Preliminary Proxy Statement
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
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Filed by
a Party other than the Registrant
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Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive
Proxy Statement
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Definitive
Additional Materials
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o
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Soliciting
Material Pursuant to §240.14a-12
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Whitney
Holding 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):
April 17,
2009
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
OF
COMMON STOCK
___________________
To our
Shareholders:
Whitney
Holding Corporation (the Company) will hold its Annual Meeting of Shareholders
of common stock on Wednesday, May 20, 2009, at 10:30 a.m. CDT at the
Pan-American Life Center Auditorium, 601 Poydras Street, 11th floor, New
Orleans, Louisiana, for the following purposes:
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1.
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Election
of two directors to serve until the 2011 annual meeting and two directors
to serve until the 2014 annual
meeting;
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2.
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To
consider and approve the following advisory (non-binding)
proposal:
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“Resolved,
that the holders of Whitney Holding Corporation common stock approve the
compensation of the named executive officers as described in the
Compensation Discussion and Analysis and the tabular disclosure regarding
named executive officer compensation (together with the accompanying
narrative disclosure and footnotes) in the proxy
statement.”
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3.
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Ratification
of the selection of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm to audit the books of the
Company and its subsidiaries for 2009;
and
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4.
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To
transact such other business as may properly come before the meeting or
any adjournments or postponements
thereof.
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Only
shareholders of common stock of record at the close of business on April 3, 2009
are entitled to notice of, and to vote at, this meeting.
By order of the Board of Directors,
JOSEPH S. SCHWERTZ, JR.
Corporate Secretary
__________________________________________________________________________________
YOUR
VOTE IS IMPORTANT
WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, YOUR VOTE IS IMPORTANT. IF
VOTING BY MAIL, PLEASE MARK, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY
IN THE ACCOMPANYING ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOU MAY ALSO VOTE TOLL FREE OVER THE TELEPHONE OR
THROUGH THE INTERNET. YOU MAY LATER REVOKE YOUR PROXY AND VOTE IN
PERSON.
228
St. Charles Avenue, New Orleans, Louisiana 70130
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TABLE
OF CONTENTS
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INFORMATION
ABOUT THE ANNUAL MEETING AND
VOTING
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1
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Where and when is the annual
meeting?
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1
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Who may vote at the annual
meeting?
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1
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How many shares must be present
to hold the annual
meeting?
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1
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What proposals will be voted on
at the annual
meeting?
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2
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How many votes are required to
approve these
proposals?
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2
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How are voted
counted?
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2
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How does the Board recommend
that I
vote?
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3
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How do I vote my shares without
attending the annual
meeting?
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3
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How do I vote my shares in
person at the annual
meeting?
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3
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What does it mean if I receive
more than one proxy
card?
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3
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May I change my
vote?
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4
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Is the annual meeting location
accessible to people with
disabilities?
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4
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How do I get additional copies
of SEC
filings?
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4
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PROPOSAL
NO. 1–ELECTION OF
DIRECTORS
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4
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BOARD
OF
DIRECTORS
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5
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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8
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BOARD
OF DIRECTORS AND ITS
COMMITTEES
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8
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Board of
Directors
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Compensation of
Directors
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9
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Board
Committees
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9
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Executive
Committee
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9
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Audit
Committee
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9
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Compensation and Human
Resources
Committee
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10
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Nominating and Corporate
Governance
Committee
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10
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COMPENSATION
AND HUMAN RESOURCES COMMITTEE REPORT
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12
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COMPENSATION
DISCUSSION AND
ANALYSIS
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13
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Overview
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13
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Objective of the Company’s
Compensation
Program
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16
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Role of the Compensation and
Human Resources
Committee
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Market
Data
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How We Determine and Assess
Executive
Compensation
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Elements of Our Compensation
Program
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Tax and Accounting
Considerations
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Stock Ownership
Guidelines
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EXECUTIVE
COMPENSATION
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24
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Potential Payments Upon
Termination Or Change In
Control
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30
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Compensation of
Directors
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32
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EQUITY
COMPENSATION PLAN
INFORMATION
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34
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COMPENSATION
AND HUMAN RESOURCES COMMITTEE INTERLOCKS
AND INSIDER
PARTICIPATION
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35
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TRANSACTIONS
WITH RELATED
PERSONS
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35
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AUDITORS
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38
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AUDIT
COMMITTEE
REPORT
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39
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PROPOSAL
NO. 2 – ADVISORY VOTE ON COMPENSATION OF NAMED
EXECUTIVE
OFFICERS
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41
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PROPOSAL
NO. 3 – RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING
FIRM
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SHAREHOLDER
COMMUNICATIONS
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42
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SHAREHOLDER
PROPOSALS FOR THE 2010 ANNUAL
MEETING
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42
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OTHER
MATTERS
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42
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PROXY
STATEMENT
FOR
ANNUAL
MEETING TO BE HELD ON MAY 20, 2009
We are providing these proxy materials in connection
with the solicitation by the Board of Directors (the Board) of Whitney Holding
Corporation (the Company) of proxies to be voted at the Company’s Annual Meeting
of Shareholders of common stock (the annual meeting) to be held on May 20, 2009,
and at any adjournments or postponements of the annual meeting. We
will begin mailing the notice of annual meeting, this proxy statement, the 2008
annual report
and
the proxy card to our common stock shareholders on or about April 17, 2009 and
will bear the cost of soliciting proxies. Directors, officers and
regular employees of the Company and its banking subsidiary, Whitney National
Bank (the Bank), may solicit proxies by mail, telephone, facsimile machine or
personal interview and will not receive additional compensation for such
solicitations. We retained Morrow & Co., LLC, 470 West Avenue,
Stamford, CT 06902 at an approximate fee of
$6,000,
plus associated costs and expenses, to assist in the soliciting of
proxies.
Important Notice Regarding Availability
of Proxy Materials for the Shareholder Meeting to be held on May 20,
2009. The notice of annual meeting, the proxy statement, the form of
proxy card and the 2008 annual report for the period ending December 31, 2008,
are available at
http://investor.whitneybank.com/annuals.cfm
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INFORMATION
ABOUT THE ANNUAL MEETING AND VOTING
Where
and when is the annual meeting?
We will hold the annual meeting on May 20, 2009, at
10:30 a.m. CDT at the Pan-American Life Center Auditorium, 601 Poydras Street,
11
th
floor, New Orleans, Louisiana. To obtain directions to attend the
annual meeting and vote in person, please contact Shareholder Services by
telephone at (504) 586-3627 or toll free at (800) 347-7272, ext. 3627, or by
email at
investor.relations@whitneybank.com
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Who
may vote at the annual meeting?
The
Board set April 3, 2009 as the record date for the annual meeting. If
you owned Company common stock at the close of business on April 3, 2009, you
may vote at the annual meeting. You are entitled to one vote for each
share of common stock you held on the record date, including
shares:
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held
directly in your name with our transfer agent, American Stock Transfer
& Trust Company, as a “shareholder of
record;”
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held
for you in an account with a broker, bank or other nominee (shares held in
“street name”); and
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credited
to your Whitney National Bank employee account in the Bank’s Savings Plus
401(k) Plan (the 401(k) plan).
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How
many shares must be present to hold the annual meeting?
A
majority of the Company’s outstanding shares of common stock as of the record
date must be present at the annual meeting to hold the meeting and conduct
business. This is called a quorum. On the record date,
there were
________
shares of Company common stock outstanding. Your shares are
counted as present at the annual meeting if you:
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properly
vote by Internet or telephone or submit a proxy card prior to the annual
meeting; or
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are
present and vote in person at the annual
meeting.
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What
proposals will be voted on at the annual meeting?
There are three proposals scheduled to
be voted on at the annual meeting:
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1.
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Election
of two directors to serve until the 2011 annual meeting and two directors
to serve until the 2014 annual
meeting;
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2.
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To
consider and approve the following advisory (non-binding)
proposal:
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“Resolved,
that the holders of Whitney Holding Corporation common stock approve the
compensation of the named executive officers as described in the
Compensation Discussion and Analysis and the tabular disclosure regarding
named executive officer compensation (together with the accompanying
narrative disclosure and footnotes) in the proxy
statement.”
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3.
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Ratification
of the selection of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm to audit the books of the
Company and its subsidiaries for
2009.
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How
many votes are required to approve these proposals?
Directors will be elected (Proposal No. 1) by a
plurality of the votes cast at the annual meeting. This means that
the four nominees who receive the largest number of “FOR” votes will be elected
as directors. The approval of the advisory proposal on compensation
of our named executive officers (Proposal No. 2) will be approved by a majority
of the votes actually cast on that proposal. Under the American
Recovery and Reinvestment Act of 2008 (the ARRA), your vote is advisory and will
not be binding on our Board. However, the Compensation and Human
Resources Committee will take into account the outcome of the vote on Proposal
No. 2 when considering future executive compensation
arrangements. The ratification of the selection of
PricewaterhouseCoopers LLP as the independent registered public accounting firm
to audit the books of the Company and its subsidiaries for 2009 (Proposal No. 3)
will be approved by a majority of the votes actually cast on that
proposal.
How
are votes counted?
You may
either vote “FOR” or “WITHHOLD” authority to vote for each nominee for the Board
(Proposal No. 1). If you withhold authority to vote with respect to
any nominee, your shares will count for the purpose of establishing a quorum,
but will have no effect on the election of that nominee.
You may vote “FOR” or “AGAINST” or “ABSTAIN” from
voting on the non-binding advisory proposal requesting approval of the
compensation of the named executive officers as described in the Compensation
Discussion and Analysis and the tabular disclosure regarding named executive
officer compensation (together with the accompanying narrative disclosure and
footnotes) in this proxy statement (Proposal No. 2). If with respect
to Proposal No. 2, you mark “abstain” on your proxy or attend the annual meeting
and abstain from voting, your shares will count for the purpose of establishing
a quorum but will not count as a vote cast and will not affect the outcome of
Proposal No. 2. Similarly, broker nonvotes will count for the purpose of
establishing a quorum, but will not count as a vote cast and will not affect the
outcome of Proposal No. 2.
You may vote “FOR” or “AGAINST” or “ABSTAIN” from
voting on the ratification of the selection of PricewaterhouseCoopers LLP as the
Company’s independent registered public accounting firm for 2009 (Proposal No.
3). If you mark “abstain” on your proxy or attend the annual meeting
and abstain from voting with respect to Proposal No. 3, your shares will count
for the purpose of establishing a quorum but will not count as a vote cast and
will not affect the outcome of Proposal No. 3. Similarly, broker
nonvotes will count for the purpose of establishing a quorum but will not count
as a vote cast and will not affect the outcome of Proposal No.
3.
If you sign and submit your proxy card without
voting instructions, the proxies will vote your shares “FOR” each director
nominee (Proposal No. 1), “FOR” the non-binding resolution approving
compensation of our named executive officers (Proposal No. 2) and “FOR” the
ratification of the selection
of PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm for 2009 (Proposal No.
3).
How
does the Board recommend that I vote?
The Board recommends that you vote “FOR” each of the
nominees, “FOR” the resolution approving compensation of our named executive
officers and “FOR” the ratification of the selection of PricewaterhouseCoopers
LLP.
How
do I vote my shares without attending the annual meeting?
Whether you hold shares in your own name, in street
name or through the 401(k) plan, you may direct your vote without attending the
annual meeting. If you are a shareholder of record or hold shares
through the 401(k) plan, you may vote by granting a proxy as
follows:
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By Internet or
Telephone
– You may submit your proxy by following the instructions
on the proxy card. Shareholders of record who are also
participants in the 401(k) plan will receive two proxy
cards. If you vote using the Internet or telephone, you do not
need to return your proxy card (or cards if you are both a record
shareholder and a participant in the 401(k) plan). We have
designed telephone and Internet voting procedures that authenticate your
identity as a shareholder, allow you to give your voting instructions and
confirm that your instructions have been properly recorded. The
deadline for telephone and Internet voting is 11:59 p.m. Eastern Time on
May 19, 2009.
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By Mail
– You may vote
by mail by signing and dating your proxy card (or cards if you are both a
record shareholder and a participant in the 401(k) plan) and mailing it in
the envelope provided. You should sign your name exactly as it
appears on the proxy card. If you are signing in a
representative capacity (for example as guardian, executor, trustee,
custodian, attorney or officer of a corporation), you should indicate your
name and title or capacity. The Corporate Secretary must
receive your proxy card by 10:30 a.m. CDT on May 20, 2009 in order for
your shares to be voted.
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For
shares held in street name, you should follow the voting directions your broker
or nominee provides. You may complete and mail a voting instruction
card to your broker or nominee or, in most cases, submit voting instructions by
telephone or the Internet. If you provide specific voting
instructions, your broker or nominee will vote your shares as you
direct.
How
do I vote my shares in person at the annual meeting?
If
you choose to vote in person at the annual meeting:
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·
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if
you are a registered shareholder of record or hold shares in the 401(k)
plan, you should bring the enclosed proxy card and proof of identity;
or
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if
you hold your shares in street name, you must obtain and bring a broker
representation letter in your name from your bank, broker or other holder
of record and proof of identity.
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At the appropriate time during the annual meeting,
we will ask the shareholders present whether anyone wishes to vote in
person. You should raise your hand at this time to receive a ballot
to record your vote.
Even if you plan to attend the annual meeting, we
encourage you to vote by telephone, Internet or mail so your vote will be
counted if you later decide not to attend the annual
meeting.
What
does it mean if I receive more than one proxy card?
If
you receive more than one proxy card, it means you hold shares registered in
more than one name, through multiple street name accounts or hold shares through
the 401(k) plan in addition to other shares. To ensure that all of
your shares are voted, sign and return each proxy card, or if you vote by
telephone or Internet, vote once for each proxy card you
receive.
May
I change my vote?
Yes. If you are a
shareholder of record of common stock or hold shares through the
401(k) plan, you may change your vote and revoke your proxy by:
·
voting by
telephone or the Internet at a later time;
·
submitting
a properly signed proxy card with a later date;
·
voting in
person at the annual meeting subject to proof of identity; or
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·
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delivering
written notice that you wish to revoke your proxy to Joseph S. Schwertz,
Jr., Corporate Secretary, at or before the annual meeting. Mr.
Schwertz’s office is located in Suite 626, 228 St. Charles Avenue, New
Orleans, LA 70130.
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If you hold shares in street name, you
must follow your broker’s instructions to change your vote.
Is the annual meeting location accessible to people with disabilities?
Yes. The
Pan-American Life Center Auditorium, where the meeting will be held, offers
access for people using wheelchairs.
How
do I get additional copies of SEC filings?
Copies of the Company’s financial reports, including
its reports to the Securities and Exchange Commission (the SEC) filed on Forms
10-K and 10-Q, with financial statements and financial statement schedules but
without exhibits, are available without cost by sending your written request
to: Mrs. Shirley N. Fremin, Manager, Shareholder Services, Whitney
Holding Corporation, P. O. Box 61260, New Orleans, LA 70161, or by calling (504)
586-3627 or toll free (800) 347-7272, ext. 3627, or by sending an e-mail to the
following address:
investor.relations@whitneybank.com
. Copies
of SEC filings, including exhibits, can also be obtained free of charge by
clicking on “SEC Filings” under “Investor Relations” on our website at
www.whitneybank.com
. This
website address is provided for your information and convenience. Our
website is not incorporated into this proxy statement and should not be
considered part of this proxy statement. You can obtain a copy of any
listed exhibit to a Form 10-K or Form 10-Q by sending your written request to
the address furnished above. We will furnish the copy upon payment of
a fee.
PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The Company’s articles of incorporation provide for
a Board of Directors of five to 25 persons, divided into five classes serving
staggered five-year terms. By Board resolution, the number of
directors has been set at 14, effective as of the date of the annual
meeting. Four directors will be elected at this year’s annual
meeting. Mr. Turner, who is the Company’s President, was appointed to
the Board in May 2008 to fill a vacancy on the expanded Board and pursuant to
the Company’s articles of incorporation, must stand for election by the
shareholders at this annual meeting. Mr. Turner will serve a two-year
term expiring at the Company’s 2011 annual meeting. Upon the Chairman
of the Board and Chief Executive Officer’s recommendation, Messrs. Blossman and
Hall were appointed in December 2008 and took office in January 2009 to fill
vacancies on the expanded Board and pursuant to the Company’s articles of
incorporation, must stand for election by the shareholders at this annual
meeting. Mr. Blossman will serve a two-year term expiring at the
Company’s 2011 annual meeting and Mr. Hall will serve a five-year term expiring
at the Company’s 2014 annual meeting. Mr. Cooper, who was elected at
prior shareholders’ meetings, is nominated to serve a five-year term expiring at
the Company’s 2014 annual meeting. Mr. Bullard is a director with a
term expiring in 2009. He will not stand for re-election to the Board
and the Nominating and Corporate Governance Committee when his term expires in
May 2009. The Nominating and Corporate Governance Committee (the
Nominating Committee) met in December 2008 and February 2009 to evaluate the
nominees standing for election. Based on the Nominating Committee’s
evaluation and with their recommendation, the Board approved the inclusion of
the nominees on the Company’s proxy card and recommends that shareholders vote
“FOR” all four nominees.
Directors are elected by a plurality of the votes
cast in accordance with the Louisiana Business Corporation Law. We
disregard abstentions and broker nonvotes in the election of
directors. We expect that each nominee will be available for
election. If a nominee is unavailable, the proxies will cast your
vote for any substitute nominee the Nominating Committee and the Board may
recommend.
The
following table sets forth information we obtained from the nominees and other
directors about: (a) their principal occupations for the last five
years; and (b) directorships they hold with other public
companies.
BOARD
OF DIRECTORS
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Nominees
with Terms Expiring in 2009 and Nominated for Terms Expiring in
2011
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A.
R. Blossman, Jr., 77
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Former
Chairman of the Board, Parish National Bank (1968 to 2008); former
Director, Parish National Corporation (2004 to 2008);
Whitney director since
2009.
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John
M. Turner, Jr., 47
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President
of the Company and the Bank (since March 2008); Executive Vice President
of the Company and the Bank (February 2005 to March 2008); Senior Vice
President of the Bank (1995 to February 2005);
Whitney director since
2008.
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Nominees
with Terms Expiring in 2009 and Nominated for Terms Expiring in
2014
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Angus
R. Cooper II, 67
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Chairman
and Chief Executive Officer, Cooper/T. Smith Corp. (shipping service
company) (since 1979);
Whitney director since
1994.
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Terence
E. Hall, 63
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Chairman
of the Board and Chief Executive Officer, Superior Energy Services, Inc.
(provider of specialized oilfield services and equipment) (since 1995);
Whitney director since
2009.
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THE
BOARD OF DIRECTORS RECOMMENDS A “FOR” VOTE FOR ALL
NOMINEES
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Incumbent
Directors with Terms Expiring in 2010
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Eric
J. Nickelsen, 64
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Real
estate developer and part owner, John S. Carr & Company, Inc. (since
1998);
Whitney director
since 2000.
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Kathryn
M. Sullivan, 53
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Chief
Executive Officer, UnitedHealthcare, Central Region (since 2008); Former
Chief Financial Officer and Senior Vice President, Blue Cross and Blue
Shield Association (2004 to 2008); Former President and Chief Executive
Officer (1999 to 2004), Blue Cross and Blue Shield of Louisiana;
Whitney director since
2003.
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Incumbent
Directors with Terms Expiring in
2011
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William
A. Hines, 72
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Chairman
of the Board, Nassau Holding, LLC (holding company of entities in the oil
field service industry) (since 1978);
Whitney director since
1986.
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Alfred
S. Lippman, 70
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Co-Manager,
Lippman, Mahfouz, Tranchina & Thorguson, LLC, Attorneys at Law (since
2001);
Whitney director
since 1996.
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Incumbent
Directors with Terms Expiring in
2012
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Richard
B. Crowell, 70
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Attorney,
Crowell & Owens (since 1970); Director, CLECO Corporation;
Whitney director since
1983.
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Michael
L. Lomax, 61
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President
and Chief Executive Officer, United Negro College Fund (since 2004);
Former President, Dillard University (1997 to 2004);
Whitney director since
2002.
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Dean
E. Taylor, 60
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Chairman
(since 2003), Chief Executive Officer (since 2002), President (since 2001)
of Tidewater, Inc. (marine offshore supply);
Whitney director since
2002.
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Incumbent
Directors with Terms Expiring in
2013
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John
C. Hope, III, 60
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Chairman
of the Board and Chief Executive Officer (since March 2008), President and
Chief Operating Officer (March 2007 to March 2008) of the Company and the
Bank; Executive Vice President of the Company (1994 to March 2008) and the
Bank (1998 to March 2008); Director, Energy South, Inc.;
Whitney director since
2007.
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R.
King Milling, 68
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Former
Vice Chairman of the Company and the Bank (March 2007 to December 2008);
President of the Company and the Bank (1984 to March 2007);
Whitney director since
1978.
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Thomas
D. Westfeldt, 57
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President,
Westfeldt Brothers, Inc. (green coffee importing firm) (since 1994);
Whitney director since
2002.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Only holders of record of our common stock as of the
close of business on April 3, 2009 are entitled to notice of, and to vote at,
the annual meeting. On that date,
__________
shares of common stock were outstanding. Each share is entitled to
one vote. As of February 6, 2009, the entity named below was, to our
knowledge, the only beneficial owner of more than 5% of our outstanding common
stock, as determined under Rule 13d-1 of the Securities Exchange Act of 1934, as
amended.
On December 19, 2008, the Company issued to Treasury
a warrant to purchase 2,631,579 shares of the Company’s common
stock. Pursuant to the terms of the warrant, approximately 1,315,789
shares of common stock are exercisable within 60 days. The exercise
price for the warrant is $17.10 per share. The warrants exercisable
within 60 days represent
____
%
of the Company’s voting stock. However, the warrant has not been
exercised and the exercise price is above the Company’s closing price for shares
of its common stock on March 25, 2009 of $12.08.
Name and
Address
Amount and
Nature
Percent of
of Beneficial
Owner
of Beneficial
Ownership
Class
Barclays Global Investors, N.A.
(1)
3,427,492
5.09%
400 Howard
Street
San Francisco,
CA 94105
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(1)
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Information
is based on the Schedule 13G filed February 5, 2009 with the SEC by
Barclays Global Investors, N.A., Barclays Global Fund Advisors and certain
related entities
.
They reported
voting and dispositive power as of December 31, 2008 as follows: (a)
Barclays Global Investors, N.A. reported sole voting power as to 1,300,939
shares, sole dispositive power as to 1,598,657 shares and beneficial
ownership of 1,598,657 shares; (b) Barclays Global Fund Advisors reported
sole voting power as to 1,052,167 shares, sole dispositive power as to
1,780,868 shares and beneficial ownership of 1,780,868 shares; (c)
Barclays Global Investors, Ltd. reported sole voting power as to 4,219
shares, sole dispositive power as to 45,314 shares and beneficial
ownership of 45,314 shares; (d) Barclay’s Global Investors Canada Limited
reported sole voting power as to 2,031 shares, sole dispositive power as
to 2,031 shares and beneficial ownership of 2,031 shares; and (e) Barclays
Global Investors Australia Limited reported sole voting power as to 622
shares, sole dispositive power as to 622 share and beneficial ownership of
622 shares. The shares reported are held by the Barclays
entities in trust accounts for the economic benefit of the beneficiaries
of those accounts. They disclaim the existence of a
group.
|
The
following table sets forth beneficial ownership of the Company’s outstanding
stock as of March 25, 2009, including shares held in the 401(k) plan by the
named executive officers.
* Less than 1% of the outstanding common stock.
|
(1)
|
Ownership
shown includes direct and indirect ownership and, unless otherwise noted
and subject to community property laws where applicable, each shareholder
has sole investment and voting power with respect to reported
holdings. The Bank serves as trustee of the Whitney National
Bank Retirement Trust, which held 39,175 shares as of March 25,
2009. An executive officer of the Company serves with other
Bank employees on a committee that makes voting and investment decisions
with respect to these shares. Shares held by the trust are
included only in the calculation of the beneficial ownership of all
executive officers and directors as a
group.
|
|
(2)
|
Mr.
Blossman’s share total includes 50,391 shares of stock owned by Mr.
Blossman’s wife, for which he disclaims beneficial
ownership.
|
|
(3)
|
Mr.
Bullard’s share total includes 5,062 shares in a profit sharing trust and
9,183 shares in family trusts, for which he disclaims beneficial
ownership. His share total includes 19,463 shares of common
stock equivalent units held in deferred compensation
accounts.
|
|
(4)
|
Mr.
Crowell’s share total includes 395,221 shares of stock in an LLC over
which he has voting rights, 18,900 shares in Mr. Crowell’s family trusts,
over which Mr. Crowell has voting rights, but for which he disclaims
beneficial ownership, and 6,175 shares in family trusts of which Mr.
Crowell’s wife is the trustee, but for which he disclaims beneficial
ownership.
|
|
(5)
|
Mr.
Hines’ share total includes 100 shares of stock that his wife holds as
trustee for her son’s trust.
|
|
(6)
|
Mr.
Hope’s share total includes 34,125 shares of stock held for the benefit of
Mr. Hope in the 401(k) plan. His share total also includes
4,200 shares of stock that Mr. Hope’s children own and his wife’s 20%
ownership in a trust that owns 225 shares, for which he disclaims
beneficial ownership. Mr. Hope’s share total does not include
90,000 restricted stock units he
holds.
|
|
(7)
|
Mr.
Lippman’s share total includes 52,378 shares held for his benefit in the
Alfred S. Lippman IRA Account. His share total includes 3,064
shares of common stock equivalent units held in deferred compensation
accounts.
|
|
(8)
|
Mr.
Marks retired from the Board of the Company and the Bank on March 15,
2008. His share total does not include 34,302 restricted stock units he
holds.
|
|
(9)
|
Mr.
Milling’s share total does not include 16,748 restricted stock units he
holds.
|
|
(10)
|
Mr.
Nickelsen’s share total includes 9,213 shares held in two trusts over
which Mr. Nickelsen has full voting authority. His share total
includes 22,746 shares of common stock equivalent units held in deferred
compensation accounts.
|
|
(11)
|
Ms.
Sullivan’s share total includes 161 shares of stock held in a custodial
account over which Ms. Sullivan has full voting
authority.
|
|
(12)
|
Mr.
Taylor’s share total includes 1,449 shares of stock held for the benefit
of Mr. Taylor’s children in an account that he controls and over which he
has voting power. His share total includes 10,315 shares of
common stock equivalent units held in deferred compensation
accounts.
|
|
(13)
|
Mr.
Turner’s share total includes 2,978 shares of stock held for his benefit
in the 401(k) plan. Mr. Turner’s share total does not include
37,500 restricted stock units he
holds.
|
|
(14)
|
Mr.
Baird’s share total includes 13,931 shares of stock held for his benefit
in the 401(k) plan. Mr. Baird’s share total does not include
43,000 restricted stock units he
holds.
|
|
(15)
|
Mr.
Callicutt’s share total does not include 28,500 restricted stock units he
holds.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers and directors to file initial reports of ownership of the Company’s
common stock, as well as reports of changes in ownership with the
SEC. Based solely on a review of Forms 3, 4 and 5 and amendments
thereto and on written representations from executive officers and directors to
the Company, all required filings by such persons were timely made during
2008.
BOARD
OF DIRECTORS AND ITS COMMITTEES
Board
of Directors
The Company’s Board held 14 meetings in
2008. The Board currently consists of 15 directors. In
February 2009, the Board set the size of the Board at 14 directors, including
two employee directors, to be effective at the annual meeting. The
Company’s Board has the power to expand or reduce its size at any
time. The Board has determined that 11 nonemployee directors are
independent under applicable rules of The Nasdaq Global Select Market
(Nasdaq). The independent directors are Joel B. Bullard, Jr., Angus
R. Cooper II, Richard B. Crowell, Terence E. Hall, William A. Hines, Alfred S.
Lippman, Michael L. Lomax, Eric J. Nickelsen, Kathryn M. Sullivan, Dean E.
Taylor and Thomas D. Westfeldt. The Board also determined that John
G. Phillips, who retired from the Board effective April 2008, was an independent
director. The Board can combine or separate the roles of the Chairman
of the Board and the Chief Executive Officer as it deems to be in the best
interest of the Company.
During 2008, Whitney’s independent directors
continued their longstanding practice of convening executive sessions by having
10 such sessions following the end of Board meetings. Messrs. Hope,
Milling and Turner (and Mr. Marks until he retired in March 2008) and all
employees excused themselves from the executive sessions. The
Chairman of the Company’s Compensation and Human Resources Committee presides at
all executive sessions of the independent directors.
During 2008, all of the directors attended at least
75% of the aggregate number of meetings of the Board and the Committees of the
Board on which they served. The Board has adopted Corporate
Governance Guidelines that include the expectation that its directors attend
each annual meeting. All of the directors attended the Company’s 2008 annual and
special shareholder’s meetings.
Compensation
of Directors
For
information regarding the compensation of our directors, see “Executive
Compensation – Compensation of Directors.”
Board
Committees
The
Company has established four standing committees: Executive, Audit, Compensation
and Human Resources and Nominating and Corporate Governance. The
Board and each committee have the authority to consult with and retain
independent legal, financial or other outside advisors, as each deems necessary
and appropriate, without seeking approval of
management.
The
members of the Board and the standing committees on which each currently serves
are identified below.
|
Name
|
Executive
|
Audit
|
Compensation
and Human Resources
|
Nominating
and
Corporate
Governance
|
|
A.
R. Blossman, Jr.
|
X
|
|||
|
Joel
B. Bullard, Jr.
(1)
|
X
|
X*
|
||
|
Angus
R. Cooper II
|
X
|
X*
|
X
|
|
|
Richard
B. Crowell
|
X*
|
|||
|
Terence
E. Hall
|
X
|
|||
|
William
A. Hines
|
X
|
X
|
||
|
John
C. Hope, III
†
|
X
|
|||
|
Alfred
S. Lippman
|
X
|
|||
|
Michael
L. Lomax
|
X
|
|||
|
R.
King Milling
|
X
|
|||
|
Eric
J. Nickelsen
|
X
|
X
^
|
X
|
X
|
|
Kathryn
M. Sullivan
|
X
|
X
|
||
|
Dean
E. Taylor
|
X
|
X
|
||
|
John
M. Turner, Jr.
|
X
|
|||
|
Thomas
D. Westfeldt
|
X
|
X
|
X^
|
† Chairman
of the Board
* Committee
Chairman
^ Committee
Vice Chairman
|
(1)
|
Mr.
Bullard is a director with a term expiring in 2009. He will not
stand for re-election to the Board of Directors or the Nominating and
Corporate Governance Committee when his term expires in May
2009.
|
Executive
Committee
In
addition to the Board meetings, the directors provide significant corporate
governance oversight through the Company’s Executive Committee. The
Executive Committee currently consists of 12 directors and thus comprises over
three-quarters of the Board. During 2008, the Executive Committee met
15 times. Among its other duties, the Executive Committee regularly
reviews recently approved loans and receives quarterly briefings from management
on operational, legal, compliance, corporate governance and Community
Reinvestment Act matters.
Audit
Committee
During
2008, the Audit Committee was comprised of Messrs. Crowell, Nickelsen, and
Westfeldt, and Ms. Sullivan. The Board has determined that Messrs.
Crowell, Nickelsen and Westfeldt and Ms. Sullivan meet the additional
independence criteria under the rules and regulations of the SEC and the listing
qualifications of Nasdaq for service on the Audit Committee. In
addition, the Board has determined that Messrs. Crowell, Nickelsen and Westfeldt
and Ms. Sullivan have the attributes of an “Audit Committee financial expert” as
defined in applicable SEC regulations and meet the Nasdaq test for financial
sophistication. The Audit Committee held 13 meetings during
2008.
The Audit
Committee is governed by a written charter that the Board and Committee
approved. A copy of this charter is available on the Corporate
Governance page of our website at
www.whitneybank.com
. Information
regarding the functions of the Audit Committee is set forth in the “Audit
Committee Report,” included on page 39 of this proxy statement.
Compensation
and Human Resources Committee
During 2008, the Compensation and Human
Resources Committee (the Compensation Committee) was comprised of Messrs.
Cooper, Hines, Lomax, Nickelsen and Taylor and Ms. Sullivan, all of whom are
independent. The Committee held six meetings during
2008.
The Compensation Committee is governed
by a written charter that the Board and the Committee approved. A
copy of this charter is available on the Corporate Governance page of our
website at
www.whitneybank.com
. Information
regarding the role of the Compensation Committee and its processes and
procedures for considering and determining executive compensation is set forth
in “Compensation Discussion and Analysis – Role of the Compensation and Human
Resources Committee” on page 17 of this proxy statement.
Nominating
and Corporate Governance Committee
During 2008, the Nominating Committee
was comprised of Messrs. Bullard, Cooper, Nickelsen and Westfeldt, all of whom
are independent, as defined for nominating committee members in the Nasdaq
listing standards. The Nominating Committee held six meetings in
2008. Its functions include: (i) identifying individuals
qualified to become Board members, (ii) recommending individuals to be nominated
by the Board for election as directors of the Company, (iii) nominating
candidates for election to the Board in the event of a vacancy between
shareholder meetings, (iv) advising the Board with respect to committees, (v)
overseeing the evaluation of the Board and (vi) assisting the Board in
establishing and maintaining effective corporate governance
practices. A current copy of the Nominating Committee’s charter is
available to shareholders on the Corporate Governance page of our website at
www.whitneybank.com
.
Shareholder
Recommendations of Director Candidates
Eligible shareholders wishing to
recommend a candidate for consideration by the Nominating Committee as a
director of the Company shall submit in writing a timely notice including the
candidate’s name and address, along with adequate information as to the
candidate’s qualifications, to the Corporate Secretary at the following
address:
Mr. Joseph S. Schwertz,
Jr.
Corporate Secretary
Whitney Holding
Corporation
228 St. Charles Avenue, Suite
626
New Orleans,
LA 70130
To be considered timely for next
year’s annual meeting, the shareholder’s notice must be delivered to, or mailed
and received at, the above address on or before December 16, 2009.
Director
Qualifications, Qualities and Skills
In addition to meeting eligibility
criteria required pursuant to all applicable laws, rules, regulations and
listing standards, the Nominating Committee believes all director nominees
should meet certain qualifications and possess certain qualities or
skills. The Nominating Committee believes that each director nominee
should:
|
∙
|
be
of the highest character and integrity, with an inquiring mind, vision, a
willingness to ask hard questions and the ability to work well with
others;
|
|
∙
|
be
free of any conflict of interest that would violate any applicable laws or
regulations or interfere with the proper performance of the
responsibilities of a director;
|
|
∙
|
be
willing and able to devote sufficient time to the affairs of the Company
and be diligent in fulfilling the responsibilities of a director and Board
committee member, as applicable (including developing and maintaining
sufficient knowledge of the Company and its industry; reviewing and
analyzing reports and other information important to Board and committee
responsibilities; preparing for, attending and participating in Board and
committee meetings; and satisfying appropriate orientation and continuing
education guidelines);
|
|
∙
|
have
the capacity and desire to represent the balanced, best interests of the
shareholders as a whole and not primarily a special interest group or
constituency; and
|
|
∙
|
if
also serving on the Board of the Bank, directly own at least $1,000 of
Company common stock.
|
At its December 2008 meeting, Whitney’s
Board voted to waive a bylaw retirement age requirement that would have made Mr.
Blossman ineligible for election to the Board and which would have required Mr.
Hines to retire at the 2009 annual meeting and Mr. Crowell to retire at the 2011
annual meeting. Our shareholders had previously elected Messrs. Hines
and Crowell for five year terms ending in 2011 and 2012,
respectively.
For a detailed description of the
qualifications required of candidates for director, as well as any specific
qualities or skills the Nominating Committee believes one or more directors
should possess, see the Nominating Committee Charter on the Corporate Governance
page on our website at
www.whitneybank.com
.
Identification
and Evaluation of Directors
The Nominating Committee is charged
with identifying individuals who are qualified to become Board members and
recommending individuals to be nominated by the Board for
election. The Nominating Committee’s criteria for identifying,
reviewing and selecting potential director nominees for election to the Board is
set forth in its Charter. To identify a candidate to fill a vacancy
on the Board, the Nominating Committee seeks recommendations from the Company’s
directors. The Board believes that the Company’s directors are in the
best position to identify individuals with the necessary qualifications,
qualities and skills to serve the Company and its shareholders. To
evaluate a director candidate, whether recommended by the Nominating Committee,
a Board member or a shareholder, the Nominating Committee will consider and
assess the skills and background of the individual and any other issues and
factors that the Nominating Committee deems appropriate, applying the criteria
set forth in the Nominating Committee Charter.
COMPENSATION
AND HUMAN RESOURCES COMMITTEE REPORT
The Compensation and Human Resources
Committee of the Board of Directors of Whitney Holding Corporation is
responsible for overseeing the Company’s Executive Compensation Programs on
behalf of the Board. In fulfilling this responsibility, the members
of the Compensation and Human Resources Committee reviewed and discussed with
the Company’s management the Compensation Discussion and Analysis set forth in
this proxy statement.
Based on
the review and discussions that took place as referenced above, the Compensation
and Human Resources Committee recommended to the Board that the Compensation
Discussion and Analysis be included in the Company’s annual report on Form 10-K
for the fiscal year ended December 31, 2008 and the Company’s proxy statement in
connection with the Company’s 2009 Annual Meeting of Shareholders of common
stock, each of which has been or will be filed with the Securities and Exchange
Commission.
In addition, as required by the
provisions of the Treasury’s CPP, the Compensation and Human Resources Committee
certifies that it has reviewed with the Senior Risk Officer of the Company the
Senior Executive Officer incentive compensation arrangements and has taken
reasonable efforts to ensure that such arrangements do not encourage Senior
Executive Officers to take unnecessary and excessive risks that threaten the
value of the Company.
Compensation
and Human Resources Committee
of the Board of Directors
Angus R.
Cooper II, Chairman
William A. Hines
Michael L. Lomax
Eric J. Nickelsen
Kathryn M. Sullivan
Dean E. Taylor
This
report shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, and shall not otherwise be deemed filed under such
acts.
COMPENSATION
DISCUSSION AND ANALYSIS
In the paragraphs that follow, we will
provide an overview and analysis of our compensation programs and policies, the
material compensation decisions we have made under those programs and policies
with respect to our top executive officers, and the material factors that we
considered in making those decisions. Later in this proxy statement
under the heading, “Executive Compensation,” is a series of tables containing
specific information about the compensation earned by or paid in 2008 to the
following individuals, whom we refer to as our named executive officers
(NEOs):
|
·
|
John
C. Hope, III, Chairman of the Board and Chief Executive Officer of the
Company and the Bank;
|
|
·
|
Thomas
L. Callicutt, Jr., Senior Executive Vice President and Chief Financial
Officer of the Company and the Bank and Treasurer of the
Company;
|
|
·
|
John
M. Turner, Jr., President of the Company and the
Bank;
|
|
·
|
Robert
C. Baird, Jr., Senior Executive Vice President of the Company and the
Bank;
|
|
·
|
R.
King Milling, Former Vice Chairman of the Board of the Company and the
Bank (retired as of December 31, 2008);
and
|
|
·
|
William
L. Marks, Former Chairman of the Board and Chief Executive Officer of the
Company and Bank (retired as of March 15,
2008).
|
The discussion below is intended to
help you understand the detailed information provided in those tables and put
that information into context within our overall compensation
program.
Overview
Like many companies, especially in the
financial services sector, the economic downturn caused the Company’s common
stock price and 2008 operating results to decline
significantly. These factors are reflected in the decreased
compensation of our NEOs for 2008 because our compensation program is designed
to align a significant portion of compensation with the performance of the
Company and the interests of our shareholders. For 2008:
|
·
|
A
new design for our annual cash incentive plan was approved, with emphasis
on an expanded list of performance
metrics.
|
|
·
|
No
bonuses under the 2008’s annual incentive plan were paid to any NEOs
because the minimum level of performance required to earn bonus payments
was not achieved.
|
|
·
|
No
salary increases for NEOs were approved, except in connection with two
promotions.
|
The
Company has implemented significant changes to the compensation program for
2009, as described below:
|
·
|
The
Compensation and Human Resources Committee (the Compensation Committee)
revised the 2009 annual incentive program to encourage an increase in loan
portfolio credit quality, the deterioration of which significantly
impacted our performance in 2008. The Compensation Committee
replaced the Net Charge Off performance criterion with a Provision for
Loan Loss performance measure and replaced the Efficiency Ratio
performance criterion with a performance criterion that compares Expense
to Average Assets. The Compensation Committee believes these
two changes will provide a more effective measure of credit quality and
success in achieving expense reduction in
2009.
|
|
·
|
There
were no base salary increases approved for NEOs, except for John Turner,
whose base salary the Compensation Committee increased by $85,000
effective April 1, 2009. Since assuming the position of
President in March 2008, Mr. Turner has continued to assume additional
responsibilities and perform at a high level. It has been the
Compensation Committee’s intent to review Mr. Turner’s performance after
he had been serving as President for one year, and to consider him for a
base salary adjustment at that time. It is the Compensation
Committee’s belief that Mr. Turner’s new salary of $480,000 is reflective
of the value he provides to the Company through his leadership and
performance.
|
|
·
|
The
Company has taken, and will continue to take, actions to comply with the
executive compensation limitations and restrictions under the Emergency
Economic Stabilization Act of 2008 (EESA) and the America Reinvestment and
Recovery Act of 2009 (ARRA) in order to comply with the terms, as in
effect from time to time, required as a result of participation in
Treasury’s Capital Purchase Program, as discussed below in more
detail.
|
Participation
in Capital Purchase Program
On
December 19, 2008, the Company sold 300,000 shares of the Company’s preferred
stock and a warrant to purchase 2,631,579 shares of the Company’s common stock
to the Treasury for a total purchase price of $300 million through participation
in Treasury’s Capital Purchase Program (CPP). As a result, the
Company became subject to certain executive compensation requirements under
EESA, Treasury regulations and the Securities Purchase Agreement pursuant to
which it sold such preferred stock and warrant. The Company was
required to take the following actions with respect to its executive
compensation arrangements relating to its senior executive officers (the SEOs)
under EESA:
|
•
|
require
that SEO bonus and incentive compensation be subject to recovery or
“clawback” by the Company if the payments were based on materially
inaccurate financial statements or any other materially inaccurate
performance metric criteria;
|
||
|
•
|
prohibit
any “golden parachute” payment to the SEOs, generally meaning any payment
made in connection with involuntary termination or severance from
employment in an insolvency context to the extent the value equals or
exceeds an amount three times the SEO’s “base amount” (generally defined
as the five-year average of taxable compensation); and
|
||
|
|
•
|
agree
that it will be subject to Section 162(m)(5) of the Internal Revenue
Code, which reduces the annual tax deduction limit for remuneration paid
to SEOs from $1,000,000 to $500,000 and eliminates the availability of the
exception for performance-based
compensation.
|
The
Company’s SEOs currently consist of John C. Hope, III, John M. Turner, Jr.,
Thomas L. Callicutt, Jr., Robert C. Baird, Jr. and Joseph S.
Exnicios. During the period from December 19, 2008, until his
retirement as of December 31, 2008, we considered Mr. Milling to be an SEO
under EESA, and therefore subject to the CPP requirements during that
time.
In order
to comply with the EESA requirements, the Company entered into letter agreements
with each of the SEOs (the Letter Agreements). The Letter Agreements have the
effect of amending each officer’s compensation, bonus, incentive and other
benefit plans, arrangements and agreements as necessary to comply with the EESA
“golden parachute” and “clawback” provisions while Treasury holds an equity or
debt position in the Company. The Letter Agreements also require the
Company to review such plans and arrangements to ensure they do not encourage an
SEO to take unnecessary and excessive risks that threaten the value of the
Company. To the extent a review requires revisions to a plan or
arrangement, the Letter Agreements require the applicable officer and the
Company to negotiate and effect such changes.
In
addition, the Compensation Committee met with the Company’s Chief Risk Officer
to discuss and review the relationship between the Company’s risk management
policies and its SEO incentive compensation arrangements.
In
preparation for this meeting, the Chief Risk Officer met with Mercer, the
Company’s external executive compensation consultant, Whitney’s Human Resources
Director and Whitney’s General Counsel to understand how Whitney’s incentive
arrangements are designed, including Whitney’s annual incentive bonus program
and long-term equity compensation plan. Additionally, the Chief Risk
Officer generated a report to the Compensation Committee identifying and
explaining the most significant risks the Company faces. His risk
identification was primarily based on the risk criteria used by the Office of
the Comptroller of the Currency for examining national banks. Such
risks include credit risk, interest rate risk, liquidity risk, compliance risk,
transaction risk, strategic risk and reputation risk.
The Chief
Risk Officer then met with the Compensation Committee to review and discuss
whether the Company’s SEO compensation arrangements could create incentives for
SEOs to act in a manner that could materially increase the types of risks
identified by the Chief Risk Officer as the kinds of risks that could
potentially threaten the value of the Company. After a discussion
regarding various practices that could induce excessive risk taking, including,
but not limited to, highly leveraged compensation arrangements and incentive
arrangements rewarding short-term rather than long-term gain, the Compensation
Committee determined that the Company’s compensation plans and programs do not
contain any features that encourage SEOs to take unnecessary and excessive risks
because they provide for a balance between current performance and the creation
of value for the shareholders over the long-term. Additionally, the
annual (short-term) incentive program contains six separate and distinct
performance criteria. This design significantly decreases the
likelihood that any one criterion could be meaningfully
manipulated.
The
required certification of the Compensation Committee is provided in the
Compensation and Human Resources Committee Report which precedes this
Compensation Discussion and Analysis.
The
Company has already fully complied with the requirements of EESA as originally
enacted. On February 4, 2009, Treasury announced guidelines (the February
Guidelines) expanding EESA restrictions for future CPP participants, as
follows:
|
·
|
The
“clawback” provision applies to the SEOs
plus
the next 20 most
highly compensated individuals.
|
|
·
|
“Golden
parachute” payments are defined as one times an SEO’s base salary amount,
as opposed to three times.
|
|
·
|
An
SEO may not be paid more than $500,000 in total compensation annually,
with an exception for restricted stock awards. The limitation can be
waived by disclosure of SEOs’ compensation and, if requested, a
non-binding “say on pay” shareholder
resolution.
|
|
·
|
Compensation
committees must review and disclose the reasons that compensation
arrangements of SEOs
and
other employees do
not encourage excessive and unnecessary risk-taking and company CEOs must
certify annually as to compliance with statutory, Treasury and contractual
executive compensation
restrictions.
|
|
·
|
Companies
must adopt a policy regarding approval of “luxury
expenditures.”
|
The
February Guidelines are general in nature and appear to contemplate new
rulemaking by Treasury before they become effective. Further, many
elements of the February Guidelines were incorporated into ARRA, as discussed
below.
On
February 17, 2009, the ARRA was signed into law. The ARRA amends the
provisions of EESA, and expands the restrictions on executive compensation for
CPP participants. ARRA includes a:
|
•
|
prohibition
on golden parachute payments (defined as any payment for departure from a
company for any reason except for payments for services performed or
benefits accrued) to any SEO or any of the next five most highly
compensated employees;
|
|||
|
|
•
|
prohibition
on paying or accruing any bonus, retention award, or incentive
compensation (other than long-term restricted stock permitted under ARRA
or pursuant to a written agreement executed prior to February 12, 2009) to
the SEOs and other employees, depending on the amount of Treasury’s
purchase (in the Company’s case, the next 10 most highly compensated
employees);
|
||
|
|
•
|
requirement
that participants conduct an annual, non-binding shareholder vote on the
company’s executive compensation program;
|
||
|
•
|
prohibition
on compensation that encourages unnecessary and excessive risks and on
compensation plans that would encourage manipulation of the reported
earnings to enhance the compensation of any employees;
|
|||
|
•
|
requirement
that participants enforce a “clawback” of any bonus, retention award or
incentive compensation paid to an SEO and any of the next 20 most highly
compensated employees based on statements of earnings, revenues, gains or
other criteria that are later found to be materially
inaccurate;
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|
•
|
$500,000
annual tax deduction limit for compensation paid to SEOs;
|
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|
•
|
requirement
that participants establish an independent board compensation committee
that will meet at least semi-annually to discuss and evaluate employee
compensation plans in light of an assessment of any risk posed to the
company from the plans;
|
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|
•
|
requirement
that participants adopt a company-wide policy regarding “excessive” or
“luxury” expenditures; and
|
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|
•
|
requirement
that participants annually file a written certification by the company’s
CEO and CFO regarding the company’s compliance with ARRA
requirements.
|
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The
foregoing restrictions imposed by ARRA implement many, but not all, of the
restrictions of the February Guidelines. At the present time,
Treasury has not announced whether it intends to publish rules to implement the
aspects of the February Guidelines that ARRA did not address. The
Compensation Committee will consider the new limits on executive compensation of
ARRA, the February Guidelines (to the extent they apply to the Company), and any
forthcoming regulations and will take any actions necessary to comply with such
regulations once they are issued.
Based on
guidance issued by the SEC on February 26, 2009, the Board of Directors
authorized a non-binding advisory shareholder vote on the Company’s executive
compensation plans, programs and arrangements as described in this proxy
statement. See “Proposal No. 2: Advisory Vote on Compensation of Named Executive
Officers.”
Finally,
ARRA directs the Treasury to review bonuses, retention awards, and other
compensation paid to SEOs and the next 20 most highly-compensated employees of
each company receiving CPP assistance before ARRA was enacted to determine
whether any such payments were inconsistent with the purposes of ARRA and TARP
or otherwise contrary to the public interest. If such determination
is made, Treasury must “seek to negotiate” with the company and the subject
employee for reimbursement to the federal government. Therefore,
payments made to our NEOs in 2008 and early 2009 may be subject to rescission in
whole or in part under ARRA.
Objective
of the Company’s Compensation Program
The objective of our compensation
program is to attract, retain, motivate and reward executives who contribute to
our financial and operational success, which ultimately builds shareholder
value. In order to do this effectively, our program
must:
|
·
|
provide
our executives with competitive total compensation opportunities relative
to comparable positions at companies and banks with whom we compete for
talent;
|
|
·
|
directly
link a significant portion of total compensation to the achievement of
specific performance goals in a manner that proportionally rewards higher
performance levels;
|
|
·
|
provide
increased compensation opportunities for exceptional individual
performance, which can result in differentiated compensation among
executives based on individual performance;
and
|
|
·
|
closely
and directly align executives’ interests with those of our shareholders by
making stock-based incentives a significant core element of our
executives’ compensation.
|
Role
of the Compensation and Human Resources Committee
The Compensation Committee assists our
Board in discharging its responsibilities relating to the compensation of our
executive officers. The Compensation Committee is responsible for
annually assessing the performance of our executive officers and for determining
their annual salary and incentive compensation. Each of the six
members of our Compensation Committee is independent as that term is defined
under Nasdaq listing standards and the director independence standards adopted
by our Board. We believe that their independence from management
allows Compensation Committee members to provide objective consideration of
various compensation elements that could be included in an executive
compensation program. It also allows the Compensation Committee to
apply independent judgment as to which compensation elements and designs will
best achieve our compensation objectives. The Compensation Committee
has and may exercise the authority of the Board as specified by the Board and to
the extent permitted under the Louisiana Business Corporation Law, and has the
authority to delegate its duties and responsibilities to subcommittees as it
deems necessary and advisable.
The Compensation Committee from time to
time retains independent executive compensation consultants to assist in
evaluating our compensation practices at the Company and to provide advice and
ongoing recommendations regarding executive compensation that are consistent
with our business goals and pay philosophy. Mercer was retained
directly by the Compensation Committee in 2008 to provide executive compensation
consulting services. The scope of the executive compensation
consulting assignment included a comparison of Whitney’s current levels of base
salary, annual cash incentive opportunity and equity-based compensation compared
to that paid by the banks in Whitney’s Peer Bank Group (listed below) as well as
to a larger universe of similarly sized financial institutions using Mercer’s
proprietary survey data. The Compensation Committee utilized data
developed by Mercer in its determination of whether each element of the
executive’s compensation package was competitive with the market and to
determine whether any adjustments were appropriate. This information
was also used to establish the value of long-term incentives granted to the
NEOs.
Market
Data
Our Compensation Committee reviews and
analyzes market data prepared internally by the Bank’s Human Resources
Department and by Mercer to ensure that our executive officer compensation is
competitive with the marketplace. We compare compensation paid to our
executive officers with compensation paid to executive officers in similar
positions at other regional banks of comparable size (the Peer Bank Group), and
we use the market information to test the reasonableness of the compensation
decisions we make. For 2008, Whitney’s Peer Bank Group consisted of
the following twenty-four banks:
|
BANK
NAME
|
TICKER
|
|
Synovus
Financial Corp
|
SNV
|
|
The
Colonial BancGroup, Inc.
|
CNB
|
|
Associated
Banc-Corp
|
ASBC
|
|
BOK
Financial Corporation
|
BOKF
|
|
Webster
Financial Corp.
|
WBS
|
|
First
Citizens BancShares, Inc.
|
FCNCA
|
|
Commerce
Bancshares, Inc.
|
CBSH
|
|
TCF
Financial Corporation
|
TCB
|
|
Fulton
Financial Corporation
|
FULT
|
|
City
National Corporation
|
CYN
|
|
The
South Financial Group Inc.
|
TSFG
|
|
Citizens
Republic Bancorp, Inc.
|
CRBC
|
|
Cullen/Frost
Bankers, Inc.
|
CFR
|
|
BancorpSouth,
Inc.
|
BXS
|
|
Susquehanna
Bancshares, Inc.
|
SUSQ
|
|
Valley
National Bancorp
|
VLY
|
|
Wilmington
Trust Corp
|
WL
|
|
First
Merit Corporation
|
FMER
|
|
Wintrust
Financial Corp
|
WTFC
|
|
UMB
Financial Corp
|
UMBF
|
|
Trustmark
Corporation
|
TRMK
|
|
United
Community Banks Inc
|
UCBI
|
|
First
Midwest Bancorp, Inc.
|
FMBI
|
|
Hancock
Holding Company
|
HBHC
|
How
We Determine and Assess Executive Compensation
We believe that the total compensation
package available to our executives should be fair, balanced and competitive; it
should provide enhanced levels of financial reward based on achieving higher
levels of performance; and it should be designed to recognize and reward both
short and long-term performance. After careful consideration and
analysis of market survey data provided by our executive compensation consultant
and by our internal Human Resources Department, we set our executive officer
compensation at levels competitive within the banking industry. While
the Compensation Committee considers many factors in setting executive
compensation, it is generally the Compensation Committee’s intent to have base
salaries for our executives at or slightly above the market median, while
providing opportunities to earn incentive-based compensation, including both
annual cash bonuses and equity compensation, at levels between the 50
th
and
75
th
percentile of market. We believe it is essential to provide incentive
opportunities above median to encourage and reward our executives for superior
performance and for retention purposes. We also consider the
Company’s overall performance relative to its Peer Bank Group when making our
long-term incentive compensation decisions. This is accomplished by
comparing our actual performance to the relative percentile performance of the
Peer Bank Group for Total Shareholder Return (TSR) and Return on Equity (ROE)
over a three year measurement period, as discussed below.
No specific formula or weightings are
applied with regard to the allocation of the various pay elements within our
executive compensation program. In general, we place greater emphasis
on variable compensation opportunities, such as the annual cash bonus plan and
long-term equity incentives, over fixed compensation, such as base salary,
because we believe rewarding high levels of performance correlates directly with
increasing shareholder value. The Compensation Committee intends to
continue this approach by providing a greater percentage of the total
compensation opportunity available to our executive officers in the form of
performance based variable compensation opportunities and a smaller percentage
as fixed compensation in the form of base salary. The Company’s
ability to provide NEOs (and other officers and employees) with short-term and
long-term incentive pay may be sharply curtailed by the legal and regulatory
requirements discussed above in relation to CPP participation.
Our Chairman of the Board and Chief
Executive Officer recommends to the Compensation Committee annual base salary
adjustments, annual long-term incentive grants and adjustments to annual bonuses
earned under the Executive Compensation Incentive Plan (the ECIP) based on his
assessment of each NEO’s individual performance. He makes these
recommendations to the Compensation Committee based on his analysis of survey
data provided by our independent compensation consultant and his qualitative
judgments regarding individual performance, including but not limited to the
accomplishment of budgeted financial objectives, effective leadership and
support of the Company’s Strategic Business Initiative. The
Compensation Committee sets the base salary of the Chairman of the Board and
Chief Executive Officer, who is not involved with any aspect of determining his
own pay.
Elements
of Our Compensation Program
Our executive officer compensation
program consists of the following elements: base salary, annual cash
bonus incentives, long-term incentives, retirement benefits, change of control
protection and other benefits, including perquisites.
Base
Salary
We provide base salaries to our
executive officers as compensation for performing their day-to-day
responsibilities. Base salaries are set based on a variety of
factors, including competitive pay levels within our industry and the Peer Bank
Group, internal pay alignment and equity, and an overall assessment of Company
and individual performance. We generally target the median, or
slightly above the median, of base salaries for similar positions paid by
companies in our Peer Bank Group and within our industry as a whole when setting
base salaries of the executive officers. We rely heavily upon the
salary survey data produced by Mercer to determine if the base salaries of our
executives are competitive in the marketplace and also look at the actual
performance of each executive to determine if base salary increases are
warranted. The Compensation Committee may, in its discretion, set an
executive salary above the market median when specific circumstances otherwise
justify a base salary adjustment to a higher level.
In
conjunction with the promotion to their new respective roles in 2008, the
Compensation Committee set the base salary of Chairman and Chief Executive
Officer John C. Hope, III at $750,000 and the base salary of President John M.
Turner, Jr. at $395,000. These salaries were set by the Compensation
Committee based on salary survey information contained in Mercer’s Executive
Remuneration Review which analyzed the salary levels of comparable positions in
the Peer Bank Group as well as other banks in Mercer’s Survey Database of
similar asset size organizations. The other NEOs were not awarded
base salary increases by the Compensation Committee in 2008 as the Mercer survey
data indicated their current salaries were at or slightly above the median
salary for comparable positions. Base salaries for the NEOs, as of
December 31, 2008, were as follows: Mr. Hope, $750,000; Mr. Turner,
$395,000; Mr. Callicutt, $340,000; Mr. Baird, $375,500 and Mr. Milling, $560,000
(retired 12/31/08). Mr. Marks retired as of March 15, 2008 and his
base salary ceased as of his retirement date.
As discussed earlier, there were no
base salary increases approved for NEOs for 2009, except in the case of Mr.
Turner. Effective April 1, 2009, Mr. Turner’s base salary was increased by
$85,000 to $480,000, based on an evaluation of his performance since assuming
the position of President in March 2008. The Compensation Committee
believes that Mr. Turner’s salary is reflective of the value he provides to the
Company through his leadership and performance
ARRA directs the Treasury to adopt
rules to implement the ARRA compensation standards. While ARRA did not
specifically require an absolute limit on executive compensation, such a
restriction was included in the February Guidelines. Whether ARRA and
the rules which implement it will impose an absolute limit on base salary or
total compensation is not clear at this time. The Compensation
Committee will consider any new limits on executive compensation and make
appropriate changes to our executive compensation program as
required.
Annual Incentives
Our annual cash bonus incentive plan,
the Executive Compensation Incentive Plan, or ECIP, provides our executive
officers with an opportunity to earn annual cash bonuses up to a maximum
percentage of their base salary based on achievement of certain pre-established
performance goals. For 2008, the maximum bonus opportunity was 120%
of base salary for our Chief Executive Officer and 90% of base salary for our
other NEOs. No bonuses were paid to NEOs because threshold
performance requirements were not met.
The primary determinant of executive
officer annual incentive compensation is Company performance related to the six
metrics listed below, with emphasis on actual financial performance achieved
versus budgeted financial objectives during the plan year. In
addition, the Compensation Committee takes into consideration individual
performance assessments, effective leadership and other nonfinancial
accomplishments in determining the annual incentive earned by each executive,
with the exception of the Chairman of the Board and Chief Executive
Officer. As the Chairman of the Board and Chief Executive Officer,
Mr. Hope has the ultimate responsibility for the Company’s financial and
operational performance. Therefore, we believe it is appropriate to
base his annual bonus solely on the financial performance of the
Company. We believe that the bonus opportunities provided to all our
NEOs are competitive with bonus opportunities available to executives in our
Peer Bank Group.
Executive officer bonuses are based on
achieving a minimum level of performance relative to Compensation
Committee-approved performance criterion. The 2008 ECIP utilized the
following six performance criterion to measure actual Company performance
against both threshold (minimum) goals and target goals approved by the
Compensation Committee. Each of these performance criteria was
weighted with a maximum value of 16.5 points on a performance matrix scorecard
with the exception of Earnings Per Share, which is weighted 17.5 points to bring
the total to an even 100 points.
Nonperforming Assets
Net Charge-Offs
Efficiency Ratio
Net Interest Margin
Earnings Per Share
Noninterest Income Growth
Points
are awarded under each category based on a comparison of actual performance to
the established goals. We then compare total points earned are then
compared against a Performance Participant Classification Matrix approved by the
Compensation Committee to determine the maximum bonus payable to the
executives. Maximum bonus opportunity is based on a fixed percentage
of the executive’s actual base earnings during the plan year. With
the exception of Mr. Hope, the actual bonus earned by a NEO is subject to
reduction based on a subjective assessment of the individual’s performance by
both the Compensation Committee and the Chairman of the Board and Chief
Executive Officer. The Compensation Committee has no discretion to
increase the bonus amount earned by executives to a level above the maximum
bonus percentage specified on the Performance Participant Classification
Matrix.
To qualify for the minimum level of
bonus payout under the ECIP, a minimum of forty points must be
earned. This would require that at least five of the six minimum
threshold goals be achieved or three of the target goals be achieved
.
The Compensation
Committee believes the specific threshold performance goals under each
performance criterion can be achieved only through sustained high level effort
throughout the course of the year.
The Compensation Committee has approved
the 2009 Executive Compensation Incentive Plan design following extensive
discussions with management. The principal changes to the 2009 ECIP
include replacing the Net Charge-Off performance criterion with a Provision for
Loan Loss performance criterion and replacing the Efficiency Ratio performance
criterion with a performance criterion that compares Expense to Average
Assets. The Compensation Committee believes the new performance
criteria will provide a more effective measurement of credit quality and success
in achieving expense reduction in 2009, a primary operational goal for
2009. There is no change to the maximum bonus opportunity for NEOs
for 2009. However, ARRA directs the Treasury to adopt rules to implement the
ARRA compensation standards, including a prohibition on bonuses and incentives
other than certain restricted stock. As a result, it is likely that
new legislative and regulatory restrictions will preclude the payment of any
bonus or incentive compensation to NEOs during the period in which any
obligation arising from the financial assistance provided under the CPP remains
outstanding.
Long-Term Incentives
Our executive officers received equity
awards in the form of Performance-Based Restricted Stock Units (PBRSUs) and
stock options as part of their 2008 compensation. We believe annual
equity-based awards are an effective form of compensation because they provide
incentives for strong performance leading to enhanced shareholder
value. PBRSUs and stock options encourage executive retention because
they generally vest over a period of three years of continuous service, and they
reward corporate performance because their value is tied to the value of our
common stock. Our annual grants of PBRSUs and stock options place
significant portions of the executive officers’ total annual compensation “at
risk” and in alignment with the long-term interests of our
shareholders.
PBRSUs represent the right to earn and
receive a number of shares of our common stock in the future based on the
Company’s performance and the executive’s continuous employment with the Company
over a three-year performance period. Each executive officer is
awarded a target number of PBRSUs that is subject to both a reduction down to
zero or an increase up to a maximum of 200% of the target award
.
Performance
adjustments to PBRSUs granted prior to 2008 were based on a formula with Return
on Average Assets (ROAA) weighted 60% and Return on Average Equity (ROAE)
weighted 40%. Whitney’s actual performance using these two criteria
was compared to the average of the top five performing banks from the designated
Peer Bank Group in each criterion for the three-year performance
period. The composite percentile ranking was next evaluated against a
Compensation Committee-approved performance award matrix to determine the target
award adjustment factor. For example, PBRSUs awarded to our NEOs in
2006 will vest in 2009, three years from the 2006 award date. These
target awards are subject to a positive performance adjustment of 130% based on
the composite average performance results achieved during the three-year
performance period of 2006 through 2008. PBRSUs have dividend rights
that are paid in cash during the vesting period.
When granting PBRSU awards in 2008, the
Compensation Committee selected TSR and ROE (ROE) as the criteria to determine
the level of performance adjustment, if any, that would be applied to the target
awards when they vest in 2011. The Company’s comparison of actual
performance over the three-year period will now be compared to the entire Peer
Bank Group with TSR weighted 60% and ROE weighted 40%. A new
performance matrix was also approved by the Compensation Committee which will be
utilized to adjust PBRSU awards granted in 2008 and subsequent years to link
performance adjustments to criteria that more directly impact creation of
shareholder value.
In 2008, the Compensation Committee
granted 40,000 PBRSUs to Mr. Hope; 15,000 PBRSUs to Mr. Turner; 11,000 PBRSUs to
Mr. Baird; and 11,000 PBRSUs to Mr. Callicutt. The Compensation
Committee did not grant PBRSUs to either Mr. Marks or Mr. Milling due to their
scheduled retirement in 2008. The Compensation Committee takes into
consideration each employee’s position, base salary and performance when making
its subjective assessment of the appropriate number of PBRSUs to
grant.
Stock options represent the right to
purchase shares of our common stock at a specified price in the
future. Stock options granted to executive officers in 2008 are
subject to a three-year cliff-vesting schedule with an exercise price not less
than the fair market value of our common stock on the date of
grant. The Compensation Committee granted 40,000 nonqualified stock
options to Mr. Hope, 15,000 non-qualified stock options to Mr. Turner and 11,000
nonqualified stock options to Messrs. Callicutt and Baird.
The Compensation Committee has not
historically targeted a specific percentage of total compensation to be provided
to executive officers in the form of equity-based awards. However,
beginning in 2008, the Compensation Committee set the target value of the equity
awards to be granted as a percentage of each executive’s base
salary. We believe this approach will provide us greater control and
consistency relative to the value of equity awards we grant each
year. The number of awards granted to each executive officer other
than the Chairman of the Board and Chief Executive Officer is approved by the
Compensation Committee based on recommendations made by our Chairman of the
Board and Chief Executive Officer. The Compensation Committee based
these decisions are based on a variety of factors, including short and long-term
company performance, the officer’s level of responsibility, an assessment of
individual performance and competitive market data.
The Compensation Committee has had a
consistent practice for 10 years of granting equity awards to our executive
officers and other employees at its regularly scheduled annual meeting in June
of each year. We do not coordinate the timing of grants with the
release of material information.
ARRA directs the Treasury to adopt
rules to implement the ARRA compensation standards, including a prohibition on
bonuses and incentives other than certain restricted stock for SEOs and the next
10 most highly compensated employees. ARRA permits “long-term” restricted stock,
but only to the extent the value of the stock does not exceed one-third of the
total amount of annual compensation of the employee receiving the stock, the
stock does not “fully vest” until after all CPP-related obligations are
satisfied, and any other conditions which the Treasury may specify have been
met. Therefore, the Company’s ability to grant stock options and
PBRSUs cannot be determined until final regulations under ARRA have been
published by the appropriate regulatory bodies. Additionally, because
ARRA appears to allow the Company to grant incentive compensation in the form of
qualifying restricted stock and the February Guidelines appear to exclude
qualifying restricted stock from the $500,000 annual compensation limit imposed
thereunder, the Compensation Committee might consider granting restricted stock
meeting applicable ARRA requirements as part of our long-term incentive program
when such requirements are issued.
Retirement Benefits
Retirement benefits also play an
important role within our overall executive compensation strategy because they
provide financial security at retirement, which encourages executives to remain
in the service of the Company over the long term. We believe that our
retirement program, including the benefits which can be earned based on service,
is comparable to those offered by the companies in our Peer Bank
Group. It continues to be an essential component to ensuring that our
executive compensation program remains competitive.
We
maintain the Whitney National Bank Retirement Plan (the Retirement Plan), a
tax-qualified, defined benefit plan in which a substantial majority of our
employees, including the NEOs, are eligible to participate. Effective
as of December 31, 2008, the Retirement Plan was amended to limit future
participation to employees who, as of December 31, 2008, were vested in plan
benefits (minimum of five years credited service) and whose age and years of
service equaled 50 points. Each of the NEOs, excluding Messrs. Marks
and Milling who retired during 2008, will continue to accrue additional service
and benefits under the Retirement Plan after January 1, 2009.
Employees who did not satisfy these
requirements and new employees hired after January 1, 2009 will now participate
in a Discretionary Profit Sharing Plan that will provide an annual contribution
equal to four percent of base earnings to a profit sharing account maintained in
the employee’s name. To be vested in his or her profit sharing
account, an employee must have a minimum of three years of service as of the
date of separation from the Bank.
In addition, we maintain the following
nonqualified retirement and deferred compensation plans that are available to
our NEOs:
|
·
|
Whitney
Holding Corporation Retirement Restoration
Plan
|
|
·
|
Whitney
Holding Corporation Deferred Compensation
Plan
|
Each of the above retirement plans is
described in more detail beginning on page 29 of this proxy
statement.
