar amounts recognized for
financial statement reporting purposes with respect to the fiscal year
in accordance with SFAS No. 123(R), and do not represent dollar amounts
payable to the directors. The assumptions made in valuation of option
awards are set forth in Note 1 to our audited financial statements for
the year ended December 31, 2008, which are included in our Form 10-K
for the year ended December 31, 2008 and in our 2008 Annual Report to
Shareholders.
(2) Information about the aggregate number of options outstanding for each
director is included in the footnotes to the "Security Ownership of
Certain Beneficial Owners and Management" table.
Organizers' Stock Options
On December 14, 1999, our Board of Directors, in consideration of the
time and efforts of our directors in organizing our Company and our subsidiary
bank and each organizing director's personally guaranteeing a portion of the
organizational expenses, granted options to each organizing director to purchase
up to 4,000 shares of our common stock for a purchase price of $10.00 per share,
which was the price at which the common stock was sold to the public in 1999.
The options became exercisable for each director one-third each year beginning
on December 14, 2000 and expire on December 14, 2009, unless they terminate
sooner as the result of the director's ceasing to be one of our directors, in
which case the options expire six months after the holder ceases to be a
director. As described in Note 18 to our Consolidated Financial Statements, our
Board of Directors declared 10 percent stock dividends to shareholders of record
on May 8, 2007, May 9, 2006, May 10, 2005, May 11, 2004, March 17, 2003 and
April 30, 2002. Our stock option agreements provide for appropriate adjustments
of the number of outstanding stock options in the event of stock dividends and
other similar stock transactions. The agreements also provide for the aggregate
consideration to be paid upon exercise of the options to be proportionately
adjusted following a stock dividend. Messrs. Childress, Wike and Warren have
exercised their organizer's options. At December 31, 2008, directors Anthony,
Brooks, Gaston, Hendricks, Hooper and Spearman each held adjusted organizers'
options to purchase 7,086 shares with an exercise price of $5.64 per share.
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Our Bank, in the ordinary course of its business, makes loans to and
has other transactions with our directors, officers, principal shareholders, and
their immediate family members and associates. Loans are made on substantially
the same terms, including rates and collateral, as those prevailing at the time
for comparable transactions with other persons and do not involve more than the
normal risk of collectibility or present other unfavorable features. All loans
on which a director is a borrower or guarantor must be approved by our Board of
Directors. Our Bank expects to continue to enter into transactions in the
ordinary course of business on similar terms with directors, officers, principal
stockholders, and their associates. The aggregate dollar amount of such loans
outstanding at each of December 31, 2008 and 2007 was $6.0 million and $6.4
million, respectively. None of such loans have at any time been classified as
nonaccrual, past due, restructured or problem loans. During 2008, $1.3 million
of new loans were made and repayments totaled $1.8 million.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
As required by Section 16(a) of the Securities Exchange Act of 1934,
our directors, executive officers and certain individuals are required to report
periodically their ownership of our Common Stock and any changes in ownership to
the Securities and Exchange Commission. Based on a review of Section 16(a)
reports available to us and representations made to us by our directors and
executive officers, it appears that all such reports for these persons were
filed in a timely fashion during 2008, except Ms. Jolly's initial Form 3. The
form was filed as soon as the oversight was noted.
REGISTERED PUBLIC ACCOUNTING FIRM
The Board has selected Elliott Davis, LLC, Certified Public
Accountants, with offices in Greenville, South Carolina, to serve as our
independent registered public accounting firm for 2009. It is not expected that
representatives from this firm will be present at the annual meeting.
Set forth below is information about fees billed by our independent
registered public accounting firm for audit services rendered in connection with
the consolidated financial statements and reports for the years ended December
31, 2008 and 2007, and for other services rendered during such years, on our
behalf and on behalf of the Bank, as well as all out-of-pocket expenses incurred
in connection with these services, which have been billed to us.
Year Ended Year Ended
December 31, 2008 December 31, 2007
----------------- -----------------
Audit Fees ..................... $ 46,400 $ 42,000
Audit-Related Fees ............. 0 0
Tax Fees ....................... 11,635 8,295
All Other Fees ................. 0 0
Total ................... $ 58,035 $ 50,295
======== ========
Audit Fees
Audit fees include fees billed for professional services rendered for
the audit of our consolidated financial statements and review of the interim
condensed consolidated financial statements included in quarterly reports, and
services that are normally provided by our independent registered public
accounting firm in connection with statutory and regulatory filings or
engagements, and attest services, except those not required by statute or
regulation.
Audit-Related Fees
Audit-related fees include fees billed for assurance and related
services that are reasonably related to the performance of the audit or review
of our consolidated financial statements and that are not reported under "Audit
Fees."
14
Tax Fees
Tax fees include fees for tax compliance/preparation and other tax
services. Tax compliance/preparation include fees billed for professional
services related to federal and state tax compliance. Other tax services include
fees billed for filing of Form 5500 for our Section 125 Flexible Spending
Account benefit plan.
