SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant ☐
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☐ | Preliminary Proxy Statement | ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
☒ | Definitive Proxy Statement | |||||
☐ | Definitive Additional Materials | |||||
☐ | Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12 |
COLUMBIA BANKING SYSTEM, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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COLUMBIA BANKING SYSTEM, INC.
1301 “A” Street
Tacoma, Washington 98402
April 13, 201712, 2019
Dear Shareholder:
We are pleased to invite you to Columbia Banking System’s Annual Meeting of Shareholders. The meeting will be at 1:00 p.m. on Wednesday, May 24, 201722, 2019 at the William W. Philip Hall at the University of Washington Tacoma, 1918 Pacific Avenue, Tacoma, Washington 98402.
At the meeting, you and the other shareholders will be asked to consider and vote on proposals with respect to (i) the election of teneleven nominees for director to serve on our Board of Directors; (ii) the approval of an Amendment to our 2018 Equity Incentive Plan (iii) the approval, on an advisory basis(non-binding), of the compensation of our named executive officers; (iii) the approval, on an advisory basis(non-binding), of the frequency of future advisory votes on executive compensation; and (iv) the approval, on an advisory basis(non-binding), of the appointment of our independent registered public accounting firm for the 20172019 fiscal year.
You also will have the opportunity to hear ourColumbia’s management discuss the developments in our business and our industry in the past year and to ask questions. You will find additional information concerning Columbia Banking System and its operations, including its audited financial statements, in the Annual Report for the year ended December 31, 2016,2018, which is available on our website at www.columbiabank.com.
We hope that you can join us on May 24th.22nd . Whether or not you plan to attend, please take the time to vote via the Internet oronline, by telephone or by completing and mailing the proxy card (if you received one) as soon as possible.Your opinion and your vote are important to us. Voting by proxy will not prevent you from voting in person if you attend the meeting, but it will ensure that your vote is counted if you are unable to attend.
| ||||
| | |||
| Hadley S. Robbins | ||||
| Chairman | ||||
COLUMBIA BANKING SYSTEM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 201722, 2019
| TIME | 1:00 p.m. on Wednesday, May | |||
| PLACE | ||||
| ITEMS OF BUSINESS | The purposes of the meeting are as follows: | |||
| (1) | To elect the | |||
| (2) | To approve an Amendment to the 2018 Equity Incentive Plan. | |||
| (3) | To approve, on an advisory basis(non-binding), the compensation of the Company’s named executive officers. |
| (4) | ||||
| To approve, on an advisory basis(non-binding), | ||||
| (5) | To transact such other business as may properly come before the meeting or any adjournment thereof. | |||
| RECORD DATE | You are entitled to vote at the annual meeting and at any adjournments or postponements | |||
| VOTING BY PROXY | Please vote | |||
| By Order of the Board of Directors | ||
 | ||
 | ||
| Kumi Y. Baruffi | ||
| Corporate Secretary |
The proxy statement was first made available or mailed to shareholders on April 13, 2017.12, 2019.
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| 2018 Board Meetings | 15 | |||
| 15 | ||||
| Page | ||||
| 17 | ||||
| Director Compensation | 18 | |||
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COLUMBIA BANKING SYSTEM, INC.
1301 “A” Street
Tacoma, Washington 98402-4200
(253)305-1900
Important Notice Regarding the Availability of Proxy Materials for the 20172019 Shareholder Meeting:
This proxy statement, the Notice of Internet Availability of Proxy Materials (the “Notice”) and our annual report to shareholders for the year ended December 31, 20162018 (the “2016“2018 Annual Report”) are available atwww.columbiabank.com.
The Columbia Board of Directors (the “Board”) is soliciting proxies for this year’s Annual Meeting of Shareholders (the “Annual Meeting”). This proxy statement contains important information for you to consider when deciding how to vote on the matters brought before the meeting. Please read it carefully.
INFORMATION ABOUT THE ANNUAL MEETING
The meeting will be at 1:00 p.m. on Wednesday, May 24, 201722, 2019 at the William W. Philip Hall, at the University of Washington, Tacoma, 1918 Pacific Avenue, Tacoma, Washington 9840298402.
The Board set March 27, 201725, 2019 as the record date for the meeting (the “Record Date”). Shareholders who owned Columbia common stock at the close of business on that date are entitled to vote at the Annual Meeting, with each share entitled to one vote for each matter to be voted on at the meeting. There were 58,325,96873,469,797 shares of Columbia common stock outstanding on the Record Date.
In this proxy statement, the terms the “Company,” “Columbia,” “we,” “us” or “our” refer to Columbia Banking System, Inc.
Under the rules of the Securities and Exchange Commission (the “SEC”), we are furnishing proxy materials to our shareholders on the Internet, rather than mailing paper copies of the materials (including the 20162018 Annual Report) to each shareholder. As a result, unless you previously elected to receive paper copies or request them this year, you will not receive paper copies of these proxy materials. We are sending to our shareholders (other than those that previously elected to receive paper copies) a copy of the Notice, which will instruct you as to how you may access and review the proxy materials over the Internet. The Notice will also instruct you as to how you may access your proxy card to vote your shares by telephone or over the Internet. If you would like to receive a paper copy of our proxy materials, free of charge, please follow the instructions included in the Notice.
The Notice was mailed to shareholders on April 13, 2017.12, 2019.
Our goal is to be thea leading Northwest regional community bank, with a significant presence in selected markets, and to consistently increase earnings per share and shareholder value. Management believes that there continues to be opportunity for organic growth based upon branch footprint and the organization’s commitment to delivering exceptional customer satisfaction and qualityquality` products, and growth through selective acquisitions. Our business strategy is to provide our customers with the financial sophistication and breadth of products of a regional banking company while retaining the appeal and service level of a community bank. We continually evaluate our existing business processes while focusing on maintaining asset quality and balanced loan and deposit portfolios, building our strong core deposit base, expanding total revenue and controlling expenses in an effort to increase our return on average equity and gain operational efficiencies. We believe that, as a result of our strong commitment to highly personalized, relationship-oriented customer service, our varied products, our strategic branch locations and the long-standing community presence of our managers, banking officers and branch personnel, we are well positioned to attract and retain new customers and to increase our market share of loans, deposits, and other financial services in the communities we serve. We are committed to increasing market share in the communities we serve by continuing to leverage our existing branch network and considering business combinations that are consistent with our expansion strategy. We believe that achievement of these goals will create long-term value for our shareholders, consistent with protecting the interests of depositors.
Why did I receive a Notice of Internet Availability of Proxy Materials instead of paper copies of the proxy materials?
In accordance with rules and regulations adopted by the SEC, instead of mailing a printed copy of our proxy materials to all shareholders entitled to vote at the Annual Meeting, we are furnishing the proxy materials to our shareholders over the Internet. If you received the Notice by mail, you will not receive a printed copy of the proxy materials. Instead, the Notice will instruct you as to how you may access and review the proxy materials and submit your vote via the Internet. If you received the Notice by mail and would like to receive a printed copy of the proxy materials, please follow the instructions included in the Notice for requesting such materials.
We mailed the Notice on April 13, 201712, 2019 to all shareholders entitled to vote at the Annual Meeting. As of the date of mailing of the Notice, all shareholders and beneficial owners have the ability to access all of our proxy materials on a website referred to in the Notice. These proxy materials are available free of charge.
What is being voted on at the Annual Meeting?
At the Annual Meeting you will be asked to vote on:
the election of teneleven nominees to serve on the Board until the 20182020 Annual Meeting of Shareholders or until their successors have been elected and have qualified;
the frequency (either one, two or three years) of future shareholder votes on an advisory(non-binding) resolution on executive compensation; and
the approval, on an advisory basis(non-binding), of the appointment of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.
Only shareholders who owned Columbia common stock, either directly or beneficially, as of the close of business on the Record Date are entitled to receive notice of the Annual Meeting and to vote the shares that they held on that date at the Annual Meeting, or any postponement or adjournment of the Annual Meeting.
At the MeetingMeeting.Shares held in your name as the shareholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in “street name” may be voted by you in person at the Annual Meeting only if you obtain a legal proxy from the broker or other agent that holds your shares, giving you the right to vote the shares, and you bring the legal proxy to the Annual Meeting.
By Mail. Shareholders who ask for and receive a paper proxy card may vote by mail and should complete, sign and date their proxy card and mail it in thepre-addressed envelope that will accompany the delivery of the paper proxy card. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to be voted.
By Internet. For shares registered in your name, you may go tohttp://www.proxyvote.comto transmit a proxy to vote your shares by means of the Internet. You will be required to provide our number and the control number, both of which are contained on the Notice or the proxy card, as applicable. You will then be asked to complete an electronic proxy card. The votes represented by such proxy will be generated on the computer screen, and you will be prompted to submit or revise them as desired. We must receive votes submitted via the Internet by 11:59 p.m. ET on May 23, 2017.
By Telephone.You may grant a proxy to vote your shares by telephone. The telephone voting procedures are designed to authenticate your identity, to allow you to grant a proxy to vote your shares, and to confirm that your instructions have been recorded properly. To vote by telephone, call1-800-690-6903by 11:59 p.m. ET on May 23, 2017.21, 2019. Please see the instructions on the Notice or the proxy card, as applicable.
For shares registered in the name of a broker or bank.Most beneficial owners, whose stock is held in “street name,” receive instructions for granting proxies from their banks, brokers or other agents, rather than a proxy card. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and as the beneficial owner, you have the right to direct your broker on how to vote.
A number of brokers and banks are participating in a program provided through Broadridge Financial Solutions Inc. that offers the means to grant proxies to vote shares over the telephone and Internet. If your shares are held in an account with a broker or bank participating in the Broadridge program, you may grant a proxy to vote those shares by calling the telephone number or visiting the website shown on the instruction form received from your broker or bank.
Can I revoke my proxy and/or change my vote?
Yes. You may revoke your proxy and change your vote at any time before the proxy is exercised by filing with Columbia’s Secretary a notice of revocation, voting again by Internet or telephone (only your last Internet or telephone proxy submitted prior to the meeting will be counted), signing and returning a new proxy card with a later date, obtaining a legal proxy from the broker or other agent that holds your shares, or attending the Annual Meeting and voting in person. The powers of the proxy holders will be suspended if you attend the Annual Meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy.
What are the Board’s recommendations?
The Board recommends a vote (i)FORthe election of the director nominees listed in this proxy statement, (ii)FOR the approval of the Amendment to the 2018 Equity Incentive Plan, (iii) FORthe approval, on an advisory basis(non-binding), of the compensation of Columbia’s named executive officers, (iii) for a frequency ofONE YEARfor holding future advisory(non-binding) shareholder votes to approve executive compensation , and (iv)FORthe approval, on an advisory basis(non-binding), of Deloitte as the independent registered public accounting firm for the fiscal year 2017.2019.
If you indicate when voting by Internet or by telephone that you wish to vote as recommended by the Board, or if you sign and return a proxy card without specific instructions as to how to vote, William T. WeyerhaeuserCraig D. Eerkes and Mr.Hadley S. Robbins, as the persons named as proxy holders on the proxy card, will vote as recommended by the Board of Directors. If any other matters are considered at the meeting, Mr. WeyerhaeuserEerkes and Mr. Robbins will vote as recommended by the Board. If the Board does not give a recommendation, Mr. WeyerhaeuserEerkes and Mr. Robbins will have discretion to vote as they think best.
Will my shares be voted if I do not vote by using the Internet, by telephone or by signing and returning my proxy card?
If your shares are registered in your name and you do not vote by using the Internet, by telephone or by returning a signed proxy card or do not vote in person at the Annual Meeting, your shares will not be voted.
If your shares are held in “street name” and you do not submit voting instructions to your broker,your broker may vote your shares at this meeting on the advisory(non-binding) approval of the appointment of the independent registered public accounting firm onlyonl.y.If no instructions are given with respect to the election of directors, the approval, on an advisory basis(non-binding), of the compensation of Columbia’s named executive officers or the selection on an advisory(non-binding) basis of the frequency for holding future advisory shareholder votes to approve executive compensation,your broker cannot vote your shares on these proposals.
How many votes are needed to hold the Annual Meeting?
A majority of Columbia’s outstanding shares as of the Record Date (a quorum) must be present at the Annual Meeting in order to hold the meeting and conduct business. Shares are counted as present at the meeting if a shareholder is present and votes in person at the meeting or has properly submitted a proxy card. As of the Record Date for the Annual Meeting, 58,325,96873,469,797 shares of Columbia common stock were outstanding and eligible to vote. Both abstentions and brokernon-votes are counted as present for the purpose of determining the presence of a quorum. Brokernon-votes, however, are not counted as shares present and entitled to be voted with respect to a matter on which the broker has expressly not voted. Generally, brokernon-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (i) the broker has not received voting instructions from the beneficial owner and (ii) the broker lacks discretionary voting power to vote such shares.
What vote is required to elect directors?
In an uncontested election, a nominee for election to a position on the Board will be elected as a director if the votes castForthe nominee exceed the votes castAgainstthe nominee (known as majority voting). The term of any director who does not receive a majority of votes cast in an election held under that standard terminates on the earliest to occur of: (i) 90 days after the date election results are certified; (ii) the date the director resigns; and (iii) the date the Board fills the position. Our Bylaws provide that an election is considered “contested,” and will be held under a plurality standard, if there are shareholder nominees for director pursuant to the advance notice provision in Section 1.17 of our Bylaws who are not withdrawn by the advance notice deadline set forth in that section. You may voteFor,Against, orAbstainfrom voting for the listed nominees. The following will not be votes cast and will have no effect on the election of any director nominee: (i) a share whose ballot is marked as abstain; (ii) a share otherwise present at the meeting but for which there is an abstention; and (iii) a share otherwise present at the meeting as to which a shareholder gives no authority or direction. Shareholders may not cumulate their votes in the election of directors.
What vote is required to approve the Amendment to the 2018 Equity Incentive Plan?
To approve the Amendment to the 2018 Equity Incentive Plan, we must receive the affirmative vote For the proposal by holders of a majority of the shares present in person or by proxy and voting on the proposal. You may vote For, Against or Abstain from approving the proposal. Abstentions and broker non-votes will have no effect on the outcome of the proposal.
What vote is required to approve the advisory(non-binding) resolution on the compensation of Columbia’s executive officers?
The affirmative voteForby a majority of those shares present in person or by proxy and voting on this matter is required on the advisory(non-binding) resolution on the compensation of Columbia’s named executive officers. You may voteFor,AgainstorAbstainfrom approving the advisory(non-binding) resolution to approve named executive officer compensation. Abstentions and brokernon-votes will have no effect on the outcome of the proposal.
What vote is required to determine the frequency of future advisory(non-binding) shareholder votes on executive compensation?
Shareholders must vote, in an advisory(non-binding) capacity, whether future advisory votes on executive compensation will occur every one, two or three years. The frequency receiving the greatest number of votes (every one, two or three years) will be considered the frequency recommended by shareholders. Shareholders may also abstain from voting. Abstentions and brokernon-votes will have no effect on the outcome of the proposal.
What vote is required to approve the advisory(non-binding) proposal on the appointment of the independent registered public accountants?
The proposal to approve, on an advisory basis(non-binding), the appointment of Deloitte as Columbia’s independent registered public accounting firm will be adopted if a majority of the votes present in person or by proxy and voting on this matter are castForthe proposal. You may voteFor,AgainstAgainstorAbstainfrom approving the proposal. Abstentions and brokernon-votes will have no effect on the outcome of the proposal.
We have not received timely notice of any shareholder proposals to be considered at the Annual Meeting, and the Board does not know of any other matters to be brought before the Annual Meeting.
Who is soliciting my proxy and who is paying the cost of solicitation?
The Board is soliciting proxies for use at the 20172019 Annual Meeting. Certain directors, officers and employees of Columbia and its banking subsidiary, Columbia State Bank, or its trust company subsidiary, Columbia Trust Company, may solicit proxies by mail, telephone, facsimile, or in person.
We will pay for the costs of solicitation. We do not expect to pay any compensation for the solicitation of proxies, except to brokers, nominees and similar record holders for reasonable expenses in mailing proxy materials to beneficial owners of our common stock. However, management may, if it determines it necessary to obtain the requisite shareholder vote, retain the services of a proxy solicitation firm.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the Annual Meeting. We will publish final results in a Current Report on Form8-K to be filed with the SEC within four business days after the Annual Meeting. After the Form 8- K8-K is filed, you may obtain a copy by visiting our website at www.columbiabank.com, the SEC’s website at www.sec.gov, or by writing to: Columbia Banking System, Inc., Attention: Corporate Secretary, 1301 “A” Street, Tacoma, Washington, 98402-4200.
When are proposals and director nominations for the 20182020 Annual Meeting due?
Proposals by shareholders to transact business at Columbia’s 20182020 Annual Meeting must be delivered to Columbia’s Secretary no later than January 24, 201823, 2020 in order to be considered for inclusion in our proxy statement and proxy card and should contain such information as is required under our Bylaws. Such proposals will also need to comply with the SEC’s regulations regarding the inclusion of shareholder proposals in Columbia-sponsored proxy materials. In order for a shareholder proposal to be raised from the floor during next year’s annual meeting, or for a shareholder to nominate a person or persons for a director, written notice must be received by us no earlier than the 150th150th day and no later than the 120thth day prior to the first anniversary of the 20172019 Annual Meeting (meaning no earlier than December 25, 2017,24, 2019, and no later than January 24, 2018)23, 2020), and should contain such information as required under our Bylaws. However, if the date of the 20182020 Annual Meeting is more than 30 days before or more than 60 days after the anniversary of the 20172019 Annual Meeting, notice must be delivered no earlier than the 150thth day and no later than the 120thth day prior to the date of the 20182020 Annual Meeting or, if the first public announcement of the 20182020 Annual Meeting date is less than 100 days before the meeting date, notice must be delivered no later than the 10thth day following the date of the Company’s first public announcement of the 20182020 Annual Meeting date.
To be in proper form, a shareholder’s notice must include the specified information concerning the proposal or director nominee as described in our Bylaws. The Company will not consider any proposal or nomination that is not timely or otherwise does not meet the Bylaw and SEC requirements for submitting a proposal or nomination.
Notice of intention to present proposals at the 20182020 Annual Meeting, or to obtain a copy of the detailed procedures regarding notice requirements for proposals or director nominations, should be directed to Columbia’s Corporate Secretary, 1301 “A” Street, Tacoma, Washington 98402.
Beneficial Owners of More Than Five Percent
As of March 15, 20172019 (except as otherwise noted), the shareholders identified in the table below beneficially owned more than 5% of the outstanding Columbia shares. To the Company’s knowledge, based on the public filings which beneficial owners of more than 5% of the outstanding shares of Columbia common shares are required to make with the SEC, there are no other beneficial owners of more than 5% of the outstanding Columbia common shares as of March 15, 2017,2019, other than those set forth below. The percentage ownership data is based on 58,332,04973,467,373 Columbia common shares outstanding as of March 15, 2017.2019.
Name and Address | Number of Shares (1) | Percentage | ||||||
Blackrock, Inc. (2) 55 East 52nd Street New York, NY 10055 | 6,776,798 | 11.62 | % | |||||
The Vanguard Group, Inc. (3) 100 Vanguard Blvd. Malvern, PA 19355 | 5,106,166 | 8.75 | % | |||||
Name and Address Number of Shares (1) Percentage Blackrock, Inc. (2) 10,189,781 13.87 % 55 East 52nd Street New York, NY 10055 The Vanguard Group, Inc. (3) 7,687,182 10.46 % 100 Vanguard Blvd. Malvern, PA 19355 T Rowe Price (4) 4,335,517 5.9 % 100 East Pratt St. Baltimore, MD 21202
| (1) | Pursuant to rules promulgated by the SEC, a person or entity is considered to beneficially own shares of common stock if the person or entity has or shares (i) voting power, meaning the power to vote or direct the voting of the shares, or (ii) investment power, meaning the power to dispose of or direct the disposition of the shares. |
| (2) | An amended Schedule 13G filed with the SEC on January |
| (3) | An amended Schedule 13G filed with the SEC on February |
| (4) | A Schedule 13G filed with the SEC on February 14, 2019 indicates that T. Rowe Price Associates, Inc. had sole voting power over 1,105,160 shares and sole dispositive power over 4,335,517 shares. |
Beneficial Ownership of Directors and Executive Officers
The following table shows, as of March 15, 2017,2019, the amount of Columbia common stock directly owned (unless otherwise indicated) by (a) each director and director nominee; (b) the executive officers named in the Summary Compensation Table below; and (c) all of our directors and executive officers (including those not named in the Summary Compensation Table) as a group. Except as otherwise noted, we believe that the beneficial owners of the shares listed below, based on information furnished by such owners, have or share with a spouse voting and/or investment power with respect to the shares. Beneficial ownership is determined under the rules of the SEC.
