Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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[X]
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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BANNER CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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[X]
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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N/A
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(2)
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Aggregate number of securities to which transactions applies:
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N/A
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
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N/A
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(4)
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Proposed maximum aggregate value of transaction:
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N/A
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(5)
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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N/A
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(2)
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Form, Schedule or Registration Statement No.:
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N/A
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(3)
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Filing Party:
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(4)
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Date Filed:
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Sincerely,
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/s/ Mark J. Grescovich
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Mark J. Grescovich
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President and Chief Executive Officer |
Proposal 1. |
Election of five directors to each serve for a three-year term and one director to serve for a one-year term.
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Proposal 2. |
Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
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Proposal 3. |
Adoption of the Banner Corporation 2018 Omnibus Incentive Plan.
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Proposal 4. |
Ratification of the Audit Committee's selection of Moss Adams LLP as our independent registered public accounting firm for 2018.
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BY ORDER OF THE BOARD OF DIRECTORS |
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/s/ ALBERT H. MARSHALL
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ALBERT H. MARSHALL
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SECRETARY |
Date: |
Tuesday, April 24, 2018
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Time: |
10:00 a.m., local time
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Place: |
Marcus Whitman Hotel, 6 W. Rose Street, Walla Walla, Washington
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Proposal 1. |
Election of five directors to each serve for a three-year term and one director to serve for a one-year term.
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Proposal 2. |
Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
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Proposal 3. |
Adoption of the Banner Corporation 2018 Omnibus Incentive Plan.
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Proposal 4. |
Ratification of the Audit Committee's selection of Moss Adams LLP as our independent registered public accounting firm for 2018.
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submitting a new proxy with a later date;
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notifying Banner's Secretary in writing before the annual meeting that you have revoked your proxy; or
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voting in person at the annual meeting.
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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;
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each director and director nominee of Banner;
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each executive officer named in the Summary Compensation Table appearing under "Executive Compensation" below (known as "named executive officers"); and
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all current directors and executive officers of Banner and Banner Bank as a group.
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Name
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Number of Shares
Beneficially Owned (1)
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Percent of Voting
Shares Outstanding (%)
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Beneficial Owners of More Than 5%
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BlackRock, Inc.
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4,586,608
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(2)
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14.06
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The Vanguard Group
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2,979,850
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(3)
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9.13
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The Bank of New York Mellon Corporation
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2,151,086
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(4)
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6.59
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Directors
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Robert D. Adams
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22,246
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*
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Gordon E. Budke
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5,407
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(5)
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*
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Connie R. Collingsworth
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3,478
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(6)
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*
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Roberto R. Herencia
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1,604
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*
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David A. Klaue
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94,551
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*
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John R. Layman
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21,242
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(7)
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*
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David I. Matson
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1,604
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*
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Brent A. Orrico
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73,695
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(8)
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*
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Merline Saintil
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907
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*
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Gary Sirmon
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20,670
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(9)
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*
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Michael M. Smith
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28,020
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(10)
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*
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Director Nominees
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Kevin F. Riordan
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--
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*
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Terry Schwakopf
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--
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*
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Named Executive Officers
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Mark J. Grescovich**
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118,784
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*
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Lloyd W. Baker
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28,833
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(11)
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*
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Peter J. Conner
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20,320
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*
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Cynthia D. Purcell
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13,870
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*
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Judith A. Steiner
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4,548
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*
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All Executive Officers and Directors as a Group (27 persons)
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574,470
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1.76
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__________- |
* |
Less than 1% of shares outstanding.
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** |
Also a director of Banner.
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(1) |
Shares of restricted stock granted under the 2012 Restricted Stock and Incentive Bonus Plan and the 2014 Omnibus Incentive Plan (Amended and Restated), as to which holders have voting but not investment power, are included as follows: Mr. Budke, 1,088 shares; Mr. Herencia, 907 shares; Mr. Grescovich, 13,142 shares; Mr. Baker, 3,189 shares; Mr. Conner, 5,115 shares; Ms. Purcell, 3,677 shares; Ms. Steiner, 2,166 shares; and all executive officers and directors as a group, 56,187 shares.
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(2) |
Based on a Schedule 13G/A dated January 18, 2018, which reports sole voting power over 4,502,505 shares and sole dispositive power over 4,586,608 shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10022.
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(3) |
Based on a Schedule 13G/A dated February 7, 2018, which reports sole voting power over 36,321 shares, shared voting power over 4,045 shares, sole dispositive power over 2,942,013 shares and shared dispositive power over 37,837 shares. The address for The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
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(4) |
Based on a Schedule 13G/A dated February 7, 2018, which reports that the Bank of New York Mellon Corporation has sole voting power over 1,069,717 shares, sole dispositive power over 1,761,678 shares and shared dispositive power over 385,539 shares, and BNY Mellon IHC, LLC and MBC Investments Corporation each have sole voting power over 1,055,048 shares, sole dispositive power over 1,563,373 shares and shared dispositive power over 385,539 shares. The address for The Bank of New York Mellon Corporation is 225 Liberty Street, New York, New York 10286.
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(5) |
Includes 2,519 shares owned by a trust directed by Mr. Budke and his wife.
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(6) |
Includes 100 shares held jointly with her husband.
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(7) |
Includes 10,914 shares which have been pledged.
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(8) |
Includes 33,935 shares owned by companies controlled by Mr. Orrico and 18,827 shares owned by trusts directed by Mr. Orrico.
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(9) |
Includes 6,998 shares held jointly with his wife.
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(10) |
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.
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(11) |
Includes 121 shares owned solely by his wife and 8,489 shares held jointly with his wife.
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selecting, evaluating, and retaining competent senior management;
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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;
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monitoring operations to ensure that they are controlled adequately and are in compliance with laws and policies;
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overseeing Banner's business performance; and
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ensuring that the Banks help to meet our communities' credit needs.
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Name
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Fees Earned
or Paid in
Cash ($)(1)
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Stock Awards
($)(2)
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Change in Pension
Value and Nonqualified
Deferred Compensation
Earnings ($)
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All Other
Compensation
($)(3)
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Total ($)
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Robert D. Adams
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52,167
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50,066
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--
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3,974
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106,207
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Gordon E. Budke
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58,667
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60,058
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--
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7,109
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(4)(5)
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125,834
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Connie R. Collingsworth
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53,750
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55,090
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--
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5,078
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(5)
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113,918
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Roberto R. Herencia
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52,667
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50,066
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--
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2,002
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(4)
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104,735
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David A. Klaue
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43,667
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50,066
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--
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3,974
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97,707
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John R. Layman
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59,667
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50,066
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--
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3,974
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113,707
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David I. Matson
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59,667
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50,066
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--
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641
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(4)
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110,374
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Brent A. Orrico
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93,250 (6)
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55,090
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--
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3,974
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152,314
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Merline Saintil
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39,667
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50,066
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--
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--
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89,733
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Gary Sirmon
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68,500 (7)
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70,104
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59,200 (8)
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148,156
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(9)
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345,960
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Michael M. Smith
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54,000
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56,304
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--
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4,636
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114,940
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Jesse G. Foster (10)
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13,000
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--
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--
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6,571
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(11)
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19,571
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Michael J. Gillfillan (10)
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11,000
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--
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--
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703
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11,703
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D. Michael Jones (10)
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11,500
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--
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78,716 (12)
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135,924
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(4)(13)
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226,140
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_____________ |
(1) |
Directors Adams, Klaue, Layman, Orrico and Smith deferred all or a portion of their fees into Banner common stock, pursuant to the deferred fee agreements described below.
