pab bankshares, inc. - SNL Financial

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Potential Payments Upon Termination or Change in Control The Company has employment agreements with Mr. Torbert, Mr. Fuller, Mr. Henderson and Ms. Stokes. The terms of these agreements regarding potential payments upon termination or a change in control of the Company are essentially the same. The Compensation Committee believes that it is important to protect these officers in the event of a change in control. Further, it is the Compensation Committee’s belief that the interests of stockholders will be best served if the interests of executive management are aligned with them, and providing change in control benefits should eliminate, or at least reduce, the reluctance of executive management to pursue potential change in control transactions that may be in the best interests of shareholders. In May of 2008, the Compensation Committee negotiated new employment agreements for the certain executive officers to address “best practice” suggestions made by compensation consultants and to adopt recent tax law changes. Although these contracts are still outstanding, under the terms of the Written Agreement, any severance payments under these contracts would require prior approval from the Company’s banking regulators. For purposes of the benefits provided in the existing agreements, a change in control is deemed to occur, in general, if (i) a shareholder or group of shareholders (with certain exceptions provided) acquires 25% or more of the Company’s or the Bank’s common stock, (ii) during any period of up to two years, individuals who, at the beginning of such period, are directors of the Company or the Bank cease to constitute at least a majority of the board of directors thereof (with certain exceptions provided), or (iii) the stockholders of the Company or the Bank approve a merger or consolidation of the Company or the Bank with any other corporation other than a merger or consolidation (with certain exceptions provided) where at least 51% of the combined voting power of the surviving entity is controlled by the Company or the Company’s stockholders. In the event of a change in control of the Company followed by a (i) reduction in the officers’ compensation, (ii) material change in the officers’ status, office, title or reporting requirements, (iii) failure by the Company to increase the officers’ salary in accordance with established procedures, or (iv) required relocation by the officers of more than 50 miles from the officers’ current office, Mr. Torbert and Mr. Fuller will be entitled to receive severance benefits in a lump sum cash amount equal to two times each officer’s total annual compensation for the fiscal year under the employment agreement in which his compensation was the highest, plus a gross up for potential excise taxes imposed by the Internal Revenue Code Section 280G if applicable. Mr. Henderson will be entitled to receive severance benefits in a lump sum cash amount equal to two times his average annual compensation for the five calendar years preceding the date of the change in control, plus a gross up for potential excise taxes imposed by the Internal Revenue Code Section 280G if applicable. Ms. Stokes will be entitled to receive severance benefits in a lump sum cash amount equal to her average annual compensation for the five calendar years preceding the date of the change in control, plus a gross up for potential excise taxes imposed by the Internal Revenue Code Section 280G if applicable. Further, on the occurrence of a change in control of the Company, any unvested stock options previously granted to Mr. Torbert, Mr. Fuller, Mr. Henderson and Ms. Stokes will be accelerated and fully vested. In the event that any of these executive officers’ employment is terminated (i) by the Company other than for “cause” (such as a material breach of the employment agreement, gross negligence or willful misconduct by the officer), or (ii) due to the Company’s breach of the employment agreement, Mr. Torbert and Mr. Fuller will be entitled to receive severance benefits in a lump sum cash amount equal to two times their base salary. Mr. Henderson will be entitled to receive severance benefits in a lump sum cash amount equal to his average annual compensation for the five calendar years preceding the date of termination. Ms. Stokes will be will be entitled to receive severance benefits in a lump sum cash amount equal to one-half her average annual compensation for the five calendar years preceding the date of termination. The employment agreements restrict the officers from, among other things, (i) disclosing confidential information, (ii) competing with the Company or the Bank within a defined territory for 12 months following termination, and (iii) employing any former employee of the Company or the Bank for 12 months following the employee’s termination. The following table summarizes in tabular form the potential post-employment payments due to the executive officers with employment agreements upon termination or a change in control of the Company assuming those events occurred on the last business day of the last fiscal year. 124