Name | Position | Number | Percentage | Position | Number | Percentage | ||||||||||||||
William T. Weyerhaeuser | Chairman of the Board | 249,746 | (1) | * | ||||||||||||||||
Melanie J. Dressel | Director, President and Chief Executive Officer | 141,956 | (2) | * | ||||||||||||||||
| Craig D. Eerkes | Chairman of the Board | 10,322 | (1) | * | ||||||||||||||||
| Hadley S. Robbins | Director, President, and Chief Executive Officer | 64,964 | (2) | * | ||||||||||||||||
| Kumi Y. Baruffi | Executive Vice President, General Counsel | 20,148 | (3) | * | ||||||||||||||||
David A. Dietzler | Director | 8,612 | (3) | Director | 12,303 | (1) | * | |||||||||||||
Craig D. Eerkes | Director | 6,631 | (3) | * | ||||||||||||||||
Ford Elsaesser | Director | 37,096 | (3) | * | Director | 41,264 | (1) | * | ||||||||||||
Mark A. Finkelstein | Director | 4,000 | (3) | * | Director | 7,691 | (1) | * | ||||||||||||
John P. Folsom | Director | 44,638 | (4) | * | Director | 48,329 | (4) | * | ||||||||||||
| Eric S. Forrest | Director | 7,463 | (5) | * | ||||||||||||||||
Thomas M. Hulbert | Director | 44,015 | (3) | * | Director | 47,706 | (1) | * | ||||||||||||
Michelle M. Lantow | Director | 11,500 | (3) | * | Director | 15,191 | (1) | * | ||||||||||||
David C. Lawson | Executive Vice President, Chief Human Resources Officer | 21,153 | (5) | * | Executive Vice President, Chief Human Resources Officer | 20,856 | (6) | * | ||||||||||||
| Randal L. Lund | Director | 3,524 | (1) | * | ||||||||||||||||
Andrew L. McDonald | Executive Vice President, Chief Credit Officer | 45,145 | (6) | * | Executive Vice President, Chief Credit Officer | 43,683 | (7) | * | ||||||||||||
S. Mae Fujita Numata | Director | 10,825 | (7) | * | Director | 14,516 | (8) | * | ||||||||||||
Hadley S. Robbins | Executive Vice President, Chief Operating Officer, Interim CEO | 32,423 | (8) | * | ||||||||||||||||
Elizabeth W. Seaton | Director | 6,000 | (3) | * | Director | 9,691 | (1) | * | ||||||||||||
| Gregory A. Sigrist | Executive Vice President, Chief Financial Officer | 5,910 | (9) | * | ||||||||||||||||
Clint E. Stein | Executive Vice President, Chief Financial Officer | 33,318 | (9) | * | Executive Vice President, Chief Operating Officer | 35,728 | (10) | * | ||||||||||||
| ||||||||||||||||||||
Directors and executive officers as a group (16 persons) | 714,345 | 1.23 | % | |||||||||||||||||
| Janine T. Terrano | Director | 2,525 | (1) | * | ||||||||||||||||
| William T. Weyerhaeuser | Director | 253,437 | (11) | * | ||||||||||||||||
| Directors and executive officers as a group (20) | 677,924 | 0.92 | % | |||||||||||||||||
| * | Represents less than 1% of outstanding common stock. |
| (1) | Includes |
| (2) |
| (3) | Includes 2,627 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2019, 5,172 unvested time-based restricted shares, and 5,400 unvested performance-based restricted shares, the maximum amount of performance-based shares that Ms. Baruffi is eligible to receive, which are subject to final calculation and approval by the Personnel and Compensation Committee of the Columbia board of directors. Ms. Baruffi has voting but not investment power for her unvested restricted shares. |
| (4) | Includes |
| (5) | Includes |
| (6) | Includes 2,844 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February |
| (7) | Includes |
| (8) | Includes |
| (9) | Includes |
| (10) | Includes |
| (11) | Includes 1,691 unvested time-based restricted shares for which Mr. Weyerhaeuser has voting but not investment power, and 223,249 shares that are held indirectly by WBW Trust Number One, for which Mr. Weyerhaeuser is the trustee with sole voting and investment power. |
INFORMATION ABOUT THE DIRECTORS AND NOMINEES
Our Bylaws provide that the number of directors to be elected by the shareholders will be at least five and not more than 17. Under the Bylaws, the Board has authority to decide the exact number of directors to be elected within these limits. On February 19, 2017, Melanie J. Dressel, who was then serving as our President, Chief Executive Officer and a director, died unexpectedly. Thereafter, theThe Board has reducedfixed the number of directors to be elected at the Annual Meeting fromat eleven to ten. The Boardand has nominated the persons listed on the following pages, each of whom has consented to serve as a director if elected, for election as directors to serve until the 20182020 Annual Meeting or until their successors are elected.
Our Bylaws provide that any person who has or will attain the age of 75 prior to a meeting of shareholders may not stand for election at such meeting. As a result, Mr. Dietzler, Mr. Folsom, and Mr. Weyerhaeuser, who have served as directors since, respectively, 2013, 1997 and 1998, have not been nominated for election at the Annual Meeting.
Replacement NomineeReplacement Nomineess
If a nominee refuses or is unable to stand for election, the Board may reduce the number of seats on the Board or designate a replacement nominee. If the Board designates a substitute, shares represented by proxy will be votedFORthe substitute nominee. The Board presently has no knowledge that any of the nominees will refuse or be unable to serve.
Information regarding each of the nominees is provided below, including each nominee’s name, age as of the Record Date, principal occupation and public company directorships during the past five years, and the year first elected or appointed a director of Columbia, its predecessor corporation or one of its former or current subsidiaries. All of the nominees are presently directors of Columbia and Columbia Bank. There are no family relationships among any of our directors or executive officers, nor are any of the corporations or organizations referenced in the biographical information below a parent, subsidiary or affiliate of Columbia.
  | Craig D. Eerkes | Director since | ||
| ||||
 | ||||
Mr. Eerkes, | ||||
 | ||||
 | Ford Elsaesser | Director since 2014 | ||
Mr. Elsaesser, | ||||
 | ||||
 | Mark A. Finkelstein | Director since 2014 | ||
Mr. Finkelstein, | ||||
 | Eric S. Forrest | Director since | ||
Mr. | ||||
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 | Thomas M. Hulbert | Director since 1999 | ||
Mr. Hulbert, | ||||
 | ||||
 | Michelle M. Lantow | Director since 2012 | ||
Ms. Lantow, | ||||
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 | Randal L. Lund | Director since | ||
Mr. Lund, 61, served as a partner for 37 years with the accounting firm KPMG and has extensive accounting and operational experience with public companies. He is a retired Certified Public Accountant in Oregon and a retired member of the American Institute of Certified Public Accountants. In his role as partner at KPMG, Mr. Lund was responsible for the audits of financial statements for a wide variety of companies, holding frequent meetings with audit committees and Securities and Exchange Commission regulators and reviewing and assessing company internal controls and corporate governance functions. He also worked for two years in the National Office of KPMG in New York City. He holds a Bachelor of Science degree from Montana State University and has served on the boards of directors of the Software Association of Oregon, Metropolitan Family Services and Business for Culture and the Arts. Mr. Lund’s deep expertise in the auditing and governance of public companies make him a valuable resource to the Board. He is one of the Board’s designated audit committee financial experts. | ||||
 | S. Mae Fujita Numata | Director since 2012 | ||
Ms. Numata, | ||||
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 | Hadley S. Robbins | Director since | ||
Mr. Robbins, 62, was named President and Chief Executive Officer of Columbia and Columbia Bank effective July 1, 2017. He was appointed Interim Chief Executive Officer of Columbia and Columbia Bank in February 2017, and prior to that, served as Executive Vice President and Chief Operating Officer of Columbia Bank since March 2014. He joined Columbia Bank as Senior Vice President and Oregon Group Manager in April 2013, when Columbia acquired West Coast Bancorp, where Mr. Robbins had served as Executive Vice President and Chief Credit Officer since 2007. Mr. Robbins has over 35 years of banking experience and has held senior level positions with Wells Fargo Bank and community banks in the Pacific Northwest. He holds an M.B.A. from the University of Oregon and a B.S. in Business Administration from Lewis and Clark College. He currently serves on the boards of directors for the Multicare Foundation, Pacific Coast Bankers School (PCBS) and the Oregon Bankers Association. As CEO and a director, Mr. Robbins serves as the primary liaison between the Board and management, and as the executive with overall responsibility for executing the Company’s strategic plan. | ||||
 | Elizabeth W. Seaton | Director since 2014 | ||
Ms. Seaton, | ||||
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 | Janine T. | Terrano | Director since | |
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The Board unanimously recommends a vote “FORFOR”” each of the nominees for director.
CORPORATE GOVERNANCCORPORATE GOVERNANCEE
The Board is committed to sound business practices, transparency in financial reporting and high standards of corporate governance. We operate within a comprehensive plan of corporate governance with the purpose of defining responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. We regularly monitor developments in the area of corporate governance and our corporate governance policies, practices and committee charters are reviewed periodically and updated as necessary to reflect changes in regulatory requirements and evolving oversight practices.
Board and Company Leadership Structure
The Board is committed to maintaining an independent board, and an overwhelming majority has been comprised of outside directors for many years. It has further been the practice of Columbia to separate the duties of Chairman and Chief Executive Officer. In keeping with good corporate governance practices, the Board believes that the separation of the duties of Chairman and Chief Executive Officer eliminates any inherent conflict of interest that may arise when the roles are combined, and that an independent director can best provide the leadership and objectivity required as Chairman.
Director QualificationDirector Qualificationss
The Board believes each of the Company’s directors should bring a rich mix of qualities and skills to the Board. All of our directors bring to the Board a wealth of leadership experience derived from their service in a variety of professional and executive positions and extensive board experience.
The Corporate Governance and Nominating Committee is responsible for the oversight and nomination process for director nominees. The Corporate Governance and Nominating Committee has not historically adopted formal “director qualification standards” for recommended nominees. However, the Corporate Governance and Nominating Committee annually reviews the experience, qualifications, attributes and skills of each director and nominee as part of its evaluation of whether these are the right individuals to serve on Columbia’s Board to help Columbia successfully meet its strategic plans. Because directors are elected forone-year terms, the Corporate Governance and Nominating Committee has an annual opportunity to assess these factors and, if appropriate, determine not tore-nominate any director. A more detailed discussion regarding the considerations given by the Corporate Governance and Nominating Committee when considering director nominees is set forth below in the section entitled“Board Structure and Compensation—Board Committees—Corporate Governance and Nominating Committee.”
The biographical information set forth above summarizes the experience, qualifications, attributes and skills that Columbia believes qualifies each director to serve on the Board. The Corporate Governance and Nominating Committee and the Board believe each respective director’s professional and business acumen and board experience, and the total mix of all directors’ experience and skills, are beneficial to the Company and the Board.
Code of Ethics and Corporate Governance Documents
We have adopted a Code of Ethics for senior financial officers, which applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and any persons performing similar functions.
You can access our Code of Ethics, Audit Committee, Corporate Governance and Nominating Committee and Personnel and Compensation Committee charters, , and our Bylaws in the “About—Investor Relations—Governance Documents” section of our website at www.columbiabank.com, or by writing to: Columbia Banking System, Inc., Attention: Corporate Secretary, 1301 “A” Street, Tacoma, Washington, 98402-4200.
With the assistance of legal counsel to Columbia, the Corporate Governance and Nominating Committee has reviewed the applicable legal standards for Board and committee member independence, and the criteria applied to determine “audit committee financial expert” status. The Corporate Governance and Nominating Committee has also reviewed the answers to annual questionnaires completed by each of the directors, which included questions regarding any potential director-affiliated transactions.
The Board then analyzed the independence of each director and nominee and determined that the following members of the Board meet the standards regarding “independence” required by applicable law, regulation and NASDAQ listing standards, and that each such director is free of relationships that would interfere with the exercise of independent judgment. In determining the independence of each director, the Board considered many factors, including any loans to the directors, each of which (i) were made in the ordinary course of business; (ii) were substantially made on the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to the Company or the Bank; and (iii) did not involve more than the normal risk of collectability or present other unfavorable features. Such arrangements are discussed in detail in the section entitled“Certain Relationships and Related Transactions.”
Based on these standards, the Board has determined that each of the following currentnon-employee directors and director nominees is independent:
| Craig D. Eerkes | ||
| Michelle M. Lantow | ||
| Ford Elsaesser | Randal L. Lund | |
| Mark A. Finkelstein | S. Mae Fujita Numata | |
| Eric S. Forrest | Elizabeth W. Seaton | |
Based on the standards described above, the Board determined that Hadley S. Robbins, who serves as the President and Chief Executive Officer of the Company, is not independent because he is an executive officer of the Company.
Compensation Committee Interlocks and Insider ParticipationParticipation
During 2016,2018, the Personnel and Compensation Committee consisted of Ms. Lantow (Chair), Mr. Eerkes, Mr. Finkelstein, Mr. Forrest , Mr. Hulbert and Ms. Numata.Numata and Mr. Weyerhaeuser, who was appointed in June, 2018. During 2016,2018, none of our executive officers served on the compensation committee (or equivalent body) or board of directors of another entity whose executive officer served on the Personnel and Compensation Committee.
Shareholder Communications with the BoardBoard
Shareholders and other interested parties may communicate with the Board by writing to the Chairman of the Board c/o Columbia’s Corporate Secretary, Columbia Banking System, Inc., 1301 “A” Street, Tacoma, Washington, 98402-4200. These communications will be reviewed by our Corporate Secretary and if they are relevant to, and consistent with, our operations and policies, they will be forwarded to the Chairman of the Board.
BOARD STRUCTURE AND COMPENSATIONCOMPENSATION
The Board met 1211 times during 2016.2018. Each director attended at least 75% of the total number of meetings of the Board and committees on which he or she served. Columbia directors are expected to attend the annual shareholder meeting. Last year, all of our directors who were then serving on the Board, with the exception of Mr. Dietzler,Ms. Seaton, attended the annual shareholder meeting. During 2016,2018, the independent directors held 1011 meetings without management present.
Board CommitteBoard Committeeses
The Board has established, among others, an Audit Committee, a Personnel and Compensation Committee, a Corporate Governance and Nominating Committee, and an Enterprise Risk Management Committee.
The following table shows the membership of these committees during 2016.2018.
Committee Membership
| Name | Audit | Compensation | Nominating | E.R.M. | |||
| David A. Dietzler | þ* | ¨ | ¨ | þ | |||
| Craig D. Eerkes(1) | ¨ | þ | þ* | ¨ | |||
| Ford Elsaesser | þ | ¨ | þ | ¨ | |||
| Mark A. Finkelstein(2) | ¨ | þ | þ | ¨ | |||
| John P. Folsom(3) | þ | ¨ | þ | þ* | |||
| Eric S. Forrest(4) | ¨ | þ | ¨ | þ | |||
| Thomas M. Hulbert | þ | þ | ¨ | ¨ | |||
| Michelle M. Lantow(5) | þ | þ * | þ | ¨ | |||
| Randal Lund(6) | þ | ¨ | ¨ | þ | |||
| S. Mae Fujita Numata | þ | þ | þ | ¨ | |||
| Elizabeth W. Seaton(7) | ¨ | ¨ | ¨ | þ* | |||
| Janine Terrano | þ | ¨ | ¨ | þ | |||
| William T. Weyerhaeuser(8) | ¨ | þ | þ* | ¨ | |||
| Total Meetings in 2018 | 9 | 8 | 4 | 6 |
* | Committee Chair |
| (1) | Mr. Eerkes served on the ERM Committee until June 2018. He was appointed to the Nominating Committee and named as its Chair in June 2018. |
| (2) | Mr. Finkelstein served on the ERM Committee until, and was appointed to the Nominating Committee in, June 2018. |
| (3) | Mr. Folsom served on the Nominating Committee and as Chair of the ERM Committee until June 2018. |
| (4) | Mr. Forrest was appointed to the ERM Committee in June 2018. |
| (5) | Ms. Lantow served on the Nominating Committee until, and was appointed to the Audit Committee in, June 2018. |
| (6) |
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| (7) |
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Audit CommitteeCommittee. The Audit Committee is comprised of fiveeight directors, each of whom is considered “independent” as defined by the NASDAQ listing standards and applicable SEC rules. The Audit Committee operates under a formal written charter, a copy of which is posted on our website at www.columbiabank.com. The Board has determined that each of Mr. Dietzler, Ms. Lantow, Mr. Lund and Ms. Numata are “Audit Committee Financial Experts” as defined by SEC rules.
The Audit Committee is responsible for the oversight of the quality and integrity of Columbia’s financial statements, its compliance with legal and regulatory requirements, the qualifications and independence of its independent auditors, the performance of its internal audit function and independent auditors and other significant financial matters. In discharging its duties, the Audit Committee is expected to, among other things:
have the sole authority to appoint, retain, compensate, oversee, evaluate and replace the independent auditors;
| ● | have the sole authority to appoint, retain, compensate, oversee, evaluate and replace the independent auditors; |
review and approve the engagement of the independent auditors to perform audit and non-audit services and related fees;
| ● | review and approve the engagement of the independent auditors to perform audit and non-audit services and related fees; |
meet independently with the internal auditing department, independent auditors and senior management;
| ● | meet independently with the internal auditing department, independent auditors and senior management; |
review the integrity of the financial reporting process;
| ● | review the integrity of the financial reporting process; |
review the financial reports and disclosures submitted to appropriate regulatory authorities;
| ● | review the financial reports and disclosures submitted to appropriate regulatory authorities; |
maintain procedures for the receipt, retention and treatment of complaints regarding financial matters; and
| ● | maintain procedures for the receipt, retention and treatment of complaints regarding financial matters; and |
| ● | review and approve related party transactions. |
review and approve related party transactions.
Personnel and Compensation Committee. The Personnel and Compensation Committee is comprised of fiveseven directors, each of whom is considered independent as defined by the NASDAQ listing standards and applicable SEC and IRS rules. The Personnel and Compensation Committee is charged with the responsibility of reviewing the performance of our Chief Executive Officer and other key employees and determines, approves and reports to the Board on the elements of their compensation and long-term equity based incentives. The committee may periodically retain an independent consultant to assist the committee in its deliberations regarding executive compensation for the Chief Executive Officer and other key executives. The committee is directly responsible and has full authority for the appointment, compensation and oversight of compensation consultants, legal counsel and any other advisors retained by the committee. The committee solicits and receives input and recommendations from the Chief Executive Officer with respect to the compensation of the other executive officers. In addition, the Executive Vice President and Chief Human Resources Officer assists the committee in its work.
In 2015, the
The Personnel and Compensation Committee commissioned Pearl Meyer and Partners (“Pearl Meyer”), an independent outside compensation consultant, to conduct a study in June 2017 of the Company’s executive compensation compared to a peer group comprised of other publicly traded financial services companies. The committee has used this report as updated in September 2015 and October 2016, as a reference in making compensation decisions. The Pearl Meyer report provided information on executive base salaries and short-term and long-term incentives based on competitive data from published proxy filings of an updateda peer group of 1617 bank holding companies. Further information relating to the Pearl Meyer report is discussed in the section entitled “Compensation“Compensation Discussion and Analysis.”
In addition, the Personnel and Compensation Committee:
reviews all employee benefit plans; and
| ● | reviews all employee benefit plans; and |
| ● | makes determinations in connection with compensation matters as may be necessary or advisable. |
makes determinations in connection with compensation matters as may be necessary or advisable.
The Personnel and Compensation Committee operates under a written charter, a copy of which is posted on our website at www.columbiabank.com. The committee meets as needed, and may delegate to one or more of its members the responsibility of meeting with consultants and management to obtain information for presentation and consideration by the entire committee.
Corporate Governance and Nominating Committee.. The Corporate Governance and Nominating Committee is currently comprised of sixfive directors, each of whom is considered “independent” as defined by the NASDAQ listing standards, andstandards. The committee is responsible for recommending a slate of directors to the full Board for election at the annual meeting, recommending directors to fill vacancies as they occur, monitoring Columbia’s corporate governance principles and practices and making appropriate recommendations for enhancements or other changes to the full Board.
The Corporate Governance and Nominating Committee will consider nominees recommended by shareholders provided that the recommendations are made in accordance with the procedures described in this proxy statement under the section “General Information—When are proposals and director nominations for the 20182020 Annual Meeting due?” The committee evaluates all candidates, including shareholder-proposed candidates, using generally the same methods and criteria. The Corporate Governance and Nominating Committee operates under a formal written charter, a copy of which is posted on our website at www.columbiabank.com.
In deciding whether to recommend incumbent directors for re-nomination, the committee evaluates Columbia’s evolving needs and assesses the effectiveness and contributions of its existing directors. The committee is authorized to establish guidelines for the qualification, evaluation and selection of new directors to serve on the Board. The committee has not adopted, nor does it anticipate adopting, specific minimum qualifications for committee-recommended nominees, nor has the committee adopted a formal policy relating to Board diversity, although the committee and the Board value and seek to include members with a diversity of backgrounds,in gender, age, race, professional experience and skills relevant to the Company. The committee instead evaluates each nominee on a case-by-case basis, including assessment of each nominee’s business experience, involvement in the communities served by Columbia, diversity and special skills. The Corporate Governance and Nominating Committee also evaluates whether the nominee’s skills are complementary to existing Board members’ skills, and the Board’s need for operational, management, financial, technological or other expertise.
The committee has the authority and responsibility to monitor and review the appropriateness of the Company’s principles and practices of corporate governance in light of emerging standards and best practices and
the needs of the Company and its shareholders, and make such recommendations to the full Board as the Committee considers appropriate. The committee also has the authority and responsibility to review the level and form of director compensation, taking into account such factors as the compensation paid to directors of comparable companies, and recommends any changes to the full Board for consideration. The process and procedures used in determining Board compensation for 20162018 are discussed in the section below.
Enterprise Risk Management Committee. The Enterprise Risk Management Committee (the “ERM Committee”) was formed in 2009 and is comprised of fivesix directors, each of whom is considered independent under NASDAQ rules. The ERM Committee works closely with the Audit Committee and is responsible for the oversight of Columbia’s policies, procedures, and practices related to business, market, and operational risks as they impact the strategic, operational, reporting, and compliance objectives of its strategic plan. The ERM Committee is responsible for reporting risk issues and events to the Board and providing the Board with necessary oversight and advice to set risk tolerances. In 2018, the Company appointed a Chief Risk Officer who assists the committee in its work.
The Board has ultimate authority and responsibility for overseeing risk management at Columbia. Some aspects of risk oversight are fulfilled at the full Board level. For example, the Board regularly receives reports from management on credit risk, liquidity risk and operational risk.risk, including cybersecurity. The Board delegates other aspects of its risk oversight function to its committees. The Audit Committee oversees financial, accounting and internal control risk management; the head of the Company’s internal audit function reports directly to the Audit Committee. The executive officers have regularly reportreported directly to the entire Board and to appropriate Board committees with respect to the risks they are responsible for managing.
The ERM Committee is responsible for the oversight of Columbia’s policies, procedures, and practices related to business, market, and operational risks as they impact the strategic, operational, reporting, and compliance objectives of its strategic plan. The ERM Committee defines the Company’s overarching risk objectives through risk policies, limits and a risk appetite statement.
The Personnel and Compensation Committee oversees the management of risks that may be posed by the Company’s compensation practices and programs. As part of this process, the Personnel and Compensation Committee is responsible for reviewing the compensation policies and practices for all employees, not just executive management. In its review of these policies and practices, the Personnel and Compensation Committee has determined that the current policies and practices do not create or encourage risks that are reasonably likely to have a material adverse effect on the Company.
Director CompensatioDirector Compensationn
The Corporate Governance and Nominating Committee has authority over director compensation subject to the Board’s authority to approve changes. Directors receive compensation in the form of cash and, as applicable, equity awards in the form of restricted stock or, in the past, stock options. We do not pay directors who are also employees of Columbia or Columbia Bank additional compensation for their service as directors.
The following table shows compensation paid or accrued for the last fiscal year to our non-employee directors. The footnotes to the table describe the details of each form of compensation paid to directors.
2016 Director Compensation Table
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Option Awards ($) | Non-Equity Incentive Plan Compensation | Change In Pension Value and Nonqualified Deferred Compensation Earnings (3) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
David A. Dietzler | $ | 75,000 | $ | 56,980 | — | — | — | — | $ | 131,980 | ||||||||||||||||||
Craig D. Eerkes | 57,000 | 56,980 | — | — | — | — | 113,980 | |||||||||||||||||||||
Ford Elsaesser | 74,000 | 56,980 | — | — | — | — | 130,980 | |||||||||||||||||||||
Mark A. Finkelstein | 58,000 | 56,980 | — | — | — | — | 114,980 | |||||||||||||||||||||
John P. Folsom | 79,000 | 56,980 | — | — | — | — | 135,980 | |||||||||||||||||||||
Thomas M. Hulbert | 72,000 | 56,980 | — | — | — | — | 128,980 | |||||||||||||||||||||
Michelle M. Lantow | 73,000 | 56,980 | — | — | 640 | — | 130,620 | |||||||||||||||||||||
S. Mae Fujita Numata | 64,000 | 56,980 | — | — | — | — | 120,980 | |||||||||||||||||||||
Elizabeth W. Seaton | 54,000 | 56,980 | — | — | — | — | 110,980 | |||||||||||||||||||||
William T. Weyerhaeuser | 110,000 | 56,980 | — | — | — | — | 166,980 | |||||||||||||||||||||
Amount shown for Mr. Eerkes represents (i) a retainer in the amount of $35,000; and (ii) aggregate per meeting board and committee attendance fees of $10,000 and $12,000, respectively
Amount shown for Mr. Elsaesser represents (i) a retainer in the amount of $35,000; (ii) $9,000 received as chairman of the Trust Committee; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and
$19,000, respectively.
Amount shown for Mr. Finkelstein represents (i) a retainer in the amount of $35,000; and (ii) aggregate per meeting board and committee attendance fees of $11,000 and $12,000, respectively.
Amount shown for Mr. Folsom represents (i) a retainer in the amount of $35,000; (ii) $9,000 received as chairman of the ERM Committee; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and $24,000, respectively.
Amount shown for Mr. Hulbert represents (i) a retainer in the amount of $35,000; (ii) $9,000 received as chairman of the M&A Committee; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and $17,000, respectively.
Amount shown for Ms. Lantow represents (i) a retainer in the amount of $35,000; (ii) $12,000 received as chairwoman of the Compensation Committee; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and $15,000, respectively.
Amount shown for Ms. Numata represents (i) a retainer in the amount of $35,000; and (ii) aggregate per meeting board and committee attendance fees of $10,000 and $19,000, respectively.
Amount shown for Ms. Seaton represents (i) a retainer in the amount of $35,000; and (ii) aggregate per meeting board and committee attendance fees of $11,000 and $8,000, respectively.
Amount shown for Mr. Weyerhaeuser represents (i) a retainer in the amount of $35,000; (ii) $45,000 received as Chairman of the Board; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and $19,000, respectively.
Cash Compensation. Non-employee directors are paid an annual retainer as compensation plus a per-meeting attendance fee for service as a director. Members of the ERM, Audit, Personnel and Compensation, and Corporate Governance and Nominating Committees, respectively, receive an additional per meeting attendance fee for committee meetings. The Chairman of the Board and Chairmenthe Chairs of the Audit, the Personnel and Compensation, ERM and certain other committees receive an additional retainer in light of the increased demands associated with those positions. Non-employee directors may elect to defer the receipt of meeting and/or director fees in accordance with the terms of the Company’s Deferred Compensation Plan.
Equity Compensation. Non-employee directors may from time to time be granted restricted stock awards pursuant to our Current2018 Equity Compensation Plan, the material terms of which are discussed under the section “Executive Compensation—Compensation – Equity Compensation.” Restricted stock awards generally vest over a pre-determined period.
Long Term Care Program. In 2001, we implemented a long-term care program for directors serving at that time, which provides benefits in the event those individuals become chronically ill. The coverage is for a period of three years up to a lifetime, depending on the age of the director, and the amount of the benefit is based on the director’s years of service with Columbia after the inception of the long-term care program. We paid a one-time premium for the long-term care policies. Expenses are allocated to the directors participating in the program on an annual basis. All directors covered by this plan are fully vested. The long-term care program was available to all directors when the plan was implemented, including executive officers that were also directors. We have purchased Bank Owned Life Insurance policies to fund this program. The Board has no plans to extend the program to any officers or directors who were not directors in 2001.
Deferred Compensation Plan. We maintain a deferred compensation plan known as the 401 Plus Plan (the “Deferred Compensation Plan”) for certain directors, a select group of senior management and key employees, as designated by resolution of the Board. The Deferred Compensation Plan generally provides for the deferral of certain taxable income earned by participants in the Deferred Compensation Plan. Non-employee directors may elect to have any portion, up to 100%, of his or her director’s fees deferred.
Stock Ownership Guidelines.. The Board has approved stock ownership guidelines that require directors to achieve a stock ownership position of at least 7,000 shares within five years of joining the Board. As of year-end 2016, all directors owned shares of Columbia’s stock. At year-end 2016, Ms. Seaton, who joined the Board in May 2014, and Messrs. Eerkes and Finkelstein, both of whom joined the Board in September 2014, have not yet met the ownership guidelines but are expected to within the five year deadline specified in the guidelines. All other directors have exceeded the ownership guidelines. In March 2017, the Board replaced the stock ownership guidelines with aCompany’s Stock Ownership Policy that, effective January 1, 2017, requires non-executive directors to hold shares equal in value to five times the annual Board cash retainer. As of year-end 2018, all non-executive directors satisfied the Stock Ownership Policy requirements other than Mr. Lund, who joined the Board in 2017, and Ms. Terrano, who joined the Board in 2018. See “Stock Ownership Guidelines;Guidelines and No Hedging” in the Compensation Discussion & Analysis below for additional details regarding the Stock Ownership Policy.Policy
The following table shows compensation paid or accrued for the last fiscal year to our non-employee directors. The footnotes to the table describe the details of each form of compensation paid to directors.
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | Option Awards ($) | Non-Equity Incentive Plan Compensation | Change In Pension Value and Nonqualified Deferred Compensation Earnings (3) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||
| David A. Dietzler | $ | 78,000 | $ | 69,974 | — | — | — | — | $ | 147,974 | ||||||||||||||||||
| Craig D. Eerkes | 99,250 | 69,974 | — | — | — | — | 169,224 | |||||||||||||||||||||
| Ford Elsaesser | 72,000 | 69,974 | — | — | — | — | 141,974 | |||||||||||||||||||||
| Mark A. Finkelstein | 67,000 | 69,974 | — | — | — | — | 136,974 | |||||||||||||||||||||
| John P. Folsom | 75,750 | 69,974 | — | — | — | — | 145,724 | |||||||||||||||||||||
| Eric Forrest | 66,000 | 69,974 | — | — | 346 | — | 136,320 | |||||||||||||||||||||
| Thomas M. Hulbert | 82,000 | 69,974 | — | — | — | — | 151,974 | |||||||||||||||||||||
| Michelle M. Lantow | 80,000 | 69,974 | — | — | 4,158 | — | 154,132 | |||||||||||||||||||||
| Randal Lund | 69,000 | 69,974 | — | — | — | — | 138,974 | |||||||||||||||||||||
| S. Mae Fujita Numata | 69,000 | 69,974 | 2,857 | — | 141,831 | |||||||||||||||||||||||
| Elizabeth W. Seaton | 69,250 | 69,974 | — | — | — | — | 139,224 | |||||||||||||||||||||
| Janine Terrano | 65,000 | 107,704 | 172,704 | |||||||||||||||||||||||||
William T.Weyerhaeuser | 85,750 | 69,974 | — | — | — | — | 155,724 | |||||||||||||||||||||
| (1) | Amount shown for Mr. Dietzler represents (i) a retainer in the amount of $35,000; (ii) $15,000 received as chairman of the Audit Committee; and (iii) aggregate per meeting board and committee attendance fees of $11,000 and $17,000, respectively. |
| (2) | For each director other than Ms. Terrano, represents a restricted stock award of 1,691 shares granted on June 27, 2018 at the grant date fair value. For Ms. Terrano, includes a restricted stock award of 834 shares granted on January 24, 2018 when she joined the Board, which represents a prorated portion of the 2017 – 2018 Board restricted stock award. The fair value of these awards was determined in accordance with the Compensation—Stock Compensation topic of the FASB ASC 718. Assumptions used to calculate these amounts are set forth in the notes to the Company’s audited financial statements for the fiscal year ended 2018, included in the Company’s 2018 Annual Report. |
| (3) | Represents above-market earnings on Mr. Forrest’s, Ms. Lantow’s and Ms. Numata’s deferred compensation accounts, the material terms of which are described below under “Deferred Compensation Plan.” |
Craig D. Eerkes
Columbia has substantially met our long-held goal of being the leading Pacific Northwest regional community bank, with 143 branches in Washington, Oregon and Idaho.
2016 Financial Results
Consolidated net income for 2016 was a record $104.9 million, representing a 6% increase compared to the prior year. The increase in net income was a result of record loan production and outstanding deposit growth, along with improved operating leverage achieved through diligent expense management.
| ● | Consolidated net income for 2018 was a record $172.9 million, representing a 53% increase compared to the prior year. The increase in net income was a result of higher net interest income primarily due to income from interest-earning assets acquired in the Pacific Continental acquisition, which closed on November 1, 2017. Higher rates on earning assets and a decrease in income tax expense in 2018 also contributed to the increase in net income compared to 2017. | ● | |
| ● | Record loan originations for 2018 of $1.43 billion, with loan growth of $32.9 million. | ● | Credit quality remained solid, with total nonperforming assets to period-end assets declining to 0.46% compared to 0.63% at December 31, 2017. |
| ● | Our ongoing commitment to our customers and the communities we serve resulted in a low cost deposit base and a core deposit ratio of 95%. Our 12 basis points average cost of total deposits is an important factor in the stability of our net interest margin. | ||
| 2018 Shareholder Return | |||
| ● | Shareholder value. Our shareholders realized a 14% decline in total return on their investment during 2018. The KBW Regional Banking and NASDAQ Composite Indexes had declines in total returns of 18% and 3% respectively, during 2018. Our three-year total shareholder return is 23%, compared to returns of 17% and 37% for the KBW Regional Banking and NASDAQ Composite Indexes, respectively. | ||
| ● | Increases in regular dividends. We raised our regular cash dividend from $0.88 to $1.00 per share during 2018, and paid a special dividend of $0.14 during the year. Our dividend payout ratio was 48% for 2018 compared to 47% for 2017. Our 2018 dividend yield was 3%, based on our closing price at December 31, 2018. | ||
Loan growth for 2016 was 7%, or $398 million, due to record loan originations for the year of $1.26 billion.
Credit quality remained solid, with total nonperforming assets to period-end assets declining to 0.35% compared to 0.39% at December 31, 2015.
Our ongoing commitment to our customers and the communities we serve resulted in a low cost deposit base and a core deposit ratio of 96%. Our four basis points average cost of core deposits is an important factor in the stability of our net interest margin. Core deposit growth for 2016 was $510.9 million, or 7%.
2016 Shareholder Return
Continued increase in shareholder value. Our shareholders realized a 45% total return on their investment during 2016, substantially outperforming relevant indexes. The KBW Regional Banking and NASDAQ Composite Indexes had total returns of 39% and 9% respectively, during 2016. Our three-year total shareholder return is 85%.
Significant increases in dividends. We raised our regular cash dividend from $0.70 to $0.77 per share during 2016, and we paid out $0.76 per share in special dividends, compared to $0.64 in 2015. Together, our regular and special dividends increased 14% from the prior year. Our regular dividend payout ratio was 43% for 2016. Including the special dividends, our payout ratio was 85% for 2016, resulting in a dividend yield of 3%, based on our closing price at December 31, 2016.
(1) |
|
2016 Milestones
Market Share. As of June 30, 2016, Columbia Bank ranked eighth in deposit market share in the Northwest. The bank ranked eighth in deposit market share out of 87 institutions in Washington, seventh out of 51 in Oregon and twelfth out of 32 in Idaho.21
| ● | Market Share. As of June 30, 2018, Columbia Bank ranked seventh in deposit market share in the Northwest. The bank ranked eighth in deposit market share out of 79 institutions in Washington, seventh out of 46 in Oregon and 14th out of 32 in Idaho. | ● | Income, Loan Production and Deposits. Columbia achieved record loan production of $1.43 billion for the year and record net income of $172.9 million. Deposits, including core deposits, continued to exceed $10 billion at December 31, 2018. |
| ● | Industry Accolades. For the 8th consecutive year, Columbia Bank was |
Melanie Dressel was named in 2016 for the seventh time byAmerican Banker Magazineas one of The 25 Most Powerful Women in Banking.
Record Income, Loan Production and Deposits.Columbia achieved record loan production of $1.26 billion for the year and record net income of $104.9 million. Deposits, including core deposits, increased to over $8 billion for the first time in company history.
Outstanding Corporate Citizen. Columbia fosters a culture of giving back to the communities where we live and conduct business. We support numerous nonprofit organizations both monetarily and through the volunteer efforts of our employees. In Through generous donations from customers, employees and the community, Columbia’s fourth annual “Warm Hearts Winter Drive” raised $257,033 and 6,542 warm winter items to benefit homeless shelters across the Northwest. In addition, our board of directors was recognized for its corporate stewardship including the Board Governance Award by Seattle Business Magazine and a Lifetime Achievement Award from the Puget Sound Business Journal for past board chairman, William Weyerhaeuser. | |||
| ● | Workplace Accolades. Our continued commitment to employees contributed to Columbia Bank | ||
| ● | 25th Anniversary. In 2018, Columbia Bank celebrated its 25th anniversary. To celebrate this milestone, Columbia Bank launched its anniversary community giving campaign which celebrates the positive impact that Columbia Bank has had on growth opportunities for families, businesses, and nonprofit organizations throughout the Northwest. Four $25,000 grants were awarded to nonprofit organizations in the |
Columbia’s second annual “Warm Hearts Winter Drive” raised $209,336 and 8,140 warm winter items to benefit homeless shelters across the Northwest. Through generous donations from customers, employees and the community, Columbia Bank surpassed its 2016 fundraising goal of $160,000 for Warm Hearts by 30.8%, and exceeded the funds raised in 2015 by 32.8%
2016 Compensation Highlights
Increased Emphasis on Long-Term Incentives. The most meaningful adjustment to the compensation structure for Named Executives in 2016 was the increased role of long-term incentives in target direct compensation. Target long-term incentives were increased by 10% of base salary for all Named Executives, from 50% to 60% of base salary for Ms. Dressel, and from 40% to 50% of base salary for the other Named Executives. Target annual incentive opportunities as a percentage of base salary were unchanged for Named Executives in 2016.
Continued Use of Performance-Based Equity Awards. To further strengthen the alignment between long term incentive compensation and the Company’s achievement of its long term performance objectives and shareholders’ interests, the Committee continued its practice of granting a substantial portion of long-term incentives in the form of performance-based equity awards for executives. 75% of Ms. Dressel’s target equity-based opportunity was contingent on the achievement of objective performance criteria and 50% is performance-based for the other Named Executives.
Above-Target Incentive Payouts. Solid annual and long-term performance resulted in above-target annual cash incentive payouts and above-target vesting of performance shares. Earned annual incentives for Named Executives for 2016 performance was paid at 104% of target, and performance shares for the 2014-2016 performance period vested at 129.8% of target.
Modest Base Salary Adjustments. The Board approved modest merit-based adjustments to base salaries ranging from 3% to 6% for our Named Executives effective March 2016, choosing to focus increased total compensation opportunities in the area of long-term incentives, as discussed above.
The table below shows the 20162018 total target direct compensation opportunities for our Named Executives. The Committee focuses on target direct compensation as shown below in making annual compensation decisions.
| 2016 Target Direct Compensation* | ||||||||||||||||
Named Executive | Annual Base Salary | Target Annual Incentive | Target Long-Term Incentive | Total | ||||||||||||
Melanie J. Dressel, | ||||||||||||||||
President and Chief Executive Officer | $ | 765,000 | $ | 382,500 | $ | 459,000 | $ | 1,606,500 | ||||||||
Clint E. Stein, | ||||||||||||||||
Executive Vice President, Chief Financial Officer | $ | 365,000 | $ | 146,000 | $ | 182,500 | $ | 693,500 | ||||||||
David C. Lawson, | ||||||||||||||||
Executive Vice President, Chief Human Resources Officer | $ | 265,000 | $ | 106,000 | $ | 132,500 | $ | 503,500 | ||||||||
Andrew L. McDonald, | ||||||||||||||||
Executive Vice President, Chief Credit Officer | $ | 310,000 | $ | 124,000 | $ | 155,000 | $ | 589,000 | ||||||||
Hadley S. Robbins, | ||||||||||||||||
Executive Vice President, Chief Operating Officer** | $ | 390,000 | $ | 156,000 | $ | 195,000 | $ | 741,000 | ||||||||
| 2018 Target Direct Compensation* | ||||||||||||||||
| Current Named Executive | Annual Base Salary | Target Annual Incentive | Target Long-Term Incentive | Total | ||||||||||||
| Hadley S. Robbins, President and Chief Executive Officer | $ | 730,000 | $ | 438,000 | $ | 675,000 | $ | 1,825,000 | ||||||||
| Gregory A. Sigrist** Executive Vice President, Chief Financial Officer | 375,000 | 150,000 | 206,250 | 731,250 | ||||||||||||
| Clint E. Stein, Executive Vice President, Chief Operating Officer*** | 427,000 | 213,500 | 277,550 | 918,050 | ||||||||||||
| Andrew L. McDonald, Executive Vice President, Chief Credit Officer | 336,000 | 134,000 | 184,800 | 655,200 | ||||||||||||
| David C. Lawson, Executive Vice President, Chief Human Resources Officer | 290,000 | 116,000 | 159,500 | 565,500 | ||||||||||||
| Kumi Y. Baruffi, Executive Vice President, General Counsel | 290,000 | 116,000 | 159,500 | 565,500 | ||||||||||||
* | The amounts reported differ from the amounts determined under SEC rules as reported for |
** The amounts reflected in the table above are Mr. Sigrist’s annual compensation levels. Mr. Sigrist’s base salary and target annual incentive for 2018 were prorated to reflect the portion of 2018 in which he was employed following his start date on |
| June 4, 2018. Additionally, the one-time sign on cash bonus paid to Mr. ***Mr. Stein also served as Chief Financial Officer during 2018 prior to |
Compensation PhilosophyIn keeping with our long-term goal to consistently increase earnings per share and shareholder value, the Committee is guided by the following key principles in determining the compensation of our Named Executives:•●Accountability for Business Performance. The executives’ compensation in salary, as well as annual incentive and long-term incentive compensation opportunities, should be tied in part to overall Company financial performance.•●Accountability for Individual Performance. To encourage and reflect individual contributions to the Company’s performance, compensation should be tied in part to the individual’s performance.•●Alignment with Shareholder Interests. Compensation should be tied in part to the Company’s stock performance through the granting of stock awards with multi-year vesting and performance-based vesting, which serves to align executives’ interests with those of our shareholders.•●Competition. Compensation should reflect the competitive marketplace, so that we can attract, retain, and motivate key executives of superior ability who are critical to our future success.•●Reasonable Levels of Compensation. Total compensation opportunities and payouts should be reasonable and not excessive. We do not rigidly target or formulaically set compensation at a specific percentile compared to our peers. However, we do target overall compensation for executive officers in amounts that are roughly in line with the median of our peers.23•●Independent Oversight. The Committee, composed solely of independent directors, is responsible for reviewing and establishing the compensation for the Named Executives. The Committee periodically receives advice from an independent compensation consultant who has been retained by and reports directly to the Committee and performs no other work for management without the authorization of the Committee. In addition, the Committee may choose to review compensation analyses prepared by consultants retained by management.•●Risk Management. Compensation policies and practices should align with sound risk management and be structured not to create incentives that subject the Company to excessive risk. Such policies and practices should strike a healthy balance between contributing to the Company’s growth and promoting a conservative exposure to risk.For 2015, includes the grant date fair value of Restricted Stock awards granted on March 25, 2015 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date and the remaining 50% of which vest on March 25, 2019February 24, 2020 and the grant date fair value of Performance Shares granted on
March 25, 201523, 2016 for the period commencing January 1, 20152016 and ending December 31, 20172018 (the 2015-20172016-2018 performance period). At stretch performance, the Performance Shares grant date fair value would be $428,289$135,571 for Ms. Dressel, $108,797Mr. Robbins, $126,891 for Mr. Stein, $77,700$92,171 for Mr. Lawson, $93,263and $107,878 for Mr. McDonald, and $116,550 for Mr. Robbins.
For 2014, includes the grant date fair value of Restricted Stock awards, 20% of which vested on the first anniversary date of the grant and will vest 30% on the third anniversary date on February 26, 2016, and the remaining 50% vest on the fourth anniversary date on February 24, 2017.McDonald.
| (4) | The grant date fair value of stock awards was determined in accordance with FASB ASC 718. Assumptions used to calculate these amounts are set forth in footnote 4 to “ |
| (5) | The amounts in this column reflect the annual incentive awards earned under the 2014 Stock Option & Equity Compensation Plan for |
| (6) | The amounts in this column do not represent amounts actually paid to a Named Executive. Includes the change in actuarial present value of the accumulated projected benefit under the SERP, which is a non-cash amount that can vary significantly from year-to-year based upon assumptions underlying the actuarial calculations. Assumptions such as discount rate and retirement age are reviewed annually by the Company and are intended to be individually appropriate. The SERP is discussed in further detail under “Post Employment and Termination Benefits—Supplemental Executive Retirement Plan.” |
For 2016,2018, amounts shown include: for Ms. Dressel, $600,531Mr. Robbins $229,538 of change in the actuarial present value of projected benefit under the Supplemental Executive Retirement Plan (the “SERP”), which he is not currently entitled to receive because such amounts are not fully vested, and $7,697$22,829 of above-market earnings on his DCA; for Mr. Sigrist includes $77,081 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested; for Mr. Stein includes $30,100 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $7,124 of above-market earnings on his DCA; for Mr. Lawson includes $127,188 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $2,880 of above-market earnings on his DCA; for Mr. McDonald includes $85,456 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $2,989 of above-market earnings on his DCA; for Ms. Baruffi includes $119,676 of change in the actuarial present value of projected benefit under the SERP, which she is not currently entitled to receive because such amounts are not fully vested, and $1,657 of above-market earnings on her DCA.;
For 2017, amounts shown include: for Mr. Robbins $1,546,008 of change in the actuarial present value of projected benefit under the SERP and which he is not currently entitled to receive because such amounts are not fully vested, and $15,477 of above-market earnings on his DCA; for Mr. Stein, $276,704 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $2,027 of above-market earnings on his DCA; for Mr. Lawson, $196,366 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $1,593 of above-market earnings on his DCA; for Mr. McDonald, $282,604 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $2,027 of above-market earnings on his DCA; and for Ms. Baruffi, $140,390 of change in the actuarial present value of projected benefit under the SERP, which she is not currently entitled to receive because such amounts are not fully vested, and $1,040 of above-market earnings on her DCA.
For 2016, amounts shown include: for Mr. Stein, $144,953 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $3,459 of above-market earnings on his DCA; for Mr. Lawson, $129,771 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $1,207 of above-market earnings on his DCA; for Mr. McDonald, $204,854 of change in the actuarial present value of projected benefit under the SERP, which he is not currently entitled to receive because such amounts are not fully vested, and $1,971 of above-market earnings on his DCA; and for Mr. Robbins, $151,430 of change in the actuarial present value of projected benefit under the SERP and $14,717 of above-market earnings on his DCA.
For 2015, amounts reflect the impact of amendments to the SERP formula. The SERP is designed to provide lifetime retirement benefits equal to 60% of the average of the three highest years of base salary (which we refer to as the “SERP formula”), with an annual two percent cost of living adjustment to benefit payments. Prior to 2015, the SERP benefits were calculated based on a fixed dollar amount. In 2015, in order to better account for fluctuations in the participant’s base salary over time, the Company amended the SERP to provide that the SERP benefit available to each participant would instead equal the SERP formula described above. This change contributed to an increase in the actuarial present value of projected benefit under the SERP, which is reflected in this column, but does not represent any cash compensation paid to the Named Executives in 2015.
| (7) | Amount shown for |
Amount shown for Mr. Sigrist includes $5,409 in 401(k) plan matching contributions, $9,014 in 401(k) discretionary contributions, $1,478 in split dollar life insurance premiums, $842 in split dollar bonus earnings, and $99 in group term life insurance premiums, and $1,168 in accrued dividends on unvested Performance Shares.
Amount shown for Mr. Stein includes $7,950$8,250 in 401(k) plan matching contributions, $13,250$13,750 in 401(k) discretionary contributions, $2,567$2,970 in split dollar life insurance premiums, $1,712$1,980 in split dollar bonus earnings,
$174 $195 in group term life insurance premiums, $4,143$4,036 in accrued dividends on unvested Performance Shares, 2,8453,686 in non-qualified deferred compensation matching contributions, and $8,355$10,837 in Company contributions to a supplemental retirement benefit plan (“UNIT plan”). Unit PlansUNIT plans are described in further detail under “Post“Post Employment and Termination Benefits—Unit Plans.Plans.”
Amount shown for Mr. Lawson includes $7,950$8,250 in 401(k) plan matching contributions, $13,250$13,750 in 401(k) discretionary contributions, $2,868$3,290 in split dollar life insurance premiums, $1,575$2,193 in split dollar bonus earnings, $154$132 in group term life insurance premiums, $3,550$2,581 in accrued dividends on unvested Performance Shares, and $1,777$1,808 in non-qualified deferred compensation matching contributions.
Amount shown for Mr. McDonald includes $7,950$8,250 in 401(k) plan matching contributions, $13,250$13,750 in 401(k) discretionary contributions, $3,958$4,602 in split dollar life insurance premiums, $2,465$3,068 in split dollar bonus earnings, $148$155 in group term life insurance premiums, $3,847$3,011 in accrued dividends on unvested Performance Shares, and $16,584$22,944 in Company contributions to a UNIT plan.
Amount shown for Mr. RobbinsMs. Baruffi includes $7,950$8,250 in 401(k) plan matching contributions, $13,250$13,750 in 401(k) discretionary contributions, $5,504$2,108 in split dollar life insurance premiums, $3,262$1,405 in split dollar bonus earnings, $186$121 in group term life insurance premiums, $4,291$2,484 in accrued dividends on unvested Performance Shares, and $7,329$832 in non-qualified deferred compensation matching contributions.
| (8) | Mr. |
Stock Option and Equity Compensation Plan. The 20142018 Plan provides for the grant of restricted stock, incentive stock options, nonqualified stock options, restricted stock units and stock appreciation rights. All eligible employees and directors may participate in the 20142018 Plan. As of December 31, 2016, 1,145,8422018, 3,015,957 shares remainremained available for future grant under the 20142018 Plan. The 20142018 Plan replaced the Amended and Restated Stock Option and Equity Compensation Plan (the “Former Equity Plan”);2014 Plan; however, any awards remaining outstanding under the Former Equity2014 Plan continue to be governed by the terms of that plan.
2016 Grants of Plan-Based Awards
| 2018 Grants of Plan-Based Awards | ||||||||||||||||||||||||||||||||||
Name | Grant Date | Estimated Future Payments Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payments Under | All Other | Grant | |||||||||||||||||||||||||||||
Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||||
| Hadley S. Robbins | 3/28/2018 | $ | 219,000 | $ | 438,000 | $ | 657,000 | |||||||||||||||||||||||||||
| 2/28/2018 | 3,936 | $ | 164,446 | |||||||||||||||||||||||||||||||
| 3/28/2018 | 5,895 | 11,790 | 17,690 | $ | 701,851 | |||||||||||||||||||||||||||||
| Gregory A. Sigrist | 6/4/2018 | $ | 43,750 | $ | 87,500 | $ | 131,250 | 2,370 | $ | 103,355 | ||||||||||||||||||||||||
| 6/28/2018 | 1,180 | 2,360 | 3,540 | $ | 126,520 | |||||||||||||||||||||||||||||
| Clint E. Stein | 3/28/2018 | $ | 106,750 | $ | 213,500 | $ | 320,250 | |||||||||||||||||||||||||||
| 2/28/2018 | 3,324 | $ | 138,877 | |||||||||||||||||||||||||||||||
| 3/28/2018 | 1,660 | 3,320 | 4,980 | $ | 197,582 | |||||||||||||||||||||||||||||
| David C. Lawson | 3/28/2018 | $ | 58,000 | $ | 116,000 | $ | 174,000 | |||||||||||||||||||||||||||
| 2/28/2018 | 1,918 | $ | 80,134 | |||||||||||||||||||||||||||||||
| 3/28/2018 | 950 | 1,900 | 2,850 | $ | 113,074 | |||||||||||||||||||||||||||||
| Andrew L. McDonald | 3/28/2018 | $ | 67,200 | $ | 134,400 | $ | 201,600 | |||||||||||||||||||||||||||
| 2/28/2018 | 2,214 | $ | 92,501 | |||||||||||||||||||||||||||||||
| 3/28/2018 | 1,105 | 2,210 | 3,320 | $ | 131,721 | |||||||||||||||||||||||||||||
| Kumi Y. Baruffi | 3/28/2018 | $ | 58,000 | $ | 116,000 | $ | 174,000 | |||||||||||||||||||||||||||
| 2/28/2018 | 1,918 | $ | 80,134 | |||||||||||||||||||||||||||||||
| 3/28/2018 | 950 | 1,900 | 2,850 | $ | 113,074 | |||||||||||||||||||||||||||||
Name | Grant Date | Estimated Future Payments Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payments Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock | Grant Date Fair and option | |||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($ ) | Threshold (#) | Target (#) | Maximum (#) | or Units (#)(3) | Awards ($)(3)(4) | |||||||||||||||||||||||||||||
Melanie J. Dressel | 2/24/2016 | — | — | — | 4,033 | $ | 114,739 | |||||||||||||||||||||||||||||
| 3/23/2016 | 5,790 | 11,580 | 17,370 | — | 440,677 | |||||||||||||||||||||||||||||||
| 3/23/2016 | $ | 191,250 | $ | 382,500 | $ | 573,750 | ||||||||||||||||||||||||||||||
Clint E. Stein | 2/24/2016 | — | — | — | 3,207 | 91,239 | ||||||||||||||||||||||||||||||
| 3/23/2016 | 1,535 | 3,070 | 4,605 | — | 116,829 | |||||||||||||||||||||||||||||||
| 3/23/2016 | $ | 73,000 | $ | 146,000 | $ | 219,000 | ||||||||||||||||||||||||||||||
David C. Lawson | 2/24/2016 | — | — | — | 2,329 | 66,260 | ||||||||||||||||||||||||||||||
| 3/23/2016 | 1,115 | 2,230 | 3,345 | — | 84,863 | |||||||||||||||||||||||||||||||
| 3/23/2016 | $ | 53,000 | $ | 106,000 | $ | 159,000 | ||||||||||||||||||||||||||||||
Andrew L. McDonald | 2/24/2016 | — | — | — | 2,724 | 77,498 | ||||||||||||||||||||||||||||||
| 3/23/2016 | 1,305 | 2,610 | 3,915 | — | 99,324 | |||||||||||||||||||||||||||||||
| 3/23/2016 | $ | 62,000 | $ | 124,000 | $ | 186,000 | ||||||||||||||||||||||||||||||
Hadley S. Robbins | 2/24/2016 | — | — | — | 3,427 | 97,498 | ||||||||||||||||||||||||||||||
| 3/23/2016 | 1,640 | 3,280 | 4,920 | — | 124,820 | |||||||||||||||||||||||||||||||
| 3/23/2016 | $ | 78,000 | $ | 156,000 | $ | 234,000 | ||||||||||||||||||||||||||||||
| (1) | Represents the possible range of possible cash payouts under the |
| (2) | Represents the possible range of Performance Shares granted on March |
| (3) | Represents the number of shares of Restricted Stock granted on February |
| (4) | Amounts shown represent the grant date fair value of Restricted Stock and Performance Shares granted on February |
Outstanding Equity Awards at Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable (1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (2) | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (4) | Equity Incentive Plan Awards: Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3)(4) | |||||||||||||||||||||||||||
Melanie J. Dressel | — | — | — | — | — | 12,624 | 564,040 | 31,955 | 1,427,749 | |||||||||||||||||||||||||||
Clint E. Stein | — | — | — | — | — | 8,777 | 392,156 | 8,310 | 371,291 | |||||||||||||||||||||||||||
David C. Lawson | — | — | — | — | — | 6,943 | 310,213 | 5,991 | 267,678 | |||||||||||||||||||||||||||
McDonald | — | — | — | — | — | 7,941 | 354,804 | 7,091 | 316,826 | |||||||||||||||||||||||||||
Hadley S. Robbins | 1,958 | — | — | 136.93 | 3/27/2017 | 9,173 | 409,850 | 8,889 | 397,161 | |||||||||||||||||||||||||||
| 1,165 | 54.70 | 4/20/2018 | ||||||||||||||||||||||||||||||||||
| Outstanding Equity Awards at Fiscal Year-End 2018 | ||||||||||||||||||||||||||||||||||||
| Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Un-exercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market of Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)(3) | ||||||||||||||||||||||||||||
| Hadley S. Robbins | — | — | — | — | — | 22,302 | 809,340 | 28,940 | 1,050,233 | |||||||||||||||||||||||||||
| Gregory A. Sigrist | — | — | — | — | — | 2,370 | 86,007 | 3,540 | 128,467 | |||||||||||||||||||||||||||
| Clint E. Stein | — | — | — | — | — | 19,660 | 713,461 | 8,775 | 318,445 | |||||||||||||||||||||||||||
| David C. Lawson | — | — | — | — | — | 6,503 | 235,994 | 5,610 | 203,587 | |||||||||||||||||||||||||||
| Andrew L. McDonald | — | — | — | — | — | 7,607 | 276,058 | 6,545 | 237,518 | |||||||||||||||||||||||||||
| Kumi Y. Baruffi | — | — | — | — | — | 6,158 | 223,474 | 5,400 | 195,966 | |||||||||||||||||||||||||||
| (1) |
For Mr. Stein,Sigrist, represents 1,500 shares of restricted stock granted in 2013 that vest on February 27, 2017; 1,6002,370 shares of restricted stock granted on February 26, 2014 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 2,470 shares of Restricted Stock granted on March 25, 2015 and 3,207 shares of restricted stock granted on March 23, 2016June 4, 2018 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary and the remaining 50% on the fourth anniversary of the grant date, respectively.
For Mr. Lawson,Stein, represents 1,250 shares of restricted stock granted in 2013 that vest on September 29, 2017; 1,6001,235 shares of restricted stock granted on February 26, 2014March 25, 2015 that vest 30%on March 25, 2019; 2,565 shares of Restricted Stock granted on February 24, 2016 that vest 37.5% on the third anniversary of the grant date and the remaining 62.5% on the fourth anniversary of the grant date; 2,536 shares of Restricted Stock granted on February 22, 2017 that vest 20% on the second anniversary of the date of grant, 30% on the third anniversary, and 50% on the fourth anniversary of the grant date; 1,764 shares of Restricted Stock granted on March 25, 2015 and 2,329date, respectively; 10,000 shares of restricted stock granted on March 23, 2016April 26, 2017 that vest on April 26, 2019; and 3,324 shares of restricted stock granted on February 28, 2018 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary and the remaining 50% on the fourth anniversary of the grant date, respectively.
For Mr. McDonald,Lawson, represents 1,500 shares of restricted stock granted in 2013 that vest on February 27, 2017; 1,600882 shares of restricted stock granted on February 26, 2014March 25, 2015 that vest 30%on March 25, 2019; 1,863 shares of Restricted Stock granted on February 24, 2016 that vest 37.5% on the third anniversary of the grant date and the remaining 62.5% on the fourth anniversary of the grant date; 1,840 shares of Restricted Stock granted on February 22, 2017 that vest 20% on the second anniversary of the date of grant, 30% on the third anniversary, and 50% on the fourth anniversary of the grant date; 2,117 shares of Restricted Stock granted on March 25, 2015date, respectively; and 2,7241,918 shares of restricted stock granted on March 23, 2016February 28, 2018 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary and the remaining 50% on the fourth anniversary of the grant date, respectively.
For Mr. Robbins,McDonald, represents 1,5001,058 shares of restricted stock granted in 2013on March 25, 2015 that vest on April 1, 2017; 1,600March 25, 2019; 2,179 shares of Restricted Stock granted on February 24, 2016 that vest 37.5% on the third anniversary of the grant date and the remaining 62.5% on the fourth anniversary of the grant date; 2,156 shares of Restricted Stock granted on February 22, 2017 that vest 20% on the second anniversary of the date of grant, 30% on the third anniversary, and 50% on the fourth anniversary of the grant date, respectively; and 2,214 shares of restricted stock granted on February 26, 201428, 2018 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary of the grant date
and the remaining 50% on the fourth anniversary of the grant date; 2,646 shares of Restricted Stock granted on March 25, 2015 and 3,427date, respectively.
For Ms. Baruffi, represents 818 shares of restricted stock granted on March 23,25, 2015 that vest on March 25, 2019; 1,722 shares of Restricted Stock granted on February 24, 2016 that vest 37.5% on the third anniversary of the grant date and the remaining 62.5% on the fourth anniversary of the grant date; 1,700 shares of Restricted Stock granted on February 22, 2017 that vest 20% on the second anniversary of the date of grant, 30% on the third anniversary, and 50% on the fourth anniversary of the grant date, respectively; and 1,918 shares of restricted stock granted on February 28, 2018 that vest 20% on the second anniversary of the grant date, 30% on the third anniversary and the remaining 50% on the fourth anniversary of the grant date, respectively.
| (2) | Amounts shown are calculated using the closing price of Columbia’s common stock on NASDAQ on December 31, |
| Actual amounts vested and earned, if any, depend on actual performance against the performance measures for the |
| Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||
Melanie J. Dressel | — | — | 14,188 | 534,020 | ||||||||||||
Clint E. Stein | — | — | 5,146 | 190,373 | ||||||||||||
David C. Lawson | — | — | 3,746 | 152,401 | ||||||||||||
Andrew L. McDonald | — | — | 5,396 | 197,533 | ||||||||||||
Hadley S. Robbins | 1,608 | 31,186 | 3,896 | 155,032 | ||||||||||||
| 2018 Option Exercises and Stock Vested | ||||||||||||||||
Name | Option Awards | Stock Awards | ||||||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of | Value | |||||||||||||
| Hadley S. Robbins | — | — | 6,662 | 256,437 | ||||||||||||
| Gregory A. Sigrist | — | — | — | — | ||||||||||||
| Clint E. Stein | — | — | 6,298 | 242,690 | ||||||||||||
| David C. Lawson | — | — | 4,839 | 187,573 | ||||||||||||
| Andrew L. McDonald | — | — | 5,509 | 212,914 | ||||||||||||
Kumi Y. Baruffi | — | — | 4,799 | 184,818 | ||||||||||||
| (1) | For |
For Mr. Stein, represents the fair market value of 1,000 shares of restricted stock granted in 2014 that vested on February 26, 2018, 741 shares of restricted stock granted in 2015 that vested on March 23, 2018, 642 shares of restricted stock granted in 2016 that vested on February 23, 2018, and 3,915 performance shares granted in 2016 that vested on December 31, 2018.
For Mr. Lawson, represents the fair market value of 1,000 shares of restricted stock granted in 2014 that vested on February 26, 2018, 529 shares of restricted stock granted in 2015 that vested on March 23, 2018, 466 shares of restricted stock granted in 2016 that vested on February 23, 2018, and 2,844 performance shares granted in 2016 that vested on December 31, 2018.
For Mr. McDonald, represents the fair market value of 1,000 shares of restricted stock granted in 2014 that vested on February 26, 2018, 635 shares of restricted stock granted in 2015 that vested on March 23, 2018, 545 shares of restricted stock granted in 2016 that vested on February 23, 2018, and 3,329 performance shares granted in 2016 that vested on December 31, 2018.
For Ms. Baruffi, represents the fair market value of 1,250 shares of restricted stock granted in 20122014 that vested on February 22, 2016, 900November 30, 2018, 491 shares of restricted stock granted in 20132015 that vested on February 26, 2016, 400March 23, 2018, 431 shares of restricted stock granted in 20142016 that vested on February 26, 201623, 2018, and 2,5962,627 performance shares granted in 20142016 that vested on December 31, 2016.2018.
For Mr. Lawson, represents the fair market value of 750 shares of restricted stock granted in 2013 that vested on September 30, 2016, 400 shares of restricted stock granted in 2014 that vested on February 26, 2016, and 2,596 performance shares granted in 2014 that vested on December 31, 2016.
For Mr. McDonald, represents the fair market value of 1,500 shares of restricted stock granted in 2012 that vested on February 22, 2016, 900 shares of restricted stock granted in 2013 that vested on February 26, 2016, 400 shares of restricted stock granted in 2014 that vested on February 26, 2016, and 2,596 performance shares granted in 2014 that vested on December 31, 2016.
For Mr. Robbins, represents the fair market value of 900 shares of restricted stock granted in 2013 that vested on April 1, 2016, 400 shares of restricted stock granted in 2014 that vested on February 26, 2016, and 2,596 performance shares granted in 2014 that vested on December 31, 2016.
PPost-Employmentost-Employment and Termination Benefits
The following is a discussion regarding the post-employment and termination arrangements currently in place for the Named Executives. The amounts are based on the maximum amounts that could be paid under these arrangements.
2018 Nonqualified Deferred Compensation
The following table provides information regarding nonqualified deferred compensation paid to the Named Executives during fiscal year 2016.2018.
Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) (2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) (3) | |||||||||||||||
Melanie J. Dressel | $ | 48,000 | $ | 3,840 | $ | 19,949 | $ | — | $ | 504,323 | ||||||||||
Clint E. Stein | 35,568 | 2,845 | 8,933 | — | 227,045 | |||||||||||||||
David C. Lawson | 22,216 | 1,777 | 3,096 | — | 83,432 | |||||||||||||||
Andrew L. McDonald | — | — | 5,135 | — | 123,113 | |||||||||||||||
Hadley S. Robbins | 91,618 | 7,329 | 38,132 | — | 940,216 | |||||||||||||||
Name | Executive (1) | Registrant | Aggregate (2) | Aggregate | Aggregate (3) | |||||||||||||||
| Hadley S. Robbins | $ | — | $ | — | $ | 58,453 | $ | — | $ | 1,044,572 | ||||||||||
| Gregory A. Sigrist | — | — | — | — | — | |||||||||||||||
| Clint E. Stein | 46,081 | 3,686 | 18,247 | — | 342,462 | |||||||||||||||
| David C. Lawson | 22,605 | 1,808 | 7,377 | — | 140,275 | |||||||||||||||
| Andrew L. McDonald | — | — | 7,654 | — | 136,778 | |||||||||||||||
Kumi Y. Baruffi | 10,400 | 832 | 4,245 | — | 81,741 | |||||||||||||||
| (1) | Amounts were deferred in |
| (2) | The interest rate is the three-month LIBOR rate plus 3.58%. The |
On the last date of each month, the each participant’s DCA is credited with an amount equal to the product of (i) one-twelfth (1/12th) of the Interest Crediting Rate for the quarter in which such month occurs, times (ii) the average balance of the DCA in the DCA for that month. The credited amount is treated as part of the credit balance for all purposes of the Deferred Compensation Plan. As used herein, the average balance in a DCA for a month is equal to the quotient determined by dividing (i) the sum of the credit balance in the DCA at the close of business each day in the calendar month, by (ii) the number of days in such month.
| (3) | For |
Deferred Compensation Plan. In February 2004, the Board adopted the 2005 Deferred Compensation Plan for certain directors, a select group of senior management and key employees, as designated by resolution of the Board. The Deferred Compensation Plan generally provides for the deferral of certain taxable income earned by participants in the Deferred Compensation Plan. Designated officers or key employees may elect to defer annually under the Deferred Compensation Plan up to 50% of his or her salary to be earned in the calendar year, and up to 100% of any cash bonuses or other incentive compensation. In October 2016, the Board and the Committee approved an Amended and Restated 2005 Deferred Compensation Plan, which froze that plan to new participants effective as of October 26, 2016, and a 2016 Deferred Compensation Plan. Except as noted below, the 2016 Deferred Compensation Plan is substantially the same as the 2005 Deferred Compensation Plan.
Distribution Election Notice.At the time a participant first makes an election to defer covered compensation, he or she must deliver to the Company a signed “distribution election notice” in which he or she elects to receive distributions of the credit balance in his or her DCA in the form of either a single lump-sum payment or monthly installment payments over a period not to exceed 120 months. A participant may change such election from time to time; but if a distribution election notice is delivered to the Company less than 12 calendar months before the month in which distributions begin, such notice will not be effective and the Company will instead treat the distribution election notice that was last delivered to the Company before such 12 calendar month period as the effective notice.
Distributions Upon Retirement or Disability. The Company will distribute the credit balance in a DCA maintained for a participant at the time he or she retires or becomes disabled as either a single lump sum or monthly installment payments, as elected by the participant. If the participant has elected a single lump-sum distribution, such distribution will be made within 90 days after the date that a participant retires or becomes disabled. If the participant has elected monthly installment payments, such distribution will be made on the first day of each month, beginning with the first day of the third month following the month in which a participant retires or becomes disabled and continuing until the full amount of the DCA maintained for the participant has been distributed. Until the DCA has been distributed in full, interest will continue to be credited to the DCA. The monthly installment payments will be in as nearly equal amounts as possible. Notwithstanding any contrary provisions of the Plan, if the participant dies after monthly installment payments of the credit balance in the DCA maintained for him or her have begun, then the remaining credit balance in the DCA will be distributed to his or her designated beneficiary in a single lump sum within 30 days after the Company receives notice that the participant has died.
Lump-Sum Distributions Upon Termination of Employment Other Than Because of Death, Disability, or Retirement or if DCA is Less Than $25,000. The 2005 Deferred Compensation Plan provides that, notwithstanding a participant’s election to receive a distribution of the credit balance in the DCA maintained for him or her in the form of monthly installment payments, such credit balance will be distributed to the participant in a single lump sum within 90 days after the date on which he or she terminates his or her services or employment with the Company, if (i) such termination of services or employment is for any reason other than because he or she retires or becomes disabled, or (ii) if the credit balance of the DCA maintained for him or her does not exceed $25,000. Unlike the 2005 Deferred Compensation Plan, the 2016 Deferred Compensation Plan permits participants to elect installment payments for any termination of employment, rather than only on a termination due to retirement or disability. If a participant’s services or employment with the Company is terminated because of his or her death, the credit balance in the participant’s DCA will be distributed to his or her designated beneficiary.
Pension Benefits
Name | Plan Name (1) | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (2) | Payments During Last Fiscal Year ($) (3) | ||||||||||||
Melanie J. Dressel | SERP | 24 | $ | 7,098,340 | $ | — | ||||||||||
Clint E. Stein | SERP | 11 | 866,413 | — | ||||||||||||
David C. Lawson | SERP | 3 | 337,069 | — | ||||||||||||
Andrew L. McDonald | SERP | 12 | 1,542,611 | — | ||||||||||||
Hadley S. Robbins | SERP | 10 | 966,559 | — | ||||||||||||
2018 Pension Benefits | ||||||||||||||
Name | Plan Name | Number of Years Credited Service | Present Value of Accumulated Benefit | Payments During Last Fiscal Year | ||||||||||
| Hadley S. Robbins | SERP | 12 | 2,742,105 | $ | — | |||||||||
| Gregory A. Sigrist | SERP | 1 | 77,081 | |||||||||||
| Clint E. Stein | SERP | 13 | 1,173,217 | — | ||||||||||
| David C. Lawson | SERP | 5 | 660,623 | — | ||||||||||
| Andrew L. McDonald | SERP | 14 | 1,910,671 | — | ||||||||||
| Kumi Y. Baruffi | SERP | 4 | 448,620 | — | ||||||||||
| (1) | Under the terms of the SERP, executives must, in addition to other conditions, be fully vested. |
| (2) | The estimated maximum annual retirement benefit payable under the SERP for the Named Executives upon |
On September 27, 2017, the Committee approved an amendment to the SERP, which revised the vesting schedule from vesting on an annual basis to vesting on a monthly basis in order to conform vesting with the methodology for determining early retirement benefits under the SERP.
frozen to new contributions. Payments under each Unit Plan were postponed until benefits are drawn from the Named Executive’s SERP (and the SERP benefits will be reduced by the amount that is attributable to the respective Unit Plan).
continue as replaced or assumed.
Ms. Dressel’sthree-years following its effective date.
Effective February 1, 2009, Ms. Dressel voluntarily agreed to an amendment to her employment agreement that provided that if the total payment and benefits to be received by her as a result of a termination of employment in connection with a change-in-control would be in an amount that would cause them to be a “parachute payment” within the meaning of Section 280G of the Code, such payments would be reduced so that the total amount of such payments and benefits is $1 less than the amount constituting a parachute payment. Ms. Dressel’s employment agreement was amended in February 2015 to remove this “cutback” provision. The 2015 amendment to Ms. Dressel’s employment agreement provided that Ms. Dressel and the Company will cooperate and use all reasonable efforts, in compliance with applicable law, to minimize the amount of any excise tax imposed by Section 4999 of the Code.
| 2018 Termination/Change-in-Control Payments – Hadley S. Robbins | |||||||||||||||||||||||||
| Death | Disability | Voluntary Termination For Good Reason (Not Due to CIC) | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC(1) | Retirement | ||||||||||||||||||||
| Employment Agreement(2) | $ | — | $ | — | $ | 1,460,000 | $ | 1,460,000 | $ | 1,460,000 | $ | — | |||||||||||||
| Annual Incentive(3) | — | — | $ | 503,317 | $ | 503,317 | $ | 438,000 | — | ||||||||||||||||
| CIC Termination Payment(4) | — | — | — | — | $ | 1,460,000 | — | ||||||||||||||||||
| Benefits Payable Under SERPs or Split Dollar Life Insurance(5) | $ | 3,410,096 | $ | 4,803,858 | $ | 181,773 | * | $ | 181,773 | * | $ | 230,542 | * | — | |||||||||||
| Bank Owned Life Insurance(6) | $ | 2,190,000 | — | — | — | — | — | ||||||||||||||||||
| Healthcare and Other Benefits(7) | — | — | $ | 20,352 | $ | 20,352 | $ | 25,440 | — | ||||||||||||||||
| FMV of Accelerated Equity Vesting(8) | $ | 1,859,572 | $ | 1,859,572 | $ | 806,703 | $ | 806,703 | $ | 1,859,572 | $ | 288,105 | |||||||||||||
| Total | $ | 7,459,668 | $ | 6,663,430 | $ | 2,972,145 | $ | 2,972,145 | $ | 5,473,554 | $ | 288,105 | |||||||||||||
Employment Agreement(2) Targeted Annual Incentive(3) CIC Termination Payment(4) Benefits Payable Under SERP(5) Bank Owned Life Insurance(6) Group Term Life Insurance(7) Healthcare and Other Benefits(8) 401(k) Employer Contribution(8) FMV of Accelerated Equity Vesting(9) Total Termination/Change-in-Control Payments – Melanie J. Dressel Death Disability Voluntary
Termination
For Good Reason Termination
w/o Cause Termination
Due to CIC (1) Retirement $ — $ — $ 1,530,000 $ 1,530,000 $ 1,530,000 $ — — — 382,500 382,500 — — — — — — 897,856 — 3,116,282 7,118,000 447,000 447,000 447,000 454,362 2,295,000 — — — — — 600,000 — — — — — — — 19,080 19,080 19,080 — — — 7,950 7,950 7,950 — 1,991,790 1,991,790 1,991,790 1,991,790 1,991,790 — $ 8,003,072 $ 9,109,790 $ 4,378,320 $ 4,378,320 $ 4,893,676 $ 454,362
| (1) | In the event |
| (2) | Represents two times |
| (3) | For voluntary termination for good reason and termination without cause, represents the prorated portion of any incentive payment earned during the year of termination payable in a lump |
| (4) | For termination due to change-in-control, represents |
| (5) | Reflects the aggregate SERP benefits (or split dollar life insurance benefits calculated based on SERP benefits) to which Mr. Robbins would be entitled, including the retirement benefit in which Mr. Robbins vested upon the Company’s acquisition of West Coast Bancorp, which had a value at December 29, 2018 of $1,241,383 and which reduces the benefits otherwise payable under Mr. Robbins’ existing SERP. See “Pension Benefits |
| (6) | Represents the amount equal to three times base salary as of the date of death that would be due to |
| (7) |
| Represents the value of continued employer-paid health and welfare benefits for two years following |
Ms. Baruffi.
In 2018, the Company extended the change-in-control agreement with Mr. Lawson for an additional five years.
Change in Control Agreement(1) Benefits Payable under SERP(2) Bank Owned Life Insurance(3) FMV of Accelerated Equity Vesting(4) Total Change in Control Agreement(1) Benefits Payable under SERP(2) Bank Owned Life Insurance(3) FMV of Accelerated Equity Vesting(4) Total Change in Control Agreement(1) Benefits Payable under SERP(2) Bank Owned Life Insurance(3) FMV of Accelerated Equity Vesting(4) Total Termination/Change-in-Control Payments—Clint E. Stein Death Disability Voluntary
Termination
For Good Reason Termination
w/o Cause Termination
Due to CIC Retirement $ — $ — $ — $ — $ 730,000 $ — 3,789,290 2,217,000 — 1,264,000 1,264,000 — 1,095,000 — — — — — 763,447 763,447 — — 763,447 — $ 5,647,737 $ 2,980,447 — $ 1,264,000 $ 2,757,447 — Termination/Change-in-Control Payments—David C. Lawson Death Disability Voluntary
Termination
For Good Reason Termination
w/o Cause Termination
Due to CIC Retirement $ — $ — $ — $ — $ 530,000 $ — 947,460 996,000 — 45,563 45,563 — 795,000 — — — — — 577,891 577,891 — — 577,891 — $ 2,320,351 $ 1,573,891 — $ 45,563 $ 1,153,454 — Termination/Change-in-Control Payments—Andrew L. McDonald Death Disability Voluntary
Termination
For Good Reason Termination
w/o Cause Termination
Due to CIC Retirement $ — $ — $ — $ — $ 620,000 $ — 2,391,960 2,559,000 106,638 106,638 106,638 106,638 930,000 — — — — — 671,630 671,630 — — 671,630 — $ 3,993,590 $ 3,230,630 $ 106,638 $ 106,638 $ 1,398,268 $ 106,638
Change in Control Agreement(1) Benefits Payable under SERP(2) Bank Owned Life Insurance(3) FMV of Accelerated Equity Vesting(4) Total Termination/Change-in-Control Payments—Hadley S. Robbins Death Disability Voluntary
Termination
For Good Reason Termination
w/o Cause Termination
Due to CIC Retirement $ — $ — $ — $ — $ 780,000 $ — 1,740,760 2,336,000 — 2,063,000 2,063,000 — 1,170,000 — — — — — 807,010 807,010 — — 807,010 — $ 3,717,770 $ 3,143,010 — $ 2,063,000 $ 3,650,010 —
| 2018 Termination/Change-in-Control Payments – Gregory A. Sigrist | ||||||||||||||||||||
| Death | Disability | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC | Retirement | ||||||||||||||||
| Change in Control Agreement(1) | $ | — | $ | — | $ | — | $ | 750,000 | $ | — | ||||||||||
| Benefits Payable Under SERPs, Unit Plans or Split Dollar Life Insurance(2) | $ | 2,361,540 | $ | 1,953,186 | — | $ | 1,329,637 | — | ||||||||||||
| Bank Owned Life Insurance(3) | $ | 1,125,000 | — | — | — | — | ||||||||||||||
| FMV of Accelerated Equity Vesting(4) | $ | 214,474 | $ | 214,474 | — | $ | 214,474 | — | ||||||||||||
| Total | $ | 3,701,014 | $ | 2,167,660 | — | $ | 2,294,111 | — | ||||||||||||
| 2018 Termination/Change-in-Control Payments - Clint E. Stein | ||||||||||||||||||||
| Death | Disability | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC | Retirement | ||||||||||||||||
| Change in Control Agreement(1) | $ | — | $ | — | $ | — | $ | 854,000 | $ | — | ||||||||||
| Benefits Payable Under SERPs, Unit Plans or Split Dollar Life Insurance(2) | $ | 4,132,638 | * | $ | 2,873,725 | $ | 1,110,302 | $ | 1,708,157 | — | ||||||||||
| Bank Owned Life Insurance(3) | $ | 1,281,000 | — | — | — | — | ||||||||||||||
| FMV of Accelerated Equity Vesting(4) | $ | 1,031,906 | $ | 1,031,906 | — | $ | 1,031,906 | — | ||||||||||||
| Total | $ | 6,445,544 | $ | 3,905,631 | $ | 1,110,302 | $ | 3,594,063 | — | |||||||||||
| 2018 Termination/Change-in-Control Payments - David C. Lawson | ||||||||||||||||||||
| Death | Disability | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC | Retirement | ||||||||||||||||
| Change in Control Agreement(1) | $ | — | $ | — | $ | — | $ | 580,000 | $ | — | ||||||||||
| Benefits Payable Under SERPs or Split Dollar Life Insurance(2) | $ | 947,460 | $ | 1,259,351 | $ | 33,759 | * | $ | 63,167 | * | — | |||||||||
| Bank Owned Life Insurance(3) | $ | 870,000 | — | — | — | — | ||||||||||||||
| FMV of Accelerated Equity Vesting(4) | $ | 439,581 | $ | 439,581 | — | $ | 439,581 | — | ||||||||||||
| Total | $ | 2,257,041 | $ | 1,698,932 | $ | 33,759 | $ | 1,082,748 | — | |||||||||||
| 2018 Termination/Change-in-Control Payments - Andrew L. McDonald | ||||||||||||||||||||
| Death | Disability | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC | Retirement | ||||||||||||||||
| Change in Control Agreement(1) | $ | — | $ | — | $ | — | $ | 672,000 | $ | — | ||||||||||
| Benefits Payable Under SERPs, Unit Plans or Split Dollar Life Insurance(2) | $ | 3,141,840 | * | $ | 2,888,360 | $ | 98,354 | ** | $ | 138,195 | ** | $ | 98,354 | ** | ||||||
| Bank Owned Life Insurance(3) | $ | 1,008,000 | — | — | — | — | ||||||||||||||
| FMV of Accelerated Equity Vesting(4) | $ | 513,576 | $ | 513,576 | — | $ | 513,576 | $ | 77,210 | |||||||||||
| Total | $ | 4,663,416 | $ | 3,401,936 | $ | 98,354 | $ | 1,323,771 | $ | 175,564 | ||||||||||
| 2018 Termination/Change-in-Control Payments – Kumi Y. Baruffi | ||||||||||||||||||||
| Death | Disability | Termination w/o Cause (Not Due to CIC) | Termination Due to CIC | Retirement | ||||||||||||||||
| Change in Control Agreement(1) | $ | — | $ | — | $ | — | $ | 580,000 | $ | — | ||||||||||
| Benefits Payable Under SERPs or Split Dollar Life Insurance(2) | $ | 2,529,593 | $ | 1,847,427 | $ | 257,447 | $ | 1,153,915 | — | |||||||||||
| Bank Owned Life Insurance(3) | $ | 870,000 | — | — | — | — | ||||||||||||||
| FMV of Accelerated Equity Vesting(4) | $ | 419,440 | $ | 419,440 | — | $ | 419,440 | — | ||||||||||||
| Total | $ | 3,819,033 | $ | 2,266,867 | $ | 257,447 | $ | 2,153,355 | — | |||||||||||
| (1) | The amount for Messrs. Stein, Lawson, McDonald and |
| (2) | Reflects the benefits to which each Named Executive would be entitled under their SERPs (or split dollar life insurance benefits calculated based on SERP benefits) and, in the case of Messrs. McDonald and Stein, under their Unit Plans, which reduce the benefits otherwise payable |
| (3) | Represents the amount equal to three times base salary as of the date of death that would be due to each Named Executive’s beneficiaries under a bank owned life insurance policy payable by the insurer. |
| (4) | Represents the fair market value of unvested equity awards (or, for Mr. McDonald in the case of retirement, represents a prorated portion of Performance Shares) based on the closing price of Columbia’s common stock on NASDAQ on December |
| CEO Total Annual Compensation as reported in the Summary Compensation Table (A) | Median Total Annual Compensation of Our Employees (B) | Ratio of (A) to (B) | ||||
| $ | 2,401,986 | $ | 52,276 | 46 to 1 | ||
ADVISORY (NON-BINDING) VOTE
ON EXECUTIVE COMPENSATION
At the 20112017 Annual Meeting, shareholders voted on an advisory (non-binding) resolution on the frequency of a shareholder vote on named executive officer compensation. As recommended by the Board, the shareholders approved that an advisory (non-binding) vote to approve named executive officer compensation should occur on an annual basis, and that frequency was subsequently approved by the Board. Accordingly, we have included and will include a non-binding advisory vote on named executive compensation in our proxy materials on an annual basis until the next vote on the frequency of such advisory votes, which will occur at the 2017no later than our 2023 annual meeting, as described below.meeting. In accordance with the vote of the shareholders and the Board, we are providing you the opportunity, as a shareholder, to endorse or not endorse our executive pay program through the following non- bindingnon-binding resolution:
“RESOLVED, that the shareholders approve the compensation of named executive officers as described in the Compensation Discussion & Analysis and the tabular disclosures regarding Named Executive compensation (together with the accompanying narrative disclosures) in this proxy statement.”
We believe that our compensation policies and procedures are strongly aligned with the long-term interests of our shareholders. Columbia’s compensation program is guided by the philosophy that total executive compensation should vary based on achievement of both individual and corporate goals and objectives, and should be focused on long-term strategies to build shareholder value. We invite you to consider the details of our executive compensation provided under “Executive Compensation—Compensation Discussion & AnalysisAnalysis”” in this proxy statement. That section provides you with information about the structure of our executive compensation and the objectives that our compensation program is intended to achieve.
The compensation of our executives for 20162018 is closely aligned with 20162018 shareholder returns and Company financial performance. Columbia had strong financial results including significant increases in net income and shareholder return. The compensation of our executives increased along with our strong performance and Columbia’s growth.
Because your vote is advisory, it will not be binding upon the Board. However, the Personnel and Compensation Committee values the opinions that our shareholders express in their votes, and will take into account the outcome of the vote when considering future executive compensation arrangements.
VotVotee Required and Board Recommendation
The proposal on the advisory (non-binding) vote to approve executive compensation requires the affirmative voteFOR of a majority of the shares present and voting on this matter.
The Board unanimously recommends a vote “FORFOR”” approval of the compensation of executive officers as described in the Compensation Discussion and Analysis and the tabular disclosures regarding named executive compensation (together with the accompanying narrative disclosures) in this proxy statement.
ADVISORY (NON-BINDING) VOTE ON FREQUENCY OF
SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION
Shareholders are being asked whether an advisory vote on executive compensation, as described in Proposal No. 2, should be held every one, two or three years. Under applicable law and implementing regulations, shareholders must vote on the executive compensation paid to executive officers at least every three years, and that a vote on the frequency of such vote must occur every six years.
The Board believes that an annual vote on compensation provides the highest level of accountability and direct communication, by enabling the vote on executive compensation to correspond to the majority of the information presented in the accompanying proxy statement for the applicable shareholders’ meeting. The Board also believes this approach will provide closer to real-time feedback, by providing shareholders an opportunity to give us their direct input on our compensation philosophy, policies and practices, and better allows management and the compensation committee to measure how they have responded to the prior year’s vote. Administratively and from a corporate governance perspective, preparing for an annual vote would lend itself to procedural consistency from year to year.
Columbia is committed to high standards of corporate governance and accountability to shareholders, as demonstrated by our majority vote standard in uncontested director elections. The Board welcomes input from and is committed to being appropriately responsive to our shareholders, who may share their views on executive compensation or other matters with the Board or individual directors in writing as described above under “Shareholder Communications with the Board of Directors,” or in person by attending our annual meeting of shareholders.
Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Personnel and Compensation Committee values the opinions that our shareholders express in their votes, and will take into account the outcome of the vote in determining the frequency in which a shareholder vote on executive compensation will be held. Such decision will be published in a Form 8-K to be filed by the Company no later than 150 days after the date of the 2017 Annual Meeting.
Vote Required and Board Recommendation
The frequency of the vote on executive compensation will be based upon which option receives the greatest number of votes. Shareholders will have the opportunity to vote for one year, two years, three years, or to abstain.
For the reasons described above, the Board of Directors unanimously recommends you vote for the option of “ONE YEAR” for the frequency of future advisory (non-binding) shareholder votes in executive compensation. Your vote is to choose the frequency of the vote (one, two or three years), not to approve or disapprove the Board’s recommendation.
The following table sets forth information with respect to the executive officers during 20162018 who are not directors or nominees for director of Columbia, including employment history for the last five years. All executive officers are elected annually and serve at the discretion of the Board.
Name | Age | Position | Has Served as an Executive Officer of the Company since | |||||||
Kumi Y. Baruffi (1) | 46 | Executive Vice President/General Counsel | 2014 | |||||||
David C. Lawson (2) | 58 | Executive Vice President/Chief Human Resources Officer | 2013 | |||||||
Andrew L. McDonald (3) | 58 | Executive Vice President/Chief Credit Officer | 2004 | |||||||
Hadley S. Robbins (4) | 60 | Interim Chief Executive Officer and Executive Vice President/Chief Operating Officer | 2014 | |||||||
Clint E. Stein (5) | 45 | Executive Vice President and Chief Financial Officer | 2012 | |||||||
Melanie J. Dressel (6) | deceased | Former President and Chief Executive Officer | 1998 | |||||||
Name | Age | Position | Has Served as an Executive Officer of the Company since | |||
| Kumi Y. Baruffi (1) | 48 | Executive Vice President/General Counsel | 2014 | |||
| Lisa K. Dow (2) | 59 | Executive Vice President/Chief Risk Officer | 2018 | |||
| David C. Lawson (3) | 60 | Executive Vice President/Chief Human Resources Officer | 2013 | |||
| Andrew L. McDonald (4) | 60 | Executive Vice President/Chief Credit Officer | 2004 | |||
| Gregory A. Sigrist (5) | 51 | Executive Vice President/Chief Financial Officer | 2018 | |||
| Clint E. Stein (6) | 47 | Executive Vice President/Chief Operating Officer, Chief Financial Officer | 2012 |
| (1) | Ms. Baruffi joined Columbia Bank as an Executive Vice President and its first General Counsel in September 2014. Prior to joining Columbia Bank, Ms. Baruffi was a partner and member of the board of directors of |
| (2) | Ms. Dow joined Columbia Bank as Senior Vice President and Credit Administrator in April 2013, when Columbia acquired West Coast Bancorp, where Ms. Dow had served as Senior Vice President and Regional Credit Administrator & Credit Services Manager for fourteen years. Ms. Dow was promoted to the new position of Executive Vice President, Chief Risk Officer in March of 2018 where she manages the bank’s comprehensive risk management process to help position Columbia for future growth. |
| (3) | Mr. Lawson joined Columbia Bank as an Executive Vice President and Director of Human Resources in July 2013. He became the Chief Human Resources Officer in October 2014. Mr. Lawson has over 30 years of human resources experience, and prior to joining Columbia Bank, he spent 11 years with Franciscan Health System. As the human resources department’s senior vice president at Franciscan Health Systems, Mr. Lawson oversaw more than six hospitals and a network of clinics and physicians in Pierce, King and Kitsap Counties with over 11,000 employees. |
| (4) | Mr. McDonald joined Columbia Bank as an Executive Vice President and Chief Credit Officer in June 2004. Prior to joining Columbia Bank, Mr. McDonald was a Senior Vice President and Team Leader at US Bank. His experience in banking spans over 30 years and includes senior credit officer positions with US Bank and West One Bank, as well as managing US Bank’s Media & Telecommunications group and South Puget Sound Commercial Banking group. Mr. McDonald previously held lending positions with Mellon Bank and Security Pacific. |
| (5) | Mr. |
| (6) | Mr. Stein joined Columbia in December 2005, when he assumed the role of Senior Vice President and Chief Accounting Officer. In May 2012, he was appointed as the acting Chief Financial Officer, and in August 2012, he was appointed Executive Vice President and Chief Financial Officer of Columbia and Columbia Bank. On July 10, 2017, Mr. Stein was appointed as Executive Vice President and Chief Operating Officer, filling the role vacated by Mr. Robbins. He continued as the Chief Financial Officer until the position was filled in May 2018. He is a Certified Public Accountant and has over 20 years of banking, finance and accounting experience. |
ININDEPENDENTDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Fees PaFees Paidid to Independent Registered Public Accounting Firm
The following table sets forth the aggregate fees charged to Columbia by Deloitte, for audit services rendered in connection with the audited consolidated financial statements and reports for the 20162018 and 20152017 fiscal years and for other services rendered during the 20162018 and 20152017 fiscal years.
Fee Category | Fiscal 2016 | % of Total | Fiscal 2015 | % of Total | Fiscal 2018 | % of Total | Fiscal 2017 | % of Total | ||||||||||||||||||||||||
Audit Fees | $ | 1,247,960 | 94.5 | % | $ | 1,184,590 | 92.5 | % | $ | 1,345,761 | 93.4 | % | $ | 1,717,460 | 95.8 | % | ||||||||||||||||
Audit-Related Fees | 0 | 0 | % | 0 | 0 | % | 0 | 0 | % | 0 | 0 | % | ||||||||||||||||||||
Tax Fees | 68,700 | 5.2 | % | 92,000 | 7.2 | % | 91,262 | 6.3 | % | 71,854 | 4.2 | % | ||||||||||||||||||||
All Other Fees | 4,161 | 0.3 | % | 4,161 | 0.3 | % | 4,173 | 0.3 | % | 4,173 | 0.2 | % | ||||||||||||||||||||
Total Fees | $ | 1,320,821 | 100 | % | $ | 1,280,751 | 100 | % | $ | 1,441,196 | 100 | % | $ | 1,793,487 | 100 | % | ||||||||||||||||
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Audit Fees. Consists of fees billed to Columbia for professional services rendered by Deloitte in connection with the audit of our financial statements included in Columbia’s Form 10-K, review of financial statements included in Columbia’s Form 10-Q’s, or services to Columbia in connection with statutory or regulatory filings or engagements, including comfort letters and consents.
Audit-Related FeesF.ees. Consists of acquisition audits and due diligence on mergers and acquisitions.
Tax FeesF.ees. Consists of tax compliance, tax advice, and tax consulting services.
All Other FeesF.ees. Consists of accounting research subscriptions.
In considering the nature of the services provided by Deloitte, the Audit Committee determined that such services are compatible with the provision of independent audit services. The Audit Committee discussed these services with Deloitte and Company management to determine that they are permitted under the rules and regulations concerning auditor independence promulgated by the SEC to implement Sarbanes-Oxley, as well as the American Institute of Certified Public Accountants.
AudAuditit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The services performed by Deloitte in 20162018 and 20152017 were pre-approved in accordance with the pre-approval policy outlined in the Audit Committee’s adopted Charter. The policy specifies that pre-approval of all permissible auditing and non-auditing services to be provided by the Company’s independent auditors is the sole responsibility of the Audit Committee. Prior to commencing such services, pre-approval is required by the Audit Committee or as delegated to the Audit Committee Chair by the Committee.
The Audit Committee of the Board makes the following report, which notwithstanding anything to the contrary set forth in any of Columbia’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, will not be incorporated by reference into any such filings and will not otherwise be deemed to be proxy soliciting materials or to be filed under such Acts.
The Audit Committee consists of the directors listed below. The Board has determined that the membership of the Audit Committee meets the independence requirements as defined under the NASDAQ listing standards.
The Audit Committee is governed by a charter. A copy of the charter is available on the Company’s website at www.columbiabank.com under “Investor Relations.” The charter was last amended effective July 25, 2018. The Audit Committee held nine meetings during fiscal year 2018.
Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. The independent auditors are responsible for auditing the Company’s financial statements, expressing an opinion as to their conformity with generally accepted accounting principles and annually auditing the Company’s internal control over financial reporting. The Audit Committee is responsible for overseeing Columbia’s financial reporting processes on behalf of the Board. With respect to fiscal year 20162018, the Audit Committee has:
(1) reviewed and discussed the audited financial statements with management, and management represented to the Audit Committee that Columbia’s consolidated financial statements were prepared in accordance with generally accepted accounting principles;
(2) discussed with Deloitte 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 in Rule 3200T;
(3) received from Deloitte the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with Deloitte that firm’s independence;
(4) discussed with Columbia’s internal and independent accountants the overall scope and plans for their respective audits; and
(5) met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, the evaluations of Columbia’s internal controls, and the overall quality of Columbia’s financial reporting.
The members of the Audit Committee are not full-time employees of the Company and are not performing the functions of auditors or accountants. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct “field work” or other types of auditing or accounting reviews or procedures or to set auditor independence standards. Members of the Audit Committee necessarily rely on the information provided to them by management and the independent accountants. Accordingly, the Audit Committee’s considerations and discussions referred to above do not assure that the audits of the Company’s financial statements and internal control over financial reporting have been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are in fact “independent.”
The Audit Committee recognizes the importance of maintaining the independence of the Company’s independent auditor, both in fact and appearance. Each year, the Audit Committee evaluates the qualifications, performance and independence of the Company’s independent auditor and determines whether to re-engage the current independent auditor. In doing so, the Audit Committee considers the quality and efficiency of the services provided by the auditors, the auditors’ capabilities and the auditors’ technical expertise and knowledge of the Company’s operations and industry. Based on this evaluation, the Audit Committee has retained Deloitte as the Company’s independent auditor for 2019. Deloitte has been the independent auditor for the Company since 1997.
The members of the Audit Committee and the Board believe that, due to Deloitte’s knowledge of the Company and its industry, it is in the best interests of the Company and its shareholders to continue retention of Deloitte to serve as the Company’s independent auditor. Although the Audit Committee has sole authority to appoint the independent auditor, the Audit Committee will continue to recommend that the Board ask the shareholders, at the Annual Meeting, to ratify the appointment of the independent auditors.
Based on the review and discussions referred to in items (1) through (5) above, the Audit Committee has recommended to the Board that the audited financial statements be included in Columbia’s Annual Report on Form 10-K for the fiscal year ended December 31, 20162018 for filing with the SEC.
Audit Committee Members
David A. Dietzler, Chairman
Ford Elsaesser
John P. Folsom
Thomas M. Hulbert
Michelle M. Lantow
Randal L. Lund
S. Mae Fujita Numata
Janine T. Terrano
ADVISORY (NON-BINDING) VOTE ON APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte currently serves as our independent registered public accounting firm, and that firm conducted the audits of our financial statements since the fiscal year ended December 31, 1997. The Audit Committee has appointed Deloitte to serve as the Company’s independent registered public accounting firm to conduct an audit of the financial statements for fiscal year 2017.2019.
Appointment of the Company’s independent registered public accounting firm is not required to be submitted to a vote of our shareholders for approval or ratification. However, upon the recommendation of the Audit Committee, the Board has determined to submit the selection of auditors to our shareholders for an advisory (non-binding)(non- binding) vote. In the event our shareholders do not vote for the appointment, the Audit Committee may reconsider whether to retain Deloitte, and may retain Deloitte or another firm without re-submitting the matter to our shareholders. Even if the appointment is approved, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the Company’s and its shareholders’ best interest.
Representatives of Deloitte are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire to do so. It is also expected that they will be available to respond to appropriate questions.
The Board unanimously recommends that you vote “FORFOR”” the appointment of Deloitte to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017.2019.
SECSECTIONTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers to send reports of their ownership of our stock to the SEC. We believe that all Section 16(a) filing requirements that apply to our directors and executive officers were complied with for the fiscal year ended December 31, 2016.2018. In making this disclosure we have relied solely on written representations of our directors and executive officers, and copies of the reports that they have filed with the SEC.
CECERTAINRTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions between Columbia or its affiliates and related persons (including directors and executive officers of Columbia and Columbia Bank, or their immediate family) must generally be approved by the Audit Committee, in accordance with the policies and procedures set forth in the Related Persons Transactions Policy adopted by the Board. Under the Related Persons Transaction Policy, a transaction between a “related person” will be consummated only if the Audit Committee, or a majority of the disinterested independent members of the Board, approves or ratifies such transaction in accordance with the guidelines set forth in the policy and if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party.
During 2016,2018, certain directors and executive officers of Columbia and Columbia Bank, and their immediate family members, were customers of Columbia Bank, and it is anticipated that such individuals will continue to be customers of Columbia Bank in the future. All transactions between Columbia Bank and its executive officers and directors, and their associates, were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons not related to the Company, and, in the opinion of management, did not involve more than the normal risk of collectability or present other unfavorable features.
ANNUAANNUALL REPORT TO SHAREHOLDERS AND FORM 10-K
Columbia’s 20162018 Annual Report and Form 10-K for the year ended December 31, 20162018 (which is not a part of Columbia’s proxy soliciting materials) have been filed with the SEC and are also available on our website. Copies of the 20162018 Annual Report and Form 10-K will be furnished to shareholders upon request to:
Investor Relations
P. O. Box 2156, MS 3100
Tacoma, WA 98401-2156
Email: investorrelations@columbiabank.com
(253) 305-1921
DeliveryDelivery of Documents to Shareholders Sharing an Address
In some cases, only one copy of the proxy statement or Notice, as applicable, is being delivered to multiple shareholders sharing an address unless we have received contrary instructions from one or more of the shareholders. We will deliver promptly, upon written or oral request, a separate copy of the proxy statement or Notice, as applicable, to a shareholder at a shared address to which a single copy of the document was delivered. To request a separate delivery of these materials now or in the future, a shareholder may submit a written or oral request to the Corporate Secretary at the address and number written above. Additionally, any shareholders who are presently sharing an address and receiving multiple copies of the proxy statement, annual reports or the Notice and who would rather receive a single copy of such materials may instruct us accordingly by directing their request to us in the manner provided above.
WE URGE YOU TO VOTE VIA THE INTERNET OR TELEPHONE ACCORDING TO THE INSTRUCTIONS ON THE NOTICE OR REQUEST A PROXY CARD AND SIGN AND RETURN IT WHEN RECEIVED AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON. IF YOU DO ATTEND THE ANNUAL MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
Non-GAAP Financial Measures
The Company considers its operating noninterest expense before acquisition, OREO and FDIC clawback liability expenses and its ratio to average assets to be important measurements as they more closely reflect the ongoing operating leverage of the Company. Additionally, presentation of this measure and ratio allows readers to compare certain aspects of the Company’s noninterest expense to other organizations. Despite the importance of these measures to the Company, there are no standardized definitions for them and, as a result, the Company’s calculations may not be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company’s calculation of the operating noninterest expense before acquisition, OREO and FDIC clawback liability expenses and its ratio to average assets:
| Twelve Months Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
Noninterest expense (numerator A) | $ | 261,142 | $ | 266,149 | ||||
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Adjustments to arrive at noninterest expense before acquisition, OREO and FDIC clawback liability expenses: | ||||||||
Acquisition-related expenses | (2,727 | ) | (10,917 | ) | ||||
Net (cost) benefit of operation of OREO | (551 | ) | 1,629 | |||||
FDIC clawback liability expense | (280 | ) | (979 | ) | ||||
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Noninterest expense before acquisition, OREO and FDIC clawback liability expenses (numerator B) | $ | 257,584 | $ | 255,882 | ||||
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Average assets (denominator) | $ | 9,311,621 | $ | 8,655,243 | ||||
Noninterest expense to average assets (numerator A / denominator) | 2.80 | % | 3.08 | % | ||||
Noninterest expense before acquisition, OREO and FDIC clawback liability expenses to average assets (numerator B /denominator) | 2.77 | % | 2.96 | % | ||||
Additionally, for purposes
| Twelve Months Ended December 31, | ||||||||
| 2018 | 2017 | |||||||
| Noninterest expense (numerator A) | $ | 340,490 | $ | 291,017 | ||||
| Adjustments to arrive at operating noninterest expense: | ||||||||
| Acquisition-related expenses | (8,661 | ) | (17,196 | ) | ||||
| Termination of FDIC loss share agreements charge | — | (2,409 | ) | |||||
| Net cost of operation of OREO and Other Personal Property Owned (OPPO) | (1,218 | ) | (466 | ) | ||||
| FDIC clawback liability recovery (expense) | — | 54 | ) | |||||
| Operating noninterest expense (numerator B) | $ | 330,611 | $ | 271,000 | ||||
| Average assets (denominator) | $ | 12,725,086 | $ | 10,134,306 | ||||
| Noninterest expense to average assets (numerator A / denominator) | 2.68 | % | 2.87 | % | ||||
| Operating noninterest expense to average assets (numerator B / denominator) | 2.60 | % | 2.67 | % | ||||
The Company also considers its core pretax return, its ratio to average assets and average tangible common equity, as well as its ratio of average nonperforming assets to period end total loans + OREO to be important measurements as they more closely reflect the ongoing operating leverage of the annual cash incentive opportunitiesCompany. Additionally, presentation of these measures and ratios allow readers to compare certain aspects of the Company’s pretax return to other organizations. Despite the importance of these measures to the Company, there are no standardized definitions for 2016,them and, as a result, the Company’s calculations may not be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company’s calculation of the core pretax return on average assets:
Twelve Months Ended
December 31, 2018 Pretax income $ 211,836 Adjustments to arrive at core pretax return: Acquisition-related expenses 8,661 Core pretax return (numerator) $ 220,497 Average assets (denominator) $ 12,725,086 Core pretax return on average assets (numerator / denominator) 1.73 %
The following table reconciles the Company’s calculation of the core pretax return on average tangible common equity:
Twelve Months Ended
December 31, 2018 Pretax income $ 211,836 Adjustments to arrive at core pretax return: Amortization of intangibles 12,236 Acquisition-related expenses 8,661 Core pretax return (numerator) $ 232,733 Average shareholder equity $ 1,969,179 Average intangibles (817,685 ) Average tangible common equity (denominator) $ 1,151,494 Tangible core pretax return on average tangible common equity (numerator / denominator) 20.21 %
The following table reconciles the Company’s calculation of the ratio of average nonperforming assets to period end total loans, OREO and OPPO:
December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | |||||||||||||
| Nonperforming assets (numerator) | $ | 60,891 | $ | 67,747 | $ | 76,584 | $ | 89,971 | ||||||||
| Loans | $ | 8,391,511 | $ | 8,514,317 | $ | 8,454,107 | $ | 8,339,631 | ||||||||
| OREO and OPPO | 6,049 | 7,415 | 7,080 | 11,507 | ||||||||||||
| Loans, OREO and OPPO (denominator) | $ | 8,397,560 | $ | 8,521,732 | $ | 8,461,187 | $ | 8,351,138 | ||||||||
| Nonperforming assets to total loans, OREO and OPPO (numerator / denominator) | 0.73 | % | 0.79 | % | 0.91 | % | 1.08 | % | ||||||||
| 2018 Four Quarter Average | ||||||||||||||||
| Nonperforming assets to total loans, OREO and OPPO – four quarter average | 0.88 | % | ||||||||||||||
2018 EQUITY INCENTIVE PLAN OF
COLUMBIA BANKING SYSTEM, INC.
(as amended though _______________, 2019)
| 1. | Purpose of the Plan |
The purpose of the Plan is to attract and retain the most talented employees and directors available to serve in positions of responsibility with Columbia Banking System, Inc. and its subsidiaries, to provide them with both rewards for exceptional performance and long-term incentives for future so contributions to it and its subsidiaries, and to align their interests with those of its shareholders that they will exert maximum efforts to promote its growth and success for the ultimate benefit of all its shareholders.
