DEF 14A 1 def14a.htm DEF 14A ssb_Current Folio_proxy

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 (Amendment No.           )

 

 

Filed by the Registrant ☒

 

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a‑12

 

 

 

 

 

SOUTH STATE CORPORATION


(Name of Registrant as Specified In Its Charter)


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

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a‑6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:
  

 

(2)

Aggregate number of securities to which transaction applies:
  

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):
  

 

(4)

Proposed maximum aggregate value of transaction:
  

 

(5)

Total fee paid:
  

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:
   

 

(2)

Form, Schedule or Registration Statement No.:
   

 

(3)

Filing Party:
   

 

(4)

Date Filed:
  

 

 

 


 

SOUTH STATE CORPORATION

520 Gervais Street

Columbia, South Carolina 29201

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held April 19, 2018

TO THE SHAREHOLDERS:

Notice is hereby given that the Annual Meeting of the Shareholders (the “Annual Meeting”) of South State Corporation, a South Carolina corporation (the “Company”), will be held at the Company’s headquarters in the Orangeburg Conference Room on the second floor, 520 Gervais Street, Columbia, South Carolina at 2:00 p.m., on April 19, 2018, for the following purposes:

(1)

To elect four directors to serve three-year terms and two directors to serve two-year terms (Board of Directors unanimously recommends that you vote “FOR” this proposal);

(2)

To conduct an advisory vote on the compensation of the Company’s named executive officers (this is a non-binding, advisory vote; the Board of Directors unanimously recommends that you vote “FOR” this proposal);

(3)

To ratify, as an advisory, non-binding vote, the appointment of Dixon Hughes Goodman LLP, Certified Public Accountants, as independent registered public accounting firm for the Company for the fiscal year ending December 31, 2018 (Board of Directors unanimously recommends that you vote “FOR” this proposal); and

(4)

To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Only record holders of Common Stock of the Company at the close of business on February 16, 2018, are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof.

You are cordially invited and urged to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting in person, you are requested to promptly vote by telephone, internet, or by mail on the proposals presented, following the instructions on the Proxy Card for whichever voting method you prefer. If you vote by mail, please complete, date, sign, and promptly return the enclosed proxy in the enclosed self-addressed, postage-paid envelope. If you need assistance in completing your proxy, please call the Company at 800-277-2175. If you are a record shareholder, attend the meeting, and desire to revoke your proxy and vote in person, you may do so. In any event, a proxy may be revoked by a record shareholder at any time before it is exercised.

By Order of the Board of Directors

Picture 3

William C. Bochette, III

Secretary

Columbia, South Carolina

March 7, 2018

 

 


 

SOUTH STATE CORPORATION

520 Gervais Street

Columbia, South Carolina 29201

 

PROXY STATEMENT

FOR THE ANNUAL MEETING OF SHAREHOLDERS

to be Held April 19, 2018

This Proxy Statement is furnished to shareholders of South State Corporation, a South Carolina corporation (herein, unless the context otherwise requires, together with its subsidiaries, the “Company”), in connection with the solicitation of proxies by the Company’s Board of Directors for use at the 2018 Annual Meeting of Shareholders to be held at the Company’s headquarters in the Orangeburg Conference Room on the second floor, 520 Gervais Street, Columbia, South Carolina at 2:00 p.m., on April 19, 2018 or any adjournment thereof (the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Directions to the Company’s headquarters may be obtained by contacting Ebony Strudwick at 803-231-5037.

Solicitation of proxies may be made in person or by mail, telephone or other means by directors, officers and regular employees of the Company. The Company may also request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the common stock, par value $2.50 per share (the “Common Stock”), of the Company held of record by such persons, and the Company will reimburse the reasonable forwarding expenses. The cost of solicitation of proxies will be paid by the Company. This Proxy Statement was first mailed to shareholders on or about March 9, 2018.

The Company’s principal executive offices are located at 520 Gervais Street, Columbia, South Carolina 29201. The Company’s mailing address is P.O. Box 1030, Columbia, South Carolina 29202, and its telephone number is 800-277-2175.

ANNUAL REPORT

The Annual Report to Shareholders (which includes the Company’s Annual Report on Form 10-K containing, among other things, the Company’s fiscal year ended December 31, 2017 financial statements) accompanies this proxy statement. Such Annual Report to Shareholders does not form any part of the material for the solicitation of proxies.

REVOCATION OF PROXY

Any record shareholder returning the accompanying proxy may revoke such proxy at any time prior to its exercise (a) by giving written notice to the Company of such revocation, (b) by voting in person at the meeting, or (c) by executing and delivering to the Company a later dated proxy. Attendance at the Annual Meeting will not in itself constitute revocation of a proxy. Any written notice or proxy revoking a proxy should be sent to South State Corporation, P.O. Box 1030, Columbia, South Carolina 29202, Attention: William C. Bochette, III. Written notice of revocation or delivery of a later dated proxy will be effective upon receipt thereof by the Company.

QUORUM AND VOTING

The Company’s only voting security is its Common Stock, each share of which entitles the holder thereof to one vote on each matter to come before the Annual Meeting. At the close of business on February 16, 2018 (the “Record Date”), the Company had issued and outstanding 36,785,071 shares of Common Stock, which were held of record by approximately 28,300 persons. Only shareholders of record at the close of business on the Record Date are entitled to notice of and to vote on matters that come before the Annual Meeting. Notwithstanding the Record Date specified above, the Company’s stock transfer books will not be closed and shares of the Common Stock may be transferred subsequent to the Record Date. However, all votes must be cast in the names of holders of record on the Record Date.

The presence in person or by proxy of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. If a share is represented for any purpose at the Annual Meeting by the presence of the registered owner or a person holding a valid proxy for the registered owner, it is deemed to be present for the purposes of establishing a quorum. Therefore, valid proxies which are marked “Abstain” or “Withhold” or as to which no vote is marked, including proxies submitted by brokers who are the record owners of shares but who lack the power to vote such shares (so‑called “broker non-votes”), will be included in determining the number of votes present or represented at the Annual Meeting. If a quorum is not present or represented at the Annual Meeting, the shareholders entitled to vote, present in person or represented by proxy, have the power to adjourn the Annual Meeting from time to time until a quorum is present or represented. If any such adjournment is for a period of less than 30 days, no notice, other than an announcement at the Annual Meeting, is required to be given of the adjournment. If the adjournment is for 30 days or more, notice of the adjourned Annual Meeting will be given in accordance with the

1


 

Company’s Bylaws. Directors, officers and regular employees of the Company may solicit proxies for the reconvened Annual Meeting in person or by mail, telephone or other means. At any such reconvened Annual Meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the Annual Meeting as originally noticed. Once a quorum has been established, it will not be destroyed by the departure of shares prior to the adjournment of the Annual Meeting.

Provided a quorum is established at the Annual Meeting, directors will be elected by a majority of the votes cast at the Annual Meeting.  Shareholders of the Company do not have cumulative voting rights.

All other matters to be considered and acted upon at the Annual Meeting require that the number of shares of Common Stock voted in favor of the matter exceed the number of shares of Common Stock voted against the matter, provided a quorum has been established. Abstentions, broker non-votes and the failure to return a signed proxy will have no effect on the outcome of such matters.

Brokers are members of the New York Stock Exchange (the “NYSE”) which allows its member-brokers to vote shares held by them for their customers on matters the NYSE determines are routine, even though the brokers have not received voting instructions from their customers. If the NYSE does not consider a matter routine, then your broker is prohibited from voting your shares on the matter unless you have given voting instructions on that matter to your broker.  Because the NYSE does not consider Proposals No. 1 and  2 to be routine matters, it is important that you provide instructions to your bank or broker if your shares are held in street name so that your vote with respect to each of these matters is counted.  If you do not give your bank or broker voting instructions with respect to Proposals No. 1 and 2, your bank or broker may not vote on these matters.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE SHAREHOLDER MEETING TO BE HELD ON April 19, 2018

This Proxy Statement and the Company’s  2017 Annual Report to Shareholders (which includes its 2017 Annual Report on Form 10-K) are available at http://www.envisionreports.com/SSB.

ACTIONS TO BE TAKEN BY THE PROXIES

Each proxy, unless the shareholder otherwise specifies therein, will be voted according to the recommendations of the Board of Directors as follows:

 

 

Proposal One:

FOR the election of the persons named in this Proxy Statement as the Board of Directors’ nominees for election to the Board of Directors; and

Proposal Two:

FOR the approval of the compensation of the Company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement; and

Proposal Three:

FOR the ratification of the appointment of Dixon Hughes Goodman LLP as independent registered public accounting firm for the fiscal year ending December 31, 2018.

In each case where the shareholder has appropriately specified how the proxy is to be voted, it will be voted in accordance with his or her specifications.  As to any other matter of business that may be brought before the Annual Meeting, a vote may be cast pursuant to the accompanying proxy in accordance with the best judgment of the persons voting the same. However, the Board of Directors does not know of any such other business.

SHAREHOLDER PROPOSALS AND COMMUNICATIONS

Any shareholder of the Company desiring to include a proposal pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (the Exchange Act) in the Company’s  2019 proxy statement for action at the 2019 Annual Meeting of Shareholders must deliver the proposal to the executive offices of the Company no later than November 9, 2018, unless the date of the 2019 Annual Meeting of Shareholders is more than 30 days before or after April 18,  2019, in which case the proposal must be received a reasonable time before we begin to print and send our proxy materials.  Only proper proposals that are timely received and in compliance with Rule 14a-8 will be included in the Company’s  2019 proxy statement.

Under our Bylaws, shareholder proposals not intended for inclusion in the Company’s  2019 proxy statement pursuant to Rule 14a-8 but intended to be raised at the 2019 Annual Meeting of Shareholders, including nominations for election of director(s) other

2


 

than the Board’s nominees, must be received no earlier than 120 days and no later than 90 days prior to the first anniversary of the 2018 Annual Meeting of Shareholders and must comply with the procedural, informational and other requirements outlined in our Bylaws. To be timely for the 2019 Annual Meeting of Shareholders, a shareholder proposal must be delivered to the Secretary of the Company, P.O. Box 1030, Columbia, South Carolina 29202, no earlier than December 21, 2018 and no later than January 18,  2019.

The Company does not have a formal process by which shareholders may communicate with the Board of Directors. Historically, however, the chairman of the Board or the Governance Committee has undertaken responsibility for responding to questions and concerns expressed by shareholders.  In the view of the Board of Directors, this approach has been sufficient to ensure that questions and concerns raised by shareholders are adequately addressed.  Any shareholder desiring to communicate with the Board may do so by writing to the Secretary of the Company at P.O. Box 1030, Columbia, South Carolina 29202.

BENEFICIAL OWNERSHIP OF CERTAIN PARTIES

The following table sets forth the number and percentage of outstanding shares that exceed 5% beneficial ownership (determined in accordance with Rule 13d‑3 under the Securities Exchange Act of 1934) by any single person or group, as known by the Company:

 

 

 

 

 

 

 

 

Title of Class

    

Name and Address of Beneficial Owner

    

Amount of Beneficial Ownership

    

Percent of Shares Outstanding

 

Common Stock

 

The Vanguard Group
100 Vanguard Boulevard, Malvern, PA 19355

 

2,934,534
(1)
8.0

%

Common Stock

 

BlackRock, Inc.
55 East 52nd Street, New York, NY 10055

 

2,741,506
(2)
7.5

%

Common Stock

 

Wellington Management Company LLP
280 Congress Street, Boston, MA 02210

 

1,947,291
(3)
5.3

%


(1)

Beneficial ownership of The Vanguard Group is based on its Schedule 13G/A filed with the SEC on February 12, 2018. The Vanguard Group reported that it has sole power to vote or to direct the vote of 41,664 shares of Common Stock, shared power to vote or direct the vote of 3,876 shares of Common Stock, sole power to dispose or direct the disposition of 2,891,998 shares of Common Stock and shared power to dispose or direct the disposition of 42,536 shares of Common Stock.

