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
Filed by
the Registrant [ x ]
Filed by
a party other than the Registrant [ ]
Check the
appropriate box:
[ x] Preliminary Proxy Statement
[
] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[
] Definitive Proxy Statement
[
] Definitive Additional Materials
[
] Soliciting Material Pursuant to Rule 14a-12
BRITTON & KOONTZ CAPITAL
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):
[ x
] No fee
required.
[ ] Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)
Proposed maximum aggregate value of transaction:
(5) Total
fee paid:
[ ] Fee
paid previously with preliminary materials.
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[ ]
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of
filing.
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(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3)
Filing Party:
(4) Date
Filed:
BRITTON
& KOONTZ CAPITAL CORPORATION
500
Main Street
Natchez,
Mississippi 39120
March
[25]
, 2009
Dear
Fellow Shareholder:
On behalf
of the board of directors, we cordially invite you to attend the 2009 Annual
Meeting of Shareholders of Britton & Koontz Capital
Corporation. The Annual Meeting will be held beginning at 3:30 p.m.,
local time, on Tuesday, April 28, 2009, in the lobby of the main office of
Britton & Koontz Bank, N.A., 500 Main Street, Natchez,
Mississippi. The formal notice of the Annual Meeting appears on the
next page.
Enclosed
is our proxy statement for the 2009 Annual Meeting, in which (1) we seek your
support for the election as directors of those nominees named in the enclosed
proxy statement and (2) we urge you to vote against a proposal to amend our
Amended and Restated Articles of Incorporation to eliminate our classified board
of directors. We urge you to review the proxy statement
carefully. Regardless of the number of shares you own, it is
important that your shares be represented and voted at the meeting.
This
proxy statement and the accompanying proxy card are first being mailed to our
shareholders on March
[25]
, 2009. On the
same date, we posted these proxy materials on our Internet website,
http://www.voteproxy.com. Our Annual Report on Form 10-K for the year
ended December 31, 2008, which is our 2008 Annual Report, accompanies this proxy
statement and is also posted on our Internet website.
Please
take a moment now to sign, date and mail the enclosed proxy card in the postage
prepaid envelope. If you prefer, you may vote your shares via a
toll-free telephone number or over the Internet. The accompanying
proxy card has instructions on how to vote by mail, by telephone or over the
Internet. Your board of directors recommends you vote
“FOR”
the election as
directors of those nominees selected by our board of directors and named in the
enclosed proxy statement and
“AGAINST”
the proposal to
amend our Amended and Restated Articles of Incorporation to eliminate our
classified board of directors.
We are
gratified by our shareholders’ continued interest in Britton & Koontz, and
are pleased that in the past so many of you have voted your
shares. We look forward to seeing you at the Annual
Meeting.
/s/ Robert R.
Punches
/s/ W. Page Ogden
Robert R.
Punches
W. Page Ogden
Chairman of the
Board President
and Chief Executive
Officer
Important
Notice Regarding the Availability of Proxy Materials for
the
Shareholder Meeting to be held on April 28, 2009:
Britton
& Koontz’s 2009 proxy statement, proxy card and Annual Report on Form 10-K
for
the year
ended December 31, 2008 are available at
http://www.voteproxy.com.
BRITTON
& KOONTZ CAPITAL CORPORATION
500
Main Street
Natchez,
Mississippi 39120
___________
Notice
of Annual Meeting of Shareholders
to
be held on Tuesday, April 28, 2009
___________
Notice is
hereby given that the Annual Meeting of Shareholders of Britton & Koontz
Capital Corporation will be held beginning at 3:30 p.m., local time, on Tuesday,
April 28, 2009, in the lobby of the main office of Britton & Koontz Bank,
N.A., 500 Main Street, Natchez, Mississippi. The Annual Meeting has
been called for the following purposes:
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1.
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To
elect three Class I directors to serve until the expiration of their
respective three-year terms in 2012 or until their successors are elected
and qualified;
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2.
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To
vote on an amendment to our Amended and Restated Articles of Incorporation
to eliminate our classified board of directors;
and
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3.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
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The board
of directors has fixed the close of business on Monday, March 16, 2009, as the
record date for the determination of the shareholders entitled to notice of, and
to vote at, the Annual Meeting. Your attention is directed to, and
you are encouraged to carefully read, the proxy statement accompanying this
Notice of Annual Meeting for a more complete description of the business to be
presented and acted upon at the meeting.
All
shareholders are cordially invited to attend the meeting in
person.
Regardless
of whether you plan to attend, however, please sign and date the enclosed proxy
card and return it in the envelope provided as promptly as
possible.
If you prefer, you may vote your shares via a
toll-free telephone number or over the Internet. Instructions for
telephone and Internet voting are set forth on the enclosed proxy
card. A proxy may be revoked at any time before it is voted at the
meeting.
By Order of the Board of
Directors,
/s/ Cliffie S.
Anderson
Cliffie S. Anderson, Corporate
Secretary
Natchez,
Mississippi
March
[25]
,
2009
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T
ABLE OF CONTENTS
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Page
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VOTING
PROCEDURES
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1
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Who is soliciting proxies from
the shareholders?
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1
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What will be voted on at the
annual meeting?
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1
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Who bears the cost of the
proxy solicitation?
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1
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Who can vote at the annual
meeting?
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2
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How many votes must be present
to hold the annual meeting?
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2
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What vote is required for
approval of proposals at the annual meeting?
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2
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How are votes
cast?
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2
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How will the proxy be voted,
and how are votes counted?
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3
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How are shares in our ESOP
voted?
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3
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Can a proxy be
revoked?
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3
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STOCK
OWNERSHIP
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4
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Does any person or group own
5% or more of our common stock?
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4
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How much stock is beneficially
owned by our directors and executive officers?
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5
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Section 16(a) Beneficial
Ownership Reporting Compliance
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6
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BOARD OF
DIRECTORS
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6
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How many directors serve on
the board, and who are the continuing directors?
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6
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Are the directors
independent?
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7
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How are directors
compensated?
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8
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How many meetings did the
board hold during 2008?
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9
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How may a shareholder
communicate with the board?
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9
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What related person
transactions involve our directors or executive
officers?
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9
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Are our directors or executive
officers indebted to the Bank?
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9
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Are there any legal proceedings
involving a director or executive officer and the
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Company or the
Bank?
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10
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COMMITTEES OF THE BOARD OF
DIRECTORS
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10
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Who serves on the audit
committee, and what are its responsibilities?
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10
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Who serves on the nominating
committee, and what are its responsibilities?
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11
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Who serves on the compensation
committee, and what are its responsibilities?
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12
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EXECUTIVE
OFFICERS
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13
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Who are our executive
officers?
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13
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EXECUTIVE
COMPENSATION
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14
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Summary Compensation
Table
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14
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How does our bonus program
operate?
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15
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Have we entered into
employment agreements with our named executive
officers?
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15
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What equity compensation do we
provide to our named executives?
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16
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Outstanding Equity Awards at
December 31, 2008
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17
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What retirement benefits do we
offer to our named executives?
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17
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Will any of our named executives
receive any payments upon termination
of employment
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or upon our change in
control?
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INDEPENDENT REGISTERED PUBLIC
ACCOUNTANTS
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18
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Who are our
auditors?
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18
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What fees were paid to the
auditors in 2008 and 2007?
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19
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REPORT OF THE AUDIT
COMMITTEE
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PROPOSALS
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20
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What are the voting
procedures?
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20
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Proposal No. 1 – Election of
Class I Directors
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21
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Proposal No. 2 – Amendment to our
Amended and Restated Articles of Incorporation
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to Eliminate our Classified
Board of Directors
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SHAREHOLDER PROPOSALS FOR THE
2010 ANNUAL MEETING
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25
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Proposals to be Included in Our
Proxy Statement
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Proposals to Introduced at the
2010 Annual Meeting
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OTHER
MATTERS
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26
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AVAILABILITY OF ANNUAL REPORT
ON FORM 10-K
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Appendix
A –Proposed Amendment to Article Tenth of the Amended and Restated Articles of
Incorporation of Britton & Koontz Capital Corporation
BRITTON
& KOONTZ CAPITAL CORPORATION
___________________
PROXY
STATEMENT
____________________
ANNUAL
MEETING OF SHAREHOLDERS
TO
BE HELD TUESDAY, APRIL 28, 2009
This
proxy statement is furnished to the shareholders of Britton & Koontz Capital
Corporation in connection with the solicitation of proxies by the board of
directors for use at the 2009 Annual Meeting of Shareholders to be held at 3:30
p.m., local time, on Tuesday, April 28, 2009, at the main office of Britton
& Koontz Bank, N.A., 500 Main Street, Natchez, Mississippi, as well as in
connection with any adjournments or postponements of that meeting. In
this proxy statement, Britton & Koontz Capital Corporation is referred to as
“we,” “our,” “us,” “B&K” or “the Company,” and Britton & Koontz Bank,
N.A. is referred to as “the Bank.”
Under
Securities and Exchange Commission, or SEC, rules, we are required to post this
proxy statement, our proxy card and our Annual Report on Form 10-K for the year
ended December 31, 2008, which is our 2008 Annual Report, on the
Internet. Accordingly, on March
[25]
, 2009, we
posted these materials on
our Internet website, http://www.voteproxy.com. We mailed these proxy
materials to our shareholders on the same date. The proxy card has
instructions on how to access our proxy materials and vote online.
VOTING
PROCEDURES
Who
is soliciting proxies from the shareholders?
Our board
of directors is soliciting the enclosed proxy. The proxy provides you
with the opportunity to vote on the proposals presented at the annual meeting,
whether or not you attend the meeting.
What
will be voted on at the annual meeting?
Shareholders
will vote on the following proposals at the annual meeting:
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The
election of three Class I directors, who are to serve until the expiration
of their respective three-year terms in 2012 or until their successors are
elected and qualified; and
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·
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An
amendment to our Amended and Restated Articles of Incorporation (referred
to in this proxy statement as our “Articles of Incorporation”) that
provides for a phased elimination of our classified board of directors,
after which all of our directors would be elected
annually.
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Your
proxy also gives the proxy holders discretionary authority to vote the shares
represented by the proxy on any matter, other than the above proposals, that is
properly presented for action at the annual meeting.
Who
bears the cost of the proxy solicitation?
We bear
the cost of solicitation of proxies, including expenses incurred in connection
with preparing and mailing the proxy statement and posting the proxy materials
on the Internet. The initial solicitation will be by
mail. We have retained Broadridge Financial Solutions, Inc., or
Broadridge, to assist in the solicitation of proxies from banks, brokers and
nominees of shareholders for the annual meeting and to maintain the Internet
website on which our proxy materials will be posted. We estimate that
Broadridge’s fees will not exceed $5,000, plus out-of-pocket costs and
expenses.
Additionally,
our directors, officers and regular employees may contact shareholders to
request that they return their proxies; such contact may occur by means of the
mail, telephone, the Internet or personal contact. A director,
officer or regular employee will not receive any additional compensation for
undertaking these efforts. We will also, in accordance with SEC
regulations, reimburse brokerage firms and other persons representing beneficial
owners of our common stock for their reasonable expenses in forwarding
solicitation material to such beneficial owners.
