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
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Filed by a Party other than the Registrant
o
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Check the appropriate box:
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x
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Preliminary Proxy Statement
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o
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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o
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Definitive Proxy Statement
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o
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Definitive Additional Materials
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o
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Soliciting Material under §240.14a-12
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POAGE BANKSHARES, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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x
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No fee required.
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o
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities
to which transaction applies:
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(2)
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Aggregate number of securities
to which transaction applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate
value of transaction:
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(5)
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Total fee paid:
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o
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Fee paid previously with preliminary materials.
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o
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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.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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[mail date], 2014
Dear Stockholder:
We cordially invite you to attend the Annual
Meeting of Stockholders of Poage Bankshares, Inc. The Annual Meeting will be held at The Park Place, located at 1701 Central Avenue,
Ashland, Kentucky 41101 on May 20, 2014, at 10:00 a.m., local time.
The enclosed Notice of Annual Meeting and
Proxy Statement describe the formal business to be transacted. During the Annual Meeting we will also report on the operations
of Poage Bankshares, Inc. Also enclosed for your review is our 2013 Annual Report to Stockholders, which contains detailed information
concerning our activities and operating performance. Our directors and officers, as well as a representative of our independent
registered public accounting firm, will be present to respond to any questions that stockholders may have.
The business to be conducted at the Annual
Meeting consists of (i) the election of three directors, (ii) the consideration of an advisory, non-binding proposal with respect
to the executive compensation as described in the Proxy Statement, and (iii) the ratification of the appointment of Crowe Horwath
LLP as independent registered public accounting firm for the year ending December 31, 2014. The Board of Directors has determined
that the matters to be considered at the Annual Meeting are in the best interest of Poage Bankshares, Inc. and its stockholders,
and the Board of Directors unanimously recommends a vote “FOR” each matter to be considered.
We believe our current stock price and the
continued payment of quarterly dividends are reflective of an increase in shareholder value, and the successful acquisition of
Town Square Financial Corporation is reflective of our desire to grow operations and increase profitability. Because of the important
role our directors serve in the continuing improvement of the Company’s overall results, and in creating shareholder value,
the Board of Directors unanimously recommends a vote “FOR” the election of Stuart N. Moore, Charles W. Robinson and
Thomas Burnette. In addition, the Board of Directors unanimously recommends a vote “FOR” the non-binding proposal with
respect to executive compensation; and “FOR” the ratification of the appointment of Crowe Horwath, LLP.
Your vote will be especially important at
this year’s Annual Meeting of Stockholders because the Company has received notice that Joseph Stilwell and a group of affiliated
entities that he controls (the “Stilwell Group”) intend to nominate one director to the Company’s Board of Directors.
The Board of Directors strongly urges you to support the Company’s nominees.
To support the Board’s
nominees, please complete, sign and date only the Company’s WHITE proxy card, and return it in the enclosed postage-paid
envelope, and do not sign or return any other proxy card sent to you by the Stilwell Group. Please sign and return your WHITE proxy
even if you currently plan to attend the Annual Meeting.
You may have received
a communication from the Stilwell Group, asking you to return their green proxy card. We urge you to not sign and return the green
proxy card. Please return the enclosed WHITE proxy card and discard the green proxy card from the Stilwell Group. If you have already
returned the green proxy card from the Stilwell Group, we urge you to change your vote by promptly signing, dating and returning
the enclosed WHITE proxy card or voting by telephone or internet using the instructions on the WHITE proxy card. Only the latest
dated proxy card or vote you submit will be counted. Your vote is important, regardless of the number of shares that you own. Voting
by proxy will not prevent you from voting in person, but will assure that your vote is counted if you are unable to attend the
meeting.
Our Proxy Statement and the 2013 Annual
Report to Stockholders are available at
www.proxyonline.com/docs/poage.pdf
.
Sincerely,
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[GRAPHIC]
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J. Thomas Rupert
Chairman of the Board
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Poage Bankshares, Inc.
1500 Carter Avenue
Ashland, Kentucky 41101
(606) 324-7196
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 20, 2014
Notice is hereby given that the Annual Meeting
of Stockholders of Poage Bankshares, Inc. will be held at The Park Place, located at 1701 Central Avenue, Ashland, Kentucky 41101
on May 20, 2014, at 10:00 a.m., local time.
A WHITE Proxy Card and Proxy Statement for
the Annual Meeting are enclosed. The Annual Meeting is for the purpose of considering and acting upon:
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1.
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the election of three directors;
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2.
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an advisory, non-binding proposal resolution with respect to the executive compensation as described in the proxy statement;
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3.
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the ratification of the appointment of Crowe Horwath LLP as independent registered public accounting firm for the year ending
December 31, 2014; and
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such other matters as may
properly
come before the Annual
Meeting, or any adjournments thereof. The Board of Directors is not aware of any other business to come before the Annual Meeting.
Any action may be taken on the foregoing
proposals at the Annual Meeting on the date specified above, or on the date or dates to which the Annual Meeting may be adjourned.
Stockholders of record at the close of business on April 4, 2014 are the stockholders entitled to vote at the Annual Meeting, and
any adjournments thereof.
EACH STOCKHOLDER, WHETHER HE OR SHE PLANS
TO ATTEND THE ANNUAL MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS VOTED. A PROXY MAY BE REVOKED BY FILING WITH
THE SECRETARY OF POAGE BANKSHARES, INC. A WRITTEN REVOCATION OR A DULY EXECUTED PROXY CARD BEARING A LATER DATE. ANY STOCKHOLDER
PRESENT AT THE ANNUAL MEETING MAY REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL MEETING.
HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER IN ORDER TO VOTE IN PERSON AT THE ANNUAL MEETING.
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By Order of the Board of Directors
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[GRAPHIC]
James W. King
Secretary
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Ashland, Kentucky
[mail date], 2014
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN
THE UNITED STATES.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2014: THE PROXY STATEMENT, INCLUDING THE NOTICE OF THE ANNUAL MEETING
OF STOCKHOLDERS, AND POAGE BANKSHARES, INC.’S 2013 ANNUAL REPORT TO STOCKHOLDERS ON FORM 10-K ARE EACH AVAILABLE ON THE INTERNET
AT
www.proxyonline.com/docs/poage.pdf
.
PROXY STATEMENT
Poage Bankshares, Inc.
1500 Carter Avenue
Ashland, Kentucky 41101
(606) 324-7196
ANNUAL MEETING OF STOCKHOLDERS
May 20, 2014
This Proxy Statement is
furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Poage Bankshares, Inc. to be used
at the Annual Meeting of Stockholders, which will be held at The Park Place, located at 1701 Central Avenue, Ashland, Kentucky
41101 on May 20, 2014, at 10:00 a.m., local time, and all adjournments of the Annual Meeting. The accompanying Notice of Annual
Meeting of Stockholders and this Proxy Statement are first being mailed to stockholders on or about [mail date], 2014. OUR BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE BOARD’S NOMINEES USING THE ENCLOSED WHITE PROXY CARD AND URGES
YOU NOT TO SIGN OR RETURN OR VOTE ANY PROXY CARD SENT TO YOU BY OTHER PARTIES.
You may have received
a communication from the Stilwell Group, asking you to return their green proxy card. We urge you to not sign and return the green
proxy card. Please return the enclosed WHITE proxy card and discard the green proxy card from the Stilwell Group. If you have already
returned the green proxy card from the Stilwell Group, you may change your vote by promptly signing, dating and returning the enclosed
WHITE proxy card or voting by telephone or internet using the instructions on the WHITE proxy card. Only the latest dated proxy
card or vote you submit will be counted.
REVOCATION OF PROXIES
Stockholders who execute proxies in the
form solicited hereby retain the right to revoke them in the manner described below. Unless so revoked, the shares represented
by such proxies will be voted at the Annual Meeting and all adjournments thereof. Proxies solicited on behalf of the Board of Directors
of Poage Bankshares, Inc. will be voted in accordance with the directions given thereon.
Please sign and return your WHITE proxy
card in the postage paid envelope provided. Where no instructions are indicated on the WHITE proxy card, signed proxies will be
voted “FOR” the election of the nominees for director named herein, “FOR” the advisory, non-binding resolution
with respect to the executive compensation as described in the proxy statement, and “FOR” the ratification of the appointment
of Crowe Horwath, LLP as our independent registered public accountants for the year ending December 31, 2014.
Proxies may be revoked
by sending written notice of revocation to the Secretary of Poage Bankshares, Inc. at the address shown above, or by filing a duly
executed proxy bearing a later date or by following the internet or phone instructions on the enclosed WHITE proxy card or by voting
in person at the Annual Meeting. The presence at the Annual Meeting of any stockholder who had given a proxy shall not revoke such
proxy unless the stockholder delivers his or her ballot in person at the Annual Meeting or delivers a written revocation to our
Secretary prior to the voting of such proxy.
If you have any questions about giving your
proxy or require assistance, please call:
Phoenix Advisory Partners, LLC
110 Wall Street, 27th Floor
New York, New York 10005
For shareholder questions:
877-478-5038.
For banks and brokers: 212-493-3910.
If you are a stockholder whose shares are
not registered in your name, you will need appropriate documentation from your record holder to vote in person at the Annual Meeting.
SOLICITATION OF PROXIES; EXPENSES
The cost of soliciting
proxies will be borne by the Company. The Company has retained Phoenix Advisory Partners, LLC (“Phoenix”) in conjunction
with the Meeting, and will pay a fee not to exceed $30,000, plus reasonable out-of-pocket travel-related expenses, for proxy solicitation
services. Phoenix expects that approximately 15 of its employees will assist in the solicitation. Our directors and certain executive
officers may supplement the proxy solicitor’s solicitation of proxies by mail, personally, by telephone, by press release,
by facsimile transmission or by other electronic means. No additional compensation will be paid to our directors or employees for
such services. Appendix A sets forth information relating to the Company’s directors and employees who are considered “participants”
in our solicitation under the rules of the Securities and Exchange Commission (“SEC”). Phoenix may ask brokerage houses,
banks and other custodians and nominees whether other persons are beneficial owners of the Company’s common stock. If so,
the Company will reimburse brokers, banks and other custodians and nominees for their costs of sending our proxy materials to the
beneficial owners of our common stock.
As a result of the actions
by the Stilwell Group, we estimate we may incur approximately $250,000 of additional expense in furtherance of, and in connection
with, the solicitation in excess of that normally spent for an annual meeting, including attorney fees, public relations fees,
and printer costs incurred in connection with the preparation and filing of preliminary proxy materials with the SEC and the preparation
of additional solicitation materials, and the fees of Phoenix, of which we estimate that approximately $28,500 of expense has been
incurred to date. However, this estimate does not include the costs represented by salaries and wages of officers and employees
of the Company engaged in the solicitation process, costs we would normally incur in an uncontested director election or any costs
associated with any potential litigation that may arise in connection with the proxy solicitation. Furthermore, the actual amount
of additional expense we may incur could be materially different from what we currently estimate, depending on possible actions
that might be taken by the Stilwell Group in connection with this proxy contest.
VOTING SECURITIES AND PRINCIPAL HOLDERS
Except as otherwise noted below, holders
of record of Poage Bankshares, Inc.’s shares of common stock, par value $0.01 per share, as of the close of business on April
4, 2014 are entitled to one vote for each share then held. As of April 4, 2014, there were 3,904,884 shares of common stock issued
and outstanding, including 557,621 shares of common stock issued to shareholders of Town Square Financial Corporation in connection
with the acquisition of Town Square Financial Corporation and Town Square Bank.
Principal Holders
Persons and groups who beneficially own
in excess of 5% of the shares of common stock are required to file certain reports with the Securities and Exchange Commission
regarding such ownership. The following table sets forth, as of April 4, 2014, the shares of common stock beneficially owned by
our directors and executive officers, individually and as a group, and by each person who was known to us as the beneficial owner
of more than 5% of the outstanding shares of common stock. The mailing address for each of our directors and executive officers
and the Home Federal Savings and Loan Association Employee Stock Ownership Plan is 1500 Carter Avenue, Ashland, Kentucky 41101.
Name and Address of Beneficial Owners
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Amount
of Shares
Owned and Nature
of Beneficial
Ownership
(1
),
(2)
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Percent of Shares
of Common Stock
Outstanding
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Five Percent Stockholders
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Home Federal Savings and Loan Association ESOP
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269,688
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6.91
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%
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Joseph Stilwell
Stilwell Partners, L.P.
Stilwell Value LLC
Stilwell Value Partners II, L.P.
Stilwell Value Partners V, L.P.
Stilwell Value Partners VII, L.P
Stilwell Activist Fund, L.P.
Stilwell Activist Investments, L.P.
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318,471
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(3)
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8.16
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%
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111 Broadway, 12
th
Floor
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New York, New York 10006
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Ithan Creek Master Investors (Cayman), L.P.
Wellington Hedge Management, LLC
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315,817
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(4)
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8.09
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%
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c/o Wellington Management Company, LLP
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280 Congress Street
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Boston, Massachusetts 02210
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Sandler O’Neill Asset Management, LLC
SOAM Holdings, LLC
Terry Maltese
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260,333
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(5)
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6.67
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%
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150 East 52
nd
Street, 30
th
Floor
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New York, New York 10022
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Directors and Executive Officers
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J. Thomas Rupert, Chairman of the Board
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41,494
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(6)
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1.06
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%
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Ralph E. Coffman, Jr., President, Chief Executive Officer and Director
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30,859
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(7)
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*
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Darryl E. Akers, Director
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7,846
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(8)
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*
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Thomas Burnette, Director
(19)
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61,715
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1.58
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%
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Thomas P. Carver, Director
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40,800
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(9)
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1.04
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%
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Everett B. Gevedon, Director
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40,494
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(10)
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1.04
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%
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Stuart N. Moore, Director
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44,194
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(11)
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1.13
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%
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Charles W. Robinson, Director
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41,994
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(12)
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1.07
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%
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John C. Stewart, Jr., Director
(19)
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34,933
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(13)
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*
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James W. King, Executive Vice President, Chief Information Officer and Secretary
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24,658
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(14)
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*
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Jane Gilkerson, Executive Vice President and Chief Financial Officer
(20)
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2,886
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(15)
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*
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Miles R. Armentrout, Executive Vice President and Chief Credit Officer
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14,443
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(16)
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*
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Bruce Van Horn, Executive Vice President
(21)
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23,886
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(17)
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*
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Jeffery W. Clark, Senior Vice President and Controller
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24,251
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(18)
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*
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All directors and executive officers as a group (14 persons)
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423,482
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10.76
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%
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(1)
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In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a person is deemed to be the beneficial owner for
purposes of this table, of any shares of common stock if he has shared voting or investment power with respect to such security,
or has a right to acquire beneficial ownership at any time within 60 days from the date as of which beneficial ownership is being
determined. As used herein, “voting power” is the power to vote or direct the voting of shares and “investment
power” is the power to dispose or direct the disposition of shares, and includes all shares held directly as well as by spouses
and minor children, in trust and other indirect ownership, over which shares the named individuals effectively exercise sole or
shared voting or investment power.
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(2)
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As of the voting record date. An aggregate of 16,760 shares held in our employee stock ownership plan have been allocated to
participant accounts. The trustee will vote the unallocated stock in proportion to the voting instructions received from plan participants
with respect to the allocated shares.
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(3)
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Based on a Schedule 13D filed with the Securities and Exchange Commission on February 24, 2014, and taking into account, for
purposes of calculating the percent of outstanding shares, the issuance of shares in connection with the acquisition of Town Square
Financial Corporation.
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(4)
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Based on a Schedule 13G/A filed with the Securities and Exchange Commission on February 14, 2014, and taking into account,
for purposes of calculating the percent of outstanding shares, the issuance of shares in connection with the acquisition of Town
Square Financial Corporation.
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(5)
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Based on a Schedule 13D filed with the Securities and Exchange Commission on October 31, 2013, and taking into account, for
purposes of calculating the percent of outstanding shares, the issuance of shares in connection with the acquisition of Town Square
Financial Corporation.
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(6)
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Includes 15,000 shares held by Mr. Rupert’s wife, over which Mr. Rupert is deemed to have shared voting and dispositive
power together with his wife, 8,094 unvested shares of restricted stock and options to purchase 2,400 shares of stock that have
vested or will vest within 60 days of the record date.
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(7)
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Includes 4,171shares held by an IRA for the benefit of Mr. Coffman, 14,838 unvested shares of restricted stock and options to
purchase 11,500 shares of stock that have vested or will vest within 60 days of the record date.
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(8)
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Includes 2,135 shares held by our employee stock ownership plan, 2,698 unvested shares of restricted stock and options to purchase
2,400 shares of stock that have vested or will vest within 60 days of the record date.
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(9)
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Includes 15,000 shares held by Mr. Carver’s wife, over which Mr. Carver is deemed to have shared voting and dispositive
power together with his wife, 8,094 unvested shares of restricted stock and options to purchase 2,400 shares of stock that have
vested or will vest within 60 days of the record date.
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(10)
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Includes 15,000 shares held by the estate of Mr. Gevedon’s mother of which Mr. Gevedon is the executor, over which Mr.
Gevedon is deemed to have voting and dispositive power, 8,094 unvested shares of restricted stock and options to purchase 2,400
shares of stock that have vested or will vest within 60 days of the record date.
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(11)
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Includes 15,000 shares held by Mr. Moore’s wife, over which Mr. Moore is deemed to have shared voting and dispositive
power together with his wife, 8,094 unvested shares of restricted stock and options to purchase 2,400 shares of stock that have
vested or will vest within 60 days of the record date.
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(12)
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Includes 15,000 shares held by Mr. Robinson’s wife, over which Mr. Robinson is deemed to have shared voting and dispositive
power together with his wife, 8,094 unvested shares of restricted stock and options to purchase 2,400 shares of stock that have
vested or will vest within 60 days of the record date.
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(13)
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Includes 11,644 share held jointly with Mr. Stewart’s spouse, over which Mr. Stewart is deemed to have shared voting
and dispositive power, and 23,289 shares held by the John C. Stewart, Jr. and Mary Patricia Stewart Living Trust, for which Mr.
Stewart serves as trustee.
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(14)
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Includes 1,415 shares held by our employee stock ownership plan, 9,443 unvested shares of restricted stock and options to purchase
5,000 shares of stock that have vested or will vest within 60 days of the record date.
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(15)
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Includes 34 shares held by Ms. Gilkerson’s spouse, over which Ms. Gilkerson is deemed to have shared voting and
dispositive power, and 2,852 shares held in an IRA for the benefit of Ms. Gilkerson.
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(16)
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Includes 9,443 unvested shares of restricted stock and options to purchase 5,000 shares of stock that have vested or will vest
within 60 days of the record date.
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(17)
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Includes 18,211 shares held jointly with Mr. Van Horn’s spouse, over which Mr. Van Horn is deemed to have shared voting
and dispositive power, and 5,801 shares held by an IRA for the benefit of Mr. Van Horn.
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(18)
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Includes 9,443 unvested shares of restricted stock and options to purchase 2,450 shares of stock that have vested or will vest
within 60 days of the record date.
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(19)
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Messrs. Burnette and Stewart were appointed to the Board of Directors on March 19, 2014 in connection with the acquisition
of Town Square Financial Corporation.
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(20)
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Ms. Gilkerson was appointed as Executive Vice President and Chief Financial Officer of Poage Bankshares, Inc. and Home
Federal Savings and
Loan Association on March 19, 2014 in connection with the
acquisition of Town Square Financial Corporation and Town Square Bank.
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(21)
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Mr. Van Horn was appointed as Executive Vice President of Poage Bankshares, Inc. and President of Home Federal Savings
and Loan Association on March 19, 2014 in connection with the acquisition of Town Square Financial Corporation and Town
Square Bank.
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Quorum
The presence in person or by proxy of a
majority of the outstanding shares of common stock entitled to vote is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining that a quorum is present.
Limitations on Voting
In accordance with the
provisions of our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10% of the outstanding
shares of common stock (the “Limit”) are not entitled to any vote with respect to the shares held in excess of the
Limit. Our Articles of Incorporation authorize the Board of Directors (i) to make all determinations necessary to implement and
apply the Limit, including determining whether persons or entities are acting in concert, and (ii) to demand that any person who
is reasonably believed to beneficially own stock in excess of the Limit supply information to us to enable the Board of Directors
to implement and apply the Limit.
Method of Counting Votes
As to the election of directors, the WHITE
Proxy Card being provided by the Board of Directors enables a stockholder to vote FOR ALL NOMINEES proposed by the Board, to WITHHOLD
AUTHORITY FOR ALL NOMINEES or to vote FOR ALL EXCEPT one or more of the nominees being proposed. Directors are elected by a plurality
of votes cast, without regard to either broker non-votes or proxies as to which the authority to vote for the nominees being proposed
is withheld. Plurality means that individuals who receive the highest number of votes cast are elected, up to the maximum number
of directors to be elected at the annual meeting.
In voting on the advisory, non-binding resolution
with respect to our executive compensation, a stockholder may: (i) vote FOR the proposal; (ii) vote AGAINST the proposal; or (iii)
ABSTAIN from voting on the proposal. To approve the proposal, the affirmative vote of a majority of the votes cast on the matter
at the Annual Meeting, without regard to broker non-votes or shares as to which the “ABSTAIN” box has been selected
on the proxy card, is required to approve this non-binding resolution. While this vote is required by law, it will neither be binding
on us or the Board of Directors, nor will it create or imply any change in the fiduciary duties of, or impose any additional fiduciary
duty on us or the Board of Directors.
As to the ratification of the appointment
of Crowe Horwath LLP as our independent registered public accounting firm, by checking the appropriate box, a stockholder may:
(i) vote FOR the ratification; (ii) vote AGAINST the ratification; or (iii) ABSTAIN from voting on such ratification. The affirmative
vote of a majority of the votes cast on the matter at the Annual Meeting, without regard to broker non-votes or shares as to which
the “ABSTAIN” box has been selected on the proxy card, is required for the ratification of Crowe Horwath LLP as the
independent registered public accounting firm for the year ending December 31, 2014.
In the event at the
time of the Meeting there are not sufficient votes for a quorum or to approve or ratify any matter being presented, the Meeting
may be adjourned in order to permit the further solicitation of proxies.
Proxies solicited hereby
will be returned to us and will be tabulated by IVS Associates, Inc., the inspector of election designated by our Board of Directors.
IF YOU HAVE ALREADY
RETURNED A GREEN PROXY CARD TO THE STILWELL GROUP, WE URGE YOU TO CHANGE YOUR VOTE BY SIGNING, DATING, AND RETURNING THE
ENCLOSED
WHITE PROXY CARD
TO SUPPORT THE BOARD’S NOMINEES.
Participants in the Home Federal Savings
and Loan Association ESOP
If you participate in the Home Federal Savings
and Loan Association Employee Stock Ownership Plan (the “ESOP”), you will receive a WHITE Vote Authorization Form for
each plan that reflects all of the shares you may direct the trustees to vote on your behalf under the plan. Under the terms of
the ESOP, the ESOP trustee votes all shares held by the ESOP, but each ESOP participant may direct the trustee how to vote the
proportionate interest of shares of Company common stock allocated to his or her account. The ESOP trustee, subject to the exercise
of its fiduciary responsibilities, will vote all unallocated shares of Company common stock held by the ESOP and allocated shares
for which no voting instructions are received in the same proportion as shares for which it has received timely voting instructions,
subject to a determination that such vote is in the best interest of ESOP participants.
You may have received a communication from
the Stilwell Group, asking you to return a green vote authorization form for the ESOP vote. We urge you to not sign and return
the green vote authorization form. Please return the enclosed WHITE ESOP Vote Authorization Form and discard the green vote authorization
form from the Stilwell Group. If you have already returned the green vote authorization form from the Stilwell Group, we urge you
to change your vote by promptly signing, dating and returning the enclosed WHITE ESOP Vote Authorization Form or voting by telephone
or internet using the instructions on the WHITE ESOP Vote Authorization Form. Only the latest dated vote authorization form or
vote you submit will be counted.
The deadline for returning your WHITE ESOP Vote Authorization Form is Wednesday, May 14
,
2014 at 5:00 p.m. Kentucky Time
. Telephonic and internet voting cutoff is 5:00 p.m. Kentucky Time.
PROPOSAL I—ELECTION OF DIRECTORS
Our Board
of Directors is comprised of nine members. Our Bylaws provide that directors are divided into three classes, with one class
of directors elected annually. Our directors are generally elected to serve for a three-year period and until their
respective successors shall have been elected and shall qualify. Three directors will be elected at the Annual Meeting to
serve for a three-year period and until their respective successors shall have been elected and shall qualify. The Nominating
Committee of the Board of Directors has nominated the following persons to serve as directors for three-year terms: Stuart N.
Moore, Charles W. Robinson and Thomas Burnette. Each of Messrs. Moore, Robinson and Burnette is currently a director of
Poage Bankshares, Inc. Mr. Burnette was appointed to the Board of Directors on March 19, 2014 in connection with the
acquisition of Town Square Financial Corporation. Messrs. Moore, Robinson and Burnette have agreed to serve, if elected. The
Board believes that all of the nominees possess the background and experience that make them valuable contributors to the
success of the Company. Messrs. Moore and Robinson have long standing ties to the local community that we have historically
served and extensive knowledge of the needs of our current customers. Mr. Burnette has long standing ties to the communities
served by Town Square Bank and extensive knowledge of its customers. The Board further believes that Messrs. Moore and
Robinson have contributed to the successful implementation of our business plan and the continuing improvement in the
Company’s operating results, and that Mr. Burnette contributed to the success of Town Square Financial Corporation and
Town Square Bank and will be essential to the ongoing integration of Town Square Financial Corporation and Town Square Bank
with our operations. Accordingly, the Board strongly urges you to support the Company’s nominees, and recommends a vote
“FOR” the election of the nominees.
The table below sets forth certain information
regarding the nominees, the other current members of our Board of Directors, and executive officers who are not directors, including
the terms of office of board members. It is intended that the proxies solicited on behalf of the Board of Directors (other than
proxies in which the vote is withheld as to any nominee) will be voted at the Annual Meeting for the election of the proposed nominees.
If a nominee is unable to serve, the shares represented by all such proxies will be voted for the election of such substitute as
the Board of Directors may determine. At this time, the Board of Directors knows of no reason why any of the nominees might be
unable to serve, if elected. There are no arrangements or understandings between any of the nominees and any other person pursuant
to which the nominees were selected, except that Mr. Burnette was appointed pursuant to the terms of the Agreement and Plan of
Merger setting forth the terms and conditions of the acquisition of Town Square Financial Corporation and Town Square Bank.
Name
|
|
Position(s) Held With
Poage Bankshares, Inc.
|
|
Age
(1)
|
|
Director
Since
(2)
|
|
Current Term
Expires
|
NOMINEES
|
Stuart N. Moore
|
|
Director
|
|
56
|
|
2005
|
|
2014
|
Charles W. Robinson
|
|
Director
|
|
67
|
|
1996
|
|
2014
|
Thomas Burnette
(3)
|
|
Director
|
|
66
|
|
2014
|
|
2014
|
CONTINUING DIRECTORS
|
Ralph E. Coffman, Jr.
|
|
President and Chief Executive Officer
|
|
62
|
|
2013
|
|
2016
|
Everett B. Gevedon
|
|
Director
|
|
55
|
|
1998
|
|
2016
|
John C. Stewart, Jr.
(3)
|
|
Director
|
|
69
|
|
2014
|
|
2016
|
J. Thomas Rupert
|
|
Chairman of the Board
|
|
67
|
|
1981
|
|
2015
|
Darryl E. Akers
|
|
Director
|
|
62
|
|
1991
|
|
2015
|
Thomas P. Carver
|
|
Director
|
|
63
|
|
2006
|
|
2015
|
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
|
Jane Gilkerson
|
|
Executive Vice President and Chief Financial Officer
|
|
52
|
|
N/A
|
|
N/A
|
Bruce Van Horn
(4)
|
|
Executive Vice President
|
|
59
|
|
N/A
|
|
N/A
|
Jeffery W. Clark
|
|
Senior Vice President and Controller
|
|
55
|
|
N/A
|
|
N/A
|
Miles R. Armentrout
|
|
Executive Vice President and Chief Credit Officer
|
|
57
|
|
N/A
|
|
N/A
|
James W. King
|
|
Executive Vice President, Chief Information Officer and Secretary
(5)
|
|
56
|
|
N/A
|
|
N/A
|
_____________________
|
(1)
|
As of December 31, 2013.
|
|
(2)
|
Includes service with Home Federal Savings and Loan Association and Poage Bankshares, Inc.
|
|
(3)
|
Messrs. Burnette and Stewart were appointed to the Board of Directors on March 19, 2014 in connection with the acquisition
of Town Square Financial Corporation and Town Square Bank. Each of Messrs. Burnette and Stewart had served as a director of Town
Square Financial Corporation and Town Square Bank since 2011.
|
|
(4)
|
Mr. Van Horn also serves as President of Home Federal Savings and Loan Association.
|
|
(5)
|
Mr. King is currently a director of Home Federal Savings and Loan Association, and has served in that capacity since 1997.
His current term as director of Home Federal Savings and Loan Association expires in 2014.
|
The biographies of each of the nominees,
continuing board members and executive officers are set forth below. With respect to directors and nominees, the biographies also
contain information regarding the person’s business experience and the experiences, qualifications, attributes or skills
that caused the Nominating Committee to determine that the person should serve as a director. Each director of Poage Bankshares,
Inc. is also a director of Home Federal Savings and Loan Association.
Director Nominees
Stuart N. Moore, DMD
is a
director. He recently retired from dentistry after practicing for twenty-five years in the Ashland area. He is currently President
of Jasmine Properties LLC, which owns and manages residential and commercial rental properties. Dr. Moore obtained his real estate
sales license in 1993 and is employed by Robinson Realty. Dr. Moore has served on the board of directors of Home Federal Savings
and Loan Association since 2005, and was selected to serve as a director of Poage Bankshares, Inc. because his knowledge of real
estate value from construction, comparable sales and income approaches are helpful in evaluating loan approvals, as well as experience
reviewing financial statements.
Charles W. Robinson
is a director.
He is a certified public accountant who has worked extensively with businesses operating in the Home Federal Savings and Loan Association
community. Mr. Robinson has worked in public accounting since 1973. Mr. Robinson performed the audit of Home Federal Savings and
Loan Association prior to becoming a director. Mr. Robinson has experience in real estate. Mr. Robinson has served as a director
of Home Federal Savings and Loan Association since 1996, and was selected to serve as a director of Poage Bankshares, Inc. because
his experience in public accounting and real estate provides a broad and unique perspective on the challenges facing our organization
and our business strategies and operations, and because his experience as a certified public accountant provides unique insight
into our financial accounting practices and procedures, financial reporting and our relationship with our auditors.
Thomas Burnette
is a director.
He was appointed in March 2014 in connection with the acquisition of Town Square Financial Corporation and Town Square Bank after
serving on the boards of directors of those institutions since 2011. Mr. Burnette has been the President and Owner of Ashland Office
Supply, Inc. since 1978. He is a graduate of Morehead State University. Mr. Burnette has served in a variety of capacities at civic
and community organizations in Boyd County, including the Ashland Kiwanis Club, Ashland National Little League, United Way of Boyd
and Greenup Counties, King’s Daughters’ Health Foundation, Community Hospice, the YMCA, the Boyd County Public Library,
Junior Achievement of the Ohio Valley, ACC Entrepreneur Center, the Ashland Planning Commission, the Woodlands Foundation and the
Kentucky Heart Institute and Kingsbrook Lifecare Center. He has also previously served as a director of the Bank of Ashland and
Fifth-Third Bank of Ashland. Mr. Stewart was selected to serve as a director of Poage Bankshares because his extensive involvement
in the management of a local business provides insight as to the lending needs of owners and operators of small businesses in our
market area, and because his prior service on the board of directors of Town Square Bank and other financial institutions with
operations in our market area will provide insight into the integration of Town Square Bank and Home Federal. In addition, his
extensive community service will be beneficial to Home Federal Savings and Loan Association’s operations.
Directors
Ralph E. Coffman, Jr.
is President
and Chief Executive Officer of Poage Bankshares, Inc. and Chief Executive Officer of Home Federal Savings and Loan Association.
He has been employed in the community banking industry since 1971. Most recently, he served as President, Chief Operating Officer
and Interim Chief Executive Officer of First Security Group, Chattanooga, Tennessee from 2010 to 2012, as President of State of
Ohio total banking operations of WesBanco Bank, Cincinnati, Ohio from 2007 to 2009, and in a variety of positions, including President
and Chief Executive Officer, Chief Administrative Officer and Area President and Branch Administrator at Oak Hill Financial, Inc.,
Jackson, Ohio, and its subsidiaries from 1996 to 2007. Mr. Coffman was selected to serve as a director because his extensive experience
in the banking industry in our market area provides a broad and unique perspective on the challenges facing our organization and
our business strategies and operations, and because his involvement in community organizations and trade associations are beneficial
to Home Federal Savings and Loan Association’s lending operations.
Everett B. Gevedon, MD
is
a director. He is President and Chief Executive Officer of Family Allergy Services, Inc., a position he has held for 23 years.
Dr. Gevedon is a founding member and past Chairman of the Ashland Alliance, the new Chamber of Commerce and Economic Development
serving a two-county area. He also served as Chairman of the City of Ashland’s Economic Development Board for five years.
His other community service and business activities include current service on the Ashland City Park Board and the Boyd County
Board of Health. Dr. Gevedon has previously served as Chairman of the Ashland Tourism Commission and as a board member of the Ashland
Community College Foundation and the Highlands Museum and Discovery Center. Dr. Gevedon has served as a director of Home Federal
Savings and Loan Association since 1998. He was selected to serve as a director of Poage Bankshares, Inc. because his long experience
as President and Chief Executive Officer of a small business provides insight to Home Federal as to the lending needs of owners
and operators of small businesses in our market area. Further, his extensive experience on area economic development boards provides
insight into economic conditions and business development projects within our market area, as well as contacts with area commercial
loan prospects.
John C. Stewart, Jr.
is a
director. He was appointed in March 2014 in connection with the acquisition of Town Square Financial Corporation and Town Square
Bank after serving on the boards of directors of those institutiosn since 2011. He retired as President of Big Sandy Furniture,
Inc. in April 2010 after dedicating 42 years to the company where he began his career in 1968 as a salesperson. Mr. Stewart is
a life-long resident of Ashland, Kentucky and he graduated from the University of Kentucky with a B. S. in Business/Economics.
Mr. Stewart previously served on the Board of Directors for Community Trust and National City Bank. Mr. Stewart is very active
in civic and educational organizations within Boyd County, including service on the Executive Committee of KDMC, as Chairman of
the Board of ACTC, and as Financial Secretary of Holy Family Church and School. Mr. Stewart was selected to serve as a director
of Poage Bankshares because his extensive involvement in the management of a local business provides insight as to the lending
needs of owners and operators of small businesses in our market area, and because his prior service on the board of directors of
Town Square Bank will provide insight into the integration of Town Square Bank and Home Federal.
J. Thomas Rupert
is Chairman
of the Board of Directors. He has been a member of the board of directors of Home Federal Savings and Loan Association since 1981
and has served as Chairman of the Board since 2006. He retired as President of Kentucky-Rupert Insurance Agency, Inc., an independent
insurance agency in Ashland, Kentucky, on December 31, 2010 after 15 years in that position. Mr. Rupert is a past board member
of the Ashland Area Chamber of Commerce and is a member and past President of the Kiwanis Club of Ashland. Mr. Rupert was selected
to serve as a director of Poage Bankshares, Inc. because his experience in insurance and financial services provides insight and
perspective with respect to general business operations, as well as experience reviewing financial statements. Further, Mr. Rupert’s
extensive business contacts derived from his senior positions with the area Chamber of Commerce and the Kiwanis Club of Ashland
have been beneficial to Home Federal Savings and Loan Association’s commercial loan operations.
Darryl E. Akers
is a director.
Mr. Akers was appointed to the board of directors of Home Federal Savings and Loan Association in 1991 and became President and
Chief Executive Officer in 1997. He served in that role or as Co-President and Co-Chief Executive Officer until his retirement
in May, 2012. He was employed by Home Federal Savings and Loan Association from 1973 until 2012, and held several positions prior
to being named President and Chief Executive Officer, including President, Vice President, loan officer and controller. Mr. Akers
was selected to serve as a director of Poage Bankshares, Inc. because his extensive experience in a variety of roles at Home Federal
Savings and Loan Association, including as senior loan officer, provides a broad and unique perspective on the challenges facing
our organization and our business strategies and operations.
Thomas P. Carver
is a director.
He served, until his retirement in 2012, as President of Light Express, Inc. (since 1997), Cascar Management & Leasing Corp.
(since 1993) and Light Logistics, Inc. (since 1989). Mr. Carver has served as a director of Home Federal Savings and Loan Association
since 2006, and was selected to serve as director of Poage Bankshares, Inc. because his extensive experience as president of several
different businesses provides a broad and unique perspective on the challenges facing the senior management of our organization
and our business strategies and operations.
Proxy Contest
Joseph Stilwell and a group of affiliated
entities that he controls (the “Stilwell Group”) has notified the Company that they intend to nominate one person for
election as a director at the Annual Meeting. Accordingly, there may be four nominees for election to the Board, but only three
nominees will be elected. The Stilwell Group consists of Stilwell Value Partners II, L.P., Stilwell Value Partners V, L.P., Stilwell
Value Partners VII, L.P., Stilwell Activist Fund, L.P., Stilwell Activist Investments, L.P., Stilwell Partners, L.P., Stilwell
Value LLC, and Mr. Joseph Stilwell. No other nominations of persons for election as directors of the Company were submitted to
the Company pursuant to the advance notice provisions of the Company’s bylaws.
The Stilwell Group has filed preliminary
proxy material with the SEC to solicit proxies in support of its candidate. The Stilwell Group’s candidate has NOT been endorsed
by our Board of Directors. We are not responsible for the accuracy of any information provided by or relating to the Stilwell Group
contained in any proxy solicitation materials filed or to be filed or disseminated by, or on behalf of, the Stilwell Group or any
other statements that the Stilwell Group may otherwise make.
We urge you to elect the directors recommended
by the Board, by completing the attached WHITE proxy card and returning it in the enclosed postage-paid envelope. The Board recommends
that you DO NOT sign or return any proxy card that may be sent to you by the Stilwell Group or anyone else.
Voting against
another person’s nominees on a proxy card sent to you by that person is not the same as voting for the Board’s nominees,
because a vote against another person’s nominees on its proxy card will revoke any previous proxy submitted by you. If you
have previously submitted the green proxy card to the Stilwell Group, we urge you to revoke that proxy by voting in favor of the
Board’s nominees by using the enclosed WHITE proxy card. Only the latest validly executed proxy that you submit will be counted.
Executive Officers Who Are Not Directors
Bruce Van Horn
was appointed
as Executive Vice President of Poage Bankshares, Inc. and President of Home Federal Savings and Loan Association in March 2014.
Previously, he served as is President, Chief Executive Officer and Chairman of the Board of Town Square Financial Corporation and
Town Square Bank. Mr. Van Horn has worked in the financial industry since 1987. He began his banking
career with Third National Bank serving as Vice President and Branch Administrator
where he was responsible for seven branches in the Boyd and Greenup County markets.
Mr. Van Horn was one of the originators of Town Square Bank and held the position of
Executive Vice President and Chief Operations Officer. In July of 2001, he was promoted
to President and Chief Executive Officer and later named Chairman of the Board. Mr. Van Horn’s educational background
includes an associate degree
in chemistry from the University of
Kentucky, a Bachelor of Business Administration from
Marshall University,
and an MBA from Morehead State University. He has also graduated
from
the Kentucky School of Banking at the University of Louisville and the Graduate
School of Banking at Louisiana State University. Mr. Van Horn is very active in
several not-for profit organizations within Boyd County, and currently is an officer within
those organizations.
Jane Gilkerson
was appointed
as Executive Vice President and Chief Financial Officer of Poage Bankshares, Inc. and Home Federal Savings and Loan Association
in March 2014. Previously, she served as Senior Vice President and Chief Financial Officer of Town Square Financial Corporation
and Town Square Bank
since February 2003. Before joining Town Square
Bank, Ms. Gilkerson worked for Hayflich &
Steinberg CPA in
Huntington, West Virginia from February 2000 to February 2003. Prior to entering public accounting, Ms. Gilkerson worked in the
banking industry since 1979, including as internal auditor at Matewan National Bank in Matewan, West Virginia and controller of
First Bank of Ceredo in Ceredo, West Virginia. From
1996 to February
2000, Ms. Gilkerson served as Chief Financial Officer of First Sentry
Bank in Huntington, West Virginia where she assisted in the opening of the de novo bank.
She is a Certified Public Accountant licensed to practice in West Virginia. She holds a Bachelor of
Business Administration in Accounting from Marshall University. Ms. Gilkerson currently serves as
Treasurer for Hope’s Place, a not-for-profit organization, in Ashland, Kentucky.
Jeffery W. Clark
is Senior
Vice President and Controller of Poage Bankshares, Inc. and Home Federal Savings and Loan Association. He served as Chief Financial
Officer from September 2011 until March 2014, after serving as Senior Accountant of Home Federal Savings and Loan Association since
July 2011. He previously served as Vice President and Chief Financial Officer of Ohio River Bank, Ironton, Ohio since July
2007. Prior to his employment with Ohio River Bank, he served as Deputy Treasurer with the Lawrence County, Ohio Treasurers
Office since March 2006. Prior to his employment with the County Treasurers Office, Mr. Clark served as Southeastern Ohio
Market Area President for Classic Bank, Ashland, Kentucky since May 2003. Prior to this position, Mr. Clark served as Controller
of First Federal Savings Bank of Ironton, Ohio since September 1986 and Chief Financial Officer of its holding company, First Federal
Financial Bancorp of Ironton, Ohio, since 1996.
Miles R. Armentrout
, was appointed
Executive Vice President and Chief Credit Officer of Poage Bankshares, Inc. and Home Federal Savings and Loan Association in June
2012. He previously served as Senior Vice President and Senior Loan Officer of Farmers and Merchants Bank, Miamisburg, Ohio since
2011. Prior to his employment with Farmers and Merchants Bank, he served as Executive Vice President and Senior Commercial Banking
Officer with WesBanco Bank, Wheeling, West Virginia since 2007 and Executive Vice President and Chief Lending Officer for Oak Hill
Banks, Jackson, Ohio since 2005. Prior to this position, he served as Regional President for the Western Ohio markets since 2003
and Senior Vice President and Senior Loan Officer of Oak Hill subsidiary bank, Towne Bank, Cincinnati, Ohio since 2001. Mr. Armentrout
served as Regional Executive of Sky Bank, Bowling Green, Ohio since 1999 and as a Vice President and Commercial Loan Officer for
Mid-American Bank and Trust Company, Bowling Green, Ohio since 1993. Prior to that position, he served in various lending management
and commercial lending positions with Farmers Banking Company, Lakeview, Ohio and BancOhio National Bank, Columbus, Ohio since
1978.
James W. King
currently serves
as Executive Vice President, Chief Information Officer and Secretary, and as a member of the board of directors of Home Federal
Savings and Loan Association. Mr. King was appointed to the board of directors of Home Federal Savings and Loan Association in
1997. Mr. King has been employed by Home Federal Savings and Loan Association since 1983, and has held several positions prior
to being named Executive Vice President in 1997 and adding the title of Chief Information Officer in 2010. Mr. King was selected
to serve as a director of Home Federal Savings and Loan Association because his experience in a variety of roles at Home Federal
Savings and Loan Association provides perspective on the challenges facing our organization and our business strategies and operations.
Board Independence
The Board of Directors has determined that
each of Poage Bankshares, Inc.’s directors, with the exception of Messrs. Akers and Coffman, is “independent”
as defined in Rule 4200(a)(15) of the listing standards of the NASDAQ Stock Market. Mr. Akers is not independent by virtue
of his employment as Co-President and Co-Chief Executive Officer within the past three years, and Mr. Coffman is not independent
by virtue of his current employment as President and Chief Executive Officer.
In determining the independence of the other
directors, the Board of Directors considered the following facts, which are not required to be disclosed under “Transactions
With Certain Related Persons” pursuant to applicable SEC rules: that during the fiscal year ended December 31, 2013, Home
Federal Savings and Loan Association paid $74,490 for office furniture and supplies and during the fiscal years ended December
31, 2013, 2012 and 2011, Town Square Bank paid $43,000, $26,000 and $91,000, respectively, for office furniture and supplies to
Ashland Office Supplies, a company of which Director Thomas Burnette is President and owner. The Board of Directors determined
that the payment of market prices for office furniture and supplies does not interfere with Mr. Burnette’s exercise of independent
judgment in carrying out his responsibilities as a director.
Board Leadership Structure and Risk Oversight
To assure effective and independent oversight
of management, the Board of Directors separated the roles of Chief Executive Officer and Chairman of the Board in recognition of
the differences between these two roles in management of the Company. The Chief Executive Officer is responsible for setting the
strategic direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board
provides guidance to the Chief Executive Officer, sets the agenda for Board meetings and presides over meetings of the full Board.
The Chairman of the Board is an independent, non-management role. In addition, to minimize the risk involved with having our President
and Chief Executive Officer serve on the Board of Directors, the independent directors meet in executive sessions periodically
to discuss certain matters such as our independent audit and internal controls. We believe our structure is appropriate given the
relatively small size and simple operating philosophy of our organization.
The Board of Directors is actively involved
in oversight of risks that could affect Poage Bankshares, Inc. This oversight is conducted in part through committees of the Board
of Directors, but the full Board of Directors has retained responsibility for general oversight of risks. The Board of Directors
satisfies this responsibility through full reports by each committee chair regarding the committee’s considerations and actions,
as well as through regular reports directly from officers responsible for oversight of particular risks within Poage Bankshares,
Inc. and Home Federal Savings and Loan Association, as well as through internal and external audits. Risks relating to the direct
operations of Home Federal Savings and Loan Association are further overseen by the Board of Directors of Home Federal Savings
and Loan Association, which includes an additional experienced director and our Chief Information Officer, James W. King. The Board
of Directors of Home Federal Savings and Loan Association also has additional committees that conduct risk oversight separate from
Poage Bankshares, Inc. Further, the Board of Directors oversees risks through the establishment of policies and procedures that
are designed to guide daily operations in a manner consistent with applicable laws, regulations and risks acceptable to the organization.
References to our Website Address
References to our website address throughout
this proxy statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements
of the Securities and Exchange Commission’s rules. These references are not intended to, and do not, incorporate the
contents of our website by reference into this proxy statement or the accompanying materials.
Section 16(a) Beneficial Ownership Reporting Compliance
Our executive officers and directors and
beneficial owners of greater than 10% of the outstanding shares of common stock are required to file reports with the Securities
and Exchange Commission disclosing beneficial ownership and changes in beneficial ownership of our common stock. Securities and
Exchange Commission rules require disclosure if an executive officer, director or 10% beneficial owner fails to file these reports
on a timely basis. Based on our review of ownership reports required to be filed for the year ended December 31, 2013, no executive
officer, director or 10% beneficial owner of our shares of common stock failed to file ownership reports on a timely basis.
Code of Ethics
Poage Bankshares, Inc. has adopted a Code
of Ethics that is applicable to its senior financial officers, including the principal executive officer, principal financial officer,
principal accounting officer and all officers performing similar functions. We have posted this Code of Ethics on our Internet
website at www.hfsl.com.
Attendance at Annual Meetings of Stockholders
Poage Bankshares, Inc. does not have a written
policy regarding director attendance at annual meetings of stockholders, although directors are expected to attend these meetings
absent unavoidable scheduling conflicts.
Communications with the Board of Directors
Any stockholder who wishes to contact our
Board of Directors or an individual director may do so by writing to: Poage Bankshares, Inc., 1500 Carter Avenue, Ashland, Kentucky
41101, Attention: Secretary. The letter should indicate that the sender is a stockholder and if shares are not held of record,
should include appropriate evidence of stock ownership. Communications are reviewed by the Secretary and are then distributed to
the Board of Directors or the individual director, as appropriate, depending on the facts and circumstances outlined in the communications
received. The Secretary may attempt to handle an inquiry directly or forward a communication for response by the director or directors
to whom it is addressed. The Secretary has the authority not to forward a communication if it is primarily commercial in nature,
relates to an improper or irrelevant topic, or is unduly hostile, threatening, illegal or otherwise inappropriate.
Meetings and Committees of the Board of Directors
The business of Poage Bankshares, Inc. is
conducted at regular and special meetings of the Board of Directors and its committees. In addition, the “independent”
members of the Board of Directors (as defined in the listing standards of the NASDAQ Stock Market) meet in executive sessions.
The standing committees of the Board of Directors of Poage Bankshares, Inc. are the Audit, Compensation and Nominating Committees.
The Board of Directors held 12 regular meetings,
three special meetings and one annual meeting during the year ended December 31, 2013. No member of the Board of Directors or any
committee thereof attended fewer than 75% of the aggregate of: (i) the total number of meetings of the Board of Directors
(held during the period for which he has been a director); and (ii) the total number of meetings held by all committees on
which he served (during the periods that he served).
Audit Committee.
The Audit
Committee is comprised of Directors Rupert, Carver, Gevedon, Moore and Robinson, each of whom is “independent” in accordance
with applicable SEC rules and Nasdaq listing standards. Mr. Robinson serves as chair of the Audit Committee. The Audit Committee
also serves as the audit committee of the board of directors of Home Federal Savings and Loan Association. The Board of Directors
has determined that Mr. Robinson qualifies as an “audit committee financial expert” as defined under applicable SEC
rules because Mr. Robinson is a certified public accountant and has nearly 40 years of public accounting experience. In addition,
each Audit Committee member has the ability to analyze and evaluate our financial statements as well as an understanding of the
Audit Committee’s functions. In addition, each Audit Committee member has overseen and assessed the finances and financial
reporting of various businesses that they own or with which they have been employed.
Our Board of Directors has adopted a written
charter for the Audit Committee, which is available on our Internet website at www.hfsl.com. As more fully described in the Audit
Committee Charter, the Audit Committee reviews the financial records and affairs of Poage Bankshares, Inc. and monitors adherence
in accounting and financial reporting to accounting principles generally accepted in the United States of America. The Audit Committee
met five times during the year ended December 31, 2013.
Nominating Committee.
The
Nominating Committee is comprised of Directors Rupert, Carver, Gevedon, Moore and Robinson, each of whom is independent in accordance
with applicable SEC rules and Nasdaq listing standards. Mr. Gevedon serves as chair of the Nominating Committee. The Nominating
Committee also serves as the nominating committee of the board of directors of Home Federal Savings and Loan Association. The Nominating
Committee operates under a written charter which is available on our Internet website at www.hfsl.com. The Nominating Committee
met two times during the year ended December 31, 2013.
The Nominating Committee does not have a
formal policy or specific guidelines regarding diversity among board members. However, the Nominating Committee seeks members who
represent a mix of backgrounds that will reflect the diversity of our stockholders, employees, and customers, and experiences that
will enhance the quality of the Board of Directors’ deliberations and decisions. As the holding company for a community bank,
the Nominating Committee also seeks directors who can continue to strengthen Home Federal Savings and Loan Association’s
position in its community and can assist Home Federal Savings and Loan Association with business development through business and
other community contacts. The Nominating Committee considers the following criteria in evaluating and selecting candidates for
nomination:
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the extent to which the candidate would contribute to the range of talent, skill and expertise appropriate for the Board of
Directors;
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the candidate’s relevant financial, regulatory and business experience and skills, including knowledge of the banking
and financial services industries, familiarity with the operations of public companies and the ability to read and understand financial
statements;
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the candidate’s familiarity with the Poage Bankshares, Inc.’s market areas, participation in local business, civic,
or charitable organizations, and ties to local businesses;
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the candidate’s personal and professional integrity, honesty and reputation;
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the candidate’s ability to represent the best interests of Poage Bankshares, Inc. and its stockholders, including potential
for conflicts of interest with the candidate’s other endeavors;
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the candidate’s ability to devote sufficient time and energy to perform his or her duties, including the ability to attend
meetings;
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whether or not the candidate would be independent under applicable SEC rules and Nasdaq listing standards for purposes of service
on the Board of Directors or on any particular committee; and
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any other factors that the Nominating Committee deems relevant to a candidate’s nomination, including the extent to which
the candidate helps the Board of Directors reflect the diversity of Poage Bankshares, Inc.’s stockholders, employees, customers
and communities, the current composition and size of the Board of Directors, the balance of management and independent directors.
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The Nominating Committee identifies nominees
by first evaluating the current members of the Board of Directors willing to continue in service, including the current members’s
board and committee attendance and performance, length of board service, experience and contributions, and independence. Current
members of the Board of Directors with skills and experience that are relevant to Poage Bankshares, Inc.’s business and who
are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members
of the board with that of obtaining a new perspective. If there is a vacancy on the Board of Directors because any member of the
Board of Directors does not wish to continue in service or if the Nominating Committee decides not to re-nominate a member for
re-election, the Nominating Committee would determine the desired skills and experience of a new nominee (including a review of
the skills set forth above), may solicit suggestions for director candidates from all board members and may engage in other search
activities.
In accordance with our Bylaws, a person
is not eligible for election or appointment to the Board of Directors: (a) if such person has been the subject of supervisory action
by a financial regulatory agency that resulted in a cease and desist order or an agreement or other written statement subject to
public disclosure under 12 U.S.C. §1818(u), or any successor provision; (b) if such person has been convicted of a crime involving
dishonesty or breach of trust which is punishable by imprisonment for a term exceeding one year under state or federal law; (c)
if such person is currently charged in any information, indictment, or other complaint with the commission of or participation
in such a crime; or (d) if such person did not, at the time of his first election or appointment to the Board of Directors maintain
his principal residence within ten miles of an office of Poage Bankshares, Inc. or any subsidiary thereof for a period of at least
one year prior to the date of his purported election or appointment to the Board of Directors, provided that clause (d) shall not
apply to full time employees of Poage Bankshares, Inc. or any of its subsidiaries. No person may serve on the Board of Directors
and at the same time be a director or officer of a co-operative bank, credit union, savings bank, savings and loan association,
trust company, bank holding company or banking association (in each case whether chartered by a state, the federal government or
any other jurisdiction), other than of a subsidiary of the Corporation, that engages in business activities or solicits customers,
whether through a physical presence or electronically, in the same market area as the Corporation or any of its subsidiaries. No
person shall be eligible for election or appointment to the Board of Directors if such person is the nominee or representative,
as that term is defined in the regulations of the Board of Governors of the Federal Reserve System, 12 C.F.R §212.2(n), of
a company the directors, partners, trustees or 10% stockholders of which would not be eligible for election or appointment to the
Board of Directors under the foregoing restrictions. The Board of Directors shall have the power to construe and apply foregoing
restrictions and to make all determinations necessary or desirable to implement such provisions, including but not limited to determinations
as to whether a person is a nominee or representative of a person, a company or a group, whether a person or company is included
in a group, and whether a person is the nominee or representative of a group acting in concert. In addition, no person shall be
eligible for election, reelection, appointment or reappointment to the Board of Directors if, at the time of such election, reelection,
appointment or reappointment, such person shall have attained the age of 70.
During the year ended December 31, 2013
we did not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees for director.
The Nominating Committee may consider qualified
candidates for director suggested by our stockholders. Stockholders can suggest qualified candidates for director by writing to
our Secretary at 1500 Carter Avenue, Ashland, Kentucky 41101. In order for the Nominating Committee to consider a candidate suggested
by a stockholder, the Secretary must receive a submission not less than 150 days prior to the anniversary of the prior year’s
annual meeting. The submission must include the following:
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the name, age, personal and business address of the candidate, the principal occupation or employment of the candidate;
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a statement of the candidate’s business and educational experience;
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such other information regarding the candidate as would be required to be included in Poage Bankshares, Inc.’s proxy
statement pursuant to Securities and Exchange Commission Regulation 14A;
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the candidate’s written consent to serve as a director;
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a statement that the writer is a stockholder and is proposing a candidate for consideration by the Nominating Committee;
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the name and address of the stockholder, and the number of shares of Poage Bankshares, Inc.’s common stock that are held
of record by such stockholder; and
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a statement disclosing whether the stockholder is acting with or on behalf of any other person, and, if applicable, the identity
of such other person.
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Submissions that are received and that satisfy the above requirements
are forwarded to the Nominating Committee for further review and consideration, using the same criteria to evaluate the candidate
as it uses for evaluating other candidates that it considers.
Compensation Committee.
The
Compensation Committee is comprised of Messrs. Rupert, Carver, Gevedon, Moore and Robinson, each of whom is independent in
accordance with applicable SEC rules and Nasdaq listing standards. Mr. Carver serves as chair of the Compensation Committee. No
member of the Compensation Committee is a current or former officer or employee of Poage Bankshares, Inc. or Home Federal Savings
and Loan Association. The Compensation Committee also serves as the compensation committee of the board of directors of Home Federal
Savings and Loan Association. The Compensation Committee met ten times during the year ended December 31, 2013.
The Compensation Committee is responsible
for establishing the compensation philosophy, developing compensation guidelines, establishing (or recommend to the entire Board
of Directors) the compensation of the Chief Executive Officer and the other senior executive officers. No executive officer who
is also a director participates with respect to decisions on his compensation. The Compensation Committee will also administer
any stock-based incentive or compensation plan that Poage Bankshares, Inc. may adopt in the future. In addition, during the fiscal
year ended December 31, 2013, the Compensation Committee retained Blanchard Consulting to provide recommendations with respect
to an incentive plan.
The Compensation Committee operates under
a written charter which is available on our Internet website at www.hfsl.com. This charter sets forth the responsibilities of the
Compensation Committee and reflects the Compensation Committee’s commitment to create a compensation structure that not only
compensates senior management but also aligns the interests of senior management with those of our stockholders.
Our goal is to determine appropriate compensation
levels that will enable us to meet the following objectives:
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to attract, retain and motivate an experienced, competent executive management team;
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to reward the executive management team for the enhancement of stockholder value based on our annual earnings performance and
the market price of our stock;
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to provide compensation rewards that are adequately balanced between short-term and long-term performance goals;
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to encourage ownership of our common stock through stock-based compensation to all levels of management; and
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to maintain compensation levels that are competitive with other financial institutions, particularly those in our peer group
based on asset size and market area.
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The Compensation Committee considers a number
of factors in their decisions regarding executive compensation, including, but not limited to, the level of responsibility and
performance of the individual executive officers, the overall performance of Poage Bankshares, Inc. and a peer group analysis of
compensation paid at institutions of comparable size and complexity. The Compensation Committee also considers the recommendations
of the Chief Executive Officer with respect to the compensation of executive officers other than the Chief Executive Officer.
The base salary levels for our executive
officers are set to reflect the duties and levels of responsibilities inherent in the position and to reflect competitive conditions
in the banking business in Poage Bankshares, Inc.’s market area. Comparative salaries paid by other financial institutions
are considered in establishing the salary for our executive officers. The Compensation Committee has utilized bank compensation
surveys compiled by the America Bankers Association as well as other surveys prepared by trade groups and independent benefit consultants.
In setting the base salaries, the Compensation Committee also considers a number of factors relating to the executive officers,
including individual performance, job responsibilities, experience level, ability and the knowledge of the position. These factors
are considered subjectively and none of the factors are accorded a specific weight.
Audit Committee Report
The Audit Committee has issued a report
that states as follows:
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We have reviewed and discussed with management our audited consolidated financial statements for the year ended December 31,
2013;
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We have discussed with the independent registered public accounting firm the matters required to be discussed by Statement
on Auditing Standards No. 61, “Communication With Audit Committees” as amended; and
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We have received the written disclosures and the letter from the independent registered public accounting firm required by
PCAOB Rule 3526, “Communication with Audit Committees Concerning Independence,” and have discussed with the independent
registered public accounting firm their independence.
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Based on the review and discussions referred
to above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included
in our Annual Report on Form 10-K for the year ended December 31, 2013 for filing with the Securities and Exchange Commission.
This report shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Poage Bankshares, Inc. specifically
incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
This report has been provided by the Audit
Committee:
Charles W. Robinson, Chair
J. Thomas Rupert
Thomas P. Carver
Everett B. Gevedon
Stuart N. Moore
Transactions With Certain Related Persons
Loans and Extensions of Credit
.
Federal law requires that all loans or extensions of credit to executive officers and directors must be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general
public and must not involve more than the normal risk of repayment or present other unfavorable features. Federal regulations adopted
under this law permit executive officers and directors to receive the same terms that are widely available to other employees as
long as the director or executive officer is not given preferential treatment compared to the other participating employees. Loans
to executive officers must be approved by the full Board of Directors, regardless of amounts, for such purposes as first and second
mortgages on primary residences, consumer loans or commercial loans.
Home Federal Savings and Loan Association
makes loans to its employees through an employee loan program. Directors, executive officers and Regulation O officers are excluded
from this program. The program applies to consumer loans, which includes automobile loans. Home Federal waives the $100 loan processing
fee for loans made under the employee loan program. Except for the waived loan processing fee, these loans were made in the ordinary
course of business, were made on substantially the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and did not involve more than the normal risk of collectability or present
other unfavorable features. Prior to the acquisition of Town Square Bank by Home Federal Savings and Loan Association, Town Square
Bank made loans to directors and officers under the same terms available to customers. Employees who were not subject to Regulation
O were eligible through an employee loan program for a one percent (1.00%) reduction in interest rate on consumer loans, and for
a waiver of the origination fee on loans on primary residences. Home Federal has adopted the Town Square Bank program following
its acquisition of Town Square Bank, and has amended Home Federal’s employee program to provide the same benefits.
All loans made by Home Federal Savings
and Loan Association to its directors and executive officers were made in the ordinary course of business, were made on substantially
the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not
related to Home Federal Savings and Loan Association, and did not involve more than the normal risk of collectability of present
other unfavorable features.
Executive Compensation
Summary Compensation Table.
The table below summarizes the total compensation paid to or earned by our Chief Executive Officers and the two next highly compensated
officers (“named executive officers”) for the fiscal years ended December 31, 2013 and December 31, 2012.
Name and principal position
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Year
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Salary
($)
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Bonus
($)
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All
other
compensation
(2)
($)
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Total
($)
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Ralph E. Coffman, Jr.
(1)
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2013
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211,063
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—
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11,497
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222,560
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President and Chief Executive Officer
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2012
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136,869
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—
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3,461
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140,330
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Miles R. Armentrout
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2013
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144,108
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—
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2,775
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146,883
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Executive Vice President and Chief Credit Officer
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2012
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72,692
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—
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—
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72,692
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James W. King
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2013
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121,472
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—
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37,658
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159,130
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Executive Vice President and Chief Information Officer
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2012
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117,002
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12,000
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66,900
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195,902
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_______________________________
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(1)
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Mr. Coffman was hired on May 1, 2012 and Mr. Armentrout was hired on June 25, 2012.
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(2)
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For 2013, the amounts in this column reflect what Home Federal Savings and Loan Association paid for, or reimbursed, the applicable
named executive officer for the various benefits and perquisites as follows:
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Name
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Board
Fees
(1)
($)
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Dividends
on Restricted Stock
(2)
($)
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Auto
Expenses
(3)
($)
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Insurance
(4)
($)
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Appraisal
Fees
(5)
($)
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Total All
Other
Compensation
($)
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Ralph E. Coffman, Jr.
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1,500
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1,929
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5,692
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2,376
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—
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11,497
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Miles Armentrout
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—
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1,228
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—
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1,547
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—
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2,775
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James W. King
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1,500
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1,228
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—
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3,230
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31,700
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37,658
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(1)
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Represents fees paid for service on the Board of Directors of Poage Bankshares, Inc. and the Board of Directors of Home Federal
Savings and Loan Association.
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(2)
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Represents dividends paid on non-vested restricted stock awards.
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(3)
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Represents amount paid to Mr. Coffman for his use of an automobile.
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(4)
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Represents imputed income from life insurance premiums paid by Home Federal Savings and Loan Association, and for Mr. King
only, the amount includes $1,396 of imputed income from long term care insurance premiums paid by Home Federal Savings and Loan
Association.
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(5)
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Represents fees paid to Mr. King for appraisal services provided on real estate properties securing loans made by Home Federal
Savings and Loan Association.
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Benefit Plans and Agreements
Employment Agreement.
Home
Federal Savings and Loan Association entered into an employment agreement with Ralph E. Coffman, Jr. effective as of May 1, 2012
and with Miles R. Armentrout effective as of June 25, 2012. Mr. Coffman’s agreement has an initial term of three years and
Mr. Armentrout’s agreement has an initial term of one year. Commencing generally on the first anniversary of each agreement
and on each subsequent anniversary thereafter, the agreement will be renewed for an additional year so that the remaining term
will be three years for Mr. Coffman and one year for Mr. Armentrout, unless a notice is provided to the executive that the agreement
will not renew. In the event of a change in control, the term of Mr. Armentrout’s agreement will automatically renew and
remain in effect for a period of three years following the date of the change in control. The current base salaries for Messrs. Coffman
and Armentrout are $221,854 and $144,200 respectively. In addition to the base salary, each agreement provides for, among other
things, participation in bonus programs and other fringe benefit plans applicable to executive employees including social membership
benefits, and, for Mr. Coffman only, automobile benefits. The executive’s employment may be terminated for cause at any time,
in which event the executive would have no right to receive compensation or other benefits for any period after termination.
Certain events resulting in the executive’s
termination or resignation entitle the executive to payments of severance benefits following termination of employment. In the
event of the executive’s involuntary termination for reasons other than for cause, change in control or retirement, or in
the event the executive resigns during the term of the agreement following (a) failure to appoint the executive to the executive
position set forth in the agreement, (b) a material change in the executive’s function, duties or responsibilities resulting
in a reduction of the responsibility, scope, or importance of executive’s position, (c) relocation of the executive’s
office by more than 20 miles for Mr. Coffman and 50 miles for Mr. Armentrout, (d) a material reduction in the benefits or
perquisites paid to the executive unless such reduction is part of a reduction that is generally applicable to officers or employees
of Home Federal Savings and Loan Association, or (e) a material breach of the employment agreement by Home Federal Savings
and Loan Association, then Mr. Coffman would be entitled to a severance payment in the form of a cash lump sum equal to (a) one
(1) times the sum of (i) the highest rate of base salary paid to the executive at any time, and (ii) the highest
bonus paid to the executive with respect to the three (3) completed fiscal years prior to the date of termination and Mr.
Armentrout would be entitled to a cash lump sum payment equal to one (1) times his base salary. Internal Revenue Code Section 409A
may require that a portion of the above payments cannot be made until six months after termination of employment, if the executive
is a “key employee” under IRS rules. In addition, Mr. Coffman (and not Mr. Armentrout) would be entitled, at no expense
to the executive, to the continuation of life insurance and non-taxable medical and dental coverage for one (1) year.
In the event of a change in control of Home
Federal Savings and Loan Association or Poage Bankshares, Inc., followed by executive’s involuntary termination other than
for cause or retirement, or resignation for one of the reasons set forth above within 18 months thereafter, Mr. Coffman would
be entitled to a severance payment in the form of a cash lump sum equal to (a) three (3) times the sum of (i) the
highest rate of base salary paid to the executive at any time, and (ii) the highest bonus paid to the executive with respect
to the three (3) completed fiscal years prior to the change of control and Mr. Armentrout would be entitled to a cash lump
sum payment equal to three (3) times his base salary. In addition, the executive would be entitled, at no expense to the executive,
to the continuation of life insurance and non-taxable medical and dental coverage for thirty-six (36) months following the
termination of employment. In the event payments made to the executive include an “excess parachute payment” as defined
in Section 280G of the Internal Revenue Code, such payments will be cutback by the minimum dollar amount necessary to avoid
this result.
Upon termination of the executive’s
employment, the executive shall be subject to certain restrictions on his ability to compete, or to solicit business or employees
of Home Federal Savings and Loan Association and Poage Bankshares, Inc. for a period of one year following termination of employment.
This restriction will not apply if the executive’s termination of employment occurs after a change in control of Home Federal
Savings and Loan Association or Poage Bankshares, Inc.
Change in Control Agreement.
On
December 12, 2011, Home Federal Savings and Loan Association entered into a change in control agreement with James W. King.
The change in control agreement provides a benefit in the event of an involuntary termination of employment or resignation for
good reason following a change in control. The agreement defines good reason as:
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the failure to appoint the executive to his executive position (as defined in the agreement);
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a material change in the executive’s position to become one of lesser responsibility, importance
or scope than the position the executive held immediately prior to the change in control;
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the relocation of the executive’s principal place of employment by more than 30 miles from
its location as of the date of the agreement;
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a material reduction in the executive’s base salary and benefits; or
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the liquidation or dissolution of Home Federal Savings and Loan Association, other than a liquidation
or dissolution caused by reorganizations that do not affect the status of the executive.
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The severance payment is an amount equal
to three times the sum of the executive’s base salary and the highest bonus earned during the prior three years, payable
in a lump sum, and the continuation of non-taxable medical and dental coverage for a three-year period. The amount of the payment
to be made in connection with a change in control will be reduced, if necessary, to an amount that is $1.00 less than the amount
that would otherwise be an “excess parachute payment” under Section 280G of the Internal Revenue Code of 1986,
as amended (the “Section 280G Limit”). Should Mr. King have his employment terminated in connection with a change in
control as of December 31, 2013, Mr. King would receive a maximum cash severance payment of approximately $365,238,
based
upon his current level of compensation, and such amounts may be reduced pursuant to each executive’s Section 280G Limit.
Executive Supplemental Retirement
Plan.
Home Federal Savings and Loan Association has purchased an insurance policy on the life of Mr. King and has entered
into an Executive Supplemental Retirement Plan (the “Plan”) with Mr. King. The insurance policy is owned by Home Federal
Savings and Loan Association, which paid the premium due on the policy in a single lump sum. The amount of the premium paid for
the life insurance policy was $365,405. Under the Executive Supplemental Retirement Plan, upon the executive’s death while
he was employed, the executive’s beneficiary will be paid a death benefit equal to the executive’s Pre-Retirement Account,
as defined in the Plan. In the event of the executive’s death as of December 31, 2013, the beneficiaries of Mr. King would
receive a death benefit of approximately $188,688.
In the event an executive remains in the
employment of Home Federal Savings and Loan Association until normal retirement age (age 65), he shall receive the balance in the
Pre-Retirement Account in 240 equal monthly installments commencing 30 days following the date of the executive’s retirement.
In the event an executive terminates employment following a change in control, then the executive shall receive the benefits as
if the executive had attained normal retirement age. In the event of a termination of employment following a change in control
as of December 31, 2013, Mr. King would receive, beginning at normal retirement age (as defined in the agreement), an estimated
monthly benefit of $3,981, which would be payable for 240 months.
Split Dollar Agreement.
Home
Federal Savings and Loan Association has purchased an insurance policy on the life of Mr. King, and Home Federal Savings and Loan
Association has entered into endorsement Split Dollar Agreement with Mr. King. The policy is owned by Home Federal Savings and
Loan Association, which paid the premium due on the policy in a single lump sum. The amount of the premium paid for the life insurance
policy was $365,405. Under the Split Dollar Agreement, upon the executive’s death while he is an executive of Home Federal
Savings and Loan Association, the executive’s beneficiary will be paid a death benefit equal to 80% of the total death proceeds
of the life insurance policy minus the cash surrender value of the policy. In the event of the executive’s death as of December
31, 2013, the beneficiaries of Mr. King would receive a death benefit of $523,918.
In the event Mr. King dies after he
terminated employment for any reason, including retirement, his beneficiary will be entitled to a reduced benefit, which will be
determined based on the number of full years the executive has been employed since the date of hire. When Mr. King attains
the age of 55, his beneficiary will be entitled to the full death benefit, as described above.
The Split Dollar Agreement may be terminated
if the executive’s employment is terminated for cause (as defined in the agreement) or upon Home Federal Savings and Loan
Association’s cancellation of the life insurance policies. Upon termination, the executive will have an option to purchase
the insurance policies for an amount equal to the greater of the cash value of the policies or the amount of premiums paid by Home
Federal Savings and Loan Association.
401(k) Plan.
Home Federal
Savings and Loan Association participates in the Pentegra Defined Contribution Plan for Financial Institutions, a tax-qualified
defined contribution plan for eligible employees (the “401(k) Plan”). Employees who have completed two consecutive
months of service and attained the age of 21 will be eligible to participate in the 401(k) Plan.
Under the 401(k) Plan, a participant may
elect to defer, on a pre-tax basis, up to 75% of his or her salary in any plan year, subject to limits imposed by the Internal
Revenue Code. For 2013, the salary deferral contribution limit is $17,500, provided, however, that a participant over age 50 may
contribute an additional $5,500 to the 401(k) Plan. During 2013, Home Federal Savings and Loan Association provided an employer
matching contribution equal to 50% of a participant’s 401(k) contributions up to 6% of a participant’s annual salary.
A participant is always 100% vested in his or her salary deferral contributions and a participant will become 100% vested in employer
contributionsafter completing three years of service. Generally, unless the participant elects otherwise, the participant’s
account balance will be distributed as a result of a participant’s termination of employment with Home Federal Savings and
Loan Association.
Defined Benefit Pension Plan.
Home
Federal Savings and Loan Association participates in the Pentegra Defined Benefit Plan for Financial Institutions, a multi-employer
pension plan (the “Pension Plan”). The Pension Plan covers all eligible employees meeting certain service and age requirements
that were employed by Home Federal Savings and Loan Association prior to January 1, 2007. Effective January 1, 2007,
Home Federal Savings and Loan Association amended the Pension Plan to provide that employees hired after December 31, 2006
would not be eligible to participate in the Pension Plan. No new or additional benefits accrue under the Pension Plan. During the
year ended December 31, 2013, Home Federal Savings and Loan Association recognized $80,591 as a pension expense.
Employee Stock Ownership Plan.
In
connection with the conversion, Home Federal Savings and Loan Association adopted an employee stock ownership plan for eligible
employees. Eligible employees who have attained age 21 and completed one year of service will begin participation in the employee
stock ownership plan on the later of the effective date of the conversion (December 12, 2011) or upon the first entry date commencing
on or after the eligible employee’s completion of 1,000 hours of service during a continuous 12-month period.
The employee stock ownership plan trustee
purchased, on behalf of the employee stock ownership plan, 269,790 shares of Poage Bankshares, Inc. common stock issued in the
offering. The employee stock ownership plan funded its stock purchase with a $2.7 million loan from Poage Bankshares, Inc., to
be repaid over 20 years. The loan will be repaid principally through Home Federal Savings and Loan Association’s contribution
to the employee stock ownership plan and dividends payable on common stock held by the employee stock ownership plan over the 20-year
term of the loan. The interest rate for the employee stock ownership plan loan is an adjustable rate equal to the prime rate, as
published in
The Wall Street Journal
, on the closing date of the offering. Thereafter, the interest rate will adjust annually
and will be the prime rate on the first business day of the calendar year, retroactive to January 1 of such year.
The trustee holds the shares purchased by
the employee stock ownership plan in an unallocated suspense account, and shares will be released from the suspense account on
a pro-rata basis as we repay the loan. The trustee will allocate the shares released among participants on the basis of each participant’s
proportional share of compensation relative to all participants. A participant will become 100% vested in his or her account balance
after completing three years of service. Participants who were employed by Home Federal Savings and Loan Association immediately
prior to the offering received credit for vesting purposes for years of service prior to adoption of the employee stock ownership
plan. Participants also become fully vested automatically upon normal retirement, death or disability, a change in control, or
termination of the employee stock ownership plan. Generally, participants will receive distributions from the employee stock ownership
plan upon separation from service. The employee stock ownership plan reallocates any unvested shares forfeited upon termination
of employment among the remaining participants.
The employee stock ownership plan permits
participants to direct the trustee as to how to vote the shares of common stock allocated to their accounts. The trustee votes
unallocated shares and allocated shares for which participants do not provide instructions on any matter in the same ratio as those
shares for which participants provide instructions, subject to fulfillment of the trustee’s fiduciary responsibilities.
Under applicable accounting requirements,
Home Federal Savings and Loan Association records a compensation expense for the employee stock ownership plan at the fair market
value of the shares as they are committed to be released from the unallocated suspense account to participants’ accounts,
which may be more or less than the original issue price. The compensation expense resulting from the release of the common stock
from the suspense account and allocation to plan participants results in a corresponding reduction in Poage Bankshares, Inc.’s
earnings.
Outstanding Equity Awards at Fiscal
Year-End
The following table provides information
concerning unexercised options and stock awards that had not vested as of December 31, 2013 for each named executive officer.
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Securities Underlying Unexercised Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(1), (4)
|
|
Option Exercise Price ($)
|
|
Option Expiration Date
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)
(2)
|
|
Market Value of Shares or Units of Stock That Have
Not Vested
($)
(3)
|
Ralph E. Coffman, Jr.
|
|
—
|
|
57,500
|
|
15.00
|
|
5/10/2023
|
|
14,838
|
|
207,880
|
Miles R. Armentrout
|
|
—
|
|
25,000
|
|
15.00
|
|
5/10/2023
|
|
9,443
|
|
132,296
|
James W. King
|
|
—
|
|
25,000
|
|
15.00
|
|
5/10/2023
|
|
9,443
|
|
132,296
|
|
(1)
|
Stock options vest at the rate of 20% per year commencing May 10, 2014, one year from the date
of grant, and continuing on each anniversary thereafter through May 10, 2018.
|
|
(2)
|
Restricted stock vests at the rate of 20% per year commencing April 16, 2014, one year from the
date of grant, and continuing on each anniversary thereafter through April 16, 2018.
|
|
(3)
|
Reflects the closing market price of the stock on December 31, 2013 ($14.01) multiplied by the
number of shares of restricted stock held by the named executive officer on such date.
|
|
(4)
|
On March 18, 2014, in connection with the acquisition of Town Square Financial Corporation and
Town Square Bank, Bruce Van Horn was granted options to purchase 20,000 shares of Poage Bankshares, Inc. common stock at $14.16
per share. The options vest at the rate of 20% per year commencing March 18, 2015, one year from the date of grant, and continuing
on each anniversary thereafter through March 18, 2018, and have an expiration date of March 18, 2024. These options are not reflected
in the table because they were not outstanding at December 31, 2013.
|
Stock Benefit Plan
2013 Equity Incentive Plan.
In
January 2013, the Company’s stockholders approved the Poage Bankshares, Inc. 2013 Equity Incentive Plan (the “Equity
Incentive Plan”), which provides officers, employees, and directors of Poage Bankshares, Inc. and Home Federal Savings and
Loan Association with additional incentives to promote the Company’s growth and performance. Most of the companies that the
Company competes with for directors and management-level employees are public companies that offer equity compensation as part
of their overall director and officer compensation programs. By approving the Equity Incentive Plan, the Company’s stockholders
have given the Company flexibility needed to continue to attract and retain highly qualified officers and directors by offering
a competitive compensation program that is linked to the performance of the Company’s common stock.
The Equity Incentive Plan authorizes the
issuance or delivery of up to 472,132 shares of Poage Bankshares, Inc. common stock pursuant to grants of restricted stock awards,
incentive stock options, and non-qualified stock options; provided, however, that the maximum number of shares of stock that may
be delivered pursuant to the exercise of stock options is 337,237 (all of which may be granted as incentive stock options) and
the maximum number of shares of stock that may be issued as restricted stock awards is 134,895.
The Equity Incentive Plan is administered
by the members of Poage Bankshares, Inc.’s Compensation Committee of the Board of Directors (the “Committee”)
who are “Disinterested Board Members,” as defined in the Equity Incentive Plan. The Committee has the authority and
discretion to select the persons who will receive awards; establish the terms and conditions relating to each award; adopt rules
and regulations relating to the Equity Incentive Plan; and interpret the Equity Incentive Plan. The Equity Incentive Plan also
permits the Committee to delegate all or any portion of its responsibilities and powers.
The Company’s employees
and outside directors are eligible to receive awards under the Equity Incentive Plan. Awards may be granted in a combination of
restricted stock awards, incentive stock options, and non-qualified stock options. The exercise price of stock options granted
under the Equity Incentive Plan may not be less than the fair market value on the date the stock option is granted. Stock options
are subject to vesting conditions and restrictions as determined by the Committee. Stock awards under the Equity Incentive Plan
will be granted only in whole shares of common stock. All restricted stock and stock option grants will be subject to conditions
established by the Committee that are set forth in the award agreement.
The Committee approved awards under the
Equity Incentive Plan on April 16, 2013 and May 10, 2013. All stock options and restricted stock awards are subject to time-based
vesting and vest over a five-year period, with 20% of the awards vesting each year. The recipients of restricted stock awards are
entitled to receive the cash dividends paid on all restricted stock awards, whether such awards are vested or not.
Securities Authorized for Issuance Under Stock-Based Compensation
Plans.
The following table sets forth information
as of December 31, 2013 about common stock that may be issued under Poage Bankshares, Inc.’s equity compensation plans.
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for issuance under stock-based compensation plans (excluding securities reflected in first column
|
Equity compensation plans approved by stockholders
(1)
|
|
300,000
|
|
$ 15.00
|
|
35,584
|
Equity compensation plans not approved by stockholders
|
|
—
|
|
—
|
|
—
|
Totals
|
|
300,000
|
|
$ 15.00
|
|
35,584
|
__________________
|
(1)
|
These awards were granted pursuant to the Poage Bankshares, Inc. 2013 Equity Incentive Plan.
|
Director Compensation
The following table sets forth for the
fiscal year ended December 31, 2013 certain information as to the total remuneration we paid to our directors other than to our
named executive officers. Information with respect to director compensation paid to directors who are also named executive officers
is included above in “—Executive Compensation—Summary Compensation Table.”
Directors Compensation Table
Name
|
|
Fees earned
or paid in
cash
($)
|
|
|
Dividends on Restricted Stock
(1)
($)
|
|
|
All other compensation
(2)
($)
|
|
|
Total
($)
|
|
Darryl Akers.
|
|
|
16,800
|
|
|
|
350
|
|
|
|
24,300
|
|
|
|
41,450
|
|
Thomas Burnette
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Thomas P. Carver.
|
|
|
24,037
|
|
|
|
1,052
|
|
|
|
—
|
|
|
|
25,089
|
|
Everett B. Gevedon
|
|
|
24,131
|
|
|
|
1,052
|
|
|
|
1,396
|
|
|
|
26,579
|
|
Stuart N. Moore
|
|
|
24,076
|
|
|
|
1,052
|
|
|
|
2,032
|
|
|
|
27,160
|
|
Charles W. Robinson
|
|
|
24,143
|
|
|
|
1,052
|
|
|
|
2,589
|
|
|
|
27,784
|
|
J. Thomas Rupert
|
|
|
38,423
|
|
|
|
1,052
|
|
|
|
2,013
|
|
|
|
41,488
|
|
James
C. Stewart, Jr.
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Represents dividends paid on non-vested restricted stock awards.
|
|
(2)
|
Represents imputed income from long term care insurance premiums paid by Home Federal Savings and Loan Association on behalf
of each director, and for Mr. Akers only, the amount includes $22,249 for consulting services and fees for appraisal services provided
on real estate properties securing loans made by Home Federal Savings and Loan Association.
|
|
(3)
|
Messrs. Burnette and Stewart were appointed as directors on March 19, 2014 in connection with the acquisition of Town Square
Financial Corporation and Town Square Bank.
|
Director Fees
Each person who serves as a director of
Poage Bankshares, Inc. also serves as a director of Home Federal Savings and Loan Association and earns director and committee
fees in his capacity as a director or committee member of Poage Bankshares and Home Federal Savings and Loan Association.
However, if a Poage Bankshares meeting immediately precedes or follows a Home Federal Savings and Loan Association meeting the
directors will only be paid for one meeting. All director fees are paid by Home Federal Savings and Loan Association. Each
director or committee member is paid only if in attendance in person or by telephone. Employee directors are only paid for
special meetings if they are held after 5:00 p.m.
Each director of Home Federal Savings and
Loan Association is paid a regular monthly meeting fee of $1,400, except that Mr. Rupert receives $2,500 as Chairman of the Board
and Mr. Carver receives $1,450 as Vice-Chairman of the Board. Each non-employee director receives $500 per committee meeting,
except that each non-employee director receives $150 per meeting of the Directors Loan Committee.
Director Plans
Director Supplemental Retirement Plans.
Home Federal Savings and Loan Association has purchased insurance policies on the lives of Messrs. Carver, Gevedon, Moore,
Robinson and Rupert and has entered into a Director Supplemental Retirement Plan (the “Plan”) with each of Messrs.
Carver, Gevedon, Moore, Robinson and Rupert. The insurance policies are owned by Home Federal Savings and Loan Association, which
paid each premium due on the policies in a single lump sum. The amount of the premiums paid for the life insurance policies was
$220,000 $60,845, $121,000, $115,504 and $132,030, respectively, on behalf of Messrs. Carver, Gevedon, Moore, Robinson and Rupert.
Under the Director Supplemental Retirement Plans, upon a director’s death, the director’s beneficiary will be paid
a death benefit equal to the director’s accrued liability retirement plan, as defined in the plan. In the event of the directors’
deaths as of December 31, 2013, the beneficiaries of Messrs. Carver, Gevedon, Moore, Robinson and Rupert would receive a death
benefit of approximately $62,659, $23,452, $22,743, $105,194 and $107,578, respectively.
In the event Messrs. Carver, Gevedon, Moore,
Robinson and Rupert remain in the service of Home Federal Savings and Loan Association until normal retirement age (age 70), each
shall receive an annual benefit payable over thirteen years (fourteen years for Messrs. Robinson and Rupert) in monthly installments
commencing thirty (30) days following the date of the director’s retirement. In the event a director terminates employment
following a change in control, then the director shall receive the benefits as if the director had attained normal retirement age.
In the event of a termination of employment following a change in control as of December 31, 2013, Messrs. Carver, Gevedon, Moore,
Robinson and Rupert would receive, beginning at normal retirement age (as defined in the plan), amounts specified in an exhibit
to each director’s agreement, which provides for different payment amounts in different years. The first year’s payment
amounts are $13,327, $12,921, $8,655, $11,832, and $12,601, respectively, which would be payable for up to thirteen years (fourteen
for Messrs. Robinson and Rupert).
PROPOSAL II—ADVISORY (NON-BINDING)
VOTE
ON EXECUTIVE COMPENSATION
The compensation of certain executive officers
with respect to whom compensation is required to be disclosed pursuant to applicable Securities and Exchange Commission regulations
(the “Named Executive Officers”) is described above under “Executive Compensation.” Stockholders are urged
to read the “Executive Compensation” section of this Proxy Statement, which discusses our compensation policies and
procedures with respect to our Named Executive Officers.
In accordance with recently adopted changes
to Section 14A of the Exchange Act, stockholders are being asked at the Annual Meeting to provide their support with respect to
the compensation of our Named Executive Officers by voting on the following advisory (non-binding) resolution:
“RESOLVED, that the stockholders
of Poage Bankshares, Inc. approve, on an advisory basis, the compensation of the Company’s named executive officers as described
in the “Executive Compensation” section of the Proxy Statement.”
This advisory vote, commonly known as a
“say-on-pay” advisory vote, gives stockholders the opportunity to endorse or not endorse the Company’s executive
pay program. Although non-binding, the Board of Directors and the Compensation Committee value constructive dialogue with our stockholders
on executive compensation and other important governance topics and encourage all stockholders to vote their shares on this matter.
The Board of Directors and the Compensation Committee will review the voting results and take them into consideration when making
future decisions regarding our executive compensation programs.
The Board of Directors recommends a vote
“FOR” the approval of the advisory (non-binding) resolution.
PROPOSAL III—RATIFICATION OF APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
The Audit Committee of Poage Bankshares,
Inc. has approved the engagement of Crowe Horwath LLP to be our independent registered public accounting firm for the year ending
December 31, 2014, subject to the ratification of the engagement by our stockholders. At the Annual Meeting, stockholders will
consider and vote on the ratification of the Audit Committee’s engagement of Crowe Horwath LLP for the year ending December
31, 2014. A representative of Crowe Horwath LLP is expected to attend the annual meeting and may respond to appropriate questions
and make a statement if he or she so desires.
Even if the engagement of Crowe Horwath
LLP is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public
accounting firm at any time during the year if it determines that such change would be in the best interests of Poage Bankshares,
Inc. and its stockholders.
Set forth below is certain information concerning
aggregate fees billed for professional services rendered by Crowe Horwath LLP during the years ended December 31, 2013 and September
30, 2012. In August 2013, Poage Bankshares, Inc. elected to change its fiscal year from September 30 to December 31, effective
December 31, 2013.
|
|
Year Ended
December 31, 2013
|
|
|
Year Ended
September 30, 2012
|
|
|
Three Months Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
89,950
|
|
|
$
|
140,343
|
|
|
$
|
4,000
|
|
Audit-Related Fees
|
|
$
|
2,389
|
|
|
$
|
—
|
|
|
$
|
51,675
|
|
Tax Fees
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
All Other Fees
|
|
$
|
1,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Audit Fees.
Audit fees represent
the aggregate fees billed to us for professional services rendered for the audit of our annual financial statements, review of
the financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided in connection
with statutory and regulatory filings and engagements.
Audit Related Fees.
Audit-related
fees billed to us during the year ended December 31, 2013 were for services rendered in connection with accounting for our ESOP
allocation and loan repayment. Audit-related fees billed to us during the three months ended December 31, 2012 were for services
rendered in connection with an instance of employee fraud, including investigation of the incident, review of and assistance in
preparing disclosure relating to our internal controls over financial reporting for the annual report on Form 10-K for the year
ended September 30, 2012, and related revisions to our financial statements for certain periods. There were no audit-related fees
billed to us during the year ended September 30, 2012.
Tax Fees.
There were no fees
billed to us for professional services rendered for tax preparation, tax consultation and tax compliance during the years ended
December 31, 2013 or September 30, 2012 or the three months ended December 31, 2012.
All Other Fees.
Other fees
billed to us during the year ended December 31, 2013 were for advice related to the pending acquisition of Town Square Financial
Corporation and Town Square Bank. There were no fees billed to us for other services during the year ended September 30, 2012 or
the three months ended December 31, 2012.
The Audit Committee has considered whether
the provision of non-audit services, which relate primarily to tax compliance services and tax advice rendered, is compatible with
maintaining the independence of Crowe Horwath LLP. The Audit Committee concluded that performing such services does not affect
the independence of Crowe Horwath LLP in performing its function as our independent registered public accounting firm.
The Audit Committee’s policy is to
pre-approve all audit and non-audit services provided by the independent registered public accounting firm, either by approving
an engagement prior to the engagement or pursuant to a pre-approval policy with respect to particular services. These services
may include audit services, audit-related services, tax services and other services. The Audit Committee may delegate pre-approval
authority to one or more members of the Audit Committee when expedition of services is necessary. The independent registered public
accounting firm and management are required to periodically report to the full Audit Committee regarding the extent of services
provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services
performed to date. The audit-related fees and all other fees described above were approved as part of our engagement of Crowe Horwath
LLP.
The Board of Directors recommends a vote
“FOR” the ratification of Crowe Horwath LLP as independent registered public accounting firm for the year ending December
31, 2014.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in
the proxy materials for our 2015 Annual Meeting of Stockholders, any stockholder proposal to take action at such meeting must be
received at Poage Bankshares, Inc.’s executive office, 1500 Carter Avenue, Ashland, Kentucky 41101, no later than December
[●], 2014, which is 120 days prior to the first anniversary of the date we expect to mail these proxy materials. If the date
of the 2015 Annual Meeting of Stockholders is changed by more than 30 days, any stockholder proposal must be received at a reasonable
time before we print or mail proxy materials for such meeting. Any such proposals shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934.
In order to be considered at our 2015 Annual
Meeting of Stockholders, but not included in proxy materials, a stockholder proposal to take action at such meeting must be received
at our executive office not more than 90 days and not less than 80 days prior to the date of such meeting; provided, that if less
than 90 days’ notice of such meeting is given to stockholders, such stockholder proposal must be received at our executive
office not later than the 10
th
day following the date on which notice of such meeting was mailed to stockholders or
was otherwise disclosed in a press release reported by a nationally recognized news service, in a document publicly filed or furnished
with the Securities and Exchange Commission, or on our website. Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act of 1934.
The notice with respect
to stockholder proposals that are not nominations for director must set forth as to each matter: (i) a brief description of
the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;
(ii) the name and address of such stockholder as they appear on the books of Poage Bankshares, Inc. and of the beneficial
owner, if any, on whose behalf the proposal is made; (iii) the class or series and number of shares of capital stock which
are owned beneficially or of record by such stockholder and such beneficial owner; (iv) a description of all arrangements
or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal
of such business by such stockholder and any material interest of such stockholder in such business; and (v) a representation
that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.
A notice with respect to director nominations
must include (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) all information
relating to such person that would indicate such person’s qualification to serve on the Board of Directors of Poage Bankshares,
Inc.; (ii) an affidavit that such person would not be disqualified under the provisions of Article II, Section 12 of our Bylaws;
(iii) such information relating to such person that is required to be disclosed in connection with solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
and (iv) a written consent of each proposed nominee to be named as a nominee and to serve as a director if elected; and (b) as
to the stockholder giving the notice: (i) the name and address of such stockholder as they appear on Poage Bankshares, Inc.’s
books and of the beneficial owner, if any, on whose behalf the nomination is made; (ii) the class or series and number of
shares of capital stock which are owned beneficially or of record by such stockholder and such beneficial owner; (iii) a description
of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nomination(s) are to be made by such stockholder; (iv) a representation that such stockholder
intends to appear in person or by proxy at the meeting to nominate the persons named in its notice; and (v) any other information
relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to Regulation 14A under the Securities Exchange
Act of 1934.
Nothing in this proxy statement shall be
deemed to require us to include in our proxy statement and proxy relating to an annual meeting any stockholder proposal that does
not meet all of the requirements for inclusion established by the Securities and Exchange Commission in effect at the time such
proposal is received.
OTHER MATTERS
The Board of Directors is not aware of any
business to come before the Annual Meeting other than the matters described above in the Proxy Statement. However, if any matters
should properly come before the Annual Meeting, it is intended that the Board of Directors, as holders of the proxies, will act
as determined by a majority vote.
MISCELLANEOUS
The cost of solicitation of proxies will
be borne by Poage Bankshares, Inc. Poage Bankshares, Inc. will 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. In addition to solicitations
by mail, directors, officers and regular employees of Poage Bankshares, Inc. may solicit proxies personally or by telephone without
additional compensation.
A COPY OF POAGE BANKSHARES, INC.’S
2013 ANNUAL REPORT TO STOCKHOLDERS WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON WRITTEN REQUEST
TO THE SECRETARY, 1500 CARTER AVENUE, ASHLAND, KENTUCKY 41101 OR BY CALLING (606) 324-7196.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
Poage Bankshares, Inc.’s Proxy Statement,
including the Notice of the Annual Meeting of Stockholders, and the 2013 Annual Report to Stockholders are each available on the
Internet at
www.proxyonline.com/docs/poage.pdf
.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
[GRAPHIC]
James W. King
Secretary
|
Ashland, Kentucky
[mail date], 2013
APPENDIX A
INFORMATION CONCERNING PARTICIPANTS
IN POAGE BANKSHARES, INC.’S SOLICITATION
OF PROXIES
The following tables
(“Directors and Nominees” and “Officers and Employees”) identify the name and business address of our directors
and director nominees, and the name, present principal occupation, and business address of our officers and employees who, under
the rules of the Securities and Exchange Commission (the “SEC”), are considered to be participants in our solicitation
of proxies from our stockholders in connection with our 2014 Annual Meeting of Stockholders.
Directors and Nominees
The principal occupations
of our directors and director nominees who are considered participants in our proxy solicitation are set forth above under the
caption “Proposal 1—Election of Directors” in this proxy statement. The name and address of the organization
of employment of our directors and director nominees are as follows:
Name
|
|
Business Address
|
|
|
|
Ralph E. Coffman
|
|
c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
J. Thomas Rupert
|
|
c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
Darryl E. Akers
|
|
c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
Thomas Burnette
|
|
c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
Thomas P. Carver
|
|
c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
Everett B. Gevedon
|
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c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
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Stuart N. Moore
|
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c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
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Charles W. Robinson
|
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c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
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John C. Stewart, Jr.
|
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c/o Poage Bankshares, Inc.
1500 Carter Avenue, Ashland, Kentucky 41101
|
Officers and Employees
The principal occupations
of our officers and employees who are considered participants in our solicitation of proxies are set forth below. The principal
occupation refers to such person’s position with us, and the business address for each person is Poage Bankshares, Inc.,
1500 Carter Avenue, Ashland, Kentucky 41101.
Name
|
|
Principal Occupation
|
|
|
|
Jane Gilkerson
|
|
Executive Vice President and Chief Financial Officer
|
Miles R. Armentrout
|
|
Executive Vice President and Chief Credit Officer
|
James W. King
|
|
Executive Vice President, Chief Information Officer and Secretary
|
Bruce Van Horn
|
|
Executive Vice President
|
Jeffery W. Clark
|
|
Senior Vice President and Controller
|
Information Regarding Ownership of Poage Bankshares, Inc.
Securities by Participants
The number of shares
of our common stock held by our directors, director nominees, officers, employees who are participants in the proxy solicitation,
and each associate (as defined under Rule 14a-1(a) of the Securities Exchange Act of 1934) of these individuals, as of April 4,
2014 is included above under the caption “Voting Securities and Principal Holders” in this proxy statement.
Information Regarding Transactions
in Poage Bankshares, Inc. Securities by Participants
The following table
provides information regarding purchases and sales of our common stock by each of the participants listed above under “Directors
and Nominees” and “Officers and Employees” during the two years prior to April 4, 2014, including the dates on
which such shares were purchased or sold and the amount purchased or sold on such dates. Unless otherwise indicated, all transactions
were conducted in the public market or pursuant to our equity compensation plans and none of the purchase price or market value
of those shares are represented by funds borrowed or otherwise obtained for the purpose of acquiring or holding the shares.
Name
|
|
Date
|
|
Number of Shares of Common Stock
|
|
Transaction Description
|
Ralph E. Coffman
|
|
6/20/2012
|
|
1,000
|
|
1
|
|
|
8/17/2012
|
|
1
|
|
1,2
|
|
|
8/20/2012
|
|
400
|
|
1,2
|
|
|
8/21/2012
|
|
99
|
|
1,2
|
|
|
8/22/2012
|
|
500
|
|
1,2
|
|
|
9/10/2012
|
|
250
|
|
1,2
|
|
|
2/21/2013
|
|
1,000
|
|
8
|
|
|
2/27/2013
|
|
350
|
|
1
|
|
|
2/27/2013
|
|
500
|
|
1,2
|
|
|
2/27/2013
|
|
500
|
|
1,2
|
|
|
2/28/2013
|
|
500
|
|
1,2
|
|
|
4/16/2013
|
|
14,838
|
|
4
|
|
|
5/21/2013
|
|
57,500
|
|
5
|
|
|
11/21/2013
|
|
700
|
|
1,2
|
|
|
11/21/2013
|
|
531
|
|
1,2
|
|
|
11/22/2013
|
|
190
|
|
1,2
|
|
|
|
|
|
|
|
J. Thomas Rupert
|
|
4/16/2013
|
|
8,094
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
11/21/2013
|
|
500
|
|
1
|
|
|
3/13/2014
|
|
500
|
|
1,2
|
|
|
|
|
|
|
|
Darryl E. Akers
|
|
4/16/2013
|
|
2,698
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
|
|
|
|
|
Thomas Burnette
|
|
3/18/2014
|
|
61,715
|
|
7
|
|
|
|
|
|
|
|
Thomas P. Carver
|
|
4/16/2013
|
|
8,094
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
12/24/2013
|
|
104
|
|
1
|
|
|
3/6/2014
|
|
202
|
|
1
|
|
|
|
|
|
|
|
Everett B. Gevedon
|
|
4/16/2013
|
|
8,094
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
|
|
|
|
|
Stuart N. Moore
|
|
2/27/2013
|
|
700
|
|
1
|
|
|
4/16/2013
|
|
8,094
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
11/22/2013
|
|
500
|
|
1
|
|
|
11/26/2013
|
|
49
|
|
1
|
|
|
11/29/2013
|
|
451
|
|
1
|
|
|
3/14/2014
|
|
200
|
|
1
|
Name
|
|
Date
|
|
Number of Shares of Common Stock
|
|
Transaction Description
|
Charles W. Robinson
|
|
4/16/2013
|
|
8,094
|
|
4
|
|
|
5/21/2013
|
|
12,000
|
|
5
|
|
|
3/14/2013
|
|
1,500
|
|
1
|
|
|
|
|
|
|
|
John C. Stewart, Jr.
|
|
3/18/2014
|
|
11,644
|
|
7
|
|
|
3/18/2014
|
|
23,289
|
|
6,7
|
|
|
|
|
|
|
|
Jane Gilkerson
|
|
3/18/2014
|
|
34
|
|
6
|
|
|
3/18/2014
|
|
2,852
|
|
2,7
|
|
|
|
|
|
|
|
Miles R. Armentrout
|
|
4/16/2013
|
|
9,443
|
|
4
|
|
|
5/21/2013
|
|
25,000
|
|
5
|
|
|
|
|
|
|
|
James W. King
|
|
4/16/2013
|
|
9,443
|
|
4
|
|
|
5/21/2013
|
|
25,000
|
|
5
|
|
|
|
|
|
|
|
Bruce Van Horn
|
|
3/18/2014
|
|
18,446
|
|
7
|
|
|
3/18/2014
|
|
5,801
|
|
2,7
|
|
|
|
|
|
|
|
Jeffery W. Clark
|
|
2/27/2013
|
|
925
|
|
1
|
|
|
2/27/2013
|
|
100
|
|
1
|
|
|
4/16/2013
|
|
9,443
|
|
4
|
|
|
5/21/2013
|
|
12,250
|
|
5
|
|
|
|
|
|
|
|
|
1.
|
Purchase in the open market; direct ownership unless otherwise noted.
|
|
2.
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Acquisition of shares under IRA.
|
|
3.
|
Acquisition of shares under 401(k).
|
|
4.
|
Restricted stock award.
|
|
7.
|
Acquired in exchange for shares of Town Square Financial Corporation; direct ownership unless otherwise noted.
|
|
8.
|
Inadvertent sale in the open market in connection with a change in stock brokers. Mr. Coffman reimbursed Poage Bankshares,
Inc. $1,465 in short-swing profits that resulted from this transaction.
|
Miscellaneous Information Concerning Participants
Except as described
in this Appendix A or otherwise disclosed in this proxy statement, to the best of our knowledge, no participant, or any of his
or her associates (as defined under Rule 14a-1(a) of the Securities Exchange Act of 1934), beneficially owns any shares of our
common stock or other securities of Poage Bankshares, Inc. or the Bank. Furthermore, except as described above under the caption
“Transactions With Certain Related Persons” in this proxy statement to the best of our knowledge, no participant or
any of his or her associates, is either a party to any transactions or series of transactions since the beginning of our last fiscal
year, or any currently proposed transaction or series of transactions in which (i) we or any of our subsidiaries are or are to
be a party, (ii) the amount involved exceeds $120,000, and (iii) any participant, or any of his or her associates, had or will
have a direct or indirect material interest.
To the best of our
knowledge, except as described in this Appendix A or as otherwise disclosed in this proxy statement, no participant, or any of
his or her associates, has entered into any agreement or understanding with any person regarding any future employment by Poage
Bankshares, Inc. or any of its affiliates or any future transactions to which Poage Bankshares, Inc. or any of its affiliates will
or may be a party. Except as described above under the caption “Transactions With Certain Related Persons” in this
proxy statement, to the best of our knowledge, no participant is a party to any contract, arrangement, or understanding with any
person with respect to any securities of Poage Bankshares, Inc., including, but not limited to joint ventures, loan or option arrangements,
puts or calls, guarantees against loss or guarantees of profit, division of losses or profits, or the giving or withholding of
proxies.
Except as described
in this Appendix A or as otherwise disclosed in this proxy statement, to the best of our knowledge, no participant has any substantial
interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon at our Annual Meeting of Stockholders.
No participant has
been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the past ten years.
Preliminary Proxy Statement – Subject to Completion
POAGE BANKSHARES,
INC.
PROXY FOR THE
2014 ANNUAL MEETING OF STOCKHOLDERS
EACH STOCKHOLDER, WHETHER HE OR SHE
PLANS TO ATTEND THE MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE WHITE PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH OUR SECRETARY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY BEARING A LATER DATE. ANY STOCKHOLDER PRESENT AT THE MEETING MAY
REVOKE HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE MEETING. HOWEVER, IF YOU ARE A STOCKHOLDER WHOSE
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN ORDER TO VOTE PERSONALLY
AT THE MEETING.
The undersigned acknowledges
receipt from Poage Bankshares, Inc. prior to the execution of this proxy of a Notice of the Meeting, a proxy statement dated April
[●], 2014, and the 2013 Annual Report to Stockholders on Form 10-K. Please sign exactly as your name appears on this card.
When signing as attorney, executor, administrator, trustee or guardian, please give your full title. If shares are held jointly,
each holder should sign.
____________________________________________________
Signature Date
____________________________________________________
Signature (if held jointly) Date
____________________________________________________
Title if a corporation, partnership
or other entity
▲
FOLD
HERE - PLEASE DO NOT TEAR
▲
THIS WHITE PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS
EACH STOCKHOLDER, WHETHER HE OR SHE
PLANS TO ATTEND THE MEETING, IS REQUESTED TO SIGN, DATE AND RETURN THE WHITE PROXY CARD WITHOUT DELAY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE. ANY PROXY GIVEN BY THE STOCKHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
This WHITE proxy may be revoked by sending written notice to the Secretary of Poage Bankshares, Inc. at the address set forth on
the Notice of Annual Meeting of Stockholders, or by the filing of a later proxy prior to a vote being taken on a particular proposal
at the Meeting. Should the undersigned be present and elect to vote in person at the Meeting or at any adjournment thereof and
after notification to the Secretary of Poage Bankshares, Inc. 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.
HOWEVER,
IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD
HOLDER IN ORDER TO VOTE PERSONALLY AT THE MEETING.
YOUR VOTE IS IMPORTANT! PLEASE TAKE
THE TIME TO VOTE USING ANY OF THE THREE SIMPLE METHODS DESCRIBED BELOW:
|
1.
Internet
:
|
Log on to
www.proxyonline.com
. Make sure to have this proxy card available when you plan to vote your shares. You will need the control number and check digit found in the box at the right at the time you execute your vote.
|
|
Control Number
:
|
|
2.
Touchtone
Phone
:
|
Simply dial toll-free (866) 745-0269 and follow the automated instructions. Please have this proxy card available at the time of the call.
|
|
|
|
3.
Mail
:
|
Simply sign, date, and complete the reverse side of this proxy card and PROMPTLY return it in the postage paid envelope provided.
|
|
|
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2014: POAGE BANKSHARES, INC.’S PROXY STATEMENT, INCLUDING THE
NOTICE OF THE ANNUAL MEETING OF STOCKHOLDERS, AND POAGE BANKSHARES, INC.’S 2013 ANNUAL REPORT TO STOCKHOLDERS ON FORM 10-K
ARE EACH AVAILABLE ON THE INTERNET AT WWW.PROXYONLINE.COM/DOCS/POAGE/PDF.
TAGID: [SCANNER BARCODE]
POAGE BANKSHARES, INC.
PROXY
FOR THE 2014 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON
BEHALF OF YOUR COMPANY’S BOARD OF DIRECTORS.
The undersigned hereby appoints the official
proxy committee, consisting of all members of the Board of Directors who are not standing for election at the Annual Meeting, 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 (“Annual Meeting”) to be held at The
Park Place, located at 1701 Central Avenue, Ashland, Kentucky 41101 on May 20, 2014, at 10:00 a.m., local time. The official proxy
committee is authorized to cast all votes to which the undersigned is entitled as follows:
TO VOTE,
MARK ONE BOX IN BLUE OR BLACK INK. Example:
x
PROPOSALS
:
1.
|
The election of Stuart N. Moore, Charles W. Robinson and Thomas Burnette, each to serve for a three-year term.
|
FOR
|
WITHHOLD
|
FOR ALL EXCEPT
|
|
INSTRUCTION:
To withhold your vote for one or more nominees, mark “For All Except” and write the name(s) of the nominee(s) on the line(s) below.
|
¨
|
¨
|
¨
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FOR
|
WITHHOLD
|
ABSTAIN
|
2.
|
The advisory (non-binding) approval of the Company’s executive compensation as described in the Proxy Statement (“say on pay”).
|
¨
|
¨
|
¨
|
|
|
|
|
|
|
|
FOR
|
WITHHOLD
|
ABSTAIN
|
3.
|
The ratification of the appointment of Crowe Horwath, LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2014.
|
¨
|
¨
|
¨
|
The Board of Directors recommends a vote
“FOR” each of Proposal 1, Proposal 2 and Proposal 3.
THIS WHITE PROXY WILL BE VOTED AS DIRECTED,
BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS WHITE PROXY WILL BE VOTED FOR EACH OF PROPOSAL 1, PROPOSAL 2, AND PROPOSAL 3 ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE NAMED PROXIES AT THE DIRECTION OF A MAJORITY
OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE
CHECK IF YOU ARE PLANNING TO ATTEND THE MEETING
¨
TAGID: [SCANNER BARCODE]
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