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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
☒
Filed by a party other than the Registrant
☐
Check the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material Pursuant to §240.14a-12
AUBURN NATIONAL BANCORPORATION, INC
(Name of Registrant as Specified in its Charter)
Not applicable.
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
☒
No fee required.
☐
Fee paid previously with preliminary materials.
☐
Fee computed on table in exhibit required by Item 25(b) per Exchange
Act Rules 14a-6(i)(1) and 0-11.
April 3, 2025
TO OUR SHAREHOLDERS:
You are cordially
invited to
attend the
Annual Meeting
of Shareholders
of Auburn
National Bancorporation,
Inc., to be held
at the AuburnBank Center,
100 North Gay Street,
Auburn, Alabama, on May 13, 2025,
at
3:00 P.M.,
local time (collectively, with any adjournments or postponements thereof, the “Meeting”).
The Notice of
Meeting, Proxy Statement
and Proxy are
enclosed. We
hope you can
attend and vote
your
shares in
person.
In any
case, please
complete the
enclosed Proxy
and return
it to
us.
This action
will
ensure that your preferences will
be expressed on the matters
that are being considered.
If you attend the
Meeting, you may vote your shares in person even if you have previously
returned your Proxy.
Prior to the meeting, a reception will
be held from 2:30 p.m. to 3:00
p.m. in the AuburnBank Center.
We
hope you can join us!
We
thank you for your support this past year,
and we encourage you to review our Annual Report.
If you
have any questions about the Proxy Statement or the Annual Report,
please call or write us.
Sincerely,
/s/ Robert W. Dumas
Robert W. Dumas
Chairman of the Board
AUBURN NATIONAL
BANCORPORATION,
INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD May 13, 2025
Notice is hereby
given that the
2025 Annual
Meeting of Shareholders
of Auburn National
Bancorporation, Inc.
(the
“Company”) will be
held at the
AuburnBank Center,
100 North Gay
Street, Auburn, Alabama
on Tuesday,
May 13,
2025,
at 3:00 P.M., local time
(collectively, with any adjournments or postponements
thereof, the “Meeting”), for the
following purposes:
1.
Election of Directors
.
To elect 11
nominees to serve on the Board of Directors for a one-year term;
2.
Advisory
Vote
on
Executive
Compensation
.
To
approve,
on
a
non-binding,
advisory
basis,
the
compensation
of the
Company’s
“named
executive
officers”
as disclosed
in
the
proxy
statement that
accompanies this notice;
3.
Frequency
of Advisory
Vote
on Executive
Compensation
. To
recommend, on
a non-binding,
advisory
basis, the frequency
(every one, two
or three years)
of shareholder votes
to approve, on
a non-binding,
advisory basis, the compensation of the Company’s
“named executive officers”;
4.
Amendment of Certificate of Incorporation
. To
approve an amendment to the Company’s
Certificate of
Incorporation to limit the liability of officers as permitted by the Delaware
General Corporation Law;
5.
Ratification of
Auditors
. To
ratify the
appointment of
Elliott Davis
LLC as
the independent
registered
public accounting firm of the Company for the fiscal year ending
December 31, 2025; and
6.
Other Business
. To transact such
other business as may properly come before the Meeting.
Only shareholders
of record
at the
close of
business on
March 17, 2025,
are entitled
to notice
of and
to vote
at the
Meeting. All shareholders, whether or
not they expect to
attend the Meeting in
person, are requested to
complete, date,
sign and return the enclosed Proxy in the accompanying envelope.
By Order of the Board of Directors,
/s/ C. Wayne Alderman
C. Wayne Alderman
Secretary
April 3, 2025
PLEASE COMPLETE,
DATE,
AND SIGN
THE ENCLOSED
PROXY AND
RETURN IT
PROMPTLY
TO THE
TRANSFER AGENT IN THE
ENVELOPE PROVIDED.
IF YOU ATTEND
THE MEETING, YOU MAY
VOTE
IN PERSON BY WRITTEN BALLOT IF YOU WISH, EVEN IF YOU HAVE
PREVIOUSLY
RETURNED YOUR
PROXY.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS
FOR THE
SHAREHOLDER MEETING TO BE HELD ON TUESDAY,
MAY 13,
2025
THE PROXY STATEMENT
AND ANNUAL REPORT TO SHAREHOLDERS
ON SECURITIES AND EXCHANGE COMMISSION FORM 10-K,
INCLUDING EXHIBITS, ARE
AVAILABLE
FREE OF CHARGES AT
WWW.AUBNPROXY.COM
AND OUR COMPANY’S
WEBSITE WWW.AUBURNBANK.COM
2
If you are
a beneficial owner
of shares of
Company common stock,
you should receive
a Notice
of Internet Availability
of Proxy Materials
or voting instructions
from any broker
or other nominee
holding your shares.
You
should follow
the instructions in
the Notice or the
voting instructions provided
by your broker or
nominee in order
to instruct your
broker or nominee on how to vote your shares.
Shares held beneficially through a broker or nominee may be voted at
the Meeting only if you obtain a legal proxy from the broker or nominee
giving you the right to vote the shares.
If the
Meeting is
adjourned or
postponed, your
proxy will
still be
effective
and will
be voted
at the
rescheduled or
adjourned Meeting. You
will still be able to change or revoke your proxy until the rescheduled or adjourned Meeting.
AVAILABILITY
OF ANNUAL REPORT
Copies of the Company’s 2024 Annual Report
on SEC Form 10-K
can also be
found by clicking the
heading “Investor
Relations” on the Company’s
website,
www.auburnbank.com,
and then clicking on “SEC Filings”,
and then clicking
on “Annual Reports”.
Upon the written request
of any person
whose Proxy is solicited
by this Proxy
Statement, the
Company will furnish to such person
without charge (other than for exhibits)
a copy of the Annual Report, including
financial statements and schedules thereto, as
filed with the SEC.
Such requests should be directed to
Luellen Bishop,
Shareholder Relations,
Auburn National Bancorporation,
Inc., P.O.
Box 3110,
Auburn, Alabama,
36831-3110 or
by
emailing: investorrelations@auburnbank.com.
REQUESTS FOR A COPY OF THE ANNUAL REPORT
(WITHOUT EXHIBITS) FROM THE
COMPANY BEFORE
THE ANNUAL MEETING MUST BE RECEIVED BY THE COMPANY
NOT
LATER THAN APRIL
26, 2025, OTHERWISE YOU MAY
NOT RECEIVE SUCH REPORT PRIOR
TO
THE MEETING.
3
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF
AUBURN NATIONAL
BANCORPORATION,
INC.
TO BE HELD MAY
13, 2025
General
This Proxy Statement
is being furnished
to shareholders of
Auburn National Bancorporation,
Inc. (the “Company”),
a
Delaware
corporation
registered
as a
bank
holding
company
under
the
Bank Holding
Company
Act
of 1956,
as
amended (the “BHC Act”), in
connection with the solicitation
of proxies by the Company’s
Board of Directors from
holders of the
outstanding shares of
the Company’s
$.01 par value
Common Stock (“Common
Stock”) for the
2025
Annual
Meeting
of
Shareholders
of
the
Company
(collectively,
with
any
adjournments
or
postponements,
the
“Meeting”).
Unless
the
context
otherwise
requires,
the
term
“Company”
includes
the
Company’s
subsidiary,
AuburnBank (the “Bank”).
The Company’s Common Stock is listed on the
Nasdaq Global Market under the symbol
“AUBN.”
The Meeting
is being
held
to consider
and
vote upon:
(i) the
election
of
11
nominees
for election
to the
Board
of
Directors
for
one-year
terms;
(ii)
on
a
non-binding,
advisory
basis,
the
compensation
of
the
Company’s
“named
executive officers”
(defined below)
as disclosed
in this
Proxy Statement
(a “say-on-pay
proposal”);
(iii) on
a non-
binding, advisory basis, the frequency
(every one, two, or
three years) of say-on-pay proposals
(the “say-on-frequency
proposal”);
(iv)
an
amendment
to
the
Company’s
Certificate
of
Incorporation
to
limit
the
liability
of
officers
as
permitted
by the
Delaware
General
Corporation
Law;
(v)
the ratification
of the
appointment
of Elliott
Davis
LLC
(“Elliott
Davis”)
as
the
independent
registered
public
accounting
firm
of
the
Company
for
the
fiscal
year
ending
December 31, 2025; and (vi) such other matters as may properly come before
the Meeting.
The Company’s Board of Directors knows of no business that will be
presented for consideration at the Meeting other
than the matters described in this Proxy Statement.
This Proxy Statement
and the Proxy
are first being
provided on or
about April 3, 2025,
to Company shareholders
of
record as of the close of business on March 17, 2025 (the
“Record Date”).
The Company’s 2024 Annual Report
(the
“Annual
Report”),
including
financial
statements
for
the
fiscal
year
ended
December 31,
2024,
can
be
found
by
clicking
the heading
“Investor Relations”
on the
Company’s
website, www.auburnbank.com,
and
then clicking
on
“SEC Filings”, and then clicking on “Annual Reports”.
Each shareholder is entitled to one vote
on each proposal for each
share of Common Stock held as
of the Record Date.
In determining
whether a
quorum exists at
the Meeting
for purposes
of all matters
to be voted
on, all votes
“for” or
“against,” as well as all abstentions (including votes to withhold authority to vote in certain cases), will be counted as
shares present,
and a
quorum will exist
if a
majority of
the shares
issued and
outstanding and
entitled to
vote at
the
meeting are present or represented by proxy.
Under Delaware law, the vote required for the election of directors is a
plurality of the votes cast by the shares
present
or represented by proxy, at the Meeting and entitled to vote on the election of directors, provided a quorum is present.
Consequently,
with respect to the election of
directors, “withhold” votes and broker
non-votes will not be counted
in
determining whether
the director
has received
the requisite number
of votes for
approval as they
are not considered
votes cast.
All other proposals require the affirmative
vote of the majority of shares present or represented by
proxy,
and
entitled
to
vote
at
the
Meeting
(meaning
that
of
the
shares
represented
at
the
meeting
and
entitled
to
vote,
a
majority of them
must be voted “for”
the proposal for it
to be approved).
Abstentions will have
the same effect
as a
vote “against”
the proposal,
and broker non-votes
will not be
counted in determining
whether the proposal
received
the requisite number of votes for approval.
4
A “broker non-vote”
occurs when a broker,
dealer, bank,
or voting trustee or
their nominee who
can be identified as
a record holder of Common Stock holding
shares in “street name” for a beneficial
owner of Common Stock does not
vote on
a particular
proposal because
the record
holder does
not have
discretionary voting
power for
that particular
item and has
not received
voting instructions
from the beneficial
owner.
