There have been a lot of interesting happenings at Tennessee Commerce Bancorp (NASDAQ:TNCC) over the last few days. First, the company announced Wednesday that three of its 13 directors had resigned from the board over disagreements on executive compensation. The next day, the company announced another quarter of blow-out earnings.

The market is pretty much ignoring the resignations and loving the earnings. I'm more curious about the resignations, because it's very uncommon to see almost one-quarter of a company's board resign in one fell swoop. One board member's resignation? Sure. Or maybe a few over a period of months, but three within a couple of days of each other and bundled up in one press release is about as abnormal as, well, directors standing up to executives at all.

The company's proxy statement from May doesn't show executive compensation that I would consider egregious. Given the performance of the business in the past year I'd say the executive team was a relative bargain.

That said, not all is right with the board of directors or the compensation committee at Tennessee Commerce, and the compensation given to execs in 2006 has very much changed in 2007. The timeline of the various announcements since the proxy was released does not lend credibility to management.

It all starts with the June 7 filing the company made with the SEC to report that the Nasdaq had notified the company on June 1 that it was out of compliance with listing regulations for its compensation committee. In a nutshell, the regulations require the compensation committee to be comprised entirely of independent directors and Tennessee Commerce had executives on its committee. The company agreed to take steps to get in compliance.

It gets a bit more interesting in the June 26 filing, where the company announced that the salaries of its executives had all approximately been doubled in a June 1 board decision. It's a bit fishy that the salaries were changed the same day the company received its notice from the SEC, but the salary increases were also made retroactive to Jan. 1.

In another interesting twist of timing the company waited until Thursday to file the text of the three resignation letters with the SEC, at about the same time it announced its earnings. This is a day after it had filed the notice of the resignations and one to three days after having received the resignation notices. The letter from Fowler H . Low is the most critical of the company's compensation committee, the recently approved executive compensation packages, and how executives sold the plan to board members.

The resignations and earnings release are all bunched together over a period of 72 hours, so it's hard to cry foul too loudly. But the order of the releases over the last few days combined with timing of the notification from Nasdaq and the retroactive change in compensation couldn't be much more suspicious.

What's really sad here is that I had Tennessee Commerce on my watch list. The company has a very unique business model for focusing on small businesses and providers of professional services, and to date the company has been quite successful. I have nothing against banking titans like Suntrust (NYSE:STI) or Wachovia (NYSE:WB), and I'm a bit disappointed to move Tennessee Commerce down on my watch list.

That disappointment is more than made up for by the fact that the three board members stood up for shareholders against what they believed was an unfair process for shareholders. It's uncommon for directors to publicly question executives, and former directors Low, Winston C. Hickman, and Regg E. Swanson deserve thank you notes from shareholders for shining a little light on the process.

Nathan Parmelee doesn't own shares in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.