UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14A-12
SOUTHWEST BANCORP, INC.
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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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):
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Proposed maximum aggregate value of transaction:
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Total Fee Paid:
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Fee paid previously with preliminary materials:
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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 its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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March 16, 2010
Dear Fellow Shareholder:
We invite you to attend our 2010 Annual Meeting of Shareholders to be held in the Auditorium,
Room 215, of the Stillwater Public Library, 1107 South Duck Street, Stillwater, Oklahoma on
Thursday, April 22, 2010 at 11:00 a.m., Central Time.
The 2009 results are presented in detail in the enclosed Annual Report.
The Annual Meeting has been called to elect directors; to ratify the appointment of Ernst &
Young LLP as the independent registered public accounting firm for the year 2010; to approve a
proposal regarding our executive compensation decisions; to amend the Certificate of
Incorporation to increase the authorized number of shares of common stock; to approve the
adjournment of the Annual Meeting, if necessary, to solicit additional proxies; and to
consider any other matters that properly come before the Annual Meeting or any adjournments.
Directors and officers of Southwest, as well as representatives of Ernst & Young LLP, will be
present to respond to any questions the shareholders may have.
Your vote is important to Southwest
. Please complete the proxy card and return it in the
enclosed, postage-paid envelope or vote your shares by telephone or on the Internet as described in
the Proxy Statement.
Thank you for investing in Southwest.
Sincerely,
SOUTHWEST BANCORP, INC.
608 South Main Street
Stillwater, Oklahoma 74074
(405) 372-2230
NOTICE OF ANNUAL MEETING
March 16, 2010
The Annual Meeting of Shareholders of Southwest Bancorp, Inc. (Southwest) will be held in
the Auditorium, Room 215, of the Stillwater Public Library, 1107 South Duck Street, Stillwater,
Oklahoma at 11:00 a.m., Central Time, on Thursday, April 22, 2010.
The Annual Meeting is for the purpose of considering and acting upon:
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The election of eight directors of Southwest;
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The ratification of the appointment of Ernst & Young LLP as the independent
registered public accounting firm for the year 2010;
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The advisory proposal to approve the compensation of certain executive
officers;
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The proposal to amend the Certificate of Incorporation to increase the
authorized number of shares of common stock, $1.00 par value per share, from 20,000,000
to 40,000,000 shares;
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5.
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The proposal to approve the adjournment of the Annual Meeting, if necessary,
to solicit additional proxies for approval of the proposal to increase the number of
authorized common; and
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The transaction of such other matters that properly come before the Annual
Meeting or any adjournments thereof.
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Your Board of Directors unanimously recommends a vote FOR the election of the persons
nominated for election, FOR the ratification of Ernst & Young LLP, FOR approval of the
compensation of certain executive officers, FOR the amendment of the Certificate of Incorporation
to increase the authorized number of shares of common stock, and FOR the approval of adjournment
of the meeting, if necessary.
The Board is not aware of any other business to come before the
Annual Meeting.
Only shareholders of record at the close of business on March 1, 2010 will be entitled to vote
at the Annual Meeting and any adjournments or postponements. A Proxy Card and a Proxy Statement for
the Annual Meeting are enclosed. Whether or not you attend the meeting in person, it is important
that your Southwest shares be represented and voted. Please vote by completing, signing, and dating
your proxy card and returning it as soon as possible in the enclosed, postage-paid envelope.
Alternatively, you may vote by telephone using the toll-free telephone number included on the proxy
card or vote by Internet through the website indicated on the proxy card. This proxy is revocable.
You may change your proxy later or vote in person at the meeting, if you wish.
A complete list of shareholders entitled to vote at the Annual Meeting will be open for
examination by any shareholder for any purpose germane to the Annual Meeting during ordinary
business hours at Southwests main office during the ten days prior to the Annual Meeting.
The proxy statement, voting instruction card, and Southwests 2009 Annual Report are being
distributed on or about March 16, 2010.
Important Notice Regarding Availability of Proxy Materials
The Notice and Proxy Statement and Annual Report on Form 10-K are available at
www.envisonreports.com/oksb
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BY ORDER OF THE BOARD OF DIRECTORS
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Stillwater, Oklahoma
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KERBY E. CROWELL
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March 16, 2010
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SECRETARY
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SOUTHWEST BANCORP, INC.
PROXY STATEMENT
TABLE OF CONTENTS
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1
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3
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6
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7
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10
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12
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13
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14
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15
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23
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24
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28
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28
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29
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29
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30
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30
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31
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31
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33
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33
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33
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33
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34
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PROXY STATEMENT
QUESTIONS AND ANSWERS
Q:
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What am I voting on?
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A:
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You are voting on:
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The re-election of the following eight directors: James E. Berry II, Tom D. Berry, Joe
Berry Cannon, John Cohlmia, Rick Green, David P. Lambert, Linford R. Pitts, and Robert B.
Rodgers, each for a one-year term (See page 3);
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A proposal to ratify the appointment of Ernst & Young LLP as the independent
registered public accounting firm for the year (See page 30); and
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An advisory (nonbinding) proposal to approve the compensation of our Chief Executive
Officer, Chief Financial Officer, and three most highly compensated other executive
officers (See page 31).
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A proposal to amend the Certificate of Incorporation to increase the authorized number
of shares of common stock, $1.00 par value per share, from 20,000,000 to 40,000,000 shares
(See page 31); and
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A proposal to approve the adjournment of the Annual Meeting, if necessary, to solicit
additional proxies for approval of the proposal to increase the number of authorized shares
of common stock (See page 33).
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Q:
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Why is Southwest proposing to increase its authorized shares of common stock?
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A:
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Southwest proposes to increase its authorized shares of common stock to provide flexibility in raising capital for future
financing opportunities and needs. The proceeds from future sales of common shares may be used for a variety of purposes
the Board of Directors deems advisable in the future, including:
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Support of future internal business growth;
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Investment in Southwests bank subsidiaries to increase their capital levels;
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Acquisitions;
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Voluntary repayment of the $70 million in Preferred Securities sold in December
2008 to the U.S. Treasury Department under its Capital Purchase Program; and
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Other corporate purposes.
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The proposal does not affect the number of authorized shares of preferred stock. Approval of
the Common Stock Amendment will require the affirmative vote of a majority of the
outstanding shares entitled to vote thereon.
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Q:
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Who is entitled to vote at the Annual Meeting?
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A:
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Shareholders of Southwests common stock as of the close of business
on March 1, 2010 (the Record Date) are entitled to vote at the
meeting.
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How do I vote?
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You may vote by completing, signing, and dating the proxy card and
returning it in the enclosed, postage-paid envelope. If you return
your signed proxy card but do not indicate your voting preference,
your card will be voted in favor of the re-election of all eight
directors, for the proposal to ratify the appointment of Ernst & Young
LLP, for the proposal to approve the compensation of our Chief
Executive Officer, Chief Financial Officer, and three most highly
compensated other executive officers, for the proposal to increase the
number of authorized shares of common stock, and for the proposal to
adjourn the annual meeting, if necessary. You have the right to revoke
your proxy any time before the Annual Meeting, and shareholders who
attend the meeting may withdraw their proxies and vote in person if
they wish.
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Many of our shareholders have the option to submit their proxies or voting instructions by
telephone or through the Internet instead of submitting proxies by mail using the enclosed
proxy card. Please note that there are different arrangements for using the telephone and
the Internet depending on whether your shares are registered in Southwests stock records in
your name or in the name of a brokerage firm or bank. Southwest shareholders should check
their proxy card or the voting instructions forwarded by their broker, bank, or other holder
of record to see which options are available. If you have Internet access, we encourage you
to record your vote on the Internet.
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The telephone and Internet procedures described below for submitting your proxy or voting
instructions are designed to authenticate shareholders identities, to allow shareholders to
have their shares voted, and to confirm that their instructions have been properly recorded.
Stockholders submitting proxies or voting instructions via the Internet should understand
that there may be costs associated with electronic access, such as usage charges from
Internet access providers and telephone companies that will be borne by the shareholder.
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Southwest holders of record may submit their proxies by telephone, by calling the toll-free
number indicated on their proxy card and following the recorded instructions; or through the
Internet, by visiting the website indicated on their proxy card and following the
instructions.
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The deadline for voting by telephone or through the Internet is 1:00 a.m. Central Time on
April 22, 2010.
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Q:
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Who will count the votes?
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Computershare Investor Services, LLC, Southwests transfer agent, will tabulate the votes.
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What should I do if I receive more than one proxy card?
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If you receive more than one proxy card, it indicates that you own shares in more than one account or that your shares are
registered in more than one name. You should vote the shares represented by all proxy cards you receive by completing,
signing, dating, and returning each proxy card in the enclosed, postage-paid envelope or by telephone or the Internet.
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What constitutes a quorum at the Annual Meeting?
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On the Record Date there were 14,779,778
shares of Southwest common stock issued and outstanding. Each share is entitled
to one vote on all matters voted on at the Annual Meeting. A majority of the outstanding shares present or represented by
proxy will be a quorum for the Annual Meeting. If you submit a properly executed proxy card, you will be considered part of
the quorum. Abstentions and shares held for you by your broker or nominee (broker shares) that are voted on any matter are
included in the quorum. Broker shares that are not voted on any matter are not included in the quorum and will not be
included in determining the number of votes cast in the election of directors; the ratification of the appointment of Ernst
& Young LLP; approval of the compensation of our Chief Executive Officer, Chief Financial Officer, stock and three most
highly compensated other executive officers; approval of the amendment to the Certificate of Incorporation to increase the
authorized number of shares of common stock; and approval of the adjournment of the Annual Meeting to solicit additional
proxies for approval of the proposal to increase the number of authorized shares of common stock, if necessary.
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Who may attend the Annual Meeting?
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All shareholders as of the Record Date may attend, although seating is limited.
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What percentage of Southwest stock did directors and executive officers of Southwest own on the Record Date?
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Together, they owned approximately 8.73% of Southwest issued and outstanding common stock.
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Who pays for this proxy solicitation and how will solicitation occur?
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Southwests Board of Directors is soliciting this proxy, and Southwest will pay the cost of the solicitation. In addition
to the use of the mail, employees of Southwest may solicit proxies personally or by telephone, fax, or electronic mail,
without additional compensation. Southwest has retained Georgeson Inc. to assist with the solicitation for a fee of
$10,000, plus reimbursement of out-of-pocket expenses. Banks, brokerage houses, and other nominees and fiduciaries are
requested to forward the proxy material to beneficial owners of Southwest stock and to obtain authorization to execute
proxies on behalf of the beneficial owners. Upon request, Southwest will reimburse these parties for their reasonable
expenses in forwarding proxy material to beneficial owners
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PROPOSAL 1ELECTION OF DIRECTORS
Your Board of Directors is composed of twelve members. Prior to the 2009 annual meeting,
Southwest had a classified Board and members of each class were elected to serve for staggered
three-year terms. At the 2008 annual meeting, shareholders approved an amendment to our Certificate
of Incorporation to provide for the election of directors for one-year terms, beginning with the
2009 annual meeting. The directors elected at this annual meeting will be elected to one-year
terms. The terms of the directors elected at the 2008 annual meeting will expire at the 2011 annual
meeting.
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The Board of Directors has nominated for re-election James E. Berry II, Tom D. Berry, Joe
Berry Cannon, John Cohlmia, Rick Green, David P. Lambert, Linford R. Pitts, and Robert B. Rodgers,
all of whom currently are directors, each to serve for a term of one year and until his successor
is elected and qualified. Each nominee must be elected by a plurality of shares voted in this
election. The individuals named as proxies on your proxy card will vote for the election of each
nominee unless you withhold authorization.
Each shareholder voting in the election of directors is entitled to cumulate his or her votes
by multiplying the number of shares of common stock owned of record by the shareholder on the
Record Date by the number of directors to be elected. Each shareholder is then entitled to cast his
or her total cumulated votes for one nominee or distribute his or her votes among any number of the
nominees being voted on at the Annual Meeting. Shareholders may not cumulate their votes on the
form of proxy solicited by the Board of Directors. In order to cumulate votes, shareholders must
attend the meeting and vote in person or make arrangements with their own proxies.
Unless otherwise
specified in the proxy, however, the right is reserved, in the sole discretion of the Board of
Directors, to vote cumulatively and to distribute votes among some or all of the nominees of the
Board of Directors in a manner other than equally so as to elect as directors the maximum possible
number of such nominees.
Each nominee has agreed to serve for a one-year term, if elected. If any nominee is unable to
stand for re-election at this Annual Meeting, the Board may (i) reduce its size or (ii) nominate an
alternate candidate, in which case the proxies will be voted for the alternate candidate.
