GLACIER BANCORP, INC.
9:00 a.m. Mountain Time
GLACIER BANCORP, INC.
We do not expect to engage an outside proxy solicitation firm to render proxy solicitation services. However, if we do, we will pay a fee for such services. Solicitation may be made through the mail or by telephone, facsimile, or personal interview.
notifying us at the Annual Meeting before the shareholder vote is taken.
Voting of Proxies by Shareholders of Record and by Beneficial Owners. A significant percentage of Glacier shareholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name.names. As summarized below, there are some differences between shares heldthe two types of record and those owned beneficially.ownership.
Shareholders of Record. If your shares are registered directly in your name with Glacier'sGlacier’s transfer agent, American Stock Transfer, you are considered, with respect to those shares, the shareholder of record, and these proxy materials are being sent to you directly by Glacier. As the shareholder of
record, you have the right to grant your voting proxy directly to Glacier or to vote in person at the Annual Meeting. We have enclosed a proxy card for you to use.
Beneficial Owner. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in “street name,” and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote. Your broker or nominee has enclosed a voting instruction card for you to use in directing your broker or nominee as to how to vote your shares.
Brokers cannot vote on behalf of beneficial owners on “non-routine” proposals (known(defined as broker non-votes)“broker non-votes”). Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because (i) the broker has not received voting instructions from the beneficial owner and (ii) the broker lacks discretionary voting power to vote such shares.
If your shares are held in street name and you do not submit voting instructions to your broker, your broker may vote your shares at this meeting on the ratification of the appointment of the independent registered public accounting firm only. If no instructions are given with respect to the election of directors or approval of the (non-binding) resolution on executive compensation, your broker cannot vote your shares on these proposals.
Voting in Person at the Annual Meeting
Shareholders of Record. Shares held directly in your name as the shareholder of record may be voted in person at the Annual Meeting. If you choose to vote your shares in person at the Annual Meeting, please bring the enclosed proxy card orand proof of identification. Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.
Beneficial Owner. Shares held in street name may be voted in person by you only if you present a “Legal Proxy” at the Annual Meeting. Contact your broker or nominee immediately to obtain a “Legal Proxy,” and bring an account statementthat document with you to the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
There were approximately 76,167,700 shares of common stock outstanding on the Record Date, which was set at March 1, 2016. Shareholders are not permitted to cumulate their votes for the election of directors.
5% Shareholders
The following table includes information as of December 31, 2015 concerning the persons or letter fromentities, including any “group” as that term is used in Section 13(d)(3) of the nominee indicating that you wereSecurities Exchange Act of 1934, as amended (“Exchange Act”), who or which was known to us to be the beneficial owner of more than 5% of the sharesissued and outstanding common stock of the Company on the record date.Record Date.
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Title of Class |
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) |
Percent of Class |
Common Stock | BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10022 | 7,373,361 | 9.7% |
Common Stock | T. Rowe Price Associates, Inc. (3) 100 E. Pratt Street Baltimore, MD 21202 | 5,639,201 | 7.4 |
Common Stock | The Vanguard Group, Inc.(4) 100 Vanguard Blvd. Malvern, PA 19355 | 5,507,224 | 7.23 |
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(1) | Pursuant to rules promulgated by the SEC under the Exchange Act, a person or entity is considered to beneficially own shares of common stock if the person or entity has or shares (i) voting power, which includes the power to vote or to direct the voting of the shares or (ii) investment power, which includes the power to dispose or direct the disposition of the shares. |
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(2) | Based on the Schedule 13G/A filed on January 26, 2016 under the Exchange Act. The securities are beneficially owned by various individual and institutional investors for which BlackRock, Inc. (“BlackRock”) serves as investment advisor with power to direct disposition and/or sole power to vote the securities. For purposes of the Exchange Act, BlackRock is deemed to be a beneficial owner of such securities; however, BlackRock expressly disclaims that it is, in fact, the beneficial owner of such securities. |
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(3) | Based on the Schedule 13G/A filed on February 11, 2016 under the Exchange Act. The securities are beneficially owned by various individual and institutional investors for which T. Rowe Price Associates, Inc. (“Price Associates”) serves as investment adviser with power to direct disposition and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities. |
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(4) | Based on the Schedule 13G/A filed on February 10, 2016 under the Exchange Act. The securities are beneficially owned by various individual and institutional investors for which The Vanguard Group, Inc. (“Vanguard”) serves as investment adviser with power to direct disposition and/or sole power to vote the securities. For purposes of the reporting requirements of the Exchange Act, Vanguard is deemed to be a beneficial owner of such securities; however, Vanguard expressly disclaims that it is, in fact, the beneficial owner of such securities. |
Directors and Named Executive Officers
The following table shows, as of February 18, 2016, the amount of Glacier common stock beneficially owned by (a) each director and director nominee of the Company, (b) the Named Executive Officers listed in the Summary Compensation Table below, and (c) all of Glacier’s directors, director nominees, and Named Executive Officers as a group. Beneficial ownership is a technical term broadly defined by the Securities and Exchange Commission (“SEC”). In general, beneficial ownership includes (i) securities over which a director or executive officer is deemed to have voting or investment control, either directly or indirectly and (ii) stock options or other rights that are exercisable currently or become exercisable within 60 days of the date upon which the beneficial ownership was determined. Except as noted below, each holder has sole voting and investment control for all shares beneficially owned.
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Name and Address** of Beneficial Owner | Position | Amount and Nature of Beneficial Ownership of Common Stock as of February 18, 2016 (1) |
Michael J. Blodnick | Director, President and Chief Executive Officer (“CEO”) | 470,320 (2) | * |
Don J. Chery | Executive Vice President (“EVP”) and Chief Administrative Officer (“CAO”) | 44,516 (3) | * |
Randall M. Chesler | President of Glacier Bank | 26,790 | * |
Sherry L. Cladouhos | Director | 13,843 (4) | * |
Ron J. Copher | EVP and Chief Financial Officer (“CFO”), Treasurer and Assistant Secretary | 51,799 (5) | * |
James M. English | Director | 41,026 (6) | * |
Annie M. Goodwin | Director | 9,134 (7) | * |
Dallas I. Herron | Director, Chairman of Glacier and Glacier Bank | 58,260 (8) | * |
Craig A. Langel | Director | 66,328 (9) | * |
Douglas J. McBride | Director | 14,393 (10) | * |
John W. Murdoch | Director | 24,592 (11) | * |
Mark J. Semmens | Director | 9,070 | * |
Executive officers and directors as a group (12 individuals) | 830,071 | 1.09% |
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* | Represents less than 1% of outstanding common stock. |
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** | The address for each beneficial owner is 49 Commons Loop, Kalispell, Montana 59901. |
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(1) | The number and percentages shown are based on the number of shares of Glacier common stock deemed beneficially owned under applicable regulations and have been adjusted for stock splits and stock dividends. |
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(2) | Includes 306,851 shares held jointly with Mr. Blodnick’s spouse, 92,647 shares owned by Mr. Blodnick’s spouse, 26,802 shares held in a 401(k) account for the benefit of Mr. Blodnick’s spouse, and 44,020 shares held for Mr. Blodnick’s account in the Company’s Profit Sharing / 401(k) Plan. |
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(3) | All shares are held jointly with Mr. Chery’s spouse. |
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(4) | Includes 8,578 shares held jointly with Ms. Cladouhos’ spouse. |
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(5) | Includes 20,109 shares held for Mr. Copher’s account in the Company’s Profit Sharing / 401(k) Plan. |
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(6) | Includes 15,026 shares held in an IRA for the benefit of Mr. English and 26,000 shares held jointly with Mr. English’s spouse of which 18,873 shares are pledged or held in a margin account. |
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(7) | Includes 4,540 shares held in an IRA for the benefit of Ms. Goodwin. |
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(8) | Includes 12,000 shares held jointly with Mr. Herron’s spouse, 1,620 shares owned by Mr. Herron’s spouse, 1,756 shares held in an IRA account for the benefit of Mr. Herron, and 1,893 shares held in an IRA account for the benefit of Mr. Herron’s spouse. |
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(9) | Includes 66,229 shares held directly by Mr. Langel of which 22,980 shares are pledged or held in a margin account and 99 shares owned by Mr. Langel’s spouse. |
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(10) | Includes 128 shares held as trustee for Dr. McBride’s children. |
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(11) | Includes 24,092 shares held in the John W. Murdoch Revocable Trust dated April 13, 2011 for which Mr. Murdoch has voting and dispositive power and 500 shares held by a trust for the benefit of Mr. Murdoch’s spouse. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers to send reports of their ownership of our stock to the SEC. We believe that all Section 16(a) filing requirements that apply to our directors and executive officers were complied with for the fiscal year ended December 31, 2015.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Articles of Incorporation and Bylaws, the Board has set the number of directors for election to the Board at the 2016 Annual Meeting at ten and has nominated the persons identified below in the section entitled “Directors and Director Nominees” for election at the Annual Meeting. If you elect the nominees presented, they will hold office until the election of their successors at the annual meeting in 2017 or until their earlier resignation.
We know of no reason why any nominee may be unable to serve as a director. If any nominee is unable to serve, your proxy holder may vote for another nominee proposed by the Board. If for any reason these nominees prove unable or unwilling to stand for election, the Board will nominate alternatives. The Board has no reason to believe that its nominees would prove unable to serve if elected.
Directors and Director Nominees
Information regarding each of the nominees is provided below, including each nominee'snominee’s name, age as of January 31, 2013,February 18, 2016, principal occupation, and public company directorships during the past five years, and the year first elected or appointed as a director of Glacier. All of the nominees are presently directors of Glacier and Glacier Bank.Bank except Mr. Chesler, who is currently a director of Glacier Bank only. Certain of the directors also served as directors of Glacier'sGlacier’s other bank subsidiaries prior to Glacier'sGlacier’s consolidation of its bank subsidiaries with and into Glacier Bank which occurred in April 2012. Information regarding the amount and nature of each nominee'snominee’s ownership of Glacier common stock is provided under the captionsection entitled “Security OwnershipVoting Securities and Principal Holders Thereof.”
Our Board is currently comprised of Certain Beneficial Ownershipnine members. Our Amended and Management.”Restated Articles of Incorporation provide that the number of directors shall be determined by a vote of the majority of the Board and shall be no fewer than seven and no more than seventeen. For election at the 2016 Annual Meeting, the Nominating Committee has identified ten director nominees, and the Board has set the number of directors at ten.
Michael J. Blodnick, 6360,, was appointed to the Board in 1993. He is a graduate of the University of Montana, the Pacific Coast Banking School and the Sheshunoff Professional Master of Banking School. He has broad experience having worked in all aspects of banking during his career. Mr. Blodnick has been employed by the Company or Glacier Bank since September of 1978. He served as the Secretary of the Company in 1993 and was appointed Executive Vice President in 1994. In July of 1998, he was appointed President and Chief Executive OfficerCEO of Glacier Bancorp.Glacier. Mr. Blodnick brings leadership skills, his long career in the banking industry, and his 35-year38-year tenure at Glacier, which enable him to advise the Board in its deliberations on a wide variety of topics. Mr. Blodnick serves on the board of directors of the Federal Home Loan Bank of Des Moines, which is an Exchange Act company.
Randall M. Chesler, 57, is a nominee for director of the Board pursuant to a provision in his employment agreement. Since August 1, 2015, Mr. Chesler has served as President of Glacier Bank. Mr. Chesler has more than 30 years of experience in the financial services industry, most recently as President of CIT Bank, the Salt Lake City-based banking subsidiary of CIT Group. During his 10 years with CIT, Mr. Chesler held progressive leadership positions including President, Small Business Lending and President, Consumer Finance. Mr. Chesler brings to the Board broad experience in a variety of aspects of the banking and technology industries as well as proven leadership skills.
Sherry L. Cladouhos, 57,60, was appointed to the Glacier Board in October 2010. She has served as Chairman of the Compensation Committee since July 2015 and served as the Chairman of the Compliance Committee from May 2013 to July 2015. She was employed by Blue Cross Blue Shield Montana for 36 years and served in a variety of leadership and executive roles, including Director of Customer Service and Administration, Vice President of Member Services and Support, Senior Vice President of Marketing and Operations, Co-Chief Operating Officer, and in 2005 was named President and CEO. She was responsible for the overall strategic direction of the
company and worked with others to provide affordable healthcare coverage to Montanans. Ms. Cladouhos is a Certified Health Insurance Executive and is a graduate of the Berkeley Healthcare Executive Program. Ms. Cladouhos also has served on the boards of numerous business and community-related organizations, and wasshe is past Chairman of the Montana Chamber of Commerce. Currently,Commerce, and she servesserved on the Montana Chamber of Commerce Foundation. Ms. Cladouhos brings extensive experience in executive levelexecutive-level leadership and strategic business decision-makingdecision making to the Board.
James M. English,, 7168,, was appointed to the Glacier Board in February 2004.2004 and has served as Chairman of the Nominating Committee since July 2013. He also served as a Directordirector of the Company'sCompany’s former subsidiary, Mountain West Bank ofin Coeur d'Alene,d’Alene, Idaho, from 1996 until the consolidation of Glacier'sGlacier’s bank subsidiaries in 2012. He earned a BS DegreeBachelor of Science degree in Financefinance and then a Law Degreelaw degree from the University of Idaho. From 1996-20001996 to 2000, Mr. English served as the President and Chief Operating Officer for Idaho Forest Industries, Inc., a lumber manufacturing, real estate development and building products retail sales company. Mr. English has been an attorney in limited private practice as a sole practitioner of the English Law Firm in Hayden, Idaho since 2000. He is a partner in Great Sky Development of Boise, Idaho sits on the board of Bennett Industries, Inc., and also serves on the board of a non-profit organization.RGB Holdings, Inc. Mr. English brings experience and expertise to the Board based on a legal career of over 40 years and experience as a business executive.
Allen J. Fetscher, 67, was appointed to the Glacier Board in December 1996. He serves as the Chairman of the Company's Compensation Committee. He also served as the Vice-Chairman of Glacier's former subsidiary, First Security Bank until the consolidation of Glacier's bank subsidiaries in 2012, and also served as its Chairman from its beginning in 1993 through its merger with the Company in 1996 until his resignation from the office in 2008. Mr. Fetscher received a BS degree in Business Administration from the University of Montana in 1968. He is the President of Fetscher's, Inc., an investment and real estate development company. He is also the Vice President of American Public Land Exchange Co., Inc., and the owner of Associated Agency, a company involved in real estate. Mr. Fetscher has been in the real estate development business since 1970. For over 40 years, he has developed subdivisions, office buildings, apartment complexes and mixed use developments, primarily in Montana. Mr. Fetscher brings extensive knowledge of local and regional real estate markets and development to the Board.
Annie M. Goodwin, 54,57, was appointed to the Glacier Board in June 2012 and has served as Chairman of the Risk Oversight Committee since July 2012. Ms. Goodwin is an attorney in Helena, Montana practicingand is the principal of the Goodwin Law Office, L.L.C. She practices banking and regulatory law. She served as Montana'sMontana’s Commissioner of Banking and Financial Institutions from 2001 to 2010, as chief legal counsel with the Montana Banking and Financial Institutions Division and Department of Commerce from 1988 -to 2001 and worked in private practice prior to that time. Ms. Goodwin alsoearned her Bachelor of Science in nursing from Carroll College and worked as a registered nurse receiving her BS in nursing from Carroll College before going on to earn her Juris Doctor from the University of Montana Law School in 1984, continuing1984. She continued her legal education attendingat Hastings College of Law, George Mason University of Law in the Banking Law Section, and completingshe completed the FDIC Bank Examination School for Attorneys. Ms. Goodwin is active in local and trade associations and was appointed to the Montana Supreme Court to the Commission on Character and Fitness of Attorney Admissions to State Bar of the Montana Supreme Court where she has served as the ChairChairman since 1988. Ms. Goodwin brings to the Board her expertise and knowledge gained in her role as Commissioner where she had regulatory oversight over the financial institutions in Montana.
Dallas I. Herron, 71 68,, was appointed to the Board in June 2008 and has served as its Chairman since the 2013 annual meeting. Prior to his appointment to the Glacier Board in June 2008.2008, Mr. Herron had previously served aswas a director of Glacier's subsidiary, Glacier Bank and served from 1998 through 2008. Mr. Herron has been appointed to succeed Mr. Sliter as Chairman of the Board following Mr. Sliter's retirement as Chairman after the 2013 Annual Meeting. He received his BSBachelor of Science degree in Aeronautical Engineeringaeronautical engineering from Northrop University in 1966. Mr. Herron has worked in the oil industry
for over 40
years and is the CEO of CityServiceValcon, LLC, which markets petroleum products in Montana, Idaho, Washington, and ten other states. He is a past presidentPresident of the Western Petroleum Marketing Association, a seven-state trade association. He serves on Chevron'sChevron’s Western U.S. Advisory Council and was recently appointed to ExxonMobil's regional council. He has also served as Senior Director of the Petroleum Marketer Association of America. Mr. Herron is active in the community and in the forest products and transportation industries. As our banks become more involved in the energy business, Mr. Herron brings to the Board over 30 years of experience as a business executive in the energy sector, which is also a regulated business.
Craig A. Langel, 6562,, was appointed to the Glacier Board in December 2005. He was appointed Chair2005 and has served as Chairman of the Audit Committee following Mr. Sliter's resignation from the Committee insince 2009. Mr. Langel received his education at Montana State University graduating with a BSBachelor of Science degree in Accountingaccounting in 1973. He received his CPACertified Public Accountant (“CPA”) license in 1974. Mr. Langel has served the accounting profession for 39over 40 years and is a Certified Public Accountant AccreditedCPA accredited in Business Valuation and a Certified Valuation Analyst. He is presidentPresident and shareholder of Langel & Associates, P.C., providing consulting and tax services throughout the United States. In addition, Mr. Langel is the owner and CEO of CLC Restaurants, Inc., which owns and operates Taco Bell and KFC restaurants in Montana, Idaho, and Washington, and he is a part owner of Mustard Seed Restaurants. Mr. Langel served as a director of Glacier'sGlacier’s former subsidiary First Security Bank of Missoula from 1984-2005,1984 to 2005 and was re-elected to the board in February 2009, serving until the consolidation of Glacier'sGlacier’s bank subsidiaries in 2012. He also serves on the boardsboard of directors of two non-profit organizations. With a career of over 3940 years as a Certified Public Accountant,CPA, Mr. Langel brings extensive financial acumen to the Board, in addition to his experience as a business owner and executive.
L. Peter Larson, 74, has served as a director of Glacier Bancorp and/or Glacier Bank since 1985. He is the Chairman of the Company's Nominating/Corporate Governance Committee. Mr. Larson received a BS degree in 1961 from Principia College in Illinois. He was the Owner/CEO/COO of several small forest products companies, including L. Peter Larson Co. and American Timber Company, until his retirement in 2002. He has served on the boards of directors of a number of non-profit organizations during his career. Currently he serves as the Northwest Healthcare/Kalispell Regional Medical Center Board Chairman and on The HealthCenter Board of Managers. Mr. Larson brings to the Board extensive experience in management, including expertise in purchasing, marketing, human resources, distribution and accounting.
Douglas J. McBride, 6063, was appointed to the Glacier Board in September 2006.2006 and has served as Chairman of the Compliance Committee since July 2015. Dr. McBride has been an optometrist in Billings for over 30 years. He received his BABachelor of Arts degree at Linfield College and his ODDoctor of Optometry degree at the Illinois College of Optometry graduating in 1978. Dr. McBride is thea former President of the Montana State Board of Examiners for Optometry, of which he has been a member since 1993. He is also the former chairmanChairman of the Advisory Board for TLC Laser Eye Center in Billings and is the currentformer administrator for the State of Montana for Vision Source, an optometric franchise. He is a past President of the Montana Optometric Association. Dr. McBride also served as a director of the Company'sCompany’s former subsidiary Western Security Bank, serving from 2003 until the consolidation of Glacier'sGlacier’s bank subsidiaries in 2012. Dr. McBride'sMcBride’s expertise in the healthcare community is valuable to the Board and allows him to provide insight into the Company'sCompany’s healthcare and medical benefit issues, as well as the healthcare industry generally.in general.
John W. Murdoch, 7073, was appointed to the Glacier Board in September 2005. Mr. Murdoch graduated from Doane College with a BABachelor of Arts degree in 1964. He worked in the ranch and home supply industry for over 40 years. Since 1994, he has been an owner of Murdoch'sMurdoch’s Ranch & Home Supply, LLC, a ranch and home retail operation, and served as its President from its founding until 2006 when he sold a
majority ownership to key employees. As President, he coordinated the efforts required to run a 17001,700 employee, multi-location, multi-state retail operation including the oversight of purchasing, marketing, human resources, distribution and accounting. Mr. Murdoch served as a director of the Company'sCompany’s former subsidiary Big Sky Western Bank untilfrom December 2002 to February 2010, and forhe served on the Montana State University Foundation.Foundation board in 2009 and 2010. He currently serves as a director for Bozeman Deaconess Hospital. Mr. Murdoch was also President of Mid-States Distributing Co., Inc., from 2006-2008. in 1990 and then again in 2006 and 2007. Mid-States is a buying cooperative for farm supply stores with over 500 stores and a$3 billion dollars in retail sales.sales annually. Mr. Murdoch brings to the Board broad experience and expertise based on his management and oversight of substantial consumer businesses.
Everit A. SliterMark J. Semmens, 5674,, was appointed to the Board in January 2016. At the end of 2015, Mr. Semmens retired from his position as a Managing Director of Investment Banking at D.A. Davidson & Co., a full-service investment firm based in Great Falls, Montana. Mr. Semmens joined D.A. Davidson & Co. in 1985, founded the firm’s investment banking practice, and served on the firm’s Management Committee, Executive Committee, and Board of Directors. Mr. Semmens served as the lead investment banking advisor to Glacier for 25 years, advising Glacier on approximately 20 acquisitions and four capital raises. He also has an extensive background in higher education, having served as a director of Glacier Bancorp and/or Glacier Bank since 1973, and was appointed Chairmanboard member (and in the latter two cases, Chairman) of the Glacier BancorpMontana Board of Regents, the Montana Higher Education Student Assistance Corporation, and the Carroll College Board of Trustees. Mr. Semmens is a graduate of Carroll College with degrees in December 2005. Mr. Sliter served as the Chairman of the Company's Audit Committee until his resignation from the Committee in 2009. He also serves as Chairman of the Company's subsidiary Glacier Bank. Mr. Sliter has informed the Board that following the 2013 Annual Meeting, he will step down as Chairman, but will remain a director. Mr. Sliter received his BS degree in Business Administrationbusiness administration and Accounting from the University of Montana in 1966finance. In addition to broad experience and he maintains a Certified Public Accountant License. From 1965 to 2003 he was a partnerexpertise in the certified public accounting firm of Jordahl & Sliter, PLLC. Since August 2003, he has been an employee of Jordahl & Sliter.financial services and financial institutions industries generally, Mr. Sliter serves on the boards of numerous non-profit organizations. Mr. SliterSemmens brings to the Board broad ranging expertise on a wide varietyhistorical knowledge of lendingthe Company and tax matters. Mr. Sliter's experience as a director of numerous civic organizations is also valuable to the Boardbusiness environment in connection with the Company's civic involvement.which it operates.
The board of directorsBoard unanimously recommends a vote “FOR”FOR the election of each of the nominees to the Board.
CORPORATE GOVERNANCE
Corporate Governance Guidelines and Policies
The board of directorsBoard is committed to good business practices, transparency in financial reporting and high standards of corporate governance. Glacier operates within a comprehensive plan of corporate governance for the purpose of defining responsibilities, setting high standards of professional and personal conduct and assuring compliance with such responsibilities and standards. GlacierWe regularly monitorsmonitor developments in the area of corporate governance. The Board periodically reviews Glacier'sour governance policies and practices against those suggested by various groups or authorities active in corporate governance and the practices of other companies, as well as the requirements of the related SEC rules and the listing standards of Thethe NASDAQ Stock Market (“NASDAQ”).
Governance Policy and Codes of Ethics
The Board has adopted and adheres to a Corporate Governance Policy which the Board and management believes represents sound governance practices and provides a framework to sustain our success and build long-term value for our shareholders.
The Board has adopted a Code of Ethics for Senior Financial Officers which applies to its principal executive officer, principal financial officer, principal accounting officer, controller, and any persons performing similar functions. The Board has also adopted a Director Code of Ethics.
Clawback Policy
The Board adopted a “clawback” policy providing for the recovery of incentive compensation in certain circumstances. Under the clawback policy, if Glacier is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under applicable securities laws, the Company will recover compensation from any current or former executive officer who received incentive compensation (including equity-based compensation) during the three-year period preceding the date of the restatement, based on the erroneous data, in excess of what would have been paid to the executive under the accounting restatement.
Anti-Hedging Policy
The Board has adopted an Anti-Hedging Policy that prohibits our directors, officers and employees from engaging in a “hedging transaction,” which is generally a transaction that would have the economic effect of establishing a downside price protection in connection with Glacier common stock owned by such person. This type of transaction may create the appearance that the person’s interests are not aligned with those of the Company’s shareholders generally, to the extent that it is designed to hedge or offset against any decrease in the market value of Glacier common stock.
Anti-Pledging and Margin Account Policy
The Board has adopted an Anti-Pledging Policy that prohibits our directors and executive officers from pledging Glacier common stock as collateral or from holding Glacier common stock in a margin account. This policy was adopted on June 30, 2015 and does not affect any pledges of Glacier common stock that were made prior to that date, except that no such pre-existing pledges may be increased in amount after that date.
Stock Ownership and Retention Guidelines
The Board has approved stock ownership and retention guidelines for its directors and executive officers which are intended to help closely align the financial interests of such persons with those of Glacier’s shareholders. Within five years after appointment or election to the Board, each director is expected to acquire and retain shares of Glacier common stock having a market value of at least five times his or her annual cash retainer. All of the current Glacier directors have exceeded this ownership guideline.
Similarly, executive officers who are required to file reports pursuant to Section 16 of the Exchange Act are expected, within five years of appointment, to acquire and retain Glacier shares having a specified market value. The CEO is expected to own shares having a market value equal to at least six times his or her annual base salary, and each other executive officer is expected to own shares having a market value equal to at least four times his or her annual base salary. Each of our executive officers has exceeded this ownership guideline except Mr. Chesler, who joined the Company effective August 1, 2015.
Unless a director or executive officer has achieved the applicable guideline level of share ownership, he or she is required to retain an amount equal to 50% of the net shares received as a result of the exercise, vesting or payment of any Glacier equity awards granted to him or her.
You can access our current corporate governance documents, including the Corporate Governance Policy, the Code of Ethics for Senior Financial Officers, the Director Code of Ethics, the Clawback Policy, the Anti-Hedging Policy, the Anti-Pledging and Margin Account Policy, the Majority Voting Policy (summarized below), the Stock Ownership and Retention Guidelines, and the charters of the Audit, Compensation, Compliance, Nominating, and Risk Oversight Committees, by visiting the Company’s website at www.glacierbancorp.com and clicking on “Governance Documents” or by writing to: LeeAnn Wardinsky, Corporate Secretary, 49 Commons Loop, Kalispell, Montana 59901.
Board Leadership Structure
The board of directorsBoard is committed to maintaining an independent Board. InTo that context,end, it has been theour practice of Glacier to separate the duties of Chairman and Chief Executive Officer. In keeping with good corporate governance practices, atCEO. At this time, the Board believes that the separation of duties of Chairman and Chief Executive OfficerCEO eliminates any inherent conflict of interest that may arise when the roles
are combined and that a non-employee director who is not serving as an executive officer of Glacier can best provide the necessary leadership and objectivity required as Chairman.
Director Qualifications
The board of directorsBoard believes that it is necessary for each of Glacier'sour directors to possess many qualities and skills. All of our directors bring to our Board a wealth of leadership experience derived from their extensive board service and their service in a variety of professional and executive positions and their extensive board experience.positions.
The Nominating/Corporate GovernanceNominating Committee is responsible for the oversight and nomination process for director nominees. The Nominating Committee has not historically adopted formal director qualification standards for Nominating Committee-recommended nominees. However, the Nominating Committee annually reviews the experience, qualifications, attributes and skills of each director and nominee as part of its evaluation as to whether theseor not the nominees are the right individuals to serve on Glacier'sGlacier’s Board and to help Glacier successfully meet its long-term strategic plans. Because each director of Glacier must be re-elected annually, the 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 Nominating Committee when considering director nominees is set forth below in the section entitled “Nominating/Nominating / Corporate Governance Committee.”
The director biographical information set forth above in the section entitled “Election of Directors and Director Nominees” summarizes the experience, qualifications, attributes and skills that Glacier believeswe believe qualifies each director to serve on the Board.
Majority Voting Policy
In 2012,September 2011, the Company adopted a majority voting policy commencing with director nominations and elections, as a corporate governance practice. Under this policy,the Majority Voting Policy under which each director nominee is required to submit an irrevocable resignation as a conditional resignation and ifdirector of the Company. The Company has such a letter on file from each 2016 director nominee. If any such nominee receives more “Withheld”WITHHELD votes than “For”FOR votes in an uncontested election of directors, his or her resignation will be considered by our Nominating/Corporate GovernanceNominating Committee and our board of directors.Board.
The Company believesWe believe that the majority voting policyMajority Voting Policy enhances itsour accountability to shareholders by formalizing the consequences of a “majority withhold” vote and demonstrating itsour responsiveness to director election results, while at the same time protecting the long-term interests of the Company and its shareholders.
An “uncontested election” is generally an election in which the number of nominees for election does not exceed the number of Board positions to be filled. In a contested election, the policyMajority Voting Policy will not apply and nominees will be elected by plurality voting.
The Nominating Committee will consider any director resignation tendered under the policy and recommend to the board of directorsBoard the action to be taken with respect to such resignation. Among other things, the recommendation of the Nominating Committee may be to accept the resignation or to defer acceptance until a qualified replacement director can be identified and elected to the Board. The Nominating Committee may also recommend that the resignation be rejected, eithereither: (i) unconditionally; (ii) by addressing what the Nominating Committee believes to be the underlying reasons for the failure of the director to be reelected;receive more FOR votes than WITHHELD votes; or (iii) resolving that the director will not be re-nominatednominated in the future for election.
In considering a tendered resignation, the Nominating Committee is authorized to consider all factors it deems relevant to the best interests of the Company and its shareholders. The policy contains a non-exclusive list of the factors that may be considered in any particular circumstance.
The board of directorsBoard (excluding the director whose resignation is being considered) will act on the recommendations of the Nominating Committee no later than 90 days following certification of the shareholder vote. The board of directorsBoard is authorized to consider the information and factors consideredwhich led to the nomination of the director by the Nominating Committee and any additional factors as the Board deems relevant to the best interests of the Company and its shareholders. Following the Board'sBoard’s decision, the Company will promptly publicly announce such decision, providing an explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation.
Code of Ethics and Corporate Governance Documents
Glacier has adopted a Code of Ethics for Senior Financial Officers which applies to its principal executive officer, principal financial officer, principal accounting officer or controller, and any persons performing similar functions.
You can access Glacier's current Code of Ethics for Senior Financial Officers, its Audit, Compensation and Nominating/Corporate Governance Committee charters, its Corporate Governance Policy, and its Majority Voting Policy by visiting the Company's Website and clicking on Corporate Overview then Governance Documents on the Company's home page at www.glacierbancorp.com, or by writing to: LeeAnn Wardinsky, Corporate Secretary, 49 Commons Loop, Kalispell, Montana, 59901.
Director Independence
With the assistance of legal counsel to the Company, the Nominating/Corporate GovernanceNominating Committee has reviewed the applicable legal standards for Board and Board committee member independence. The Nominating Committee has also reviewed a summary of the answers to annual questionnaires completed by each of the directors, which also includedidentifies any potential director-affiliated transactions.
The Board then analyzed the independence of each director and nominee and determined that the following members of the Boardwhich directors meet the standards regarding “independence” required by applicable law, regulation and NASDAQ listing standards and thatwhether or not each such director is free of relationships that would interfere with the individual exercise of independent judgment. In determining the independence of each director, the Board considered many factors, including any loans to the directors, each of which were made on the same terms as comparable transactions made with persons not related to Glacier, Glacier Bank, or its subsidiary banks.our bank divisions. Such arrangements are discussed in detail under the section entitled “Transactions with Management.”
Based on these standards, the Board determined that each of the following non-employee directorsdirector nominees is independent:
|
| | |
| Sherry L. Cladouhos | Craig A. Langel |
| James M. English | L. Peter Larson |
| Allen J. Fetscher | Douglas J. McBride |
| Annie M. Goodwin | John W. Murdoch |
| Dallas I. Herron | Mark J. Semmens |
Based on the standards described above, the Board determined that Michael J. Blodnick, who servedserves as an executive officer of Glacier, in 2012, and Everit A. Sliter, whose former firm provides accounting services to the Company,Randall M. Chesler, who serves as an executive officer of Glacier Bank, are not independent.
Stock Ownership Guidelines
The board of directors has approved stock ownership guidelines for its members, which are intended to help closely align the financial interests of directors with those of Glacier's shareholders. Within three years after they are first appointed or elected to the Board, directors are required to own shares of Glacier common stock with a market value of at least $100,000. All of the current Glacier directors have exceeded this ownership, with the exception of Ms. Goodwin who joined the Board in 2012.
Shareholder Communications with the Board of Directors
The Company and the Board welcome communication from shareholders and other interested parties. Communications may be made by writing to the Chairman of the Board, c/o the Corporate Secretary, Glacier Bancorp, Inc., 49 Commons Loop, Kalispell, Montana 59901. A copy of any such written communication will also be sent to our CEO. If the Chairman and the CEO determine that such communication is relevant to and consistent with Glacier'sGlacier’s operations and policies, such communication will be forwarded to the entire Board for review and consideration.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met 1512 times during the fiscal year.year ended December 31, 2015. Each director attended at least 75% of the meetings of the Board and the committees on which he or she served. Glacier encourages,We encourage but doesdo not require theour directors to attend Annual Shareholder Meetings.the annual meeting of the shareholders. Last year, all except one of our directors attended the Annual Shareholder Meeting.annual meeting of the shareholders.
Board Authority for Risk Oversight
The Board has the ultimate authority and responsibility for overseeing risk management at Glacier. Some aspects of risk oversight are fulfilled at the full Board level. For example, the Board regularly receives reports from management;management - specifically from enterprise risk management - on numerous risk components that impact the operations and reputation of the Company. The Board delegates other aspects of its risk oversight function to its committees.
The Audit Committee oversees financial, accounting and internal control risk management. The headdirector of the Company'sCompany’s internal audit function reports directly to the Audit Committee. The executive officers regularly report directly to the entire Board and to appropriate Board committees with respect to the risks they are responsible for managing.
The Compensation Committee oversees the management of risks that may be posed by the Company'sCompany’s compensation practices and programs. As part of this process, the Compensation Committee is responsible for analyzing the compensation policies and practices for all employees, not just executive management.Named Executive Officers. In its review of these policies and practices, the Compensation Committee has determined that the current policies and practices do not create or encourage employees to take risks that are reasonably likely to have a material adverse effect on the Company. In June 2015, the Board adopted a clawback policy for the recovery of incentive payments to executive officers in certain circumstances, which further mitigates risk.
The Compliance Committee monitors compliance with federal and state laws and the associated regulations applicable to the Company, Glacier Bank, and our bank divisions.
Glacier'sGlacier’s independent directors meet in executive session during regularly scheduled meetings of the board of directorsBoard and at other times as required. During 2012, Chairman Sliter presided over three2015, the independent directors met in executive sessions.session eight times.
Committee Membership
TheThroughout this Proxy Statement, we refer to five of the committees established by the Board, has established, among others, an Audit Committee, a Compensation Committee, a Nominating/Corporate Governance Committee and a Risk Oversight Committee. The following table shows the membership of these committees.each is shown in the table below.
|
| | | | |
Name | Audit | Compensation | Nominating | R.O.C. |
Sherry L. Cladouhos | þ | þ | þ | þ |
James M. English | þ | þ | þ | þ |
Allen J. Fetscher | o | þ* | þ | þ |
Annie M. Goodwin | þ | þ | þ | þ* |
Dallas I. Herron | þ | þ | þ | þ |
Craig A. Langel | þ* | þ | þ | þ |
L. Peter Larson | þ | þ | þ* | þ |
Douglas J. McBride | þ | þ | þ | þ |
John W. Murdoch | þ | þ | þ | þ |
Total Meetings in 2012 | 14 | 9 | 10 | 6 |
|
| | | | | |
Name | Audit | Compensation | Compliance | Nominating | Risk Oversight |
Michael J. Blodnick | ¨ | ¨ | ¨ | ¨ | ¨ |
Randall M. Chesler | ¨ | ¨ | ¨ | ¨ | ¨ |
Sherry L. Cladouhos | þ | þ* (1) | þ* (2) | þ | þ |
James M. English | þ | þ | þ | þ* | þ |
Allen J. Fetscher (3) | ¨ | þ* (4) | ¨ | þ | þ |
Annie M. Goodwin | þ | þ | þ | þ | þ* |
|
| | | | | |
Name | Audit | Compensation | Compliance | Nominating | Risk Oversight |
Dallas I. Herron | þ | þ | þ | þ | þ |
Craig A. Langel | þ* | þ | þ | þ | þ |
Douglas J. McBride | þ | þ | þ* (5) | þ | þ |
John W. Murdoch | þ | þ | þ | þ | þ |
Mark J. Semmens (6) | þ | þ | þ | þ | þ |
Total Meetings in 2015 | 14 | 6 | 12 | 6 | 12 |
*Committee ChairChair. Chairmanship information is for the calendar year 2015 only.
____________________
| |
(1) | Ms. Cladouhos was appointed Chairman of the Compensation Committee on July 29, 2015. |
| |
(2) | Ms. Cladouhos served as Chairman of the Compliance Committee from January 1 to July 29, 2015. |
| |
(3) | Mr. Fetscher retired from the Board effective June 30, 2015. The committee memberships listed for Mr. Fetscher cover the period from January 1 to June 30, 2015. |
| |
(4) | Mr. Fetscher served as Chairman of the Compensation Committee from January 1 to June 30, 2015. |
| |
(5) | Dr. McBride was elected Chairman of the Compliance Committee on July 29, 2015. |
| |
(6) | Mr. Semmens was appointed to the Board effective January 1, 2016. The committee memberships listed for Mr. Semmens cover the period from January 1, 2016 to present. |
Audit Committee. During the fiscal year ended December 31, 2012,2015, the Audit Committee was comprised of 8 directors, each of whomseven directors. Each Audit Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC rules. Mr. Langel served as the Chairman of the Audit Committee and qualifies as an “audit committee financial expert” under SEC rules. The Audit Committee operates under a formal written charter adopted by the Board. As part of its periodic review of audit committee-relatedAudit Committee matters, the Audit Committee has received updates on the relevant requirements of applicable SEC rules and the corporate governance listing standards of NASDAQ.
The Audit Committee is responsible for the oversight of the quality and integrity of Glacier'sGlacier’s financial statements, its compliance with legal and regulatory requirements, the qualifications and independence of its independent auditors, the performance of its internal audit function and independent auditors, and other significant financial matters. In discharging its duties, the Audit Committee is expected to, among other things:
have the sole authority to appoint, retain, compensate, oversee, evaluate and replace the independent auditors;
review and approve the engagement of Glacier'sGlacier’s independent auditors to perform audit and non-audit services and related fees;
meet independently with Glacier'sGlacier’s internal auditing department, independent auditors and senior management;
review the integrity of Glacier'sGlacier’s financial reporting process;
review Glacier'sGlacier’s financial reports and disclosures submitted to Bankbank regulatory authorities;
maintain procedures for the receipt, retention and treatment of complaints regarding financial matters; and
review and approve related person transactions.
Compensation Committee. During the fiscal year ended December 31, 2012,2015, the Compensation Committee was comprised of 9eight directors each of whom arefrom January 1, 2015 to June 30, 2015 and seven directors from July 1, 2015 to December 31, 2015 due to Mr. Fetscher’s retirement. Each Compensation Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC and IRS rules. The Compensation Committee reviews the performance of the Company's Chief Executive OfficerCompany’s CEO and other key employees and determines, approves, and reports to the Board on the elements of their compensation and long-term equity basedequity-based incentives. In determining the CEO'sCEO’s compensation, the Compensation Committee evaluates several performance factors including the Company'sCompany’s financial results and levels of compensation of peer financial institutions, and the report of our compensation consultants, McLagan.institutions. The Compensation Committee operates under a formal written charter.charter adopted by the Board. A complete description of the executive compensation process applicable to 20122015 is described under the section entitled "“Compensation Discussion and Analysis.”
In addition, the Compensation Committee:
recommends, if appropriate, new employee benefit plans to the board of directors;Board;
reviews all employee benefit plans;
makes determinations in connection with compensation matters as may be necessary or advisable; and
recommends, if appropriate, revisions to the compensation and benefit arrangements for directors.
Nominating/Compliance Committee. During the fiscal year ended December 31, 2015, the Compliance Committee was comprised of seven directors. Each Compliance Committee member is considered “independent” as defined by NASDAQ listing standards and applicable SEC and IRS rules. The Compliance Committee monitors compliance with federal and state laws and the associated regulations applicable to the Company, Glacier Bank, and our bank divisions and reports to the Board on such matters.
The Compliance Committee operates under a written charter adopted by the Board. In discharging its duties, the Compliance Committee is expected to, among other things:
review the material risk areas and review the regulatory environment and legal requirements associated with the same;
oversee the development and execution of a plan to monitor and remediate all compliance deficiencies identified by the Company or its examiners;
review internal reports to management prepared by the compliance department;
review and approve responses to regulatory agency examination reports prior to submission of any such response on examinations and ensure that all information requests made by regulatory agencies are accurately and timely addressed;
pre-approve all compliance auditing services to be provided to the Company; and
review, with legal counsel, any legal matter that could have a significant impact on the Company.
In carrying out its responsibilities and duties, the Compliance Committee will foster an environment that encourages all bank officers and employees to raise any compliance issues or concerns freely and without concern for retribution.
Nominating / Corporate Governance Committee. During the fiscal year ended December 31, 2012,2015, the Nominating/Corporate GovernanceNominating Committee (“Nominating Committee”) was comprised of 9eight directors each of whomfrom January 1, 2015 to June 30, 2015 and seven directors from July 1, 2015 to December 31, 2015 due to Mr. Fetscher’s retirement. Each Nominating Committee member is considered “independent” as defined by NASDAQ listing standards. The Nominating Committee is responsible for nominating a slate of directors for election at Glacier'sGlacier’s annual meeting and appointing directors to fill vacancies as they occur. It is also responsible forfor: (i) considering management succession plans, the appropriate Board size, and committee structure and appointments; and (ii) developing and reviewing corporate governance principles applicable to Glacier, Glacier Bank, and its subsidiaries,our bank divisions, including itsGlacier’s Corporate Governance Policy, in light of emerging standards and best practices and the needs of Glacier and its shareholders,shareholders; and make(iii) making such recommendations to the full Board as the Nominating Committee considers appropriate. The Nominating Committee operates under a formal written charter approvedadopted by the Board.
The Nominating Committee will consider nominees recommended by shareholders if the recommendations are made in accordance with the procedures described in this Proxy Statement under the section entitled “Shareholder Proposals and Director Nominations.”
In deciding whether or not to recommend incumbent directors for re-nomination, the Nominating Committee evaluates Glacier'sGlacier’s evolving needs and assesses the effectiveness and contributions of its existing directors. The Nominating Committee is authorized to establish guidelines for the qualification, evaluation and selection of new directors to serve on the Board. The Nominating Committee has not adopted, nor does it anticipate adopting, specific qualifications for Nominating Committee recommendedCommittee-recommended nominees, nor has the Nominating Committee adopted a formal policy relating to Board diversity, although the Nominating Committee and Board value a diversity of backgrounds, professional experience and skills among directors. The Nominating Committee will instead evaluate each nominee on a case-by-case basis, including assessment of each nominee'snominee’s business experience and special skills. The Nominating Committee will also evaluate whether or not a nominee'snominee’s skills are complementary to existing Board members'members’ skills and the Board'sBoard’s need for operational, management, financial, technological or other expertise.
Risk Oversight Committee. CommitteeThe. During the fiscal year ended December 31, 2015, the Risk Oversight Committee was formed in July 2012 and is comprised of eachall of the independent directors of the Company. The Risk Oversight Committee'sCommittee was formed in July 2012 to assist the Board in fulfilling its oversight responsibilities extend over all organizationalwith regard to the Company’s risk types, andmanagement program. The scope of the Committee coordinates relations and communications among the Audit Committee, the Compensation Committee and the full board. The Risk Oversight Committee is responsible forextends over the oversightentire enterprise and includes identification, measurement, monitoring, and controlling of Glacier's policies, procedures and practicesthe Company’s principle business risks related to business,strategy, the market, operations, and operational risks as they impact or may impact Glacier's business and objectives.all aspects of compliance. Among the responsibilities of the Risk Oversight Committee is to engage management onin an ongoing risk appetiterisk-appetite dialogue as conditions and circumstances change and new opportunities arise,arise. The Risk Oversight Committee reviews and to review and approve Glacier's risk appetiteapproves Glacier’s risk-appetite statement annually and approveapproves any material amendments to the risk appetiterisk-appetite statement.
COMPENSATION OF DIRECTORSMANAGEMENT
Named Executive Officers Who Are Not Directors
The Compensation Committee has authority over director compensation subject to the Board's authority to approve changes. Our directors receive compensation in the form of cash and, as applicable, awards in the form of restricted stock or stock options. Glacier does not pay directors who are also employees of the Company additional compensation for their service as directors.
The following table shows compensation paidsets forth information with respect to Named Executive Officers during 2015 who are not directors or accruednominees for director of Glacier, including employment history for the last fiscal year to Glacier's non-employee directors who alsofive years. All executive officers are appointed annually and serve onat the Glacier Bankdiscretion of the Board. Mr. Blodnick is not included in the table as he is an employee of Glacier and thus receives no compensation for his service as a director. The footnotes to the table describe the details of each form of compensation paid to directors.
2012 Director Compensation Table16
|
| | | | | | | | | | | | | | | | |
Name | |
Fees Earned or Paid in Cash ($) | |
Stock Awards ($) | | Nonqualified Deferred Compensation Earnings ($) | |
Total ($) |
| | (1) | | (2)(3) | | (4) | | |
Sherry L. Cladouhos | | $ | 30,000 |
| | $ | 18,000 |
| | $ | 559 |
| | $ | 48,559 |
|
James M. English | | 47,270 |
| | 18,000 |
| | — |
| | 65,270 |
|
Allen J. Fetscher | | 58,650 |
| | 18,000 |
| | — |
| | 76,650 |
|
Annie M. Goodwin | | 27,513 |
| | 9,013 |
| | — |
| | 36,526 |
|
Dallas I. Herron | | 31,200 |
| | 18,000 |
| | 2,021 |
| | 51,221 |
|
Craig A. Langel | | 50,400 |
| | 18,000 |
| | — |
| | 68,400 |
|
L. Peter Larson | | 39,109 |
| | 18,000 |
| | 13,236 |
| | 70,345 |
|
Douglas J. McBride | | 42,000 |
| | 18,000 |
| | 3,644 |
| | 63,444 |
|
John W. Murdoch | | 30,000 |
| | 18,000 |
| | 2,850 |
| | 50,850 |
|
Everit A. Sliter | | 63,259 |
| | 18,000 |
| | 6,282 |
| | 87,541 |
|
|
| | | |
Name | Age | Position | Has Served as an Officer of the Company Since |
| | | |
Don J. Chery | 53 | EVP and CAO | 1989 |
Ron J. Copher | 58 | EVP and CFO, Treasurer and Assistant Secretary | 2006 |
______________
| |
(1) | Directors are paid an annual retainer of $30,000 and receive additional compensation for services performed as committee members. Amount includes Board and committee fees earned or deferred in 2012.
|
| |
(2) | Represents the grant date fair value of the stock awards, based on the price of Glacier's common stock on the close of business on April 16, 2012 ($14.32) and for Ms. Goodwin only, July 12, 2012 ($15.38), the dates that the awards were granted. The fair value of these awards was determined in accordance with the Compensation - Stock Compensation topic of the FASB ASC. Assumptions used to calculate these amounts are set forth in the notes to the Company's audited financial statements for the fiscal year ended 2012, included in the Company's accompanying Annual Report. |
| |
(3) | The awards were fully vested at the time of grant. |
| |
(4) | The amount represents the above market earnings on non-qualified deferred compensation. Earnings are credited at one-half of the Company's current year return-on-equity. |
2012 Director Compensation
Directors' Stock Option Plan. Glacier previously maintained a Directors' Stock Option Plan (“Director Plan”) for non-employee directors. Under the Director Plan, a set number of shares of common stock were reserved for issuance upon the exercise of nonqualified stock options granted to non-employee directors of the Company and each of the Company's former subsidiary banks. Nonqualified options allow a director to purchase shares of common stock at a price equal to the fair market value (closing price) of the common stock on the date of grant. Each option granted under the Director Plan vested six months following the date of grant and expires upon the earlier of five years following the date of grant or three years following the date the optionee ceases to be a director, except in the event of death, in which case the period is one year from the date of death.
The Director Plan expired in March 2009. Although no new options may be issued under the Director Plan, there are previously granted but unexercised options outstanding under that plan. Glacier's 2005 Stock Incentive Plan provides for the grant of equity awards to directors. Accordingly, Glacier determined not to renew the Director Plan when it expired, and will make subsequent grants to directors under the 2005 Stock Incentive Plan.
As set forth in the table on the previous page, stock awards were awarded to Glacier's non-employee directors during the year 2012.
EXECUTIVE COMPENSATION
The following section describes the compensation that Glacier pays its ChiefNamed Executive Officer, Chief Financial Officer,Officers. “Officer” is defined in Rule 16a-1 of the Exchange Act to include those who perform a policy-making function, and each other“named executive officers” are defined by Item 402 of Regulation S-K to be the principal executive officer, who in 2012 earnedthe principal financial officer, and the other three most highly compensated executive officers, each of whose total compensation exceeding $100,000 (the “Named Executive Officers”), consisting offor the following persons:
Michael J. Blodnick, President and Chief Executive Officer and a Glacier Director
Ron J. Copher, Executive Vice President and Chief Financial Officer
Don J. Chery, Executive Vice President and Chief Administrative Officerlast fiscal year exceeded $100,000.
Glacier has only threefour Named Executive Officers rather than five, as typically disclosed under SEC rules, because Glacier has only threefour executive officers who perform a policy-making function for Glacier.
Glacier’s Named Executive Officers for the fiscal year ending December 31, 2015 are:
Michael J. Blodnick, President and CEO and a Glacier director;
Ron J. Copher, EVP and CFO;
Don J. Chery, EVP and CAO; and
Randall M. Chesler, President of Glacier Bank.
ThisThe following section includes:
Compensation Discussion and Analysis (“CD&A”);
Report of Compensation Committee;Analysis;
Summary Compensation Table and other tables detailing the compensation of the Named Executive Officers; and
Narrative disclosure about various compensation plansprograms and arrangements and post-employment and termination benefits payable to the Named Executive Officers.Officers;
Compensation Committee Interlocks and Insider Participation; and
13Report of Compensation Committee.
COMPENSATION DISCUSSION AND ANALYSIS
Overview
The following discussion provides an overview and analysis of our Compensation Committee'sCommittee’s philosophy and objectives in designing the Company'sGlacier’s compensation programs, as well as the compensation determinations and the rationale for those determinations relating to our Chief Executive Officer, Chief Financial Officer, and the Chief Administrative Officer, to whom we refer collectively as our “named executive officers” (NEOs). The Company has only three Named Executive Officers rather than five, as typically disclosed under SEC rules, because Glacier has only three executive officers who perform a policymaking function for the Company.Officers.
This discussion should be read together with the compensation tables for our named executive officers,Named Executive Officers, which can be found following this discussion. Unless otherwise indicated, any references to a particular year in this discussion means the fiscal year ended December 31 of such year.
Executive Summary
Financial and Strategic Highlights
2012 was2015 hit an all-time record year for earnings at $75.5$116 million, which is an increase of 3% over 2014.
Both return on average assets (“ROAA”) and return on tangible equity (“ROTE”) remained well above peer averages for the year. ROAA was 1.36%, and ROTE was 12.71%.
Credit quality improved as non-performing assets decreased to 0.88% of assets in 2015, down from 1.08% in 2014. In addition, net charge-offs declined by 7% to $2.3 million.
ImprovedThe loan portfolio increased organically by 8%, which is the third consecutive annual increase in the loan portfolio.
The dollar amount of non-interest bearing accounts organically increased by 10% during the current year, overcontributing to the low cost of funding of 40 basis points for 2015.
Net interest income increased 6% for the year ROAA (return on average assets) from 0.25% to 1.01% and ROAE (return on average equity) from 2.04% to 8.54%; increased ROTE (return on tangible equity) year over year from 7.25% to 9.96%.during a period of historically low interest rates.
Achieved significant reduction in non-performing assetsNet interest margin as a percentage of totalearning assets, on a tax-equivalent basis, increased to 4.00% in 2015 from 2.92% to 1.87%.3.98% in 2014.
Completed the reorganizationThe Company completed two acquisitions in 2015 - that of GlacierMontana Community Banks, Inc. and its subsidiary Community Bank, the Company's wholly-ownedInc. and that of Cañon Bank Corporation and its subsidiary from 11 bank charters into one charter with 11 separately branded divisions.
Record year for mortgage loan origination, with a 20% increase over the prior record year.
Increased customer checking account base, both personal and business, to in excess of 250,000 accounts.Cañon National Bank.
Key Executive Compensation Actions - Background
We believe that we need to offer competitive compensation in order to recruit, motivate and retain qualified executives. TheIn late 2011 and early 2012, the Compensation Committee, with the assistance of its independent consultant, McLagan, reviewed a peer benchmarking analysis and determined that NEOGlacier’s Named Executive Officer compensation levels for Messrs. Blodnick, Copher and Chery, who were then the only Named Executive Officers, were below the 25th percentilespercentile (that is to say, such levels were in the lowest 25%) in terms of salary and total compensation compared to the peer group. As a result, the Compensation Committee undertook the following compensation program initiatives commencing in 2012:
Salaries: The McLagan study determined that Mr. Blodnick' salary was positioned 48% below the peer group median, and that Mr. Copher was 36% below the median and Mr. Chery was 27% below the median. As a result, a plan was developed to bring salaries closer to the peer group median over the next five years, beginning with moving the salaries of
Messrs. Copher and Chery to the market 25th percentile and increasing Mr. Blodnick's | |
• | Salaries: The McLagan study determined that Mr. Blodnick’s salary was positioned 48% below the peer group median, Mr. Copher was 36% below the median, and Mr. Chery was 27% below the median. As a result, a plan was developed to bring salaries closer to the peer group median over the following five years, beginning with moving the salaries of Messrs. Copher and Chery to the market 25th percentile and increasing Mr. Blodnick’s salary by 20% of the shortfall to median. This plan was implemented effective January 2012 and was continued for 2013, 2014 and 2015; and |
Performance-Based Incentive PlansPrograms: ForIn 2012, the Compensation Committee established both an annual and a long-term incentive planprogram with pre-defined performance goals directly linking incentive awards to the Company'sCompany’s goals. 2012Both such programs were
implemented again in 2015. 2015 resulted in achievement of 103%106.8% of the target short-term awards and 105%105.7% of the target long-term awards.
Say on PaySay-on-Pay Vote
The Compensation Committee evaluates the Company'sour executive compensation programs in light of market conditions, shareholder views, and governance considerations and makes changes as appropriate. As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, we held an advisory vote on the compensation of our executive officers (the "Say on Pay Vote"Named Executive Officers (“Say-on-Pay”) at the 20122015 annual shareholdersshareholder meeting. Our shareholders overwhelmingly approved the compensation of our named executive officers,Named Executive Officers, with 99.40%approximately 97.8% of shareholder votes cast in favor of the Say-on-Pay resolution. As the Compensation Committee evaluated the Company'sour compensation programs in 2012,2015, it took into account our shareholders'shareholders’ vote of confidence in making changes to our executive compensation program as described above to ensure a continued link of pay to performance.
Executive Compensation Philosophy
The quality of our employees, including our executive team, is critical to executing our community banking philosophy, emphasizing personalized service combined with the full resources of a larger banking organization. To meet our primary goal of attracting, retaining and incentivizing highly-qualifiedincenting highly qualified executives and employees within the context of our corporate culture, our compensation programs are designed with the following principles in mind:
We are committed to providing effective compensation and benefit programs that are competitive within our industry and with other relevant organizations with whomwhich Glacier, Glacier Bank, and our banking subsidiariesbank divisions compete for employees.
Our programs are designed to encourage and reward behaviors that ultimately contribute to the achievement of organizational goals.
Pay programs and practices reinforce our commitment to providing a work environment that promotes respect, teamwork, and individual growth opportunities.
Consistent with this overall philosophy, we have designed our compensation programs to be relatively straightforward and transparent to shareholders, while providing benefits attractiveappealing enough to attract, retain and motivate highly qualified employees.
The Compensation Committee designs our overall compensation program and makes decisions regarding individual executive compensation in the context of a “total compensation policy” that takes into account the overall package of compensation benefits provided to each executive. Our philosophy is to tie a significant percentage of an executive'sexecutive’s compensation to the achievement of Company financial and performance goals. Accordingly, Glacier strives to set base salaries at competitive levels, with an opportunity for each executive to be well-rewardedwell rewarded through the annual incentive bonus and equity grants if Glacier meets its performance objectives.
The compensation philosophy will beis reviewed and approved annually by the Compensation
Committee. Decisions made by the Compensation Committee and the board of directorsBoard relative to compensation will take all current applicable rules, regulations and guidance into consideration and will beare made with the goal of being compliant with all such requirements.
Role of the Compensation Committee
The Compensation Committee operates under a written charter adopted by the Board. The Compensation Committee is responsible for the design, implementation and administration of the compensation programs for our executive officers and directors of the Company.directors. When appropriate, the Compensation Committee makes recommendations to the board of directorsBoard on items that require full Board approval. Specifically, in 2012,2015, the Compensation Committee:
Reviewed and revised our executive and director compensation philosophies
Revised our Compensation Committee Charter to include oversight of all incentive compensation arrangements and determined that the Compensation Committee has sole authority to retain and terminate any advisors to assist in the performance of its duties
Monitored incentive plansprograms with a view to avoiding the creation ofavoid creating incentives that could subject the Company to excessive riskrisk;
Reviewed and approved the compensation peer group
Reviewed comprehensive executive (“Compensation Peer Group”). As discussed below, the Compensation Peer Group was updated in late 2014 but was not utilized for purposes of 2014 or 2015 compensation analysis but rather for the analysis of current equity and director benchmark analyses provided by McLaganlong-term incentive practices across the banking industry;
Reviewed and recommended NEO salary adjustments for approval by the board of directorsMessrs. Blodnick, Copher and Chery for Board approval;
Approved the annual and long-term incentive planprogram opportunities and goalsgoals; and
Reviewed and approved the incentive planprogram awards for the NEOsNamed Executive Officers.
Role and Relationship of the Compensation Consultant
The Compensation Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant'sconsultant’s fees and all other terms of the engagement. The Compensation Committee has direct access to outside advisors and consultants throughout the year.
SinceIn 2011 and 2012, the Compensation Committee has retained the services of McLagan an Aon Hewitt company, as an independent outside compensation consultant. McLagan'sMcLagan’s services include conducting peer group analysis and benchmarking studies, establishing compensation guidelines, assisting with the design of incentive programs, and providing insight on emerging regulations and best practices. McLagan was engaged directly by the Compensation Committee and reportsreported directly to the Compensation Committee. McLagan was retained in 2014 to provide guidance and direction relative to long-term incentive program issues and in 2015 (i) to provide certain assistance to the Compensation Committee on an advisory basis and (ii) to assist the Compensation Committee in establishing the terms of Mr. Chesler’s compensation arrangement.
The Compensation Committee considered the independence of McLagan in light of new SEC rules and proposed NASDAQ listing standards. The Compensation Committee requested and received a report from McLagan addressing McLagan'sMcLagan’s independence and the independence of the senior advisors involved in the engagement's independence, includingengagement which included the following factors:following: (1) other services provided to us by McLagan; (2) fees paid by us as a percentage of McLagan'sMcLagan’s total revenue; (3) policies or procedures maintained by McLagan that are designed to prevent a conflict of interest; (4) any business or personal relationships between the senior advisors and a memberany member(s) of the Compensation Committee; (5) any company stock owned by the senior advisors; and (6) any business or personal relationships between our executive officers and the senior advisors. The Compensation Committee discussed these considerations and concluded that the work performed by McLagan and McLagan'sMcLagan’s senior advisors involved in the
engagements engagement did not raise any conflict of interest.
Role of Management
Our Chief Executive OfficerCEO performs an annual performance review for executive officers of the Company and subsidiaryour bank division presidents and provides a recommendation to the Compensation Committee regarding base salary and bonus targets for each other executive officer,such persons, which the Compensation Committee has discretion to approve or modify. The Compensation Committee meets separately on an annual basis with our Chief Executive OfficerCEO to determinediscuss his compensation. No named executive officersNamed Executive Officers are present for the Compensation Committee'sCommittee’s discussions, deliberations and decisions with respect to their individual compensation. The Compensation Committee then submits a recommendation regarding compensation for all executive officers to the Board for approval.
Risk Review
The Compensation Committee reviewed and discussed a compensation risk assessment performed by representatives from Human Resources. The Compensation Committee’s conclusion was that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our business or operations. This risk assessment process included a periodic review of the design and operation of the Company'sCompany’s incentive compensation programs, identifying and evaluating situations or compensation elements that may raise material risks, and an evaluation of other controls and processes designed to identify and manage risk.
Competitive Benchmarking and Peer Group
The Compensation Peer Group is periodically updated by the Compensation Committee and consists of companies that the Compensation Committee believes are comparable in size to the Company and with whomwhich we may compete against.compete. In 2010, the Compensation Committee, at the direction of the Board,2012, McLagan conducted an extensive reviewanalysis of the process by which the Compensation Peer Group is established,with emphasis on factors previously utilized by the Compensation Committee to determine appropriate companies for inclusion, with emphasis on asset size, profitability and location as the measures of comparability, in that order of importance; this process was used for the 2012 analysis conducted by McLagan.importance.
Potential comparable companies were initially filtered by asset size and then were evaluated for profitability, including provisions for asset quality and other performance standards believed to best generally align with Glacier'sGlacier’s goals. The Compensation Committee relied on profitability data provided by Bank Director Magazine's list of the top 150 financial institutions, as Glacier has been in this group for the past five years.
Potential comparable companies were analyzed for compensation, utilizing data from the SNL Financial Executive Compensation Review, and other information compiled by the Compensation Committee. Finally, executive compensation data was analyzed by region. The compensation for each region was then compared and assigned points based on the relative similarity to compensation in the region in which the Company operates. Points were assigned to each of the three designated comparability measures, and the companies with the 20 highest point totals were selected as the Compensation Peer Group.
Based upon its analysis and the information provided by McLagan, the Compensation Committee approved a list of companies constituting the 2013 Compensation Peer Group. The Compensation Committee approvedupdated the peer group in late 2014, again with the input of McLagan. The updated peer group was not used for purposes of 2015 executive compensation analysis for Messrs. Blodnick, Copher or Chery but was used to establish the compensation package for Mr. Chesler.
The following peer banks for 2012:constituted the Compensation Peer Group as updated in late 2014:
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Beneficial Mutual Bncp (BNCL)Banner Corp. (BANR) | First Financial Bankshares (FFIN) | PacWest Bancorp (PACW) |
Chemical Financial Corp. (CHFC) | First Interstate BancSystem (FIBK) | Provident Financial Services (PFS)Park National Corp. (PRK) |
Chemical Financial Corp. (CHFC)Columbia Banking System Inc. (COLB) | First Midwest Bancorp Inc. (FMBI) | Texas Capital Bancshares Inc. (TCBI) |
CVB Financial Corp. (CVBF) | Hilltop Holdings Inc. (HTH) | Trustmark Corp. (TRMK) |
F.N.B. Corp. (FNB) | International Bancshares Corp. (IBOC) | United Community Bank SystemBanks Inc. (CBU)(UCBI) |
First Commonwealth Financial (FCF) | National Penn Bancshares Inc. (NPBC) | TFS Financial Corp (TFSL) |
CVB Financial Corp. (CVBF) | Old NationalWestern Alliance Bancorp (ONB) | Umpqua Holdings Corp. (UMPQ) |
F.N.B. Corp. (FNB) | Pacific Capital Bancorp (PCBC) | United Bankshares Inc. (UBSI) |
First Commonwealth Financial (FCF) | PacWest Bancorp (PACW) | WesBanco Inc. (WSBC)(WAL) |
First Financial Bancorp. (FFBC) | ParkOld National Corp. (PRK)Bancorp (ONB) | |
Discussion of Executive Compensation Components
The following table outlines the major elements of 20122015 total compensation for our named executive officers:Messrs. Blodnick, Copher and Chery:
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Compensation Element | Purpose | Link to Performance | Fixed/ Performance BasedFixed / Performance-Based | Short/Short- / Long-Term |
Base Salary | Helps attract and retain executives through market-competitive base pay | Based on individual performance and market practices | Fixed | Short-Term |
Annual Cash Incentive Awards | Encourages achievement of financial performance metrics that create near-term shareholder value | Based on achievement of predefined corporate performance objectives; a portion of NEONamed Executive Officer cash bonuses are deferred on a mandatory basis, with additional performance triggers related to long-term performance | Performance BasedPerformance-Based | Short-Term Long-Term: Mandatory Deferrals |
Long-Term Incentive Awards | Aligns executives'executives’ and shareholders'shareholders’ long-term interests while creating a retention incentive through multi-year vesting | Based on achievement of predefined corporate performance objectives | Performance BasedPerformance-Based | Long-Term |
Supplemental Executive Retirement Plans (SERPs)Plan | Provides income security into retirement | Competitive practice | Fixed | Long-Term |
Benefits and Perquisites | ProvideProvides limited perquisites as well as health and welfare benefits on the same basis as to our general employee population | Competitive practice | Fixed | Short-Term |
Base Salary
The Compensation Committee reviews salaries of the Compensation Peer Group but always bases its determinations on the qualifications, experience and performance of the individual executives and the value of the position to the organization.
The compensation study performed by McLagan in the fall of 2011 concluded that the salaries for each of Glacier's named executive officersMessrs. Blodnick (CEO), Copher (CFO) and Chery (CAO) were significantly below the Compensation Peer Group market median: the CEO was 48% below the median, the CFO was 36% below, and the CAO was 27% below.
As a result of the findings of the study, effective January 2012, executive officer salaries for Messrs. Blodnick, Copher and Chery were increased to move toward levels that were more in line with the market. As discussed under the section entitled “Executive Summary - Key Executive Compensation Actions - Background” above, a plan was developed to bring salaries closer to the 2012 peer group median over five years, commencing in 2012.The Compensation Committee established the following strategy:strategy, which is reflected in salaries paid to Messrs, Blodnick, Copher and Chery in 2015:
CEO: Increase current base salary to the 2012 market median over the nextfollowing five years by providing the following adjustments: 1/5 (20%) of the shortfall in 2012, 1/4 (25%) in 2013, 1/3 (33.33%) of the shortfall in 2014, 1/2 (50%) of the shortfall in 2015, and the remaining shortfall in 2016.
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Year | Adjustment for Market Median Shortfall (%) |
2012 2013 2014 2015 2016 | 20.0% 25.0% 33.3% 50.0% 100.0% |
Other Key OfficersCFO and CAO: Bring salaries to the 25th percentile of the 2012 market median in 2012. Increase to the 2012 market median equally over the remaining four years: 25% of the shortfall in 2013, 33.33% of the shortfall in 2014, 50% of the shortfall in 2015, and 100% of the shortfall in 2016.years as follows:
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Year | Adjustment for Market Median Shortfall (%) |
2013 2014 2015 2016 | 25.0% 33.3% 50.0% 100.0% |
The Compensation Committee recognizes the importance of annual monitoring of competitive salary levels and will consider whether or not shortfalls for some executives should be addressed in a shorter timeframe than described above.
The table below shows the 20122014 and 20132015 salary adjustments, which remain well below the peer groupCompensation Peer Group market median.
| | Name | Position | Base Salary 2011 | Base Salary 2012 | Increase over 2011 | Base Salary 2013 | Increase over 2012 | Position | Base Salary 2013 | Base Salary 2014 | Increase over 2013 | Base Salary 2015 | Increase over 2014 |
Michael J. Blodnick | President and CEO | $ | 334,183 |
| $ | 395,644 |
| 18.4% | $ | 470,817 |
| 19.0% | President and CEO | $470,817 | $548,245 | 16.4% | $627,997 | 14.5% |
Ron J. Copher | EVP, CFO | 205,602 |
| 278,305 |
| 35.4% | 302,680 |
| 8.8% | EVP and CFO | 302,680 | 327,786 | 8.2 | 353,645 | 7.8 |
Don J. Chery | EVP, CAO | 205,602 |
| 260,192 |
| 26.6% | 273,227 |
| 5.0% | EVP and CAO | 273,227 | 286,653 | 4.9 | 300,482 | 4.8 |