SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
|
☐
|
Preliminary Proxy Statement
|
☐
|
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
|
☒
|
Definitive Proxy Statement
|
||
|
☐
|
Definitive Additional Materials
|
||
|
☐
|
Soliciting Material Pursuant to §240.14a-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)
Payment of Filing Fee (Check the appropriate box):
| ☒ |
No fee required.
|
| ☐ |
Fee computed on table below per Exchange Act Rules 12a(6)(i)(1) and 0-11.
|
| (1) |
Title of each class of securities to which transaction applies:
|
| (2) |
Aggregate number of securities to which transaction applies:
|
| (3) |
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
|
| (4) |
Proposed maximum aggregate value of transaction:
|
| (5) |
Total fee paid:
|
| ☐ |
Fee paid previously with preliminary materials.
|
| ☐ |
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
|
| (1) |
Amount Previously Paid:
|
| (2) |
Form, Schedule or Registration Statement No.:
|
| (3) |
Filing Party:
|
| (4) |
Date Filed:
|
COLUMBIA BANKING SYSTEM, INC.
1301 “A” Street
Tacoma, Washington 98402
April 13, 2018
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 23, 2018 at the Greater Tacoma Convention and Trade Center, 1500 Broadway, 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 fourteen nominees for director to serve on our Board of Directors; (ii) the approval of a new equity plan, (iii) the approval, on an advisory basis (non-binding), of the compensation of our named executive officers; and (iv) the approval, on an advisory basis (non-binding), of the appointment of our independent registered public accounting firm for the 2018 fiscal year.
You also will have the opportunity to hear our 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, 2017, which is available on our website at www.columbiabank.com.
We hope that you can join us on May 23rd. Whether or not you plan to attend, please take the time to vote via the Internet or 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.
 |
 |
|
William T. Weyerhaeuser
|
Hadley S. Robbins
|
|
Chairman
|
President & Chief Executive Officer
|
COLUMBIA BANKING SYSTEM, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 2018
|
TIME
|
1:00 p.m. on Wednesday, May 23, 2018
|
|
PLACE
|
Greater Tacoma Convention and Trade Center, 1500 Broadway, Tacoma, Washington 98402
|
|
ITEMS OF BUSINESS
|
The purposes of the meeting are as follows:
|
|
(1) To elect the fourteen nominees for director named in the attached proxy statement to serve on the Board of Directors until the 2019 Annual Meeting of Shareholders or until their successors have been elected and have qualified.
|
|
|
(2) To approve 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), the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018.
|
|
|
(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 thereof if you were a shareholder at the close of business on March 26, 2018.
|
|
VOTING BY PROXY
|
Please vote via the Internet or telephone or submit your proxy card (if you received one), as soon as possible so that your shares can be voted at the annual meeting in accordance with your instructions. For specific instructions on voting, please refer to the instructions in the proxy statement and on the Notice of Internet Availability of Proxy Materials you received in the mail or, if you received a hard copy of the proxy materials, on the enclosed proxy card.
|
|
By Order of the Board
|
|
 |
|
|
Kumi Y. Baruffi
|
|
|
Corporate Secretary
|
The proxy statement was first made available or mailed to shareholders on April 13, 2018.
|
Page
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
|
3
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
4
|
|
|
5
|
|
|
5
|
|
|
5
|
|
|
6
|
|
|
6
|
|
|
7
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
9
|
|
|
10
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
15
|
|
|
16
|
|
|
16
|
|
|
16
|
|
|
17
|
|
|
17
|
|
|
17
|
i
|
Page
|
|
|
19
|
|
|
19
|
|
|
23
|
|
|
23
|
|
|
37
|
|
|
40
|
|
|
43
|
|
|
52
|
|
|
53
|
|
|
55
|
|
|
55
|
|
|
60
|
|
|
60
|
|
|
61
|
|
|
61
|
|
|
62
|
|
|
63
|
|
|
63
|
|
|
63
|
|
|
64
|
|
|
65
|
|
|
65
|
|
|
65
|
|
|
66
|
|
|
66
|
|
|
A-1
|
|
|
B-1
|
COLUMBIA BANKING SYSTEM, INC.
1301 “A” Street
Tacoma, Washington 98402-4200
(253) 305-1900
Important Notice Regarding the Availability of Proxy Materials for the 2018 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, 2017 (the “2017 Annual Report”) are available at www.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.
The meeting will be at 1:00 p.m. on Wednesday, May 23, 2018 at the Greater Tacoma Convention and Trade Center, 1500 Broadway, Tacoma, Washington 98402
The Board set March 26, 2018 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 73,206,039 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 2017 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, 2018.
Our goal is to be a 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 quality 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, 2018 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.
At the Annual Meeting you will be asked to vote on:
| • |
the election of fourteen nominees to serve on the Board until the 2019 Annual Meeting of Shareholders or until their successors have been elected and have qualified;
|
| • |
the approval of the 2018 Equity Incentive Plan, which we refer to as the “2018 Plan”
|
| • |
the approval, on an advisory basis (non-binding), of the compensation of Columbia’s named executive officers; 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, 2018.
|
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 Meeting. 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 the pre-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 to http://www.proxyvote.com to 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 22, 2018.
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, call 1-800-690-6903 by 11:59 p.m. ET on May 22, 2018. 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.
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.
The Board recommends a vote (i) FOR the election of the director nominees listed in this proxy statement, (i) FOR the approval of the 2018 Plan, (iii) FOR the approval, on an advisory basis (non-binding), of the compensation of Columbia’s named executive officers, and (iv) FOR the approval, on an advisory basis (non-binding), of Deloitte as the independent registered public accounting firm for the fiscal year 2018.
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. Weyerhaeuser and 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. Weyerhaeuser and Mr. Robbins will vote as recommended by the Board. If the Board does not give a recommendation, Mr. Weyerhaeuser 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 only. 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.
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, 73,206,039 shares of Columbia common stock were outstanding and eligible to vote. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum. Broker non-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, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (i) the broker has not received voting instructions from the beneficial owner and (ii) the broker lacks discretionary voting power to vote such shares.
In an uncontested election, a nominee for election to a position on the Board will be elected as a director if the votes cast For the nominee exceed the votes cast Against the 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 vote For, Against, or Abstain from 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.
To approve the 2018 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 vote For by 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 vote For, Against or Abstain from approving the advisory (non-binding) resolution to approve named executive officer compensation. 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) 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 cast For the proposal. You may vote For, Against or Abstain from approving the proposal. Abstentions and broker non-votes will have no effect on the outcome of the proposal.
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.
The Board is soliciting proxies for use at the 2018 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.
Preliminary voting results will be announced at the Annual Meeting. We will publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days after the Annual Meeting. After the Form 8-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.
Proposals by shareholders to transact business at Columbia’s 2019 Annual Meeting must be delivered to Columbia’s Secretary no later than January 25, 2019 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 150th day and no later than the 120th day prior to the first anniversary of the 2018 Annual Meeting (meaning no earlier than December 26, 2018, and no later than January 25, 2019), and should contain such information as required under our Bylaws. However, if the date of the 2019 Annual Meeting is more than 30 days before or more than 60 days after the anniversary of the 2018 Annual Meeting, notice must be delivered no earlier than the 150th day and no later than the 120th day prior to the date of the 2019 Annual Meeting or, if the first public announcement of the 2019 Annual Meeting date is less than 100 days before the meeting date, notice must be delivered no later than the 10th day following the date of the Company’s first public announcement of the 2019 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 2019 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.
As of March 15, 2018 (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, 2018, other than those set forth below. The percentage ownership data is based on 73,258,428 Columbia common shares outstanding as of March 15, 2018.
|
Name and Address
|
Number of Shares (1)
|
Percentage
|
|
Blackrock, Inc. (2)
55 East 52nd Street
New York, NY 10055
|
9,307,225
|
12.70%
|
|
The Vanguard Group, Inc. (3)
100 Vanguard Blvd.
Malvern, PA 19355
|
6,933,336
|
9.46%
|
|
T Rowe Price (4)
100 East Pratt St.
Baltimore, MD 21202
|
3,936,306
|
5.37%
|
|
(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 23, 2018 indicates that BlackRock, Inc. had sole voting power over 9,149,166 shares and sole dispositive power over 9,307,225 shares. Various persons had the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the Columbia common shares. No one person’s interest in the Columbia common shares was more than five percent of the total outstanding Columbia common shares.
|
| (3) |
An amended Schedule 13G filed with the SEC on February 9, 2018 indicates that The Vanguard Group, Inc. had sole voting power over 85,947 shares, shared voting power over 8,238 shares, sole dispositive power over 6,845,530 shares and shared dispositive power over 87,806 shares.
|
| (4) |
A Schedule 13G filed with the SEC on February 14, 2018 indicates that T. Rowe Price Associates, Inc. had sole voting power over 948,399 shares and sole dispositive power over 3,936,306 shares.
|
The following table shows, as of March 15, 2018, 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
|
||||||
|
William T. Weyerhaeuser
|
Chairman of the Board
|
251,746(1)
|
|
*
|
|||||
|
Hadley S. Robbins
|
Director, President, and
Chief Executive Officer
|
50,843(2)
|
|
*
|
|||||
|
Kumi Y. Baruffi
|
Executive Vice President,
General Counsel
|
18,648(3)
|
|
*
|
|||||
|
David A. Dietzler
|
Director
|
10,612(4)
|
|
*
|
|||||
|
Craig D. Eerkes
|
Director
|
8,631(4)
|
|
*
|
|||||
|
Ford Elsaesser
|
Director
|
39,096(4)
|
|
*
|
|||||
|
Mark A. Finkelstein
|
Director
|
6,000(4)
|
|
*
|
|||||
|
John P. Folsom
|
Director
|
46,638(5)
|
|
*
|
|||||
|
Eric Forrest
|
Director
|
5,772(6)
|
|
*
|
|||||
|
Thomas M. Hulbert
|
Director
|
46,015(4)
|
|
*
|
|||||
|
Michelle M. Lantow
|
Director
|
13,500(4)
|
|
*
|
|||||
|
David C. Lawson
|
Executive Vice President,
Chief Human Resources Officer
|
21,564(7)
|
|
*
|
|||||
|
Randal Lund
|
Director
|
1,833(8)
|
|
*
|
|||||
|
Andrew L. McDonald
|
Executive Vice President,
Chief Credit Officer
|
45,752(9)
|
|
*
|
|||||
|
S. Mae Fujita Numata
|
Director
|
12,825(10)
|
|
*
|
|||||
|
Elizabeth W. Seaton
|
Director
|
8,000(4)
|
|
*
|
|||||
|
Clint E. Stein
|
Executive Vice President,
Chief Operating Officer,
Chief Financial Officer
|
33,810(11)
|
|
*
|
|||||
|
Janine Terrano
|
Director
|
834(12)
|
|
*
|
|||||
|
Melanie J. Dressel
|
Former Director, President
and Chief Executive Officer
|
141,956(13)
|
|
*
|
|||||
|
Directors and executive officers as a group (20)
|
775,025
|
1.06
|
%
|
||||||
| * |
Represents less than 1% of outstanding common stock.
|
| (1) |
Includes 2,000 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.
|
| (2) |
Includes 1,165 shares issuable upon the exercise of currently exercisable stock options, 3,679 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2018, 23,095 unvested time-based restricted shares and 16,170 unvested performance-based restricted shares, the maximum amount of performance-based shares that Mr. Robbins is eligible to receive, which are subject to final calculation and approval by the Personnel and Compensation Committee of the Columbia board of directors. Mr. Robbins has voting but not investment power for his unvested restricted shares.
|
| (3) |
Includes 2,276 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2018, 7,899 unvested time-based restricted shares, and 5,640 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 2,000 unvested time-based restricted shares for which the director has voting but not investment power.
|
| (5) |
Includes 2,000 unvested time-based restricted shares for which Mr. Folsom has voting but not investment power, 10,600 shares held indirectly in Mr. Folsom’s IRA, 950 shares held in Mrs. Folsom’s IRA and 23,088 shares held in a joint account with his wife.
|
| (6) |
Includes 1,333 unvested time-based restricted shares for which Mr. Forrest has voting but not investment power and 933 shares held in a joint account with his wife.
|
| (7) |
Includes 2,452 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2018, 7,032 unvested time-based restricted shares, and 6,105 unvested performance-based restricted shares, the maximum amount of performance-based shares that Mr. Lawson is eligible to receive, which are subject to final calculation and approval by the Personnel and Compensation Committee of the Columbia board of directors. Mr. Lawson has voting but not investment power for his unvested restricted shares.
|
| (8) |
Consists of 1,833 unvested time-based restricted shares for which Mr. Lund has voting but not investment power.
|
| (9) |
Includes 2,943 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2018, 8,242 unvested time-based restricted shares, and 7,140 unvested performance-based restricted shares, the maximum amount of performance-based shares that Mr. McDonald is eligible to receive, which are subject to final calculation and approval by the Personnel and Compensation Committee of the Columbia board of directors. Mr. McDonald has voting but not investment power for his unvested restricted shares.
|
| (10) |
Includes 2,000 unvested time-based restricted shares for which Ms. Numata has voting but not investment power, and 825 shares held jointly with spouse.
|
| (11) |
Includes 3,434 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2018, 20,401 unvested time-based restricted shares, and 8,400 unvested performance-based restricted shares, the maximum amount of performance-based shares that Mr. Stein is eligible to receive, which are subject to final calculation and approval by the Personnel and Compensation Committee of the Columbia board of directors. Mr. Stein has voting but not investment power for his unvested restricted shares.
|
| (12) |
Includes 834 unvested time-based restricted shares for which Ms. Terrano has voting but not investment power.
|
| (13) |
Ms. Dressel passed away on February 19, 2017. Amounts shown are as of March 15, 2017. Includes 51,134 shares held in Ms. Dressel’s Family LLC, 2,408 shares held by a corporation owned by Ms. Dressel and her spouse, 9,136 shares held in Ms. Dressel’s 401(k) and 7,788 vested performance shares, which were calculated and approved by the Personnel and Compensation Committee of the Columbia board of directors in February 2017; does not include 12,624 time-based restricted shares and 31,955 performance-based restricted shares vested in Ms. Dressel’s estate upon her death.
|
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. The Board has fixed the number of directors to be elected at the Annual Meeting at fourteen and 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 2019 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.
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 voted FOR the substitute nominee. The Board presently has no knowledge that any of the nominees will refuse or be unable to serve.
ELECTION OF DIRECTORS
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.
 |
David A. Dietzler
|
Director since 2013
|
|
Mr. Dietzler, 74, served as a director of West Coast Bancorp prior to the acquisition of West Coast Bancorp by Columbia. Mr. Dietzler was managing partner of KPMG LLP’s office in Portland, Oregon before retiring in 2005 after 37 years of service. He earned his MSBA from the University of North Dakota. Mr. Dietzler has extensive experience auditing public companies and working with audit committees, and gained significant expertise in SEC reporting, financial statement preparation, internal control and compliance requirements. Mr. Dietzler has been a director of Portland General Electric Company since 2006 serving as Chair of the Audit Committee until May 2015 and remains a member of the Audit and Nominating and Corporate Governance Committees. Mr. Dietzler’s expertise in compliance matters as well his experience serving on multiple audit committees make him a valuable resource to the Board. Mr. Dietzler is considered one of the Board’s designated audit committee financial experts.
|
||
 |
Craig D. Eerkes
|
Director since 2014
|
|
Mr. Eerkes, 66, has served as the President and Chief Executive Officer of Sun Pacific Energy, Inc., a Tri-Cities based retail and wholesale petroleum company with locations throughout Washington since 1981. He has an extensive background with financial institutions and broad experience in highly regulated industries, including sixteen years as a director of WMI Insurance Company, a health and life insurance company based in Salt Lake City, Utah. He was the chairman and a director of AmericanWest Bancorp from 2004 to 2012, as well as a director of First Hawaiian Bank from 1996 to 1999. He was founder, director and chairman of American National Bank, N.A., Kennewick, Washington, from 1981 to 1996. Mr. Eerkes is a graduate of the University of Puget Sound. He was named “Tri-Citian of the Year” for 2014 and is actively involved in the Boy Scouts, Boys & Girls Clubs, United Way and several other community organizations. His expertise in community banking and risk management brings strong operational depth to the Board.
|
||
 |
Ford Elsaesser
|
Director since 2014 |
|
Mr. Elsaesser, 66, was a member of the Intermountain Community Bancorp board of directors from 1997 until its acquisition by Columbia in 2014, serving as its Chairman from May 2013. An attorney with extensive experience with financial service companies, Mr. Elsaesser is a senior partner at Elsaesser Anderson Chtd, a Sandpoint, Idaho-based law firm founded in 1979. His practice focuses on commercial law and banking, civil litigation, bankruptcy and trusteeships and receiverships. He has served as Adjunct Professor at St. John’s University School of Law since 2003, and on the Advisory Board of the University’s Bankruptcy Program since 1999. He has also served as an Adjunct Professor at the University of Idaho Law School since 2005. A graduate of Goddard College and the University of Idaho Law School, Mr. Elsaesser has served as Chairman of the Lake Pend Oreille Commission since 2003 and Chairman of Bonner General Health Hospital since 2006. He is also a director of Food for Our Children, Bonner General Health Hospital, and the American Bankruptcy Institute. His knowledge of and contacts within the local Idaho market, as well as his legal experience, make him a valuable resource to the Board.
|
||
 |
Mark A. Finkelstein
|
Director since 2014
|
|
Mr. Finkelstein, 59, has extensive legal background and experience with financial services companies. He served as the Chief Legal and Administrative Officer and Secretary at Blucora, Inc., a tech-enabled financial solutions business, from September 2014 through June of 2017, overseeing the company’s legal and compliance functions and advising on legal and corporate strategy matters. From December 2011 through July 2014, he served as Executive Vice President – Corporate Development and General Counsel of Emeritus Corporation, an NYSE-listed healthcare company with over 30,000 employees, and as the Corporate Secretary of Emeritus from May 2012 through July 2014. Before joining Emeritus, Mr. Finkelstein served as a strategy advisor for private investment management firms in the United States and Europe and as the chief executive officer and a member of the board of directors of Novellus Capital Management, a specialized asset management firm. From 1986 to 2006, he practiced law with the Seattle law firm of Graham & Dunn, P.C., where he specialized in mergers and acquisitions, complex financing strategies and other corporate transactions involving financial service companies. Mr. Finkelstein received his B.A. with High Honors in Economics from The University of Michigan and his J.D. from The University of Michigan Law School. He is a member of the Audit and Corporate Responsibility Committee of the Board of Trustees for Seattle Children’s Hospital. Mr. Finkelstein’s legal, strategic management and financial expertise make him a valuable resource to the Board.
|
||
 |
John P. Folsom
|
Director since 1997
|
|
Mr. Folsom, 74, served as President of Brown & Brown, Inc. of Washington, formerly Raleigh, Schwarz & Powell (insurance brokers and consulting), Tacoma, Washington, from 1990 through December 31, 2006. Mr. Folsom received his professional designation in underwriting and risk management and currently serves as an independent consultant on insurance and risk management matters. Mr. Folsom earned his B.S. degree from the University of Washington and his J.D. from the University of California. He was also a past member of the California and American Bar Association. Mr. Folsom is a resident of Pierce County, and has served many community organizations. He currently serves as Emeritus Director of the Tacoma Art Museum, Director of MultiCare Health System and a member of the University of Washington – Tacoma Urban Studies Advisory Board. Mr. Folsom’s knowledge of, and business and personal contacts in the local market, together with his expertise in risk management matters and legal background, make him a valuable resource to the Board.
|
||
 |
Eric Forrest
|
Director since 2017
|
|
Mr. Forrest, 50, served as a director of Pacific Continental Corporation prior to its acquisition by Columbia. He is co-President of Eugene-based beverage distributor, Bigfoot Beverages, overseeing the company’s Pepsi franchises throughout Oregon and managing its day-to-day operations, warehousing and fleet. Mr. Forrest has served on the Board of Directors of Eugene School District 4J, chaired the Eugene Chamber of Commerce executive committee and served on the City of Eugene’s budget committee. He currently chairs the Oregon Beverage Recycling Board, which he also co-founded, and serves on the boards of directors of the Pepsi-Cola Bottlers Association and the Ford Family Foundation. He received an M.B.A. from Willamette University and a B.A. from Oregon State University. Mr. Forrest’s strong ties within the Eugene market, as well as his deep management experience and entrepreneurial drive, make him a valuable resource to the Board.
|
||
 |
Thomas M. Hulbert
|
Director since 1999
|
|
Mr. Hulbert, 71, has been President and Chief Executive Officer of Hulco, Inc., Olympia, Washington, a family- held real estate holding and investment company focusing on the acquisition, management and sale of properties within Washington state since 1979. He was also President and Chief Executive Officer of Winsor Corporation, a Seattle-based research and development company specializing in lighting technologies from 1996 to 2013. Mr. Hulbert’s business experience also includes serving as President and Chief Executive Officer of a manufacturing company and supervising the operations of a timber contracting and logging company in Montana and Washington. He has served on numerous boards of local private companies, and his leadership experience and knowledge of real estate investment provides a valuable resource to the Board.
|
||
 |
Michelle M. Lantow
|
Director since 2012
|
|
Ms. Lantow, 56, served as Chief Administrative Officer at New Season’s Market, LLC from July 2012 to September 2016, where she was responsible for all financial reporting, accounting, cash management, information technology and strategic planning. From 2010, she served as the Chief Financial Officer of McCormick & Schmick’s, a locally owned restaurant company established in 1970 and owning over 80 restaurants until the company was sold in 2012. As the Chief Financial Officer, Ms. Lantow was responsible for all financial reporting associated with a public company, in addition to human resources and information technology functions. Prior to that time, Ms. Lantow worked at lucy activewear, Inc., an apparel company that designs and sells fashion-forward performance apparel for athletic women, serving as the President from 2007 to 2009 and the Chief Financial Officer from 2000 to 2007. During the period 1995 to 2000, Ms. Lantow served as the Corporate Controller and Vice President of Investor Relations with The Gap, Inc., a diversified international specialty retailer. Ms. Lantow holds a BA in Business Economics from the University of California. She is active in her community and is a member of the Multnomah County Library Foundation. She also serves as a member of the advisory boards of the Women’s Venture Fund and Grand Central Bakery. Ms. Lantow’s depth of public company, strategic management and leadership experience make her a valuable resource for the Board.
|
||
 |
Randal Lund
|
Director since 2017
|
|
Mr. Lund, 60, 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 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.
|
||
 |
S. Mae Fujita Numata
|
Director since 2012
|
|
Ms. Numata, 61, is the founder of Numata Consulting PLLC. Since 2009, she has provided interim executive leadership services to predominantly privately-owned companies. Ms. Numata is also a former Engagement Partner with Tatum, a national CFO consulting firm. From 2006 to 2008, Ms. Numata served as the Senior Vice President/Chief Financial Officer and Corporate Secretary of Fisher Communications, Inc., a broadcasting company. From 1997 to 2006, Ms. Numata served as Vice President and Chief Financial Officer of The Seattle Times Company, and from 1993 to 1997 was a Senior Vice President of Corporate Development of KeyBank of Washington. Ms. Numata is currently a director and chair of the Audit Committee for both Oberto Sausage Company and GeoEngineers, Inc. She is a member of the Washington Society of and American Institute of Certified Public Accountants, Women Corporate Directors and National Association of Corporate Directors. She is a board member and former co-president of the board for the Executive Development Institute and current board chair for the Girl Scouts of Western Washington. She graduated from the University of Washington and holds a B.A. in Business Administration with a concentration in banking. Ms. Numata’s extensive accounting and banking background provide the Board and Audit Committee with valuable expertise, and she is one of the Board’s designated audit committee financial experts.
|
||
 |
Hadley S. Robbins
|
Director since 2017
|
|
Mr. Robbins, 61, 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 has 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 and the Oregon Bankers Association. As Chief Executive Officer 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, 57, is the Senior Vice President of Operations for Saltchuk Resources Inc., a family of diversified transportation and fuel distribution companies, headquartered in Seattle. Ms. Seaton served as Vice President of Strategic Planning and Corporate Development for Weyerhaeuser Company from 2008 to 2014. Her career with Weyerhaeuser spanned over twenty years, and included positions in strategic planning, capital investments and business leadership. Prior to Weyerhaeuser, she was Principal for Boston Consulting Group, a global management consulting firm. Ms. Seaton is a graduate of Princeton University, holds a J.D./M.B.A. from the University of Chicago and is a member of the California Bar. She has more than ten years of experience as a board member and advisor to a wide range of organizations, including Liaison Technologies, and she contributes to her community as the Board Chair of Planned Parenthood of the Great Northwest and Hawaii. Her broad experience in business leadership, change management, strategic development, mergers and acquisitions and enterprise risk management provides a valuable resource to the Board.
|
||
 |
Janine Terrano
|
Director since 2018
|
|
Ms. Terrano, 56, has extensive business leadership expertise and experience building companies in the technology sector. Ms. Terrano founded Business Internet Services in 1996 and grew the organization to serve the web application development needs of large commercial and government clients. In 1999, Ms. Terrano launched Topia Technology, Inc. Topia’s patented solutions securely manage the movement of data between disparate platforms, components and devices, allowing commercial and government clients to connect new technologies to complex legacy systems. Ms. Terrano is a resident of Tacoma, Washington and attended Carroll College, University of Washington and University of Oklahoma. She currently serves on the Boards of MultiCare Health Systems, Geneva Foundation and Tacoma Art Museum. Ms. Terrano is a TEDx speaker and was the recipient of the 2013 University of Washington Tacoma Small Business Leader award. Her depth of technology, data security and business experience make her a valuable resource to the Board.
|
||
 |
William T. Weyerhaeuser
|
Director since 1998
|
|
Mr. Weyerhaeuser, 74, is the Chairman of the Board of Columbia. He is also a Director of eHarmony, an online dating website for singles, and a Director of Clearwater Management Company, an employee owned investment management firm. He is the former Chairman of Comerco, Inc., a holding company for Yelm Telephone Company, and Rock Island Company, a private investment company. He is also a former Director and Vice Chairman of the Board of Potlatch Corporation, a forest products company, and a former Director of Clearwater Paper Corporation, a forest products company. Mr. Weyerhaeuser received his undergraduate degree from Stanford University and his Ph.D. in Clinical Psychology from Fuller Graduate School of Psychology, Fuller Theological Seminary. He had a private practice in Tacoma from 1975-1998. He is a Trustee and past Chairman of the Board of the University of Puget Sound, a Director and Vice Chairman of LeMay-America’s Car Museum, a Trustee and former President of the Seattle Opera Board of Trustees and past President of the Pacific Harbors Council, Boy Scouts of America. Among other past volunteer activities, Mr. Weyerhaeuser has served as President of the Board of the Tacoma Art Museum and as a Director of The Greater Tacoma Community Foundation. Mr. Weyerhaeuser’s diverse background and public company experience provides a valuable perspective to the Board.
|
||
The Board unanimously recommends a vote “FOR” each of the nominees for director.
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.
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.
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 for one-year terms, the Corporate Governance and Nominating Committee has an annual opportunity to assess these factors and, if appropriate, determine not to re-nominate any director. A more detailed discussion regarding the considerations given by the 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.
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 current non-employee directors and director nominees is independent:
|
David A. Dietzler
|
Michelle M. Lantow
|
|
Craig D. Eerkes
|
Randal Lund
|
|
Ford Elsaesser
|
S. Mae Fujita Numata
|
|
Mark A. Finkelstein
|
Elizabeth W. Seaton
|
|
John P. Folsom
|
Janine Terrano
|
|
Eric Forrest
|
William T. Weyerhaeuser
|
|
Thomas M. Hulbert
|
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.
During 2017, the Personnel and Compensation Committee consisted of Ms. Lantow (Chair), Mr. Eerkes, Mr. Finkelstein, Mr. Forrest (effective November 1, 2017), Mr. Hulbert and Ms. Numata. During 2017, 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.
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.
The Board met 13 times during 2017. 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 attended the annual shareholder meeting. During 2017, the independent directors held 9 meetings without management present.
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 2017. Janine Terrano was appointed to the Board effective January 24, 2018 and therefore did not serve on any committees during 2017.
Committee Membership
|
Name
|
Audit
|
Compensation
|
Nominating
|
E.R.M.
|
|||
|
David A. Dietzler
|
þ*
|
☐
|
☐
|
☑
|
|||
|
Craig D. Eerkes
|
☐
|
☑
|
☐
|
☑
|
|||
|
Ford Elsaesser
|
☑
|
☐
|
☑
|
☐
|
|||
|
Mark A. Finkelstein
|
☐
|
☑
|
☐
|
☑
|
|||
|
John P. Folsom
|
☑
|
☐
|
☑
|
þ*
|
|||
|
Eric Forrest (1)
|
☐
|
☑
|
☐
|
☐
|
|||
|
Thomas M. Hulbert
|
☑
|
☑
|
☑
|
☐
|
|||
|
Michelle M. Lantow
|
☐
|
þ*
|
☑
|
☐
|
|||
|
Randal Lund (2)
|
☑
|
☐
|
☐
|
☐
|
|||
|
S. Mae Fujita Numata
|
☑
|
☑
|
☑
|
☐
|
|||
|
Elizabeth W. Seaton
|
☐
|
☐
|
☐
|
☑
|
|||
|
William T. Weyerhaeuser
|
☐
|
☐
|
þ*
|
☐
|
|||
|
Total Meetings in 2017
|
8
|
12
|
10
|
4
|
| * |
Committee Chair
|
| (1) |
Mr. Forrest was appointed to the Board effective November 1, 2017 and therefore did not serve on the Compensation Committee for the full year.
|
| (2) |
Mr. Lund was appointed to the Board effective July 26, 2017 and therefore did not serve on the Audit Committee for the full year.
|
Audit Committee. With the appointment of Janine Terrano in January, 2018, the Audit Committee is now comprised of seven 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 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;
|
| • |
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;
|
| • |
review the integrity of the financial reporting process;
|
| • |
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
|
| • |
review and approve related party transactions.
|
Personnel and Compensation Committee. The Personnel and Compensation Committee is comprised of six 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 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.
The Personnel and Compensation Committee commissioned Pearl Meyer and Partners (“Pearl Meyer”), an independent outside compensation consultant, to conduct a study of the Company’s 2016 executive compensation compared to a peer group comprised of other publicly traded financial services companies. The committee has used this report, 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 a peer group of 16 bank holding companies. Further information relating to the Pearl Meyer report is discussed in the section entitled “Compensation Discussion and Analysis.”
In addition, the Personnel and Compensation Committee:
| • |
reviews all employee benefit plans; and
|
| • |
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 comprised of six directors, each of whom is considered “independent” as defined by the NASDAQ listing standards, and 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 2019 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, 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, 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 2017 are discussed in the section below.
Enterprise Risk Management Committee. The Enterprise Risk Management Committee (the “ERM Committee”) was formed in 2009 and, with the addition of Janine Terrano in January 2018, is now comprised of six 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. It is anticipated that the company’s new Executive Vice President and Chief Risk Officer who took office in March, 2018 will assist 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, 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 reported 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 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.
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.
2017 Director Compensation Table
|
Name
|
Fees Earned or
Paid in Cash
($)
(1)
|
Stock Awards
($)
(2)
|
Option Awards ($)
|
Non-Equity
IncentivePlan
Compensation
|
Change In Pension Value
and Nonqualified
Deferred Compensation
Earnings
(3)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
|
David A. Dietzler
|
$
|
92,000
|
$
|
78,700
|
—
|
— | — |
—
|
$ | 170,700 | ||||||||||||||||||
|
Craig D. Eerkes
|
84,000
|
78,700
|
—
|
— | — |
—
|
162,700 | |||||||||||||||||||||
|
Ford Elsaesser
|
89,000
|
78,700
|
—
|
— | — |
—
|
167,700 | |||||||||||||||||||||
|
Mark A. Finkelstein
|
81,000
|
78,700
|
—
|
— | — |
—
|
159,700 | |||||||||||||||||||||
|
John P. Folsom
|
93,000
|
78,700
|
—
|
— | — |
—
|
171,700 | |||||||||||||||||||||
|
Eric Forrest
|
8,834
|
58,865
|
—
|
— | — |
—
|
67,699 | |||||||||||||||||||||
|
Thomas M. Hulbert
|
92,000
|
78,700
|
—
|
— | — |
—
|
170,700 | |||||||||||||||||||||
|
Michelle M. Lantow
|
99,000
|
78,700
|
—
|
— | 2,112 |
—
|
179,812 | |||||||||||||||||||||
|
Randal Lund
|
25,500
|
72,568
|
—
|
— | — |
—
|
98,068 | |||||||||||||||||||||
|
S. Mae Fujita Numata
|
89,000
|
78,700
|
—
|
— | 803 |
—
|
168,503 | |||||||||||||||||||||
|
Elizabeth W. Seaton
|
68,000
|
78,700
|
—
|
— | — |
—
|
146,700 | |||||||||||||||||||||
|
William T.
|
||||||||||||||||||||||||||||
|
Weyerhaeuser
|
118,000
|
78,700
|
—
|
— | — |
—
|
196,700 | |||||||||||||||||||||
| (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 $13,000 and $29,000, respectively, of which $16,000 were fees paid for special meetings to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
|
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 $13,000 and $36,000, respectively, of which $14,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
Amount shown for Mr. Elsaesser represents (i) a retainer in the amount of $35,000; (ii) $9,000 received as chairman of Columbia Trust Company; and (iii) aggregate per meeting board and committee attendance fees of $13,000 and $32,000, respectively, of which $18,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
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 $13,000 and $33,000, respectively, of which $16,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
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 $13,000 and $36,000, respectively, of which $21,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
Amount shown for Mr. Forrest represents (i) a prorated retainer in the amount of $5,834; and (ii) aggregate per meeting board and committee attendance fees of $1,000 and $2,000, 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 $13,000 and $35,000, respectively, of which $14,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
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 $13,000 and $39,000, respectively, of which $21,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
Amount shown for Mr. Lund represents (i) a prorated retainer in the amount of $17,500; and (ii) aggregate per meeting board and committee attendance fees of $5,000 and $3,000, 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 $13,000 and $41,000, respectively, of which $20,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
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 $12,000 and $21,000, respectively, of which $15,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
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 $13,000 and $25,000, respectively, of which $8,000 were fees paid for special meetings held to address the leadership transition resulting from Ms. Dressel’s unexpected passing.
| (2) |
For each director other than Messrs. Forrest and Lund, represents a restricted stock award of 2,000 shares granted on June 28, 2017 at the grant date fair value. For Mr. Forrest, represents a restricted stock award of 1,333 shares granted on November 1, 2017 and for Mr. Lund, represents a restricted stock award of 1,833 shares granted on July 26, 2017. 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 2017, included in the Company’s 2017 Annual Report.
|
| (3) |
Represents above-market earnings on Ms. Lantow’s and Ms. Numata’s deferred compensation accounts, the material terms of which are described below under “Deferred Compensation Plan.”
|
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 the 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 2014 Stock Option & Equity Compensation Plan, the material terms of which are discussed under the section “Executive 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 had previously approved stock ownership guidelines that required directors to achieve a stock ownership position of at least 7,000 shares within five years of joining the Board. In March 2017, the Board replaced the stock ownership guidelines with a 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 2017, all non-executive directors satisfied the Stock Ownership Policy requirements other than Mr. Lund, who joined the Board in 2017. See “Stock Ownership Guidelines and No Hedging” in the Compensation Discussion & Analysis below for additional details regarding the Stock Ownership Policy.
Compensation Committee Report
The Personnel and Compensation 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 Personnel and Compensation Committee of the Board met and discussed with management the Compensation Discussion and Analysis (“CD&A”) required by Item 402(b) of Regulation S-K, and based on that review and discussion, the committee recommended to the Board that the CD&A be included as part of this proxy statement and the 2017 10-K Annual Report.
Members of the Personnel and Compensation Committee
Michelle M. Lantow, Chairwoman
Craig D. Eerkes
Mark A. Finkelstein
Eric Forrest
Thomas M. Hulbert
S. Mae Fujita Numata
Columbia has substantially met our long-held goal of being a leading Northwest regional community bank, with 155 branches in Washington, Oregon and Idaho. The Personnel and Compensation Committee (referred to in this Compensation Discussion and Analysis as the “Committee”) made compensation decisions for our executive team in the context of this achievement and other core performance results.
|
2017 Financial Results
|
|
·
|
Consolidated net income for 2017 was a record $112.8 million, representing an 8% increase compared to the prior year. The increase in net income was a result of higher net interest income from the growth in our interest-earning assets, higher noninterest income due to the sale of our merchant card services portfolio, and improved operating leverage achieved through diligent expense management.
|
|
·
|
Loan growth for 2017 was 35%, or $2.15 billion, due to the acquisition of Pacific Continental, which added $1.87 billion in loans, and substantial loan originations for the year of $1.20 billion.
|
|
·
|
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 six basis points average cost of core deposits is an important factor in the stability of our net interest margin. Core deposit growth for 2017 was $2.29 billion due to the acquisition of Pacific Continental as well as organic growth.
|
|
·
|
Core noninterest expense to average assets(1), a measure of operating efficiency, improved significantly during 2017, declining to 2.67% from 2.77% in 2016. Reported noninterest expense to average assets increased to 2.87% in 2017, compared to 2.80% in 2016 as a result of higher acquisition-related expense in 2017.
|
|
·
|
Credit quality remained solid, with total nonperforming assets to period-end assets at 0.63% compared to 0.35% at December 31, 2016. This metric was negatively impacted by the nonperforming assets acquired through the Pacific Continental acquisition.
|
|
|
|
|
2017 Shareholder Return
|
|
·
|
2017 Total Shareholder Return. Our shareholders realized a 1% total return on their investment during 2017, which was in line with the KBW Regional Banking Index’s return of 2%. The NASDAQ Composite Index performed better than the financial sector with a total return of 30% during 2017. Our three-year total shareholder return is 77%, compared to returns of 50% and 51% for the KBW Regional Banking and NASDAQ Composite Indexes, respectively.
|
|
·
|
Increases in regular dividends. We raised our regular cash dividend from $0.77 to $0.88 per share during 2017. Our dividend payout ratio was 47% for 2017 compared to 85% for 2016. The decrease was due to the special dividends paid in 2016. Our 2017 dividend yield was 2%, based on our closing price at December 31, 2017.
|
(1) Core noninterest expense to average assets is a non-GAAP financial measure. Please refer to Appendix A for additional information and reconciliations to the most directly comparable GAAP financial measure.
|
2017 Milestones
|
|
·
|
Market Share. As of June 30, 2017, Columbia Bank ranked seventh in deposit market share in the Northwest. The bank ranked eighth in deposit market share out of 83 institutions in Washington, seventh out of 49 in Oregon and thirteenth out of 32 in Idaho.
|
|
·
|
Industry Accolades. Columbia Bank was again recognized by Forbes on its 2018 list of “America’s Best Banks,” ranking 11th in the country. The rankings were based on asset quality, capital adequacy, net interest margin and profitability of the nation’s 100 largest publicly traded banks and thrifts.
|
|
·
|
Workplace Accolades. Our continued commitment to employees contributed to Columbia Bank being named as one of “Washington’s Best Workplaces” 2017 by the Puget Sound Business Journal for the eleventh consecutive year.
|
|
·
|
Record Income, Loan Production and Deposits. Columbia achieved strong loan production of $1.20 billion for the year and record net income of $112.8 million. Deposits, including core deposits, increased to over $10 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 2017, we provided support to organizations that serve the homeless, the arts, chambers of commerce, economic development organizations, public school districts, and numerous other causes.
Through generous donations from customers, employees and the community, Columbia’s third annual “Warm Hearts Winter Drive” raised $220,365 and 6,542 warm winter items to benefit homeless shelters across the Northwest.
|
|
|
|
2017 Compensation Highlights
|
|
·
|
Leadership Transition. Following the unexpected passing of Ms. Dressel in February 2017, Mr. Robbins, formerly our Executive Vice President, Chief Operating Officer, was appointed our President and Chief Executive Officer. In connection with his appointment, we entered into an employment agreement with Mr. Robbins that reflects our compensation best practices. As a result of Mr. Robbins’ increased authority and responsibilities, the Compensation Committee, in consultation with its independent compensation consultant, increased Mr. Robbins’ target compensation opportunity to better align with the target compensation opportunities provided to the chief executive officers at our peers.
|
|
·
|
Above-Target Incentive Earnouts. 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 our Named Executives for 2017 performance ranged from 134% to 136% of target, and performance shares for the 2015-2017 performance period were earned at 139% of target.
|
|
·
|
Updated Compensation Policies. In 2017, the Board adopted (1) a new Clawback Policy, which provides for the recovery of incentive compensation from current and former executive officers under certain circumstances and (2) a new Stock Ownership Policy, which requires our Chief Executive Officer and Executive Vice Presidents to own shares equal in value to three times and two times, respectively, their annual base salaries.
|
Changes in Leadership
Mr. Robbins was appointed Interim Chief Executive Officer on February 22, 2017 following the unexpected passing of Ms. Dressel. The board conducted a national, external search for a permanent Chief Executive Officer and determined that Mr. Robbins was the leading candidate. Accordingly, on June 28, 2017, Mr. Robbins was appointed to serve as President and Chief Executive Officer and a member of the Board, effective as of July 1, 2017.
On July 10, 2017, Mr. Stein was appointed as Executive Vice President and Chief Operating Officer, filling the role vacated by Mr. Robbins. Mr. Stein also continues as the Company’s Chief Financial Officer while the Company conducts a search for a successor Chief Financial Officer.
In connection with these leadership changes, the Committee approved an increase in the base salary and the target annual incentive and target long-term incentive opportunities for Mr. Robbins effective July 1, 2017, which are described in more detail in “Compensation Tables—Post-Employment and Termination Benefits—Executive Employment Agreements” below.
The table below shows the 2017 total target direct compensation opportunities for our current Named Executives. For Mr. Robbins, (1) the base salary reflects the prorated annual base salary to which Mr. Robbins was entitled for each position that he held in 2017, for the period of time in 2017 in which he held that position, (2) the target annual incentive reflects the target calculated based on the actual base salary paid to Mr. Robbins in 2017 and (3) the target long-term incentive reflects the target long-term incentive opportunity to which Mr. Robbins is entitled as the Company’s President and Chief Executive Officer. The Committee focuses on target direct compensation as shown below in making annual compensation decisions.
|
2017 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
|
$548,833
|
$329,300
|
$436,320
|
$1,314,453
|
|
|
Clint E. Stein,
Executive Vice President, Chief Operating Officer and Chief Financial Officer
|
406,600
|
162,640
|
223,630
|
792,870
|
|
|
David C. Lawson,
Executive Vice President, Chief Human Resources Officer
|
276,000
|
110,400
|
151,800
|
538,200
|
|
|
Andrew L. McDonald,
Executive Vice President, Chief Credit Officer
|
323,000
|
129,200
|
177,650
|
629,850
|
|
|
Kumi Y. Baruffi,
Executive Vice President, General Counsel
|
255,000
|
102,000
|
140,250
|
497,250
|
|
|
* The amounts reported differ from the amounts determined under SEC rules as reported for 2017 in the Summary Compensation Table set forth under “Compensation Tables” below. The above table is not a substitute for the Summary Compensation Table.
|
|||||
Compensation Philosophy
In 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.
|
| · |
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.
|
|
Our Key Compensation Best Practices
|
|
✓
|
Pay-for-performance
|
|
✓
|
Share ownership guidelines
|
|
✓
|
Double-trigger severance benefits
|
|
✓
|
Independent compensation consultant
|
|
✓
|
Clawback policy
|
|
✓
|
No-hedging policy
|
|
´
|
No tax gross-ups on severance payments
|
|
´
|
No equity grants below 100% of fair market value
|
|
´
|
No significant perquisites
|
|
|
The compensation tables that appear later in this proxy statement reflect decisions made by the Committee. We encourage you to refer to the tables while reviewing this section in order to understand how our compensation philosophy is put into action.
Factors in Setting Overall Compensation Levels
When establishing overall compensation opportunities for the Named Executives, the Committee considers the following factors:
| · |
the Company’s overall performance and performance relative to its peers during the past year, including meeting its financial and other strategic goals;
|
| · |
the executives’ respective levels of responsibility and functions within the Company;
|
| · |
each executive’s performance during the past year in meeting individual objectives;
|
| · |
how compensation of our executives compares to executives at peer institutions, with a particular focus on financial institutions with similar corporate objectives and comparable asset size;
|
| · |
the alignment of executive compensation decisions and policies with the decisions and policies applicable to other employees;
|
| · |
the need to provide a competitive executive compensation package to attract and retain superior executive talent;
|
| · |
as appropriate, general economic conditions within our market area and the overall banking industry;
|
| · |
the recommendations of our Chief Executive Officer in setting compensation for other executives; and
|
| · |
the results of the prior year’s shareholder advisory vote on executive compensation, which, consistent with prior years, received solid shareholder support in 2017, reflecting our shareholders’ support for our compensation philosophy and the executive compensation decisions made by the Committee.
|
The Committee generally follows this process for determining executive compensation; however, other discretionary and subjective components may also be considered if appropriate.
Role and Relationship of the Compensation Consultant
The Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant’s fees and all other terms of the engagement. The Committee has direct access to outside advisors and consultants throughout the year.
The Committee engaged Pearl Meyer with respect to recommendations regarding 2017 executive compensation decisions. The Committee made these decisions in part based on Pearl Meyer’s study of the Company’s executive compensation program in 2016 (the “2016 Executive Compensation Study”). The Committee also retained the services of Pearl Meyer in June 2017 to consider whether any updates to the Company’s peer group were appropriate following the Company’s acquisition of Pacific Continental Corporation, as described below in “The Role of Benchmarking.”
In accordance with SEC rules and NASDAQ listing standards, the Committee took appropriate actions in 2017 to consider the independence of Pearl Meyer.
The Role of Benchmarking
The 2016 Executive Compensation Study compared the Company’s executive compensation program to the compensation programs of a peer group comprised of other publicly traded financial services companies, as described below. The Committee used the report as a tool in setting compensation levels in 2017.
Pearl Meyer’s 2016 Executive Compensation Study provided market observations on executive base salaries and short- and long-term incentive opportunities based on competitive data from published proxy filings of a peer group of 16 bank holding companies. The peer group in the 2016 Executive Compensation Study was selected primarily based on the assets, operating revenue and market capitalization, geographic location, communities served and loan mix and revenue mix of the peer group, which Pearl Meyer advised were appropriate parameters. Based on the recommendations of Pearl Meyer, the Committee approved the peer group for market comparisons and benchmarking in October 2016, which consisted of the following bank holding companies:
|
2016-2017 Peer Group
|
|||
|
BancorpSouth, Inc.
|
Heartland Financial USA, Inc.
|
||
|
Banner Corporation
|
MB Financial, Inc.
|
||
|
CVB Financial Corp.
|
NBT Bancorp Inc.
|
||
|
First Financial Bancorp
|
Old National Bancorp
|
||
|
First Interstate BancSystem, Inc.
|
Pinnacle Financial Partners, Inc.
|
||
|
First Midwest Bancorp, Inc.
|
Sterling Bancorp
|
||
|
Glacier Bancorp Inc.
|
Trustmark Corporation
|
||
|
Great Western Bancorp, Inc.
|
Western Alliance Bancorporation
|
||
In conducting the 2016 Executive Compensation Study, Pearl Meyer also considered compensation at Umpqua Holdings Corporation, Washington Federal, Inc., South State Corporation and Banner Corporation as additional reference points where appropriate as requested by the Committee.
For compensation decisions beginning with 2018 compensation, the Committee engaged Pearl Meyer to consider whether any updates to the 2016 peer group were appropriate. Based upon Pearl Meyer’s recommendation, the Committee approved the 2017-2018 peer group in June 2017. In considering the 2017-2018 peer group, Pearl Meyer considered the assets, operating revenue, market capitalization, and loan mix and revenue mix of the peer companies, which Pearl Meyer determined to be the appropriate parameters. The 2017-2018 peer group consists of the following 17 bank holding companies:
|
2017-2018 Peer Group
|
|||
|
BancorpSouth, Inc.
|
Great Western Bancorp, Inc.
|
||
|
Banner Corporation
|
MB Financial, Inc.
|
||
|
Chemical Financial Corporation*
|
Old National Bancorp
|
||
|
CVB Financial Corp.
|
Pinnacle Financial Partners, Inc.
|
||
|
First Financial Bancorp
|
Sterling Bancorp
|
||
|
First Interstate BancSystem, Inc.
|
Texas Capital Bancshares, Inc.*
|
||
|
First Midwest Bancorp, Inc.
|
Trustmark Corporation
|
||
|
Fulton Financial Corporation*
|
Western Alliance Bancorporation
|
||
|
Glacier Bancorp Inc.
|
|||
|
* Denotes a company added to the peer group in 2017
|
|||
|
NBT Bancorp Inc. and Heartland Financial USA, Inc. were removed from the peer group in 2017 because their size and/or loan mix were determined to no longer fit within the parameters of the peer group.
|
|||
Compensation Structure
Principal Elements of Compensation
Our overall compensation program for executives currently consists of six key elements:
|
·
|
Base Salary
|
|
·
|
Annual Incentive Compensation
|
|
·
|
Long-Term Equity Incentives
|
|
·
|
Retirement Benefits
|
|
·
|
Severance and Change-in-Control Benefits
|
|
·
|
General Employee Benefits
|
|
|
The combination of these six key elements reinforces our pay‑for‑performance philosophy and strengthens our ability to attract and retain highly qualified executives in our highly competitive banking environment. We believe that this mix of fixed and variable pay advances both the short- and long-term interests of our business, promotes creating long‑term shareholder value and helps us recruit and retain top executives. The Committee’s
decisions regarding the executive compensation program design and individual pay are made in the context of the total compensation philosophy outlined above, including our financial performance.
Base Salary
Salaries are used to provide a competitive fixed amount of base compensation. Our goal is to provide base salary levels that reflect a combination of factors, including competitive pay levels relative to our peer group (as in effect at the time of the determination), the executives’ individual performance and overall contribution to the organization, the relevant position’s scope of responsibilities, the executives’ experience and tenure, and our overall annual budget, which takes into account Company financial performance. The salaries of the Named Executives are reviewed on an annual basis, as well as at the time of a promotion or other change in responsibilities.
In connection with Mr. Robbins’ appointment as interim Chief Executive Officer in February 2017, the Committee approved a bi-weekly stipend of $5,538 to compensate Mr. Robbins for his additional responsibilities and then, as discussed above, the adjustment to Mr. Robbins’ compensation in connection with his appointment as the Company’s President and Chief Executive Officer increased his base salary. Accordingly, Mr. Robbins’ base salary effective July 2017 reflected an increase over his 2016 base salary by approximately 79%. Mr. Stein’s base salary was increased by approximately 11% from his annual base salary rate in effect at the end of 2016 to reflect his additional responsibilities as the Company’s Chief Operating Officer. Other Named Executives’ base salaries were increased from 2016 rates by approximately 4%.
Annual Cash Incentive Compensation
Consistent with competitive practices, we believe that a portion of our Named Executives’ target compensation should be at risk, contingent upon the Committee’s assessment of performance. When determining earned annual cash incentive awards, the Committee considers the Company’s performance against pre-established financial performance measures as well as the executive’s individual performance and contribution to the Company’s overall performance. Annual cash incentive awards therefore seek to drive progress toward achieving the Company’s annual business objectives and permit individual performance to be recognized.
In early 2017, the Committee established target annual cash incentive opportunities for 2017 equal to 40% of base salary for the Named Executives other than Ms. Dressel, who did not participate in the annual incentive plan for 2017. Earned annual incentive awards could range from 0% to 60% of base salary for those Named Executives, based on the level of achievement of the following performance goals:
|
Performance Goals
|
Weighting
|
2017 Actual
|
% Achieved
|
||||
|
Threshold
(50% of
Target)
|
Target
(100% of
Target)
|
Stretch
(150% of
Target)
|
|||||
|
Core Return on
Average Assets (%)1
|
0.95%
|
1.03%
|
1.30%
|
30%
|
1.27%
|
144.44%
|
|
|
Core Return on Average Tangible Common Equity (%)
|
9%
|
11.10%
|
15%
|
25%
|
14%
|
137.18%
|
|
|
Ratio of Core Noninterest Expense to Average Assets (%)1
|
2.92%
|
2.72%
|
2.52%
|
15%
|
2.67%
|
111.48%
|
|
|
Ratio of Non-Performing Assets to period end Total Loans & OREO(%)2
|
1.30%
|
1.00%
|
0.75%
|
15%
|
0.69%
|
150%
|
|
|
Individual Performance
|
N/A
|
N/A
|
N/A
|
15%
|
**
|
115-125%
|
|
|
Total:
|
134-136% of Target
|
||||||
|
1 Core return on average assets and ratio of core noninterest expense to average assets are non-GAAP financial measures. Please refer to Appendix A for additional information regarding how these performance measures are calculated from the Company’s audited financial statements.
|
|||||||
|
2 Because the period end financials of the Company included the financial results of Pacific Continental Corporation, which the Company acquired in the fourth quarter of 2017, the Committee determined to calculate actual performance under the Ratio of Non-Performing Assets to Total Loans & OREO (the “NPA Ratio”) by averaging the NPA Ratio as of the end of each quarter in 2017. This revised calculation reduced the earned NPA Ratio from 0.72% to 0.69% but did not change the percentage achievement of the goal, which exceed the stretch performance level and was therefore capped at 150% of target.
|
|
|
** Each Named Executive earned 115% of target for the individual performance goal except for Mr. Stein, who earned 125% of target. The individual performance results for each Named Executive are discussed below.
|
For the individual performance metrics, Mr. Robbins established and approved individual performance factors for the other Named Executives, which factors are discussed in more detail below.
Performance below the “threshold” level results in no payout earned for the applicable performance goal. If performance falls between the “threshold” and “target” or “target” and “stretch” levels, then the earned payout is determined using straight line interpolation. Once earned annual incentive awards were calculated based on actual performance as compared to the goals set forth above, the Committee had the discretion to reduce or increase the payouts to the extent it determined appropriate to reflect the business environment and market conditions that may affect Columbia’s financial and stock price performance. Based in part on the recommendations of Mr. Robbins, the Committee approved the final annual incentive award payouts to the Named Executives other than Mr. Robbins. The Committee approved and recommended to the Board for approval the final annual incentive award payout to Mr. Robbins.
The table above shows the Company performance in 2017 for each of the four Company performance metrics, as well as the resulting weighted achievement percentage earned as a result of 2017 performance. For the individual performance component, the Committee considered the following achievements for each Named Executive with respect to his or her individual performance factors. For Mr. Robbins, who was responsible for leading the performance of the Company as a whole, the Committee considered the successful closing of the Company’s acquisition of Pacific Continental Corporation, including the on-schedule integration and system conversions relating to that acquisition, and Mr. Robbins’ stabilization of the Company’s operational activities and achievement of the Company’s advance strategic initiatives for 2017. For Mr. Stein, the Committee considered Mr. Stein’s service during 2017 as Chief Financial Officer and Chief Operating Officer and his preparation of the Company’s DFAST model for submission to the Federal Reserve Board. For Mr. Lawson, the Committee considered the Company’s successful integration and transition of the Pacific Continental Corporation workforce planning and talent management processes and continued achievement of human resources business objectives during the integration related to that acquisition. For Mr. McDonald, the Committee considered Mr. McDonald’s successful integration of the Pacific Continental Corporation business, smooth transition from procedures to policies in accordance with Federal Deposit Insurance Corporation recommendations and successful implementation of document imaging. For Ms. Baruffi, the Committee considered Ms. Baruffi’s contributions towards the successful closing of the Company’s acquisition of Pacific Continental Corporation and the integration of Pacific Continental Corporation into the Company’s businesses, including Ms. Baruffi’s coordination with outside counsel, regulatory agencies and third parties; support for project management, human resources and business lines; and continued focus on governance and corporate strategy. After considering each Named Executive’s performance in 2017, the Committee approved the achievement of the individual performance component at 100% of the target level for each Named Executive.
In connection with his appointment as the Company’s President and Chief Executive Officer, Mr. Robbins’ target bonus opportunity was increased to 60% of base salary (calculated for 2017 based on actual base salary paid during the year) and could range from 0% to 90% of base salary. In addition to the Company and individual performance metrics discussed above, Mr. Robbins’ bonus for 2017 was subject to a threshold goal established by the Committee in June 2017, which required the Company to achieve positive net income for the period from July 1, 2017 through December 31, 2017. The Committee certified the achievement by the Company of this threshold goal on March 2, 2018.
Based on these 2017 Company and individual performance results, the Committee approved annual incentive awards to the Named Executives for 2017 as follows:
|
Named Executive
|
Target
Annual
Incentive
|
Earned
Annual
Incentive
|
|
Hadley S. Robbins
|
$329,300
|
$441,593
|
|
Clint E. Stein
|
162,640
|
220,541
|
|
David C. Lawson
|
110,400
|
148,047
|
|
Andrew L. McDonald
|
129,000
|
173,258
|
|
Kumi Y. Baruffi
|
102,000
|
136,783
|
Long-Term Equity Incentive Compensation
Columbia believes executive officers and other key management positions should have a meaningful portion of their competitive total compensation opportunity linked to shareholder return, which is directly tied to our long-term vision of growth, stability, asset quality and our commitment to a personalized banking approach. Long-term incentives take the form of equity awards that are intended to align the interests of the executive with those of our shareholders by encouraging ownership of our common stock and tying value to the long-term market value of the Company’s stock. These awards also serve to promote an executive’s continued service to the organization by vesting over a period of years and encourage sound risk management by providing a balanced view of performance and aligning awards with the longer-term time horizon of risk outcomes.
Since 2014, our long-term incentive compensation has consisted of a combination of performance-based restricted stock awards (“Performance Shares”) that are earned over a three-year performance period and time-based restricted stock awards (“Restricted Stock”), in each case issued under the Company’s 2014 Stock Option & Equity Compensation Plan (the “2014 Plan”).
Grant of 2017 Long-Term Incentive Awards
In 2017, we granted our Named Executives Performance Shares that are earned and vest at the end of a three-year performance period based on achieving relative total shareholder return (“TSR”) compared to the KBW Regional Banking Index (KRX) and our return on average assets (“ROAA”) against targets established by the Committee. After the end of the performance period, the Committee will assess performance against the goals and determine the amount, if any, of earned Performance Shares. We also granted our Named Executives Restricted Stock awards that vest over four years, 20% on the second anniversary of grant, 30% on the third anniversary, and the remaining 50% on the fourth anniversary subject to continued service.
Performance Measures for 2017 Performance Shares
For 2017, Performance Shares are earned and vest based on achievement of the following performance goals for the period from January 1, 2017 through December 31, 2019, as established by the Committee:
|
Performance Measure
|
Weighting
|
Measurement
Perspective
|
Performance Goals
|
||
|
Threshold
|
Target
|
Stretch
|
|||
|
Return on Average Assets
(“ROAA”)
|
50%
|
Columbia
|
0.85%
|
1.00%
|
1.25%
|
|
Total Shareholder Return
(“TSR”)
|
50%
|
Relative to KBW Regional Banking Index (KRX)
|
30th Percentile
|
50th Percentile
|
80th Percentile
|
|
Payout as % of Target
|
50%
|
100%
|
150%
|
||
The performance measures are calculated as follows:
| · |
ROAA: Average of the Company’s ROAA for the 12 calendar quarters between January 1, 2017 and December 31, 2019, with each calendar quarter calculated separately, measured against our performance goals shown above.
|
| · |
TSR: Measured on a relative basis against a defined group of peer banks over the period January 1, 2017 through December 31, 2019 (calculated assuming that dividends during the period are reinvested in company shares on the date paid). For this purpose, peer banks will consist of all companies included in the KBW Regional Banking Index as of December 31, 2019.
|
Payout Determination for Performance Shares
At the end of the performance period, the Committee will review the Company’s actual performance and determine the number of earned awards. Performance below “threshold” for a given performance measure will result in forfeiture of the respective shares; performance at or above “stretch” for a given performance measure will result in payout equal to 150% of the respective target shares. Performance between threshold and target and target and stretch will be determined using straight line interpolation and rounded up to the nearest whole number of shares. All financial performance determinations for the Company and the peer banks will be made at the ultimate parent company level. Dividends earned on Performance Shares will accrue, but will not be paid until vesting is determinable and will only be paid on those shares earned and released from restriction.
2017 Target Long-Term Equity Incentive Award Opportunities
The target long-term equity incentive award opportunities granted in early 2017 represented, in the aggregate, approximately 55% of base salary for our current Named Executives other than Mr. Robbins. Ms. Dressel was not awarded any long-term equity incentive awards in 2017. For each of our current Named Executives, 50% of the total target opportunity was granted in the form of restricted stock and 50% in the form of Performance Shares.
In connection with his appointment as the Company’s President and Chief Executive Officer, Mr. Robbins’ target long-term incentive opportunity was increased to 80% of base salary. To effect this target opportunity for 2017, the Committee granted Mr. Robbins additional long-term incentive awards in July with an aggregate fair market value equal to $260,000, 25% of which were granted in restricted stock and the remainder of which were granted in Performance Shares. The June awards were granted with the same terms as applied to the awards granted in the beginning of 2017; provided that, in addition to the performance measures discussed above, Mr. Robbins’ June 2017 Performance Shares were subject to a threshold goal that required the Company to achieve positive net income for the
period from July 1, 2017 through December 31, 2017. The Committee certified the achievement by the Company of this threshold goal on March 2, 2018.
Equity award values are based on the closing market price of our stock on the date the Board approves the grant. For a discussion of the treatment of Ms. Dressel’s long-term incentive awards following her unexpected passing, see “Compensation Tables—Post-Employment and Termination Benefits” below.
|
Current Named Executive
|
Target Performance Shares
(Performance-Based Vesting)
|
Restricted Stock
(Time-Based Vesting)
|
|
Hadley S. Robbins
|
7,500
|
4,302
|
|
Clint E. Stein
|
2,530
|
2,536
|
|
David C. Lawson
|
1,840
|
1,840
|
|
Andrew L. McDonald
|
2,150
|
2,156
|
|
Kumi Y. Baruffi
|
1,700
|
1,700
|
|
Former Named Executive
|
||
|
Melanie Dressel
|
¾
|
¾
|
In establishing award levels, the Committee views each grant of an equity award to an executive as a separate incentive intended to drive future shareholder return and to promote retention. In determining the value of equity awards to executives, the Committee also considers comparisons to our peer group. Additionally, the Committee also considers awards to executives compared to the level of equity awards offered to other Company employees.
2015 Performance Share Award Payout
The Performance Shares granted in 2015 were subject to performance vesting conditions tied to the Company’s ROAA and TSR relative to a defined group of peer banks, in each case over the period from January 1, 2015 through December 31, 2017. In February 2018, the Committee reviewed the Company’s actual performance against the ROAA and TSR targets and determined that the awards would pay out at 139% of target. A summary of the Company’s performance as measured against the goals, and the resulting payout, is set forth below:
|
Performance
Measure
|
Weighting
|
Measurement
Perspective
|
Performance Goals
|
Results
|
|||
|
Threshold
(50%
Payout)
|
Target
(100%
Payout)
|
Stretch
(150%
Payout)
|
Actual
Performance
|
Percent of
Target
Payout
|
|||
|
ROAA
|
50%
|
Columbia
|
0.85%
|
1.00%
|
1.25%
|
1.14%
|
128%
|
|
TSR
|
50%
|
Relative to
KRX
|
30th Percentile
|
50th Percentile
|
80th Percentile
|
87.6th Percentile
|
150%
|
|
Total:
|
139%
|
||||||
Targeted Retention Awards
During the period in which the Board considered the Company’s leadership team following Ms. Dressel’s passing, the Committee determined to award Messrs. Robbins and Stein one-time, equity-based retention awards in recognition of the additional responsibilities that each assumed on an interim basis. Accordingly, the Committee awarded each of Messrs. Robbins and Stein 10,000 shares of Restricted Stock on April 26, 2017, which are scheduled to vest on April 26, 2019.
Retirement Benefits
We believe that a retirement plan for our Named Executives is an important part of the total compensation package and provides a mechanism for attracting and retaining superior executives. We have not adopted a formal pension plan but, instead, have historically provided retirement benefits through a retirement plan that provides lifetime benefits (also known as a Supplemental Executive Retirement Plan, or “SERP”), a long-term compensation plan (also known as a “Unit Plan”) and an Executive Deferred Compensation Plan. In 2013, the Unit Plans for the Named Executives were frozen and supplemented by SERPs. Both programs are described in greater detail below under “Compensation Tables—Pension Benefits.”
In 2001, the Company implemented a SERP for certain executive officers to provide retirement benefits to those officers. The SERP provides a lifetime annual retirement benefit, the amount of which declines to the extent the executive retires before a specified retirement age. The SERPs serve a retention purpose by vesting over a period of time and by restricting the executive from working for a competitor for a period following termination of employment. Starting in 2004, the Company began using supplemental compensation arrangements, which we called Unit Plans, to provide retirement benefits for executive officers instead of SERPs. Between 2004 and 2012, we awarded three separate Unit Plans to Mr. McDonald and a Unit Plan to Mr. Stein.
In 2013, the Committee approved offering SERPs to replace the Named Executives’ Unit Plans. Accordingly, the Company entered into SERPs with Messrs. McDonald and Stein, which provide that amounts drawn under their SERPs will be reduced by the amount that is attributable to each respective Unit Plan. This approach provides these executives with a retirement benefit that is consistent with Columbia’s compensation philosophy, while optimally leveraging the expense already incurred in funding the Unit Plans.
In 2013, following the acquisition of West Coast Bancorp, the Company assumed the SERP that was provided to Mr. Robbins as an executive of West Coast Bancorp; the Company also entered into a SERP with Mr. Lawson in 2013 and Ms. Baruffi in 2015. A more detailed description regarding payments under the SERPs and Unit Plans is set forth below under “Compensation Tables—Post Employment and Termination Benefits.”
As more fully described below under “Compensation Tables—Post Employment and Termination Benefits,” we also provide non-employee directors and highly-compensated employees (as defined by IRS rules) with the opportunity to defer compensation through two Executive Deferred Compensation Plans. The participation in our 401(k) plan for these individuals is limited under federal income tax rules, and we believe they should have other similar means of saving for retirement. Currently, interest paid on the participant deferrals is three-month LIBOR (the “London Interbank Offered Rate”) plus 3.58%.
Executive Employment and Change-in-Control Agreements
We provide severance and change-in-control benefits to executives that are payable in circumstances the Committee believes are appropriate and market-competitive. Change-in-control benefits are generally “double-trigger,” meaning they are payable only if the executive experiences a qualifying termination of employment in connection with a change-in-control of the Company.
Employment Agreement with Mr. Robbins. Mr. Robbins serves as President and Chief Executive Officer of Columbia and Columbia Bank pursuant to an employment agreement entered into effective July 1, 2017, which is described in detail in the section entitled “Compensation Tables—Post Employment and Termination Benefits” below. We believe that an employment agreement with our President and Chief Executive Officer helps protect the interests of our shareholders in a number of meaningful ways. It guarantees continuity of leadership through retention and through severance and change-in-control provisions and reduces potential concerns from shareholders about the degree to which the Chief Executive Officer is affected by short-term prospects for continued employment when making key strategic, long-term decisions.
In general, upon a qualifying termination, Mr. Robbins’ agreement entitles him to receive any earned but unpaid bonus for a prior fiscal year, cash severance equal to two times Mr. Robbins’ annual base salary, a prorated bonus for the year of termination based on actual performance, a prorated portion of any long-term incentive awards
(based on actual performance in the case of awards subject to performance-based vesting) and continued health and welfare benefits for twenty-four months.
Upon a qualifying termination related to a change-in-control, Mr. Robbins’ agreement entitles him to receive any earned but unpaid bonus for a prior fiscal year, cash severance equal to two and a half times the sum of Mr. Robbins’ annual base salary and target annual bonus, a prorated target bonus for the year of termination and continued health and welfare benefits for thirty months. Mr. Robbins is subject to customary restrictive covenants, including non-competition and non-solicitation covenants, during his employment and for two years following termination of employment for any reason.
Change-in-Control Agreements with Other Named Executives. The Company has entered into change-in-control agreements with each of the current Named Executives, which are described in more detail below under “Compensation Tables—Post Employment and Termination Benefits.” Mr. Robbins’ change-in-control agreement was superseded by his employment agreement effective as of July 1, 2017. The change-in-control agreements contain provisions, similar to those in Mr. Robbins’ employment agreement, that require payments in the event of termination of employment related to a change-in-control. These arrangements are “double trigger,” meaning that they provide payments only upon a covered termination of employment in connection with a change-in-control, and no covered executive will receive payments under the agreements due to a change-in-control alone. In general, upon a qualifying termination related to a change-in-control, an executive with a change-in-control agreement will be entitled to two years’ annual base salary paid monthly over two years, accelerated vesting of any options and lapse of restrictions on restricted stock awards and will be subject to two-year non-compete and non-solicit covenants.
Employment Agreement with Ms. Dressel. Ms. Dressel served as the President and Chief Executive Officer until her death in February 2017 pursuant to an employment agreement entered into effective August 1, 2004. For a description of the terms of Ms. Dressel’s employment agreement and the benefits to which her estate was entitled following her death, see the section entitled “Compensation Tables—Post Employment and Termination Benefits” on page 43.
Perquisites and General Employee Benefits
As with all of our employees, we strive to assist our executives in meeting their retirement income, health care, disability income, time off and other needs through competitive, cost-effective, Company-sponsored programs that provide individuals with reasonable flexibility in the context of their individual circumstances, and the Named Executives participate in these and other benefits to the same extent as other employees. These benefits include medical and dental insurance, disability insurance, and the Company’s 401(k) plan. The Named Executives do not receive any perquisites or similar benefits such as Company-provided cars, car allowances, or country club memberships.
Clawback Policies for the Recovery of Incentive Compensation
Our annual and long-term incentive compensation programs provide for the recovery of incentive compensation under certain circumstances. Under these programs, the Company will recover incentive compensation awarded to current or former executive officers (during the preceding three years) if the Company restates its financial results due to material noncompliance with any financial reporting requirement under the securities laws (a “restatement”), to the extent the original awards exceeded the amounts that would have been paid under the restated results.
In June 2017, the Committee approved, and in July 2017, the Board adopted, a new Clawback Policy that covers current and former executive officers of the Company and applies to all incentive compensation granted following the date of adoption. The Clawback Policy provides that, to the full extent permitted by law, the Committee may require the forfeiture and/or repayment of unpaid incentive compensation (whether vested or unvested) and incentive compensation paid in the preceding three-year period (but not prior to July 2017) if a “triggering event” occurs.
For purposes of the Clawback Policy, a “triggering event” is any of the following events: (1) the Company is required to prepare a restatement, (2) the executive engages in conduct that causes material financial or reputational
harm to the Company or its business activities, (3) the grant or payment of incentive compensation was based on materially inaccurate performance metrics or a material misrepresentation by the executive, (4) the executive improperly or with gross negligence failed to identify, raise or assess, in a timely manner, risks material to the Company or its business activities or (5) the executive engages in a fraudulent act or knowing and willful misconduct or violates restrictive covenants or employment restrictions to which the executive is subject.
Stock Ownership Guidelines and No-Hedging
Stock Ownership Guidelines
In March 2017, the Board adopted a Stock Ownership Policy, which replaced our prior stock ownership guidelines effective as of January 1, 2017. The Stock Ownership Policy requires each Named Executive to own shares equal in value to a multiple of his or her annual base salary rather than a fixed number of shares, as was required under the prior stock ownership guidelines. For the Chief Executive Officer, the multiple is three; for Executive Vice Presidents, which include the Chief Financial Officer, Chief Operating Officer, Chief Credit Officer, Chief Human Resources Officer, and General Counsel, the multiple is two. The Stock Ownership Policy also requires non-employee directors to own shares equal in value to five times the annual Board cash retainer. The share value is based on the average closing price of Company’s common stock over the 200 trading days preceding December 31 of the applicable calendar year.
The Named Executives and non-employee directors may satisfy the ownership requirements in the Stock Ownership Policy with common stock owned directly or indirectly (if the participant has a pecuniary interest in the shares), vested stock-based awards (other than options) and unvested restricted stock or restricted stock unit awards that are subject to time-based vesting requirements. If a participant is not in compliance with the Stock Ownership Policy as of December 31 of any year, he or she must retain all of the shares held as of that date and all shares acquired in the following year (including any shares granted to the participant pursuant to an equity award or acquired on exercise of an option), other than any shares withheld to pay an option exercise price or tax obligations.
At year‑end 2017, each Named Executive satisfied the new Stock Ownership Policy requirements other than Mr. Robbins, who joined the Company in 2013 following its acquisition of West Coast Bancorp and whose salary was increased in connection with his appointment as our Chief Executive Officer in 2017, and Ms. Baruffi, who joined the Company in September 2014. Accordingly, Mr. Robbins and Ms. Baruffi will be required to retain the shares that each held as of December 31, 2017 and any shares acquired in 2018, except as described above.
No-Hedging
The Company has also adopted insider-trading policies that prohibit directors, executive officers and certain other individuals from (1) trading in any put, call, short sale or other derivative securities relating to the Company’s securities and (2) engaging in any hedging transactions with respect to any of the Company’s securities.
Impact of Tax Treatment of Compensation
The Committee and management consider the accounting and tax impacts of various programs designed to balance the potential cost to the Company with the benefit/value to the executive. Section 162(m) of the Code generally prohibits publicly held companies from deducting compensation paid to a Named Executive that exceeds $1 million during the tax year. Prior to the adoption of the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, to the extent that compensation was based upon the attainment of performance goals set by the Committee pursuant to plans approved by our shareholders, the compensation generally was not included in the $1 million limit. The Tax Act repealed this exemption, and, as a result, compensation paid to Named Executive in excess of $1 million will no longer be deductible, even if performance-based, other than with respect to certain arrangements in place on November 2, 2017 (and the scope of such transition relief is currently uncertain).
The Committee generally sought to maximize deductibility of executive compensation under Section 162(m), as in effect prior to the Tax Act, while retaining discretion to compensate executives in a manner commensurate with performance and the competitive market for executive talent. In 2014, we adopted and our shareholders approved the 2014 Plan, which allowed for the grant of awards that qualified as performance-based compensation under Section
162(m). Following the enactment of the Tax Act, we retain the ability to pay compensation that exceeds deductibility limits and believe that having flexibility to recruit, retain and motivate our employees is in the best interests of our shareholders.
The following table shows compensation paid or accrued in the years shown for Columbia’s Named Executives. As required by SEC rules, Columbia’s Named Executives include Columbia’s current Chief Executive Officer, Chief Financial Officer and the three other most highly paid executive officers, as well as Columbia’s former Chief Executive Officer who served in that role during part of 2017.
2017 Summary Compensation Table
|
Name and
Principal
Position
|
Year
|
Salary
($)
(1)
|
Bonus
($)
|
Stock
Awards
($)
(2)(3)
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation (4)
|
Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
($)
(5)
|
All Other
Compensation
($)
(6)
|
Total
($)
|
|||||||||||||||||||||||||
|
Hadley S. Robbins
|
2017
|
538,616
|
—
|
919,666
|
—
|
441,593
|
1,561,485
|
39,770
|
3,501,130
|
|||||||||||||||||||||||||
|
President, Chief
|
2016
|
374,000
|
—
|
222,319
|
—
|
162,630
|
166,147
|
41,772
|
966,868
|
|||||||||||||||||||||||||
|
Executive Officer (7)
|
2015
|
369,827
|
277,182
|
195,592
|
—
|
183,236
|
64,200
|
78,469
|
1,168,506
|
|||||||||||||||||||||||||
|
Clint E. Stein
|
2017
|
385,300
|
—
|
623,572
|
—
|
220,541
|
278,731
|
41,671
|
1,549,815
|
|||||||||||||||||||||||||
|
Executive Vice
President, Chief
Financial Officer and
Chief
|
2016
|
349,865
|
—
|
208,068
|
—
|
152,205
|
148,412
|
40,996
|
899,546
|
|||||||||||||||||||||||||
|
Operating Officer (7)
|
2015
|
345,000
|
—
|
182,582
|
—
|
173,120
|
506,955
|
40,261
|
1,247,918
|
|||||||||||||||||||||||||
|
David C. Lawson
|
2017
|
273,885
|
—
|
157,545
|
—
|
148,047
|
197,959
|
30,064
|
807,500
|
|||||||||||||||||||||||||
|
Executive Vice
President,
|
2016
|
253,327
|
—
|
151,123
|
—
|
110,505
|
130,978
|
31,124
|
677,057
|
|||||||||||||||||||||||||
|
Chief Human
Resources
Officer
|
2015
|
247,500
|
—
|
130,395
|
—
|
122,157
|
129,182
|
31,980
|
661,214
|
|||||||||||||||||||||||||
|
Andrew L. McDonald
|
2017
|
320,500
|
—
|
184,336
|
—
|
173,258
|
286,740
|
50,595
|
1,015,429
|
|||||||||||||||||||||||||
|
Executive Vice
President, Chief
|
2016
|
297,603
|
—
|
176,821
|
—
|
129,270
|
206,825
|
48,202
|
858,721
|
|||||||||||||||||||||||||
|
Credit Officer
|
2015
|
298,000
|
—
|
156,504
|
—
|
146,589
|
831,885
|
45,811
|
1,478,789
|
|||||||||||||||||||||||||
|
Kumi Y. Baruffi
Executive Vice
President, General
Counsel
|
2017
|
253,077
|
—
|
145,558
|
—
|
136,783
|
141,430
|
27,019
|
703,867
|
|||||||||||||||||||||||||
|
Former Named
Executive Officer
|
||||||||||||||||||||||||||||||||||
|
Melanie J. Dressel
|
2017
|
140,098
|
—
|
—
|
—
|
—
|
1,089
|
16,897
|
158,084
|
|||||||||||||||||||||||||
|
Former President,
Chief
Executive Officer
|
2016
|
733,519
|
—
|
$
|
555,416
|
—
|
398,757
|
608,228
|
62,879
|
2,358,799
|
||||||||||||||||||||||||
|
2015
|
729,167
|
—
|
534,975
|
—
|
448,928
|
3,408,038
|
38,654
|
5,159,762
|
||||||||||||||||||||||||||
| (1) |
Amounts include discretionary contributions under the Deferred Compensation Plan as follows: Ms. Dressel $8,000, Mr. Stein $32,581 and Mr. Lawson $18,851. The material terms of the Deferred Compensation Plan are described under “Post-Employment and Termination Benefits—Deferred Compensation Plan.”
|
| (2) |
For 2017, amounts shown include the grant date fair value of (a) Restricted Stock awards granted on February 22, 2017 that vest 20% on the second anniversary of grant date, 30% on the third anniversary of grant date and the remaining 50% vesting on February 22, 2021, (b) in the case of Messrs. Robbins and Stein, Restricted Stock awards granted on April 26, 2017 that vest on April 26, 2019, (c) in the case of Mr. Robbins, Restricted Stock awards granted on July 3, 2017 that vest on the same schedule as the Restricted Stock awards granted on February 22, 2017 and (d) the grant date fair value of Performance Shares granted on February 22, 2017 and, in the case of Mr. Robbins, July 3, 2017 for the period commencing January 1, 2017 and ending December 31, 2019 (the 2017-2019 performance period). At stretch performance, the Performance Shares grant date fair value would be $389,547 for Mr. Robbins, $129,258 for Mr. Stein, $94,006 for Mr. Lawson, $109,844 for Mr. McDonald, and $86,853 for Ms. Baruffi.
|
For 2016, amounts shown include the grant date fair value of Restricted Stock awards granted on February 24, 2016 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 February 24, 2020 and the grant date fair value of Performance Shares granted on March 23, 2016 for the period commencing January 1, 2016 and ending December 31, 2018 (the 2016-2018 performance period). At stretch performance, the Performance Shares grant date fair value would be $135,571 for Mr. Robbins, $126,891 for Mr. Stein, $92,171 for Mr. Lawson, $107,878 for Mr. McDonald, and $478,630 for Ms. Dressel.
For 2015, amounts shown include 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, 2019 and the grant date fair value of Performance Shares granted on March 25, 2015 for the period commencing January 1, 2015 and ending December 31, 2017 (the 2015-2017 performance period). At stretch performance, the Performance Shares grant date fair value would be $116,550 for Mr. Robbins, $108,797 for Mr. Stein, $77,700 for Mr. Lawson, $93,263 for Mr. McDonald, and $428,289 for Ms. Dressel.
| (3) |
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 “2017 Grants of Plan-Based Awards” and in Note 23 to the Company’s audited financial statements for the fiscal year ended 2017, included in the Company’s 2017 Annual Report. The fair market value of Restricted Stock awards granted in 2017 was based on the closing price of Columbia’s common stock on NASDAQ on the applicable grant date, February 22, 2017 ($41.25 per share), April 26, 2017 ($40.67 per share) and July 3, 2017 ($40.70 per share). The fair market value of 50% of the Performance Shares was based on the closing price of Columbia’s common stock on NASDAQ on the grant date February 22, 2017 ($41.25 per share) and July 3, 2017 ($40.70 per share) and 50% on a fair value calculation using a Monte-Carlo simulation ($26.87 per share and $29.19 per share, respectively).
|
| (4) |
The amounts in this column reflect the annual incentive awards earned under the 2014 Stock Option & Equity Compensation Plan for 2017 performance.
|
| (5) |
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 2017, amounts shown include: for Mr. Robbins $1,546,008 of change in the actuarial present value of projected benefit under the Supplemental Executive Retirement Plan (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 Ms. Dressel, $600,531 of change in the actuarial present value of projected benefit under the SERP and $7,697 of above-market earnings on her DCA; 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.
| (6) |
Amount shown for Mr. Robbins includes $8,100 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, $7,737 in split dollar life insurance premiums, $5,158 in split dollar bonus earnings, $190 in group term life insurance premiums, and $5,085 in accrued dividends on unvested Performance Shares.
|
Amount shown for Mr. Stein includes $8,100 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, $2,679 in split dollar life insurance premiums, $1,786 in split dollar bonus earnings, $186 in group term life insurance premiums, $3,278 in accrued dividends on unvested Performance Shares, 2,606 in non-qualified deferred compensation matching contributions, and $9,536 in Company contributions to a supplemental retirement benefit plan (“UNIT plan”). UNIT plans are described in further detail under “Post Employment and Termination Benefits—Unit Plans.”
Amount shown for Mr. Lawson includes $8,100 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, $2,868 in split dollar life insurance premiums, $1,575 in split dollar bonus earnings, $131 in group term life insurance premiums, $2,382 in accrued dividends on unvested Performance Shares, and $1,508 in non-qualified deferred compensation matching contributions.
Amount shown for Mr. McDonald includes $8,100 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, $3,958 in split dollar life insurance premiums, $2,465 in split dollar bonus earnings, $153 in group term life insurance premiums, $2,787 in accrued dividends on unvested Performance Shares, and $19,632 in Company contributions to a UNIT plan.
Amount shown for Ms. Baruffi includes $8,100 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, $1,858 in split dollar life insurance premiums, $1,239 in split dollar bonus earnings, $121 in group term life insurance premiums, and $2,201 in accrued dividends on unvested Performance Shares.
Amount shown for Ms. Dressel includes $3,291 in 401(k) plan matching contributions, $13,500 in 401(k) discretionary contributions, and $106 in group term life insurance premiums.
| (7) |
Mr. Robbins served as the Company’s Chief Operating Officer until July 1, 2017 when he began serving as the Company’s President and Chief Executive Officer (following his service as Interim Chief Executive Officer from February 2017 through June 2017). Mr. Stein was appointed the Company’s Chief Operating Officer effective July 14, 2017 and continues to serve as the Company’s Chief Financial Officer.
|
Stock Option and Equity Compensation Plan. The 2014 Plan provides for the grant of restricted stock, incentive stock options, nonqualified stock options, restricted stock units and stock appreciation rights. All eligible employees and directors may participate in the 2014 Plan. As of December 31, 2017, 893,982 shares remain available for future grant under the 2014 Plan. The 2014 Plan replaced the Amended and Restated Stock Option and Equity Compensation Plan (the “Former Equity Plan”); however, any awards remaining outstanding under the Former Equity Plan continue to be governed by the terms of that plan. See the section entitled “Proposal No.2 Approval of 2018 Equity Incentive Plan” for a discussion of our proposal with respect to shareholder approval of the 2018 Equity Incentive Plan (the “2018 Plan”), which the Board adopted on March 28, 2018 subject to shareholder approval.
2017 Grants of Plan-Based Awards
|
Name
|
Estimated Future Payments Under Non-
Equity Incentive Plan Awards(1)
|
Estimated Future Payments Under
Equity Incentive Plan Awards(2)
|
All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)(3)
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)(3)(4)
|
||||||||||||||||||||||||||||||
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
(#)
|
Target
(#)
|
Maximum
(#)
|
||||||||||||||||||||||||||||
|
Hadley S. Robbins
|
2/22/2017
|
$
|
78,000
|
$
|
156,000
|
$
|
234,000
|
|||||||||||||||||||||||||||
|
7/3/2017
|
$
|
86,650
|
$
|
173,300
|
$
|
259,950
|
||||||||||||||||||||||||||||
|
2/22/2017
|
1,350
|
2,700
|
4,050
|
2,714
|
$
|
231,758
|
||||||||||||||||||||||||||||
|
4/26/2017
|
10,000
|
406,700
|
||||||||||||||||||||||||||||||||
|
7/3/2017
|
2,400
|
4,800
|
7,200
|
1,588
|
281,208
|
|||||||||||||||||||||||||||||
|
Clint E. Stein
|
2/22/2017
|
$
|
81,320
|
$
|
162,640
|
$
|
243,960
|
|||||||||||||||||||||||||||
|
2/22/2017
|
1,265
|
2,530
|
3,795
|
2,536
|
216,872
|
|||||||||||||||||||||||||||||
|
4/26/2017
|
10,000
|
406,700
|
||||||||||||||||||||||||||||||||
|
David C. Lawson
|
2/22/2017
|
$
|
55,200
|
$
|
110,400
|
$
|
165,600
|
|||||||||||||||||||||||||||
|
2/22/2017
|
920
|
1,840
|
2,760
|
1,840
|
157,545
|
|||||||||||||||||||||||||||||
|
Andrew L. McDonald
|
2/22/2017
|
$
|
64,600
|
$
|
129,200
|
$
|
193,800
|
|||||||||||||||||||||||||||
|
2/22/2017
|
1,075
|
2,150
|
3,225
|
2,156
|
184,336
|
|||||||||||||||||||||||||||||
|
Kumi Y. Baruffi
|
2/22/2017
|
$
|
51,000
|
$
|
102,000
|
$
|
153,000
|
|||||||||||||||||||||||||||
|
2/22/2017
|
850
|
1,700
|
2,550
|
1,700
|
145,558
|
|||||||||||||||||||||||||||||
|
Former Named Executive
|
||||||||||||||||||||||||||||||||||
|
Melanie J.
Dressel
|
—
|
|||||||||||||||||||||||||||||||||
| (1) |
Represents the possible range of possible cash payouts under the 2017 annual cash incentive opportunities granted under the 2014 Plan. Actual amounts earned, as determined by the Committee in the first quarter of 2018, are reflected in the 2017 Summary Compensation Table under Non-Equity Incentive Plan Compensation. See “Compensation Discussion & Analysis—Compensation Structure—Annual Cash Incentive Compensation.”
|
| (2) |
Represents the possible range of Performance Shares granted on February 22, 2017 and July 3, 2017 under the Long-Term Incentive Plan, a subplan under the 2014 Plan. Actual amounts of Performance Shares earned will be based on achieving relative TSR compared to the KBW Regional Banking Index and Columbia’s ROAA against targets established by the Committee as determined by the Committee, in each case over the 2017-2019 performance period. Dividends earned on Performance Shares will accrue, but will not be paid until vesting is
|
determinable and will only be paid on those shares earned and released from restriction. See “Compensation Discussion & Analysis—Compensation Structure—Long-Term Equity Incentive Compensation.”
| (3) |
Represents the number of shares of Restricted Stock granted on (a) February 22, 2017 and July 3, 2017 under the 2014 plan that vest 20% on February 22, 2019, 30% on February 22, 2020, and the remaining 50% on February 22, 2021 and (b) April 26, 2017 under the 2014 plan that vest on April 26, 2019. Dividends earned on Restricted Stock are paid to award holders at the same time as dividends are paid to shareholders.
|
| (4) |
Amounts shown represent the grant date fair value of Restricted Stock and Performance Shares granted on February 22, 2017, April 26, 2017 and July 3, 2017, determined in accordance with FASB ASC 718. Assumptions used to calculate these amounts are set forth in Note 23 to the 2017 Annual Report. The grant date fair value of Restricted Stock was based on the closing prices of Columbia’s common stock on NASDAQ on the grant dates, February 22, 2017 ($41.25 per share), April 26, 2017 ($40.67 per share) and July 3, 2017 ($40.70 per share). The grant date fair values of the Performance Shares are shown at stretch performance and are 50% based on the closing price of Columbia’s common stock on NASDAQ on the grant dates, February 22, 2017 and July 3, 2017 ($41.25 per share and $40.70, respectively) and 50% on a fair value calculation using a Monte-Carlo simulation ($26.87 per share and $29.19, respectively).
|
Outstanding Equity Awards at Fiscal Year-End 2017
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||||||||||||||||||
|
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
Number of
Securities
Underlying
Unexercised
Options (#)
Un-
exercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of Shares
or Units
of
Stock
That
Have Not
Vested
(#)
(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)
|
|||||||||||||||||||||||||||
|
Hadley S. Robbins
|
1,165
|
—
|
—
|
$
|
54.70
|
4/20/2018
|
20,845
|
$
|
905,507
|
16,170
|
$
|
702,425
|
||||||||||||||||||||||||
|
Clint E. Stein
|
—
|
—
|
—
|
—
|
—
|
18,719
|
813,153
|
8,400
|
364,896
|
|||||||||||||||||||||||||||
|
David C. Lawson
|
—
|
—
|
—
|
—
|
—
|
6,580
|
285,835
|
6,105
|
265,201
|
|||||||||||||||||||||||||||
|
Andrew McDonald
|
—
|
—
|
—
|
—
|
—
|
7,573
|
328,971
|
7,140
|
310,162
|
|||||||||||||||||||||||||||
|
Kumi Y. Baruffi
|
—
|
—
|
—
|
—
|
—
|
6,412
|
278,537
|
5,640
|
245,002
|
|||||||||||||||||||||||||||
|
Former Named Executive
|
||||||||||||||||||||||||||||||||||||
|
Melanie J. Dressel
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||||
| (1) |
Outstanding options for Mr. Robbins were granted by West Coast Bancorp and became vested at the close of the merger between Columbia and West Coast Bancorp on April 1, 2013.
|
| (2) |
For Mr. Robbins, represents 1,000 shares of restricted stock granted on February 26, 2014 that vest on February 26, 2018; 2,116 shares of Restricted Stock granted on March 25, 2015 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 10,000 shares of restricted stock granted on April 26, 2017 that vest on April 26, 2019; 3,427 shares of restricted stock granted on February 24, 2016, 2,714 shares of restricted stock granted on February 22, 2017, and 1,588 shares of restricted stock granted on July 3, 2017 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. Stein, represents 1,000 shares of restricted stock granted on February 26, 2014 that vest on February 26, 2018; 1,976 shares of Restricted Stock granted on March 25, 2015 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 10,000 shares of restricted stock
granted on April 26, 2017 that vest on April 26, 2019; 3,207 shares of restricted stock granted on February 24, 2016 and 2,536 shares of restricted stock granted on February 22, 2017 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, represents 1,000 shares of restricted stock granted on February 26, 2014 that vest on February 26, 2018; 1,411 shares of Restricted Stock granted on March 25, 2015 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 2,329 shares of restricted stock granted on February 24, 2016 and 1,840 shares of restricted stock granted on February 22, 2017 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, represents 1,000 shares of restricted stock granted on February 26, 2014 that vest on February 26, 2018; 1,693 shares of Restricted Stock granted on March 25, 2015 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 2,724 shares of restricted stock granted on February 24, 2016 and 2,156 shares of restricted stock granted on February 22, 2017 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 Ms. Baruffi, represents 1,250 shares of restricted stock granted on December 1, 2014 that vest on November 30, 2019; 1,309 shares of Restricted Stock granted on March 25, 2015 that vest 30% on the third anniversary of the grant date and the remaining 50% on the fourth anniversary of the grant date; 2,153 shares of restricted stock granted on February 24, 2016 and 1,700 shares of restricted stock granted on February 22, 2017 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.
All of Ms. Dressel’s unvested shares vested upon death and were released to her estate.
| (3) |
Amounts shown are calculated using the closing price of Columbia’s common stock on NASDAQ on December 29, 2017 of $43.44 per share.
|
| (4) |
Amounts shown represent Performance Shares granted in 2016 and 2017 at stretch performance. Actual amounts vested and earned, if any, depend on actual performance against the performance measures for the 2016-2018 performance period that ends December 31, 2018 and 2017-2019 performance period that ends December 31, 2019, respectively. For Mr. Robbins, represents 4,920 Performance Shares granted on March 23, 2016, 4,050 Performance Shares granted on February 22, 2017, and 7,200 Performance Shares granted on July 3, 2017. For Mr. Stein, represents 4,605 Performance Shares granted on March 23, 2016 and 3,795 Performance Shares granted on February 22, 2017. For Mr. Lawson, represents 3,345 Performance Shares granted on March 23, 2016 and 2,760 Performance Shares granted on February 22, 2017. For Mr. McDonald, represents 3,915 Performance Shares granted on March 23, 2016 and 3,225 Performance Shares granted on February 22, 2017. For Ms. Baruffi, represents 3,090 shares granted on March 23, 2016 and 2,550 shares granted on February 22, 2017. All of Ms. Dressel’s unvested shares vested upon death and were released to her estate.
|
2017 Option Exercises and Stock Vested
|
Option Awards
|
Stock Awards
|
|||||||||||||||
|
Name
|
Number of Shares
Acquired on
Exercise (#)
|
Value Realized on
Exercise ($)
|
Number of
Shares
Acquired on
Vesting
(#)
|
Value
Realized on
Vesting
($)(1)
|
||||||||||||
|
Hadley S. Robbins
|
—
|
—
|
6,309
|
$
|
262,778
|
|||||||||||
|
Clint E. Stein
|
—
|
—
|
6,028
|
253,598
|
||||||||||||
|
David C. Lawson
|
—
|
—
|
4,655
|
196,954
|
||||||||||||
|
Andrew L. McDonald
|
—
|
—
|
5,467
|
229,628
|
||||||||||||
|
Kumi Y. Baruffi
|
—
|
—
|
3,354
|
145,974
|
||||||||||||
|
Former Named Executive
|
||||||||||||||||
|
Melanie J. Dressel
|
—
|
—
|
44,579
|
1,826,402
|
||||||||||||
| (1) |
For Mr. Robbins, represents the fair market value of 1,500 shares of restricted stock granted in 2013 that vested on April 1, 2017, 600 shares of Restricted Stock granted in 2014 that vested on February 24, 2017, 530 shares of Restricted Stock granted in 2015 that vested on March 24, 2017, and 3,679 Performance Shares granted in 2015 that vested on December 31, 2017.
|
For Mr. Stein, represents the fair market value of 1,500 shares of Restricted Stock granted in 2013 that vested on February 27, 2017, 600 shares of Restricted Stock granted in 2014 that vested on February 24, 2017, 494 shares of Restricted Stock granted in 2015 that vested on March 24, 2017, and 3,434 Performance Shares granted in 2015 that vested on December 31, 2017.
For Mr. Lawson, represents the fair market value of 1,250 shares of Restricted Stock granted in 2013 that vested on September 29, 2017, 600 shares of Restricted Stock granted in 2014 that vested on February 24, 2017, 353 shares of Restricted Stock granted in 2015 that vested on March 24, 2017, and 2,452 Performance Shares granted in 2015 that vested on December 31, 2017.
For Mr. McDonald, represents the fair market value of 1,500 shares of Restricted Stock granted in 2013 that vested on February 27, 2017, 600 shares of Restricted Stock granted in 2014 that vested on February 24, 2017, 424 shares of Restricted Stock granted in 2015 that vested on March 24, 2017, and 2,943 Performance Shares granted in 2014 that vested on December 31, 2016.
For Ms. Baruffi, represents the fair market value of 750 shares of Restricted Stock granted in 2014 that vested on December 1, 2017, 328 shares of Restricted Stock granted in 2015 that vested on March 24, 2017, and 2,276 Performance Shares granted in 2015 that vested on December 31, 2017.
For Ms. Dressel, represents the fair market value of 3,750 shares of Restricted Stock granted in 2013, 1,600 shares of Restricted Stock granted in 2014, 3,241 shares of Restricted Stock granted in 2015, 4,033 shares of Restricted Stock granted in 2016, 14,585 of Performance Shares granted in 2015, and 17,370 of Performance Shares granted in 2016, all of which were immediately vested to her estate upon her death on February 19, 2017.
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.
2017 Nonqualified Deferred Compensation
The following table provides information regarding nonqualified deferred compensation paid to the Named Executives during fiscal year 2017.
|
Name
|
Executive
Contributions
in Last FY
($)
(1)
|
Registrant
Contributions
in Last FY
($)
|
Aggregate
Earnings in
Last FY
($)
(2)
|
Aggregate
Withdrawals/
Distributions
($)(3)
|
Aggregate
Balance at
Last FYE
($)(4)
|
|||||||||||||||
|
Hadley S. Robbins
|
$
|
—
|
$
|
—
|
$
|
45,903
|
$
|
—
|
$
|
986,119
|
||||||||||
|
Clint E. Stein
|
32,581
|
2,606
|
12,216
|
—
|
274,448
|
|||||||||||||||
|
David C. Lawson
|
18,851
|
1,508
|
4,695
|
—
|
108,485
|
|||||||||||||||
|
Andrew L. McDonald
|
—
|
—
|
6,011
|
—
|
129,124
|
|||||||||||||||
|
Kumi Y. Baruffi
|
—
|
—
|
3,085
|
—
|
66,264
|
|||||||||||||||
|
Former Named Executive
|
||||||||||||||||||||
|
Melanie J. Dressel
|
—
|
—
|
—
|
516,203
|
—
|
|||||||||||||||
| (1) |
Amounts were deferred in 2017 under the Deferred Compensation Plan, which is described below under “Deferred Compensation Plan.” The amounts for Messrs. Robbins, Stein, Lawson and Mses. Baruffi and Dressel are reflected in the salary column of the Summary Compensation Table.
|
| (2) |
The interest rate is the three-month LIBOR rate plus 3.58%. The Plan Administrator annually reviews for appropriateness the calculation of the rate of interest (the “Interest Crediting Rate”) that is applied to a participant’s DCA in the Deferred Compensation Plan. The Interest Crediting Rate is adjusted quarterly for fluctuations in the three-month LIBOR rate. Plan participants are notified of any adjustments to the Interest Crediting Rate.
|
On the last date of each month, 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 Ms. Dressel, represents the lump sum distribution of her Deferred Compensation Plan account to her estate following her death.
|
| (4) |
For Mr. Robbins includes amounts previously reported in the Summary Compensation Table for 2014 through 2016 ($867,699). For Mr. Stein includes amounts previously reported in the Summary Compensation Table for 2012 through 2016 ($153,335). For Mr. Lawson includes amounts previously reported in the Summary Compensation Table for 2014 through 2016 ($69,889). For Mr. McDonald includes amounts previously reported in the Summary Compensation Table for 2004 through 2016 ($78,179).
|
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 $25,000. Unlike the 2005 Deferred Compensation Plan, the 2016 Deferred Compensation Plan permits participants to elect installment payments for any termination of employment, rather than only on a termination due to retirement or disability. If a participant’s services or employment with the Company is terminated because of his or her death, the credit balance in the participant’s DCA will be distributed to his or her designated beneficiary.
|
2017 Pension Benefits
|
||||||||||||||
|
Name
|
Plan Name
(1)
|
Number of
Years Credited
Service
(#)
|
Present Value of
Accumulated
Benefit
($)
(2)
|
Payments During
Last Fiscal Year
($)
|
||||||||||
|
Hadley S. Robbins
|
SERP
|
11
|
$
|
2,512,567
|
$
|
—
|
||||||||
|
Clint E. Stein
|
SERP
|
12
|
1,143,117
|
—
|
||||||||||
|
David C. Lawson
|
SERP
|
4
|
533,435
|
—
|
||||||||||
|
Andrew L. McDonald
|
SERP
|
13
|
1,825,215
|
—
|
||||||||||
|
Kumi Y. Baruffi
|
SERP
|
3
|
328,944
|
—
|
||||||||||
|
Melanie J. Dressel
|
SERP
|
—
|
—
|
—
|
||||||||||
| (1) |
Under the terms of the SERP, executives must, in addition to other conditions, be fully vested. Full vesting is based on a 20 year schedule. As of December 31, 2017, Messrs. Robbins, Stein, Lawson, and McDonald were approximately 54%, 61%, 23% and 68% vested, respectively and Ms. Baruffi was approximately 17% vested. Named Executives (other than Mr. Robbins) must have at least 10 years of service with the Company in order to receive benefits upon a voluntary termination that occurs prior to reaching the early retirement age of 55. Mr. Robbins became fully vested in a retirement benefit upon the Company's acquisition of West Coast Bancorp.
|
| (2) |
The estimated maximum annual retirement benefit payable under the SERP for the Named Executives upon achieving age 64 for Mr. Robbins and age 65 for Messrs. Stein, Lawson and McDonald and Ms. Baruffi; and is as follows assuming a single life annuity: Messrs. Robbins, Stein, Lawson, and McDonald, $292,730, $318,863, $94,174 and $181,416, respectively and Ms. Baruffi, $252,959. As discussed below, Ms. Dressel’s beneficiaries were not entitled to payments under her SERP following her death and instead were entitled to payments under certain Bank-Owned Life Insurance policies.
|
Supplemental Executive Retirement Plan. Over the years, Columbia has implemented a supplemental executive retirement plan, or SERP, for certain executive officers of Columbia to provide retirement benefits to those officers. Where a participant has twenty years of service and is therefore fully vested, 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 available to each participant were calculated based on a fixed dollar amount set forth in the officer’s SERP, which was intended to approximate the SERP formula. 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. 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.
Each SERP includes a number of restrictions on payment, including a requirement, subject to certain exceptions, that the Named Executive (other than Mr. Robbins) attain age 65 (62 in the event of a change-in-control). Each Named Executive’s SERP, other than Mr. Robbins’ SERP, includes a number of potential
adjustments to the date on which retirement payments are initiated and to the amount of the Named Executive’s benefit. These potential adjustments include provisions for early retirement subject to the early commencement reduction factor of 5% for each year that the benefit is paid prior to reaching age 65, payable upon reaching age 55, and a 2% annual inflation adjustment to benefit payments. As of December 31, 2017, Mr. McDonald was eligible for early retirement benefits. Ms. Dressel was eligible for early retirement benefits on February 22, 2017. Named Executives terminated pursuant to a change-in-control of Columbia shall be vested in the benefit that the executive would have received had the Named Executive remained employed by Columbia until reaching the normal retirement age. In the event the Named Executive becomes disabled, the executive will be 100% vested, regardless of tenure. Other potential SERP adjustments include an elimination of benefits if the Named Executive violates non-competition requirements or if the Named Executive is terminated for cause or resigns voluntarily before reaching the early retirement age and does not have ten years of service or before achieving 100% vesting. Under the terms of each SERP, the Named Executive 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 Internal Revenue Code.
The SERP is unsecured and unfunded and there are no plan assets. Columbia has purchased Bank-Owned Life Insurance (“BOLI”) policies on the lives of the Named Executives and other officers and intends to use income from these policies to offset SERP benefit expenses. In 2016, Columbia purchased additional BOLI policies to supplement Columbia’s existing portfolio. The BOLI policies, through the split dollar life insurance agreements with the officers, provide a death benefit equal to three times the officer’s then current base salary and approximately ten times the projected benefit at normal retirement age of the officer’s SERP. The agreements take into account any other life insurance policies purchased by and owned by the Company that pay benefits to the participant’s beneficiary at death. This split dollar benefit is payable to the officer’s beneficiaries if the officer dies while employed with the Company, in which case the officer (and his or her beneficiaries) would not be entitled to any benefits under the SERP. If the officer retires or terminates employment for any reason other than death, then the officer and his or her beneficiaries forfeit any benefits under the split dollar agreement, and all proceeds from the BOLI policies are instead paid to the Company.
The income generated from the BOLI policies is projected to, on a cumulative basis, substantially offset the ongoing costs of the SERP program. This projection includes assumptions related to future BOLI policy performance, the Bank’s cost of funds and discount rates applicable to the SERP program. Any excess revenue generated from the BOLI will be used to offset other employee benefit costs. BOLI is not a permissible bank investment but BOLI may be purchased in order to offset employee benefit expenses pursuant to the authority granted by the “Interagency Statement on the Purchase and Risk Management of Life Insurance,” dated December 7, 2004 and described for State-Chartered Federal Reserve member banks in Supervisory Letter SR 04-19.
As described below, the Company had previously entered into Unit Plans with each of Messrs. McDonald and Stein in lieu of a SERP. In 2013, the Company entered into SERPs with Messrs. McDonald and Stein, and their respective Unit Plan were 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).
Long-Term Incentive Awards Change-in-Control Treatment. In the event of a change-in-control, all unvested 2014 Performance Shares vest in full as of the date of the closing of such change-in-control transaction based on stretch performance. For the 2016 and 2017 Performance Shares, the Committee determined that, in the event of a change-in-control, all unvested Shares will vest in full as of the date of the closing of such change-in-control transaction based on the greater of target or actual performance. The Committee intends that future awards of Performance Shares will provide for change-in-control vesting treatment consistent with the change-in-control vesting treatment in the 2016 and 2017 Performance Shares.
Executive Employment Agreement. Mr. Robbins serves as President and Chief Executive Officer of Columbia and Columbia Bank pursuant to an employment agreement entered into effective July 1, 2017. The term of the employment agreement with Mr. Robbins extends for three-years following its effective date.
Mr. Robbins’ employment agreement provides that if his employment is terminated without cause or if he resigns for good reason, then he would receive cash severance equal to two times his annual base salary, a prorated portion of any incentive payment earned during the year of termination, continued welfare benefits for two years and vesting of a pro rata portion of his long-term incentive awards (based on the portion of the vesting period in which Mr. Robbins
remained employed with the Company), subject to achievement of any performance criteria. The employment agreement also provides for certain benefits and payments if Mr. Robbins terminates his employment within two years following a change-in-control (as defined in the agreement) or if Mr. Robbins’ employment was terminated by the Company without cause or by Mr. Robbins with good reason at any time from and after six months prior to the public announcement of a transaction that will result in a change-in-control. In such event, the agreement provides that Mr. Robbins would receive an amount equal to 2.5 times the sum of his annual base salary and target bonus, a prorated target bonus for the year of termination, continued welfare benefits for 30 months and his long-term incentive awards would be treated in accordance with their terms. In the event Mr. Robbins is terminated without cause, or he voluntarily terminates for good reason, and within six months the Company publicly announced a change-in-control, upon closing of the change-in-control, the agreement provides that he would be entitled to receive the change-in-control payments set forth above, less any payments that he received as a termination payment.
The table below shows the maximum amounts that could be paid to Mr. Robbins under his agreements, and (i) is based on his salary at December 29, 2017; and (ii) assumes the triggering event was December 29, 2017.
|
2017 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)
|
$
|
—
|
$
|
—
|
$
|
1,400,000
|
$
|
1,400,000
|
$
|
1,400,000
|
$
|
—
|
||||||||||||
|
Annual Incentive(3)
|
—
|
—
|
441,593
|
441,593
|
329,300
|
—
|
||||||||||||||||||
|
CIC Termination Payment(4)
|
—
|
—
|
—
|
—
|
1,173,500
|
—
|
||||||||||||||||||
|
Benefits Payable Under SERPs or Split Dollar Life Insurance(5)
|
3,410,096
|
4,886,000
|
—
|
117,200
|
*
|
169,667
|
*
|
—
|
||||||||||||||||
|
Bank Owned Life Insurance(6)
|
2,100,000
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
|
Healthcare and Other Benefits(7)
|
—
|
—
|
19,584
|
19,584
|
24,480
|
—
|
||||||||||||||||||
|
FMV of Accelerated Equity Vesting(8)
|
1,607,932
|
1,607,932
|
518,674
|
518,674
|
1,607,932
|
—
|
||||||||||||||||||
|
Total
|
$
|
7,118,028
|
$
|
6,493,932
|
$
|
2,379,851
|
$
|
2,497,051
|
$
|
4,704,879
|
$
|
—
|
||||||||||||
|
*
|
Reflects the annual lifetime annuity payable following the triggering event under the terms of the applicable plan.
|
| (1) |
In the event Mr. Robbins was terminated without cause, or he voluntarily terminated for good reason, and within six months the Company publicly announced a change-in-control, upon closing of the change-in-control, he would be entitled to receive change-in-control payments, less any payments that he received as a termination payment.
|
| (2) |
Represents two times Mr. Robbins annual salary in the year of termination payable in equal monthly installments over two years following termination.
|
| (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 sum; provided that, if such termination is due to change-in-control, represents the prorated portion of Mr. Robbins’ target annual incentive.
|
| (4) |
For termination due to change-in-control, represents 0.5 times Mr. Robbins annual salary in the year of termination plus 2.5 times Mr. Robbins target annual incentive payable in equal monthly installments over a 30-month period following termination.
|
| (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, 2017 of $1,159,314 and
|
which reduces the benefits otherwise payable under Mr. Robbins’ existing SERP. See “Pension Benefits” above for more details regarding these benefits. Annual amounts reflected in the table above reflect a single lifetime annuity; however Mr. Robbins alternatively may elect a joint and survivor annuity.
Benefits on Death. Death benefits are not payable pursuant to the SERP; however, in the event of Mr. Robbins’ death while employed, a Split Dollar Agreement provides a one-time lump sum benefit of a stated dollar amount calculated as ten times the projected annual SERP benefit at normal retirement.
Benefits on Disability. In the event that Mr. Robbins becomes Disabled, the amount represents a one-time lump sum payment calculated as the present value of the projected stream of retirement benefit payments that Mr. Robbins would expect to receive had he remained employed until normal retirement age.
Benefits on Termination without Cause or Due to CIC. Upon a termination without cause or due to a change-in-control, benefits are payable in a lifetime annuity.
| (6) |
Represents the amount equal to three times base salary as of the date of death that would be due to Mr. Robbins’ beneficiaries under a bank owned life insurance policy payable by the insurer.
|
| (7) |
Represents the value of continued employer-paid health and welfare benefits for two years following termination (or in the event of a termination due to change-in-control, for 30 months following termination).
|
| (8) |
Represents the fair market value of unvested equity awards with performance shown at stretch performance or, in the case of a voluntary termination for good reason or a termination without cause not in connection with a change-in-control, a prorated portion of the target number of unvested equity awards, in each case based on the closing price of Columbia’s common stock on NASDAQ on December 29, 2017 of $43.44 per share.
|
Change-in-Control Agreements. Columbia Bank has entered into change-in-control agreements with Messrs. Stein, Lawson and McDonald and Ms. Baruffi.
The agreements contain provisions, similar to those contained in the employment agreement for Mr. Robbins discussed above, that require payments in the event of termination of employment without cause or by the executive for good reason within 365 days following a change-in-control (as defined in the agreements) or termination of employment without cause prior to the change-in-control at any time from and after sixty days prior to the public announcement of a transaction that will result in a change-in-control, provided that the change-in-control occurs within 18 months of the executive’s termination date. Under the agreements, the executives are entitled to (i) receive their base salary for terms of two years; (ii) accelerated vesting of options; and (iii) removal of restrictions on any restricted stock or other restricted securities, subject to Federal securities laws. These agreements also contain a covenant that the executive will not compete with or solicit employee, customer or business partner of Columbia or any of its subsidiaries for up to two years after the commencement of severance benefit payments, unless payments of such severance benefits are waived by the executive. The terms of the agreements are five years unless otherwise extended in writing.
Unit Plans. Columbia previously entered into Unit Plans with each of Mr. McDonald (three plans, one each in 2004, 2006 and 2007) and Mr. Stein (in 2008). The plans were provided primarily to supplement retirement benefits in lieu of a SERP. Each separate Unit Plan provides that the executive will begin receiving a monthly payment beginning the first month following the tenth anniversary of each plan, based on an annual aggregate payment of $25,000 per year for ten years. In the event the executive’s employment is terminated by the Company without cause, or he is terminated due to disability, the executive will be entitled to receive a payment based on the prorated portion of his term of employment, payable in monthly payments following the tenth anniversary of each plan. If the executive leaves the employment of Columbia prior to expiration during the respective ten-year period, the entire amount is forfeited. Once receiving the benefit, there is a non-competition clause restricting the executive from working for a competitor.
As noted above, in 2013, the Company entered into a SERP with Messrs. McDonald and Stein. Benefits under the Unit Plans were frozen to new contributions. In the event any benefit payments due Messrs. McDonald or Stein pursuant to their respective SERP plans are to be made simultaneously with payment amounts due them pursuant to their respective Unit Plans, then any SERP benefit payments will be reduced by amounts to be paid out from their Unit Plans. The reduced SERP benefit payment will be determined by deducting the amount of the Unit
Plan payments from the scheduled SERP benefit payments. Once the Unit Plan benefit payment periods expire, retirement benefit payments under the SERP plan will no longer be reduced.
The tables below show the maximum amounts that could be paid to Messrs. Stein, Lawson, McDonald and Ms. Baruffi under their respective agreements, which are based on (i) the executive’s salary at December 29, 2017; and (ii) assumes the triggering event was December 29, 2017.
|
2017 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)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
813,200
|
$
|
—
|
||||||||||
|
Benefits Payable Under SERPs, Unit Plans or Split Dollar Life Insurance(2)
|
4,130,558
|
*
|
3,076,000
|
1,044,000
|
1,740,000
|
—
|
||||||||||||||
|
Bank Owned Life Insurance(3)
|
1,219,800
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
FMV of Accelerated Equity Vesting(4)
|
1,178,049
|
1,178,049
|
—
|
1,178,049
|
—
|
|||||||||||||||
|
Total
|
$
|
6,280,527
|
$
|
4,254,049
|
$
|
1,044,000
|
$
|
3,731,249
|
$
|
—
|
||||||||||
* Includes $247,880, which is the aggregate amount that would be payable in monthly installments over a ten-year period under Mr. Stein’s Unit Plan.
|
2017 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)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
552,000
|
$
|
—
|
||||||||||
|
Benefits Payable Under SERPs or Split Dollar Life Insurance(2)
|
947,460
|
1,281,000
|
22,147
|
*
|
56,248
|
*
|
—
|
|||||||||||||
|
Bank Owned Life Insurance(3)
|
828,000
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
FMV of Accelerated Equity Vesting(4)
|
551,036
|
551,036
|
—
|
551,036
|
—
|
|||||||||||||||
|
Total
|
$
|
2,326,496
|
$
|
1,832,036
|
$
|
22,147
|
$
|
1,159,284
|
$
|
—
|
||||||||||
|
*
|
Reflects the annual lifetime annuity payable following the triggering event under the terms of the applicable plan.
|
|
2017 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)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
646,000
|
$
|
—
|
||||||||||
|
Benefits Payable Under SERPs, Unit Plans or Split Dollar Life Insurance(2)
|
3,141,840
|
*
|
2,985,000
|
78,838
|
**
|
123,885
|
**
|
78,838
|
**
|
|||||||||||
|
Bank Owned Life Insurance(3)
|
969,000
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
FMV of Accelerated Equity Vesting(4)
|
639,133
|
639,133
|
—
|
639,133
|
—
|
|||||||||||||||
|
Total
|
$
|
4,000,093
|
$
|
3,624,133
|
$
|
78,838
|
$
|
1,409,018
|
$
|
78,838
|
||||||||||
* Includes $749,880, which is the aggregate amount that would be payable in monthly installments over a ten-year period under Mr. McDonald’s Unit Plans.
** Reflects the annual lifetime annuity payable following the triggering event under the terms of the applicable plan.
|
2017 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)
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
510,000
|
$
|
—
|
||||||||||
|
Benefits Payable Under SERPs or Split Dollar Life Insurance(2)
|
2,529,593
|
2,008,000
|
183,000
|
1,217,000
|
—
|
|||||||||||||||
|
Bank Owned Life Insurance(3)
|
765,000
|
—
|
—
|
—
|
—
|
|||||||||||||||
|
FMV of Accelerated Equity Vesting(4)
|
523,539
|
523,539
|
—
|
523,539
|
—
|
|||||||||||||||
|
Total
|
$
|
3,818,132
|
$
|
2,531,539
|
$
|
183,000
|
$
|
2,250,539
|
—
|
|||||||||||
| (1) |
The amount for Messrs. Stein, Lawson, McDonald and Ms. Baruffi represents two times each Named Executive’s annual base salary payable in equal monthly installments for two years following the termination date.
|
| (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 under their SERPs (except in the event of death). See “Pension Benefits” and “Unit Plans” above for more details regarding these benefits. Annual amounts reflected in the tables above reflect a single lifetime annuity; however the Named Executives alternatively may elect a joint and survivor annuity.
|
Benefits on Death. Death benefits are not payable pursuant to the SERP; however, in the event of death of a Named Executive while employed, a Split Dollar Agreement provides a one-time lump sum benefit of a stated dollar amount calculated as ten times the projected annual SERP benefit at normal retirement. For Messrs. McDonald and Stein, amounts also include the benefits that each would be entitled under their Unit Plans, which would not reduce the benefits payable under their SERPs. Mr. Stein’s Unit Plan provides for $24,788 annually for ten years following death and Mr. McDonald’s Unit Plans collectively provide for $74,988 annually for ten years following death. In the event that Mr. Stein or Mr. McDonald dies after their respective Unit Plan payments have begun, then any remaining payments in the ten-year benefit stream will be made to his beneficiaries.
Benefits on Disability. In the event of disability, the amounts for Messrs. Stein, Lawson, McDonald and Ms. Baruffi represent a one-time lump sum payment calculated as the present value of the projected stream of retirement benefit payments that the Named Executive would expect to receive had he or she remained employed until normal retirement age.
Benefits on Termination without Cause or Due to CIC. Upon a termination without cause or due to a change-in-control, benefits are payable in a one-time lump sum, except that for Messrs. Lawson and McDonald benefits are payable in a lifetime annuity. The benefits payable on a termination without cause reported for Messrs. Stein, Lawson and McDonald in the Company’s 2017 proxy statement were overstated as a result of calculating the benefits assuming a change-in-control had occurred. These amounts have been corrected in the tables above.
Retirement Benefits. Mr. McDonald was eligible to retire as of December 29, 2017 and receive benefits under his SERP payable in a lifetime annuity.
| (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 based on the closing price of Columbia’s common stock on NASDAQ on December 29, 2017 of $43.44 per share. Performance Shares granted in 2016 and 2017 are shown at stretch performance.
|
Former Named Executive Employment Agreement. Ms. Dressel served as President and Chief Executive Officer of Columbia and Columbia Bank pursuant to an employment agreement entered into effective August 1, 2004. The term of the employment agreement with Ms. Dressel was a rolling three-year term that provided for termination by either party through a notice of non-renewal submitted at least 60 days prior to the anniversary of the agreement.
Ms. Dressel’s employment agreement provided that if her employment was terminated without cause or if she resigned for good reason, then she would receive salary and benefits for the greater of two years or the balance of the contract term, a prorated portion of any incentive payment earned during the year of termination, and all forfeiture provisions regarding any outstanding restricted stock or other compensation agreements would lapse. The employment agreement also provided for certain benefits and payments if Ms. Dressel terminated her employment within two years following a change-in-control (as defined in the agreement) or if Ms. Dressel’s employment was terminated by the Company without cause or by Ms. Dressel with good reason at any time from and after six months prior to the public announcement of a transaction that would result in a change-in-control. In such event, in addition to the continued benefits and payment of base salary described above (as well as the lapsing of any forfeiture provisions), the agreement provided that Ms. Dressel would receive an amount equal to two times any incentive payment she received for the year preceding her termination, and all of her stock awards would fully vest and any restrictions would lapse. In the event Ms. Dressel was terminated without cause, or she voluntarily terminated for good reason, and within six months the Company publicly announced a change-in-control, upon closing of the change-in-control, the agreement provided that she would be entitled to receive the change-in-control payments set forth above, less any payments that she received as a termination payment.
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 would 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.
Following Ms. Dressel’s unexpected passing in February 2017, her beneficiaries became entitled to the lump sum payout of her Deferred Compensation Plan account equal to $516,203 and payout of the BOLI policies described above in an aggregate amount of approximately $6.3 million.
Employee Stock Purchase Plan. We also maintain an Employee Stock Purchase Plan (the “ESPP”) that was adopted in 1995, and amended in 2000, 2006, 2009 and 2010. The ESPP allows eligible employees to purchase shares of Columbia common stock at 90% of the lower of the market price at either the beginning or the end of each six-month offering period by means of payroll deductions. At December 31, 2017, there were 428,829 shares available for purchase under the ESPP.
Pay Ratio
Set forth below is the total annual compensation for 2017 of Mr. Robbins, the median of the total annual compensation of our employees (other than Mr. Robbins) and the ratio of those two values:
|
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)
|
|||||
|
$
|
3,501,130
|
$
|
48,738
|
72 to 1
|
|||
To identify our median employee, we used our entire employee population as of December 31, 2017, excluding the approximately 344 employees of Pacific Continental Corporation who became employees of the Company as a result of our acquisition of Pacific Continental Corporation on November 1, 2017. We measured compensation based on total gross pay for 2017 as reported to the Internal Revenue Service on Form W-2 for 2017 and annualized the compensation of all permanent employees hired or rehired during 2017. In accordance with SEC rules, after identifying our median employee, we calculated 2017 total annual compensation for both our median employee and Mr. Robbins using the same methodology that we use to determine our Named Executives’ total annual compensation for the Summary Compensation Table. This calculation produced the ratio shown in the table above.
Mr. Robbins’ total annual compensation above reflects his compensation for approximately six months as our President and Chief Executive Officer, four months as our interim Chief Executive Officer and two months in his former position as our Executive Vice President, Chief Operating Officer. If Mr. Robbins had served as our President and Chief Executive Officer for the entire year at the annual base salary rate set forth in his employment agreement then, assuming that Mr. Robbins earned an annual bonus at the same percentage of target bonus as described in the section entitled “Annual Cash Incentive Compensation” on page 29, Mr. Robbins’ total annual compensation for 2017 would be $3,784,144 and the resulting pay ratio would have been 78 to 1.
APPROVAL OF 2018 EQUITY INCENTIVE PLAN
The Board adopted the 2018 Equity Incentive Plan of Columbia Banking System, Inc. (the “2018 Plan”) on March 28, 2018, subject to shareholder approval at the Annual Meeting. The 2018 Employee Plan will be effective on May 23, 2018 if it is approved by our shareholders at the 2018 Annual Meeting (the “Effective Date”).
The 2018 Plan will be applicable only to awards granted on or after the Effective Date and will replace the 2014 Stock Option and Equity Compensation Plan (the “Current Plan”) for awards granted on or after the Effective Date. The Board has determined that, subject to shareholder approval of the 2018 Plan, no shares will be available, and no new grants will be made, under the Current Plan after the Effective Date. The terms and conditions of awards granted under the Current Plan prior to the Effective Date will not be affected by the adoption or approval of the 2018 Plan and the Current Plan will remain effective with respect to such awards.
The 2018 Plan provides for the issuance of equity-based awards covering up to 3,050,000 shares. We believe that the shares available for issuance under the Current Plan would only provide sufficient shares for our equity-based compensation programs for no more than approximately one to two years. Therefore, if our shareholders do not approve the 2018 Plan, our future ability to issue equity-based awards, other than cash-settled awards, will be limited. This could have significant adverse consequences, including to our ability to attract and retain talent and align compensation with the interests of our shareholders.
Best Practices and Updates. The 2018 Plan includes a number of provisions designed to protect stockholder interests and appropriately reflect our compensation philosophy and current tax law regime, which include:
| · |
Default Double-Trigger Change in Control Treatment. On a change in control of the Company, awards will not be entitled to “single-trigger” vesting unless the surviving company does not assume the awards or replace the awards with awards containing substantially the same terms.
|
| · |
No Dividends or Dividend Equivalents Paid on Unvested Awards. The 2018 Plan provides that any dividends paid on restricted shares and any dividend equivalent rights granted in respect of a restricted stock unit will accrue during the period in which such awards are unvested and will only be paid to the holder of the award if and to the extent that the award vests. No dividends or dividend equivalents may be paid on unvested awards.
|
| · |
Non-Employee Director Awards. The 2018 Plan incorporates the program by which we will compensate our non-employee directors beginning after the Annual Meeting, which includes the following: (1) an annual cash retainer of $35,000, (2) an annual equity retainer of $70,000 and (3) a per-meeting attendance fee of $1,000. Additionally, the Board may determine to establish an annual retainer for each non-employee director chairing or serving on any standing committee of the Board that does not exceed $15,000 per committee. The Board may also provide a retainer or other fee for other services, including for service as Chair of the Board or on a specific purpose committee.
|
| · |
Clawback and No Hedging Policies. Awards will be subject to our policies, including our clawback, stock ownership and no hedging policies. For a description of these policies, see “Compensation Discussion & Analysis—Clawback Policies for the Recovery of Incentive Compensation” and “—Stock Ownership Guidelines and No-Hedging.”
|
| · |
No Discounted Awards or Repricings. The exercise price per share of options and stock appreciation rights must be not less than the fair market value of a share on the grant date and may not be repriced without shareholder approval.
|
| · |
No “Evergreen” or Liberal Share Recycling. The 2018 Plan does not contain an evergreen provision and authorizes a fixed number of shares available for grant. Shares tendered by a grantee or withheld by the Company in payment of the exercise price or consideration required to be paid, or to satisfy any tax withholding obligation, with respect to an award are not available for future awards.
|
| · |
Changes Related to Tax Reform. As a result of the changes to Section 162(m) of the Code resulting from the Tax Cuts and Jobs Act enacted on December 22, 2017, the 2018 Plan does not include certain provisions that are in the Current Plan and that were designed to qualify awards under that plan as performance-based compensation for purposes of Section 162(m), including annual limitations on certain awards that could be granted to individual participants. As described in greater detail under “Compensation Discussion & Analysis—Impact of Tax Treatment of Compensation,” the recent tax reform eliminated the performance-based compensation exception other than with respect to certain arrangements in place on November 2, 2017. Nevertheless, we will continue to be able to grant awards that are subject to performance-based vesting conditions under the 2018 Plan consistent with our compensation philosophy.
|
Burn Rate and Overhang. The Company’s historical share usage under its equity compensation plans (sometimes referred to as “burn rate”) and the potential dilution of the Company’s shareholders that could occur with respect to the Company’s equity plans (sometimes referred to as “overhang”) are summarized below.
Burn rate is a calculation of shares granted during the year divided by weighted average shares outstanding.
|
2017
|
2016
|
2015
|
Average
|
||
|
(a) Restricted Stock and Performance Share awards granted (1)
|
337,384
|
335,593
|
306,007
|
326,328
|
|
|
(b) Weighted average basic shares outstanding
|
59,882,000
|
57,184,000
|
57,019,000
|
58,028,333
|
|
|
(c) Burn rate (a/b) (2)
|
0.56%
|
0.59%
|
0.54%
|
0.56%
|
|
|
(d) Adjusted burn rate (3)
|
1.40%
|
1.47%
|
1.34%
|
1.40%
|
|
|
(1) Reflects the maximum, gross number of shares underlying awards made during the respective year.
|
|||||
|
(2) Not adjusted for forfeitures, withholding and expirations, which would reduce the burn rate if taken into account.
|
|||||
|
(3) Adjusted to reflect the Institutional Shareholder Services “multiplier” cou | |||||