Your Board recommends a vote FOR these directors.
DIRECTOR NOMINEES
Term Expiring in 2010
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James E. Berry II
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Director Since 1998
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Mr. Berry, age 64, has been the owner of Shading Concepts, which manufactures and sells
solarium draperies, since 1988. From 1973 to 1988, Mr. Berry was a stockbroker in Oklahoma City
with a major Wall Street firm. He is the current President of the United States Chess Federation.
J. Berry Harrison and Robert B. Rodgers are his cousins.
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Tom D. Berry
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Director Since 1981
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Mr. Berry, age 66, is involved in oil and gas exploration in North Central Oklahoma and is an
Auctioneer and Real Estate Broker in Stillwater, Oklahoma.
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Joe Berry Cannon
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Director Since 1981
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Mr. Cannon, age 73, is an Assistant Professor of Management at Oral Roberts University School
of Business in Tulsa, Oklahoma. Mr. Cannon served as Chairman, President, Chief Executive Officer,
and Senior Trust Officer of First National Bank and Trust Co. in Blackwell, Oklahoma from
1968-1991. He has been a member of the Kiwanis Club, a member of the First United Methodist Church
Board of Directors, and is a member of the American and Oklahoma Bar Associations.
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John Cohlmia
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Director Since 2006
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Mr. Cohlmia, age 47, was appointed as a director of the Company in July 2006. He has been a
director of Stillwater National Bank and Trust Company (Stillwater National) since August 2003.
Mr. Cohlmia is a Real Estate Broker with Grubb & Ellis Levy Beffort of Oklahoma City, Oklahoma.
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Rick Green
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Director Since 1998
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Mr. Green, age 62, was appointed the Chief Executive Officer (CEO) of Southwest effective
January 1, 1999. Mr. Green previously served as Chief Operating Officer, President of the Central
Oklahoma division, and Executive Vice President of Stillwater National, Southwests principal bank
subsidiary. He is a member of the Oklahoma City and Edmond Chambers of Commerce and has served as
Chair/Ambassador of the Stillwater Chamber of Commerce, on the Oklahoma State University Alumni
Association Homecoming and Honor Students Committees, as Chairman of Payne County Youth Services,
as Co-Chairman of the United Way of Stillwater Fund Drive and as a member of the Advisory Board of
the Oklahoma State University Technical Institute. He is a member of the Commercial Real Estate
Association of Oklahoma City, the Oklahoma and Oklahoma City Homebuilders Associations, and past
member of the Stillwater Medical Center Committee on Physician Recruitment. Mr. Green is also a
member of Leadership Stillwater and Leadership Oklahoma City. Mr. Green continues to be active as
an alumnus of Oklahoma State University, serving on various committees and boards, including as a
current member of the Oklahoma State University Spears School of Business Advisory Committee and
Dean Search Committee, a past member of the Board of Governors of the Oklahoma State University
Development Foundation, and as a member of the Oklahoma State University College of Business Alumni
Hall of Fame.
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David P. Lambert
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Director Since 1981
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Mr. Lambert, age 70, served as President and Chief Executive Officer of the Lambert
Construction Company from 1974 until 2005 and continues to serve as Chairman of the Board. He is
Chairman of the Trustees of the Oklahoma Construction Advancement Foundation and a member and past
chairman of the Stillwater Chamber of Commerce and the Stillwater Industrial Foundation. Mr.
Lambert is a life director of the Associated General Contractors of America and was inducted into
the Oklahoma State University Construction Management Hall of Fame.
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Linford R. Pitts
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Director Since 1981
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Mr. Pitts, age 72, is President of Stillwater Transfer & Storage, Inc. in Stillwater, Oklahoma
and invests in real estate and in oil and gas properties and other various small businesses. Mr.
Pitts is a member of the Past Presidents Council of the Stillwater Chamber of Commerce.
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Robert B. Rodgers
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Director Since 1996
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Mr. Rodgers, age 56, has been Chairman of the Board since December 31, 1999. He previously
served as Vice Chairman of the Board, beginning in May 1999. Mr. Rodgers is president of Bob
Rodgers Motor Company in Pauls Valley, Oklahoma and is owner of Rapid Enterprises. He is a former
director and was the President and Chairman of the Board of Directors of CDI II, a credit life
insurance company headquartered in Oklahoma City, Oklahoma. Mr. Rodgers also previously served on
the Board of Directors and was the Regional Vice President of the Oklahoma Auto Dealers
Association. Mr. Rodgers is past chairman of the Planning and Zoning Commission for the City of
Pauls Valley, Oklahoma. James E. Berry II and J. Berry Harrison are his cousins.
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Term Expiring in 2011
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David S. Crockett Jr.
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Director Since 2006
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Mr. Crockett, age 65, was appointed as a director in July 2006. Mr. Crockett, who has an MBA,
owns the CPA firm David S. Crockett & Co., CPAs in Dallas, Texas. He obtained his CPA designation
in 1969 and holds permits to practice in both Texas and Oklahoma. Mr. Crockett is a member of the
American Institute of Certified Public Accountants, the Texas Society of CPAs, the Dallas Estate
Planning Council, and the Petroleum Accounting Society. He is also Vice-President of Stonetex Oil
Corp. and is independently active in oil and gas exploration with various partners. He serves on
the Audit Committee and is the Audit Committees Financial Expert.
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J. Berry Harrison
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Director Since 1991
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Mr. Harrison, age 71, is a retired Oklahoma State Senator and has been a rancher and farmer in
Fairfax, Oklahoma since 1962. Mr. Harrison serves as Conservation District Director of Osage
County, President of the Oklahoma Association of Conservation Districts, and is a member of many
other civic groups. James E. Berry II and Robert B. Rodgers are his cousins.
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James M. Johnson
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Director Since 2006
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Mr. Johnson, age 50, was appointed as a director in May 2006. Mr. Johnson has an MBA from
Emory University and is a self-employed small business owner. He previously served for fourteen
years as a supervisory analyst, financial analyst, and examiner of financial institutions with the
federal Office of Thrift Supervision and its predecessor.
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Russell W. Teubner
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Director Since 2000
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Mr. Teubner, age 53, is founder and CEO of Host Bridge Technology, LLC, a computer software
company. The Stillwater Chamber of Commerce honored him as Citizen of the Year in 1992, Small
Business Person of the Year in 1991-92, and Small Business Exporter of the Year in 1992-93. In
1993, he received the Outstanding Young Oklahoman award given annually by the Oklahoma Jaycees. In
1997, Oklahoma State University named Mr. Teubner as a recipient of their Distinguished Alumni
award. During 1996 and 1997 he served on the Citizens Commission on the Future of Oklahoma Higher
Education. Currently, he serves on the board of the OSU Education and Research Foundation. Mr.
Teubner is a past director of the Global Commerce Network, a non-profit organization devoted to
helping business leaders extend their influence into the social sector, and the Oklahoma City
branch of the Federal Reserve Bank of Kansas City.
BOARD MEETINGS AND COMMITTEES
Southwests Board conducts its business through meetings of the Board and of its committees.
The Board meets monthly and may have additional special meetings. The Board met sixteen times
during 2009. Each director in office at the record date attended more than 85% of the meetings of
the Board held in 2009 and more than 80% of the total number of meetings held in 2009 of the Board
and the committees on which he served.
6
BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT
Separate Chairman of the Board and President and Chief Executive Officer
The position of Southwests Chairman of the Board and the office of its President and Chief
Executive Officer are held by different persons. The Chairman of the Board, Robert B. Rodgers, is
an independent director and became Chairman in 1999, after three years of service on the Board. He
is an ex officio member of the Compensation Committee and the Audit Committee and chairs the
Nominating Committee and Director Search Committee. The duties of these committees are described on
pages 8 through 10.
The duties of the Chairman of the Board include providing strategic leadership and guidance;
presiding at the meetings of the Board and executive sessions of independent directors; calling
executive sessions and special meetings of the board; establishing agendas for meetings of the
board and independent directors with advice from senior management and outside advisers; advising
and consulting with the President and Chief Executive Officer, other executive officers, including
Southwests senior risk officers, and the chairmen of the Audit, Compensation, and other Southwest
standing committees regarding strategies, risks, opportunities, and other matters; and conducting
the affairs of the Nominating and Director Search committees as their chairman.
The President and Chief Executive, Rick Green, was appointed to those offices on January 1,
1999, after previous service as Chief Operating Officer, President of the Central Oklahoma
Division, and Executive Vice President of Stillwater National. He is the principal management
officer of Southwest, with responsibility for supervision of its executive and senior management
and the operations of Southwest and its subsidiaries. His duties include developing strategic and
tactical initiatives in consultation with other members of executive management and the Chairman of
the Board; making recommendations regarding other members of executive management to the Board; and
implementing approved strategic and tactical plans and initiatives.
We think separation of the two offices is the appropriate leadership structure for Southwest.
We believe the division of duties is especially appropriate as legal and regulatory requirements
applicable to the Board and its committees continue to expand, and help provide the appropriate
levels of communication between the Board of Directors and Executive Management for Board oversight
of Southwest and its management.
Risk Oversight and the Board
The Board of Directors as a whole is ultimately responsible for risk management oversight of
Southwest. It is assisted by its committees, including the Audit Committee and the Compensation
Committee, whose duties are described below, as well as other committees, such as the Directors
Loan Review Committee, responsible for oversight of credit polices and risks, and the Compliance
Committee, responsible for oversight of compliance with banking regulatory matters. These
committees regularly provide reports of their activities and conclusions to the full board for
discussion and acceptance.
The Chairman of the Board and the President and Chief Executive Officer address risk matters
at the regular board meetings. In addition to Mr. Green, other members of senior management,
including senior risk officers, regularly provide reports directly to the Board of Directors in the
Board meetings.
7
Audit Committee
The Audit Committee of the Board oversees and reports to the Board of Directors regarding
accounting and financial reporting processes, the audits of the financial statements, the
qualifications and independence of registered public accounting firm engaged to provide independent
audits and related services, and the performance of the internal audit function and independent
registered public accounting firm; and performs the other duties of the committee specified by
federal securities laws and regulations, the Federal Deposit Insurance Act, and related regulations
(the FDIA), the listing standards of the NASDAQ Stock Market, Inc. (the Listing Standards),
enterprise risk management, and its charter. In addition the committee, as directed by the Board,
investigates and reports to the Board with respect to specific matters involving financial
reporting, financial accounting, conflicts of interest, internal controls, and compliance with laws
and regulations relating to such matters. The committee, in its capacity as a committee of the
Board, is directly responsible for the appointment, compensation, retention, evaluation,
termination, and oversight of the work of any independent auditor employed by Southwest for the
purpose of preparing or issuing an audit report or related work. The independent registered public
accounting firm reports directly to the committee. The committee is responsible for the resolution
of any disagreements between management of Southwest and the independent registered public
accounting firm regarding financial reporting. All members of the committee are independent as
defined in applicable law, regulations of the Securities and Exchange Commission (SEC), the FDIA,
and the Listing Standards. Members of the committee also meet all other applicable requirements of
the SEC, FDIA, and the Listing Standards for financial, accounting, or related expertise. The
committee has adopted a written charter, which has been approved by the Board of Directors. A copy
of this charter is available on the governance area of Southwests website at www.oksb.com. The
committee met twelve times in 2009. Current members are Joe Berry Cannon, David S. Crockett Jr.,
James M. Johnson, Russell W. Teubner, and Linford R. Pitts, Chairman. Robert B. Rodgers, Chairman
of the Board of Directors, is an ex-officio member of the Audit Committee. The Board has determined
that Mr. Crockett qualifies as an audit committee financial expert under the Listing Standards and
applicable securities regulations. Under SEC regulations and Southwest policy, the identification
of a person as an audit committee financial expert does not impose on such person any duties,
obligations, or liability greater than those to which he or she otherwise is subject as a member of
the Audit Committee and Board of Directors.
Compensation Committee
The Compensation Committee of the Board reviews Southwests compensation policies and employee
benefit plans and programs and makes recommendations to the Board based on such reviews; reviews
and recommends CEO compensation to the Board for its approval; determines executive management
incentive awards and stock based awards to eligible officers; reviews and recommends employment
agreements, including change-in-control agreements; recommends changes in director compensation to
the Board; performs the other duties of the committee specified by federal banking and securities
laws and regulations, the FDIA, and the Listing Standards, including oversight of compensation
related risks required by the American Recovery and Reinvestment Act (the Recovery Act); and as
directed by the Board, investigates and reports to the Board with respect to specific matters
involving compensation and benefit matters. The committee has a written charter which is available
at www.oksb.com in the governance section. Members of the committee are independent directors
within the meaning of the Listing Standards. The committee is advised by an outside compensation
consulting firm and by legal counsel. The committee may delegate to the appropriate officers of
Southwest the responsibility for executing and delivering agreements and documents approved by the
committee. The Chief Executive Officer is not present during voting or deliberation of his
compensation by the committee or the board. The compensation of other Named Executive Officers is
determined by a vote of the independent directors in connection with the annual budget process.
