Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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))
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
First 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:
N/A
------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
N/A
------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
N/A
------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
------------------------------------------------------------------------------
(5) Total fee paid:
N/A
------------------------------------------------------------------------------
Fee paid previously with preliminary materials:
N/A
------------------------------------------------------------------------------
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:
N/A
------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
N/A
------------------------------------------------------------------------------
(3) Filing party:
N/A
------------------------------------------------------------------------------
(4) Date filed:
N/A
------------------------------------------------------------------------------
FIRST BANCSHARES, INC.
P.O. Box 777
Mountain Grove, Missouri 65711
Telephone: (417-926-5151)
October 13, 2006
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
First Bancshares, Inc. to be held at the Days Inn Conference Room, 300 East
19th Street, Mountain Grove, Missouri, on Thursday, November 9, 2006, at 2:00
p.m., Central Time.
The attached Notice of Annual Meeting of Stockholders and Proxy Statement
describe the formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Corporation. Directors
and officers of the Corporation, as well as a representative of McGladrey &
Pullen, LLP, the Corporation's independent auditors, will be present to
respond to any appropriate questions stockholders may have.
To ensure proper representation of your shares at the meeting, please
sign, date and return the enclosed proxy card in the postage-prepaid envelope
provided as soon as possible even if you currently plan to attend the meeting.
This will not prevent you from voting in person, but will assure that your
vote is counted if you are unable to attend the meeting.
Sincerely,
/s/James W. Duncan
James W. Duncan
President and
Chief Executive Officer
FIRST BANCSHARES, INC.
142 EAST FIRST STREET
MOUNTAIN GROVE, MISSOURI 65711
(417) 926-5151
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2006
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders
("Meeting") of First Bancshares, Inc. ("Corporation") will be held at the Days
Inn Conference Room, 300 East 19th Street, Mountain Grove, Missouri, on
Thursday, November 9, 2006, at 2:00 p.m., Central Time. A Proxy Card and a
Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Corporation; and
2. Such other matters as may properly come before the Meeting or any
adjournments thereof.
NOTE: The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on the
date specified above, or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Pursuant to the Corporation's
Bylaws, the Board of Directors has fixed the close of business on August 31,
2006 as the record date for the determination of the stockholders entitled to
notice of and to vote at the Meeting and any adjournments thereof.
You are requested to complete and sign the enclosed form of Proxy which
is solicited by the Board of Directors and mail it promptly in the enclosed
envelope. The Proxy will not be used if you attend the Meeting and vote in
person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Sonya Everett
Sonya Everett
SECRETARY
Mountain Grove, Missouri
October 13, 2006
IMPORTANT: THE PROMPT RETURN OF THE PROXY CARD WILL SAVE THE CORPORATION THE
EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
OF
FIRST BANCSHARES, INC.
142 EAST FIRST STREET
MOUNTAIN GROVE, MISSOURI 65711
(417) 926-5151
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 9, 2006
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of First Bancshares, Inc. ("Corporation") to
be used at the Annual Meeting of Stockholders of the Corporation ("Meeting").
The Meeting will be held at the Days Inn Conference Room, 300 East 19th
Street, Mountain Grove, Missouri, on Thursday, November 9, 2006, at 2:00 p.m.,
Central Time. The accompanying Notice of Annual Meeting of Stockholders and
this Proxy Statement are being mailed to stockholders on or about October 13,
2006. The Corporation is the holding company for First Home Savings Bank
("Savings Bank").
VOTING AND PROXY PROCEDURE
Stockholders Entitled to Vote. Stockholders of record as of the close of
business on August 31, 2006 ("Voting Record Date") are entitled to one vote
for each share of common stock of the Corporation ("Common Stock") then held.
As of the close on business on the Voting Record Date, the Corporation had
1,552,480 shares of Common Stock issued and outstanding.
As provided in the Corporation's Articles of Incorporation, record
holders of Common Stock who beneficially own, either directly or indirectly,
in excess of 10% of the Corporation's outstanding shares are not entitled to
any vote with respect to the shares they hold in excess of the 10% limit.
If you are a beneficial owner of Common Stock held by a broker, bank or
other nominee (i.e., in "street name"), you will need proof of ownership to be
admitted to the Meeting. A recent brokerage statement or letter from a bank
or broker are examples of proof of ownership. If you want to vote your shares
of Common Stock held in street name in person at the Meeting, you will have
to get a written proxy in your name from the broker, bank or other nominee who
holds your shares.
Quorum. The presence, in person or by proxy, of at least a majority of
the total number of outstanding shares of Common Stock entitled to vote is
necessary to constitute a quorum at the Meeting. Abstentions will be counted
as shares present and entitled to vote at the Meeting for purposes of
determining the existence of a quorum. Broker non-votes will be considered
shares present and will be included in determining whether a quorum is
present.
Voting. The Board of Directors solicits proxies so that each stockholder
has the opportunity to vote on the proposal to be considered at the Meeting.