The Plan replaces the 2014 Stock Option and Equity Compensation Plan, which was approved by the Company’s stockholders at the 2014 Annual Stockholder Meeting and effective on April 23, 2014, (the “Prior Plan”), for awards granted on or after the date the Plan is approved by the Company’s stockholders (the “Effective Date”). Awards may not be granted under the Prior Plan beginning on the Effective Date, but the Plan will not affect the terms and conditions of any equity award grants under the Prior Plan (or any predecessor plans) granted prior to the Effective Date. Awards granted prior to the Effective Date shall be governed by the terms applicable to such awards and as in effect prior to the Effective Date. The terms of the Plan are not intended to affect the interpretation of the terms of the Prior Plan for Awards granted prior to the Effective Date. In the event that the Plan is not approved by the Company’s stockholders, the Plan shall be null and void and of no force or effect, but the Prior Plan and the Awards granted thereunder (or under any predecessor plan) on or prior to the Effective Date shall remain in full force and effect.
| 2. | Definitions |
As used herein, the following definitions shall apply:
a. “Award” means a grant of an Option, Restricted Stock, Restricted Stock Unit (which may or may not include a Dividend Equivalent), Stock Appreciation Right or Cash Award under the Plan.
b. “Award Agreement” means a written agreement entered into by and between a Grantee and the Company setting forth terms and conditions relating to an Award granted to such Grantee. The agreement shall take such form, and contain such terms and conditions, as shall be determined from time to time by the Committee in its sole discretion.
c. “Cash Award” means an Award granted as described in Section 7 herein.
d. “Board” means the board of directors of the Company.
e. “Cause” means (i) with respect to a Grantee employed pursuant to a written employment, change in control or similar agreement that includes a definition of “Cause,” “Cause” as defined in that agreement or (ii) with respect to any other Grantee, any of the following: (A) dishonesty in performing one’s duties to the Company or a Subsidiary, (B) willful misconduct, or a willful failure to act, with the intent of injuring, or having the effect of injuring, the reputation, business or business relationships of the Company or a Subsidiary, or any of their officers, directors or employees; (C) conviction of a felony or of any crime involving fraud, dishonesty or moral turpitude or that reflects unfavorably on the Company or a Subsidiary; (D) willful or prolonged absence from work or failure for any reason to perform duties as net income, excluding acquisition-related expenses, dividedan Employee or Director, unless excused by average assets.the Company or a Subsidiary, whichever is the entity for which services are performed; (E) breach of any material terms of an employment or service agreement with the Company or a Subsidiary, including an Award Agreement; or (F) disqualification or bar by any governmental or self-regulatory authority from serving in the capacity required by his or her job description or loss of any governmental or self-regulatory license that is reasonably necessary for such Grantee to perform his or her duties or responsibilities.
f. “Change in Control” means the first to occur of the following events:
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g. “Code” means the Internal Revenue Code of 1986, as amended.
h. “Common Stock” means the no par value common stock of the Company.
i. “Committee” has the meaning given such term in Section 4.a.
j. “Company” means Columbia Banking System, Inc., a Washington corporation.
k. “Director” means a person elected or appointed as a member of the Board or the board of directors of a Subsidiary.
l. “Disability” has the meaning given to such term in Code Section 22(e)(3).
m. “Dividend Equivalent” means, with respect to Restricted Stock Units, an amount equal to the total dollar value of all dividends that would have been paid on the shares of Common Stock covered by the Award between the date of grant of the Restricted Stock Units and the date on which the Restricted Stock Units are settled if such shares of Common Stock had been delivered pursuant to such Award. A Restricted Stock Unit does not include a Dividend Equivalent unless the Award Agreement for the Restricted Stock Unit clearly specifies that it does. Further, a Grantee shall have no right to receive payment of a Dividend Equivalent unless and until the Restricted Stock Unit that includes it Vests and is settled as provided herein.
n. “Employee” means a person employed by the Company or a Subsidiary.
o. “Exchange Act” means the Securities Exchange Act of 1934, as amended.
p. “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:
| (i) | If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid price, if no sales were reported) as quoted on such exchange or system for such date (or, if such pricing information is not published for such date, the last date prior to such date for which pricing information is published), as reported in The Wall Street Journal or such other source as the Committee deems reliable; |
| (ii) | If the Common Stock is regularly quoted by recognized securities dealers but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for such stock on such date, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or |
| (iii) | In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Committee and by taking into account such criteria and information as is required to comply with Code Section 409A to the extent applicable. |
q. “Good Reason” means (i) with respect to a Grantee employed pursuant to a written employment, change in control or similar agreement that includes a definition of “Good Reason,” “Good Reason” as defined in that agreement or (ii) with respect to any other Grantee, the occurrence of any of the following in the absence of the Grantee’s written consent: (A) any material and adverse change in the Grantee’s position or authority with the Company as in effect immediately before a Change in Control, other than an isolated and insubstantial action not taken in bad faith and which is remedied by the Company within 30 days after receipt of notice thereof given by the Grantee; (B) the transfer of the Grantee’s primary work site to a new primary work site that is more than 50 miles from the Grantee’s primary work site in effect immediately before a Change in Control; or (C) a diminution of the Grantee’s base salary in effect immediately before a Change in Control by more than 10%, unless such diminution applies to all similarly situated employees. If the Grantee does not deliver to the Company a written notice of termination within 60 days after the Grantee has knowledge that an event constituting Good Reason has occurred, the event will no longer constitute Good Reason. In addition, the Grantee must give the Company 30 days to cure the event constituting Good Reason.
r. “Grantee” means a person who has been granted an Award.
s. “Incentive Stock Option” means an Option that qualifies as an “incentive stock option,” as that term is defined in Code Section 422.
t. “Nonqualified Stock Option” means an Option, other than an Incentive Stock Option.
u. “Option” means a right granted under the Plan to purchase Common Stock. Options granted under this Plan may be either Incentive Stock Options or Nonqualified Stock Options, and the term means either or both, as the context requires. Each Award Agreement shall state whether an Option subject to the agreement is an Incentive Stock Option or a Nonqualified Stock Option.
v. “Plan” means this 2018 Equity Incentive Plan of Columbia Banking System, Inc., as amended from time to time.
w. “Restricted Stock” means a share of Common Stock, issued under the Plan that is subject to such restrictions and conditions as are set forth in the Plan and the related Award Agreement.
x. “Restricted Stock Unit” means a right granted under the Plan to receive a payment in cash or Common Stock, or a combination of both, as determined by the Committee, with a value equal to the sum of (i) the Fair Market Value, on the date of that the Restricted Stock Unit is settled, of one share of Common Stock per Restricted Stock Unit, and (ii) the Dividend Equivalent, if the Award Agreement for the Restricted Stock Unit clearly specifies that it includes a Dividend Equivalent. If the Committee determines to settle payment in Common Stock, then it may pay cash in lieu of fractional shares.
y. “SEC” means the U.S. Securities and Exchange Commission.
z. “Shareholder-Employee” means an Employee who owns, at the time an Incentive Stock Option is granted, stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a Subsidiary. For this purpose, the attribution of stock ownership rules of Code Section 424(d) shall apply.
aa. “Stock Appreciation Right” means a right granted under the Plan to receive a payment in cash or Common Stock, or a combination of both, as determined by the Committee, with a value equal to the excess of (i) the Fair Market Value, on the date of exercise of the right, of one share of Common Stock per Stock Appreciation Right, over (ii) the Fair Market Value, on the date of grant of the right, of such share of Common Stock. Such Fair Market Value shall not be increased or otherwise adjusted because of dividends or other distributions paid at any time on or with respect to shares of Common Stock. In addition, the following shall apply to Stock Appreciation Rights: (1) Amounts payable under the Stock Appreciation Right shall not be greater than the excess of the Fair Market Value of Common Stock (disregarding lapse restrictions as defined in Treasury Regulations §1.83-3(i)) on the date the Stock Appreciation Right is granted over the Fair Market Value of the Common Stock (disregarding lapse restrictions as defined in Treasury Regulations §1.83-3(i)) on the date the Stock Appreciation Right is exercised, with respect to the number of shares fixed on or before the date of grant of the Stock Appreciation Right; (2) the Stock Appreciation Right exercise price shall never be less than the Fair Market Value of the underlying stock (disregarding lapse restrictions as defined in Treasury Regulations § 1.83-3(i)) on the date the Stock Appreciation Right is granted; (3) the Stock Appreciation Right shall not include any feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the Stock Appreciation Right, and (4) no Stock Appreciation Right shall be exercisable later than the 10th anniversary date of its grant.
bb. “Subsidiary” means, (i) in the case of an Incentive Stock Option, a corporation having a relationship with the Company described in Code Section 424(f), and (ii) in the case of any other type of Award, a corporation with which the Company is considered a single employer under Code Section 414(b).
cc. “Vest” means satisfaction in full of all conditions precedent, imposed by the Plan and the related Award Agreement, to a Grantee’s right to exercise an Option, to hold Restricted Stock free of any obligation to forfeit or retransfer the same to the Company or to receive payments under a Restricted Stock Unit, Stock Appreciation Right or Cash Award.
| 3. | Stock Subject to Plan and Maximum Awards |
a. General. Subject to the adjustments provided in Section 17, the number of shares of Common Stock that may be made subject to Awards of all types shall be Three Million, Fifty Thousand (3,050,000). The Company shall reserve such shares, to the extent that it deems appropriate from authorized but unissued shares of Common Stock and from shares of Common Stock that have been reacquired by it. Shares of Common Stock subject to Awards that are assumed, converted or substituted under the Plan as a result of the Company’s acquisition of another company (including by way of merger, combination or similar transaction) will not count against the number of shares that may be granted under the Plan. Available shares under a stockholder approved plan of an acquired company (as appropriately adjusted to reflect the transaction) may be used for Awards under the Plan and do not reduce the maximum number of shares available for grant under the Plan, subject to applicable stock exchange requirements.
b. Share Counting. Shares of Common Stock that are made subject to an Award of Options, Restricted Stock, Restricted Stock Units (together with any Dividend Equivalent) or Stock Appreciation Rights that will or may be settled in stock shall be counted against the number of shares set forth in Section 3.a, unless and until the Grantee forfeits rights in the Award by failing to satisfy any condition to Vesting; and shares of Common Stock that are made subject to an Award of Restricted Stock Units (together with any Dividend Equivalent) shall not count against such number if, in either case, they are settled in cash. Any shares of Common Stock made subject to an Award shall again become available to be made subject to a new Award if the shares are not issued because the Award is forfeited or cancelled, but shares of Common Stock shall not again become available under Section 3.a to be made subject to an Award in the case of shares that are (i) used to satisfy a withholding obligation of the Grantee, (ii) tendered to the Company to pay the exercise price or consideration required to be paid with respect to an Award, and (iii) subject to a Stock Appreciation Right, to the extent the Stock Appreciation Right is exercised.
c. Maximum Awards. The maximum number of shares of Common Stock subject to Incentive Stock Options granted to any one Grantee (other than a non-employee Director) in a calendar year is 100,000.
d. Non-Employee Director Awards.
| (1) | For the 12-month period following the first Board meeting after each annual meeting of the Company’s stockholders (beginning after the Company’s 2019 annual meeting of stockholders) (each such 12-month period, the “Annual Period”), each non-employee Director shall receive for service on the Board (A) an annual cash retainer of $47,000 and (B) an annual equity retainer of $70,000, in each case increased by 5% per year beginning with the 2020-2021 Annual Period unless the Board determines in its discretion to defer and cumulate any increase (or portion). |
| (2) | For each Annual Period, the Board may establish a retainer for each non-employee Director chairing or serving on any standing committee of the Board as determined in |
| (3) | The Board may at any time provide any Director with a retainer or other fee for service in addition to that provided for in this Section 3.d., including for service as Chair of the Board, on a specific purpose committee or to any Subsidiary or for any other special service, in each case determined in the discretion of the Board. |
| (4) | Any retainer or fee pursuant to this Section 3.d. may be payable in the form of a Cash Award, Restricted Stock and/or Restricted Stock Unit Award, in such combination and on such terms and conditions as determined in the discretion of the Board. Unless the Board determines otherwise, (A) no fee or retainer shall be prorated for a partial year served except that a non-employee Director who joins the Board after the annual grant of Restricted Stock and/or Restricted Stock Unit Award to the Board for that year will receive a prorated Award for such year and any Award of Restricted Stock Units shall accrue Dividend Equivalents, which shall be paid in accordance with Section 6.a. of the Plan. |
| 4. | Administration of the Plan |
a. The Committee. The power and authority to administer the Plan is vested in the Personnel and Compensation Committee of the Board and, with respect to Awards to non-employee Directors, the Corporate Governance and Nominating Committee of the Board (each such committee as the context requires is the “Committee”), each of which shall be selected by the Board and shall consist of at least two (2) Directors. Persons selected to the Committee shall satisfy applicable independence criteria of the stock exchange or quotation system on which the Common Stock may then be listed or quoted and be a “non-employee director” within the meaning of Rule 16b-3 promulgated under the Exchange Act. If the Committee does not exist or the Board, for any reason determined by it desires to directly administer the Plan, then the Board may take any action under the Plan that would otherwise be the responsibility of the Committee. Once appointed, the Committee shall continue to serve until otherwise directed by the Board.
b. Delegation of Responsibilities. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange or quotation system, the Committee may delegate all or some of its power and authority to administer the Plan to one or more of its members, or to any other person or persons selected by it. The Committee may revoke such delegation at any time.
c. Powers of the Committee. Subject to the terms and conditions explicitly set forth in the Plan, the Committee shall have the authority and discretion to do the following:
| (1) | determine the persons to whom Awards are to be granted, the times of grant, and the number of shares of Common Stock subject to each Award; |
| (2) | subject to the terms of this Plan, determine the exercise price for shares of Common Stock to be issued pursuant to the exercise of an Option; the purchase price, if any, of Restricted Stock; the Fair Market Value of Common Stock used to determine the amount required to be paid under a Restricted Stock Unit (if applicable) or Stock Appreciation Right; and whether a Restricted Stock Unit includes a Dividend Equivalent; |
| (3) | determine all other terms and conditions (which need not be identical between or among Grantees) of each Award; |
| (4) | modify or amend the terms of any Award previously granted, or grant substitute Options, subject to the provisions of Sections 15 and 20; |
| (5) | cancel or suspend Awards, subject to the provisions of Section 20; |
| (6) | interpret the Plan and Awards; |
| (7) | authorize any person or persons to execute and deliver Award Agreements, or to take any other actions deemed by the Committee to be necessary or appropriate, to effectuate the grant of Awards; |
| (8) | waive any conditions to Vesting; and |
| (9) | make all other determinations, and take all other actions that the Committee deems necessary or appropriate, to administer the Plan in accordance with its |
All decisions, determinations and interpretations of the Committee relating to the Plan and Awards shall be final and binding upon all persons, including all Grantees and any other persons interested in any Awards, unless otherwise expressly determined by a vote of a majority of the entire Board. No member of the Committee or the Board, or any person to whom the Committee delegates its powers, responsibilities or duties in writing (each, a “Covered Person”) shall be liable to any person (including any Grantee) for any action taken or omitted to be taken with respect to the Plan or any Awards. Each Covered Person shall be indemnified and held harmless by the Company against and from:
| (x) | any loss, cost, liability or expense (including attorneys’ fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan or any Award Agreement, in each case, in good faith; and |
| (y) | any and all amounts paid by such Covered Person, with the Company’s approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that the Company will have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company will have sole control over such defense with counsel of the Company’s choice. |
The foregoing right of indemnification will not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person’s bad faith, fraud or willful misconduct. The foregoing right of indemnification will not be exclusive of any other rights of indemnification or coverage to which Covered Persons may be entitled under the Company’s articles of incorporation or bylaws or insurance policies, pursuant to any individual indemnification agreements between such Covered Person and the Company, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.
d. Section 16(b) Compliance and Bifurcation of Plan. It is the intention of the Company that the Plan comply in all respects with Rule 16b-3 under the Exchange Act, and the Plan shall be construed in favor of its so complying. If any Plan provision is determined to not comply with such Rule 16b-3, the provision shall be deemed null and void. Notwithstanding any contrary provisions of the Plan, the Board, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan with respect to Grantees who are officers and directors subject to Section 16(b) of the Exchange Act, without so restricting, limiting, or conditioning the use of such provision of the Plan with respect to other Grantees.
| 5. | Eligibility |
All Employees and Directors are eligible to be selected to be granted an Award. Notwithstanding any contrary provisions of this Plan, a Director who is not also an Employee may not be selected to be granted an Incentive Stock Option.
| 6. | Granting of Awards |
a. General. Only Employees and Directors selected by the Committee, in its sole discretion, shall be granted Awards. An Award may consist solely of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units (either including or not including a Dividend Equivalent), Stock Appreciation Rights, Cash Awards or any combination of the foregoing. All Awards are subject to the terms and conditions of the Plan. Notwithstanding any actions taken by the Company in connection with the grant of an Award to any person, such person shall have no rights to or under such Award prior to the time he first performs services as an Employee or Director. Any Restricted Stock Units that are granted with Dividend Equivalents shall accrue Dividend Equivalents at the time and at the same rate as dividends are paid on shares of Common Stock, which Dividend Equivalents shall be retained by the Company and shall be paid to the Grantee (without interest) if and to the extent that the Restricted Stock Units vest and shall be forfeited if for any reason the Restricted Stock Units are forfeited. For the avoidance of doubt, no dividends or Dividend Equivalents shall be paid on unvested Awards.
b. Award Agreement. Each Award shall be evidenced by an Award Agreement that sets forth the terms and conditions of the Award. A person who is granted an Award shall have no rights under the Award unless and until such person duly executes and delivers to the Company an Award Agreement. An Award shall expire, and the Company shall have no further obligations with respect thereto, if the person does not so execute and deliver an Award Agreement within any period of time prescribed by the Company.
c. Consideration. The Committee shall determine the form and amount, if any, of consideration required to be paid by a Grantee with respect to an Award. Such consideration may take the form of cash, property, shares of Common Stock or services.
d. Arrangements to Cancel Restricted Stock. The Company may make such arrangements as it deems necessary or appropriate to hold shares of Restricted Stock in escrow until Grantee satisfies all conditions to Vesting and to automatically cancel such shares if Grantee fails to satisfy such conditions.
| 7. | Cash Awards |
a. Grant of Cash Awards. Subject to the terms of this Plan, Cash Awards (including, without limitation, retainers and meeting-based fees for Directors) may be granted to Grantees in such amounts, and upon such terms, at any time and from time to time, as shall be determined by the Committee.
b. Value of Cash Awards. Each Cash Award shall have a value as may be determined by the Committee.
c. Earning of Cash Awards. Each Cash Award shall be subject to such Vesting conditions (which may include performance goals) as determined by the Committee in its discretion.
d. Form and Timing of Cash Awards. Payment of earned Cash Awards shall be as determined by the Committee and as evidenced by the applicable Award Agreement, which shall in any event be no later than as may be required under Section 409A of the Code.
| 8. | Vesting of Awards |
a. The Committee may impose any terms and conditions on the Vesting of an Award that it determines to be appropriate, including requiring the Grantee to continue to provide services as an Employee or Director for a specified period of time or to meet performance goals established by the Committee. Such terms and conditions shall be set forth in an Award Agreement.
b. Unless otherwise provided in an Award, in the event of the death or Disability of a Grantee who at the time of his death or cessation of service due to Disability was an Employee or Director and who was an Employee or Director at all times since the date of grant of (i) a Restricted Stock Award, or (ii) a Restricted Stock Unit Award, then the target number of shares of Restricted Stock and/or Restricted Stock Units, as the case may be, shall Vest upon such death or cessation of services due to Disability.
| 9. | Exercise and Settlement of Awards |
a. Options. Grantee shall pay the full exercise price for shares of Common Stock purchased under an Option, at the time the Option is exercised, in cash or other consideration of comparable value deemed acceptable by the Committee (including by tendering, by either actual delivery of shares or by attestation, shares of Common Stock acceptable to the Committee and valued at Fair Market Value as of the date of exercise), or in any combination thereof, as determined by the Committee. The Committee may permit a Grantee to elect to pay the exercise price upon the exercise of an Option by irrevocably authorizing a third party to sell shares of Common Stock (or a portion of the shares of Common Stock sufficient to pay the exercise price) acquired upon exercise of the Option and remit to the Company the sale proceeds therefrom sufficient to pay the entire exercise price and any tax withholding resulting from such exercise.
b. Restricted Stock. The Company shall take such actions as it determines to be reasonably necessary to release Restricted Stock from forfeiture restrictions as soon as practicable after the Restricted Stock Vests.
c. Other Equity-Based Awards. The Company shall settle payment of any amounts due under a Restricted Stock Unit (together with any Dividend Equivalent that it includes) or Stock Appreciation Right upon exercise of such right by the Grantee; provided, however, that notwithstanding any contrary provisions of the Plan, Restricted Stock Units (together with any Dividend Equivalent that it includes) that become Vested shall be settled by payment of amounts owed thereunder on or before the later of (i) the date that is two and one-half (2 1∕2) months after the end of the Grantee’s first taxable year in which such amounts are no longer subject to a substantial risk of forfeiture, or (ii) the date that is two and one-half (2 1∕2) months after the end of the first taxable year of the person for whom the Grantee performed services in which such amounts are no longer subject to a substantial risk of forfeiture.
d. Cash Awards. Cash Awards shall be paid as described in Section 7 above.
| 10. | Terms Applicable to Options |
a. Limit on Value of Options Granted. Subject to Section 3.c. above, any number of Options may be granted from time to time to a person eligible to receive the same hereunder, except that in the case of Incentive Stock Options the aggregate Fair Market Value (determined as of the date each Option is granted) of all shares of Common Stock with respect to which Incentive Stock Options become exercisable for the first time by the Grantee in any one calendar year (under all incentive stock option plans of the Company and all Subsidiaries taken together) shall not exceed $100,000.
b. Exercise Price. The exercise price for shares of Common Stock subject to an Option shall not be less than 100% of the Fair Market Value of a share of Common Stock as of the date of grant of the Option; provided, however, that in the case of an Incentive Stock Option granted to an Employee who immediately before the grant of such Incentive Stock Option is a Shareholder-Employee, the Incentive Stock Option exercise price shall be at least 110% of the Fair Market Value of the Common Stock as of the date of grant of the Incentive Stock Option.
c. Term of Option. No Option granted under the Plan shall in any event be exercisable after the expiration of ten (10) years from the date such Option is granted; provided, however, that in the case an Incentive Stock Option granted to an Employee who immediately before such Incentive Stock Option is granted is a Shareholder-Employee, the term of such Incentive Stock Option shall be for not more than five (5) years from the date such Option is granted. Subject to the foregoing and other applicable provisions of the Plan, the Committee shall determine the term of each Option in its sole discretion.
d. Exercise During Lifetime of Grantee. During the lifetime of a Grantee, only the Grantee may exercise such Option.
| 11. | Termination of Employment or Directorship |
a. Unvested Awards. Subject to the provisions of Section 8 above, a Grantee shall forfeit all rights in, to and under all Awards that have not Vested prior to the time the Grantee first ceases to be an Employee or Director. Such forfeiture shall occur without the need for further action by any person.
b. Vested Restricted Stock Units and Cash Awards. All Restricted Stock Units and Cash Awards that are Vested at the time a Grantee first ceases to be an Employee or Director shall be settled promptly following such event.
c. Vested Options and Stock Appreciation Rights. Options and Stock Appreciation Rights that are Vested at the time a Grantee first ceases to be an Employee or Director shall terminate on, if not exercised before, the earlier of (i) the same day of the third month after the date of termination of his status as an Employee or Director, or (ii) the expiration date of the Option or Stock Appreciation Right provided in the Award Agreement. Notwithstanding the immediately preceding sentence:
| i. | Upon the death of a Grantee who at the |
| ii. | If a Grantee ceases to be |
| iii. | If a Grantee ceases to be an Employee or Director for Cause, then all Options and Stock Appreciation Rights that are Vested at such time shall terminate, and may no longer be exercised, immediately upon his or her ceasing to be an Employee or Director; and |
| iv. | Nonqualified Stock Options and Stock Appreciation Rights granted to a person who is a Director but who ceases thereafter to be a Director (other than due to death or Disability or Cause) shall expire at such time as the Committee shall determine, but in no event more than six (6) months after the person ceases to be a Director, and shall otherwise be exercisable on such terms and conditions as the Committee shall determine. |
d. Permitted Absences From Work. A person shall not be treated as ceasing to be an Employee or Director if the interruption of his or her services as such is caused by military leave, sick leave or any other bona fide leave of absence approved by the Company or a Subsidiary, whichever is the entity for which the person primarily performs services; provided, however, that in the case of Incentive Stock Options, the foregoing is subject to any restrictions of laws or regulations applicable to such Options.
| 12. | Compliance with Applicable Law and Clawback Policies |
a. Shares of Common Stock shall not be issued pursuant to the Plan or any Award granted hereunder, unless the issuance and delivery of the shares will not violate, and can otherwise be done in a manner that complies with, the provisions of applicable law (including, without limitation, the Securities Act of 1933, as amended, and the Exchange Act), and the rules regulations of any stock exchange or quotation system on which the Common Stock may then be listed or quoted. Issuance of shares of Common Stock is further subject to the approval of counsel for the Company with respect to such compliance. Notwithstanding anything to the contrary, the Company will not be required to make any payment or grant any Award under the Plan or any Award Agreement that would otherwise be a prohibited golden parachute payment within the meaning of Section 18(k) of the Federal Deposit Insurance Act.
b. If the Committee at any time determines that any consent is necessary or desirable as a condition of, or in connection with, the granting of any Award, the delivery of shares of Common Stock or the delivery of any cash, securities or other property under the Plan, or the taking of any other action thereunder (each such action a “Plan Action”), then, subject to Section 22 such Plan Action will not be taken, in whole or in part, unless and until such consent will have been effected or obtained to the full satisfaction of the Committee. The Committee may direct that any certificate evidencing shares of Common Stock delivered pursuant to the Plan will bear a legend setting forth such restrictions on transferability as the Committee may determine to be necessary or desirable, and may advise the transfer agent to place a stop transfer order against any legended shares. The term “consent” for this purpose shall include (i) any listings, registrations, qualifications, consents or approvals upon or by any securities exchange or governmental agency or regulatory body, (ii) other consents or authorizations required to comply with applicable law or (iii) any consents by the Grantee to any restrictions on the shares of Common Stock or other property delivered under the Plan. Nothing herein will require the Company to list, register or qualify the Shares on any securities exchange.
c. Awards under the Plan will be subject to any clawback or recapture policy that the Company may adopt from time to time to the extent provided in such policy and, in accordance with such policy, may be subject to the requirement that the Awards be repaid to the Company after they have been distributed to the Grantee.
| 13. | Tax Compliance |
The Company, in its sole discretion, may take any actions that it deems to be necessary or advisable to comply with all tax reporting and withholding requirements applicable to Awards under applicable law, including, but not limited to, withholding or causing to be withheld from any form of compensation or other amount due a Grantee such amounts as the Company determines is required to be withheld. Notwithstanding anything to the contrary contained herein, in no event will the Company be liable to a Grantee on account of an Award’s failure to (a) qualify for favorable United States or foreign tax treatment or (b) avoid adverse tax treatment under United States or foreign law, including, without limitation, Section 409A.
| 14. | Non-Transferability |
No Award or rights under an Award may be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution if permitted herein. Shares of Restricted Stock may be sold, pledged, assigned, hypothecated, transferred, or disposed of only after such shares Vest and are released from forfeiture restrictions in accordance with Section 9.b. and only in compliance with the Company’s policies as in effect from time to time.
| 15. | Change in Control |
a. Except as otherwise provided in the Award Agreement, in the event of a Change in Control, then all Awards (including Awards subject to performance-vesting conditions) shall immediately Vest as of the date of the closing of such transaction, unless the Committee elects to Vest the Awards as of an earlier date. Notwithstanding the immediately preceding sentence, if the surviving, successor or acquiring corporation in the transaction (or its parent) agrees to replace Awards with rights to its equity that confer substantially the same benefits as those represented by the Awards, as determined by the Committee, then the Awards shall not Vest but shall be so replaced. The Committee shall notify each Grantee in writing of any action to Vest or replace Awards hereunder not less than twenty (20) days prior to the expected closing date of the transaction that prompts such action. Unless the Committee determines otherwise or as otherwise provided in the applicable Award Agreement, if a Grantee’s Employment is terminated by the Company or any successor entity thereto without Cause, or the Grantee resigns his or her Employment for Good Reason, in either case, on or within two (2) years after a Change in Control, (i) each Award granted to such Grantee prior to such Change in Control will become fully vested (including the lapsing of all restrictions and conditions) and, as applicable, exercisable, and (ii) any Shares deliverable pursuant to Restricted Stock Units will be delivered promptly (but no later than 15 days) following such Grantee’s termination of employment.
b. Unless the Committee determines otherwise, as of the Change in Control date, any outstanding Awards that are subject to performance-vesting conditions shall be deemed earned at the greater of the target level and the actual performance level as of the date of the Change in Control with respect to all open performance periods and will cease to be subject to any further performance conditions. Such Awards will continue to be subject to time-based vesting following the Change in Control in accordance with the original performance period except as provided in Section 15.a. or as determined by the Committee in accordance with Section 15.c.
c. In the event of a Change in Control, a Grantee’s Award will be treated, to the extent determined by the Committee to be permitted under Section 409A, in accordance with one or more of the following methods as determined by the Committee in its sole discretion: (i) settle such Awards for an amount of cash or securities equal to their value, where in the case of stock options and stock appreciation rights, the value of such awards, if any, will be equal to their in-the-money spread value (if any), as determined in the sole discretion of the Committee; (ii) provide for the assumption of or the issuance of substitute awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan, as determined by the Committee in its sole discretion; (iii) modify the terms of such awards to add events, conditions or circumstances (including termination of Employment within a specified period after a Change in Control) upon which the vesting of such Awards or lapse of restrictions thereon will accelerate; or (iv) provide that for a period of at least 20 days prior to the Change in Control, any stock options or stock appreciation rights that would not otherwise become exercisable prior to the Change in Control will be exercisable as to all Shares subject thereto (but any such exercise will be contingent upon and subject to the occurrence of the Change in Control and if the Change in Control does not take place within a specified period after giving such notice for any reason whatsoever, the exercise will be null and void) and that any stock options or stock appreciation rights not exercised prior to the consummation of the Change in Control will terminate and be of no further force and effect as of the consummation of the Change in Control. In the event that the consideration paid in the Change in Control includes contingent value rights, earnout or indemnity payments or similar payments, then the Committee will determine if Awards settled under clause (i) above are (a) valued at closing taking into account such contingent consideration (with the value determined by the Committee in its sole discretion) or (b) entitled to a share of such contingent consideration. For the avoidance of doubt, in the event of a Change in Control where all Options and Stock Appreciation Rights are settled for an amount (as determined in the sole discretion of the Committee) of cash or securities, the Committee may, in its sole discretion, terminate any Stock Option or Stock Appreciation Right for which the exercise price is equal to or exceeds the per share value of the consideration to be paid in the Change in Control transaction without payment of consideration therefor. Similar actions to those specified in this Section 15 may be taken in the event of a merger or other corporate reorganization that does not constitute a Change in Control.
| 16. | Rights as a Shareholder |
No person shall have any rights as a shareholder by reason of an Award until and unless the Company actually issues and delivers shares of Common Stock to such person pursuant to the Award. In the case of Restricted Stock, the Grantee thereof shall have all the rights of a shareholder (including voting and liquidation rights) with respect to shares of Restricted Stock that are issued and delivered to the Grantee, until such shares are forfeited or reacquired by the Company in accordance with the terms of the Award. Notwithstanding the foregoing, all ordinary cash dividends or other ordinary distributions paid upon any share of Restricted Stock during the period of restriction shall be retained by the Company and shall be paid to the Grantee (without interest) if and to the extent that the Award of Restricted Stock vests and shall revert back to the Company if for any reason the share of Restricted Stock upon which such dividends or other distributions were paid reverts back to the Company. Any extraordinary dividends or other extraordinary distributions shall be treated in accordance with Section 17. If any such dividends or distributions are paid in Shares, such Shares shall automatically be subject to the same restrictions and conditions as the shares of Restricted Stock with respect to which they were paid.
| 17. | Adjustments on Change in Capitalization |
Subject to any required action by the shareholders of the Company, the number of shares of Common Stock subject to Awards, the number of shares of Common Stock available for grants under additional Awards, the exercise price for shares of Common Stock specified in each outstanding Option or Stock Appreciation Right, the value of Common Stock used to determine amounts required to be paid under Restricted Stock Units (together with any Dividend Equivalent that it includes) and Stock Appreciation Rights and the individual Grantee limitations set forth in Section 3.c. shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or other subdivision or consolidation of shares, the payment of any extraordinary cash or stock dividend on the Common Stock or any other increase or decrease in the number of such shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” The Committee shall make such adjustments and its determination in that respect shall be final, binding and conclusive. No Incentive Stock Option shall be adjusted by the Committee pursuant to this Section 17 in a manner that causes the Incentive Stock Option to fail to continue to qualify as an “incentive stock option” within the meaning of Code Section 422. Except as otherwise expressly provided in this Section 17, no Grantee shall have any rights by reason of any stock split or other subdivision or consolidation of shares, any payment of an extraordinary cash or stock dividend, or any other increase or decrease in the number of such shares of Common Stock. Except as otherwise expressly provided in this Section 17, any issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect the number of shares or price of Common Stock subject to any Award, and no adjustments in Awards shall be made by reason thereof. The grant of an Award shall not affect in any way the right or power of the Company to adjust, reclassify, reorganize or change its capital or business structure.
| 18. | Term of the Plan |
The Plan became effective on March 28, 2018 and was approved by shareholders on May 23, 2018. The Plan, as amended by the Board on March 27, 2019 shall be effective on shareholder approval. Revisions and amendments to the Plan requiring the approval of shareholders of the Company, as described in Section 20, shall be effective when approved by the shareholders. Subject to Section 20, the Plan shall have a term of 10 years following the date of shareholder approval on May 23, 2018. In the event the Plan terminates or is terminated as provided in this Section 18 or Section 20, it shall remain in effect with respect to any Awards granted under it that are outstanding at the time of such termination.
| 19. | No Right to Employment |
Neither the adoption of the Plan nor the granting of an Award shall (i) confer upon any person a right to be employed by or to provide services to the Company or any Subsidiary, or to continue such employment or service; or (ii) interfere in any way with the right of a person, or the right of the Company or a Subsidiary, to terminate such employment relationship or service at any time.
| 20. | Amendment or Early Termination of the Plan |
a. Amendment or Early Termination. The Board may terminate the Plan at any time. The Board may amend the Plan from time to time in such respects as the Board deems advisable, except that, without proper approval of the shareholders of the Company, no such revision or amendment shall:
| 1. | increase the number of shares of Common Stock subject to the Plan, other than in connection with an adjustment under Section 17; or |
| 2. | otherwise modify the Plan in a manner that would require shareholder approval under any applicable laws or regulations or the rules of any stock exchange or quotation system on which the Common Stock may then be listed or quoted. |
Subject to the foregoing, it is specifically intended that the Board or Committee may amend the Plan without shareholder approval to comply with legal, regulatory, and stock exchange or quotation system requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purposes of the Plan or any Award Agreement.
b. Modification and Amendment of Awards. The Board or Committee may modify or amend outstanding Awards granted under the Plan; provided, however that the modification or amendment shall not, without the consent of the Grantee, materially impair or diminish any of the Grantee’s rights or any of the obligations of the Company under such Award. Except as otherwise provided in this Plan, no outstanding Award shall be terminated without the consent of the Grantee. Unless the Grantee otherwise agrees, any changes or adjustments made to outstanding Incentive Stock Options granted under this Plan shall be prospective only and shall be made in a manner that will not constitute a “modification,” as defined in Code Section 424(h), and will not cause such Incentive Stock Options to fail to qualify as “incentive stock options” under Code Section 422.
c. Re-pricing or Repurchase of Options and Stock Appreciation Rights. The exercise price of outstanding Options and Stock Appreciation Rights may not be changed, and the Company may not make an offer to purchase outstanding Options or Stock Appreciation Rights for cash or exchange outstanding Options or Stock Appreciation Rights for other securities, at a time when the exercise price of the outstanding Options or Stock Appreciation Rights exceeds the Fair Market Value of the Common Stock covered by the Options or Stock Appreciation Rights, except (i) with the approval of shareholders of the Company, or (ii) as otherwise required or permitted in the Plan.
| 21. | Nature of Awards; Other Payments or Awards |
All Awards are unfunded and unsecured obligations of the Company. Any bookkeeping entries maintained by the Company with respect to Awards are merely for the convenience of the Company. The Company is not required to segregate any assets that may at any time represent an Award and no Grantee or other person shall have any rights or interests in any particular assets of the Company by reason of an Award. A Grantee is a mere general unsecured creditor of the Company with respect to an Award. Nothing contained in the Plan will be deemed in any way to limit or restrict the Company from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
| 22. | IRC Section 409A |
The provisions of this Plan are intended to comply with Section 409A of the Code, U.S. Treasury regulations issued thereunder, and related U.S. Internal Revenue Service guidance (“Section 409A”). Such provisions will be interpreted and applied in a manner consistent with Section 409A so that payments and benefits provided to Employee hereunder will not, to the greatest extent possible, be subject to taxation under such Section 409A. Notwithstanding any contrary provisions hereof, this Plan may be amended if and to the extent the Company determines that such amendment is necessary to comply with Section 409A. Without limiting the generality of this Section 22, with respect to any Award made under the Plan that is intended to be “deferred compensation” subject to Section 409A:
a. Any payment due upon a Grantee’s termination of employment will be paid only upon such Grantee’s separation from service from the Company within the meaning of Section 409A;
b. Any payment due upon a Change in Control of the Company will be paid only if such Change in Control constitutes a “change in ownership” or “change in effective control” within the meaning of Section 409A, and in the event that such Change in Control does not constitute a “change in the ownership” or “change in the effective control” within the meaning of Section 409A, such Award will vest upon the Change in Control and any payment will be delayed until the first compliant date under Section 409A;
c. Any payment to be made with respect to such Award in connection with the Grantee’s separation from service from the Company within the meaning of Section 409A (and any other payment that would be subject to the limitations in Section 409A(a)(2)(B) of the Code) will be delayed until six months after the Grantee’s separation from service (or earlier death) in accordance with the requirements of Section 409A;
d. To the extent necessary to comply with Section 409A, any other securities, other Awards or other property that the Company may deliver in lieu of Shares in respect of an Award will not have the effect of deferring delivery or payment beyond the date on which such delivery or payment would occur with respect to the Shares that would otherwise have been deliverable (unless the Committee elects a later date for this purpose in accordance with the requirements of Section 409A);
e. With respect to any required consent described in Section 12(b) or the applicable Award Agreement, if such consent has not been effected or obtained as of the latest date provided by such Award Agreement for payment in respect of such Award and further delay of payment is not permitted in accordance with the requirements of Section 409A, such Award or portion thereof, as applicable, will be forfeited and terminate notwithstanding any prior earning or vesting;
f. If the Award includes a “series of installment payments” (within the meaning of Section 1.409A-2(b)(2)(iii) of the Treasury Regulations), the Grantee’s right to the series of installment payments will be treated as a right to a series of separate payments and not as a right to a single payment;
g. If the Award includes Dividend Equivalents, the Grantee’s right to the Dividend Equivalents will be treated separately from the right to other amounts under the Award; and
h. For purposes of determining whether the Grantee has experienced a separation from service from the Company within the meaning of Section 409A, “subsidiary” will mean a corporation or other entity in a chain of corporations or other entities in which each corporation or other entity, starting with the Company, has a controlling interest in another corporation or other entity in the chain, ending with such corporation or other entity. For purposes of the preceding sentence, the term “controlling interest” has the same meaning as provided in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations, provided that the language “at least 20 percent” is used instead of “at least 80 percent” each place it appears in Section 1.414(c)-2(b)(2)(i) of the Treasury Regulations.
| 23. | Non-Uniform Determinations; Waiver of Claims; No Third-Party Beneficiaries |
a. The Committee’s determinations under the Plan and Award Agreements need not be uniform and any such determinations may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee will be entitled, among other things, to make non-uniform and selective determinations under Award Agreements, and to enter into non-uniform and selective Award Agreements, as to (a) the persons to receive Awards, (b) the terms and provisions of Awards and (c) whether a Grantee’s employment has been terminated for purposes of the Plan.
b. Each Grantee of an Award recognizes and agrees that before being selected by the Committee to receive an Award the Grantee has no right to any benefits under the Plan. Accordingly, in consideration of the Grantee’s receipt of any Award hereunder, the Grantee expressly waives any right to contest the amount of any Award, the terms of any Award Agreement, any determination, action or omission hereunder or under any Award Agreement by the Committee, the Company or the Board, or any amendment to the Plan or any Award Agreement (other than an amendment to the Plan or an Award Agreement to which his or her consent is expressly required by the Plan or the express terms of an Award Agreement). Nothing contained in the Plan, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between the Company and any Grantee. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
c. Except as expressly provided in an Award Agreement, neither the Plan nor any Award Agreement will confer on any person other than the Company and the Grantee of any Award any rights or remedies thereunder. The exculpation and indemnification provisions of Section 4.c. will inure to the benefit of a Covered Person’s estate and beneficiaries and legatees.
| 24. | Construction of Certain Terms |
The term “Section” or “Sections,” as used herein, shall mean a Section or Sections of this Plan, unless otherwise required by the context. As required by the context (i) the masculine form of words shall include the feminine, and vice-versa, and (ii) the singular form of words shall include the plural form, and vice-versa.
| 25. | Governing Law |
This Plan and any agreements or other documents hereunder shall be interpreted and construed in accordance with the laws of the State of Washington and applicable Federal law. Any reference in this Plan or in any Award Agreement to a provision of law or to a rule or regulation shall be deemed to include any successor law, rule or regulation of similar effect or applicability.
* * * * *
CERTIFICATE OF ADOPTION
I certify that the foregoing Plan was duly adopted by the Board of Directors of Columbia Banking System, Inc. on March 28, 2018 and duly approved by the shareholders of Columbia Banking System, Inc. on May 23, 2018.
| Cathleen Dent, Assistant Secretary |
CERTIFICATE OF AMENDMENT
I certify that the foregoing Plan was duly amended by the Board of Directors of Columbia Banking System, Inc. on March 27, 2019 and duly approved by the shareholders of Columbia Banking System, Inc. on [●].
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders for the May 24, 2017 Annual Meeting, and the accompanying documents forwarded therewith, and ratifies all lawful action taken by the above-named attorneys and proxies.
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| Cathleen Dent, Assistant Secretary |
