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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities
Exchange Act of 1934 (Amendment No. ____
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|â||Definitive Proxy Statement.|
|â||Definitive Additional Materials.|
|â||Soliciting Material under Â§ 240.14a-12.|
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if other than the Registrant)
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SERVISFIRST BANCSHARES, INC.
2500 Woodcrest Place
Birmingham, Alabama 35209
March 10, 2021
Dear Fellow Stockholder:
You are cordially invited
to attend the Annual Meeting of Stockholders of ServisFirst Bancshares, Inc. Our Annual Meeting will be held at the companyâs
corporate headquarters, located at 2500 Woodcrest Place, Birmingham, Alabama 35209, on April 19, 2021, at 9:00 a.m., Central Daylight
Time. As a result of public health and travel guidance due to COVID-19, you also will be able to attend the annual meeting,
vote and submit your questions during the annual meeting by visiting www.meetingcenter.io/288623911. We may announce alternative
arrangements for the meeting, which may include switching to a virtual only meeting format, or changing the time, date or location
of the annual meeting. If we take this step, we will announce any changes in advance in a press release available on our website
www.servisfirstbancshares.com and filed with the Securities Exchange Commission in addition to proxy materials, and as otherwise
required by applicable state law.
The enclosed proxy
materials describe the formal business to be transacted at the Annual Meeting, which includes a report on our operations. Many
of our directors and officers will be present to answer any questions that you and other stockholders may have. Included in the
materials is our Annual Report to Stockholders, which contains detailed information concerning our activities and operating performance
including our Annual Report on Form 10-K for the year ended December 31, 2020.
The business to be
conducted at the Annual Meeting consists of (1) the election of seven directors; (2) an advisory vote on executive compensation;
(3) the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the
year ending December 31, 2021; and (4) such other business as may properly come before the Annual Meeting. Our board of directors
unanimously recommends a vote âFORâ the election of the director nominees; âFORâ the âSay on Payâ
advisory vote approving our executive compensation; and âFORâ the ratification of the appointment of Dixon Hughes Goodman
LLP as our independent registered public accounting firm for the year ending December 31, 2021.
You may vote your shares
by following your brokerâs voting instructions, by submitting voting instructions by telephone or by Internet, by voting
in person or virtually at the Annual Meeting or, if you requested to receive printed proxy materials, by completing and returning
your proxy card. Instructions regarding the methods of voting are contained in the enclosed Proxy Statement and on the Notice of
Internet Availability of Proxy Materials or proxy card.
On behalf of our board
of directors, we request that you vote your shares now, even if you currently plan to attend the Annual Meeting. This will not
prevent you from voting in person, but will assure that your vote is counted. Your vote is important.
The proxy materials
are first being made available to stockholders on or about March 10, 2021.
|Â||Thomas A. Broughton III|
|Â||Chairman, President and Chief Executive Officer|
SERVISFIRST BANCSHARES, INC.
2500 Woodcrest Place
Birmingham, Alabama 35209
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 19, 2021
To Our Stockholders:
Notice is hereby given
that our Annual Meeting of Stockholders will be held at the companyâs corporate headquarters, located at 2500 Woodcrest Place,
Birmingham, Alabama 35209, on April 19, 2021, at 9:00 a.m., Central Daylight Time. This yearâs Annual Meeting will also
be held virtually via live webcast on the Internet at www.meetingcenter.io/288623911 for the following purposes:
1.Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
to elect seven nominees to serve on our board of directors until the next Annual Meeting of Stockholders and until their
successors are duly elected and qualified, as set forth in the accompanying Proxy Statement;
2.Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
to conduct a âSay on Payâ advisory vote on our executive compensation;
3.Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
to ratify the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm for the year
ending December 31, 2021; and
4.Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
to transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof.
Our board of directors
unanimously recommends a vote âFORâ the election of the director nominees, âFORâ the âSay on Payâ
advisory vote approving our executive compensation, and âFORâ the ratification of the appointment of Dixon Hughes Goodman
LLP as our independent registered public accounting firm for the year ending December 31, 2021. Our board of directors is not aware
of any other business to come before the Annual Meeting. Directions to the Annual Meeting location at the companyâs corporate
headquarters, are available at www.investorvote.com/SFBS.
To access the Annual
Meeting virtually, please click the virtual meeting link: www.meetingcenter.io/288623911. There are two options when logging
in to the virtual meeting: Join as a âGuestâ or Join as a âStockholderâ. When joining a âStockholderâ
a control number and password will be required. The password for the meeting is SFBS2021.
Stockholders of record
as of the close of business on February 22, 2021 are entitled to notice of, and to vote their shares in person or by proxy at,
the Annual Meeting. Stockholders may vote during the Annual Meeting when attending virtually by providing their control number
and following instructions available on the virtual meeting website during the meeting. For registered stockholders, the control
number can be found on the proxy card or notice. If shares of common stock are held through an intermediary, such as a bank or
broker, you must register in advance to attend the Annual Meeting virtually as a stockholder. To register, you must submit proof
of proxy power (legal proxy) reflecting your company stockholdings along with your name and email address to Computershare. Requests
for registration must be labeled as âLegal Proxyâ and be received no later than 4:00 p.m., Central Time, on April 14,
2021. Registered stockholders will receive an email from Computershare confirming registration.
Requests for registration should be directed to Computershare at the following address:
Inc. Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Forward the broker provided email, or attach an image of the legal proxy, to [email protected]
Anyone may attend the
virtual shareholder meeting as a guest, but will not have the option to vote shares during the meeting or ask questions. Closed
captioning will be provided for the duration of the virtual meeting.
The proxy materials
are first being made available to stockholders on or about March 10, 2021.
REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD APRIL 19, 2021:
Our Proxy Statement, form of proxy and 2020
Annual Report on Form 10-K are available at: www.investorvote.com/SFBS.
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT
THAT YOU SUBMIT VOTING INSTRUCTIONS BY TELEPHONE OR BY INTERNET OR, IF YOU REQUESTED TO RECEIVE PRINTED PROXY MATERIALS, BY RETURNING
YOUR PROXY CARD. THEREFORE, WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON OR VIA THE VIRTUAL WEBCAST, PLEASE
VOTE BY TELEPHONE OR BY INTERNET, SUBMIT VOTING INSTRUCTIONS OR SIGN, DATE AND RETURN THE PROXY CARD AS SOON AS POSSIBLE. STOCKHOLDERS
OF RECORD WHO VOTE OVER THE TELEPHONE OR THE INTERNET, SUBMIT VOTING INSTRUCTIONS OR EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND
THE ANNUAL MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
|Â||By Order of the Board of Directors,|
|Â||William M. Foshee|
|Â||Secretary and Chief Financial Officer|
March 10, 2021
Proposal 1: Election of
The board of directors unanimously
The seven director nominees presented in this proposal are recommended for election to the board of directors.
Additional information about each director and his or her qualifications may be
Advisory Vote on Executive
Ratify Appointment of the
|The board of directors unanimously recommends a vote FOR the resolution.||Â||The board of directors unanimously recommends a vote FOR the resolution.|
information about executive compensation may be found on page 14.
information about the independent registered public accounting firm may be found on page 28.
Throughout this Proxy Statement, unless
the context indicates otherwise, when we use the terms âthe company,â âwe,â âourâ or âus,â
we are referring to ServisFirst Bancshares, Inc. and its wholly-owned subsidiary, ServisFirst Bank (which we refer to as the âbankâ).
When we use the term âAnnual Meeting,â we intend to include both the Annual Meeting to be held on the date and at the
time and place identified above and any adjournment or postponement of such Annual Meeting.
Under our bylaws, our board of directors
consists of six directors unless a different number is fixed from time to time by resolution passed by a majority of our board
of directors, which is the only means of fixing a different number. In October 2019, our board voted to increase the size of the
board to seven directors. Seven directors will be elected at the Annual Meeting to hold office until our 2022 Annual Meeting of
Stockholders and until their successors are elected and have qualified.
Our board has nominated the seven persons
named below, all of whom currently serve as directors, for election as directors at the 2021 Annual Meeting. Other than Ms. Tuder,
who began serving as a director of the bank and the company on October 15, 2018, and Mr. Mettler, who began serving as a director
of the bank and the company on October 21, 2019, each of our director nominees has served as a director of the bank since its inception
in 2005 and as a director of the Company since our formation in 2007. Each of these nominees has consented to serve as a director,
if re-elected. Unless otherwise instructed, the management proxies intend to vote the proxies received by them for the election
of all seven of these nominees. If any nominee identified below becomes unable to serve as a director before the Annual Meeting,
the management proxies will vote the proxies received by them for the election of a substitute nominee selected by our board of
The seven nominees receiving the most votes
cast in the election of directors by holders of shares of common stock present or represented by proxy and entitled to vote at
the Annual Meeting will be elected to serve as directors of the company for the next year. As a result, although shares as to which
the authority to vote is withheld will be counted, such âwithholdâ votes will have no effect on the outcome of the
election of directors, except with respect to our director resignation policy.
Information regarding directors and director
nominees and their ages as of the record date is as follows:
|Thomas A. Broughton III||Â||65||Â||2007||Â||Chairman, President and Chief Executive Officer of
ServisFirst Bancshares, Inc. and ServisFirst Bank
|J. Richard Cashio||Â||63||Â||2007||Â||Retired Chief Executive Officer of TASSCO, LLC||Â||X||Â||[M]||Â||[M]||Â||[C][M]|
|James J. Filler||Â||77||Â||2007||Â||Retired Chief Executive Officer of Jefferson Iron &
Metal Brokerage, Inc.
|Michael D. Fuller||Â||68||Â||2007||Â||President of Double Oak Water Reclamation||Â||X||Â||[M]||Â||Â||Â||[M]|
|Christopher J. Mettler||Â||45||Â||2019||Â||Founder and President of Sovereign Co.||Â||X||Â||Â||Â||[M]||Â||Â|
|Hatton C. V. Smith||Â||70||Â||2007||Â||Retired Chief Executive Officer of Royal Cup Coffee;||Â||X||Â||Â||Â||[C][M]||Â||Â|
|Â||Â||Â||Â||Â||Â||Chief Executive Officer of Back Forty Beer Company||Â||Â||Â||Â||Â||Â||Â||Â|
|Irma L. Tuder||Â||59||Â||2018||Â||Manager of Tuder Investments, LLC||Â||X||Â||[C][FE][M]||Â||Â||Â||[M]|
AC: Audit CommitteeÂ Â Â Â Â CC:
Compensation CommitteeÂ Â Â Â Â CGNC: Corporate Governance & Nominations Committee
[C] Committee ChairÂ Â Â [M] Committee MemberÂ Â Â [FE]
The following summarizes the business experience
and background of each of our nominees. Each of the director nominees also serves as a director of the bank, and Mr. Broughton
also serves as Chairman, President and Chief Executive Officer of us and the bank.
|Thomas A. Broughton III||Â||Â|
|Age: 65||Committees: None||Position: President, CEO and Chairman|
|Director Since: 2007Â Â||Bank Director Since: 2005||Â|
Mr. Broughton has served as our President
and Chief Executive Officer and a director since 2007 and as President, Chief Executive Officer and a director of the bank since
its inception in May 2005. Mr. Broughton was named chairman of the board of the company and the bank effective January 1, 2019.
Mr. Broughton has spent the entirety of his 35-year banking career in the Birmingham area. In 1985, Mr. Broughton was named President
of the de novo First Commercial Bank. When First Commercial Bank was bought by Synovus Financial Corp. in 1992, Mr. Broughton continued
as President and was named Chief Executive Officer of First Commercial Bank. In 1998, he became Regional Chief Executive Officer
of Synovus Financial Corp., responsible for the Alabama and Florida markets. In 2001, Mr. Broughtonâs Synovus region shifted,
and he became Regional Chief Executive Officer for the markets of Alabama, Tennessee and parts of Georgia. He continued his work
in this position until his retirement from Synovus in August 2004. Mr. Broughtonâs experience in banking has afforded him
opportunities to work in many areas of banking and has given him exposure to all bank functions. Mr. Broughton served on the Board
of Directors of Cavalier Homes, Inc. from 1986 until 2009, when the company was sold to a subsidiary of Berkshire Hathaway. We
believe that Mr. Broughtonâs extensive experience in banking in Alabama and the Southeast, and, in particular, his success
in building and growing new banks and developing new markets, makes him highly qualified to serve as a director.
|J. Richard Cashio||Â||Â|
|Age: 63||Committees: Audit; Compensation; Corporate Governance and Nominations (Chair)||Position: Director|
|Director Since: 2007||Bank Director Since: 2005||Â|
Mr. Cashio has served as a director of
the company since 2007 and as a director of the bank since its inception in May 2005. Mr. Cashio has been a private investor since
his retirement in 2013. Mr. Cashio served as Chief Executive Officer of TASSCO, LLC from 2005 until his retirement in January 2014
and served as the Chief Executive Officer of Tricon Metals & Services, Inc. from 2000 until its sale in October 2013. We believe
that Mr. Cashioâs experience as the chief executive officer of successful industrial enterprises allows him to offer our
board both the benefit of his business experience and the perspectives of one of our target customer groups, making him highly
qualified to serve as a director.
|James J. Filler||Â||Â|
|Age: 77||Committees: Compensation||Position: Lead Independent Director|
|Director Since: 2007||Bank Director Since: 2005||Â|
Mr. Filler has served as a director of
the company since 2007 and as a director of the bank since its inception in May 2005. In January 2019, following Mr. Broughton
becoming chairman of our board of directors, Mr. Filler was appointed to serve as the boardâs lead independent director.
