BANK PEER GROUP COMPENSATION SURVEYS
Due to passage of the Sarbanes-Oxley Act in mid-2002, there has been an increased focus on good corporate governance practices. Activist shareholders, regulators, and the media alike have been constant corporate watchdogs, increasing potential liability exposure for directors. As a result, today’s environment has substantially impacted how the board of directors operates. A financial institution’s board of directors must closely examine the process of determining the competitiveness of executive pay. One area receiving significant attention is the selection of an appropriate group of peer companies that compensation decisions can be measured against. At a minimum, peer group data can be used by the board to make informed executive compensation decisions by examining data on the design and levels of compensation provided to executives who are performing similar duties in roles of similar complexity. Grady & Associates can assist financial institutions in this endeavor by providing bank and peer group compensation surveys so that financial institutions’ boards of directors have the insight necessary to carry out their fiduciary responsibilities in the area of executive pay.
Grady & Associates’ peer group compensation surveys are based on information from proxy statement filings, annual reports to shareholders, and Form 10-Ks filed with the Securities and Exchange Commission. Each survey takes into account organization size, geographic location, types of qualified and nonqualified deferred compensation plans offered to employees and executive officers, and participation rates across a particular state and across the country in general. Grady & Associates also prepares surveys showing the incidence of director retirement plans and director split dollar agreements. Like our executive peer group compensation surveys, the director retirement plan and director split dollar agreement surveys are based on review of proxy statement and Form 10-K filings with the SEC. Grady & Associates’ peer group compensation surveys cover all fifty states and Puerto Rico, and are available on a fixed price basis.
Today, the board of directors needs a great deal more information than was required in the past. Grady & Associates’ peer group compensation surveys allow the board of directors to (i) make an effective market comparison of executive and director compensation practices, (ii) evaluate the appropriateness of a particular qualified or nonqualified deferred compensation plan, and (iii) understand changes in compensation and benefit plan participation in the regional and national marketplace so that the board can make an informed compensation decision consistent with good corporate governance.
We advise financial institutions on appropriate executive compensation
packages designed to meet the preferences of an individual officer and the needs
of the financial institution. Employment contracts, qualified and non-qualified
incentive compensation plans, severance payments, stock option plans, stock appreciation
rights, and restricted stock may be included in specially designed plans for an
institution and its executives.
COURTESY OVERDRAFT PROTECTION PROGRAM SERVICES
- Executive compensation planning
- design and preparation of SERPs (Supplemental Executive Retirement
Plan), split dollar agreements, and other BOLI-financed compensation agreements
- consideration of change-in-control and I.R.C. §280G parachute
payment tax issues
- peer group analysis of industry
- benchmarking an institution's executive compensation practices
vis-à-vis public company banking organizations
- preparing surveys showing the incidence of director retirement
plans and director split dollar agreements so as to facilitate director recruitment
Grady & Associates provides legal services regarding the compliance issues associated with implementing, marketing, and maintaining an ad hoc courtesy overdraft protection program. Financial institutions have long maintained policies by which an institution may, in the exercise of its sole discretion, decide whether to honor customer checks presented for payment that would produce an occasional or inadvertent overdraft. Payment of the insufficient funds (“NSF”) item (which now typically includes electronic transactions as well as paper-based transactions) is not a customer entitlement. Rather, in the absence of an explicit agreement to extend credit, the institution determines on a case-by-case basis whether to honor the customer’s overdraft. If the institution decides to pay the NSF item, the institution notifies the customer and demands that the account be made whole immediately. Typically, the institution also charges the customer a fee for paying an NSF item. This practice, which can be implemented either manually or through an automated process, is commonly referred to as an ad hoc courtesy overdraft protection program or a “bounce protection” program. Overdraft protection coverage for retail checking accounts is a familiar product to the financial services industry. Nonetheless, a number of legitimate regulatory and legal concerns should be addressed to make an institution’s ad hoc courtesy overdraft protection program airtight from challenge by customers and bank regulators.
Courtesy overdraft protection program compliance issues include state consumer protection law, Section 5 of the Federal Trade Commission Act (unfair or deceptive acts or practices), the Truth in Lending Act and Regulation Z, the Equal Credit Opportunity Act and Regulation B, the Truth in Savings Act and Regulation DD, and finally the Electronic Fund Transfer Act and Regulation E. Moreover, on May 28, 2004, the Office of the Comptroller of the Currency, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration issued proposed Interagency Guidance on Overdraft Protection Programs to address concerns related to the marketing, disclosure, and implementation of courtesy overdraft protection programs. Having extensively counseled a number of financial institutions with prominent “free checking” programs with associated large NSF/overdraft fee revenues, Grady & Associates is aware of challenges that have been marshaled by the plaintiff’s bar to date and current “bank” regulatory scrutiny visited upon financial institutions’ NSF/overdraft fee practices. In this regard, Grady & Associates can provide financial institutions with the relevant ad hoc courtesy overdraft protection program materials including (i) an analysis of legal issues, (ii) an analysis of the proposed Interagency Guidance on Overdraft Protection Programs, (iii) appropriate deposit agreement disclosure, and (iv) appropriate specimen customer communication materials.