Who
can vote at the annual meeting?
Our board
of directors has fixed the close of business on Monday, March 16, 2009, as the
record date for the 2009 annual meeting. Only shareholders of record
on that date are entitled to receive notice of and vote at the annual
meeting. As of March 16, 2009, our only outstanding class of
securities was common stock, $2.50 par value per share. On that date,
we had 12,000,000 shares authorized, of which 2,126,466 shares were
outstanding.
How
many votes must be present to hold the annual meeting?
A
“quorum” must be present to hold our annual meeting. A majority of
the votes entitled to be cast at the annual meeting constitutes a
quorum. Your shares, once represented for any purpose at the annual
meeting, are deemed present for purposes of determining a quorum for the
remainder of the meeting and for any adjournment, unless a new record date is
set for the adjourned meeting. This is true even if you abstain from
voting with respect to any matter brought before the annual
meeting.
What
vote is required for approval of proposals at the annual meeting?
At the
annual meeting, you will consider two proposals: a proposal to elect three Class
I directors, and a proposal to amend our Articles of
Incorporation. Shareholders are entitled to one vote for each share
held on all proposals.
Directors
are elected by plurality vote. The candidates in each class who
receive the highest number of votes cast, up to the number of directors to be
elected in that class, are elected. Shareholders do not have the
right to cumulate their votes in the election of directors.
The
amendment to our Articles of Incorporation to eliminate our classified board of
directors requires the approval of at least 80% of our outstanding
shares. This means that shareholders holding at least 80%
of the total voting power of all issued and outstanding shares of Company stock,
and not just shares represented in person or by proxy at the annual meeting,
must vote in favor of the approval of the amendment.
For all
other proposals brought before this year’s annual meeting, if any, the proposal
is approved if the votes cast in favor of the proposal are greater than the
votes cast opposing the proposal, unless our Articles of Incorporation or
bylaws, as amended, or applicable provisions of Mississippi law require a
different vote.
How
are votes cast?
You can
vote either in person at the annual meeting (if you, rather than your broker,
are the record holder of our stock) or by proxy, whether or not you attend the
annual meeting. You can vote your shares by proxy either by mail, via
a toll-free telephone number or over the Internet. To vote your proxy
by mail, you must fill out the enclosed proxy card, date and sign it, and either
return it in the enclosed postage-paid envelope in time for us to receive it
prior to the annual meeting or attend the annual meeting and return the proxy at
that time. The proxy card sets forth the instructions for voting by
telephone and over the Internet.
How
will the proxy be voted, and how are votes counted?
If you
vote by proxy (either by properly completing and returning a paper proxy card or
voting by telephone or over the Internet), the shares represented by your proxy
will be voted at the annual meeting as you instruct, including any adjournments
or postponements of the meeting. If you return a signed proxy card
but no voting instructions are given, the proxy holders will exercise their
discretionary authority to vote the shares represented by the proxy at the
annual meeting and any adjournments or postponements as follows:
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“FOR”
the election of
nominees Gordon S. LeBlanc, Jr., Bethany L. Overton and Robert R. Punches
as Class I directors; and
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·
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“AGAINST”
the proposal
to amend our Articles of Incorporation to eliminate our classified board
of directors.
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If you
hold your shares in a broker’s name (sometimes called “street name” or “nominee
name”), you must provide voting instructions to your broker. If you
do not provide instructions to your broker, the shares will not be voted on any
matter on which your broker does not have discretionary authority to vote, which
generally includes non-routine matters. A vote that is not cast for
this reason is called a “broker non-vote.” Broker non-votes will be treated as
shares present for the purpose of determining whether a quorum is present at the
meeting, but they will not be considered present for purposes of calculating the
vote on a particular matter, nor will they be counted as a vote FOR or AGAINST a
matter or as an abstention on the matter. The election of directors
is generally considered a routine matter for broker voting purposes, while the
amendment to our Articles of Incorporation is a non-routine matter.
Under
Mississippi law, an abstention by a shareholder who is either present in person
at the annual meeting or represented by proxy is not a vote “cast” and is
counted neither “for” nor “against” the matter subject to the
abstention. However, since shareholders holding at least 80% of our
total issued and outstanding shares (as opposed to just votes cast at the annual
meeting) must vote in favor of the amendment to our Articles of Incorporation
for the amendment to be approved, abstentions and failures to vote will have the
same effect as a vote against the proposed amendment.
How
are shares in our ESOP voted?
If you
are our employee or an employee of the Bank who participates in the Britton
& Koontz Capital Corporation Employee Stock Ownership Plan, or the ESOP, you
can vote the number of shares of common stock allocated to you under the ESOP,
determined as of the close of business on March 16, 2009. The trustee
of the ESOP, Argent Trust, a division of National Independent Trust Company,
acts as a proxy and actually votes the shares. If you do not submit
your proxy within the time required, the trustee will vote your ESOP shares in
the manner it deems to be in the best interests of the plan and its
participants. If you return your proxy card for your ESOP shares, but
give no specific voting instructions, the trustee will vote the shares
represented by the proxy at the annual meeting and any adjournments or
postponements in the manner described in the question immediately
above.
Can
a proxy be revoked?
Yes. You
can revoke your proxy at any time before it is voted. You revoke your
proxy (1) by giving written notice to our Secretary before the annual meeting,
(2) by granting a subsequent proxy either by telephone or through the Internet
or (3) by delivering a signed proxy card dated later than your previous
proxy. If you, rather than your broker, are the record holder of our
stock, a proxy can also be revoked by appearing in person and voting at the
annual meeting. Written notice of the revocation of a proxy should be
delivered to the following address: Ms. Cliffie S. Anderson, Britton &
Koontz Capital Corporation, 500 Main Street, Natchez, Mississippi
39120.
STOCK
OWNERSHIP
Does
any person or group own 5% or more of our common stock?
The
following table sets forth information regarding the beneficial ownership of our
common stock as of March 16, 2009, by each person or entity, including any group
(as that term is used in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, referred to as the “Exchange Act”), known to us to be the
beneficial owner of 5% or more of our outstanding common
stock. Information regarding the ESOP is also
included. Beneficial ownership has been determined under Rule 13d-3
promulgated under the Exchange Act.
Number of Shares
Beneficially Percent
Name and
Address
Owned
of
Class
(1)
Hot Creek
Capital, L.L.C., Hot Creek Investors, L.P.
and David
M. W. Harvey
(2)
148,742
7.0%
6900 South McCarran Blvd., Suite
3040
Reno, Nevada 89509
Wellington
Management Company, LLP and Wellington
Trust
Company, NA
(3)
119,159
5.6%
75 State Street
Boston, Massachusetts
02109
Britton
& Koontz Capital Corporation Employee
Stock
Ownership Plan
(4)
93,362
4.4%
500 Main Street
Natchez, Mississippi 39120
______________
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(1)
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Based
upon 2,126,466 shares of our common stock outstanding as of March 16,
2009.
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(2)
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Based
on a Schedule 13G jointly filed by Hot Creek Investors, L.P. (“HC-LP”),
Hot Creek Capital, L.L.C. (“HC-GP”) and David M. W. Harvey (“Harvey”) on
June 26, 2006, with the SEC. HC-LP is the owner of record of
the shares of our common stock listed on such Schedule
13G. HC-GP is the general partner of HC-LP, and Harvey is the
principal member of HC-GP. In these capacities, HC-GP and
Harvey share voting and dispositive power with respect to shares held by
HC-LP.
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(3)
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Based
on a Schedule 13G filed by Wellington Management Company, LLP (“WMC”) on
February 17, 2009 and on a Schedule 13G filed by Wellington Trust Company,
NA (“WTC”) on February 17, 2009, each filed with the SEC. Each
Schedule 13G has been filed in WMC’s or WTC’s, as applicable, capacity as
an investment adviser. The actual shares of our common stock
are owned of record by clients of WMC or WTC, as applicable, and such
record owners have the right to receive dividends on our common
stock. WTC is listed as a client of WMC in the Schedule 13G
filed by WMC.
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(4)
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Argent
Trust, a division of National Independent Trust Company, acts as trustee
of the ESOP. All of the shares held in the ESOP are allocated
to individual participant accounts. The trustee generally votes
the shares in accordance with instructions it receives from the
participants, as described above in the question “
How are shares in our ESOP
voted?
” under the heading “Voting
Procedures.”
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How
much stock is beneficially owned by our directors and executive
officers?
The
following table sets forth, as of March 16, 2009, the number of shares of our
common stock beneficially owned by (1) all directors and nominees for director,
(2) the named executive officers, and (3) all directors and executive officers
as a group. Unless otherwise noted, the named persons have sole
voting and investment power with respect to the shares indicated (subject to any
applicable community property laws). The address of each director and
executive officer is the address of our executive offices.
Number of Shares
Beneficially Percent
of
Owned
(1)
Class
(2)
Directors
and Nominees
W. W.
Allen,
Jr.
4,384
(3)
*
Craig A.
Bradford,
D.M.D. 23,912
(4)
1.1%
George R.
Kurz
3,500
*
Gordon S.
LeBlanc,
Jr. 7,000
(5)
*
Bethany
L.
Overton
3,188
*
Robert R.
Punches
12,344
*
Vinod K.
Thukral,
Ph.D. 48,649
(6)
2.3%
Named
Executive Officers
W. Page
Ogden
52,289
(7)
2.5%
William
M.
Salters
7,013
(8)
*
Jarrett
E.
Nicholson
4,765
(9)
*
Directors
and executive officers as a group
(10
persons)
167,044
(10)
7.9%
______________
* Less
than one percent.
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(1)
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Includes
shares as to which the named individual, directly or indirectly, through
any contract, arrangement, understanding, relationship, or otherwise, has
beneficial ownership, the right to acquire beneficial ownership within 60
days of March 16, 2009, or shares voting power and/or investment power as
these terms are defined in Rule 13d-3 of the Exchange Act. Also
includes shares allocated to participant accounts under the ESOP, with
respect to which each individual has voting
power.
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(2)
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Based
upon 2,126,466 shares of our common stock outstanding as of March 16,
2009.
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(3)
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Includes
20 shares held by Mr. Allen as custodian for his son and 20 shares owned
by his wife, of which he disclaims beneficial
ownership.
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(4)
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Includes
2,901 shares owned by Mr. Bradford’s wife, of which he disclaims
beneficial ownership.
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(5)
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Mr.
LeBlanc is a nominee for election as a Class I
director.
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(6)
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Includes
15,810 shares held by Thukral Holdings, LLC over which Dr. Thukral has
sole voting power. Also includes 1,500 shares owned by Dr.
Thukral’s wife and 703 shares owned by his daughter, of which he disclaims
beneficial ownership.
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(7)
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Mr.
Ogden is also a director. Includes 14,413 shares held in an
IRA, 12,382 shares which have been allocated to Mr. Ogden’s account in the
ESOP and 4,000 shares representing an award of restricted stock under the
Britton & Koontz Capital Corporation 2007 Long-Term Incentive
Compensation Plan, or LTIP, with respect to which Mr. Ogden possesses
voting and dividend rights. Under the terms of this award, the
shares of restricted stock vest upon the completion of a three-year
service period.
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(8)
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Includes
2,290 shares that Mr. Salters may acquire pursuant to currently
exercisable stock options, 3,073 shares which have been allocated to Mr.
Salters’ account in the ESOP and 1,500 shares representing an award of
restricted stock under the LTIP with respect to which Mr. Salters
possesses voting and dividend rights. Under the terms of this
award, the shares of restricted stock vest upon the completion of a
three-year service period.
|
|
(9)
|
Consists
of 1,328 shares that Mr. Nicholson may acquire pursuant to currently
exercisable stock options, 1,937 shares which have been allocated to Mr.
Nicholson’s account in the ESOP and 1,500 shares representing an award of
restricted stock under the LTIP with respect to which Mr. Nicholson
possesses voting and dividend rights. Under the terms of this
award, the shares of restricted stock vest upon the completion of a
three-year service period.
|
|
(10)
|
To
the extent that any shares of common stock are deemed to be beneficially
owned by more than one director and/or executive officer, they are
included only once in the total number of shares beneficially owned by all
directors and executive officers as a
group.
|
Section
16(a) Beneficial Ownership Reporting Compliance
Pursuant
to Section 16(a) of the Exchange Act, our directors, executive officers and any
person beneficially owning more than 10% of our common stock are required to
report their initial ownership of our common stock and any subsequent changes in
that ownership to the SEC. Although Mr. LeBlanc is currently only a
member of the Bank’s board of directors, we consider him a “director” for
purposes of Section 16(a) filing requirements.
Based
solely upon a review of Forms 3 and 4 and amendments thereto furnished to us
during 2008, any Form 5 and amendments thereto furnished to us with respect to
fiscal year 2008, and certain written representations made by our directors and
officers, we believe that during 2008, our officers and directors complied with
all applicable Section 16(a) filing requirements, except that a Form 3 for Mr.
LeBlanc was filed late, and three reports for Mr. LeBlanc, each covering one
transaction, were filed late.
BOARD
OF DIRECTORS
How
many directors serve on the board, and who are the continuing
directors?
Effective
as of the 2009 annual meeting, and assuming that all of our nominees for
director are elected at the annual meeting, a total of eight directors will
serve on our board; they also serve on the board of directors of the
Bank. There are three classes of directors, with three directors in
Class I, three directors in Class II and two directors in Class
III. The current term of office for our Class I directors expires at
the current annual meeting, while the current term of office for our Class II
directors expires at the 2010 annual meeting and the current term of office for
our Class III directors expires at the 2011 annual meeting. Even if
our shareholders approve the proposed amendment to eliminate our classified
board of directors, no current director’s term of office will be
shortened. Rather, the annual election of directors will be phased in
over the next three years.
Gordon S.
LeBlanc, Jr., a member of the board of directors of the Bank, has been nominated
for election as a Class I director. Biographical information about
Mr. LeBlanc is set forth below in the “Proposals” section under the heading
“
Proposal No. 1 – Election of
Class I Directors
.”
The
following table provides information about our current directors:
|
Name
|
Age
|
Director
Since
|
Business
Experience During
Past
Five Years
|
|
Bethany
L. Overton
(Class
1)
|
71
|
1989
|
Mrs.
Overton is the President of Lambdin-Bisland Realty Co., a real estate
company. Mrs. Overton has previously served as the President
and Vice President of Oilwell Acquisition Co., an oil operating and
production company from 1986 through 1996.
|
|
Robert
R. Punches
(Class
1)
|
59
|
1985
|
Mr.
Punches is the Chairman of the Company’s board and is a partner in the
Natchez law firm of Gwin, Lewis & Punches, LLP. Mr. Punches
is also a partner/member of various timber management
companies.
|
|
W.
W. Allen, Jr.
(Class
II)
|
57
|
1989
|
Mr.
Allen is President of Allen Petroleum Services, Inc., an oil and gas
exploration and petroleum land services company. Mr. Allen is
also a partner in various timber management companies and an officer in
Dutch Ann Foods, Inc., a pie shell and tart business. Mr. Allen
is also the Chairman of the Natchez Adams County Development
Authority.
|
|
Craig
A. Bradford, D.M.D.
(Class
II)
|
53
|
1989
|
Dr.
Bradford is a dentist engaged solely in pediatric dentistry. He
is also a partner in various timber management companies and is as officer
of Mount Olive Farms, LLC, a firm that raises cattle and show
horses.
|
|
Vinod
K. Thukral, Ph.D.
(Class
II)
|
64
|
2001
|
Dr.
Thukral is Chairman of Global Bancorp and Global Trust Bank, a commercial
bank in Mountain View, California. He was formerly a director
of Louisiana Bancshares, Inc., and a professor at Tulane University in New
Orleans, Louisiana. Dr. Thukral now lives in San Jose,
California.
|
|
George
R. Kurz
(Class
III)
|
54
|
2005
|
Mr.
Kurz is a principal and vice president of Kurz & Hebert, a company
engaged in the sales, leasing and management of real property, and is a
board member of the Baton Rouge Chamber of Commerce.
|
|
W.
Page Ogden
(Class
III)
|
62
|
2008
|
Mr.
Ogden has served as the Bank’s President and Chief Executive Officer since
May of 1989. He joined the Bank in February of 1988 and served
as the Bank’s Senior Vice President and Senior Lending Officer until he
assumed his current positions.
|
Are
the directors independent?
Our board
has determined that each of W. W. Allen, Jr., Craig A. Bradford, D.M.D., George
R. Kurz, Bethany L. Overton, Robert R. Punches and Vinod K. Thukral, Ph.D., is
an “independent director” as defined under Rule 4200(a)(15) of the Nasdaq
Marketplace Rules. This constitutes a majority of the members of our
board. The Board has also determined that Gordon S. LeBlanc, Jr., a
nominee for election as a Class I director, meets the requirements to be an
“independent director” under the Nasdaq Marketplace Rules. Finally,
A.J. Ferguson and R. Andrew Patty II, former directors who resigned from the
board as of the 2008 annual meeting, were also “independent
directors.”
In
addition to the indebtedness of some of our directors to the Bank described in
this section below under the question “
Are our directors or executive
officers indebted to the Bank?
”, the board considered other relationships
between our directors and us or the Bank when determining each director’s status
as an “independent director” under Rule 4200(a)(15) of the Nasdaq Marketplace
Rules. Mr. Punches, a partner in the law firm of Gwin, Lewis &
Punches, LLP, serves as our outside general counsel. Gwin, Lewis
& Punches, LLP provided legal services to us and to the Bank during 2008,
and we expect such relationship to continue in 2009. The board
determined that this relationship did not affect Mr. Punches’ status as an
“independent director.”
We are
not aware of any family relationships between any director, executive officer or
person nominated to become a director or an executive officer.
How
are directors compensated?
Directors
are compensated in the form of cash fees and retainer; they do not receive
options or other equity compensation or participate in any retirement or similar
benefit plan maintained by us or the Bank. During 2008, each director
received an annual retainer of $9,600 for service as a member of our board,
except that Mr. Ogden, who is both a director and an employee, received an
annual retainer of $7,200 for his service on the board. The Chairman
received an additional fee of $9,600 for service as a member of the board, while
the Vice-Chairman received an additional fee of $7,200 for his
service. In addition to these amounts, each non-employee director
serving on the board’s executive, audit, nominating and compensation committees
received a monthly fee of $150. The audit committee chairman also
received an additional monthly fee of $400 for his service. The Bank
paid a monthly fee of $50 for service on its trust committee, a monthly fee of
$150 for service on its asset and liability management committee and a monthly
fee of $150 for service on its loan committee.
The
following table sets forth the compensation paid to our non-employee directors
with respect to our 2008 fiscal year, including former directors A.J. Ferguson
and R. Andrew Patty II. Compensation paid to Mr. Ogden is included in
the Summary Compensation Table that follows. The compensation committee of the
board of directors recommends the level of director compensation; the board of
directors adopts or modifies this recommendation. For more
information regarding the composition and responsibilities of this committee,
please refer to the question “
Who serves on the compensation
committee, and what are its duties?
” under the heading “Committees of the
Board of Directors” below.
|
|
Name
|
Fees
Earned or Paid in Cash ($)
|
Total ($)
|
|
Robert
R. Punches
|
$ 29,700
|
$ 29,700
|
|
|
W.
W. Allen, Jr.
|
29,000
|
29,000
|
|
|
Craig
A. Bradford, D.M.D
|
16,300
|
16,300
|
|
|
A.J.
Ferguson
|
7,450
|
7,450
|
|
|
George
R. Kurz
|
17,150
|
17,150
|
|
|
Bethany
L. Overton
|
17,150
|
17,150
|
|
|
R.
Andrew Patty II
|
10,800
|
10,800
|
|
|
Vinod
K. Thukral, Ph.D.
|
16,450
|
16,450
|
|
How
many meetings did the board hold during 2008?
The board
of directors met 14 times in 2008. Each director attended at least
75% of the aggregate of all meetings held by the board and the committees on
which he or she served. At each board meeting in 2008, the members of
the board who are “independent directors” under Nasdaq Rule 4200(a)(15)
considered whether it was necessary to meet in executive session but determined
that an executive session was not necessary.
The board
of directors has no written policy as to its members’ attendance at the annual
meeting of shareholders; however, it is the practice of board members to attend
the annual shareholders meeting. Last year, the entire board attended
the annual shareholders meeting, with the exception of George R.
Kurz. We expect all of our directors to attend this year’s
meeting.
How
may a shareholder communicate with the board?
The board
has not adopted a formal procedure that shareholders must follow to send
communications to it. However, we have an unwritten “open door”
policy for our customers and shareholders, which we believe satisfactorily
ensures that the views of shareholders are heard by the board or individual
directors, as applicable. The board does receive communications from
shareholders, from time to time, and addresses those communications as
appropriate. Shareholders can send communication to the board or any
individual director by contacting any of our executive officers, our outside
general counsel, Robert R. Punches, or our President, W. Page Ogden, in any one
of the following ways:
|
·
|
In
writing, to Britton & Koontz Capital Corporation, Attn: W. Page Ogden,
500 Main Street, Natchez, Mississippi
39120;
|
|
·
|
By
e-mail, at corporate@bkbank.com; or
|
|
·
|
By
phone, at (601) 445-5576 or facsimile, at (601)
445-2481.
|
Mr. Ogden
will forward written and e-mail correspondence to the appropriate
addressee. If a shareholder requests information or asks questions
that can be more efficiently answered by management, management will respond
without consulting the board of directors. Any shareholder communication
concerning employee fraud or accounting matters will be forwarded to the audit
committee. Any communication relating to corporate governance or requiring
action by the board will be forwarded to the full board.
What
related person transactions involve our directors or executive
officers?
We did
not engage in 2007 or in 2008 in any related person transactions that are
required to be disclosed under applicable SEC regulations, other than
indebtedness transactions described immediately below.
Are
our directors or executive officers indebted to the Bank?
Certain
of our directors and officers, businesses with which they are associated, and
members of their immediate families are customers of the Bank and have entered
into loan transactions with the Bank in the ordinary course of its business in
2007 and 2008. For both years, in the opinion of the board of
directors, these transactions were made in the ordinary course of business and
were made on substantially the same terms, including with respect to interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and do not involve more than the normal risk of
collectability or present other unfavorable features.
Are
there any legal proceedings involving a director or executive officer and the
Company or the Bank?
We are
not aware of any current legal proceedings involving any of our directors or
executive officers and either the Company or the Bank.
COMMITTEES
OF THE BOARD OF DIRECTORS
Our board
of directors and the board of directors of the Bank have established various
joint committees, including the executive committee, the audit committee, the
nominating committee, the compensation committee, the trust investment
committee, the asset/liability management committee and the director’s loan
committee. The composition and functions of the audit, nominating and
compensation committees are described in more detail below.
Who
serves on the audit committee, and what are its responsibilities?
Messrs.
Allen (Chairman), Bradford and Thukral and Ms. Overton are members of the
audit committee. No member of the audit committee is our employee or
an employee of the Bank. Each member of the audit committee is an
“independent director” as defined in Rule 4200(a)(15) of the Nasdaq Marketplace
Rules and meets the criteria for independence under Rule 10A-3 promulgated under
the Exchange Act.
Although
the board has determined that Mr. Thukral meets the “financial sophistication”
requirements under Rule 4350(d) of the Nasdaq Marketplace Rules, the board has
determined that none of the current members of the audit committee qualify as an
“audit committee financial expert” as such term is defined under SEC
regulations. The board of directors has continued its search within
our local markets to locate an individual who would satisfy both the SEC’s
criteria for an audit committee financial expert and the board’s director
qualifications and who was otherwise willing to serve on our
board. Our headquarters location outside a major metropolitan area,
among other factors, has contributed to the board’s inability to find a suitable
candidate. The board intends in 2009 to continue its search to
identify an individual willing to serve on the board who meets the criteria for
an audit committee financial expert and the board’s director
qualifications. If an individual is identified, the board will first
be able to increase its size and appoint such individual to the board, and
subsequently the audit committee, at the 2010 annual meeting.
The audit
committee has adopted a written charter that governs its
operations. A copy of the audit committee charter is available on our
website at http://www.bkbank.com/info/investor under the link “Audit Committee
Charter.”
The
purpose of the audit committee is to oversee our financial reporting process on
behalf of the board. The audit committee has sole authority to
select, evaluate, appoint and replace the independent auditor and to approve in
advance all audit engagement fees and terms and non-audit engagements with the
independent auditors. The audit committee’s other duties and
responsibilities include assisting the board relating to:
|
·
|
The
integrity of our financial statements and financial reporting process and
our systems of internal accounting and financial
controls;
|
|
·
|
The
performance of the internal audit
function;
|
|
·
|
The
annual independent audit of our financial statements and the evaluation of
the independent auditors’ qualifications, independence and
performance;
|
|
·
|
Our
compliance with legal and regulatory requirements, including our
disclosure controls and procedures;
and
|
|
·
|
The
fulfillment of the other responsibilities set out in the audit committee
charter.
|
In
addition, the audit committee is responsible for establishing procedures for (1)
the receipt, retention and treatment of complaints received by us regarding
accounting, internal accounting controls or auditing matters and (2) the
confidential, anonymous submission by our employees of any concerns regarding
questionable accounting or auditing matters.
In 2008,
the audit committee held eight meetings.
Who
serves on the nominating committee, and what are its
responsibilities?
The
current members of the nominating committee are Messrs. Allen, Kurz and Punches
(Chairman), each of whom is an “independent director,” as that term is defined
in Rule 4200(a)(15) of the Nasdaq Marketplace Rules. The nominating
committee met twice in 2008.
The
nominating committee has adopted a written charter that governs its
operations. A copy of the nominating committee charter is available
on our website at http://www.bkbank.com/info/investor under the link “Nominating
Committee Charter.”
The
nominating committee interviews, evaluates, nominates and recommends individuals
for membership on our board of directors and the committees of the
board. In assessing potential new directors, the nominating committee
specifically looks at the candidate’s qualifications in light of our needs at
that time, given the then-current mix of director attributes.
Any
potential director must possess certain minimum qualifications, qualities and
skills that are necessary for election as a director. First, a
candidate must meet the eligibility requirements set forth in our
bylaws. Next, candidates for director must also satisfy the following
criteria:
|
·
|
The
“independence” of the candidate under Rule 10A-3 promulgated under the
Exchange Act and for purposes of Rule 4200(a)(15) of the Nasdaq
Marketplace Rules;
|
|
·
|
Significant
business experience in banking, or in marketing, financial, legal,
accounting or other professional
disciplines;
|
|
·
|
Familiarity
with and participation in the local
community;
|
|
·
|
Prominence
and a highly-respected reputation in their
profession;
|
|
·
|
A
record of honest and ethical conduct, personal integrity and independent
judgment;
|
|
·
|
The
ability to represent the interests of our shareholders;
and
|
|
·
|
Sufficient
time available to devote to board activities and to enhance their
knowledge of our industry.
|
The
approval of the nominating committee is necessary for the candidate to be
selected as a nominee for election to the board. Nominees for
election to the board of directors are proposed to the board from various
sources, including management and members of the board of
directors. The nominating committee will also consider candidates
recommended by shareholders. Such recommendations should be made in
writing and delivered to the nominating committee at the following address:
Corporate Secretary, Britton & Koontz Capital Corporation, 500 Main Street,
Natchez, Mississippi 39120.
Shareholder
recommendations for director candidates for the 2010 annual meeting must be
received by the Corporate Secretary within the time periods set forth below in
the “Shareholder Proposals for the 2010 Annual Meeting” section under the
heading “
Proposals to be
Introduced at the 2010 Annual Meeting
.” As provided in Section
2.13 of our bylaws, a copy of which is available upon request, the shareholder’s
notice must set forth as to each nominee:
|
·
|
The
reason for making such nomination;
|
|
·
|
All
arrangements or understandings between or among the recommending
shareholder(s) and the nominee, as well as any information that would have
to be disclosed under Item 404 of Regulation S-K if the recommending
shareholder (and any beneficial owner on whose behalf the recommendation
has been made) was the registrant;
|
|
·
|
All
information relating to such nominee that is required to be disclosed in
solicitations of proxies for the election of directors pursuant to
Regulation 14A under the Exchange Act;
and
|
|
·
|
The
nominee’s written consent to being named in the proxy statement and to
serve as a director if elected.
|
The
shareholders’ notice must also set forth the name and address of the nominating
shareholder and information relating to, among other things, (1) all direct and
indirect ownership interests (including hedges, short positions and
derivatives), economic incentives and proxies to vote our stock held by such
shareholder and (2) all other information that the shareholder would be required
to disclose under Section 14 of the Exchange Act in connection with the
solicitation of proxies by such shareholder. If a shareholder intends
to recommend a nominee for election as director or proposes any other business
for consideration at an annual shareholders meeting on behalf of the beneficial
owner of the shares that the recommending shareholder is the record owner of,
the recommending shareholder must also provide the information described above
with respect to such beneficial owner. Any shareholder wishing to
nominate a candidate for election as a director should consult our bylaws for a
complete description of the informational and procedural requirements for
shareholder nominations of director candidates.
The board
may choose not to consider an unsolicited recommendation if no vacancy exists on
the board and the board does not perceive a need to increase the size of the
board. When it considers an unsolicited recommendation, the board
uses the same criteria as the nominating committee to evaluate the recommended
candidate.
Who
serves on the compensation committee, and what are its
responsibilities?
General.
The
compensation committee consists of Messrs. Allen, Bradford, Punches (Chairman)
and Thukral. Each member of the compensation committee is an
“independent director,” as defined under Rule 4200(a)(15) of the Nasdaq
Marketplace Rules. Each member is also a “non-employee director,” as
defined in Rule 16b-3 promulgated under the Exchange Act, and, with the
exception of Mr. Punches, each qualifies as an “outside director” within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, or
the Code.
The
compensation committee has adopted a written charter that governs its
operations. A copy of the compensation committee charter is available
on our website at http://www.bkbank.com/info/investor under the link
“Compensation Committee Charter.”
Committee
Functions.
The compensation committee recommends to the board
of directors the amount and type of compensation for our executives and our
directors. The members of the board who are independent directors for
purposes of the Nasdaq Marketplace Rules finally determine the compensation that
is paid to our executives and directors. The fundamental purpose of
our executive compensation program is to assist us in achieving our financial
performance goals and strategic objectives, which during 2008 were growth in
earnings per share, reduction of non-interest expenses, increasing the Bank’s
commercial loan portfolio and furthering the expansion of our presence in our
Baton Rouge market. Our compensation program has three basic goals
that are intended to advance these financial performance goals and strategic
objectives:
|
·
|
To
retain and motivate our executive officers, including the “named
executives officers” (see the “Executive Compensation” section
below);
|
|
·
|
To
reward our executives upon the achievement of measurable corporate,
business unit and individual performance goals and progress toward our
quantitative strategic objectives;
and
|
|
·
|
To
align each executive’s interests with the creation of shareholder
value.
|
The four
elements of our compensation program, (1) base salary, (2) annual short-term
cash incentives, (3) equity-based compensation and (4) perquisites, welfare
benefits and retirement plans, have been designed by the committee and the board
to achieve the goals of our compensation program.
Role of Our Executive
Officers.
Our executive officers compile and provide
information, make recommendations for the committee’s and the board’s
consideration and assist in the management and administration of our executive
benefit plans. Their responsibilities may include, but are not
limited to, the following:
|
·
|
Recommending
pay levels and grants and awards for key executive officers, other than
our chief executive officer;
|
|
·
|
Recommending
changes to ensure that our compensation programs remain competitive and
aligned with our objectives; and
|
|
·
|
Providing
information to the committee and the board, including but not limited to
(1) information concerning Company and individual performance, (2)
information concerning the attainment of our strategic objectives, (3) the
common stock ownership of each executive and his option holdings, (4)
equity compensation plan dilution, and (5) peer group compensation and
performance data.
|
Our
executive officers may attend the meetings of the committee, at its request,
except that our chief executive officer, Mr. Ogden, is not present during the
deliberations of his compensation.
Other.
Each of the
committee and the board may delegate its respective authority to subcommittees
as it deems appropriate, and it may engage accountants, attorneys and
consultants in its discretion. Although the compensation committee
has the authority to engage compensation consultants, it did not do so in
2008.
The
compensation committee met four times in 2008. A portion of each of
the committee’s meetings in 2008 was an executive session during which none of
our executive officers was present.
