Filed by the Registrant [X] | ||||
Filed by a Party other than the Registrant [ ] | ||||
Check the appropriate box: | ||||
[ ] | Preliminary Proxy Statement | [ ] | Soliciting Material Under Rule 14a-12 | |
[ ] | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |||
[X] | Definitive Proxy Statement | |||
[ ] | Definitive Additional Materials |
Westamerica Bancorporation | ||
(Name of Registrant as Specified In Its Charter) | ||
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) |
Payment of Filing Fee (Check the appropriate box): | ||||
[X] | No fee required. | |||
[ ] | Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. | |||
1) | Title of each class of securities to which transaction applies: | |||
2) | Aggregate number of securities to which transaction applies: | |||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
4) | Proposed maximum aggregate value of transaction: | |||
5) | Total fee paid: | |||
[ ] | Fee paid previously with preliminary materials: | |||
[ ] | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. | |||
1) | Amount previously paid: | |||
2) | Form, Schedule or Registration Statement No.: | |||
3) | Filing Party: | |||
4) | Date Filed: | |||
1108 Fifth Avenue
San Rafael, California 94901
March 10, 20149, 2015
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of Westamerica Bancorporation. It will be held at11:00 a.m. Pacific Time on Thursday, April 24, 2014,23, 2015, at the Hilton Garden Inn, 2200 Gateway Court, Fairfield, California as stated in the formal notice accompanying this letter. We hope you will plan to attend.
At the Annual Meeting, the shareholders will be asked to (i) elect nine Directors; (ii) approve a non-binding advisory vote on the compensation of our named executive officers; (iii) ratify the selection of the independent auditor; and (iv) conduct other business that may properly come before the Annual Meeting.
In order to ensure your shares are voted at the Annual Meeting, you can vote through the internet, by telephone or by mail. Instructions regarding internet and telephone voting are included on the Proxy Card. If you elect to vote by mail, please sign, date and return the Proxy Card in the accompanying postage-paid envelope. The Proxy Statement explains more about voting in the section entitled “Voting Information – How You Can Vote.”
We look forward to seeing you at the Annual Meeting on Thursday, April 24, 2014,23, 2015, at the Hilton Garden Inn in Fairfield, California.
Sincerely, | |
![]() ![]() | |
David L. Payne | |
Chairman of the Board, President | |
and Chief Executive Officer |
WESTAMERICA BANCORPORATION
1108 Fifth Avenue
San Rafael, California 94901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date and Time
Thursday, April 24, 2014,23, 2015, at 11:00 a.m. Pacific Time
Place
Hilton Garden Inn, 2200 Gateway Court, Fairfield, California.
Items of Business
1. | To elect nine Directors to serve until the 2016 Annual Meeting of Shareholders; |
2. | To approve a non-binding advisory vote on the compensation of our named executive officers; |
3. | To ratify selection of independent auditor; and |
4. | To conduct other business that may properly come before the Annual Meeting and any adjournments postponements. |
Who Can Vote?
Shareholders of Record at the close of business on February 24, 201423, 2015 are entitled to notice of, and to vote at the Annual Meeting or any postponement or adjournment thereof.
Admission to the Annual Meeting
No ticket will be necessary for admission to the Annual Meeting. However, to facilitate the admission process, Shareholders of Record (Holder) planning to attend the Annual Meeting should check the appropriate box on the Proxy Card. Your name will be added to a list of attendees. If you hold shares through an intermediary, such as a bank or broker (beneficial holder), you may need to register at the desk in the lobby. Please bring the following as evidence of ownership: 1) a Legal Proxy, which you can obtain from your bank or broker or other intermediary, or your brokerage statement dated on or after February 24, 2014,23, 2015, evidencing your shareholding on the February 2423 record date; and 2) photo identification.
Annual Report
Westamerica Bancorporation’s Annual Report on Form 10-K (“Annual Report”) to shareholders for the fiscal year ended December 31, 20132014 is enclosed or is available for viewing as indicated on the Shareholder Meeting Notice and on the Corporation’s website at https://www.westamerica.com/ under “Shareholders.” The Annual Report contains financial and other information about the activities of Westamerica Bancorporation, but does not constitute a part of the proxy soliciting materials.
BY ORDER OF THE BOARD OF DIRECTORS | |
![]() ![]() | |
Kris Irvine | |
Dated: March |
|
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING BEING HELD ON THURSDAY, APRIL 24, 2014.23, 2015. THE PROXY STATEMENT AND ANNUAL REPORT ON FORM 10-K TO SHAREHOLDERS ARE AVAILABLE AT: WWW.WESTAMERICA.COM
YOUR VOTE IS IMPORTANT | |
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY, OR VOTE BY | |
TELEPHONE OR | |
TABLE OF CONTENTS
WESTAMERICA BANCORPORATION
1108 Fifth Avenue
San Rafael, California 94901___________
PROXY STATEMENT
March 10, 2014___________
9, 2015
The Westamerica Board of Directors is soliciting proxies to be used at the 20142015 Annual Meeting of Shareholders of Westamerica Bancorporation, which will be held at 11:00 a.m. Pacific Time, Thursday, April 24, 2014,23, 2015, or at any adjournment or postponement of the Annual Meeting. Proxies are solicited to give all Shareholders of Record (“registered holder”) an opportunity to vote on matters to be presented at the Annual Meeting. In the following pages of this Proxy Statement, you will find information on matters to be voted at the Annual Meeting.
Internet Availability of Proxy Materials. We are providing proxy materials to our shareholders primarily via the Internet,internet, instead of mailing printed copies of those materials to each shareholder. By doing so, we save costs and reduce the environmental impact of our Annual Meeting. On or about March 10, 2014,9, 2015, we mailed a Notice of Internet Availability of Proxy Materials (“Notice”) to certain of our shareholders. The Notice contains instructions about how to access our proxy materials and vote online or vote by telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions included in the Notice. If you previously chose to receive our proxy materials electronically, you will continue to receive access to these materials via email unless you elect otherwise.
Proof of Ownership May Be Required for Attending Annual Meeting in Person. You are entitled to attend the Annual Meeting only if you are a shareholder as of the close of business on February 24, 2014,23, 2015, the record date, or hold a valid proxy for the meeting. In order to be admitted to the Annual Meeting, the Corporation reserves the right to request proof of ownership of Westamerica stock on the record date. This
can be:
A legal proxy provided by your broker, bank or nominee.
· | A brokerage statement or letter from a bank or broker indicating ownership on February 23, 2015; |
· | The Notice of Internet Availability of Proxy Materials; |
· | A printout of proxy distribution email (if you received your materials electronically); |
· | A Proxy Card; |
· | A voting instruction form; or |
· | A legal proxy provided by your broker, bank or nominee. |
Any holder of a proxy from a shareholder must present the Proxy Card properly executed, and a copy of the proof of ownership. The Corporation reserves the right to ask shareholders and proxy holders to present a form of photo identification such as a driver’s license.
Proxy Card. The Board has designated Arthur C. Latno, Jr., Ronald A. Nelson and Edward B. Sylvester to serve as Proxies for the Annual Meeting. As Proxies, they will vote the shares represented by proxies at the Annual Meeting. If you sign, date and return your Proxy Card but do not specify how to vote your shares, the Proxies will vote FOR the election of all of the Director nominees, FOR approval of the advisory vote on the compensation of our named executive officers, and FOR ratifying the selection of independent auditor. The Proxies will also have discretionary authority to vote in accordance with their judgment on any other
1 |
matter that may properly come before the Annual Meeting that we did not have notice of by January 25, 2014.24, 2015.
Quorum and Shares Outstanding.A quorum, which is a majority of the total shares outstanding as of the record date, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented by shareholders attending in person or by proxy. On February 24, 2014, 26,409,14623, 2015, 25,617,758 shares of Westamerica common stock were outstanding. We also count broker non-votes, which we describe below, as shares present or represented at the Annual Meeting for the purpose of determining whether a quorum exists.
Election of Director Nominees.Each share is entitled to one vote, except in the election of Directors where a shareholder may cumulate votes as to candidates nominated prior to voting, but only when a shareholder gives notice of intent to cumulate votes prior to the voting at the Annual Meeting. If any shareholder gives such notice, all shareholders may cumulate their votes for nominees. Under cumulative voting, each share carries as many votes as the number of Directors to be elected, and the shareholder may cast all of such votes for a single nominee or distribute them in any manner among as many nominees as desired. This Proxy Statement solicits the discretionary authority to cumulate votes and allocate them in the Proxy Holders’ discretion if any shareholder requests cumulative voting. In the election of Directors, the nine nominees receiving the highest number of votes will be elected. If your proxy is marked “Withhold” with regard to the election of any nominee, your shares will be counted toward a quorum and for other nominees but they will not be voted for the election of that nominee.If you attend the Annual Meeting and have already voted, you may vote in person in order to rescind your previous vote.
Vote Required; Effect of Abstentions and Broker Non-Votes. The shares of a shareholder whose ballot on any or all proposals is marked as “abstain” will be included in the number of shares present at the Annual Meeting to determine whether a quorum is present. If you are the beneficial holder of shares held by a broker or other custodian, you may instruct your broker how to vote your shares through the voting instruction form included with this Proxy Statement. If you wish to vote the shares you own beneficially at the meeting, you must first request and obtain a legal proxy from your broker or other custodian. If you choose not to provide instructions or a legal proxy, your shares are referred to as “uninstructed shares.” Whether your broker or custodian has the discretion to vote these shares on your behalf depends on the ballot item. The following table summarizes the votes required for passage of each proposal and the effect of abstentions and uninstructed shares held by brokers.
Brokers and custodians cannot vote uninstructed shares on your behalf in director elections or advisory votes on executive compensation. For your vote to be counted, you must submit your voting instruction form to your broker or custodian.
Proposal Number | Proposals | Votes Required for Approval | Abstentions | Uninstructed Shares | Management Vote | |||||
Recommendation | ||||||||||
1 | Election of Directors | See election of directors above | Not Voted | Not Voted | For | |||||
2 | Advisory vote on executive | |||||||||
compensation (Say on Pay) | Majority of shares voted | Not Voted | Not Voted | For | ||||||
3 | Ratification of independent auditor | Majority of | ||||||||
shares voted | Not Voted | Broker Discretionary Vote | For |
Other Matters. Approval of any other matter considered at the Annual Meeting will require the affirmative vote of a majority of the shares present or represented by proxy and voting at the Annual Meeting.
How You Can Vote.Your vote is very important and we hope that you will attend the Annual Meeting. However, whether or not you plan to attend the Annual Meeting, please vote by proxy.
Registered Holders. If your shares are registered directly in your name with the Company’s transfer agent, Computershare Investor Services, LLC, you are considered a registered holder of those shares. Please vote by proxy in accordance with the instructions on your Proxy Card, or the instruction you received through electronic mail.
A registered holder can vote in one of the following four ways:
Via the Internet. Go to the website noted on your Proxy Card in order to vote via the Internet.internet. Internet voting is available 24 hours a day. We encourage you to vote via the Internet,internet, as it is the most cost-effective way to vote. When voting via the Internet,internet, you do not need to return your Proxy Card.
By Telephone. Call the toll-free telephone number indicated on your Proxy Card and follow the voice prompt instructions to vote by telephone. Telephone voting is available 24 hours a day. When voting by telephone, you do not need to return your Proxy Card.
By Mail. Mark your Proxy Card, sign and date it, and return it in the enclosed postage-paid envelope. If you elected to electronically access the Proxy Statement and Annual Report, you will not be receiving a Proxy Card and must vote via the Internetinternet or by telephone.
In person. You may vote your shares at the Annual Meeting if you attend in person, even if you previously submitted a Proxy Card or voted via Internetinternet or telephone. Whether or not you plan to attend the Annual Meeting, however, we strongly encourage you to vote your shares by proxy before the meeting.
Beneficial Shareholders. If your shares are held in a brokerage account in the name of your bank, broker, or other holder of record (this is called “street name”), you are not a registered holder, but rather are considered a “beneficial holder” of those shares. Your bank, broker, or other holder of record will send you instructions on how to vote your shares. If you are a beneficial holder, you must obtain a proxy, executed in your favor, from the holder of record to be able to vote in person at the Annual Meeting.
We have been advised by counsel that these telephone and internet voting procedures comply with California law.
Voting Deadlines. If you are a participant in the Westamerica Bancorporation Tax Deferred Savings/Retirement Plan (ESOP) your vote must be received by 11:59 p.m. Central Time, on April 21, 2014.20, 2015. All other shareholders voting by telephone or Internetinternet must vote by 1:00 a.m. Central Time, on April 24, 201423, 2015 to ensure that their vote is counted.
Revocation of Proxy. Record Holders who vote by proxy, whether by telephone, internet or mail, may revoke that proxy at any time before it is voted at the Annual Meeting. You may do this by: (a) signing another Proxy Card with a later date and delivering it to us prior to the Annual Meeting or sending a notice of revocation to the Corporate Secretary of Westamerica at 1108 Fifth Avenue, San Rafael, CA 94901; (b) voting at a later time by telephone or on the internet prior to 1:00 a.m. Central Time, on April 24, 201423, 2015 (prior to 11:59 p.m. Central Time, on April 21, 201420, 2015 for ESOP participants); or (c) attending the Annual Meeting in person and casting a ballot. If you hold shares in street name, you may change your vote by submitting new voting instructions to your broker or other nominee.
3 |
Householding.As permitted by the Securities Exchange Act of 1934 (the “Exchange Act”) only one envelope containing two or more Notices of Internet Availability of Proxy Materials is being delivered to shareholders residing at the same address, unless such shareholders have notified their bank, broker, Computershare Investor Services, or other holder of record that they wish to receive separate mailings. If you are a beneficial holder and own your shares in street name, contact your broker, bank or other holder of record to discontinue householding and receive your own separate copy of the Notice in future years. If you are a registered holder and own your shares through Computershare Investor Services, contact Computershare toll-free at 877-588-4258 or in writing directed to Computershare Investor Services, 250 Royall Street, Mail Stop 1A, Canton, MA 02021 to discontinue householding and receive multiple Notices in future years. To receive an additional Annual Report or Proxy Statement this year, contact Shareholder Relations at 707-863-6992 or follow the instructions on the Notice. Mailing of dividends, dividend reinvestment statements, and special notices will not be affected by your election to discontinue duplicate mailings of the Notice.
Electronic Access to Proxy Materials and Annual Reports. Whether you received the Notice of Internet Availability of Proxy Materials or paper copies of proxy materials, this Proxy Statement and the 20132014 Annual Report are available on the Corporation’s internet site at: www.westamerica.com. If you hold your Westamerica common stock in street name through a broker, a bank or other nominee, you may have the option of securing your Proxy Statement and Annual Report via the Internet.internet. If you vote this year’s proxy electronically, you may also elect to receive future Proxy Statements, Annual Reports and other materials electronically by following the instructions given by your bank, broker, or other holder of record when you vote. Our website is available for information purposes only and should not be relied upon for investment purposes, nor is it incorporated by reference into this Proxy Statement.
Security Ownership of Certain Beneficial Holders. Based on Schedule 13G filings, shareholders beneficially holding more than 5% of Westamerica common stock outstanding as of December 31, 2013,2014, in addition to those disclosed in the Security Ownership of Directors and Management below, were:
Number of Shares | ||||||||
Name and Address of Beneficial Owner | Title of Class | Beneficially Owned | Percent of Class | |||||
T. Rowe Price Associates, Inc | ||||||||
1100 East Pratt Street, Baltimore, MD 21202-1009 | Common | 2,662,028 | (1) | 10.00% | ||||
BlackRock, Inc. | ||||||||
40 East 52nd Street, New York, NY 10022 | Common | 2,328,399 | (2) | 8.70% | ||||
Neuberger Berman, Inc. | ||||||||
605 Third Avenue, New York, NY 10158 | Common | 2,259,427 | (3) | 8.49% | ||||
State Street Corporation | ||||||||
One Lincoln Street, Boston, MA 02111 | Common | 1,562,549 | (4) | 5.90% | ||||
The Vanguard Group, Inc. | ||||||||
100 Vanguard Boulevard, Malvern, PA 19355 | Common | 1,493,600 | (5) | 5.60% |
Name and Address of Beneficial Owner | Title of Class | Number of Shares Beneficially Owned | Percent of Class | |||||||
T. Rowe Price Associates, Inc 100 East Pratt Street, Baltimore, MD 21202-1009 | Common | 2,628,233 | (1) | 10.10 | % | |||||
BlackRock, Inc. 55 East 52nd Street, New York, NY 10022 | Common | 2,308,265 | (2) | 8.90 | % | |||||
The Vanguard Group, Inc. 100 Vanguard Boulevard, Malvern, PA 19355 | Common | 1,902,250 | (3) | 7.34 | % | |||||
American Century Investment Management, Inc. 4500 Main Street, Kansas City, MO 64111 | Common | 1,624,969 | (4) | 6.30 | % | |||||
Neuberger Berman Group LLC 605 Third Avenue, New York, NY 10158 | Common | 1,377,392 | (5) | 5.32 | % |
(1) The Schedule 13G was filed with the SEC on February 10, 2015. These securities are owned by various individual and institutional investors, which T. Rowe Price Associates, Inc. (Price Associates) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial holder of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial holder of such securities.
(2) The Schedule 13G filed with the SEC on January 22, 2015 disclosed that the reporting entity, BlackRock, Inc., held sole voting power over 2,241,638 shares and sole dispositive power over 2,308,265 shares.
| ||
| ||
| ||
| ||
|
(3) The Schedule 13G filed with the SEC on February 10, 2015 disclosed that the reporting entity, The Vanguard Group, Inc., held sole voting power over 38,867 shares and sole dispositive power over 1,865,683 shares, and shared dispositive power over 36,567 shares.
(4) The Schedule 13G filed with the SEC on February 10, 2015 disclosed that the reporting entity, American Century Investment Management, Inc., held sole voting power over 1,585,773 shares and shared dispositive power over 1,624,969 shares.
(5) The Schedule 13G filed with the SEC on February 12, 2015 disclosed that the reporting entity, Neuberger Berman Group LLC., held shared voting power over 1,372,092 shares and shared dispositive power over 1,377,372 shares.
Security Ownership of Directors and Management. The following table shows the number of common shares and the percentage of the common shares beneficially owned (as defined below) by each of the current Directors, by the Chief Executive Officer (“CEO”), by the Chief Financial Officer (“CFO”), and by the three other most highly compensated executive officers, and by all Directors and Officers of the Corporation as a group as of February 24, 2014.23, 2015. As of February 24, 2014,23, 2015, there were 26,409,14625,617,758 outstanding shares of Westamerica Bancorporation’s common stock. For the purpose of the disclosure of ownership of shares by Directors and Officers below, shares are considered to be beneficially owned if a person, directly or indirectly, has or shares the power to vote or direct the voting of the shares, the power to dispose of or direct the disposition of the shares, or the right to acquire beneficial ownership of shares within 60 days of December 31, 2013.2014.
Amount And Nature Of Beneficial Ownership
Sole Voting and | Shared Voting | Right to Acquire | |||||||||||||
Investment | and Investment | Within 60 days of | Percent of | ||||||||||||
Name and Address** | Power | Power | December 31, 2013 | Total(1) | Class(2) | ||||||||||
Etta Allen | 10,830 | (3) | - | - | 10,830 | * | |||||||||
Louis E. Bartolini | 1,800 | - | - | 1,800 | * | ||||||||||
E. Joseph Bowler | - | 25,887 | (4) | - | 25,887 | 0.1% | |||||||||
Arthur C. Latno, Jr. | 3,440 | (5) | - | - | 3,440 | * | |||||||||
Patrick D. Lynch | 1,000 | - | - | 1,000 | * | ||||||||||
Catherine Cope MacMillan | 8,600 | (6) | - | - | 8,600 | * | |||||||||
Ronald A. Nelson | 44,000 | - | - | 44,000 | 0.2% | ||||||||||
David L. Payne | 462 | (7) | 885,570 | (8) | 252,500 | 1,138,532 | 4.3% | ||||||||
Edward B. Sylvester | 73,750 | - | - | 73,750 | 0.3% | ||||||||||
John "Robert" A. Thorson | 830 | (9) | 7,471 | (10) | 94,891 | 103,192 | 0.4% | ||||||||
David L. Robinson | 122 | 1,385 | 141,490 | (11) | 142,997 | 0.5% | |||||||||
Jennifer J. Finger | 9,838 | 175 | 165,736 | (11) | 175,749 | 0.7% | |||||||||
Dennis R. Hansen | 30 | 25,842 | 156,021 | (11) | 181,893 | 0.7% | |||||||||
All 15 Directors and Executive | |||||||||||||||
Officers as a Group | 154,727 | 946,766 | 907,041 | 2,008,534 | 7.4% |
Name and Address** | Sole Voting and Investment Power | Shared Voting and Investment Power | Right to Acquire Within 60 days of December 31, 2014 | Total(1) | Percent of Class(2) | |||||||||||||||
Etta Allen | 10,845 | (3) | - | - | 10,845 | * | ||||||||||||||
Louis E. Bartolini | 1,800 | - | - | 1,800 | * | |||||||||||||||
E. Joseph Bowler | - | 25,887 | (4) | - | 25,887 | 0.1 | % | |||||||||||||
Arthur C. Latno, Jr. | 3,460 | (5) | - | - | 3,460 | * | ||||||||||||||
Patrick D. Lynch | 1,000 | - | - | 1,000 | * | |||||||||||||||
Catherine Cope MacMillan | 8,600 | (6) | - | - | 8,600 | * | ||||||||||||||
Ronald A. Nelson | 44,000 | - | - | 44,000 | 0.2 | % | ||||||||||||||
David L. Payne | 1,453 | (7) | 885,570 | (8) | - | 887,023 | 3.5 | % | ||||||||||||
Edward B. Sylvester | 73,750 | - | - | 73,750 | 0.3 | % | ||||||||||||||
John "Robert" A. Thorson | 830 | (9) | 8,078 | (10) | 105,737 | 114,645 | 0.4 | % | ||||||||||||
David L. Robinson | 188 | 1,571 | 152,950 | (11) | 154,709 | 0.6 | % | |||||||||||||
Jennifer J. Finger(12) | 11,002 | 456 | 168,182 | (11) | 179,640 | 0.7 | % | |||||||||||||
Dennis R. Hansen | 30 | 26,861 | 165,241 | (11) | 192,132 | 0.7 | % | |||||||||||||
All 15 Directors and Executives | ||||||||||||||||||||
Officers as a Group | 158,953 | 949,020 | 641,743 | 1,749,716 | 6.8 | % |
* Indicates beneficial ownership of less than one-tenth of one percent (0.1%) of the Corporation’s common shares.
** The address of all persons listed is 1108 Fifth Avenue, San Rafael, CA 94901.
(1) None of the shares held by the Directors and Officers listed above have been pledged.
(2) In calculating the percentage of ownership, all shares which the identified person or persons have the right to acquire by exercise of options are deemed to be outstanding for the purpose of computing the percentage of the class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person.
(3) Includes 10,350 shares held in a trust as to which Mrs. Allen is trustee.
(4) Includes 25,887 shares held in trust as to which Mr. Bowler is co-trustee with shared voting and investment power.
(5) Includes 1,115 shares owned by Mr. Latno’s wife as to which Mr. Latno disclaims beneficial ownership.
| ||
| ||
| ||
| ||
| ||
| ||
|
(6) Includes 6,000 shares held in a trust as to which Ms. MacMillan is trustee and 400 shares held in trust under the California Uniform Gift to Minors Act as to which Ms. MacMillan is custodian.
(7) Includes 462 shares held in a trust under the California Uniform Gift to Minors Act as to which Mr. Payne is custodian.
(8) Includes 528,837 shares owned by Gibson Radio and Publishing Company, of which Mr. Payne is President and Chief Executive Officer, as to which Mr. Payne disclaims beneficial ownership, and 345,808 shares held in a trust as to which Mr. Payne is co-trustee with shared voting and investment power.
(9) Includes 415 shares held in trusts under the California Uniform Gift to Minors Act as to which Mr. Thorson is custodian.
(10) Includes 7,152 shares held in a trust as to which Mr. Thorson is co-trustee with shared voting and investment power.
(11) During 1996, the Corporation adopted the Westamerica Bancorporation Deferral Plan (the “Deferral Plan”) that allows recipients of Restricted Performance Shares (“RPS”) to defer receipt of vested RPS shares into succeeding years. Amounts shown include RPS shares that have been deferred into the Deferral Plan for the following accounts in amounts of: Ms. Finger – 25,030 shares; Messrs. Hansen – 14,780 shares; and Robinson – 19,140 shares.
(12) Ms. Finger resigned from the position of Treasurer of the Corporation on February 13, 2015.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Corporation’s Directors and Executive Officers and persons who own more than 10% of a registered class of the Corporation’s equity securities to file with the SEC and NASDAQ Nasdaqinitial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Corporation, and to send a copy to the Corporation.
To the Corporation’s knowledge and based solely on a review of the copies of reports furnished to the Corporation and written representations that no other reports were required, during the fiscal year ended December 31, 2013,2014, Westamerica’s Directors and Officers complied timely with all filing requirements.
Proposal 1 — Election of Directors
Nine Directors have been nominated for election at the Annual Meeting to hold office until the next Annual Meeting or until their successors are elected and qualified. The Proxies will vote for the nine nominees named below unless you give different voting instructions on your Proxy Card. Each nominee is presently a Director of the Corporation and has consented to serve a new term. The Board does not anticipate that any of the nominees will be unavailable to serve as a Director, but if that should occur before the Annual Meeting, the Board reserves the right to substitute another person as nominee. The Proxies will vote for any substitute nominated by the Board of Directors. The Proxies may use their discretion to cumulate votes for election of Directors and cast all of such votes for any one or more of the nominees, to the exclusion of the others, and in such order of preference as they may determine at their discretion.
The nominees for election as Directors are named and certain information with respect to them is given below. Our nominees are seasoned leaders who bring to the Board an array of financial services, public and private company, non-profit, and other business experience. As a group they possess experience in leadership, consumer banking, commercial and small business banking, investment banking, capital markets, financial advisory services, finance and accounting, risk management and real estate. Many of the Board Members have seen the company through a variety of economic conditions which was especially beneficial during the current economic environment. The information below has been furnished to the Corporation by the respective nominees. All of the nominees have engaged in their indicated principal occupation for more than five years, unless otherwise indicated and no nominee has served on the Board of Directors of another public company during the past five years.
6
Name of Nominees, Principal Occupations, and Qualifications
Etta Allen – Director since 1988
Etta Allen (84)(85) is President and CEO of Allen Heating and Sheet Metal and President and CEO of Sunny Slope Vineyard in Sonoma County, California. She is a member of the Employee Benefits and Compensation Committee and the Loan and Investment Committee. Mrs. Allen is also a Director of Westamerica Bank.
In 1972, she became the second woman in the state of California to become a licensed contractor in heating, ventilation, air conditioning and sheet metal, and in 1974 she became President and CEO of Allen Heating and Sheet Metal. Under her leadership the company became recognized throughout California. She was the first woman president of Marin Builders Exchange and during her time on the executive committee she also served as a trustee and later as chairman of their successful insurance trust. She was the first woman contractor on the Executive Committee of the California Association of Builders Exchanges.
Etta Allen is one of the pioneers for women in non-traditional careers. As an entrepreneur, businesswoman and an involved community leader, she brings independence, operations management and executive experience to the Board.
Louis E. Bartolini – Director since 1991
Louis E. Bartolini (81)(82) retired from Merrill Lynch, Pierce, Fenner & Smith, Inc. (now Merrill Lynch and Co.) as a financial consultant. He currently serves on the Audit Committee and is also a Director of Westamerica Bank. Mr. Bartolini has 3334 years of experience in the financial industry serving as a financial consultant and branch manager for Merrill Lynch and Co. and has been active for over 3536 years in the non-profit community in Marin County. He has served on the boards of many non-profit organizations, including a five-year term as president of the Marin Symphony, a Board member of the Association of California Symphony Orchestras, and a past District Governor of Rotary International.
Mr. Bartolini’s continuing interest in the financial industry, his leadership skills, and financial and investment expertise are of great value to the Board. His extensive ties to local community and business leaders through his long-term volunteer involvement provide the Board with a broad prospective and insights into key segments of our markets and customer base.
E. Joseph Bowler – Director since 2003
E. Joseph Bowler (77)(78) retired as Senior Vice President and Treasurer of the Corporation in 2002. He currently serves as a member of the Audit Committee, and is also a Director of Westamerica Bank. Mr. Bowler holds a Masters of Business Administration from Stanford University.
With many years of direct banking experience, Mr. Bowler brings strong financial and investment expertise important to the oversight of our financial reporting and interest rate risk management. In addition, Mr. Bowler’s experience as a director and trustee of various non-profit community and educational organizations brings strategic planning and corporate governance skills to the Board.
Arthur C. Latno, Jr. – Director since 1985
Arthur C. Latno, (84)Jr. (85) retired from Pacific Telesis Group (now Pacific Bell Telephone Company) as an Executive Vice President. He currently serves on the Corporation’s Executive Committee, the Employee Benefits and Compensation Committee, and the Loan and Investment Committee and is Chairman of the Nominating Committee. Mr. Latno is also a Director of Westamerica Bank. His expertise stems from his wide-ranging responsibilities at Pacific Bell, which included operations, regulatory responsibilities, and public and governmental relations. His proficiency in strategic planning was recognized by the City of San Francisco when he was selected to serve on the City’s Port of San Francisco Strategic Planning Advisory Panel. He has also been involved with the Marin General Hospital Foundation, the Fine Arts Museum of San Francisco and numerous other community organizations in the locations where the Corporation has a
significant presence. Mr. Latno is also a former U.S. Ambassador and Chairman of the U.S. Delegation Treaty Conference (rank accorded by President Reagan) in Melbourne, Australia, and a former Chairman of the Board of Trustees and Past President of Board of Regents of St. Mary’s College in California. He was a recipient of the Anti-Defamation League’s Americanism Award and the Friends of the Human Rights Commission’s Human Rights Award.
7
Mr. Latno’s most important contributions to the Board are his executive leadership, strategic planning skills, and regulatory and public relations experience.
Patrick D. Lynch – Director since 1986
Patrick D. Lynch (80)(81) retired as Vice President and General Manager of the U.S. Semiconductor Division of Motorola. He currently serves as Chairman of the Employee Benefits and Compensation Committee and is a member of the Executive Committee and the Nominating Committee. Mr. Lynch is also a Director of Westamerica Bank and has held executive positions at Nicolet Instrument Corporation and several venture capital high-tech start-up companies.
Mr. Lynch brings to the Board operations, financial and marketing expertise as well as a valued historical perspective.
Catherine Cope MacMillan – Director since 1985
Catherine Cope MacMillan (66)(67) is a former owner of the Huntington Hotel in San Francisco and La Playa Hotel in Carmel-by-the-Sea. She is a member of the Loan and Investment Committee and the Audit Committee. She is also a Director of Westamerica Bank. Ms. MacMillan previously operated a prominent restaurant for nearly 20 years. She is a graduate of the University of California at Davis and Pacific McGeorge School of Law. She has also served in numerous leadership capacities for community organizations.
Ms. MacMillan’s experience in administration and operational aspects of various businesses and organizations provides the Board with sound leadership.
Ronald A. Nelson – Director since 1988
Ronald A. Nelson (71)(72) was Executive Vice President of Charles M. Schulz Creative Associates through 1995. He serves as the Chairman of the Audit Committee and is a member of the Employee Benefits and Compensation Committee. He is also a Director of Westamerica Bank. Mr. Nelson has a background as a Certified Public Accountant and has been designated as the Audit Committee’s “financial expert.” He has been a resident of Sonoma County since 1970, which is one of the bank’s primary markets and where he has been involved in business management, investment management, and the development of commercial real estate. He also served as a board member and chairman of Santa Rosa Memorial Hospital, which is the area’s primary acute care hospital.
Mr. Nelson’s extensive business and financial expertise provides important oversight of our financial reporting and risk management.
David L. Payne – Director since 1984
David L. Payne (58)(59) is Chairman, President & CEO of Westamerica Bancorporation. He was appointed Chairman in 1988 and Chief Executive Officer in 1989 and is Chairman of the Executive Committee. Mr. Payne is also Chairman, President & CEO of Westamerica Bank. He brings to the Board strong leadership and a vision for the future. He has a thorough knowledge of the banking industry, manages regulatory and business development issues, and has extensive financial and accounting expertise. Mr. Payne possesses excellent management, strategic development and business skills.
8
Since Mr. Payne’s appointment to the Board, Westamerica’s dividends per share have risen eleven-fold
and capital levels have increased eight-fold. Total assets have quadrupled during his tenure and net income has risen by a multiple of 16.12. Return on equity is currently near 15%12%.
Mr. Payne has successfully negotiated and led the Corporation through many mergers including: John Muir National Bank, Napa Valley Bancorporation, PV Financial, CapitolBank – Sacramento, North Bay Bancorp, ValliCorp Holdings, First Counties Bank, Kerman State Bank, Redwood Empire Bancorp, County Bank, and Sonoma Valley Bank. Mr. Payne also manages his family printing, publishing and cable television business.
Edward B. Sylvester – Director since 1979
Edward Sylvester (77)(78) is a licensed civil engineer and the founder of SCO Planning and Engineering. He retired from the day-to-day engineering profession in 2007, but continues as a private consultant. Mr. Sylvester is currently a member of the Executive Committee, the Nominating Committee and is Chairman of the Loan and Investment Committee, and is a Director of Westamerica Bank. He was a founding Director of Gold Country Bank headquartered in Grass Valley until the bank merged with Westamerica’s predecessor, Independent Bankshares, at which time he was nominated to serve on the corporate Board by his peers. Mr. Sylvester is the Chairman of the Board of Nevada County Broadcasters and serves as Vice Chairman of the Nevada County Business Association, andAssociation. He is a memberVice Chairman of the Board of Sierra Nevada Memorial Hospital where he is a member of their Finance Committee, and Chairschairs the Hospital’shospital’s Citizen Outreach Committee and is Chairman of the Strategy Committee. Mr. Sylvester has previously served as a member and Chairman of the California Transportation Commission that prioritizes state transportation projects and allocates funding. He is a past President of the Rotary Club of Grass Valley and past Chairman of the Grass Valley Chamber of Commerce. Mr. Sylvester has run 23 marathons to date and was the 14th person in the world to complete a full marathon on all seven continents including Antarctica.
The depth of Mr. Sylvester’s experience gives him first-hand understanding of all the nuances of development and development funding, a current knowledge of the retail economy, and a state-wide perspective and experience in funding allocation. His long tenure on the Board brings a historical and long-term perspective while he remains current on financial issues with his continuing leadership role in the community and active management positions.
THE BOARD OF DIRECTORS RECOMMENDSRECOMMEND ELECTION OF ALL NOMINEES
Board of Directors and Committees
Director Independence and Leadership Structure
The Board of Directors has considered whether any relationships or transactions related to a Director were inconsistent with a Director’s independence. Based on this review, the Board has determined that E. Allen, L.E. Bartolini, E.J. Bowler, A.C. Latno, Jr., P.D. Lynch, C.C. MacMillan, R.A. Nelson, and E.B. Sylvester are “independent” Directors as defined in NASDAQ Nasdaqrules.
Our Board believes that the most effective leadership structure for the Corporation at this time is to combine the responsibilities of the Chairman and CEO, a structure that has been successful since 1989. The combined positions avoid a duplication of efforts, enable decisive leadership, ensure a clear accountability for the performance of the Corporation, a more rapid implementation of decisions, and a consistent vision. Given the size of our employee base and our level of assets relative to larger, more complex banking structures, our Corporation is particularly well suited to combine the Chairman and CEO functions. Furthermore, our management team has an average tenure of 2122 years and does not require the substantial oversight needed by a less experienced team, which has allowed our Chairman and CEO to lead the Corporation through eleven acquisitions since 1992.
9
To ensure strong Board oversight eight of our nine Directors are, as noted above, independent as defined by NasdaqASDAQ.. Only non-management directors sit on Board committees, with the exception of the Executive Committee, and every non-management director sits on one or more of these Committees. All non-management directors meet at least four times a year outside the presence of the Chairman and CEO and although a lead director has not been appointed, pertinent information from these meetings is regularly communicated to the Chairman and CEO. The Board completes an annual board evaluation that is discussed by the Nominating Committee and presented to the full Board.
The Board of the Corporation also serves as the Board of Directors of Westamerica Bank, and as such is well informed of Bank operations through regular reports and discussions on the operations of the Bank. The Directors’ longevity with the Corporation has exposed them to a wide range of business cycles, which plays a critical role in maintainingmanaging the risk profile and profitability of the Corporation through the current economic environment.
Role of the Board of Directors in Risk Oversight
The Board is also responsible for overseeing all aspects of management of the Corporation, including risk oversight, which is effected through all Board committees, but primarily through the Board’s Audit Committee. The Internal Audit Department reports directly to the Board’s Audit Committee. It presents its independently prepared company-wide annual risk assessment, its evaluation of Management’s prepared risk assessment and its audit plan incorporating the risk assessment, including the policies and procedures utilized to monitor and control such exposures.
The internal loan review function reports directly to the Board’s Loan and Investment Committee. It reports ongoing evaluations of loan portfolios and the risk rating of individual loans using guidelines established by bank regulatory authorities.
Meetings
The Corporation expects all Board Members to attend all meetings, including the Annual Meeting of Shareholders, except for reasons of health or special circumstances. The Board held a total of ten meetings during 2013.2014. Every Director attended at least 75% of the aggregate of: (i) the Board Meetings held during that period in which they served; and (ii) the total number of meetings of any Committee of the Board on which the Director served. Each individual who served on the Board of the Corporation on the date of the 20132014 Annual Meeting of Shareholders attended the meeting.
10
Committees of the Board
Employee | |||||||||||
Benefits and | Loan and | ||||||||||
Executive | Audit | Compensation | Investment | Nominating | |||||||
Director Name | Committee | Committee | Committee | Committee | Committee | ||||||
Etta Allen | X | X | |||||||||
Louis E. Bartolini | X | ||||||||||
E. Joseph Bowler | X | ||||||||||
Arthur C. Latno, Jr. | X | X | X | Chair | |||||||
Patrick D. Lynch | X | Chair | X | ||||||||
Catherine Cope MacMillan | X | X | |||||||||
Ronald A. Nelson | Chair | X | |||||||||
David L. Payne | Chair | ||||||||||
Edward B. Sylvester | X | Chair | X | ||||||||
Number of Meetings in 2013 | 9 | 5 | 5 | 9 | 1 |
Director Name | Executive Committee | Audit Committee | Employee Benefits and Compensation Committee | Loan and Investment Committee | Nominating Committee | |||||
Etta Allen | X | X | ||||||||
Louis E. Bartolini | X | |||||||||
E. Joseph Bowler | X | |||||||||
Arthur C. Latno, Jr. | X | X | X | Chair | ||||||
Patrick D. Lynch | X | Chair | X | |||||||
Catherine Cope MacMillan | X | X | ||||||||
Ronald A. Nelson | Chair | X | ||||||||
David L. Payne | Chair | |||||||||
Edward B. Sylvester | X | Chair | X | |||||||
Number of Meetings in 2014 | 9 | 5 | 5 | 9 | 1 |
Executive Committee
Functions:Functions:The Board delegates to the Executive Committee all powers and authority of the Board in the management of the business affairs of the Corporation between Board Meetings, which the Board is allowed to delegate under California law.
Audit Committee
The Board of Directors has determined that all members are independent, as that term is defined by applicable rules of NASDAQ Nasdaqfor Audit Committee purposes. The Board has also designated Mr. Nelson as the “Audit Committee financial expert” as defined by the rules of the SEC and has determined that he is “financially sophisticated” under NASDAQ Nasdaqrules. In concluding that Mr. Nelson is the Audit Committee financial expert, the Board determined that he has:
· | an understanding of generally accepted accounting principles and financial statements; |
· | the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; |
· | experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation’s financial statements, or experience actively supervising one or more persons engaged in such activities; |
· | an understanding of internal control over financial reporting; and |
· | an understanding of Audit Committee functions. |
Designation of a person as an Audit Committee financial expert does not result in the person being deemed an expert for any purpose, including under Section 11 of the Securities Act of 1933. The designation does not impose on the person any duties, obligations or liability greater than those imposed on any other Audit Committee member or any other Director and does not affect the duties, obligations or liability of any other member of the Audit Committee or Board of Directors.
Functions:The Audit Committee provides independent, objective oversight of the integrity of the Corporation’s financial statements, the Corporation’s compliance with legal and regulatory requirements, the independence and performance of the Corporation’s independent auditor as it performs audit, review or attest services, and the Corporation’s internal audit and control function. It selects and
retains the independent auditors,registered public accounting firm, and reviews the plan and the results of the auditing engagement. It acts pursuant to a written charter that was last revised by the Board of Directors in July 2013April 2014 and is attached as Exhibit A to the Proxy Statement for this 20142015 Annual Meeting of Shareholders. The Audit Committee Report that follows below more fully describes the responsibilities and the activities of the Audit Committee.
11
Employee Benefits and Compensation Committee
The Employee Benefits and Compensation Committee of the Board of Directors (the “Compensation Committee”) is comprised solely of Directors who are not current or former employees of Westamerica or any of its affiliates. They are independent as defined by NASDAQNasdaq rules.
Functions:The Compensation Committee administers Westamerica Bancorporation’s 2012 Amended and Restated Stock Option Plan of 1995, Tax Deferred Savings and Retirement Plan, Deferred Profit Sharing Plan, Deferred Compensation Plan, and the Westamerica Bancorporation Deferral Plan. It administers the Corporation’s compensation programs and reviews and reports to the Board the compensation level for executive officers, including the CEO, of the Corporation and its subsidiaries and determines that compensation plans are balanced between financial results without motivation of excessiveand prudent risk taking. The Compensation Committee determines annual corporate performance objectives for equity compensation and cash bonuses and their related corporate, divisional and individual goals. Based on the CEO’s assessment of the extent to which each executive officer met those objectives and goals, the Committee determines each executive officer’s annual equity compensation and cash bonus. The Compensation Committee also establishes the individual goals and targets for the CEO. All compensation approved by the Compensation Committee is reported to the full Board of Directors. The role of the Compensation Committee is described in greater detail under the section entitled “Compensation Discussion and Analysis.”
The Compensation Committee is governed by a written charter as required by NASDAQNasdaq rules. The charter iswas adopted April 24, 2013 and attached to this proxy statement as Exhibit B.B to the Proxy Statement for the 2014 Annual Meeting of Shareholders. The Compensation Committee has the authority to seek assistance from officers and employees of the Corporation as well as external legal, accounting and other advisors. It has not retained outside consultants for compensation advice, but can request assistance on an as-needed basis. It does not delegate authority to anyone outside of the Compensation Committee. The Payroll and Employee Benefits Department supports the Compensation Committee by fulfilling certain administrative duties regarding the compensation programs.
Nominating Committee
The Board of Directors has determined that all members of the Nominating Committee are independent, as defined in NASDAQ Nasdaqrules.
Functions:The Nominating Committee is governed by a written charter, which was affirmed in January 2013 and was attached as Exhibit A to the Proxy Statement for the 2013 Annual Meeting of Shareholders. The Nominating Committee screens and recommends qualified candidates for Board membership. This Committee recommends a slate of nominees for each Annual Meeting. As part of that process, it evaluates and considers all candidates submitted by shareholders in accordance with the Corporation’s Bylaws, and considers each existing Board member’s contributions. The Committee applies the same evaluation standards whether the candidate was recommended by a shareholder or the Board.
While the Board does not have a formal diversity policy, it believes that the Board broadly defines diversity to encompass a diverse range of skills and expertise sufficient to provide prudent guidance to
12 |
the Corporation. In addition to the qualifications and characteristics described below, it considers whether the potential Director assists in achieving a mix of Board Members that represents a diversity of background, perspective, and experience. Our Board includes Directors with experience in public corporations and non-profit organizations, as well as entrepreneurial individuals who have successfully run their own private enterprise. Our Board also has a broad set of skills necessary for providing oversight to a financial institution, which includes proven leadership, and expertise in capital management, finance, accounting, regulatory affairs, and investment management.
12
Nominating Directors. The Nominating Committee will consider shareholder nominations submitted in accordance with Section 2.14 of the Bylaws of the Corporation. That section requires, among other things, that nominations be submitted in writing and must be received by the Corporate Secretary at least 45 days before the anniversary of the date on which the Corporation first mailed its proxy materials for the prior year’s Annual Meeting of Shareholders. If the date for the current year’s Annual Meeting changes more than 30 days from the date on which the prior year’s meeting was held, the Corporation must receive notice with a reasonable amount of time before the Corporation mails its proxy materials for the current year.
Nominations must include the following information:
· | The principal occupation of the nominee; |
· | The total number of shares of capital stock of the Corporation that the shareholder expects will be voted for the nominee; |
· | The name and address of the nominating shareholder; and |
· | The number of shares of capital stock of the Corporation owned by the nominating shareholder. |
The Committee has specified the following minimum qualifications it believes must be met by a nominee for a position on the Board:
· | Appropriate personal and professional attributes to meet the Corporation’s needs; |
· | Highest ethical standards and absolute personal integrity; |
· | Physical and mental ability to contribute effectively as a Director; |
· | Willingness and ability to participate actively in Board activities and deliberations; |
· | Ability to approach problems objectively, rationally and realistically; |
· | Ability to respond well and to function under pressure; |
· | Willingness to respect the confidences of the Board and the Corporation; |
· | Willingness to devote the time necessary to function effectively as a Board member; |
· | Possess independence necessary to make unbiased evaluation of Management performance; |
· | Be free of any conflict of interest that would violate applicable law or regulation or interfere with ability to perform duties; |
· | Broad experience, wisdom, vision and integrity; |
· | Understanding of the Corporation’s business environment; and |
· | Significant business experience relevant to the operations of the Corporation. |
Loan and Investment Committee
Functions:This Committee reviews major loans and investment policies.
The following table and footnotes provide information regarding the compensation paid to the Corporation’s non-employee members of the Board of Directors in the fiscal year 2013.2014. Directors who are employees of the Corporation receive no compensation for their services as Directors.
13
(1) Non-employee Directors did not receive options or stock awards. During 2014, non-employee Directors of the Corporation each received an annual retainer of $18,000. Each non-employee Director received $1,200 for each meeting of the Board attended and $600 for each Committee meeting attended. The Chairman of each Committee received an additional $250 for each Committee meeting attended. All non-employee Directors are reimbursed for expenses incurred in attending Board and Committee meetings. The Chairman of the Board, David L. Payne, is compensated as an employee and did not receive any compensation as a Director.
(2) The Deferred Compensation Table For Fiscal Year 2013Plan allows non-employee Directors to defer some or all of their Director compensation with interest earnings credited on deferred compensation accounts. The amount shown is the interest on nonqualified deferred compensation that exceeds 120% of the long-term Applicable Federal Rate, with compounding, on all cash compensation deferred in 2014 and in previous years.
Change in Pension Value and | |||||||
Fees Earned | Nonqualified Deferred | ||||||
Name(1) | Paid in Cash ($) | Compensation Earnings(2) | Total ($) | ||||
Etta Allen | $34,800 | $62,677 | $97,477 | ||||
Louis E. Bartolini | 33,000 | 651 | 33,651 | ||||
E. Joseph Bowler | 33,000 | - | 33,000 | ||||
Arthur C. Latno, Jr. | 44,050 | - | 44,050 | ||||
Patrick D. Lynch | 40,250 | - | 40,250 | ||||
Catherine Cope MacMillan | 36,600 | - | 36,600 | ||||
Ronald A. Nelson | 37,250 | - | 37,250 | ||||
Edward B. Sylvester | 42,450 | 11,422 | 53,872 |
| ||
|
Westamerica Bancorporation does not have a charitable donations program for Directors nor does it make donations on behalf of any Director(s). The Corporation may make a nominal donation through its Community Relations program to non-profit organizations where a Director(s) may have an affiliation.
Compensation Discussion and Analysis
The executive compensation practices described below have been followed consistently for twenty-twotwenty-three years. At the 2010, 2011, 2012 and 2013each Annual MeetingsMeeting of Shareholders since 2010, a majority of our shareholders approved an advisory proposal on the Corporation’s executive compensation.
The Compensation Committee governs the executive compensation program that combines three compensation elements: base salary, annual non-equity cash incentives, and long-term stock grants. Several compensation philosophies and practices underlie this program:
· | Base salaries for participants in this program should be limited to foster an environment where incentive compensation motivates and rewards
|
· | Incentive compensation (annual non-equity cash incentives and long-term stock grants) is based on measurement of performance against pre-established objective measurable goals. Specific criteria for each objective are established for “threshold,” “target,” and “outstanding” performance. On any one measure, performance below “threshold” results in no credit for that objective. “Threshold” performance results in 75% achievement, “target” performance results in 100% achievement, and “outstanding” performance results in 150% achievement. The performance achievement level determines the size of incentive compensation awards. |
· | Long-term incentive stock grants will be awarded to senior management if the corporate |
performance level is rated “threshold” or better. The purpose of long-term incentive grants is to:
– motivate senior management to focus on long-term performance; – avoid excessive risk-taking and instill conservative management practices; – build equity ownership among Westamerica’s senior management; – link shareholder interests to management incentives; and – create ownership mentality among senior management. | ||
In February 2013, the Board of Directors adopted a clawback policy that requires executive officers to forfeit previously awarded incentive compensation if the incentives were based on materially inaccurate financial statements or other performance measures that are later proven to be materially inaccurate or the achievement of which were due to fraud or other misconduct.
Establishing Incentive Levels, Determining Objectives and Measuring Performance
In administering the executive compensation program, the Compensation Committee determines “target” incentives for each position annually. The Compensation Committee exercises discretion in establishing “target” incentives in an effort to provide competitive pay practices while motivating and rewarding performance that benefits the Corporation’s long-term financial performance and shareholder interests, and avoiding excessive risk-taking.
At the beginning of each calendar year, the Compensation Committee establishes annual corporate performance objectives. In establishing corporate performance objectives, the Compensation Committee takes into consideration the current operating environment for the commercial banking industry as well as internal management policies and practices which would, in the Compensation Committee’s opinion, benefit the long-term interests of the Corporation and its shareholders. Corporate performance measures include risk management elements considered to be responsive to the impact that current operating conditions could have on the long-term performance of the Company. The Compensation Committee monitors the economy and the banking industry’s operating environment throughout the ensuing year, and may exercise discretion in adjusting corporate performance objectives during the year.
The operating environment for the commercial banking industry is impacted by a myriad of factors including, but not limited to, local, national and global economic conditions, interest rate levels and trends, monetary policies of the Federal Reserve Board and its counterparts in other countries, fiscal policies of the United States government and other global political conditions, regulations and legislation, liquidity in capital markets, the demand for capital by commercial enterprises and consumers, new financial products, competitive response to changing conditions within the industry, trade balances, the changing values of real estate, currencies, commodities and other assets, and other factors.
Management policies and practices the Board considers in establishing corporate performance objectives include, but are not limited to, management of the Corporation’s balance sheet and product pricing in a manner which will provide consistent sustainable growth in long-term financial results for shareholders, the type and variety of financial products offered by the Corporation, adherence to internal controls, management of the credit risk of the Corporation’s loan and investment portfolios, the results of internal, regulatory and external audits, service quality delivered to the Corporation’s customers, service quality of “back office” support departments provided to those offices and departments directly delivering products and services to the Corporation’s customers, maintenance of operating policies and procedures which remain appropriate for risk management in a dynamic environment, timely and efficient integration of acquired companies, operational efficiencies, and capital management practices.
Restricted performance shares (“RPS”) represent awards of Westamerica’s common stock subject to achievement of performance objectives established by the Compensation Committee. The 2012 Amended and Restated Stock Option Plan of 1995 (the “2012 Amended Plan”), which was originally approved by shareholders in 1995, and amended with shareholder approval in 2003 and again in 2012, defines the performance factors the Board must use in administering RPS grants as one or more of the following: earnings, diluted earnings per share, revenue and revenue per diluted share, expenses, share price, return on equity, return on equity relative to the average return on equity for similarly sized institutions, return on assets, return on assets relative to the average return on assets for similarly sized institutions, efficiency ratio (operating expenses divided by operating revenues), net loan losses as a percentage of average loans outstanding, nonperforming assets, and nonperforming assets as a percentage of total assets.
In addition to establishing corporate performance objectives, the Compensation Committee also establishes individual goals for the CEO. In regard to the other executives named in the accompanying tables, the CEO recommends divisional and individual performance objectives to the Compensation Committee, which considers, discusses, adjusts as necessary, and adopts such performance objectives.
Upon the closure of each calendar year, the Compensation Committee reviews corporate, divisional, and individual performance against the performance objectives for the year just completed. After thorough review and deliberation, the Compensation Committee determines the recommended amount of individual non-equity cash incentives and stock-based incentive awards. The Compensation Committee reports such incentives to the Board of Directors. Meetings of the Compensation Committee and Board of Directors routinely occur in January, immediately following the closure of the calendar year for which performance is measured for incentive compensation purposes.
Stock Grants
Long-term stock grants may only be awarded under shareholder approved stock-based incentive compensation plans. The Corporation’s Proxy Statement dated March 12, 2012, as filed with the SEC on March 13, 2012, summarizes the 2012 Amended Plan’s changes from the predecessor plan. Such changes included:
· | reducing the issuable shares to 1,500,000 (plus shares that become available if awards under prior plans expire unexercised or are cancelled, forfeited or terminated before being exercised); |
· | any additional authorization of shares available for issuance must be approved by shareholders; and |
· | establishing a plan expiration date of April 26, 2022 after which shareholder approval is again required to extend the term or approve a new stock option plan. |
The 2012 Amended Plan allows four types of stock-based compensation awards:
Incentive Stock Options (“ISO”) allow the optionee to buy a certain number of shares of Westamerica common stock at a fixed price, which is established on the date of the option grant. ISOs are intended to meet the requirements of Section 422 of the Internal Revenue Code which provide advantages if certain conditions are met. If the optionee holds the acquired stock for the designated holding period, the optionee defers the timing of recognizing taxable income related to exercising the ISO. If the optionee complies with the ISO requirements, the Corporation does not receive a corporate tax deduction related to the shares issued.
Nonqualified Stock Options(“NQSO”) also give the optionee the option to buy a certain number of shares of Westamerica common stock at a fixed price, which is established on the date of grant. Unlike ISOs, NQSOs do not allow deferral of taxable income for the optionee. At the time NQSOs are
exercised, the optionee incurs taxable income equal to the spread between the exercise price and the market price of the stock, and the Corporation receives a corporate tax deduction in the same amount.
Stock Appreciation Rights (“SAR”) provide the holder a cash payment equal to the difference between the fair market value of the Corporation’s common stock on the date the SAR is surrendered and the fair market value of the Corporation’s common stock on the date the SAR was granted. The optionee incurs taxable income at the time the SAR is settled and the Corporation receives a corporate tax deduction in the same amount.
Restricted Performance Share Grants, as noted above, are awards of the Corporation’s common stock that are subject to the achievement of performance objectives. Award recipients receive shares at the end of the performance measurement period only if performance objectives are achieved. The award recipient incurs taxable income at the time any RPS vests and the Corporation receives a corporate tax deduction in the same amount.
Determination of Awards to Grant
In determining which type of stock-based compensation awards to grant, the Compensation Committee considers the attributes of each form of incentive. Examples include the ability to motivate management to make decisions based on the long-term interests of shareholders, the desire to compensate with shares rather than cash, and the tax consequences of each type of award. The Compensation Committee retains the latitude to utilize all forms of incentives provided under the 2012 Amended Plan. In the current and preceding years, the Compensation Committee has utilized NQSO and RPS based on the motivational aspects of stock price appreciation, the settlement in shares rather than cash, and the preservation of tax deductions for the Corporation. As of February 24, 2014,2015, the Corporation had no ISO or SAR awards outstanding.
Determination of Option Exercise Price
The 2012 Amended Plan also requires the exercise price of each NQSO or ISO to be no less than one hundred percent (100%) of the fair market value of the Corporation’s common stock on the date of grant. The 2012 Amended Plan does not allow re-pricing stock options for poor stock price performance.
Stock-based compensation awards are submitted by the Compensation Committee to the full Board of Directors for review. As described above, these meetings have routinely occurred in January immediately following the closure of the calendar year for which performance is measured for incentive compensation purposes. The Compensation Committee meeting has routinely been held during the same week as the related Board of Directors meeting. These January meetings follow by no more than ten business days the Corporation’s public disclosure of its financial results for the preceding year. As a result, stock option grants are awarded, and the exercise price of such grants are determined at a time when the Corporation has broadly disseminated its financial condition and current operating results to the public. The Corporation’s outstanding stock option grants are dated, and related stock option exercise prices are determined, on the January date the Compensation Committee meets to approve such grants.(1)
Long-Term Incentive Attributes
The Board of Directors has designated the Compensation Committee as the administrator of the 2012 Amended Plan. The Compensation Committee reports to the Board the terms and conditions of stock option awards. In carrying out this responsibility, the Compensation Committee designs such awards as long-term incentives. The terms and conditions of currently outstanding awards include:
(1) Due to merger and acquisition activity, the Corporation converts stock option grants vest one-third (1/3) on each anniversary of the grant date. As such, NQSO grants become fully vested over a three-year period. NQSO grants expireoutstanding for acquired companies based on the tenth anniversaryterms and conditions of related merger agreements. The dating of such converted stock options generally remains as originally dated by the acquired company. As a result, the Corporation at times has options outstanding related to acquisitions with grant date. The Corporation does not pay dividends on shares underlying NQSO grants until the optionee exercises thedates different from its routine stock option and the shares are outstanding on a dividend record date.
· | NQSO grants vest one-third (1/3) on each anniversary of the grant date. As such, NQSO grants become fully vested over a three-year period. NQSO grants expire on the tenth anniversary of the grant date. The Corporation does not pay dividends on shares underlying NQSO grants until the optionee exercises the option and the shares are outstanding on a dividend record date. |
· | RPS awards vest three years following the grant date, only if corporate performance objectives are achieved over the three-year period. The Corporation does not pay dividends on RPS shares until vesting occurs and shares awarded become outstanding on a dividend record date. |
Compensation for the Chairman, President & CEO
Mr. Payne performs two functions for the Corporation. These two functions tend to be compensated separately at similarly sized banking institutions. Mr. Payne serves as Chairman of the Board and Chief Executive Officer with responsibilities including oversight of the organization and external strategic initiatives. Mr. Payne also serves as President and Chief Operating Officer with responsibilities including daily management of internal operations. Mr. Payne’s total compensation reflects these broad responsibilities. Consistent with the overall compensation philosophy for senior executives, Mr. Payne’s compensation has a greater amount of pay at risk through incentives than through base salary. Since Mr. Payne is compensated as an executive, he is not eligible to receive compensation as a Director.
As noted on page 28 of the Proxy under the Pension Benefits Table, during 1997 the Corporation entered into a nonqualified pension agreement (“Pension Agreement”) with Mr. Payne in consideration of Mr. Payne’s agreement that RPS granted in 1995, 1996 and 1997 would be cancelled.(2) In entering the Pension Agreement, the Board of Directors considered the following:
· | Mr. Payne had a significant beneficial interest in Corporation common stock, which was more than adequate to continue to provide motivation for Mr. Payne to continue managing the Corporation in the best interests of shareholders. |