(2)

Beneficial ownership of BlackRock, Inc. is based on its Schedule 13G/A filed with the U.S. Securities and Exchange Commission (“SEC”) on January 23,  2018. BlackRock, Inc. reported that it has sole power to vote or to direct the vote of 2,652,122 shares of Common Stock and sole power to dispose or direct the disposition of 2,741,506 shares of Common Stock.

(3)

Beneficial ownership of Wellington Management Group LLP is based on its Schedule 13G filed with the SEC on February 8, 2018. Wellington Management Group LLP reported that it has shared power to vote or to direct the vote of 1,714,106 shares of Common Stock and shared power to dispose or direct the disposition of 1,947,291 shares of Common Stock.

3


 

BENEFICIAL OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth, as of February 16, 2018, the number and percentage of outstanding shares of Common Stock beneficially owned by (i) each director and nominee for director of the Company, (ii) each executive officer named in the Summary Compensation Table, and (iii) all executive officers and directors of the Company as a group. Unless otherwise indicated, the mailing address for each beneficial owner is care of South State Corporation, P.O. Box 1030, Columbia, South Carolina 29202.

 

 

 

 

 

 

 

 

 

 

Amount and Nature of Beneficial Ownership

 

Name of Beneficial Owner

    

Common Shares
Beneficially Owned
(1)

    

Common Shares Subject
to a Right to Acquire
(2)

    

Percent of
Shares Outstanding

 

Jimmy E. Addison (6)

 

13,893

 

 —

 

*

%

Paula Harper Bethea (6)

 

12,941

 

 —

 

*

%

Renee R. Brooks (4) (6)

 

13,308

 

6,213

 

*

%

Joseph E. Burns (5) (6)

 

30,620

 

21,453

 

*

%

James C. Cherry

 

11,500

 

 —

 

*

%

Jean E. Davis (6)

 

12,721

 

 —

 

*

%

Martin B. Davis (6)

 

892

 

 —

 

*

%

Robert H. Demere, Jr. (3) (5) (6)

 

94,130

 

 —

 

*

%

Cynthia A. Hartley (6)

 

7,388

 

 —

 

*

%

Robert R. Hill, Jr. (6)

 

91,319

 

42,110

 

*

%

Robert R. Horger (6)

 

82,324

 

17,189

 

*

%

Thomas J. Johnson (6)

 

21,955

 

 —

 

*

%

Grey B. Murray (6)

 

3,455

 

 —

 

*

%

John C. Pollok (3) (4) (6)

 

66,205

 

43,180

 

*

%

James W. Roquemore (3) (5) (6)

 

45,365

 

 —

 

*

%

Thomas E. Suggs (6)

 

15,640

 

 —

 

*

%

Kevin P. Walker (6)

 

11,598

 

 —

 

*

%

John F. Windley (4)

 

25,517

 

26,286

 

*

%

All directors and executive officers as a group (19 persons) (4) (6)

 

564,409

 

156,431

 

1.96

%

  * Represents less than 1%.

 

 

 

 

 

 

 


(1)

As reported to the Company by the directors, nominees and executive officers.

(2)

Based on the number of shares of Common Stock acquirable by directors and executive officers through vested stock options within 60 days of the Record Date of February 16, 2018.

(3)

Excludes shares of Common Stock owned by or for the benefit of family members of the following directors and executive officers, each of whom disclaims beneficial ownership of such shares:  Mr. Pollok, 666 shares; Mr. Demere, 1,325 shares and Mr. Roquemore, 5,587 shares; and all directors and executive officers as a group, 7,578 shares.

(4)

Includes shares of Common Stock held as of December 31, 2017 by the Company under the Company’s 401(K) Employee Savings Plan, as follows: Mrs. Brooks, 4,064 shares; Mr. Pollok,  8,079 shares; Mr. Windley, 2,801 shares; and all directors and executive officers as a group,  14,944 shares.

(5)

For Mr. Demere, includes 52,257 shares of Common Stock owned by Colonial Group, Inc., of which Mr. Demere is President and Chief Executive Officer.  For Mr. Roquemore, includes 9,426 shares owned by Patten Seed Company, of which Mr. Roquemore is a 29% owner and management affiliate. For Mr. Burns, includes 2,137 shares owned by J.E. Burns Holdings, Inc., of which Mr. Burns is an 86% owner and has the ability to direct the voting and disposition of the shares.

(6)

Includes unvested shares of restricted stock, as to which the executive officers and directors have full voting privileges. The shares are as follows: Mrs. Brooks, 1,396 shares; Mr. Burns, 1,645 shares; Mr. Hill, 15,246 shares; Mr. Horger, 1,603 shares; Mr. Pollok, 13,155 shares; and all directors and executive officers as a group, 36,145 shares.

4


 

PROPOSAL NO. 1:  ELECTION OF DIRECTORS

The Articles of Incorporation of the Company provide for a maximum of twenty directors; to be divided into three classes with each director serving a three-year term, with the classes as equal in number as possible. The Board of Directors has currently established the number of directors at fifteen.

John C. Pollok,  Cynthia A. Hartley,  Thomas E. Suggs,  Kevin P. Walker,  James C. Cherry, and Jean E.  Davis, all of whom currently are directors of the Company and whose terms expire at the Annual Meeting, have been nominated by the Board of Directors for re-election by the shareholders. If re-elected, Ms. Hartley and Messrs. Pollok, Suggs and Walker will serve as directors of the Company for a three-year term, expiring at the 2021 Annual Meeting of Shareholders of the Company.

James C. Cherry and Jean E. Davis were appointed to the Board of Directors effective December 1, 2017. Under South Carolina law, Mr. Cherry’s and Ms. Davis’ terms expire at the Annual Meeting, and we ask that you re-elect Mr. Cherry and Ms. Davis to our Board of Directors. If re-elected, Mr. Cherry and Ms. Davis will each serve as director of the Company for a two-year term, expiring at the 2020 Annual Meeting of Shareholders of the Company.

Under our current Bylaws, in the event that a director attains age 72 during his or her term of office, he or she shall serve only until the next shareholders’ meeting after his or her 72nd birthday.

The Board of Directors unanimously recommends that shareholders vote “FOR” the director nominees.

The table below sets forth for each director his or her name, age, when first elected and current term expiration, business experience for at least the past five years, and the qualifications that led to the conclusion that the individual should serve as a director.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First

 

Current

 

Nominee

 

 

 

 

 

 

 

Elected

 

Term

 

for New

 

Business Experience for the Past Five Years and

 

Name

    

Age

    

Director

    

Expires

    

Term

    

Director Qualifications

 

Robert R. Horger

Chairman

South State Bank

Employee

 

67

 

1991

 

2019

 

 

 

Mr. Horger has served as Chairman of the Company and its wholly-owned banking subsidiary, South State Bank (sometimes also referred to herein as the “Bank”), since 1998. He also has served as Vice Chairman of the Company and the Bank, from 1994 to 1998. Mr. Horger has been an attorney with Horger, Barnwell and Reid in Orangeburg, South Carolina, since 1975. During his tenure as Chairman, Mr. Horger has developed knowledge of the Company’s business, history, organization, and executive management which, together with his personal understanding of many of the markets that we serve, has enhanced his ability to lead the Board of Directors through the current challenging business environment for all financial institutions. Mr. Horger’s legal training and experience enhance his ability to understand the Company’s regulatory framework.

 

Robert R. Hill, Jr.

Chief Executive Officer

South State Bank

Employee

 

51

 

1996

 

2020

 

 

 

Mr. Hill has served as Chief Executive Officer of the Company since July 26, 2013. Prior to that time, Mr. Hill served as President and Chief Executive Officer of the Company from November 6, 2004 to July 26, 2013. Prior to that time, Mr. Hill served as President and Chief Operating Officer of South State Bank, from 1999 to November 6, 2004. Mr. Hill joined the Company in 1995. He was appointed to serve on the Federal Reserve Board of Directors in December 2010. Mr. Hill brings to the board an intimate understanding of the Company’s business and organization, as well as substantial leadership ability, banking industry expertise, and management experience.

 

5


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First

 

Current

 

Nominee

 

 

 

 

 

 

 

Elected

 

Term

 

for New

 

Business Experience for the Past Five Years and

 

Name

    

Age

    

Director

    

Expires

    

Term

    

Director Qualifications

 

John C. Pollok

Chief Financial Officer &

Chief Operating Officer

South State Bank

Employee

 

52

 

2012

 

2018

 

 

Mr. Pollok has served as Chief Financial Officer and Chief Operating Officer of the Company since March 21, 2012.  Mr. Pollok previously served as the Chief Operating Officer of the Company and the Bank from January 4, 2010 until March 21, 2012. Prior to that time, Mr. Pollok served as the Chief Financial Officer and Chief Operating Officer of the Company and the Bank from February 15, 2007 until January 3, 2010. Mr. Pollok brings to the board an overall institutional knowledge of the Company’s business, banking industry expertise, and leadership experience.

 

Jimmy E. Addison

 

57

 

2007

 

2019

 

 

 

Mr. Addison has served as Chief Executive Officer of SCANA Corporation, the holding company of South Carolina Electric and Gas Company and other utility-related concerns since January 1, 2018. He previously served as Chief Financial Officer from 2006 through 2017 and as President of SCANA Energy from 2014 through 2017. He also serves as a member of the board (past president) for the Business Partnership Foundation of the Darla Moore School of Business at the University of South Carolina.  Mr. Addison is also a licensed CPA and previously worked for an international accounting firm.  His leadership experience, knowledge of financial reporting requirements of public companies, and business and personal ties to many of the Bank’s market areas enhance his ability to contribute as a director.

 

Paula Harper Bethea

Vice Chairman

 

62

 

2013

 

2020

 

 

 

Mrs. Bethea has served as Vice-Chairman of the Board of Directors of the Company and the Bank since 2013. Mrs. Bethea is currently President of Strategic Synergies LLC and President of Dillon Property Holdings LLC. Mrs. Bethea was formerly the Executive Director of the South Carolina Education Lottery and was one of nine South Carolinians chosen in 2001 to establish the Lottery. Prior to this position, Mrs. Bethea was with the McNair Law Firm from 2006 to 2009 where she served as Director of External Relations. Mrs. Bethea served on the board of directors of former First Financial Holdings, Inc. of Charleston, South Carolina (“FFHI”) from 1996 until FFHI merged with the Company in 2013. Her business and personal experience in certain of the communities that the Bank serves provides her with an appreciation of markets that we serve, and her leadership experiences provide her with insights regarding organizational behavior and management.

 

James C. Cherry

 

67

 

2017

 

2018

 

 

Mr. Cherry served as the Chief Executive Officer and as a director of the Park Sterling Corporation from its formation in 2010 until November 2017. Mr. Cherry has served as a consultant to the Bank since November 2017. He retired as the Chief Executive Officer for the Mid-Atlantic Banking Region at Wachovia Corporation in 2006, and previously served as President of Virginia Banking, Head of Trust and Investment Management, and in various positions in North Carolina and Virginia banking including Regional Executive, Area Executive, City Executive, Corporate Banking and Loan Administration Manager, and Retail Banking Branch Manager for Wachovia. Mr. Cherry was formerly Chairman of the Virginia Bankers Association. He is currently a director of Armada Hoffler Properties Inc., a Virginia-based publicly traded real estate company. Mr. Cherry’s extensive experience in commercial and retail banking operations, credit administration, product management and merger integration at Wachovia, which was focused in the Carolinas and Virginia, provides the Board of Directors with significant expertise important to the oversight of the Company and expansion into its target markets.