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(2) |
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 14 of the Notes to Consolidated Financial Statements in Banner's Annual Report on Form 10-K for the year ended December 31, 2017. Consists of awards of restricted stock units (restricted stock for Messrs. Budke and Herencia) on April 28, 2017, which vest on April 24, 2018. The directors had the following number of unvested stock awards or restricted stock units outstanding on December 31, 2017: Directors Adams, Herencia, Klaue, Layman, Matson and Saintil, 907 shares each; Director Budke, 1,088 shares; Directors Collingsworth and Orrico, 998 shares; Director Sirmon, 1,270 shares; and Director Smith, 1,020 shares.
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(3) |
For directors other than Messrs. Herencia, Matson and Jones, and Ms. Saintil, includes dividends on unvested and vested but deferred restricted stock units, as well as a one-time tax gross-up. In 2017, it was determined that dividends on unvested and vested but deferred restricted stock units should have been paid instead of deferred; therefore, dividends that should have been paid in 2015 and 2016 were paid in 2017. The plan documents have been revised to clarify that dividends on restricted stock units can be deferred until settlement of the units. It was further determined that dividends on unvested restricted stock and units should be subject to payroll taxes, which was the rationale for the one-time tax gross-up.
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(4) |
Includes dividends on restricted stock.
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(5) |
Includes 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 the director's behalf.
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(6) |
Includes $30,000 in fees for attending meetings of the Board of Directors of Islanders Bank.
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(7) |
Includes $500 for attending meetings of the Board of Directors of Community Financial Corporation, a subsidiary of Banner Bank.
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(8) |
As a result of changes in the expected life assumption, the present value of Mr. Sirmon's supplemental retirement benefits and salary continuation plan increased by $59,200 in 2017. Had we used the same life expectancy assumption as in the prior year, the value would have decreased by $75,000.
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(9) |
Includes $77,062 pursuant to Mr. Sirmon's salary continuation agreement and $57,604 pursuant to his supplemental retirement agreement (each as described below), as well as country club dues and life insurance premiums paid.
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(10) |
Retired effective April 25, 2017.
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(11) |
Includes life insurance premiums paid.
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(12) |
As a result of changes in the expected life assumption, the present value of Mr. Jones's supplemental retirement benefits and salary continuation plan increased by $74,500 in 2017. Had we used the same life expectancy assumption as in the prior year, the value would have decreased by $99,200. Also includes above-market earnings on deferred compensation of $4,216.
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(13) |
Includes $134,050 pursuant to Mr. Jones's supplemental retirement agreement (as described below), as well as life insurance premiums paid.
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Mark J. Grescovich, President and Chief Executive Officer;
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Lloyd W. Baker, Executive Vice President and Chief Financial Officer, Banner;
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Peter J. Conner, Executive Vice President and Chief Financial Officer, Banner Bank;
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Cynthia D. Purcell, Executive Vice President of Retail Banking and Administration; and
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Judith A. Steiner, Executive Vice President and Chief Risk Officer.
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Total assets at December 31, 2017 were $9.76 billion, postponing the adverse effects of the Durbin Amendment;
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Completed sale of Banner Bank's seven Utah branches generating a gain on sale of $12.2 million;
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$145 million, or 2%, growth in loans despite the Utah sale;
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$125 million, or 4%, growth in non-interest-bearing deposits;
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$140 million, or 2%, growth in core deposits, with core deposits representing 88% of total deposits, an increase from 87% at the end of the prior year;
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Revenues from core operations increased 4% to $479.3 million;
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Net interest margin was 4.24%, compared to 4.20% in 2016;
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Deposit fees increased by 5%;
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Pre-tax net income increased 17% to $151.3 million, compared to $129.6 million in 2016;
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A moderate risk profile in asset quality with non-performing assets of just 0.28% of total assets;
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Substantially enhanced compliance and enterprise risk management platforms;
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Dividends to shareholders increased from $0.88 per share to $1.98 per share, including a $1.00 special dividend per share paid in the third quarter; and
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Repurchased 545,166 shares of common stock at an average price of $56.91 per share.
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Base salaries:
Salary increases were 3% for Mr. Grescovich, Mr. Baker and Ms. Steiner, 3.5% for Mr. Conner and 7% for Ms. Purcell, all consistent with general staff salary increases for the year, except for Ms. Purcell, whose job functions and performance were the major considerations for the increase.
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2017 annual incentive results:
While performance against goals varied by performance measure, each of the named executive officers earned annual incentive payouts between 55% and 78% of their overall target opportunities. Please see the discussion beginning on page 20 for more information.
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2015-2017 performance shares results:
None of the performance shares granted in 2015 for the 2015-2017 performance cycle vested as the threshold performance requirements were not achieved. Please see the discussion beginning on page 22 for more information.
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Regular review of pay versus performance.
The Compensation Committee continually reviews the relationship between executive compensation (particularly Chief Executive Officer) and Banner's performance on both an absolute basis and relative to its compensation benchmarking peer group (described in the section entitled "Compensation Benchmarking").
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Rigorous and diversified performance metrics.
The Compensation Committee annually reviews performance goals for our annual and long-term incentive awards to assure the use of diversified and rigorous but attainable goals.
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No repricing or cash buyouts of underwater stock options or stock appreciation rights.
Exercise prices are not allowed to be reduced, nor are outstanding awards allowed to be replaced with stock options or stock appreciation rights with a lower exercise price, without shareholder approval (except to adjust for stock splits or similar transactions), and Banner does not allow buyouts of underwater stock options or stock appreciation rights under any circumstances.
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Use of double-triggers.
All change-in-control severance arrangements and accelerated vesting on all equity awards have a double-trigger, rather than a single-trigger for benefit eligibility. This means that a change-in-control will not automatically entitle an executive to severance benefits or acceleration of vesting in outstanding equity awards; the executive must also lose his or her job, suffer a significant adverse change to employment terms and conditions, or be denied the continuation (or replacement) of the outstanding unvested awards by the acquiring company.
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No excessive perquisites.
We provide limited perquisites to our executives that are consistent with the practices of our peer group and other comparable financial institutions. Benefits include use of company cars, auto allowances and/or club memberships believed to be advantageous to Banner.
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No tax gross-ups.
Parachute excise tax reimbursements and gross-ups will not be provided in the event of a change-in-control.
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Clawback of compensation.
The Annual and Long-term Incentive Plans both provide that incentive awards are subject to clawback in the event that Banner is required to prepare an accounting restatement due to error, omission or fraud.
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Review of Committee charter.
The Compensation Committee reviews its charter annually to incorporate best-in-class governance practices. The charter is attached to this Proxy Statement as
Appendix B
.
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attract and retain key executives who are vital to our long-term success and are of the highest caliber;
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provide levels of compensation competitive with those offered throughout the financial industry and consistent with our level of performance, complexity and market capitalization;
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motivate executives to enhance long-term shareholder value by granting awards tied to the value of our common stock; and
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integrate the compensation program with our annual and long-term strategic planning and performance measurement processes.
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BancorpSouth, Inc.
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NBT Bancorp Inc.
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Chemical Financial Corporation
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Old National Bancorp
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Columbia Banking System, Inc.
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PacWest Bancorp
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CVB Financial Corp.
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PrivateBancorp, Inc.
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First Interstate BancSystem, Inc.
