ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE
Listed below
are the Directors and Executive Officers of the Company.
Certain information
with respect to the nine (9) Directors of the Company is provided below:
Michael J.
Cushman (
age 59), has been a Director of the Company since February 1999, and is President and Chief Executive Officer of
the Company and its subsidiary, North Valley Bank. Mr. Cushman served as Senior Vice President and Chief Business Banking Officer
of North Valley Bank from March 1998 to February 1999. From March 1995 through March 1998, he was a self-employed investor. From
November of 1994 through March of 1995, Mr. Cushman served as Vice President of Tri-Counties Bank, which acquired Country
National Bank in November of 1994 where Mr. Cushman had served as President and Chief Executive Officer since September of 1992.
Dante W.
Ghidinelli
(age 66), has been a Director of the Company since 1993. He is a Certified Public Accountant. Mr. Ghidinelli
was a partner in Nystrom & Company since 1974. In 2012 Nystrom & Company, LLP merged with Matson & Isom. Mr. Ghidinelli
retired as a partner from that firm in 2012.
Kevin D.
Hartwick
(age 52), was a Director of Six Rivers National Bank and became a Director of the Company in October 2000, when North
Valley Bank acquired Six Rivers National Bank. Mr. Hartwick has been a Certified Public Accountant and managing partner with Cholwell
Benz & Hartwick in Crescent City, California since 1989.
Patrick W.
Kilkenny
(age 67), has been a Director of the Company since 2011. Formerly, he was the Chairman, President and Chief Executive
Officer of the National Bank of the Redwoods and President and Chief Executive Officer of Redwood Empire Bancorp, its holding
company. He is currently self-employed as a business consultant in business finance, banking, and capital markets. Mr. Kilkenny
received a Bachelor Science of Commerce – Finance from Santa Clara University in 1969, and a Juris Doctorate from Empire
College School of Law.
Roger B.
Kohlmeier
(age 74), was a Director of Yolo Community Bank and became a Director of the Company in August 2004, when North
Valley Bank acquired Yolo Community Bank. He was the founding President and Chief Executive Officer of Bank of Woodland which
changed its name to Business & Professional Bank, at which time he retired but continued as Director until its sale to U.S.
Bank of California in 1997. He is a graduate of California Polytechnic University of San Luis Obispo and is actively involved
with the Economic Development Council and Woodland Health Care.
Timothy R.
Magill
(age 64), has been a Director of the Company since 2011. He was a founding Director of Yolo Community Bank with its
main office in Woodland, California. In 2004, Yolo Community Bank was acquired and operated as a subsidiary of the Company and
Mr. Magill continued as a Director of the subsidiary bank, which did business as Yolo Community Bank, and subsequently as North
Valley Business Bank, and in 2006 was merged into North Valley Bank. Prior to that, Mr. Magill was a Director of Bank of
Woodland. Mr. Magill holds an MBA degree from California State University at Sacramento. Since 1987, Mr. Magill has worked
in various capacities, including General Manager, Division President, District Manager, and Marketing and Planning Development
Manager for Waste Management, Inc. Mr. Magill retired from Waste Management, Inc. in 2012 and remains an outside consultant to
that firm.
Martin A.
Mariani
(age 57), was a Director of Yolo Community Bank and became a Director of the Company in August 2004, when North Valley
Bank acquired Yolo Community Bank. He is a partner in Mariani Nut Company of Winters, California. He graduated from the University
of California, Davis in 1978.
Dolores M.
Vellutini
(age 76), was a Director of Six Rivers National Bank and became a Director of the Company in October 2000, when
North Valley Bank acquired Six Rivers National Bank. She is a developer and the owner of Vellutini Properties in Eureka, California.
J. M. (“Mike”)
Wells, Jr.
(age 73), is Chairman and a founding member of the Board of Directors of the Company. Mr. Wells was formerly a
member of the law firm of Wells, Small, Selke & Graham, a Law Corporation, located in Redding, California. Mr. Wells practiced
law with that firm starting in 1972 and retired in 2004. Mr. Wells received a Bachelor of Arts in Economics from Stanford University
and a Juris Doctorate from Hastings College of the Law.
Certain information
with respect to the current Executive Officers of the Company and North Valley Bank (other than Michael J. Cushman, listed above
as a Director) is provided below:
Kevin R.
Watson
(age 48), has served as Executive Vice President and Chief Financial Officer of the Company and its subsidiary since
March 2006. Prior to that, he served as Chief Financial Officer at Calnet Business Bank in Sacramento from January 2004 to March
2006. Prior to Calnet Business Bank, his experience includes serving as the Chief Financial Officer of California Independent
Bancorp and Feather River State Bank from April 2001 to January 2004.
Scott R.
Louis
(age 64), has served as Executive Vice President and Chief Operations Officer of the Company and its subsidiary since
October 2005. Prior to that, he served as Senior Vice President and Chief Operating Officer since joining the Company in April
2005. Prior to joining the Company, Mr. Louis served as First Vice President at Farmers and Merchants Bank in Lodi, California.
Mr. Louis began his financial services career with Bank of America in 1971.
Roger D.
Nash
(age 66), has served as Executive Vice President and Chief Credit Officer of the Company and its subsidiary since September
2006. Prior to that, he served as Chief Lending Officer of the Company and its subsidiary since joining the Company in October
2005. Prior to that, he served 35 years at Bank of America, most recently as Senior Vice President/Senior Client Manager in Visalia,
California. While at Bank of America, he also served as Senior Vice President/Credit Risk Manager and as Senior Vice President
in Business Lending.
Gary S. Litzsinger
(age 58), has served as Executive Vice President and Chief Risk Officer of the Company and its subsidiary since October 2005.
Prior to that, he served as Senior Vice President and Chief Risk Officer since joining the Company in July, 2004. Prior to joining
the Company, Mr. Litzsinger served as Director of Audit and Risk Management for Humboldt Bancorp and Audit Manager for California
Federal Savings Bank in Sacramento. He began his audit career in 1990 and obtained his California CPA license in 1994.
Leo J. Graham
(age 63), has served as Corporate Secretary and General Counsel of the Company and its subsidiary since January 2004. Mr.
Graham was formerly a member of the law firm of Wells, Small, Selke & Graham, a Law Corporation, located in Redding, California.
Mr. Graham practiced law with that firm starting in 1978. Mr. Graham received a Bachelor of Arts in Political Science from the
University of California, Berkeley and a Juris Doctor from the University of Santa Clara School of Law.
None
of the directors were selected pursuant to any arrangement or understanding other than with the directors and executive officers
of the Company acting within their capacities as such. There are no family relationships among any two or more of the Company’s
executive officers or directors.
No
director or officer of the Company currently serves, or within the last five years has served, as a director of any public company,
including any company which has a class of securities registered under, or which is subject to the periodic reporting requirements
of, the Securities Exchange Act of 1934, or of any company registered as an investment company under the Investment Company Act
of 1940. No director or officer of the Company was subject to any legal, judicial or administrative proceedings involving or based
on violations of federal or state securities, commodities, banking or insurance laws and regulations or settlements thereof, involvement
in mail or wire fraud or fraud in connection with any business entity, any disciplinary sanctions or orders imposed by a stock,
commodities or derivatives exchange or other self-regulatory organization, convictions in a criminal proceeding (excluding traffic
violations and minor offenses) or had a petition under bankruptcy laws filed against themselves or an affiliate, in each case
within the last ten years.
GOVERNANCE
OF THE COMPANY
Code of Business
Conduct and Ethics
The Board of
Directors of North Valley Bancorp believes the cornerstones of our business are honesty, truthfulness, integrity and ethics.
In keeping with
this belief, the Board of Directors has adopted a Code of Business Conduct and Ethics, which applies to the Board of Directors
and the officers and employees of the Company and North Valley Bank. The North Valley Bancorp Code of Business Conduct and Ethics
is available through the Shareholders Relations link on the Company’s website at http://www.novb.com/shareholderrelations.aspx.
A copy of the Code of Business Conduct and Ethics may be obtained without charge by submitting a request to the Corporate Secretary,
P.O. Box 994630, Redding, CA 96099-4630.
Risk Oversight
Risk management
is the responsibility of management and risk oversight is the responsibility of the Board of Directors. The Board administers
its risk oversight function principally through a division of responsibility within its committee structure, with each committee
of the Board of Directors being responsible for overseeing risk within its area of responsibility. The responsibilities of the
Board committees are discussed under each committee below. Some significant risk oversight matters are reported directly to the
Board, including matters not falling within the area of the responsibility of any committee. Types of risks with the potential
to adversely affect the Company include credit, interest rate, liquidity, and compliance risks, and risks relating to our operations
and reputation. Management regularly provides the Board of Directors and its various committees with a significant amount of information
regarding a wide variety of matters affecting the Company. Matters presented to the Board and Board committees generally include
information with respect to risk, including input from Gary S. Litzsinger, Executive Vice President and Chief Risk Officer. The
Board and its committees consider the risk aspects of such information and often request additional information with respect to
issues that involve risks to the Company. The Board and its committees also raise risk issues on their own initiative.
Review of
Risk Associated with Compensation Plans
The Company
develops and implements compensation plans that provide strategic direction to the plan participants and engage them in the Company’s
success, thereby contributing to shareholder value. The Board of Directors believes that its approach to goal setting, performance
evaluation and discretion in the payout of incentives help to mitigate excessive risk-taking that could harm the Company or reward
poor judgment by senior officers. The Company’s pay programs are designed to reward outstanding individual and team performance
while mitigating risk-taking behavior that might affect financial results. The Compensation Committee met with senior officers,
including the General Counsel and Corporate Secretary of the Company, to review the 2013 incentive compensation plans and concluded
that, based on the controls described above and elsewhere in this Proxy Statement, that such plans do not present risks that are
reasonably likely to have a material adverse affect on the Company.
Committees
of the Board of Directors
The Board of
Directors of the Company has established the following committees of the Board: Audit, Nominating, Compensation and Executive/Corporate
Governance.
The current
members of the Board and the Committees of the Board on which they serve are as follows:
Director
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Audit
Committee
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Nominating
Committee
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Compensation
Committee
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Executive
Committee
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Governance
Committee
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Michael
J. Cushman
(2)
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*
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*
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Dante W. Ghidinelli
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**
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*
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*
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Kevin D. Hartwick
(1)(2)
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*
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Patrick W. Kilkenny
(2)
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*
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Roger B. Kohlmeier
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*
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*
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*
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*
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Timothy R. Magill
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*
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*
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Martin A. Mariani
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**
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**
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Dolores M. Vellutini
(2)
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*
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J. M. (“Mike”) Wells, Jr.
(2)(3)
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*
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*
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*
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**
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**
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* Member
** Chairman
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(1)
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Mr.
Hartwick is the Chairman of the Director’s Loan Committee of North Valley Bank.
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(2)
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These
Directors serve on the Director’s Loan Committee of North Valley Bank.
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(3)
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Mr.
Wells as Chairman of the Board of Directors serves on all Board Committees.
|
Audit Committee
The functions
of the Audit Committee are more particularly described in the Audit Committee Charter, which can be found at http://www.novb.com.
The Board of Directors has determined that Chairman Dante W. Ghidinelli and Director Kevin D. Hartwick each qualify as a result
of their accounting backgrounds as an Audit Committee Financial Expert as defined under the Sarbanes-Oxley Act of 2002 (“SOX”),
SEC rules and regulations and NASDAQ listing standards. The Audit Committee met seven (7) times in 2013. For more information,
see the “Report of the Audit Committee”
on page 28
.
Nominating
Committee
The Board of
Directors has adopted a Nominating Committee Charter and appoints the members of the Nominating Committee. All of the members
are “independent” within the requirements of SOX, SEC rules and regulations, and NASDAQ listing standards. The Nominating
Committee held one (1) meeting in 2013. The functions of the Nominating Committee are more particularly described in the Nominating
Committee Charter, which can be found at http://www.novb.com.
The Nominating
Committee Charter includes a policy for consideration of candidates proposed by shareholders. Any recommendations by shareholders
will be evaluated by the Nominating Committee in the same manner as any other recommendation and in each case in accordance with
the Nominating Committee Charter. Shareholders that desire to recommend candidates for consideration by the Nominating Committee
should mail or deliver written recommendations to the Nominating Committee addressed as follows: North Valley Bancorp Nominating
Committee, P.O. Box 994630, Redding, CA 96099-4630. Each recommendation should include the experience of the candidate that qualifies
the candidate for consideration as a potential director for evaluation by the Nominating Committee. Shareholders who wish to nominate
a candidate for election to the Company’s Board of Directors, as opposed to recommending a potential nominee for consideration
by the Nominating Committee, are required to comply with the advance notice and any other requirements of the Company’s
Bylaws, applicable laws and regulations.
Compensation
Committee
The Board of
Directors has formed a Compensation Committee and appoints the members of the Compensation Committee, comprised solely of independent
Directors. This Committee reviews and recommends to the Board of Directors the salaries, performance-based incentives, both annual
and long term, and other matters relating to compensation of the Executive Officers.
The Compensation
Committee also reviews and approves various other compensation policies and matters. The Compensation Committee held two (2) meetings
in 2013. For more information, see the “Report of the Compensation Committee” on
page 18.
The functions of the Compensation Committee are more particularly described in the Compensation Committee Charter,
which can be found at http://www.novb.com.
Executive/Corporate
Governance Committee
The Company
has an Executive/Corporate Governance Committee which functions to review, evaluate and make decisions on actions that are required
between the regular meetings of the Board of Directors. In addition, this Committee functions to review and recommend to the Board
of Directors principles, policies and procedures affecting the Board of Directors and its operation and effectiveness. The Committee
further oversees the evaluation of the Board of Directors and its effectiveness. The Committee did not meet in 2013.
Meetings
of the Board of Directors
During 2013,
the Board of Directors held four (4) regularly scheduled meetings and 14 special meetings and each Director attended at least
75% of the aggregate of the total number of meetings of the Board of Directors (held during the period for which he or she was
a Director) and the total number of meetings of Committees of the Board of Directors on which such Director served (during the
periods that he or she served).
The Company
encourages the members of its Board of Directors to attend the Company’s annual meeting of shareholders each year. All of
the Directors, except one, attended the Company’s Annual Meeting of Shareholders held in 2013.
Shareholder
Communications with Directors
A shareholder
who wishes to communicate directly with the Board of Directors, a Committee of the Board or an individual Director should send
correspondence to:
Board
of Directors (or Committee Name or Director’s Name)
c/o
Corporate Secretary
North
Valley Bancorp
P.O.
Box 994630
Redding,
California 96099-4630
The Corporate
Secretary has been instructed to forward such correspondence to the Board Committee or individual as addressed as soon as practicable.
If it is marked “Personal and Confidential”, it will only be forwarded to the addressee. The Board has instructed
the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to
forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for the Board’s
consideration.
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a)
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s Directors and
Executive Officers and persons who own more than 10% of a registered class of the Company’s equity securities to file with
the Securities and Exchange Commission (the “SEC”) initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers, Directors and greater than 10% shareholders are required
by the SEC to furnish the Company with copies of all Section 16(a) forms they file.
To the Company’s
knowledge, based solely on a review of such reports furnished to the Company and written representations that no other reports
were required, during the fiscal year ended December 31, 2013, all Section 16(a) filing requirements applicable to its Officers,
Directors and 10% shareholders were complied with on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Introduction
The Board of
Directors of North Valley Bancorp strives to ensure that its compensation programs are consistent with the strategic goals and
objectives of the Company and maintains the standards of good corporate governance.
Philosophy
All elements
of the Company’s compensation program are designed to attract and retain key employees, motivating them to achieve and rewarding
them for superior performance. Different programs are geared to short and longer-term performance with the goal of increasing
shareholder value over the long term. Executive compensation programs impact all employees by setting general levels of compensation
and helping to create an environment of goals, rewards and expectations. North Valley Bancorp believes the performance of every
employee is important to its success and recognizes the importance of executive compensation and incentive programs to achieve
improved performance.
North Valley
Bancorp believes that the compensation of its executives should reflect their success as a management team, rather than individuals,
in attaining key operating objectives, such as growth of deposits, loans, maintaining credit quality, growth of operating earnings
and earnings per share and growth or maintenance of market share and long-term competitive advantage, and ultimately, in attaining
an increased market price for its stock. North Valley Bancorp believes that the performance of the executives in managing the
Company, considered in light of general economic and specific company, industry and competitive conditions, should be the basis
for determining their overall compensation. North Valley Bancorp also believes that their compensation should not be based on
the short-term performance of the Company stock, whether favorable or unfavorable, but rather that the price of the Company stock
will, in the long-term, reflect its operating performance, and ultimately, the management of the Company by its executives. North
Valley Bancorp seeks to have the long-term performance of the Company stock reflected in executive compensation through stock
option awards.
Compensation
Committee Interlocks and Insider Participation
During the fiscal
year 2013, Michael J. Cushman participated in deliberations of the Company’s Board of Directors concerning Executive Officer
compensation for all Executive Officers, excluding himself.
Overview
of Compensation and Process
Elements of
compensation for corporate executives include: salary, bonus, stock option awards, deferred compensation plans, salary continuation
plan, health, disability and life insurance, and perquisites. Base salaries for Executive Officers are reviewed and considered
for adjustment at a meeting of the Compensation Committee usually held in the first quarter of each year. At this meeting, the
Compensation Committee also reviews and recommends the management incentive plan for the fiscal year (the “Executive Discretionary
Incentive Plan”) and recommends stock option awards for the Company’s Executive Officers and certain other eligible
employees.
At the start
of each fiscal year, it has been the practice of the Compensation Committee to meet and review the history of all the elements
of each Executive Officer’s total compensation over previous years and compare the compensation of the Executive Officers
with that of the executive officers in an appropriate market place and industry comparison group. Typically, the Chief Executive
Officer makes compensation recommendations to the Compensation Committee with respect to the Executive Officers who report to
him. Such Executive Officers are not present at the time of these deliberations. The Chairman of the Board then makes compensation
recommendations to the Compensation Committee with respect to the Chief Executive Officer, who is absent from that meeting. The
Compensation Committee may accept or adjust such recommendations.
The Compensation
Committee has the authority to directly engage outside consultants and in the fall of 2012, the Committee engaged EW Partners,
Inc. to assist in evaluating the Company’s compensation practices and to provide advice concerning Director and Executive
compensation. Specifically, the Compensation Committee asked EW Partners, Inc. to conduct a compensation review of the Independent
Directors of the Company and the Bank and of the six named Executive Officers. As further discussed below, EW Partners, Inc.’s
review consisted of a market data assessment and competitive review and analysis of base salary, incentive plans, and benefits/perquisites.
EW Partners, Inc. reported directly to the Chairman of the Compensation Committee and, in the performance of its duties, EW Partners,
Inc. interacted with the Chief Executive Officer, Chief Financial Officer, and Executive Officers as it deemed appropriate in
order to gather information necessary for its evaluation. EW Partners, Inc. is not affiliated with North Valley Bancorp nor did
it provide any other services for the Company in 2013.
North Valley
Bancorp chooses to pay each element of compensation as a means to attract and retain the necessary executive talent, reward annual
performance and provide incentive for their balanced focus on long-term strategic goals as well as short-term performance. The
amount of each element of compensation is determined by or under the direction of the Compensation Committee, which uses the following
factors to determine the amount of salary and other benefits to pay each Executive Officer:
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Performance against corporate and individual objectives for the previous
year;
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●
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Value of their unique skills and capabilities to support long-term performance
of the Company;
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●
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Achievement of strategic objectives;
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●
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Deposits and/or loan growth; and
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●
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Any of the above measures compared to peer or other companies.
|
These elements
fit into our overall compensation objectives by helping to secure the future potential of our operations, facilitating our strategic
plan, providing proper compliance and regulatory compliance, and helping to create a cohesive team. Actual performance measures
for the Executive Officers are set by the Compensation Committee. During 2013, an outside benefits attorney was engaged by the
Company to review non-qualified deferred compensation plans and to recommend changes to those plans to make them conform with
IRS regulations and regulatory requirements and, further, to advise with regard to best practices concerning the structure and
implementation of those plans.
At the Company’s
annual meeting of shareholders held on May 31, 2013, the shareholders approved, on an advisory basis, the compensation paid to
the Company’s executive officers. The favorable outcome of that “Say on Pay” proposal was taken into account
by the Board of Directors and the Compensation Committee in determining the Company’s annual compensation policies and decisions.
EXECUTIVE
COMPENSATION
At the meeting
held in December 2013, the Compensation Committee evaluated the performance of the Chief Executive Officer and the other members
of the Executive Team. The Compensation Committee determined the Executive Team succeeded in meeting the strategic goals set for
the Company during 2013. The Compensation Committee did a thorough review of the data prepared by outside consultants with regard
to peer bank information. This market study conducted by the independent consultants, along with a study done by the California
Bankers Association, which provided peer bank information as to both director compensation and executive compensation, was used
by the Compensation Committee to determine whether the Executive Team’s base salary and total compensation was consistent
with its peer group and current market factors. This information was used to award the Executive Officers incentives under the
Executive Incentive Plan. Based on a review of the information provided to the Compensation Committee and because of the over-all
improvement of the financial condition of the Company and the Bank, the Compensation Committee recommended to the Board of Directors
that incentive bonus payments be awarded to the Executive Team in December 2013, as set forth in the “Summary Compensation
Table” on page 10 and the “Report of the Compensation Committee” on page 18.
Also at the
meeting held in December 2013, due to ongoing strategic planning discussions (which ultimately resulted in the Merger Agreement
signed with TriCo on January 21, 2014), the Compensation Committee determined, after discussions with the Chief Executive
Officer, the General Counsel, outside legal counsel and other consultants, to postpone indefinitely any adjustments to the base
salaries of the executive officers and the grant of any stock options, pending the announcement of a possible business combination
transaction and the impact, if any, the terms and conditions of such a transaction might have on future director and executive
officer compensation decisions, including the award of stock options.
Base Salary
It is the goal
of the Company’s Compensation Committee to establish salary compensation for its Executive Officers based on the Company’s
operating performance relative to comparable peer companies over a three-year to five-year period. The Compensation Committee
believes this provides an opportunity to attract and retain talented managerial employees, both at the senior executive level
and below. In January, 2013, the Board of Directors, acting upon the recommendation of the Compensation Committee, approved base
salary adjustments for the Executive Officers in recognition of the overall improved performance of the Company and Bank as set
forth in the “Report of the Compensation Committee” on page 18. As noted
above, those base salaries remained in effect for the remainder of 2013 and will continue to remain unchanged and in effect for
2014.
Bonus
The Executive
Discretionary Incentive Plan set annually by the Compensation Committee is designed to reward the Company’s Executives for
the achievement of short-term financial goals, including increases in performance against peer banks, the achievement of short-term
and long-term strategic goals, and overall financial performance of the Company. It is the Company’s general philosophy
that management be rewarded for their performance as a team in the attainment of these goals, rather than individually. North
Valley Bancorp believes that this is important to aligning our Executive Officers and promoting teamwork among them. Bonus percentages
for Executive Officers were initially suggested by a compensation consultant based on an analysis of peer banks and industry sector
considerations. Those basic percentages, which are discretionary with the Compensation Committee, have generally been followed
in recent years. Those percentages are as follows: for Executive Officers other than the Chief Executive Officer, the range is
10% - 40% of base salary; and for the Chief Executive Officer, the range is 10% - 50% of base salary. Similarly, Executive Officers
are eligible for discretionary incentive stock option awards based on the following percentages: for Executive Officers other
than the Chief Executive Officer, the range is 0% - 5% of base salary as the number of options considered for award; and for the
Chief Executive Officer, the range is 0% - 6% of base salary as the number of options considered for award.
Although each
Executive Officer is eligible to receive a bonus award at the discretion of the Compensation Committee, the granting of the award
as to any individual, officer or as a group, is first at the discretion of the Chief Executive Officer and then, based on his
recommendation, at the discretion of the Compensation Committee and the entire Board of Directors. The Compensation Committee
may choose whether to award a bonus and decides on the actual level of the award in light of all relevant factors after completion
of the applicable fiscal year. At the meeting of the Board of Directors in December 2013, the Board of Directors awarded the Chief
Executive Officer and the Executive Officers bonuses for the 2013 fiscal year effective immediately. The bonuses to the Chief
Executive Officer and the Executive Officers for the 2013 fiscal year were awarded on the basis of the overall improved financial
performance of the Company and the Bank, the meeting of strategic goals, including reduction in non-performing assets, overall
improvement in credit quality, and improvements in quarter after quarter earnings of the Company and Bank.
The following
Summary Compensation Table sets forth the compensation of the President and Chief Executive Officer (Principal Executive Officer)
and the Executive Vice President and Chief Financial Officer (Principal Financial Officer) of the Company and all of the other
Executive Officers for services in all capacities provided to the Company and North Valley Bank during 2013, 2012, and 2011:
SUMMARY
COMPENSATION TABLE
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Change in
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Pension Value
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and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Name
and Principal Position
|
|
Year
|
|
|
(1)($)
|
|
|
(2)($)
|
|
|
($)
|
|
|
(3)($)
|
|
|
($)
|
|
|
(4)($)
|
|
|
(5)($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Cushman
|
|
|
2013
|
|
|
$
|
323,512
|
|
|
$
|
139,000
|
|
|
$
|
—
|
|
|
$
|
150,571
|
|
|
$
|
—
|
|
|
$
|
352,256
|
|
|
$
|
8,127
|
|
|
$
|
973,466
|
|
President and Chief
|
|
|
2012
|
|
|
$
|
316,031
|
|
|
$
|
134,313
|
|
|
$
|
—
|
|
|
$
|
57,334
|
|
|
$
|
—
|
|
|
$
|
251,821
|
|
|
$
|
7,397
|
|
|
$
|
766,896
|
|
Executive Officer
|
|
|
2011
|
|
|
$
|
300,982
|
|
|
$
|
90,294
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
239,313
|
|
|
$
|
5,827
|
|
|
$
|
666,851
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin R. Watson
|
|
|
2013
|
|
|
$
|
212,580
|
|
|
$
|
72,000
|
|
|
$
|
—
|
|
|
$
|
78,668
|
|
|
$
|
—
|
|
|
$
|
268,563
|
|
|
$
|
16,984
|
|
|
$
|
648,795
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
206,388
|
|
|
$
|
67,076
|
|
|
$
|
—
|
|
|
$
|
24,962
|
|
|
$
|
—
|
|
|
$
|
172,986
|
|
|
$
|
15,544
|
|
|
$
|
486,956
|
|
and Chief Financial
Officer
|
|
|
2011
|
|
|
$
|
196,560
|
|
|
$
|
68,787
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
146,276
|
|
|
$
|
12,196
|
|
|
$
|
454,254
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott R. Louis
|
|
|
2013
|
|
|
$
|
174,879
|
|
|
$
|
60,000
|
|
|
$
|
—
|
|
|
$
|
64,709
|
|
|
$
|
—
|
|
|
$
|
102,497
|
|
|
$
|
12,301
|
|
|
$
|
414,385
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
169,785
|
|
|
$
|
55,180
|
|
|
$
|
—
|
|
|
$
|
20,536
|
|
|
$
|
—
|
|
|
$
|
86,518
|
|
|
$
|
10,876
|
|
|
$
|
342,895
|
|
and Chief Operating
Officer
|
|
|
2011
|
|
|
$
|
161,700
|
|
|
$
|
56,595
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
74,776
|
|
|
$
|
6,645
|
|
|
$
|
330,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Nash
|
|
|
2013
|
|
|
$
|
174,879
|
|
|
$
|
70,000
|
|
|
$
|
—
|
|
|
$
|
64,709
|
|
|
$
|
—
|
|
|
$
|
41,717
|
|
|
$
|
10,150
|
|
|
$
|
361,454
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
169,785
|
|
|
$
|
55,180
|
|
|
$
|
—
|
|
|
$
|
20,536
|
|
|
$
|
—
|
|
|
$
|
106,530
|
|
|
$
|
10,420
|
|
|
$
|
362,451
|
|
and Chief Credit Officer
|
|
|
2011
|
|
|
$
|
161,700
|
|
|
$
|
56,595
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
93,761
|
|
|
$
|
6,829
|
|
|
$
|
349,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary S. Litzsinger
|
|
|
2013
|
|
|
$
|
149,940
|
|
|
$
|
55,000
|
|
|
$
|
—
|
|
|
$
|
53,360
|
|
|
$
|
—
|
|
|
$
|
52,381
|
|
|
$
|
9,345
|
|
|
$
|
320,027
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
140,000
|
|
|
$
|
45,500
|
|
|
$
|
—
|
|
|
$
|
15,240
|
|
|
$
|
—
|
|
|
$
|
42,874
|
|
|
$
|
6,286
|
|
|
$
|
249,900
|
|
and Chief Risk Officer
|
|
|
2011
|
|
|
$
|
120,000
|
|
|
$
|
42,000
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
35,369
|
|
|
$
|
2,253
|
|
|
$
|
230,057
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leo J. Graham
|
|
|
2013
|
|
|
$
|
193,597
|
|
|
$
|
70,000
|
|
|
$
|
—
|
|
|
$
|
71,636
|
|
|
$
|
—
|
|
|
$
|
255,119
|
|
|
$
|
11,325
|
|
|
$
|
601,677
|
|
General Counsel and
|
|
|
2012
|
|
|
$
|
187,958
|
|
|
$
|
61,087
|
|
|
$
|
—
|
|
|
$
|
22,733
|
|
|
$
|
—
|
|
|
$
|
180,491
|
|
|
$
|
10,367
|
|
|
$
|
462,636
|
|
Corporate Secretary
|
|
|
2011
|
|
|
$
|
179,000
|
|
|
$
|
62,664
|
|
|
$
|
—
|
|
|
$
|
30,435
|
|
|
$
|
—
|
|
|
$
|
173,996
|
|
|
$
|
6,182
|
|
|
$
|
452,277
|
|
(1) Base
salary includes 401(k) Plan and Executive Deferred Compensation Plan (“EDCP”) contributions made by the named officers.
(2) These
bonus amounts were paid in 2013 and 2012 attributable to 2013, 2012 and 2011 performance, respectively.
(3) The amount
reported in this column is the dollar amount recognized for financial statement reporting purposes as the grant date fair value
for 2013 in accordance with FAS ASC Topic 718. The assumptions used to calculate the grant date fair value are described in the
footnotes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31,
2013.
(4) The
amounts in this column represent the increase in the actuarial net present value of all future retirement benefits under the individual’s
salary continuation plan and the above-market or preferential earnings on any nonqualified deferred compensation. The above-market
rate is determined by using the amount above 120% of the Federal long-term rate. For 2013, the interest rate paid was 8.00% and
the above-market rate was determined to be 3.42%. For 2012, the interest rate paid was 8.00% and the above-market rate was determined
to be 2.97%. For 2011, the interest rate paid was 8.00%, and the above-market rate was determined to be 4.38%.
(5) Included
in this column are taxable economic benefits of $9,170, $7,804, and $6,107, imputed to Mr. Cushman for 2013, 2012, and 2011, respectively,
under the terms of his split dollar (life insurance) agreement. Also included in this column are the perquisites described below
in the table under the heading “Perquisites.”
Perquisites
Executive Officers
who participated in the North Valley Bancorp 401(k) Plan received matching funds, as did all employees of the Company who participated
in the Plan. All of the Company’s employees and Executive Officers named in the Summary Compensation Table above are eligible
to participate in the Company’s ESOP Plan. Executive Officers, in addition, are eligible to receive the same health and
insurance benefits as made available to all other employees of the Company. In addition, Executive Officers are eligible to participate
in executive and key employee deferred compensation plans as discussed hereafter. Executive Officers also have certain 2013, 2012,
and 2011 perquisites as follows:
|
|
|
|
|
Auto
|
|
|
Club Memberships
|
|
|
401K Matching
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
|
|
|
& Dues
|
|
|
Contribution
|
|
|
ESOP
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Cushman
|
|
|
2013
|
|
|
$
|
2,350
|
|
|
$
|
4,220
|
|
|
$
|
—
|
|
|
$
|
1,557
|
|
|
$
|
8,127
|
|
President and Chief
|
|
|
2012
|
|
|
$
|
1,773
|
|
|
$
|
4,020
|
|
|
$
|
—
|
|
|
$
|
1,604
|
|
|
$
|
7,397
|
|
Executive Officer
|
|
|
2011
|
|
|
$
|
620
|
|
|
$
|
4,330
|
|
|
$
|
—
|
|
|
$
|
877
|
|
|
$
|
5,827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin R. Watson
|
|
|
2013
|
|
|
$
|
6,000
|
|
|
$
|
4,160
|
|
|
$
|
5,267
|
|
|
$
|
1,557
|
|
|
$
|
16,984
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
6,000
|
|
|
$
|
3,960
|
|
|
$
|
3,980
|
|
|
$
|
1,604
|
|
|
$
|
15,544
|
|
and Chief Financial Officer
|
|
|
2011
|
|
|
$
|
6,000
|
|
|
$
|
4,120
|
|
|
$
|
1,351
|
|
|
$
|
725
|
|
|
$
|
12,196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott R. Louis
|
|
|
2013
|
|
|
$
|
731
|
|
|
$
|
4,220
|
|
|
$
|
5,793
|
|
|
$
|
1,557
|
|
|
$
|
12,301
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
731
|
|
|
$
|
4,330
|
|
|
$
|
4,366
|
|
|
$
|
1,449
|
|
|
$
|
10,876
|
|
and Chief Operating Officer
|
|
|
2011
|
|
|
$
|
731
|
|
|
$
|
3,850
|
|
|
$
|
1,482
|
|
|
$
|
582
|
|
|
$
|
6,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Nash
|
|
|
2013
|
|
|
$
|
586
|
|
|
$
|
4,220
|
|
|
$
|
3,787
|
|
|
$
|
1,557
|
|
|
$
|
10,150
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
586
|
|
|
$
|
4,020
|
|
|
$
|
4,366
|
|
|
$
|
1,448
|
|
|
$
|
10,420
|
|
and Chief Credit Officer
|
|
|
2011
|
|
|
$
|
586
|
|
|
$
|
4,180
|
|
|
$
|
1,482
|
|
|
$
|
581
|
|
|
$
|
6,829
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary S. Litzsinger
|
|
|
2013
|
|
|
$
|
1,555
|
|
|
$
|
1,265
|
|
|
$
|
4,992
|
|
|
$
|
1,533
|
|
|
$
|
9,345
|
|
Executive Vice President
|
|
|
2012
|
|
|
$
|
1,281
|
|
|
$
|
1,495
|
|
|
$
|
2,378
|
|
|
$
|
1,132
|
|
|
$
|
6,286
|
|
and Chief Risk Officer
|
|
|
2011
|
|
|
$
|
372
|
|
|
$
|
900
|
|
|
$
|
550
|
|
|
$
|
431
|
|
|
$
|
2,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leo J. Graham
|
|
|
2013
|
|
|
$
|
—
|
|
|
$
|
3,560
|
|
|
$
|
6,208
|
|
|
$
|
1,557
|
|
|
$
|
11,325
|
|
General Counsel and
|
|
|
2012
|
|
|
$
|
—
|
|
|
$
|
3,935
|
|
|
$
|
4,833
|
|
|
$
|
1,599
|
|
|
$
|
10,367
|
|
Corporate Secretary
|
|
|
2011
|
|
|
$
|
—
|
|
|
$
|
3,900
|
|
|
$
|
1,641
|
|
|
$
|
641
|
|
|
$
|
6,182
|
|
Stock Option
Awards
North Valley
Bancorp intends that its stock option award program be the primary vehicle for offering long-term incentives and rewarding its
Executive Officers and key employees. The Company also regards its stock option award program as a key retention tool. This is
a very important factor in its determination of the type of option award to grant and the number of underlying shares that are
granted in connection with that award. Because of the direct relationship between the value of an option and the market price
of the Company’s Common Stock, North Valley Bancorp has always believed that granting stock options is the best method of
motivating the Executive Officers to manage the Company in a manner that is consistent with the interests of the Company and its
shareholders.
Timing of
Grants
Stock options
awarded to the Company’s Executive Officers and other key employees are typically granted annually in conjunction with a
review of the individual performance of its Executive Officers. This review typically takes place at the meeting of the Compensation
Committee held in conjunction with the quarterly meeting of the Board in January following the fiscal year under consideration.
Grants to newly hired employees are effective on the date of grant as consideration for the hiring of the new employee. The exercise
price of all stock options is set at the closing price of Common Stock as reported on the NASDAQ Global Select Market on the date
of grant.
2013
GRANTS OF PLAN-BASED AWARDS TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
Estimated Future Payouts
Under
|
|
|
Estimated Future Payouts
Under
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value of
|
|
|
|
|
|
Non-Equity Incentive Plan
Awards
|
|
|
Equity Incentive Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
Stock and
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
Option Awards
|
|
Name
|
|
Grant
Date
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($
/ Sh)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Cushman
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,802
|
|
|
$
|
16.80
|
|
|
$
|
150,571
|
|
Kevin R. Watson
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,256
|
|
|
$
|
16.80
|
|
|
$
|
78,668
|
|
Scott R. Louis
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,791
|
|
|
$
|
16.80
|
|
|
$
|
64,709
|
|
Roger D. Nash
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,791
|
|
|
$
|
16.80
|
|
|
$
|
64,709
|
|
Gary S. Litzsinger
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,600
|
|
|
$
|
16.80
|
|
|
$
|
53,360
|
|
Leo J. Graham
|
|
1/31/2013
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,518
|
|
|
$
|
16.80
|
|
|
$
|
71,636
|
|
Outstanding
Equity Awards At Fiscal Year-End
The following
table summarizes information about the options, warrants and rights and other equity compensation under the Company’s equity
plans as of December 31, 2013, for each of the Executive Officers.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END TABLE
|
|
Option Awards
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Equity Incentive
|
|
|
Equity Incentive
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Plan Awards:
|
|
|
Plan Awards:
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Number of
|
|
|
Market or Payout
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Unearned Shares,
|
|
|
Value of Unearned
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
Option
|
|
|
Option
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Units or Other
|
|
|
Shares, Units or
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Have Not
|
|
|
Have Not
|
|
|
Rights that Have
|
|
|
Other Rights That
|
|
|
|
|
|
|
|
|
|
Unearned Options
|
|
|
Price
|
|
|
Date
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Have Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Cushman
|
|
|
2,400
|
(1)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
78.60
|
|
|
|
1/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,992
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
99.30
|
|
|
|
1/20/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,991
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
89.75
|
|
|
|
2/3/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,992
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,611
|
(9)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
11,766
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
—
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,805
|
(12)
|
|
|
7,224
|
(12)
|
|
|
—
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
15,802
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin R. Watson
|
|
|
2,000
|
(7)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
81.90
|
|
|
|
4/27/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,440
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,872
|
(9)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,859
|
(10)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
—
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
786
|
(12)
|
|
|
3,145
|
(12)
|
|
|
—
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
8,256
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott R. Louis
|
|
|
500
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
88.15
|
|
|
|
4/28/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,120
|
(8)
|
|
|
—
|
|
|
|
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,540
|
(9)
|
|
|
—
|
|
|
|
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,106
|
(10)
|
|
|
—
|
|
|
|
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
646
|
(12)
|
|
|
2,588
|
(12)
|
|
|
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
6,791
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roger D. Nash
|
|
|
2,000
|
(5)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
85.00
|
|
|
|
10/20/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,120
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,540
|
(9)
|
|
|
—
|
|
|
|
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,631
|
(10)
|
|
|
—
|
|
|
|
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
646
|
(12)
|
|
|
2,588
|
(12)
|
|
|
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
6,791
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gary S. Litzsinger
|
|
|
800
|
(2)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
80.90
|
|
|
|
8/5/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
400
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
99.30
|
|
|
|
1/20/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
571
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
89.75
|
|
|
|
2/3/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
838
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,111
|
(9)
|
|
|
—
|
|
|
|
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,302
|
(10)
|
|
|
—
|
|
|
|
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
480
|
(12)
|
|
|
1,920
|
(12)
|
|
|
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
5,600
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leo J. Graham
|
|
|
1,000
|
(1)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
78.60
|
|
|
|
1/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
600
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
99.30
|
|
|
|
1/20/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
840
|
(6)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
89.75
|
|
|
|
2/3/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,311
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
$
|
100.15
|
|
|
|
1/25/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,705
|
(9)
|
|
|
—
|
|
|
|
|
|
|
$
|
65.05
|
|
|
|
1/24/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,909
|
(10)
|
|
|
—
|
|
|
|
|
|
|
$
|
23.95
|
|
|
|
11/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(11)
|
|
|
3,000
|
(11)
|
|
|
|
|
|
$
|
10.40
|
|
|
|
7/28/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
716
|
(12)
|
|
|
2,864
|
(12)
|
|
|
|
|
|
$
|
11.25
|
|
|
|
3/8/2022
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
(13)
|
|
|
7,518
|
(13)
|
|
|
—
|
|
|
$
|
16.80
|
|
|
|
1/31/2023
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
(1)
|
These stock options were vested at 100% on January 20, 2008.
|
(2)
|
These stock options were vested at 100% on August 5, 2008.
|
(3)
|
These stock options were vested at 100% on January 20, 2009.
|
(4)
|
These stock options were vested at 100% on April 28, 2009.
|
(5)
|
These stock options were vested at 100% on October 20, 2009.
|
(6)
|
These stock options were vested at 100% on February 3, 2010.
|
(7)
|
These stock options were vested at 100% on April 27, 2010.
|
(8)
|
These stock options were vested at 100% on January 25, 2011.
|
(9)
|
These stock options were vested at 100% on January 24, 2012.
|
(10)
|
These stock options were vested at 100% on November 20, 2013.
|
(11)
|
These stock options vest 20% per year over five years; 40% were vested at December 31, 2013 with the remaining vesting to occur on July 28, 2014, 2015 and 2016.
|
(12)
|
These stock options vest 20% per year over five years; 20% were vested at December 31, 2013 with the remaining vesting to occur on March 8, 2014, 2015, 2016 and 2017.
|
(13)
|
These stock options vest 20% per year over five years; 0% were vested at December 31, 2013 with the remaining vesting to occur on January 31, 2014, 2015, 2016, 2017 and 2018.
|
Options Exercised
and Stock Vested
The following
table summarizes information with respect to stock option awards exercised and restricted stock and restricted stock unit awards
vested during fiscal year 2013 for each of the Executive Officers.
OPTION EXERCISES AND STOCK VESTED TABLE
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized On
|
|
|
Number of Shares
|
|
|
Value Realized On
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Acquired on Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
Michael J. Cushman
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kevin R. Watson
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Scott R. Louis
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Roger D. Nash
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gary S. Litzsinger
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Leo J. Graham
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Employment
Agreements
The Company
entered into an Employment Agreement with Michael J. Cushman in 2001, revised in 2012. The Company entered into an Employment
Agreement with Leo J. Graham in 2004, revised in 2006 and in 2012. The Company entered into Employment Agreements with Gary S.
Litzsinger, Scott R. Louis and Roger D. Nash during 2005, revised in 2012. The Company entered into an Employment Agreement
with Kevin R. Watson in 2006, revised in 2012.
The Employment
Agreement entered into in 2001 with Mr. Cushman had an initial term of three years with annual renewals. The current Employment
Agreements with Messrs. Watson, Louis, Nash, Litzsinger, and Graham have a rolling term of one year and provide that they will
be automatically extended for additional one-year periods unless either the employee or the employer gives notice of non-renewal
60-days before the end of the term or extended term. All of the Employment Agreements have been extended at their annual anniversary
dates upon the same terms and conditions, except for Mr. Cushman, whose Employment Agreement has been extended annually since
the end of its initial three year term upon the same terms and conditions. The compensation paid to each of Messrs. Cushman, Watson,
Louis, Nash, Litzsinger, and Graham for years 2013, 2012, and 2011 under the terms of their respective Employment Agreements is
set forth in the “Summary Compensation Table” on page 10 of this Proxy
Statement.
Under the terms
of their respective Employment Agreements, all Executive Officers are eligible to participate in the Executive Deferred Compensation
Plan and the Salary Continuation Agreements (see discussion below) and are entitled to all other benefits made available to employees
of the Company generally.
All Executive
Officers will receive severance pay upon termination of their written Employment Agreement by the Company without cause in an
amount ranging from 12 months to 24 months of current base salary, except Mr. Cushman who also will receive a pro rata share
of his annual incentive compensation for the prior year. Payment of severance pay is subject to the limitations set forth in applicable
laws and regulations.
POST-EMPLOYMENT
COMPENSATION
Salary Continuation
Agreements
The Company
has entered into a Salary Continuation Agreement with each of the Executive Officers. The Salary Continuation Agreements provide
for five general classes of benefits for Executive Officers, which benefits vest over a period of eight (8) to ten (10) years
with credit for prior service or as determined by the Chief Executive Officer and the Board of Directors:
|
1.
|
Normal
Retirement Benefits. The normal retirement benefit is calculated to provide a target
benefit in the amount equal to sixty percent (60%) of the Executive’s compensation
at the time of retirement (age 65) or a lesser amount as determined by the Chief Executive
Officer and the Board of Directors.
|
|
2.
|
Early
Termination Benefit. The early termination benefit is the vested portion of the target
retirement benefit.
|
|
3.
|
Disability
Benefit. The disability benefit is a Disability Lump Sum Benefit specified in the agreement
for the plan year immediately preceding the disability, payable only upon total disability
as defined in the agreement.
|
|
4.
|
Death
Benefit. The death benefit is an amount determined by a formula that takes into account
the number of years of service and the anticipated compensation level at the age of retirement.
|
|
5.
|
Change
of Control Benefit. The change of control benefit is an amount determined as follows:
Executive Officer’s Fully Vested Present Value Benefit payable at age 65 for the
current plan year plus two times the Executive Officer’s current Plan Year Compensation
(except with respect to the Chief Executive Officer, which is 2.99 times plan year compensation).
This benefit is payable only in the event of a change in control as defined in the Salary
Continuation Agreement and is limited by the provisions of Internal Revenue Code section
280G and by federal statute or regulation.
|
The Company
determined that it would be more cost effective for the Company to acquire prepaid policies of life insurance to fund these anticipated
future obligations than to pay annual premiums. The Company, as a result of acquiring the prepaid policies, has cash values in
the policies in excess of the amount paid for those policies.
The Company
and some of the Executive Officers who have Salary Continuation Agreements have entered into split dollar life insurance agreements
in connection with the life insurance policies obtained by the Company on their lives.
The following
table illustrates the approximate annual retirement income that may become payable to a key employee credited with the number
of years of service shown, assuming that benefits commence at age 65 and are payable in the form of an annuity for the employee’s
life or for 20 years (whichever is greater):
ANNUAL RETIREMENT INCOME
Years of Credited Service
Final Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
|
$
|
100,000
|
|
|
$
|
6,000
|
|
|
$
|
12,000
|
|
|
$
|
18,000
|
|
|
$
|
24,000
|
|
|
$
|
30,000
|
|
|
|
|
120,000
|
|
|
|
7,200
|
|
|
|
14,400
|
|
|
|
21,600
|
|
|
|
28,800
|
|
|
|
36,000
|
|
|
|
|
140,000
|
|
|
|
8,400
|
|
|
|
16,800
|
|
|
|
25,200
|
|
|
|
33,600
|
|
|
|
42,000
|
|
|
|
|
160,000
|
|
|
|
9,600
|
|
|
|
19,200
|
|
|
|
28,800
|
|
|
|
38,400
|
|
|
|
48,000
|
|
|
|
|
180,000
|
|
|
|
10,800
|
|
|
|
21,600
|
|
|
|
32,400
|
|
|
|
43,200
|
|
|
|
54,000
|
|
|
|
|
200,000
|
|
|
|
12,000
|
|
|
|
24,000
|
|
|
|
36,000
|
|
|
|
48,000
|
|
|
|
60,000
|
|
|
|
|
250,000
|
|
|
|
15,000
|
|
|
|
30,000
|
|
|
|
45,000
|
|
|
|
60,000
|
|
|
|
75,000
|
|
|
|
|
300,000
|
|
|
|
18,000
|
|
|
|
36,000
|
|
|
|
54,000
|
|
|
|
72,000
|
|
|
|
90,000
|
|
Final Average
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
|
|
6
|
|
|
7
|
|
|
8
|
|
|
9
|
|
|
10
|
|
|
|
$
|
100,000
|
|
|
$
|
36,000
|
|
|
$
|
42,000
|
|
|
$
|
48,000
|
|
|
$
|
54,000
|
|
|
$
|
60,000
|
|
|
|
|
120,000
|
|
|
|
43,200
|
|
|
|
50,400
|
|
|
|
57,600
|
|
|
|
64,800
|
|
|
|
72,000
|
|
|
|
|
140,000
|
|
|
|
50,400
|
|
|
|
58,800
|
|
|
|
67,200
|
|
|
|
75,600
|
|
|
|
84,000
|
|
|
|
|
160,000
|
|
|
|
57,600
|
|
|
|
67,200
|
|
|
|
76,800
|
|
|
|
86,400
|
|
|
|
96,000
|
|
|
|
|
180,000
|
|
|
|
64,800
|
|
|
|
75,600
|
|
|
|
86,400
|
|
|
|
97,200
|
|
|
|
108,000
|
|
|
|
|
200,000
|
|
|
|
72,000
|
|
|
|
84,000
|
|
|
|
96,000
|
|
|
|
108,000
|
|
|
|
120,000
|
|
|
|
|
250,000
|
|
|
|
90,000
|
|
|
|
105,000
|
|
|
|
120,000
|
|
|
|
135,000
|
|
|
|
150,000
|
|
|
|
|
300,000
|
|
|
|
108,000
|
|
|
|
126,000
|
|
|
|
144,000
|
|
|
|
162,000
|
|
|
|
180,000
|
|
Mr. Cushman
began accruing retirement benefits under his Salary Continuation Agreement effective January 1, 2001, and is fully vested. Messrs.
Watson, Louis, Nash, Litzsinger, and Graham began accruing retirement benefits under their Salary Continuation Agreements according
to their respective hire dates. The terms of the Salary Continuation Agreements did not change in form, timing, or with regard
to any amount payable under the Agreements.
As of December
31, 2013, the Company’s aggregate accrued obligations under all Salary Continuation Agreements were $9,973,000 (includes
obligations to retirees under old plans).
The following
table summarizes the retirement benefits payable to the Executive Officers as of December 31, 2013.
PENSION BENEFITS TABLE
|
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
Years
|
|
|
|
|
|
|
|
|
|
|
|
Credited
|
|
|
Present
Value as of
|
|
|
Payments
During
|
|
Name
|
|
Plan
Name
|
|
Service
|
|
|
December
31, 2013
|
|
|
Last
Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Cushman
|
|
Salary
Continuation Plan
|
|
|
16
|
|
|
$
|
2,502,138
|
|
|
|
—
|
|
Kevin R. Watson
|
|
Salary Continuation
Plan
|
|
|
7
|
|
|
$
|
1,256,010
|
|
|
|
—
|
|
Scott R. Louis
|
|
Salary Continuation
Plan
|
|
|
8
|
|
|
$
|
560,874
|
|
|
|
—
|
|
Roger D. Nash
|
|
Salary Continuation
Plan
|
|
|
8
|
|
|
$
|
648,074
|
|
|
|
—
|
|
Gary S. Litzsinger
|
|
Salary Continuation
Plan
|
|
|
9
|
|
|
$
|
265,351
|
|
|
|
—
|
|
Leo J. Graham
|
|
Salary Continuation
Plan
|
|
|
10
|
|
|
$
|
1,558,615
|
|
|
|
—
|
|
Executive
Deferred Compensation Plan
The Executive
Deferred Compensation Plan (“EDCP”), adopted by the Directors of the Company and North Valley Bank effective January
1, 2001 and restated effective January 1, 2007, is a nonqualified executive benefit plan in which the eligible executive voluntarily
elects to defer some or all of his or her current compensation in exchange for the Company’s promise to pay a deferred benefit.
The deferred compensation is credited with interest under the plan and the accrued liability is paid to the executive at retirement.
Unlike a 401(k) plan or a pension plan, an EDCP is a nonqualified plan. Accordingly, this plan is selectively made available to
certain highly compensated employees and executives without regard to the nondiscrimination requirements of qualified plans. The
EDCP is also an unfunded plan, which means there are no specific assets set aside to fund the plan. The Company has purchased
life insurance policies in order to provide for payment of its obligations under the Executive Deferred Compensation Plan, but
the executive has no rights under the plan beyond those of a general creditor of the plan sponsor. The deferred amount is not
taxable income to the individual and is not a tax-deductible expense to the plan sponsor.
The EDCP is
embodied in a written agreement between the plan sponsor and the executive selected to participate in the plan. The agreement
includes provisions that indicate the benefits to be provided at retirement or in the event of death, disability, or termination
of employment prior to retirement. The agreement provides for full vesting of deferred amounts since the executive is setting
aside his or her current compensation. If the individual leaves, the account balance would be paid according to the terms specified
in the agreement. If the individual were to die prior to or during retirement, the promised benefits would be paid to the individual’s
beneficiary or estate.
As of December
31, 2013, the Company’s aggregate accrued obligations under all executive deferred compensation plans were $436,000.
The following
table summarizes the nonqualified deferred compensation benefits payable to the Executive Officers as of December 31, 2013.
NONQUALIFIED
DEFERRED COMPENSATION TABLE
|
|
Executive
|
|
|
Registrant
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate
Balance
|
|
|
|
Contributions
in
|
|
|
Contributions
in
|
|
|
Aggregate
Earnings
|
|
|
Withdrawals/
|
|
|
at
Last Fiscal Year-
|
|
|
|
Last
Fiscal Year
|
|
|
Last
Fiscal Year
|
|
|
in
Last Fiscal Year
|
|
|
Distributions
|
|
|
End
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
(1)($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J.
Cushman
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,697
|
|
|
$
|
—
|
|
|
$
|
113,475
|
|
Kevin R. Watson
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Scott R. Louis
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Roger D. Nash
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Gary S. Litzsinger
|
|
$
|
3,892
|
|
|
$
|
—
|
|
|
$
|
3,015
|
|
|
$
|
—
|
|
|
$
|
40,802
|
|
Leo J. Graham
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
973
|
|
|
$
|
—
|
|
|
$
|
12,696
|
|
|
(1)
|
Earnings
credited to the accounts are based upon the terms of the Deferred Compensation Plan.
The rate credited for 2013 was 8.00%.
|
Change in
Control Agreements
In the event
of a sale, dissolution or liquidation of the Company or a merger or a consolidation in which the Company is not the surviving
or resulting Company, a “change in control” occurs.
All of the Executive
Officers are, upon a change in control of the Company, entitled under their Employment Agreements to receive the “change
in control” benefits described in their Salary Continuation Agreements (see discussion of Salary Continuation Agreements
above), subject to any limitations by federal statute or regulation.
All options
outstanding under the 1998 Employee Stock Incentive Plan and the 2008 Stock Incentive Plan which at the time are not fully vested
may, nonetheless, under the terms of the relevant agreement of merger or consolidation or plan of sale, liquidation or dissolution,
be entitled to be exercised as if they were fully (100 percent) vested. Summary information regarding each Company stock option
plan is set forth below.
The North Valley
Bank Executive Deferred Compensation Agreements and North Valley Bank Executive Salary Continuation Agreements provide for the
acceleration of the payment of benefits to Executive Officers thereunder upon a change in control of the Company. Summary information
regarding such agreements is set forth below, as of December 31, 2013, except for acceleration of equity awards which is computed
as of January 21, 2014, the date of the Merger Agreement signed with TriCo.
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL TABLE
|
|
|
|
Amount
|
|
Name
|
|
|
|
Payable
(1)
|
|
|
|
|
|
|
|
Michael
J. Cushman
(2)
|
|
Payment
of Three-times current Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
1,353,255
|
|
Kevin R. Watson
|
|
Payment of Two-times current
Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
859,181
|
|
Scott R. Louis
|
|
Payment of Two-times current
Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
648,141
|
|
Roger D. Nash
|
|
Payment of Two-times current
Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
601,127
|
|
Gary S. Litzsinger
|
|
Payment of Two-times current
Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
549,358
|
|
Leo J. Graham
|
|
Payment of Two-times current
Salary plus 3-year Average Bonus and Accelerated vesting of Salary Continuation Plan
|
|
$
|
655,317
|
|
|
(1)
|
Each
amount shown in this column is the maximum, as the individual Agreements limit the amount
of payment to any Executive Officer as a result of a change in control, including the
value of acceleration of any equity awards and salary continuation plans, to the maximum
amount permissible to avoid an “excess parachute payment” under Section 280G
of the Internal Revenue Code and may be further limited by federal statute or regulation.
|
|
(2)
|
The
above amount is reduced by $235,131 due to the amount exceeding the 280G threshold.
|
REPORT OF
THE COMPENSATION COMMITTEE
The Compensation
Committee consists of the following members of the Company’s Board of Directors: Martin A. Mariani (Chairman), Roger B.
Kohlmeier, Timothy R. Magill, and J.M. “Mike” Wells, Jr. All members of the Committee are independent as defined under
SOX, the rules and regulations of the SEC and the corporate governance listing standards of NASDAQ.
The Compensation
Committee reviews and recommends to the Board of Directors, salaries, performance based incentives, both annual and long-term,
and other matters relating to the compensation of the Chief Executive Officer and the Chief Executive Officer’s recommendations
as to Executive Officers, taking into consideration non-salary based benefits in the form of Company paid expenses for car allowances
and club memberships. The Committee determines the base salary for the Chief Executive Officer by: (1) examining the Company’s
performance against preset goals, (2) examining the Company’s performance within the banking industry, (3) evaluating the
overall performance of the Chief Executive Officer, and (4) comparing the base salary of the Chief Executive Officer to that of
other chief executive officers in the banking industry in the Company’s market area. In December 2013, the Committee recommended,
and the Board approved, the following executive salaries, unchanged from January 2013, effective January 15, 2014: Mr. Cushman’s
annual salary of $323,512; Mr. Watson’s annual salary of $212,580; Mr. Louis’ annual salary of $174,879;
Mr. Nash’s annual salary of $174,879; Mr. Litzsinger’s annual salary of $149,940; and Mr. Graham’s annual salary
of $193,597.
In December
2013, the Committee recommended, and the Board approved, that no stock options be awarded to the executives or directors as a
result of discussions with the Chief Executive Officer, the General Counsel, outside legal counsel and other consultants in contemplation
of the possible announcement of the Merger Agreement (subsequently signed on January 21, 2014) and the potential impact of the
terms and conditions of the Merger Agreement on director and executive compensation issues, including the awarding of stock options.
The members
of the Compensation Committee have reviewed and discussed the foregoing Compensation Discussion and Analysis with management and,
based on such review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the North Valley Bancorp Annual Report on Form 10-K for the year ended December 31,
2013.
|
Submitted by:
|
|
|
|
|
|
Martin A. Mariani, Chairman
|
|
|
Roger B. Kohlmeier
|
|
|
Timothy R. Magill
|
|
|
J.M. “Mike” Wells, Jr.
|
|
|
|
|
NOTWITHSTANDING
ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE COMPANY’S PREVIOUS OR FUTURE FILINGS UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE THIS PROXY STATEMENT OR FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION, IN WHOLE OR IN PART, THE ABOVE REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
DIRECTOR COMPENSATION
As a result
of the review by the Compensation Committee of certain third party compensation studies and other publicly available information,
the Committee made recommendation to the Board of Directors concerning the forms and amount of Director Compensation that would
be appropriate for the Company and its banking subsidiary based on market study, peer analysis, duties and responsibilities of
an independent director, and performance of the Company and subsidiary Bank. The following sets forth the forms of Director Compensation
that the Company employs to recruit and retain experienced directors.
Director
Deferred Fee Plan
The Director
Deferred Fee Plan (“DDFP”), adopted by the Directors of the Company and North Valley Bank effective January 1, 2001
and restated effective January 1, 2008, is a nonqualified director benefit plan in which the eligible director voluntarily elects
to defer some or all of his or her current fees in exchange for the Company’s promise to pay a deferred benefit. The deferred
fees are credited with interest under the plan and the accrued liability is paid to the Director at retirement. Unlike a 401(k)
plan or a pension plan, a DDFP is a nonqualified plan. Accordingly, this plan is only made available to outside Directors without
regard to the nondiscrimination requirements of qualified plans. The DDFP is also an unfunded plan, which means there are no specific
assets set aside to fund the plan. The Company has purchased life insurance policies in order to provide for payment of its obligations
under the Director Deferred Fee Plan, but the Director has no rights under the plan beyond those of a general creditor of the
plan sponsor. The deferred amount is not taxable income to the individual and is not a tax-deductible expense to the plan sponsor.
The Company
and the Directors who have DDFP Agreements have also entered into split dollar life insurance agreements in connection with the
life insurance policies obtained by the Company and North Valley Bank on their lives.
The DDFP is
embodied in a written agreement between the plan sponsor and the Director selected to participate in the plan. The Agreement includes
provisions that indicate the benefits to be provided at retirement or in the event of death, disability, or termination of Board
membership prior to retirement. The Agreement provides for full vesting of deferred amounts since the Director is setting aside
his or her current fees. If the individual leaves, the account balance would be paid according to the terms specified in the Agreement.
If the individual were to die prior to or during retirement, the promised benefits would be paid to the individual’s beneficiary
or estate.
As of December
31, 2013, the Company’s aggregate accrued obligations under the Directors Deferred Fee Plan were $1,334,000.
Components
of Director Compensation
North Valley
Bancorp reviews the level of compensation of its non-employee Directors on an annual basis. To determine whether the current level
of compensation for its non-employee Directors is appropriate, North Valley Bancorp has historically obtained data from a number
of different sources including:
|
●
|
Publicly
available data describing director compensation in peer companies;
|
|
●
|
Data
provided by the California Banker’s Association with regard to director compensation;
|
|
●
|
Information
obtained directly from other companies.
|
During 2013,
each Director (other than the Chairman) of North Valley Bancorp was paid $3,000 per quarterly meeting of the Board of Directors
and each Director (other than the Chairman) of North Valley Bank was paid $500 per monthly meeting of the Board of Directors.
Payments for attendance at Loan Committee meetings of North Valley Bank during 2013 were $250 per meeting. The Chairman of the
Board of Directors of the Company was paid $5,000 for each quarterly meeting of the Board of Directors and the Chairman of the
Board of Directors of North Valley Bank was paid $850 for each Board of Directors meeting during 2013. The Chairman of the Loan
Committee was paid $350 per meeting during 2013. The Chairman of the Audit Committee was paid a quarterly fee of $1,000 during
2013. The Chairman of the Compensation Committee was paid a quarterly fee of $850 during 2013. In 2013, the Board of Directors
of the Company approved an annual retainer of $18,000 paid quarterly to the Chairman of the Board of the Company and $12,000 to
each of the independent Directors paid quarterly.
Commencing in
1998, each non-employee Director of the Company has received an award of shares of Common Stock as part of his or her annual retainer
as a Director pursuant to the 1998 Employee Stock Incentive Plan and continued under the 2008 Stock Incentive Plan. Each award
is fully vested when granted to the outside Director. The amount of Common Stock awarded annually is 180 shares per Director.
During 2013,
cash compensation paid to non-employee Directors of the Company totaled $154,800. Directors electing coverage under the group
health insurance plan available to employees of the Company have been required to pay 100% of their health insurance premiums
since January 1989.
The following
table sets forth information with regard to compensation earned by non-employee Directors in 2013. Compensation earned by the
only employee Director, Michael J. Cushman, is described in the “Executive Compensation” section above.
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
Fees
Earned or
|
|
|
|
|
|
|
|
|
Incentive
Plan
|
|
|
Compensation
|
|
|
All
Other
|
|
|
|
|
|
|
Paid
in Cash
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
Total
|
|
Name
(1)
|
|
(2)($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(3)($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante W.
Ghidinelli
|
|
$
|
49,600
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
124,456
|
|
Kevin D. Hartwick
|
|
$
|
51,950
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
1,374
|
|
|
|
—
|
|
|
$
|
128,180
|
|
Patrick W. Kilkenny
|
|
$
|
46,800
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
121,656
|
|
Roger B. Kohlmeier
|
|
$
|
44,350
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
119,206
|
|
Timothy R. Magill
|
|
$
|
44,700
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
3,215
|
|
|
|
—
|
|
|
$
|
122,771
|
|
Martin A. Mariani
|
|
$
|
47,700
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
4,020
|
|
|
|
—
|
|
|
$
|
126,576
|
|
Dolores M. Vellutini
|
|
$
|
45,950
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
$
|
120,806
|
|
J.M. Wells, Jr.
|
|
$
|
71,500
|
|
|
$
|
3,391
|
|
|
$
|
71,465
|
|
|
|
—
|
|
|
$
|
28,186
|
|
|
|
—
|
|
|
$
|
174,542
|
|
(1)
|
Includes only Directors who
served during 2013.
|
(2)
|
Includes cash payments made
to Directors of North Valley Bancorp for meetings attended during 2013.
|
(3)
|
The
amounts in this column represent the above-market or preferential earnings on any nonqualified
compensation. The above-market rate is determined by using the amount above 120% of the
Federal long-term rate. For 2013, the interest rate paid was 8.00%, and the above-market
rate was determined to be 3.42%.
|
The following
table shows the aggregate number of stock awards and option awards outstanding for each non-employee Director as of December 31,
2013.
|
|
Aggregate
Stock
|
|
|
Aggregate
Option
|
|
|
Grant
Date Fair Value of
|
|
|
|
Awards
Outstanding
|
|
|
Awards
|
|
|
Stock
and Option Awards
|
|
|
|
as
of 12/31/13
|
|
|
Outstanding
as of
|
|
|
Made
during 2013
|
|
Name
|
|
(#)
|
|
|
12/31/13
(#)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dante W.
Ghidinelli
|
|
|
—
|
|
|
|
21,460
|
|
|
$
|
74,856
|
|
Kevin D. Hartwick
|
|
|
—
|
|
|
|
21,460
|
|
|
$
|
74,856
|
|
Patrick W. Kilkenny
|
|
|
—
|
|
|
|
17,500
|
|
|
$
|
74,856
|
|
Roger B. Kohlmeier
|
|
|
—
|
|
|
|
20,740
|
|
|
$
|
74,856
|
|
Timothy R. Magill
|
|
|
—
|
|
|
|
17,500
|
|
|
$
|
74,856
|
|
Martin A. Mariani
|
|
|
—
|
|
|
|
20,740
|
|
|
$
|
74,856
|
|
Dolores M. Vellutini
|
|
|
—
|
|
|
|
21,460
|
|
|
$
|
74,856
|
|
J.M. Wells, Jr.
|
|
|
—
|
|
|
|
20,760
|
|
|
$
|
74,856
|
|
STOCK OPTION
PLANS
North Valley
Bancorp 1998 Employee Stock Incentive Plan
The North Valley
Bancorp 1998 Employee Stock Incentive Plan (the “Stock Incentive Plan”) was adopted by the Board of Directors in February
1998 and approved by the shareholders of the Company at the 1998 Annual Meeting. The Stock Incentive Plan provides for awards
in the form of options (which may constitute incentive stock options or non-statutory stock options to key employees) and also
provides for the award of shares of Common Stock to outside Directors. The shares of Common Stock authorized to be awarded as
options under the Stock Incentive Plan consist of 120,000 shares increased in an amount equal to 2% of shares outstanding each
year, commencing January 1, 1999. The Stock Incentive Plan defines “key employee” as a common-law employee of the
Company, its parent or any subsidiary of the Company, an “outside Director,” or a consultant or advisor who provides
services to the Company, its parent or any subsidiary of the Company. For purposes of the Stock Incentive Plan, an “outside
Director” is defined as a member of the Board who is not a common-law employee of the Company, its parent or any subsidiary
of the Company.
Pursuant to
the Stock Incentive Plan, as of April 1, 2014, there were outstanding options to purchase 47,718 shares of Company Common Stock.
As provided in the Stock Incentive Plan, the authorization to award incentive stock options terminated on February 19, 2008.
The Stock Incentive
Plan is administered by a committee of the Board of Directors. As of April 1, 2014, the Committee members are Dante W. Ghidinelli,
Kevin D. Hartwick, Patrick W. Kilkenny, Roger B. Kohlmeier, and Dolores M. Vellutini. The Committee must have a membership composition
which enables the Stock Incentive Plan to qualify under SEC Rule 16b-3 with regard to the grant of options or other rights under
the Stock Incentive Plan to persons who are subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee
to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the
Committee may not delegate its authority with regard to the selection for participation of or the granting of options or determining
awards or other rights under the Stock Incentive Plan to persons subject to Section 16 of the Exchange Act.
In the event
that the Company is a party to a merger or other reorganization, outstanding options and stock awards shall be subject to the
agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding options
by the surviving Company or its parent, for their continuation by the Company (if the Company is a surviving Company), for accelerated
vesting and accelerated expiration, or for settlement in cash.
North Valley
Bancorp 2008 Stock Incentive Plan
The North Valley
Bancorp 2008 Stock Incentive Plan (the “2008 Stock Incentive Plan”) was adopted by the Board of Directors in February
2008 and approved by the shareholders of the Company at the 2008 Annual Meeting. The 2008 Stock Incentive Plan provides for the
grant to key employees of stock options, which may consist of incentive stock options or non-statutory stock options. The 2008
Stock Incentive Plan also provides for the grant to outside Directors, and to consultants and advisers to the Company, of stock
options, all of which must be non-statutory stock options. The shares of Common Stock authorized to be awarded as options under
the 2008 Stock Incentive Plan consist of 549,995 shares and shall be increased by a number of shares of Common Stock equal to
2% of the total number of the shares of Common Stock of the Company outstanding at the end of the most recently concluded calendar
year. The vesting period is generally four years; however the vesting period can be modified at the discretion of the Company’s
Board of Directors, and for all options granted in the fourth quarter in 2008 the vesting period is five years. The 2008 Stock
Incentive Plan defines “key employee” as a common-law employee of the Company, its parent or any subsidiary of the
Company, an “outside Director,” or a consultant or advisor who provides services to the Company, its parent or any
subsidiary of the Company. For purposes of the 2008 Stock Incentive Plan, an “outside Director” is defined as a member
of the Board who is not a common-law employee of the Company, its parent or any subsidiary of the Company.
Pursuant to
the 2008 Stock Incentive Plan, as of April 1, 2014, there were outstanding options to purchase 302,780 shares of Company Common
Stock.
The 2008 Stock
Incentive Plan is administered by a committee of the Board of Directors. As of April 1, 2014, the Committee members are Dante
W. Ghidinelli, Kevin D. Hartwick, Patrick W. Kilkenny, Roger B. Kohlmeier, and Dolores M. Vellutini. The Committee must have a
membership composition which enables the Stock Incentive Plan to qualify under SEC Rule 16b-3 with regard to the grant of options
or other rights under the Stock Incentive Plan to persons who are subject to Section 16 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Subject to the requirements of applicable law, the Committee may designate persons
other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it
may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation
of or the granting of options or determining awards or other rights under the Stock Incentive Plan to persons subject to Section
16 of the Exchange Act.
In the event
that the Company is a party to a merger or other reorganization, outstanding options and stock awards shall be subject to the
agreement of merger or reorganization. Such agreement may provide, without limitation, for the assumption of outstanding options
by the surviving Company or its parent, for their continuation by the Company (if the Company is a surviving Company), for accelerated
vesting and accelerated expiration, or for settlement in cash.