gfed20170413_def14a.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. __)

 

Filed by the registrant                                            [X]

 

Filed by a party other than the registrant           [   ]

 

Check the appropriate box:

 

[  ] Preliminary Proxy Statement          

 

[  ] Confidential, for use of the Commission

 

      Only (as permitted by Rule 14a-6(e)(2))

 

[X] Definitive Proxy Statement

 

[  ] Definitive Additional Materials

 

[  ] Soliciting Material Under Rule 14a-12

 

 

Guaranty Federal Bancshares, Inc. 

 

 

(Name of Registrant as Specified in Its Charter)

 

     
  (Name of Person(s) Filing Proxy Statement, if other than the Registrant)  

 

Payment of filing fee (Check the appropriate box):

 

 [X] No fee required

 

 [  ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)            Title of each class of securities to which transaction applies: 

______________________________________

 

(2)            Aggregate number of securities to which transaction applies: 

______________________________________

 

(3)            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): 

______________________________________

 

(4)            Proposed maximum aggregate value of transaction: 

______________________________________

 

(5)            Total fee paid: 

______________________________________

 

[  ]            Fee paid previously with preliminary materials. 

______________________________________

 

[  ]            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.

 

(1)            Amount previously paid: 

______________________________________

 

(2)            Form, Schedule or Registration Statement No.:

______________________________________

 

(3)            Filing Party:

______________________________________

 

(4)            Date Filed:

______________________________________ 

 

 
 

 

  

GUARANTY FEDERAL BANCSHARES, INC.

1341 WEST BATTLEFIELD
SPRINGFIELD, MO 65807-4181
(417) 520-4333

 

_______________________________

 

NOTICE OF MEETING OF STOCKHOLDERS

To Be Held on May 24, 2017

 

Notice is hereby given that an annual meeting of the stockholders (the “Meeting”) of Guaranty Federal Bancshares, Inc. (the “Company”) will be held at the Guaranty Bank Operations Center, 1414 W. Elfindale, Springfield, Missouri, on May 24, 2017, at 6:00 p.m., local time. Stockholders of record at the close of business on April 3, 2017 are the stockholders entitled to vote at the Meeting.

 

A Proxy Card and a Proxy Statement for the Meeting are enclosed.

 

The Meeting is being held for the purpose of considering and acting upon:

 

 

1.

The election of three directors.

 

 

2.

The advisory (non-binding) vote to approve executive compensation.

 

 

3.

The ratification of BKD, LLP as Independent Registered Public Accounting Firm to the Company for the fiscal year ending December 31, 2017.

 

 

4.

Such other matters as may come properly before the Meeting or any adjournments thereof. Except with respect to procedural matters incident to the conduct of the Meeting, the Board of Directors is not aware of any other business to come before the Meeting.

 

Important Notice Regarding the Availability of Proxy Materials for the 2016 Annual Stockholders’ Meeting to be Held on May 24, 2017. Pursuant to the rules promulgated by the Securities and Exchange Commission, we have elected to provide access to our proxy materials both by: (i) sending you this full set of proxy materials, including a proxy card; and (ii) notifying you of the availability of our proxy materials on the internet. This Notice and Proxy Statement and our 2016 Annual Report may be accessed at www.gbankmo.com.

 

  BY ORDER OF THE BOARD OF DIRECTORS

 

 

   

 

/s/ James Batten

 

 

James Batten
Chairman of the Board

 

 

 

Springfield, Missouri
April 24, 2017

 

 
 

 

 

THE BOARD OF DIRECTORS URGES YOU TO SIGN, DATE AND RETURN YOUR PROXY CARD AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING. THIS WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE ANNUAL MEETING IF YOU DESIRE, AND YOU MAY REVOKE YOUR PROXY BY WRITTEN INSTRUMENT AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL MEETING. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE MEETING.

 

 

 

 
 

 

 

 

 

 

 1341 W. Battlefield ▪ Springfield, MO 65807
417-520-4333 ▪ www.gbankmo.com

 

 

 

April 24, 2017

 

 

 

Dear Fellow Stockholder:

 

On behalf of the Board of Directors and management of Guaranty Federal Bancshares, Inc., I cordially invite you to attend the 2017 Annual Meeting of Stockholders to be held at the Guaranty Bank Operations Center, 1414 W. Elfindale, Springfield, Missouri, on Wednesday, May 24, 2017 at 6:00 p.m., local time. The attached Notice of Annual Meeting of Stockholders and Proxy Statement describe the formal business to be transacted at the meeting. Following the formal meeting, I will report on the operations of the Company. Directors and officers of the Company, as well as representatives of BKD, LLP, our independent registered public accounting firm, will be present to respond to any questions that stockholders may have.

 

Whether or not you plan to attend the meeting, please sign and date the enclosed proxy card and return it in the accompanying postage-paid return envelope as soon as possible. This will not prevent you from voting in person at the meeting but will assure that your vote is counted if you are unable to attend the meeting.

 

Respectfully,

 

/s/ Shaun A. Burke

 

Shaun A. Burke
President and CEO

 

 

 

 

GUARANTY FEDERAL BANCSHARES, INC.
1341 WEST BATTLEFIELD
SPRINGFIELD, MISSOURI 65807-4181

 

_____________________

 

PROXY STATEMENT
_____________________

 

This Proxy Statement has been prepared in connection with the solicitation of proxies by the Board of Directors of Guaranty Federal Bancshares, Inc. (the “Company”) for use at the annual meeting of stockholders to be held on May 24, 2017 (the “Annual Meeting”), and at any adjournment(s) thereof. The Annual Meeting will be held at 6:00 p.m., local time, at the Guaranty Bank Operations Center, 1414 W. Elfindale, Springfield, Missouri. It is anticipated that this Proxy Statement will be mailed to stockholders on or about April 24, 2017.

 

RECORD DATE--VOTING--VOTE REQUIRED FOR APPROVAL

 

All persons who were holders of record of the common stock, par value $0.10 per share (“Common Stock”) of the Company at the close of business on April 3, 2017 (“Record Date”) will be entitled to cast votes at the Annual Meeting. Article XIII of the Company’s Certificate of Incorporation provides that no holder of Common Stock that beneficially owns in excess of 10% of the outstanding shares of Common Stock as of the Record Date (the “Limit”), may vote the shares that exceed the Limit. However, if the Company’s Board of Directors (the “Board of Directors” or the “Board”) approves the acquisition of the shares of Common Stock that result in the beneficial owner owning more than 10% of the outstanding Common Stock, Article XIII is not applicable.

 

Voting may be by proxy or in person. As of the Record Date, the Company had 4,421,275 shares of Common Stock issued and outstanding. Holders of a majority of the outstanding shares of Common Stock entitled to vote (after giving effect, if required, to Article XIII), will constitute a quorum for purposes of transacting business at the Annual Meeting.

 

Stockholders are urged to indicate their vote in the appropriate spaces on the proxy card. Each proxy solicited hereby, if properly executed, duly returned to the Board of Directors and not revoked prior to the Annual Meeting, will be voted at the Annual Meeting in accordance with the stockholder’s instructions indicated thereon. Where no instructions are indicated, proxies will be voted by those named in the proxies FOR the approval of the specific proposals presented in this Proxy Statement and on the proxy card and in the discretion of those named in the proxies upon any other business that may properly come before the Annual Meeting or any adjournment thereof. Each stockholder shall have one vote for each share of Common Stock owned. No appraisal or dissenters’ rights exist for any action to be taken at the Annual Meeting.

 

A stockholder giving a proxy has the power to revoke the proxy at any time before it is exercised by filing with the Secretary of the Company written instructions revoking the proxy. A duly executed proxy bearing a later date will be sufficient to revoke an earlier proxy. The proxy executed by a stockholder who attends the Annual Meeting will be revoked only if that stockholder files the proper written instrument with the Secretary prior to the end of the voting at the Annual Meeting.

 

To the extent necessary to assure sufficient representation at the Annual Meeting, proxies may be solicited by officers, directors and regular employees of the Company personally, by telephone, by internet or by further correspondence. Officers, directors and regular employees of the Company will not be compensated for their solicitation efforts. The cost of soliciting proxies from stockholders will be borne by the Company. The Company will also reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Common Stock.

 

 
1

 

 

Regardless of the number of shares of the Company’s Common Stock owned, it is important that stockholders be represented by proxy or be present in person at the Annual Meeting. In order for any proposals considered at the Annual Meeting to be approved by the Company’s stockholders, a quorum must be present. Stockholders are requested to vote by completing the enclosed proxy card and returning it signed and dated in the enclosed postage-paid envelope.

 

Proxies marked as abstentions and broker non-votes (as defined below) will be treated as shares present for purposes of determining whether a quorum is present. Proxies marked as abstentions will not be counted as votes cast and will not affect the election of directors, advisory approval of executive compensation, or ratification of BKD, LLP as the independent registered public accounting firm. Brokers are entitled to vote the shares they hold for their customers in “street name” on routine matters when the customers (i.e. the “beneficial owners”) do not instruct the brokers how to vote the customer’s shares. Only Proposal Three, regarding the ratification of BKD, LLP as Independent Registered Public Accounting Firm, is deemed to be a routine matter. Brokers will be entitled to vote shares of Common Stock they hold in street name on Proposal Three in the absence of instructions on how to vote by the beneficial owners. Proposals One and Two are not deemed to be routine matters and, as such, brokers are not entitled to vote shares of Common Stock they hold in street name on Proposals One and Two in the absence of instructions on how to vote from the beneficial owners. These are referred to as “broker non-votes.” Broker non-votes will not be counted as votes cast, and therefore will not affect the election of directors or the advisory approval of executive compensation.

 

Pursuant to Article XIII of the Company’s Certificate of Incorporation, no record owner of shares of Common Stock such as a broker, a bank, a trust company or other nominee that holds shares for a beneficial owner that beneficially owns in excess of the Limit, may vote the shares that exceed the Limit despite the instructions of the beneficial owner. However, as stated above, if the Board approved the acquisition of the shares that resulted in the beneficial owner owning more than 10% of the outstanding Common Stock, Article XIII is not applicable and such shares in excess of the Limit may be voted as instructed by the beneficial owner.

 

Directors are elected by a plurality of votes of the shares represented in person or by proxy at the Annual Meeting. The proposals to approve executive compensation (advisory) and to ratify the selection of the independent registered public accounting firm require the affirmative vote of a majority of the votes cast on such matters.

