DEF 14A of Sierra Bancorp, Apr 8, 2025

DEF 14A of Sierra Bancorp

Filed Apr 8, 2025 · FY20240001558370-25-004576

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Bylaws currently provide that the number of directors shall not be fewer than seven nor more than thirteen until changed by a bylaw amendment duly adopted by the vote or written consent of our shareholders. The Bylaws further provide that the exact number of directors shall be fixed from time to time, within the foregoing range, by a bylaw or amendment thereof or by a resolution duly adopted by the vote or written consent of our shareholders or by our Board of Directors. The exact number of directors is presently fixed at eleven. Pursuant to the Company’s Articles of Incorporation, the Board of Directors is divided into two classes, designated Classes I and II. The directors serve staggered two-year terms, so that directors of only one class are elected at each Annual Meeting of Shareholders. At the Meeting, shareholders will be asked to elect the following Class II directors for an additional term of two years to serve until 2027 and their successors are elected and have qualified:

  2. ELECTION OF DIRECTORS

    | Albert L. Berra | Julie G. Castle | | Vonn R. Christenson | Laurence S. Dutto | | Ermina Karim | |

  3. ELECTION OF DIRECTORS

    Since shareholders do not have cumulative voting rights in the election of directors, a plurality of the votes cast is required for the election of directors. See “VOTING SECURITIES” above. In the event that any of the nominees should be unable to serve as a director, it is intended that the Proxy will be voted for the election of such substitute nominee, if any, as shall be designated by the Board of Directors. Management has no reason to believe that any nominee will become unavailable.

  4. Director Nomination Procedures, Qualifications and Related Matters

    Director Nomination Procedures, Qualifications and Related Matters Procedure for Consideration of Director Nominees. Prior to making any recommendations to the Board of Directors concerning the nomination of directors for each year’s annual meeting, the Nominating and Governance Committee (the “Governance Committee”) shall (i) evaluate the performance, attendance records of, and any loans or other transactions between the Company or the Bank and each of the current Board members proposed for reelection, and on that basis consider the appropriateness of such members standing for reelection; (ii) review the composition and size of the Board in order to ensure that the Board is comprised of members reflecting the proper expertise, skills, attributes and personal and professional backgrounds for service as directors of the Company; (iii) consider the need to augment the Board for any specific purpose; (iv) review and consider any additional requests from outside parties to serve as directors; (v) if a new nominee is needed, determine the specific skills and experience desired in a new director; and (vi) in such case, identify potential nominees who have such skills and experience, determine whether the potential nominees are shareholders of the Company, investigate the potential nominee’s background, develop personal knowledge about the candidate, develop a consensus of the committee members with respect to which potential nominee would be best suited for the position, determine whether the candidate is interested, and vote on the recommendation. The Governance Committee shall consider recommendations from directors, officers and employees of the Company and the Bank, as well as persons recommended by shareholders of the Company, and shall evaluate persons recommended by directors, officers, or employees in the same manner as those recommended by shareholders in selecting Board nominees. Director Qualifications. In considering a possible candidate for election as a director, the Governance Committee shall be guided by the principle that each director should: (i) be an individual of the highest ethical character and integrity; (ii) have substantial experience which is of particular relevance to the Company; (iii) have the ability and willingness to devote sufficient time to the affairs of the Company; (iv) have a meaningful financial stake in the Company so as to assure that every director’s interests are aligned with those of the shareholders; (v) be knowledgeable about the business activities and market areas in which the Company and its subsidiaries engage; (vi) have a general appreciation regarding major issues facing public companies of a size and operational scope similar to the Company, including contemporary governance concerns, regulatory obligations of a public issuer, strategic business planning, competition in a global economy, and basic concepts of corporate accounting and finance; (vii) live or work within 25 miles of an existing or proposed office of the Bank; (viii) have an excellent personal and professional reputation in and commitment to one or more communities in which the Company does business; (ix) serve or have served as chief executive officer or in another position of active leadership with a business or professional interest located within the market areas served by the Company and its subsidiaries; (x) have an inquiring mind, a willingness to ask hard questions, and the ability to work constructively with others; (xi) have the ability and desire to exercise independent thinking when considering matters brought before the Board, and not be unduly influenced by the opinions of others; (xii) have no conflict of interest that would interfere with his or her performance as a director; and (xiii) have the capacity and desire to represent the best interests of the shareholders as a whole and not primarily a specific interest group or constituency. While the Board and the Governance Committee believe that every director should possess as many of the foregoing attributes as possible, the Governance Committee has not recommended, and the Board has not established, any specific group of such attributes to be considered “minimum qualifications” for serving as a director. In considering the desirability of any particular candidate as a potential director, the Governance Committee shall also consider the contributions that a candidate can be expected to make to the collective functioning of the Board based upon the totality of the candidate’s credentials, experience and expertise, the composition of the Board at the time, and other relevant circumstances, including the fit of the individual’s skills and personality with those of other directors and potential directors in building a Board that is effective, collegial and responsive to the needs of the Company. Board Diversity, Qualifications, and Experience. As currently comprised, the Board of Directors is a diverse group of individuals drawn from various market sectors and industry groups with a presence in the Company’s markets. The board, including nominees, includes five female directors and three directors that are also members of an under- represented community. The Board considers diversity as one of many factors in evaluating the composition of the Board but has no set policy in this regard. Board members are individuals with knowledge and experience who serve and represent the communities we serve. Current Board representation provides backgrounds in accounting, banking, farming, legal, manufacturing, and retail. The expertise of these individuals covers accounting and financial reporting, corporate management, strategic planning, business acquisitions, legal matters, marketing, retail, and small business operations. What follows is a brief description of the particular experience, attributes, and qualifications of each member of the Company’s Board of Directors that led to the conclusion that these individuals should serve as directors of the Company. Morris A. Tharp is an original proponent of the Bank and has served as Chairman of the Board of the Bank and of Sierra Bancorp since their formations in 1977 and 2000, respectively. He also serves as Chairman of the Nominating and Governance Committee (“Governance Committee”) and has served on the Audit Committee and Compensation Committee for many years. Mr. Tharp is a native of Porterville and following his schooling, joined his father in the family business of E.M. Tharp, Inc. Over the years, he has purchased the family business and is now sole owner. For many years he has been very involved in community activities. Mr. Tharp was selected to serve on the Board because of his involvement in the formation of the Bank, his lengthy experience as a bank director and accumulated knowledge of the Company’s operations, his leadership qualities and management expertise gained by owning and running his own company, and his involvement in the local community.

