Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
|
|
Filed by the Registrant ■
|
|
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))
|
■
|
Definitive Proxy Statement
|
□
|
Definitive Additional Materials
|
□
|
Soliciting Material Pursuant to § 240.14a-12
|
BANNER CORPORATION
|
|
(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):
|
|
■
|
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:
|
N/A
|
|
(2)
|
Aggregate number of securities to which transactions applies:
|
N/A
|
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
|
N/A
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
N/A
|
|
(5)
|
Total fee paid:
|
N/A
|
|
□
|
Fee paid previously with preliminary materials:
|
N/A
|
|
□
|
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:
|
N/A
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
N/A
|
|
(3)
|
Filing Party:
|
N/A
|
|
(4)
|
Date Filed:
|
N/A
|
Sincerely,
|
|
/s/ Mark J. Grescovich | |
Mark J. Grescovich
|
|
President and Chief Executive Officer
|
|
Proposal 1.
|
Election of four directors to each serve for a three-year term and one director to serve for a two-year term.
|
|
Proposal 2.
|
An advisory (non-binding) vote to approve our executive compensation as disclosed in this Proxy Statement.
|
|
Proposal 3.
|
Adoption of the Banner Corporation 2014 Omnibus Incentive Plan.
|
|
Proposal 4.
|
Ratification of the Audit Committee’s selection of Moss Adams LLP as our independent auditor for 2014.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
/s/ ALBERT H. MARSHALL | |
ALBERT H. MARSHALL | |
SECRETARY
|
Date:
|
Tuesday, April 22, 2014
|
|
Time:
|
10:00 a.m., local time
|
|
Place:
|
Marcus Whitman Hotel, 6 W. Rose Street, Walla Walla, Washington
|
|
Proposal 1.
|
Election of four directors to each serve for a three-year term and one director to serve for a two-year term.
|
|
Proposal 2.
|
An advisory (non-binding) vote to approve our executive compensation as disclosed in this Proxy Statement.
|
|
Proposal 3.
|
Adoption of the Banner Corporation 2014 Omnibus Incentive Plan.
|
|
Proposal 4.
|
Ratification of the Audit Committee’s selection of Moss Adams LLP as our independent auditor for 2014.
|
• |
submitting a new proxy with a later date;
|
• |
notifying Banner’s Secretary in writing before the annual meeting that you have revoked your proxy; or
|
• |
voting in person at the annual meeting.
|
• |
those persons or entities (or groups of affiliated person or entities) known by management to beneficially own more than five percent of Banner’s common stock other than directors and executive officers;
|
• |
each director and director nominee of Banner;
|
• |
each executive officer named in the Summary Compensation Table appearing under “Executive Compensation” below (known as “named executive officers”); and
|
• |
all current directors and executive officers of Banner and Banner Bank as a group.
|
Name
|
Number of Shares
Beneficially Owned (1)
|
Percent of Shares
Outstanding
|
|||
Beneficial Owners of More Than 5%
|
|||||
BlackRock, Inc.
|
2,063,273 |
(2)
|
10.57
|
||
40 East 52
nd
Street
|
|||||
New York, New York 10022
|
|||||
The Vanguard Group
|
1,154,672 |
(3)
|
5.92
|
||
100 Vanguard Boulevard
|
|||||
Malvern, Pennsylvania 19355
|
|||||
FMR LLC
|
1,774,760
|
(4)
|
9.09
|
||
245 Summer Street
|
|||||
Boston, Massachusetts 02110
|
|||||
Directors
|
|||||
Robert D. Adams
|
19,158
|
(5)
|
*
|
||
Gordon E. Budke
|
1,590
|
(6)
|
*
|
||
Connie R. Collingsworth
|
100
|
*
|
|||
Jesse G. Foster
|
9,881
|
(7)
|
*
|
||
D. Michael Jones
|
22,616
|
(8)
|
*
|
||
David A. Klaue
|
83,049
|
*
|
|||
Constance H. Kravas
|
13,460
|
(9)
|
*
|
||
John R. Layman
|
20,299
|
(10)
|
*
|
||
Brent A. Orrico
|
77,986
|
(11)
|
*
|
||
Gary Sirmon
|
36,337
|
(12)
|
*
|
||
Michael M. Smith
|
25,228
|
(13)
|
*
|
||
Named Executive Officers
|
|||||
Mark J. Grescovich**
|
60,058
|
|
*
|
||
Lloyd W. Baker
|
15,683
|
(14)
|
*
|
||
Richard B. Barton
|
6,392
|
*
|
|||
Cynthia D. Purcell
|
3,750
|
|
*
|
||
Douglas M. Bennett
|
5,997
|
(15)
|
*
|
||
All Executive Officers and Directors as a Group (22 persons)
|
435,627
|
2.23
|
*
|
Less than 1% of shares outstanding.
|
**
|
Also a director of Banner.
|
(1)
|
Shares held in accounts under the ESOP and shares of restricted stock granted under Mr. Grescovich’s employment agreement, as well as under the 2012 Restricted Stock and Incentive Bonus Plan, as to which the holders have voting power but not investment power, are included as follows: Mr. Grescovich,
29,593
shares; Mr. Jones,
595
shares; Mr. Baker,
5,320
shares; Mr. Barton,
4,130
shares; Ms. Purcell, 2,878 shares; Mr. Bennett,
5,682
shares; and all executive officers and directors as a group,
66,687
shares. The amounts shown also include the following number of shares which the indicated individuals have the right to acquire within 60 days of the voting record date through the exercise of stock options granted pursuant to Banner’s stock option plans: Dr. Kravas,
2,592
; Mr. Klaue,
2,500
; Mr. Layman,
2,500
; Mr. Smith,
2,592
; Mr. Baker,
285
; Mr. Barton,
285
; Ms. Purcell,
285
; Mr. Bennett,
285
; and all executive officers and directors as a group,
12,321
.
|
(2)
|
Based on a Schedule 13G/A dated January 10, 2014, which reports sole voting power over 2,008,337 shares and sole dispositive power over 2,063,273 shares.
|
(3)
|
Based on a Schedule 13G/A dated February 6, 2014, which reports sole voting power over 27,778 shares, sole dispositive power over 1,027,652 shares and shared dispositive power over 26,578 shares.
|
(4)
|
Based on a Schedule 13G dated February 13, 2014, which reports sole voting power over 1,362 shares and sole dispositive power over 1,774,760 shares.
|
(5)
|
Includes 1,895 shares owned by a trust directed by Mr. Adams.
|
(6)
|
Owned by a trust directed by Mr. Budke and his wife.
|
(7)
|
Includes 7,404 shares owned solely by his wife.
|
(8)
|
Includes 142 shares held as custodian for minors.
|
(9)
|
Includes 881 shares held jointly with her husband.
|
(10)
|
Includes 10,714 shares which have been pledged.
|
(11)
|
Includes 44,706 shares owned by companies controlled by Mr. Orrico and 18,827 shares owned by trusts directed by Mr. Orrico.
