UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.___)
Filed by the Registrant
þ
Filed by a Party other
than the Registrant
¨
Check the appropriate box:
þ
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 Pursuant to §240.14a-12
FIRST CITIZENS BANCSHARES, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
No fee required
¨
Fee computed on table below per Exchange Act Rules (14a-6(i)(1) and 0-11
-
Title of each class of
securities to which transaction applies:
______________________________________________
-
Aggregate number of
securities to which transaction applies:
_____________________________________________
-
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): _____
-
Proposed maximum
aggregate value of transaction:
__________________________________________________
-
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.
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Amount Previously Paid:
__________________________________
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Form, Schedule or
Registration Statement No.: __________________________
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Filing Party:
______________________
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Date Filed:
________________________
FIRST CITIZENS BANCSHARES, INC.
One First Citizens Place
Dyersburg, Tennessee 38024
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Wednesday, April
15, 2009
TO: Shareholders of First Citizens Bancshares, Inc.
The annual meeting of shareholders of First Citizens Bancshares, Inc. will be
held in the Lipford Room of First Citizens National Bank, One First Citizens
Place, Dyersburg, Tennessee, on April 15, 2009 at 10:00 a.m. to act upon the
following items of business:
1.
To elect eight directors for a term of three years expiring in 2012.
2. To
ratify the appointment of Alexander Thompson Arnold PLLC as our independent
registered public accounting firm for the
year ending December 31, 2009.
3. To
approve the Articles of Amendment to the Charter of First Citizens Bancshares,
Inc.
4. To
transact such other business as may properly come before the meeting or any
adjournment thereof.
We describe these items of
business in more detail in the accompanying proxy statement. Shareholders of
record at the close of business February 13, 2009 are entitled to notice of and
to vote at the meeting.
Please date, sign and return the enclosed proxy immediately in the stamped
envelope provided. It is important that you sign and return the proxy,
even though you plan to attend the meeting in person. You may revoke the
proxy at any time before the proxy is exercised by giving written notice to us
or by advising us at the meeting. If you will need special assistance at the
meeting because of a disability, please contact Judy Long, Secretary at (731)
287-4254.
This 13th day of March 2009.
By Order of the Board of Directors
/s/ Katie S. Winchester
Chairman
-1-
First Citizens
Bancshares, Inc.
One First Citizens Place
Dyersburg, Tennessee 38024
Proxy Statement
Annual Meeting of Shareholders
April 15, 2009
Solicitation
The proxy accompanying this statement is solicited by and on behalf of the board
of directors of First Citizens Bancshares, Inc. (the "Company") for use at the
annual meeting of shareholders to be held April 15, 2009 and any adjournment
thereof. The time and place of the meeting is set forth in the
accompanying Notice of Annual Meeting of Shareholders.
We
will pay the expense of preparing, assembling, printing and mailing the proxy
statement and materials used in the solicitation of proxies for the meeting.
We will solicit proxies principally through use of the mail, but our officers,
directors and employees may solicit proxies personally or by telephone, without
receiving special compensation therefor. Brokers, custodians and similar
parties will be requested to send proxy material to beneficial owners of stock
and will be reimbursed for reasonable expenses. We anticipate mailing this
proxy statement and accompanying form of proxy to shareholders on or about
March 13, 2009.
We
will vote all proxies in the accompanying form, which are properly executed and
returned to management, in accordance with your directions. You may revoke any
proxy you delivered to us at any time before it is exercised if you provide
written notice to Judy Long, Secretary of the Company. If you are present at
the meeting and wish to vote in person, you may advise the Chairman of your
intention to vote in person. In this case, we will suspend powers of proxy
holders with respect to your proxy.
If
you return your proxy but do not specify how you wish your shares to be voted,
we will vote the shares represented by your executed proxy "for" the
nominees for election as directors (provided that in the event cumulative
voting occurs, the proxy holders will cumulate votes using their judgment so as
to ensure the election of as many of the nominees as possible), "for"
the ratification of Alexander Thompson Arnold PLLC to serve as our independent
registered public accounting firm for the year ending December 31, 2009 and
"for" approval of the Articles of Amendment to our Charter. If any other
business is properly presented at the meeting, we will vote your proxy in
accordance with the recommendation of our board of directors.
Voting Securities
At
the close of business February 13, 2009, we had 3,717,593 shares of common
stock outstanding and entitled to vote. You are entitled to one vote, in
person or by proxy, for each share of common stock you owned as of February 13,
2009, our record date.
If
any shareholder present at the annual meeting gives notice at the meeting prior
to the voting for election of directors of the intention to vote cumulatively,
then all shareholders eligible to vote will be entitled to cumulate their
shares in voting for the election of directors. Cumulative voting allows you
to cast a number of votes equal to the number of shares held in your name as of
the record date, multiplied by the number of directors to be elected. You may
cast votes for any one nominee or you may distribute your votes among as many
nominees as you wish. You
may not, however, cumulate your votes against a nominee. If cumulative voting is declared at the meeting, we
will cumulate votes represented by proxies delivered pursuant to this proxy
statement at the discretion of the proxy holder, in accordance with
management's recommendation.
If
cumulative voting is not declared at the meeting, director nominees will be
elected by a plurality of the votes cast by the shareholders of our common
stock entitled to vote in the election of directors. The ratification of
Alexander Thompson Arnold PLLC to serve as our independent registered public
accounting firm for the year ending December 31, 2009 and the approval of the
Articles of Amendment to our Charter will each require the affirmative vote of
a majority of the shares of our common stock present in person or by proxy at
the annual meeting. The approval of all other matters submitted to the
shareholders will also require the affirmative vote of a majority of the shares
of our common stock present in person or by proxy at the annual meeting.
Inspectors
of election will treat shares referred to as "broker non-votes" (i.e. shares
held of record by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote with respect to
proposals that do not relate to "routine" matters) as shares that are present
and entitled to vote for purposes of determining the presence of a quorum. For
purposes of determining the outcome of any matter as to which the broker has
physically indicated on the proxy that it does not have discretionary authority
to vote, however, those shares will be treated as not present and not entitled
to vote with respect to that matter (even though those shares are considered
entitled to vote for quorum purposes and may be entitled to vote on other
matters). Because approval of the Articles of Amendment to our Charter is not a
routine matter, broker non-votes on this proposal will have the effect of a
vote against the proposal at the annual meeting.
Proposal I. Election of Directors
Our board of directors consists of 22
members with the terms of approximately 1/3 of the directors expiring every
year. At the meeting you will be asked to elect the individuals listed below
who have been nominated by the board of directors to serve a term of three
years. Once elected, each director shall serve the stated term or until his
successor has met the necessary qualifications and has been elected. Should
any nominee determine that he/she is unable to serve, the persons named in the accompanying
proxy intend to vote for the balance of those named. Each member of the
Company's board of directors also serves as a director on the board of First
Citizens National Bank (the "Bank"), a wholly owned subsidiary of the
Company.
The following tables set forth
information (as of February 13, 2009) for each of our nominees to become
directors and for directors whose terms expire in the years 2010 and 2011. No
director holds a directorship with any other public company or registered
investment company.
NOMINEES FOR
ELECTION WHOSE TERMS WILL EXPIRE IN 2012
|
|
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Name and Principal Occupation for Past Five Years
|
Age
|
Director
Since
|
|
|
|
JEFFREY D. AGEE
|
48
|
2005
|
President and CEO of the
Bank and the Company. Previously served as Executive Vice President and CFO
of the Bank and Vice President and CFO of the Company from August 1999 to
June 2004.
|
|
|
|
|
|
EDDIE EUGENE ANDERSON
|
61
|
1984
|
Partner, Anderson Farms II.
|
|
|
|
|
|
CHRISTIAN E. HECKLER
|
41
|
2006
|
Appointed Regional
President of the Southwest Region for the Bank in April 2006. Previously
served as Community Bank President and Commercial Lender from 2002 to April
2006.
|
|
|
|
|
|
BARRY T. LADD
|
68
|
1996
|
Retired. Previously served
as Executive Vice President and Chief Administrative Officer of the Company
and the Bank from January 1996 to December 31, 2006.
|
|
|
|
|
|
JOHN M. LANNOM
|
55
|
1999
|
Attorney, private legal
practice. Chairman and Chief Executive Officer of Forcum Lannom,
Incorporated.
|
|
|
|
|
|
MILTON E. MAGEE
|
72
|
1969
|
Retired, Chic Farm Co.,
general farming. Partner Magee and Taylor, FLP, and J&M FLP, general
farming.
|
|
|
|
|
|
G.W. SMITHEAL
|
53
|
1993
|
Partner, Smitheal Farm
& Biesel and Smitheal Cattle Company
|
|
|
|
|
|
P.H. WHITE, JR.
|
77
|
1978
|
Owner, P.H. White Farms,
general farming and P.H. White Company, manufacturer and distributor of
livestock insecticide applicators.
|
|
|
-2-
INCUMBENTS WHOSE TERMS WILL EXPIRE IN 2011
|
|
|
Name and Principal Occupation for Past Five Years
|
Age
|
Director
Since
|
|
|
|
J. WALTER BRADSHAW
|
47
|
1993
|
Vice President and
Director, Bradshaw & Co. Insurors, an independent insurance agency.
|
|
|
LARRY W. GIBSON
|
62
|
1995
|
President, Roberts-Gibson,
Inc., gasoline jobber company.
|
|
|
ALLEN G. SEARCY
|
67
|
1999
|
Secretary of Allen Searcy Builder-Contractor, Inc. President of
Crestwood Development Corp. Vice President of Building Solutions, Inc.
