Business Context and Reporting Period
This Form 8-K filing by Banner Corporation (Banner Corp) reports on events occurring on May 30, 2013, regarding executive compensation arrangements. The filing details the implementation of shareholder-approved plans following the 2013 Annual Meeting of Shareholders held on April 23, 2013.
Key Financial Metrics
This filing does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity data. It focuses exclusively on the terms of executive compensation plans.
Material Changes and Compensation Plans
The Compensation Committee approved two primary compensation mechanisms effective June 3, 2013:
- Amended and Restated 2012 Restricted Stock and Incentive Bonus Plan: Amended to allow for Section 162(m) deductible awards. Performance-based restricted stock awards were granted with a performance period from April 1, 2013, through December 31, 2015.
- 2013 Annual Incentive Plan: A cash-based plan for eligible employees, including executive officers, with payouts determined by corporate and individual performance measures.
Performance Criteria
Corporate performance measures for the 2013 Annual Incentive Plan include:
- Return on average assets (pre-tax, pre-provision).
- Efficiency ratio.
- Ratio of non-performing assets to total assets.
- Total operating revenue.
Performance-based restricted stock awards are measured against peer banks using Return on average assets and Total shareholder return (with dividends reinvested).
Executive Compensation Ranges
The following table outlines the potential additional compensation as a percentage of base salary for Named Executive Officers (NEOs) under the new plans:
| Named Executive Officer | Restricted Stock (Min/Max %) | Cash Incentive Bonus (Min/Max %) |
|---|---|---|
| Mark J. Grescovich | 0% / 60% | 0% / 75.0% |
| Lloyd W. Baker | 0% / 30% | 0% / 37.5% |
| Richard B. Barton | 0% / 30% | 0% / 37.5% |
| Cynthia D. Purcell | 0% / 30% | 0% / 37.5% |
| Douglas M. Bennett | 0% / 30% | 0% / 37.5% |
Guidance, Risks, and Contingencies
Payout Conditions: Cash incentive payouts are subject to a "performance gate" relative to a peer group. If the Company's relative performance falls below an established level for a specific measure, no incentive is paid for that goal regardless of absolute performance. Participants must be employed by the Company or Banner Bank on the earlier of the payment determination date or March 15 of the year following the performance period to receive payment.
Share Calculation: The number of shares for restricted stock awards was determined using the average closing price of Banner's common stock over the ten-day period immediately preceding the grant date.
Investor Verification Checklist
- Verify the specific peer group of financial institutions selected by the Compensation Committee for relative performance comparisons.
- Review the attached Exhibits 10.1, 10.2, and 10.4 for detailed terms of the award agreements.
- Confirm the exact number of shares granted to executives based on the stock price calculation method described.
- Monitor future filings for the actual performance results against the 2013-2015 targets to determine final payout amounts.