|
(12)
|
Includes 11,249 shares held jointly with his wife and 12,900 shares owned by companies controlled by Mr. Sirmon.
|
(13)
|
Includes 1,457 shares held jointly with his wife, 2,285 shares owned solely by his wife and 7,142 shares owned by a company controlled by Mr. Smith.
|
(14)
|
Includes 121 shares owned solely by his wife and 8,489 shares held jointly with his wife.
|
(15)
|
Includes three shares held as custodian to a minor.
|
• |
selecting, evaluating, and retaining competent senior management;
|
• |
establishing, with senior management, Banner’s long- and short-term business objectives, and adopting operating policies to achieve these objectives in a legal and sound manner;
|
• |
monitoring operations to ensure that they are controlled adequately and are in compliance with laws and policies;
|
• |
overseeing Banner’s business performance; and
|
• |
ensuring that the Banks help to meet our communities’ credit needs.
|
Name
|
Fees Earned or
Paid in Cash ($)(1)
|
Change in Pension Value
and Nonqualified
Deferred Compensation
Earnings ($)
|
All Other
Compensation ($)(2)
|
Total ($)
|
||||
Robert D. Adams
|
45,000
|
--
|
1,102
|
46,102
|
||||
Gordon E. Budke
|
72,000
|
--
|
1,912
|
73,912
|
||||
Connie R. Collingsworth
|
34,000
|
--
|
--
|
34,000
|
||||
Jesse G. Foster
|
37,500(3)
|
(4)
|
75,783(5)
|
113,283
|
||||
David A. Klaue
|
53,000
|
--
|
1,555
|
54,555
|
||||
Constance H. Kravas
|
53,000
|
--
|
1,459
|
54,459
|
||||
D. Michael Jones
|
34,500(3)
|
2,472(6)
|
141,599(7)
|
178,571
|
||||
Robert J. Lane (8)
|
28,750
|
--
|
1,310
|
30,060
|
||||
John R. Layman
|
45,000
|
--
|
1,297(9)
|
46,297
|
||||
Brent A. Orrico
|
66,200(10)
|
--
|
1,056
|
67,256
|
||||
Gary Sirmon
|
60,500(3)
|
(11)
|
137,800(12)
|
198,300
|
||||
Michael M. Smith
|
65,500
|
--
|
1,794
|
67,294
|
(1)
|
The following directors deferred all or a portion of their fees into Banner common stock, pursuant to the deferred fee agreements described below: Adams, Klaue, Kravas, Layman, Orrico and Smith.
|
(2)
|
Unless otherwise noted, consists of dividends paid on vested phantom stock awards and business and occupation tax reimbursement. Effective July 1, 2010, Washington State subjects directors’ fees to a 1.8% business and occupation tax, which may be reduced by a small business tax credit allowance. Banner has agreed to reimburse or pay the tax on each director’s behalf.
|
(3)
|
Includes $500 for attending meetings of the Board of Directors of Community Financial Corporation, a subsidiary of Banner Bank.
|
(4)
|
The present value of Mr. Foster’s supplemental retirement benefits decreased by $63,695 in 2013.
|
(5)
|
Mr. Foster received $72,000 pursuant to his supplemental retirement agreement (as described below); also includes life insurance premiums paid and dividends on vested phantom stock awards.
|
(6)
|
Consists of above-market earnings on deferred compensation. The present value of Mr. Jones’ supplemental retirement benefits decreased by $72,906 in 2013.
|
(7)
|
Mr. Jones received $134,050 pursuant to his supplemental retirement agreement (as described below); also includes life and health insurance premiums paid.
|
(8)
|
Mr. Lane resigned from the Board effective June 30, 2013.
|
(9)
|
Consists of the value of a life insurance premium under a split-dollar arrangement, as well as dividends paid on vested phantom stock awards and business and occupation tax reimbursement.
|
(10)
|
Includes $21,700 in fees for attending meetings of the Board of Directors of Islanders Bank.
|
(11)
|
The present value of Mr. Sirmon’s supplemental retirement benefits and salary continuation plan decreased by $73,853 in 2013.
|
(12)
|
Mr. Sirmon received $77,062 pursuant to his salary continuation agreement and $57,604 pursuant to his supplemental retirement agreement (each as described below); also includes life insurance premiums paid, business and occupation tax reimbursement, and dividends on vested phantom stock awards.
|
• |
Mark J. Grescovich, President and Chief Executive Officer;
|
• |
Lloyd W. Baker, Executive Vice President and Chief Financial Officer;
|
• |
Richard B. Barton, Executive Vice President and Chief Lending Officer;
|
• |
Cynthia D. Purcell, Executive Vice President of Retail Banking and Administration; and
|
• |
Douglas M. Bennett, Executive Vice President of Real Estate Lending Operations.
|
• |
modest salary increases (no increase for the Chief Executive Officer and two percent increases for the other named executive officers);
|
• |
establishment of a formal annual incentive plan, including a combination of pre-established corporate goals and less-formulaic individual goals; and
|
• |
establishment of a formal long-term incentive plan tied to shares of Banner stock, with 50% or more of the target award in the form of performance-based equity.
|
• |
1.09% return on average assets;
|
• |
$185 million, or 6%, growth in loans;
|
• |
$134 million, or 14%, growth in non-interest-bearing deposits;
|
• |
9% growth in core deposits, with core deposits representing 76% of total deposits, an increase from 71% at the end of the prior year;
|
• |
42% reduction in non-performing assets (excluding performing restructured loans) to 0.66% of total assets at December 31, 2013;
|
• |
increases of $0.50 per share in dividends to common shareholders and $1.62 per share in tangible book value, resulting in $27.50 in tangible book value per share at December 31, 2013; and
|
• |
total shareholder return for 2013 was slightly more than 48%.
|
• |
to attract and retain key executives who are vital to our long-term success and are of the highest caliber;
|
• |
to provide levels of compensation competitive with those offered throughout the financial industry and consistent with our level of performance, complexity and market capitalization;
|
• |
to motivate executives to enhance long-term shareholder value by granting awards tied to the value of our common stock; and
|
• |
to integrate the compensation program with our annual and long-term strategic planning and performance measurement processes.
|
BofI Holdings, Inc.
|
National Bank Holdings Corporation
|
|
Cascade Bancorp
|
Pacific Continental Corporation
|
|
Central Pacific Financial Corp.
|
PacWest Bancorp
|
|
CoBiz Financial Inc.
|
Sterling Financial Corporation
|
|
Columbia Banking System, Inc.
|
TriCo Bancshares
|
|
CVB Financial Corp.
|
Umpqua Holdings Corporation
|
|
First Interstate BancSystem, Inc.
|
Washington Banking Company
|
|
Glacier Bancorp, Inc.
|
Washington Federal, Inc.
|
|
Heritage Financial Corporation
|
Westamerica Bancorporation
|
|
HomeStreet, Inc.
|
Western Alliance Bancorporation
|
• |
base salary;
|
• |
short-term incentive compensation;
|
• |
long-term incentive compensation; and
|
• |
participation in a supplemental executive retirement program.