Potential Payments Upon Termination or Change in Control As of December 31, 2009 Name Benefit Before Change in Control Termination w/o Cause or for Good Reason 1 After Change in Control Termination w/o Cause or for Good Reason 2 Voluntary Termination Death or Disability Change in Control ($) ($) ($) ($) ($) Donald J. Torbert, Jr. Contract termination payment 345,560 605,616 - - - Stock option vesting 3 27,104 27,104 - 27,104 27,104 acceleration IRC Sec. 280G excise tax gross-up Double gross-up to officer for excise tax and income tax on the gross-up 4 - 126,544 - - - - 154,665 - - - Total 372,664 913,929 - 27,104 27,104 R. Wesley Fuller Contract termination payment 345,560 608,060 - - - Stock option vesting acceleration 3 16,792 16,792 - 16,792 16,792 IRC Sec. 280G excise tax gross-up - 124,970 - - - Double gross-up to officer for excise tax and income - 152,742 - - - tax on the gross-up 4 Total 362,352 902,564 - 16,792 16,792 George D. Henderson Contract termination payment 176,448 352,897 - - - Stock option vesting acceleration 3 14,882 14,882 - 14,882 14,882 IRC Sec. 280G excise tax gross-up - - - - - Double gross-up to officer for excise tax and income - - - - - tax on the gross-up 4 Total 191,330 367,779 - 14,882 14,882 Nicole S. Stokes Contract termination payment 50,269 100,538 - - - Stock option vesting 10,080 - 10,080 acceleration 3 10,080 10,080 IRC Sec. 280G excise tax gross-up Double gross-up to officer for excise tax and income 4 tax on the gross-up - - - - - - - - - - Total 60,349 110,618 - 10,080 10,080 125
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2009 Annual Report
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UNITED STATES SECURITIES AND EXCHAN
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TABLE OF CONTENTS Item Page Caution
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PART I ITEM 1. BUSINESS General PAB
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North Georgia During the fourth qua
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Supervision and Regulation The bank
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Payment of Dividends PAB is a legal
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An institution that is categorized
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USA Patriot Act of 2001 In October
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If our allowance for loan losses is
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Our net interest income could be ne
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We may need to raise additional cap
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If we fail to continue to meet all
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Performance Graph The following gra
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GAAP Reconciliation and Management
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The three primary reasons for this
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At December 31, 2009, commercial re
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Average Balances, Interest and Yiel
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Loan Portfolio We make both secured
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A summary of loans from each market
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The following table summarizes our
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The first component of the allowanc
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Summary of Loan Loss Experience The
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The following table summarizes our
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On September 4, 2009, the Company b
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Provision for Loan Losses The provi
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Income Taxes The provision for inco
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We have reduced the level of asset-
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MANAGEMENT’S REPORT ON INTERNAL C
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Because of its inherent limitations
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PAB BANKSHARES, INC. AND SUBSIDIARI
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NOTES TO CONSOLIDATED FINANCIAL STA
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Page 75 and 76: NOTES TO CONSOLIDATED FINANCIAL STA
Page 109 and 110: JAMES W. GODBEE, JR Certified Publi
Page 111 and 112: KENNITH D. MCLEOD Certified Public
Page 113 and 114: The Audit Committee is a separately
Page 115 and 116: SECTION 16(a) BENEFICIAL OWNERSHIP
Page 117 and 118: Compensation Benchmarks and Use of
Page 119 and 120: The following table summarizes in t
Page 121 and 122: Base Salaries The Company’s philo
Page 125: (1) The listed stock option grants
Page 131 and 132: (5) Includes 1,659,310 shares owned
Page 133 and 134: All related party transactions set
Page 135 and 136: 10.5 Rescission Agreement, dated De
Page 137 and 138: SIGNATURES Pursuant to the requirem
Page 139 and 140: Shareholder Information Corporate O
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