UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant x
Filed by a Party other than the Registrant o
Check the appropriate box:
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| o | Preliminary Proxy Statement |
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| x | Definitive Proxy Statement |
| o | Definitive Additional Materials |
| o | Soliciting Material Under Rule 14a-12 |
WEST BANCORPORATION, INC.
(Name of Registrant as Specified In Itsin its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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| x | No fee required. |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11. |
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| | (2) Aggregate number of securities to which transaction applies: |
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| o | Fee paid previously with preliminary materials. |
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WEST BANCORPORATION, INC.
NOTICE OF ANNUAL STOCKHOLDERS'STOCKHOLDERS’ MEETING TO BE HELD APRIL 23, 201526, 2018
Dear Fellow Stockholders:
The West Bancorporation, Inc. (the "Company"“Company”) Annual Meeting of Stockholders will be held in the David L. Miller Conference Center at the Company'sCompany’s headquarters located at 1601 22nd Street, West Des Moines, Iowa, on Thursday, April 23, 201526, 2018, at 4:00 p.m. Central Time.time. We will review the progress of the Company and answer questions during the meeting. If a quorum of stockholders is represented at the meeting, in person or by proxy, the following matters will be presented for votes:
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| Item 1. | The election of the 1412 directors nominated in the proxy statement to serve as the Board of Directors until the next Annual Meetingannual meeting and until their successors are elected and have been qualified; |
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| Item 2. | The approval, on a nonbinding basis, of the 20142017 compensation of the named executive officers disclosed in the proxy statement; |
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| Item 3. | The approval, on a nonbinding basis, of the frequency (every one, two or three years) of the nonbinding vote to approve the compensation of the named executive officers; |
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| Item 4. | The ratification of the appointment of McGladreyRSM US LLP as the independent registered public accounting firm for the Company for the year ending December 31, 2015;2018; and |
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Item 4.5. | All other matters that may properly come before the Annual Meeting and any adjournments or postponements thereof. |
The Board of Directors has fixed the close of business on February 19, 201516, 2018, as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting. A list of stockholders entitled to notice will be available for inspection, upon written request, at the Company'sCompany’s headquarters located at 1601 22nd Street, West Des Moines, Iowa, beginning two business days after this notice is first mailed.
Whether or not you expect to attend the Annual Meeting, in order to make sure your vote is received, please complete and return the enclosed proxy card or vote your proxy electronically via the internet or telephone as instructed on the proxy card. A prompt response would beis appreciated.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders'Stockholders’ Meeting to be held on April 23, 2015:26, 2018:
Copies of the documents included in this mailing, including the proxy statement, Form 10-K and summary annual report, are also available at www.snl.com/irweblinkx/docs.aspx?iid=irw/docs/1021570.
We hope you will personally attend the Annual Meeting, and we look forward to seeing you there. Thank you for your interest in our Company.
For the Board of Directors,
/s/ David R. Milligan
David R. Milligan
Chairman
West Bancorporation, Inc.
March 5, 20151, 2018
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PROXY STATEMENT
TABLE OF CONTENTS
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WEST BANCORPORATION, INC.
1601 22nd Street
West Des Moines, Iowa 50266
PROXY STATEMENT
20152018 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 23, 201526, 2018
This proxy statement and the accompanying proxy card are being furnished in connection with the solicitation by the Board of Directors (the "Board"“Board”) of West Bancorporation, Inc. (the "Company"“Company”) of proxies to be used at the 20152018 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”). The meeting will be held in the David L. Miller Conference Center at the Company'sCompany’s headquarters located at 1601 22nd Street, West Des Moines, Iowa, on April 23, 201526, 2018, at 4:00 p.m. Central Time,time, and at any and all adjournments thereof. A copyCopies of the Company'sCompany’s 20142017 summary annual report to stockholders and Form 10-K containing the annual report to stockholders, including our consolidated financial statements for the fiscal year ended December 31, 20142017, accompany this proxy statement. This proxy statement, form of proxy, and other accompanying materials are first being mailed to stockholders on or about March 5, 20151, 2018.
QUESTIONS AND ANSWERS
What is a proxy?
A proxy is a document, also referred to as a "proxy“proxy card,"” on which you authorize someone else to vote for you in the way that you want to vote. The proxy holders will vote your shares as you have instructed, thereby ensuring your shares will be voted whether or not you attend the Annual Meeting. You may also choose to abstain from voting.
What is a proxy statement?
A proxy statement is a document required by the Securities and Exchange Commission (the "SEC"“SEC”) that, among other things, explains the items on which you are asked to vote on the proxy card.
Why am I receiving this proxy statement and proxy card?
You are receiving a proxy statement and proxy card from us because you were a stockholder of record of the Company at the close of business on February 19, 201516, 2018 (the "Record Date"“Record Date”). As a stockholder of record on the Record Date, you are entitled to vote at the Annual Meeting. This proxy statement describes the matters that will be presented for consideration by the stockholders at the Annual Meeting. It also gives you information concerning those matters to assist you in making an informed decision on each matter.
When you sign the enclosed proxy card or otherwise vote pursuant to the instructions set forth in the proxy card, you appoint the proxy holders designated on the proxy card as your representatives at the meeting. The proxy holders will vote your shares as you have instructed, thereby ensuring your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we ask that you instruct the proxies how to vote your shares in advance of the meeting just in case your plans change.
What if I receive more than one proxy card?
You will receive more than one proxy card if you have multiple holdings reflected in our stock transfer records and/or in accounts with brokers. Please sign and return ALL proxy cards or otherwise vote pursuant to the instructions set forth in the proxy card to ensure that all of your shares are voted.
What matters will be voted on at the meeting?
You are being asked to vote on the following matters proposed by our Board of Directors:Board:
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| (1) | the election of 1412 directors; |
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| (2) | the approval, on a nonbinding proposal onbasis, of the 20142017 compensation of the named executive officers, commonly known as a "say-on-pay"“say-on-pay” proposal; and |
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| (3) | the approval, on a nonbinding basis, of the frequency (every one, two or three years) of the nonbinding vote to approve compensation of the named executive officers; and |
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| (4) | the ratification of McGladreyRSM US LLP as our independent registered public accounting firm for the 20152018 fiscal year. |
These matters are more fully described in this proxy statement. We are not aware of any other matters that will be voted on at the Annual Meeting. However, if any other business properly comes before the meeting, the persons named as proxies for stockholders will vote on such matters in a manner they consider appropriate.
How do I vote?
After reviewing this document, please submit your proxy using any of the voting methods indicated on the proxy card. By submitting your proxy, you authorize the individuals named in it to represent you and vote your shares at the Annual Meeting in accordance with your instructions. Your vote is important. Whether or not you plan to attend the Annual Meeting, please submit your proxy card promptly in the enclosed envelope, or through the internet or via telephone by following the instructions on the proxy card.
If you sign and return your proxy card but do not mark the card to provide voting instructions, the shares represented by your proxy card will be voted "FOR"“FOR” all 1412 nominees named in this proxy statement, "FOR"“FOR” the say-on-pay proposal, “FOR” the approval of the one-year frequency of future votes on compensation of named executive officers and "FOR"“FOR” the ratification of the appointment of McGladreyRSM US LLP as our independent registered public accounting firm for the 20152018 fiscal year.
If you are a beneficial owner and a broker or other fiduciary is the record holder of your shares (which is usually referred to as "street name"“street name” ownership), then you received this proxy statement from the record holder of the shares that you beneficially own. The record holder should have given you instructions for directing how the record holder should vote your shares. It will then be the record holder'sholder’s responsibility to vote your shares in the manner you direct.
If you want to vote in person, please come to the Annual Meeting. We will distribute ballots to anyone who wants to vote at the meeting. Please note, however, that if your shares are held in the name of a broker or other fiduciary (i.e., in street name), you will need to arrange to obtain a legal proxy from the record holder in order to vote in person at the meeting. Even if you plan to attend the Annual Meeting, we ask that you complete and return your proxy card or vote via the internet or by telephone in advance of the Annual Meeting in case your plans change.
If I hold shares in the name of a broker, who votes my shares?
If your broker holds your shares in its name and you have not provided voting instructions for your shares, your broker may choose to either leave your shares unvoted or vote your shares on certain "routine"“routine” matters on which the broker is deemed to have discretionary voting authority. The ratification of the appointment of an issuer'sa company’s independent registered public accounting firm is considered a routine matter, while the election of directors, andthe approval of say-on-pay proposals and the approval of the frequency of future votes on compensation of named executive officers are bothall considered nonroutine matters. Thus, if you do not provide instructions to your broker as to how it should vote the shares beneficially owned by you, your broker will be able to vote on the ratification of the appointment of McGladreyRSM US LLP as our independent registered public accounting firm but will not be permitted to vote on the election of directors, the approval of the say-on-pay proposal or say-on-pay proposal.the approval of the frequency of future votes on compensation of named executive officers. If your broker does not receive instructions from you on how to vote on a particular matter on which your broker does not have discretionary authority to vote, your broker will return the proxy to us indicating the broker does not have authority to vote on these matters. This is referred to as a "broker non-vote"“broker non-vote” with respect to the nonroutine matters and will affect the outcome of the voting as described below under "What“What options do I have in voting on each of the proposals?"” Therefore, we encourage you to provide directions to your broker as to how you want your shares voted on all matters brought before the Annual Meeting.
If I hold shares in the West Bancorporation Employee Savings and Stock Ownership Plan, who votes my shares?
If you are a holder of stock in the Company'sCompany’s Employee Savings and Stock Ownership Plan (the "Plan"“Plan”), you can direct the Trusteetrustee of the Plan (the “Trustee”) how to vote the number of shares you hold in the Plan for each proposal included in this proxy statement. If you do not provide timely voting directions to the Trustee, then the Trustee shall vote the shares held for your benefit in the same proportion as those shares of stock held in the Plan for which the Trustee has received proper directions for voting.
What if I change my mind after I return my proxy?
If you hold your shares in your own name, you may revoke your proxy and change your vote at any time before the polls close atfor the meeting. You may do this by:
signing another proxy card with a later date and returning that proxy card to American Stock Transfer & Trust Company, LLC, Operations Center, 6201 15th Avenue, Brooklyn,Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11219, Attn: Proxy Dept.;11717;
timely submitting another proxy via the internet, if that is the method you originally used to submit your proxy;internet;
timely submitting another proxy via telephone;
sending notice to us at the address below that you are revoking your proxy; or
voting in person at the meeting.
All written notices of revocation and other written communications with respect to revocation of proxies should be sent to West Bancorporation, Inc., 1601 22nd22nd Street, West Des Moines, Iowa 50266, Attention: Corporate Secretary. If you hold your shares in the name of your broker and desire to revoke your proxy, you will need to contact your broker.
How many votes do we need to hold the Annual Meeting?
AThe holders of a majority of the outstanding sharesvotes entitled to votebe cast as of the Record Date must be present in person or by proxy at the meeting in order to hold the meeting and conduct business. Shares are counted as present at the meeting if the stockholder either:
is present and votes in person at the meeting; or
has properly submitted a signed proxy card or other form of proxy (through the internet).internet or telephone); or
is present and votes in person at the meeting.
Shares of common stock held by stockholders abstaining from voting but otherwise present at the meeting in person or by proxy, votes withheld, and broker non-votes are included in determining whether a quorum is present. On the Record Date, there were 16,018,73416,215,672 shares of common stock issued and outstanding, all of which were entitled to vote. Therefore, at least 8,009,3688,107,837 shares need to be present, in person or by proxy, at the Annual Meeting.
What happens if a nominee is unable to stand for re-election?
The Board of Directors may, by resolution, provide for a lesser number of directors or designate a substitute nominee. In the latter case, shares represented by proxies may be voted for a substitute nominee at the discretion of the proxy holders. Proxies cannot be voted for more than 1412 nominees. We have no reason to believe any nominee will be unable to stand for election.
What options do I have in voting on each of the proposals?
The directors are elected by a plurality, and the 1412 nominees receiving the greatest number of votes cast "FOR"“FOR” their election will be elected as directors of the Company. Votes withheld from any nominee have no legal effect on the election of directors due to the fact that such elections are by a plurality of the votes cast.
The affirmative vote of a majority of the votes cast on the proposal (meaning the number of shares present in person or by proxy atvoted “for” the Annual Meeting and entitled to voteproposal must exceed the number of shares voted “against” such proposal) is required to approve the 2014 compensation of the named executive officerssay-on-pay proposal and the ratification of the appointment of McGladreyRSM US LLP as our registered independent public accounting firm for the fiscal year ending December 31, 20152018. The votefrequency choice (every one, two or three years) with the highest number of votes cast will be considered the stockholders’ choice. The votes on our executive compensation isand the frequency of future votes on executive compensation are advisory and isare not binding on the directors of the Company. However, the Compensation Committee of the Board will consider stockholder votes in establishing our compensation plans for subsequent years.years and the frequency of future proposals for stockholder approval of executive compensation.
Broker non-votes will not be counted as entitled to vote,votes cast, but will count for purposes of determining whether a quorum is present. So long as a quorum is present, broker non-votes will have no effect on the outcome of the matters to be presented for a vote at the Annual Meeting.
Where do I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting. The voting results will also be disclosed in a Current Report on Form 8-K that we will file with the SEC within four business days after the meeting.
Who bears the cost of soliciting proxies?
The Company will bear the cost of soliciting proxies. In addition to solicitations by mail, our officers, directors or employees, without extra compensation, may solicit proxies in person, via email or by telephone. We may reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to stockholders.
YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED AND SIGNED PROXY CARD, OR VOTE BY INTERNET OR TELEPHONE, PROMPTLY SO YOUR SHARES CAN BE REPRESENTED, EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON.
PROPOSALS FOR ANNUAL MEETING
ItemProposal 1. Election of Directors.
The Company'sCompany’s Bylaws provide that the number of directors of the Company shall not be less than 5 nor greater than 15. The Board currently consists of 14 members. For reasons explained below inThe Board has considered and nominated all except two of the current directors to serve as directors of the Company for the next year. Frank W. Berlin, a director since 1995, and Joyce A. Chapman, a director since 2009, are ineligible to hold office as a director for an additional term due to reaching the age limitation for board service, which requires that a person who has attained or will attain the age of 73 years on or before the date of the forthcoming annual stockholders meeting is not eligible for election to the Board. Accordingly, the Board did not nominate them for election at this year’s meeting. As a result, Mr. Berlin and Mrs. Chapman’s directorships will end at the 2018 Annual Meeting of Stockholders and we thank them for their service. At the recommendation of the Nominating and Corporate Governance Committee, Report, the Board has set the number of directors for 2015following the Annual Meeting at 14.12. Proxies cannot be voted for more than 1412 persons.
The term for directors is until the next Annual Meetingannual meeting of Stockholdersstockholders and until their successors are duly elected and qualified or until their earlier resignation, removal from office, death or incapacitation.
The Board recommends a vote "FOR" each of the nominees listed in the table below.
Properly executed proxies in the accompanying form will be voted "FOR" the election of the listed individuals, unless contrary instructions are given. If any nominee or nominees shall become unavailable for election, it is intended that the size of the Board will be reduced accordingly, provided that the number of nominees shall not be less than five. Any stockholder has the option to withhold authority to vote for any or all nominees. Votes withheld from any nominee have no legal effect on the election of directors due to the fact that such elections are by a plurality of the votes cast.
The Board recommends a vote “FOR” each of the nominees listed in the table below. Properly executed proxies on the accompanying proxy card will be voted “FOR” the election of the listed individuals, unless contrary instructions are given.
Information concerning the nominees, including their ages, year first elected as a director of West Bancorporation, Inc., and business experience during the previous five yearsprincipal occupation as of February 19, 201516, 2018, is set forth in the table and narrative description of each director’s experience below. Unless otherwise noted, the nominees have been employed in their principal occupation with the same organization for at least the last five years. All the nominees are currently serving as directors of the Company, and as directors of the Company'sCompany’s wholly-owned subsidiary, West Bank.
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Name (Age) | Has Served as Director Since | Principal Occupation and/or Position with Company and West Bank and Location |
Frank W. Berlin
(Age 69)
| 1995 | Consultant, Frank W. Berlin & Associates, and Director of the Company
and West Bank
West Des Moines, Iowa
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Thomas A. Carlstrom
(Age 69)
| 2009 | Retired and Director of the Company and West Bank
Des Moines, Iowa
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Joyce A. Chapman
(Age 70)
| 2009 | Retired and Director of the Company and West Bank
Des Moines, Iowa
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Steven K. Gaer (Age 54)57) | 2011 | Chief Operating Officer and General Counsel, R&R Realty Group, and Director of the Company and West Bank West Des Moines, Iowa |
Michael J. Gerdin (Age 45)48) | 2013 | Chairman and Chief Executive Officer, Heartland Express, Inc., and Director of the Company and West Bank North Liberty, Iowa |
Kaye R. Lozier (Age 69)72) | 2009 | DirectorOwner and President of Donor Relations, Community Foundation of Greater Des Moines,Lozier Consulting, LLC,
and Director of the Company and West Bank Des Moines, Iowa |
Sean P. McMurray (Age 47)50) | 2013 | Chief ExecutiveTechnology Officer, AgSolver,Businessolver, Inc., and Director of the Company and West Bank Clive, Iowa |
David R. Milligan (Age 67)70) | 2009 | Chairman and Director of the Company and Director of West Bank West Des Moines, Iowa |
George D. Milligan (Age 58)61) | 2005 | President, The Graham Group, Inc., and Director of the Company and West Bank Des Moines, Iowa |
David D. Nelson (Age 54)57) | 2010 | Chief Executive Officer, President and Director of the Company; Chairman, Chief Executive Officer and Director of West Bank West Des Moines, Iowa |
James W. Noyce (Age 59)62) | 2009 | Retired and Vice Chairman and Director of the Company and Director of West Bank West Des Moines, Iowa |
Robert G. Pulver (Age 67)70) | 1984 | President and Chief Executive Officer, All-State Industries, Inc., and Director of the Company and West Bank West Des Moines, Iowa |
Lou Ann Sandburg (Age 66)69) | 2011 | Retired and Director of the Company and West Bank Clive, Iowa |
Steven T. Schuler (1) (Age 66) | 2018 | Retired and Director of the Company and West Bank Urbandale, Iowa |
Philip Jason Worth (Age 43)46) | 2013 | SalesGeneral Manager, Gilcrest/Jewett Lumber Company,
and Director of the Company and West Bank West Des Moines, Iowa |
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| (1) | Mr. Schuler was appointed to the Board of Directors effective January 1, 2018. |
The particular experiences, qualifications, attributes and skills that led the Board to conclude that each nominee should serve as a director are as follows:
Frank W. Berlin has served as a director of West Bank since 1995. Mr. Berlin is a consultant and former President of Frank W. Berlin & Associates, a West Des Moines company specializing in employee benefits. He also has extensive knowledge and experience with executive compensation programs.
Thomas A. Carlstrom has served as a director of West Bank since 1996. Dr. Carlstrom is a retired neurosurgeon. Prior to his retirement, Dr. Carlstrom practiced in Des Moines, Iowa. He has extensive knowledge of and familiarity with the central Iowa business community.
Joyce A. Chapman has served as a director of West Bank since 1975. Mrs. Chapman served as an officer of West Bank from 1971 until she retired as Executive Vice President in 2006. During her career at West Bank, she served in a variety of capacities, covering virtually all aspects of bank administration and operation. Mrs. Chapman is also a board member of the public company American Equity Investment Life Holding Company of West Des Moines, Iowa. She has extensive knowledge and experience with bank practices and procedures.