  5. Director Nomination Procedures, Qualifications and Related Matters

    Susan M. Abundis joined the Boards of both Bank of the Sierra and Sierra Bancorp on December 17, 2020. Ms. Abundis serves as the Chairperson of the Board Credit Committee and also serves on the Compensation and Nominating and Governance Committees. Ms. Abundis has 40 years of banking experience and is currently on the Board of Trustees at Community Medical Center, California Health Sciences University, and Tesoro Viejo Conservancy. Most recently, she was Chief Operating Officer at Wellness Clinic at California Health Sciences University in Clovis. Her last banking role was as Managing Director–Division Credit Manager at Bank of the West–BNP, where she started as an Area Manager and Senior Vice President. Abundis also held several jobs at Bank of America culminating in her position as Market President, Area Manager and Senior Vice President. Originally from Chowchilla, she currently resides in Fresno, earned her bachelor’s degree at California State University Fresno (“CSUF”), and a Graduate Degree of Banking at the University of Washington’s Pacific Coast Banking School. Among her many professional awards, Abundis was named Woman of the Year by both Soroptimist of Ventura and Girl Scouts of America–Tres Condados of Ventura County, Common Thread Award – Ag One at CSUF, Women Worth Watching 2014, and the Marjoree Mason Center’s list of Top Ten Women of the Year. In selecting Ms. Abundis to serve as a director, the Board considered her extensive banking industry knowledge and network and her involvement in the local community. Albert L. Berra has been a director of the Bank and of Sierra Bancorp since their formations in 1977 and 2000, respectively. He has served on numerous committees of the Bank and the Company throughout that time and is currently Chairman of the Compensation Committee and a member of both the Audit and Governance Committees. A native of Porterville, Dr. Berra attended the University of California, Berkeley after high school and went on to St. Louis University to complete his dental and orthodontic training. After service in the U.S. Army, Dr. Berra returned to Porterville to establish his orthodontic practice, which he operated continuously since his return until he retired and sold his practice in 2014. He also runs a farming operation in the area. Dr. Berra is involved in many community activities. Dr. Berra was selected as a nominee because of his involvement in the formation of the Bank, his lengthy experience as a bank director and accumulated knowledge of the Company’s operations, his experience operating his own business, his agricultural expertise, and his active involvement in the local community. Julie G. Castle joined the Boards of both Bank of the Sierra and Sierra Bancorp on December 17, 2020. Ms. Castle currently serves as the Audit Committee Chairperson and also serves on the Compensation and Nominating and Governance Committees. Ms. Castle’s career has included over 35 years of financial services experience, including 11 years in the roles of President and/or CEO and 10 years of board service for a variety of companies. Most recently, Ms. Castle served as President, Chief Banking Officer, and Board Member for Rabobank, N.A., a $15 billion national bank. In addition to serving on the Rabobank, N.A. board, she was a board member of First Interstate Bank, Zions Trust, N.A., and the Pacific Coast Banking School, as well as a member of various non-profit boards. She has held leadership and executive roles at institutions large and small including Bank of America, First Interstate Bank, Zions Bancorporation, and Cannon Financial Institute. Ms. Castle earned a B.S. degree from UC Davis and a Graduate Degree of Banking at the University of Washington’s Pacific Coast Banking School. Ms. Castle was selected as a nominee by the Board due to her extensive banking industry knowledge and her strong financial acumen. Vonn R. Christenson was appointed to the Boards of the Bank and of Sierra Bancorp effective September 15, 2016. Mr. Christenson currently serves as the Chairperson of the Finance and Sustainability Committee and also serves on the Compensation and Nominating and Governance Committees. Mr. Christenson graduated from Brigham Young University with honors in 2003 and earned his J.D. at Harvard Law School in 2006. After working for a time as an attorney in Orange County, California, Mr. Christenson joined the Christenson Law Firm in Porterville, California, specializing in business and contract disputes, personal injury, and intellectual property litigation. Mr. Christenson is also the CEO and Co-Founder of Zero Nox, Inc., which provides a platform for clean energy technologies to come to market, specializing in microgrids and electric powertrain solutions for off-highway vehicles. He currently resides in Porterville and is actively involved in the community including with the Porterville Optimist Club, and the Porterville Unified School District Academy of Law, Justice & Ethics Advisory Board. In selecting Mr. Christenson as a nominee, the Board considered Mr. Christenson’s active involvement in the local community, his stellar educational background, and his ability to add a unique legal perspective to Board discussions. Laurence S. Dutto, Ph.D., was appointed to the Boards of the Bank and of Sierra Bancorp effective September 15, 2016. Dr. Dutto currently serves on the Risk, Nominating and Governance and Finance and Sustainability Committees. Dr. Dutto, a resident of Visalia, California, is a retired college administrator with extensive hands-on agricultural experience. His decorated 30-year career at College of the Sequoias in Visalia, California includes service as Provost of the Tulare College Center, Dean of Academic Services, Dean of Technical Education, Agriculture Division Chair, and Faculty Academic Senate President. His prior experience includes 15 years working on his family’s dairy farm, and he currently is in a partnership with his sister growing almonds. In selecting Dr. Dutto as a nominee, the Board considered his management and administrative expertise and his community connections, and his ability to help strengthen the Bank’s ties to the local agricultural community. Michele M. Gil (Andujo) was elected as a director May 25, 2022. Mrs. Gil currently serves on the Risk and Finance and Sustainability Committees. Mrs. Gil is Managing Partner and majority equity owner with more than 20 years of recruiting and management experience at the Los Angeles-based Chrisman & Company, a national executive search consultancy to financial and related industries. She leads the firm’s board of directors practice as well as searches for senior/executive management positions, including C-level positions, for prominent clients in banking and financial services. Clients include regional and community banks, investment banks, wealth management firms, FinTech’s, credit unions, as well as other sectors in the financial services industry. Mrs. Gil has experience working with bank regulatory agencies (FDIC, OCC, Federal Reserve and DFP&I). She consults with boards of directors and executive teams on issues concerning succession planning, leadership development and human capital strategies. Mrs. Gil holds a Bachelor of Science degree from the University of Southern California. She has served on the Diversity & Inclusion Advisory Committee and the Women in Banking Committee for the Western Bankers Association and has been a guest speaker to financial institutions and banking associations. She currently serves as a board member of the International Bankers Association of California. Mrs. Gil was selected to serve as a director due in part to her management and leadership expertise gained by owning and operating her company, her involvement in the banking industry as a recruiter, and her involvement in the local community.

  6. Director Nomination Procedures, Qualifications and Related Matters

    James C. Holly is a founding Director and Vice Chairman of the Board of both the Bank and Sierra Bancorp and currently serves as a member of the Finance and Sustainability and Credit Committees. He served as President and Chief Executive Officer of the Bank and Sierra Bancorp from their formations in 1977 and 2000, respectively, until January 1, 2014, when Mr. McPhaill was appointed President and Chief Operating Officer of both entities. Mr. Holly continued to serve as Chief Executive Officer of both entities until he retired on March 31, 2015, and was appointed Vice Chairman of the Board effective April 1, 2015. He was born and raised in Racine, Wisconsin and received both a BBA and an MBA degree from the University of Wisconsin. Mr. Holly is also a graduate of the Southwestern Graduate School of Banking at Southern Methodist University and served as a Commissioned Officer in the U.S. Army (Armor). He began his banking career with United California Bank, now Wells Fargo Bank. After 10 years as a branch manager, Mr. Holly left United California Bank and joined in the effort to organize Bank of the Sierra of which he served as President and Chief Executive Officer from its inception in 1977 until January 1, 2014, and served as Chief Executive Officer until his retirement in March 2015. He is a current director of the Sequoia Parks Conservancy, a philanthropic and educational organization, and a director of River Island Country Club. Mr. Holly was selected to serve as a director because of his leadership capabilities; his long tenure and strong track record as President and CEO of the Bank; his deep understanding of bank lending, operations, and financial management resulting from his banking background; his extensive network in the banking industry; his knowledge of the local economy; and his involvement in the local community. Kevin J. McPhaill has been a director of the Bank and of Sierra Bancorp since January 1, 2015, and was appointed President and Chief Executive Officer of the Company and the Bank effective April 1, 2015. Mr. McPhaill is a native and current resident of Visalia, California, and his educational background includes a bachelor’s degree from Fresno Pacific University, a master’s degree in business administration from Fresno State, and the successful completion of post-graduate training at the Southwestern Graduate School of Banking at Southern Methodist University. He has been employed by Bank of the Sierra since June 2001, starting as the regional manager of the Hanford area, then progressing to Executive Vice President and Chief Banking Officer of the Company and the Bank in 2006, to President and Chief Operating Officer of the Company and the Bank in 2014, and to his current positions on April 1, 2015. Mr. McPhaill serves as a member of the Risk, Credit and Finance and Sustainability Committees. McPhaill is involved in the local community and is active in financial education outreach efforts to primary and secondary schools in the Bank’s market areas. Mr. McPhaill also sits on the Tulare County Economic Development Corporation’s Board of Directors. Mr. McPhaill was selected to serve as a director because of his leadership abilities; his extensive experience at the Bank and other financial institutions; his knowledge of the Bank’s culture; his lending, operations, and management experience; and his insight into key factors that drive the Bank’s financial success. Ermina Karim was elected as a director May 25, 2022. Ms. Karim currently serves as a member of the Risk, Nominating and Governance and Credit Committees. Ms. Karim holds a Bachelor of Science degree in Journalism and Economics from Northwestern University. She has worked in a number of industries including journalism, finance and non-profits with roles such as reporter, editor, Vice President of equity capital markets and CEO. Ms. Karim has experience with several companies ranging in size and complexity, including International Financing Review, Credit Suisse, The Tribune, and the San Luis Obispo Chamber of Commerce. In addition to her vocational background, Ms. Karim serves on a number of boards including President’s Local Economic Development Council Cal Poly, French Hospital Medical Center and REACH (Regional Economic Action Coalition Central Coast of California) among others. Ms. Karim has lived and worked in San Luis Obispo for several years and was recognized as a Top 20 Under 40 by the San Luis Obispo Tribune, 40 Under 40 by the Pacific Coast Business Times and Top Women in Business by the Pacific Coast Business Times. In selecting Ms. Karim as a nominee, the Board considered her extensive involvement in the local community, her experience in the financial services industry, and her leadership skills. Lynda B. Scearcy has been a director of the Bank and of Sierra Bancorp since December 2007. She has been a valuable member of the Audit Committee since that time and is currently designated as an audit committee financial expert, while also chairing the Risk Committee. Ms. Scearcy also serves on the Nominating and Governance Committee. Scearcy received her undergraduate degree from the University of Florida and her master’s degree in taxation from San Joaquin College of Law. Ms. Scearcy is a retired tax professional. She was previously the tax partner at McKinley Scearcy Associates, an accounting and consulting firm which she joined in 1983. McKinley Scearcy Associates sold to H&R Block in November 2014, and Ms. Scearcy retired from the firm in September 2017. She is deeply committed to the community, as demonstrated by her involvement with, among others, the Rotary Club of Porterville (Past President), Porterville Chamber of Commerce (Past Treasurer), Tule River Economic Development Corporation (Past Treasurer) and Tulare County Office of Education Foundation (Past Board Member). Ms. Scearcy was selected to serve as a director because of her strong educational background, her experience as a partner and leader at her accounting and consulting firm, her deep understanding of accounting and tax issues, her financial acumen, and her strong commitment to and involvement in the local community. Consideration of Shareholder Recommendations. In considering any additional requests from outside parties to serve as directors, including parties recommended by shareholders, the Governance Committee shall follow the same principles outlined above, and shall request of any potential nominee such information, including a completed Directors’ and Officers’ Questionnaire of the same type completed by each of the Company’s existing directors and executive officers each year in connection with the preparation of the Company’s proxy materials, as the Committee deems necessary to enable it to properly evaluate such person’s qualifications and to be aware of any information concerning such person which might require disclosure to shareholders pursuant to SEC rules concerning proxy statements.