Partner, Allen's Building Materials, Inc. and owner of commercial real estate
and rental properties.
|
|
|
DAVID R. TAYLOR
|
62
|
1997
|
CEO of Forcum-Lannom Contractors, LLC a company of engineers,
contractors and developers.
|
|
|
DWIGHT STEVEN WILLIAMS
|
53
|
1991
|
Owner and President,
Johnson-Williams Funeral Home. Partner, West TN Golf, LLC.
|
|
|
KATIE S. WINCHESTER
|
68
|
1990
|
Chairman
of the Company and the Bank. Previously served as President, CEO and Vice
Chairman of the Company and the Bank, from 1996 to April 2007.
|
|
|
JOSEPH S. YATES
|
46
|
2005
|
President, General
Appliance and Furniture Company, retail furniture and appliance outlet.
|
|
|
-3-
INCUMBENTS WHOSE TERMS WILL EXPIRE IN 2010
|
|
|
Name and Principal Occupation for Past Five Years
|
Age
|
Director
Since
|
|
|
|
WILLIAM C. CLOAR
|
72
|
1991
|
Retired 1998 from Dyersburg Fabrics, Inc., a
textile manufacturing plant.
|
|
|
JAMES DANIEL CARPENTER
|
59
|
1993
|
Partner, Flatt Heating & Air Conditioning.
|
|
|
RICHARD W. DONNER
|
58
|
1985
|
President of Trenton Mills, a textile
manufacturing facility.
|
|
|
BENTLEY F. EDWARDS
|
51
|
1997
|
Executive Vice President
and Director of Burks Enterprises, Inc., a distributor of Dr. Pepper-Pepsi
Cola products. Chief Operating Officer of Burks Beverage, L.P. P
|
|
|
RALPH E. HENSON
|
67
|
1997
|
Executive Vice President of the Bank and the Company. Previously
served as Chief Credit Officer of the Bank from February 1993 to December 31,
2006, at which time he transitioned to part-time employment.
|
|
|
STALLINGS
LIPFORD
|
79
|
1960
|
Chairman Emeritus of the Board of the Bank and the Company.
Previously served as Chairman of the Board of the Company and the Bank from February
1984 to April 2005.
|
|
|
LARRY S. WHITE
|
60
|
1997
|
|
|
|
Required Vote
If cumulative voting is not declared at the annual
meeting, and assuming the presence of a
quorum, director nominees will be elected
by a plurality of the votes cast by the shares of our common stock entitled to
vote at the annual meeting. If cumulative voting is declared at the annual
meeting, the eight director nominees receiving the highest number of votes cast
by the shares of our common stock present in person or by proxy at the annual
meeting will be elected, assuming the presence of a quorum.
The board of directors
recommends a vote "FOR" each of the nominees listed above.
-4-
PROPOSAL 2: RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The
Audit Committee has selected Alexander Thompson Arnold PLLC, as our independent
registered public accounting firm for the year ending December 31, 2009. We
are presenting this proposal to the shareholders for ratification at the annual
meeting. A representative of Alexander Thompson Arnold PLLC is expected to be
present at the meeting, will have the opportunity to make a statement and will
be available to respond to appropriate questions.
Total fees paid to Alexander Thompson
Arnold PLLC for the fiscal years ended December 31, 2008 and 2007 are as
follows:
|
|
|
|
Audit Fees
(1)
|
$
|
99,500
|
|
$
|
90,300
|
Audit-Related Fees
|
-
|
|
-
|
Tax Fees
(2)
|
22,215
|
|
17,088
|
All Other Fees
|
-
|
|
-
|
Total
|
$
|
121,715
|
|
$
|
107,388
|
__________________________
(1) The Audit Fees for the years ended
December 31, 2008 and 2007 consisted principally of fees for professional
services in connection with the audits of our consolidated financial statements
and the audit of internal control over financial reporting as well as various
statutory and compliance audits.
(2) The Tax Fees for the years ended
December 31, 2008 and 2007 consisted principally of fees for professional
services for tax compliance, tax advice and tax planning.
All audit and non-audit services performed by
Alexander Thompson Arnold PLLC must be pre-approved by the Audit Committee. The
Audit Committee specifically reviews and pre-approves each audit and non-audit
service provided by Alexander Thompson Arnold PLLC prior to its engagement to
perform such services. The Audit Committee has not adopted any other
pre-approval policies or procedures.
Required
Vote
Assuming the presence of a quorum, the affirmative
vote of the majority of the shares of our common stock present in person or by
proxy at the annual meeting and entitled to vote is required to ratify the
selection of Alexander Thompson Arnold PLLC as our independent registered
public accounting firm. In the event that such a majority does not ratify the
appointment of Alexander Thompson Arnold PLLC, the Audit Committee would
consider the vote in connection with the engagement of an independent
registered public accounting firm for fiscal year 2010, but would likely not
consider a change for fiscal year 2009 because of the difficulty and expense of
making such a change.
The board of directors recommends a vote
"FOR" the ratification of the appointment of Alexander Thompson
Arnold PLLC as our independent registered public accounting firm
for the year ending December 31, 2009.
-5-
PROPOSAL 3: AMENDMENT TO OUR CHARTER
Introduction
On February 18, 2009, our board of
directors authorized and approved an amendment (the "Amendment") to our Charter
to authorize the issuance of up to 1,000,000 shares of preferred stock, no par
value per share ("Preferred Stock"), subject to approval by our shareholders.
The complete text of the Amendment is
attached hereto as
Appendix A
. If the Amendment is approved by the shareholders,
the Amendment will become effective upon filing with the Tennessee Secretary of
State, which we expect to occur promptly after the annual meeting or any
adjournment thereof. The text of the Amendment may vary, however, for such
changes that are consistent with this proposal that we may deem necessary or
appropriate.
Purpose of the Amendment
Our board of directors believes that
approving the Amendment to authorize the issuance of Preferred Stock is
advisable and in our best interests and the best interests of our shareholders
for several reasons. The authorization of Preferred Stock will supplement our
authorized common stock by creating an undesignated class of Preferred Stock to
increase our flexibility in structuring capital raising transactions,
acquisitions, financings, joint ventures and strategic alliances. Preferred
Stock may also be useful in connection with stock dividends, equity
compensation plans or other corporate actions. Our board of directors from time
to time evaluates such opportunities and considers different capital
structuring alternatives designed to advance our business strategy. Having the
authority to issue Preferred Stock will enable us to develop equity securities
with terms tailored to specific purposes and to avoid the possible delay
associated with, and significant expense of, calling and holding a special
meeting of shareholders to authorize additional Preferred Stock on a
case-by-case basis. Our board of directors believes that approving the
Amendment to authorize the issuance of Preferred Stock will provide us with an
enhanced ability to respond to opportunities and favorable capital market
conditions before the opportunity or conditions pass. Although we may consider
issuing shares of the Preferred Stock in the future for purposes of raising
additional capital or in connection with acquisition transactions, there are
currently no binding agreements or commitments with respect to the issuance of
the Preferred Stock.
Description of the Preferred Stock
Currently, the Charter
authorizes only the issuance of up to 10,000,000 shares of our common stock. If
this proposal is approved by our shareholders, we will also be authorized to
issue up to 1,000,000 shares of Preferred Stock.
Although we may consider issuing shares of
the Preferred Stock in the future for purposes of raising additional capital or
in connection with acquisition transactions, there are currently no binding
agreements or commitments with respect to the issuance of the Preferred Stock.
The Amendment will give our board of directors the express authority, without
further action by our shareholders (except as may be required by applicable
law, rule or regulation), to issue shares of Preferred Stock from time to time
in one or more series and to fix before issuance with respect to each series:
The designation and number of
shares constituting the series;
The increase or decrease of the
number of shares constituting the series to a number not less than the number
of outstanding shares of such series;
The dividend rights and rates, if
any, including whether or not dividends shall be cumulative;
The rights and terms of
redemption, if any;
The liquidation rights, if any;
The voting rights, if any;
Whether the shares will be subject
to the operation of a sinking fund or purchase fund, if any;
The conversion rights, if any; and
Any other powers, preferences,
rights, limitations or restrictions.
