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Section 1: DEF 14A (PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
SCHEDULE 14A
 
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No._)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
 
Check the appropriate box:
[   ] Preliminary Proxy Statement
[   ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[   ] Definitive Additional Materials
[   ] Soliciting Material Pursuant to §240.14a-12

 
GREAT SOUTHERN BANCORP, INC.

(Name of Registrant as Specified In Its Charter)
 
 
 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
 
Payment of Filing Fee (Check the appropriate box):
[X]
No fee required.
[  ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1)
Title of each class of securities to which transaction applies:
2)
Aggregate number of securities to which transaction applies:
3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
4)
Proposed maximum aggregate value of transaction:
5)
Total fee paid:
[  ]
Fee paid previously with preliminary materials.
 
[  ]
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
1)
Amount previously paid:
2)
Form, Schedule or Registration Statement No.:
3)
Filing Party:
4)
Date Filed:
 
 
 

 
 

GREAT SOUTHERN BANCORP, INC.
1451 E. Battlefield
Springfield, Missouri 65804
(417) 887‑4400

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 9, 2018

You are hereby notified and cordially invited to attend the Annual Meeting of Stockholders (the "Annual Meeting") of Great Southern Bancorp, Inc. ("Bancorp"), to be held at the Great Southern Operations Center, 218 S. Glenstone, Springfield, Missouri, on May 9, 2018, at 10:00 a.m., local time.
A proxy statement and proxy card for the Annual Meeting are enclosed. The Annual Meeting is for the purpose of considering and voting upon the following matters:
1.
the election of three directors, each for a term of three years;
2.
an advisory (non-binding) vote on executive compensation;
3.
an advisory (non-binding) vote as to whether future advisory votes on executive compensation should be held every year, every two years or every three years;
4.
the approval of the Great Southern Bancorp, Inc. 2018 Omnibus Incentive Plan;
5.
the ratification of the appointment of BKD, LLP as Bancorp's independent registered public accounting firm for the fiscal year ending December 31, 2018; and
6.
such other matters as may properly come before the Annual Meeting, or any adjournments or postponements thereof.
Pursuant to the bylaws of Bancorp, the Board of Directors has fixed February 28, 2018 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting. Only record holders of the common stock of Bancorp as of the close of business on that date will be entitled to vote at the Annual Meeting, or any adjournments or postponements thereof.
The Board of Directors of Bancorp unanimously recommends that you vote FOR the election of the nominees named in the accompanying proxy statement, FOR the advisory (non-binding) vote on executive compensation, FOR every year (One Year) on the advisory (non-binding) vote as to the frequency of future advisory votes on executive compensation, FOR the approval of the Great Southern Bancorp, Inc. 2018 Omnibus Incentive Plan and FOR the ratification of the appointment of the independent registered public accounting firm.
This year Bancorp is using a Securities and Exchange Commission rule to furnish its proxy statement, Annual Report and proxy card over the internet to stockholders who own fewer than 500 shares.  This means that these stockholders will not receive paper copies of the proxy materials.  Instead, these stockholders will receive only a notice containing instructions on how to access the proxy materials over the internet.  If you received only this notice by mail and would like to request a printed copy of the proxy materials, the notice contains instructions on how you can do so.
Stockholders are encouraged to attend the Annual Meeting in person. Regardless of whether you plan to attend the Annual Meeting in person, please read the accompanying proxy statement and then vote by internet, telephone or mail as promptly as possible. Voting promptly will help ensure the presence of a quorum and save Bancorp from additional expense in soliciting proxies.
 

 
 
 
 
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 9, 2018. 
The Proxy Statement and the annual report to stockholders are available at www.greatsouthernbank.com (click "Investor Relations").
 
 
By Order of the Board of Directors
   
 
   
 
William V. Turner
 
Chairman of the Board

Springfield, Missouri
March 27, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
GREAT SOUTHERN BANCORP, INC.
1451 E. Battlefield
Springfield, Missouri 65804
(417) 887-4400

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2018

Solicitation of Proxies
This proxy statement is being furnished to stockholders of Great Southern Bancorp, Inc. ("Bancorp," the "Company," "we," "us," "our") in connection with the solicitation by our Board of Directors of proxies to vote our common stock, $.01 par value per share ("Common Stock"), at our Annual Meeting of Stockholders (the "Annual Meeting") to be held at the Great Southern Operations Center, 218 S. Glenstone, Springfield, Missouri, on May 9, 2018, at 10:00 a.m., local time, and at any and all adjournments or postponements thereof. The Notice of the Annual Meeting, a proxy card and our Annual Report to Stockholders for the fiscal year ended December 31, 2017 accompany this proxy statement. Certain of the information in this proxy statement relates to Great Southern Bank ("Great Southern" or the "Bank"), a wholly owned subsidiary of Bancorp.
At the Annual Meeting, stockholders are being asked to consider and vote upon (i) the election of three directors of Bancorp, (ii) an advisory (non-binding) vote on executive compensation (the "Say on Pay Vote"), (iii) an advisory (non-binding) vote on whether an advisory vote on executive compensation should be held every year, every two years or every three years (the "Say on Pay Frequency Vote"), (iv) the approval of the Great Southern Bancorp, Inc. 2018 Omnibus Incentive Plan (the "Omnibus Incentive Plan Proposal") and (v) the ratification of the appointment of BKD, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (the "Independent Auditor Proposal").
Regardless of the number of shares of Common Stock owned, it is important that stockholders be represented by proxy or present in person at the Annual Meeting. Stockholders are requested to vote by internet, telephone or mail as promptly as possible.
A proxy may be revoked by a stockholder at any time prior to its exercise by filing written notice of revocation with the Secretary of Bancorp at the above address, by delivering to Bancorp, at any time before the Annual Meeting, a duly executed proxy card bearing a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not in and of itself have the effect of revoking a properly executed proxy.  If your shares are held in "street name" through a bank, broker or other nominee, you must follow the instructions on the form you receive from your bank, broker or other nominee with respect to revoking your proxy.
The cost of solicitation of proxies and of the Annual Meeting will be borne by Bancorp. In addition to the solicitation of proxies by mail, proxies may also be solicited personally or by telephone by directors, officers and other employees of Bancorp or Great Southern not specifically engaged or compensated for that purpose. Bancorp will also, upon request, reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses in sending proxy materials to beneficial owners of the Common Stock.
This year we are using a Securities and Exchange Commission ("SEC") rule to furnish our proxy statement, Annual Report and proxy card over the internet to stockholders who own fewer than 500 shares.  This means that these stockholders will not receive paper copies of the proxy materials.  Instead, these stockholders will receive only a notice containing instructions on how to access the proxy materials over the internet.  If you received only this notice by mail and would like to request a printed copy of the proxy materials, the notice contains instructions on how you can do so.
The approximate date on which this proxy statement and the accompanying proxy card are first being made available to stockholders is March 27, 2018.
 
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Voting
Bancorp's Board of Directors has fixed February 28, 2018 as the record date (the "Record Date") for the determination of stockholders entitled to notice of and to vote at the Annual Meeting, and any and all adjournments or postponements thereof. Only stockholders of record as of the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting. The total number of shares of Common Stock outstanding on the Record Date was 14,106,962.  These are the only securities of Bancorp entitled to vote at the Annual Meeting.
Each holder of the Common Stock is entitled to cast one vote for each share of Common Stock held on the Record Date on all matters, except that, pursuant to Section D of Article V of Bancorp's charter, any stockholder that beneficially owns in excess of 10% of the then outstanding shares of Common Stock (the "Limit") is not entitled to vote shares in excess of the Limit.
In order for any proposals considered at the Annual Meeting to be approved by stockholders, a quorum must be present. The holders of a majority of the shares of the Common Stock entitled to vote, present in person or represented by proxy at the meeting, will constitute a quorum. Abstentions and broker non-votes will be counted for purposes of determining a quorum. Shares in excess of the Limit, however, will not be considered present for purposes of determining a quorum. Directors will be elected by a plurality of the votes cast.  The approvals of the Say on Pay Vote, the Omnibus Incentive Plan Proposal and the Independent Auditor Proposal each require the affirmative vote of a majority of the votes cast on the matter.  On the Say on Pay Frequency Vote, the choice receiving the greatest number of votes – one year, two years or three years – will be the frequency that stockholders will be deemed to have approved.
With regard to the election of directors, votes may be cast in favor or withheld. Votes that are withheld and broker non-votes will be excluded entirely from the vote and will have no effect on the election of directors. With regard to the Say on Pay Vote, the Omnibus Incentive Plan Proposal, and the Independent Auditor Proposal, stockholders may vote for or against these proposals or abstain from voting on these proposals. In determining the percentage of shares that have been affirmatively voted on the Say on Pay Vote, the Omnibus Incentive Plan Proposal and the Independent Auditor Proposal, the affirmative votes will be measured against the aggregate votes for and against each proposal. Thus, abstentions and broker non-votes will have no effect on the Say on Pay Vote, the Omnibus Incentive Plan Proposal or the Independent Auditor Proposal. With regard to the Say on Pay Frequency Vote, stockholders may vote for a frequency of one year, two years or three years or abstain from voting on this proposal. Abstentions and broker non-votes will have no effect on the Say on Pay Frequency Vote.
All shares of Common Stock represented at the Annual Meeting by proxies solicited hereunder will be voted in accordance with the specifications made by the stockholders executing the proxies. If a properly executed and unrevoked proxy solicited hereunder does not specify how the shares represented thereby are to be voted, the shares will be voted FOR the election as directors of the persons named in this proxy statement, FOR the Say on Pay Vote,  for a frequency of every ONE YEAR on the Say on Pay Frequency Vote, FOR the Omnibus Incentive Plan Proposal and FOR the Independent Auditor Proposal, and in accordance with the discretion of the persons appointed proxy for the shares upon any other matters as may properly come before the Annual Meeting.
PROPOSAL I. ELECTION OF DIRECTORS
The number of directors constituting Bancorp's Board of Directors is currently nine. Bancorp's Board is divided into three classes. The term of office of one class of directors expires each year in rotation so that the class up for election at each annual meeting of stockholders serves for a three-year term. The terms of three of the present directors are expiring at the Annual Meeting.
Each director elected at the Annual Meeting will hold office for a three-year term expiring in 2021, or until his or her successor is elected and qualified. We expect that the other directors will continue in office for the remainder of their terms. The nominees for director have indicated that they are willing and able to serve as director if elected and have consented to being named as nominees in this proxy statement. If the nominees should for any reason become unavailable for election, it is intended that the proxies will be voted for the substitute nominees as shall be designated by the present Board of Directors, upon the recommendation of the Nominating Committee, unless the proxies direct otherwise.
 
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The principal occupation and business experience for the last five years and certain other information with respect to each nominee is set forth below. The information concerning the nominees has been furnished by them to us.
Nominees to Serve a Three-Year Term Expiring at the 2021 Annual Meeting
Thomas J. Carlson, age 65, was first appointed a Director of Bancorp in January 2001. Mr. Carlson is an attorney and practiced law for 20 years. He is now engaged full-time in real estate development. He has developed various properties and managed many housing projects in Missouri, Kansas and Oklahoma.  Mr. Carlson served on the Springfield City Council from 1983 through 2008, and served seven terms as Mayor of the City of Springfield. None of these entities are affiliated with Bancorp.  Mr. Carlson's many years of service on the Springfield City Council and as Mayor of the City of Springfield give him deep ties to the Springfield community and a thorough understanding of local business and economic matters.  He also brings to the Board knowledge and experience in real estate and legal matters.
Joseph W. Turner, age 53, joined Great Southern in 1991 and became an officer of Bancorp in 1995. Mr. J. Turner became a Director of Bancorp and Great Southern in 1997 and currently serves as President and Chief Executive Officer of Bancorp and Great Southern. Prior to joining Great Southern, Mr. J. Turner was an attorney with the Kansas City, Missouri law firm of Stinson, Mag and Fizzell. Mr. J. Turner is the son of William V. Turner, who is a Director and the Chairman of the Board of Bancorp and Great Southern. Mr. J. Turner is also the brother of Julie Turner Brown, who is a Director of Bancorp and Great Southern.  Mr. J. Turner currently serves as a board member and chairman of the board at CoxHealth.  Mr. J. Turner's many years of experience as an executive of the Company, including as Chief Executive Officer since 2000, have given him invaluable knowledge of all aspects of the Company's business and operations and strong leadership and organizational skills.
Debra Mallonee Shantz Hart, age 54, was first appointed a director of Bancorp and Great Southern effective March 1, 2017.  Ms. Hart was appointed to complete the term left vacant due to the death of Director Grant Q. Haden, who passed away in November 2016, while serving as a director of Bancorp and Great Southern.  Ms. Hart is an attorney and practiced law for more than 25 years, representing clients in the areas of real estate development, real estate finance and business law. She is now engaged full-time in real estate development and management.  Ms. Hart served as vice president and general counsel for John Q. Hammons Hotels for thirteen years. She has developed real estate for affordable housing purposes since 2008 in Missouri, Arkansas and Oklahoma. Active in the community, Ms. Hart has served on numerous community and non-profit boards, including the Board of Public Utilities of Springfield, Mo., Community Partnership of the Ozarks, Springfield Area Chamber of Commerce Board and Executive Committee (Chairman 2016), Discovery Center and Springfield Boy's and Girl's Club Trust Advisory Board.  Ms. Hart's many years of service on numerous community and non-profit boards give her deep ties to the Springfield community and a thorough understanding of local business and economic matters.  She also brings to the Board knowledge and experience in real estate and legal matters.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES NAMED IN THIS PROXY STATEMENT.
Information with Respect to the Continuing Directors
In addition to the nominees proposed for re-election to the Bancorp Board of Directors, the following individuals are also members of the Bancorp Board, each serving for a term ending on the date of the annual meeting of stockholders in the year indicated. The principal occupation and business experience for the last five years and certain other information with respect to each continuing director of Bancorp is set forth below. The information concerning the continuing directors has been furnished by them to us.
Directors Serving a Term Expiring at the 2019 Annual Meeting
William V. Turner, age 85, has served as the Chairman of the Board of Great Southern since 1974, Chief Executive Officer of Great Southern from 1974 to 2000, and President of Great Southern from 1974 to 1997. Mr. W. Turner has served in similar capacities with Bancorp since its formation in 1989. Mr. W. Turner has also served as Chairman of the Board and President of Great Southern Financial Corporation (a subsidiary of Great Southern) since
 
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its incorporation in 1974. Mr. W. Turner is the father of Joseph W. Turner, who is a Director and the Chief Executive Officer and President of Bancorp and Great Southern. Mr. W. Turner is also the father of Julie Turner Brown, who is a Director of Bancorp and Great Southern.  Mr. W. Turner's service as Chairman of Great Southern for more than 40 years, including 26 years as Chief Executive Officer, has given him a thorough understanding of the Company's business and the banking industry and invaluable institutional knowledge.
Julie Turner Brown, age 56, was first appointed a Director of Great Southern and Bancorp in 2002. Ms. Brown is an attorney and shareholder with the Springfield, Missouri law firm of Carnahan, Evans, Cantwell and Brown, P.C., having joined the firm in February 1996. Ms. Brown is active in local civic affairs, currently serving on the Boards of Care to Learn and Springfield Innovations, Inc., and previously serving on the Boards of the Ozarks Technical College Foundation, Boys and Girls Club and the Foundation for Springfield Public Schools, among others. Ms. Brown is the daughter of William V. Turner, who is a Director and the Chairman of the Board of Bancorp and Great Southern, and the sister of Joseph W. Turner, who is a Director and the Chief Executive Officer and President of Bancorp and Great Southern.  Ms. Brown's legal background and experience make her a particularly valuable resource to the Board.  Ms. Brown also has strong ties to the local community through her involvement in civic affairs.
Earl A. Steinert, Jr., age 81, was first appointed a Director of Great Southern and Bancorp in 2004. Mr. Steinert was a practicing certified public accountant from 1962 until his retirement in 2006. He is the owner of EAS Investment Enterprises Inc., which owns and operates hotels in Springfield, Missouri, and was the managing general partner/owner of Mid American Real Estate Partners, which owned and operated apartments.  Mr. Steinert is a member of the American Institute of Certified Public Accountants and Missouri Society of CPAs. None of these entities are affiliated with Bancorp.  Mr. Steinert brings to the Board more than 40 years of experience in public accounting, as well as knowledge and experience in commercial real estate matters.
Directors Serving a Term Expiring at the 2020 Annual Meeting
Kevin R. Ausburn, age 62, was first appointed a director of Bancorp and Great Southern effective March 1, 2017. Mr. Ausburn is currently the chairman and chief executive officer of SMC Packaging Group in Springfield, Mo. He has served with many civic and charitable organizations, including as the current President of the Springfield Business Development Corporation, and on the Ozarks Trails Council – Boy Scouts of America Board, Association of Independent Corrugated Converters Board, Good Government Committee, Voice of Business Committee, Council of Churches of the Ozarks Foundation and Community Foundation of the Ozarks – Audit/Operations Committee.  He is also a certified public accountant.  Mr. Ausburn's background as a senior executive, owner and operator of multiple businesses in the Springfield area provides a long history of entrepreneurship and managerial knowledge that are particularly valuable to the Board.   He also brings to the Board knowledge and experience regarding local business and economic matters.  Mr. Ausburn was recommended as a director by the Chief Executive Officer of Bancorp.  The Nominating Committee reviewed Mr. Ausburn's background and experience prior to recommending that the Board nominate him as a director.
Larry D. Frazier, age 80, was first elected a Director of Great Southern and of Bancorp in May 1992. Mr. Frazier was elected a Director of Great Southern Financial Corporation in 1976, where he served until his election as Director of Great Southern and Bancorp. Mr. Frazier is retired from White River Valley Electric Cooperative in Branson, Missouri, where he served as Chief Executive Officer from 1975 to 1998. Mr. Frazier also has served as President of Rural Missouri Cable T.V., Inc. from 1979 to 2000. These entities are not affiliated with Bancorp.  Mr. Frazier brings to the Board strong organizational and leadership skills developed from his many years of experience as a chief executive.
Douglas M. Pitt, age 51, was first appointed a Director of Bancorp and Great Southern in January 2015.  Mr. Pitt has been a technology entrepreneur for decades, currently as the owner of Pitt Technology Group, LLC.  His former company, ServiceWorld Computer Center, was a past recipient of the Springfield Area Chamber of Commerce Small Business of the Year Award and was also recognized as the Springfield Business Journal's Philanthropic Business of the Year.  Mr. Pitt is also the owner of Pitt Development Group, LLC, a medical office specialty real estate development company.  Mr. Pitt is a well-known philanthropist and civic leader, both locally and internationally. He currently serves as a board member of WorldServe International, which operates one of the largest water drilling companies in East Africa. Locally, he founded Care To Learn, a non-profit organization with a mission to fund child health, hunger and hygiene needs. Mr. Pitt is also past Chairman of the Springfield Area Chamber of Commerce. Mr. Pitt's experience as a business owner and entrepreneur, as well as his significant community involvement, provide knowledge and leadership that are valuable to the Board.
 