Brokers (and other
similar record
holders)
that
have
not
received
voting
instructions
from
their
clients
cannot
vote
on
their
clients’
behalf
on
“nonroutine
matters.”
All matters
to be
considered at
the Meeting
are “non-routine,”
except brokers
lacking voting
instructions
from the beneficial owners,
may vote on
ratification of the
appointment of Elliott
Davis as the
Company’s independent
registered
public
accounting
firm.
Such
broker
votes
on
the
ratification
of
the
auditors
are
“broker
discretionary
votes,” and may be counted in meeting the quorum requirements.
Unless
otherwise
required
by
the
Company’s
Certificate
of
Incorporation
or
Amended
and
Restated
Bylaws
(“Bylaws”), or by the Delaware General Corporation Law or other applicable law,
any other proposal that is properly
brought before the Meeting will require the affirmative vote of the
majority of shares present or represented by proxy,
and
entitled
to
vote
at
the
Meeting
(meaning
that
of
the
shares
represented
at
the
meeting
and
entitled
to
vote,
a
majority
of
them
must
be
voted
“for”
the
proposal
for
it
to
be
approved).
With
respect
to
any
such
proposal,
abstentions will
have the
same effect
as a
vote “against”
the proposal,
and broker
non-votes will
not be
counted in
determining whether such proposal has received the requisite number of votes for approval.
The
Company’s
principal
executive
offices
are
located
at
100
N.
Gay
Street,
Auburn,
Alabama
36830,
and
its
telephone number is (334) 821-9200. The Company maintains an internet
website at www.auburnbank.com.
Record Date, Solicitation and Revocability of Proxies
The Record Date for the Meeting has been set as the close of business on
March 17, 2025. Accordingly,
only holders
of record
of shares
of Common
Stock on
the Record
Date will
be entitled
to vote
at the
Meeting.
At the
close of
business on such
date, there were
approximately 3,493,699
shares of Common
Stock issued and
outstanding, which
were held by approximately 330 shareholders of record.
Shares
of
Common
Stock
represented
by
a
properly
executed
Proxy,
if
such
Proxy
is
received
in
time
and
is
not
revoked, will be
voted at the
Meeting in
accordance with
the instructions
indicated in
such Proxy.
If you properly
execute and return your Proxy but do not indicate any voting instructions with respect
to one or more matters
to
be
voted
upon
at
the
Meeting,
or
if
your
voting
instructions
are
unclear,
your
shares
will
be
voted
in
accordance with the recommendation of the Board of Directors as to all such matters. Specifically, your shares
will be voted FOR the election of all
director nominees, FOR the advisory approval of the say-on-pay proposal,
FOR
the
advisory
recommendation
of
the
annual
say-on-frequency
proposal,
FOR
the
amendment
of
the
Certificate
of
Incorporation,
FOR
the
ratification
of
the
appointment
of
Elliott
Davis
as
the
independent
registered public
accounting firm
of the Company
for the fiscal
year ending December
31, 2025;
as well as
in
the discretion of the persons named
as proxies on all other
matters that may properly come before the Meeting.
A shareholder who has given a Proxy may revoke it at any time prior to
its exercise at the Meeting by either (i) giving
written notice
of revocation
to the
Company’s
Secretary,
(ii) properly
submitting
to the
Company
a duly
executed
Proxy
bearing
a
later date,
or (iii)
appearing
in person
at
the Meeting
and voting
in person
by written
ballot.
All
written notices
of revocation
or other
communications with
respect to
revocation of
Proxies should
be addressed
as
follows: Auburn National Bancorporation, Inc., P.O.
Box 3110, Auburn, Alabama 36831-3110,
Attention: C. Wayne
Alderman, Secretary.
Proxy Solicitation Costs
The cost of soliciting Proxies for the Meeting will be paid by the Company.
The Company’s officers
may also solicit
proxies by telephone or otherwise, but will not receive additional compensation for these activities.
In addition to the
solicitation of shareholders of record by mail, telephone, facsimile, email, or personal contact, the Company may also
make arrangements with brokers, dealers, banks, or
voting trustees or their nominees who can be identified
as record
holders
of
Common
Stock
to
forward
this
proxy
statement
and
the
2024
Annual
Report
to
beneficial
owners
of
Common
Stock.
The Company
will reimburse
such third-parties
for
their reasonable
expenses in
connection
with
these services.
5
PROPOSAL ONE: ELECTION OF DIRECTORS
General
Eleven persons have been nominated to serve on the
Company’s Board of Directors for one-year terms expiring at the
Company’s next scheduled annual meeting of shareholders and until their successors have been elected and qualified.
All the nominees for director are current directors of the Company,
and all have agreed to serve, if elected.
Proxies cannot be voted for more than the 11
nominees.
Cumulative voting for directors is not permitted.
All shares
represented by valid Proxies received and not revoked before they are exercised will be voted in the manner specified
therein.
If no specification is made, the Proxies will be voted for
the election of all 11 nominees listed below.
In the
unanticipated event
that any nominee
is unable
to serve,
the persons
designated as
proxy holders
will cast
votes for
the remaining nominees and for such other replacements as may be nominated by the Company’s
Board of Directors.
The nominees have been nominated by the Company’s Board of
Directors based on the recommendation of the
Nominating and Corporate Governance Committee, and
the Board unanimously recommends you vote
“FOR”
the election of all 11 nominees listed below.
Information about Nominees for Directors and Executive Officers
The following table sets forth the name
and age of each nominee for
director, a brief description of his or her
principal
occupation
and business
experience,
certain other
directorships and
how long
he or
she has
been a
director for
the
Company or the Bank.
In addition, we have also provided
a brief discussion of the
specific experience, qualifications,
attributes or
skills that
led to
the Nominating
and Corporate
Governance Committee’s
conclusion that
the nominee
should serve as
one of
our directors.
Except for
Robert W. Dumas, Chairman
of the
Board of
Directors of the
Company
and
the Bank
and David
A. Hedges,
President
and
CEO of
the Company
and the
Bank, none
of the
nominees
are
employed by the Company or the Bank or any entity that is an affiliate
of the Company or the Bank.
Name, Principal Occupation, Business Experience, Age, Directorships
and Qualifications
Director
Since
C. Wayne Alderman
2004
Dean
and
Professor
Emeritus,
former
Dean
of
Enrollment
Services
and
former
Dean,
College
of
Business, Auburn University; former Director of
Financial Operations of the
Bank from 2000 to
2007;
employed by Auburn University from 1979 to 2022.
Dr. Alderman is 74.
Dr. Alderman, a certified public
accountant and former Torchmark Professor of Accounting
at Auburn
University,
has
strategic
planning
expertise,
public
accounting
and
risk
and
general
management
knowledge to the Board.
He also has
valuable insight and banking knowledge
as a result
of his service
as the Bank’s Director of Financial Operations
from 2000 to 2007, in addition to serving as a director
of the Bank since 1993.
Terry W.
Andrus
1998
Retired President and
Chief Executive Officer
of the East
Alabama Medical Center
from 1984 to
2018;
Director
of Care
Network
Southeast, Former
Director of
Blue Cross/Blue
Shield of
Alabama.
Mr.
Andrus is 73.
Mr. Andrus
has executive decision-making,
financial expertise, and business-building
skills from his
past
service
as
the
Chief
Executive
Officer
of
a
regional
hospital.
Mr.
Andrus
also
has
served
as
Chairman of the Alabama Hospital
Association.
He possesses banking knowledge through his
service
as a director of the Bank since 1991.
6
Name, Principal Occupation, Business Experience, Age, Directorships
and Qualifications
Director
Since
J. Tutt
Barrett
2010
Mr. Barrett is a senior partner
in the law firm of Dean & Barrett, located in Opelika,
Alabama, where
he has worked since 1992. Mr. Barrett is 73.
Mr.
Barrett
brings
a
wealth
of
legal
and
risk
management
skills
to
the
Board.
He
also
provides
governance
skills
and
experience
gained
through
his
service
on
the
boards
of
various
charitable
organizations. In
addition, Mr.
Barrett served
on one of
the Bank’s
local advisory
boards from 1991
to 2010.
Laura J. Cooper
2020
Executive Director of Lee
County Youth
Development Center in Opelika,
Alabama since 2000.
She
has held various
positions with the
Lee County Youth
Development Center since
1987.
Ms. Cooper
is 66.
Ms.
Cooper
has
extensive
executive
experience
as
head
of
a
large
non-profit
in
Lee
County,
Alabama.
She also
currently serves
on the
Auburn Industrial
Development Board
of Directors,
the
Opelika Chamber of Commerce Board of Directors, and the Auburn University Human Development
and
Family
Studies
Advisory
Council.
Ms.
Cooper
has
held
numerous
other
leadership
positions,
including her past
service as President
of the Auburn
City School Board,
Chairperson of the
Auburn
Chamber of Commerce Board of Directors,
Chairperson of the United Way of Lee County Board, and
as a member of the Auburn University College of Education
Advisory Council. Ms. Cooper provides
a unique perspective to the Board of Directors regarding the financial needs of the
local community.
Robert W.
Dumas
2001
Chairman of the
Board of the Company
and the Bank since
January 2020; President
and CEO of the
Company
from 2017
to December
31, 2022
and
the
Bank from
2001
to
December 31,
2022;
Vice
Chairman of the Company
and the Bank from 2013
until his election as the
Chairman; President and
Chief Lending Officer of the Bank
from 1998 to 2001. He
has been employed by the
Bank since 1984;
and is a Director of East Alabama Medical Center.
Mr. Dumas is 71.
Mr.
Dumas
brings
valuable
insight
and
knowledge
to
the
Board
as
a
result
of
his
prior
service
as
President and CEO of the Company and the
Bank.
Mr. Dumas currently serves as a trustee or director
of the Auburn
University Board of
Trustees, the Auburn Research
and Technology Board of Directors,
and served
on the Board
of Directors
of the
Alabama Bankers
Association, and
the Federal Reserve
Bank of Atlanta.
He has
held numerous other
positions in professional
leadership, including his
service
as
President
and
Chairman
of
the
Alabama
Bankers
Association
and
a
member
of
the
Auburn
University
Business
Advisory
Council.
Mr.
Dumas
has
valuable
knowledge
from
his
46
years
of
service in the banking industry,
including serving as a director of the Bank since 1997.
William F.
Ham, Jr.