Possible Effects on Holders of Common
Stock
We are unable to determine the actual
effect of the issuance of a series of Preferred Stock on the rights of the
holders of our common stock until our board of directors determines the rights
of the holders of such series. A series of Preferred Stock may have features,
however, that could include:
Restricting our ability to declare
dividends on our common stock;
Restricting our ability to
repurchase outstanding common stock;
Diluting the voting power of our
common stock;
Diluting the equity interests and
voting power of holders of our common stock if the Preferred Stock is
convertible into common stock; and
Restricting distributions of
assets to the holders of our common stock upon liquidation or dissolution and
until the satisfaction of any liquidation preference granted to the holders of
Preferred Stock.
Possible Anti-Takeover Effects
The Amendment could adversely effect the
ability of third parties to take us over or change our control by, for example,
permitting issuances that would dilute the stock ownership of a person seeking
to effect a change in the composition of our board of directors or
contemplating a tender offer or other transaction for the combination of us
with another company. The ability of our board of directors to establish the
rights of, and to cause us to issue, substantial amounts of Preferred Stock
without the need for shareholder approval, upon such terms and conditions, and
having such rights, privileges and preferences, as our board of directors may
determine from time to time in the exercise of its business judgment, may,
among other things, be used to create voting impediments with respect to
changes in our control or to dilute the stock ownership of holders of common
stock seeking to obtain control of us. The rights of the holders of common
stock will be subject to, and may be adversely affected by, any Preferred Stock
that may be issued in the future. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions,
financings and other corporate transactions, may have the effect of
discouraging, delaying or preventing a change in our control.
Dissenters' Rights
Pursuant to the Tennessee Business
Corporation Act, shareholders are not entitled to dissenters' rights with
respect to the Amendment.
Required Vote
Assuming the presence of a quorum, the
affirmative vote of the majority of the shares of our common stock present in
person or by proxy at the annual meeting and entitled to vote is required to
approve the proposed Amendment.
The board of directors recommends that shareholders
vote "FOR" approval of the
proposed Amendment to our Charter.
-6-
CORPORATE GOVERNANCE
A majority of our directors are
independent, as that term is defined below. The Corporate Governance Committee
of the board of directors has determined that Messrs. Agee, Henson, Heckler and Lipford, and Ms. Winchester are not independent, because each is an employee of
the Bank. Mr. Ladd is also not considered independent because he retired as
Executive Vice President and Chief Administrative Officer of the Bank as of
December 31, 2006. Although Mr. Larry White meets the criteria defined below
for independence, the Corporate Governance Committee does not consider Mr.
White to be independent because he serves as Managing Partner of First
Citizens/White and Associates Insurance Company, LLC, which is a 50% owned
subsidiary of the Bank. The Corporate Governance Committee annually reviews
relationships that exist between the Company and a director and his or her
related interests for the purpose of determining whether the director is independent.
The full board conducts this review on directors serving as members of the
Corporate Governance Committee. A director is presumed to be independent
unless the director (or their immediate family members):
Has been an employee or executive
of the Company during the last 3 years;
Has been an employee or partner of
the Company's independent registered public accounting firm during the last
three years;
Is an owner, partner, employee,
director of an entity with material relationships (i.e., makes payments to, or
receives payments from the Company which exceed the greater of $1 million, or 2% of the entity's gross revenues) with the Company, either as a vendor or
customer, except in situations where revenues are generated as a result of a
competitive bid process in which the board determines the business relationship
is in the best interest of the Company; or
Receives more than $100,000 per
year in direct compensation from the Company, other than director and related
fees.
These
independence standards can also be found in the "About Us - Investor
Relations - Selection and Composition of the Board" section of our website
at www.firstcitizens-bank.com.
Board
and Committee Meetings
Our
board of directors met five times in 2008, while the Bank's board of directors
held 12 meetings. The Company's board of directors has no standing committees.
All directors attended a minimum of 75% of the total of all meetings of the
board and all Bank board committees on which such director served during the fiscal
year. Although we have no specific policy with regard to attendance by
directors at the annual meeting, all directors attended the annual meeting in
2008.
Committees of the Board of Directors
Although the Company's board of directors has no
standing committees, the Bank's board of directors has an Audit Committee and a
Corporate Governance/Nominating/Compensation Committee. On April 16, 2008, the
Bank's board appointed members of the Audit Committee and the Corporate
Governance/Nominating/Compensation Committee to serve for a term of one year.
All
members of the Audit Committee and the Corporate
Governance/Nominating/Compensation Committee are "independent" as
described above in the section entitled "Director Independence."
Directors serving as members of the Corporate Governance Committee also serve
as the members of the Nominating and Compensation Committees. The Corporate
Governance/Nominating/Compensation Committee met five times during 2008. The
Audit Committee charter, the Corporate Governance/Nominating/Compensation
Committee charter can be found in the "About Us - Investor Relations"
section of our website at www.firstcitizens-bank.com.
Audit Committee
The Audit Committee charter requires members of the
committee to be financially literate. No members of the committee are
considered a "financial expert," as defined in regulations adopted by
the Securities and Exchange Commission. The Audit Committee held six meetings
in 2008. The committee's meetings included, whenever appropriate, sessions
with our independent registered public accounting firm and our senior internal
auditor, in each case without the presence of management.
Nominating
Committee
The
Corporate Governance/Nominating/Compensation Committee assists the board in
identifying individuals qualified to become directors and recommending to the
board nominees to be voted upon at the next annual meeting of shareholders. The
committee has responsibility for the selection and composition of the board. In
fulfilling that commitment, the committee seeks members from diverse
professional backgrounds who combine a broad spectrum of experience and
expertise with a reputation for integrity. The process for nominees to be
proposed for election to the board other than those made by the existing board
is discussed in detail in the section entitled "General Information -
Proposals by Shareholders/Director Selection."
Compensation Committee
The Corporate Governance Committee also functions as
the Compensation Committee. Compensation issues were considered during two of
the five meetings of the Corporate Governance/Nominating/Compensation Committee
in 2008. The purpose of the Compensation Committee is to discharge the board's
responsibilities relating to compensation of executive officers. The committee
has overall responsibility for evaluating and approving executive officer
salary, benefits, bonus, incentive compensation, severance, equity-based or
other compensation plans, as well as compensation policies and programs.
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of five directors as identified in the
Compensation Committee Report. No member of this committee has at any time
been an officer or employee of the Company, the Bank or any of its subsidiaries
and all are considered independent based on
the guidelines described above. None of our executive officers serves, or in
the past year served, as a member of the board of directors or compensation
committee of any entity that has or had one or more of its executive officers
serving on our board of directors or Compensation Committee.
Code of Ethics
The Company has a Code of Ethics
applicable to all employees, including the principal executive officer as well
as all professionals serving in a finance, accounting, treasury, tax or
investor relation role. A separate Code of Ethics is applicable to our
financial professionals and contains provisions specific to financial
professionals. Both the Code of Conduct and the Code of Ethics for Financial
Professionals are available under the "About Us - Investor Relations" section
on our website (www.firstcitizens-bank.com). We also intend to post changes
and amendments (if any) to our Code(s) of Conduct and Ethics on our website.
-7-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table below sets forth, as of the record date for
the 2009 annual meeting, the beneficial ownership of our common stock by (i)
each person known by us to be the beneficial owner of more than 5% of the
outstanding shares of our common stock, (ii) each director and nominee, (iii)
each of our Named Executive Officers identified in the section below entitled
"Executive Compensation - Summary Compensation Table" and (iv) all of our
directors and executive officers as a group. As of February 13, 2009, there
were 3,717,593 shares of our common stock outstanding. We relied on information
supplied by our directors, executive officers and beneficial owners for
purposes of this table.
Name and Address of Beneficial
Owner
(1)
|
Amount and Nature of
Beneficial Ownership
|
|
First Citizens National
Bank Employee Stock Ownership Plan and Trust
|
735,223
|
19.78%
|
Jeffrey
D. Agee
|
9,049
(2)
|
*
|
Eddie
Eugene Anderson
|
10,556
|
*
|
Sherrell
Armstrong
|
422(2)
|
*
|
J.