 

 

SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND management

 

Persons and groups owning in excess of 5% of the Common Stock are required to file certain reports regarding such ownership pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Article XIII of the Certificate of Incorporation of the Company restricts the voting by persons who beneficially own in excess of 10% of the outstanding shares of Common Stock unless the Board approved the acquisition of the shares that resulted in the beneficial owner owning more than 10% of the outstanding Common Stock. This restriction does not apply to employee benefit plans of the Company. The following table sets forth, as of the Record Date, persons or groups who are known by the Company to beneficially own more than 5% of the Common Stock.

 

   

Amount and Nature of

   

Percent of Total

 

Name and Address 

 

Beneficial

   

Outstanding

 

of Beneficial Owner 

 

Ownership

   

Common Shares

 

Castle Creek Capital Partners V, LP

               

6051 El Tordo

               

Racho Santa Fe, CA 92067

    794,022 (1)      17.96%  
                 

FJ Capital Management, LLC

               

1313 Dolley Madison Blvd, Ste 306

               

McLean, VA 22101

    330,715 (2)      7.48%  

 

 
2

 

 

(1)

Information based on a joint schedule 13G/A filed with the Securities and Exchange Commission on August 18, 2016 by Castle Creek Capital Partners V, LP (“Fund V”), Castle Creek Capital V LLC (“CCC V”), John M. Eggmeyer III, Mark G. Merlo, John T. Pietrzak and J. Mikesell Thomas as the “Reporting Persons.” Each of the Reporting Persons may be deemed to be the beneficial owner of the 794,022 shares of Common Stock held directly by Fund V. CCC V is the sole general partner of Fund V. Mr. Eggemeyer, Mr. Merlo, Mr. Pietrzak, and Mr. Thomas share voting and dispositive power over the 794,022 shares beneficially owned by Fund V, due to the fact that each is a managing principal of CCC V. CCC V, Mr. Eggemeyer, Mr. Merlo, Mr. Pietrzak, and Mr. Thomas each disclaim beneficial ownership of the Common Shares, except to the extent of their respective pecuniary interest in Fund V. The record holder of the shares of Common Stock beneficially owned by Fund V may vote all 794,022 shares of Common Stock, including the 351,894 shares that exceed the 442,128 shares that constitute the Limit pursuant to Article XIII of the Company’s Certificate of Incorporation, because the Board of Directors approved the acquisition by Fund V of the shares of Common Stock that exceed the Limit.

 

(2)

Information based on a joint schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2017 by FJ Capital Management LLC (“FJ”), Financial Opportunity Fund (“FOF”), Financial Opportunity Long/Short Fund LLC (“FOLSF”), Bridge Equities III LLC (BE III”), Bridge Equities VIII LLC (“BE VIII”), Bridge Equities IX LLC (“BE IX”), Bridge Equities X LLC (“BE X”), Bridge Equities XI LLC (“BE XI”), Martin S. Friedman, SunBridge Manager LLC (“SB Manger”), SunBridge Holdings LLC (“SB Holdings”) and Realty Investment Company Inc. (“RIC”) as the “Reporting Persons.” The Schedule 13G/A reports shared voting and investment power over the shares as follows: FJ (330,715 voting and 67,438 investment), FOF (45,724 voting and investment), FOLSF (4,903 voting and investment), BE III (246,186 voting and investment), BE VIII (2,794 voting and investment), BE IX (3,252 voting and investment), BE X (2,295 voting and investment), BE XI (8,750 voting and investment), Mr. Friedman (330,715 voting and 67,438 investment), SB Manager (263,277 voting and investment), SB Holdings (263,277 voting and investment) and RIC (263,277 voting and investment).

 

 
3

 

 

The following table sets forth certain information as of the Record Date, with respect to the shares of Common Stock beneficially owned by each of the directors, nominees for director and Named Executive Officers (see section titled “Summary Compensation Table”) of the Company, and the total shares beneficially owned by directors and executive officers as a group. The Company’s policy is for each director to own a minimum of 2,500 shares, exclusive of stock grants and non-exercised stock options. Directors with less than five years of experience on the Board are required to own a minimum of 500 shares for each full year of service on the Board, up to 2,500 shares. Less than 1% stock ownership is shown below with an asterisk (*).

 

   

Amount and Nature of

   

Percent of Total

 
   

Beneficial

   

Outstanding

 

Name of Beneficial Owner

 

Ownership (1)

   

Common Shares

 

Shaun A. Burke

    74,921 (2)      1.7%  

Kurt Hellweg

    94,308 (3)      2.1%  

Tim Rosenbury

    29,650 (4)      *  

Jamie Sivils, III

    26,492 (5)      *  

James Batten

    50,447 (6)      1.1%  

John Griesemer

    109,263       2.4%  

David Moore

    4,201       *  

Greg Horton

    2,817       *  

Carter Peters

    31,093 (7)      *  

H. Charles Puls

    1,000       *  

Sheri Biser

    15,224 (8)      *  

Robin Robeson

    11,168       *  

Total owned by all directors and executive officers as a group (Twelve persons)

    450,584 (9)     10.0%  

 

 

 

(1)

Amounts may include shares held directly, as well as shares held jointly with family members, in retirement accounts, in a fiduciary capacity, by certain family members, by certain related entities or by trusts of which the directors and executive officers are trustees or substantial beneficiaries, with respect to which shares the respective director or executive officer may be deemed to have sole or shared voting and/or investment powers. Due to the rules for determining beneficial ownership, the same securities may be attributed as being beneficially owned by more than one person. The holders may disclaim beneficial ownership of the included shares which are owned by or with family members, trust or other entities.

 

(2) Includes 20,000   shares that may be acquired within 60 days of the Record Date through the exercise of options.

(3)

Includes

2,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(4)

Includes

7,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(5)

Includes

7,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(6)

Includes

32,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(7)

Includes

5,000 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(8)

Includes

6,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

(9)

Includes

81,500 

 

shares that may be acquired within 60 days of the Record Date through the exercise of options.

 

 

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Section 16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of the Common Stock, to file reports detailing their ownership and changes of ownership in the Common Stock with the Securities and Exchange Commission (“SEC”) and to furnish the Company with copies of all such ownership reports. Based solely on the Company’s review of the copies of the ownership reports furnished to the Company, and written representations relative to the filing of certain forms, the Company believes that all Section 16(a) filing requirements applicable to its officers and directors, and persons who own more than 10% of the Common Stock, were complied with during the 2016 fiscal year.

 

 
4

 

 

FIRST PROPOSAL: ELECTION OF DIRECTORS

 

The number of directors constituting the Board will be eight. The Board is divided into three classes. The term of office of one class of directors expires each year in rotation so that the class up for election at each annual meeting of stockholders has served for a three-year term. The terms of three of the present directors (Messrs. Moore, Sivils and Griesemer) are expiring at the Annual Meeting.

 

Messrs. Moore, Sivils and Griesemer have been nominated, upon the recommendation of the Nominating Committee of the Board, by the Board and, upon election at the Annual Meeting, will hold office for a three-year term expiring in 2020 or until their successors are elected and qualified. Each nominee has indicated that he is willing and able to serve as a director if elected and has consented to being named as a nominee in this Proxy Statement.

 

Unless otherwise specified on the proxies received by the Company, it is intended that proxies received in response to this solicitation will be voted in favor of the election of each person named in the following table to be a director of the Company for the term as indicated, or until his successor is elected and qualified. There are no arrangements or understandings between the nominees or directors and any other person pursuant to which any such person was or is selected as a director or nominee.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE FOLLOWING NOMINEES

Nominees for Three-Year Terms Expiring 2020

 

Name

Age (1)

Director Since

Current Term

Expires

John F. Griesemer

49

2008

2017

James L. Sivils, III

52

2002

2017

David T. Moore

46

2014

2017

 

In addition to the three nominees proposed to serve on the Board as described above, the following individuals are also directors of the Company, each serving for the current term indicated.

 

Directors Who Are Not Nominees
Who Will Continue in Office After the Annual Meeting

 

 

Name

 

Age (1)

 

Director Since

Current Term

Expires

Greg A. Horton

57

2016

2019

Tim Rosenbury

60

2002

2019

Shaun A. Burke

53

2004

2019

Kurt D. Hellweg

59

2000

2018

James R. Batten

54

2006

2018

 

(1)

As of the Record Date

 

 
5

 

 

Biographical Information

 

Set forth below are brief summaries of the background and business experience, including principal occupation, of each nominee and director currently serving on the Board of Directors of the Company.

 

John F. Griesemer is Executive Vice President, Chief Operations Officer and member of the Board of Directors of Springfield Underground, Inc.  Springfield Underground, Inc. is a privately held construction materials supplier and real estate developer in the Springfield, Missouri area.  Mr. Griesemer previously served as Area Manager and General Manager of Springfield Underground, Inc. related companies and as a management trainee with Vulcan Materials Company in Northern Virginia.  Mr. Griesemer holds a B.S. degree in Industrial Management and Engineering from Purdue University.  He is the Chairman of the Board of Mercy Springfield Communities, member of the Springfield Catholic Schools Development Board and a member of the Board of the National Stone Sand and Gravel Association.  He is a past Member of the Board of the Missouri Limestone Producers Association, Catholic Campus Ministries, Junior Achievement of the Ozarks and Ozark Technical Community College Foundation.  Mr. Griesemer brings to the Board a strong organizational and leadership background, management experience and deep ties in the local community.

 

James L. Sivils, III, JD, is the CEO of Environmental Works, Inc., an environmental consulting firm with offices in Springfield, Kansas City and St. Louis, MO.  Mr. Sivils began his career as a Missouri licensed attorney in 1990.  In 1993, Mr. Sivils began developing Real Estate and became a licensed Missouri Real Estate Broker. Mr. Sivils has developed numerous commercial and residential projects in Southwest Missouri.  Mr. Sivils holds a J.D. degree from the University of Missouri – Kansas City Law School and a B.A. degree from the University of Missouri – Columbia.  Mr. Sivils is a member and past Chapter Chair of the Ozarks Chapter of the Young Presidents’ Organization and a member of the World Presidents Organization.  Mr. Sivils legal background, knowledge and experience with real estate matters and experience running a 100+ employee company make him a valuable resource to the Board. 

 

David T. Moore is President, Chief Executive Officer, and member of the Board of Directors of Paul Mueller Company. Paul Mueller Company is a publicly held manufacturer of milk cooling equipment and processing equipment headquartered in Springfield, Missouri. Mr. Moore has worked at Paul Mueller Company since 2002, serving as the President since 2011. Additionally, he has been a member of the company’s Board of Directors since 1997. Prior to joining Paul Mueller Company, Mr. Moore was Vice President of Product Development at Corporate Document Systems, a computer software company, for six years. Mr. Moore holds an MBA from The University of Chicago - Booth School of Business and a B.A. from Middlebury College. Mr. Moore is a valuable asset to the Board due to his significant experience in public company management, corporate governance, business acquisition and integration, and information and technology development.  In addition, Mr. Moore has long-term personal and business ties to the local community.

