DEF 14A of Timberland Bancorp Inc
Filed Dec 18, 2023 · FY20230000939057-23-000361
Vote Required to Approve Proposal 1: Election of Directors
Vote Required to Approve Proposal 1: Election of Directors Directors are elected by a plurality of the votes cast, in person or by proxy, at the annual meeting by holders of Timberland common stock. Accordingly, the four nominees for election as directors who receive the highest number of votes actually cast will be elected. Pursuant to our Articles of Incorporation, 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 because the nominees receiving the greatest number of votes will be elected. Our Board of Directors unanimously recommends that you vote FOR the election of each of its director nominees.
PROPOSAL 1 – ELECTION OF DIRECTORS
PROPOSAL 1 – ELECTION OF DIRECTORS Our Board of Directors consists of eight members and is divided into three classes. Approximately one-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. The table below sets forth information regarding each director of Timberland and each nominee for director. Mr. Brydon was appointed to the Board effective February 1, 2023 in connection with his promotion to Chief Executive Officer of Timberland. Mr. Drugge was appointed to the Board effective April 3, 2023 in connection with his retirement as Executive Vice President of Lending of Timberland. Mr. Brydon and Mr. Drugge were recommended for appointment to the Board by the Nominating and Governance Committee. The Nominating and Governance Committee of the Board of Directors selects nominees for election as directors. Each of our nominees currently serves as a Timberland director, and has consented to being named in this Proxy Statement and has agreed to serve if elected. If a nominee is unable to stand for election, the Board of Directors may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected. The Board of Directors recommends a vote FOR the election of Ms. Clinton, Ms. Leodler and Mr. Drugge, each for a term of three years, and Mr. Brydon for a term of two years.
PROPOSAL 1 – ELECTION OF DIRECTORS
| | Age as of | Year First Elected or | Term to | | Name | September 30, 2023 | Appointed Director (1) | Expire | | Board Nominees | | | | | Andrea M. Clinton | 66 | 1996 | 2027 (2) | | Robert A. Drugge | 72 | 2023 | 2027 (2) | | Kathy D. Leodler | 68 | 2017 | 2027 (2) | | Dean J. Brydon | 56 | 2023 | 2026 (2) | | Directors Continuing in Office | | | | | Parul Bhandari | 48 | 2021 | 2025 | | David A. Smith | 68 | 2000 | 2025 | | Michael J. Stoney | 54 | 2010 | 2026 | | Kelly A. Suter | 54 | 2020 | 2026 |
PROPOSAL 1 – ELECTION OF DIRECTORS
| _______________ | | (1) For years prior to 1998, includes prior service on the Board of Directors of Timberland Bank. Each member of our Board of Directors is also a member of the Board of Directors of the Bank. | | (2) Assuming re-election. |
PROPOSAL 1 – ELECTION OF DIRECTORS
Set forth below is the principal occupation of each nominee for director and each director continuing in office. All nominees and directors have held their present positions for at least five years unless otherwise indicated. Andrea M. Clinton, an interior designer, is the owner of AMC Interiors at Home and AMC Interiors, both of which are located in Olympia, Washington. Robert A. Drugge has been affiliated with Timberland since April 2006, serving as Executive Vice President of Lending from September 2006 until his retirement in March 2023. Prior to joining Timberland, Mr. Drugge was employed at Bank of America as a senior officer and most recently served as Senior Vice President and Commercial Banking Manager. Mr. Drugge began his banking career at Seafirst in 1974, which was acquired by Bank America Corp. and became known as Bank of America. Kathy D. Leodler is the founder and Chief Executive Officer of the Rampart Group LLC, based in Silverdale, Washington, that provides security, consulting and investigation and litigation support services to corporations, law- firms, small- and medium-sized businesses, and individuals. Ms. Leodler formed the Rampart Group LLC in 2011, after a 23-year distinguished federal law enforcement career as an FBI Special Agent and executive leader. She has also served as Director-Anti Piracy for the music industry and Director-Security for a medical technology company and a high net worth family and business. Dean J. Brydon was appointed as Chief Executive Officer of Timberland and Timberland Bank effective February 1, 2023. Mr. Brydon has been affiliated with Timberland since 1994, serving as Chief Financial Officer from January 2000 until January 2023, and as President from January 2022 until January 2023. Mr. Brydon is a Certified Public Accountant. Parul Bhandari currently leads Partner Strategy for the Worldwide Media and Communications Industry Solutions Team at Microsoft. Ms. Bhandari also led Data and AI for the Worldwide Public Sector, driving cross-industry partnerships, and engaging in global digital transformation initiatives. Prior to Microsoft, she was the VP of Business Development and Alliances at Acelsior. David A. Smith is a pharmacist and the former owner of Harbor Drug, Inc., a retail pharmacy located in Hoquiam, Washington. Michael J. Stoney is a licensed Certified Public Accountant and a partner in the accounting firm, Easter & Stoney, P.S. Kelly A. Suter is a technology executive with over 25 years of experience in software, data management and digital transformation. Since late 2017, she has been an independent consultant and executive to early stage companies. Prior to that she was the Chief Operating Officer at Calico Energy Services, which provided services to large investor-owned utilities. She has also held various technical, financial and/or operational roles in other regulated industries, including two payroll companies and Key Bank. She began her career as an auditor at Price Waterhouse and is a Certified Public Accountant (inactive status). The following table identifies the experience, qualifications, attributes and skills that led to the conclusion that the individual should serve as a director of Timberland.