8
The committee met seven times in 2009. Current members are James E. Berry II, John Cohlmia,
James M. Johnson, David P. Lambert, Linford R. Pitts, and Russell W. Teubner, Chairman. Robert B.
Rodgers, Chairman of the Board of Directors, is an ex-officio member of the Compensation Committee.
Compensation Committee Interlocks and Insider Participation
In 2009, no Southwest executive officer served as a member of the compensation committee of
another entity that had an executive officer who served as a Southwest director, and no Southwest
executive officer served as a director of another entity that had an executive officer serving on
Southwests Compensation Committee. No member of the Compensation Committee served as an officer or
employee of Southwest or any of its subsidiaries during 2009 or had any related party transaction
during 2009 that was required to be disclosed in this proxy statement. See Certain Transactions
on page 28.
Nominating and Director Search Committees
Southwest has a Nominating Committee and a Director Search Committee with responsibility for
recommending persons to be nominated as directors. The Chairman of the Board is the chairman of
both committees. Members of the committees are independent directors within the meaning of the
Listing Standards. The Nominating Committee has responsibility for recommending to the Board of
Directors whether or not to nominate each director whose term expires at the next annual meeting of
shareholders. The Nominating Committee met one time in 2009. Current members are James E. Berry II,
James M. Johnson, Russell W. Teubner, and Robert B. Rodgers, Chairman. In its determination of
whether or not to recommend a director for nomination, the Nominating Committee considers whether
or not the director meets the minimum criteria for board membership based upon the directors
honesty, integrity, reputation in his or her community, existence of any actual or potential
conflicts of interest, and past service as director, and may consider additional factors it deems
appropriate. The Director Search Committee has responsibility for identifying and recommending to
the Board of Directors persons to be nominated as new directors of Southwest. The committee is also
responsible for interviewing and investigating potential new directors. The Director Search
Committee did not meet in 2009. Current members of the committee are James E. Berry II, J. Berry
Harrison, David P. Lambert, Russell W. Teubner, and Robert B. Rodgers, Chairman. In its
determination of whether or not to recommend a director for nomination, the Director Search
Committee will consider whether or not such director meets the minimum criteria for board
membership described above and may consider additional factors it deems appropriate. Additional
factors considered by the Nominating Committee and the Director Search Committee in performing
their functions, and by the Board of Directors in considering whether nominees and continuing
directors should serve on the Board of Directors, may include many factors, including the
directors past service on the Board of Directors and its committees, special skills, experience,
and qualifications that are noted in the brief director biographies and committee descriptions and
certifications, among others. The committees and the Board of Directors may consider diversity in
market knowledge, experience, employment, and other factors. Decisions the Nominating Committee and
the Director Search Committee in performing their functions, and by the Board of Directors
regarding continued service of directors, are made based on expected contributions to the Board of
Directors in furtherance of the interests of shareholders, and regardless of gender or race.
The Director Search Committee is also responsible for considering persons recommended for
nomination as directors by shareholders, other directors, and officers. Under the charter of the
Director Search Committee, no shareholder nomination or recommendation need be considered unless
the committee determines, in its good faith discretion, that (i) the manner and substance of the
9
recommendation or nomination and the related information and materials provided in connection with
the recommendation or nomination comply with the procedural and substantive requirements of
Southwests Certificate of Incorporation, relevant Bylaws, and state and federal law, and (ii) if
elected, the person recommended or nominated may lawfully serve on the board. Shareholders may
submit recommendations for director candidates for consideration by the Director Search Committee
to the Secretary by first class mail. Please also see Shareholder Proposals and Communications on
page 33 of this Proxy Statement.
The Nominating Committee and the Director Search Committee have written charters that have
been approved by the Board of Directors. Copies of these charters are available on the governance
area of Southwests website at www.oksb.com.
DIRECTOR INDEPENDENCE
The Board of Directors has affirmatively determined that all Directors other than Mr. Green
are independent under the Listing Standards. Those independent directors are:
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James E. Berry II
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David S. Crockett, Jr.
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Linford R. Pitts
|
Thomas D. Berry
|
|
J. Berry Harrison
|
|
Robert B. Rodgers
|
Joe Berry Cannon
|
|
James M. Johnson
|
|
Russell W. Teubner
|
John Cohlmia
|
|
David P. Lambert
|
|
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Independence Standards for Directors not on the Audit Committee
In general, an independent director means a person, other than a person having a relationship
that, in the opinion of the Board of Directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. In addition, the following persons are
not independent:
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(i)
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|
A person who is now or during the last three years has been an officer or
employee of Southwest or of any parent or subsidiary of Southwest;
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|
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(ii)
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A person who accepted, or who has a family member who accepted, any payments in
excess of $120,000 from Southwest or any parent or subsidiary of Southwest during the
current fiscal year or in any of the three preceding fiscal years, excluding the
following payments:
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(A)
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Compensation for board or committee service;
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(B)
|
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Payments arising solely from investment in Southwests securities (e.g.
dividends);
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(C)
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Compensation to a family member who is a non-executive employee;
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(D)
|
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Benefits under a tax-qualified retirement plan or non-discretionary
compensation; and
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(E)
|
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Loans permitted under Section 13(k) of the Securities Exchange Act of
1934 (the Act), which, in general, include loans made in accordance with
regulations governing loans between banks and their directors.
|
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(iii)
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A director who is a family member of a person who is, or at any time during
the past three years was, employed as an executive officer by Southwest or of any
parent or subsidiary of Southwest;
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(iv)
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A director who is, or who has a family member who is, a partner, controlling
shareholder, or executive officer of any organization to which Southwest made, or from
which Southwest received, payments for property or services in the current or any of
the past three fiscal years that exceed 5% of the recipients consolidated gross
revenues for that year, or $200,000,
|
10
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|
whichever is more, other than (i) payments arising solely from investments in
Southwests securities, or (ii) payments under non-discretionary charitable contribution
matching programs:
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(v)
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A person who is, or who has a family member who is, an executive officer of
another entity at which any of the executive officers of Southwest have served on the
compensation committee of the other entity; and
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(vi)
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A person who is, or who has a family member who is, a current partner of
Southwests outside auditor, or who was a partner or employee of Southwests outside
auditor who worked on Southwests audit at any time during the past three years.
|
Independence Standards for Members of the Audit Committee
.
Each member of the Audit Committee must meet the independence standards summarized above. In
addition, none of the following are considered independent for purposes of Audit Committee
membership:
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(i)
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A person who currently accepts, directly or indirectly, any consulting,
advisory, or other compensatory fee from Southwest or from any subsidiary of Southwest,
other than fixed amounts of compensation under a retirement plan (including deferred
compensation) for prior service with Southwest if such compensation is not contingent
in any way on continued service with Southwest or any subsidiary of Southwest; or
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(ii)
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A person who is an affiliated person of Southwest or any subsidiary of
Southwest. Affiliated persons are persons who directly or indirectly control Southwest,
including, but not limited to, persons who are executive officers of Southwest or a
subsidiary of Southwest, a director who is also an employee of Southwest or a
subsidiary of Southwest, and a general partner or management member of a subsidiary of
Southwest. Affiliated persons do not include persons who do not beneficially own 10% or
more of any class of voting securities of Southwest or a subsidiary of Southwest and
who are not executive officers of Southwest or a subsidiary of Southwest.
|
The Board of Directors of Stillwater National, Southwests primary banking subsidiary, also
has determined that each member of the Audit Committee, which has the same membership as the
Southwest Audit Committee, is independent of management, based upon consideration of whether the
director is or has been an officer or employee of Stillwater National or any of its affiliates;
serves or served as a consultant, advisor, promoter, underwriter, legal counsel, or trustee of or
to Stillwater National or any of its affiliates; is a relative of an officer or other employee of
Stillwater National or any of its affiliates; holds or controls or held or controlled, direct or
indirect financial interest in Stillwater National or any of its affiliates; or has outstanding
extensions of credit from Stillwater National or any of its affiliates, among other factors the
board deems relevant. A director is not considered independent of management if such director is,
or has been within the preceding year, an officer or employee of Stillwater National or any of its
affiliates, or owns or controls, or has owned or controlled within the preceding year, assets
representing 10% or more of any outstanding class of voting securities of Stillwater National.
Executive Sessions
Independent directors have regularly scheduled meetings at which only independent directors
are present.
11
DIRECTOR COMPENSATION
During 2009, the Chairman of the Board of Directors of Southwest received an annual retainer
of $18,000, the Chairman of the Audit Committee received an annual retainer of $14,000, the
Chairman of the Compensation Committee received an annual retainer of $12,500, the Chairman of the
Loan Committee received an annual retainer of $11,000, and other non-officer Directors of Southwest
each received an annual retainer of $8,000. In addition, non-officer Directors received fees of
$750 per board meeting attended and a committee meeting fee of $300 per meeting if the meeting was
held the same day as the board meeting or $600 if the committee meeting was held on another day.
The Financial Expert on the Audit Committee receives $1,000 per meeting in addition to the regular
committee meeting fee. Directors who also serve as Southwest officers did not receive these fees.
Southwest directors are also eligible to receive non-incentive stock options and other stock based
awards under Southwests 2008 Stock Based Award Plan. Awards of 2,200 shares of restricted stock
with a market value on the date of grant of $8.90 per share were granted in 2009 to directors who
were not employees of Southwest or any of its subsidiaries. The following table summarized
compensation for each person who was a member of Southwests board of directors during 2009.
Director Compensation
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Fees Earned
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or Paid in
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Name
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Cash
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Stock Awards (1)
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Total
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James E. Berry, II
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$
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26,900
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$
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19,580
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$
|
46,480
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Thomas D. Berry
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23,600
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|
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19,580
|
|
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43,180
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Joe Berry Cannon
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23,900
|
|
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19,580
|
|
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43,480
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John Cohlmia
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26,900
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|
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19,580
|
|
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46,480
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David S. Crockett, Jr.
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32,800
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|
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19,580
|
|
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52,380
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J. Berry Harrison
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25,550
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19,580
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45,130
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James M. Johnson (2)
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26,300
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19,580
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45,880
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David P. Lambert
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26,900
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19,580
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46,480
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Linford R. Pitts
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34,100
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19,580
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53,680
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Robert B. Rodgers
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37,500
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19,580
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57,080
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Russell W. Teubner
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29,900
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19,580
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49,480
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(1)
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Represents the grant date fair value for stock awards. See the discussion of share-based
compensation in notes 1 and 14 to the Consolidated Financial Statements included in Southwests
2009 Annual Report on Form 10-K. At December 31, 2009, the aggregate number of shares subject to
unvested awards of restricted common stock was: Director Crockett-3,106; Director Johnson-3,168,
and each other non-officer Director-3,252. At December 31, 2009, no non-officer Director had
outstanding stock options.
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(2)
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Director Johnson elected to defer 50% of the fees for 2009 under the Directors Deferred
Compensation Plan. This plan is unfunded, and pays interest on amounts deferred at an annual rate
that is 1.00% less than the rate earned on interest earning assets by Stillwater National. No other
Director participated in the plan during 2009.
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12
COMMON STOCK OWNED BY DIRECTORS AND EXECUTIVE OFFICERS
The shares of Southwests common stock that were beneficially owned on the Record Date
by each person who was a director or officer on that date or is a Named Executive Officer are shown
below. The number or shares shown below includes directors qualifying shares. No shares included
below are pledged as security.
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Common Stock
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Amount and
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Nature of
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Percentage
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Beneficial
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of Shares
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Name
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Ownership(1)
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Outstanding(2)
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James E. Berry II
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257,720
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1.74
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%
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Thomas D. Berry
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70,807
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*
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Joe Berry Cannon
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109,036
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*
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John Cohlmia
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10,413
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*
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David S. Crockett Jr.
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6,912
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|
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*
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Rick Green
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64,183
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(3)
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*
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J. Berry Harrison
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105,326
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*
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James M. Johnson
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7,320
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|
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*
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David P. Lambert
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64,041
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*
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Linford R. Pitts
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42,950
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|
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*
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Robert B. Rodgers
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295,858
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2.00
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Russell W. Teubner
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65,739
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*
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Kerby E. Crowell
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63,538
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(4)
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*
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Jerry L. Lanier
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31,644
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(5)
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*
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Kimberly G. Sinclair
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35,527
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(6)
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*
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Charles H. Westerheide
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34,177
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(7)
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*
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|
All Directors and Executive
Officers as a Group
(21 persons)
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1,308,027
|
(8)
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|
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8.73
|
%
|
|
|
|
*
|
|
Less than one percent of shares outstanding.
|
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(1)
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Beneficial ownership is defined by rules of the Securities and Exchange Commission and
includes shares that the person has or shares voting or investment power over and shares that
the person has a right to acquire within 60 days from March 1, 2010.
