UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 240.14a-11(c) or 240.14a-12
SOUTHFIRST BANCSHARES, INC.
Name of Registrant as Specified in Its Charter
N/A
(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 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(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:
SOUTHFIRST BANCSHARES, INC.
April 18, 2005
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of SouthFirst Bancshares, Inc. ("SouthFirst") to be held on Wednesday, May 18,
2005, at 10:00 a.m., local time, at First Federal of the South, 126 North
Norton Avenue, Sylacauga, Alabama 35150.
The formal notice of the meeting and the proxy statement appear on the
following pages and describe the matters to be acted upon. Time will be
provided during the meeting for discussion, and you will have an opportunity to
ask questions about your company.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
notice of the meeting and proxy statement, please complete, sign, date and
return the enclosed proxy at your earliest convenience. Returning the signed
proxy card will not prevent you from voting in person at the meeting, should
you later decide to do so.
Sincerely,
/s/ Sandra H. Stephens
Sandra H. Stephens
Interim Chief Executive Officer
126 North Norton Avenue - P.O. Box 167 - Sylacauga, Alabama 35150
(256) 245-4365 - (800) 239-1492 - Fax (256) 245-6341 - (256) 245-6388
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SOUTHFIRST BANCSHARES, INC.
126 NORTH NORTON AVENUE
SYLACAUGA, ALABAMA 35150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2005
To the Holders of Common Stock of SOUTHFIRST BANCSHARES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of SouthFirst Bancshares, Inc. ("SouthFirst") is to be held
on Wednesday, May 18, 2005, at 10:00 a.m., local time, at First Federal of the
South, 126 North Norton Avenue, Sylacauga, Alabama 35150, for the following
purposes:
(1) To elect two directors of SouthFirst to hold office until the
2008 Annual Meeting or until a successor is elected and
qualified;
(2) To ratify the selection of Jones & Kirkpatrick, P.C. as the
independent registered public accounting firm for SouthFirst
for fiscal year 2005; and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournments or postponements
thereof.
The Board of Directors has fixed April 7, 2005, as the record date for
the determination of stockholders entitled to vote at the Annual Meeting and
any adjournments and postponements thereof. Only stockholders of record at the
close of business on that date will be entitled to notice of and to vote at the
Annual Meeting and any adjournments or postponements thereof.
A Proxy Statement and a proxy solicited by the Board of Directors,
together with a copy of the 2004 Annual Report to Stockholders are enclosed
herewith. Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend the Annual Meeting in person, you are
requested to complete, sign and date the enclosed proxy and return it as
promptly as possible in the accompanying envelope. If you attend the Annual
Meeting, you may, if you wish, withdraw your proxy and vote in person.
By Order of the Board of Directors
/s/ Sandra H. Stephens
Sandra H. Stephens
Interim Chief Executive Officer
Sylacauga, Alabama
April 18, 2005
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING U.S. POSTAGE PAID ENVELOPE. RETURNING A SIGNED PROXY
WILL NOT PREVENT YOU FROM ATTENDING THE MEETING AND VOTING IN PERSON, IF YOU SO
DESIRE.
1
SOUTHFIRST BANCSHARES, INC.
126 NORTH NORTON AVENUE
SYLACAUGA, ALABAMA 35150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 2005
--------------------------
PROXY STATEMENT
-------------------------
This Proxy Statement is furnished to the stockholders of SouthFirst
Bancshares, Inc. ("SouthFirst") in connection with the solicitation of proxies
by the Board of Directors of SouthFirst for the Annual Meeting of Stockholders
(the "Annual Meeting") to be held on Wednesday, May 18, 2005, at 10:00 a.m.,
local time, at First Federal of the South, 126 North Norton Avenue, Sylacauga,
Alabama 35150 and at any adjournments and postponements thereof. At the Annual
Meeting, the stockholders of SouthFirst are being asked to consider and vote
upon (i) the election of two directors of SouthFirst, each to serve until the
2008 Annual Meeting of stockholders or until a successor is elected and
qualified, and (ii) a proposal to ratify the selection of Jones & Kirkpatrick,
P.C. as the independent registered public accounting firm for SouthFirst for
fiscal year 2005.
VOTING RIGHTS AND PROCEDURES
GENERAL VOTING INFORMATION
Only holders of record of SouthFirst's common stock, $.01 par value
per share (the "Common Stock") at the close of business on April 7, 2005 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
the close of business on the Record Date, there were 709,406 shares of Common
Stock outstanding. The presence, either in person or by proxy, of the holders
of one-third (1/3) of the outstanding shares of Common Stock outstanding on the
Record Date is necessary to constitute a quorum at the Annual Meeting. All
abstentions and broker non-votes will be included as shares that are present
and entitled to vote for purposes of determining the presence of a quorum at
the meeting.
Each stockholder will be entitled to one vote, in person or by proxy,
for each share of Common Stock held in such stockholder's name on the Record
Date on any matter submitted to a vote of stockholders at the Annual Meeting.
The election of the two directors will require the affirmative vote of
a plurality of the shares of Common Stock represented and voting in person or
by proxy at the Annual Meeting. All abstentions and broker non-votes will be
disregarded in tabulating the vote on the election of Directors.
The adoption of the proposal to ratify the selection of Jones &
Kirkpatrick, P.C. as the independent registered public accounting firm for
SouthFirst for fiscal year 2005 will require the affirmative vote of a majority
of the votes cast by the holders of Common Stock who are present in person or
represented by proxy and entitled to vote at the Annual Meeting. All
abstentions and broker non-votes will be disregarded in tabulating the vote on
this proposal.
Unless otherwise provided by SouthFirst's Certificate of Incorporation
or Bylaws or by statute, the affirmative vote of a majority of the votes
present in person or by proxy at the Annual Meeting is required to pass on any
matters, other than the election of directors. Abstentions and broker non-votes
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will not be counted as votes, either in favor of or against the matter with
respect to which the abstention or broker non-vote relates. All votes will be
tabulated by the inspector of election appointed for the Annual Meeting, who
will separately tabulate affirmative and negative votes, abstentions and broker
non-votes.
Under applicable Delaware law, none of the holders of Common Stock is
entitled to appraisal rights in connection with any matter to be acted on at
the Annual Meeting.
VOTING BY STOCKHOLDERS OF RECORD AND BENEFICIAL OWNERS
Stockholders whose shares are registered directly with SouthFirst's
transfer agent are considered, with respect to those shares, to be the
stockholder of record. SouthFirst is sending these proxy materials directly to
stockholders of record. Stockholders of record have the right to submit a proxy
directly to SouthFirst or to vote in person at the Annual Meeting.
Stockholders whose shares are held in a brokerage account, through an
employee benefit plan or by another nominee, are considered the beneficial
owners of shares held in "street name." The proxy materials for these
stockholders are being forwarded to beneficial owners, together with a voting
instruction card. Beneficial owners have the right to direct their broker,
trustee or nominee as to how to vote and also are invited to attend the Annual
Meeting.
Since a beneficial owner is not the stockholder of record, he or she
may not vote these shares in person at the Annual Meeting without a proxy from
the broker, trustee or nominee that holds the shares, giving the beneficial
owner the right to vote the shares at the meeting. The broker, trustee or
nominee of each beneficial owner has enclosed or provided voting instructions
for use in directing the broker, trustee or nominee how to vote these shares.
REVOCATION OF PROXIES OR VOTING INSTRUCTIONS
Stockholders may change their vote at any time prior to the vote at
the Annual Meeting. Record holders may accomplish this by granting a new proxy
bearing a later date (which automatically revokes the earlier proxy), by
providing a written notice of revocation to the Secretary of SouthFirst prior
to the Annual Meeting, or by attending the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not, in and of itself, cause a previously
granted proxy to be revoked. Beneficial owners may change their vote by
submitting new voting instructions to their broker, trustee or nominee, or, if
the beneficial owner has obtained a proxy from his or her broker or nominee
giving the beneficial owner the right to vote the shares, by attending the
meeting and voting in person.
VOTING OF PROXIES
Shares of Common Stock represented by properly executed proxies
received in time for voting at the Annual Meeting will, unless such proxy has
previously been revoked, be voted in accordance with the instructions indicated
thereon. In the absence of specific instructions to the contrary, the persons
named in the accompanying form of proxy intend to vote all properly executed
proxies received by them FOR the election of the Board of Directors' nominees
as Directors, and FOR the proposal to ratify the selection of Jones &
Kirkpatrick, P.C. as the independent registered public accounting firm for
SouthFirst for fiscal year 2005.
No business other than as set forth in the accompanying Notice of
Annual Meeting is expected to come before the Annual Meeting. However, the
proxy confers discretionary authority upon the persons
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named therein, or their substitutes, with respect to any other business that
may properly come before the Annual Meeting. Should any other matter requiring
a vote of stockholders be properly brought before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote such proxy
in accordance with their best judgment on such matters. For information with
respect to advance notice requirements applicable to stockholders who wish to
propose any matter for consideration or nominate any person for election as a
Director at the 2006 Annual Meeting, see "STOCKHOLDERS' PROPOSALS FOR THE 2006
ANNUAL MEETING."
OTHER INFORMATION
SouthFirst is making this solicitation. The cost of this solicitation
will be borne by SouthFirst. Solicitation will be made by mail and may be made
personally or by telephone by officers and other employees of SouthFirst who
will not receive additional compensation for solicitation.