PROPOSAL 1 – ELECTION OF DIRECTORS
| | Current or Past Owner of a Business Enterprise | CPA or Financial Expert | Technology Expert | Strong Community Presence or Involvement | Knowledge of Local Real Estate Markets | Current or Past CEO or President | | Parul Bhandari | | | X | X | X | | | Dean J. Brydon | | X | | X | X | X | | Andrea M. Clinton | X | | | X | X | X | | Robert A. Drugge | | X | | X | X | | | Kathy D. Leodler | X | | X | X | X | X | | David A. Smith | X | | | X | X | X | | Michael J. Stoney | X | X | | X | X | X | | Kelly A. Suter | X | X | X | X | X | X |
Board Diversity
Board Diversity As part of its director nominee evaluation process, the Board considers diverse viewpoints, backgrounds and experiences, as well as gender, age, race and ethnicity, as important in the selection of directors to enhance the Board’s diversity. The table below presents a summary of the Board’s diversity statistics, as required by Nasdaq. Each of the categories listed in the table below has the meaning as it is used in Nasdaq Rule 5605(f).
Board Diversity
| Board Diversity Matrix (As of December 18, 2023) | | | | | | Board Size: | | | | | | Total number of directors | 8 | | | | | Gender: | Female | Male | Non-binary | Gender Undisclosed | | Number of directors based on gender identity | 4 | 4 | -- | -- | | Number of directors who identify in any of the categories below: | | | | | | Asian | 1 | -- | -- | -- | | White | 3 | 4 | -- | -- |
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE MATTERS
AND CORPORATE GOVERNANCE MATTERS
Board of Directors
Board of Directors The Boards of Directors of Timberland and Timberland Bank conduct their business through board and committee meetings. Both Boards generally meet on a monthly basis, holding additional special meetings as needed. During the fiscal year ended September 30, 2023, the Board of Directors of Timberland held 12 meetings and the Board of Directors of the Bank held 12 meetings. No director of Timberland or Timberland Bank attended fewer than 75% of the total meetings of the boards and committees on which such person served during this period, including 100% committee attendance.
DIRECTORS’ COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Parul Bhandari | 40,920 | 16,422 | -- | 57,342 | | Andrea M. Clinton | 40,920 | 16,422 | -- | 57,342 | | Robert A. Drugge (2) | 20,460 | 16,422 | 190,127 (3) | 227,009 | | Kathy D. Leodler | 40,920 | 16,422 | -- | 57,342 | | David A. Smith | 40,920 | 16,422 | -- | 57,342 | | Michael J. Stoney | 40,920 | 16,422 | -- | 57,342 | | Kelly Suter | 40,920 | 16,422 | -- | 57,342 | | Jon C. Parker (4) | 30,690 | -- | -- | 30,690 | | ____________ | | | | |
Objectives and Overview of the Compensation Program
| • | to attract and retain key executives who are vital to our long-term success; |
Objectives and Overview of the Compensation Program
| • | to motivate executives to enhance long-term shareholder value by building their equity interest in Timberland. |
Compensation Consultant
Compensation Consultant From time to time, the Compensation Committee engages outside advisors to assist the Committee with its responsibilities. In 2023, the Compensation Committee retained Blanchard Consulting Group (“Blanchard”) to review Board compensation and to assist in developing a more formalized incentive plan for Timberland’s executive officers for the year ending September 30, 2024. Blanchard was retained by, and reports directly to, the Compensation Committee and provided no other services to Timberland in 2023. Based on SEC and Nasdaq standards regarding compensation advisor independence, as well as the analysis conducted by Blanchard in its independence review, the Compensation Committee concluded that Blanchard is an independent and conflict-free advisor to the Committee.