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(2)
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In calculating the percentage ownership of each named individual and the group, the number of
shares outstanding includes any shares that the person or the group has the right to acquire
within 60 days of March 1, 2010.
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(3)
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Includes 51,372 shares that Mr. Green has the right to acquire within 60 days of March 1,
2010, pursuant to the exercise of stock options.
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(4)
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Includes 38,492 shares that Mr. Crowell has the right to acquire within 60 days of March 1,
2010, pursuant to the exercise of stock options.
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(5)
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Includes 31,009 shares that Mr. Lanier has the right to acquire within 60 days of March 1,
2010, pursuant to the exercise of stock options.
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(continued)
13
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(6)
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Includes 27,243 shares that Ms. Sinclair has the right to acquire within 60 days of March 1,
2010, pursuant to the exercise of stock options.
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(7)
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Includes 33,948 shares that Mr. Westerheide has the right to acquire within 60 days of March
1, 2010, pursuant to the exercise of stock options.
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(8)
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Includes shares held by certain directors and executive officers as custodians under Uniform
Transfers to Minors Acts, by their spouses and children, and for the benefit of certain
directors and executive officers as custodians under individual retirement accounts (IRAs),
limited liability partnerships, and living trusts. Includes 211,404 shares that executive
officers and directors have the right to acquire within 60 days of March 1, 2010, pursuant to
the exercise of stock options. Does not include shares beneficially owned by Directors of Bank
of Kansas who are not also directors of Southwest.
|
OWNERS OF MORE THAN 5% OF SOUTHWESTS COMMON STOCK
Beneficial owners of more than 5% of the common stock are required to file certain ownership
reports under the federal securities laws. The following table shows the common stock beneficially
owned by persons who have filed these reports reporting beneficial ownership that exceeds 5% of
Southwests outstanding common stock at March 1, 2010.
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Amount and Nature
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|
Percentage
|
|
|
of Beneficial
|
|
of Shares
|
Name
|
|
Ownership
(1)
|
|
Outstanding
(2)
|
Polaris Capital Management, Inc.(3)
|
|
|
1,622,777
|
|
|
|
10.98
|
%
|
Dimensional Fund Advisors LP (4)
|
|
|
1,063,771
|
|
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7.20
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%
|
BlackRock Inc.(5)
|
|
|
869,062
|
|
|
|
5.88
|
%
|
|
|
|
(1)
|
|
Beneficial ownership is defined by rules of the Securities and Exchange Commission and
includes shares for which the person has or shares voting or investment power. A decision to
disclaim beneficial ownership or to include shares held by others is made by the shareholder,
not by Southwest.
|
|
(2)
|
|
Calculated by Southwest based upon shares reported as beneficially owned by the listed
persons and shares of Southwest common stock outstanding at March 1, 2010.
|
|
(3)
|
|
The address of Polaris capital Management, Inc. is 125 Summer Street, Suite 1470, Boston, MA
02110.
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|
(4)
|
|
The address of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX
78746.
|
|
(5)
|
|
The address of BlackRock Inc. is 40 East 52
nd
Street, New York, NY 10022.
|
14
COMPENSATION DISCUSSION AND ANALYSIS
Overview
This Compensation Discussion and Analysis describes Southwests compensation philosophy,
components, goals, processes, and methodologies for determining executive compensation for
Southwests Principal Executive Officer, Principal Financial Officer, and three most highly
compensated other executive officers (the Named Executive Officers).
The Compensation Committee, the CEO, and the full Board of Directors have important roles in
the process of establishing executive officer compensation. The Compensation Committee has engaged
Amalfi Consulting to provide independent compensation information and advice. Amalfi Consulting was
engaged by and reports directly to the Compensation Committee and does not perform other work for
Southwest or its management.
Please refer to the Summary Compensation Table on page 24, which summarizes compensation for
the Named Executive Officers for 2009, 2008, and 2007, and to the detailed compensation disclosures
under the heading Executive Compensation beginning on page 24.
Important Information About 2008, 2009, and Future Executive Compensation
Federal laws enacted in 2008 and 2009 and economic conditions have caused us to significantly
change our executive compensation plans and decisions. These changes and the reasons for them are
discussed below.
Capital Raising.
We decided to raise capital in 2008 to support our strategic goals.
We achieved our capital raising goals through two initiatives:
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|
|
The $34.5 million sale of our trust preferred securities in a public offering; and
|
|
|
|
|
The $70.0 million sale of our preferred securities and warrants in a private
placement under the Capital Purchase Program established by the United States
Department of the Treasury.
|
The public offering was completed in early July 2008. Shortly after that date, the public
market for most new banking securities collapsed as the economy deteriorated. The Treasury
Department responded by developing the voluntary Capital Purchase Program in the fall of 2008. The
stated goal of this voluntary program was to buy nonvoting investment securities from qualified,
healthy banks in order to encourage a return to more normal liquidity and help stabilize the
financial markets.
We applied for approval to participate in the Capital Purchase Program after determining
that its terms were likely to be more favorable than any market alternative. We completed the sale
of preferred securities and warrants to the Treasury in December 2008.
New Compensation Restrictions
. In February 2009, the federal American Recovery and
Reinvestment Act (the Recovery Act) became law. It subjects companies that participated in the
Capital Purchase Program to new executive compensation restrictions and requirements that last as
long as its Capital Purchase Plan preferred securities are outstanding. These include prohibitions
of:
|
|
|
Incentive compensation payments payable in cash or in stock options to covered
officers;
|
|
|
|
|
Incentive compensation paid in stock, except for grants of restricted stock that may
not fully vest until after none of Southwests Capital Purchase Plan preferred shares
remain outstanding, and are limited in value to 1/3 of total compensation per covered
officer;
|
|
|
|
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Incentives that would cause a covered officer to take unnecessary and excessive
risks that threaten the value of Southwest;
|
15
|
|
|
Payments to a covered officer triggered by his or her departure from employment,
other than payments for services performed and accrued benefits; and
|
|
|
|
|
Payments of tax-gross ups, which are reimbursements to cover taxes owed by officers
with respect to any compensation.
|
The incentive compensation restrictions apply to the five most highly compensated employees at
Southwest. The severance payment restrictions apply to the Named Executive Officers and the next
five most highly compensated officers. Some of the additional provisions of the Recovery Act may
apply to additional officers at Southwest.
Covered officers also are required to return any bonus or incentive compensation they receive
that was based upon statements of earnings, revenues, gains, or other criteria that are later found
to be materially inaccurate.
The Recovery Act also requires companies with outstanding Capital Purchase Program preferred
securities to:
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|
|
Provide shareholders with an opportunity to cast nonbinding advisory votes on
executive compensation (Please see Proposal 3 on page 31);
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|
|
|
|
Establish independent compensation committees;
|
|
|
|
|
Establish polices regarding excessive luxury expenditures; and
|
|
|
|
|
Provide certifications of compliance with these Recovery Act provisions.
|
The Treasury Department is required to issue regulations to implement the Recovery Act. These
regulations will affect how the Recovery Act applies to Southwest.
Effects of Economic Conditions and the Recovery Act on Compensation of Our Named Executive Officers
Base Salary
. We last adjusted base salaries for the Named Executive Officers effective January
1, 2008. In December 2008, we decided not to increase their base salaries for 2009 because of
economic conditions. This decision was not affected by the Recovery Act.
Short-Term and Long-Term Incentive Compensation
. Our incentive compensation plans consist of a
short-term plan under which cash awards are paid based upon annual performance or discretionary
factors and a long-term plan under which stock based awards are made based upon three-year average
performance.
No payouts to Named Executive Officers under our short-term or long-term incentive
compensation plans were made based upon 2009 performance. We suspended both the short-term and the
long-term incentive compensation plans for 2009 because of the Recovery Acts severe restrictions
on incentive compensation. The plans remain suspended.
The Compensation Committee has reviewed the suspended incentive compensation plans with
Southwests senior risk officers and has made reasonable efforts to ensure that those plans, had
they been in effect, would not encourage the Named Executive Officers to take unnecessary and
excessive risks that threaten the value of Southwest.
Benefits and Perquisites.
In 2009, we adopted and implemented a policy regarding excessive or
luxury expenditures, as required under the Recovery Act. The policy did not have a material effect
on existing benefits and perquisites, which we believe are reasonable. A copy of the policy is
available on the governance area of Southwests website at www.oksb.com.
16
Potential Change in Control Effects
. Southwest will not make any unearned or unaccrued
payments to Named Executive Officers under our Severance Plan or any other plan that provides
termination benefits while they are prohibited by the Recovery Act.
Philosophy and Guiding Principles
Southwest recognizes that the ability to retain and recruit executive officers is critical to
the achievement of its annual and long range goals. Our executive compensation philosophy is
intended to effectively attract, motivate, and retain top executive talent at a reasonable cost to
Southwest. Where allowed by federal law and regulation, our goal is to link executive rewards with
shareholder returns, to reward both short and long-term performance, to achieve strategic business
objectives, and to provide the opportunity to receive incentives for exceeding targeted goals.
As described above, we did not increase base salaries of any Named Executive Officer for 2009
and have suspended our short-term and long-term incentive compensation plans applicable to them.
The following discussion is based upon principles that applied to prior periods and which may apply
in the future when consistent with law and economic conditions.
Southwest intends that total compensation and each of its components be market competitive and
consistent with Southwests performance goals. The Compensation Committee assesses the
competitiveness of the CEOs total compensation and its components on an annual basis. This annual
compensation review assesses the appropriateness of the mix of compensation components and
considers comparisons of compensation levels and practices at Southwest versus a peer group of
approximately twenty publicly traded bank holding companies (a detailed listing of the peer group
is provided on page 21). The peer group compensation data and other market compensation data is
provided by the committees independent compensation consultants. This peer group market
compensation data is used to assist the committee in making compensation adjustments and decisions,
but is not the sole factor that the committee utilizes. The committee also takes into account the
performance of Southwest, the performance of the CEO and other Named Executive Officers, internal
and external factors that are affecting the Company, and the advice and recommendations of its
independent compensation consultants. The CEO does not participate in the deliberation of his
compensation.
The components of total compensation are (a) base compensation (salary), (b) annual cash
incentive compensation, (c) long-term incentive compensation in the form of stock based awards, and
(d) executive benefits and perquisites. Southwest is guided by the following principles in
establishing executive compensation. A discussion of each of these components begins on page 18.
|
|
|
CEO base salary compensation generally should be set at the approximate median level of
its peers, subject to adjustment based on factors relating to the CEOs value and Board
discretion. Base salary for other Named Executive Officers is based upon the individual
executives value in consideration of their levels of responsibility, ability, experience,
and on discretion. The base salaries of the Named Executive Officers have not been adjusted
for 2009.
|
|
|
|
|
A substantial part of potential total annual cash compensation should be in the form of
cash incentive payments based upon the annual performance of Southwest and the performance
of the individual officer. The CEOs performance for annual cash incentive payments
generally should be based upon Southwests performance. As noted above, however, the
short-term incentive compensation plan that provides such payments was suspended in early
2009.
|
|
|
|
|
Long-term incentive compensation should be provided through Stock Based awards under
Southwests shareholder approved Stock Based plans. The CEO and Named Executive Officers
are eligible for annual grants of Stock Based awards that are based upon a percentage of
salary that is
|
17
|
|
|
determined by Southwests long-term performance over a three-year period. As noted above,
however, the long-term incentive compensation plan that provides such grants was suspended
in 2009.
|
|
|
|
|
The types and amounts of perquisites and benefits provided to the Named Executive
Officers should be comparable to peer levels.
|
|
|
|
|
Overall compensation should be comparable to peer levels, subject to differences in
performance. Please see the Effects of Economic Conditions and the Recovery Act on
Compensation of Our Named Executive Officers on page 16.
|
The Board may make exceptions to these principles at its discretion. (See Board of Directors and
Compensation Committee Discretion; Adjustments on page 20.)
Base Salary Compensation (Salary)
(Please see the Salary column in the Summary Compensation Table on page 24.)
The base salary of the Named Executive Officers is reviewed annually in December, and any
changes are made effective on the following January 1st. Base compensation is intended to provide a
predictable and stable source of income over the year but is subject to increase or decrease at the
discretion of the Board.