 

6


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First

 

Current

 

Nominee

 

 

 

 

 

 

 

Elected

 

Term

 

for New

 

Business Experience for the Past Five Years and

 

Name

    

Age

    

Director

    

Expires

    

Term

    

Director Qualifications

 

Jean E. Davis

 

62

 

2017

 

2018

 

 

Ms. Davis, former Park Sterling Corporation Board member, retired as the head of Operations, Technology and e-Commerce of Wachovia Corporation in 2006. She previously served as the Head of Operations and Technology, Head of Human Resources, Head of Retail Banking, and in several office executive, regional executive and corporate banking roles for Wachovia. She is currently a member of the Board of Safe Alliance, Charlotte, NC and of the Charlotte Latin School.  Ms. Davis brings extensive knowledge of bank operations and technology, as well as human resources, to the Board of Directors, both of which are important to the Company’s long-term success. In addition, she brings a strong background in retail banking, merger due diligence and merger integration experience.

 

Martin B. Davis

 

54

 

2016

 

2020

 

 

 

Mr. Davis is executive vice president of Southern Company Services and chief information officer of Southern Company. Mr. Davis has spent nearly 30 years leading complex technology organizations in highly regulated environments. Mr. Davis serves on the American Heart Association’s Mid-Atlantic region board of directors. Mr. Davis served on the board of trustees at Winston-Salem State University. He has been recognized as one of the “50 Most Important African-Americans in Technology” by U.S. Black Engineers & Information Technology magazine and one of the “75 Most Powerful African-Americans in Corporate America” by Black Enterprise. Mr. Davis’ technology-related experience provides him with useful insight regarding this area of increasing strategic importance to bank marketing and operations.

 

Robert H. Demere, Jr.

 

69

 

2012

 

2019

 

 

 

Mr. Demere serves as President, Chief Executive Officer and director of Colonial Group, Inc., a petroleum marketing company located in Savannah, Georgia. Mr. Demere has been employed by Colonial Group, Inc. since 1974.  As President of Colonial Group, Inc., Mr. Demere has attained valuable experience in raising equity in the capital markets. Prior to working for Colonial, Mr. Demere worked as a stockbroker for Robinson-Humphrey Company. Mr. Demere served on the board of directors of Savannah Bancorp Inc. from 1989 until its acquisition by the Company in 2012. His business and personal experience in certain of the communities that the Bank serves also provides him with an appreciation of and useful insight regarding certain markets that we serve.

 

Cynthia A. Hartley

 

69

 

2011

 

2018

 

 

Mrs. Hartley retired in 2011 as Senior Vice President of Human Resources with Sonoco Products Company in Hartsville, South Carolina.  Mrs. Hartley served as the Chairman of the Board of Trustees for Coker College in Hartsville, South Carolina. Mrs. Hartley was first elected to the Board of Directors of the Company in May of 2011.  Her leadership experience, knowledge of human resource matters, and business and personal ties with many of the Bank’s market areas enhance her ability to contribute as a director.

 

Thomas J. Johnson

 

67

 

2013

 

2020

 

 

 

Mr. Johnson is President, Chief Executive Officer, and Owner of F&J Associates, a company that owns and operates automobile dealerships in the southeastern United States and the U.S. Virgin Islands. He serves on the Board of Directors of the South Carolina Automobile Dealers Association, the Board of Visitors of the Coastal Carolina University School of Business and the South Carolina Business Resources Board. Mr. Johnson served on the board of directors of FFHI from 1998 until FFHI merged with the Company in 2013. Mr. Johnson’s extensive business experience and knowledge of markets that we serve enhance his ability to contribute as a director.

 

7


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First

 

Current

 

Nominee

 

 

 

 

 

 

 

Elected

 

Term

 

for New

 

Business Experience for the Past Five Years and

 

Name

    

Age

    

Director

    

Expires

    

Term

    

Director Qualifications

 

Grey B. Murray

 

52

 

2017

 

2019

 

 

 

Mr. Murray, former Georgia Bank & Trust board member, serves as President of United Brokerage Company, Inc., headquartered in Augusta, Georgia.  Mr. Murray also serves as a Commissioner on the Augusta Aviation Commission and is a graduate of Leadership Georgia. An active member of the community, Mr. Murray has served on the board of directors of the American Heart Association, University Health Care Foundation, Augusta Country Club, Secession Golf Club, St. Paul’s Building Authority, Exchange Club of Augusta, Georgia Movers Association, and Augusta Preparatory Day School (past Chairman of the Board).  Mr. Murray’s extensive business experience and knowledge of markets that we serve enhance his ability to contribute as a director.

 

James W. Roquemore

 

63

 

1994

 

2019

 

 

 

Mr. Roquemore serves as Chief Executive Officer of Patten Seed Company, Inc. of Lakeland, Georgia, and General Manager of Super-Sod/Carolina, a company that produces and markets turf, grass, sod and seed, since 1997. As the chief executive officer of a company, Mr. Roquemore has experience with management, marketing, operations, and human resource matters. His business and personal experience in the communities that the Bank serves also provides him with an appreciation of markets that we serve. Moreover, during his tenure as a director he has developed knowledge of the Company’s business, history, organization, and executive management which, together with the relationships that he has developed, enhance his leadership and consensus-building ability.

 

Thomas E. Suggs

 

68

 

2001

 

2018

 

 

Mr. Suggs has served as President and Chief Executive Officer of HUB Carolinas, a region of HUB International, the eighth largest insurance broker in the world, since August 2016. Mr. Suggs was the President and Chief Executive Officer of Keenan & Suggs, Inc., an insurance brokerage and consulting firm, before it was acquired by HUB international in August 2016. Mr. Suggs has over 21 years of experience in the insurance industry and 25 years of banking experience. As the chief executive officer of the region, Mr. Suggs has experience with management, marketing, operations, and human resource matters, and his experience with the banking industry also provides him with certain insights. His business and personal experience in communities that the Bank serves also provides him with an appreciation of markets that we serve.

 

Kevin P. Walker

 

67

 

2010

 

2018

 

 

Mr. Walker, CPA/ABV, CFE, is a founding partner of GreerWalker LLP with offices in Charlotte, North Carolina and Greenville, South Carolina. GreerWalker LLP is the largest certified public accounting firm founded and headquartered in Charlotte and currently employs approximately 115 people. Mr. Walker is also a member of the American Institute of Certified Public Accountants, the North Carolina Association of Certified Public Accountants, the Financial Consulting Group, the Association of Certified Fraud Examiners, and the American Arbitration Association Panel of Arbitrators. Mr. Walker was first elected to the Board of Directors of the Company in October 2010. Mr. Walker’s leadership experience, accounting knowledge and business and personal experience in certain of the Company’s markets enhance his ability to contribute as a director.

 

 

8


 

FAMILY RELATIONSHIPS

There are no family relationships among any of the directors and executive officers of the Company.

THE BOARD OF DIRECTORS AND COMMITTEES

During 2017, the Board of Directors of the Company held seven meetings. All directors attended at least 85% of the aggregate of (a) the total number of meetings of the Board of Directors held during the period for which he or she served as a director, and (b) the total number of meetings held by all committees of the Board of Directors of the Company on which he or she served.

There is no formal policy regarding attendance at annual shareholder meetings; although such attendance has always been strongly encouraged.  All of the directors attended the 2017  Annual Shareholders Meeting.

The Board of Directors has adopted a Code of Ethics that is applicable to, among other persons, the Company’s chief executive officer, chief financial officer, principal accounting officer and all managers reporting to these individuals who are responsible for accounting and financial reporting. The Code of Ethics is located on the Company’s website at https://www.southstatebank.com/ under Investor Relations. We will disclose any future amendments to, or waivers from, provisions of these ethics policies and standards on our website promptly as practicable, as and to the extent required under NASDAQ Stock Market listing standards and applicable SEC rules.

The Board of Directors of the Company maintains executive, audit, compensation, governance, and risk committees. The composition and frequency of meetings for these committees during 2017 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Committees of the Board of Directors

 

 

 

Independent
Under
NASDAQ

 

Executive

 

Audit

 

Compensation

 

Governance

 

Risk

 

Name

    

Requirements (2)

    

(8 meetings)

    

(9 meetings)

    

(6 meetings)

    

(4 meetings)

    

(5 meetings)

 

Robert R. Horger

 

No

 

● Chair

 

 

 

 

 

 

 

 

 

Robert R. Hill, Jr.

 

No

 

 

 

 

 

 

 

 

 

 

John C. Pollok

 

No

 

 

 

 

 

 

 

 

 

 

 

Jimmy E. Addison

 

Yes

 

 

 

 

 

 

● Chair

 

 

 

Paula Harper Bethea

 

Yes

 

 

 

 

 

 

 

 

 

James C. Cherry (1)

 

No

 

 

 

 

 

 

 

 

 

 

Jean E. Davis (1)

 

Yes

 

 

 

 

 

 

 

 

 

Martin B. Davis

 

Yes

 

 

 

 

 

 

 

 

● Chair

 

Robert H. Demere Jr.

 

Yes

 

 

 

 

 

 

 

 

 

Cynthia A. Hartley

 

Yes

 

 

 

 

 

● Chair

 

 

 

 

Thomas J. Johnson

 

Yes

 

 

 

 

 

 

 

 

 

Grey B. Murray

 

Yes

 

 

 

 

 

 

 

 

 

James W. Roquemore

 

Yes

 

 

 

 

 

 

 

 

 

Thomas E. Suggs

 

Yes

 

 

 

 

 

 

 

 

 

Kevin P. Walker

 

Yes

 

 

 

● Chair

 

 

 

 

 

 


(1)

James C. Cherry and Jean E. Davis were appointed to the Board of Directors on December 1, 2017 effective with the consummation of the merger with Park Sterling Corporation.

(2)

All directors other than Robert R. Horger, Robert R. Hill, Jr., John C. Pollok and James C. Cherry meet the independence requirements of The NASDAQ Stock Market. Therefore, under these requirements, a majority of the members of the Company’s Board of Directors is independent.  The functions of these committees are as follows:

Executive Committee—The Board of Directors of the Company may, by resolution adopted by a majority of its members, delegate to the executive committee the power, with certain exceptions, to exercise the authority of the Board of Directors in the management of the affairs and property of the Company. The Executive Committee has the authority to recommend and approve new policies and to review and approve present policies or policy updates and changes.  The Executive Committee charter can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Audit Committee—The Board of Directors has determined that all members of the Audit Committee are independent directors under the independence requirements of The NASDAQ Stock Market. The Board of Directors has also determined that Kevin P. Walker is an “Audit Committee financial expert” for purposes of the rules and regulations of the SEC adopted pursuant to the Sarbanes‑Oxley Act of 2002. The primary function of the Audit Committee is to assist the Board of Directors of the Company in overseeing (i) the

9


 

Company’s accounting and financial reporting processes generally, (ii) the audits of the Company’s financial statements and (iii) the Company’s systems of internal controls regarding finance and accounting. In such role, the Audit Committee reviews the qualifications, performance, effectiveness and independence of the Company’s independent accountants and has the authority to appoint, evaluate and, where appropriate, replace the Company’s independent accountants. The Audit Committee also oversees the Company’s internal audit department and consults with management regarding the internal audit process and the effectiveness and reliability of the Company’s internal accounting controls. The Board of Directors has adopted a charter for the Audit Committee, a copy of which is located on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Compensation Committee—The Board of Directors has determined that all members of the Compensation Committee are independent directors under the independence requirements of The NASDAQ Stock Market applicable to directors who do not serve on the Audit Committee. The Compensation Committee, among other functions, has overall responsibility for evaluating, and approving or recommending to the Board for approval, the director and officer compensation plans, policies and programs of the Company. The full Board of Directors is then responsible for approving or disapproving compensation paid to the CEO and each of the other executive officers of the Company. The committee, which currently consists of five independent directors, is required to be made up of no fewer than three independent directors who are recommended by the Chairman of the Board of Directors and approved by the Board. The Compensation Committee’s processes and procedures for considering and determining executive compensation are described below under “Compensation Discussion and Analysis.” The Compensation Committee charter can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Governance Committee—The Board of Directors has determined that all members of the Governance Committee are independent directors under the independence requirements of The NASDAQ Stock Market applicable to directors who do not serve on the Audit Committee. The Governance Committee identifies and recommends individuals qualified to become Board members, reviews the corporate governance practices employed by the Company and recommends changes thereto, and assists the Board in its periodic review of the Board’s performance.  The Governance Committee charter can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

The Governance Committee acts as the nominating committee for the purpose of recommending to the Board of Directors nominees for election to the Board. The Governance Committee has not established any specific, minimum qualifications that must be met for a person to be nominated to serve as a director, and the Governance Committee has not identified any specific qualities or skills that it believes are necessary to be nominated as a director. The Governance Committee charter provides that potential candidates for the Board are to be reviewed by the Governance Committee and that candidates are selected based on a number of criteria, including a proposed nominee’s independence, age, skills, occupation, diversity, experience and any other factors beneficial to the Company in the context of the needs of the Board. The Governance Committee has not adopted a formal policy with regard to the consideration of diversity in identifying director nominees. In determining whether to recommend a director nominee, Governance Committee members consider and discuss diversity, among other factors, with a view toward the needs of the Board of Directors as a whole. The Governance Committee members generally conceptualize diversity expansively to include, without limitation, concepts such as race, gender, national origin, differences of viewpoint, professional experience, education, skill and other qualities or attributes that contribute to Board heterogeneity when identifying and recommending director nominees. The Governance Committee believes that the inclusion of diversity as one of many factors considered in selecting director nominees is consistent with the Committee’s goal of creating a Board of Directors that best serves the needs of the Company and the interest of its shareholders.