Elements of Compensation
Elements of Compensation The Compensation Committee focuses primarily on the following three components in forming the total compensation package for our executive officers: base salary; annual bonus; and long-term incentive compensation. The current compensation plans involve a combination of salary and annual bonus to reward short-term performance, and equity awards and contributions to the Timberland Bank 401(k) Plan as long-term incentive compensation, as well as to provide employees with a retirement benefit. There is no formula whereby one element of compensation is used to offset another element. Base Salary. Base salary is intended to create a secure base of cash compensation for executives and to reward an executive’s ongoing performance. Base salaries are standard in the banking industry for most positions, including executive positions. Timberland Bank’s Board of Directors approves an annual base salary for all senior officers and executive officers, based upon recommendations from the Compensation Committee. Annual base salaries are generally effective October 1st of each year. Factors considered in setting base salaries include the executive’s performance, our overall performance and compensation levels in the financial industry, among other factors. The salary levels of our executive officers are designed to be competitive with those of executives at similarly-sized institutions in our market area. Each year, management reviews the Northwest Financial Industry Salary Survey prepared by Milliman USA and provides salary range information to the Compensation Committees. Executive salaries generally fall within the ranges provided by the survey data; however, individual salaries may fall outside the range depending on an individual’s qualifications and contributions. Individual annual performance is reviewed by the Compensation Committee (in the case of the Chief Executive Officer) or the Chief Executive Officer (in the case of the other executive officers) to determine adjustments to compensation. The Compensation Committee also evaluates compensation in light of our annual financial performance. Material changes in compensation are rare but may be made to reward an executive for his or her contributions to our success. The Compensation Committee engaged Boardspan, a third-party service provided, to facilitate the evaluation of the Chief Executive Officer’s overall performance and achievement of annual goals and objectives. Annual Bonus. Bonuses are intended to reward performance in furthering our financial goals. Annual bonuses supplement base salary and allow us to provide a competitive pay package to our executive officers. We maintain a discretionary bonus plan which is based on profitability and various financial goals for each year. The former Chief Executive Officer, who retired on January 31, 2023, historically received a bonus equal to 0.70% of Timberland Bank’s net income, subject to a cap of 40% of base salary. For the 2023 fiscal year, the former Chief Executive Officer received this bonus (0.70% of Timberland Bank’s net income) for the four-month period during which he was employed. The current Chief Executive Officer and the other named executive officers had the potential to earn up to 30% of their base salary in annual bonuses for the year ended September 30, 2023. For the 2023 fiscal year, the bonuses to the current Chief Executive Officer and the other named executive officers were awarded on a subjective determination, but objective factors such as net income, net interest margin, asset quality, capital levels, and individual goals were also considered. The Compensation Committee has engaged Blanchard to assist in developing a more formalized incentive plan for Timberland’s executive officers for the year ending September 30, 2024. Long-Term Incentive Compensation. Long-term incentive compensation is intended to reward executives for their performance, while encouraging them to remain employed by Timberland and Timberland Bank. We grant long-term compensation in the form of equity awards and contributions to the Timberland Bank ESOP and 401(k) Plan. Equity-based compensation functions as a long-term incentive because awards are generally made with a five-year vesting schedule. In addition, the value of awards varies in part as a function of our financial performance. Awards are made either in the form of stock options or restricted stock. Awards may be subject to time- and/or performance-based conditions. We maintain the 2019 Equity Incentive Plan, which was approved by our shareholders. The plan is administered and interpreted by the Compensation Committee. Under the plan, the Committee determines which officers and key employees will receive awards, the number of shares subject to each option or shares of restricted stock awarded, and the vesting of the awards. In addition, newly hired employees may receive awards at the time of their employment. The per share exercise price of an option will equal at least 100% of the fair market value of a share of common stock on the date the option is granted. All equity-based awards are subject to the approval of the Board of Directors. Timberland Bank also maintains an ESOP and 401(k) Plan, which is for the benefit of employees with at least one year of service. Employees who have attained the age of 18 are eligible to participate in the 401(k) Plan and employees who have attained the age of 21 were eligible to participate in the ESOP. Shares held in the ESOP were released for allocation as the ESOP debt was repaid; as of March 31, 2019, all shares have been allocated. Each year, we make a contribution of at least three percent of each participant’s eligible compensation to the 401(k) portion of the plan.