 

Tim Rosenbury, AIA, is Managing Partner of Butler, Rosenbury & Partners, Inc., an architecture and planning firm in Springfield, Missouri.  Mr. Rosenbury joined the firm in 1984 after practicing in Memphis, Tennessee.  He graduated with a B.Arch. from Mississippi State University in 1980, which in 1999 awarded him the designation of Alumni Fellow.  He is a member of a number of professional and civic organizations, for many of which he has held leadership positions, including Chairman of the Springfield Area Chamber of Commerce and Vice President of the Board of Education for Springfield Public Schools. Mr. Rosenbury brings to the Board strong community leadership and significant experience in general business and real estate development and management.

 

Greg A. Horton, CPA, is Chief Executive Officer and co-owner of Integrity Home Care & Hospice, a multi-line home care enterprise that employs 2,000 and serves over 5,000 clients in Missouri and Kansas, and co-founder of affiliate Integrity Pharmacy.  Prior to launching Integrity Home Care in 2000, Mr. Horton was a partner in the accounting firm Whitlock, Selim & Keehn, LLP.  He has twenty years of experience in public accounting with an emphasis in management consulting, information systems, and auditing services.  Mr. Horton holds a Bachelor of Science in Business Administration with an Accounting Specialization from Central Missouri State University.  He is a member of the American Institute of Certified Public Accountants, and has been active in board and volunteer service with the Fellowship of Christian Athletes, Boys & Girls Town of Missouri, Rotary Club of Springfield Southeast, and the Springfield Area Chamber of Commerce.  Mr. Horton’s expertise in large service-based organizations and his background in public accounting make him a valuable resource to the Board.

 

 
6

 

 

James R. Batten, CPA, is Chief Financial Officer of International Dehydrated Foods (IDF) a privately held manufacturer of ingredients for the food industry.  Prior to joining IDF in September 2016, Mr. Batten served as a management consultant serving businesses and non-profit organizations from March 2014 through August 2016.  Mr. Batten was the Executive Vice President of Convoy of Hope, an international nonprofit relief organization from April 2009 through February 2014.  Mr. Batten served as Chief Operations Officer and Executive Vice President of AG Financial Solutions from September 2007 through March 2009.  Mr. Batten served as the Executive Vice President of Finance, Chief Financial Officer and Treasurer of O’Reilly Automotive, Inc. (NASDAQ: ORLY) from January 1993 through March 2007.  Prior to joining O’Reilly, Mr. Batten was employed by the accounting firms of Whitlock, Selim & Keehn, from 1986 to 1993 and Deloitte, Haskins & Sells from 1984 until 1986.  Mr. Batten is a member of the board of AG Financial Solutions, Foundation Capital Resources and Treasurer of Hope Church.  Mr. Batten is a former member of the NASDAQ Issuer Affairs Committee.  He has also served on a number of other professional and civic boards including the Springfield Area Chamber of Commerce, Big Brothers Big Sisters of the Ozarks and New Covenant Academy. 

 

Shaun A. Burke joined the Bank in March 2004 as President and Chief Executive Officer and was appointed President and Chief Executive Officer of the Company on February 28, 2005.  He has over 30 years of banking experience. Mr. Burke received a Bachelor of Science Degree in Finance from Missouri State University and is a graduate of the Graduate School of Banking of Colorado.    Mr. Burke currently serves on the board of the Missouri Bankers Association as Vice Chairman of the Legislative Affairs Committee and was previously Chairman of the Audit Committee. In 2014, he began a three-year term on the Community Bankers Council of the American Bankers Association. In March 2016 he was appointed to the Federal Reserve Bank of St. Louis’ Community Depository Institutions Advisory Council. From 2012 to 2014, he was a Board Member of the Springfield Area Chamber of Commerce serving as Vice Chairman of Economic Development in 2014. From 2009 through 2014, he was a Board Member of the Springfield Business Development Corporation, the economic development subsidiary of the Springfield Area Chamber of Commerce serving as President in 2012. He is also a past Member of the United Way Allocations and Agency Relations Executive Committee, Salvation Army Board, and Big Brothers Big Sisters Board.

 

Kurt D. Hellweg is the Chairman of the Board of International Dehydrated Foods, Inc. (“IDF”), American Dehydrated Foods, Inc. (“ADF”), Food Ingredients Technology Company, L.L.C (“FITCO” – a joint venture with Mars Petcare), and Chairman of the Board of IsoNova Technologies, L.L.C. (“IsoNova” – a joint venture with Rembrandt Enterprises, Inc.). IDF, ADF, FITCO and IsoNova are privately held companies that manufacture and market ingredients for both the food and feed industries. Mr. Hellweg joined ADF in 1987 and has previously served as Vice President of Sales, Senior Vice President of Operations, and President/COO. Prior to joining ADF, Mr. Hellweg was an officer in the U.S. Navy from 1980 to 1987. During that time, he served tours as a helicopter pilot in the Atlantic Fleet and as an instructor pilot. Mr. Hellweg holds a B.S. degree in Engineering from the University of Nebraska. He is a past Board Member of the Springfield Area Chamber of Commerce, the Springfield Area Arts Council, and the Springfield Symphony. He is the founding member of the Greater Ozarks Chapter of World Presidents’ Organization (“WPO”) (where he is still active), and has previously chaired the Greater Ozarks Chapter of the Young Presidents’ Organization. He is a Black Belt in Taekwondo, a member of Mensa, and enjoys competing in ultra-distance bicycling races. He currently serves on the following Boards: ADF, CoxHealth, the Darr Family Foundation, Environmental Works, Inc., FITCO, Hammons Products Company, IDF, IsoNova, WPO, and is a Trustee of the ADF profit sharing plan, serving as a Director of the Investment Committee.

 

Director Independence

 

The Board has determined that all of the directors, except for Mr. Burke who is an executive officer of the Company, are “independent directors” as that term is defined in Rule 5605(a) (2) of the Marketplace Rules of The NASDAQ Stock Market (“NASDAQ”). These directors constitute a majority of the Board.

 

 

Board Leadership Structure

 

Throughout its history, the Company has kept the positions of Chairman of the Board and Chief Executive Officer separate. Currently, Mr. Batten holds the position of Chairman of the Board and Mr. Burke holds the position of Chief Executive Officer. Mr. Batten is considered to be “independent” according to NASDAQ listing requirements.

 

 
7

 

 

The Board believes that having separate positions and having an independent outside director serve as Chairman is the appropriate leadership structure for the Company at this time and demonstrates our commitment to good corporate governance.  Separating these positions allows our Chief Executive Officer to focus on our day-to-day business, while allowing the Chairman to lead the Board in its fundamental role of providing advice to and independent oversight of management.  We believe that having an independent Chairman eliminates the conflicts of interest that may arise when the positions are held by one person.  In addition, this leadership structure allows the Board to more effectively monitor and evaluate the performance of our Chief Executive Officer.

 

 

Board’s Role in Risk Oversight

 

It is necessary to effectively manage risk when managing and operating every financial institution. We face a number of risks, including but not limited to, general economic risks, credit risks, regulatory risks, audit risks, reputational risks, and business competition. Management is responsible for the day-to-day management of risks the Company faces, while the Board, as a whole and through its committees, has responsibility for the general oversight of risk management. In its role of risk oversight, the Board has the responsibility to satisfy itself that the risk management processes and procedures designed and implemented by management are appropriate and functioning as designed.

 

While the full Board is charged with ultimate oversight responsibility for risk management, various committees of the Board and members of management also have specific responsibilities with respect to our risk oversight. Each Board committee has been assigned oversight responsibility for specific areas of risk and risk management, and each committee considers risks within its areas of responsibility. Each of these committees receives regular reports from management regarding our risks and reports regularly to the Board concerning risk.

 

We believe that providing for full and open communication between management and the Board is essential for effective risk management and oversight. Certain senior management personnel, consistent with their specific areas of responsibility, attend Board meetings and/or Board committee meetings on a regular and consistent basis. We have regular and ongoing reporting and communication mechanisms in place to ensure that oversight is effective.

 

 

Meetings and Committees of the Board of Directors

 

The business of the Company is conducted at regular and special meetings of the full Board of Directors and its standing committees. The standing committees consist of the Executive, Audit, Compensation, Investment, Nominating, Building and Special. During the twelve months ended December 31, 2016, the Board held twelve regular meetings. No director attended less than 75% of those meetings and the meetings held by all committees of the Board of Directors on which he served.

 

Although the Company does not have a formal policy regarding director attendance at the Company’s annual stockholders’ meeting, all directors are expected to attend these annual meetings absent extenuating circumstances. All current directors attended the Company’s annual meeting of stockholders held on May 25, 2016.

 

 

Stockholder Communications with Directors

 

Stockholders and other interested persons who wish to communicate with the Board of Directors of the Company, or any individual director, should send their written correspondence by mail to: Vicki Lindsay, Secretary, Guaranty Federal Bancshares, Inc., 1341 West Battlefield, Springfield, Missouri 65807.

 

 
8

 

  

Audit Committee

 

The Company has a separately designated Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee of the Board currently consists of four directors: Messrs. Moore, Horton, Batten, and Hellweg, each of whom is an “independent director” as defined under the NASDAQ listing standards and the criteria for independence set forth in Rule 10A-3 of the Securities Exchange Act of 1934. The Board has determined that Mr. Moore qualifies as an Audit Committee Financial Expert, as defined in the rules and regulations of the SEC. This standing committee, among other things, (i) regularly meets with the internal auditor to review audit programs and the results of audits of specific areas as well as other regulatory compliance issues, (ii) meets at least annually in executive session with the Company’s independent auditors to review the results of the annual audit and other related matters, and (iii) meets quarterly with management and the independent auditors to review the Company’s financial statements and significant findings based on the independent auditor’s review. The Audit Committee is responsible for hiring, retaining, compensating and terminating the Company’s independent auditors. The Audit Committee operates under a written charter adopted by the Company’s Board of Directors. A copy of the Audit Committee Charter was included as Appendix B to the Proxy Statement prepared in connection with the annual meeting of stockholders held on May 27, 2015.

 

During the twelve months ended December 31, 2016, the Audit Committee met five times.

