UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the commission only (as permitted by rule 14A-
6(E)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240-14a-12
SOUTHWEST GEORGIA FINANCIAL CORPORATON
(Exact name of Registrant as specified in its charter)
_________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing and registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No:
(3) Filing Party:
(4) Date Filed:
April 15, 2010
Dear Shareholder:
The Annual Meeting of the Shareholders of Southwest Georgia Financial
Corporation will be held on Tuesday, May 25, 2010, in the Southwest Georgia
Bank Administrative Services Building, 205 Second Street S.E., Moultrie,
Georgia, at 4:30 P.M. for the purposes set forth in the accompanying Notice
of Annual Meeting of Shareholders and Proxy Statement.
In order to ensure that your shares are voted at the meeting, please
complete, date, sign, and return the Proxy in the enclosed postage-paid
envelope at your earliest convenience. Every shareholder's vote is
important, no matter how many shares you own.
We encourage you to attend this annual meeting of the shareholders and
join us in the lobby immediately following the meeting for hors d'oeuvres
and refreshments. We look forward to your continued support.
Very truly yours,
/s/Dewitt Drew
DeWitt Drew
President and Chief Executive Officer
SOUTHWEST GEORGIA FINANCIAL CORPORATION
P.O. Box 3488
201 First Street, S.E.
Moultrie, Georgia 31768
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 25, 2010
The annual meeting of shareholders of Southwest Georgia Financial
Corporation ("the Corporation") will be held on Tuesday, May 25, 2010, at
4:30 p.m. at the Southwest Georgia Bank Administrative Services Building,
205 Second Street, S.E., Moultrie, Georgia, for the purposes of considering
and voting upon:
1. The election of nine directors to constitute the Board of Directors
to serve until the next annual meeting and until their successors
are elected and qualified; and
2. Such other matters as may properly come before the meeting or any
adjournment thereof.
Only shareholders of record at the close of business on April 5, 2010,
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
A Proxy Statement and a Proxy solicited by the Board of Directors are
enclosed herewith. Even if you plan to attend the meeting in Moultrie,
Georgia, please provide us voting instructions in one of the following ways
as soon as possible:
(1) Please mark, sign, date, and return the Proxy promptly in the
enclosed business reply envelope;
(2) If your shares are held in "street-name", that is held for your
account by a broker, bank or other nominee, you will receive
instructions from your nominee which you must follow in order to
have your shares voted.
The Corporation is doing a full set delivery of its Proxy material by
mail to its shareholders. For disclosure purposes, the Corporation's Proxy
Statement, Proxy Card, and 2009 Annual Report to the Shareholders are
available on the Corporation's web address at
http://www.sgfc.com/pdf/2009annualreportandproxy.pdf. This internet posting
of the Corporation's Proxy materials will be available on this website on
and after April 15, 2010.
For directions to the annual meeting, call (229) 985-1120. If you
attend the meeting you may, if you wish, withdraw your Proxy and vote in
person.
Also enclosed is the Corporation's 2009 Annual Report to Shareholders,
which contains financial data and other information about the Corporation.
By Order of the Board of Directors,
/s/DeWitt Drew
DeWitt Drew
President and
Chief Executive Officer
April 15, 2010
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE
COMPLETE AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENCLOSED SELF-
ADDRESSED ENVELOPE. IF YOU ARE PRESENT AT THE ANNUAL MEETING, YOU MAY, IF
YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE THE RIGHT TO VOTE YOUR
SHARES PERSONALLY.
SOUTHWEST GEORGIA FINANCIAL CORPORATION
P.O. Box 3488
201 First Street, S.E.
Moultrie, Georgia 31768
PROXY STATEMENT
April 15, 2010
This Proxy Statement is furnished in connection with the solicitation
of Proxies by the Board of Directors of Southwest Georgia Financial
Corporation for use at the Annual Meeting of Shareholders of the Corporation
to be held on May 25, 2010, and any postponement and adjournment thereof,
for the purposes set forth in the accompanying notice of the meeting. The
expenses of this solicitation, including the cost of preparing and mailing
this Proxy Statement, will be paid by the Corporation. Copies of
solicitation materials may be furnished to banks, brokerage houses, and
other custodians, nominees, and fiduciaries for forwarding to beneficial
owners of shares of the Corporation's Common Stock, and normal handling
charges may be paid for such forwarding service. In addition to
solicitations by mail, directors and regular employees of the Corporation
may solicit Proxies in person or by telephone. It is anticipated that this
Proxy Statement and the accompanying Proxy will first be mailed to
shareholders on April 15, 2010.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
What is the purpose of the Annual Meeting?
At the Annual Meeting of Shareholders, shareholders will act upon the
matters set forth in the accompanying notice of meeting, including the
election of nine directors and any other matters that may properly come before
the meeting.
Who is entitled to vote?
All shareholders of record of the Corporation's common stock at the close
of business on April 5, 2010, which is referred to as the record date, are
entitled to receive notice of the Annual Meeting and to vote the shares of
common stock held by them on the record date. Each outstanding share of
common stock entitles its holder to cast one vote for each matter to be voted
upon.
How do I cast my vote?
You may vote your shares by marking, signing, dating and returning the
Proxy in the enclosed business reply envelope provided to you, or you may vote
in person at the Annual Meeting. If your shares of common stock are held in
"street name", that is held for your account by a broker, bank or other
nominee, you will receive instructions from your nominee which you must follow
in order to have your shares voted.
If the Proxy is returned but no choice is specified thereon, it will be
voted for all the persons named below under the caption "Information about
Nominees for Director".
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What are the quorum and voting requirements?
A quorum is present when the holders of a majority of the shares
outstanding on the record date are present at the Annual Meeting of
Shareholders in person or by proxy. On the record date, the Corporation had
outstanding and entitled to vote 2,547,837 shares of Common Stock, par value
$1.00 per share.
The required vote for each item of business at the Annual Meeting is as
follows:
1. For Proposal 1, the election of directors, those nominees receiving
the greatest number of votes at the Annual Meeting of Shareholders
shall be deemed elected, even though the nominees may not receive a
majority of the votes cast.
2. For any other business at the Annual Meeting, the vote of a
majority of the shares voted on the matter, assuming a quorum is
present, shall be the act of the shareholders on that matter,
unless the vote of a greater number is required by law.
How are votes counted?
Abstentions and "broker non-votes" will be counted only for purposes of
establishing a quorum, but will not otherwise affect the vote. "Broker non-
votes" are proxies received from brokers or other nominees holding shares on
behalf of their clients (in "street name") who have not been given specific
voting instructions from their clients with respect to non-routine matters.
Typically, the election of directors is considered a routine matter by brokers
and other nominees allowing them to have discretionary voting power to vote
shares they hold on behalf of their clients for the election of directors.
Because directors are elected by a plurality of the votes cast, the
directors that get the most votes will be elected even if such votes do not
constitute a majority. Directors cannot be voted "against" and votes to
"withhold authority" to vote for a certain nominee will have no effect if the
nominee receives a plurality of the votes cast. For all other proposals that
come before the meeting, you may vote "for" or "against" the proposal.
If you hold your shares of common stock in your own name as a holder of
record, and you fail to vote your shares, either in person or by proxy, the
votes represented by your shares will be excluded entirely from the vote.
Will other matters be voted on at the Annual Meeting?
The Corporation is not aware of any other matters to be presented at the
Annual Meeting other than those described in this Proxy Statement. If any
other matters not described in the Proxy Statement are properly presented at
the meeting, proxies will be voted in accordance with the best judgment of the
proxy holders.
Can I revoke my Proxy instructions?
Any Proxy given pursuant to this solicitation may be revoked by any
shareholder who attends the meeting and gives oral notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any Proxy given pursuant to this solicitation may be revoked prior
to the meeting by delivering a signed writing revoking it or a duly executed
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Proxy bearing a later date to the Secretary of the Corporation at Southwest
Georgia Financial Corporation, P.O. Box 3488, Moultrie, Georgia 31776-3488.
Any shareholder of record as of the record date attending the Annual Meeting
may vote in person by ballot whether or not a Proxy has been previously given,
but the presence (without further action) of a shareholder at the Annual
Meeting will not constitute revocation of a previously given Proxy.
Any shareholder holding shares in "street name" by a broker or other
nominee must contact the broker or nominee to obtain instructions for revoking
the Proxy instructions.
What other information should I review before voting?
The 2009 Annual Report to Shareholders, including financial statements
for the year ended December 31, 2009, is enclosed with this Proxy Statement.
The Annual Report on Form 10-K except for the exhibits is part of the proxy
solicitation material. The Corporation will furnish without charge a copy of
its complete Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the fiscal year ended December 31, 2009, including
financial statements and schedules, to any record or any beneficial owner of
its Common Stock as of April 5, 2010, who requests a copy of such report.
Any request for the Form 10-K report should be in writing addressed to:
Mr. George R. Kirkland
Southwest Georgia Financial Corporation
P.O. Box 3488
Moultrie, Georgia 31776-3488
You may also obtain copies of the Corporation's Form 10-K from the SEC at
prescribed rates by writing to the Public Reference Section of the SEC, Room
1580, F. Street, N.E., Washington, D.C. 20549. Please call the SEC at (800)
SEC-0330 for further information.
If the person requesting the report was not a shareholder of record on
April 5, 2010, the request must include a representation that the person was a
beneficial owner of Common Stock on that date. Copies of any exhibit to the
Form 10-K will be furnished on request and upon receipt of the payment of the
Corporation's expense in furnishing the exhibits.
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
We have posted materials related to the 2010 annual meeting on the
Internet. The following materials are available on the Internet at
http://www.sgfc.com/pdf/2009annualreportandproxy.pdf:
* This Proxy Statement for the 2010 Annual Meeting, and
* The Corporation's 2009 Annual Report to Shareholders, which
includes the Corporation's Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
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VOTING SECURITIES AND PRINCIPAL HOLDERS
The following table sets forth as of March 12, 2010, beneficial
ownership of the Corporation's Common Stock by each "person" (as that term
is defined by the Securities and Exchange Commission) known by the
Corporation to be the beneficial owner of more than 5% of the Corporation's
common stock, by each director and named executive officers of the
Corporation and all such persons as a group.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership (1) of Class
The Employee Stock Ownership Plan
and Trust of Southwest Georgia
Financial Corporation 316,307 12.33%
Cecil H. Barber 26,468 1.03%
John J. Cole, Jr. 56,267 2.19% (2)
DeWitt Drew 11,777 * (3)
Michael McLean 87,412 3.41% (4)
Richard L. Moss 24,538 *
Roy H. Reeves 26,530 1.03%
Johnny R. Slocumb 50,848 1.98%
M. Lane Wear 6,317 *
Marcus R. Wells 8,507 * (5)
C.Wallance Sansbury 3,117 * (6)
Charles R. Lemons 1,391 *
George R. Kirkland 35,808 1.40% (7)
All Directors, Named Executive Officers,
and 5% Shareholders as a Group
(12 persons) 592,190 23.08%
* Indicates less than one percent (1%).
(1) Based on 2,565,677 shares outstanding as of March 12, 2010, which
includes shares underlying outstanding stock options exercisable within 60
days of the record date, which are deemed to be outstanding for purposes
of calculating the percentage owned by a holder.
(2) Includes 43,372 shares allocated to the account of Mr. Cole in the
Employee Stock Ownership Plan and Trust, over which shares Mr. Cole
exercises voting power.
(3) Includes 6,131 shares allocated to the account of Mr. Drew in the
Employee Stock Ownership Plan and Trust, over which shares Mr. Drew
exercises voting power.
(4) Includes (i) 75,025 shares of which Mr. McLean holds the voting power of
attorney for E. J. McLean, Jr. and (ii) 1,385 shares pledged as collateral
for loans.
(5) Includes 6,000 shares of which Mr. Wells holds the voting power of
attorney for Hiller M. Gammage, Jr.
(6) Includes 2,321 shares allocated to the account of Mr. Sansbury in the
Employee Stock Ownership Plan and Trust, over which shares Mr. Sansbury
exercises voting power.
(7) Includes 11,273 shares allocated to the account of Mr. Kirkland in the
Employee Stock Ownership Plan and Trust, over which shares Mr. Kirkland
exercises voting power.
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ELECTION OF DIRECTORS
The bylaws of the Corporation provide that the Board of Directors shall
consist of not less than five nor more than 25 directors. The exact number
of directors is currently set at nine by Board resolution. However, the
number of directors may be increased or decreased within the foregoing range
from time to time by the Board of Directors or by resolution of the
shareholders.
The terms of office for directors continue until the next Annual
Meeting of Shareholders and until their successors are elected and qualified
or until earlier resignation, removal from office, or death.
Each Proxy executed and returned by a shareholder will be voted as
specified thereon by the shareholder. If no specification is made, the
Proxy will be voted for the election of the nominees named below to
constitute the entire Board of Directors. In the event that any nominee
withdraws or for any reason is not able to serve as a director, the Proxy
will be voted for such other person as may be designated by the Board of
Directors as substitute nominee. Management of the Corporation has no
reason to believe that any nominee will not serve if elected.
INFORMATION ABOUT NOMINEES FOR DIRECTOR
The following information as of April 5, 2010, has been furnished by
the respective nominees for director. Except as otherwise indicated, each
nominee has been or was engaged in his present or last principal employment,
in the same or a similar position, for more than five years.
Name (Age) Information about Nominee
Cecil H. Barber (45) A director of Southwest Georgia Bank ("the Bank") and
the Corporation since 1999, Mr. Barber is Vice
President of Barber Contracting, a general contracting
company. Mr. Barber earned a Bachelor of Science degree
in Civil Engineering from Georgia Institute of
Technology. Also, he has participated in various
internally provided training workshops for directors.
Mr. Barber's education, director training, business
experience, and long-term board directorship deems him
qualified as a board member.
John J. Cole, Jr. (60) A director of the Bank and of the Corporation. Mr.
Cole became Executive Vice President and Cashier of
the Bank and Executive Vice President of the
Corporation in 2002. Previously, he had been Senior
Vice President and Cashier of the Bank and Senior Vice
President of the Corporation since 1992. He has served
in various other positions with the Bank since 1976 and
the Corporation since 1981. Mr. Cole earned a Bachelor
of Science degree in Business Administration from
Valdosta State University. Mr. Cole graduated from the
School for Bank Administration at the University of
Wisconsin as well as Stonier Graduate School of
Banking. Also, he has participated in various
internally provided training workshops for directors.
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Mr. Cole's education, director training, business
experience, and long-term board directorship deems him
qualified as a board member.
DeWitt Drew (53) Mr. Drew has been President and Chief Executive Officer
of the Bank and Corporation since May 2002. Previously,
he served as President and Chief Operating Officer
during 2000 and 2001 and Executive Vice President
during 1999 for the Bank and Corporation. Mr. Drew
earned a Bachelor of Science degree in Business
Administration with a concentration in Accounting from
the University of South Alabama. He is a graduate of
The Graduate School of Banking of the South at
Louisiana State University. Also, he has participated
in various internally provided training workshops for
directors. Mr. Drew's education, director training,
business experience, and long-term board directorship
deems him qualified as a board member.
Michael J. McLean (63) Chairman of the Board of the Corporation and Presiding
Director of the Bank since 2006, Mr. McLean has been a
director of the Bank and Corporation since 1999. Mr.
McLean is the owner of McLean Engineering Company,
Inc., an engineering consulting firm. Mr. McLean earned
Bachelor of Science degrees in Textiles and Electrical
Engineering from Georgia Institute of Technology. Also,
he has participated in various internally provided
training workshops for directors. Mr. McLean's
education, director training, business experience, and
long-term board directorship deems him qualified as a
board member.
Richard L. Moss (58) Vice Chairman of the Board of the Corporation and
Assistant Presiding Director of the Bank since 2006,
Mr. Moss has been a director of the Bank since 1980 and
of the Corporation since 1981. Mr. Moss is President
of Moss Farms. Mr. Moss earned a Bachelor of Science
degree in Agricultural Economics from North Carolina
State University. Also, he has participated in various
internally provided training workshops for directors.
Mr. Moss's education, director training, business
experience, and long-term board directorship deems him
qualified as a board member.
Roy H. Reeves (50) A director of the Bank and the Corporation since 1991,
Mr. Reeves is the owner of Reeves Properties, L.P., a
property rental company. Mr. Reeves earned a Bachelor
degree in Business Administration from the University
of Georgia. He has attended several Georgia Bankers
Association sponsored bank director training programs.
Also, he has participated in various other internally
provided training workshops for directors. Mr.
Reeves's education, director training, business
experience, and long-term board directorship deems
him qualified as a board member.
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Johnny R. Slocumb (57) A director of the Bank and the Corporation since 1991,
Mr. Slocumb is the owner of Slocumb and Associates,
Inc., a company which offers real estate and insurance
services. Mr. Slocumb earned a Bachelor of Science
degree in Business from Georgia Southwestern College.
Also, he has participated in various internally
provided training workshops for directors. Mr.
Slocumb's education, director training, business
experience, and long-term board directorship deems him
qualified as a board member.
M. Lane Wear (58) A director of the Bank and of the Corporation since
2007. Mr. Wear is a Certified Public Accountant and has
been a partner with Vines, Wear and Mangum, LLP since
1986. Mr. Wear earned a Bachelor of Business
Administration degree from Georgia Southern College.
Also, he has participated in various internally provided
training workshops for directors. Mr. Wear's education,
director training, and business experience deems him
qualified as a board member.
Marcus R. Wells (52) A director of the Bank and of the Corporation since
2007. Mr. Wells is a licensed physical therapist and
has been owner and Chief Executive Officer of Alliance
Rehab, Inc., d/b/a Moultrie Physical Therapy &
Rehabilitation since January 2004. Previously, he was
employed from 1999 to March 2003 and was managing
partner from April 2003 to December 2003 by Moultrie
Physical Therapy & Rehabilitation. Also, Mr. Wells is
Chief Executive Officer of POINT, Inc., (Prevention of
Occupational & Industrial Trauma) since 1998. Mr.
Wells earned an Associate in Arts degree from
Tallahassee Community College and a Bachelor of Science
degree in Physical Therapy from Florida A & M
University. He has earned certificates from Community
Bankers Association of Georgia and from Terry College
of Business (University of Georgia) in bank director
and fundamentals training. Also, he has participated in
various other internally provided training workshops
for directors. Mr. Wells' education, director
training, and business experience deems him qualified
as a board member.
There are no family relationships between any director, executive
officer, or nominee for director of the Corporation or any of its
subsidiaries.
Meetings and Composition of the Board of Directors
The Board of Directors held 12 regular meetings and three called
meetings during 2009. All of the directors attended at least seventy-five
percent (75%) of the Board and committee meetings held during their tenure
as directors. Directors are expected to be present at all Board of
Directors meetings of the Corporation.
The Board has determined that seven of the nine members of the Board of
Directors are "independent" as defined under applicable federal securities
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laws and listing standards of the NYSE Amex ("NYSE Amex"). The
"independent" directors are Mr. Barber, Mr. McLean, Mr. Moss, Mr. Reeves,
Mr. Slocumb, Mr. Wear, and Mr. Wells. The independent directors met in
executive session without the non-independent directors and management two
times in 2009.
Board Leadership Structure and Role in Risk Oversight
The Corporation is led by Mr. DeWitt Drew who serves as the President
and Chief Executive Officer. Mr. Drew has been President and Chief
Executive Officer since 2002. The Board of Directors is led by Michael J.
McLean and is comprised of nine directors total, seven of whom have been
determined to be independent directors. Each of the Audit Committee,
Personnel Committee and Nominating Committee of the Board of Directors is
comprised entirely of independent directors.
The Chief Executive Officer is responsible for oversight of the day-to-
day operations and business affairs of the Corporation, including directing
the business conducted by the employees, managers and officers of the
Corporation. The Chairman is responsible for leading the Board of Directors
in its duty to oversee the management of the business and affairs of the
Corporation and ensuring that he and the other directors act in the best
interest of the Corporation and its shareholders.
Risk oversight of the Corporation is the responsibility of the Board of
Directors. It administers this oversight function by evaluating various
components of risks to the company at each meeting of the Board. The
current structure of the Board of Directors is appropriate for the
Corporation and facilitates careful oversight of risk for the Corporation.
The structure of the Board of Directors provides strong oversight by the
independent directors, with the independent directors meeting frequently in
executive sessions of the Board of Directors without management. These
executive sessions allow the Board of Directors to review key decisions and
discuss matters in a manner that is independent of senior management.
Committees of the Board of Directors
The Board of Directors has established three committees, a Personnel
Committee, an Audit Committee, and a Nominating Committee.
Personnel Committee
The Personnel Committee is composed of four members, Cecil Barber, Michael
J. McLean, Richard L. Moss, and M. Lane Wear. The Board of Directors has
determined that all of these directors are "independent" under applicable
federal securities laws and listing standards of the NYSE Amex. The
Personnel Committee held three meetings during 2009.
The Personnel Committee is responsible for establishing and
administering the policies that govern the compensation arrangements for
executive officers and other employees. The Personnel Committee is also
responsible for oversight and administration of certain executive and
employee compensation and benefit plans, including the Pension Retirement
Plan (the "Pension Plan"), the Supplemental Retirement Plan (the "Supplemental
Plan"), the 401(K) Plan, the Director's and Executive Officer's Stock Purchase
Plan (the "Stock Purchase Plan") and the Key Individual Stock Option Plan (the
"Option Plan"). It periodically reviews and makes recommendations to the
Board with respect to Directors Compensation.
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Audit Committee
The Audit Committee presently consists of four directors, Richard L.
Moss, Marcus R. Wells, M. Lane Wear, and Johnny R. Slocumb. The Audit
Committee held 11 meetings during 2009.
The Board of Directors has determined that all of the members of the
Audit Committee are "independent" under applicable federal securities laws and
listing standards of the NYSE Amex and have sufficient knowledge in
financial and accounting matters to serve on the Audit Committee, including
the ability to read and understand fundamental financial statements. Mr.
Wear, CPA, the chairman of the Audit Committee, qualifies as "financially
sophisticated" under the listing standards of the NYSE Amex or an "audit
committee financial expert" under the federal securities laws.
The Audit Committee is responsible for recommending the selection of
independent auditors; meeting with the independent auditors to review the
scope and results of the audit; reviewing with management and the internal
auditor the systems of internal control and the internal audit reports; and
ascertaining that any and all operational deficiencies are satisfactorily
corrected. The Board of Directors has adopted a written Audit Committee
Charter that is annually reviewed and assessed.
Nominating Committee
The Board of Directors has a standing Nominating Committee that
presently consists of seven members, Cecil Barber, Richard L. Moss, Michael
J. McLean, Roy H. Reeves, M. Lane Wear, Johnny R. Slocumb, and Marcus R.
Wells. The Nominating Committee nominates all directors and presents a slate
of nominees for the Board of Directors to be approved by a majority of
independent directors. The Board has determined that all of the members of
the Nominating Committee are "independent" under applicable federal
securities laws and listing standards of the NYSE Amex. The Board of
Directors has adopted a written Nominating Committee Charter that is
annually reviewed and assessed.
Director Nominations
A candidate for the Board of Directors must meet the eligibility
requirements set forth in the Corporation's bylaws and in any applicable
Board or committee resolutions. The Nominating Committee considers
qualifications and characteristics that it deems appropriate from time to
time when selecting individuals to be nominated for election to the Board of
Directors. These qualifications and characteristics may include, without
limitation, independence, integrity, business experience, education,
accounting and financial expertise, age, diversity, reputation, civic and
community relationships, and knowledge and experience in matters impacting
financial institutions. In addition, prior to nominating an existing
director for re-election to the Board of Directors, the Nominating Committee
will consider and review an existing director's Board and committee
attendance, performance, and length of Board service.
The Nominating committee will consider in accordance with the analysis
described above all director nominees properly recommended by shareholders.
Any shareholder wishing to recommend a candidate for consideration as a
possible director nominee for election at an upcoming meeting of
shareholders must provide written notice to Mr. George R. Kirkland,
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Southwest Georgia Financial Corporation, P. O. Box 3488, Moultrie, GA,
31776-3488 pursuant to the deadlines described in "Shareholders Proposals
and Director Nominations."
Code of Ethical Conduct
The Corporation has adopted a Code of Ethics Policies and Procedures
designed to promote ethical conduct by all of the Corporation's directors,
officers, and employees. The Code of Ethics Policies and Procedures
includes a Code of Ethical Conduct for the Chief Executive Officer and
Senior Financial Officers which sets forth standards applicable to all
officers, directors, and employees but has provisions specifically
applicable to the Chief Executive Officer and the principal financial
officer. The Code of Ethics Policies and Procedures complies with the
federal securities law requirement that issuers have a code of ethics
applicable to the chief executive officer and principal financial officer,
and the NYSE Amex requirement that listed companies have a code of ethical
conduct applicable to all directors, officers, and employees. The
Corporation's Code of Ethical Conduct applicable to the Chief Executive
Officer and the principal financial officer was filed as Exhibit 14 to its
Form 8-K dated February 27, 2008. The Corporation has not had any amendment
to or waiver of the Code of Ethical Conduct. If there is an amendment or
waiver, the Corporation will post such amendment or waiver on its website,
www.sgfc.com.
EXECUTIVE COMPENSATION
Overview and Philosophy
The objective of the Corporation's compensation program is to offer a
compensation package that will attract, motivate, reward, and retain high-
performing and dedicated employees. The package must balance competitive
need and individual performance with affordability. The package must also
provide financial security for employees and dependents upon retirement,
disability, or death. The compensation program is designed to reward
performance, longevity, professional growth, initiative, and increased
responsibility.
Administration
The Personnel Committee of the Corporation reviews, evaluates, and
approves compensation and benefits for all officers, including the "Named
Executive Officers", who are DeWitt Drew, who is President and Chief
Executive Officer of the Corporation and the Bank, Charles R. Lemons, who is
President and Chief Executive Officer of Empire Financial Services, Inc., a
subsidiary of the Bank, and John J. Cole, Jr., who is Executive Vice President
of the Corporation and the Bank, and also reviews general policy matters
relating to compensation and benefits. The executive officers recommend to
the Personnel Committee compensation for other employees based on comparison
to compensation data received from banking related compensation and benefits
surveys.
All remuneration paid to the Corporation's officers during the year ended
December 31, 2009, was paid by subsidiaries of the Corporation.
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Elements of Compensation
Annual Base Salary and Cash Bonus. Executive officer annual base
salary and bonus awards are determined by the Personnel Committee with
reference to Corporation-wide, divisional, and individual performance for
the previous fiscal year based on a wide range of measures, which include
comparisons with competitors' performance and internal goals set before the
start of each fiscal year and by comparison to the level of executive
officers' compensation of other financial institutions of comparable size in
comparable markets. No relative weights are assigned for these factors.
The Personnel Committee believes that the most meaningful performance
and pay equity comparisons are made against companies of similar size and in
comparable markets. In keeping with this belief, the Committee consistently
participates in and uses compensation and benefit surveys from the Georgia
Bankers Association and the Bank Administration Institute and measures the
Corporation's performance with peer comparison from the Federal Financial
Institution Examining Council Peer Group Report.
During 2009, the Personnel Committee set annual salary and bonus for
the Named Executive Officers in 2009 based primarily on Corporation-wide
performance. The Personnel Committee believes that returns on assets
("ROA") and equity ("ROE") are the most appropriate measures for evaluating
this performance.
In 2009, the Corporation had net income of $1.8 million, an increase of
$3.1 million when compared with the previous year's net loss, and the ROA
was .65% and ROE was 7.48%, compared to ROA of (.46)% and ROE of (5.04)% in
2008. While net income, ROA and ROE were less than the 2009 performance
goals of $2.5 million in net income, ROA of .95% and ROE of 10.67%, certain
events occurred in 2009 that affected net earnings causing the Corporation
to not meet its 2009 performance goals. Specifically, the Corporation
recognized a provision for loan losses of $536 thousand higher than
projected as well as an increase in other operating expenses of $794
thousand. The higher non-planned operating expenses were due primarily to
increased legal and FDIC insurance fees of $675 thousand and $416 thousand,
respectively. Besides these items, 2009 results were markedly improved
compared to 2008.
In view of the Corporation's 2009 performance, some of the Named
Executive Officers received raises in their annual salary up to 4% and all
Named Executive Officers received bonuses of up to 5% of base salary
compared with no increases in salary and no bonuses in 2008. The Named
Executive Officers' base salaries and annual bonuses for 2009 are listed in
"Executive Compensation - Summary Compensation Table".
Equity Incentive Awards. The Corporation did not grant any equity
incentive awards in fiscal year 2009 to the Named Executive Officers or any
other employee or director.
Retirement and Other Benefits
The Corporation offers retirement and other benefits that the Personnel
Committee believes provides employees with a highly competitive package of
benefits. The Corporation believes these forms of compensation enhance the
ability to competitively search, hire, and retain a strong competent
executive staff, and that the 401(k) Plan, ESOP and Stock Purchase Plan
encourage corporate ownership among employees.
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Pension Plan. The Corporation's Pension Plan is a qualified
noncontributory defined benefit pension plan and is described in "Executive
Compensation - Pension Benefits". During the fourth quarter of 2006, the
Corporation froze the Pension Plan.
401(k) Plan. In place of the frozen Pension Plan, the Corporation
adopted the Southwest Georgia Bank 401(k) Plan effective January 1, 2007 (the
"401(k) Plan") for the benefit of almost all of the employees who attain the
age of 21 years and complete a year of service. The 401(k) Plan is a
qualified defined contribution plan as provided for under Section 401(k) of
the Internal Revenue Code. This 401(k) Plan will match contributions dollar
for dollar for the first 4% of compensation that each participant defers
into the 401(k) Plan each payroll period. The 401(k) Plan allows for a
discretionary match in excess of 4% and for participants to defer up to 80%
of their compensations, subject to the maximum deferrals permitted under the
Internal Revenue Code. In 2009, the Corporation matched up to 4% of
compensation for Mr. Drew, Mr. Lemons, and Mr. Cole in the amounts of
$7,758, $6,081, and $5,290, respectively.
Employee Stock Ownership Plan. The Corporation has a qualified,
nondiscriminatory Employee Stock Ownership Plan ("ESOP") administered by an
ESOP Committee, and its assets are held and managed by a trustee. This ESOP
is designed to motivate and reward employees as corporate owners and to
provide to eligible employees additional retirement benefits. The ESOP
covers almost all employees who have completed at least two years of
service. Contributions to the ESOP are at the discretion of the Board of
Directors and are allocated to participants who are actively employed on the
last day of the plan year and who have completed a year of service for such
year (as defined in the ESOP). The annual amount of the contribution is
determined by taking into consideration the prevailing financial conditions
and fiscal requirements of the Corporation. The total annual contribution
is limited by the amount that the Corporation can deduct for federal income
tax purposes. Each eligible participant's contribution is based on a
percentage of annual compensation. This form of compensation plan supports
the Corporation's overall mission statement to attain motivated and
dedicated employees. In 2009, the Corporation's subsidiaries did not make
ESOP contributions to any employee or the Named Executive Officers.
Supplemental Retirement Plan. The Corporation's Supplemental Plan is a
non-qualified retirement plan which provides benefits for any excess annual
retirement benefits which can not be paid under the Pension Plan and ESOP,
and is described in "Executive Compensation - Pension Benefits". There was
no impact to the ESOP part of this plan as a result of the frozen Pension
Plan. Mr. Drew is the only active participant in the Supplemental
Retirement Plan and the Bank made no contribution for Mr. Drew in 2009.
Stock Purchase Plan. The Corporation has adopted the Stock Purchase
Plan for executive officers and directors of the Corporation. The plan
provides that participants may elect to contribute up to $500 monthly of
salary or directors' fees and receive corporate common stock with an
aggregate value of 1.5 times the contribution. The maximum level of monthly
contribution is set by the Board of Directors. In 2009, the Corporation
contributed $3,000 to the Stock Purchase Plan accounts of Mr. Drew and Mr.
Lemons and $1,500 to the Stock Purchase Plan account of Mr. Cole.
Insurance. The Corporation provides to all employees group term life
insurance benefit of 2.5 times their annual base salary not to exceed
$350,000. The Corporation's subsidiaries paid premiums of $828, $1,548 and
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$1,450, respectively, for Mr. Drew, Mr. Lemons and Mr. Cole during 2009.
The excess premium paid over $50,000 of life insurance benefit is non-cash
compensation to the employee. Mr. Drew was the only management officer with
bank owned life insurance compensation of $840 during 2009.
Employment Contracts and Change in Control Arrangements
DeWitt Drew. On October 1, 2003, the Corporation and the Bank entered
into an employment agreement with DeWitt Drew. Under the employment
agreement, Mr. Drew serves as the President and Chief Executive Officer of
the Corporation and the Bank and is entitled to receive an annual base
salary (currently $201,520) which is subject to normal annual increases as
shall be determined by the Board of Directors of the Corporation from time
to time. The employment agreement commenced on October 1, 2003, and is for
a rolling five-year term that is extended for an additional day each day of
his employment. In addition to the base salary, Mr. Drew is eligible to
earn incentive or bonus compensation in accordance with such bonus plan as
may be established by the Board of Directors of the Corporation for the
fiscal year. Mr. Drew receives benefits of the kind customarily granted to
other executives of the Bank and the Corporation, including participation in
the Corporation's benefit plans. The Bank also pays the premiums on a $1
million split dollar life insurance policy for Mr. Drew. If Mr. Drew's
employment terminates for any reason, he agrees not to provide banking
services or solicit certain bank customers within certain geographical
limits for a period of two years after such termination.
If Mr. Drew's employment is terminated for Cause (as defined in the
agreement) or if he voluntarily terminates his employment, the Bank and the
Corporation will have no further financial obligation to him. The stock
options that are vested as of the termination date will be exercisable for
90 days and then terminate. If Mr. Drew's employment is terminated without
cause or by Mr. Drew for Good Reason (as defined) after a Change in Control
(as defined), he is entitled to the salary and medical benefits provided to
him under the agreement for the remainder of the then current term, subject
to the terms and conditions of the agreement. Any options he has been
granted as of the termination date will immediately vest and expire upon
their normal expiration date in the case of a change in control or one year
in case of another termination without cause. If Mr. Drew's employment is
terminated due to a disability, he shall continue to receive his salary for
the remainder of the then current term and receive medical benefits until
the earlier of the end of the then current term or he is entitled to
disability coverage. If Mr. Drew's employment terminates because of death
or disability, his options will vest and will expire upon their normal
expiration date. In the event of any such termination at December 31, 2009,
except as set forth below, Mr. Drew would have been entitled to $1,031,122,
which is the sum of his present salary and medical benefits for the five-
year term.
Mr. Drew's employment agreement provides that the compensation and
benefits provided for under the agreement shall be reduced or modified so as
to insure that the payments thereunder do not constitute an "excess
parachute payment" as defined under Section 280G of the Internal Revenue
Code (an "Excess Severance Payment"). The agreement does not provide for
the payment of any taxes or a gross-up of payments to pay any taxes in the
event any of the compensation or benefits were considered to be an Excess
Severance Payment.
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Charles R. Lemons. As of January 8, 2007, the Banks' subsidiary,
Empire, entered into an employment agreement with Charles R. Lemons. On
July 31, 2009, the Bank agreed to guarantee Empire's performance of its
obligation under the employment agreement. Under the employment agreement,
Mr. Lemons, who now serves as President and Chief Executive Officer of
Empire, is entitled to receive an annual base salary (currently $156,220)
subject to normal annual increases as determined by the Board of Directors
from time to time. The employment agreement commenced on January 8, 2007,
and is for a three-year term and shall automatically renew for an additional
three-year term. In addition to the base salary, Mr. Lemons is eligible to
earn incentive or bonus compensation in accordance with such bonus plan as
may be established by the Board of Directors of the Corporation for the
fiscal year. Mr. Lemons receives benefits of the kind customarily granted
to other executives of the Bank and the Corporation, including participation
in the 401(k) plan, disability insurance, medical insurance, and life
insurance pursuant to the agreement. If Mr. Lemons' employment terminates
for any reason other than without Cause (as defined in the agreement) or for
Good Reason (as defined), he agrees not to provide banking services or
solicit certain bank customers within certain geographical limits for a
period of two years after such termination.
If Mr. Lemons' employment is terminated for Cause or if he voluntarily
terminates his employment, the Bank and the Corporation will have no further
financial obligation to him. The stock options that are vested as of the
termination date will be exercisable for 90 days and then terminate. If Mr.
Lemons' employment is terminated without Cause or by Mr. Lemons for Good
Reason, he is entitled to the salary and medical benefits provided to him
under the agreement for one year, subject to the terms and conditions of the
agreement. Any options he has been granted as of the termination date will
immediately vest and be exercisable for one year and then terminate. If Mr.
Lemons' employment is terminated due to a disability, he shall continue to
receive his salary for one year and receive medical benefits until the
earlier of one year or he is entitled to disability coverage. If Mr. Lemons'
employment terminates because of death or disability, his options if any
will vest and will expire upon their normal expiration date. In the event
of any such termination at December 31, 2009, Mr. Lemons would have been
entitled to $152,018, which is the sum of his present salary for one year.
John J. Cole, Jr. On February 28, 2006, the Corporation and the Bank
entered into an employment agreement with John Cole. Under the employment
agreement, Mr. Cole serves as an Executive Vice President of the Corporation
and the Bank and is entitled to receive an annual base salary (currently
$137,292) which is subject to normal annual increases as shall be determined
by the Board of Directors of the Corporation from time to time. The
employment agreement commenced on February 28, 2006, and is for a five-year
term. In addition to the base salary, Mr. Cole is eligible to earn
incentive or bonus compensation in accordance with such bonus plan as may be
established by the Board of Directors of the Corporation for the fiscal
year. Mr. Cole receives benefits of the kind customarily granted to other
executives of the Bank and the Corporation, including participation in the
pension benefit plans, disability insurance, medical insurance, and life
insurance pursuant to the agreement. If Mr. Cole's employment terminates
for any reason other than without Cause (as defined in the agreement) or for
Good Reason (as defined), he agrees not to provide banking services or
solicit certain bank customers within certain geographical limits for a
period of two years after such termination.
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If Mr. Cole's employment is terminated for Cause or if he voluntarily
terminates his employment, the Bank and the Corporation will have no further
financial obligation to him. The stock options that are vested as of the
termination date will be exercisable for 90 days and then terminate. If Mr.
Cole's employment is terminated without Cause or by Mr. Cole for Good
Reason, he is entitled to the salary and medical benefits provided to him
under the agreement for the remainder of the then current term, subject to
the terms and conditions of the agreement. Any options he has been granted
as of the termination date will immediately vest and be exercisable for one
year and then terminate. If Mr. Cole's employment is terminated due to a
disability, he shall continue to receive his salary for the remainder of the
then current term and receive medical benefits until the earlier of the end
of the then current term or he is entitled to disability coverage. If Mr.
Cole's employment terminates because of death or disability, his options
will vest and will expire upon their normal expiration date. In the event
of any such termination at December 31, 2009, Mr. Cole would have been
entitled to $160,174, which is the sum of his present salary for the
remaining 1.2 year-term.
Summary Compensation Table
The following table sets forth the annual and other compensation paid or
accrued in 2009 for the Named Executive Officers. No other executive officers
of the Corporation are required to be included in table and/or were paid
$100,000 or more in total compensation during 2009.
Annual Compensation
Name and Principal All Other
Position During 2009 Year Salary Bonus Compensation(1) Total
DeWitt Drew 2009 $193,980 $10,000 $22,426 (2) $226,406
President and CEO of the 2008 $193,980 $ - $24,008 $217,988
Corporation and the Bank
Charles R. Lemons 2009 $152,018 $ 5,000 $10,629 $167,647
President and CEO of Empire 2008 $149,570 $ - $ 9,068 $158,638
Financial Services, Inc.
John J. Cole, Jr. 2009 $132,243 $ 5,000 $18,640 (3) $155,883
Executive Vice President of 2008 $132,243 $ - $19,520 $151,763
the Corporation and the Bank
(1) Amounts shown include stock purchase plan contributions, 401(k) match,
ESOP contributions, group term life insurance, and bank owned life
insurance benefits.
(2) Includes director's fees for 2009 of $10,000.
(3) Includes director's fees for 2009 of $10,400.
Equity-Based Compensation
The Corporation established the Key Individual Stock Option Plan to
provide for the grant of stock options to officers of the Corporation.
Although the plan is administered by the Personnel Committee of the Board of
Directors, no new stock options or other awards have been granted under the
plan since 2007.
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Outstanding Equity Awards at Fiscal Year-End Table
The following table provides information as of December 31, 2009, about
outstanding equity awards under the Option Plan. The Corporation has never
granted any other type of stock awards under the Option Plan or otherwise.
Option Awards
Equity Incentive
Plan Awards: Number
Number of Securities Number of Securities of Securities
Underlying Underlying Underlying Option Option
Unexercised Options Unexercised Options Unexercised Unearned Exercise Expiration
Name (# exercisable) (# exercisable) Options (#) Price Date
DeWitt Drew 6,600 (1) - - $13.07 1/2/2010
(1) Each stock option is exercisable for one share of the Corporation's
common stock. Stock options vest on the date of grant. The expiration
date of each option is 10 years after the date of grant.
Pension Benefits
The Corporation maintains the Pension Plan which was frozen effective
December 31, 2006 as a result of the increasing costs to keep it funded.
The cost of this plan which represents the current and future benefits of
current and retired employees has been funded by the Corporation's
subsidiaries. These benefits accrue based upon actuarial determinations
employing the aggregate funding method. The compensation covered by the
Pension Plan has included total annual compensation including bonuses and
overtime pay. The employee benefits earned through December 31, 2006, are
preserved and the funds will be maintained in a trust account to pay future
benefits through retirement, but new benefits will not accrue under the
Pension Plan. The portion of compensation which is considered covered
compensation under the Pension Plan equals the annual salary and bonus
amounts indicated in "Executive Compensation - Summary Compensation Table".
All executive officers who exceed the maximum covered compensation
limited by federal law of $245,000 are covered under the Corporation's
Supplemental Retirement Plan. Any excess annual retirement benefit which
could not be paid under the Pension Plan and ESOP because of the above
federal limitation will be payable under the Supplemental Plan. During 2009,
only DeWitt Drew, the Chief Executive Officer qualified for this Plan.
Generally, when a participant retires, both the Pension Plan and the
Supplemental Plan will pay to the participant benefits in the form of equal
monthly installments for such participant's life unless the participant elects
to have his retirement benefits payable under one of several optional forms of
payment. The benefits are based on compensation and years of service and are
taxable to the participant. The normal retirement age defined in the plan is
65.
Director Compensation
All of the members of the Board of Directors of the Corporation also
serve on the Bank's Board of Directors. Each Board member is compensated for
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his board services by the Bank. The annual director fees for the Chairman,
Vice Chairman, and each director are $12,000, $8,400, and $4,800, respectively.
In addition, directors are paid $400 for each Board meeting attended and
$200 for each committee meeting attended (committee meeting attendance fees
are paid only to outside directors). These fees remain unchanged as
compared with 2008. There are three retired directors emeritus. A retired
director emeritus at age 70 with at least seven years of directorship
service is compensated $3,600 per year for five years. Directors may
contribute their directors' fees to the Corporation's Stock Purchase Plan
and receive common stock of the Corporation with an aggregate value of 1.5
times their contribution.
The Corporation has a voluntary deferred compensation plan for the
Board of Directors administered by an insurance company. The plan
stipulates that if a director participates in the Plan for four years, the
Corporation will pay the Director future monthly income for 10 years
beginning at normal retirement age, and the Corporation will make specified
monthly payments to the Director's beneficiaries in the event of his or her
death prior to the completion of such 10-year payments. The plan is funded
by life insurance policies, with the Corporation as the named beneficiary.
This plan is closed to new director enrollment and participation. The only
current participant is Richard L. Moss.
The following table summarizes 2009 non-employee director compensation.
There were no option or stock awards granted to directors for 2009, and
directors do not participate in the Pension Plan or receive any non-
qualified deferred compensation. Mr. Drew and Mr. Cole were the only
employees on the Board of Directors for 2009 and their compensation for that
service is described in "Executive Compensation - Summary Compensation
Table". The Corporation believes that the total level of compensation for
directors is reasonably comparable with other small public traded community
bank holding companies.
Director Compensation Table
Fees Earned All Other
Name or Paid in Cash Compensation Total
Cecil H. Barber $19,000 $3,000 $22,000
Michael J. McLean 26,400 3,000 29,400
Richard L. Moss 16,600 3,000 19,600
Roy H. Reeves 21,200 3,000 24,200
Johnny R. Slocumb 15,600 3,000 18,600
M. Lane Wear 14,000 3,000 17,000
Marcus R. Wells 15,600 3,000 18,600
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The Corporation has a written related person transaction policy that
governs the review, approval and ratification of any transaction that would be
required to be disclosed by the Corporation pursuant to Item 404 of
Regulation S-K under the Securities Act of 1933. The Board of Directors of
the Corporation or the Audit Committee must approve all such transactions
under the policy.
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The Bank from time to time has had, and expects to have in the future,
banking transactions in the ordinary course of business with officers and
directors of the Corporation and other related persons, on substantially the
same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with unaffiliated third parties. Such
transactions have not involved more than the normal risk of collectibility
or presented other unfavorable features. At December 31, 2009, loans to
officers, directors, and principal shareholders of the Corporation and the
Bank and to other related persons amounted to $2,626,370. Also, during
2009, directors and executive officers had approximately $2,508,138 in
deposits with the Bank.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee operates pursuant to an Audit Committee Charter
that was adopted by the Board on May 24, 2000 and revised July 23, 2003. The
Corporation's management is responsible for its internal accounting controls
and the financial reporting process. The Corporation's independent
accountants, Thigpen, Jones, Seaton & Co., P.C. ("Thigpen"), are responsible
for performing an audit of the Corporation's consolidated financial
statements in accordance with auditing standards of the Public Company
Accounting Oversight Board and for expressing an opinion as to their
conformity with generally accepted accounting principals. The Audit
Committee's responsibility is to monitor and oversee these processes.
The Audit Committee was involved with the selection process and the
approval of Thigpen as the Corporation's principal independent auditors.
Also, the Audit Committee has approved Thigpen to provide some non-audit
services related to improving the Corporation's internal audit program and
performing an information technology audit.
In keeping with its responsibilities, the Audit Committee has reviewed
and discussed the Corporation's audited consolidated financial statements
with management and the independent accountants. The Audit Committee has
discussed with the Corporation's independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communications with Audit Committee," as currently in effect. In addition,
the Audit Committee has received the written disclosures from the
independent accountants required by Independence Standards Board Standard
No.1, "Independence Discussions with Audit Committees," and has discussed
with the independent accountants their independence. The Audit Committee
has considered whether the provision of non-audit services by the
independent auditors is compatible with maintaining their independence.
The Audit Committee also discussed with management and the auditors the
quality and adequacy of the Corporation's internal controls over financial
reporting and the internal audit function's organization, responsibilities,
budget, and staffing.
Members of the Audit Committee rely without independent verification on
the information provided to them and on the representations made by
management and the independent auditors. Accordingly, the Audit Committee's
oversight does not provide an independent basis to determine that management
has maintained appropriate accounting and financial reporting principles or
appropriate internal controls and procedures designed to assure compliance
with accounting standards and applicable laws and regulations. Furthermore,
the Audit Committee's considerations and discussions referred to above do
not assure that the audit of the Corporation's financial statements has been
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carried out in accordance with standards of the Public Company Accounting
Oversight Board, that the financial statements are presented in accordance
with generally accepted accounting principals or that the Corporation's
auditors are in fact "independent".
Based on the reports and discussions described in this report, and
subject to the limitations on the role and responsibilities of the committee
referred to above and in the Audit Committee Charter, the committee
recommended to the Board of Directors that the audited consolidated
financial statements of the Corporation be included in the Annual Report on
Form 10-K for the year ending December 31, 2009, for filing with the
Securities and Exchange Commission.
This report is respectfully submitted by the Audit Committee of the
Board of Directors.
Richard L. Moss M. Lane Wear
Johnny R. Slocumb Marcus R. Wells
INFORMATION CONCERNING THE COMPANY'S ACCOUNTANTS
Thigpen was the principal independent public accountant for the
Corporation during the years ended December 31, 2009 and 2008.
Representatives of Thigpen are expected to be present at the Annual Meeting
and will have the opportunity to make a statement if they desire to do so
and to respond to appropriate questions. The Corporation anticipates that
Thigpen will be the Corporation's accountants for the current fiscal year.
Audit Fees
The aggregate fees billed for professional services by Thigpen for the
audit of the Corporation and a review of Empire's annual financial
statements and reviews of the Corporation's quarterly financial statements
for 2009 and 2008 were $58,454 and $59,150, respectfully.
Audit-Related Fees
The aggregate fees billed for professional services by Thigpen for an
agreed upon procedural review of the trust division and of the Bank's loan
portfolio for 2009 and 2008 were $8,663 and $8,250, respectively. Other
professional services billed for by Thigpen in 2009 were for a Bank Secrecy
Act procedures review for $3,990, and Asset and Liability Management
procedures review for $2,095.
Tax Fees
The aggregate fees billed for professional services by Thigpen for tax
compliance for 2009 and 2008 were $6,866 and $4,850, respectively.
All Other Fees
The aggregate fees billed for professional services by Thigpen for the
Corporation in 2009 were the pension plan audit of $5,237, 401(k) plan audit
of $4,725, and the information technology audit of $3,675. In 2008, the
services performed and fees billed for the pension plan audit, 401(k) plan
audit, and information technology audit were $4,988, $4,500 and $3,500,
respectively.
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The Audit Committee approves all audit and non-audit services performed
by the Corporation's independent public accountant.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, each executive officer, director and beneficial owner of 10% or
more of the Corporation's Common Stock is required to file certain forms
with the Securities and Exchange Commission ("SEC"). Based solely on its
review of the copies of such reports received by the Corporation, or written
representations from certain reporting persons, the Corporation believes
that during the last fiscal year all Section 16 filing requirements
applicable to its reporting persons were fulfilled.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Any proposals of shareholders or recommendations for director nominees
intended to be presented at the Corporation's 2011 Annual Meeting of
Shareholders must be received by December 8, 2010, in order to be eligible for
inclusion in the Corporation's Proxy Statement and Proxy for that meeting.
The Corporation must be notified of any other matter intended to be presented
by a shareholder at the 2011 Annual Meeting no later than February 21, 2011.
SHAREHOLDER COMMUNICATIONS
The Board of Directors maintains a process for shareholders to
communicate with the Board. Shareholders wishing to communicate with the
Board of Directors should send any communication in writing to Mr. George R.
Kirkland, Southwest Georgia Financial Corporation, P. O. Box 3488, Moultrie, GA
31776-3488. Any such communication should state the number of shares
beneficially owned by the shareholder making the communication. The
communication will be forwarded to the full Board of Directors or to any
individual director or directors to whom the communication is directed unless
the communication is illegal or otherwise inappropriate.
OTHER MATTERS THAT MAY COME BEFORE THE MEETING
Management of the Corporation knows of no matters other than those
stated above that are to be brought before the meeting. If any other
matters should be presented for consideration and voting, however, it is the
intention of the persons named as proxies in the enclosed Proxy to vote in
accordance with their judgment as to what is in the best interest of the
Corporation.
By order of the Board of Directors,
/s/DeWitt Drew
DeWitt Drew
President and
Chief Executive Officer
April 15, 2010
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