Other Benefits and
Perquisites
We provide our executive officers with
Group Variable Universal term life insurance and long-term disability insurance
coverage that provide tax-free benefits. In addition, our NEOs
receive various perquisites, such as club memberships, home security services,
limited personal financial planning services, free parking, and spousal travel
to company-related events and, in the case of Messrs. Hope and Turner, a monthly
auto allowance. Prior to their retirement in 2008, both Mr. Marks and
Mr. Milling were provided a leased vehicle by the Bank for business and personal
use. We believe the perquisites provided to our NEOs are reasonable
in light of industry practices and perquisites available to executive officers
of the companies in our Peer Bank Group. We review the perquisites
provided to our executive officers on a periodic basis to ensure that we are
providing benefits that align with our overall compensation goal of providing
competitive compensation to our executive officers. Although we
believe that the perquisites we provide are reasonable, we will review such
benefits in connection with the adoption of a luxury expenditures policy
required under ARRA once final regulations have been published.
Change in Control
Agreements
The Company has entered into change in
control agreements (which we refer to as Executive Agreements) with certain
executive officers, including the NEOs. In the event that a
qualifying termination occurs within one year prior to or within three years
following a change in control of the Company, the executive is entitled to
receive a severance benefit equal to 300% of the average compensation, excluding
stock-based compensation, paid to the executive during the highest three of the
five calendar years immediately preceding the calendar year in which a change in
control occurs. This level of severance was set by the Compensation
Committee after looking at practices within the Peer Bank Group and the
financial services industry as a whole. The Executive Agreements also
provide for immediate vesting and lapse of any restrictions on outstanding
equity awards, continued coverage under our group health and life plans for a
period of three years and payment of a lump sum equal to the accruals that would
have been made under our retirement plans for the lesser of three years or the
number of years remaining until the executive reaches normal retirement
age. The Company will pay or reimburse the executive for any golden
parachute excise tax payable with respect to such payments.
In accordance with the Letter
Agreements entered into between the Company and each of the NEOs, the potential
benefits under the Executive Agreements are subject to reduction as necessary to
be in compliance with the provisions of EESA in the event a triggering event
were to occur. Under the February Guidelines and ARRA, certain
post-termination payments to the NEOs are prohibited. To the extent
ARRA
and the
rules implementing it prohibit any benefits under the Executive Agreements, the
Company shall comply with any such restrictions.
We believe the Executive Agreements are
an important element of our executive officers’ overall compensation
packages. The Executive Agreements serve to ensure the continued
employment and dedication of our executive officers notwithstanding any personal
concerns they may have regarding their continued employment, either prior to or
following a change in control. These types of agreements, which are
very common in today’s business environment and within our Peer Bank Group, are
also equally important as a recruiting and retention device.
Tax
and Accounting Considerations
Code Section 162(m)
Prior to the amendments enacted by
EESA, Section 162(m) of the Internal Revenue Code placed a limit of $1 million
on the amount of compensation that we could deduct in any year with respect to
any one of our NEOs. This limitation did not apply to compensation
meeting the requirements under Section 162(m) for “qualifying performance-based”
compensation. Section 302(a) of EESA amends Section 162(m) to add Section
162(m)(5) which reduces the tax deduction for executive remuneration from $1
million to $500,000 for CPP participants and eliminates the exception for
qualified performance-based compensation. In connection with our
participation in the CPP, we agreed not to take a federal income tax deduction
for annual compensation paid to any SEO in excess of $500,000. This
limit will continue to apply for so long as Treasury holds any debt or equity
position in the Company. As a result, we are likely to be denied a deduction for
a significant portion of the compensation we pay to our NEOs in 2009 and in any
future year until Treasury no longer retains a position in the
Company. The reduced annual deduction limit also applies under
ARRA.
It is the Compensation Committee’s
intent to maximize deductibility of executive compensation while retaining some
discretion to compensate executives in a manner commensurate with performance
and the competitive landscape for executive talent.
Code Sections 280G and
4999
As
discussed above, we provide certain change in control severance benefits to our
NEOs under the Executive Agreements, including a reimbursement to the executive
for any excise tax imposed under Code Section 4999. Code Section 4999
imposes a 20% excise tax on our NEOs who receive an “excess parachute payment”
and Section 280G disallows the tax deduction to the Company for any excess
parachute payment. An excess parachute payment is the aggregate amount of cash
and other benefits payable upon a change in control that exceeds 2.99 times the
executive’s base amount (average W-2 compensation for five calendar years
preceding the change in control). The IRS imposes the excise tax on
the amount that exceeds the executive’s base amount.
EESA
amends the Section 280G definition of a parachute payment to mean severance
payments paid by reason of an involuntary termination or in connection with
bankruptcy, liquidation, or receivership by the employer in excess of three
times the base amount and EESA also requires a financial institution
participating in the CPP to commit not to provide excess parachute payments
under Section 280G. In connection with our participation in the CPP,
EESA limitations will apply to us for so long as Treasury holds any debt or
equity position in the Company.
The
February Regulations further amend the definition of a parachute payment to mean
one times the base amount and ARRA deems any payment for departure from the
Company to be a parachute payment. Therefore, the Company’s tax
considerations related to Code Sections 280G and 4999 may no longer be relevant
during the period in which any obligation arising from the financial assistance
provided under the CPP remains outstanding, as our ability to provide any change
in control severance benefits to NEOs may be eliminated. When regulations are
issued implementing ARRA, we will determine the effect on the Executive
Agreements.
FAS 123R
With the adoption of the Financial
Accounting Standards Board Statement of Financial Accounting Standards No.123R,
we do not expect accounting treatment of differing forms of equity awards to
vary significantly and, therefore, accounting treatment does not have a material
effect on the selection of forms of compensation.
Stock
Ownership Guidelines
While many of the Company’s executive
officers have significant Company stock holdings, we do not have specific
guidelines regarding stock ownership for our officers. The
Compensation Committee believes that the annual equity-based awards to our NEOs
provide a sufficient opportunity for the executives to acquire Company stock and
to further align their interests with the interests of our
shareholders.
EXECUTIVE
COMPENSATION
|
SUMMARY
COMPENSATION TABLE
|
||||||||
|
Name
and
Principal
Position
|
Year
|
Salary
|
Stock
Awards
(1)
|
Option
Awards
(2)
|
Non-Equity
Incentive
Plan Compen-sation (3)
|
Change
in Pension Value and Nonqualified
Deferred
Compensation
Earnings (4)
|
All
Other
Compen-
sation (5)
|
Total
|
|
John
C. Hope, III
Chairman
of the Board & Chief Executive Officer of the Company and the
Bank
|
2008
2007
2006
|
$698,000
467,500
370,000
|
$658,316
876,913
585,918
|
$109,487
57,570
14,460
|
$ -
377,506
262,700
|
$392,776
222,293
143,688
|
$104,413
366,153
23,242
|
$1,962,992
2,367,935
1,400,008
|
|
Thomas
L. Callicutt, Jr.
Sr.
Executive Vice President & Chief Financial Officer of the Company and
the Bank and Treasurer of the Company
|
2008
2007
2006
|
340,000
332,500
317,500
|
230,754
352,081
306,705
|
49,598
33,650
12,050
|
-
236,075
225,425
|
179,916
139,315
117,932
|
17,651
13,923
12,935
|
817,919
1,107,544
992,547
|
|
John
M. Turner, Jr.
President
of the Company and the Bank
|
2008
|
382,225
|
289,082
|
61,475
|
-
|
108,039
|
110,370
|
951,191
|
|
Robert
C. Baird, Jr.
Sr.
Executive Vice President of the Company and the Bank
|
2008
2007
2006
|
375,550
372,500
370,000
|
402,664
737,230
585,918
|
58,238
40,380
14,460
|
-
224,804
262,700
|
173,746
141,063
128,360
|
29,289
22,851
12,244
|
1,039,487
1,538,828
1,373,682
|
|
R.
King Milling
Former
Vice Chairman of the Company and the Bank
|
2008
2007
2006
|
560,000
560,000
560,000
|
268,029
656,738
575,118
|
24,218
28,920
14,460
|
-
397,600
397,600
|
333,780
201,705
234,721
|
79,145
34,892
29,026
|
1,265,172
1,879,855
1,810,925
|
|
William
L. Marks
Former
Chairman of the Board & Chief Executive Officer of the Company and the
Bank
|
2008
2007
2006
|
187,500
900,000
900,000
|
287,060
2,361,905
2,259,656
|
29,520
120,500
60,250
|
-
855,000
855,000
|
111,082
796,436
748,009
|
44,710
38,802
48,765
|
659,872
5,072,643
4,871,680
|
|
|
(1) The
Stock Awards column shows the dollar amount recognized for financial
statement reporting purposes in 2008 in accordance with FAS 123R
(disregarding for this purpose
the estimate of forfeitures related to service-based vesting
conditions) for awards of PBRSUs granted in 2008 (which are described in
the Grants of Plan-Based Awards table
beginning on page 26 of this proxy statement) and for awards of
PBRSUs granted in 2005, 2006 and 2007 for which we continued to recognize
expense in 2008. The fair value
of the
stock
awards was based on the fair market value as of the grant date of the
stock underlying the awards. Refer to Note 16 to the
Consolidated Financial Statements
included
in our annual report on Form 10-K for the year ended December 31, 2008 for
additional information on these awards during the
year.
|
|
|
Under
provisions of a Performance-Based Restricted Stock Agreement, the target
award of 55,000 shares granted to Mr. Marks in 2005 was prorated to 54,479
shares due to his retirement on March 15, 2008 before the scheduled
vesting date. This prorated target award was increased to
78,242 shares based on the Company’s achievement of performance goals over
a three-year performance period ending December 31, 2007, and such shares
became vested on June 13, 2008.
|
|
|
Under
provisions of a Performance-Based Restricted Stock Unit Agreement, the
target award of 60,000 PBRSUs granted to Mr. Marks in 2006 was a prorated
to 34,302 PBRSUs due to his retirement. This prorated target award was
increased to 44,593 PBRSUs based on the Company’s achievement of
performance goals over a three-year performance period ending December 31,
2008, and such PBRSUs will convert to shares of common stock on June 28,
2009.
|
|
|
Under
provisions of a Performance-Based Restricted Stock Unit Agreement, Mr.
Milling’s target award of 20,000 PBRSUs granted in 2006 was prorated to
16,748 PBRSUs due to his retirement on December 31, 2008. This prorated
target award was increased to 21,772 PBRSUs based on the Company’s
achievement of performance goals over a three-year performance period
ending December 31, 2008, and such PBRSUs will convert to shares of common
stock on June 28, 2009.
|
|
|
The
Stock Awards column includes expense related to prorated target awards
only up to the retirement dates of Messrs. Marks and
Milling. Expense related to changes in the estimate of the
performance shares and units are included for the
year.
|
|
(2)
|
The
Option Awards column shows the dollar amount recognized for financial
statement reporting purposes in 2008 in accordance with FAS 123R for
options granted in 2006, 2007 and 2008. The fair value of the
stock options was estimated as of the grant dates using the Black-Sholes
option-pricing model. Refer to Note 16 to the Consolidated
Financial Statements included in our Annual Report on Form 10-K for the
year ended December 31, 2008 for additional information on these options,
including the assumptions used in determining their fair
value.
|
|
|
On
June 28, 2006, Messrs. Marks and Milling were awarded 50,000 and 12,000
stock options, respectively, with a scheduled vesting date of June 28,
2009. Under terms of the award, a pro rata number of options
became immediately exercisable upon their respective retirements and
remained exercisable for 90 days. Mr. Marks vested in 28,585
options and forfeited 21,415 options, when he retired on March 15,
2008. Mr. Milling vested in 10,049 options and forfeited 1,951
options when he retired on December 31,
2008.
|
|
(3)
|
The
Non-Equity Incentive Plan Compensation column reflects the fact that the
NEOs did not earn annual cash bonuses in 2008 because the Company did not
achieve the minimum level of performance required by the
ECIP. Refer to the discussion of “Annual Incentives” in the
Compensation Discussion and Analysis on page 19 of this proxy statement
for additional information.
|
|
(4)
|
The
Change in Pension Value and Nonqualified Deferred Compensation Earnings
column reflects the aggregate of the increase in actuarial present values
of each of the NEO’s accumulated benefits under our qualified Retirement
Plan and our nonqualified Retirement Restoration
Plan.
|
|
(5)
|
Amounts
for 2008 in the All Other Compensation column include premiums for group
life and long-term disability insurance, matching contributions to the
401(k) plan and reimbursements for taxes on certain perquisites for all
NEOs. Reimbursements for taxes amounted to $22,883 for Mr. Hope
and $28,699 for Mr. Turner and were less than $10,000 each for Messrs.
Callicutt, Baird, Milling and Marks. For Messrs. Marks and
Milling who retired in 2008, the column also includes the value of
furnished offices in the Company’s headquarters, parking spaces for three
years and part-time secretarial support for one year. We valued
this benefit for Messrs. Marks and Milling as having an aggregate
incremental cost to the Company of $40,425 per executive, for the three
year period, by combining the fair market rental value of the furnished
office space, the fair market cost for reserved parking spaces, the
purchase cost of standard office equipment and salary expense of the
part-time secretary.
|
|
|
The
amounts also reflect the value of certain perquisites and other personal
benefits the Company makes available to its executive officers, including
club memberships, home security services, personal financial planning
services, executive wellness checkups and reimbursements of travel,
accommodations and other expenses of family members who accompanied
executive officers on business trips. In 2008 the Company
reimbursed Messrs. Hope and Turner for the cost of their country club
memberships in the amounts of $35,000 and $34,223 respectively.
Additionally, the Company provided Mr. Milling the use of a leased
automobile, provided Mr. Hope with an automobile allowance of $30,000 and
provided Mr. Turner with an automobile allowance. No other
individual perquisites exceeded
$25,000.
|
|
2008
GRANTS OF PLAN-BASED AWARDS
|
||||||||||
|
Name
|
Grant
Date
|
Estimated
Possible Payouts
Under
Non-Equity Incentive Plan Awards (1)
|
Estimated
Future Payouts Under Equity Incentive Plan Awards (2)
|
All
Other Option Awards:
Number
of Securities
Underlying
Options
(3)
|
Exercise Price
of Option Awards
|
Grant
Date Fair Value of Stock and Option Awards
(4)
|
||||
|
Thres-
hold
|
Target
|
Maxi-
mum
|
Thres-hold
Number
of
Shares
|
Target
Number
of Shares
|
Maximum
Number
of
Shares
|
|||||
|
John
C. Hope, III
|
1/22/08
|
$375,000
|
$660,000
|
$900,000
|
||||||
|
6/24/08
|
10,000
|
40,000
|
80,000
|
$750,000
|
||||||
|
6/24/08
|
40,000
|
$18.77
|
139,200
|
|||||||
|
Thomas
L. Callicutt, Jr.
|
1/22/08
|
129,200
|
224,400
|
306,000
|
||||||
|
6/24/08
|
2,750
|
11,000
|
22,000
|
206,470
|
||||||
|
6/24/08
|
11,000
|
18.77
|
38,280
|
|||||||
|
John
M. Turner, Jr.
|
1/22/08
|
150,100
|
260,700
|
355,500
|
||||||
|
6/24/08
|
3,750
|
15,000
|
30,000
|
281,550
|
||||||
|
6/24/08
|
15,000
|
18.77
|
52,200
|
|||||||
|
Robert
C. Baird, Jr.
|
1/22/08
|
142,709
|
247,863
|
337,995
|
||||||
|
6/24/08
|
2,750
|
11,000
|
22,000
|
206,470
|
||||||
|
6/24/08
|
11,000
|
18.77
|
38,280
|
|||||||
|
R.
King Milling
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
William
L. Marks
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
|
(1)
|
Amounts
represent estimated possible payouts of annual incentive bonuses under our
ECIP. The threshold amount is the payout corresponding to the
minimum performance level under the ECIP that would result in the payment
of an executive bonus. The target amount reflects the payout
corresponding to the estimate of the level of achievement of performance
goals at the date of the award. The maximum amount is the
payout corresponding to the maximum performance level under the
ECIP. No incentive bonuses were earned by the NEOs in 2008
because the Company did not achieve the minimum level of performance
required by the ECIP. Refer to the discussion of “Annual
Incentives” in the “Compensation Discussion and Analysis” on page 19 of
this proxy statement for additional
information.
|
|
(2)
|
Amounts
represent the estimated number of PBRSUs to be earned based on the
Company’s composite performance percentage compared to our Peer Bank Group
in the categories of TSR and ROE for the three-year period ending December
31, 2010. The threshold number of shares is the award
corresponding to the minimum performance level under the plan that would
result in some PRSUs being earned. The maximum number of shares
is the award corresponding to the maximum performance level under the
ECIP. Each earned PRSU represents a right to receive one share of our
common stock on June 24, 2011 (or earlier upon a change in control of the
Company) provided the executive is still employed by the Company (or has
incurred a prior termination of employment due to death, disability,
retirement or involuntary severance without cause). PRSUs have
dividend-equivalent rights payable in cash if dividends are paid on our
common stock. Refer to the discussion of “Long-Term Incentives”
in the “Compensation Discussion and Analysis” on page 20 of this proxy
statement for additional
information.
|
|
(3)
|
Amounts
reflect the number of options to purchase shares of our common stock
awarded in 2008 to each NEO under the Company’s Long-Term Incentive
Plan. The options vest three years from the date of grant (or
earlier upon a change in control of the Company) and expire 10 years from
the date granted.
|
|
(4)
|
Represents
the grant date fair value of the awards determined in accordance with FAS
123R.
|
|
OUTSTANDING
EQUITY AWARDS AT DECEMBER 31, 2008
|
||||||||
|
Option
Awards
|
Stock
Awards
|
|||||||
|
Name
|
Number
of Securities Underlying Unexercised Options Exercisable
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
Option
Exercise Price
|
Option
Expira-tion Date
|
Number
of Units That Have Not Vested
(4)
|
Market
Value of Units That Have Not Vested (5)
|
Equity
Incentive Plan Awards: Number of Unearned Units That Have Not
Vested
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Units
That Have Not Vested (5)
|
|
John
C. Hope, III
|
16,873
|
$18.07
|
6/09/09
|
26,000
|
$415,740
|
36,000(6)
|
$1,215,240
|
|
|
16,873
|
16.53
|
6/13/10
|
40,000(7)
|
|||||
|
16,875
|
18.58
|
6/12/11
|
||||||
|
21,000
|
22.58
|
6/11/12
|
||||||
|
21,000
|
22.44
|
6/10/13
|
||||||
|
21,000
|
28.86
|
6/15/14
|
||||||
|
10,000
|
31.59
|
6/14/15
|
||||||
|
12,000
(1)
|
35.41
|
6/28/16
|
||||||
|
30,000
(2)
|
28.76
|
7/10/17
|
||||||
|
40,000
(3)
|
18.77
|
6/24/18
|
||||||
|
Thomas
L. Callicutt, Jr.
|
3,375
|
$18.07
|
6/09/09
|
9,750
|
$155,903
|
12,000
(6)
|
$367,700
|
|
|
13,498
|
16.53
|
6/13/10
|
11,000
(7)
|
|||||
|
13,500
|
18.58
|
6/12/11
|
||||||
|
16,875
|
22.58
|
6/11/12
|
||||||
|
16,875
|
22.44
|
6/10/13
|
||||||
|
16,875
|
28.86
|
6/15/14
|
||||||
|
10,000
|
31.59
|
6/14/15
|
||||||
|
10,000 (1)
|
35.41
|
6/28/16
|
||||||
|
10,000 (2)
|
28.76
|
7/10/17
|
||||||
|
11,000 (3)
|
18.77
|
6/24/18
|
||||||
|
John
M. Turner, Jr.
|
3,375
|
$18.07
|
6/09/09
|
9,750
|
$155,903
|
18,000
(6)
|
$
527,670
|
|
|
3,375
|
16.53
|
6/13/10
|
15,000
(7)
|
|||||
|
3,375
|
18.58
|
6/12/11
|
||||||
|
7,500
|
22.58
|
6/11/12
|
||||||
|
7,500
|
22.44
|
6/10/13
|
||||||
|
7,500
|
28.86
|
6/15/14
|
||||||
|
10,000
|
31.59
|
6/14/15
|
||||||
|
10,000
(1)
|
35.41
|
6/28/16
|
||||||
|
15,000
(2)
|
28.76
|
7/10/17
|
||||||
|
15,000
(3)
|
18.77
|
6/24/18
|
||||||
|
Robert
C. Baird, Jr.
|
16,873
|
$18.07
|
6/09/09
|
26,000
|
$
415,740
|
14,000
(6)
|
$
399,750
|
|
|
16,873
|
16.53
|
6/13/10
|
11,000
(7)
|
|||||
|
16,875
|
18.58
|
6/12/11
|
||||||
|
21,000
|
22.58
|
6/11/12
|
||||||
|
21,000
|
22.44
|
6/10/13
|
||||||
|
21,000
|
28.86
|
6/15/14
|
||||||
|
10,000
|
31.59
|
6/14/15
|
||||||
|
12,000
(1)
|
35.41
|
6/28/16
|
||||||
|
12,000
(2)
|
28.76
|
7/10/17
|
||||||
|
11,000
(3)
|
18.77
|
6/24/18
|
||||||
|
R.
King Milling
|
6,535
|
$16.53
|
3/31/09
|
21,772
|
$
348,134
|
-
|
-
|
|
|
17,535
|
28.86
|
3/31/09
|
||||||
|
10,000
|
31.59
|
3/31/09
|
||||||
|
10,049
|
35.41
|
3/31/09
|
||||||
|
William
L. Marks
|
-
|
44,593
|
$713,042
|
-
|
-
|
|||
|
(1)
|
Options
were awarded on June 28, 2006 and become exercisable on June 28, 2009 (or
earlier upon a change in control of the Company) provided the executive
officer is still employed. A prorated number of options can
vest and become immediately exercisable upon a NEO’s retirement, death or
disability within the three-year period before
vesting.
|
|
(2)
|
Options
were awarded on July 10, 2007 and become exercisable on July 10, 2010 (or
earlier upon a change in control of the Company) provided the executive
officer is still employed. A prorated number of options can
vest and become immediately exercisable upon a NEO’s retirement, death or
disability within the three-year period before
vesting.
|
|
(3)
|
Options
were awarded on June 24, 2008 and become exercisable on June 24, 2011 (or
earlier upon a change in control of the Company) provided the executive
officer is still employed. A prorated number of options can
vest and become immediately exercisable upon a NEO’s retirement, death or
disability within the three-year period before
vesting.
|
|
(4)
|
PBRSUs
will vest and convert to shares on June 28,
2009.
|
|
(5)
|
Market
value is calculated based on the closing price of our common stock on
December 31, 2008 of $15.99.
|
|
(6)
|
Reflects
awards of PBRSUs that are earned based on the Company’s achievement of
ROAA and ROAE relative to the Peer Bank Group over a three-year
performance period ending on December 31, 2009 and that vest on July 10,
2010. The table reflects the number of PBRSUs that would have
been earned based on the Company’s actual performance levels for 2007 and
2008.
|
|
(7)
|
Reflects
awards of PBRSUs that are earned based on the Company’s achievement of TSR
and ROE relative to our Peer Bank Group over a three-year performance
period ending on December 31, 2010 and that vest on June 24,
2011. The table reflects the number of PBRSUs that the NEOs
would have been earned based on the Company’s actual performance levels
for 2008.
|
|
2008
OPTION EXERCISES AND STOCK VESTED
|
||||
|
Name
|
Option
Awards
|
Stock
Awards
|
||
|
Number
of Shares
Acquired
on Exercise
|
Value
Realized
on
Exercise (1)
|
Number
of Shares
Acquired
on Vesting
|
Value
Realized
on
Vesting (2)
|
|
|
John
C. Hope, III
|
-
|
$ -
|
18,600
|
$ 354,702
|
|
Thomas
L. Callicutt, Jr.
|
-
|
-
|
8,525
|
162,572
|
|
John
M. Turner, Jr.
|
-
|
-
|
8,525
|
162,572
|
|
Robert
C. Baird, Jr.
|
-
|
-
|
18,600
|
354,702
|
|
R.
King Milling
|
12,189
|
86,506
|
18,600
|
354,702
|
|
William
L. Marks
|
-
|
-
|
78,242
|
1,492,075
|
|
(1)
|
Reflects
the excess of the fair market value of the shares at the time of exercise
over the exercise price of the
options.
|
|
(2)
|
Reflects
the fair market value of the underlying shares as of the vesting
date.
|
|
PENSION
BENEFITS
|
||||
|
Name
|
Plan
Name
|
Number
of Years of Credited Service
|
Present
Value of
Accumulated
Benefit
|
Payments
During
2008
|
|
John
C. Hope, III
|
Retirement
Plan
|
14
|
$ 421,970
|
-
|
|
Retirement
Restoration Plan
|
14
|
995,524
|
-
|
|
|
Thomas
L. Callicutt, Jr.
|
Retirement
Plan
|
10
|
345,249
|
-
|
|
Retirement
Restoration Plan
|
10
|
474,330
|
-
|
|
|
John
M. Turner, Jr.
|
Retirement
Plan
|
14
|
198,080
|
-
|
|
Retirement
Restoration Plan
|
14
|
194,383
|
-
|
|
|
Robert
C. Baird, Jr.
|
Retirement
Plan
|
13
|
368,823
|
-
|
|
Retirement
Restoration Plan
|
13
|
664,113
|
-
|
|
|
R.
King Milling
|
Retirement
Plan
|
24
|
902,040
|
-
|
|
Retirement
Restoration Plan
|
24
|
3,026,910
|
-
|
|
|
William
L. Marks
|
Retirement
Plan
|
18
|
706,059
|
-
|
|
Retirement
Restoration Plan
|
18
|
4,735,886
|
-
|
|
The Bank’s Retirement Plan is a
tax-qualified, funded, noncontributory defined benefit pension
plan. Pension benefits accrue through the employee’s career and are
based upon the employee’s years of service and the employee’s earnings during
the highest five-year consecutive period during the 10 years preceding
retirement. The plan formula also contains a partial offset for
social security income attributable to earnings at the Bank. Earnings
include both salary and cash incentives earned under the ECIP. Under
Internal Revenue Service (IRS) regulations, the maximum amount of earnings that
could be considered in 2008 was $230,000 and the maximum amount in 2009 will be
$245,000.
Benefits under the Bank’s Retirement
Plan at normal retirement age (65) are based on the following formula: the
number of years of service (up to a maximum of 35) multiplied by 1.83% of final
average earnings, reduced by 1.60% of the primary social security
benefit. The number of years of credited service represents actual
years of service. Early retirement benefits, which are subject to an
actuarial reduction of 5% per year for each year before age 65 are available to
employees at age 55 who have at least 10 years of credited
service. Messrs. Hope, Callicutt and Baird are currently eligible for
early retirement. Benefits are payable in the form of an annuity and
are paid from a trust fund funded solely by Bank contributions. The
present value of the accumulated benefit is calculated assuming a straight life
annuity option.
The maximum annual benefit that the
Retirement Plan can pay under IRS guidelines is $185,000 for 2008 and $195,000
for 2009.
The Bank also sponsors an unfunded
nonqualified Retirement Restoration Plan that provides a supplemental pension
benefit out of general assets substantially equal to the difference between the
amount that would have been paid under the qualified Retirement Plan, in the
absence of statutory provisions limiting the amount of annual earnings that can
be considered when computing benefits, and the amount that can be paid annually
to a retiree.
In the table above, the present value
of the accrued benefit with respect to each NEO under both the Retirement Plan
and the Retirement Restoration Plan is based on assumptions described in
Footnote 15 to the Consolidated Financial Statements included in our Annual
Report on Form 10-K for the year ended December 31, 2008.
|
2008
NONQUALIFIED DEFERRED COMPENSATION
|
|||||
|
Name
|
Executive
Contributions in 2008
|
Registrant
Contributions in 2008
|
Aggregate
Earnings (Losses) in 2008
|
Aggregate
Withdrawals/
Distributions
|
Aggregate
Balance at December 31, 2008
|
|
John
C. Hope, III
Deferred
Compensation Plan
|
-
|
-
|
$ (238,206)
|
-
|
$ 402,848
|
|
Thomas
L. Callicutt, Jr.
Deferred
Compensation Plan
|
-
|
-
|
(33,904)
|
-
|
65,727
|
|
John
M. Turner, Jr.
Deferred
Compensation Plan
|
$ 44,410
|
-
|
(49,292)
|
-
|
88,144
|
|
Robert
C. Baird, Jr.
Deferred
Compensation Plan
|
-
|
-
|
-
|
-
|
-
|
|
R.
King Milling
Deferred
Compensation Plan
|
-
|
-
|
(44,460)
|
38,940
|
88,594
|
|
William
L. Marks
Deferred
Compensation Plan
|
-
|
-
|
(1,877,452)
|
387,472
|
2,916,908
|
The Company’s Deferred Compensation
Plan is a nonqualified deferred compensation plan pursuant to which the NEOs may
elect to defer up to 25% of their base salary and 100% of their annual incentive
bonus. Deferred amounts are credited with investment gains or losses
based on the rate of return of available mutual funds selected by the executive
that the executive may change at any time. The Company does not make
contributions to participant accounts under the Deferred Compensation
Plan. Distributions are payable in the form of a lump sum or in
installments over a five- or ten-year period beginning on the date selected in
advance by the participant.
Potential
Payments Upon Termination Or Change In Control
As noted
in the Compensation Discussion and Analysis section of this proxy statement, we
have entered into Executive Agreements with all executive officers, including
our NEOs. These agreements provide for payments to each NEO in the
event of his qualifying termination if it occurs within one year before or three
years after a change in control of the Company.
A change in control of the Company is
defined in the Executive Agreements to mean (i) the consummation of certain
types of transactions, including mergers and the sale of all or substantially
all of our assets or stock, (ii) acquisition by any person or entity of the
beneficial ownership of securities representing 20% or more of the voting power
of our then outstanding securities without approval of the Board of Directors,
or (iii) a change in members of the Board that results in the exclusion of the
continuing Board.
A qualifying termination means the
occurrence of one of the following events in connection with a change in
control: (i) a diminution in the nature and scope of the NEO’s authorities or
duties, a change in his or her reporting responsibilities or titles or the
assignment of any NEO to any duties or responsibilities that are inconsistent
with his position, duties, responsibilities or status immediately preceding such
assignment, (ii) a reduction in the NEO’s compensation during the covered
period, (iii) the transfer of a NEO to a location requiring a change in his
residence or a material increase in the amount of travel ordinarily required of
the NEO in the performance of his duties, or (iv) a good faith determination by
the NEO that his position, duties, responsibilities or status has been affected
in a manner that prohibits the effective discharge of any such duties or
responsibilities.
The payment obligations of the Company
upon a qualifying termination of a NEO are estimates calculated under the terms
the Executive Agreements. The calculations assume that the
termination took place on December 31, 2008 and that the price per share of our
common stock is the closing market price on such date of $15.99.
Additionally,
the calculations have been adjusted in order to comply with the legislation and
regulations applicable to CPP participants. SEC regulations require us to report
compensation that would have been paid had a termination event occurred on the
last day of our fiscal year. Therefore, the discussion and figures
below are limited by TARP regulations only to the extent they applied to us on
December 31, 2008.
As of
December 31, 2008, EESA prohibited any “golden parachute” payments in connection
with an involuntary termination of employment made to our NEOs to the extent the
value equals or exceeds an amount three times the SEO’s “base amount” (generally
defined as the five-year average of taxable compensation). The NEOs agreed to
this reduction under the Letter Agreements entered into with the Company in
December 2008 and the reduction is reflected in the following
table.
The table
does not reflect the provision of ARRA prohibiting
any
severance payments
because ARRA was not in effect on December 31, 2008. We will assess the impact
of this provision on our Executive Agreements once the ARRA compensation
standards are established and we will take all actions necessary to comply with
such standards.
No
disclosure is provided for Messrs. Marks and Milling due to their respective
retirements on March 15, 2008 and December 31, 2008.
|
POTENTIAL
PAYMENTS UPON CHANGE IN CONTROL
|
||||||||
|
Name
|
Severance
Payment
(1)
|
Executive
Compensa-tion Plan Bonus
(2)
|
Vesting
of Unvested Equity Awards
(3)
|
Retirement
Plan Enhancement
(4)
|
Benefit
Continu-ation
(5)
|
Other
Benefits and Perquisites
(6)
|
Excise
Tax Gross-up
(7)
|
Total
Payments
|
|
John
C. Hope, III
|
$
-
|
$537,967
|
$1,245,632
|
$1,101,923
|
$59,516
|
$54,400
|
$
-
|
$2,999,438
|
|
Thomas
L. Callicutt, Jr.
|
857,020
|
306,000
|
379,167
|
400,417
|
25,568
|
54,400
|
-
|
2,022,572
|
|
John
M. Turner, Jr.
|
299,840
|
355,500
|
539,067
|
286,126
|
94,906
|
54,400
|
-
|
1,629,839
|
|
Robert
C. Baird, Jr.
|
1,531,871
|
337,995
|
436,538
|
304,259
|
71,863
|
54,400
|
-
|
2,736,926
|
|
(1)
|
The
Executive Agreements provide that the Company will pay severance amount
equal to 300% of the average of all compensation paid to the NEO for the
highest three of five calendar years immediately preceding the calendar
year in which the change in control occurs, including the amount of any
compensation the NEO has elected to defer. Compensation related
to equity awards, such as restricted stock, restricted stock units and the
exercise of stock options is excluded from the calculation of this
obligation. The reduction required by EESA has been allocated
first to the severance payments in this column rather than allocating the
reduction among other benefits and payments shown in the
table. In the case of Mr. Hope, the allocation reduced his
severance amount to zero with the remaining amount of the required
reduction allocated to his bonus.
|
|
(2)
|
The
Company would pay to the NEO an amount to which the NEO would have been
entitled to receive under the Company’s ECIP for the calendar year in
which a change in control occurs. We would determine the amount
as though the Company and the NEO achieved all applicable performance
goals. In the case of Mr. Hope, the portion of the total
reduction required by EESA that could not be allocated to his severance
payment was allocated to his bonus.
|
|
(3)
|
All
outstanding restricted stock units and stock options become fully vested
upon a change in control. The performance cycle for PBRSUs
would be deemed to terminate as of the December 31, 2008 and the value of
the performance-based awards earned would be based on the higher of the
target award or the actual performance of the Company for the shortened
performance period. We assigned no value to stock options
outstanding because the exercise prices were higher than the fair market
value of the underlying shares at December 31,
2008.
|
|
(4)
|
The
present value of the additional benefits that would have accrued under the
Retirement Plan and the Retirement Restoration Plan during the lesser of
(i) three years following the date of his termination, or (ii) the number
of years until the NEO reaches normal retirement age (65) would be paid to
the NEO.
|
|
(5)
|
Health
and welfare benefits would be provided to the NEO under the plans,
policies or programs the Company maintains for purposes of providing
medical and dental benefits and life and disability insurance to other
executives of the Company with comparable duties. Coverage
would end on the earlier of (i) the NEO’s coverage under Medicare Part B
or (ii) the date on which the NEO is covered under group plans maintained
by another employer. The value of this coverage is measured by
the present value of the monthly payments the Company would make for
premiums paid for the benefits. We have discounted values back
to December 31, 2008.
|
|
(6)
|
The
Company would pay an amount to the NEO equal to the contributions to the
Company’s 401(k) Plan that would have been made for the lesser of (i)
three years following the date of the change in control or (ii) the number
of years until the NEO’s normal retirement age under the 401(k)
plan. Also included in this amount is the value of club
memberships that would be transferred to each NEO under the Executive
Agreements.
|
|
(7)
|
The
NEOs are also eligible to receive a “gross-up” payment from the Company to
the extent that they incur excise taxes under Section 4999 of the Code
under the Executive Agreements. However, as of December 31,
2008, the executives would not receive any tax gross-ups since
restrictions under EESA limit change in control severance benefits to less
than three times the executive’s “base amount,” and therefore, no benefits
would incur excise taxes).
|
Compensation
of Directors
Cash
Compensation.
All Company directors are also directors of the
Bank. During 2008, the Bank paid its nonemployee directors annual
retainer fees of $18,000 plus $1,500 for each Board meeting attended and $1,250
for each committee meeting attended with a maximum of two paid committee
meetings per day. The Bank paid additional annual retainers to
committee chairmen as follows: Audit Committee, $10,000, Compensation
Committee, $7,500 and Nominating Committee, $2,500. The Company does
not pay nonemployee directors additional fees for attendance at meetings of the
Company’s Board and committees that meet on the same days as their Bank
counterparts. Messrs. Bullard and Cooper, who live in Point Clear,
Alabama, serve as the Board’s representatives on an advisory board in
Mobile. Mr. Nickelsen, who lives in Pensacola, Florida, serves as the
Board’s representative on an advisory board in Pensacola. Their
participation permits them to give guidance to, and assess the performance of,
Whitney’s regional management in those markets. They receive per diem
compensation and, in Florida, an annual retainer for this participation, which
vary depending on the market, but which are less than the per diem and annual
retainer amounts they receive for attending the Company’s Board and committee
meetings. In 2008, Messrs. Bullard, Cooper and Nickelsen received
aggregate amounts of $5,000, $2,500 and $3,650, respectively, for their service
on advisory boards, which amounts are included in the “Fees Earned” or “Paid in
Cash” columns in the 2008 Director Compensation table below.
Equity
and Deferred Compensation
.
Pursuant to the
terms of the Company’s 2001 Directors’ Compensation Plan, each nonemployee
director received annually an award of 675 shares of common stock and 4,500
stock options. Directors could elect to defer all or part of their
annual stock awards and fees. Any deferred amounts were credited to a
bookkeeping account maintained for each director. Pursuant to the
terms of the Company’s 2001 Directors’ Compensation Plan as amended in July
2008, each nonemployee director will receive annually an award of our common
stock shares based on a value of $30,000. The number of actual shares
issued is based on the closing price of our common stock on the date of the
award. Directors may elect to defer all or part of their annual stock awards,
retainer and fees. Directors can allocate deferred amounts among an
equity fund, S&P 500 Index Fund, a fixed income fund, a money market fund
and credits representing shares of the Company’s common
stock. Earnings and losses based on the performance of the selected
investments are credited daily to each director’s account. Plan
benefits are distributed as designated by each director, which is usually after
the director is no longer on the Board. Benefits are equal to the
amount credited to a director’s account at the time of
distribution. Amounts credited to the Company’s common stock fund are
distributed in shares of common stock.
|
2008
DIRECTOR COMPENSATION
|
||||
|
Name
|
Fees Earned or Paid in
Cash
(1)
|
Stock
Awards
(2)
|
Option Awards
(3)
|
Total
|
|
Joel
B. Bullard, Jr.
|
$64,000
|
$12,352
|
$15,390
|
$ 91,742
|
|
Angus
R. Cooper II
|
75,875
|
12,352
|
15,390
|
103,617
|
|
Richard
B. Crowell
|
65,250
|
12,352
|
15,390
|
92,992
|
|
William
A. Hines
|
57,250
|
12,352
|
15,390
|
84,992
|
|
Alfred
S. Lippman
|
62,750
|
12,352
|
15,390
|
90,492
|
|
Michael
L. Lomax
|
46,500
|
12,352
|
15,390
|
74,242
|
|
Eric
J. Nickelsen
|
86,500
|
12,352
|
15,390
|
114,242
|
|
John
G. Phillips
(4)
|
13,375
|
-
|
-
|
13,375
|
|
Kathryn
M. Sullivan
|
54,750
|
12,352
|
15,390
|
82,492
|
|
Dean
E. Taylor
|
65,250
|
12,352
|
15,390
|
92,992
|
|
Thomas
D. Westfeldt
|
80,250
|
12,352
|
15,390
|
107,992
|
|
(1)
|
Includes
amounts deferred pursuant to the Company’s 2001 Directors’ Compensation
Plan, described above.
|
|
(2)
|
Reflects
the grant date fair value of an award of 675 shares of common stock, based
on the closing price of the Company’s common stock ($18.30) on the date of
grant (June 30, 2008). These awards were fully vested upon
grant, and therefore 100% of the grant date fair value was recognized as
an expense for financial statement reporting purposes for 2008 in
accordance with SFAS 123R. The fair value of the stock awards
was based on the fair market value of our common stock as of the grant
date. The total number of shares of common stock owned by each
of the directors is set forth in the “Security Ownership of Certain
Beneficial Owners and Management” section on page 7 of this proxy
statement.
|
|
(3)
|
Reflects
the grant date fair value of an award of 4,500 stock
options. These awards were fully vested upon grant, and
therefore 100% of the grant date fair value was recognized as an expense
for financial statement reporting purposes for 2008 in accordance with
SFAS 123R. The fair value of the stock options was estimated as
of the grant dates using the Black-Scholes option-pricing
model. The assumptions made in valuing the options include a
weighted-average expected annualized volatility of 24.38%, a
weighted-average option life of seven years, an expected annual dividend
yield of 4.00% and a weighted-average risk-free interest rate of
3.78%. The aggregate number of options outstanding and held by
each director as of December 31, 2008 is set forth in the “Security
Ownership of Certain Beneficial Owners and Management” section on
page
7 of
this proxy statement.
|
|
(4)
|
Mr.
Phillips retired from the Board on April 23,
2008.
|
EQUITY
COMPENSATION PLAN INFORMATION
The
following table summarizes certain information regarding the Company’s equity
compensation plans as of December 31, 2008. Our shareholders
previously approved the underlying compensation plans, which are more fully
described in Note 16 to the Consolidated Financial Statements included in our
Annual Report on Form 10-K for the year ended December 31, 2008.
|
(a)
|
(b)
|
(c)
|
|
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|
Equity
compensation plans
approved
by shareholders
|
2,650,288
(1)
|
$25.55
(2)
|
2,224,159
(3)
|
|
Equity
compensation plans
not
approved by shareholders
|
--
|
--
|
--
|
|
Total
|
2,650,288
|
$25.55
|
2,224,159
|
|
(1)
|
The
total includes an aggregate of 2,198,288 shares that can be issued on the
exercise of options held by employees. 392,788 shares are
subject to options granted under the 2007 Long-Term Compensation Plan
(2007 LTCP), 913,031 shares are subject to options granted under the 2004
Long-Term Incentive Plan (2004 LTIP), and 892,469 shares are subject to
options granted under the 1997 Long-Term Incentive Plan (1997
LTIP). The total also includes an aggregate of 369,000 shares
that can be issued on the exercise of options held by nonemployee
directors of the Company. These options were granted under the
Directors’ Compensation Plan, as amended and
restated.
|
|
|
Also
included in the total are 83,000 common stock equivalent units held in
deferred compensation accounts maintained for certain of the Company’s
directors, which must eventually be distributed as common shares of the
Company. As allowed under the Directors’ Compensation Plan,
certain nonemployee directors have deferred receipt of annual stock awards
and fees, and the value of these deferrals has been credited to a
bookkeeping account maintained for each director. The value of
an account is indexed to the performance of one or more investment options
specified in the plans. One of the investment options is
equivalent units of the Company’s common stock. This option is
mandatory for deferred stock awards and was extended by the Directors’
Compensation Plan to deferred compensation account balances maintained
under a prior deferred compensation plan. The number of common
stock equivalent units allocated to a director’s account for each deferral
is based on the fair market value of the Company’s common stock on the
deferral date. The common stock equivalent units are deemed to
earn any dividends declared on the Company’s common stock, and additional
units are allocated on the dividend payment date based on the stock’s fair
market value.
|
|
(2)
|
Represents
the weighted-average exercise price of options granted under the 2007
LTCP, the 2004 LTIP, the 1997 LTIP, and the Directors’ Compensation
Plan. It does not include the per share price of common stock
equivalent units held in deferred compensation accounts for the benefit of
nonemployee directors. These units are allocated to accounts
based on the fair market value of the Company’s common stock on the date
of each account transaction.
|
(3) Under
the 2007 LTCP, the Company is authorized to make awards with respect to a
maximum of 3,200,000 shares of its common stock. The 2007 LTCP
provides for the award
of options, stock appreciation rights, restricted stock and restricted stock
units that represent common stock, as well as other stock-based awards that the
Compensation
Committee deems consistent with the plan’s purposes. Of the total
shares authorized, the Company can make awards with respect to a maximum of
2,400,000 shares in a form of
full-value awards, i.e., awards other than in the form of stock options or stock
appreciations rights and which are settled in stock. A maximum of
1,000,000 shares may be issued
upon exercise of incentive stock options awarded under the 2007
LTCP. At December 31, 2008, the Company could make future awards
under the 2007 LTCP with respect to
1,882,702 shares of its common stock, of which 1,475,490 can be issued pursuant
to full-value
|
|
awards. No
incentive stock options had been awarded under the 2007 LTCP as of
December 31, 2008. The total shares available for award has
been reduced by the maximum number of shares that could be issued with
respect to performance-based awards under the 2007 LTCP for which the
performance measurement period was not completed by December 31,
2008.
|
|
|
Under
the Directors’ Compensation Plan, as originally implemented, the Company
is authorized to make awards of stock options or common stock and
allocations of common stock equivalent units with respect to the lesser of
either 1,687,500 shares of common stock or 3% of its issued and
outstanding common stock, as determined from time to time. The
Board subsequently amended the plan to reduce the authorized shares to no
more than 937,500 and to eliminate the annual award of stock options
beginning in 2009. At December 31, 2008, the Company could make
future awards or allocations of common stock equivalent units under the
plan with respect to 341,457 shares of its common
stock.
|
COMPENSATION
AND HUMAN RESOURCES COMMITTEE INTERLOCKS
AND
INSIDER PARTICIPATION
In 2008, the members of the
Compensation Committee were Messrs. Cooper (who presided as Chairman after Mr.
Phillips retired in April 2008), Hines, Lomax, Nickelsen and Taylor and Ms.
Sullivan, none of whom served as an officer or employee of the Company during
2008, nor at any time prior thereto. During 2008, none of the members
of the Compensation Committee had any relationship with the Company requiring
disclosure under Item 404 of SEC Regulation S-K, and none of our executive
officers served on the compensation committee (or its equivalent) or the board
of directors of another entity whose executive officer(s) served on our Board or
our Compensation Committee.
TRANSACTIONS
WITH RELATED PERSONS
The Bank
has made, and expects to make in the future, loans in the ordinary course of
business to directors and officers of the Company and the Bank, members of their
immediate families and their associates. The Bank has made such loans on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and,
except as noted in the following paragraph, the loans did not involve more than
the normal risk of collectibility or present other unfavorable
features.
Mr.
Bullard, a director since 1994 who is not standing for re-election at the annual
meeting, has direct and indirect indebtedness to the Bank, which the Bank
classified as having more than the normal risk of collectibility as of December
31, 2008. Mr. Bullard’s indirect indebtedness arises from his
guaranty of loans made to several of his related interests, Bullard Automotive
Group, Inc., Bullard Management Corporation and JJT, an Alabama General
Partnership. The largest aggregate indebtedness for Mr. Bullard and
his related interests from January 1, 2008 through March 24, 2009 was
$7,815,772. During this same period, Mr. Bullard and his related
interests repaid $730,209 in principal on term loans and $4,019,813 on revolving
lines of credit, and paid $450,331 in interest. Interest rates ranged
from 2.42 to 7.25 percent during this period. Mr. Bullard generally
owns 100% of the related interests named above, except that he owns 95% of JJT,
an Alabama General Partnership.
The Bank
employs several relatives of directors and executive officers, including three
employees who were paid or otherwise earned compensation exceeding $120,000 in
the aggregate during 2008. Each of these employees is also covered
under the Bank’s employee benefit plans, generally available to all similarly
situated Bank employees.
Leonard J. Marks, the son of William L.
Marks, our former Chairman of the Board and Chief Executive Officer who retired
in early 2008, is employed by the Bank as a commercial lender. During
2008, the Bank paid Leonard Marks gross cash compensation of $101,807 and
awarded him 627 PBRSUs valued at $11,768 based on a per share price of $18.77
(the value of the Company’s common stock on the award date), which PBRSUs will
not vest until 2011. In addition, Jay R. Exnicios, the brother of
Joseph S. Exnicios, one of our executive officers, is employed by the Bank as a
regional market manager. During 2008, the Bank paid Jay Exnicios
gross cash compensation of $149,687 and awarded him 1,254 PBRSUs
valued at
$23,538 based on a per share price of $18.77 (the value of the Company’s common
stock on the award date), which PBRSUs will not vest until 2011. The
Bank also paid for benefits to Leonard Marks and Jay Exnicios valued at $10,921
and $27,909, respectively, which benefits include matching contributions to the
401(k) plan, accidental death and disability insurance, long-term disability
insurance and the change in retirement plan pension value. These
benefits are available to all similarly situated Bank employees.
The Bank also employs Gary Blossman as
a Senior Vice President, serving as the Bank’s Regional President – North Shore
Region (suburban New Orleans). Gary Blossman is the son of Mr. A. R.
Blossman, Jr., who is one of our directors and a nominee for election at the
annual meeting. Gary Blossman was formerly the President of Parish
National Corporation and the President and Chief Executive Officer of Parish
National Bank. The Company acquired Parish National Corporation on
November 7, 2008 and Parish National Bank was merged with Whitney National Bank
on December 5, 2008. Gary Blossman’s annual base salary is
$240,000. He entered into an employment agreement with the Bank that
includes a change in control agreement that would be activated if a change in
control should occur. That change in control agreement provides a
potential payment of an amount equal to 200% of Gary Blossman’s total
compensation. Gary Blossman will also participate in the Bank’s
executive bonus program beginning in 2009. In connection with the
Parish merger Gary Blossman also received (i) a lump sump payment of $480,000 as
compensation for entering into a Protective Covenant (noncompete) Agreement with
Whitney; (ii) a lump sum payment of $5,083,002, as settlement of a Deferred
Compensation Agreement he had with Parish National Bank and (iii) title to an
automobile with a taxable value of $10,385 (his compensation reported to the IRS
included this value).
In addition to the foregoing, as a
condition to the merger with Parish National Corporation, the Company required
that Parish National Corporation divest its interest in an airplane, an airplane
hangar, a hangar lease and related assets held by Parish Financial Services,
Inc., a subsidiary of Parish National Bank, by transferring it for a cash
payment equal to the book value of such assets. To effect these
transfers, Mr. A. R. Blossman, Jr. and his siblings Jack A. Blossman and Susan
Blossman Pierce, each of whom served as members of the Board of Directors of
Parish National Corporation, formed two Louisiana limited liability companies,
Touch N Go, LLC and Hammond Hangar, LLC. In early December 2008 these
companies purchased the airplane and related assets for a total aggregate
purchase price of $2,158,958, the book value of such assets. The
Company did not obtain an appraisal for market value of the transferred
assets. As each of Mr. A. R. Blossman, Jr., Jack A. Blossman and
Susan Blossman Pierce are one-third owners of the acquiring companies, each
individual’s share of the transaction was approximately $719,653. Mr.
A. R. Blossman also purchased a vehicle from Parish National Bank for $37,921,
its book value on the records of Parish National Bank.
Mr. A. R.
Blossman Jr.’s son, Roy E. Blossman, is a founding partner and member of
executive management of one of the Company’s primary law firms, Carver, Darden,
Koretsky, Tessier, Finn, Blossman & Areaux, LLC. Roy Blossman
owns approximately 9.1% of the equity of the firm. During 2008, the
Company and the Bank collectively paid approximately $1,201,946 to Roy
Blossman’s law firm for legal services and Bank customers paid approximately
$777,272 in legal expenses incurred by the Bank in connection with loan
closings. The Carver Darden law firm has regularly provided legal
services to the Company and the Bank since its organization in 1994 and provided
substantial services to Parish National Corporation and Parish National Bank
prior to, and in connection with, Whitney’s acquisition of Parish on November 7,
2008.
In
accordance with the terms of the Amended and Restated Agreement and Plan of
Merger negotiated between the Company and Parish National Corporation, each
member of Parish National Corporation’s former Board of Directors, including A.
R. Blossman, Jr., Jack A. Blossman and Susan Blossman Pierce entered into a
Shareholder Support Agreement with the Company. Pursuant to these
agreements,
A. R.
Blossman, Jr., Jack A. Blossman and Susan Blossman Pierce each agreed to
noncompete and nonsolicitation provisions during the three years following the
closing of the merger in consideration for which the Company pays each of them
$1,000 per month for the 36-month period following the closing of the
merger.
Our
written Corporate Governance Guidelines require that we review all transactions
that are required to be disclosed pursuant to Item 404 of SEC Regulation S-K
(Related Party Transactions) for potential conflicts of interest. Our
Board has approved a written Audit Committee Charter, which assigns to the Audit
Committee the duty to ascertain that there is an ongoing review process of all
Related Party Transactions for potential conflicts of interest and that the
Audit Committee approve any such transactions.
The
Company conducts virtually all of its business activities through the Bank,
whose business activities primarily consist of offering deposit accounts, making
loans, engaging in a trust business and, through Bank subsidiaries, offering
securities and insurance products. While Section 402 of the
Sarbanes-Oxley Act of 2002 generally prohibits a public company from extending
or renewing credit or arranging the extension or renewal of credit to an officer
or director, this prohibition does not apply to loans made by a depository
institution such as the Bank that is insured by the Federal Deposit Insurance
Corporation and is subject to the insider lending restrictions of the Federal
Reserve Board’s Regulation O. Accordingly, we permit our directors
and executive officers, their family members and their related interests, to
establish and maintain banking and business relationships in the ordinary course
of business with the Bank. With respect to lending activities, the
Company has a special written policy governing affiliate and insider lending
transactions. This policy prohibits extensions of credit to
“insiders,” as defined in the policy, unless the extension of
credit:
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·
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is
made in the ordinary course of business on substantially the same terms
(including interest rates and collateral) as, and following credit
underwriting procedures that are not less stringent than, those prevailing
at the time for comparable transactions by the Bank with members of the
general public; and
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·
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does
not involve more than the normal risk of repayment or present other
unfavorable features.
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Under this policy, prior approval by
the Audit Committee is required for any lending transaction that alone or
together with other extensions of credit to an “insider” exceeds a specified
dollar threshold
and does not meet the
criteria noted above or which becomes a past due, nonaccrual, or restructured
loan or a potential problem as of year-end under applicable SEC
rules. Also, in compliance with Regulation O, a majority of the Board
must approve in advance any extension of credit to any director or executive
officer or any of their covered entities that exceeds $500,000. A
director with an interest in the extension of credit must abstain from voting or
participating in the discussion and approval of the extension of
credit.
In
accordance with Regulation O, additional restrictions are imposed on extensions
of credit to any executive officer. The Bank may make extensions of
credit to an executive officer:
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in
any amount to finance the education of his or her
children;
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in
any amount to finance or refinance the purchase, construction or
renovation of a residence when secured by a first lien on the
residence;
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·
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in
any amount provided that the extension of credit is secured by U.S.
Government obligations, or a perfected security interest in a segregated
deposit account of the Bank; or
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·
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for
any other purpose if the aggregate amount of loans (excluding loans for
education and residence) does not exceed
$100,000.
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Regulation O requires that all
extensions of credit to executive officers must be (1) promptly reported to the
Board; (2) preceded by the submission of a detailed personal financial
statement; and (3) made subject to the written provision (in the promissory note
or allonge thereto) that the loan will, at the option of the Bank, be due and
payable at any time that the executive officer is indebted to any other bank or
banks in an amount greater than the dollar thresholds set forth
above.
In order
to promote compliance with applicable laws, regulations and rules pertaining to
“insider” lending transactions discussed above, the Bank has appointed an
officer (the Regulation O Officer) to assist
Bank
employees in identifying and reviewing pertinent transactions with identified
“insiders.” The Regulation O Officer annually receives lists of all
directors and executive officers of the Company and the Bank and any other
subsidiaries from our Corporate Secretary, as well as a list of our principal
shareholders, if any. The information provided includes the names of
these individuals and their family members, as well as the names of their
related interests, which are referred to as “covered entities,” and is put
together based on questionnaires our directors and executive officers submit to
the Corporate Secretary, as well as information available from public databases
and the Bank’s records. The Bank’s officer managing a proposed
extension of credit to an “insider” is responsible for confirming that the
proposed extension of credit is in compliance with the Bank’s policy on insider
transactions. The Regulation O Officer will promptly notify our
Corporate Secretary and the chairman of our disclosure committee in the event
the Regulation O Officer detects an extension of credit to an “insider” that
appears to violate the policy.
The
Corporate Secretary has procedures to help us determine at the end of each year
whether any insider relationship or transaction has occurred that must be
disclosed pursuant to the SEC’s rules regarding Related Party Transactions, or
that might impair a nonemployee director’s independence under SEC rules or
Nasdaq listing requirements. These procedures include director and
executive officer questionnaires, a survey of customer databases of the Company
and its subsidiaries, as well as a review of other records, including accounts
payable, payroll and real estate transaction records. The Corporate
Secretary reports any Related Party Transactions so discovered to the Audit
Committee for review, approval or ratification and reports other matters that
would disqualify a nonemployee director from meeting Nasdaq or SEC independence
requirements to the Board.
To
further raise awareness regarding, and to ensure the proper handling of, insider
transactions, we have adopted various codes of conduct, including the Employee
Code of Conduct and Standard of Ethics, the Code of Ethics and Conduct for
Senior Financial Officers and Executive Officers, and the Code of Business
Conduct and Ethics for the Board of Directors. These codes, which are
available on the Corporate Governance page of our website at
www.whitneybank.com
,
promote the ethical handling of actual or apparent conflicts of interest between
personal and professional relationships, encourage covered persons to seek
advice to avoid conflicts of interest, and provide that banking and business
relationships between directors, executive officers, and their family members
and their entities and us be on nonpreferential terms and in the ordinary course
of business. Employees are also prohibited from handling any customer
or vendor relationship involving themselves, their family members or a “covered
entity” associated with an employee or their family members. Our
Audit Committee is responsible for applying and interpreting the codes
pertaining to senior financial officers, executive officers and directors, and
is required to report its findings of violations to the Board for further
action.
AUDITORS
The Company’s Audit Committee selected
PricewaterhouseCoopers LLP (PwC) as the Company’s independent registered public
accounting firm to audit the books of the Company and its subsidiaries for
2008. As part of its role in the oversight of the independent
registered public accounting firm, the Audit Committee has adopted policies and
procedures to preapprove all audit and permissible nonaudit services performed
by the independent registered public accounting firm. The policy
requires that on an annual basis the Audit Committee preapprove the general
engagement of the independent registered public accounting firm to provide
defined audit, audit-related and possible tax services within preapproved fee
levels. Unless otherwise provided, such preapprovals shall remain in
effect for 12 months. The Audit Committee may revise the list of
generally preapproved services from time to time. The Audit Committee
may also grant general preapproval for other permissible nonaudit services
classified as “all other services,” provided that such services would not impair
the independent registered public accounting firm’s
independence. Preapproval may be granted by action of the full Audit
Committee or, in the absence of such action, b. one or more members of the Audit
Committee. Any preapproval granted by less than the full Audit
Committee must be reported to the full Audit Committee at its next scheduled
meeting. The Audit Committee will consult the SEC’s rules and
relevant guidance in applying this policy. During 2008, the Audit
Committee preapproved all nonaudit services provided by PwC.
Audit
Fees
For 2008 and 2007, the Company and its
subsidiaries incurred aggregate fees of $800,300 and $684,300, respectively,
payable to PwC for the audits of the consolidated financial statements of the
Company and its subsidiaries, reviews of the quarterly consolidated financial
statements of the Company and the audit of the design and operating
effectiveness of internal control over financial reporting in compliance with
Section 404 of the Sarbanes-Oxley Act of 2002 and the Federal Deposit Insurance
Corporation Improvement Act.
Audit-Related
Fees
For 2008 and 2007, the Company and its
subsidiaries incurred aggregate audit-related fees of $109,750 and $203,025
respectively, payable to PwC, for assurance and related services for employee
benefit plan audits, Statement on Auditing Standards (SAS) 70 procedures and
agreed upon procedures engagements. The Audit Committee preapproved
100% of the audit-related fees paid to PwC in 2008 and 2007.
Tax
Fees
Neither
the Company nor any of its subsidiaries paid fees for tax services to PwC for
the fiscal years 2008 and 2007.
All
Other Fees
Neither the Company nor any of its
subsidiaries paid fees for any other services to PwC for the fiscal years 2008
and 2007.
AUDIT
COMMITTEE REPORT
The Audit Committee assists the Board
in monitoring the Company’s accounting and financial reporting processes and has
a key role in the oversight and supervision of PwC, the Company’s independent
registered public accounting firm. The Audit Committee’s role
includes sole authority to: (1) appoint or replace the Company’s independent
registered public accounting firm; (2) preapprove all audit or permissible
nonaudit services that the Company’s independent registered public accounting
firm performs on behalf of the Company; and (3) approve compensation related to
all auditing services and any permissible nonaudit services. The
Audit Committee monitored management’s evaluation of the effectiveness of
internal control over financial reporting and retained and monitored the
activities of PwC. The Audit Committee also oversees the Company’s
procedures for the receipt, retention and treatment of complaints the Company
receives regarding accounting, internal accounting controls or auditing matters
and reviews Related Party Transactions for potential conflicts of
interest. For greater detail regarding the functions and
responsibilities of the Audit Committee, please refer to the Audit Committee
Charter, which is available on the Corporate Governance page on our website at
www.whitneybank.com
. The
Audit Committee is in compliance with the Audit Committee Charter, which both
the Audit Committee and the Board approved.
Management has the primary
responsibility for the financial statements and reporting processes including
the system of internal control over financial reporting. In
fulfilling its oversight responsibilities for 2008, the Audit Committee reviewed
and discussed with management the audited financial statements as of and for the
year ended December 31, 2008. Management has represented to the Audit
Committee that the financial statements were prepared in accordance with
accounting principles generally accepted in the United States of America
(GAAP).
The Audit Committee reviewed the
audited financial statements with the independent registered public accounting
firm who is responsible for expressing an opinion on the conformity of those
statements with GAAP and discussed with the independent registered public
accounting firm their judgment as to the quality, not just the acceptability, of
the Company’s accounting principles and the matters required to be communicated
by SAS 61, as amended, “Communication with Audit Committees” and applicable
Public Company Accounting Oversight Board (PCAOB) standards. The
Audit Committee has also received the written disclosures and letter required by
the applicable requirements of the PCAOB regarding the independent accountant’s
communications with the Audit Committee concerning independence, and has
discussed with the independent registered public accounting firm their
independence and considered the compatibility of nonaudit services with the
independent registered public accounting firm’s independence.
The Audit Committee discussed with the
Company’s internal auditors and the independent registered public accounting
firm the overall scope and plans for their respective audits. The
Audit Committee met with the internal auditors and the independent registered
public accounting firm to discuss the results of audits, evaluations of the
Company’s system of internal control over financial reporting, and the overall
quality of the Company’s financial reporting. The Audit Committee
also met on a regular basis with management from the Departments of Credit
Administration, Credit Review, Financial, Legal and Operations &
Technology. Both the internal auditors and the independent registered
public accounting firm have unrestricted access to the Audit
Committee. The members of the Audit Committee met by themselves in
several executive sessions during 2008 and had separate executive sessions with
the independent registered public accounting firm and with the internal
auditors.
In reliance on the reviews and
discussions referred to above, the Audit Committee recommended to the Board that
the audited financial statements be included in the Annual Report on Form 10-K
for the year ended December 31, 2008 for filing with the SEC. The
Audit Committee has selected PricewaterhouseCoopers LLP as the Company’s
independent registered public accounting firm to audit the books of the Company
and its subsidiaries for 2009.
Audit Committee of the Board of Directors,
Richard B. Crowell, Chairman
Eric J. Nickelsen, Vice Chairman
Kathryn M. Sullivan
Thomas D. Westfeldt
PROPOSAL
NO. 2
ADVISORY
VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
In February 2009, Congress enacted
ARRA. ARRA imposes a number of requirements on financial
institutions, including the Company, that received an investment under the
Treasury’s CPP. One of the requirements is that at each annual
meeting of shareholders during the period in which any obligation arising from
the CPP remains outstanding, the financial institution shall permit a
non-binding “say on pay” shareholder vote to approve the compensation of
NEOs. We believe that our compensation policies and procedures are
centered on a pay-for-performance culture and are strongly aligned with the
long-term interests of our shareholders. We also believe that both
the Company and the shareholders benefit from responsive corporate governance
policies and constructive and consistent dialogue. Thus, with the Board’s
approval, we are providing you the right to cast a non-binding advisory vote on
the compensation of our NEOs at the annual meeting.
We believe that the expanded disclosure
of executive compensation provided in this proxy statement provides the
information you need to make an informed decision regarding compensation of our
NEOs. This proposal, commonly known as a “say on pay” proposal, gives
you as a shareholder the opportunity to endorse or not endorse our executive
compensation program and policies by voting on the following
resolution:
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“Resolved,
that the holders of Whitney Holding Corporation common stock approve the
compensation of the named executive officers as described in the
Compensation Discussion and Analysis and the tabular disclosure regarding
named executive officer compensation (together with the accompanying
narrative disclosure and footnotes) in the proxy
statement.”
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We encourage you to closely review our
Compensation Discussion and Analysis and the tabular disclosure that follows it,
which appear on pages 13 to 25 of this proxy statement. In that
section, we discuss material elements of executive compensation, as well as our
policies and other factors, such as financial and regulatory constraints, that
affect our decisions or those of our Compensation Committee related to executive
compensation.
We are generally required to disclose
information for our five most highly-compensated officers for the past three
years in this proxy statement. Therefore, most of our tabular
disclosure is backwards-looking. As discussed in our Compensation
Discussion and Analysis, recent legislation and new regulations will greatly
affect our compensation practices going forward. These laws apply to
us because we participated in the Treasury’s CPP. Unfortunately, key
details of these new laws will be determined only after the Treasury and the SEC
issue new regulations and guidance with respect to the new laws. As a
result, we cannot reliably predict what changes may be required to our executive
compensation programs to comply with the regulations once they are
issued. In the Compensation Discussion and Analysis section, we have
attempted to discuss the impact of these regulations on our executive
compensation as accurately as possible. We will fully comply with all
applicable requirements as soon as the Treasury and the SEC issue the new
regulations.
Because your vote is advisory, it will
not be binding upon the Board and may not be construed as overruling any
decision by the Board. However, the Compensation Committee may, in
its sole discretion, take into account the outcome of the vote when considering
future executive compensation arrangements.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THE COMPENSATION
DISCUSSION AND ANALYSIS AND THE TABULAR DISCLOSURE REGARDING NAMED EXECUTIVE
OFFICER COMPENSATION (TOGETHER WITH THE ACCOMPANYING NARRATIVE DISCLOSURE AND
FOOTNOTES) IN THE PROXY STATEMENT.
PROPOSAL
NO. 3
RATIFICATION
OF SELECTION OF INDEPENDENT
REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee has selected
PricewaterhouseCoopers LLP as our independent registered public accounting firm
to perform the audit of our financial statements and to attest to management’s
annual report on internal control over financial reporting for
2009. PricewaterhouseCoopers LLP was our independent registered
public accounting firm for the year ended December 31, 2008. The firm
is a registered public accounting firm with the PCAOB, as required by the
Sarbanes-Oxley Act of 2002 and the rules of the PCAOB.
We expect PricewaterhouseCoopers LLP
representatives to attend the annual meeting. They will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate shareholder questions.
We are asking our shareholders to
ratify the selection of PricewaterhouseCoopers LLP as our independent registered
public accounting firm to audit the books of the Company and its subsidiaries
for 2009. Although ratification is not required by our bylaws or
otherwise, the Board is submitting the selection of PricewaterhouseCoopers LLP
to our shareholders for ratification as a matter of good corporate
practice. Even if the selection is ratified, the Audit Committee in
its discretion may select a different independent registered public accounting
firm at any time during the year if it determines that such a change would be in
the best interests of the Company and our shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO AUDIT THE BOOKS OF THE COMPANY AND ITS SUBSIDIARIES FOR THE YEAR
2009
.
SHAREHOLDER
COMMUNICATIONS
The Board provides a process for
shareholders to send communications to the Board or to individual
directors. Information regarding this process is available to
shareholders on the Corporate Governance page on our website at
www.whitneybank.com.
SHAREHOLDER
PROPOSALS FOR THE 2010 ANNUAL MEETING
For any shareholder proposal to be
considered for inclusion in our proxy statement and proxy for the 2010 Annual
Meeting of Shareholders, we must receive the written proposal at our principal
executive office no later than December 16, 2009. Any shareholder
proposal not received at the Company’s principal executive offices by March 1,
2010, which is 45 calendar days before the one-year anniversary of the date the
Company mailed this proxy statement to shareholders, will be considered untimely
and, if presented at the 2010 Annual Meeting of Shareholders, the proxy holders
will be able to exercise discretionary authority to vote on any such proposal to
the extent authorized by Rule 14a-4(c) under the Securities Exchange Act of
1934, as amended.
OTHER
MATTERS
We do not know of any matters to be
presented at our 2009 annual meeting other than those set forth in the
accompanying notice. However, if any other matters properly come
before the annual meeting or any adjournments or postponements thereof, the
proxy holders will vote or abstain from voting thereon in accordance with their
best judgment.
By order of the Board of Directors,
John
C. Hope, III
Chairman of the Board and
Chief Executive Officer