Mr. Filler has been a private investor since his retirement in 2006. Prior to his retirement, Mr. Filler spent 44 years in the
metals recycling industry with Jefferson Iron & Metal, Inc. and Jefferson Iron & Metal Brokerage Co., Inc. We believe that
Mr. Fillerâs extensive business experience and strong ties to the Birmingham business community offer us valuable strategic
insights and make him highly qualified to serve as a director.
|Michael D. Fuller||Â||Â|
|Age: 68||Committees: Audit; Corporate Governance and Nominations||Position: Director|
|Director Since: 2007||Bank Director Since: 2005||Â|
Mr. Fuller has served as a director of
the company since 2007 and as a director of the bank since its inception in May 2005. For over 20 years, Mr. Fuller has been a
private investor in real estate investments. Prior to that time, Mr. Fuller played professional football for nine years. Mr. Fuller
has served as President of Double Oak Water Reclamation, a private wastewater collection and treatment facility in Shelby County,
Alabama, since 1998. We believe that Mr. Fullerâs experience in the real estate sector, which is a major focus of our business,
as well as his overall business experience and community presence, make him highly qualified to serve as a director.
|Christopher J. Mettler||Â||Â|
|Age: 45||Committees: Compensation Committee||Position: Director|
|Director Since: 2019||Bank Director Since: 2019||Â|
Mr. Mettler has served as a director of
the company and the bank since October 21, 2019. Mr. Mettler is Founder and President of Sovereign Co., where he leads strategy
and business development. Mr. Metter assumed a full-time role at Sovereign as of April 26, 2019. Sovereign leverages proprietary
marketing attribution and artificial intelligence technology to systematically measure thousands of simultaneous marketing messages
to display the most relevant products for consumers. Previously, Mr. Mettler founded two marketing and financial technology businesses,
CompareCards and SnapCap, both of which were acquired in two separate transactions by LendingTree (Nasdaq: TREE). Mr. Mettler served
as President of Iron Horse Holdings LLC from January 1, 2014 until November 16, 2016. Following LendingTreeâs acquisition
of CompareCards from Iron Horse Holdings in November 2016, Mr. Mettler transitioned to serve as a salaried employee of LendingTree
through April 26, 2019. We believe Mr. Mettlerâs business experience, his strong background in the financial technology sector
and his prior service on our Charleston, South Carolina advisory board makes him highly qualified to serve as a director.
|Hatton C. V. Smith||Â||Â|
|Age: 70||Committees: Compensation (Chair)||Position: Director|
|Director Since: 2007||Bank Director Since: 2005||Â|
Mr. Smith has served as a director of the
company since 2007 and as a director of the bank since its inception in May 2005. Mr. Smith served as the Chief Executive Officer
of Royal Cup Coffee from 1996 until 2014 and in various other positions with Royal Cup Coffee prior to 1996. Mr. Smith retired
from all positions with Royal Cup Coffee effective February 2020. He currently serves as the Chief Executive Officer of Back Forty
Beer Company specializing in unique craft beers in the southeast. Mr. Smith is also involved in many different charities and has
served as Chair of the United Way and President of the Baptist Health System. We believe that Mr. Smithâs business experience,
his strong roots in the greater Birmingham business and civic community, and his high profile and extensive community contacts
in one of our largest markets make him highly qualified to serve as a director.
|Irma L. Tuder||Â||Â|
|Age: 59||Committees: Audit (Chair); Corporate Governance and Nominations||Position: Director|
|Director Since: 2018||Bank Director Since: 2018||Â|
Ms. Tuder is currently a private investor.
She is the founder, former CEO and Board Chairperson of Analytical Services, Inc. (ASI), a nationally recognized business providing
management and technical solutions to federal government agencies. Ms. Tuder successfully led the acquisition of ASI by Arctic
Scope Regional Corporation Federal Holding Company in 2007. Ms. Tuder has over 30 years of experience in strategic business planning
and execution, executive leadership, financial management and business operations. Prior to founding ASI, Ms. Tuder spent five
years as a controller in private industry and five years in public accounting. In addition to her service as a director of the
company and bank, Ms. Tuder is a member of the Notre Dame Institute for Latino Studies Advisory Council, HudsonAlpha Institute
for Biotechnology Board of Directors, University of Alabama in Huntsville (UAH) Foundation Board and Business School Advisory Board
and chairs the St. John Paul II Catholic High School Board of Trustees. Ms. Tuder received a BBA in accountancy from the University
of Notre Dame and MBA from Troy State University in Montgomery. We believe that Ms. Tuderâs extensive background in business,
finance and accounting make her highly qualified to serve as both a director and as Chair of our audit committee.
The Board of Directors
Unanimously Recommends a Vote âFORâ the Election of Each of the Board Nominees
Our business is managed under the direction
of our board of directors. The board has the legal responsibility for overseeing the affairs and performance of the company. The
primary responsibility of the board is to exercise their business judgment in what they believe to be in the best interests of
the company and its stockholders.
Our board of directors believes that sound
governance practices and policies provide an important framework to assist them in fulfilling their oversight duty. In March 2014,
our board formally adopted the Corporate Governance Guidelines of ServisFirst Bancshares, Inc. (the âGovernance Guidelinesâ),
which include a number of the practices and policies under which our board has operated for some time, together with concepts suggested
by various authorities in corporate governance and the requirements under the NASDAQ Global Select Marketâs listed company
rules and the Sarbanes-Oxley Act of 2002.
Each year, our board of directors reviews
our Governance Guidelines and other governance documents and modifies them as it deems appropriate. These documents include the
Governance Guidelines, the committee charters, our Code of Business Conduct and Ethics, our Related Party Transactions Policy and
other key policies and practices. Copies of the currently effective charters for each board committee, the Code of Business Conduct
and Ethics, the Governance Guidelines and certain other corporate governance policies are available on the companyâs website
at www.servisfirstbancshares.com under the âIR Menuâ tab.
Some of the principal subjects covered
by our Governance Guidelines comprise:
|Â||â¢||Director Qualifications, which include: a board candidateâs independence, experience, knowledge, skills, expertise, integrity, ability to make independent analytical inquiries; his or her understanding of our business and the business environment in which we operate; and the candidateâs ability and willingness to devote adequate time and effort to board responsibilities, taking into account the candidateâs employment and other board commitments.|
|Â||â¢||Responsibilities of Directors, which include: acting in the best interests of all stockholders; maintaining independence; developing and maintaining a sound understanding of our business and the industry in which we operate; preparing for and attending board and board committee meetings; and providing active, objective and constructive participation at those meetings.|
|Â||â¢||Director Access to Management and, as Necessary and Appropriate, Independent Advisors, which covers: encouraging presentations to our board from the officers responsible for functional areas of our business and from outside consultants who are engaged to conduct periodic reviews of various aspects of our operations or the quality of certain of our assets, such as the bankâs loan portfolio.|
|Â||â¢||Director Orientation and Continuing Education, such as: programs to familiarize directors with any changes to our business, strategic plans, and significant financial, accounting and risk management issues; our compliance programs and conflicts policies; our code of business conduct and ethics and our corporate governance guidelines. In addition, each director is expected to participate in continuing education programs relating to developments in our business and in corporate governance.|
|Â||â¢||Regularly Scheduled Executive Sessions, without Management, will be held by our board, led by our Lead Independent Director, and by the Audit Committee, which meets separately with our independent auditors.|
In October 2016, our board approved and
adopted a Director Resignation Policy. This policy provides that, in an uncontested election, any director nominee who receives
a greater number of âWithholdâ votes than votes âForâ his or her election shall promptly tender his or
her resignation to the Chairman of our board following the certification of the election results. The companyâs Corporate
Governance and Nominations Committee (âCG&N Committeeâ) will consider the offer of resignation and recommend to
the board whether to accept or reject the resignation. Our board must then act on the recommendation within 90 days following certification
of the election results following receipt of the recommendation. After the board makes a formal decision on the CG&N Committeeâs
recommendation, the company must publicly disclose the action on a Current Report on Form 8-K within four business days of the
decision. If the board determines to take any action other than accepting such resignation, the Current Report must also include
the boardâs rationale supporting its decision. A copy of our Director Resignation Policy is available on our website www.servisfirstbancshares.com
under the âIR Menuâ tab.
board has approved and adopted a Clawback Policy for recovery of incentive compensation from the companyâs current and former
executive officers under certain circumstances. The Clawback Policy is designed to
comply with Section 10D of the Securities Exchange Act of 1934 (the âExchange Actâ) and
proposed Rule 10D-1. The Clawback Policy provides that, in the event the company is
required to restate financial results due to material noncompliance with any financial reporting requirement under the securities
laws, the board may adjust future compensation, cancel outstanding awards, seek recoupment of previous awards and take any other
remedial and recovery action permitted by law, to recoup all or a portion of any incentive compensation approved, awarded or granted
to an executive officer of the company after the date of adoption of the Clawback Policy and such award, vesting or payment occurred
or was received during the three completed fiscal years immediately preceding the date on which the company is required to prepare
the restatement. The Clawback Policy applies when the compensation committee has determined that the incentive compensation approved,
awarded or granted was predicated upon the achievement of certain financial results that were the subject of the restatement andÂ that
a lesser amount of incentive compensation would have been approved, awarded or granted to the executive officer based upon the
restated financial results. In each such instance, the company will seek to recoup the amounts by which an executive officerâs
incentive compensation that was awarded, vested or paid during the three-year period referenced above exceeded the amounts that
would have been awarded, vested or paid based on the restated financial results.
Long-term stock ownership is deeply engrained
in our culture and reflects our boardâs strong commitment to the companyâs success. We have reviewed the stock ownership
policies of other financial institutions, the criteria identified by certain proxy advisory firms in determining whether a stock
ownership policy is ârigorousâ or ârobust,â and the stock ownership of our directors and executive officers.
We ultimately concluded not to adopt a formal stock ownership policy at this stage of the companyâs existence primarily because
the current ownership levels of our long-time directors and, with one exception, our named executive officers far exceed the ownership
requirements of even the most rigorous policies we reviewed. Using the market price and the number of shares of common stock beneficially
owned as of December 31, 2020, each of our non-employee directors held common stock valued over 25 times such directorâs
annual retainer, our Chief Executive Officer held common stock valued at over 55 times his annual base salary, and each of our
other named executive officers, with the exception of Mr. Abbott, held common stock valued at over 40 times his annual base salary.
Our board annually reviews our Governance
Guidelines and other governance documents and practices and modifies them as it deems appropriate. Although we will reconsider
adopting stock ownership guidelines in the future, including in the event of board or management changes, we intend to operate
the company in a way that we believe makes the most sense taking into account numerous factors.
The company is dedicated to growing its
business and enhancing stockholder value in an ethical way while being mindful of the need to avoid taking actions that pose undue
risk or have the appearance of posing undue risk to the company. Our goal is to grow stockholder value in both the short term and
in the longer term, and we expect our directors, officers and employees to have the same goals as the company. Consistent with
these goals, our Insider Trading Policy prohibits any of our directors, officers and employees from engaging in hedging activities
involving the companyâs securities, including the following:
|Â·||short sales, meaning any transactions in the companyâs securities whereby one may benefit
from a decline in the stock price of our common stock;
|Â·||purchases or sales of derivative securities related to the companyâs securities (puts, calls,
collars, swaps forward sale contracts and similar arrangements, excluding stock options issued pursuant to employee benefit plans);
|Â·||investments in exchange funds (a stock fund that allows an investor to exchange his or her holdings
in company securities for units in a portfolio of securities), excluding investments in the company stock fund available under
the companyâs 401(k) plan.
Our Insider Trading Policy prohibits our
directors, officers and employees from pledging our securities as collateral for loans unless approved by our Insider Trading Compliance
Officer. While being mindful of the need to avoid taking actions that pose undue risk or appear to pose undue risk to our company,
we also appreciate that our situation may be unique. We are a public company that has, since the bankâs inception in 2005
and our formation in 2007, experienced a relative amount of success. As a result of this success, a significant portion of the
wealth of some of our officers and employees resides in their ownership of our common stock. As detailed above, all of our directors
and all but one of our executive officers own enough shares of common stock to far exceed the multiples of base salary or annual
cash retainer typically required by stock ownership guidelines. Accordingly, we provide our Insider Trading Compliance Officer
with the discretion to permit pledges in certain limited circumstances.
The cornerstone of our corporate governance
program is an independent and qualified board of directors. The board has established guidelines consistent with the current listing
standards of the NASDAQ Global Select Market for determining director independence. You can find these guidelines in our Governance
Guidelines, which are posted on the companyâs website at www.servisfirstbancshares.com under the âIR Menuâ tab.
During its most recent review, our board
considered transactions and relationships between each director or any member of a directorâs immediate family and us and
the bank. Our board also considered whether there were any transactions or relationships between our company and any entity of
which a director or an immediate family member of a director is an executive officer, general partner or significant equity holder.
The purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with
a determination that a director is independent. Independent directors must be free of any relationship with us or our management
that may impair the directorâs ability to make independent judgments.
Our CG&N Committee has determined in
its business judgment that six of the companyâs seven directors are independent as defined in the applicable NASDAQ Global
Select Market listing standards and that each member is free of any relationships that would interfere with his individual exercise
of independent judgment. Our independent directors are Messrs. Cashio, Filler, Fuller, Mettler and Smith, and Ms. Tuder. Mr. Broughton,
our Chairman, is considered an inside director because of his employment as our President and Chief Executive Officer (see âCertain
Relationships and Related Transactionsâ for a list of other relationships the board considered when determining independence).
The members of our board also are members
of the board of directors of the bank, which accounts for substantially all of our consolidated operating results. The members
of our board keep informed about our business through discussions with senior management and other officers and managers of the
company and the bank, by reviewing analyses and reports sent to them by management and outside consultants, and by participating
in meetings of the board and meetings of those board committees on which they serve.
We believe that our stockholders are best
served by a strong, independent board of directors with extensive business experience and strong ties to our markets. We believe
that objective oversight of the performance of our management team is critical to effective corporate governance, and we believe
our board provides such objective oversight.
Our board is led by a combination of Mr.
Filler, our Lead Independent Director, and Mr. Broughton, our Chairman, President and CEO, supplemented by engaged, independent
committee chairs and directors. Our independent directors unanimously voted for Mr. Broughton to serve as the chairman of our board
following the retirement of our prior Chairman on December 31, 2018.
The board believes that the company has
been well served by Mr. Broughtonâs leadership since the bankâs inception in 2005 and our formation in 2007. The board
further believes that Mr. Broughtonâs combined role as chairman and CEO will allow him to set the overall tone and direction
for the company, maintain consistency in the internal and external communication of our strategic and business priorities, and
have primary responsibility for managing our operations. The board also believes that a strong, effective Lead Independent Director,
like Mr. Filler, an independent board, and independent committees provide the independent leadership necessary to balance the combined
chairman and CEO role and, with the formal and informal mechanisms we have in place to facilitate the work of the board and its
committees, results in the board effectiveness and efficiency that our stockholders expect.
Mr. Broughtonâs leadership has been
especially evident during the COVID-19 pandemic. While the company and bank are known for being able to make lending decisions
quickly on a decentralized basis, our employees look to Mr. Broughton to set the tone for the entire company. Under his leadership,
the bank handled an extraordinary number of Payroll Protection Plan (âPPPâ) loans pursuant to the terms of the CARES
Act for both existing bank customers and new customers. Mr. Broughtonâs emphasis on customer service leveraged existing relationships
and earned new banking relationships during the pandemic, as new customers were able to compare their experience with the bank
against the service provided by their current bankers.