The base salary of the CEO is approved by the Board of Directors based upon the recommendation
of the Compensation Committee. The base salary of the other Named Executive Officers is established
by the Board based upon the recommendations of the CEO in connection with approval of the annual
budget.
Generally, the goal of the committee is to maintain the annual base salary level for the CEO
at approximately the median level of the peer group reflected in the report of the compensation
consultant used by the committee in its annual review, although the committee may make
discretionary adjustments. The CEO proposes the annual base compensation levels of the other Named
Executive Officers based upon data from those reports and the CEOs consideration of the
executives responsibilities, qualifications, experience, and performance as well as internal pay
equity and market competitiveness factors. As shown below, base salary for each executive officer
for 2009 was the same as for 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Base Salary
|
|
Increase
|
Name and Position
|
|
2009
|
|
2008
|
|
Amount
|
|
Percentage
|
Rick Green
|
|
$
|
470,967
|
|
|
$
|
470,967
|
|
|
$
|
|
|
|
|
0.00
|
%
|
President and Chief
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kerby E. Crowell
|
|
|
264,000
|
|
|
|
264,000
|
|
|
|
|
|
|
|
0.00
|
%
|
Executive Vice President,
Secretary and Chief Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Lanier
|
|
|
286,000
|
|
|
|
286,000
|
|
|
|
|
|
|
|
0.00
|
%
|
Executive Vice President and
Chief Lending Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly G. Sinclair
|
|
|
225,500
|
|
|
|
225,500
|
|
|
|
|
|
|
|
0.00
|
%
|
Executive Vice President and
Chief Administrative Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles H. Westerheide
|
|
|
222,000
|
|
|
|
222,000
|
|
|
|
|
|
|
|
0.00
|
%
|
Executive Vice President and
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No changes have been made in the base salaries of Named Executive Officers for 2010.
18
Annual Cash Incentive Compensation
(Please see the Non-Equity Incentive Plan column in the Summary Compensation Table on page
24.)
Regular annual incentive compensation is paid in cash. It is designed to directly reward
the achievement of key performance measures established for each year. Annual cash incentive
compensation for the CEO is based upon the annual consolidated performance of Southwest in terms of
actual versus targeted earnings per share growth, return on equity, and return on assets. Annual
cash incentive compensation for the other Named Executive Officers is based on a combination of
consolidated performance and divisional or personal performance goals.
Annual cash incentive compensation is calculated as a percentage of base compensation. The
threshold, targeted, and maximum (superior) award opportunity levels for each of these performance
levels and the corresponding percentages of base salary payable at those levels are determined each
year following approval of the annual budget. Targets may include items that are not part of the
budget. When items are included in the budget, the thresholds for awards may exceed budgeted
levels. The targets for Southwest consolidated performance to be used for annual incentive
compensation calculations and the percentage payouts at threshold, target, and maximum performance
levels are approved by the Board based upon the recommendation of the Compensation Committee.
Divisional and other performance factors for Named Executive Officers other than the CEO are
established by the CEO. Southwest does not provide earnings forecasts or guidance. No divisional
performance factors for Named Executive Officers for 2009 were established because the plan had
been suspended.
Discretionary Adjustments
. The Compensation Committee and the CEO may recommend, and the Board
may approve, discretionary adjustments in the calculated awards. There were no other discretionary
adjustments of Named Executive Officer annual cash incentives for 2009.
Long-Term Incentive Compensation
(Please see the Stock Awards and Option Awards columns in the Summary Compensation Table
on page 24 and the material under Stock Based Plans beginning on page 24.)
Long-Term incentive compensation paid through stock based awards issued under Southwests
Stock Based Award Plan. Southwest believes that granting stock based awards is an effective way to
align the interests of management with those of Southwests shareholders over time, encourage
ownership, and foster retention. All stock options are granted with an exercise price equal to the
market price of common stock at the date of grant. The value of the equity awards granted is based
on a percentage of base salary for each Named Executive Officer. The performance is determined by
the average of Southwests consolidated performance, using the factors used for the corporate
portion of the annual incentive awards, against target levels for the current year and the two
preceding years (three-year average). No threshold, target, and maximum levels for the three-year
average performance were established for 2009 payments, because the plans had been suspended.
Awards may be made in the form of stock options or shares of restricted stock at the
discretion of the Board of Directors upon the recommendation of the Compensation Committee. The
weighted performance results are multiplied by the earned percentages of base salary and the
resulting value is provided to the officer based on the grant date fair market value of the
restricted stock or stock options that are awarded. For stock options we utilize a Black-Scholes
method of valuation.
The percentage of base salary payable to each Named Executive Officer and the form and terms
of Stock Based awards are approved by the Board based upon the recommendation of the Compensation
Committee. In developing its recommendation the committee considers the accounting and tax effects
of the awards and the potential dilutive effect of the awards on other shareholders.
19
Benefits and Perquisites
(Please see the Non-Equity Incentive Plan Compensation, Change in Pension Value and
Nonqualified Deferred Compensation Earnings, and All Other Compensation columns in the Summary
Compensation Table on page 24, the material under Other Compensation Plans on page 26, and the
material under Nonqualified Deferred Compensation on page 27.)
Benefits and perquisites are essential components of competitive total compensation.
Southwest intends to provide benefits and perquisites that are competitive and consistent with
prevailing industry practice. The Named Executive Officers are eligible to participate in the
benefit plans generally available to Southwest employees, including its tax qualified profit
sharing plan. In addition, Mr. Green, Mr. Crowell, and Mr. Lanier participate in a non-qualified,
unfunded top hat profit sharing plan that allows them to receive the same profit sharing
percentage as other employees without regard to federal tax limitations. Mr. Green also has
participated in a non-qualified, unfunded deferred compensation plan, under which he was eligible
to defer all or part of his 2002 and 2003 cash compensation. The amount deferred earns interest
each quarter at an annualized rate that is one percent less than the rate Stillwater National
earned on average interest earning assets during the previous quarter.
Potential Change in Control Effects
(Please see the material under Severance Arrangements on page 27.)
Under Southwests Severance Compensation Plan, executive officers are entitled to
lump-sum severance compensation upon a qualifying termination of service equal to a percentage of
their respective total annual base compensation in effect at the date of termination. For purposes
of the Severance Compensation Plan, a qualifying termination of service is defined as either an
involuntary termination of service or a voluntary termination of service for good reason, in either
case within two years following a change-in-control occurring after the effective date of the
Severance Compensation Plan.
The rights to change in control benefits under the Separation Agreements are dependent on a
double trigger, that is, there must be both a change in control and a termination of employment
without just cause or with good reason. The Compensation Committee believes these double trigger
provisions are reasonable and in the best interests of shareholders and should help to reduce
potential mis-incentives for executives in the period in which a change in control is being
evaluated and negotiated; and to avoid the potential double payment of executives who continue
their employment after a change in control that could result from a single change in control
trigger.
All awards under Southwests Stock Option Plan become fully vested in the event of a change in
control.
No termination payments will be made to Named Executive Officers or other covered officers
under our Severance Plan or other plans to the extent they are prohibited by the Recovery Act.
Please see Effects of Economic Conditions and the Recovery Act on Compensation of Our Named
Executive Officers on page 16.
Board of Directors and Compensation Committee Discretion; Adjustments
Additional performance bonuses, stock options, and other Stock Based awards may be made within
the discretion of the Compensation Committee and the Board of Directors, subject to compliance with
the Recovery Act. The Compensation Committee also may consider other factors, and may change the
basis of assessing Southwests performance in the future, based upon Southwests annual or
longer-term goals. Southwests compensation philosophy and its methodologies for determining
compensation components are not a binding plan or contract that conveys rights to base salary,
annual cash incentive compensation, or grants of Stock Based awards, all of which are
discretionary.
20
In connection with the Capital Purchase Program, Southwest and all of the Named Executive
Officers agreed to comply with the requirements of law and regulation for recovery of any bonus or
incentive compensation received by Named Executive Officers that was based upon statements of
earnings, revenues, gains, or other criteria that are later found to be materially inaccurate.
Compensation Consultants
The Compensation Committee has engaged Amalfi Consulting and its predecessor to provide
executive and director compensation consulting advice to the committee since 2003. This advice
includes annual reviews of the overall compensation of executive officers and directors. These
reviews evaluate total compensation and its components, including the individual compensation
component mix. The annual compensation reviews provide analytical peer reviews and other data on
market practices. The compensation reviews are also provided to the CEO for his use in developing
compensation recommendations to the Board regarding the other Named Executive Officers. Amalfi
Consulting reports directly to the Compensation Committee and the committee discusses, reviews, and
approves all consulting projects performed by Amalfi Consulting.
Peer Analysis
The peer analysis described previously is used as a general guide in assessing the
competitiveness of Southwests executive compensation and is based upon compensation practices and
levels of a group of publicly traded bank holding companies with December 31, 2008 assets of from
$2.3 to $5.6 billion in Midwestern, Western, and Southern states that are current or possible
markets for Southwest or where it may compete for executive or other senior officers. The median
total assets for the group as of December 31, 2008, was $3.2 billion, compared to Southwests total
assets at that date of $$2.9 billion. The members of the peer group used in the committees October
2009 review of compensation were:
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|
|
IBERIABANK Corporation
|
|
|
Texas Capital Bancshares, Inc.
|
|
First Financial Bankshares, Inc.
|
Sterling Bancshares, Inc.
|
|
Old Second Bancorp, Inc.
|
First Merchants Corporation
|
|
Simmons First National Corp.
|
1
st
Source Corporation
|
|
MainSource Financial Group, Inc.
|
First Busey Corporation
|
|
Southside Bancshares, Inc.
|
Taylor Capital Group, Inc.
|
|
CoBiz Financial Inc.
|
Renasant Corporation
|
|
Great Southern Bancorp, Inc.
|
Midwest Banc Holdings, Inc.
|
|
Home Bancshares, Inc.
|
Integra Bank Corporation
|
|
First Financial Corporation
|
Bank of the Ozarks, Inc.
|
|
Enterprise Financial Services Corp.
|
Data for the Peer compensation reports prepared by Amalfi Consulting are derived primarily
from proxy statements, which generally reflect compensation for the year prior to the year in which
compensation reviews are conducted. For example, the review of compensation conducted in October
2009, which included a discussion of base compensation to be paid for the year 2010, was based
largely on the peer compensation paid or relating to 2008. The effect of this delay can be to
understate or overstate the levels of peer based compensation, which do not reflect changes since
the 2008 levels, compared to current Southwest based compensation. The Compensation Committee seeks
to take this timing difference into account through estimating projected average increases with the
assistance of Amalfi Consulting. In the December 2009 review, the compensation data was reviewed as
in the past, but Amalfi Consulting encouraged the committee to take into account the current
economic environment in banking and the possible decrease in executive compensation given the
current environment.
21
The measures used to assess Southwests performance relative to its peer group in the 2008 and
2009 consultants reports included net interest margin, efficiency ratio, return on average equity,
earnings per share growth, and return on average assets for the six months ended June 30, 2009 and
for the full-year
of 2008. The analysis also includes values for total return on a theoretical investment in the
stock of each company over the three years then ended.
Although the committee performed a compensation review in October 2009, no adjustment was made
to the base salaries of any Named Executive Officer. Please see Effects of Economic Conditions and
the Recovery Act on Compensation of Our Named Executive Officers on page 16.
22
COMPENSATION COMMITTEE REPORT
We have reviewed and discussed the foregoing Compensation Discussion and Analysis with
management. Based on our review and discussion with management, we have recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in this proxy statement and in
Southwests Annual Report on Form 10-K for the year ended December 31, 2009.
We certify that the committee, as required by the American Recovery and Reinvestment Act:
|
|
|
Has reviewed with Southwests senior risk officers the compensation plans for the
Named Executive Officers and has made all reasonable efforts to ensure that these plans
do not encourage the Named Executive Officers to take unnecessary and excessive risks
that threaten Southwests value;
|
|
|
|
|
Has reviewed with Southwests senior risk officers Southwests employee compensation
plans and has taken all reasonable efforts to limit any unnecessary risks that these
plans pose to Southwest; and
|
|
|
|
|
Has reviewed Southwests employee compensation plans to eliminate any features of
these plans that would encourage the manipulation of Southwests reported earnings to
enhance the compensation of any employee.
|
March 4, 2010
|
|
|
|
|
|
|
Russell W. Teubner, Chairman
James E. Berry II
John Cohlmia
James M. Johnson
|
|
David P. Lambert
Linford R. Pitts
Robert B. Rodgers
|
23
EXECUTIVE COMPENSATION
The following table summarizes compensation earned by or awarded to Rick Green,
Southwests principal executive officer; Kerby E. Crowell, Southwests principal financial officer;
and the three most highly compensated other executive officers for 2009 (the Named Executive
Officers).