The Governance Committee has performed a review of the experience, qualifications, attributes and skills of the Board’s current membership, including the director nominees for election to the Board of Directors and the other members of the Board, and believes that the current members of the Board, including the director nominees, as a whole possess a variety of complementary skills and characteristics, including the following:

·

successful business or professional experience;

·

various areas of expertise or experience, which are desirable to the Company’s current business, such as general management, planning, legal, marketing, technology, banking and financial services;

·

personal characteristics such as character, integrity and accountability, as well as sound business judgment and personal reputation;

·

willingness and ability to commit the necessary time to fully discharge the responsibilities of Board membership to the affairs of the Company;

10


 

·

leadership and consensus building skills; and

·

commitment to the success of the Company.

Each individual director has qualifications and skills that the Governance Committee believes, together as a whole, create a strong, well-balanced Board. The experiences and qualifications of our directors are found in the table on pages 5-8.

The Governance Committee will consider director nominees identified by its members, other directors, officers and employees of the Company and other persons, including shareholders of the Company. The Governance Committee will consider nominees for director recommended by a shareholder if the shareholder provides the committee with the information described in Paragraph 7 under the caption “Committee Authority and Responsibilities” of the Governance Committee’s charter.

The required information regarding a director nominee is also discussed in general terms within the first paragraph of the “Shareholder Proposals and Communications” section on page 2 of this proxy statement.

Risk Committee—The Risk Committee of the Board of Directors of the Company provides assistance to the Board of Directors in fulfilling its responsibility to the Company and its shareholders by striving to identify, assess, and monitor key business risks that may impact the Company’s operations and results.  The charter for this committee can be found at https://www.southstatebank.com/ under Investors Relations.

While the Risk Committee oversees and reviews the Company’s risk functions to monitor key business risks, management is ultimately responsible for designing, implementing, and maintaining an effective risk management program to identify, plan for, and respond to the Company’s material risks. The Risk Committee charter acknowledges that the Audit Committee of the Board is primarily responsible for certain risks, including accounting and financial reporting.  Although the Risk Committee does not have primary responsibility for the risks which are subject to the jurisdiction of the Audit Committee, it is anticipated that on occasion certain results from audit functions will be reviewed by the Risk Committee.

Code of Ethics—The Board of Directors of the Company and the Board of Directors of the bank have adopted a Code of Ethics to provide ethical guidelines for the activities of agents, attorneys, directors, officers, and employees of the Company and its subsidiaries. The Code of Ethics will promote, train, and encourage adherence in business and personal affairs to a high ethical standard and will also help to maintain the Company as an institution that serves the public with honesty, integrity and fair-dealing. The Code of Ethics is designed to comply with the Sarbanes-Oxley Act of 2002, and certain other laws that provide guidelines in connection with possible breaches of fiduciary duty, dishonest efforts to undermine financial institution transactions and the intent to corrupt or reward a Company employee or other Company representative. A copy of the Code of Ethics can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Board of Directors’ Corporate Governance Guidelines—The Board of Directors of the Company and the Board of Directors of the bank have each adopted certain guidelines governing the qualifications, conduct and operation of the Board. Among other things, these guidelines outline the duties and responsibilities of each director, and establish certain minimum requirements for director training. Each director is required to read, review and sign the corporate governance guidelines on an annual basis. A copy of these guidelines can be found on the Company’s website at https://www.southstatebank.com/ under Investor Relations.

Board Leadership Structure and Role in Risk Oversight

We are focused on the Company’s corporate governance practices and value independent Board oversight as an essential component of strong corporate performance to enhance shareholder value. Our commitment to independent oversight is demonstrated by the fact that over 73% of all of our directors are independent. In addition, all of the members of our Board’s Audit, Compensation, Risk and Governance Committees are deemed independent based on a Board evaluation.

See the discussion entitled Certain Relationships and Related Transactions on page 47 for additional information concerning Board independence.

Our Board believes that it is preferable for Mr. Horger to serve as Chairman of the Board because of his strong institutional knowledge of the Company’s business, history, industry, markets, organization and executive management gained in his 20 years of experience in a leadership position on the Board.  We believe it is the Chief Executive Officer’s responsibility to manage the Company and the Chairman’s responsibility to guide the Board as the Board provides leadership to our executive management.  As directors continue to have more oversight responsibility than ever before, we believe it is beneficial to have separate individuals in the role of Chairman and Chief Executive Officer. Traditionally, the Company has maintained the separateness of the roles of the Chairman and

11


 

the Chief Executive Officer.  In making its decision to continue to have a separate individual as Chairman, the Board considered the time and attention that Mr. Hill is required to devote to managing the day-to-day operations of the Company.  We believe that this Board leadership structure is appropriate in maximizing the effectiveness of Board oversight and in providing perspective to our business that is independent from executive management.

The Board of Directors oversees risk through the various Board standing committees, principally the Audit Committee and the Risk Committee, which report directly to the Board.  Our Audit Committee is primarily responsible for overseeing the Company’s accounting and financial reporting risk management processes on behalf of the full Board of Directors.  The Audit Committee focuses on financial reporting risk and oversight of the internal audit process.  It receives reports from management at least quarterly regarding the Company’s assessment of risks and the adequacy and effectiveness of internal control systems, and also reviews credit and market risk (including liquidity and interest rate risk), and operational risk (including compliance and legal risk).  Our Chief Credit Officer and Chief Financial Officer meet with the Audit Committee on a quarterly basis in executive sessions to discuss any potential risks or control issues involving management.  Our Chief Risk Officer meets with the Risk Committee each quarter to identify, assess, and monitor key business risks that may impact the Company’s operations and results.

Each of the Board’s standing committees, as described above, is involved to varying extents in the following:

·

determining risk appetites, policies and limits

·

monitoring and assessing exposures, trends and the effectiveness of risk management;

·

reporting to the Board of Directors; and

·

promoting a sound risk management culture.

The full Board of Directors focuses on the risks that it believes to be the most significant facing the Company and the Company’s general risk management strategy. The full Board of Directors also seeks to ensure that risks undertaken by the Company are consistent with the Board of Directors’ approved risk management strategies. While the Board of Directors oversees the Company’s risk management, management is responsible for the day-to-day risk management processes. We believe this division of responsibility is the most effective approach for addressing the risks facing our Company and that our Board leadership structure supports this approach.

We recognize that different Board leadership structures may be appropriate for companies in different situations. We will continue to reexamine our corporate governance policies and leadership structures on an ongoing basis in an effort to ensure that they continue to meet the Company’s needs.

12


 

PROPOSAL NO. 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

The Securities and Exchange Commission rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) require the Company to provide shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executives officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.

As described in greater detail under the heading “Compensation Discussion and Analysis,” the Company seeks to align the interests of our named executive officers with the interests of our shareholders.  The Company’s compensation programs are designed to reward our named executive officers for the achievement of strategic and operational goals and the achievement of increased shareholder value, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.  The Company believes its compensation policies and procedures are competitive, focused on pay for performance principles and strongly aligned with the interest of the Company’s shareholders.  The Company also believes that both it and its shareholders benefit from responsive corporate governance policies and constructive and consistent dialogue.  The proposal described below, commonly known as a “Say-on-Pay” proposal, gives you as a shareholder the opportunity to express your views regarding the compensation of the named executive officers by voting to approve or not approve such compensation as described in this Proxy Statement.

This vote is advisory, which means that it is not binding on the Company, the Board of Directors or the Compensation Committee.  The vote on this resolution is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers, as described in this proxy statement in accordance with the compensation disclosure rules of the Securities and Exchange Commission.

The Board of Directors asks our shareholders to vote in favor of the following resolution at the Annual Meeting:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s Proxy Statement for the 2018 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in the proxy statement, is hereby APPROVED.”

The Board of Directors unanimously recommends that shareholders vote FOR the approval of the resolution related to compensation of named executive officers.

 

 

13


 

PROPOSAL NO. 3:  RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

Although the Company is not required to seek shareholder ratification of the selection of its accountants, the Company believes obtaining shareholder ratification is desirable. If the shareholders do not ratify the appointment of Dixon Hughes Goodman LLP, the Audit Committee will re-evaluate the engagement of the Company’s independent auditors. Even if the shareholders do ratify the appointment, the Audit Committee has the discretion to appoint a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interest of the Company and its shareholders.

The Board unanimously recommends that shareholders vote FOR the ratification of the appointment of Dixon Hughes Goodman LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.

If a quorum is present, the number of shares of Common Stock voted in favor of this proposal must exceed the number of shares voted against it for approval of this proposal.

14


 

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion & Analysis explains our 2017 executive compensation programs and decisions with respect to our executive officers and, in particular, our Named Executive Officers, or which we sometimes refer to herein as our “NEOs”. In this discussion, we explain, among other things, our compensation philosophy and program, factors considered by the Compensation Committee in making compensation decisions and additional details about our compensation program and practices. The following discussion is organized into four parts:

1.

Executive Summary

2.

South State Executive Compensation Process (page 19)

3.

Components of Executive Compensation (page 23)

4.

Other Aspects of South State’s Executive Compensation Program (page 26)

Part 1Executive Summary

The Compensation Committee seeks to provide compensation arrangements for the Company’s executive officers that are designed to retain and attract talented executives who can perform at a high level and manage the Company in the shareholders’ best interest. Among other things, these compensation arrangements are intended to align executive compensation with the Company’s performance, both on a short-term basis and a long-term basis. This is accomplished through incentive compensation that is based primarily on the Company’s performance and secondarily on individual contributions. Our Named Executive Officers for 2017 were:

 

 

 

 

 

 

Name

    

Title

    

Years of
Service at
South State

 

Robert R. Hill, Jr.

 

Chief Executive Officer of South State Corporation

 

22

 

John C. Pollok

 

Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer

 

22

 

John F. Windley

 

Chief Banking Officer, President and Chief Executive Officer of South State Bank

 

16

 

Joseph E. Burns

 

Senior Executive Vice President and Chief Credit Officer

 

17

 

Renee R. Brooks

 

Senior Executive Vice President and Chief Administrative Officer

 

22

 

When setting specific goals and objectives, the Compensation Committee considers the priorities of Soundness, Profitability and Growth. These priorities are the foundation from which we build and measure our performance.

We believe these priorities have enabled the Company to be well-positioned to take advantage of strategic growth opportunities and deliver outstanding returns to our shareholders. A solid company culture, focused values and a strong team, complement these priorities and are the core contributors of our continued success.