All Other Fees
All other fees include fees for all services other than those reported
above.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors
The Audit Committee pre-approves all audit and permitted non-audit
services (including the fees and terms thereof) provided by the independent
registered public accounting firm, subject to possible limited exceptions for
non-audit services described in Section 10A of the Securities Exchange Act of
1934, which are approved by the Audit Committee prior to completion of the
audit. The Committee may delegate to one or more designated members of the
Committee the authority to pre-approve audit and permissible non-audit services,
provided such pre-approval decision is presented to the full Committee at its
next scheduled meeting. Prior to the performance of any services by our
independent registered public accounting firm, executive management requests an
estimate of the fees and an outline of the proposed services. The estimated fees
are submitted in advance to the audit committee via letter directly from Elliott
Davis to the chairman of the Audit Committee. At its next scheduled meeting, the
Audit Committee approves the estimated fees and services expected to be provided
and advises management of their decision. During 2008, all audit and permitted
non-audit services were pre-approved by the Committee.
AUDIT COMMITTEE REPORT
The Audit Committee of our Board of Directors has reviewed and
discussed with our management our audited financial statements for the year
ended December 31, 2008. Our Audit Committee has discussed with our independent
auditors, Elliott Davis, LLC, the matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1
AU section 380), as adopted by the Public Company Accounting Oversight Board in
Rule 3200T. Our Audit Committee has also received the written disclosures and
the letter from Elliott Davis, LLC, required by applicable requirements of the
Public Company Accounting Oversight Board regarding Elliott Davis, LLC's
communications with the Committee concerning independence, and has discussed
with Elliott Davis, LLC, their independence.
Based on their review of the consolidated financial statements and
discussions with and representations from management and Elliott Davis, LLC
referred to above, our Audit Committee recommended to the Board of Directors
that the audited financial statements be included in our Annual Report on Form
10-K for fiscal year 2008, for filing with the Securities and Exchange
Commission.
Joe E. Hooper George I. Wike, Jr.
J. Bruce Gaston S. Ervin Hendricks, Jr.
Robert R. Spearman
The Audit Committee Report shall not be deemed to be incorporated by
reference into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 unless we specifically incorporate it by reference into any
such filing.
15
OTHER MATTERS
Our Board of Directors does not know of any other business to be
presented at the meeting of stockholders. If matters other than those described
herein should properly come before the meeting, the persons named in the
enclosed form of proxy intend to vote at such meeting in accordance with their
best judgment on such matters. If you specify a different choice on the Proxy,
your shares will be voted in accordance with your specifications.
Unless contrary instructions are indicated on the Proxy, all shares of
stock represented by valid proxies received pursuant to this solicitation, and
not revoked before they are voted, will be voted FOR the election of any or all
of the nominees for directors named herein.
SHAREHOLDER PROPOSALS
If you wish to submit proposals for the consideration of the
shareholders at the 2010 Annual Meeting, you may do so by mailing or delivering
them in writing to Jennifer M. Champagne, Senior Vice President and Chief
Financial Officer at our main office, 1670 East Main Street, Easley, South
Carolina 29640. We must receive such written proposals prior to December 11,
2009, if you want us to include them, if otherwise appropriate, in our proxy
statement and form of proxy relating to that meeting. If we do not receive
notice of a shareholder proposal prior to February 9, 2010, the persons named as
proxies in the proxy materials relating to that meeting will use their
discretion in voting the proxies when the proposal is raised at the meeting.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
You may obtain copies of our annual report on Form 10-K required to be
filed with the Securities and Exchange Commission for the year ended December
31, 2008, free of charge by requesting such form in writing from Jennifer M.
Champagne, Chief Financial Officer, Cornerstone Bancorp, Post Office Box 428,
Easley, South Carolina 29641. The Form 10-K is also available on the Securities
and Exchange Commission's website at www.sec.gov.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE SHAREHOLDERS MEETING TO BE HELD ON TUESDAY MAY 12, 2009
The Company's 2008 Annual Report and 2009 Proxy Statement are available
via the Internet at: http://www.cornerstonenatlbank.com.
16
PROXY
CORNERSTONE BANCORP
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - Tuesday, May 12, 2009
J. Rodger Anthony and Jennifer M. Champagne, or either of them, with
full power of substitution, are hereby appointed as agent(s) of the undersigned
to vote as proxies for the undersigned at the Annual Meeting of Shareholders to
be held on Tuesday, May 12, 2009, and at any adjournment thereof, as follows:
1. ELECTION OF FOR all nominees listed WITHHOLD AUTHORITY
DIRECTORS below (except any I have to vote for all nominees listed
written below) [ ] below [ ]
Three-year terms: Joe E. Hooper, Robert R. Spearman, John M. Warren, Jr.,
M. D. and George I. Wike, Jr.
One-year term: Janice E. Childress
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL(S) WRITE THE
NOMINEE'S(S') NAME(S) ON THE LINE BELOW.
2. And, in the discretion of said agents, upon such other business as may
properly come before the meeting, and matters incidental to the conduct of
the meeting. (Management at present knows of no other business to be
brought before the meeting.)
THE PROXIES WILL BE VOTED AS INSTRUCTED. IF NO CHOICE IS INDICATED WITH RESPECT
TO A MATTER WHERE A CHOICE IS PROVIDED, THIS PROXY WILL BE VOTED "FOR" SUCH
MATTER.
Please sign exactly as name appears below. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If more than one
trustee, all should sign. All joint owners must sign.
Dated: , 2009 _______________________________________________
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