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and Non-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
qualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
|
|
|
Incentive Plan
|
|
Deferred
|
|
All Other
|
|
|
Name and Principal
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Option
|
|
Compensation
|
|
Compensation
|
|
Compensation
|
|
|
Position
|
|
Year
|
|
Salary
|
|
(1)
|
|
Awards
(2)
|
|
(3)
|
|
Earnings
(4)
|
|
(5)
|
|
Total
|
Rick Green
|
|
|
2009
|
|
|
$
|
470,967
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
21,595
|
|
|
$
|
37,706
|
|
|
$
|
530,267
|
|
President and Chief
|
|
|
2008
|
|
|
|
470,967
|
|
|
|
10,559
|
|
|
|
|
|
|
|
|
|
|
|
28,050
|
|
|
|
43,068
|
|
|
|
552,644
|
|
Executive Officer
|
|
|
2007
|
|
|
|
440,967
|
|
|
|
96,368
|
|
|
|
|
|
|
|
|
|
|
|
37,164
|
|
|
|
79,178
|
|
|
|
653,676
|
|
Kerby E. Crowell
|
|
|
2009
|
|
|
|
264,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,004
|
|
|
|
282,004
|
|
Executive Vice President,
|
|
|
2008
|
|
|
|
264,000
|
|
|
|
4,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,624
|
|
|
|
289,199
|
|
Secretary and Chief Financial
|
|
|
2007
|
|
|
|
249,000
|
|
|
|
|
|
|
|
51,064
|
|
|
|
|
|
|
|
|
|
|
|
39,259
|
|
|
|
339,322
|
|
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Lanier
|
|
|
2009
|
|
|
|
286,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,198
|
|
|
|
313,198
|
|
Executive Vice President and
|
|
|
2008
|
|
|
|
286,000
|
|
|
|
4,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,524
|
|
|
|
338,350
|
|
Chief Lending Officer
|
|
|
2007
|
|
|
|
263,500
|
|
|
|
|
|
|
|
51,830
|
|
|
|
|
|
|
|
|
|
|
|
63,254
|
|
|
|
378,584
|
|
Kimberly G. Sinclair
|
|
|
2009
|
|
|
|
225,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,702
|
|
|
|
240,202
|
|
Executive Vice President and
|
|
|
2008
|
|
|
|
225,500
|
|
|
|
3,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,794
|
|
|
|
245,216
|
|
Chief Administrative Officer
|
|
|
2007
|
|
|
|
215,500
|
|
|
|
|
|
|
|
44,221
|
|
|
|
|
|
|
|
|
|
|
|
23,662
|
|
|
|
283,383
|
|
Charles H. Westerheide
|
|
|
2009
|
|
|
|
222,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,486
|
|
|
|
237,486
|
|
Executive Vice President and
|
|
|
2008
|
|
|
|
222,000
|
|
|
|
3,821
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,676
|
|
|
|
242,497
|
|
Treasurer
|
|
|
2007
|
|
|
|
210,000
|
|
|
|
|
|
|
|
40,430
|
|
|
|
25,000
|
|
|
|
|
|
|
|
23,537
|
|
|
|
298,967
|
|
|
|
|
(1)
|
|
Represents the grant date fair value for restricted stock award. See the discussion of
restricted stock in Notes 1 and 14 to the Consolidated Financial Statements contained in
Southwests 2009 Annual Report on Form 10-K.
|
|
(2)
|
|
Represents the grant date fair value for option awards. See the discussion of equity award
valuation in Notes 1 and 14 to the Consolidated Financial Statements contained in Southwests 2009
Annual Report on Form 10-K.
|
|
(3)
|
|
Represents annual incentive compensation payments.
|
|
(4)
|
|
Represents amounts earned under an unfunded, unqualified deferred compensation plan, including
preferential interest of $0 (2009), $1,790 (2008), and $7,641 (2007).
|
|
(5)
|
|
Includes annual contributions under Southwests qualified profit sharing plan of $11,350 (
2009), $11,650 (2008), and $22,505 (2007) for Mr. Green, Mr. Crowell and Mr. Lanier, $10,508
(2009), $11,650 (2008), and $22,505 (2007) for Ms. Sinclair, and $10,548 (2009), $11,650 (2008),
and $22,505 (2007) for Mr. Westerheide; contributions under Southwests unfunded, unqualified
supplemental profit sharing plan of $10,573 (2009), $17,989 (2008), and $45,080 (2007), for Mr.
Green, $998 (2009), $3,231 (2008), and $11,670 (2007) for Mr. Crowell, $2,788 (2009), $6,941
(2008), and $13,455 (2007) for Mr. Lanier and other perquisites and benefits individually
less than $25,000, including country club dues, automobile usage, apartment rental for Mr. Laniers
use while attending to business in Southwests Texas operations, and incremental cost of
supplemental life, long-term care, and, other than for Mr. Green, long-term disability.
|
Stock Based Plans.
Southwest maintains stock based plans to attract, retain, and motivate key
officers of Southwest and its subsidiaries by providing them with a stake in the success of
Southwest as measured by the value of its shares.
The 2008 Stock Based Awards Plan (the 2008 Plan), which was approved by the shareholders at
the 2008 Annual Meeting of Shareholders, authorizes the issuance of up to 800,000 shares of common
stock and stock-based awards, subject to certain adjustments for changes in Southwests capital
structure.
The 2008 Plan has a term of 10 years from its effective date April 24, 2008 after which date no
awards may
24
be granted under the 2008 Plan. As of December 31, 2009, no options for shares were outstanding
under the 2008 Plan. The 2008 Plan replaced a plan adopted in 1999 (as amended, the 1999 Option
Plan), which was terminated except with respect to options that were outstanding on the plans
termination date. As of December 31, 2009, options for 379,324 shares were outstanding under the
1999 Option Plan. The 1999 Option Plan replaced a plan adopted in 1994 (the 1994 Option Plan),
which was terminated except with respect to options that were outstanding on the plans termination
date. As of December 31, 2009, no options for shares were outstanding under the 1994 Option Plan.
The 1999 Option Plan and the 1994 Option Plan are referred to below as the Option Plans.
The Option Plans provide for the grant of incentive options as defined in Section 422 of the
Code. The 2008 Plan and the 1999 Option Plan also provide for the grant of non-incentive options,
restricted stock, and stock appreciation rights to directors, officers, and non-officer employees
on terms and conditions established by the Stock Option Committee, which administers the Option
Plans. The independent members of the Board of Directors act as the Stock Option Committee. As of
December 31, 2009, only stock options and restricted stock awards have been made under the Option
Plans and only restricted stock awards have been made under the 2008 Plan.
Under the Option Plans, the maximum option term is 10 years from the date of grant. Options
are granted with various vesting schedules and terms. The exercise price of a stock option may not
be less than 100% of the fair market value of the common stock on the date of grant. The exercise
price of stock options must be paid in full in cash or shares of common stock, or a combination of
both. The Stock Option Committee has the discretion when making a grant of stock options under the
2008 Plan to impose restrictions on the shares to be purchased upon exercise of such options.
There were no grants of equity plan based awards to the Named Executive Officers in 2009.
The following table provides information regarding stock options exercised during 2009.
Option
Exercises
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Number of
|
|
|
|
|
Shares
|
|
|
|
|
Acquired on
|
|
Value Realized on
|
Name
|
|
Exercise
|
|
Exercise
|
Rick Green
|
|
|
28,700
|
|
|
$
|
123,091
|
|
Kerby E. Crowell
|
|
|
30,000
|
|
|
|
132,150
|
|
Jerry L. Lanier
|
|
|
19,800
|
|
|
|
88,353
|
|
Kimberly E. Sinclair
|
|
|
33,500
|
|
|
|
226,540
|
|
Charels H. Westerheide
|
|
|
5,000
|
|
|
|
31,125
|
|
No stock appreciation rights (SARs) were exercised by the Named Executive Officers
during 2009. No SARs were held by any Named Executive Officer at year-end. None of the Named
Executive Officers had stock appreciation rights during 2009
.
No options held by any Named
Executive Officer repriced during the last ten full years.
The plan provides that all awards vest upon a change in control. However, all of the awards to
Named Executive Officers are fully vested. In any event, no change in control vesting would occur
to the extent prohibited by the Recovery Act.
25
The following table provides information regarding awards outstanding at December 31, 2009,
under equity compensation plans, consisting only of the 1994 option plan and the 1999 option plan
(each expired but having outstanding options that may still be exercised). As of December 31, 2009,
no options for shares were outstanding under the 2008 Plan. The Option Plans and the 2008 Plan were
approved by shareholders.
Outstanding Equity Awards At December 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
Market Value
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
Units of
|
|
of Shares or
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Stock that
|
|
Units of Stock
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Expiration
|
|
Have Not
|
|
that Have Not
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Price
|
|
Date
|
|
Vested (1)
|
|
Vested
|
Rick Green
|
|
|
27,893
|
|
|
|
|
|
|
$
|
19.750
|
|
|
|
3/3/2010
|
|
|
|
2,043
|
|
|
$
|
14,178
|
|
|
|
|
4,200
|
|
|
|
|
|
|
|
5.260
|
|
|
|
12/21/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
19,279
|
|
|
|
|
|
|
|
22.140
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
Kerby Crowell
|
|
|
11,680
|
|
|
|
|
|
|
|
19.750
|
|
|
|
3/3/2010
|
|
|
|
182
|
|
|
|
1,263
|
|
|
|
|
9,000
|
|
|
|
|
|
|
|
5.260
|
|
|
|
12/21/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
8,611
|
|
|
|
|
|
|
|
22.140
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
9,201
|
|
|
|
|
|
|
|
26.395
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jerry Lanier
|
|
|
11,767
|
|
|
|
|
|
|
|
19.750
|
|
|
|
3/3/2010
|
|
|
|
193
|
|
|
|
1,339
|
|
|
|
|
1,200
|
|
|
|
|
|
|
|
5.260
|
|
|
|
12/21/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
8,703
|
|
|
|
|
|
|
|
22.140
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
9,339
|
|
|
|
|
|
|
|
26.395
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly Sinclair
|
|
|
10,373
|
|
|
|
|
|
|
|
19.750
|
|
|
|
3/3/2010
|
|
|
|
157
|
|
|
|
1,090
|
|
|
|
|
1,500
|
|
|
|
|
|
|
|
5.260
|
|
|
|
12/21/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
7,402
|
|
|
|
|
|
|
|
22.140
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7,968
|
|
|
|
|
|
|
|
26.395
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chuck Westerheide
|
|
|
8,542
|
|
|
|
|
|
|
|
19.750
|
|
|
|
3/3/2010
|
|
|
|
153
|
|
|
|
1,062
|
|
|
|
|
12,000
|
|
|
|
|
|
|
|
5.260
|
|
|
|
12/21/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
6,121
|
|
|
|
|
|
|
|
22.140
|
|
|
|
3/23/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
7,285
|
|
|
|
|
|
|
|
26.395
|
|
|
|
3/22/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Unvested stock awards were granted on February 28, 2008 and vest 1/3 each on February 28,
2009, 2010, and 2011.
|
Other Compensation Plans
Southwest has established a deferred compensation plan for the benefit of Mr. Green and a
Supplemental Profit Sharing Plan for the benefit of the Mr. Green, Mr. Crowell, and Mr. Lanier.
Both plans are unfunded. The deferred compensation plan allows Mr. Green to make annual elections
to defer all or part of annual cash compensation for the following year. Amounts deferred increase
or decrease in each calendar quarter as though they were invested in a nondeposit account with an
annualized return equal to one percentage point less than the annualized average interest rate
earned by Stillwater National on average interest earning assets for the previous calendar quarter,
or in a fund invested in Southwest common stock, as elected by Mr. Green. Under the Plan, accrued
amounts are payable following separation of service from Stillwater National; the year in which Mr.
Green reaches 72 years of age; or the year following the year in which Mr. Green reaches 72 years
of age. Mr. Green elected not to defer compensation for any years since 2003. Mr. Greens total
earnings on the deferred balances were $21,595 in 2009. Mr. Green has elected not to defer
compensation for 2010.
26
Nonqualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Balance at
|
|
|
Contributions
|
|
Contributions
|
|
Earnings in
|
|
Withdrawals/
|
|
December 31,
|
Name
(1)
|
|
in 2009
|
|
in 2009
|
|
2009 (2)
|
|
Distributions
|
|
2009
|
Rick Green
|
|
|
|
|
|
|
|
|
|
$
|
21,595
|
|
|
|
|
|
|
$
|
548,743
|
|
|
|
|
(1)
|
|
Mr. Green is the only Named Executive Officer who has participated in this plan.
|
|
(2)
|
|
Includes preferential interest of $0.
|
Southwest accrues expense to the Supplemental Profit Sharing Plan in amounts sufficient to
ensure that the participants obtain the same profit sharing contribution as a percentage of
compensation as do other officers and employees of Southwest without regard to limitations of
Southwests qualified Profit Sharing Plan. During 2009, the following amounts were accrued under
the Supplemental Profit Sharing Plan: Mr. Green $10,573; Mr. Crowell $998; and Mr. Lanier -
$2,788.
