pre14a
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. _____)
Filed by
the Registrant þ
Filed by a party other than the Registrant o
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Preliminary Proxy Statement |
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Confidential, for Use of the Common Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-11(c) or §240.14a-12 |
INTERMOUNTAIN COMMUNITY BANCORP.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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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. |
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Date Filed: |
Intermountain Community Bancorp
414 Church Street
Sandpoint, Idaho 83864
March 20, 2009
To the Shareholders of Intermountain Community Bancorp:
We cordially invite you to attend the 2009 Annual Shareholders Meeting of Intermountain
Community Bancorp to be held on Wednesday, April 29, 2009 at 10 a.m. at the Sandpoint Center,
located at 414 Church Street, Sandpoint, Idaho.
Your vote is important. Whether or not you plan to attend the annual meeting, we hope that you
will vote as soon as possible. We encourage you to promptly complete and return the enclosed proxy
card or vote by Internet or telephone, as specified in your proxy card; if you attend the meeting
in person, you may withdraw your proxy and vote your shares.
Further information regarding voting rights and the business to be transacted at the annual
meeting is included in the accompanying Proxy Statement. Your continued interest in and support of
Intermountain Community Bancorp is truly appreciated.
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Sincerely,
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/s/ Curt Hecker
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Curt Hecker |
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President and Chief Executive Officer |
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INTERMOUNTAIN COMMUNITY BANCORP
414 Church Street
Sandpoint, Idaho 83864
(208) 263-0505
Notice of Annual Meeting of Shareholders
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10:00 a.m. on Wednesday, April 29, 2009 |
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PLACE |
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Sandpoint Center, 414 Church Street, Sandpoint, Idaho |
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ITEMS OF BUSINESS
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(1)
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To elect four directors to a three-year term. |
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(2)
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To consider and approve an advisory (non-binding)
vote on executive compensation, as disclosed in the
proxy statement. |
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(3)
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To ratify the appointment of BDO Seidman, LLP as the
independent registered public accounting firm for
Intermountain Community Bancorp for 2009. |
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(4)
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To act upon such other matters as may properly come
before the meeting or any adjournments or postponements
thereof. |
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RECORD DATE |
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You are entitled to vote at the annual meeting and at
any adjournments or postponements thereof if you were a
shareholder at the close of business on February 27,
2009. |
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VOTING BY PROXY |
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Please submit your proxy card as soon as possible so
that your shares can be voted at the annual meeting in
accordance with your instructions. For specific
instructions on voting, please refer to the instructions
on your enclosed proxy card. |
Your vote is important. Whether or not you plan to attend the annual meeting, we urge you
to vote and submit your proxy by the Internet, telephone or mail in order to ensure the presence of
a quorum.
Registered holders may vote:
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By Internet: go to www.proxyvote.com |
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By Phone: call toll-free 1-800-690-6903 |
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By Mail: mark, sign, date and mail your proxy card |
Beneficial Holders: If your shares are held in the name of a broker, bank or other
holder of record, you must follow the instructions you receive from the holder of record to
vote your shares.
By Order of the Board
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/s/ Dale Schuman
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/s/ Curt Hecker |
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Dale Schuman
Corporate Secretary
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Curt Hecker
President and Chief Executive Officer |
This proxy statement and the accompanying proxy card are being distributed on or about
March 20, 2009
TABLE OF CONTENTS
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ii
PROXY STATEMENT
For Annual Meeting of Shareholders
to be held on April 29, 2009
INFORMATION ABOUT THE MEETING
Important Notice Regarding the Availability of Proxy Materials for the 2009 Shareholder
Meeting:
A copy of this Proxy Statement, the Annual Report to Shareholders and the Annual
Report on Form 10-K for the year ended December 31, 2008 are available at
www.panhandlebank.com.
General
Meeting Information. This Proxy Statement and the accompanying Proxy are being sent to
shareholders on or about March 20, 2009, for use in connection with the Annual Meeting of
Shareholders of Intermountain Community Bancorp (Intermountain or the Company) to be held on
Wednesday, April 29, 2009.
Shares Entitled to Vote at the Annual Meeting. Holders of shares of Intermountain common
stock as of the record date (see below) are entitled to vote at the Annual Meeting. No other
Intermountain securities are entitled to vote at the Annual Meeting, including but not limited to
our outstanding Series A Preferred Stock. References in this proxy statement to shareholders and
shares in the context of matters to be voted upon at and the solicitation of proxies for the
annual meeting refer to holders of Intermountain common stock and shares of Intermountain common
stock, respectively.
Distribution of Proxy Materials. In accordance with the rules and regulations adopted by the
Securities and Exchange Commission (SEC), instead of mailing a printed copy of our proxy
materials to each shareholder of record, we may now furnish proxy materials including this Proxy
Statement, the proxy card, the Companys Annual Report to Shareholders and Annual Report on Form
10-K for the year ended December 31, 2008 to our shareholders by providing access to such documents
on the Internet.
In that regard, shareholders who beneficially hold shares in street name will not receive
printed copies of the proxy materials unless requested. Instead, the Notice of Internet
Availability of Proxy Materials (Notice) previously distributed to these shareholders instructs
shareholders as to how they may access and review all of the proxy materials. The Notice also
instructs shareholders how to submit a proxy through the Internet. If you would like to receive a
paper copy or e-mail copy of your proxy materials, you should follow the instructions for
requesting such materials included in the Notice. We will pay the entire cost of preparing,
assembling, printing, mailing and distributing these proxy materials.
If you are a shareholder of record, you will receive a paper copy of the proxy materials in
the mail. However, instead of receiving paper copies of future proxy materials in the mail, you
can elect to receive an e-mail that will provide an electronic link to these documents. Choosing
to receive your proxy materials online will save us the cost of producing and mailing documents to
you as well as conserve natural resources. With electronic delivery, we will notify you by e-mail
as soon as the proxy materials are available on the Internet, and you can easily submit your
shareholder vote online. If you are a shareholder of record, you may enroll in the electronic
delivery service by voting on the Internet and following the enrollment instructions after
selecting electronic delivery.
Solicitation of Proxies. The Board of Directors is soliciting shareholder proxies, and we
will pay the associated costs. Solicitation may be made by our directors, officers and by employees
of our subsidiary bank, Panhandle State Bank. In addition, we may engage an outside proxy
solicitation firm to render proxy
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solicitation services. If we do, we will pay a fee for such services. Solicitation may be made
through the mail, or by telephone, facsimile, or personal interview. We also may reimburse
brokerage firms, custodians and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners.
Record Date. If you were a shareholder on February 27, 2009 (the Record Date), you are
entitled to vote at the annual meeting. There were approximately 8,441,653 shares of common stock
issued and outstanding on the Record Date.
Quorum. The quorum requirement for holding the annual meeting and transacting business is a
majority of the shares entitled to be voted. The shares may be present in person or represented by
proxy at the annual meeting. Both abstentions and broker non-votes are counted as present for the
purpose of determining the presence of a quorum.
Business of the Meeting
The matters that are being presented for consideration by our shareholders at the annual
meeting are the (i) election of directors; (ii) approval of an advisory (non-binding) vote on
executive compensation; and (iii) ratification of the appointment of our independent public
accountants for 2009.
Voting Requirement to Approve Matters Presented
Election of Directors. The four nominees for election as directors at the annual meeting with
three-year terms to expire in 2012 who receive the highest number of affirmative votes will be
elected. Shareholders are not permitted to cumulate their votes for the election of directors.
Votes may be cast for or withheld from each nominee. Votes that are withheld and broker non-votes
will have no effect on the outcome of the election.
Advisory (non-binding) Vote on Executive Compensation. To consider and approve in an advisory
(non-binding) vote, the compensation of executives as described in the Compensation Discussion &
Analysis, and the tabular and narrative disclosure in this proxy statement. The advisory
(non-binding) vote on executive compensation requires the affirmative vote FOR the proposal by
holders of a majority of the shares present in person or by proxy and entitled to vote on the
proposal. You may vote for, against or abstain from approving the advisory (non-binding) vote on
executive compensation. Abstentions and broker non-votes will have no effect on the outcome of the
votes.
Ratification of the Appointment of Independent Accountants. The proposal to ratify the
appointment of Intermountains independent registered public accounting firm for 2009 requires the
affirmative vote FOR the proposal by holders of a majority of the shares present in person or by
proxy and entitled to vote on the proposal. You may vote for, against or abstain from the
ratification of the independent public accountants. Abstentions and broker non-votes will have no
effect on the outcome of the votes.
Voting and Revocation of Proxies. Shares represented by properly executed proxies that are
received in time and not revoked will be voted in accordance with the instructions indicated on the
proxies. If no instructions are indicated, the persons named in the proxy will vote the shares
represented by the proxy FOR the director nominees listed in this Proxy Statement, FOR the approval
of the advisory (non-binding) vote on executive compensation and FOR the ratification of the
independent registered public accounting firm. Any proxy given by a shareholder may be revoked
before its exercise by (1) giving notice to us in writing, (2) delivering to us a subsequently
dated proxy, or (3) notifying us at the annual meeting before the shareholder vote is taken.
Shareholders of record are entitled to one vote per share on the proposals.
Voting of Proxies by Shareholders of Record and by Beneficial Owners. Holders of approximately
54% of the outstanding shares of Intermountain common stock hold their shares through a
stockbroker, bank
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or other nominee rather than directly in their own name. As summarized below, there are some
differences between shares held of record and those owned beneficially.
Shareholders of Record. If your shares are registered directly in your name with
Intermountains transfer agent, American Stock Transfer and Trust, you are considered, with respect
to those shares, the shareholder of record, and these proxy materials are being sent to you by
Intermountain through Broadridge Financial Solutions, Inc. As the shareholder of record, you have
the right to grant your voting proxy directly to Intermountain or to vote in person at the annual
meeting. Intermountain has enclosed a proxy card for you to use. For instructions on voting by
telephone or Internet please refer to your proxy card.
Beneficial Owner. If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in street name, and you will
receive a Notice of Internet Availability of Proxy Materials (Notice) from your broker or nominee
who is considered, with respect to those shares, the shareholder of record. As the beneficial
owner, you have the right to direct your broker on how to vote. The Notice will explain how you
may direct your vote and if desired, how you may obtain copies of the proxy statement.
Brokers cannot vote on behalf of beneficial owners on non-routine proposals. A broker
non-vote occurs when shares held by a broker for a beneficial owner are not voted with respect to
a particular proposal because (1) the proposal is not routine and the broker therefore lacks
discretionary authority to vote the shares, and (2) the beneficial owner does not submit voting
instructions to the broker.
Voting in Person at the Annual Meeting
You may vote your shares either in person at the annual meeting or by proxy. To vote by
proxy, you should mark, date, sign and mail your proxy card in the envelope provided. If your
shares are registered in your own name and you attend the meeting, you may deliver your completed
proxy card in person. Street name shareholders, that is, those shareholders whose shares are held
in the name of and through a broker or nominee, who wish to vote at the meeting will need to obtain
a proxy form from the institution that holds their shares.
Telephone Voting. You may grant a proxy to vote your shares by telephone by calling
1-800-690-6903. Please see the instructions on your proxy card.
Internet Voting. You may also grant a proxy to vote your shares by means of the Internet. The
Internet voting procedures below are designed to authenticate your identity, to allow you to grant
a proxy to vote your shares, and to confirm that your instructions have been recorded properly.
For shares registered in your name. As a shareholder of record, you may go to
www.proxyvote.com to grant a proxy to vote your shares by means of the Internet. You will be
required to provide our number and the control number, both of which are contained on your proxy
card. You will then be asked to complete an electronic proxy card. The votes represented by such
proxy will be generated on the computer screen, and you will be prompted to submit or revise them
as desired.
For shares registered in the name of a broker or bank. Most beneficial owners, whose stock is
held in street name receive instructions for granting proxies from their banks, brokers or other
agents, rather than a proxy card.
A number of brokers and banks are participating in a program provided through Broadridge
Financial Solutions Inc. that offers the means to grant proxies to vote shares over the telephone
and Internet. If your shares are held in an account with a broker or bank participating in the
Broadridge program, you may grant a proxy to vote those shares by calling the telephone number or
accessing the website as shown on the
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instruction form received from your broker or bank. In addition, if your shares are held in street
name, the Notice sent to you will include instructions on voting by the Internet.
General information for all shares voted via the Internet or by phone. We must receive
Internet or telephone votes by 11:59 p.m. on April 28, 2009. Submitting your proxy via the Internet
or by phone will not affect your right to vote in person should you decide to attend the annual
meeting.
PROPOSAL NO. 1 ELECTION OF DIRECTORS
General
Our Articles of Incorporation and Bylaws allow the Board to set the number of directors on the
Board within a range of five to fifteen. The Articles also authorize the Board to fill vacancies
that occur on the Board, including vacancies that are a result of increasing the number of
directors. The Board has set the number of directors at eleven. Information regarding the
directors backgrounds and qualifications is set forth below under each of their biographical
summaries.
Directors are elected for terms of three years or until their successors are elected and
qualified. Our Articles of Incorporation provide for staggered terms, with approximately one-third
of the directors elected each year. Our Articles of Incorporation require that our classes of
directors be of as near-equal size as possible.
Our Nominating/Corporate Governance Committee has recommended, and the Board has nominated,
Ford Elsaesser, Curt Hecker, Michael J. Romine and Jerry Smith for election as directors for
three-year terms to expire at the 2012 annual meeting of shareholders. If any of the nominees
should refuse or become unable to serve, your proxy will be voted for the person the Board
designates to replace that nominee. We are not aware of any nominee who will be unable to or
refuses to serve as a director.
Vote Required
The four nominees for election as directors at the annual meeting with three-year terms to
expire in 2012 who receive the highest number of affirmative votes will be elected.
The Board of Directors unanimously recommends a vote FOR each of the nominees to the Board.
INFORMATION WITH RESPECT TO NOMINEES
AND OTHER DIRECTORS
The following tables set forth certain information with respect to the director nominees and
the other continuing directors.
Director Nominees
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Age as of |
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Terms To Expire 2012 |
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Ford Elsaesser
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Attorney Firm of Elsaesser, Jarzabek, Anderson, Marks,
Elliott and McHugh |
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Curt Hecker
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President & CEO of Intermountain; CEO of Panhandle State Bank |
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Michael J. Romine
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68 |
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Retired; Former Vice President & CFO of Inland Northwest Distributing, Inc. |
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Age as of |
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Jerry Smith
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President of Panhandle State Bank; Executive Vice President
of Intermountain |
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Continuing Directors |
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Terms Expiring 2010 |
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James T. Diehl
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54 |
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Attorney Firm of J.T. Diehl |
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John B. Parker
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75 |
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Retired Auto Dealer |
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Jim Patrick
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63 |
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Farm Owner/Operator; Idaho State Legislator |
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Terms Expiring 2011 |
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Charles L. Bauer
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74 |
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Retired; Former President of Panhandle State Bank |
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Maggie Y. Lyons
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51 |
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Plan Administrator and Trustee for Metropolitan Creditors
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Ronald Jones
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Chief Financial Officer of Ecolotree, Inc; Farm Owner/Operator |
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Barbara Strickfaden
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69 |
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Retired; Former President and CEO of the Idaho Bankers
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Background of Nominees and Continuing Directors
The business experience of each of the directors for the past five years is described below.
Directors of Intermountain also serve as directors of Panhandle State Bank. Six of the directors
(Messrs. Bauer, Diehl, Elsaesser, Hecker, Parker and Romine) have been directors of Intermountain
since the Companys inception in 1997.
Director Nominees
Ford Elsaesser has been a director of Intermountain since 1997 and of Panhandle State Bank
since 1992. Mr. Elsaesser is an attorney and has been with the law firm of Elsaesser, Jarzabek,
Anderson, Marks, Elliott and McHugh since 1980. From 1977 to 1980, Mr. Elsaesser was with the law
firm of Cooke & Lamanna.
Curt Hecker has been a director and Intermountains President and Chief Executive Officer
since its inception. Mr. Hecker was hired in 1995 as an Executive Vice President of Panhandle State
Bank. He has served as Chief Executive Officer and director of Panhandle State Bank since 1996.
From 1996 until 2001, Mr. Hecker also served as Panhandle State Banks President. Mr. Hecker also
serves as a member of the Board of Directors of Coldwater Creek, Inc.
Michael J. Romine has been a director of Intermountain since 1997 and Panhandle State Bank
since 1980. Mr. Romine served as the Vice President and Chief Financial Officer of Inland Northwest
Distributing, Inc. from 1992 until his retirement in 2007.
Jerry Smith has been a director of Intermountain and Panhandle State Bank since 2000. Mr.
Smith joined Panhandle State Bank in 1999 as President of Intermountain Community Bank, a division
of Panhandle State Bank. Since 2001, Mr. Smith has served as President of Panhandle State Bank and
Executive Vice President of Intermountain. Mr. Smith has 30 years of banking experience, beginning
with Idaho First National Bank in 1979.