|
Executive
|
Below
Threshold
|
Threshold
(50%)
|
Target
(100%)
|
Stretch/Max
(150%)
|
||||
Mark J. Grescovich
|
0%
|
25.0%
|
50.0%
|
75.0%
|
||||
Other named executive officers
|
0%
|
12.5%
|
25.0%
|
37.5%
|
Executive
|
Corporate
|
Individual
|
||
Mark J. Grescovich
|
80%
|
20%
|
||
Other named executive officers
|
65%
|
35%
|
Absolute Performance Goals
|
||||||||||||||
Performance Measure
|
Minimum
Relative
Performance
Threshold
|
Threshold
|
Target
|
Stretch
|
Weighting
(% of
Corporate
Goals)
|
|||||||||
Return on average assets (1)
|
50
th
Percentile
|
1.28% | 1.42% | 1.86% | 60% | |||||||||
Efficiency ratio
|
35
th
Percentile
|
70.0% | 68.0% | 65.0% | 40% | |||||||||
Payout as a percentage of target
|
50
%
|
100% | 150% |
(1)
|
Determined based on income before income taxes and before provision for loan and lease losses.
|
Absolute Performance Goals
|
||||||||||||||
Performance Measure
|
Minimum
Relative
Performance
Threshold
|
Threshold
|
Target
|
Stretch
|
Weighting
(% of
Corporate
Goals)
|
|||||||||
Return on average assets (1)
|
50
th
Percentile
|
1.28% | 1.42% | 1.86% | 40% | |||||||||
Efficiency ratio
|
35
th
Percentile
|
70.0% | 68.0% | 65.0% | 20% | |||||||||
Ratio of non-performing assets to total assets (2)
|
50
th
Percentile
|
2.20% | 2.00% | 1.70% | 20% | |||||||||
Total operating revenue (3)
|
50
th
Percentile
|
$146 million
|
$154 million
|
$167 million
|
20% | |||||||||
Payout as a percentage of target
|
50% | 100% | 150% |
(1)
|
Determined based on income before income taxes and before provision for loan and lease losses.
|
(2)
|
At December 31, 2013. Non-performing assets include performing restructured loans.
|
(3)
|
Defined as net interest income plus non-interest income, adjusted to remove trading account income. The relative measure used for percentile ranking purposes is the annualized rate of growth in total operating revenue for the nine month period from April 1, 2013 to December 31, 2013 as compared to the same measure for the nine month period from April 1, 2012 to December 31, 2012.
|
Performance Measure
|
Actual
Percentile
Ranking
|
Required
Percentile
|
1Minimum
Achieved?
|
|||
Return on average assets
|
58%
|
50%
|
Yes
|
|||
Efficiency ratio
|
45%
|
35%
|
Yes
|
|||
Ratio of non-performing assets to total assets
|
64%
|
50%
|
Yes
|
|||
Growth in operating revenue
|
34%
|
50%
|
No
|
Performance Measure
|
Performance
Achieved
|
Payout Earned
as
a % of Target
|
|||
Return on average assets
|
1.62%
|
123%
|
|||
Efficiency ratio
|
67.50%
|
108%
|
|||
Ratio of non-performing assets to total assets
|
1.68%
|
150%
|
|||
Total operating revenue
|
$157,054,000
|
0% (1)
|
____________ | |||||
(1) |
Although absolute performance exceeded threshold performance, no incentive was earned for performance related to this measure because the minimum performance relative to peers was not achieved.
|
Executive
|
Target Opportunity
as % of Salary
|
% of Target
Incentive Achieved
|
Incentive Earned as
% of Salary
|
|||
Mark J. Grescovich
|
50%
|
100.7%
|
50.4%
|
|||
Other named executive officers
|
25%
|
111.2%
|
27.8%
|
Relative Performance Percentile Ranking (1)
|
||||||||
Performance Measure
|
Weighting
|
Threshold
|
Target
|
Stretch
|
||||
Return on average assets (2)
|
50%
|
50
th
|
65
th
|
80
th
|
||||
Total shareholder return (3)
|
50%
|
50
th
|
65
th
|
80
th
|
||||
Payout as a percentage of target
|
50%
|
100%
|
150%
|
(1)
|
Peer companies for any given performance cycle will consist of all U.S. commercial banks with total assets between 50% and 200% of Banner’s total assets as of the last day of the performance cycle.
|
(2)
|
Return on average assets determined based on net income before income taxes and before provision for loan and lease losses from April 1, 2013 through December 31, 2015.
|
(3)
|
Total shareholder return from April 1, 2013 through December 31, 2015, assuming that dividends paid during the period are reinvested in company shares on the date paid.
|
Executive
|
Total Target
Stock-based Award
|
Restricted
Stock Award
|
Target Performance
Share Award
|
|||
Mark J. Grescovich
|
70%
|
30%
|
40%
|
|||
Other named executive officers
|
40%
|
20%
|
20%
|
•
|
provide employees incentives that appropriately balance risk and reward;
|
|
•
|
be compatible with effective controls and risk-management; and
|
|
•
|
be supported by strong corporate governance, including active and effective oversight by the bank’s board of directors.
|
|
1.
|
do not encourage imprudent risk-taking behavior;
|
|
2.
|
appear to appropriately balance risk and reward; and
|
|
3.
|
are compatible with effective controls and risk management practices.
|
|
Michael M. Smith, Chair
|
|
Connie R. Collingsworth
|
|
Constance H. Kravas
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock
Awards
($)(1)
|
Non-
equity
Incentive
Plan
Compen-
sation
($)
|
Change in
Pension
Value and
Non-
qualified
Deferred
Compensation
Earnings
($)(2)
|
All Other
Compen-
sation
($)(3)
|
Total ($)
|
||||||||
Mark J. Grescovich
|
2013
|
715,000
|
--
|
812,924
|
360,131
|
--
|
26,297
|
1,914,352
|
||||||||
President and Chief
|
2012
|
670,833
|
290,000
|
300,000
|
--
|
--
|
7,540
|
1,268,373
|
||||||||
Executive Officer
|
2011
|
600,000
|
--
|
250,000
|
--
|
--
|
69,545
|
919,545
|
||||||||
Lloyd W. Baker
|
2013
|
253,542
|
--
|
117,276
|
70,485
|
4,485 (4)
|
17,990
|
463,778
|
||||||||
Executive Vice President,
|
2012
|
250,000
|
50,000
|
65,820
|
--
|
107,012 (4)
|
9,238
|
482,070
|
||||||||
Chief Financial Officer
|
2011
|
250,000
|
--
|
--
|
--
|
186,705 (4)
|
18,518
|
455,223
|
||||||||
Richard B. Barton
|
2013
|
257,598
|
--
|
119,117
|
71,612
|
178,409 (5)
|
29,578
|
656,314
|
||||||||
Executive Vice President,
|
2012
|
254,000
|
75,000
|
65,820
|
--
|
139,723 (5)
|
22,580
|
514,826
|
||||||||
Chief Lending Officer
|
2011
|
254,000
|
--
|
--
|
--
|
188,677 (5)
|
28,526
|
445,491
|
||||||||
Cynthia D. Purcell
|
2013
|
289,038
|
--
|
133,793
|
80,352
|
102,820 (4)
|
11,018
|
617,021
|
||||||||
Executive Vice President,
|
2012
|
285,000
|
45,000
|
--
|
--
|
134,798 (4)
|
4,951
|
469,749
|
||||||||
Retail Banking and Administration
|
2011
|
285,000
|
--
|
--
|
--
|
234,116 (4)
|
14,051
|
533,167
|
||||||||
Douglas M. Bennett (6)
|
2013
|
236,174
|
--
|
109,168
|
65,656
|
215,161 (7)
|
13,666
|
639,825
|
||||||||
Executive Vice President,
|
2012
|
230,578
|
50,000
|
65,820
|
--
|
172,601 (7)
|
6,461
|
525,460
|
||||||||
Real Estate Lending Operations
|
(1)
|
Represents the aggregate grant date fair value of awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, “Compensation – Stock Compensation” (“FASB ASC Topic 718”). For a discussion of valuation assumptions, see Note 16 of the Notes to Consolidated Financial Statements in Banner’s Annual Report on Form 10-K for the year ended December 31, 2013. For 2013, included time-based and performance-based restricted stock awards as described on page 18 of this Proxy Statement under “Short-term Incentive Compensation.” For Mr. Grescovich, the 2013 entry also includes a restricted stock grant with a grant date fair value of $224,994 awarded pursuant to his 2012 discretionary bonus.