The address of the principal executive offices of SouthFirst is 126
North Norton Avenue, Sylacauga, Alabama 35150, and SouthFirst's telephone
number is (256) 245-4365. First Federal of the South ("First Federal"), a
wholly-owned subsidiary of SouthFirst, is a federally-chartered savings
association.
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4
AGENDA ITEM ONE
ELECTION OF DIRECTORS
SouthFirst's Board of Directors presently consists of seven (7)
directors, elected to staggered three-year terms. Upon the resignation of Mr.
McArthur in March 2005, the Board elected to reduce the size of the Board from
eight (8) directors to seven (7) directors. The terms of Donald R. Hardy and
Allen Gray McMillan, III will expire at this Annual Meeting of Stockholders.
The Board of Directors has nominated Messrs. Hardy and McMillan for election as
directors of SouthFirst. Unless otherwise directed, the proxies will be voted
at the Annual Meeting FOR the election of the nominees. In the event that
neither one of the nominees is able to serve or either declines to serve as a
director at the time of the Annual Meeting, the persons named as proxies will
have discretionary authority to vote the proxies for the election of such
person or persons as may be nominated in substitution by the present Board of
Directors. Management knows of no current circumstances which would render
either nominee named herein unable to accept nomination or election. The
affirmative vote of a plurality of the votes present in person or by proxy at
the Annual Meeting is required for the election of the two nominees standing
for election.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
SOUTHFIRST'S NOMINEES AS DIRECTORS.
The following individuals have been nominated by management for
election to SouthFirst's Board of Directors for a term of three years and until
their successors are elected and qualified:
DONALD R. HARDY, age 55, has served as a director of First Federal and
SouthFirst since January 2001. Mr. Hardy is the owner, President and CEO of H &
B Builders, Inc., located in Sylacauga, Alabama. He is a member of the Business
Council of Alabama, Sylacauga Chamber of Commerce and has served on the
Sylacauga Planning Commission since 1992. Mr. Hardy is an active member of the
First Baptist Church of Sylacauga.
ALLEN GRAY MCMILLAN, III, age 48, has served as a director of First
Federal since 1993 and of SouthFirst since 1994. On August 15, 2001, Mr.
McMillan was elected Chairman of SouthFirst and First Federal. Mr. McMillan is
also President of Brecon Knitting Mill, where he has been employed since 1979.
Mr. McMillan has been active in the Kiwanis Club, United Way, and Boy Scouts of
America. He is a member of the First United Methodist Church.
************
Each of the following individuals is a member of SouthFirst's Board of
Directors who is not standing for election to the Board of Directors this year
and whose term will continue after the Annual Meeting:
J. MALCOMB MASSEY, age 54, has served as a director of First Federal
and SouthFirst since May, 1997. On September 26, 2001, Mr. Massey was elected
President of SouthFirst effective October 1, 2001. In addition, Mr. Massey is
President and Chief Executive Officer of Pension & Benefit, First Federal's
wholly-owned, operating subsidiary. This is a position that Mr. Massey has held
since he joined Pension & Benefit in 1997, after it acquired substantially all
of the assets of Lambert, Massey, Roper & Taylor, Inc., an employee benefits
consulting firm, based in Montgomery, for which Mr. Massey had served as
President since 1980. Mr. Massey is a member of the American Society of Pension
Actuaries, the South Central Alabama Association of Insurance and Financial
Advisors, Life and Qualifying Member of Million Dollar Roundtable, Top of the
Table, Montgomery Lions Club and Young Meadows Presbyterian Church.
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SANDRA H. STEPHENS, age 46, was elected as director of SouthFirst and
First Federal, effective November 2002. In addition, Ms. Stephens was elected
as Interim Chief Executive Officer of SouthFirst and First Federal upon the
resignation of the former Chief Executive Officer in March of 2005. Ms.
Stephens has served as Executive Vice President and Chief Operating Officer of
SouthFirst and First Federal since November 2001. Ms. Stephens previously
served as the Chief Operating Officer, from 1997 to 2001, and Chief Financial
Officer, from 1992 to 1997, of First Federal Bank, in Tuscaloosa, Alabama.
Prior to her employment with First Federal Bank, Ms. Stephens held various
executive positions with Federal Home Loan Mortgage Corporation, Atlanta,
Georgia from 1990 until 1992, and with Pinnacle Bank, Jasper, Alabama from 1981
until 1990. Ms. Stephens is a member of the American Society of Women
Accountants, and she is a member of Saint Mark United Methodist Church in
Birmingham, Alabama and serves on the Board of Trustees of the North Alabama
Conference of the United Methodist Church.
KENNETH E. EASTERLING, age 62, has served as a director of First
Federal since 1997 and of SouthFirst since 2001. Mr. Easterling previously
served as a member of the Board of Directors of First Federal Savings and Loan
of Chilton County from 1992 to 1997. Mr. Easterling is the owner of Home
Printing Company, located in Clanton, Alabama, which was established in 1969.
Mr. Easterling served in the Army National Guard from 1963 to 1969, is a
Charter Member of the Exchange Club of Chilton County, a member of the Board of
Directors of Chilton County Cattlemen's Association, a member of the Board of
Directors of Alfa, and has served as a Deacon of the West End Baptist Church
from 1969 to the present.
H. DAVID FOOTE, JR., age 55, has served as a director of First Federal
since 1988 and of SouthFirst since 1994. Mr. Foote has been President and owner
of Foote Bros. Furniture since 1973. Mr. Foote has been a director of the
Sylacauga Chamber of Commerce, the Coosa Valley Country Club and Talladega
County E-911. He has served as President of Wesley Chapel Methodist Men's Club
and head of the Wesley Chapel Methodist Administrative Board.
L. NEAL BICE, age 64, has served as a director of First Federal since
1997 and of SouthFirst since 2001. Mr. Bice previously served as a director of
First Federal Savings and Loan of Chilton County, from 1989 to 1997. Mr. Bice
is an owner and a director of Chilton County Feed and Seed Company, located in
Clanton, Alabama. Mr. Bice presently is a professor of economics and business
at the Clanton extension of the George C. Wallace State Community College. Mr.
Bice is a past professor of finance at Auburn University, a past professor of
economics, finance and banking at the University of Southwestern Louisiana, and
a past professor of finance at the University of Alabama. Mr. Bice is a member
of the Chilton County Board of Education, the Alabama Education Association,
the Southern School Board Association, Omicron Delta Epsilon Society in
Economics, the Chilton County High School Athletic Association, and the Chilton
County Cattlemen's Association. He is a past President of the Chilton County
Board of Education, and serves as director of the Chilton County Chamber of
Commerce, the President of the Chilton County University of Alabama Alumni
Association, the Zone Chairman of the Clanton Lion's Club, and the President of
the War Eagle Lion's Club, Auburn, Alabama. Mr. Bice is a member of the Concord
Baptist Church.
There are no family relationships between any director, executive
officer, or person nominated to become a director or executive officer and any
other director, executive officer, or person nominated to become a director or
executive officer of SouthFirst.
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6
COMMITTEES OF THE BOARD
AUDIT COMMITTEE
The Audit Committee is currently comprised of Messrs. Bice (Chairman),
Easterling, Foote, Hardy, and McMillan. The Board of Directors of SouthFirst
has adopted a written charter setting forth the composition, authority and
responsibilities of the Audit Committee. The independence of the Audit
Committee members has been established by, and pursuant to, the listing
standards of the American Stock Exchange, as set forth in Section 121(A) of the
American Stock Exchange Company Guide. Immediately following is the report of
the Audit Committee.
REPORT OF AUDIT COMMITTEE(1)
The following is the report of the Audit Committee with
respect to the audited financial statements of SouthFirst for the
fiscal year ended September 30, 2004.
With respect to fiscal year 2004, the Audit Committee has
done each of the following: (i) reviewed SouthFirst's audited
financial statements and discussed such financial statements with
management, (ii) discussed with Jones & Kirkpatrick, P.C., the
independent auditors for SouthFirst, the matters required to be
discussed by the Statement on Auditing Standards No. 61 (SAS 61,
Communication with Audit Committee), (iii) received the written
disclosures and the letter from Jones & Kirkpatrick, P.C., required by
Independence Standards Board Standard No. 1 (Independence Standards
Board Standard No. 1, Independence Discussions with Audit Committees),
and (iv) discussed with Jones & Kirkpatrick, P.C. their independence
from SouthFirst.
Based on the aforementioned reviews and discussions, the
Audit Committee recommended to the Board of Directors that the audited
financial statements be included in SouthFirst's Annual Report on Form
10-KSB for the fiscal year ended September 30, 2004. Further, the
Audit Committee, based upon the aforementioned reviews and
discussions, hereby selects and appoints Jones & Kirkpatrick, P.C. as
the independent auditors to audit the accounts and records of
SouthFirst for the current fiscal year.
AUDIT COMMITTEE
L. Neal Bice
Kenneth E. Easterling
H. David Foote, Jr.
Donald R. Hardy
Allen Gray McMillan, III
- ---------
(1) The material in this report is not "soliciting material," is not
deemed filed with the SEC and is not to be incorporated by reference
in any filing of the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether
made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
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OTHER COMMITTEES
In addition to the Audit Committee, SouthFirst's Board of Directors
has established the Executive Committee, which during fiscal year 2004
consisted of Messrs. McMillan (Chairman), Foote, Hardy, Massey, McArthur
(resigned effective March 2005) and Ms. Stephens. The Executive Committee,
which did not meet in fiscal year 2004, has the power to exercise most of the
powers of the Board of Directors, in the intervals between the meetings of the
Board of Directors. Any activity of the Executive Committee is reported to the
Board of Directors at the next meeting thereof.