EXECUTIVE
OFFICERS
Who
are our executive officers?
W. Page
Ogden, William M. Salters and Jarrett E. Nicholson are our only executive
officers. The following table sets forth biographical information
about Mr. Salters and Mr. Nicholson.
Because he is also a
member of our board of directors, biographical information about Mr. Ogden
appeared previously under the heading “Board of Directors.”
Mr. Ogden
has entered into an employment agreement with us, while Mr. Salters and Mr.
Nicholson are appointed annually by the board of directors and serve at the
discretion of the board. The material terms of our employment
agreement with Mr. Ogden are described below under the question “
Have we entered into employment
agreements with our named executive officers?
” in the “Executive
Compensation” section.
Officer
Name
Since Age Position
William M.
Salters
2004
53
Chief
Financial & Accounting Officer and Treasurer of the Company and
the Bank.
Jarrett E.
Nicholson
2007
38
Chief
Operating Officer and Chief Credit Policy Officer of the Company and the
Bank
The
following is a brief summary of the business experience of Mr. Salters and Mr.
Nicholson:
William M. Salters
has served
as our and the Bank’s Chief Financial Officer since June, 2004. He
joined the Bank in July of 1993 when we acquired Natchez First Federal Savings
Bank. Since then he has served as the Bank’s Vice President in charge
of credit administration and Senior Vice President and Controller in charge of
financial and regulatory reporting. Mr. Salters was previously
employed by Natchez First Federal Savings Bank where he served as Vice President
and Treasurer in charge of various areas including accounting, loan servicing
and teller administration.
Jarrett E. Nicholson
has
served as Chief Operating Officer and Chief Credit Policy Officer since April,
2007. He joined the Bank in September, 1993 and served in various
capacities at the Bank until he assumed his current position. Prior
to becoming Chief Operating Officer and Chief Credit Policy Officer, Mr.
Nicholson served as a Senior Vice President and Regional Credit Officer for the
Bank.
EXECUTIVE
COMPENSATION
The
following tables and accompanying disclosures describe the compensation of our
named executive officers, or NEOs. Our NEOs are Mr. Ogden, Mr.
Salters and Mr. Nicholson. As noted above, the compensation committee
recommends to the board the compensation to be paid to our NEOs; the members of
the board who are independent directors for purposes of the Nasdaq Marketplace
Rules finally determine the named executive officers’ compensation.
Summary
Compensation Table
(2008
Fiscal Year)
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Grants
($)
(1)
|
Nonqualified
Deferred Compensation Earnings
|
All
Other Compensation ($)
|
Total
($)
|
|
W.
Page Ogden
President,
Chief Executive Officer
|
2008
2007
|
$170,000
169,167
|
$54,000
54,000
|
—
—
|
—
—
|
$32,444
(2)
26,606
|
$256,444
249,773
|
|
William
M. Salters
Chief
Financial Officer
|
2008
2007
|
$134,317
125,000
|
$25,000
25,000
|
$4,099
2,607
|
—
—
|
$12,948
(3)
11,813
|
$176,364
164,420
|
|
Jarrett
Nicholson
Chief
Operating Officer
|
2008
2007
|
$135,000
135,000
|
$25,000
25,000
|
$3,794
2,148
|
—
—
|
$22,599
(4)
22,723
|
$186,393
184,871
|
______________
|
(1)
|
The
amounts listed in this column reflect expense recorded in 2008 with
respect to all outstanding stock option grants, calculated in accordance
with Statement of Financial Accounting Standards No. 123R, “Share-Based
Payment.” Please refer to Note A, “Summary of Significant
Accounting Policies,” and Note J, “Employee Benefit Plans,” in the Notes
to Consolidated Financial Statements in our Annual Report on Form 10-K for
the year ended December 31, 2008, for details regarding the assumptions we
made to derive the fair value of our stock option grants. The
material terms of our stock option grants are set forth in this section
below under the question “
What equity compensation do we
provide to our named
executives?
”
|
|
(2)
|
Consists
of $7,200 in director fees for service on our and the Bank’s board of
directors, $4,819 accrued to Mr. Ogden under his Salary Continuation
Agreement, Company contributions to the 401(k) plan of $5,632,
Company-paid life insurance premiums of $401, the value of the
Company-owned automobile used by Mr. Ogden in the amount of $9,429 and
club memberships and civic association dues of
$4,963.
|
|
(3)
|
Consists
of $4,917 in Company contributions to the 401(k) plan, Company-paid life
insurance premiums of $401, club memberships and civic association dues of
$3,480 and an automobile allowance of
$4,150.
|
|
(4)
|
Consists
of $4,950 in Company contributions to the 401(k) plan, Company-paid life
insurance premiums of $401, automobile allowance of $12,000 and club
memberships and civic association dues of
$5,248.
|
How
does our bonus program operate?
Each
year, the board of directors budgets an aggregate amount that will be paid as
cash bonuses to all employees, including our named executives. At its meeting in
January of each year, the board analyzes progress toward our performance goals
and strategic objectives and various other factors that it deems relevant. The
board then determines how much each of our named executives contributed towards
our goals and objectives and allocates a cash bonus on that basis. No specific
formula is used; the board’s decisions are largely
discretionary. Cash bonuses paid to our named executives are listed
on the Summary Compensation Table above. On average, each named executive
received a cash incentive in the amount of $35,000.
Have
we entered into employment agreements with our named executive
officers?
Effective
as of January 1, 2009, we entered into a new employment agreement with Mr. Ogden
to replace the previous agreement, which had expired. Mr. Ogden is
our most senior executive and plays an integral role in our
success. We believe that his employment agreement, as well as the
Salary Continuation Agreement discussed below, creates a retention device and
demonstrates our loyalty to him. The material terms of Mr. Ogden’s
employment agreement are described below.
Position and
Term.
Mr. Ogden will serve as our President and Chief
Executive Officer. The initial term of the employment agreement
expires on December 31, 2012; the agreement provides for two successive one-year
renewal terms, each expiring on December 31st. The agreement
automatically renews, unless either we or Mr. Ogden give notice of non-renewal
at least 90 days prior to the expiration of the applicable term.
Compensation and
Benefits.
Mr. Ogden will receive an annual salary equal to his
current salary, which is $170,000. The board of directors or the compensation
committee will review Mr. Ogden’s salary at least annually and may increase or
reduce it. Mr. Ogden is eligible to participate in bonus and incentive plans and
employee benefit plans that we and the Bank maintain for our senior executives
and employees. We provide Mr. Ogden with a company-owned automobile
and reimburse him for his membership dues in country clubs.
Termination.
If
Mr. Ogden’s employment terminates because he dies, becomes disabled or retires,
or because the term of the employment agreement expires without further renewal,
Mr. Ogden (or his estate, as applicable) will receive a payment of the target
amount of his incentive bonus for the year in which his employment terminates,
pro rated to reflect his actual period of service during the
year. Payment will be made on the date that the incentive bonus is
ordinarily payable. The employment agreement describes when Mr. Ogden
will be considered “disabled” or to have “retired.”
If the
Company terminates Mr. Ogden’s employment for “cause” or he voluntarily
terminates his employment, we will pay Mr. Ogden only such amounts or benefits
as are required by law to be paid. In addition, he will forfeit any stock
options, restricted stock and other awards then subject to forfeiture conditions
or holding period limitations. Generally, “cause” includes (1) Mr.
Ogden’s commission of willful misconduct materially injurious to us, (2) his
indictment for a felony or a crime involving moral turpitude, (3) the willful
breach of his applicable agreement that is not cured after notice, and (4) the
willful failure to perform the duties of his position.
If we
terminate Mr. Ogden’s employment without cause, he will receive the following
payments: (1) an amount equal to his annual base compensation then in effect,
payable in a lump sum 30 days after termination; (2) the target amount of his
incentive bonus for the year in which the termination occurs, prorated to
reflect his actual service during the year and payable on the date the bonus is
ordinarily payable; and (3) if he and/or his dependents elect to continue group
medical coverage under Internal Revenue Code Section 4980B (that is, COBRA), the
amount of the continuation coverage premium for the same type and level of
coverage as received during his employment for the period such coverage is
actually continued, limited to 12 months. In addition, Mr. Ogden will
fully vest in the maximum benefit under his Salary Continuation
Plan. Finally, he will vest in the number of shares of restricted
stock awarded to him (if any) in the year of his termination occurs, prorated to
reflect his actual service during the year.
Change in
Control.
If we terminate Mr. Ogden’s employment without cause
or he terminates his employment for “good reason” within 24 months following a
“change in control” of the Company, Mr. Ogden will receive, in lieu of the
compensation and benefits described above, a lump-sum payment of an amount equal
to his annual base compensation then in effect and the target amount of his
incentive bonus for the year in which the termination occurs, without
proration. Such payment will be made 30 days after
termination. In addition, we will pay his COBRA continuation premiums
for up to 12 months following his termination. Finally, all of Mr.
Ogden’s stock options shall be immediately exercisable and all restrictions on
shares of restricted stock awarded to him shall lapse or be deemed satisfied on
the day of such termination.
Under the
employment agreement, “change in control” generally refers to: (1) the
acquisition by an unrelated person of not less than 50% of our common stock; (2)
the sale of all or substantially all of our assets; (3) a merger in which we are
not the surviving entity; or (4) a change in a majority of the members of our
board of directors that occurs within a specified period. “Good
reason” includes (1) a reduction in Mr. Ogden’s base compensation or his
authority, duties or responsibilities, (2) our breach of the employment
agreement, or (3) a material relocation of Mr. Ogden from where he currently
works.
Other
Provisions.
The employment agreement also imposes
noncompetition, nonsolicitation, confidentiality and other obligations on Mr.
Ogden both during and after his employment terminates. If he fails to satisfy
these obligations, we may suspend or cancel any payments or benefits due to Mr.
Ogden.
What
equity compensation do we provide to our named executives?
We
maintain the Britton & Koontz Capital Corporation 2007 Long-Term Incentive
Compensation Plan, or LTIP, under which stock options may be granted and
restricted stock may be awarded. The board believes that grants and
awards of equity compensation may be an effective method to align the interests
of our named executives with the interests of our shareholders; the board also
uses equity compensation to create performance-based incentives and to operate
as a retention device.
Grants or
awards are not made on a regular or recurring basis. Instead, each
year the board evaluates the aggregate compensation otherwise paid or payable to
our executives and their current share ownership and determines whether
additional compensation in the form of our common stock is
appropriate. In 2008, we did not grant any stock options or award any
shares of restricted stock.
When
stock options are granted, the exercise price is always fair market value, that
is, the closing market price of our common stock on the date of the grant as
quoted on The NASDAQ Capital Market (or on the immediately preceding trading
date if shares are not traded on the grant date). Because the
board does not make grants on a recurring basis, its practice is to determine
the appropriate vesting schedule and expiration date at the time of grant,
taking into consideration current practice and market conditions and the
purposes of the grant. We do not backdate options or grant options
retroactively.
The
following table includes information about unexercised stock options held by our
named executives as of December 31, 2008. None of our named executive
exercised any of his stock options in 2008.
Outstanding
Equity Awards at December 31, 2008
|
Name
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
|
W.
Page Ogden
|
0
|
0
|
0
|
0
|
|
William
M. Salters
|
750
|
2,250
(1)
|
19.02
|
05/30/12
|
|
|
1,540
|
460
(2)
|
14.50
|
11/20/11
|
|
Jarrett
Nicholson
|
750
|
2,250
(1)
|
19.02
|
05/30/12
|
|
|
578
|
172
(2)
|
14.50
|
11/20/11
|
______________
|
(1)
|
The
Company granted options on June 19, 2007, to vest 25% beginning June 1,
2008, and each June 1
st
thereafter. These options are set to expire May 30,
2012.
|
|
(2)
|
The
Company granted options on November 20, 2001, to vest 11% beginning June
1, 2002, and each June 1
st
thereafter. These options are set to expire November 11,
2011.
|
What
retirement benefits do we offer to our named executives?
We offer
to all our eligible employees, including our named executives, participation in
a tax-qualified 401(k) plan, which allows savings for retirement on a tax
deferred basis. Subject to applicable limits imposed under tax law,
eligible employees may elect to defer up to 100% of compensation. We
provide matching contributions on a discretionary basis, usually determined as
100% of the first 3% of each employee’s contribution plus 50% of the next 2% of
each employee’s contribution, and may elect to make an additional profit-sharing
contribution. Matching and profit sharing contributions are subject
to the completion of a six-year incremental vesting period. The plan
provides for the distribution of account balances following termination of
employment, generally in the form of a lump sum payment. The
footnotes to the Summary Compensation Table include information about our plan
contributions for the benefit of our named executives in the 2008 fiscal
year.
We also
maintain the ESOP, which is a tax-qualified employee stock ownership plan, to
which we make discretionary contributions. Our contributions are
allocated on the basis of compensation to individual accounts of eligible
employees. The contributions are invested in our common
stock. Benefits vest subject to the completion of a six-year
incremental vesting period. Benefits are usually paid in the form of
our common stock following the termination of employment.
We have
entered into a Salary Continuation Agreement with Mr. Ogden, which provides for
equal annual payments during the 15-year period following the later of (1) his
attainment of age 65 or (2) his separation from service. This
agreement is primarily intended to supplement the retirement income payable from
our tax qualified retirement plans. The amount of the benefit is
fixed and is based on Mr. Ogden’s age when his separation occurs; the maximum
annual benefit that Mr. Ogden may receive under the plan is
$40,000. One-half of the benefit vested on Mr. Ogden’s 55th birthday;
the remaining benefit will fully vest on August 31, 2010. If Mr.
Ogden dies while he is employed, his beneficiaries will be paid an annual
benefit equal to $40,000 during the 15-year period following his date of
death. If he dies after his installment payments have commenced, his
beneficiaries will receive the remaining payments. If Mr. Ogden’s
employment ceased as of December 31, 2008, he would have been eligible to
receive $18,311 annually during the 15-year period following his 65th
birthday.
Under the
Salary Continuation Agreement, upon the occurrence of a change in control, Mr.
Ogden will fully vest in the maximum annual benefit. He must forfeit
any portion of the benefit that constitutes an “excess parachute payment” under
Code Section 280G. For purposes of the Salary Continuation Agreement,
“change in control” means that a person or group has acquired 50% or more of the
total fair market value or voting power of the common stock of the Company or
the Bank, as determined by our board of directors.
Mr.
Ogden’s benefit under the Salary Continuation Agreement is subject to forfeiture
if he is terminated for cause. The agreement also contains a
non-competition covenant during the three-year period after his employment
ceases for any reason. If he breaches this covenant, we may cease all
further payments.
Will
any of our named executives receive any payments upon termination of employment
or upon our change in control?
Except
for the provisions of our employment agreement with Mr. Ogden, neither the
Company nor the Bank provides to our named executive officers cash payments in
the event of a change in control or a severance of employment occurring in
connection with a change in control. As described above, under his
employment agreement, Mr. Ogden may receive a cash payment in the event he
separates from service in connection with a change in control.
The LTIP
provides that all outstanding options will be deemed fully vested and
exercisable until the later of six months following a change in control change
or the expiration of their original term. All restrictions or conditions
applicable to shares of restricted stock will be deemed
satisfied. The term “change in control” is defined in the LTIP; it
generally refers to:
|
·
|
The
acquisition by a person or group of more than 50% of the fair market value
or total voting power of our common
stock;
|
|
·
|
The
change in a majority of the members of our board during a rolling 12-month
period without the approval of a majority of the existing members or that
a person or group acquires common stock representing 35% or more of our
total voting power during a rolling 12-month period;
or
|
|
·
|
The
sale of at least 40% of the fair market value of our
assets.
|
If a
change in control had occurred as of December 31, 2008 and Mr. Ogden’s
employment was terminated without cause or for good reason in connection with
the change, he would have received a cash payment of $85,000 pursuant to his
previous employment agreement (under his new employment agreement, upon his
termination under similar circumstances, Mr. Ogden would have received a
lump-sum payment of $170,000, plus COBRA continuation premiums for 12 months in
the aggregate amount of $6,994). Mr. Ogden would also have vested in
his right to receive the maximum annual benefit of $40,000 under his Salary
Continuation Agreement. Upon the occurrence of a change in control as
of December 31, 2008, each of Mr. Salters and Mr. Nicholson would have fully
vested in their respective stock options, but none of these stock options were
“in the money” on December 31, 2008.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
Who
are our auditors?
Our
consolidated financial statements for the year ended December 31, 2008, were
audited by the firm of Hannis T. Bourgeois, LLP. A representative of
Hannis T. Bourgeois, LLP is expected to be present at the annual
meeting. If present, the representative will have the opportunity to
make a statement if he or she desires to do so and will be available to respond
to appropriate questions. The audit committee has selected Hannis T.
Bourgeois, LLP as our independent registered public accountants for the fiscal
year ended December 31, 2009.
What
fees were paid to the auditors in 2008 and 2007?
Fees
billed by Hannis T. Bourgeois, LLP for professional services rendered for the
fiscal years ending December 31, 2008 and 2007 are shown below.
|
|
|
2008
|
|
|
2007
|
|
|
Audit
Fees
(1)
|
|
$
|
85,500
|
|
|
$
|
72,000
|
|
|
Audit-Related
Fees
(2)
|
|
|
730
|
|
|
|
7,250
|
|
|
Tax Fees
|
|
|
|
|
|
|
—
|
|
|
All
Other Fees
|
|
|
|
|
|
|
—
|
|
|
Total
|
|
$
|
86,230
|
|
|
$
|
79,250
|
|
______________
|
(1)
|
“Audit
Fees” include amounts paid for the audit of our annual financial
statements and review of the financial statements included in our Forms
10-Q in 2007 and 2008 and other regulatory
filings.
|
|
(2)
|
“Audit-Related
Fees” consist of fees for assurance and related services that are
reasonably related to the performance of the audit or review of our
financial statements. This category includes fees related to
the audit and attest services not required by statute or regulations, due
diligence related to mergers, acquisitions and investments, employee
benefit plan audits and consultations concerning financial accounting and
reporting standards.
|
In
accordance with the procedures set forth in its charter, the audit committee
pre-approves all auditing services and permitted non-audit services (including
fees and terms of those services) to be performed for us by our independent
registered public accountant prior to the engagement of the independent
registered public accountant with respect to such services, subject to the de
minimis exceptions for non-audit services permitted by the Exchange Act, which
are approved by the audit committee prior to the completion of the
audit. For fiscal years 2007 and 2008, none of the fees listed above
were covered by the de minimis exception for non-audit services permitted by the
Exchange Act. The audit committee has considered whether the
provision of services by Hannis T. Bourgeois, LLP for us other than audit
services is compatible with maintaining Hannis T. Bourgeois, LLP’s independence
and has concluded that it is compatible.
REPORT
OF THE AUDIT COMMITTEE
The
information provided in this section shall not be deemed to be proxy “soliciting
material” or to be “filed” with the SEC or subject to its proxy regulations or
to the liabilities of Section 18 of the Exchange Act. The information
provided in this section shall not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Exchange
Act.
Management
has the responsibility of preparing our financial statements and Hannis T.
Bourgeois, LLP, our independent auditors, has the responsibility for the audit
of those statements. The audit committee oversees our financial
reporting process on behalf of the board of directors. The audit
committee has sole authority to select, evaluate, appoint and replace the
independent auditor. The audit committee’s other duties and
responsibilities include assisting the board relating to:
|
·
|
The
integrity of our financial statements and financial reporting process and
our systems of internal accounting and financial
controls;
|
|
·
|
The
performance of the internal audit
function;
|
|
·
|
The
annual independent audit of our financial statements, the engagement of
the independent auditors and the evaluation of the independent auditors’
qualifications, independence and
performance;
|
|
·
|
Our
compliance with legal and regulatory requirements, including our
disclosure controls and procedures;
and
|
|
·
|
The
fulfillment of the other responsibilities set out in the audit committee
charter.
|
The audit
committee, in fulfilling its oversight responsibilities, reviewed and discussed
our audited financial statements for the year ended December 31, 2008, with
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments, and
the clarity of disclosures in the financial statements.
The audit
committee held eight meetings during 2008. The meetings were designed
to facilitate and encourage private communication between the audit committee,
our internal auditors and the independent auditors. The audit
committee discussed with our internal auditors and the independent auditors the
overall scope and plan of their respective audits. The audit
committee met with the internal auditors and the independent auditors, with and
without management present, to discuss the results of their examinations, their
evaluation of our internal controls, and the overall quality of our financial
reporting.
During
these meetings, the audit committee reviewed and discussed the audited financial
statements with management and the independent auditors. The
audit committee reviewed with the independent auditors their judgments as to the
quality, not just the acceptability, of our accounting principles and such other
matters as are required to be discussed with the audit committee under generally
accepted auditing standards, including, without limitation, the matters required
to be discussed by the Statement on Auditing Standards No. 61, as amended,
Communication with Audit
Committees
(AICPA, Professional Standards , Vol. 1. AU section 380). In
addition, the audit committee has received the written disclosures and letter
from the independent auditors required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent auditor’s
communications with the audit committee regarding independence, has discussed
this information regarding Hannis T. Bourgeois, LLP’s independence with Hannis
T. Bourgeois, LLP, and has considered the compatibility of non-audit services
with the independence of Hannis T. Bourgeois, LLP.
Based
upon the review and discussions referred to above, the audit committee
recommended to the board of directors that the audited financial statements be
included in our Annual Report on Form 10-K for the fiscal year ended December
31, 2008, for filing with the SEC.
Audit
committee:
W. W. Allen, Jr.
(Chairman)
Craig A. Bradford, D.M.D.
Bethany L. Overton
Vinod K. Thukral, Ph.D.
March
[17]
, 2009
PROPOSALS
What
are the voting procedures?