Walter Bradshaw
|
43,047(2)
|
1.16%
|
Laura
Beth Butler
|
100(2)
|
*
|
James
Daniel Carpenter
|
3,226
|
*
|
William
C. Cloar
|
20,208
|
*
|
Richard
W. Donner
|
8,778
|
*
|
Bentley
F. Edwards
|
886
|
*
|
Larry
W. Gibson
|
6,887
|
*
|
Christian
E. Heckler
|
250(2)
|
*
|
Ralph
E. Henson
|
14,894(2)
|
*
|
Barry
T. Ladd
|
24,693(2)
|
*
|
John
M. Lannom
|
26,840
|
*
|
Stallings
Lipford
|
32,727(2)
|
*
|
Judy
Long
|
3,219(2)
|
*
|
Milton
E. Magee
|
50,597
|
1.36%
|
Allen
G. Searcy
|
20,906
|
*
|
G.W.
Smitheal
|
32,211
|
*
|
David
R. Taylor
|
2,544
|
*
|
Larry
S. White
|
59,189
|
1.59%
|
P.H.
White, Jr.
|
13,393
|
*
|
Dwight
Steven Williams
|
4,724
|
*
|
Katie
S. Winchester
|
2,015(2)
|
*
|
Joseph
S. Yates
|
4,610
|
*
|
Directors
and executive officers as a group (26 persons)
|
396,461
|
10.66%
|
__________________________
* Less than one
percent.
(1) The address for all listed beneficial owners is
One First Citizens Place, Dyersburg, Tennessee 38024.
(2) Does
not include certain shares of our common stock held through the First Citizens
National Bank Employee Stock Ownership Plan and Trust (the "ESOP"). As of
February 13, 2009, Messrs. Agee and Armstrong, Ms. Butler, Messrs. Heckler,
Henson and Lipford, Ms. Long and Ms. Winchester held 16,625 shares, 2,877
shares, 277 shares, 523 shares, 25,900 shares, 23,013 shares, 12,888 shares and
23,331 shares, respectively, through the ESOP.
-8-
COMPENSATION DISCUSSION AND ANALYSIS
Our
compensation programs are designed to align compensation with business
objectives and performance, and to enable us to attract, retain and reward
executive officers who contribute to the success of the Company. In order to
link pay to performance, we provide an executive compensation program that
includes base pay, annual incentive bonuses and retirement benefits through
contributions to our ESOP and 401(k) plans. In addition, all executive
officers except for the Chief Financial Officer are provided life insurance
during the term of their employment and in post-retirement periods. Life
insurance benefits for the Chief Financial Officer are limited to the term of
her employment.
Compensation
Philosophy
The
same philosophies used in determining compensation for all Named Executive
Officers are used in determining compensation for the Chief Executive Officer
and Chief Financial Officer. The Chief Executive Officer's compensation has
been reviewed and set by the Compensation Committee since 1996. The
Compensation Committee establishes compensation of the Chief Executive Officer
based on the achievement of specific financial and non-financial objectives.
The Chief Executive Officer makes recommendations for base salary of all
executive officers (other than for Chief Executive Officer) subject to approval
of the Compensation Committee. No specific weighting or formula is used to
determine the aggregate amount of base salary and cash incentive bonus for the
Chief Executive Officer or Chief Financial Officer. In determining the
aggregate amount of base salary and cash incentive bonus for the Named
Executive Officers, the Compensation Committee considers compensation levels
for chief executive officer, chief financial officer and other executive
officer positions of peer financial institutions as published in annual
compensation and benefits surveys conducted by American Bankers Association,
Tennessee Bankers Association and the Delves Group. These surveys do not
identify the specific banks or bank holding companies that participated in the
survey, but do provide data for the participating institutions grouped
according to asset size and geographic region. In its review of the aggregate
amount of base salary and incentive bonus for the Named Executive Officers for
2008, the Compensation Committee primarily focused on data in these surveys for
financial institutions with an asset size of $500 million to $1 billion located
in the Southeastern region of the United States.
Base
Salary
Subject
to the approval of the Compensation Committee, base salaries of the Named
Executive Officers are set annually contingent upon job-related experience,
individual performance and pay levels of similar positions at peer
institutions. Ms. Winchester's base
salary is determined in accordance with the terms of her employment agreement,
as discussed below in the section entitled "Executive Compensation - Summary
Compensation Table - Employment Agreements." For each executive office position, salary and incentive bonus ranges
for similarly situated executives in our peer group as published in annual
surveys are averaged and compared to current salary and incentive bonus levels
for our executives. The Compensation Committee determined that the 2008 base
salary plus cash incentive bonus for each of the Named Executive Officers was
below the aggregate average base salary plus incentive bonus for the surveys.
Furthermore, the Compensation Committee determined that each of the Named
Executive Officers (excluding Ms. Winchester) had an aggregate base salary and
cash incentive bonus for 2008 that was below the 50th percentile of the
aggregate base salary plus incentive bonus for financial institutions in our
asset size and region, as reported in the Delves Group survey.
The following table provides the base salary
for each of the Named Executive Officers for the year ended December 31, 2008:
|
|
Change from 2007 Base Salary
|
Jeffrey
D. Agee
|
$
|
200,000
|
|
Laura
Beth Butler
|
110,000
|
10.0
|
Katie
S. Winchester
|
200,000
|
(28.6)
|
Judy
Long
|
160,000
|
3.7
|
Sherrell
Armstrong
|
135,712
|
6.3
|
|
|
|
|
Incentive Compensation Plan
Each
of the Named Executive Officers except for Ms. Winchester is eligible for a
cash incentive bonus under a customized individual incentive plan. Each
incentive plan provides bonus cash compensation based on corporate, business
unit and individual performance goals that are established each year by the
Compensation Committee. For 2008 cash bonuses, the level of incentive compensation
for the applicable Named Executive Officers was based on a minimum return on
equity of 10.0% for the Company. Because the Company had a return on equity of
10.07% for the year ended December 31, 2008, each of the eligible Named
Executive Officers received a cash incentive bonus under his or her respective
incentive plan. Further, after the amount of each earned bonus is determined
for each eligible Named Executive Officer, as discussed below, up to 25% of
each such bonus can be deducted from the total amount actually paid if the
executive does not meet or exceed personal business development goals during
the plan year. For 2008, all eligible Named Executive Officers met or exceeded
their personal business development goals and, therefore, no cash incentive
bonuses were reduced by 25%.
The incentive bonus awardable to each of Mr. Agee and
Ms. Long for 2008 was not contingent upon achievement of any other corporate or
individual goals and, therefore, each received 100% of his or her respective
incentive bonus. The incentive bonus awardable to each of Ms. Butler and Mr.
Armstrong was contingent upon achievement of additional
goals, as discussed below. Prior to 2008, cash incentives were paid annually
in December of each year. Beginning in 2008, annual incentive compensation for
each year is paid in January of the following year.
The following bonuses were paid to the Named Executive Officers in
2009 based on achievement of corporate and individual performance goals for
2008:
|
Percentage of Potential Bonus
Received
|
Incentive Plan Compensation
|
Jeffrey
D. Agee
|
100%
|
$
|
63,250
|
Laura
Beth Butler
|
92
|
23,000
|
Katie
S. Winchester
|
N/A
|
--
|
Judy
Long
|
100
|
42,550
|
Sherrell
Armstrong
|
95
|
32,237
|
For the year ended December 31, 2008, the incentive plan
for Ms. Butler was revised as approved by the Compensation Committee based on
the recommendation of the Chief Executive Officer. The plan provided for a
bonus of up to $25,000 if certain individual and Company performance targets
were met. There were five equally weighted performance targets, which
consisted of the following:
|
|
Return on Equity
|
Return on equity is benchmarked against Southeast Bank Group Index
(data provided by SNL Financial and produced by Mercer Capital's Financial
Institutions Group) and must meet or exceed peer averages.
|
Total Shareholder Return
|
Total shareholder return is benchmarked against Southeast Bank Group
Index and must meet or exceed peer averages.
|
Dividend Yield
|
Dividend yield is benchmarked against Southeast Bank Group Index and
must meet or exceed peer averages.
|
Audits
|
Results and/or ratings of
internal and external audits must be satisfactory and limited to minor
findings/exceptions, if any.
|
Regulatory Ratings
|
Consideration of regulatory
ratings helps ensure balance of risk management and profitability.
|
-9-
For the year ended December 31, 2008, the incentive
plan for Mr. Armstrong was revised as approved by the Compensation Committee
based on the recommendation of the Chief Executive Officer. The plan provided
for a bonus of up to 25% of base salary if certain Company performance targets
were met. There were six performance targets designed to emphasize credit
quality as well as overall growth and profitability goals of the Bank. The six
factors were as follows:
|
|
|
Return on Equity
|
Return on equity is benchmarked against Southeast Bank Group Index
and must meet or exceed peer averages.
|
20%
|
Criticized Loans
|
Criticized loans as a percent of total capital are compared to
internal policy limit of 25%.
|
20%
|
Net Loan Losses to Average Total Loans
|
Net losses for the year as a percent of average total loans are
benchmarked to Uniform Bank Performance Report (as provided by Federal
Financial Institutions Examination Council) and must be equal or less than
peer averages.
|
20%
|
Average Non-performing Loans to Average Total Loans
|
Average non-performing loans as a percent of average total loans are
benchmarked to Uniform Bank Performance Report and must be equal or less than
peer averages.
|
20%
|
Average Loan Yield
|
Average loan yield is benchmarked to Uniform Bank Performance Report
and must be equal or exceed peer averages.
|
10%
|
Loan Volume Goals
|
Loan volumes must meet or
exceed internal growth goals as determined by the Chief Executive Officer and
board of directors.
|
10%
|
For 2009, the incentive plans for Mr. Agee and Ms.