We believe our boardâs structure
provides leadership and operational oversight, notwithstanding Mr. Broughtonâs role as Chairman. Our boardâs three
standing committees, which are described below under âBoard Committees and Their Functionsâ, are composed exclusively
of independent directors. In addition to the board committees at the company, our bank has a separate loan committee on which all
of our directors serve. We believe that this structure further reinforces the boardâs role as an objective overseer of our
business, operations, risk sensitivity and day-to-day management.
While our board is ultimately responsible
for the management of risks inherent in our business, in our day-to-day operations senior management is responsible for instituting
risk management practices that are consistent with our overall business strategy and risk tolerance. In addition, because our operations
are conducted primarily through the bank, we maintain an asset-liability and investment committee at the bank level, consisting
of four executive officers of the bank. This committee is charged with monitoring our liquidity and funds positions. The committee
regularly reviews the rate sensitivity position on three-month, six-month and one-year time horizons; loans-to-deposits ratios;
and average maturities for certain categories of liabilities. This committee reports to our board of directors at least quarterly,
and otherwise as needed.
In addition, our audit committee assists
the board in overseeing and monitoring managementâs conduct of our financial reporting process and system of internal accounting
and financial controls, and our compensation committee oversees the management of risks relating to executive and non-executive
Outside of formal meetings, which our board
holds every month, our board and its committees have regular access to senior executives, including our Chief Executive Officer,
Chief Operating Officer and Chief Financial Officer, as well as our senior credit officers. We believe that this structure allows
the board to maintain effective oversight over our risks and to ensure that our management personnel are following prudent and
appropriate risk management practices.
Our board maintains three standing committees
that are each composed entirely of independent directors. The governing charter for each of the three committees is available on
our website www.servisfirstbancshares.com under the âIR Menuâ tab.
Broughton is not independent and therefore does not serve on any committee. Â Â Â Â
Number of meetings in 2020: 5
|Â||â¢||Assists our board of directors in maintaining the integrity of our financial statements and of our financial reporting processes and systems of internal audit controls, as well as our compliance with legal and regulatory requirements;|
|Â||â¢||Reviews the scope of independent audits and assesses the results;|
|Â||â¢||Meets with management to consider the adequacy of the internal control over, and the objectivity of, financial reporting, and meets with our independent auditors and with appropriate financial personnel concerning these matters;|
|Â||â¢||Selects, determines the compensation of, appoints and oversees our independent auditors, and evaluates their qualifications, performance and independence; and|
|Â||â¢||Reviews and approves all related party transactions of the company.|
Our board of directors has determined that
each audit committee member meets the independence standards for audit committee membership under the rules of the Securities and
Exchange Commission (âSECâ) and the rules of the NASDAQ Global Select Market.
Number of meetings in 2020: 8
|Â||â¢||Annually reviews the performance and compensation of our Chief Executive Officer, who is not present during deliberations or voting with respect to his compensation;|
|Â||â¢||Makes recommendations to the independent members of our board of directors with respect to the compensation of our Chief Executive Officer and all other executive officers of the company;|
|Â||â¢||Makes determinations, either as a committee or together with the other independent directors, regarding the performance and compensation level of our Chief Executive Officer and our other named executive officers;|
|Â||â¢||Establishes the compensation structure for our senior management and approves the compensation of our senior executives; and|
|Â||â¢||Advises and reports to our board of directors at least annually, including with respect to the companyâs incentive and equity-based compensation plans, and oversees the activities of the individuals and committees responsible for administering such plans.|
The compensation committee has the authority,
in its sole discretion, to appoint, engage, retain and terminate any compensation consultant, legal counsel or other advisor to
assist in the performance of its duties, and the company is responsible for providing appropriate funding to the compensation committee
for payment of reasonable compensation to any such advisor retained by the compensation committee. During fiscal 2020, our compensation
committee retained McLagan to conduct a comprehensive review of our compensation programs. The committee determined that there
were no conflicts between McLagan and the company or any member of the compensation committee.
Our board of directors has determined that
each compensation committee member is independent under the rules of the NASDAQ Global Select Market.
Number of meetings in 2020: 2
|Â||â¢||Identifies individuals believed to be qualified to become board members, and selects or recommends to the board, the nominees to stand for election as directors;|
|Â||â¢||Establishes the criteria for selecting candidates for nomination to our board, actively seeks candidates who meet those criteria and makes recommendations to our board of directors to fill vacancies on, or make additions to, our board or any committee of our board (see âOther Governance Practicesâ for a detailed discussion of qualification criteria);|
|Â||â¢||Develops and recommends to our board standards to be applied in making determinations as to the absence of material relationships between the company and a director;|
|Â||â¢||Establishes the procedures for the evaluation and oversight of our board and management; and|
|Â||â¢||Monitors and recommends changes in the organization and procedures of the board, in the size of the board or any board committee and in our corporate governance policies, and monitors the companyâs corporate governance structure.|
The CG&N committee considers candidates
for director who are recommended by its members, by other board members, and by management. The CG&N committee will consider
stockholder nominees for election to our board that are timely recommended by stockholders provided that a complete description
of the nomineesâ qualifications, experience and background, together with a statement signed by each nominee in which he
or she consents to act as a board member if elected, accompany the recommendations. Stockholder nominations should be directed
to the chair of the CG&N Committee, care of our chief financial officer, at the companyâs principal executive office,
2500 Woodcrest Place, Birmingham, Alabama 35209. The CG&N committee will evaluate candidates recommended by stockholders using
the same criteria as for other candidates recommended by its members, other members of the board, or management.
In evaluating nominees for director, the
CG&N committee believes that it is of primary importance to ensure that the boardâs composition reflects a diversity
of business experience and community leadership, as well as a demonstrated ability to promote the companyâs strategic objectives
and expand its presence, profile and customer base in its local markets. Additionally, our CG&N committee charter provides
that the CG&N committee, in selecting or recommending board candidates, shall consider factors it deems appropriate, which
may include diversity. The members of the CG&N committee and the board also take into account views on diversity that our stockholders
may communicate to us.
Our board of directors has determined that
each member of the CG&N committee is independent under the standards of independence of the rules of the NASDAQ Global Select
In addition to the boards of directors
of the company and the bank, the bank also has a non-voting advisory board of directors in each of the Huntsville, Montgomery,
Dothan and Mobile, Alabama, Pensacola, Florida, Atlanta, Georgia, Charleston, South Carolina and Nashville, Tennessee markets.
These advisory directors represent a wide array of business experience and community involvement in the service areas where they
live. As residents of these service areas, they are sensitive and responsive to the needs of our customers and potential customers.
In addition, our directors and advisory directors bring substantial business and banking contacts to us. The bank has established
the following regional advisory boards:
|Atlanta Region||Â||Charleston Region||Â||Dothan Region|
|Jeffrey B. Baker||Â||Peter McKellar||Â||Jerry Adams|
|Michael A. Bowling||Â||Weesie Newton||Â||Charles H. Chapman III|
|Paul Conley||Â||Skip Sawin||Â||Ronald DeVane|
|John Loud||Â||Daniel Vallini||Â||John Downs|
|Zach Parker||Â||Â||Â||Watson Downs|
|Brent Reid||Â||Â||Steve McCarroll|
|Â||Â||Â||Charles E. Owens|
|Â||Â||Â||William C. (Bill) Thompson|
|Huntsville Region||Â||Mobile Region||Â||Montgomery Region|
|E. Wayne Bonner||Â||Steve Crawford||Â||Dr. John A. Jernigan|
|Dennis Bragg||Â||Lowell Friedman||Â||Ray B. Petty|
|Dr. Hoyt A. âTresâ Childs, III||Â||Barry Gritter||Â||Edward M. Stivers III|
|David Mathis||Â||Dr. James M. Harrison, Jr.||Â||Todd Strange|
|David J. Slyman, Jr.||Â||James Henderson||Â||G.L. Pete Taylor|
|Irma Tuder||Â||Richard D. Inge||Â||W. Ken Upchurch, III|
|Sidney R. White||Â||Kenneth S. Johnson||Â||Alan E. Weil, Jr.|
|Danny J. Windham||Â||John H. Lewis, Jr.||Â||Taylor Williams|
|Thomas J. Young||Â||Hunter Lyons||Â||Â|
|Nashville Region||Â||Pensacola Region||Â||Â|
|Charles Robert Bone||Â||Thomas M. Bizzell||Â||Â|
|Mary Margaret Bourbeau||Â||Bo Carter||Â||Â|
|Joe Cashia||Â||Leo Cyr||Â||Â|
|Ryan Chapman||Â||Matt Durney||Â||Â|
|Todd Robinson||Â||Dr. Mark S. Greskovich||Â||Â|
The primary functions of the compensation
committee are to evaluate and administer the compensation of our President and Chief Executive Officer and other executive officers
and to review our general compensation programs. No member of this committee has served as an officer or employee of the company,
the bank or any other subsidiary. In addition, none of our executive officers has served as a director or as a member of the compensation
committee of a company which employs any of our directors. For further information, see âCompensation Discussion and Analysisâ
and âBoard Committees and Their Functions.â
Our board of directors held 12 meetings
in 2020. Each director attended more than 75% of the aggregate of: (i) the number of meetings of the board of directors held during
the period he or she served on the board; and (ii) the number of meetings of committees of the board of directors held during the
period he or she served on such committees. While we do not have a formal policy regarding director attendance at our annual meetings,
we generally expect our directors to attend if at all possible. All of our directors attended the 2020 Annual Meeting via remote
We have not entered into any business transactions
with related parties required to be disclosed under Rule 404(a) of Regulation S-K other than banking transactions in the ordinary
course of our business with our directors and officers, as well as members of their families and corporations, partnerships or
other organizations in which they have a controlling interest, and the lease arrangement described below. Management recognizes
that related party transactions can present unique risks and potential conflicts of interest (in appearance and in fact). Therefore,
we maintain written policies around interactions with related parties which require that these transactions are entered into and
maintained on the following terms:
|Â||â¢||in the case of banking transactions, each is on substantially the same terms, including price or interest rate, collateral and fees, as those prevailing at the time for comparable transactions with unrelated parties that are not expected to involve more than the normal risk of collectability or present other unfavorable features to the bank; and|
|Â||â¢||in the case of any related party transactions, including banking transactions, each is approved by a majority of the directors who do not have an interest in the transaction.|
Any potential related party transactions
are reported to our chief financial officer, who then reports such transactions to our audit committee. Our audit committee determines
whether such transactions constitute related party transactions and, if so, reports those transactions to our board for consideration
if such transactions are not deemed pre-approved under our policy. A copy of our policy governing related party transactions is
available on our website www.servisfirstbancshares.com under the âIR Menuâ tab.
The aggregate amount of indebtedness from
our directors and executive officers (including their affiliates and inclusive of persons serving as executive officers of the
bank) to the bank as of December 31, 2020 was approximately $36.97 million, which equaled 3.72% of our total equity capital as
of that date. Related party transactions are made in the ordinary course of business, on substantially the same terms, including
interest rates and collateral (where applicable), as those prevailing at the time for comparable transactions with persons not
related to us, and do not involve more than normal risk of collectability or present other features unfavorable to us. As of the
date of this Proxy Statement, no related party loans were categorized as non-accrual, past due, restructured or potential problem
loans. We anticipate making related party loans in the future to the same extent as we have in the past.
In addition to banking transactions made
in the ordinary course of business, the company leased office space in its corporate headquarters to one related party in 2020
pursuant to the terms of a lease entered into 2017. Prior to entering into such lease in 2017, the company obtained, and the Board
considered, a market reasonableness study, and the Board, other than the related party, approved such lease on terms consistent
with the results of the market reasonableness study. Under the terms of the lease, the company agreed to lease an office of approximately
120 square feet to Mr. Michael D. Fuller, a director of the Company, on a month-to-month basis at $26.00 per square foot, subject
to 1.5% annual escalations, plus a utilities and overhead fee equal to 10% of the rental rate.
Our board of directors has adopted a Code
of Business Conduct and Ethics that applies to all of our employees, officers and directors. The Code of Business Conduct and Ethics
covers compliance with law; fair and honest dealings with us, with competitors and with others; fair and honest disclosure to the
public; and procedures for compliance with the Code of Business Conduct and Ethics. A copy of our Code of Business Conduct and
Ethics is, and any amendment to or waiver from a provision of our Code of Business Conduct and Ethics will be, available free of
charge on our website at www.servisfirstbancshares.com under the âIR Menuâ tab.
You may contact any of our independent
directors, individually or as a group, by writing to them c/o William M. Foshee, Chief Financial Officer, ServisFirst Bancshares,
Inc., 2500 Woodcrest Place, Birmingham, Alabama 35209. Mr. Foshee will review and forward to the appropriate directors copies of
all such correspondence that, in the opinion of Mr. Foshee, deals with the functions of the board of directors or its committees
or that he otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing matters
will be brought promptly to the attention of the Chairwoman of the audit committee and will be handled in accordance with procedures
established by the audit committee.
Each of our directors has been a member
of our board since our formation in 2007 and a member of the board of the bank since its inception in 2005, other than Ms. Tuder
and Mr. Mettler, who were appointed to our and the bankâs board in October 2018 and October 2019, respectively. As of February
22, 2021, our six non-employee directors beneficially owned, collectively, approximately 5.69% of our outstanding common stock.
Prior to 2019, we historically had not granted any stock options or other equity-based incentive compensation for our directors
on an annual basis due to their collective substantial ownership of company stock. In 2020, the compensation committee recommended
and our board approved a grant of 655 shares of restricted stock to each of our directors, which grant vests 100% on the first
anniversary of the date of grant. Our restricted stock grants to directors were targeted to have a value of $20,000 based on the
market price of our common stock. We seek to structure director compensation to further align the interests of directors with the
interests of our stockholders.
In 2020, directors each received an annual
cash retainer of $30,000, except that our Lead Independent Director and our Audit Committee Chairman each received a $35,000 annual
retainer. Directors were paid $600 for each board meeting or board event attended, $500 for each committee meeting attended that
is not held on the same day as a board meeting, and $250 for each committee meeting attended that occurs on the same day as a full
board meeting. Mr. Broughton is a named executive officer, and his compensation is reflected in the Summary Compensation Table.