Summary Compensation Table
Summary Compensation Table The following table shows information regarding compensation earned by our named executive officers: (1) Dean J. Brydon, our principal executive officer; and (2) our two next most highly compensated officers who earned in excess of $100,000, who are Jonathan A. Fischer and Matthew J. DeBord; and (3) Michael R. Sand, who served as principal executive officer until his retirement on January 31, 2023.
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | All Other Compen- sation ($)(2) | Total ($) | | Dean J. Brydon (3) | 2023 | 326,621 | 97,986 | 47,898 | -- | 18,780 | 491,285 | | Chief Executive Officer | 2022 | 243,360 | 73,008 | -- | 17,205 | 18,000 | 351,573 | | Jonathan A. Fischer (4) | 2023 | 295,000 | 88,500 | 47,898 | -- | 18,780 | 450,178 | | President and Chief Operating Officer | | | | | | | | | Matthew J. DeBord (4) | 2023 | 221,191 | 71,887 | 41,055 | -- | 17,472 | 351,605 | | Executive Vice President and Chief Lending Officer | | | | | | | | | Michael R. Sand | 2023 | 172,883 | 68,907 | -- | -- | 43,382 | 285,172 | | Former Chief Executive Officer (5) | 2022 | 518,650 | 166,157 | -- | 34,410 | 21,374 | 740,591 | | _____________ | | | | | | | |
Summary Compensation Table
| (1) Represents the aggregate grant date fair value of awards, computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 15 of the Notes to Consolidated Financial Statements in Timberland’s Annual Report on Form 10-K for the year ended September 30, 2023. | | (2) The following table reflects all other compensation paid to our named executive officers for the year ended September 30, 2023. |
Summary Compensation Table
| Name | 401(k) Plan Contribution ($) | Life Insurance Premiums ($) | Membership Dues ($) | Personal Use of Company Vehicle ($) | Board Fees ($) | | Dean J. Brydon | 18,300 | 480 | -- | -- | -- | | Jonathan A. Fischer | 18,300 | 480 | -- | -- | -- | | Matthew J. DeBord | 16,992 | 480 | -- | -- | -- | | Michael R. Sand | 18,300 | 104 | 3,936 | 582 | 20,460 |
Summary Compensation Table
| (3) Mr. Brydon served as President and Chief Financial Officer before being promoted to Chief Executive Officer on February 1, 2023. | | (4) Not a named executive Officer in 2022. | | (5) Mr. Sand retired as Chief Executive Officer effective January 31, 2023 and retired from the Board of Directors effective July 31, 2023. |
Summary Compensation Table
Employment Agreement. Timberland and Timberland Bank entered into an employment agreement with Dean J. Brydon on March 26, 2013, which was replaced with a new agreement on May 24, 2022. Timberland and Timberland Bank entered into an employment agreement with Jonathan A. Fischer on May 24, 2022. The agreements each have a term of three years and beginning on the first anniversary of the effective date, and will be extended for a year in addition to the then-remaining term unless either party gives at least 90 days prior written notice to the other that the employment period will not be extended, or the Board of Directors of Timberland or Timberland Bank (or in each case its designated committee) does not approve the renewal of the agreement. The agreements provide for an annual base salary of $350,000 and $310,000 for Mr. Brydon and Mr. Fischer, respectively, which is reviewed annually and may be increased at the discretion of the Board. Both agreements provide the executives will be eligible to receive performance-based and discretionary bonuses, as well as employee benefits on as favorable a basis as other similarly situated and performing senior executives of Timberland and Timberland Bank. The agreements provide that compensation may be paid in the event of the executive’s disability, death or termination, as described below under “Potential Payments Upon Termination.”
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table shows information regarding grants of plan-based awards made to our named executive officers for the fiscal year ended September 30, 2023.