Long have been revised to ensure the compensation program is competitive,
comprehensive and properly reflects our strategic direction. The new plan will
provide an incentive of 25% to 50% of annual salary based on performance in
certain categories. Performance will be measured using a "balanced scorecard"
matrix, which is aligned with our strategic goals of creating long-term
shareholder value and protecting the interests of the Bank's depositors. The
plan is subject to the Company attaining a minimum return on equity as set by
the board of directors, which has been set at 10.0% for
2009. The
"balanced scorecard" matrix for 2009 is equally weighted with five major
components, which are as follows:
|
|
Employees
|
Employee turnover rates compared to peer institutions and corporate
culture survey results are used to gauge achievement of goals to attract,
develop and retain high quality employees in positive corporate culture and
environment.
|
Customers
|
Results from various customer surveys provide independent feedback
about mission to provide exceptional level of customer service.
|
Growth and Innovation
|
Growth and innovation drive and create long-term shareholder value.
Quantitative factors include growth rates for assets, market share and
referrals. Qualitative factors considered include leadership development,
new projects, products or services implemented during the plan year and other
accomplishments.
|
Shareholder Return
|
Shareholder return is
measured by comparing the Company to peer institutions on dividend yield,
return on equity and total shareholder return.
|
Regulatory Ratings
|
Consideration of regulatory
ratings helps ensure balance of risk management and profitability.
|
Retirement Contributions
The
ESOP provides for participation by all employees of the Bank who are at least
21 years old and who have completed a year of service
if, at the end of the first 12 consecutive months of
employment, the employee has been credited with at least 1,000 hours of service
.
All of the Named Executive Officers are participants in the ESOP. The Bank
makes contributions equal to 7% of a participant's total compensation under the
ESOP.
The Bank's 401(k) plan provides for participation by all
employees of the Bank who are at least 21 years old and who have completed a
year of service if, at the end of the first 12 consecutive months of
employment, the employee has been credited with at least 1,000 hours of
service. All of the Named Executive Officers are participants in the 401(k)
plan. The Bank makes contributions equal to 3% of a participant's total
compensation under the 401(k) plan. In addition, employees may elect to make
employee contributions subject to applicable IRS regulations and limits. Total
compensation for retirement contribution purposes is based on total
compensation that is subject to federal income tax for each calendar year.
Endorsement Split Dollar Life Insurance and Imputed Income
Tax Reimbursement Agreements
The Bank has a
bank-owned life insurance plan that offers Endorsement Split Dollar Life
Insurance to certain officers of the Bank with a position of Vice President and
higher. Each of the Named Executive Officers participates in this plan. Each
of the Named Executive Officers except for Ms. Butler is eligible for death
benefits in post-retirement periods under this plan. Ms. Butler is eligible
for death benefits under the plan limited to the term of her employment.
Executive
Management Life Insurance Death Benefit Only Salary Continuation Plans provided
for in the employment agreements with Ms. Winchester, Mr. Agee, Ms. Long, Mr.
Ladd and Mr. Henson were replaced in December 2007 with Endorsement Split
Dollar Life Insurance Plans and Amended and Restated Split Dollar Agreements.
The new agreements combine the death benefits from the Bank's larger group plan
discussed above with the death benefits established in the Executive Management
Life Insurance Death Benefit Only Salary Continuation Plans. The new
agreements did not change the total after-tax death benefit provided to each
participant.
Because the
new Endorsement Split Dollar Life Insurance Plans created imputed income to
each participant without generating cash to pay the tax expense associated with
the imputed income, and in order to provide participants the same after-tax
benefit provided under the previous plans, effective January 1, 2008 we entered
into Imputed Income Tax Reimbursement Agreements with Ms. Winchester, Mr. Agee,
Ms. Long, Mr. Ladd and Mr. Henson under the Amended and Restated Split Dollar
Agreements. The Imputed Income Tax Reimbursement Agreements provide for annual
cash payments to the participants until death beginning in March 2009 for the
previous tax year in amounts equal to a portion of federal income taxes
attributable to (i) the income imputed to the participant on the benefit under
the Amended and Restated Split Dollar Agreement and (ii) the additional cash
payments under the Imputed Income Tax Reimbursement Agreement. Each participant
was 100% vested in this benefit as of January 1, 2008. Thus, 100% of the
principal (or service) cost of the plan was accrued for as of January 1, 2008
and expensed through earnings in the year ended December 31, 2008. Interest
accrues monthly at a discount rate of 7.0%. The plan is accounted for under
guidance provided in Accounting Principles Board Opinion No. 12 as amended by
SFAS No. 106 "Employers' Accounting for Postretirement Benefits Other than Pensions."
-11-
Summary Compensation Table
The
table below discloses the compensation paid to each of the Chief Executive
Officer, Chief Financial Officer and our three other most highly compensated
executive officers who were serving as executive officers at December 31, 2008
and whose total compensation for 2008 exceeded $100,000 (the "Named Executive
Officers"). This tabulation is for the years ended December 31, 2008, 2007 and
2006.
Name and Principal Position
|
|
|
Non-Equity Incentive Plan
Compensation
(1)
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings
(2)
|
All Other Compensation
(3)
|
|
Jeffrey D. Agee
Chief Executive Officer
and President
|
2008
|
$
|
200,000
|
$
|
63,250
|
$
|
20,677
|
$
|
36,535
|
$
|
320,462
|
2007
|
185,000
|
69,133
|
--
|
40,561
|
294,694
|
2006
|
165,000
|
61,985
|
--
|
35,699
|
262,684
|
Laura Beth Butler
Chief Financial Officer
|
2008
|
110,000
|
23,000
|
--
|
11,317
|
144,317
|
2007
|
100,000
|
16,013
|
--
|
15,208
|
131,221
|
2006
|
88,000
|
14,095
|
--
|
10,507
|
112,602
|
Katie S. Winchester
Chairman
|
2008
|
200,000
|
-
|
119,824
|
44,967
|
364,791
|
2007
|
280,000
|
102,200
|
--
|
47,451
|
429,651
|
2006
|
264,120
|
96,695
|
--
|
42,519
|
403,334
|
Judy Long
Chief Operating Officer
|
2008
|
160,000
|
42,550
|
34,780
|
31,658
|
268,988
|
2007
|
154,260
|
57,006
|
--
|
34,994
|
246,260
|
2006
|
139,260
|
51,968
|
--
|
31,649
|
222,877
|
Sherrell Armstrong
Chief Credit Officer
|
2008
|
135,712
|
32,237
|
--
|
14,054
|
182,003
|
2007
|
127,712
|
32,041
|
--
|
16,263
|
176,016
|
2006
|
107,712
|
13,467
|
--
|
12,385
|
133,564
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________________
(1) Reflects cash bonus awards earned during
the years indicated.
__________________________
(a) Reflects a gross-up payment for social
security and Medicare taxes.
(b) Named
Executive Officers who are also directors receive fees for board meetings they
attend but not for Bank board committee meetings. For additional information
about fees for board meetings, see the section below entitled "Director
Compensation." Compensation for service by
Named Executive Officers on our board of directors and the Bank board of directors
during the year ended December 31, 2008 are reflected in the following table:
|
Fees Earned or Paid
in Cash
|
|
|
Jeffrey
D. Agee
|
$
|
3,000
|
$
|
10,000
|
$
|
13,000
|
Katie
S. Winchester
|
|
13,000
|
13,000
|
Judy Long
|
9,000
|
1,000
|
10,000
|
|
|
|
|
|
|
|
__________________________
* All
Other Compensation consists of director fees paid to charitable organizations.
Employment Agreements
Employment
agreements are currently in effect for Mr. Agee, Ms. Long and Ms. Winchester.
