DEF 14A: The First Bancshares Seeks Shareholder Approval for Amended Stock Incentive Plan, Announces Virtual Annual Meeting

The First Bancshares, Inc. is holding its annual shareholder meeting virtually on May 23, 2024, to vote on director elections, executive compensation, an amendment to the stock incentive plan, and the ratification of the accounting firm.

Summary

• The First Bancshares, Inc. will hold its annual meeting of shareholders on May 23, 2024, in a virtual-only format.
• Shareholders will vote on the election of twelve director nominees, the advisory approval of executive compensation, an amendment to the 2007 Stock Incentive Plan, and the ratification of FORVIS, LLP as the company's independent registered public accounting firm for 2024.
• The Board of Directors recommends voting FOR all proposals.
• The proxy statement provides details on director nominees, executive compensation, corporate governance, and other important information for shareholders.
• The company is seeking approval to increase the number of shares reserved for issuance under the 2007 Stock Incentive Plan by 500,000 shares.
• The company's burn rate for 2022 was 0.58%, and the three-year average burn rate for 2020-2022 is 0.47%.
• The current overhang is 0.69%, below the peer group 25th percentile.
• The company's CEO pay ratio is 55.17 to 1, with the median employee's annual total compensation at $43,973 and the CEO's at $2,426,148.
• The company is committed to corporate social responsibility and has a written Diversity Policy.

Sentiment

Score: 7

Explanation: The document is generally positive, highlighting the company's commitment to corporate governance, social responsibility, and shareholder engagement. However, it also acknowledges some challenges, such as the need to improve executive compensation competitiveness and the presence of cybersecurity risks.

Positives

• The company is committed to strong corporate governance principles.
• The company has a written Diversity Policy to promote diversity on the Board of Directors.
• The company is dedicated to corporate social responsibility best practices.
• The company maintains stock ownership guidelines for NEOs.
• The company has a clawback policy applicable to all NEOs.
• The company utilizes an independent consultant to help the Committee understand compensation practices that impact NEO compensation.
• The company provides for minimum required vesting periods for its equity awards.

Negatives

• The company's financial performance varies versus peers with some metrics near or above the peer group 50th percentile and some near or below the 25th percentile of peers.
• Total Cash Compensation of the NEOs was below the market competitive range when compared to peer (more than 15% below the peer group 50th percentile) in 2023.
• For Direct Compensation, FBMS granted conservative equity awards and in combination with below market salaries and cash incentives, direct compensation remained well below the peer group 50th percentile.
• Total Compensation showed that FBMS had competitive executive benefits, however, total compensation for the NEOs remained below the market competitive range in 2023.

Risks

• The company faces cybersecurity and information security risks.
• The company's compensation plans incorporate a balance of profitability and strategic goals, such as core deposit growth, asset quality, and audit/compliance ratings, to ensure the officers of the Company are focusing both on profits and strategic goals that are linked to the long-term viability of the organization.
• The Board of Directors discourage directors and officers from engaging in derivative or speculative transactions involving unvested company stock, including hedging, holding unvested stock in a margin account, or pledging unvested stock as collateral for a loan.

Future Outlook

The company looks forward to continued enhancement of its shareholder engagement program in 2024 and is committed to an open dialogue where investor views and priorities may be gathered and discussed, thereby informing and guiding a deliberative decision-making process with a diverse shareholder base in mind.

Management Comments

• We are excited about our achievements in 2023 and our plans for the future and we look forward to discussing these with you.
• We are very pleased that this years Annual Meeting will be held as a completely virtual meeting of shareholders, which will be conducted solely online via live webcast.
• We are excited to embrace the latest technology to provide expanded access, improved communication and cost savings for our shareholders and the Company.
• We believe that hosting a virtual meeting will enable greater shareholder attendance and participation from any location around the world.

Industry Context

The document provides insight into the corporate governance practices, executive compensation, and shareholder engagement strategies of a publicly traded bank holding company, which are relevant to understanding industry trends and best practices.

Comparison to Industry Standards

• The company compares its executive compensation to a peer group of twenty publicly traded banks, including Trustmark Corporation, Renasant Corporation, and ServisFirst Bancshares, Inc.
• The company aims to maintain a burn rate and overhang within that of its peer group and the banking industry in general and that is also within limits recommended by certain independent shareholder advisory groups.
• The company's total shareholder return is slightly below the OMX Banks-Index peer group for 2020, 2021, 2022, and 2023.

Related Party Transactions

• Milton R. (Mit) Cole, III, EVP-Division Manager, Private Banking, was paid total gross compensation of $421,112 which included approximately $232,130 in salary, $31,610 in annual incentive bonus paid in cash and a grant of a maximum of 50% of salary payable in shares of time vesting restricted stock of the Company; Mr. Cole is the son of M. Ray (Hoppy) Cole, Jr., President, CEO and Chairman of the Board and a director of the Company and the Bank.
• Chase Blankenship, SVP and Pine Belt Division Manager, was paid total gross compensation of $347,434 which included approximately $210,327 in salary and $40,416 in annual incentive bonus paid in cash and a grant of a maximum of 45% of salary payable in shares of time vesting restricted stock of the Company; Mr. Blankenship is the son-in-law of Director, E. Ricky Gibson.

Stakeholder Impact

• Shareholders are asked to vote on key proposals that will impact the company's governance and executive compensation.
• Employees may be affected by changes to the stock incentive plan.
• Customers and communities may benefit from the company's commitment to corporate social responsibility and community development.

Next Steps

• Shareholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will continue to monitor emerging developments in corporate governance and enhance its policies and procedures when required.
• The company will continue to enhance its shareholder engagement program in 2024.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Director Election, Executive Compensation, Stock Incentive Plan, Corporate Governance, FORVIS LLP, The First Bancshares, Shareholders