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Director Independence
The Board of Directors of Bancorp has determined that Directors Ausburn, Carlson, Frazier, Hart, Pitt and Steinert are "independent directors," as that term is defined in Rule 5605 of the Listing Rules of the NASDAQ Stock Market. These directors constitute a majority of the Board.
Board Leadership Structure and Board's Role in Risk Oversight
Leadership Structure.  The positions of Chairman of the Board and Chief Executive Officer of the Company are currently held by two persons, with Mr. W. Turner serving as Chairman and Mr. J. Turner serving as Chief Executive Officer. This structure has been in place since 2000, when, as part of a leadership transition, Mr. J. Turner was promoted to Chief Executive Officer and Mr. W. Turner, who had served as Chairman and Chief Executive Officer since 1974, continued as Chairman in an executive capacity. Although Mr. J. Turner has subsequently assumed increased responsibilities from Mr. W. Turner, the Board believes that the separation of the Chairman and Chief Executive Officer positions remains appropriate, as this allows Mr. J. Turner to better focus on his primary responsibilities of overseeing the implementation of our strategic plans and daily consolidated operations, while allowing Mr. W. Turner to lead the Board in its fundamental role of oversight of management.
Role in Risk Oversight.  Risk is inherent with the operation of every financial institution, and how well an institution manages risk can ultimately determine its success. We face a number of risks, including but not limited to credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of the risks we face, while the Board has ultimate responsibility for the oversight of risk management. The Board believes that risk management, including setting appropriate risk limits and monitoring mechanisms, is an integral component and cannot be separated from strategic planning, annual operating planning, and daily management of the Company. Consistent with this approach as well as based on the belief that certain risks require an oversight focus that a Board committee can better provide, the Board integrated the oversight of certain risk areas (internal control, financial reporting and compliance; and compensation and incentive programs) with the Audit Committee and Compensation Committee, respectively. These committees regularly provide reports of their activities and recommendations to the full Board. The Board directly oversees all other material risks, including interest rate risk, credit risk, liquidity and capital adequacy. In support of those activities, members of senior management regularly attend meetings of the Board to report to the Board on the primary areas of risk facing the Company and to respond to any questions or concerns raised by the directors.
DIRECTORS MEETINGS AND COMMITTEES OF
THE BOARD OF DIRECTORS
Meetings of the Board and Committees of the Board
The Board of Directors of Bancorp meets monthly and may have additional special meetings upon the request of one third of the directors then in office (rounded up to the nearest whole number) or upon the request of the President. The Board of Directors of Bancorp is authorized to appoint various committees and has formed the Audit Committee, the Compensation Committee, the Stock Option Committee and the Nominating Committee. The Board of Directors of Bancorp has not formed any other committees. The Board of Directors of Bancorp held 18 meetings during fiscal 2017. During fiscal 2017, each of the directors of Bancorp attended 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors of Bancorp and (ii) the total number of meetings held by all committees of the Board of Directors of Bancorp on which the director served, in each case during the period in which he or she served, other than William E. Barclay, who retired as a director of Bancorp in May 2017 but remains a director of Great Southern. Mr. Barclay attended 57% of the Bancorp Board of Directors meetings held in 2017 during the period in which he served on that Board; Mr. Barclay did not serve on any committees of Bancorp's Board of Directors during that period.  The missed meetings by Mr. Barclay were for health-related reasons.
 
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The Audit Committee is currently comprised of Directors Ausburn, Carlson, Frazier, Hart, Pitt and Steinert.  Each member of the Audit Committee is "independent," as independence for audit committee members is defined in the Listing Rules of the NASDAQ Stock Market.  The Board of Directors of Bancorp has determined that Director Steinert is an "audit committee financial expert," as defined in the SEC's rules.  The Audit Committee held 10 meetings during fiscal 2017.
The Audit Committee operates under a written charter adopted by Bancorp's Board of Directors, a copy of which is available on our website, at www.greatsouthernbank.com, by clicking "Investor Relations" and then "Corporate Governance." The Audit Committee is appointed by Bancorp's Board of Directors to provide assistance to the Board in fulfilling its oversight responsibility relating to the integrity of our consolidated financial statements and the financial reporting processes, the systems of internal accounting and financial controls, compliance with legal and regulatory requirements, the independent registered public accounting firm's qualifications and independence, the performance of our internal audit function and independent registered public accounting firm and any other areas of potential financial risks as may be specified by the Board. The Audit Committee also is responsible for hiring, retaining and terminating Bancorp's independent registered public accounting firm.
Audit Committee Report. The Audit Committee Report included herein shall not be incorporated by reference into any filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, notwithstanding the incorporation by reference of this proxy statement into any such filings. The Audit Committee of the Board of Directors of Bancorp has issued the following report with respect to the audited financial statements of Bancorp for the fiscal year ended December 31, 2017:
·
The Audit Committee has reviewed and discussed with management Bancorp's fiscal 2017 audited financial statements;
·
The Audit Committee has discussed with Bancorp's independent registered public accounting firm (BKD, LLP) the matters required to be discussed by PCAOB Auditing Standard No. 16;
·
The Audit Committee has received the written disclosures and letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the firm's communications with the Audit Committee concerning independence and has discussed with the independent registered public accounting firm their independence; and
·
Based on the review and discussions referred to in the items above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Bancorp's Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Submitted by the Audit Committee of the Board of Directors of Bancorp:
Larry D. Frazier
Kevin R. Ausburn
Thomas J. Carlson
Debra M. Shantz Hart
Douglas M. Pitt
Earl A. Steinert, Jr.

The Compensation Committee is currently comprised of Ausburn, Carlson, Frazier, Hart, Pitt and Steinert.  The Compensation Committee consists solely of independent directors.
The Compensation Committee is responsible for reviewing and evaluating executive compensation and administering our compensation and benefit programs. The Compensation Committee also is responsible for:
·
reviewing from time to time our compensation plans and, if the Committee believes it to be appropriate, recommending that the Board amend these plans or adopt new plans;
 
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·
annually reviewing and approving corporate goals and objectives relevant to our Chief Executive Officer's compensation, evaluating the Chief Executive Officer's performance in light of these goals and objectives and recommending to the Board the Chief Executive Officer's compensation level based on this evaluation;
·
overseeing the evaluation of our management, and recommending to the Board the compensation for our executive officers and other key members of management;
·
recommending to the Board the appropriate level of compensation and the appropriate mix of cash and equity compensation for directors;
·
administering any benefit plan which the Board has determined should be administered by the Committee; and
·
reviewing, monitoring and reporting to the Board, at least annually, on management development efforts to ensure a pool of candidates for adequate and orderly management succession.
The Compensation Committee operates under a formal written charter, a copy of which is available on our website, at www.greatsouthernbank.com, by clicking "Investor Relations" and then "Corporate Governance." The members of the Compensation Committee are "independent directors," as that term is defined in the Listing Rules of the NASDAQ Stock Market. During 2017, the Compensation Committee met once.
The charter of the Compensation Committee does not specifically provide for delegation of any of the authorities or responsibilities of the committee. In setting the compensation of executive officers other than the Chief Executive Officer, the Compensation Committee considers the recommendations of the Chief Executive Officer.
The Stock Option Committee is currently comprised of Directors Ausburn, Frazier, Hart and Pitt.  The Stock Option Committee consists solely of independent directors. The Stock Option Committee generally meets at least once per year (usually late in the third quarter or early in the fourth quarter) to consider stock option grants to officers and at other times during the year as necessary to consider proposals for the granting of stock options to employees. The Stock Option Committee met five times during 2017.
The current members of the Nominating Committee are Directors Ausburn, Carlson, Frazier, Hart, Pitt and Steinert.  The Nominating Committee consists solely of independent directors.  The Nominating Committee met four times during 2017.
The Nominating Committee is responsible for identifying and recommending director candidates to serve on the Board of Directors. Final approval of director nominees is determined by the full Board, based on the recommendation of the Nominating Committee. The Nominating Committee also is responsible for:
·
recommending to the Board the appropriate size of the Board and assist in identifying, interviewing and recruiting candidates for the Board;
·
recommending candidates (including incumbents) for election and appointment to the Board of Directors, subject to the provisions set forth in Bancorp's charter and bylaws relating to the nomination or appointment of directors, based on the following criteria: business experience, education, integrity and reputation, independence, conflicts of interest, diversity, age, number of other directorships and commitments (including charitable organizations), tenure on the Board, attendance at Board and committee meetings, stock ownership, specialized knowledge (such as an understanding of banking, accounting, marketing, finance, regulation and public policy) and a commitment to Bancorp's communities and shared values, as well as overall experience in the context of the needs of the Board as a whole.  Although we do not have a formal policy with regard to the consideration of diversity in identifying director nominees, the Board seeks candidates who further its objective of having a Board that encompasses a broad range of talents and expertise and that reflects a diversity of background, experience and viewpoints;
 
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·
reviewing nominations submitted by stockholders, which have been addressed to the Corporate Secretary, and which comply with the requirements of Bancorp's charter and bylaws. Nominations from stockholders will be considered and evaluated using the same criteria as all other nominations;
·
annually recommending to the Board committee assignments and committee chairs on all committees of the Board, and recommend committee members to fill vacancies on committees as necessary; and
·
performing any other duties or responsibilities expressly delegated to the Committee by the Board.
Pursuant to Bancorp's bylaws, nominations for directors by stockholders must be made in writing and delivered to the Secretary of Bancorp no earlier than 120 days prior to the meeting date and no later than 90 days prior to the meeting date. If, however, less than 100 days' notice of the date of the meeting is given or made to stockholders by public notice or mail, nominations must be received by Bancorp not later than the close of business on the tenth day following the earlier of the day on which notice of the date of the meeting was mailed or public announcement of the date of the meeting was first made. In addition to meeting the applicable deadline, nominations must be accompanied by certain information specified in Bancorp's bylaws.
The Nominating Committee operates under a formal written charter, a copy of which is available on our website, at www.greatsouthernbank.com, by clicking "Investor Relations" and then "Corporate Governance."
Stockholder Communications with Directors
Stockholders may communicate with Bancorp's Board of Directors by writing to: William V. Turner, Chairman of the Board, Great Southern Bancorp, Inc., 1451 E. Battlefield, Springfield, Missouri 65804.
Board Member Attendance at Annual Stockholder Meetings
Although we do not have a formal policy regarding director attendance at annual stockholder meetings, directors are expected to attend these meetings absent extenuating circumstances. Every current director of Bancorp (who was also a director as of last year's annual meeting) attended last year's annual meeting of stockholders.
Directors' Compensation
For 2017, directors of Bancorp received a monthly fee of $1,000 for each Board meeting attended, which was the only compensation paid to directors by Bancorp, except for stock options which may be granted in the discretion of the Board of Directors. Directors of Great Southern received a monthly fee of $3,000 for each regular Board meeting attended. In 2017, the directors of Bancorp and the directors of Great Southern were the same individuals, except for Mr. Barclay, who retired as a director of Bancorp in 2017 but remains a director of Great Southern. Ms. Brown, who serves on Great Southern's Compliance Committee, receives a fee of $300 for each meeting of that committee that she attends. The directors of Bancorp serving on the Audit Committee are paid a fee of $300 per meeting attended, except for the Chairman of the Audit Committee, who is paid a fee of $350 per meeting attended. The directors of Bancorp and its subsidiaries are not reimbursed for their costs incurred in attending Board and Board committee meetings.
 
8

 
 
The following table sets forth certain information regarding the compensation earned by or awarded to each director, who is not also a named executive officer, who served on Bancorp's Board of Directors in 2017. Compensation paid to Messrs. W. and J. Turner for their service as directors is reflected in the Summary Compensation Table under the "Salary" Column.
Name
 
Fees Earned
or Paid in
Cash
($)
   
Option
Awards
($)(1)
   
All Other
Compensation
($)
   
Total
($)
 
                         
Kevin R. Ausburn(2)
 
$
40,900
   
$
77,660
     
---
   
$
118,560
 
William E. Barclay(3)
   
41,000
     
19,760
     
---
     
60,760
 
Julie Turner Brown
   
48,000
     
19,760
     
---
     
67,760
 
Thomas J. Carlson
   
49,800
     
19,760
     
---
     
69,560
 
Larry D. Frazier
   
50,100
     
19,760
     
---
     
69,860
 
Debra M. Shantz Hart(2)
   
37,200
     
77,660
     
---
     
114,860
 
Douglas M. Pitt
   
49,800
     
19,760
     
---
     
69,560
 
Earl A. Steinert
   
49,800
     
19,760
     
---
     
69,560
 
________________
(1)
An option to purchase 2,000 shares of the Company's common stock was awarded during 2017 to each of the non-employee directors named in the table, and an additional option to purchase 5,000 shares was awarded during 2017 to each of Mr. Ausburn and Ms. Hart.  The amount in the table reflects the grant date fair value of each award determined in accordance with Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("ASC Topic 718") using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model to calculate the grant date fair value of these awards are included in Note 21 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.  As of December 31, 2017, total shares underlying stock options held by such directors were as follows:  Mr. Ausburn – 7,000 shares, Mr. Barclay – 9,000 shares, Ms. Brown – 7,750 shares, Mr. Carlson – 9,000 shares, Mr. Frazier – 9,000 shares, Ms. Hart – 7,000 shares, Mr. Pitt – 9,000 shares and Mr. Steinert - 6,500 shares.
(2)
Mr. Ausburn and Ms. Hart were first appointed directors of Bancorp and Great Southern effective March 1, 2017.
(3)
Mr. Barclay retired as a director of Bancorp in May 2017 but remains a director of Great Southern.

Transactions with Certain Related Persons
The charter of the Audit Committee of Bancorp's Board of Directors provides that the Audit Committee is to review and approve all related party transactions (defined as transactions requiring disclosure under Item 404 of SEC Regulation S-K) on a regular basis.
Loans to Directors and Executive Officers.  Great Southern, like many financial institutions, has from time to time extended loans to its officers, directors and employees, generally for the financing of their personal residences, at favorable interest rates. Generally, residential first mortgage loans and home equity lines of credit have been granted at interest rates equal to Great Southern's cost of funds. Residential first mortgage loans are subject to annual adjustments while home equity lines of credit are subject to monthly adjustments. Other than the interest rate, these loans have been made in the ordinary course of business, on substantially the same terms and collateral as those of comparable transactions prevailing at the time, and, in the opinion of management, do not involve more than the normal risk of collectibility or present other unfavorable features. All loans by Great Southern to its directors and executive officers are subject to regulations restricting loans and other transactions with affiliated persons of Great Southern. Great Southern may also grant loans to officers, directors and employees, their related interests and their immediate family members in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons which, in the opinion of management, do not involve more than the normal risk of collectibility or present other unfavorable features.
 
9

 
 
          No directors, executive officers or their affiliates had aggregate indebtedness to Great Southern on below market rate loans exceeding $120,000, or a combination of outstanding indebtedness to and credit availability from Great Southern exceeding $120,000 at below market rates, at any time since January 1, 2017 except as noted below.
Name and Position
 
Loan Type
 
Date of Loan
 
Largest
Amount
Outstanding
Since
01/01/17
   
Principal
Paid
During
2017
   
Interest
Paid
During
2017
   
Balance as
of 12/31/17
   
Interest
Rate at
12/31/17
   
Estimated
Average
Market Rate
of Interest
for 2017
   
Estimated
Difference in
Interest from
Actual Rate
to Average
Market Rate
 
Rex A. Copeland
 
Home Mortgage
 
06/01/00
 
$
87,232
   
$
6,358
   
$
426
   
$
80,874
     
0.53
%
   
3.79
%
 
$
2,852
 
Treasurer of
 
Home Equity Line
 
09/19/08
 
$
0
   
$
0
   
$
0
   
$
0
     
0.60
%
   
4.00
%
 
$
0
 
Bancorp; Senior
                                                               
Vice President and
                                                               
CFO of Great
                                                               
Southern
                                                               
                                                                 
Kevin L. Baker
 
Home Mortgage
 
01/14/16
 
$
272,240
   
$
8,694
   
$
1,349
   
$
263,546
     
0.52
%
   
3.68
%
 
$
9,041
 
Chief Credit
                                                               
Officer and
                                                               
Vice President of
                                                               
Great Southern
                                                               
                                                                 
John M. Bugh
 
Home Mortgage
 
10/13/17
 
$
1,100,000
   
$
4,779
   
$
1,221
   
$
1,095,221
     
0.55
%
   
4.33
%
 
$
8,384
 
Chief Lending
                                                               
Officer and
                                                               
Vice President of
                                                               
Great Southern
                                                               
                                                                 
Douglas W. Marrs
 
Home Mortgage
 
02/29/16
 
$
173,066
   
$
5,512
   
$
845
   
$
167,554
     
0.52
%
   
3.74
%
 
$
5,784
 
Secretary of
                                                               
Bancorp; Vice
                                                               
President -
                                                               
Operations of
                                                               
Great Southern
                                                               
                                                                 
Linton J. Thomason
 
Home Mortgage
 
11/13/17
 
$
225,000
   
$
2,108
   
$
314
   
$
222,892
     
0.56
%
   
4.43
%
 
$
1,345
 
Vice President -
                                                               
Information
                                                               
Systems of Great
                                                               
Southern
                                                               
                                                                 
Douglas M. Pitt
 
Home Mortgage
 
11/03/15
 
$
724,968
   
$
23,307
   
$
3,531
   
$
701,661
     
0.51
%
   
3.52
%
 
$
23,184
 
Director
                                                               

The estimated average market rates of interest for 2017 as shown in the table above are based on the interest rate index and margin for each loan that would have been used if Great Southern's cost of funds was not used.  Interest rate reset dates were factored into the index rates used.  The estimated difference in interest from actual rate amounts to average market rate amounts shown in the table above represent the difference in interest actually paid during 2017 and interest that would have been paid if the estimated market rates of interest for 2017 were charged.
 