Picture 1

15


 

During 2017, there were three significant events that impacted the company and include the following:

1.

In 2016, we announced the planned merger with Southeastern Bank Financial Corporation, and laid significant groundwork for successful closing of the merger and integration of the two companies. The merger with Southeastern Bank Financial closed successfully on January 3, 2017 and added $2.1 billion in total assets.  The systems integration was completed during the first quarter of 2017;

2.

In April of 2017, we announced the merger with Park Sterling Corporation, which closed on November 30, 2017 and added $3.5 billion in total assets.  The systems integration is expected to be completed during the second quarter of 2018; and

3.

The passage of the Tax Cut and Jobs Act on December 22, 2017, which resulted in a large income tax charge related to our deferred tax items.

The Company believes that key 2017 indicators of soundness, profitability and growth include the following:

Soundness

·

Total nonperforming assets declined by 6.5% to $36.1 million.

·

Non-acquired loan net charge-offs decreased to 0.04% in 2017 from 0.06% in 2016.

·

Other real estate owned (OREO) decreased by $7.1 million, or 38.8%, from $18.3 million at December 31, 2016 to $11.2 million at December 31, 2017. The decline occurred even with the addition of $3.0 million in OREO from two mergers in 2017.

Profitability

·

Diluted earnings per common share (EPS), in accordance with generally accepted accounting principles (GAAP), decreased 29.9% to $2.93 per share in 2017 from $4.18 per share in 2016. This decline was driven to a significant extent by a reduction in the value of net deferred tax assets by $26.6 million, or $0.83 per diluted share, in the fourth quarter of 2017 as a result of the recently enacted Tax Cuts and Jobs Act.

·

Adjusted EPS—Diluted* (non-GAAP) increased 6.8% to $4.85 per share in 2017 from $4.55 per share in 2016.  We believe that it is important to examine the results of our performance on an adjusted basis as well as a GAAP basis due to certain expense items that impact our GAAP financials.  Adjusted performance results give insight into how performance on our core ongoing business changes from year to year by excluding certain items.  For example, in 2017, the Company incurred securities gains of $445,000, net of tax; merger and branch consolidation expense of $31.5 million, net of tax; and net deferred tax revaluation of $26.6 million.  In 2016, the Company incurred certain expense items relative to ongoing branch consolidation, early termination of our loss share agreements with the FDIC, and expenses related to the merger with Southeastern Bank Financial Corporation. These expenses totaled $8.9 million, net of tax, or $0.37 per diluted share in 2016.

o

As highlighted above, there were a number of differences between our reported (GAAP) and adjusted (non-GAAP) financials for fiscal year 2017 as shown below in the chart on the following page:

§

Return on average assets (GAAP) totaled 0.77% in 2017 compared to 1.16% in 2016.  Adjusted return on average assets* (non-GAAP) totaled 1.28% in 2017 compared to 1.26% in 2016.

§

Adjusted return on average tangible equity* (non-GAAP) decreased to 15.49% in 2017 from 15.94% in 2016.

·

Our performance in 2017 on return on average assets and return on average tangible equity continues to be strong relative to our peers, in spite of the fact that both represent a slight decrease from our 2016 performance.  The following chart illustrates that performance relative to our peers.

*Adjusted EPS—Diluted, Return on Average Tangible Equity, Core Return on Average Assets and Return on Average Tangible Equity are non-GAAP financial measures.  See page 40 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 for the non-GAAP to GAAP reconciliation and other relevant information.

16


 

C:\Users\readt\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Word\18-02-20 SSB Performance Chart_combined.jpg

Growth

·

Non-acquired loan growth in all categories totaled $1.25 billion, or 23.9%, in 2017.

·

Organic core deposit growth was 7.5% during 2017;  organic demand deposit growth was $64.9 million in 2017.

·

These two mergers resulted in total assets growing by $5.6 billion, or 62.5%, to $14.5 billion at December 31, 2017.

·

Shareholder value returns were less than those of the Southeast Bank Index and less than those of the NASDAQ Composite Index for the five-year period (as shown in the following chart):

17


 

Returns are shown on a total return basis, assuming the reinvestment of dividends and a beginning stock index value of $100 per share. The value of the Company’s stock as shown in the graph is based on published prices for transactions in the Company’s stock.

Total Return Performance

Picture 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period Ending

 

Index

    

12/31/2012

    

12/31/2013

    

12/31/2014

    

12/31/2015

    

12/31/2016

    

12/31/2017

 

South State Corporation

 

100.00

 

167.92

 

171.72

 

186.67

 

230.79

 

233.67

 

NASDAQ Composite Index

 

100.00

 

140.12

 

160.78

 

171.97

 

187.22

 

242.71

 

SNL Southeast Bank Index

 

100.00

 

135.52

 

152.63

 

150.24

 

199.45

 

246.72

 

Key 2017 Compensation Decisions by the Compensation Committee

The Compensation Committee made the following key compensation decisions during 2017:

·

Continued the Executive Incentive Plan with goals and opportunity levels that reflected South State’s size in 2017.  This plan has both short-term and long-term components designed to align incentive compensation with the strategic focus of the Company.

o

Continued the Long-Term Incentive Plan with three-year performance vesting conditions that are intended to provide alignment with increased shareholder value and long-term performance. The 2017-2019 goals for restricted stock units (which we refer to as “RSUs”) were split between cumulative adjusted EPS growth (67%) and adjusted return on average tangible equity (“ROATE”) (33%).

o

Maintained a short-term annual cash bonus component based on annual financial and performance goals and objectives.

o

Maintained a stock option component that rewards executives for individual performance with stock option grants. Beginning in 2018, stock options will no longer be awarded as part of the long-term incentive plan. All long-term incentive will be in the form of three-year performance based RSUs.

o

In addition to the performance goals referenced above, the following specified minimum “performance triggers,” which were intended to encourage soundness, must also be achieved for the annual cash bonus to be earned and the RSUs to vest based on 2017 performance:

§

Aggregate net income must be sufficient to cover aggregate dividends; and

§

The Bank must receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that is not lower than the Bank’s most regulatory rating for asset quality prior to December 31, 2015.

·

Increased the base salaries for each of our NEOs by 2.75% for 2017 with the exception of Renee R. Brooks, the Company’s  Chief Administrative Officer, whose salary was increased by 3.56% due to responsibility, performance and to better align her compensation with the other NEOs.

18


 

·

Focused on performance-based compensation and, therefore, variable compensation opportunities that are subject to attaining specific performance metrics. Consistent with the Compensation Committee’s compensation philosophy, a significant portion of NEO total compensation is in the form of incentive, or “at-risk” compensation, which will vary annually based on the performance of the Company. The chart below shows the average pay mix for the Chief Executive Officer (often referred to in this Proxy Statement as the “CEO”) and the average of our other NEOs compared to recent peer practices.

C:\Users\readt\AppData\Local\Microsoft\Windows\Temporary Internet Files\Content.Outlook\F1CCE21X\18-01-29 SSB Pay Mix Exhibit.JPG

·

Awarded NEOs cash incentives at maximum level based on results for the year as set forth under the annual cash bonus component of the 2017 Executive Incentive Plan.

In summary, the Committee concluded that the 2017 performance-based compensation, together with 2017 base salary levels, were well aligned with the Company’s performance and the individual’s contribution for the year.

Part 2South State Executive Compensation Process

Compensation Philosophy

In 2017, the Compensation Committee reviewed and validated its compensation philosophy with the assistance of the Compensation Committee’s independent compensation consultant. The purpose of the review was to ensure that compensation decisions made by the Compensation Committee and the Board of Directors were consistent with this philosophy. The fundamental philosophy of the Company’s compensation program is to offer competitive compensation opportunities for executive officers that (i) align compensation with the performance of the Company on both a short-term and long-term basis, and (ii) are based on both the Company’s performance and the individual’s contribution. The compensation structure is designed to retain and reward executive officers who are capable of leading the Company in achieving its business objectives. The philosophy is to also consider applicable rules and regulations and current peer group compensation in determining compensation levels.

The Compensation Committee considers this philosophy as it develops its incentive plans. Cash incentives for 2017 were designed to reward executives for achieving annual financial and performance goals based on soundness and profitability. The performance objectives of the 2017 annual cash incentive plan reflect this focus.  Equity grants are designed to reward our NEOs for achievement of business objectives that benefit shareholders and support the retention of a talented management team over time. When making compensation determinations for the Company’s NEOs, the Compensation Committee considers many factors, including peer data and individual roles, responsibilities, tenure, and performance, to set NEO pay levels. The Company’s compensation peer group is explained on page 22.

Role of the Compensation Committee

The Compensation Committee is responsible for the design, implementation and administration of the compensation programs for the executive officers and directors of the Company. The Compensation Committee keeps the full Board of Directors apprised of the decisions and activities of the Compensation Committee. When appropriate, the Compensation Committee makes recommendations to the Board of Directors on items that require approval by the full Board of Directors.

19


 

The Compensation Committee seeks to increase shareholder value by rewarding performance with cost-effective compensation and striving to attract and retain talented executives through adherence to the following compensation objectives:

·

The Company’s compensation programs are designed to reward NEOs based on key standards that reflect the Company’s culture, including its strategic focus on soundness, profitability and growth, as well as its emphasis on ethics, execution of strategic goals, the ability to inspire and motivate, and sound corporate governance.

·

The Compensation Committee’s philosophy is to provide competitive compensation to attract and retain key management to ensure a balance of soundness, profitability and growth while providing long-term value for the shareholders of the Company.

·

The Compensation Committee seeks to reward executives consistent with the Company’s culture of being a meritocracy in regard to compensation for all employees.

·

The Compensation Committee annually reviews and approves corporate goals and objectives utilized in either annual cash or long-term incentive plans.

·

The Compensation Committee evaluates and recommends to the Board of Directors for its approval, when not delegated to the Compensation Committee, the director and executive officer compensation plans, policies and programs of the Company.

·

The Compensation Committee reviews and considers the results of any shareholder advisory vote on executive compensation and takes into consideration the result of such advisory votes in relation to the Company’s executive compensation policies and procedures.

·

The Compensation Committee annually reviews the incentive compensation arrangements to ensure that they are appropriate to the business plans of the Company and reviews the risks arising from such incentive plans to determine any material adverse impact to the Company.

The Compensation Committee is comprised of five independent directors and met six times in 2017. The Compensation Committee is supported in its work by the Director of Human Resources, supporting staff, and an executive compensation consultant, as described below.

The Compensation Committee may receive recommendations from the chairman of the Board of Directors with respect to the CEO’s performance in light of goals and objectives relevant to the compensation of our CEO. The CEO reviews the performance of the other NEOs with the Compensation Committee and makes recommendations to the Compensation Committee about the total compensation of the other NEOs. The CEO does not participate in, and is not present during, deliberations or approvals by the Compensation Committee or the Board of Directors with respect to his own compensation.

The Compensation Committee reviews and approves the equity compensation of the NEOs annually. The Compensation Committee makes decisions based on the Company’s philosophy of providing a competitive base salary (relative to the peer group) complemented with significant performance-based incentives. After reviewing all of the compensation arrangements discussed below, along with corporate and individual performance, the Compensation Committee believes that the measurement tools, compensation levels and the design of the Company’s executive compensation program are appropriate and motivate the NEOs to lead the Company in the best interests of its shareholders.

The primary goals of the Compensation Committee in 2017 were consistent with its established philosophy.  The Compensation Committee seeks to provide compensation arrangements for executive officers that are designed to retain, attract, and motivate talented executives who can perform at a high level and manage the company in the shareholders’ best interest.  The NEO compensation arrangements are designed to align compensation with the performance of the Company both on a short-term and long-term basis and are based both on the Company’s performance and the individual’s contribution.  The Compensation Committee considered the Company’s financial performance throughout its decision-making process in 2017.