When a proxy card is returned properly signed and dated, the shares
represented thereby will be voted in accordance with the instructions on the
proxy card. Where no instructions are indicated, proxies will be voted in
accordance with the recommendations of the Board of Directors. If a
stockholder of record as of the close of business on the Voting Record Date
attends the Meeting, he or she may vote by ballot. The Board recommends a
vote FOR the election of the nominees for director.
1
The two directors to be elected at the Meeting will be elected by a
plurality of the votes cast by stockholders present in person or by proxy and
entitled to vote. Stockholders are not permitted to cumulate their votes for
the election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld and broker non-votes will have no effect on
the outcome of the election because the nominees receiving the greatest number
of votes will be elected.
If a stockholder does not return a signed and dated proxy card, or does
not attend the Meeting and vote in person, his or her shares will not be
voted.
Revocation of a Proxy. The Board of Directors solicits proxies so that
each stockholder has the opportunity to vote on the proposals to be considered
at the Annual Meeting. When a proxy card is returned properly signed and
dated, the shares represented thereby will be voted in accordance with the
instructions on the proxy card. Where a proxy card is properly signed and
dated but no instructions are indicated, proxies will be voted FOR the
nominees for directors set forth below.
Stockholders who execute proxies retain the right to revoke them at any
time before they are voted. Proxies may be revoked by written notice
delivered in person or mailed to the Secretary of the Corporation or by filing
a later dated and signed proxy prior to a vote being taken on a particular
proposal at the Meeting. Attendance at the Meeting will not automatically
revoke a proxy, but a stockholder of record in attendance may request a ballot
and vote in person, thereby revoking a prior granted proxy.
If your Common Stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via telephone or the Internet. Please see the
instruction form that accompanies this proxy statement. If you wish to change
your voting instructions after you have returned your voting instruction form
to your broker or bank, you must contact your broker or bank.
Participants in the First Home Savings Bank ESOP. If a stockholder is a
participant in the First Home Savings Bank Employee Stock Ownership Plan (the
"ESOP"), the proxy card represents a voting instruction to the trustees of the
ESOP as to the number of shares in the participant's plan account. Each
participant in the ESOP may direct the trustees as to the manner in which
shares of Common Stock allocated to the participant's plan account are to be
voted. Allocated shares for which no voting instructions are received will be
voted by the trustees in the same proportion as shares for which the trustees
have received voting instructions.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons and groups who beneficially own in excess of five percent of the
outstanding shares of the Corporation's Common Stock are required to file with
the Securities and Exchange Commission ("SEC"), and furnish a copy to the
Corporation, certain reports disclosing their ownership pursuant to the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Based upon
these reports, the following table sets forth, as of the close of business on
the Voting Record Date, certain information as to those persons who were
beneficial owners of more than five percent of the outstanding shares of
Common Stock. Management knows of no persons other than those set forth below
who beneficially owned more than five percent of the outstanding shares of
Common Stock as of the close of business on the Voting Record Date. The table
also
2
sets forth, as of the close of business on the Voting Record Date, certain
information as to the shares of Common Stock beneficially owned by (a) each
current director of the Corporation and each of management's nominees for
director, (b) each of the executive officers named in the Summary Compensation
Table ("named executive officers") and (c) all executive officers and
directors of the Corporation as a group.
Names and Addresses Number of Shares Percent of Common
of Beneficial Owners Beneficially Owned (1) Stock Outstanding
-------------------- ---------------------- -----------------
Beneficial Owners of More Than 5%
First Home Savings Bank Employee
Stock Ownership Plan Trust
142 East First Street
Mountain Grove, Missouri 65711 144,916 9.33%
Tontine Financial Partners, L.P. (2)
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830 108,880 7.01
Directors
Harold F. Glass 45,649 2.94
Dr. James F. Moore, Jr. 17,250 1.11
John G. Moody 8,850 0.57
Thomas M. Sutherland (3) 25,379 1.64
Billy E. Hixon - -
Named Executive Officers (4)
James W. Duncan 7,787 0.50
Charles W. Schumacher (5) - -
Stephen H. Romines (6) 4,444 0.29
Susan J. Uchtman (7) 15,381 0.99
All Executive Officers and
Directors as a Group (seven persons) 127,702 8.20
-----------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed
to be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting and/or investment power with respect
to such security. The table includes shares owned by spouses, other
immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of
ownership, over which shares the persons named in the table may possess
voting and/or investment power. Shares held in accounts under the ESOP as
of the close of business on the Voting Record Date, as to which the
holders have voting power but not investment power, are also included as
follows: Mrs. Uchtman,15,381 shares; and all executive officers and
directors as a group, 22,788 shares. The amounts shown also include the
following number of shares which the indicated individuals have the right
to acquire within 60 days of the close of business on the Voting Record
Date, through the exercise of stock options granted pursuant to the
Corporation's 2004 Stock Option Plan ("Option Plan"): Mr. Duncan, 5,000
shares.
3
(2) Based on information disclosed in an Amended Schedule 13D, dated September
10, 2003, filed with the SEC.
(3) Includes 1,348 shares held directly, 405 shares held in his wife's IRA,
507 shares held in trust for one adult child and 23,119 held in trust for
a minor child under the Missouri Uniform Transfers to Minors Law.
(4) SEC regulations define the term "named executive officer" to include the
chief executive officer, regardless of compensation level, and the four
most highly compensated executive officers, other than the chief executive
officer, whose total annual salary and bonus for the last completed fiscal
year exceeded $100,000. Mr. Duncan, Mrs. Uchtman and Mr. Schumacher were
the Corporation's only "named executive officers" for the fiscal year
ended June 30, 2006.
(5) Mr. Schumacher resigned as the Chairman of the Board, Chief Executive
Officer and President of the Corporation and the Savings Bank effective
September 7, 2005.
(6) In connection with Mr. Schumacher's resignation, Mr. Romines was appointed
by the Board to serve as Interim President and Chief Executive Officer of
the Corporation and the Savings Bank. Mr. Romines served in this capacity
until Mr. Duncan was appointed by the Board to serve as President and
Chief Executive Officer of the Corporation and the Savings Bank effective
December 19, 2005.
(7) Mrs. Uchtman stepped down from her positions as the Chief Financial
Officer of the Corporation and the Savings Bank effective September 18,
2006.
PROPOSAL I - ELECTION OF DIRECTORS
The Corporation's Board of Directors consists of five members. Dr. James
F. Moore, Jr. has served as a director of the Corporation since 1993 and
announced in June 2006 he will not stand for reelection as a director when his
term expires this year. The Board of Directors has nominated James W. Duncan,
the Corporation's President and Chief Executive Officer, to fill the vacancy
created by Dr. Moore's retirement from the Board of Directors.
The Corporation's Bylaws provide that directors are elected for terms of
three years, approximately one-third of whom are elected annually. A majority
of the Board of Directors is comprised of independent directors, in accordance
with the requirements for companies quoted on The Nasdaq Stock Market LLC
("Nasdaq"). The Board of Directors has determined that all of the members of
the Board of Directors are independent, except for Mr. Glass, who also serves
as the Savings Bank's legal counsel, and Mr. Duncan, who serves as President
of the Corporation.
The Nominating Committee of the Board of Directors has nominated for
election as directors Harold F. Glass and James W. Duncan, each to serve for a
three-year term, or until their respective successors have been elected and
qualified. Mr. Glass is a current member of the Board of Directors of the
Corporation and the Savings Bank.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the above-named nominees. If either nominee is
unable to serve, the shares represented by all valid proxies will be voted for
the election of such substitute as the Board of Directors may recommend. At
this time, the Board knows of no reason why either nominee might be
unavailable to serve.
The Board of Directors recommends a vote "FOR" the election of Messrs.
Glass and Duncan.
The following table sets forth as to the nominee for election at the
meeting and each director continuing in office, his name, age, and the year he
first became a director. Unless
4
otherwise indicated, the principal occupation listed for each person below has
been his occupation for the past five years.
Year First Year
Elected Term
Name Age (1) Principal Occupation Director (2) Expires
---- ------- -------------------- ------------ -------
BOARD NOMINEES
Harold F. Glass 65 Partner of Millington, Glass 1978 2009(4)
& Love, a law firm located in
Springfield, Missouri
James W. Duncan 49 President and Chief Executive 2006(3) 2009(4)
Officer of the Corporation and
the Savings Bank
DIRECTORS CONTINUING IN OFFICE
John G. Moody 54 Judge of the 44th Missouri 1993 2007
Judicial Circuit
Billy E. Hixon 59 Retired partner from regional 2005 2007
CPA firm of BKD, LLP
Thomas M.
Sutherland 55 One of the owners and operators 2004 2008
of the Sutherlands Home Improve-
ment Centers group of stores
---------
(1) At June 30, 2006.
(2) Includes prior service on the Board of Directors of the Savings Bank.
(3) Mr. Duncan is not currently a director of the Corporation or the Savings
Bank.
(4) Assuming election at the Meeting.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Corporation and Savings Bank conduct their
business through meetings and committees of their respective Boards. The
Board of Directors of the Corporation and the Savings Bank meets monthly and
holds additional special meetings as needed. During the fiscal year ended June
30, 2006, the Board of Directors of the Corporation held 12 meetings and the
Board of Directors of the Savings Bank held 12 meetings. No director of the
Corporation or the Savings Bank attended fewer than 75% of the total meetings
of the respective Boards' and committee meetings on which such Board member
served during this period.
The Board of Directors of the Corporation has an Executive Committee that
consists of Messrs. Glass and Moody. The Executive Committee meets for the
purpose of acting as a long range planning committee of the Corporation and to
take any and all actions they deem necessary or appropriate between regular
meetings of the Board. This Committee did not meet during fiscal 2006.
5
The Corporation's Audit Committee consists of Messrs. Moore, Moody and
Hixon. This Committee meets for the purpose of reviewing the audit procedures
at the Corporation and the report and performance of the Corporation's
independent auditing firm, and taking such other actions and responsibilities
as shall from time to time be deemed necessary or appropriate by the
Committee. The Audit Committee has a Charter which specifies its obligations
and the Committee believes it has fulfilled its responsibilities under the
Charter. The Charter was attached as Exhibit A to the 2004 proxy statement.
Each member of the Audit Committee is "independent," in accordance with the
requirements for companies quoted on Nasdaq. The Board of Directors has
determined that Billy E. Hixon meets the definition of "audit committee
financial expert," as defined by the SEC. This Committee met four times during
fiscal 2006.
Messrs. Moore, Moody and Sutherland are members of the Compensation
Committee. Accordingly, each member of the Committee is independent in
accordance with the requirements for companies quoted on Nasdaq. The
Compensation Committee has a Charter which specifies its obligations and the
Committee believes it has fulfilled its responsibilities under the Charter.
The Compensation Committee met twice during the fiscal year ended June 30,
2006.
The Board of Directors also has a Nominating Committee, currently
consisting of Messrs. Moody, Moore, and Sutherland for selecting the nominees
for election as directors. Each member of the Committee is independent in
accordance with the requirements for companies quoted on Nasdaq. The
Nominating Committee met three times during the fiscal year ended June 30,
2006.
The Committee has a Charter which specifies its obligations. The Charter
is not available on the Corporation's website, but a copy may be obtained from
the Corporate Secretary, First Bancshares Inc., P.O. Box 777, Mountain Grove,
Missouri 65711. A copy of the Nominating Committee Charter was attached as
an exhibit to the September 2004 annual meeting proxy statement.
Only those nominations made by the Committee or properly presented by
stockholders will be voted upon at the Meeting. In its deliberations for
selecting candidates for nominees as director, the Nominating Committee
considers the candidate's knowledge of the banking business and involvement in
community, business and civic affairs, and also considers whether the
candidate would provide for adequate representation of the Savings Bank's
market area. Any nominee for director made by the Committee must be highly
qualified with regard to some or all these attributes. In searching for
qualified director candidates to fill vacancies in the Board, the Committee
solicits its current Board of Directors for names of potentially qualified
candidates. Additionally, the Committee may request that members of the Board
of Directors pursue their own business contacts for the names of potentially
qualified candidates. The Committee would then consider the potential pool of
director candidates, select the candidate the Committee believes best meets
the then-current needs of the Board, and conduct a thorough investigation of
the proposed candidate's background to ensure there is no past history that
would cause the candidate not to be qualified to serve as a director of the
Corporation. The Committee will consider director candidates recommended by
the Corporation's stockholders. If a stockholder submits a proposed nominee,
the Committee would consider the proposed nominee, along with any other
proposed nominees recommended by members of the Corporation's Board of
directors, in the same manner in which the Committee would evaluate its
nominees for director. For a description of the proper procedure for
stockholder nominations, see "Stockholder Proposals" in this proxy statement.
6
Compensation Committee Interlocks and Insider Participation. No members
of the Compensation Committee were officers or employees of the Corporation or
any of its subsidiaries during the year ended June 30, 2006, were formerly
Corporation officers or had any relationships otherwise requiring disclosure.
Communications with the Board of Directors and Attendance at Annual Meetings
The Board of Directors maintains a process for stockholders to
communicate with the Board of Directors. A stockholder may communicate with
the Board of Directors or any individual director by mailing a written
communication to the Corporate Secretary, First Bancshares, Inc., P.O. Box
777, Mountain Grove, Missouri 65711. The Corporate Secretary will forward such
communication to the full Board of Directors or to any individual director or
directors to whom the communication is directed unless the communication is
unduly hostile, threatening, illegal or similarly inappropriate, in which case
the Corporate Secretary has the authority to discard the communication or take
appropriate legal action regarding the communication.
All directors are requested to attend the Corporation's annual meetings
of stockholders. All directors attended the 2005 Annual Meeting of
Stockholders.
Corporate Governance
The Corporation and the Savings Bank are committed to establishing and
maintaining high standards of corporate governance. The Board of Directors is
cognizant of its responsibility to comply with the provisions contained in the
Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted
thereunder, and Nasdaq with respect to corporate governance. The Board and
its committees will continue to evaluate and improve the Corporation's and the
Savings Bank's corporate governance principles and policies as necessary and
as required.
Code of Ethics. On August 25, 2004, the Board Directors adopted the
Officer and Director Code of Ethics. The Code is applicable to each of the
Corporation's directors and officers, including the principal executive
officer and senior financial officers, and requires individuals to maintain
the highest standards of professional conduct. A copy of the Code of Ethics
is available upon request by contacting the Corporate Secretary, First
Bancshares, Inc., P.O. Box 777, Mountain Grove, Missouri 65711.
DIRECTORS' COMPENSATION
Members of the Board of Directors of the Corporation do not receive any
fees. Members of the Board of Directors of the Savings Bank currently receive
a fee of $600 per Board meeting, Director Glass receives $43 per meeting as a
travel allowance and $157 per meeting for legal fees. No fees are paid to
directors for attendance at committee meetings. Total fees paid to directors
of the Savings Bank during the fiscal year ended June 30, 2006 were $31,250.
During the fiscal year ended June 30, 2006, non-employee Directors
Sutherland and Hixon each were granted options to acquire 1,000 shares of
Common Stock under the Corporation's 2004 Stock Option Plan. The options vest
at a rate of 20% per year over a five year period. Options will become
immediately exercisable in the event of a change in control of the
Corporation.
7
EXECUTIVE COMPENSATION
Summary Compensation Table
The following information is furnished for Messrs. Duncan, Schumacher,
Romines and Mrs. Uchtman. No other executive officer of the Corporation or
the Savings Bank received salary and bonus in excess of $100,000 during the
year ended June 30, 2006.
Long-Term
Compensation
Annual Compensation(1) Awards
------------------------ ----------
Other
Annual Securities All Other
Compen- Underlying Compen-
Name and Salary sation Options sation
Position Year ($)(2) ($)(3) (#)(4) ($)(5)
-------- ---- -------- ------- ---------- ---------
James W. Duncan (6) 2006 81,368 -- 30,000 --
President and Chief Executive
Officer of the Corporation
and the Savings Bank
Charles W. Schumacher (7) 2006 59,827 -- -- 67,724
President and Chief Executive 2005 142,150 -- -- --
Officer of the Corporation 2004 131,100 -- -- 2,249
and the Savings Bank
Stephen H. Romines (8) 2006 -- -- -- 6,000
Interim President and Chief 2005 -- -- -- --
Executive Officer of the 2004 23,225 -- -- --
Corporation and the Savings
Bank
Susan J. Uchtman (9) 2006 101,790 -- -- 234
Chief Financial Officer 2005 96,878 -- -- --
of the Corporation and the 2004 91,676 -- -- 56,634
Savings Bank
-----------
(1) All compensation, including fringe benefits, is paid by the Savings Bank.
(2) Amounts for fiscal 2006 include: for Mr. Schumacher, Chairman of the
Board fees of $2,275.
(3) Does not include perquisites which did not exceed $50,000 or 10% of
salary and bonus.
(4) Mr. Duncan was granted 30,000 incentive stock options on December 15,
2005 in connection with his employment with the Corporation. Other than
5,000 options that were vested immediately, the remaining 25,000 options
vest at the rate of 20% per year.
(5) Amounts for fiscal year 2006 reflect: for Mr. Schumacher, automobile
allowance of $3,705, travel allowance for spouse of $673, cash received
for accrued personal and vacation leave earned but not taken of $21,346,
and severance payment of $42,000 in connection with resignation; for Mr.
Romines, a consulting fee for six months at $1,000 per month; and for
Mrs. Uchtmann, matching 401(k) contribution.
(6) Mr. Duncan joined the Corporation in December 2005.
(7) Mr. Schumacher resigned as the Chairman of the Board, Chief Executive
Officer and President of the Corporation and the Savings Bank effective
September 7, 2005.
(footnotes continued on following page)
8
(8) In connection with Mr. Schumacher's resignation, Mr. Romines was
appointed by the Board to serve as Interim President and Chief Executive
Officer of the Corporation and the Savings Bank. Mr. Romines retired as
Chairman of the Board, President and Chief Executive Officer of the
Corporation and as Vice President of the Savings Bank effective June 30,
2004.
(9) Mrs. Uchtman stepped down from her positions as the Chief Financial
Officer of the Corporation and the Savings Bank effective September 18,
2006.
Option Grant Table
The following table sets forth information concerning the grant of stock
options to the Chief Executive Officer during the fiscal year ended June 30,
2006. No options were awarded to Mr. Schumacher, Mr. Romines and Mrs. Uchtman
during fiscal 2006.
Number of Securities
Underlying Options
Name Granted (1) Exercise Price Expiration Date
--------------- -------------------- -------------- ---------------
James W. Duncan 30,000 $17.79 12/15/2010
-----------
(1) The reported option grants vest at the rate of 20% per year. Options will
become immediately exercisable in the event of a change in control of the
Corporation. Except for 5,000 shares that were vested immediately, the
remainder vest at the rate of 20% per year.
Option Exercise/Value Table
The following table sets forth information with respect to the number and
value of stock options held at June 30, 2006 by the Chief Executive Officer
and the named executive officers.
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options at
Options at FY-End($)(1)
Shares FY-End (#)
Acquired on Value Exercisable Exercisable
Name Exercise (#) Realized($) Unexercisable Unexercisable
---- ------------ ----------- ------------- -------------
James W. Duncan -- -- 5,000/25,000 -- / --
Charles W. Schumacher -- -- -- / -- -- / --
Stephen H. Romines -- -- -- / -- -- / --
Susan J. Uchtman -- -- -- / -- -- / --
---------
(1) Value of unexercised in-the-money stock options equals the market value
of shares covered by in-the-money options on June 30, 2006 less the
option exercise price. Options are in-the-money if the market value of
shares covered by the options is greater than the exercise price.
Employment Agreement
The Savings Bank has entered into an employment agreement with Mr. Duncan
effective December 15, 2005. The agreement has a term of one year and may be
renewed by the Board for an additional year each year unless the Board has
given Mr. Duncan advance written notice of their intention not to extend the
term of the agreement. The agreement further provides for a base salary which
may not be reduced. Mr. Duncan's current base salary under the agreement
is
9
$160,000 and is subject to annual review by the Board. Under the agreement,
Mr. Duncan is eligible to participate in retirement and employee benefit
programs available to employees of the Savings Bank as well as any programs
made available to executive officers.
