DEFA14A: SouthState Corp Addresses Executive Pay Concerns Ahead of 2024 Annual Meeting

SouthState Corporation clarifies the status of executive compensation agreements, urging shareholders to support the advisory vote on executive pay at the upcoming annual meeting.

Summary

• SouthState Corporation has issued a supplement to its proxy statement regarding the 2024 annual meeting of shareholders.
• The supplement addresses concerns about executive compensation, specifically related to the 'Grandfathered Agreements' with CEO John C. Corbett and Chief Strategy Officer Stephen D. Young.
• These agreements, dating back to 2010, provide for change in control payments, including excise tax gross-up protections.
• In 2020, during the merger with CenterState Bank Corporation, Corbett and Young voluntarily waived these payments through 'Retention Agreements'.
• The Retention Agreements were terminated in February 2024, as they had served their purpose, but the Grandfathered Agreements remain in effect.
• SouthState has committed not to enter into any new agreements with single-trigger change in control provisions or excise tax gross-up protections.
• The company emphasizes that its overall executive compensation program has historically received strong shareholder support, with Say on Pay proposals achieving high approval rates.
• SouthState urges shareholders to vote FOR Proposal 2, the Advisory Vote to Approve Executive Officer Compensation.

Sentiment

Score: 7

Explanation: The document is largely a defensive clarification, but the company highlights past shareholder support and commits to avoiding similar provisions in the future, suggesting a moderately positive outlook.

Positives

• SouthState is being transparent about its executive compensation arrangements.
• The company has committed not to implement similar single-trigger change in control provisions in future agreements.
• Shareholders have historically shown strong support for the company's executive compensation program.
• The company engaged with investors representing approximately 65% of SouthState shares during 2023, and shareholders expressed no concern with the Grandfathered Agreements.

Negatives

• The 'Grandfathered Agreements' contain provisions that some shareholders may find unfavorable, such as single-trigger change in control payments and excise tax gross-up protections.
• SouthState is contractually obligated to adhere to these provisions unless the executives consent to changes.

Risks

• Potential shareholder dissatisfaction with the existing 'Grandfathered Agreements' could lead to lower support for future Say on Pay proposals.
• The company's inability to unilaterally modify the agreements poses a risk if a change in control event occurs.

Future Outlook

SouthState has publicly committed not to enter into any new agreements or plans with single-trigger change in control provisions or excise tax gross-up protections.

Management Comments

• One of the most important objectives of the Board is to ensure the retention of a high-performing management team to create value for shareholders.
• We believe these agreements, in the context of our entire executive compensation program, have been effective in achieving that objective.

Industry Context

Executive compensation practices are under increasing scrutiny from shareholders and governance watchdogs. Companies are moving away from single-trigger change in control provisions and excise tax gross-ups due to concerns about alignment with shareholder interests.

Comparison to Industry Standards

• Many companies are eliminating single-trigger change-in-control provisions, which trigger payouts upon a change in control regardless of whether the executive's employment is terminated.
• Excise tax gross-up provisions, which reimburse executives for taxes incurred on change-in-control payments, are also becoming less common.
• Companies like JPMorgan Chase and Bank of America do not have single trigger agreements.
• The trend is towards double-trigger arrangements, requiring both a change in control and a subsequent termination of employment for payouts to be triggered.

Stakeholder Impact

• Shareholders are directly impacted by the executive compensation arrangements.
• Employees may be affected by the company's overall compensation philosophy and practices.

Next Steps

• Shareholders will vote on Proposal 2, the Advisory Vote to Approve Executive Officer Compensation, at the 2024 annual meeting.

Key Dates

Keywords

executive compensation, proxy statement, SouthState Corporation, shareholders, change in control, Grandfathered Agreements, Retention Agreements, Say on Pay, Corbett, Young