 

 

 

Nominating Committee

 

 

The Nominating Committee of the Board is composed of three or more directors as appointed by the Board, each of whom are required to be an “independent director” as defined under the NASDAQ listing standards. Currently, the Nominating Committee consists of three directors, Messrs. Sivils, Moore, and Batten, each of whom is an “independent director.” During the twelve months ended December 31, 2016, the Nominating Committee met two times. The Nominating Committee operates under a formal written charter adopted by the Board of Directors. A copy of the Nominating Committee Charter is included as Appendix A to this Proxy Statement.

 

The Nominating Committee is responsible for identifying individuals qualified to serve as members of the Board and recommending to the Board the director nominees for election and appointment to the Board, as well as director nominees for each of the committees of the Board. In accordance with its charter, the Nominating Committee recommends candidates (including incumbent nominees) based on the following criteria: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable obligations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to the Company’s communities and shared values, as well as overall experience in the context of the needs of the Board as a whole. The Committee monitors the mix of skills and experience of its directors and committee members in order to assess whether the Board has the appropriate tools to perform its oversight function effectively. The Committee does not have a separate diversity policy, but the Nominating Committee does consider the diversity of its directors and nominees in terms of knowledge, experience, skills, expertise, and other demographics which may contribute to the Board.

 

With respect to nominating existing directors, the Nominating Committee reviews relevant information available to it and assesses their continued ability and willingness to serve as a director. The Nominating Committee will also assess such person’s contribution in light of the mix of skills and experience the Nominating Committee has deemed appropriate for the Board as a whole. With respect to nominations of new directors, the Nominating Committee will conduct a thorough search to identify candidates based upon criteria the Nominating Committee deems appropriate and considering the mix of skills and experience necessary to complement existing members of the Board. The Nominating Committee will then review selected candidates and make its recommendation to the Board.

 

Nominations by a stockholder will be considered by the Nominating Committee if such nomination is written and delivered or mailed by first class United States mail, postage prepaid, to the Secretary of the Company between 30 and 60 days prior to the meeting at which such nominee may be considered. However, if less than 31 days’ notice of the meeting is given by the Company to stockholders, written notice of the stockholder nomination must be given to the Secretary of the Company as provided above no later than the tenth day after notice of the meeting was mailed to stockholders. A nomination must set forth, with respect to the nominee, (i) name, age, and addresses, (ii) principal occupation or employment, (iii) Common Stock beneficially owned, and (iv) other information that would be required in a proxy statement. The stockholder giving notice must list his or her name and address, as they appear on the Company’s books, and the amount of Common Stock beneficially owned by him or her. In addition, the stockholder making such nomination must promptly provide to the Company any other information reasonably requested by the Company. Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations.

 

 
9

 

 

Compensation Committee

 

The Board of Directors of the Company and the Board of Directors of the Bank are comprised of the same persons. The Compensation Committee of the Bank’s Board of Directors, which consists solely of non-employee directors of the Bank, is comprised of Messrs. Hellweg, Griesemer, Moore and Horton. As indicated above, each of these committee members is an “independent director” as defined under the NASDAQ listing standards. The Company has no employees and relies on employees of the Bank for the limited services received by the Company. All compensation paid to executive officers of the Company is paid by the Bank.

 

The Compensation Committee, together with the full Board, is responsible for designing the compensation and benefit plans for all employees, executive officers and directors of the Company and the Bank, including the Chief Executive Officer, based on its review of performance measures, industry salary surveys and the recommendations of management concerning compensation (See “Report on Executive Compensation”). The Compensation Committee recommends adjustments to the compensation of the Chief Executive Officer and the other Named Executive Officers of the Company based upon its assessment of individual performance and the Bank’s performance, and makes other recommendations, when appropriate, to the full Board of Directors. Independent consultants may be engaged directly by the Compensation Committee to evaluate the Company’s executive compensation. The Compensation Committee, together with the full Board, determines the compensation of all other officers. The Compensation Committee may delegate its authority to a subcommittee of the Compensation Committee.

 

During the twelve months ended December 31, 2016, the Compensation Committee met two times. The Compensation Committee operates under a formal written charter adopted by the Company’s Board of Directors. A copy of the Compensation Committee Charter is included as Appendix B to this Proxy Statement.

 

 

 

 

 

REPORT OF THE COMPENSATION COMMITTEE

  

Compensation Committee Interlocks and Insider Participation

 

Since August 2002, the Compensation Committee of the Board has consisted of non-employee directors of the Bank. Mr. Burke, the current President and Chief Executive Officer of the Company and the Bank, did not serve as a member of the Compensation Committee during 2016. No executive officer of the Company served on the Compensation Committee or Board of Directors of any company that employed any member of the Company’s Compensation Committee or Board of Directors.

 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

Overall Compensation Philosophy and Objectives

 

The Compensation Committee, together with the full Board, has designed the compensation and benefit plans for all employees, executive officers and directors in order to attract and retain individuals who have the skills, experience and work ethic to provide a coordinated work force that will effectively and efficiently carry out the policies adopted by the Board and to manage the Company and the Bank to meet the Company’s mission, goals and objectives.

 

 
10

 

 

To determine the compensation of executive officers and directors, the Compensation Committee reviews industry compensation statistics based on our asset size, makes cost of living adjustments, and establishes salary ranges for each executive officer and fees for the Board. The Compensation Committee then reviews (i) the financial performance of the Bank over the most recently completed fiscal year (including Return on Assets, Return on Equity, asset quality, etc.) compared to results at comparable companies within the industry, and (ii) the responsibilities and performance of each executive officer and the salary compensation levels of each executive officer compared to like positions at comparable companies within the industry. The Compensation Committee evaluates all factors subjectively in the sense that they do not attempt to tie any factors to a specific level of compensation.

 

The Compensation Committee offers long-term incentives for executive officers and other management personnel primarily in the form of restricted stock awards. We believe that our stock award programs are an important component of compensation to attract and retain talented executives, provide an incentive for long-term corporate performance, and to align the long-term interests of executives and stockholders.

 

All executive officers may participate on an equal, non-discriminatory basis in the Bank’s contributory 401(k) tax-deferred savings plan, medical insurance plan, long-term disability plan and group life insurance plan. The Compensation Committee of the Bank recommends all compensation and benefit plans to the full Board for approval annually.

 

Executive Compensation Philosophy and Objectives

 

The Compensation Committee is guided by the following four key principles in determining the compensation of the Company’s executive officers:

 

 

Competition. The Committee believes that compensation should reflect the competitive marketplace, so the Company can attract, retain and motivate talented personnel.

 

Accountability for Business Performance. Compensation should be tied in part to the Company’s financial performance, so that executives are held accountable through their compensation for the performance of the Company.

 

Accountability for Individual Performance. Compensation should be tied in part to the individual’s performance to reflect individual contributions to the Company’s performance.

 

Alignment with Stockholder Interests. Compensation should be tied in part to the Company’s stock performance through long-term incentives such as restricted stock, to align the executive’s interests with those of the Company’s stockholders.

 

Consideration of 2016 Say on Pay

 

At the Company’s 2016 annual meeting of shareholders, 94.75% of voting shareholders approved the non-binding advisory proposal on the compensation of the Named Executive Officers (or “NEOs”), (commonly referred to as a “say-on-pay” vote).

 

The Board and the Compensation Committee pay careful attention to communications received from shareholders regarding executive compensation, including the non-binding advisory vote. The Company carefully considered the result of the 2016 advisory vote on executive compensation but not for specific 2016 compensation decisions. Based on this consideration and the other factors described in this Compensation Discussion and Analysis, the Compensation Committee did not materially alter the policies or structure for the NEO’s compensation for 2016 or 2017.

 

 
11

 

 

Report of Executive Compensation 

 

The compensation of the Chief Executive Officer (the “CEO”) and other NEOs is recommended by the Compensation Committee with final approval from the full Board. The CEO is not a member of the Compensation Committee and does not attend any Compensation Committee meetings unless specifically requested to do so by the Chairman of the Compensation Committee. The CEO may act as a key discussion partner with the Compensation Committee members to provide information regarding business context, the market environment and our strategic direction. The CEO also provides recommendations to the Compensation Committee on individual performance evaluations and compensation for the NEOs, other than himself. The Compensation Committee strives to provide total compensation that is aligned and competitive with compensation data compiled in 2016 by its compensation consultant, ChaseCompGroup, LLC, based on a peer group of selected publicly-traded companies within the banking industry, a similar geographic location and with comparable financial performance. The peer group provides a reference point when making pay decisions and benchmarking short-term and long-term incentive plan awards and mechanics. The compensation packages reflect a range based on this analysis, augmented by the performance of the individual executive officer and the Company. Grants under the various equity plans described below provide long-term incentive to stay with the Company, but should not replace, or override, maintenance of the compensation range established from the peer group.

 

The Compensation Committee has reviewed all components of the CEO’s and the other NEOs compensation, including salary, bonus, accumulated and realized and unrealized stock options and restricted stock awards. Based on this review, the Committee finds the CEO’s and other NEOs total compensation in the aggregate to be reasonable and not excessive. It should be noted that when the Compensation Committee considers any component of the CEO’s and NEOs total compensation, the aggregate amounts and mix of all the components, including accumulated and realized and unrealized stock options and restricted stock awards, are taken into consideration in the Committee’s decisions.

 

 

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included in this Statement with management. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Statement for filing with the SEC.

 

In view of the current economic and financial environment, the Compensation Committee of the Board of Directors has reviewed the design and operation of the Company's incentive compensation arrangements, including the performance objectives and target levels used in connection with incentive awards and evaluated the relationship between the Company's risk management policies and practices and these arrangements. The Compensation Committee’s review was designed to assess whether any aspect of the compensation program would encourage any of the Company’s executives to take any unnecessary or inappropriate risks that could threaten the value of the Company or the Bank.

 

The Committee members identified the risks that the Company faces that could threaten its value. These risks include, but are not limited to, the following:

 

 

Credit risk

 

Liquidity risk

 

Interest rate risk

 

Market risk

 

Operation/transactional risk

 

Information and technology risk

 

Fiduciary/litigation risk

 

 
12

 

 

 

Compliance risk

 

Environmental risk

 

Reputation risk

 

Financial risk

 

Fraud risk

 

The Compensation Committee also reviewed and discussed materials on compensation risk assessment, including information on executive compensation design and administrative features that could induce excessive risk taking. In this regard, the performance objectives contained in our annual incentive compensation plan have been balanced with those contained in our long-term incentive compensation plan to ensure that both are aligned and consistent with our long-term business plan, our mix of equity-based awards has been allocated to ensure an appropriate combination of incentive and retention objectives, and our stock ownership guidelines have been established to ensure that the interests of our Senior Executive Officers have been aligned with the interests of our stockholders.

 

THE COMPENSATION COMMITTEE

Kurt D. Hellweg              John F. Griesemer

David T. Moore                Greg A. Horton

 

 

Summary Compensation Table 

 

The following table sets forth information with respect to the compensation awarded to, paid to or earned for the periods indicated by the CEO, the Chief Financial Officer (“CFO”), the Chief Lending Officer (“CLO”), the Chief Credit Officer (“CCO”) and the Chief Operating Officer (“COO”). These executive officers are collectively referred to as the NEOs. During the fiscal year ended December 31, 2016, no other person served as the CEO or CFO of the Company, and no other executive officer received annual compensation that exceeded $100,000. Mr. H. Charles Puls, CLO, began his employment on June 27, 2016 as the replacement for H. Michael Mattson, who retired effective June 30, 2016. Thus, only a partial year is presented for both officers.

 

 

Name and Principal

Position

Year

 

Salary

(1)

   

Bonus (2)

   

Stock

Awards

(3)

   

Option

Awards

   

Non-Equity

Incentive Plan Compensation

   

Nonqualified

Deferred

Compensation

   

All Other

Compensation

   

Total

Compensation

 

Shaun A. Burke

2016

  $ 306,866     $ 61,000     $ 47,850     $ -     $ -     $ -     $ 16,080 (4)   $ 431,796  

President/CEO

2015

    300,600       47,846       63,601       -       -       -       14,620 (4)     426,667  
 

2014

    300,600       31,796       60,422       -       -       -       19,152 (4)     411,970  

Carter Peters

2016

    184,166       62,000       36,000       -       -       -       13,709 (5)     295,875  

EVP/CFO

2015

    180,000       36,000       35,987       -       -       -       12,840 (5)     264,827  
 

2014

    180,000       17,990       21,006       -       -       -       12,266 (5)     231,262  

H.Michael Mattson

2016

    105,461       -       17,130       -       -       -       7,573 (6)     130,164  

EVP/CLO

2015

    168,333       17,125       20,474       -       -       -       11,449 (6)     217,381  
 

2014

    164,625       10,235       26,937       -       -       -       11,316 (6)     213,113  

H. Charles Puls

2016

    87,575       6,832       -       -       -       -       3,725 (7)     98,132  

EVP/CLO

                                                                 

Sheri Biser

2016

    172,333       36,049       17,175       -       -       -       7,580 (8)     233,137  

EVP/CCO

2015

    165,833       17,179       20,396       -       -       -       7,041 (8)     210,449  
 

2014

    149,638       10,196       24,496       -                       5,986 (8)     190,316  

Robin Robeson

2016

    194,166       54,000       37,995       -       -       -       9,286 (9)     295,447  

EVP/COO

2015

    187,833       38,000       47,167       -       -       -       7,513 (9)     280,513  
 

2014

    176,583       23,580       32,116       -                       7,063 (9)     239,342  

 

 

 

(1)

No director fees were paid to Mr. Burke for any of the years presented.

 

 
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(2)

Cash bonuses were awarded to NEOs in accordance with established Executive Incentive Compensation Annual Plans.

 

(3)

This column represents compensation related to restricted stock awards granted in 2016, 2015 and 2014. Amounts represent the aggregate grant date fair value computed in accordance with Accounting Standards Codification Topic 718 (“ASC Topic 718”) of time-vested restricted stock granted. No assumptions were necessary to determine the fair value. The number of shares and grant price of restricted stock awarded to each of the executives was as follows: Mr. Burke: 2016 – 3,190 shares at a per share grant price of $15.00; 2015 – 4,300 shares at a per share grant price of $14.79; 2014 - 5,543 shares at a per share grant price of $10.90; Mr. Peters: 2016 – 2,400 shares at a per share grant price of $15.00; 2015 – 2,433 shares at a per share grant price of $14.79; 2014 – 1,927 shares at a per share grant price of $10.90; Mr. Mattson: 2016 – 1,142 shares at a per share grant price of $15.00; 2015 – 1,384 shares at a per share grant price of $14.79; 2014 - 2,471 shares at a per share grant price of $10.90; Ms. Biser: 2016 – 1,145 shares at a per share grant price of $15.00; 2015 – 1,379 shares at a per share grant price of $14.79; 2014 – 2,247 shares at a per share grant price of $10.90, respectively; and Ms. Robeson: 2016 – 2,533 shares at a per share grant price of $15.00; 2015 – 3,189 shares at a per share grant price of $14.79; 2014 – 2,946 shares at a per share grant price of $10.90. The restricted stock grants cliff vest three years after the grant date.

 

(4)

Amount includes payments of $10,600, $9,314 and $9,148 in 2016, 2015 and 2014, respectively, to Mr. Burke for the Company’s 401(k) matching contribution and payments of $5,480, $5,306 and $10,004, respectively, for country club dues.

 

(5)

Amount includes payments of $8,806, $7,920 and $7,620 in 2016, 2015 and 2014, respectively, to Mr. Peters for the Company’s 401(k) matching contribution and payments of $4,903, $4,920 and $4,646, respectively, for country club dues.

 

(6)

Amount includes payments of $4,903, $6,733 and $6,585 in 2016, 2015 and 2014, respectively, to Mr. Mattson for the Company’s 401(k) matching contribution and payments of $2,670, $4,716 and $4,731, respectively, for country club dues.

 

(7)

Amount includes payments of $1,700 for the Company’s 401(k) matching contribution and $2,025 for country club dues to Mr. Puls in 2016.

 

(8)

Amount includes payments of $7,580, $7,041 and $5,986 in 2016, 2015 and 2014, respectively, to Ms. Biser for the Company’s 401(k) matching contribution.

 

(9)

Amount includes payments to Ms. Robeson of $9,286, $7,513 and $7,063 in 2016, 2015 and 2014, respectively, for the Company’s 401(k) matching contribution.

 

 

Employment Agreements, Potential Payments Upon Termination or Change-in-Control

 

On March 24, 2014, the Company entered into Employment Agreements with the NEOs (including amendments dated June 2016). On June 27, 2016, the Company entered into an employment agreement with the new CLO H. Charles Puls. Each employment agreement has a term of one year, unless further extended or earlier terminated pursuant to its terms, and sets forth a minimum base salary payable to the officer and provides that the officer is eligible to participate in the Company’s bonus, incentive, retirement, health and other insurance benefit plans made available to executive-level employees.

 

Each employment agreement obligates the Company to pay the officer severance in the event the officer’s employment is terminated by the Company without cause. In the event of the officer’s involuntary termination without cause prior to a change in control of the Company (as defined in the employment agreement), each officer other than Mr. Burke would receive 24 months base pay. Mr. Burke would receive 36 months base pay. Such severance would be made in periodic installments and is conditioned upon the officer executing a release and waiver of claims in favor of the Company.

 

In the event of involuntary termination without cause within 12 months after a change in control of the Company, each officer other than Mr. Burke would receive 12 months base pay. Mr. Burke would receive 24 months base pay. Such severance would be made in a single lump sum and is conditioned upon the officer executing a release and waiver of claims in favor of the Company.

 

 
14

 

 

As a condition of entering into the employment agreement, each officer has agreed not to divulge any confidential information during his or her employment or to solicit the Company’s employees or customers for a period of 12 months (24 months in the case of Mr. Burke) following the officer’s termination of employment.

 

On June 1, 2016, the Company entered into incentive compensation arrangements with respect to bonuses payable to NEOs in 2017 for the calendar year 2016, which are further discussed below.

 

The Compensation Committee approved an incentive compensation plan for Mr. Burke, the Company’s CEO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Mr. Burke, with the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). One hundred percent of the bonus amount will be paid in cash. For any amount to be paid, the threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) revenue growth (20%); (ii) net interest margin (20%); (iii) pre-tax net income (40%); and (iv) non-performing assets to average total assets (20%). Certain criteria, however, must be satisfied before an award is paid under this plan.

 

The Compensation Committee approved an incentive compensation arrangement with respect to Mr. Peters, the Company’s CFO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Mr. Peters, with the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). One hundred percent of the bonus amount will be paid in cash. For any amount to be paid under this plan, the threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) revenue growth (30%); (ii) net interest margin (20%); (iii) efficiency ratio (20%); and (iv) pre-tax net income (30%). Certain criteria, however, must be satisfied before an award is paid under this plan.

 

The Compensation Committee approved an incentive compensation arrangement with respect to Ms. Robeson, the Company’s COO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Ms. Robeson, with the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). One hundred percent of the bonus amount will be paid in cash. For any amount to be paid under this plan, the threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) revenue growth (30%); (ii) net interest margin (20%); (iii) efficiency ratio (20%); and (iv) pre-tax net income (30%). Certain criteria, however, must be satisfied before an award is paid under this plan.

 

The Compensation Committee approved an incentive compensation arrangement with respect to Ms. Biser, the Company’s CCO, for 2016. Pursuant to this plan, a maximum amount of 50% of base pay may be paid to Ms. Biser, with the amount of bonus being based on three possible levels of incentive awards: threshold (25%); target (50%); and maximum (100%). One hundred percent of the bonus amount will be paid in cash. For any amount to be paid under this plan, the threshold level of performance must be achieved. The four performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) revenue growth (20%); (ii) net interest margin (20%); (iii) pre-tax net income (30%); and (iv) non-performing assets to average total assets (30%). Certain criteria, however, must be satisfied before an award is paid under this plan.

 

On June 27, 2016, the Compensation Committee approved an incentive compensation arrangement with respect to Mr. Puls, the Company’s CLO, for 2016. Pursuant to this plan, a maximum amount of 25% of base pay may be paid to Mr. Puls, with the amount of bonus being based on three possible levels of incentive awards; threshold (25%); target (50%); and maximum (100%). One hundred percent of the bonus amount will be paid in cash. For any amount to be paid under this plan, the threshold level of performance must be achieved. The three performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) net loan growth (33.33%), (ii) commercial deposit growth (33.33%), and (iii) pre-tax net income (33.33%). Certain criteria, however, must be satisfied before an award is paid under this plan.

 

 
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Outstanding Equity Awards at Fiscal Year End 2016

 

The following table summarizes the option and stock awards the Company has made to the NEOs which were outstanding as of December 31, 2016.

 

   

OPTION AWARDS

    STOCK AWARDS  

Name and 

Principal Position

 

Number of Securities Underlying Unexercised Options (#) Exercisable

   

Number of Securities Underlying Unexercised Options (#) Unexercisable

   

Equity Incentive

Plan Awards:Number of Securities Underlying Unexercised

Unearned Options

(#)

   

Option Exercise Price

   

Option Expiration Date

   

Equity Incentive Plan Awards:Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)

   

Equity Incentive Plan Awards:Market

or Payout Value

Unearned of

Shares, Units or

Other Rights

That Have Not

Vested ($)(6)

 

Shaun A. Burke

    10,000       -       -     $ 28.43    

1/3/2017

      13,033 (2)   $ 276,039  

President/CEO(1)

    10,000       -       -       28.78    

1/2/2018

                 

Carter Peters

    5,000       -       -       28.78    

1/2/2018

      6,760 (3)   $ 143,177  

EVP/CFO

                                                       

Sheri Biser

    1,500       -       -       5.40    

2/9/2019

      4,771 (4)   $ 101,050  

EVP/CCO

    5,000       -       -       5.08    

1/4/2020

                 

Robin Robeson

    -       -       -       -       -       8,668 (5)   $ 183,588  

EVP/COO

                                                       

 

(1)

Shares of stock purchased pursuant to options granted to Mr. Burke in 2005 (20,000 shares) are subject to a 5-year holding period upon vesting and exercise, unless the employment relationship between the Company and him is terminated.

(2)

Restricted stock awards vest as follows: 5,543 – 2/4/17; 4,300 – 2/2/18; 3,190 – 2/25/19

(3)

Restricted stock awards vest as follows: 1,927 – 2/4/17; 2,433 – 2/2/18; 2,400 – 2/25/19

(4)

Restricted stock awards vest as follows: 2,247 – 2/4/17; 1,379 – 2/2/18; 1,145 – 2/25/19

(5)

Restricted stock awards vest as follows: 2,946 – 2/3/17; 3,189 – 2/2/18; 2,533 – 2/25/19

(6)

Represents aggregate unvested stock awards at a per share price of $21.18

 

 

Directors’ Compensation

 

 

During 2016, each non-employee member of the Board received cash compensation from the Bank of $830 per each Bank board meeting attended, payable monthly. In addition to the cash compensation, each non-employee member of the Board receives equity compensation from the Company. Directors will receive fees for committee memberships or attendance at committee meetings comprised of $200 per meeting for the Executive, Audit and Compensation Committees and $125 per meeting for any other committee. The Chairman of the Board, receives an additional $340 monthly fee. The Chairman of each of the Audit, Building and Compensation Committees receives an additional $170 monthly fee in addition to the regular per meeting fee.

 

Directors may participate in the Company’s 2015 Equity Plan. During fiscal years 2016, 2015, and 2014, restricted stock awards of 1,167, 1,183, and 1,606, respectively, were granted to each independent, non-employee director to provide equity compensation from the Company. Annual equity compensation is determined at the discretion of the Compensation Committee.

 

 
16

 

 

The following table sets forth information with respect to the compensation received in fiscal years 2016 2015, and 2014 for serving as a director of the Company and the Bank.

 

Name

Year

 

Fees Earned

or Paid in

Cash ($)

   

Stock

Awards

($)(1)

   

Total

Compensa-

tion ($)

 

Don Gibson

2016

  $ 5,975     $ 17,505     $ 23,480  
 

2015

    14,620       17,497       32,117  
 

2014

    11,615       17,505       29,120  

Jack Barham

2016

    -       -       -  
 

2015

    -       -       -  
 

2014

    875       -       875  

James Batten

2016

    14,430       17,505       31,935  
 

2015

    12,355       17,497       29,852  
 

2014

    12,640       17,505       30,145  

Kurt Hellweg

2016

    15,150       17,505       32,655  
 

2015

    12,695       17,497       30,192  
 

2014

    12,000       17,505       29,505  

Gregory Ostergren

2016

    -       -       -  
 

2015

    -       -       -  
 

2014

    4,450       17,505       21,955  

Tim Rosenbury

2016

    14,045       17,505       31,550  
 

2015

    12,740       17,497       30,237  
 

2014

    11,175       17,505       28,680  

James Sivils

2016

    12,685       17,505       30,190  
 

2015

    12,870       17,497       30,367  
 

2014

    10,800       17,505       28,305  

John Griesemer

2016

    13,085       17,505       30,590  
 

2015

    13,425       17,497       30,922  
 

2014

    10,975       17,505       28,480  

David Moore

2016

    11,800       17,505       29,305  
 

2015

    13,080       17,497       30,577  
 

2014

    4,700       -       4,700  

Greg Horton

2016

    7,870       17,505       25,375  
 

2015

    -       -       -  
 

2014

    -       -       -  

 

 

 

(1)

This column represents equity compensation from the Company and is the aggregate grant date fair value of restricted stock awards granted under the 2015 Equity Plan and 2010 Equity Plan. The compensation for 2016 per director of $17,505 represents 1,167 shares granted at a per share price of $15.00. The compensation for 2015 per director of $17,497 represents 1,183 shares granted at a per share price of $14.79. The compensation for 2014 per director of $17,505 represents 1,606 shares granted at a per share price of $10.90.

 

 
17

 

 

Indebtedness of Management and Directors and Transactions with Certain Related Persons

 

Loans made to a director or executive officer in excess of the greater of $25,000 or 5% of the Company’s capital and surplus (up to a maximum of $500,000) must be approved in advance by a majority of the disinterested members of the Board of Directors. The Bank, like other financial institutions, provides loans to its officers, directors, and employees to purchase or refinance personal residences as well as consumer loans. As an additional benefit to eligible Bank directors and employees, the Bank offers an employee mortgage loan program (the “Loan Program”). The Loan Program provides mortgage loans at favorable interest rates, namely a one-year adjustable rate mortgage priced at the Bank’s cost of funds with a 1% floor. The purpose of the loan must be to purchase or refinance a primary or secondary residence (i.e., no investment properties). All full-time employees that have completed the 30-day probation period are eligible to participate in this Loan Program. Underwriting includes standard application and financial disclosures, which must qualify to standard secondary market requirements. The borrower is responsible for all third party closing costs. Payments must be automatically deducted from an account maintained at the Bank. The index rate is the Bank’s all-in cost of funds with a 1% floor. The index will be the last month-end calculation within 45 days prior to closing. The maximum adjustment per year is 2% with a 6% lifetime maximum. Each loan has up to a 30-year note/amortization. If the borrower’s employment is terminated for reasons other than normal retirement, disability or death, or if the property securing the Note ceases to be the primary or secondary residence of the Employee, the interest rate will adjust to the rate that would have been in effect pursuant to the original provision of the Note. The payment will adjust the following month to amortize the outstanding balance of the Note using the new interest rate and the remaining term. Other than the interest rate with respect to the Loan Program, all loans provided under the Loan Program and any other loans provided to Directors and Executive Officers have been made in the ordinary course of business, on substantially the same terms and collateral as those of comparable transactions prevailing at the time, and, in the opinion of management of the Company, do not involve more than the normal risk of collectability or present other unfavorable features.

 

No Directors, Executive Officers or their affiliates had aggregate indebtedness to the Company or the Bank on below market rate loans exceeding the lesser of (i) $120,000 or (ii) one percent of the average of the Company’s total assets at year-end for the last completed fiscal year, at any time since January 1, 2016 except as noted in the following table.

 

 

 

Name

Position

Date of Loan

 

Largest Principal

Amount

Outstanding

Since 01/01/16

   

Principal

Balance as of

3/31/17

   

Interest Rate

at 3/31/17

 

Type

The Burke Family Trust

(Shaun A. Burke)

President, CEO &

 Director

1/14/2011

  $ 247,278     $ 236,408       1.00%  

Home Mortgage

Carter M. Peters

EVP, CFO

6/9/2008

  $ 439,161     $ -       1.00%  

Home Mortgage

Carter M. Peters

EVP, CFO

7/18/2016

  $ -     $ 353,980       1.00%  

Home Mortgage

Henry Charles Puls

EVP, CLO

8/22/2016

  $ -     $ 350,899       1.00%  

Home Mortgage

James R. Batten

Director

10/27/2008

  $ 431,552     $ 410,475       1.00%  

Home Mortgage

John F. Griesemer

Director

5/9/2016

  $ -     $ 861,063       1.00%  

Home Mortgage

James L. Sivils III

Director

6/1/2014

  $ 382,720     $ 368,120       1.00%  

Home Mortgage

Kurt Hellwegg

Director

8/14/2008

  $ 789,927     $ 751,030       1.00%  

Home Mortgage

George Timothy

Rosenbury

Director

6/19/2008

  $ 159,747     $ 142,470       1.00%  

Home Mortgage

Don M. Gibson

Director

9/12/2008

  $ 148,821     $ -       1.00%  

Home Mortgage

 

 
18

 

 

SECOND PROPOSAL

 

ADVISORY (NON-BINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION

 

Background of the Proposal

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and corresponding SEC rules enable the Company’s stockholders to vote to approve, on an advisory and non-binding basis, the compensation of Company’s named executive officers as disclosed in this Proxy Statement in accordance with SEC rules. As a result, the following proposal will be presented at the Annual Meeting in the form of the following resolution:

 

 

Proposal

 

RESOLVED, that the stockholders approve the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, and the compensation tables (together with the accompanying narrative disclosure) and related material in the Company’s Proxy Statement for the Annual Meeting.

 

Effect of Proposal

 

As provided under the SEC rules, this vote will not be binding on the Company’s Board of Directors or the Compensation Committee and may not be construed as overruling a decision by the Board or as creating or implying any additional fiduciary duty of the Board. Further, the vote shall not affect any compensation paid or awarded to any executive. The Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSAL ON EXECUTIVE COMPENSATION.

 

 

REPORT OF THE AUDIT COMMITTEE

 

The Audit Committee of the Board is composed of four directors. The Board has determined that each of these directors is independent under the Marketplace Rules of Nasdaq. In particular, each of these directors is independent as defined under Rule 5605(a)(2) and qualified pursuant to Rule 5605(c)(2)(A). The Board has also determined that Mr. Moore qualifies as an Audit Committee Financial Expert as defined by the rules and regulations of the SEC. Only this paragraph of the Report of the Audit Committee shall be incorporated by reference into the Company’s Annual Report on form 10-K filed with the SEC under the Exchange Act, notwithstanding the incorporation by reference of this Report of the Audit Committee into such filing.