2004
Former
Mayor
of
City
of
Auburn
from
1998
to
2018;
owner
of
Varsity
Enterprises,
a
company
providing coin laundry services, since 1977.
Mr. Ham is 71.
Mr. Ham brings a
wealth of business-building
skills and community
knowledge to the
Board as a
result
of his experience as an entrepreneur and as
the former Mayor of City of
Auburn.
He also has valuable
knowledge through his service as a director of the Bank since 1993.
7
Name, Principal Occupation, Business Experience, Age, Directorships
and Qualifications
Director
Since
David A. Hedges
2022
President and Chief Executive Officer of the
Company and the Bank since January 1, 2023; formerly
Executive Vice
President and Chief Financial
Officer of the Company
and the Bank since December
2015; and various other positions with the Company and Bank since 2006.
Mr. Hedges is 46.
Mr. Hedges brings valuable knowledge
and insight to the Board as a result of his service as President
and CEO of
the Company and
the Bank and
his prior service
as Executive
Vice
President and Chief
Financial Officer
of the
Company and
the Bank.
Mr.
Hedges currently
serves on
the East
Alabama
Medical Center Foundation Board of Directors.
Prior to joining the Company, Mr.
Hedges worked at
KPMG LLP in their financial services audit practice from 2002 to 2006.
David E. Housel
2004
Director
of
Athletics
Emeritus
at
Auburn
University
since
January
2006;
Director
of
Athletics
at
Auburn University from 1994 to January 2006. He was employed by Auburn University from 1970 to
2006.
Mr. Housel is 78.
Mr.
Housel
brings
valuable
business,
public
relations,
and
strategic
planning
skills
to
the
Board
through
his
previous
experience
managing
a
major
collegiate
athletic
program
with
numerous
employees
and
supervising
multi-million
dollar
budgets.
He
also
possesses
banking
knowledge
through his service as a director of the Bank since 1997.
Michael A. Lawler
2024
Founder
and
Chief
Executive
Officer
of
Fullsteam
Holdings
LLC
(“Fullsteam”)
since
April
2018;
formerly President –
Strategic Markets Group
and executive officer
for Heartland Payment Systems,
Inc. from 2012 until its sale to
Global Payment System Inc. in 2016. After the sale,
Mr. Lawler briefly
retired before discussions that led to the formation of Fullsteam.
Mr. Lawler is 62.
Mr.
Lawler
has
executive
decision-making,
strategic
planning,
and
business-building
skills
as
the
founder and Chief Executive Officer of Fullsteam and previously as an executive officer of Heartland
Payment
Systems.
He also
possesses valuable
insight regarding
the intersection
of technology
and
payments for a variety of small business industry verticals and as a vendor to banks.
Anne M. May
1990
Retired Partner,
Machen & McChesney,
LLP,
an accounting firm
located in Auburn,
Alabama, from
1983 to 2018.
Ms. May is 74.
Ms.
May
has
valuable
risk
management
skills,
public
accounting
knowledge
and
expertise
in
compensation
and tax
compliance as
a partner
and former
managing
partner for
a local
accounting
firm.
She also possesses extensive
banking knowledge through
her service as a
director of the
Bank
since 1982.
Sandra J. Spencer
2024
Retired
from
Auburn
University;
where
she
served
as
Director
for
the
Alabama
4-H
Youth
Development and Conference Center in Columbiana, Alabama from 2000
to 2014. Ms. Spencer is 65
Ms. Spencer has
valuable business insights
and expertise from
her 25+ years
working in the
hospitality
industry.
She also
possesses a
wealth of
community knowledge
from her
service and
dedication to
local philanthropic
efforts, including
Chapter A, P.E.O.,
a philanthropic organization
focused on the
education and advancement of women.
8
CORPORATE GOVERNANCE
Board Leadership Structure
Robert W.
Dumas serves
as Chairman
of the
Company and
the Bank,
and previously
was Chairman,
President and
CEO of the Company and the Bank through December
31, 2022. The Board of Directors does not have a policy
with
respect to the separation of the
offices of Chairman and the Chief
Executive Officer.
The Board believes this issue is
part of the succession
planning process and that
it is in the
best interests of the
Company and our shareholders to
retain
the flexibility to combine or separate these functions.
The Board
believes that
combining the
positions of
Chairman and
Chief Executive
Officer did
not adversely
affect
the Board’s
independence.
The Company’s
Board
had
nine members
and
Mr.
Dumas was
the only
inside director
prior
to
the
election
of
Mr.
Hedges
in
November
2022
as
part
of
the
Company’s
and
the
Bank’s
management
succession plan. After filling
two vacancies on the
Board in March 2024,
eight directors have been
determined to be
independent under Nasdaq’s listing standards, and one
outside director is a
strong community and business
leader who
has not served as an
employee or officer of
the Company or the Bank.
Our corporate governance guidelines
provide
that the independent directors will meet at least semi-annually in executive
session without management present.
Anne
M.
May is
formally
identified
as
the
lead
independent
director.
The
lead
independent
director
has
broad
responsibility and authority,
including to:
●
Preside at all meetings of the Board
at which the Chairman is not
present, including executive sessions of the
independent directors;
●
Call meetings of independent directors; and
●
Serve as the principal liaison between the Chairman and the independent
directors.
The
Company
believes
the
foregoing
structure,
combined
with
the
Company’s
other
governance
policies
and
procedures,
provide
appropriate
oversight,
discussion
and
evaluation
of
decisions
and
direction
from
the Board
of
Directors.
9
Board’s Role in Risk Oversight
The
Board
of
Directors
maintains
oversight
responsibility
of
the
management
of
the
Company’s
risks.
Risk
management
includes
understanding
the
risks
to
the
Company,
the
actions
needed
to
manage
those
risks,
and
determining
acceptable
levels
of
risk
for
the
Company.
The
full
Board
of
Directors
reviews
enterprise
risk
management
through or
with the
Company’s
and
the Bank’s
Board
committees
and
management
committees, and
with management.
While
the
Board
of
Directors
maintains
the
ultimate
oversight
responsibility
for
risk
management,
the
following
committees have these responsibilities for risk management oversight:
•
The Compensation Committee evaluates,
with our senior
officers, risks posed by
our compensation programs
and
seeks
to
avoid
compensation
that
may
promote
unnecessary
or
excessive
risks,
and
which
does
not
reward
performance
inconsistent
with
applicable
laws.
The
Compensation
Committee’s
role
and
its
relationship
with
the
Board
are
more
fully
described
under
“Committees
of
the
Board
–
Compensation
Committee.”
•
The
Audit
Committee
oversees
risks
related
to
our
financial
statements,
our
compliance
with
legal
and
regulatory requirements,
including transactions
with insiders
and affiliates,
our financial
reporting process
and system of
internal controls.
The Audit
Committee also
appoints and
evaluates the performance
of our
independent
auditors
and
our
internal
auditing
department.
The
Audit
Committee
periodically
meets
privately in separate
executive sessions with
management, our internal audit
department, and the
independent
auditors.
The Audit
Committee’s
role and
its relationship
with the
Board are
more fully
described under
“Committees of the Board – Audit Committee.”
While each of these committees is responsible for evaluating
and overseeing the management of these risks, the
entire
Board
of
Directors
is
informed
through
committee
reports
about
such
risks.
In
addition,
each
of
the
Company’s
directors serves on the Bank’s Board of Directors.
We believe that Board committees that report at the Bank level are
critical to
the
Company’s
risk management
processes.
These
committees
include
the Director’s
Loan
Committee,
Asset/Liability
Committee,
Information
Technology/Information
Security
(“IT/IS”)
Steering
Committee,
and
Operations
and
Bank
Secrecy
Act
(“BSA”)
Committee.
These
committees
each
play
a
role
in
monitoring
the
following
risks
to
the
Bank
and
Company:
credit,
liquidity,
interest
rate,
anti-money
laundering
and
sanctions
compliance,
general
compliance,
and
operational,
reputational
and
information
technology
and
systems
security,
including cybersecurity risks.
Director Nominating Process
The Nominating
and Corporate
Governance
Committee, in
consultation
with the
Chairman
of the
Board, monitors
existing director qualifications
and periodically examines
the composition of
the Company’s
Board of Directors
and
determines whether the Board of Directors would better serve its purposes with the addition of one or more directors.
This assessment includes, among other relevant
factors, in the context of
the perceived needs of
the Board at that
time,
including experience and relevant knowledge, reputation, judgment, diversity
and skills.
If the
Nominating and
Corporate Governance
Committee determines
that adding
a new
director is
advisable or
if a
vacancy on the Board
arises or is
expected, the Nominating and
Corporate Governance Committee initiates
the search,
and collaborates with
the other directors
and management.
This Committee may
retain a search
firm to assist
in the
search,
if the
Committee
determines
this is
necessary
or appropriate.
The Nominating
and
Corporate
Governance
Committee will consider all appropriate candidates proposed by
management, directors and shareholders.
10
Information
regarding
potential
candidates
is presented
to
the
Nominating
and
Corporate
Governance
Committee,
which then evaluates the candidates based on the needs of the Board of Directors at that time. Nominees for directors
are
considered
on
the
basis
of
various
factors,
including
their
character,
experience,
skills,
and
knowledge
of
our
communities. We
seek a Board of Directors with
a majority of independent directors
with a range of complementary
experiences
and
perspectives,
including
persons
with
the
expertise
and
qualifications
required
by
our
Audit
and
Compensation Committees.
Potential candidates
are evaluated
according to
the same
criteria, regardless
of whether
the candidate
was recommended
by the
Nominating and
Corporate Governance
Committee, a
shareholder,
another
director,
management or
another third
party.
The Nominating
and Corporate
Governance Committee
then meets
to
consider
the
candidate(s)
and
recommends
candidate(s)
to
the
full
Board
of
Directors
for
approval
and
recommendation to the shareholders as nominees for director.
The director nomination process
is designed so
that the Board
considers members with diverse
backgrounds, including
race,
ethnicity,
gender,
education,
skills
and
experience,
with
a
focus
on
appropriate
financial
and
other
expertise
relevant
to
the
Company’s
business
and
knowledge
of
the
communities
we
serve.
The
nomination
process
also
considers
issues
of
judgment,
independence,
conflicts
of
interest,
integrity,
ethics
and
commitment
to
the
goal
of
maximizing
shareholder
value.
The
Board
and
the
Nominating
and
Corporate
Governance
Committee’s
goal
with
regard to the consideration of diversity in identifying director nominees is to assemble a group of directors with deep,
varied experiences and perspectives, sound judgment and commitment to
the Company’s success.