Steven K. Gaer has served as a director of West Bank since 2011. Mr. Gaer is Chief Operating Officer and General Counsel for R&R Realty Group, central Iowa'sIowa’s largest commercial real estate development, management and investment company. He has extensive knowledge of commercial real estate structuring, financing and underwriting. He is also currently serving as the Mayor of the City of West Des Moines, Iowa;Iowa, a position he has held since April 2007. Mr. Gaer is also serving on the following boards: Greater Des Moines Partnership; Regional Economic Development Board; Metropolitan Planning Organization; Des Moines Area Regional Transit Authority; and the County Assessor Boards for Polk, Dallas, Madison and Warren counties. We consider Mr. Gaer to be a qualified candidate for service on the board and on the committee he is a member of due to his extensive knowledge of commercial real estate structuring, development, financing and underwriting.
Michael J. Gerdin has served as a director of West Bank since 2013. Mr. Gerdin is the Chairman, and Chief Executive Officer and director of Heartland Express, Inc., which is a publicly traded company that is a short-to-medium haul truckload carrier with corporate headquarters in North Liberty, Iowa. From 1998 to 2001, he was President of A&M Express, a wholly-owned subsidiary of Heartland Express. In 2001,We consider Mr. Gerdin was appointedto be a qualified candidate for service on the board and on the committee he is a member of due to his extensive experience as Vice Presidentthe head of Regional Operations,a public company and in 2006 he was appointed as President of Heartland Express, Inc. He became Chairman and Chief Executive Officer in 2011. Mr. Gerdin hashis familiarity with the eastern Iowa business community and has extensive experience in a public company environment.community.
Kaye R. Lozier has served as a director of West Bank since 2005. Mrs. Lozier is the owner and President of Lozier Consulting, LLC, and served as the Director of Donor Relations for the Community Foundation of Greater Des Moines.Moines until June 2015. She is involved in the Des Moines area, serving on the Executive Committee of Restoration Ingersoll. Ingersoll and as Chair of the Terrace Hill Commission. We consider Mrs. Lozier to be a qualified candidate for service on the board and on the committee she is a member of due to her knowledge of the business community and her commitment to civic organizations in central Iowa.
Sean P. McMurray has served as a director of West Bank since 2013. Mr. McMurray currently serveshas served as the Chief Technology Officer of Businessolver, Inc., a human resources benefits administration technology company, a company he helped found in 1998, since May 2017. Mr. McMurray served as Chief Executive Officer of AgSolver, Inc., a technology company.company, from 2014 until October 2017. Mr. McMurray founded DataVision Resources and served as the Chief Executive Officer for 15 years until DataVision Resources was acquired by Equifax, Inc. in 2011. Mr. McMurray served as a Senior Vice President at Equifax, Inc. until May 2013. Mr. McMurray also currently servesserved as the Chairman of SmartyPig, LLC.LLC until its sale in November 2015. Previously, he was the Chief Technology Officer of SmartyPig, LLC and was principally responsible for managing the integration with SmartyPig, LLC partner banks. This included satisfying all regulatory and compliance issues, monitoring risk and security during and after integration, and designing accounting and tax solutions for the financial aspects of SmartyPig, LLC. He has also helped to build and design the business platformplatforms for Businessolver, LLC, whereInc. and AgSolver, Inc. We consider Mr. McMurray to be a qualified candidate for service on the board and on the committee he servesis a member of due to his extensive knowledge and experience as an owner and board member. Mr. McMurray has extensive knowledge aboutinformation technology relevant to the financialexpert in a wide array of services industry.industries.
David R. Milligan has served as a director of West Bank since 2000. Mr. Milligan has served as Chairman of the CompanyBoard since April 2010. Mr. Milligan joined West Bank in 1980 and served in various capacities, including General Counsel. He retired as Executive Vice President of the Company and as Chairman and Chief Executive Officer of West Bank on December 31, 2004. He served as a director of the Company from 2002 through 2004, and as Vice Chairman of West Bank until December 2006. He was a self-employed attorney and “Of Counsel” with Ahlers & Cooney, P.C. of Des Moines, Iowa, from March 2007 through February 2009. Mr. Milligan resumed part-time employment with West Bank in February 2009 and full-time employment in May 2009. Mr. Milligan was elected interim Chief Executive Officer of the Company and interim Chief Executive Officer and Chairman of West Bank in July 2009 and served in those positions until April 1, 2010. He then served as Executive Vice President of West Bank from April 1, 2010 through April 30, 2010. He hasWe consider Mr. Milligan to be a qualified candidate for service on the board and the committee he serves on due to his extensive knowledge of the Company and bank regulatory matters, loan portfolio management and corporate governance.
George D. Milligan has served as a director of West Bank since 1994. Mr. Milligan is President of theThe Graham Group, Inc., a Des Moines, Iowa-based real estate development and investment company. He hasis also a board member and member of the audit committee and nominating and governance committee of the public company United Fire Group, Inc. of Cedar Rapids, Iowa. We consider Mr. Milligan to be a qualified candidate for service on the board and the committee he is a member of due to his extensive knowledge of commercial real estate financing and underwriting. He is also a board member of the public company United Fire & Casualty Company of Cedar Rapids, Iowa.
David D. Nelson has served as a director of West Bank since 2010. Mr. Nelson joined the Company on April 1, 2010, as Chief Executive Officer and President and as Chairman and Chief Executive Officer of West Bank. Mr. Nelson has more than 3035 years of experience in commercial banking. Prior to joining the Company, he was the President of Southeast Minnesota Business Banking and President of Wells Fargo Bank Rochester in Rochester, Minnesota. He hasWe consider Mr. Nelson to be a qualified candidate for service on the board due to his experience as the Chief Executive Officer and President of the Company, his extensive experience in banking and his strong backgrounds in customer relationship building, credit and leadership development.
James W. Noyce has served as a director of West Bank since 2009. Mr. Noyce has nearly three decadesserved as Vice Chairman of the Company since April 2017. Mr. Noyce most recently served as the interim Chief Executive Officer of the YMCA of Greater Des Moines from January 2016 until June 2016. Mr. Noyce has over 35 years of experience in the financial services industry, most recentlyand previously served as the Chief Executive Officer of FBL Financial Group, Inc., a publicly traded financial services company, and Farm Bureau Financial Services Companies from January 2007 through his retirement in April 2009, and Chief Financial Officer of these entities from January 1996 through December 2006. Prior to that, Mr. Noyce held various positions with FBL Financial Group, Inc. and Farm Bureau Financial Services Companies, including Controller and Vice President. He served on the Advisory Committee to Farm Bureau Bank for approximately seven years until May 2009. Mr. Noyce served as the Senior Advisor and Major Gifts Officer for Drake University Athletics from August 2009 to November 2010. Mr. Noyce is also a board member and member of the audit committee, compensation committee and nominating and governance committee of the public company United Fire & Casualty CompanyGroup, Inc. of Cedar Rapids, Iowa. He is an audit committee financial expert and serves as Chair of the Audit Committee. Mr. Noyce is a Certified Public Accountant (inactive), a Fellow of the Casualty Actuarial Society and an Associate of the Society of Actuaries. We consider Mr. Noyce to be a qualified candidate for service on the board and the committees he is a member of due to his knowledge and experience with public companies, his extensive financial services industry experience and his education and training as an accountant.
Robert G. Pulver has served as a director of West Bank since 1981. He also served as Vice Chairman of the Board from July 2009 until April 2014. Mr. Pulver is the President and Chief Executive Officer of All-State Industries, Inc., an industrial rubber products manufacturer, which he founded and has operated for 39over 40 years. We consider Mr. Pulver to be a qualified candidate for service on the board and the committee he is a member of due to his extensive business experience and knowledge of the business community in central Iowa.
Lou Ann Sandburg has served as a director of West Bank since 2011. Mrs. Sandburg served as Vice President of Investments at FBL Financial Group, Inc., a publicly traded financial services company, from 1998 until her retirement in 2008. From 1980 through 1998, Mrs. Sandburg managed various fixed-income portfolios at FBL Financial Group, Inc. Mrs. Sandburg is a chartered financial analyst. We consider Mrs. Sandburg to be a qualified candidate for service on the board and the committee she is a member of due to her extensive experience at a public company and management of investment portfolios.
Steven T. Schuler has served as a director of West Bank since January 2018. Mr. Schuler served as an executive officer of the Federal Home Loan Bank of Des Moines (FHLB) from September 2006 through his retirement in January 2017. Mr. Schuler served as Executive Vice President and Chief Financial Officer of FHLB from September 2006 until June 2015; as Executive Vice President, Chief Financial Officer and Chief Operations Officer from June 2015 until June 2016; and Executive Vice President and Chief Operations Officer from June 2016 through his retirement in January 2017. Mr. Schuler had management responsibility for accounting and financial reporting, planning and budgeting, treasury and capital markets, information technology, facilities administration, and business process management. Prior to joining FHLB, Mr. Schuler served in various accounting and financial management positions in the commercial banking and wireless technology industries. From 2001 to 2006, Mr. Schuler served as Chief Financial Officer, Treasurer and Secretary for Iowa Wireless Services, LLC. Mr. Schuler also previously served in various capacities, including Senior Vice President, Chief Financial Officer, Secretary and Treasurer with Brenton Banks, Inc., a publicly traded regional commercial banking company that was sold to Wells Fargo in 2000. Throughout his career, Mr. Schuler has served on the boards of various nonprofit, public service, and industry association organizations. Mr. Schuler is an audit committee financial expert and is a Certified Public Accountant (inactive). We consider Mr. Schuler to be a qualified candidate for service on the board and the committee he is a member of due to his extensive experience with public companies, his knowledge of the financial services industry and his education and training as an accountant.
Philip Jason Worth has served as a director of West Bank since 2011. Mr. Worth grew up in West Des Moines, Iowa, and has been workingworked in the family business, Gilcrest/Jewett Lumber Company, since 1999.1999 and has served in his current role as the General Manager since April 2017 and as Sales Manager previously. Gilcrest/Jewett Lumber Company was founded in 1856, and Mr. Worth represents the sixth generation of ownership. The company supplies building materials to general contractors and homeowners in central and eastern Iowa and employs 230305 people at four retail locations. The company focuses on building strong, lasting relationships, extending and managing its own credit, and staying active in the communities it serves. We consider Mr. Worth hasto be a qualified candidate for service on the board and the committee he is a member of due to his extensive knowledge of and familiarity with the real estate construction businessindustry in the Company'sCompany’s primary markets.
As noted above, with the exception of Mrs. Chapman, who is a director of American Equity Investment Life Holding Company, Mr. Gerdin, who is a director of Heartland Express, Inc., Mr. G. Milligan, who is a director of United Fire & Casualty Company,Group, Inc., Mr. Noyce, who is a director of United Fire & Casualty CompanyGroup, Inc. and was a director of Berthel Fisher Financial Services, Inc. until May 2014, and Mrs. Sandburg, who was a director of Berthel Fisher Financial Services, Inc. until May 2014, and Mr. Pulver, who was a director of The Summit Group through early 2012, none of the other above nominees hold a directorship in any other company with a class of securities registered pursuant to Section 12 or subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”), or registered as an investment company under the Investment Company Act of 1940. Those are the only directorships that require disclosure that have been held by the nominees in the past five years.
None of the nominees for director or executive officers of the Company have any family relationship with any other nominees or with any executive officers of the Company.
Item 2. Approve the 2014 Compensation There are no arrangements or understandings between any of the Company's Named Executive Officers.
Section 14A of the Exchange Act, as created by Section 951 of the Dodd-Frank Wall Street Reformnominees and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), enacted in July 2010, and the rules and regulations promulgated thereunder by the SEC, require publicly traded companies, such as the Company,any other person pursuant to conduct an advisory stockholder vote to approve compensation of named executive officers. This proposal, commonly knownwhich he or she was selected as a “say-on-pay” proposal, gives stockholders the opportunity to endorse or not endorse the Company’s pay program for its named executive officers. We currently hold our say-on-pay vote every year. The Company is requesting stockholder approval, on an advisory basis, of the compensation of the Company’s named executive officers for 2014 as listed in the Summary Compensation Table, appearing in the Executive Compensation section in this proxy statement, and as described in more detail in the Compensation Discussion and Analysis section of this proxy statement. The Company believes that its executive compensation programs, as explained in the Executive Compensation section of this proxy statement, are straightforward and reasonable. As explained in the Compensation Discussion and Analysis section, the general objectives of, and important factors for, the Company's executive compensation program include significant emphasis on the long-term success of the Company through long-term performance of its executives. Stockholders are urged to carefully read the Compensation Discussion and Analysis section of this proxy statement, as well as the Summary Compensation Table and narrative disclosures that describe the compensation of our named executive officers in 2014. The Board has previously approved the 2014 compensation.
The following resolution is submitted for stockholder approval:
"RESOLVED, that West Bancorporation, Inc.'s stockholders approve, on an advisory basis, its executive compensation as described in the section captioned 'Compensation Discussion and Analysis' and the tabular disclosure regarding named executive officer compensation under 'Executive Compensation' contained in the West Bancorporation Inc's proxy statement dated March 5, 2015."
Approval of this resolution requires the number of votes cast for the proposal to exceed the number of votes cast against the proposal at the Annual Meeting. In tabulating this vote, abstentions will be disregarded and have no effect on the outcome of the vote. While this "say-on-pay" vote is required, as provided in Section 14A of the Exchange Act, it is not binding on the Board and may not be construed as overruling any decision by the Board. However, the Compensation Committee will take into account the outcome of the votes when considering future compensation arrangements.
The Board recommends a vote "FOR" approval of the 2014 compensation of the named executive officers. Proxies in the accompanying form will be voted "FOR" approval of the 2014 compensation of the named executive officers unless contrary instructions are given.nominee.
Item 3. Ratify the Appointment of Independent Registered Public Accounting Firm.
The Audit Committee of the Board has selected the accounting firm of McGladrey LLP, independent certified public accountants, as the independent registered public accounting firm for the Company for the year ending December 31, 2015. McGladrey LLP will conduct the audit examination of the Company and its subsidiary for 2015. McGladrey LLP was also the independent registered public accounting firm and performed the Company's audit for the years ending December 31, 2014 and 2013. The Company is asking its stockholders to ratify the appointment of McGladrey LLP as the Company's independent certified public accounting firm for 2015. For a description of the fees for services rendered by McGladrey LLP for 2014 and 2013, and a description of the Company's policy regarding the approval of independent registered public accountants' fees, see the Independent Registered Public Accounting Firm section of this proxy statement.
Although ratification by the stockholders is not required by law, the Board has determined that it is desirable to request stockholder approval of its appointment of McGladrey LLP. In the event the stockholders fail to ratify the appointment, the Audit Committee will consider this factor when making any future determination regarding McGladrey LLP. Even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its stockholders.
Under applicable law, the ratification of the appointment of McGladrey LLP requires the number of votes cast for the proposal to exceed the number of votes cast against the proposal at the Annual Meeting. In tabulating the votes, abstentions on the ratification of the appointment of McGladrey LLP will be disregarded and have no effect on the outcome of the vote.
The Board recommends a vote "FOR" the ratification of the appointment of McGladrey LLP as our independent registered public accounting firm for the year ending December 31, 2015.Proxies in the accompanying form will be voted "FOR" the ratification of the appointment of McGladrey LLP as the independent registered public accounting firm for the year ending December 31, 2015, unless contrary instructions are given.
Other Matters. Management does not know of any other matters to be presented at the Annual Meeting, but should other matters properly come before the Annual Meeting, the proxies will vote on such matters in accordance with their best judgment.
GOVERNANCE AND BOARD OF DIRECTORS
General
Generally, the Board oversees our business and monitors the performance of our management. In accordance with our corporate governance procedures, the Board does not involve itself in the day-to-day operations of the Company, which are monitored by our executive officers and management. Our directors fulfill their duties and responsibilities by attending regular meetings of the full Board, which are scheduled for five times per year; special meetings which are held from time to time; and through committee membership, which is discussed below. Our directors also discuss business and other matters with our key executives and our principal external advisors, such as our legal counsel, auditors and other consultants.
The Board currently has 14 directors, and will have 1412 directors after the Annual Meeting if all nominees set forth in this proxy statement are elected. The Board has determined that the following 13 existing directors Berlin, Chapman, Gaer, Gerdin, Lozier, McMurray, D. Milligan, G. Milligan, Noyce, Pulver, Sandburg, Schuler and Worth are “independent” as defined by the Nasdaq Listing Rule 5605(a)(2) and Item 407 of Regulation S-K, and the Board has determined that the independent directors do not have other relationships with us that prevent them from making objective, independent decisions.
Frank W. Berlin
Thomas A. Carlstrom
Joyce A. Chapman
Steven K. Gaer
Michael J. Gerdin
Kaye R. Lozier
Sean P. McMurray
David R. Milligan
George D. Milligan
James W. Noyce
Robert G. Pulver
Lou Ann Sandburg
Philip Jason Worth
David D. Nelson, the 14th director, is an executive officer of the Company and is not considered independent. In “independent.”
2014, theThe Board held five regularly scheduled meetings, one special meetingand one organizational meeting. Each director is required to attendmeeting in 2017. In addition, the Company Board’s and West Bank’s Board held two combined meetings for the purpose of strategic planning. All directors attended at least 75 percent of the full Board meetings and the meetings of any committees on which the director serves. This requirement was satisfied by all directors. Board members are encouraged to attend the Annual Meeting, and all Board members attended the 20142017 Annual Meeting.
The Board has established the following standing committees:
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Risk Management and Information Technology Committee
The Board has adopted written charters for each standing committee. The charters may be seen on the Investor Relations, Corporate Information, Corporate Governance section of the Company'sCompany’s website (www.westbankstrong.com). The primary responsibilities of the committees are described below. The 2014 reports ofon the Audit, Compensation, and Nominating and Corporate Governance Committees follow the descriptions.following pages.
Committees of the Board of Directors
The table below shows the current membership for each of the standing Board committees:
|
| | | | | | | | |
| | | | | | | | | Risk |
| | | | | | | Nominating | | Management |
| | | | | | | and Corporate | | and Information |
| | | Audit | | Compensation | | Governance | | Technology |
| Directors | | Committee | | Committee | | Committee | | Committee |
| Frank W. Berlin | | | | Chair | | | | |
| Joyce A. Chapman | | u | | | | | | |
| Steven K. Gaer | | | | u | | | | |
| Michael J. Gerdin | | | | u | | | | |
| Kaye R. Lozier | | | | | | u | | |
| Sean P. McMurray | | | | | | | | Chair |
| David R. Milligan | | u | | | | | | |
| George D. Milligan | | | | | | Chair | | |
| James W. Noyce | | Chair | | | | | | u |
| Robert G. Pulver | | | | | | u | | |
| Lou Ann Sandburg | | | | | | | | u |
| Steven T. Schuler | | u | | | | | | |
| Philip Jason Worth | | u | | | | | | |
| | | | | | | | | |
| Meetings held during 2017 | | 4 | | 4 | | 5 | | 4 |
Audit Committee. The current members of the Audit Committee are James W. Noyce, Chair, Joyce A. Chapman, David R. Milligan, Steven T. Schuler and Philip Jason Worth. Mr. Schuler was appointed to the Audit Committee in January 2018 at the same time as his appointment to the Board. Mrs. Chapman will no longer serve on the Audit Committee following the Annual Meeting. Each of the Audit Committee members is considered “independent” according to Nasdaq listing requirements and Rule 10A-3 of the Exchange Act, as required for audit committee membership. Mr. Noyce and Mr. Schuler are “audit committee financial experts” as defined in the Sarbanes-Oxley Act of 2002 and related regulations based on their level of education and work experience, as described previously in this proxy statement. The Audit Committee selects the independent and internal auditors; reviews with the independent and internal auditors the plan, scope and results of the auditors’ services; approves their fees; and reviews the Company’s financial reporting and internal control functions and risk assessment. The Audit Committee has authority to retain special legal, accounting or other consultants as it deems appropriate or necessary. The Audit Committee also performs the other duties set forth in its charter. The Audit Committee reviews its charter at least annually and recommends changes to the Board when it deems necessary. The Audit Committee met four times during 2017 and also met with the Company’s management and internal and independent auditors four times in separate executive sessions. The Audit Committee is also prepared to meet privately at any other time at the request of the independent registered public accountants, internal auditors or members of management to review any special situation arising on any of the above subjects. Mr. Noyce is a member of the Audit Committee who also serves on the audit committee of another listed company (United Fire Group, Inc.). The functions of the Audit Committee are detailed at length in its charter, which may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations, Corporate Information, Corporate Governance.