Severance Arrangements
Under Southwests Severance Compensation Plan, executive officers are entitled to lump-sum
severance compensation upon a qualifying termination of service equal to a percentage of their
respective total annual base compensation in effect at the date of termination. For purposes of the
Severance Compensation Plan, a qualifying termination of service is defined as either an
involuntary termination of service or a voluntary termination of service for good reason, in either
case within two years following a change-in-control occurring after the effective date of the
Severance Compensation Plan. Good reason would include: (i) a reduction in their base salary; (ii)
their assignment without their consent to a distant location; (iii) the failure to maintain them in
a position of comparable authority or responsibility; or (iv) a material reduction in their level
of incentive compensation or benefits. A change-in-control is deemed to occur whenever: (i) any
entity or person becomes the beneficial owner of or obtains voting control over 50% or more of the
outstanding shares of common stock of either Southwest or Stillwater National; (ii) the
shareholders of either Southwest or Stillwater National approve (a) a merger or consolidation in
which Southwest or Stillwater National is not the survivor or pursuant to which the outstanding
shares of either would be converted into cash, securities, or other property of another corporation
other than a transaction in which shareholders maintain the same proportionate ownership interests,
or (b) a sale or other disposition of all or substantially all of the assets of either Southwest or
Stillwater National; or (iii) a change in a majority of the Boards of Directors of either Southwest
or Stillwater National within a twelve-month period unless each new director was approved by the
vote of two-thirds of the directors still in office who were in office at the beginning of the
twelve-month period. The plan provides, however, that payment may not be greater than the amount
that would be deductible for federal income tax purposes under Internal Revenue Code Section 280G
after taking into consideration all payments covered by that section. No payments to Named
Executive Officers may be made under the Severance Plan while Capital Purchase Program preferred
securities are outstanding. Please see Effects of Economic Conditions and the Recovery Act on
Compensation of Our Named Executive Officers on page 16.
27
RELATIONSHIP OF COMPENSATION POLICIES AND PRACTICES TO RISK MANAGEMENT
Southwest intends that total compensation and each of its components, including base salary,
incentive compensation (if applicable), benefits, and perquisites be market competitive and
consistent with Southwests performance goals. We seek to attract, retain, develop, and reward high
performance team members who are passionately committed to Southwests success. Base salaries and
incentive compensation (if applicable) are primarily based on merit. Southwest and its subsidiaries
are equal employment opportunity employers.
We strive to insure that our compensation plans and arrangements do not create inappropriate
risks. As required by the Recovery Act, the Compensation Committee meets at least once every six
months in order to:
|
|
|
Review with Southwests senior risk officers the compensation plans for the Named
Executive Officers and make all reasonable efforts to ensure that these plans do not
encourage the Named Executive Officers to take unnecessary and excessive risks that
threaten Southwests value;
|
|
|
|
|
Review with Southwests senior risk officers Southwests employee compensation plans and
has taken all reasonable efforts to limit any unnecessary risks that these plans pose to
Southwest; and
|
|
|
|
|
Review Southwests employee compensation plans to eliminate any features of these plans
that would encourage the manipulation of Southwests reported earnings to enhance the
compensation of any employee.
|
The reviews include consideration of risks in all compensation plans and factors designed to
mitigate risks, such as including consideration of the credit quality of a lending officers
portfolio in the determination of the amount, if any, of incentive compensation the officer may
receive. Also, as required by the Recovery Act, Southwest requires any of specified officers to
repay any bonus or incentive compensation that was based upon statements of earnings, revenues,
gains, or other criteria that are later found to be materially inaccurate.
For additional information regarding the Recovery Act and the compensation of Named Executive
Officers, please refer to the Compensation Discussion and Analysis beginning on page 15 and
Executive Compensation beginning on page 24. Additional information regarding the structure and
function of the Compensation Committee is included in Compensation Committee beginning on page 8,
and Compensation Committee Report on page 23.
CERTAIN TRANSACTIONS
Southwests banking subsidiaries have, and expect to have in the future, banking and other
transactions with certain officers and directors of Southwest and its subsidiaries and with greater
than 5% shareholders of Southwest and their immediate families and associates. These transactions
are in the ordinary course of business, and loans have been, and will be, made on substantially the
same terms, including interest rates and collateral, as those prevailing at the time for comparable
transactions with persons not related to the lender. In the opinion of Southwests management,
these loans did not involve more than normal risk of collectability or present other unfavorable
features.
Under written policy adopted by resolution of the Board of Directors, extensions of credit
from banking subsidiaries of Southwest to executive officers, directors, or principal shareholders
must be approved by the independent directors on the Director Loan Review Committee and must meet
the
procedural and financial requirements of Regulation O of the Board of Governors of the Federal
Reserve
28
System. Other transactions between Southwest and any of its subsidiaries and executive
officers, directors,
or principal shareholder must be approved by the independent directors. These other transactions
include any financial transactions, arrangements, or relationships, regardless of dollar amount,
other than an extension of credit.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on Southwests review of the copies of initial statements of beneficial ownership on
Form 3 and reports of changes in beneficial ownership on Form 4 that it has received in the past
year, all directors, executive officers, and beneficial owners of more than 10% of its common stock
have timely filed those reports with respect to 2009. Southwest makes no representation
regarding persons who have not identified themselves as being subject to the reporting requirements
of Section 16(a) of the Securities Exchange Act of 1934 or as to the appropriateness of disclaimers
of beneficial ownership.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
A representative of Ernst & Young LLP, Southwests independent certified public accounting
firm, is expected to be present at the Annual Meeting to respond to shareholders questions and
will have the opportunity to make a statement.
Fees
The following table presents fees for professional audit services rendered by Ernst & Young
LLP for the audit of the annual financial statements of Southwest Bancorp, Inc. and subsidiaries
for the years ended December 31, 2009 and 2008, and fees billed for other services rendered by
Ernst & Young LLP.
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
Audit Fees
(1)
|
|
$
|
856,900
|
|
|
$
|
887,200
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
Tax Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
856,900
|
|
|
$
|
887,200
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Audit fees consist of fees and expenses for professional services rendered for the audit of
Southwests consolidated financial statements, for review of financial statements included in
Southwests quarterly reports on Form 10-Q, and for other services normally provided by the
independent registered public accounting firm in connection with statutory and regulatory filings
or engagements. Includes fees and expenses for services rendered for the years shown regardless of
when the fees and expenses were billed.
|
Preapproval of Services
The Audit Committee is required by Securities and Exchange Commission regulations to
preapprove all auditing services and permitted non-audit services provided by Southwests
independent registered public accounting firm. There is an exception for preapproval of non-audit
services if the aggregate amount of all such non-audit services provided to Southwest constitutes
not more than five percent of the total amount of revenues paid by it to its independent registered
public accounting firm during the fiscal year in which the non-audit services are provided; such
services were not recognized by Southwest at the time of the engagement to be non-audit services;
and the non-audit services are promptly brought to the attention of the committee and approved
prior to the completion of the audit by the committee or by one or more members of the committee to
whom authority to grant such approval has
29
been delegated by the committee. All audit services and
permitted non-audit services to be performed by Southwests independent auditor have been
preapproved by the Audit Committee as required by
Securities and Exchange Commission regulations and the Audit Committees charter without
exception.
REPORT OF THE AUDIT COMMITTEE
The Southwest Audit Committee oversees and reports to the Board of Directors
regarding accounting and financial reporting processes, the audits of the financial statements, the
qualifications and independence of the independent registered public accounting firm engaged to
provide independent audits and related services, and the performance of the internal audit function
and independent registered public accounting firm; and also performs the other duties of the
committee specified by federal securities laws and regulations, the Federal Deposit Insurance Act
and related regulations, the Listing Standards and its charter. The committee (1) has reviewed and
discussed the audited financial statements included in Southwests 2009 Annual Report on Form 10-K
with management; (2) has discussed with independent registered public accounting firm the matters
required to be discussed by Statement of Auditing Standards 61; and (3) has received the written
disclosures and the letter from the independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent
accountants communications with the committee concerting independence and has discussed
independence with the independent registered public accounting firm. Based upon this review,
discussion, disclosures, and materials described in (1) through (3), the committee recommended to
the Board of Directors that the audited financial statements be included in the 2009 Annual Report
on Form 10-K. The committee also has considered whether the amount and nature of non-audit services
rendered by the independent accountant are consistent with its independence.
|
|
|
|
March 4, 2010
|
|
Linford R. Pitts, Chairman
|
|
|
|
Joe Berry Cannon
|
|
|
David S. Crockett Jr.
|
|
|
James M. Johnson
|
|
|
Robert B. Rodgers
|
|
|
Russell W. Teubner
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PROPOSAL 2RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 2010
The engagement of Ernst & Young LLP as Southwests independent registered public accounting
firm for 2010 has been recommended by Southwests Audit Committee and approved by Southwests Board
of Directors. The board is submitting this appointment to the vote of the shareholders for
ratification.
The affirmative vote of a majority of the shares of common stock present in person or
represented by proxy and entitled to vote at the annual meeting is required to ratify the
appointment of Ernst & Young LLP as Southwests independent registered public accounting firm for
2010. Therefore, abstentions effectively count as votes against this proposal. If the appointment
is not ratified by a majority of the shareholders, the vote will be considered in connection with
the auditor appointment for 2011. However, it is not anticipated that any change in Southwests
independent registered public accounting firm would be made for the current year because of the
difficulty and expense of making a change so long after the beginning of the year.
The Board of Directors recommends that you vote FOR the ratification of Ernst & Young LLP as
Southwests independent registered public accounting firm for 2010.
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PROPOSAL 3ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are submitting our compensation decisions for our Named Executive Officers for your
approval as required by the Emergency Economic Stabilization Act of 2008. These decisions, along
with other important information regarding executive compensation, are described in the
Compensation Discussion and Analysis beginning on page 15 and the compensation disclosures under
the heading Executive Compensation beginning on page 24.
Your vote is advisory and will not be binding on the Board of Directors or the Compensation
Committee. However, we will take into account the outcome of the vote when considering future
executive compensation arrangements.
The Board of Directors recommends that you vote FOR approval of the compensation of our Chief
Executive Officer, Chief Financial Officer, and three most highly compensated other executive
officers.
PROPOSAL 4APPROVAL OF AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
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On February 5, 2010, our Board of Directors unanimously:
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Adopted a resolution recommending that Southwests Certificate of Incorporation be
amended to increase the authorized number of shares of common stock, $1.00 par value
per share, from 20,000,000 to 40,000,000 shares (the Common Stock Amendment), and
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Directed that the Common Stock Amendment be submitted for consideration by
shareholders at our 2010 Annual Meeting.
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As of the voting record date for the special meeting, there were
14,779,778 shares of
common stock issued and outstanding and another 703,753 shares of common stock were reserved for
issuance upon exercise of the warrant for common stock issued to the United States Treasury
Department under its Capital Purchase Program, our stock based compensation plans, and our employee
stock purchase plan. As a result, Southwest would have available for future issuance only
approximately 3,300,000 shares of common stock should the Common Stock Amendment not be approved
by our shareholders.
The Board of Directors believes that it is in Southwests best interest to increase the number
of authorized but unissued shares of common stock to provide flexibility in raising capital for
future financing opportunities and needs. The proceeds from future sales of common shares may be
used for a variety of purposes the Board of Directors deems advisable in the future, including:
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Support of future internal business growth;
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Investment in Southwests bank subsidiaries to increase their capital levels;
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Acquisitions;
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Voluntary repayment of the $70 million in Preferred Securities sold in December
2008 to the U.S. Treasury Department under its Capital Purchase Program; and
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Other corporate purposes.
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The Board of Directors will not issue any additional shares of common stock for any purposes
unless it believes that the terms of issuance are in the best interests of Southwest and its
shareholders.
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Each share of common stock authorized for issuance has the same rights as, and is identical in
all respects to, each other share of common stock. The newly authorized shares of common stock will
not affect the rights, such as voting and liquidation rights, of the shares of common stock
currently
outstanding. Shareholders will not have preemptive rights to purchase any subsequently issued
shares of common stock.