If you
vote by proxy (either by properly completing and returning a paper proxy card or
voting by telephone or over the Internet), the shares represented by your proxy
will be voted at the annual meeting as you instruct, including any adjournments
or postponements of the meeting. If you return a signed proxy card
but no voting instructions are given, the proxy holders will exercise their
discretionary authority to vote the shares represented by the proxy at the
annual meeting and any adjournments or postponements (1)
“FOR”
the election of nominees
Gordon S. LeBlanc, Jr., Bethany L. Overton and Robert R. Punches as Class I
directors and (2)
“AGAINST”
the proposal to
amend our Articles of Incorporation to eliminate our classified board of
directors.
If for
any reason one or more of the nominees is not available as a candidate for
director, an event that the board of directors does not anticipate, the proxy
holders will vote, in their discretion, for another candidate or candidates
nominated by the board.
Directors
are elected by a plurality vote; the nominees in each class who receive the
highest number of votes cast, up to the number of directors to be elected in
that class, are elected. The proposed amendment to our Articles of
Incorporation to eliminate our classified board of directors requires the
approval of at least 80% of our issued and outstanding shares. That
is, shareholders holding at least 80% of our issued and outstanding common stock
must vote in favor of the amendment. Abstentions and votes not cast
will have the same effect as a vote against the amendment.
You are
entitled to one vote for each share held.
Proposal No.
1 - Election of Class I Directors
The three
Class I directors elected at our annual meeting will serve a three-year term, or
until the 2012 annual meeting. The board has nominated for election
as Class I directors:
|
·
|
Gordon
S. LeBlanc, Jr.;
|
|
·
|
Bethany
L. Overton; and
|
Ms.
Overton and Mr. Punches currently serve on our board of directors; all of the
nominees serve on the board of directors of the Bank. Information
about Ms. Overton and Mr. Punches age and experience can be found earlier in
this proxy statement.
Mr.
LeBlanc, 48, is a managing director of Stonehenge Capital, LLC, a national
specialty finance company focusing on private equity, tax credit finance and
structured finance, having joined the company in 1999. From 1998 to
1999, Mr. LeBlanc was a director of Banc One Capital Markets,
Inc. Prior to joining Banc One, Mr. LeBlanc served as assistant
treasurer and ultimately senior vice president and treasurer at United Companies
Financial Corporation. From 1985 to 1990, Mr. LeBlanc worked for Premier Bank,
the predecessor to Bank One, Louisiana, serving in various positions, including
commercial lender. The board of directors has determined that, if
elected as a director, Mr. LeBlanc will be an “independent director” for
purposes of the Nasdaq Marketplace Rules. Mr. LeBlanc currently serves on the
Bank’s board of directors. Mr. Kurz and Mr. Patty, a former director,
recommended Mr. LeBlanc as a nominee for election to the board of
directors.
The
board of directors unanimously recommends a vote “FOR” the election of Gordon S.
LeBlanc, Jr., Bethany L. Overton and Robert R. Punches as Class I directors to
the board of directors.
Proposal
No. 2 – Amendment to our Amended and Restated Articles of Incorporation to
Eliminate our Classified Board of Directors
Proposal
No. 2 concerns a proposed amendment to Article Tenth of our Articles of
Incorporation pursuant to which our classified board of directors would be
eliminated over the next three years, with directors instead elected annually
(the “Declassification Amendment”). As noted earlier, for the
Declassification Amendment to become effective, it must be approved by 80% of
our issued and outstanding shares. If our shareholders do not approve
the Declassification Amendment in accordance with the previous sentence, the
present classification of the board of directors will continue, with three
classes of directors serving staggered three-year terms.
The
proposed amendment to Article Tenth of our Articles of Incorporation, which
restates Article Tenth in its entirety, is attached as Appendix A to this proxy
statement. Appendix A is incorporated herein by reference, and we
urge you to carefully read Appendix A in its entirety.
Background.
On
November 10, 2008, we received from Gerald R. Armstrong, the record holder of
300 shares of our common stock, a shareholder resolution he proposed to
introduce at the 2009 annual meeting. The proposed resolution, if
approved by our shareholders, requested the board of directors to take the steps
necessary to eliminate our classified board and to require that all of our
directors stand for election annually. After discussions regarding
the substance of this proposal among board members and with our outside
advisors, the board concluded that the elimination of the classified board
structure is not in the best interests of us or our shareholders. The
reasons underlying the board’s conclusion are set forth below under the heading
“Board of Directors’ Statement in Opposition to Eliminating our Classified Board
of Directors.”
The board
also concluded that, if Mr. Armstrong’s proposal received the support of a
majority of our shareholders, the board would likely submit an amendment to our
Articles of Incorporation eliminating the classified board of directors for a
shareholder vote at our 2010 annual meeting. Although the board
believed that less than a majority of our shareholders were likely to support
Mr. Armstrong’s proposed resolution, the board decided simply to allow our
shareholders to vote on the ultimate purpose of the resolution, the elimination
of our classified board of directors, at the 2009 annual meeting. The
board felt that addressing Mr. Armstrong’s proposal in this manner would have
the ancillary benefit of reducing the time and costs incurred in addressing his
proposal.
The board
then contacted Mr. Armstrong regarding the withdrawal of his proposal in
exchange for submitting to a shareholder vote at the 2009 annual meeting a
proposal to amend our Articles of Incorporation to eliminate our classified
board of directors. The board also offered to include Mr. Armstrong’s
statement in support of his proposal in the proxy statement for this annual
meeting. This supporting statement is set forth below under the
heading “Mr. Armstrong’s Statement in Support of Eliminating our Classified
Board of Directors.” On January 11, 2009, Mr. Armstrong agreed to the
board’s offer and withdrew his shareholder proposal.
Mr.
Armstrong’s address and telephone number are 910 Sixteenth Street, No. 412,
Denver, Colorado 80202-2917; (303) 355-1199.
The Declassification Amendment and
Ancillary Changes.
As noted earlier, Article Tenth of our
Articles of Incorporation currently provides for the classification of the board
of directors into three classes, as nearly equal in number as possible, with the
term of office of each class being three years. If the
Declassification Amendment is approved, the annual election of directors will be
phased in as follows:
|
·
|
Our
Class I directors (who are standing for election at this year’s annual
meeting) and our Class III directors (elected at the 2008 annual meeting)
will continue to hold office until the end of their respective
terms. Thus, the Class I directors elected at this year’s
annual meeting will serve for a term expiring at the 2012 annual meeting,
while our Class III directors will continue to serve for the term expiring
at the 2011 annual meeting; and
|
|
·
|
Commencing
with the 2010 annual meeting, directors will stand for election for
one-year terms, expiring at the next succeeding annual
meeting. Accordingly, at the 2010 annual meeting, our Class II
directors will be elected for a term expiring at the 2011 annual
meeting.
|
In all
cases, each director will hold office until his or her successor has been
elected and qualified or until the director’s earlier resignation or
removal. If the Declassification Amendment is approved, the board
will promptly adopt conforming amendments to our bylaws to reflect the
elimination of our classified board of directors.
In
addition to the above-described changes, the Declassification Amendment will
also eliminate the supermajority voting requirement that requires at least 80%
of our issued and outstanding shares approve any amendment to Article Tenth of
our Articles of Incorporation. This 80% voting requirement will be
removed so that, if shareholders wish to reestablish a classified board in the
future, only a majority of shares voted at a shareholders meeting at which a
quorum is present will need to vote in favor of the necessary amendment to our
Articles of Incorporation for the amendment to be approved.
The
Declassification Amendment will not become effective until it is filed with the
Secretary of State of Mississippi. If the Declassification Amendment
is approved, we intend to make this filing promptly after the annual
meeting.
Mr. Armstrong’s Statement in Support
of Eliminating our Classified Board of Directors.
The
following is the statement that Mr. Armstrong submitted in support of his
proposed shareholder resolution relating to the elimination of our classified
board of directors (with Mr. Armstrong’s approval, the statement has been
revised to reflect that an amendment, rather than a resolution, has been
submitted to the shareholders and to correct typographical errors):
The
proponent [Mr. Armstrong] believes the election of directors is the strongest
way that shareholders influence the directors of any
corporation. Currently, our board of directors is divided into three
classes with each class serving three-year terms. Because of this
structure, shareholders may only vote for one-third of the directors each
year. This is not in the best interest of shareholders because it
reduces accountability.
Xcel
Energy Inc., Devon Energy Corporation, ConocoPhillips, ONEOK, Inc. and
CenterPoint Energy, Inc., have adopted this practice, and it has been approved
by shareholders at C H Energy Group, Inc., Central Vermont Public Service
Corporation and Black Hills Corporation upon presentation of a similar
resolution by the proponent during 2008. The proponent is a
professional investor who has studied this issue carefully.
The
performance of our management and our Board of Directors is now being more
strongly tested due to economic conditions and the accountability for
performance must be given to the shareholders whose capital has been entrusted
in the form of share investments.
A study
by researchers at Harvard Business School and the University of Pennsylvania’s
Wharton School, titled “Corporate Governance and Equity Prices” (Quarterly
Journal of Economics, February, 2003), looked at the relationship between
corporate governance practices (including classified boards) and firm
performance. The study found a significant positive link between
governance practices favoring shareholders (such as annual directors election)
and firm value.
While
management may argue that directors need and deserve continuity, management
should become aware that continuity and tenure may be best assured when their
performance as directors is exemplary and is deemed beneficial to the best
interests of the corporation and its shareholders.
The
proponent regards as unfounded the concern expressed by some that annual
election of all directors could leave companies without experienced directors in
the event that all incumbents are voted out by shareholders. In the
unlikely event that shareholders do vote to replace all directors, such a
decision would express dissatisfaction with the incumbent directors and reflect
the need for change.
If you
agree that shareholders may benefit from greater accountability afforded by
annual election of all directors, please vote “
FOR”
this
[amendment].
Board of Directors’ Statement in
Opposition to Eliminating our Classified Board of
Directors.
After careful consideration, the board has
determined that the Declassification Amendment is not in the best interests of
the Company or our shareholders. Accordingly, the board of directors
unanimously recommends a vote AGAINST the Declassification
Amendment.
Our board
of directors is committed to the long-term financial health of the
Company. It has considered the most effective structure for the board
and determined that the classified board of directors is in our and our
shareholders’ best interests for the following reasons:
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·
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Continuity, Stability
and Experience
. A classified board ensures that, at any
given time, a majority of our directors will have prior experience and
familiarity with the Company, its operations, strategies and markets, as
well as with our management team. Thus, this structure provides
stability and continuity. A classified board structure also
enhances long-term planning because it helps attract and retain director
candidates who are willing to make long-term commitments of their time and
energy. Indeed, four of our directors have over 20 years of
service on the board. We believe such a commitment is necessary
for the board to maintain a focus on long-term business oversight and
strategic planning.
|
|
·
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Independence
. Electing
directors to three-year terms also enhances the independence of
non-management directors. A three-year term allows for a
certain amount of independence from management and special interest groups
who may have an agenda contrary to the long-term interests of all
shareholders. As a result, such directors are able to make
decisions that are in the best interest of the Company without having to
consider annual elections.
|
|
·
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Accountability
. The
board does not agree with Mr. Armstrong that annual elections of all
directors are necessary to provide greater
accountability. Rather, the board believes that accountability
depends upon the selection of responsible and experienced individuals who
are committed to sound corporate governance practices, such as our current
directors. In addition, the length of a directors’ term in
office does not affect the fiduciary duties to the Company and its
shareholders that our directors are bound to uphold. Finally,
regulatory changes governing the independence of directors and recent
public scrutiny of corporate directors serve as additional checks on the
performance and accountability of
directors.
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·
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Protection Against
Takeovers
. Finally, the board believes that its
classified structure improves its ability to protect the Company against
unsolicited takeover bids and better positions the board to negotiate
effectively on behalf of shareholders to realize the greatest possible
value in a change in control. Since only one-third of our
directors are elected at any annual meeting, it is impossible to elect
even a majority of the board at a single meeting. Thus, a
hostile purchaser cannot remove all of our directors at a single annual
meeting and thereby gain control of the Company without paying fair market
value. With a classified board, we have at least two annual
meetings to negotiate the best results for our shareholders without a
change in control of the board in any one year. A classified
board does not preclude a takeover, but rather, it provides us with time
and leverage to evaluate the adequacy and fairness of any takeover
proposal, negotiate on behalf of all shareholders and weigh alternative
methods of maximizing value for all
shareholders.
|
Similarly,
a classified board reduces our vulnerability to coercive tactics by
short-term-oriented shareholders who may seek, through a combination of
threatened or actual proxy contests and accumulation of sizeable minority
positions, to force a sale of the Company or a restructuring or recapitalization
transaction that may be in the interest of the particular shareholder but not in
the best interest of the Company and our shareholders as a whole.
For
the foregoing reasons, the board of directors unanimously recommends a
vote
“AGAINST”
the Declassification Amendment.
SHAREHOLDER
PROPOSALS FOR THE 2010 ANNUAL MEETING
At the
annual meeting each year, the board of directors submits to shareholders its
nominees for election as directors. In addition, the board may submit
other matters to the shareholders for action at the annual
meeting. Shareholders may also submit proposals for action at the
annual meeting.
Proposals
to be Included in Our Proxy Statement
Shareholders
interested in submitting a proposal for inclusion in our proxy materials for the
2010 Annual Meeting of Shareholders may do so by following the procedures
prescribed in Rule 14a-8 of the Exchange Act. If the 2010 annual
meeting is held within 30 days of April 28, 2010, shareholder proposals must be
received by the Corporate Secretary at 500 Main Street, Natchez, Mississippi
39120, no later than the close of business on November
[25]
, 2009 in order for such
proposals to be considered for inclusion in the proxy statement and form of
proxy relating to such meeting.
Proposals
to be Introduced at the 2010 Annual Meeting
For any
shareholder proposal intended to be presented in connection with the 2010 Annual
Meeting of Shareholders, including any proposal relating to the nomination of a
director to be elected to the board of directors, but not to be included in our
proxy statement for such meeting, a shareholder must give timely written notice
thereof to the Corporate Secretary in compliance with the advance notice and
eligibility requirements contained in our bylaws. To be timely, a shareholder’s
notice must be delivered to the Corporate Secretary at the address given above
not less than 90 days nor more than 120 days prior to the first anniversary of
the immediately preceding year’s annual meeting; provided, however, that in the
event that the date of the annual meeting is advanced by more than 30 days or
delayed by more than 90 days from such anniversary date, notice by the
shareholder to be timely must be so delivered not earlier than the 120th day
prior to such annual meeting and not later than the close of business on the
later of the 90th day prior to such annual meeting or the 10th day following the
day on which public announcement of the date of such meeting is first made. The
notice must contain information specified in our bylaws about each nominee or
the proposed business and the shareholder making the nomination or
proposal.
Under our
bylaws, based upon the meeting date of April 28, 2009 for the 2010 Annual
Meeting, a qualified shareholder intending to introduce a proposal or nominate a
director at the 2010 annual meeting but not intending the proposal to be
included in our proxy materials should give written notice to our Corporate
Secretary not earlier than the close of business on December 29, 2009 and not
later than the close of business on January 28, 2010.
The
advance notice provisions in our bylaws also provide that in the case of a
special meeting of shareholders called for the purpose of electing one or more
directors, a shareholder may nominate a person or persons (as the case may be)
for election to such position if the shareholder’s notice is delivered to the
Corporate Secretary at the above address not earlier than the 120th day prior to
the special meeting and not later than the close of business on the later of the
90th day prior to the special meeting or the 10th day following the day on which
public announcement is first made of the date of the special meeting and of the
nominees proposed by the board of directors to be elected at such
meeting.
The
specific requirements of our advance notice and eligibility provisions are set
forth in Article II, Section 2.13 of our bylaws, as amended, a copy of which is
available upon request. Such requests and any shareholder proposals
should be sent to the Corporate Secretary at 500 Main Street, Natchez,
Mississippi 39120.
OTHER
MATTERS
We are
not aware of any other matters to be brought before the annual
meeting. However, if any other matters are properly brought before
the annual meeting, the persons named on the enclosed proxy card will have
discretionary authority to vote all proxies with respect to such matters in
accordance with their judgment.
AVAILABILITY
OF ANNUAL REPORT ON FORM 10-K
Our
Annual Report on Form 10-K for the year ended December 31, 2008, which serves as
our annual report to shareholders, accompanies this proxy
statement. However, the Annual Report on Form 10-K does not form any
part of the material for the solicitation of proxies.
Upon
the written request of any record holder or beneficial owner of shares entitled
to vote at the annual meeting, we will provide without charge a copy of our
Annual Report on Form 10-K, as filed with the SEC. Requests should be
mailed to Ms. Cliffie S. Anderson, Corporate Secretary, Britton & Koontz
Capital Corporation, 500 Main Street, Natchez, Mississippi 39120.
By Order
of the Board of Directors
/s/ W. Page Ogden
W. Page
Ogden
President
and Chief Executive Officer
Appendix
A
Proposed
Amendment to Article Tenth of Amended and Restated Articles of Incorporation of
Britton & Koontz Capital Corporation:
The
Amended and Restated Articles of Incorporation of Britton & Koontz Capital
Corporation would be amended by deleting Article Tenth in its entirety and
substituting the following therefor:
TENTH: The
business and affairs of this Corporation shall be managed by or under the
direction of a Board of Directors consisting of such number of directors as
fixed in accordance with the bylaws of the Corporation.
Directors
shall be elected only at annual meetings of shareholders, and any vacancy in the
Board of Directors, however created, shall be filled at the annual meeting
succeeding the creation of such vacancy. At the 2009 annual meeting
of shareholders, the successors of the directors whose terms expired at that
meeting were elected for a term expiring at the 2012 annual meeting of
shareholders and shall serve until such directors’ successors shall have been
elected and qualified. Commencing at the annual meeting of
shareholders that is held in 2010 (the “
2010 Annual
Meeting
”), directors shall be elected annually for terms of one year,
except that any director in office at the 2010 Annual Meeting whose term expires
at the annual meeting of shareholders to be held in 2011 or 2012 (a “
Continuing Classified
Director
”) shall continue to hold office until the end of the term for
which such director was previously elected and until such director’s successor
shall have been elected and qualified. After the terms of all
Continuing Classified Directors have expired, all directors shall be elected for
terms expiring at the next annual meeting of stockholders and until such
directors’ successors shall have been elected and qualified.
No member
of the Board of Directors may be removed, with or without cause, except at a
meeting called in accordance with the Bylaws expressly for that purpose and
except upon a vote in favor of such removal of the holders of eighty percent
(80%) of the shares then entitled to vote at an election of
directors.
PROXY
PROXY
BRITTON
& KOONTZ CAPITAL CORPORATION
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 28, 2009
The undersigned hereby appoints Lane S.
Feltus, C. H. Kaiser, Jr. and A. Duncan McFarlane, or any one of them, proxies
for the undersigned, with full power of substitution, to represent the
undersigned and to vote, as designated on the reverse side, all shares of Common
Stock of Britton & Koontz Capital Corporation (the “Company”) held of record
by the undersigned as of March 16, 2009, at the 2009 Annual Meeting of
Shareholders of the Company to be held on April 28, 2009, or any adjournment(s)
or postponements thereof (the “Annual Meeting”). The proxies are
authorized to vote all shares of stock in accordance with the following
instructions and with discretionary authority upon such other business as may
properly come before the meeting or any adjournment or postponement
thereof.
I acknowledge receipt of the
accompanying Notice of Annual Meeting and Proxy Statement.
PLEASE
DATE, SIGN AND MAIL YOUR PROXY CARD IN THE ENVELOPE PROVIDED AS SOON AS
POSSIBLE.
Important
Notice Regarding the Availability of Proxy Materials for
the
Shareholder Meeting to be held on April 21, 2009:
Britton
& Koontz Capital Corporation’s 2009 proxy statement and its Annual Report
on
Form 10-K
for the year ended December 31, 2008, which is its 2008 Annual
Report,
are
available at http://www.voteproxy.com.
(Continued
and to be signed on reverse side)
Please sign, date and return promptly
in the enclosed envelope. Please mark your vote in blue or black ink
as shown here:
█
(1)
PROPOSAL NO. 1
– TO
ELECT THREE CLASS I DIRECTORS
|
Nominees:
01) Gordon
S. LeBlanc, Jr.
02) Bethany
L. Overton
03) Robert
R. Punches
|
o
FOR
ALL
o
WITHHOLD
ALL
o
FOR ALL
EXCEPT
|
INSTRUCTION
: To
withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT”
and write the number(s) of the nominee(s) on the line below.
________________________________
(2)
PROPOSAL NO. 2
– TO
AMEND THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF THE COMPANY TO
ELIMINATE ITS CLASSIFIED BOARD OF DIRECTORS
|
o
FOR
|
o
AGAINST
|
o
ABSTAIN
|
(3) IN
THEIR DISCRETION, TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
The
Board of Directors unanimously recommends that you vote “FOR” the nominees
listed in Proposal No. 1. The Board of Directors unanimously
recommends that you vote “AGAINST”
the
amendment to our Amended and Restated Articles of Incorporation to
eliminate
our
classified board of directors set forth in Proposal No. 2.
This
proxy, when properly executed, will be voted in the manner directed herein by
the undersigned shareholder.
If no specific directions are given,
the proxy holders will exercise their discretionary authority (1) to vote your
shares FOR the nominees listed at left and (2) AGAINST the amendment to our
Amended and Restated Articles of Incorporation. The proxy holders
designated on the reverse side will vote in their discretion on any other matter
that may properly come before the Annual Meeting.
Date:
Signature
of Shareholder
Date:
Signature
of Shareholder
NOTE: Please
sign exactly as your name appears on this Proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign in the full
corporation name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by
authorized person(s).
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