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Texas Capital Bancshares, Inc.
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First Midwest Bancorp, Inc.
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Trustmark Corporation
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F.N.B. Corporation
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Union Bankshares Corporation
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Fulton Financial Corporation
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United Bankshares, Inc.
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Glacier Bancorp, Inc.
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United Community Banks, Inc.
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Home BancShares, Inc.
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Valley National Bancorp
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IBERIABANK Corporation
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Washington Federal, Inc.
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National Penn Bancshares, Inc.
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Western Alliance Bancorporation
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Bank of California, Inc.
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NBT Bancorp Inc.
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BancorpSouth, Inc.
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Old National Bancorp
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Chemical Financial Corporation
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PacWest Bancorp
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Columbia Banking System, Inc.
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Pinnacle Financial Partners, Inc.
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CVB Financial Corp.
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PrivateBancorp, Inc.
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First Interstate BancSystem, Inc.
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Trustmark Corporation
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First Midwest Bancorp, Inc.
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Union Bankshares Corporation
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Fulton Financial Corporation
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United Bankshares, Inc.
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Glacier Bancorp, Inc.
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United Community Banks, Inc.
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Great Western Bancorp, Inc.
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Washington Federal, Inc.
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Home BancShares, Inc.
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Western Alliance Bancorporation
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IBERIABANK Corporation
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•
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base salary;
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•
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short-term incentive compensation;
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long-term incentive compensation; and
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•
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participation in a supplemental executive retirement program.
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Executive
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Below
Threshold
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Threshold
(50%)
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Target
(100%)
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Stretch/Max
(150%)
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Mark J. Grescovich
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0%
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40%
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80%
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120%
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Lloyd W. Baker
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0%
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25%
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50%
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75%
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Peter J. Conner
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0%
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25%
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50%
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75%
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Cynthia D. Purcell
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0%
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25%
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50%
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75%
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Judith A. Steiner
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0%
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20%
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40%
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60%
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Executive
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Corporate
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Individual
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Mark J. Grescovich
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80%
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20%
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Other named executive officers
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65%
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35%
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Absolute Performance Goals
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Weighting (% of
Target Opportunity)
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||||||||||||||
Performance Measure
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Threshold
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Target
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Stretch
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CEO
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Other NEOs
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||||||||||
Return on average assets (1)
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1.50%
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1.60%
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1.80%
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32%
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39%
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||||||||||
Efficiency ratio (2)
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67.0%
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65.0%
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60.0%
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16%
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26%
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||||||||||
Ratio of non-performing assets to total assets (3)
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0.55%
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0.35%
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0.25%
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16%
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N/A
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||||||||||
Total operating revenue (4)
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(5)
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$478.7 million
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$492.5 million
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16%
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N/A
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||||||||||
Payout as a percentage of target
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50%
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100%
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150%
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||||||||||||
____________ |
(1) |
Net income before income taxes and before provision for loan and lease losses, adjusted to remove realized gains/losses on securities, nonrecurring items and trading account income, divided by average total assets.
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(2) |
Noninterest expense before foreclosed property expense, amortization of intangibles and goodwill impairments as a percentage of net interest income and noninterest revenues, excluding realized gains/losses on securities, nonrecurring items and trading account income.
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(3) |
Nonaccrual loans, loans past due 90 days or more and still accruing and other real estate owned as a percentage of total assets, as of December 31, 2017.
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(4) |
Net interest income plus non-interest income, adjusted to remove trading account income; does not include realized gains/losses on securities or nonrecurring revenue.
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(5) |
No payout below target performance.
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Absolute Performance Measure
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Performance
Achieved
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Payout Earned as
a % of Target
|
||||
Return on average assets
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1.50%
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50.0%
|
||||
Efficiency ratio
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67.54%
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0.0%
|
||||
Ratio of non-performing assets to total assets
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0.28%
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134.2% (1)
|
||||
Growth in total operating revenue (2)
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$479.3 million
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100.0% (3)
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(1) |
Relative performance on this metric was at the 84
th
percentile of Banner's 2017 compensation peer group, qualifying for payout above target at the calculated level.
|
(2) |
Annualized rate of growth is measured as total operating revenue for the twelve-month period from January 1, 2017 to December 31, 2017, as compared to total operating revenue for the twelve-month period from January 1, 2016 to December 31, 2016.
|
(3) |
Although operating revenue performance exceeded the target goal, relative growth failed to exceed the required 25
th
percentile performance necessary to payout above target for this measure.
|
Executive
|
Target Opportunity
as % of Salary
|
% of Target
Incentive Achieved
|
Incentive Earned as
% of Salary
|
2017
Incentive Earned
|
|||||||||
Mark J. Grescovich
|
80%
|
78.5%
|
62.8%
|
$
|
481,416
|
||||||||
Lloyd W. Baker
|
50%
|
54.5%
|
27.3%
|
$
|
75,400
|
||||||||
Peter J. Conner
|
50%
|
63.3%
|
31.6%
|
$
|
94,120
|
||||||||
Cynthia D. Purcell
|
50%
|
63.3%
|
31.6%
|
$
|
101,676
|
||||||||
Judith A. Steiner
|
40%
|
72.0%
|
28.8%
|
$
|
88,344
|
Relative Performance Percentile Ranking (1)
|
||||||||
Performance Measure
|
Weighting
|
Threshold
|
Target
|
Stretch
|
||||
Return on average tangible common equity (2)
|
50%
|
25
th
|
50
th
|
75
th
|
||||
Total shareholder return (3)
|
50%
|
25
th
|
50
th
|
75
th
|
||||
Payout as a percentage of target
|
50%
|
100%
|
150%
|
|||||
____________ |
(1) |
Peer companies for the 2017-19 performance cycle consist of all U.S. commercial banks (or their holding companies) traded on Nasdaq, NYSE or NYSE American (formerly NYSE MKT), with total assets between 50% and 200% of Banner's total assets as of December 31, 2019.
|
(2) |
Net income before amortization of intangibles and goodwill (tax-adjusted), divided by average tangible common equity; the measure used for relative comparisons will be an average of the calculated results for the years 2017, 2018 and 2019, each determined separately.
|
(3) |
Total shareholder return from January 1, 2017 through December 31, 2019, assuming that dividends paid during the period are reinvested in the respective company's shares on the date paid.
|
Executive
|
Total target
stock-based award
as % of salary
|
Restricted stock
award
as % of salary
|
Target performance
share award
as % of salary
|
|||
Mark J. Grescovich
|
100%
|
50%
|
50%
|
|||
Lloyd W. Baker
|
70%
|
35%
|
35%
|
|||
Peter J. Conner
|
70%
|
35%
|
35%
|
|||
Cynthia D. Purcell
|
70%
|
35%
|
35%
|
|||
Judith A. Steiner
|
50%
|
25%
|
25%
|
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
|
2017
|
766,875
|
--
|
999,410
|
481,416
|
--
|
74,723
|
2,322,424
|
||||||||
President and Chief
|
2016
|
744,825
|
--
|
1,342,509
|
368,536
|
--
|
48,723
|
2,504,593
|
||||||||
Executive Officer
|
2015
|
716,415
|
--
|
616,437
|
279,518
|
--
|
28,673
|
1,641,043
|
||||||||
Lloyd W. Baker
|
2017
|
276,697
|
--
|
252,417
|
75,400
|
160,507 (4)
|
30,508
|
795,529
|
||||||||
Executive Vice President,
|
2016
|
269,282
|
50,000
|
193,723
|
53,439
|
94,581 (4)
|
25,535
|
686,560
|
||||||||
Chief Financial Officer, Banner
|
2015
|
260,724
|
65,181
|
125,038
|
34,155
|
114,031 (4)
|
24,761
|
623,890
|
||||||||
Peter J. Conner (5)
|
20177
|
297,612
|
--
|
271,768
|
94,120
|
--
|
32,834
|
696,334
|
||||||||
Executive Vice President, Chief
|
||||||||||||||||
Financial Officer, Banner Bank
|
||||||||||||||||
Cynthia D. Purcell
|
2017
|
312,496
|
--
|
295,953
|
101,676
|
491,814 (4)
|
25,186
|
1,227,125
|
||||||||
Executive Vice President,
|
2016
|
303,971
|
60,000
|
219,132
|
60,323
|
246,885 (4)
|
20,208
|
910,519
|
||||||||
Retail Banking and Administration
|
2015
|
294,311
|
73,578
|
141,142
|
38,555
|
337,450 (4)
|
18,176
|
903,212
|
||||||||
Judith A. Steiner (5)
|
2017
|
306,750
|
150,000
(6)
|
199,768
|
88,344
|
--
|
30,660
|
775,522
|
||||||||
Executive Vice President,
|
||||||||||||||||
Chief Risk Officer
|
(1)
|
Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 14 of the Notes to Consolidated Financial Statements in Banner's Annual Report on Form 10-K for the year ended December 31, 2017. Includes time-based and performance-based restricted stock awards as described beginning on page 22 of this Proxy Statement under "Long-term Incentive Compensation."
|
(2)
|
See "Pension Benefits" below for a detailed discussion of the assumptions used to calculate the Change in Pension Value. Changes to the expected life assumptions resulted in material increases in the change in pension values for Mr. Baker and Ms. Purcell, adding $94,749 and $240,847, respectively, to the reported compensation.
|
(3)
|
Please see the table below for more information on the other compensation paid to our executive officers in 2017.
|
(4)
|
Represents an increase in the value of the executive's SERP.
|
(5)
|
Not a named executive officer in 2016 or 2015.
|
(6)
|
Retention bonus paid pursuant to Ms. Steiner's employment agreement.
|
Name
|
Employer
401(k)
Matching
Contribu-
tion ($)
|
Dividends
and Tax
Gross-Up
($)(1)
|
Life
Insurance
Premium
($)
|
Club Dues
($)
|
Company
Car
Allowance
($)
|
Relocation
Reimburse
-ment ($)
|
Total ($)
|
|||||||
Mark J. Grescovich
|
10,800
|
57,418
(2)
|
1,753
|
3,885
|
867
|
--
|
74,723
|
|||||||
Lloyd W. Baker
|
10,800
|
6,443
|
5,958
|
3,885
|
3,422
|
--
|
30,508
|
|||||||
Peter J. Conner
|
10,800
|
13,931
|
2,103
|
--
|
6,000
|
--
|
32,834
|
|||||||
Cynthia D. Purcell
|
10,800
|
7,410
|
4,525
|
1,468
|
983
|
--
|
25,186
|
|||||||
Judith A. Steiner
|
10,800
|
4,719
|
861
|
--
|
--
|
14,280
|
30,660
|
|||||||
___________ |
(1) |
Consists of dividends on restricted stock and a one-time tax gross-up. It was determined that dividends on unvested restricted stock and units should be subject to payroll taxes, which was the rationale for the tax gross-up.
|
(2) |
Also includes dividends on vested but deferred restricted stock units. In 2017, it was determined that dividends on unvested and vested but deferred restricted stock units should have been paid instead of deferred; therefore, dividends that should have been paid in 2016 were paid in 2017. The plan documents have been revised to clarify that dividends on restricted stock units can be deferred until settlement of the units.
|
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
units (#)
|
Grant date
fair value
of stock
and option awards ($)
|
|||||||||||||||
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
|||||||||||
Mark J. Grescovich
|
04/03/17
|
306,750
|
613,500
|
920,250
|
7,024
|
385,056
|
||||||||||||
04/03/17
|
3,512
|
7,024
|
10,536
|
614,354
(3)
|
||||||||||||||
Lloyd W. Baker
|
04/03/17
|
69,174
|
138,349
|
207,524
|
1,774
|
97,251
|
||||||||||||
04/03/17
|
887
|
1,774
|
2,661
|
155,166
(3)
|
||||||||||||||
Peter J. Conner
|
04/03/17
|
74,403
|
148,806
|
223,209
|
1,910
|
104,706
|
||||||||||||
04/03/17
|
955
|
1,910
|
2,865
|
167,062
(3)
|
||||||||||||||
Cynthia D. Purcell
|
04/03/17
|
78,124
|
156,248
|
234,372
|
2,080
|
114,026
|
||||||||||||
04/03/17
|
1,040
|
2,080
|
3,120
|
181,927
(3)
|
||||||||||||||
Judith A. Steiner
|
04/03/17
|
61,350
|
122,700
|
184,050
|
1,404
|
76,967
|
||||||||||||
04/03/17
|
702
|
1,404
|
2,106
|
122,801
(3)
|
(1)
Represents the potential range of awards payable under our 2017 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 20.
|
(2)
Represents the potential range of restricted stock awards payable under our 2017 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 22.
|
(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 at the maximum performance level. 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.
|
Name
|
Number of Shares or
Units of Stock That
Have Not Vested (#)
|
Market Value of
Shares or Units of
Stock That Have Not
Vested ($)
|
Equity Incentive
Plan Awards:
Number of Unearned
Shares, Units or
Other Rights That
Have Not Vested (#)
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested ($)
|
||||
Mark J. Grescovich
|
13,142 (1)
|
724,387
|
32,777 (2)
|
1,806,668
|
||||
Lloyd W. Baker
|
3,189 (1)
|
175,778
|
6,706 (2)
|
369,635
|
||||
Peter J. Conner
|
5,115 (3)
|
281,939
|
5,433 (4)
|
299,467
|
||||
Cynthia D. Purcell
|
3,677 (1)
|
202,676
|
7,686 (2)
|
423,652
|
||||
Judith A. Steiner
|
2,166 (5)
|
119,390
|
2,106 (6)
|
116,083
|
(1)
|
Consists of awards of restricted stock on March 27, 2015, April 1, 2016 and April 3, 2017 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the applicable grant date.
|
(2)
|
Consists of awards of restricted stock on March 27, 2015, April 1, 2016 and April 3, 2017 which vest after attainment of performance goals.
|
(3)
|
Consists of awards of restricted stock on October 6, 2015, April 1, 2016 and April 3, 2017 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the applicable grant date.
|
(4)
|
Consists of awards of restricted stock on April 1, 2016 and April 3, 2017 which vest after attainment of performance goals.
|
(5)
|
Consists of awards of restricted stock on September 30, 2016 and April 3, 2017 which vest pro rata over a three-year period from the grant date, with the first one-third vesting one year after the applicable grant date.
|
(6)
|
Consists of an award of restricted stock on April 3, 2017 which vests after attainment of performance goals.