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Continuing Directors
Charles L. Bauer has been a director of Intermountain since 1997 and of Panhandle State Bank
since 1985. Mr. Bauer served as President of Panhandle State Bank from 1985 to his retirement in
1996.
James T. Diehl has served as Vice Chairman of the Board of Intermountain since its formation
in 1997. Mr. Diehl has been a director of Panhandle State Bank since 1990 and has served as Vice
Chairman of the Board of Panhandle State Bank since 2001. He is an attorney and has been the sole
proprietor of the law firm of J. T. Diehl since 1987.
Maggie Y. Lyons has been a director of Intermountain and Panhandle State Bank since 2001. Ms.
Lyons is currently the sole officer and director of Metropolitan Mortgage and Securities, Inc. and
Summit Securities, Inc., and Plan Administrator and Trustee of Metropolitan and Summit Creditors
Trusts. From July 2004 until February 2006, Ms. Lyons served as the Chief Financial Officer and
acting Chief Executive Officer for Metropolitan Mortgage and Securities, and President and
Principal Financial Officer of Summit Securities, both located in Spokane, Washington and both of
which are in Chapter 11 proceedings. Ms. Lyons was appointed to these positions in July 2004 by the
Eastern District of Washington Bankruptcy Court. Ms. Lyons is a Certified Public Accountant and
Microsoft Certified Systems Engineer and provided business consulting services prior to working on
the Metropolitan and Summit bankruptcy cases.
Ronald Jones was appointed to the Intermountain Board in November 2004, following
Intermountains merger with Snake River Bancorp, Inc./Magic Valley Bank. Mr. Jones served as
Chairman of Magic Valley Bank from its opening in 1997 until April 2004. From 2002 until the merger
with Intermountain, Mr. Jones served as corporate secretary of Snake River Bancorp, Inc. Mr. Jones
has farmed south of Twin Falls, Idaho, since 1978. Since 2002, he has been Chief Financial Officer
of Ecolotree Inc., a privately held Iowa engineering company. Ecolotree uses trees in patented
processes to remediate environmental contamination and to cap landfills.
John B. Parker has served as Chairman of the Board of Intermountain since its formation in
1997, and has been a director of Panhandle State Bank since 1980 and Chairman of the Board of
Panhandle State Bank since 1995. Mr. Parker began his career as an auto dealer in Sandpoint in
1957, and retired in June 1999 from Taylor-Parker Motor Company as general manager.
Jim Patrick was appointed to the Intermountain Board in November 2004, following
Intermountains merger with Snake River Bancorp, Inc./Magic Valley Bank. Mr. Patrick was a
founding director of Magic Valley Bank, and he served on the Snake River Bancorp, Inc. Board from
the companys formation in 2002 until its merger with Intermountain. Mr. Patrick has been the
owner/operator of a farm in south central Idaho since 1972 and has served on the boards of various
state and national farm organizations. In 2006, Mr. Patrick was elected and continues to serve in
the Idaho State Legislature as Representative for District 23.
Barbara Strickfaden joined the boards of Intermountain and Panhandle State Bank in February
2004. Mrs. Strickfaden retired in January 2004 after serving as President and CEO of the Idaho
Bankers Association since 1992. In 1998/1999 she chaired the State Associations Division of the
American Bankers Association and served on the Board of Directors of the American Bankers
Association.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Board of Directors is committed to good business practices, transparency in financial
reporting and strong corporate governance. Intermountain operates within a comprehensive plan of
corporate governance for the purpose of defining responsibilities, setting high standards of
professional and personal conduct and assuring compliance with such responsibilities and standards.
The Board regularly monitor developments in
6
the area of corporate governance, and our corporate governance policies, practices and
committee charters are reviewed periodically and updated as necessary to reflect changes in
regulatory requirements and evolving oversight practices.
Code of Ethics
The Company adopted a Code of Ethics for Senior Financial Officers, which applies to its
principal executive officer, principal financial officer, principal accounting officer or
controller, as well as to directors and all other employees of the Company and Panhandle State Bank
and its divisions.
You can access the Companys current Code of Ethics, as well as our Audit, Compensation and
Nominating/Corporate Governance Committee charters by visiting one of our subsidiary websites
(www.panhandlebank.com, www.magicvalleybank.com, or
www.intermountainbank.com) and clicking on the Governance Documents link under Investor
Relations, or by writing to: Intermountain Community Bancorp, c/o the Corporate Secretary, P. O.
Box 967, Sandpoint, Idaho 83864.
Director Independence
The Board has analyzed the independence of each director and nominee and has determined that
each of the following members of the Board meets the applicable laws and listing standards
regarding independence as defined by the Nasdaq listing standards and that each such director is
free of relationships that would interfere with the individual exercise of independent judgment.
In determining the independence of each director, the Board considered many factors, including any
lending arrangements with the directors, each of which were made on the same terms as comparable
transactions made with persons unaffiliated with the Company. Such arrangements are discussed in
detail in the section entitled Transactions with Management.
Based on these standards, the Board determined that each of the following current non-employee
directors is independent and has no other relationship with Intermountain, except as a director and
shareholder:
|
|
|
|
|
|
|
Charles L. Bauer
|
|
John B. Parker |
|
|
James T. Diehl
|
|
Michael J. Romine |
|
|
Ford Elsaesser
|
|
Barbara Strickfaden |
|
|
Maggie Y. Lyons |
|
|
In addition, based on such standards, the Board determined that Curt Hecker, the President and
Chief Executive Officer of Intermountain, and Jerry Smith, the Executive Vice President of
Intermountain and President of Panhandle State Bank, are not independent because they are executive
officers of Intermountain. The Board further determined that Ronald Jones and Jim Patrick, each of
whom was a director of Snake River Bancorp, Inc. and Magic Valley Bank, do not meet the
independence standards of Nasdaq as a result of their involvement in a transaction between
Intermountain, Snake River Bancorp, Inc. and Magic Valley Bank that closed on January 5, 2007.
Shareholder Communications with the Board of Directors
The Company and the Board of Directors welcome communication from shareholders and other
interested parties. Communications may be made by writing to the Chairman of the Board, c/o the
Corporate Secretary, Intermountain Community Bancorp, P. O. Box 967, Sandpoint, Idaho 83864. A copy
of such written communication will also be sent to our Chief Executive Officer. If the Chairman and
the Chief Executive Officer determine that such communications are relevant to and consistent with
our operations and policies, such communications will be forwarded to the entire Board for review
and consideration.
7
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors met 11 times during the fiscal year ended December 31, 2008. Each
director attended at least 75% of the aggregate number of meetings of the Board and of the
committees on which he or she served. We encourage, but do not require, directors to attend annual
shareholder meetings. Last year, all of our directors attended the annual shareholder meeting
except for Barbara Strickfaden. In 2008, our independent directors met seven times without
management present.
The Board of Directors has established, among others, an Audit Committee, a Compensation
Committee, and a Nominating/Corporate Governance Committee. In addition, Panhandle State Bank,
Intermountains wholly owned subsidiary, has various committees on which directors serve, including
the Loan, Compliance, and Technology Committees.
The following table shows the membership of certain committees of the Board during 2008.
Committee Membership
|
|
|
|
|
|
|
Name |
|
Audit |
|
Compensation |
|
Nominating |
Charles L. Bauer
|
|
þ
|
|
þ
|
|
þ |
James T. Diehl
|
|
o
|
|
þ*
|
|
o |
Ford Elsaesser
|
|
o
|
|
þ
|
|
þ |
Maggie Y. Lyons
|
|
þ
|
|
o
|
|
o |
John B. Parker
|
|
þ
|
|
þ
|
|
þ |
Michael J. Romine
|
|
þ*
|
|
þ
|
|
o |
Barbara Strickfaden
|
|
o
|
|
o
|
|
þ* |
Audit Committee. During 2008, the Audit Committee was comprised of four directors,
each of whom was considered independent as defined by the Nasdaq listing standards and applicable
Securities and Exchange Commission (SEC) rules. The Board has determined that Michael J. Romine
meets the definition of audit committee financial expert as defined by rules adopted by the SEC
under the Sarbanes-Oxley Act of 2002 (Sarbanes Act).
The Committee operates under a formal written charter, a copy of which is available on our
website. As part of its periodic review of audit committee-related matters, the Audit Committee
receives updates on relevant legal and regulatory requirements, including under the Sarbanes Act
and SEC rules as revised from time to time. Even though our stock is not currently listed on
Nasdaq, the Audit Committee has also considered the corporate governance listing standards of
Nasdaq in reviewing and updating its charter including with respect to committee membership. The
Audit Committee held 12 meetings during 2008.
The Audit Committee is responsible for the oversight of the quality and integrity of
Intermountains financial statements, compliance with legal and regulatory requirements, the
qualifications and independence of its independent auditors, the performance of its internal audit
function and independent auditors, and other significant financial matters. It is the
responsibility of management to prepare our financial statements and to maintain internal controls
over the financial reporting process. In discharging its duties, the Audit Committee, among other
things:
|
|
|
Has the sole authority to appoint, retain, compensate, oversee, evaluate and
replace the independent auditors; |
|
|
|
|
Reviews and approves the engagement of our independent auditors to perform
audit and non-audit services, and fees related to these services; |
8
|
|
|
Meets independently with our internal auditing department, independent auditors
and senior management; |
|
|
|
|
Reviews the integrity of our financial reporting process; |
|
|
|
|
Reviews our financial reports and disclosures submitted to bank regulatory
authorities; |
|
|
|
|
Maintains procedures for the receipt, retention and treatment of complaints
regarding financial matters; and |
|
|
|
|
Reviews and has the authority to approve related person transactions. |
Compensation Committee. During 2008, the Compensation Committee was comprised of five
directors, each of whom satisfies independence criteria under the Nasdaq listing standards and
applicable rules of the SEC and IRS. The Compensation Committee reviews the performance of the
Companys Chief Executive Officer and other key employees and determines, approves and reports to
the Board on the elements of their compensation and long-term equity based incentives. The
Committee will periodically retain an independent outside human resources consulting firm to assist
the Committee in its deliberations regarding executive compensation for the Chief Executive Officer
and other key executives. The most recent outside review was conducted by RSM McGladrey in 2005.
For 2008, in addition to the RSM McGladrey report, the Committee reviewed the annual Moss Adams
Bankers Compensation Survey, the Milliman Northwest Financial Industry Survey, and other public
information relating to other financial institutions when determining executive compensation. In
addition to the process and procedures discussed above, in determining compensation for the other
key executives, the Committee also takes into account the recommendations of the Chief Executive
Officer.
In addition the Committee:
|
|
|
Recommends, if appropriate, new employee benefit plans to the Board of
Directors; |
|
|
|
|
Reviews general compensation and employee benefit plans for all employees; and |
|
|
|
|
Makes determinations in connection with compensation matters as may be
necessary or advisable. |
The Compensation Committee operates under a formal written charter, a copy of which is
available on our website. The Compensation Committee met five times during the year for the
purposes of reviewing salary and incentive compensation for the Chief Executive Officer and certain
other executive officers, and reviewing and recommending to the full Board stock option or
restricted stock awards for executive officers.
Nominating/Corporate Governance Committee. The Nominating/Corporate Governance
Committee (Nominating Committee) is comprised of four directors, each of whom is considered
independent as defined by the Nasdaq listing standards. The Committee is responsible for
recommending a slate of directors for election at Intermountains annual meeting and appointing
directors to fill vacancies as they occur. It is also responsible for (i) considering management
succession plans, the appropriate Board size and committee structure and appointments; (ii)
determining Board and Committee compensation; and (iii) developing and reviewing corporate
governance principles applicable to Intermountain and its subsidiaries. The Committee operates
under a formal written charter, a copy of which is available on our website. The committee met
five times during 2008.
The Nominating Committee will consider nominees recommended by shareholders, provided that the
recommendations are made in accordance with the procedures described in this Proxy Statement under
Shareholder Proposals and Director Nominations. The Committee evaluates all candidates, including
shareholder-proposed candidates, using generally the same methods and criteria, although those
methods and criteria are not standardized and may vary from time to time. The Nominating Committee
is authorized to establish guidelines for the qualification, evaluation and selection of new
directors to serve on the Board. We do not anticipate that the Committee will adopt specific
minimum qualifications for Committee-recommended nominees, but that the Committee will instead
evaluate each nominee on a case-by-case basis, including
9
assessment of each nominees business experience, involvement in the communities served by the
Company, and special skills. The Nominating Committee will also evaluate whether the nominees
skills are complimentary to existing Board members skills, and the Boards need for operational,
managerial, financial, technological or other expertise, as well as geographical representation of
the Companys market areas.
The Corporate Governance Guidelines require that within 12 months of commencing service as a
director, and continuing thereafter while serving as a director, each director of Intermountain and
each director of Panhandle State Bank shall own shares of Intermountain common stock having a book
value of at least $500. All directors have met this stock ownership requirement.
Report of Audit Committee
The Audit Committee of the Board of Directors makes the following report which,
notwithstanding anything to the contrary set forth in any of our filings under the Securities Act
of 1933 or the Securities Exchange Act of 1934, will not be incorporated by reference into any such
filings and will not otherwise be deemed to be proxy soliciting materials or to be filed under such
Acts.
The Audit Committee operates under a written charter that is reviewed annually by the Board of
Directors and complies with all current regulatory requirements. Our agendas are controlled by the
Committee Chair. The Audit Committee met 12 times during the year.
The Audit Committee provides assistance to the Board of Directors in fulfilling its oversight
responsibilities relating to our corporate accounting and reporting practices, and the quality and
integrity of our financial reports. The purpose of the Committee is to serve as an independent and
objective party to monitor our financial reporting process and internal control system, review and
appraise the audit effort of our independent accountants and internal auditing department, and
maintain free and open means of communication between the Board of Directors, the independent
accountants, financial management, and the internal audit department.
The Audit Committee is responsible for assuring the independence of the independent auditor
and for retention, supervision and termination of the independent auditor. The independent auditor
reports directly to the Audit Committee. The Committee has established a policy for approval of
non-audit related engagements awarded to the independent auditor. Such engagements must not impair
the independence of the auditor with respect to Intermountain, as prescribed by the Sarbanes Act.
As a result, payment amounts are limited and non-audit related engagements must be approved in
advance by the Committee. The Audit Committee determines the extent of funding that we must provide
to it, and has determined that such amounts are sufficient to carry out its duties.
Management has the primary responsibility for our financial statements and reporting process,
including the system of internal controls and reporting. Our independent auditors are responsible
for performing an independent audit of our consolidated financial statements in accordance with
generally accepted auditing standards and issuing a report thereon. The Audit Committee monitors
the integrity of our financial reporting process and system of internal controls and monitors the
independence and performance of our independent auditors and internal auditors.
With respect to the year ended December 31, 2008, in addition to its other work, the
Committee:
|
|
|
Reviewed and discussed with management the audited consolidated financial
statements of Intermountain as of and for the year ended December 31, 2008; |
|
|
|
|
Reviewed and discussed with management the results of managements assessment
of the Companys internal control over financial reporting; |
|
|
|
|
Discussed with BDO Seidman, LLP, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit Committees, as
amended, with respect |
10
|
|
|
to its review of the findings of the independent auditor during its examination of our
financial statements; |
|
|
|
Received from BDO Seidman, LLP, written disclosures and the letter from the
independent registered public accountants required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent registered public
accountants communications with the Audit Committee concerning independence, discussed
with the auditors the firms independence, and determined that the provision of
non-audit services was compatible with maintaining auditor independence; and |
|
|
|
|
Discussed with our internal and independent auditors the overall scope and plan
for their respective audits. The Audit Committee met with the internal and independent
auditors, with and without management present, to discuss the results of their
examination, their evaluations of our internal controls and the overall quality of our
financial reporting. |
The Committee recommended, based on the review and discussion summarized above, that the Board
of Directors include the audited consolidated financial statements in Intermountains Annual Report
on Form 10-K for the year ended December 31, 2008 for filing with the SEC. The Audit Committee
also appointed and recommended to the Board for approval and ratification the retention of BDO
Seidman, LLP as the Companys independent registered public accounting firm for 2009. The Board
has approved and ratified the appointment.
2008 Audit Committee Members
Michael J. Romine (Chairperson) * Charles L. Bauer * Maggie Y. Lyons * John B. Parker
DIRECTOR COMPENSATION
All directors, including those who are Company employees, receive fees for their service on
the Board of Directors. We review the level of compensation of our directors on an annual basis.
To determine the appropriate level of compensation for our directors, we obtain information from a
number of different sources, including publicly available data describing director compensation in
peer companies and information obtained directly from other companies.
Non-employee directors have historically received a mix of cash and equity-based compensation.
In particular, non-employee directors receive an annual cash retainer based on the chairmanship of
the Board and its committees. In addition to the retainer, we pay per meeting fees for each
meeting attended, whether in person or by phone. Directors who are employees receive an annual
cash retainer and meetings fees but do not receive restricted stock awards for their service as
directors.
The following table reflects the annual retainer and the per meeting fees that were approved
by the Nominating/Corporate Governance Committee for payments to directors in 2008.
|
|
|
|
|
|
|
|
|
Committee/Chair |
|
Annual Retainer |
|
Monthly Meeting Fee (1) |
Chairman of the Board |
|
$ |
9,760 |
|
|
$ |
2,324 |
|
Chair Audit Committee |
|
|
9,260 |
|
|
|
1,874 |
|
Chair Compensation Committee |
|
|
8,760 |
|
|
|
1,824 |
|
Chair Loan Committee |
|
|
8,760 |
|
|
|
1,824 |
|
Chair Compliance Committee |
|
|
8,760 |
|
|
|
1,824 |
|
Chair Nominating/Corporate Governance Committee |
|
|
8,760 |
|
|
|
1,824 |
|
Chair Executive Committee |
|
|
8,260 |
|
|
|
1,774 |
|
11
|
|
|
|
|
|
|
|
|
Committee/Chair |
|
Annual Retainer |
|
Monthly Meeting Fee (1) |
Chair Technology Committee |
|
|
8,260 |
|
|
|
1,774 |
|
Chair Trust Committee |
|
|
8,260 |
|
|
|
1,774 |
|
Non-Chair Directors |
|
|
7,260 |
|
|
|
1,074 |
|
Employee Directors |
|
|
5,760 |
|
|
|
924 |
|
|
|
|
(1) |
|
Directors will receive twice the per meeting fee for attending a two-day meeting. |
In 2008, non-employee directors also received an annual restricted stock award of 170 shares
under our Amended and Restated Director Stock Plan (Director Plan). As discussed below, the
Director Plan expired and is not expected to be renewed during 2009. The Nominating/Corporate
Governance Committee does not anticipate increasing the cash portion of the director fees for 2009.
The following table shows compensation earned during the last fiscal year by our non-employee
directors. The footnotes to the table describe the details of each form of compensation paid to
directors.
2008 Director Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned or |
|
|
|
|
|
All Other |
|
|
|
|
Paid in Cash |
|
Stock Awards |
|
Option Awards |
|
Compensation |
|
Total |
Name |
|
($)(1) |
|
($)(2) |
|
($)(3) |
|
($)(4) |
|
($) |
|
Charles L. Bauer |
|
|
28,824 |
|
|
$ |
2,427 |
|
|
$ |
1,806 |
|
|
$ |
0 |
|
|
$ |
33,057 |
|
James T. Diehl |
|
|
28,824 |
|
|
|
2,427 |
|
|
|
1,806 |
|
|
|
0 |
|
|
|
33,057 |
|
Ford Elsaesser |
|
|
24,222 |
|
|
|
2,427 |
|
|
|
1,806 |
|
|
|
0 |
|
|
|
28,455 |
|
Ronald Jones |
|
|
25,996 |
|
|
|
1,883 |
|
|
|
12,404 |
|
|
|
240 |
|
|
|
40,523 |
|
Maggie Y. Lyons |
|
|
23,352 |
|
|
|
2,427 |
|
|
|
1,806 |
|
|
|
0 |
|
|
|
27,585 |
|
John B. Parker |
|
|
35,320 |
|
|
|
2,427 |
|
|
|
1,806 |
|
|
|
0 |
|
|
|
39,553 |
|
Jim Patrick |
|
|
19,074 |
|
|
|
1,883 |
|
|
|
12,404 |
|
|
|
681 |
|
|
|
34,042 |
|
Michael J. Romine |
|
|
29,878 |
|
|
|
2,427 |
|
|
|
1,806 |
|
|
|
0 |
|
|
|
34,111 |
|
Barbara Strickfaden |
|
|
28,824 |
|
|
|
2,427 |
|
|
|
11,876 |
|
|
|
0 |
|
|
|
43,127 |
|
Douglas P. Ward * |
|
|
4,568 |
|
|
|
0 |
|
|
|
0 |
|
|
|
9,746 |
|
|
|
14,314 |
|
|
|
|
* |
|
Mr. Ward retired in April 2008 |
|
(1) |
|
Amounts reflect fees paid to directors in the form of an annual retainer and aggregate
per-day fees for each Board meeting attended. |
|
(2) |
|
These amounts reflect the total compensation cost recognized for fiscal 2008 in accordance
with Statement of Financial Accounting Standards No. 123(R) (FAS 123(R)), for financial
statement reporting purposes for restricted stock granted under the Director Plan. The
assumptions used to determine these amounts are discussed in Note 10 to the Consolidated
Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31,
2008 (Financial Statements). The 2008 restricted stock award granted to the non-employee
directors on February 28, 2008 had an aggregate grant-date fair value of $22,185, which value
was calculated in accordance with FAS 123(R) and determined using a share price of $14.50,
the closing price of the Companys common stock on the grant date as reported on the OTC
Bulletin Board. Although each restricted stock award vests in 20% installments on each
anniversary of the date of grant, we recognized expense proportionately as if the restricted
shares vested monthly rather than annually. |
|
|
|
At fiscal year end, each non-employee director held unvested shares of Intermountain common
stock granted pursuant to restricted stock awards as follows: Mr. Bauer 523 shares; Mr. Diehl
523 shares; Mr. Elsaesser 523 shares; Mr. Jones 442 shares; Ms. Lyons 523 shares; Mr. Parker
523 shares; Mr. Patrick 442 shares; Mr. Romine 523 shares; and Ms. Strickfaden 523 shares. |
|
(3) |
|
These amounts reflect the total compensation cost recognized for fiscal 2008 in accordance
with FAS 123(R), for financial statement reporting purposes for stock options granted under
the Director Plan. The assumptions used to determine these amounts are discussed in the
Notes to the Financial Statements.
As of December 31, 2008, each non-employee director held in the aggregate outstanding stock
option awards (vested and unvested) to purchase shares of Intermountain as follows: Mr.
Bauer 364 shares; Mr. Diehl 19,512 shares; Mr. Elsaesser 19,512 shares; Mr. Jones |
12
|
|
|
|
|
6,353 shares; Ms. Lyons 545 shares; Mr. Parker 545 shares; Mr. Patrick 6,353 shares; Mr.
Romine 19,512 shares; and Ms. Strickfaden 6,353 shares. |
|
(4) |
|
Represents the premiums paid by Intermountain on behalf of Messrs. Jones and Patrick in
connection with the split dollar life insurance arrangements described below in the
amounts of $240 and $681, respectively, and above-market earnings on non-qualified
deferred compensation for Mr. Ward in the amount of $9,746. |
Split Dollar Life Insurance. Ronald Jones and Jim Patrick, the two directors of Intermountain
who are former directors of Snake River Bancorp, Inc., are parties to split-dollar life insurance
agreements with Magic Valley Bank. Panhandle State Bank has assumed these agreements, which are
identical to those with the other former Snake River Bancorp, Inc. directors. Pursuant to the terms
of the agreements, (i) Panhandle State Bank is obligated to pay the premiums on a bank-owned life
insurance policy; and (ii) beneficiaries of the directors will receive a certain portion of any
death benefits upon the death of the directors.
Amended and Restated Director Stock Plan. Intermountain previously maintained a director
stock option plan (the Director Plan) for the benefit of non-employee directors, under which we
generally made annual stock option grants to non-employee directors on an annual basis during each
year prior to 2005. In 2005, shareholders approved amending the plan to provide for the grant of
restricted stock awards, and since then we have made annual equity grants to non-employee directors
in the form of restricted stock awards. Options and restricted stock awards granted under the
Director Plan typically vest over a five-year period in 20% installments beginning on the first
anniversary of the date of grant. Stock options granted under the Director Plan have an exercise
price equal to the fair market value of our common stock on the date of grant as determined by the
Board, and typically expire ten years from the date of grant. Restricted stock awards do not
require payment of a cash purchase price for the shares. At December 31, 2008, 62,233 shares
remained available for future grant. The Director Plan had a term of ten years. On January 14,
2009, the term of the Director Plan expired, and, upon recommendation of management and approval of
the Board of Directors, it was determined that, due to the economic environment, the Board would
not seek to implement a new plan at this time and the stock portion of the compensation paid to
Intermountain directors would be eliminated for 2009. The compensation received by directors in
the form of cash will remain at the current amounts paid in 2008.
We historically used the closing bid price for valuing stock awards and stock options under
our respective plans. However, consistent with the executive compensation rules adopted by the
SEC, all awards made after December 31, 2006 were granted at the closing market price on the date
of grant.
EXECUTIVE COMPENSATION
The following section describes the compensation that Intermountain paid to its Chief
Executive Officer, Chief Financial Officer and the next three most highly compensated executive
officers in 2008, each of whom is listed in the Summary Compensation Table (the Named Executive
Officers). This section includes:
|
|
|
Compensation Discussion and Analysis (CD&A); |
|
|
|
|
Report of the Compensation Committee; |
|
|
|
|
Detailed tables showing compensation of the Named Executive Officers; and |
|
|
|
|
Narrative disclosure about various compensation plans and arrangements and post
employment and termination benefits. |
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
We believe that the most effective executive compensation program is one that is designed to
reward the achievement of specific annual, long-term and strategic goals by the Company, and that
aligns the
13
executives interests with those of the shareholders by rewarding performance against
established goals, with the ultimate objective of improving shareholder value. We evaluate both
performance and compensation to ensure that we are able to attract, retain and motivate executives
of superior ability who are critical to our future success. We believe that the majority of each
executives annual total compensation opportunity should be directly aligned with our performance,
and to this end a significant portion of an executives compensation should be based on achievement
of financial and operational goals and other factors that impact shareholder value. Moreover,
compensation opportunities provided to our executive officers must remain competitive relative to
the compensation paid to similarly situated executives of peer companies. To accomplish these
objectives, we believe executive compensation packages should include both cash and stock-based
compensation with both short-term and long-term incentives in order to reward performance as
measured against established goals, without creating incentives that are inconsistent with the
Companys risk management policies and practices or that would motivate executives to take
unnecessary and excessive risks that may threaten the value of the Company in order to achieve such
goals.
The Compensation Committee and management established 2008 compensation based on established
goals. We believe that our compensation programs are balanced, avoid undue risks to the Company,
and allow us to retain top quality employees.
Executive Compensation Considerations Related to TARP. In December 2008, the Company
completed raising $27 million in capital by issuing shares of its Series A preferred stock to the
Treasury together with a warrant to purchase the Companys common stock as a voluntary participant
in the TARP Capital Purchase Program. As a participant in the TARP, the Company must comply with
Section 111 of the Emergency Economic Stabilization Act of 2008 (EESA), which requires that
participants meet appropriate standards on executive compensation (generally applicable to our
Named Executive Officers) so long as the preferred stock the Company issued and sold to Treasury
under the TARP continues to be held by the federal government. When deciding to participate in the
program, our Board evaluated these requirements and the impact they would have on the Company, and
considered them in light of the support this capital would provide to our lending programs.
As part of the American Recovery and Reinvestment Act (ARRA), Congress enacted new and
revised executive compensation requirements, some of which may affect the Company, as a participant
in the TARP Capital Purchase Program. At this time, we cannot ascertain with certainty all of the
specific effects of this new legislation or pending implementing regulations. However, as of the
date of this proxy statement, the Company expects the effects of the new regulations to include,
but not necessarily be limited to:
|
o |
|
excluding incentives from compensation programs for covered executives to take
unnecessary and excessive risks that threaten the value of the Company; |
|
|
o |
|
prohibiting severance payments in the event of termination; |
|
|
o |
|
implementing clawback provisions providing for the recovery by the Company of
incentive compensation based on materially inaccurate financial or other performance
criteria; |
|
|
o |
|
limiting the Companys annual tax deduction for each covered executive under
Section 162(m) of the Internal Revenue Code to $500,000, including performance-based
compensation (currently $1 million, excluding performance-based compensation); |
|
|
o |
|
prohibiting the Company from paying a bonus, retention award, or incentive
compensation other than in the form of restricted stock with a value no greater than
one-third of each covered executives total annual compensation and that does not fully
vest so long as the preferred stock the Company issued and sold to Treasury remains
outstanding, subject to certain exceptions for bonus payments under arrangements
existing on February 11, 2009; |
14
|
o |
|
requiring the Companys board of directors to establish a policy regarding
excessive or luxury expenditures; |
|
|
o |
|
requiring the Company to permit a non-binding shareholder vote on executive
compensation (as disclosed in the Companys proxy statement); and |
|
|
o |
|
requiring annual reviews and certifications as to compliance with applicable
restrictions. |
The Compensation Committee reviews and approves the compensation policies and practices of
Intermountain, particularly in respect to executive officers, and other members of senior
management. In light of these new requirements governing executive compensation, the Committee has
begun a review of existing policies, programs and arrangements and will implement additional or
take appropriate steps to modify existing policies, programs and arrangements as necessary to
comply with the new regulations, including with respect to 2009 executive compensation. In this
regard, in connection with the Companys issuance and sale of preferred stock and a warrant to
purchase shares of common stock to Treasury, each of the Named Executive Officers entered into an
agreement with the Company prospectively agreeing to modify their employment and compensation
agreements or arrangements as necessary to comply with applicable TARP restrictions.
Administration of Compensation Programs and the Role of Executive Officers
The Compensation Committee (the Committee) of the Board has the responsibility for
establishing, maintaining and administering the Companys compensation programs and employee
benefit plans, including reviewing and approving compensation of the Chief Executive Officer and
other executive officers. In particular, the Committee determines and approves, or recommends to
the entire Board for approval, the base salary, bonus, incentive plans and equity awards for the
Chief Executive Officer. Our Chief Executive Officer, with input from our Vice President Human
Resources, makes recommendations to the Committee regarding the base salary, target bonus levels,
actual bonus payouts and long-term incentive grants for the remainder of our executive team. The
Chief Executive Officer makes these recommendations based in part on periodic performance reviews
of each executive officer, as well as data and analysis provided by RSM McGladrey, our compensation
consultant (discussed below), and current public information available for similar financial
institutions. The Chief Executive Officer is not involved in determining his own compensation
package. The Committee has discretion to approve, disapprove or modify recommendations made by our
Chief Executive Officer, and then provides a recommendation regarding compensation of our executive
team to the Board for its approval.
Overview of Executive Compensation Components
Our executive compensation program consists of several compensation elements, as illustrated
in the table below:
15
|
|
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|
Pay Element |
|
What the Pay Element Rewards |
|
Purpose of the Pay Element |
Base Salary
|
|
Core competence in the executive role
relative to skills, experience and
contributions to the Company
|
|
Provide fixed compensation based on
competitive market practice and experience
and tenure of each executive |
|
|
|
|
|
Short-Term Incentive
|
|
Contributions toward the Companys
achievement of specified objectives.
Bonuses under this plan are based on net
income and average asset growth. Bonuses
under the Executive Incentive plan are
paid prior to March 15th of
the following year
|
|
Provides focus on meeting annual
goals that lead to the Companys long-term
success and the creation of shareholder
value
Provides annual performance-based
cash incentive compensation |
|
|
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|
Motivates achievement of critical
annual performance metrics |
|
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|
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|
Long-Term Incentive
|
|
Restricted Stock Awards and
Stock Purchase Bonus Program
|
|
The combination of restricted stock awards, the Stock Purchase Bonus Program and the
Long-Term Incentive Plan provides a blended
focus on |
|
|
|
|
|
|
|
Sustained stock price
appreciation, thereby aligning
executives interests with those of
shareholders
|
|
Profitability and the creation of shareholder value |
|
|
Continued employment with the
Company during a 5-year vesting period
with respect to restricted stock awards
|
|
Executive ownership of Company stock |
|
|
Continued employment with the
Company during a 3-10 year bonus payout
period for purchasing shares under the
Stock Purchase Bonus Program
|
|
Retention in a challenging business
environment and competitive labor market |
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|
Long-Term Incentive Plan |
|
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Based on average asset growth and
average annual return on equity
|
|
|
|
|
Continued employment with the
Company over a five-year period,
consisting of the three-year performance
period and two years of vesting
following the performance period |
|
|
|
|
|
|
|
Retirement Benefits
|
|
Executive officers are eligible
to participate in employee benefit plans
available to our eligible employees
|
|
The SCA is designed to make total
retirement benefits for certain Named
Executive Officers commensurate with those
in comparable companies |
|
|
The Salary Continuation Agreement
(SCA) is a nonqualified,
noncontributory and unfunded program.
The SCA is intended to provide additional
retirement benefits to certain Named
Executive Officers |
|
|
16
|
|
|
|
|
Pay Element |
|
What the Pay Element Rewards |
|
Purpose of the Pay Element |
Welfare Benefits
|
|
Executives participate in
employee benefit plans generally
available to our employees, including
medical, health, life insurance and
disability plans
|
|
These benefits are part of our broad-based
total compensation program |
|
|
Continuation of welfare benefits
may occur as part of severance upon
certain terminations of employment |
|
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|
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|
Additional Benefits
and Perquisites
|
|
Club memberships
Company
provided auto or auto
allowance
|
|
Provide additional benefits and perquisites
commensurate with the competitive market |
|
|
Life Insurance & Accidental Death
& Dismemberment Coverage |
|
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|
Short-Term and Long-Term
Disability |
|
|
|
|
|
|
|
Change in Control
and Termination
Benefits
|
|
We have change in control agreements with
certain officers, including our Named
Executive Officers. The agreements
provide severance benefits if an
officers employment is terminated
following a change in control.
|
|
Change in control arrangements are designed
to retain executives and provide continuity
of management in the event of an actual or
threatened change in control. The change
in control agreements are described in more
detail in the section Post Employment and
Termination Benefits. |
The use of these programs enables us to carry out our pay for performance philosophy, as well
as to strengthen our ability to attract and retain highly qualified executives. This combination
of programs provides an appropriate mix of fixed and variable pay, balances short-term operational
performance with long-term shareholder value, and encourages executive recruitment and retention.
As noted above, the Company and other TARP participants are awaiting additional regulations and
implementation guidance with respect to newly-enacted restrictions on executive compensation for
TARP participants. The Committee and executive management have begun a review of the Companys
current compensation programs and when those regulations and guidance are available, the Company
will revise its compensation programs and arrangements as necessary to comply with applicable
restrictions.
Determination of Appropriate Pay Levels
In general, we seek to provide competitive pay by targeting
the top 25th percentile relative to a peer group for total
compensation opportunities, including salary, short-term incentive, remaining stock option vesting, restricted
stock awards and long-term incentives. The Committee sets base compensation for its executive officers below the
50th percentile, while targeting equity compensation above the median target
range in an effort to attract the most qualified and talented individuals, motivated to achieve higher total percentile
compensation by exceeding plan results for financial objectives. The remuneration programs established by the Committee
are designed to pay for performance and require that executives perform at an exceptional level to achieve maximum
awards. Setting short and long term incentive goals that require maximum performance benefit the Company, the shareholders
and the executive officers.
The peer group consists of six publicly traded companies and includes many of the Companys
direct competitors including Cascade Bancorp, Cascade Financial Corporation, Columbia Bancorp,
Idaho Independent Bank, Pacific Continental Corporation and Premier West Bancorp (Peer Group).
We compare compensation paid to our Named Executive Officers with compensation paid to
executive officers in comparable positions at similar companies. From time to time, the Committee
has engaged RSM McGladrey, an outside human resources consulting firm, to conduct reviews of the
total compensation program for the Chief Executive Officer and the remainder of our executive team.
RSM McGladrey provides the Chief Executive Officer and our Committee with relevant market data and
alternatives to consider in structuring executive compensation packages. In addition, the
Committee also considers the Moss Adams Bankers Compensation Survey and the Milliman Northwest
Financial Industry Salary Survey.
17
For 2008, the Company also utilized publicly filed documents of its Peer Group in determining
executive compensation.
2008 Base Salary
Our base salary levels reflect a combination of factors, including competitive pay levels
relative to our Peer Group, each executives experience and tenure, our overall annual budget for
merit increases and net income, the executives individual performance and changes in
responsibility. We review salary levels annually to recognize these factors. We do not target
base salary at any particular percent of total compensation, however, incentive pay is more heavily
weighted in the total compensation package as an effort to retain and motivate the executive group
and align their total compensation with the creation of shareholder value.
As noted above, our compensation philosophy includes setting competitive base salaries for
comparable positions at similarly situated companies. Base salary increases for our Named Executive
Officers in 2008 were 4%. We established these increases after considering job performance,
internal pay alignment and equity and marketplace competitiveness. These increases are consistent
with comparative marketplace data and were within our 2008 budget limits for pay increases.
The Compensation Committee had recommended that our Chief Executive Officer receive an
approximately 15.0% increase over 2007, since his base pay is below the Peer Group; however, our
Chief Executive Officer declined this increase and accepted a 4% increase.
Short-Term Incentives
The Executive Incentive Plan is designed to provide our executive officers with an opportunity
to earn annual cash bonuses based on our achievement of certain pre-established performance goals.
We consider a combination of factors in establishing the annual target bonus opportunities for our
Named Executive Officers. Budgeted net income and average asset growth are primary factors, as
target bonus opportunities are adjusted annually when we set our net income goals for the year. We
budget short-term incentive opportunities as a percentage of base compensation.
For our Named Executive Officers, we set short-term incentive opportunities based on
achievement of performance goals relating to net income and average asset growth of the Company;
factors which we believe have a strong correlation with shareholder value. The net income goals are
set at levels that are intended to reflect improvements in performance over the prior fiscal year
and better than average growth within our competitive industry. Our Chief Executive Officer
recommends specific performance targets, which the Committee then reviews and approves, rejects or
modifies before forwarding its recommendation to the Board for approval.
In setting target incentive levels for bonus opportunities under the Executive Incentive Plan,
we considered the following factors:
|
|
|
Competitive market data, defined by the competitive award levels summarized by RSM
McGladrey in 2005, the Moss Adams Bankers Compensation Survey, the Milliman Northwest
Financial Industry Salary Survey and publicly available information; |
|
|
|
|
The officers responsibility and individual performance level; |
|
|
|
|
The officers specific function within the overall organization structure; and |
|
|
|
|
The Companys profitability and general performance (including issues of compliance
and safety and soundness) in the preceding year. |
18
Once performance goals have been set and approved, the Committee then sets a range of
short-term bonus opportunities for the executive group.
2008 Incentive Goals. Target short-term incentive opportunities for 2008 were set as a
percentage of each Named Executive Officers base salary, and were weighted at 60% net income and
40% average asset growth.
Actual bonus amounts for 2008 were determined based on relative achievement of the performance
goals of net income and average asset growth. The Named Executive Officers were eligible to earn
from 0% to 100% of their base pay, with the maximum achievable if the Company achieved the maximum
net income and average asset growth targets. No bonus is earned if performance falls below
specified net income and average asset growth minimum thresholds. For 2008, the Companys actual
net income and the average asset growth was below the targeted level of $7.2 million and 10.5%,
respectively, did not meet the minimum threshold of $6.5 million for net income, but exceeded the
minimum threshold of 5.25% for average asset growth, resulting in bonus payments earned by the
Named Executive Officers equal to 8% of their respective base pay. However, in light of the
current economic environment and the challenges facing the Company and its industry, each of the
Named Executive Officers voluntarily elected not to accept their respective bonus for 2008.
For additional information about the 2008 Executive Incentive plan, please refer to the
Grants of Plan-Based Awards table, which shows the threshold, target and maximum bonus amounts
payable under the plan for 2008, and the Summary Compensation Table, which shows the actual amount
of bonuses paid under the plan to our Named Executive Officers for 2008.
Long-Term Incentives
The Committee believes that a significant portion of executive compensation should be
stock-based and therefore directly tied to the performance of the Companys stock as an additional
incentive to create shareholder value. Additionally, the vesting provisions of equity awards act
as a retention tool. Accordingly, in 2008, the Committee granted restricted stock awards (RSAs)
to each of our Named Executive Officers under the Companys Employee Stock Option and Restricted
Stock Award Plan. In addition, in 2006, the Company implemented the 2006-2008 Long-Term Incentive
Plan which was approved by shareholders in 2007. The 2006-2008 Long-Term Incentive Plan served as
a replacement to our 2003-2005 Long-Term Incentive Plan. As discussed below, no bonuses were
awarded under this plan. The Committee believes these compensation measures are effective for
aligning executive performance and achievement with shareholder interests, and also contribute to
the retention of our executive team. The material terms of the following incentive programs are
discussed in the section Executive Compensation Incentive and Stock Plans.
|
|
|
Restricted Stock Awards: RSAs are intended to retain key employees and
align their interests with shareholders by granting awards of stock that vest over a
period of time. RSAs provide the opportunity for capital accumulation and more
predictable long-term incentive value, encourage ownership, and result in business
decisions that may drive stock price appreciation. RSAs generally are awarded to the
Named Executive Officers once a year, at the same time as awards to the other eligible
employees. RSAs are shares of Intermountain common stock that are subject to
forfeiture restrictions which require that an employee remain with us through each
vesting date. RSAs generally vest in 20% installments beginning on the first
anniversary from the date of grant. Holders of RSAs have the same rights as a
shareholder as to voting and dividend rights. Any unvested RSAs generally are
forfeited if the holder terminates employment with the Company. Grants for 2008 to the
Named Executive Officers are reflected in the 2008 Grants of Plan Based Awards Table. |
|
|
|
|
Stock Purchase Bonus Program: The Stock Purchase Bonus Program is not based
on the achievement of specific performance objectives, but rather professional
performance generally. |
19
|
|
|
The Board of Directors, or Compensation Committee as appropriate, approves awards under
this program on a case-by-case basis. Executives who are invited to and who participate
in the program purchase shares of Intermountain stock on the open market pursuant to
individual award agreements, and generally receive a bonus equal to 20% of the purchase
price of the stock each year over a five-year period following the original purchase
date. In certain circumstances, an executive may receive a bonus that exceeds the value
of stock required to be purchased under their respective agreement. The Stock Purchase
Bonus Program has the additional purpose of encouraging the officers of Intermountain
and/or Panhandle State Bank to own Intermountain common stock. Bonuses paid in 2008
under this program are reflected in the Bonus column of the Summary Compensation
Table. |
|
|
|
|
Long-Term Incentive Plans: The Named Executive Officers participated in the
2006-2008 Long-Term Incentive Plan or LTIP. Each Named Executive Officer had an
opportunity to earn shares of restricted stock as allocated by the Committee subject to
the terms of the plan based on average annual return on equity and average asset growth
rate targets for the three-year period ended December 31, 2008. Payments under this
plan required the Company to meet performance goals relating to the average return on
equity and average asset growth rate targets. If these goals had been met, shares
would have been issued on January 5, 2009 (following expiration of the performance
period), and one-third of such shares would have vested upon grant, with an additional
one third vesting on the second and third anniversary of the grant date, subject to
continued employment by such Named Executive Officer through each such vesting date.
As approved by the Board, allocation of awards under the plan were set at 50% to the
Chief Executive Officer, with the remaining 50% to be allocated among the remainder of
the executive team based on the Chief Executive Officers evaluation of each
executives performance. At the end of 2008, the minimum threshold for payment under
this plan was not met, and therefore, the Company cancelled all accruals and suspended
the plan. Accordingly, no payouts will be made under the 2006-2008 LTIP. |
|
|
|
|
The 2003-2005 LTIP is the predecessor to the 2006-2008 LTIP and contained terms
substantially similar in framework to the terms of the 2006-2008 LTIP. The Board of
Directors originally approved an allocation of shares under this plan of 50% to our
Chief Executive Officer and 50% to be divided between the other executives based on
their comparative base salaries. Our Chief Executive Officer instead recommended an
allocation of 35% to himself and 65% to be divided between the remaining executive team,
and this recommendation was approved by the Compensation Committee. Accordingly,
Messrs. Hecker, Smith, Wright and Nagel were awarded 33,033, 22,340, 21,395 and 17,621
shares of Intermountain common stock, respectively, as adjusted for stock splits and
stock dividends, of which one-third were vested upon grant and the remaining vested in
one third increments in January 2007 and January 2008. |
In general, the number of shares of restricted stock awarded to the Named Executive Officers
under our long term incentive plan is determined by targeting a value that is above the long-term
compensation provided by our Peer Group, as determined by review of public information, annual
compensation surveys and periodic consultation with independent consultants. This is in line with
our philosophy to target compensation opportunities above the median of our Peer Group through
incentive programs that place a significant portion of executive compensation at risk. Determining
long-term incentive awards in this manner assists us in achieving our target compensation
objectives and is consistent with our total compensation philosophy. The main objectives of the
programs are to 1) provide pay-for-performance opportunities and reinforce a high performance
culture, 2) align the interests of our executives with our shareholders, and 3) design incentive
plans that are simple, straightforward and transparent.
The Compensation Committee has not adopted a long term incentive program for 2009. The
Committee will continue to evaluate the appropriate long-term incentive compensation framework as
part of its
20
overall review and analysis of executive compensation, and in light of the current economic
environment and evolving regulatory restrictions.
The Committee has engaged RSM McGladrey from time to time to review competitive long-term
incentive grant levels, and we intend to closely monitor our competitive position, program
alternatives and the financial implications to the Company. Please refer to the Grants of
Plan-Based Awards and Outstanding Equity Awards at Fiscal-Year End tables and the related
footnotes for additional information about long-term incentive awards.
Impact of Accounting and Tax Treatment of Compensation
The Committee and management have considered the accounting and tax impacts of various
programs designed to balance the potential cost to the Company with the benefit/value to the
executive. With regard to Internal Revenue Code Section 162(m), it is the Committees intent to
maximize deductibility of executive compensation while retaining discretion to compensate
executives in a manner commensurate with performance and the competitive market for executive
talent. Differences in accounting expense for various forms of equity awards under FAS 123(R)
relative to the value of the awards to recipients have not had, and are not expected to have, a
material effect on the selection of forms of equity compensation. In addition, the change in
control provisions described in the section Post Employment and Termination Benefits contemplate
that the Company will gross-up the amount of tax due under Internal Revenue Code Section 280G.
However, as discussed below, such termination benefits and related gross up payments will be
restricted by restrictions applicable to TARP participants. Information relating to the potential
payment by the Company under this provision is set forth in the Post Employment and Termination
Benefits section of the proxy statement.
As a participant in the TARP Capital Purchase Program, so long as the preferred stock the
Company issued and sold to Treasury under the TARP continues to be held by the federal government,
compensation paid to executive officers upon termination and the tax deduction available to the
Company for compensation paid to certain executives is limited. Specifically, as it relates to tax
treatment, the tax deduction previously available to the Company for compensation paid to
executives covered by Section 162(m) of the Internal Revenue Code has been reduced from $1 million
to $500,000, and the exception for performance-based compensation (which previously was not
subject to the limit on tax deductible compensation) will no longer apply. A complete discussion
regarding the restrictions on executive compensation and related tax consequences is more fully
discussed under Post Employment and Termination Benefits Restrictions on Compensation and Tax
Deduction section below.
Report of Compensation Committee
The Compensation Committee of the Board of Directors makes the following report which,
notwithstanding anything to the contrary set forth in any of our filings under the Securities Act
of 1933 or the Securities Exchange Act of 1934, will not be incorporated by reference into any such
filings and will not otherwise be deemed to be proxy soliciting materials or to be filed under such
Acts.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis
(CD&A) with management, and based on that review and discussions, the Compensation Committee
recommended to the Board that the CD&A be included as part of this Proxy Statement and 2008 Annual
Report on Form 10-K.
The Compensation Committee certifies that it has reviewed with the Companys senior risk
officers the incentive compensation arrangements for the Companys senior executive officers, as
defined in subsection 111(b)(3) of the Emergency Economic Stabilization Act of 2008 and regulations
and guidance issued thereunder, and has made reasonable efforts to ensure that such arrangements do
not encourage the senior executive officers to take unnecessary and excessive risks that threaten
the value of the Company.
21
2008 Compensation Committee Members
James T. Diehl (Chairperson) * Charles L. Bauer * Ford Elsaesser
John B. Parker * Michael J. Romine
Compensation Tables
The following table shows compensation paid or accrued for the last fiscal year to the Named
Executive Officers.
2008 Summary Compensation Table
|
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|
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|
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|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
|
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|
|
Pension Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and |
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
Deferred |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
Option |
|
Incentive Plan |
|
Compensation |
|
All Other |
|
|
|
|
|
|
|
|
Salary |
|
Bonus |
|
Awards |
|
Awards |
|
Compensation |
|
Earnings |
|
Compensation |
|
|
Name and Principal |
|
|
|
|
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
($) |
|
Total |
Position |
|
Year |
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7)(8) |
|
($) |
Curt Hecker, |
|
|
2008 |
|
|
$ |
232,244 |
|
|
$ |
0 |
|
|
$ |
37,649 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
32,163 |
|
|
$ |
9,053 |
|
|
$ |
311,109 |
|
President and CEO of the |
|
|
2007 |
|
|
|
223,000 |
|
|
|
0 |
|
|
|
58,389 |
|
|
|
5,989 |
|
|
|
58,240 |
|
|
|
28,577 |
|
|
|
11,451 |
|
|
|
385,646 |
|
Company and CEO of the Bank |
|
|
2006 |
|
|
|
223,924 |
|
|
|
0 |
|
|
|
274,239 |
|
|
|
8,368 |
|
|
|
108,160 |
|
|
|
16,460 |
|
|
|
7,500 |
|
|
|
638,651 |
|
Jerry Smith |
|
|
2008 |
|
|
|
198,564 |
|
|
|
0 |
|
|
|
28,913 |
|
|
|
0 |
|
|
|
0 |
|
|
|
40,131 |
|
|
|
10,468 |
|
|
|
278,076 |
|
President of the Bank, |
|
|
2007 |
|
|
|
190,615 |
|
|
|
0 |
|
|
|
26,781 |
|
|
|
4,908 |
|
|
|
49,172 |
|
|
|
35,657 |
|
|
|
14,060 |
|
|
|
321,193 |
|
EVP of the Company |
|
|
2006 |
|
|
|
181,596 |
|
|
|
0 |
|
|
|
72,779 |
|
|
|
16,856 |
|
|
|
86,149 |
|
|
|
20,538 |
|
|
|
7,500 |
|
|
|
385,418 |
|
Douglas Wright, |
|
|
2008 |
|
|
|
175,271 |
|
|
|
0 |
|
|
|
27,782 |
|
|
|
48,288 |
|
|
|
0 |
|
|
|
0 |
|
|
|
11,387 |
|
|
|
262,728 |
|
EVP and Chief Financial |
|
|
2007 |
|
|
|
168,529 |
|
|
|
12,000 |
|
|
|
26,087 |
|
|
|
71,460 |
|
|
|
47,188 |
|
|
|
0 |
|
|
|
16,095 |
|
|
|
341,359 |
|
Officer of the Company and the Bank |
|
|
2006 |
|
|
|
157,248 |
|
|
|
12,000 |
|
|
|
72,553 |
|
|
|
74,175 |
|
|
|
81,769 |
|
|
|
0 |
|
|
|
7,770 |
|
|
|
405,515 |
|
John Nagel |
|
|
2008 |
|
|
|
146,232 |
|
|
|
0 |
|
|
|
23,542 |
|
|
|
27,363 |
|
|
|
0 |
|
|
|
0 |
|
|
|
5,630 |
|
|
|
202,767 |
|
EVP, Chief Credit |
|
|
2007 |
|
|
|
140,608 |
|
|
|
10,000 |
|
|
|
23,465 |
|
|
|
38,045 |
|
|
|
39,370 |
|
|
|
0 |
|
|
|
13,050 |
|
|
|
264,538 |
|
Officer of the Bank |
|
|
2006 |
|
|
|
135,200 |
|
|
|
10,000 |
|
|
|
71,627 |
|
|
|
42,858 |
|
|
|
70,304 |
|
|
|
0 |
|
|
|
4,400 |
|
|
|
334,389 |
|
Pamela Rasmussen |
|
|
2008 |
|
|
|
149,044 |
|
|
|
41,370 |
|
|
|
27,688 |
|
|
|
3,544 |
|
|
|
0 |
|
|
|
0 |
|
|
|
12,701 |
|
|
|
234,347 |
|
EVP, Chief Operating |
|
|
2007 |
|
|
|
143,312 |
|
|
|
44,370 |
|
|
|
27,476 |
|
|
|
3,544 |
|
|
|
40,127 |
|
|
|
0 |
|
|
|
9,097 |
|
|
|
267,926 |
|
Officer of the Bank |
|
|
2006 |
|
|
|
135,200 |
|
|
|
14,370 |
|
|
|
75,638 |
|
|
|
3,544 |
|
|
|
70,304 |
|
|
|
0 |
|
|
|
7,770 |
|
|
|
306,826 |
|
|
|
|
(1) |
|
Includes directors fees paid during the fiscal year 2008 to Messrs. Hecker and Smith in the
amount of $15,924. The amounts for years 2007 and 2006 have also been adjusted from prior
year disclosures to include directors fees paid for those years in the amounts of $15,000 and
$15,924, respectively. |
|
(2) |
|
Includes bonus amounts that vested under the Stock Purchase Bonus Program and the amount
vested under a Retention Bonus Agreement for Ms. Rasmussen. The terms of the Stock Purchase
Bonus Program and Ms. Rasmussens Retention Bonus Agreement are discussed below. |
|
(3) |
|
Represents the proportionate amount of the total fair value of the stock awards recognized by
Intermountain as an expense in 2008 for financial accounting purposes, disregarding for this
purpose the estimate of forfeitures related to service-based vesting conditions. The fair
values of these awards and the amounts expensed in 2008 were determined in accordance with FAS
123(R). The awards for which expense is shown in this table include the awards described in
the Grants of Plan-Based Awards Table below as well as awards previously granted for which the
Company continued to recognize expense in 2008. The assumptions used in determining the grant
date fair values of these awards are set forth in footnotes to the Grants of Plan-Based Awards
table and in Note 10 to our Financial Statements, which are included in the accompanying
Annual Report. The amounts have been adjusted to reflect all stock splits and stock
dividends. |
|
(4) |
|
Represents the proportionate amount of the total fair value of the stock options recognized
by Intermountain as an expense in 2008 for financial accounting purposes, disregarding for
this purpose the estimate of forfeitures related to service-based vesting conditions. The
fair values of these options and the amounts expensed in 2008 were determined in accordance
with FAS 123(R). The options for which expense is shown in this table include options
previously granted for which the Company continued to recognize expense in 2008. The
assumptions used in determining the grant date fair values of these awards are set forth in
Note 10 to our Financial Statements, which are included in the accompanying Annual Report.
The amounts have been adjusted to reflect all stock splits and stock dividends. |
|
(5) |
|
Although the Companys performance permitted an 8% bonus payout to each Named Executive
Officer under the Executive Incentive Plan for the fiscal year 2008, each elected not to
accept a bonus. |
|
(6) |
|
Represents the increase during 2008 in actuarial present values of each Named Executive
Officers accumulated benefits under the individual Salary Continuation and Split Dollar
Agreements. |
22
|
|
|
(7) |
|
Amounts reflect contributions paid by Intermountain or Panhandle State Bank under the 401(k)
Savings Plan and Trust (401(k) Plan) in the following amounts: Mr. Hecker $5,750, Mr. Smith
$8,268, Mr. Wright $6,220, Mr. Nagel $2,925 and Ms. Rasmussen $7,750. |
|
(8) |
|
Represent amounts paid by the Company to the executive in the form of 401(k) matching funds,
automobile allowance, club dues and miscellaneous awards. |
2008 Grants of Plan-Based Awards
The following table provides information on the grant of equity and non-equity awards under
compensatory plans during 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
Grant Date |
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts |
|
|
Stock Awards: |
|
|
Fair Value of |
|
|
|
|
|
|
|
|
|
|
|
Under Non-Equity Incentive |
|
|
Number of |
|
|
Stock and |
|
|
|
|
|
|
|
|
|
|
|
Plan Awards |
|
|
Shares of Stock |
|
|
Option |
|
|
|
|
|
|
|
Grant |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
Awards |
|
Name |
|
|
Date |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#) |
|
|
$ |
|
Curt Hecker |
|
|
(1 |
) |
|
|
2/28/08 |
|
|
$ |
0 |
|
|
$ |
86,528 |
|
|
$ |
173,056 |
|
|
|
0 |
|
|
$ |
0 |
|
|
|
|
(2 |
) |
|
|
2/28/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,303 |
|
|
|
62,394 |
|
Jerry Smith |
|
|
(1 |
) |
|
|
2/28/08 |
|
|
|
0 |
|
|
|
73,056 |
|
|
|
146,112 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(2 |
) |
|
|
2/28/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,633 |
|
|
|
52,679 |
|
Douglas Wright |
|
|
(1 |
) |
|
|
2/28/08 |
|
|
|
0 |
|
|
|
70,108 |
|
|
|
140,217 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(2 |
) |
|
|
2/28/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,487 |
|
|
|
50,562 |
|
John Nagel |
|
|
(1 |
) |
|
|
2/28/08 |
|
|
|
0 |
|
|
|
58,493 |
|
|
|
116,986 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(2 |
) |
|
|
2/28/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,909 |
|
|
|
42,181 |
|
Pamela Rasmussen |
|
|
(1 |
) |
|
|
2/28/08 |
|
|
|
0 |
|
|
|
59,618 |
|
|
|
119,235 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
(2 |
) |
|
|
2/28/08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,965 |
|
|
|
42,993 |
|
|
|
|
(1) |
|
Represents threshold, target and maximum payout levels under the Executive
Incentive Plan for 2008 performance. No payments were made for 2008 under the
Executive Incentive Plan, as discussed in the CD&A and reported under the Non-Equity
Incentive Plan Compensation column in the Summary Compensation Table. Additional
information regarding the design of the Executive Incentive Plan is included in the
CD&A and also discussed below. |
|
(2) |
|
Represents a restricted stock award granted under Intermountains Employee
Stock Option and Restricted Stock Plan that vests in 20% installments, beginning
February 28, 2009, and becoming fully vested February 28, 2013. |
|
|
|
In accordance with FAS 123(R), the fair market value of the restricted stock award on
the date of grant was determined by the Compensation Committee to be the closing
market price of Intermountains common stock on February 28, 2008 ($14.50). The
material terms of the restricted stock award are discussed below. |
Incentive and Stock Plans
General. Intermountain and Panhandle State Bank have implemented three executive incentive
and stock programs: the Executive Incentive Plan, Long-Term Incentive Plans (LTIPs) and the
Stock Purchase Bonus Program, the material terms of which are summarized below. The objectives of
the two incentive programs (the LTIPs and the Executive Incentive Plan) are to provide the
executive officers of Intermountain and Panhandle State Bank with specific performance objectives
and goals, and to motivate such executive officers to reach such objectives and goals. The
objectives of the Stock Purchase Bonus Program are to encourage executive stock ownership and
promote long term retention of executive officers.
Executive Incentive Plan. The Executive Incentive Plan is designed to provide a cash
incentive for management to achieve annual (as opposed to long-term) Company performance goals.
The key executives who are eligible to participate in the plan include all of the Named Executive
Officers. Under the plan, prior to the beginning of each year, Intermountains management selects
appropriate performance criteria and develops annual performance goals for Intermountain for
approval by the Compensation Committee. The performance criteria for 2008 consisted of net income
and average asset growth, with a weighting of 60% net income and 40% average asset growth. With
respect to each performance criteria, at least three specific performance measurements are
established: (i) a threshold level, the minimum acceptable level of performance below which no
incentives will be paid, (ii) a target level, the expected level of performance, and (iii) an
outstanding
23
performance level, an exceptional level of performance that will generate maximum performance
awards under the plan. Bonuses are calculated as a percentage of each participants base salary,
with the percentage dependent on which performance level is achieved. If employment is voluntarily
(except for retirement) or involuntarily terminated (unless due to a sale transaction, or due to
the retirement, death or disability of the participant) during a plan year, the executives rights
to any incentive award for that plan year will be forfeited. In the event of a sale transaction,
as defined in the plan, or in the event of the retirement, death or disability of a participant, a
bonus will be paid on a pro rata basis for performance level goals reached for the most
recently-completed quarter.
Long-Term Incentive Plans. The Company believes that it is in the best interest of the
Company and our shareholders to balance the compensation of our executive officers between
short-term and long-term incentives, to encourage decision-making that will benefit Intermountain
in the longer term. To that end, the Company adopted the 2006-2008 LTIP (which was approved by
shareholders at the 2007 annual meeting). Prior to that time, the Company had implemented the
2003-2005 LTIP, the terms of which were similar in nature to the 2006-2008 LTIP. The key
executives who were eligible to participate in the 2006-2008 LTIP in 2008 included all of the Named
Executive Officers. The 2006-2008 LTIP was structured to permit a restricted stock award after the
end of the performance period based on a three-year (from 2006 through 2008) running average of
Intermountains average annual return on equity and average annual net asset growth. In order to
be eligible to receive a stock award, the key executives must have been continuously employed by
Intermountain or Panhandle State Bank from 2006 through 2008. In addition, to receive the award,
they must have been employed by Intermountain or the Bank on the dates in which each portion
vested. In the event of an executives disability or death or a change in control (as defined),
the stock award benefit would vest, on a pro rata basis, through the most recent quarter end. If
employment was otherwise voluntarily or involuntarily terminated prior to an executives receipt of
stock benefits, such executives rights to any awards under the plan would automatically be
forfeited.
In 2006, the Company granted restricted stock awards to the Named Executive Officers under the
2003-2005 LTIP based on the achievement of pre-established Company goals. The shares subject to
the award vested one-third on March 31, 2006 (the date of grant), January 2, 2007 and January 2,
2008.
In 2008, it became apparent that due to the downturn in the Companys financial performance in
a worsening economy, the goals established under the 2006-2008 LTIP would not be met. As a result,
the Company cancelled all accruals and suspended the plan. The 2006-2008 LTIP has now expired and
there will be no payments or benefits payable to the Named Executive Officers under the plan.
Stock Purchase Bonus Program. The Company has adopted a Stock Purchase Bonus Program for
executive officers and other officers of Intermountain and Panhandle State Bank. The program is
implemented through the execution of individual stock purchase bonus agreements entered into by
Intermountain and the officer. The purpose of the program is to encourage and incent officers of
Intermountain and/or Panhandle State Bank to own Company stock, thereby further aligning the
interests of management with those of Intermountains shareholders. Under the agreement, these
officers may purchase on the open market shares of Intermountain common stock. If the officer
makes such a purchase within the required time frame, the officer will generally be paid a bonus
equal to the lesser of (i) the actual dollar amount paid by the officer for Intermountain shares,
including fees and/or commissions; or (ii) the maximum award amount. In certain circumstances,
however, the Company may elect to pay a bonus greater than the value of the stock required to be
purchased under the agreement in order to provide a supplemental bonus opportunity for retention
purposes. The bonus is paid to the officer in either three, five or ten annual installments. In
order to receive any payment installment, an officer must be a full-time employee on the date such
installment is due and payable; provided, however, that in the event of officers disability or
death, and in some cases in the event of a change in control of Intermountain (as defined in the
agreement), the balance of the bonus will become fully vested and the officer will become eligible
to receive a cash payment equal to such remaining bonus.
24
Employee Stock Plan. In 2008, Intermountain maintained an Employee Stock Option and Restricted
Stock Plan (Employee Stock Plan), as amended and approved by the shareholders, that provided for
the grant of incentive and non-qualified stock options and restricted stock awards to key officers
and employees of Intermountain and/or the Bank. Stock options under the Employee Stock Plan expire
ten years from the date of grant, and must have an exercise price of not less than the fair market
value of Intermountain stock at the time of grant, as determined by the Board or the Compensation
Committee. These awards typically vest over five years in order to motivate long-term performance
and to serve as a retention tool for award recipients. At December 31, 2008, the number of shares
subject to granted but unexercised options and unvested stock awards, and the number of shares that
remained available for grant under the Employee Stock Plan, as adjusted for subsequent stock splits
and stock dividends, was 422,049 and 62,298 shares, respectively. The Employee Stock Plan had a
term of ten years. On January 14, 2009, the term of the Employee
Stock Plan expired, and, upon
recommendation of management and approval of the Board of Directors, it was determined that, due to
the current economic environment, the Board would not seek to implement a new plan at this time.