 

The primary duties and responsibilities of the Audit Committee are to (i) monitor the Company’s financial reporting process and systems of internal control, (ii) monitor the independence and performance of the Company’s independent registered public accounting firm and internal auditors, and (iii) assure that management, the Board of Directors, the internal auditors and the independent auditors have the opportunity to communicate with one another.

 

 
19

 

 

The Committee has reviewed and discussed the audited consolidated financial statements with management and has discussed with BKD, LLP, the Company’s independent registered public accounting firm matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees.

 

The Audit Committee has also received the written disclosures and the letter from BKD, LLP, the Company’s independent registered public accounting firm, required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee has discussed with the independent registered public accounting firm that firm’s independence. The Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the independence of the independent registered public accounting firm. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company.

 

Based upon the Audit Committee’s discussions and review described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 for filing with the SEC.

 

 

 

THE AUDIT COMMITTEE

 

David T. Moore                                                Greg A. Horton

 

Kurt D. Hellweg                                              James R. Batten          

 

 

PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

During the calendar years ended December 31, 2016 and December 31, 2015, BKD, LLP, the Company’s independent registered public accounting firm during these periods, provided various audit, audit related and non-audit services, including tax, to the Company. Set forth below are the aggregate fees billed for these services during these periods and a brief description of such services:

 

 

(a)

Audit fees: Aggregate fees billed for professional services rendered for the audits of the Company’s annual financial statements and reviews of quarterly financial statements were $154,345 for the calendar year ended December 31, 2016 and $146,980 for the calendar year ended December 31, 2015.

 

 

(b)

Audit-related fees: Aggregate fees billed for assurance and related services rendered and consultation on accounting matters not otherwise reported in (a) above were $4,070 for the calendar year ended December 31, 2016 and $13,180 for the calendar year ended December 31, 2015.

 

 

(c)

Tax fees: Aggregate fees billed for professional services rendered related to tax compliance, tax advice and tax planning were $23,000 for the calendar year ended December 31, 2016 and $22,800 for the calendar year ended December 31, 2015.

 

 

(d)

All other fees: Aggregate fees billed for all other professional services, including compliance work and ESOP services, were $1,410 for the calendar year ended December 31, 2016, and $6,605 for the calendar year ended December 31, 2015.

 

The Audit Committee pre-approves all audit and permissible non-audit services to be provided by BKD, LLP and the estimated fees for these services. There are no other specific policies or procedures relating to the pre-approval of services performed by BKD, LLP. The Audit Committee considered whether the audit and non-audit services rendered by BKD, LLP were compatible with maintaining BKD, LLP’s independence as auditors of our financial statements.

 

 
20

 

 

Third PROPOSAL

 

RATIFICATION OF BKD, LLP AS

 

INDEPENDENT registered PUBLIC ACCOUNTING FIRM

 

The independent registered public accounting firm for the period ended December 31, 2016 for the Company and its subsidiary, the Bank, was BKD, LLP. In accordance with its charter, the Audit Committee has selected and appointed BKD, LLP to continue as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2017. As part of good corporate practice, the Audit Committee and the Company’s Board of Directors are requesting that its stockholders ratify such appointment. The Audit Committee is not required to take any action as a result of the outcome of the vote on this proposal. If the stockholders do not ratify the appointment, however, the Audit Committee may investigate the reasons for stockholder rejection and may consider whether to retain BKD, LLP or to appoint another independent registered public accounting firm.

 

A representative of BKD, LLP will be present at the Annual Meeting. The representative will have an opportunity to make a statement, if so desired, and will be available to respond to appropriate questions.

 

 

THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF BKD, LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.

 

 

 

MISCELLANEOUS

 

The Board of Directors is not aware of any business to come before the Annual Meeting other than those matters described above in this Proxy Statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form that are received from stockholders will be voted in respect thereof in the discretion of the persons named in the accompanying proxy. If the Company did not have notice of a matter on or before May 1, 2017, it is expected that the persons named in the accompanying proxy will exercise discretionary authority when voting on that matter.

 

It is anticipated that the Company’s annual report to stockholders for the period ended December 31, 2016, including financial statements, will be mailed on April 24, 2017, together with this Proxy Statement, to all stockholders of record as of the Record Date. Any stockholder who has not received a copy of the annual report may obtain a copy by writing to the Secretary of the Company at the Company’s address as provided at the end of the next section of this Proxy Statement.

 

If a stockholder and other residents at the same mailing address own Common Stock in street name, the broker or bank may have sent the stockholder a notice that his or her household will receive only one annual report and proxy statement for each company in which they hold shares through that broker or bank. This practice of sending only one copy of proxy materials is known as “householding.” If the stockholder did not respond that he or she did not want to participate in householding, he or she was deemed to have consented to the process. If the foregoing procedures apply, the broker has sent one copy of the annual report and this Proxy Statement to such address. However, even if the broker has sent only one copy of these proxy materials, each stockholder in the household should receive a proxy card. If a stockholder wishes to revoke his or her consent to householding, or to request householding if a household is receiving multiple copies of the Company’s proxy statement and annual report, the stockholder must contact his or her broker, bank or other nominee.

 

 
21

 

 

STOCKHOLDER PROPOSALS

 

In order to be eligible for inclusion in the Company’s proxy materials for next year’s annual meeting of stockholders, any stockholder proposal to take action at such meeting must be received at the Company’s executive offices at 1341 W. Battlefield, Springfield, Missouri 65807-4181, no later than December 25, 2017.

 

In the event the Company receives notice of a stockholder proposal to take action at next year’s annual meeting of stockholders that is not submitted for inclusion in the Company’s proxy material, or is submitted for inclusion but is properly excluded from the proxy material, the persons named in the proxy sent by the Company to its stockholders intend to exercise their discretion to vote on the stockholder proposal if notice of such proposal is received at the Company’s main office between 60 days and 30 days prior to the meeting. If next year’s annual meeting is held on May 23 2018, then stockholder proposals would have to be delivered to the Company between March 24, 2018 and April 23, 2018. The Company’s Certificate of Incorporation provides that if notice of a stockholder proposal to take action at next year’s annual meeting is not received at the Company’s main office between 60 days and 30 days prior to the meeting, the proposal will not be eligible for presentation at that meeting. However, if less than 31 days’ notice of the annual meeting is provided by the Company, a stockholder’s proposal would have to be received no later than 10 days after notice was mailed to the stockholders by the Company for that meeting.

 

A COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS) FOR THE PERIOD ENDED DECEMBER 31, 2016, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST TO VICKI LINDSAY, SECRETARY, GUARANTY FEDERAL BANCSHARES, INC., 1341 WEST BATTLEFIELD, SPRINGFIELD, MISSOURI 65807-4181.

 

Dated: April 24, 2017

 

 
22

 

 

[FORM OF PROXY]

 

REVOCABLE PROXY

 

|X| PLEASE MARK VOTES AS IN THIS EXAMPLE

PROXY

 

GUARANTY FEDERAL BANCSHARES, INC.

 

ANNUAL MEETING OF STOCKHOLDERS

 

May 24, 2017

 

The undersigned hereby appoints the Board of Directors of Guaranty Federal Bancshares, Inc. (the “Company”), or each of them individually, with full powers of substitution, to act as attorneys and proxies for the undersigned, to vote all shares of Common Stock of the Company which the undersigned is entitled to vote at the Annual Meeting of Stockholders (the “Meeting”), to be held at the Guaranty Bank Operations Center, 1414 W. Elfindale, Springfield, Missouri, on Wednesday, May 24, 2017, at 6:00 p.m. local time and at any and all adjournments thereof, in the following manner: (Please be sure to sign and date this Proxy below. All joint holders should sign.)

 

Date_________

 

Stockholder Signature___________________________                     

 

Stockholder Co-holder (if any) ______________________

 

 
23

 

 

1.

The election as directors of all nominees listed and the terms indicated (except as marked to the contrary below):

Three Year Terms:                                               David T. Moore

James L. Sivils, III

John F. Griesemer

 

FOR

[  ]

WITHHOLD     

[  ]

FOR ALL EXCEPT

[  ]       

 

INSTRUCTION: To withhold authority to vote for individual nominee(s), mark “For All Except” and write the name(s) in the space provided below.

 

 

2.

The advisory (non-binding) vote to approve executive compensation.

 

 

FOR

[  ]

AGAINST 

 [  ] 

 ABSTAIN

[  ]        

                             

3.

The ratification of the appointment of BKD, LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2017.

 

FOR

[  ]

AGAINST 

 [  ] 

 ABSTAIN

[  ]        

 

In their discretion, such attorneys and proxies are authorized to vote upon such other business as may properly come before the Meeting or any adjournments thereof.

 

The Board of Directors recommends a vote “FOR” all of the above listed nominees and propositions 2, and 3.

 

THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS PROPERLY PRESENTED AT SUCH MEETING, THIS SIGNED PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR DISCRETION. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.

 

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.

 

Detach above card, sign, date and mail in postage paid envelope provided.

 

GUARANTY FEDERAL BANCSHARES, INC.

 

Should the above signed be present and elect to vote at the Meeting, or at any adjournments thereof, and after written notification to the Secretary of the Company at the Meeting of the stockholder’s decision to terminate this Proxy, the power of said attorneys and proxies shall be deemed terminated and of no further force and effect. The undersigned may also revoke this Proxy by filing a subsequently dated Proxy or by written notification to the Secretary of the Company of the stockholder’s decision to terminate this Proxy. The above signed acknowledges receipt from the Company prior to the execution of this proxy of a Notice of Meeting of Stockholders, a Proxy Statement dated April 24, 2017, and an Annual Report to Stockholders for the period ended December 31, 2016.

 

Please sign exactly as your name appears on this Proxy. When signing as attorney, executor, administrator, trustee, guardian, or any other representative capacity, please give full title. If shares are held jointly, each holder should sign.

 

 
24

 

 

PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE.

 

 
25

 

 

APPENDIX A

 

Guaranty Federal Bancshares, Inc.

Nominating Committee Charter

 

Purpose

 

The Nominating Committee (the “Committee”) shall be appointed by the Board of Directors (the “Board”) of Guaranty Federal Bancshares, Inc. (the “Corporation”) for the purpose of (i) identifying individuals qualified to serve as Board members, consistent with criteria approved by the Board; (ii) recommending to the Board the director nominees for election or appointment to the Board of Directors; and (iii) recommending to the Board director nominees for each committee.

 

Committee Composition and Meetings

 

The Committee shall be comprised of three or more directors (including a chairperson) as appointed by the Board, each of whom shall be an independent director as defined by the NASDAQ Stock Market (the “NASDAQ”) listing standards and each of whom shall be free from any relationship that would interfere with the exercise of his or her independent judgment. The Board shall have the power at any time to change or replace the membership of the Committee and to fill vacancies, subject to the qualification requirements of this Charter. The Committee chairperson shall be designated by the Board, or if the Board chooses not to do so, by a majority vote of the Committee.

 

The Committee shall meet at least two times annually or more frequently as circumstances dictate. The Committee will cause to be kept adequate minutes of all its proceedings, will report its actions at the next meeting of the Board and will file the Committee minutes with the minutes of the meeting of the Board. Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent. The Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board. The Committee is authorized and empowered to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Corporation, or (c) the laws of the state of Delaware.

 

Committee Authority, Responsibilities and Process

 

The Committee shall have the following authority and responsibilities:

 

 

1.

Recommend to the Board the appropriate size of the Board and assist in identifying, interviewing and recruiting candidates for the Board.

 

 

2.

Access to the Corporation’s resources and to request that any directors, officers or employees of the Corporation, or other persons whose advice and counsel are sought by the Committee, attend any meeting of the Committee to provide such pertinent information as the Committee requests.

 

 

3.

Recommend candidates (including incumbents) for election and appointment to the Board of Directors, subject to the provisions set forth in the Corporation’s Certificate of Incorporation and Bylaws relating to the nomination or appointment of directors, based on the following criteria: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable obligations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to the Corporation’s communities and shared values, as well as overall experience in the context of the needs of the Board as a whole. The Committee shall monitor the mix of skills and experience of its directors and committee members in order to assess whether the Board has the appropriate tools to perform its oversight function effectively.

 

 
26

 

 

Taking this into account, for each year’s nominations the Committee will take the following steps:

 

 

a.

With respect to nominating existing directors, the Committee will review relevant information available to it and assess their continued ability and willingness to serve as a director. The Committee will also assess such person’s contribution in light of the mix of skills and experience the Committee has deemed appropriate for the Board.

 

 

b.

With respect to nominations of new directors, the Committee will conduct a thorough search to identify candidates based upon criteria the Committee deems appropriate and considering the mix of skills and experience necessary to complement existing Board members. The Committee will then review selected candidates and make a recommendation to the Board. The Committee may seek input from other Board members or senior management in identifying candidates.

 

 

4.

Conduct or authorize studies of or investigations into matters within the Committee’s scope of responsibilities, and may retain, at the Corporation’s expense, such counsel or other advisers as it deems necessary (which may, if the Committee deems it appropriate, be the Corporation’s legal counsel, accountants or other advisers). The Committee shall have the authority to retain or terminate one or more search firms to assist the Committee in identifying director candidates and otherwise carrying out its responsibilities, including sole authority to approve the search firm’s fees and retention terms, which fees shall be borne by the Corporation.

 

 

5.

Review nominations submitted by stockholders, which have been addressed to the corporate secretary, and which comply with the requirements of the Corporation’s Certificate of Incorporation and Bylaws. Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations.

 

 

6.

Annually (i) recommend to the Board committee assignments and committee chairs on all committees of the Board, and recommend committee members to fill vacancies on committees as necessary, and (ii) review and reassess the adequacy of this Charter and recommend any proposed changes to the Board for approval.

 

 

7.

Form and delegate authority to subcommittees when appropriate.

 

 

8.

Perform any other duties or responsibilities expressly delegated to the Committee by the Board.

 

 
27

 

 

APPENDIX B

 

COMPENSATION COMMITTEE CHARTER

 

PURPOSE

 

The Compensation Committee (the “Committee”) of Guaranty Federal Bancshares, Inc. (the “Company”) and Guaranty Bank (the “Bank”) is responsible for human resource policies, salaries and benefits, compensation arrangements and executive development.

 

COMPOSITION

 

Committee members shall be elected by the Board of Directors annually. The membership of the Committee shall consist of at least three or more directors, each of whom shall satisfy the definition of independent director as defined in any qualitative listing requirements for NASDAQ Stock Market, Inc. issuers and any applicable Securities and Exchange Commission rules and regulations. The Committee shall maintain free and open communication with Bank management. The Committee may retain outside counsel and other advisors as it determines necessary to carry out its duties. The Committee shall have sole authority to approve related fees and retention terms.

 

ORGANIZATION

 

One member of the Committee shall be appointed as chair by the Board of Directors on an annual basis. The chair shall be responsible for leadership of the Committee, including scheduling and presiding over meetings, preparing agendas, and making regular reports to the Board. The chair will also maintain regular liaison with Bank management. The Committee shall meet at least semi-annually, or more frequently as the Committee considers necessary.

 

RESPONSIBILITIES AND DUTIES

 

The general recurring activities of the Committee in carrying out its oversight role are described below. The duties specified below are not intended to limit the scope of activities of the Committee. The Committee shall have the following authority and responsibilities:

 

Establish and provide oversight regarding the Bank’s compensation and benefit plans and approve changes deemed appropriate and consistent with regulations and sound compensation principles and practices.

 

 

Recommend adjustments to the compensation of the President/Chief Executive Officer based upon its assessment of individual performance and the Bank’s performance, and make other recommendations, when appropriate, to the full Board of Directors.

 

 

Review and approve base salary and all incentive compensation payments for other officers or employees of the Bank as designated by the Committee, taking into account corporate and individual performance, as well as peer group practices and any other considerations the Committee deems appropriate.

 

 

Establish and provide oversight of all incentive compensation plans and approve changes deemed appropriate and consistent with regulations and sound compensation principles and practices.

 

 
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Serve as the administrative committee for the equity-based plans, which includes establishing, reviewing and approving all short- and long-term performance goals used to grant equity-based compensation. Establish, approve and recommend to the Stock Option Committee the grant and issuance of stock options, stock awards, and other equity awards, establishing purchase discounts for the Company’s stock purchase plans, interpreting plan provisions where necessary, and performing other administrative duties as set forth in the plan documents or from time to time as deemed appropriate.

 

Establish, review and provide oversight of the Bank’s compensation philosophy and composition of the peer group used for market comparison.

 

Review and approve all employment contractual agreements, severance agreements, and change in control agreements with Bank management.

 

Review and elect, on behalf of the Board, individuals proposed by Management to hold the position of Executive Vice President or equivalent position.

 

Evaluate director compensation and recommend to the full Board the appropriate level of director compensation, including compensation for service as a member or chair of a Board committee. 

 

Establish and periodically review stock ownership guidelines for directors and officers.

 

Monitor the Bank’s compliance with the requirements of the Sarbanes-Oxley Act of 2002 and other applicable laws, regulations and rules relating to compensation arrangements for directors, CEO, and Executive Officers.

 

Make an annual report on executive compensation for inclusion in the Company’s annual proxy statement as required by the rules or regulations promulgated by any Regulatory Authority.

 

Report regularly to the Board on its activities with such recommendations and other matters as the Committee may deem appropriate, so that the Board is informed of the Committee’s activities.

 

Periodically, but no less than annually, review and assess the adequacy of this Charter to ensure compliance with any rules or regulations promulgated by any Regulatory Authority and, when appropriate, recommend any modifications to the Board for its approval.

 

The Committee may, in its discretion, delegate any portion of its duties and responsibilities to a subcommittee of the Committee.

 

 

RESOURCES AND AUTHORITY

 

The Committee shall have the authority and resources appropriate to discharge its duties and responsibilities at the Bank’s expense, and may obtain advice from external legal, accounting, or other advisors. The Committee shall have the authority to select and retain consultants to assist in the evaluation of executive compensation, to terminate the services of any such consultant, and to approve the consultant’s fees and other retention terms, all at the Bank’s expense.

 

 
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Ultimately, the Committee acting on behalf of the Board of Directors is responsible for ensuring that the Bank’s incentive compensation arrangements for all covered employees -- not solely senior executives -- are appropriately balanced. The Committee should receive data and analysis from Bank management or other sources that are sufficient to allow the board to assess whether the overall design and performance of the Bank’s incentive compensation arrangements are consistent with the Bank’s financial condition.

 

In performing their responsibilities, Committee members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by:

 

 

One or more officers or employees of the Bank whom the Committee member reasonably believes to be reliable and competent in the matters presented.

 

 

Counsel, independent auditors, or other persons as to matters which the Committee member reasonably believes to be within the professional or expert competence of such person.

 

 

Another committee of the Board as to matters within its designated authority which the Committee member reasonably believes to merit confidence.

 

 

MANAGEMENT RESPONSIBILITIES

 

The Committee recognizes that incentive compensation serves as a key tool to attract and retain skilled staff. As such, a goal of the Committee is to properly balance such compensation arrangements with prudent operations that do not encourage excessive risk-taking. In doing so, the Committee also recognizes the following three key principles for consideration in compensation arrangements: (1) incentive compensation arrangements at the Bank should provide employees incentives that appropriately balance risk and financial results in a manner that does not encourage employees to expose the Bank to imprudent risk; (2) such arrangements should be compatible with effective controls and risk-management; and (3) these arrangements should be supported by strong corporate governance, including active and effective oversight by the Board of Directors.

 

To reinforce and support the development and maintenance of balanced incentive compensation arrangements, the Committee requires that appropriate Bank personnel, including risk management, have input in the design and assessment of such arrangements. Therefore, the Committee designates that the following members of Bank management should be involved in design recommendations, monitoring, and assessment of incentive compensation arrangements and payouts:

 

President/Chief Executive Officer & Executive Vice President Incentive Plans: President/Chief Executive Officer, Director of Risk Management, and the Human Resources Director.

 

 

Senior Vice Presidents, Vice Presidents, Mortgage Banking Personnel, Operations Personnel & Other Applicable Personnel Incentive Plans: President/Chief Executive Officer, Executive Vice Presidents, Director of Risk Management and the Human Resources Director.

 

 

These members of management are responsible for the design of incentive compensation plans as directed by the Committee. All incentive compensation plans and payments must be approved by the Committee prior to implementation. Additionally, upon approval and implementation these individuals will evaluate the effectiveness and success of the plans to be balanced from a risk and reward perspective and will provide feedback and/or make recommendations to the Committee based upon such evaluations. Furthermore, at the end of the incentive period, management will make recommendation for payout under the incentive plan to the Director of Risk Management for verification purposes. Once verification and eligibility of payout in accordance with the established plan has been conducted, the Director of Risk Management will make such recommendations for payment to the Committee. The Committee will review such recommendations and any other pertinent information in consideration of approved payments.

 

 

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