Grants of Plan-Based Awards
| Name | Grant Date | Stock Awards: Number of Shares of Stock or Units (#)(1) | Grant Date Fair Value of Option Awards ($) | | Dean J. Brydon | 09/26/23 | 1,750 | 47,898 | | Jonathan A. Fischer | 09/26/23 | 1,750 | 47,898 | | Matthew J. DeBord | 09/26/23 | 1,500 | 41,055 | | Michael R. Sand | -- | -- | -- |
Grants of Plan-Based Awards
___________
Grants of Plan-Based Awards
| (1) Restricted stock awards vest ratably over the five-year period from the grant date, with the first 20% vesting one year after the grant date. |
Outstanding Equity Awards
Outstanding Equity Awards The following information with respect to outstanding equity awards as of September 30, 2023 is presented for the named executive officers. The named executive officers did not have any equity incentive plan awards.
Outstanding Equity Awards
| | | Option Awards (1) | | | | Stock Awards (1) | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expir- ation Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Dean J. Brydon | 01/24/14 | 4,000 | -- | 10.59 | 01/24/24 | | | | | 04/30/15 | 3,000 | -- | 10.55 | 04/30/25 | | | | | 09/22/15 | 2,000 | -- | 10.71 | 09/22/25 | | | | | 09/27/16 | 2,000 | -- | 15.67 | 09/27/26 | | | | | 09/23/17 | 2,000 | -- | 29.69 | 09/23/27 | | | | | 09/25/18 | 1,600 | -- | 31.80 | 09/25/28 | | | | | 09/24/19 | 1,200 | 300 | 27.14 | 09/24/29 | | | | | 09/22/20 | 1,500 | 1,000 | 16.87 | 09/22/30 | | | | | 09/28/21 | 1,000 | 1,500 | 28.23 | 09/28/31 | | | | | 09/27/22 | 500 | 2,000 | 27.40 | 09/27/32 | | | | | 09/26/23 | -- | -- | -- | -- | 1,750 | 47,425 | | Jonathan A. Fischer | 04/30/15 | 3,000 | -- | 10.55 | 04/30/25 | | | | | 09/22/15 | 2,000 | -- | 10.71 | 09/22/25 | | | | | 09/27/16 | 2,000 | -- | 15.67 | 09/27/26 | | | | | 09/23/17 | 2,000 | -- | 29.69 | 09/23/27 | | | | | 09/25/18 | 1,600 | -- | 31.80 | 09/25/28 | | | | | 09/24/19 | 1,200 | 300 | 27.14 | 09/24/29 | | | | | 09/22/20 | 1,500 | 1,000 | 16.87 | 09/22/30 | | | | | 09/28/21 | 1,000 | 1,500 | 28.23 | 09/28/31 | | | | | 09/27/22 | 500 | 2,000 | 27.40 | 09/27/32 | | | | | 09/26/23 | -- | -- | -- | -- | 1,750 | 47,425 | | Matthew J. DeBord | 09/23/17 | 2,000 | -- | 29.69 | 09/23/27 | | | | | 09/25/18 | 1,600 | -- | 31.80 | 09/25/28 | | | | | 09/24/19 | 1,120 | 280 | 27.14 | 09/24/29 | | | | | 09/22/20 | 400 | 800 | 16.87 | 09/22/30 | | | | | 09/28/21 | 800 | 1,200 | 28.23 | 09/28/31 | | | | | 09/27/22 | 400 | 1,600 | 27.40 | 09/27/32 | | | | | 09/26/23 | -- | -- | -- | -- | 1,500 | 40,650 | | Michael R. Sand | 09/23/17 | 5,000 | -- | 29.69 | 09/23/27 | | | | | 09/25/18 | 2,000 | -- | 31.80 | 09/25/28 | | | | | 09/22/20 | 1,000 | 2,000 | 16.87 | 09/22/30 | | | | | 09/28/21 | 2,000 | 3,000 | 28.23 | 09/28/31 | | | | | 09/27/22 | 1,000 | 4,000 | 27.40 | 09/27/32 | | | | _____________ | | | | | | | |
Outstanding Equity Awards
| (1) Equity awards vest ratably over the five-year period from the grant date, with the first 20% vesting one year after the grant date. |
Outstanding Equity Awards
| (2) Based on the closing price of Timberland common stock of $27.10 on September 30, 2023. |
Potential Payments Upon Termination
Potential Payments Upon Termination We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination and death. In addition, our equity plans also provide for potential payments upon termination. The following table shows, as of September 30, 2023, the value of potential payments and benefits following a termination of employment under a variety of scenarios.
Potential Payments Upon Termination
| | Involuntary Termination ($) | Involuntary Termination Following Change in Control ($) | Death ($) | Disability ($) | | Dean J. Brydon | | | | | | Employment Agreement | 957,376 | 824,317 | -- | -- | | Equity Plans | -- | 57,655 | 57,655 | 57,655 | | Jonathan A. Fischer | | | | | | Employment Agreement | 850,592 | 813,826 | -- | -- | | Equity Plans | -- | 57,655 | 57,655 | 57,655 | | Matthew J. DeBord | | | | | | Severance Plan | -- | 482,832 | -- | -- | | Equity Plans | -- | 48,834 | 48,834 | 48,834 | | Michael R. Sand | | | | | | Employment Agreement | -- | -- | -- | -- | | Equity Plans | -- | -- | -- | -- |
Potential Payments Upon Termination
Employment Agreements. Timberland and Timberland Bank entered into employment agreements with Mr. Sand, Mr. Brydon and Mr. Fischer effective March 26, 2013, May 24, 2022 and May 24, 2022, respectively. The agreements provide that compensation may be paid in the event of the executive’s disability, termination and death. Mr. Sand retired as Chief Executive Officer effective January 31, 2023 and his employment contract was terminated at that time. Mr. Brydon and Mr. Fischer’s employment agreements provide for severance benefits in the event the executive’s employment is terminated by Timberland and Timberland Bank, other than for cause or as a result of his death or disability, or if the employment is terminated by the executive for good reason (“Termination”). For a Termination not in connection with a change in control, Mr. Brydon and Mr. Fischer would be entitled to continued payments of their base salary as in effect at the time of Termination, plus continued medical, dental, life insurance, and other benefits for the remaining term of the agreement. For a Termination occurring after a change in control event, Mr. Brydon and Mr. Fischer would be entitled to receive an amount equal to 299% of his “base amount” as defined under Section 280G of the Internal Revenue Code, payable in a lump sum within 25 days of the change in control, and continued benefits for the remaining term of the agreement. The “base amount” excludes gains attributable to compensation related to equity awards provided by Timberland and Timberland Bank. The agreement is subject to the golden parachute payment restrictions of Section 280G and other regulatory provisions, as well as Timberland’s clawback policy. In the event of the death Mr. Brydon or Mr. Fischer while employed, Timberland and Timberland Bank will jointly pay to the executive’s estate, or such person as the executive may have previously designated in writing, the salary which was not previously paid to the executive and which he would have earned if he had continued to be employed under the agreement through the last day of the calendar month in which the executive died, together with the benefits provided hereunder through such date. Mr. Brydon and Mr. Fischer’s agreements provide that if the executive becomes entitled to benefits under the terms of the then-current disability plan, if any, of Timberland or Timberland Bank or becomes otherwise unable to fulfill his duties under the employment agreement, he shall be entitled to receive such group and other disability benefits, if any, as are then provided for executive employees. In the event of the executive’s disability, the agreement will not be suspended, except that (1) the obligation to pay the executive’s salary will be reduced by the amount of disability income benefits he receives and (2) upon a resolution adopted by a majority of the disinterested members of the Board of Directors or the Compensation Committee, Timberland and Timberland Bank may discontinue payment of the executive’s salary beginning six months following a determination that he has become entitled to benefits under the disability plan or is otherwise unable to fulfill his duties under the employment agreement. The agreements for Mr. Brydon and Mr. Fischer contain restrictive covenants prohibiting the unauthorized disclosure of confidential information of Timberland or its affiliates during and after his employment with Timberland and Timberland Bank. The agreements also prohibit the executive from competing with Timberland and its affiliates and for soliciting their employees or customers during employment and after termination of employment for any reason. The non-solicitation and non-competition provisions apply to Mr. Brydon and Mr. Fischer for a period of six months following any termination. Severance Plan. On March 26, 2007, Timberland and Timberland Bank adopted, and on March 26, 2017, amended, the Timberland Bank Employee Severance Compensation Plan, which provides eligible employees of the Bank with the potential to receive severance pay in connection with a change in control of Timberland or Timberland Bank. Mr. DeBord participates in this plan. Under the plan, if an executive’s employment with Timberland Bank is terminated or the executive terminates his employment for good reason (as defined in the plan) within one year following a change in control, the executive shall receive a lump sum cash payment equal to the product of the executive’s monthly compensation and his years of service (including partial years rounded to the nearest full year) from the executive’s date of hire through the date of termination. The plan further provides that officers holding a position of vice president or higher are entitled to a minimum payment equal to 18 times his/her monthly compensation and the maximum payment may not exceed one hundred fifty percent (150%) of the officer’s annual compensation. Equity Plans. The 2014 Equity Incentive Plan and 2019 Equity Incentive Plan provide that upon a change in control of Timberland followed by an involuntary termination of the award recipient within 12 months of the change in control or upon the termination of the award recipient’s service due to death or disability, all unvested awards under the relevant plan shall become exercisable in the case of stock options, or vest in the case of restricted stock, as of the date of the termination.