10

 
 
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
In this section, we provide an overview and analysis of our compensation programs, the material compensation policy decisions we have made under those programs, and the material factors that we considered in making those decisions. Following this section, you will find a series of tables containing specific information about compensation paid or payable to the following individuals, whom we refer to as our "named executive officers":
·
William V. Turner, Chairman of the Board of Directors of Bancorp and Great Southern;
·
Joseph W. Turner, President and Chief Executive Officer of Bancorp and Great Southern;
·
Rex A. Copeland, Treasurer of Bancorp and Senior Vice President and Chief Financial Officer of Great Southern;
·
Kevin L. Baker, Vice President and Chief Credit Officer of Great Southern; and
·
John M. Bugh, Vice President and Chief Lending Officer of Great Southern.

The discussion below is intended to help you understand the detailed information provided in those tables and put that information into context within our overall compensation program.
Compensation Philosophy and Objectives
The Compensation Committee (the "Committee") of Bancorp's Board of Directors, which consists solely of independent directors, administers our compensation and benefit programs and determines the compensation of our senior management. The Committee is responsible for setting and administering the policies which govern executive compensation. The Committee has focused its evaluation of executive compensation on operating performance and the creation of stockholder value, with the intent of meeting the following objectives:
·
maintain the financial strength, safety and soundness of Bancorp and Great Southern;
·
reward and retain key personnel by compensating them at the middle to upper levels of compensation for comparable financial institutions;
·
focus management on long term goals through long-term incentives;
·
provide fair, reasonable and competitive base salaries;
·
provide the opportunity to earn additional compensation if Bancorp's stockholders experience long-term increases in the value of Bancorp stock;
·
emphasize long-term stock ownership of Bancorp stock by executive officers; and
·
properly align risk-taking and compensation.
While the primary components of our compensation program have been base salary, annual incentive bonus and long-term incentives in the form of stock options, the Committee also takes into account the full compensation package provided to the individual, including pension benefits, termination agreements, insurance, perquisites and other benefits. In structuring Mr. J. Turner's base salary for 2018, the Committee reviewed several surveys of base salaries paid to the chief executive officers of groups of financial institutions comparable to us in size and performance on a nationwide basis and based in the Midwest region.  Specifically, the Committee considered the following information:
 
11

 
 
(i)
surveys prepared by SNL Financial of the average base salary paid to chief executive officers at banks and thrifts with total assets of between $1.0 billion and $5.0 billion (A) on a nationwide basis ($466,061), (B)  for the Midwest region ($452,369) and (C) on a nationwide basis limited to institutions with a return on average equity of 10.00% to 12.49% ($467,677), with the average of the amounts in (A) – (C) being $462,036;
(ii)
a survey prepared by McLagan Aon Hewitt of the base salaries paid to chief executive officers at regional and community banks nationwide with total assets between $3.0 billion and $8.0 billion, the average of which was $607,300;
(iii)
surveys prepared by Compdata Surveys of the average base salary paid to chief executive officers at banks and other financial services organizations nationwide with (A) total assets of between $1.0 billion and $9.9 billion ($515,900), (B) with a total number of full-time equivalent employees of between 1,000 and 4,999 ($751,000), (C) Midwest Region ($480,300) and (D) commercial banks ($487,900), with the average of (A) – (D) being $558,775;
(iv)
surveys prepared by Crowe Horwath of the average base salary paid to chief executive officers at banks and other financial services organizations (A) on a nationwide basis ($268,599), (B) with total assets $1.0 billion to $5.0 billion ($452,159) and (C) with headquarters located in a population greater than 100,000 ($347,214), with the average of (A) – (C) being $355,991.
Mr. J. Turner's base salary of $368,985 for both 2017 and 2018 were below the average chief executive officer base salary in each of the surveys noted above, except for survey (iv).
Base Salaries
We provide the opportunity for our named executive officers and other executives to earn a competitive annual base salary. We do so in order to attract and retain an appropriate caliber of talent for the position, and to provide a base wage that is not subject to our performance risk. Our base salary levels reflect a combination of factors, including competitive pay levels, the executive's experience and tenure, our overall annual strategic plan for salary increases, the executive's individual performance, and changes in responsibility. We review salary levels annually to recognize these factors. We do not target base salary at any particular percentage of total compensation.
Each of Messrs. W. and J. Turner has an employment agreement with Bancorp. These agreements provide that the annual base salaries payable to Messrs. W. and J. Turner may be reduced only as part of an overall program, implemented prior to a change in control, applied uniformly and equitably to all members of our senior management. Since 2005, in recognition of the increased responsibilities assumed by Mr. J. Turner and at Mr. W. Turner's suggestion, Mr. W. Turner's base annual salary has remained at $200,000 and he has waived his right to receive the annual cash bonus provided for under his employment agreement (discussed below under "-Bonuses").  Mr. J. Turner was paid salary of $368,985 for 2017 and his base salary remained at $368,985 for 2018.  During 2017, Messrs. Copeland, Baker and Bugh were paid salaries of $328,387, $305,938 and $305,000, respectively.  For 2018, the base salary amounts for Messrs. Copeland, Baker and Bugh increased to $334,955, $312,057 and $311,100, respectively.  In setting the base salaries of the executive officers other than Mr. W. Turner, the Committee takes into account the responsibilities of the position and the experience level of the individual executive, as well as our financial performance and the size and complexity of our operations.  In structuring the base salaries for 2018 for Messrs. Copeland, Baker and Bugh, the Committee reviewed surveys of base salaries paid to the chief financial officers and chief credit and lending officers of groups of financial institutions comparable to us in size and performance on a nationwide basis and based in the Midwest region.
Bonuses
Under their employment agreements, Messrs. W. and J. Turner are each entitled to receive annual cash bonuses equal to one-half of one percent of Bancorp's pre-tax earnings.  We believe that this provides an appropriate short-term incentive to increase our earnings, when coupled with the incentives Messrs. W. and J. Turner have through their substantial stock holdings to increase our earnings over the long term.   Since 2005, Mr. W. Turner has waived
 
12

 
 
his right to this bonus, with the understanding that Mr. J. Turner's bonus, if any, may be increased by one-fourth of one percent of our pre-tax earnings.  The Compensation Committee approved this arrangement in recognition of the additional responsibilities that Mr. J. Turner had assumed from Mr. W. Turner, and the fact that it would at the same time reduce by 25% the total cost to the Company for bonuses, if any, under the employment agreements.  The amount of this bonus ($463,936 for 2016 and $527,412 for 2017) is included in the Summary Compensation Table below under the "Non-Equity Incentive Plan Compensation" column.
Under our 2017 Annual Incentive Bonus Plan, each of the named executive officers other than Messrs. W. and J. Turner (Messrs. Copeland, Baker and Bugh) could earn a cash bonus of up to 15.75% of base annual salary, with up to one-half of this bonus based on the achievement of targeted earnings per share and up to one-half of this bonus based on individual performance.  Bonuses paid to the participating named executive officers under our 2017 Annual Incentive Bonus Plan are included in the Summary Compensation Table below under the "Non-Equity Incentive Plan Compensation" column. Because, as noted above, their bonus arrangements are set forth in previously negotiated employment agreements, Messrs. W. Turner and J. Turner do not participate in our Annual Incentive Bonus Plan and therefore are not subject to a cap on their bonus as a percentage of base salary.
The earnings per share component was based on actual quarterly earnings per share relative to targeted quarterly earnings per share, with each quarter receiving an equal weighting in determining that component.  For the quarterly periods during 2017, the targeted and actual levels of earnings per share were as follows:
First Quarter 2017
Targeted EPS
 
Percentage received for EPS
component
 
       
$0.70  
   
  50%
 
0.74
   
  75%
 
0.78
   
100%
 
0.82
   
110%
 

Earnings per share for the first quarter of 2017 calculated in accordance with accounting principles generally accepted in the United States ("GAAP") were $0.81.  No adjustment during this quarter was warranted, so this amount was used as the actual earnings per share for purposes of the bonus plan.
Second Quarter 2017
Targeted EPS
 
Percentage received for EPS
component
 
       
$0.74  
   
  50%
 
0.78
   
  75%
 
0.82
   
100%
 
0.86
   
110%
 

Earnings per share for the second quarter of 2017 calculated in accordance with GAAP were $1.14.  The actual earnings per share used for purposes of the bonus plan was an adjusted (non-GAAP) measure of earnings per share of $0.82, which reflected non-operational activity during the quarter resulting in adjustments of $0.32 per share due to a gain associated with the early termination during the quarter of Great Southern Bank's loss-sharing agreements with the Federal Deposit Insurance Corporation (the "FDIC") in connection with one FDIC-assisted transaction.
 
13

 
 
Third Quarter 2017
Targeted EPS
 
Percentage received for EPS
component
 
       
$0.75  
   
  50%
 
0.79
   
  75%
 
0.83
   
100%
 
0.87
   
110%
 

Earnings per share for the third quarter of 2017 calculated in accordance with GAAP were $0.82.  No adjustment during this quarter was warranted, so this amount was used as the actual earnings per share for purposes of the bonus plan.
Fourth Quarter 2017
Targeted EPS
 
Percentage received for EPS
component
 
       
$0.79
   
  50%
 
0.84
   
  75%
 
0.88
   
100%
 
0.92
   
110%
 

Earnings per share for the fourth quarter of 2017 calculated in accordance with GAAP were $0.86.  The actual earnings per share used for purposes of the bonus plan was an adjusted (non-GAAP) measure of earnings per share of $0.89, which reflected non-operational activity during the quarter resulting in an adjustment of: (i) $0.05 per share for a one-time compensation expense associated with the Company's decision to pay a special bonus to employees as a result of the tax reform legislation enacted in December 2017 and (ii) $0.02 per share of reduced income tax expense associated with the Company's accounting entries required as a result of the tax reform legislation enacted in December 2017.
For the individual performance component of the bonuses paid to the named executive officers who participated in the 2017 Annual Incentive Bonus Plan (Rex A. Copeland, Kevin L. Baker and John M. Bugh), the factors considered included the following accomplishments during 2017 attributable to the efforts of these officers, in addition to recognition of their contributions to the Company's normal, day-to-day operations: Mr. Copeland – the successful negotiation of the termination of loss-sharing agreements with the FDIC for one of the Company's FDIC-assisted transactions; Mr. Baker – the size and complexity of the Company's loan portfolio in light of competitive market conditions, the level of new commercial loan origination volume and the overall level of credit quality of the portfolio; Mr. Bugh – the maintenance of growth in the size of the Company's loan portfolio in light of competitive market conditions, the level of new commercial loan origination volume, including the successful opening of a new commercial loan production office, and the overall level of credit quality of the portfolio. It was determined that Messrs. Copeland, Baker and Bugh each earned 93.3% of the individual performance component.
In addition to the bonus he earned under the 2017 Annual Incentive Bonus Plan, Mr. Bugh earned $7,625 under a separate commercial lending bonus plan in which he participated prior to becoming an executive officer in July 2017.  This additional bonus was based on the level of new commercial loan origination volume and the overall level of credit quality of the portfolio.
Stock Options
Stock options have been an integral part of our executive compensation program. They are intended to encourage ownership and retention of Bancorp's stock by key employees as well as non-employee members of the Board of Directors. Through stock options, the objective of aligning key employees' long-term interests with those of stockholders may be met by providing key employees with the opportunity to build, through the achievement of corporate goals, a meaningful stake in Bancorp. In fiscal 2013, Bancorp's stockholders approved the 2013 Equity Incentive Plan. Upon approval of the 2013 plan by stockholders, Bancorp's Board of Directors froze the 2003 Stock
 
14

 
 
Option and Incentive Plan, which means that no new grants of awards will be made under that plan, but outstanding awards under the plan were not affected. The Stock Option Committee considers additional options each year as needed to attract and retain employees. These grants typically have been made late in the third quarter or early in the fourth quarter of each year, though the Stock Option Committee retains discretion to grant options at any time during the year. Our senior management group provides recommendations to the Committee for option grants for rank and file employees. Mr. J. Turner provides recommendations to the Committee for grants to members of the senior management group other than himself. All options granted by the Committee are subject to ratification by the Board of Directors, which typically occurs on the same day as the Committee approval. We do not coordinate the timing of stock option grants with the release of material non-public information.   Option grants made during 2017 to the named executive officers are included in the Grants of Plan-Based Awards table.
As required by plan, stock options have an exercise price that is equal to no less than the market value of Bancorp's common stock on the date of grant, which is the date on which the Board of Directors ratifies the approval of the grant by the Stock Option Committee.  To provide an incentive for a sustained increase in the value of our common stock, stock options granted to employees typically do not begin vesting until the second anniversary of the grant date, with 25% of the option vesting on that second anniversary date and 25% vesting on each anniversary date thereafter through the fifth anniversary date.
The 2013 Stock Option and Incentive Plan authorizes the granting of restricted stock in addition to stock options.  Although no shares of restricted stock have been granted to date under the 2013 plan, the Committee and the Board may consider the utilization of restricted stock awards in the future.
At the Annual Meeting, stockholders will be asked to approve the 2018 Omnibus Incentive Plan, which would, as does the 2013 Stock Option and Incentive Plan, permit the granting of stock options, stock appreciation rights and restricted stock awards, as well as restricted stock units, performance shares and performance units.  If the 2018 Omnibus Incentive Plan is approved at the Annual Meeting, then no future awards will be made under the 2013 Stock Option and Incentive Plan.  See "Proposal IV. Approval of the 2018 Omnibus Incentive Plan."
Retirement and Other Benefits
We participate in a multi-employer defined benefit pension plan covering all employees who have met minimum service requirements. Effective July 1, 2006, this plan was closed to new participants. Employees already in the plan will continue to accrue benefits. For information regarding benefits payable under this plan to the named executive officers, see "Pension Benefits."
We have a defined contribution retirement plan covering substantially all of our employees. During 2017, we matched 100% of the employee's contribution on the first 3% of the employee's compensation, and also matched 50% of the employee's contribution on the next 2% of the employee's compensation. Our matching contributions for 2017 under this plan to the named executive officers are reflected in the Summary Compensation Table under the "All Other Compensation" column.
In addition to the basic term life insurance coverage maintained for nearly all employees (providing a maximum death benefit of $60,000), Great Southern maintains supplemental life insurance coverage for all personnel with an "officer" designation, which provides an additional death benefit of $175,000. Each named executive officer has supplemental life insurance coverage of $175,000, other than Mr. W. Turner whose coverage has been age-adjusted to $87,500, and each named executive officer other than Mr. W. Turner (who does not have the basic term life insurance benefit) has the maximum coverage ($60,000) under the basic term life insurance benefit. Premiums paid on behalf of the named executive officers are reflected in the Summary Compensation Table under the "All Other Compensation" column. As part of its health insurance coverage, Great Southern also provides long-term disability coverage to all employees generally. Each of the named executive officers other than Mr. W. Turner (who does not participate in Great Southern's health insurance plan) is entitled to the maximum long-term disability benefit of $10,000 per month.
 
15

 
 
Perquisites and Other Personal Benefits
We provide the named executive officers with perquisites and other personal benefits that we and the Committee believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites and other personal benefits provided to the named executive officers.
Payments Upon Termination or Change in Control
Each of Messrs. W. and J. Turner has an employment agreement with Bancorp that provides for certain payments and benefits if their employment is terminated under certain scenarios, including, but not limited to, within the 12 months preceding, at the time of or within 24 months after a change in control.  See "Employment Agreements."  These employment agreements thus require a "double trigger" in order for any payments or benefits under the agreements to be provided to Messrs. W. or J. Turner in connection with or following a change in control - in other words, both a change in control and an involuntary termination of employment (which includes a voluntary termination by the executive following a material reduction in his duties, responsibilities or benefits) must occur. The purpose of providing the change in control payments and benefits is to attract and retain top level executives of the highest caliber and mitigate the risk to these executives that their employment will be involuntarily terminated in the event we are acquired. At the same time, the mere sale of our company will not automatically trigger a payout, as our intention is to induce the executive to remain employed following a change in control so long as the acquiring company so desires without a material reduction in the executive's duties, responsibilities or benefits. Each of the employment agreements with Messrs. W. and J. Turner contains a tax gross up provision which provides generally that if the executive receives payments or benefits in connection with a change in control, then to the extent such payments or benefits constitute "excess parachute payments" under Section 280G of the Internal Revenue Code, he generally will be paid an additional amount (referred to as a "gross up payment") that will offset, on an after tax basis, the effect of any excise tax consequently imposed on him under Section 4999 of the Internal Revenue Code. The effects of Section 4999 generally are unpredictable and can have widely divergent and unexpected effects based on an executive's personal compensation history. Therefore, to provide an equal level of benefit without regard to the effects of the excise tax, we determined that Section 4999 gross up payments are appropriate for Messrs. W. and J. Turner.
We do not have employment or severance agreements with any of our other named executive officers. To mitigate the risk of loss of benefits to these officers if a change in control occurs, their unvested stock options (like the unvested stock options of all other employees) will vest in full upon a change in control.
Tax Considerations
As in effect during 2017 and prior years, Section 162(m) of the Internal Revenue Code of 1986, as amended, generally eliminated the deductibility of compensation over $1 million paid to the principal executive officer and certain highly compensated executive officers of publicly held corporations, excluding certain qualified performance-based compensation.  Stock options, which are the only form of equity-based award currently provided to our executive officers, automatically constituted qualified performance-based compensation, provided that certain plan content and grant procedure requirements were met.  Effective for 2018 and future years, H.R. 1, originally known as the "Tax Cut and Jobs Act," amended Section 162(m) to provide that qualified performance-based compensation will be subject to the $1 million deduction limit, subject to grandfathering of amounts payable under certain agreements in effect on November 2, 2017.
Role of Executive Officers in Determining Compensation
Our Chief Executive Officer, Mr. J. Turner, makes recommendations to the Committee regarding compensation for executive officers other than himself.  These recommendations are taken under advisement by the Committee, which may decide to provide compensation in amounts greater or lesser than the amounts recommended by Mr. J. Turner. For 2016, the compensation paid to the executive officers other than Mr. J. Turner was generally consistent with Mr. J. Turner's recommendations.  Mr. J. Turner is not involved with any aspect of determining his own compensation; nor is his sister, Ms. Turner Brown.  Mr. W. Turner is not involved with any aspect of the determining the compensation of Mr. J. Turner, other than waiving Mr. W. Turner's right to receive a bonus under Mr. W. Turner's employment agreement with the understanding that Mr. J. Turner's bonus, if any, may be increased by one-fourth of one percent of our pre-tax earnings.  See "—Bonuses." 
 