|
Stock Awards
|
||||
Name
|
Number of
Shares Acquired
on Vesting (#)
|
Value Realized
on Vesting ($)
|
||
Mark J. Grescovich
|
5,575
|
303,509
|
||
Lloyd W. Baker
|
1,309
|
71,214
|
||
Peter J. Conner
|
2,633
|
158,232
|
||
Cynthia D. Purcell
|
1,482
|
80,626
|
||
Judith A. Steiner
|
381
|
23,146
|
Name
|
Plan Name
|
Number of
Years
Credited
Service (#)
|
Present
Value of
Accumulated
Benefit
($)(1)
|
Payments
During Last
Fiscal Year
($)
|
||||
Mark J. Grescovich
|
N/A
|
--
|
--
|
--
|
||||
Lloyd W. Baker
|
Supplemental Executive Retirement Program
|
23
|
2,169,019
|
--
|
||||
Peter J. Conner
|
N/A
|
--
|
--
|
--
|
||||
Cynthia D. Purcell
|
Supplemental Executive Retirement Program
|
33
|
2,620,260
|
--
|
||||
Judith A. Steiner
|
N/A
|
--
|
--
|
--
|
||||
_____________ |
(1) |
Amounts shown assume normal retirement age as defined in individual agreements and an assumed life based on social security life expectancy tables, but not less than 15 years following retirement, for the recipient and recipient's spouse, with the projected cash flows discounted at 4½% to calculate the resulting present value.
|
Name
|
Executive
Contributions
in Last FY ($)
|
Registrant
Contributions
in Last FY ($)
|
Aggregate
Earnings in
Last FY ($)
|
Aggregate
Withdrawals/
Distributions ($)
|
Aggregate
Balance
at FYE ($)(1)
|
|||||
Mark J. Grescovich
|
--
|
--
|
--
|
--
|
--
|
|||||
Lloyd W. Baker
|
--
|
--
|
697
|
--
|
31,427
|
|||||
Peter J. Conner
|
--
|
--
|
--
|
--
|
--
|
|||||
Cynthia D. Purcell
|
--
|
--
|
4,040
|
--
|
22,755
|
|||||
Judith A. Steiner
|
51,114
|
--
|
3,698
|
--
|
54,812
|
|||||
__________ |
(1) |
Includes prior period executive contributions and employer contributions to the deferred compensation plan. Of these amounts, the following amounts were previously reported as other compensation to the officers in the Summary Compensation Table: for Mr. Baker, $6,762; and for Ms. Purcell, $8,421.
|
Death ($)
|
Disability ($)
|
Involuntary
Termination
($)
|
Involuntary
Termination
Following
Change in
Control ($)
|
Early
Retirement
($)
|
Normal
Retirement
($)
|
|||||||||||
Mark J. Grescovich
|
||||||||||||||||
Employment Agreement
|
--
|
667,786
|
(1)
|
2,812,572
|
4,218,858
|
--
|
--
|
|||||||||
Equity Plans
|
2,531,055
|
(2)
|
2,531,055
|
(2)
|
--
|
2,531,055
|
(2)
|
--
|
--
|
|||||||
Lloyd W. Baker
|
||||||||||||||||
Employment Agreement
|
--
|
--
|
726,079
|
890,161
|
--
|
--
|
||||||||||
SERP
|
94,853
|
(3)
|
189,705
|
(3)
|
189,705
|
(4)
|
189,705
|
(4)
|
189,705
|
(4)
|
189,705
|
(3)
|
||||
Equity Plans
|
545,413
|
(2)
|
545,413
|
(2)
|
--
|
545,413
|
(2)
|
--
|
--
|
|||||||
Peter J. Conner
|
||||||||||||||||
Employment Agreement
|
--
|
200,100
|
(5)
|
788,645
|
1,810,472
|
--
|
--
|
|||||||||
Equity Plans
|
581,406
|
(2)
|
581,406
|
(2)
|
--
|
581,406
|
(2)
|
--
|
--
|
|||||||
Cynthia D. Purcell
|
||||||||||||||||
Employment Agreement
|
--
|
217,901
|
(5)
|
836,246
|
991,051
|
--
|
--
|
|||||||||
SERP
|
100,710
|
(3)
|
201,421
|
(3)
|
190,385
|
(4)
|
190,385
|
(4)
|
190,385
|
(4)
|
194,449
|
(3)
|
||||
Equity Plans
|
626,328
|
(2)
|
626,328
|
(2)
|
--
|
626,328
|
(2)
|
--
|
--
|
|||||||
Judith A. Steiner
|
||||||||||||||||
Employment Agreement
|
--
|
206,000
|
(5)
|
155,978
|
314,676
|
--
|
--
|
|||||||||
Equity Plans
|
235,473
|
(2)
|
235,473
|
(2)
|
--
|
235,473
|
(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; for purposes of this calculation, assumes that all shares vested at the maximum performance level.
|
(3) |
Indicates annual payments.
|
(4) |
Indicates annual payments (which may not begin before age 62).
|
•
|
Mr. Grescovich, Chief Executive Officer, annual total compensation:
$2,322,424
|
•
|
Median employee annual total compensation:
$
55,297
|
•
|
Ratio of Chief Executive Officer to median employee compensation:
42 to 1
|
•
|
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 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/Units
Granted
|
Options
Granted
|
Total Granted
|
Basic
Weighted Average
Number of Common
Shares Outstanding
|
Gross Burn
Rate (1)
|
|||||
2017
|
153,777
|
--
|
153,777
|
32,888,007
|
.0047
|
|||||
2016
|
177,775
|
--
|
177,775
|
33,820,148
|
.0053
|
|||||
2015
|
155,183
|
--
|
155,183
|
23,801,373
|
.0065
|
|||||
Three-year average
|
162,245
|
--
|
162,245
|
30,169,843
|
.0054
|
(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, 2018 | |
Shares underlying outstanding awards
|
298,777
|
Shares outstanding
|
32,724,839
|
Overhang (shares underlying outstanding awards/shares outstanding)
|
0.91%
|
Shares available for grant under prior plans
|
523,876
|
Total overhang (shares underlying outstanding awards and plan shares available/shares outstanding)
|
2.51%
|
Shares Board seeks approval for
|
900,000
|
As a percentage of shares outstanding
|
2.75%
|
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:
|
--
|
--
|
522,984
|
|||
Equity compensation plans not
|
||||||
approved by security holders:
|
--
|
N/A
|
--
|
|||
Total
|
--
|
522,984
|
•
|
The Audit Committee has completed its review and discussion of the 2017 audited financial statements with management;
|
•
|
The Audit Committee has discussed with the independent registered public accounting firm (Moss Adams LLP) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard 1301,
Communications with Audit Committees
;
|
•
|
The Audit Committee has received written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm's communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm's independence; and
|
•
|
The Audit Committee has, based on its review and discussions with management of the 2017 audited financial statements and discussions with the independent registered public accounting firm, recommended to the Board of Directors that Banner's audited financial statements for the year ended December 31, 2017 be included in its Annual Report on Form 10-K.
|
|
Audit Committee
|
|
|
|
Gordon E. Budke, Chairman
|
|
Robert D. Adams
|
|
David A. Klaue |
|
John R. Layman
David I. Matson
|
Year Ended December 31,
|
||||||||
2017
|
2016
|
|||||||
Audit Fees (1)
|
$
|
1,030,264
|
$
|
1,070,138
|
||||
Audit-Related Fees
|
--
|
--
|
||||||
Tax Fees (2)
|
4,424
|
14,394
|
||||||
All Other Fees
|
--
|
--
|
||||||
____________ |
(1) |
Fees for 2017 include estimated amounts to be billed.