Shareholder Nominations
Subject to the requirements of
the Company’s Certificate of Incorporation and Amended
and Restated Bylaws, as
well
as any requirements of law
or regulation, any shareholder entitled to
vote for the election of
directors may recommend
a director nominee. Advance notice
of such proposed nomination must
be received by the Secretary
of the Company
not less than
21 days nor
more than 60
days prior to
any meeting of
the shareholders called for
the election of
directors.
Nominations should be submitted
in writing to
the Secretary of
the Company specifying the
nominee’s name and other
required
information
set
forth
in
the
Company’s
Bylaws.
No
shareholder
nominee
recommendations
have
been
received with
respect to
the Annual
Meeting, and
no third-party
search firms
were used
in 2024 to
identify director
candidates.
Code of Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics applicable to all Company’s directors, officers and
employees.
The
Code
of
Conduct
and
Ethics,
as
well
as
the
charters
for
the
Audit
Committee,
Compensation
Committee,
and
the
Nominating
and
Corporate
Governance
Committee,
can
be
found
by
clicking
the
heading
“Investor Relations” on the Company’s
website,
www.auburnbank.com
, and then clicking on “Corporate Overview,”
and then
clicking on
“Governance Documents.”
The Company
posts any
amendments to
or waivers
of its
Code of
Conduct and
Ethics at
this location
on the
Company’s
website.
Any shareholder
may make
a written
request for
a
copy
of
the
Company’s
Code
of
Conduct
or
the
Audit
Committee,
Compensation
Committee,
or
Nominating
and
Corporate
Governance
Committee
charters
to
Auburn
National
Bancorporation,
Inc.,
100
N.
Gay
Street,
Auburn,
Alabama 36830, Attention: Marla
Kickliter, Senior
Vice President of
Compliance and Internal Audit.
Requests may
also be made via telephone
by contacting Ms. Kickliter or
Tamela Seymour, Chief Human Resources Officer, at (334)
821-9200.
As additional corporate
governance standards are
adopted, they will
be disclosed on
an ongoing basis on
the Company’s website.
11
Insider Trading Policy
The
Company
maintains
an
Insider
Trading
Policy
which
is
reviewed
and
updated
at
least
annually.
The
Insider
Trading Policy
is included as
Exhibit 19.1 to
our 2024 Annual
Report on SEC
Form 10-K filed
with the SEC.
This
Policy covers Company and
Bank directors, officers, and employees,
and certain of their family members,
as well as
consultants or
independent contractors,
whose business
relationship with
the Company
provides access
to “material
nonpublic information” regarding the Company or
third parties acquired as a result of their services to the Company.
All Covered Persons are prohibited
from engaging in transactions, including purchases
and sales in, and gifts of, any
(i)
Company
Security
while
in in
possession
of
Material
Nonpublic
Information
about
the Company
regardless
of
whether the Company’s Trading Window is open
or closed, or
(ii) third party
securities while in
possession of Material
Nonpublic
Information
about
such
issuer
that
has
been
obtained
by
reason
of
the
person’s
employment
by,
or
association
with,
the
Company.
No
such
“covered
person”
may
engage
in
transactions
with
respect
to
Company
securities of
a speculative
nature at
any time.
Such persons
are at
all times
prohibited from
short-selling Company
securities or engaging
in transactions involving
Company Derivative Securities.
This prohibition includes
trading in
Company-based put options and other
options contracts, including straddles, swaps,
short sales and the
like, excluding
the exercise of options and other equity awards or Company Derivative
Securities, if any, granted
to covered persons
by the Company as incentive compensation.
This Policy also requires prior notice to and approval
of the Company before entering into, modifying or terminating
a Rule
10b5-1 plan,
Non-Rule 10b5-1
plan, or
other trading
plan.
Covered persons
are responsible
for determining
that they are not in possession of,
and do not have access to,
material nonpublic information, and for verifying that the
Company has not imposed any
restrictions on their ability to engage
in trades when taking action with
respect to any
trades
or
entering into,
modifying
and
terminating
any Rule
10b5-1,
Non-Rule
10b5-1
or other
trading
plan.
The
Insider Trading
Policy includes
a policy
that any
Company issuances
or repurchases
of Company
securities will
be
reasonably designed to promote compliance with (i) the
Nasdaq listing standards applicable to the Company,
and (ii)
any insider trading laws that are applicable to the Company in connection to
such transactions.
Shareholder Communications
Shareholders who
wish to communicate
with the
Board, or
any individual
director or
group of
directors, may
do so
by sending written communications addressed to: Board of Directors of Auburn National Bancorporation, Inc., c/o C.
Wayne
Alderman,
Secretary,
Auburn
National
Bancorporation,
Inc.,
100
N.
Gay
Street,
P.O.
Box
3110,
Auburn,
Alabama, 36831-3110.
All information will be
compiled by the Secretary
of the Company and
submitted to the Board
of Directors or each applicable director at the next regular meeting of
the Board of Directors.
Meetings of the Board of Directors
The
Boards
of
Directors
of
the
Company
and
the
Bank,
as well
as
the
committees
of
the
Company’s
and
Bank’s
Boards of Directors,
generally hold meetings on
the same day.
The Company’s
Board of Directors held
12 meetings
during 2024.
All directors attended at least
75% of the aggregate of
all meetings of the Company’s Board of
Directors
and
each
committee
on
which
they
served.
Company
directors
are
encouraged
to
attend
the
Company’s
annual
meetings of shareholders,
and all company directors attended the 2024 Annual Meeting of Shareholders.
12
Committees of the Board of Directors
In
accordance
with
the
Company’s
Corporate
Governance
Guidelines
or
Bylaws,
the
Company’s
Board
has
established the committees described below.
At the beginning of
2025, the Board dissolved
its Independent Directors,
Property
and Strategic
Planning
Committees.
This action
was taken
after consideration
of the
Company’s
current
business
and
to
better
(i)
focus
the
Board’s
activities
and
(ii)
utilize
its
directors’
time
and
talents.
Independent
Directors can
meet any
time, and
are required
by the
Nasdaq governance
rule to
meet in
executive session
at least
twice a year.
A committee structure is unnecessary.
The Board determined that Strategic Planning is best conducted
by the Board, as a whole.
The Property Committee was determined as not needed.
As of March 17, 2025, the members of each committee are identified below
:
Director Name
Audit
Compensation
Nominating
& Corporate
Governance
Executive
Alderman
✓
✓
Andrus
✓
(C)
✓
✓
(C)
Barrett
✓
✓
✓
Cooper (1)
Dumas
✓
(C)
Ham, Jr.
✓
Hedges
✓
Housel
✓
✓
Lawler
✓
May
✓
✓
(C)
✓
✓
Spencer (2)
(C)
Chairman
(1)
Although Ms. Cooper does not currently serve on any committees at the Company level, she serves on the Bank’s
IT/IS
Steering Committee, Operations Committee and Asset/Liability Committee.
(2)
Although Ms. Spencer does not currently serve on any committees at the Company level, she serves on the Bank’s Loan
Committee, Operations Committee and Asset/Liability Committee.
Audit Committee
The
Audit
Committee
has
the
responsibilities
set
forth
in
the
Audit
Committee
Charter,
including
reviewing
the
Company’s
financial statements,
evaluating internal
accounting controls,
reviewing reports of
regulatory authorities
and determining
that all
audits and
examinations required
by law
are performed.
It appoints
independent
auditors,
reviews
and
approves
their
audit
plan
and
reviews
with
the
independent
auditors
the
results
of
the
audit
and
management’s
response thereto.
The Audit
Committee also
reviews the
adequacy of
the internal
audit budget
and
personnel, the internal audit plan
and schedule, and results of audits performed
by the internal audit staff.
The Audit
Committee
is
responsible
for
overseeing
the
entire
audit
function
and
appraising
the
effectiveness
of
internal
and
external audit efforts.
The Audit Committee
also coordinates with
our Compensation
Committee in the
event of any
restatement
of
our
financial
statements
that
would
require
a
clawback
of
previously
paid
compensation
under
our
Erroneously
Awarded
Executive
Incentive-Based
Compensation
Recovery
Policy.
All
members
of
the
Audit
Committee are “independent directors,”
as defined in
the Nasdaq governance rules,
and meet the
independence criteria
set forth in
SEC Rule 10A
-3(b)(1) and
the Nasdaq
governance rule,
and also the
Nasdaq and
SEC financial
literacy
requirements.
The
audit
committee
has
the
authority
to
engage
independent
counsel
and
other
advisers,
as
it
determines necessary
to perform
its duties.
This committee
held 16
meetings in
2024.
The Board
of Directors
has
determined that C.
Wayne
Alderman and Terry
W.
Andrus, members of
the Audit Committee,
are “audit committee
financial experts,” as defined by SEC rules.
13
Compensation Committee
The Compensation Committee
Charter authorizes the
Compensation Committee to
review,
recommend and
approve
the compensation of
the Chief Executive
Officer,
other executive officers
and other key
employees of the
Company
and the Bank;
evaluate the
Company's incentive compensation
plans, including
any equity compensation
plans; and
select, interview and make hiring
recommendations to the Board for
the Chief Executive Officer position.
In addition,
the Committee
approves changes
to any
Company personnel
policy manuals
or handbooks,
and annually
evaluates
director
compensation.
This Committee
will
administer
the Company’s
2024 Equity
and
Incentive
Compensation
Plan, and,
in coordination
with the
Audit Committee,
make determinations
regarding, and
oversee, the
recovery of
erroneously
awarded
executive
compensation
under
our
Erroneously
Awarded
Executive
Incentive-Based
Compensation Recovery
Policy.
Although it has
not done so,
the Compensation
Committee may delegate
authority
to subcommittees
consisting of
one or
more members,
as it deems
appropriate.
The Compensation
Committee may
engage its
own legal
counsel and
compensation consultants,
funded by
the Company.
All current
members of
the
Compensation Committee are “independent directors” as
defined in the Nasdaq listing
standards. This committee held
three meetings in 2024.
Nominating and Corporate Governance Committee
The
Nominating
and
Corporate
Governance
Committee’s
purpose
is
to
identify
individuals
qualified
to
become
members of the Company’s Board of Directors and
recommend to the Board any
director nominees.
The Nominating
and Corporate
Governance Committee
considers all
appropriate candidates
proposed by
management, directors
and
shareholders.
The
Committee
will
consider
all
shareholder
nominees
that
are
submitted
in
accordance
with
the
procedures described
in the
Shareholder Nominations
section in
this Proxy
Statement.
This committee
also takes
a
leadership role in shaping
corporate governance policies and
practices of the
Company, and changes to the
Company’s
and
the
Bank’s
organization
and
governing
documents.
The
responsibilities
and
duties
of
the
Nominating
and
Corporate
Governance Committee
are more
fully set
out in
the Nominating
and Corporate
Governance Committee
Charter.
All
members
of
the
Nominating
and
Corporate
Governance
Committee
are
“independent
directors”
as
defined in the
Nasdaq listing standards.
The Nominating and
Corporate Governance
Committee held four
meetings
in 2024.
Executive Committee
The Company’s Executive Committee
is authorized to act in the absence of the Board of Directors on certain matters
that require Board approval.
This committee held one meeting during 2024.
14
Board Compensation
In
2024,
the
Chairman
received
$2,000
and
each
director
received
$1,000,
respectively,
for
each
Board
meeting
attended,
which
have
been
increased
to
$2,200
and
$1,100
respectively
for
2025.
When
the
Company
and
Bank
boards meet on the same day, a fee is paid for one board meeting only.
In addition, members of the Audit Committee
and the Compensation Committee of the Company,
which also serve as the members of the Audit Committee and the
Compensation
Committee of
the Bank,
respectively,
receive an
additional fee
of $250
for each
committee meeting
attended, while each Chairman
of these committees receives
$500 per meeting attended.
Members of the Bank’s Loan
Committee,
Asset/Liability
Committee
and
IT/IS
Steering
Committee
receive
$250
for
each
committee
meeting
attended, while each
Chairman of these committees
receives $500 per meeting
attended.
In 2024, Committee
chairs
and members of the Bank’s Strategic Planning Committee and Property
Committee received $250 for each committee
meeting attended.
Members of the
Independent Directors
Committee did not
receive fees in 2024.
Historically,
the
Company’s
and
the
Bank’s
directors
were
eligible
to
receive
year-end
cash
bonuses
based
upon
the
Company’s
financial
performance.
No
such
bonuses
were
paid
in
2025
for
the
Company’s
performance
in
2024.
The
Compensation
Committee
considered
director
compensation
and
eliminated
bonuses
and
adopted
a
new
director
retainer fee of $300
per month per director
and $600 per month
for the Chairman of
the Board effective January, 2024,
which
are
paid
in
addition
to
fees
for
attending
Board
and
Committee
meetings.
In
2024,
aggregate
fees
paid
to
Company and
Bank directors totaled
approximately $275,900.
The compensation of
directors may be
changed from
time to time
by the Board
of Directors upon
recommendation of
the Compensation
Committee, without shareholder
approval.
The
following
table
provides
information
concerning
the
compensation
of
the
Company’s
directors
for
2024.
Compensation
paid
to
David
A.
Hedges
for
his
service
as
director
is
reported
as
part
of
his
compensation
as
an
employee and is reported in the Summary Compensation Table
on page 17.
Name
Fees Earned or
Paid in Cash
Non-equity
Incentive Plan
Compensation
Total
C. Wayne Alderman
$
38,100
$
—
$
38,100
Terry W.
Andrus
24,100
—
24,100
J. Tutt Barrett
29,850
—
29,850
Laura J. Cooper
19,350
—
19,350
Robert W.
Dumas
41,200
—
41,200
William F.
Ham, Jr.
25,100
—
25,100
David E. Housel
24,600
—
24,600
Michael A. Lawler
11,950
—
11,950
Anne M. May
21,600
—
21,600
Sandra J. Spencer
13,700
—
13,700
The Company did not grant any equity or non-equity incentive plan awards in 2024. No stock options were exercised
or stock awards vested in 2024.
15
PROPOSAL TWO: ADVISORY VOTE ON
EXECUTIVE COMPENSATION
The
purpose
of
the
Company’s
compensation
policies
and
procedures
is
to
attract
and
retain
experienced,
highly
qualified executives
to promote our
long-term success
and shareholder
value.
The Board, upon
recommendation of
its Compensation Committee, believes our compensation policies
and procedures achieve this objective, and
therefore
recommends
that shareholders vote “FOR” the say-on-pay proposal
through approval of the following resolution:
“RESOLVED,
that
the
compensation
paid
to
the
Company’s
named
executive
officers,
as
disclosed
in
the
Company’s
Proxy
Statement
for
the
2025
Annual
Meeting
of
Shareholders
pursuant
to
the
compensation
disclosure rules of the
Securities and Exchange Commission,
including the compensation tables
and any related
material disclosed in the Proxy Statement, is hereby
APPROVED.”
This say-on-pay proposal
gives you as a
shareholder the opportunity
to endorse or not
endorse the compensation
we
pay
to our
named executive
officers
(identified
below) by
voting
to approve
or not
approve such
compensation
as
described in this Proxy
Statement. This vote is
advisory, which means that it is
not binding on the
Company, the Board
or the
Compensation Committee.
However,
the Board
and the Compensation
Committee will
consider the
outcome
of the vote when considering future executive compensation arrangements.
In last year’s Proxy
Statement for the 2024 Annual
Meeting, a similar advisory vote
was requested by the Company.
The results of last year’s vote were as follows:
2024
Vote
Count
Percent
For
1,408,997
96.1%
Against
43,730
3.0%
Abstain
14,121
0.9%
1,466,848
100.0%
The vote on
this resolution is
not intended to
address any specific
element of compensation,
but rather relates
to the
overall compensation
of our
named executive
officers, as
described in
this Proxy
Statement in
accordance with
the
compensation
disclosure rules
of the
SEC. We
encourage
you to
closely review
the information
we have
provided
under the caption “Executive Compensation” below.
The Board
recommends
you vote
“FOR” the
approval
of this
Resolution related
to the
compensation
of the
Company’s named executive officers.
16
PROPOSAL THREE – FREQUENCY OF ADVISORY
VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank
Act provides
that shareholders
must be
given the
opportunity to
vote, on
a non-binding,
advisory
basis, for their preference
as to how frequently
the Company should seek
future advisory votes on
the compensation
of the
named executive
officers as
disclosed in
accordance with
the compensation
disclosure rules
of the
Securities
and
Exchange
Commission.
By
voting
with
respect
to
this
say-on-frequency
proposal,
shareholders
may
indicate
whether they would prefer that we conduct future say-on-pay votes once every
one, two, or three years. Shareholders
also may, if they wish, abstain from
casting a vote on this proposal.
Our
Board
has determined
that an
annual say-on-pay
advisory
vote
will allow
our shareholders
to provide
timely,
direct input
on the
Company’s
executive compensation
philosophy,
policies and
practices as
disclosed in
the proxy
statement each year.
The Company
recognizes that
the shareholders
may have
different views
as to
the best
approach for
the Company,
and therefore we look forward
to hearing from our shareholders
as to their preferences on
the frequency of a say-on-
pay vote.
This vote
is advisory
and not
binding on
the Company
or our
Board in
any way.
The Board
and the
Compensation
Committee will take into account the outcome of
the vote, however, when considering the frequency of future say-on-
pay votes. The
Board may decide
that it
is in
the best
interests of our
shareholders and the
Company to hold
an advisory
vote
on
executive
compensation
more
or
less
frequently
than
the
frequency
receiving
the
most
votes
cast
by
our
shareholders.
Shareholders may cast a vote on
the preferred voting frequency by selecting the
option of one year, two years, or
three
years (or abstain) when voting in response to the resolution set forth below.
“RESOLVED,
that the
shareholders determine,
on an
advisory basis,
whether the
preferred
frequency of
an
advisory
vote
on
the
executive
compensation
of
the
Company’s
named
executive
officers
as
set
forth
in the
Company’s proxy statement should be every
year,
every two years, or every three years.”
The proxy card provides shareholders with the opportunity to choose among four options
(holding the vote every one,
two
or
three
years,
or
abstaining)
and,
therefore,
shareholders
will
not
be
voting
to
approve
or
disapprove
the
recommendation of the Board.
We
have
included
this
proposal
in
our
Proxy
Statement
pursuant
to
the
requirements
of
the
Dodd-Frank
Act
and
Section 14A of the Securities Exchange Act of 1934.
The Board
recommends
you vote
“FOR” the
option of
once every
year as
the preferred
frequency
of future
advisory votes to approve the compensation of the Company’s
named executive officers.
17
EXECUTIVE OFFICERS
Executive
officers
of
the
Company
and
the
Bank
generally
are
appointed
annually
at
a
meeting
of
the
respective
Boards of
Directors
of the
Company
and
the Bank
in January
to serve
for
one-year terms
and
until successors
are
chosen
and
qualified.
In
addition
to
Mr.
Hedges,
whose
complete
information
is
included
under
“Proposal
One
–
Election of Directors,” our other executive officers are:
Name
Information About Executive Officers
Shannon S. O’Donnell
Chief Risk Officer since April 2014 and Senior Vice
President of Credit
Administration since 2007; formerly Vice
President of Credit Administration
since 2001.
Ms. O’Donnell is 55.
Robert L. Smith
Senior Vice President and
Chief Lending Officer of the Bank since April
2014; Vice President
(Commercial and Consumer Lending) of the Bank since
2001; Mr. Smith is 56.
W. James Walker,
IV
Senior Vice President and
Chief Financial Officer of the Company and the
Bank since January 2023; formerly Senior Vice
President and Chief
Accounting Officer of the Company and the Bank since 2015.
Mr. Walker
is
55.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information concerning
the compensation of our named executive officers
for the years
ended 2024
and 2023.
Name and Principal Position
Year
Salary
Bonus
(3)
All Other
Compensation
(4)
Total
David A. Hedges
2024
$
312,000
$
36,000
$
45,222
$
393,222
President and Chief Executive
Officer of the Bank and the
Company
(1)
2023
300,000
—
41,224
341,224
Robert L. Smith
(2)
2024
238,571
34,000
10,205
282,776
Senior Vice President and
Chief
Lending Officer of the Bank
2023
227,212
34,000
8,996
270,208
W. James
Walker,
IV
(2)
2024
244,400
27,000
10,438
281,838
Senior Vice President and
Chief
Financial Officer of the Bank
and the Company
2023
235,000
27,000
10,030
272,030
______________
(1)
Mr. Hedges received fees for his service as a director of the Company and
the Bank of $25,300 in 2024, and $21,250 in
2023.
(2)
Considered the two most highly compensated
executive officers other than the
principal executive officer for the
year ended
December 31, 2024.
18
(3)
Represents cash incentive awards
paid to the Company’s executive officers.
Bonuses that were earned in
2023 and 2024 were
paid in 2024 and 2025, respectively.