SouthFirst presently does not have a compensation committee because,
except for J. Malcomb Massey (who receives an annual salary from SouthFirst as
its President, in the amount of $20,000), none of the officers of SouthFirst
receive compensation for services to SouthFirst. SouthFirst's officers are
compensated by SouthFirst's wholly-owned subsidiary, First Federal, and First
Federal's wholly-owned subsidiary, Pension & Benefit, solely for their services
to First Federal and Pension & Benefit. In addition, non-employee directors are
paid for attendance at First Federal committee meetings, but employee members
of committees are not paid.
In addition to SouthFirst's committees, First Federal has established
various committees, including the Executive Committee, the Loan Committee, the
Audit Committee, the Asset/Liability Committee, the Wage and Compensation
Committee, and the Strategic Planning Committee.
The Executive Committee of First Federal consisted during fiscal year
2004 of Messrs. McMillan (Chairman), Foote, Hardy, Massey, McArthur (resigned
effective March 2005) and Ms. Stephens. The Executive Committee of First
Federal, which did not meet in fiscal year 2004, has the power to exercise most
powers of the Board of Directors of First Federal in the intervals between
meetings of the Board of Directors of First Federal. Any activity of the
Executive Committee is reported to the Board of Directors of First Federal at
the next meeting thereof. First Federal's Loan Committee was comprised during
fiscal year 2004 of Ms. Stephens (Chairwoman), Mr. Bice, Mr. Easterling, Mr.
Foote, Mr. Hardy, Mr. Mark Haynes, Mr. McArthur (resigned effective March
2005), and Ms. Anna Tyler. This committee meets weekly to consider loan
applications. Approval of a loan application requires approval by at least two
members (other than the person signing the application) of the Loan Committee.
The Audit Committee of First Federal consisted during fiscal year 2004 of
Messrs. Bice (Chairman), Easterling, Foote, Hardy, and McMillan. This committee
meets at least annually and more frequently if necessary to review the results
of the audit program. Recommendations and observations are reported to the
Board of Directors of First Federal. The Asset/Liability Committee consisted
during fiscal year 2004 of Mr. McArthur (resigned effective March 2005), Mr.
Hardy, Mr. Foote, Mr. McMillan, Ms. Stephens and Ms. Janice Browning. This
committee meets quarterly to establish and monitor policies to control interest
rate sensitivity. First Federal's Wage and Compensation Committee consisted
during fiscal year 2004 of Mr. Easterling (Chairman), Mr. Bice, Mr. Foote, Mr.
Massey, Mr. McMillan, Ms. Stephens and Mr. McArthur (resigned effective March
2005). This committee, which met twice in fiscal year 2004, is responsible for
reviewing compensation matters, including salaries and benefits of directors,
officers, and employees. The Strategic Planning Committee consisted during
fiscal year 2004 of Messrs. Foote (Chairman), Bice, Easterling, Massey and
McArthur (resigned effective March 2005). This committee meets semi-annually to
review the progress of First Federal in meeting goals established under its
business plan and to consider possible revisions thereto, if deemed necessary
by the committee.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of SouthFirst held twelve regular monthly
meetings and two special meetings during the fiscal year ended September 30,
2004. During fiscal year 2004, each director
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attended at least 90% of the aggregate number of meetings held by the Board of
Directors and Committee(s) on which they served.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
SouthFirst's directors, certain of SouthFirst's officers and persons who own
more than 10% of the outstanding Common Stock of SouthFirst ("Reporting
Persons") to file with the SEC reports of changes in ownership of the Common
Stock of SouthFirst held by such persons ("Section 16(a) Reports"). Reporting
Persons are also required to furnish SouthFirst with copies of all Section
16(a) Reports that they file. SouthFirst has been subject to this regulation
since February 13, 1995.
To SouthFirst's knowledge, based solely on a review of copies of
Section 16(a) Reports furnished to SouthFirst and representations that no other
Section 16(a) Reports were required, all Section 16(a) filing requirements
applicable to such Reporting Persons were complied with during fiscal year
2004.
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EXECUTIVE COMPENSATION
The following table provides certain summary information for fiscal
years 2004, 2003, and 2002 concerning compensation paid or accrued by
SouthFirst and First Federal to or on behalf of SouthFirst's former Chief
Executive Officer and the other executive officers of SouthFirst whose total
annual salary and bonus exceeded $100,000 during fiscal year 2004 (the "Named
Executive Officers"):
Summary Compensation Table
Long Term
Annual Compensation(1) Compensation
---------------------------------------- ------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(2) Options (No.) Compensation
- ---------------------- ------ -------- ------- --------------- ------------- ------------
Joe K. McArthur(3) 2004 $150,000 $23,788(4) $21,000 0 $2,451(5)
Chief Executive 2003 150,000 26,669(6) 24,000 4,300(7) 2,451(8)
Officer of 2002 142,917 25,439(9) 22,995 0 2,451(10)
SouthFirst and
First Federal,
President of First
Federal
J. Malcomb Massey(1) 2004 $150,000 $15,551(11) $21,000 0 $2,488(12)
President of 2003 150,000 5,850(13) 24,000 4,300(14) 2,488(15)
SouthFirst, 2002 150,000 13,270(16) 22,995 0 2,488(17)
President and Chief
Executive Officer of
Pension & Benefit
Sandra H. Stephens 2004 $125,000 $11,887(18) $21,000 0 $1,747(19)
Executive 2003 125,000 14,290(20) 22,500 4,300(21) 1,537(22)
Vice President, 2002 105,417 39,500(23) 4,500 7,500(24) 1,537(25)
and Chief
Operating Officer
of SouthFirst and
First Federal
Ruth M. Roper 2004 $100,000 $12,649(26) $ 2,850 0 $2,744(27)
Executive Vice 2003 100,000 5,598(28) 3,000 1,950(29) 2,744(30)
President of Pension 2002 98,000 5,778(31) 3,000 0 2,744(32)
& Benefit
- -----------------
(1) All compensation received by the Named Executive Officers was paid by
First Federal and Pension & Benefit, except for an annual salary, in
the amount of $20,000, paid by SouthFirst to its President, J. Malcomb
Massey.
(2) Fees received as a member of the Board of Directors of SouthFirst,
First Federal, Pension & Benefit and/or SouthFirst Mortgage.
(3) Mr. McArthur resigned effective March 2005 but was employed in the
capacities indicated for all of fiscal year 2004.
(4) Consists of a regular bonus of $5,769 as well as $18,019 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(5) Represents a $1,485 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
10
(6) Consists of a regular bonus of $8,650 as well as $18,019 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Compensation of
Directors" below.
(7) On October 16, 2002, SouthFirst issued 4,300 options under the 1998
plan to Mr. McArthur at an exercise price of $12.10 per share. These
options vest in equal increments commencing October 16, 2002 through
October 16, 2007.
(8) Represents a $1,485 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(9) Consists of a regular bonus of $10,000 as well as $15,439 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(10) Represents a $1,485 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(11) Consists of a regular bonus of $9,701 as well as $5,850 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(12) Represents a $1,522 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(13) Consists of dividends paid under SouthFirst's Dividend Incentive Plan
on unexercised stock options. See "Dividend Incentive Plan" below.
(14) On October 16, 2002, SouthFirst issued 4,300 options under the 1995
plan to Mr. Massey at an exercise price of $12.10 per share. These
options vest in equal annual increments commencing October 16, 2002
through October 16, 2007.
(15) Represents a $1,522 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(16) Consists of a regular bonus of $10,000 as well as $3,270 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(17) Represents a $1,522 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(18) Consists of a regular bonus of $4,807 as well as $7,080 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(19) Represents a $1,117 automobile allowance and income of $630 recognized
on employer provided group term life insurance in excess of $50,000.
(20) Consists of a regular bonus of $7,210 as well as $7,080 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(21) On October 16, 2002, SouthFirst issued 2,589 options under the 1995
plan and 1,711 options under the 1998 plan to Ms. Stephens at an
exercise price of $12.10 per share. These options vest in equal annual
increments commencing October 16, 2002 through October 16, 2007.
(22) Represents a $1,117 automobile allowance and income of $420 recognized
on employer provided group term life insurance in excess of $50,000.
(23) Consists of a signing bonus of $17,500, a regular bonus of $10,000, a
tax bonus, with respect to MRP shares (see "Management Recognition
Plans" below), of $7,500, and $4,500 of compensation consisting of
dividends paid under SouthFirst's Dividend Incentive Plan on
unexercised stock options. See "Dividend Incentive Plan" below.
(24) On December 1, 2001, SouthFirst issued 7,500 options under the 1995
plan to Ms. Stephens at an exercise price of $9.92 per share. These
options vest in equal annual increments commencing on December 1, 2002
through December 1, 2006.
(25) Represents a $1,117 automobile allowance and income of $420 recognized
on employer provided group term life insurance in excess of $50,000.
11
(26) Consists of a regular bonus of $9,701 as well as $2,948 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(27) Represents a $1,778 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(28) Consists of a regular bonus of $2,650 as well as $2,948 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(29) On October 16, 2002, SouthFirst issued 1,950 options under the 1998
plan to Ms. Roper at an exercise price of $12.10 per share. These
options vest in equal annual increments commencing October 16, 2002
through October 16, 2007.