In the event of involuntary termination without cause other than after a
change of control which occurs during the term of this Agreement, the Bank
shall pay to Mr. Duncan his salary, for a period of six months following such
termination, at the rate in effect immediately prior to the date of
termination, payable in such manner and at such times as the salary would have
been payable to Mr. Duncan if he had continued to be employed by the Savings
Bank. If Mr. Duncan's employment terminates by reason of this death, the
Savings Bank will pay his salary which was not previously paid and which he
would have earned if he had continued to be employed under this Agreement
through the last day of the calendar month in which he died, together with the
benefits provided hereunder through such date.
In the event of Mr. Duncan's termination without cause with or within 12
months before or after a Change of Control, the Savings Bank shall pay in a
lump sum in cash within 25 business days after the date of termination an
amount equal to 299% of the Employee's "base amount" as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"). In the
event that a change of control of the Savings Bank had occurred on June 30,
2006, based solely on the cash compensation paid to Mr. Duncan during 2006 and
excluding the value of any other employee benefits which may be payable, Mr.
Duncan would have received a payment of approximately $478,000. For purposes
of the agreement, a "change of control" will be deemed to have occurred if at
any time during this agreement: (1) any person or persons acting in concert
has or have beneficial ownership of twenty-five percent (25%) or more of the
common stock of Corporation; (2) during any period of twenty-four (24)
consecutive months, individuals who at the beginning of such period constitute
the Savings Bank's or the Corporation's Board of Directors cease for any
reason to constitute at least a majority of the Board, unless the election of
each director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds (2/3) of the
directors then in office who were directors at the beginning of the period; or
(3) approval by the Corporation's stockholders of a plan of reorganization,
merger or consolidation of the Savings Bank or the Corporation, sale of all or
substantially all of the assets of the Savings Bank or the Corporation, a
similar transaction in which the Savings Bank or the Corporation is not the
resulting entity of such transaction.
The Corporation and the Savings Bank entered into a severance agreement
and general release with Charles W. Schumacher on October 31, 2005 in
connection with his termination of employment. The material terms of the
agreement provided for Mr. Schumacher to receive a payment of $42,000 in
consulting fees and for unused vacation and personal days. Following his
resignation on September 7, 2005, and as provided by the agreement, Mr.
Schumacher served as a consultant to the Corporation and the Savings Bank
through November 21, 2005. The agreement also provided for Mr. Schumacher's
release of the Savings Bank and its directors, employees and agents from all
claims and demands arising out of or in connection with his prior employment
contract with the Savings Bank and any matters related to his employment with
the Savings Bank. Similarly, the agreement provided for the Savings Bank's
release of Mr. Schumacher from any claims arising out of his employment with
the Savings Bank.
AUDIT COMMITTEE MATTERS
Audit Committee Charter. The Audit Committee operates pursuant to a
Charter approved by the Corporation's Board of Directors. A copy of the Audit
Committee Charter was attached to the 2004 annual meeting proxy statement as
Exhibit A. The Audit Committee reports
10
to the Board of Directors and is responsible for overseeing and monitoring
financial accounting and reporting, the system of internal controls
established by management and the audit process of the Corporation. The Audit
Committee Charter sets out the responsibilities, authority and specific duties
of the Audit Committee. The Charter specifies, among other things, the
structure and membership requirements of the Audit Committee, as well as the
relationship of the Audit Committee to the independent accountants, the
internal audit department, and management of the Corporation.
Audit Committee Report. The Corporation's Audit Committee has issued the
following report with respect to the audited financial statements of the
Corporation for the fiscal year ended June 30, 2006.
* The Audit Committee has reviewed and discussed with the Corporation's
management the Corporation's fiscal 2006 audited financial
statements;
* The Audit Committee has discussed with the Corporation's independent
auditors (McGladrey & Pullen, LLP) the matters required to be
discussed by Statement on Auditing Standards No. 61;
* The Audit Committee has received the written disclosures and letter
from the independent auditors required by Independence Standards
Board No. 1 (which relates to the auditors' independence from the
Corporation and its related entities) and has discussed with the
auditors their independence from the Corporation; and
* Based on the review and discussions referred to in the three items
above, the Audit Committee recommended to the Board of Directors that
the fiscal 2006 audited financial statements be included in the
Corporation's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2006.
Submitted by the Audit Committee of the Corporation's Board of Directors:
Billy E. Hixon
John G. Moody
Dr. James F. Moore, Jr.
TRANSACTIONS WITH MANAGEMENT
Mr. Harold F. Glass, a director of the Savings Bank and the Corporation,
is a partner with the law firm of Millington, Glass & Love, which firm serves
as legal counsel for the Corporation, the Savings Bank and its subsidiary. As
counsel for the Corporation and the Savings Bank for the fiscal year ended
June 30, 2006, Millington, Glass & Love was paid $47,395 in fees and expense
reimbursement, which amount did not exceed five percent of the law firm's
annual gross revenues.
The above-described transactions were made on terms no less favorable to
the Savings Bank and the Corporation than ones with unaffiliated third
parties.
The Savings Bank, like many financial institutions, has followed the
policy of granting loans to its officers, directors and employees on the
security of their primary residences and also
11
makes consumer loans to such persons. Loans to such persons are made in the
ordinary course of business on substantially the same terms, including
interest rate and collateral, as those prevailing at the time for comparable
transactions with other persons. Management believes that these loans neither
involve more than the normal risk of collectability nor present other
unfavorable features. The Savings Bank has never granted loans to its
directors and officers on preferred terms. In accordance with the requirements
of applicable law, loans to executive officers and directors of the
Corporation or the Savings Bank are made on substantially the same terms,
including interest rates, fees and collateral, as those prevailing at the time
for comparable transactions with other persons, and, in the opinion of
management, do not involve more than the normal risk of collectability or
present other unfavorable features. At June 30, 2006, loans to directors and
executive officers, including immediate family members, totaled $532,652.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires certain officers of the
Corporation and its directors, and persons who beneficially own more than ten
percent of any registered class of the Common Stock, to file reports of
ownership and changes in ownership with the SEC and the Corporation.
Based solely on a review of the report and written representations
provided to the Corporation, the Corporation believes that during the fiscal
year ended June 30, 2006, all filing requirements applicable to its reporting
officers, directors and greater than ten percent beneficial owners were
properly and timely complied with.
AUDITORS
McGladrey & Pullen, LLP served as the Corporation's independent auditors
for the fiscal year ended June 30, 2006. The Audit Committee of the Board of
Directors has appointed McGladrey & Pullen, LLP as the independent auditors
for the fiscal year ending June 30, 2007. A representative of McGladrey &
Pullen, LLP will be present at the Meeting to respond to shareholders'
questions and will have the opportunity to make a statement if he or she so
desires.
On April 26, 2006, the Audit Committee of the Corporation selected
McGladrey & Pullen, LLP to serve as the Corporation's independent public
accountants for the fiscal year ending June 30, 2006. The Corporation
terminated its engagement of Kirkpatrick, Phillips & Miller, CPAs, P.C. as its
independent accountants effective April 26, 2006. The decision to change
accountants was approved by the Corporation's Audit Committee and Board of
Directors on April 26, 2006.
In connection with the audit for the 2005 fiscal year and through April
26,2006, (1) there were no disagreements with Kirkpatrick, Phillips & Miller,
CPAs, P.C. on any matter of accounting principle or practice, financial
statement disclosure, auditing scope or procedure, whereby such disagreements,
if not resolved to the satisfaction of Kirkpatrick, Phillips & Miller, CPAs,
P.C., would have caused them to make reference thereto in their report on the
financial statements for such years; and (2) there have been no reportable
events (as defined in Item 304(a)(1)(iv) of Regulation S-B).
The Corporation requested that Kirkpatrick, Phillips & Miller, CPAs, P.C.
furnish it with a letter addressed to the SEC, stating whether they agree with
the foregoing statements, and if not, stating the respects in which they do
not agree. The required letter from Kirkpatrick, Phillips &
12
Miller, CPAs, P.C. with respect tothe above statements made by the Corporation
was filed as an exhibit to the Current Report on Form 8-K filed by the
Corporation on May 2, 2006.
The report of Kirkpatrick, Phillips & Miller, CPAs, P.C. on the
Corporation's financial statements for fiscal year ended June 30, 2005
contained no adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
The Corporation had not consulted with McGladrey & Pullen, LLP during
2005 or the period from July 1, 2005 through April 26, 2006, on either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion McGladrey & Pullen, LLP
might issue on the Corporation's financial statements.
The following table sets forth the aggregate fees billed, or expected to
be billed, to the Corporation by McGladrey & Pullen, LLP for professional
services rendered for the fiscal year ended June 30, 2006.
June 30,
------------------
2006 2005
---- ----
Audit Fees (1) $136,279 $ -
Audit-Related Fees - -
Tax Fees 12,500 -
All Other Fees - -
------------
(1) Fees for 2006 include estimated amounts to be billed.
The Audit Committee will establish general guidelines for the permissible
scope and nature of any permitted non-audit services to be provided by the
independent auditors in connection with its annual review of its Charter.
Pre-approval may be granted by action of the full Audit Committee or by
delegated authority to one or more members of the Audit Committee. If this
authority is delegated, all approved non-audit services will be presented to
the Audit Committee at its next meeting. In considering non-audit services,
the Audit Committee or its delegate will consider various factors, including
but not limited to, whether it would be beneficial to have the service
provided by the independent auditors and whether the service could compromise
the independence of the independent auditors.
OTHER MATTERS
The cost of solicitation of proxies will be borne by the Corporation. In
addition to solicitations by mail, directors, officers and regular employees
of the Corporation may solicit proxies personally or by telecopier or
telephone without additional compensation.
The Board of Directors of the Corporation is not aware of any business to
come before the Meeting other than those matters described in this Proxy
Statement. However, if any other matters should properly come before the
Meeting, it is intended that proxies in the accompanying form will be voted in
respect thereof in accordance with the judgment of the person or persons
voting the proxies.
FINANCIAL STATEMENTS
The Corporation's 2006 Annual Report to Stockholders, including
consolidated financial statements, accompanies this Proxy Statement and has
been mailed to all stockholders of record
13
as of the close of business on the Voting Record Date. Any stockholder who has
not received a copy of such Annual Report may obtain a copy by writing to the
Secretary of the Corporation. The Annual Report is not to be treated as part
of the proxy solicitation material or as having been incorporated herein by
reference.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Corporation's
annual meeting to be held in October 2007 must be received by the Corporation
no later than June 15, 2007 to be considered for inclusion in the proxy
materials and form of proxy relating to such meeting. Any such proposals shall
be subject to the requirements of the proxy rules adopted under the Exchange
Act.
The Corporation's Bylaws provide that in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before an annual meeting, the stockholder must deliver notice of
nominations and/or proposals to the Secretary of the Corporation not less than
30 nor more than 60 days prior to the date of the annual meeting; provided
that if less than 40 days' notice of the annual meeting is given to
stockholders, the stockholder's notice must be delivered not later than the
close of the tenth day following the day on which notice of the annual meeting
was mailed to stockholders. The Corporation anticipates that, in order to be
timely, stockholder nominations or proposals intended to be made at this
year's Meeting must be made by October 23, 2006. As specified in the Articles
of Incorporation, the notice with respect to nominations for election of
directors must set forth certain information regarding each nominee for
election as a director, including that person's written consent to being named
in the proxy statement as a nominee and to serving as a director, if elected,
and certain information regarding the stockholder giving the notice. The
notice with respect to business proposals to be brought before the Meeting
must state the stockholder's name, address and number of shares of Common
Stock held, and briefly discuss the business to be brought before the Meeting,
the reasons for conducting such business at the Meeting and any interest of
the stockholder in the proposal.
BY ORDER OF THE BOARD OF DIRECTORS
/s/SONYA EVERETT
SONYA EVERETT
SECRETARY
Mountain Grove, Missouri
October 13, 2006
FORM 10-KSB
A COPY OF THE FORM 10-KSB AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT
CHARGE TO STOCKHOLDERS OF RECORD AS OF THE CLOSE OF BUSINESS ON AUGUST 31,
2006 UPON WRITTEN REQUEST TO SONYA EVERETT, SECRETARY, FIRST BANCSHARES, INC.,
P.O. BOX 777, MOUNTAIN GROVE, MISSOURI 65711.
THE CORPORATION'S FORMS 10-KSB, 10-QSB AND OTHER DISCLOSURE DOCUMENTS FILED
WITH THE SEC CAN BE OBTAINED FROM THE SEC'S HOME PAGE ON THE WORLD WIDE WEB AT
http://www.sec.gov.
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS SAMPLE FIRST BANCSHARES, INC.
With For All
For hold Except
1. The election as
ANNUAL MEETING OF STOCKHOLDERS director of the [ ] [ ] [ ]
NOVEMBER 9, 2006 nominees listed
The undersigned hereby appoints John G. Harold F. Glass
Moody and Thomas M. Sutherland as the James W. Duncan
official Proxy Committee of the Board of
Directors with full powers of substitu- INSTRUCTION: To withhold
tion, as attorneys and proxies for the authority to vote for the
undersigned, to vote all shares of nominee, mark "For All
common stock of First Bancshares, Inc. Except" and write the
which the undersigned is entitled to vote nominee's name in the space
at the Annual Meeting of Stockholders, provided below.
to be held at the Days Inn Conference
Room, 300 East 19th Street, Mountain
Grove, Missouri, on Thursday, November
9, 2006 at 2:00 p.m., Central Time, and ------------------------------
at any and all adjournments thereof, as
follows:
---------
Please be sure to sign and Date The Board of Directors recommends a
date this Proxy in the Vote "FOR" the above proposal.
box below.
-------------------------------------- THIS PROXY WILL BE VOTED AS DIRECTED,
BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE
-------------------------------------- PROPOSITION STATED. IF ANY OTHER
Stockholder sign Co-holder (if any) BUSINESS IS PRESENTED AT SUCH MEET-
above sign above ING, THIS PROXY WILL BE VOTED BY THE
THOSE NAMED IN THIS PROXY IN THEIR
BEST JUDGMENT. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE
MEETING.
------------------------------------------------------------------------------
Detach above card, sign, date and mail in
postage paid envelope provided.
FIRST BANCSHARES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the above signed be present and elect to vote at the Annual
Meeting or at any adjournment thereof and after notification to the Secretary
of the Corporation at the Meeting of the stockholder's decision to terminate
this proxy, then the power of said attorneys and proxies shall be deemed
terminated and of no further force and effect.
The above signed acknowledges receipt from the Corporation prior to the
execution of this proxy of notice of the Meeting, a proxy statement dated
October 13, 2006 and the 2006 Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give full
title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
-------------------------
-------------------------
-------------------------