16

 
 
 
Director compensation is determined by the Company's Board of Directors.  Other than Mr. W. Turner and Mr. J. Turner acting in their capacity as Board members, none of the Company's executive officers has any role in determining the amount of director compensation.
 
 
 
 
 
 
 
 
 
 
 
 
 
17

 
 
Summary Compensation Table
The following table sets forth information concerning the compensation paid to or earned by the named executive officers for the years ended December 31, 2017, 2016 and 2015:
Name and
Principal Position
 
Year
 
Salary
($)(1)
 
Bonus
($)
 
Stock
Awards
($)
 
Option
Awards
$(2)
 
Non-Equity
Incentive Plan
Compensation
($)(3)
 
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings($)(4)
 
All
Other
Compensation
($)(5)
 
Total
($)
                                     
William V. Turner
 
2017
 
$248,098
 
$---
 
$---
 
$59,280
 
$          ---
 
$102,000
 
$209,091
 
$   618,469
Chairman of the
 
2016
 
242,098
 
---
 
---
 
39,540
 
          ---
 
67,000
 
194,618
 
543,256
Board of Bancorp and
 
2015
 
236,098
 
---
 
---
 
59,580
 
          ---
 
---
 
161,056
 
456,734
Great Southern
                                   
                                     
Joseph W. Turner
 
2017
 
$414,739
 
$---
 
$---
 
$59,280
 
$527,412
 
$171,000
 
$ 77,679
 
$1,250,110
Chief Executive
 
2016
 
354,573
 
---
 
---
 
39,540
 
463,936
 
89,000
 
  40,193
 
987,242
Officer and President
 
2015
 
342,446
 
---
 
---
 
59,580
 
461,345
 
---
 
  55,394
 
918,765
of Bancorp and Great
                                   
Southern
                                   
                                     
Rex A. Copeland
 
2017
 
$326,174
 
$---
 
$---
 
$41,496
 
$ 46,077
 
$103,000
 
$ 23,186
 
$  539,933
Treasurer of Bancorp
 
2016
 
272,804
 
---
 
---
 
27,678
 
  40,317
 
58,000
 
10,831
 
409,630
and Senior Vice
 
2015
 
267,457
 
---
 
---
 
41,706
 
  40,537
 
4,000
 
  26,365
 
380,065
President and Chief
                                   
Financial Officer of
                                   
Great Southern
                                   
                                     
Kevin L. Baker
 
2017
 
$303,744
 
$---
 
$---
 
$27,664
 
$ 42,927
 
$ 71,000
 
$ 11,031
 
$  456,366
Chief Credit Officer
                                   
and Vice President
                                   
of Great Southern (6)
                                   
                                     
John M. Bugh
 
2017
 
$302,806
 
$---
 
$---
 
$27,664
 
$ 50,420
 
$        ---
 
$ 30,068
 
$  410,958
Chief Lending Officer
                                   
and Vice President
                                   
of Great Southern (6)
                                   
_______________
(1)
For Messrs. W. and J. Turner, the 2017, 2016 and 2015 amounts in the table include directors' fees of $48,000, $42,000 and $36,000, respectively.
(2)
Represents the grant date fair value of the award determined in accordance with ASC Topic 718 using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model to calculate the grant date fair value of these awards are included in Note 21 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.
(3)
Represents incentive bonus awards earned for the years shown in the table. Mr. Bugh's incentive bonus award for 2017 also included $7,625 earned under a separate commercial lending bonus plan prior to becoming an executive officer.
(4)
Represents the changes during the years shown in the table in the actuarial present value of the named executive officer's accumulated benefit under Great Southern's multi-employer defined benefit pension plan. The assumptions used for this calculation were the same as those used for the calculation of the present value of accumulated benefit in the table under "Pension Benefits."  For 2015, the actual change in pension value was $0 for Mr. W. Turner and $(18,000) for Mr. J. Turner.  The negative amount for Mr. J. Turner is reflected as zero in the table per SEC rules. Mr. Bugh is not eligible for this benefit.
(5)
For Messrs. W. Turner, J. Turner, Copeland and Bugh, the 2017 amounts in the table include the aggregate incremental cost to Bancorp of certain perquisites and other personal benefits provided to them, comprised of the following: for Mr. W. Turner, personal use of company vehicle, the payment of club dues, personal use of company aircraft and use of tickets to various local sporting events; Mr. J. Turner, personal use of company aircraft, the payment of club dues, payments of the costs of executive physicals, and use of tickets to various local sporting events; Mr. Copeland, the payment of club dues, fitness center benefit and use of tickets to various local sporting events; and for Mr. Bugh, the payment of club dues.  SEC rules require that each perquisite or other personal benefit provided to a named executive officer that exceeds the greater of $25,000 or 10% of the total amount of perquisites and other personal benefits for that officer be quantified.  The only such perquisites or other personal benefits provided to Messrs. W. Turner and J. Turner during 2017 that are required to be quantified are the personal use of a company vehicle by Mr. W. Turner ($54,258) and the personal use of a company aircraft by Mr. J. Turner ($38,759).  For Mr. Baker, the aggregate incremental cost to Bancorp of the perquisites and other personal benefits provided to him during 2017 was less than $10,000; in accordance with the rules of the SEC, the amounts of these perquisites and other personal benefits are not included in the table. For Messrs. W. Turner, J. Turner, Copeland and Bugh, the amounts in the table for 2017 also include, and for Mr. Baker, the amounts in the table for 2017 are comprised of, the following: (a) company matching contributions under our
 
18

 
 
 
 
401(k) plan (Mr. W. Turner - $10,800, Mr. J. Turner - $10,800, Mr. Copeland - $10,800, Mr.  Baker - $10,800 and Mr. Bugh - $10,800); (b) life insurance premiums paid by Great Southern for the benefit of each named executive officer of $231, except for Mr. W. Turner, whose premium was $116; and (c) annual benefit payments under our pension plan to Mr. W. Turner - $123,000.
(6)
No compensation information is provided for Mr.  Baker or Mr. Bugh for 2015 and 2016 because they were not named executive officers for those years.


Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards to the named executive officers during 2017.
         
Estimated Possible
Payouts Under
Non-Equity Incentive Plan Awards(1)
   
Estimated Future
Payouts Under
Equity Incentive Plan Awards
                     
Name
 
Grant
Date
   
Thres-
hold
($)(1)
   
Target
($)(1)
   
Maximum
($)(1)
   
Thres-
hold
($)
   
Target
($)
   
Maximum
($)
   
All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
   
All Other
Option
Awards:
Number of
Securities
Under-
lying
Options
(#)(2)
   
Exercise
Price of
Option
Awards
($/Sh)
   
Grant
Date Fair
Value of
Stock and
Option
Awards(3)
 
                                                                   
William V. Turner
   
n/a
   
$
---
   
$
---
   
$
---
     
---
     
---
     
---
     
---
     
---
     
---
     
---
 
   
11/15/17
     
---
     
---
     
---
     
---
     
---
     
---
     
---
     
6,000
   
$
52.20
   
$
59,280
 
                                                                                         
Joseph W. Turner
   
n/a
   
$
---
   
$
---
   
$
---
     
---
     
---
     
---
     
---
     
---
     
---
     
---
 
   
11/15/17
     
---
     
---
     
---
     
---
     
---
     
---
     
---
     
6,000
   
$
52.20
   
$
59,280
 
                                                                                         
Rex A. Copeland
   
n/a
   
$
---
   
$
---
   
$
51,721
     
---
     
---
     
---
     
---
     
---
     
---
     
---
 
   
11/15/17
     
---
     
---
     
---
     
---
     
---
     
---
     
---
     
4,200
   
$
52.20
   
$
41,496
 
                                                                                         
Kevin L. Baker
   
n/a
   
$
---
   
$
---
   
$
48,185
     
---
     
---
     
---
     
---
     
---
     
---
     
---
 
   
11/15/17
     
---
     
---
     
---
     
---
     
---
     
---
     
---
     
2,800
   
$
52.20
   
$
27,664
 
                                                                                         
John M. Bugh
   
n/a
   
$
---
   
$
---
   
$
48,038
     
---
     
---
     
---
     
---
     
---
     
---
     
---
 
   
11/15/17
     
---
     
---
     
---
     
---
     
---
     
---
     
---
     
2,800
   
$
52.20
   
$
27,664
 

______________________
                   
(1)
Under their employment agreements, each of Messrs. W. and J. Turner are entitled to receive annual cash bonuses equal to one-half of one percent of Bancorp's pre-tax earnings. Since 2005, Mr. W. Turner has waived his right to this bonus, with the understanding that Mr. J. Turner's bonus, if any, may be increased by ¼ of one percent of our pre-tax earnings.  Under our 2017 Annual Incentive Bonus Plan, participating officers could earn a cash bonus of up to 15.75% of base annual salary, with a bonus of up to 8.25% of base annual salary based on the achievement of targeted earnings per share and a bonus of up to 7.50% of base annual salary based on individual performance.  See "Compensation Discussion and Analysis-Bonuses." The actual bonus amounts awarded to the named executive officers for 2017 are set forth in the Summary Compensation Table under the "Non-Equity Incentive Plan Compensation" column.
(2)
Represents a stock option grant under Bancorp's 2013 Stock Option and Incentive Plan that is scheduled to vest in 25% increments beginning November 15, 2019.
(3)
Represents the grant date fair value of the award determined in accordance with ASC Topic 718 using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model to calculate the grant date fair value of these awards are included in Note 21 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC.

Each of Messrs. W. and J. Turner has an employment agreement with Bancorp. For descriptions of these agreements, see "Employment Agreements."
 
19

 

 
Outstanding Equity Awards at December 31, 2017
The following table provides information regarding each unexercised stock option held by each of our named executive officers as of December 31, 2017:
   
Option Awards
 
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
   
Option
Exercise
Price ($)
 
Option
Expiration
Date
 
Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
(#)
   
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
   
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
   
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)
 
                                                   
William V. Turner
   
6,000
     
---
     
---
     
19.5300
 
11/16/2021
   
---
     
---
     
---
     
---
 
     
6,000
     
---
     
---
     
24.8200
 
11/28/2022
   
---
     
---
     
---
     
---
 
     
4,500
     
1,500
(1) 
   
---
     
29.6400
 
12/18/2023
   
---
     
---
     
---
     
---
 
     
3,000
     
3,000
(2) 
   
---
     
32.5900
 
10/15/2024
   
---
     
---
     
---
     
---
 
     
1,500
     
4,500
(3) 
   
---
     
50.7100
 
11/18/2025
   
---
     
---
     
---
     
---
 
     
---
     
6,000
(4) 
   
---
     
41.3000
 
10/24/2026
   
---
     
---
     
---
     
---
 
     
---
     
6,000
(5) 
   
---
     
52.2000
 
11/15/2027
   
---
     
---
     
---
     
---
 
Total
   
21,000
     
21,000
                                                   
                                                                   
Joseph W. Turner
   
6,000
     
---
     
---
     
19.5300
 
11/16/2021
   
---
     
---
     
---
     
---
 
     
6,000
     
---
     
---
     
24.8200
 
11/28/2022
   
---
     
---
     
---
     
---
 
     
4,500
     
1,500
(1) 
   
---
     
29.6400
 
12/18/2023
   
---
     
---
     
---
     
---
 
     
3,000
     
3,000
(2) 
   
---
     
32.5900
 
10/15/2024
   
---
     
---
     
---
     
---
 
     
1,500
     
4,500
(3) 
   
---
     
50.7100
 
11/18/2025
   
---
     
---
     
---
     
---
 
     
---
     
6,000
(4) 
   
---
     
41.3000
 
10/24/2026
   
---
     
---
     
---
     
---
 
     
---
     
6,000
(5) 
   
---
     
52.2000
 
11/15/2027
   
---
     
---
     
---
     
---
 
Total
   
21,000
     
21,000
                                                   
                                                                   
                                                                   
Rex A. Copeland
   
2,100
     
---
     
---
     
8.3600
 
11/19/2018
   
---
     
---
     
---
     
---
 
     
4,200
     
---
     
---
     
19.5300
 
11/16/2021
   
---
     
---
     
---
     
---
 
     
1,050
     
---
     
---
     
24.8200
 
11/28/2022
   
---
     
---
     
---
     
---
 
     
1,050
     
1,050
(6) 
   
---
     
29.6400
 
12/18/2023
   
---
     
---
     
---
     
---
 
     
2,100
     
2,100
(7) 
   
---
     
32.5900
 
10/15/2024
   
---
     
---
     
---
     
---
 
     
1,050
     
3,150
(8) 
   
---
     
50.7100
 
11/18/2025
   
---
     
---
     
---
     
---
 
     
---
     
4,200
(9) 
   
---
     
41.3000
 
10/24/2026
   
---
     
---
     
---
     
---
 
     
---
     
4,200
(10) 
   
---
     
52.2000
 
11/15/2027
   
---
     
---
     
---
     
---
 
Total
   
11,550
     
14,700
                                                   
                                                                   
Kevin L. Baker
   
2,000
     
---
     
---
     
24.8200
 
11/28/2022
   
---
     
---
     
---
     
---
 
     
1,875
     
625
(11) 
   
---
     
29.6400
 
12/18/2023
   
---
     
---
     
---
     
---
 
     
1,250
     
1,250
(12) 
   
---
     
32.5900
 
10/15/2024
   
---
     
---
     
---
     
---
 
     
625
     
1,875
(13) 
   
---
     
50.7100
 
11/18/2025
   
---
     
---
     
---
     
---
 
     
---
     
2,500
(14) 
   
---
     
41.3000
 
10/24/2026
   
---
     
---
     
---
     
---
 
     
---
     
2,800
(15) 
   
---
     
52.2000
 
11/15/2027
   
---
     
---
     
---
     
---
 
Total
   
5,750
     
9,050
                                                   
 
 
20

 
 

 
   
Option Awards
 
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
   
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
   
Option
Exercise
Price ($)
 
Option
Expiration
Date
 
Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
(#)
   
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested ($)
   
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested (#)
   
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have Not
Vested ($)
 
                                                   
                                                   
John M. Bugh
   
10,000
     
---
     
---
     
16.8100
 
09/26/2021
   
---
     
---
     
---
     
---
 
     
1,500
     
---
     
---
     
24.8200
 
11/28/2022
   
---
     
---
     
---
     
---
 
     
1,125
     
375
(16) 
   
---
     
29.6400
 
12/18/2023
   
---
     
---
     
---
     
---
 
     
876
     
874
(17) 
   
---
     
32.5900
 
10/15/2024
   
---
     
---
     
---
     
---
 
     
438
     
1,312
(18) 
   
---
     
50.7100
 
11/18/2025
   
---
     
---
     
---
     
---
 
     
---
     
2,500
(14) 
   
---
     
41.3000
 
10/24/2026
   
---
     
---
     
---
     
---
 
     
---
     
2,800
(15) 
   
---
     
52.2000
 
11/15/2027
   
---
     
---
     
---
     
---
 
Total
   
13,939
     
7,861
                                                   
_______________
(1)
Vesting schedule is as follows: 1,500 shares on December 18, 2018.
(2)
Vesting schedule is as follows: 1,500 shares on October 15, 2018 and 2019.
(3)
Vesting schedule is as follows: 1,500 shares on November 18, 2018, 2019 and 2020.
(4)
Vesting schedule is as follows: 1,500 shares on October 24, 2018, 2019, 2020 and 2021.
(5)
Vesting schedule is as follows: 1,500 shares on November 15, 2019, 2020, 2021 and 2022.
(6)
Vesting schedule is as follows: 1,050 shares on December 18, 2018.
(7)
Vesting schedule is as follows: 1,050 shares on October 15, 2018 and 2019.
(8)
Vesting schedule is as follows: 1,050 shares on November 18, 2018, 2019 and 2020.
(9)
Vesting schedule is as follows: 1,050 shares on October 24, 2018, 2019, 2020 and 2021.
(10)
Vesting schedule is as follows: 1,050 shares on November 15, 2019, 2020, 2021 and 2022.
(11)
Vesting schedule is as follows: 625 shares on December 18, 2018.
(12)
Vesting schedule is as follows: 625 shares on October 15, 2018 and 2019.
(13)
Vesting schedule is as follows: 625 shares on November 18, 2018, 2019 and 2020.
(14)
Vesting schedule is as follows: 625 shares on October 24, 2018, 2019, 2020 and 2021.
(15)
Vesting schedule is as follows: 700 shares on November 15, 2019, 2020, 2021 and 2022.
(16)
Vesting schedule is as follows: 375 shares on December 18, 2018.
(17)
Vesting schedule is as follows: 437 shares on October 15, 2018 and 2019.
(18)
Vesting schedule is as follows: 438 shares on November 18, 2018 and 437 shares on November 18, 2019 and 2020.
   