  7. Director Nomination Procedures, Qualifications and Related Matters

    A shareholder wishing to submit recommendations for director candidates for election at an annual meeting of shareholders must do so in writing by December 16th of the previous calendar year, and must include the following in the written recommendation: (i) a statement that the writer is a shareholder and is proposing a candidate for consideration; (ii) the name and contact information for the candidate; (iii) a statement of the candidate’s business and educational experience; (iv) information regarding the candidate’s qualifications to be a director; (v) the number of shares of the Company’s stock owned either beneficially or of record by the candidate and the length of time such shares have been so owned; (vi) the written consent of the candidate to serve as a director if nominated and elected; (vii) information regarding any relationship or understanding between the proposing shareholder and the candidate; (viii) a statement that the proposed candidate has agreed to furnish to the Company all information (including a completed Directors’ and Officers’ Questionnaire as described above) as the Company deems necessary to evaluate such candidate’s qualifications to serve as a director; and (ix) as to the shareholder giving the notice, the name and address of the shareholder and the number of shares of the Company’s stock which are owned beneficially or of record by the shareholder. Nominations by Shareholders. The procedure and requirements for shareholders to nominate directors (as opposed to making recommendations as described above) are set forth in our Bylaws, which provide in pertinent part as follows: “Nominations for election of members of the Board of Directors may be made by the Board of Directors or by any shareholder entitled to vote for the election of directors. Notice of intention to make any nominations by a shareholder shall be made in writing and shall be delivered or mailed to and received by the Secretary of the Corporation not less than one hundred twenty (120) calendar days in advance of the date corresponding to that on which the Corporation’s proxy statement was released to the shareholders in connection with the previous year’s annual meeting of shareholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than thirty (30) days from the date contemplated at the time of the previous year’s proxy statement, notice by the shareholder must be received by the Secretary of the Corporation not later than the close of business on the later of (i) one hundred and twenty (120) days prior to such annual meeting; or (ii) ten (10) days after the date the notice of such meeting is sent to shareholders pursuant to Section 2.2(d) of these Bylaws…. Such notification shall contain the following information to the extent known to the notifying shareholder: (a) the name and address of each proposed nominee; (b) the principal occupation of each proposed nominee; (c) the number of shares of voting stock of the Corporation owned by each proposed nominee; (d) the name and residence address of the notifying shareholder and the beneficial owner, if any, on whose behalf the nomination is made; and (e) the number of shares of voting stock of the Corporation owned beneficially and of record by the notifying shareholder and such beneficial owner.” For our 2026 Annual Meeting of Shareholders, written notice of intention to make any nominations must be received no later than December 9, 2025. Board Leadership Structure. The Company is focused on corporate governance practices, and independent Board oversight is valued as an essential component of strong corporate performance to enhance shareholder value. Our commitment to independent oversight is demonstrated by the fact that all but one of our current directors are independent. In addition, all current members of the Board’s Audit, Compensation, and Nominating and Governance Committees are independent. The Company currently has an independent Chairman separate from the Chief Executive Officer, and our corporate governance guidelines specify that these two positions should be kept separate except in unusual circumstances. Such circumstances have not occurred in the Company’s history. The Board believes it is important to maintain flexibility in its leadership structure but firmly supports having an independent director in a board leadership position. If for any reason it was necessary for the Chairman to also hold the office of Chief Executive Officer temporarily, the Board would appoint an independent lead director to serve in an independent leadership position during this time. Having an independent Chairman or lead director enables non-management directors to raise issues and concerns for Board consideration without immediately involving management. The Chairman provides independent leadership of the Board and also serves as a liaison between the Board and senior management. The Board has determined that the current structure, with an independent Chair, separate from the Chief Executive Officer, is the most appropriate structure at this time, while ensuring that, at all times, there will be an independent director in a Board leadership position. Board Role in Risk Oversight. Risk is inherent with every business, and how well a firm manages risk can ultimately determine its success. The Company faces a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk, regulatory risk, market risk and reputational risk. Management is responsible for the day-to-day identification and measurement of these risks, while the Board, as a whole and through its committees, is responsible for oversight of management actions in addressing those risks. The Risk Committee is responsible for overseeing the Company’s enterprise risks and establishing a risk appetite statement for the full Board to review and approve. The Risk Committee receives regular reports regarding the Company’s compliance risks, including Bank Secrecy Act/Anti-Money Laundering, Cyber Security, Information Security, Operational Risks, Business Continuity, and Vendor Risk. In addition, the Risk Committee reviews the Company’s business continuity and model validation programs, oversees the Company’s insurance program and Community Reinvestment Act compliance, and coordinates with other Committees on other key risks. The Audit Committee is responsible for overseeing the Company’s financial reporting risk and the entire audit function, and it evaluates the effectiveness of internal and external audit efforts. It receives a status report from the Company’s Director of Internal Audit on at least a quarterly basis regarding the adequacy and effectiveness of internal control systems, including the design and operating effectiveness of the Company’s internal controls over financial reporting. The Director of Internal Audit will also present annually to the Board an internal audit plan for the coming year. It is the Committee’s responsibility to review and approve the internal audit plan and to ensure it meets the needs of the organization. The Credit Committee is responsible for overseeing, establishing, and monitoring risk tolerances with respect to credit risk, including concentrations. The Finance and Sustainability Committee is responsible for the oversight of interest rate risk, liquidity risk, and capital risk. The Finance and Sustainability Committee also oversees Environmental, Social and Governance risk items.

  8. Director Nomination Procedures, Qualifications and Related Matters

    The Board considers the most significant risks facing the Company and the Company’s general risk management strategy, to ensure that risks undertaken by the Company are consistent with the Board’s stated risk appetite. In its risk oversight role, the Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed. The Chairman of the Board and other independent directors work together to provide strong, independent oversight of the Company’s management and affairs directly and through its standing committees and, when necessary, special meetings of independent directors. The Board believes this structure and division of responsibility is an effective approach in identifying and mitigating risks. Although seemingly well suited to this purpose, the Company will continue to regularly reevaluate the Board leadership structure to ensure appropriateness in the face of various situations and circumstances. Employee, Officer and Director Hedging. The Company does not allow directors and executive officers to enter into short sales of common stock or similar hedging or other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of our equity securities or where potential gains are linked to a decline in the price of our stock. Recipients of equity awards also may not enter into any agreement that has the effect of transferring or exchanging any economic interest in an award for any other consideration. Further, directors and executive officers, as well as all officers of the Company, are prohibited from pledging Company securities as collateral for a loan or holding Company securities in a margin account.

  9. Compensation Philosophy and Objectives

    Compensation Philosophy and Objectives Our primary objectives with respect to executive compensation are to attract and retain the most talented and dedicated executives possible, and to align their interests with those of our shareholders. To that end, we strive to maintain compensation plans that are competitive relative to those of similar publicly traded banking institutions, and to provide a substantial level of at-risk compensation for our executives that depends in part on the Company’s financial performance. Compensation for our Named Executive Officers consists primarily of the following elements, which are discussed in greater detail below: base salary; annual discretionary bonuses based on performance guidelines; and longer-term incentive awards including restricted stock and stock option grants, and salary continuation agreements. The Compensation Committee periodically evaluates and adjusts the types and weighting of these components to support Company objectives.