2008 Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards * |
|
Stock Awards * |
|
|
Number of Shares |
|
Value Realized on |
|
|
|
|
|
Value Realized on |
|
|
Acquired on |
|
Exercise |
|
Number of Shares |
|
Vesting |
|
|
Exercise |
|
($) |
|
Acquired on Vesting |
|
($) |
Name |
|
(#) |
|
(1) |
|
(#) |
|
(2) |
Curt Hecker |
|
|
46,379 |
|
|
$ |
40,735 |
|
|
|
11,011 |
|
|
$ |
165,165 |
|
|
|
|
78,579 |
|
|
|
69,016 |
|
|
|
572 |
|
|
|
8,294 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
425 |
|
|
|
4,951 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
605 |
|
|
|
5,445 |
|
Jerry Smith |
|
|
0 |
|
|
|
0 |
|
|
|
7,447 |
|
|
|
111,705 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
456 |
|
|
|
6,612 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
338 |
|
|
|
3,938 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
363 |
|
|
|
3,267 |
|
Douglas Wright |
|
|
0 |
|
|
|
0 |
|
|
|
7,132 |
|
|
|
106,980 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
433 |
|
|
|
6,279 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
321 |
|
|
|
3,740 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
363 |
|
|
|
3,267 |
|
John Nagel |
|
|
0 |
|
|
|
0 |
|
|
|
5,874 |
|
|
|
88,110 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
372 |
|
|
|
5,394 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
276 |
|
|
|
3,215 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
303 |
|
|
|
2,727 |
|
Pamela Rasmussen |
|
|
0 |
|
|
|
0 |
|
|
|
372 |
|
|
|
5,394 |
|
|
|
|
0 |
|
|
|
0 |
|
|
|
708 |
|
|
|
8,248 |
|
|
|
|
* |
|
The numbers have been adjusted to reflect all applicable stock splits and stock
dividends |
|
(1) |
|
Value realized represents the excess of the fair market value of the shares
at the time of exercise over the exercise price (grant price) of the options. |
|
(2) |
|
Value realized represents the fair market value (closing price) of the
shares at the time of vesting. |
25
2008 Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards * |
|
Stock Awards * |
|
|
Number of |
|
Number of |
|
|
|
|
|
|
|
|
|
Number of |
|
Market Value |
|
|
Securities |
|
Securities |
|
|
|
|
|
|
|
|
|
Shares or Units |
|
of Shares or |
|
|
Underlying |
|
Underlying |
|
|
|
|
|
|
|
|
|
of Stock That |
|
Units of Stock |
|
|
Unexercised |
|
Unexercised |
|
Option Exercise |
|
|
|
|
|
Have Not |
|
That Have Not |
|
|
Options |
|
Options |
|
Price |
|
Option |
|
Vested |
|
Vested |
Name |
|
(#) Exercisable |
|
(#) Unexercisable |
|
($) |
|
Expiration Date |
|
(#) |
|
($)(3) |
Curt Hecker |
|
|
5,760 |
|
|
|
|
|
|
|
3.72 |
|
|
|
01/01/11 |
|
|
|
9,074 |
|
|
|
39,926 |
|
|
|
|
3,845 |
|
|
|
|
|
|
|
3.72 |
|
|
|
01/01/11 |
|
|
|
|
|
|
|
|
|
|
|
|
1,437 |
|
|
|
|
|
|
|
5.51 |
|
|
|
01/01/13 |
|
|
|
|
|
|
|
|
|
|
|
|
5,750 |
|
|
|
|
|
|
|
5.51 |
|
|
|
01/01/13 |
|
|
|
|
|
|
|
|
|
Jerry Smith |
|
|
3,384 |
|
|
|
|
|
|
|
3.73 |
|
|
|
06/21/10 |
|
|
|
7,195 |
|
|
|
31,658 |
|
|
|
|
9,663 |
|
|
|
|
|
|
|
3.73 |
|
|
|
01/01/11 |
|
|
|
|
|
|
|
|
|
|
|
|
3,536 |
|
|
|
|
|
|
|
5.51 |
|
|
|
01/01/13 |
|
|
|
|
|
|
|
|
|
Douglas Wright |
|
|
15,263 |
|
|
|
|
|
|
|
4.82 |
|
|
|
05/31/12 |
|
|
|
6,905 |
|
|
|
30,382 |
|
|
|
|
17,970 |
|
|
|
|
|
|
|
5.51 |
|
|
|
01/01/13 |
|
|
|
|
|
|
|
|
|
|
|
|
3,952 |
|
|
|
|
|
|
|
6.12 |
|
|
|
06/04/13 |
|
|
|
|
|
|
|
|
|
|
|
|
13,467 |
|
|
|
3,630 |
(1) |
|
|
4.79 |
|
|
|
02/03/14 |
|
|
|
|
|
|
|
|
|
John Nagel |
|
|
14,494 |
|
|
|
|
|
|
|
3.87 |
|
|
|
05/23/11 |
|
|
|
5,828 |
|
|
|
25,643 |
|
|
|
|
3,513 |
|
|
|
|
|
|
|
4.16 |
|
|
|
01/01/12 |
|
|
|
|
|
|
|
|
|
|
|
|
5,990 |
|
|
|
|
|
|
|
5.51 |
|
|
|
01/01/13 |
|
|
|
|
|
|
|
|
|
|
|
|
10,541 |
|
|
|
|
|
|
|
6.12 |
|
|
|
06/04/13 |
|
|
|
|
|
|
|
|
|
|
|
|
7,260 |
|
|
|
1,815 |
(1) |
|
|
4.79 |
|
|
|
02/02/14 |
|
|
|
|
|
|
|
|
|
Pamela Rasmussen |
|
|
726 |
|
|
|
363 |
(2) |
|
|
12.95 |
|
|
|
11/09/14 |
|
|
|
6,574 |
|
|
|
28,926 |
|
|
|
|
* |
|
The numbers have been adjusted to reflect all applicable stock splits and stock dividends. |
|
(1) |
|
Stock options vested on February 3, 2009. |
|
(2) |
|
Stock options vest over a five-year period and become fully vested November 9, 2009. |
|
(3) |
|
Based on the closing market price of Intermountain common stock on December 31, 2008
($4.40). |
Post Employment and Termination Benefits
The following is a discussion regarding the post employment and termination arrangements
currently in place for the Named Executive Officers. The amounts stated are based on the maximum
amounts that could be paid under these arrangements. As discussed in detail under the section
TARP Restrictions on Compensation and Tax Deduction set forth below, compensation paid in the
event of termination will be limited under recent and pending legislation and regulations
applicable to TARP participants. The specific effects of recent legislation and pending
regulations on existing compensation arrangements with the Named Executive Officers are unclear.
We have noted below where such effects on amounts required to be reported in the tables cannot be
determined until further guidance is provided by Treasury or the SEC. We have also summarized
agreement provisions without knowing whether or to what extent payments under the agreements will
be permissible.
26
2008 Pension Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Years |
|
Present Value of |
|
|
|
|
|
|
Credited Service |
|
Accumulated Benefit |
Name |
|
Plan Name |
|
(#) |
|
($) |
|
|
(1) |
|
(2) |
|
(3) |
Curt Hecker |
|
SCA/SDA |
|
7 years |
|
$ |
439,764 |
|
Jerry Smith |
|
SCA/SDA |
|
7 years |
|
|
353,613 |
|
Douglas Wright |
|
N/A |
|
N/A |
|
N/A |
John Nagel |
|
N/A |
|
N/A |
|
N/A |
Pamela Rasmussen |
|
N/A |
|
N/A |
|
N/A |
|
|
|
(1) |
|
The terms of the Salary Continuation Agreement and Split Dollar
Agreement (SCA/SDA) are described below. |
|
(2) |
|
Under the terms of the SCA/SDA, executives must, in addition to
other conditions, be employed with Intermountain through 2012. |
|
(3) |
|
The estimated maximum annual retirement benefit payable under the
SCA/SDA for Messrs. Hecker and Smith, payable at age 60 is as follows: Mr.
Hecker $148,000 and Mr. Smith $111,000. |
Salary Continuation Agreement and Split Dollar Agreement. Effective January 1, 2002,
Panhandle State Bank entered into Salary Continuation Agreements and Split Dollar Agreements with
Curt Hecker and Jerry Smith. Each of these agreements was amended and restated on January 1, 2008.
The purpose of these agreements is to provide Mr. Hecker and Mr. Smith with additional retirement
benefits. The agreements are unsecured and unfunded and there are no plan assets. Panhandle State
Bank has purchased a single premium bank owned life insurance policy (BOLI policy) on the lives
of Mr. Hecker and Mr. Smith and intends to use income from the BOLI policy to offset benefit
expenses. All amounts below have been rounded up to the nearest thousand dollars.
Upon reaching age 60 the salary continuation agreements provide for maximum annual payments to
Mr. Hecker and Mr. Smith of $148,000 and $111,000, respectively, for a period of ten years. So
long as Mr. Hecker and Mr. Smith remain employed by Panhandle State Bank until January 1, 2012, in
the event that the employment of Mr. Hecker or Mr. Smith terminates for any reason and such
individual is less than 60 years of age as of such termination (other than for death, disability,
for cause or in connection with a change in control, as each term is defined in their respective
salary continuation agreements), then Mr. Hecker would receive annual payments ranging from $85,000
to $148,000, and Mr. Smith would receive annual payments ranging from $81,000 to $111,000,
depending on the date of their respective termination, during each of the 10 years beginning at age
60. If Mr. Heckers or Mr. Smiths employment is terminated because of disability before the age
of 60, each will receive an annual payment ranging from $54,000 to $148,000 (in the case of Mr.
Hecker) and $52,000 to $111,000 (in the case of Mr. Smith), depending on the date of disability,
during each of the 10 years beginning at age 60. Finally, if Mr. Heckers or Mr. Smiths employment
is terminated in connection with a change in control (so long as they are not terminated for cause,
as defined), Mr. Hecker and Mr. Smith will be entitled to a lump sum payment of $493,000 to
$1,110,000 (in the case of Mr. Hecker) and $485,000 to $834,000 (in the case of Mr. Smith),
depending upon the date of the change in control. Furthermore, if Mr. Hecker or Mr. Smith is
subject to any excise tax as a result of an acceleration of their respective benefits under his
agreement in the event of a change in control, Mr. Hecker and Mr. Smith will receive a cash payment
equal to the amount of their respective excise tax.
Under the salary continuation agreement and the split dollar agreement, Mr. Heckers estate
will receive a one-time payment of $1,110,000 if Mr. Hecker dies before the age of 60, provided
that Panhandle State Bank employed him at the time of death; and, subject to the same conditions,
Mr. Smiths estate will
27
receive a one time payment of $834,000. The Bank will be the beneficiary of any death proceeds
remaining after Mr. Heckers or Mr. Smiths interest has been paid to their respective estates.
Curt Hecker Employment Agreement
Mr. Hecker serves as President and Chief Executive Officer of Intermountain and Chief
Executive Officer of Panhandle State Bank under the terms of an employment agreement that was
amended and restated effective January 1, 2008 to, among other things, incorporate and make such
modifications as necessary to comply with Section 409A of the Internal Revenue Code (the Code).
The agreement renews automatically for a new three-year term on January 1, 2011, unless earlier
cancelled by the Board. The Compensation Committee set Mr. Heckers annual salary for 2008 at
$216,320. The agreement grants Mr. Hecker four weeks of paid vacation annually and miscellaneous
fringe benefits, including use of an automobile, as well as his eligibility to participate in
incentive and stock plans made available to executive officers.
If Mr. Heckers employment terminates involuntarily without cause or if he voluntarily
terminates for any reason, he will be entitled to severance in an amount calculated at twice the
average of his annual base salary over the two most recent calendar years payable in one lump sum
on the first day of the seventh month after the month following termination. But if Mr. Heckers
employment terminates involuntarily (i) other than for cause, disability, retirement or death
within 24 months after a change in control, or (ii) within the period between the date of entering
into a definitive agreement and the effective date of the change in control, or (iii) if he
terminates for good reason (as defined in the agreement), his severance would instead be calculated
at twice the sum of his average annual base salary and short-term bonus over the two preceding
years. The difference between the change-in-control severance amount (twice the average annual base
salary and short-term bonus) versus severance payable for employment termination in other contexts
(twice the average annual base salary) would also be payable to Mr. Hecker if his employment
terminates involuntarily without cause or if he terminates for any reason within 12 months before
an agreement for a change in control is entered into. The change-in-control severance is payable on
the later of the date his employment terminated, the effective date of the change in control, or
the first day of the seventh month after the month in which his employment was terminated.
The employment agreement also provides for a tax gross-up benefit if the aggregate benefits
payable to Mr. Hecker after a change in control are subject to excise taxes under sections 280G and
4999 of the Internal Revenue Code. In general terms, IRC section 280G disallows an employers
compensation deduction for so-called excess parachute payments made to an executive after a
change in control. Correspondingly, section 4999 imposes a 20% excise tax on the executive
receiving excess parachute payments. Payments made to an executive as the result of a change in
control are excess parachute payments if they equal or exceed the executives base amount
multiplied by three. If the payments equal or exceed that threshold, the 20% excise tax is imposed
on payments exceeding the executives base amount, and the employers compensation deduction is
forfeited on those same dollars. The executives base amount is his five-year average taxable
compensation. The additional tax gross-up benefit payable to Mr. Hecker would compensate him for
federal excise taxes imposed as well as for federal and state income taxes imposed on the gross-up
benefit itself, but the tax gross-up benefit would not be a deductible payment to Intermountain or
Panhandle State Bank. For purposes of the calculation under sections 280G and 4999 of benefits
payable after a change in control, the total benefits include severance payable under a severance
or employment agreement, accelerated payment or accelerated vesting of benefits under compensation
arrangements such as stock option plans and salary continuation agreements, and other benefits
whose payment or vesting accelerates because of the change in control. Taking into account Mr.
Heckers potential change-in-control severance benefit under the employment agreement and the
benefit payable under his Salary Continuation Agreement, Intermountain considers it possible that a
portion of the benefits payable to Mr. Hecker after a change in control may constitute excess
parachute payments, and therefore that a tax gross-up benefit could be payable to him. However, the
precise amount of the excise tax gross-up benefit depends on the price paid by the acquiring
company, the date when the change in control occurs, the executives five-year average taxable
compensation at that time, applicable federal and state tax rates, and other factors, including the
discount rate employed at the time to determine the
28
present value of accelerated benefits and the number of months remaining until the executive
attains his normal retirement age.
Mr. Heckers employment agreement provides that he is entitled to reimbursement of up to
$500,000 of legal fees if his employment agreement is challenged after a change in control,
regardless of whether Mr. Hecker prevails in such dispute.
Lastly, the employment agreement prohibits Mr. Hecker from competing with Intermountain or
Panhandle State Bank as a director, officer, shareholder, or otherwise during the term of his
employment and for two years after termination of his employment. The prohibition against
competition terminates immediately after a change in control occurs.
The table below shows the maximum amounts that could be paid to Mr. Hecker under his
agreement, without giving effect to forthcoming guidance and regulations related to the recent
legislation restricting executive compensation of TARP participants and (i) is based on the
executives salary at December 31, 2008; and (ii) assumes that a triggering event occurred on
December 31, 2008. As indicated below, pending implementing regulations, the effects of recent
legislation are unclear on amounts payable under the applicable agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination/Change in Control |
|
Termination /Change in Control Payments |
|
|
Payments Under |
|
Under Salary Continuation Agreement |
|
|
Employment Agreement |
|
and Split Dollar Agreement |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary or |
|
(without cause) |
|
|
|
|
|
|
|
|
|
Voluntary or |
|
|
Involuntary |
|
or constructive |
|
|
|
|
|
Termination Due |
|
Involuntary |
|
|
Termination |
|
termination |
|
Payment Due to |
|
to Disability Prior |
|
Termination |
|
|
(without cause) |
|
in connection |
|
Death Prior to |
|
to |
|
(without cause) |
|
|
(1) |
|
with a CIC (2) |
|
Age 60 (3) |
|
Age 60 (4) |
|
Due to CIC (5) |
|
|
|
Base salary |
|
$ |
424,320 |
|
|
$ |
424,320 |
|
|
$ |
1,110,000 |
|
|
$ |
54,400 |
|
|
$ |
492,708 |
|
Short-term bonus |
|
|
0 |
|
|
|
166,400 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Fair market values of
accelerated equity
vesting(6) |
|
|
0 |
|
|
|
39,926 |
|
|
|
0 |
|
|
|
0 |
|
|
|
39,926 |
|
Total |
|
$ |
424,320 |
|
|
$ |
630,646 |
|
|
$ |
1,110,000 |
|
|
$ |
54,400 |
|
|
$ |
532,634 |
|
Total allowed under
TARP |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
|
(1) |
|
Represents two times Mr. Heckers average base salary, payable in a lump sum payment. |
|
(2) |
|
Represents two times Mr. Heckers average base salary and short-term bonus over the two years
preceding termination, payable in a lump sum payment. |
|
(3) |
|
Represents amount payable to Mr. Heckers beneficiaries under the Split Dollar Agreement in
the event Mr. Hecker dies while still employed by the Company, payable in a lump sum payment. |
|
(4) |
|
Represents the amount payable each year for a 10-year period based on the accrual balance at
December 31, 2008. |
|
(5) |
|
Represents the amount payable based on the accrual balance at December 31, 2008, payable in a
lump sum payment. |
|
(6) |
|
For the purposes of this table, the fair market value of the accelerated vesting of equity
awards is determined as being the difference between the December 31, 2008 closing price of
our common stock and the exercise price of the accelerated equity awards. It is possible that
in the event of a change of control, the per share settlement stock price would be
substantially higher than that used in this table. |
|
(7) |
|
Under the TARP Capital Purchase Program, restrictions on payments made to the Named Executive
Officers upon termination are governed by the terms of EESA, as recently amended by ARRA.
Until such time as Treasury issues implementing regulations governing EESA, it is not possible
to quantify how such restrictions will affect the payments made under these respective
agreements. |
29
Jerry Smith Employment Agreement
Mr. Smith
serves as the Executive Vice President of Intermountain and President of Panhandle State Bank under an employment agreement that was
amended and restated effective January 1, 2008 to, among other things, incorporate and make such
modifications as necessary to comply with Section 409A of the Code. The terms of Mr. Smiths
agreement are essentially identical to those of Mr. Heckers employment agreement. The term of Mr.
