Preliminary |
Confidential, for 14a-6(e)(2)) |
Definitive proxy statement |
☐ | Definitive |
Soliciting 240.14a-12 |
☒ | ||||
No fee required. | ||||
Fee paid previously with preliminary materials. | ||||
☐ | Fee computed on table | |||
2023
Proxy Statement
Dear
Shareholder:
You are cordially invited to attend the annual meeting of shareholders of Banner Corporation. The meetingCorporation, which will be held at the Marcus Whitman Hotel, 6 W. Rose Street, Walla Walla, Washington, on Tuesday, AprilWednesday, May 24, 2018,2023, at 10:00 a.m., local time.
You can attend the meeting by visiting www.meetnow.global/MLDTADP. To participate in the annual meeting, registered shareholders will need the control number included on their proxy card and all other shareholders will need to follow the instructions that accompanied their proxy materials.
The Notice of Annual Meeting of Shareholders and Proxy Statement describe the formal business to be transacted at the meeting. During the meeting, we will also report on our operations. Directors and officers of Banner Corporation, as well as a representative of Moss Adams LLP, our independent auditor,registered public accounting firm, will be presentavailable to respond to relevantshareholder questions. We intend to answer questions pertinent to our business immediately following the formal meeting of shareholders.
It is important that your shares are represented at thisthe meeting, whether or not you attend the meeting in personvirtually and regardless of the number of shares you own. To make sure your shares are represented, we urge you to promptly vote.vote promptly. You may vote your shares via the Internet or a toll-free telephone number, or by completing and mailing the enclosed proxy card. If you attend the virtual meeting as a shareholder, you may vote in personyour shares at that time even if you have previously submitted your proxy.
We look forward to seeinghope you atcan attend the virtual meeting.
Sincerely,
Mark J. Grescovich
President and Chief Executive Officer
April 18, 2023
Notice is hereby given that the 2018 annual meeting of shareholders Annual Meeting
of Banner Corporation will be held at the Marcus Whitman Hotel, 6 W. Rose Street, Walla Walla, Washington, on Tuesday, April 24, 2018, at 10:00 a.m., local time, for the purpose of considering and acting upon the following:
Date Wednesday, May 24, 2023 | Time 10:00 a.m., Pacific Time | Record Date March 23, 2023 | ||
Location Online at www.meetnow.global/MLDTADP Important notice regarding the availability of proxy materials for the annual meeting of shareholders Our Proxy Statement, proxy card and 2022 Annual Report to Shareholders are available at www.bannerbank.com/proxymaterials. |
Items of Business
Proposal 1. | Election of |
Proposal 2. | Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in this Proxy Statement. |
Proposal 3. |
Ratification of the Audit |
Proposal 4. | Adoption of the Banner Corporation 2023 Omnibus Incentive Plan. |
We will also consider and act upon such other matters as may properly come before the meeting or any adjournments or postponements thereof. As of the date of this notice, we are not aware of any other business to come before the annual meeting.
Your Vote is Important
To ensure that your shares are represented at the meeting, please take the time to vote by submitting your vote via the Internet or telephone, or by signing, datingsign, date and mailingmail the enclosed proxy card which is solicited on behalf of the Board of Directors. The proxy will not be used if you attend and vote at the virtual annual meeting in person.meeting. Regardless of the number of shares you own, your vote is very important. Please act today.
Our 2023 annual meeting of shareholders will save usbe a virtual meeting conducted solely online via live webcast. There is no physical location for the expense of further requests for proxiesannual meeting. The online meeting format will facilitate remote shareholder attendance and participation, including the ability to vote your shares electronically and submit questions during the meeting. To participate in order to ensure a quorum. You may vote via the Internet or by telephone. Alternatively, aannual meeting, registered shareholders will need the control number included on their proxy card and self-addressed envelope are enclosedall other shareholders will need to follow the instructions that accompanied their proxy materials. Beneficial owners of shares held in street name must register in advance with Computershare no later than 5:00 p.m., Eastern Time, on May 19, 2023. (Late submissions will be processed to the extent feasible, but registration cannot be guaranteed in time for your convenience. No postage is necessary if mailedparticipation in the United States.
BY ORDER OF THE BOARD OF DIRECTORS
SHERREY LUETJEN
Secretary, Banner Corporation
Walla Walla, Washington
April 18, 2023
IMPORTANT: Voting promptly will save us the expense of further requests for proxies in order to ensure a quorum. You may vote via the Internet or by telephone. Alternatively, a proxy card and self-addressed envelope are enclosed for your convenience. No postage is necessary if mailed in the United States. |
Table
of Contents
Information about the Annual Meeting
PROXY STATEMENT
OF
BANNER CORPORATION
10 S. FIRST AVENUE
WALLA WALLA, WASHINGTON 99362
(509) 527-3636
The Board of Directors of Banner Corporation is using this Proxy Statement to solicit proxies from our shareholders for use at the 20182023 annual meeting of shareholders. We are first mailing this Proxy Statement and the form of proxy to our shareholders on or about March 23, 2018.
The information provided in this Proxy Statement relates to Banner Corporation and its wholly-owned subsidiaries,subsidiary, Banner Bank and Islanders Bank.(collectively, the “Corporation”). Banner Corporation may also be referred to as "Banner"“Banner” and Banner Bank and Islanders Bank may also be referred to as the "Banks."“Bank.” References to "we," "us"“we,” “us” and "our"“our” refer to Banner and, as the context requires, the Banks.
Information about the Annual Meeting
Date Wednesday, May 24, 2023 | Time 10:00 a.m., | Record Date March 23, 2023 | ||
Location Online at www.meetnow.global/MLDTADP Proxy materials for the annual meeting of shareholders Our Proxy Statement, proxy card and 2022 Annual Report to Shareholders are available at www.bannerbank.com/proxymaterials. |
Matters to Be Considered at the Annual Meeting At the meeting, you will be asked to consider and vote upon the following proposals: Proposal 1. | Election of |
Proposal 2. | Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in this Proxy Statement. |
Proposal 3. |
Ratification of the Audit Proposal 4. Adoption of the Banner Corporation 2023 Omnibus Incentive Plan. We also will transact any other business that may properly come before the annual meeting. As of the date of this Proxy Statement, we are not aware of any other business to be presented for consideration at the annual meeting other than the matters described in this Proxy Statement. | How to Vote: To ensure that your shares are represented at the meeting, please take the time to submit your vote in one of the following ways: | |||||
Internet Go to www.investorvote.com/BANR or scan the QR code on your proxy card | ||||||
Telephone Call 1 (800) 652-VOTE (8683) within the USA, US territories and Canada | ||||||
Sign, date and mail the enclosed proxy card | ||||||
BANNER CORPORATION 2023 PROXY STATEMENT | 1 |
Information about the Annual Meeting?
Annual Meeting Frequently Asked Questions
Q. | Who is Entitled to Vote? |
A. | We have fixed the close of business on March 23, 2023 as the record date for shareholders entitled to notice of and to vote at our annual meeting. You are entitled to one vote for each share of Banner common stock you own, unless you acquired more than 10% of Banner’s outstanding common stock without prior Board approval. As provided in our Restated Articles of Incorporation, for each vote in excess of 10% of the voting power of the outstanding shares of Banner’s voting stock, the record holders in the aggregate will be entitled to cast one-hundredth of a vote, and the aggregate power of these record holders will be allocated proportionately among these record holders. On March 23, 2023, there were 34,238,553 shares of Banner common stock outstanding and entitled to vote at the annual meeting. |
Q. | How Do I Vote at the Annual Meeting? |
A. | Proxies are solicited to provide all shareholders on the voting record date an opportunity to vote on matters scheduled for the annual meeting and described in these materials. You are a shareholder of record if your shares of Banner common stock are held in your name. This section provides voting instructions only for shareholders of record. If you are a beneficial owner of Banner common stock held by a broker, bank or other nominee (i.e., in “street name”), please see the instructions in the following question and response. |
Shares of Banner common stock can only be voted if the shareholder is present in personvirtually or by proxy at the annual meeting. To ensure your representation at the annual meeting, we recommend you vote by proxy even if you plan to attend the virtual annual meeting. You can always change your vote at the meeting if you are a shareholder of record.
Shareholders may vote by proxy via the Internet or a toll-free telephone number, or by mailing a proxy card. Instructions for voting are found on the proxy card. Shares of Banner common stock represented by properly executed proxies will be voted by the individuals named on the proxy card in accordance with the shareholder'sshareholder’s instructions. Where properly executed proxies are returned to us with no specific instruction as how to vote at the annual meeting, the persons named in the proxy will vote the shares FOR election of each of our director nominees, FOR advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement, FOR adoption of the 2018 Omnibus Incentive Plan and FOR ratification of the selectionappointment of Moss Adams LLP as our independent registered public accounting firm for 2018.2023 and FOR adoption of the Banner Corporation 2023 Omnibus Incentive Plan. If any other matters are properly presented at the annual meeting for action, the persons named in the enclosed proxy and acting thereunder will have the discretion to vote on these matters in accordance with their best judgment. We do not currently expect that any other matters will be properly presented for action at the annual meeting.
You may receive more than one proxy card depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse or other party and some in trust for your children. In this case, you will receive three separate proxy cards to vote.
2 | BANNER CORPORATION 2023 PROXY STATEMENT |
Information about the Annual Meeting | Annual Meeting Frequently Asked Questions
To ensure that your shares are represented at the meeting, please take the time to submit your vote in Street Name?
Internet Go to www.investorvote.com/BANR or scan the QR code on your proxy card | ||
Telephone Call 1 (800) 652-VOTE (8683) within the USA, US territories and Canada | ||
Sign, date and mail the enclosed proxy card |
Q. | What if My Shares Are Held in Street Name? |
A. | If you are the beneficial owner of shares held in “street name” by a broker, bank or other nominee (“nominee”), the nominee, as the record holder of the shares, is required to vote the shares in accordance with your instructions. If you do not give instructions to the nominee, the nominee may nevertheless vote the shares with respect to discretionary items, but will not be permitted to vote your shares with respect to non-discretionary items, pursuant to the rules governing brokers. In the case of non-discretionary items, the shares not voted will be treated as “broker non-votes.” The proposals to elect directors and adopt the 2023 Omnibus Incentive Plan, as well as the advisory vote on executive compensation, are considered non-discretionary items; therefore, you must provide instructions to the nominee in order to have your shares voted with respect to these proposals. |
If your shares are held in street name and you would like to fully participate in the annual meeting, you must register in advance. You may participate as a “Guest” without having a unique control number, but you will need proof of ownership to be admitted tonot have the annual meeting. A recent brokerage statement or letter from the record holder of your shares are examples of proof of ownership. If you wantoption to vote your shares of common stock held in street name in personor ask questions at the annualvirtual meeting. To fully participate in the meeting as a “Shareholder,” you will have to getmust obtain a writtenunique control number by registering in advance with Computershare and submitting proof of your proxy inpower (legal proxy) reflecting your Banner holdings along with your name from the broker, bank or other nominee who holds your shares.
By email: Forward the proxy-granting email from your broker, or email an image of your legal proxy, to be conducted.legalproxy@computershare.com. The presence atsubject line of your email should include “Legal Proxy.”
By mail:
Computershare
Banner Corporation Legal Proxy
P.O. Box 43006
Providence, RI 02940-3006
You will receive an email from Computershare confirming your registration and providing you with your unique control number needed to participate in the meeting, in person or by proxy, of at least a majority of the shares of Banner common stock entitled to vote at thevirtual annual meeting as a “Shareholder”
BANNER CORPORATION 2023 PROXY STATEMENT | 3 |
Information about the Annual Meeting | Annual Meeting Frequently Asked Questions
if you register by email or if you provide an email address when registering by mail. If you do not provide an email address when registering by mail, confirmation of the record date will constitute a quorum. Proxies received but marked as abstentions or broker non-votesyour registration and your unique control number will be included in the calculation of the number of shares considered to be present at the meeting.
Q. | How Many Shares Must Be Present to Hold the Meeting? |
A. | A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person via the virtual meeting platform or by proxy, of at least a majority of the shares of Banner common stock entitled to vote at the annual meeting will constitute a quorum. Proxies received but marked as abstentions or broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting. |
Q. | What if a Quorum Is Not Present at the Meeting? |
A. | If a quorum is not present at the scheduled time of the meeting, a majority of the shareholders virtually present or represented by proxy may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the meeting is adjourned for 120 days or more. An adjournment will have no effect on the business that may be conducted at the meeting. |
Q. | Vote Required to Approve Proposal 1: Election of Directors |
A. | Banner’s Amended and Restated Bylaws provide for the election of directors by a majority of the votes cast by shareholders in uncontested elections. Accordingly, in an uncontested election, the number of shares voted “for” a director nominee must exceed the number of shares voted “against” the nominee, in order for that nominee to be elected. The following are not considered votes cast: (1) a share whose ballot is marked as abstain; (2) a share otherwise present at the meeting but for which there is an abstention; and (3) a share otherwise present at the meeting as to which a shareholder of record gives no authority or direction. The term of any director who was a director at the time of the election but who does not receive a majority of votes cast in an election held under the majority vote standard will continue to serve as a director until terminated on the earliest to occur of: (1) 90 days after the date election results are determined; (2) the date the Board appoints a new director to fill the position; or (3) the date and time the director’s resignation is effective. |
Banner’s Amended and Restated Bylaws provide that an election is considered a contested election if there are shareholder nominees for director pursuant to the advance notice provision, and who are not withdrawn by the advance notice deadline set forth in Banner'sBanner’s Restated Articles of Incorporation. If the Board determines there is a contested election, the election of directors will be held under a plurality standard. Under the plurality standard, the nominees who receive the highest number of votes for the directorships for which they have been nominated will be elected.
Pursuant to our Restated Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or against each nominee, or shareholders may abstain from voting. Abstentions and broker non-votes will have no effect on the outcome of the election. Our Board of Directors unanimously recommends that you vote FOR the election of each of our director nominees.
Q. | Vote Required to Approve Proposal 2: Advisory Approval of Executive Compensation |
A. | The advisory (non-binding) vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement requires the affirmative vote of a majority of the votes cast, in |
4 | BANNER CORPORATION 2023 PROXY STATEMENT |
Information about the Annual Meeting of Shareholders to Be Held on April 24, 2018
person via the virtual meeting platform or by proxy, at the annual meeting. Abstentions and broker non-votes will have no effect on the outcome of the proposal. Our Board of Directors unanimously recommends that you vote FOR approval of the compensation of our named executive officers. |
Q. | Vote Required to Approve Proposal 3: Ratification of the Appointment of the Independent Registered Public Accounting Firm |
A. | Ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 requires the affirmative vote of a majority of the votes cast, in person via the virtual meeting platform or by proxy, at the annual meeting. Abstentions will have no effect on the outcome of the proposal. Our Board of Directors unanimously recommends that you vote FOR the ratification of the appointment of the independent registered public accounting firm. |
Q. | Vote Required to Approve Proposal 4: Adoption of the Banner Corporation 2023 Omnibus Incentive Plan. |
A. | Adoption of the Banner Corporation 2023 Omnibus Incentive Plan requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting. Any shareholder represented in person or by proxy at the meeting and entitled to vote on the subject matter may elect to abstain from voting on this proposal. If so, the abstention will not be counted as a vote cast on the proposal and, therefore, will have no effect on the outcome of the vote on the proposal. Provided there is a quorum of shareholders present in person or by proxy, shareholders not attending the meeting, in person or by proxy, will also have no effect on the outcome of this proposal. Broker non-votes do not constitute votes cast and will have no effect on the outcome of the proposal. Our Board of Directors unanimously recommends that you vote FOR adoption of the 2023 Omnibus Incentive Plan. |
Q. | May I Revoke My Proxy? |
A. | You may revoke your proxy before it is voted by: |
• | Submitting a new proxy with a later date; |
• | Notifying Banner’s Secretary in writing before the annual meeting that you have revoked your proxy; or |
• | Voting at the virtual annual meeting. |
If you plan to attend the virtual annual meeting and wish to vote in person, weduring the meeting, you must join the meeting as a “Shareholder.” If you are a shareholder of record, you will giveneed the control number on your proxy card. If you a ballot atare the annual meeting. However, if yourbeneficial owner of shares are held in "street name,"“street name” by a broker, bank or other nominee, you must bring a validly executed proxy fromwill need to register in advance with Computershare by following the nominee indicating that you haveinstructions in the right to vote your shares.question above titled, “What if My Shares Are Held in Street Name?”
Q. | May I Ask A Question During the Virtual Meeting? |
A. | Yes. There will be a question and answer session following the formal portion of the meeting, during which we will answer questions pertinent to our business as time allows. Questions of a similar nature may be grouped together and answered once to avoid repetition. The virtual meeting platform will allow shareholders to ask questions, provided the shareholder is logged into the meeting as a “shareholder.” Shareholders entering the virtual meeting as “guests” will not be |
BANNER CORPORATION 2023 PROXY STATEMENT | 5 |
Information about the Annual Meeting | Annual Meeting Frequently Asked Questions
able to ask questions. To ask a question during the meeting, registered shareholders will need the control number included on their proxy card and all other shareholders will need to register in advance to obtain a unique control number as described in the Notice of Annual Meeting of Shareholders and in the question above titled, “What if My Shares Are Held in Street Name?” |
Q: | What if I Have Trouble Accessing the Annual Meeting Virtually? |
A: | The virtual meeting platform is fully supported across Microsoft Edge, Firefox, Chrome and Safari browsers and devices (desktops, laptops, tablets and cell phones) running the most up-to-date version of applicable software and plugins. Please note that Internet Explorer is not a supported browser. Participants should ensure that they have a strong Internet connection wherever they intend to participate in the meeting. We encourage you to access the meeting prior to the start time. If you need further assistance, you may call 1-888-724-2416 (US) or 1-781-575-2748 (outside the US). |
6 | BANNER CORPORATION 2023 PROXY STATEMENT |
Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 1, 2018,23, 2023, the voting record date, information regarding share ownership of:
• | Those persons or entities (or groups of affiliated person or entities) known by management to beneficially own more than five percent of Banner’s common stock, other than directors and executive officers; |
• | Each director and director nominee of Banner; |
• | Each executive officer named in the Summary Compensation Table appearing under “Executive Compensation” below (known as “named executive officers”); and |
• | All directors and executive officers of Banner and Banner Bank as a group. |
Persons and groups who beneficially own in excess of five percent of Banner'sBanner’s common stock are required to file with the U.S. Securities and Exchange Commission ("SEC"(“SEC”), and provide a copycopies to us, reports disclosing their ownership under the Securities Exchange Act of 1934, as amended ("(“Securities Exchange Act"Act”). To our knowledge, no other person or entity, other than those set forth below, beneficially owned more than five percent of the outstanding shares of Banner'sBanner’s common stock as of the close of business on the voting record date.
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or shethat person has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power. In addition, in computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to outstanding optionsrestricted share units that are currently exercisable or exercisablewill vest within 60 days after the voting record date are included in the number of shares beneficially owned by the person and are deemed outstanding for the purpose of calculating the person'sperson’s percentage ownership. These shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
BANNER CORPORATION 2023 PROXY STATEMENT | 7 |
Security Ownership of Certain Beneficial Owners and 100,029 were non-voting shares. The non-voting shares consist of shares of restricted stock subject to performance-based vesting conditions that were issued to the named executive officers as well as other executive officers. The rights associated with the shares of restricted stock are described in greater detail below on page 23.
Name | Number of Shares Beneficially Owned (1) | Percent of Voting Shares Outstanding (%) | ||||
Beneficial Owners of More Than 5% | ||||||
BlackRock, Inc. | 4,586,608 | (2) | 14.06 | |||
The Vanguard Group | 2,979,850 | (3) | 9.13 | |||
The Bank of New York Mellon Corporation | 2,151,086 | (4) | 6.59 | |||
Directors | ||||||
Robert D. Adams | 22,246 | * | ||||
Gordon E. Budke | 5,407 | (5) | * | |||
Connie R. Collingsworth | 3,478 | (6) | * | |||
Roberto R. Herencia | 1,604 | * | ||||
David A. Klaue | 94,551 | * | ||||
John R. Layman | 21,242 | (7) | * | |||
David I. Matson | 1,604 | * | ||||
Brent A. Orrico | 73,695 | (8) | * | |||
Merline Saintil | 907 | * | ||||
Gary Sirmon | 20,670 | (9) | * | |||
Michael M. Smith | 28,020 | (10) | * | |||
Director Nominees | ||||||
Kevin F. Riordan | -- | * | ||||
Terry Schwakopf | -- | * | ||||
Named Executive Officers | ||||||
Mark J. Grescovich** | 118,784 | * | ||||
Lloyd W. Baker | 28,833 | (11) | * | |||
Peter J. Conner | 20,320 | * | ||||
Cynthia D. Purcell | 13,870 | * | ||||
Judith A. Steiner | 4,548 | * | ||||
All Executive Officers and Directors as a Group (27 persons) | 574,470 | 1.76 | ||||
__________- |
Name | Number of Shares Beneficially | Percent of Voting Shares Outstanding (%) | ||||||||
Beneficial Owners of More Than 5% |
| |||||||||
BlackRock, Inc. |
| 4,887,742 | (2) |
| 14.28 | |||||
The Vanguard Group |
| 4,053,060 | (3) |
| 11.84 | |||||
Dimensional Fund Advisors LP |
| 2,342,715 | (4) |
| 6.84 | |||||
Directors |
| |||||||||
Ellen R.M. Boyer |
| 2,225 |
| * | ||||||
Connie R. Collingsworth |
| 9,172 | (5) |
| * | |||||
Margot J. Copeland |
| 1,171 |
| * | ||||||
Roberto R. Herencia |
| 10,287 |
| * | ||||||
David A. Klaue |
| 121,566 |
| * | ||||||
John R. Layman |
| 28,817 | (6) |
| * | |||||
John Pedersen |
| 2,225 |
| * | ||||||
Kevin F. Riordan |
| 6,470 | (7) |
| * | |||||
Terry Schwakopf |
| 5,557 |
| * | ||||||
Paul J. Walsh |
| 1,171 |
| * | ||||||
Named Executive Officers |
| |||||||||
Mark J. Grescovich** |
| 143,435 |
| * | ||||||
Peter J. Conner |
| 31,741 |
| * | ||||||
Cynthia D. Purcell |
| 19,903 |
| * | ||||||
James M. Costa |
| 1,503 |
| * | ||||||
M. Kirk Quillin |
| 19,259 |
| * | ||||||
All Executive Officers and Directors as a Group (23 persons) |
| 1.40 |
* | Less than 1% of shares outstanding. |
** | Also a director of Banner. |
(1) | Shares of restricted stock granted under the |
(2) | Based on a Schedule 13G/A dated January |
(3) | Based on a Schedule 13G/A dated February |
(4) | Based on a Schedule 13G/A dated February |
(5) |
Includes 100 shares held jointly with her husband. |
(6) | Includes 9,414 shares that have been pledged. |
(7) | Includes |
8 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 1 – ELECTION OF DIRECTORS
Proposal 1 – Election of Directors
Banner’s Board of Directors currently consists of 12 members11 members. In prior years, approximately one-third of the directors were elected annually to serve for a three-year period or until their respective successors are elected and is divided into three classes. Director Smithqualified. However, at last year’s annual meeting, Banner’s shareholders approved an amendment to our Articles of Incorporation to eliminate staggered terms for directors and provide for the annual election of all directors. Accordingly, each director will retire effective asbe elected annually upon expiration of the director’s term, beginning with directors whose terms are expiring at the 2023 annual meeting of shareholders. Also effective as ofshareholders, with all directors being subject to annual elections beginning with the 2025 annual meeting Gordon E. Budke will have reached our mandatory retirement age. However, because of his qualification as audit committee financial expert and his continuing contributions to the Board and Banner, the Board of Directors has made an exception to our policy and accepted the Corporate Governance/Nominating Committee's nomination of Mr. Budke for a one-year term. The Corporate Governance/Nominating Committee has also nominated Kevin F. Riordan and Terry Schwakopf for election. Mr. Riordan and Ms. Schwakopf were each recommended for nomination by a non-management director.
If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected.
The Board of Directors recommends a vote FOR the election of Roberto R. Herencia, John R. Layman,Margot J. Copeland, Mark J. Grescovich, David I. Matson, Kevin F. RiordanA. Klaue and Terry Schwakopf,Paul J. Walsh, each for a three-year term, and Gordon E. Budke for a one-year term.
Name | Age as of December 31, 2017 | Year First Elected or Appointed Director (1) | Term to Expire | |||
BOARD NOMINEES | ||||||
Roberto R. Herencia | 58 | 2016 | 2021 (2) | |||
John R. Layman | 59 | 2007 | 2021 (2) | |||
David I. Matson | 73 | 2016 | 2021 (2) | |||
Kevin F. Riordan | 61 | -- | 2021 (2) | |||
Terry Schwakopf | 66 | -- | 2021 (2) | |||
Gordon E. Budke | 76 | 2002 | 2019 (2) | |||
DIRECTORS CONTINUING IN OFFICE | ||||||
Robert D. Adams | 76 | 1984 | 2019 | |||
Connie R. Collingsworth | 59 | 2013 | 2019 | |||
Brent A. Orrico | 68 | 1999 | 2019 | |||
Gary Sirmon | 74 | 1983 | 2019 | |||
Mark J. Grescovich | 53 | 2010 | 2020 | |||
David A. Klaue | 64 | 2007 | 2020 | |||
Merline Saintil | 41 | 2017 | 2020 |
Name | Age as of December 31, 2022 | Year First Elected or Appointed Director | Term to Expire | |||
Board Nominees | ||||||
Margot J. Copeland | 71 | 2022 | 2024 (1) | |||
Mark J. Grescovich | 58 | 2010 | 2024 (1) | |||
David A. Klaue | 69 | 2007 | 2024 (1) | |||
Paul J. Walsh | 54 | 2022 | 2024 (1) | |||
Directors Continuing in Office | ||||||
Roberto R. Herencia | 63 | 2016 | 2024 | |||
John R. Layman | 64 | 2007 | 2024 | |||
Kevin F. Riordan | 66 | 2018 | 2024 | |||
Terry Schwakopf | 71 | 2018 | 2024 | |||
Ellen R.M. Boyer | 62 | 2021 | 2025 | |||
Connie R. Collingsworth | 64 | 2013 | 2025 | |||
John Pedersen | 65 | 2021 | 2025 |
(1) | Assuming re-election. |
Information Regarding Nominees for Election.
Set forth below is the present principal occupation and other business experience during at least the last five years of each nominee for election, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the nominee should serve as a director of Banner.BANNER CORPORATION 2023 PROXY STATEMENT | 9 |
Proposal 1 – Election of BXM Holdings, a fund specializing in community bank investments. He is a director and ChairmanDirectors
Margot J. Copeland | ||||
Director Since: 2022 | Committees: | |||
• Compensation and Human Capital • Credit Risk | ||||
Key Qualifications: • Extensive banking and executive leadership, philanthropic and community engagement experience • Corporate responsibility expertise, including in relation to diversity, equity and inclusion Margot J. Copeland specializes in developing strategies in the areas of workforce development and management, leadership, diversity and inclusion, philanthropy, and community outreach and engagement. Ms. Copeland has over 20 years of experience, with her previous positions being at KeyBank (a subsidiary of KeyCorp (NYSE: KEY)) and its affiliate, KeyBank Foundation, in Cleveland, Ohio. At KeyBank, she was Executive Vice President and Director Corporate Philanthropy and Community Engagement from 2001 through 2019. During the same period, she served as Board Chair and Chief Executive Officer for KeyBank Foundation. As a corporate officer and leader of corporate philanthropy and civic engagement, Ms. Copeland was a member of KeyBank’s Corporate Social Responsibility Council, which focused on philanthropic investments, corporate citizenship, and regulatory and corporate strategy. She was also a member of the Diversity & Inclusion Council and she served as KeyBank’s Chief Diversity Officer from 2001 through 2013. Prior to joining KeyBank, Ms. Copeland served on the Advisory Board of US Bank (formerly Firstar) from 1998 through 2001. Ms. Copeland is actively involved in her community, having served on a number of advisory boards and boards of directors for educational institutions, health care systems, community organizations and other nonprofit entities. She currently serves on the Board of Trustees for The Cleveland Clinic and the Board of Directors for AARP, among others. Ms. Copeland received a Master’s degree from The Ohio State University, a Bachelor of Science in Physics from Hampton University, Hampton, Virginia and an Honorary Doctorate of Humane Letters from Cuyahoga Community College, Cleveland, Ohio. With her vast experience in social responsibility and her long-tenured connection to banking, the directors believe that Ms. Copeland should continue to serve on the Board of Directors. |
Mark J. Grescovich | ||||
President and CEO | ||||
Director Since: 2010 | Committees: | |||
• Credit Risk • Executive | • Risk | |||
Key Qualifications: • Extensive bank leadership experience • Acquisition and strategic planning expertise • Credit and risk management expertise Mark J. Grescovich is President and Chief Executive Officer, and a director, of Banner Corporation and Banner Bank. Mr. Grescovich joined Banner Bank in April 2010 and became Chief Executive Officer in August 2010 following an extensive banking career specializing in finance, credit administration and risk management. Under his leadership, Banner has grown from $4.7 billion in assets in 2010 to more than $15 billion through organic growth as well as selective acquisition. During that time, Mr. Grescovich has guided the expansion of Banner’s footprint to over 135 locations in four states. Prior to joining Banner, Mr. Grescovich was the Executive Vice President and Chief Corporate Banking Officer for Akron, Ohio-based FirstMerit Corporation and FirstMerit Bank N.A. He assumed responsibility for FirstMerit’s commercial and regional line of business in 2007, having served since 1994 in various commercial and |
10 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 1 – Election of Directors
corporate banking positions, including that of Chief Credit Officer. Prior to joining FirstMerit, Mr. Grescovich was a Managing Partner in corporate finance with Sequoia Financial Group, Inc. of Akron, Ohio, and a commercial and corporate lending officer and credit analyst with Society National Bank of Cleveland, Ohio. He has a Bachelor of Business Administration degree in finance from Miami University and a Master of Business Administration degree, also in finance, from The University of Akron. |
David A. Klaue | ||||
Director Since: 2007 | Committees: | |||
• Audit • Corporate Governance/Nominating | ||||
Key Qualifications: • Bank leadership experience • Acquisition, business expansion and strategic planning expertise • Extensive business operational experience • Organizational effectiveness expertise David A. Klaue served as Chairman of the Board of Directors of F&M Bank until its acquisition by Banner Bank in May 2007. He is Chairman of the Board of Empire Lumber Co., a diversified wood products manufacturer with operations in Washington, Idaho and Montana, and of Park Ranch Land & Cattle Co., a cow/calf feeder and hay producer; he is also the Manager of EmpireAir, LLC, an air transportation company, and of Empire Investments, LLC, a real estate investment company. Mr. Klaue has been affiliated with these companies for more than 35 years. Additionally, he is a managing member in various other real estate investment, equipment and sales companies. Mr. Klaue’s career has afforded him expertise in banking, business, and agricultural and real estate management. Based on these qualifications, the directors believe that Mr. Klaue should continue to serve on the Board of Directors. |
Paul J. Walsh | ||||
Director Since: 2022 | Committees: | |||
• Audit • Risk | ||||
Key Qualifications: • Strong technology, information security, cybersecurity and digital expertise • Leadership and advisory board experience Paul J. Walsh is currently Senior Vice President, Head of Digital, Engineering, and IT at Sony Interactive Entertainment (part of Sony Group Corp, NYSE: SONY) in Kirkland, Washington, which he joined in January 2022. He was an Executive-In-Residence with Adobe (NYSE: ADBE) in Kirkland, Washington, from 2021 to 2022. Mr. Walsh served as Senior Vice President and Global Chief Digital Officer with Lenovo (OTCM: LNVGF) in Kirkland, Washington, from 2018 to 2020. Prior to Lenovo, Mr. Walsh served as Senior Vice President, Platform Strategy & Innovation for Visa Inc. (NYSE: V) in Kirkland, Washington, from 2016 to 2018. Mr. Walsh previously served as the Global Chief Information Officer at Dell (NYSE: DELL) in Austin, Texas, from 2013 through 2015. Mr. Walsh is also an experienced advisory board member. Mr. Walsh received a Bachelor of Science, BSc Computer Science at Griffith College, Dublin, Ireland. He is a technology leader with more than 25 years of experience in both scale and scope with some of the most respected brands in the industry. With his advisory board experience and technical background, the directors believe Mr. Walsh should continue to serve on the Board of Directors. |
BANNER CORPORATION 2023 PROXY STATEMENT | 11 |
Proposal 1 – Election of First Bancorp and its subsidiary, FirstBank Puerto Rico, positions he has held since October 2011. He has been an independent director and the Chairman of the Board of Byline Bancorp and its subsidiary bank, Byline Bank, since June 2013. Between 2009 and 2010, Mr. Herencia was President and Chief Executive Officer of Midwest Banc Holdings, Inc. and its subsidiary, Midwest Bank
Information Regarding Incumbent Directors.
Set forth below is the present principal occupation and other business experience during at least the last five years of each director continuing in office, as well as a brief discussion of the particular experience, qualifications, attributes and skills that led the Board to conclude that the director should serve onRoberto R. Herencia | ||||
Board Chair Director Since: 2016 | Committees: | |||
• Compensation and Human Capital • Corporate Governance/Nominating | • Credit Risk • Executive (Chair) | |||
Key Qualifications: • Extensive bank leadership experience, including as a director and chief executive officer • Acquisition and strategic planning expertise • Credit and risk management expertise Roberto R. Herencia is President and Chief Executive Officer of BXM Holdings, a fund specializing in community bank investments. He is a director and Chairman of the Board of First BanCorp. (NYSE: FBP) and its subsidiary, FirstBank Puerto Rico, positions he has held since October 2011. He has been an independent director and the Chairman of the Board of Byline Bancorp (NYSE: BY) and its subsidiary bank, Byline Bank, since June 2013, and effective February 12, 2021 assumed the role of Chief Executive Officer of Byline Bancorp. Between 2009 and 2010, Mr. Herencia was President and Chief Executive Officer of Midwest Banc Holdings, Inc. and its subsidiary, Midwest Bank and Trust. Prior to that, he spent 17 years with Popular Inc. as its Executive Vice President and as President of Popular Inc.’s subsidiary, Banco Popular North America. Prior to joining Popular, Mr. Herencia spent 10 years with The First National Bank of Chicago (now J.P. Morgan Chase) in a variety of roles, including Deputy Senior Credit Officer and Head of the Emerging Markets Division. Mr. Herencia previously served on the US International Development Finance Corporation’s Board of Directors, to which he was appointed by President Obama in 2011. He graduated magna cum laude and received his Bachelor of Science in Business Administration degree in finance from Georgetown University and his Master of Business Administration degree from the Kellogg School of Management at Northwestern University. Based on these qualifications, the directors believe that Mr. Herencia should continue to serve on the Board of Directors. |
John R. Layman | ||||
Director Since: 2007 | Committees: | |||
• Audit • Risk | ||||
Key Qualifications: • Extensive legal experience, including in mergers and acquisitions and complex litigation matters • Bank leadership and operational experience • Risk management expertise • Strategic planning experience John R. Layman served as Co-Vice Chairman of the Board of Directors of F&M Bank until its acquisition by Banner Bank in May 2007. He is Managing Partner of Layman Law Firm, PLLP, with which he has |
12 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 1 – Election of Directors
been associated since 1983. His areas of practice include real estate development, commercial litigation, personal injury and product liability. He also has experience in securities litigation, fiduciary obligations, corporate governance and compliance and reporting requirements. Based on these qualifications, the directors believe that Mr. Layman should continue to serve on the Board of Directors. |
Kevin F. Riordan | ||||
Director Since: 2018 | Committees: | |||
• Audit (Chair) • Compensation and Human Capital | • Credit Risk • Executive | |||
Key Qualifications: • Audit experience; qualifies as an audit committee financial expert • Risk management expertise • Corporate governance best practices and organizational effectiveness expertise Kevin F. Riordan retired as a Banking & Capital Markets audit and client service Partner of PricewaterhouseCoopers LLP (PwC), a global professional services firm, in June 2014, having served in that capacity since 2000. Prior to joining PwC in 1994, Mr. Riordan served various banking and securities trading companies as both an independent auditor and senior financial/accounting executive. During his career at PwC, Mr. Riordan gained significant experience working with the boards and audit committees of publicly traded banking and lending institutions while managing major client relationships across multiple markets. In those roles, Mr. Riordan developed expertise in complex accounting, auditing and financial reporting matters. He has been a Certified Public Accountant since 1983. Mr. Riordan’s qualification as an audit committee financial expert was the primary reason for his nomination to the Board. The directors believe that this qualification, together with his experience with banking entities and financial reporting matters, support Mr. Riordan’s continued service on the Board of Directors. |
Terry Schwakopf | ||||
Director Since: 2018 | Committees: | |||
• Corporate Governance/Nominating • Executive | • Risk (Chair) | |||
Key Qualifications: • Extensive bank regulatory supervision experience • Banking and fintech expertise • Risk management expertise Terry Schwakopf is an Independent Senior Advisor to the banking practice of Deloitte & Touche, LLP. Prior to joining Deloitte in 2007, Ms. Schwakopf was Executive Vice President of the Federal Reserve Bank of San Francisco with overall responsibility for banking supervision. In that capacity, she oversaw the supervision of state member banks and bank and financial holding companies in the nine western states that comprise the San Francisco District. During her 23-year career with the Federal Reserve, she had a number of other responsibilities, including oversight of community affairs, public information, the corporate secretary’s function and communications. Before joining the Federal Reserve, she held positions in both the commercial banking and savings and loan industries and |
BANNER CORPORATION 2023 PROXY STATEMENT | 13 |
Proposal 1 – Election of Directors
worked as a consultant to community banks. Ms. Schwakopf serves on the Board of Directors of IDB Bank, and is a member of the advisory board of Blockchain Capital, a venture capital fund. She was on the Board of United Way of the Bay Area, and is actively involved in a number of international organizations and civic groups. Ms. Schwakopf previously served on the Boards of Directors of Bridge Bank and Bridge Capital Holdings, Nara Bank and Nara Bancorporation, and Rabobank, NA. She was a member of the accreditation cadre for the Conference of State Bank Supervisors and a board advisor for Solar Mosaic, a crowdfunding site for solar energy financing. Ms. Schwakopf was honored as one of WomenInc. magazine’s 2019 Most Influential Corporate Directors. Based on these qualifications, the directors believe that Ms. Schwakopf should continue to serve on the Board of Directors. |
Ellen R.M. Boyer | ||||
Director Since: 2021 | Committees: | |||
• Audit • Compensation and Human Capital (Chair) | • Executive | |||
Key Qualifications: • Audit experience; qualifies as an audit committee financial expert • Certified Public Accountant (Active) • Experienced chief financial officer and chief operating officer • Acquisition and strategic planning expertise Ellen R.M. Boyer is Chief Financial Officer of Logic20/20, a business and technology consulting firm headquartered in Seattle, Washington. Ms. Boyer has over 30 years of finance and operational experience in a variety of industries, including technology, financial services and healthcare. Prior to joining Logic20/20 in 2014, Ms. Boyer held chief financial officer and/or chief operating officer roles at several companies in the Seattle area beginning in 1997. Ms. Boyer was previously an Audit Senior Manager at PriceWaterhouseCoopers, where she worked for 12 years. Ms. Boyer has extensive experience in strategic planning, mergers and acquisitions, governance matters, organizational effectiveness, and audit and financial matters. Ms. Boyer graduated from Oregon State University with degrees in Accounting and Spanish and minors in Computer Science and Latin American Affairs. She maintains an active Certified Professional Accountant license. Ms. Boyer is active in her community and has served on several for-profit and not-for-profit boards, including Umpqua Holdings Corporation (now Columbia Banking System, Inc. (Nasdaq: COLB)) from 2014 through 2016 and Sterling Financial Corporation (subsequently Umpqua and now Columbia) from 2007 through 2014. Ms. Boyer qualifies as an audit committee financial expert. This qualification, together with her deep financial expertise and strategic planning experience add value to the Board and the directors believe that Ms. Boyer should continue to serve on the Board of Directors. |
14 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 1 – Election of Directors
Connie R. Collingsworth | ||||
Director Since: 2013 | Committees: | |||
• Compensation and Human Capital • Corporate Governance/Nominating (Chair) | • Executive | |||
Key Qualifications: • Risk management expertise • Acquisition, business expansion and complex investment experience • Organizational effectiveness and corporate governance best practices leadership • Unique insights regarding environmental, social and governance (ESG) issues; diversity, equity and inclusion; and corporate social responsibility Connie R. Collingsworth served as the Chief Operating Officer of the Bill & Melinda Gates Foundation in Seattle, Washington, where she managed the Foundation’s legal, information technology, human resources, security and other business operations units, and provided leadership in the areas of risk management, compliance and corporate governance. From 2007 to 2023, she served on the Foundation’s Executive Leadership Team, which is responsible for the development and execution of Foundation-wide strategy and policy. Prior to joining the Foundation in 2002, Ms. Collingsworth was a partner of Preston Gates & Ellis, now K&L Gates, which has grown from a leading Northwest law firm based in Seattle to one of the largest law firms in the world. She currently serves on the Advisory Board for Planet First Partners and on the Board of Directors of Axxes Capital. Ms. Collingsworth previously served on the Board of Directors of Premera Blue Cross, one of the largest health plan providers in the Pacific Northwest, and on the Board of Directors of Women’s World Banking, a global non-profit devoted to giving low-income women access to the financial tools and resources essential to their security and prosperity. Ms. Collingsworth was honored as one of WomenInc. magazine’s 2019 Most Influential Corporate Directors. Based on these qualifications, the directors believe that Ms. Collingsworth should continue to serve on the Board of Directors. |
John Pedersen | ||||
Director Since: 2021 | Committees: | |||
• Audit • Executive | • Credit Risk (Chair) • Risk | |||
Key Qualifications: • Extensive bank leadership experience, including as a chief risk officer • Deep expertise in risk management • Acquisition and strategic planning expertise • Corporate governance best practices and organizational effectiveness expertise John Pedersen was with City National Bank of Los Angeles, California from 2004, serving as Executive Vice President and Chief Risk Officer from 2006 until his retirement in 2019. He has over three decades of progressive commercial banking credit and risk management responsibilities and significant expertise in establishing and managing risk management functions within a regional bank setting. Mr. Pedersen is skilled in strategic planning, including turn-around and growth strategies. He has a thorough understanding of many aspects of banking, including retail, small business, commercial real estate, dealer banking, consumer lending, mortgage banking and middle market |
BANNER CORPORATION 2023 PROXY STATEMENT | 15 |
Proposal 1 – Election of Directors
lending. Mr. Pedersen began his career in government and held staff and leadership positions with the Office of the Comptroller of the Currency and the Office of Thrift Supervision. After government service, Mr. Pedersen managed a wide range of risk management activities for several financial institutions, including First Interstate Bancorp, KeyCorp, Wachovia and Bank of the West. Active in the community, Mr. Pedersen is involved with various philanthropic organizations that facilitate the micro-financing of small business entrepreneurs domestically and abroad. Mr. Pedersen earned a Bachelor of Business Administration degree in finance and accounting from the University of Oklahoma. Mr. Pedersen’s deep risk management expertise and broad banking experience add value to the Board and the directors believe that Mr. Pedersen should continue to serve on the Board of Directors. |
Director Nomination Process. The Corporate Governance/Nominating Committee oversees the director nomination process. The Committee may consider both incumbent and Chief Executive Officer,new director nominees to nominate for election at each annual meeting of shareholders. The Committee also may recommend that the Board appoint new directors to serve until the next annual meeting of shareholders and then stand for election by shareholders. Only those nominations made by the Committee or properly presented by shareholders will be voted upon at the annual meeting.
In its deliberations for selecting candidates for nominees as director, the Committee seeks individuals of integrity, with a proven record of professional accomplishments and/or civic leadership, sound business judgment and practical wisdom, risk oversight skills, an ability to represent a broad spectrum of interests, an ability to work collaboratively with other directors and our executives, an inquiring and independent mind, who can function well as discussion leaders and consensus builders. The Committee also considers diversity characteristics (see “Board Diversity” below), the candidate’s knowledge of the banking business and whether the candidate would provide for adequate representation of our market area. Any nominee for director recommended by the Committee must be highly qualified in some or all of Banner Corporation and Banner Bank. Mr. Grescovich joinedthese areas.
In searching for qualified director candidates to fill vacancies on the Bank in April 2010 and became Chief Executive Officer in August 2010 following an extensive banking career specializing in finance, credit administration and risk management. Prior to joiningBoard, the Bank, Mr. Grescovich wasCommittee solicits its current Board of Directors for names of potentially qualified candidates. Additionally, the Executive Vice President and Chief Corporate Banking Officer for Akron, Ohio-based FirstMerit Corporation and FirstMerit Bank N.A., a commercial bank with $14.5 billion in assets and over 200 branch offices in three states. He assumed the role and responsibility for FirstMerit's commercial and regional line of business in 2007, having served since 1994 in various commercial and corporate banking positions, includingCommittee may request that of Chief Credit Officer. Prior to joining FirstMerit, Mr. Grescovich was a Managing Partner in corporate finance with Sequoia Financial Group, Inc. of Akron, Ohio and a commercial and corporate lending officer and credit analyst with Society National Bank of Cleveland, Ohio.
16 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 1 | The Right Skills for our Board
Board Diversity. Included among the attributes considered by the Corporate Governance/Nominating Committee in recommending director nominees is diversity by gender, race, ethnicity, national origin and/or age. Our Board believes that diversity, including differences in backgrounds, qualifications and Montana; Felts Field Aviation, an air transportation company; Park Ranch Land & Cattle Co., a cow/calf feeder and hay producer; and Empire Investments, a real estate investment company, companies with which he has been affiliated for over 36 years. Hepersonal characteristics, is a managing member in various other real estate investment, equipment and sales companies. Mr. Klaue's career has afforded him expertise in banking, business, agricultural and real estate management.
Board Diversity Matrix (As of March 23, 2023) | ||||||||||||||||
Board Size: | ||||||||||||||||
Total Number of Directors | 11 | |||||||||||||||
Gender: | Male | Female | Non-Binary | | Gender Undisclosed |
| ||||||||||
7 | 4 | — | — | |||||||||||||
Number of directors who identify in any of the categories below: |
| |||||||||||||||
African American or Black | 1 | 1 | — | — | ||||||||||||
Alaskan Native or American Indian | — | — | — | — | ||||||||||||
Asian | — | — | — | — | ||||||||||||
Hispanic or Latinx | 1 | — | — | — | ||||||||||||
Native Hawaiian or Pacific Islander | — | — | — | — | ||||||||||||
White | 6 | 3 | — | — | ||||||||||||
Two or More Races or Ethnicities | 1 | — | — | — | ||||||||||||
LGBTQ+ | — | |||||||||||||||
Undisclosed | — |
Of our 11 directors, 6 identify as having at least one diversity characteristic (i.e., female, non-binary, LGBTQ+ and/or race or ethnicity other than white).
Gender Diversity | Ethnic Diversity | Overall Diversity | ||||||||||
36% | 27% | 55% | ||||||||||
4 of 11 directors | 3 of 11 directors |
| 6 of 11 directors have at least one diversity characteristic |
The Right Skills for our Board
As a global nonprofit dedicatedpart of the Board evaluation and director selection processes, the Corporate Governance/Nominating Committee (“Governance Committee”) maintains a Director Attributes Matrix (described further in the “Director Selection Process” section of this Proxy Statement). The Governance Committee and the Board believe that the director nominees for 2023, together with the continuing directors, provide Banner with the right mix of skills and experience necessary for a highly functioning board. The chart below summarizes the number of Banner’s directors who consider themselves to empowering underrepresented young peoplebe skilled in each primary category; the descriptions below each category heading are illustrative of the types of experience that generally would be considered in determining whether a given director is skilled in that particular area, and should not be read to become innovators and leaders, through STEM learningimply that has supported over 100,000 students in 117 countries. She currently servesevery listed example or title is represented on the Board.
BANNER CORPORATION 2023 PROXY STATEMENT | 17 |
Proposal 1 | The Right Skills for our Board
Total Directors and Director Nominees with Particular Qualifications and Experience
(out of 11 total Directors and Nominees)
5 | Financial Expertise/Audit Committee Financial Expert | |
Independent auditors/certified public accountants, chief financial officers, chief accounting officers, senior professionals overseeing capital management activities, or otherwise qualified as an “audit committee financial expert.” | ||
11 | Leadership | |
Experience as a business line leader or C-suite professional, or otherwise demonstrating advanced leadership expertise. | ||
8 | Mergers & Acquisitions (M&A) | |
C-suite professionals or senior leaders directly involved in M&A (e.g., chief executive officers, chief financial officers, chief operating officers, general counsels, operational heads), M&A attorneys, accountants with direct M&A experience, investment bankers. | ||
8 | Risk Management | |
Chief risk officers and senior professionals with experience in compliance, fraud prevention, or enterprise risk management; senior level internal audit professionals; attorneys or other professionals with relevant risk management expertise. | ||
6 | �� | Human Capital Management/Executive Compensation |
Chief human resources officers or other senior human resources professionals, employment attorneys, prior experience as a compensation committee member or consultant to compensation committees. | ||
3 | Communications/Marketing | |
Experience as a public relations officer, senior marketing professional, head of customer relations, community engagement leader, media professional (including social media), or similar role. | ||
8 | Strategic Planning | |
Senior leaders who have led or actively participated in the development of numerous strategic plans. |
7 | Financial Industry Experience | |
Management experience in traditional banking (commercial/retail), investment banking, wealth management, securities/investment management or fintech. | ||
5 | Legal/Regulatory | |
Attorneys, chief risk officers, bank regulatory agency staff, lobbyists, legislators/legislative aides with experience in a highly regulated industry such as financial services. | ||
5 | Organizational Effectiveness/Continuous Improvement | |
Experienced professionals who are LEAN or Six Sigma certified, continuous improvement professionals, or executives with significant experience implementing continuous improvement approaches. | ||
8 | Public Company Governance/Corporate Governance Best Practices | |
Experienced chief executive officers, chief financial officers, general counsels, corporate secretaries, other governance specialists, or investor relations professionals at a publicly-traded company, prior experience as a governance committee member or professional advising governance committees. | ||
11 | Prior Board Experience/Interaction | |
Experience as a board member or advisory board member of a publicly-traded company, private company, or non-profit organization, or executives regularly interacting with boards. | ||
1 | Information Technology/Cybersecurity | |
Senior management experience at technology/ cybersecurity companies, in IT/cybersecurity roles outside of technology companies, or in relevant fintech organizations. | ||
10 | Geographic Representation | |
Knowledge of or experience in a specific geographic area or market in which Banner and its subsidiaries operate. |
18 | BANNER CORPORATION 2023 PROXY STATEMENT |
Corporate Governance | Board of Directors
Corporate Governance
Our Board is committed to maintaining an effective corporate governance framework. Strong governance practices support long-term, sustainable value creation for our shareholders and provide a foundation for effective Board oversight. The Board of Directors has maintained comprehensive corporate governance guidelines since January 2018 to provide a framework to assist the Board in fulfilling its responsibilities to shareholders. The guidelines, as amended from time to time, are available on our website at https://investor.bannerbank.com and cover a wide range of Watermark, the Bay Area's largest membership organization dedicated to increasing the numbertopics including: Board composition; selection, tenure, evaluation and retirement of women in leadership positions. She has received numerous awards for her contributions to her communityBoard members; Board leadership; and support of women in technology, including being recognized by Business Insider as #6 on their list of the 22 Most Powerful Women Engineers in the World and Women of Influence 2017 by Silicon Valley Business Journal. Ms. Saintil received a B.S. from Florida A&M University, where she graduated summa cum laude and was the valedictorian. She earned her M.S. from Carnegie Mellon University and has completed Stanford Directors' College and Harvard Business School's executive education programs. She is certified in Cybersecurity Oversight by the National Association ofdirector responsibilities. The Board’s Corporate Directors and the Carnegie Mellon Software Engineering Institute.
Board of Directors of Premera Blue Cross, one of the largest health plan providers in the Pacific Northwest, and Women's World Banking, a global non-profit devoted to giving more low-income women access to the financial tools and resources essential to their security and prosperity.
The Board of Directors conducts its business through Board meetings and through its committees. During the year ended December 31, 2017,2022, the Board of Directors held nine14 meetings. NoEach director attended fewermore than 75% of the total meetings of the Board and committees on which such personthat director served during this period.
Leadership Structure
The positions of Board Chair and of President and Chief Executive Officer are held separately by two individuals. This has been the case since 1995, when Banner was formed to become the holding company for Banner Bank. The Board believes this structure is appropriate for Banner because it provides the Board with capable leadership and independence from management. It also allows the President and Chief Executive Officer to focus on the day-to-day business of managing Banner, while the Chair leads the Board.
Committees and Committee Charters
The Board of Directors has established standing Executive, Audit, Compensation and Human Capital, Corporate Governance/Nominating, Credit Risk, and Corporate Governance/NominatingRisk Committees. The Board has adopted written charters for each committee other than the Audit, Compensation, Risk and Corporate Governance/ Nominating Committees and although copies of theseExecutive Committee. These charters are not available on our website the charters, excepting the Riskat https://investor.bannerbank.com. Our directors’ current membership on these committees is reflected below.
BANNER CORPORATION 2023 PROXY STATEMENT | 19 |
Corporate Governance | Committees and Committee charter, must be attached to the annual meeting proxy statement at least once every three years or when the charter has been materially amended. The Audit, Compensation and Corporate Governance/Nominating Committee charters are attached to this Proxy Statement as Appendix A, Appendix B and Appendix C, respectively.
Executive Committee
Audit Committee
The Corporation’s Independent Auditor routinely attends Audit Committee meetings and the Audit Committee regularly meets in executive session with the Corporation’s Independent Auditor. The Audit Committee also routinely meets in executive session with the Corporation’s Chief Audit Executive.
The Audit Committee believes it has fulfilled its responsibilities under its charter. The Committee met 12 times during the year ended December 31, 2017.
20 | BANNER CORPORATION 2023 PROXY STATEMENT |
Corporate Governance | Committees and Committee Charters
“independent,” in accordance with the requirements for companies quoted on The NASDAQNasdaq Stock Market ("NASDAQ"(“Nasdaq”). In addition, the Board of Directors has determined that Mr. BudkeCommittee members Boyer and Mr. MatsonRiordan meet the definition of "audit“audit committee financial expert,"” as defined by the SEC.
Compensation Committee
The Committee believes it has fulfilled its responsibilities under its charter. The Compensation and Human Capital Committee met sevenfive times during the year ended December 31, 2017.
The Committee meets, outside of the presence of Mr. Grescovich, to discuss his compensation and to make its recommendationassociated recommendations to the full Board, which then votes on hisMr. Grescovich’s compensation. Mr. Grescovich makes recommendations to the Compensation Committee regarding the compensation of all other executive officers. The Committee considers theMr. Grescovich’s recommendations of Mr. Grescovich and makes itsa recommendation to the full Board, which then votes on executive compensation.
Additional discussion regarding the Committee’s significant activities for fiscal year 2022 can be found in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement.
Corporate Governance/Nominating Committee. The Corporate Governance/Nominating Committee oversees the Corporation’s efforts to maintain the highest standards and best practices in all critical areas relating to the management of the business of Banner. The Committee oversees the Board’s annual review of Board performance and reviews and recommends to the Board corporate governance guidelines. Additionally, the Committee reviews the Corporation’s environmental, social and governance (ESG) framework and initiatives and reviews policies and programs that relate to matters of corporate social responsibility. The Committee is also responsible for succession planning for the Board of Directors, including identifying needed skills and backgrounds, developing a list of nominees for board vacancies and selecting nominees for directors. The Committee also oversees our directors’ continuing education and ongoing training.
The Corporate Governance/Nominating Committee believes it has fulfilled its responsibilities under its charter. Each member of the Committee is “independent,” in accordance with the requirements for companies listed on Nasdaq. The Committee met eight times during the year ended December 31, 2022.
Credit Risk Committee. The Credit Risk Committee provides oversight of Banner’s credit risk structure and the processes established to identify, understand, measure, monitor and manage Banner’s credit risks. The Committee serves as the primary point of contact between the Board and the management-level committees dealing with credit risk management. The Committee is intended to enhance the Board’s oversight and understanding of credit risk management activities and the effectiveness thereof. Additional detail is provided below in “Board Involvement in the Risk Management Process.” The Credit Risk Committee met six times during the year ended December 31, 2022.
BANNER CORPORATION 2023 PROXY STATEMENT | 21 |
Corporate Governance | Director Independence
Risk Committee. The Risk Committee consisting of Directors Orrico (Chairman), Adams, Grescovich, Layman, Matson and Saintil, provides oversight of our enterprise-wide risk structure and the processes established to identify, measure, monitor and manage our credit risk, market and liquidity risk, interest rate risk and operating risk, including technology, legal and compliance risk.risk, and risks associated with the Corporation’s environmental, social and governance (ESG) program. The Committee is responsible for reviewing the Corporation’s progress on ESG risk management initiatives and activities, including climate change risk management relative to any stated ESG program goal. The Committee also reviews management'smanagement’s strategies and policies for managing these risks and serves as the primary point of contact between the Board and senior management in assessing enterprise-wide risk management activities and effectiveness. Additional detail is provided below in “Board Involvement in the Risk Management Process.” The Risk Committee met seveneight times during the year ended December 31, 2017.
Director Independence
Our common stock is listed on The Nasdaq Global Select Market. In accordance with Nasdaq rules, at least a majority of our directors must be independent directors. The Board has determined that 10 of our 11 directors are independent, as defined by Nasdaq. Ellen R.M. Boyer, Connie R. Collingsworth, Margot J. Copeland, Roberto R. Herencia, David A. Klaue, John R. Layman, John Pedersen, Kevin F. Riordan, Terry Schwakopf and Paul J. Walsh are independent.
Director Tenure
The Corporate Governance/Nominating Committee consisting of Directors Collingsworth (Chair), Herencia and Smith, assures that we maintain the highest standards and best practices in all critical areas relatingseeks to the management of the business of Banner.select directors who will contribute to Banner’s corporate goals. The Committee also selects nominees forrecognizes the electionimportance of directors and develops a list of nominees for board vacancies. The Corporate Governance/Nominating Committee believes it has fulfilled its responsibilities under its charter. Each member of the Committee is "independent," in accordance with the requirements for companies quoted on NASDAQ. The Committee met seven times during the year ended December 31, 2017.
Director Independence | Non-Management Director Tenure | |||
91% | ||||
10 of 11 Directors are Independent | ||||
Diversity, Equity and Inclusion
Banner’s Board and management understand the importance of diversity and inclusion, including ensuring that all individuals are compensated equitably for similar work and have an equal opportunity to contribute and advance in the workplace. We are committed to creating a diverse and vibrant workplace that respects individuality, helps every person realize their full potential, and includes people with a broad range of experiences, backgrounds and skills that enable us to anticipate and meet the needs of our business and whether the candidate would provide for adequate representationthose of our market area. Any nominee for director made by the Committee must be highly qualified with regard to some or all these attributes. The Committee does not specifically consider diversityclients. Additional details regarding our efforts in identifying nominees for director; however, the Committee believes that the judicious application of the criteria described above provide Banner with a well-rounded and effective Board with a diverse range of experience and perspectives.
22 | BANNER CORPORATION 2023 PROXY STATEMENT |
Corporate Governance | Board Involvement in the Risk Management Process
Board Involvement in the Risk Management Process
The Board of Directors recognizes that effective risk management requires a high level of cooperation between the Board and senior management. Nonetheless, the Board has established and maintains its independence in overseeing the conduct of Banner, including the risk management process. The Board'sBoard’s leadership structure takes into account its risk administrationoversight function by the conduct of its business through Board meetings and through its committees, in particular the Audit, Corporate Governance/Nominating, AuditCredit Risk and Risk Committees, as well as by the separation of the positions of Chairman of the Board Chair and of President and Chief Executive Officer as described above.
Directors keep themselves informed of the activities and condition of Banner and of the risk environment in which it operates by regularly attending Board and assigned Committee meetings, and by review of meeting materials, auditor'sauditor’s findings and recommendations, and supervisory communications. Directors stay abreast of general industry trends and any statutory and regulatory developments pertinent to Banner and the BanksBank by periodic briefings byfrom senior management, counsel, auditors or other consultants, and by more formal director education. The Corporate Governance/Nominating Committee monitors and evaluates director training and information resources.
The Board oversees the conduct of Banner'sBanner’s business and administers the risk management functionfunctions by:
• | Monitoring the selection, evaluation and retention of competent senior management; |
• | Establishing, with senior management, Banner’s strategic business objectives, and adopting operating policies to support these objectives in a legal and sound manner; |
• | Monitoring operations to ensure that they are controlled adequately and are in compliance with laws and policies; |
• | Overseeing Banner’s business performance; and |
• | Ensuring that the Bank helps to meet our communities’ credit needs. |
These responsibilities are governed by a complex framework of federal and state lawlaws and regulationregulations as well as regulatory guidelines applicable to the operation of Banner and the Banks.
The Board ensures that all significant risk takingrisk-taking activities are covered by written policies that are communicated to appropriate employees. Specific policies cover material credit, market, liquidity, operational, legal and reputation risks. The policies are formulated to further Banner'sBanner’s business plan in a manner consistent with safe and sound practices. The Board ensuresrequires that all such policies arebe monitored by senior management to make certainhelp ensure that they conform with changes in laws and regulations, economic conditions, and Banner'sBanner’s and the Banks'Bank’s circumstances. The policies are implemented by senior management who develop and maintain procedures, including a system of internal controls, designed to foster sound practices, to comply with laws and regulations and to protect Banner against external crimes and internal fraud and abuse.
The Board'sBoard’s policies also establish mechanisms for providing the Board with the information needed to monitor Banner'sBanner’s operations. This includes senior management reports to the Board. These reports present information in a form meaningful to members of the Board, who recognize that the level of detail and frequency of individual senior management reports will vary with the nature of the risk under consideration and Banner'sBanner’s and the Banks'Bank’s unique circumstances.
The Board further enhanced its involvement in the risk management process in September 2010 by the establishment ofestablishing a Risk Committee. The Risk Committee reviews management'smanagement’s strategies and policies for
BANNER CORPORATION 2023 PROXY STATEMENT | 23 |
Corporate Governance | Cybersecurity Risk Management
managing enterprise-wide risks and the processes established to identify, measure, monitor and manage those risks. The Risk Committee also serves as the primary point of contact between the Board and senior management in assessing enterprise-wide risk management activities and effectiveness.
The Board has also established a mechanism for independent third partythird-party review and testing of compliance with policies and procedures, applicable laws and regulations, and the accuracy of information provided by senior management. This is accomplished, for example, by the Director of InternalChief Audit Executive reporting directly to the Audit Committee. In addition, an annual external audit is performed. The Audit Committee reviews the auditors'independent registered public accounting firm’s findings with senior management and monitors senior management'smanagement’s efforts to resolve any identified issues and recommendations. The Audit Committee provides regular reports of its activities to the Board.
The Board also reviews reports of inspection and examination or other supervisory activity, and any other material correspondence received from Banner'sBanner’s regulators. Findings and recommendations, if any, are carefully reviewed, and progress in addressing such matters is routinely monitored.
Cybersecurity Risk Management
The Board of Directors oversees our management of information and cybersecurity risks. We manage cybersecurity risks through our Information Security Program and related polices and standards, which are committed to establishing and maintaining high standards of corporate governance. The Corporate Governance/Nominating Committee is responsible for initiatives to comply with the provisions contained in the Sarbanes-Oxley Act of 2002, the rules and regulations of the SEC adopted thereunder, and NASDAQ rules governing corporate governance. In January 2018,approved by the Board of DirectorsDirectors. The Board’s Risk Committee directly oversees information technology and cybersecurity activities and risks through the review of regular management reporting and discussions with senior management regarding the effectiveness of our Information Security Program. In connection with its review of these risks, the Risk Committee also reviews management’s plans to mitigate risk.
CYBERSECURITY GOVERNANCE PRINCIPLES
• | Ensure the confidentiality, integrity and availability of Banner data by means of comprehensive security policies, processes and technologies that allow for the proper protection of data and that facilitate secure, robust access |
• | Continually maintain a scalable, secure and reliable production environment by means of advanced security processes and technologies to facilitate comprehensive attack identification, analysis and response |
• | Design and maintain a secure digital environment to protect and enable Banner’s operations by implementing effective and secure technologies |
• | Establish a mutual culture of security by creating a secure environment and a strong alliance with all employees in the practice of information security |
• | Engage external expertise as part of the verification and ongoing testing of an effective cybersecurity program |
24 | BANNER CORPORATION 2023 PROXY STATEMENT |
Corporate Governance | Code of Ethics and Ethics Officer
Key components of our Information Security Program include:
• | Ensuring employees complete regular information security awareness training; |
• | NIST Industry Standards Incident Response Framework: Identify, Protect, Detect, Respond and Recover, along with alerting and defense-in-depth technology controls; |
• | Regular internal and third-party program oversight; and |
• | Consistent reviews of third parties who maintain sensitive data. |
Our Information Security Program includes a cybersecurity response plan, which is a component of our broader crisis management plan that outlines the approach for our response, management, communication and successful resolution of cyber incidents. The response plan includes reporting procedures for the timely notification of the appropriate federal and state regulators for material incidents when applicable.
Additionally, we routinely partner with cybersecurity firms and penetration testing companies to help test and evaluate our information security environment. The Bank’s regulators also annually review the Bank’s Information Security Program. We use these assessments and reviews to analyze the effectiveness of our Information Security Program and to identify opportunities to enhance our identification and mitigation of related risks.
Code of Ethics and Ethics Officer
Banner has adopted comprehensivea Code of Ethics and Business Conduct (“Code of Ethics”), which incorporates corporate governance guidelines asbest practices and is applicable to directors, officers and employees. All new hires undergo interactive online training, after which they must certify they understand and will abide by the Code of Ethics. This process is repeated annually for all employees. Directors also provide a framework to assist thesimilar certification annually.
The Code of Ethics is reviewed by our Board in fulfilling its responsibilities to shareholders. A copy of the guidelinesDirectors on an annual basis and was reapproved without significant changes on July 26, 2022. The Code of Ethics covers conflicts of interest, insider trading, regulatory and compliance issues, reporting complaints and concerns, and other ethics-related policies and procedures. The Code of Ethics is available on ourBanner’s website at www.bannerbank.com.https://investor.bannerbank.com.
On June 26, 2018, Banner established the position of Ethics Officer, responsible for overall administration of Banner’s ethics program, and for handling particular ethics and conflicts of interest issues. General Counsel Sherrey Luetjen serves as the Corporation’s Ethics Officer. Banner uses EthicsPoint, a third-party website and hotline complaint service, and provides information as to the availability of that service on its website and in its internal communications. The guidelines cover a wide rangeEthicsPoint service is available to any person, including employees and clients, to report any ethical violation they believe to have occurred or any other concern they believe may warrant management attention. Reports can be submitted anonymously. Every EthicsPoint report is automatically routed to an established group of topics including Board composition, selection, tenure, evaluationexecutives, which includes our Ethics Officer and retirementour Chief Audit Executive, as well as the Chair of Board members, Board leadership and director responsibilities. The the Board’s Audit Committee, who is an independent director. Additional management representatives are engaged as appropriate to assess each report. Additionally, the Ethics Officer reports any complaints relating to financial record-keeping or reporting to the Audit Committee ahead of the release of key financial reports.
BANNER CORPORATION 2023 PROXY STATEMENT | 25 |
Corporate Governance/Nominating Committee will continue to evaluate and improve our corporate governance principles and policies as necessary and as required.
Insider Trading Policy
The Board of Directors has also adopted a policy governing trading in Banner'sBanner’s securities by ourits directors and officers. This wide-ranging policy covers permissible timing of trades, as well as prohibitions on trades. In particular, the policy prohibits short sales, transactionstransaction in publicly-tradedpublicly traded options and other types of hedging transactions. The policy also prohibits holding Banner securities in margin accounts or pledging Banner securities for any purpose, with the exception of pledges in effect before the policy was adopted.
Annual Meeting Attendance by Directors
We do not have a policy regarding Board member attendance at annual meetings of Ethics.
Shareholder Communications with Shareholders.
The Board of Directors maintains a process for shareholders to communicate with the Board. Shareholders wishing to communicate with the Board of Directors should send any communication to the Secretary, Banner Corporation, 10 S. First Avenue, Walla Walla, Washington 99362. Any communication must state the number of shares beneficially owned by the shareholder making the communication. The Secretary will forward such communication to the full Board of Directors or to any individual director or directors to whom the communication is directed unless the communication is unduly hostile, threatening, illegal or similarly inappropriate, in which case the Secretary has the authority to discard the communication or take appropriate legal action.
Succession Planning
Succession planning and leadership development are key priorities for Banner’s Board of Directors and management. The Board regularly reviews our talent development activities in support of our business strategy, engaging in meaningful discussion regarding Banner’s development programs, leadership bench and succession plans, with a focus on key positions at the senior executive level and other critical roles. Throughout the year, the Board or its committees engage in a variety of activities in support of succession planning.
Activity | Succession Planning Impact | |
Employee engagement and organizational effectiveness review | Informs the directors as to the current state of Banner’s talent base in terms of employee engagement levels and overall organizational effectiveness | |
Enterprise risk assessment report | Enables Board oversight of risk and related mitigation efforts regarding talent recruitment, development and retention | |
Talent, succession and engagement update | Provides directors with detailed insight on senior management selection, succession readiness, leadership development, diversity and employee engagement |
26 | BANNER CORPORATION 2023 PROXY STATEMENT |
Corporate Governance | Related Party Transactions.
Related Party Transactions
We have a number of written policies governing transactions with related parties. These policies are intended to ensure that all transactions entered into with related parties are in the best interests of Banner and its shareholders. As a general rule, transactions with directors and officers and their related interests are prohibited. An exception applies to normal banking relationships.
Our Code of Ethics provides that wherewhen an officer or director finds that any financial or business relationship with customers, consultants, or vendors may impair, or appear to impair, the independence of business judgment on behalf of Banner, that person must (1) disclose fully to a supervisor, the Chief Executive Officer or to the Board of Directors the existence and nature of the conflict and (2) remove and insulate himself/herself from all decision-making and action related to that financial or business activity of Banner. Each year, our directors and executive officers complete a conflict of interest questionnaire to ensure that no conflicts,actual or potential conflicts of interest are overlooked.
The Banks haveBank has followed a policy of granting loans to our employees, officers and directors, which is designed to fully compliescomply with all applicable federal and state regulations. All outstanding loans to our directors and executive officers: (1) were made in the ordinary course of business; (2) were 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 Banks;Bank; and (3) did not involve more than the normal risk of collectability or present other unfavorable features when made. Loans made to executive officers and directors are granted pursuant to the normal underwriting procedures of the Banks.Bank. Loans made to a director or executive officer in an amount that, when aggregated with the amount of all other loans to that person and his or her related interests, are in excess of the greater of $25,000 or 5% of the institution'sinstitution’s capital and surplus (up to a maximum of $500,000) must be approved in advance by a majority of the disinterested members of the Board of Directors. All lines of credit to insiders that, combined with other loans, do not exceed $500,000 for directors and their related interests or $100,000 for executive officers and that do not fall within the exceptions to Regulation O of the Board of Governors of the Federal Reserve System ("(“Federal Reserve"Reserve”) must be approved by the Board of Directors at least annually. All loan approval and review procedures are governed by written policies.
Each director and executive officer completes a form annuallydiscloses to identifyus all related interests.interests on an annual basis. Deposit and loan accounts of directors, executive officers and related interests are then coded in our systems so that developments can be tracked. Our Regulation O officer, a compliance specialist, monitors developments monthly and completes and submits to the Board of Directors a quarterly report of Regulation O compliance which is submitted to the Board of Directors.compliance.
BANNER CORPORATION 2023 PROXY STATEMENT | 27 |
Corporate Governance | Stock Ownership Guidelines
Stock Ownership Guidelines
Banner has had stock ownership guidelines since October 2015,2015. As originally adopted by the Board of Directors, adopted a non-employee stockthe ownership policy requiring requirements applied to Banner’s non-employee directors directors. The Board later expanded the guidelines to also apply to Banner’s executive officers. Directors and executive officers are required to own shares of Banner'sBanner’s common stock equal in value to three timesa multiple of the respective director'srelevant individual’s base salary or annual cash retainer. retainer as shown in the table below. In 2021, the Board doubled the multiples applicable to the Chief Executive Officer and Executive Vice Presidents.
Position | Stock Ownership Guideline | |
Non-employee Director | 3X annual cash retainer | |
Chief Executive Officer | 6X base salary | |
Executive Vice President | 2X base salary |
Directors and executives are permitted to meet the policy requirementsownership guidelines over time and are restricted from divesting shares until the policy requirementrequisite ownership level is met. As of December 31, 2017, eightMarch 23, 2023, the record date, 6 of our 10 non-employee directors, and Mr. Grescovich and 5 of the eleven non-employee directorsremaining 12 executive officers, exceeded the ownership requirements under the policy.guidelines. The three non-employee directors and executive officers who do not currently meet the ownership requirements are in the process of fulfilling the policyapplicable requirements over time.
28 | BANNER CORPORATION 2023 PROXY STATEMENT |
Environmental, Social and Governance (ESG): Supporting Sustainability
Environmental, Social and Governance (ESG): Supporting Sustainability
We believe that operating a sustainable business is a multi-faceted undertaking. We recognize that incorporating sustainable practices into our strategy and operations is essential to creating long-term shareholder value, and we pursue ESG initiatives that support this objective. We know our human capital is integral to our long-term success. Accordingly, we invest in our employees and aim to offer competitive compensation and benefits, career development and advancement opportunities, and an equitable and inclusive culture. We also strive to create positive change in the communities we serve, through our day-to-day business activities, longer-term strategic initiatives and charitable support. Strong governance has long been a key component of our success, and we continuously seek to enhance our governance practices. We believe that environmental considerations are critically important and we actively support clients pursuing innovative, environmentally responsible endeavors. We are also taking steps to begin assessing our own environmental impact. These considerations are discussed in greater detail on our website at www.bannerbank.com/esg. Detailed human capital metrics are provided in our most recent Annual Report on Form 10-K, as filed with the SEC.
Human Capital
Talent Acquisition and Attrition.
• | In 2022, we formally launched a Flexible Workplace Program designed to support hiring talent from a more diverse group of candidates, improve the work experience for our employees, enhance retention and strengthen our leadership pipeline. Nearly 40% of our workforce worked remotely in 2022, with women representing approximately 65% of that population and people of color representing nearly 20%. |
• | We remain highly focused on retention of female talent. In an effort to retain more of our existing female talent and facilitate their progress into leadership roles, we introduced two employee resource groups (ERGs) in 2022 – the Women in Leadership ERG where participants can share experiences and gain inspiration for progressing their careers; and the Working Parents and Caregivers ERG for employees who are, or are preparing to be, the primary caregivers to young family members and/or elders. |
Employee Engagement. We utilize anonymous employee surveys to seek valuable feedback on key initiatives and leverage the results to improve current programs and develop new programs. In 2022, we focused on employee well-being by adding a pulse survey to address employee burnout.
Benefits.
• | At the beginning of 2022, we launched our parental leave program which provides eight weeks of leave for both birth and non-birth parents, as well as adoption or surrogacy. In addition to traditional sick leave of up to ten days per year, in 2022 we added (1) 12 weeks of short-term disability coverage, and (2) a new paid company holiday – Juneteenth – a historically important day that aligns with our diversity and inclusion efforts. |
• | In 2022, we were pleased to add a wellness coach benefit (which can also be shared with up to five non-family members) that provides unlimited free one-on-one personal coaching in several |
BANNER CORPORATION 2023 PROXY STATEMENT | 29 |
Environmental, Social and Governance (ESG): Supporting Sustainability
different categories such as fitness, nutrition, life coaching, and financial coaching, as well as a range of tools to improve sleep quality. |
Diversity, Equity and Inclusion.
• | Our cross-functional, employee-led DEI council provides leadership and serves as a catalyst for inclusion and diversity initiatives across our organization. The DEI council is intended to help develop effective strategies to encourage diversity, equity and inclusion in our workplace as well as to attract, develop and retain diverse talent. |
• | Our CEO, Mark Grescovich, has signed the CEO Action for Diversity & Inclusion Pledge to demonstrate our commitment to fostering a diverse and inclusive workplace. With this commitment, among other things, we provide unconscious bias training to all of our employees to help them recognize their blind spots. |
Social Contributions and Community Support
Banner has a positive impact on the communities it serves in a variety of ways. One key measure of the Bank’s community impact is its Community Reinvestment Act rating, which is issued by the FDIC. Banner Bank received a rating of “Outstanding” in its most recent examination. This is the highest rating available and indicates that the FDIC has determined the Bank has an outstanding record of helping to meet the credit needs of its assessment area, including low- and moderate-income neighborhoods, in a manner consistent with its resources and capabilities.
Volunteerism. We strive to be a good corporate citizen by encouraging employees to be engaged in the communities where they live and work. To help remove roadblocks to volunteering, we offer Community Connections, a program that offers employees up to 16 hours of paid time off to volunteer at non-profit organizations of their choice. We also encourage employees to serve in leadership roles in these organizations as part of their professional development. We are proud to support many local community organizations through financial contributions and employee-driven volunteerism, including Junior Achievement, United Way and hundreds of other organizations.
Governance
• | To further increase our accountability to shareholders, we began declassifying our Board so that by 2025 all directors will be up for election annually. |
• | To foster mutual learning and understanding between the Board and executives, we launched a program to assign each director to a specific executive committee member. |
• | We have increased the use of executive sessions at both the committee and Board levels to provide more opportunities for candid and confidential conversations. |
Environmental Responsibility
In 2022, under the oversight of our Board’s Risk Committee, Banner began construction of a formal climate risk management program. This program will provide broad governance over climate risks and support compliance with developing regulations regarding climate risk management.
Energy Usage. At the sites we own, all new or replacement building generators, where required, are now powered by natural gas, not diesel. When HVAC systems need to be retired, we upgrade to high-
30 | BANNER CORPORATION 2023 PROXY STATEMENT |
Environmental, Social and Governance (ESG): Supporting Sustainability
efficiency systems as standard. Two sites have been upgraded to fully automated HVAC energy management systems.
Water usage. While our water footprint is relatively low, we plan on continuing to explore ways to reduce water usage across our owned properties. For example, in water stressed locations, particularly in California, we are working to increase hardscaping at our sites to reduce water consumption. We increased hardscaping at three sites in 2022.
Fleet management. We have also reduced the internal combustion engine cars in our company fleet from 25 to just four over recent years and have moved to a rental model, which allows us to use more energy-efficient vehicles.
BANNER CORPORATION 2023 PROXY STATEMENT | 31 |
Directors’ Compensation | Director Compensation Table
Directors’ Compensation
Director Compensation Table
The following table shows the compensation paid to our directors for 2017,2022, with the exception of Mark J. Grescovich, a director and our President and Chief Executive Officer, whose compensation is included in the section entitled "Executive“Executive Compensation."
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(3) | Total ($) | ||||||
Robert D. Adams | 52,167 | 50,066 | -- | 3,974 | 106,207 | ||||||
Gordon E. Budke | 58,667 | 60,058 | -- | 7,109 | (4)(5) | 125,834 | |||||
Connie R. Collingsworth | 53,750 | 55,090 | -- | 5,078 | (5) | 113,918 | |||||
Roberto R. Herencia | 52,667 | 50,066 | -- | 2,002 | (4) | 104,735 | |||||
David A. Klaue | 43,667 | 50,066 | -- | 3,974 | 97,707 | ||||||
John R. Layman | 59,667 | 50,066 | -- | 3,974 | 113,707 | ||||||
David I. Matson | 59,667 | 50,066 | -- | 641 | (4) | 110,374 | |||||
Brent A. Orrico | 93,250 (6) | 55,090 | -- | 3,974 | 152,314 | ||||||
Merline Saintil | 39,667 | 50,066 | -- | -- | 89,733 | ||||||
Gary Sirmon | 68,500 (7) | 70,104 | 59,200 (8) | 148,156 | (9) | 345,960 | |||||
Michael M. Smith | 54,000 | 56,304 | -- | 4,636 | 114,940 | ||||||
Jesse G. Foster (10) | 13,000 | -- | -- | 6,571 | (11) | 19,571 | |||||
Michael J. Gillfillan (10) | 11,000 | -- | -- | 703 | 11,703 | ||||||
D. Michael Jones (10) | 11,500 | -- | 78,716 (12) | 135,924 | (4)(13) | 226,140 | |||||
_____________ |
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||||||
Ellen R.M. Boyer | 63,375 | 66,839 | 42 (2) | 130,256 | ||||||||||||||||
Connie R. Collingsworth | 64,000 | 62,272 | 3,086 (2)(3) | 129,358 | ||||||||||||||||
Margot J. Copeland | 42,500 | 65,517 | — | 108,017 | ||||||||||||||||
Roberto R. Herencia | 87,750 | 86,834 | 2,685 (2)(3) | 177,269 | ||||||||||||||||
David A. Klaue | 58,000 | 56,174 | 3,760 (2)(3) | 117,934 | ||||||||||||||||
John R. Layman | 59,000 | (4) | 56,174 | 2,682 (2)(3) | 117,856 | |||||||||||||||
David I. Matson (5) | 26,083 | — | 12,633 (2)(3) | 38,716 | ||||||||||||||||
Brent A. Orrico (5) | 31,750 | — | 12,170 (2) | 43,920 | ||||||||||||||||
John Pedersen | 61,375 | 63,839 | 1,770 (2) | 129,984 | ||||||||||||||||
Kevin F. Riordan | 77,000 | (4) | 66,357 | 2,725 (2)(3) | 146,082 | |||||||||||||||
Merline Saintil (5) | 23,750 | — | 28,453 (2)(3) | 52,203 | ||||||||||||||||
Terry Schwakopf | 64,500 | 63,839 | 317 (2)(3) | 128,656 | ||||||||||||||||
Paul J. Walsh | 49,167 | 65,517 | — | 114,684 |
(1) |
Represents the aggregate grant date fair value of awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, |
(2) | Includes dividends and/or dividend equivalents accrued during 2022 on restricted stock and/or restricted stock units. |
(3) |
Includes business and occupation tax reimbursement. Effective July 1, 2010, Washington State subjects |
Includes |
(5) | Effective May 18, 2022, Mr. Matson and |
Non-employee directors of Banner receive an annual cash retainer of $45,000, paid monthly, of $40,000,and an annual restricted stock or restricted stock unit award of $50,000$55,000. Annual cash retainers for committee members (including the committee chairs) are as follows: Audit Committee, $8,000; Compensation and a fee of $1,000 per committee meeting attended.Human Capital Committee, $6,000; Corporate Governance/Nominating Committee, $5,000; Credit Risk Committee, $6,000; and Risk Committee, $6,000. The Chairman of the Board Chair and various committee chairs receive additional retainers as follows, paid 50% in cash and 50% in restricted stock or restricted stock units: the Chairman of the Board $40,000; the Chairman ofChair, $60,000; the Audit Committee Chair, $20,000; the Chairman ofCompensation and Human Capital
32 | BANNER CORPORATION 2023 PROXY STATEMENT |
Directors’ Compensation | Director Compensation Table
Committee Chair, the CompensationCredit Risk Committee $12,500;Chair and the Chairman ofRisk Committee Chair $15,000 each; and the Corporate Governance/Nominating Committee $10,000;Chair, $12,000. These fees compensate the directors for service on the Boards of Directors of both Banner Corporation and the Chairman of the Risk Committee, $10,000.
In order to encourage the retention of qualified directors, we have entered into deferred fee agreements whereby directors may defer payment of all or a portion of their regular fees until retirement.fees. Each directorparticipant may direct the investment of the deferred fees toward the purchase of Banner common stock, mutual fund-style investments or a stable value account.various investment funds offered under Banner’s nonqualified deferred compensation plan. We have established grantor trusts to hold the common stock and mutual fund-style investments. The assets of the trusts are considered part of our general assets and the directors have the status of unsecured creditors of Banner with respect to the trust assets. The deferred fee agreements provide pre-retirement death and disability benefits in an amount equal to the value of the director'sdirector’s account balance upon the occurrence of either event. At retirement, aA director as previously elected, may receive the balance of his or her account in a lump sum or in annual installments over a period not exceeding ten years.as previously elected at the time of enrollment. In connection with its acquisitions, Banner also assumed liability for certain deferred compensation plans for the acquired institutions'institutions’ directors. At December 31, 2017,2022, our estimated deferred compensation liability accrual with respect to non-employee directors under these agreements was $3.8$4.0 million.
BANNER CORPORATION 2023 PROXY STATEMENT | 33 |
Compensation Discussion and Sirmon while each was employed by Banner as an executive officer. Banner Bank has purchased life insurance to recover the benefits payable under these agreements upon each individual's death. The agreements provide that, following retirement at or after attaining age 65 for Mr. JonesAnalysis | Executive Summary
Compensation Discussion and age 62 for Mr. Sirmon and for a minimum of a 180-month period thereafter, Banner Bank will pay each individual (or his beneficiary) an annual benefit based on his level of pre-retirement compensation and other retirement benefits. Mr. Jones' monthly benefit is $11,171 and was first paid on March 1, 2011. Mr. Sirmon's monthly benefit is approximately $4,800 and was first paid on August 1, 2005.
This section discusses our executive compensation philosophy and programs, and is intended to give context to the tables that follow in the section entitled, "Executive“Executive Compensation."” In particular, we address the 20172022 compensation of the following individuals, who are known as our named executive officers:
Name | Title | |
Mark J. Grescovich | President and Chief Executive Officer | |
Peter J. Conner | Executive Vice President and Chief Financial Officer | |
Cynthia D. Purcell | Executive Vice President and Chief Strategy and Administration Officer | |
James M. Costa | Executive Vice President and Chief Risk Officer | |
M. Kirk Quillin | Executive Vice President and Chief Commercial Officer |
Executive Summary
2022 Corporate Highlights. Banner’s successful execution of its super community bank model and Chief Executive Officer;
Highlights of performance in 20172022 include:
• | Revenues increased 6%, to $628.4 million, compared to $593.3 million for the prior year. |
• | Net income decreased to $195.4 million, or $5.67 per diluted share, compared to net income of $201.0 million, or $5.76 per diluted share for the prior year. |
• | Net interest income increased 11% to $553.2 million, compared to $496.9 million for the prior year. |
• | Net interest margin, on a tax equivalent basis, was 3.68% compared to 3.39% in the prior year. |
• | Non-interest income decreased to $75.3 million, compared to $96.4 million for the prior year. |
• | Non-interest expense decreased to $377.3 million, compared to $380.1 million for the prior year. |
• | Return on average assets was 1.18%, compared to 1.24% in the prior year. |
• | Efficiency ratio was 60.04%, compared to 64.06% in the prior year. |
• | Net loans receivable increased 12% to $10.01 billion at December 31, 2022, compared to $8.95 billion a year prior. |
• | Non-performing assets decreased to $23.4 million, or 0.15% of total assets, at December 31, 2022, compared to $23.7 million, or 0.14% of total assets, a year prior. |
• | The allowance for credit losses – loans was $141.5 million, or 1.39% of total loans receivable, at December 31, 2022, compared to $132.1 million, or 1.45% of total loans receivable a year prior. |
• | Core deposits (non-interest-bearing and interest-bearing transaction and savings accounts) decreased to $12.90 billion at December 31, 2022, compared to $13.49 billion a year prior. Core deposits represented 95% of total deposits at December 31, 2022. |
34 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Discussion and Analysis | Executive Summary
• | Cash dividends paid to shareholders were $1.76 per share, compared to $1.64 for the prior year. |
• | Common shareholders’ equity per share decreased to $42.59 at December 31, 2022, compared to $49.35 a year prior. |
Banner reports its financial results in accordance with general accepted accounting principles in the United States (“GAAP”). However, management uses both GAAP and non-GAAP financial measures as it believes the additional non-GAAP measures can provide useful and comparative information – for example, to assess trends in Banner’s core operations. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP. A reconciliation of these non-GAAP financial measures can be found beginning on page 44 of our Annual Report on Form 10-K for the year ended December 31, 2017 were $9.76 billion, postponing2022 filed with the adverse effects ofSEC or, to the Durbin Amendment;
2022 Executive Compensation Highlights.
Results of Shareholder Vote on Executive Compensation.
We are required to periodically permit shareholders to vote to approve executive compensation, commonly known as a say-on-pay proposal. AtBANNER CORPORATION 2023 PROXY STATEMENT | 35 |
Compensation Discussion and Analysis | Executive Summary
Executive Compensation Practices.
We are committed to strong compensation governance and continually monitor the evolution of best compensation practices.What We Do | What We Don’t Do | |||||||||
Regular review of pay versus performance • Ongoing review by the Compensation and Human Capital Committee • Includes both absolute and relative assessment • Involves use of compensation benchmarking peer group (see “Peer Group” section) Rigorous and diversified performance metrics • Annual review by the Compensation and Human Capital Committee • Measurable goals established for both annual and long-term incentive awards • Goals are diversified and rigorous but attainable Clawback of compensation • The Executive and Long-term Incentive Plans both provide that incentive awards are subject to clawback if Banner is required to prepare an accounting restatement due to error, omission or fraud | Use of double-triggers • Change-in-control severance arrangements and accelerated vesting on equity awards require double-trigger for benefit eligibility • Change-in-control will not automatically entitle an executive to severance benefits or acceleration of vesting in outstanding equity awards • Second trigger involves executive’s loss of job, significant adverse change to employment terms and conditions, or denial of continuation or replacement of outstanding unvested awards by the acquiring company Review of Committee • The Compensation and Human Capital Committee reviews its charter annually to incorporate best-in-class Independent compensation consultant • The | No repricing or cash buyouts of underwater stock options or stock appreciation rights • Exercise prices may not be reduced • Outstanding awards may not be replaced with stock options or stock appreciation rights with a lower exercise price except in limited circumstances or with shareholder approval • Buyouts of underwater stock options or stock appreciation rights are not permitted No excessive perquisites • Limited executive perquisites consistent with the practices of our peer group and other comparable financial institutions No tax gross-ups • Parachute excise tax reimbursements and gross-ups will not be provided upon a change-in-control |
36 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Program ObjectivesDiscussion and Governance
What Guides Our Program
Objectives and Overview of the Compensation Program.
Our executive compensation policies are designed to establish an appropriate relationship between executive pay andPRINCIPLES UNDERLYING OUR EXECUTIVE COMPENSATION POLICIES
• | Attract and retain key executives who are vital to our long-term success and are of the highest caliber |
• | Provide levels of compensation competitive with those offered throughout the financial industry and consistent with our level of performance, complexity and asset size |
• | Motivate executives to enhance long-term shareholder value by granting awards tied to the value of our common stock |
• | Integrate the compensation program with our annual and long-term strategic planning and performance measurement processes |
• | Develop, execute and govern all incentive compensation plans to discourage imprudent or excessive risk-taking and balance financial reward in a manner that supports Banner and its clients, employees and shareholders |
The Compensation Committees of Banner and Banner Bank considerHuman Capital Committee considers a variety of subjectiveobjective and objectivesubjective factors in determining the compensation package for individual executives including: (1) the performance of Banner and Banner Bank as a whole, with emphasis on annual performance factors and long-term objectives; (2) the responsibilities assigned to each executive; and (3) the performance of each executive of assigned responsibilities as measured by the progress of Banner and Banner Bank during the year.
Target Total Direct Compensation.
A significant portion of total compensation opportunity for our executives is performance-based, with goals focused on growing sustainable company value while prudently managing risk. Performance-based pay comprisedCEO TARGET COMPENSATION MIX | OTHER NEO TARGET COMPENSATION MIX (AVERAGE) | |
|
BANNER CORPORATION 2023 PROXY STATEMENT | 37 |
Allocation of 2017 Target Total Direct Compensation for the Named Executive Officers | ||||||
Pay Component | Chief Executive Officer | Chief Risk Officer | Other Named Executive Officers | |||
Base salary | 36% | 53% | 45% | |||
Target annual incentive | 29% | 21% | 23% | |||
Target performance-based equity | 18% | 13% | 16% | |||
Time-based restricted stock | 18% | 13% | 16% | |||
Target total direct compensation | 100% | 100% | 100% |
Compensation Discussion and Analysis | Compensation Benchmarking
Compensation Governance.
The Compensation and Human Capital Committee of the Banner Board of Directors is responsible for setting the policies and compensation levels for Banner directors, officers and employees, while the Compensation and Human Capital Committee of the Banner Bank Board of Directors is responsible for setting the policies and compensation levels for Banner Bank directors, officers and employees. Banner Bank is the primary subsidiary of Banner. Each Committee is responsible for evaluating the performance of the Chief Executive Officer, while the Chief Executive Officer evaluates the performance of otherUse of Compensation Consultants.
From time to time,Compensation Benchmarking
The Compensation and Human Capital Committee uses comparative executive compensation data publicly available from a designated peer group of companies in combination with executive compensation survey data to evaluate the competitiveness of Banner’s executive compensation program. The Committee’s objective is to set total target compensation and benefit levels within the median range of market pay and benefit levels. Total compensation opportunities are intended to be consistent with market practices as established by the peer group described below to help Banner attract and retain talented executives and incentivize them to produce superior long-term shareholder returns.
The Compensation and Human Capital Committee reviews market compensation levels to determine whether total target compensation for our executive officers remains in the targeted median pay range and makes adjustments when appropriate. This assessment includes evaluation of base salary, annual incentive opportunities and long-term incentives. In 2016,addition, the Compensation Committee engaged Pearl Meyerreviews other items of compensation and total rewards such as health benefits and retirement benefits in comparison to prepare a total compensation benchmarking analysismarket. The Committee also reviews the competitive performance of Banner’s peers to help establish performance targets for Banner's Chief Executive Officerincentive plans and to assess appropriate payout levels for performance. In analyzing this information, the Committee compares the pay of individual executives if it believes the positions are sufficiently similar to make meaningful comparisons and considers each executive’s level of responsibility, prior experience, job performance, contribution to Banner’s success and results achieved.
Peer Group. When establishing base salaries and target pay opportunities for our named executive officers non-named executive officersfor 2022, the Compensation and non-employee directors. The comparison companies were selected by theHuman Capital Committee in consultation withJune 2021 reviewed competitive market data prepared by Pearl Meyer and the underlying data was based on the most recent public filings of Banner and the peer companies. The 20162021 peer group, approved bywhich consisted of 20 financial institutions headquartered throughout the United States, ranging in total assets from approximately $11 billion to $29 billion as of December 31, 2020. Each year the Compensation and Human Capital Committee, was based onworking with its independent compensation consultant, reviews the following criteria: (1) listed on eithercomposition of the NYSE or NASDAQ exchange; (2) within 0.5 to 2.4 times Banner's asset size;
38 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Discussion and (3) likely competitor for executive talent. These criteria resulted in a Analysis | Compensation Risk Management
peer group consisting ofand determines when changes should be made. The 2022 peer group was adjusted to remove four companies that were impacted by merger and acquisition activity and/or no longer met the following 24desired size or business model criteria, and to include three companies meeting the criteria, resulting in 19 financial institutions ranging in total assets from $7.7approximately $12 billion to $21.6 billion, and headquartered throughout the United States:
Ameris Bancorp** | Home BancShares, Inc. | |||
Atlantic Union Bankshares Corporation | Independent Bank Group, Inc. | |||
Columbia Banking System, Inc.* | NBT Bancorp Inc. | |||
CVB Financial Corp. | Pacific Premier Bancorp, Inc. | |||
First Busey Corporation | Renasant Corporation | |||
First Financial Bancorp | Sandy Spring Bancorp, Inc.** | |||
First Interstate BancSystem, Inc. | Simmons First National Corporation | |||
First Merchants Corporation | Trustmark Corporation | |||
First Midwest Bancorp, Inc.* | Umpqua Holding Corporation* | |||
Glacier Bancorp, Inc. | United Community Banks, Inc. | |||
Great Western Bancorp, Inc.* | WesBanco, Inc.** | |||
Heartland Financial USA, Inc. |
* | 2021 peer group only; removed in 2022 |
** | Added to peer group in 2022 |
Compensation Risk Management
We strive to align incentives with the risk and performance frameworks of the Company. The Company’s “pay for performance” philosophy connects individual, operating unit and Company results of its benchmarking analysis to compensation, providing employees with opportunities to share in the Compensation CommitteeCompany’s overall growth and success. We develop, execute and govern all incentive compensation plans to discourage imprudent or excessive risk-taking and balance financial reward in June 2017. The Committee will consider the findings from the 2017 analysis when making pay decisions in 2018.
2022 Compensation Program
The Compensation and Human Capital Committees focus primarily on the following fourthree components in forming the total compensation package for our named executive officers:
Base Salary | Short-Term Incentive Compensation | Long-Term Incentive Compensation | ||||||||||||||||||
Base Salary.
The salary levels of named executive officers are designed to be competitive within the banking and financial services industries. The Compensation and Human Capital Committees take a number of factors into account when setting the base salaries of the named executive officers. These factors include peer data provided by compensation consultants, theBANNER CORPORATION 2023 PROXY STATEMENT | 39 |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
responsibilities assigned to the officer, the officer'sofficer’s performance during the previous year, and Banner'sBanner’s overall financial health. In 2017, salary increases ranged from 3% for2022, Mr. Grescovich Mr. Baker and Ms. Steiner, 3.5% for Mr. Conner and 7% for Ms. Purcell, allreceived an increase consistent with general staff salary increases for the year, except for Ms. Purcell, whose job functions and performance were the major considerations for the increase. In February 2018, the Compensation Committee approved salary increases of 3% for Mr. Grescovich, Ms. Purcell and Ms. Steiner, and 13.3% for Mr. Conner. Mr. Baker's salary was left unchanged from his 2017 level. Mr. Baker has announced his retirement as Executive Vice President and Chief Financial Officer of Banner effective April 30, 2018.year. Mr. Conner has been named as his successor.
Named Executive Officer | 2021 Base Salary | 2022 Base Salary ($) | % Increase | ||||||||||||
Mark J. Grescovich | 844,132 | 869,456 | 3.00 | % | |||||||||||
Peter J. Conner | 422,280 | 465,000 | 10.12 | % | |||||||||||
Cynthia D. Purcell | 371,030 | 425,000 | 14.55 | % | |||||||||||
James M. Costa | 410,000 | 410,000 | 0.00 | % | |||||||||||
M. Kirk Quillin | 320,672 | 340,000 | 6.03 | % |
Incentive Compensation.
Short-term Incentive Compensation.
The CompensationThe annual incentive opportunities for the named executive officers, expressed as a percentage of base salary earned during 2017,2022, were as follows:
Executive | Below Threshold | Threshold (50%) | Target (100%) | Stretch/Max (150%) | ||||
Mark J. Grescovich | 0% | 40% | 80% | 120% | ||||
Lloyd W. Baker | 0% | 25% | 50% | 75% | ||||
Peter J. Conner | 0% | 25% | 50% | 75% | ||||
Cynthia D. Purcell | 0% | 25% | 50% | 75% | ||||
Judith A. Steiner | 0% | 20% | 40% | 60% |
Executive | Below Threshold | Threshold (50%) | Target (100%) | Stretch/Max (150%) | ||||
Chief Executive Officer | 0% | 45% | 90% | 135% | ||||
Other Named Executive Officers | 0% | 25-32.5% | 50-65% | 75-97.5% |
For 2017, the Compensation Committee established the following balance between2022, corporate goals were weighted 80% and individual goals:goals were weighted 20% for Executive Incentive Plan participants whose opportunities do not include a line of business component. For those Executive Incentive Plan participants whose incentive opportunities include a line of business component, corporate goals were weighted 70%, line of business goals were weighted 20% and individual goals were weighted 10%.
40 | BANNER CORPORATION 2023 PROXY STATEMENT |
Executive | Corporate | Individual | ||
Mark J. Grescovich | 80% | 20% | ||
Other named executive officers | 65% | 35% |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
The portion of the AnnualExecutive Incentive Plan award tied to corporate performance is based on relative and absolute performance requirements for measures established by the Compensation Committee.measures. If Banner'sBanner’s financial performance relative to its 2017 peer group of financial institutions (see the "Compensation Benchmarking" discussion“Compensation Benchmarking” and “Peer Group” sections above) is below the 25th25th percentile, the payout associated with that measure will not exceed the target payout, regardless of absolute performance, unless the Compensation and Human Capital Committee exercises discretion to waive the threshold requirement. For the 2017 fiscal year,2022, the Compensation and Human Capital Committee approved the following corporate performance measures for the named executive officers:
Absolute Performance Goals | Weighting (% of Target Opportunity) | ||||||||||||||
Performance Measure | Threshold | Target | Stretch | CEO | Other NEOs | ||||||||||
Return on average assets (1) | 1.50% | 1.60% | 1.80% | 32% | 39% | ||||||||||
Efficiency ratio (2) | 67.0% | 65.0% | 60.0% | 16% | 26% | ||||||||||
Ratio of non-performing assets to total assets (3) | 0.55% | 0.35% | 0.25% | 16% | N/A | ||||||||||
Total operating revenue (4) | (5) | $478.7 million | $492.5 million | 16% | N/A | ||||||||||
Payout as a percentage of target | 50% | 100% | 150% | ||||||||||||
____________ |
Performance Measure (1) | Weighting (CEO and Non-Line of Business Executive) | Weighting (Line of Business Executive) | ||||||||
Threshold | Target | Stretch | ||||||||
Absolute Performance Goals | ||||||||||
Pretax Pre-provision (“PTPP”) Return on Average Assets (2) | 1.17% | 1.34% | 1.48% | 30% | 20% | |||||
Efficiency Ratio (3) | 64.14% | 61.01% | 58.47% | 25% | 25% | |||||
Total Operating Revenue (4) | $540.70 million | $568.45 million | $593.06 million | 15% | 15% | |||||
Line of Business PTPP ROA – Community Banking (5) | 1.18% | 1.22% | 1.28% | n/a | 10% | |||||
Line of Business PTPP ROA – Commercial Banking Group (5) | 0.61% | 0.69% | 0.80% | n/a | 10% | |||||
Line of Business Efficiency Ratio – Community Banking (6) | 43.44% | 41.72% | 39.58% | n/a | 10% | |||||
Line of Business Efficiency Ratio – Commercial Banking (6) | 67.50% | 59.55% | 49.75% | n/a | 10% | |||||
Performance Goal Relative to Peer Banks | ||||||||||
Ratio of Non-performing Assets to Total Assets (%) (7) | 25th percentile | 50th percentile | 75th percentile | 10% | 10% | |||||
Payout as a Percentage of Target | 50% | 100% | 150% |
|
|
(1) | In March 2022, the Compensation and Human Capital Committee selected the participants under the Executive Incentive Plan and established performance goals for all participants. The Community Banking and Commercial Banking Group line of business performance metrics were adjusted in February 2023 to appropriately reflect organizational and business model changes over the course of 2022. |
(2) | Defined as net income before |
Efficiency Ratio reflected in the table above and used for compensation decisions is a non-GAAP financial measure defined as noninterest expense before foreclosed property expense, amortization of intangibles, and goodwill impairments as a |
BANNER CORPORATION 2023 PROXY STATEMENT | 41 |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
(4) | Defined as net interest income plus non-interest income, adjusted to remove trading account income; Total Operating Revenue does not include realized gains/(losses) on securities or nonrecurring revenue. |
(5) | Defined as Pretax, Pre-provision, Pre-allocated Return on Average Assets (ROAA) for the respective business line, determined based on income before income taxes (including Washington B&O tax expenses), excluding provision for loan losses, foreclosed property expense and amortization of intangibles, nonrecurring items as determined by the finance group, and realized gains/(losses) on securities. The Community Banking line of business metric was used for Ms. Purcell’s incentive plan performance calculation; and the Commercial Banking Group line of business metric was used for Mr. Quillin’s calculation. |
(6) | Defined as noninterest expense before foreclosed property expense, amortization of intangibles, and goodwill impairments as a percent of net interest income and noninterest revenues, excluding realized gains/(losses) on securities, nonrecurring items, trading account income (as identified by S&P Global Market Intelligence) and Washington B&O tax expenses for the respective business line. |
(7) | Defined as nonaccrual loans and leases, renegotiated loans |
Individual performance goals are established attoward the beginning of each plan year. An executive'sexecutive’s individual and line of business goals may relate to responsibilities, projects and initiatives specific to the executive'sexecutive’s business or function that are not covered in the corporate performance measurements, and may include areas such asas: environmental, social and governance (ESG); diversity, equity and inclusion (DEI); succession planning; merger and acquisition and related integration activities,activities; new software or program implementation,implementation; and efficiency initiatives. The Compensation Committee establishes and approves corporate performance goals for all of the named executive officers and individual goals for the Chief Executive Officer, and the Chief Executive Officer establishes and approves individual goals for the other participants. With the exception of incentive awards intended to be qualified performance-based awards (as defined in the 2014 Omnibus Incentive Plan), the CompensationHuman Capital Committee has the discretion to adjust awards as needed to reflect the business environment and market conditions that may affect Banner'sBanner’s performance and incentive plan funding, or to waive, change or amend any of the Plan provisions as it deems appropriate. Incentive awards are subject to clawback if Banner is required to prepare an accounting restatement due to error, omission or fraud.
2022 Executive Incentive Plan Results.
The following table summarizesAbsolute Performance Measure | Performance Achieved | Payout Earned as a % of Target | ||||
Return on average assets | 1.50% | 50.0% | ||||
Efficiency ratio | 67.54% | 0.0% | ||||
Ratio of non-performing assets to total assets | 0.28% | 134.2% (1) | ||||
Growth in total operating revenue (2) | $479.3 million | 100.0% (3) |
Absolute Performance Measure | Performance Achieved | Payout Earned as a % of Target | ||||||||
Pretax Pre-provision Return on Average Assets (“PTPP ROA”) | 1.61% | 150% (1) | ||||||||
Efficiency Ratio | 57.47% | 150% (1) | ||||||||
Total Operating Revenue | $623,070 | 150% (1) | ||||||||
Line of Business PTPP ROA – Community Banking (2) | �� | 1.32% | 150% (1) | |||||||
Line of Business PTPP ROA – Commercial Banking Group (2) | 0.67% | 87.5% | ||||||||
Line of Business Efficiency Ratio – Community Banking (2) | 40.07% | 138.6% (3) | ||||||||
Line of Business Efficiency Ratio – Commercial Banking Group (2) | 59.46% | 100.5% (3) | ||||||||
Relative Performance Measure |
|
| ||||||||
Ratio of Non-performing Assets to Total Assets (4) | 82nd percentile | 150% (1) |
(1) | Performance on this metric exceeded the stretch goal, but payout was capped at 150% of target per the |
42 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
(2) | The Community Banking line of business metric was used for Ms. Purcell’s incentive plan performance; and the Commercial Banking Group line of business metric was used for Mr. Quillin’s calculation. |
(3) | Performance on this metric exceeded the target goal, qualifying for payout |
For relative performance purposes, performance is compared to peers as of |
The Compensation Committee determined that Mr. Grescovich's overall individual performance in 2017 was effective and that his leadership was instrumental in strategic planning and the execution of the successful build-out of Banner's compliance and risk management infrastructure to address the increased complexity of operations. The Committee also noted significant personnel management and executive hiring decisions and felt that Mr. Grescovich's representation of Banner in the investment community was both professional and productive. TheHuman Capital Committee awarded Mr. Grescovich with a payout for 20172022 individual goal performance equal to $153,375 (125%$139,997 (90% of target). In determining the payout for Mr. Grescovich, the Committee recognized his leadership of the Banner Forward initiative. Evaluation of 20172022 performance against individual goals for the other named executive officers resulted in 100%the following percentages of target payout for Mr. Baker, 125% of target payoutpayout: 121% for Mr. Conner, and131% for Ms. Purcell, and 150% of target payout125% for Mr. Steiner.
The named executive officers earned total annual incentive payouts between 54%133% and 78%147% of target opportunity for performance during 2017,2022, as summarized below.
Executive | Target Opportunity as % of Salary | % of Target Incentive Achieved | Incentive Earned as % of Salary | 2017 Incentive Earned | |||||||||
Mark J. Grescovich | 80% | 78.5% | 62.8% | $ | 481,416 | ||||||||
Lloyd W. Baker | 50% | 54.5% | 27.3% | $ | 75,400 | ||||||||
Peter J. Conner | 50% | 63.3% | 31.6% | $ | 94,120 | ||||||||
Cynthia D. Purcell | 50% | 63.3% | 31.6% | $ | 101,676 | ||||||||
Judith A. Steiner | 40% | 72.0% | 28.8% | $ | 88,344 |
2022 Executive Incentive Plan Results | |||||||||||||||||||||||||||||||||||
Name | Target Bonus (% of Base Salary) | Target Bonus Amount ($) | Payout for Corporate Achievement ($) | Payout for ($) | Payout for Individual Performance ($) | Total Incentive Payout ($) | Total Incentive Payout (% of Target) | ||||||||||||||||||||||||||||
Mark J. Grescovich | 90 | % | 782,510 | 933,314 | N/A | 139,997 | 1,073,311 | 137 | % | ||||||||||||||||||||||||||
Peter J. Conner | 65 | % | 302,250 | 355,758 | N/A | 71,745 | 427,503 | 141 | % | ||||||||||||||||||||||||||
Cynthia D. Purcell | 65 | % | 276,250 | 290,062 | 79,726 | 36,189 | 405,977 | 147 | % | ||||||||||||||||||||||||||
James M. Costa | 50 | % | 205,000 | 246,000 | N/A | 51,250 | 297,250 | 145 | % | ||||||||||||||||||||||||||
M. Kirk Quillin | 50 | % | 170,000 | 176,386 | 31,582 | 18,521 | 226,488 | 133 | % |
Please see the discussion beginning on page 40 for more information regarding the Executive Incentive Plan.
Long-term Incentive Compensation.
BANNER CORPORATION 2023 PROXY STATEMENT | 43 |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
In March 2022, the Committee determined to grant both time-based and performance-based awards effective April 3, 2017 to each of the named executive officers. The time-based awards are detailed below in the Grants of Plan-basedPlan-Based Awards table. The time-based sharesrestricted stock units vest ratably over a three-year period beginning on April 3, 2018March 31, 2023 and ending on the third anniversary of the grant date.
Awards of performance-based restricted stock ("units (“performance shares"units”) are contingent on attaining pre-established three-year performance goals. The Compensation and Human Capital Committee reviews and approves goals in consultation with management. The Committee establishedmanagement and establishes threshold, target and stretch performance levels and associated payouts. At the end of the performance cycle, resulting payouts are determined based on Banner'sBanner’s performance relative to the peer financial institutions.
2020-22 Long-term Incentive Plan – Performance Units Results (1) | ||||||||||||||||||||
Performance Metric | 2020-22 Performance Result | Percentile Ranking Relative to Peer Group | Payout Allocation as % of Target | Metric Weighting | Weighted Payout as % of Target | |||||||||||||||
Return on Average Tangible Common Equity (ROATCE) | 14.56 | % | 51 | st | 102 | % | 50 | % | 51 | % | ||||||||||
Total Shareholder Return (TSR) | 25.87 | % | 84 | th | 150 | % | 50 | % | 75 | % |
(1) | 2020 Long-term Incentive Plan Results as of December 31, 2022. |
Performance units granted in 2020 for the 2020-22 performance cycle vested at 126% of target. The required minimum threshold performance level was the 25th percentile for both performance measures. Please see the discussion beginning on page 43 for more information.
Performance Units for the 2022-24 Performance Cycle. For the awards made in 2017,2022, the Committee approved the following corporate performance measures, weightings and relative performance goals:
Relative Performance Percentile Ranking (1) | ||||||||
Performance Measure | Weighting | Threshold | Target | Stretch | ||||
Return on average tangible common equity (2) | 50% | 25th | 50th | 75th | ||||
Total shareholder return (3) | 50% | 25th | 50th | 75th | ||||
Payout as a percentage of target | 50% | 100% | 150% | |||||
____________ |
|
| Relative Performance Percentile Ranking (1) | ||||||
Performance Measure | Weighting | Threshold | Target | Stretch | ||||
Return on Average Tangible Common Equity (ROATCE) (2) | 50% | 25th | 50th | 75th | ||||
Total Shareholder Return (TSR) (3)(4) | 50% | 25th | 50th | 75th | ||||
Payout as a Percentage of Target |
| 50% | 100% | 150% |
(1) | Peer companies for the |
(2) | Net income before amortization of intangibles and goodwill (tax-adjusted), divided by average tangible common equity; the measure used for relative comparisons will be an average of the calculated results for the years |
(3) | TSR from January 1, |
(4) | In the event that Banner’s absolute TSR result for the performance cycle is negative, vesting will be limited to 100% of target for this metric, regardless of Banner’s relative performance percentile ranking. |
44 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Discussion and Analysis | 2022 Compensation Program Decisions in Detail
The Compensation and Human Capital Committee approved target long-term incentive awards expressed as a percentage of base salary which were subsequently denominated in shares based on the average of the closing prices of Banner'sBanner’s stock on the ten days prior to the date of grant. AwardsTarget awards for 20172022 were allocated between time-based restricted stock units and performance shares,units, illustrated below as a percentage of base salary:
Executive | Total target stock-based award as % of salary | Restricted stock award as % of salary | Target performance share award as % of salary | |||
Mark J. Grescovich | 100% | 50% | 50% | |||
Lloyd W. Baker | 70% | 35% | 35% | |||
Peter J. Conner | 70% | 35% | 35% | |||
Cynthia D. Purcell | 70% | 35% | 35% | |||
Judith A. Steiner | 50% | 25% | 25% |
Executive | Total Target Stock-based Award as % of Salary | Time-based Restricted Stock Units as % of Salary | Performance Units as % of Salary | |||
Chief Executive Officer | 130% | 52% | 78% | |||
Other Named Executive Officers | 60-80% (1) | 30-40% (1) | 30-40% (1) |
(1) | The target stock-based award for other named executive officers was 80%, except for Mr. Quillin whose target was 60%. Mr. Quillin’s target varied from other named executive officers due to competitive practices for similar roles. The target award for other named executive officers was split evenly between time-based and performance units. |
The Grants of Plan-basedPlan-Based Awards Table on page 50 provides additional detail relating to the 2017 equity2022 restricted stock unit awards for the named executive officers.
Recipients of time-based restricted stock receive dividendsunits and/or performance units accumulate dividend equivalents during the restriction period and have the power to vote unvested stock. Recipients of performance-based restricted stockbut are only entitled to dividends but onlythese dividend equivalents as and when the shares to which the dividendsdividend equivalents are attributable become vested. Recipients of performance-basedtime-based restricted stock units and/or performance units do not have voting rights with respectthe power to vote unvested shares.units. If Banner is required to prepare an accounting restatement due to error, omission or fraud, executive officers may be required to reimburse Banner for part or all of the entire incentive award made to the officer on the basis of having met or exceeded specific targets for performance periods. With the exception of incentive awards intended to be qualified performance-based awards (as defined in the 2014 Omnibus Incentive Plan), theThe Compensation and Human Capital Committee has the discretion to adjust awards as needed to reflect the business environment and market conditions that may affect Banner'sBanner’s performance and incentive plan funding.
Performance Shares VestingUnits for the 2015-172020-22 Performance Cycle.
|
| Relative Performance Percentile Ranking (1) | ||||||
Performance Measure | Weighting | Threshold | Target | Stretch | ||||
Return on Average Tangible Common Equity (ROATCE) (2) | 50% | 25th | 50th | 75th | ||||
Total Shareholder Return (TSR) (3) | 50% | 25th | 50th | 75th | ||||
Payout as a Percentage of Target |
| 50% | 100% | 150% |
(1) | Peer companies for the 2020-22 performance cycle consisted of all U.S. commercial banks (or their holding companies) traded on Nasdaq, NYSE or NYSE American over the entire performance cycle with total assets between 50% and 200% of Banner’s total assets as of December 31, 2022. |
(2) | Net income prior to amortization of intangibles and goodwill (tax-adjusted), divided by average tangible common equity, from January 1, 2020 through December 31, 2022; the measure used for relative comparisons will be an average of the calculated ROATCE for the calendar years 2020, 2021 and 2022, each determined separately. |
(3) | TSR from January 1, 2020 through December 31, 2022; this measure was calculated assuming that dividends during the period were reinvested in each company’s respective shares on the ex-dividend date. |
BANNER CORPORATION 2023 PROXY STATEMENT | 45 |
Compensation Discussion and Analysis | Other Practices, Policies and Guidelines
Other Practices, Policies and Guidelines
Stock Ownership Guidelines. Directors and executive officers are required to own shares of Banner’s common stock equal to a multiple of the relevant individual’s base salary or annual cash retainer. Directors and executives are permitted to meet the ownership guidelines over time and are restricted from divesting shares until the requisite ownership level is met.
Clawback Policy. In the event that Banner is required to prepare an accounting restatement due to error, omission or fraud, each executive officer must reimburse the Bank for part or the entire incentive award made to that executive officer on the basis of having met or exceeded specific targets for performance shares grantedperiods. The Bank may seek to reclaim incentives within a three-year period of the incentive payout. Additionally, in the first quarterevent any incentive compensation is paid to a plan participant based upon performance results or other criteria that are deemed materially inaccurate, manipulated, or fraudulent in nature, that compensation was not earned by the plan participant and Banner Bank may recover such amounts paid. Banner Bank has the right to offset the amount of 2015 vestedthe unearned incentive compensation against any current or future amounts due the plan participant, including, but not limited to, salary, bonus, incentive compensation, severance, deferred compensation or any other funds payable to the plan participant by Banner Bank. Banner is focused on the SEC’s recent rulemaking in this area; once the corresponding rules are finalized by Nasdaq, Banner will review the clawback policy and make adjustments as relative performanceneeded for compliance with the new rules.
Insider Trading Policy. The Board of Directors has also adopted a policy governing trading in Banner’s securities by our directors and officers. This wide-ranging policy covers permissible timing of trades, as well as prohibitions on trades. In particular, the policy prohibits short sales, transaction in publicly-traded options and other types of hedging transactions. The policy also prohibits holding Banner securities in margin accounts or pledging Banner securities for any purpose, with the exception of pledges in effect before the policy was below the required threshold performance level (50th percentile) for both performance measures. Relative performance for pretax pre-provision return on average assets for Banner during the 2015-2017 performance cycle was at the 17rd percentile of peers and relative total shareholder return over this period was at the 14th percentile of peers.
Change-in-Control Agreements. We have adopted a supplemental executive retirement program ("SERP") in whichentered into employment agreements with change-in-control provisions with Mr. BakerGrescovich, Mr. Conner and Ms. Purcell, participate. The SERP is intendedand we established the Executive Severance and Change in Control Plan for certain executive employees, to encourage retention by ensuring that the executives reach a targeted retirement income, recognizing their value to Bannerfull attention and rewarding them for their long-term service commitments. At termination of employment at or after retirement age and achievement of a service requirement, the executive's annual benefit under the SERP, which may be reduced by certain other retirement benefits, would be computed as a percentage of the executive's final average compensation (as defined in the plan) and the executive's annual years of service (called the "supplemental benefit"). The executives are eligible for a reduced benefit
General Benefits and non-competition provisions. ThePerquisites. Our named executive officers havereceive the statussame benefits as our salaried employees generally, including medical and dental benefits, group term life insurance, and short- and long-term disability protection. Our executive officers are also eligible for certain limited executive perquisites consistent with the practices of unsecured creditorsour peer group and other comparable financial institutions. See “Executive Compensation – Employment Agreements and Perquisites” for more information.
Retirement Benefits.
• | 401(k) Profit Sharing Plan. We provide a 401(k) profit sharing plan. The Board of Directors has appointed an administrative committee of Banner Bank officers to administer the 401(k) plan, and the named executive officers participate in this plan. On an annual basis, the Board of Directors establishes the level of employer contributions to the 401(k) plan, which applies to all eligible participants including the named executive officers. In 2022, we matched participants’ contributions into the 401(k) plan up to four percent of eligible earnings for each payroll period. |
46 | BANNER CORPORATION 2023 PROXY STATEMENT |
Compensation Discussion and Analysis | Compensation and Human Capital Committee Report
• | Nonqualified Deferred Compensation Plan. In 2004, we adopted deferred compensation plans which allow executive officers of Banner to defer all or part of their cash compensation or non-qualified stock options until retirement. See “Executive Compensation – Nonqualified Deferred Compensation” for more information. |
Compensation Risk Assessment. To support our compensation risk management efforts, we perform an annual formal risk assessment of Banner Bank with respecteach of our incentive compensation plans. The risk assessments encompass overall program administration, compensation structure, plan design, performance metrics, termination provisions and regulatory compliance. The risk assessments are presented to the benefits accrued under the SERP.
Tax and Accounting Considerations
Federal tax legislation enacted in December 2017 eliminated the Section 162(m) performance-based compensation exemption prospectively and made other changes to Section 162(m), but with a transition rule that preservespreserved the performance-based compensation exemption for certain arrangements and awards in place as of November 2, 2017. We intendGoing forward, in those instances in which the limitations on deductibility under Section 162(m) conflict with our executive compensation philosophy and objectives or with what the Compensation and Human Capital Committee believes to continue to administer arrangements and awards subject to this transition rule withbe in the best interests of the shareholders, the Committee may authorize compensation which is not fully deductible for any given year. Therefore, it is anticipated that Section 162(m) will result in a view toward preserving their eligibilityportion of compensation not being deductible for the performance-based compensation exemption to the extent practicable.
Compensation and Human Capital Committee Report
The Compensation and Human Capital Committee of Banner'sBanner’s Board of Directors has submitted the following report for inclusion in this Proxy Statement:
The Compensation and Human Capital Committee has reviewed and approved the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on the Committee'sCommittee’s discussion with management, the Compensation and Human Capital Committee recommended that the Board of Directors approve and include the Compensation Discussion and Analysis in this Proxy Statement.
The foregoing report is provided by the following directors, who constitute the Committee:
The Compensation and Human Capital Committee
Ellen R. M. Smith,Boyer, Chair
Connie R. Collingsworth
Margot J. Copeland
Roberto R. Herencia
Kevin F. Riordan
BANNER CORPORATION 2023 PROXY STATEMENT | 47 |
Executive Compensation | Summary Compensation Table
Executive Compensation
Summary Compensation Table
The following table presents information regarding compensation for our named executive officers. No executive officer of Islanders Bank or Community Financial Corporation is an executive officer of Banner.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non- equity Incentive Plan Compen- sation ($) | Change in Pension Value and Non- qualified Deferred Compensation Earnings ($)(2) | All Other Compen- sation ($)(3) | Total ($) | ||||||||
Mark J. Grescovich | 2017 | 766,875 | -- | 999,410 | 481,416 | -- | 74,723 | 2,322,424 | ||||||||
President and Chief | 2016 | 744,825 | -- | 1,342,509 | 368,536 | -- | 48,723 | 2,504,593 | ||||||||
Executive Officer | 2015 | 716,415 | -- | 616,437 | 279,518 | -- | 28,673 | 1,641,043 | ||||||||
Lloyd W. Baker | 2017 | 276,697 | -- | 252,417 | 75,400 | 160,507 (4) | 30,508 | 795,529 | ||||||||
Executive Vice President, | 2016 | 269,282 | 50,000 | 193,723 | 53,439 | 94,581 (4) | 25,535 | 686,560 | ||||||||
Chief Financial Officer, Banner | 2015 | 260,724 | 65,181 | 125,038 | 34,155 | 114,031 (4) | 24,761 | 623,890 | ||||||||
Peter J. Conner (5) | 20177 | 297,612 | -- | 271,768 | 94,120 | -- | 32,834 | 696,334 | ||||||||
Executive Vice President, Chief | ||||||||||||||||
Financial Officer, Banner Bank | ||||||||||||||||
Cynthia D. Purcell | 2017 | 312,496 | -- | 295,953 | 101,676 | 491,814 (4) | 25,186 | 1,227,125 | ||||||||
Executive Vice President, | 2016 | 303,971 | 60,000 | 219,132 | 60,323 | 246,885 (4) | 20,208 | 910,519 | ||||||||
Retail Banking and Administration | 2015 | 294,311 | 73,578 | 141,142 | 38,555 | 337,450 (4) | 18,176 | 903,212 | ||||||||
Judith A. Steiner (5) | 2017 | 306,750 | 150,000 (6) | 199,768 | 88,344 | -- | 30,660 | 775,522 | ||||||||
Executive Vice President, | ||||||||||||||||
Chief Risk Officer |
Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Non-equity Incentive Plan Compensation ($) (2) | Change in Pension Value and Non-qualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | ||||||||||||||||||||||||||||
Mark J. Grescovich President and Chief Executive Officer | 2022 | 864,179 | 1,079,464 | 1,073,311 | — | 106,814 | 3,123,768 | ||||||||||||||||||||||||||||
2021 | 844,132 | 987,469 | 669,295 | — | 118,073 | 2,618,969 | |||||||||||||||||||||||||||||
2020 | 839,010 | 1,031,802 | 687,249 | — | 107,410 | 2,665,471 | |||||||||||||||||||||||||||||
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Peter J. Conner Executive Vice President and Chief Financial Officer | 2022 | 456,100 | 331,829 | 427,503 | — | 40,419 | 1,255,850 | ||||||||||||||||||||||||||||
2021 | 422,280 | 330,743 | 233,753 | — | 41,278 | 1,028,054 | |||||||||||||||||||||||||||||
2020 | 410,805 | 344,052 | 248,311 | — | 32,926 | 1,036,094 | |||||||||||||||||||||||||||||
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Cynthia D. Purcell Executive Vice President and Chief Strategy and Administration Officer | 2022 | 425,000 | 333,949 | 405,977 | 503,226 | (5) | 35,928 | 1,704,080 | |||||||||||||||||||||||||||
2021 | 371,030 | 290,574 | 199,076 | 104,677 | (5) | 37,292 | 1,002,649 | ||||||||||||||||||||||||||||
2020 | 368,778 | 302,325 | 219,128 | 175,767 | (5) | 30,241 | 1,096,240 | ||||||||||||||||||||||||||||
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James M. Costa (6) | 2022 | 410,000 | 322,169 | 297,250 | — | 14,753 | 1,044,172 | ||||||||||||||||||||||||||||
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M. Kirk Quillin (6) | 2022 | 335,971 | 188,943 | 226,488 | — | 32,874 | 784,279 | ||||||||||||||||||||||||||||
2021 | 320,672 | 156,944 | 187,674 | — | 33,549 | 698,839 | |||||||||||||||||||||||||||||
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(1) | Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note |
(2) | Cash incentives earned under the Executive Incentive Plan. |
(3) | See |
Please see the table below for more information on the other compensation paid to our executive officers in |
Represents an increase in the value of Ms. Purcell’s SERP of $503,226 for 2022, $104,677 for 2021 and $175,767 for 2020. The increases in SERP value were inadvertently omitted from Ms. Purcell’s Total ($) amounts in last year’s Proxy Statement. The Total ($) shown above for 2021 and 2020 reflect the |
Mr. Costa was not a named executive officer in |
BANNER CORPORATION 2023 PROXY STATEMENT |
Executive Compensation | Summary Compensation Table
All Other Compensation.
The following table sets forth details ofName | Employer 401(k) Matching Contribu- tion ($) | Dividends and Tax Gross-Up ($)(1) | Life Insurance Premium ($) | Club Dues ($) | Company Car Allowance ($) | Relocation Reimburse -ment ($) | Total ($) | |||||||
Mark J. Grescovich | 10,800 | 57,418 (2) | 1,753 | 3,885 | 867 | -- | 74,723 | |||||||
Lloyd W. Baker | 10,800 | 6,443 | 5,958 | 3,885 | 3,422 | -- | 30,508 | |||||||
Peter J. Conner | 10,800 | 13,931 | 2,103 | -- | 6,000 | -- | 32,834 | |||||||
Cynthia D. Purcell | 10,800 | 7,410 | 4,525 | 1,468 | 983 | -- | 25,186 | |||||||
Judith A. Steiner | 10,800 | 4,719 | 861 | -- | -- | 14,280 | 30,660 | |||||||
___________ |
Name | Employer 401(k) Matching Contribution ($) | Dividends ($) (1) (2) | Life Insurance Premium ($) | Club Dues ($) | Company Car Allowance ($) | Other ($) (3) | Total ($) | ||||||||||||||||||||||||||||
Mark J. Grescovich | 12,200 | 87,289 | (4) | 1,665 | 346 | 5,139 | 175 | 106,814 | |||||||||||||||||||||||||||
Peter J. Conner | 12,200 | 21,694 | — | 350 | 6,000 | 175 | 40,419 | ||||||||||||||||||||||||||||
Cynthia D. Purcell | 12,200 | 20,651 | 495 | 1,596 | 986 | — | 35,928 | ||||||||||||||||||||||||||||
James M. Costa | 12,200 | 1,853 | — | — | — | 700 | 14,753 | ||||||||||||||||||||||||||||
M. Kirk Quillin | 12,200 | 10,624 | — | 350 | 9,000 | 700 | 32,874 |
(1) | Consists of dividends and dividend equivalents accrued and paid in 2022 on restricted stock and |
(2) | Also includes dividends earned and paid in relation to performance unit awards granted in 2019 and disbursed to executives in 2022. |
(3) | Includes technology allowance, mobile phone allowance and work from home setup allowance. |
(4) | Also includes dividend equivalents on vested but deferred restricted stock units. |
Employment Agreements and Perquisites.
We have entered into employment agreements withThe executives may participate with other executive officers of Banner Bank in such performance-based and discretionary bonuses, and incentive compensation opportunities, if any, as are authorized by the Board or Board committee. The executives also may be eligible to participate in equity or incentive award programs sponsored by Banner Bank. The executives may participate, to the same extent as executive officers of Banner Bank generally, in all Bank plans relating to pension, retirement, thrift, profit-sharing, savings, group or other life insurance, hospitalization, medical and dental coverage, travel and accident insurance, education, cash bonuses, and other retirement or employee benefits or combinations thereof.benefits. In addition, the executives are entitled to participate in any other fringe benefit plans or perquisites which are generally available to Banner Bank'sBank’s executive officers, including but not limited to supplemental retirement, deferred compensation programs, supplemental medical or life insurance plans, company cars, club dues and physical examinations. The executives also willmay be provided an automobile for their business use, monthly club and/or gym membership dues and other employee benefits such as vacation and sick leave. The agreements also provide that compensation may be paid in the event of disability, death, involuntary termination or a change in control, as described below under "Potential“Potential Payments Upon Termination or Change in Control."”
BANNER CORPORATION 2023 PROXY STATEMENT | 49 |
Executive Compensation | Grants of Plan-Based Awards
Grants of Plan-Based Awards
The following table shows information regarding grants of plan-based awards made to our named executive officers for 2017.
Estimated future payouts under non-equity incentive plan awards (1) | Estimated future payouts under equity incentive plan awards (2) | All other stock awards: number of shares of stock or units (#) | Grant date fair value of stock and option awards ($) | |||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||
Mark J. Grescovich | 04/03/17 | 306,750 | 613,500 | 920,250 | 7,024 | 385,056 | ||||||||||||
04/03/17 | 3,512 | 7,024 | 10,536 | 614,354 (3) | ||||||||||||||
Lloyd W. Baker | 04/03/17 | 69,174 | 138,349 | 207,524 | 1,774 | 97,251 | ||||||||||||
04/03/17 | 887 | 1,774 | 2,661 | 155,166 (3) | ||||||||||||||
Peter J. Conner | 04/03/17 | 74,403 | 148,806 | 223,209 | 1,910 | 104,706 | ||||||||||||
04/03/17 | 955 | 1,910 | 2,865 | 167,062 (3) | ||||||||||||||
Cynthia D. Purcell | 04/03/17 | 78,124 | 156,248 | 234,372 | 2,080 | 114,026 | ||||||||||||
04/03/17 | 1,040 | 2,080 | 3,120 | 181,927 (3) | ||||||||||||||
Judith A. Steiner | 04/03/17 | 61,350 | 122,700 | 184,050 | 1,404 | 76,967 | ||||||||||||
04/03/17 | 702 | 1,404 | 2,106 | 122,801 (3) |
Estimated future payouts under non-equity incentive plan awards (1) |
Estimated future payouts under equity incentive plan | All other stock awards: number of shares of stock or units (#) | Grant date fair value of stock and option awards ($) (3) | ||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date |
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||
Mark J. Grescovich | 3/31/22 | 391,255 | 782,510 | 1,173,766 | |||||||||||||||||||||||||||||||||||||||||||
3/31/22 | 5,492 | 10,983 | 16,475 | 650,907 | |||||||||||||||||||||||||||||||||||||||||||
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| 7,322 | 428,557 | |||||||||||||||||||||||||
Peter J. Conner | 3/31/22 | 151,125 | 302,250 | 453,375 | |||||||||||||||||||||||||||||||||||||||||||
3/31/22 | 1,409 | 2,817 | 4,226 | 166,950 | |||||||||||||||||||||||||||||||||||||||||||
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| 2,817 | 164,879 | |||||||||||||||||||||||||
Cynthia D. Purcell | 3/31/22 | 138,125 | 276,250 | 414,375 | |||||||||||||||||||||||||||||||||||||||||||
3/31/22 | 1,418 | 2,835 | 4,253 | 168,016 | |||||||||||||||||||||||||||||||||||||||||||
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| 2,835 | 165,933 | |||||||||||||||||||||||||
James M. Costa | 3/31/22 | 102,500 | 205,000 | 307,500 | |||||||||||||||||||||||||||||||||||||||||||
3/31/22 | 1,368 | 2,735 | 4,103 | 162,090 | |||||||||||||||||||||||||||||||||||||||||||
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| 2,735 | 160,080 | |||||||||||||||||||||||||
M. Kirk Quillin | 3/31/22 | 85,000 | 170,000 | 255,000 | |||||||||||||||||||||||||||||||||||||||||||
3/31/22 | 802 | 1,604 | 2,406 | 95,061 | |||||||||||||||||||||||||||||||||||||||||||
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| 1,604 | 93,882 |
(1) | Represents the potential range of cash incentive awards payable under our |
(2) | Represents the potential range of restricted stock unit awards payable under our |
(3) | The fair value of the portion of the |
50 | BANNER CORPORATION 2023 PROXY STATEMENT |
Executive Compensation | Outstanding Equity Awards
Outstanding Equity Awards
The following information with respect to outstanding stock awards as of December 31, 20172022 is presented for the named executive officers. The named executive officers have no stock option awards outstanding.
Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||
Mark J. Grescovich | 13,142 (1) | 724,387 | 32,777 (2) | 1,806,668 | ||||
Lloyd W. Baker | 3,189 (1) | 175,778 | 6,706 (2) | 369,635 | ||||
Peter J. Conner | 5,115 (3) | 281,939 | 5,433 (4) | 299,467 | ||||
Cynthia D. Purcell | 3,677 (1) | 202,676 | 7,686 (2) | 423,652 | ||||
Judith A. Steiner | 2,166 (5) | 119,390 | 2,106 (6) | 116,083 |
Name | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | ||||||||||||||||
Mark J. Grescovich | 16,297 | 1,029,970 | 40,492 | 2,559,094 | ||||||||||||||||
Peter J. Conner | 6,558 | 414,466 | 11,017 | 696,274 | ||||||||||||||||
Cynthia D. Purcell | 6,122 | 386,910 | 10,040 | 634,528 | ||||||||||||||||
James M. Costa | 4,443 | 280,798 | 2,735 | 172,852 | ||||||||||||||||
M. Kirk Quillin | 3,379 | 213,553 | 5,495 | 347,284 |
(1) | Consists of awards of restricted stock on March 27, |
(2) | Based on the Banner stock December 30, 2022 closing price of $63.20. |
(3) | Consists of awards of restricted stock on March 27, |
Option Exercises and Stock Vested
The following table shows the value realized upon vesting of stock awards for our named executive officers in 2017.2022. The named executive officers have no option awards outstanding.
| Stock Awards | |||||||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | ||||||||
Mark J. Grescovich | 14,992 | 907,611 | ||||||||
Peter J. Conner | 5,135 | 310,136 | ||||||||
Cynthia D. Purcell | 4,780 | 288,910 | ||||||||
James M. Costa | 854 | 61,667 | ||||||||
M. Kirk Quillin | 2,492 | 150,552 |
(1) | Reflects fair market value per share as of the vesting date multiplied by the number of shares vesting. |
BANNER CORPORATION 2023 PROXY STATEMENT | 51 |
Stock Awards | ||||
Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
Mark J. Grescovich | 5,575 | 303,509 | ||
Lloyd W. Baker | 1,309 | 71,214 | ||
Peter J. Conner | 2,633 | 158,232 | ||
Cynthia D. Purcell | 1,482 | 80,626 | ||
Judith A. Steiner | 381 | 23,146 |
Executive Compensation | Pension Benefits
Pension Benefits
The following information is presented with respect to the nature and value of pension benefits for the named executive officers at December 31, 2017.
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | ||||
Mark J. Grescovich | N/A | -- | -- | -- | ||||
Lloyd W. Baker | Supplemental Executive Retirement Program | 23 | 2,169,019 | -- | ||||
Peter J. Conner | N/A | -- | -- | -- | ||||
Cynthia D. Purcell | Supplemental Executive Retirement Program | 33 | 2,620,260 | -- | ||||
Judith A. Steiner | N/A | -- | -- | -- | ||||
_____________ |
Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) (1) | Payments During Last Fiscal Year ($) | |||||||||||||
Mark J. Grescovich | N/A |
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Peter J. Conner | N/A |
| — |
| — |
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Cynthia D. Purcell | Supplemental Executive Retirement Program |
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| 4,287,704 |
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James M. Costa | N/A |
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| — | ||||||||||
M. Kirk Quillin | N/A |
| — |
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(1) | Amounts shown assume normal retirement age as defined in |
Supplemental Executive Retirement Program.
We have adopted a52 | BANNER CORPORATION 2023 PROXY STATEMENT |
Executive Compensation | Nonqualified Deferred Compensation
Nonqualified Deferred Compensation
The following information is presented with respect to plans that provide for the deferral of compensation on a basis that is not tax-qualified in which the named executive officers participated in 2017.
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at FYE ($)(1) | |||||
Mark J. Grescovich | -- | -- | -- | -- | -- | |||||
Lloyd W. Baker | -- | -- | 697 | -- | 31,427 | |||||
Peter J. Conner | -- | -- | -- | -- | -- | |||||
Cynthia D. Purcell | -- | -- | 4,040 | -- | 22,755 | |||||
Judith A. Steiner | 51,114 | -- | 3,698 | -- | 54,812 | |||||
__________ |
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at FYE ($) (1) | ||||||||||||||||||||
Mark J. Grescovich | — | — | — | — | — | ||||||||||||||||||||
Peter J. Conner | — | — | — | — | — | ||||||||||||||||||||
Cynthia D. Purcell | — | — | (8,417 | ) | — | 35,343 | |||||||||||||||||||
James M. Costa | — | — | — | — | — | ||||||||||||||||||||
M. Kirk Quillin | 16,799 | — | (172,411 | ) | — | 459,965 |
(1) | Includes prior period executive contributions and employer contributions to the deferred compensation plan. |
In 2004, we adopted deferred compensation plans which allow executive officers of Banner to defer all or part of their cash compensation or non-qualified stock options until retirement. Each executive officer may direct the investment of the deferred compensation toward the purchase of life insurance, Banner common stock, mutual fund-style investments or a stable value account. We have established grantor trusts to hold the common stock and mutual fund-style investments. The assets of the trusts are considered part of our general assets and the executive officers have the status of unsecured creditors of Banner with respect to the trust assets. The deferred compensation agreements provide pre-retirement death and disability benefits in an amount based on the value of the executive officer'sofficer’s account balance upon the occurrence of either event. At retirement, an executive officer, as previously elected, may receive the balance of his or her account in a lump sum or in annual installments over a period not exceeding ten years. At December 31, 2017,2022, our estimated deferred compensation liability accrual with respect to executive officers under these agreements was $650,000.$1.06 million.
BANNER CORPORATION 2023 PROXY STATEMENT | 53 |
Executive Compensation | Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control
We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination, early retirement, normal retirement and death. In addition, our equity plans also provide for potential payments upon termination. The following table shows, as of December 31, 2017,2022, the value of potential payments and benefits following a termination of employment under a variety of scenarios.
Death ($) | Disability ($) | Involuntary Termination ($) | Involuntary Termination Following Change in Control ($) | Early Retirement ($) | Normal Retirement ($) | |||||||||||
Mark J. Grescovich | ||||||||||||||||
Employment Agreement | -- | 667,786 | (1) | 2,812,572 | 4,218,858 | -- | -- | |||||||||
Equity Plans | 2,531,055 | (2) | 2,531,055 | (2) | -- | 2,531,055 | (2) | -- | -- | |||||||
Lloyd W. Baker | ||||||||||||||||
Employment Agreement | -- | -- | 726,079 | 890,161 | -- | -- | ||||||||||
SERP | 94,853 | (3) | 189,705 | (3) | 189,705 | (4) | 189,705 | (4) | 189,705 | (4) | 189,705 | (3) | ||||
Equity Plans | 545,413 | (2) | 545,413 | (2) | -- | 545,413 | (2) | -- | -- | |||||||
Peter J. Conner | ||||||||||||||||
Employment Agreement | -- | 200,100 | (5) | 788,645 | 1,810,472 | -- | -- | |||||||||
Equity Plans | 581,406 | (2) | 581,406 | (2) | -- | 581,406 | (2) | -- | -- | |||||||
Cynthia D. Purcell | ||||||||||||||||
Employment Agreement | -- | 217,901 | (5) | 836,246 | 991,051 | -- | -- | |||||||||
SERP | 100,710 | (3) | 201,421 | (3) | 190,385 | (4) | 190,385 | (4) | 190,385 | (4) | 194,449 | (3) | ||||
Equity Plans | 626,328 | (2) | 626,328 | (2) | -- | 626,328 | (2) | -- | -- | |||||||
Judith A. Steiner | ||||||||||||||||
Employment Agreement | -- | 206,000 | (5) | 155,978 | 314,676 | -- | -- | |||||||||
Equity Plans | 235,473 | (2) | 235,473 | (2) | -- | 235,473 | (2) | -- | -- | |||||||
____________ |
| Death ($) | Disability ($) | Involuntary Termination ($) | Involuntary Termination Following Change in Control ($) | Early Retirement ($) | Normal Retirement ($) | ||||||||||||||||||
Mark J. Grescovich |
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Employment Agreement | — | 771,252 | (1) | 3,347,524 | 5,021,285 | — | — | |||||||||||||||||
Equity Plans | 4,868,549 | (2) | 4,868,549 | (2) | — | 4,868,549 | (2) | — | — | |||||||||||||||
Peter J. Conner |
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Employment Agreement | — | 327,500 | (3) | 1,515,543 | 2,355,029 | — | — | |||||||||||||||||
Equity Plans | 1,458,846 | (2) | 1,458,846 | (2) | — | 1,458,846 | (2) | — | — | |||||||||||||||
Cynthia D. Purcell |
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Employment Agreement | — | — | 1,085,166 | 1,876,862 | — | — | ||||||||||||||||||
SERP | 144,411 | (4) | 288,822 | (4)�� | 288,822 | (4) | 288,822 | (4) | 288,822 | (4) | 288,822 | (4) | ||||||||||||
Equity Plans | 1,339,271 | (2) | 1,339,271 | (2) | — | 1,339,271 | (2) | — | — | |||||||||||||||
James M. Costa |
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Executive Severance and Change in Control Plan | — | — | 439,503 | 1,274,255 | — | — | ||||||||||||||||||
Equity Plans | 540,044 | (2) | 540,044 | (2) | — | 540,044 | (2) | — | — | |||||||||||||||
M. Kirk Quillin |
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Executive Severance and Change in Control Plan | — | — | 358,611 | 1,047,917 | — | — | ||||||||||||||||||
Equity Plans | 734,447 | (2) | 734,447 | (2) | — | 734,447 | (2) | — | — |
(1) | Annually through the term of the employment agreement unless the Board exercises an election to discontinue. |
(2) | Represents accelerated vesting of restricted stock. Performance-based vesting would be determined based on actual performance; for purposes of this calculation, assumes that all shares vested at the maximum performance level. |
(3) | Indicates annual |
(4) | Indicates annual |
Employment Agreements.
54 | BANNER CORPORATION 2023 PROXY STATEMENT |
Executive Compensation | Potential Payments Upon Termination or Change in Control
Mr. Grescovich'sGrescovich’s agreement provides that if he becomes entitled to benefits under the terms of the then-current disability plan, if any, of Banner or Banner Bank or becomes otherwise unable to fulfill his duties under his employment agreement, he shall be entitled to receive such group and other disability benefits as are then provided for executive employees. In the event of his disability, the employment agreement is not suspended, except that (1) the obligation to pay Mr. Grescovich'sGrescovich’s salary will be reduced by the amount of disability income benefits he receives and (2) upon a resolution adopted by a majority of the disinterested members of the Board of Directors or the Compensation and Human Capital Committee, Banner or Banner Bank may discontinue payment of his salary beginning six months following a determination that he has become entitled to benefits under the disability plan or otherwise unable to fulfill his duties under his agreement. If Mr. Grescovich'sGrescovich’s disability does not constitute a disability within the meaning of Section 409A of the Internal Revenue Code, and he is a "specified employee"“specified employee” within the meaning of Section 409A, then disability payments will not begin until the earlier of his death or the sixth month anniversary of his separation from service.
The employment agreements with each of the named executive officers other than Mr. GrescovichConner and Ms. Purcell provide that if the executive becomes disabled or incapacitated to the extent that he or she is unable to perform the duties of his or her position, he or she shall receive short-term disability benefits equal to 100% of his or her monthly compensation beginning on the 15th15th day of disability and continuing until the 180th180th day of disability and long-term disability benefits equal to 66⅔%66% of monthly salary beginning on the 181st181st day of disability and continuing until he or she attains age 65. These benefits will be reduced by the amount of any benefits payable to the executive under any other disability program of Banner Bank. The Bank currently provides disability benefits with certain limitations to all full timefull-time employees. In addition, during any period of disability, the executive and his or her dependents shall, to the greatest extent possible, continue to be covered under all executive benefits plans of Banner Bank, including without limitation, its retirement plans, life insurance plan and health insurance plans, as if actively employed by Banner Bank. If the executive is disabled for a continuous period exceeding six calendar months, Banner Bank may, at its election, terminate the employment agreement. If the executive'sexecutive’s disability does not constitute a disability within the meaning of Section 409A of the Internal Revenue Code, and the executive is a "specified employee"“specified employee” within the meaning of Section 409A, then disability payments will not begin until the earlier of the executive'sexecutive’s death or the sixth month anniversary of the executive'sexecutive’s separation from service.
The employment of the executivesMr. Grescovich, Mr. Conner and Ms. Purcell is terminable at any time for just cause as defined in the agreements. In addition, the employment of an executive may be terminated without just cause, in which case the agreements provide that the named executive officers other than Mr. GrescovichConner and Ms. Purcell would continue to receive (1) base salary over the remaining term and (2) the executive'sexecutive’s group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance for the remaining term (for Ms. Steiner, an amount equal to the monthly COBRA premium payment for herself, her spouse and any eligible dependants).term. Mr. Grescovich'sGrescovich’s agreement provides that we must pay him a lump sum equal to two times the sum of (1) his annual salary in effect on the date of termination and (2) any unearned performance-based bonus based on the target opportunity on the date of termination. We would also be required to pay to him any earned but unpaid performance-based bonus and continue his group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance for 24 months after the date of termination.
The employment agreements also provide for benefits in the event of the executives' termination of Mr. Grescovich, Mr. Conner or Ms. Purcell in connection with a change in control. For the named executive officers other than Mr. Grescovich,Conner and Ms. Purcell, if, within six months prior to a change in control or 24 months after a change in control, we (or our acquiror) terminate an executive'sthe executive’s employment or otherwise change the circumstances in
BANNER CORPORATION 2023 PROXY STATEMENT | 55 |
Executive Compensation | Potential Payments Upon Termination or Change in Control
which he or she is employed, or cause a reduction in responsibilities or authority or compensation or other benefits provided under the employment agreement without consent, other than for just cause, the agreements provide that we must pay to the executive and provide him or her, or the his or her beneficiaries, dependents and estate, with the following: (1) 2.99 times (1.00 times for Ms. Steiner) the executive'sexecutive’s base amount as defined in Section 280G of the Internal Revenue Code (and for Mr. Conner, his target annual bonus opportunity); and (2) during the period of 36 calendar months beginning with the event of termination, continued coverage under all Banner employee benefit plans as if the executive were still employed during that period under the employment agreement. If Mr. Grescovich'sGrescovich’s employment is terminated within 24 months of a change in control, we must pay him a lump sum equal to three times the sum of (1) his annual salary in effect on the date of termination and (2) any unearned performance-based bonus based on the target opportunity on the date of termination. We would also be required to pay to him any earned but unpaid performance-based bonus and continue his group life insurance, hospitalization, medical, dental, prescription drug and other health benefits, and long-term disability insurance for 36 months after the date of termination. The employment agreements limit these payments and do not allow payments of amounts in excess of the limits imposed by Section 280G of the Internal Revenue Code.
Executive Severance and Change in Control Plan. We established the Executive Severance and Change in Control Plan on January 1, 2018 to provide certain executive employees of the Bank with the opportunity to receive severance benefits in connection with certain terminations of employment, including a termination of employment after a change in control of the Banner or Banner Bank. Mr. Costa and Mr. Quillin participate in this plan. The Bank amended and restated the Plan, effective as of October 1, 2021, to update the severance payable upon a termination of employment in connection with a change in control. If, within six months prior to a change in control or 24 months after a change in control (“Covered Period”), we (or our acquiror) terminate the executive’s employment or otherwise change the circumstances in which he or she is employed, or cause a reduction in responsibilities or authority, other than for just cause, the plan provides that we must pay to the executive a lump sum equal to: (1) 2.0 times the executive’s base salary, plus the executive’s target annual cash incentive compensation for the year in which the termination occurs; and (2) a pro-rated annual bonus. During the period of 18 calendar months beginning with the event of termination, we must reimburse the monthly COBRA premium paid by the executive for the executive and his or her eligible dependents until the executive is eligible to receive similar coverage from another employer or is no longer eligible for COBRA continuation coverage. If the termination does not occur within the Covered Period, the plan provides that we must pay to the executive: (1) 1.0 times the executive’s base salary, payable over the one-year period following termination in accordance with the Bank’s normal payroll practices; and (2) during the period of 12 calendar months beginning with the event of termination, reimbursement for monthly COBRA premium paid by the executive for the executive and his or her eligible dependents.
Supplemental Executive Retirement Program.
We have adopted a56 | BANNER CORPORATION 2023 PROXY STATEMENT |
Executive Compensation | Chief Executive Officer Pay Ratio
supplemental benefit begins on the first day of the month next following the executive'sMs. Purcell’s retirement date and continues monthly for the executive'sher life, unless the executiveMs. Purcell is a specified employee (as defined in Section 409A of the Internal Revenue Code), in which
In the event of an executive'sMs. Purcell’s death, the executive'sher surviving spouse, if any, shall receive a spouse'sspouse’s supplemental benefit. If the death occurs following the executive'sher retirement date, the surviving spouse shall be entitled to a spouse'sspouse’s supplemental benefit, payable for life, equal to 50% of the monthly amount of the supplemental benefit payable to the executiveMs. Purcell prior to his or her death. If the death occurs while the executiveMs. Purcell is actively employed by Banner or any of its affiliates, the surviving spouse shall receive a spouse'sspouse’s supplement benefit equal to 50% of the amount the executiveshe would have received as a supplemental benefit if the executive'sher retirement date had occurred on the date immediately preceding the executive'sher death.
The agreement provides that in the event of the executive'sMs. Purcell’s involuntary termination of employment on or after the effective date of a change in control, the date of termination shall be treated as the executive'sher retirement date and he or she shall be entitled to receive a supplemental benefit. If the executiveMs. Purcell had reached his or her retirement date, the supplemental benefit would be calculated as described above for normal retirement and if the executiveshe had not reached his or her retirement date but had satisfied the years of service requirement, the supplemental benefit would be calculated as described above for early retirement. No benefit payment will begin before age 62 andBenefit payments for Ms. Purcell will be subject to the delayed distribution requirements if the executiveshe is a specified employee.
The supplemental benefit shall cease to be paid to the executiveMs. Purcell (and rights to the spouse'sspouse’s supplemental benefit shall terminate) if the executiveshe (1) discloses material confidential information or trade secrets concerning Banner Bank or any of its subsidiaries without its consent or (2) engages in any activity that is materially damaging to the Bank including engaging in competitive employment during the three-year period beginning on the executive'sher retirement date.
Equity Plans.
Chief Executive Officer Pay Ratio
In August 2015 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"“Dodd-Frank Act”), the SEC adopted Item 402(u) of Regulation S-K, requiring annual disclosure of the ratio of the annual total compensation of the Chief Executive Officer to the median employee'semployee’s annual total compensation. For 2017,2022, this information is as follows:
Mr. Grescovich, Chief Executive Officer, annual total compensation: | $3,123,768 | |
Median employee annual total compensation: | $ 69,160 | |
Ratio of Chief Executive Officer to median employee compensation: | 45 to 1 |
BANNER CORPORATION 2023 PROXY STATEMENT | 57 |
Executive Compensation | Chief Executive Officer annual total compensation:$2,322,424
We have concluded that it is appropriate to identify a new median employee compensation:
As a result of the flexibility permitted by Item 402(u), the method we used to determine our median employee may differ from the methods used by our peers, so the ratios may not be comparable.
58 | BANNER CORPORATION 2023 PROXY STATEMENT |
Year | Summary Compensation Table Total for PEO (1) | Compensation Actually Paid to PEO (2) | Average Summary Compensation Table Total for non-PEO NEOs (1) | Average Compensation Actually Paid to non-PEO NEOs (3) | Value of Initial Fixed $100 Investment based on (4): | Net Income ($000) | Company- selected Measure: ROATCE (5) | |||||||||||||||||||||||||
Total Shareholder Return (TSR) | KRX Index Total Shareholder Return (TSR) | |||||||||||||||||||||||||||||||
2022 | $ | 3,123,768 | $ | 3,296,615 | $ | 1,197,095 | $ | 1,113,315 | $ | 125.86 | $ | 116.15 | $ | 195,378 | 17.47 | % | ||||||||||||||||
2021 | $ | 2,618,969 | $ | 3,388,567 | $ | 868,651 | $ | 976,064 | $ | 117.43 | $ | 124.78 | $ | 201,048 | 16.26 | % | ||||||||||||||||
2020 | $ | 2,665,471 | $ | 2,635,857 | $ | 881,251 | $ | 853,575 | $ | 87.46 | $ | 91.32 | $ | 115,928 | 9.95 | % |
(1) | The principal executive officer (“PEO”) for all three years was Mark J. Grescovich. The non-PEO named executive officers (non-PEO NEOs) were as follows: |
2022: Peter J. Conner, Cynthia D. Purcell, James M. Costa, M. Kirk Quillin |
2021: Peter J. Conner, Cynthia D. Purcell, M. Kirk Quillin, James P. G. McLean, Judith A. Steiner |
2020: Peter J. Conner, Cynthia D. Purcell, Judith A. Steiner, Keith A. Western, Richard B. Barton |
(2) Adjustments from Summary Compensation Table total for PEO | 2022 | 2021 | 2020 | |||||||||
Deduction for change in actuarial present values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column in the Summary Compensation Table | — | — | — | |||||||||
Increase for service cost of pension plans | — | — | — | |||||||||
Increase/deduction for prior service cost of pension plans | — | — | — | |||||||||
Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table | (1,079,464 | ) | (987,469 | ) | (1,031,802 | ) | ||||||
Increase based on fair value of awards granted during year that remain unvested as of year-end, determined as ofyear-end | 1,156,876 | 1,099,765 | 1,446,852 | |||||||||
Increase/deduction for change in fair value from prior year-end to currentyear-end of awards granted in prior years that were outstanding and unvested as ofyear-end | 97,387 | 543,333 | (240,000 | ) | ||||||||
Increase based on fair value of awards granted during year that vested during year, determined as of vesting date | — | — | — | |||||||||
Increase/deduction for change in fair value from prior year-end to vesting date of awards granted in prior years that vested during year | (1,953 | ) | 113,969 | (204,665 | ) | |||||||
Deduction of fair value of awards granted prior to year that were forfeited during year | — | — | — | |||||||||
Increase based on dividends or other earnings paid during year prior to vesting date of award that are not otherwise included in total compensation | — | — | — | |||||||||
Increase based on incremental value of awards modified during year | — | — | — | |||||||||
Total Adjustments | 172,846 | 769,598 | (29,614 | ) |
BANNER CORPORATION 2023 PROXY STATEMENT | 59 |
(3) Adjustments from Average Summary Compensation Table total for non-PEO NEOs | 2022 | 2021 | 2020 | |||||||||
Deduction for change in actuarial present values reported under the “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column in the Summary Compensation Table | (125,807 | ) | (20,935 | ) | (35,555 | ) | ||||||
Increase for service cost of pension plans | — | — | — | |||||||||
Increase/deduction for prior service cost of pension plans | — | — | — | |||||||||
Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table | (294,222 | ) | (237,932 | ) | (228,334 | ) | ||||||
Increase based on fair value of awards granted during year that remain unvested as of year-end, determined as ofyear-end | 315,716 | 263,793 | 381,106 | |||||||||
Increase/deduction for change in fair value from prior year-end to current year-end of awards granted in prior years that were outstanding and unvested as of year-end | 18,853 | 124,174 | (60,270 | ) | ||||||||
Increase based on fair value of awards granted during year that vested during year, determined as of vesting date | — | — | — | |||||||||
Increase/deduction for change in fair value from prior year-end to vesting date of awards granted in prior years that vested during year | 1,680 | 28,426 | (51,066 | ) | ||||||||
Deduction of fair value of awards granted prior to year that were forfeited during year | — | (50,112 | ) | (33,558 | ) | |||||||
Increase based on dividends or other earnings paid during year prior to vesting date of award that are not otherwise included in total compensation | — | — | — | |||||||||
Increase based on incremental value of awards modified during year | — | — | — | |||||||||
Total Adjustments | (83,780 | ) | 107,413 | (27,677 | ) |
(4) | Total shareholder return (“TSR”) assumes $100 invested in Banner common stock and the KBW Regional Bank Index on December 31, 2019 with all dividends reinvested. |
(5) | We determined the return on average tangible common equity (“ROATCE”) to be the most important financial performance measure not otherwise disclosed in the table, that is used to link compensation actually paid to our NEOs to company performance, for the most recently completed fiscal year. ROATCE defined as net income prior to amortization of intangibles and goodwill (tax-adjusted), divided by average tangible common equity. |
60 | BANNER CORPORATION 2023 PROXY STATEMENT |
BANNER CORPORATION 2023 PROXY STATEMENT | 61 |
62 | BANNER CORPORATION 2023 PROXY STATEMENT |
BANNER CORPORATION 2023 PROXY STATEMENT | 63 |
Proposal 2 – ADVISORY VOTE ON EXECUTIVE COMPENSATION
Proposal 2 – Advisory Vote to Approve Executive Compensation
Under the Dodd-Frank Act, we are required to periodically include in our annual meeting proxy statements and present at the annual meeting of shareholders a non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in the proxy statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a "say-on-pay"“say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the compensation of Banner'sBanner’s executives as disclosed in the Proxy Statement. At the 20132018 annual meeting of shareholders, we were also required under the Dodd-Frank Act to include a non-binding shareholder resolution regarding the frequency of future votes on executive compensation. Shareholders voted in favor of holding an annual vote and the Board of Directors determined to hold an annual shareholder advisory vote to approve the compensation of our named executive officers, beginning with the 2014 annual meeting of shareholders.officers. We will continue to hold an annual vote until such time that the frequency vote is next presented to shareholders or until the Board determines that a different frequency is in the best interest of Banner.
The say-on-pay proposal will be presented at the annual meeting in the form of the following resolution:
RESOLVED, that the shareholders approve the compensation of Banner Corporation'sCorporation’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related material in the Proxy Statement for the 20182023 annual meeting of shareholders.
This vote will not be binding on our Board of Directors or Compensation and Human Capital Committee and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board. It will also not affect any compensation paid or awarded to any executive. The Compensation and Human Capital Committee and the Board may, however, take into account the outcome of the vote when considering future executive compensation arrangements.
Our executive compensation policies are designed to establish an appropriate relationship between executive pay and the annual and long-term performance of Banner and Banner Bank, to reflect the attainment of short- and long-term financial performance goals, to enhance our ability to attract and retain qualified executive officers and to align to the greatest extent possible the interests of management and shareholders. Our Board of Directors believes that our compensation policies and procedures achieve these objectives.
The Board of Directors unanimously recommends that you vote FOR approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
64 | BANNER CORPORATION 2023 PROXY STATEMENT |
Audit Committee Matters
Audit Committee Matters
Audit Committee Charter. The Audit Committee operates pursuant to a charter approved by our Board of Directors. The Audit Committee reports to the Board of Directors and is responsible for overseeing and monitoring our financial accounting and reporting, system of internal controls established by management and audit process. The charter sets out the responsibilities, authority and specific duties of the Audit Committee. The charter specifies, among other things, the structure and membership requirements of the Audit Committee, as well as the relationship of the Audit Committee to our independent registered public accounting firm, the internal audit department and management.
Report of the Audit Committee. The Audit Committee reports as follows with respect to the Corporation’s audited consolidated financial statements for the year ended December 31, 2022:
• | The Audit Committee has completed its review and discussion of the 2022 audited consolidated financial statements with management; |
• | The Audit Committee has discussed with the independent registered public accounting firm (Moss Adams LLP) the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard 1301, Communications with Audit Committees; |
• | The Audit Committee has received written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the independent registered public accounting firm’s independence; and |
• | The Audit Committee has, based on its review and discussions with management of the 2022 audited consolidated financial statements and discussions with the independent registered public accounting firm, recommended to the Board of Directors that the Corporation’s audited consolidated financial statements for the year ended December 31, 2022 be included in its Annual Report on Form 10-K. |
The foregoing report is provided by the following directors, who constitute the Audit Committee as of December 31, 2022:
Audit Committee
Kevin F. Riordan, Chair
Ellen R.M. Boyer
David A. Klaue
John R. Layman
John C. Pedersen
Paul J. Walsh
This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under such acts.
BANNER CORPORATION 2023 PROXY STATEMENT | 65 |
Proposal 3 – APPROVAL OF 2018 OMNIBUS INCENTIVE PLANRatification of Appointment of Independent Registered Public Accounting Firm
Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors has appointed Moss Adams LLP as our independent registered public accounting firm for the year ending December 31, 2023 and that appointment is being submitted to shareholders for ratification. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the appointment of Moss Adams LLP to our shareholders for ratification as a matter of good corporate practice. If the appointment is not ratified, the Audit Committee will consider whether it is appropriate to appoint another registered public accounting firm. Even if the appointment is ratified, the Audit Committee in its discretion may appoint a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Banner and our shareholders. Moss Adams LLP served as our independent registered public accounting firm for the year ended December 31, 2022 and a representative of the firm will be present at the annual meeting to respond to shareholders’ questions and will have the opportunity to make a statement if he or she so desires.
The Board of Directors unanimously recommends that you vote FOR the ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm.
The following table sets forth the aggregate fees billed, or expected to be billed, to us by Moss Adams LLP for professional services rendered for the fiscal years ended December 31, 2022 and 2021.
Year Ended December 31, | ||||||||
2022 ($) | 2021 ($) | |||||||
Audit Fees (1) |
| 1,267,700 |
|
| 1,155,741 |
| ||
Audit-Related Fees |
| — |
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| — |
| ||
Tax Fees |
| — |
|
| — |
| ||
All Other Fees |
| — |
|
| — |
|
(1) | Includes estimated amounts to be billed and related out-of-pocket expenses incurred by Moss Adams. |
The Audit Committee will establish general guidelines for the permissible scope and nature of any permitted non-audit services to be provided by the independent registered public accounting firm in connection with the Committee’s annual review of its charter. Pre-approval may be granted by action of the full Audit Committee or by delegated authority to one or more members of the Audit Committee. If this authority is delegated, all approved non-audit services will be presented to the Audit Committee at its next meeting. In considering non-audit services, the Audit Committee or its delegate will consider various factors, including but not limited to, whether it would be beneficial to have the service provided by the independent registered public accounting firm and whether the service could compromise the independence of the independent registered public accounting firm. For the year ended December 31, 2022, the Audit Committee approved all of the services provided by Moss Adams LLP that were designated as audit-related fees, tax fees and all other fees as set forth in the table above.
66 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 3 – Ratification of Appointment of Independent Registered Public Accounting Firm
The Audit Committee of the Board of Directors determined that all of the services performed by Moss Adams LLP in fiscal year 2022 were not incompatible with Moss Adams LLP maintaining its independence.
BANNER CORPORATION 2023 PROXY STATEMENT | 67 |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Overview
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan
Overview
On February 26, 2018,27, 2023, our Board of Directors unanimously adopted, subject to shareholder approval, the Banner Corporation 20182023 Omnibus Incentive Plan. The purpose of the Plan is to promote the success, and enhance the value, of Banner by linking the personal interests of employees and directors with those of Banner'sBanner’s shareholders. The Plan is further intended to provide flexibility to Banner in its ability to motivate, attract, and retain the services of employees and directors upon whose judgment, interest and special effort Banner depends.
We strongly believe that the approval of the 20182023 Omnibus Incentive Plan is essential to our continued success. The Compensation and Human Capital Committee, the Board and management believe that incentive awards are an important element of Banner'sBanner’s overall retention, recruitment and growth strategies. The Committee, Board and management further believe that equity awards are a competitive necessity in our industry, allowing us to recruit and retain the highly qualified officers and other key personnel who help Banner meet its goals, and reward and encourage current directors and employees. Furthermore, the 20182023 Omnibus Incentive Plan is strongly focused on pay for performance principles. It emphasizes compensation opportunities that reward our employees and directors when they deliver targeted financial results. Through equity incentives and performance-based compensation, the 20182023 Omnibus CompensationIncentive Plan also serves to ensure the continuing alignment of the interests of our employees and directors with those of Banner shareholders and the long-term interests of Banner.
The following summary is a brief description of the material features of the 20182023 Omnibus Incentive Plan. This summary is qualified in its entirety by reference to the Plan, a copy of which is attached to this Proxy Statement as Appendix D.
Summary
Administration.
TheAwards.
The68 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Summary
the 2014 and 2018 Omnibus Incentive Plans, as well as 366,138 shares subject to unvested restricted stock units, performance units and restricted stock awards that were previously granted under the 2014 and 2018 Omnibus Incentive Plans. Subject to adjustments described below under "Adjustments“Adjustments in the Event of Business Reorganization; Other Adjustments," Banner has reserved 900,000” the current request for a total of 625,000 shares of its common stock for issuance under the 2023 Omnibus Incentive Plan in connection with the exerciserepresents 1.83% of awards, which represents 2.8% of Banner'sBanner’s common stock outstanding on the voting record date. The 625,000 common shares that will be available for grants under the 2023 Omnibus Incentive Plan will not be affected by the number of common shares that remained available for grant under the 2014 and 2018 Omnibus Incentive Plans as of March 23, 2023, or the common shares subject to outstanding awards under those plans. The fair market value per share of these 625,000 shares is $49,680,000,$52.97, based on the closing price of Banner'sBanner’s common stock as of the close of business on the voting record date. Only shares actually issued to participants or retained or surrendered to satisfy tax withholding obligations for awards under the Plan, or which are used to exercise an option or stock appreciation right, count against this total number of shares available under the Plan.
Under the 20182023 Omnibus Incentive Plan, the Committee may grant stock options that, upon exercise, result in the issuance of 900,000625,000 shares of our common stock (all of which may be incentive stock options). The Plan also provides that during any calendar year, the maximum aggregate number of shares with respectsubject to which awards may be granted to a non-employee director, together with any one individual (including awards of options, restricted stock and other stock-based awards) is 100,000 (10,000 for non-employee directors), and the maximum aggregate amount that may becash fees paid to the non-employee director during any one individual with respect to one or more cash awards is $3,000,000.calendar year shall not exceed $300,000. Each of the maximum amounts of shares described in this paragraph
The 20182023 Omnibus Incentive Plan provides for the use of authorized but unissued shares or shares that have been reacquired by Banner to fund share-based awards. Awards denominated in shares will have the effect of diluting the holdings of persons who own our common stock. Assuming all awards under the Plan are awarded denominated in shares and exercised through the use of treasury shares and authorized but unissued common stock and shares that have been reacquired by Banner, current shareholders would be diluted by approximately 2.7%1.83% based on the number of shares outstanding as of the close of business on the voting record date.
Eligibility to Receive Awards.
The Committee may grant awards under theMinimum Vesting Period. Generally, awards granted under the Plan that are payable in shares shall vest no earlier than the first anniversary of the grant date of the award. The Plan provides for certain specified exceptions to the one-year minimum vesting period (see Section 3.7 of the Plan for the complete list), including the vesting periods applicable to awards to non-employee directors (which may vest on the earlier of (1) the one year anniversary of the date of grant or (2) the next annual meeting of shareholders that occurs prior to such first anniversary, but in any case at least 50 weeks after the date of grant). Additionally, notwithstanding the required minimum vesting, the Committee may provide for accelerated vesting or exercisability of an award, or otherwise act to waive or lapse any restriction on an award, in connection with a participant’s death, disability or retirement, or in connection with a change in control (each as defined in the Plan).
BANNER CORPORATION 2023 PROXY STATEMENT | 69 |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Summary
Terms and Conditions of Stock Options.
Stock options may be granted to participants at any time during the term of the Plan by the Committee, subject to the maximum award limitations in the Plan. However, incentive stock options may only be granted to employees. Each option grant will be evidenced by an award agreement that specifies the exercise price, the exercise period, the number of shares to which the option pertains, theA participant may pay the exercise price of his or herthe participant’s option: (a) in cash, (b) if and to the extent permitted by the Committee, by delivering shares that he or shethe participant already owns having an aggregate fair market value equal to the aggregate exercise price, (c) by Banner withholding shares otherwise issuable upon the exercise having an aggregate fair market value on the date the option is exercised equal to the aggregate exercise price to be paid, or (d) by a combination of the foregoing methods. The participant also will be permitted to pay the exercise price through a cashless exercise facilitated through a broker.
The termination of a participant'sparticipant’s service with Banner and its affiliates will affect his or herthe participant’s ability to exercise options granted under the Plan. Upon termination of service of a participant, unless otherwise determined by the Committee or specified in the award agreement, all outstanding unexercisable options granted to the participant will be forfeited and all outstanding exercisable options granted to the participant will remain exercisable for three months following the termination date, but in no event beyond the expiration date of the option. However, upon termination of service of a participant due to death or disability, unless otherwise determined by the Committee and specified in the award agreement, all outstanding options granted to the participant will become exercisable in full. Also upon the occurrence of a change in control of Banner, as defined in the Plan, all outstanding options granted to the participant will become exercisable in full. Upon termination of service of a participant for cause, all outstanding options granted to the participant will immediately be forfeited.
If a change in control (as defined in the Plan) occurs prior to when a participant'sthe vesting date of an option award, has become exercisable, and the participant experiences an involuntary separation from service during the 365-day periodyear following the change in control date, then the exercisevesting date for any then-nonexercisablethe option shall be accelerated to the date of the participant'sparticipant’s involuntary separation from service. If at the effective time of the change in control Banner'sBanner’s successor
70 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Summary
Terms and Conditions of Stock Appreciation Rights.
Stock appreciation rights may be granted to participants at any time and from time to time as determined by the Committee, subject to the maximum award limitations in the Plan. Each stock appreciation right will be evidenced by an award agreement that specifies the terms of the award, including the number of shares subject to the award, vesting conditions, exercise price per share (which, except in the case of a substitute award (as defined in the 2023 Omnibus Incentive Plan), must be equal to at least 100% of the fair market value of a share on the date of grant), the exercise period (which may not exceed ten years) and whether the stock appreciation right will be settled in cash or shares or a combination thereof. No stock appreciation right may vest earlier than one year after the date on which it is granted. A stock appreciation right may be granted in tandem with a stock option or be granted independently of any option. In the case of a stock appreciation right that is granted in tandem with a stock option, the exercise of one award will reduce, on a one-to-one basis, the number of shares covered by the other award. The Plan provisions on the vesting and exercising of stock appreciation rights after termination of service are essentially the same as those applicable to stock options.The exercise of a stock appreciation right will entitle its holder to receive an amount of cash or shares having a value equal to the difference between the fair market value of a share on the date of exercise over the exercise price, multiplied by the number of shares with respect to which the stock appreciation right is exercised.
If a change in control (as defined in the Plan) occurs prior to when a participant'sparticipant’s stock appreciation rights have vested, and the participant experiences an involuntary separation from service during the 365-day periodyear following the change in control date, then the vesting date for any then-unvested stock appreciation rights shall be accelerated to the date of the participant'sparticipant’s involuntary separation from service. If at the effective time of the change in control Banner'sBanner’s successor does not either assume the stock appreciation right or replace it with an award that is determined by the Committee to be at least equivalent in value to such outstanding stock appreciation right on the date of the change in control, then the vesting date of any nonvested stock appreciation rights shall be accelerated to the date of the change in control.
Terms and Conditions of Restricted Stock Awards.
During the vesting period, unless specified otherwise in the applicable award agreement, a holder of shares of restricted stock will have all the rights of a shareholder, including the right to vote and the right to receive dividends paid with respect to those shares. A holder of restricted stock units will not have voting rights with respect to the underlying shares until those shares are issued and, unless otherwise provided in the applicable award agreement, will not have the right to receive dividend
BANNER CORPORATION 2023 PROXY STATEMENT | 71 |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Summary
equivalents in the case of any dividends paid on the shares. However, Dividends and dividend equivalents on restricted stock or restricted stock units vest and are paid only if and to the extent those underlying awards become vested. Shares of restricted stock and restricted stock units generally may not be sold, assigned, transferred, pledged or otherwise encumbered by the participant during the restricted period.
Unless otherwise determined by the Committee and specified in the award agreement: (1) if a participant terminates service with Banner and its affiliates for any reason other than death, disability, or prior to a change in control of Banner as defined in the Plan, any unvested shares of restricted stock or any unvested restricted stock units held by the participant will be forfeited; and (2) if a participant terminates service with Banner and its affiliates due to death or disability, any unvested shares of restricted stock or any unvested restricted stock units held by the participant will vest
If a change in control (as defined in the Plan) occurs prior to whenvesting of a participant'sparticipant’s restricted stock award, has vested, and the participant experiences an involuntary separation from service during the 365-day periodyear following the change in control date, then the vesting date for any unvested restricted stock award shall be accelerated to the date of the participant'sparticipant’s involuntary separation from service. If at the effective time of the change in control Banner'sBanner’s successor does not either assume the restricted stock award right or replace it an award that is determined by the Committee to be at least equivalent in value to such outstanding restricted stock award on the date of the change in control, then the vesting date of any unvested restricted stock award shallwill be accelerated to the date of the change in control.
Terms and Conditions of Performance Shares andAwards. Performance Units.
The Committee will establish a maximum amount of a participant'sparticipant’s award, denominated in shares, in the case of performance shares, or units, in the case of performance units. Each award of performance shares or performance unitsaward will be evidenced by an award agreement, which will set forth (1) the target and maximum amount payable to the participant, (2) the performance goals and level of achievement versus these goals that will determine the amount of payment, (3) the performance period as to which performance will be measured, (4) the form and timing of any payment earned by virtue of performance, (5) whether and the extent to which participants holding performance shares or performance units will receive dividends or dividend equivalents, (6) restrictions on the alienation or transfer of the award prior to actual payment and restrictions on the sale or transfer of shares following actual payment of an award paid in shares, (7) forfeiture provisions, (8) whether the award will be become payable upon an involuntary separation from service following a change in control, and if so, the amount of the performance award benefit, and (9) such other terms as may be determined by the Committee.
72 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Summary
After the end of each performance period, the Committee will determine the extent to which performance goals have been attained, and the satisfaction of any other terms and conditions. The Committee will determine what, if any, payment is due with respect to an award and, in the case of performance units, whether the payment will be made in cash, shares or a combination of both. Any dividends or dividend equivalents with respect to performance awards will vest and are paid only if and to the extent those underlying awards become vested. Payment will be made in a lump sum, generally within 60 days after the Committee determines that a payment is due, unless otherwise provided in an award. Notwithstanding satisfaction of any performance goals, the amount paid under an award ofa performance shares or performance unitsawards on account of either financial performance or personal performance evaluations may be reduced by the Committee in its discretion, if the terms of the award so provide.
Unless provided otherwise in the participant'sparticipant’s award agreement related to performance shares or performance units:
• | if the employment or service of a participant terminates before the end of a performance period due to death, disability or retirement after reaching age 65, then to the extent it is determined by the Committee following the end of the performance period that the performance goals have been attained, the participant will be entitled to a pro rata payment based on the number of months’ continuous service during the performance period but based on the achievement of performance goals during the entire performance period. Payment under these circumstances will be made at the same time payments are made to participants who did not terminate service during the performance period. |
• | if the employment or service of a participant terminates before the end of a performance period for any other reason, all outstanding performance awards made to the participant will be cancelled; however, if the |
• | performance awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the participant’s death, to the participant’s designated beneficiary or, if no beneficiary has been designated by the participant, by will or by the laws of descent and distribution. |
Terms and Condition of Other Share-Based Awards.
The Committee may, subject to the award limitations in the Plan, grant to any participant other share-based awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares or factors that may influence the value of shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into shares, purchase rights for shares, awards with value and payment contingent upon performance of Banner or an affiliate or business unit thereof, or any other factors designated by the Committee, and awards valued by reference to the book value of shares or the value of securities of, or the performance of specified affiliates or other business units of Banner. The Committee shall determine the terms and conditions of such other stock-based awards, including the number of underlying shares, the purchase price, if any, vesting, if any, forfeiture and transferability.Terms and Conditions of Cash Awards.
The Committee also may grant cash awards to any participant. The Committee will determine the terms and conditions of cash awards, including, without limitation, any performance criteria which must beProhibition on Repricing of Options ofor Stock Appreciation Rights.
BANNER CORPORATION 2023 PROXY STATEMENT | 73 |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Important Considerations
appreciation right, or cancel the stock option or stock appreciation right at a time when the exercise price is greater than the fair market value of Banner'sBanner’s common stock in exchange for another award.
Forfeiture of Awards.
If the holder of an unvested award terminates service other than due to death, disability, retirement (with respect to performance awards only) or a change in control of Banner as defined in the Plan, the unvested portion of the award will be forfeited by the holder. Upon any termination of service for cause, all awards not previously exercised or paid shall be forfeited immediately by the holder.Transferability of Awards.
Stock options, stock appreciation rightsAmendment and Termination of the Plan; Clawback; Section409A.
TheAdjustments in the Event of Business Reorganization; Other Adjustments.
In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, exchange of shares or other securities, stock dividend or other special and nonrecurring dividend or distribution, liquidation, dissolution or other similar corporate transaction or event, affects the shares of Banner common stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of participants, the Committee must, in such manner as it deems equitable, adjust the number of shares as to which future awards may be made and theImportant Considerations
The 20182023 Omnibus Incentive Plan contains a number of provisions that we believe are consistent with, and protective of, the interests of shareholders, our compensation philosophy, recent developments in compensation practices and sound corporate governance practices, including:
• | No liberal share |
• | No repricing of stock options and stock appreciation |
74 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Important Considerations
• | No discounted stock |
• | No dividends on unearned |
Minimum vesting period. The Plan generally imposes a |
Banner currently maintains the Long-Term Incentive Plan, 2012 Restricted Stock and Incentive Bonus Plan, and 2014 Omnibus Incentive Plan, and 2018 Omnibus Incentive Plan. Stock options, shares of restricted common stock and phantom stock were awarded pursuant toOutstanding awards under these plans and outstanding awards will not be affected by adoption of the 20182023 Omnibus Incentive Plan. As of March 1, 2018, 523,87623, 2023, 366,138 shares were subject to outstanding awards under the existing plans and 515,943 shares remained available for award under the existing plans.2014 and 2018 Omnibus Incentive Plans. We believe that the availability of stock and incentive cash compensation programs is an important element of Banner'sBanner’s overall retention, recruitment, incentive compensation and growth strategies and that the adoption of the 20182023 Omnibus Incentive Plan will assist us in meeting the objectives of these strategies.
In determining the number of shares to be reserved for issuance under the 20182023 Omnibus Incentive Plan and analyzing the impact on our shareholders of making equity awards, we considered our "burn rate"“burn rate” and "overhang." "Burn rate"“overhang.” “Burn rate” provides a measure of the potential dilutive impact of our equity award program. Set forth below is a table that reflects our burn rate for 2017, 20162022, 2021 and 20152020 as well as the average over those years.
Fiscal Year | Restricted Stock/Units Granted | Options Granted | Total Granted | Basic Weighted Average Number of Common Shares Outstanding | Gross Burn Rate (1) | |||||
2017 | 153,777 | -- | 153,777 | 32,888,007 | .0047 | |||||
2016 | 177,775 | -- | 177,775 | 33,820,148 | .0053 | |||||
2015 | 155,183 | -- | 155,183 | 23,801,373 | .0065 | |||||
Three-year average | 162,245 | -- | 162,245 | 30,169,843 | .0054 |
Fiscal Year | Restricted Stock/Units Granted | Options Granted | Total Granted | Basic Weighted Average Number of Common Shares Outstanding | Gross Burn Rate (1) | |||||||||||||||
2022 | 169,564 | 169,564 | 34,264,322 | 0.0049 | ||||||||||||||||
2021 | 178,704 | — | 178,704 | 34,610,056 | 0.0052 | |||||||||||||||
2020 | 367,619 | — | 367,619 | 35,264,252 | 0.0104 | |||||||||||||||
Three-year average | 238,629 | — | 238,629 | 34,712,877 | 0.0068 |
(1) | Gross burn rate is defined as the number of shares of common stock underlying awards granted in the year divided by the basic weighted average number of shares of common stock outstanding. |
The following table provides information as of March 1, 201823, 2023 regarding our total outstanding shares of common stock, shares underlying outstanding awards under prior plans and shares that would be added upon shareholder approval of the 20182023 Omnibus Incentive Plan:
As of March | ||||
(a) Shares underlying outstanding awards | 366,138 | |||
(b) Shares outstanding | 34,238,553 | |||
(c) Overhang (shares underlying outstanding | 1.07 | % | ||
(d) Shares available for grant under prior plans | 515,943 | |||
(e) Total overhang (shares underlying outstanding awards | 2.58 | % | ||
(f) Shares Board seeks approval for | 625,000 | |||
(g) Shares Board seeks approval for, as a percentage of shares outstanding [((f)/(b))%] | 1.83 | % |
BANNER CORPORATION 2023 PROXY STATEMENT | 75 |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Federal Income Tax Consequences
Federal Income Tax Consequences
The following discussion provides a general overview of the federal tax consequences that apply to non-qualified stock options, incentive stock options, restricted stock awards, stock appreciation rights, performance awards and other awards, as of the date of this Proxy Statement.
Non-qualified Stock Options.
Under current federal tax law, the non-qualified stock options granted under theIncentive Stock Options.
Neither the grant nor the exercise of an incentive stock option under theRestricted Stock Awards.
Stock Appreciation Rights.
In general, the grant of a stock appreciation right will not result in income to the recipient or in a tax deduction to Banner. Upon the settlement of a stock appreciation right,76 | BANNER CORPORATION 2023 PROXY STATEMENT |
Proposal 4 – Adoption of 2023 Omnibus Incentive Plan | Proposed Awards Under the Plan
whether in cash or in shares of Banner stock, the recipient will recognize compensation income equal to the aggregate value of the payment received, and Banner generally will be entitled to an income tax deduction in the same amount.
Performance Shares or Performance Units.
Other Share or Cash Awards.
In general, other awards of Banner stock or cash will be includible as compensation income to the participant upon receipt, and Banner will be entitled to an income tax deduction at such time equal to the amount of income recognized by the participant.Proposed Awards Under the Plan
No awards have been proposed under the 20182023 Omnibus Incentive Plan as of the date of this Proxy Statement.
Equity Compensation Plan Information
The following table summarizes share and exercise price information regarding our equity compensation plans as of December 31, 2017:
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average of outstanding (b) | Number of securities for future issuance under equity | |||||||||
(c) | ||||||||||||
Equity compensation plans approved by security holders: | — | — | 527,661 | |||||||||
Equity compensation plans not approved by security holders: | — | — | ||||||||||
Total | — | |||||||||||
527,661 | ||||||||||||
Voting Recommendation
The Board of Directors unanimously recommends that you vote FOR the ratificationadoption of the appointment of Moss Adams LLP as our independent registered public accounting firm.Banner Corporation 2023 Omnibus Incentive Plan.
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Audit Fees (1) | $ | 1,030,264 | $ | 1,070,138 | ||||
Audit-Related Fees | -- | -- | ||||||
Tax Fees (2) | 4,424 | 14,394 | ||||||
All Other Fees | -- | -- | ||||||
____________ |
BANNER CORPORATION 2023 PROXY STATEMENT | 77 |
Miscellaneous
Miscellaneous
The Board of Directors is not aware of any business to come before the annual meeting other than those matters described in this Proxy Statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the person or persons voting the proxies.
We will bear the cost of solicitation of proxies, and will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of Banner'sBanner’s common stock. In addition to solicitations via the Internet and by mail, our directors, officers and regular employees may solicit proxies personally or by telecopier or telephone without additional compensation.
Banner’s 2022 Annual Report to Shareholders, including financial statements, has been mailed to all shareholders of record as of the close of business on March 1, 2018.23, 2023. Any shareholder who has not received a copy of the Annual Report may obtain a copy by writing to us or by accessing our proxy materials online at www.bannerbank.com/proxymaterialshttp://www.investorvote.com/banr.proxymaterials. The Annual Report is not to be treated as part of the proxy solicitation material or having been incorporated herein by reference.
A copy of Banner'sBanner’s Annual Report on Form 10-K for the year ended December 31, 2017,2022, as filed with the SEC, will be furnished without charge to shareholders of record as of March 1, 201823, 2023, upon written request to Albert H. Marshall,Sherrey Luetjen, Secretary, Banner Corporation, 10 S. First Avenue, Post Office Box 907, Walla Walla, Washington 99362.
78 | BANNER CORPORATION 2023 PROXY STATEMENT |
Shareholder Proposals of shareholders
Shareholder Proposals
Shareholder proposals intended to be presented at our annual meeting to be held in 20192024 must be received by us no later than November 23, 2018December 20, 2023 to be considered for inclusion in the proxy materials and form of proxy relating to that meeting. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act.
In addition, our Restated Articles of Incorporation provide that in order for business to be brought before the annual meeting, a shareholder must deliver notice to the Secretary not less than 30 nor more than 60 days prior to the date of the annual meeting; provided that if less than 31 days'days’ notice of the annual meeting is given to shareholders, such notice must be delivered not later than the close of the tenth day following the day on which notice of the annual meeting was mailed to shareholders. The notice must state the shareholder'sshareholder’s name, address and number of shares of Banner common stock held, and briefly discuss the business to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any interest of the shareholder in the proposal.
Our Restated Articles of Incorporation provide that if a shareholder intends to nominate a candidate for election as a director, the shareholder must deliver written notice of his or her intention to our Secretary not less than 30 days nor more than 60 days prior to the date of the annual meeting of shareholders; provided, however, that if less than 31 days'days’ notice of the annual meeting is given to shareholders, such written notice must be delivered to our Secretary not later than the close of the tenth day following the day on which notice of the annual meeting was mailed to shareholders. The notice must set forth (1) the name, age, business address and, if known, residence address of each nominee for election as a director, (2) the principal occupation or employment of each nominee, (3) the number of shares of Banner common stock which are beneficially owned by each such nominee, (4) such other information as would be required to be included pursuant to the Securities Exchange Act in a proxy statement soliciting proxies for the election of the proposed nominee, including, without limitation, such person'sperson’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected, and (5) as to the shareholder giving such notice (a) his or her name and address as they appear on our books and (b) the class and number of Banner shares which are beneficially owned by such shareholder.
BY ORDER OF THE COMPENSATION COMMITTEE
BOARD OF DIRECTORS
SHERREY LUETJEN
SECRETARY, BANNER CORPORATIONANDTHE COMPENSATION COMMITTEEOF BANNER BANK
Walla Walla, Washington
April 18, 2023
BANNER CORPORATION 2023 PROXY STATEMENT | 79 |
Appendix A
BANNER CORPORATION
2023 OMNIBUS INCENTIVE PLAN
TABLE OF CONTENTS
ARTICLE VIII PERFORMANCE AWARDS | A-18 | ||||||
A-18 | |||||||
SIZEOF PERFORMANCE AWARD. | A-18 | ||||||
A-18 | |||||||
PERFORMANCE GOALS. | A-19 | ||||||
A-19 | |||||||
PAYMENTOF AWARDS. | A-19 | ||||||
A-20 | |||||||
TERMINATIONOF CONTINUOUS SERVICEFOR OTHER REASONS. | A-20 | ||||||
NONTRANSFERABLITY. | A-20 | ||||||
ARTICLE IX OTHER STOCK-BASED AWARDS AND CASH AWARDS | A-20 | ||||||
OTHER STOCK-BASED AWARDS. | A-20 | ||||||
A-21 | |||||||
ARTICLE X ADDITIONAL TAX PROVISION | A-21 | ||||||
TAX WITHHOLDING RIGHTS. | |||||||
A-21 | |||||||
ARTICLE XI AMENDMENT AND TERMINATION | A-21 | ||||||
TERMINATION | A-21 | ||||||
A-21 | |||||||
ADJUSTMENTSINTHE EVENTOF BUSINESS REORGANIZATION. | |||||||
ARTICLE XII MISCELLANEOUS | A-22 | ||||||
A-22 | |||||||
A-22 | |||||||
A-23 | |||||||
A-23 | |||||||
A-23 | |||||||
A-23 | |||||||
A-23 | |||||||
NOTICES. | A-23 | ||||||
APPROVALOF SHAREHOLDERS. | A-24 | ||||||
CLAWBACK. | A-24 | ||||||
COMPLIANCEWITH SECTION 409A. | A-24 |
Appendix A
Banner Corporation2018
2023 Omnibus Incentive Plan
ARTICLE I
ESTABLISHMENT, PURPOSE AND DURATION
Section 1.1
Establishment of the Plan.The Company hereby establishes an incentive compensation plan to be known as the "Banner“Banner Corporation 20182023 Omnibus Incentive Plan"Plan” (the "Plan"“Plan”), as set forth in this document. The Plan permits the granting of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units,Awards, Other Stock-Based Awards and Cash Awards.
The Plan was originally adopted effective as of February 26, 201827, 2023 by the Board, and became effective on February 26, 2018[May 24, 2023] (the "Effective Date"“Effective Date”), the date the Plan was approved by the Company'sCompany’s shareholders.
As of the Effective Date, this Plan shall be treated as a new plan for purposes of Section 422 of the Code (as herein defined)defined below), so that an Option granted hereunder on a date that is not more than ten years after the Effective Date, and that is intended to qualify as an Incentive Stock Option under Section 422 of the Code, complies with the requirements of Section 422(b)(2) of the Code and the applicable regulations thereunder.
Section 1.2
Purpose of the Plan.The purpose of the Plan is to promote the success, and enhance the value, of the Company by linking the personal interests of Employees and Directors with those of Company shareholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Employees and Directors upon whose judgment, interest, and special effort the successful conduct of its operation largely is dependent.
Section 1.3
Duration of the Plan.Subject to approval by the shareholders of the Company, the Plan shall commence on the Effective Date, as described in Section 1.1, herein, and shall remain in effect, subject to the right of the Board to terminate the Plan at any time pursuant to Article XII herein.XII. However, in no event may an Award be granted under the Plan on or after the tenth anniversary of the Effective Date.
ARTICLE II
DEFINITIONS
The following definitions shall apply for the purposes of thisthe Plan, unless a different meaning is plainly indicated by the context:
Affiliate
means anyAward
meansAward Agreement
means a written instrument evidencing an Award under the Plan and establishing the terms and conditions thereof.BANNER CORPORATION 2023 PROXY STATEMENT | A-1 |
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Beneficiary means the Person designated by a Participant to receive any Shares subject to a Restricted Stock Award made to such Participant that become distributable, to have the right to exercise any Options or Stock
Board
means the Board of Directors ofCash Award
means an Award pursuant to Article IX.Change in Control
means the first to occur of aCode
means the Internal Revenue Code of 1986, as amended from time to time.Committee
means the Committee described in Article IV.Company
means Banner Corporation, a Washington corporation, and any successor thereto.Continuous Service means, unless the Committee provides otherwise in an Award Agreement, that the Participant’s service with the Company or an Affiliate, whether as an Employee or a Director,
is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the Company or an Affiliate as an Employee or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service; provided further that if any Award is subject to Section 409A, this sentence shall only be given effect to the extent consistent with Section 409A. For example, a change in status from an Employee of the Company to a Director of an Affiliate will not constitute an interruption of Continuous Service. The Committee or its delegate, in its sole discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal or family leave of absence.Director means any individual who is a member of the Board or the board of directors of an Affiliate or an advisory or emeritus director of the Company or an Affiliate who is not currently an Employee.
Disability
means a total and permanent disability, within the meaning of Section 22(e)(3) of the Code, as determined by the Committee in good faith, upon receipt of sufficient competent medical advice from one or more individuals, selected by the Committee, who are qualified to give professional medical advice.Domestic Relations Order
means a domestic relations order that satisfies the requirements of Section 414(p)(1)(B) of the Code, or any successor provision, as if such section applied to the applicable Award.Employee
means a full-time or part-time employee of the Company or an Affiliate. Directors who are not otherwise employed by the Company or an Affiliate shall not be considered EmployeesExchange Act
means the Securities Exchange Act of 1934, as amended.A-2 | BANNER CORPORATION 2023 PROXY STATEMENT |
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Exercise Period means the period during which an Option or Stock Appreciation Right may be exercised.
Exercise Price
means the price per Share at which Shares subject to an Option may be purchased upon exercise of the Option and on the basis of which the Shares due upon exercise of a Stock Appreciation Right is computed.Fair Market Value
means, with respect to a Share on a specified date:(a)
If the Shares are listed on any U.S. national securities exchange registered under the Securities Exchange Act of 1934(b)
If the Shares are not listed on a National Exchange but are traded on the over-the-counter market or other similar system, the mean between the closing bid and the asked price for the Shares at the close of trading in the over-the-counter market or other similar system on the applicable date, or if the applicable date is not a trading day, on the trading day immediately preceding the applicable date; and(c)
In the absence of such markets for the Shares, the Fair Market Value shall be determined in good faith by the Committee.Notwithstanding anything hereinin the Plan to the contrary, the determination of Fair Market Value shall comply with Section 409A, where necessary for the Award or benefit provided thereunder to comply with Section 409A.
Family Member
means with respect to any Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, registered domestic partner (as determined under state law), former spouse, sibling, niece, nephew, mother-in-law,Incentive Stock Option
meansInvoluntary Separation from Service
means a termination by the Company or Affiliate without “cause” as defined in the relevant incentive plan and/or employment agreement, as applicable, provided that such termination must also qualify as anNon-Qualified Stock Option
meansOfficer means eithera person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
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Option means an Incentive Stock Option or a Non-Qualified Stock Option.
Option Holder
means, at any relevant time with respect to an Option, the person having the right to exercise the Option.Other Stock-Based Award
Participant
means any Employee or Director who is selected by the Committee to receive an Award.Performance Period
Performance Period means the period of time as specified by the Committee over which the achievement of performance goals related to Performance Awards is measured.
Period of Restriction
means the period during which the entitlement of a Participant under an Award is limited in some way or subject to forfeiture, in whole or in part, based on the passage of time, the achievement of performance goals, or upon the occurrence of other events as determined by the Committee, in its discretion.Person
means an individual, a corporation, a partnership, a limited liability company, an association, a joint-stock company, a trust, an estate, an unincorporated organization and any other business organization or institution.Plan
means the Banner CorporationRestricted Award means an Award of Restricted Stock
or Restricted Stock Units pursuant to Article VII.Restricted Stock means an award of Shares subject to a Period of Restriction granted pursuant to Article VII herein.
Restricted Stock Units pursuant to Article VII.
Retirement
means, subject to the terms of an Award, in the case of an Employee, the termination of aSection 409A
means Section 409A of the Code and any regulations or guidance of general applicability thereunder.Share
means a share of common stock ofStock Appreciation Right
meansStock Appreciation Right Holder
means, at any relevant time with respect to a Stock Appreciation Right, the person having the right to exercise the Stock Appreciation Right.A-4 | BANNER CORPORATION 2023 PROXY STATEMENT |
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Termination for Cause means termination of Continuous Service upon an intentional failure to perform stated duties, a breach of a fiduciary duty involving personal dishonesty which results in material loss to the Company or any of its Affiliates or a willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or a final cease-and-desist order which results in material loss to the Company or one of its Affiliates. No act or failure to act on Participant'sParticipant’s part shall be considered willful unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Company. Notwithstanding the above, if a Participant is subject to a different definition of termination for cause in an employment or severance or similar agreement with the Company or any Affiliate, such other definition shall control.
Vesting Date
means, with respect to an Option or a Stock Appreciation Right, the date or dates on which theARTICLE III
AVAILABLE SHARES -– ELIGIBILITY -– PARTICIPATION
Section 3.1
Shares Available Under the Plan.Subject to adjustment as provided in Section 11.3, the total number of Shares available for grant under the Plan shall be 900,000625,000 (the "Limit"“Limit”). These Shares may be either authorized but unissued, or Shares that have been reacquired by the Company. Awards that are not settled in Shares shall not be counted against the Limit. Shares representing tandem Stock Appreciation Rights shall for such purpose only be counted as either Shares representing Options outstanding or Stock Appreciation Rights outstanding, but not as both.
Section 3.2
Maximum Awards.The maximum aggregate number of Shares that may be issued pursuant to Options that are Incentive Stock Options is 900,000,625,000, subject to adjustment as provided in Section 11.3 herein.11.3. Notwithstanding any provision in the Plan to the contrary and subject to adjustment as provided in Section 11.3, herein, the maximum aggregate number of Shares with respectsubject to one or more Awards that may be granted to a non-employee Director, together with any one personcash fees paid to the non-employee Director during any calendar year shall be 100,000 (or 10,000not exceed $300,000 (calculating the value of any Awards based on the grant date fair value for financial reporting purposes).
Section 3.3 Substitute Awards.
Awards may, in the casesole discretion of non-employee Directors), the maximum aggregate numberCommittee, be granted under the Plan in assumption of, Sharesor in substitution for, outstanding awards previously granted by an entity acquired by the Company or with respectwhich the Company combines (“Substitute Awards”). Substitute Awards shall not be counted against the Limit; provided, that, Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding options intended to qualify as Incentive Stock Options shall be counted against the Incentive Stock Option limit. Subject to applicable stock exchange requirements, available shares under a shareholder-approved plan of an entity directly or Stock Appreciation Rights thatindirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect such acquisition or transaction) may be granted to any one person during any calendar yearused for Awards under the Plan and shall be
Section 3.3
For purposes of this Article III, Shares shall be considered issued pursuant to the Plan only if actually issued upon the exercise of an Award. Any Award subsequently forfeited, in whole or in part,
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shall not be considered issued. If any Award granted under the Plan is settled in cash, terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available for the grant of an Award under the Plan. Shares used to pay the Exercise Price of an Option and Shares used to satisfy tax withholding obligations shall not be available for future Awards under the Plan. To(For the avoidance of doubt, to the extent that Shares are delivered pursuant to the exercise of an Option or a stock-settled Stock Appreciation Right, the number of underlying Shares as to which the exercise is related shall be counted against the number of Shares available for Awards, as opposed to only counting the Shares issued. The number of underlying Shares related to Restricted Stock Units shall be counted against the number of Shares available for Awards even if the Restricted Stock Unit is satisfied in cash rather than Shares.
Section 3.4
Persons eligible to participate in the Plan include all Employees and Directors.
Section 3.5
Subject to the provisions of the Plan, the Committee may, from time to time, select from all Employees and Directors, those to whom Awards shall be granted and shall determine the nature, type and amount of each Award. No Employee or Director shall be entitled to be granted an Award under the Plan.
Section 3.7 Minimum Vesting Period.
Notwithstanding any other provision of the Plan to the contrary, Awards granted under the Plan that are payable in Shares shall vest no earlier than the first anniversary of the grant date of the Award, except that this restriction shall not apply to: (a) Substitute Awards, (b) Shares delivered in lieu of fully vested cash Awards, (c) Awards to non-employee Directors (which may vest on the earlier of (i) the one year anniversary of the date of grant or (ii) the next annual meeting of shareholders that occurs prior to such first anniversary, but in any case at least 50 weeks after the date of grant), (d) Awards with respect to a maximum of 5% of the aggregate maximum number of shares specified in Section 3.1, subject to adjustment as provided in Section 11.3, and (e) Awards that may become vested in connection with a termination of Continuous Service on account of death or Disability. Notwithstanding the minimum vesting required by the preceding sentence, the Committee may provide for accelerated vesting or exercisability of an Award, or otherwise act to waive or lapse any restriction on an Award, in connection with a Participant’s death, Disability or Retirement, or in connection with a Change in Control.
ARTICLE IV
ADMINISTRATION
Section 4.1
Committee.(a)
The Plan shall be administered by a Committee appointed by the Board for that purpose and consisting of not less than two (2) members of the Board. Each member of the Committee shall be a(b)
The act of a majority of the members present at a meeting duly called and held shall be the act of the Committee. Any decision or determination reduced to writing and signed by all members shall be as fully effective as if made by unanimous vote at a meeting duly called and held.A-6 | BANNER CORPORATION 2023 PROXY STATEMENT |
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(c)The Committee'sCommittee’s decisions and determinations under the Plan need not be uniform and may be made selectively among Participants, whether or not such Participants are similarly situated.
Section 4.2
Committee Powers.Subject to the terms and conditions of the Plan and such limitations as may be imposed by the Board, the Committee shall be responsible for the overall management and administration of the Plan. The Committee shall have full power except as limited by law or by the charter or by-laws of the Company or by resolutions adopted by the Board, and subject to the provisions herein,of the Plan, to determine the size and types of Awards; to determine the terms and conditions of such Awards in a manner consistent with the Plan; to construe and interpret the Plan and any agreement or instrument entered into under the Plan; to establish, amend, or waive rules and regulations for the Plan'sPlan’s administration; and (subject to the provisions of Article XI herein)XI) to amend or otherwise modify the Plan or the terms and conditions of any outstanding Award to the extent such terms and conditions are within the discretion
ARTICLE V
STOCK OPTIONS
Section 5.1
Grant of Options.(a)
Subject to the limitations of the Plan, the Committee may, in its discretion, grant to a Participant an(b)
(i) specify the number of Shares covered by the Option; (ii) specify the Exercise Price; (iii) specify the Exercise Period; (iv) specify the Vesting Date; and (v) contain such other |
Section 5.2
Size of Option.Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted Optionspursuant to an Option shall be determined by the Committee, in its discretion.
Section 5.3
Exercise Price.The price per Share at which an Option may be exercised shall be determined by the Committee, in its discretion; provided, however, that the Exercise Price shall not be less than the Fair Market Value of a
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Share on the date on which the Option is granted.
Section 5.4
Exercise Period.The Exercise Period during which an Option may be exercised shall commence on the Vesting Date. It shall expire on the earliest of:
(a) the date specified by the Committee in the Award Agreement;
(b) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant'sParticipant’s termination of Continuous Service, other than on account of death, Disability, Retirement or a Termination for Cause;
(c) unless otherwise determined by the Committee and set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant's termination of Service due to death, Disability or Retirement;
(d) the last day of the ten-year period commencing on the date on which the Option was granted.
An Option that remains unexercised at the close of business on the last day of the Exercise Period shall be canceled without consideration at the close of business on that date.
Section 5.5
Vesting Date.(a)
(b) Subject to Section 3.7: (i) each Option shall vest and therefore become exercisable no earlier than one year after the date on which the Option is granted, whether vesting pursuant to a schedule based on the continued service of the Participant, the achievement of performance or other criteria, or a combination of continued service and achievement; and (ii) the Committee may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Award Agreement upon the occurrence of a specified event. No Option may be exercised for a fraction of a Share.
(c) The following provisions apply if an Option Holder terminates Continuous Service prior to the Vesting Date:
(i) if the Option Holder terminates Continuous Service prior to the Vesting Date for any reason other than death or Disability or a Change in Control, any unvested Option shall be forfeited without consideration;
(ii) if the Option Holder terminates Continuous Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant’s termination of Continuous Service; and
(iii) if a Change in Control occurs prior to the Vesting Date of an Option that is outstanding on the date of the Change in Control, and the Option Holder experiences an Involuntary Separation from Service during the 365-day period following the date of such Change in Control, then
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Appendix A
the Vesting Date for any non-vested portion of the Option shall be accelerated to the date of the Participant’s Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company’s business and/or assets does not either assume the outstanding Option or replace the outstanding Option with an award that is determined by the Committee or specifiedto be at least equivalent in value to such outstanding Option on the Award Agreement (but subjectdate of the Change in Control, then the Vesting Date of such outstanding Option shall be accelerated to Section 4.2(b)):
Section 5.6
Additional Restrictions on Incentive Stock Options.An Option designated by the Committee to be an Incentive Stock Option shall be subject to the following provisions:
(a)
Notwithstanding any other provision of this Plan to the contrary, no Participant may receive an Incentive Stock Option under the Plan if such Participant, at the time the(b)
Each Participant who receives Shares upon exercise of an Option that is an Incentive Stock Option shall give the Company prompt notice of any sale of Shares prior to a date which is two years from the date the(c)
The aggregate Fair Market Value (determined with respect to each Incentive Stock Option at the time such Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by a Participant during any calendar year (under this Plan or any other plan of the Company or an Affiliate) shall not exceed $100,000 and the term of the Incentive Stock Option shall not be more than ten years.(d)
Any Option under this Plan which is designated by the Committee as an Incentive Stock Option but fails, for any reason, to meet the foregoing requirements shall be treated as a Non-Qualified Stock Option.Section 5.7
Method of Exercise.(a)
Subject to the limitations of the Plan and the Award Agreement, an Option Holder may, at any time on or after the Vesting Date and during the Exercise Period, exercise his or her right to purchase all or any part of the Shares to which the Option relates; provided, however, that the minimum number of Shares which may be purchased at any time shall be 100, or, if less, the total number of Shares relating to the Option which remain un-purchased. An Option Holder shall exercise an Option to purchase Shares by:(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Option;
(ii) delivering to the Committee full payment for the Shares as to which the Option is to be exercised; and
(iii) satisfying such other conditions as may be prescribed in the Award Agreement.
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(b)
The Exercise Price of Shares to be purchased upon exercise of any Option shall be paid in full:(i) in cash (by certified or bank check or such other instrument as the Company may accept); or
(ii) if and to the extent permitted by the Committee, in the form of Shares already owned by the Option Holder as of the exercise date and having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or
(iii) if and to the extent permitted by the Committee, by the Company withholding Shares otherwise issuable upon the exercise having an aggregate Fair Market Value on the date the Option is exercised equal to the aggregate Exercise Price to be paid; or
(iv) by a combination thereof.
Payment for any Shares to be purchased upon exercise of an Option may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price and applicable tax withholding amounts (if any), in which event the Shares acquired shall be delivered to the broker promptly following receipt of payment.
(c)
When the requirements ofSection 5.8
Limitations on Options.(a)
An Option by its terms shall not be transferable by the Option Holder other than by will or the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, and shall be exercisable, during the life of the Option Holder, only by the Option Holder or an alternate payee designated pursuant to such a Domestic Relations Order (but such transfer shall cause an Incentive Stock Option to become an Non-Qualified Stock Option as of the day of the transfer); provided, however, that a Participant may, at any time at or after the grant of a Non-Qualified Stock Option under the Plan, apply to the Committee for approval to transfer all or any portion of such Non-Qualified Stock Option which is then unexercised to suchA-10 | BANNER CORPORATION 2023 PROXY STATEMENT |
Appendix A
and obligations which would attach thereunder to the Participant. If a privilege of the Option depends on the life, Continuous Service or other status of the Participant, such privilege of the Option for the transferee shall continue to depend upon the life, Continuous Service or other status of the Participant. The Committee shall have full and exclusive authority to interpret and apply the provisions of the Plan to transferees to the extent not specifically addressed herein.
(b)
The(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or
(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
(c)
An Option Holder may designate a Beneficiary to receive any Options that may be exercised after his or her death. Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by the Committee. In the event that the designated Beneficiary dies prior to the Option Holder, or in the event that no Beneficiary has been designated, any Options that may be exercised following the OptionSection 5.9
Prohibition Against Option Repricing.Except as provided in Section 11.3 and notwithstanding any other provision of this Plan, neither the Committee nor the Board shall have the right or authority following the grant of an Option pursuant to the Plan to amend or modify the Exercise Price of any such Option, or to cancel the Option at a time when the Exercise Price is greater than the Fair Market Value of the Shares in exchange for another Option or Award.
ARTICLE VI
STOCK APPRECIATION RIGHTS
Section 6.1
Grant of Stock Appreciation Rights.(a)
Subject to the limitations of the Plan, the Committee may, in its discretion, grant to a Participant a Stock Appreciation Right. A Stock Appreciation Right must be designated as either a tandem Stock Appreciation Right or a stand-alone Stock Appreciation Right and, if not so designated, shall be deemed to be a stand-alone Stock Appreciation Right. A tandem Stock Appreciation Right may only be granted at the same time as the Option to which it relates. The exercise of a tandem Stock Appreciation Right shall cancel the related Option for a like number of Shares and the exercise of a related Option shall cancel a tandem Stock Appreciation Right for a like number of Shares.BANNER CORPORATION 2023 PROXY STATEMENT | A-11 |
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(b)Any Each Stock Appreciation Right granted shall be evidenced by an Award Agreement which shall:
(i) specify the number of Shares covered by the Stock Appreciation Right;
(ii) specify the Exercise Price;
(iii) specify the Exercise Period;
(iv) specify the Vesting Date;
(v) specify that the Stock Appreciation Right shall be settled in cash or Shares, or a combination of cash and Shares; and
(vi) contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
The terms and conditions of any Stock Appreciation Right shall not include provisions that provide for the deferral of compensation other than the recognition of income until the exercise of the Stock Appreciation Right (so that the Stock Appreciation Right will not be subject to Section 409A).
Section 6.2
Size of Stock Appreciation Right.Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted pursuant to a Stock Appreciation RightsRight shall be determined by the Committee, in its discretion.
Section 6.3
Exercise Price.The price per Share at which a Stock Appreciation Right may be exercised shall be determined by the Committee, in its discretion; provided, however, that the Exercise Price shall not be less than the Fair Market Value of a Share on the date on which the Stock Appreciation Right is granted.
Section 6.4
Exercise Period.The Exercise Period during which a Stock Appreciation Right may be exercised shall commence on the Vesting Date. It shall expire on the earliest of:
(a) the date specified by the Committee in the Award Agreement;
(b) unless otherwise determined by the Committee or set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant'sParticipant’s termination of Continuous Service, other than on account of death, Disability, Retirement or a Termination for Cause;
(c) unless otherwise determined by the Committee or set forth in the Award Agreement, the last day of the three-month period commencing on the date of the Participant's termination of Service due to death, Disability or Retirement;
(d) the last day of the ten-year period commencing on the date on which the Stock Appreciation Right was granted.
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A Stock Appreciation Right that remains unexercised at the close of business on the last day of the Exercise Period shall be canceled without consideration at the close of business on that date.
Section 6.5
Vesting Date.(a)
The Vesting Date for each Stock Appreciation Right Award shall be determined by the Committee and specified in the Award Agreement.(b)
(c) The following provisions apply if a Stock Appreciation Rights Holder terminates Continuous Service prior to the Vesting Date:
(i) if the Stock Appreciation Right Holder terminates Continuous Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Award shall be forfeited without consideration;
(ii) if the Stock Appreciation Right Holder terminates Continuous Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of the Participant’s termination of Continuous Service; and
(iii) if a Change in Control occurs prior to the Vesting Date of a Stock Appreciation Right that is outstanding on the date of the Change in Control, and the Stock Appreciation Right Holder experiences an Involuntary Separation from Service during the 365-day period following the date of such Change in Control, then the Vesting Date for any non-vested portion of the Stock Appreciation Right shall be accelerated to the date of the Participant’s Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company’s business and/or assets does not either assume the outstanding Stock Appreciation Right Award or replace the outstanding Stock Appreciation Right Award with an award that is determined by the Committee or specifiedto be at least equivalent in value to such outstanding Stock Appreciation Right Award on the date of the Change in Control, then the Vesting Date of such outstanding Stock Appreciation Right Award Agreement:
Section 6.6
Method of Exercise.(a)
Subject to the limitations of the Plan and the Award Agreement, a Participant may, at any time on or after the Vesting Date and during the Exercise Period, exercise his or her Stock Appreciation Right as to all or any part of the Shares to which the Stock Appreciation Right relates; provided, however, that the minimum number of Shares as to which a Stock Appreciation Right may be exercised shall be 100, or, if less, the total number of Shares relating to the Stock Appreciation Right which remain unexercised. A Stock Appreciation Right Holder shall exercise a Stock Appreciation Right by:(i) giving written notice to the Committee, in such form and manner as the Committee may prescribe, of his or her intent to exercise the Stock Appreciation Right; and
(ii) satisfying such other conditions as may be prescribed in the Award Agreement.
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(b)
When the requirements ofSection 6.7
Limitations on Stock Appreciation Rights.(a)
A Stock Appreciation Right by its terms shall not be transferable by the Stock Appreciation Right Holder other than by will or the laws of descent and distribution, or pursuant to the terms of a Domestic Relations Order, and shall be exercisable, during the life of the Stock Appreciation Right Holder, only by the Stock Appreciation Right Holder or an alternate payee designated pursuant to such a Domestic Relations Order; provided, however, that a Participant may, at any time at or after the grant of a Stock Appreciation Right under the Plan, apply to the Committee for approval to transfer all or any portion of such Stock Appreciation Right which is then unexercised to such(b)
The(i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded; or
(ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
(c)
A Stock Appreciation Right Holder may designate a Beneficiary to receive any Stock Appreciation Right that may be exercised after his or her death. Such designation and any change or revocation of such designation shall be made in writing in the form and manner prescribed by theA-14 | BANNER CORPORATION 2023 PROXY STATEMENT |
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Committee. In the event that the designated Beneficiary dies prior to the Stock Appreciation Right Holder, or in the event that no Beneficiary has been designated, any Stock Appreciation Rights that may be exercised following the Stock Appreciation Right Holder'sHolder’s death shall be transferred to the Stock Appreciation Right Holder'sHolder’s estate. If the Stock Appreciation Right Holder and his or her Beneficiary shall die in circumstances that cause the Committee, in its discretion, to be uncertain which shall have been the first to die, the Stock Appreciation Right Holder shall be deemed to have survived the Beneficiary.
Section 6.8
Prohibition Against Stock Appreciation Right Repricing.Except as provided in Section 11.3 and notwithstanding any other provision of this Plan, neither the Committee nor the Board shall have the right or authority following the grant of a Stock Appreciation Right pursuant to the Plan to amend or modify the Exercise Price of any such Stock Appreciation Right, or to cancel the
ARTICLE VII
RESTRICTED STOCK AWARDS
Section 7.1
In General.(a)
Each Restricted(i) the number of shares of |
(ii) the amount, if any, which the Participant shall be required to pay to the Company in consideration for the issuance of such Restricted Stock or Restricted Stock Units;
(iii) the date of grant of the Restricted Award;
(iv) the Period of Restriction for the Restricted Award (including the performance conditions, if any, which must be satisfied in order for the Vesting Date to occur);
(v) as to Restricted Stock, the rights of the Participant with respect to dividends, voting rights and other rights and preferences associated with such Shares; and
(vi) as to Restricted Stock Units, the rights of the Participant with respect to attributes of the Restricted Stock Units which are the equivalent of dividends and other rights and preferences associated with Shares and the circumstances pursuant to which Restricted Stock Units shall be converted to Shares.
Restricted Awards may contain such other terms and conditions not inconsistent with the Plan as the Committee may, in its discretion, prescribe.
Restricted Stock Units shall be settled (paid) at such time as is specified in the Restricted Stock Unit Award. Unless otherwise specified in the Award, when and if Restricted Stock Units become payable, a Participant having received the grant of such units shall be entitled to receive payment from the Company in cash, Shares or a combination thereof, as determined by the Committee atin its sole discretion.
BANNER CORPORATION 2023 PROXY STATEMENT | A-15 |
Appendix A
As to Awards awarding Restricted Stock Units, the terms of the Award shall either result in the Restricted Stock Units not being subject to Section 409A or, if the Restricted Stock Units are subject to Section 409A, include terms that cause the Restricted Stock Units to comply with Section 409A.
(b)
All Awards consisting of Restricted Stock shall be in the form of issued and outstanding Shares that shall be registered in the name of the Participant, subject to written transfer restriction instructions issued to theThese shares of common stock are subject to the terms of an Award Agreement between Banner Corporation and [Name of Participant] dated [Award Date] made pursuant to the terms of the Banner Corporation 20182023 Omnibus Incentive Plan, copies of which are on file at the executive offices of Banner Corporation and may not be sold, encumbered, hypothecated or otherwise transferred, except in accordance with the terms of such Plan and Award Agreement.
or such other restrictive communication or legend as the Committee, in its discretion, may specify.
(c)
Unless otherwise set forth in the Award Agreement, a RestrictedSection 7.2
Size of Restricted Award.Subject to the restrictions of the Plan, the number of Shares as to which a Participant may be granted pursuant to a Restricted Award shall be determined by the Committee, in its discretion.
Section 7.3 Vesting Date.
(a)
The Period of Restriction and Vesting Date for each Restricted(b) Subject to Section 3.7: (i) the Period of Restriction shall end no earlier than one year after the date a Restricted Award is granted, and (ii) any Restricted Award that vests based on the achievement of performance or other criteria shall vest no earlier than one year after the date on which the Restricted Award is granted.
A-16 | BANNER CORPORATION 2023 PROXY STATEMENT |
Appendix A
(c) The following provisions shall apply if a Participant holding a Restricted Award terminates Continuous Service prior to the Vesting Date:
(i) if the Participant terminates Continuous Service prior to the Vesting Date for any reason other than death, Disability or a Change in Control, any unvested Restricted Award shall be forfeited without consideration; provided, however that with the exception of a Termination for Cause, the Committee, in its sole discretion, shall have the right to reduce, eliminate, or otherwise modify the Period of Restriction with respect to Restricted Stock or Restricted Stock Units following termination of Continuous Service for any reason, upon such terms and provisions as it deems proper, but subject to Section 3.7;
(ii) if the Participant terminates Continuous Service prior to the Vesting Date on account of death or Disability, the Vesting Date shall be accelerated to the date of termination of the Participant’s Continuous Service; and
(iii) if a Change in Control occurs prior to the Vesting Date of a Restricted Award that is outstanding on the date of the Change in Control, and the Participant experiences an Involuntary Separation from Continuous Service during the 365-day period following the date of such Change in Control, then the Vesting Date for any non-vested Restricted Award shall be accelerated to the date of the Participant’s Involuntary Separation from Service. Notwithstanding the preceding sentence, if at the effective time of the Change in Control the successor to the Company’s business and/or assets does not either assume the outstanding Restricted Award or replace the outstanding Restricted Award with an award that is determined by the Committee or specifiedto be at least equivalent in value to such outstanding Restricted Award on the date of the Change in Control, then the Vesting Date of such outstanding Restricted Award Agreement:
Section 7.3
(a)
(b)
Participants shall have no rights to dividends or other distributions paid on the Shares underlying Restricted Stock Units other than dividends and distributions with a record date on or after the date on which the Shares are issued to theBANNER CORPORATION 2023 PROXY STATEMENT | A-17 |
Appendix A
Section 7.47.5 Voting Rights.
(a)
Unless otherwise specified in the Award Agreement, a Participant who is awarded(b)
A Participant shall have no voting rights with respect to any Shares underlying Restricted Stock Units unless and until such Shares are issued to the Participant in settlement of the Restricted StockSection 7.5
A Participant who has received a Restricted Stock Award may designate a Beneficiary to receive any unvested Restricted Stock or Shares distributed in satisfaction of any unvested Restricted Stock Units that become vested on the date of the Participant'sParticipant’s death. Such designation (and any change or revocation of such designation) shall be made in writing in the form and manner prescribed by the Committee. In the event that the Beneficiary designated by a Participant dies prior to the Participant, or in the event that no Beneficiary has been designated, any vested Shares that become available for distribution on the Participant'sParticipant’s death shall be paid to the executor or administrator of the Participant'sParticipant’s estate.
Section 7.6
The Company'sCompany’s obligation to deliver Shares with respect to a Restricted Stock Award shall, if the Committee so requests, be conditioned upon the receipt of a representation as to the investment intention of the Participant or Beneficiary to whom such Shares are to be delivered, in such form as the Committee shall determine to be necessary or advisable to comply with the provisions of applicable federal, state or local law. It may be provided that any such representation shall become inoperative upon a registration of the Shares or upon the occurrence of any other event eliminating the necessity of such representation. The Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such Shares to listing on any stock exchange or trading on any automated quotation system on which Shares may then be listed or traded, or (ii) the completion of such registration or other qualification under any state or federal law, rule or regulation as the Committee shall determine to be necessary or advisable.
ARTICLE VIII
PERFORMANCE SHARES AND PERFORMANCE UNITS
Section 8.1
Grant of PerformanceSubject to the limitations set forth in Sections 3.1 and 3.2 herein and the other terms of the Plan, the Committee, at any time and from time to time, may grant Performance Shares, orAwards, in accordance with this Article VIII.
Section 8.2 Size of Performance Units, entitling the Participant to future cash payments or Shares or a combination thereof, based upon the level of achievement with respect to one or more pre-established performance goals established for a Performance Period.
Subject to the limitationsrestrictions of Section 3.1,the Plan, the number of Shares as to which a Participant may be granted pursuant to a Performance Award shall be determined by the Committee, shall establish a maximum amount of a Participant'sin its discretion.
Section 8.3 Award which amount shall be denominated in Shares in the case ofAgreement.
Each Performance Shares or in units in the case of Performance Units.
A-18 | BANNER CORPORATION 2023 PROXY STATEMENT |
Appendix A
pursuant to the Award; (ii) the performance goals and level of achievement versus these goals that shall determine the amount of such payment; (iii) subject to Section 3.7, the Performance Period as to which performance shall be measured for determining the amount of any payment; (iv) the form and timing of any payment earned by virtue of performance (which must comply with, or be exempt from, Section 409A); (v) whether and the extent to which Participants holding Performance Awards that are denominated in Shares or Performance Units will receive dividends or dividend equivalents with respect to dividends declared with respect to the Shares;provided, however, that any dividends or dividend equivalents shall be withheld by the Company for the Participant’s account during the Period of Restriction to be distributed to the Participant in cash or, at the discretion of the Committee, in Shares having a Fair Market Value equal to the amount of such dividends or dividend equivalents, if applicable, following the Period of Restriction and if the Performance Award is forfeited, the Participant shall have no right to such dividends or dividend equivalents; (vi) restrictions on the alienation or transfer of the Award prior to actual payment and restrictions on the sale or transfer of Shares following actual payment of an Award paid in Shares; (vii) forfeiture provisions; (viii) subject to Section 3.7, whether the Award shall become payable upon an Involuntary Separation from Service within a specified period following a Change in Control, and in such event the amount of the Performance Share or Performance UnitAward benefit (or(and if the formula or methodology used to determine such benefit)Award is so payable, whether the Award will vest on a pro rata basis based on target performance), and (ix) such further terms and conditions, in each case not inconsistent with the Plan, as may be determined from time to time by the Committee. No Award of Performance Shares or Performance UnitsAward may provide for voting rights with respect to the underlying Shares, and any such provision shall be null and void.
Section 8.4
PerformancePerformance goals established by the Committee shall relate to Company- or Affiliate-wide, group or individual performance, and be based upon such measures as are determined by the Committee. Multiple performance goals may be used and the components of multiple performance goals may be given the same or different weighting in determining the amount of ana Performance Award earned, and may relate to absolute performance or relative performance measured against other groups, individuals or entities.
Section 8.5
Discretionary Adjustments.Notwithstanding satisfaction of any performance goals, the amount paid under ana Performance Award of Performance Shares or Performance Units on account of either financial performance or personal performance evaluations may be reduced by the Committee on the basis of such further considerations as the Committee shall determine, if so provided in the terms of the Award.
Section 8.6
Payment of Awards.Following the conclusion of each Performance Period (or earlier if so provided in the Award Agreement or otherwise determined by the Committee), the Committee shall determine the extent to which performance goals have been attained, and the satisfaction of any other terms and conditions with respect to ana Performance Award relating to such Performance Period. The Committee shall determine what, if any, payment is due with respect to ana Performance Award and in the case of Performance Units, whether such payment shall be made in cash, Shares or a combination thereof. Payment shall be made in a lump sum within 60 days after the Committee determines that a payment is due (or at such other time as provided for in the Performance Share or Performance Unit Award that qualifies as a short-term deferral that is exempt from Section 409A).
BANNER CORPORATION 2023 PROXY STATEMENT | A-19 |
Appendix A
Section 8.7 Termination of Continuous Service Due to Death, Disability, Retirement or Following a Change in Control.
Unless provided otherwise in the Participant’s Award Agreement evidencing his or her Performance Award, if the Continuous Service of a Participant shall terminate before the end of a Performance Period by reason of death, Disability or Retirement, then to the extent it is determined by the Committee following the end of the Performance Period in accordance with Section 8.6 that the performance goals have been attained, the Participant shall be entitled to a pro rata payment based on the number of months’ Continuous Service during the Performance Period but based on the achievement of performance goals during the entire Performance Period; payment under these circumstances shall be made at the time payments are made to Participants who did not terminate Continuous Service during the Performance Period, subject to Section 8.6. In addition, a Performance Award shall not be cancelled if and to the extent the Award Agreement provides for a payment due to an Involuntary Separation from Service following a Change in Control. This Section 8.68.7 shall also apply if at the effective time of the Change in Control the successor to the Company'sCompany’s business and/or assets does not either assume the outstanding Award or replace the outstanding Award with an award that is determined by the Committee to be at least equivalent in value to such outstanding Award on the date of the Change in Control, except that the determination shall be made by the Committee prior to the earliest date of the Change in Control.
Section 8.8
Termination ofUnless provided otherwise in the Participant'sParticipant’s Award Agreement evidencing his or her Performance Shares or Performance Units,Award, if the Continuous Service of a Participant shall terminate before the end of a Performance Period for any other reason than described in Section 8.7, all of the Participant’s outstanding Awards of Performance Shares or Performance Units to such ParticipantAwards shall be cancelled; provided, however, that in the event of a termination of the Service of the Participant by the Company other than Termination for Cause, the Committee in its sole discretion may waive the foregoing automatic cancellation provision and pay out on a pro rata basis as set forth in Section 8.7 herein. Notwithstanding the foregoing, the Award shall not be cancelled on account of this Section 8.8 if and to the extent an Award provides for a payment due to an Involuntary Separation from Service following a Change in Control.
Section 8.9
Nontransferablity.Except as otherwise provided in the Participant'sParticipant’s Award Agreement evidencing his or her Performance Shares orAward, Performance Units, Performance Shares and Performance UnitsAwards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than upon the Participant'sParticipant’s death, to the Participant'sParticipant’s Beneficiary or, if no Beneficiary has been designated by the Participant, by will or by the laws of descent and distribution. Further, except as otherwise provided in the Participant's agreementAward Agreement evidencing his or hera Participant’s Performance Award, of Performance Shares or Performance Units, a Participant'sthe Participant’s rights under the Plan shall inure during his or her lifetime only to such Participant.
ARTICLE IX
OTHER STOCK-BASED AWARDS AND CASH AWARDS
Section 9.1
Other Stock-Based Awards.The Committee may, subject to the limitations of Sections 3.1 and 3.2 herein,this Plan, grant to any Participant such other awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares or factors that may influence the value of Shares, including, without limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable into Shares, purchase rights for Shares, awards with value and payment contingent upon performance of the Company or any Affiliate or business unit thereof, or any other factors designated by the Committee, and awards valued by reference to the book value of Shares or the value of securities of, or
A-20 | BANNER CORPORATION 2023 PROXY STATEMENT |
Appendix A
the performance of specified Affiliates or other business units of the Company ("(“Other Stock-Based Awards"Awards”). The Committee shall determine the terms and conditions of such Other Stock-Based Awards, including, without limitation, the number of underlying Shares, the purchase price, if any, vesting (which will be subject to Section 3.7 and may, but need not, be subject to achievement of specified performance criteria, or conditioned upon a Change in Control, or a Change in Control followed by an Involuntary Separation from Service, if any (but provided that (i) vesting that is based on achievement of any performance goals will only occur in connection with a Change in Control or a Change in Control followed by an Involuntary Separation from Service to the extent the performance goals were achieved prior to the date of the Change in Control or, as applicable, the date of the Involuntary Separation from Service following the Change in Control and (ii) any vesting in connection with a Change in Control will only occur if at the effective time of the Change in Control the successor to the Company’s business and/or assets does not either assume the outstanding Award or replace the outstanding Award with an award that is determined by the Committee to be at least equivalent in value to such outstanding Award on the date of the Change in Control), forfeiture and transferability.
Section 9.2
Cash Awards.Subject to the limitations of Section 3.2, herein, the Committee may grant cash awards ("(“Cash Awards"Awards”) to any Participant. The Committee shall determine the terms and conditions of such Cash Awards, including, without limitation, performance criteria which must be satisfied for a Performance Period.
ARTICLE X
ADDITIONAL TAX PROVISION
Section 10.1
Tax Withholding Rights.The Company shall have the power and the right to deduct or withhold, or require a Person to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Participant'sParticipant’s FICA obligation) required by law to be withheld with respect to any grant, exercise or payment made under or as a result of the Plan. In this regard, where any Person is entitled to receive Shares, the Company shall have the right to require such Person to pay to the Company the amount of any tax which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a sufficient number of Shares to cover the minimum amount required to be withheld.
ARTICLE XI
AMENDMENT AND TERMINATION
Section 11.1
TerminationThe Board may suspend or terminate the Plan in whole or in part at any time prior to the tenth anniversary of the Effective Date by giving written notice of such suspension or termination to the Committee. Unless sooner terminated, the Plan shall terminate automatically on the tenth anniversary of the Effective Date. In the event of any suspension or termination of the Plan, all Awards previously granted under the Plan that are outstanding on the date of such suspension or termination of the Plan shall remain outstanding and exercisable for the period and on the terms and conditions set forth in the Award Agreements evidencing such Awards.
Section 11.2
Amendment.The Board may amend or revise the Plan in whole or in part at any time; provided, however, that, to the extent required to comply with the corporate governance standards imposed under the listing or
BANNER CORPORATION 2023 PROXY STATEMENT | A-21 |
Appendix A
trading requirements imposed by any national securities exchange or automated quotation system on which the Company lists or seeks to list or trade Shares, no such amendment or revision shall be effective if it amends a material term of the Plan unless approved by the holders of a majority of the votes cast on a proposal to approve such amendment or revision.
Section 11.3
Adjustments in the Event of Business Reorganization.In the event any recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination, exchange of Shares or other securities, stock dividend or other special and nonrecurring dividend or distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of:
(i) the maximum number of Shares (or the maximum number and kind of other securities) subject to all Awards stated in Section 3.1, including the maximum number and kind of securities that may be issued pursuant to the exercise of Incentive Stock Options pursuant to Section 3.2;
(ii) the number and kind of securities that may be delivered or deliverable in respect of outstanding Awards; and
(iii) the Exercise Price of Options and Stock Appreciation Rights and any other equitable adjustments to the price per Share subject to any other outstanding Awards.
In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards (including, without limitation, cancellation of Awards in exchange for the in-the-money value, if any, of the vested portion thereof, or substitution of Awards using stock of a successor or other entity) in recognition of unusual or nonrecurring events (including, without limitation, events described in the preceding
ARTICLE XII
MISCELLANEOUS
Section 12.1
Status as an Employee Benefit Plan.This Plan is not intended to satisfy the requirements for qualification under Section 401(a) of the Code or to satisfy the definitional requirements for an "employee“employee benefit plan"plan” under Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. It is intended to be a non-qualified incentive compensation program that is exempt from the regulatory requirements of the Employee Retirement Income Security Act of 1974, as amended. The Plan shall be construed and administered so as to effectuate this intent.
Section 12.2
No Right to Continued Service.Neither the establishment of the Plan nor any provisions of the Plan nor any action of the Board or Committee with respect to the Plan shall be held or construed to confer upon any Participant any right to a continuation of his or her position as an Employee or a Director. The Company reserves the right to remove any participating member of the Board or dismiss any Participant or otherwise deal with any Participant to the same extent as though the Plan had not been adopted.
A-22 | BANNER CORPORATION 2023 PROXY STATEMENT |
Appendix A
Section 12.3Construction of Language.
Whenever appropriate in the Plan, words used in the singular may be read in the plural, words used in the plural may be read in the singular, and words importing the masculine gender may be read as referring equally to the feminine or the neuter. Any reference to an Article or Section number shall refer to an Article or Section of this Plan unless otherwise indicated.
Section 12.4
Severability.In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.
Section 12.5
Governing Law.The Plan shall be construed, administered and enforced according to the laws of the State of Washington without giving effect to the conflict of laws principles thereof. The federal and state courts located in theKing County, or contiguous counties in which the Company's headquarters are locatedWashington shall have exclusive jurisdiction over any claim, action, complaint or lawsuit brought under the terms of the Plan. By accepting any Award granted under this Plan, the Participant, and any other person claiming any rights under the Plan, agrees to submit himself, and any such legal action as he shall bring under the Plan, to the sole jurisdiction of such courts for the adjudication and resolution of any such disputes.
Section 12.6
Headings.The headings of Articles and Sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Plan, the text shall control.
Section 12.7
Non-Alienation of Benefits.The right to receive a benefit under the Plan shall not be subject in any manner to anticipation, alienation or assignment, nor shall such right be liable for or subject to debts, contracts, liabilities, engagements or torts.
Section 12.8
Notices.Any communication required or permitted to be given under the Plan, including any notice, direction, designation, comment, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally or three (3) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below, or at such other address as one such party may by written notice specify to the other party:
(a)
If to the Committee:Banner Corporation
10 South First Avenue
Walla Walla, Washington 99362
Attention: Corporate Secretary
(b)
If to a Participant, to suchBANNER CORPORATION 2023 PROXY STATEMENT | A-23 |
Appendix A
Section 12.9Approval of Shareholders.
The Plan shall be subject to approval by the Company'sCompany’s shareholders within twelve (12) months before or after the date the Board adopts the Plan.
Section 12.10
Clawback.All Awards (whether vested or unvested) shall be subject to such clawback (recovery) as may be required to be made pursuant to law, rule, regulation or stock exchange listing requirement or any policy of the Company adopted pursuant to any such law, rule, regulation or stock exchange listing requirement.
Section 12.11
Compliance with Section 409A.The Company intends for this Plan and all Awards to satisfy applicable provisions of the Code, including Section 409A, either by meeting an exemption or through direct compliance, and to that end this Plan and all Award Agreements will be interpreted in accordance with Section 409A, and will be deemed to incorporate by reference, to the extent needed and permissible, the terms and conditions necessary to avoid adverse consequences under Section 409A. With respect to any amount payable under an Award that constitutes a deferral of compensation within the meaning of Section 409A, the Plan is intended to comply with Section 409A, and the Plan shall be administered, construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereunder is subject to Section 409A, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A, except as otherwise determined by the Committee. In the case of amounts not intended to be deferrals of compensation subject to Section 409A, payment or settlement of amounts under such Awards shall occur not later than March 15 of the year following the year in which the Participant has a legally-binding right to payment or settlement (or such later time as permitted under Section 409A that does not cause the amount to be considered a deferral of compensation for purposes of Section 409A, or at such other time that complies with Section 409A). In the case of amounts intended to be deferrals of compensation subject to Section 409A, if the amount is subject to a deferral election by the Participant, the initial deferral election shall be made and become irrevocable no later than December 31 of the year immediately preceding the year in which the Participant first performs services related to such compensation, provided that the timing of such initial deferral election may be later as provided in Section 409A with respect to initial participation in the Plan and for "performance-based compensation"“performance-based compensation” as defined under Section 409A. If an amount that is subject to Section 409A becomes payable under an Award as a result of the Participant's "separationParticipant’s “separation from service"service” (as defined under Section 409A) other than due to death, and the Participant is a "specified employee"“specified employee” (as defined under Section 409A), then payment of such amount shall not occur until six (6) months and a day after the date of Participant's "separationParticipant’s “separation from service"service” except as permitted under Section 409A.
A-24 | BANNER CORPORATION 2023 PROXY STATEMENT |
SKU: 001CSN53BF |
Your vote matters – here’s how to vote! You may vote online or by | ||||||||||||
Online Go to www.investorvote.com/BANR | ||||||||||||
Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories |
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qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION,VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A | Proposals – The Board of Directors recommends a vote FOR all the nominees listed, and FOR Proposals 2, 3 and 4. | |||||||||||||||||||||||||||||||
1. | Election of | |||||||||||||||||||||||||||||||
For | Against | Abstain | For | Against | Abstain | For | Against | Abstain | ||||||||||||||||||||||||
01 - Margot J. Copeland (for one-year term) | ☐ | ☐ | ☐ | 02 - (for one-year term) | ☐ | ☐ | 03 - David (for one-year term) | |||||||||||||||||||||||||
☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||
04 - Paul J. Walsh (for one-year term) | ☐ | |||||||||||||||||||||||||||||||
☐ | ☐ |
For | Against | Abstain | For | Against | Abstain | |||||||||||||||
2. |
Advisory approval of the compensation of Banner Corporation’s named executive officers. | ☐ | ☐ | ☐ |
3. |
Ratification of the Audit Committee’s appointment of Moss Adams LLP as the independent registered public accounting firm for the year ending December 31, 2023. | ☐ | ☐ | ☐ | |||||||||||
4. | Adoption of the Banner Corporation 2023 Omnibus Incentive Plan. | ☐ | ☐ | ☐ |
Authorized Signatures – This section must be completed for | |||||
your vote to count. Please date and sign below. |
Please sign exactly as your namename(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy) | Signature 1 | Signature 2 | ||||||
/ / |
1 P C F |
The 2023 Annual Meeting of
Wednesday, May 24, 20182023, 10:00 A.M. Locala.m., Pacific Time,
To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this admission ticket
We encourage you to access the registration desk.
1-781-575-2748 (outside the US).
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.
The material is available at: www.bannerbank.com/proxymaterials.
| Small steps make an impact. Help the environment by consenting to receive electronic delivery; sign up at www.investorvote.com/BANR |
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qIF YOU HAVE NOT VOTED VIA THE INTERNET
2023 Annual Meeting of Shareholders
Proxy — Banner Corporation
The undersignedabove-signed hereby appoints Gordon E. BudkeRoberto Herencia and Robert D. Adams,Sherrey Luetjen, and each of them, with full powers of substitution to act as attorneys and proxies for the undersigned,above-signed, to vote all shares of common stock of Banner Corporation ("Banner"(“Banner”) which the undersignedabove-signed is entitled to vote at the annual meeting of shareholders, to be held at the Marcus Whitman Hotel, 6 West Rose, Walla Walla, Washington,virtually on Tuesday, AprilMay 24, 2018,2023, at 10:00 a.m., local time,Pacific Time, and at any and all adjournments thereof, as indicated.
This proxy also provides voting instructions to the Trustees of the Banner Corporation 401(k) Plan for participants with shares allocated to their accounts.
This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted forFOR the propositions stated.election of our director nominees, and FOR Proposals 2, 3 and 4. If any other business is presented at suchthe annual meeting, this proxy will be voted by the directorsproxies named above in their best judgment. At the present time, the Board of Directors knows of no other business to be presented at the annual meeting. This proxy also confers discretionary authority to the directorsproxies named above to vote with respect to the election of any person as director where the nominees are unable to serve or for good cause will not serve, and matters incident to the conduct of the annual meeting and such other business as may properly come before the meeting.
Should the above-signed be virtually present and elect to vote at the Annual Meetingannual meeting or at any adjournment thereof and after notification to the Secretary of Banner at the annual meeting of the shareholder'sshareholder’s decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.
The above-signed acknowledges receipt from Banner prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement dated on or about March 23, 2018April 18, 2023 and the 20172022 Annual Report to Shareholders.
(Items to be voted appear on reverse side.)side)
C | Non-Voting Items |
Change of Address – Please print new address below. | Comments – Please print your comments below. | |||