  10. Targeted Compensation

    In November 2023, the Compensation Committee recommended to the Board the grant of additional restricted stock awards to the Named Executive Officers, which unanimously approved those recommendations. The amount of the restricted stock awards granted in November 2023 was $250,000 for the Chief Executive Officer and $150,000 each to the Chief Financial Officer, Chief Banking Officer, and the Chief Credit Officer. Half of the restricted awards were time-based and vest ratably over three years. The remaining half of the restricted stock award is performance-based and vests at the end of three years. With respect to the performance-based restricted stock awards, 100% vests if the Company’s 3-year average Return on Average Assets (ROAA) is at the 50th percentile as compared to the peer average ROAA over the same 3-year period. None of the performance-based awards vest if actual performance is below the 30th percentile as compared to peers and 150% of the performance-based awards will vest if actual performance is at or above the 75th percentile as compared to peers. Vesting for actual performance between the different performance targets is determined by interpolation. The total restricted stock awards granted to the CEO was approximately 39% of his base salary for 2023 and the total restricted stock awards granted to the other Named Executive Officers ranged from approximately 34% to 38% of each of their base salaries for 2023. In addition, in November 2023, the Compensation Committee granted $400,000 of time-based restricted stock to the Chief Risk Officer as part of her employment agreement upon being hired in the third quarter of 2023. The restricted stock grant to the Chief Risk Officer vests ratably over 5 years. No restricted stock was granted to the Named Executive Officers during 2024. The independent members of the Board of Directors and the Compensation Committee adopted a new formula for calculating restricted stock grants. The first grant under the new formula was made in February 2025. This formula considers the Company’s relative performance to peers to determine the value of restricted stock to grant to the Named Executive Officers. Each Named Executive Officer’s grant will vary based on their Total Compensation relative to peers in order to begin to move Total Compensation at Target closer to peer median for the Named Executive Officers. However, performance above peer median is expected to result in higher than peer median total compensation. Conversely, over time performance below peer median is expected to result in lower than median total compensation when combined with other components of total compensation. Specifically, if current year ROAA is at peer median, restricted stock equal to 25% to 50% of base compensation will be granted to each executive. If current year ROAA is at the 75th percentile of peers, the grant will be increased by 10% to 25% of base compensation. If current year ROAA is at the 25th percentile of peers, the grant will be decreased by 15% to 25%. The actual grant will also be split between time-based and performance-based awards. For the CEO and the CBO, 50% of the grant will be performance based. For the CFO, 35% of the grant will be performance-based and the other Named Executive Officers will have 25% of the grant be performance-based. The performance criteria will be determined by the Compensation Committee for each grant but is expected to generally be a Company specific financial metric such as the average Return on Average Assets or Return on Average Equity over the three-year period. In January 2025, the Board of Directors authorized the Compensation Committee to grant shares under the Board-approved restricted stock granting formula. In February 2025, upon the reporting of year-end results by nearly all peers, the Compensation Committee determined that the Company achieved a 2024 peer performance just above the 74th percentile of peers. The CEO was granted restricted stock awards equal to 74.4% of his base salary. The CBO and the CFO were granted restricted stock awards equal to 49.8% of their respective base salaries, whereas the CCO and the CRO were granted restricted awards equal to 39.6% of their respective base salaries. The performance criteria for the performance-based portion of the award was determined to be an average three-year ROAA of at least 1.14% to achieve Target performance. Actual performance below Target will result in a reduction in vesting of the performance-based shares and actual performance below 50% of Target will result in no performance-based shares vesting. The time-based awards will vest ratably over three years. Factoring in base salaries, assuming an incentive bonus payout at target, and the value of stock grants at target performance, the potential Total Compensation for Named Executive Officers for 2024 was at the following percentile rankings relative to the Peer Group’s adjusted 2024 compensation data (as noted above, the adjusted Peer estimate incorporates 3% annual increase): the 59th percentile for the CEO, the 54th percentile for the CFO, the 64th percentile for the CBO, the 79th percentile for the CCO, and the 75th percentile for the CRO. Based on actual 2024 compensation, including base salary, a cash incentive payout of 105.48% of target and no receipt of equity-based compensation in 2024, the Actual Total Compensation for Named Executive Officers relative to the Peer Group’s adjusted 2024 compensation data was at the following percentile rankings: the 43rd percentile for the CEO, the 37th percentile for the CFO, the 60th percentile for the CBO, the 71st percentile for the CCO, and the 64th percentile for the CRO.

  11. Employment Agreements

    Employment Agreements In December 2018, the Company entered into employment agreements with the Chief Executive Officer and the Chief Banking Officer that commenced on January 1, 2019 with initial terms of three years, with evergreen renewals for one-year terms subsequent to the initial term unless either the executive or the Company provides notification of non-renewal to the other party at least six months in advance of the renewal date. Similar agreements were entered into with the Company’s new executive officers upon commencement of their employment, Mr. Treece’s employment agreement became effective in January 2020, Mr. Boyle’s employment agreement became effective in December 2020 and Ms. Coen’s employment agreement became effective in August 2023. The agreements specified minimum annual base salaries as well as annual discretionary bonuses of up to 75% of annual base salary for Mr. McPhaill and 50% of annual base salary for the other Named Executive Officers. Mr. Treece’s employment agreement authorized the grant of 20,000 stock options to vest ratably over 5-years, whereas Mr. Boyle’s and Ms. Coen’s employment agreements authorized the grant of $400,000 of restricted stock to vest ratably over 5-years. The agreements also note the basic terms and conditions of other benefits, delineate permitted outside activities, and provide indemnification for the executives for certain circumstances. Each agreement includes noncompetition, non-solicitation and nondisclosure conditions applicable to the executives. The employment agreements automatically terminate in certain circumstances, including the following: the death or incapacity of the executive; termination of the executive’s employment for cause; or a change in control of Sierra Bancorp. For such automatic terminations, there is no further obligation on the part of the Company to make payments or provide any benefits pursuant to an agreement except in the case of a change in control of the Company. Furthermore, the agreements stipulate that the Company may terminate the employment of the named executive officer with 30 days prior written notice to the executive, and the executive may terminate his agreement and his employment with the Company at any time with 90 days prior written notice to the Company. Under the Employment Agreements, as amended on January 19, 2023, in the event of a change in control, or if the Company initiates termination of employment for a reason other than one which constitutes an automatic termination, the Company will provide the executive(s) with the payments and benefits that are outlined below under “EXECUTIVE OFFICER AND DIRECTOR COMPENSATION – Potential Payments Upon Termination or Change in Control.” An executive’s receipt of severance benefits of any kind pursuant to his employment agreement is conditioned upon his execution of the full and complete release of any and all claims against Sierra Bancorp and Bank of the Sierra and their respective affiliates, directors, officers, employees, agents, attorneys, insurers, and successors in interest, arising from or in any way related to executive’s employment or termination of executive’s employment. The employment agreements do not include a tax gross-up for any taxes, including excise taxes, owed in a change-of-control. In February 2024, the Compensation Committee voted to explicitly prohibit any tax gross-ups in any change-in-control arrangement or equity compensation plan.

  12. Elements of Executive Compensation

    Elements of Executive Compensation Base Salary. Base salaries for our executives are dependent on the scope of their responsibilities, taking into account competitive market compensation paid by similar companies for comparable positions. Base salaries are reviewed and adjusted annually, as necessary, to realign them with market levels based upon individual responsibilities and work experience. Discretionary Annual Incentive Bonus. The Board of Directors has the authority to award discretionary annual cash bonuses to the Named Executive Officers based on the recommendations of the Compensation Committee. The Board has adopted an incentive bonus plan for Named Executive Officers that is dependent on individual performance, as determined by the Compensation Committee and the Board with input from the CEO in the case of the other Named Executive Officers, and the Company’s financial performance relative to Board-approved targets. Earnings targets and individual performance goals are carefully established to provide a challenge, while at the same time being realistically achievable without engaging in activities posing excessive risk. The Board establishes potential levels for incentive bonuses at the start of each fiscal year, based on the recommendations of the Compensation Committee. Bonuses for any given calendar year are typically accrued as an expense by the Company during the year for which they are applicable but are not paid until March of the following year, upon completion of the auditors’ required communications with the Audit Committee, and after the review and approval of bonus recommendations made by the Compensation Committee to the Board of Directors. For 2024, the executive incentive plan payouts are based upon 80% for achievement of target net income and 20% will be discretionary for individual performance. If target net income is exceeded, the payout can be increased by 50% of the percentage excess up to an achievement of 20% of overachievement. Therefore, if target net income is exceeded by 10%, executive incentive compensation may be increased by 50% of the 10% excess, or 5%. For 2024, there was a board-approved earnings target of $36.6 million in net income for a potential target bonus payout, with a minimum net income of $18.3 million. If actual net income was between those two targets, the potential payout ratio of the bonus would be equal to net income for the year divided by $36.6 million. For 2024, it was determined that all Named Executive Officers fully met their respective discretionary targets. Further, Company net income relative to 2024 earnings target was 110.96% and therefore, the incentive bonus was increased by 5.48% (50% of the excess of net income over Target) for an incentive of 105.48% of each Named Executive Officer’s target incentive bonus. For 2025, the executive incentive plan payouts are to be calculated similarly to 2024 with 80% based upon achievement of target net income and 20% discretionary for individual performance. If target net income is exceeded, the payout can be increased by 50% of the excess achievement of up to 20%, which would result in a maximum payout of 110% of Target. Equity Incentives and Stock Ownership. Our 2023 Equity Based Compensation Plan, as Amended (the “2023 Plan”) authorizes the Board of Directors or the Compensation Committee to grant certain employees and non-employee directors restricted stock awards and other equity-based compensation. It should be noted that the 2023 Equity Based Compensation Plan was adopted at the 2023 Annual Meeting of Shareholders on May 24, 2023, and was immediately amended to modify Section 2.5 of the Plan to prohibit the reduction of the exercise price of any Option or Stock Appreciation Right granted pursuant to the Plan following the date of the Award or accept the surrender of outstanding Options or Stock Appreciation Rights as consideration for the grant of a new Award with a lower per-share exercise price, or for cash. Prior to the adoption of the 2023 Plan, the 2017 Stock Incentive Plan (the “2017 Plan”) authorized the Board of Directors or the Compensation Committee in their discretion to grant directors, consultants and employees of the Company restricted stock awards and/or options to purchase shares of our common stock. Prior to 2020, the Company had exclusively granted stock options to directors and employees of the Company. Starting in August 2020, the Compensation Committee elected to shift from issuing stock options to restricted stock as its primary long-term equity incentive vehicle. The Board and the Compensation Committee feel that restricted stock better aligns the interests of our executives with those of our shareholders, the unvested shares act as a retention vehicle for our executives as the Company no longer uses a Supplemental Employee Retirement Plan for its Named Executive Officers other than for the CEO, and restricted stock provides a long-term balance to the shorter-term nature of base salary and discretionary annual bonuses. As described above, in November 2024, the Board and Compensation Committee recommended a change to the formula to determine the value of grants of restricted stock awards to the Named Executive Officers. No new restricted stock grants were made in 2024 but instead were made in February 2025 based upon this new formula as further described above. Additional details concerning the 2023 Plan, the 2017 Plan, and awards held at December 31, 2024, by the Named Executive Officers are set forth below under “EXECUTIVE OFFICER AND DIRECTOR COMPENSATION – Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year End.” In February 2024, the Compensation Committee adopted new stock holding requirements for executives and the Board. Specifically, the CEO must hold a minimum of one and one-half times base salary and executive vice presidents must hold a minimum amount equal to their respective base salary. In addition, non-employee directors are required to own a minimum of $100,000 in stock. Individuals subject to this requirement have until the later of February 15, 2027, or three years following hiring or appointment to the Board to meet the holding requirement. Unvested restricted stock is included in calculating the ownership requirement. Shares owned are valued at time of purchase, or adoption of the new requirement, whichever is later. Unvested restricted stock will be valued at the time of grant. In addition to the above stock holding requirement, executives and non-employee directors are required to hold vested restricted stock for a minimum of one year following vesting, excluding the net settlement of shares for taxes or shares sold under a Rule 10b5-1 Plan established to pay taxes.

  13. Elements of Executive Compensation

    Salary Continuation Agreements. The only active Named Executive Officer with a salary continuation agreement is our Chief Executive Officer. We entered into a salary continuation agreement with our CEO that provides an annual benefit of $150,000 per year for 15 years, with payments commencing after retirement from the Company. The benefit amount and term were determined by the CEO’s position and scope of responsibility, as well as the amount of the annual expense accrual required to accumulate the appropriate liability for payment obligations. Expense accruals associated with salary continuation agreements are reflected in compensation tables as a change in pension value. No benefits are payable in the event of a voluntary termination prior to a specified retirement date, or an involuntary termination for cause. However, the salary continuation benefit becomes fully vested and payable upon a change in control if followed by resignation or other termination of employment. The material terms of the salary continuation agreement are described below under “EXECUTIVE OFFICER AND DIRECTOR COMPENSATION – Potential Payments Upon Termination or Change in Control – Salary Continuation and Split Dollar Agreements.” Deferred Compensation Plan. Executive officers are eligible to participate in a non-qualified deferred compensation plan, the “409A Plan,” whereby they can elect to defer all or part of their cash compensation for payment after retirement or termination of employment. Deferred compensation amounts are not taxed until received by the participant. Deferred compensation balances are unsecured obligations of the Company and are credited/charged by the Company for gains/losses pegged to participant-directed investment allocations. Investment allocation options include equity funds, real estate funds, bond funds and a fixed income alternative. The Company offsets deferred compensation accruals with tax-advantaged income/losses on separate account Company-owned life insurance that is invested in options similar to those selected by deferred compensation plan participants. No above market or preferential earnings are provided by the Company with respect to these plans. Further details on the 409A Plan are described below under “EXECUTIVE OFFICER AND DIRECTOR COMPENSATION – Deferred Compensation.” Perquisites and Other Programs. The Company provides its executive officers with perquisites and personal benefits that it believes are reasonable and consistent with its overall compensation strategy to attract and retain qualified executives and facilitate the performance of their duties. The Company maintains a 401(k) employee savings and retirement plan, which is offered to all employees. Beginning in 2024, the Company moved to a safe-harbor 401(k) plan with a per pay period match of 100% of the first 1% and 50% of the next 5% of eligible compensation, subject to IRS maximums. Prior to 2024, a discretionary contribution to the 401(k) plan was considered by the Board at the end of each year. The Board approved employer discretionary contributions of 80% of the first 6% of employee contributions for 2023 and 2022. Other benefits available to all employees include medical, disability, dental, life, and vision insurance. Executive officers may also be provided with club memberships, an automobile allowance or use of a Company-owned automobile, and use of a cell phone or a cell-phone allowance. Reportable annual benefits of $10,000 or more are described in the Summary Compensation Table below. Conclusion. The Compensation Committee intends to continue to link executive compensation to corporate performance and shareholder return, while avoiding forms of compensation that might encourage behavior which could have an adverse impact on the Company. The various pay vehicles offered to our executives are balanced to compensate them for current performance and provide motivation for them to contribute to our overall future success, and we believe that our executive compensation policies and programs serve the best interests of our Company and our shareholders.

  14. EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

    EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

  15. Summary Compensation

    | Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | Changes in Pension Value(4) | All Other Compensation | Total | | Kevin J. McPhaill | 2024 | $665,635 | $526,584 | $— | $48,165 | $161,918(5) | $1,402,302 | | President and | 2023 | 633,938 | 458,337 | 249,933 | 44,219 | 130,088(5) | 1,516,515 | | Chief Executive Officer | 2022 | 603,750 | 429,266 | 249,998 | 40,561 | 93,045(5) | 1,416,620 | | Christopher G. Treece | 2024 | $441,000 | $232,583 | $— | $— | $63,478(6) | $737,062 | | Executive Vice President | 2023 | 420,000 | 202,440 | 149,937 | — | 47,131(6) | 819,508 | | and Chief Financial Officer | 2022 | 400,000 | 189,600 | 149,965 | — | 38,058(6) | 777,623 | | Michael W. Olague | 2024 | $441,085 | $232,583 | $— | $— | $67,483(7) | $741,151 | | Executive Vice President | 2023 | 420,076 | 202,440 | 149,937 | — | 51,121(7) | 823,574 | | and Chief Banking Officer | 2022 | 400,076 | 189,600 | 149,965 | — | 45,216(7) | 784,857 | | Hugh F. Boyle | 2024 | $441,000 | $232,583 | $— | $— | $53,037(8) | $726,621 | | Executive Vice President | 2023 | 435,750 | 210,032 | 149,937 | — | 38,126(8) | 833,845 | | Chief Credit Officer | 2022 | 415,000 | 196,710 | 149,965 | — | 63,191(8) | 824,866 | | Natalia Coen | 2024 | $400,000 | $210,960 | $— | $— | $49,060(9) | $660,020 | | Executive Vice President | 2023 | 112,308 | 55,912 | 399,889 | — | 5,527(9) | 573,636 | | and Chief Risk Officer | | | | | | | |

  16. Grants of Plan-Based Awards

    Grants of Plan-Based Awards There were no plan-based non-equity awards granted to the Named Executive Officers in 2024. While annual grants of plan-based equity awards to the Company’s executive officers is customary, the Company changed its approach for granting performance-based equity awards in 2024 to allow for consideration of Bank performance relative to peer banks, in determining the size of the grant. This resulted in a shift of the timing of executive equity awards from fourth quarter to first quarter, and as a result no grants were made to our Named Executive Officers in 2024.

  17. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth outstanding stock options and restricted stock awards held by the Named Executive Officers as of December 31, 2024:

  18. Outstanding Equity Awards at Fiscal Year-End

    | | Number of Shares Underlying Unexercised Options Exercisable | Number of Shares Underlying Unexercised Options Unexercisable(1) | Exercise Price | Expiration Date | Number of Unvested Restricted Shares | Market Value of Unvested Restricted Shares | | Kevin J. McPhaill | 5,000 | — | $28.21 | 2/16/2027 | — | $— | | | 5,000 | — | 27.35 | 2/15/2028 | — | — | | | 5,000 | — | 27.30 | 2/21/2029 | — | — | | | 5,000 | — | 27.11 | 2/20/2030 | — | — | | | — | — | | | 31,770 | 918,788 | | Christopher G. Treece | 20,000 | — | $27.11 | 2/20/2030 | — | — | | | — | — | | | 19,504 | 564,056 | | Michael W. Olague | 5,000 | — | $17.25 | 2/18/2026 | — | $— | | | 5,000 | — | 28.21 | 2/16/2027 | — | — | | | 5,000 | — | 27.35 | 2/15/2028 | — | — | | | 5,000 | — | 27.30 | 2/21/2029 | — | — | | | 5,000 | — | 27.11 | 2/20/2030 | — | — | | | — | — | | | 19,504 | 564,056 | | Hugh F. Boyle | — | — | $— | — | 21,384 | $618,425 | | Natalia Coen | — | — | $— | — | 16,962 | $490,541 |

  19. Outstanding Equity Awards at Fiscal Year-End

    | 1 | Options in the table granted in 2020 to Mr. McPhaill and Mr. Olague became fully vested on the one-year anniversary of the grant date. Options granted in 2020 to Mr. Treece vest in increments of one-fifth on each of the first five anniversaries of the 2020 option grant date. Options expire following terms of 10 years. Unvested options become immediately vested in the event of a change in control of the Company, and options terminate in the event of termination of employment, with the time period for exercise of the vested portion depending on the reason the service ceases. In the case of termination for cause, the options expire immediately. |

  20. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table provides information regarding exercised options and restricted stock vested during 2024, and the value realized thereon.

  21. Option Exercises and Shares Vested in 2024

    Option Exercises and Shares Vested in 2024

  22. Option Exercises and Shares Vested in 2024

    | | Option Awards | | Restricted Stock Awards | | | Name | Shares Acquired on Exercise in 2024 | Value Realized on Exercise(1) | Number of Shares Acquired upon Vesting in 2024(2) | Value Realized on Vesting(3) | | Kevin J. McPhaill | 12,849 | $174,870 | 11,596 | $339,120 | | Christopher G. Treece | — | — | 7,401 | 215,808 | | Michael W. Olague | 5,000 | 56,759 | 7,401 | 215,808 | | Hugh F. Boyle | — | — | 6,119 | 149,332 | | Natalia Coen | — | — | 4,241 | 132,871 |

  23. Option Exercises and Shares Vested in 2024

    | 1 | Represents the excess of the aggregate fair market value over the aggregate exercise price of the shares at the time of exercise. |

  24. Option Exercises and Shares Vested in 2024

    | 2 | Mr. McPhaill vested 6,666 shares on August 20, 2024, 2,209 shares on November 16, 2024, 1,954 shares on November 18, 2024, and 767 shares on November 19, 2024. Mr. Treece and Mr. Olague each vested 4,444 shares on August 20, 2024, 1,325 shares on November 16, 2024, 1,172 shares on November 18, 2024, and 460 shares on November 19, 2024. Mr. Boyle vested 3,162 shares on March 1, 2024, 1,325 shares on November 16, 2024, 1,172 shares on November 18, 2024, and 460 shares on November 19, 2024. Ms. Coen vested 4,241 shares on November 16, 2024. |

  25. Option Exercises and Shares Vested in 2024

    | 3 | Represents the market price of the shares on the date of vesting, multiplied by the shares vested. |

  26. Pension Benefits

    Pension Benefits The table below shows the present value of accumulated benefits payable to each Named Executive Officer with a Salary Continuation Agreement. Detailed information concerning the material provisions of such agreements appears below under “Potential Payments Upon Termination or Change in Control – Salary Continuation and Split Dollar Agreements.”

  27. Pension Benefits

    | Name | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments During Last Fiscal Year | | Kevin J. McPhaill | Salary Continuation Agreement | n/a | $442,777 | — |

  28. Pension Benefits

    | 1 | Benefits due under the salary continuation agreements are set forth in each agreement and are not determined by a formula based on years of service. |

  29. Pension Benefits

    | 2 | Represents the cumulative amount accrued with respect to the salary continuation agreements for each of the listed Named Executive Officers as of December 31, 2024. Monthly charges are made to accrue for these post-retirement benefit obligations in a systematic and orderly way using an appropriate discount rate, such that the accrued liability balance at the participant’s retirement date will be equal to the then present value of the benefits promised under the salary continuation agreement. During 2024, a 5.79% discount rate was utilized. Any payments made to participants pursuant to the agreements reduce the accrued liability. |

  30. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation

  31. Non-Qualified Deferred Compensation

    | Name | Executive Contributions in Last Fiscal Year(1) | Company Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year(2) | Aggregate Withdrawals/ (Distributions) | Aggregate Balance at Last Fiscal Year-End(3) | | Kevin J. McPhaill | $— | $— | $41,718 | $— | $291,816 | | Michael W. Olague | 22,954 | — | 154,457 | — | 2,840,226 |

  32. Non-Qualified Deferred Compensation

    | 1 | These amounts were included for 2024 in the Salary and/or Bonus columns of the Summary Compensation Table in “Summary Executive Compensation Information” above. |

  33. Non-Qualified Deferred Compensation

    | 2 | These amounts were not included in the Summary Compensation Table as none of the earnings on the accounts were above-market or preferential. |

  34. Non-Qualified Deferred Compensation

    | 3 | The balances in these accounts represent a combination of cumulative participant contributions and earnings or losses thereon. All participant contributions were reported in the Summary Compensation Table for the year earned and deferred. |

  35. Potential Payments Upon Termination or Change in Control

    Potential Payments Upon Termination or Change in Control The following discussion summarizes the compensation and benefits payable to the Named Executive Officers in the event of a termination of employment under various circumstances, assuming that a termination of employment had occurred on December 31, 2024. The benefits which would be triggered in the event of a change in control of the Company’s common stock include: (i) acceleration of unvested stock options; (ii) acceleration of vesting of unvested restricted stock grants; (iii) amounts due under employment agreements; and (iv) accelerated vesting and payment of benefits under salary continuation agreements. For the salary continuation benefits to be triggered, the individuals must also either resign or be terminated following the change in control. If a change in control had occurred on December 31, 2024, any unvested stock options for the Named Executive Officers would have become vested and exercisable and any restricted stock would have become vested. Based on the closing market price of $28.92 per share for the Company’s stock on the last business day in 2024, the intrinsic value of in-the-money unvested options and the value of unvested restricted stock as of that date were as follows:

  36. Potential Payments Upon Termination or Change in Control

    | Name | Value of Unvested Restricted Stock as of 12/31/2024 | Intrinsic Value of Unvested Stock Options as of 12/31/2024 | | Kevin J. McPhaill | $738,183 | $— | | Christopher G. Treece | 455,721 | — | | Michael W. Olague | 455,721 | — | | Hugh F. Boyle | 510,091 | — | | Natalia Coen | 490,541 | — |

  37. Potential Payments Upon Termination or Change in Control

    The material terms of employment agreements and salary continuation agreements with the Named Executive Officers, including payments due upon termination or change in control, are described in detail below. Executive Employment Agreements. As discussed above under “Employment Agreements,” the Company has entered into employment agreements, as amended, with each of its executive officers. In the event of a change in control, the agreements, as amended, specify that the executive shall receive a cash payment in an amount equal to two times the executive’s annualized base salary that is in effect during the year the termination occurs plus the maximum eligible bonus compensation for the year. The executive shall also receive a continuation of group health, vision and dental insurance coverages, and reimbursement for 50% of the cost of insurance for the executive’s dependents, for a period of 12 months from the date of termination. If the Company terminates the executive’s employment for a reason other than a change in control, the death or incapacity of the executive, or for cause, the agreements specify that the executive shall receive a cash payment in an amount equal to the executive’s annualized base salary during the year the termination occurs, as well as a continuation of group health, vision and dental insurance coverages and reimbursement for 50% of the cost of insurance for executive’s dependents, for a period of 12 months from the date of termination. Salary Continuation and Split Dollar Agreements. The Company entered into a salary continuation agreement with Mr. McPhaill in January 2007 (amended in April 2015 in conjunction with his promotion to President and Chief Executive Officer), which entitles him to an annual benefit of $150,000 for 15 years subsequent to his retirement at age 65 or later, subject to certain restrictions. No benefits are payable in the event of a voluntary termination prior to his 65th birthday (except in connection with a change in control as discussed below), or termination for cause. In the event of cessation of employment due to disability or termination without cause prior to his designated retirement age, Mr. McPhaill’s benefit would be a lump sum payment equal to the amount accrued on the Company’s books for such liability as of the end of the month preceding termination of employment. The actual accrual balance at December 31, 2024, is shown in the Pension Benefits table above. This accrual balance is currently expected to reach $1.06 million by the end of 2030 but is subject to change depending on the discount rate utilized. Mr. McPhaill’s benefit will be fully accrued in May 2037, at which time it will be $1.52 million. Mr. McPhaill’s revised salary continuation agreement also provides a lump sum death benefit of $1.52 million in the event of his death prior to retirement from the Company; or, in the event of death after salary continuation benefits have commenced or after he becomes eligible for such benefits to be paid, there will be no lump sum death benefit but his beneficiary will receive, or continue to receive, the same benefits under his salary continuation agreement to which he was entitled at the time of his death. In the event of a change in control of the Company’s common stock followed within 12 months by Mr. McPhaill’s resignation or termination of his employment for any reason other than death, he would be fully vested in his retirement benefits and would begin to receive such benefits within the month following termination (subject to the requirements of Section 409A of the Internal Revenue Code). The Company accrues monthly for post-retirement benefit obligations under the salary continuation agreement in a systematic and orderly way using an appropriate discount rate. The Company also purchased single-premium life insurance policies when the salary continuation agreement was originally established, in part to provide tax advantaged income to offset the annual cost of the accruals. These policies name the Company as beneficiary and the proceeds or cash surrender value of the policies will ultimately reimburse the Company for the original investments in the policies, as well as for payments made under the salary continuation agreement. The Company may purchase additional life insurance from time to time such that the aggregate amount is appropriate in relation to the accruals and ultimate obligations under the salary continuation agreement. The amounts expensed in 2024 for the Named Executive Officers for salary continuation arrangements are included as part of “Changes in Pension Value” in the Summary Compensation Table and were roughly offset by income from Company-owned life insurance policies.

  38. Compensation of Directors

    Compensation of Directors All directors received an annual retainer in 2024 of $36,750 plus per-meeting fees for their attendance. Additional retainers of $20,000, $10,000 and $10,000 were paid to the Board Chairman, Vice Chairman and Audit Committee Chairman, respectively. The per-meeting fee for attendance in 2024 was $1,250 each for board meetings for both Sierra Bancorp and Bank of the Sierra, while per meeting fees of $1,000 per meeting were paid for committee meetings of both Sierra Bancorp and Bank of the Sierra. The Board Chairperson received an additional $625 per board meeting fee and Committee Chairpersons received an additional $500 per committee meeting fee. In 2021, the Compensation Committee hired a third-party consultant, Pearl Meyer, to perform a Director Compensation Review. The same peer group as used for the executive compensation study (described above) was used. During 2022, 2023 and 2024, the Compensation Committee directed Company personnel to utilize publicly available data to update the peer Director Compensation study, using the same peer group and methodology, as performed in 2021 by Pearl Meyer. The Company instituted a Director Retirement Plan on October 1, 2002, and entered into associated agreements with its non-employee directors at that time. A supplemental plan for independent directors was adopted effective January 1, 2007. Current directors who qualify as plan participants are directors Tharp and Berra. The plans provide a combined annual benefit of $50,000 to each participant for a period of 10 years, commencing at retirement, disability, or a “change in control.” In the event of death prior to any of those events, the plans provide a combined death benefit of $393,220, which is equal to the Company’s accrued liability for each plan participant. In case of death after the commencement of any benefit payments made pursuant to retirement disability, or a change in control, the death benefit is bifurcated according to the different terms of the 2002 and 2007 agreements. The earlier agreements provide for the payment of a lump sum benefit equal to the present value of the remaining payments under those agreements, discounted at 8%, while the latter agreements stipulate that the normal benefit due under those agreements will continue to be paid. The Company’s liability for potential payments under the director retirement agreements is fully accrued, and directors with retirement agreements are completely vested and eligible for their full benefits under those agreements. In October 2002, the Company entered into a salary continuation agreement with Mr. Holly that was fully vested as of his retirement as the Company’s CEO on March 31, 2015. The Company also purchased single-premium life insurance policies covering most of the non-employee directors when the Director Retirement Plan was first implemented, in part to provide tax-advantaged income to offset the annual cost of the expense accruals. Those policies name the Company as beneficiary and the proceeds or cash surrender value of the policies will ultimately reimburse the Company for its original investment in the policies, as well as for certain payments made under the retirement agreements. The Company may purchase additional life insurance from time to time such that the aggregate amount is appropriate in relation to the accruals and ultimate obligations under the retirement agreements. In addition to such single-premium life insurance policies described above, in January 2003, the Board also approved a split-dollar benefit to director Berra in the amount of $400,000 as a result of transitioning his then current benefit from a predecessor director annuity plan to the Director Retirement Plan. The table below summarizes the compensation paid to non-employee directors for the year ended December 31, 2024. Director compensation paid to Mr. McPhaill, the only director who is also a Named Executive Officer, is included in “All Other Compensation” in the Named Executive Officers Summary Compensation earlier in this proxy statement.

  39. Director Summary Compensation Table

    | Name | Fees Earned or Paid in Cash | Restricted Stock Awards(1) | All Other Compensation(2) | Total | | Susan M. Abundis | $73,500 | $39,999 | $— | $113,499 | | Albert L. Berra | 77,750 | 39,999 | 10,847 | 128,596 | | Julie G. Castle | 94,000 | 39,999 | — | 133,999 | | Vonn R. Christenson | 70,500 | 39,999 | — | 110,499 | | Laurence S. Dutto | 69,500 | 39,999 | — | 109,499 | | Michele M. Gil | 68,500 | 39,999 | — | 108,499 | | James C. Holly | 78,500 | 39,999 | — | 118,499 | | Ermina Karim | 70,500 | 39,999 | — | 110,499 | | Lynda B. Scearcy | 77,750 | 39,999 | — | 117,749 | | Morris A. Tharp | 107,875 | 39,999 | 12,198 | 160,071 |

  40. CEO Pay Ratio Disclosure

    CEO Pay Ratio Disclosure This section is provided to satisfy the provisions of the SEC’s pay ratio disclosure rule (Item 402(u) of Reg S-K), which requires the disclosure of the ratio of the total annual compensation of the Company’s CEO to the total annual compensation of the median employee, in terms of total compensation, within the Company. To determine the median employee of the Company based on total compensation, we utilized a list of all active employees of the Company at December 31, 2024, excluding the CEO. The compensation calculated for each of those employees includes wages paid during 2024 and, if applicable, incentive compensation, the grant date fair value of stock options and restricted stock, employer contributions to the employee’s 401(k) plan, and the value of any other compensation or perquisites not generally available to all employees, if material. Base wages were annualized for employees who had not been with the Company for the full year. Based on our analysis of this data, total compensation for the Company’s median employee was $55,481 for 2024. As disclosed in “EXECUTIVE OFFICER AND DIRECTOR COMPENSATION – Summary Executive Compensation Information,” the total annual compensation for our CEO was $1,402,302 in 2024. Total compensation for our CEO was thus determined to be 25.3 times that of our median employee.

  41. Pay Versus Performance Disclosure

    Pay Versus Performance Disclosure We are providing the following information about the relationship between executive compensation and certain measures of the Company’s financial performance. The SEC rules require disclosure of the Reported Total Compensation (“Reported Compensation”), as reported in the Summary Compensation Table in addition to Compensation Actually Paid (“CAP”) over the preceding five years. CAP reflects adjustments made to Reported Compensation, in the case of the Company, exclusively related to equity-based compensation, as the fair value at the date of grant, included in Reported Compensation, is reversed with the fair value of awards vested, and the fair value of outstanding awards as of year-end, added back. These measures of executive compensation are required to be disclosed for the Company’s Principal Executive Officer (“PEO”), or our CEO. Additionally, an average of the Reported Compensation and CAP for our non-PEO named executive officers is also required. Other disclosure requirements include Total Shareholder Return (“TSR”) for both the Company and a Company defined peer group, Net Income and if applicable a Company selected financial performance measure which is most closely linked to compensation actually paid. The Company has identified Return on Average Assets (“ROAA”) as the primary financial performance measure tied to executive compensation and as a result has included the Company’s ROAA over the preceding five years in the table below.

  42. Pay Versus Performance Disclosure

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Reported Total Compensation CEO(1) | Total Compensation Actually Paid CEO(1)(2) | Average Reported Total Compensation Non-CEO NEOs(3) | Average Total Compensation Actually Paid Non-CEO NEOs(2)(3) | Sierra Bancorp TSR | Peer Group TSR(4) | Net Income ('000s) | Return on Average Assets (%) | | 2024 | $1,402,302 | $1,769,385 | $716,213 | $902,032 | $121.25 | $132.44 | $40,560 | 1.12% | | 2023 | 1,516,515 | 1,586,827 | 816,346 | 867,506 | 90.98 | 112.03 | 34,844 | 0.94% | | 2022 | 1,416,620 | 1,142,299 | 785,401 | 623,794 | 81.64 | 111.47 | 33,659 | 0.97% | | 2021 | 1,297,509 | 1,410,330 | 801,651 | 857,294 | 100.27 | 126.43 | 43,012 | 1.29% | | 2020 | 1,735,320 | 1,818,743 | 1,053,152 | 1,097,658 | 85.30 | 90.82 | 35,444 | 1.22% |

  43. Pay Versus Performance Disclosure

    | 1 | The Company’s Principal Executive Officer was Kevin McPhaill for each year (2020-2024) included in the table. |

  44. Pay Versus Performance Disclosure

    | 2 | For each of the Named Executive Officers, for each year reported on, a reconciliation between Compensation Actually Paid and Reported Total Compensation is included following the footnotes to this table. |

  45. Pay Versus Performance Disclosure

    | 3 | The Average Reported Compensation and Average Compensation Actually Paid for the Non-CEO NEOs consists of compensation to the reported Named Executive Officers, other than the CEO, in the 2021, 2022, 2023, 2024 and 2025 Proxy Statements. 2024 Average Compensation includes compensation of Christopher Treece, Mike Olague, Hugh Boyle and Natalia Coen. 2023, 2022 and 2021 Average Compensation includes compensation of Christopher Treece, Mike Olague, Hugh Boyle and Jennifer Johnson. 2020 Average Compensation includes compensation of Christopher Treece, Mike Olague, Matt Macia and Jennifer Johnson. |

  46. Pay Versus Performance Disclosure

    | 4 | The Peer Group selected for this TSR disclosure is the S&P U.S. Small Cap Banks Index as disclosed in Part II Item 5 of the Company’s Annual Report on Form 10-K as of December 31, 2024. |

  47. Pay Versus Performance Disclosure

    The following table provides a reconciliation between Total Reported Compensation and Compensation Actually Paid for the Company’s CEO for 2020 through 2024.

  48. Pay Versus Performance Disclosure

    | CEO | 2024 | 2023 | 2022 | 2021 | 2020 | | Reported Total Compensation | $1,402,302 | $1,516,515 | $1,416,620 | $1,297,509 | $1,735,320 | | Reported Equity Compensation (-) | - | (249,933) | (249,998) | (124,990) | (623,630) | | Fair Value of Equity Awards Granted During the Year and Outstanding at Year-End (+) | - | 298,833 | 249,060 | 124,944 | 797,325 | | Fair Value of Equity Awards Granted During Prior Years and Outstanding at Year-End (+/-) | 191,151 | 51,116 | (216,997) | 127,833 | (83,168) | | Fair Value of Equity Awards Granted During Prior Years and Vested During the Year (+/-) | 199,422 | (8,810) | (37,873) | 1,333 | 8,200 | | Reported Changes in Pension Value (-) | (48,165) | (44,219) | (40,561) | (37,141) | (32,161) | | Service Cost for Pension Plan (+) | 24,675 | 23,325 | 22,048 | 20,842 | 16,856 | | Compensation Actually Paid | 1,769,385 | 1,586,827 | 1,142,299 | 1,410,330 | 1,818,743 |

  49. Pay Versus Performance Disclosure

    The following table provides a reconciliation between Total Reported Compensation and Compensation Actually Paid for the Average Non-CEO NEO for 2020 through 2024.

  50. Pay Versus Performance Disclosure

    | Non-CEO NEOs | 2024 | 2023 | 2022 | 2021 | 2020 | | Reported Total Compensation | $716,213 | $816,346 | $785,401 | $801,651 | $1,053,152 | | Reported Equity Compensation (-) | - | (149,937) | (149,965) | (174,960) | (459,087) | | Fair Value of Equity Awards Granted During the Year and Outstanding at Year-End (+) | - | 179,273 | 149,402 | 182,244 | 531,550 | | Fair Value of Equity Awards Granted During Prior Years and Outstanding at Year-End (+/-) | 128,967 | 28,113 | (135,239) | 47,691 | (36,157) | | Fair Value of Equity Awards Granted During Prior Years and Vested During the Year (+/-) | 56,852 | (6,288) | (25,805) | 667 | 8,200 | | Reported Changes in Pension Value (-) | - | - | - | - | - | | Service Cost for Pension Plan (+) | - | - | - | - | - | | Compensation Actually Paid | 902,032 | 867,506 | 623,794 | 857,294 | 1,097,658 |

  51. Pay Versus Performance Disclosure

    The most important metrics impacting 2024 Compensation Actually Paid to the Company’s Named Executive Officers is detailed in the following table.

  52. Pay Versus Performance Disclosure

    | Most Important Financial and Non-Financial Measures Impacting Executive Compensation Actually Paid in 2024 | | Net Income | | Return on Average Assets | | Return on Average Equity |

  53. Pay Versus Performance Disclosure

    In accordance with SEC rules, the Company is providing the following descriptions of the relationships between the various information included in the Pay versus Performance table included above over the five-year time horizon. Specifically, the following discussion describes the relationship between (i) The Company’s TSR and the Peer Group TSR, (ii), PEO and Other NEOs’ CAP and the Company’s TSR, (iii) PEO and Other NEOs’ CAP and the Company’s Net Income and (iv) PEO and Other NEOs’ CAP and the Company’s ROAA. The following graph illustrates the level the Total Shareholder return of a $100 investment made in both the Company’s stock and in a proportionately allocated investment in the common stock of the peer group over the five-year time horizon. Additionally, the graph includes the CAP of both the Company’s CEO and the average of the non-CEO NEOs over the five-year time horizon. The Company’s TSR compared to the Peer Group TSR. Assuming the theoretical investment of $100 in the Company’s common stock versus a proportionately allocated investment in the common stock of the Peer Group on December 31, 2019, the TSR of the Company’s Common Stock underperformed the TSR of the peer group over the five-year time horizon ending December 31, 2024. Management speculates that the underperformance of the Company’s TSR compared to the Peer Group TSR is a result of volatility in loan growth. The PEO and Other NEO’s Compensation Actually Paid to Company’s TSR. Reported, performance-based compensation for the Company’s Named Executive Officers includes compensation under the Company’s Cash Incentive Plan and both Time Based and Performance Based Restricted Stock. While there is no direct link between cash awards made under the Cash Incentive Plan or Restricted Stock awards made by the Company and TSR, financial performance impacts the size of these awards and also impacts TSR. Financial performance likewise impacts the amount of Performance Based restricted stock that ultimately vests. Due to the Company’s equity-based compensation of its executive officers, each Named Executive Officer has a substantial amount of unvested restricted stock outstanding at any point in time. In 2020 the Company transitioned from the use of stock-options as its primary equity-based compensation vehicle to restricted stock. Each of the NEOs, with the exception of Mr. Boyle and Ms. Coen, also had unexercised stock options outstanding as of December 31, 2024, as a result of option awards made in 2020 and earlier. Due to significant amounts of outstanding restricted stock and unexercised stock options CAP to each of the NEOs is impacted directly by the changes in fair value of the Company’s common stock. In 2020, CAP to both the Company’s CEO and Other NEOs reflected a shift in the Company’s approach to equity-based compensation, with a transition from stock options to restricted stock as its primary equity-based compensation vehicle. Upon this transition in 2020, the Company made significant initial grants of restricted stock to the Named Executive Officers at that time for retention and to better align executive interests with those of shareholders. These initial restricted stock grants were made to each of the named executive officers in August 2020 in an amount approximately equal to one year of base compensation with a 5-year vesting period. A similar award was made to Mr. Boyle in March 2021 and to Ms. Coen in 2023. The decline in CAP in 2021 to both the CEO and other NEOs, despite positive TSR was largely a result of smaller restricted stock awards made in 2021 relative to 2020, although the significant award made to Mr. Boyle in March 2021 following his hiring in December 2020 did impact the average CAP to Non-CEO NEOs in 2021. The decline in CAP in 2022 to both the CEO and other NEOs was primarily a result of the decline in the value of the Company’s common stock as reflected in the TSR. Similarly, the increase in CAP in 2023 is primarily a reflection of an increase in the Company’s stock price during 2023. The increase in CAP in 2024 is primarily a reflection of a significant increase in the Company’s stock price during 2024, despite the fact that no stock compensation awards were made in 2024 due to a shift in the timing of the grant of these awards, as described in the Compensation Discussion and Analysis. The following graph illustrates the level of the Company’s net income over the five-year time horizon in comparison to the CAP of both the Company’s CEO and the average of the non-CEO NEOs. PEO and Other NEOs’ CAP and the Company’s Net Income. As noted above, CAP of the Company’s NEOs is influenced by the valuation of the Company’s common stock, as a result of each Named Executive Officer having a substantial amount of unvested restricted stock outstanding in addition to unexercised stock options at any point in time. Additionally, the Company has three established mechanisms for compensating executives based on the Company’s financial performance: (i) the cash incentive plan (ii) the size of time and performance-based restricted stock grants and (iii) the financial performance criteria which determine at what level performance-based restricted stock ultimately vests. The Company’s bonuses paid in March 2025 tied to the 2024 Cash Incentive Plan were tied to established goals for Net Income (80% weighting) and individual performance (20%). Historically, there has been a strong weighting assigned to the achievement of targeted net income in the payment of bonuses under the cash incentive plan for any given year. Vesting in shares of performance-based restricted stock varies with each different award but the performance criteria for all awards made prior to December 31, 2024, has been based on the Company’s Return on Average Equity relative to peer levels, which is heavily influenced by net income. The decline in CAP in 2021 to the CEO and to other NEOs, relative to 2020, despite record earnings in 2021, was a result of a decline in the size of the restricted stock grants made in 2021, relative to 2020 as outlined earlier. The decline in CAP in 2022 to both the CEO and the other NEOs was primarily a result of a decline in the value of the Company’s common stock as reflected in the TSR for 2022, this decline in the TSR during 2022 was impacted by broad economic conditions but may have also been influenced by a decline in the Company’s earnings, primarily as result of charge-offs and requisite provision expense resulting from the deterioration of a single loan relationship. CAP increased in 2023, despite a relatively consistent level of net income, this increase was primarily attributable to an improvement in the Company’s stock price. CAP to the CEO and other NEOs increased in 2024, this was primarily a result of an increase in the Company’s stock price, driven by improved investor sentiment towards the Banking industry and likely also influenced by the Company’s strong 2024 earnings. The following graph illustrates the level of the Company’s ROAA over the five-year time horizon in comparison to the CAP of both the Company’s CEO and the average of the non-CEO NEOs. PEO and Other NEOs’ CAP and the Company’s ROAA. As noted above the fluctuations in the CAP between 2020 and 2024 are largely a result of the valuation of the Company’s common stock as reflected in the TSR, with the decline in 2021 and 2022 reflecting the significant grant of restricted stock in August 2020 as well as the decline in Bank stock valuations in 2022. However, Management does see a relationship between stock performance and financial performance as reflected in ROAA and maintains that as a result a relationship, albeit indirect, exists between ROAA and CAP.

  54. Pay Versus Performance Disclosure

    During 2021 the Company earnings benefited from an increased level of deposits, bolstered by the liquidity experienced by many financial institutions following the onset of the COVID-19 pandemic. Additionally, a significant decline in loan balances occurred in 2021, as the Company took action to reduce exposure in commercial real estate, this reduction in total loans resulted in reserve releases that bolstered earnings. Despite improving financial performance as reflected in growth in 2021 ROAA, CAP declined in 2021 primarily as a result of the significant restricted stock grants made in 2020. While the Company’s strong 2021 financial performance reflected in ROAA likely contributed to the 2021 appreciation in the Company’s stock price, this appreciation was not enough to bring 2021 CAP up to 2020 levels, again due to the significant restricted stock awards made in 2020. The decline in CAP in 2022 reflects the deterioration in the value of the Company’s stock, which was likely the result of various investor concerns, including; the prospect of reduced future earnings following a series of accelerated Federal Reserve rate hikes in response to historically high inflation levels and the impact of the deterioration of a single significant loan relationship on the Company’s asset quality and earnings. As illustrated in the TSR graph above, peer stock prices also deteriorated in 2022 due to broad economic concerns, following the rapid series of Federal Reserve rate hikes in 2022. ROAA declined slightly in 2023, despite growth in net income, as earnings growth was outpaced by growth in average assets. As noted previously, CAP increased in 2023 due to an increase in the Company’s stock price. In 2024 CAP increased again, primarily as a result of the increase in the Company’s stock price, which benefited from a general appreciation in Bank stocks, but which also was likely a result of the Company’s stronger than peer financial performance as reflected in the growth in 2024 ROAA. Improved 2024 ROAA was largely a result of the Company’s balance sheet restructure in early 2024, where a significant balance of low-yielding investment securities was sold and high-cost, shorter-term borrowings were paid off.