Smiths employment agreement will automatically renew for a new three-year term on January 1, 2011,
unless earlier canceled by the Board. The Compensation Committee set Mr. Smiths annual salary for
2008 at $182,640. The agreement promises severance benefits and change-in-control severance
benefits on the same terms and calculated in the same manner as Mr. Heckers, a potential excise
tax gross-up in connection with a change in control, and reimbursement of up to $500,000 of legal
fees if the employment agreement is challenged after a change in control. Mr. Smiths employment
agreement includes a prohibition against competition identical to the prohibition in Mr. Heckers
agreement, but like Mr. Heckers agreement the prohibition against competition would not apply
after a change in control occurs.
The table below shows the maximum amounts that could be paid to Mr. Smith under his agreement, without giving effect to forthcoming guidance and regulations related to the recent legislation
restricting executive compensation of TARP participants and (i) is based on the executives salary
at December 31, 2008; and (ii) assumes that a triggering event occurred on December 31, 2008. As
indicated below, pending implementing regulations, the effects of recent legislation are unclear on
amounts payable under the applicable agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination /Change in Control |
|
Termination/Change in Control |
|
|
Payments Under |
|
Payments Under Salary |
|
|
Employment Agreement |
|
Continuation Agreement and Split Dollar Agreement |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination |
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary or |
|
(without cause) |
|
|
|
|
|
|
|
|
|
Voluntary or |
|
|
Involuntary |
|
or constructive |
|
|
|
|
|
Termination Due |
|
Involuntary |
|
|
Termination |
|
termination |
|
Payment Due to |
|
to Disability |
|
Termination |
|
|
(without cause) |
|
in connection |
|
Death Prior to |
|
Prior to |
|
(without cause) |
|
|
(1) |
|
with a CIC(2) |
|
Age 60 (3) |
|
Age 60 (4) |
|
Due to CIC (5) |
|
|
|
Base salary |
|
$ |
358,255 |
|
|
$ |
358,255 |
|
|
$ |
834,000 |
|
|
$ |
51,783 |
|
|
$ |
485,345 |
|
Short-term bonus |
|
|
0 |
|
|
|
148,821 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
Fair market values
of accelerated
equity vesting (6) |
|
|
0 |
|
|
|
31,658 |
|
|
|
0 |
|
|
|
0 |
|
|
|
31,658 |
|
Total |
|
$ |
358,255 |
|
|
$ |
532,734 |
|
|
$ |
834,000 |
|
|
$ |
51,783 |
|
|
$ |
517,003 |
|
Total allowed under
TARP |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
|
|
|
(1) |
|
Represents two times Mr. Smiths average base salary, payable in a lump sum payment. |
|
(2) |
|
Represents two times Mr. Smiths average base salary and short-term bonus over the
two years preceding termination, payable in a lump sum payment. |
|
(3) |
|
Represents amount payable to Mr. Smiths beneficiaries under the Split Dollar
Agreement in the event Mr. Smith dies while still employed by the Company, payable in
a lump sum payment. |
|
(4) |
|
Represents the amount payable each year for a 10-year period based on the accrual
balance at December 31, 2008. |
|
(5) |
|
Represents the amount payable based on the accrual balance at December 31, 2008,
payable in a lump sum. |
|
(6) |
|
For the purposes of this table, the fair market value of the accelerated vesting of
equity awards is determined as being the difference between the December 31, 2008
closing price of our common stock and the exercise price of the accelerated equity
awards. It is possible that in the event of a change of control, the per share
settlement stock price would be substantially higher than that used in this table. |
|
(7) |
|
Under the TARP Capital Purchase Program, restrictions on payments made to the Named
Executive Officers upon termination are governed by the terms of EESA, as recently
amended by ARRA. Until such time as Treasury issues implementing regulations governing
EESA, it is not possible to quantify how such restrictions will affect the payments made
under these respective agreements. |
30
Executive Severance Agreements for Douglas Wright and John Nagel
The Executive Severance Agreements with Messrs. Wright and Nagel, respectively, amended and
restated effective January 1, 2008 (as to Mr. Wrights agreement) and December 27, 2007 (as to Mr.
Nagels agreement) to, among other things, incorporate and make such modifications as necessary to
comply with Section 409A of the Code, provide that each of Messrs. Wright and Nagel is entitled to
severance if his employment terminates involuntarily (i) other than for cause, disability,
retirement or death within 24 months after a change in control, (ii) within the period between the
date of entering into a definitive agreement and the effective date of the change in control, or
(iii) within 12 months before an agreement for a change in control is entered into, or if he
terminates for good reason (as defined in the agreement). The severance payment would be an amount
equal to twice the sum of his average annual base salary and short-term bonus over the two
preceding years, payable on the later of the date employment is terminated, the effective date of
the change in control, or the first day of the seventh month after the month employment is
terminated.
Mr. Wrights Executive Severance Agreement further provides for a tax gross-up benefit if the
aggregate benefits payable to Mr. Wright after a change in control are subject to excise taxes
under sections 280G and 4999 of the Code, payable under the same terms as described for Mr. Hecker
and Mr. Smith. Mr. Wrights agreement also provides that he is entitled to reimbursement of up to
$300,000 of legal fees if his employment agreement is challenged after a change in control,
regardless of whether Mr. Wright prevails in such dispute.
Under Mr. Nagels Executive Severance Agreement, his severance benefit will be reduced as
necessary to avoid application of sections 280G and 4999 of the Code. Mr. Nagels agreement also
provides that he is entitled to reimbursement of up to $250,000 of legal fees if his employment
agreement is challenged after a change in control, regardless of whether Mr. Nagel prevails in such
dispute.
The table below shows the maximum amounts that could be paid to Messrs. Wright and Nagel under
their respective agreements, without giving effect to forthcoming guidance and regulations related
to the recent legislation restricting executive compensation of TARP participants and (i) is based
on the executives salary at December 31, 2008; and (ii) assumes that a triggering event occurred
on December 31, 2008. As indicated below, pending implementing regulations, the effects of recent
legislation are unclear on amounts payable under the applicable agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination in Connection with Change in Control |
|
|
|
|
|
|
|
|
(other than for cause, death, disability or retirement) |
|
|
|
|
|
Total |
|
|
|
|
|
|
Short-Term |
|
|
|
Total |
|
Allowed |
|
|
Salary |
|
Bonus |
|
Equity Awards |
|
Payments to |
|
Under |
Name |
|
($) |
|
($) |
|
($) |
|
Executive(1) |
|
TARP |
Douglas Wright |
|
$ |
340,799 |
|
|
|
$132,557 |
|
|
$ |
30,382 |
|
|
$ |
503,738 |
|
|
|
(2 |
) |
John Nagel |
|
|
286,840 |
|
|
|
109,674 |
|
|
|
25,643 |
|
|
|
422,157 |
|
|
|
(2 |
) |
|
|
|
(1) |
|
Represents two times the average base pay and short term bonus over the two
years preceding termination, payable in a lump sum payment. |
|
(2) |
|
Under the TARP Capital Purchase Program, restrictions on payments made to
the Named Executive Officers upon termination are governed by the terms of EESA, as
recently amended by ARRA. Until such time as Treasury issues implementing
regulations governing EESA, it is not possible to quantify how such restrictions
will affect the payments made under these respective agreements. |
Executive Severance and Retention Bonus Agreements for Pamela Rasmussen
On March 14, 2007, Intermountain entered into an Executive Severance Agreement with Ms.
Rasmussen, which was subsequently amended and restated effective December 28, 2007 to, among other
things, incorporate and make such modifications as necessary to comply with Section 409A of the
Code. The
31
terms of this agreement are substantially identical in nature to the Executive Severance Agreement
with Mr. Nagel, including a provision for reimbursement of up to $250,000 of legal fees in certain
circumstances.
In August 2005, as amended September 2006, the Company has also entered into a Retention Bonus
Agreement with Ms. Rasmussen that provides for a bonus in the amount of $56,850, payable in five
equal annual installments, beginning on August 15, 2005, and the remaining installments paid on
each of the next four anniversary dates of the first payment date, provided in each case that Ms.
Rasmussen is employed with the Company on the date the portion of the bonus is due and payable.
However, in the event of a change in control, or if Ms. Rasmussen is terminated without cause, or
because of death or permanent disability, Ms. Rasmussen, or her estate in the event of death, will
be entitled to continue to receive the annual bonus payments.
On March 14, 2007, the Company entered into a Stock Purchase Bonus Agreement with Ms.
Rasmussen. Under the terms of this agreement, Ms. Rasmussen would be reimbursed up to $200,000
payable over a ten year period, provided Ms. Rasmussen acquired shares of Intermountain common
stock prior to November 30, 2007. This agreement was subsequently amended and restated to
decrease the required total investment in Intermountain common stock to $100,000. The bonus
payable under this agreement remains at $200,000, with the additional $100,000 not used to
reimburse stock purchases intended to be a supplemental bonus.
The table below shows the maximum amounts that could be paid to Ms. Rasmussen under the
agreements described above, without giving effect to forthcoming guidance and regulations related
to the recent legislation restricting executive compensation of TARP participants and (i) is based
on the executives salary at December 31, 2008; and (ii) assumes that a triggering event occurred
on December 31, 2008. As indicated below, pending implementing regulations, the effects of recent
legislation are unclear on amounts payable under the applicable agreements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination in Connection with Change in Control |
|
Total |
|
Total |
|
|
|
|
|
|
|
|
|
|
(other than for cause, death, disability or retirement) |
|
Payments to |
|
Allowed |
|
|
|
|
|
|
|
|
|
|
Salary |
|
Short-Term Bonus |
|
Equity Awards |
|
Executive |
|
Under |
|
|
|
|
|
|
|
|
Name |
|
($) |
|
($) |
|
($) |
|
(1) |
|
TARP |
|
|
|
|
|
|
|
|
Pamela Rasmussen |
|
$ |
292,356 |
|
|
$ |
144,631 |
|
|
$ |
28,926 |
|
|
$ |
465,913 |
|
|
|
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents the two times average base salary and short term bonus and retention
bonus over the two years preceding termination, payable in a lump sum payment. |
|
(2) |
|
Under the TARP Capital Purchase Program, restrictions on payments made to the
Named Executive Officers upon termination are governed by the terms of EESA, as
recently amended by ARRA. Until such time as Treasury issues implementing regulations
governing EESA, it is not possible to quantify how such restrictions will affect the
payments made under these respective agreements. |
TARP Restrictions on Compensation and Tax Deduction
As noted above, Intermountain participated in and received from the Treasury $27,000,000 under
the TARP Capital Purchase Program in exchange for shares of Intermountain preferred stock. Under
the TARP Capital Purchase Program, so long as the preferred stock the Company issued and sold to
Treasury under the TARP Capital Purchase Plan continues to be held by the federal government,
compensation payable to Intermountains top five executive officers upon termination and the tax
deduction available to the Company for compensation paid to certain executives will be limited.
The requirements will no longer apply if the Treasury continues to hold only the warrant and not
the preferred stock. The Board was aware of certain requirements when deciding to participate in
the TARP Capital Purchase Program, and to assure compliance, entered into an agreement with each
Named Executive Officer prospectively agreeing to modify their employment and compensation
arrangements as necessary to comply with these applicable regulations. In addition, recently
enacted legislation seems to prohibit paying severance to any of the top five executive officers of
Intermountain, subject to pending regulations. Further, the tax deduction previously available to
the
32
Company for compensation paid to covered executives has been reduced from $1 million to $500,000,
and the exception for performance-based compensation (which previously was excluded from the
calculation of the limit on deductible compensation) will no longer apply.
Employee Benefit Plans
401(k) Savings Plan. Intermountain and Panhandle State Bank have a 401(k) Savings Plan
(401(k) Plan) covering substantially all employees. An employee must be at least 18 years of age
and have six months of service with Intermountain or Panhandle State Bank to be eligible for the
401(k) Plan (Effective Date). Under the 401(k) Plan, participants may defer a percentage of their
compensation, the dollar amount of which may not exceed the limit as governed by law. At the
direction of the Board of Directors, Intermountain may also elect to pay a discretionary matching
contribution equal to a percentage of the amount of the salary deferral made by the participant.
The 401(k) Plan provides that contributions made by the employee are 100% vested immediately upon
the participants Effective Date. Contributions made by the employer vest 50% in year one and 100%
in year two.
A committee of Panhandle State Bank acts as the Plan Administrator of the 401(k) Plan. The
general investment options are determined by the Plans Administrative Committee.
PROPOSAL NO. 2 ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of
2009 into law. The ARRA includes a provision, commonly referred to as Say-on-Pay, that amends
existing law and requires a TARP recipient to permit a separate shareholder vote to approve the
compensation of executives, as disclosed pursuant to the compensation disclosure rules of the [SEC]
(which disclosure shall include the compensation discussion and analysis, the compensation tables,
and any related material) at its annual meeting of shareholders. As noted previously in this
proxy statement, the Company is a TARP recipient because of its participation in the Treasurys Capital Purchase Program, pursuant to which the Company issued
preferred stock and a warrant to purchase common stock to the Treasury.
Therefore, we are providing you the opportunity, as a shareholder, to endorse or not endorse
our executive pay programs and policies through the following resolution:
RESOLVED, that the shareholders approve the compensation of executive officers as
described in the Compensation Discussion and Analysis and the tabular disclosures
regarding Named Executive Officer compensation (together with the accompanying
narrative disclosures) in this proxy statement.
As provided in the ARRA, the vote is not binding on the Board of Directors and may not be
construed as overruling a decision by the Board of Directors, nor creating or implying any
additional fiduciary duty by the Board of Directors, nor be construed to restrict or limit the
ability of shareholders to make proposals for inclusion in proxy materials related to executive
compensation.
We believe that our compensation policies and procedures are strongly aligned with the
long-term interests of our shareholders. Because your vote is advisory, it will not be binding
upon the Board. However, the Compensation Committee will take into account the outcome of the vote
when considering future executive compensation arrangements.
33
Vote Required and Board Recommendation
The proposal to approve the advisory (non-binding) vote on executive compensation requires the
affirmative vote FOR of a majority of the shares present and entitled to vote.
The Board of Directors unanimously recommends a vote FOR approval of the compensation of
executive officers as described in the Compensation Discussion and Analysis and the tabular
disclosures regarding Named Executive Officer compensation (together with the accompanying
narrative disclosures) in this proxy statement.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth information as of February 15, 2009, regarding the shares of
Intermountain common stock beneficially owned by (i) each person (other than executive officers or
directors whose stock ownership is listed below), known by Intermountain to own beneficially more
than 5% of Intermountains common stock, (ii) each director of Intermountain, (iii) the Named
Executive Officers, and (iv) all directors and executive officers of Intermountain as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as
noted below, to our knowledge, each holder has sole voting and investment power with respect to
shares of Intermountain common stock listed as owned by such person or entity. The number of shares
beneficially owned is based on the shares of our common stock outstanding on February 15, 2009.
Share figures in the table below have been adjusted for all stock splits and stock dividends to
date. Shares of our common stock subject to stock options that are currently exercisable or
exercisable within 60 days of February 15, 2009 are deemed to be outstanding and to be beneficially
owned by the person holding the options for the purpose of computing the percentage ownership of
that person, but are not treated as outstanding for the purpose of computing the percentage
ownership of any other person.
Principal Shareholders (5% Owners Exclusive of Directors and Officers)
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of |
|
Percentage of |
|
|
Common Stock |
|
Outstanding Common |
Name and Address of Beneficial Owner |
|
Owned |
|
Stock |
|
Wray D. Farmin
11815 Waikiki
Rd
Spokane, WA 99218 |
|
|
454,321 |
(1) |
|
|
5.4 |
% |
|
James Fenton Company, Inc.
P. O. Box 505
Dover, ID 83825 |
|
|
456,649 |
(2) |
|
|
5.4 |
% |
|
|
|
(1) |
|
The shares beneficially owned by Mr. Farmin are owned by the Farmin
Family LLP, of which Mr. Farmin is the general partner and has sole voting and
dispositive power. |
|
(2) |
|
The number of shares beneficially owned include 15,524 shares held in
trust for the minor children of Julie Meyer, President of James Fenton Company
Inc.; 1,089 shares held by Ms. Meyer and her spouse; and 12,640 shares held in
trust for the minor children of Susan Kubiak, Vice President of James Fenton
Company, Inc. |
34
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
Number of Shares of |
|
Percentage of |
|
|
Common Stock |
|
Outstanding |
Name and Position |
|
Owned(1)(2) |
|
Common Stock |
|
Directors |
|
|
|
|
|
|
|
|
John B. Parker, Chairman |
|
|
114,875 |
(3) |
|
|
1.4 |
% |
James T. Diehl, Vice Chairman |
|
|
209,197 |
(4) |
|
|
2.5 |
% |
Curt Hecker, Director,
President and CEO of the
Company and CEO of the Bank |
|
|
202,587 |
(5) |
|
|
2.4 |
% |
Charles L. Bauer, Director |
|
|
196,569 |
(6) |
|
|
2.3 |
% |
Ford Elsaesser, Director |
|
|
104,429 |
(7) |
|
|
1.2 |
% |
Ronald Jones, Director |
|
|
29,340 |
(8) |
|
|
* |
|
Maggie Y. Lyons, Director |
|
|
32,231 |
(9) |
|
|
* |
|
Jim Patrick, Director |
|
|
43,721 |
(10) |
|
|
* |
|
Michael J. Romine, Director |
|
|
511,212 |
(11) |
|
|
6.0 |
% |
Jerry Smith, Director,
Executive Vice President of
the Company and President of
the Bank |
|
|
149,259 |
(12) |
|
|
1.8 |
% |
Barbara Strickfaden, Director |
|
|
8,936 |
(13) |
|
|
* |
|
|
|
|
(1) |
|
Includes shares subject to options that could be exercised within 60
days or April 16, 2009 as follows: 363 shares each for Mr. Parker and Ms. Lyons;
726 shares for each of Messrs. Diehl, Elsaesser, and Romine; 16,792 shares for
Mr. Hecker; 16,583 shares for Mr. Smith; 6,353 shares for Ms. Strickfaden; 5,082
shares each for Messrs. Jones and Patrick; and 182 shares for Mr. Bauer. |
|
(2) |
|
Includes shares of restricted stock subject to vesting requirements as
follows: 523 shares held by Messrs. Parker, Diehl, Bauer, Elsaesser, Romine and
Ms. Lyons and Ms. Strickfaden; 442 shares held by Messrs. Jones and Patrick;
9,074 shares held by Mr. Hecker; and 7,195 shares held by Mr. Smith. |
|
(3) |
|
Includes 54,780 shares held in the Parker Family LLC of which Mr.
Parker is co-manager with his spouse; 3,000 shares held in an IRA for Mr.
Parker; and 41,123 shares held jointly with spouse. |
|
(4) |
|
Includes 9,695 shares held jointly with spouse; 78 shares held by
spouse; 283 shares held in an IRA for spouse; 314 shares held in an IRA for the
benefit of Mr. Diehl; 7,168 shares held in a trust for Erick Joseph Diehl and
7,168 shares held in a trust for Jess Isaac Diehl, both trusts of which Mr.
Diehl is a co-conservator; and 170,459 shares held in the Diehl Family LLC of
which Mr. Diehl is a managing member. |
|
(5) |
|
Includes 158,827 shares held in the Hecker Family Trust; 17,182 shares
held in an IRA account for the benefit of Mr. Hecker; 356 shares held in a
custodial account for son; and 356 shares held jointly with son. |
|
(6) |
|
Includes 96,274 shares held in the Bauer Family Trust; 53,169 shares
held in IRA accounts for the benefit of Mr. Bauer; and 46,421 shares held in IRA
accounts for the benefit of Mr. Bauers spouse. |
|
(7) |
|
Includes 2,195 shares held jointly with spouse; 2,944 shares held by
Mr. Elsaessers minor children and daughter; 75,975 shares held in a pension
fund trust for the benefit of Mr. Elsaesser; and shares held in pension fund
trusts of which Mr. Elsaesser is trustee as follows: 6,055 shares for Joseph
Jarzabek; 1,291 shares for Donna La Rue; 356 shares for Lois LaPointe; 77 shares
for Sherylee Foster; 401 shares for Deborah Hillen; and 81 shares for the
benefit of Darla Kuhman. |
|
(8) |
|
Includes 3,375 shares held jointly with spouse; 7,242 shares held in
an IRA account for the benefit of Mr. Jones spouse; and 8,860 shares held in an
IRA account for the benefit of Mr. Jones. |
|
(9) |
|
Includes 5,720 shares held jointly with spouse and 1,280 shares held
in a profit sharing plan for the benefit of Ms. Lyons spouse. |
|
(10) |
|
Includes 28,214 shares held jointly with spouse; 280 shares held by
spouse; 220 shares held in an IRA account for the benefit of Mr. Patricks
spouse; and 9,363 shares held in IRA accounts for the benefit of Mr. Patrick. |
|
(11) |
|
Includes 1,179 shares held in the Romine Educational Trust; 5,461
shares held by Mr. Romines spouse; and 503,203 shares held in the Romine Family
LLC. |
|
(12) |
|
Includes 108,083 shares held in the Smith Family Trust; and 17,398
shares held in IRA accounts for the benefit of Mr. Smith. |
|
(13) |
|
Includes 1,815 shares held in an IRA account for Ms. Strickfaden. |
35
Officers
In addition to their stock ownership, the following table includes information with respect to
the five year employment history of the executives listed below.
|
|
|
|
|
|
|
|
|
|
|
Number and Percentage of |
|
Name and Age |
|
Position/Employment History |
|
Outstanding Common Stock(1)(2)(3) |
|
|
John Nagel, 58
|
|
EVP & Chief Credit Officer of Bank (4)
|
|
64,204
|
* |
|
Douglas Wright, 44
|
|
EVP & Chief Financial Officer(5)
|
|
87,481
|
1.0% |
|
Pamela Rasmussen, 48
|
|
EVP & Chief Operating Officer(6)
|
|
21,004
|
* |
|
Dale Schuman, 50
|
|
SVP, Trust and Wealth Management(7)
|
|
26,848
|
* |
|
Officers & Directors as a Group (15 individuals)
|
|
|
|
1,801,893 |
21.4% |
|
|
|
|
(1) |
|
Includes shares subject to options exercisable within 60 days or April
16, 2009 as follows: Mr. Nagel 43,613 shares; Ms. Rasmussen 726 shares; Mr.
Wright 54,282 shares; and 154,599 shares held by officers and directors as a
group. |
|
(2) |
|
Includes shares of restricted stock subject to forfeiture as follows:
Mr. Nagel 5,828 shares; Ms. Rasmussen 6,574 shares; Mr. Wright 6,905 shares; and
Mr. Schuman 15,368 shares. |
|
(3) |
|
Includes 1,298 shares that Mr. Wright holds jointly with his spouse;
13,704 shares held by Ms. Rasmussen in the Rasmussen Family Trust; and 11,480
shares held jointly by Mr. Shuman and his spouse. |
Background of Executive officers
John Nagel joined the Company in 2001. Prior to that time Mr. Nagel served as Credit
Approval Officer at Washington Trust Bank from December 1999 to May 2001.
Douglas Wright joined the Company in 2002. Prior to that time Mr. Wright served as
Senior Vice President and Production Manager at Sterling Savings Bank from June 1996 to May
2002.
Pamela Rasmussen joined the Company in 2004 as Senior Vice President and Chief Operating
Officer. In 2006, Ms. Rasmussen was promoted to Executive Vice President and Chief Operating
Officer. Prior to joining the Company, Ms. Rasmussen was the Vice President of Operations
and Cashier at Stockman Financial Corporation from March 2000 to April 2002, and the
Operations Officer and Chief Financial Officer of Snake River Bancorp, Inc. (the former
holding company of Magic Valley Bank) from April 2002 to November 2004.
Dale Schuman joined the Company in 2006 as Senior Vice President and General Manager of
the Trust and Wealth Management division. Mr. Schuman is an attorney and prior to joining
the Company, he practiced commercial, mergers and acquisitions, trust and probate law from
1986 to 1999, and worked as an executive manager for an investment management institution
from 1999 to 2005.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions between Intermountain or its affiliates and related persons (including directors
and executive officers of Intermountain and Panhandle State Bank, or their immediate families) must
be approved by the Audit Committee of the Board. A transaction between a related person shall be
consummated only if the Audit Committee approves or ratifies such transaction in accordance with
the procedures established by the Board in accordance with its lending and Corporate Governance
Policy, and if the transaction is on terms comparable to those that could be obtained in arms
length dealings with an unrelated third party.
Intermountain and Panhandle State Bank have had, and expect to have in the future, banking
transactions, including loans, in the ordinary course of business with directors, executive
officers, and their associates, on substantially the same terms, including interest rates and
collateral, as those prevailing at the
36
same time for comparable transactions with other persons, which transactions do not involve
more than the normal risk of collectibility or present other unfavorable features.
PROPOSAL NO. 3 RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed BDO Seidman, LLP (BDO) to serve as the independent
registered public accounting firm for Intermountain and its subsidiaries for the year ending
December 31, 2009, and any interim periods, subject to ratification by our shareholders at the
annual meeting. BDO has advised Intermountain that it will have in attendance at the annual meeting
one or more representatives who will be available to respond to appropriate questions presented at
the annual meeting. Such representatives will have an opportunity to make a statement at the annual
meeting if they desire to do so. If the required number of votes does not ratify the appointment of
BDO, the Audit Committee will take that into account for future selection of independent registered
public accountants.
Vote Required and Board Recommendation
The proposal for the shareholders to ratify the selection of BDO as our independent registered
public accounting firm requires the affirmative vote FOR of a majority of the shares present and
entitled to vote.
The Board of Directors unanimously recommends that Shareholders vote FOR the proposal to
ratify the appointment of BDO as the independent auditors for Intermountain for 2009.
COMPLIANCE WITH SECTION 16(A) FILING REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934 requires that all of our executive
officers and directors and all persons who beneficially own more than 10 percent of our common
stock file reports with the SEC regarding beneficial ownership of Company stock. We have adopted
procedures to assist our directors and executive officers in complying with the Section 16(a)
filings.
Based solely on our review of the copies of the filings which we received for the fiscal year
ended December 31, 2008, or written representations from certain reporting persons, we believe that
the reporting persons made all filings required by Section 16(a) on a timely basis, except for the
following individuals: each of Messrs. Hecker, Nagel and Parker and Ms. Rasmussen had one
transaction not timely reported on a Form 4.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BDO Seidman, LLP, independent registered public accounting firm, performed the audit of our
consolidated financial statements, which include our subsidiary Panhandle State Bank, for the year
ended December 31, 2008. In addition, the effectiveness of Intermountains internal control over
financial reporting as of December 31, 2008 has been audited to by BDO Seidman, LLP.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The following table sets forth the aggregate fees charged to Intermountain by BDO, for audit
services rendered in connection with the audited consolidated financial statements and reports for
the 2008 and 2007 fiscal years and for other services rendered during the 2008 and 2007 fiscal
years.
37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fee Category |
|
Fiscal 2008 |
|
|
% of Total |
|
|
Fiscal 2007 |
|
|
% of Total |
|
|
Audit Fees |
|
$ |
394,050 |
|
|
|
90% |
|
|
$ |
360,324 |
|
|
|
86 |
% |
Audit-Related Fees |
|
|
29,000 |
|
|
|
7% |
|
|
|
18,313 |
|
|
|
4 |
|
Tax Fees |
|
|
14,675 |
|
|
|
3% |
|
|
|
39,165 |
|
|
|
10 |
|
All Other Fees |
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Fees |
|
$ |
437,725 |
|
|
|
100% |
|
|
$ |
417,802 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees. Consists of fees billed to Intermountain for professional services
rendered by BDO in connection with the audit of our financial statements and review of financial
statements included in Intermountains Form 10-Qs and 10-Ks, fees for services performed in
relation to compliance with Sarbanes Oxley Rule 404, or services by BDO in connection with
statutory or regulatory filings or engagements.
Audit-Related Fees. Consists of fees relating to the audit of the employee benefit
plan.
Tax Fees. Consists of fees related to the preparation of Intermountains consolidated
federal and state tax returns and tax consulting services.
All Other Fees. We did not incur any other fees during 2008 or 2007.
In considering the nature of the services provided by BDO, the Audit Committee determined that
such services are compatible with the provision of independent audit services. The Audit Committee
discussed these services with BDO and Company management to determine that they are permitted under
the rules and regulations concerning auditor independence promulgated by the SEC to implement the
Sarbanes Act, as well as the American Institute of Certified Public Accountants.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors
The Audit Committee pre-approves all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related services, tax
services, compliance services, consulting services and other services. For each proposed service,
the independent auditor is required to provide detailed back-up documentation at the time of
approval. The Audit Committee may delegate pre-approval to its chairman or one or more of its
members. Such a member must report any decisions to the Audit Committee at the next scheduled
meeting.
OTHER BUSINESS
The Board knows of no other matters to be brought before the shareholders at the annual
meeting. If other matters are properly presented for a vote at the annual meeting, the proxy
holders will vote shares represented by properly executed proxies in their discretion in accordance
with their judgment on such matters.
SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
Shareholder Proposals
In order for a shareholder proposal to be considered for inclusion in our Proxy Statement for
next years annual meeting, the written proposal must be received by us no later than November 20,
2009 and should contain such information as required under our Bylaws. Such proposals should be
directed to our Corporate Secretary, at P. O. Box 967, Sandpoint, Idaho 83864, and must comply with
the SECs regulations regarding the inclusion of shareholder proposals in company-sponsored proxy
materials. No shareholder proposal from the floor will be considered at the annual meeting. In
addition, if we receive notice of a shareholder proposal after February 3, 2010, the persons named
as proxies in such proxy statement and form of proxy will have discretionary authority to vote on
such shareholder proposal.
38
Director Nominations
Our Bylaws provide for the nomination of director candidates by Company shareholders. In order
to recommend that the Nominating Committee consider a person for inclusion as a director nominee in
our proxy statement for next years annual meeting, we must receive a recommendation no later than
November 20, 2009. In addition, the notice of recommendation must meet all other requirements
contained in our Bylaws. Such recommendation should be sent to the attention of the Secretary of
the Company, and should contain the following information: (a) the name and address of each
proposed nominee and the number of shares of Intermountain stock held by such nominee; (b) the
principal occupation of each proposed nominee; (c) a description of any arrangements or
understandings between the nominee and the nominating shareholder pursuant to which the nomination
is being made; (d) your name and address; (e) the number of shares of stock of Intermountain you
own; and (f) a consent of the nominee agreeing to the nomination. The presiding officer of the
meeting may disregard your nomination if it does not contain the above information and otherwise
meet the requirements set forth in our Bylaws.
Copy of Bylaw Provisions
You may contact our Corporate Secretary for a copy of the relevant Bylaw provisions regarding
the requirements for making shareholder proposals and nominating director candidates.
ANNUAL REPORT TO SHAREHOLDERS
Any shareholder may obtain without charge a copy of our Annual Report on Form 10-K filed with
the SEC under the Securities Exchange Act of 1934 for the year ended December 31, 2008, including
financial statements. Written requests for the Form 10-K should be addressed to Susan Pleasant,
Asst. Vice President, Shareholder Relations, P. O. Box 967, Sandpoint, Idaho 83864.
39
INTERMOUNTAIN COMMUNITY BANCORP
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
APRIL 29, 2009
The shareholder(s) hereby appoint John B. Parker, James T. Diehl and Charles L. Bauer, or either of them, as proxies, with full power to act
alone, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the
shares of Common Stock of Intermountain Community Bancorp that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held to
be held at 10:00 am Pacific Time on April 29, 2009, at the Sandpoint Center, 414 Church Street,
Sandpoint, Idaho, and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER (S). IF NO SUCH
DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR EACH PROPOSAL.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED REPLY ENVELOPE
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
INTERMOUNTAIN COMMUNITY BANCORP
C/O PROXY SERVICES
P.O. BOX
9142
FARMINGDALE, NY 11735
VOTE BY INTERNET www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you
access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE SHAREHOLDER
COMMUNICATIONS
If you would like to reduce the costs incurred by INTERMOUNTAIN COMMUNITY BANCORP in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access shareholder communications electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to INTERMOUNTAIN COMMUNITY BANCORP, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH
AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN
SIGNED AND DATED.
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INTERMOUNTAIN COMMUNITY BANCORP
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 and 3.
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Vote On Directors |
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For All |
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Withhold All |
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For All Except |
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To withhold authority to vote for any individual
nominee(s), mark For All Except
and write the
number(s) of the nominee(s) on the line below.
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1. |
ELECTION OF DIRECTORS
Nominees:
01) Ford Elsaesser
02) Curt Hecker
03) Michael J. Romine
04) Jerry Smith
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Vote on Proposal |
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For |
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Against |
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Abstain |
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2. |
Advisory (Non-binding) Vote on Executive Compensation
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3. |
Ratify the appointment of BDO Seidman, LLP as the independent registered public accountants for Intermountain for 2009.
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4. |
In their discretion, upon such other matters as may properly come before the meeting or any adjournment thereof.
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The shares represented by this proxy when properly executed
will be voted in the manner directed herein by the
undersigned Shareholder(s). If no direction is made, this proxy
will be voted FOR items 1, 2 and 3. If any other matters
properly come before the meeting, or if cumulative voting is
required, the person named in this proxy will vote in their
discretion.
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For address changes and/or comments, please check this box and
write them on the back where indicated. |
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Please sign your name exactly as it appears hereon. When signing as attorney, executor, administrator, trustee or guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If a signer is a corporation, please sign in full corporate name by duly authorized officer.
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Yes |
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No |
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Please indicate if you plan to attend this meeting. |
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date |
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