Voting on Matters Presented
Proposal No. 1 - Election of Directors. The ten director nominees who receive the highest number of affirmative votes will be elected. Shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast FOR or WITHHELD from each nominee. Votes that are withheld and broker non-votes will have no effect on the outcome of the election.
As described below under the section entitled “Corporate Governance - Majority Voting Policy,” in September 2011, the Company adopted a Majority Voting Policy (“Majority Voting Policy”). As a requirement of nomination, each director nominee of the Company is required to submit an irrevocable resignation as a director of the Company. The Company has such a letter on file from each 20162018 director nominee. If any such director nominee receives more WITHHELD votes than FOR votes in an uncontested election of directors, his or her resignation will be considered by the Company’s Nominating/Corporate Governance Committee (“NominatingNominating/Governance Committee”) and the Board.
Proposal No. 2 - Advisory (Non-Binding) Vote on Executive Compensation. The affirmative vote FOR by a majority of those shares present in person or by proxy and voting on this matter is required to approve the advisory (non-binding) resolution on the compensation of our Named Executive Officers (“Named Executive Officers”). You may vote FOR, AGAINST or ABSTAIN from approving the advisory (non-binding) resolution on executive compensation. Abstentions and broker non-votes will have no effect on the outcome of the proposal.
Proposal No. 3-3 - Ratification of Independent Registered Public Accounting Firm. The proposal to ratify the appointment of BKD, LLP as the Company’s independent registered public accounting firm (“independent(also referred to as “independent auditors”) for the fiscal year ending December 31, 20162018 will be adopted if a majority of the votes present and entitled to vote are cast FOR the proposal. You may vote FOR, AGAINST or ABSTAIN from approving the proposal. Abstentions and broker non-votes will have no effect on the outcome of the proposal.
Voting of Proxies. Shares represented by properly executed proxies that are received prior to the deadline for submitting proxies and that are not revoked will be voted in accordance with the instructions indicated on the proxies. If no instructions are indicated, the persons named in the proxy will vote the shares represented by the proxy (i) FOR the director nominees listed in this Proxy Statement, (ii) FOR the advisory (non-binding) resolution to approve the compensation of our Named Executive Officers, and (iii) FOR the ratification of the appointment of the independent registered public accounting firm. Any proxy given by a shareholder may be revoked before its exercise by:
giving notice to us in writing;
delivering to us a subsequently dated proxy card; or
notifying us at the Annual Meeting before the shareholder vote is taken.
Voting of Proxies by Shareholders of Record and by Beneficial Owners. A significant percentage of Glacier shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own names. As summarized below, there are some differences between the two types of ownership.
Shareholders of Record. If your shares are registered directly in your name with Glacier’s transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the shareholder of record, and these proxy materials are being sent to you directly by
Glacier. As the shareholder of
record, you have the right to grant your voting proxy directly to Glacier or to vote in person at the Annual Meeting. We have enclosed a proxy card for you to use.
Beneficial Owner. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote. Your broker or nominee has enclosed a voting instruction card for you to use in directing your broker or nominee as to how to vote your shares.
Brokers cannot vote on behalf of beneficial owners on “non-routine” proposals (defined as “broker non-votes”). Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (i) the broker has not received voting instructions from the beneficial owner and (ii) the broker lacks discretionary voting power to vote such shares.
If your shares are held in street name and you do not submit voting instructions to your broker, your broker may vote your shares at this meeting on the ratification of the appointment of the independent registered public accounting firm only. If no instructions are given with respect to the election of directors or approval of the (non-binding) resolution on executive compensation, your broker cannot vote your shares on these proposals.
Voting in Person at the Annual Meeting
Shareholders of Record. Shares held directly in your name as the shareholder of record may be voted in person at the Annual Meeting. If you choose to vote your shares in person at the Annual Meeting, please bring the enclosed proxy card and proof of identification. Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.
Beneficial Owner. Shares held in street name may be voted in person by you only if you present a “Legal Proxy” at the Annual Meeting. Contact your broker or nominee immediately to obtain a “Legal Proxy,” and bring that document and proof of identification with you to the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
There were approximately 76,167,70084,506,494 shares of common stock outstanding on the Record Date, which was set at March 1, 2016.2, 2018. Shareholders are not permitted to cumulate their votes for the election of directors.
5% Shareholders
The following table includes information as of December 31, 20152017 concerning the persons or entities, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), who or which was known to us to be the beneficial owner of more than 5% of the issued and outstanding common stock of the Company on the Record Date.
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class |
| Common Stock | BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10022 | 7,373,361 | 9.7% |
| Common Stock | T. Rowe Price Associates, Inc. (3) 100 E. Pratt Street Baltimore, MD 21202 | 5,639,201 | 7.4 |
| Common Stock | The Vanguard Group, Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 | 5,507,224 | 7.23 |
| Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class |
Common Stock | BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 10,551,595 | 13.5% |
Common Stock | The Vanguard Group, Inc.(3) 100 Vanguard Blvd. Malvern, PA 19355 | 7,453,627 | 9.55% |
| (1) | Pursuant to rules promulgated by the SEC under the Exchange Act, a person or entity is considered to beneficially own shares of common stock if the person or entity has or shares (i) voting power, |
| (2) |
| (3) |
Directors and Named Executive Officers
The following table shows, as of February 18, 2016,March 2, 2018, the amount of Glacier common stock beneficially owned by (a) each director and director nominee of the Company, (b) the Named Executive Officers listed in the Summary Compensation Table below, and (c) all of Glacier’s directors, director nominees, and Named Executive Officers as a group. Beneficial ownership is a technical term broadly defined by the Securities and Exchange Commission (“SEC”). In general, beneficial ownership includes (i) securities over which a director or executive officer is deemed to have voting or investment control, either directly or indirectly, and (ii) stock options or other rights that are exercisable currently or become exercisable within 60 days of the date upon which the beneficial ownership was determined. Except as noted below, each holder has sole voting and investment control for all shares beneficially owned.
Name and Address** of Beneficial Owner | Position | Amount and Nature of Beneficial Ownership of Common Stock as of February 18, 2016 (1) | |
| Michael J. Blodnick | Director, President and Chief Executive Officer (“CEO”) | 470,320 (2) | * |
| Don J. Chery | Executive Vice President (“EVP”) and Chief Administrative Officer (“CAO”) | 44,516 (3) | * |
| Randall M. Chesler | President of Glacier Bank | 26,790 | * |
| Sherry L. Cladouhos | Director | 13,843 (4) | * |
| Ron J. Copher | EVP and Chief Financial Officer (“CFO”), Treasurer and Assistant Secretary | 51,799 (5) | * |
| James M. English | Director | 41,026 (6) | * |
| Annie M. Goodwin | Director | 9,134 (7) | * |
| Dallas I. Herron | Director, Chairman of Glacier and Glacier Bank | 58,260 (8) | * |
| Craig A. Langel | Director | 66,328 (9) | * |
| Douglas J. McBride | Director | 14,393 (10) | * |
| John W. Murdoch | Director | 24,592 (11) | * |
| Mark J. Semmens | Director | 9,070 | * |
| Executive officers and directors as a group (12 individuals) | 830,071 | 1.09% | |
Name and Address** of Beneficial Owner | Position | Amount and Nature of Beneficial Ownership of Common Stock as of March 2, 2018 (1) | ||
| Don J. Chery | Executive Vice President (“EVP”) and Chief Administrative Officer (“CAO”) | 32,392 (2) | * | |
| Randall M. Chesler | Director, President and Chief Executive Officer (“CEO”) | 42,105 | * | |
| Sherry L. Cladouhos | Director | 15,871 (3) | * | |
| Ron J. Copher | EVP and Chief Financial Officer (“CFO”); Secretary | 60,620 (4) | * | |
| James M. English | Director | 36,918 (5) | * | |
| Annie M. Goodwin | Director | 10,642 (6) | * | |
| Dallas I. Herron | Director, Chairman of Glacier and Glacier Bank | 63,078 (7) | * | |
| Craig A. Langel | Director | 61,269 (8) | * | |
| Douglas J. McBride | Director | 10,320 (9) | * | |
| John W. Murdoch | Director | 12,631 (10) | * | |
| Mark J. Semmens | Director | 10,505 | * | |
| George R. Sutton | Director | 1,211 (11) | * | |
| Executive officers and directors as a group (12 individuals) | 357,562 | * | ||
| * | Represents less than 1% of outstanding common stock. |
| ** | The business address for each beneficial owner is 49 Commons Loop, Kalispell, Montana 59901. |
| (1) | The number and percentages shown are based on the number of shares of Glacier common stock deemed beneficially owned under applicable regulations and have been adjusted for stock splits and stock dividends. |
| (2) |
| All shares are held jointly with Mr. Chery’s spouse. |
| Includes |
| Includes |
| Includes |
| Includes |
| Includes 12,000 shares held jointly with Mr. Herron’s spouse, |
| Includes 128 shares held as trustee for Dr. McBride’s children. |
| (11) | Includes 300 shares held in an IRA for the benefit of Mr. Sutton. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers to send reports of their ownership of our stock to the SEC. WeBased solely upon a review of Forms 3 and 4 furnished to the Company, we believe that all Section 16(a) filing requirements that apply to our directors and executive officers were complied with for the fiscal year ended December 31, 2015.2017 with one exception. Michael J. Blodnick, a director of the Company during 2017, filed one late Form 4 (two days after the deadline) which disclosed one late transaction.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Articles of Incorporation and its amended and restated Bylaws (the “Bylaws”), the Board has set the number of directors for election to the Board at the 20162018 Annual Meeting at ten and has nominated the persons identified below in the section entitled “Directors and Director Nominees” for election at the Annual Meeting. If you elect the nominees presented, they will hold office until the election of their successors at the annual meeting in 20172019 or until their earlier resignation.
We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, yourthe proxy holder may votebe voted for another nominee proposedthe election of such substitute nominee(s) as may be designated by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternatives. The Board has no reason to believe that its nominees would prove unable to serve if elected.
Directors and Director Nominees
Information regarding each of the nominees is provided below, including each nominee’s name, age as of February 18, 2016,March 2, 2018, principal occupation, public company directorships during the past five years, and the year first elected or appointed as a director of Glacier. All of the nominees are currently directors of both Glacier and Glacier Bank except Mr. Chesler, who is currently a director of Glacier Bank only.Bank. Certain of the directors also served as directors of Glacier’s other bank subsidiaries prior to Glacier’s consolidation of its bank subsidiaries with and into Glacier Bank which occurred in April 2012. Information regarding the amount and nature of each nominee’s ownership of Glacier common stock is provided under the section entitled “Voting Securities and Principal Holders Thereof.”
Our Board is currently comprised of nineten members. Our Amended and Restated Articles of Incorporation provide that the number of directors shall be determined by a vote of the majority of the Board and shall be no fewer than seven and no more than seventeen. For election at the 20162018 Annual Meeting, the NominatingNominating/Governance Committee has identified ten director nominees, and the Board has set the number of directors at ten.
Randall M. Chesler, 57,59, is a nominee for director ofwas elected to the Board pursuant to a provision in his employment agreement. Sinceat the Company’s 2016 annual meeting. From August 1, 2015 to December 31, 2016, Mr. Chesler served as President of Glacier Bank. Since January 1, 2017, Mr. Chesler has served as President and CEO of each of Glacier and Glacier Bank. Mr. Chesler has more than 30 years of experience in the financial services industry, most recently as President of CIT Bank, the Salt Lake City-based banking subsidiary of CIT Group. During his 10 years with CIT, Mr. Chesler held progressive leadership positions including President, Small Business Lending and President, Consumer Finance. Mr. Chesler brings to the Board broad experience in a variety of aspects of the banking and technology industries as well as proven leadership skills.
Sherry L. Cladouhos, 6062, was appointed to the Board in October 2010. She has served as Chairman of the Compensation Committee since July 2015 and served as the Chairman of the Compliance Committee from May 2013 to July 2015. She was employed by Blue Cross Blue Shield Montana for 36 years and served in a variety of leadership and executive roles, including Director of Customer Service and Administration, Vice President of Member Services and Support, Senior Vice President of Marketing and Operations, Co-Chief Operating Officer, and in 2005 was named President and CEO. She was responsible for the overall strategic direction of the company and worked with others to provide affordable healthcare coverage to Montanans. Ms. Cladouhos is a Certified Health Insurance Executive and is a graduate of the Berkeley Healthcare Executive Program. Ms. Cladouhos also has served on the boards of numerous business and community-related organizations, she is past Chairman of
the Montana Chamber of Commerce, and she served on the Montana Chamber of Commerce Foundation. Ms. Cladouhos brings extensive experience in executive-level leadership and strategic business decision making to the Board.
James M. English, 7173, was appointed to the Board in February 2004 and has served as Chairman of the NominatingNominating/Governance Committee since July 2013. He also served as a director of the Company’s former subsidiary, Mountain West Bank in Coeur d’Alene, Idaho, from 1996 until the consolidation of Glacier’s bank subsidiaries in 2012. He earned a Bachelor of Science degree in finance and a law degree from the University of Idaho. From 1996 to 2000, Mr. English served as the President and Chief Operating Officer for Idaho Forest Industries, Inc., a lumber manufacturing, real estate development and building products retail sales company. Mr. English has been an attorney in limited private practice as a sole practitioner of the English Law Firm in Hayden, Idaho since 2000. He is a partner in Great Sky Development of Boise, Idaho and serves on the board of RGB Holdings, Inc. Mr. English brings experience and expertise to the Board based on a legal career of over 40 years and experience as a business executive.