Agreements for Mr. Agee and Ms. Long include severance provisions in the event
the executive voluntarily terminates his or her employment or the executive is
terminated under certain circumstances, including without "cause" or in
connection with a change in control, as specified below. Under the employment
agreements for Mr. Agee and Ms. Long, "cause" generally means (i) the
conviction of the executive or the rendering of a final non-appealable judgment
for the willful and continued failure to substantially perform his or her
duties under the agreement, our policies or federal or state law, which breach
of duty materially adversely affected the safety and soundness of the Company
or (ii) the non-appealable conviction of a felony. Further, "change in control" generally means (i) the
acquisition by any person or group of persons of the shares of the Company or
the Bank which, when added to any other shares beneficially owned by such
acquiror, results in ownership by any person(s) of 10% of such stock or which
would require prior notification under any federal or state banking law or
regulation or (ii) the occurrence of any merger, consolidation or
reorganization to which the Company or the Bank is a party and to which the
Bank or the Company is not a surviving entity, or the sale of substantially all
of the assets of the Company or the Bank.
Under the employment agreements for Mr. Agee and Ms.
Long, if termination by the Company for cause occurs before, coincident with or
after a change in control or termination by the executive occurs prior to a
change in control (including by reason of death, disability or retirement), the
executive is entitled to receive (a) his or her base salary at the annual rate
in effect through the last day of the month in which the termination occurs,
(b) a pro-rata portion of any bonus earned prior to the date of termination to
the extent not paid and (c) any amounts due under any other benefit plans in
effect at the date of termination. If
termination by the Company not for cause occurs at least six months before a
change in control, the executive is entitled to receive payments under the
agreement through the end of the term of the agreement without further
automatic extensions. Both of these employment agreements are renewable
annually in April.
In the event that either Mr. Agee or Ms. Long is
terminated without cause or terminates his or her employment coincident with or
following a change of control (including by reason of death, disability or
retirement), the employment agreements provide for compensation in addition to
the amount specified above that the executive would receive upon termination
for cause. In these circumstances, the executive would also receive a lump sum
cash payment in an amount equal to two times compensation paid in the preceding
calendar year, or scheduled to be paid to the executive during the year of the
termination, whichever is greater, plus an additional amount sufficient to pay
United States income tax on such lump sum amount; provided, however that if the
lump sum payment, together with other payments that the executive is entitled
to receive from the Company, would constitute a parachute payment under Section
280G of the Internal Revenue Code, the payment will be reduced to the largest
amount that would result in no portion of the lump sum payment being subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code. For
purposes of this calculation, compensation is equal to the amount of total
compensation reported or to be reported on the executive's Form W-2 for the
applicable year.
Pursuant to these employment agreements as amended by
the Amended and Restated Split Dollar Agreements (described above in the
section entitled "Compensation Discussion and Analysis - Endorsement Split
Dollar Life Insurance and Imputed Income Tax Reimbursement Agreements"), the
Company has purchased a life insurance policy for each of Mr. Agee and Ms. Long
with a face amount of $650,000.
Upon
the death of Mr. Agee prior to separation of service
, we will pay an amount
equal to $650,000 from the proceeds of the policy to the person(s) he properly
designated or the personal representative of the his estate. Upon the death of
Mr. Agee after separation of service, we will pay an amount equal to $300,000
from the proceeds of the policy to the person(s) he properly designated or the
personal representative of his estate. Upon the death of Ms. Long prior to or
after separation of service, we will pay an amount equal to $650,000 from the
proceeds of the policy to the person(s) she properly designated or the personal
representative of her estate. All proceeds received from the policy in excess
of these amounts will be retained by the Company to offset the cost of
providing these benefits.
The
employment agreement for Ms. Winchester was amended and restated effective
January 1, 2008 to provide for part-time
employment. The term of employment under the new contract ends December 31,
2011, unless earlier terminated pursuant to the terms of the contract. The
contract provides for annual base compensation of $200,000 inclusive of payment
of premiums on her long-term care insurance. Additional benefits include
payment of premiums on health insurance and a monthly allowance to cover
automobile expenses for Bank related travel. Ms. Winchester participates in the
ESOP and 401(k) plan and will serve as a member of the board during the term of
her employment for so long as shareholders continue to elect her. Ms.
Winchester does not participate in any incentive compensation plans that are offered
to other Named Executive Officers. Pursuant
to her Amended and Restated Split Dollar Agreement (described above in the
section entitled "Compensation Discussion and Analysis - Endorsement Split
Dollar Life Insurance and Imputed Income Tax Reimbursement Agreements"), the
Company has purchased a life insurance policy for Ms. Winchester with a face
amount of $850,000. Upon the death of Ms. Winchester prior to or after
separation of service, we will pay an amount equal to $850,000 from the
proceeds of the policy to the person(s) she properly designated or the personal
representative of her estate. All proceeds received from the policy in excess
of this amount will be retained by the Company to offset the cost of providing
the benefit.
-12-
Pension Benefits
The following
table provides information regarding the present value of the accumulated
benefit to each of our Named Executive Officers under the corresponding Imputed
Income Tax Reimbursement Agreement, each of which is a non-qualified defined
benefit plan and not a pension plan, as of December 31, 2008:
|
|
Number of Years Credited
Service
|
Present Value of Accumulated
Benefit
|
Payments During Last Fiscal
Year
|
Jeffrey D. Agee
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
$
|
20,677
|
$
|
--
|
Laura Beth Butler
|
--
|
|
|
|
Katie S. Winchester
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
119,824
|
|
Judy Long
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
34,780
|
|
Sherrell Armstrong
|
--
|
|
|
|
|
|
|
|
|
|
|
Under each Imputed Income Tax
Reimbursement Agreement, the present value of the accumulated benefit consists
of two components - service costs and interest costs. As participants were 100%
vested as of January 1, 2008, 100% of service cost for each participant was
accrued as of January 1, 2008. Service costs are based on the net present
value of the sum of payments in accordance with each participant's agreement.
Interest costs are credited at an interest rate of 7%.
Potential
Payments Upon Termination or Change-in-Control
We have entered into certain agreements and
maintain certain plans that will require us to provide compensation to Mr. Agee
and Ms. Long in the event of a termination of employment or change in control.
We are not required to make any payments to Mr. Armstrong, Ms. Butler or Ms. Winchester
upon their termination or a change in control except for death benefits from
life insurance plans described above in the section entitled "Compensation
Discussion and Analysis - Endorsement Split Dollar Life Insurance and Imputed
Income Tax Reimbursement Agreements." The amount of compensation payable to
each Named Executive Officer if each situation occurred on December 31, 2008 is
listed in the tables below.
Mr. Agee
Executive
Benefits and Payments upon Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
-
|
$
|
60,822(1)
|
$
|
-
|
$
|
599,570(2)
|
$
|
650,000(3)
|
Federal Tax
Gross-Up Payments
|
-
|
-
|
-
|
209,850(4)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Butler
Executive
Benefits and Payments upon Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
300,000(3)
|
Federal Tax
Gross-Up Payments
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Winchester
Executive
Benefits and Payments upon Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
850,000(3)
|
Federal Tax
Gross-Up Payments
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Ms. Long
Executive
Benefits and Payments upon Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
-
|
$
|
48,658(1)
|
$
|
-
|
$
|
468,416(2)
|
$
|
650,000(3)
|
Federal Tax
Gross-Up Payments
|
-
|
-
|
-
|
163,946(4)
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Armstrong
Executive
Benefits and Payments upon Termination
|
|
Involuntary
Termination
without Cause
|
Involuntary
Termination
for Cause
|
Termination
Related to
Change in
Control
|
|
Cash Payments
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
350,000(3)
|
Federal Tax
Gross-Up Payments
|
-
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
__________________________
(1) Pursuant
to the Named Executive Officer's employment agreement, the amount shown
reflects a severance payment equal to the executive's base salary at the annual
rate for the period from
December 31, 2008 to the end of the current term of
the agreement, April 21, 2009, and assumes that the termination occurs at least
six months before a change in control.
(2) Pursuant
to the Named Executive Officer's employment agreement, the amount shown
reflects a severance payment equal to two times the compensation that is subject to federal income taxes for 2008.
(3) Pursuant
to the Named Executive Officer's Amended and Restated Split Dollar Agreement,
the amount shown reflects the proceeds from a life insurance policy purchased
and maintained by the Company, offset by our cost in providing the benefit. For
Mr. Agee, the amount shown reflects a payment upon his death prior to
separation of service.
(4) Pursuant
to the Named Executive Officer's employment agreement, the amount shown
reflects an amount sufficient to pay income tax on the severance amount,
assuming a tax rate of 35%.