(4)
For 2024, includes compensation as described under “All Other Compensation” below.
All Other Compensation
All Other Compensation for 2024 in the Summary Compensation Table
above consisted of:
Name
Insurance
Premiums
Company
Contributions
to Retirement and
401(k) Plans
Total
Compensation
as Director
(1)
Total
David A. Hedges
$
8,310
$
11,612
$
25,300
$
45,222
Robert L. Smith
662
9,543
—
10,205
W. James Walker,
IV
662
9,776
—
10,438
______________
(1)
Represents fees earned as an employee director of the Bank and Company.
2024 Grants of Plan-Based Awards
The Company did not grant any equity or non-equity incentive plan
awards in 2024.
2024 Option Exercises and Stock Vested
There were no stock options exercised or stock awards vested in 2024.
Outstanding Equity Awards
at December 31, 2024
There were
no unexercised
options, unvested
stock, and
equity incentive
plan awards
for named
executive officers
outstanding as of December 31, 2024.
Pension Benefits and Nonqualified Deferred Compensation
The
Company
does
not
offer
any
pension
or
nonqualified
deferred
compensation
benefits
to
its
named
executive
officers.
19
Pay-Versus-Performance
The following table sets forth information concerning the compensation of our principal
executive officer, or “PEO,”
and, on an average basis,
the compensation for our two
other highest paid named executive
officers, or “Other NEOs,”
for each of the fiscal
years ending December 31, 2024,
2023 and 2022, as such
compensation relates to our financial
performance for each such fiscal year.
Year
Summary
Compensation
Table Total
for
PEO (3)
Compensation
Actually Paid to
PEO (3)
Average
Summary
Compensation
Table Total
for
Other NEOs (3)
Average
Compensation
Actually Paid to
Other NEOs (3)
Initial Fixed
$100 Investment
Based on Total
Shareholder
Return (4)
Net Income
2024
(1)
$
393,222
$
393,222
$
282,307
$
282,307
$
83.66
$
6,397,000
2023
(2)
341,224
341,224
271,119
271,119
71.93
1,395,000
2022
(2)
519,810
519,810
290,714
290,714
74.01
10,346,000
______________
(1)
For 2024
and 2023,
the PEO
was
David A. Hedges
and the
Other NEOs
were Robert
L. Smith,
Senior Vice
President and
Chief Lending Officer and W. James Walker,
IV,
Senior Vice President and Chief Financial Officer.
(2)
For 2022, the PEO
was Robert W.
Dumas and the Other
NEOs were David
A. Hedges, Executive Vice
President and Chief
Financial Officer and Robert L. Smith, Senior Vice President and Chief Lending Officer.
(3)
The Company did not have any equity awards for the years presented; therefore, the Summary Compensation Table Total for
PEO and Compensation Actually Paid to PEO are the
same, and the Average Summary
Compensation Table Total
for Other
NEOs and Average Compensation Actually Paid to Other NEOs are the same.
(4)
Total Shareholder Return
is the cumulative total shareholder return, which
assumes $100 was invested in our common
stock
at the market price at the regular close of Nasdaq trading on December 31, 2021 through December 31, 2024.
It assumes the
reinvestment of all cash
dividends prior to any
tax effect.
Net income for 2023
reflects the losses incurred
to reposition our
balance sheet in December 2023.
20
Relationship Between Pay and Performance
Description
of
Relationship
Between
PEO
and
Other
NEO
Compensation
Actually
Paid
and
Company
Total
Shareholder Return (“TSR”)
The
following
chart
sets
forth
the
relationship
between
Compensation
Actually
Paid
to
our
PEO,
the
average
of
Compensation
Actually Paid
to our
other NEOs,
and the
Company’s
cumulative
TSR over
the three
most recently
completed fiscal years.
.
Description of Relationship Between PEO and Other NEO Compensation
Actually Paid and Net Income
The
following
chart
sets
forth
the
relationship
between
Compensation
Actually
Paid
to
our
PEO,
the
average
of
Compensation Actually Paid to our
other NEOs, and our Net Income during
the three most recently completed
fiscal
years.
.
21
POTENTIAL PAYMENTS
UPON TERMINATION
OR CHANGE IN CONTROL
The Company does not have any severance or change in control agreements with any of its named executive officers.
STOCK OWNERSHIP BY CERTAIN
PERSONS
The following
table sets
forth the number
and the
percentage of
shares of the
Company’s
Common Stock
that were
beneficially owned, as of the Record
Date, by (1) each of our
directors and each of our named
executive officers, (2)
all of our directors and executive
officers as a group, and
(3) each person known to us
to beneficially own more than
5% of any class of our
voting common stock.
Other than as set forth below,
no “persons” (as that term is defined
by
the
SEC)
are
known
by
the
Company
to
be
the
beneficial
owners
of
more
than
5%
of
the
Common
Stock,
the
Company’s only class of voting
securities, as of the Record Date.
Name of Beneficial Owner
(1)
Number of Shares
(2)
Percent of Class
All Directors and Named Executive Officers:
C. Wayne Alderman
5,116
*
Terry W.
Andrus
(3)
4,045
*
J. Tutt Barrett
8,808
*
Laura J. Cooper
127
*
Robert W.
Dumas
43,710
1.25%
William F.
Ham, Jr.
(4)
5,037
*
David E. Housel
8,125
*
Anne M. May
(5)
43,663
1.25%
Michael A. Lawler
2,000
*
Sandra J. Spencer
(6)-(12)
743,378
21.28%
David A. Hedges
12,860
*
Robert L. Smith
389
*
W. James Walker,
IV
300
*
All Directors and Executive Officers as a Group (14
persons)
877,555
25.12%
Persons known to Company who own more than 5%
of outstanding shares of Company Common Stock:
Sandra J. Spencer
(6)-(12)
743,378
21.28%
100 N. Gay Street
Auburn, AL 36830
Emil F. Wright,
Jr.
(13)-(15)
392,484
11.23%
_____________
*
Less than 1%
(1)
Unless specified below, each director’s and
named executive officer’s business
address is c/o AuburnBank,
100 N. Gay Street,
Auburn, Alabama 36830.
22
(2)
Information relating
to beneficial
ownership of
Common Stock
by the
individuals named
in the
above table
is based
upon
information furnished by the respective individuals using “beneficial ownership” concepts set forth in rules of the SEC under
the Securities
Exchange Act
of 1934,
as amended.
Under such
rules, a
person is
deemed to
be a
“beneficial owner”
of a
security if that person has or shares “voting power,” which includes the power to vote or direct the voting of such security, or
“investment power,” which
includes the power to dispose
of or to direct the
disposition of such security.
The person is also
deemed to be
a beneficial owner
of any
security of which
that person has
a right
to acquire beneficial
ownership within
60
days.
Under such rules, more
than one person may
be deemed to be
a beneficial owner of
the same securities, and
a person
may
be
deemed
to
be
a
beneficial
owner
of
securities
as
to
which
he
or
she
may
disclaim
any
beneficial
ownership.
Accordingly,
directors
and named
executive officers
may be
named
as beneficial
owners of
shares as
to
which they
may
disclaim any
beneficial interest.
Except as
indicated in
other notes
to this
table describing
special relationships
with other
persons and
specifying shared
voting or
investment power,
directors and
named executive
officers possess
sole voting
and
investment power with
respect to all
shares of Common
Stock set forth
opposite their names.
Shares have been
rounded to
whole shares.
(3)
Includes 3,292 shares held by Mr. Andrus that were pledged as collateral for a loan from the Bank.
(4)
Includes 300
shares held
by Mr.
Ham’s
wife, as
to which
Mr.
Ham may
be deemed
to have
shared voting
and investment
power.
(5)
Includes 33,311 shares held
individually by Ms. May.
It also includes 10,352 shares held by
Ms. May pursuant to a durable
power of attorney on behalf of another person, as to which Mr. May disclaims beneficial ownership.
(6)
Includes 666,825 shares held as the sole Personal Representative of the Estate of Edward L. Spencer, Jr.
(7)
Includes 47,882 shares held by the E.L. Spencer, Jr. 2008 Irrevocable Trust
,
where Ms. Spencer is the sole trustee.
(8)
Includes 17,000
shares held
as the
sole Personal
Representative of
the Estate
of Ms.
Ruth Spencer,
Ms. Spencer’s
mother,
which ultimately may
be distributed equally
to Ms. Spencer
and her two
brothers.
Ms. Spencer disclaims
beneficial ownership
of 11,333 of these shares that ultimately may be distributed to her brothers.
(9)
Includes 10,272 shares held individually by Ms. Spencer.
(10) Includes
1,320 of
the 3,960
shares held
by Spencer
LLC where
Ms. Spencer
is a
one-third member
who shares
voting and
dispositive power with two other members.
Ms. Spencer disclaims beneficial ownership of 2,640 shares held beneficially by
the other two members of Spencer LLC.
(11)
Includes 79 shares
owned by Ms.
Spencer’s husband, individually,
as to which
Ms. Spencer may
be deemed to
have shared
voting and dispositive power.
(12) Excludes
a total
of 16,362
shares held by
the Edward
L. Spencer
Foundation, where
Ms. Spencer
is one
of three
directors.
Ms. Spencer disclaims any economic interest in these shares.
(13) Includes 58,978 shares held
by Dr. Wright’s wife, as to
which Dr. Wright may
be deemed
to have shared
voting and investment
power.
(14) Excludes 57,820 shares held by Ferrocene,
LP, a family limited partnership where
Dr. Wright and his wife
are general partners
with voting and
dispositive power,
but where the
limited partners beneficially
own 57,820 shares
(95% of the
partnership’s
total interests),
as to which Dr. Wright disclaims any economic interest.
(15) Excludes 500 shares held
by Comitas
Foundation, Inc., a
501(c)(3) private foundation,
whose executive
officers are Dr. Wright
and his wife.
Dr. Wright disclaims any economic interest in such shares.
23
CERTAIN
TRANSACTIONS AND BUSINESS RELATIONSHIPS
Various
Company and
Bank directors,
officers, and
their affiliates,
including corporations
and firms
where they
are
directors or officers or where they
and/or their families have an
ownership interest, are customers of the
Company and
the Bank.
These persons,
corporations, and
firms have
had transactions
in the
ordinary course
of business
with the
Company
and
the
Bank,
including
borrowings,
all
of
which
management
believes
were
on
substantially
the
same
terms,
including
interest
rates
and
collateral,
as
those
prevailing
at
the
time
for
comparable
transactions
with
unaffiliated
persons
and
did
not
involve
more
than
the
normal
risk
of
collectability
or
present
other
unfavorable
features. Such transactions
are subject to
review and approval
as and to the
extent provided in
our Audit Committee
Charter. The
Company and the Bank
expect to have such
transactions, under similar
conditions, with their
directors,
officers, and affiliates in the future.