Authorized, unissued, and unreserved capital stock may be issued from time to time for any
proper purpose without further action of the shareholders, except as required by the Certificate of
Incorporation, law, or stock exchange rules. For example, the Board of Directors may issue shares
to accomplish a stock split without shareholder approval, but shareholders approval would be
required for a merger of Southwest with an unaffiliated company. The ability of the Board of
Directors to issue additional shares of capital stock without additional shareholder approval may
be deemed to have an anti-takeover effect, since unissued and unreserved shares of capital stock
could be issued by the Board of Directors in circumstances that may have the effect of deterring
takeover bids. However, the Board of Directors has no plans to utilize the authorized shares in
that manner and is not aware of any effort by any third parties to acquire control of Southwest.
The issuance of additional shares of common stock for any of the corporate purposes listed
above could have a dilutive effect on earnings per share and the book or market value of our
outstanding common stock, depending on the circumstances, and could dilute a shareholders
percentage voting power in Southwest. As noted above, we may repurchase our Series B Preferred
Stock and the related Treasury Warrant issued under the Capital Purchase Program with the proceeds
from any sale of these additional shares of common stock. If we elect to repurchase the Series B
Preferred Stock and the Treasury Warrant, the Treasury Warrant may be repurchased for an amount
that exceeds our carrying value which would negatively affect our net income available to common
shareholders and our earnings per share.
If shareholders approve the Common Stock Amendment, Article V of Southwests Certificate of
Incorporation will be amended to increase the number of shares of common stock that Southwest is
authorized to issue from 20,000,000 to 40,000,000. The par value of the common stock will remain at
$1.00 per share. Upon effectiveness of the Amendment, the first sentence of Article V of
Southwests Certificate of Incorporation will read as follows:
ARTICLE V. Capital Stock
. The aggregate number of shares of all classes of capital stock which
the Corporation has authority to issue is 42,000,000 of which 40,000,000 are to be shares of common
stock, $1.00 par value per share, of which 1,000,000 are to be shares of serial preferred stock,
$1.00 par value per share, and of which 1,000,000 shall be Class B serial preferred stock, $1.00
par value per share.
The amendment does not affect the number of authorized shares of preferred stock. The
remaining text of Article V of Southwests Certificate of Incorporation would remain unchanged.
Approval of the Common Stock Amendment will require the affirmative vote of a majority of the
outstanding shares entitled to vote thereon. Proxies received in response to the Board of
Directors solicitation will be voted FOR approval of the Common Stock Amendment if no specific
instructions are included thereon for this Proposal 4.
The Board of Directors recommends a vote FOR the amendment of the Certificate of
Incorporation to increase the number of authorized shares of common stock.
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PROPOSAL 5APPROVAL OF ADJOURNMENT OF THE ANNUAL MEETING, IF NECESSARY
If Southwest does not receive a sufficient number of votes to approve Proposal 4, Southwest
may propose to adjourn the Annual Meeting, if a quorum is present, from time to time with the
approval of a majority of shares present in person or by proxy and entitled to vote. Southwest
currently does not intend to propose an adjournment of the Annual Meeting if there are sufficient
votes to approve Proposal 4.
The affirmative vote of a majority of the shares of our common stock present in person or by
proxy and voting at the Annual Meeting is required to approve the Adjournment Proposal. Abstentions
and broker non-votes will have no effect on the Adjournment Proposal.
Southwests Board of Directors has determined that the proposal to adjourn the Annual Meeting,
if necessary to solicit additional proxies if there are not sufficient votes in favor of Proposal 4
is advisable and in the bests interests of Southwest and its shareholders.
The Board of Directors unanimously recommends that you vote FOR this proposal.
CODE OF ETHICS
The Board of Directors of Southwest has adopted a code of ethics that applies to all
directors, officers, and employees of Southwest and its consolidated subsidiaries. This code, which
fulfills the requirements of the Listing Standards and the criteria established by applicable SEC
regulations, is available through the governance area of Southwests website at www.oksb.com.
OTHER MATTERS
The Board is not aware of any business to come before the Annual Meeting other than those
matters described above in this Proxy Statement and matters incident to the conduct of the Annual
Meeting. However, if any other matters should properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted as determined by a majority of the
Board of Directors.
SHAREHOLDER PROPOSALS AND COMMUNICATIONS
Any shareholder proposal to take action at the year 2011 Annual Meeting of Shareholders must
be received at Southwests executive office at 608 South Main Street, Stillwater, Oklahoma 74074 no
later than November 16, 2010, in order to be eligible for inclusion in Southwests proxy materials
for that meeting, unless the date of the 2011 annual meeting is more than 30 days from April 22,
2011, in which case the deadline is a reasonable time before Southwest begins to print and send
proxy materials. Any such proposals shall be subject to the requirements of the proxy rules adopted
under the Securities Exchange Act of 1934. Under Southwests Certificate of Incorporation, a
shareholder proposal or nomination for director may be eligible for consideration at an annual or
special meeting if written notice is delivered or mailed to the Secretary not less than thirty days
nor more than sixty days before the meeting, provided that, if less than forty days notice of the
meeting has been given, such written notice may be delivered or mailed by the close of the tenth
day after the date notice of the meeting was mailed. Such notices also must include information
required by and comply with procedures established by the Certificate of Incorporation.
Southwests shareholders may communicate with the Board of Directors or any individual
director by addressing correspondence to the board or such director in care of the Secretary at
Southwests main office by mail, courier, or facsimile or by e-mail through Southwests Contact
Us button on the Investor Relations area of its website at www.oksb.com.
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The Board of Directors believes it is important for all directors to attend the annual meeting
of shareholders in order to show their support for Southwest and to provide an opportunity for
shareholders to express any concerns to them. Southwest has adopted a policy that all directors
should attend each annual meeting of shareholders unless they are unable to attend by reason of
personal or family illness or pressing matters.
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BY ORDER OF THE BOARD OF DIRECTORS
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KERBY E. CROWELL
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SECRETARY
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Stillwater, Oklahoma
March 16, 2010
ANNUAL REPORT ON FORM 10-K
A copy of Southwests Annual Report on Form 10-K for the year ended December 31, 2009, as filed
with the Securities and Exchange Commission, will be furnished without charge to shareholders as of
the record date upon written request to: Kerby E. Crowell, Southwest Bancorp, Inc., P.O. Box 1988,
Stillwater, Oklahoma 74076.
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Form of Proxy I
SOUTHWEST BANCORP, INC.
Admission Ticket
Electronic Voting Instructions
You can vote by Internet or telephone!
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting
methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by
1:00 a.m., Central Time, on April 22, 2010.
Vote by Internet
Log on to the Internet and go to
www.envisionreports.com/oksb
Follow the steps outlined on the secured website.
Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the United
States, Canada & Puerto Rico any time on a touch tone
telephone. There is NO CHARGE to you for the call.
Follow the instructions provided by the recorded message.
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. X
ANNUAL MEETING PROXY CARD
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE._
Annual Meeting Proxy Card.
A Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR
Proposals 2, 3, 4, and 5.
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For
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Withhold
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01
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James E. Berry II
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For
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Withhold
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02
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Tom D. Berry
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For
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Withhold
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03
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Joe Berry Cannon
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For
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Withhold
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04
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John Cohlmia
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For
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Withhold
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05
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Rick Green
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For
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Withhold
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06
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David P. Lambert
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For
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Withhold
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07
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Linford R. Pitts
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For
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Withhold
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08
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Robert B. Rodgers
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2.
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Proposal to
Ratify the appointment of Ernst & Young, LLP as the independent registered public accounting firm for 2010.
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For
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Against
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Abstain
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3.
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Proposal to
approve the compensation of our Chief Executive Officer, Chief
Financial Officer, and three most highly compensated other executive officers.
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For
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Against
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Abstain
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4.
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Proposal to amend the Certificate of Incorporation to increase the authorized number of shares of common stock, $1.00
par value per share, from 20,000,000 to 40,000,000
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For
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Against
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Abstain
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5.
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Proposal to
approve the adjournment of the Annual Meeting to
solicit additional proxies for approval of the proposal to increase the number of authorized shares of common stock, if necessary
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For
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Against
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Abstain
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B Non-Voting Items
Change of Address Please print your new address below.
Comments Please print your comments below.
Meeting Attendance
Mark the box to the right ___
if you plan to attend the
Annual Meeting.
C Authorized Signatures This section must be completed for your vote to be counted. Date and
Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box.
Signature 2
Please keep signature within the box
2010 Annual Meeting Admission Ticket
2010 Annual Meeting of
Southwest Bancorp, Inc. Shareholders
April 22, 2010, 11:00 a.m. Local Time
Stillwater Public Library
Auditorium Room 215
1107 South Duck Street
Stillwater, Oklahoma
Upon arrival, please present this admission ticket
and photo identification at the registration desk
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE
Proxy Southwest Bancorp, Inc.
Notice of 2010 Annual Meeting of Shareholders
Address
Proxy Solicited by Board of Directors for Annual Meeting April 22, 2010
James M. Johnson, Linford R. Pitts, Robert B. Rodgers, or any of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the undersigned, with all
the powers which the undersigned would possess if personally present, at the Annual Meeting of
Stockholders of Southwest Bancorp, Inc. to be held on April 22, 2010 or at any postponement or
adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are
indicated, the Proxies will have authority to vote FOR the election of directors, FOR the
ratification of the appointment of Ernst & Young LLP as the independent registered public
accounting firm for the year 2010, FOR item 3 the advisory proposal to approve the compensation of
certain executive officers, FOR the proposal to increase the number of authorized shares of common
stock, and FOR the adjournment of the Annual Meeting, if necessary.
This proxy may be revoked at any time prior to its exercise. Should the undersigned be present and
elect to vote at the Annual Meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the Annual Meeting of the shareholders decision to terminated this
proxy, the power of said attorneys and proxies shall be deemed terminated ad of no further force
and effect. The undersigned hereby revokes any and all proxies heretofore given with respect to the
shares of Common Stock held of record by the undersigned.
In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
(Items to be voted appear on reverse side.)
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Form of Proxy II
(Brokers)
SOUTHWEST BANCORP, INC.
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. X
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE._
A Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR
Proposals 2, 3, 4, and 5.
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For
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Withhold
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01 James E. Berry II
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For
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Withhold
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02 Tom D. Berry
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For
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Withhold
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03 Joe Berry Cannon
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For
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Withhold
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04 John Cohlmia
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For
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Withhold
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05 Rick Green
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For
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Withhold
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06 David P. Lambert
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For
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Withhold
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07 Linford R. Pitts
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For
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Withhold
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08 Robert B. Rodgers
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2.
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Proposal to Ratify the appointment of Ernst & Young, LLP
as the independent registered public accounting firm for 2010.
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For
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Against
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Abstain
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3.
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Proposal to approve the compensation of our
Chief Executive Officer, Chief Financial Officer, and three
most highly compensated other executive officers.
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For
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Against
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Abstain
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4.
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Proposal to amend the Certificate of Incorporation to
increase the authorized number of shares of common stock, $1.00
par value per share, from 20,000,000 to 40,000,000
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For
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Against
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Abstain
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5.
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Proposal
to approve the adjournment of the Annual Meeting to solicit additional proxies for approval of the proposal
to increase the number of authorized shares of common stock, if necessary
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For
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Against
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Abstain
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B Authorized Signatures This section must be completed for your vote to be counted. Date and
Sign Below Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give
full title.
Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box.
Signature 2
Please keep signature within the box
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN
THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE
Proxy Southwest Bancorp, Inc.
Notice of 2010 Annual Meeting of Shareholders
Address
Proxy Solicited by Board of Directors for Annual Meeting April 22, 2010
James M. Johnson, Linford R. Pitts, Robert B. Rodgers, or any of them, each with the power of
substitution, are hereby authorized to represent and vote the shares of the undersigned, with all
the powers which the undersigned would possess if personally present, at the Annual Meeting of
Stockholders of Southwest Bancorp, Inc. to be held on (Date) or at any postponement or adjournment
thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are
indicated, the Proxies will have authority to vote FOR the election of directors, FOR the
ratification of the appointment of Ernst & Young LLP as the independent registered public
accounting firm for the year 2010, FOR item 3 the advisory proposal to approve the compensation of
certain executive officers, FOR the proposal to increase the number of authorized shares of common
stock, and FOR the adjournment of the Annual Meeting, if necessary.
This proxy may be revoked at any time prior to its exercise. Should the undersigned be present and
elect to vote at the Annual Meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the Annual Meeting of the shareholders decision to terminated this
proxy, the power of said attorneys and proxies shall be deemed terminated ad of no further force
and effect. The undersigned hereby revokes any and all proxies heretofore given with respect to the
shares of Common Stock held of record by the undersigned.
In their discretion, the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
(Items to be voted appear on reverse side.)