UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Preliminary
Proxy Statement
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Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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American River Bankshares
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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appropriate box):
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and 0-11.
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Amount Previously Paid:
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AMERICAN
RIVER BANKSHARES
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
May
17, 2018
TO THE
SHAREHOLDERS OF AMERICAN RIVER BANKSHARES:
NOTICE IS
HEREBY GIVEN
that, pursuant to the call of its Board of Directors, the Annual Meeting of Shareholders (the “Meeting”)
of American River Bankshares (the “Company”) will be held on Thursday, May 17, 2018 at 3:00 p.m. Pacific Time, at
the Rancho Cordova City Hall, American River Room North, 2729 Prospect Park Drive, Rancho Cordova, CA 95670 for the following
purposes:
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1.
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Election
of Directors
. To elect nominees, Nicolas C. Anderson, Kimberly A. Box, Charles
D. Fite, Jeffery Owensby, David E. Ritchie, Jr., William A. Robotham, Stephen H. Waks,
Philip A. Wright, and Michael A. Ziegler to serve until the 2019 Annual Meeting of Shareholders
and until their successors are duly elected and qualified.
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2.
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Ratification
of Independent Registered Public Accounting Firm
. To ratify the selection of
Crowe Horwath, LLP as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2018.
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3.
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Executive
Compensation
. To hold an advisory (non-binding) vote to approve named executive
officer compensation.
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4.
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Other
Business
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To transact such other business as may properly come before
the Meeting and any and all postponements or adjournments thereof.
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Article
III, Section 3.3 of the bylaws of the Company provides for the nomination of directors in the following manner:
“Nominations
for election of members of the board may be made by the board or by any holder of any outstanding class of capital stock of the
corporation entitled to vote for the election of directors. Notice of intention to make any nominations (other than for persons
named in the notice of the meeting called for the election of directors) shall be made in writing and shall be delivered or mailed
to the president of the corporation by the later of: (i) the close of business twenty-one (21) days prior to any meeting of shareholders
called for the election of directors; or (ii) ten (10) days after the date of mailing of notice of the meeting to shareholders.
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 capital stock of
the corporation owned by each proposed nominee; (d) the name and residence address of the notifying shareholder; (e) the number
of shares of capital stock of the corporation owned by the notifying shareholder; (f) the number of shares of capital stock of
any bank, bank holding company, savings and loan association, or other depository institution owned beneficially by the nominee
or by the notifying shareholder and the identities and locations of any such institutions; and (g) whether the proposed nominee
has ever been convicted of or pleaded nolo contendere to any criminal offense involving dishonesty or breach of trust, filed a
petition in bankruptcy or been adjudged bankrupt. The notification shall be signed by the nominating shareholder and by each nominee,
and shall be accompanied by a written consent to be named as a nominee for election as a director from each proposed nominee.
Nominations not made in accordance with these procedures shall be disregarded by the chairperson of the meeting, and upon his
or her instructions, the inspectors of election shall disregard all votes cast for each such nominee. The foregoing requirements
do not apply to the nomination of a person to replace a proposed nominee who has become unable to serve as a director between
the last day for giving notice in accordance with this paragraph and the date of election of directors if the procedure called
for in this paragraph was followed with respect to the nomination of the proposed nominee.”
The Board
of Directors has fixed the close of business on March 26, 2018 as the record date for determination of shareholders entitled to
notice of, and to vote at, the Meeting and any and all postponements or adjournments thereof.
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BY
ORDER OF THE BOARD OF DIRECTORS
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Stephen H. Waks
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Dated: April 6,
2018
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Corporate Secretary
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Please
sign and return the enclosed Proxy Card (“PROXY”) as promptly as possible and indicate if you will attend the meeting
in person. ALTERNATIVELY, a shareholder can choOse to vote by telephone or by using the internet as indicated on the proxy. if
you vote by telephone or electronically through the internet, you do not need to return the proxy. please refer to the proxy statement
AND PROXY for a more complete description of the procedures for telephone and internet voting.