Pay Versus Performance
Pay Versus Performance In August 2022 pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the SEC adopted Item 402(v) of Regulation S-K, requiring information about the relationship between executive compensation actually paid to our named executive officers and Timberland’s financial performance.
Pay Versus Performance
| Year | Summary Compensa- tion Table Total for PEO (Brydon) ($)(1) | Compensa- tion Actually Paid to PEO (Brydon) ($)(2) | Summary Compensa- tion Table Total for PEO (Sand) ($)(1) | Compensa- tion Actually Paid to PEO (Sand) ($)(2) | Average Summary Compensa- tion Table Total for Non-PEO NEOs ($)(1) | Average Compensa- tion Actually Paid to Non-PEO NEOs ($)(2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($)(3) | Net Income ($) | | 2023 | 491,285 | 487,491 | 285,172 | 279,104 | 400,892 | 397,443 | 100.17 | 27,118,000 | | 2022 | -- | -- | 740,591 | 721,749 | 351,468 | 340,705 | 98.81 | 23,600,000 |
Pay Versus Performance
| (1) Dean J. Brydon was appointed as Chief Executive Officer (principal executive officer (“PEO”)) on February 1, 2023, succeeding Michael R. Sand. The compensation for Dean J. Brydon listed in the Summary Compensation Table for 2023 also includes $126,871 in compensation earned during the period (10/1/2022 - 1/31/2023) that he served as President and Chief Financial Officer. The compensation for Michael R. Sand listed in the Summary Compensation Table for 2023 also includes $20,460 for Board fees received after retiring as the Chief Executive Officer. The non-PEO named executive officers (“NEOs”) for 2023 are Jonathan A. Fischer and Matthew J. DeBord and for 2022 are Dean J. Brydon and Robert A. Drugge. |
Pay Versus Performance
| (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by Timberland’s NEOs. These amounts reflect the Summary Compensation Table totals with certain adjustments, as follows: |
Pay Versus Performance
| | 2023 | | | 2022 | | | Name | PEO (Brydon) ($) | PEO (Sand) ($) | Average of Non-PEO NEOs ($) | PEO ($) | Average of Non-PEO NEOs ($) | | Summary Compensation Table total | 491,285 | 285,172 | 400,892 | 740,591 | 351,468 | | Decrease for amounts reported under the Stock Awards column in the Summary Compensation Table | (47,898) | -- | (44,477) | (34,410) | (17,205) | | Increase for fair value at year-end of awards granted during year that remain unvested as of year-end | 47,425 | -- | 44,038 | 35,660 | 17,830 | | Decrease for change in fair value from prior period year-end to vesting date of award granted in prior years that vested during the year | (681) | (1,118) | (623) | (4,592) | (2,738) | | Decrease for change in fair value at year-end of awards granted in prior years that remain unvested as of year-end | (2,640) | (4,950) | (2,387) | (15,500) | (8,650) | | Compensation Actually Paid | 487,491 | 279,104 | 397,443 | 721,749 | 340,705 |
Pay Versus Performance
| (3) Total Shareholder Return assumes $100 invested on September 30, 2021, with all dividends reinvested. |
Pay Versus Performance
The following charts illustrate the relationship between the compensation actually paid to our named executive officers, calculated in accordance with Item 402(v) of Regulation S-K, and Timberland’s total shareholder returns on a cumulative basis, assuming an investment of $100 on September 30, 2021 and all dividends reinvested, and net income over the two most recently completed fiscal years.