-13-
DIRECTOR COMPENSATION
The following table provides information with respect
to director compensation for directors who were not Named Executive Officers
for the fiscal year ended December 31, 2008:
|
Fees Earned or Paid in Cash
|
Non-equity Incentive
Compensation
(1)
|
Change in Pension Value and
Nonqualified Deferred Compensation Earnings
(2)
|
|
|
Eddie E. Anderson
|
$
|
18,000
|
$
|
--
|
$
|
--
|
$
|
1,500
|
$
|
19,500
|
J. Walter Bradshaw
|
6,500
|
--
|
--
|
8,000
|
14,500
|
James Daniel Carpenter
|
9,000
|
--
|
--
|
6,000
|
15,000
|
William C. Cloar
|
15,000
|
--
|
--
|
--
|
15,000
|
Richard W. Donner
|
18,000
|
--
|
--
|
2,000
|
20,000
|
Bentley F. Edwards
|
19,500
|
--
|
--
|
--
|
19,500
|
Larry W. Gibson
|
14,000
|
--
|
--
|
1,000
|
15,000
|
Christian E. Heckler
|
13,000
|
14,915
|
-
|
165,128(3)
|
178,128
|
Ralph E. Henson
|
5,500
|
-
|
71,800
|
121,789(3)
|
199,089
|
Barry T. Ladd
|
12,000
|
-
|
71,264
|
20,194(3)
|
103,458
|
John M. Lannom
|
30,000
|
--
|
--
|
--
|
30,000
|
Stallings Lipford
|
10,000
|
--
|
--
|
136,661(3)
|
146,661
|
Milton E. Magee
|
32,000
|
--
|
--
|
--
|
32,000
|
Allen G. Searcy
|
26,000
|
--
|
--
|
4,000
|
30,000
|
G. W. Smitheal
|
19,000
|
--
|
--
|
1,000
|
20,000
|
David R. Taylor
|
20,000
|
--
|
--
|
11,500(3)
|
31,500
|
Larry S. White
|
--
|
--
|
--
|
19,500(3)
|
19,500
|
P. H. White, Jr.
|
13,300
|
--
|
--
|
16,700(3)
|
30,000
|
Dwight Steven Williams
|
13,000
|
--
|
--
|
7,000
|
20,000
|
Joseph S. Yates
|
13,500
|
--
|
--
|
1,000
|
14,500
|
|
|
|
|
|
|
|
|
|
|
|
__________________________
(1) Reflects cash bonus awards earned during 2008.
(2) Messrs. Ladd and Henson are participants in the
non-qualified defined benefit plan discussed in the section above entitled
"Compensation Discussion and Analysis-
Endorsement Split Dollar Life
Insurance and Imputed Income Tax Reimbursement Agreements." The key
assumptions used to determine the present value of the accumulated benefit
under the Imputed Income Tax Reimbursement Agreements are described above in
the section entitled "Executive Compensation - Pension Benefits." Participant
information for these directors is as follows:
|
|
Number of Years Credited Service
|
Present Value of Accumulated
Benefit
|
Payments During Last Fiscal
Year
|
Ralph E. Henson
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
$
|
71,800
|
$
|
--
|
Barry T. Ladd
|
Imputed Income Tax Reimbursement Agreement
|
N/A
|
71,264
|
--
|
|
|
|
|
|
|
|
__________________________
(a) Reflects
a gross-up payment for social security and Medicare taxes.
The board of
directors establishes director fees on an annual basis. Directors who are
executive officers of the Bank or any of its subsidiaries receive fees for
service on the board, but do not receive additional compensation for service on
a Bank board committee. In 2008, directors were paid $500 for each meeting
attended as well as an annual retainer fee of $4,000. In addition, annual fees
were paid in the amount of $3,000 to each of Ms. Winchester and Messrs. Heckler
and Agee for service on our Southwest Region Advisory Board. This Advisory
Board considers issues specific to customers in our southwest markets.
We
pay additional amounts annually for service on various Bank board committees.
Members of the Audit Committee and Corporate Governance/Nominating/Compensation
Committee are each paid $10,000 with an additional $2,000 paid to each
committee chairman. Outside directors serving on all other Bank board
committees are compensated at $5,000 annually, except Executive Committee
members who receive $10,000 annually.
All
director fees are paid in cash. Directors may choose to have their fees
donated to a charitable organization qualifying under Section 501(c)(3) of the
Internal Revenue Code.
-14-
COMPENSATION COMMITTEE REPORT
The
Compensation Committee has reviewed the section titled "Compensation
Discussion and Analysis" with management. Based on the review and
discussions with management, the Compensation Committee recommended to the
board that the Compensation Discussion and Analysis be included in this proxy
statement and incorporated by reference into our Annual Report on Form 10-K for
the year ended December 31, 2008.
Compensation
Committee:
Milton
E. Magee, Chairman
John
M. Lannom
Allen
G. Searcy
David
R. Taylor
P.
H. White, Jr.
-15-
AUDIT COMMITTEE REPORT
The role and responsibilities of the Audit Committee
are set forth in the committee's charter, a copy of which
can
be found in the " About Us - Investor Relations" section of our website at
www.firstcitizens-bank.com. In fulfilling its responsibilities, the Audit
Committee:
The Audit Committee has reviewed
and discussed the audited financial statements
with management.
The Audit Committee has discussed
with Alexander Thompson Arnold PLLC the matters required to be discussed by the statement
on Auditing Standards No. 61, as amended, as adopted by the Public Company
Accounting Oversight Board in Rule 3200T.
The Audit Committee has received
written disclosures and the letter from independent accountants required by
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant's communications with the audit committee
concerning independence, and has discussed with the independent accountants the
independent accountant's independence.
Based on the
review and discussions referred to above, the Audit Committee recommended to
the Company's board of directors that the audited financial statements be
included in the Company's annual report on Form 10-K for the year ended
December 31, 2008 and for filing with the Securities and Exchange Commission.
Audit Committee:
David R. Taylor, Chairman
Eddie E. Anderson
Bentley S. Edwards
John M. Lannom
G. W. Smitheal
-16-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We conduct certain transactions with
executive officers, directors, principal shareholders and their affiliates
(collectively referred to hereafter as "related parties"). Such
transactions are conducted under the ordinary course of business and consist
primarily of loan and deposit activities. Extensions of credit to related
parties are governed by board-approved policies. Such policies are designed
and implemented to comply with applicable regulations including but not limited
to Regulation O (12 CFR 215). Our board of directors approved Code of Conduct
provides guidance regarding transactions with related parties. Written
policies and procedures as well as the Code of Conduct require related party
transactions to be entered into under substantially the same terms as unrelated
party transactions. All non-lending transactions with related parties of a
material nature must be approved by the board of directors.
Banking
transactions in the ordinary course of business with directors, officers,
principal shareholders and their affiliates are on substantially the same
terms, including interest rates and collateral on loans, as those prevailing at
the time for comparable transactions with others. An affiliate includes a
corporation or other entity of which an officer or director of the Company is
an officer, partner, or 10% shareholder, any trust or estate of which he is a
trustee, executor or significant beneficiary or any relative or spouse or
spouse's relative who lives in his home. These loans do not represent
unfavorable features or more than a normal risk of collectibility. These loans
aggregated total $16.1 million and represent approximately 21% of shareholders'
equity as of December 31, 2008.
During
2008, the Bank paid approximately $1.2 million to Forcum-Lannom Contractors,
LCC for renovations to full service branches in Franklin and Atoka, Tennessee as well as site work for a lot in Jackson, Tennessee. Mr. Taylor, a director of
the Company, owns 40% of Forcum-Lannom Contractors, LCC and serves as its
president. Mr. Lannom, a director of the Company, holds the position of
chairman and chief executive officer of Forcum-Lannom, Inc., which owns 27.5%
of Forcum-Lannom Contractors, LLC. The Bank seeks competitive bids for all of
its construction projects.
-17-
GENERAL INFORMATION
Section
16(a) Beneficial Ownership Reporting Compliance
Our officers and directors are subject to
reporting requirements of Section 16(a) of the Securities and Exchange Act of
1934. Based solely on a review of relevant filings and representations made to
us by these persons, all changes in beneficial ownership of securities by
insiders were reported to the Securities and Exchange Commission in 2008 on a
timely basis.
Proposals by Shareholders/Director Selection
Shareholder
proposals intended to be presented in proxy materials to be mailed in 2010
other than nominees to be proposed for election to the board of directors must
be submitted by certified or registered mail to Judy Long, Secretary, First
Citizens Bancshares, Inc., P.O. Box 370, Dyersburg, Tennessee 38025-0370. Such proposals must include proof of ownership of our common stock in accordance
with Rule 14a-8(b)(2) promulgated under the Securities Exchange Act of 1934, as
amended. We must receive all such proposals not later than November 13, 2009 in
order for the nomination or proposal to be included in our proxy statement.
Shareholder proposals, other than director nominations, submitted after
November 13, 2009 but before January 27, 2009 will not be included in our proxy
statement, but may be included in the agenda for our 2010 annual meeting if
properly submitted to our Secretary at the address listed above.
Names
of nominees to be proposed for election to the board of directors other than
those made by the Nominating Committee must be delivered in writing to the
Secretary of the Company no later than December 19, 2009. The written notice
must include the full name of the proposed director, age and date of birth,
educational background and a list of business experience and positions held by
the proposed director for the preceding five years. The notice must include
home and business addresses and telephone numbers. In addition, the submission
must include a signed representation by the nominee to timely provide all
necessary information requested by the Company in order that disclosure
requirements may be met in the solicitation of proxies for the election of
directors. The name of each nominee for director must be placed in nomination
by a shareholder present in person at the annual meeting. The nominee must
also be present in person at the annual meeting for the nomination to be made.
Shareholder Communication
Shareholders desiring to communicate
directly with the board of directors may do so through the Corporate
Governance/Nominating/Compensation Committee by contacting the chairman or any
member of the committee. Committee membership is identified on our website at www.firstcitizens-bank.com or may be obtained by calling the Audit Department
at 731-287-4275. Letters sent via the U.S. Postal Service may be mailed to
Chairman, Corporate Governance Committee, First Citizens National Bank Audit
Department, P.O. Box 890, Dyersburg, Tennessee 38025-0890.
Other
Business
The
board of directors knows of no other business other than that set forth herein
to be transacted at the meeting; but, if other matters requiring a vote of
shareholders arise, persons designated as proxies will vote their judgment on
such matters. If you specify a different choice on the proxy, your shares will
be voted in accordance with the specifications you make.
Annual
Reports
A copy of our Annual
Report to Shareholders for the year ended December 31, 2008, accompanies this
report.
A copy of our Annual Report on Form 10-K for the year ended
December 31, 2008 will be furnished without charge to any shareholder who
requests such report by sending a written request to:
First
Citizens Bancshares, Inc.
P.O. Box 370
Dyersburg, Tennessee 38025-0370
Attention: Judy Long, Secretary
Neither the Annual Report to Shareholders nor the Annual
Report Form 10-K is considered proxy-soliciting material except to the extent
expressly incorporated by reference in this proxy statement.
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting
This proxy statement and our 2008 Annual
Report to Shareholders are available in the "About Us - Investor
Relations" section of our website at www.firstcitizens-bank.com. If you
wish to attend the annual meeting and need directions, please call us at (731)
287-4254.
By Order of the Board of Directors
/s/
Judy Long
Judy Long
Secretary
Dyersburg, Tennessee
March 13, 2009
-18-
APPENDIX A
ARTICLES OF AMENDMENT
TO THE CHARTER
OF
FIRST CITIZENS BANCSHARES, INC.
In accordance with the provisions of Section
48-20-106 of the Tennessee Business Corporation Act, the undersigned corporation
adopts the following Articles of Amendment (the "Articles of Amendment") to its
charter, as amended (the "Charter"):
First
:
The name of the corporation is First Citizens Bancshares, Inc.
Second:
Article 6 of the Charter is
hereby deleted in its entirety and replaced with the following:
Article 6:
Capital Stock
(a) The aggregate number of shares of capital stock the
corporation is authorized to issue is (i) ten million (10,000,000) shares of
common stock, all one class having no par value per share,
and (ii)
one million (1,000,000)
shares of preferred stock, having no par
value per share (the "Preferred Stock").
(b) Shares of the Preferred Stock may be issued from time to
time in one or more classes or series by the corporation's board of directors.
The board of directors of the corporation is hereby expressly authorized, subject to the limitations provided by law, to amend this
charter to establish and designate classes or series of the Preferred Stock, to
fix the number of shares constituting each class or series, and to fix the designations and the voting
powers, preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions of the shares of each class or series and the variations in the
relative powers, rights, preferences and limitations as between or among classes
or series, and to increase and to decrease the number of shares constituting each class or series, and to increase
and to decrease the number of shares constituting each class or series. The
authority of the board of directors with respect to any class or series shall include, but shall not be limited to,
the authority to fix and determine the following:
(i) The number of shares constituting
that class or series and the distinctive designation of that class or
series;
(ii) The increase and the decrease,
to a number not less than the number of the outstanding shares of such
class or series, of the number of shares constituting such class or series as theretofore fixed;
(iii) The rate or rates and the time at
which dividends on the shares of such class or series shall be paid, and
whether or not such dividends shall be cumulative, and, if
such dividends shall be cumulative,
the date or dates from and after which they shall accumulate;
(iv) Whether or not the shares of such
class or series shall be redeemable, and, if such shares shall be
redeemable, the terms and conditions of such redemption, including, but not limited to, the
manner of selecting shares of such class or series for redemption, if less
than all shares are to be redeemed, the date or dates upon or after which such shares shall
be redeemable and the amount per share which shall be payable upon such
redemption, which amount may vary under different conditions and at different
redemption dates;
(v) The amount payable on the shares
of such class or series in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the corporation. A liquidation, dissolution or
winding up of the corporation, as such terms are used in this subparagraph
(e), shall not be deemed to be occasioned by or to include any consolidation or merger of
the corporation with or into any other entity or entities or a sale, lease
or conveyance of all or a part of the assets of the corporation;
(vi) Whether or not the shares of
such class or series shall have voting rights and the terms and conditions
thereof;
(vii) Whether or not a sinking fund or
purchase fund shall be provided for the redemption purchase of the shares
of such class or series, and if such a sinking fund or purchase fund shall be
provided, the terms and conditions thereof;
(viii) Whether or not the shares of such class or
series shall have conversion privileges, and, if such shares shall have
conversion privileges, the terms and conditions of conversion, including but
not limited to, any provision for the adjustment of the conversion rate or
the conversion price; and
(ix) Any other powers, preferences
and relative participating, optional, or other special rights, or
qualifications, limitations or restrictions thereof, as shall not be
inconsistent with the
provisions of this Article 6 or the limitations provided by applicable
law.
Third:
These Articles of Amendment
were duly adopted by the board of directors of the corporation on
______________, 2009 and by the shareholders of the corporation on ________,
2009.
Fourth:
Except as amended by these
Articles of Amendment, the Charter shall remain in full force and effect.
Dated: ______________________, 2009
FIRST CITIZENS BANCSHARES, INC.
By: __________________________________________________
Name: ________________________________________________
Title: _________________________________________________
-19-
FIRST
CITIZENS BANCSHARES, INC.
One First Citizens Place
Dyersburg, Tennessee 38024
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, a shareholder of First
Citizens Bancshares, Inc., hereby appoints William C. Cloar and Steve Williams, and each of them severally,
proxies of the undersigned, with full power of substitution, to vote the shares
of Capital Stock of First Citizens Bancshares, Inc. held in the name of the
undersigned, at the Annual Meeting of Shareholders to be held in the Lipford
Room of First Citizens National Bank, on Wednesday, April 15, 2009, at 10:00
A.M., and at all adjournments thereof:
(1)
Election of Directors
[_] For all nominees listed below [_]
Withhold authority to vote for all nominees
listed below
INSTRUCTIONS: YOU MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE LISTED BELOW BY LINING
THROUGH OR STRIKING OUT SUCH INDIVIDUAL'S
NAME
NOMINEES FOR ELECTION WHOSE TERMS WILL EXPIRE IN 20
12
Jeffrey
D. Agee, Eddie Eugene Anderson , Christian E. Heckler, Barry T. Ladd, John M.
Lannom, Milton E. Magee, G. W. Smitheal, P. H. White, Jr.
(2)
Approval of Alexander Thompson Arnold, PLLC as independent registered public accounting firm for the year ending
December 31, 2009
[_] FOR
[_] AGAINST [_] ABSTAIN
(3)
Approval of the Articles of Amendment
to the Charter of First Citizens Bancshares, Inc.
[_] FOR
[_] AGAINST [_] ABSTAIN
(4) To
transact other business as may properly come before the meeting or any adjournments thereof
[_] FOR
[_] AGAINST [_] ABSTAIN
This
proxy confers authority to vote "For" the propositions listed unless
"Against" or "Abstain" is indicated.
If no direction is given, this proxy will be voted
"For" the election of all nominees named (provided that in the event
cumulative voting occurs, the proxy holders will cumulate votes using their
judgment so as to ensure the election of as many of the nominees as possible),
"For" approval of Alexander Thompson Arnold, PLLC as independent
registered public accounting firm for the current year and "For" approval of
the Articles of Amendment.
Please sign
exactly as name appears below.
When shares
are held by joint tenants both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please sign full title. If more than one
trustee, all should sign.
Dated March 13, 2009
Signature ____________________________________________
Signature if jointly held __________________________________
PLEASE
MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
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