|
(1) |
Fees for 2017 and 2016 include consultation regarding Affordable Care Act compliance and tax depreciation.
|
|
BY ORDER OF THE BOARD OF DIRECTORS |
|
|
|
/s/ ALBERT H. MARSHALL
|
|
|
|
ALBERT H. MARSHALL
|
|
SECRETARY
|
1.
|
Approve all audit engagement fees and terms and pre‑approve all audit and permitted non‑audit engagements and services with the independent auditor. The Committee may delegate authority to pre‑approve audit and permitted non‑audit services to one or more members of the Committee. If this authority is delegated, all pre‑approved audit and permitted non‑audit services will be presented to the Committee at its next scheduled meeting.
|
2.
|
Ensure that engagement letters and any related agreements with independent auditors do not include any limitation of liability provisions that (i) indemnify the independent auditor against claims made by third parties; (ii) hold harmless or release the
independent public accountant from liability for claims or potential claims that might be asserted by the Corporation or its subsidiaries, other than claims for punitive damages; or (iii) limit the remedies available to the Corporation or its subsidiaries.
|
3.
|
Receive 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, and obtain a written statement from the independent auditor describing, any relationships between the independent auditor and the Corporation and any relationships or services that may impact the objectivity and independence of the auditors, to determine the auditor's independence and objectivity. The Committee shall take appropriate action to oversee the independence of the auditor.
|
4.
|
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.
|
5.
|
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 and does not serve as the lead audit partner or primary reviewing partner at any time during the five year period after being rotated (or such shorter period as may be required by law, rule or regulation).
|
1.
|
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. The Committee shall also produce the audit committee report required to be included in the Corporation's annual proxy statement.
|
2.
|
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.
|
3.
|
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 over financial reporting and any special steps adopted in light of material control deficiencies.
|
4.
|
Review and discuss with management and the independent auditor any major issues as to the adequacy of the Corporation's internal controls over financial reporting, any special steps adopted in light of material control deficiencies and the adequacy of disclosures about changes in internal control over financial reporting.
|
5.
|
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.
|
6.
|
Review and discuss reports/presentations from the independent auditor on:
|
a.
|
All critical accounting policies and practices to be used.
|
b.
|
All alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor.
|
c.
|
Other material written communication between the independent auditor and management, such as any management letter or schedule of unadjusted differences.
|
7.
|
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.
|
8.
|
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.
|
9.
|
In coordination and consultation 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.
|
10.
|
Discuss with the independent auditor the matters required to be discussed by AU Section 380 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.
|
11.
|
Review disclosures made to the 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.
|
12.
|
Review the minutes of the Corporation's Disclosure Committee and consider, when practicable, having a member of the Committee attend such meetings.
|
1.
|
Oversee the internal auditor such that the Chief Audit Executive shall functionally report directly to the Committee and administratively to the Chief Executive Officer.
|
2.
|
Review and approve the Internal Audit charter annually and proposed annual internal audit plan, financial budget and resources, and overall risk assessment methodology, and approve any significant interim changes to the foregoing.
|
3.
|
Receive periodic communications from Internal Audit on the completion status of the annual plan, including any significant changes made to the plan and the rationale. The internal auditor will also provide the Committee a periodic "Open Issues" report.
|
4.
|
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.
|
5.
|
Ensure there are no unjustified restrictions or limitations on the internal audit function.
|
6.
|
Review the effectiveness of the internal audit activity including timeliness and rationale of management response to tracked outstanding issues.
|
7.
|
Review annually the performance and compensation of the Chief Audit Executive.
|
8.
|
The Committee shall approve all material services to be performed by experts and consultants in support of internal audit activities.
|
1.
|
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.
|
2.
|
Obtain from the independent auditor assurance that, if it detects or becomes aware of any illegal act, to assure that the Committee is adequately informed and to provide a report if the independent auditor has reached specified conclusions with respect to such illegal acts.
|
3.
|
Obtain reports from management, the Chief Audit Executive, Chief Risk Officer, the Board‑level Risk Committee 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.
|
4.
|
Review the significant results of regulatory examinations of the Corporation related to the Corporation's financial statements, internal controls or accounting policies.
|
5.
|
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.
|
6.
|
Discuss with the Corporation's Legal Counsel, when appropriate, legal matters that may have a material impact on the financial statements or the Corporation's compliance policies.
|
1.
|
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.
|
2.
|
In coordination and consultation with the Board‑level Risk Committee, review and discuss the effectiveness of the Corporation's overall risk governance framework and such other matters as required by law, regulation or agreement.
|
3.
|
Review the Corporation's policies and procedures for regular review of the expense accounts of the Corporation's executive management.
|
4.
|
At its discretion, request that management, the independent auditor or the internal auditors undertake special projects or investigations which the Committee deems necessary to fulfill its responsibilities.
|
I.
|
Purpose
|
II.
|
Composition
|
III.
|
Meetings and Structure
|
IV.
|
Responsibilities and Duties
|
|
Compensation Policies
|
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.
|
At least annually, review the compensation policies to ensure that they are effective in meeting goals for compensation and make new recommendations, as needed.
|
4.
|
Review and approve the list of a peer group of companies to which the Corporation and the Bank shall compare themselves for compensation purposes.
|
5.
|
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.
|
6.
|
Review and approve other large compensation expense categories such as employee benefit plans.
|
|
Compensation
|
1.
|
Review director compensation levels and recommend, as necessary, changes in the compensation levels, with an equity ownership requirement in the Corporation based on the annual recommendation of the Committee.
|
2.
|
Receive and review an annual report from the Chief Executive Officer which includes the performance assessment for all executive officers and recommendations for compensation levels, and which also includes salary recommendations for all employees.
|
3.
|
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.
In evaluating and determining CEO compensation, the Committee shall consider the results of the most recent stockholder advisory vote on executive compensation ("
Say on Pay Vote
") required by Section
14A of the Exchange Act.
The Chief Executive Officer shall not be present during voting on deliberations on his/her compensation.
|
4.
|
Review and approve compensation for all executive officers, other than the Chief Executive Officer with input from the Chief Executive Officer. I
n evaluating and determining executive compensation, the Committee shall consider the results of the most recent Say on Pay Vote.
|
5.
|
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.
|
6.
|
Adopt, administer, approve and ratify awards, as the Committee deems appropriate, under incentive compensation and stock plans, including amendments to the awards made under any such plans, and review and monitor awards under such plans.
|
7.
|
Work closely with each Board's Risk Committee to ensure that incentive compensation arrangements do not encourage employees to take risks beyond the Corporation and its subsidiaries' risk tolerance and risk policies and evaluate whether incentive compensation practices may increase the potential for imprudent risk taking.
|
8.
|
Adopt, administer and approve clawback provisions for incentive-based compensation arrangements for senior executives and significant risk takers as the Committee deems necessary or as required by applicable law and review the facts and circumstances regarding whether to exercise any claw-back right on behalf of the Corporation or its subsidiaries.
|
9.
|
Receive and review data and analysis from management or other sources and assess whether incentive compensation arrangements are consistent with the safety and soundness of the Corporation and its subsidiaries and the Corporation's risk policies.
|
1.
|
Review and approve the Corporation's
Compensation Discussion and Analysis
and related executive compensation information to be included in the Corporation's annual report and proxy statement.
|
2.
|
Prepare a report on executive compensation for inclusion in the Corporation's annual report and proxy statement, consulting with the Corporation's legal counsel, if necessary.
|
3.
|
Review and recommend for approval by the Board the frequency with which the Company will conduct a shareholder advisory vote on executive compensation, taking into account the results of the most recent shareholder advisory vote on the frequency of shareholder advisory votes on executive compensation required by Section 14A of the Exchange Act, and review and approve the proposals regarding the shareholder advisory vote on executive compensation and the frequency of the shareholder advisory vote on executive compensation to be included in the Company's proxy statement.
|
V.
|
Compensation Advisers
|
·
|
the provision of other services to the Corporation by the person that employs the compensation adviser, counsel or other adviser;
|
·
|
the amount of fees received from the Corporation or its subsidiaries by the person that employs the compensation adviser, counsel or other adviser, as a percentage of the total revenue of the person that employs the compensation adviser, counsel or other adviser;
|
·
|
the policies and procedures of the person that employs the compensation adviser, counsel or other adviser, that are designed to prevent conflicts of interest;
|
·
|
any business or personal relationship of the compensation adviser, counsel or other adviser, with a member of the Committee;
|
·
|
any stock of the Corporation owned by the compensation adviser, counsel or other adviser; and
|
·
|
any business or personal relationship of the compensation adviser, counsel or other adviser, or the person employing the compensation adviser, counsel or other adviser with an executive officer of the Corporation or its subsidiaries.
|
VI.
|
Charter
|
I.
|
Purpose
|
II.
|
Composition
|
III.
|
Meetings and Structure
|
IV.
|
Responsibilities and Duties
|
1.
|
Review and make recommendations to the Board regarding the process and procedures by which a candidate shall be nominated
for election to the Board of Directors and be submitted to a shareholder vote at the annual meeting of shareholders.
|
2.
|
Develop and recommend to the Board for approval a board succession plan ("
Board
Succession Plan
"), review the Board Succession Plan periodically, develop and evaluate potential candidate for election to the Board of Directors.
|
3.
|
In accordance with the Banner Corporation's Articles of Incorporation, Bylaws and the Board Succession Plan, evaluate the size and composition of the Board, including procedures for filling Director positions vacated other than at the completion of an appointed term and make
|
|
recommendations regarding the selection and approval of candidates to fill such vacancy either by election by shareholders or appointment by the Board. The Committee shall consider any candidate recommended by Banner Corporation's shareholders pursuant to the procedures set forth in Banner Corporation's Articles of Incorporation.
|
4.
|
Recommend to the Board prospective candidates for election to the Board. In assessing the qualifications of prospective candidates, the Committee will:
|
a.
|
Have sole authority to retain and terminate search firms, including the approval of all fees and contract terms.
|
b.
|
Set board member qualifications, qualities, skills, and other expertise required to be a board member.
|
c.
|
Interview nominees.
|
d.
|
Determine whether or not a candidate would qualify as an independent board member in accordance with
rules established by the Securities and Exchange Commission, the listing rules of the NASDAQ and other applicable laws and regulations.
|
5.
|
Review the form, composition and effectiveness of authorized Board committees under the same standards applied to the Board as a whole and in accordance with the requirements under the Securities and Exchange Commission, listing rules of NASDAQ and other applicable laws and regulations, and make recommendations to the Board regarding the appointment of directors to serve as members of each committee.
|
6.
|
Review membership, composition, qualifications, duties and obligations of subsidiary boards, subject to the requirements of the Securities and Exchange Commission, listing rules of NASDAQ, and other applicable laws and regulations consistent with the standards of governance applicable to the entire Corporation.
|
7.
|
Develop and recommend to the Board approval standards for determining whether the director has a relationship with the Corporation that would impair his or her independence.
|
8.
|
Develop and recommend the duties and responsibilities of elected Board Members including:
|
9.
|
Acknowledging that the Board and the Board of Banner Bank each have a Compensation Committee with oversight over compensation matters, establish criteria for evaluation of members of the Board and oversee annual evaluation of the Board and the executives.
|
10.
|
Develop and oversee director training and information resources including:
|
1.
|
Review
and
discuss with management disclosure of the Corporation's corporate
governance
practices, including information regarding the operations of the Committee
and
other Board committees, director independence
and
the director nominations process,
and
to recommend that this disclosure be, included in the Corporation's proxy statement or annual report on Form 10-K, as applicable.
|
2.
|
Monitor
documentation of Board activities including the timing and content of board reports, board communication, documents retention, adequacy of minutes and committee deliberations including an effective summary of discussion points and dissenting opinions
|
3.
|
Monitor meeting schedule and agendas, including the required frequency of meetings, materials supplied to members, minutes taken and other record keeping requirements.
|
4.
|
Review director access to management, employees, regulators and independent advisors.
|
5.
|
Review and oversee shareholder access to director information.
|
6.
|
Develop and recommend to the Board for approval a management succession plan ("
Management
Succession Plan
"), review the Management Succession Plan periodically, develop and evaluate potential candidate for executive positions and recommend to the Board any changes to any candidates for succession under the Management Succession Plan.
|
7.
|
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 Committee 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.
|
1.
|
Create and maintain the Corporation's Code of Ethics including review, revision, disclosure, and application.
|
2.
|
Create and maintain policies and procedures regarding:
|
a.
|
Corporate opportunities guidelines.
|
b.
|
Competition and fair dealing.
|
c.
|
Human resources, including issues of discrimination, harassment, health and safety.
|
d.
|
Customer confidentiality and privacy.
|
e.
|
Community/public relations.
|
V.
|
Outside Advisors
|
VI.
|
Authority to Delegate
|
VII.
|
Charter
|
|
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
|
4
|
|
Section 3.3
Computation of Shares Issued
|
5
|
|
Section 3.4
Eligibility
|
5
|
|
Section 3.5
Actual Participation
|
5
|
|
|
|
ARTICLE IV ADMINISTRATION |
5
|
|
|
|
|
|
Section 4.1
Committee
|
5
|
Section 4.2 Committee Powers | 5 | |
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 | 6 | |
Section 5.5 Vesting Date | 7 | |
Section 5.6 Additional 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 | 16 |
Section 8.4 P erformance goals | 16 | |
Section 8.5 D iscretionary adjustments | 16 | |
Section 8.6 P ayment 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 | 17 | |
Section 8.9 N ontransferability | 17 | |
ARTICLE IX OTHER STOCK-BASED AWARDS AND CASH AWARDS | 17 | |
Section 9.1 Other Stock Based Awards | 17 | |
|
Section 9.2 C
ash awards
|
17
|
Section 9.3 S ection 409A Compliance | 17 | |
ARTICLE X ADDITIONAL TAX PROVISION | 18 | |
Section 10.1 Tax Withholding Rights | 18 | |
ARTICLE XI AMENDMENT AND TERMINATION | 18 | |
Section 11.1 Termination | 18 | |
Section 11.2 Amendment | 18 | |
Section 11.3 Adjustments in the Event of Business Reorganization | 18 | |
ARTICLE XII MISCELLANEOUS | 19 | |
19 | ||
Section 12.1 Status as an Employee Benefit Plan | 19 | |
Section 12.2 No Right to Continued Service | 19 | |
Section 12.3 Construction of Language | 19 | |
Section 12.4 Severability | 19 | |
Section 12.5 Governing Law | 19 | |
Section 12.6 Headings | 19 | |
Section 12.7 Non-Alienation of Benefits | 19 | |
Section 12.8 Notices | 20 | |
Section 12.9 Approval of Shareholders | 20 | |
Section 12.10 Clawback | 20 | |
Section 12.11 Compliance with Section 409A | 20 |
|
(i) specify the number of Shares covered by the Option;
|
|
(ii) specify the Exercise Price;
|
|
(iii) specify the Exercise Period;
|
|
(iv) specify the Vesting Date; and
|
|
(v) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
|
|
(i) if the Participant of an Option Award terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Option shall be forfeited without consideration; provided, however, that with the exception of a Termination for Cause, the Committee, in its sole discretion, shall have the right to waive such forfeiture and to immediately make exercisable all or any portion of such Options;
|
|
(ii) if the Participant of an Option Award terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant's termination of Service; and
|
|
(iii) if a Change in Control occurs prior to the Vesting Date of an Option Award that is outstanding on the date of the Change in Control, and the Participant experiences an Involuntary Separation from Service during the 365-day period following the date of such Change in Control, then the Vesting Date for any non-vested Option Award shall be accelerated to the date of the Participant's Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company's business and/or assets does not either assume the outstanding Option Award or replace the outstanding Option Award with an award that is determined by the Committee to be at least equivalent in value to such outstanding Option Award on the date of the Change in Control, then the Vesting Date of such outstanding Option Award shall be accelerated to the earliest date of the Change in Control.