Compensation Committee. The current members of the Compensation Committee are Frank W. Berlin, Chair, Steven K. Gaer and Michael J. Gerdin, all of whom are considered “independent” as defined by the Nasdaq listing requirements, “outside” directors pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and “nonemployee” directors under Section 16 of the Exchange Act. Mr. Berlin will no longer serve on the Compensation Committee following the Annual Meeting. As required by the Compensation Committee’s charter, the members of the Compensation Committee are elected annually by the independent directors of the Board. The Compensation Committee annually reviews the Company’s compensation and benefit programs, including compensation for the named executive officers. The Compensation Committee determines the compensation plans for the named executive officers. The Compensation Committee makes compensation recommendations to the Board concerning the amount and the form of director compensation. The independent directors of the Board ultimately determine director compensation. The Compensation Committee has authority to retain consultants and advisors, which it does periodically. The Compensation Committee first retained F.W. Cook in July 2011 to provide the Compensation Committee with independent, objective analysis and professional opinions on executive compensation matters. F.W. Cook has been determined by the Compensation Committee to be independent, reports directly to the Chair of the Compensation Committee, and performs no other work for the Company.
Since 2011, F.W. Cook has assisted the Compensation Committee in its review of compensation issues for the Company’s executives and directors. Every three years, the Compensation Committee has engaged F. W. Cook to specifically gather and analyze market data for compensation paid for similar positions at companies with which the Company competes for executive talent. F.W. Cook also provides input on marketplace trends and best practices relating to competitive pay levels, as well as developments in regulatory and technical matters. During 2017, F. W. Cook completed a detailed peer analysis of our executive and director compensation programs.
The Compensation Committee may delegate any of its authorities to a sub-committee, but has not done so to date. The Compensation Committee considers input from the executive officers concerning executive and other compensation but is not required to do so. The functions of the Compensation Committee are detailed at length in its charter, which may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations, Corporate Information, Corporate Governance. Additional details about the Compensation Committee’s processes and procedures are discussed under “Executive Compensation—Compensation Discussion and Analysis” below.
Nominating and Corporate Governance Committee. The current members of the Nominating and Corporate Governance Committee are George D. Milligan, Chair, Kaye R. Lozier and Robert G. Pulver, all of whom are considered “independent” as defined by Nasdaq listing requirements. As required by the Nominating and Corporate Governance Committee’s charter, the members of the Nominating and Corporate Governance Committee are elected annually by the independent directors of the Board. The Nominating and Corporate Governance Committee makes recommendations to the Board regarding the composition and structure of the Board and nominations for election of directors, including the director nominees proposed in this proxy statement. It develops policies and processes regarding principles of corporate governance in order to ensure the Board’s compliance with its fiduciary duties to the Company and its stockholders. The Nominating and Corporate Governance Committee will consider for nomination at the 2019 Annual Meeting, as part of its nomination process, any director candidate recommended by a stockholder who follows the procedures described in the “General Matters—2019 Stockholder Proposals” section of this proxy statement.
The Nominating and Corporate Governance Committee follows the process described below when identifying and evaluating nominees to the Board:
Procedures for identifying candidates:
| |
| a) | Review current directors of the Company; |
| |
| b) | Review current directors of West Bank; |
| |
| c) | Solicit input from existing directors and executive officers; and |
| |
| d) | Review submissions from stockholders, if any. |
The following criteria will be considered when evaluating nominee candidates, including candidates recommended by stockholders:
The Board should be composed of:
| |
| 1. | Directors chosen with a view of bringing to the Board a variety of experiences and backgrounds; |
| |
| 2. | Directors who have a high level of managerial experience or are accustomed to dealing with complex challenges; and |
| |
| 3. | Directors who will represent the best interests of the stockholders as a whole rather than special interest groups or constituencies, while also taking into consideration the assessment of the overall composition and needs of the Board. |
The Nominating and Corporate Governance Committee also evaluates potential nominees to determine if they have any conflicts of interest that may interfere with their ability to serve as effective board members, to determine if they meet the Company’s age eligibility requirements (a person who has attained or will attain age 73 before the date of the annual meeting is not eligible for election to the Board), and to determine whether they are “independent” in accordance with the SEC and Nasdaq listing requirements. A majority of the Board’s directors are required to be independent under the criteria for independence created by the SEC and Nasdaq. Although it does not have a formal diversity policy, the Nominating and Corporate Governance Committee has historically considered diversity in its director nomination process.
In considering possible candidates for nomination as a director, the Nominating and Corporate Governance Committee considers the following general guidelines and criteria:
| |
| 1. | Each director should be of the highest character and integrity, have experience at or demonstrated understanding of strategy/policy setting, and have a reputation for working constructively with others; |
| |
| 2. | Each director should have sufficient time available to devote to the affairs of the Company in order to effectively carry out the responsibilities of a director; |
| |
| 3. | Each director should be free of any conflict of interest that would interfere with the proper performance of his or her responsibilities as a director, including his or her responsibilities as a member of any committee of the Board; and |
| |
| 4. | The Chief Executive Officer is expected to be a director. Other members of senior management may be nominated to be directors, but Board membership is not necessary or a prerequisite for senior executive positions. |
The Nominating and Corporate Governance Committee evaluates all candidates in the same way, reviewing the aforementioned factors, among others, regardless of the source of such candidates, including stockholder recommendations. Because of this, there is no separate policy with regard to consideration of candidates recommended by stockholders.
The functions of the Nominating and Corporate Governance Committee are detailed at length in its charter, which may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations, Corporate Information, Corporate Governance.
Risk Management and Information Technology Committee. The Risk Management and Information Technology Committee members are Sean P. McMurray, Chair, James W. Noyce and Lou Ann Sandburg, all of whom are considered “independent” as defined by Nasdaq listing requirements. As required by the Risk Management and Information Technology Committee’s charter, the members of the Risk Management and Information Technology Committee are elected annually by the independent directors of the Board. The Risk Management and Information Technology Committee is charged with being the primary Board committee to actively monitor and oversee the enterprise risk management process for the Company and West Bank. The Risk Management and Information Technology Committee regularly reviews ongoing or pending litigation, credit metrics, trends and compliance with established lending limits, investment portfolio performance and potential risks, information technology and cybersecurity risks, and potential reputational risks facing the Company. The Risk Management and Information Technology Committee also monitors liquidity, cash flow, regulatory and strategic risks, as well as reviewing risk disclosures in the Company’s financial statements and other public filings. On an annual basis, the Risk Management and Information Technology Committee reviews policies and procedures regarding risk management, including insurance coverage, business continuity, information and cybersecurity, and regulatory policies. The Risk Management and Information Technology Committee reviews its charter at least annually and recommends changes to the Board when it deems necessary. The Risk Management and Information Technology Committee met four times during 2017. The functions of the Risk Management and Information Technology Committee are detailed at length in its charter, which may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations, Corporate Information, Corporate Governance.
Code of Ethics
We have a Code of Conduct in place that applies to all of our directors, officers and employees. The Code of Conduct sets forth the standard of ethics that we expect all of our directors, officers and employees to follow, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Code of Conduct may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations, Corporate Information, Corporate Governance. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the Code of Conduct with respect to our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, and persons performing similar functions, by posting such information on our website. The Audit Committee reviewed the Company’s Code of Conduct during 2017 and recommended minor changes to the Board, which the Board implemented.
Board Leadership Structure
The Board believes that having a non-chief executive officer director serve as Chairman of the Board is in the best interests of stockholders. The Board currently intends to maintain the leadership structure of a non-chief executive officer chairman. The Board and its Nominating and Corporate Governance Committee believe that this structure will continue to be useful in providing consistent oversight and strategic direction to the Company. The Board expects Mr. Nelson to take the lead in developing strategic plans, providing day-to-day leadership and managing the performance of the Company. The Board intends to periodically review its leadership structure and make changes as dictated by the circumstances and the best interests of the stockholders.
Board'sBoard’s Role in Risk Oversight
The Board has historically performedperforms its risk oversight function primarily through the Audit, Compensation, and Nominating and Corporate Governance, and Risk Management and Information Technology Committees, which report to the whole Board and are comprisedcomposed solely of independent directors. The Board also has a Risk Management Committee that monitors and oversees the enterprise risk management process for the Company. This structure has provided greater Board awareness of policy and operational issues at the Company.
The Risk Management Committee is comprised of independent directors and may request any officer of the Company to attend meetings, including Harlee Olafson, the Company's Chief Risk Officer. Under its charter, the Risk Management Committee is charged with identifying and assessing the risks facing the Company and overseeing the development, implementation and monitoring of the Company's risk management process. The Risk Management Committee also oversees the division of risk-related responsibilities to each of the other Board committees. The Risk Management Committee oversees and reviews with management the Company's credit, market, liquidity, reputation, regulatory, strategic and similar risks. On an annual basis, the Risk Management Committee reviews policies and procedures regarding risk management, information technology and safety, liquidity and any other policies regarding employee conduct.
The Board'sBoard’s Audit Committee, which also functions as West Bank'sBank’s Audit Committee, reviews with management the Company'sCompany’s major financial transactional, and operational risk exposures, including policies regarding employee conduct, and the steps management has taken to monitor and control such exposures, including the Company'sCompany’s risk assessment and risk management policies.policies related to controls over financial reporting. These reviews are completed at least annually. In addition, the Audit Committee has quarterly executive sessions with both the Company'sCompany’s independent and internal auditors concerning any topic of concern to the auditors. Internal auditing is done by an independent public accounting firm retained by the Audit Committee. The Audit Committee also retains and receives an annual report from an independent public accounting firm employed specifically to review West Bank'sBank’s trust department.
The Compensation Committee, is charged in accordance with its charter, with at least annually reviewingreviews all compensation policies, practices, and plans of the Company to determine whether they encourage excessive risk-taking or pose any other threat to the safety and soundness of the Company or West Bank, or are otherwise inconsistent with the stockholders'stockholders’ long-term best interests.
CodeThe Nominating and Corporate Governance Committee reviews at least annually all policies and practices related to the governance of Ethicsthe Company. In addition, it periodically reviews management succession plans with executive management.
We have a Code of Conduct in place that applies to all of our directors, officersThe Risk Management and employees. The Code of Conduct sets forthInformation Technology Committee is charged with identifying and assessing the standard of ethics that we expect all of our directors, officersrisks facing the Company and employees to follow, including our Chief Executive Officeroverseeing the development, implementation and Chief Financial Officer. The Code of Conduct may be viewed on the Company's website (www.westbankstrong.com) under Investor Relations, Corporate Governance. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waivermonitoring of the CodeCompany’s risk management process. The Risk Management and Information Technology Committee also oversees the division of Conductrisk-related responsibilities to each of the other Board committees. The Risk Management and Information Technology Committee oversees and reviews with respect to our Chief Executive Officermanagement the Company’s credit, market, liquidity, reputation, transactional and Chief Financial Officer,operational, regulatory, information technology, cybersecurity, strategic and persons performing similar functions, by posting suchrisks. On an annual basis, the Risk Management and Information Technology Committee reviews risk assessments, policies and procedures regarding risk management, information on our website. The Audit Committee reviewed the Company's Code of Conduct during 2014technology and recommended minor changes to the Board, which the Board implemented.safety, and liquidity.
Committees of the Board of Directors
The table below shows the current membership for each of the standing Board committees:
|
| | | | | | | | |
| | | | | | | Nominating | | |
| | | | | | | and Corporate | | Risk |
| | | Audit | | Compensation | | Governance | | Management |
| Directors | | Committee | | Committee | | Committee | | Committee |
| Frank W. Berlin | | | | a | | a | | |
| Thomas A. Carlstrom | | | | a | | | | |
| Joyce A. Chapman | | a | | | | | | a |
| Steven K. Gaer | | | | Chair | | | | a |
| Michael J. Gerdin | | | | a | | | | |
| Kaye R. Lozier | | | | | | Chair | | |
| Sean P. McMurray | | | | | | | | a |
| George D. Milligan | | a | | | | a | | |
| James W. Noyce | | Chair | | | | | | a |
| Robert G. Pulver | | | | a | | a | | |
| Lou Ann Sandburg | | a | | | | | | Chair |
| Philip Jason Worth | | a | | | | | | |
| | | | | | | | | |
| Meetings held during 2014 | | 4 | | 3 | | 4 | | 4 |
Audit Committee. The members of the Audit Committee are James W. Noyce, Chair, Joyce A. Chapman, George D. Milligan, Lou Ann Sandburg and Philip Jason Worth. Each of the Audit Committee Members is considered "independent" according to Nasdaq listing requirements and Rule 10A-3 of the Exchange Act, as required for audit committee membership. Mr. Noyce is an "audit committee financial expert" as defined in the Sarbanes-Oxley Act of 2002 and related regulations based on his level of education and work experience, as described previously in this proxy statement. The Audit Committee selects the independent auditors; reviews with the independent and internal auditors the plan, scope and results of the auditors' services; approves their fees; and reviews the Company's financial reporting and internal control functions and risk assessment. The Audit Committee has authority to retain special legal, accounting or other consultants as it deems appropriate or necessary. The Audit Committee also performs the other duties set forth in its charter. The Audit Committee is prepared to meet privately at any time at the request of the independent registered public accountants or members of management to review any special situation arising on any of the above subjects. The Audit Committee reviews its charter at least annually and recommends changes to the Board when it deems necessary. The Audit Committee met four times during 2014 and also met with the Company's management and internal and independent auditors four times in executive session. Messrs. Noyce and G. Milligan are members of the Audit Committee who also serve on the audit committee of another listed company (United Fire & Casualty Company). Mrs. Sandburg served on the audit committee of Berthel Fisher Financial Services, Inc., a registered investment company, until May 2014. The functions of the Audit Committee are detailed at length in its charter, which may be viewed on the Company's website (www.westbankstrong.com) under Investor Relations, Corporate Governance.
Compensation Committee. The Compensation Committee consists of Steven K. Gaer, Chair, Frank W. Berlin, Thomas A. Carlstrom, Michael J. Gerdin and Robert G. Pulver, all of whom are considered "independent" as defined by the Nasdaq listing requirements, "outside" directors pursuant to Section 162(m) of the Internal Revenue Code, and "nonemployee" directors under Section 16 of the Exchange Act. As required by the Compensation Committee's charter, the members of the Compensation Committee are elected annually by the independent directors of the Board. The Compensation Committee annually reviews the Company's compensation and benefit programs, including compensation for the named executive officers. The Compensation Committee makes compensation recommendations to the Board concerning the amount and the form of executive and director compensation. The independent directors of the Board ultimately determine the compensation. The Compensation Committee has authority to retain consultants and advisors, which it does periodically. The Compensation Committee first retained Frederic W. Cook & Co., Inc. ("F.W. Cook") in July 2011 to provide the Compensation Committee with independent, objective analysis and professional opinions on executive compensation matters. F.W. Cook was independent, reported directly to the Chair of the Compensation Committee and performed no other work for the Company.
During 2011, F.W. Cook assisted the Compensation Committee in its review of the total compensation program, including gathering and analyzing market data for compensation paid for similar positions at companies with which the Company competes for executive talent. F.W. Cook also provided input on marketplace trends and best practices relating to competitive pay levels, as well as developments in regulatory and technical matters. During 2012, F.W. Cook continued to review and monitor our executive compensation programs. During 2013, F.W. Cook provided an update on trends in director compensation. During 2014, F.W. Cook provided an update to the Committee on trends in executive compensation and director compensation matters. It is anticipated that the Committee will obtain an independent review of compensation matters every three years.
The Compensation Committee may delegate any of its authorities to a sub-committee but has not done so to date. The Compensation Committee considers input from the executive officers concerning executive and other compensation but is not required to do so. The functions of the Compensation Committee are detailed at length in its charter, which may be viewed on the Company's website (www.westbankstrong.com) under Investor Relations, Corporate Governance. Additional details about the Compensation Committee's processes and procedures are discussed in the Compensation Discussion and Analysis below.
Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee members are Kaye R. Lozier, Chair, Frank W. Berlin, George D. Milligan and Robert G. Pulver, all of whom are considered "independent" as defined by Nasdaq listing requirements. As required by the Nominating and Corporate Governance Committee's charter, the members of the Nominating and Corporate Governance Committee are elected annually by the independent directors of the Board. The Nominating and Corporate Governance Committee makes recommendations to the Board regarding the composition and structure of the Board and nominations for election of directors, including the director nominees proposed in this proxy statement. It develops policies and processes regarding principles of corporate governance in order to ensure the Board's compliance with its fiduciary duties to the Company and its stockholders. The Nominating and Corporate Governance Committee will consider for nomination at the 2016 Annual Meeting, as part of its nomination process, any director candidate recommended by a stockholder who follows the procedures described in the 2016 Stockholder Proposals section of this proxy statement.
The Nominating and Corporate Governance Committee follows the process described below when identifying and evaluating nominees to the Board:
Procedures for identifying candidates:
| |
a) | Review current directors of the Company; |
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b) | Review current directors of West Bank; |
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c) | Solicit input from existing directors and executive officers; and |
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d) | Review submissions from stockholders, if any. |
The following criteria will be considered when evaluating nominee candidates:
The Board should be composed of:
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1. | Directors chosen with a view of bringing to the Board a variety of experiences and backgrounds; |
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2. | Directors who have high-level managerial experience or are accustomed to dealing with complex challenges; and |
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3. | Directors who will represent the best interests of the stockholders as a whole rather than special interest groups or constituencies while also taking into consideration the assessment of the overall composition and needs of the Board. |
A majority of the Board's directors shall be independent directors under the criteria for independence created by the SEC and Nasdaq. The Nominating and Corporate Governance Committee has historically considered diversity in its director nomination process and will continue to do so by looking for differences of viewpoint, professional experience, education, skills, and other individual qualities and attributes as well as characteristics such as race, gender and national origin.
In considering possible candidates for nomination as a director, the Nominating and Corporate Governance Committee considers the following general guidelines and criteria:
| |
1. | Each director should be of the highest character and integrity, have experience at or demonstrated understanding of strategy/policy setting, and have a reputation for working constructively with others; |
| |
2. | Each director should have sufficient time available to devote to the affairs of the Company in order to carry out the responsibilities of a director; |
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3. | Each director should be free of any conflict of interest that would interfere with the proper performance of the responsibilities of a director; and |
| |
4. | The Chief Executive Officer is expected to be a director. Other members of senior management may be nominated to be directors, but Board membership is not necessary or a prerequisite for senior executive positions. |
The Nominating and Corporate Governance Committee evaluates all candidates in the same way, reviewing the aforementioned factors, among others, regardless of the source of such candidate, including stockholder recommendations. Because of this, there is no separate policy with regard to consideration of candidates recommended by stockholders.
The functions of the Nominating and Corporate Governance Committee are detailed at length in its charter, which may be viewed on the Company's website (www.westbankstrong.com) under Investor Relations, Corporate Governance.
Risk Management Committee. The Risk Management Committee members are Lou Ann Sandburg, Chair, Joyce A. Chapman, Steven K. Gaer, Sean P. McMurray and James W. Noyce, all of whom are considered "independent" as defined by Nasdaq listing requirements. As required by the Risk Management Committee's charter, the members of the Risk Management Committee are elected annually by the independent directors of the Board. The Risk Management Committee is charged with being the primary board committee to actively monitor and oversee the enterprise risk management process for the Company and West Bank. The Risk Management Committee regularly reviews ongoing or pending litigation, credit metrics, trends and compliance with established lending limits, investment portfolio performance and potential risks, and potential reputational risks facing the Company. The Risk Management Committee also monitors liquidity, cash flows, regulatory and strategic risks. On an annual basis, the Risk Management Committee reviews policies and procedures regarding risk management, including insurance coverage, security, disaster recovery and regulatory policies. The Risk Management Committee reviews its charter at least annually and recommends changes to the Board when it deems necessary. The Risk Management Committee met four times during 2014. The functions of the Risk Management Committee are detailed at length in its charter, which may be viewed on the Company's website (www.westbankstrong.com) under Investor Relations, Corporate Governance.