(30) Represents a $1,778 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
(31) Consists of a regular bonus of $4,000 as well as $1,778 of
compensation consisting of dividends paid under SouthFirst's Dividend
Incentive Plan on unexercised stock options. See "Dividend Incentive
Plan" below.
(32) Represents a $1,778 automobile allowance and income of $966 recognized
on employer provided group term life insurance in excess of $50,000.
EMPLOYMENT AGREEMENTS
SouthFirst, First Federal and Pension & Benefit have entered into
employment agreements with each of the following executive officers (including
each of the remaining Named Executive Officers). The terms and conditions of
these employment contracts are summarized below.
SANDRA H. STEPHENS
Interim Chief Executive Officer, Chief Operating Officer and Executive
Vice President of SouthFirst and First Federal
The employment agreement by and between First Federal and Ms. Stephens
was effective as of January 1, 2005 and is for a term of two years. On each
annual anniversary date from the effective date, Ms. Stephens' term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided First Federal's Board of Directors
determines in a duly adopted resolution that the performance of Ms. Stephens
has met its requirements and standards, and that such employment agreement
should be extended.
Pursuant to Ms. Stephens's employment agreement, First Federal pays
Ms. Stephens an annual base salary of $125,000, payable in cash not less
frequently than monthly. Beginning on the Effective Date, Ms. Stephens shall be
eligible to receive such performance bonuses as may be determined in the sole
discretion of First Federal's Board of Directors. In addition, Ms. Stephens
shall participate in standard retirement and medical plans, and is entitled to
customary fringe benefits, vacation and sick leave.
Ms. Stephens's employment agreement terminates upon her death or
disability, and is terminable for "cause" as defined in the employment
agreement. In the event of termination for cause, no severance benefits are
payable to Ms. Stephens. If First Federal terminates Ms. Stephens without
cause, she will be entitled to receive her base salary for a twelve month
period plus her "average annual compensation" less the base salary for a twelve
month period either in periodic payments over the remaining term of the
employment agreement or in one lump sum. "Average annual compensation" is the
average payment of monies or other things of value in consideration of
employment, including, base salary, insurance, bonuses, pension and profit
sharing plans, director and committee fees, fringe benefits and deferred
12
compensation accruals, over the five full fiscal years (or the number of full
fiscal years of employment, if employment is less than five years at the time
of termination) preceding the fiscal year in which termination occurs. Ms.
Stephens may voluntarily terminate her employment agreement by providing sixty
days written notice to the Board of Directors of First Federal, in which case
she is entitled to receive only her compensation, vested rights and benefits up
to the date of termination.
Ms. Stephens's employment agreement further provides that, in the
event of her involuntary termination in connection with, or within two years
after any change in control of First Federal or SouthFirst, other than for
"cause," or death or disability, Ms. Stephens will be paid, within 10 days of
such termination, an amount equal to the difference between (i) 2.99 times her
"base amount," as defined in Section 280G(b)(3) of the Internal Revenue Code of
1986, as amended (the "Code"), and (ii) the sum of any other "parachute
payments," as defined under Section 280G(b)(2) of the Code, that Ms. Stephens
receives on account of the change in control. Under Ms. Stephens' employment
agreement, a "change in control" generally refers to a change in ownership,
holding or power to vote more than 25% of First Federal's or SouthFirst's
voting stock, a change in the ownership or possession of the ability to control
the election of a majority of First Federal's or SouthFirst's directors, or the
exercise of a controlling influence over the management or policies of First
Federal or SouthFirst. In addition, under Ms. Stephens' employment agreement, a
change in control occurs when, during any consecutive two-year period, the
directors of First Federal or SouthFirst, at the beginning of such period,
cease to constitute two-thirds of the Board of Directors of First Federal or
SouthFirst, unless the election of replacement directors was approved by a
two-thirds (66 2/3%) vote of the initial directors then in office. Ms.
Stephens' employment agreement also provides for a similar lump sum payment to
be made in the event of her voluntary termination of employment within one year
following a change in control of First Federal or SouthFirst.
J. MALCOMB MASSEY
President of SouthFirst and Chief Executive Officer of Pension &
Benefit
The employment agreement by and between Pension & Benefit and Mr.
Massey was effective as of January 1, 2005 and provides for a term of two
years. On each annual anniversary date from the effective date, Mr. Massey's
term of employment shall be extended for an additional one-year period beyond
the then effective expiration date, provided the Board determines in a duly
adopted resolution that the performance of Mr. Massey has met the Board's
requirements and standards, and that such employment agreement should be
extended.
The employment agreement with Mr. Massey provides for an annual base
salary of $150,000, payable in cash not less frequently than monthly. In
addition, as a provision of a prior employment agreement, Mr. Massey received
15,512 shares of restricted SouthFirst Common Stock, one-fifteenth of which
vest on each of the first fifteen anniversaries of April 11, 1997. Should Mr.
Massey's employment be terminated due to death, disability or the termination
of his employment "without cause," as defined in the employment agreement, all
unvested shares shall be deemed earned and fully vested as of such date and
shall be distributed as soon as practicable thereafter. All unvested shares
will also vest upon a "change in control" of Pension & Benefit, First Federal
or SouthFirst. Under Mr. Massey's employment agreement, "change in control"
generally refers to a change in ownership, holding or power to vote more than
25% of Pension & Benefit's, First Federal's or SouthFirst's voting stock, a
change in the ownership or possession of the ability to control the election of
a majority of Pension & Benefit's, First Federal's or SouthFirst's directors,
or the exercise of a controlling influence over the management or policies of
Pension & Benefit, First Federal or SouthFirst. In addition, under Mr. Massey's
employment agreement, a change in control occurs when, during any consecutive
two-year period, directors of Pension & Benefit, First Federal or SouthFirst,
at the beginning of such period, cease to constitute two-thirds of the Boards
of
13
Directors of Pension & Benefit, First Federal or SouthFirst, unless the
election of replacement directors was approved by a two-thirds (66 2/3%) vote
of the initial directors then in office.
Mr. Massey's employment agreement entitles him to participate in an
equitable manner with all other senior management employees of Pension &
Benefit in discretionary bonuses that the Board may award from time to time to
senior management employees. Mr. Massey may also participate in standard
retirement and medical plans, and is entitled to customary fringe benefits,
vacation and sick leave.
Mr. Massey's employment agreement terminates upon his death or
disability, and is terminable for "cause," as defined in the employment
agreement. In the event of termination for cause, no severance benefits are
payable to Mr. Massey. If Mr. Massey is terminated without cause, he will be
entitled to receive his base salary for a twelve month period plus his "average
annual compensation" less the base salary for a twelve month period either in
periodic payments over the remaining term of the employment agreement or in one
lump sum. "Average annual compensation" is the average payment of monies or
other things of value in consideration of employment, including, base salary,
insurance, bonuses, pension and profit sharing plans, director and committee
fees, fringe benefits and deferred compensation accruals, over the five full
fiscal years (or the number of full fiscal years of employment, if employment
is less than five years at the time of termination) preceding the fiscal year
in which termination occurs. Mr. Massey may voluntarily terminate his
employment agreement by providing sixty days written notice to the Board, in
which case he is entitled to receive only his compensation, vested rights and
benefits up to the date of termination.
RUTH M. ROPER
Executive Vice President of Pension & Benefit
The employment agreement by and between Pension & Benefit and Ms.
Roper was effective as of January 1, 2005 and provides for a term of two years.
On each annual anniversary date from the effective date, Ms. Roper's term of
employment shall be extended for an additional one-year period beyond the then
effective expiration date, provided the Board determines in a duly adopted
resolution that the performance of Ms. Roper has met the Board's requirements
and standards, and that such employment agreement should be extended.
The employment agreement with Ms. Roper provides for an annual base
salary of $100,000, payable in cash not less frequently than monthly. In
addition, as a provision of a prior employment agreement, Ms. Roper received
5,623 shares of restricted SouthFirst Common Stock, one-fifteenth of which vest
on each of the first fifteen anniversaries of April 11, 1997. Should Ms.
Roper's employment be terminated due to death, disability or the termination of
her employment "without cause," as defined in the employment agreement, all
unvested shares shall be deemed earned and fully vested as of such date and
shall be distributed as soon as practicable thereafter. All unvested shares
will also vest upon a "change in control" of Pension & Benefit, First Federal
or SouthFirst. Under Ms. Roper's employment agreement, "change in control"
generally refers to a change in ownership, holding or power to vote more than
25% of Pension & Benefit's, First Federal's or SouthFirst's voting stock, a
change in the ownership or possession of the ability to control the election of
a majority of Pension & Benefit's, First Federal's or SouthFirst's directors,
or the exercise of a controlling influence over the management or policies of
Pension & Benefit, First Federal or SouthFirst. In addition, under Ms. Roper's
employment agreement, a change in control occurs when, during any consecutive
two-year period, directors of Pension & Benefit, First Federal or SouthFirst,
at the beginning of such period, cease to constitute two-thirds of the Boards
of Directors of Pension & Benefit, First Federal or SouthFirst, unless the
election of replacement directors was approved by a two-thirds (66 2/3%) vote
of the initial directors then in office.
14
Ms. Roper's employment agreement entitles her to participate in an
equitable manner with all other senior management employees of Pension &
Benefit in discretionary bonuses that the Board may award from time to time to
senior management employees. Ms. Roper may also participate in standard
retirement and medical plans, and is entitled to customary fringe benefits,
vacation and sick leave.
Ms. Roper's employment agreement terminates upon her death or
disability, and is terminable for "cause," as defined in the employment
agreement. In the event of termination for cause, no severance benefits are
payable to Ms. Roper. If Ms. Roper is terminated without cause, she will be
entitled to receive her base salary for a twelve month period plus her "average
annual compensation" less the base salary for a twelve month period either in
periodic payments over the remaining term of the employment agreement or in one
lump sum. "Average annual compensation" is the average payment of monies or
other things of value in consideration of employment, including, base salary,
insurance, bonuses, pension and profit sharing plans, director and committee
fees, fringe benefits and deferred compensation accruals, over the five full
fiscal years (or the number of full fiscal years of employment, if employment
is less than five years at the time of termination) preceding the fiscal year
in which termination occurs. Ms. Roper may voluntarily terminate her employment
agreement by providing sixty days written notice to the Board, in which case
she is entitled to receive only her compensation, vested rights and benefits up
to the date of termination.
In addition to Ms. Roper's employment agreement, SouthFirst, First
Federal, Pension & Benefit and Ms. Roper have entered into a guaranty of
employment agreement pursuant to which SouthFirst and First Federal have
guaranteed the performance of Pension & Benefit under the terms of the
employment agreement by and between Pension & Benefit and Ms. Roper.
DEFERRED COMPENSATION AGREEMENTS
First Federal previously entered into deferred compensation agreements
(collectively, the "Deferred Compensation Agreements") with Mr. McArthur and
Ms. Roper, pursuant to which each would receive certain retirement benefits at
age 65. Under the Deferred Compensation Agreements, benefits would be payable
for 15 years. A portion of the retirement benefits would accrue each year until
age 65 or, if sooner, until termination of employment. In connection with Mr.
McArthur's resignation from First Federal, Mr. McArthur is entitled to a vested
benefit of 11.25 years at a benefit of $1,834.69 per month for 180 months,
commencing on the earlier of Mr. McArthur's attaining age 65, or his death. If
Mr. McArthur should die before full payment of such benefit, then the payment
will be due and payable to Mr. McArthur's designated beneficiary. If Ms. Roper
remains in the employment of First Federal until age 65, her annual benefit
will be $30,000. If Ms. Roper dies prior to age 65, while in the employment of
First Federal, the full retirement benefits available under the deferred
compensation agreement will accrue and will, thereupon, be payable to her
beneficiaries.
The retirement benefits available under the Deferred Compensation
Agreements are unfunded. However, First Federal has purchased life insurance
policies on the lives Mr. McArthur and Ms. Roper that will be available to
SouthFirst and First Federal to provide, both, for retirement benefits and for
"key man" insurance. The costs of these arrangements was $35,719 for each of
2004, 2003, and 2002.
MANAGEMENT RECOGNITION PLANS
The SouthFirst Board of Directors has adopted two management
recognition plans ("MRPs"), denominated SouthFirst Bancshares, Inc. Management
Recognition Plan "A" ("Plan A") and SouthFirst Bancshares, Inc. Management
Recognition Plan "B" ("Plan B") (collectively, the "MRP Plans"). The objective
of the MRP Plans is to enable SouthFirst and First Federal to reward and retain
personnel of experience and ability in key positions of responsibility by
providing such personnel with a proprietary
15
interest in SouthFirst and by recognizing their past contributions to
SouthFirst and First Federal, and to act as an incentive to make such
contributions in the future.
Except for the fact that Plan B provides for awards only to employees
of SouthFirst and First Federal, while Plan A provides for awards to employees
as well as to non-employee directors of SouthFirst and First Federal, the terms
of the MRP Plans are the same. The MRP Plans are administered by a committee
(the "Committee") of the SouthFirst Board of Directors. Awards under the MRP
Plans are in the form of restricted stock grants ("MRP grants"). Each MRP Plan
has reserved a total of 16,600 shares of SouthFirst Common Stock for issuance
pursuant to awards made by the Committee. Such shares, with respect to each MRP
Plan, are held in trust until awards are made by the Committee, at which time
the shares are distributed from the trust to the award recipient, and such
shares bear restrictive legends until vested. The Committee may make awards to
eligible participants under the MRP Plans in its discretion, from time to time.
Under Plan A, on November 15, 1995, each non-employee director, serving in such
capacity on February 13, 1995 (the effective date of the conversion of
SouthFirst from a mutual to a stock form of ownership), automatically received
an award of 1,660 shares. In selecting the employees to whom awards are granted
under the MRP Plans, the Committee considers the position, duties and
responsibilities of the employees, the value of their services to SouthFirst
and First Federal and any other factors the Committee may deem relevant.
Awards under the MRP Plans vest at the rate of 20% per year,
commencing on the first anniversary of the date of the award. The Committee
may, however, from time to time and in its sole discretion, accelerate the
vesting with respect to any participant, if the Committee determines that such
acceleration is in the best interest of SouthFirst. If a participant terminates
employment for reasons other than death or disability, the participant forfeits
all rights to any shares which have not vested, including the dividends
received with respect to such non-vested shares. If the participant's
termination is caused by death or disability, all shares become vested.
Participants will recognize compensation income on the date their interests
vest, or at such earlier date pursuant to a participant's election to
accelerate recognition pursuant to Section 83(b) of the Code.
During the year ended September 30, 2001, SouthFirst repurchased
11,525 shares of its Common Stock, which shares subsequently were designated
MRP shares. During 2002, 1,750 shares were issued to employees under MRP
grants, leaving 9,775 shares in trust at September 30, 2004, which the
Committee may issue in its sole discretion.
STOCK OPTION PLANS
The SouthFirst Board of Directors has adopted two stock option plans.
The first was adopted November 15, 1995 and is denominated the SouthFirst
Bancshares, Inc. Stock Option and Incentive Plan (the "1995 Plan"), and the
second was adopted on January 28, 1998 and is denominated the 1998 Stock Option
and Incentive Plan (the "1998 Plan") (collectively, the "Stock Option Plans").
The objective of each of the Stock Option Plans is to attract, retain, and
motivate the best possible personnel for positions of substantial
responsibility with SouthFirst and First Federal. In order to attract and
retain members of the Board of Directors of SouthFirst who contribute to
SouthFirst's success, each of the Stock Option Plans also provides for the
award of non-qualified stock options to non-employee directors of SouthFirst.
The 1995 Plan authorizes the grant of up to 83,000 shares of Common
Stock to select officers and employees in the form of (i) incentive and
non-qualified stock options ("Options") or (ii) Stock Appreciation Rights
("SARs") (Options and SARs are referred to herein collectively as "Awards"), as
determined by the committee administering the 1995 Plan. As of September 30,
1996, Options to purchase a total of 83,000 shares had been issued under the
1995 Stock Option Plan, and, as of that date, no other shares were available
for future issuance. Subsequently, Options to purchase 8,300 shares were
exercised, which shares are no longer available for issuance under the 1995
Plan; Options to purchase
16
56,649 shares expired prior to being exercised, which shares then became
available for re-issuance under the 1995 Plan; and additional Options to
purchase 55,649 shares were issued. Thus, at September 30, 2004, 1,000 shares
were available for issuance under the 1995 Plan.
The 1998 Plan authorizes the grant of up to 63,361 shares of Common
Stock to select officers and employees in the form of (i) Options or (ii) SARs,
all of which shares were granted under the 1998 Plan. Subsequently, Options to
purchase 36,798 shares expired prior to being exercised, which shares then
became available for re-issuance under the 1998 Plan, and additional Options to
purchase 35,388 shares were issued. Thus, at September 30, 2004, 1,390 shares
were available for issuance under the 1998 Plan.
The terms and conditions of the Stock Option Plans are substantially
the same. The exercise price for Options and SARs granted under the Stock
Option Plans may not be less than the fair market value of the shares on the
day of the grant, and no Awards shall be exercisable after the expiration of
ten years from the date of this grant. Each Stock Option Plan has a term of 10
years unless earlier terminated by the SouthFirst Board of Directors. The Stock
Option Plans are administered by a committee of the directors of SouthFirst
(the "Option Plan Committee"). Except as discussed below with respect to
non-employee directors, the Option Plan Committee has complete discretion to
make Awards to persons eligible to participate in the Stock Option Plans, and
determines the number of shares to be subject to such Awards, and the terms and
conditions of such Awards. In selecting the persons to whom Awards are granted
under the Stock Option Plans, the Option Plan Committee considers the position,
duties, and responsibilities of the employees, the value of their services to
SouthFirst and First Federal, and any other factor the Option Plan Committee
may deem relevant to achieving the stated purpose of the Stock Option Plan.
Options granted under the Stock Option Plans become exercisable at
rates ranging from 20% to 33% per year commencing one year from the date of
grant, with the exception that all options will become immediately exercisable
in the event the optionee's employment is terminated due to the optionee's
death, disability or retirement, or in the event of a change in control of
First Federal or SouthFirst.
Under the 1995 Plan, all directors who were not employees of
SouthFirst as of November 15, 1995 (the date of the approval of the Stock
Option Plan by the stockholders of SouthFirst and the OTS), received
non-qualified stock options to purchase 4,150 shares, which options had an
exercise price of $14.00 per share, the fair market value of SouthFirst Common
Stock on the date of grants. Likewise, under the 1998 Plan, all directors who
were not employees of SouthFirst as of January 28, 1998 (the date of the
approval of the Stock Option Plan by the Board of Directors of SouthFirst)
received non-qualified stock options to purchase 2,700 shares, which options
had an exercise price of $21.25 per share, the fair market value of SouthFirst
Common Stock on the date of grants.