|
|
(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Option;
|
|
|
|
(ii) delivering to the Committee full payment for the Shares as to which the Option is to be exercised; and
|
|
|
|
(iii) satisfying such other conditions as may be prescribed in the Award Agreement.
|
|
|
|
(i) in cash (by certified or bank check or such other instrument as the Company may accept); or
|
|
(ii) if and to the extent permitted by the Committee, in the form of Shares already owned by the Option Holder as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or
|
|
(iii) if and to the extent permitted by the Committee, by the Company withholding Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or
|
|
(iv) by a combination thereof.
|
|
(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or
|
|
(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable
|
|
(i) specify the number of Shares covered by the Stock Appreciation Right;
|
|
(ii) specify the Exercise Price;
|
|
(iii) specify the Exercise Period;
|
|
(iv) specify the Vesting Date;
|
|
(v) specify that the Stock Appreciation Right shall be settled in cash or Shares, or a combination of cash and Shares; and
|
|
(vi) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
|
|
(i) if the Participant of a Stock Appreciation Right Award terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Award shall be forfeited without consideration;
provided, however,
that with the exception of a Termination for Cause, the Committee, in its sole discretion, shall have the right to waive such forfeiture and to make exercisable all or any portion of such Stock Appreciation Rights;
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(ii) if the Participant of a Stock Appreciation Right Award terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant's termination of Service; and
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(iii) if a Change in Control occurs prior to the Vesting Date of a Stock Appreciation Right Award that is outstanding on the date of the Change in Control, and the Participant experiences an Involuntary Separation from Service during the 365-day period following the date of such Change in Control, then the Vesting Date for any non-vested Stock Appreciation Right Award shall be accelerated to the date of the Participant's Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company's business and/or assets does not either assume the outstanding Stock Appreciation Right Award or replace the outstanding Stock Appreciation Right Award with an award that is determined by the Committee to be at least equivalent in value to such outstanding Stock Appreciation Right Award on the date of the Change in Control, then the Vesting Date of such outstanding Stock Appreciation Right Award shall be accelerated to the earliest date of the Change in Control.
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(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Stock Appreciation Right; and
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(ii) satisfying such other conditions as may be prescribed in the Award Agreement.
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(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or
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(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
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(i) the number of shares of Restricted Stock or Restricted Stock Units covered by the Restricted Stock Award;
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(ii) the amount, if any, which the Participant shall be required to pay to the Company in consideration for the issuance of such Restricted Stock or Restricted Stock Units;
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(iii) the date of grant of the Restricted Stock Award;
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(iv) the Period of Restriction for the Restricted Stock Award and the performance conditions, if any, which must be satisfied in order for the Vesting Date to occur;
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(v) as to Awards awarding Restricted Stock, the rights of the Participant with respect to dividends, voting rights and other rights and preferences associated with such Shares; and
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(vi) as to Awards awarding Restricted Stock Units, the rights of the Participant with respect to attributes of the Restricted Stock Units which are the equivalent of dividends and other rights and preferences associated with Shares and the circumstances pursuant to which Restricted Stock Units shall be converted to Shares.
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(i) if the Participant terminates Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Restricted Stock or Restricted Stock Units shall be forfeited without consideration;
provided, however
that with the exception of a Termination for Cause, the Committee, in its sole discretion, shall have the right to reduce or eliminate the Period of Restriction with respect to Restricted Stock or Restricted Stock Units following termination of employment or service for any reason, upon such terms and provisions as it deems proper;
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(ii) if the Participant terminates Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of termination of the Participant's Service with the Company; and
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(iii) if a Change in Control occurs prior to the Vesting Date of a Restricted Stock Award that is outstanding on the date of the Change in Control, and the Participant experiences an Involuntary Separation from Service during the 365-day period following the date of such Change in Control, then the Vesting Date for any non-vested Restricted Stock Award shall be accelerated to the date of the Participant's Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company's business and/or assets does not either assume the outstanding Restricted Stock Award or replace the outstanding Restricted Stock Award with an award that is determined by the Committee to be at least equivalent in value to such outstanding Restricted Stock Award on the date of the Change in Control, then the Vesting Date of such outstanding Restricted Stock Award shall be accelerated to the earliest date of the Change in Control.
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(i) the number and kind of securities deemed to be available thereafter for grants of Awards in the aggregate to all Participants;
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(ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Awards; and
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(iii) the Exercise Price of Options and Stock Appreciation Rights.
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Admission Ticket
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Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on April 24, 2018.
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Vote by Internet
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Go to
www.investorvote.com/BANR
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Or scan the QR code with your smartphone
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Follow the steps outlined on the secure website
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Vote by telephone
·
Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
·
Follow the instructions provided by the recorded message
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Annual Meeting Proxy Card
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1. Election of Directors
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For Against Abstain
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For Against Abstain
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For Against Abstain
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01- Roberto R. Herencia
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[ ] [ ] [ ]
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02 - John R. Layman
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[ ] [ ] [ ]
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03- David I. Matson
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[ ] [ ] [ ]
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(for three-year term)
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(for three-year term)
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(for three-year term)
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04- Kevin R. Riordan | [ ] [ ] [ ] | 05- Terry Schwakopf | [ ] [ ] [ ] | 06- Gordon E. Budke | [ ] [ ] [ ] |
(for three-year term) | (for three-year term) | (for one-year term) |
For Against Abstain
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For Against Abstain | ||||
2. Advisory approval of the compensation of Banner | [ ] [ ] [ ] |
3. Adoption of the Banner Corporation 2018 Omnibus
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[ ] [ ] [ ] | ||
Corporation's named executive officers. | Incentive Plan. | ||||
4. The ratification of the Audit Committee's selection | [ ] [ ] [ ] | 5. In their discretion, upon such other matters as may | |||
of Moss Adams LLP as the independent auditor | properly come before the meeting. | ||||
for the year ended December 31, 2018. | |||||
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Change of Address
— Please print your new address below.
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Comments — Please print your comments below. |
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Meeting Attendance
Mark the box to the right
if you plan to attend the [ ]
Annual Meeting.
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Date (mm/dd/yyyy) — Please print date below.
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Signature 1 — Please keep signature within the box.
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Signature 2 — Please keep signature within the box. |
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