Federal Reserve Regulation O requires loans made to executive officers and directors
to be made on substantially the
same
terms,
including
interest
rates
and
collateral,
and
following
credit-underwriting
procedures,
that
are
no
less
stringent than
those prevailing
at the
time for
comparable transactions
by the
Bank with
other persons.
Such loans
also may not involve more than the normal risk of repayment or
present other unfavorable features.
Additionally, no
event
of default
may have
occurred
(that is,
such loans
are not
disclosed
as non-accrual,
past due,
restructured,
or
potential problems).
Regulation O requires the Board of
Directors to review any loan
to a director or his
or her related
interests that has become criticized and whether such classification affects such director’s independence.
In addition,
the Audit Committee
Charter provides that
the Audit Committee
will review
and approve all
related-party transactions.
This
includes
a
review
of
the Company’s
compliance
with applicable
banking
laws,
including,
without
limitation,
those banking laws and regulations concerning loans to insiders.
None of
the directors
or executive
officers
of the
Company,
owners of
5% or
more of
the Company’s
outstanding
stock, or their immediate
family members, had a direct
or indirect interest in any
transaction involving the Company
during
2024
or
2023,
served
as
an
executive
officer
of,
or
owns,
or
during
2024
or
2023
owned,
of
record
or
beneficially,
greater than 10%
equity interest in
any business or professional
entity that has made
or received during
2024
or 2023,
or has
a currently
proposed
transaction,
where the
Company
is to
be participant,
where
the amount
involved
exceeds $120,000.
24
COMPLIANCE WITH SECTION 16(A)
OF THE
SECURITIES EXCHANGE ACT OF 1934
The Company
is subject
to Section
16(a) of
the Securities
Exchange
Act of
1934,
as amended,
which requires
the
Company’s
executive
officers
and
directors,
and
persons
who
own
more
than
10%
of
a
registered
class
of
the
Company’s equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange
Commission.
Officers, directors
and greater-than-10%
shareholders are
required by
SEC regulations
to furnish
the
Company with copies of all Section 16(a) forms they file.
Delinquent Section 16(a) Reports
Based solely
on its
review of
the copies
of Forms
3, 4
and 5
furnished to
the Company
during and
with respect
to
2024, or
written representations
that no
Forms 5
were required,
the Company
believes that
all Section
16(a) filing
requirements
applicable
to
the
Company’s
and
the
Bank’s
executive
officers,
directors
and
greater-than-10%
beneficial owners were complied with during 2024.
25
PROPOSAL FOUR: AMENDMENT OF CERTIFICATE
OF INCORPORATION
The Company is a corporation organized
under the Delaware General Corporation Law (the
“DGCL”).
Section 7.04
of the Company’s
Certificate of Incorporation, as
amended (the “Certificate”) eliminates
the personal liability of
our
directors for monetary damages
for breach of fiduciary
duty pursuant to DGCL
Section 102(b)(7).
Delaware amended
DGCL Section 102(b)(7) effective August 7, 2022 to also allow Delaware corporations
to include a similar provision
in their
certificates of
incorporation
eliminating
the personal
liability of
certain
officers
for
monetary
damages
for
breach of fiduciary duty as an officer in certain circumstances.
The Board
of Directors,
upon the recommendation
of its Nominating
and Governance
Committee, has adopted,
and
recommends
that
our
shareholders
approve,
the
amendment
and
restatement
of
Section
7.04
of
the
Company’s
Certificate (the “Amendment”) to eliminate the personal liability of officers specified in DGCL Section 102(b)(7)
for
monetary
damages
for
breach
of
fiduciary
duty
as
an
officer
to
the
fullest
extent
permitted
by
the
DGCL,
and
to
otherwise conform
the exculpation
provisions of
Section 7.04
of the
Company’s
Certificate of
Incorporation
to the
current version of DGCL Section 102(b)(7).
DGCL Section 102(b)(7)
states that references
to “officers” mean
the following officers,
as provided in
the
Laws of Delaware, Title 10, Section 3114(b)
(“Section 3114(b)”):
(1)
Is or was the president, chief executive officer,
chief operating officer, chief financial
officer, chief legal
officer, controller,
treasurer or chief accounting officer of the corporation
at any time during the course
of conduct alleged in the action or proceeding to be wrongful;
(2)
Is or was identified in the corporation’s
public filings with the United States Securities and Exchange
Commission because such person is or was one of the most highly compensated
executive officers of the
corporation at any time during the course of conduct alleged in the action
or proceeding to be wrongful;
or
(3)
Has, by written agreement with the corporation, consented to be identified as an
officer for purposes of
service of process under Section 3114(b).
The Board considered
the limited group of officers
to which the proposed
Amendment would apply and
the types of
claims for which officers
are permitted to be
exculpated from personal liability.
Both of these are more
limited than
the protections
currently permitted
for our
directors by
the DGCL
and our
Certificate.
Consistent with
the DGCL
amendments, the Amendment would only
exculpate officers for direct claims
brought by shareholders, including class
actions, for breaches of the duty of care.
Neither the DGCL nor the Amendment eliminates or
limits officers’ liability
for:
●
Any breach of the duty of loyalty to the Company or its shareholders;
●
Any
acts
or
omissions
not
in
good
faith
or
which
involve
intentional
misconduct
or
a
knowing
violation of the law;
●
Any transaction from which the officer derived an improper personal
benefit; or
●
Any action by or in the right of the Company,
such as derivative actions.
As provided
in
DGCL Section
102(b)(7),
the
Amendment
does
not
eliminate
or
limit
the liability
of
a
director
or
officer for any act or omission occurring prior to the date when such
provision becomes effective.
26
The Board of
Directors believes that
the Amendment
will limit concerns
about personal liability,
which will help
to
attract
and
retain
capable
senior
officers.
Senior
officers
often
must
make
difficult
judgments
and
decisions
on
important and complex matters, which can
create the risk of investigations, claims,
actions, suits, or other proceedings
seeking, regardless
of merit,
to impose
personal liability
on the basis
of hindsight,
especially in
the current
litigious
environment.
We believe that the Amendment
will enable such senior officers to exercise their business judgment in
furtherance
of
the
Company’s
and
our
shareholders’
interests
without
the
risks
of
the
distractions
and
costs
of
defending
often
frivolous
proceedings
asserting
personal
liability.
The
Company
may
bear
the
costs
of
such
proceedings through
indemnification of
its officers
and/or as
a result
of higher
insurance premiums.
The Board
of
Directors believes the Amendment better aligns the protections available to our
officers with those currently available
to our directors
and that it
would discourage plaintiff’s
attorneys from adding
officers to
claims relating to
breaches
of the duty
of care,
which can lead
to increased
litigation and insurance
costs.
The Amendment
may also eliminate
claims against
senior officers
also serving
as directors,
and where,
in the
absence of
the Amendment,
such persons
may
be
subject
to
proceedings
as
officers,
although
they
would
have
no
liability
as
directors
under
our
current
Certificate and the DGCL.
In addition, the Board of Directors believes it is important to protect our officers to the fullest extent permitted by the
DGCL, to
better align with
industry practice and
better enable
us to
continue to attract
and retain experienced,
qualified
officers.
Other Delaware
corporations have
adopted, and others
are likely to
adopt amendments
to their certificates
of incorporation
to limit
the personal
liability of
officers.
The corporate
laws of
several other
states, including
the
Alabama
Business
and
Nonprofit
Entity
Code
applicable
to
Alabama
corporations
such
as
the
Bank,
permit
corporations to exculpate
officers similar to
the DGCL.
Our failure to
adopt the Amendment
could adversely affect
the Company’s ability to attract and
retain experienced, qualified senior officers.
The Board of Directors
unanimously determined that the
Amendment is appropriate, advisable
and in the
best interests
of the Company
and its shareholders,
and unanimously recommends
that our shareholders
approve the Amendment.
The Board believes that eliminating personal monetary liability for officers
under the circumstances permitted by the
DGCL
is
reasonable
and
appropriate.
The
Board
further
believes
that
the
Amendment
properly
balances
the
shareholders’ interest in
accountability and their
interest in limiting
the assertion of
time consuming, distracting
and
costly potential proceedings.
If this proposed Amendment is approved, the Company expects to file a Certificate of Amendment to the Company’s
Certificate with the Delaware Secretary of State promptly
after the Meeting.
The Amendment will be effective upon
its filing date with Delaware Secretary of State.
27
The description
of the
Amendment is
qualified by
the full
text of
amended Section
7.04 of
the Certificate,
set forth
below.
Additions to such Section 7.04 are indicated by underlining and deletions are
indicated by strike-outs.
Proposed Amended and Restated Section 7.04
of the
Auburn National Bancorporation, Inc.
Certificate of Incorporation
Marked to Show Changes
7.04
To
the
fullest
extent
permitted
by
the
Delaware
General
Corporation
Law
(the
“DGCL”),
as
currently in effect
or hereafter
amended, no director
or officer
(as defined in
Section 102(b)(7) of
the DGCL)
shall be held
personally
liable to the Corporation
or its shareholders
for monetary
damages
for breach
of fiduciary
duty as
a director
or officer,
except
this provision shall not eliminate
or limit the liability of
a
director
(i)
of
a
director
or
officer
for
any
breach
of the
director's
or
officer’s
duty
of
loyalty
to the
Corporation
or its
stockholders,
(ii) a
director or officer for acts
or omissions
not in
good faith
or which
involved intentional misconduct or a knowing
violation of law, (iii) any transaction from
which the director
or officer derived
an improper personal
benefit, (iv) a
director for unlawful
payment or dividend
or unlawful
stock purchase or
redemption under DGCL
Delaware General Corporation Law, Section
174, or (iv)
for any
transaction from which the director derived an improper personal benefit. or (v) an
officer in any action by
or in the right of the Corporation
.
Any repeal
or modification
of this Section
7.04 by
the stockholders
of the Corporation
shall not
adversely
affect
any
right
of
protection
of
a
director
of
the
Corporation
existing
at
the
time
of
such
repeal
or
modification
with respect
to acts or
omissions occurring
prior to
such repeal or
modification. If
the DGCL
Delaware General Corporation Law hereafter is amended to authorize the further elimination or
limitation of
the liability of directors or officers, then the liability of a director or officer of the Corporation, in addition to
the
limitation
on
personal
liability
provided
herein,
shall
be
eliminated
or
limited
to
the
fullest
extent
permitted
by the
amended
DGCL Delaware
General
Corporation
Law.