THIS
PAGE INTENTIONALLY LEFT BLANK
AMERICAN
RIVER BANKSHARES
PROXY
STATEMENT
FOR
ANNUAL
MEETING OF SHAREHOLDERS
May
17, 2018
INTRODUCTION
This
proxy statement is furnished in connection with the solicitation of proxies for use at the 2018 Annual Meeting of Shareholders
(the “Meeting”) of American River Bankshares (the “Company”) to be held on Thursday, May 17, 2018, at
3:00 p.m. Pacific Time, at the Rancho Cordova City Hall, American River Room North, 2729 Prospect Park Drive, Rancho Cordova,
CA 95670 for the following purposes and at any and all postponements or adjournments thereof. Only shareholders of record on March
26, 2018 (the “Record Date”) will be entitled to notice of the Meeting and to vote at the Meeting. At the close of
business on the Record Date, the Company had outstanding and entitled to be voted 5,883,781 of the Company’s no par value
common stock. Directions to the Meeting can be found later in this proxy statement.
Revocability
of Proxies
A
proxy for voting your shares at the Meeting is enclosed. Any shareholder who executes and delivers such proxy has the right to
and may revoke it at any time before it is exercised by filing with the Secretary of the Company an instrument revoking it or
a duly executed proxy bearing a later date. In addition, a proxy will be revoked if the shareholder executing such proxy is in
attendance at the Meeting and such shareholder votes in person. Subject to such revocation, all shares represented by a properly
executed proxy received in time for the Meeting will be voted by the proxyholders in accordance with the instructions specified
on the proxy.
Unless
otherwise directed in the accompanying proxy, the shares represented by your executed proxy will be voted “FOR” the
nominees for election of directors named herein, “FOR” the ratification of the selection of Crowe Horwath LLP as the
Company’s independent registered public accounting firm for the 2018 fiscal year, and “FOR” approval on an advisory
(non-binding) basis of the Company’s named executive officer compensation.
If any other business is properly presented
at the Meeting and at any and all postponements or adjournments thereof, the proxy will be voted in accordance with the recommendations
of management.
Solicitation
of Proxies
This
solicitation of proxies is being made by the Board of Directors of the Company. The expenses of preparing, assembling, printing,
and mailing this proxy statement and the materials used in this solicitation of proxies will be borne by the Company. It is contemplated
that proxies will be solicited principally through the use of the mail, but directors, officers, and employees of the Company
may solicit proxies personally or by telephone, without receiving special compensation. The Company will reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy statement and materials
to shareholders whose stock in the Company is held of record by such entities. In addition, the Company may use the services of
individuals or companies it does not regularly employ in connection with this solicitation of proxies, if management determines
it advisable.
Voting
Securities
On
any matter submitted to the vote of the shareholders, each holder of common stock will be entitled to one vote, in person or by
proxy, for each share of common stock he or she held of record on the books of the Company as of the Record Date.
A
majority of the shares entitled to vote, represented either in person or by a properly executed proxy, will constitute a quorum
at the Meeting. If, by the time scheduled for the Meeting, a quorum of shareholders of the Company is not present or if a quorum
is present but sufficient votes in favor of any of the proposals have not been received, the Meeting may be held for purposes
of voting on those proposals for which sufficient votes have been received, and the persons named as proxyholders may propose
one or more adjournments of the Meeting to permit further solicitation of proxies with respect to any of the proposals as to which
sufficient votes have not been received.
Votes
cast will be counted by the Inspector of Election for the Meeting. Approval of any proposal (other than the election of
directors) requires the affirmative vote of a majority of the shares represented and voting at the Annual Meeting which also constitutes
a majority of the required quorum (unless a greater number is required as described in a proposal). In the election of directors,
the nine (9) nominees receiving the highest number of affirmative votes will be elected. Shares represented by proxies that
reflect abstentions or “broker non-votes” will be treated by the Inspector of Election as shares present and entitled
to vote for purposes of determining the presence of a quorum; however, broker non-votes will not be treated as shares voted on
any proposal and therefore will have no effect upon the outcome of any proposal. Abstentions will not be treated as affirmative
votes on any proposal at the Meeting and will have the same effect as a vote “against” a proposal (other than the
election of directors proposal) if the affirmative votes in favor of a proposal are less than a majority of the required quorum.
“Broker non-votes” means shares held by brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power under applicable
rules of the stock exchange or other self-regulatory organization of which the broker or nominee is a member.
Any
shareholder may choose to vote shares of common stock by telephone by calling the toll-free number (at no cost to the shareholder)
indicated on the proxy. Telephone voting is available 24 hours per day. Easy to follow voice prompts allow a shareholder to vote
shares and to confirm that instructions have been properly recorded. The Company’s telephone voting procedures are designed
to authenticate the identity of shareholders by utilizing individual control numbers.