Option Exercises and Stock Vested

The following table sets forth information about stock options exercised during the year ended December 31, 2017 by each named executive officer:
   
Option Awards
 
Name
 
Number of
Shares
Acquired on
Exercise (#)
   
Value Realized
on Exercise
($)(1)
 
             
William V. Turner
   
5,000
   
$
130,735
 
Joseph W. Turner
   
9,600
   
$
250,077
 
Rex A. Copeland
   
5,250
   
$
148,110
 
Kevin L. Baker
   
2,000
   
$
64,740
 
John M. Bugh
   
---
   
$
---
 

________________  
(1)
Represents amount realized upon exercise of stock options, based on the difference between the market value of the shares acquired at the time of exercise and the exercise price.
 
21

 
 
Pension Benefits
Great Southern participates in the Pentegra Financial Institutions Retirement Fund, a multi-employer comprehensive defined benefit pension plan. Effective July 1, 2006, this plan was closed to new participants. Employees already in the plan as of that date generally will continue to accrue benefits. Mr. W. Turner is no longer accruing additional benefits under the plan. A participant becomes fully vested after five years of service or upon attaining age 65 regardless of the number of years of service. The annual benefit for normal retirement (after attaining age 65) is calculated as follows:
[(2% x years of service prior to 7/1/06 x "high-five average salary" through 6/30/06) – (1% x years of service prior to 7/1/06 x "high-five average salary" through 6/30/06)] + (1% x years of service before and after 7/1/06 x "high-five average salary" before and after 7/1/06) = annual benefit
The "high-five average salary" refers to the participant's average annual salary for the five consecutive years of highest salary. A participant retiring with 30 years of service (15 prior to 07/01/06 and 15 after 07/01/06) and a high-five average salary of $40,000 ($30,000 prior to July 1, 2006) would receive an annual benefit of $16,500 computed as ((2% x 15 x $30,000) – (1% x 15 x $30,000) + (1% x 30 x $40,000)); $9,000 – $4,500 + $12,000 = $16,500.
A participant becomes eligible for early retirement at age 45, in which case the benefit, otherwise payable beginning at age 65, is reduced by applying an early retirement factor based on his or her age when payments begin. The factor is determined by subtracting the following from 100%: 6% for each year between age 60 and 65, 4% for each year between age 55 and 60 and 3% for each year between age 45 and 55. If payments were to begin at age 55, the early retirement factor would be 50%. A participant taking early retirement at age 55 with 18 years of service and a high-five average salary of $90,000 prior to July 1, 2006 and 12 years of service after July 1, 2006 and a high-five average salary of $100,000 ($90,000 before July 1, 2006) would receive an annual benefit of $23,100 computed as (((2% x 18 x $90,000) - (1% x 18 x $90,000) + (1% x 30 x $100,000)) x 50%). Each of Messrs. J. Turner, Copeland and Baker are currently eligible for early retirement under the pension plan.
The regular form of retirement benefit (whether normal or early) is guaranteed for the life of the participant, but not less than 120 monthly installments. If a retired participant dies before receiving 120 monthly installments, his or her beneficiary would be entitled to the present value of the unpaid installments in a lump sum (or in installments, at the election of the participant or his or her beneficiary). If a participant dies in active service after having become vested, his or her beneficiary is entitled to a lump sum death benefit equal to the present value of 120 monthly retirement benefit installments which would have been payable had the participant's retirement benefits commenced on the first day of the month after the month in which he or she died.
The benefit under the pension plan is subject to Internal Revenue Service annual compensation limits (generally $270,000 for 2017 and $275,000 for 2018).
 
22

 
 
The following table sets forth information regarding benefits payable to the named executive officers under the pension plan.
Name
 
Plan Name
 
Number of
Years
Credited
Service
(#)
   
Present
Value
of
Accumulated
Benefit
($)
   
Payments
During Last
Fiscal Year
($)
 
                       
William V. Turner
 
Pentegra Retirement Fund
   
24
   
$
1,219,000
   
$
123,000
 
Joseph W. Turner
 
Pentegra Retirement Fund
   
25
     
997,000
     
---
 
Rex A. Copeland
 
Pentegra Retirement Fund
   
17
     
535,000
     
---
 
Kevin L. Baker
 
Pentegra Retirement Fund
   
12
     
278,000
     
---
 
John M. Bugh
 
Not eligible under the plan
   
---
     
---
     
---
 

The information contained in the table above was provided to us by Pentegra Retirement Services. The amounts shown for the present value of accumulated benefit were calculated by Pentegra Retirement Services assuming an age 65 retirement date, a discount rate of 3.60% and the RP-2014 Mortality table (with Scale MP-2017).
Employment Agreements
Effective October 1, 2002, Messrs. W. and J. Turner (the "Employees") entered into new employment agreements with Bancorp (the "Employment Agreements").  Each Employment Agreement is for a five-year term and provides for an extension of one year, in addition to the then-remaining term under the agreement, on each October 1st, as long as (1) Bancorp has not notified the Employee at least 90 days in advance that the term will not be extended further and (2) the Employee has not received an unsatisfactory performance review by the Board of Directors of Bancorp or Great Southern. Pursuant to the most recent extensions, the term of each Employment Agreement ends September 30, 2022.  The Employment Agreements provide for annual base salaries as determined from time to time by the Compensation Committee of the Board of Directors, subject to reduction only as part of an overall program, implemented prior to a change in control (as defined in the Employment Agreements), applied uniformly and equitably to all members of senior management. The Employment Agreements also provide for participation in benefit plans and the receipt of fringe benefits to the same extent as the other executive officers of Bancorp and Great Southern and equitable participation in any performance-based and discretionary bonuses awarded to the executive officers of Bancorp and Great Southern. In addition, each Employee is entitled to an annual bonus equal to one-half of one percent of Bancorp's pre-tax earnings for the year; for every year since 2005, Mr. W. Turner has waived his right to receive this bonus.
Each Employment Agreement provides that if the Employee's employment is involuntarily terminated, then during the remaining term of the agreement he will be entitled to receive (1) on a monthly basis, 1/12th of his annual salary and 1/12th of the average annual amount of cash bonus and cash incentive compensation for the two full fiscal years preceding the date of termination, subject to reduction by the amount of the Employee's earned income from personal services during the applicable payout period; (2) substantially the same life and disability insurance coverage and health and dental benefits as he and his dependents and beneficiaries would have received if he had remained employed, subject to reduction to the extent he receives equivalent or better benefits from another employer (the "Post-Employment Group Health, Life and Disability Insurance Benefits"); and (3) if the involuntary termination occurs within the 12 months preceding, at the time of, or within 24 months after a change in control of Bancorp, a lump sum amount in cash equal to 299% of the Employee's "base amount" (as defined in Section 280G of the Internal Revenue Code).
The term "involuntary termination" is defined as termination of the Employee's employment by Bancorp or Great Southern (other than for cause, or due to death, disability or a prohibition by law from participating in the conduct of the affairs of a depository institution) without the Employee's consent or by the Employee following a material reduction of or interference with his duties, responsibilities or benefits without his consent. Each Employment Agreement provides that to the extent the Employee receives any amounts or benefits, whether under the Employment Agreement or otherwise, that will constitute "excess parachute payments" under Section 280G of the
 
23

 
 
Internal Revenue Code and subject him to excise tax under Section 4999 of the Internal Revenue Code, he will be paid an additional amount that will offset the effect of any such excise tax.
Each Employment Agreement also provides that if the Employee dies while employed under the Employment Agreement, his estate or designated beneficiary will receive (1) the salary the Employee would have earned if he had remained employed through the 180th day after the date of his death; (2) the amounts of any benefits or awards which were earned with respect to the fiscal year in which the Employee died and the amount of any bonus or incentive compensation for that fiscal year, pro-rated in accordance with the portion of the fiscal year elapsed prior to his death; and (3) any unpaid deferred amounts described in the next paragraph.
Each Employment Agreement provides that to the extent the Employee's total compensation for any taxable year exceeds the greater of $1,000,000 or the maximum amount of compensation deductible by the Company under Section 162(m) of the Internal Revenue Code (the greater of these two amounts referred to below as the "maximum allowable amount"), the excess amount must be deferred, with interest (at an annual rate equal to the Federal short-term rate under Section 1274(d)(1) of the Internal Revenue Code, determined as of the last day of the calendar year in which the Employee's compensation is first not deductible under Section 162(m) of the Internal Revenue Code) compounded annually, to a taxable year in which the amount to be paid to the Employee in that year (including deferred amounts and interest) does not exceed the maximum allowable amount.
Potential Payments Upon Termination of Employment
Messrs. W. and J. Turner. The following tables summarize the approximate value of the termination payments and benefits that Messrs. W. and J. Turner would have received if their employment had been terminated on December 31, 2017 under the circumstances shown.  The tables also exclude (i) amounts accrued through December 31, 2017 that would be paid in the normal course of continued employment, such as accrued but unpaid salary and bonus amounts, (ii) vested account balances under Great Southern's 401(k) plan and (iii) vested account balances under our defined benefit pension plan, as described under "Pension Benefits."
 
 
 
 
 
 
 
 
 
 
 
 
 
24

 
William V. Turner
Termination Scenario
 
Salary
and
Bonus
Continuation
($)
   
Continuation
of Group
Health, Life
and
Disability
Insurance
Coverage
($)
   
Life
Insurance
Benefit
($)
   
Accelerated
Vesting of
Stock
Options
($)
   
Payment of
299% of
"Base
Amount"
($)
   
Tax Gross
Up
Payment
($)
 
                                     
If termination for cause occurs
 
$
---
   
$
---
   
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If voluntary termination (not
constituting "involuntary
termination" under
Employment Agreement)
occurs
 
$
---
   
$
---
   
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If "involuntary termination"
under Employment
Agreement (not within 12
months prior to, at the
time of or within 24 months
after change in control)
occurs
 
$
950,019(1
)
 
$
---(2
)
 
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If "involuntary termination"
under Employment
Agreement occurs within 12
months prior to, at the time of
or within 24 months after a
change in control
 
$
950,019(1
)
 
$
---(2
)
 
$
---
   
$
156,525(3
)
 
$
883,035(4
)
 
$
913,586(5
)
                                                 
If termination occurs as a result of death
 
$
100,000(6
)
 
$
---
   
$
87,500(7
)
 
$
156,525(3
)
 
$
---
   
$
---
 
                                                 
If termination occurs due to disability
 
$
---
   
$
---
   
$
---
   
$
156,525(3
)
 
$
---
   
$
---
 
________________
(1)
Represents the total salary and bonus continuation payments payable monthly to Mr. W. Turner under his employment agreement, as described under "Employment Agreements," for the remaining term of the agreement (i.e., through September 30, 2022, assuming Mr. W. Turner's employment were "involuntarily terminated" (as defined under "Employment Agreements") on December 31, 2017). The monthly payment amount would be $16,667. While the employment agreement provides for a reduction in the monthly payment amount to the extent of any income earned from providing services to another company during the payout period, the monthly payment amount in the preceding sentence and the total amount of payments shown in the table assumes no such reduction.
(2)
Although Mr. W. Turner's employment agreement provides that if his employment is involuntarily terminated, he will continue to receive through the remaining term of the agreement (i.e., through September 30, 2022, assuming an involuntary termination on December 31, 2017), at the same premium cost to him, substantially the same life and disability insurance coverage and health and dental benefits as he would have received had he remained employed, Mr. Turner was not receiving any such benefits on December 31, 2017. Consequently, no such benefits would be provided to him following termination of his employment.
(3)
Represents the value of acceleration of unvested stock options, based on the closing price of Bancorp's common stock on December 31, 2017 ($51.65) and the exercise prices of the options. All unvested options vest upon a change in control, regardless of whether Mr. W. Turner's employment is "involuntarily terminated."
(4)
Represents the lump sum amount payable to Mr. W. Turner under his employment agreement in the event his employment is "involuntarily terminated" within the 12 months preceding, at the time of or within 24 months after a change in control of Bancorp, as described under "Employment Agreements."
(5)
Represents tax gross up payment payable to Mr. W. Turner under his employment agreement.
(6)
Represents the amount of Mr. W. Turner's salary that he would have earned had he remained employed by Bancorp through the 180th day after the date of death, payable to Mr. W. Turner's estate or designated beneficiary in accordance with his employment agreement.
(7)
Represents the death benefit payable under the supplemental life insurance policy maintained for Mr. W. Turner and other officers.
 
25


 

Joseph W. Turner
Termination Scenario
 
Salary
and
Bonus
Continuation
($)
   
Continuation
of Group
Health, Life
and
Disability
Insurance
Coverage
($)
   
Life
Insurance
Benefit
($)
   
Accelerated
Vesting of
Stock
Options
($)
   
Payment of
299% of
"Base
Amount"
($)
   
Tax Gross
Up
Payment
($)
 
                                     
If termination for cause occurs
 
$
---
   
$
---
   
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If voluntary termination (not
constituting "involuntary
termination" under
Employment Agreement)
occurs
 
$
---
   
$
---
   
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If "involuntary termination"
under Employment
Agreement (not within 12
months prior to, at the
time of or within 24 months
after change in control)
occurs
 
$
3,590,224(1
)
 
$
44,192(2
)
 
$
---
   
$
---
   
$
---
   
$
---
 
                                                 
If "involuntary termination"
under Employment
Agreement occurs within 12
months prior to, at the time of or
within 24 months after a change
in control
 
$
3,590,224(1
)
 
$
44,192(2
)
 
$
---
   
$
156,525(3
)
 
$
2,364,836(4
)
 
$
3,255,195(5
)
                                                 
If termination occurs as a result of death
 
$
184,493(6
)
 
$
---
   
$
235,000(7
)
 
$
156,525(3
)
 
$
---
   
$
---
 
                                                 
If termination occurs due to disability
 
$
---
   
$
---
   
$
---
   
$
156,525(3
)
 
$
---
   
$
---
 
________________
(1)
Represents the total salary and bonus continuation payments payable monthly to Mr. J. Turner under his employment agreement, as described under "Employment Agreements," for the remaining term of the agreement (i.e., through September 30, 2022, assuming Mr. J. Turner's employment were "involuntarily terminated" (as defined under "Employment Agreements") on December 31, 2017). The monthly payment amount would be $69,302. While the employment agreement provides for a reduction in the monthly payment amount to the extent of any income earned from providing services to another company during the payout period, the monthly payment amount in the preceding sentence and the total amount of payments shown in the table assumes no such reduction.
(2)
Represents the approximate cost to Bancorp of providing the "Post-Employment Group Health, Life and Disability Insurance Benefits," described under "Employment Agreements," to which Mr. J. Turner would be entitled for the remaining term of his employment agreement (i.e., through September 30, 2022, assuming Mr. J. Turner's employment were terminated on December 31, 2017). Amount shown represents the aggregate share of the premium payments to be made by Bancorp, based on the monthly premium rates in effect on December 31, 2017. While the employment agreement provides for a reduction in these benefits to the extent Mr. J. Turner receives such benefits, on no less favorable terms, from another employer during the benefits continuation period, the amount shown in the table assumes no such reduction in benefits.
(3)
Represents the value of acceleration of unvested stock options, based on the closing price of Bancorp's common stock on December 31, 2017 ($51.65) and the exercise prices of the options. All unvested options vest upon a change in control, regardless of whether Mr. J. Turner's employment is "involuntarily terminated."
(4)
Represents the lump sum amount payable to Mr. J. Turner under his employment agreement in the event his employment is "involuntarily terminated" within the 12 months preceding, at the time of or within 24 months after a change in control of Bancorp, as described under "Employment Agreements."
(5)
Represents tax gross up payment payable to Mr. J. Turner under his employment agreement.
(6)
Represents the amount of Mr. J. Turner's salary that he would have earned had he remained employed by Bancorp through the 180th day after the date of death, payable to Mr. J. Turner's estate or designated beneficiary in accordance with his employment agreement.
(7)
Represents the aggregate death benefits payable under the supplemental life insurance coverage maintained for Mr. J. Turner and other officers ($175,000) and the term life insurance coverage maintained for all employees generally ($60,000).
 
26

 

 
Messrs. Copeland, Baker and Bugh. None of Messrs. Copeland, Baker or Bugh has an employment or severance agreement with Bancorp or any of its subsidiaries. Each of Messrs. Copeland, Baker and Bugh held unvested stock options as of December 31, 2017, the vesting of which accelerates upon a change in control of Bancorp. If a change in control of Bancorp had occurred on December 31, 2017, the value that would have been realized by Messrs. Copeland, Baker and Bugh as a result of the accelerated vesting of these options (based on the closing price of Bancorp's common stock on December 31, 2017 ($51.65) and the exercise prices of the options) are $109,568, $65,219 and $52,020, respectively.  Great Southern maintains supplemental life insurance for Messrs. Copeland, Baker and Bugh, along with other officers. If Messrs. Copeland, Baker and Bugh were to have died on December 31, 2017, the death benefit payable for each officer under the supplemental life insurance coverage would have been $175,000. This is in addition to the term life insurance benefit generally available to all employees (which would have provided a death benefit of $60,000 for each of Messrs. Copeland, Baker and Bugh).
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained above with management and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Compensation Committee of Bancorp's Board of Directors:
Thomas J. Carlson
Kevin R. Ausburn
Larry D. Frazier
Debra M. Shantz Hart
Douglas M. Pitt
Earl A. Steinert, Jr.

Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a current or former officer or employee of Bancorp or any of Bancorp's subsidiaries. None of our executive officers has served on the board of directors or the compensation committee of any other entity that had an executive officer serving on Bancorp's Board of Directors or on the Compensation Committee of Bancorp's Board of Directors.
CEO Pay Ratio
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the SEC's implementing rules, we are providing the following information about the relationship of the compensation of our President and CEO, Joseph W. Turner, to the compensation of our median employee.  The pay ratio set forth below is a reasonable estimate determined in a manner consistent with the SEC's rules.
For 2017, our last completed fiscal year:
·
the annual total compensation of our median employee was $28,552;
·
the annual total compensation of our President and CEO was $1,250,110; and
·
the ratio of the annual total compensation of our President and CEO to the annual total compensation of our median employee was 44 to 1.
To identify our median employee, as well as to determine the annual total compensation of our median employee and our President and CEO, we took the following steps:
 
27

 
 
·
To identify the "median employee," we compared the amount of total cash earnings (base salary, bonus, paid time off and any other cash payments) during the year ended December 31, 2017 for each employee (other than our President and CEO) included in our payroll records as of December 31, 2017.  Earnings were annualized for those employees who were not employed for the full year.  Because there was an even number of employees in the population, we designated the employee with the lower level of compensation between the two middlemost employees as the median employee.
·
Once we identified our median employee, we combined all of the applicable elements of such employee's compensation for 2017 in accordance with the SEC's rules for reporting compensation in the Summary Compensation Table, and used the amount that would be reportable in the "Total" column of that table as such employee's annual total compensation.
·
With respect to the annual total compensation of our President and CEO, we used the amount reported in the "Total" column of our 2017 Summary Compensation Table included in this proxy statement.
PROPOSAL II.  ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
We are required, like most other publicly held companies, to include a non-binding vote to approve the compensation of our executives in our proxy statement pursuant to the Dodd-Frank Act and the SEC's implementing rules, commonly known as a "say on pay" vote.  A say on pay vote is required to be held no less often than every three years.  We last held a say on pay vote at our annual meeting of stockholders in 2015.
The say on pay proposal at the Annual Meeting gives stockholders the opportunity to endorse or not endorse the compensation of the Company's named executive officers as disclosed in this proxy statement.  The proposal will be presented at the Annual Meeting as a resolution in substantially the following form:
RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in the Company's proxy statement for the annual meeting pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby approved.
This vote will not be binding on Bancorp's Board of Directors and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board.  Nor will it affect any compensation paid or awarded to any executive.  The Compensation Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.
The purpose of our compensation policies and procedures is to attract and retain experienced, highly qualified executives critical to our long-term success and enhancement of stockholder value.  The Board of Directors believes that our compensation policies and procedures achieve this objective, and therefore recommends that stockholders vote FOR this proposal.
PROPOSAL III.  ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY
OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
Under the Dodd-Frank Act, in addition to providing stockholders with the opportunity to cast an advisory vote on executive compensation, we are required this year to include in this proxy statement and present at the Annual Meeting a non-binding stockholder vote on whether an advisory vote on executive compensation should be held every year, every two years or every three years.  At our 2012 annual meeting of stockholders, when we last held this frequency vote, our stockholders expressed a preference to hold a say on pay vote every three years.
After considering the practices by other companies in this area, the Board and Compensation Committee now believe that holding an advisory vote on executive compensation each year is the optimal interval for conducting and responding to a say on pay vote.    
 
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Stockholders have the opportunity to choose among four options (holding the advisory vote on executive compensation every year, every two years, every three years or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the Board's recommendation.
Although this advisory vote on the frequency of the say on pay vote is nonbinding, the Board and the Compensation Committee may take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
The Board of Directors recommends that stockholders vote for a say on pay frequency of every "ONE YEAR."
PROPOSAL IV.  APPROVAL OF THE 2018 OMNIBUS INCENTIVE PLAN
Introduction
On February 21, 2018, based upon the recommendation of the Compensation Committee, our Board of Directors approved the Company's 2018 Omnibus Incentive Plan (the "2018 Plan"), subject to approval by the Company's stockholders at the Annual Meeting. The 2018 Plan will only become effective if it is approved by the Company's stockholders at the Annual Meeting.
The purpose of the 2018 Plan is to promote the long-term success, and enhance the long-term value, of the Company by linking the personal interests of employees and directors with those of the Company's stockholders. The 2018 Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of employees and directors upon whose judgment, interest, and special effort the successful conduct of its operation largely is dependent, in a manner that does not expose the Company to imprudent risks and that is consistent with the long-term health of the Company.
We currently have one active equity-based incentive plan in effect, the Company's 2013 Equity Incentive Plan (the "Existing Plan"), which provide for awards to employees, officers and directors (including emeritus directors and advisory directors) of the Company and its subsidiaries of stock options, stock appreciation rights and restricted stock. If our stockholders approve the 2018 Plan, no further awards will be made under the Existing Plan, and shares of Common Stock reserved to make new awards under that plan will be released; shares of Common Stock reserved to fund issued and outstanding awards under the Existing Plan and our prior equity incentive plans will continue to be reserved for those awards. All awards outstanding under the Existing Plan and our prior equity incentive plans will remain outstanding in accordance with their terms and will continue to be governed solely by the terms of the documents evidencing such awards, and no provision of the 2018 Plan will be deemed to affect or otherwise modify the rights or obligations of the holders of such awards with respect to their acquisition of shares.
Reasons for Seeking Stockholder Approval of the 2018 Plan
We use equity compensation as a key tool for attracting, retaining and motivating the best available talent. Our stockholders have previously authorized a total of 700,000 shares of Common Stock for awards under the Existing Plan. As of March 20, 2018 (the latest practicable date prior to the mailing of this proxy statement), 656,907 shares were subject to outstanding awards under the Existing Plan and our prior equity incentive plans and 79,862 shares remained available for future awards under the Existing Plan. We believe approval of the 2018 Plan is critical to ensuring that we have adequate shares available to attract, retain and motivate top talent.
As previously stated, if stockholders approve the 2018 Plan, no further awards will be made under the Existing Plan and shares of Common Stock reserved to make new awards under the Existing Plan will be released.
Certain Considerations
Burn Rate; Longevity of Authorized Shares. Burn rate, which is a measure of the rate at which companies use (or burn) shares available for grant in their equity compensation plans, is an important factor for investors concerned about stockholder dilution. The burn rate is defined in terms of the gross number of equity awards granted during a
 
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calendar year divided by the weighted average of number of shares of Common Stock outstanding during the year. We believe our current three-year average burn rate of 1.00% should be viewed favorably by our stockholders.
Although our future annual share usage will depend upon and be influenced by a number of factors, such as the number of plan participants, the price per share of our Common Stock and the methodology used to establish the equity award mix, the 800,000 shares of Common Stock reserved for issuance under the 2018 Plan will enable us to continue to utilize equity awards as an important component of our compensation program and help meet our objectives to attract, retain and incentivize talented personnel. The calculation of the share reserve took into account, among other things: (i) the effect the acquisitions over the previous seven years have had on our size and employee head count, (ii) our stock price and volatility, (iii) our share burn rate and overhang, (iv) the existing terms of our outstanding awards, and (v) our proposed fungible share rate of 2.5-for-1 for full value awards (stock-based awards other than stock options and stock appreciation rights) under the 2018 Plan. The results of this analysis were presented to our Compensation Committee for their consideration. In addition, we anticipate that the fungible share design will permit a more efficient and effective use of those shares for future equity awards. Upon approval of the proposal, based on the factors described above, we estimate that the pool of shares available under the 2018 Plan would last for approximately four to six years.
Plan Cost. Another metric often used by investors to assess the appropriateness of the number of shares to be authorized for issuance under an equity plan is the cost of the shares relative to the current outstanding shares of the Company. The 800,000 shares being requested will represent 5.7% of the approximately 14.1 million shares outstanding as of the date of this proxy statement. Although our current practice has been to grant a significant portion of the awards as options, to the extent we grant full value awards, the number of the additional shares which will actually be issued will be less, because each share issued under full value awards counts on a 2.5-for-1 basis against the number of shares authorized for issuance according to the plan. For example, this means that, for every 100 shares of restricted stock issued by us under the 2018 Plan, the number of shares available under the 2018 Plan will be reduced by 250 shares. We believe these facts should be viewed favorably by investors as they demonstrate that the cost of our 2018 Plan is reasonable.
Overhang. Overhang is another measure that is sometimes used to assess the dilutive impact of equity programs such as the 2018 Plan. Overhang indicates the amount by which existing stockholder ownership would be diluted if the shares authorized for issuance under our Existing Plan, coupled with the shares subject to outstanding awards under the Existing Plan and our prior equity incentive plans, were issued. As of March 20, 2018, the overhang represented by the number of outstanding awards plus shares available for issuance under the Existing Plan stood at 5.22%. The additional 800,000 shares to be authorized under the 2018 Plan (taking into account that no further grants will be made under the Existing Plan if stockholders approve the 2018 Plan) will result in an overhang of between 6.92% and 10.33%, depending on the mix of awards. We believe these levels of overhang should not be viewed as excessive by investors.
The following description sets forth the material terms of the 2018 Plan. It does not purport to be complete and is qualified in its entirety by reference to the full text of the 2018 Plan, a copy of which is attached to this proxy statement as Appendix A.
Corporate Governance Practices
The 2018 Plan incorporates the following provisions that enable us to maintain sound corporate governance practices in granting equity-based awards to employees and directors that we believe are consistent with the interests of stockholders, including:
·
Limit on Shares Authorized: Based on our current three-year average burn rate, we believe that the shares authorized for issuance under the 2018 Plan would be sufficient to make awards for four to six years following approval of the 2018 Plan by stockholders.
·
Limit on Shares Issued for Full Value Awards: The 2018 Plan limits the number of shares which may be issued under full value awards (awards other than stock options and stock appreciation rights). Under the 2018 Plan, utilizing shares for full value awards has the effect of reducing the aggregate shares available
 
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for issuance on a 2.5-for-1 basis. Although our past grant practices have been to award stock options, to the extent a portion of awards are full value awards (for example, time or performance-based restricted stock), the actual number of shares that will be issued will be less than the number of shares authorized for issuance. In the event all awards granted under the 2018 Plan are full value awards, then the actual number of shares to be issued will be 320,000.
·
Annual Limit on Director Awards: The 2018 Plan limits the number of shares of Common Stock that may be subject to awards to non-employee directors. Not more than 10,000 shares may be issuable under awards made to a non-employee director in any one calendar year.
·
No Liberal Share Recycling Provisions: The 2018 Plan provides that the following shares may not be added back (recycled) to the aggregate plan limit: (1) shares tendered in payment of the option exercise price; (2) shares withheld by the Company to satisfy tax withholding obligations; and (3) shares that are repurchased by the Company with proceeds from option exercises. The 2018 Plan expressly provides that the gross number of stock appreciation rights exercised or settled, in stock and not just the net shares issued upon exercise or settlement, count against the aggregate limit on the number of shares which may be issued under the 2018 Plan.
·
Minimum Vesting and Restricted Period. Not more than 5% of the shares authorized for issuance under the 2018 Plan may be issued with time-vested award schedules that fully vest in less than one year from the grant date (three years for the chief executive officer).
·
No Discount Stock Options or Stock Appreciation Rights: The 2018 Plan prohibits the grant of stock options or stock appreciation rights with an exercise or grant price less than the fair market value of the Common Stock on the date of grant. Fair market value is the closing price of the Common Stock on the date of grant.
·
No Repricing of Stock Options or Stock Appreciation Rights: The 2018 Plan prohibits the repricing of stock options and stock appreciation rights without stockholder approval. It also prohibits the exchange of underwater stock options or stock appreciation rights for cash or a different award without stockholder approval.
·
"Double-Trigger" Vesting on Change in Control: A change in control does not, by itself, trigger full vesting of awards under the 2018 Plan. The continuing awards or replacement awards will continue under their pre-change in control vesting and other terms, except that full vesting will occur in the event the participant's employment is involuntarily terminated within two years following a change in control (the occurrence of the "double trigger").
·
Protective Provisions: The 2018 Plan authorizes the Committee (as defined below under "-Administration of the 2018 Plan") to include clawback, holding period or other protective provisions in the terms of any award. Clawback provisions enable the Company to recover amounts which were paid or earned based upon financial statements or other metrics which subsequently prove to be erroneous. Holding period requirements mandate that participants retain earned shares in order to further link their interests to the long-term interests of the stockholders. Other protective provisions, such as conditioning an award upon the participant's consent to restrictive covenants, are additional ways through which participants' interests and those of the Company can be aligned.
·
No Dividend Equivalents Paid on Unvested Performance Awards or on Options and SARs: The 2018 Plan prohibits payment of dividends or dividend equivalents on performance share awards until those awards are earned and vested. It also prohibits the granting of dividends or dividend equivalents on Options and SARs.
·
Material Amendments to the Plan Require Stockholder Approval: The 2018 Plan provides that a material amendment to the plan will not be effective unless approved by the Company's stockholders.
 
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·
Independent Committee Administration: The 2018 Plan is to be administered by a committee of the Company's board of directors comprised entirely of independent directors.
Awards, Shares Authorized and Limitations
The 2018 Plan provides for the grant to employees and directors of the Company and its subsidiaries (whom we refer to collectively as "participants") of the following types of awards:
·
options to purchase shares of Common Stock, which may be either "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code (which we refer to as "incentive stock options") or non-statutory options which do not satisfy the provisions of Section 422 of the Internal Revenue Code (which we refer to as "non-qualified stock options") (incentive stock options and non-qualified stock options are together referred to as "stock options" or "options");
·
stock appreciation rights;
·
restricted stock and restricted stock units; and
·
performance shares and performance units.
Subject to adjustment as described under "- Changes in Capitalization," the total number of shares available for awards under the 2018 Plan will be 800,000. Shares issued under the 2018 Plan may be either authorized but unissued shares, or shares that have been reacquired by the Company. Shares subject to awards which terminate, expire or lapse are again available for awards under the 2018 Plan. Awards that are not settled in shares will not be counted against the limit described above.
The 2018 Plan sets forth annual limits with respect to awards which may be granted to a participant. A participant may receive different types of awards during a calendar year. Under the 2018 Plan, subject to adjustment as described in "Changes in Capitalization," awards granted during a calendar year to any one participant are subject to the following limitations: (1) aggregate grants of stock options or stock appreciation rights are subject to an annual limit of 100,000 shares; (2) aggregate grants of restricted stock or restricted stock units are subject to an annual limit of 25,000 shares; and (3) aggregate grants of performance shares or performance units are subject to an annual limit of 25,000 shares. In addition, the aggregate number of shares that may be credited as director compensation and/or covered by awards to a non-employee director with respect to a calendar year is subject to an annual limit of 10,000 shares. The 2018 Plan provides that up to 750,000 of the shares available for award under the Plan may be issued as incentive stock options.
Changes in Capitalization
The 2018 Plan provides that in the event of any corporate event or transaction, including, but not limited to, a change in the shares of Common Stock or the capitalization of the Company, such as may result from a merger, consolidation, reorganization, recapitalization, separation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in kind, or other like change in capital structure or distribution, other than normal cash dividends, in order to prevent dilution or enlargement of participant rights under the 2018 Plan, the number of shares of Common Stock authorized for issuance, available for issuance or covered by any outstanding award and the exercise price or other per share amounts applicable to any such award, and the various limitations described above, will be adjusted. Fractional shares will not be issued under the 2018 Plan.
Eligibility
Any employee or director (including advisory and emeritus directors) of the Company or any of its subsidiaries is eligible to receive an award under the 2018 Plan. As of December 31, 2017, there were approximately 1,225 employees, including 290 part-time employees and eight non-employee directors of the Company and its subsidiaries.
 