|
|||||||||
(2)
|
See “Pension Benefits” below for a detailed discussion of the assumptions used to calculate the Change in Pension Value.
|
|||||||||
(3)
|
Please see the table below for more information on the other compensation paid to our executive officers in 2013.
|
|||||||||
(4)
|
Represents an increase in the value of the executive’s SERP.
|
|||||||||
(5)
|
Consists of the following increases in the value of Mr. Barton’s SERP: $178,326 for 2013, $139,405 for 2012 and $188,421 for 2011; and the following amounts of above-market earnings on deferred compensation: $83 for 2013, $318 for 2012 and $256 for 2011. For Mr. Barton, 2011 and 2012 SERP amounts have been recalculated to conform to the current year’s presentation, which more accurately reflects the SERP agreement.
|
|||||||||
(6)
|
Mr. Bennett was not a named executive officer in 2011.
|
|||||||||
(7)
|
Consists of an increase in the value of Mr. Bennett’s SERP of $215,127 for 2013 and $172,471 for 2012 and above-market earnings on deferred compensation of $34 for 2013 and $130 for 2012.
|
Name
|
Employer
401(k)
Matching
Contribution
($)
|
Dividends
on Vested
Phantom
Stock
Awards ($)
|
Dividends
on
Unvested
Restricted
Stock ($)
|
Life
Insurance
Premium ($)
|
Club
Dues
($)
|
Company
Car
Allowance
($)
|
Total ($)
|
|||||||
Mark J. Grescovich
|
5,100
|
--
|
14,396
|
1,912
|
3,362
|
1,527
|
26,297
|
|||||||
Lloyd W. Baker
|
5,100
|
1,668
|
1,350
|
5,374
|
3,362
|
1,136
|
17,990
|
|||||||
Richard B. Barton
|
5,100
|
1,251
|
1,357
|
5,743
|
10,127
|
6,000
|
29,578
|
|||||||
Cynthia D. Purcell
|
3,345
|
1,668
|
479
|
3,802
|
1,247
|
477
|
11,018
|
|||||||
Douglas M . Bennett
|
5,100
|
1,251
|
1,321
|
4,825
|
--
|
1,169
|
13,666
|
Estimated future payouts
under non-equity incentive plan
awards (1)
|
Estimated future payouts
under equity incentive plan
awards (2)
|
All other
stock awards:
number of
shares of
stock or
|
Grant date
fair
value of
stock
|
|||||||||||||||||||||||||
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
units
(#)
|
and option
awards ($)
|
|||||||||||||||||||
Mark J. Grescovich
|
03/01/13
|
7,460 | 224,994 | |||||||||||||||||||||||||
06/03/13
|
6,545 | 209,571 | ||||||||||||||||||||||||||
06/03/13
|
178,750 | 357,500 | 536,250 | 4,364 | 8,728 | 13,092 | 378,359 | (3) | ||||||||||||||||||||
Lloyd W. Baker
|
06/03/13
|
1,556 | 49,823 | |||||||||||||||||||||||||
06/03/13
|
31,875 | 63,750 | 95,625 | 778 | 1,556 | 2,334 | 67,453 | (3) | ||||||||||||||||||||
Richard B. Barton
|
06/03/13
|
1,581 | 50,624 | |||||||||||||||||||||||||
06/03/13
|
32,385 | 64,770 | 97,155 | 790 | 1,580 | 2,370 | 68,493 | (3) | ||||||||||||||||||||
Cynthia D. Purcell
|
06/03/13
|
1,774 | 56,803 | |||||||||||||||||||||||||
06/03/13
|
36,338 | 72,675 | 109,013 | 888 | 1,776 | 2,664 | 76,990 | (3) | ||||||||||||||||||||
Douglas M. Bennett
|
06/03/13
|
1,449 | 46,397 | |||||||||||||||||||||||||
06/03/13
|
29,692 | 59,383 | 89,075 | 724 | 1,448 | 2,172 | 62,771 | (3) |
(1) |
Represents the potential range of awards payable under our 2013 Annual Incentive Plan. The performance goals and measurements associated with this Plan that generate the awards set forth above are provided in the “Short-term Incentive Compensation” section beginning on page 18.
|
(2) |
Represents the potential range of restricted stock awards payable under our 2013 Long-term Incentive Plan subject to performance measurements. The performance goals and measurements associated with this Plan that generate the awards set forth above are provided in the “Long-term Incentive Compensation” section beginning on page 20.
|
(3) |
The fair value of the portion of the performance-based stock that is tied to return on average assets is based on the stock price on the date of grant. The fair value of the portion of the performance-based stock that is tied to total shareholder return is based on a statistical “Monte Carlo simulation” modeling technique that simulates potential stock price movements and all potential outcomes of achievement of the goal.
|
Option Awards (1)
|
Stock Awards
|
|||||||||||||||||||||||||||
Name
|
Grant Date (1)
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price ($)
|
Option
Expira-
tion
Date
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)
|
|||||||||||||||||||||
Mark J. Grescovich
|
-- | -- | -- | -- | -- | 23,048 | (2) | 1,033,011 | ||||||||||||||||||||
6,545 | (3) | 293,347 | ||||||||||||||||||||||||||
13,092 | (4) | 586,783 | ||||||||||||||||||||||||||
Lloyd W. Baker
|
12/16/04
|
285 | -- | 221.97 |
12/16/14
|
|||||||||||||||||||||||
2,000 | (5) | 89,640 | ||||||||||||||||||||||||||
1,556 | (3) | 69,740 | ||||||||||||||||||||||||||
2,334 | (4) | 104,610 | ||||||||||||||||||||||||||
Richard B. Barton
|
12/16/04
|
285 | -- | 221.97 |
12/16/14
|
|||||||||||||||||||||||
2,000 | (5) | 89,640 | ||||||||||||||||||||||||||
1,581 | (3) | 70,860 | ||||||||||||||||||||||||||
2,730 | (4) | 106,223 | ||||||||||||||||||||||||||
(Table continues on following page)
|
Option Awards (1)
|
Stock Awards
|
|||||||||||||||||||||||||||
Name
|
Grant Date (1)
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option
Exercise
Price ($)
|
Option
Expira-
tion
Date
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($)
|
|||||||||||||||||||||
Cynthia D. Purcell
|
12/16/04 | 285 | -- | 221.97 | 12/16/14 | |||||||||||||||||||||||
1,774 | (3) | 79,511 | ||||||||||||||||||||||||||
2,664 | (4) | 119,400 | ||||||||||||||||||||||||||
Douglas M. Bennett
|
12/16/04
|
285 | -- | 221.97 |
12/16/14
|
|||||||||||||||||||||||
2,000 | (5) | 89,640 | ||||||||||||||||||||||||||
1,449 | (3) | 64,944 | ||||||||||||||||||||||||||
2,172 | (4) | 97,349 |
(1)
|
Option grants vest pro rata over a five-year period from the grant date, with the first 20% vesting one year after the grant date.
|
(2)
|
Consists of awards of restricted stock on August 22, 2011, April 24, 2012 and March 1, 2013 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the grant date.
|
(3)
|
Consists of awards of restricted stock on June 3, 2013 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the grant date.
|
(4)
|
Consists of awards of restricted stock on June 3, 2013 which vest after attainment of performance goals. The measurement period is April 1, 2013 through December 31, 2015.
|
(5)
|
Consists of awards of restricted stock on July 2, 2012 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the grant date.
|
Option Awards
|
Stock Awards
|
|||||||
Number of
|
Number of
|
|||||||
Shares
|
Value
|
Shares
|
Value
|
|||||
Acquired on
|
Realized on
|
Acquired on
|
Realized on
|
|||||
Exercise
|
Exercise
|
Vesting
|
Vesting
|
|||||
Name
|
(#)
|
($)
|
(#)
|
($)
|
||||
Mark J. Grescovich
|
--
|
--
|
16,263
|
551,932
|
||||
Lloyd W. Baker
|
--
|
--
|
1,000
|
34,875
|
||||
Richard B. Barton
|
--
|
--
|
1,000
|
34,875
|
||||
Cynthia D. Purcell
|
--
|
--
|
--
|
--
|
||||
Douglas M. Bennett
|
--
|
--
|
1,000
|
34,875
|
Name
|
Plan Name
|
Number of
Years
Credited
Service (#)
|
Present
Value of
Accumulated
Benefit
($)(1)
|
Payments
During Last
Fiscal Year
($)
|
||||
Mark J. Grescovich
|
N/A
|
--
|
--
|
--
|
||||
Lloyd W. Baker
|
Supplemental Executive Retirement Program
|
19
|
1,740,517
|
--
|
||||
Richard B. Barton
|
Supplemental Executive Retirement Program
|
7
|
900,081
|
--
|
||||
Cynthia D. Purcell
|
Supplemental Executive Retirement Program
|
29
|
1,298,765
|
--
|
||||
Douglas M. Bennett
|
Supplemental Executive Retirement Program
|
7
|
907,687
|
--
|
(1)
|
Amounts shown assume normal retirement age as defined in individual agreements and an assumed life of 82 years, but not less than 15 years following retirement, for the recipient and recipient’s spouse, with the projected cash flows discounted at 5% to calculate the resulting present value.
|
Name
|
Executive
Contributions
in Last FY ($)
|
Registrant
Contributions
in Last FY ($)
|
Aggregate
Earnings in
Last FY ($)(1)
|
Aggregate
Withdrawals/
Distributions ($)
|
Aggregate
Balance
at FYE ($)(2)
|
|||||||||||||||
Mark J. Grescovich
|
-- | -- | -- | -- | -- | |||||||||||||||
Lloyd W. Baker
|
-- | -- | 7,614 | -- | 23,534 | |||||||||||||||
Richard B. Barton
|
-- | -- | 834 | -- | 19,666 | |||||||||||||||
Cynthia D. Purcell
|
-- | -- | 3,557 | -- | 14,514 | |||||||||||||||
Douglas M. Bennett
|
-- | -- | 593 | -- | 8,811 |
(1)
|
The following amounts, constituting above-market earnings, were reported as compensation in 2013 in the Summary Compensation Table: for Mr. Barton, $83; and for Mr. Bennett, $34.
|
(2)
|
Includes prior period executive contributions and employer contributions to the deferred compensation plan and for Mr. Barton and Mr. Bennett, also includes above-market earnings. Of these amounts, the following amounts were previously reported as other compensation to the officers in the Summary Compensation Table: for Mr. Baker, $4,310; for Mr. Barton, $5,919; for Ms. Purcell, $4,772; and for Mr. Bennett, $130.
|
Death ($)
|
Disability ($)
|
Involuntary
Termination ($)
|
Involuntary
Termination
Following
Change in
Control ($)
|
Early
Retirement ($)
|
Normal
Retirement ($)
|
||||||||||||
Mark J. Grescovich
|
|||||||||||||||||
Employment Agreement
|
--
|
602,903
|
(1)
|
2,160,807
|
3,241,211
|
--
|
--
|
||||||||||
Equity Plans
|
1,913,141
|
(2)
|
1,913,141
|
(2)
|
--
|
1,913,141
|
(2)
|
--
|
--
|
||||||||
Lloyd W. Baker
|
|||||||||||||||||
Employment Agreement
|
--
|
--
|
637,500
|
822,540
|
--
|
--
|
|||||||||||
SERP
|
75,779
|
(4)
|
151,557
|
(4)
|
151,557
|
(5)
|
151,557
|
(5)
|
151,557
|
(5)
|
151,557
|
(4)
|
|||||
Equity Plans
|
263,990
|
263,990
|
(2)
|
--
|
263,990
|
(2)
|
--
|
--
|
|||||||||
Richard B. Barton
|
|||||||||||||||||
Employment Agreement
|
--
|
--
|
626,110
|
850,172
|
--
|
--
|
|||||||||||
SERP
|
42,530
|
(4)
|
85,059
|
(4)
|
85,059
|
(3)
|
85,059
|
(6)
|
85,059
|
(6)
|
85,059
|
(4)
|
|||||
Equity Plans
|
266,723
|
(2)
|
266,723
|
(2)
|
--
|
266,723
|
(2)
|
--
|
--
|
||||||||
Cynthia D. Purcell
|
|||||||||||||||||
Employment Agreement
|
--
|
193,800
|
(3)
|
629,850
|
930,519
|
--
|
--
|
||||||||||
SERP
|
77,646
|
(4)
|
155,292
|
(4)
|
117,033
|
(5)
|
117,033
|
(5)
|
117,033
|
(5)
|
137,264
|
(4)
|
|||||
Equity Plans
|
198,911
|
(2)
|
198,911
|
(2)
|
--
|
198,911
|
(2)
|
--
|
--
|
||||||||
Douglas M. Bennett
|
|||||||||||||||||
Employment Agreement
|
--
|
158,354
|
(3)
|
613,624
|
754,116
|
--
|
--
|
||||||||||
SERP
|
37,583
|
(4)
|
75,165
|
(4)
|
75,165
|
(5)
|
75,165
|
(5)
|
75,165
|
(5)
|
75,165
|
(4)
|
|||||
Equity Plans
|
251,933
|
(2)
|
251,933
|
(2)
|
--
|
251,933
|
(2)
|
--
|
--
|
(1)
|
Annually through the term of the employment agreement unless the Board exercises an election to discontinue.
|
(2)
|
Represents accelerated vesting of restricted stock. Performance-based vesting would be determined based on actual performance.
|
(3)
|
Indicates annual payments; payable only until age 65.
|
(4)
|
Indicates annual payments.
|
(5)
|
Indicates annual payments (which may not begin before age 62).
|
(6)
|
Indicates annual payments (which may not begin before age 68).
|
•
|
if the employment or service of a participant terminates before the end of a performance period due to death, disability or retirement after reaching age 65, 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.
|
|
•
|
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 cancelled; however, if the participant’s employment or service is terminated by Banner 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 paragraph.
|
|
•
|
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.
|
• |
No liberal share counting
. The Plan prohibits the reuse of shares withheld or delivered to satisfy the exercise price of an option or to satisfy tax withholding requirements.
|
• |
No repricing of stock options and stock appreciation rights
. The Plan prohibits the repricing of stock options or stock appreciation rights, or the exchange of a stock option or stock appreciation right at a time when the exercise price exceeds the fair market value of the shares (i.e., when the shares are “underwater”).
|
• |
No discounted stock options
. All stock options must have an exercise price equal to or greater than the fair market value of the underlying common stock on the date of grant.
|
• |
No dividends on unearned awards
. Except for restricted stock, the Plan prohibits the payment of dividends on unearned awards, unless provided in an award agreement.
|
• |
Limit on awards to any one individual
. The Plan imposes a maximum number of shares or cash performance awards that may be granted to any one individual in any 12-month period.
|
Fiscal Year
|
Restricted Stock
Granted
|
Options
Granted
|
Total Granted
|
Basic
Weighted Average
Number of Common
Shares Outstanding
|
Gross Burn
Rate (1)
|
|||||
2013
|
98,891
|
--
|
98,891
|
19,397,360
|
.0051
|
|||||
2012
|
92,035
|
--
|
92,035
|
18,722,859
|
.0049
|
|||||
2011
|
17,692
|
--
|
17,692
|
16,752,848
|
.0011
|
|||||
Three-year average
|
69,539
|
--
|
69,539
|
18,291,022
|
.0038
|
(1)
|
Gross burn rate is defined as the number of shares of common stock underlying awards granted in the year divided by the basic
weighted average number of shares of common stock outstanding.
|
As of March 1, 2014
|
|
Shares underlying outstanding awards
|
172,939
|
Shares outstanding
|
19,518,834
|
Overhang (shares underlying outstanding awards/shares outstanding)
|
0.89%
|
Shares available for grant under prior plans
|
101,781
|
Total overhang (shares underlying outstanding awards and plan shares available/shares outstanding)
|
1.41%
|
Shares Board seeks approval for
|
900,000
|
As a percentage of shares outstanding
|
4.61%
|
Plan category
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price
of outstanding
options, warrants
and rights
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
|
|||
(a)
|
(b)
|
(c)
|
||||
Equity compensation plans approved
|
||||||
by security holders:
|
26,364
|
$206.27
|
110,574
|
|||
Equity compensation plans not
|
||||||
approved by security holders:
|
--
|
N/A
|
--
|
|||
Total
|
26,364
|
110,574
|
• |
The Audit Committee has completed its review and discussion of the 2013 audited financial statements with management;
|
• |
The Audit Committee has discussed with the independent auditor (Moss Adams LLP) the matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit
Committees
, as amended, as adopted by the Public Company Accounting Oversight Board in Rule 3200T;
|
• |
The Audit Committee has received written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence, and has discussed with the independent auditor the independent auditor’s independence; and
|
• |
The Audit Committee has, based on its review and discussions with management of the 2013 audited financial statements and discussions with the independent auditors, recommended to the Board of
|
Directors that Banner’s audited financial statements for the year ended December 31, 2013 be included in its Annual Report
|
|
Gordon E. Budke, Chairman
|
|
Robert D. Adams
|
|
D. Michael Jones
|
|
John R. Layman
|
Year Ended December 31,
|
|||
2013
|
2012
|
||
Audit Fees (1)
|
$464,756
|
$449,486
|
|
Audit-Related Fees
|
30,520
|
84,273
|
|
Tax Fees
|
120,615
|
100,250
|
|
All Other Fees
|
--
|
--
|
|
___________ |
(1)
|
Fees for 2013 include estimated amounts to be billed.
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
/s/ ALBERT H. MARSHALL | |
ALBERT H. MARSHALL | |
SECRETARY
|
|
1.
|
Develop guidelines and policies for director compensation, coordinating actions between the Corporation Compensation Committee and the Bank Compensation Committee.
|
|
2.
|
Develop guidelines and policies for executive compensation, coordinating actions between the Corporation Compensation Committee and the Bank Compensation Committee.
|
|
3.
|
Make regular reports to the appropriate Board of Directors.
|
|
4.
|
At least annually, review the compensation policies to ensure that they are effective in meeting goals for compensation and make new recommendations, as needed.
|
|
5.
|
Review and approve the list of a peer group of companies to which the Corporation and the Bank shall compare themselves for compensation purposes.
|
|
6.
|
If necessary, engage consultants, legal counsel or other advisers ("compensation advisers") to provide comparative information regarding compensation and benefits, and advice on issues involving laws and regulations governing compensation.
|
|
7.
|
Review and approve other large compensation expense categories such as employee benefit plans.
|
|
8.
|
At least annually, review and update (if necessary) this Charter, as conditions dictate.
|
|
9.
|
Review director compensation levels and recommend, as necessary, changes in the compensation levels, with equity ownership in the Corporation encouraged.
|
|
10.
|
Receive and review an annual report from the Chief Executive Officer which includes the performance assessment for all senior officers and recommendations for compensation levels, and which also includes salary recommendations for all employees.
|
|
11.
|
Set compensation for all executive management officers, other than the Chief Executive Officer, based on the recommendations of the Chief Executive Officer.
|
|
12.
|
On an annual basis, review and approve goals and objectives relevant to compensation of the Chief Executive Officer, evaluate the Chief Executive Officer’s performance in light of those goals and objectives, and determine the Chief Executive Officer’s compensation based on this evaluation. The Chief Executive Officer shall not be present during voting on deliberations on his/her compensation.
|
|
13.
|
Annually review and approve any (i) employment agreements, severance agreements and change in control agreements or provisions, in each case, when and if appropriate, and (ii) any special or supplemental benefits.
|
|
14.
|
Adopt, administer, approve and ratify awards under incentive compensation and stock plans, including amendments to the awards made under any such plans, and review and monitor awards under such plans.
|
|
15.
|
Prepare a report on executive compensation for inclusion in the Corporation’s annual proxy statement, consulting with the Corporation’s legal counsel, if necessary.
|
●
|
the provision of other services to the Corporation by the person that employs the compensation adviser;
|
●
|
the amount of fees received from the Corporation by the person that employs the compensation adviser, as a percentage of the total revenue of the person that employs the compensation adviser;
|
●
|
the policies and procedures of the person that employs the compensation adviser that are designed to prevent conflicts of interest;
|
●
|
any business or personal relationship of the compensation adviser with a member of the Committee;
|
●
|
any stock of the Corporation owned by the compensation adviser; and
|
●
|
any business or personal relationship of the compensation adviser or the person employing the adviser with an Executive Officer of the Corporation.
|
I.
|
Statement of Purpose
|
II.
|
Composition
|
III.
|
Meetings
|
IV.
|
Authority
|
V.
|
Charter
|
VI.
|
Responsibilities and Duties
|
|
1.
|
Approve all audit engagement fees and terms and all non-audit engagements with the independent auditor. The Committee may delegate authority to pre-approve non-audit services to one or more members of the Committee. If this authority is delegated, all approved non-audit services will be presented to the Committee at its next scheduled meeting.
|
|
2.
|
Ensure receipt directly from the independent auditor any and all reports and annually a formal written statement delineating all relationships between the auditor and the Corporation, consistent with Independence Standards Board Standard 1. On an annual basis, the Committee should review and discuss with the auditor any such relationships to determine the auditor’s independence and objectivity. The Committee should take appropriate action to oversee the independence of the auditor.
|
|
3.
|
Not less than quarterly, consult with the independent auditor out of the presence of management about internal controls and the completeness and accuracy of the Corporation’s financial statements.
|
|
4.
|
Ensure that the lead audit partner of the independent auditor and the audit partner responsible for reviewing the audit are rotated at least every five years or such shorter period as may be required by law, rule or regulation.
|
|
5.
|
Review and discuss with financial management and the independent auditor the financial statements, including disclosures made in Management’s Discussion and Analysis of Financial Condition and Results of Operations, in the Corporation’s reports on Forms 10-Q and 10-K and annual reports to shareholders prior to any such report’s filing with the SEC or prior to the release of earnings. The Committee shall determine whether or not the audited financial statements should be included in the Corporation’s Form 10-K.
|
|
6.
|
Review and discuss with management and the independent auditor the Corporation’s quarterly financial statements prior to the filing of its Form 10-Q, including the results of the independent auditor’s review of the quarterly financial statements.
|
|
7.
|
Discuss with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of the Corporation’s financial statements, including any significant changes in the Corporation’s selection or application of accounting principles, any major issues as to the adequacy of the Corporation’s internal controls and any special steps adopted in light of material control deficiencies.
|
|
8.
|
Review and discuss with management and the independent auditor any major issues as to the adequacy of the Corporation’s internal controls, any special steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting.
|
|
9.
|
Review and discuss with management and the independent auditor the Corporation’s internal controls report and the independent auditor’s attestation of the report prior to the filing of the Corporation’s Form 10-K.
|
|
10.
|
Review and discuss quarterly reports from the independent auditor on:
|
|
11.
|
Review and discuss with management the Corporation’s earnings press releases, including the use of “pro forma” or “adjusted” non-GAAP information, as well as financial information and earnings guidance provided to analysts and rating agencies. Such review may be done generally (consisting of discussing the types of information to be disclosed and the types of presentations to be made) and the chair of the Committee may represent the entire Committee for the purposes of this review.
|
|
12.
|
Discuss with management and the independent auditor the effect of regulatory and accounting initiatives as well as off-balance sheet structures on the Corporation’s financial statements.
|
|
13.
|
In coordination with the Board-level Risk Committee, discuss with management the Corporation’s major financial risk exposures and the steps management has taken to monitor and control such exposures.
|
|
14.
|
Discuss with the independent auditor the matters required to be discussed by Statement on Auditing Standards No. 61 relating to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope of activities or access to requested information, and any significant disagreements with management.
|
|
15.
|
Review disclosures made to the Audit Committee by the Corporation’s CEO and CFO during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud involving management or other employees who have a significant role in the Corporation’s internal controls.
|
|
16.
|
Review the minutes of the Corporation’s Disclosure Committee and consider, when practicable, having a member of the Audit Committee attend such meetings.
|
|
17.
|
Receive regular reports from the Audit Committee representative serving on the Board-level Risk Committee.
|
|
18.
|
Review the activities of and receive reports from the Compensation Committee to provide support and assurance of compliance with statutory requirements.
|
|
19.
|
Review and approve the Internal Audit charter annually.
|
|
20.
|
Be responsible for recommendations to Management as to the appointment, annual review, compensation and replacement of the head of Internal Audit.
|
|
21.
|
Review the significant reports to management prepared by the internal auditing department and management’s responses.
|
|
22.
|
Review and discuss with the independent auditor and management the internal audit department responsibilities, including approval of the annual internal audit plan and budget, adequacy of staffing and any recommended changes in the planned scope of the internal audit.
|
|
23.
|
Ensure there are no unjustified restrictions or limitations on the internal audit function.
|
|
24.
|
Review the effectiveness of the internal audit activity.
|
|
25.
|
Maintain procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by employee or others of concerns regarding questionable accounting and auditing matters.
|
|
26.
|
Obtain from the independent auditor assurance that, if it detects or becomes aware of any illegal act, to assure that the Audit Committee is adequately informed and to provide a report if the independent auditor has reached specified conclusions with respect to such illegal acts.
|
|
27.
|
Obtain reports from management, the Corporation’s Chief Internal Auditor and the independent auditor that the Corporation is in conformity with applicable legal requirements and the Corporation’s Code of Business Conduct and Ethics, which includes special ethics obligations for employees with financial reporting responsibilities. Advise the Board with respect to the Corporation’s policies and procedures regarding compliance with applicable laws and regulations and with the Corporation’s Code of Business Conduct and Ethics.
|
|
28.
|
Ensure that the Corporation conducts on an ongoing basis an appropriate review of all related party transactions and that all such transactions are approved by the Audit Committee or another independent body of the Board of Directors and to initiate any special investigations of conflicts of interest and compliance with federal, state, local and foreign laws and regulations, including the Foreign Corrupt Practices Act, as may be warranted.
|
|
29.
|
Discuss with management and the independent auditor any correspondence with regulators or governmental agencies and any published reports which raise material issues regarding the Corporation’s financial statements or accounting policies.
|
|
30.
|
Review the significant results of regulatory examinations of the Corporation related to the Corporation’s financial statements, internal controls or accounting policies.
|
|
31.
|
Discuss with the Corporation’s General Counsel, preferably quarterly, legal matters that may have a material impact on the financial statements or the Corporation’s compliance policies.
|
|
32.
|
Discuss with management any second opinions sought from an accounting firm other than the Corporation’s independent auditor, including the substance and reasons for seeking any such opinion.
|
|
33.
|
Review the Corporation’s policies and procedures for regular review of the expense accounts of the Corporation’s executive management.
|
|
34.
|
At its discretion, request that management, the independent auditor or the internal auditors undertake special projects or investigations which the Audit Committee deems necessary to fulfill its responsibilities.
|
|
35.
|
Perform any other activities consistent with this Charter, the Corporation’s By-laws and governing law; as the Committee or Board deems necessary or appropriate.
|
VII.
|
Limitations of Audit Committee’s Roles
|
Page | |||
ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION | 1 | ||
Section 1.1 | Establishment of the Plan | 1 | |
Section 1.2 | Purpose of the Plan | 1 | |
Section 1.3 | Duration of the Plan | 1 | |
ARTICLE II DEFINITIONS | 1 | ||
ARTICLE III AVAILABLE SHARES- ELIGIBILITY - PARTICIPATION | 4 | ||
Section 3.1 | Shares Available Under the Plan | 4 | |
Section 3.2 | Maximum Awards | 5 | |
Section 3.3 | Computation of Shares Issued | 5 | |
Section 3.4 | Eligibility | 5 | |
Section 3.5 | Actual Participation | 5 | |
ARTICLE IV AMINISTRATION | 5 | ||
Section 4.1 | Committee | 5 | |
Section 4.2 | Committee Powers | 6 | |
ARTICLE V STOCK OPTIONS | 6 | ||
Section 5.1 | Grant of Options | 6 | |
Section 5.2 | Size of Option | 6 | |
Section 5.3 | Exercise Price | 6 | |
Section 5.4 | Exercise Period | 7 | |
Section 5.5 | Vesting Date | 7 | |
Section 5.6 | Restrictions on Incentive Stock Options | 7 | |
Section 5.7 | Method of Exercise | 8 | |
Section 5.8 | Limitations on Options | 9 | |
Section 5.9 | Prohibition Against Option Repricing | 9 | |
ARTICLE VI STOCK APPRECIATION RIGHTS | 10 | ||
Section 6.1 | Grant of Stock Appreciation Rights | 10 | |
Section 6.2 | Size of Stock Appreciation Right | 10 | |
Section 6.3 | Exercise Price | 10 | |
Section 6.4 | Exercise Period | 10 | |
Section 6.5 | Vesting Date | 11 | |
Section 6.6 | Method of Exercise | 11 | |
Section 6.7 | Limitations on Stock Appreciation Rights | 12 | |
Section 6.8 | Prohibition Against Stock Appreciation Right Repricing | 12 | |
ARTICLE VII RESTRICTED STOCK AWARDS | 13 | ||
Section 7.1 | In General | 13 | |
Section 7.2 | Vesting Date | 14 | |
Section 7.3 | Dividend Rights | 14 | |
Section 7.4 | Voting Rights | 15 | |
Section 7.5 | Designation of Beneficiary | 15 | |
Section 7.6 | Manner of Distribution of Awards | 15 | |
ARTICLE VIII PERFORMANCE SHARES AND PERFORMANCE UNITS | 15 | ||
Section 8.1 | Grant of Performance Shares and Performance Units | 15 | |
Section 8.2 | Amount of Award | 15 | |
Section 8.3 | Award Agreement | 15 |
Section 8.4 | Performance Goals | 16 | |
Section 8.5 | Discretionary Adjustments | 16 | |
Section 8.6 | Payment of Awards | 16 | |
Section 8.7 | Termination of Employment or Service Due to Death, Disability or Retirement | 16 | |
Section 8.8 | Termination of Employment or Service for Other Reasons | 16 | |
Section 8.9 | Nontransferability | 17 | |
ARTICLE IX OTHER STOCK-BASED AWARDS AND CASH AWARDS | 17 | ||
Section 9.1 | Other Stock Based Awards | 17 | |
Section 9.2 | Cash Awards | 17 | |
Section 9.3 | Section 409A Compliance | 17 | |
ARTICLE X QUALIFIED PERFORMANCE-BASED COMPENSATION | 17 | ||
Section 10.1 | General | 17 | |
Section 10.2 | Qualifying Perforance Measures | 18 | |
ARTICLE XI ADDITIONAL TAX PROVISION | 19 | ||
Section 11.1 | Tax Withholding Rights | 19 | |
ARTICLE XII AMENDMENT AND TERMINATION | 19 | ||
Section 12.1 | T ermination | 19 | |
Section 12.2 | Amendment | 19 | |
Section 12.3 | Adjustments in the Event of Business Reorganization | 19 | |
ARTICLE XIII MISCELLANEOUS | 20 | ||
Section 13.1 | Status as an Employee Benefit Plan | 20 | |
Section 13.2 | No Right to Continued Service | 20 | |
Section 13.3 | Construction of Language | 20 | |
Section 13.4 | Severability | 20 | |
Section 13.5 | Governing Law | 20 | |
Section 13.6 | Headings. | 20 | |
Section 13.7 | Non-Alienation of Benefits | 20 | |
Section 13.8 | Notices | 21 | |
Section 13.9 | Approval of Shareholders | 21 | |
Section 13.10 | Clawback | 21 | |
Section 13.11 | Compliance with Section 409A | 21 | |
Banner Corporation
10
South First Avenue
Walla Walla, Washington 99362
Attention: Corporate Secretary
|
FOR
|
VOTE
WITHHELD
|
||
1
|
The election as director of the nominees listed below (except as marked to the contrary below)
|
[ ]
|
[ ]
|
Three-Year Term
:
|
|||
Jesse G. Foster
|
|||
Mark J. Grescovich
|
|||
D. Michael Jones
|
|||
David A. Klaue
|
|||
Two-Year Term
:
|
|||
Brent A. Orrico
|
|||
FOR
|
AGAINST
|
ABSTAIN
|
||
2
|
Advisory (non-binding) vote to approve the compensation of
Banner Corporation’s named executive officers.
|
[ ]
|
[ ]
|
[ ]
|
3
|
The adoption of the Banner Corporation 2014 Omnibus Equity
|
||||||
Plan.
|
[ ]
|
[ ]
|
[ ]
|
||||
4
|
The ratification of the Audit Committee’s selection of Moss
Adams LLP as the independent auditor for the year ending
December 31, 2014.
|
[ ]
|
[ ]
|
[ ]
|
|||
5
|
In their discretion, upon such other matters as may
|
||||||
properly come before the meeting.
|
|||||||
The Board of Directors recommends a vote FOR all proposals.
|
PRINT NAME OF SHAREHOLDER
|
PRINT NAME OF SHAREHOLDER
|
|
SIGNATURE OF SHAREHOLDER
|
SIGNATURE OF SHAREHOLDER
|
|