The following table sets forth information
regarding the compensation of our non-employee directors for the year ended December 31, 2020.
|Â||Fees earned or
paid in cash
|J. Richard Cashio||Â||Â||41,600||Â||Â||Â||20,022||Â||Â||–||Â||Â||61,622||Â|
|Michael D. Fuller||Â||Â||40,200||Â||Â||Â||20,022||Â||Â||–||Â||Â||60,222||Â|
|James J. Filler||Â||Â||44,450||Â||Â||Â||20,022||Â||Â||–||Â||Â||64,472||Â|
|Christopher J. Mettler||Â||Â||38,450||Â||Â||Â||20,022||Â||Â||–||Â||Â||58,472||Â|
|Hatton C. V. Smith||Â||Â||39,450||Â||Â||Â||20,022||Â||Â||–||Â||Â||59,472||Â|
|Irma L. Tuder||Â||Â||44,950||Â||Â||Â||20,022||Â||Â||–||Â||Â||64,972||Â|
For fiscal 2021, our CG&N committee
and our compensation committee jointly recommended a change in director compensation to our board. For fiscal 2021, each of our
directors will receive an annual cash retainer of $45,000. Our Lead Independent Director will receive an additional retainer of
$25,000. Audit committee members will receive a retainer of $8,000, with the audit committee chair receiving an additional $10,000
retainer. compensation committee members will receive a $6,000 retainer, with the compensation committee chair receiving an additional
$8,000 retainer. Members of the CG&N committee will receive a $4,000 retainer, with the chair receiving an additional $7,500
retainer. With the adoption of the increased board retainers and the new committee retainers, directors will no longer receive
fees for attending board and committee meetings. In addition, Mr. Broughton will no longer receive any compensation for his service
as Chairman of the board. These changes were based on the results of the market competitive analysis conducted by our independent
compensation consultant and evaluated by our compensation committee in November 2020.
The following table sets forth the beneficial
ownership of our common stock as of February 22, 2021 by: (i) each of our directors; (ii) our named executive officers; (iii) all
of our directors and our executive officers as a group; and (iv) each stockholder known by us to beneficially own more than 5%
of our common stock. Except as otherwise indicated, each person listed below has sole voting and investment power with respect
to all shares shown to be beneficially owned by him except to the extent that such power is shared by a spouse under applicable
law. The information provided in the table is based on our records, information filed with the SEC and information provided to
|Name and Address of Beneficial Owner(1)||Â||Amount and Nature of
|Â||Percentage of Outstanding
Common Stock (%)(2)
|Five Percent Stockholders||Â||Â||Â||Â|
|Blackrock, Inc.(3)||Â||Â||7,254,600||Â (4)||Â||Â||Â||13.5||%(4)|
55 East 52nd Street
New York, NY 10055
|The Vanguard Group(5)||Â||Â||4,799,090||Â (4)||Â||Â||Â||8.9||%(4)|
|100 Vanguard Blvd.
Malvern, PA 19355
|Directors and Executive Officers||Â||Â||Â||Â||Â||Â||Â||Â|
|Thomas A. Broughton III||Â||Â||813,081||Â (6)||Â||Â||Â||1.5||%|
|Irma L. Tuder||Â||Â||70,621||Â (7)||Â||Â||Â||*||Â|
|Michael D. Fuller||Â||Â||507,342||Â (8)||Â||Â||Â||*||Â|
|James J. Filler||Â||Â||1,370,886||Â (9)||Â||Â||Â||2.53||%|
|J. Richard Cashio||Â||Â||672,054||Â (10)||Â||Â||Â||1.24||%|
|Hatton C. V. Smith||Â||Â||437,228||Â (11)||Â||Â||Â||*||Â|
|Christopher J. Mettler||Â||Â||20,745||Â (12)||Â||Â||Â||*||Â|
|William M. Foshee||Â||Â||335,713||Â (13)||Â||Â||Â||*||Â|
|Clarence C. Pouncey III(14)||Â||Â||711,939||Â (15)||Â||Â||Â||1.32||%|
|Rodney E. Rushing||Â||Â||423,250||Â (16)||Â||Â||Â||*||Â|
|Henry F. Abbott||Â||Â||8,613||Â (17)Â||Â||Â||Â||*||Â|
|All directors and executive officers as a group (11 persons)||Â||Â||5,371,472||Â (18)||Â||Â||Â||9.93||%|
|Â||*||Indicates ownership of less than 1% of outstanding common stock.|
|Â||(1)||The address for all directors and executive officers is 2500
Woodcrest Place, Birmingham, Alabama 35209.
|Â||(2)||Except as otherwise noted herein, the percentage is determined
on the basis of 54,099,004 shares of our common stock outstanding plus securities deemed outstanding pursuant to Rule 13d-3
promulgated under the Exchange Act. Under Rule 13d-3, a person is deemed to be a beneficial owner of any security owned by
certain family members and any security of which that person has the right to acquire beneficial ownership within 60 days,
including, without limitation, shares of our common stock subject to currently exercisable options.
|Â||(3)||In a Schedule 13G/A filed January 26, 2021, Blackrock, Inc. reported
having sole power to vote or to direct the vote of 7,184,439 shares of common stock, shared power to vote or direct the vote
of zero shares of common stock, sole power to dispose or direct the disposition of 7,254,600 shares of common stock and shared
power to dispose or to direct the disposition of zero shares of common stock. All information in this footnote was obtained
from the Schedule 13G/A filed by Blackrock, Inc.
|Â||(4)||Reflects shares reported on Schedule 13G/A as beneficially owned
as of December 31, 2020.
|Â||(5)||In a Schedule 13G/A filed February 10, 2021, The Vanguard Group
reported having sole power to vote or direct the vote of 0 shares of common stock, shared power to vote or direct to vote
94,812 shares of common stock, sole power to dispose or direct the disposition of 4,667,066 shares of common stock and shared
power to dispose or to direct the disposition of 132,024 shares of common stock. All information in this footnote was obtained
from the Schedule 13G/A filed by The Vanguard Group.
|Â||(6)||Includes 54,790 shares of common stock owned by his spouse and
14,290 shares of common stock owned by his two stepchildren. Does not include 366,000 shares of common stock owned by TAB2,
LLC, a limited liability company, or 300,000 shares of common stock owned by TAB3, LLC. Mr. Broughton no longer has a reportable
beneficial interest in shares of common stock owned by TAB2, LLC or TAB3, LLC. Mr. Broughton disclaims beneficial ownership
of common stock held by his spouse, his two stepchildren, TAB2, LLC and TAB3, LLC. Mr. Broughton has pledged 12,000 shares
to Business First Bank, Baton Rouge, as security for a line of credit.
|Â||(7)||Does not include an option granted on October 15, 2018 to purchase
up to 25,000 shares of common stock for $35.65 per share which vests 100% on October 15, 2023. Includes 40,215 shares owned
by Tuder Family, LLC, a limited liability company of which the reporting person is a member and manager. The reporting person
disclaims beneficial ownership of the Tuder Family, LLC shares except to the extent of her pecuniary interest therein.
|Â||(8)||Includes 93,052 shares of common stock held by Mr. Fullerâs
spouse. Does not include 790,000 shares of common stock held by Tyrol, Inc., which is owned by Mr. Fullerâs adult children.
Mr. Fuller resigned as a director of Tyrol, Inc. during 2019 and disclaims beneficial ownership of such shares.
|Â||(9)||Includes 151,500 shares Mr. Filler owns jointly with his spouse.
|Â||(10)||Does not include 28,752 shares owned by Mr. Cashioâs adult
daughter. Includes 184,000 shares of common stock held by Mr. Cashioâs spouse. Mr. Cashio disclaims beneficial ownership
of all shares not directly owned by him. Mr. Cashio has pledged 159,112 shares to ServisFirst Bank as security for a loan.
|Â||(11)||Mr. Smith has pledged 96,999 shares to ServisFirst Bank, as security
for a line of credit.
|Â||(12)||Does not include an option granted to Mr. Mettler on October
21, 2019 to purchase 25,000 shares of common stock for $33.90 per share which vests 100% after five years.
|Â||(13)||Includes 24,000 share held by Mr. Fosheeâs spouse. Mr.
Foshee disclaims beneficial ownership of such shares. Mr. Foshee has pledged 48,000 shares to Morgan Stanley and 41,500 shares
to US Bank.
|Â||(14)||Mr. Pouncey retired as Chief Operating Officer of the Company
effective December 31, 2020.
|Â||(15)||Includes 15,133 shares of common stock beneficially owned by
Mr. Pounceyâs wife through a limited liability company and 6,000 shares of common stock owned by the Pouncey Education
Trust. Members of Mr. Pounceyâs immediate family are among the beneficiaries of the trust and the reporting person is
trustee of the trust. Mr. Pouncey disclaims beneficial ownership of the common stock held by the trust except to the extent
of his pecuniary interest therein. Mr. Pouncey has pledged 20,804 shares to Valley Bank.
|Â||(16)||Includes an option to purchase 15,000 shares of common stock
for $6.915 per share granted on February 10, 2014, which vested 100% on February 10, 2021.
|Â||(17)||Includes an option granted to Mr. Abbott on January 25, 2016
to purchase 2,000 shares of common stock for $19.155 per share which vested 100% on January 25, 2021.
|Â||(18)||Includes 17,000 shares obtainable within 60 days pursuant to
the exercise of outstanding options or warrants.
Section 16(a) of the Exchange Act requires
our Section 16 officers, directors and persons who own more than 10% of our common stock to file reports of ownership and changes
in ownership with the SEC. Mr. Broughton reported an exercise of stock options on January 31, 2020 one day late, in a Form 4 filing
made February 5, 2020. Mr. Bibb Lamar reported sales of stock on February 19 and 20, 2020, in a Form 4 filing made February 25,
As required under Section 14A of the Exchange
Act, we provide our stockholders with an annual advisory vote on the compensation of our named executive officers. In 2017, our
stockholders approved an annual advisory vote. At the 2020 Annual Meeting, approximately 97% of the votes cast (which excludes
broker non-votes) were in approval of our executive compensation program.
Our compensation committee reviewed the
results of the advisory vote and did not implement any significant changes to our executive compensation as a result of the say-on-pay
advisory vote. The compensation committee recognizes that effective practices evolve, and the committee will continue to consider
changes as needed to keep our executive compensation program competitive and tightly linked to performance. See âCompensation
Discussion and Analysisâ for a detailed discussion of our executive compensation practices, philosophy and objectives.
Consistent with our stockholdersâ
preference and prevailing demand, we expect to hold an advisory vote on executive compensation every year. This year, we are asking
stockholders to approve the following resolution:
RESOLVED, that the compensation paid
to the companyâs named executive officers as disclosed in the Proxy Statement for the 2021 Annual Meeting of Stockholders
pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion,
is hereby approved.
The advisory vote will not be binding on
the compensation committee or the board of directors. However, they will carefully consider the outcome of the vote and take into
consideration any specific concerns raised by investors when determining future compensation arrangements.
The Board of Directors
Unanimously Recommends a Vote âFORâ the Resolution Approving the Compensation Paid to Our Named Executive Officers.
This CD&A describes our executive compensation
objectives and philosophy. It also describes our compensation program and reviews the compensation outcomes for fiscal 2020. Our
ânamed executive officersâ in 2020 were:
|Â||â¢||Thomas A. Broughton III, President and Chief Executive Officer|
|Â||â¢||Clarence C. Pouncey III, Executive Vice President and Chief Operating Officer|
|Â||â¢||William M. Foshee, Executive Vice President and Chief Financial Officer|
|Â||â¢||Rodney E. Rushing, Executive Vice President and Executive for Correspondent Banking|
|Â||â¢||Henry F. Abbott, Senior Vice President and Chief Credit Officer|
Each of our five named executive officers
also held the same position with the bank during fiscal 2020. Mr. Pouncey retired from his positions with us and the bank effective
December 31, 2020, and Mr. Rushing subsequently was appointed to serve as Chief Operating Officer. All of such officers are employees
of the bank for payroll and tax purposes. The board of directors of the bank also has a compensation committee. At the time we
became a bank holding company, our board of directors appointed a separate compensation committee, consisting of the same individuals
as the compensation committee of the bank, with the authority to determine the compensation of our Chief Executive Officer and,
either independently or with other independent directors of the board, the compensation of our other executive officers, and to
further administer any equity or other incentive plans. Because our officers, including Messrs. Broughton, Pouncey, Foshee, Rushing
and Abbott, remain employees of the bank for payroll and tax purposes, their compensation is set by the compensation committee
of the bank as a technical matter. However, such compensation is then approved by the bankâs board of directors and by our
compensation committee. Because both compensation committees consist of the same persons, as do both boards of directors, references
herein to âourâ or âtheâ compensation committee will be deemed to refer to our compensation committee and/or
the bankâs compensation committee, as applicable.
We are a bank holding company
headquartered in Birmingham, Alabama. Our bank, founded in 2005, provides commercial banking services through 21 full-service
banking offices and three loan production offices located in Alabama, Georgia, South Carolina, Tennessee and Florida. We
operate our bank using a simple business model based on organic loan and deposit growth, generated through high quality
customer service, delivered by a team of experienced bankers focused on developing and maintaining long-term banking
relationships with our target customers. Our strategy focuses on operating a limited and efficient branch network with
sizable aggregate balances of total loans and deposits housed in each branch office. We strive to translate this business
model and strategy into higher profits for our stockholders.
Our compensation program is intended to
incentivize our named executive officers to pursue strategies and actions that promote both annual and longer-term value to stockholders,
consistent with the intention of our business model. We have experienced accelerated growth and change in recent yearsâduring
the last six years, we have taken the company public through our initial public offering, increased our geographic footprint to
include branch offices in South Carolina, Tennessee and Georgia, effectuated a 3-for-1 stock dividend and a 2-for-1 stock dividend
and instituted a quarterly cash dividend while increasing our net income from approximately $52.4 million in 2014 to approximately
$170 million in 2020 âand we believe our compensation processes have been designed to permit us to attract and retain the
highly skilled executive and management staff who have been instrumental to our past successes and who will be key to our future.
During 2020, we continued to experience growth in the midst of a global pandemic. At December 31, 2020, our loans had increased
17% from 2019, our total deposits had grown by 32% over 2019 and our net income increased 14% over 2019 net income. Looking forward,
the compensation committee intends to strengthen the competitiveness of our compensation program in order to incentivize continuing
growth in our business.
In order to recruit, retain and appropriately
incentivize the most qualified and competent individuals as executive officers, we strive to maintain a compensation program that
not only is competitive in our market but that also provides our compensation committee with the flexibility to determine incentive
compensation using a common sense approach. Our compensation committee believes that the most effective executive compensation
program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by us and the bank,
and which aligns executivesâ interests with those of our stockholders by rewarding performance, with the ultimate objective
of improving stockholder value. No executive officers of the company make any recommendations to the compensation committee or
participate in any way regarding the compensation of other executive officers, other than the President and Chief Executive Officer,
Mr. Broughton. The compensation committee consults with Mr. Broughton to gain a better insight into the performance of the executive
team as a basis for the compensation committeeâs determinations regarding executive compensation. While the compensation
committee consults with Mr. Broughton, the compensation committee makes its decisions independently.
The fundamental purpose of our executive
compensation program is to assist us in achieving our financial and operating performance objectives. Specifically, our compensation
program has two basic objectives:
|Â||â¢||to attract, retain and motivate our executive officers by fairly compensating them, which includes rewarding executives upon the achievement of measurable company, business unit and individual performance goals; and|
|Â||â¢||to align each executiveâs interests with the creation of stockholder valueâthat is, we want our executives to be âlong our stockâ rather than âlong a paycheck.â|
Our board and compensation committee have
found that people do what you incentivize them to do. We believe that it is of paramount importance to be careful when setting
absolute incentive compensation goals. Instead, our compensation committee is thoughtful about the objective performance measures
it uses to incentivize executive officers and, when determining the incentive compensation of each executive, our compensation
committee considers all available information, including our overall performance.
The compensation committee believes that
executive compensation packages should include cash, annual short-term cash incentives and, when appropriate, long-term equity
based incentives that reward performance as measured against established company, business unit and individual goals. These goals
may include any number of criteria and may be unique to the particular executive officer based upon his or her duties, but the
criteria typically include net income, asset growth and deposit growth and contain a credit quality component, in addition to considering
such executive officerâs personal production. Above all, though, the compensation committee endeavors to use a common sense
approach when determining incentive compensation and establishing incentive goals. To our compensation committee, a âcommon
sense approachâ means maintaining a compensation program that adapts to the circumstances and performance of each executive
officer, considers the performance in the area of responsibility of such officer, including the achievement of established performance
measures, and takes into account the companyâs overall performance.
Additionally, the compensation committee
believes that we should offer competitive benefit plans, including health insurance and a 401(k) plan. We also have entered into
change in control agreements that apply to particular circumstances where we believe it is important to ensure the retention of
certain key executives during the critical period immediately preceding a change in control, if and when applicable.
The compensation committee evaluates both
performance and compensation to ensure that we maintain our ability to attract, retain and properly incentivize superior employees
in key positions and that compensation provided to the named executive officers and other officers remains competitive relative
to the compensation paid to similarly situated executives of our peers. Historically, our compensation committee has not designated
a specific peer group for this purpose, instead relying on general information about similarly sized financial institutions in
similar markets. In conjunction with the market compensation analysis referenced below, the compensation committee approved a peer
group for use in future compensation purposes at the end of 2020.
At the 2020 Annual Meeting, approximately
97% of the votes cast (which excludes broker non-votes) were in approval of our executive compensation program. Our compensation
committee reviewed the results of the advisory vote and did not implement any significant changes to our executive compensation
as a result of the say-on-pay advisory vote. The compensation committee recognizes that effective practices evolve, and the committee
will continue to consider changes as needed to keep our executive compensation program competitive and tightly linked to performance.
The compensation committee did not retain
a compensation consultant to advise with respect to fiscal 2020 compensation; however, the compensation committee did retain McLagan
(a division of Aon plc) as an independent compensation consultant during 2020 to conduct a comprehensive review of our compensation
program. The purpose of this review was to evaluate the continued appropriateness of our compensation program as compared to the
programs of certain peer companies, with the goal of ensuring that our pay practices mature in tandem with our business. The compensation
committee has adopted changes to our compensation program for the 2021 fiscal year in light of the recommendations provided by
its compensation consultant.
All of our named executive officers received
stock options or restricted stock awards and were encouraged to purchase our stock when they joined the company, other than Mr.
Abbott, who received restricted stock awards in 2020 in connection with his promotion to Chief Credit Officer. We want each of
our executive officers to think like a stockholder, which means we want all of our executive officers to be substantial stockholders
so that their interests are aligned with those of our other stockholders.
This element is intended to directly reflect an executiveâs job responsibilities and his or her value to us. We also use
this element to attract and retain our executives and, to some extent, acknowledge each executiveâs individual efforts in
furthering our strategic goals.
short-term cash incentives: This annual cash incentive is one of the performance-based elements of our compensation.
It is intended to motivate our executives and to provide a current reward for short-term (annual) measurable performance.
incentives: The grant of stock options and/or other equity-based incentive compensation is the method we use to align
the interests of our named executive officers with the interests of our stockholders, which is another element of performance-based
and benefits: These benefits and plans are intended to attract and retain qualified executives, by ensuring that our
compensation program is competitive and provides an adequate opportunity for retirement savings. We believe that these programs
tend to reward long-term service. Some of our perquisites are designed to facilitate the promotion of our business interests, such
as country club memberships that are utilized by our executives to develop and maintain customer relationships. We have also, on
occasion, offered specific benefits to our longest serving executives to recognize and reward their long-term service. During 2020,
we entered into endorsement split-dollar agreement with certain named executive officers. The agreements provide the named executives
with death benefits through bank-owned life insurance policies.
in control agreements: These agreements, or comparable provisions in an employment or similar agreement, provide a form
of severance payable in the event we are the subject of a change in control. They are primarily intended to align the interests
of our executives with our stockholders by providing for a secure financial transition in the event of termination in connection
with a change in control. With the retirement of Mr. Pouncey, we only have one remaining change in control agreement with our Chief
Financial Officer, Mr. Foshee.
To reward both short- and long-term performance
in the compensation program and in furtherance of our compensation objectives noted above, our executive officer compensation philosophy
includes the following principles:
should be related to performance. The compensation committee believes that a significant portion of an executive officerâs
compensation should be tied not only to individual performance, but also the companyâs performance measured against both
financial and non-financial goals and objectives.
compensation should represent a portion of an executive officerâs total compensation. The compensation committee
is committed to providing competitive compensation that reflects our performance and that of the individual officer or employee.
levels should be competitive. The compensation committee reviews available data to ensure that our compensation is competitive
with that provided by other comparable companies. The compensation committee believes that competitive compensation enhances our
ability to attract and retain executive officers. As discussed above, our compensation committee retained a compensation consultant
during the 2020 fiscal year to complete a deep review of our compensation structure in order to ensure that our compensation remains
competitive. Following completion of this review, our compensation committee approved a peer group for compensation purposes and
utilized said peer group to determine compensation levels for 2021.
compensation should balance short-term and long-term performance. The compensation committee seeks to achieve a balance
between encouraging strong short-term annual results and ensuring our long-term viability and success. To reinforce the importance
of balancing these perspectives, executive officers generally will be provided both short- and long-term incentives. The compensation
committee historically has not made automatic equity grants each fiscal year, preferring instead to utilize such grants on an as-needed
basis to provide additional long-term incentives. Such long-term equity incentives historically have not vested immediately, but
rather require the officers and directors who receive such grants to earn them over a period of years with the company. As a result
of the review of compensation competitiveness by McLagan, the compensation committee has adopted short-term and long-term compensation
plans for its executives in 2021.
The compensation committee does not use
a specific formula to determine the amount allocated to each element of compensation. Instead, the compensation committee analyzes
the total compensation paid to each executive and makes individual compensation decisions as to the mixture between base salary,
annual short-term cash incentives and equity-based incentives. To date, in determining the amount or mixture of compensation to
be paid to any executive, the compensation committee has not considered any severance payment to be paid under an employment agreement
or change in control agreement or any equity-based incentives previously awarded. The limited use of equity as compensation has
been based, in large part, on high levels of stock ownership by the companyâs executive officers. Using the market price
and the number of shares of common stock beneficially owned as of December 31, 2020, our Chief Executive Officer held common stock
valued at over 55 times his annual base salary, and each of our other named executive officers, with the exception of Mr. Abbott,
held common stock valued at over 40 times his annual base salary.
For fiscal year 2020, an average of 45.5%
of our named executive officersâ compensation was in annual short-term cash incentives which, as described below, are largely
performance-based awards; however, we have reported these short-term cash incentives as bonus payments due to the flexibility retained
by our compensation committee in determining final award amounts. Only Messrs. Broughton and Abbott received equity-based incentives
during the 2020 fiscal year, with Mr. Broughtonâs award made in connection with his board service. The following table illustrates
the percentage of each named executive officerâs total compensation, as reported in the âSummary Compensation Tableâ
below, related to base salary, annual short-term cash incentives and long-term equity-based incentives:
|Â||Â||Percentage of Total Compensation
(Fiscal Year 2020)(1)
|Named Executive Officer||Â||
|Thomas A. Broughton III, Principal Executive Officer (âPEOâ)||Â||Â||33.6||%||Â||Â||60.1||%||Â||Â||1.3||%||Â||Â||5||%|
|William M. Foshee, Principal Financial Officer (âPFOâ)||Â||Â||55.9||%||Â||Â||38.2||%||Â||Â||–||%||Â||Â||5.9||%|
|Clarence C. Pouncey III||Â||Â||59.4||%||Â||Â||35.7||%||Â||Â||–||%||Â||Â||4.9||%|
|Rodney E. Rushing||Â||Â||56.2||%||Â||Â||38.2||%||Â||Â||–||%||Â||Â||5.6||%|
|Henry F. Abbott||Â||Â||58.4||%||Â||Â||18||%||Â||Â||15||%||Â||Â||8.7||%|
|(1)||Total percentages may not equal 100% due to rounding.|
The compensation of Thomas A. Broughton
III, our President and Chief Executive Officer, is discussed throughout the following paragraphs. The compensation committee establishes
Mr. Broughtonâs compensation package each year with the intent of providing compensation designed to retain Mr. Broughtonâs
services and motivate him to perform to the best of his abilities. Mr. Broughtonâs 2020 base salary and incentive compensation
reflect the compensation committeeâs and our boardâs determination of the total compensation package necessary to meet
The compensation committee endeavors to
establish base salary levels for executives that are consistent and competitive with those provided for similarly situated executives
of other similar financial institutions, taking into account each executiveâs areas and level of responsibility.
For the year ended December 31, 2020, the
compensation committee elected not to increase the base salaries of our named executive officers from 2019 levels, and all base
salaries remained the same for the 2020 fiscal year.
None of our named executive officers have
employment agreements, although two of our named executive officers have change in control agreements. Following Mr. Pounceyâs
retirement, only Mr. Foshee continues to have a change in control agreement. See âPotential Payments Upon Termination
or Change in Controlâ below for a more detailed discussion.
For the year ended December 31, 2020, the
compensation committee relied on various performance measurements for determining executive officer cash incentive compensation
for the named executive officers which included, among other factors,
our net income, loan growth and asset quality. Each of the performance measurements was applied and determined at the discretion
of the compensation committee. The potential award level for Mr. Broughton is purely discretionary, but the potential cash award
level for each of our other named executive officers is generally limited to 30% of their respective base salaries for meeting
threshold goals and 50% of their respective base salaries for meeting performance targets. The compensation committee also has
discretionary authority to establish âstretchâ performance goals for individual officers, potentially allowing for
cash incentive compensation in excess of 50% of an officerâs base salary. In 2020, the committee established such âstretchâ
goals for Messrs. Foshee, Pouncey and Rushing, meaning that each such officer had the opportunity to earn cash incentive compensation
of 60% or more of their respective base salaries. Mr. Abbott has âstretchâ performance goals that would potentially
allow for cash incentive compensation of 30% of his base salary. We do not have any contractual obligations to provide the opportunity
to earn specified levels of cash incentive compensation or to limit cash incentive compensation to a specified percentage, and
thus such determination is entirely within the discretion of the compensation committee. The compensation committee makes a determination
of awards based on the information available to it at the time the award is made. As discussed in more detail in âCorporate
GovernanceâOther Governance PracticesâIncentive Compensation Clawback Policy,â our board adopted a Clawback
Policy to recover awards or payments if the relevant company performance measures upon which they are based are restated in a manner
that would reduce the size of an award or payment.
Although the achievement of any of the
specific and objective numerical targets set by the compensation committee does not alone ensure an incentive compensation award,
the compensation committee believed that, based upon our overall performance and the specific individual performance levels of
our named executive officers, it was appropriate to provide significant cash incentive bonuses to all of our named executive officers
for 2020. Given our performance for the 2020 fiscal year and, in particular, our executivesâ exceptional performance in managing
our business through the pandemic, our compensation committee made the determination to exceed the stretch goal percentage for
each of Messrs. Pouncey, Foshee, Rushing and Abbott. Mr. Broughtonâs incentive award was purely discretionary by our compensation
committee. As a result of the review of the competitiveness of our compensation practices by McLagan, the compensation committee
adopted a structured annual incentive plan with defined goals and award opportunities for each of our executive officers, including
our chief executive officer, for the 2021 performance period.
The table below details, for each named
executive officer, the range of cash incentive compensation each was eligible to earn (expressed as a percentage of base salary),
cash incentive compensation paid as a percentage of base salary and cash incentive compensation paid for 2020 performance.
|Â||2020 Incentive as
a Percentage of
Base Salary (%)
|Thomas A. Broughton III||Â||None||Â||Â||178.67%||Â||Â||Â||$938,000||Â|
|William M. Foshee||Â||30-60%||Â||Â||68.33%||Â||Â||Â||205,000||Â|
|Clarence C. Pouncey III||Â||30-60%||Â||Â||60.12%||Â||Â||Â||202,000||Â|
|Rodney E. Rushing||Â||30-60%||Â||Â||67.89%||Â||Â||Â||222,000||Â|
|Henry F. Abbott||Â||20-30%||Â||Â||30.77%||Â||Â||Â||60,000||Â|
In general, we have granted stock options
to our executive officers only in connection with their initial hiring, but with vesting schedules designed to enhance their retention
and align their interests with those of our stockholders. These stock options generally vest within seven years from their date
of grant, with many grants not beginning to vest until three years following their date of grant. However, in recognition of the
contributions made by our Chief Executive Officer, Mr. Broughton has received both stock options and restricted stock awards from
time to time, and is eligible to receive awards in connection with his service on our board. Mr. Broughton received a board-related
grant of 655 shares of restricted stock in 2020 which vests on the one year anniversary of grant. However, beginning in 2021, Mr.
Broughton will no longer receive additional compensation for his board service. Mr. Abbott received an incentive grant of 1,527
shares of restricted stock in 2020 which vests on the third anniversary of the date of grant. See âExecutive Compensation
â Outstanding Equity Awards at Fiscal Year-Endâ for a detailed description of the vesting schedules of each of
the options and restricted stock awards granted to the named executive officers that were outstanding at December 31, 2020.