No
amendment
or
repeal
of
this
Section
7.04
shall
(i)
apply
to
or
have
any
effect
on
the
liability
or
alleged
liability
of
any
director or
officer for or with respect to any acts or omissions of such director or officer
occurring prior to the effective
time of such
amendment or
repeal, or (ii)
adversely affect any
right or protection
of a director
or officer
of
the Corporation existing
hereunder in respect
of any act or omission
occurring prior to
the effective time of
such
amendment
or
repeal.
Solely
for
purposes
of
this
Section
7.04,
“officer”
shall
have
the
meaning
provided in Section 102(b)(7) of the DGCL, as it
presently exists or may be amended and in effect from time
to time.
In the event that any of the provisions of
this Section 7.04 (including any provision within a single sentence)
are held
by a court
of competent
jurisdiction to
be invalid, void
or otherwise
unenforceable, the remaining
provisions are severable and shall remain enforceable to the fullest extent permitted by law.
The Board unanimously recommends
you vote “FOR” approval
of the proposed amendment
and restatement
of Section 7.04 of the Company’s Certificate
of Incorporation.
28
AUDIT COMMITTEE REPORT
Management is responsible for the Company’s
internal controls and the financial reporting
process.
The Company’s
independent
registered
accountants
are
responsible
for
performing
an
independent
audit
of
the
Company’s
consolidated
financial
statements
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board
(“PCAOB”) and
to issue
a report
thereon.
The Audit
Committee’s
responsibility
is to
monitor
and oversee
these processes.
In this context, we
have met and held
discussions with management and
the independent registered
accountants.
We have reviewed and discussed the Company’s audited consolidated
financial statements for the fiscal
year ended December 31,
2024, with management
and the independent registered
accountants. This review
included
discussions with the Company’s independent registered
accountants of matters required to be discussed by PCAOB’s
AS 1301, Communications with Audit Committees and the SEC.
The Company’s
independent registered
accountants have
provided us
the written
disclosures and
the letter
required
by PCAOB
Professional
Standards
Rule 3526,
Communication
with Audit
Committees Concerning
Independence,
and we discussed with the independent registered accountants that firm’s
independence.
Based
upon
our
discussions
with
management
and
the
independent
registered
accountants
and
our
review
of
the
representations of management and
the report of the
independent registered accountants to
the Audit Committee, we
recommended
to
the
Board
of
Directors
that
the
audited
consolidated
financial
statements
be
included
in
the
Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2024.
Terry W.
Andrus
C. Wayne Alderman
J. Tutt Barrett
William F.
Ham, Jr.
David E. Housel
Anne M. May
29
PROPOSAL FIVE: RATIFICATION
OF INDEPENDENT PUBLIC ACCOUNTANTS
Appointment of Independent Registered Public Accounting
Firm
The Audit Committee
of the Board
of the Company
has approved the
appointment of Elliott
Davis, LLC to
serve as
the
Company’s
independent
registered
public
accounting
firm
for
the
Company
for
the year
ending
December 31,
2025. The
Audit Committee
considered the
background, expertise
and experience
of the
audit team
assigned to
the
Company and various other
relevant matters, including the
proposed fees for
audit services.
A representative of
Elliott
Davis will be present at the Meeting and will be given
the opportunity to make a statement on behalf of the firm, and
will also be
available to
respond to
appropriate questions
from shareholders.
If the shareholders
should fail
to ratify
the
appointment
of
the
independent
registered
public
accounting
firm,
the
Audit
Committee
will
reconsider
the
appointment.
Independent Public Accountants
The fees billed by the Company’s
independent registered public accounting firm
relating to the 2024 and 2023
fiscal
years were as follows:
2024
2023
Audit Fees
(1) (2) (3)
$
175,000
$
246,000
Audit-Related Fees
(4)
17,200
13,000
Total
$
192,200
$
259,000
____________________
(1)
Includes the aggregate
fees billed by
Elliott Davis for
professional services rendered
for the audit
of the Company’s
annual
financial statements, review of
unaudited financial statements included
in the Company’s Forms 10-Q
filed during fiscal years
2024
and 2023 and
services normally provided
for statutory and
regulatory filings or
engagements for the fiscal
years 2024
and 2023.
(2)
Audit
fees
for
2023
includes
fees
billed
by
Elliott
Davis
for
professional
services
rendered,
as
the
independent
public
accountant who
audits the
institution’s
financial statements,
to examine,
attest to,
and report
separately on
the assertion
of
management concerning the effectiveness of the institution’s
internal control structure and procedures for financial reporting
as
required
by
FDIC
regulations
applicable
to
FDIC-insured
institutions
with
more
than
$1 billion
in
total
assets
at
the
beginning of the fiscal year.
(3)
Audit fees
for 2023
include $30,000
to audit the
Company’s
adoption of
Accounting Standards
Codification (“ASC”) 326,
Current Expected Credit Losses,
effective January 1, 2023.
(4)
Includes the aggregate fees billed
by Elliott Davis for professional services
rendered for certain agreed upon
procedures and
other audit and attestation reports related to compliance matters during fiscal years 2024 and 2023.
Audit Committee Review
The Company’s Audit Committee has reviewed the services rendered and the
fees billed by Elliott Davis for the
fiscal
year ended December
31, 2024.
The Audit Committee
has determined
that the services
rendered and the
fees billed
last year that
were not related
to the audit
of the Company’s financial statements
are compatible with the
independence
of Elliott Davis as the Company’s independent
registered accountants.
30
Audit Committee Pre-Approval
Policy
Under
the
Audit
Committee’s
Charter
and
its
pre-approval
policy,
the
Audit
Committee
is
required
to
approve
in
advance the terms of all audit services provided to the Company as well as all permissible audit related and non-audit
services to
be provided
by the independent
public accountants.
Unless a
service to
be provided
by the
independent
public accountants has received approval under the pre-approval policy,
it will require specific approval by the Audit
Committee.
The pre-approval policy
describes the particular
services to be provided,
and the Audit Committee
is to
be informed about each
service provided.
The approval
of non-audit services may
be performed by the Chairman
of
the
Committee
and
reported
to
the
full
Audit
Committee
at
its
next
meeting,
but
may
not
be
performed
by
the
Company’s
management.
The
term
of
any
pre-approval
is
12
months,
unless
the
Audit
Committee
specifically
provides for a different period.
The Audit
Committee will
approve the
annual audit
engagement terms
and fees
prior to
the commencement
of any
audit work
other than
that necessary
for the
independent public
accountant to
prepare the
proposed audit
approach,
scope and fee estimates.
In addition to the
annual audit work, the
independent public accountants may perform
certain
other
audit
related
or
non-audit
services
that
are
pre-approved
by
the
Audit
Committee
and
are
not
prohibited
by
regulatory or other professional requirements.
Engagements for the annual audit and recurring tax return preparation
engagements shall be reviewed and approved annually
by the Audit Committee based on
the agreed upon engagement
terms,
conditions
and
fees.
The
nature
and
dollar
value
of
services
provided
under
these
engagements
shall
be
reviewed by
the Audit
Committee to
approve changes
in terms,
conditions and
fees resulting
from changes
in audit
scope, Company structure, exchange rates or other items, if any.
In the event audit-related or non-audit services that are pre-approved under the pre-approval policy have an estimated
cost in excess of certain dollar thresholds, these services will require specific
approval by the Audit Committee or by
the
Chairman
of
the
Audit
Committee.
Any
proposed
engagement
must
be
approved
in
advance
by
the
Audit
Committee or
by the Chairman
of the
Audit Committee
applying the
principles set
forth in
the pre-approval
policy,
prior to
the commencement
of the
engagement.
In determining
the approval
of services
by the
independent public
accountants, the Audit
Committee evaluates each
service to determine
whether the performance
of such service
would:
(a)
impair
the
public
accountant’s
independence;
(b)
create
a
mutual
or
conflicting
interest
between
the
public
accountant and the Company; (c)
place the public accountant
in the position of
auditing his or her
own work; (d) result
in the public accountant acting as management or
an employee of the Company; or (e) place the public accountant
in
a position of being an advocate for the Company.
In no event are monetary limits the only basis for the pre-approval
of services.
All of
the services
provided by
Elliott Davis
during 2024
and described
above under
the caption
“Audit Fees”
and
“Audit-Related Fees” were pre-approved by the Company’s
Audit Committee pursuant to SEC Regulation S-X, Rule
2-01(c)(7)(i).
The
Board
recommends
you
vote
“FOR”
the
approval
of
this
Resolution
related
to
the
ratification
of
the
appointment of
Elliott Davis
as the
independent registered
public accounting
firm for
the fiscal
year ending
December 31, 2025.
31
SHAREHOLDER PROPOSALS FOR the 2026
ANNUAL MEETING
Proposals of shareholders
intended to be presented at
the Company’s
2026 Annual Meeting of
Shareholders must be
received by the Company
on or before December 4,
2025
and must comply with
the requirements of SEC
Rule 14a-
8, in order to be eligible for inclusion
in the Company’s proxy statement and form of proxy for that meeting.
If notice
of a proposal is not received
by the Company in accordance with the
dates specified pursuant to SEC Rule 14a-8,
then
the proposal
will be
deemed untimely
and we
will have
the right
to exclude
the proposal
from consideration
at the
2026
Annual Meeting and/or to exercise discretionary voting authority and vote proxies returned to us with respect to
such proposal or director nomination.
If a shareholder does not submit a proposal for inclusion in next year’s proxy statement, but instead wishes to present
it directly at
the Company’s 2026 Annual
Meeting of
Shareholders, the Company’s Bylaws
require that the
shareholder
notify the Company
of such proposal
in writing no
later than December 4,
2025, or 120
calendar days in advance
of
the date (with respect to
the Company’s 202
6
Annual Meeting of Shareholders)
that the Company’s
proxy statement
was
released
to
its
shareholders
in
connection
with
the
Meeting.
The
shareholder
must
also
comply
with
the
requirements of Article III, Section 16 of the Company’s
Bylaws with respect to shareholder proposals.
OTHER MATTERS
The Company
knows of
no other
matters to
be brought before
the Meeting.
However, if
any other
proper matter
is
presented, the persons named
in the enclosed
form of Proxy
intend to vote
the Proxy in
accordance with their
judgment
of what is in the best interest of the Company.
By Order of the Board of Directors
/s/ Robert W. Dumas
Robert W.
Dumas
Chairman of the Board
April 3, 2025