REPRICING OF STOCK OPTIONS UNDER THE STOCK OPTION PLANS
On January 28, 1998, the Wage and Compensation Committee, acting on
the approval of the Board of Directors, granted incentive stock options to
purchase 7,428 and 3,726 options to Joe K. McArthur and J. Malcomb Massey,
respectively (i.e., the Named Executive Officers at that time). Options to
purchase an aggregate of 50,597 shares were concurrently granted to
approximately 19 non-executive employees of SouthFirst and/or First Federal and
two former executive officers. Such options were granted at an exercise price
of $21.25 per share, which was equal to the fair market value of SouthFirst's
Common Stock on the date of grant. During the ensuing nine and one half months,
the market price of SouthFirst's Common Stock declined significantly to a point
at which such options no longer served the intended purpose for which they were
issued. In order to protect the intended value of the January 28, 1998 options,
the Board of Directors elected to reprice all such options by the cancellation
of such options and the regrant of an equal number of new options at the then
current, lower market price.
17
Such replacement options were granted on November 4, 1998 at an exercise price
of $15.75 per share, which was equal to the fair market value of SouthFirst's
Common Stock on the date of grants. The following table provides, with respect
to the Named Executive Officers, the name of grantee, number of securities
underlying the options repriced, the original exercise price, the new exercise
price, and the length of original option term remaining after the repricing, as
of September 30, 2004:
TEN-YEAR OPTION/SAR REPRICINGS
Number of
Securities Length of
Underlying Original Original Option
Options Exercise Price New Exercise Term Remaining at
Name Date Repriced(1) ($) Price ($) Date of Repricing
- ---- ---------------- ----------- -------------- ------------ -----------------
Joe K. McArthur November 4, 1998 7,428 21.25 15.75 9.2 years
(1998 Plan)
J. Malcomb Massey November 4, 1998 3,726 21.25 15.75 9.2 years
(1998 Plan)
(1) The 1998 Plan authorizes the grant of up to 63,361 shares of Common
Stock to select officers and employees in the form of (i) Options or
(ii) SARs, all of which shares were granted under the 1998 Plan.
Subsequently, options to purchase 36,778 shares expired prior to being
exercised, which shares then became available for re-issuance under
the 1998 Plan, and additional options to purchase 35,388 shares were
issued. Thus, at September 30, 2004, 3,062 shares were available for
issuance under the 1998 Plan.
The following table provides certain information concerning the
exercise of stock options under SouthFirst's Stock Option Plans during the
fiscal year ended September 30, 2004, by the Named Executive Officers and the
fiscal-year-end value of unexercised options held by those individuals:
[table on following page]
18
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options at Options at Fiscal
Fiscal Year End Year End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable(1)
- ---- --------------- -------- ---------------------- ------------------
Joe K. McArthur 0 $0 26,592 / 3,440 $49,816 / $11,352
J. Malcomb Massey 0 $0 6,310 / 3,440 $12,579 / $11,352
Sandra H. Stephens 0 $0 3,860 / 7,940 $19,278 / $36,012
Ruth M. Roper 0 $0 3,354 / 1,560 $6,734 / $5,148
- --------------
(1) Represents the value of unexercised, in-the-money stock options on
September 30, 2004, using the $15.40 closing price of SouthFirst
Common Stock on that date.
No grants of options to executive officers were made during fiscal
year 2004.
EMPLOYEE RETIREMENT SAVINGS PLAN
First Federal has established a savings and profit-sharing plan that
qualifies as a tax-deferred savings plan under Section 401(k) of the Internal
Revenue Code (the "401(k) Plan") for its employees who are at least 21 years
old and who have completed one year of service with First Federal. Under the
401(k) Plan, eligible employees may contribute up to $13,000 of their gross
salary to the plan. Currently, all contributions are fully vested under the
401(k) Plan at the time of contribution. Prior to April 1, 2003, all
contributions up to 3% by eligible employees were 100% matched. However, since
401(k) matching is discretionary, upon review by the board of directors of
First Federal, effective April 1, 2003, all matching contributions were
temporarily suspended. The board of directors of First Federal will review the
401(k) Plan on an annual basis and implement any changes as appropriate.
EMPLOYEE STOCK OWNERSHIP PLAN
First Federal has adopted an Employee Stock Ownership Plan (the
"ESOP") for the exclusive benefit of participating employees. All employees of
First Federal who are at least 21 years old and who have completed a year of
service with First Federal are eligible to participate in the ESOP. SouthFirst
loaned the ESOP $664,000, which the ESOP used to purchase 66,400 shares of
SouthFirst Common Stock. This loan is secured by the shares purchased with the
proceeds of the loan. Shares purchased with the loan proceeds are held in a
suspense account for allocation among participants as the loan is repaid. All
loan proceeds had been repaid at September 30, 2004.
19
Contributions to the ESOP were used to repay the ESOP loan. Shares
released from the suspense account, as the ESOP loan was repaid, any
contributions to the ESOP that were not used to repay the ESOP loan, and
forfeitures will be allocated among participants on the basis of their relative
compensation. With the exception of terminations due to death, disability or
retirement, a participant must be employed by First Federal on the last day of
the ESOP plan year and must have completed 1,000 hours of service during the
plan year in order to share in the allocation for the plan year. Any dividends
paid on unallocated shares of SouthFirst Common Stock were used to repay the
ESOP loan; any dividends paid on shares of SouthFirst Common Stock allocated to
participant accounts will be credited to said accounts.
Benefits under the ESOP vest at a rate of 20% per year of service,
with the first 20% vesting after a participant has served for two years.
Participant's benefits also become fully vested upon his or her death,
disability, attainment of normal retirement age, or the termination of the
ESOP. For vesting purposes, a year of service means any plan year in which an
employee completes at least 1,000 hours of service with First Federal. An
employee's years of service prior to the ESOP's effective date will be
considered for purposes of determining vesting under the ESOP.
A participant who separates from service because of death, disability
or retirement will be entitled to receive an immediate distribution of his or
her benefits. A participant who separates from service for any other reason and
who is not reemployed by an employer will receive a lump sum distribution of
the vested portion of his account as soon as administratively feasible after
his date of termination, unless the participant elects a later distribution.
Distributions generally will be made in whole shares of SouthFirst Common
Stock, with the value of fractional shares being paid in cash. Although
accounts generally will be distributed in a lump sum, if the fair market value
of a participant's account is in excess of $500,000, as of the date
distribution is required to begin, distributions will be made in substantially
equal annual payments over a period not longer than five (5) years, plus an
additional one (1) year (up to an additional five (5) years) for each $100,000
increment, or fraction of such increment, by which the value of the
participant's account exceeds $500,000.
Pension & Benefit serves as the plan administrator and trustee of the
ESOP (the "ESOP Trustee"). Participants may vote the shares of SouthFirst
Common Stock that are allocated to their account. Any unallocated shares of
SouthFirst Common Stock and allocated shares of SouthFirst Common Stock for
which no timely direction is received are voted by the ESOP Trustee in
accordance with its fiduciary obligations.
DIVIDEND INCENTIVE PLAN
SouthFirst, in November 1995, adopted, by resolution of the Board of
Directors of SouthFirst, a dividend incentive plan (the "Dividend Incentive
Plan"), pursuant to which each director and/or employee in the SouthFirst
family, who holds options to purchase SouthFirst Common Stock under the Stock
Option Plans, is paid an amount equal to the number of shares underlying the
stock options held by him or her, multiplied by the amount of dividends
SouthFirst pays to the holders of its Common Stock. If the service of an
employee or director is terminated prior to the full vesting of his or her
stock options, then the employee or director immediately forfeits, and must
repay to SouthFirst, all amounts received under the Dividend Incentive Plan
with respect to the non-vested options.
20
COMPENSATION OF DIRECTORS
DIRECTOR FEES AND DIVIDENDS
Each member of the First Federal Board of Directors, with the
exception of the Chairman of the Board, receives a fee of $750 for each board
meeting attended (with one excused absence). The Chairman of the Board receives
a fee of $1,500 for each board meeting attended. Each non-employee director of
First Federal, if a member of a committee, receives $500 for each committee
meeting attended. The members of the SouthFirst Board of Directors receive a
fee in the amount of $750 for each board meeting attended.
During fiscal year 2004, each non-employee director was paid from
$3,414 to $7,524 under the Dividend Incentive Plan with respect to the shares
of Common Stock underlying the stock options held by each non-employee
director. Further, certain SouthFirst directors, during fiscal year 2004,
received a cash dividend in the amount of $996 with respect to the restricted
shares held by such directors, as granted under Management Recognition Plans
"A" and "B."
DIRECTOR RETIREMENT BENEFITS
The Board of Directors of First Federal has adopted, effective as of
October 1, 2001, the Bank Director Supplemental Retirement Plan (the "Director
Plan"), under which First Federal will make certain payments to each
participating director, upon the director's retirement, or to the director's
beneficiary(ies) in the event of the director's death. The Director Plan is an
unfunded arrangement maintained primarily to provide supplemental retirement
benefits for each participating director and constitutes a non-qualified
benefit plan for purposes of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). A "pre-retirement account" is established under the
Director Plan, as a liability reserve account on the books of First Federal for
the benefit of each participating director. Such liability reserve account
shall be increased or decreased each plan year, until the participating
director either retires, or has a termination of service, as a director of
First Federal.
The annual increase or decrease in this liability reserve account is
determined by an index, which generally measures the amount of aggregate annual
after-tax income from certain life insurance contracts owned by First Federal
on the lives of each participating director against the annual cost of funds of
First Federal represented by the net premiums paid on these life insurance
policies. Each participating director of First Federal will receive, on a
monthly basis beginning at retirement or termination of service, as a
supplemental retirement benefit, the amount attributed to their liability
service account, adjusted, as applicable, under the terms of the Director Plan.
The cost of the Director Plan was $26,073 and $33,869 for fiscal years 2004 and
2003, respectively. However, no benefits were paid under the Director Plan in
fiscal year 2003 or 2002.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
SouthFirst presently does not have a compensation committee because,
except for an annual salary, in the amount of $20,000, paid by SouthFirst to
its President, J. Malcomb Massey, no officers of SouthFirst receive any
compensation for services to SouthFirst. All officers of SouthFirst are
compensated by First Federal solely for their services to First Federal. In
addition, directors are paid for attendance at First Federal committee
meetings, but employee members of committees are not paid. Sandra H. Stephens,
Interim Chief Executive Officer of SouthFirst and First Federal, and J. Malcomb
Massey, President of SouthFirst and Pension & Benefit, currently serve as
members of the Wage and Compensation Committee of First Federal. First
Federal's Wage and Compensation Committee is responsible for reviewing salaries
and benefits of directors, officers, and employees of First Federal. SouthFirst
had no "interlocking" relationships existing at or before the year ended
September 30, 2004 in which (i) any executive officer was a member of the board
of directors/trustees of another entity, one of
21
whose executive officers was a member of the First Federal Board of Directors,
or where (ii) any executive officer was a member of the compensation committee
of another entity, one of whose executive officers was a member of the First
Federal Board of Directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
First Federal, like many financial institutions, has followed a policy
of granting various types of loans to officers, directors and employees. The
loans have been made in the ordinary course of business and on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with First Federal's other customers, and
do not involve more than the normal risk of collectibility, nor present other
unfavorable features. All loans by First Federal to its officers and executive
officers are subject to OTS regulations restricting loans and other
transactions with affiliated persons of First Federal. In addition, all future
credit transactions with such directors, officers and related interests of
SouthFirst and First Federal will be on substantially the same terms as, and
following credit underwriting procedures that are not less stringent than,
those prevailing at the time for comparable transactions with unaffiliated
persons and must be approved by a majority of the directors of SouthFirst,
including a majority of the disinterested directors. At September 30, 2004, the
aggregate of all loans by First Federal to its officers, directors, and related
interests was $739,000.
INDEPENDENT PUBLIC ACCOUNTANTS
Jones & Kirkpatrick, P.C. audited the financial statements of
SouthFirst for the fiscal years ended September 30, 2002, 2003 and 2004. The
Audit Committee has selected this same firm to audit the accounts and records
of SouthFirst for the current fiscal year. Representatives of Jones &
Kirkpatrick, P.C. are expected to be present at the Annual Meeting to respond
to stockholders' questions and will have an opportunity to make any statements
they consider appropriate.
AUDIT FEES
Fees billed by our independent accounting firm, Jones & Kirkpatrick,
P.C. for audit services, SEC compliance reviews and tax preparation services
for the SouthFirst were as follows, for the fiscal years ending September 30,
2004 and 2003:
Audit Audit-Related Tax Other Total
Fees Fees(1) Fees(2) Fees(3) Fees
-------- ------------- ------- ------- -------
Fiscal Year 2004 $109,685 $29,550 $10,100 $ -- $149,335
Fiscal Year 2003 $ 91,988 $24,862 $10,190 $2,470 $129,510
(1) Audit related fees are for SEC compliance reviews of Form 10-QSB.
(2) Tax fees are for preparation of federal and state income tax returns.
(3) "Other Fees" included primarily assistance with OTS accounting
consultation. No financial information systems implementation or
design services were rendered by Jones & Kirkpatrick, P.C. during
fiscal year 2004 or 2003.
22
In addition to the foregoing, Jones & Kirkpatrick, P.C., performed
audit services and tax preparation services for Pension & Benefit and was paid
as follows:
Audit Tax Total
Fees Fees Fees
------ ---- ------
Fiscal Year 2004 $9,000 $185 $9,185
Fiscal Year 2003 $5,500 $185 $8,685
Effective May 6, 2003, the Securities and Exchange Commission adopted
rules that require that before our independent auditor is engaged by us to
render any auditing or permitted non-audit related service, the engagement be:
- approved by our audit committee; or
- entered into pursuant to pre-approval policies and procedures
established by the audit committee, provided the policies and
procedures are detailed as to the particular service, the
audit committee is informed of each service, and such
policies and procedures do not include delegation of the
audit committee's responsibilities to management.
The audit committee pre-approves all services provided by our
independent auditors, including those set forth above. The audit committee has
considered the nature and amount of fees billed by Jones & Kirkpatrick, P.C.
and believes that the provision of services for activities unrelated to the
audit is compatible with maintaining Jones & Kirkpatrick, P.C.'s independence.
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23
AGENDA ITEM TWO
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected the firm of Jones & Kirkpatrick, P.C.
as the independent registered public accounting firm to perform the integrated
audit of the financial statements of SouthFirst for the 2005 fiscal year.
Additional information regarding the Audit Committee and the independent
auditors, including the fees paid by the Company to Jones & Kirkpatrick, P.C.
in fiscal year 2004, is provided in the "Report of the Audit Committee" in this
Proxy Statement.
Representatives from Jones & Kirkpatrick, P.C. are expected to be
present at the Annual Meeting. They will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
SouthFirst is asking its stockholders to ratify the selection of Jones
& Kirkpatrick, P.C. as SouthFirst's independent registered public accounting
firm. Although ratification is not required by SouthFirst's Bylaws or
otherwise, the Board is submitting the selection of Jones & Kirkpatrick, P.C.
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the appointment, the Audit Committee may
reconsider its selection. Even if the selection is ratified, the Audit
Committee, in its discretion, may select a different independent registered
public accounting firm at any time during the year if it determines that such a
change would be in the best interests of SouthFirst or its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE SELECTION OF JONES & KIRKPATRICK, P.C. AS THE INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR SOUTHFIRST FOR FISCAL YEAR 2005.
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24
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of September 30,
2004, with respect to the beneficial ownership of SouthFirst's Common Stock by
(i) each person known by SouthFirst to own beneficially more than five percent
(5%) of SouthFirst Common Stock, (ii) each director of SouthFirst, (iii) each
director nominee, (iv) each of the Named Executive Officers (as defined
herein), and (v) all directors and executive officers of SouthFirst as a group.
Unless otherwise indicated, (i) each of the beneficial owners has sole voting
and investment power with respect to the shares beneficially owned, and (ii)
the address for each of the beneficial owners is 126 North Norton Avenue,
Sylacauga, Alabama, 35150.
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES(2)
- ---------------- ------------ -----------
Joe K. McArthur(3) 40,541 5.5%
471 Alta Vista Dr.
Chelsea, AL 35043
H. David Foote, Jr.(4) 16,113 2.2%
2517 Overhill Rd.
Sylacauga, AL 35150
J. Malcomb Massey(5) 31,174 4.4%
8318 Longneedle, Dr.
Montgomery, AL 36117
Allen Gray McMillan, III(6) 21,613 3.0%
One Gunston Ave.
Talladega, AL 35160
Kenneth E. Easterling(7) 27,903 3.9%
4141 Co. Road 85
Clanton, AL 35045
L. Neal Bice(8) 33,484 4.7%
304 Eastwood Dr.
Clanton, AL 35045
Donald R. Hardy(9) 3,303 0.5%
130 Stone Ridge Dr.
Sylacauga, AL 35150
Jeffrey L. Gendell, et. al.(10)
55 Railroad Ave., 3rd Floor 62,800 8.9%
Greenwich, CT 06830
25
SHARES OF
COMMON STOCK PERCENT OF
BENEFICIALLY OUTSTANDING
BENEFICIAL OWNER OWNED(1) SHARES(2)
- ---------------- ------------ -----------
Robert J. Salmon and Mary Anne J. Salmon(11)
3623 Raymond St. 47,600 6.7%
Chevy Chase, MD 20815
Sandra H. Stephens(12) 7,163 1.0%
4004 Charring Cross Lane
Hoover, AL 35226
Ruth M. Roper(13) 12,622 1.8%
1111 Buck Ridge Rd
Wetumpka, AL 36093
Pension & Benefit Financial Services, Inc.(14) 37,510 5.3%
260 Commerce St., 3rd Floor
Montgomery, AL 36101
All directors and executive officers as
a group (9 persons) 193,916(15) 24.6%
- ---------
(1) "Beneficial Ownership" includes shares for which an individual,
directly or indirectly, has or shares voting or investment power or
both and also includes options which are exercisable within sixty days
of the date hereof. Beneficial ownership as reported in the above
table has been determined in accordance with Rule 13d-3 of the
Exchange Act.