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Administration of the 2018 Plan
The 2018 Plan is administered by a committee (which we refer to in this section as the "Committee") of two or more members of the Company's board of directors, each of whom qualifies as (i) a "Non-Employee Director," as defined in Rule 16b-3 under the Securities Exchange Act of 1934, and (ii) an "Independent Director" under the Listing Rules of the NASDAQ Stock Market. Committee members serve at the discretion of the Company's board of directors and may be removed by the board at any time.
The Committee generally has full power to:
·
determine the size and types of awards;
·
determine the terms and conditions of awards in a manner consistent with the 2018 Plan;
·
interpret the 2018 Plan and any agreement or instrument entered into under the 2018 Plan;
·
establish, amend or waive rules and regulations for the administration of the 2018 Plan;
·
amend or otherwise modify the 2018 Plan or the terms and conditions of any outstanding award under the 2018 Plan;
·
make all other determinations which are necessary or advisable for the administration of the 2018 Plan; and
·
delegate its authority under the 2018 Plan to the extent permitted by law, rule or regulation.
Duration and Modification
The 2018 Plan will remain in effect until terminated in accordance with its terms; however, no award may be made under the 2018 Plan on or after the tenth anniversary of its approval by the Company's stockholders. The Company's board of directors or the Committee generally may, at any time, terminate, amend or modify the 2018 Plan without approval of participants or the Company's stockholders. Stockholder approval must be obtained if it is required by law, rule or regulation. As a result, stockholder approval will generally be required for material amendments to the 2018 Plan, such as amendments to increase the number of shares which may be issued under awards. Additionally, the Company's board of directors, in its discretion, may voluntarily seek stockholder approval if it so desires.
No Repricing Without Stockholder Approval
Stock options and stock appreciation rights may not be repriced, replaced or regranted through cancellation, exchanged for cash or other awards or by lowering the exercise or grant price of a previously granted stock option or stock appreciation right (other than as described under "- Changes in Capitalization"), except with the approval of the Company's stockholders.
Stock Options
GeneralStock options may be granted to employees and directors at any time and from time to time by the Committee. The Committee has broad discretion in determining the number of shares subject to options granted to each participant. Each option grant is evidenced by an option agreement that specifies the exercise price, the duration of the option, the number of shares to which the option pertains, the vesting schedule, and such other provisions as the Committee determines. In addition, the option agreement specifies whether the option was intended to be an incentive stock option or a non-qualified stock option. The exercise price must not be less than the fair market value of a share of Common Stock on the date of grant, provided that the exercise price of an incentive stock option granted to a holder of more than ten percent of the Common Stock must not be less than 110% of fair market value on the date of grant. The
 
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duration of a stock option may not exceed ten years, provided that the duration of an incentive stock option granted to a holder of more than ten percent of the Common Stock may not exceed five years.
Stock Option ExercisesA participant may pay the exercise price of his or her option in cash, by delivering shares of Common Stock that he or she already owns having a total market value equal to the total exercise price, through a broker-assisted (cashless) exercise, by net settlement, or by a combination of cash and shares.
Exercising Options After Termination of Employment or ServiceThe termination of a participant's employment or service as a director affects his or her ability to exercise options granted under the 2018 Plan.
Termination of Service or Employment-General. Unless otherwise set forth in the participant's option agreement or as described below, if a participant's employment or service terminates, any portion of the participant's option which has not yet vested will be forfeited, unless the Committee decides to waive this forfeiture and allow the participant to exercise that portion (in addition to the already vested portion) of the option. Thereafter, unless otherwise provided in the participant's option agreement, the exercisable portion of the participant's option may be exercised for three months after the date of termination or until the expiration date of the option, whichever period is shorter. Unless otherwise set forth in the participant's option agreement, should the participant die during the shorter of these two periods, the participant's option may be exercised by the participant's designated beneficiary (or, if no beneficiary has been designated, by such person or persons who have acquired the participant's rights under the option by will or the laws of descent and distribution) for one year after the participant's death.
Termination Due to Death. Unless otherwise set forth in the participant's option agreement, if a participant's employment or service is terminated due to death, any unvested portion of the participant's option will immediately become exercisable and the option may be exercised  by the participant's designated beneficiary (or, if no beneficiary has been designated, by such person or persons who have acquired the participant's rights under the option by will or the laws of descent and distribution) for one year after the participant's death.
Termination Due to Disability. Unless otherwise set forth in the participant's option agreement, if a participant's employment or service is terminated due to permanent and total disability, any unvested portion of the participant's option will immediately become exercisable and the option may be exercised for one year after the date of termination or until the expiration date of the option, whichever period is shorter. Unless otherwise set forth in the participant's option agreement, should the participant die during the shorter of these two periods, the participant's option may be exercised by the participant's designated beneficiary (or, if no beneficiary has been designated, by such person or persons who have acquired the participant's rights under the options by will or the laws of descent and distribution) for one year after the participant's death.
Termination Due to Cause. If a participant's employment or service is terminated for cause, all of his or her outstanding options under the 2018 Plan (regardless of vesting status) will immediately be forfeited.
TransferabilityExcept as otherwise permitted by the Internal Revenue Code or the regulations under the Internal Revenue Code, no incentive stock option may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than, upon the participant's death, to the participant's designated beneficiary or, if no beneficiary has been properly designated by the participant, by will or by the laws of descent and distribution. An incentive stock option may be transferred incident to a divorce (within the meaning of Section 1041 of the Internal Revenue Code) or pursuant to a qualified domestic relations order, but such a transfer will cause the incentive stock option to become a non-qualified stock option as of the day of the transfer. An incentive stock option may be transferred to a grantor trust under which the participant is considered the sole beneficial owner of the incentive stock option while it is held by the trust. No non-qualified stock option may be sold, transferred, pledged, assigned or otherwise alienated or hypothecated, other than (1) upon the participant's death, to the participant's designated beneficiary or, if no beneficiary has been properly designated by the participant, by will or by the laws of descent and distribution, (2) pursuant to a qualified domestic relations order, (3) to a grantor trust, or (4) if specified by the Committee in the participant's option agreement, by gift to any member of the participant's immediate family or to a trust for the benefit of the participant or one or more of the participant's immediate family members. For these purposes, a participant's "immediate family" means the participant, and the lineal ascendants and lineal descendants of the participant or his or her spouse, or any one or more of them. Unless transferred as permitted under the 2018 Plan, a stock option may be exercised during the participant's lifetime only by the participant.
 
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Stock Appreciation Rights
The exercise of a stock appreciation right entitles its holder to receive in cash, shares of Common Stock or a combination of both (as determined by the Committee), an amount equal to (1) the difference between the fair market value of a share of Common Stock on the date of exercise over the grant (exercise) price, multiplied by (2) the number of shares with respect to which the stock appreciation right is exercised.
Stock appreciation rights may be granted to employees and directors at any time and from time to time as determined by the Committee. The Committee has broad discretion in establishing the terms of stock appreciation rights, including the number of shares subject to a particular award, conditions to exercising, grant price (which must be equal to at least 100% of the fair market value of a share of Common Stock on the date of grant) and duration of the award (which may not exceed ten years). A stock appreciation right may be related to a stock option or be granted independently of any option. In the case of a stock appreciation right that is related to a stock option, the exercise of one award will reduce, on a one-to-one basis, the number of shares covered by the other award. The plan provisions on exercising stock appreciation rights after termination of employment or service and transferability of stock appreciation rights are essentially the same as those applicable to stock options.
Restricted Stock and Restricted Stock Units
GeneralShares of restricted stock and restricted stock units may be granted to employees and directors at any time and from time to time by the Committee. Each restricted stock or restricted stock unit grant is evidenced by a restricted stock or restricted stock unit agreement that specifies the period of restriction (that is, the period during which the entitlement of the participant under the award is limited in some way or subject to forfeiture) and any other vesting terms, the number of shares of restricted stock or restricted stock units granted, and such other provisions as the Committee may determine, including whether the award is subject to vesting upon the achievement of performance goals. Each restricted stock unit agreement will also specify the time at which, after vesting, the award will be settled (i.e., paid out to the participant) and the form in which settlement will be made (i.e., in shares of Common Stock, in cash, or a combination of both). In addition, the Committee may require that a participant pay a stipulated purchase price for each share of restricted stock or restricted stock unit, or impose holding requirements or sale restrictions upon vesting of restricted stock or settlement of restricted stock units in shares.
The 2018 Plan does not prescribe a specific period over which shares of restricted stock and restricted stock units generally must vest. During the period of restriction, a participant holding shares of restricted stock may exercise full voting rights with respect to those shares, and also is entitled to receive all dividends and distributions paid with respect to those shares while they are held. The Committee may provide that payment of such dividends shall not be made until the underlying restricted stock vests. If any dividends or distributions are paid in shares of Common Stock, those shares will be subject to the same restrictions as the shares of restricted stock with respect to which they were paid. A participant has no voting or dividend rights with respect to shares underlying restricted stock units unless and until the shares are issued to the participant in settlement of the restricted stock units. The Committee may, however, provide in the participant's restricted stock unit agreement for the crediting of dividend equivalent units.
Termination of Service or EmploymentUnless otherwise set forth in the participant's restricted stock or restricted stock unit agreement, if a participant's employment or service is terminated due to death or permanent and total disability, the period of restriction will lapse as of the date of termination. Unless otherwise set forth in the participant's restricted stock or restricted stock unit agreement, if a participant's employment or service is terminated for any other reason, all unvested shares awarded as restricted stock and restricted stock units will immediately be forfeited unless the termination is not for cause and the Committee, in its sole discretion, determines to provide for the lapsing of all or a portion of the unvested shares or restricted stock units.
TransferabilityShares of restricted stock and restricted stock units generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable period of restriction (and in the case of restricted stock units, until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the Committee in its sole discretion and set forth in the restricted stock or restricted stock unit agreement.
 
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Performance Shares and Performance Units
General. Performance shares and performance units may be granted to employees and directors at any time and from time to time by the Committee, entitling the participant to future cash payments, shares of Common Stock or a combination of both, based upon the level of achievement with respect to one or more pre-established performance goals over a specified performance period.
The Committee will establish a maximum amount of a participant's award, denominated in shares of Common Stock, in the case of performance shares, or units, in the case of performance units. Each award of performance shares or performance units will be evidenced by a performance share or performance unit agreement, which will set forth (1) the target and maximum amount payable to the participant, (2) the performance goals and level of achievement versus these goals that will determine the amount of payment, (3) the performance period as to which performance will be measured, (4) the timing of any payment earned by virtue of performance, (5) whether and the extent to which participants holding performance shares or performance units will receive dividends or dividend equivalents, (6) restrictions on the alienation or transfer of the award prior to actual payment and restrictions on the sale or transfer of shares following actual payment of an award paid in shares, (7) forfeiture provisions and (8) such other terms as may be determined by the Committee.
After the end of each performance period, the Committee will determine the extent to which performance goals have been attained, and the satisfaction of any other terms and conditions. The Committee will determine what, if any, payment is due with respect to an award and, in the case of performance units, whether the payment will be made in cash, shares of Common Stock or a combination of both. Payment will be made in a lump sum within 60 days after the Committee determines that a payment is due. Notwithstanding satisfaction of any performance goals, the amount paid under an award of performance shares or performance units on account of either financial performance or personal performance evaluations may be reduced by the Committee in its discretion, if the terms of the award so provide.
Termination of Employment or ServiceUnless provided otherwise in the participant's agreement evidencing his or her award of performance shares or performance units, if the employment or service of a participant terminates before the end of a performance period due to death or permanent and total disability, then to the extent it is determined by the Committee following the end of the performance period that the performance goals have been attained, the participant will be entitled to a pro rata payment based on the number of months' service during the performance period but based on the achievement of performance goals during the entire performance period; payment under these circumstances will be made at the same time payments are made to participants who did not terminate service during the performance period. Unless provided otherwise in the participant's agreement evidencing his or her award of performance shares or performance units, if the employment or service of a participant terminates before the end of a performance period for any other reason, all outstanding performance shares or performance units awarded to the participant will be canceled; however, if the participant's employment or service is terminated by the Company other than for cause, the Committee in its sole discretion may waive the automatic cancellation provision and pay out on a pro rata basis as described in the immediately preceding sentence.
TransferabilityExcept as otherwise provided in the participant's agreement evidencing his or her award of performance shares or performance units, performance shares and performance units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the participant's death, to the participant's designated beneficiary or, if no beneficiary has been designated by the participant, by will or by the laws of descent and distribution.
Change in Control
Under the 2018 Plan in the event of a change in control, to the extent that outstanding awards under the Plan are assumed or replaced with a replacement award, such awards will not vest automatically (so-called "single-trigger" vesting), but instead remain outstanding and continue to be governed by their terms. However, if within two years following a change in control, a participant is involuntarily terminated other than for cause (including voluntary resignation for good reason under an applicable plan or agreement), death or disability, then upon such termination the awards will become fully vested (so-called "double-trigger" vesting). If the Committee determines that existing
 
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awards are not appropriately assumed or are not appropriately replaced in connection with a change in control, and unless otherwise provided by the Committee in the agreement applicable to an award, upon a change in control:
·
each option and stock appreciation right then outstanding shall become fully vested and exercisable;
·
all restrictions on restricted stock will lapse and all restricted stock units will become fully-vested; and
·
each performance-based award will be deemed earned and shall be paid to the extent of the greater of (i) the extent, as determined by the Committee, to which the performance goals applicable to such performance-based award have been met during the applicable performance period up through and including the effective date of the change in control or (ii) the target number of performance shares or performance units determined at the date of grant.
Federal Income Tax Consequences
The following discussion is intended for the information of stockholders considering how to vote on the proposed 2018 Plan, and not as tax guidance to plan participants. Under current U.S. federal income tax laws, awards of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units under the 2018 Plan will generally have the following federal income tax consequences:
(1) The grant of a stock option will not, by itself, result in the recognition of taxable income to the participant or entitle the Company to a deduction at the time of grant.
(2) If the participant exercises an incentive stock option, the exercise of the option will generally not, by itself, result in the recognition of taxable income by the participant or entitle the Company to a deduction at the time of exercise. However, the difference between the exercise price and the fair market value of the shares of Common Stock acquired on the date of exercise is an item of adjustment included for purposes of calculating the participant's alternative minimum tax.
If the participant does not hold the shares of Common Stock acquired upon exercise of an incentive stock option for at least one year after the exercise of the stock option or two years after the grant of the stock option, whichever is later, the participant will recognize ordinary (compensation) income upon disposition of the shares in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise of the stock option. If this happens, the Company will be entitled to a corresponding deduction in the amount of ordinary income, if any, that the participant recognizes, subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. The participant also will recognize a capital gain (loss) to the extent the sale price exceeds (is less than) the fair market value of the shares of Common Stock on the date of exercise of the stock option. The Company will not be entitled to a corresponding deduction for any such capital gain. The capital gain (loss) will be characterized as short-term if the participant does not hold the shares for more than one year after the exercise of the stock option and long-term if the participant does hold the shares for more than one year after the exercise of the stock option.
If the participant holds the shares of Common Stock acquired upon exercise of an incentive stock option for one year after the stock option is exercised and two years after the option is granted, the participant will recognize a capital gain (loss) upon disposition of the shares to the extent the sale price exceeds (is less than) the exercise price. This capital gain (loss) will be characterized as short-term if the participant does not hold the shares for more than one year after the exercise of the stock option and long-term if the participant does hold the shares for more than one year after the exercise of the stock option. The Company will not be entitled to a corresponding deduction for any such capital gain.
(3) If the participant exercises a non-qualified stock option, the participant will recognize ordinary (compensation) income on the date of exercise in an amount equal to the difference between the fair market value on the date of exercise of the shares of Common Stock acquired pursuant to the exercise and the exercise price of the non-qualified stock option. The Company will be allowed a deduction in the amount of any ordinary income recognized by the participant upon exercise of the non-qualified stock option, subject to the deduction limitations
 
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under Section 162(m) of the Internal Revenue Code. When the participant sells the shares acquired upon exercise of a non-qualified stock option, the participant will recognize a capital gain (loss) to the extent of any appreciation (depreciation) in value of the shares from the date of exercise to the date of sale. The Company will not be entitled to a corresponding deduction for any such capital gain. The capital gain (loss) will be short-term if the participant does not hold the shares for more than one year after the exercise of the stock option and long-term if the participant does hold the shares for more than one year after the exercise of the stock option.
(4) The grant of a stock appreciation right will not, by itself, result in the recognition of taxable income to the participant or entitle the Company to a deduction at the time of grant. If the participant exercises a stock appreciation right, the participant will recognize ordinary (compensation) income on the date of exercise in an amount equal to the difference between the fair market value on the date of exercise of the shares of Common Stock underlying the stock appreciation right being exercised and the grant price of the stock appreciation right. The Company will be entitled to a corresponding tax deduction, subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. To the extent the stock appreciation right is settled in shares of Common Stock, when the participant sells the shares, the participant will recognize a capital gain (loss) to the extent of any appreciation (depreciation) in value of the shares from the date of exercise. The Company will not be entitled to a corresponding deduction for any such capital gain. The capital gain (loss) will be short-term if the participant does not hold the shares for more than one year after the exercise of the stock appreciation right and long-term if the participant does hold the shares for more than one year after the exercise of the stock appreciation right.
(5) The grant of restricted stock will not, by itself, result in the recognition of taxable income to the participant or entitle the Company to a deduction at the time of grant. Holders of shares of restricted stock will recognize ordinary (compensation) income on the date that the shares of restricted stock are no longer subject to a substantial risk of forfeiture, in an amount equal to the fair market value of the shares on that date. A holder of restricted stock may generally elect under Section 83(b) of the Internal Revenue Code to recognize ordinary income in the amount of the fair market value of the shares of restricted stock on the date of grant. The Company will be entitled to a tax deduction equal to the amount of ordinary income recognized by the holder, subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. When the participant disposes of shares granted as restricted stock, the difference between the amount received by the participant upon the disposition and the fair market value of the shares on the date the participant recognized ordinary income will be treated as a capital gain or loss. The capital gain or loss will be short-term if the participant does not hold the shares for more than one year after recognition of ordinary income and long-term if the participant does hold the shares for more than one year after the recognition of ordinary income. The holding period begins when the restricted stock vests, unless a Section 83(b) election is made, in which case the holding period begins upon the restricted stock grant date. The Company will not be entitled to a corresponding deduction for any such capital gain. Holders of restricted stock will also recognize ordinary income equal to any dividend when such payments are received, even if the restricted stock remains subject to a substantial risk of forfeiture.
(6)  The grant of restricted stock units will not, by itself, result in the recognition of taxable income to the participant or entitle the Company to a deduction at the time of grant. Upon settlement of the restricted stock units, the participant will generally recognize ordinary (compensation) income in the amount of the fair market value of the shares of Common Stock and/or the amount of cash paid to the participant. The Company will be entitled to a tax deduction equal to the amount of ordinary income recognized by the holder, subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. When the participant disposes of any shares of Common Stock paid upon settlement of the restricted stock units, the difference between the amount received by the participant upon the disposition and the fair market value of the shares on the date the participant recognized ordinary income with respect to the shares will be treated as a capital gain or loss. The capital gain or loss will be short-term if the participant does not hold the shares for more than one year after recognition of ordinary income and long-term if the participant does hold the shares for more than one year after the recognition of ordinary income. The Company will not be entitled to a corresponding deduction for any such capital gain.
(7) The grant of performance shares or performance units will not, by itself, result in the recognition of taxable income to the participant or entitle the Company to a deduction at the time of grant. The participant will recognize ordinary (compensation) income, and the Company will be entitled to a corresponding deduction, at the time shares of Common Stock are delivered in payment of performance shares or shares of Common Stock and/or cash are delivered in payment of performance units. The amount of such ordinary income will be the amount of the fair
 
38

 
 
market value of the shares of Common Stock and/or the amount of cash delivered to the participant. The Company will be entitled to a tax deduction equal to the amount of ordinary income recognized by the holder, subject to the deduction limitations under Section 162(m) of the Internal Revenue Code. When the participant disposes of any shares of Common Stock, the difference between the amount received by the participant upon the disposition and the fair market value of the shares on the date the participant recognizes ordinary income will be treated as a capital gain or loss. The capital gain or loss will be short-term if the participant does not hold the shares for more than one year after recognition of ordinary income and long-term if the participant does hold the shares for more than one year after the recognition of ordinary income. The Company will not be entitled to a corresponding deduction for any such capital gain.
Proposed Awards under the 2018 Plan
No awards have been proposed under the 2018 Plan as of the date of this proxy statement.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
39

 
 
Equity Compensation Plan Information
The following table sets forth information as of December 31, 2017 with respect to compensation plans of Bancorp under which shares of Common Stock may be issued (currently limited to the 2013 Plan).   As noted above, if the 2018 Plan is approved by stockholders at the Annual Meeting, no future awards will be made under the 2013 Plan.
Equity Compensation Plan Information 
 
Plan Category
 
Number of Shares
 to be issued upon
 Exercise of
 Outstanding
 Options, Warrants
 and Rights 
 
Weighted Average
 Exercise Price of
 Outstanding
 Options, Warrants
 and Rights
 
Number of Shares
Remaining
 Available for Future
Issuance
 Under Equity
Compensation
 Plans (Excluding Shares
 Reflected in the First
Column)
Equity compensation plans approved by stockholders
 
682,799
 
$38.860
 
77,512(1)
Equity compensation plans not approved by stockholders
 
N/A
 
N/A
 
N/A
Total
 
682,799
 
$38.860
 
77,512
 _________________________
 (1)  Under the Company's 2013 Equity Incentive Plan, up to 100,000 of such shares could be issued to plan participants as restricted stock. There have been no grants of restricted stock to plan participants.
Board Recommendation
Bancorp's Board of Directors unanimously recommends that stockholders vote FOR approval of the 2018 Omnibus Incentive Plan.
 
 
 
 
 
 
 
 
 
 
40

 
 
PROPOSAL V. RATIFICATION OF THE APPOINTMENT OF
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of Bancorp's Board of Directors has engaged the independent registered public accounting firm of BKD, LLP to audit Bancorp's financial statements for the 2018 fiscal year, subject to the ratification of the appointment by Bancorp's stockholders at the Annual Meeting. Representatives of BKD, LLP are expected to attend the Annual Meeting to respond to appropriate questions and to make a statement if they so desire.
During the fiscal years ended December 31, 2017 and 2016, BKD, LLP provided various audit, audit related and non-audit services to Bancorp. Set forth below are the aggregate fees billed for these services:
 
(a)
Audit Fees: Aggregate fees billed for professional services rendered for the audits of Bancorp's annual financial statements and internal control over financial reporting and reviews of financial statements included in Bancorp's Quarterly Reports on Form 10-Q: $353,820 – 2017; $345,810 – 2016.
 
(b)
Audit Related Fees: Aggregate fees billed for professional services rendered related to audits, including required procedures for providing negative assurances in connection with the Bank's loss-sharing agreements with the FDIC: $13,950 – 2017; $99,335 – 2016.
 
(c)
Tax Fees: Aggregate fees billed for professional services rendered related to tax compliance, tax advice and tax consultations: $0 – 2017; $0 – 2016.
 
(d)
All other fees: Aggregate fees billed for all other professional services, including regulatory compliance work and 401(k) plan administration: $204,541 – 2017; $238,821 – 2016.

The Audit Committee pre-approves all audit and permissible non-audit services to be provided by BKD, LLP and the estimated fees for these services.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF BKD, LLP AS BANCORP'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2018.
 
 
 
 
 
 

 
41


 

PRINCIPAL STOCKHOLDERS AND STOCK HOLDINGS OF MANAGEMENT
The following table sets forth certain information, as of the Record Date, as to those persons believed by management to be beneficial owners of more than five percent of the outstanding shares of Common Stock. Persons, legal or natural, and groups beneficially owning in excess of five percent of the Common Stock are required to file certain reports regarding their ownership with Bancorp and with the SEC in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Where appropriate, historical information set forth below is based on the most recent filing on behalf of the person with Bancorp. Other than those persons listed below, management is not aware of any person or group that beneficially owns more than five percent of the Common Stock as of the Record Date. Each beneficial owner listed has sole voting and dispositive power with respect to the shares of Common Stock reported, except as otherwise indicated.
Name and Address of Beneficial Owner
 
Amount and
Nature of Beneficial
Ownership(1)
 
Percent of
Class
         
Joseph W. Turner
c/o Great Southern Bancorp, Inc.
1451 E. Battlefield
Springfield, MO 65804
 
 1,830,684(2)
 
12.96%
         
Julie Turner Brown
c/o Great Southern Bancorp, Inc.
1451 E. Battlefield
Springfield, MO 65804
 
1,700,862(3)
 
12.06   
         
Earl A. Steinert, Jr.
c/o Great Southern Bancorp, Inc.
1451 E. Battlefield
Springfield, MO 65804
 
   936,096(4)
 
6.64  
         
BlackRock, Inc.
55 East 52nd Street
New York, NY 10005
 
   773,095(5)
 
5.48  
_______________
(1)
Due to the rules for determining beneficial ownership, the same securities may be attributed as being beneficially owned by more than one person. The holders may disclaim beneficial ownership of the included shares which are owned by or with family members, trusts or other entities. Under Rule 13d-3 under the Exchange Act, share amounts shown for Bancorp's officers and directors include shares that they may acquire upon the exercise of options that are exercisable at the Record Date or will become exercisable within 60 days after that date.
(2)
Includes 102,672 shares held jointly with Mr. J. Turner's spouse, with whom Mr. J. Turner shares voting and dispositive power as to such shares, 2,478 shares held by Mr. J. Turner's spouse, 21,000 shares which may be acquired through option exercises, 10,200 shares held in trust accounts for Mr. J. Turner's children, 93,050 shares held by the Turner Family Foundation, a charitable foundation of which Mr. J. Turner, Ms. Julie Turner Brown, a director of Bancorp, Mr. W. Turner, Bancorp's Chairman, and Mr. W. Turner's spouse are directors, and 1,566,024 shares held by the Turner Family Limited Partnership, of which Mr. J. Turner and Ms. Brown are the general partners; Mr. J. Turner, Ms. Brown, Mr. W. Turner and Mr. W. Turner's spouse share voting and dispositive powers over the 93,050 shares held by the Turner Family Foundation and Mr. J. Turner and Ms. Brown share voting and dispositive powers over the 1,566,024 shares held by the Turner Family Limited Partnership.
(3)
Includes 31,780 shares held jointly with Ms. Brown's spouse, with whom Ms. Brown shares voting and dispositive power as to such shares, 1,250 shares which may be acquired through option exercises, 1,535 shares held in custodial accounts for Ms. Brown's children, 6,108 shares held in a trust account for Ms. Brown's children, 93,050 shares held by the Turner Family Foundation, a charitable foundation of which Ms. Brown, Mr. J. Turner, Mr. W. Turner and Mr. W. Turner's spouse are directors, and 1,566,024 shares held by the Turner Family Limited Partnership, of which Ms. Brown and Mr. J. Turner are the general partners; Ms. Brown and Mr. J. Turner share voting and dispositive powers over the 1,566,024 shares held by the Turner Family Limited Partnership and Ms. Brown, Mr. J. Turner, Mr. W. Turner and Mr. W. Turner's spouse share voting
 
 
42

 
 
 
 
 
 
and dispositive powers over the 93,050 shares held by the Turner Family Foundation.
(4)
Mr. Steinert has sole voting and dispositive power as to all 936,096 shares.
(5)
As reported in an amended Schedule 13G filed with the SEC on January 25, 2018 by BlackRock, Inc. ("BlackRock").  With respect to the shares listed in the table, BlackRock reported having sole voting power as to 753,322 shares and sole dispositive power as to 773,095 shares.
 

 
Stock Ownership of Management
The following table sets forth information, as of the Record Date, as to the shares of Common Stock beneficially owned by the directors and nominees named under "Proposal I. Election of Directors" above, the named executive officers, and all directors and executive officers as a group. Each beneficial owner listed has sole voting and dispositive power with respect to the shares of Common Stock reported, except as otherwise indicated.
Name
 
Amount and
Nature of Beneficial
Ownership(1)
   
Percent of
Class
 
William V. Turner
   
357,350(2
)
   
2.53
%
Earl A. Steinert, Jr.
   
936,096(3
)
   
6.64
 
Joseph W. Turner
   
1,830,684(4
)
   
12.96
 
Larry D. Frazier
   
94,300(5
)
   
0.67
 
Julie Turner Brown
   
1,700,862(6
)
   
12.06
 
Thomas J. Carlson
   
15,936(7
)
   
0.11
 
Douglas M. Pitt
   
5,600(8
)
   
0.04
 
Kevin R. Ausburn
   
100(9
)
   
0.00
 
Debra M. Shantz Hart
   
1,584(9
)
   
0.01
 
Rex A. Copeland
   
33,098(10
)
   
0.23
 
Kevin L. Baker
   
6,507(11
)
   
0.05
 
John M. Bugh
   
12,046(12
)
   
0.09
 
Directors and Executive Officers as a Group (14 persons)
   
3,264,557(13
)
   
23.00
 
_______________
(1)
Amounts include shares held directly, as well as shares held jointly with family members, in retirement accounts, in a fiduciary capacity, by certain family members, by certain related entities or by trusts of which the directors and executive officers are trustees or substantial beneficiaries, with respect to which shares the respective director or executive officer may be deemed to have sole or shared voting and/or dispositive powers. Under Rule 13d-3 of the Exchange Act, share amounts shown for Bancorp's officers and directors include shares that they may acquire upon the exercise of options that are exercisable at the Record Date or will become exercisable within 60 days after that date. Due to the rules for determining beneficial ownership, the same securities may be attributed as being beneficially owned by more than one person. The holders may disclaim beneficial ownership of the included shares which are owned by or with family members, trusts or other entities.
(2)
Includes 69,847 shares held by Mr. W. Turner's spouse, 21,000 shares which may be acquired through option exercises and 93,050 shares held by the Turner Family Foundation, a charitable foundation of which Mr. W. Turner, Mr. W. Turner's spouse, Mr. J. Turner and Ms. J. Brown are directors; Mr. W. Turner, Mr. W. Turner's spouse, Mr. J. Turner and Ms. Brown share voting and dispositive powers over the 93,050 shares held by the Turner Family Foundation. Not included in the shares beneficially owned by Mr. W. Turner are the 1,566,024 shares held by the Turner Family Limited Partnership. On September 30, 2004, in a transaction undertaken for estate planning purposes, each of Mr. W. Turner and his spouse transferred all of their respective general partnership units in the partnership to Mr. J. Turner and Ms. Brown in exchange for a portion of the limited partnership units held by Mr. J. Turner and Ms. Brown. Although, as a result of the exchange, Mr. J. Turner and Ms. Brown replaced Mr. W. Turner and his spouse as general partners, each family member's share of the partnership's capital account and profits did not substantially change and their economic interest in the shares of the Common Stock held by the partnership were not significantly affected by the exchange.
(3)
For a discussion of Mr. Steinert's ownership, see footnote 4 to the immediately preceding table.
(4)
For a discussion of Mr. J. Turner's ownership, see footnote 2 to the immediately preceding table.
(5)
Includes 91,800 shares held jointly with Mr. Frazier's spouse, with whom Mr. Frazier shares voting and dispositive power as to such shares. Also includes 2,500 shares which may be acquired through option exercises.
(6)
For a discussion of Ms. Brown's ownership, see footnote 3 to the immediately preceding table.
 
43

 
 
 
(7)
Includes 13,336 shares held by Mr. Carlson's spouse. Also includes 2,500 shares which may be acquired through option exercises.
(8)
Includes 2,500 shares which may be acquired through option exercises.
(9)
Appointed as a director of Bancorp effective March 1, 2017.
(10)
Includes 9,450 shares which may be acquired through option exercises.
(11)
Includes 5,750 shares which may be acquired through option exercises.
(12)
Includes 10,256 shares which may be acquired through option exercises.
(13)
Includes an aggregate of 89,606 shares which may be acquired through option exercises by all directors and executive officers as a group.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
                    Section 16(a) of the Exchange Act requires Bancorp's directors, its executive officers and persons who beneficially own more than ten percent of the Common Stock, to file reports detailing their ownership and changes of ownership in the Common Stock with the SEC and to furnish Bancorp with copies of all such ownership reports. Based solely on Bancorp's review of the copies of the ownership reports furnished to Bancorp, and written representations relative to the filing of certain forms, Bancorp is aware of:  one late Form 4 filing for each of Bancorp's directors and executive officers (Kevin R. Ausburn, Kevin L. Baker, Julie Turner Brown, John M. Bugh, Thomas J. Carlson, Rex A. Copeland, Larry D. Frazier, Debra M. Shantz Hart, Douglas W. Marrs, Douglas M. Pitt, Earl A. Steinert, Jr., Linton J. Thomason, Joseph W. Turner and William V. Turner), for one transaction in November 2017; one late Form 3 filing for Mr. Ausburn after becoming a director of Bancorp in March 2017; and one late Form 3 filing for Ms. Hart after becoming a director of Bancorp in March 2017.
STOCKHOLDER PROPOSALS – 2019 ANNUAL MEETING
                    In order to be eligible for inclusion in Bancorp's proxy materials for its next annual meeting of stockholders, any stockholder proposal for that meeting must be received by the Secretary of Bancorp at the executive office of Bancorp, located at 1451 E. Battlefield, Springfield, Missouri 65804, by November 27, 2018.  Any such proposal will be subject to the requirements of the proxy rules adopted under the Securities Exchange Act of 1934, as amended.
                    In addition to the deadline and other requirements referred to above for submitting a stockholder proposal to be included in Bancorp's proxy materials for its next annual meeting of stockholders, Bancorp's bylaws require a separate notification to be made in order for a stockholder proposal to be eligible for presentation at the meeting, regardless of whether the proposal is included in Bancorp's proxy materials for the meeting.  In order to be eligible for presentation at Bancorp's next annual meeting of stockholders, written notice of a stockholder proposal containing the information specified in Article I, Section 6 of Bancorp's bylaws must be received by the Secretary of Bancorp not earlier than the close of business on January 9, 2019 and not later than the close of business on February 8, 2019.  If, however, the date of the next annual meeting is before April 19, 2019 or after July 8, 2019, the notice of the stockholder proposal must instead be received by Bancorp's Secretary not earlier than the close of business on the 120th day prior to the date of the next annual meeting and not later than the close of business on the later of the 90th day before the date of the next annual meeting or the tenth day following the first to occur of the day on which notice of the date of the next annual meeting is mailed or the day on which public announcement of the date of the next annual meeting is first made by Bancorp.
OTHER MATTERS
                    The Board of Directors knows of no business that will be presented for consideration at the Annual Meeting other than the proposals discussed in this proxy statement. If, however, other matters are properly brought before the Annual Meeting, it is the intention of the holders of the proxies to vote the shares represented thereby on such matters in accordance with their best judgment.
                    The cost of solicitation of proxies will be borne by Bancorp. Bancorp will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of the Common Stock. In addition to solicitation by mail, directors, officers and other employees of Bancorp and/or Great Southern may solicit proxies personally or by telephone without additional compensation.
 
44

 
 
 
A COPY OF BANCORP'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2017, AS FILED WITH THE SEC, MAY BE OBTAINED FROM THE SEC'S WEBSITE, AT WWW.SEC.GOV, OR FROM GREAT SOUTHERN'S WEBSITE, AT WWW.GREATSOUTHERN BANK.COM.
 
By Order of the Board of Directors
   
 
   
 
William V. Turner
Chairman of the Board

Springfield, Missouri
March 27, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
45

 

 

 
 
 
 
 
 

 
APPENDIX A








GREAT SOUTHERN BANCORP, INC.

2018 OMNIBUS INCENTIVE PLAN
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
TABLE OF CONTENTS
   
Page
ARTICLE 1    ESTABLISHMENT, PURPOSE AND DURATION
A-1
1.1
Establishment of the Plan
A-1
 
1.2
Purpose of the Plan
A-1
 
1.3
Duration of the Plan
A-1
 
ARTICLE 2    DEFINITIONS AND CONSTRUCTION
A-1
 
2.1
Definitions
A-1
 
2.2
Gender and Number
A-4
 
2.3
Severability
A-4
 
ARTICLE 3    ADMINISTRATION
A-4
 
3.1
The Committee
A-4
 
3.2
Authority of the Committee
A-5
 
3.3
Decisions Binding
A-5
 
ARTICLE 4    SHARES SUBJECT TO THE PLAN
A-5
 
4.1
Number of Shares
A-5
 
4.2
Maximum Awards
A-5
 
4.3
Lapsed Awards
A-6
 
4.4
Adjustments in Authorized Shares
A-6
 
4.5
Dividends and Dividend Equivalents
A-6
 
ARTICLE 5    ELIGIBILITY AND PARTICIPATION
A-7
 
5.1
Eligibility
A-7
 
5.2
Actual Participation
A-7
 
ARTICLE 6    STOCK OPTIONS
A-7
 
6.1
Grant of Options
A-7
 
6.2
Option Agreement
A-7
 
6.3
Exercise Price
A-7
 
6.4
Duration of Options
A-7
 
6.5
Exercise of Options
A-8
 
6.6
Payment
A-8
 
6.7
Restrictions on Share Transferability
A-8
 
6.8
Termination of Employment or Service Due to Death or Disability
A-8
 
6.9
Termination of Employment or Service for Other Reasons
A-9
 
6.10
Additional Requirements with Respect to Incentive Stock Options
A-9
 
6.11
Transferability of Options
A-9
 
ARTICLE 7    STOCK APPRECIATION RIGHTS
A-10
 
7.1
Grant of SARs
A-10
 
7.2
Exercise of SARs
A-10