Annie M. Goodwin,57 59, was appointed to the Board in June 2012 and has served as Chairman of the Risk Oversight Committee since July 2012. Ms. Goodwin is an attorney in Helena, Montana and is the principal of the Goodwin Law Office, L.L.C. She practices banking and regulatory law. She served as Montana’s Commissioner of Banking and Financial Institutions from 2001 to 2010, as chief legal counsel with the Montana Banking and Financial Institutions Division and Department of Commerce from 1988 to 2001 and worked in private practice prior to that time. Ms. Goodwin earned her Bachelor of Science degree in nursing from Carroll College and worked as a registered nurse before going on to earn her Juris Doctor degree from the University of Montana Law School in 1984. She continued her legal education at Hastings College of Law, George Mason University of Law in the Banking Law Section, and she completed the FDIC Bank Examination School for Attorneys. Ms. Goodwin is active in local and trade associations and was appointed to the Commission on Character and Fitness of Attorney Admissions to State Bar of the Montana Supreme Court where she has served as Chairman since 1988. Ms. Goodwin brings to the Board her expertise and knowledge gained in her role as Commissioner where she had regulatory oversight over the financial institutions in Montana.
Dallas I. Herron, 7173, was appointed to the Board in June 2008 and has served as its Chairman since the 2013 annual meeting. Prior to his appointment to the Glacier Board in 2008, Mr. Herron was a director of Glacier Bank and served from 1998 through 2008. He received his Bachelor of Science degree in aeronautical engineering from Northrop University in 1966. Mr. Herron has worked in the oil industry
for over 40 years and is the CEO of CityServiceValcon, LLC, which markets petroleum products in Montana, Idaho, Washington, and ten other states. He is a past President of the Western Petroleum Marketing Association, a seven-state trade association. He serves on Chevron’s Western U.S. Advisory Council and has also served as Senior Director of the Petroleum Marketer Association of America. Mr. Herron is active in the community and in the forest products and transportation industries. Mr. Herron brings to the Board over 3040 years of experience as a business executive in the energy sector, which is also a regulated business.
Craig A. Langel, 6567, was appointed to the Board in December 2005 and has served as Chairman of the Audit Committee since 2009. Mr. Langel received his education at Montana State University graduating with a Bachelor of Science degree in accounting in 1973. He received his Certified Public Accountant (“CPA”) license in 1974. Mr. Langel has served the accounting profession for over 40 years and is a CPA accredited in Business Valuation and a Certified Valuation Analyst. He is President and shareholder of Langel & Associates, P.C., providing consulting and tax services throughout the United States. In addition, Mr. Langel is the owner and CEO of CLC Restaurants, Inc., which owns and operates Taco Bell and KFC restaurants in Montana, Idaho, and Washington, and he is a part owner of Mustard
Seed Restaurants. Mr. Langel served as a director of Glacier’s former subsidiary First Security Bank of Missoula from 1984 to 2005 and was re-elected to the board in February 2009, serving until the consolidation of Glacier’s bank subsidiaries in 2012. He also serves on the board of directors of two non-profit organizations. With a career of over 40 years as a CPA, Mr. Langel brings extensive financial acumen to the Board, in addition to his experience as a business owner and executive.
Douglas J. McBride, 6365, was appointed to the Board in September 2006 and has served as Chairman of the Compliance Committee since July 2015. Dr. McBride has been an optometrist in Billings for over 30 years. He received his Bachelor of Arts degree at Linfield College and his Doctor of Optometry degree at the Illinois College of Optometry in 1978. Dr. McBride is a former President of the Montana State Board of Examiners for Optometry, of which he has been a member since 1993. He is also the former Chairman of the Advisory Board for TLC Laser Eye Center in Billings and is the former administrator for the State of Montana for Vision Source, an optometric franchise. He is a past President of the Montana Optometric Association. Dr. McBride also served as a director of the Company’s former subsidiary Western Security Bank, serving from 2003 until the consolidation of Glacier’s bank subsidiaries in 2012. Dr. McBride’s expertise in the healthcare community is valuable to the Board and allows him to provide insight into the Company’s healthcare and medical benefit issues, as well as the healthcare industry in general.
John W. Murdoch, 7375, was appointed to the Board in September 2005. Mr. Murdoch graduated from Doane College with a Bachelor of Arts degree in 1964. He worked in the ranch and home supply industry for over 40 years. SinceFrom 1994 to July 2017, he has beenwas an owner of Murdoch’s Ranch & Home Supply, LLC, a ranch and home retail operation, and served as its President from its founding until 2006 when he sold a majority ownership to key employees. As President, he coordinated the efforts required to run a 1,700 employee, multi-location, multi-state retail operation including the oversight of purchasing, marketing, human resources, distribution and accounting. Mr. Murdoch served as a director of the Company’s former subsidiary Big Sky Western Bank from December 2002 to February 2010, and he served on the Montana State University Foundation board in 2009 and 2010. He currently servesIn addition, he served as a director for Bozeman Deaconess Hospital.Hospital from 2008 to 2017. Mr. Murdoch was also President of Mid-States Distributing Co., Inc. in 1990 and then again in 2006 and 2007. Mid-States is a buying cooperative for farm supply stores with over 500 stores and $3 billion in retail sales annually. Mr. Murdoch brings to the Board broad experience and expertise based on his management and oversight of substantial consumer businesses.
Mark J. Semmens, 5658, was appointed to the Board in January 2016. At the end of 2015, Mr. Semmens retired from his position as a Managing Director of Investment Banking at D.A. Davidson & Co., a full-service investment firm based in Great Falls, Montana. Mr. Semmens joined D.A. Davidson & Co. in 1985, founded the firm’s investment banking practice, and served on the firm’s Management Committee, Executive Committee, and Board of Directors. Mr. Semmens served as the lead investment banking advisor to Glacier for 25 years, advising Glacier on approximately 20 acquisitions and four capital raises. He also has an extensive background in higher education, having served as a board member (and in the latter two cases, Chairman) of the Montana Board of Regents, the Montana Higher Education Student Assistance Corporation, and the Carroll College Board of Trustees. Mr. Semmens is a graduate of Carroll College with degrees in business administration and finance. In addition to broad experience and expertise in the financial services and financial institutions industries generally, Mr. Semmens brings to the Board historical knowledge of the Company and the business environment in which it operates.
George R. Sutton, 70, was appointed to the Board in September 2017. Mr. Sutton is an attorney and Of Counsel to the Salt Lake City-based law firm Jones Waldo Holbrook & McDonough where he has practiced since March of 2008. Mr. Sutton served as the Utah Commissioner of Financial Institutions from 1987 to 1992, where he was responsible for regulating all state-chartered depository institutions and
all consumer financial services providers in Utah. Since 1993, Mr. Sutton has specialized in bank regulation. He assists clients with new bank and other regulatory applications, provides compliance reviews of products and services, and advises boards and management on regulation and corporate governance matters. From July 2009 to December 2016, Mr. Sutton served as a member of the board of directors of Synchrony Bank (previously named GE Capital Retail Bank). Synchrony Bank is a federal savings bank with assets in excess of $73.6 billion and is a wholly owned subsidiary of Synchrony Financial, which is traded on the NYSE under the symbol “SYF.” Mr. Sutton was an independent director and a member of the Audit and Compensation Committees. Mr. Sutton completed his undergraduate studies and his Juris Doctor degree at the University of Utah. Mr. Sutton brings to the Board his extensive experience in the banking industry as a regulator, operator, and attorney.
The Board unanimously recommends a vote FOR the election of each of the nominees to the Board.
CORPORATE GOVERNANCE
Corporate Governance Guidelines and Policies
The Board is committed to good business practices, transparency in financial reporting and high standards of corporate governance. Glacier operates within a comprehensive plan of corporate governance for the purpose of defining responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. We regularly monitor developments in the area of corporate governance. The Board periodically reviews our governance policies and practices against those suggested by various groups or authorities active in corporate governance and the practices of other companies, as well as the requirements of the related SEC rules and the listing standards of the NASDAQ Stock Market (“NASDAQ”).
Governance Policy and Codes of Ethics
The Board has adopted and adheres to a Corporate Governance Policy which the Board and management believesbelieve represents sound governance practices and provides a framework to sustain our success and build long-term value for our shareholders.
The Board has adopted a Code of Ethics for Senior Financial Officers which applies to its principal executive officer, principal financial officer, principal accounting officer, chief administrative officer, controller, treasurer, and any persons performing similar functions. The Board has also adopted a Director Code of Ethics.
Clawback Policy
The Board adopted a “clawback” policy providing for the recovery of incentive compensation in certain circumstances. Under the clawback policy, if Glacier is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, the Company will recover compensation from any current or former executive officer who received incentive compensation (including equity-based compensation) during the three-year period preceding the date of the restatement, based on the erroneous data, in excess of what would have been paid to the executive under the accounting restatement.
Anti-Hedging Policy
The Board has adopted an Anti-Hedging Policy that prohibits our directors, officers and employees from engaging in a “hedging transaction,” which is generally a transaction that would have the economic effect of establishing a downside price protection in connection with Glacier common stock owned by such person. This type of transaction may create the appearance that the person’s interests are not aligned with those of the Company’s shareholders generally, to the extent that it is designed to hedge or offset against any decrease in the market value of Glacier common stock.
Anti-Pledging and Margin Account Policy
The Board has adopted an Anti-Pledging Policy that prohibits our directors and executive officers from pledging Glacier common stock as collateral or from holding Glacier common stock in a margin account. This policy was adopted on June 30, 2015 and does not affect any pledges of Glacier common stock that were made prior to that date, except that no such pre-existing pledges may be increased in amount after that date.
Stock Ownership and Retention Guidelines
The Board has approved stock ownership and retention guidelines for its directors and executive officers which are intended to help closely align the financial interests of such persons with those of Glacier’s shareholders. Within five years after appointment or election to the Board, each director is expected to acquire and retain shares of Glacier common stock having a market value of at least five times his or her annual cash retainer. All of the current Glacier directors have exceeded this ownership guideline.guideline with the exception of Mr. Sutton, who was appointed to the Board on September 27, 2017.
Similarly, executive officers who are required to file reports pursuant to Section 16 of the Exchange Act are expected, within five years of appointment, to acquire and retain Glacier shares having a specified market value. The CEO is expected to own shares having a market value equal to at least six times his or her annual base salary, and each other executive officer is expected to own shares having a market value equal to at least four times his or her annual base salary. Each of our executive officers has exceeded this ownership guideline except Mr. Chesler, who joined the Company effective August 1, 2015.
Unless a director or executive officer has achieved the applicable guideline level of share ownership, he or she is required to retain an amount equal to 50% of the net shares received as a result of the exercise, vesting or payment of any Glacier equity awards granted to him or her.
You can access our current corporate governance documents, including the Corporate Governance Policy, the Code of Ethics for Senior Financial Officers, the Director Code of Ethics, the Clawback Policy, the Anti-Hedging Policy, the Anti-Pledging and Margin Account Policy, the Majority Voting Policy (summarized below), the Stock Ownership and Retention Guidelines, and the charters of the Audit, Compensation, Compliance, Nominating,Nominating/Governance, and Risk Oversight Committees, by visiting the Company’s website at www.glacierbancorp.com and clicking on “Governance Documents” or by writing to: LeeAnn Wardinsky, Corporate Secretary, 49 Commons Loop, Kalispell, Montana 59901.
Board Leadership Structure
The Board is committed to maintaining an independent Board. To that end, it has been our practice to separate the duties of Chairman and CEO. At this time, the Board believes that the separation of duties of Chairman and CEO eliminates any inherent conflict of interest that may arise when the roles
are combined and that a non-employee director who is not serving as an executive officer of Glacier can best provide the necessary leadership and objectivity required as Chairman.
Director Qualifications
The Board believes that it is necessary for each of our directors to possess many qualities and skills. All of our directors bring to our Board a wealth of leadership experience derived from their extensive board service and their service in a variety of professional and executive positions.
The NominatingNominating/Governance Committee is responsible for the oversight and nomination process for director nominees. The NominatingNominating/Governance Committee has not historically adopted formal director qualification standards for NominatingNominating/Governance Committee-recommended nominees. However, the NominatingNominating/Governance Committee annually reviews the experience, qualifications, attributes and skills of each director and nominee as part of its evaluation as to whether or not the nominees are the right individuals to serve on Glacier’s Board and to help Glacier successfully meet its long-term strategic plans. Because each director must be re-elected annually, the NominatingNominating/Governance Committee has an annual opportunity to assess these factors and, if appropriate, determine not to re-nominate any director. A more detailed discussion regarding the considerations given by the NominatingNominating/Governance Committee when considering director nominees is set forth below in the section entitled “Nominating / Nominating/Corporate Governance Committee.”
The director biographical information set forth above in the section entitled “Directors and Director Nominees” summarizes the experience, qualifications, attributes and skills that we believe qualifies each director nominee to serve on the Board.
Majority Voting Policy
In September 2011, the Company adopted the Majority Voting Policy under which each director nominee is required to submit an irrevocable resignation as a director of the Company. The Company has such a letter on file from each 20162018 director nominee. If any such nominee receives more WITHHELD votes than FOR votes in an uncontested election of directors, his or her resignation will be considered by our NominatingNominating/Governance Committee and our Board.
We believe that the Majority Voting Policy enhances our accountability to shareholders by formalizing the consequences of a “majority withhold” vote and demonstrating our responsiveness to director election results, while at the same time protecting the long-term interests of the Company and its shareholders.
An “uncontested election” is generally an election in which the number of nominees for election does not exceed the number of Board positions to be filled. In a contested election, the Majority Voting Policy will not apply and nominees will be elected by plurality voting.
The NominatingNominating/Governance Committee will consider any director resignation tendered under the policy and recommend to the Board the action to be taken with respect to such resignation. Among other things, the recommendation of the NominatingNominating/Governance Committee may be to accept the resignation or to defer acceptance until a qualified replacement director can be identified and elected to the Board. The NominatingNominating/Governance Committee may also recommend that the resignation be rejected, either: (i) unconditionally; (ii) by addressing what the NominatingNominating/Governance Committee believes to be the underlying reasons for the failure of the director to receive more FOR votes than WITHHELD votes; or (iii) resolving that the director will not be nominated in the future for election.
In considering a tendered resignation, the NominatingNominating/Governance Committee is authorized to consider all factors it deems relevant to the best interests of the Company and its shareholders. The policy contains a non-exclusive list of the factors that may be considered in any particular circumstance.
The Board (excluding the director whose resignation is being considered) will act on the recommendations of the NominatingNominating/Governance Committee no later than 90 days following certification of the shareholder vote. The Board is authorized to consider information and factors which led to the nomination of the director by the NominatingNominating/Governance Committee and any additional factors as the Board deems relevant to the best interests of the Company and its shareholders. Following the Board’s decision, the Company will promptly publicly announce such decision, providing an explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation.
Director Independence
With the assistance of legal counsel to the Company, the NominatingNominating/Governance Committee has reviewed the applicable legal standards for Board and Board committee member independence. The NominatingNominating/Governance Committee has also reviewed a summary of the answers to annual questionnaires completed by each of the directors, which identifies any potential director-affiliated transactions.
The Board then analyzed the independence of each director and determined which directors meet the standards regarding “independence” established by industry best practices and required by applicable law, regulation and NASDAQ listing standards and whether or not each such director is free of relationships that would interfere with the individual exercise of independent judgment. In determining the independence of each director, the Board considered many factors, including any loans to the directors, each of which were made on the same terms as comparable transactions made with persons not related to Glacier, Glacier Bank, or our bank divisions. Such arrangements are discussed in detail under the section entitled “Transactions with Management.”
Based on the standards described above, the Board determined that Michael J. Blodnick, who serves as an executive officereach of Glacier, andthe director nominees listed in the table below is independent but that Randall M. Chesler, who serves as an executive officer of Glacier Bank, areGlacier’s President and CEO, is not independent.
Ÿ Sherry L. Cladouhos | Ÿ Dallas I. Herron | Ÿ John W. Murdoch |
Ÿ James M. English | Ÿ Craig A. Langel | Ÿ Mark J. Semmens |
Ÿ Annie M. Goodwin | Ÿ Douglas J. McBride | Ÿ George R. Sutton |
Shareholder Communications with the Board of Directors
The Company and the Board welcome communication from shareholders and other interested parties. Communications may be made by writing to the Chairman of the Board, c/o theo: Corporate Secretary, Glacier Bancorp, Inc., 49 Commons Loop, Kalispell, Montana 59901. A copy of any such written communication will also be sent to our CEO. If the Chairman and the CEO determine that such communication is relevant to and consistent with Glacier’s operations and policies, such communication will be forwarded to the entire Board for review and consideration.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met 12thirteen times during the fiscal year ended December 31, 2015.2017. Each director attended at least 75% of the meetings of the Board and the committees on which he or she served.served, with the exception of Mr. Sutton. Mr. Sutton was appointed to the Board on September 27, 2017 and attended the October and November Board and committee meetings; however, due to a commitment made prior to his appointment to the Board, Mr. Sutton did not attend the December meetings. We encourage but do not require our directors to attend the annual meeting of the shareholders. Last year, all except one of our directors attended the annual meeting of the shareholders.
Board Authority for Risk Oversight
The Board has the ultimate authority and responsibility for overseeing risk management at Glacier. Some aspects of risk oversight are fulfilled at the full Board level. For example, the Board regularly receives reports from management - specifically from enterprise risk management - on numerous risk components that impact the operations and reputation of the Company. The Board delegates other aspects of its risk oversight function to certain of its committees.
The Audit Committee oversees financial, accounting and internal control risk management. The director of the Company’s internal audit function reports directly to the Audit Committee. The executive officers regularly report directly to the entire Board and to appropriate Board committees with respect to the risks they are responsible for managing.
The Compensation Committee oversees the management of risks that may be posed by the Company’s compensation practices and programs. As part of this process, the Compensation Committee is responsible for analyzing the compensation policies and practices for all employees, not just Named Executive Officers. In its review of these policies and practices, the Compensation Committee has determined that the current policies and practices do not create or encourage employees to take risks that are reasonably likely to have a material adverse effect on the Company. In June 2015, the Board adopted a clawback policy for the recovery of incentive payments to executive officers in certain circumstances, which further mitigates risk.
The Compliance Committee monitors compliance with federal and state laws andassociated with the associated regulationsconsumer, including the Community Reinvestment Act, which are applicable to the Company, Glacier Bank, and our bank divisions.
The Risk Oversight Committee oversees the enterprise risk management practices of the Company regarding the identification, measurement, monitoring, and control of the Company’s principal business risks related to strategy, credit, the market and interest rates, liquidity, operations, reputation, and safety and soundness laws and regulations.
Glacier’s independent directors meet in executive session during regularly scheduled meetings of the Board and at other times as required. During 2015,2017, the independent directors met in executive session eight times.twice.
Committee Membership
Throughout this Proxy Statement, we refer to five of the committees established by the Board, and the membership of each is shown in the table below. All of the independent directors were members of all five committees throughout 2017 except for Mr. Sutton, who was appointed to the Board and each of its committees on September 27, 2017. Messrs. Blodnick and Chesler are excluded from the chart since neither was considered independent in 2017.
| Name | Audit | Compensation | Compliance | Nominating | Risk Oversight | Audit | Compensation | Compliance | Nominating/ Governance | Risk Oversight |
| Sherry L. Cladouhos | þ | þ* | þ | |||||||
| James M. English | þ | þ* | þ | |||||||
| Annie M. Goodwin | þ | þ* | ||||||||
| Dallas I. Herron | þ | þ | þ | þ | ||||||
| Craig A. Langel | þ* | þ | þ | þ* | þ | |||||
| Douglas J. McBride | þ | þ | þ* (5) | þ | þ | þ* | þ | |||
| John W. Murdoch | þ | þ | þ | þ | ||||||
Mark J. Semmens (6) | þ | þ | þ | |||||||
| Total Meetings in 2015 | 14 | 6 | 12 | 6 | 12 | |||||
| Mark J. Semmens | þ | |||||||||
| George R. Sutton | þ | |||||||||
| Total Meetings in 2017 | 13 | 8 | 9 | |||||||
*Committee Chair. Chairmanship information is for the calendar year 2015 only.Chair during all of 2017.
Audit Committee. During the fiscal year ended December 31, 2015, the Audit Committee was comprised of seven directors. Each Audit Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC rules. Mr. Langel servedserves as Chairman of the Audit Committee and qualifies as an “audit committee financial expert” under SEC rules. The Audit Committee operates under a written charter adopted by the Board. As part of its periodic review of Audit Committee matters, the Audit Committee has received updates on the relevant requirements of applicable SEC rules and the corporate governance listing standards of NASDAQ.
The Audit Committee is responsible for the oversight of the quality and integrity of Glacier’s financial statements, its compliance with legal and regulatory requirements, the qualifications and independence of its independent auditors, the performance of its internal audit function and independent auditors, and other significant financial matters. In discharging its duties, the Audit Committee is expected to, among other things:
have the sole authority to appoint, retain, compensate, oversee, evaluate and replace the independent auditors;
review and approve the engagement of Glacier’s independent auditors to perform audit and non-audit services and related fees;
meet independently with Glacier’s internal auditing department, independent auditors and management;
review the integrity of Glacier’s financial reporting process;
review Glacier’s financial reports and disclosures submitted to bank regulatory authorities;
maintain procedures for the receipt, retention and treatment of complaints regarding financial matters; and
review and approve related person transactions.
Compensation Committee. During the fiscal year ended December 31, 2015, the Compensation Committee was comprised of eight directors from January 1, 2015 to June 30, 2015 and seven directors from July 1, 2015 to December 31, 2015 due to Mr. Fetscher’s retirement. Each Compensation Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC and IRS rules. The Compensation Committee reviews the performance of the Company’s CEO and other key employees and determines, approves, and reports to the Board on the elements of their compensation and long-term equity-based incentives. In determining the CEO’s compensation, the Compensation Committee evaluates several performance factors including the Company’s financial results and levels of compensation of peer financial institutions. The
Compensation Committee operates under a written charter adopted by the Board. A complete description of the executive compensation process applicable to 20152017 is described under the section entitled “Compensation Discussion and Analysis.”
In addition, the Compensation Committee:
recommends, if appropriate, new employee benefit plans to the Board;
reviews all employee benefit plans;
makes determinations in connection with compensation matters as may be necessary or advisable; and
recommends, if appropriate, revisions to the compensation and benefit arrangements for directors.
Compliance Committee. During the fiscal year ended December 31, 2015, the Compliance Committee was comprised of seven directors. Each Compliance Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC and IRS rules. The Compliance Committee monitors compliance with federal and state laws and the associated regulations applicable to the Company, Glacier Bank, and our bank divisions and reports to the Board on such matters.
The Compliance Committee operates under a written charter adopted by the Board. In discharging its duties, the Compliance Committee is expected to, among other things:
review the material risk areas and review the regulatory environment and legal requirements associated with the same;
oversee the development and execution of a plan to monitor and remediate all compliance deficiencies identified by the Company or its examiners;
review internal reports to management prepared by the compliance department;
review and approve responses to regulatory agency examination reports prior to submission of any such response on examinations and ensure that all information requests made by regulatory agencies are accurately and timely addressed;
pre-approve all compliance auditing services to be provided to the Company; and
review, with legal counsel, any legal matter that could have a significant impact on the Company.
In carrying out its responsibilities and duties, the Compliance Committee will foster an environment that encourages all bank officers and employees to raise any compliance issues or concerns freely and without concern for retribution.
The NominatingNominating/Governance Committee will consider nominees recommended by shareholders if the recommendations are made in accordance with the procedures described in this Proxy Statement under the section entitled “Shareholder Proposals and Director Nominations.”
In deciding whether or not to recommend incumbent directors for re-nomination, the NominatingNominating/Governance Committee evaluates Glacier’s evolving needs and assesses the effectiveness and contributions of its existing directors. The NominatingNominating/Governance Committee is authorized to establish guidelines for the qualification, evaluation and selection of new directors to serve on the Board. The NominatingNominating/Governance Committee has not adopted, nor does it anticipate adopting, specific qualifications for NominatingNominating/Governance Committee-recommended nominees, nor has the NominatingNominating/Governance Committee adopted a formal policy relating to Board diversity, although the NominatingNominating/Governance Committee and Board value a diversity of backgrounds, professional experience and skills among directors. The NominatingNominating/Governance Committee instead will instead evaluate each nominee on a case-by-case basis, including assessment of each nominee’s business experience and special skills. The NominatingNominating/Governance Committee will also evaluate whether or not a nominee’s skills are complementary to existing Board members’ skills and the Board’s need for operational, management, financial, technological or other expertise.
In 2017, our Nominating/Governance Committee conducted an assessment survey of the Board’s performance. All directors were given a comprehensive questionnaire which included topics related to the composition, performance, initiative, and overall effectiveness of the Board and included a director peer review. The Board reviewed the results of the survey at a Board meeting, in executive session, and intends to continue this process annually in the future. The Board’s evaluation includes a review of the Corporate Governance Guidelines and an annual review of its committee charters to consider proposed changes.
Risk Oversight Committee. During the fiscal year ended December 31, 2015, the Risk Oversight Committee was comprised of all of the independent directors of the Company. The Risk Oversight Committee was formed in July 2012 to assistassists the Board in fulfilling its oversight responsibilities with regard to the Company’s risk management program. The scope of the Risk Oversight Committee extends over the entire enterprise and includes identification, measurement, monitoring, and controlling of the Company’s principle business risks related to strategy, the market, operations, and all aspects of compliance. Among the responsibilities of the Risk Oversight Committee is to engage management in an ongoing risk-appetite dialogue as conditions and circumstances change and new opportunities arise. The Risk Oversight Committee reviews and approves Glacier’s risk-appetite statement annually and approves any material amendments to the risk-appetite statement.
MANAGEMENT
Named Executive Officers Who Are Not Directors
The following table sets forth information with respect to Named Executive Officers during 20152017 who are not directors or nominees for director of Glacier, including employment history for the last five years. All executive officers are appointed annually and serve at the discretion of the Board.
| Name | Age | Position | Has Served as an Officer of the Company Since | Age | Position | Has Served as an Officer of the Company Since |
| Don J. Chery | 53 | EVP and CAO | 1989 | 55 | EVP and CAO | 1989 |
| Ron J. Copher | 58 | EVP and CFO, Treasurer and Assistant Secretary | 2006 | 60 | EVP and CFO; Secretary (1) | 2006 |
_____________________________
| (1) | Mr. Copher served as EVP and CFO; Assistant Secretary from 2011 to March 28, 2017 and was elected Secretary on March 29, 2017. |
EXECUTIVE COMPENSATION
The following section describes the compensation that Glacier pays its Named Executive Officers. “Officer” is defined in Rule 16a-1 of the Exchange Act to include those who perform a policy-making function, and “named executive officers” are defined by Item 402 of Regulation S-K to be the principal executive officer, the principal financial officer, and the other three most highly compensated executive officers, each of whose total compensation for the last fiscal year exceeded $100,000.
For 2017, Glacier hashad only fourthree Named Executive Officers rather than five as typically disclosed under SEC rules, because Glacier hasthere are only fourthree executive officers who perform a policy-making function for Glacier.
Glacier’s Named Executive Officers for the fiscal year endingended December 31, 2015 are:2017 were:
Ron J. Copher, EVP and CFO; Secretary; and
Don J. Chery, EVP and CAO; andCAO.
The following section includes:
includes the (i) Compensation Discussion and Analysis;
(ii) the Summary Compensation Table and other tables detailing the compensation of the Named Executive Officers;
(iv) the Report of the Compensation Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The following discussion provides an overview and analysis of our Compensation Committee’s philosophy and objectives in designing Glacier’s compensation programs, as well as the compensation determinations and the rationale for those determinationsdecisions relating to our Named Executive Officers.
This discussion should be read together with the compensation tables for our Named Executive Officers, which can be found following this discussion. Unless otherwise indicated, any references to a particular year in this discussion means the fiscal year ended December 31 of such year.
Executive Summary
Financial and Strategic Highlights
Net income was $116 million which isfor 2017. Excluding the impact of the Tax Act, net income was a record $136 million, an increase of 3%$14.9 million, or 12%, over 2014.the prior year net income of $121 million.*
The loan portfolio increased organically by 8%, which is the third consecutive annual increase in the loan portfolio.11%.
The dollar amount of non-interest bearing accounts organically increased by 10%6% during the current year,2017, contributing to the low cost of funding of 4036 basis points for 2015.points.
Net interest income increased 6%by 10% for the year, during a period of historically low interest rates.primarily from increased commercial loan growth.
Net interest margin as a percentage of earning assets, on a tax-equivalent basis, increased to 4.00%4.12% in 20152017 from 3.98%4.02% in 2014.2016.
Credit quality further improved as non-performing assets decreased to 0.67% of assets in 2017, down from 0.76% in 2016.
The Company completed two acquisitionsthe acquisition of The Foothills Bank of Yuma, Arizona, with assets of approximately $360 million, which marked the Company’s entrance into the state of Arizona.
The Company announced the signing of a definitive agreement to acquire Columbine Capital Corp., the holding company for Collegiate Peaks Bank, a community bank in 2015 - thatBuena Vista, Colorado, with assets of approximately $533 million.
The Company announced the signing of a definitive agreement to acquire Inter-Mountain Bancorp., Inc., the holding company for First Security Bank, a community bank in Bozeman, Montana, Community Banks, Inc.with assets of approximately $1.0 billion.
*Net income, ROAA and its subsidiary Community Bank, Inc.ROE which exclude the impact of the Tax Act are “Non-GAAP” financial measures. More information regarding these measurements and that of Cañon Bank Corporation and its subsidiary Cañon National Bank.
Say-on-Pay Vote
The Compensation Committee evaluates our executive compensation programs in light of market conditions, shareholder views, and governance considerations and makes changes as appropriate. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and under Section 14A of the Exchange Act, we held an advisory vote on the compensation of our Named Executive Officers (“Say-on-Pay”) at the 20152017 annual shareholder meeting. Our shareholders overwhelmingly approved the compensation of our Named Executive Officers, with approximately 97.8%98.7% of shareholder votes cast in favor of the Say-on-Pay resolution. As the Compensation Committee evaluated our compensation programs in 2015,2017, it took into account our shareholders’ vote of confidence in making changes to our executive compensation program as described above to ensure a continued link of pay to performance.
Executive Compensation Philosophy
The quality and loyalty of our employees, including our executive team, is critical to executing our community banking philosophy, emphasizing personalized service combined with the full resources of a larger banking organization. To meet our primary goal of attracting, retaining and incenting highly qualified and loyal executives and employees within the context of our corporate culture, our compensation programs are designed with the following principles in mind:
We are committed to providing effective compensation and benefit programs that are competitive within our industry and with other relevant organizations with which Glacier, Glacier Bank, and our bank divisions compete for employees.
Our programs are designed to encourage and reward behaviors that ultimately contribute to the achievement of organizational goals.
Our executive officer compensation has a meaningful portion of total compensation opportunity linked to the achievement of short- and long-term goals and delivering increasing shareholder value.
Pay programs and practices reinforce our commitment to providing a work environment that promotes respect, teamwork, and individual growth opportunities.
Consistent with this overall philosophy, we have designed our executive compensation programs to be relatively straightforward and transparent to shareholders, while providing benefits appealing enough to attract, retain and motivate highly qualified employees.executives.
The Compensation Committee designs our overall compensation program and makes decisions regarding individual executive compensation in the context of a “total compensation policy” that takes into account the overall package of compensation benefits provided to each executive. Our philosophy is to tie a significant percentage of an executive’s compensation to the achievement of Company financial and performance goals. Accordingly, Glacier strives to set base salaries at competitive levels, with an opportunity for each executive to be well rewarded through the annual incentive bonus and equity grants if Glacier meets its performance objectives.
The compensation philosophy is reviewed and approved annually by the Compensation Committee. Decisions made by the Compensation Committee and the Board relative to compensation take all current applicable rules, regulations and guidance into consideration and are made with the goal of being compliant with all such requirements.
Role of the Compensation Committee
The Compensation Committee operates under a written charter adopted by the Board. The Compensation Committee is responsible for the design, implementation and administration of the compensation programs for our executive officers and directors. When appropriate, the Compensation Committee makes recommendations to the Board on items that require Board approval. Specifically, in 2015,2017, the Compensation Committee:
Monitored incentive programs with a view to avoid creating incentives that could subject the Company to excessive risk;
Reviewed and approved the compensation peer group (“Compensation Peer Group”). As discussed below, the Compensation Peer Group was updated in late 2014 but was not utilized for purposes of 2014 or 2015 compensation analysis but rather for the analysis of current equity and long-term incentive practices across the banking industry;;
Reviewed and recommended salary adjustments for Messrs. Blodnick,Chesler, Copher and Chery for Board approval; and
Role and Relationship of the Compensation Consultant
The Compensation Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The Compensation Committee has direct access to outside advisors and consultants throughout the year.
The Compensation Committee considered the independence of McLagan in light of SEC rules and NASDAQ listing standards. The Compensation Committee requested and received a report from McLagan addressing McLagan’s independence and the independence of the senior advisors involved in the engagement which included the following: (1)(i) other services provided to us by McLagan; (2)(ii) fees paid by us as a percentage of McLagan’s total revenue; (3)(iii) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4)(iv) any business or personal relationships between the senior advisors and any member(s) of the Compensation Committee; (5)(v) any company stock owned by the senior advisors; and (6)(vi) any business or personal relationships between our executive officers and the senior advisors. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan’s senior advisors involved in the engagement did not raise any conflict of interest.
Role of Management
Our CEO performs an annual performance review for executive officers of the Company and our bank division presidents and provides a recommendation to the Compensation Committee regarding base salary and bonus targets for such persons, which the Compensation Committee has discretion to approve or modify. The Compensation Committee meets separately on an annual basis with our CEO to discuss his compensation. No Named Executive Officers are present for the Compensation Committee’s discussions, deliberations and decisions with respect to their individual compensation. The Compensation Committee then submits a recommendation regarding compensation for all executive officers to the Board for approval.
Risk Review
The CompensationCompliance Committee reviewed and discussed a compensation risk assessment performedprepared by representatives from Human Resources.the Compliance Department in connection with the Enterprise-Wide Risk Management Department. The CompensationCompliance Committee’s conclusion was that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our business or operations. This risk assessment processreview included a periodic reviewan analysis of the design and operation of the Company’s incentive compensation programs, identifying and evaluating situations or compensation elements that may raise material risks, and an evaluation of other controls and processes designed to identify and manage risk.
Competitive Benchmarking and Peer Group
The Compensation Peer Group is periodically updated by the Compensation Committee and consists of companies that the Compensation Committee believes are comparable in size, performance and business model to the Company and with which we may compete. In 2012, McLagan conducted an analysis of the Compensation Peer Group with emphasis on factors previously utilized by the Compensation Committee to determine appropriate companies for inclusion, with emphasis on asset size, profitability and location as the measures of comparability, in that order of importance.
Potential comparable companies were initially filtered by asset size and then werealso evaluated for profitability, including provisions for asset quality and other performance standards believed to best generally align with Glacier’s general goals.
| Banner Corp. (BANR) | First Financial Bankshares (FFIN) | |
| Chemical Financial Corp. (CHFC) | First Interstate BancSystem (FIBK) | Park National Corp. (PRK) |
| Columbia Banking System Inc. (COLB) | First Midwest Bancorp Inc. (FMBI) | Texas Capital Bancshares Inc. (TCBI) |
| CVB Financial Corp. (CVBF) | Hilltop Holdings Inc. (HTH) | Trustmark Corp. (TRMK) |
| F.N.B. Corp. (FNB) | United Community Banks Inc. (UCBI) | |
| First Commonwealth Financial (FCF) | Western Alliance Bancorp (WAL) | |
| First Financial | ||
Discussion of Executive Compensation Components
The following table outlines the major elements of 20152017 total compensation for Messrs. Blodnick, Copher and Chery:the Named Executive Officers:
| Compensation Element | Purpose | Link to Performance | Fixed / Performance-Based | Short- / Long-Term |
| Base Salary | Helps attract and retain executives through market-competitive base pay | Based on individual performance and market practices | Fixed | Short-Term |
| Annual Cash Incentive Awards | Encourages achievement of financial performance metrics that create near-term shareholder value | Based on achievement of predefined corporate performance objectives; a portion of Named Executive Officer cash bonuses are deferred on a mandatory basis, with additional performance triggers related to long-term performance | Performance-Based | Short-Term Long-Term: Mandatory Deferrals |
| Long-Term Incentive Awards | Aligns executives’ and shareholders’ long-term interests while creating a retention incentive through multi-year vesting | Based on achievement of predefined corporate performance objectives | Performance-Based | Long-Term |
| Supplemental Executive Retirement Plan | Provides income security into retirement | Competitive practice | Fixed | Long-Term |
| Benefits and Perquisites | Provides | Competitive practice | Fixed | Short-Term |
Base Salary
The Compensation Committee reviews salaries of the Compensation Peer Group but bases its determinations on the qualifications, experience and performance of the individual executives and the value of the position to the organization.
CEO Salary
Mr. Chesler’s 2017 salary was established pursuant to the terms of his employment agreement with the Company dated June 18, 2015 (the “2015 Agreement”). The compensation study performed2015 Agreement provided that Mr. Chesler’s salary for 2017, which was the first year that Mr. Chesler served as President and CEO of both
the Company and Glacier Bank, was to be determined by the Company’s Board based on factors including then-current market data for CEOs of comparable financial institutions, assets, job performance, and Company performance. The 2015 Agreement provided that Mr. Chesler’s annual salary for 2017 would not be less than the greater of $631,000 or the 35th percentile of the base salary of CEOs of a peer group to be developed by the Compensation Committee. In late 2016, McLagan assisted the Compensation Committee in the establishment of such peer group. Based upon data provided by McLagan, in the fall of 2011 concluded that the salaries for each of Messrs. Blodnick (CEO), Copher (CFO) and Chery (CAO) were significantly below the Compensation Peer Group market median: the CEO was 48% below the median, the CFO was 36% below, and the CAO was 27% below.Committee set Mr. Chesler’s 2017 annual salary at $687,000.
CFO and COO Salary
| Name | Position | Base Salary 2013 | Base Salary 2014 | Increase over 2013 | Base Salary 2015 | Increase over 2014 |
| Michael J. Blodnick | President and CEO | $470,817 | $548,245 | 16.4% | $627,997 | 14.5% |
| Ron J. Copher | EVP and CFO | 302,680 | 327,786 | 8.2 | 353,645 | 7.8 |
| Don J. Chery | EVP and CAO | 273,227 | 286,653 | 4.9 | 300,482 | 4.8 |
Annual Incentive Bonus
The short-term incentive program (“STIP”) for 20152017 is designed (i) to motivate executives to attain superior annual performance in key areas we believe create long-term value to Glacier and its shareholders. The STIP is also designedshareholders and (ii) to provide incentive compensation opportunities competitive with those of Glacier’s peers.
The STIP and its goals are reviewed annually by the Compensation Committee. The 20152017 STIP opportunities as a percentage of salary for Messrs. Blodnick, Cophereach of the Named Executive Officers and Chery and 20152017 results are shown below. Mr. Chesler did not participate in the STIP for 2015 but will be eligible in 2016.
Position | Annual Incentive Program Opportunity Levels as a % of Base Salary | Actual Earned | Annual Incentive Program Opportunity Levels as a % of Base Salary | Actual Earned | ||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||
| CEO | 0% | 60% | 90% | 74% | ||||
| CAO and CFO | 0% | 40% | 60% | 49% | ||||
| President & CEO | 0% | 60% | 90% | 84% | ||||
| CFO and CAO | 0% | 40% | 60% | 56% | ||||
To maintain focus on long-term Company performance and discourage excessive risk taking, the Compensation Committee established that incentive awards earned for 20152017 performance were subject to a mandatory deferral, as follows:with 50% was paid on February 12, 2016, and the remaining 50% is9, 2018, 25% to be paid 25% by March 15, 20172019 and 25% to be paid by March 15, 2018.2020. This mandatory deferral program continues the practice implemented in prior years with respect to incentive awards. Payment of deferrals in 20172019 and 20182020 are triggered by meeting the following minimum performance conditions over the deferral period:
NPAs / Total Subsidiary Assets no greater than 2.0%; and
Must be employed andmeet eligibility requirements outlined in good standing at the time of payment.STIP program document.
Performance goals were established in 20152017 to balance Company focus on profitability, credit quality, and growth. Goals are reviewed and approved annually by the Board with input from management. The table below shows the goals and corresponding results for 2015:2017:
| Short-Term Incentive Program | Threshold | Target | Maximum | Short-Term Incentive Program | Threshold | Target | Maximum | Actual Result | Result % of Target | Weighted % of Target | ||||
| Performance Area | Weight | 80% | 100% | 115% | Actual Result | Result % of Target | Weighted % of Target | Weight | 80% | 100% | 115% | |||
| YTD Return on Tangible Equity* | 20.00% | 9.60% | 12.00% | 13.80% | 12.53% | 104.4% | 20.9% | |||||||
| YTD Return on Tangible Equity | 20.00% | 9.60% | 12.00% | 13.80% | 13.26% | 110.50% | 22.10% | |||||||
| Non-performing Assets / Total Subsidiary Assets | 20.00% | 1.56% | 1.30% | 1.105% | 0.87% | 115.0% | 23.0% | 20.00% | 1.44% | 1.20% | 1.02% | 0.66% | 115.00% | 23.00% |
| Net DDA Growth (# of accounts) | 20.00% | 2.80% | 3.50% | 4.025% | 4.07% | 115.0% | 23.0% | 20.00% | 3.20% | 4.00% | 4.60% | 4.84% | 115.00% | 23.00% |
| YTD Efficiency Ratio | 20.00% | 57.00% | 53.00% | 49.00% | 55.33% | 88.4% | 17.7% | 20.00% | 58.00% | 55.00% | 52.00% | 54.11% | 104.45% | 20.89% |
| YTD Net Interest Margin | 20.00% | 3.20% | 3.60% | 4.1% | 3.97% | 111.1% | 22.2% | 20.00% | 3.75% | 3.90% | 4.05% | 4.08% | 115.00% | 23.00% |
| 100.00% | Overall Performance: | 106.8% | 100.00% | Overall Performance: | 111.99% | |||||||||
The goals were selected in light of Glacier’s strategic plan, key initiatives, and the need to balance risks in executive compensation arrangements. The 20152017 goals represent metrics addressing key areas of the Company’s performance including profitability, credit and asset quality, and growth in assets and the customer base. The goals were established based on the expectation that 20152017 performance results would reflect an increase over 20142016 results.
The goals exclude the impact of acquisitions during 2017. Additionally, for purposes of 2017 awards, the Board determined to exclude the impact of the Company’s one-time tax expense from the revaluation of the net deferred asset as a result of the enactment of the Tax Act. Such exclusion applies to all employee compensation subject to the relevant performance goals.
Long-term Incentives
The long-term incentive program (“LTIP”) is designed to reward executives for annual performance results relative to Company objectives while aligning the interests of executives with those of our shareholders. The LTIP provides executives the opportunity to increase their ownership in Glacier while at the same time createscreating a retention vehicle through the use of a multi-year vesting period.
Target long-term awards as a percentage of executive salary for each of the Named Executive Officers and the 20152017 results are shown below. Mr. Chesler did not participate in the LTIP for 2015 but will be eligible in 2016.
| Position | Long-Term Incentive Program Opportunity Levels as a % of Base Salary | Actual Earned | Long-Term Incentive Program Opportunity Levels as a % of Base Salary | Actual Earned | ||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||
| CEO | 0% | 50% | 75% | 59% | ||||
| CAO and CFO | 0% | 30% | 45% | 36% | ||||
| President & CEO | 0% | 50% | 75% | 69% | ||||
| CFO and CAO | 0% | 30% | 45% | 41% | ||||
LTIP performance goals were set similarly to those of the STIP, with the exception of net interest margin, which is excluded. Goals are reviewed and approved annually by the Board with input from management.
The LTIP goals were selected in light of Glacier’s long-term strategic plan, long-term initiatives, and the need to balance risks in executive compensation arrangements. The 20152017 goals represent metrics addressing key areas of the Company’s performance including profitability, credit and asset quality, and growth in assets and the customer base. The goals were established based on the expectation that 20152017 performance results would reflect an increase over 20142016 results.
| Long-Term Incentive Program | Threshold | Target | Maximum | ||||
| Performance Area | Weight | 80% | 100% | 115% | Actual Result | Result % of Target | Weighted % of Target |
| YTD Return on Tangible Equity* | 25.00% | 9.60% | 12.00% | 13.80% | 12.53% | 104.4% | 26.1% |
| Non-performing Assets / Total Subsidiary Assets | 25.00% | 1.56% | 1.30% | 1.105% | 0.87% | 115.0% | 28.75% |
| Net DDA Growth (# of accounts) | 25.00% | 2.80% | 3.50% | 4.025% | 4.07% | 115.0% | 28.75% |
| YTD Efficiency Ratio | 25.00% | 57.00% | 53.00% | 49.00% | 55.33% | 88.4% | 22.1% |
| 100.00% | Overall Performance: | 105.7% | |||||
| Long-Term Incentive Program | Threshold | Target | Maximum | Actual Result | Result % of Target | Weighted % of Target | |
| Performance Area | Weight | 80% | 100% | 115% | |||
| YTD Return on Tangible Equity | 25.00% | 9.60% | 12.00% | 13.80% | 13.26% | 110.50% | 27.63% |
| Non-performing Assets / Total Subsidiary Assets | 25.00% | 1.44% | 1.20% | 1.02% | 0.66% | 115.00% | 28.75% |
| Net DDA Growth (# of accounts) | 25.00% | 3.20% | 4.00% | 4.60% | 4.84% | 115.00% | 28.75% |
| YTD Efficiency Ratio | 25.00% | 58.00% | 55.00% | 52.00% | 54.11% | 104.45% | 26.11% |
| 100.00% | Overall Performance: | 111.24% | |||||
The 20152017 long-term incentive awards consist solely of restricted stock units (“RSUs”) that vest in equal installments on each of the first three anniversaries of the grant date, subject to the executive’s continued employment. Restricted sharesRSUs were chosen because they provide the desired retention incentive for executives while also aligning the executives’ interests with those of shareholders without encouraging excessive risk taking. In addition, restricted sharesRSUs deliver value reflecting the long-term performance of the Company.
Profit Sharing and 401(k) Plan
The Named Executive Officers participate in the Glacier Profit Sharing and 401(k) Plan (the “Profit Sharing Plan”), which includes a 3% safe harbor contribution plus a discretionary contribution. The Profit Sharing Plan includes a trigger for the discretionary contribution, which is set equal to the 20152017 LTIP qualifier of NPAs / Total Subsidiary Assets no greater than 2.0%. The Company considered ROTEreturn on tangible equity (“ROTE”) as a primary metric in determining its discretionary contribution. Based on ROTE of 12.71%13.66% (which for purposes of the Profit Sharing Plan includes the impact of acquisitions during 2015)2017), the 20152017 discretionary contribution was 5%5.5%. For purposes of 2017 ROTE, the Board determined to exclude the impact of the Company’s one-time tax expense from the revaluation of the net deferred asset as a result of the enactment of the Tax Act. Such exclusion applies to all employee compensation subject to this performance metric.
Retirement Benefits
As part of our total compensation policy, we offer executives the opportunity to participate in both a tax-deferred compensation plan and a Supplemental Executive Retirement Plan (“SERP”). Messrs, Blodnick, Copher and Chery are participantsEach of our Named Executive Officers is a participant in the SERP. The SERP is intended to supplement payments due to participants upon retirement under our other qualified plans.
The deferred compensation plan allows certain Company and bank division executives to defer a portion of their salary and bonus and thereby defer tax payable on that income. Members of the Board are
also entitled to participate in a deferred compensation plan, but not the SERP. Participation in these plans is elective. Terms of the deferred compensation plans and the Named Executive Officer SERP are described under the section entitled “Post-Employment and Termination Benefits.”
Termination and Change-in-Control Benefits
As an additional part of our total compensation policy, we have entered into employment agreements with certain executive officers that allow for continuation of current base salary upon termination without cause or upon termination under certain circumstances following a change in control of the Company. These agreements provide for payments ranging from one times annual base salary to 2.99 times annual base salary. These arrangements are intended to retain our executives who could have other employment alternativesopportunities that may appear to them to be less risky absent these arrangements.
The terms of these agreements are described under the section entitled “Post-Employment and Termination Benefits.”That section also contains tables showing the amounts that the Named Executive Officers would have received if their employment had terminated at fiscal year-endon December 31, 2017 in connection with a change in control.
Other General Employee Benefits
Executive officers are eligible to participate in all employee benefit plans that are available to eligible employees generally, including health insurance, life and disability insurance, and 401(k) matching contributions.
Other Arrangements
The Board and the Compensation Committee have established additional policies to ensure the overall compensation structure is responsive to shareholder interests and competitive with the market. These specific policies are summarized below.
162(m) and Tax Consequences
Under federal income tax law applicable in 2017, a public company may not deduct non-performance-based compensation in excess of $1 million paid to its chief executive officerCEO or any of its other three highest-paid executive officers (excluding the CFO)CFO, for the tax year 2017). No executive officer of Glacier received non-performance-based compensation in excess of this limit in fiscal year 2015.2017. The Compensation Committee currently intends to continue to manage Glacier’s executive compensation program in a manner that will maximizegives appropriate consideration to federal income tax deductions. However, the Compensation Committee may from time to time exercise its discretion to award compensation that may not be deductible under Section 162(m) of the Internal Revenue Code (“Section 162(m)”) when in its judgment such award would be appropriate to achieve Glacier’s compensation objectives and otherwise is in the best interests of the Company.policy.
The 2015 Stock Incentive Plan (“2015 Equity Plan”) and 2015 Short Term Incentive Plan (“2015 Short Term Incentive Plan”) approved by the Company’s shareholders at the 2015 annual meeting are intended, among other purposes, to allow for performance-based compensation to executive officers within the meaning of Section 162(m).
The Tax Act expands the scope of the $1 million deduction limitation to include the CFO as a covered employee and repeals the exception for performance-based compensation. Accordingly, subject to certain limitations, all compensation to a covered employee in excess of $1 million will be non-deductible, effective with the 2018 tax year, other than qualifying performance-based compensation paid under written binding agreements in effect as of November 2, 2017.
Discussion of Option and Restricted Stock Unit Grant Timing
The Company does not have a policy as to when options and restricted sharesequity awards are granted during the year. The Compensation Committee and Board plan to meet in January of each year to consider the award of stock options, RSUs, and restrictedfully vested shares of our common stock to directors, executives and other officers with a February grant date. The Company does not back date options or grant options retroactively and does not coordinate option grants with the release of positive or negative corporate news. Neither the Company’s 2005 Stock Incentive Plan (“2005 Plan”), which expired in February 2015, nor the 2015 Equity Plan permit the award of discounted options or the repricing of stock options. Pursuant to the terms of the 2005 Plan and the 2015 Equity Plan, option prices are determined based on the closing price of the Company’s publicly tradedour common stock on the grant date, or if shares were not traded on the grant date, then on the nearest preceding trading day.
Compensation Tables
The following table shows compensation paid to or accrued by the Named Executive Officers for the last three fiscal years.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (14) | All Other Compensation ($) | Total ($) |
Michael J. Blodnick, President and CEO | 2015 2014 2013 | $624,929 545,267 466,137 | $-- -- -- | $351,806 (2) 291,545 (3) 230,802 (4) | $339,107 (5) 301,697 (6) 236,263 (7) | $157,241 123,025 78,685 | $28,781 (15) 27,888 (16) 24,862 (17) | $1,501,864 1,289,422 1,036,749 |
Ron J. Copher, EVP and CFO | 2015 2014 2013 | 352,651 326,821 301,760 | -- -- -- | 126,201 (2) 112,751 (3) 97,409 (4) | 129,810 (8) 122,824 (9) 103,878 (10) | 30,213 21,368 12,517 | 27,808 (18) 27,206 (19) 24,206 (20) | 666,683 610,970 539,770 |
Don J. Chery, EVP and CAO | 2015 2014 2013 | 299,950 286,137 272,732 | -- -- -- | 110,363 (2) 101,860 (3) 91,074 (4) | 111,366 (11) 108,446 (12) 94,751 (13) | 17,715 11,734 5,310 | 31,355 (21) 30,536 (22) 27,736 (23) | 570,749 538,713 491,603 |
Randall M. Chesler, President of Glacier Bank (24) | 2015 | 153,846 | 200,000 | -- | -- | -- | -- | 353,846 |
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (11) | All Other Compensation ($) (12) | Total ($) |
Randall M. Chesler, President and CEO (1) | 2017 2016 2015 | 676,423 411,538 153,846 | -- -- 300,000 (9) | 205,487 (3) 200,016 (4) 400,000 (5) | 353,876 (7) 130,810 (8) -- (9) | 59,841 34,069 -- | 47,133 37,043 257,912 | 1,342,760 813,476 1,111,758 |
Ron J. Copher, EVP and CFO | 2017 2016 2015 | 391,250 379,256 352,651 | -- -- -- | 142,257 (3) 126,252 (4) 126,201 (6) | 201,323 (7) 183,021 (8) 166,535 (10) | 42,553 36,150 30,213 | 35,113 34,682 37,594 | 812,496 759,361 713,194 |
Don J. Chery, EVP and CAO | 2017 2016 2015 | 323,805 314,178 299,950 | -- -- -- | 117,715 (3) 107,291 (4) 110,363 (6) | 167,575 (7) 154,447 (8) 144,517 (10) | 25,577 22,394 17,715 | 37,459 36,059 40,169 | 672,131 634,369 612,714 |
| (1) | Mr. Chesler’s employment commenced on August 1, 2015. |
| (2) | Represents the grant date fair value of the |
| The fair market value of the |
| (4) | The fair market value of the RSU awards granted in 2016 is based on the per-share price of Glacier’s common stock at the close of business on February 12, 2016 ($23.38). The date on which the awards were granted, February 15, 2016, was a non-trading day. The awards vest in three equal annual installments beginning February 15, 2017. |
| (5) | The fair market value of the RSU award granted in 2015 is based on the per-share price of Glacier’s common stock at the close of business on July 31, 2015 ($28.10). The date on which the award was granted, August 1, 2015, was a non-trading day. The award vests in four equal annual installments beginning August 1, 2016. |
| (6) | The fair market value of the RSU awards granted in 2015 is based on the per-share price of Glacier’s common stock at the close of business on February 13, 2015 ($25.02), the date on which the |
| (7) | Represents the performance-based cash bonus that was paid in |
| (8) | Represents the performance-based cash bonus that was paid in |
| (9) | Mr. Chesler was not eligible for a cash bonus pursuant to the STIP in 2015. The total represents a $200,000 cash incentive bonus and a $100,000 signing bonus. |
| (10) | Represents the performance-based cash bonus that was paid in 2016 pursuant to the STIP. The bonus amount is payable 50% in 2016, 25% in 2017, and 25% in 2018. The deferred portions of the cash bonus are payable only upon the satisfaction of certain requirements as described in the section entitled “Compensation Discussion & Analysis - Annual Incentive Bonus.” |
| (11) |
The amount represents the increase in the actuarial present value of accumulated benefit under Glacier’s SERP, the material terms of which are described below under the section entitled “Post-Employment and Termination Benefits - Supplemental Executive Retirement Plan” and above-market earnings on non-qualified deferred compensation. Earnings are credited at one-half of the Company’s current year return on average equity. |
| Name and Principal Position | Year | 401(k) | Profit Sharing | Dividend Equivalents ($) (1) | Other ($) | Total ($) |
Randall M. Chesler, President and CEO | 2017 2016 2015 | 12,000 12,000 -- | 22,950 21,200 5,147 | 10,966 3,843 -- | 1,217 (2) -- 252,765 (3) | 47,133 37,043 257,912 |
Ron J. Copher, EVP and CFO | 2017 2016 2015 | 6,833 6,720 6,608 | 22,950 21,200 21,200 | 5,330 6,762 9,786 | -- -- -- | 35,113 34,682 37,594 |
Don J. Chery, EVP and CAO | 2017 2016 2015 | 9,885 8,854 10,155 | 22,950 21,200 21,200 | 4,624 6,005 8,814 | -- -- -- | 37,459 36,059 40,169 |
_____________________________
| (1) | Reflects dividend equivalents paid on RSU awards. |
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | ||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | Threshold | Target | Maximum | ($) | ||
| Michael J. Blodnick | --- | $374,957 | $562,436 | --- | $312,465 | $468,697 | ||||||||
| Randall M. Chesler | --- | 405,854 | 608,781 | --- | 338,212 | 507,317 | ||||||||
| Ron J. Copher | --- | 141,060 | 211,590 | --- | 105,795 | 158,693 | --- | 156,500 | 234,750 | --- | 117,375 | 176,063 | ||
| Don J. Chery | --- | 119,980 | 179,970 | --- | 89,985 | 134,978 | --- | 129,522 | 194,283 | --- | 97,141 | 145,712 | ||
| Randall M. Chesler (3) | --- | |||||||||||||
| (1) | These amounts represent ranges of the possible performance-based cash bonuses that could have been paid in |
| (2) | These amounts |
Outstanding Equity Awards at Fiscal Year-End
The following table presents certain information concerning the outstanding stockRSUs that have vested under equity incentive plan awards held as of December 31, 2015 by2017 for each Named Executive Officer of the Company.
| Stock Awards | ||
| Name | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) (1) | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) |
| Michael J. Blodnick | 15,982 | $373,659 |
| Ron J. Copher | 5,400 | $126,252 |
| Don J. Chery | 4,589 | $107,291 |
| Randall M. Chesler | 8,555 | $200,016 |
| Stock Awards | |||
| Name | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) (1) | |
| Randall M. Chesler | 18,415 (2) | 725,367 | |
| Ron J. Copher | 9,154 (3) | 360,576 | |
| Don J. Chery | 7,735 (4) | 304,682 | |
| (1) |
| Stock Awards | ||
| Name | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) |
| Michael J. Blodnick | 14,061 | $351,806 |
| Ron J. Copher | 5,044 | 126,201 |
| Don J. Chery | 4,411 | 110,363 |
| Randall M. Chesler | -- | -- |
| (2) | Includes RSUs for 5,593 shares granted February 15, 2017 that vest in equal annual installments over a three-year period beginning the year after the grant was made so that 1,864 shares will vest in February 2018, 1,864 shares will vest in February 2019, and 1,865 shares will vest in February 2020; and RSUs for 5,704 shares granted February 15, 2016 that vest in equal annual installments over a three-year period beginning the year after the grant was made so that 2,852 shares will vest in February 2018 and 2,852 shares will vest in February 2019; 7,118 shares granted August 1, 2015 that vest in equal annual installments over a four-year period beginning the year after the grant was made so that 3,559 shares will vest in August 2018 and 3,559 shares will vest in August 2019. |
| (3) | Includes RSUs for 3,872 shares granted February 15, 2017, RSUs for 3,600 shares granted February 15, 2016, and RSUs for 1,682 shares granted February 13, |
| (4) | Includes RSUs for 3,204 shares granted February 15, 2017, RSUs for 3,060 shares granted February 15, 2016, and RSUs for 1,471 shares granted February 13, 2015. Each grant of RSUs vests in equal annual installments over a three-year period beginning the year after the grant was made so that 4,069 shares will vest in February 2018, 2,598 shares will vest in February 2019, and 1,068 shares will vest in February 2020. |
Option Exercises and Stock Vested
The following table presents information concerning the vesting of RSUs during 2017 for each Named Executive Officer of the Company.
| Stock Awards | ||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
| Randall M. Chesler | 6,410 | 230,023 |
| Ron J. Copher | 4,893 | 179,769 |
| Don J. Chery | 4,274 | 157,027 |
Director and Employee Plans
Equity Award Plans
The Company maintained the 2005 Plan until its expiration in February 2015. Equity awards to eligible officers, employees, consultants and directors for 2015, excluding Mr. Chesler who commenced service to the Company effective August 1, 2015, were made under the 2005 Plan prior to such plan’s
expiration. Options and equityEquity awards made under the 2005 Plan will remain outstanding until the awards vest or are cancelled and will be governed by the terms of the 2005 Plan.
At the 2015 annual meeting, Glacier’s shareholders of Glacier approved the 2015 Equity Plan. The 2015 Equity Plan provides for awards of stock-based incentive compensation to eligible employees, consultants, and directors of the Company or its affiliates. Shares of Glacier common stock are issuable under the 2015 Equity Plan in the form of stock options, share appreciation rights, restricted shares, restricted sharestock units, unrestricted shares, and performance awards.
The 2015 Equity Plan is effective for ten years and limits the grant of equity awards to any one eligible person to a maximum of 50,000 shares in a calendar year; the maximum number of shares subject to all awards to any non-employee director in a calendar year is 5,500. The aggregate number of shares authorized for issuance under the 2015 Equity Plan is 2,500,000, of which 14,235250,233 have been issued and 2,485,7652,249,767 remain available for issuance at December 31, 2015.2017.
Cash Incentive Award PlanProgram
The Company has maintained an annual cash incentive award program as part of our overall compensation structure since 2012 when we adopted such program for our executive officers following the recommendation of our outside compensation consultant. The expired 2005 Plan provided for the granting of cash-based performance compensation awards, although the Company did not utilize this feature of the 2005 Plan in making awards under its annual cash incentive awards program. The 2015 Short Term Incentive Plan approved by Glacier shareholders at the 2015 annual meeting iswas designed, among other purposes, to allow for annual cash incentive awards to executive officers, such as those made since the adoption of our annual cash incentive award program in effect since 2012, under a compensatory plan that meetsmet the requirements of Section 162(m) of the Internal Revenue Code.Code for performance-based compensation.
Deferred Compensation Plan
Directors and Key Employees. Since December 1995, Glacier has maintained a non-qualified and non-funded deferred compensation plan (“Deferred Plan”) for directors and key employees. The Deferred Plan permits eligible directors and officers of the Company to defer certain income that would otherwise be taxable as earned and paid in the ordinary course. The Deferred Plan was amended in 2005 and 2008 principally in response to the enactment of Section 409A of the Internal Revenue Code and permits participants to elect cash-out distributions and to make new distribution elections on terms that conform to the restrictions set forth in Section 409A of the Internal Revenue Code.
As amended and restated, the Deferred Plan permits a designated officer or key employee to annually defer up to 50% of his or her salary, as well as up to 100% of any cash bonuses. A non-employee director may elect to have any portion of his or her director’s fees deferred into an account. The amended and restated Deferred Plan also provides that the post-2004 rate of return on deferred compensation accounts will equal 50% of the Company’s return on average equity (whether positive or negative) as of December 31 for such year. This change is expected to limit the Company’s future compensation expense while retaining the Deferred Plan’s performance-based nature.
None of the Company’s Named Executive Officers currently participate in the Deferred Plan.
Supplemental Executive Retirement Plan. In December 1995, the Board adopted a nonqualified and nonfunded SERP for executive officers and entered into separate SERP agreements with certain of the executives. The SERP is intended to supplement payments due to participants upon retirement under the Company’s qualified plans. In general, the SERP provides that Glacier will credit each participating executive’s account, on an annual basis, an amount equal to employer contributions that would have otherwise been allocated to the executive’s account under the tax-qualified plans were it not for limitations imposed by the Internal Revenue Code on participation in the Deferred Plan. Payments under the SERP are payable in a lump sum (with respect to Messrs. Copher and Chery) or in five annual installments (with respect to Mr. Chesler). Amounts credited to the executive’s account shall be paid to him on, or beginning on, the first day of the first month immediately following the month upon a payment trigger event, including (i) separation from service; (ii) attainment of age 65; (iii) any of the first five anniversary dates following his separation from service; or (iv) any of the first five anniversary dates following his attainment of age 65. In the event of a change in control, the amounts in the individual SERP accounts will be deposited into a trust, and the Company will continue to be obligated to provide for the benefits under the SERP. In the event the executive is terminated for cause (as defined in the SERP agreement), no benefits will be payable to the executive under the SERP, and all obligations of the Company with respect to the executive’s SERP will cease.
In 2005 and 2008, the SERP was amended principally to mirror the changes described above for the Company’s Deferred Plan; namely, permitting participants to make cash-out elections and new distribution elections and providing that, for years after 2004, the account balance for each participant will be credited with a rate of return that is equal to 50% of the Company’s return on average equity.
Pension Benefits
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | Plan Name (1) | Number of Years Credited Service (#) (2) | Present Value of Accumulated Benefit ($) (3) | Payments During Last Fiscal Year ($) |
| (1) | (2) | (3) | ||||||
| Michael J. Blodnick | SERP | N/A | $1,012,749 | $0 | ||||
| Randall M. Chesler | SERP | N/A | 93,910 | 0 | ||||
| Ron J. Copher | SERP | N/A | 73,335 | 0 | SERP | N/A | 152,038 | 0 |
| Don J. Chery | SERP | N/A | 36,216 | 0 | SERP | N/A | 84,187 | 0 |
| Randall M. Chesler (4) | N/A | N/A | N/A | |||||
| (1) | The terms of the SERP are described |
| (2) | There are no minimum service requirements under the SERP. |
| (3) | Based on the amounts accrued through |
2017 Employment Arrangements and Potential Payments Upon Termination Benefits
| Name | Executive Contributions in Last FY | Registrant Contributions in Last FY | Aggregate Earnings in Last FY | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE |
| ($) (1) | ($) | ($) (2) | ($) | ($) | |
| Michael J. Blodnick | $-- | $-- | $65,776 | $-- | $1,353,351 |
| Ron J. Copher | -- | -- | -- | -- | -- |
| Don J. Chery | -- | -- | -- | -- | -- |
| Randall M. Chesler | -- | -- | -- | -- | -- |
Below are summaries of certain agreementsarrangements between the Named Executive Officers and the Company or Glacier Bank. These summaries aredo not purport to include all of the provisions of the employment agreements with each Named Executive Officer, and this section is qualified in theirits entirety by reference to the individualfull employment agreements which are filed as exhibitscan be accessed through links in our exhibit index to our Form 10-K for the year ended December 31, 2015.2017. The terms “Cause,” “Good Reason,” and “Change in Control” are defined in the respective employment agreements with each of Messrs. Blodnick, Copher, Chery and Chesler.Named Executive Officer.
During calendar year 2015,2017, Mr. Blodnick’sChesler’s employment was governed by an employment agreement that became effective JanuaryJune 18, 2015, with a term of August 1, 2015. The agreement terminated2015 to December 31, 2015, and a2017. A new agreement was entered into effective March 5, 2018. Beginning January 1, 2016.2017, Mr. Blodnick’s 2016 employment agreement provides for an annual salaryChesler served as President and CEO of $710,140,each of Glacier Bank and Mr. Blodnick shall be eligible to participate in the Company’s incentive compensation programs, which include cash incentives as a percentage of salary under the 2015 Short Term Incentive Plan and equity awards as a percentage of salary under the 2015 Equity Plan, both plans being referred to together as the “Plans.” All awards granted under the Plans shall be made in accordance with and shall be subject to all the terms and conditions of the Plans.Company.
If Mr. Blodnick’sChesler’s employment ishad been terminated by the Company without Cause or by Mr. BlodnickChesler for Good Reason during the term of the agreement,2017, Mr. Blodnick will receiveChesler would have received a payment equal to the base salary to which he would have been entitled for the remainder of the term of the agreement if his employment had not terminated. All such payments must be completed no later than March 15 of the calendar year following the calendar year in which employment was terminated. Mr. Blodnick is prohibited fromThe agreement includes a prohibition on competing with the Company or its subsidiaries during the term of the agreement and for a three-year period following his termination of employment.
If Mr. Blodnick’sChesler’s employment ishad been terminated by the Company or its successor without Cause either following the announcement of a Change in Control that subsequently occurs,occurred, within three years following a Change in Control, or if Mr. Blodnick terminatesChesler terminated his employment for Good Reason within three years of a Change in Control, the agreement providesprovided that Mr. Blodnick willChesler would be entitled to receive an amount equal to 2.99 times his then-current annual salary, payable in 36 monthly installments. The agreement providesprovided that payments to be received by Mr. Blodnick willChesler would be limited to less than the amount that would cause them to be an “excess parachute payment” within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code. In addition, the payments to be received by Mr. Blodnick willChesler would be reduced by any compensation that he receivesreceived from the Company or its successor following the Change in Control and/or after his termination of employment.
During calendar year 2015,2017, Mr. Chesler’sCopher’s employment was governed by an employment agreement that became effective June 18, 2015, with a term of AugustJanuary 1, 2015 to2017. The agreement terminated December 31, 2017, and provides thata new agreement was entered into effective March 5, 2018. Except as described below, the provisions of the 2017 employment agreement for Mr. Chesler shall serveCopher were substantially the same as (i) President and a director of Glacier Bank beginning August 1, 2015 and (ii) President and CEO of each of Glacier Bank andthose for Mr. Chesler.
If Mr. Copher’s employment had been terminated by the Company beginning January 1, 2017. Mr. Chesler’s agreement provides that his annual salary from August 1, 2015 to December 31, 2016 is $400,000, andor its successor without Cause either following the Board determined to increase Mr. Chesler’s annual salary to $412,000 effective January 1, 2016. From January 1, 2017 to December 31, 2017, his annual salary will be determined by the Board but will not be less than the greaterannouncement of $631,000 or the 35th percentile of the then-current base salary for chief executive officers of a peer group to be developed by the Compensation Committee.
Don J. Chery
The material terms of Mr. Blodnick’sthe 2017 employment agreement for Mr. Chery were the same as described above.those for Mr. Copher.
The table below shows the maximum amounts that could behave been paid to Mr. Blodnick and Mr. Cheslereach Named Executive Officer in 2017 under their respective agreements. In the event of death or disability, Mr. Blodnick or Mr. Chesler, or his respective estate, if applicable, would be paid any amounts earned through the termination date.agreement. The following information is based on (i) the executives’executive’s compensation at December 31, 20152017 and (ii) assumes the triggering event occurred on December 31, 2015.2017, except as indicated by footnote.
| Chief Executive Officer (1) | President of Glacier Bank | |||
Termination Without Cause or by Executive with Good Reason | Termination Without Cause or by Executive with Good Reason due to a Change in Control (2) | Termination Without Cause or by Executive with Good Reason | Termination Without Cause or by Executive with Good Reason due to a Change in Control (2) | |
| Base Salary | $627,997 | $1,877,711 | $800,000 | $1,196,000 |
| Healthcare and Other Benefits | -- | 18,192 | -- | 25,325 |
Benefits Payable under SERP (3) | 1,012,749 | 1,012,749 | -- | -- |
| Total | $1,640,746 | $2,908,652 | $800,000 | $1,221,325 |
| Randall M. Chesler | Termination by Company for Cause | Termination by Company without Cause or by Executive for Good Reason | Death | Disability | Change-In-Control Termination by Company without Cause or by Executive for Good Reason within 3 years of CIC (1) | Change-In-Control Termination by Company without Cause before CIC | Retirement |
| Employment Agreement | $-- | $687,000 (2) | $-- | $-- | $2,054,130 (3) | $2,054,130 (3) | $-- |
| Health and Welfare Benefits | -- | -- | -- | -- | 29,772 | -- | -- |
Benefits Payable under SERP (4) | -- | 93,910 | 93,910 | 93,910 | 93,910 | 93,910 | 93,910 |
| Profit Sharing Plan | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 |
Accrued Vacation (5) | 51,842 | 51,842 | 51,842 | 51,842 | 51,842 | 51,842 | 51,842 |
Life Insurance (6) | -- | -- | 50,000 | -- | -- | -- | -- |
| STIP | -- | 707,753 | 707,753 | 707,753 | 707,753 | 707,753 | 707,753 |
LTIP (RSU Accelerated Vesting) (7) | -- | -- | 655,420 | 655,420 | -- | -- | -- |
| TOTAL | 74,792 | 1,563,455 | 1,581,875 | 1,531,875 | 2,960,357 | 2,930,585 | 876,455 |
| (1) |
| Represents payments |
| Chief Financial Officer (1) | Chief Administrative Officer (1) | |||
Termination Without Cause or by Executive with Good Reason | Termination Without Cause or by Executive with Good Reason due to a Change in Control (2) | Termination Without Cause or by Executive with Good Reason | Termination Without Cause or by Executive with Good Reason due to a Change in Control (2) | |
| Base Salary | $353,645 | $707,290 | $300,482 | $600,964 |
| Healthcare and Other Benefits | -- | 9,990 | -- | 11,948 |
Benefits Payable under SERP (3) | 73,335 | 73,335 | 36,216 | 36,216 |
| Total | $426,980 | $790,615 | $336,698 | $649,128 |
| Beginning within 30 days after a Change in Control; payable in 36 substantially equal monthly payments. |
| (4) | Payable in five annual installments. |
| (5) | Based on accrued hours times hourly pay rate. |
| (6) | Paid by a third party upon death. |
| (7) | Pursuant to Mr. Chesler’s employment agreement, his unvested RSUs would have vested immediately only upon his death or disability. |
| Ron J. Copher | Termination by Company for Cause | Termination by Company without Cause or by Executive for Good Reason | Death | Disability | Change-In-Control Termination by Company without Cause or by Executive for Good Reason (1) | Retirement |
| Employment Agreement | $-- | $391,689 (2) | $-- | $-- | $783,378 (3) | $-- |
Benefits Payable under SERP (4) | -- | 152,038 | 152,038 | 152,038 | 152,038 | 152,038 |
| Profit Sharing Plan | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 |
Accrued Vacation (5) | 30,130 | 30,130 | 30,130 | 30,130 | 30,130 | 30,130 |
Life Insurance (6) | -- | -- | 50,000 | -- | -- | -- |
| STIP | -- | 359,265 | 359,265 | 359,265 | 359,265 | 359,265 |
LTIP (RSU Accelerated Vesting) (7) | -- | -- | 244,807 | 244,807 | -- | -- |
| TOTAL | 53,080 | 956,072 | 859,190 | 809,190 | 1,347,761 | 564,383 |
_____________________________
| (1) | Represents payments to the executive in the event of termination |
| (2) | Applicable rules provide that the assumed date for the triggering event is December 31, 2017. However, the agreement with Mr. Copher expired on December 31, 2017, and a corresponding termination on that date would have resulted in no payment for this compensation item. Accordingly, the table assumes a January 1, 2017 triggering event for this compensation item for purposes of illustration. |
| (3) |
| (4) | Payable in a lump sum. |
| (5) | Based on accrued hours times hourly pay rate. |
| (6) | Paid by a third party upon death. |
| (7) | Pursuant to the LTIP program document, Mr. Copher’s unvested RSUs would have vested immediately only upon his death or disability. |
| Don J. Chery | Termination by Company for Cause | Termination by Company without Cause or by Executive for Good Reason | Death | Disability | Change-In-Control Termination by Company without Cause or by Executive for Good Reason (1) | Retirement | |
| Employment Agreement | $-- | $324,168 (2) | $-- | $-- | $648,336 (3) | $-- | |
Benefits Payable under SERP (4) | -- | 84,187 | 84,187 | 84,187 | 84,187 | 84,187 | |
| Profit Sharing Plan | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 | 22,950 | |
Accrued Vacation (5) | 12,481 | 12,481 | 12,481 | 12,481 | 12,481 | 12,481 | |
Life Insurance (6) | -- | -- | 50,000 | -- | -- | -- | |
| STIP | -- | 298,290 | 298,290 | 298,290 | 298,290 | 298,290 | |
LTIP (RSU Accelerated Vesting) (7) | -- | 187,466 | 187,466 | 187,466 | 187,466 | 187,466 | |
| TOTAL | 35,431 | 929,542 | 655,374 | 605,374 | 1,253,710 | 605,374 | |
_____________________________
| (1) | Represents payments to the executive in the event of termination (i) without Cause within two years of a Change in Control; (ii) without Cause before a Change in Control and within six months of termination if a Change in Control occurs; or (iii) executive terminates his employment with Good Reason within two years of a Change in Control. In the event any severance payments would otherwise constitute a parachute payment, such payments will be reduced to the extent necessary to ensure that they are less than the amount that would cause them to be deemed an “excess parachute payment” within the meaning of Section 280G(b)(2)(A) of the Internal Revenue Code. The amount shown does not reflect any adjustment that would be made in this regard. |
| (2) | Applicable rules provide that the assumed date for the triggering event is December 31, 2017. However, the agreement with Mr. Chery expired on December 31, 2017, and a corresponding termination on that date would have resulted in no payment for this compensation item. Accordingly, the table assumes a January 1, 2017 triggering event for this compensation item for purposes of illustration. |
| (3) | Beginning within 30 days after a Change in Control; payable |
| (4) | Payable in a lump sum. |
| (5) | Based on accrued hours times hourly pay rate. |
| (6) | Paid by a third party upon death. |
| (7) | Pursuant to the |
CEO Compensation Pay Ratio
As required by Item 402(u) of Regulation S-K, we are providing the following information for 2017, which is our last completed fiscal year:
The median of the annual total compensation of all Glacier employees (other than Mr. Chesler, our President and CEO), was $45,780; and
The annual total compensation of Mr. Chesler was $1,342,760.
Based on this information, the ratio for 2017 of the annual total compensation of our CEO to the median of the annual total compensation of all employees is 29 to 1.
The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain
exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
We completed the following steps to identify the median of the annual total compensation of all our employees and to determine the annual total compensation of our median employee and CEO:
On December 31, 2017, our employee population consisted of approximately 2,280 individuals, including any full-time, part-time, temporary, or seasonal employees employed on that date.
To find the median of the annual total compensation of all our employees (other than our CEO), we used wages from our payroll records as reported to the Internal Revenue Service on Form W-2 for the fiscal year 2017. In making this determination, we annualized the compensation of full-time and part-time permanent employees who were employed on December 31, 2017 but who did not work for us the entire year. No full-time equivalent adjustments were made for part-time employees.
We identified our median employee using this compensation measure and methodology, which was consistently applied to all employees who were included in the calculation.
After identifying the median employee, we added together all of the elements of such employee’s compensation for 2017 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K, resulting in annual total compensation of $45,780.
With respect to the annual total compensation of our CEO, we used the amount reported in the “Total” column of our 2017 Summary Compensation Table.
COMPENSATION OF DIRECTORS
The Compensation Committee has authority over director compensation subject to the Board’s authority to approve changes. Our directors receive cash compensation in the form of cash and as applicable, awards in the form of restricted stock.stock awards. Glacier does not pay directors who are also employees of the Company additional compensation for their service as directors.
The following table shows compensation paid or accrued for the last fiscal year2017 to Glacier’s non-employee directors. These directors also serve on the board of directors of Glacier Bank. Mr. BlodnickChesler is not included in the table as he iswas an employee of Glacier in 2017 and thus receivesreceived no compensation for his serviceservices as a director. The footnotes to the table describe the details of each form of compensation paid to directors.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Nonqualified Deferred Compensation Earnings ($) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Nonqualified Deferred Compensation Earnings ($) | Total ($) | |||
| (2) | (3)(4) | (5) | (1) | (2) (3) | (4) | (5) | |||||
| Michael J. Blodnick | $34,000 | $25,020 | $-- | $59,020 | |||||||
| Sherry L. Cladouhos | $38,930 | $25,000 | $3,828 | $67,758 | 41,000 | 25,020 | 6,698 | 72,718 | |||
| James M. English | 56,630 | 25,000 | -- | 81,630 | 59,600 | (6) | 25,020 | -- | 84,620 | ||
Allen J. Fetscher (1) | 33,615 | 25,000 | -- | 58,615 | |||||||
| Annie M. Goodwin | 38,930 | 25,000 | -- | 63,930 | 41,000 | 25,020 | -- | 66,020 | |||
| Dallas I. Herron | 46,880 | 25,000 | 6,508 | 78,388 | 47,750 | (7) | 25,020 | 10,356 | 83,126 | ||
| Craig A. Langel | 48,930 | 25,000 | -- | 73,930 | 41,000 | 25,020 | -- | 66,020 | |||
| Douglas J. McBride | 48,047 | 25,000 | 10,590 | 83,637 | 51,900 | (8) | 25,020 | 15,483 | 92,403 | ||
| John W. Murdoch | 26,608 | 25,000 | 8,060 | 59,668 | 37,000 | (9) | 25,020 | 11,583 | 73,603 | ||
| Mark J. Semmens | 34,000 | 25,020 | -- | 59,020 | |||||||
| George R. Sutton | 8,500 | (10) | -- | -- | 8,500 | ||||||
| (1) |
| Directors are paid an annual retainer of |
| Represents the grant date fair value of the stock awards, based on the per-share price of Glacier’s common stock |
| The awards were fully vested at the time of grant. |
| The amount represents the above-market earnings on non-qualified deferred compensation. Earnings are credited at one-half of the Company’s current year |
| (5) | Amount includes all Board and committee chairperson fees earned or deferred in 2017. |
| (6) | Amount includes fees earned for services performed as a director of Mountain West Bank, a division of Glacier Bank. |
| (7) | Amount includes $13,750 for services performed as Chairman of the Board. |
| (8) | Amount includes fees earned for services performed as a director of Western Security Bank, a division of Glacier Bank. |
| (9) | Amount includes fees earned for services performed as a Glacier Bank committee liaison. |
| (10) | Amount reflects fees earned for a partial year (one quarter) of service. Mr. Sutton was appointed to the Board on |
Director Equity Compensation
Directors’ Stock Awards
Equity awards for 2015,2017, as set forth in the 2015 Director Compensation Table above, were made to non-employee directors in February 20152017 under Glacier’s 2005 Plan, which expired February 23, 2015.2015 Plan.
Due to the expiration of the 2005 Plan, the Company’s Board approved the 2015 Equity Plan and the 2015 Short Term Incentive Plan, both plans being referred to together as the “Plans,” and both Plans were approved by the Company’s shareholders on April 29, 2015. Therefore, the Company’s directors are eligible to participate in both Plans.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the board of directors makes the following report which, notwithstanding anything to the contrary set forth in any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, will not be incorporated by reference into any such filings and will not otherwise be deemed to be proxy soliciting materials or to be filed under such Acts.
The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) as required by Item 402(b) of Regulation S-K with management, and, based on that review and those discussions, the Compensation Committee recommended to the Board that the CD&A be included as part of this Proxy Statement and 20152017 Annual Report on Form 10-K.
Compensation Committee Members
uSherry L. Cladouhos (Chairman) u James M. English u Annie M. Goodwin u
u Dallas I. Herron u Craig A. Langel u Douglas J. McBride u
uJohn W. Murdoch u Mark J. Semmens u George R. Sutton (appointed September 27, 2017)
PROPOSAL NO. 2
ADVISORY (NON-BINDING) VOTE
ON EXECUTIVE COMPENSATION
Our shareholders are entitled to vote to approve, on an advisory (non-binding) basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with Section 14A of the Exchange Act. At the 20112017 annual meeting, as recommended by the Board, shareholders voted on an advisory (non-binding) basis on the frequency of shareholder voting on executive compensation. The federal law requiring this advisory Say-on-Pay vote also requires that shareholders be asked to vote on the frequency of Say-on-Pay votes. Pursuant to this new law, which is set forth in Section 14A of the Exchange Act, the advisory vote regarding the frequency of Say-on-Pay votes must be held at least once every six years, so we anticipate the advisory vote on the frequency of advisory Say-on-Pay votes will again be held in 2017.
Accordingly, we are providing you the opportunity as a shareholder to endorse or not endorse our executive pay programcompensation programs through an advisory vote for or against the following non-binding resolution:
“Resolved,RESOLVED, that the Company’s shareholders APPROVE, on an advisory (non-binding) basis, the compensation paid to the company'sCompany's Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K and including the Compensation Discussion and Analysis, compensation tables, and related narrative discussion is hereby APPROVED.in the proxy statement.”
We invite you to consider the details of our executive compensation programs provided under the section entitled “Compensation Discussion and Analysis” in this Proxy Statement. That section provides you with information about the structure of our executive compensation program and the objectives that our compensation program is intended to achieve.
Because your vote is advisory, it will not be binding upon the Board. However, the Compensation Committee values the opinions that our shareholders express in their votes and will take into account the outcome of the vote when considering future executive compensation arrangements.
The proposal to approve the advisory (non-binding) vote on executive compensation requires the affirmative vote FOR byof a majority of the shares present and voting on this matter.
The Board unanimously recommends a vote FOR approval of the compensation of Glacier’s Named Executive Officers as described in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative discussion in this Proxy Statement.
AUDITORS
Fees Paid to Independent Registered Public Accounting Firm
BKD, LLP was selected by the Company to serve as the Company’s independent public accountants for the 20152017 fiscal year, and the shareholders of the Company ratified the selection at the 20152017 annual meeting of shareholders in April 2015.2017. The Company has selected BKD, LLP to serve as the Company’s independent public accountants for the 20162018 fiscal year, and the shareholders of the Company are being asked to ratify the selection at the 20162018 Annual Meeting.
The following table sets forth the aggregate fees charged to Glacier by BKD, LLP for audit services rendered in connection with the audited consolidated financial statements and reports for the 20152017 and 20142016 fiscal years.
| Fee Category | Fiscal 2015 | % of Total | Fiscal 2014 | % of Total | Fiscal 2017 | % of Total | Fiscal 2016 | % of Total | ||
| Audit Fees | $712,000 | 80.0% | $712,000 | 87.3% | $1,066,736 | 97.2 | % | $954,349 | 99.0 | % |
| Audit-Related Fees | 177,625 | 20.0% | 103,925 | 12.7% | 30,350 | 2.8 | 9,775 | 1.0 | ||
| Tax Fees | --- | --- | --- | --- | --- | |||||
| All Other Fees | --- | --- | --- | --- | --- | |||||
| Total Fees | $889,625 | 100.0% | $815,925 | 100.0% | $1,097,086 | 100.0 | % | $964,124 | 100.0 | % |
Audit Fees. Consists of fees billed to Glacier for professional services rendered by BKD, LLP in connection with the audits of the Company’s financial statements, the effectiveness of internal controls over financial accounting, the reviews of financial statements included in Glacier’s Forms 10-Q and Form 10-K, and the services to Glacier in connection with statutory or regulatory filings or engagements.
Audit-Related Fees. Fees in both 20152017 and 20142016 include SEC filings other than the Forms 10-Q and Form 10-K, technical accounting research and consultation relating to acquisitionsadoption and implementation of new and revised financial accounting and reporting standards.
Tax Fees. There were no fees incurred for tax services for the fiscal years ended December 31, 20152017 and 2014.2016.
All Other Fees. There were no fees for services not included above for the fiscal years ended December 31, 20152017 and 2014.2016.
In considering the nature of the services provided by BKD, LLP, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with BKD, LLP and Company management to determine that the services are permitted under the rules and regulations concerning auditor independence promulgated by
(i) the SEC to implement the Sarbanes-Oxley Act of 2002 and (ii) the American Institute of Certified Public Accountants.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The services performed by BKD, LLP in 20152017 were pre-approved in accordance with the pre-approval policy and procedures adopted by the Audit Committee. This policy describes the permitted audit, audit-related, tax, and other services (collectively, “Disclosure Categories”) that BKD, LLP may perform. The policy requires that, prior to the beginning of each fiscal year, a description of the services (“Service List”) expected to be performed by BKD, LLP in each of the Disclosure Categories in the following fiscal year be presented to the Audit Committee for approval.
Services provided by BKD, LLP during the following year that were included in the Service List were pre-approved following the policies and procedures of the Audit Committee.
Any requests for audit, audit-related, tax, and other services not contemplated on the Service List must be submitted to the Audit Committee for specific pre-approval, and services cannot commence until such approval has been granted. Normally, pre-approval is provided at regularly scheduled meetings of the Audit Committee. However, the authority to grant specific pre-approval between meetings, as necessary, has been delegated to the Chairman of the Audit Committee. The Chairman of the Audit Committee must update the Audit Committee at the next regularly scheduled meeting of any services that were granted specific pre-approval.
In addition, although not required by the rules and regulations of the SEC, the Audit Committee generally requests a range of fees associated with each proposed service on the Service List and any services that were not originally included on the Service List. Providing a range of fees for a service provides appropriate oversight and control of the independent auditor relationship, while permitting the Company to receive immediate assistance from BKD, LLP when time is of the essence.
The Audit Committee reviews the status of services and fees incurred year-to-date against the original Service List and the forecast of remaining services and fees for the fiscal year.
REPORT OF AUDIT COMMITTEE
The Audit Committee of the board of directors makes the following report which, notwithstanding anything to the contrary set forth in any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, will not be incorporated by reference into any such filings and will not otherwise be deemed to be proxy soliciting materials or to be filed under such Acts.
The Board has determined that the current members of the Audit Committee meet the independence requirements as defined under the NASDAQ listing standards and that each of Craig A. Langel, and Mark J. Semmens, meetand George R. Sutton meets the “audit committee financial expert” qualifications, as defined by SEC rules.
Management has the primary responsibility for the financial statements and the reporting process of the Company, including the systems of internal controls. The Audit Committee is responsible for overseeing Glacier’s financial reporting processes on behalf of the Board.
The Audit Committee has met and held discussions with management and Glacier’s independent auditors. Management represented to the Audit Committee that Glacier’s consolidated financial
statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed the audited consolidated financial statements with management and the independent auditors. The Audit Committee discussed with the independent auditors matters required to be discussed by AS 161301 (Communications with Audit Committees).
Our independent auditors also provided to the Audit Committee the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditors’ communications with the Audit Committee concerning independence, and the Audit Committee discussed with the independent auditors that firm’s independence.
Based on the Audit Committee’s review of the audited consolidated financial statements and the various discussions with management and the independent auditors noted above, the Audit Committee recommended that the Board include the audited consolidated financial statements in Glacier’s Annual Report on Form 10-K for the year ended December 31, 2015,2017, filed with the SEC.
Audit Committee Members
u Craig A. Langel (Chairman) u Sherry L. Cladouhos u James M. English u
uAnnie M. Goodwin u Dallas I. Herron u Douglas J. McBride u
u John W. Murdoch u Mark J. Semmens u George R. Sutton (appointed September 27, 2017)
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
BKD, LLP currently serves as our independent registered public accounting firm and conducted the audit of our financial statements for the fiscal years ended December 31, 2006 through December 31, 2015.2017. The Audit Committee has appointed BKD, LLP to serve as Glacier’s independent registered public accounting firm to conduct an audit of the financial statements for fiscal year 2016.2018.
Appointment of Glacier’s independent registered public accounting firm is not required to be submitted to a vote of our shareholders for ratification. However, upon the recommendation of the Audit Committee, the Board has determined to submit the selection of auditors to our shareholders for ratification. In the event our shareholders fail to ratify the appointment, the Audit Committee may reconsider whether or not to retain BKD, LLP and may retain BKD, LLP or another firm without re-submitting the matter to our shareholders. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in Glacier’s and its shareholders’ best interest.interests.
Representatives of BKD, LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that they will be available to respond to appropriate questions.
The Board unanimously recommends a vote FOR the ratification of the appointment of BKD, LLP to serve as Glacier’s independent registered public accounting firm for the fiscal year ending December 31, 2016.2018.
TRANSACTIONS WITH MANAGEMENT
Certain Transactions
Transactions between Glacier or its affiliates and related persons (including directors and executive officers of Glacier or their immediate family)family members) generally must generally be approved by the Audit Committee (or a comparable committee of independent disinterested directors), in accordance with the Statement of Policy with Respect to Related Person Transactions adopted by the Board. Under the policy, a transaction between a “related person” will be consummated only if (i) the designated committee, or a majority of the disinterested independent members of the Board, approves or ratifies such transaction in accordance with the guidelines set forth in the policy and (ii) the transaction is on terms comparable to those that could be obtained in arm’s-length dealings with an unrelated third party.
During 2015,2017, certain directors and executive officers (and their associates) of Glacier and Glacier Bank were customers of one or more of our bank divisions, and it is anticipated that such individuals will continue to be customers in the future. All transactions between Glacier Bank and its executive officers and directors (and their associates) were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the lending bank, and, in the opinion of management, did not involve more than the normal risk of collectability or present other unfavorable features.
OTHER BUSINESS
The Board knows of no other matters to be brought before the shareholders at the Annual Meeting. If other matters are properly presented for a vote at the Annual Meeting, the proxy holders will vote shares represented by properly executed proxies in their discretion in accordance with their judgment on such matters.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Shareholder Proposals
In order for a shareholder proposal to be considered for inclusion in our Proxy Statement for next year’s annual meeting, the written proposal must be received by the Company no later than November 10, 201615, 2018 and should contain the information required under our Bylaws. Such proposals also need to comply with the SEC’s regulations regarding the inclusion of shareholder proposals in Company-sponsored proxy materials. No shareholder proposal from the floor will be considered at the annual meeting. In addition, if we receive notice of a shareholder proposal after November 10, 2016, the persons named as proxies in such Proxy Statement and form of proxy will have discretionary authority to vote on such shareholder proposal.
Director Nominations
Glacier’s Bylaws provide for the nomination of director candidates by its shareholders. In order to recommend that the Nominating Committee consider a personnominate one or more persons for inclusionelection as a director nominee in the Company’s proxy statement for next year’s annual meeting, wedirectors, you must receive a recommendationgive written notice of your intent to make such nomination(s) by personal delivery or by U.S. mail, postage prepaid, no later than November 10, 2016.15, 2018. In addition, the notice of recommendation must meet all other requirements contained in our Bylaws. Such recommendationnotice should be sent to the attention of the Corporate Secretary of the Company and should contain the following information:information set forth in the Company’s Bylaws including (a) the name and address of each proposed nominee and the number of shares of Glacier stock held by such nominee; (b) the principal occupation of each proposed nominee; (c) a description of any arrangements or understandings between the nominee and the nominating shareholder pursuant to which the nomination is being made; (d) your name and address; (e) the number of shares of CompanyGlacier stock you own;own of record; and (f) a consent of the nominee agreeing to the nomination. The presiding officer of the annual meeting may disregard your nomination if it does not contain the above information andor otherwise does not meet the requirements set forth in our Bylaws.
The Nominating/Governance Committee will consider candidates for director recommended by any of our shareholders and will evaluate such recommendations in accordance with its charter, our Bylaws and the regular nominee criteria described above under the section entitled “Nominating/ Corporate Governance Committee.” This process is designed to ensure that the Board includes members with diverse backgrounds, skills and experience, including appropriate financial and other expertise relevant to our business. Eligible shareholders wishing to recommend a candidate for nomination should follow the procedures set forth in our Bylaws, as described above. In connection with its evaluation of a director nominee, the Nominating/Governance Committee may request additional information from the candidate or the recommending shareholder and may request an interview with the candidate. The Nominating/Governance Committee has discretion to decide which individuals to recommend for nomination as directors. Shareholders should submit any recommendations for director nominees at our 2019 annual meeting to us by November 15, 2018 (120 days prior to the anniversary of mailing this proxy statement).
Copy of BylawBylaws Provisions
You may contact Glacier’s Corporate Secretary for a copy of the relevant BylawBylaws provisions regarding the requirements for making shareholder proposals and nominating director candidates.candidates
ANNUAL REPORT TO SHAREHOLDERS
Any shareholder may obtain without charge a copy of our Annual Report and/or Form 10-K filed with the SEC under the Exchange Act for the year ended December 31, 2015,2017, including financial statements. Written requests for the Annual Report and/or Form 10-K should be addressed to LeeAnn Wardinsky,to: Corporate Secretary, 49 Commons Loop, Kalispell, Montana 59901. The Annual Report and Form 10-K are also available at www.glacierbancorp.com.www.glacierbancorp.com.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
In some cases, only one copy of this Proxy Statement is being delivered to multiple shareholders who share an address (unless we have received contrary instructions from one or more of the shareholders). We will deliver promptly, upon written request, a separate copy of this Proxy Statement to a shareholder at a shared address to which a single copy of the document was delivered. To request a separate delivery of these materials now or in the future, a shareholder may submit a written request to Glacier’s Corporate Secretary at the address above. A shareholder may also request these materials by calling (406) 756-4200. Additionally, any shareholders who are presently sharing an address and receiving multiple copies of either the Proxy Statement or the Annual Report and who would rather receive a single copy of such materials may instruct us accordingly by directing their request to us in the manner provided above.
| March | BY ORDER OF THE BOARD OF DIRECTORS | |
| /s/ | ||