(2) The percentages are based upon 709,406 shares outstanding, except for
certain parties who hold presently exercisable options to purchase
shares. The percentages for those parties holding presently
exercisable options are based upon the sum of 709,406 shares plus the
number of shares subject to presently exercisable options held by
them, as indicated in the following notes.
(3) Mr. McArthur served as Chief Executive Officer of both SouthFirst and
First Federal during fiscal year 2004 but resigned effective March
2005. Of the amount shown, 5,781 shares are held in Mr. McArthur's
account under SouthFirst's 401(k) Plan, 7,064 shares are held in his
account under First Federal's ESOP, 27,452 shares are subject to
presently exercisable options and 244 shares represent restricted
stock granted under SouthFirst's Management Recognition Plans "A" and
"B," all of which are fully vested.
(4) Of the amount shown, 3,000 shares are owned jointly by Mr. Foote and
his wife, 1,500 shares are held by Mr. Foote as custodian for each of
his two minor children, 9,953 shares are subject to presently
exercisable options and 1,660 shares represent restricted stock
granted under SouthFirst's Management Recognition Plan "A," all of
which are fully vested.
(5) Of the amount shown, 15,521 shares are restricted stock acquired
pursuant to that certain employment agreement between Mr. Massey and
Pension & Benefit, vesting in equal increments over a period of 15
years beginning on April 11, 1997, 3,782 shares are held in his
account under SouthFirst's 401(k) plan, 2,642 shares are held in an
Individual Retirement Account, 2,059 shares are held in his account
under First Federal's ESOP, and 7,170 shares are subject to
exercisable options.
(6) Of the amount shown, 10,000 shares are held jointly by Mr. McMillan
and his wife, 9,953 shares are subject to presently exercisable
options and 1,660 shares represent restricted stock granted under
SouthFirst's Management Recognition Plan "A," all of which are fully
vested.
(7) Of the amount shown, 21,099 shares are held jointly by Mr. Easterling
and his wife, 1,001 shares are held individually by Mr. Easterling and
5,803 shares are subject to exercisable options.
26
(8) Of the amount shown, 27,681 are held individually by Mr. Bice and
5,803 shares are subject to exercisable options.
(9) Of the amount shown, 200 shares are held jointly by Mr. Hardy and his
wife and 3,103 shares are subject to exercisable options.
(10) Of the amount shown, Jeffrey L. Gendell has shared voting power with
respect to 62,800 shares, Tontine Management, L.L.C. ("TM") has shared
voting power with respect to 62,800 shares, and Tontine Financial
Partners, L.P. ("TFP") has shared voting power with respect to 62,800
shares. TM, the general partner of TFP, has the power to direct the
affairs of TFP. Mr. Gendell is the Managing Member of Tontine
Management, L.L.C. and, in that capacity, directs its operations. The
business address of Mr. Gendell and TFP is 237 Park Avenue, 9th Floor,
New York, New York 10017. The foregoing information is based on a
Schedule 13F, dated November 12, 2004 filed by Mr. Gendell, TM, and
TFP. SouthFirst makes no representation as to the accuracy or
completeness of the information reported.
(11) Robert J. Salmon and Mary Anne J. Salmon beneficially own and have
shared voting and dispositive power with respect to 47,600 shares. The
foregoing information is based on a Schedule 13G, dated October 8,
1998 received by SouthFirst from Mr. and Mrs. Salmon. SouthFirst makes
no representation as to the accuracy or completeness of the
information reported therein.
(12) Of the amount shown, 6,220 shares are subject to presently exercisable
options, 243 shares are held in her account under First Federal's
ESOP, and 700 shares represent restricted stock granted under
SouthFirst's Management Recognition Plan(s), all of which shares are
fully vested.
(13) Of the amount shown, 1,914 shares are owned jointly by Ms. Roper and
her husband, 5,623 shares are restricted stock acquired pursuant to
that certain employment agreement between Ms. Roper and Pension &
Benefit, vesting in equal increments over a period of 15 years
beginning on April 11, 1997, 1,341 shares are held in her account in
First Federal's ESOP, and 3,744 shares are subject to presently
exercisable options.
(14) These shares are held in trust by Pension & Benefit as trustee of
First Federal's ESOP. See "EXECUTIVE COMPENSATION - Employee Stock
Ownership Plan."
(15) Includes the shares attributable to Mr. McArthur during fiscal year
2004. Of the amount shown, 79,201 shares are subject to exercisable
options.
There are no arrangements known to SouthFirst pursuant to which a
change in control of SouthFirst would result.
[remainder of this page intentionally left blank]
27
The following table provides information, as of September 30, 2004,
with respect to shares of SouthFirst Common Stock authorized for issuance under
equity compensation plans:
EQUITY COMPENSATION PLAN INFORMATION (1)
NUMBER OF
NUMBER OF SECURITIES REMAINING
SECURITIES TO BE ISSUED WEIGHTED-AVERAGE AVAILABLE FOR FUTURE
UPON EXERCISE OF EXERCISE PRICE ISSUANCE UNDER EQUITY
OUTSTANDING OF OUTSTANDING COMPENSATION PLANS
OPTIONS, WARRANTS AND OPTIONS, WARRANTS (EXCLUDING SECURITIES
PLAN CATEGORY RIGHTS AND RIGHTS REFLECTED IN COLUMN (A))
(A) (B) (C)
Equity compensation plans
approved by security holders(2) 133,999 $12.84 4,062
Equity compensation plans not
approved by security holders 0 $0 0
- ---------
(1) The term "equity compensation plan," as used in this table, refers to
compensation plans and individual compensation arrangements for
employees and directors of SouthFirst and its affiliates, which
authorize the issuance of equity securities of SouthFirst, excluding
all compensation plans and arrangements which meet the qualification
requirements under Section 401(a) of the Code.
(2) Includes the SouthFirst Bancshares, Inc. Stock Option and Incentive
Plan and the 1998 Stock Option and Incentive Plan; and the SouthFirst
Bancshares, Inc. Management Recognition Plan "A" and the SouthFirst
Bancshares, Inc. Management Recognition Plan "B". See, also,
"EXECUTIVE COMPENSATION - Management Recognition Plans, and - Stock
Option Plans."
STOCKHOLDERS' PROPOSALS FOR THE 2006 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action
at SouthFirst's 2006 Annual Meeting, consistent with the regulations of the
Securities and Exchange Commission. Proposals by stockholders intended to be
presented at the 2006 Annual Meeting must be received by SouthFirst no later
than November 18, 2005, in order to be included in SouthFirst's proxy materials
for that meeting. With respect to any such proposals received by SouthFirst
after January 20, 2006, the proposals will be considered untimely and the
persons named in the form of Proxy solicited by management will vote the Proxy
in accordance with their judgment of what is in the best interests of
SouthFirst. Such proposals should be directed to SouthFirst Bancshares, Inc.,
Attention: Corporate Secretary, 126 North Norton Avenue, Sylacauga, Alabama
35150.
28
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if other matters should come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of proxy
to vote the proxy in accordance with their judgment of what is in the best
interest of SouthFirst.
By Order of The Board of Directors
/s/ Sandra H. Stephens
Sandra H. Stephens
Interim Chief Executive Officer
Sylacauga, Alabama
April 18, 2005
29
REVOCABLE PROXY
SOUTHFIRST BANCSHARES, INC.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED 1. To elect DONALD R. HARDY AND ALLEN GRAY MCMILLAN, III,
ON BEHALF OF EACH for a term of three years and until their successors
THE BOARD OF DIRECTORS are elected and have qualified.
FOR THE
2005 ANNUAL MEETING
OF STOCKHOLDERS. For All
For Withhold Except
The undersigned hereby appoints Sandra H. Stephens and Janice [ ] [ ] [ ]
R. Browning, or either of them, with power of substitution to
each, the proxies of the undersigned to vote the Common Stock INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OF THE
of the undersigned at the Annual Meeting of Stockholders of TWO NOMINEES, MARK "FOR ALL EXCEPT" AND WRITE THE NAME OF
SOUTHFIRST BANCSHARES, INC. to be held on Wednesday, May 18, THE NOMINEE FOR WHOM YOU WISH TO WITHHOLD AUTHORITY TO VOTE
2005, at 10:00 a.m., local time, at First Federal of the South, IN THE SPACE PROVIDED BELOW.
126 North Norton Avenue, Sylacauga, Alabama 35150, and at any
adjournments or postponements thereof, as indicated on this ------------------------------------------
revocable proxy:
2. To ratify the selection of Jones & Kirkpatrick, P.C. as
the independent registered public accounting firm for
SouthFirst for fiscal year 2005.
For Against Abstain
[ ] [ ] [ ]
------------------------------------------
3. To vote in accordance with their best judgment with
respect to any other matters that may properly come before
the meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE
PROPOSALS SET FORTH ABOVE AND UNLESS INSTRUCTIONS TO THE
CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS PROXY
WILL BE SO VOTED.
-----------------
Please be sure to sign and date Date Please date and sign exactly as
this Proxy in the box below. your name(s) appear(s) on this card.
- --------------------------------------------------------
NOTE: When signing as an attorney, trustee, executor,
administrator or guardian, please give your title as such.
If a corporation or partnership, give full name of
authorizing officer. In the case of joint tenants, each
joint owner must sign.
Stockholder sign above -- Co-holder (if any) sign above
- --------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED TO:
SOUTHFIRST BANCSHARES, INC.
126 NORTH NORTON AVENUE
SYLACAUGA, ALABAMA 35150
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY