DEF 14A 1 tm2112071-1_def14a.htm DEF 14A

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

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SEACOAST BANKING CORPORATION OF FLORIDA

 

(Name of Registrant as Specified in its Charter)

 

 

 

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

 

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Proxy Statement

2021

 

 

 

 

 
 

 

 

815 Colorado Avenue

Stuart, Florida 34994

 

NOTICE OF 2021 ANNUAL MEETING OF SHAREHOLDERS

 

Wednesday, May 26, 2021

10:00 a.m. Eastern Time

 

Seacoast Banking Corporation of Florida (“Seacoast”, or the “Company”), intends to hold its 2021 Annual Meeting of Shareholders (the “Annual Meeting”) at the Hutchinson Shores Resort, 3793 NE Ocean Blvd, Jensen Beach, FL 34957, on Wednesday, May 26, 2021 at 10:00 a.m. Eastern Time. However, we are sensitive to the public health and travel concerns our shareholders may have and recommendations that public health officials have and may continue to issue in light of the ongoing coronavirus (COVID-19) pandemic. As a result, we may impose additional procedures or limitations on meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We plan to announce any such updates on our proxy website www.proxyvote.com, and we encourage you to check this website prior to the meeting if you plan to attend.

 

 

ITEMS OF BUSINESS

 

The purpose of the Annual Meeting is to vote on the following proposals:

 

1.Election of Directors. To re-elect four Class I directors (“Proposal 1”);

 

2.Approval and Adoption of the Company’s 2021 Incentive Plan. To consider and act upon a proposal to approve and adopt the Seacoast 2021 Incentive Plan, reserving for issuance up to 2,250,000 shares of the Company’s common stock for such purpose (“Proposal 2”);

 

3.Amendment of Employee Stock Purchase Plan. To approve an amendment to Section 2 of Seacoast’s Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”) to increase the number of authorized shares of common stock reserved for issuance under the plan from 300,000 to 800,000 (“Proposal 3”);

 

4.Advisory (Non-binding) Vote to Approve Compensation of Named Executive Officers. To hold an advisory vote to approve the compensation of the Company’s named executive officers as disclosed in this proxy statement (“Proposal 4”);

 

5.Ratification of Appointment of Independent Auditor. To ratify the appointment of Crowe LLP as independent auditors for Seacoast for the fiscal year ending December 31, 2021 (“Proposal 5”); and

 

6.Other Business. To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

 

RECORD DATE

 

You are eligible to vote if you were a shareholder of record on the close of business on March 29, 2021, which is the record date for the Annual Meeting. This Notice of the 2021 Annual Meeting of Shareholders and the accompanying proxy statement are sent by order of the Company’s Board of Directors.

 

YOUR VOTE IS IMPORTANT

 

Please review the voting instructions described in this proxy statement, as well as in the notice you received in the mail or by e-mail. By voting prior to the Annual Meeting, you will help ensure that we have a quorum and that your preferences will be expressed on the matters that are being considered.

 

 
  Dennis S. Hudson, III
April 9, 2021 Executive Chairman

 

 

 

 

 
 

 

SHAREHOLDER LETTER

 

To our fellow shareholders, customers, partners and friends:

 

Seacoast delivered record net revenue and strong financial performance in 2020. While 2020 was an incredibly challenging year, it also showcased the benefits of our balanced growth strategy and the relentless commitment of our dedicated associates. We successfully and carefully adjusted our operations in response to the coronavirus pandemic to protect the health of our associates and customers and were incredibly proud to help our business customers access the federal Paycheck Protection Program. We continue to generate disciplined growth while maintaining our strict underwriting guidelines and delivering continued improvements in operating leverage. Our customers have demonstrated resilience during this extraordinary time, as reflected in our strong credit metrics.

 

In 2020, the Company produced net revenue of $324.3 million, an increase of 8 percent from 2019, and achieved $77.8 million in net income, down 21 percent from the prior year, primarily the result of recording an elevated provision for anticipated loan losses at the outset of the pandemic and in connection with the adoption of new accounting rules. Adjusted net revenue1 in 2020 was $323.1 million, an increase of 8 percent from 2019, and adjusted net income1 was $89.0 million, down 15 percent from the prior year. We achieved $1.44 in diluted earnings per share, 24 percent lower than 2019, and $1.65 in adjusted earnings per share1, a decrease of 18 percent from 2019 returns. In 2020, we increased tangible book value per share to $16.16 from $14.76, an improvement of 9 percent, which we believe is a key indicator of improved shareholder value despite operating in a pandemic environment.

 

Other 2020 highlights include:

 

·Loans totaled $5.7 billion at December 31, 2020, an increase of $500 million, or 10 percent, from December 31, 2019, primarily the result of our participation in the Paycheck Protection Program. Seacoast acquired loans of $147 million through the First Bank of the Palm Beaches acquisition and $303 million through the Freedom Bank acquisition, in addition to record originations of $2.1 billion, reflecting the execution of the Company’s disciplined approach to lending.
·Assets at year end totaled $8.3 billion, up from $7.1 billion at the end of 2019, reflecting the impact of our two acquisitions which continued our expansion across Florida’s most attractive MSAs.
·Total deposits were $6.9 billion as of December 31, 2020, an increase of $1.3 billion, or 24 percent, from the prior year. Interest bearing deposits increased year-over-year by $1.0 billion, or 36 percent, to $3.8 billion. Noninterest bearing demand deposits increased 44 percent to $2.3 billion, while certificates of deposit decreased 30 percent to $831 million.
·Seacoast’s successful combination of organic growth with value-creating acquisitions continued to benefit shareholders and associates in 2020 with the acquisitions of First Bank of Palm Beaches and Freedom Bank. Both acquisitions added experienced bankers while expanding our presence in attractive growth markets, further supporting sustainable, profitable growth.
·For the third consecutive year, Seacoast has been recognized as one of Fortune Magazine’s 100 Fastest-Growing Companies. As the only financial institution headquartered in Florida to earn a spot on the prestigious list, this distinction is a direct reflection of the remarkable job the Seacoast team has done serving customers, implementing technological improvements, and executing our balanced growth strategy.
·Seacoast was also named one of the Best Banks to Work For in 2020 by American Banker. This program identifies, recognizes and honors U.S. banks for outstanding employee satisfaction and engagement.

 

As we reflect on the year, we are incredibly proud of what the team accomplished and reminded of the many times our team has risen to the challenges of the day, and our organization has become stronger and more resilient as a result.

 

While the outlook for the pandemic remains uncertain, our goal remains to continue increasing market share in a disciplined manner by cultivating value-creating relationships, improving digital customer experiences, and driving greater productivity across the franchise by delivering products and services to our markets more efficiently and effectively than our competition.

 

We appreciate your continued support and loyalty.

 

Sincerely,

 

   
Dennis S. Hudson, III Charles M. Shaffer
Executive Chairman President and Chief Executive Officer

 

1 Non-GAAP measure; refer to Appendix A – Information Regarding Non-GAAP Financial Measures.

 

 

 

 

 
 

 

TABLE OF CONTENTS

 

VOTING INFORMATION 1
  How to Cast Your Vote 1
  How to View Proxy Materials Online 1
PROXY SUMMARY 2
  Introduction 2
  2020 Performance Highlights 2
  Value Creation for our Shareholders 2
  Valuable Florida Franchise 2
  Executive Compensation Program Highlights 4
  Summary of Proposals and Board Recommendations 5
  Our Director Nominees 5
  Director Nomination Process 5
  Shareholder Engagement and Board Responsiveness 6
  Board and Governance Highlights 7
  Board Composition 7
  Skills and Qualification Mix 8
  Our Corporate Governance Framework 9
CORPORATE GOVERNANCE AT SEACOAST 10
  The Board’s Role in Strategy and Risk Oversight 10
  Environmental, Social and Governance (“ESG”) 10
  COVID-19 Response 11
  Associate Health and Financial Well-Being 11
  Associate Diversity 11
  Human Capital Management (“HCM”) 11
  Corporate Governance Principles and Practices 12
  Governance Policies 12
  Board Independence 12
  Board Evaluation Process 12
  Board Leadership Structure 12
  Lead Independent Director 13
  Non-Management Executive Sessions 13
  Management Succession Planning and Development 13
  Committee Structure and Other Matters 13
BOARD MEETINGS AND COMMITTEES 14
  Board Meeting Attendance 14
  Annual Meeting Attendance 14
  Board Committees 14
  Board Committee Membership and 2020 Committee Meetings 14
  Key Committee Responsibilities 15
AUDIT COMMITTEE REPORT 16
OWNERSHIP OF OUR COMMON STOCK 17
  Director, Executive Officers and Certain Beneficial Stock Ownership 17
  Delinquent Section 16(a) Reports 18
  Named Executive Officers 18

 

 

 

EXECUTIVE COMPENSATION 20
  Compensation Discussion & Analysis 20
  Executive Summary 20
  2020 Performance Considerations 20
  Say on Pay Results 20
  Our Executive Compensation Design Priorities and Prohibitions 20
  2020 NEO Pay 21
  Summary of Compensation Decisions in 2020 21
  2020 NEO Mix of Total Direct Compensation 21
  Base Salary 21
  2020 Annualized Base Salary Actions 22
  Annual Short-Term Incentives 22
  Equity Awards 22
  Evolution of Seacoast’s Equity Strategies 22
  2020 Performance Stock Unit (“PSU”) Awards 23
  Time-Based Restricted Stock Awards (“RSA”) 23
  Other Considerations Involving 2020 Equity Awards 23
  Overview of Executive Compensation 23
  Role of the CGC 23
  Role and Independence of the Compensation Consultant 23
  Benchmarking and Peer Group 24
  Executive Compensation Framework Highlights 25
2020 EXECUTIVE COMPENSATION ACTIONS 26
  2020 Pay Outcomes 26
  Key Influences in Compensation Decisions 26
  Performance Metrics 26
  Individual Contributions 27
  Other Elements of the 2020 Compensation Program for Executive Officers 27
 
  Change in Control Severance Benefits 27
  Retirement and Employee Welfare Benefits 28
  Executive Perquisites 28
  Risk Analysis of Incentive Compensation Plans 28
  Clawback Policy 28
  Hedging and Pledging Policy 29
  Stock Ownership Guidelines 29
  Impact of Deduction Limit 29
  Strategies to Ensure that Incentive Compensation is Sensitive to Risk Considerations 30
 
COMPENSATION AND GOVERNANCE COMMITTEE REPORT 30
EXECUTIVE COMPENSATION TABLES 31
  2020 Summary Compensation Table 31
  2020 Components Of All Other Compensation 32
  2020 Grants Of Plan-Based Awards 32

 

 

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  Employment and Change in Control Agreements 33
  Employment Agreement with Executive Chairman Hudson 33
  Employment Agreement with CEO Shaffer 33
  Change in Control Agreements with Other Named Executive Officers 34
 
  Outstanding Equity Awards at Fiscal Year End 2020 35
  2020 Option Exercises and Stock Vested 36
  Executive Deferred Compensation Plan 36
  2020 Nonqualified Deferred Compensation 37
  2020 Other Potential Post-Employment Payments 38
  CEO Pay Ratio 39
  Equity Compensation Plan Information 39
PROPOSAL 1: ELECTION OF DIRECTORS 40
  General 40
  Manner for Voting Proxies 40
  Nominees for Election at the Annual Meeting 41
  Director Terms Extended Beyond the Annual Meeting 42
  Director Compensation 45
  Non-Employee Director Compensation Structure 45
  Lead Independent Director Compensation 45
  Director Stock Ownership Policy 45
  2020 Director Compensation Table 46
  Stock Awards & Options Granted To Directors In 2020 47
  Directors’ Deferred Compensation Plan 47
PROPOSAL 2: APPROVAL AND ADOPTION OF SEACOAST’S 2021 INCENTIVE PLAN 48
  Summary of the 2021 Plan 48
  Important Provisions 48
  Purpose 48
  Permissible Awards 48
  Awards to Non-Employee Directors 49
  Shares Available for Awards 49
  Share Counting 49
  Key Data Relating to Outstanding Awards 49
  Information Regarding our Authorized Shares and Stock Price 49
  Significant Historical Award Information 49
  Number of Shares Requested 50
  Administration 50
  Limitations on Transfer; Beneficiaries 50
  Acceleration upon Certain Events 50
  Adjustments 51
  Termination and Amendment 51
  Prohibition on Repricing 52
  Certain Federal Tax Effects 52
  Benefits to Named Executive Officers and Others 53
PROPOSAL 3: AMENDMENT OF EMPLOYEE STOCK PURCHASE PLAN TO INCREASE THE SHARES RESERVED FOR ISSUANCE UNDER THE PLAN 54

 

 

 

  Administration 54
  Securities Subject to the Purchase Plan 54
  Eligibility and Participation 54
  Participation and Withdrawal 55
  Purchase Price 55
  Rights as Shareholder 55
  Certain Federal Income Tax Effects 55
  Amendment and Termination 56
  Benefits to Named Executive Officers and Others 56
PROPOSAL 4: ADVISORY (NON-BINDING) VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS 57
PROPOSAL 5: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR 58
  Relationship with Independent Registered Public Accounting Firm 58
 
  Independent Registered Public Accounting Firm’s Fees 58
  Pre-Approval Policy 58
OTHER INFORMATION 59
  Certain Transactions and Business Relationships 59
  Related Party Transactions 59
  Other Matters 60
  Principal Offices 60
  Availability of Form 10-K 60
  Solicitation of Proxies; Expenses 60
  Notice of Business to Come Before the Meeting 60
  Shareholder Proposals for 2022 60
  Shareholder Proposals for Inclusion in 2022 Proxy Statement 60
  Shareholder Proposals for Presentation at 2022 Annual Meeting 60
  Additional Voting Information 61
  Voting at Annual Meeting 61
  Record Date 61
  Forms of Ownership of Shares 61
  Street Name Holders 61
  Revocation of Proxies 62
  Quorum and Required Vote 62
  Multiple Shareholders Sharing the Same Address 63
LOCATION OF THE 2021 ANNUAL MEETING OF SHAREHOLDERS 64
APPENDIX A: INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES A-1
APPENDIX B: SEACOAST BANKING CORPORATION OF FLORIDA 2021 INCENTIVE PLAN B-1
APPENDIX C: AMENDED EMPLOYEE STOCK PURCHASE PLAN C-1

 

 

  

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VOTING INFORMATION

 

How to Cast Your Vote

 

You may vote if you were a shareholder of record as of the close of business on March 29, 2021.

 

ONLINE: 

www.proxyvote.com 

   

MAIL: 

Complete, sign, date and return your proxy
card in the envelope provided. 

         
 

PHONE: 

Call the number on your proxy card

or voting instruction form. 

   

IN PERSON: 

Vote by ballot in person at the Annual Meeting.

 

For telephone and internet voting, you will need the 16-digit control number included in your notice, proxy card or voting instructions that accompanied your proxy materials. For shares held in employee plans, we must receive your voting instructions no later than 11:59 P.M. Eastern Time on May 23, 2021 (the “cut-off date”) to be counted. Otherwise, you may vote up until 11:59 P.M. Eastern Time on May 25, 2021.

 

Street Name Holders: If your shares of Seacoast common stock are held in a bank, brokerage or other institutional account (which is commonly referred to as holding shares in “street name”), you are a beneficial owner of these shares, but you are not the record holder. If your shares are held in street name, you are invited to attend the Annual Meeting; however, to vote your shares in person at the meeting, you must request and obtain a power of attorney or other authority from the bank, broker or other nominee who holds your shares and bring it with you to submit with your ballot at the meeting. In addition, you may vote your shares before the meeting by phone or over the internet by following the instructions set forth below or, if you received a voting instruction form from your brokerage firm, by completing, signing and returning the form you received by mail. Your voting instruction form will set forth whether internet or telephone voting is available to you.

 

If you are able to attend the Annual Meeting, you may vote your shares in person, even if you have previously voted by another means by revoking your proxy vote at any time prior to the meeting, pursuant to the procedures specified in “Revocation of Proxies”. If you hold your shares in street name, you must obtain a proxy from the record holder in order to vote in person.

 

If Seacoast determines that the Annual Meeting will be held by remote-means only due to public safety and health concerns resulting from the ongoing COVID-19 global pandemic, you will be able to vote your shares by any of the means outlined herein other than in-person.

 

How to View Proxy Materials Online

 

Important Notice Regarding the Availability of Proxy Materials for the 2021 Shareholder Meeting

 

Our 2021 proxy statement and 2020 Annual Report on Form 10-K (referred to collectively as the “proxy materials”) are available online at: www.proxyvote.com or at http://www.seacoastbanking.com/financials-regulatory-filings/2021-Annual-Meeting-Proxy-Materials.

 

We have mailed to certain shareholders a notice of internet availability of proxy materials on or about April 9, 2021. This notice contains instructions on how to access and review the proxy materials on the internet. The notice also contains instructions on how to submit your proxy on the internet or by phone, or, if you prefer, to obtain a paper or email copy of the proxy materials.

 

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PROXY SUMMARY

 

Introduction

 

We believe our balanced growth strategy, which is focused on organic growth and disciplined acquisitions in growing markets, is delivering value for our shareholders.

 

In this section, we summarize 2020 performance highlights and other information contained elsewhere in this proxy statement. Please carefully review the information included throughout this proxy statement and as provided in the 2020 Annual Report on Form 10-K before you vote.

 

In 2020, the Board worked in collaboration with Mr. Hudson to orchestrate the planning and preparation for the transition to a new CEO in accordance with our carefully developed and methodical succession plan. As of January 1, 2021, Mr. Hudson became Executive Chairman of the Board of Directors and former Chief Operating Officer, Charles M. Shaffer, became President and Chief Executive Officer.

 

2020 Performance Highlights

 

Value Creation for our Shareholders

 

Seacoast continued to drive positive momentum in performance metrics, leading to sustained outperformance in total shareholder returns.

 

 

 

* Total return combines share price appreciation and dividends paid to show the total return to the shareholder expressed as an annualized percentage.

 

Valuable Florida Franchise

 

Seacoast operates with a disciplined growth strategy, benefiting from a fortress balance sheet with robust capital generation, a prudent liquidity position and strict credit underwriting in significant growth areas of Florida, the nation’s third-most populous state. Our balanced growth strategy combines organic growth and select strategic M&A along with prudent risk management, leading to strong results.

 

   

Seacoast has a strong and growing presence in four of Florida’s most attractive MSAs

 

#1 Florida-based bank in Orlando

#1 Market share in Port St Lucie MSA

#2 Florida-based bank in West Palm Beach/Fort Lauderdale

#2 Florida-based community bank in Tampa, and #1 in St. Petersburg

 

Our acquisition strategy has expanded the customer franchise

 

 

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Execution of our balanced growth strategy in 2020 produced outstanding results year over year:

 

For the year ended December 31, 2020, the Company reported $77.8 million in net income, or $1.44 per share. Net revenue for the same period was $324.3 million, an increase of 8% year-over-year. The Company continued to see positive performance reflected in its ratios, with a return on average tangible assets of 1.08%, return on average tangible shareholders’ equity of 10.1% and an efficiency ratio of 54.8%. On an adjusted basis, the Company reported $89.0 million in adjusted net income1, or $1.65 per share1. Net revenues were $323.1 million, an increase of 8% year-over-year. Adjusted return on tangible assets1 was 1.17%, adjusted return on tangible equity1 was 10.9% and the adjusted efficiency ratio1 was 51.6%. The Company continues to build shareholder value, reflected in our tangible book value of $16.16, an increase of 9% year-over-year and a compounded annual growth rate of 12% since 2017.

 

 

  

   
YE Total Assets YE Market Capitalization Tangible Book Value Per Share
($ in Billions) ($ in Billions)
     
     

 

Adjusted Adjusted FY Return Adjusted FY
FY EPS1 on Tangible Assets1 Efficiency Ratio1
     
     

 

1 Non-GAAP measure; refer to Appendix A – Information Regarding Non-GAAP Financial Measures.

  

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Executive Compensation Program Highlights

 

The Compensation and Governance Committee (“CGC”) is committed to aligning our compensation strategies with our evolving business strategy, good governance and effective risk management practices, and our efforts to generate superior long-term returns for our shareholders. To this end, we emphasize pay-for-performance in executive compensation programs. Our executive compensation strategy strongly aligns our CEO and other executives’ pay with long-term shareholder interests. In 2019, the CGC redesigned the compensation structure to better align compensation decisions relative to a peer group. The same structure was used in 2020. The following table summarizes the primary elements of our executive compensation for 2020:

 

The following table summarizes the primary elements of our executive compensation for 2020:

 

Pay Element Purpose Determination 2020 Results
Base Salary Recognize performance of job responsibilities and attract and retain individuals with superior talent. Reflects the CGC’s assessment of the executive’s experience, skills and value to Seacoast. Our CEO’s base salary did not increase in 2020. Base salaries for other named executive officers include adjustments made in recognition of Mr. Shaffer’s promotion to President and Chief Operating Officer (11% salary increase) and Ms. Kleffel’s expanded role as Chief Banking Officer (15% salary increase).
Annual Cash Incentive Recognize achievement of our short- term business strategy objectives and individual executive performance. Incorporates both quantitative and qualitative goals. Reflects the individual executive’s performance against pre-established individual goals, as well as relative bank performance. In FY2020, these bank goals included performance relative to peer performance in pre- provision pre-tax return on assets, ratio of net charge-offs to total loans, and tangible common equity divided by tangible assets. Qualitative goals were primarily related to managing the impact of the ongoing crisis on the bank’s operations. Goals included implementing government programs such as the Paycheck Protection Program, implementing and executing a Pandemic Business Continuity Plan, sustaining ongoing operations, and implementing and executing appropriate robust credit risk processes and controls. Individual and Company performance were evaluated in Q1 2021, with corresponding payout determinations approved in March 2021, reflect Company performance in 2020 and subjective adjustments based on the achievement of individual goals.
Performance Share Units (“PSUs”) Align compensation with our business strategy and long-term shareholder value while providing a strong retention element. The number of PSUs granted is determined by the CGC after consideration of each executive’s performance scorecard for the prior year. The number of PSUs that may be earned is based on the level of achievement of goals established by the CGC for a three-year performance period. Value realized upon vesting varies based on stock price performance at the vesting date. PSUs granted in 2020 vest based on the level of achievement of goals relating to average annual EPS growth and average annual return on average tangible common equity over a three- year period (2020-2022) relative to a peer group. PSUs for which performance goals are met will vest on December 31, 2023, subject to the grantee’s continued service.
Restricted Stock Awards (“RSAs”) Provide a strong retention element and align executive and shareholder interests. The amount of RSAs granted is determined by the CGC after consideration of each executive’s performance scorecard for the prior year. The realized value of RSAs is based on stock price performance at the vesting date. RSAs granted in 2020 vest in equalannual installments over three years.

 

Please refer to the Compensation Discussion and Analysis and The Executive Compensation Tables in this proxy statement for additional details about our compensation programs.

 

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Summary of Proposals and Board Recommendations

 

Item Proposal Board Voting Recommendation Vote Required
1 Election of Four Class I Directors FOR ALL Plurality vote*
2 Approval and Adoption of the Company’s 2021 Incentive Plan FOR Affirmative vote of a majority of votes cast
3 Amendment of Employee Stock Purchase Plan FOR Affirmative vote of a majority of votes cast
4 Advisory (Non-binding) Vote to Approve Executive Compensation (Say on Pay) FOR Affirmative vote of a majority of votes cast
5 Ratification of Appointment of Crowe LLP as Independent Auditor for 2021 FOR Affirmative vote of a majority of votes cast

 

* More fully described in Proposal 1 - Election of Directors, Manner of Voting Proxies

 

Our Director Nominees

 

You are being asked to, among other proposals, elect four Class I directors of Seacoast. All of the nominees are presently directors of Seacoast. Mr. Charles M. Shaffer was appointed as a Director in January 2021 upon his promotion as CEO. All of the nominees also serve as members of the board of directors of Seacoast’s principal banking subsidiary, Seacoast National Bank (the “Bank”). If elected, each director nominee will serve a three year term expiring at the 2024 Annual Meeting and until their successors have been elected and qualified. Detailed information about each nominee’s background, skills and expertise can be found in Proposal I – Election of Directors.

 

Name Age Director Since Current Occupation Independent No. of Other
Public Boards
Jacqueline L. Bradley 63 2014 Management and Financial Services 1
H. Gilbert Culbreth, Jr. 75 2008 CEO and President of Auto and other sales companies 0
Christopher E. Fogal 69 1997 Certified Public Accountant and Partner of Firm 0
Charles M. Shaffer 47 January President and CEO of Company and Bank   0
2021  

 

Director Nomination Process

 

The CGC serves as the nominating committee of the Company. The committee annually reviews and makes recommendations to the full Board of Directors regarding the composition and size of the Board of Directors and its committees, and if determined necessary, recommends potential candidates to the Board for nomination for election to the Board by the Company’s shareholders. The CGC’s goal is to ensure that the Board of Directors consists of a diverse group of members with the relevant expertise, skills, personal attributes and professional backgrounds who, individually and collectively, are appropriate to achieve the Company’s strategic vision and business objectives, and best serve the Company’s and shareholders’ long-term interests.

  

As part of the assessment process, the CGC evaluates whether the addition of a director or directors with particular attributes, experience, or skill sets could enhance the Board’s effectiveness. The CGC identifies director candidates through business, civic and legal contacts, and may consult with other directors and senior officers of the Company. The CGC may also utilize a search firm to help it identify, evaluate and conduct due diligence on potential director candidates. Once a candidate has been identified, the CGC confirms that the candidate meets the minimum qualifications for director nominees, and gathers information about the candidate through interviews, questionnaires, background checks, or any other means that the CGC deems to be helpful in the evaluation process. Director candidates are interviewed by the Chair of the CGC and at least one other member of the committee. Each member of the committee participates in the review and discussion of director candidates. Where appropriate, directors who are not on the CGC are encouraged to meet with and evaluate the suitability of potential candidates. The CGC then evaluates the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board in relation to the Company’s strategic goals, and recommends nominees to the Board. The full Board formally nominates candidates to be included in the slate of directors presented for shareholder vote based upon the recommendations of the CGC following this process.

 

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Given the evolving needs and business strategy of the Company, the CGC believes that the Board of Directors as a whole should have diversity of thought and experience, which may, at any one or more times, include differences with respect to personal, educational or professional experience, gender, ethnicity, national origin, geographic representation, community involvement and age. However, the CGC does not assign specific weights to any particular criteria. Its goal is to identify nominees that, considered as a group, will possess the talents and characteristics necessary for the Board of Directors to fulfill its responsibilities and advance our strategic mission. In addition, each director must have the qualifications set forth in the Company’s Bylaws, as well as the personal characteristics and core competencies described below as our Director Eligibility Guidelines:

  

Director Eligibility Guidelines
Personal Characteristics Core Competencies
· the highest ethical character · substantial business or professional experience and ability to offer
· a personal and professional reputation consistent with Seacoast’s   meaningful advice and guidance to the Company’s management
  values as reflected in its Code of Conduct   based on that experience
· the ability to exercise sound business judgment · professional achievement through service as a principal executive
·  a willingness to listen to differing points of view and work in a mutually respectful manner    of a major company, partner in a law or accounting firm, successful entrepreneur, prominent academic or similar position of significant responsibility

 

The CGC also considers numerous other qualities, skills and characteristics when evaluating director nominees, such as a candidate’s:

 

·understanding of and experience in the financial services industry, as well as accounting, finance, legal, real estate, corporate governance and technology expertise;
·leadership experience with public companies or other major organizations, as well as civic and community relationships;
·availability and commitment to carry out the responsibilities as a director;
·knowledge, experience and skills that enhance the mix of the Board’s core competencies and provide a different perspective;
·the absence of any real or perceived conflict of interest that would impair the director’s ability to act in the best interest of shareholders; and
·qualification as an independent director.

 

In addition to nominations by the CGC, any Company shareholder entitled to vote generally on the election of directors may recommend a candidate for nomination as a director by providing advance notice of such proposed nomination to the Corporate Secretary at the Company’s principal offices. The written submission must comply with the applicable provision in the Company’s Articles of Incorporation. To be considered, recommendations with respect to an election of directors to be held at an annual meeting must be received not less than 60 days nor more than 90 days prior to the anniversary of the Company’s last annual meeting of shareholders (or, if the date of the annual meeting is changed by more than 20 days from such anniversary date, within 10 days after the date that the Company mails or otherwise gives notice of the date of the annual meeting to shareholders), and recommendations with respect to an election of directors to be held at a special meeting called for that purpose must be received by the 10th day following the date on which notice of the special meeting was first mailed to shareholders. Recommendations meeting these requirements will be brought to the attention of the Company’s CGC. Candidates for director recommended by shareholders in compliance with these provisions and who satisfy the Director Eligibility Guidelines will be afforded the same consideration as candidates for director identified by Company directors, executive officers or search firms, if any, employed by the Company. For our 2021 Shareholder Meeting, no shareholder nominee recommendations were received.

 

Shareholder Engagement and Board Responsiveness

 

The Company engages with our shareholders to ensure that the Board and management are aware of and address issues of importance to our investors. We regularly meet with various institutional shareholders and welcome feedback from other shareholders, which is considered by the Board or appropriate Board committee.

 

Since 2009, the Company has annually included in its proxy statement a separate advisory vote on the compensation paid to its executives, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related proxy disclosure, commonly known as a “say-on-pay” proposal. Independent surveys have shown that an annual vote is the preferred frequency of most institutional investors. Our shareholders also have expressed a preference for an annual vote. Our Board also endorses an annual vote as we believe it gives shareholders an opportunity to voice their concerns with respect to executive compensation. Shareholder support of our say-on-pay proposal at our 2020 annual meeting was inline compared to the prior year. (See “Outcome of our 2020 Say-On-Pay vote” in the table below.) Shareholder support of directors standing for election at the 2020 annual meeting was also inline compared to the prior year. Below are highlights of the feedback we have received from shareholders and our Board’s response:

 

What We Heard Our Board’s Response
Continue to deliver industry-leading financial results Delivered 2020 earnings of $1.44 diluted EPS and $1.65 diluted adjusted EPS1 and efficiency ratio of 48.2% and adjusted efficiency ratio1 of 48.8% in the fourth quarter of 2020.
Continue to emphasize stock ownership by management and directors We continue to emphasize stock compensation with PSUs and RSAs granted under the long-term incentive plan (“LTIP”) to executive officers for achievement of performance objectives in 2020. All of our directors are paid a stock retainer; some defer a portion or all of their cash compensation into our director deferred compensation plan.

 

1 Non-GAAP measure; refer to Appendix A - Information Regarding Non-GAAP Financial Measures.

 

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What We Heard Our Board’s Response

Outcome of our 2020 Say-

On-Pay vote

At our 2020 annual meeting of shareholders, our say-on-pay proposal received the support of 99.5% of the votes cast. Our CGC considered the vote in relaton to: 1) the alignment of our compensation program with the long-term interests of our shareholders, 2) the evolution of our business strategy with emerging opportunities and in fulfilling customer demand for innovative products and services, and 3) the relationship between risk-taking and the incentive compensation provided to our executives. The CGC will continue to evaluate and refine our executive compensation programs and welcomes input from our shareholders.

Disclose ESG efforts,

including with respect to

human capital management

Included information in our 2021 proxy statement about the Company’s ESG initiatives and HCM oversight.

 

The Company’s Corporate Governance Guidelines provide for a process by which shareholders may communicate with the Board, a Board committee or the non-management directors as a group, or other individual directors. Shareholders who wish to communicate with the Board of Directors, a Board committee, the Lead Independent Director, other directors or an individual director may do so by sending written communications addressed to the Board of Directors, a Board committee or such group of directors or individual director, c/o Corporate Secretary, Seacoast Banking Corporation of Florida, 815 Colorado Avenue, P.O. Box, 9012, Stuart, Florida 34995. All communications will be compiled by the Company’s Secretary and submitted to the Board of Directors, a committee of the Board of Directors or the group of directors or individual director, as appropriate, at the next regular meeting of the Board.

 

Board and Governance Highlights

 

Board Composition

 

Over the past years, we have continually recruited new talent to our Board to increase diversity of thought and experience and to better align overall Board capability with our strategic focus. During this time, our Chairman and CEO and CGC have focused considerable attention on Board refreshment and, since 2013, we have added seven new directors with skill sets needed to help navigate the fast-changing environment impacting our business. As a result, our overall Board composition has been significantly altered across a number of important aspects creating a vibrant Board culture and focus on creating shareholder value over the long term. Seacoast continues to build a diverse Board with experience aligned with our strategic mission to ensure a balanced mix of directors with a deep knowledge of Seacoast and its markets, as well as new members with fresh perspectives.

 

BOARD REFRESHMENT AND CHARACTERISTICS (NON-EXECUTIVE DIRECTORS)

 

 

 

 

* Resignation effective as of January 11, 2021

 

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Skills and Qualification Mix

 

We have revitalized our Board to align with our balanced growth strategy. Below are the mix of skills and qualification of our Board as of the Annual Meeting date:

 

Skills and Qualifications

Dennis J.
Arczynski
Jacqueline
L. Bradley

H. Gilbert
Culbreth,
Jr.

Julie H.
Daum

Christopher
E. Fogal


Maryann Goebel

Dennis S.
Hudson,
III

Robert J.
Lipstein

Alvaro J.
Monserrat

Thomas
E. Rossin

Charles M.
Shaffer

Accounting experience is important in overseeing our financial reporting and internal controls and M&A

✔        ✔    ✔  ✔  ✔  ✔  ✔ 

Banking / Investments experience is important to guide product evolution and lead investment initiatives

✔  ✔      ✔    ✔  ✔    ✔  ✔ 

Executive Leadership experience is important to monitor strategy and performance

✔  ✔  ✔  ✔  ✔  ✔  ✔  ✔  ✔  ✔  ✔ 

Financial Services experience is important to manage our business model and revenue generating services

✔  ✔      ✔  ✔  ✔  ✔  ✔  ✔  ✔ 

Governance / Legal experience is important to conduct decision-making and validate implementation

✔      ✔      ✔  ✔  ✔  ✔  ✔ 

Data Analytics experience is important for innovation and strengthening profitability and understanding customers

✔          ✔  ✔    ✔     

Local Community experience and stature is important in understanding the customer segments in markets served

  ✔  ✔    ✔    ✔    ✔  ✔  ✔ 

Marketing / Digital experience is important to assess brand loyalty, customer experiences and create valuable customer relationships and long-term profitability

✔            ✔    ✔    ✔ 

Regulatory / Compliance experience is important to monitor compliance and regulatory requirements

✔        ✔    ✔  ✔  ✔  ✔  ✔ 

Risk Management experience is important in overseeing the risks throughout the organization

✔    ✔      ✔  ✔  ✔  ✔  ✔  ✔ 

Technology / Information Security experience is important to assess tools to enhance business operations, customer service and cyber and information security

✔          ✔  ✔  ✔  ✔     

Human Capital Management experience is important to assess compensation practices, diversity mix, talent, training programs and corporate culture within the company

✔  ✔    ✔    ✔  ✔    ✔     

 

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Our Corporate Governance Framework

 

Board Independence

 

•    A total of 9 of our 11 directors, or over 80% are considered independent as of the Annual Meeting date.

•    Our Executive Chairman and CEO are the only members of management who serve as directors.

Board Refreshment & Diversity

 

•    We seek a board that, considered as a group, will possess a diversity of experience and differences with respect to personal, educational or professional experience, gender, ethnicity, national origin, geographic representation, community involvement and age.

•    We have a mix of new and longer tenured directors to help ensure fresh perspectives as well as continuity and experience. The average tenure of our non-management directors is 9.9 years.

Board Committees

 

•    We have four standing Board committees—Audit; Compensation and Governance (“CGC”); Enterprise Risk Management (“ERMC”); and Corporate Development (“CD”).

•    The Audit Committee and CGC consist entirely of independent, non-management directors.

•    Chairs of the committees shape the agenda and information presented to their committees.

Lead Independent Director

 

•    Our independent directors elect a lead independent director.

•    Our lead independent director chairs regularly scheduled executive sessions, without management present, at which directors can discuss management performance, succession planning, board informational needs, board effectiveness or any other matter.

Board Oversight of Strategy & Risk

 

•    Our Board has ultimate oversight responsibility for strategy and risk management. 

•    Our Board directly advises management on development and execution of the Company’s strategy and provides oversight through regular updates. 

•    The CD Committee helps ensure that the strategic vision for the Company is fulfilled by challenging, proposing, reviewing, and monitoring corporate development initiatives of the Company relating to M&A activity, capital allocation and planning, corporate development strategies, and shareholder relations.

•    Through an integrated enterprise risk management process, key risks, including those related to privacy and cybersecurity are reviewed and evaluated by the ERMC before they are reviewed by the Board. 

•    The ERMC oversees the integration of risk management at Seacoast, monitors the risk framework and makes recommendations to the Board regarding the Company’s risk appetite. 

•    The Audit Committee oversees the Company’s financial risk management process. 

•    The CGC oversees risks and exposures related to the Company’s corporate governance, director succession planning, and compensation practices to ensure that they do not encourage imprudent or excessive risk-taking, and assists with its leadership assessment and CEO succession planning. 

Accountability

 

•    We have a plurality vote standard for the election of directors, with a director resignation policy for uncontested elections. 

•    Each common share is entitled to one vote. 

•    We have a process by which all shareholders may communicate with our Board, a Board committee or non-management directors as a group, or other individual directors. 

Director Stock Ownership

•    A minimum stock holding of three times the annual base retainer is required for each director, to be acquired within four years of joining the Board.

Succession Planning

•    CEO and management succession planning is one of the Board’s highest priorities. Our Board ensures that appropriate attention is given to identifying and developing talented leaders. In 2020, the Board implemented its CEO Succession Plan and appointed Charles. M. Shaffer as the Company’s CEO effective as of January 1, 2021.

Board Effectiveness

 

•    The Board meets in a director-only session prior to each regular meeting to discuss the Company’s business condition. After each regular meeting, directors are offered the opportunity to meet in an executive session of non-management directors led by the lead independent director.

•    The Board and its independent committees annually evaluate their performance.

Open Communication

 

•    Our Board receives regular updates from business leaders regarding their area of expertise.

•    Our directors have access to all management and employees on a confidential basis.

•    Our Board and its committees are authorized to hire outside consultants at their discretion and at the Company’s expense.

  

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CORPORATE GOVERNANCE AT SEACOAST

 

Our goal is to maintain a corporate governance framework that supports an engaged, independent board with diverse perspectives and judgment that is committed to representing the long-term interests of our shareholders. We believe our directors should possess the highest personal and professional standards for ethics, integrity and values, as well as practical wisdom and mature judgment. Therefore, our Board, with the assistance of management and the CGC, regularly reviews our corporate governance principles and practices.

 

The Board’s Role in Strategy and Risk Oversight

 

The Board of Directors actively reviews our long-term strategy and the plans and programs that management develops to implement our strategy. While the Board meets formally at least once every year to consider overall long-term strategy, it generally reviews various elements of strategy, and our progress towards implementation, at every regular meeting. Our directors are active in our strategic planning process and exercise robust oversight while challenging our strategies and implementation of such strategies.

 

The Board believes that strategic risk is an exceptionally important risk element among a number of risks that the Company faces and works to ensure that this risk is appropriately managed in the context of the rapidly changing environment in which the Company and its customers operate. The Board does not believe this risk can be delegated and the Board as a whole regularly spends a significant amount of its time engaged with management and in executive session discussing our long term strategy, the effectiveness of our plans to implement such strategy, and our progress against those plans.

 

The Board believes that an integral part of managing strategic risk is ensuring that the Board’s views are considered as our strategy evolves. The Board strongly believes that having active and engaged committee chairs and a lead independent director better ensures that the Board as a whole can serve as a credible challenge to management’s plans and programs and increases transparency into the fast-paced changes management is implementing.

 

The Board’s committees also work to ensure that we have the right alignment to support our long-term strategic direction including: (i) an active Board recruitment process focused on developing or acquiring the skill, experience and attributes of both individuals and the Board as a whole needed to support our strategy, (ii) ensuring an appropriate link is established between our compensation design and our long-term strategy to encourage and reward the achievement of our long-term goals and protect shareholder value by discouraging excessive risk, and (iii) ensuring that our risk management structure can effectively manage the inherent risks that underlie our strategy.

 

Other types of risks that the Company faces include:

 

macro-economic risks, such as inflation, interest rate fluctuations, reductions in economic growth, or recession;

political or regulatory risks, such as restriction on access to markets;

event risks, such as global pandemics, including COVID-19, natural disasters, or cybersecurity breaches; and

business-specific risks related to financial reporting, credit, asset/liability management, market, operational execution (corporate governance, legal and regulatory compliance), and reputation.

 

Our Enterprise Risk Management Committee (“ERMC”) regularly assesses our overall risk profile and oversees our risk management programs which are implemented by our chief risk officer. Information security is a significant operational risk for financial institutions, and includes the risk of losses resulting from cyber-attacks. Our Board recognizes the importance of maintaining the trust and confidence of our customers, clients, and employees, and information security risk. In light of these risks, the Board also assesses the risks and changes in the cyber environment through presentations and reports provided to our ERMC.

 

Environmental, Social and Governance (“ESG”)

 

Our Board recognizes the importance to operate in a responsible and sustainable manner aligned with our mission, vision and values. Our Compensation and Governance Committee (“CGC”) is charged with monitoring ESG efforts, and identifies and discusses ESG issues material to our business and communities where we operate. A key focus of our long-term strategic plan is managing growth through an evolving risk view, in which attention to ESG matters is critical to success. The Board and senior management are committed to continuing to build upon these efforts in the coming years.

 

We believe that a key element of sustainability is being a great place to work for our employees. In 2020, Seacoast’s subsidiary bank was named one of the “Best Banks to Work For” by American Banker and earned the designation of “2020 Best Place to Work for LGBTQ Equality” by the Human Rights Campaign Foundation in its first year of application.

 

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COVID-19 Response

 

The health, well-being and safety of our employees, customers and communities are top priority. We began to focus on COVID-19 as a potentially significant issue in March 2020. As we followed developments, our senior management team initiated regular COVID-19 planning sessions to address the critical safety, operational and business risks associated with the pandemic across the organization, including a work-from-home plan. Through these efforts, as well as our continued commitment to monitor, assess and implement guidance and best practices recommended by the Centers for Disease Control and Prevention (CDC), we have been able to maintain the continuity of all services that we provide to our customers, while also managing the spread of the virus and promoting the health, well-being and safety of our employees, customers and communities. We acted quickly at the onset of the pandemic and took multiple measures to promote safety in our offices and protect our team members, including the implementation of:

 

·enhanced hygiene, cleaning and sanitizing protocols;
·physical distancing and work-from-home protocols;
·travel restrictions and cancellation of in-person meetings;
·standard investigation, disinfection and return-to-work protocols;
·contact tracing and quarantines;
·frequent communication to team members; and
·$500 stipend to front line associates.

 

Associate Health and Financial Well-Being

 

Seacoast provides access to a variety of resources to address personal health and financial wellness. Comprehensive Employee Assistance Plan (EAP) resources are accessible to all associates addressing a wide range of topics from substance abuse to child and elder care resources. Associates are encouraged to balance their physical fitness with their work life with a reimbursement for a portion of fitness center memberships. We also offer financial planning resources for help with student debt, retirement planning and one-on-one financial planning sessions to all associates.

 

Associate Diversity

 

We strive to create an atmosphere where associates feel welcome and confident bringing their whole self to work. Inclusion, respect, and fairness live at the core of our company culture, and we believe the diversity of our associate base and of the communities we serve make us stronger. We believe that each associate has a unique perspective that can be valuable to our company, our customers, and our communities. We have been intentional in listening to and discussing the racism experienced firsthand by our associates. In 2020, our CEO held roundtables with black associates to address diversity inclusion, inequality and racial issues. The company also acknowledged the celebration of Juneteenth with an early closure. Additionally, Seacoast pledged a donation of $15,000 toward local chapters of the National Association for the Advancement of Colored People (NAACP) and Big Brothers / Big Sisters across our markets.

 

As part of the many things we do to support our associates and their families, as well as additional steps we are taking to continue to build on this progress, we have established four Associate Resource Groups (“ARGs”): LGBT+, Military Outreach and Women Mean Business, as well as the recent addition of Black Associates and Allies Network (BAAN) all of which collaborate across regions. The Company places a high value on inclusion, engaging employees in our ARG programs comprised of associates with diverse backgrounds, experiences or characteristics who share a common interest in professional development, improving corporate culture and delivering sustained business results. Each group is sponsored by a senior executive leader. As of December 31, 2020, over 18% of employees across the Company are a member of at least one of our ARGs.

 

Human Capital Management (“HCM”)

 

The Board believes that human capital management is an important element of the Company’s continued growth and success, and is essential for our ability to attract, retain and develop talented and skilled associates. Our senior leadership and human resources teams, with oversight by our CGC, are responsible for attracting and retaining top talent by facilitating an environment where employees feel supported and encouraged in their professional and personal development. Additionally, we maintain competitive compensation, comprehensive benefits and appropriate training that provide growth, developmental opportunities and multiple career paths within our company. We also identify potential internal candidates to fill positions by evaluating critical job skill sets, identifying competency gaps and creating developmental plans. We invest in our associates through training and development programs, as well as tuition reimbursement to promote continued professional growth.

 

To ensure that we are meeting associates’ expectations, we conduct an Employee Engagement Survey each year. The results of the survey and the process of continuous improvement that ensues are discussed with the Board at least annually. In 2020, our engagement score was 84%, with 84% participation by the associate base, and an 8% increase in participation from the prior year.

 

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Corporate Governance Principles and Practices

 

Governance Policies

 

Important elements of our corporate governance framework are our governance policies, which include:

 

·Corporate Governance Guidelines
·Code of Conduct (applicable to all directors, officers and employees)
·Code of Ethics for Financial Professionals (applicable to, among others, our chief executive officer and chief financial officer); and
·charters for each of our Board committees

 

You may view these and other corporate governance documents on the investor relations page on our website located at www.SeacoastBanking.com, or request a copy, without charge, upon written request to Seacoast Banking Corporation of Florida, c/o Corporate Secretary, 815 Colorado Avenue, P. O. Box 9012, Stuart, Florida 34995. Information included on our website, other than the proxy statement and form of proxy, is not a part of the proxy soliciting material.

 

Board Independence

 

The Company’s common stock is listed on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “SBCF”. Nasdaq requires that a majority of the Company’s directors be “independent,” as defined by the Nasdaq rules. Generally, a director does not qualify as an independent director if the director (or, in some cases, a member of the director’s immediate family) has, or in the past three years had, certain relationships or affiliations with the Company, its external or internal auditors, or other companies that do business with the Company. The Board of Directors has determined that a majority of the Company’s directors are independent directors under the Nasdaq rules. The Company’s independent directors in 2020 were: Dennis J. Arczynski, Jacqueline L. Bradley, H. Gilbert Culbreth, Jr., Julie H. Daum, Christopher E. Fogal, Maryann Goebel, Robert J. Lipstein, Herbert A. Lurie, Alvaro J. Monserrat and Thomas E. Rossin. Mr. Lurie is a senior advisor of Guggenheim Securities that, from time to time, has provided financial advisory services to Seacoast. The Board considered this relationship when assessing Mr. Lurie’s independence in 2020. For reasons unrelated to this relationship, Mr. Lurie resigned from the Board in January 2021. Our governance principles provide that a substantial majority of our directors will meet the criteria for independence required by Nasdaq. Over 80% of our Board meets our criteria for independence.

 

Board Evaluation Process

 

Periodically, our Board and each Board committee evaluate their performance and effectiveness, along with processes and structure, to identify areas for enhancement. The process is described below.

 

Element Description
Corporate Governance Review and Investor Feedback The CGC reviews corporate governance principles with consideration given to generally accepted practices and feedback from investors and makes recommendations for Board changes. This committee also oversees the process for annual board evaluations.
Annual Board & Committee Self-Evaluations In 2020, Board and committee evaluations were individually conducted to assess the effectiveness of the Board and committees of the Board.
Summary and Review For the 2020 Board and committee evaluations, responses were compiled and summarized, including comments, which were reviewed by the Chairman and Lead Independent Director, and together presented summary results to the full Board. The committee evaluations were reviewed by the respective committee chairs, who then discussed the results with their respective committees and the full Board.
Actions As a result of the Board evaluation process, the Board gained insight as to committee structure, process improvements to facilitate broader engagement around governance matters and implementation of the CEO succession plan.

 

Board Leadership Structure

 

The Company’s former Chief Executive Officer, Dennis S. Hudson, III, also served as the Chairman of the Board of Directors in 2020. As part of the CEO Succession Plan implemented in 2020, Mr. Hudson was appointed Executive Chairman of the Board of Directors and Charles M. Shaffer was appointed as the Company’s President and Chief Executive Officer, effective January 1, 2021. Mr. Hudson has held the post of Chief Executive Officer for the past 23 years, Chairman for the past 16 years, President for the 13 years prior to being named Executive Chairman, and has also served as Chief Executive Officer of the Bank for the past 28 years. During this time, Mr. Hudson has led the Company through its growth from a local community bank to the fourth largest Florida bank with $8.3 billion in assets and 51 full-service branches in 15 counties and a group of commercial banking centers throughout the footprint as of year-end 2020.

 

The Board leadership framework is provided through: 1) Executive Chairman Hudson’s guidance and deep understanding of the financial services industry, 2) a clearly defined lead independent director role, 3) active committees and committee chairs, and 4) talented directors who are committed and independent-minded. At this time, the Board believes this governance structure is appropriate and best serves the interests of our shareholders.

 

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Lead Independent Director

 

To further strengthen our corporate governance, our independent directors annually select a Lead Director from the independent directors. Our Board believes that the Lead Director serves an important corporate governance function by providing separate leadership for the non-management and independent directors. In January 2021, the Board re-elected Christopher E. Fogal to serve as Lead Independent Director.

 

Non-Management Executive Sessions

 

In order to give a significant voice to our non-management directors, our Corporate Governance Guidelines provide for executive sessions of our non-management and independent directors. Our Board believes this is an important governance practice that enables the Board to discuss matters without management present.

 

Our non-management directors are given the opportunity to meet in executive session following each regularly scheduled Board meeting. Our independent directors meet separately from the other directors in regularly scheduled executive sessions at least twice annually, and at such other times as may be deemed appropriate by the Company’s independent directors. Our Lead Independent Director presides at all executive sessions of the independent directors and non-management directors, and sets the agenda for such executive sessions. Any independent director may call an executive session of independent directors at any time. The independent directors met three times in executive session in 2020.

 

Management Succession Planning and Development

 

Our Board understands that a strong succession framework reduces Company risk and therefore ensures that appropriate attention is given to identify and develop talented leaders. Consequently, we have a robust management succession and development plan which is reviewed and updated annually. The Board maintains oversight responsibility for succession planning with respect to the position of CEO and monitors and advises management regarding succession planning for other executive officers. The Board’s goal is to have a long-term and continuing program for effective senior leadership development and succession. The Board also has short-term contingency plans in place for emergency and unexpected occurrences, such as the sudden departure, death, or disability of our CEO or other executive officers.

 

The CGC, working with the CEO, annually evaluates succession planning at the senior levels of management and reports the results of such evaluation to the Board, along with recommendations on management development and succession planning. The updated succession plan is reviewed and approved by the Board to ensure that competencies are in alignment with our strategic plan. The annual review of the CEO succession planning includes a review of specific individuals identified as active CEO succession candidates, and each of those individuals is reviewed with respect to progress in his or her current job position and progress toward meeting his or her defined leadership development plan. The Company’s CEO and senior management are similarly responsible for supporting “next generation” leadership development by: identifying core talent, skills and capabilities of future leaders within the Company; assessing the individuals against leadership capabilities; identifying talent and skill gaps and development needs; assisting with internal candidate development; and identifying significant external hiring needs.

 

The Board and individual Board members may advise, meet with and assist CEO succession candidates and become familiar with other senior and future leaders within the Company. Directors are encouraged to become sufficiently familiar with the Company’s executive officers to be able to provide perspective on the experience, capabilities and performance of potential CEO candidates. The Board encourages senior management, as well as other members of management who have future leadership potential within the Company, to attend and present at Board meetings so that each can be given appropriate exposure to the Board. The Board may contact and meet with any employee of the Company at any time, and are encouraged to make site visits, to meet with management, and to attend Company, industry and other events.

 

In 2020, the Board worked in collaboration with Mr. Hudson to orchestrate the planning and preparation for the transition to a new CEO in accordance with our carefully developed and methodical succession plan. As of January 1, 2021, Mr. Hudson became Executive Chairman of the Board of Directors and former Chief Operating Officer, Charles M. Shaffer, became President and Chief Executive Officer.

 

Committee Structure and Other Matters

 

Oversight is also provided through the extensive work of the Board’s committees – Audit Committee; Compensation and Governance Committee (“CGC”); Corporate Development Committee (“CDC”); and Enterprise Risk Management Committee (“ERMC”) – in key areas such as financial reporting, internal controls, compliance, corporate governance, succession planning, compensation programs, capital planning and risk management. The Audit Committee and the CGC consist entirely of independent, non-management directors.

 

In addition, at the end of each year, the Board and each of its committees review a schedule of agenda topics to be considered in the coming year. Each Board and committee member may raise subjects that are not on the agenda at any meeting and suggest items for inclusion in future agendas. The Company believes that the foregoing structure, policies, and practices, when combined with the Company’s other governance policies and procedures, provide appropriate opportunities for oversight, discussion, evaluation of decisions and direction from the Board of Directors.

 

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BOARD MEETINGS AND COMMITTEES

 

Board Meeting Attendance

 

The Board of Directors held four regular meetings and four special meetings during 2020. Each of the directors attended either in-person or virtually at least 75% of the total number of meetings of the Board of Directors and committees on which they served.

 

Annual Meeting Attendance

 

The Company encourages all of its directors to attend its shareholders’ meetings but understands that situations may arise that prevent such attendance. Seven of the 11 then-incumbent Directors attended the Company’s 2020 annual shareholders’ meeting by phone in light of travel restrictions and safety precautions amid COVID-19, and one Director attended in-person.

 

Board Committees

 

The Company’s Board of Directors has four standing permanent committees. These committees serve the same functions for the Company and the Bank. The current composition of each Company committee and the number of meetings held in 2020 are set forth in the table:

 

Board Committee Membership and 2020 Committee Meetings

 

Director Name Audit Compensation &
Governance
Corporate
Development
Enterprise Risk
Management
Dennis J. Arczynski (1)      (2)
Jacqueline L. Bradley (1)    
H. Gilbert Culbreth, Jr. (1)      
Julie H. Daum (1)      
Christopher E. Fogal (1)(3)      
Maryann Goebel (1)    ✔ (2)  
Dennis S. Hudson, III (4)      
Robert J. Lipstein (1)   ✔ (2)  
Herbert A. Lurie (1)(5)      
Alvaro J. Monserrat (1)  
Thomas E. Rossin (1)        (2)
TOTAL MEETINGS HELD IN 2020 9 6 7 6

 

(1) Independent Director

(2) Committee Chair

(3) Lead Independent Director

(4) Executive Chairman of the Board

(5) Resignation effective as of January 11, 2021

 

Each committee has a charter specifying such committee’s responsibilities and duties. Each committee charter, including the Audit Committee and Compensation and Governance Committee charters, are reviewed annually. These charters are available on the Company’s website at www.SeacoastBanking.com or upon written request.

 

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Key Committee Responsibilities

 

AUDIT COMMITTEE COMPENSATION AND GOVERNANCE COMMITTEE
Key Responsibilities Key Responsibilities

•      reviews Seacoast’s financial statements and internal accounting controls, and reviews reports of regulatory authorities and controls, and reviews reports of regulatory authorities and determines that all audits and examinations required by law are performed

•      appoints the independent auditors, reviews their audit plan, and reviews with the independent auditors the results of the audit and management’s response thereto

•       reviews the procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and changes to the Company’s Code of Conduct, and approves related party transactions

•      reviews the adequacy of the internal audit budget and personnel, the internal audit plan and schedule, and results of audits performed by the internal audit staff and those outsourced to a third party; oversees the audit function and appraises the effectiveness of internal and external audit efforts

•      determines the compensation of the Company’s and the Bank’s key executive officers

•      recommends director compensation for Board approval

•      administers the Company’s incentive compensation plans and other employee benefit plans

•      oversees the preparation of the “Compensation Discussion and Analysis” section of this proxy statement

•      identifies and recommends to the Board qualified individuals to serve as members of the Boards of Directors of the Company and/ or the Bank

•      oversees efforts to create a diverse workforce that fosters and supports an inclusive culture

•      takes a leadership role in shaping corporate governance policies, practices, and guidelines, and oversees the Board’s governance processes

•      proposes recommendations to the Board of Directors concerning management development and succession planning activities at the senior levels of management

Independence / Qualifications Independence / Qualifications

•      all committee members are independent under Nasdaq and SEC rules and each member is able to read and understand financial statements

•      at least one committee member is an “audit committee financial expert” as defined by Item 407 of Regulation S K; the Board has determined that Christopher E. Fogal and Robert J. Lipstein are such financial experts

•      the Audit Committee met two times in private session with our independent auditor, and two times in private session without members of management present, following meetings in 2020

•      all committee members are independent under Nasdaq and SEC rules

•      no member of the committee is a former or current officer or employee of the company or any of its subsidiaries

•      no member has any interlocking relationship with the Company requiring disclosure under the rules of the SEC

ENTERPRISE RISK MANAGEMENT COMMITTEE CORPORATE DEVELOPMENT COMMITTEE
Key Responsibilities Key Responsibilities

•      monitors the risk framework to assist the Board in identifying, considering, and overseeing critical issues and opportunities

•      evaluates strategic opportunities from a risk perspective, highlights key risk considerations embedded in such strategic opportunities, and makes recommendations on courses of action to the Board based on such evaluation

•      provides oversight of the risk management monitoring and reporting functions to help ensure these functions are independent of business line or risk-taking processes

•      makes recommendations to the Board regarding the Company’s risk appetite, limits and policies and reviewing the strategic plan to help ensure it aligns with the Board-approved risk appetite

•      reviews key management, systems, processes and decisions, and assesses the integrity and adequacy of the risk management function to help build risk assessment data into critical business systems

•      recommends to the Board the capital policy consistent with the Company’s risk appetite and reviews capital adequacy and its allocation to each line of business

•      supports, sources and/or challenges M&A activities related to banks and non-bank entities as pertinent to the Company’s stated strategic objectives

•      oversees business model transformation activities including investments in corporate development

•      reviews capital allocations and planning to ensure an acceptable return on capital while ensuring timely exits from businesses that do not provide an acceptable return or have limited growth prospects

•      reviews the Company’s long-term corporate development strategies and monitors progress tracking

•      makes inquiries of management that appropriate strategic metrics and modeling capabilities are used in order to assess the strength of existing strategies and potential investments, aligned with the Company’s stated strategic objectives

•      ensures that management is effectively and consistently communicating with shareholders in a manner that is aligned with the Company’s broader strategic vision

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AUDIT COMMITTEE REPORT

 

The Audit Committee is currently comprised of five directors: Dennis J. Arczynski, Christopher E. Fogal, Maryann Goebel, Robert J. Lipstein (Chair) and Alvaro J. Monserrat.

 

The purpose of the Audit Committee (the “Committee”) is to assist the Board of Directors (the “Board”) of Seacoast Banking Corporation of Florida (the “Company”) in its general oversight of the Company’s accounting, auditing and financial reporting practices. Management is primarily responsible for the Company’s financial statements, systems of internal controls and compliance with applicable legal and regulatory requirements. The Company’s independent registered public accounting firm, Crowe LLP, for the year ended December 31, 2020 is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those financial statements with accounting principles generally accepted in the United States, as well as expressing an opinion (pursuant to Section 404 of the Sarbanes-Oxley Act of 2002) on the effectiveness of internal control over financial reporting.

 

The members of the Committee are not professional auditors, and their functions are not intended to duplicate or to certify the activities of management and the independent registered public accounting firm, nor can the Committee certify that the Company’s registered public accounting firm is “independent” under applicable rules. The Committee serves a board-level oversight role, in which it provides advice, counsel and direction to management and the independent registered public accounting firm on the basis of the information it receives, discussions with management and the independent registered public accounting firm, and the experience of the Committee’s members in business, financial and accounting matters. To carry out its responsibilities, the Committee held nine meetings in 2020.

 

In the performance of its oversight responsibilities, the Committee has reviewed and discussed with management and Crowe LLP the audited financial statements of the Company for the year ended December 31, 2020. Management represented to the Committee that all financial statements were prepared in accordance with accounting principles generally accepted in the United States and that these statements fairly present the financial condition and results of operations of the Company at the dates and for the periods described. The Committee has relied upon this representation without any independent verification, except for the work of Crowe LLP. The Committee also discussed these statements with Crowe LLP, both with and without management present, and has relied upon their reported opinion on these financial statements. The Committee’s review included discussion with Crowe LLP of the matters required to be discussed under Public Company Accounting Oversight Board standards.

 

With respect to the Company’s independent registered public accounting firm, the Committee, among other things, discussed with Crowe LLP matters relating to its independence and received from Crowe LLP the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Committee concerning independence.

 

On the basis of these reviews and discussions, and subject to the limitations of its role, the Committee recommended that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the Securities and Exchange Commission.

 

The Audit Committee:

 

Robert J. Lipstein, Chair

Dennis J. Arczynski

Christopher E. Fogal

Maryann Goebel

Alvaro J. Monserrat

February 26, 2021

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OWNERSHIP OF OUR COMMON STOCK

 

The tables below provide information regarding the beneficial ownership of our common stock as determined in accordance with SEC rules and regulations as of the Record Date by (i) each of the Company’s directors, (ii) each of the executive officers named in the Summary Compensation Table, (iii) all current directors and executive officers as a group, and (iv) each beneficial owner of more than 5%. As of the Record Date, 55,295,596 shares of common stock were outstanding. Unless otherwise indicated, and subject to community property laws where applicable, the Company believes that each of the shareholders named in the table below has sole voting and investment power with respect to the shares indicated as beneficially owned.

 

Director, Executive Officers and Certain Beneficial Stock Ownership

 

As of the Record Date, based on available information, all directors, director nominees and executive officers of Seacoast as a group (14 persons) beneficially owned approximately 1,198,712 outstanding shares of common stock, constituting 2.2% of the total number of shares of common stock outstanding at that date as set forth in the table below. In addition, as of the Record Date, various subsidiaries of Seacoast, as fiduciaries, custodians, and agents, had sole or shared voting power over 219,256 outstanding shares, or 0.1% of the outstanding shares, of Seacoast common stock, including shares held as trustee or agent of various Seacoast employee benefit and stock purchase plans.

 

The following table also sets forth information regarding the number and percentage of shares of common stock held by all persons and entities, or principal shareholders, known by the Company to beneficially own 5% or more of the Company’s outstanding common stock, exclusive of directors and officers. The information regarding beneficial ownership of common stock by the entities identified below are included in reliance on reports filed by the entities with the SEC, except that the ownership percentage is based on the Company’s calculations.

 

Name of Beneficial Owner Amount and Nature of Percentage of
Directors and Executive Officers Beneficial Ownership Outstanding Shares
Dennis J. Arczynski 54,087 (1) *
Jacqueline L. Bradley 28,800 (2) *
H. Gilbert Culbreth, Jr. 84,214 (3) *
Julie H. Daum 62,568 (4) *
Christopher E. Fogal 46,870 (5) *
Maryann Goebel 28,832 (6) *
Dennis S. Hudson, III 592,612 (7) 1.1%
Robert J. Lipstein 12,423 (8) *
Alvaro J. Monserrat 16,759 (9) *
Thomas E. Rossin 17,639 (10) *
Charles M. Shaffer 166,357 (11) *
Tracey L. Dexter 8,409 (12) *
Joseph M. Forlenza 16,209 (13) *
Juliette P. Kleffel 62,933 (14) *
All directors and executive officers as a group (14 persons) 1,198,712 2.2%
Name of Beneficial Owner Amount and Nature of Percentage of
Certain Other Beneficial Owners Beneficial Ownership Outstanding Shares
BlackRock, Inc.    
55 East 52nd Street 7,914,580 (15) 14.3%
New York, NY 10055    
T. Rowe Price Associates, Inc.    
100 E. Pratt Street 5,169,288 (16) 9.3%
Baltimore, MD 21202    
Capital World Investors    
333 South Hope Street 3,781,901 (17) 6.9%
Los Angeles, CA 90071    
The Vanguard Group    
100 Vanguard Boulevard 3,361,372 (18) 6.1%
Malvern, PA 19355    

 

* Less than 1%

 

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(1)Includes 1,672 shares held in a limited liability company, as to which shares Mr. Arczynski has sole voting and investment power. Also includes 9,110 shares held jointly with his wife, as to which shares Mr. Arczynski may be deemed to share both voting and investment power. Also includes 33,744 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Arczynski has no voting or dispositive power. Also includes 5,561 shares that Mr. Arczynski has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(2)Includes 14,802 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Ms. Bradley has no voting or dispositive power. Also includes 6,998 shares that Ms. Bradley has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(3)Includes 10,000 shares held in an IRA, 26,000 shares held in a family limited liability company, and 8,200 shares held in a family sub-S corporation, as to which shares Mr. Culbreth has sole voting and investment power. Also includes 1,000 shares held jointly with Mr. Culbreth’s children and 10,328 shares held jointly with his wife, as to which shares Mr. Culbreth may be deemed to share both voting and investment power. Also includes 24,872 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Culbreth has no voting or dispositive power. Also includes 2,142 shares that Mr. Culbreth has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(4)Includes 27,011 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Ms. Daum has no voting or dispositive power. Also includes 8,138 shares that Ms. Daum has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(5)Includes 4,490 shares held jointly with Mr. Fogal’s wife and 4,688 shares held by Mr. Fogal’s wife, as to which shares Mr. Fogal may be deemed to share both voting and investment power. Also includes 18,193 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Fogal has no voting or dispositive power. Also includes 8,138 shares that Mr. Fogal has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(6)Includes 17,271 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Ms. Goebel has no voting or dispositive power. Also includes 5,561 shares that Ms. Goebel has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(7)Includes 51,416 shares held by Sherwood Partners Ltd, of which Mr. Hudson is the general partner and has sole voting and investment power with respect to such shares. Also includes 18,104 shares held jointly with Mr. Hudson’s wife. Also includes 29,964 shares held in the Company’s Retirement Savings Plan, and 272,631 shares that Mr. Hudson has the right to acquire by exercising options that are exercisable within 60 days after the Record Date. Also includes 31,282 shares held by Mr. Hudson’s wife as to which shares Mr. Hudson may be deemed to share both voting and investment power. Includes 9,356 shares held in an IRA.
(8)Includes 10,111 shares held jointly with Mr. Lipstein’s wife.
(9)Includes 10,186 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Monserrat has no voting or dispositive power and 3,573 shares that Mr. Monserrat has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(10)Includes 72 shares held jointly with Mr. Rossin’s wife. Also includes 17,567 shares held in the Bank’s Directors’ Deferred Compensation Plan for which receipt of such shares has been deferred, and as to which shares Mr. Rossin has no voting or dispositive power.
(11)Includes 1,028 shares held in the Company’s Retirement Savings Plan and 4,611 shares held in the Company’s Employee Stock Purchase Plan. Also includes 104,251 shares that Mr. Shaffer has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(12)Includes 215 shares held in the Company’s Employee Stock Purchase Plan. Also includes 2,842 shares that Ms. Dexter has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(13)Includes 12,635 shares that Mr. Forlenza has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(14)Includes 35,966 shares that Ms. Kleffel has the right to acquire by exercising options that are exercisable within 60 days after the Record Date.
(15)According to a Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) on January 26, 2021 with the SEC with respect to Seacoast common stock beneficially owned as of December 31, 2020, BlackRock, Inc. has sole voting power with respect to 7,822,759 shares of Seacoast common stock and sole dispositive power with respect to 7,914,580 shares of Seacoast common stock. The Schedule 13G/A provides that BlackRock is a parent holding company and that the shares of common stock listed on the Schedule 13G/A are owned by various subsidiaries of BlackRock. In addition, BlackRock reported that various persons have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, these shares of common stock, and that one such person, iShares Core S&P Small-Cap ETF, is known to have more than 5% of Seacoast common stock.
(16)According to a Schedule 13G/A filed jointly by T. Rowe Price Associates, Inc., (“Price Associates”) and T. Rowe Price Funds on February 16, 2021 with the SEC with respect to Seacoast common stock beneficially owned as of December 31, 2020, Price Associates has sole voting power with respect to 1,094,795 shares of Seacoast common stock and sole dispositive power with respect to 5,169,288 shares of Seacoast common stock. The Schedule 13G/A provides that Price Associates is an investment advisor and not more than 5% of Seacoast common stock is owned by any one client subject to the investment advice of Price Association. The schedule further provides that the shares of common stock listed on the Schedule 13G/A are owned by various subsidiaries of Price Associates. In addition, Price Associates reported that in respect to securities owned by any one of the T. Rowe Funds, only the custodian has the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, these shares of common stock.
(17)According to a Schedule 13G filed by Capital World Investors, a division of Capital Research and Management Company (“CRMC”), and Capital International Limited, collectively, on February 16, 2021 with the SEC with respect to Seacoast common stock beneficially owned as of December 31, 2020, Capital World Investors has sole voting power with respect to 3,781,901 shares of Seacoast common stock and sole dispositive power with respect to 3,781,901 shares of Seacoast common stock. The Schedule 13G provides that Capital World Investors is an investment advisor and that the shares of common stock listed on the Schedule 13G is owned on behalf of one client subject to the investment advice of Capital World Investors. In addition, Capital World Investors reported that various persons have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, these shares of common stock, and that one such person, SMALLCAP World Fund, Inc., is known to have more than 5% of Seacoast common stock.
(18)According to a Schedule 13G filed by The Vanguard Group on February 8, 2021 with the SEC with respect to Seacoast common stock beneficially owned as of December 31, 2020, The Vanguard Group has shared sole dispositive power with respect to 3,270,011 shares of Seacoast common stock and 91,361 shares have shared dispositive voting power and 51,690 shares with shared voting power. The Schedule 13G provides that The Vanguard Group is an investment advisor and that the shares of common stock listed on the Schedule 13G are owned by various subsidiaries of The Vanguard Group, the parent holding company. In addition, The Vanguard Group reported that no one person is known to have more than 5% of Seacoast common stock.

 

Delinquent Section 16(a) Reports

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of the Company’s common stock, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Based on the Company’s review of such reports and written representations from the reporting persons, the Company believes that, during and with respect to fiscal year 2020, all filing requirements applicable to its directors, executive officers and beneficial owners of more than 10% of its common stock were complied with in a timely manner, except for:

 

The Form 4 for Dennis S. Hudson, III filed with the SEC on November 20, 2020 which reported the acquisition of 9,356 shares of common stock on November 6, 2020. The Company believes that the Form 4 filed on November 20, 2020 reflects Mr. Hudson’s current holdings.

 

Named Executive Officers

 

Named Executive Officers (“NEOs”) are appointed annually at the organizational meetings of the respective Boards of Directors of Seacoast and the Bank, to serve until the next annual meeting and until successors are chosen and qualified. In 2020, the Board appointed two new NEOs, Tracey L. Dexter and Joseph M. Forlenza. Mr. Hudson served as CEO until December 31, 2020. Mr. Shaffer served as President and COO in 2020 and became CEO on January 1, 2021.

 

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Dennis S. Hudson, III

Executive Chairman

and former CEO

 

Age: 65                 Education: MBA, Florida State University                                 Tenure: 44 years

 

SELECT PRIOR EXPERIENCE: 

●     Chairman of Seacoast since July 2005 

●     Chairman and of the Bank since 1992

●     CEO of Seacoast from 1998 to 2020 and Bank from 1992 to 2020 

●     Director of Seacoast since 1984

●     Over 40 years of banking experience with Seacoast

OTHER AFFILIATIONS/CERTIFICATIONS: 

●     Chesapeake Utilities Corporation, member of board, audit and compensation committees 

●     PENN Capital Funds, a mutual fund group managed by PENN Capital Management, independent director 

●     Miami Branch of Federal Reserve Bank of Atlanta Board from 2005 to 2010 

   

 

Charles M. Shaffer

President and CEO

 

Age: 47                 Education: MBA, University of Central Florida                          Tenure: 23 years

 

SELECT PRIOR EXPERIENCE:

●     CEO and Director of Seacoast since January 2021

●     President of Seacoast since June 2020

●     Held various executive roles of Seacoast and the Bank including EVP, Community Banking Executive, Chief Financial Officer and Chief Operating Officer and Controller from 2005 to 2020

●     Over 20 years of diverse experience from multiple roles including strategy, corporate finance, traditional sales, and alternative sales platforms

OTHER AFFILIATIONS/CERTIFICATIONS:

●     CPA licensed in Florida

●     Board Member, United Way of Martin County

●     Board Member, Florida Bankers Association, BancServ

●     Board Member, Armellini Express Lines

   

 

Tracey L. Dexter

EVP, Chief Financial Officer

 

Age: 47                 Education: B.S., Florida State University                                  Tenure: 4 years

 

SELECT PRIOR EXPERIENCE:

●     SVP and Controller at Seacoast from January 2017 to June 2020

●     Senior Manager, Banking and Capital Markets Practice of PricewaterhouseCoopers

●     Held various positions in audit and advisory roles

●     Over 20 years of accounting and audit experience

OTHER AFFILIATIONS/CERTIFICATIONS:

●     CPA licensed in Florida

●     Former Series-7 Registered Financial Advisor

   

 

Joseph M. Forlenza

EVP and Chief Risk Officer

 

Age: 59                 Education: B.S., Pace University                                              Tenure: 4 years

 

SELECT PRIOR EXPERIENCE:

●     EVP and Chief Audit Executive of Seacoast and Bank from January 2017 to April 2019

●     Managing Director and Chief Audit Executive of Treasury and Commercial Lending with GE Capital from 2015 to 2017

●     Served numerous roles, including Chief Audit Executive for broker-dealer and Audit Director covering capital markets, banking and risk management functions for over 15 years at Citigroup

●     Various audit and consulting in financial services positions with Coopers & Lybrand

●     Over 35 years of financial services, risk management, treasury, valuation, and internal audit experience

OTHER AFFILIATIONS/CERTIFICATIONS:

●     CPA licensed in New York

●     Member of Risk Management Association

   

 

Juliette P. Kleffel

EVP, Chief Banking Officer

Age: 50                 Education: The Stonier Graduate School of Banking              Tenure: 6 years

 

SELECT PRIOR EXPERIENCE:

●     EVP and Community Banking Executive and Central Florida Market President at Seacoast to July 2020

●     EVP and Community Banking Executive at Seacoast from 2017 to 2020

●     EVP and Small Business Banking Sales Leader at Seacoast from October 2014 to January 2017

●     Held various positions managing Government Lending/SBA, Treasury Sales, Marketing, as well as Commercial Lending with BankFIRST from November 2000 to October 2014 until the merger into Seacoast

●     Over 24 years of retail and business banking experience in the Orlando market

OTHER AFFILIATIONS/CERTIFICATIONS:

●     Executive Director and Vice President for The Gardens at DePugh Nursing Home

●     Board Member and Finance Committee member for the Central Florida YMCA

●     Board Member of Edgewood Children’s Ranch

●     Lifetime Director for the West Orange County Chamber of Commerce

●     Former Executive Director for the National Entrepreneur Center and the Garden Theatre

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EXECUTIVE COMPENSATION

 

Compensation Discussion & Analysis

 

Executive Summary

 

2020 Performance Considerations

 

Our strategic plan for 2020 continued to focus on shareholder value creation, and the CGC used average annual earnings per share (“EPS”) growth and average return on average tangible common equity (“ROATE”) as key indicators that management is on the right path to produce sustainable long-term value. EPS provides a direct link to value creation at the shareholder level, and ROATE provides a measure of risk- adjusted returns that illustrates the health of the Company. The CGC determined the amount of annual and long-term incentives to award to our named executive officers (“NEOs”) for 2020 using a qualitative assessment of management’s performance in 2020 and 2019, respectively, taking into account both growth and returns with consideration given to our risk framework. The assessment process included scorecards that identified shared and individual goals for the year in the areas of operations, technology, risk, talent, and business transformation, with our average annual EPS growth and average annual ROATE serving as the primary considerations for long-term incentive awards granted in 2020. Grants made in 2020 were based on the scorecard assessment of performance in the prior year.

 

Say on Pay Results

 

In 2020, our “Say on Pay” proposal received 99.5% support, in line with 99.7% in 2019; indicating plan design and governance are well aligned with our shareholders. While our historical results indicate strong support for Seacoast’s NEO compensation, the CGC continues to review our executive compensation structure to increase its effectiveness and further align with shareholder interests in light of changing industry dynamics.

 

Our Executive Compensation Design Priorities and Prohibitions

 

Design Priorities (what we do) Design Prohibitions (what we don’t do)

   Manage our executive compensation programs to have a strong pay-for-performance orientation.

 

   Link performance-based incentive awards to enterprise-wide and individual performance goals.

 

   Grant our NEOs equity-based awards based on Company and individual performance.

 

   Emphasize long-term stock-based awards in our executive compensation and total incentive strategies.

 

   Set meaningful performance goals that align management with shareholder interests.

 

   Require Tier 1 Capital compliance thresholds be met in order for any portion of the PSUs to vest.

 

  Ensure that incentives are sensitive to risk considerations.

 

  Provide minimal executive benefits and perquisites.

 

   Maintain executive stock ownership requirements, and require post-settlement holding periods or mandatory deferral of certain performance-based awards.

 

   Provide reasonable executive post-employment and change-in-control protections.

 

   Require “clawback” provisions for certain incentive-based compensation to ensure accountability.

 

   Engage with shareholders on their concerns or priorities for our director and executive compensation programs. 

û    No repricing of stock options without shareholder approval.

 

û    No incentives that encourage improper risk taking.

 

û    No excise tax gross-ups upon a change in control.

 

û    No single trigger vesting acceleration on unvested equity in connection with a change-in-control for awards granted since 2014.

 

û    No hedging, and limited pledging, of our common shares by our directors and executive officers.

 

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2020 NEO Pay

 

·Cumulative base salary for our CEO was unchanged for 2020. Adjustments included increases in recognition of Mr. Shaffer’s promotion to President and COO (11% salary increase) and Ms. Kleffel’s expanded role as Chief Banking Officer (15% salary increase) in 2020.
·In 2020, our NEOs received short-term incentive awards based on Company performance for the year and the achievement of individual goals established in March related to the Company’s response to the pandemic. The CEO and COO awards were also based on the successful transition to our new CEO and additional changes in our leadership structure, the achievement of our Vision 2020 Strategic Plan and the roll out of the new strategic plan.
·In 2020, our NEOs received awards of Performance Share Units (“PSUs”) in quantities that vest based on the level of achievement of goals relating to average annual growth in EPS and average annual ROATE over a three-year period relative to the performance of a selected Peer Group. PSUs for which performance goals are met will vest in 2023, subject to the grantee’s continued service. Ms. Kleffel received a stock award comprised entirely of RSAs.
·In 2020, our NEOs received awards of time-based Restricted Stock Awards (“RSAs”) that vest over a three-year period.
·The number of PSUs and RSAs granted in 2020 was determined by the CGC based upon the scorecard assessment of 2019 performance. Any awards granted based upon 2020 scorecard performance will be granted in 2021. Where applicable, the CGC will use the grant date value of the PSUs or RSAs for purposes of calculating any potential severance benefits that are based upon prior year bonuses.

 

Summary of Compensation Decisions in 2020

 

The CGC structures the compensation program for executive management with an emphasis on long-term and short-term performance-based compensation. For planning purposes, the CGC focuses on the sum of annual base salary, short-term incentives and the values it considers and approves for equity awards, which are granted in the subsequent year based on annual scorecard performance. We refer to this planning value as Total Direct Compensation or “TDC”. The CGC considered this TDC in its decision process when determining the value of the total incentive award value granted in 2020. The following chart illustrates the relative emphasis of each pay element in relation to TDC, as disclosed in our 2020 Summary Compensation Table (“SCT”),

 

2020 NEO Mix of Total Direct Compensation

 

 

* Excludes Ms. Kleffel, whose 2020 equity awards consisted entirely of RSAs.

 

In general, the CGC closely aligns the compensation of our executives with the creation of both short-term profitability and long-term value for our shareholders by structuring a substantial portion of TDC as “at risk” incentive pay. The CGC relies on this structure to ensure that both short-term and long-term incentive awards are fully reflective of performance for the year in which cash bonuses are earned and new target award values are determined, and that performance-based equity serves as the key element of incentive compensation.

 

Base Salary

 

All of our named executive officers receive a base salary that reflects the CGC’s assessment of the NEO’s skills and value to Seacoast. It is the CGC’s philosophy to keep salaries within a competitive market range and increase base salaries in response to increases in the size, scope or complexity of an executive’s job, in connection with a promotion or other forms of recognition that appropriately reflect value considerations, or to maintain the desired level of internal relative value. Mr. Hudson’s base salary remained unchanged for 2020. In 2020, Mr. Shaffer was promoted as President with additional responsibilities incorporated into his duties in addition to those as Chief Operating Officer (“COO”) of the Company. Ms. Kleffel also expanded the scope of her role with added responsibilities with her promotion of Chief Banking Officer (“CBO”)

 

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in 2020. Additionally, Ms. Dexter was promoted to the Company’s Chief Financial Officer (“CFO”) in 2020, and Mr. Forlenza became a NEO with his role as Chief Risk Officer (“CRO”). The 2020 annualized base salary actions for our named executive officers are summarized in the following table.

 

2020 Annualized Base Salary Actions

 

Named Executive Officer 2019 2020 % Change
Dennis S. Hudson, III $600,000 $600,000 --
Charles M. Shaffer $450,000 $500,000 11%
Tracey L. Dexter -- $330,000 --
Joseph M. Forlenza -- $325,000 --
Juliette P. Kleffel $325,000 $375,000 15%

 

Annual Short-Term Incentives

 

Prior to 2019, Seacoast did not award annual cash incentives to its NEOs, rather choosing to grant additional time-vested stock awards in recognition of annual performance. Beginning in 2019, the bank transitioned to awarding cash bonuses, with initial year payout amounts determined at the discretion of the CGC and the CEO.

 

For 2020 short-term incentives, Seacoast established an objective annual incentive structure that includes both qualitative and quantitative components, reflecting the individual executive’s performance against pre-established individual goals as well as Company performance in 2020 relative to peer performance for pre-provision pre-tax return on assets, ratio of net charge-offs to total loans, and tangible common equity divided by tangible assets. Individual goals covered the implementation of specific qualitative goals related to managing the impact of the pandemic on the Company’s operations. These included implementing government programs such as the Paycheck Protection Program, implementing and executing a Pandemic Business Continuity Plan, sustaining ongoing operations, and implementing and executing appropriate robust credit risk processes and controls.

 

Equity Awards

 

Seacoast’s equity strategy has evolved in order to increase the alignment of equity recipients with shareholder interests, support our retention strategies, and elevate our visibility and appeal as an employer of choice for highly skilled talent. The following tables summarize the evolution and emphasis of our equity strategies since 2018.

 

Evolution of Seacoast’s Equity Strategies

 

Grant Cycle Type of
Equity
  Performance Period / Payout Range /
Option Vesting Period
  Performance Objective(s)
        · Adjusted EPS
  PSUs · 3-year Performance Period · Adjusted Return on Average Tangible Common Equity
2018   · Payout as a % of Target (0-200%) · Tier 1 Capital Compliance
(Apr.)      
    · 3-year ratable vesting    
  Options · Exercise price set at 120% of grant date fair · Stock Price Appreciation above 120% of exercise price
      market value of the underlying shares    
    · 75% of 2019 LTI Award performance-based    
    · 3-year Performance Period (2019-2021), with · Relative Average Annual EPS Growth (50%)
  PSUs   additional service required through the end of · Relative Average Annual ROATE (50%)
2019     2022 · Tier 1 Capital Compliance
(Dec.)   · Payout as a % of Target (0-225%)    
   
    · 25% of 2019 LTI Award · Pay-for-performance as part of LTI in relation to
  RSAs · 3-year retable vesting   overall performance in 2018
    · 75% of 2020 LTI Award performance-based    
    · 3-year Performance Period (2020-2022), with · Relative Average Annual EPS Growth (50%)
  PSUs   additional service required through the end of 2023 · Relative Average Annual ROATE (50%)
2020       · Tier 1 Capital Compliance
(Apr.)   · Payout as a % of Target (0-225%)    
  RSAs · 25% of 2020 LTI Award · Pay-for-performance as part of LTI in relation to
  · 3-year retable vesting   overall performance in 2019

 

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2020 Performance Stock Unit (“PSU”) Awards

 

2020 PSUs represent stock-settled incentive awards where payout can vary from 0% to 225% of the target number of shares granted. One- half of the PSUs will be earned based on Seacoast’s three-year (2020-2022) average annual growth in EPS (“EPS PSUs”) relative to the Peer Group. The remaining one-half of the PSUs will be earned based on Seacoast’s three-year (2020-2022) average annual return on average tangible common equity (“ROATE PSUs”) relative to the Peer Group. PSUs for which performance goals are met will vest on December 31, 2023, subject to the grantee’s continued service. The CGC selected EPS and ROATE given their importance in our strategic plan and significant influence on our stock price performance over sustained periods of time. In each case, the number of PSUs actually earned will be determined by our performance as compared to the median Peer Group performance as approved by the CGC at the time of grant, subject to an absolute performance payout cap. PSU payouts will be capped at 100% of the target number of shares granted in the event that certain absolute Company performance hurdles are not met, irrespective of performance relative to the Peer Group. The PSUs also include a risk-based condition (meet or exceed minimum requirements for Tier 1 Regulatory Capital) that must be met in order for the awards to vest.

 

Time-Based Restricted Stock Awards (“RSA”)

 

Our pay-for-performance stock incentive strategy is balanced with the use of time-based RSAs to enhance holding power, retention and recruitment. The CGC granted RSAs to the NEOs as part of the LTIP. The RSAs granted in 2020 were issued in relation to 2019 performance, and vest ratably over a three-year period.

 

Other Considerations Involving 2020 Equity Awards

 

The compensation structure is designed to place greater emphasis on performance metrics in order to better align the award structure relative to peers. Based on the long-term incentive plan award structure, no stock options were granted in 2020. Our NEOs are subject to stock ownership requirements and holding periods in connection with stock-settled incentive awards.

 

Overview of Executive Compensation

 

Role of the CGC

 

The CGC is responsible for establishing our compensation philosophy and for overseeing our executive compensation policies and programs generally. As part of this responsibility, the CGC:

 

·regularly interacts with our executives in order to make informed decisions on performance, potential, developmental needs and their value to Seacoast;

·approves our executive compensation programs, including construction of our peer group, issuance of equity awards, and certification of results;

  · evaluates the performance of the CEO and determines the CEO’s compensation;

·reviews the performance of other members of executive management and their compensation adjustments proposed by the CEO; and

·assesses our incentive strategies from a risk perspective, ensuring that earnings opportunities strike the right balance between risk and reward and that our executives are not motivated to take excessive risks.

 

Role and Independence of the Compensation Consultant

 

The CGC is comprised solely of independent directors and met six times in 2020. The Committee engaged Alvarez and Marsal, LLC (“A&M”) as its independent compensation consultant to advise the CGC in 2020. A&M periodically attended CGC meetings, including executive sessions, and provided information and advice independent of management and, at the direction of the CGC Chairperson, assisted management with various activities that support Seacoast’s executive compensation program. The CGC discussed these considerations pursuant to SEC and NASDAQ rules and concluded that the engagement of A&M, and the services it provided did not raise any conflict of interest.

 

In addition, in 2020 the CGC engaged Frederic W. Cook & Co., Inc. (“FW Cook”) as special compensation consultants to advise the CGC on matters in connection with the CEO transition, which was effective in January 2021. FW Cook periodically attended CGC meetings and provided information and advice to the CGC with respect to the compensation of Mr. Hudson and Mr. Shaffer and Mr. Shaffer’s employment agreement. The CGC discussed these considerations pursuant to SEC and NASDAQ rules and concluded that the engagement of FW Cook, and the services it provided did not raise any conflict of interest.

 

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Benchmarking and Peer Group

 

The CGC relies on market pay data and related research to inform its decision on the construction and expected outcomes of our director and executive compensation programs. In considering comparator group construction, the CGC recognizes that Seacoast competes for executive talent against a wide variety of financial services organizations and companies in other industries that rely on or want to acquire the skill sets that our executives offer. As a result, the CGC relies substantially on information developed from a size-appropriate, high-performing core bank industry compensation comparator group in its decision process. In terms of assessing the effect of the CGC’s decisions on how we position pay vis-à-vis market, we rely exclusively on pay and performance data developed using our core bank industry compensation comparator group or, as needed, from the McLagan Regional Bank Survey. The CGC does not identify a specific target level or percentile of base salary, incentive cash, or stock-based awards for our NEOs. Instead, pay outcomes, which include the target value of stock awards to be earned for future performance, initially are determined by internal performance and talent considerations. The CGC then compares contemplated NEO pay actions against market pay levels for reasonableness with the market assessments serving as key points of reference and validation in the CGC’s process.

 

In 2020, the CGC evaluated the peer group for determining relative performance (the “Peer Group”). To better align a relevant peer group mix, the Peer Group was selected from comparable publicly-traded banks, primarily southeast companies, with market caps between $1- $3 billion and total assets above $5 billion. This determination reflects the CGC’s desire to incorporate an important relative performance dimension that is critical to our efforts to continue to grow the value of Seacoast. The CGC sees this approach as appropriate given its expectations for performance and growth.

 

The CGC reviews the Peer Group annually to ensure continued appropriateness, and makes changes when it believes warranted. In 2020, the CGC removed two banks, South State Corporation and CenterState Bank Corporation, due to acquisition during the year, and added one bank, City Holding Company, to the prior year’s peer group. Our 2020 Peer Group was comprised of:

 

2020 PEER GROUP
Ameris Bancorp (ABCB) FB Financial Corp.(FBK) ServisFirst Bankshares (SFBS)
Atlantic Union Bankshares (AUB) First BanCorp (FBNC) Simmons First National (SFNC)
BancFirst Corp. (BANF) First Busey Corp (BUSE) Tompkins Financial (TMP)
BancorpSouth Bank (BXS) Heritage Financial (HFWA) TowneBank (TOWN)
Brookline Bancorp (BRKL) Pacific Premier Bancorp (PPBI) Trustmark Corporation (TRMK)
City Holding Co. (CHCO) Renasant Corp. (RNST) United Community (UCBI)
Eagle Bancorp (EGBN) S&T Bancorp, Inc. (STBA) WesBanco Inc. (WSBC)
Enterprise Financial (EFSC) Sandy Spring Bancorp (SASR)

  

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Executive Compensation Framework Highlights

 

Structure

Reasoning

COMPENSATION COMPARATOR GROUP:

 

A comparator group of banks of similar size, business model and financial performance.

 

 

 

Our business model requires us to compete with these groups for executive talent in order to achieve our business objectives related to growth, innovation and profitability.

COMPENSATION PHILOSOPHY:

 

•    No specific target level or percentile of pay relative to comparable positions

•    Pay decisions reflect the performance of the Company and each executive in relation to prior year pay and performance, planning considerations, and relationship to market pay levels and practices of the peer group

•    Actual pay relative to the market data will vary based on performance in terms of the calibration of total incentive awards and amounts ultimately earned from our LTIP

 

 

•    Improve pay for performance linkage

•    Align pay with overall value of each individual to Seacoast

•    Ensure reasonableness of pay relative to industry peers and market data

•    Ensure a significant portion of pay is “at-risk”, consistent with philosophy and comparator group practices

•    To understand potential payments assuming various Company performance outcomes and understand how potential performance extremes are reflected in pay, which is a component of our compensation risk assessment

EQUITY:

 

•    Mix of time-based and performance-based structure with a long-term emphasis weighted more heavily toward PSUs (75%)

•    Meaningful stock-based award opportunities “right-sized” for company and individual performance considerations and needs

•    A substantial portion of TDC for our named executive officers delivered as performance-based pay

•    Annual award cycles

•    3-year PSU performance period aligning program design with typical industry practices. A 50% mandatory 12-month deferral requirement on the settlement of any shares earned ensures sensitivity to risk considerations and additional holding power

•    Risk considerations serve as an additional vesting requirement on PSUs

 

 

•    PSUs allow for upside in underlying shares, providing direct linkage between potential award payouts and management’s success at driving earnings growth and improving returns without inappropriate risk taking

•    RSAs provide a key retentive component to our overall compensation package whereby enhancing retention of the management team

•    Provide more compensation contingent upon achievement of performance goals or our stock’s performance

•    Aligns more closely with shareholder interests

•    Continuously recalibrate performance expectations and promote consistent improvement

•    Enhance long-term performance accountability

•    Provide executives with an economic incentive to deliver sustainable results within a risk appropriate framework

PERFORMANCE SCORECARDS:

 

•    Performance scorecards serve as the basis for annual cash incentive compensation and time-based RSAs; and the target value of PSUs granted in the subsequent year

 

 

 

•    Establish clear expectations for individual goals as well as link with enterprise-wide growth, return and risk management objectives

•    To understand important context that may impact the evaluation of each executive such as; experience, skills and scope of responsibilities, individual performance and succession planning

  

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2020 EXECUTIVE COMPENSATION ACTIONS

 

The CGC and our CEO rely on qualitative assessments of the performance of our NEOs and other members of the senior management team given our accelerated growth, the rapid evolution of business, and the changing demands on our executives. The assessment process relies on scorecards that are approved at the start of each year, establishing performance guidelines against which results are compared at the end of the year. Performance ratings are then developed for each NEO, which are used to inform the CGC’s decision regarding pay actions. The CGC believes that qualitative assessments of NEO performance for the purpose of compensation, development and advancement continue to serve the best interests of our shareholders.

 

Our CEO works closely with the CGC in establishing executive compensation and overall bonus and incentive payments each year. The CEO evaluates the performance of each NEO and other senior executives, and, based on these performance evaluations, market compensation surveys, and other data, he will then make qualitative assessments and recommendations to the CGC. The CEO also presents incentive compensation payment recommendations for the Committee’s consideration. The CGC evaluates and makes a qualitative assessment of the CEO’s performance and determines his compensation without the CEO present.

 

Performance-based equity and time-based equity granted in 2020 were issued based on 2019 performance scorecard evaluations. Equity awards relating to 2020 performance scorecard evaluations will be granted in 2021. Cash incentives were based on 2020 performance scorecard evaluations.

 

2020 Pay Outcomes

 

  Dennis S. Hudson, III Charles M. Shaffer Tracey L. Dexter Joseph M. Forlenza Juliette P. Kleffel
  Executive Chairman President & CEO EVP & CFO EVP & CRO EVP & CBO
  & former CEO        
Base Salary(1) $600,000 $500,000 $330,000 $325,000 $375,000
Cash Incentive $600,000 $600,000 $215,000 $185,000 $250,000
RSA(2) $200,000 $82,500 $31,250 $56,250 $350,000
PSU(2) $600,000 $247,500 $93,750 $168,750

 

(1)Includes promotional increases for Mr. Shaffer’s promotion to President and COO and Ms. Dexter’s promotion to EVP and CFO on June 15, 2020.
(2)Grant date value; each executive officer received PSUs with the exception of Ms. Kleffel who received a stock award comprised entirely of RSAs.

 

Key Influences in Compensation Decisions

 

Performance Metrics

 

The components of our executive compensation program demonstrate alignment with long-term shareholder value creation. The CGC considers performance metrics for both the CEO and each NEO, collectively. In 2019, the CGC evaluated performance metrics and made the following LTIP element changes: 1) the use of relative rather than absolute measures for performance metrics, 2) remove “premium” options, and 3) overall LTIP mix to 25% time-based RSAs and 75% performance-based PSUs split evenly between EPS and ROATE. One-half of the performance-based stock units (the “EPS Growth Units”) shall be eligible to vest based on the Company’s Average Annual EPS Growth for the three-year performance period, relative to the average ratio of the Peer Group, and one-half of the performance-based stock units (the “ROATE Units”) shall be eligible to vest based on the Company’s Average Annual ROATE for the same performance period, relative to the average ratio of the Peer Group. PSUs for which performance goals are met will vest one year from the performance period, subject to the grantee’s continued service. In 2020, the CGC evaluated performance metrics and determined that the same LTIP elements were appropriate.

 

In 2020, senior executives were assessed on the following performance:

 

 

Component What it Measures Why it is Used

Average Annual EPS Growth

Earnings per share (EPS) is the portion of the Company’s profit allocated to each share of common stock. A broadly used indicator of profitability, useful for tracking performance over time or in comparison to benchmarks.

Average Annual ROATE

Net income as a percentage of average shareholders’ equity, excluding intangible assets. Adjustments are made to net income to facilitate analysis of performance trends.

A broadly used indicator of effective utilization of capital, useful for tracking performance over time or in comparison to benchmarks.

 

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Individual Contributions

 

The CGC also considers roles and responsibilities of the CEO and each NEO and links most of the pay for senior executives to long-term business strategies and key priorities. Considerations for 2020 awards included the following items.

 

Dennis S. Hudson, III, Executive Chairman of the Board and former Chief Executive Officer

 Strengthening of the executive team and other improvements in key operating areas
 Strong credit quality and advances in enterprise risk management framework
 Significant upgrades and oversight of our risk management capabilities, across the Company
 Attainment of growth and strategic initiatives measured by growth, accretive acquisitions, increased percentages of new accounts and loans originated through alternative channels, and a lower fixed cost structure

 Implementation of plan to improve operating leverage and customer experience via channel optimization
 Maintain strong associate engagement and enterprise-wide alignment with the business strategy
 Smooth and successful transition to our new CEO with succession support provided throughout the year

Charles M. Shaffer, President and Chief Executive Officer

Ongoing leadership and contributions to our business transformation and strategy efforts
Expansion to include oversight of line of business operating units
Corporate Development, including the successful acquisition and integration of First Bank of the Palm Beaches and Freedom Bank
Continued talent upgrading across the enterprise
Improvements in internal and external communications and deeper engagement with shareholders
Development and communication of our new strategic plan

Tracey L. Dexter, Executive Vice President, Chief Financial Officer

Contributions to enterprise-wide business transformation efforts
Expansion of responsibilities of financial planning and analysis and strategy
Successful implementation and monitoring of Current Expected Credit Losses (“CECL”) modeling and processes

Joseph M. Forlenza, Executive Vice President, Chief Risk Officer

Contributions to the Company’s enterprise-wide risk management process
Improvements in risk and audit functions
Substantial enhancements to the BSA Program and Third Party Risk Management Program

Juliette P. Kleffel, Executive Vice President, Chief Banking Officer

Contributions to enterprise-wide business transformation efforts
Substantial year-over-year productivity gains in organizational units
Executive role model and champion of the customer experience
Expansion of responsibilities across the organization including residential, marine and SBA lending, wealth management and the Customer Service Center
Key driver of Seacoast’s balanced growth strategy, delivering growth in new client acquisition, and enhancing client satisfaction in multiple areas across the enterprise.

 

Other Elements of the 2020 Compensation Program for Executive Officers

 

Change in Control Severance Benefits

 

We provide change in control severance benefits to the named executive officers to encourage them to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being in the face of a potential change in control of the Company. These agreements are described under “Employment and Change in Control Agreements”, and detailed information is provided under “2020 Other Potential Post-Employment Payments.”

  

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Retirement and Employee Welfare Benefits

 

We sponsor a retirement savings plan for employees of the Company and its affiliates (the “Retirement Savings Plan”) and a nonqualified deferred compensation plan for certain executive officers (the “Executive Deferred Compensation Plan”). We offer these plans, and make contributions to them, to provide employees with tax-advantaged savings vehicles and to encourage them to save money for their retirement. The Executive Deferred Compensation Plan is described under “Executive Compensation–Nonqualified Deferred Compensation.”

 

In addition to our retirement programs, we provide employees with welfare benefits, including hospitalization, major medical, disability and group life insurance plans and paid vacation. We also maintain a Section 125 cafeteria plan that allows our employees to set aside pre-tax dollars to pay for certain benefits. All of the full-time employees of the Company and the Bank, including the named executive officers, are eligible to participate in the Retirement Savings Plan and our welfare plans, subject to the terms of those plans.

 

The Bank provides supplemental disability insurance to certain members of executive management, including the named executive officers, in excess of the maximum benefit of $15,000 per month provided under the group plan for all employees. The supplemental insurance provides a benefit up to 70% of the executive’s monthly pre-disability income based on the executive’s base salary and annual incentive compensation not to exceed $17,500. Coverage can be converted and maintained by the individual participant after employment ends. The benefit may be reduced by income from other sources, and a partial benefit is paid if a disabled participant is able to work on a part-time basis. In 2020, the Company paid an aggregate of $4,543 for supplemental disability insurance for the named executive officers.

 

The retirement and employee welfare benefits paid by the Company for the named executive officers that are required to be disclosed in this proxy statement are included in the “Summary Compensation Table,” the “Components of All Other Compensation,” and the “Nonqualified Deferred Compensation Table,” and are described in the footnotes thereto.

 

Executive Perquisites

 

We do not consider perquisites to be a significant element of our compensation program. However, we believe they are important and effective for attracting and retaining certain executive talent. We do not provide tax reimbursements, or “gross-ups,” on perquisites. For additional details regarding the executive perquisites, see the “Summary Compensation Table” and the “Components of All Other Compensation.”

 

Risk Analysis of Incentive Compensation Plans

 

The CGC reviews the sensitivity of our performance and incentives to risk considerations for our executives throughout the year. It also periodically reviews our cash and equity incentive strategies for other key contributors. In 2020, the CGC with the assistance of our Chief Human Resources Officer completed a review of our incentive strategies for our incentive eligible non-executive employees. The CGC concluded that our incentive compensation programs are designed with the appropriate balance of risk and reward in relation to our overall business strategy, will not motivate people to take excessive or imprudent risks, and do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

Clawback Policy

 

We have adopted a Compensation Recoupment Policy to recover incentive compensation from any executive officer when:

 

the incentive compensation payment or award (or the vesting of such award) was based upon the achievement of financial results that were subsequently the subject of an accounting restatement, regardless of whether the executive engaged in misconduct or otherwise contributed to the requirement for the restatement; and

a lower payment or award would have been made to the executive officer based upon the restated financial results.

 

The policy is available on our website at www.SeacoastBanking.com. The policy anticipates the final rules implementing the clawback provision of the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, but will be amended, if necessary, when final regulations are issued by the SEC.

 

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Hedging and Pledging Policy

 

The Company has adopted a hedging and pledging policy. The policy prohibits our employees, including our executive officers and directors, from purchasing any financial instrument or entering into any transaction that is designed to hedge or offset any decrease in the market value of our stock, including, without limitation, exchange funds, prepaid variable forward contracts, equity swaps, puts, calls, collars, forwards or short sales.

 

In addition, directors and executive officers are required to obtain advance approval of any pledging of Company shares as collateral for loans, including holding Company shares in margin accounts. The policy also limits pledging to reasonable purposes (as defined in the policy) and limits the value of the securities pledged in connection with a loan or other indebtedness to $250,000.

 

Stock Ownership Guidelines

 

The Board has established stock ownership guidelines for its officers and directors, as described below:

 

       

Individual/Group 

Stock Ownership Target 

Holding Requirement 

    Before Ownership
Target Met
After Ownership
Target Met

Chief Executive Officer

5 times annual base salary

75% of net shares until target number of shares is met

 

50% of net shares held for one year after vesting / exercise

 

Other Senior Executive Officers

3 times annual base salary

Non-Employee Directors

3 times annual retainer

 

Our executive compensation program is designed to allow a participant to earn targeted ownership over a reasonable period, usually within five years, provided individual and Company targets are achieved and provided the participant fully participates in the program. For purposes of these guidelines, net sharesmeans shares of stock in excess of those sold or withheld to satisfy the minimum tax liability upon vesting or conversion. All of our named executive officers and non-employee directors have met or are on track to meet their stock ownership target.

 

Impact of Deduction Limit

 

Code Section 162(m) generally establishes, with certain exceptions, a $1 million deduction limit for all publicly held companies on compensation paid to an executive officer in any year. Prior to enactment of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), this limitation did not generally apply to compensation paid to the Chief Financial Officer or to compensation paid based on achievement of pre-established performance goals if certain requirements were met. The exemption from Section 162(m)’s deduction limit for CFO pay and performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to all of our NEOs in excess of $1 million in 2018 and future years will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. The CGC reserves the right to pay executives’ compensation that is not deductible under Section 162(m).

 

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Strategies to Ensure that Incentive Compensation is Sensitive to Risk Considerations

 

Seacoast implemented a number of changes to our incentive strategies in our equity award cycle over the last few years. These strategies have been updated in response to shareholder feedback and governance considerations. The CGC and our Chief Risk Officer share the view that our incentive strategies strike the right balance between risk and reward, motivating and retaining our executives in ways that align with shareholder interests but do not motivate inappropriate or excessive risk taking. The evolution of our incentive strategies reflect our commitment to listen to our shareholders and continuously refine our programs to align with our governance and risk management efforts given the growth of Seacoast and changes within the industry and what is deemed as best practice.

 

Strategy

Compensation Design

Compensation is tied to equity and Company performance

•    Time-based RSAs vesting period is three years

•    Performance period for PSU awards is three years (2020-2022)

Seacoast performance at levels that equal or exceed the industry

•     Annual incentive compensation that incorporates a quantitative component based on relative performance for pre-provision pre-tax return on assets, ratio of net charge-offs to total loans, and tangible common equity as a percent of tangible assets

•     PSU metrics based on three-year average annual growth in EPS and average return on tangible common equity compared to peers, which our shareholders views as key indicators of our performance

Governance Considerations

 

•     PSU performance period allows for direct and relevant pay and performance comparisons with industry competitors and alternative investments that share our risk profile

•     PSU program include two types of goals; PSU will be earned for growth in average annual EPS, and PSU will be earned for average annual ROATE, each compared to peer ratios

•     PSU payouts are capped in the event that certain absolute Company performance in EPS and ROATE are not met

Risk Considerations

 

•     PSUs for which performance goals are met will vest one year after the end of the performance period, subject to the grantee’s continued service. In addition, we implemented a mandatory deferral feature on new PSU awards so that settlement of at least 50% of any shares earned will be delayed for an additional 12 months

•     Maintained the 12-month stock holding requirement on 50% of the net shares received upon the exercise of options

•     Maintained service and risk-based vesting requirements on all new performance-contingent and performance-based equity awards

•    Maintained “clawback” provisions for certain incentive-based compensation to ensure accountability

 

 

COMPENSATION AND GOVERNANCE COMMITTEE REPORT

 

The Compensation and Governance Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation and Governance Committee recommended to the board of directors, and the board of directors approved, that the Compensation Discussion and Analysis be included in this proxy statement.

 

This report shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall this report be incorporated by reference by any general statement incorporating by reference this 2021 Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such Acts.

 

Compensation and Governance Committee:

 

H. Gilbert Culbreth, Jr.

Julie H. Daum

Maryann Goebel, Chair

Alvaro J. Monserrat

 

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EXECUTIVE COMPENSATION TABLES

 

2020 Summary Compensation Table

 

The table below sets forth the elements that comprise total compensation for the named executive officers of the Company for the periods indicated.

 

Name and Principal
Position
Year Salary
($)(1)
Bonus
($)
Stock
Awards
($)(2)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)
All Other
Compensation
($)(3)
Total
($)
                 
Dennis S. Hudson, III 2020 600,000 600,000 799,993 -- -- 33,710 2,033,703
Executive Chairman & former 2019 600,000 200,000 699,962 -- -- 33,370 1,533,332
CEO of Seacoast and Bank 2018 600,000 -- 568,732 306,246 -- 33,910 1,508,888
                 
                 
Charles M. Shaffer 2020 475,000 600,000 329,973 -- -- 27,425 1,432,398
President and Chief 2019 421,667 259,000 399,977 -- -- 23,085 1,103,729
Executive Officer 2018 331,250 -- 474,938 104,994 -- 22,675 933,857
                 
                 
Tracey L. Dexter 2020 289,949 215,000 124,972 -- -- 10,689 640,610
EVP, Chief Financial                
Officer                
                 
                 
Joseph M. Forlenza 2020 325,000 185,000 224,978 -- -- 11,939 746,917
EVP, Chief Risk Officer                
                 
                 
Juliette P. Kleffel 2020 375,000 250,000 349,985 -- -- 19,848 994,833
EVP, Chief Banking 2019 316,667 164,000 274,946 -- -- 19,708 775,321
Officer 2018 285,000 -- 325,954 69,998 -- 19,075 700,027

 

(1)Amount of salary actually received in any year may differ from the annual base salary amount due to the timing of changes in base salary, which typically occur in April or following a mid-year promotion. A portion of executive’s base salary included in this number may have been deferred into the Company’s Executive Deferred Compensation Plan (“EDCP”), the amounts of which are disclosed in the Nonqualified Deferred Compensation Table for the applicable year. Executive officers who are also directors do not receive any additional compensation for services provided as a director.
(2)Represents the aggregate grant date fair value as of the respective grant date for each award calculated in accordance with FASB ASC Topic 718. The assumptions made in valuing stock awards reported in this column are discussed in Note K to the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. Generally, the aggregate grant date fair value is the amount that the company expects to expense for accounting purposes and does not correspond to the actual value that the named executives will realize from the award. For additional information regarding such grants, see “Compensation Discussion and Analysis – Elements of the 2020 Compensation Program for Executive Officers – Equity Awards.” See also “2020 Grants of Plan-Based Awards”.

 

Each of our executive officers received PSUs with the exception of Ms. Kleffel who received a stock award comprised entirely of RSAs. Each executive receiving PSUs also received RSAs. With respect to the PSU awards, the grant date fair value included in the table assumes that target performance is achieved. The maximum value for each executive as of the grant date, assuming the highest level of performance will be achieved, is:

 

 

Name Grant Date Value
Assuming Target
Performance
Grant Date Value
Assuming Maximum
Performance
Dennis S. Hudson, III $ 599,999 $ 1,349,998
Charles M. Shaffer 247,484 556,839
Tracey L. Dexter 93,733 210,899
Joseph M. Forlenza 168,738 379,661
Juliette P. Kleffel -- --

 

(3)Additional information regarding other compensation is provided in “2020 Components of All Other Compensation”.
(4)Mr. Hudson served as CEO during 2020 and retired from that position effective December 31, 2020. Mr. Shaffer, who served as President and Chief Operating Officer in 2020, became CEO on January 1, 2021.

 

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2020 Components Of All Other Compensation

 

  Company Paid   Company Paid    
  Contributions Company Paid Contributions to    
  to Retirement Contributions Supplemental LTD    
Name Savings Plan to EDCP Insurance Car Allowance Total
Dennis. S. Hudson, III $11,150 $12,600 $960 $9,000 $33,710
Charles M. Shaffer $9,865 $7,600 $960 $9,000 $27,425
Tracey L. Dexter $9,922 -- $767 -- $10,689
Joseph M. Forlenza $11,043 -- $896 -- $11,939
Juliette P. Kleffel $9,888 -- $960 $9,000 $19,848

 

2020 Grants Of Plan-Based Awards

 

The following table sets forth certain information concerning plan-based awards granted during 2020 to the named executive officers. 

 

      All Other Stock All Other Option Exercise or Grant Date Fair
    Estimated Future Payouts Under Awards: Number Awards: Number Base Price Value of Stock
    Equity Incentive Plain Awards of Shares of of Securities of Option and Option
  Grant Threshold Target Maximum Stock or Units Underlying Options Awards Awards (1)
Name Date (#) (#) (#) (#) (#) ($/Sh) ($)

Dennis S. Hudson, III

4/1/2020 8,418 33,670 75,762 33,670     600,000
   
  4/1/2020       11,223     199,993

Charles M. Shaffer

4/1/2020 3,472 13,888 31,248 13,888     247,484
   
  4/1/2020       4,629     82,489

Tracey L. Dexter

4/1/2020 1,315 5,260 11,836 5,260     93,733
   
  4/1/2020       1,753     31,239
Joseph M. Forlenza 4/1/2020 2,367 9,469 21,306 9,469     168,738
   
  4/1/2020       3,156     56,240

Juliette P. Kleffel

4/1/2020       19,640     349,985
         

 

(1)Represents the aggregate grant date fair value as of the respective grant date for each award, calculated in accordance with FASB ASC Topic 718. The assumptions made in valuing stock awards reported in this column are discussed in Note K to the Company’s audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020.

 

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Employment and Change in Control Agreements

 

The Company and the Bank currently maintain employment and change in control agreements with certain of the Company’s executive officers, the terms of which are described in more detail below.

 

Employment Agreement with Executive Chairman Hudson

 

On June 15, 2020, the Company and the Bank entered into an amendment to an employment agreement between Dennis S. Hudson, III and Seacoast and the Bank dated December 18, 2014, as amended June 27, 2017.

 

Under the agreement terms, Mr. Hudson shall serve as the Chairman of the Board of Directors and Chief Executive Officer of Seacoast and the Bank through December 31, 2020, and shall serve as Executive Chairman of the Board of Directors of Seacoast and the Bank effective January 1, 2021. The amended agreement extended Mr. Hudson’s employment under the agreement terms through December 31, 2021. Under the agreement, Mr. Hudson receives a base salary, medical, long-term disability and life insurance in accordance with the Bank’s insurance plans for senior management, as well as a car allowance and any other perquisites that are approved by the Board. Mr. Hudson may also receive other compensation including bonuses, and he will be entitled to participate in all current and future employee benefit plans and arrangements in which senior management of the Bank may participate. In addition, the agreement contains certain non-competition, non-disclosure and non-solicitation covenants.

 

Under the agreement, if Mr. Hudson is terminated for “cause”, or resigns without “good reason,” as defined in the agreement, he will receive payment of his base salary and unused vacation through the date of termination, and any unreimbursed expenses (collectively, the “Accrued Obligations”). The employment agreement also contains provisions for termination upon Mr. Hudson’s death or permanent disability.

 

If Mr. Hudson resigned for “good reason” or was terminated “without cause” prior to a change in control and prior to January 1, 2021, he would have received: 1) the Accrued Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) two times the sum of his base salary in effect on the date of separation, and the highest bonus earned by Mr. Hudson for the previous three full fiscal years (“Cash Bonus”) payable over 24 months, and b) continuing group medical, dental, vision and prescription drug plan benefits (“Continuing Benefits”) for two years.

 

If Mr. Hudson resigns for “good reason” or is terminated “without cause”, within twelve months following a change in control (as defined in the agreement), he will receive: 1) the Accumulated Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) three times the sum of his base salary in effect on the date of separation, and the Cash Bonus payable in a lump sum, and b) Continuing Benefits for 36 months. In response to the unintended negative consequence created by granting equity awards in lieu of cash bonuses for certain prior years, the CGC determined that the Cash Bonus portion of Mr. Hudson’s severance for such years would be calculated using the same bonus cash equivalent value that is relied on in determining the value of such equity awards.

 

In addition, under the agreement, Mr. Hudson is subject to the Company’s policies applicable to executives generally, including its policies relating to claw-back of compensation. For a further discussion of the payments and benefits to which Mr. Hudson would be entitled upon termination of his employment see “2020 Other Potential Post-Employment Payments.”

 

Employment Agreement with CEO Shaffer

 

On December 31, 2020, the Company and the Bank entered into an employment agreement with Mr. Shaffer. The employment agreement replaced the previous change of control agreement between these parties dated September 21, 2016. Under the agreement terms, Mr. Shaffer shall serve as the Company’s President and Chief Executive Officer and a member of the Board of Directors for Seacoast and the Bank effective January 1, 2021. The agreement extends Mr. Shaffer’s employment under the agreement terms for a term of three years and continuing until December 31, 2023 and provides for automatic one year extensions unless expressly not renewed.

 

Under the agreement, Mr. Shaffer receives a base salary, medical, long-term disability and life insurance in accordance with the Bank’s insurance plans for senior management, as well as a car allowance and any other perquisites that are approved by the Board. Mr. Shaffer may also receive other compensation including bonuses, and he will be entitled to participate in all current and future employee benefit plans and arrangements in which senior management of the Bank may participate. In addition, the agreement contains certain non-competition, non-disclosure and non-solicitation covenants.

 

Under the agreement, if Mr. Shaffer is terminated for “cause”, or resigns without “good reason,” as defined in the agreement, he will receive payment of his base salary and unused vacation through the date of termination, and any unreimbursed expenses (collectively, the “Accrued Obligations”). The employment agreement also contains provisions for termination upon Mr. Shaffer’s death or permanent disability.

 

If Mr. Shaffer resigns for “good reason” or is terminated “without cause” prior to a change in control, he will receive: 1) the Accrued Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) two times the sum of his base salary in effect on the date of separation, and the highest bonus earned by Mr. Shaffer for the previous three full fiscal years (“Cash Bonus”) payable over a period of 24 months, and b) continuing group medical, dental, vision and prescription drug plan benefits (“Continuing Benefits”) for two years. If Mr. Shaffer resigns for “good reason” or is terminated “without cause”, within twelve months following a change in control (as defined in the agreement), he will receive: 1) the Accumulated Obligations; and 2) upon execution of a release of all claims against the Company, severance of: a) three times the sum of his base salary in effect on the date of separation, and the Cash Bonus payable in a lump sum, and b) Continuing Benefits for 36 months. In response to the unintended negative consequence created by granting equity awards in lieu of cash bonuses for certain prior years, the CGC determined that the Cash Bonus portion of Mr. Shaffer’s severance for such years would be calculated using the same bonus cash equivalent value that is relied on in determining the value of such equity awards.

 

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In addition, under the agreement, Mr. Shaffer is subject to the Company’s policies applicable to executives generally, including its policies relating to claw-back of compensation. For a further discussion of the payments and benefits to which Mr. Shaffer would be entitled upon termination of his employment at December 31, 2020 see “2020 Other Potential Post-Employment Payments.”

 

Change in Control Agreements with Other Named Executive Officers

 

The Company entered into change in control employment agreements with Mr. Forlenza on March 30, 2017 and Ms. Kleffel on April 6, 2017 (each referred to here as the “Executive” or by name). The Company also entered into a change in control employment agreement with Ms. Dexter on January 20, 2021.

 

Each agreement has an initial term of one year and provides for automatic one-year extensions unless expressly not renewed. A change in control, as defined in the agreement, must occur during the term in order to trigger the agreement. The agreement provides that, once a change in control has occurred, the Company agrees to continue the employment of the Executive subject to the contract for a one-year period, in a comparable position as the Executive held in the 120-day period prior to the change in control, and with the same annual base pay and target bonus opportunity. If the Executive is terminated “without cause” or resigns for “good reason,” as defined in the agreement, during the one-year period following a change in control, the Executive will receive:

 

cash severance equal to a multiple one of the sum of (i) Executive’s Annual Base Salary at the rate in effect on the date of termination, and (ii) the Executive’s average annual performance bonus for the last three full fiscal years prior to the date of termination (“Executive’s Average Annual Performance Bonus”);
a prorated final year bonus, based on the Executive’s Average Annual Performance Bonus; and
health and other welfare benefits, as defined in the agreement, for a period of 12 months following termination.

 

In response to the unintended negative consequence created by granting equity awards in lieu of cash bonuses for certain prior years, the CGC determined that the Cash Bonus portion of each Named Executive Officer’s severance for such years would be calculated using the same bonus cash equivalent value that is relied on in determining the value of such equity awards. The Executive is required to execute a release of claims as a condition to receipt of severance under the Change in Control Agreement and is subject to protective covenants prohibiting the disclosure and use of the Company’s confidential information and, during the one-year period following a termination by the company any reason other than for death or disability, or by the Executive for Good Reason, protective covenants regarding non-competition, non-solicitation of protected customers; non-solicitation of employees, and non-disparagement of the Company or its directors, officers, employees or affiliates.

 

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Outstanding Equity Awards at Fiscal Year End 2020

 

The following table sets forth certain information concerning outstanding equity awards as of December 31, 2020 granted to the named executive officers. 

 

  Option Awards Stock Awards
  Number of Number of     Number of   Equity incentive plan Equity incentive plan awards:
  Securities Securities     Shares or Market Value of awards: number of market or payout value of
  Underlying Underlying Option   Units of Stock Shares or Units of unearned shares, unearned shares, units or
  Unexercised Unexercised Exercise Option That Have Not Stock That Have units or other rights other rights that have not
  Options Options Price Expiration Vested (1) Not Vested (2) that have not vested Vested (2)
Name (#) Exercisable (#) Unexercisable ($) Date (#) ($) (#) ($)
  19,400(3) -- 11.00 06/28/2023        
  50,000(3) -- 10.54 04/29/2024        
  17,975(3) -- 12.63 01/29/2023        
  51,956(3) -- 14.82 02/28/2024        
D. Hudson, III 78,021(3) -- 28.69 04/01/2027        
36,853 18,426(4) 31.15 04/01/2028        
              10,954(9) 322,595
              10,954(9) 322,595
          3,836(7) 112,970 17,173(10) 505,745
          11,223(8) 330,517 33,670(11) 991,582
  2,400(3) -- 11.00 06/28/2023        
  25,000(3) -- 10.54 04/29/2024        
  8,100(3) -- 12.63 01/29/2023        
  21,255(3) -- 14.82 02/28/2024        
C. Shaffer 28,544(3) -- 28.69 04/01/2027        
12,635 6,317(4) 31.15 04/01/2028        
          3,667(5) 107,993 3,755(9) 110,585
              3,755(9) 110,585
          2,192(7) 64,554 9,813(10) 288,993
          4,629(8) 136,324 13,888(11) 409,002
  1,895 947(4) 31.15 04/01/2028        
          1,106(5) 32,572 563(9) 16,580
T. Dexter             563(9) 16,580
        1,218(6) 35,870    
          301(7) 8,864 1,349(10) 39,728
          1,753(8) 51,626 5,260(11) 154,907
  8,424 4,211(4) 31.15 04/01/2028        
              2,503(9) 73,713
J. Forlenza             2,503(9) 73,713
          1,233(7) 36,312 5,520(10) 162,564
          3,156(8) 92,944 9,469(11) 278,862
  5,253(3) -- 15.99 03/31/2024        
  18,078(3) -- 28.69 04/01/2027        
  8,424 4,211(4) 31.15 04/01/2028        
J. Kleffel         2,568(5) 75,628 2,503(9) 73,713
              2,503(9) 73,713
          1,507(7) 44,381 6,746(10) 198,670
          19,640(8) 578,398    

 

(1) During the vesting period, the named executive officer has full voting and dividend rights with respect to the restricted stock, but does not have dividend rights with respect to the units until the performance criteria has been met.
(2) For the purposes of this table, the market value is determined using the closing price of the Company’s common stock on December 31, 2020 ($29.45).
(3) Represents option to purchase fully vested common stock, as long as named executive officer remains employed by the Company.
(4) Represents option to purchase common stock, of which one-third of the unexercisable shares covered by this award vested on April 2, 2021
(5) Represents time-vested restricted stock units granted on April 2, 2018, of which the remaining shares will vest on April 2, 2021.
(6) Represents time-vested restricted stock units granted on October 1, 2019, of which one-third of the shares vested on April 1, 2020, one-third of the shares will vest on April 1, 2021 and the remaining shares will, as long as named executive officer remains employed by the Company, vest one-third on April 1, 2022.
(7) Represents time-vested restricted stock awards granted on December 30, 2019, of which one-third of the shares vested on December 30, 2020, one-third of the shares will vest on December 30, 2021 and the remaining shares will, as long as named executive officer remains employed by the Company, vest one-third on December 30, 2022.
(8) Represents time-vested restricted stock awards granted on April 1, 2020, of which one-third of the shares will vest, as long as named executive officer remains employed by the Company, each one-third on April 1, 2021, April 1, 2022 and April 1, 2023.
(9) Represents performance-vesting restricted stock units granted on April 2, 2018, representing the named executive officer’s right to earn, on a one-for-one basis, shares of common stock, subject to performance requirements over a period ending December 31, 2020. These units vested one-half on March 1, 2021 and will vest one-half on December 31, 2021.
(10) Represents performance-vesting restricted stock units granted on December 30, 2019, representing the named executive officer’s right to earn, on a one-for-one basis, shares of common stock, subject to performance requirements over a period ending December 31, 2021 and additional service through December 31, 2022.
(11) Represents performance-vesting restricted stock units granted on April 1, 2020, representing the named executive officer’s right to earn, on a one-for-one basis, shares of common stock, subject to performance requirements over a period ending December 31, 2022 and additional service through December 31, 2023. The awards are more fully described under “Equity Awards–2020 Performance Share Unit (“PSU”) Awards”.

 

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2020 Option Exercises and Stock Vested

 

The following table reports the exercise of stock options, and the vesting of stock awards or similar instruments during 2020, for the named executive officers and the value of the gains realized on vesting. No stock options were exercised in 2020.

 

Name Number of Shares
Acquired on Vesting
Value Realized on
Vesting
Dennis S. Hudson, III 56,681 $1,481,093
Charles M. Shaffer 29,816 $720,884
Tracey L. Dexter 2,104 $39,192
Joseph M. Forlenza 1,034 $25,394
Juliette P. Kleffel 15,471 $377,223

 

Executive Deferred Compensation Plan

 

The Bank’s Executive Deferred Compensation Plan is designed to permit a select group of management and highly compensated employees, including two of the current named executive officers (Messrs. Hudson and Shaffer), to elect to defer a portion of their compensation until their separation from service with the Company, and to receive matching and other Company contributions that are precluded under the Company’s Retirement Savings Plan as a result of limitations imposed under ERISA.

 

The Executive Deferred Compensation Plan was amended and restated in 2007 to reflect changes arising from requirements under Code Section 409A and the underlying final regulations. As a result, each participant account is separated into sub-accounts to reflect:

 

  · contributions and investment gains or losses that were earned and vested on or before December 31, 2004, and any subsequent investment gains or losses thereon (the “Grandfathered Benefits”); and
  · contributions and earnings that were earned and vested after December 31, 2004 (the “Non-Grandfathered Benefits”).

 

A participant’s elective deferrals to the Executive Deferred Compensation Plan are immediately vested. The Company contributions to the Executive Deferred Compensation Plan vest at the rate of 25 percent for each year of service the participant has accrued under the Retirement Savings Plan, with full vesting after four years of service. If a participant would become immediately vested in his Company contributions under the Retirement Savings Plan for any reason (such as death, disability, or retirement on or after age 55), then he would also become immediately vested in his account balance held in the Executive Deferred Compensation Plan.

 

Each participant directs how his account in the Executive Deferred Compensation Plan is invested among the available investment vehicle options. The plan’s investment options are reviewed and selected annually by a committee appointed by the Board of Directors of the Company to administer the plan. The plan committee may appoint other persons or entities to assist it in its functions. No earnings or dividends paid under the Executive Deferred Compensation Plan are above-market or preferential.

 

All amounts paid under the plan are paid in cash from the general assets of the Company, either directly by the Company or via a “rabbi trust” the Company has established in connection with the plan. Nothing contained in the plan creates a trust or fiduciary relationship of any kind between the Company and a participant, beneficiary or other person having a claim to payments under the plan. A participant or beneficiary does not have an interest in his plan account that is greater than that of an unsecured creditor.

 

Upon a participant’s separation from service with the Company, he will receive the balance of his account in cash in one of the following three forms specified by the participant at the time of initial deferral election, or a subsequent permitted amendment:

 

  · a lump sum;
  · monthly installments over a period not to exceed five years; or
  · a combination of an initial lump sum of a specified dollar amount and the remainder in monthly installments over a period not to exceed five (5) years.

 

A participant may change his existing distribution election relating to Non-Grandfathered Benefits only in very limited circumstances. Upon death of the participant, any balance in his account will be paid in a lump sum to his designated beneficiary or to his estate.

 

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2020 Nonqualified Deferred Compensation

 

The following table discloses, for each of the named executive officers, contributions, earnings and balances during 2020 under the Executive Deferred Compensation Plan, described above. 

 

  Executive Registrant Aggregate Earnings / Aggregate Aggregate Balance
  Contributions in Contributions in Losses in Last Withdrawals/ at Last Fiscal
  Last Fiscal Year Last Fiscal Year Fiscal Year Distributions Year End
Name ($) ($)(1) ($)(2) ($) ($)
Dennis S. Hudson, III 16,443 12,600 11,077 -- 1,346,279(3)
Charles M. Shaffer 48,400 7,600 24,257 -- 161,089(4)
Tracey L. Dexter -- -- -- -- --
Joseph M. Forlenza -- -- -- -- --
Juliette P. Kleffel -- -- -- -- --

 

(1)Total amount included in the All Other Compensation column of the Summary Compensation Table.
(2)None of the earnings or dividends paid under the Executive Deferred Compensation Plan are above-market or preferential.
(3)Includes $303,581 contributed by the Company, as well as executive contributions, which were included in the Summary Compensation Table for previous years.
(4)Includes $18,350 contributed by the Company, as well as executive contributions, which were included in the Summary Compensation Table for previous years.

 

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2020 Other Potential Post-Employment Payments

 

The following table quantifies, for each of the named executive officers, the potential post-employment payments under the provisions and agreements described above under “Employment and Change in Control Agreements,” assuming that the triggering event occurred on December 31, 2020. The closing market price of the Company’s common stock on that date was $29.45 per share. None of the named executive officers would be eligible for any of these payments if they were terminated for cause.

  

 

Name Term
(in
years)
(#)
Cash
Severance
($)
Value of
Other
Annual
Benefits
($)

Total Value of
Outstanding
Stock
Awards that
Immediately
Vest

($)

In-the-Money
Value of
Outstanding
Stock Option
Awards that
Immediately
Vest

($)

Total Value
of

Benefit
($)

Dennis S. Hudson, III (5)            
Upon Termination without Cause or with Resignation for Good Reason(1)    2(2) 1,733,333 3,720 -- -- 1,737,053
Upon Death or Disability (1)    2(2) 1,200,000 3,720 2,586,005(3) --(3) 3,789,725
Upon Termination Following a Change-in-Control (1) 3 2,600,000 5,580 2,586,005(3) --(3) 5,191,585
Upon Change-in-Control where Award is not assumed by surviving entity -- -- -- 2,586,005(3) --(3) 2,586,005
Upon Change-in-Control where Award assumed by surviving entity -- -- -- --(3) --(3) --
Charles M. Shaffer (6)            
Upon Death or Disability (1) -- -- -- 1,228,036(3) --(3) 1,228,036
Upon Termination Following a Change-in-Control (4) 2 1,859,000 3,390 1,228,036 -- 3,090,426
Upon Change-in-Control where Award is not assumed by surviving entity -- -- -- 1,228,036(3) --(3) 1,228,036
Upon Change-in-Control where Award assumed by surviving entity -- -- -- --(3) --(3) --
Tracey L. Dexter            
Upon Death or Disability -- -- -- 162,093(3) --(3) 162,093
Upon Termination Following a Change-in-Control (4) 1 531,333 1,867 162,093 -- 695,293
Upon Change-in-Control where Award is not assumed by surviving entity -- -- -- 162,093(3) --(3) 162,093
Upon Change-in-Control where Award assumed by surviving entity -- -- -- --(3) --(3) --
Joseph M. Forlenza            
Upon Death or Disability -- -- -- 276,683(3) --(3) 276,683
Upon Termination Following a Change-in-Control(4) 1 537,667 1,996 276,683 -- 816,346
Upon Change-in-Control where Award is not assumed by surviving entity -- -- -- 276,683(3) --(3) 276,683
Upon Change-in-Control where Award assumed by surviving entity -- -- -- --(3) --(3) --
Juliette P. Kleffel            
Upon Death or Disability -- -- -- 845,833(3) --(3) 845,833
Upon Termination Following a Change-in-Control(4) 1 651,000 1,860 845,833 -- 1,498,693
Upon Change-in-Control where Award is not assumed by surviving entity -- -- -- 845,833(3) --(3) 845,833
Upon Change-in-Control where Award assumed by surviving entity -- --  -- --(3) --(3) -- 

  

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(1)As provided for in Mr. Hudson’s employment agreement, the Bank would continue to pay to Mr. Hudson or his estate or beneficiaries his annual base salary, including any other cash compensation to which he would be entitled at termination date, for the period indicated under Term. In addition, the Bank would continue to pay the insurance premium for Mr. Hudson, his spouse and eligible dependents for continued participation in any group medical, dental, vision and/or prescription drug plan benefits (including any excess COBRA cost of coverage) for the term indicated or until his earlier death. In the case of termination without cause or resignation for good reason, Mr. Hudson’s severance for the Term also would include an amount equal to his highest annual bonus for the previous three full fiscal years. In the case of termination without cause or resignation for good reason within twelve months following a change in control, severance payments would be made in a lump sum.
(2)The initial term of agreement is three years, but benefits under the agreement are paid for the Term as indicated in the table.
(3)As provided for in the award document. Starting with awards granted in January 2015, there is no vesting of equity in a change in control if the award is assumed by the surviving entity or otherwise equitably converted or substituted.
(4)As provided for change in control agreement, the Company shall pay the executive officer in a lump sum in cash within thirty (30) days after the date of termination the aggregate of the: (i) base salary through the termination date to the extent not paid (assumed already paid in table above), (ii) annual bonus (prorated in the event that the executive was not employed by the Company for the whole of such fiscal year), and (iii) annual base salary and annual bonus, multiplied by the Term as indicated in the table. Annual base salary is equal to 12 times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the executive officer by the Company in the 12-month period immediately preceding the month in which the triggering event occurs. Annual bonus is equal to the executive officer’s average annual bonus for the last three full fiscal years prior to the triggering event. All unvested stock options and restricted stock of the Company held by the executive officer shall immediately and fully vest on termination. In addition, the Company will pay or provide to the executive officer or eligible dependents “Welfare Benefits”, for a period of 18 months for Mr. Shaffer and 12 months for Ms. Dexter, Mr. Forlenza and Ms. Kleffel. “Welfare Benefits” include similar medical, prescription, dental, and vision insurance plans benefits paid by the Company prior to the change in control. If the executive officer’s employment is terminated by reason of death, disability, retirement or for cause within the term indicated following a change in control, no further payment is owed to the executive except for accrued obligations, such as earned but unpaid salary and bonus.
(5)On June 15, 2020, Mr. Hudson entered into an amended employment agreement with the Company. The employment contract terms are more fully described under “Employment and Change in Control Agreements”.
(6)On December 31, 2020, Mr. Shaffer entered into employment agreement with the Company effective January 1, 2021. The employment contract terms are more fully described under “Employment and Change in Control Agreements”.

  

CEO Pay Ratio

 

We are providing the following information to comply with Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K. For our last completed fiscal quarter at December 31, 2020, the median annual total compensation of our employees (other than Mr. Hudson, our CEO in 2020) was $61,238 and the annual total compensation for Mr. Hudson, as reported in the Summary Compensation Table was $2,033,703. Based on this information, for 2020, the ratio of compensation for our Chief Executive Officer to the median employee was 33:1. This ratio is specific to our Company and may not be comparable to any ratio disclosed by another company.

 

To identify the median of the annual total compensation of all of our employees, we reviewed 2020 compensation reflected in our payroll records as reported by our human resource information system (“HRIS”) for our over 900 associates as of December 31, 2020, which includes all full-time employees employed at the end of 2020. Using our HRIS we were able to determine any compensation earned by associates including regular pay, incentive, bonus, business continuity, and any other perquisites. No assumptions, adjustments, or estimates, including any cost of living adjustments were made in identifying the median employee. Next we calculated the median employee’s annual total compensation for 2020 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K for the Summary Compensation Table on page 31, consistent with the calculations we provide all of our Named Executive Officers. No adjustments were made to the annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation Table, to calculate the reported ratio of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all employees.

  

Equity Compensation Plan Information

 

The following table sets forth information about our common stock that may be issued under all of our existing compensation plans as of December 31, 2020.

 

       
  (a)   Number of securities remaining
  Number of securities to   available for future issuance
  be issued upon exercise of Weighted average exercise under equity compensation
  outstanding options, warrants price of outstanding options, plans (excluding securities
Plan Category and rights warrants, rights represented in column (a))
       
       
Equity Compensation plans      
approved by shareholders:      
2013 Plan (1) 839,884 $22.94 534,682
Employee Stock Purchase Plan (2) -- -- 33,401
       
TOTAL 839,884 $22.94 568,083

 

(1)Seacoast Banking Corporation of Florida 2013 Long-Term Incentive Plan. Shares reserved under this plan are available for issuance pursuant to the exercise of stock options and stock appreciation rights granted under the plan, and may be granted as awards of restricted stock, performance shares, or other stock-based awards, prospectively.
(2)Seacoast Banking Corporation of Florida Employee Stock Purchase Plan, as amended.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

 

 

General

 

Our non-employee directors are appointed to act on behalf of shareholders by overseeing critical aspects of our business strategy, operations, risk management and governance efforts. Our belief is that superior talent in the board room should generate exceptional levels of customer service, financial performance and, ultimately, superior shareholder returns compared to alternative investments. To this end, the Board is committed to identifying the best available talent to make meaningful contributions to our business and fully execute its duties and responsibilities on behalf of shareholders. The profile of our Board continues to evolve in response to the needs of a dynamic and growing organization. Our Board of Directors plays a meaningful role in helping Seacoast develop, test and implement our business, risk management, talent and reward strategies. The Board’s activities are focused on representing our shareholders in ways that position Seacoast to create significant value for customers, employees and our shareholders within a risk appropriate framework. For additional detail regarding skills and qualifications of our directors, see “Skills and Qualification Mix”.

 

As of the date of this proxy statement, Seacoast’s Board of Directors consists of eleven members divided into three classes, serving staggered three year terms as provided in our Articles of Incorporation. On June 15, 2020, Charles M. Shaffer was appointed to the Board of Directors (Class I Director) effective January 1, 2021. In addition, we were informed on January 7, 2021, that Director Herbert A. Lurie decided to resign from the board effective January 11, 2021. At this time, Seacoast’s Compensation and Governance Committee and Board of Directors believe that eleven directors is adequate to provide a diversity of background, experience and expertise, and that there are sufficient independent directors to staff the independent committees of the Board and provide independent oversight.

 

The Annual Meeting is being held to, among other things, elect four Class I directors of Seacoast, each of whom has been nominated by the CGC of the Board of Directors. Each of the nominees is presently a director of Seacoast. All of the nominees will also serve as members of the Board of Directors of Seacoast National Bank (the “Bank”). The members of the Boards of Directors of the Bank and the Company are the same except for Dale M. Hudson and T. Michael Crook, who are currently directors of the Bank only. If elected, each Class I director nominee will serve a three year term expiring at the 2024 Annual Meeting and until their successors have been elected and qualified.

 

Currently, the Board of Directors is classified as follows:

 

Class Term Names of Directors
Class I Term Expires at the 2021
Annual Meeting

Jacqueline L. Bradley 

H. Gilbert Culbreth, Jr.
Christopher E. Fogal 

Charles M. Shaffer

Class II Term Expires at the 2022
Annual Meeting
Dennis J. Arczynski
Maryann Goebel
Robert J. Lipstein
Thomas E. Rossin
Class III Term Expires at the 2023
Annual Meeting
Julie H. Daum
Dennis S. Hudson, III
Alvaro J. Monserrat

  

Manner for Voting Proxies

 

All shares represented by valid proxies, and not revoked before they are exercised, will be voted in the manner specified therein. If a valid proxy is submitted but no vote is specified, the proxy will be voted FOR the election of each of the four nominees for election as directors. Please note that banks and brokers that do not receive voting instructions from their clients are not able to vote their client’s shares in the election of directors. Although all nominees are expected to serve if elected, if any nominee is unable to serve, then the persons designated as proxies will vote for the remaining nominees and for such replacements, if any, as may be nominated by the CGC. Proxies cannot be voted for a greater number of persons than the number of nominees specified herein (four persons). Cumulative voting is not permitted.

 

The affirmative vote of the holders of shares of common stock representing a plurality of the votes cast at the Annual Meeting at which a quorum is present is required for the election of the directors listed below, which means that the director nominees who receive the highest votes “for” their election are elected. However, to provide shareholders with a meaningful role in uncontested director elections, which is the case for the election of the director nominees listed below, our Corporate Governance Guidelines provide that if any director nominee receives a greater number of votes “withheld” for his or her election than votes “for” such election, then the director will promptly tender his or her resignation to the Board following certification of the shareholder vote, with such resignation to be effective upon acceptance by the Board of Directors. The CGC would then review and make a recommendation to the Board of Directors as to whether the Board should accept the resignation, and the Board would ultimately decide whether to accept or reject the resignation. The Company will disclose its decision-making process regarding any resignation in a Form 8-K filed with the SEC. In contested elections, the required vote would be a plurality of votes cast and the resignation policy would not apply.