Our Stock Incentive Plans allow for the
accelerated vesting of equity awards in the event of a change in control. In general, under these Plans a âchange in controlâ
means a reorganization, merger or consolidation of the company or the bank with or into another entity where our stockholders before
the transaction own less than 50% of our combined voting power after the transaction, a sale of all or substantially all of our
assets or a purchase of more than 50% of the combined voting power of our outstanding capital stock in a single transaction or
a series of related transactions by one âpersonâ (as that term is used in Section 13(d) of the Exchange Act) or more
than one person acting in concert.
Following the review of our compensation
structure conducted by McLagan, the committeeâs independent compensation consultant, our compensation committee made some
initial changes to our compensation structure for fiscal 2021. The changes are designed to (1) ensure that the mix of pay elements
reflects current market practice; (2) move executive pay levels closer to the market median, as compared to pay levels at peer
companies; and (3) emphasize performance-based and at-risk pay elements, thus increasing the degree of alignment between executive
pay and stockholder interests. Additionally, with the retirement of Mr. Pouncey, the compensation committee and the board named
Mr. Rushing as the new Chief Operating Officer. As a result of these changes, Mr. Broughton will no longer receive separate compensation
(including equity grants) for his service as a director. Changes to our executive compensation structure include three distinct
Base Salary. Each of our named executive officers received an increase in their base salaries, effective as of their
work anniversary date. The base salaries of our named executive officers were below peer group median and the increases below are
the initial steps to align the salaries of our named executives with competitive market levels.
|Named Executive Officer||Â||
|Thomas A. Broughton III, Principal Executive Officer (âPEOâ)||Â||$525,000||Â||Â||$675,000||Â|
|William M. Foshee, Principal Financial Officer (âPFOâ)||Â||300,000||Â||Â||340,000||Â|
|Rodney E. Rushing||Â||327,000||Â||Â||375,000||Â|
|Henry F. Abbott||Â||195,000||Â||Â||225,000||Â|
Incentive Compensation. Our board and compensation committee adopted an annual incentive plan which will be administered
by the committee. The annual incentive plan provides a framework for annual or short-term cash incentive award opportunities for
our executive officers and key employees. Prior to or shortly after the beginning of each performance period, our compensation
committee will establish the specific performance goals and designate each participantâs target award under the plan.
For 2021, each of our named executive officers
has been named as a participant in the annual incentive plan, with target awards approved by the committee as follows:
|Named Executive Officer||Â||Target Award (as a
% of base salary)
|Thomas A. Broughton III, Principal Executive Officer (âPEOâ)||Â||Â||105||%||Â||Â||$708,750||Â|
|William M. Foshee, Principal Financial Officer (âPFOâ)||Â||Â||50||%||Â||Â||187,500||Â|
|Rodney E. Rushing||Â||Â||50||%||Â||Â||170,000||Â|
|Henry F. Abbott||Â||Â||50||%||Â||Â||112,500||Â|
Payouts under the annual incentive plan
will range between 0-150% of the executiveâs target award, depending on our achievement of the selected performance criteria.
If the threshold targets are achieved, 50% of the target award would be earned while 150% of the target award would be earned if
the maximum performance levels are met or exceeded. Results that fall between two performance levels (threshold and target or target
and maximum) will be pro-rated, while no payout will be earned if results fall below the established thresholds.
Incentive Compensation. As part of the 2021 changes to our compensation structure, our committee intends to make awards
of long-term incentives to our named executive officers annually, with those awards consisting of a mix of time- and performance-based
components. For fiscal 2021, our committee granted the following time-based and performance-based awards:
|Named Executive Officer||Â||
Restricted Stock (#)
Share Units (#)
|Thomas A. Broughton III, Principal Executive Officer (âPEOâ)||Â||Â||8,267||Â||Â||Â||8,267||Â||Â||Â||$709,000||Â|
|William M. Foshee, Principal Financial Officer (âPFOâ)||Â||Â||1,983||Â||Â||Â||1,983||Â||Â||Â||188,000||Â|
|Rodney E. Rushing||Â||Â||2,187||Â||Â||Â||2,187||Â||Â||Â||170,000||Â|
The time-based restricted stock will vest
one-third per year on the first three anniversaries of the grant date, provided that the executive remains employed through the
applicable vesting date. The performance shares represent the opportunity to earn shares of our common stock after a three-year
period, subject to the executiveâs continued employment through the end of the performance period. The actual number of shares
earned under the performance share units will range between 0-150%, depending on the total stockholder return (TSR) of our company
over the three-year performance period ranked relative to the TSR of certain peer companies over the same period. Given his 2020
grant, Mr. Abbott did not receive a grant for 2021, but will be eligible to receive a long-term incentive award in future periods.
We do not have an employment or other agreement
with Messrs. Broughton, Rushing or Abbott that would require us to pay them severance payments upon termination of employment.
We have entered into change in control agreements with Mr. Foshee and Mr. Pouncey. Mr. Pounceyâs agreement terminated upon
his retirement. See âExecutive Compensation â Potential Payments Upon Termination or Change in Controlâ
for more information.
Clawback Policy: In the event the company is required to restate financial results, the compensation committee may adjust
future compensation, cancel outstanding stock or performance-based awards, or seek recoupment of previous awards from company officers.
Executive Investment in Company Stock: Long-term stock ownership is deeply engrained in our culture, and it reflects
our boardâs strong commitment to the companyâs success. For more information, see âCorporate GovernanceâOther
Governance PracticesâStock Ownership of Board and Executives.â
on Hedging or Pledging Company Stock: Executive officers and directors of the company are not permitted to use options,
contracts or other arrangements to hedge their holdings of company stock. They also are prohibited from pledging company stock
as security for loans without approval from our Insider Trading Compliance Officer.
The compensation committee of the board
of directors of ServisFirst Bancshares, Inc. has reviewed and discussed the Compensation Discussion and Analysis for the company
for the year ended December 31, 2020 with management. In reliance on the reviews and discussions with management, the compensation
committee recommended to the board of directors, and the board of directors has approved, that the Compensation Discussion and
Analysis be included in the required company filings with the SEC, including the Proxy Statement for the 2021 Annual Meeting of
The Compensation Committee Report shall
not be deemed incorporated by reference in any document previously or subsequently filed with the SEC that incorporates by reference
all or any portion of this Proxy Statement.
Submitted by the Compensation Committee:
Hatton C.V. Smith, Chairman
J. Richard Cashio
James J. Filler
Christopher J. Mettler
The following table sets forth the aggregate
compensation paid by us or the bank to our named executive officers:
|Name and Principal
|Â||Change in Pension
Value and Non-
|Thomas A. Broughton III||Â||Â||2020||Â||Â||Â||525,000||Â||Â||Â||938,000||Â||Â||Â||20,022Â (1)||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||77,604||Â (2)||Â||Â||1,560,626||Â|
|President and Chief||Â||Â||2019||Â||Â||Â||525,000||Â||Â||Â||575,000||Â||Â||Â||20,022Â Â Â Â Â||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||77,541||Â||Â||Â||1,197,563||Â|
|Clarence C. Pouncey III||Â||Â||2020||Â||Â||Â||336,000||Â||Â||Â||202,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||27,800||Â (3)||Â||Â||565,800||Â|
|EVP and Chief||Â||Â||2019||Â||Â||Â||336,000||Â||Â||Â||140,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||27,968||Â||Â||Â||503,968||Â|
|William M. Foshee||Â||Â||2020||Â||Â||Â||300,000||Â||Â||Â||205,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||31,702||Â (4)||Â||Â||536,702||Â|
|EVP and Chief||Â||Â||2019||Â||Â||Â||300,000||Â||Â||Â||125,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||30,842||Â||Â||Â||455,842||Â|
|Rodney E. Rushing||Â||Â||2020||Â||Â||Â||327,000||Â||Â||Â||222,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||32,827||Â (5)||Â||Â||581,827||Â|
|EVP and Executive for||Â||Â||2019||Â||Â||Â||327,000||Â||Â||Â||132,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||32,690||Â||Â||Â||491,690||Â|
|Henry F. Abbott||Â||Â||2020||Â||Â||Â||195,000||Â||Â||Â||60,000||Â||Â||Â||50,009Â (6)||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||29,124||Â (7)||Â||Â||334,133||Â|
|SVP and Chief Credit||Â||Â||2019||Â||Â||Â||195,000||Â||Â||Â||40,000||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||27,256||Â||Â||Â||262,256||Â|
|Officer||Â||Â||2018||Â||Â||Â||175,000||Â||Â||Â||37,406||Â||Â||Â||24,726Â Â Â Â Â||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||24,305||Â||Â||Â||261,437||Â|
|Â||(1)||Represents the grant date fair value of the grants
of restricted stock under our 2009 Amended and Restated Stock Incentive Plan in accordance with FASB ASC Topic 718 of awards
made during 2020.Â Â A grant of 655 shares of restricted stock was made to Mr. Broughton on April 23, 2020 and was
based on a grant date fair value of $30.58 per share, the closing price of our common stock on the date of grant, with a total
fair value of $20,022.Â Â Please refer to Note 13 (Employee and Director Benefits) in our 2020 Annual Report on Form
10-K for a discussion of the assumptions used to calculate this amount.
|Â||(2)||All Other Compensation for 2020 includes car allowance ($9,000),
directorâs fees ($37,200), country club allowance ($8,180), healthcare premiums ($9,280), matching contributions to
401(k) plan ($11,400), group life and long-term disability insurance premiums ($1,362) and imputed income in connection with
an endorsement split-dollar agreement Â ($1,182). Mr. Broughtonâs spouse travels with him on business trips using
the company aircraft from time to time. The company has determined that Mrs. Broughtonâs travel results in no additional
incremental cost to the company.
|Â||(3)||All Other Compensation for 2020 includes car allowance ($9,000),
country club allowance ($8,158), group life and long-term disability insurance premiums ($1,362) and healthcare premiums ($9,280).
|Â||(4)||All Other Compensation for 2020 includes car allowance ($9,000),
matching contributions to 401(k) plan ($11,400), healthcare premiums ($9,280), group life and long-term disability insurance
premiums ($1,362) and imputed income in connection with an endorsement split-dollar agreement ($660).
|Â||(5)||All Other Compensation for 2020 includes car allowance ($9,000),
healthcare premiums ($9,280), matching contributions to 401(k) plan ($11,400), group life and long-term disability insurance
premiums ($1,362), club dues ($1,680) and imputed income from an endorsement split-dollar agreement Â ($497).
|Â||(6)||Represents the grant date fair value of the grants of restricted
stock under our 2009 Amended and Restated Stock Incentive Plan in accordance with FASB ASC Topic 718 of awards made during
2020.Â Â A grant of 1,527 shares of restricted stock was made to Mr. Abbott on May 18, 2020 and was based on a grant
date fair value of $32.75 per share, the closing price of our common stock on the date of grant, with a total fair value of
$50,009.Â Â Please refer to Note 13 (Employee and Director Benefits) in our 2020 Annual Report on Form 10-K for a
discussion of the assumptions used to calculate this amount.
|Â||(7)||All Other Compensation for 2020 includes car allowance ($5,400),
healthcare premiums ($10,431), matching contributions to 401(k) plan ($9,716), group life and long-term disability insurance
premiums ($1,057) and club dues ($2,520).
The table below sets forth information
regarding grants of plan-based awards made to our named executive officers during 2020.
All Other Stock Awards:
All Other Option
Grant Date Fair
|Thomas A. Broughton III (PEO)||Â||4/23/2020||Â||655||Â||–||Â||Â||–||Â||$20,022||Â|
|William M. Foshee (PFO)||Â||–||Â||–||Â||–||Â||Â||–||Â||–||Â|
|Clarence C. Pouncey III||Â||–||Â||–||Â||–||Â||Â||–||Â||–||Â|
|Rodney E. Rushing||Â||–||Â||–||Â||–||Â||Â||–||Â||–||Â|
|Henry F. Abbott||Â||5/18/2020||Â||1,527||Â||–||Â||Â||–||Â||50,009||Â|
The below table details all outstanding
equity awards as of December 31, 2020. All equity awards identified
below were granted under our 2009 Amended and Restated Stock Incentive Plan.
|Â||Â||Option Awards||Â||Stock Awards|
|Thomas A. Broughton III (CEO) (1)||Â||
|William M. Foshee (CFO)||Â||–||Â||–||Â||–||Â||Â||–||Â||–||Â||–||Â||–||Â||–||Â||–|
|Clarence C. Pouncey III||Â||–||Â||–||Â||–||Â||Â||–||Â||–||Â||–||Â||–||Â||–||Â||–|
|Rodney E. Rushing (2)||Â||–||Â||15,000||Â||–||Â||$||6.915||Â||02/10/2024||Â||–||Â||–||Â||–||Â||–|
|Henry F. Abbott (3)||Â||–||Â||2,000||Â||–||Â||$||19.155||Â||01/25/2026||Â||–||Â||–||Â||–||Â||–|
|Â||(1)||The award of 655 shares of restricted stock made on April 23,
2020 vests 100% on April 23, 2021.Â Â The market value of this restricted stock award is based on $40.29 per share,
the closing price of our common stock on December 31, 2020..
|Â||(2)||The option to purchase 15,000 shares at $6.915 per share granted
to Mr. Rushing on February 10, 2014 vested 100% on February 10, 2021. Share numbers and exercise price reflect 3-for-1 stock
split that occurred on July 16, 2014 and 2-for-1 stock split that occurred on December 20, 2016.
|Â||(3)||The option to purchase 2,000 shares at $19.155 per share granted
to Mr. Abbott on January 26, 2016 vested 100% on January 26, 2021. The award of 600 shares of restricted stock made to Mr.
Abbott on February 20, 2018 vests 100% on February 20, 2023. The award of 1,527 shares made to Mr. Abbott on May 18, 2020
vests 100% on May 18, 2023. Share numbers and exercise price reflect 3-for-1 stock split that occurred on July 16, 2014 and
2-for-1 stock split that occurred on December 20, 2016. The market value of this restricted stock award is based on $40.29
per share, the closing price of our common stock on December 31, 2020.
The following table sets forth information
regarding option exercises by and restricted stock vesting for our named executive officers during 2020:
|Â||Â||Option Awards||Â||Stock Awards|
on Exercise (#)
on Exercise ($) Â
|Â||Number of Shares
on Vesting (#)
on Vesting ($)
|Thomas A. Broughton III(1)||Â||Â||20,000||Â||Â||Â||$403,600||Â||Â||Â||579||Â||Â||Â||$15,488||Â|
|William M. Foshee||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â|
|Clarence C. Pouncey III||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â|
|Rodney E. Rushing||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â|
|Henry F. Abbott||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â||Â||Â||–||Â|
|(1)||Â||Mr. Broughton exercised options for 10,000 shares at a price
of $15.085 per share, for 5,000 shares at a price of $15.085 per share and for 5,000 shares at a price of $15,085 per share.
Based upon a value of $36.75 per share, the closing price of the companyâs common stock on the date of exercise of 10,000
shares, the value realized by Mr. Broughton on the exercise of such options was $216,650. Based upon a value of $34.55, the
closing price of the companyâs common stock on the date of exercise of 5,000 shares, the value realized by Mr. Broughton
on the exercise of such options was $97,325. Based upon a value of $33.01 per share, the closing price of the companyâs
common stock on the date of exercise of 5,000 shares, the value realized by Mr. Broughton on the exercise of such options
was $89,625. On April 16, 2020, 579 shares of restricted stock vested. Based on a value of $26.75 per share, the closing price
of the companyâs common stock on the vesting date, the value realized by Mr. Broughton was $15,488.
The company does not maintain any benefit
plan that provides for payments or other benefits at, following or in connection with retirement, other than the companyâs
The company does not maintain any defined
contribution or other plans that provide for the deferral of compensation on a basis that is not tax-qualified.
Rules adopted by the SEC following passage
of the Dodd-Frank Wall Street Reform and Consumer Protection Act require us to provide a reasonable estimate of the ratio of the
annual total compensation of our Chief Executive Officer to the median annual total compensation of our employees. In order to
retain comparability, we re-identified our median employee using the same methodologies and assumptions used in identifying the
median employee in 2017 and 2019, by comparing all salary, matching contributions to our 401(k) plan, annual incentive compensation,
long-term incentive awards vested in 2020 and our payment of insurance premiums and provision of other perquisites, as reported
to the Internal Revenue Service on Form W-2 for 2020 for all of our employees (excluding our Chief Executive Officer) as of December
31, 2020. As further detailed in the paragraphs and Summary Compensation Table below, Mr. Broughtonâs total annual compensation
in fiscal 2020 was $1,560,626. The company has determined that the median annual compensation for all company employees, excluding
Mr. Broughton, as of the same date was approximately $77,021. Accordingly, we believe that the ratio of the annual total compensation
of Mr. Broughton, our Chief Executive Officer, to the median of the annual total compensation of all our employees in 2020 was
20.26 to 1.
There is inherent risk in the business
of banking. However, we do not believe that any of our compensation policies and practices provide incentives to our employees
to take risks that are reasonably likely to have a material adverse effect on us. We believe that our compensation policies and
practices are consistent with those of similar bank holding companies and their banking subsidiaries and are intended to encourage
and reward performance that is consistent with sound practice in the industry.
We have two change in control severance
agreements with named executive officers, William M. Foshee and Clarence C. Pouncey III. Each of these change in control agreements
was originally entered into with the bank in 2005, but each has been amended and restated to apply to a change in control of the
company as well as the bank. Mr. Pounceyâs change in control severance agreement terminated upon his retirement effective
December 31, 2020.
Messrs. Foshee and Pounceyâs agreements
generally provide for a lump sum payment (equal to two times annual base salary for Mr. Foshee and one times annual base salary
for Mr. Pouncey) in the event of the termination of their respective employment by the bank or the company, other than for âcauseâ
or upon death, disability or attainment of normal retirement date, or by the employee in certain specific instances, in each case
if such termination occurs within 24 months after a change in control. These agreements are not employment agreements and do not
guarantee employment for any term or period; they only apply if a change in control occurs. The size of each benefit was set through
armâs-length negotiations with each individual upon his employment and consistent with general industry standards. Each of
these agreements was approved by the board of directors of the bank and the company.
The term âchange in controlâ
is defined in these change in control agreements as any of the following events:
|Â||â¢||a merger, consolidation or other corporate reorganization (other than a holding company reorganization) involving either the company or the bank in which we do not survive, or if we survive, our stockholders before such transaction do not own more than 50% of, respectively, (i) the common stock of the surviving entity, and (ii) the combined voting power of any other outstanding securities entitled to vote on the election of directors of the surviving entity;|
|Â||â¢||the acquisition, other than from us, by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership of 50% or more of either the then outstanding shares of our common stock or the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors; provided, however, that neither of the following shall constitute a change in control: (i) any acquisition by us, by any of our subsidiaries, or by any employee benefit plan (or related trust) of us or our subsidiaries, or (ii) any acquisition by any corporation, entity, or group, if, following such acquisition, more than 50% of the then-outstanding voting rights of such corporation, entity or group are owned, directly or indirectly, by all or substantially all of the persons who were the owners of our common stock immediately prior to such acquisition;|
|Â||â¢||individuals who, as of the effective date of the change in control agreement, constituted our board of directors cease for any reason to constitute at least a majority of our board of directors, except as otherwise provided in the agreement; or|
|Â||â¢||approval by our stockholders of: (i) our or the bankâs complete liquidation or dissolution, or (ii) the sale or other disposition of all or substantially all our assets, other than to an entity with respect to which immediately following such sale or other disposition, more than 50% of, respectively, the then-outstanding shares of common stock of such corporation and the combined voting power of the then-outstanding voting securities of such corporation entitled to vote generally in the election of directors, is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of our outstanding common stock and our outstanding voting securities immediately prior to such sale or other disposition, in substantially the same proportions as their ownership, immediately prior to such sale or disposition, of our outstanding common stock and our outstanding securities, as the case may be.|
Notwithstanding the foregoing, if Section
409A of the Internal Revenue Code would apply to any payment or right arising under the change in control agreements as a result
of a change in control as described above, then with respect to such right or payment the only events that would constitute a change
in control will be deemed to be those events that would constitute a change in the ownership or effective control of the company,
or in the ownership of a substantial portion of the assets of the company in accordance with Section 409A.
The change in control payments are due
in the event that we terminate Mr. Foshee or Mr. Pouncey without âcauseâ (as defined in the change in control agreement)
any time within two years after a change in control. In addition, the change in control payment is triggered in the event that
Mr. Foshee or Mr. Pouncey terminates his employment any time within two years after a change in control for any of the following
reasons: (i) he is assigned to duties or responsibilities that are materially inconsistent with his position, duties, responsibilities
or status immediately preceding such change in control, or a change in his reporting responsibilities or titles in effect at such
time resulting in a reduction of his responsibilities or position; (ii) the reduction of his base salary or, to the extent such
has been established by the board of directors or its compensation committee, target bonus (including any deferred portions thereof)
or substantial reduction in his level of benefits or supplemental compensation from those in effect immediately preceding such
change in control; or (iii) his transfer to a location requiring a change in residence or a material increase in the amount of
travel normally required of him in connection with his employment.
In addition to the cash payments set forth
in the change in control agreements, any stock options and restricted stock awards granted to the affected employee will immediately
vest upon a change in control.
On November 9, 2020, the bank entered into
endorsement split dollar agreements with each of Messrs. Broughton, Foshee and Rushing. The agreements provide the executives with
death benefits funded through bank-owned life insurance policies. The bank solely owns all of the rights, title, and interest in
the life insurance policy and will control all rights of ownership with respect to the policy including, without limitation, the
right to withdraw the cash value of such policy. The agreements provide Mr. Broughton with a $3,000,000 death benefit endorsement,
and each of Messrs. Foshee and Rushing with a $1,500,000 death benefit endorsement. The amounts of the bank-owned life insurance
policies are sufficient to fund both the death benefit endorsement to the executivesâ beneficiaries and a complete return
of all premiums paid on the policies to the bank. The executivesâ beneficiaries designated in accordance with the terms of
the agreements are entitled to the endorsed death benefit amount from the proceeds of the insurance policies, provided each such
executive remains employed by the bank through the earlier of (1) such executiveâs date of death or (2) the second anniversary
of the effective date of the agreements; provided, however, if such executive terminates employment, other than due to death, during
the period between the first and second anniversaries of the effective date, such executiveâs beneficiaries shall be entitled
to fifty percent (50%) of the endorsed death benefit amount.
The agreements will terminate immediately
upon the first to occur of the following: (1) payment of the endorsed death benefit in accordance with the terms of the agreements;
or (2) termination of an executiveâs employment for any reason, other than death, prior to the first anniversary of the effective
Under the change in control agreements,
Mr. Foshee is entitled to a change in control payment equal to two times his annual base salary at the time of the change in control
and Mr. Pouncey is entitled to a change in control payment equal to one times his annual base salary at the time of the change
in control. Assuming that we had a change in control as of December 31, 2020, as defined in both the change in control agreements
above, and assuming further that each of the requisite triggering events had occurred as of such date, we estimate that the following
officers would receive the following benefits in a lump sum payment within 30 days of their respective termination:
Furthermore, assuming we had a change in
control as of December 31, 2020, as defined in either of our stock incentive plans, and further assuming that the value of the
stock as of that date was $40.29 per share (the closing price on such date), then each of the named executive officers would become
immediately vested in their unvested stock options as of such date. The following table contains a schedule of unvested stock options
that would vest upon a change in control and the value of such unvested options based upon the difference between $40.29 per share
and their respective exercise prices per share:
|Name||Â||Shares Represented by
|Abbott||Â||Â||2,000||Â||Â||Â||$Â Â 42,270||Â|
Additionally, in the event Mr. Broughtonâs
or Mr. Abbottâs employment was terminated as of December 31, 2020 due to a change in control, all unvested shares of restricted
stock held by Mr. Broughton or Mr. Abbott would become immediately vested. Mr. Broughton held 655 shares of restricted stock as
of December 31, 2020, with a value of $26,390 as of such date. Mr. Abbott held 2,127 shares of restricted stock as of December
31, 2020, with a value of $85,697 as of such date.
Under the endorsement split dollar agreements,
assuming each of Messrs. Broughton, Foshee and Rushing died on or about December 31, 2020, none of the beneficiaries of Messrs.
Broughton, Foshee or Rushing would be entitled to any endorsement death benefit under the terms of said agreements.
Subject to the ratification by our stockholders,
our board of directors intends to engage Dixon Hughes Goodman LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2021.
The submission of this matter for ratification
by stockholders is not legally required; however, our board of directors believes that such submission is consistent with best
practices in corporate governance and affords stockholders an opportunity to provide direct feedback to the directors on an important
issue of corporate governance. A majority of the total votes cast at the Annual Meeting, either in person or by proxy, will be
required for the ratification of the appointment of the independent registered public accounting firm. If our stockholders do not
ratify the selection of Dixon Hughes Goodman LLP, the appointment of the independent registered public accounting firm will be
reconsidered by the Audit Committee and the board of directors.
The Board of Directors
Unanimously Recommends a Vote âFORâ the Ratification of Dixon Hughes Goodman LLP as our Independent Registered Public
Accounting Firm for the Year Ending December 31, 2021.
Our consolidated balance sheet as of December
31, 2020, and the related consolidated statements of income, comprehensive income, stockholdersâ equity and cash flows for
the year ended December 31, 2020 have been audited by Dixon Hughes Goodman LLP, our independent registered public accounting firm,
as stated in their report appearing in our 2020 Annual Report on Form 10-K. Dixon Hughes Goodman LLP was initially engaged as our
independent registered public accounting firm on June 18, 2014. Representatives of Dixon Hughes Goodman LLP are expected to be
in attendance at our Annual Meeting, will have the opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.
The audit committeeâs charter provides
that the audit committee must pre-approve services to be performed by our independent registered public accounting firm. In accordance
with that requirement, the audit committee pre-approved the engagement of Dixon Hughes Goodman LLP pursuant to which it provided
the audit and audit-related services described below for the fiscal year ended December 31, 2020. One hundred percent of the fees
set forth below were pre-approved by the audit committee.
Dixon Hughes Goodman LLP
|(1) Audit fees||Â||Â||$||548,040||Â (1)||Â||$||545,700||Â (1)|
|(2) Audit-related fees||Â||Â||$||64,700||Â (2)||Â||$||62,000||Â (2)|
|(3) Tax fees||Â||Â||$||36,000||Â (3)||Â||$||35,000||Â (3)|
|(4) All other fees||Â||Â||$||11,825||Â (4)Â||Â||$||4,400||Â (4)|
|Â||(1)||Consists of fees incurred in connection with the audit of the
companyâs financial statements, the review of quarterly financial statements, and SEC filings.
|Â||(2)||Consists of fees incurred in connection with the audit of the
companyâs FHA lending program, 401(k) plan, real estate investment trusts and certain Tennessee public fund pledging.
|Â||(3)||Consists of fees incurred in connection with tax return filings
for the year ended December 31, 2020 and 2019, respectively.
|Â||(4)||In 2020, consists of fees incurred in connection with research
and consultation relating to adoption of new accounting pronouncements, CARES Act implementation, and accounting for PPP loans
and executive benefits. In 2019, consists of fees incurred in connection with accounting for payment resulting from the termination
of a loan guarantee program operated by the State of Alabama and certain community investment tax credits offered by the State
The audit committee of the board of directors
of ServisFirst Bancshares, Inc. has reviewed and discussed the audited consolidated financial statements of the company and its
subsidiary, ServisFirst Bank, with management of the company and Dixon Hughes Goodman LLP, independent registered public accountants
for the company for the year ended December 31, 2020. Management represented to the audit committee that the companyâs audited
consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles.
The audit committee has discussed with
Dixon Hughes Goodman LLP the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The audit
committee has received the written disclosures and confirming letter from Dixon Hughes Goodman LLP required by Independence Standards
Board Standard No. 1, âIndependence Discussions with Audit Committees,â and, in compliance with PCAOB Rule 3520, has
discussed with Dixon Hughes Goodman LLP their independence from the company.
Based on these reviews and discussions
with management of the company and Dixon Hughes Goodman LLP referred to above, the audit committee has recommended to our board
of directors that the audited consolidated financial statements of the company and its subsidiaries for the fiscal year ended December
31, 2020 be included in the companyâs Annual Report on Form 10-K for the year ended December 31, 2020.
This Audit Committee Report shall not be
deemed incorporated by reference in any document previously or subsequently filed with the SEC that incorporates by reference all
or any portion of this Proxy Statement.
Submitted by the Audit Committee:
Irma L. Tuder, Chairwoman
J. Richard Cashio
Michael D. Fuller
As of the date of this Proxy Statement,
the board of directors does not know of any other business to be presented for consideration or action at the Annual Meeting, other
than that stated in the notice of the Annual Meeting. If other matters properly come before the Annual Meeting, the persons named
in the accompanying form of proxy will vote thereon in their best judgment.
What is a proxy?
It is your legal designation of another
person to vote the stock you own. The person so designated is called a proxy. If you designate someone as your proxy in a written
document, that document is called a proxy or a proxy card. We have designated Thomas A. Broughton III and William M. Foshee (the
âmanagement proxiesâ) as proxies for the 2021 Annual Meeting of Stockholders.
What are the purposes of the Annual Meeting?
At the Annual Meeting, stockholders will
vote on: (1) the election of seven directors; (2) an advisory vote on our executive compensation; (3) the ratification of Dixon
Hughes Goodman LLP as our independent public accounting firm for the year ending December 31, 2021; and (4) such other business
as may properly come before the Annual Meeting. Our board of directors is not aware of any matters that will be brought before
the Annual Meeting, other than procedural matters, that are not listed above. However, if any other matters properly come before
the Annual Meeting, the individuals named on the proxy card, or their substitutes, will be authorized to vote on those matters
in their own judgment.
How do I receive a printed copy of proxy materials?
To request a printed copy of the proxy
materials, please call 1-866-641-4276, visit www.investorvote.com/SFBS or email [email protected] with âProxy
Materials ServisFirst Bancshares, Inc.â in the subject line. To make your request, you will need the 15-digit control number
printed on your Notice of Internet Availability of Proxy Materials or proxy card.
How may I attend the Annual Meeting virtually?
To access the Annual Meeting virtually,
please click the virtual meeting link: www.meetingcenter.io/288623911. There are two options when logging in to the virtual
meeting: Join as a âGuestâ or Join as a âStockholderâ. When joining a âStockholderâ a control
number and password will be required. The password for the meeting is SFBS2021.
Anyone may attend the virtual shareholder
meeting as a guest, but will not have the option to vote shares during the meeting or ask questions.
You may vote during the Annual Meeting
when attending virtually by providing their control number and following instructions available on the virtual meeting website
during the meeting. For registered stockholders, the control number can be found on the proxy card or notice. If shares of common
stock are held through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually
as a stockholder. For instructions on how to register to attend and vote virtually when you hold your shares in a brokerage account
or in your brokerâs or another nomineeâs name, see âHow do I vote?â below.
Who is entitled to vote?
Stockholders of record at the close of
business on February 22, 2021, the record date for the Annual Meeting, are entitled to receive
notice of the Annual Meeting and to vote shares of common stock held as of the record date at the Annual Meeting. As of the record
date, 54,099,004 shares of our common stock were outstanding and entitled to vote. Each outstanding share of common stock entitles
its holder to cast one vote on each matter to be voted upon. There are no cumulative voting rights.
How do I vote?
If you hold your shares in a brokerage
account in your brokerâs or another nomineeâs name (held in âstreet nameâ), you are a beneficial owner
and you should follow the voting directions provided by your broker or nominee:
|Â||â¢||You may complete and mail a voting instruction form to your broker or nominee.|
|Â||â¢||If your broker allows, you may submit voting instructions by telephone or the Internet.|
|Â||â¢||You may use a mobile device, scanning the QR barcode on your voter instruction form or Notice of Internet Availability of Proxy Materials and following the prompts that appear on your mobile device.|
|Â||â¢||You may cast your vote in person at the 2021 Annual Meeting, but you must request a legal proxy from your broker or nominee and bring it to the Annual Meeting.Â|
You may cast your vote at the virtual meeting,
By mail: Requests for registration
ServisFirst Bancshares, Inc. Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001
Forward the broker provided email, or attach an image of the
If you hold your shares in your own name
as a holder of record with our transfer agent, Computershare, you are a âstockholder of recordâ and may vote using
any of the following methods:
|Â||â¢||By going to the website www.investorvote.com/SFBS and following the instructions for Internet voting on the proxy card or Notice of Internet Availability of Proxy Materials that you received in the mail. You will need the 15-digit control number printed therein. You may also access instructions for telephone voting on the website.|
|Â||â¢||By using your mobile device to scan the QR barcode on your proxy card or Notice of Internet Availability of Proxy Materials and following the prompts that appear on your mobile device.|
|Â||â¢||If you received a printed copy of the proxy materials, by completing and mailing your proxy card in the prepaid return envelope, or if you reside in the United States or Canada, by dialing 1-800-652-8683 and following the instructions for telephone voting provided by the recorded message at that number. You will need your 15-digit control number printed on your proxy card.|
|Â||â¢||By casting your vote in person or virtually at the 2021 Annual Meeting. You may vote during the Annual Meeting when attending virtually by providing your control number and following instructions available on the virtual meeting website during the meeting. For registered stockholders, the control number can be found on your proxy card or notice.|
If you invest in our common stock through
the company stock fund in the ServisFirst Bank 401(k) Profit Sharing Plan and Trust, you will receive instructions for submitting
your voting directions from the 401(k) planâs administrator, Lincoln Financial. The 401(k) planâs trustees will vote
shares held by the 401(k) plan in accordance with the tabulation. Any shares for which the trustees do not received timely voting
directions will be voted by the trustees in proportion to the shares for which directions were actually received. To allow the
trustees sufficient time to process voting directions, the voting deadline for 401(k) plan participants is 5:00 p.m., Central Time,
on April 16, 2021.
What if I change my mind after I vote my shares?
You can revoke or change your proxy at
any time before it is voted at the 2021 Annual Meeting.
If you hold your shares in a brokerage
account in your brokerâs or another nomineeâs name (âstreet nameâ), you may revoke or change your vote:
|Â||â¢||Via telephone or Internet, using the voting directions provided by your broker or nominee; or|
|Â||â¢||By casting your vote in person at the 2021 Annual Meeting, but you must present a legal proxy at the Annual Meeting.|
|Â||â¢||By casting your vote at the virtual meeting, but you must register in advance to attend the Annual Meeting virtually as a stockholder. You can find registration instructions above under âHow do I vote?â. Attendance at the virtual meeting will not revoke any proxy you have previously granted unless you specifically so request.|
If you are a registered stockholder, you
may revoke or change your vote by:
|Â||â¢||Voting by telephone or the Internet, using the voting directions provided on the proxy card or Notice of Internet Availability of Proxy Materials that you received in the mail;|
|Â||â¢||Notifying our Secretary, William M. Foshee, in writing;|
|Â||â¢||Sending another executed proxy card dated later than the first proxy card; or|
|Â||â¢||Voting in person or virtually at the 2021 Annual Meeting. Attendance at the Annual Meeting will not revoke any proxy you have previously granted unless you specifically so request.|
If you invest in our common stock through
the company stock fund in the ServisFirst Bank 401(k) Profit Sharing Plan and Trust, you may revoke or change your vote by following
the instructions provided by the 401(k) planâs administrator, Lincoln Financial. To allow the trustees sufficient time to
process voting directions, the deadline for 401(k) plan participants to revoke or change their voting directions is 5:00 p.m.,
Central Time, on April 16, 2021.
How many shares must be present to hold the 2021 Annual Meeting?
More than one-half of the Companyâs
outstanding common stock as of the record date must be represented at the 2021 Annual Meeting in person, virtually or by proxy
in order to hold the Annual Meeting. This is called a quorum. We will count your shares as present at the Annual Meeting if you:
|Â||â¢||Are present and vote in person or virtually at the Annual Meeting;|
|Â||â¢||Have properly submitted a proxy card or a voter instruction form, or voted by telephone or the Internet on a timely basis; or|
|Â||â¢||Hold your shares through a broker or otherwise in street name, and your broker uses its discretionary authority to vote your shares on Proposal Number 3.|
As of the record date, 54,099,004 shares
of our common stock, $0.001 par value per share, held by 510 stockholders of record, were issued and outstanding. Proxies received
but marked as abstentions will be included in the calculation of the number of shares considered to be present at the Annual Meeting.
How many votes are needed to approve each item?
Directors are elected by a plurality of
the votes cast. A âplurality voteâ means that the winning candidate only needs to get more votes than a competing candidate.
If a director runs unopposed, he or she only needs one vote to be elected. However, if any nominee for director receives a greater
number of âwithholdâ votes than votes âforâ such election, our director resignation policy requires that
such person must promptly tender his resignation to the Chairman of our board following certification of the Annual Meeting results.
Any other matter that may properly come
before the Annual Meeting must be approved by the affirmative vote of a majority of the shares entitled to vote that are present
or represented by proxy at the Annual Meeting.
What is the effect of an âabstainâ vote or a
âbroker non-voteâ on the proposals?
Under the General Corporation Law of the
State of Delaware, an abstention from voting on any proposal will have the same legal effect as an âagainstâ vote,
except election of directors, where an abstention has no effect under plurality voting.
A âbroker non-voteâ occurs
if your shares are not registered in your name (that is, you hold your shares in âstreet nameâ) and you do not provide
the record holder of your shares (usually a bank, broker or other nominee) with voting instructions on any matter as to which a
broker may not vote without instructions from you, but the broker nevertheless provides a proxy for your shares. Shares as to which
a âbroker non-voteâ occurs are considered present for purposes of determining whether a quorum exists, but are not
considered votes cast or shares entitled to vote with respect to a voting matter. The election of directors and the advisory vote
on executive compensation are considered ânon-routineâ matters on which a broker may not vote without your instructions.
However, the ratification of the appointment of Dixon Hughes Goodman LLP as our independent registered public accounting firm is
a âroutineâ matter, and brokers who do not receive instructions from you on how to vote on that matter generally may
vote on that matter in their discretion.
Why did I receive a âNotice Regarding the Availability
of Proxy Materialsâ but no proxy materials?
We distribute our proxy materials to stockholders
via the Internet under the âNotice and Accessâ approach permitted by the rules of the SEC. This approach conserves
natural resources and reduces our distribution costs, while providing a timely and convenient method of accessing the materials
and voting. On or about March 10, 2021, we mailed a âNotice Regarding the Availability of Proxy Materialsâ to stockholders,
containing instructions on how to access the proxy materials on the Internet.
What are the Boardâs recommendations?
Our board of directors unanimously recommends
that stockholders vote your shares: (1) âFORâ the election of the seven nominees for the board of directors, as more
fully described in Proposal 1; (2) âFORâ the proposal regarding an advisory vote on executive compensation, as more
fully described in Proposal 2; and (3) âFORâ the ratification of Dixon Hughes Goodman LLP as our independent registered
public accounting firm for 2021, as more fully described in Proposal 3.
If you timely submit voting instructions
by telephone or by Internet, or if your proxy card is properly executed and received in time for voting, and not revoked, your
shares will be voted in accordance with your instructions. In the absence of any instructions or directions to the contrary on
any proposal on a proxy card, the management proxies will vote all shares of common stock for which such proxy cards have been
received âforâ Proposals 1, 2 and 3.
Our board of directors does not know of
any matters other than the above proposals that may be brought before the Annual Meeting. If any other matters should come before
the Annual Meeting, the management proxies will have discretionary authority to vote all proxies not marked to the contrary with
respect to such matters in accordance with their best judgment.
In particular, the management proxies will
have discretionary authority to vote with respect to the following matters that may come before the Annual Meeting: (i) approval
of the minutes of the prior meeting if such approval does not amount to ratification of the action or actions taken at that meeting;
(ii) any proposal omitted from the Proxy Statement and form of proxy pursuant to Rules 14a-8 and 14a-9 under the Exchange Act;
and (iii) matters incident to the conduct of the Annual Meeting. In connection with such matters, the management proxies will vote
in accordance with their best judgment.
Who pays for this proxy solicitation?
We do. We are making this proxy solicitation
and will pay all costs in connection with the meeting, including the cost of preparing, assembling and, as applicable, mailing
the Notice of the Annual Meeting, Proxy Statement, proxy card and our Annual Report to Stockholders for the year ended December
31, 2020, as well as handling and tabulating the proxies returned. In addition, proxies may be solicited by directors, officers
and regular employees of the company, without additional compensation, in person or by other electronic means. We will reimburse
brokerage houses and other nominees for their expenses in forwarding proxy materials to beneficial owners of our common stock.
Who can help answer your questions?
If you have questions about the Annual
Meeting, you should contact our Secretary, William M. Foshee, 2500 Woodcrest Place, Birmingham, Alabama 35209, telephone (205)
On written request, we will provide, without
charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2020 (including a list briefly describing the
exhibits thereto), as filed with the SEC (including any amendments filed with the SEC), to any record holder or beneficial owner
of our common stock as of the close of business on February 22, 2021, the record date, or to any person who subsequently becomes
such a record holder or beneficial owner. Requests should be directed to the attention of our Secretary at the address set forth
Under Exchange Act Rule 14a-8, any stockholder
desiring to submit a proposal for inclusion in our proxy materials for our 2022 Annual Meeting of Stockholders must provide the
company with a written copy of that proposal by no later than November 10, 2021, which is 120 days before the first anniversary
of the date on which the companyâs proxy materials for the 2021 Annual Meeting were first made available to stockholders.
However, if the date of our Annual Meeting in 2022 changes by more than 30 days from the date of our 2021 Annual Meeting, then
the deadline would be a reasonable time before we begin distributing our proxy materials for our 2022 Annual Meeting. Matters pertaining
to such proposals, including the number and length thereof, eligibility of persons entitled to have such proposals included and
other aspects are governed by the Exchange Act and the rules of the SEC thereunder and other laws and regulations, to which interested
stockholders should refer.
If a stockholder desires to bring other
business before the 2022 Annual Meeting without including such proposal in the companyâs proxy statement, the stockholder
must notify the company in writing on or before January 24, 2022.
Our CG&N Committee will consider nominees
for election to our board of directors. See âCorporate GovernanceâBoard Committees and Their FunctionsâCorporate
Governance and Nominations Committeeâ for details to be included in any such nomination. Nominations should be submitted
in a timely manner in care of our Chief Financial Officer. Generally, we will consider nominations to be timely if submitted no
later than the date a stockholder must submit a proposal for inclusion in our proxy materials.
Our board of directors solicits the accompanying
proxy for use at our Annual Meeting of Stockholders to be held on April 19, 2021, at 9 a.m., Central Daylight Time, at 2500 Woodcrest
Place, Birmingham, Alabama 35209. This yearâs meeting will also be held virtually via live webcast on the Internet at www.meetingcenter.io/288623911.
The Notice of Annual Meeting of Stockholders and this Proxy Statement are being made available on or about March 10, 2021 to our
stockholders of record as of the close of business on February 22, 2021, the record date for the Annual Meeting.
Our corporate headquarters is located at
2500 Woodcrest Place, Birmingham, Alabama 35209 and our toll free telephone number is (866) 317-0810.
|Â||Â||By Order of the Board of Directors|
|Â||Â||SERVISFIRST BANCSHARES, INC.|
|Â||Â||William M. Foshee|
|Â||Â||Secretary and Chief Financial Officer|
March 10, 2021