Audit Committee Report
The incorporation by reference of this proxy statement into any document filed with the SEC by the Company shall not be deemed to include the following report unless such report is specifically stated to be incorporated by reference into such document.
The Audit Committee hereby states as follows:
It has reviewed and discussed the audited financial statements as of and for the year ended December 31, 2014, with management;
It has discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board (the "PCAOB") in Rule 3200T;
It has received the written disclosures and the letter from our independent accountant, McGladrey LLP, required by applicable requirements of the PCAOB regarding the independent accountant's communications with the Audit Committee concerning independence and has discussed with the independent accountant the independent accountant's independence;
Based on the review and discussions referred to immediately above, it recommended to the Board that the audited financial statements be included in the Company's annual report on Form 10-K for the year ended December 31, 2014, for filing with the SEC;
It has reviewed and approved or ratified all related-party transactions between the Company and its directors; and
The Board has approved the Audit Committee Charter.
The undersigned members of the Audit Committee have submitted this report.
James W. Noyce, Chair
Joyce A. Chapman
George D. Milligan
Lou Ann Sandburg
Philip Jason Worth
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are identified in the section titled Committees of the Board of Directors. No Compensation Committee members have ever been officers or employees of the Company or West Bank. No executive officer served as a director or member of the compensation committee of any other entity whose directors or executive officers served as a member of our Board or a member of the Compensation Committee.
Compensation Committee Report
The incorporation by reference of this proxy statement into any document filed with the SEC by the Company shall not be deemed to include the following report unless such report is specifically stated to be incorporated by reference into such document.
The Compensation Committee hereby states as follows:
It has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management; and
Based on the review and discussion referred to immediately above, it recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
The undersigned members of the Compensation Committee have submitted this report.
Steven K. Gaer, Chair
Frank W. Berlin
Thomas A. Carlstrom
Michael J. Gerdin
Robert G. Pulver
Nominating and Corporate Governance Committee Report
During 20142017, the Nominating and Corporate Governance Committee reviewed the composition of the existing Board giving specific attention to the questions of the desirable size of the Board and how many insiders should be on the Board. As a result of the 2017 adoption of a Board policy that no Board member should be nominated for election to the Board who has attained or will attain the age of 73 years on or before the date of the forthcoming annual stockholders meeting and election of directors, two current directors are affected by the change in policy. Frank W. Berlin and Joyce A. Chapman will retire from the Board effective as of the date of the Annual Meeting. Based on its review of these questions,the Board composition after the upcoming retirements, the Nominating and Corporate Governance Committee decided to recommend retainingreducing the size of the Board atto 1412 directors. In planning for the retirements, the Nominating and Corporate Governance Committee performed a search for a new director, following its established processes and evaluation criteria. It took action in November 2017 to recommend the addition of Steven T. Schuler as a director. The Board approved the nomination and addition to the Board effective January 1, 2018. In addition, the Nominating and Corporate Governance Committee decided that it was in the best interest of the stockholders to continue the model of having only one member of management, the Chief Executive Officer, on the Board in order to clearly differentiate the roles of the Board and management.
The Nominating and Corporate Governance Committee also evaluated the qualifications and performance of each of the current members of the Board. In its evaluation, the Nominating and Corporate Governance Committee compared each of the current directors to the qualifications and characteristics of a director set forth in the Nominating and Corporate Governance Committee'sCommittee’s charter. The Nominating and Corporate Governance Committee then polled each director eligible to stand for re-election to determine his or her willingness to stand for re-election and determined that each director was willing to continue service. The Nominating and Corporate Governance Committee did not receive any stockholder recommendations for 20152018 director nominees. No third party was retained, in any capacity, to provide assistance in either identifying or evaluating potential director nominees for 20152018.
Based on the foregoing, the Nominating and Corporate Governance Committee recommended to the Board that Frank W. Berlin, Thomas A. Carlstrom, Joyce A. Chapman, Steven K. Gaer, Michael J. Gerdin, Kaye R. Lozier, Sean P. McMurray, David R. Milligan, George D. Milligan, David D. Nelson, James W. Noyce, Robert G. Pulver, Lou Ann Sandburg, Steven T. Schuler and Philip Jason Worth should be nominated for re-election to the Board at the Annual Meeting. The Board accepted this recommendation.
During 20142017, the Nominating and Corporate Governance Committee reviewed its charter, and minor changes were recommended to the Board, which the Board implemented. The charter may be reviewed on the Company's website (www.westbankstrong.com) under Investors Relations, Corporate Governance.
The undersigned members of the Nominating and Corporate Governance Committee have submitted this report.
George D. Milligan, Chair
Kaye R. Lozier Chair
Frank W. Berlin
George D. Milligan
Robert G. Pulver
2017 Director Compensation
In 2017, the directors of the Company received an annual retainer of $10,000, payable quarterly. Committee chairpersons received an additional $2,000 annual retainer. Directors also received $500 per meeting attended (Board and committee). Members of the Audit Committee received $600 per Audit Committee meeting attended. Mr. David Milligan also received a monthly fee of $2,500 for his service as Chairman of the Board. He maintains an office at the Company’s headquarters. Mr. James Noyce received a monthly fee of $1,250, beginning in May 2017, for his service as Vice Chairman of the Board.
Directors of the Company who also served as directors of West Bank received an annual retainer of $6,500, and $500 for each meeting attended (Board and committee). At the annual organizational meeting of the Board on April 27, 2017, each director was granted a restricted stock unit award for 2,000 shares of the Company’s common stock with a grant date of April 28, 2017. Messrs. Nelson, Gulling, Olafson and Winterbottom are employees and do not receive any compensation for services as directors of the Company or West Bank.
None of the directors receive any compensation or other payment in connection with his or her service as a director other than compensation received by the Company as set forth below.
The following table sets forth all compensation earned or paid to our nonemployee directors for the fiscal year ended December 31, 2017.
|
| | | | | | | | |
| Name | | Fees Earned or Paid in Cash by Company ($) | | Fees Earned or Paid in Cash by West Bank ($) | | Stock Awards ($) (1) | | Total ($) |
| Frank W. Berlin | | $17,500 | | $17,500 | | $44,719 | | $79,719 |
| Joyce A. Chapman | | 15,900 | | 12,500 | | 44,719 | | 73,119 |
| Steven K. Gaer | | 15,500 | | 17,000 | | 44,719 | | 77,219 |
| Michael J. Gerdin | | 14,500 | | 10,500 | | 44,719 | | 69,719 |
| Kaye R. Lozier | | 16,000 | | 13,500 | | 44,719 | | 74,219 |
| Sean P. McMurray | | 17,500 | | 12,500 | | 44,719 | | 74,719 |
| David R. Milligan | | 45,900 | | 19,000 | | 44,719 | | 109,619 |
| George D. Milligan | | 17,500 | | 17,000 | | 44,719 | | 79,219 |
| James W. Noyce | | 29,900 | | 11,500 | | 44,719 | | 86,119 |
| Robert G. Pulver | | 15,500 | | 17,000 | | 44,719 | | 77,219 |
| Lou Ann Sandburg | | 15,500 | | 13,500 | | 44,719 | | 73,719 |
| Philip Jason Worth | | 15,900 | | 12,500 | | 44,719 | | 73,119 |
| |
| (1) | The amounts set forth in the “Stock Awards” column reflect the grant date fair value of restricted stock units awarded on April 28, 2017, valued in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Each nonemployee director was granted a restricted stock unit award for 2,000 shares of the Company’s common stock with a vesting date of April 26, 2018. These were the only outstanding nonemployee director equity awards as of December 31, 2017. |
Executive Officers of the Company
The following table sets forth summary information about the current executive officers of the Company.
|
| | |
| Name | Age | Position with the Company or West Bank |
| David D. Nelson | 5457 | Director, Chief Executive Officer and President of the Company; Chairman, and Chief Executive Officer and Director of West Bank |
| Douglas R. Gulling | 6164 | Executive Vice President, Treasurer and Chief Financial Officer of the Company; Director, Executive Vice President and Chief Financial Officer of West Bank |
| Harlee N. Olafson | 5760 | Executive Vice President and Chief Risk Officer of the Company; Director, Executive Vice President and Chief Risk Officer of West Bank |
| Brad L. Winterbottom | 5861 | Executive Vice President of the Company; Director and President of West Bank |
The executive officers of the Company are appointed on an annual basis by the Board of Directors. An executive officer may be removed by the Board of Directors whenever, in its judgment, the best interests of the Company will be served thereby. There are no arrangements or understandings between any of the executive officers and any other person pursuant to which he was selected as an officer.
The principal occupation or business and experience of the executive officers of the Company and West Bank for the past five years are set forth below.
David D. Nelson is Chief Executive Officer and President of the Company and Chairman of West Bank’s Board and Chief Executive Officer of West Bank (since 2010). Mr. Nelson is a member of the Company'sCompany’s Board (since 2010). Mr. Nelson has more than 30 yearsHe was previously President of experience in commercial banking. He most recently was President, Southeast Minnesota Business Banking and President of Wells Fargo Bank Rochester in Rochester, Minnesota. He has a strong background in customer relationship building, credit and leadership development. Mr. Nelson has been employed in the banking industry since 1984.
Douglas R. Gulling is Executive Vice President (since 2004), Treasurer (since 2013) and Chief Financial Officer (since 2001) of the Company. He was a member of the Company'sCompany’s Board from 2009 through April 2011. He also serves as a director (since 2005), Executive Vice President (since 2015) and Chief Financial Officer (since 2002) of West Bank. Mr. Gulling is a Certified Public Accountant (inactive) and has been employed in the banking industry since 1979.
Harlee N. Olafson is Executive Vice President and Chief Risk Officer of the Company and of West Bank (since 2010). He also serves as a director of West Bank (since 2011). Mr. Olafson has more than 35 years of experience in commercial banking. Prior to joining the Company, he was President of Southern Minnesota Business Banking and President of Wells Fargo Bank Mankato in Mankato, Minnesota. He has strong business development, credit and team building backgrounds. Mr. Olafson has been employed in the banking industry since 1979.
Brad L. Winterbottom is Executive Vice President of the Company (since 2006) and director and President (since 2000) of West Bank. He was a directormember of the Company'sCompany’s Board from 2009 through April 2011. He joined West Bank in 1992 and has served as an executive and policy maker since 1998. He has extensive experience in commercial lending and loan portfolio administration, and knowledge of the central Iowa business community. Mr. Winterbottom has been employed in the banking industry since 1981.
2014 Director Compensation
In 2014, the directors of the Company received an annual retainer of $8,000, payable quarterly. Committee chairpersons received an additional $500 per quarter. Directors also received $500 per meeting attended (Board and committee). Members of the Audit Committee received $600 per Audit Committee meeting attended. Mr. David Milligan also received a monthly fee of $5,000 for his service as Chairman of the Board. He maintains an office at the Company's headquarters and works regular office hours on Board matters. Directors of the Company who also served as directors of West Bank received an annual retainer of $6,500, and $500 for each meeting attended (Board and committee). On April 24, 2014, each director was granted a restricted stock unit award for 1,500 shares of the Company's common stock. Messrs. Nelson, Gulling, Olafson and Winterbottom are employees and do not receive any compensation for services as directors.
The following table sets forth all compensation earned or paid to our nonemployee directors for the fiscal year ended December 31, 2014.
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| | | | | | | | |
| Name | | Fees Earned or Paid in Cash by Company ($) | | Fees Earned or Paid in Cash by West Bank ($) | | Stock Awards ($) (1) | | Total ($) |
| Frank W. Berlin | | $14,500 | | $18,000 | | $21,655 | | $54,155 |
| Thomas A. Carlstrom | | 12,000 | | 19,500 | | 21,655 | | 53,155 |
| Joyce A. Chapman | | 15,400 | | 14,000 | | 21,655 | | 51,055 |
| Steven K. Gaer | | 16,500 | | 17,500 | | 21,655 | | 55,655 |
| Michael J. Gerdin | | 11,500 | | 10,500 | | 21,655 | | 43,655 |
| Kaye R. Lozier | | 15,000 | | 15,500 | | 21,655 | | 52,155 |
| Sean P. McMurray | | 13,000 | | 14,500 | | 21,655 | | 49,155 |
| David R. Milligan | | 71,000 | | 20,000 | | 21,655 | | 112,655 |
| George D. Milligan | | 15,400 | | 18,000 | | 21,655 | | 55,055 |
| James W. Noyce | | 17,400 | | 14,000 | | 21,655 | | 53,055 |
| Robert G. Pulver | | 13,500 | | 16,500 | | 21,655 | | 51,655 |
| Lou Ann Sandburg | | 17,400 | | 14,000 | | 21,655 | | 53,055 |
| Philip Jason Worth | | 12,800 | | 15,500 | | 21,655 | | 49,955 |
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(1) | The amounts set forth in the "Stock Awards" column reflect the grant date fair value of restricted stock units awarded on April 24, 2014, valued in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. Each nonemployee director was granted 1,500 restricted stock units which have a vesting date of April 23, 2015. These were the only outstanding nonemployee director equity awards as of December 31, 2014.
|
Security Ownership of Certain Beneficial Owners and Executive Officers
The following table contains the shares of the Company'sCompany’s common stock beneficially owned by each director and each named executive officer listed in the Summary Compensation Table, and all directors and executive officers of the Company and subsidiary (including named executive officers) as a group. The ownership information is as of February 19, 201516, 2018.
| | | Name | Shares Beneficially Owned (1) (2) | | Percent of Total Shares Outstanding | Shares Beneficially Owned (1) (2) | | Percent of Total Shares Outstanding |
| Frank W. Berlin | 52,444 |
| | * |
| 57,944 |
| | * |
|
Thomas A. Carlstrom (3) | 42,585 |
| | * |
| |
Joyce A. Chapman (4) | 29,812 |
| | * |
| |
Joyce A. Chapman (3) | | 30,620 |
| | * |
|
| Steven K. Gaer | 3,588 |
| | * |
| 9,088 |
| | * |
|
| Michael J. Gerdin | 1,000 |
| | * |
| 4,000 |
| | * |
|
| Douglas R. Gulling | 28,402 |
| | * |
| |
Douglas R. Gulling (4) | | 61,012 |
| | * |
|
| Kaye R. Lozier | 4,608 |
| | * |
| 10,108 |
| | * |
|
| Sean P. McMurray | 8,300 |
| | * |
| 13,800 |
| | * |
|
| David R. Milligan | 30,000 |
| | * |
| 32,000 |
| | * |
|
| George D. Milligan | 9,088 |
| | * |
| 14,588 |
| | * |
|
| David D. Nelson | 69,005 |
| | * |
| |
David D. Nelson (4) | | 111,027 |
| | * |
|
| James W. Noyce | 4,588 |
| | * |
| 9,988 |
| | * |
|
| Harlee N. Olafson | 16,784 |
| | * |
| |
Harlee N. Olafson (4) | | 46,275 |
| | * |
|
Robert G. Pulver (5) | 92,347 |
| | * |
| 47,847 |
| | * |
|
| Lou Ann Sandburg | 3,188 |
| | * |
| 8,688 |
| | * |
|
Brad L. Winterbottom (6) | 32,518 |
| | * |
| |
| Steven T. Schuler | | — |
| | * |
|
Brad L. Winterbottom (4)(6) | | 66,181 |
| | * |
|
| Philip Jason Worth | 1,294 |
| | * |
| 6,894 |
| | * |
|
Executive officers and directors as a group (17 persons) | 429,551 |
| | 2.68 | % | 530,060 |
| | 3.27 | % |
*Indicates less than 1 percent ownership of outstanding shares.
| |
| (1) | Shares “beneficially owned” include shares owned by or for, among others, the spouse and/or minor children of the named individual and any other relative who has the same home address as such individual, as well as other shares with respect to which the named individual has or shares voting or investment power.power or has the right to acquire such powers within 60 days. Beneficial ownership may be disclaimed as to certain of the shares. |
| |
| (2) | Except as otherwise indicated in the following notes, each named individual owns his or her shares directly, or indirectly through a self-directed IRA or the Company'sCompany’s Employee Savings and Stock Ownership Plan, and has sole investment and voting power with respect to such shares. |
| |
| (3) | Includes shares held in his spouse'sher spouse’s name. Dr. CarlstromMrs. Chapman disclaims any beneficial ownership of 3,00030,620 shares held in his spouse'sher spouse’s name. |
| |
| (4) | Includes 13,500 shares held in her spouse's name. Mrs. Chapman disclaims any beneficial ownershipsubject to restricted stock unit awards that are currently unvested but will vest within 60 days of 28,224 shares held in her spouse's name.February 16, 2018. |
| |
| (5) | Includes shares held in his spouse'sspouse’s name. Mr. Pulver disclaims any beneficial ownership of 6,614 shares held in his spouse'sspouse’s name. |
| |
| (6) | Includes shares held in his spouse'sspouse’s name. Mr. Winterbottom disclaims any beneficial ownership of 6,5006,607 shares held in his spouse'sspouse’s name. |
Other Beneficial Owners
The following table sets forth certain information on each person known to the Company to be the beneficial owner of more than 5five percent of the Company'sCompany’s common stock. The ownership information is as of February 19, 201516, 2018.
| | | Name and Address | | Shares Beneficially Owned | | Percent of Total Shares Outstanding | | Shares Beneficially Owned | | Percent of Total Shares Outstanding |
The Jay Newlin Trust 6165 NW 86th Street Johnston, IA 50131 | | 1,041,952 |
| | 6.50 | % | |
The Jay Newlin Trust 2661 86th Street Urbandale, IA 50322 | | | 1,041,952 |
| | 6.43 | % |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires that the Company'sCompany’s directors and executive officers and persons who own more than 10 percent of the Company'sCompany’s common stock file initial reports of ownership and reports of changes of ownership with the SEC and Nasdaq. Reporting persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. The Company has not received any Section 16(a) formforms indicating that any one person owns more than 10 percent of the Company'sCompany’s stock, and the Company does not know of any one stockholder who owns more than 10 percent of the Company'sCompany’s stock. Based solely on its review of the copies of Section 16(a) forms received from its directors and executive officers and written representations that no other reports were required, the Company believes that all Section 16(a) reports applicable to its directors and officers during 20142017 were filed on a timely basis, with the exception of Marie I. Roberts, the Principal Accounting Officer,Joyce A. Chapman, a director, who filed a late Form 3.5 reporting four gifting transactions that should have been reported earlier on Form 4s or Form 5s.
Change in Control Agreements
The Company does not know of any arrangements or pledges that would result in a future change in control of the Company.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (“CD&A”) provides information aboutexplains our compensation objectives and policies for our named executive officers and explains the structure and rationale of the variousour compensation elements.program. Our CD&A is organized as follows:
Overview and Executive Summary. Background context and highlights are provided to put the overall disclosure in perspective.
Objectives of Our Compensation Program. The objectives of our executive compensation program are based on our business model and the competitive pressures we face in attracting and retaining executive talent. We structure our executive compensation program to reflect our compensation philosophy and related operating principles.
Compensation Process. Our executive compensation programs are regularly reviewed to ensure that we meet our compensation objectives.
Elements of Compensation. The key components of our compensation program are base salary, annual bonuses and long-term stock awards, with an emphasis on tying executive compensation to Company performance.
Compensation Process. Our executive compensation programs are regularly reviewed to ensure that we meet our compensation objectives.
Analysis of 20142017 Compensation. Decisions on 20142017 compensation are analyzed and explained in the context of our compensation objectives and performance.
Regulatory Considerations. We consider guidance established by the Federal Deposit Insurance Corporation (the "FDIC"“FDIC”) and other bank regulatory agencies, in additionas well as guidance from other regulators applicable to various other regulatory requirements,publicly traded companies, in making decisions about executive compensation.compensation and risk mitigation.
Share OwnershipOther Compensation and Retention GuidelinesGovernance Policies. OurWe have adopted other policies intended to more closely align the interests of our named executive officers maintain a significant equity interest inwith those of our Company pursuant to our ownershipstockholders and retention guidelines.
Insider Trading Policy. The Company has an insider trading policy in place that applies to our named executive officers.reflect governance best practices.
Overview and Executive Summary
Business Overview
The Company, through West Bank, provides lending, deposit and trust services for individualsbusinesses and businesses.individuals. We offer competitive commercial and personal banking products and are committed to providing superior customer service. We place a high priority on community service and are actively involved with many civic and community projects in the communities where we conduct business. We operate in an intensely competitive and uncertain business environment. From a business perspective, not only do we compete with numerous companies in our markets for customers, but we also compete with many different types and sizes of organizations for senior leadership capable of executing our business strategies. Among other challenges, our business model requires experienced leaders with banking and operational expertise who are capable of taking on high levels of personal responsibility in an ever-evolving banking industry and economy.
Financial and Operational Performance
Our fiscal year ending December 31, 2014The Company’s focus on organic growth resulted in continued strong financial performance for 2017. Consolidated net income of $23,070,000 for 2017 was a great yearthe highest ever recorded in the Company’s history. When full-year results for the Company and West Bank. We2017 become available for our benchmarking peer group, we believe we achieved our goal of being in thewill be a top quartile of our benchmarkingperformer relative to the peer group. A listing of the Company'sour peer group and highlights of 20142017 performance can be found later in this section of this proxy statement.are provided below.
The Company'sIn addition, the Company’s profitability, as measured by return on average assets and return on average equity through September 30, 2017, put us in the top quartile of all banks nationally that havewith assets between $1 billion and $3 billion, (accordingaccording to the September 20142017 Bank Holding Company Performance Report which is prepared(the most recent available when this report was prepared), as compiled by the Federal Reserve Board's Division of Banking Supervision and Regulation).
The Company was again recognized by the investment banking firm, Sandler O'Neill + Partners, L.P., as oneRegulation of the top 35 community banks in the United States. A total of 443 bank holding companies were considered in this process. The Company is one of only two companies to be included in this list of top-performing banks for three years in a row.Federal Reserve.
Overview of Our Executive Compensation Programs
The Company and West Bank share an executive management team. The members of the executive management team, consisting of our named executive officers, are compensated by West Bank rather than the Company. The compensation packagesCompensation of our named executive officers areis determined and approved by the Company'sCompany’s Compensation Committee based on their performance and roles for both the Company and West Bank.
The Company and West Bank are committed to paying for performance. This commitment is reflected by the significant portion of our named executive officers'officers’ compensation that is provided through performance-based programs. Our executive compensation programs evolve and are adjusted over time to support the business goals of the Company and West Bank and to promote both near- and long-term profitable growth. Total compensation for each named executive officer varies with performance in achieving financial and nonfinancial objectives.
Say-on-Pay
At the 20142017 annual stockholders'stockholders’ meeting, 96more than 95 percent of votes cast were in support of our executive compensation program.program for 2016. The Company, the Board and the Compensation Committee pay careful attention to communications received from stockholders regarding executive compensation, including the results of thesethe annual nonbinding, advisory "say-on-pay" votes.say-on-pay vote. The Compensation Committee considered the results of the advisory vote and believes the vote reflects our stockholders’ support of our compensation philosophy and the manner in which we compensate our named executive officers. As such, the Compensation Committee made no specific changes as a result of the 20142017 vote.
Objectives of Our Compensation Program
The goal of our compensation program is to create superior long-term value for our investorsstockholders by attracting, motivating and retaining outstanding employees who serve our customers while also generating financial performance that is consistently better than our competitors.peers. Our compensation program for executives is based in large part on our business needs and challenges in creating stockholder value. To support the achievement of our business strategies and goals, we strive to:
Pay for performance;
Tie equity compensation to long-term value creation for our stockholders;
Align executives'executives’ financial interests with those of our stockholders;
Support the Company'sCompany’s and West Bank'sBank’s values, strategy and development of employees;
Foster a team approach among top executives;
Attract retain and alignretain leaders capable of delivering superior business results;
Provide competitive cash compensation and benefit opportunities; and
Adhere to the highest legal and ethical standards.
Compensation Process
The Compensation Committee has broad discretion in overseeing our compensation programs and reviews each element of compensation for each of our named executive officers at least annually. The Compensation Committee considers each named executive officer’s responsibilities, performance and experience, as well as competitive compensation levels in reviewing compensation. During the annual review process, the Compensation Committee also reviews our financial results against other banking organizations, and the structure of our compensation programs relative to sound risk management.
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The primary considerations in making executive compensation decisions are:
Key financial measurements;
Strategic initiatives related to our business;
Achievement of specific operational goals relating to the executive’s area of oversight; and
Compensation of peer group executives.
Role of Compensation Consultant
Under its charter, the Compensation Committee has the authority to retain independent compensation consultants. Since 2011, the Compensation Committee has retained F.W. Cook to provide the Compensation Committee with independent, objective analysis and professional opinions on executive and director compensation matters. F.W. Cook is independent, reports directly to the Chair of the Compensation Committee, and performs no other work for the Company other than assisting the Compensation Committee in the review of the total compensation program. F.W. Cook also provides input on marketplace trends and best practices relating to competitive pay levels, as well as developments in regulatory and technical matters. The Compensation Committee reviewed F.W. Cook’s independence as contemplated by the Compensation Committee’s charter and applicable Nasdaq rules, and determined that there were no conflicts of interest and that F.W. Cook is independent from the Company, the Compensation Committee members and our executive officers. During 2017, F.W. Cook was engaged to review the Company’s peer group and to provide a market review of the Company’s executive and nonemployee director compensation.
Role of Executive Officers
As requested by the Compensation Committee, various members of management facilitate the Compensation Committee’s consideration of compensation for our named executive officers by providing information for the Compensation Committee’s review. In particular, Mr. Nelson provides background and recommendations with respect to each of the other named executive officers but is not present for the discussion or determination of his own compensation. Information considered includes, among other items, financial results and analysis, performance evaluations, compensation provided to our named executive officers, technical and regulatory considerations, and input on program design and possible modifications.
Peer Group
Market pay practices are one of many factors we consider in setting executive pay levels and designing compensation programs. Information on pay levels and practices is gathered for a group of publicly traded companies selected based on their business focus, scope and location of operations, size and other considerations. The Company’s initial peer group of 16 financial institutions for 2017 was jointly presented by F.W. Cook and management and approved by the Compensation Committee. The Company is in the middle of the group in terms of size. The group is periodically reviewed, with changes made to reflect merger and acquisition activity, financial situation and development, and other considerations. During the third quarter of 2017, one peer ceased to exist due to a merger, so it was removed from the group, resulting in the current group of 15. An additional financial institution will be added to the peer group in 2018. The following is the composition of the peer group as of December 31, 2017.
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| | |
| BankFinancial Corporation | Hills Bancorporation | MutualFirst Financial, Inc. |
| Farmers Capital Bank Corporation | Horizon Bancorp | Nicolet Bankshares, Inc. |
| First Business Financial Services | Isabella Bank Corporation | Peoples Bancorp |
| First Defiance Financial Corp. | Mercantile Bank Corporation | QCR Holdings, Inc. |
| First Mid-Illinois Bancshares, Inc. | MidWestOne Financial Group, Inc. | Waterstone Financial, Inc. |
Elements of Compensation
Our executive compensation program consists of several elements, each with an objective that fits into our overall compensation program.program to provide an integrated and competitive total pay package. The following overview explains the structure and rationale of the elements of compensation used for 2014.2017.
Base Salary
We consider base salary a tool to provide executives with a reasonable level of fixed income relative to their level of responsibility. The Compensation Committee reviewsPerformance and base salary level of each named executive officer's base salary annually, as well as at the time of a promotion or other material change in responsibility. Performanceofficer is reviewed annually, butannually; however, our recent practice has been to only adjust their base salaries on a triennial basis. Base salaries are established and adjusted using criteria that include the level of responsibility for the position, base salary data forinternal pay equity with other internal positions, and base salaries for similar positions within our peer group.
Annual Incentive Bonus
Annual incentive bonuses are an important piece of total compensation for our named executive officers, as they support and encourage the achievement of our business goals and strategies by tying a meaningful portion of cash compensation to financial results for the year as compared to internal and external standards. Maximum bonus opportunities are capped to avoid encouraging excessive risk-taking and to avoid any focus on maximizing short-term results at the expense of long-term soundness.
Annual bonuses for named executive officers for 20142017 will be determined based on quantitative and qualitative analyses performed by the Compensation Committee in 2015.2018. The quantitative analysis, as further described in the next paragraph, includes the Company'sCompany’s relative performance with respect to four key financial measures. The qualitative analysis includes any and all items deemed relevant by the Compensation Committee, including, for example, regulatory action,actions, if any, and Company profitability and changes in dividends.profitability. The Compensation Committee may increase or decrease the bonuses indicated from the peer comparison as it sees fitdeems appropriate in its sole discretion, with all determinations by the Compensation Committee being final. Positive Company earnings are required for any bonuses to be paid to our named executive officers.
The quantitative analysis has two parts: (1) performance against our peer group in four key areas, and (2) the Company'sCompany’s net profit compared to the prior year. The four key areas (equally weighted) in which we measure ouryear, and (2) the Company’s performance againstcompared to our peer group arebased on the following four key metrics (equally weighted): return on average assets, return on average equity, efficiency ratio and Texas ratio. Each ratio is defined in Item 6 of our Annual Report on Form 10-K. These ratiosquantitative measures were selected becauseby the Compensation Committee because it believes they encompass important aspects of our financial performance: earnings, capital levels, expense control and asset quality. Based on our ranking among our peers in each of these key areas, our named executive officers are eligible for a cash bonus payment equal to:to a percentage of salary, according to the following schedule:
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| | |
| | Percent |
| Level | Peer Ranking | %of Salary |
| Maximum | At or Above 75th Percentile | 60% |
| Target | Median | 40% |
| Threshold | 25th Percentile | 20% |
| | Below 25th Percentile | 0% |
If our ranking in the peer group falls between any of the listed points, our named executive officers will be eligible for a proportional cash bonus. Reflecting our team approach to management, all the named executive officers have the same incentive opportunities relative to salary.
Long-Term Stock Incentives
Equity compensation is the other key element of compensation for our named executive officers and supports the achievement of manyofficers. Effective as of our key compensation objectives:
Tie2017 Annual Meeting, all new equity awards are made under our 2017 Equity Incentive Plan (“2017 Equity Plan”), which was adopted by our Board and approved by the stockholders in 2017. Initially, there were 800,000 shares authorized for issuance under the 2017 Equity Plan. The prior 2012 Equity Incentive Plan (“2012 Equity Plan”) was frozen with respect to future grants upon approval of the 2017 Equity Plan. At the time the 2012 Equity Plan was frozen, 232,318 shares had not been issued. Each of the equity plans are administered by the Compensation Committee and permit the Company to grant a variety of equity-based and cash-based incentive awards including: nonqualified and incentive stock options, stock appreciation rights, restricted stock, restricted stock units and cash incentive awards. In recent years, it has been the Company’s practice to grant equity awards in the form of restricted stock units vesting in annual installments tied to continued service over five years. Unvested awards are forfeited upon early termination other than a termination in connection with a change in control or due to the named executive officer’s death, disability or retirement. Outstanding restricted stock units do not pay or accumulate dividend equivalents during the applicable vesting periods. In addition to maintaining a simple program easily understood by our executives and stockholders, this approach is designed to tie pay to performance, by linking compensation to stockholder value creation;
Align executives'align executives’ interests with those of our stockholders;
Attract executives, particularly those interested in buildingstockholders, provide a long-term valueplanning horizon, mitigate adverse risk-taking, and attract and retain key employees. As of December 31, 2017, there were 776,000 remaining shares available for our stockholders; and
Retain executives and reward continued service by providing for forfeiture of awards prior to satisfaction of multi-year vesting periods.grant under the 2017 Equity Plan.
Proxy Statement TableAll three of Contentsthe above components of executive compensation are reviewed on a triennial basis using data and professional opinions provided by an independent compensation consultant.
Discretionary Holiday Bonus
All employees of West Bank, including our named executive officers, are eligible to receive a discretionary annual holiday bonus paid as a percentage of their annual salary. Our named executive officers participate in the holiday bonus on the same terms as our other employees. This discretionary bonus has been 2 percent of base salary for many years.
Retirement Benefits
Our named executive officers are eligible to participate in our Employee Savings and Stock Ownership Plan, which is intended to assist all eligible employees in providing for income and financial security in retirement. Executives participate under the same terms as other eligible employees. During 2014,2017, this plan provided a 100 percent Company matching contribution on participant deferrals up to 6 percent of the participant'sparticipant’s pay and an additional 4 percent discretionary Company contribution of 4 percent of pay (in each case subject to applicable IRS limitations on contributions)compensation limitations).
Deferred Compensation
The West Bancorporation, Inc. Deferred Compensation Plan (the "Deferred“Deferred Compensation Plan"Plan”) was adopted effective January 1, 2013 to provide certain individuals with additional deferral opportunities in planning for retirement. The Deferred Compensation Plan is an unfunded, nonqualified deferred compensation plan that provides an opportunity for eligible participants, including the named executive officers, to voluntarily defer receipt of a portion of their cash compensation. The Company and West Bank can make discretionary contributions under the Deferred Compensation Plan to participants but have not yet nor plan to do so. Compensation deferred will be payable as selected by each participant. In the event of a change in control of the Company, amounts deferred by a participant will be distributed in a lump sum, and Company contributions will be distributed in accordance with the participant's elections. The Deferred Compensation Plan currently provides for a notional interest rate equal to the Moody's Seasoned Aaa Corporate Bond Rate in effect as of January 1 of the applicable year. As of January 1, 2015,2018, none of our named executive officers have elected to participateare participating in the Deferred Compensation Plan.
Perquisites and Other Benefits
We have generally avoided the use of perquisites and other types of benefits, emphasizing instead compensation tied to performance. Our named executive officers participatehave historically participated in our broad-based employee benefit programs, such as medical, dental, disability and life insurance coverage, on the same terms as other eligible employees.
Employment Agreements
Employment agreements are in place with each of our named executive officers. We believe employment agreements for our named executive officers help us recruit and retain executives with the experience, skills, knowledge and background needed to achieve our business goals and strategy.
Mr. Nelson. Mr. Nelson serves as the President and Chief Executive Officer of the Company and as the Chief Executive Officer of West Bank under his agreement, as well as a member of the Boards of Directors of both entities. The initial term under Mr. Nelson's agreement ends on December 31, 2015, but the agreement extended automatically for another year on January 1, 2015, and will extend on each January 1 going forward, unless the Board or Mr. Nelson notifies the other party of its intent not to renew. Mr. Nelson is entitled to a minimum annual salary pursuant to the agreement, as well as participation in the Company's annual incentive plan and the Company's other benefit plans. Upon an involuntary termination of Mr. Nelson's employment, he will be entitled to severance benefits contingent upon execution of a general release of claims. Mr. Nelson also will be subject to non-compete and non-solicit restrictive covenants following termination of employment.
Messrs. Gulling, Olafson and Winterbottom. Under their respective agreements, Mr. Gulling serves as Executive Vice President, Treasurer and Chief Financial Officer of the Company and Chief Financial Officer of West Bank, Mr. Olafson serves as Executive Vice President and Chief Risk Officer of the Company and West Bank, and Mr. Winterbottom serves as Executive Vice President of the Company and President of West Bank. Each individual also serves as a member of the Board of Directors of West Bank. The initial term under each agreement ended on December 31, 2014, but the agreements extended automatically for another year on January 1, 2014 and 2015 and will extend on each January 1 going forward, unless the Board or the named executive officer notifies the other party of its intent not to renew. Messrs. Gulling, Olafson and Winterbottom are entitled to a minimum annual salarypursuant to their agreements, as well as participation in the Company's annual incentive plan and the Company's other benefit plans. Upon an involuntary termination of employment, the executive will be entitled to severance benefits contingent upon execution of a general release of claims. Messrs. Gulling, Olafson and Winterbottom also will be subject to non-compete and non-solicit restrictive covenants following termination of employment.
2012 Equity Incentive Plan - Acceleration of Awards
The 2012 Plan provides for possible accelerated vesting of awards in certain circumstances. Unless provided otherwise in the agreements setting forth the terms of the award, vesting will be accelerated for outstanding awards upon a “change in control” of the Company (as defined in the 2012 Plan) if the awards are not assumed or otherwise converted into comparable awards by the acquiring company. If the awards are assumed by the acquiror and a participant's employment is terminated without “cause” or a participant resigns for “good reason,” the participant's awards will become vested (this is what is known as a “double trigger” approach). We adopted this approach, rather than providing for vesting solely upon a change in control (a “single trigger” approach), because we believe the double trigger provides adequate employment protection and reduces, for the stockholders' benefit, potential transaction costs associated with the awards. Further, the award agreements generally provide that vesting will be accelerated for outstanding awards upon the respective participant's disability or death.
No Tax Gross-Ups
Under Section 280G of the Internal Revenue Code (the "Code"), an executive may be subject to excise taxes on certain benefits received in relation to a change in control of the Company. While many companies provide excise tax gross-ups to executives to place the executive in the same tax position as if the excise tax did not apply, we do not believe at this time that it is necessary to provide this type of protection to our executives.
Compensation Process
The Compensation Committee has broad discretion in overseeing our compensation programs and reviews each element of compensation for each of our named executive officers at least annually. The Compensation Committee considers the scope of each named executive officer's responsibilities, performance and experience, as well as competitive compensation levels in reviewing compensation. During the annual review process, the Compensation Committee also reviews our financial results against other banking organizations and the structure of our compensation programs relative to sound risk management.
The primary considerations in making executive compensation decisions are:
Key financial measurements;
Strategic initiatives related to our business;
Achievement of specific operational goals relating to the executive's area of oversight; and
Compensation of peer group executives.
Consulting Assistance
Under its charter, the Compensation Committee has the authority to retain its own compensation consultants. Since 2011, the Compensation Committee has retained F.W. Cook to provide the Compensation Committee with independent, objective analysis and professional opinions on executive and director compensation matters. F.W. Cook is independent, reports directly to the Chair of the Compensation Committee, and performs no other work for the Company other than assisting the Committee in the review of the total compensation program, including gathering and analyzing market data for compensation paid for similar positions at companies with which we compete for executive talent, and for director compensation. F.W. Cook also provides input on marketplace trends and best practices relating to competitive pay levels, as well as developments in regulatory and technical matters. In 2014, F.W. Cook provided the Compensation Committee with market analysis and opinions on executive and director compensation matters.
Role of Executive Officers
As requested by the Compensation Committee, various members of management facilitate the Committee's consideration of compensation for our named executive officers by providing information for the Committee's review. In particular, Mr. Nelson provides background and recommendations with respect to each of the other named executive officers but is not present for the discussion or determination of his own compensation. Information considered includes, among other items, financial results and analysis, performance evaluations, compensation provided to our named executive officers, technical and regulatory considerations, and input on program design and possible modifications.
Peer Group
Market pay practices are one of many factors we consider in setting executive pay levels and designing compensation programs. Information on pay levels and practices is gathered for a group of publicly traded companies selected based on their business focus, scope and location of operations, size and other considerations. The Company's peer group of 16 financial institutions was jointly presented by F.W. Cook and management and approved by the Compensation Committee. The Company is in the middle of the group in terms of size. The group is periodically reviewed, with changes made to reflect merger and acquisition activity, financial situation and development, and other considerations. The following is the composition of the peer group as of December 31, 2014.
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| | |
BankFinancial Corporation | Horizon Bancorp | Peoples Bancorp |
Baylake Corp. | Isabella Bank Corporation | Pulaski Financial Corp. |
Farmers Capital Bank Corporation | Mercantile Bank Corporation | QCR Holdings, Inc. |
First Defiance Financial Corp. | MidWestOne Financial Group, Inc. | Southwest Bancorp |
First Mid-Illinois Bancshares, Inc. | MutualFirst Financial, Inc. | Waterstone Financial, Inc. |
Hills Bancorporation | | |
Analysis of 20142017 Compensation
This section discusses the compensation actions that were taken in 20142017 for our named executive officers.
Base Salary
Unchanged since 2012,2015 and consistent with our practice of a triennial compensation review process as described above, salaries for 2014 for our named executive officers for 2017 were: Mr. Nelson - $350,000;$400,000; Messrs. Gulling, Olafson, and Winterbottom - $247,000$275,000 each. In light of Company and individual performance as well as an analysis of peer pay levels, salaries, for 2015 will beeffective January 1, 2018 are as follows: Mr. Nelson - $400,000;$436,000; Messrs. Gulling, Olafson, and Winterbottom - $275,000$300,000 each.
Annual Incentive Bonus
For 2014, the maximum bonus amount that our named executive officers were eligible for was 60 percent of base salary. Based on September 30, 20142017 data, we believe Companythe Company’s financial results likely will be at or above the 75th percentile of our peer group. As such, we believegroup for all of 2017. These preliminary results of the quantitative portion of the annual incentive bonus determination indicate that our named executive officers will be eligible to receive their maximum cash bonuses atbonus amount equal to 60 percent of each officer’s base pay with respect to 2014.salary. However, because the ultimateThe final determination of each officer’s bonus amount of the cash bonus is based on the Company'sCompany’s full-year performance compared to that of the peer group for the entire year and the Committee'sCompensation Committee’s qualitative analysis, the amount of theanalysis. Therefore, cash bonus paymentsamounts will not be knowndetermined by the Compensation Committee until after theall peer group institutions have reportedreport their financial results for 2014.2017. See the Summary Compensation Table for the anticipated cash bonus amount.
The following table sets forthCompany and peer results for the key financial performance measures of the Company and identified peer group:are summarized below:
| | | | West Bancorporation, Inc. | | Peer Group Range | West Bancorporation, Inc. | | Peer Group Range | | Peer Group Percentile |
| | Year ended December 31, 2014 | | Nine months ended September 30, 2014 | | Nine months ended September 30, 2014 | Year ended December 31, 2017 | | Nine months ended September 30, 2017 | | Nine months ended September 30, 2017 | | Nine months ended September 30, 2017 |
Return on average assets | 1.32% | | 1.27% | | 0.55% - 1.32% | 1.18% | | 1.32% | | 0.59% - 1.69% | | > 75th |
Return on average equity | 15.19% | | 14.57% | | 3.17% - 11.15% | 13.29% | | 14.69% | | 5.26% - 11.45% | | > 75th |
| Efficiency ratio | 49.93% | | 50.16% | | 55.50% - 80.69% | |
| Texas ratio | 2.71% | | 6.21% | | 3.81% - 41.8% | |
Efficiency ratio* (2) | | 45.39% | | 45.95% | | 55.07% - 71.71% | | > 75th |
| Texas ratio* | | 0.32% | | 0.27% | | 2.97% - 20.68% | | > 75th |
*A lower ratio is more desirable.
| |
| (1) | The Company’s ratios for the year ended December 31, 2017, were affected by a one-time increase in federal income tax expense related to the enactment of tax reform legislation on December 22, 2017. Management expects peer results to be similarly affected by the legislation. |
| |
| (2) | Non-GAAP financial measure. See reconciliation in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 on page 32. |
Long-Term Stock Incentives
The Compensation Committee granted 12,50015,000 restricted stock units to each of our named executive officers in March 20142017 that vest in annual installments tied to continued service over five years. This was the same amount granted in 2016. These grants are part of a broader annual award program under which further awards are anticipated in 2015 and thereafter. This program is designed to align executives'executives’ interests with the interests of stockholders, provide a long-term planning horizon, mitigate excessive risk-taking, and retain participants by providing compensation that is market competitive and that vests over a period of time. Each of our named executive officers has received identical grants for the past five years to reflect our team-oriented philosophy.
Regulatory Considerations
As a publicly traded financial institution, the Company must contend with several, often overlapping,multiple layers of regulations when considering and implementing compensation-relatedcompensation decisions. These regulations do not set specific parameters within which compensation decisions must be made, but do require the Company and the Compensation Committee to be mindful of the risks that often go hand-in-handassociated with compensation programs designed to incentivize the achievement of better than averagesuperior performance. While the regulatory focus on risk assessment has been heightened over the last several years, the incorporation of general concepts of risk assessment concepts into compensation decisions is not a recent development.
Under its long-standing Interagency Guidelines Establishing Standards for Safety and Soundness, the FDIC has held that excessive compensation is prohibited as an unsafe and unsound practice. In describing a framework within which to make a determination as todetermine whether compensation is to be considered excessive, the FDIC has indicated that financial institutions should consider whether aggregate cash amounts paid, or noncash benefits provided, to employees are unreasonable or disproportionate to the services performed by an employee. The FDIC encourages financial institutions to review an employee'semployee’s compensation history and to consider internal pay equity, and, as appropriate, to consider benchmarking compensation to peer groups. Finally, the FDIC provides that such an assessment must be made in light of the institution'sinstitution’s overall financial condition.
In addition, the various financial institution regulatory agencies have issued additional guidance, Guidance on Sound Incentive Compensation Policies, that serves as a complement to the Safety and Soundness standards. As its title would imply, the joint agency guidance sets forth a framework for assessing the soundness of incentive compensation plans, programs, and arrangements maintained by financial institutions. The joint agency guidance is narrower in scope than the Safety and Soundness standards because it applies only to senior executive officers and those other individuals who, either alone or as a group, could pose a material risk to the institution. With respect to those identified individuals, the joint agency guidance is intended to focus the institution'sinstitution’s attention on balanced risk-taking incentives, compatibility with effective controls, and risk management, with a focus on general principles of strong corporate governance.
Also, onceIn addition to the foregoing, we anticipate that currently proposed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) intended to implement further risk assessment guidelines and procedures as required under the Dodd-Frank Act, aremay eventually be finalized by the financial institution regulatory agencies and the SEC, the Company expectsSEC. We expect that it will alsowe would be subject to those further guidelines and procedures.procedures should they be finalized and become effective. Initial proposed guidance resulting fromwith respect to the Dodd-Frank Act risk assessment guidelines and procedures was issued during 2011.2011 and revised and re-proposed in 2016. Depending on when the rules are finalized, the earliest they could apply to the Company is for performance periods beginning on or after January 1, 2020. In large part, that guidance restateswould restate and codify the frameworks presently set forth in the Safety and Soundness standards and joint agency guidance described above.
Finally, in addition to the foregoing,Also, as a publicly traded corporation, the Company is also subject to the SEC'sSEC’s rules regarding risk assessment. Those rules require a publicly traded company to determine whether any of its existing incentive compensation plans, programs, or arrangements createscreate risks that are reasonably likely to have a material adverse effect on the company.Company. The Compensation Committee completed a risk assessment of all of the Company’s compensation programs and components in January 2018 and plans to do so each year. We do not believe that our incentive compensation plans, programs or arrangements create risks that are reasonably likely to have a material adverse effect on the Company.
The Compensation Committee believes that a sensible approach to balancing risk-taking and rewarding reasonable, but not necessarily easily attainable, goals has always been a component of its overall assessment of the compensation plans, programs and arrangements it has established for the Company'sCompany’s named executive officers. In this regard, the Compensation Committee has revisited the components of the frameworks set forth in the Safety and Soundness standards and the joint agency guidance as an effective tool for conducting its own assessment of the balance between risk and reward built into the Company'sCompany’s compensation programs for named executive officers. In addition, the Compensation Committee continues to anticipate finalmonitor the status of the proposed guidance under the Dodd-Frank Act and will be prepared to incorporate into its risk assessment procedures any new guidelines and procedures as may be necessary or appropriate.
In making decisions about executive compensation, in addition to the above, we also consider the impact of other regulatory provisions, including: the provisions of Section 162(m) of the Code that may limit the tax deductibility of certain compensation unless it is considered performance-based;compensation; Section 409A of the Code regarding nonqualified deferred compensation; and Section 280G of the Code regarding excise taxes and deduction limitations on golden parachute payments made in connection with a change in control. In making decisions about executive compensation, we also consider how various elements of compensation will impact our financial results. For example, we considercontrol; and the impact of FASB ASC Topic 718, which requires us to recognize the compensation cost of grants of equity awards based upon thetheir grant date fair value of those awards.value.
Other Compensation and Governance Policies
Acceleration of Equity Awards
In regard to equity awards, we use a “double trigger” approach to vesting upon a change in control, rather than providing for vesting solely upon a change in control (a “single trigger” approach). Under the double trigger, vesting would occur if a change in control occurs and the outstanding equity awards are not fully assumed, or where the outstanding equity awards are fully assumed by the resulting entity and the participant is subsequently terminated without cause or resigns for good reason. We believe the double trigger provides adequate employment protection and reduces, for the stockholders’ benefit, potential transaction costs associated with the awards. Further, the award agreements provide that vesting will be accelerated upon the participant’s disability or death.
No Tax Gross-Ups
Under Section 280G of the Code, an executive may be subject to excise taxes on certain benefits received in relation to a change in control of the Company. While some companies provide excise tax gross-ups to executives to place the executive in the same tax position as if the excise tax did not apply, we do not believe at this time that it is necessary to provide this type of protection to our executives.
Share Ownership and Retention Guidelines
We believe that our named executive officers and nonemployee directors should have a significant equity interest in the Company. To promote such equity ownership and further align the interests of our executives and directors with those of our stockholders, we maintain share retention and ownership guidelines that requirefor our named executivesenior officers and directors. Prior to 2018, the guidelines required Mr. Nelson to hold Company stock in an amount equal to or greater than threetwo and one-half times his annual salary, Messrs. Gulling, Olafson and Winterbottom to hold Company stock in an amount equal to or greater than one and one-half times their annual salary, and our directors to hold Company stock in an amount equal to or greater than three times their annual cash retainer. Effective for 2018, the guidelines for Messrs. Gulling, Olafson and Winterbottom were increased to two and one-half times their annual salary. Their guidelines were increased to match the guidelines for Mr. Nelson in order to reflect the same team approach applicable to other compensation parameters of the named executive officers. Until the stock ownership guidelinesguideline levels are met, the executives and directors are expected to retain at least 50 percent of any applicable shares received (on a net after taxafter-tax basis) under our equity compensation program. If an officer fails to satisfy the guidelines, the officer would have 25 percent of his annual incentive bonus paid solely in shares of Company stock until the officer owns the number of shares required by the guidelines. A failure to satisfy the guidelines by a director would be considered by the Nominating and Corporate Governance Committee in evaluating the director’s qualifications for nomination. The guidelines are subject to periodic review by the Compensation Committee, and compliance is monitored on an annual basis. AllWith the exception of newly appointed director, Mr. Schuler, all of our named executive officers areand directors currently hold shares in compliance with theseexcess of the requirements in the guidelines.
Insider Trading Policy
The Company has anCompany’s insider trading policy that permits open market transactions in Company stock beginning 48 hours after quarterly earnings have been made public until the 10th day of the third month in the quarter. In addition, our named executive officers may purchase Company stock through payroll deductions under our Employee Savings and Stock Ownership Plan. Changes to purchases under the Employee Savings and Stock Ownership Plan may only be done during the period when open market transactions are permitted.
Anti-Hedging Policy
The Company’s insider trading policy prohibits any margin and/orall employees and directors from entering into hedging transactions involving the Company's securities.Company’s stock. To our knowledge, all of our officers and directors are in compliance with this policy.
Anti-Pledging Policy
The Company’s insider trading policy prohibits all named executive officers and directors from keeping Company stock in a margin account. A named executive officer or director may pledge Company stock as collateral for a loan if written approval is obtained from the Chief Financial Officer. To our knowledge, all of our officers and directors are in compliance with this policy.
27
Clawback
Our employment agreements with each of our named executive officers provide that such officer must return any severance-related payments upon request of the Company, to the extent required under any applicable statute, law, regulation or other regulatory agency guidance. Additionally, all equity awards granted under our 2017 Equity Plan and our 2012 Equity Plan are subject to potential cancellation, recoupment, rescission or payback in accordance with applicable law.
Compensation Committee Report
The incorporation by reference of this proxy statement into any document filed with the SEC by the Company shall not be deemed to include the following report unless such report is specifically stated to be incorporated by reference into such document.
The Compensation Committee hereby states as follows:
It has reviewed and discussed the Compensation Discussion and Analysis section of this proxy statement with management; and
Based on the review and discussion referred to immediately above, it recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
The undersigned members of the Compensation Committee have submitted this report.
Frank W. Berlin, Chair
Steven K. Gaer
Michael J. Gerdin
Summary Compensation Table
The following table provides information concerning compensationCompensation earned or paid for services rendered in the year ended December 31, 20142017, to our Chief Executive Officer, our Chief Financial Officer and our other most highly compensated executive policymaking officers (of which we had two). These individuals wereis provided in the Company's named executive officers during 2014.following table. Compensation for 20132016 and 20122015 is also presented for these individuals because they were named executive officers in those years as well. West Bank, rather than the Company, paid Messrs. Nelson, Gulling, Olafson and Winterbottom in all years shown.
| | | Name and Principal Positions | Year | | Salary (1) | | Bonus (2) | | Stock Awards (3) | | Non-Equity Incentive Plan Compensation (4) (5) | | All Other Compensation (6) | | Total | Year | | Salary (1) | | Bonus (2) | | Stock Awards (3) | | Non-Equity Incentive Plan Compensation (4) (5) | | All Other Compensation (6) | | Total |
| David D. Nelson | 2014 | | $350,000 | | $7,000 | | $171,851 | | $210,000 | | $26,000 | | $764,851 | 2017 | | $400,000 | | $8,000 | | $291,847 | | $240,000 | | $27,000 | | $966,847 |
| President and Chief Executive Officer | 2013 | | 350,000 | | 7,000 | | 97,253 | | 189,000 | | 25,500 | | 668,753 | 2016 | | 400,000 | | 8,000 | | 244,929 | | 240,000 | | 77,269 | | 970,198 |
| of the Company; | 2012 | | 350,000 | | 7,000 | | 70,000 | | 210,000 | | 25,000 | | 662,000 | 2015 | | 400,000 | | 8,000 | | 262,396 | | 240,000 | | 26,500 | | 936,896 |
| Chairman and Chief Executive | | |
| Officer of West Bank | | |
| | | |
| Douglas R. Gulling | 2014 | | $247,000 | | $4,940 | | $171,851 | | $148,200 | | $24,700 | | $596,691 | 2017 | | $275,000 | | $5,500 | | $291,847 | | $165,000 | | $27,000 | | $764,347 |
| Executive Vice President, Treasurer | 2013 | | 247,000 | | 4,940 | | 97,253 | | 133,380 | | 24,700 | | 507,273 | 2016 | | 275,000 | | 5,500 | | 244,929 | | 165,000 | | 71,981 | | 762,410 |
| and Chief Financial Officer | 2012 | | 247,000 | | 4,940 | | 49,400 | | 148,200 | | 22,700 | | 472,240 | 2015 | | 275,000 | | 5,500 | | 262,396 | | 165,000 | | 26,500 | | 734,396 |
| of the Company; | | |
| Director and Chief Financial Officer | | |
| Director, Executive Vice President | | |
| and Chief Financial Officer | | |
| of West Bank | | |
| | | |
| Harlee N. Olafson | 2014 | | $247,000 | | $4,940 | | $171,851 | | $148,200 | | $24,700 | | $596,691 | 2017 | | $275,000 | | $5,500 | | $291,847 | | $165,000 | | $27,000 | | $764,347 |
| Executive Vice President and Chief | 2013 | | 247,000 | | 4,940 | | 97,253 | | 133,380 | | 24,700 | | 507,273 | 2016 | | 275,000 | | 5,500 | | 244,929 | | 165,000 | | 55,587 | | 746,016 |
| Risk Officer of the Company; | 2012 | | 247,000 | | 4,940 | | 49,400 | | 148,200 | | 22,700 | | 472,240 | 2015 | | 275,000 | | 5,500 | | 262,396 | | 165,000 | | 26,500 | | 734,396 |
| Director, Executive Vice President | | |
| and Chief Risk Officer of West | | |
| Bank | | |
| | | |
| Brad L. Winterbottom | 2014 | | $247,000 | | $4,940 | | $171,851 | | $148,200 | | $24,700 | | $596,691 | 2017 | | $275,000 | | $5,500 | | $291,847 | | $165,000 | | $27,000 | | $764,347 |
| Executive Vice President of the | 2013 | | 247,000 | | 4,940 | | 97,253 | | 133,380 | | 24,700 | | 507,273 | 2016 | | 275,000 | | 5,500 | | 244,929 | | 165,000 | | 92,077 | | 782,506 |
| Company; | 2012 | | 247,000 | | 4,940 | | 49,400 | | 148,200 | | 22,700 | | 472,240 | 2015 | | 275,000 | | 5,500 | | 262,396 | | 165,000 | | 26,500 | | 734,396 |
| Director and President of West Bank | | |
| |
| (1) | Amounts reflectReflects base salary earned during the year beforeincluding, if any, deferrals and including salary increases during the year, if any.increases. |
| |
| (2) | Consists of a holiday bonus equal to 2two percent of annual salary paid to all officers and employees of West Bank. |
| |
| (3) | The amounts set forth in the "Stock Awards" column reflectReflects the grant date fair value of awards granted during the year ended December 31, 2014,2017, computed in accordance with FASB ASC Topic 718. The assumptions used in calculatingBecause the currently outstanding restricted stock units do not pay or accumulate dividend equivalents during the five-year vesting period, these amounts were calculated based on the Company’s closing share price on the date of grant discounted by the present value of the dividends expected to be paid on the underlying shares during the vesting period. Expected dividends are set forth in Note 12calculated using the current quarterly dividend with future increases projected based on the Company’s historic practices. The Company uses a discount rate equal to our consolidated financial statements for the year ended December 31, 2014, which is included in Item 8.five-year U.S. Treasury rate on the date of our Annual Report on Form 10-K.grant. |
| |
| (4) | Amounts are shown infor the year earned.in which the applicable performance measures were satisfied. |
| |
| (5) | Based upon our results for the fiscal year ended December 31, 20142017 and the results of our peers as of September 30, 2014,2017, annual bonuses for 20142017 are anticipated to be paid out as shown, which is the maximum potential amount. The final determination of amounts earned for 20142017 will be made after the benchmarking peer group companies' 2014companies’ 2017 financial information is available.available; to the extent different than the amounts shown, the actual amounts will be disclosed at that time. |
| |
| (6) | Consists entirely of contributions made by the Company on behalf of the named executive officer to the Company'sCompany’s Employee Savings and Stock Ownership Plan (including 401(k) matches and discretionary plan contributions). In 2016, the amount disclosed also included a one-time payment of accrued but unused vacation due to a company-wide change in policy. |
Pay Ratio Disclosure
In August 2015 the SEC adopted a rule requiring disclosure of the ratio of the Chief Executive Officer’s annual total compensation to the total annual compensation of the median employee.
In determining the median employee, a list of all full-time and part-time employees, exclusive of our Chief Executive Officer, Mr. Nelson, was prepared based on active employees included in the Company’s payroll system as of December 31, 2017. Salaries and wages were annualized for those employees who were not employed for the full year of 2017. Salaries and wages were ranked from lowest to highest, and the salary of the median employee was selected from the list. The total annual compensation of the median employee was then calculated in the same manner as the total compensation disclosed for Mr. Nelson in the Summary Compensation Table shown on the previous page.
