def14a
SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant
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X |
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Filed by a party other than the Registrant |
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 |
FENTURA FINANCIAL, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
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fee was paid previously. |
Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement:
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Filing Party:
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Date Filed: |
TABLE OF CONTENTS
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NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS
FENTURA FINANCIAL, INC.
175 North Leroy Street
P.O. Box 725
Fenton, Michigan 48430 |
The Fentura Financial, Inc. 2007 Annual Shareholders Meeting will be held at the Genesys
Conference and Banquet Center, 805 Health Park Boulevard, Grand Blanc, Michigan, Tuesday, April 24,
2007, at 7:00 p.m. for the following purposes:
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To elect three directors; and |
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Transact any other business that may properly come before the meeting or any
adjournment of the meeting. |
The Board of Directors has fixed the close of business on March 14, 2007, as the record date for
the purpose of determining shareholders who are entitled to notice of and to vote at the meeting
and any adjournment of the meeting.
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BY ORDER OF THE BOARD OF DIRECTORS
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Ronald L. Justice |
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Secretary |
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Fenton, Michigan
March 22, 2007
IMPORTANT
All shareholders are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN
TO ATTEND IN PERSON, YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY FORM AND RETURN
IT PROMPTLY IN THE POSTAGE PAID ENVELOPE PROVIDED. This will assure your
representation and a quorum for the transaction of business at the meeting. If you do attend the
meeting in person and if you have submitted a proxy form, it will not be necessary for you to vote
in person at the meeting. However, if you attend the meeting and wish to change your proxy vote,
you will be given an opportunity to do so.
PROXY STATEMENT
FENTURA FINANCIAL, INC.
175 North Leroy Street
P.O. Box 725
Fenton, Michigan 48430
Telephone: (810) 750-8725
ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is furnished in connection with the solicitation of proxies by the Board
of Directors of Fentura Financial, Inc. (the Corporation) to be voted at the annual meeting of
its shareholders to be held at the Genesys Conference and Banquet Center, 805 Health Park
Boulevard, Grand Blanc, Michigan, on Tuesday, April 24, 2007, at 7:00 p.m., eastern standard time,
and at any adjournment of the meeting, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders. This proxy statement and form of proxy are first being sent to
shareholders on or about March 23, 2007.
If a proxy in the accompanying form is properly executed, duly returned to the Corporation,
and not revoked, the shares represented by the proxy will be voted at the annual meeting of the
Corporations shareholders and at any adjournment of that meeting. Where a shareholder specifies a
choice, a proxy will be voted as specified. If no choice is specified, the shares represented by
the proxy will be voted for election of all nominees of the Board of Directors. The Corporations
management does not know of any other matters to be presented at the annual meeting. If other
matters are presented, the shares represented by proxy will be voted at the discretion of the
persons designated as proxies, who will take into consideration the recommendations of the
Corporations management.
Any shareholder executing a proxy in the enclosed form has the power to revoke it by notifying
the Secretary of the Corporation in writing at the address indicated above at any time before it is
exercised, or by appearing at the meeting and voting in person.
Solicitation of proxies is being made by mail. Directors, officers, and regular employees of
the Corporation and its subsidiaries may also solicit proxies in person or by telephone without
additional compensation. In addition, banks, brokerage firms, and other custodians, nominees, and
fiduciaries may solicit proxies from the beneficial owners of shares they hold and may be
reimbursed by the Corporation for reasonable expenses incurred in sending proxy material to
beneficial owners of the Corporations stock. The Corporation will pay all expenses of soliciting
proxies.
Boards of Directors
The names of directors of the Corporation and its three subsidiary banks, The State Bank,
Davison State Bank, and West Michigan Community Bank (the Affiliate Banks), are set forth below.
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FENTURA FINANCIAL, INC.
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THE STATE BANK (cont.)
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DAVISON STATE BANK (cont.)
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Kenneth R. Elston
Chief Financial Officer
MAG Industrial Automation
Systems
Donald L. Grill
President & CEO Fentura
CEO The State Bank
J. David Karr
Owner & Attorney
Karr Law Office
Thomas P. McKenney
Owner/President & Attorney
McKenney & McKenney
Thomas L. Miller
Owner/President & CEO
TMI, Inc.
Brian P. Petty
Owner & President
Fenton Glass Service, Inc
Ian W. Schonsheck
CEO
Schonsheck, Inc.
Forrest A. Shook
President & CEO
NLB Corporation
THE STATE BANK
Louis O. Blessing
Owner & President
Blessing Co.
Kenneth E. Burchfield
Senior Partner & Attorney
Burchfield, Park, & Pollesch
Donald L. Grill
President & CEO Fentura
CEO The State Bank
Mark T. Hamel
Owner
The French Laundry
Patrick M. Hanniford
Certified Public Accountant
Pfeffer, Hanniford, Palka
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Dennis E. Leyder
President & COO
The State Bank
Victor J. Lukasavitz
President & Senior Partner
Gould Engineering, Inc.
James T. Peabody
Partner & President
Smith-Peabody-Stiles-
Insurance Agency
Brian P. Petty
Owner & President
Fenton Glass Service, Inc.
Susan Yeotis
Realtor
Prudential Great Lakes Realty
DAVISON STATE BANK
Thomas G. Donaldson
Vice President
McLaren Foundation
Kenneth R. Duetsch
Real Estate Broker
Red Carpet Keim
John A. Emmendorfer, Jr.
President
Davison State Bank
David H. Fulcher
Chairman
The Fulcher Companies, Inc.
Kevin M. Hammer
Senior Vice President
Davison State Bank
Ronald L. Justice
Chief Executive Officer
Davison State Bank
J. David Karr
Owner & Attorney
Karr Law Office
Holly J. Pingatore
Senior Vice President
Fentura Financial, Inc.
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Craig L. Stefanko
Partner & President
DCC Development Corporation
Sheryl E. Stephens
President
Stephens Wealth
Management Group, Inc.
William J. Zirnhelt
Business Manager
St John
Evangelical Church
WEST MICHIGAN
COMMUNITY BANK
Michael A. Byars, M.D.
Partner
Georgetown Physicians, P.C.
James W. Fredricks,
Economic Development Director
City of Hudsonville & Jamestown
TWP.
Donald L. Grill
President & CEO Fentura
CEO The State Bank
Richard A. Patmos
Co-Owner & President
Sunrise Acres, Inc.
Douglas W. Rotman
Partner
Ferris, Busscher & Zwiers, P.C.
Robert E. Sewick
President & CEO
West Michigan Community Bank
James H. Vander Kolk
President
Royal Plastics, Inc.
Samuel L. Wanner
Director of Finance
Calvin College
James A. Wesseling
Senior Partner & Attorney
Wesseling & Brackmann, P.C. |
2007 ELECTION OF DIRECTORS
The only matter scheduled to be considered at the annual meeting will be the election of three
persons to the Board of Directors of the Corporation. The Corporations Board of Directors is
divided into three classes. Each year, on a rotating basis, the terms of office of the directors
in one of the three classes expire. Directors are elected for a three year term. The directors
whose terms expire at the annual meeting (Class I Directors) are J. David Karr, Thomas P.
McKenney and Brian P. Petty. The Board has nominated these same individuals for reelection as
Class I Directors. If elected, the terms of these directors will expire at the 2010 annual meeting
of shareholders.
Except for those individuals nominated by the Board of Directors, no persons may be nominated
for election at the 2007 annual meeting. The Corporations Bylaws require at least 120 days prior
written notice of any other proposed shareholder nominations and no such notice has been received.
The proposed nominees are willing to be elected and to serve. In the event that any nominee is
unable to serve or is otherwise unavailable for election, which is not now contemplated the
incumbent Board of Directors may or may not select a substitute nominee. If a substitute nominee is
selected, all proxies will be voted for the person so selected. If a substitute nominee is not so
selected, all proxies will be voted for the election of the remaining nominee. Proxies will not be
voted for a greater number of persons than the number of nominees named.
A vote of shareholders holding a plurality of shares voting is required to elect directors.
For the purpose of counting votes on this proposal, abstentions, broker nonvotes, and other shares
not voted will not be counted as shares voted.
The Nomination Process
Director nominees are considered and must be recommended to the full Board by the Director
Selection Committee, whose members are independent under SEC and NASDAQ Standards. When
considering a potential candidate for membership on the Corporations Board, the Committee seeks to
identify candidates who will meet the challenges and needs of the Board. The Committee considers,
among other qualifications, demonstrated character and judgment, diversity, geographic
representation, professional credentials, recognition in the marketplace, and experience in
business and the financial industry. The Committee has not established specific minimum age,
education, and years of business experience or specific types of skills for potential candidates,
but, in general, expects qualified candidates will have ample experience and a proven record of
business success and leadership. In general, the Board requires that each of its members will have
the highest personal and professional ethics, integrity and values; will consistently exercise
sound and objective business judgment; and will have a comfort with diversity in its broadest
sense. In addition, it is anticipated that the Board as a whole will have individuals with
significant appropriate senior management and leadership experience, a comfort with technology, a
long-term and strategic perspective, and the ability to advance constructive debate. It is
considered important for the Board as a whole to operate in an atmosphere where the chemistry of
the Board is collaborative and constructive in effectively representing the interests of the
shareholders.
The Committee will consider shareholder nominations for directors submitted in accordance with
the procedure set forth in Article III, Section 15(c) of the Corporations Bylaws. The procedure
provides that a notice relating to the nomination must be given in writing to the Corporation not
later than 120 days prior to the annual meeting. Such notice must contain identification
information, business experience and background information with respect to the proposed nominee
and contain information with respect to the proposed nominees share ownership. There are no
differences in the manner in which the Committee evaluates a candidate that is recommended for
nomination for membership on the Corporations Board by
a shareholder. As noted, the Board has not received any recommended nominations from any of
the Corporations shareholders in connection with the annual meeting.
Upon receipt of information concerning a shareholder proposed candidate, the Committee
assesses the Boards needs, primarily whether or not there is a current or pending vacancy or a
possible need to fulfill by adding or replacing a director, and then develops a director profile by
comparing the current state of Board characteristics with the desired state and the candidates
qualifications. The profile and the candidates submitted information are provided to the Board
for discussion. Similarly, if at any time the Committee determines there may be a need to add or
replace a director, the Committee develops a director profile by comparing the current state of
Board characteristics with the desired state. If no candidates are apparent from any source, the
Committee will determine the appropriate method to conduct a search. The Committee has, to date,
not paid any third party fee to assist in identifying and evaluating nominees.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR ELECTION OF ALL NOMINEES AS DIRECTORS
4
STOCK OWNERSHIP INFORMATION
Stock Ownership of Directors, Executive Officers and Certain Major Shareholders
At the close of business on March 14, 2007, the record date for determination of the
shareholders entitled to vote at the annual meeting, the Corporation had issued and outstanding
2,160,106 shares of its common stock, the only class of voting securities presently outstanding.
Each share entitles its holder to one vote on each matter to be voted upon at the meeting.
In general, beneficial ownership includes those shares a director or officer has the power
to vote or transfer, and stock options that are exercisable currently or within 60 days. The table
below shows the beneficial stock ownership of the Corporations directors and executive officers
named in the summary compensation table below and those shareholders who hold more than 5% of the
total outstanding shares as of March 14, 2007.
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Shares |
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Percent |
Name of |
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Beneficially |
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Beneficial Owner |
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Owned(1) |
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Outstanding(2) |
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Kenneth R. Elston (Director) |
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1,738 |
(3) |
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* |
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Donald L. Grill (Director, Executive Officer) |
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13,003 |
(3)(5) |
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* |
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Ronald L. Justice (Executive Officer) |
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4,795 |
(3)(5) |
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* |
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J. David Karr (Director) |
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3,110 |
(3) |
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* |
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Douglas J. Kelley (Executive Officer) |
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974 |
(5) |
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* |
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Dennis E. Leyder (Executive Officer) |
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1,466 |
(5) |
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* |
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Thomas P. McKenney (Director) |
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5,464 |
(3)(4) |
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* |
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Thomas L. Miller (Director) |
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3,377 |
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* |
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Brian P. Petty (Director) |
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15,689 |
(3)(4) |
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* |
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Holly J. Pingatore (Executive Officer) |
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1,863 |
(5) |
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* |
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Robert E. Sewick (Executive Officer) |
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4,396 |
(5) |
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* |
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Ian W. Schonsheck (Director) |
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3,450 |
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* |
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Forrest A. Shook (Director) |
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30,551 |
(3)(4) |
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1.41 |
% |
Donald E. Johnson, Jr.(6) |
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220,836 |
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10.22 |
% |
Mary Alice Heaton(6) |
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113,583 |
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5.26 |
% |
Linda J. Lemieux(6) |
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111,631 |
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5.17 |
% |
Directors and Executive Officers
as a group (13 persons) |
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89,876 |
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4.16 |
% |
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The number of shares in this column includes shares owned directly or indirectly, through any
contract, arrangement, understanding or relationship, or that the indicated beneficial owner
otherwise has the power to vote, or direct the voting of, and/or has investment power. This
includes shares allocated to the person under the Corporations Employee Stock Ownership Plan
(ESOP). Due to a change in plan administrators, the actual allocation of such shares is not
currently available, and the allocation of shares has been estimated based on prior year
allocations. This column includes shares that may be acquired pursuant to stock options that
are exercisable within 60 days. |
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The symbol * shown in this column indicates ownership of less than 1%.
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Ownership and voting rights of all shares are joint with spouse or individually held. |
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Includes 1,336 shares for Mr. Petty and 668 shares for Mr. McKenney and Mr. Shook that may be
acquired pursuant to stock options that are exercisable within 60 days. |
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Includes 5,107 shares for Mr. Grill, 2,104 shares for Mr. Justice, 732 shares for Mr. Kelley,
1,135 shares for Mr. Leyder, 1,523 shares for Ms. Pingatore, and 2,803 shares for Mr. Sewick
that may be acquired pursuant to stock options that are exercisable within 60 days. |
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Each persons address is: SNB Trust Operations, 101 North Washington Avenue, Saginaw,
Michigan 48607. |
THE CORPORATIONS BOARD OF DIRECTORS
Biographical information concerning the current directors and the nominees who are nominated
for election to the Board of Directors at the annual meeting is presented below. Except as
otherwise indicated, all directors and nominees have had the same principal employment for over
five years.
Directors with Terms Expiring in 2010
J. David Karr, age 68, serves as a Director and Chairman of Davison State Bank and was
appointed as a Director of the Corporation effective January 2001 and was re-elected by the
shareholders at the 2001 annual meeting. Mr. Karr is a Class I Director. Mr. Karr is an attorney
with a private practice located in Davison, Michigan.
Thomas P. McKenney, age 55, has been a Director of the Corporation since 1992 and was a
Director of The State Bank from 1991 to 2003, serving as Chairman of The State Banks Board from
2001 to 2003. Mr. McKenney was appointed Vice Chairman of the Corporation in May 2003. Mr.
McKenney is a Class I Director. Mr. McKenney is an attorney with a private practice located in
Holly, Michigan.
Brian P. Petty, age 49, was appointed a Director of the Corporation effective September 26,
2002. Mr. Petty has served as a Director of The State Bank since January of 1994 and has served as
Chairman since 2003. Mr. Petty previously served as a Director of the Corporation from March of
1995 to December of 2000. Mr. Petty is a Class I Director. Mr. Petty is the owner and President
of Fenton Glass Service, Inc., which sells and installs glass for automobile, residential,
industrial and specialty uses.
Nominees for 3-Year Terms Expiring 2009
Donald L. Grill, age 59, has been a Director since 1996. Mr. Grill is a
Class III Director. Mr. Grill joined the Corporation as President and Chief Executive Officer in
1996. From 1976-1983, Mr. Grill was employed by Key State Bank in Owosso, Michigan. From
1983-1996, Mr. Grill was employed by First of America Bank Corporation and served as President and
Chief Executive Officer of First of America Bank-Frankenmuth.
Forrest A. Shook, age 64, has been a Director since 1996 and served as Vice Chairman of the
Board of Directors of the Corporation from 1997 to May 2003. Mr. Shook was appointed Chairman of
the Board of Directors of the Corporation in May 2003. He was a member of The State Bank Board
from 1996 through 2000 and served as its Vice Chairman from 1997 through 2000. Mr. Shook is a
Class III Director. Mr. Shook is the founder and now President & CEO of NLB Corporation located in
Wixom, Michigan. NLB Corporation manufactures high pressure pumps that are used around the world
in many applications.
Directors with Terms Expiring 2008
Kenneth R. Elston, age 46, was appointed to the Board of Directors of the Corporation,
effective September 29, 2005. Mr. Elston is a Class II Director. Mr. Elston is Vice President of
Finance for MAG
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Industrial Automation Systems in Sterling Heights, Michigan. MAG is a multinational machine tool
manufacturing company. Mr. Elston serves as the Chairman of the Corporations Audit Committee.
Thomas L. Miller, age 57, was appointed as a Class II Director of the Corporation on June 26,
2003. He is the CEO and founder of TMI, Inc., a company that specializes in the design and
fabrication of large air handling units for various industrial applications.
Ian W. Schonsheck, age 53, was appointed as a Class II Director of the Corporation on June 26,
2003. He is the CEO of Schonsheck, Inc., a company he founded in 1985. Schonsheck, Inc. is a
design, construction and land development company that specializes in industrial and commercial
buildings, expansions and renovations.
Independence of Directors and Attendance at Meetings
The Board of Directors of the Corporation is composed of a majority of independent directors
(as independence is defined in Rule 4200(a) (15) of the NASDAQ Listing Standards). The Board has
determined that each of Messrs. Elston, Karr, McKenney, Miller, Petty, Schonsheck, and Shook are
independent. During the fiscal year ended December 31, 2006, the Board of Directors of the
Corporation held a total of 11 regular meetings. Various committees of the Board held meetings as
needed. Each director attended at least 75 percent of the total meetings of the Board of Directors
and meetings of the committees on which he served. The Corporation also encourages all members of
the Board to attend the Corporations annual meeting of shareholders each year. Except for
Chairman Shook who was ill, all members of the Board of Directors of the Corporation attended the
Corporations 2006 annual meeting.
Communication with the Corporations Board of Directors
Shareholders may communicate with members of the Corporations Board by mail addressed to the
Board of Directors, a specific member of the Board, or to a particular committee of the Board at
175 North Leroy Street, P.O. Box 725, Fenton, Michigan 48430-0725.
Director Compensation
The Corporation and Affiliate Bank directors are compensated in three ways: cash retainer
fees, stock options and participation in stock purchase plans. Each director of the Corporation is
paid an annual retainer fee. In 2006, the annual retainer was $12,000 unless a Director serves on
a Board of a subsidiary bank, in which case their annual retainer for serving as a Director of the
Company may be reduced. The Chairman of the Board receives an additional annual $2,000 retainer
fee. The Chairman of the Audit Committee receives an additional $500 for each Audit Committee
meeting attended and the remaining Audit Committee members receive $250 for attending each Audit
Committee meeting. Directors of the Corporation who also serve on Affiliate Bank Boards receive
additional compensation because of their Affiliate Bank Board service.
Stock option grants are available to directors who are not employees of the Corporation under
the 1996 Nonemployee Director Stock Option Plan. However, no options were granted to directors
during the year 2006. Exercisable stock options issued in prior years are included in the table
and footnotes which appear on page 5.
Directors of the Corporation and the Affiliate Banks may also use director cash retainer fees
to purchase shares of the Corporation issued by the Corporation at fair market value under the
Corporations Director Stock Retainer Plan. Directors may also use other personal funds or cash
retainer fees to purchase shares under the Fentura Financial, Inc. Stock Purchase Plan. This plan
permits all employees of the Corporation and Affiliate Banks, as well as directors, to purchase
shares at fair market value through regular payroll or fee deductions and also through lump sum
payments. The maximum annual
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dollar amount of purchases per individual through payroll or fee deductions is $10,000 and the
maximum annual dollar amount of lump sum purchases is also $10,000, for a total annual maximum of
$20,000.
2006 DIRECTOR COMPENSATION ($)
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Change in |
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Pension |
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Value and |
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Nonqualified |
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Fees Earned or |
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Non-Equity |
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Deferred |
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Paid in |
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Option |
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Incentive Plan |
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Compensation |
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All Other |
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Name |
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Cash (1) |
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Awards |
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Awards |
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Compensation |
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Earnings |
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Compensation (2) |
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Total |
Kenneth R.
Elston |
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$ |
14,000 |
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$ |
14,000 |
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J. David Karr |
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$ |
10,200 |
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$ |
4,800 |
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$ |
15,000 |
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Thomas P.
McKenney |
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$ |
12,000 |
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$ |
12,000 |
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Thomas L. Miller |
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$ |
13,000 |
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$ |
13,000 |
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Brian P. Petty |
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$ |
4,000 |
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$ |
11,250 |
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$ |
15,250 |
|
Ian W.
Schonsheck |
|
$ |
12,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
5,000 |
|
|
$ |
17,000 |
|
Forrest A. Shook |
|
$ |
14,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
14,000 |
|
|
|
|
(1) |
|
Amounts for Messrs. Elston, Karr, and Miller include fees paid as members of the Audit
Committee for each meeting attended. As Chairman, Mr. Shook receives an additional
retainer fee. |
|
(2) |
|
Amounts include retainer fees paid by a subsidiary Bank for serving on their Board. |
Code of Ethics
Fentura Financial, Inc. is dedicated to upholding the highest ethical standards and
principles throughout our operations. Our Code of Ethics is a product of our commitment to comply
with the law and to conduct business ethically while reinforcing values of trust, respect, dignity,
and honesty which form the foundation for our relationships with our shareholders, employees, and
customers. The Corporations Board of Directors reaffirmed its Code of Ethics on January 19, 2006.
The Code details principles and responsibilities governing professional and ethical conduct for
all directors and officers of the Corporation and its Affiliate Banks. The revised Code is filed
as an exhibit to the Corporations 2006 annual report on Form 10-K. Any
changes or waivers to the Code of Ethics will be promptly disclosed in our SEC filings.
8
Going beyond the legal requirements for corporate ethics, we require all members of
management to sign our Code and to conduct themselves consistent with its requirements.
Additionally, the Boards of the Corporation and each Affiliate Bank and all Board Committees are
chaired by an independent outside director and, at each Board and Audit Committee session, our
outside directors reserve time for discussions without management or management directors present.
Another example of the Corporations commitment to ethical conduct is its support of the Internal
Audit Function. Previously outsourced, Internal Audit returned to an in house function in 2006 to
strengthen the risked based annual audit program, including incorporating testing consistent with
the Sarbanes-Oxley Act Section 404, which the Corporation may be required to comply with by
December 31, 2007.
Committees of the Corporation Board
The Corporation maintains the following standing committees: Executive, Forward Planning,
Director Selection, Audit, and Compensation/ESOP.
Executive Committee
The Executive Committee, which met five times in 2006, consists of Messrs. Grill, McKenney,
and Shook. This Committee reviews in depth the status and progress of various projects, management
activities and the Corporations financial performance. As necessary, it provides guidance and
makes recommendations to management and/or the Board of Directors.
Forward Planning Committee
The Forward Planning Committee consists of Messrs. Grill, Miller, and Schonsheck. This
Committee evaluates and recommends strategic initiatives and alternatives to guide the future
performance and direction of the Corporation. All Forward Planning matters during 2006 were
considered by the full Board at regular Board meetings.
Director Selection Committee
The Corporations Director Selection Committee consists of Messrs. McKenney, Miller and Shook.
This Committee coordinates the process of identifying, interviewing and recommending new director
candidates. In reviewing director selections, the Committee will consider recommendations of
shareholders. Shareholders who wish to recommend nominees should submit their recommendations in
writing, delivered or mailed to the Secretary of the Corporation. The Director Selection Committee
met
one time during 2006. The Director Selection Committee adopted a charter on November 30, 2006, a
copy of which is available on the Corporations website at www.fentura.com.
Audit Committee
The Corporations Audit Committee consists of Messrs. Elston, Miller and Petty, and the Audit
Committee chairpersons of each Affiliate Bank Audit Committees as ex-officio members. The Audit
Committee oversees the Corporations corporate accounting, financial reporting and internal audit
processes. For this purpose, the Audit Committee performs several functions. For example, the
Audit Committee evaluates the performance of and assesses the qualifications of the independent
auditors; appoints and approves the compensation of the independent auditors; determines whether to
retain or terminate the existing independent auditors or to appoint and engage new independent
auditors; reviews the annual internal risk based audit plan and approves the retention of auditors
to perform portions of the internal audit functions and services which the independent auditors are
not permitted to perform; reviews
9
the financial statements to be included in the Corporations
Annual Report on Form 10-K; and discusses with management and the independent auditors the results
of the annual audit and the results of the Corporations quarterly financial statements.
Mr. Elston has been designated by the Board as the Audit Committees financial expert. Mr.
Elston is independent as defined in Rule 4200(a) (15) of the NASDAQ listing standards.
The Audit Committee is guided by an Audit Committee Charter, which is available on the
Corporations website at www.fentura.com. All of the members of the Audit Committee are
independent, as defined in Rule 4200(a) of the NASDAQ Listing Standards. During 2006, the Audit
Committee held four meetings. On March 22, 2007, the Audit Committee submitted to the Board the
following report:
Report of Audit Committee
We have reviewed and discussed with management the Corporations audited financial statements
as of and for the year ended December 31, 2006.
We have discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as amended, by the
Auditing Standards Board of the American Institute of Certified Public Accountants.
We have received and reviewed the written disclosures and the letter from the independent
auditors required by Independence Standard No. 1, Independence Discussions with Audit Committees,
as amended, by the Independence Standards Board, and have discussed with the auditors the auditors
independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors
that the financial statements referred to above be included in the Corporations annual report on
Form 10-K for the year ended December 31, 2006.
Respectfully submitted,
Audit Committee
Kenneth R. Elston
Thomas L. Miller
Brian P. Petty
Compensation/ESOP Committee
The members of the Compensation/ESOP Committee are Messrs. Karr, Petty and Shook. This
Committee oversees the administration of the Corporations compensation and benefit programs. The
Committee met two times during 2006. The Compensation/ESOP Committee adopted a charter on November
30, 2006, which is available on the Corporations website at www.fentura.com. The
performance of the CEO and all Compensation/ESOP Committee items were reviewed by the committee and
approved by the full Board.
10
Report of Compensation/ESOP Committee
We have reviewed and discussed with management the Corporations Compensation Discussion &
Analysis required by Item 402(b) of Regulation S-K. Based upon our review and discussions, we
recommended to the Board of Directors that the Compensation, Discussion & Analysis be included in
the Corporations annual report on Form 10-K for the year ended December 31, 2006 and the
Corporations 2007 proxy statement.
Respectfully submitted,
Year 2006 Compensation/ESOP Committee
J. David Karr
Brian P. Petty
Forrest A. Shook
COMPENSATION/ESOP COMMITTEE INTERLOCKS
The members of the Compensation Committee are set forth in the preceding section. There are
no members of the Compensation Committee who were officers or employees of the Corporation, former
officers of the Corporation or its subsidiaries or had any relationship otherwise requiring
disclosure here.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION & ANALYSIS
During 2006, the Corporation did not compensate any of its executive officers, each of whom
was also an executive officer of one of the Affiliate Banks and is paid for services by an
Affiliate Bank following the corporate guidelines described below.
Role and Composition of the Committee
The Compensation Committee discharges the Boards responsibilities relating to compensation of
the Companys executive officers, including reviewing the competitiveness of executive compensation
programs, evaluating the performance of the Companys executive officers, and approving their
annual compensation and equity awards. The Committee also assists the CEO in establishing annual
goals and objectives and, after considering the results of the CEO performance review, recommends
CEO compensation to the Board for approval. The specific responsibilities and functions of the
Compensation Committee are delineated in the Compensation Committee Charter.
The Compensation Committee has three members. Each Committee members meets the independence
requirements established by NASDAQ.
Under its Charter, the Compensation Committee has the authority to retain outside services to
assist it in carrying out its duties and responsibilities. No initiatives or actions required the
Committee to execute this authority in 2006. However, management used outside services provided by
the legal firm Howard & Howard to assist with certain human resource issues and the Committee
reviewed their recommendations.
11
Compensation Philosophy and Objectives
All of our compensation programs are designed to attract and retain key employees, motivating
them to achieve and rewarding them for superior performance. Different programs are geared to
short and longer-term performance with the goal of increasing shareholder value over the long term.
Executive compensation programs impact all employees by setting general levels of compensation and
helping to create an environment of goals, rewards and expectations. Because we believe the
performance of every employee is important to our success, we are mindful of the effect of
executive compensation and incentive programs on all of our employees.
We believe that the compensation of our executives should reflect their success as a
management team, rather than individuals, in attaining key operating objectives, such as growth of
earnings, return on equity, net interest margin, and operating efficiency. We believe that the
performance of the executives in managing our Company, considered in light of general economic and
specific Company, industry, and competitive conditions, should be the basis for determining their
overall compensation. We believe that compensation based on managements success in achieving
Company goals will, in the long-term, positively impact our stock performance.
The Company achieves these objectives through a compensation philosophy that provides
employees with a distinctive overall compensation package. Outstanding performers have the
opportunity to earn competitive compensation over the long-term through a pay-for-performance
approach. The programs are designed to provide executives with competitive base salary and bonus
compensation with a significant portion of total compensation at risk, tied both to individual and
Company performance, and the creation of shareholder value.
Components of Executive Compensation
The components of the compensation program for executive officers are described below.
Base Salary. Base salaries are determined based on a variety of factors, including the
executives scope of responsibilities, a market competitive assessment of similar roles at other
companies, and a comparison of salaries paid to peers within the Company. Base salaries are set at
levels that allow the Company to attract and retain superior leaders that will enable the Company
to deliver on its business goals. Base salaries are reviewed once each year and may be adjusted
after considering the above factors.
The CEO will make recommendations for base salaries for each executive officer, excluding the
CEO. When setting the base salaries for executive officers, excluding the CEO, the Committee
considers recommendations from the CEO and makes a final determination based on the factors listed
above and the executive officers performance during the year.
Bonus. Executives have the opportunity to earn a bonus ranging from 30% to 45% of their base
salary. Bonuses are determined based upon a combination of quantative measures, the details of
which are established annually by the Board of Directors.
Executive Benefits
In fiscal year 2006, Fenturas executives were eligible for the same level and offering of
benefits made available to other employees, including the Companys 401(k) Plan and other benefit
programs. In addition to the standard benefits offered to all employees, Fentura maintains
non-qualified deferred compensation plans for certain executives. Effective January 1, 2006,
Fentura modified certain non-
12
qualified deferred compensation plans to comply with certain IRS
requirements. Fenturas contributions
to the non-qualified deferred compensation plans are further discussed in the supplementary
retirement benefit section of the proxy information.
How Executive Pay Levels are Determined
Fentura participates in executive compensation benchmarking surveys that provide summarized
data on levels of base salary, target annual incentives, and stock-based and other long-term
incentives. These surveys also provide benchmark information on compensation practices such as the
prevalence of types of compensation plans and the proportion of the types of pay components as part
of the total compensation package. These surveys are supplemented by other publicly available
information and input from trade associations on other factors such as recent market trends. The
entire comparison group includes banks from Michigan and the Midwest. The Company does not
customarily use consultants in establishing executive compensation. The Committee uses formal
performance plans that ascribe performance expectations to the components of executive officer
compensation, including salary and bonus. Information about the Companys severance arrangements
is provided on pages 20 and 21.
How Stock-Based Awards are Determined
In 2006, no stock-based awards were granted to executive officers. However, generally the
level of usage is determined based on factors such as compensation levels at comparison companies
relative to Fenturas target total compensation levels and the desired mix of cash and equity pay.
Each year, the Committee and management determine the appropriate usage, balancing these factors
against the projected needs of the business as well as financial considerations, including the
projected impact on shareholder dilution. The Company emphasizes differentiation in the executive
stock compensation and broad based stock award program.
Compensation for the Chief Executive Officer
The independent members of the Board approve the compensation of Donald L. Grill, President
and Chief Executive Officer. The Committee recommends salary and bonus amounts to the Board. Mr.
Grills salary and total compensation are considered competitive with industry averages. Mr.
Grills bonus was determined by the independent members of the Board based on an evaluation of his
performance against his annual performance plan, including achievement of Company performance
objectives, achievement of major market development activities, progress in improving internal
efficiency, progress in business growth initiatives, and development of senior leadership. The
Summary Compensation Table sets forth all compensation received by Mr. Grill during the fiscal year
2006. He is eligible for a Company sponsored supplemental retirement program and the Companys
401(k) and ESOP program. Mr. Grill does have a change of control agreement. He may be eligible
for severance under the Companys executive severance plan.
13
The following tables show the compensation for services to Affiliate Banks of the principal
executive officer, principal financial officer and the four highest paid corporate executive
officers who received total compensation in excess of $100,000 for the year 2006.
SUMMARY COMPENSATION TABLE ($)
|
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|
Change in |
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Pension |
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|
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Value and |
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|
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|
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Nonqualified |
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|
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|
|
|
|
|
|
|
|
|
|
|
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|
Deferred |
|
|
|
|
Name and Principal |
|
|
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|
|
|
|
|
|
|
|
|
Option |
|
Compensation |
|
All Other |
|
|
Position |
|
Year |
|
Salary |
|
Bonus (1) |
|
Awards (2) |
|
Earnings (3) |
|
Compensation (4) |
|
Total |
Donald L.
Grill
President & CEO of the
Corporation and CEO of
The State Bank |
|
|
2006 |
|
|
$ |
234,965 |
|
|
$ |
63,762 |
|
|
|
|
|
|
$ |
55,075 |
|
|
$ |
12,038 |
|
|
$ |
365,840 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J.
Kelley
Senior Vice President
and CFO of the
Corporation |
|
|
2006 |
|
|
$ |
108,283 |
|
|
$ |
22,855 |
|
|
|
|
|
|
|
|
|
|
$ |
8,981 |
|
|
$ |
140,119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E.
Sewick
President & CEO
West Michigan Community
Bank |
|
|
2006 |
|
|
$ |
159,599 |
|
|
$ |
46,044 |
|
|
|
|
|
|
$ |
23,358 |
|
|
$ |
7,881 |
|
|
$ |
236,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald L.
Justice
CEO Davison State Bank
and Senior Vice
President and Secretary
of the Corporation |
|
|
2006 |
|
|
$ |
124,944 |
|
|
$ |
29,938 |
|
|
|
|
|
|
|
|
|
|
$ |
11,533 |
|
|
$ |
166,415 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis E.
Leyder
President & COO
The State Bank |
|
|
2006 |
|
|
$ |
124,532 |
|
|
$ |
25,358 |
|
|
|
|
|
|
|
|
|
|
$ |
14,178 |
|
|
$ |
164,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holly J.
Pingatore
Senior Vice President
of the Corporation and
The State Bank |
|
|
2006 |
|
|
$ |
101,147 |
|
|
$ |
18,299 |
|
|
|
|
|
|
|
|
|
|
$ |
8,952 |
|
|
$ |
128,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts reflect payments made pursuant to the Annual Bonus Plan as in effect for the
fiscal year indicated. For more information on this plan, see the Compensation Discussion
and Analysis. |
|
(2) |
|
Amounts calculated utilizing the provisions of Statement of Financial Accounting
Standards (SFAS) No. 123R, Share-based Payments. No options were granted in the
fiscal year ended December 31, 2006. |
|
(3) |
|
Amounts reflect the actuarial increase in the present value of the named executive
officers benefits under all pension plans established by the Company determined using
interest rate and mortality rate assumptions consistent with those used in the Companys
financial statements and includes amounts which the named executive officer may not
currently be entitled to receive because such amounts are not vested. |
|
(4) |
|
Amounts include the taxable benefit of Company owned vehicles for Messrs. Grill
and Sewick, the Corporate match for the 401k profit sharing plan and the Corporate
distribution to the Employee Stock Ownership plan for all named executive officers, and
awards under the Non-Qualified Deferred Compensation Plan. Deferred Compensation awards
were as follows, Mr. Kelley $4,196, Mr. Justice $4,842, Mr. Leyder $4,826, and Ms.
Pingatore $3,919. |
14
Option Grants in 2006
The following table sets forth certain information concerning the number and value of stock
options granted in the last fiscal year to the individuals named above in the summary compensation
table:
2006 GRANTS OF PLAN-BASED AWARDS TABLE
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All Other |
|
All Other |
|
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|
|
|
|
|
|
|
|
Stock Awards: |
|
Option Awards: |
|
|
|
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|
|
|
|
|
Number of |
|
Number of |
|
Exercise or |
|
Grant Date |
|
|
|
|
|
|
Shares of |
|
Securities |
|
Base Price |
|
Fair Value of |
|
|
|
|
|
|
Stock or |
|
Underlying |
|
of Option |
|
Stock and |
|
|
Grant |
|
Units |
|
Options |
|
Awards |
|
Option |
Name |
|
Date |
|
(#) |
|
(#) |
|
($ / Sh) |
|
Awards |
|
Donald L. Grill |
|
|
|
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Douglas J. Kelley |
|
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Robert E. Sewick |
|
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Ronald L. Justice |
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Dennis E. Leyder |
|
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|
Holly J. Pingatore |
|
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|
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|
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|
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|
|
|
|
|
|
|
|
No Options were granted in the fiscal year ended December 31, 2006.
15
2006 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
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Option Awards |
|
Stock Awards |
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|
Number |
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|
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of |
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Number of |
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|
Securities |
|
Securities |
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|
Market Value of |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
Number of Shares or |
|
Shares or Units of |
|
|
Unexercised Options |
|
Unexercised Options |
|
Option Exercise |
|
|
|
|
|
Units of Stock That |
|
Stock That Have Not |
|
|
(#) |
|
(#) |
|
Price |
|
Option Expiration |
|
Have Not Vested |
|
Vested |
Name |
|
Exercisable |
|
Unexercisable (1) |
|
($) |
|
Date |
|
(#) |
|
($) |
|
|
|
|
832 |
|
|
|
|
|
|
$ |
32.37 |
|
|
|
01/25/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
1303 |
|
|
|
|
|
|
$ |
20.77 |
|
|
|
01/25/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
1157 |
|
|
|
|
|
|
$ |
21.90 |
|
|
|
01/31/2012 |
|
|
|
|
|
|
|
|
|
Donald L. Grill |
|
|
403 |
|
|
|
807 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
807 |
|
|
$ |
3,420.44 |
|
|
|
|
202 |
|
|
|
403 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
403 |
|
|
$ |
1,710.22 |
|
|
|
|
1210 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61 |
|
|
|
121 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
121 |
|
|
$ |
514.48 |
|
Douglas J. Kelley |
|
|
121 |
|
|
|
242 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
242 |
|
|
$ |
1,026.13 |
|
|
|
|
550 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
290 |
|
|
|
|
|
|
$ |
37.19 |
|
|
|
07/07/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
248 |
|
|
|
|
|
|
$ |
32.37 |
|
|
|
01/25/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
661 |
|
|
|
|
|
|
$ |
20.77 |
|
|
|
01/25/2011 |
|
|
|
|
|
|
|
|
|
Robert E. Sewick |
|
|
581 |
|
|
|
|
|
|
$ |
21.90 |
|
|
|
01/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
202 |
|
|
|
403 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
403 |
|
|
$ |
1,710.22 |
|
|
|
|
161 |
|
|
|
323 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
323 |
|
|
$ |
1,368.18 |
|
|
|
|
660 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
254 |
|
|
|
|
|
|
$ |
32.37 |
|
|
|
01/25/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
467 |
|
|
|
|
|
|
$ |
20.77 |
|
|
|
01/25/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
401 |
|
|
|
|
|
|
$ |
21.90 |
|
|
|
01/31/2012 |
|
|
|
|
|
|
|
|
|
Ronald L. Justice |
|
|
161 |
|
|
|
323 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
323 |
|
|
$ |
1,368.18 |
|
|
|
|
161 |
|
|
|
323 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
323 |
|
|
$ |
1,368.18 |
|
|
|
|
660 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
303 |
|
|
|
|
|
|
$ |
21.90 |
|
|
|
01/31/2012 |
|
|
|
|
|
|
|
|
|
|
|
|
121 |
|
|
|
242 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
242 |
|
|
$ |
1,026.13 |
|
Dennis E. Leyder |
|
|
161 |
|
|
|
323 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
323 |
|
|
$ |
1,368.18 |
|
|
|
|
550 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121 |
|
|
|
|
|
|
$ |
32.37 |
|
|
|
01/25/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
292 |
|
|
|
|
|
|
$ |
20.77 |
|
|
|
01/25/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
278 |
|
|
|
|
|
|
$ |
21.90 |
|
|
|
01/31/2012 |
|
|
|
|
|
|
|
|
|
Holly J. Pingatore |
|
|
121 |
|
|
|
242 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
242 |
|
|
$ |
1,026.13 |
|
|
|
|
161 |
|
|
|
323 |
|
|
$ |
28.31 |
|
|
|
06/26/2013 |
|
|
|
323 |
|
|
$ |
1,368.18 |
|
|
|
|
550 |
|
|
|
|
|
|
$ |
35.45 |
|
|
|
12/01/2014 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Options become exercisable in three equal installments each year beginning on
the third anniversary of the grant date. |
16
2006 OPTION EXERCISES AND STOCK VESTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
Stock Awards |
|
|
Number of |
|
|
|
|
|
Number of |
|
|
|
|
Shares |
|
|
|
|
|
Shares |
|
|
|
|
Acquired |
|
Value Realized |
|
Acquired |
|
Value Realized |
|
|
on Exercise |
|
on Exercise |
|
on Vesting |
|
on Vesting |
Name |
|
(#) |
|
($) |
|
(#) |
|
($) |
|
Donald L. Grill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J. Kelley |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Sewick |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald L. Justice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis E. Leyder |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holly J. Pingatore |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No options were exercised and no shares were awarded during the fiscal year ended December 31,
2006
2006 SUPPLEMENTAL RETIREMENT BENEFITS
Fentura Financial, Inc. and The State Bank have entered into Supplemental Executive
Retirement Agreements (SERP Agreements) with Mr. Donald L. Grill and Mr. Robert E. Sewick. The SERP
Agreements are designed to encourage executives to remain long term employees of the Corporation,
and to provide specified benefits to certain key executives who contribute materially to the
continued growth, development and future business success of the Corporation. The retirement
benefits are an unsecured obligation of the Corporation. The Corporation has purchased certain
prepaid life insurance policies and expects to apply investment earnings on the policies to pay for
all or a portion of the annual costs for the SERP Agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present |
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
Number of Years |
|
Accumulated Benefit |
|
Payments During |
Name |
|
Plan Name |
|
Credited Service |
|
(1) |
|
Last Fiscal Year (2) |
|
Donald L. Grill |
|
Supplemental
Executive
Retirement Plan |
|
|
10.0 |
|
|
$ |
226,505 |
|
|
|
|
|
Robert E. Sewick |
|
Supplemental
Executive
Retirement Plan |
|
|
7.5 |
|
|
$ |
95,247 |
|
|
|
|
|
|
|
|
(1) |
|
Amounts show the present value of accumulated benefits payable to each of the named
executive officers, including the number of years of service credited to each such named
executive officer, under the Supplemental Executive Retirement Plan determined using interest rate and
mortality rate assumptions consistent with those used the Companys financial statement.
Amounts included may not currently be available to named executive officers because such
amounts are not vested. Vesting begins at age 55 and full vesting occurs at age 60. |
|
(2) |
|
Annual payments are accrued based on the named executives retirement benefit at
normal retirement age. The Plans target retirement benefit is an annual retirement payment
equal to a percentage of the executives projected final salary, 25% for Mr. Grill and 20% for
Mr. Sewick. |
17
2006 NONQUALIFED DEFERRED COMPENSATION
The Corporation and the Affiliate Banks have established a Non-Qualified Deferred
Compensation Plan (the Plan) for key executives not covered under the SERP. The plan is
designed to encourage highly compensated officers to remain long term employees of the
Corporation and the Affiliate Banks, and to provide the officers with supplemental
retirement income.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive |
|
Registrant |
|
|
|
|
|
Aggregate |
|
Aggregate Balance |
|
|
Contributions in |
|
Contributions in |
|
Aggregate Earnings |
|
Withdrawals/ |
|
at Last |
Name |
|
Last FY |
|
Last FY (1) |
|
in Last FY (2) |
|
Distributions |
|
FYE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J. Kelley |
|
|
|
|
|
$ |
4,196 |
|
|
$ |
179 |
|
|
|
|
|
|
$ |
8,493 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald L. Justice |
|
|
|
|
|
$ |
4,842 |
|
|
$ |
878 |
|
|
|
|
|
|
$ |
25,905 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis E. Leyder |
|
|
|
|
|
$ |
4,826 |
|
|
$ |
747 |
|
|
|
|
|
|
$ |
22,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Holly J. Pingatore |
|
|
|
|
|
$ |
3,919 |
|
|
$ |
184 |
|
|
|
|
|
|
$ |
8,341 |
|
|
|
|
(1) |
|
Discretionary contributions to the plan may be granted each Plan year by the
Corporations Board of Directors based on financial performance of the Corporation and in
an amount up to 5% of the participants annual compensation. Discretionary contributions
under the plan are credited to a deferred compensation account (the Account) established
and maintained for each participant. Participants shall vest in their account based on the
Plans schedule which begins at 3 years of service and is fully vested after 7 years of
service. |
|
(2) |
|
Interest is earned on the deferred compensation based on the U.S. Treasury 5 year rate
at the end of each calendar year. The interest along with the deferred compensation is
credited to the deferred compensation account. |
Qualified Retirement Plans
The Corporation and the Affiliate Banks offer all employees two separate qualified retirement
plans, the first of which is the Employee Stock Ownership Plan (ESOP) and the second is a 401k
profit sharing plan. The ESOP is 100% funded by the Corporation and/or Affiliate Banks. Based on
Corporate earnings, the Corporate Board approves an amount to be distributed into the plan. In
order to promote longevity with the Corporation, this plan includes a vesting schedule of seven
years before a participant is fully vested. The 401k profit sharing plan allows participants to
defer compensation, before taxes, in order to invest in various investment vehicles. Participants
also receive a corporate match of 100% on the first 3% and 50% on the next 2% (participants are
allowed to defer up to 15%) of their annual compensation.
Potential Post-Employment Payments
Payments upon Termination/Change in Control
The Corporation and the Affiliated Banks have entered into Severance Compensation Agreements
with each of Messrs. Grill, Kelley, Sewick, Justice, Leyder, and Ms. Pingatore. Under each of
these agreements, if a change in control occurs while the Executive is an employee of the
Corporation or the Affiliate Bank, and if within five years thereafter the Executives employment
is
18
terminated without cause, by the Executive for good reason, or by either party because of
the Executives death or disability, then the Corporation and the Affiliate Bank are required to
pay the Executive an annual amount equal to 50% of the highest amount of the Executives annual
compensation in the five preceding calendar years, with such payments being made for a period of
time ranging from one to five years, as specified in each Executives agreement (Grill, Justice and
Sewick 5 years; Leyder 2 years; Kelley and Pingatore 1 year). In the case of Mr. Grill
and Mr. Sewick, the Executive may also be entitled to payment for certain excise, income and other
taxes that such Executive may become subject to as a result of Section 280G of the Internal Revenue
Code (i.e. tax gross-up payments). In contrast, the Executives other than Mr. Grill and Mr. Sewick
are to have their payments reduced to the extent necessary to avoid such excise and other taxes.
Each Executive is also entitled to the acceleration of vesting of any outstanding stock options
and/or restricted stock upon a change in control.
Change in Control means (i) the acquisition, directly, indirectly and/or beneficially, by
any person or group, of more than fifty percent (50%) of the voting securities of the Corporation
or the Bank, (ii) the occurrence of any event at any time during any two (2) year period which
results in a majority of the Board of Directors of the Corporation or the Bank being comprised of
individuals who were not members of such Board at the commencement of that two (2) year period (the
Incumbent Board); provided, however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the Corporations or the Banks
shareholders, was approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of the Incumbent Board,
but excluding for this purpose any such individual whose initial assumption of the office occurs as
a result of an actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by or on behalf of a
person other than the Incumbent Board, (iii) a sale of all or substantially all of the assets of
the Corporation or the Bank to another entity, or (iv) a merger or reorganization of the
Corporation or the Bank with another entity.
Cause means (i) the willful and continuing failure by the Executive to substantially perform
his duties with the Bank or the Corporation (other than any such failure resulting from the
Executives death or Disability) and which is not remedied in a reasonable period of time after
receipt by Executive of written notice from the Bank specifying the duties the Executive has failed
to perform, or (ii) the willful and continued engaging by Executive in gross misconduct that is
materially injurious to the Bank or the Corporation and which is not ceased within a reasonable
period of time after receipt by Executive of written notice from the Bank specifying the misconduct
and the injury, or (iii) an adjudication of the Executives guilt of any crime involving a serious
and substantial breach of the Executives fiduciary duties to the Bank. No act or failure to act
on the Executives part shall be considered willful unless done, or omitted to be done, by him in
bad faith and without reasonable belief that his action or omission was in the best interest of the
Bank or the Corporation.
Good Reason means any of the following, as determined by the Executive in his discretion:
(i) the assignment to the Executive by the Bank or the Corporation of any duties inconsistent with
his position, duties, responsibilities and status with the Bank or the Corporation immediately
prior to a Change in Control, or a change adverse to Executive in Executives reporting
responsibilities, titles, terms of employment (including bonus, compensation, fringe benefits and
vacation entitlement) or offices as in effect immediately prior to a Change in Control; or (ii) the
Bank or the Corporation requiring Executive to be based anywhere other than within fifteen (15)
miles of his present office location, or to travel on business of the Bank to an extent
substantially greater than Executives present business travel obligations; or (iii) the failure by
the Corporation to obtain the assumption of the agreement. If any of the foregoing result from, or
follow, a termination of employment for Cause, then Good Reason will not have occurred.
Assuming, in accordance with applicable SEC rules that the foregoing executive officers were
terminated on December 31, 2006 in the manner described above, the estimated aggregate total value
of compensation and benefits (including the economic benefit resulting from the acceleration of
options and
19
restricted stock) from Severance Compensation Agreements would be as follows: Mr. Grill
$872,380, Mr. Kelley $103,717, Mr. Sewick $619,320, Mr. Justice $449,754, Mr. Leyder $197,138,
and Ms. Pingatore $91,443.
Additionally, under the change of control provisions of the Supplemental Executive Retirement
Plans, assuming executive officers were terminated on December 31, 2006 in the manner described
above, Mr. Grill would receive an additional $881,119 and Mr. Sewick would receive an additional
$598,496.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Corporation for the year ended December 31, 2006,
have been examined by Crowe Chizek and Company LLC, independent certified public accountants. A
representative of Crowe Chizek and Company is expected to be present at the annual meeting with the
opportunity to make a statement, if desired, and will be available to respond to appropriate
questions. The Corporations Audit Committee selects the Corporations auditors before the end of
each calendar year.
Fees Paid to Independent Accountants
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
2005 |
Audit Fees |
|
$ |
99,125 |
|
|
$ |
93,500 |
|
Audit-related Fees |
|
$ |
54,060 |
|
|
$ |
34,020 |
|
Tax Fees |
|
$ |
18,550 |
|
|
$ |
26,115 |
|
All Other Fees |
|
$ |
8,221 |
|
|
$ |
0 |
|
The amount shown for Audit-related Fees for 2006 related to the development of tools
designed to assist the Corporation in complying with certain provisions of the Sarbanes-Oxley Act
and related consultation and advice.
The amounts shown for Tax Fees were for corporate tax compliance, tax advice and tax
planning services.
The Audit Committee has considered whether the provision of these services is compatible with
maintaining our principal auditors independence. Following the adoption of the Sarbanes-Oxley Act
of 2002 and the rules promulgated thereunder, our independent auditors are proscribed from offering
certain services to us. None of those proscribed services were provided to us in 2006. The
Corporations Audit Committee has concluded that the provision of services covered under the
caption All Other Fees is compatible with Crowe Chizek and Company LLC maintaining their
independence. None of the hours expended on Crowe Chizek and Company LLCs engagement to audit the
Corporations consolidated financial statements for the year ended December 31, 2006, were
attributed to work performed by persons other than Crowe Chizek and Company LLCs full-time,
permanent employees.
The Charter of the Audit Committee provides that the Audit Committee will administer the
Corporations policy regarding the approval of audit and non-audit services. Under that policy,
the Audit Committee must pre-approve all engagements of the Corporations independent auditors.
Before the end of the first quarter of each year, the retention of the independent auditors to
audit the Corporations financial statements, including the associated fee, is approved by the
Audit Committee. At the same time, the Audit Committee will evaluate other known potential
engagements of the independent auditors, including the scope of the work proposed to be performed
and the proposed fees, and approve or reject each service, taking into account whether the services
are permissible under applicable law and the possible impact of each non-audit service on the
independent auditors independence from management.
20
At each subsequent meeting of the Audit Committee, the Audit Committee will receive updates on the
services actually provided by the independent auditors and management may present additional
services for approval. The Audit Committee has delegated to the Chairman of the Audit Committee
the authority to evaluate and approve engagements on behalf of the Audit Committee in the event
that the need arises for pre-approval between Audit Committee meetings. This might occur, for
example, if the Corporation was proposing to execute a financing on an accelerated timetable. If
the Chairman so approves any such engagements, he/she is required to report that approval to the
full Audit Committee at the next Audit Committee meeting.
All of the services described above as Audit-related Fees and Tax Fees were approved under
this policy.
COMPLIANCE WITH SECTION 16 REPORTING
The rules of the Securities and Exchange Commission require that the Corporation disclose late
filings of reports of stock ownership (and changes in stock ownership) by its directors, executive
officers and beneficial owners of more than 10% of the Corporations common stock. Based solely on
its review of the copies of such reports received by it, and written representations from certain
reporting persons, the Corporation believes that during the year ended December 31, 2006, its
directors, executive officers and beneficial owners of more than 10% of the Corporations common
stock have complied with all filing requirements applicable to them.
OTHER INFORMATION
Annual Report on Form 10-K
The Corporation will provide a copy of its 2006 Annual Report on SEC Form 10-K to any
shareholder who asks for it in writing, without charge. Please direct your request to our
Secretary, Ronald L. Justice, at 175 North Leroy Street, P.O. Box 725, Fenton, Michigan 48430. The
Form 10-K and certain other periodic filings are filed with the Securities and Exchange Commission
(SEC). The SEC maintains an Internet web site that contains reports and other information
regarding companies, including the Corporation, that file electronically. The SECs web site
address is www.sec.gov.
Transactions with Certain Interested Parties
The Company has Related Party Transactions provisions in its lending policies which require
preapproval of any loans to a related party with a subsidiary Bank by a majority of disinterested
board members of the Board of Directors. Additionally, the Board reaffirms all debt with related
parties at least annually.
Certain directors and officers of the Corporation have had and are expected to have in the
future, transactions with the subsidiaries of the Corporation, or have been directors or officers
of corporations, or members of partnerships, which have had and are expected to have in the future,
transactions with the subsidiaries of the Corporation. All such transactions with officers and
directors, either directly or indirectly, have been made in the ordinary course of business and on
substantially the same terms, including interest rates and collateral, as those prevailing at the
same time for comparable transactions with other customers, and these transactions do not involve
more than the normal risk of collection or present other unfavorable features. All such future
transactions, including transactions with principal shareholders and other Corporation affiliates,
will be made in the ordinary course of business, on terms no
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less favorable to the Corporation than with other customers, and will be subject to approval
by a majority of the Corporations independent, outside disinterested directors.
Shareholder Proposals
An eligible shareholder who wants to have a qualified proposal considered for inclusion in the
proxy statement for the 2008 Annual Meeting of Shareholders must notify the Corporations Secretary
by delivering a copy of the proposal to the Corporations offices no later than November 26, 2007.
If a shareholder notifies the Corporation after 45 days before the first anniversary of the date on
which this Proxy Statement is first mailed of an intent to present a proposal at the 2008 annual
meeting of shareholders, the Corporation will have the right to exercise its discretionary voting
authority with respect to such proposal without including information regarding such proposal in
its proxy materials.
Expenses of Solicitation
The Corporation pays the cost of preparing, assembling and mailing this proxy-soliciting
material. In addition to the use of the mail, proxies may be solicited personally, by telephone or
telegraph, or by the Corporations officers and employees without additional compensation. The
Corporation pays all costs of solicitation, including certain expenses of brokers and nominees who
mail proxy material to their customers or principals.
BY ORDER OF THE BOARD OF DIRECTORS,
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Dated: March 22, 2007 |
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See enclosed voting (proxy) form please sign and mail promptly.
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P.O. Box 725
Fenton, Michigan 48430-0725
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please complete, date, sign and mail the
detached proxy card in the enclosed postage-prepaid envelope.
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DETACH PROXY CARD HERE
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
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This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this Proxy will be
voted FOR all nominees listed in No. 1. |
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If you personally plan to attend the
Annual Meeting of Shareholders,
please check the box below and list
names of attendees on reverse side. |
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Signature
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Return this stub in the enclosed
envelope with your completed proxy
card.
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Signature
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I/We do plan to attend the
Annual meeting.
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Date |
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Please sign exactly as your name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give your full title as such. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in partnership name by authorized person. |
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Number attending |
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PROXY FENTURA FINANCIAL, INC.
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Annual Meeting of Shareholders, April 24, 2007
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The undersigned hereby appoints Donald L. Grill and Thomas L. Miller as Proxies, each with the
power to appoint his substitute, and hereby authorized them to represent and to vote, as designated
below, all the shares of Common Stock of Fentura Financial, Inc. held of record by the undersigned
on March 14, 2007 at the Annual Meeting of Shareholders to be held April 24, 2007 and at any
adjournment thereof. |
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1. In the election of three directors (Class I), each to be elected for term expiring in
2010. |
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o FOR the nominees listed below |
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o WITHHOLD AUTHORITY to vote for the nominees listed below |
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J. David Karr Thomas P. McKenney Brian P. Petty
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(INSTRUCTION: To withhold authority to vote for any individual nominee strike a line through the nominees name in the list above.)
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2. In their discretion, the Proxies are authorized to vote upon such other business as may
properly come before the meeting.
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