Audit Committee Charter
The Board of Directors of First Citizens National Bank has established a committee of directors to be known as the Audit Committee. The members of the Audit Committee are Barry Ladd (Chairman), Larry Gibson, John Lannom, Eddie Anderson and Danny Carpenter. The composition, authority, purposes and responsibilities of the Committee are outlined below.
To assist Board of Directors in fulfilling its oversight responsibilities for financial reporting process, system of internal controls, and internal and external audit process, and the company's process for monitoring compliance with laws and regulations and the code of conduct.
Audit Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:
- Appoint, compensate, and oversee work of any registered public accounting firm employed by the organization.
- Resolve disagreements between management and auditor regarding financial reporting.
- Pre-approve all auditing and non-audit services.
- Assume an ongoing investigation or conduct an investigation without the Auditor or Ethics Committee participation
- Retain independent counsel, accountants, or others to advise Committee or assist in investigation as considered necessary.
- Seek any information it requires from employees-all of whom are directed to cooperate with Committee's requests-or external parties.
- Meet with company officers, external auditors, or outside counsel, as necessary.
Audit Committee will consist of at least three and no more than six members of Board of Directors. Board or its Nominating Committee will appoint Committee members and Committee chair. Each Committee member will be both independent and financially literate.
Committee will meet at least four times a year, with authority to convene additional meetings, as circumstances require. Committee members are expected to attend each meeting. Committee will invite members of management, auditors or others to attend meetings and provide pertinent information, as necessary. Committee will hold private meetings with auditors and have executive sessions. Meeting agendas will be prepared and provided in advance to members, along with appropriate briefing materials. Minutes will be prepared.
Committee will carry out the following responsibilities:
- Review significant accounting and reporting issues, including complex or unusual transactions and highly judgmental areas, and recent professional and regulatory pronouncements, and understand their impact on financial statements.
- Review with management and external auditors results of audits.
- Review process of completion of annual financial statements, and consider whether statements are complete and consistent with information known to committee members.
- Review process of completion of other annual report sections and related regulatory filings before release.
- Review with management and external auditors all matters required to be communicated to Committee under Generally Accepted Auditing Standards.
- Understand how management develops interim financial information, and nature and extent of internal and external auditor involvement.
- Review process of completion of interim financial reports with management and external auditors before filing with regulators, and consider whether they are complete and consistent with information known to Committee.
- Consider effectiveness of company's internal control system, including information technology security and control.
- Understand scope of internal and external auditors' review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management's responses.
- Review with management and chief audit executive charter, plans, activities, staffing, and organizational structure of internal audit function.
- Ensure there are no unjustified restrictions or limitations, and review and concur in appointment, replacement, or dismissal of chief audit executive.
- Review effectiveness of internal audit function, including compliance with The Institute of Internal Auditors' Standards for the Professional Practice of Internal Auditing.
- On a regular basis, meet separately with chief audit executive to discuss any matters that Committee or internal audit believes should be discussed privately.
- Determine hiring, retaining or dismissing a chief internal audit executive as well as proposed performance evaluations and compensation changes.
- Delegate to chief audit executive receipt and handling of complaints related to accounting, internal accounting controls, and auditing matters. Oversee reports of complaints by reviewing preliminary, ongoing, and completed investigations making recommendations for outside counsel. Participate in investigation process as needed.
- Review external auditors' proposed audit scope and approach, including coordination of audit effort with internal audit.
- Review performance of external auditors, and exercise final approval on appointment or discharge of auditors.
- Review and confirm independence of external auditors by obtaining statements from auditors on relationships between auditors and bank, including non-audit services, and discussing relationships with auditors.
- On an annual basis, meet separately with external auditors to discuss any matters that Committee or auditors believe should be discussed privately.
- Review effectiveness of system for monitoring compliance with laws and regulations and results of management's investigation and follow-up (including disciplinary action) of any instances of noncompliance.
- Review findings of any examinations by regulatory agencies, and any auditor observations.
- Review process for communicating the code of conduct to company personnel, and for monitoring compliance therewith.
- Obtain regular updates from management regarding compliance matters.
- Regularly report to Board of Directors concerning Committee activities, issues, and related recommendations.
- Provide an open avenue of communication between internal audit, external auditors, and Board of Directors.
- Review other reports bank issues that relate to Committee responsibilities.
- Perform other activities related to Committee Charter as requested by Board of Directors.
- Institute and oversee special investigations as needed.
- Review and assess adequacy of Committee Charter annually, requesting Board approval for proposed changes; ensure appropriate disclosure as may be required by law or regulation.
- Confirm annually that all responsibilities outlined in this charter have been carried out.
- Evaluate Committee and individual member performance on a regular basis and report results to Corporate Governance Committee.
- Committee Chairman will read annual OCC exam to identify issues referenced in the Report which relate to oversight responsibilities of the Committee. Committee will discuss with management resolution of any identified issues or findings.
Corporate Governance Guidelines
First Citizens through its Board of Directors and management, has long sought to meet the highest standards of corporate governance. These Guidelines are a further effort in that regard and will help guide the Board and management. Guidelines should be considered in conjunction with First Citizens Bancshares, Inc. Bylaws and applicable provisions of corporate law and regulations.
- The primary duty of the Board is to select a Chief Executive Officer and to oversee the Chief Executive Officer and other senior management in the competent and ethical operations of First Citizens.
- It is the responsibility of management to operate First Citizens in an effective and ethical manner in order to produce value for stockholders. Senior management is expected to know how First Citizens earns its income and what risks First Citizens is undertaking in the course of carrying out its business. Management should never place personal interests ahead of, or allow personal interests to conflict with, the interests of First Citizens or its shareholders.
- It is the responsibility of management, through oversight of the Board and its Audit Committee, to produce financial statements that fairly present the financial condition and results of operations of First Citizens and to make timely disclosures needed by investors to assess the financial condition, business soundness and risks of First Citizens Bancshares, Inc.
- It is the responsibility of the Audit Committee to engage an independent accounting firm which will audit financial statements prepared by management and issue an opinion on those statements based on Generally Accepted Accounting Principles. The Board, its Audit Committee, and management must be vigilant to ensure that no actions taken by First Citizens or its employees compromise the independence of the outside auditor.
- It is the responsibility of the independent accounting firm to ensure that it is in fact independent, is without conflicts of interest, employs highly competent staff, and carries out its work in accordance with Generally Accepted Auditing Standards. It is also the responsibility of the independent accounting firm to inform the Board, through the Audit Committee, of any concerns the auditor may have about the appropriateness or quality of significant accounting treatments and/or business transactions that affect the fair presentation of First Citizens' financial condition and results of operations. Finally, it is the responsibility of the independent accounting firm to report to the Board through the Audit Committee any weaknesses in internal control systems. The auditor should do so in a forthright manner and on a timely basis, whether or not management has also communicated with the Board or the Audit Committee on these matters.
Selection and Composition of the Board
The Board seeks members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The Compensation, Nominating and Corporate Governance Committee (the "Committee") is responsible for reviewing with the Board, on a periodic basis, the appropriate skills and characteristics required of Board members in the context of the current make-up of the Board. This assessment includes issues such as independence, age, diversity, skills such as understanding the financial services industry, general business knowledge and experience, all in the context of an assessment of the perceived needs of the Board at that point in time. Each Board member is expected to ensure that existing and planned future commitments do not materially interfere with the member's service as a fully contributing Director of First Citizens.
Nominees to be proposed for election to the Board of Directors of the corporation other than those made by the existing Board of Directors must be delivered in writing to the Secretary of First Citizens Bancshares ninety (90) days prior to the month and day that proxy materials regarding the most recent election of directors were mailed to shareholders. The written notice must include the full name of the proposed director, age and date of birth, educational background and a list of business experience and positions held by the proposed director for the preceding five (5) years. The notice must include home and business addresses and telephone numbers. In addition, the submission must include a signed representation by the nominee to timely provide all necessary information requested by the corporation in order that disclosure requirements may be met in the solicitation of proxies for the election of directors. The name of each nominee for director must be placed in nomination by a shareholder present in person at the Annual Meeting of the Corporation. The nominee must also be present in person at the annual meeting.
First Citizens shall have a majority of independent Directors. At least once each year, the Board will review any and all relationships that exist with a Director and his/her related interests for the purpose of determining whether the Director is independent. This information shall be initially reviewed by the Governance Committee or, in the case of members of the Governance Committee, the Board. It is the policy of the Board that a Director is presumed to be independent unless the Director (or their immediate family members) (i) is/was a current/former employee/executive of the Corporation during the last three (3) years; (ii) is/was a current/former employee/partner of the Corporation's current or former independent auditors during the last three (3) years; (iii) is an owner, partner, employee, director of an entity with material relationships (makes payments to, or receives payments from the Corporation which exceed the greater of $1 million, or 2% of the entity's gross revenues) with the Corporation, either as a vendor or customer, except in situations where revenues are generated as a result of a competitive bid process in which the business relationship is determined to be in the best interest of the Corporation; and (iv) receives more than $100,000 per year in direct compensation from the Corporation other than director and related fees.
The Board shall broadly consider all relevant facts and circumstances when making a determination of independence. The Board shall consider the issue not merely from the standpoint of a Director, but also from that of persons or organizations with which the Director has an affiliation. An independent Director should be free of any relationship with First Citizens or its management that may impair the Director's ability to make independent judgments. Particular attention will be paid to whether a Director is independent from management and to any credit relationships that may exist with a Director or a related interest.
The following guidelines are to be followed when determining the impact of a credit relationship on a Director's independence: Extensions of credit that comply with Regulation O shall be presumed to be consistent with Director independence. Normal, arms length credit relationships entered into in the ordinary course of business shall not negate Director independence. In addition, an extension of credit to a company, an executive officer of which serves on the Board of First Citizens, must meet the substantive requirements of Regulation O in order to maintain the independence of such Director. Such loans must be made on substantially the same terms, including interest rates and collateral, following credit-underwriting procedures that are no less stringent than those prevailing at the time for comparable transactions by First Citizens with other persons. Such loans also shall not involve more than the normal risk of repayment or other unfavorable features and no event of default shall have occurred. The Board must review any credit of a director or his or her related interests that has become criticized in order to determine the impact that such classification has on the Director's independence.
Orientation of New Directors
New Directors must participate in the Corporation's Director Orientation Program, which should be conducted within two months of the annual meeting at which new Directors are elected or within three months of the time a new Director otherwise joins the Board. This orientation will include presentations by executive management to familiarize new Directors with the Corporation's Strategic Plan, financial accounting and risk management issues, compliance programs, the Corporation's Code of Conduct, its principal officers, and internal and independent auditors.
The basic responsibility of Directors of the Corporation is to exercise their business judgment in good faith to act in what they reasonably believe to be in the best interest of the Corporation. In discharging that obligation, Directors should be entitled to rely on the honesty and integrity of their fellow Directors and the Corporation's senior executives and outside advisors and auditors. Directors shall also be entitled to have the Corporation purchase reasonable directors' and officers' liability insurance on their behalf, to the benefits of indemnification to the fullest extent permitted by law and the Corporation's Articles of Incorporation, By-laws and any indemnification agreements.
Directors are expected to attend Board meetings and meetings of committees on which they serve, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. Information and data needed to make informed decisions will be provided Directors prior to scheduled meetings.
The Board has no policy with respect to the separation of the offices of Chairman and the Chief Executive Officer (the "CEO"). The Board believes this matter is part of the succession planning process, which is overseen by the Governance Committee, and that it is in the best interest of the Corporation for the Board to make a determination when it elects a new chief executive officer or Board Chairman.
The Board believes that the number of shares of the Corporation's common stock owned by each Director is a personal decision; however, the Board strongly supports the position that Directors should own a meaningful number of shares in the Corporation, not less than that mandated by regulation for Directors of National Banks.
The responsibility for communications and relationships on behalf to the Corporation with institutional investors, the media, and customers should be management's. The Board may participate occasionally in such interaction at the request of or with prior knowledge of management. The Chairman of the Board and Chief Executive Officer is responsible for establishing effective communications with First Citizens stakeholder groups, i.e., shareholders, Regulators, customers, Company associates, communities, suppliers, creditors, government and corporate partners. It is the policy of the Board that management speaks for First Citizens.
In order to facilitate open discussion, the Board believes maintaining confidentiality of information and deliberations is an imperative.
The Board will have a Presiding Director, selected by non-employee Directors, who will chair regularly scheduled meetings of non-employee Directors. Normally, the Chairman of the Governance Committee shall be the Presiding Officer. In the absence of the Chairman of the Governance Committee, the Chairman of the Audit Committee shall be the Presiding Director. Non-employee Directors of the Board will meet at least once each year, and at such other times as deemed necessary, and such meeting(s) will be presided over by the Presiding Director.
Directors have full and free access to officers and employees of the Corporation. Any meetings or contacts that a Director wishes to initiate may be arranged through the CEO, the Corporate Secretary or directly by the Director. Directors will use their judgment to ensure that any such contact is not disruptive to the business operations of the Corporation and will, to the extent not inappropriate, copy the CEO on any written communications between a Director and an officer or employee of the Corporation.
Shareholders desiring to communicate directly with the Board of Directors may do so through the Corporate Governance/Nominating/Compensation Committee by contacting the Chairman or any member of the committee. Committee membership is listed below or may be obtained by calling the Audit Department at (731) 287-4275. Letters sent via the US Postal Service may be mailed to Chairman, Corporate Governance Committee, First Citizens National Bank Audit Department, P.O. Box 890, Dyersburg, TN 38025-0890.
Board Composition and Performance
The Board believes that the number of Directors should not exceed a number that can function efficiently as a body. The exact number of Directors constituting the Board of Directors of First Citizens shall be fixed from time to time solely by the Board of Directors by resolution. It is the sense of the Board that individual Directors who change their principal occupation, position or responsibility they held when elected to the Board should volunteer to resign from the Board. However, it is not the sense of the Board that in every instance Directors who retire or change the position they held when they joined the Board should necessarily leave the Board. There should, however, be an opportunity for the Board through the Governance Committee to review the continued appropriateness of Board membership under such circumstances.
The Board is not of the opinion that term limits should be established. While term limits could possibly insure the presence of fresh ideas and viewpoints, they have the disadvantage of losing the contribution of Directors who have been able to develop, over a period of time, increasing insight into the Corporation and its operations and, therefore, provide an increasing contribution to the Board as a whole. Retirement of a Director from the Board of the Corporation is established by policy to occur January 1st following their 75th birthday, excepting those Directors elected to Board service prior to January 1st, 1984, in which case there is no mandatory retirement age.
The form and amount of Director compensation will be determined by the Governance Committee in accordance with policies and principles set forth in its charter and any other applicable rules. Company staff will report annually to the Governance Committee, the status of First Citizens Board compensation in relation to that of comparable peer banks. The Governance committee will consider that Directors' independence may be jeopardized if Director compensation and prerequisites exceed customary levels.
Annual Performance Evaluation
The Board of Directors will conduct an annual self-evaluation with the assistance of the Governance Committee to determine whether it and its committees are functioning effectively. The Governance Committee will receive comments from all Directors and report annually to the Board with an assessment of the Board's performance. This will be discussed with the full Board following the end of each calendar year. The assessment will focus on the Board's contribution to the Corporation and specifically focus on areas in which the Board or management believes that the Board could improve.
The Chairman of the Board and the Chief Executive Officer will establish an agenda for each Board Meeting. Board members may suggest the inclusion of additional item(s) on the agenda for Board consideration and/or discussion by contacting the Board Chairman, CEO or Board Secretary.
The Governance Committee is responsible, after consultation with the Chairman of the Board and Chief Executive Officer, and with consideration of the desires of individual Board members, for the assignment of the Board members to various Committees. It is the sense of the Board that consideration should be given to rotating Committee members periodically, but the Board does not mandate a policy of such rotation since there may be reasons to maintain an individual Director's Committee membership for a longer period.
The Board will have at all times an Executive Committee, Audit Committee, Compensation/Nominations/Corporate Governance Committee, Trust Committee, Community Reinvestment Act Committee and Investment Committee. All members of the Audit and Corporate Governance Committee will be independent Directors under criteria established by the applicable regulatory authorities. In general, committee members will be nominated by the Governance Committee and appointed by the Board. It is the sense of the Board that consideration should be given to rotating committee members periodically, but the Board does not feel that rotation should be mandated as a policy.
Each committee will have its own charter. Charters will set forth purposes, goals and responsibilities of the committees as well as certain specific qualifications for committee membership and procedures for committee member appointments. In addition, charters will address committee reporting to the Board. The charters will also provide that each committee annually evaluates its performance.
The Board may, from time to time, establish or maintain additional standing or temporary committees as necessary or appropriate.
CEO Evaluation and Management Succession
The Governance Committee will conduct an annual review of the CEO's performance, as set forth in its charter. The Board of Directors will review the Governance Committee's report in order to confirm that the CEO is providing effective leadership for the Corporation in the long- and short-term.
The Governance committee should periodically report to the Board on succession planning. The entire Board will work with the Governance committee to nominate and evaluate potential successors to the CEO. The CEO should at all times make available his or her recommendations and evaluations of potential successors, along with a review of any development plans recommended for such individuals.
FIRST CITIZENS NATIONAL BANK
CODE OF CONDUCT
PPROVED BY: Board of Directors
First Citizens Bancshares, Inc
First Citizens National Bank
Code of Conduct
It is the policy of First Citizens National Bank to prohibit its officers and employees from engaging in any activity or practice in conflict with the interest of a customer or of the Bank. Even the appearance of such a conflict should be avoided. Each officer, employee or director of First Citizens National Bank is required to certify that he/she has personally reviewed the code of conduct and that he/she is fully in compliance. Each employee shall review the Code of Conduct paying special attention to the following:
It is the policy of First Citizens National Bank that Directors, Principal Shareholders, Officers and Employees shall keep in strict confidence all information received by them regarding the affairs of customers and Bank business.
Information relating to account balances, the financial condition of a customer, and anticipated changes in the management or conduct of the affairs of a business must be held in strict confidence.
Acceptance of Gifts, Fees, Legacies, and Loans
It is the Policy of First Citizens National Bank to prohibit Directors, Officers, Employees, or Bank legal counsel from soliciting for themselves or for a third party anything of value from anyone in return for any business, service or confidential information of the bank and from accepting anything of value other than bona fide salary, wages, and fees from anyone in connection with the business of the bank either before or after a transaction is discussed or consummated. The policy states the limited circumstances in which the acceptance of gifts, by Directors, Officers, and Employees from customers or suppliers of the bank is permitted.
Any officer or employee desiring to run for an elective political office or to accept an appointment to a federal, state, or local government office, must secure the approval of the CEO to his or her becoming a candidate or accepting an appointment. Each employee and officer must abide by the Code of Conduct Policy concerning political offices.
Purchase or Sale of Securities
Officers and Employees are prohibited from acting upon material inside information prior to public disclosure through the purchase of such securities for their own accounts or for fiduciary or agency accounts, and for divulging such information or others except as required by Bank business.
Code of Ethics for Financial Professionals Policy
This First Citizens Code of Ethics for Financial Professionals applies to the principal executive officer of First Citizens and its reporting subsidiaries and all professionals serving in a finance, accounting, treasury, tax or investor relations role. First Citizens expects all of its employees to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities, to comply with all applicable laws, rules and regulations, and to deter wrongdoing and abide by the First Citizens Code of Conduct and other policies and procedures adopted by First Citizens that govern the conduct of its employees. This Code of Ethics is intended to supplement the First Citizens Code of Conduct.
You agree to:
- Engage in and promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships:
- Avoid conflicts of interest and to disclose to the Auditor or an Executive Officer of First Citizens any material transaction or relationship that reasonably could be expected to give rise to such a conflict.
- Take all reasonable measures to protect confidentiality of non-public information about First Citizens or its subsidiaries and their customers obtained or created in connection with your activities and to prevent the unauthorized disclosure of such information unless required by applicable law or regulation or legal or regulatory process.
- Produce full, fair accurate, timely and understandable disclosure in reports and documents that First Citizens or its subsidiaries files with, or submits to, the Securities and Exchange Commission and other regulators and in other public communications made by First Citizens or its subsidiaries.
- Comply with applicable governmental laws, rules and regulations, as well as the rules and regulations of self-regulatory organizations of which First Citizens or its subsidiaries is a member; and
Promptly report any possible violation of this Code of Ethics to the Auditor or an Executive Officer of First Citizens or any of the parties or channels listed in the First Citizens Code of Conduct.
You are prohibited from directly or indirectly taking any action to fraudulently influence, coerce, manipulate or mislead First Citizens or its subsidiaries' independent public auditors for the purpose of rendering the financial statement of First Citizens or its subsidiaries misleading.
You understand that you will be held accountable for your adherence to this Code of Ethics. Your failure to observe the terms of this Code of Ethics may result in disciplinary action, up to and including termination of employment. Violations of this Code of Ethics may also constitute violations of law and may result in civil and criminal penalties for you, your supervisor and/or First Citizens.
If you have any questions regarding the best course of action in a particular situation, you should promptly contact the Auditor or an Executive Officer. You may choose to remain anonymous in reporting any possible violation of this Code of Ethics.
Governance Committee Charter
The Board of Directors (the "Board") of First Citizens National Bank (the "Bank") has established a committee of directors to be known as the Compensation/Nominations/Corporate Governance Committee (the "Committee"). The committee members are Milton Magee (Chairman), Richard Donner, John Lannom, Ralph Henson and Steve Williams. The composition, authority, purposes and responsibilities of the Committee are outlined below.
The membership of the Committee shall be as follows:
- Based on the recommendations of the Committee, the Board shall annually appoint members of the Committee ("Members"). The Committee shall consist of no fewer than five (5) members of the Board. The Board will appoint one of the Members to serve as chairperson of the Committee (the "Committee Chair"). The Board may at any time and with complete discretion remove any Member and may fill any vacancy in the Committee.
- The Board shall determine to their satisfaction that all Members meet the "independence" requirements as defined by the applicable rules and regulations.
- The Committee may also appoint a Secretary, who need not be a Director, and may delegate to the Committee Chair such power and authority as the Committee deems to be appropriate, except such powers and authorities required by law to be exercised by the whole Committee.
The Committee shall have the following authority, to the extent it deems necessary or appropriate to discharge its duties and responsibilities:
- The Committee shall have the complete authority and resources to select, approve, and retain advisors or consultants to assist the Committee without seeking the prior approval of the Board or management of the Bank or First Citizens Bancshares, Inc. (the "Corporation") and shall have sole authority to approve such advisor's or consultant's fees and other retention terms. Any advisor or consultant retained by the Committee or that provides advice or information to the Committee shall be independent of management and shall perform no other services for the Corporation unless such services are approved and overseen by the Committee. The Committee shall also have authority to obtain advice and assistance from internal or external legal, accounting or other advisors as the Committee deems necessary to carry out its duties, at the expense of the Corporation, without seeking prior approval of the Board or management.
- In performing their responsibilities, Members are entitled to rely in good faith on information, opinions, reports or statements prepared or presented by: (a) officers or employees of the Bank or the Corporation whom the Member reasonably believes to be reliable and competent in the matters presented; (b) counsel, advisors, or other persons as to matters which the Member reasonably believes to be within the professional or expert competence of such person; or (c) another committee of the Board as to matters within its designated authority which committee the Member reasonably believes to merit confidence.
MEETINGS OF THE COMMITTEE
The Committee will meet at least [two] times annually, and more frequently if circumstances dictate. The Committee should meet at least annually with the executive officers of the Corporation and other members of management in separate executive sessions to discuss compensatory, performance and any other matters that the Committee or any of these persons believe should be discussed privately. The Committee may set its own rules of procedure and may delegate authority to subcommittees of the Members. The Committee shall keep minutes of its actions.
PURPOSES OF THE COMMITTEE
The Committee is appointed to discharge the Board's responsibilities relating to Compensation of the Corporation's executive officers. The Committee has overall responsibility for evaluating and approving the executive officers benefits, bonus, incentive compensation, severance, equity-based or other compensation plans, policies and programs of the Corporation.
Additionally, the Committee's purpose is to assist the Board in promoting the best interests of the Corporations and its shareholders through the implementation of sound corporate governance principles and practices. The Committee will accomplish this by (i) assisting the Board in identifying individuals qualified to become directors and recommending to the Board nominees for the next annual meeting of shareholders; (ii) reviewing the qualifications and independence of the members of the Board and its various committees on a periodic basis and making any recommendations the Members may deem appropriate from time to time concerning any recommended changes in the composition of the Board and its committees; (iii) recommending to the Board the Corporate Governance Guidelines and standards regarding the independence of outside directors applicable to the Corporation and reviewing such guidelines and standards and the provisions of this Charter on a periodic basis to confirm that such guidelines, standards and this Charter remain consistent with sound corporate governance practices and with any legal or regulatory requirements and any recommendations of the federal banking regulators regarding general best corporate governance practices; (iv) monitoring the Board's and the Corporation's compliance with any commitments made to the Corporation's regulators or otherwise regarding changes in corporate governance practices; and (v) leading the Board in its annual review of the Board's performance.
RESPONSIBILITIES OF THE COMMITTEE
- Review and recommend to the Board all persons to be appointed as Chairman, Chief Executive Officer, or President of the Corporation or the Bank and such other executive positions as the Members may from time to time determine to be appropriate, and shall review and report to the Board as to the performance evaluation of each such officer on at least an annual basis.
- Oversee the development of an executive management succession plan and for periodically reviewing and evaluating the plan.
- Review with the Chief Executive Officer and the Director of Human Resources all material criteria used in evaluating employee performance throughout the organization and in establishing appropriate compensation, retention, incentive, severance and benefit policies and programs.
- Review and approve corporate, individual and other goals and performance metrics, if any, relevant to the compensation of the executive officers pursuant to any corresponding incentive compensation plans, evaluate the performance of each of the applicable executive officers in light of those goals and performance metrics, and determine and approve the amount of any bonus based on such evaluation.
- Review and approve or make recommendations to the Board with respect to the adoption of or material changes in employee benefit, bonus, incentive compensation, severance, equity-based or other compensation or incentive plans of the Corporation.
- Review and approve, for the Chief Executive Officer and the other executive officers of Corporation and the Bank: (a) the annual base salary level; (b) the annual incentive opportunity level; (c) employment agreements; (d) any prerequisites or other in-kind benefits; and (e) any other special or supplemental benefits, in each case as, when and if appropriate.
- In determining the salary, annual incentive and other components of each executive officer’s compensation, the Committee should consider, as appropriate, (a) any applicable performance metrics and goals, (b) the salary, bonus and value of similar incentive awards for executive officers in comparable positions at comparable companies, (c) the salary, annual incentive and other compensation given to the executive officer in past years, (d) the other executive officer’s total compensation and (e) such other matters as it may deem relevant.
Nominations and Corporate Governance Matters
- Identify and consider potential candidates for nomination, including those properly submitted by qualified shareholders, as members of the Board on an ongoing basis, in such manner as the Committee deems appropriate. The Committee will oversee the invitation to join the Board.
- Recommend, as necessary, to the Board the number of Directors to be elected and a slate of nominees for election as Directors at the Corporation's annual meeting of shareholders.
- Recommend, as necessary, to the Board persons to be appointed as Directors in the interval between annual meetings of the Corporation's shareholders.
- Recommend to the Board standards for determining outside director independence consistent with applicable regulations, review the independence of the members of the Board in accordance with such requirements and review and assess such requirements on a regular periodic basis.
- The Committee shall develop criteria, which shall be considered, changed (if appropriate) and approved by the Board, for selection of members of the Board and its committees. The Committee shall review with the Board, on an annual basis, the requisite skills and characteristics of new members of the Board as well as the composition of the Board as a whole. This assessment will include the characteristics and qualifications set forth in the Corporate Governance Guidelines.
- The Committee and the Chief Executive Officer of the Corporation shall actively seek individuals qualified to become Board members for recommendation to the Board and to the shareholders. The Committee shall have the sole authority to retain, at the Corporation’s expense, and terminate any search firm to be used to identify director candidates and shall have sole authority to approve the search firm’s fees and other retention terms. In consultation with the Chief Executive Officer of the Corporation, the Committee shall determine if any written nominations that are proposed by a shareholder or shareholders of the Corporation have been properly submitted in accordance with the Corporation’s Bylaws and/or other applicable law. The Committee shall review and consider any and all such nominations that have been properly submitted. After consulting with the Chief Executive Officer of the Corporation, the Committee shall recommend the director nominees and committee members (and chairmanships thereof) to the Board for approval and, as applicable, inclusion in the Corporation’s annual Proxy Statement.
- Oversee the Corporation's director orientation and continuing education programs.
- The Committee shall evaluate, and make recommendations to the Board regarding, the form and amount of non-management director compensation in accordance with this Charter and the Corporate Governance Guidelines. The Committee shall conduct a review of non-management director compensation at least every two years.
- Recommend to the Board such changes to the Board's committee structure and committee functions as the Committee deems advisable.
- Confirm that each standing committee of the Board has a Charter in effect and that such Charter is reviewed periodically by the applicable committee.
- Review shareholder proposals duly and properly submitted to the Corporation and recommend appropriate action to the Board.
- Review any proposed amendments to the Corporation's or the Bank's Charter and Bylaws and recommend appropriate action to the Board.
- Review and assess the adequacy of the Corporate Governance Guidelines of the Corporation and recommend any proposed changes to the Board for approval.
- Review and assess the Corporation's compliance with the corporate governance requirements by federal banking laws and regulations or otherwise as applicable to the Corporation and its subsidiaries.
- Monitor the Board's and the Corporation's compliance with any commitments made to the Corporation's regulators or otherwise regarding changes in corporate governance practices.
- Recommend to the Board such additional actions related to corporate governance matters as the Committee may deem necessary or advisable from time to time.
- Evaluate the effectiveness of the Board's oversight of management activities and the major operations of the Corporation and its subsidiaries and controlled affiliates.
- Report annually to the Board an assessment of the Board's performance, to be discussed with the full Board near or following the end of each calendar year.
- Review and approve reports and/or disclosures for regulatory filings as required by law.
- Report regularly to the Board on the Committee's activities.
- Committee Chair will read annual OCC exam to identify issues referenced in the Report which relate to oversight responsibilities of the Committee. Committee will discuss with management resolution of any identified issues or findings.
- Maintain minutes of the Committee's meetings and records relating to those meetings and the Committee's activities.
- Review and reassess the adequacy of this Charter annually and recommend to the Board any proposed changes to this Charter.
- Annually review the Committee's own performance.
Executive Committee Charter
The Board of Directors of First Citizens National Bank has established a committee of directors and officers of the bank to be known as the Executive Committee. The members of the Executive Committee are Jeff Agee (Chairman), Eddie Anderson, Ralph Henson, Richard Donner, Milton Magee, Larry White, Judy Long and Sherrell Armstrong. The composition, authority, purposes and responsibilities of the Committee are outlined below:
Membership of the committee shall include officers and directors of the Bank. The Committee will always include the Chairman of the Board and President and CEO and such other officers deemed necessary by the Board.
The Committee is responsible to address major policy making functions and decisions, approve loans in accordance with authority delegated by loan policy and to act on behalf of the full board between regularly scheduled meetings.
PURPOSE OF THE COMMITTEE
To act as a standing committee of the Board of Directors authorized to make business decisions between meetings of the full Board. The Executive Committee is considered to always be in session.
RESPONSIBILITIES OF THE COMMITTEE
- To review, and approve or disapprove submitted loan applications in line with policy established by the Board of Directors
- To approve and authorize, or disapprove loans and renewals of loans in excess of the lending limitations of officers.
- To consider and approve new branch/market locations.
- To consider and act upon matters relative to the operations of the Bank on behalf of the Board of Directors when a full meeting cannot be called.
- Committee Chairman will read annual OCC exam to identify issues referenced in the Report, which relate to the oversight responsibilities of the Committee. Committee will discuss with management resolution of any identified issues or finding.