De Novo Banks
Members of the firm counsel organizing groups throughout
Nevada and the Carolinas in the chartering of state-chartered banks and savings
associations, national banks and federally chartered savings associations,
commonly referred to as de novo institutions. Working with the
organizers and management during the pre-opening/opening phase of the bank
chartering process, Grady & Associates prepares state and federal charter
applications, and responds to comments raised by regulatory agencies during the
application process. Grady & Associates also prepares corporate governance
documents, stock compensation plans for directors and officers, and private
placement memoranda, as well as offering circulars or prospectuses to be used in
connection with raising capital through initial securities offerings. We also
offer substantial experience in structuring stock benefit plans, founders
warrants and other compensation plans in compliance with applicable federal and
DIRECTORS AND OFFICERS LIABILITY
The liability of financial institution directors and officers
for acts committed or omitted has grown exponentially. The attorneys of Grady
& Associates regularly counsel bank and thrift institutions, their boards
of directors and their officers and employees regarding potential sources of liability
and how best to design internal controls to avoid situations which may lead to
HOLDING COMPANY FORMATION AND REORGANIZATIONS
The firm assists financial institution boards of directors in
the formation of a one-bank or a unitary savings and loan holding company, a multiple
bank or a multiple savings and loan holding company, or a mutual savings and loan
holding company. The firm will prepare and file the necessary regulatory applications
on behalf of the institution, including proxy statements and any required securities
Financial institutions recognize the importance and value of
providing topical information to their boards of directors and management personnel.
We can design specialized presentations to update your directors, executive officers
and other managerial employees on current regulatory or legislative developments,
or any of the other areas in which
have expertise. An appropriate in-house seminar can be tailored to fit the requirements
for a particular financial institution. We would be pleased to share our compilation
of suggested seminar programs.
The firm’s lawyers have extensive experience in real estate
development and construction lending and loan participation transactions. The
firm has prepared form lending documents and customized loan documents for large
LITIGATION/REGULATORY ENFORCEMENT ACTION
Grady & Associates counsels financial institutions involved
in regulatory enforcement proceedings with the financial institution regulators
and provides advice on litigation and settlement strategies. Our experience in
public sector gives us unique insights into the workings of the federal and state
bank regulatory agencies and assists us in aiding bank and thrift clients to resolve
disputes with the least possible disruption to the institution’s business.
MERGERS AND ACQUISITIONS
Financial institution mergers and acquisitions are complex corporate
and regulatory transactions. Deciding whether to merge, buy or sell, and determining
how each option affects the on-going strategic planning of the organization; negotiating
financial terms, management compensation arrangements and conditions of a transaction;
determining the appropriate structure of a transaction; and obtaining regulatory
approvals require both regulatory and business law expertise. A branch purchase
or sale presents a wide range of business and legal options. The firm's attorneys
have acted as advisor to both buyers and sellers in branch transfer transactions.
Cross-industry and interstate
present complex and changing regulatory issues, familiar to the attorneys of Grady
& Associates. We assist institutions in evaluating the options available and the
best methods of achieving those goals. By virtue of its significant practice involving
financial institution mergers and acquisitions, Grady & Associates is well positioned
to provide anti-takeover protections for a particular institution. We have represented
acquirers and selling institutions in both solicited and unsolicited acquisitions.
Banking-related consumer protection law has taken on a heightened
importance in recent years. Media publicity and increasing public awareness accorded
the CRA, fair lending and other consumer protection statutes are making it increasingly
necessary for financial institutions to commit larger amounts of resources to
ensure compliance. Grady & Associates has lawyers who are both authors and
recognized experts in banking-related consumer protection law. The firm provides
timely counsel regarding compliance with new consumer protection statutes, the
design and implementation of new consumer credit and deposit products, sale of
securities and insurance products, and compliance of existing operations and consumer
lending and deposit products.
corporate governance of financial institutions is controlled by numerous federal
and state statutes and regulations which are in a constant state of flux. Legislative
and regulatory developments impact the day-to-day operations and long-range planning
of financial institutions. Knowledgeable regulatory counsel can position management
to stay ahead of regulatory developments. Increased regulatory supervision of
financial institutions requires even greater knowledge of, and the need to communicate
with, both federal and state financial institution regulatory agencies.
With Francis Grady’s significant experience and background
as an FDIC attorney involved in enforcement work, Grady & Associates has a
unique ability to counsel financial institution clients regarding responses to
regulatory directives, requirements and supervision, including the negotiation
of formal and informal supervisory agreements. Our experience in working with
federal and state regulatory agencies can facilitate smooth relations with regulators
and allow management to concentrate its resources on what it knows best –the
operation of the financial institution.
Grady & Associates also has an active practice involving
the preparation and required review of required regulatory policies and procedures.
We can assist in preparing polices and procedures that are at once workable and
in compliance with all regulatory requirements.
SECURITIES OFFERINGS AND SECURITIES LAW COMPLIANCE
Grady & Associates has the expertise and experience to assist
banks, thrifts and their holding companies with securities offerings on both a
private placement and public offering basis. We can help an institution structure
the type of offerings best suited to its capital needs and subsequent operations
through the formation of holding companies and affiliates. For those financial
institutions whose stock is registered under the Securities Exchange Act of 1934,
our lawyers assist in preparation, review and filings of annual and periodic reports
both for the company and its officers and directors. We routinely update our clients
on new developments in securities law.
Summary of Topic Presentations for