Compensation Consultant

During 2017, the Compensation Committee engaged the services of McLagan, an Aon Hewitt company, to provide independent compensation consulting services for both directors and executive management of the Company. McLagan reports directly to the

20


 

Compensation Committee. The Compensation Committee has the sole authority to hire consultants and set the engagements and the related fees of those consultants.

The following consulting services were provided to the Compensation Committee in 2017:

·

Provided education to the Board of Directors regarding compensation related trends in the banking industry;

·

Revised the Company’s compensation peer group of publicly-traded financial institutions (the peer group is described below;

·

Reviewed the competitiveness of the compensation elements currently offered by the Company to its top executives, including base salary, annual incentive or bonus, long-term incentives (stock options and RSUs), all other compensation, and changes in retirement benefits as compared to that of the customized peer group;

·

Reviewed the competitiveness of the Company’s director compensation elements as compared to that of the customized peer group;

·

Recommended and made observations regarding the potential alignment of the Company’s executive compensation practices with the Company’s overall business strategy and culture relative to the market as defined by the peer group. This included a review of the current performance-based programs with respect to the annual cash incentives and annual equity grants for the 2017 and 2018 fiscal year plans; and

·

Assisted the Company in its preparation of compensation disclosures as required under Regulation S-K with respect to this proxy statement including this CD&A and associated tables and disclosures included herein by reference.

Compensation Committee’s Relationship with its Independent Compensation Consultant

The Compensation Committee considered the independence of McLagan in light of applicable SEC rules and NASDAQ listing standards. The Compensation Committee requested and received a report from McLagan addressing the independence of McLagan and its senior advisors. The following factors were considered: (1) services other than compensation consulting provided to us by McLagan; (2) fees paid by us as a percentage of McLagan’s total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisors of McLagan and a member of the Compensation Committee; (5) any stock of the Company owned by the senior advisors of McLagan; and (6) any business or personal relationships between our executive officers and the senior advisors of McLagan. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan’s senior advisors involved in the engagements did not raise any conflict of interest.

Compensation Benchmarking and Compensation Committee Functions

Each year, with assistance from McLagan, the Compensation Committee reviews the compensation practices of the Company’s peers in order to assess the competitiveness of the compensation arrangements of our NEOs. Although benchmarking is an active tool used to measure compensation structures among peers, it is only one of the tools used by the Compensation Committee to determine total compensation. Benchmarking is used by the Compensation Committee primarily to ascertain competitive total compensation levels (including base salary, equity awards, cash incentives, etc.) with comparable institutions. Using this data as a reference point, the Compensation Committee addresses pay-for-performance (meritocracy) as discussed further in the sections below on cash incentives and long-term retention. Peer performance, market factors, Company performance and personal performance are all factors that the Compensation Committee considers when establishing total compensation, including incentives. This practice is in line with the Company’s meritocracy philosophy of pay. The Compensation Committee, at its discretion, may determine that it is in the best interest of the Company to negotiate total compensation packages that deviate from regular compensation and incentive levels in order to attract and retain specific talent.

The Compensation Committee reviews the composition of the peer group annually at a minimum and may change it as a result of mergers, changes to banks within the group, or changes within the Company. The 2017 compensation peer group was selected based on certain current market criteria, including the following:

·

National banks with total assets from $8.5 billion to $20.0 billion, after planned acquisitions;

·

No thrifts;

21


 

·

Bank must have branch locations;

·

Return on average assets and return on average equity greater than 0%;

·

Satisfactory Performance Measures (positive profitability, three-year asset growth greater than 12.5%); and

·

Commercial loan portfolio less than 85% of total loan portfolio.

The Compensation Committee reviewed a group of 28 peers with median assets, including pending acquisitions, of $12.5 billion (median actual assets of $10.3 billion), defined as of December 31, 2016. The specific members of this peer group are as follows:

 

 

 

Banc of California Inc. (BANC)

FCB Financial Holdings, Inc. (FCB)

Old National Bancorp (ONB)

BancorpSouth Inc. (BXS)

First Merchants Corp. (FRME)

Pinnacle Financial Partners (PNFP)

Bank of Hawaii Corp. (BOH)

First Midwest Bankcorp Inc. (FMBI)

Renasant Corp. (RNST)

Bank of the Ozarks Inc. (OZRK)

First Interstate BancSys. (FIBK)

Simmons First National Corp. (SFNC)

Banner Corp. (BANR)

Glacier Bancorp Inc. (GBCI)

Trustmark Corp. (TRMK)

Berkshire Hills Bancorp (BHLB)

Heartland Fin’l USA (HTLF)

United Bankshares Inc. (UBSI)

Capital Bank Finl Corp (CBF)

Hilltop Holdings Inc. (HTH)

United Community Banks Inc. (UCBI)

Cathay General BankCorp (CATY)

Home BancShares Inc. (HOMB)

WesBanco Inc. (WSBC)

Chemical Financial Corp. (CHFC)

MB Financial Inc. (MBFI)

 

Community Bank System (CBU)

NBT Bancorp Inc. (NBTB)

 

 

22


 

Part 3Components of Executive Compensation

The following table summarizes the components of compensation paid or awarded to our Named Executive Officers who appear in the “Summary Compensation Table” below.

 

 

 

 

 

 

Compensation Component

    

What the Component Rewards

    

Key Features

 

Base Salary

 

Reflects the scope of leadership and responsibility, individual achievement toward the objectives of their respective position and their relative value in the industry.

 

The Compensation Committee approved increases for the CEO and the four other NEOs in January 2017 to make them competitive with the market as determined by the compensation peer group. Actual positioning within the peer group reflects each executive’s performance, among other things.

 

Performance-Based Annual Cash Incentive

 

Focuses executives on achieving annual financial and performance goals and objectives based on Soundness and Profitability.

 

The opportunity for performance-based annual cash incentive compensation was based upon financial and performance goals and objectives. The Compensation Committee established the weighting for the performance goals with 25% based on soundness and 75% based on profitability with each goal having threshold, target and maximum levels. Performance goals for 2017 were achieved at 100% of maximum levels.

 

2017 Long-Term Incentive Plan75% Restricted Stock Units and 25% Stock Options

 

Rewards the achievement of superior three-year cumulative operating EPS growth (67%) and operating return on tangible equity performance (33%).

 

The 2017 Long-Term Incentive Plan consists of 75% RSU grants and 25% Stock Options at target performance levels. The RSU awards are designed to measure relative performance over three-year cycles. Each year begins a new three-year cycle. RSUs are both performance and time (three years) vested.

Stock Options are granted based upon both corporate and individual performance objectives that are non-formulaic. Beginning in 2018, stock options will not be a part of the long-term incentive plan. The full amount of 2018 long-term incentive plan will be in the form of three-year performance based RSUs and remain formulaic.

 

Benefits and Perquisites

 

Helps keep the Company competitive in attracting and retaining employees.

 

The Compensation Committee believes that its employee benefits are generally in line with benefits provided by the Company’s peer group and consistent with industry standards.

 

The key elements of compensation for the NEOs are base salary, annual and long-term incentives, and benefits, which are discussed below in greater detail.

·

Base Salary—Base salaries are determined based on historical and anticipated individual contribution and performance toward accomplishing the Company’s stated objectives. Base salaries are also reviewed in the context of comparability with the key executives of the Company’s peer group. We believe that the annual base salary levels for the NEOs helps us to retain qualified executives and provides income stability that lessens potential pressures for the NEOs to take risks to achieve performance measures under incentive compensation arrangements. Effective January 1, 2017, the CEO, along with the other NEOs, received a merit increase to base salary as a reflection of 2016 performance and to maintain competitiveness with peer group. As a result, the CEO and each of the other four NEOs received a 2.75% base salary increase with the exception of Renee R. Brooks, the Company’s Chief Administrative Officer, whose salary was increased by 3.56% due to responsibility, performance and to better align her compensation with the other NEOs.

·

2017 Executive Performance Plan—In 2017, the Executive Performance Plan was approved to include both an Annual Incentive Plan (Cash) and the three-year Long-Term Incentive Plan.  The Executive Performance Plan is designed to establish reasonable goals and objectives measured on an annual basis as well as to develop long-term goals that align the interests of the NEOs with those of the Company’s shareholders.  The purposes of the Executive Performance Plan include (1) aligning executive compensation with the Company’s performance, (2) attracting and retaining key officers and employees of outstanding ability, (3) strengthening the Company’s capability to develop, maintain, and direct a competent management team, (4) providing an effective means for selected key officers and employees to acquire and maintain ownership of Company stock, and (5) providing incentive compensation opportunities competitive with those of other major corporations.

The 2017 Executive Performance Plan was composed of cash, RSUs and stock option components.

·

2017 Annual Incentive Plan (Cash): At target performance levels, the 2017 Executive Performance Plan was weighted 50% in the form of an annual cash incentive bonus under the 2017 Annual Incentive Plan. The amount of cash that may be earned was based upon financial and regulatory performance goals/objectives for 2017.

23


 

·

2017 Long-Term Incentive Plan (Equity): At target performance levels, the 2017 Executive Performance Plan was weighted 50% in the form of equity. The equity component was made up of both RSUs and stock options as follows:

a.

Restricted Stock Units: Of the equity granted, at target performance levels 75% may be earned in the form of RSUs. All of the RSUs vest based upon achievement of three-year performance goals. RSUs are subject to both performance and time vesting conditions (three years).

b.

Stock Options: The remaining 25% of the equity that would be granted at target performance levels was structured to be earned in the form of stock options. Stock options were granted based upon the achievement of individual performance objectives. Stock options vest ratably (25% per year) over four years. Beginning in 2018, stock options will not be a part of the long-term incentive plan.  The full amount of the 2018 long-term incentive plan will be in the form of three-year performance based RSUs and remain formulaic.

2017 Annual Incentive Plan

Cash incentive opportunities as a percentage of salary for each of the applicable NEOs and results under the 2017 Annual Incentive Plan are displayed below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Opportunity as a
% of Salary (Cash)

 

 

 

Name

    

Position

    

Thresh

    

Target

    

Max

    

Actual
Earned

 

Robert R. Hill, Jr.

 

Chief Executive Officer of South State Corporation

 

55

%

110

%

165

%

165

%

John C. Pollok

 

Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer

 

45

%

90

%

135

%

135

%

John F. Windley

 

Chief Banking Officer, President and Chief Executive Officer of South State Bank

 

30

%

60

%

90

%

90

%

Joseph E. Burns

 

Senior Executive Vice President and Chief Credit Officer

 

30

%

60

%

90

%

90

%

Renee R. Brooks

 

Senior Executive Vice President and Chief Administrative Officer

 

30

%

60

%

90

%

90

%

The primary objectives of the 2017 Annual Incentive Plan were to enhance shareholder value by focusing on operating earnings, growth, and soundness. Accordingly, subject to the conditions and limits described below, the Compensation Committee was allowed under the 2017 Annual Incentive Plan to determine the actual cash bonus amounts based on the following performance goals, weighted 25% for soundness and 75% for profitability.

·

Soundness: This component was based on achieving the specified asset quality test. Specifically, the Bank was required to receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 31, 2015.We believe it is important to include a measurement of soundness in our annual incentive plan in order to ensure that soundness is not sacrificed at the expense of growth or profitability, and that appropriate focus is placed on continuing to improve credit-related issues.

·

Profitability: This measure was based on adjusted earnings per share (“Adjusted EPS”). Since growth in Adjusted EPS is a key component in building shareholder value, this element was weighted at 75% of the total cash incentive opportunity. Emphasis on this performance metric aligns the interests of the executive with those of the shareholder. Adjusted Earnings is a non-GAAP measure which excludes the after-tax effect of gains on acquisitions, OTTI (Other Than Temporarily Impaired Items), and merger and branding-related expense. Ultimately, the Compensation Committee determined the final Adjusted Earnings performance used in calculating incentive results, and exercised its authority to exclude certain revenue or expenses that it deemed to not reflect core earnings. For 2017, the Company’s diluted GAAP EPS was $2.93. The calculated Adjusted EPS used in connection with the annual incentive plan was $4.85, which excluded the after-tax impact of $445,000 in securities gains, $26.6 million in deferred tax asset revaluation and $31.5 million in branch consolidation and acquisition expense.

24


 

The goals and the actual results of the 2017 Executive Incentive Plan are outlined in the table below:

 

 

 

 

 

 

 

 

Soundness (25%)

 

Profitability (75%)

 

 

    

2017 Asset Quality 

    

2017 Operating EPS

 

Threshold

 

See Below*

 

4.23

 

Target

 

 

 

4.46

 

Maximum

 

 

 

4.70

 

Actual

 

Achieved

 

4.85

 


*The Bank was required to receive a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 31, 2015.

The 2017 Annual Incentive Plan was implemented under the 2012 Omnibus Stock and Performance Plan, which allows the Compensation Committee to structure awards to “covered employees” to meet the “qualified performance-based compensation” exception under Section 162(m) of the internal revenue code (the “tax code”). For 2017, the Compensation Committee approved an aggregate incentive pool under the Annual Incentive Plan equal to 15% of pre-tax net income, and set maximum incentive pool allotments for each of the participants. In addition, incentive payments under the 2017 Annual Incentive Plan were limited to the amounts shown in the maximum column in the table above and were subject to the following “minimum performance triggers”: a) net income sufficient to fully cover the cash dividends paid to the Company’s shareholders, and b) a regulatory rating for asset quality in its most recent regulatory report issued prior to December 31, 2017 that was not lower than the Bank’s most recent regulatory rating for asset quality prior to December 21, 2015.

2017 Long-Term Incentive Plan

2017 Long-Term Incentive Plan opportunities as a percentage of salary for each of the NEOs are displayed below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted Stock Units

as a % of Salary

 

Stock Options
as a % of Salary

 

Name

    

Position

    

Thresh

    

Target

    

Max

    

Thresh

    

Target

    

Max

 

Robert R. Hill, Jr.

 

Chief Executive Officer of South State Corporation

 

41.25

%

82.5

%

123.75

%

13.75

%

27.50

%

41.25

%

John C. Pollok

 

Senior Executive Vice President, Chief Financial Officer, and Chief Operating Officer

 

33.75

%

67.5

%

101.25

%

11.25

%

22.50

%

33.75

%

John F. Windley

 

Chief Banking Officer, President and Chief Executive Officer of South State Bank

 

22.5

%

45.0

%

67.5

%

7.5

%

15.0

%

22.5

%

Joseph E. Burns

 

Senior Executive Vice President and Chief Credit Officer

 

22.5

%

45.0

%

67.5

%

7.5

%

15.0

%

22.5

%

Renee R. Brooks

 

Senior Executive Vice President and Chief Administrative Officer

 

22.5

%

45.0

%

67.5

%

7.5

%

15.0

%

22.5

%

Long-Term Incentive Plan Performance Goals

The RSUs granted in 2017 vest based on the attainment of the following pre-established performance goals over the three-year period ending December 31, 2019:

 

 

 

Performance Goal

    

Goal Weighting

(% of RSU Target Award)

3-Year Cumulative Adjusted EPS Growth

 

67%

3-Year Return on Average Tangible Equity

 

33%

The grants are reported in the “Summary Compensation Table” on page 31 at target level, in accordance with SEC reporting rules. RSUs are intended to meet the “qualified performance-based compensation” exception from the $1 million

25


 

deduction limitation of Section 162(m) of the tax code. Vesting of the RSUs is subject to achievement of the minimum “performance triggers” as of December 31, 2019.

Individual Performance-Based Goals

Under the 2017  Long-Term Incentive Plan, 25% of the value of the equity grants (at target levels) was determined based on non-formulaic individual performance objectives for the stock option component. The individual performance objectives were based on implementation of actions to achieve long-term growth and profitability such as completion and successful integration of acquisitions, improvement in credit practices and measurements and other practices related to risk management, team building, and leadership development, succession planning and continuing to build upon Company culture.

The Compensation Committee granted Incentive Stock Options in 2018 under the 2017 Long-Term Incentive Plan at the maximum level in recognition of our NEOs’ 2017 individual contributions. Specifically, Mr. Hill received 11,565 stock options, while the other NEOs received between 2,294 and 6,759 stock options in recognition of their 2017 contributions. The contributions included the closing of two successful acquisitions of Southeastern Bank Financial Corporation and Park Sterling Corporation in 2017.  These two acquisitions resulted in the growth of company from $8.9 billion in assets to $14.5 billion in assets. As required by SEC disclosure rules, the stock options granted in 2018 will be reported in the compensation tables included in our 2019 proxy statement, in spite of the fact that we consider them to be part of our 2017 executive compensation plan. In addition, as noted above, stock options are not a component in the 2018 Long-Term Incentive Plan as the full amount of the 2018 Long-Term Incentive Plan will be in the form of RSUs and remain formulaic.

Results of 2015 Long-Term Incentive Plan Which Ended in 2017

On January 1, 2015, the Compensation Committee granted performance-vesting RSUs to each of our NEOs.  The vesting of 67% of these RSUs was dependent on achieving pre-determined levels of cumulative Adjusted EPS, with the remaining 33% vesting based on cumulative average adjusted ROATE.  Both objectives are measured over the three-year performance period from January 1, 2015 through December 31, 2017.

Target performance over the three-year period represented 52.3% growth in cumulative adjusted EPS and 14.0% cumulative average adjusted ROATE.  Actual performance represented 65.6% growth in cumulative adjusted EPS, which was less than maximum performance under the plan, and cumulative average ROATE was 16.05%, which was above the maximum performance guidelines under the plan.  As a result, the RSUs granted as part of the 2015 plan vested at 96.7% of maximum on December 31, 2017.  The RSUs that have been earned and have vested are shown in the Option Exercises and Stock Vested table on page 34.

Part 4Other Aspects of South State’s Executive Compensation Program

Benefits

During 2017, the Company maintained various employee benefit plans that constitute a portion of the total compensation package available to the NEOs and all eligible employees of the Company.  These plans consist of the following:

Employees’ Pension Plan—The NEOs are participants in a non-contributory defined pension plan which covers substantially all employees of the Company hired before January 1, 2006. Pension benefits are paid based upon age of the employee and years of service with the Company. The Plan was frozen in July 2009, and no further benefits are being accrued.  See the Pension Benefits table and the accompanying footnotes and narrative for more information.

Retirement Savings Plan401(k)—Each of the NEOs are participants in a defined contribution plan which in 2017 permitted employees to contribute a portion of their compensation, on a tax-deferred basis, up to certain IRS compensation deferral amount limits applicable to a tax-qualified retirement plan. The Company matched 100% up to 6% of participants’ deferrals (4% Safe Harbour, 1% discretionary and an additional 1% discretionary at year-end).  See the table in footnote 7 of the Summary Compensation Table.

Health Care—The NEOs are eligible to receive medical and dental coverage that is provided to all eligible employees.

Other Welfare Benefits—The NEOs receive sick leave, vacation and other benefits available to all eligible employees of the Company.

26


 

The employee benefits for the NEOs discussed in the subsection above are determined by the same criteria applicable to all Company employees.  These benefits help keep the Company competitive in attracting and retaining employees.  The Company believes that its employee benefits are generally competitive with benefits provided by the Peer Group and consistent with industry standards.

Supplemental Executive Retirement Plan—The Company provides a non-qualified supplemental executive retirement plan (a “SERP”) for Mr. Windley, and certain other executives who are not NEOs. The Company elects to offer this type of incentive as a way to retain executives over the long-term and to provide a partial offset to shortfalls in the percentage of income provided for retirement by its qualified retirement plans.

Deferred Compensation Plan—We make available to selected members of our senior management group, including all NEOs and/or other selected employees who are highly compensated, the opportunity to elect to defer current compensation for retirement income or other future financial needs. The plan is a nonqualified deferred compensation plan that is designed to be exempt from certain ERISA requirements as a plan that covers a select group of management and certain other highly compensated employees. Each year participants can choose to have their compensation for the upcoming year reduced by a certain whole percentage amount ranging between 5% and 80% or by a specific dollar amount (in all cases, subject to a minimum value established by the Company). In addition, the Company may make matching or partially-matching contributions for participant deferrals. The Company may also make discretionary contributions for any or all participant(s). Both of these types of employer contributions would be subject to certain vesting requirements. There are also forfeiture provisions, which can result from unvested amounts existing at terminations or from materially incorrect earnings that are subsequently adjusted or corrected.  Deferrals may be held by a trustee in a grantor (rabbi) trust and may be invested in funds that mirror deemed investments selected by the participants and offered pursuant to the plan. Such a trust would not isolate assets for the benefit of the participants. Consequently, distributions made under the plan will be made from the general assets of the bank which could be subject to claims of its creditors. Amounts deferred under the plan will generally be subject to income taxes payable by the participant in the year in which received (end of the deferral period), but these deferred amounts are subject to employment taxes in the year of deferral.  In 2017, Mr. Hill and Mr. Windley elected to participate.  No employer contributions have been made to this plan in 2017 or in the past.

See the discussion entitled Deferred Compensation Plan for additional information.

Perquisites—The Company also provides limited perquisites to NEOs that are not available to all employees. Some examples of these include Company-owned automobiles, automobile allowances and club and membership dues. The values of these items are presented in the Summary Compensation Table under the heading All Other Compensation. The value attributable to any personal use of Company-owned automobiles is considered compensation to the executive and represents the aggregate incremental cost to the Company associated with that personal use. The Company and the Board of Directors believe that the use of each of these perquisites is helpful for the proper performance of the NEOs’ duties.

Role of Shareholder Say on Pay Vote

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we held an annual advisory vote on the compensation of our executive officers (the “Say on Pay Proposal”) at our 2017 annual shareholders meeting.  At the 2017 annual shareholders meeting, 97.51% of the votes cast on the Say on Pay proposal were cast in support of the compensation of the Company’s named executive officers. While the 2017 shareholder vote reflected strong support for our executive compensation programs, the Compensation Committee, Board of Directors and executive management has evaluated compensation programs each year to ensure the plans have continued to align the interest of the executives with those of the Company’s shareholders and continued to strengthen the linkage of pay to performance.

At the Annual Meeting, we are submitting a Say on Pay Proposal for shareholders to vote on. See Proposal No. 2 for more information on the Say on Pay Proposal.

Clawback Policy

The Compensation Committee is committed to adopting a formal clawback provision for adjustment or recovery of incentive awards or payments in the event the performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment.  The Compensation Committee intends to fully comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act regarding this issue once rulemaking has been completed with respect to these provisions.  

27


 

Until formal guidance is available, the Compensation Committee will seek to address any situation that may arise and determine the proper and appropriate course of action in fairness to shareholders and NEO award recipients.

Share Ownership Guidelines

The Company’s stock ownership guidelines call for NEOs to own equity representing a multiple of their salary and to retain this equity throughout their tenure with the Company. The specific share ownership guidelines are:

·

Chief Executive Officer—three times salary

·

Other NEOs—two times salary

The Company’s NEOs have five years from being named a NEO to comply with the stock ownership guidelines.  As of the end of our fiscal year, all NEOs have exceeded their required ownership levels.  Beneficially owned shares include shares held by a named executive officer, directly or indirectly, and unvested shares of restricted stock, as to which the executive officers have full voting privileges, but exclude vested and unexercised stock options.  Until the stock ownership guidelines are achieved, the sale of shares of the Company’s common stock is restricted.

Equity Grant Practices

To address volatility concerns, the 30-day moving average of the Company’s stock was utilized to determine the number of RSUs to be issued under the Executive Performance Plan for 2017.  The 30-day average is defined as the 30 trading days immediately preceding the last business day of the prior month.  Stock option values were determined based upon Black Scholes Valuation methodology as of the last day of the preceding quarter.  This value was divided into the dollar amount of options that an executive was to receive to quantify the number of options granted to an executive.  The calculated number of stock options is issued with an exercise price equal to the stock price on the date of the grant.

Employment and Non-Competition Agreements

The purpose of these agreements is to attract and retain highly qualified executive officers, recognizing that termination and change in control protections are commonly provided at comparable financial institutions with which we compete for executive talent.  In addition, the Compensation Committee believes change in control protections enhance the impartiality and objectivity of the NEOs in the event of a change in control transaction and better ensure that shareholder interests are protected.  Finally, these agreements include non-competition provisions that further protect the company should the NEO elect to pursue other employment opportunities. Each of our NEOs has an employment agreement.  The agreements provide for the following:

·

Term of Employment. The employment agreements for Messrs. Hill, Pollok, Windley, and Burns and Mrs. Brooks have a term of employment of three years from the effective date of the agreement. On each anniversary date of the effective date of the agreement, the term of the agreement is automatically extended for an additional year unless at least 60 days prior to the anniversary date either party gives the other party written notice of non-renewal.

·

Reimbursement of Expenses. The Company will reimburse the executive all reasonable travel and other business related expenses incurred in performing duties under the agreement.

·

Vacation and Sick Leave. The Company will provide vacation and sick leave to the executive in accordance with policies and procedures established from time to time.

·

Employee Benefit Plans. The executive is entitled to participate in the employee benefit plans presently in effect or as these plans may be modified or added from time to time.

·

Incentive Bonus Plans. The executive is entitled to participate in the incentive bonus plans, applicable to his or her employment position, in accordance with policies and procedures established from time to time.

·

Fringe Benefits. The Company will reimburse the executive for the cost of attending required meetings and conventions and will cover membership dues to an approved country club. In addition, Mr. Hill, Mr. Pollok, Mr. Windley, Mr. Burns and Mrs. Brooks are provided the use of a Company-owned automobile or car allowance.

28


 

·

Termination of Employment. See the discussion below entitled “Potential Payments upon Termination or Change in Control” for a description of the payments that may be due to each executive upon termination of employment.

·

Non-compete. The period of non-compete for the executive runs during the period of employment and for a designated period of time following termination of employment. If the executive is found to violate the covenants contained in the agreement, the non-compete period will be extended for a period equal to the amount of time the executive is found to have been in non-compliance. If Mr. Hill is terminated for cause according to his agreement, the non-compete period is abbreviated and ends 12 months after the date of termination.

See the discussion entitled “Potential Payments upon Termination or Change in Control,” which provides the amount of compensation each executive would receive under various termination events based upon the employment agreements.

Tax Deductibility of Compensation

Section 162(m) of the Internal Revenue Service Code limits the Company’s ability to deduct certain compensation in excess of $1 million paid to the Company’s Chief Executive Officer and to certain other executives (excluding the company’s Chief Financial Officer). For 2017 and prior years, this limitation did not apply to compensation that qualified under applicable regulations as “performance-based.” In line with this, the Company has aimed to design and approve the performance-based compensation paid to its NEOs so that such compensation would satisfy the requirements for deductibility under Section 162(m). For 2017 and prior years, the Compensation Committee considered Section 162(m) when making compensation decisions.  However, other considerations, such as providing the Company’s NEOs with competitive and adequate incentives to remain with the Company and increase the Company’s business operations, financial performance and prospects, as well as rewarding extraordinary contributions, also significantly factored into the Committee’s decisions.

In December 2017, the Tax Cuts and Jobs Act was enacted. Under the Tax Cuts and Jobs Act, the qualified performance-based compensation exception to Section 162(m) that generally provided for the continued deductibility of performance-based compensation was repealed, effective for tax years commencing on or after January 1, 2018. Accordingly, commencing with our fiscal year ending December 31, 2018, compensation to our Named Executive Officers in excess of $1,000,000 not awarded prior to November 2, 2017 will generally not be deductible.  Performance-based compensation awarded to our Named Executive Officers for periods prior to November 2, 2017, such as our performance-based RSUs granted in 2017 and prior years that have not yet been settled into shares of Common Stock, are expected to continue to qualify for the performance-based compensation exemption under Section 162(m).  The United States Treasury has not yet issued any guidance on any limitations on the continued deductibility of these awards.  Accordingly, the future deductibility of these grandfathered awards cannot be guaranteed.

Risk Assessment of Compensation Programs

As part of an annual practice, the Compensation Committee reviewed and discussed a compensation risk assessment performed by the Company’s Incentive Risk Committee. The Incentive Risk Committee is chaired by the Chief Risk Officer and composed of representatives from Risk, Compliance, Audit, Accounting, and Human Resources. This risk assessment process included a review of the design and operation of the Company’s eleven incentive compensation programs. It also identified and evaluated situations or compensation elements that could raise material risks. The Incentive Risk Committee met in 2017 and then presented the findings of the review to the Compensation Committee at its October 2017 meeting. Based on the Incentive Risk Committee’s findings and the Compensation Committee’s deliberations, the Compensation Committee concluded that the Company’s compensation policies and practices do not create risks that are likely to have a material adverse effect that would cause plan participants to take unnecessary risks.

Transactions in Company Securities

In general, SEC rules prohibit uncovered short sales of shares of the Company’s common stock by its executive officers, including the NEOs. Accordingly, the Company’s insider trading policy prohibits short sales of shares of the Company’s common stock by its executive officers, including the NEOs, and discourages all employees from engaging in any hedging transactions relating to the Company’s common stock. The policy also requires all affiliates and insiders to consult with the Company’s Treasurer or Chief Executive Officer if they intend to engage in any hedging transactions involving the Company’s common stock. In 2017, no executive officer consulted with the Company’s Treasurer or Chief Executive Officer regarding hedging transactions.

29


 

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis required by Item 402 (b) of Regulation S-K with management and, based on such review and discussions, has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and be incorporated by reference into the Company’s  2017 Annual Report on Form 10-K.

This report is provided by the following independent directors, who comprise the Compensation Committee:

Cynthia A. Hartley, Chair

Paula Harper Bethea

Jean E. Davis

Thomas J. Johnson

James W. Roquemore

 

30


 

SUMMARY COMPENSATION TABLE

The following table summarizes for the fiscal years ended December 31, 2017,  2016 and 2015, the current and long-term compensation for the Chief Executive Officer, the Chief Financial Officer and the three most highly compensated executive officers other than the Chief Executive Officer and Chief Financial Officer. Each component of compensation is discussed in further detail in the footnotes following the table. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salary ($)

 

Bonus ($)

 

Stock
Awards ($)

 

Option
Awards ($)

 

Non-Equity
Incentive Plan
Compensation ($)

 

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)

 

All Other
Compensation ($)

 

 

 

 

Name and Principal Position

    

Year

    

(1)

    

 

    

(2)

    

(3)

    

(4)

    

(5)

    

(6)

    

Total ($)

 

Robert R. Hill, Jr.

 

2017

 

$

761,201

 

$

—  

 

$

635,455

 

$

320,471

 

$

1,255,982

 

$

36,685

 

$

45,604

 

$

3,055,398

 

Chief Executive Officer of South State

 

2016

 

 

740,825

 

 

—  

 

 

637,130

 

 

253,300

 

 

1,222,366

 

 

13,583

 

 

56,578

 

 

2,923,782

 

Corporation

 

2015

 

 

721,000

 

 

—  

 

 

637,212

 

 

260,119

 

 

1,189,650

 

 

2,268

 

 

60,948

 

 

2,871,197

 

John C. Pollok

 

2017

 

 

543,715

 

 

—  

 

 

371,368

 

 

187,296

 

 

734,015

 

 

33,998

 

 

41,937

 

 

1,912,329

 

Senior Executive Vice President,

 

2016

 

 

529,163

 

 

—  

 

 

372,307

 

 

148,028

 

 

714,370

 

 

12,487

 

 

41,937

 

 

1,818,292

 

Chief Financial Officer and Chief Operating Officer

 

2015

 

 

515,000

 

 

—  

 

 

372,371

 

 

152,025

 

 

695,250

 

 

2,556

 

 

48,101

 

 

1,785,303

 

John F. Windley

 

2017

 

 

364,289

 

 

—  

 

 

165,926

 

 

83,664

 

 

327,860

 

 

34,324

 

 

19,613

 

 

995,676

 

Chief Banking Officer, President and

 

2016

 

 

354,539

 

 

—  

 

 

166,297

 

 

66,124

 

 

319,085

 

 

54,123

 

 

24,215

 

 

984,383

 

Chief Executive Officer of South State Bank

 

2015

 

 

345,050

 

 

—  

 

 

166,368

 

 

67,902

 

 

310,545

 

 

108,502

 

 

27,220

 

 

1,025,587

 

Joseph E. Burns

 

2017

 

 

339,751

 

 

—  

 

 

154,751

 

 

78,025

 

 

305,776

 

 

25,585

 

 

21,898

 

 

925,786

 

Senior Executive Vice President

 

2016

 

 

330,658

 

 

—  

 

 

155,100

 

 

61,666

 

 

297,592

 

 

13,032

 

 

42,598

 

 

900,646

 

and Chief Credit Officer

 

2015

 

 

321,808

 

 

—  

 

 

155,132

 

 

62,843

 

 

289,627

 

 

8,849

 

 

47,410

 

 

885,669

 

Renee R. Brooks

 

2017

 

 

339,751

 

 

—  

 

 

154,751

 

 

77,422

 

 

305,776

 

 

8,693

 

 

22,125

 

 

908,518

 

Senior Executive Vice President

 

2016

 

 

328,081

 

 

—  

 

 

153,915

 

 

61,190

 

 

295,273

 

 

3,019

 

 

22,086

 

 

863,564

 

and Chief Administrative Officer

 

2015

 

 

319,300

 

 

—  

 

 

153,906

 

 

62,843

 

 

287,370

 

 

498

 

 

22,904

 

 

846,821

 


(1)

Consists of total salary compensation, including all amounts that have been deferred at the officers’ election.  During 2017, 2016 and 2015, Mr. Hill deferred $52,083, $226,364 and $105,188, respectively, and Mr. Windley deferred $28,963, $24,790 and $23,147 respectively, into the deferred compensation plan (see description of plan on page 35).

(2)

Beginning in 2013, the Company awarded performance-based RSUs to its executive officers.  These grants are both performance and time vested over a three-year performance period.  The Company communicates threshold, target, and maximum performance RSU awards and performance targets to the executives at the beginning of a performance period. The value of the RSU grants shown above equals the grant date fair value in accordance with FASB ASC Topic 718. See discussion of assumptions used in the valuation of the stock awards in Note 19, “Share‑based Compensation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

(3)

The value of the stock option awards shown above equals the grant date fair value in accordance with FASB ASC Topic 718. See discussion of assumptions used in the valuation of the stock awards in Note 19, “Share‑based Compensation” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

(4)

Reflects the dollar value of all amounts earned during the fiscal year pursuant the performance based non-equity incentive plans.

(5)

Includes the change in pension value to the NEOs with the exception of Mr. Windley.  In 2017, Mr. Windley’s amount includes the change in pension value in addition to the SERP accrual of $48,077. It also includes the portion of income earned during the fiscal year in the nonqualified deferred compensation plan exceeding 120% of the applicable long-term federal rate (“AFR”). During 2016, nonqualified deferred compensation plan balances experienced an unrealized gain/loss; however, there was no income exceeding 120% of the AFR.

(6)

The following table provides all other compensation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

    

Matching

Contributions

to 401k Retirement

Savings Plan

    

Life Insurance
and
Long-term
Disability
Premium

    

Dividends on
Unvested
Restricted
Stock

    

Memberships

    

Imputed
Taxable
Value of
Vehicles

    

Other
Cash

    

Total

 

Robert R. Hill, Jr.

 

$

16,200

 

$

1,620

 

$

22,403

 

$

2,376

 

$

2,105

 

$

900

 

$

45,604

 

John C. Pollok

 

 

16,200

 

 

1,620

 

 

19,581

 

 

—