If a shareholder votes by telephone,
there is no need to return the proxy.
Any
shareholder may choose to vote shares of common stock electronically by using the Internet, as indicated on the proxy. Internet
voting procedures are designed to authenticate the identity of a shareholder and to confirm that instructions have been properly
recorded. The Company believes these procedures are consistent with the requirements of applicable law.
If a shareholder votes
electronically by using the Internet, there is no need to return the proxy.
If
you vote by telephone or Internet, your vote must be received by 1:00 a.m., Eastern Time, on May 17, 2018 to ensure that your
vote is counted.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information as of March 26, 2018, concerning the equity ownership of the Company’s directors,
director-nominees, and the executive officers named in the “Summary Compensation Table” in this proxy statement, shareholders
known to us to beneficially own more than 5% of our common stock, and directors, director-nominees, and executive officers as
a group. Unless otherwise indicated in the notes to the table, each person listed below possesses sole voting and sole investment
power, or shared voting and investment power with a spouse, for the shares of the Company’s common stock listed below. All
of the shares shown in the following table are owned both of record and beneficially except as indicated in the notes to the table.
The Company has only one class of shares outstanding, common stock. Management is not aware of any arrangements which may, at
a subsequent date, result in a change in control of the Company. The table below does not include David T. Taber, who resigned
from all positions with the Company and American River Bank on October 31, 2017 and Loren E. Hunter, who resigned from all positions
with the Company and American River Bank on January 3, 2018.
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Amount
and
Nature of
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Name
and Address (1) of
Beneficial Owner
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Beneficial
Ownership
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Percent
of
Class(2)
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Nicolas
C. Anderson
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—
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(3)
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—
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Kevin
B. Bender
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31,192
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(4)
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0.5
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%
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Kimberly
A. Box
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18,724
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(5)
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0.3
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%
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Mitchell
A. Derenzo
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74,439
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(6)
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1.3
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%
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Charles
D. Fite
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172,457
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(7)
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2.9
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%
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Jeffery
Owensby
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6,515
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0.1
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%
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Dennis
F. Raymond
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—
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(8)
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—
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David
E. Ritchie
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11,663
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(9)
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0.2
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%
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William
A. Robotham
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96,982
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(10)
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1.6
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%
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Stephen
H. Waks
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76,810
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(11)
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1.3
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%
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Philip
A. Wright
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83,721
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(12)
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1.4
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%
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Michael
A. Ziegler
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24,484
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(13)
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0.4
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%
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All
directors, director-nominees, and executive officers as a group (11 persons)
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596,987
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(14)
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10.1
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%
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5%
or Greater Owners of Voting Securities
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Amount
and
Nature of
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Name
and Address of Beneficial Owner
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Beneficial
Ownership
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Percent
of
Class
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Basswood
Capital Management, L.L.C.
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635,735
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(15)
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10.8
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%
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645 Madison Avenue, 10
th
Floor,
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New York, NY 10022
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Maltese Capital Management,
LLC
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505,354
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(16)
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8.6
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%
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150 East 52
nd
Street, 30
th
Floor, New
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York, NY 10022
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Dimensional Fund Advisors
LP
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365,922
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(17)
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6300 Bee Cave Road Building
One
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6.3
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%
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Austin, TX 78746
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The Banc Funds Company,
LLC.
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352,419
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(18)
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6.0
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%
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20 North Wacker Drive,
Suite 3300
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Chicago, IL 60606
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Firefly Value Partners,
LP
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331,533
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(19)
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5.6
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%
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601 West 26
th
Street, Suite 1520
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New York, NY 10001
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(1)
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The
address for all persons listed is c/o American River Bankshares, 3100 Zinfandel Drive,
Suite 450, Rancho Cordova, CA 95670.
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(2)
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Includes
shares subject to stock options exercisable within 60 days of the Record Date and restricted
shares.
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(3)
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Mr.
Anderson was named to the Board of Directors effective March 22, 2018.
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(4)
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Includes
14,909 shares which Mr. Bender has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 7,069 restricted shares.
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(5)
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Includes
1,247 restricted shares.
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(6)
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Includes
12,579 shares which Mr. Derenzo has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 7,205 restricted shares.
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(7)
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Includes
2,785 shares which Mr. Fite has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 1,627 restricted shares.