The ratio of compensation of the Chief Executive Officer to the median employee’s compensation is as follows:
|
| | |
Annual total compensation of David D. Nelson, Chief Executive Officer (1) | $966,847 |
Annual total compensation of the median employee (2) | 53,907 |
|
| Ratio of Chief Executive Officer to median employee compensation | 17.9:1.0 |
|
| |
| (1) | Annual total compensation of our Chief Executive Officer includes the anticipated annual incentive bonus award calculated based upon our results for the fiscal year ended December 31, 2017 and the results of our peers as of September 30, 2017, which is the maximum potential amount. The final determination of the annual incentive bonus award earned for 2017 will be made after the peer group companies’ 2017 financial information is available; to the extent the annual total compensation of the Chief Executive Officer is different than the amount shown above, the actual amount and revised pay ratio will be disclosed at that time. |
| |
| (2) | Annual total compensation of the median employee consisted of salary ($44,963), overtime ($2,102), holiday bonus ($935), annual bonus ($1,200), and Company 401(k) matches and discretionary plan contribution ($4,707). |
Grants of Plan-Based Awards
The following table sets forth information concerning grants of plan-based awards made to our named executive officers during 20142017. All restricted stock unit grants reflected in the table were made under the West Bancorporation, Inc. 2012 Equity Incentive Plan.
| | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards (1) |
| Name | Type of Award | Grant Date | Threshold | Target | Maximum | Type of Award | Grant Date | Threshold | Target | Maximum |
| David D. Nelson | Annual Bonus | — | $70,000 | $140,000 | $210,000 | — |
| $ — |
| Annual Bonus | — | $80,000 | $160,000 | $240,000 | — |
| $ — |
|
| | Restricted Stock Units | 03/24/14 | — |
| — |
| — |
| 12,500 |
| 171,851 |
| Restricted Stock Units | 03/27/17 | — |
| — |
| — |
| 15,000 |
| 291,847 |
|
| Douglas R. Gulling | Annual Bonus | — | $49,400 | $98,800 | $148,200 | — |
| $ — |
| Annual Bonus | — | $55,000 | $110,000 | $165,000 | — |
| $ — |
|
| | Restricted Stock Units | 03/24/14 | — |
| — |
| — |
| 12,500 |
| 171,851 |
| Restricted Stock Units | 03/27/17 | — |
| — |
| — |
| 15,000 |
| 291,847 |
|
| Harlee N. Olafson | Annual Bonus | — | $49,400 | $98,800 | $148,200 | — |
| $ — |
| Annual Bonus | — | $55,000 | $110,000 | $165,000 | — |
| $ — |
|
| | Restricted Stock Units | 03/24/14 | — |
| — |
| — |
| 12,500 |
| 171,851 |
| Restricted Stock Units | 03/27/17 | — |
| — |
| — |
| 15,000 |
| 291,847 |
|
| Brad L. Winterbottom | Annual Bonus | — | $49,400 | $98,800 | $148,200 | — |
| $ — |
| Annual Bonus | — | $55,000 | $110,000 | $165,000 | — |
| $ — |
|
| | Restricted Stock Units | 03/24/14 | — |
| — |
| — |
| 12,500 |
| 171,851 |
| Restricted Stock Units | 03/27/17 | — |
| — |
| — |
| 15,000 |
| 291,847 |
|
Annual Bonuses
Annual bonuses for our named executive officers for 2014 will be based on quantitative and qualitative analyses. The quantitative analysis includes the Company's relative performance against a peer group of other banking organizations. The qualitative analysis will include any and all items deemed relevant by the Compensation Committee including, for example, regulatory action, Company profitability and changes in dividends. The Compensation Committee may increase or decrease the bonuses indicated based on its evaluation of the peer comparison as it deems appropriate in its sole discretion, with all determinations by the Committee being final. Positive Company earnings are required for any bonuses to be paid to our named executive officers.
| |
| (1) | Reflects the grant date fair value of awards granted during the year ended December 31, 2017, computed in accordance with FASB ASC Topic 718. Because the currently outstanding restricted stock units do not pay or accumulate dividend equivalents during the five-year vesting period, these amounts were calculated based on the Company’s closing share price on the date of grant discounted by the present value of the dividends expected to be paid on the underlying shares during the five-year vesting period. Expected dividends are calculated using the current quarterly dividend with future increases projected based on the Company’s historic practices. The Company uses a discount rate equal to the five-year U. S. Treasury rate on the date of grant. |
Restricted Stock Units
In March 2014,2017, the Compensation Committee approved equity grants for our named executive officers comprised solely of restricted stock units that vest 20 percent per year subject to continued service, with accelerated vesting in certain circumstances as described in the “Executive Compensation—Potential Payments upon Termination or Change in Control” section of this proxy statement.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning outstanding equity awards held as of December 31, 2017 by our named executive officers . Market values for outstanding restricted stock units are based on the closing price of our stock on December 29, 2017 (the last trading day of the year) of $25.15.
|
| | |
| | Stock Awards |
| Name | Number of Shares or Units of Stock that Have Not Vested (1) | Market Value of Shares or Units of Stock That Have Not Vested |
| David D. Nelson | 43,000 | $1,081,450 |
| Douglas R. Gulling | 43,000 | 1,081,450 |
| Harlee N. Olafson | 43,000 | 1,081,450 |
| Brad L. Winterbottom | 43,000 | 1,081,450 |
| |
| (1) | For each named executive officer, reflects restricted stock units which vest in five equal annual installments, including: 2,000 restricted stock units granted on March 25, 2013, with the remaining installment vesting on March 25, 2018; 5,000 restricted stock units granted on March 24, 2014, with two remaining installments vesting on March 25 of 2018 and 2019; 9,000 restricted stock units granted on March 23, 2015, with three remaining installments vesting on March 25 of 2018, 2019 and 2020; 12,000 restricted stock units granted on March 21, 2016, with four remaining installments vesting on March 25 of 2018, 2019, 2020 and 2021; and 15,000 restricted stock units granted on March 27, 2017, which vest in five equal annual installments, beginning on March 25, 2018. |
Option Exercises and Stock Vested
The following table sets forth information for each of our named executive officers regarding vesting of stock awards during the year ended December 31, 2017. None of our named executive officers held any stock options during 2017.
|
| | | | |
| Stock Awards |
| Name | Number of Shares Acquired on Vesting | Value Realized on Vesting |
| David D. Nelson | 12,149(1) |
| $267,239 |
|
| Douglas R. Gulling | 11,662(2) | 255,917 |
|
| Harlee N. Olafson | 11,662(2) | 255,917 |
|
| Brad L. Winterbottom | 11,662(2) | 255,917 |
|
| |
| (1) | Reflects vesting of 10,500 restricted stock units on March 27, 2017, with a closing stock price of $21.80; and vesting of 1,649 restricted stock units on August 1, 2017, with a closing stock price of $23.25. |
| |
| (2) | Reflects vesting of 10,500 restricted stock units on March 27, 2017, with a closing stock price of $21.80; and vesting of 1,162 restricted stock units on August 1, 2017, with a closing stock price of $23.25. |
Potential Payments upon Termination or Change in Control section of the CD&A.
Employment Agreements
As described in greater detail in the Potential Payments upon Termination or Change in Control section of the CD&A, eachEach of our named executive officers is party to an employment agreement with the Company and West Bank pursuant to which the officer is entitled to a minimum annual salary and participation in our annual incentive plan and other benefit plans. This fact may help to provide some context for the amounts reported in the foregoing Summary Compensation Table and Grants of Plan-Based Awards table.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning outstanding equity awards held as of December 31, 2014 by our named executive officers (all of which consisted of restricted stock units). Market values for outstanding restricted stock units are based on the closing price of our stock on December 31, 2014 (the last trading day of the year) of $17.02.
|
| | |
| 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
|
David D. Nelson | 25,441(1)
| $433,006 |
Douglas R. Gulling | 23,986(2)
| 408,242 |
Harlee N. Olafson | 23,986(2)
| 408,242 |
Brad L. Winterbottom | 23,986(2)
| 408,242 |
| |
(1) | Reflects 4,941 restricted stock units granted on August 1, 2012, which vest in equal installments on August 1 of 2015, 2016 and 2017; 8,000 restricted stock units granted on March 25, 2013, which vest in equal installments on March 25 of 2015, 2016, 2017 and 2018; and 12,500 restricted stock units granted on March 24, 2014, which vest in five equal annual installments beginning on March 25, 2015. |
| |
(2) | Reflects 3,486 restricted stock units granted on August 1, 2012, which vest in equal installments on August 1 of 2015, 2016 and 2017; 8,000 restricted stock units granted on March 25, 2013, which vest in equal installments on March 25 of 2015, 2016, 2017 and 2018; and 12,500 restricted stock units granted on March 24, 2014, which vest in five equal annual installments beginning on March 25, 2015. |
Option Exercises and Stock Vested
The following table sets forth information for each of our named executive officers regarding vesting of stock awards during the year ended December 31, 2014. None of our named executive officers held any stock options during 2014.
|
| | | | |
| Stock Awards |
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting |
David D. Nelson | 11,895(1)
|
| $172,740 |
|
Douglas R. Gulling | 8,561(2)
| 124,962 |
|
Harlee N. Olafson | 3,162(3)
| 47,810 |
|
Brad L. Winterbottom | 8,561(2)
| 124,962 |
|
| |
(1) | Reflects vesting of 2,000 restricted stock units on March 25, 2014 with a closing stock price of $15.44; vesting of 8,249 restricted stock units on May 17, 2014 with a closing stock price of $14.29; and vesting of 1,646 restricted stock units on August 1, 2014 with a closing stock price of $14.57. |
| |
(2) | Reflects vesting of 2,000 restricted stock units on March 25, 2014 with a closing stock price of $15.44; vesting of 5,399 restricted stock units on May 17, 2014 with a closing stock price of $14.29; and vesting of 1,162 restricted stock units on August 1, 2014 with a closing stock price of $14.57. |
| |
(3) | Reflects vesting of 2,000 restricted stock units on March 25, 2014 with a closing stock price of $15.44; and vesting of 1,162 restricted stock units on August 1, 2014 with a closing stock price of $14.57. |
Potential Payments upon Termination or Change in Control
The table below sets forth the estimated amount of compensation that would be payable to each of our named executive officers upon termination of such officer's employment in the event of (1) the officer's disability or death, (2) termination by the Company without cause or by the officer for good reason, in each case other than in connection with a change in control, andor (3) termination by the Company without cause or by the officer for good reason, in each case in connection withduring the period beginning six months before, and ending 24 months after, a change in control. The amounts shown assume the termination was effective as of December 31, 2014,2017, and that the price of Company stock as of termination was the closing price of $17.02$25.15 on December 31, 201429, 2017 (the last trading day of the year). The actual amounts to be paid can be determined only following the named executive officer'sofficer’s termination. We do not provide any benefits to our named executive officers solely as a result of a change in control.
| | | Name | | Type of Payment | | Payments Upon Disability or Death | Payments Upon Termination by the Company without Cause or by the Executive for Good Reason-No Change in Control | Payments Upon Termination by the Company without Cause or by the Executive for Good Reason-Change in Control | | Type of Payment | | Payments Upon Disability or Death | Payments Upon Termination by the Company without Cause or by the Executive for Good Reason-No Change in Control | Payments Upon Termination by the Company without Cause or by the Executive for Good Reason-Change in Control |
| David D. Nelson | | Cash Severance | | $ — |
| $1,335,923 | $1,888,923 | | Cash Severance | | $ — |
| $1,260,000 | $1,890,000 |
| | | Continuation of Insurance Benefits | | — |
| 17,699 | 17,699 | | Continuation of Insurance Benefits | | — |
| 22,599 | 22,599 |
| | | Acceleration of Stock Awards | | 433,006 | — |
| 433,006 | | Acceleration of Stock Awards | | 1,081,450 | — |
| 1,081,450 |
| | | Total | | $433,006 | $1,353,622 | $2,339,628 | | Total | | $1,081,450 | $1,282,599 | $2,994,049 |
| | | | | | | |
| Douglas R. Gulling | | Cash Severance | | $ — |
| $552,520 | $942,780 | | Cash Severance | | $ — |
| $434,400 | $868,800 |
| | | Continuation of Insurance Benefits | | — |
| 11,610 | 17,415 | | Continuation of Insurance Benefits | | — |
| 14,949 | 22,424 |
| | | Acceleration of Stock Awards | | 408,242 | — |
| 408,242 | | Acceleration of Stock Awards | | 1,081,450 | — |
| 1,081,450 |
| | | Total | | $408,242 | $564,130 | $1,368,437 | | Total | | $1,081,450 | $449,349 | $1,972,674 |
| | | | | | | |
| Harlee N. Olafson | | Cash Severance | | $ — |
| $552,520 | $942,780 | | Cash Severance | | $ — |
| $434,400 | $868,800 |
| | | Continuation of Insurance Benefits | | — |
| 11,799 | 17,699 | | Continuation of Insurance Benefits | | — |
| 14,949 | 22,424 |
| | | Acceleration of Stock Awards | | 408,242 | — |
| 408,242 | | Acceleration of Stock Awards | | 1,081,450 | — |
| 1,081,450 |
| | | Total | | $408,242 | $564,319 | $1,368,721 | | Total | | $1,081,450 | $449,349 | $1,972,674 |
| | | | | | | |
| Brad L. Winterbottom | | Cash Severance | | $ — |
| $552,520 | $942,780 | | Cash Severance | | $ — |
| $434,400 | $868,800 |
| | | Continuation of Insurance Benefits | | — |
| 11,799 | 17,699 | | Continuation of Insurance Benefits | | — |
| 15,066 | 22,599 |
| | | Acceleration of Stock Awards | | 408,242 | — |
| 408,242 | | Acceleration of Stock Awards | | 1,081,450 | — |
| 1,081,450 |
| | | Total | | $408,242 | $564,319 | $1,368,721 | | Total | | $1,081,450 | $449,466 | $1,972,849 |
Termination and Change in Control Benefits under Employment Agreement with Mr. Nelson
The Company and Mr. Nelson are parties to an employment agreement with an effective date of July 23, 2012. Mr. Nelson serves as the President and Chief Executive Officer of the Company and as the Chief Executive Officer of West Bank under the agreement, as well as a member of the Board of Directors of both entities. The initial term of Mr. Nelson'sNelson’s agreement endsended on December 31, 2015, but the agreement extended automatically for an additional year on January 1, 2015 and each January 1 since that date, and will extend on each January 1 going forward unless either party gives notice of nonrenewal. As of December 31, 2017, Mr. Nelson iswas entitled to a minimum annual salary of $350,000$400,000 pursuant to the agreement, as well as participation in the Company'sCompany’s annual incentive bonus plan and the Company'sCompany’s other benefit plans. Under the agreement, upon a termination of Mr. Nelson'sNelson’s employment by the Company without cause or by Mr. Nelson for good reason, Mr. Nelson will be entitled to severance payments equal to 200 percent of the sum of his base salary plus his average annual bonus for the prior three years, payable in 24 equal monthly installments following the date of termination, as well as 18 months of continued medical coverage.coverage at active employee rates. If such a termination occurs within six months prior to or two years following a change in control, Mr. Nelson will be entitled to severance payments equal to 300 percent of the sum of his base salary plus his average annual bonus for the prior three years, payable in a lump sum, as well as 18 months of continued medical coverage.coverage at active employee rates. All the aforementioned severance benefits are contingent upon Mr. Nelson'sNelson’s execution of a general release of claims.claims against the Company. Under the agreement, Mr. Nelson will be subject to 24-month non-compete and non-solicit restrictive covenants following the termination of his employment.
Termination and Change in Control Benefits under Employment Agreements with Messrs. Gulling, Olafson and Winterbottom
The Company is a party to employment agreements with each of Messrs. Gulling, Olafson and Winterbottom, with effective dates of July 23, 2012. Under their respective agreements, Mr. Gulling serves as Executive Vice President, Treasurer and Chief Financial Officer of the Company and Executive Vice President and Chief Financial Officer of West Bank, Mr. Olafson serves as Executive Vice President and Chief Risk Officer of the Company and West Bank, and Mr. Winterbottom serves as Executive Vice President of the Company and President of West Bank. Each individual serves as a member of the Board of Directors of West Bank. The initial term under each agreement ended on December 31, 2014, but the agreements extended automatically for an additional year on January 1, 2014 and 2015,each January 1 since that date, and will extend on each January 1 going forward unless either party gives notice of nonrenewal. As of December 31, 2017, Messrs. Gulling, Olafson and Winterbottom arewere each entitled to a minimum annual salary of $247,000$275,000 pursuant to their agreements, as well as participation in the Company'sCompany’s annual incentive bonus plan and the Company'sCompany’s other benefit plans. Under the agreements, upon a termination of the respective executive'sexecutive’s employment by the Company without cause or by the executive for good reason, the executive will be entitled to severance payments equal to 100 percent of the sum of his base salary plus his average annual bonus for the prior three years, payable in 12 equal monthly installments following the date of termination, as well as 12 months of continued medical coverage.coverage at active employee rates. If such a termination occurs within six months prior to or two years following a change in control, the executive will be entitled to severance payments equal to 200 percent of the sum of his base salary plus his average annual bonus for the prior three years, payable in a lump sum, as well as 18 months of continued medical coverage.coverage at active employee rates. All the aforementioned severance benefits are contingent upon the respective executive'sexecutive’s execution of a general release of claims.claims against the Company. Under the agreements, Messrs. Gulling, Olafson and Winterbottom will be subject to 12-month non-compete and non-solicit restrictive covenants following termination of employment (24 months if the termination occurs following a change in control of the Company).
Termination and Change in Control Benefits under 2012 and 2017 Equity Incentive PlanPlans
All awards under the 2012 Equity Plan and the 2017 Equity Plan then held by the participant will become fully vested immediately if (1) the 2012 Plansuch plans and thetheir respective award agreements are not fully assumed in a change in control, or (2) the 2012 Plansuch plans and thetheir respective award agreements are fully assumed in the change in control and the participant incurs a termination of serviceis terminated by the Company or a subsidiary without cause or by the participant resigns for good reason.
Further under the 2012 Equity Plan and the 2017 Equity Plan, all restricted stock units generally will become fully vested upon the participant'sparticipant’s termination of service due to the participant'sparticipant’s disability or death. In the event that the participant retires (as defined under each plan), the outstanding restricted stock units will continue to vest as scheduled provided that the participant gives at least 6 months’ notice (with respect to awards under the 2012 Equity Plan), signs a release and waiver, and does not compete with the Company.
Termination under Deferred Compensation Plan
In the event of a change in control of the Company or the participant’s separation from service due to death or disability, amounts deferred by a participant will be distributed in a lump sum, and Company contributions will be distributed in accordance with the participant’s elections.
32
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Frank W. Berlin, Steven K. Gaer and Michael J. Gerdin. No Compensation Committee members have been officers or employees of the Company or West Bank. No executive officer served as a director or member of the compensation committee of any other entity whose executive officers served as a member of our Board or a member of the Compensation Committee.
Proposal 2. Approve the 2017 Compensation of the Company’s Named Executive Officers.
Section 14A of the Exchange Act requires the Company to conduct an advisory stockholder vote to approve the compensation of named executive officers. This proposal, commonly known as a “say-on-pay” proposal, gives stockholders the opportunity to endorse or not endorse the Company’s pay program for its named executive officers. We currently hold our say-on-pay vote every year, and the proposal for the frequency of future votes is set forth in Proposal 3 below. The Company is requesting stockholder approval, on an advisory basis, of the compensation of the Company’s named executive officers for 2017 as listed in the Summary Compensation Table, appearing in the “Executive Compensation” section in this proxy statement, and as described in more detail in the “Compensation Discussion and Analysis” section of this proxy statement. The Company believes that its executive compensation programs, as explained in the “Executive Compensation” section of this proxy statement, are straightforward and reasonable. As explained in the “Compensation Discussion and Analysis” section, the general objectives of, and important factors for, the Company’s executive compensation program include significant emphasis on the long-term success of the Company through long-term performance of its executives. Stockholders are urged to carefully read the “Compensation Discussion and Analysis” section of this proxy statement, as well as the Summary Compensation Table and narrative disclosures that describe the compensation of our named executive officers in 2017 in the “Executive Compensation” section. The Board has previously approved the 2017 compensation.
The following resolution is submitted for stockholder approval:
“RESOLVED, that West Bancorporation, Inc.’s stockholders approve, on an advisory basis, its executive compensation as described in the section captioned ‘Compensation Discussion and Analysis’ and the tabular disclosure regarding named executive officer compensation under ‘Executive Compensation’ contained in the West Bancorporation Inc. proxy statement dated March 1, 2018.”
Approval of this resolution requires the affirmative vote of a majority of the votes cast on the matter at the Annual Meeting (meaning the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal). In tabulating the votes, abstentions and broker non-votes will be disregarded and have no effect on the outcome of the vote. While this say-on-pay vote is required, as provided in Section 14A of the Exchange Act, it is not binding on the Board and may not be construed as overruling any decision by the Board. However, the Compensation Committee will take into account the outcome of the votes when considering future compensation arrangements.
The Board recommends a vote “FOR” approval of the 2017 compensation of the named executive officers. Properly executed proxies on the accompanying proxy card will be voted “FOR” approval of the 2017 compensation of the named executive officers unless contrary instructions are given.
Proposal 3. Advisory Vote on the Frequency of Future Stockholder Advisory Votes on Executive Compensation.
In accordance with Section 14A of the Exchange Act, we are providing stockholders with an advisory vote on the frequency with which our stockholders will vote on the compensation of the named executive officers, such as the one contained in Proposal 2, above, in future years. Stockholders are provided the option of selecting a frequency of every year, every two years or every three years, or they may abstain from the vote.
Section 14A of the Exchange Act requires us to hold an advisory vote on the frequency of say-on-pay votes at least once every six years. The next such vote on the frequency of say-on-pay advisory votes will be held at the 2024 annual meeting.
After careful consideration, the Board is recommending that future stockholder say-on-pay votes continue to be conducted annually as is the current practice. The Board values and encourages constructive input from our stockholders regarding the Company’s compensation philosophy, policies and practices, and believes it is important that such policies and practices are aligned with the best interests of our stockholders. An annual say-on-pay vote will provide the Board and the Compensation Committee with useful information on stockholder sentiment about these important matters on the most frequent and consistent basis.
The choice which receives the highest number of votes will be deemed the choice of the stockholders. In tabulating the votes, abstentions and broker non-votes will be disregarded and have no effect on the outcome of the vote.
While this advisory vote is required, as provided in Section 14A of the Exchange Act, it is not binding on the Board and may not be construed as overruling any decision by the Board. However, the Board will take into account the outcome of the vote when determining the frequency of future say-on-pay votes.
The Board recommends a vote “FOR” a one-year frequency for the non-binding stockholder vote to approve the compensation of our named executive officers. Proxies in the accompanying form will be voted “FOR” approval of the one-year frequency unless contrary instructions are given.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND SERVICES
Proposal 4. Ratify the Appointment of Independent Registered Public Accounting Firm.
The Audit Committee approved McGladreyof the Board has reappointed RSM US LLP an(“RSM”), independent certified public accountants, as the Company’s independent registered public accounting firm as the principal accountant for the Company for the fiscal year ended ending December 31, 2015. McGladrey LLP2018. RSM will conduct the annual audit of the Company and its subsidiary for 20152018. McGladrey LLP was alsoRSM has served as the Company's principal accountantCompany’s independent registered public accounting firm since 1998. In support of the reappointment of RSM as West Bancorporation, Inc.’s independent registered public accounting firm, the Audit Committee considered the following factors:
The firm’s independence, objectivity and performedprofessional skepticism.
The firm’s compliance with the auditSEC requirement to rotate the lead engagement partner and concurring review partner every five years.
Quality of services provided.
Quality of communication and interaction with the firm.
A review of the firm’s most recent Public Company Accounting Oversight Board inspection report.
Audit and non-audit fees.
The Company is asking its stockholders to ratify the appointment of RSM as the Company’s independent certified public accounting firm for 2018. A description of the fees for services rendered by RSM for 2017 and 2016, and a description of the Company’s policy regarding the approval of independent registered public accountants’ fees is set forth below.
In the event the stockholders fail to ratify the appointment, the Audit Committee will consider this factor when making any future determination regarding RSM. Even if the selection is ratified, the Audit Committee, in 2014its discretion, may direct the appointment of a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and its stockholders.
Ratification of the appointment of RSM requires the affirmative vote of a majority of the votes cast on the matter at the Annual Meeting (meaning the number of shares voted “for” the proposal must exceed the number of shares voted “against” such proposal). In tabulating the votes, abstentions and broker non-votes will be disregarded and have no effect on the outcome of the vote.
A representative from McGladrey LLPRSM will be present at the Annual Meeting. The representative will have the opportunity to make a statement and will be available to respond to appropriate questions from stockholders.
The Board recommends a vote “FOR” the ratification of the appointment of RSM as our independent registered public accounting firm for the year ending December 31, 2018. Properly executed proxies on the accompanying proxy card will be voted “FOR” the ratification of the appointment of RSM as the independent registered public accounting firm for the year ending December 31, 2018, unless contrary instructions are given.
Audit Fees
During the period covering the fiscal years ended December 31, 20142017 and 20132016, McGladrey LLPRSM performed the professional services listed in the following table.
| | | | 2014 | | 2013 | 2017 | | 2016 |
Audit fees (1) | $240,500 | | $251,000 | $258,500 | | $248,000 |
Audit-related fees (2) | 30,800 | | 24,000 | 82,385 | | 25,000 |
Tax fees (3) | 7,910 | | 8,090 | 5,933 | | 5,650 |
All other fees (4) | 1,540 | | 431 | 3,061 |
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| Total | $280,750 | | $283,521 | $349,879 | | $278,650 |
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| (1) | Audit fees represent fees for professional services provided for the audit of the Company'sCompany’s annual financial statements, review of the Company'sCompany’s quarterly financial statements in connection with the filing of current and periodic reports, Federal Housing Administration compliance audit, and reporting on internal controls in accordance with Section 404 of Sarbanes-Oxley. |
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| (2) | Audit-related fees represent fees for professional services provided for the audit of the Company'sCompany’s Employee Savings and Stock Ownership Plan, and filing of atwo registration statementstatements in 2014.2017 and services performed to analyze capital and debt structures. |
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| (3) | Tax fees represent fees for professional services related to tax compliance, which included review of tax returns and advice on certain tax issues. |
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| (4) | All other fees represent fees for information technology consulting.preparation of a tax-related cost segregation study of a facility. |
The Audit Committee considered whether the non-audit services provided to the Company by McGladrey LLPRSM are compatible with maintaining McGladrey LLP'sRSM’s independence and concluded that the independence of McGladrey LLPRSM is not compromised by the provision of such services. The Audit Committee pre-approves all audit services and permitted non-audit services, including the fees and terms of those services, to be performed for the Company by its independent registered public accounting firm prior to engagement.
Audit Committee Report
The incorporation by reference of this proxy statement into any document filed with the SEC by the Company shall not be deemed to include the following report unless such report is specifically stated to be incorporated by reference into such document.
The Audit Committee hereby states as follows:
It has reviewed and discussed the audited financial statements as of and for the year ended December 31, 2017, with management;
It has discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 1301, as adopted by the Public Company Accounting Oversight Board (the “PCAOB”);
It has received the written disclosures and the letter from our independent accountant, RSM US LLP, required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence and has discussed with the independent accountant the independent accountant’s independence;
Based on the review and discussions referred to above, it recommended to the Board that the audited financial statements be included in the Company’s annual report on Form 10-K for the year ended December 31, 2017, for filing with the SEC;
It has reviewed and approved or ratified all related-party transactions between the Company and its directors;
The Board has reviewed and approved the Audit Committee Charter; and
It has selected RSM US LLP, independent registered public accounting firm, as the principal accountant for 2018.
The undersigned members of the Audit Committee have submitted this report.
James W. Noyce, Chair
Joyce A. Chapman
David R. Milligan
Steven T. Schuler
Philip Jason Worth
GENERAL MATTERS
Certain Relationships and Related Transactions
Certain directors of the Company have direct and indirect material interests in loans made by West Bank. All the loans were made in West Bank'sBank’s ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with other persons not related to West Bank or the Company, and did not involve more than the normal risk of collectability or present other unfavorable features. None of the loans have been classified as nonaccrual, past due, troubled debt restructured or potential problem loans. The Board considered these loans when consideringreviewing the independence of its directors and determined that such loans did not prevent the relevant directors from being able to serve as independent directors.
The Audit Committee'sCommittee’s charter requires the Audit Committee to review and approve all related-party transactions that must be disclosed. All transactions between the Company or its subsidiaries and any related person, including loans made by West Bank involving $120,000 or more, are reviewed to determine whether all material facts of the transaction are known to the Audit Committee, the transaction complies with known legal requirements, and the transaction is fair to the Company and West Bank. The Audit Committee completed the required review of the fiscal year 20142017 related-party transactions, and all transactions were approved and ratified.
20162019 Stockholder Proposals
AnyIn order for a proposal whichfrom a stockholder intends to present atbe eligible for inclusion in the 2016 annual meetingCompany’s proxy statement and proxy card relating to the 2019 Annual Meeting of stockholdersStockholders, the proposal must be received by the Company by November 4, 2015, in order to be eligible for inclusion in the Company's proxy statement and proxy card relating to such meeting, unless1, 2018. However, if the date of the 2016 annual meeting2019 Annual Meeting is changed by more than 30 days from April 28, 2016, in which case26, 2019, the proposal must be received a reasonable time before the Company begins to print and send its proxy materials for the 2016 annual meeting.2019 Annual Meeting in order to be eligible for inclusion in the Company’s proxy statement and proxy card. Upon timely receipt of any such proposal, the Company will determine whether to include such proposal in the proxy statement and proxy card in accordance with applicable SEC regulations governing stockholder proposals and the solicitation of proxies.
In order for a stockholder to propose other business to be considered at the 2019 Annual Meeting, the stockholder must deliver written notice of the proposed business to the Company prior to January 15, 2019, which is 45 days prior to the first anniversary date of the proxy statement mailing date for the prior year’s meeting.
Stockholders wishing to recommend names of individuals for possible nomination to the Board may do so according to the following procedures:
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| 1. | Contact Alice A. Jensen, Corporate Secretary, at the address below to obtain the Board Membership Criteria established by the Board. |
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| 2. | Provide Ms. Jensen with a typewritten recommendation naming the proposed candidate and specifically explaining how the candidate meets the criteria adopted by the Board. |
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| 3. | Submit the recommendation to Ms. Jensen no later than November 4, 20151, 2018, which is 120 days prior to the expectedanniversary of this year’s proxy mailing date. |
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| 4. | Prove the person making the recommendation is a Company stockholder who owns shares with a market value of at least $2,000 and who has held those shares for at least one year at the time the submission is made.provided. |
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| 5. | If the person being recommended is aware of the submission, he or she must sign a statement so indicating. |
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| 6. | If the person being recommended is not aware of the submission, the submitter must explain why. |
The written submission must be mailed or hand delivered to:
Ms. Alice A. Jensen
Corporate Secretary
West Bancorporation, Inc.
1601 22nd Street
West Des Moines, Iowa 50266
Stockholder Communications
It is the general policy of the Board that management speaks for the Company. To the extent stockholders wish to communicate with a Company representative, they may do so by contacting Douglas Gulling, Executive Vice President, Treasurer and Chief Financial Officer, 1601 22nd Street, West Des Moines, Iowa 50266. Mr. Gulling may be reached by telephone at 515-222-2300 or by email at dgulling@westbankstrong.com.
The Company has a process for stockholders to send communications to the Board or any of its individual members. Any stockholder wishing to communicate with one or more Board members should address a written communication to Mr. Gulling at one of the addresses noted above. Mr. Gulling will forward all appropriate stockholder communications to the full Board or its individual members as appropriate. Mr. Gulling will generally not forward communications that are primarily commercial in nature or related to an improper or irrelevant topic.
Form 10-K
The Company has included a copy of its annual report on Form 10-K for the year ended December 31, 20142017, as filed with the SEC, with this proxy statement. A request for an additional copy should be directed to Alice A. Jensen, Corporate Secretary, West Bancorporation, Inc., 1601 22nd Street, West Des Moines, Iowa 50266 or by calling 515-222-2300. The Company'sCompany’s Form 10-K willis also be available on the SEC'sSEC’s website at www.sec.gov, and through a link at the Investor Relations, SEC Filings, Documents section of the Company'sCompany’s website (www.westbankstrong.com).
Delivery of Documents to Stockholders Sharing an Address
In some instances, only one annual report or proxy statement is being delivered to two or more stockholders who share an address. The Company will promptly deliver additional copies of its proxy statement, summary annual report, and the annual report on Form 10-K to any stockholder who makes such a request. Any stockholder who wishes to receive separate copies of these documents in the future may notify Alice A. Jensen, Corporate Secretary, at 1601 22nd Street, West Des Moines, Iowa 50266, or by calling 515-222-2300. Alternatively, any stockholders sharing an address, who are receiving multiple copies of these documents, may also notify Ms. Jensen to request delivery of only one copy.
By Order of the Board of Directors,
/s/ Alice A. Jensen
Alice A. Jensen
Secretary
West Bancorporation, Inc.
March 5, 20151, 2018
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice of Meeting, Proxy Statement, Proxy Card, Annual Report and Form 10-K are available at
www.snl.com/irw/docs/1021570
Proxy for WEST BANCORPORATION, INC.
Annual Meeting of Stockholders on
April 23, 201526, 2018 4:00 PM
Solicited on Behalf ofThis proxy is solicited by the Board of Directors
The undersigned hereby appoints David R. Milligan and David D. Nelson, or either of them, the undersigned'sundersigned’s attorneys and proxies, with full power of substitution, to vote all shares of common stock of West Bancorporation, Inc. which the undersigned is entitled to vote as of the record date, February 19, 2015,16, 2018, as fully as the undersigned could do if personally present, at the Annual Meeting of Stockholders of said corporation to be held in the David L. Miller Conference Center at the headquarters of the Company, located at 1601 22nd Street, West Des Moines, Iowa, on Thursday, April 23, 2015,26, 2018, at 4:00 p.m. Central Time,time, and any and all adjournments thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
(
Continued and to be signed on the reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
West Bancorporation, Inc.
April 23, 2015side
PROXY VOTING INSTRUCTIONS
VOTE BY INTERNET - www.proxyvote.com
Use of the Internet to transmit your voting instructions and for electronic delivery of
information up until 11:59 P.M. Eastern time the day before the meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction
form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy
materials, you can consent to receiving all future proxy statements, proxy cards and
annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials electronically
in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M.
Eastern time the day before the meeting date. Have your proxy card in hand when
you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we
have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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INTERNET - Access "www.voteproxy.com" and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.
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Vote online until 11:59 PM EST the day before the meeting. | COMPANY NUMBER | |
MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.
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ACCOUNT NUMBER | |
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IN PERSON - You may vote your shares in person by attending the Annual Meeting.
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GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access.
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| NOTICE OF INTRNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, Proxy Statement and Proxy Card are available at www.snl.com/irweblinkx/docs.aspx?iid=1021570
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| | WEST BANCORPORATION, INC. | For | Withhold | For All | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | |
| | | | | | All | All | Except | | | |
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| | The Board of Directors recommends you vote FOR the following: | o | o | o | | | | | | |
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| | 1. | Election of Directors | | | | | | | | | | |
| | | Nominees | | | | | | | | | | | |
| | 01 | Steven K. Gaer | 02 | Michael J. Gerdin | 03 | Kaye R. Lozier | | 04 | Sean P. McMurray | | | |
| | 05 | David R. Milligan | 06 | George D. Milligan | 07 | David D. Nelson | | 08 | James W. Noyce | | | |
| | 09 | Robert G. Pulver | 10 | Lou Ann Sandburg | 11 | Steven T. Schuler | | 12 | Philip Jason Worth | | | |
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| | The Board of Directors recommends that you vote FOR proposals 2 and 4 and vote EVERY YEAR for proposal 3. | | | | For | Against | Abstain |
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| | 2. | To approve, on a nonbinding basis, the 2017 compensation of the named executive officers disclosed in the proxy statement. | o | o | o |
| | | | | | | Every Year | Every Two Years | Every Three Years | Abstain |
| | 3. | To approve, on a nonbinding basis, the frequency of holding future stockholder votes on approval of the compensation of the named executive officers. | | | o | o | o | o |
| | | | For | Against | Abstain |
| | 4. | To ratify the appointment of RSM US LLP as the Company’s independent registered public accounting firm for 2018. | o | o | o |
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| | Such other business as may properly come before the meeting or any adjournment thereof. | | | | |
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| | This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s). | | | |
| | If this proxy is signed but no direction is given for a particular matter, this proxy will be voted (1) FOR THE ELECTION OF ALL OF THE NOMINEES LISTED IN PROPOSAL 1; (2) FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS IN PROPOSAL 2; (3) FOR EVERY YEAR IN PROPOSAL 3; (4) FOR THE RATIFICATION OF THE APPOINTMENT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM IN PROPOSAL 4; AND IN THE DISCRETION OF THE NAMED PROXIES UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. | | |
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| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | | | | |
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| | Signature [PLEASE SIGN WITHIN BOX] | Date | | Signature (Joint Owners) | Date | |
Please detach along perforated line and mail in the envelope provided IF you are not voting via the internet..
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| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSALS 2 AND 3.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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| 1. Election of Directors | | | | FOR | AGAINST | ABSTAIN |
| | | Nominees: | 2. To approve on a nonbinding basis, the 2014 compensation of the named executive officers disclosed in the proxy statement. | | | |
| o | FOR ALL NOMINEES | ¡ | Frank W. Berlin | o | o | o |
| o | WITHHOLD AUTHORITY FOR ALL NOMINEES | ¡ | Thomas A. Carlstrom | | | |
| o | FOR ALL EXCEPT
(See instructions below)
| ¡ | Joyce A. Chapman | 3. To ratify the appointment of McGladrey LLP as the Company's independent registered public accounting firm for 2015. | | | |
| | | ¡ | Steven K. Gaer | o | o | o |
| | | ¡ | Michael J. Gerdin | | | |
| | | ¡ | Kaye R. Lozier | In accordance with their discretion, upon all other business that may
properly come before the Annual Meeting and any adjournments or postponements thereof.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder(s). If this proxy is
signed but no direction is given for a particular matter, this proxy
will be voted (1) FOR THE ELECTION OF THE NOMINEES
LISTED IN PROPOSAL 1; (2) FOR THE APPROVAL OF THE
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
IN PROPOSAL 2; (3) FOR THE RATIFICATION OF THE
APPOINTMENT OF THE INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM IN PROPOSAL 3; AND IN
THE DISCRETION OF THE NAMED PROXIES UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING.
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| | | ¡ | Sean P. McMurray |
| | | ¡ | David R. Milligan |
| | | ¡ | George D. Milligan |
| | | ¡ | David D. Nelson |
| | | ¡ | James W. Noyce |
| | | ¡ | Robert G. Pulver |
| | | ¡ | Lou Ann Sandburg |
| | | ¡ | Philip Jason Worth |
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| Instructions: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold, as shown here: l
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| MARK "X" HERE IF YOU PLAN TO ATTEND THE MEETING. | o |
| To change the address on your account, please check the box at the right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. ¨
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| Signature of stockholder _______________________________ Date ______________ | Signature of stockholder __________________________ Date ____________ |
| | Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | |