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(8)
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Mr.
Raymond joined the Company as its Executive Vice President and Chief Lending Officer
on December 7, 2017.
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(9)
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Mr.
Ritchie was appointed to the Company’s and American River Bank’s Boards of
Directors and to the position of President and Chief Executive Officer effective November
6, 2017. Includes 11,663 restricted shares.
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(10)
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Includes
2,785 shares which Mr. Robotham has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 1,247 restricted shares.
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(11)
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Includes
2,785 shares which Mr. Waks has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 1,247 restricted shares.
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(12)
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Includes
4,360 shares which Mr. Wright has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 1,247 restricted shares.
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(13)
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Includes
2,785 shares which Mr. Ziegler has the right to acquire upon the exercise of stock options
within 60 days of the Record Date and 1,247 restricted shares.
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(14)
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Includes
42,988 shares subject to stock options exercisable within 60 days of the Record Date
and 33,799 restricted shares.
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(15)
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This
information is taken from a Schedule 13G/A as of December 31, 2017, filed with the SEC
on February 9, 2018 by Basswood Capital Management LLC, which reflects ownership of 635,735
shares.
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(16)
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This
information is taken from a Schedule 13G/A as of December 31, 2017, filed with the SEC
on February 5, 2018 by Maltese Capital Management LLC, which reflects ownership of 505,354
shares.
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(17)
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This
information is taken from Schedule 13G/A as of December 31, 2017, filed with the SEC
on February 9, 2018 by Dimensional Fund Advisors LP, which reflects ownership of
365,922 shares
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(18)
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This
information is taken from Schedule 13G/A as of December 31, 2017, filed with the SEC
on February 13, 2018 by The Banc Funds Company, L.L.C., which reflects ownership
of 352,419 shares.
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(19)
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This
information is taken from Schedule 13G/A as of December 31, 2017, filed with the SEC
on February 14, 2018 by Firefly Value Partners, LP, which reflects ownership of
331,533 shares.
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PROPOSAL
NO. 1
ELECTION
OF DIRECTORS
The
Company’s Bylaws provide that the number of directors of the Company shall not be less than eight (8) nor more than fifteen
(15) until changed by an amendment to Article III, Section 3.2 of the Bylaws duly adopted by the vote or written consent of holders
of a majority of the outstanding shares entitled to vote. The exact number of directors shall be fixed from time to time within
the authorized range by, among other means, (i) a resolution duly adopted by the Board of Directors; or (ii) a bylaw or amendment
thereof duly adopted by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum
is present; or (iii) by the written consent of the holders of a majority of the outstanding shares entitled to vote.
The
Board of Directors has nominated the nine (9) incumbent directors named below for election as directors of the Company and to
apprise you of their qualifications to serve as directors, we include the information below concerning each of the nominees, as
of the Record Date, that each nominee has given us regarding age, current positions held, principal occupation and business experience
for the past five years, and the names of other publicly-held companies of which the nominee currently serves as a director or
has served as a director during the past five years. In addition to the information presented regarding each nominee’s specific
experience, qualifications, attributes and skills that led the Nominating Committee to recommend that our Board of Directors nominate
these individuals, all of the nominees have a reputation for honesty, integrity and adherence to high ethical standards. The Nominating
Committee also believes that the nominees possess the willingness to engage management and each other in a positive and collaborative
fashion, and are prepared to make the significant commitment of time and energy to serve on our Board of Directors and its committees.
The following persons are the nominees of the Board of Directors for election to serve for a one-year term until the 2019 annual
meeting of shareholders and until their successors are duly elected and qualified:
NICOLAS
C. ANDERSON
Age: 33, Director since 2018; Principal Occupation: Chief Executive Officer, Capitol Digital & Califorensics,
2015 – Present; Managing Partner, Elm Grove Partners; 2013 – Present.
Mr.
Anderson is Chief Executive Officer of Capitol Digital & Califorensics, a company that provides digital forensics and high-value
digital discovery services to law firms, corporations and government agencies. Headquartered in Sacramento, the company
has been operating in the region for over 20 years. Mr. Anderson is also currently a managing Partner of Elm Grove Partners,
a private investment firm headquartered in New Haven, Connecticut, organized to acquire and operate companies in the lower middle
market. He has been involved in a variety of community-based organizations including presently, a mentor in “Streetwise
Partners,” a New York based program that matches aspiring professionals from low income backgrounds with career mentors
to provide them the support and guidance they may not receive elsewhere to reach their career goals. Mr. Anderson graduated
from Harvard University with an AB in Economics (Bachelor of
A
rts degree in Economics)
and graduated with Distinction from the Harvard Business School with a Master of Business Administration degree. We believe
that Mr. Anderson’s strong educational background, financial and investment experience as well as being a CEO directing
strategy and operations of an expanding company qualifies him to serve on our Board of Directors.
KIMBERLY
A. BOX
Age: 58, Director since 2012; Principal Occupation: President & CEO since 2017 and President & COO since
2016, of Gatekeeper Innovation, Inc.; President & CEO, Kamere, Inc. since 2011.
Ms.
Box is President and CEO of Gatekeeper Innovation, Inc., a company that provides products for medication safekeeping. She is a
former Hewlett Packard Vice President with vast experience in the IT industry. Over her career, she has led IT outsourcing services,
product engineering and support services including leading a $1 billion global organization. Ms. Box is also very active in the
community, having served on the board of directors of several not-for-profit organizations including the local chapter of the
American Red Cross. She is also a dynamic international keynote speaker on topics including leadership, diversity, transformation
and has authored the book, “Woven Leadership – The Power of Diversity to Transform Your Organization for Success.”
Ms. Box is currently Chairman of American River Bank’s Loan Committee. Her extensive experience in the IT industry, her
entrepreneurial acumen and her active involvement in the community provides valuable insight and contribution to our Board of
Directors.
CHARLES
D. FITE
Age: 60. Director since 1993; Principal Occupation: President, Fite Development Company in Sacramento since 1980.
President, Fite Properties Inc. since 1999 and President, Fite Construction Inc. since 1999.
Mr.
Fite is President of the Fite Development Company, founded in 1970 by D. Bruce Fite. As President, Mr. Fite is involved
in all aspects of the company’s operations including development, management, marketing and financing of both existing and
proposed projects. Mr. Fite serves as Chairman of the American River Bankshares Foundation, a non-profit organization whose
mission is to serve the needs of the most vulnerable women and children within our communities. Mr. Fite is a licensed real
estate broker and has over 30 years of experience as a real estate developer. He has been the Chairman of the Board of Directors
of American River Bankshares since 2001. Mr. Fite’s qualifications to serve as Chairman of our Board of Directors
include his business acumen, integrity, leadership and knowledge of the commercial real estate market, as well as his community
service.
JEFFERY
OWENSBY
Age: 60. Director since 2016; Principal Occupation: Partner, Kennaday Leavitt Owensby, PC, October 2016 to present.
Partner, Rediger, McHugh & Owensby, LLP, November 2007 to October 2016.
Mr.
Owensby is an Equity Partner at Kennaday Leavitt Owensby PC, a healthcare and employment legal practice. His 34 years of industry
experience include top professional roles in labor and employment law. He is regularly called upon as a subject matter expert
and is an active contributor pro bono with many philanthropic and community entities. Mr. Owensby serves on the Board of Directors
of the American River Bankshares Foundation, a non-profit organization whose mission is to serve the needs of the most vulnerable
women and children within our communities. Mr. Owensby’s extensive legal experience, analytical capabilities and diligence
in guiding organizations through complex decision-making processes makes him a great addition to the Board of Directors.
DAVID
E. RITCHIE, JR.
Age: 59. Director since 2017; Principal Occupation: President and Chief Executive Officer of American
River Bankshares since 2017.
Mr.
Ritchie’s prior roles include Senior Vice President and Regional Manager, Commercial Banking at US Bank, Executive Vice
President and Regional Manager of Commercial Banking at One West Bank and 25 years in various leadership positions with Wells
Fargo Bank. He attended University of Southern California and University of California, Irvine and holds a Bachelor of Arts degree
in Economics. He has served on the board of directors of the San Juan Capistrano Chapter of Legatus and is past chairman of the
board of directors of the Orangewood Children’s Foundation in Southern California, an organization he was involved with
for thirteen years, among many other community roles. Mr. Ritchie’s extensive experience in the banking industry as well
as his involvement in the community makes him highly qualified to serve on our Board of Directors.
WILLIAM
A. ROBOTHAM
Age: 76. Director since 2004; Principal Occupation: CPA, Former Executive Partner, Pisenti & Brinker LLP,
Certified Public Accountants in Santa Rosa since 1996.
Mr.
Robotham has been a Certified Public Accountant since 1967. He joined Pisenti & Brinker LLP in 1966, became a partner in 1969,
managing partner in 1983 and executive partner in 1996. He has served as the partner-in-charge of the Auditing and Accounting
department, the Tax department and the Management Advisory Services department. Mr. Robotham currently works in tax, general practice
and management consulting for the firm. Mr. Robotham is currently Vice Chairman of the Board of Directors of American River Bankshares
and serves as the Chairman of the Audit Committee for American River Bankshares. Mr. Robotham was a founding member and a director
of North Coast Bank. He remained on the North Coast Bank board of directors until 2003 when North Coast Bank was merged into American
River Bank. He joined the American River Bank Board of Directors in 2004. Mr. Robotham has also been the President of Randal Nutritional
Products, Inc. (“Randal”) since 2000. Randal is based in Santa Rosa and has been manufacturing nutritional products
since 1947. Mr. Robotham is also a founding member of the Board of Directors of the American River Bankshares Foundation and serves
as the Foundation’s Vice Chairman. Mr. Robotham’s experience in public and private business and his more than
40 years of experience in the field of public accounting led us to conclude he should serve on our Board of Directors.
STEPHEN
H. WAKS
Age: 71. Director since 1986; Principal Occupation: Attorney-at-Law; Owner of Stephen H. Waks, Inc. dba Waks Law
Firm since 1979.
Mr.
Waks has been a practicing attorney since 1974, and has practiced law in Sacramento since 1977. His law practice has focused on
real estate law, tax law and business law. In his law practice, Mr. Waks has developed expertise in dealing both on a business
level and on a legal level with many banks and financial institutions. He has also represented many clients as they negotiated
and documented business and real estate loans. His knowledge of the real estate market and his experience has made him knowledgeable
about the opportunities that exist for a community bank to improve its services and operations and makes his continued
service on our Board of Directors a valuable asset.
PHILIP
A. WRIGHT
Age: 71. Director since 2009; Principal Occupation: Real Estate Broker and President and Owner of Wright Investment
Inc. dba Wright Realty since 1984; Developer, Wright Investment since 1984 and President, Trowbridge & Wright Investment Inc.
since 1976.
Mr.
Wright was a founding member of the board of directors of North Coast Bank and was its first Chairman from 1990 to 1995. He remained
on the North Coast Bank Board of Directors until 2003 and joined the American River Bank Board of Directors in 2004 when the two
banks merged. Mr. Wright was named to the American River Bankshares Board of Directors in 2009. Mr. Wright has been
an active real estate agent/broker for over 40 years. He owned a mortgage company for four years and presently manages his
own real estate business. Mr. Wright has been involved in subdividing and marketing land in Sonoma County since 1977, which
included processing all governmental permits, project financing, budgets, construction bidding and overseeing construction of
the final project. Mr. Wright’s extensive experience in the real estate business as well as in the banking industry
qualifies him to serve as a member of our Board of Directors.
MICHAEL
A. ZIEGLER
Age: 73. Director since 2002; Principal Occupation: President and Chief Executive Officer of PRIDE Industries
in Roseville, California.
As
President/CEO of PRIDE Industries, Mr. Ziegler oversees a company with over $330 million in sales and more than 5,600 part-time
and full time employees working throughout the country. Mr. Ziegler attended San Francisco State University and completed
his MBA at the University of San Francisco. He was a graduate of the Stanford Small Business Ex
ecutive
Program and has an Honorary Ph.D. from the Golden Gate University. His entrepreneurial background revolves around business
ownership, sales/marketing and leadership. He serves on the board of directors of Greater Sacramento Area Economic Council, UC
Davis Health System National Board of Advisors, Teichert Inc., California Chamber of Commerce, PRIDE Foundation, and he is a founding
member of the board of directors and a senior fellow of the American Leadership Forum Mountain Valley Chapter. Mr. Ziegler’s
experience in running a large-scale company including his involvement in many academic and community activities makes him a valuable
member of our Board of Directors.
All
proxies will be voted for the election of the nine (9) nominees recommended by the Board of Directors, unless authority to vote
for the election of any director or all directors is withheld. All of the nominees are incumbent directors.
If
any of the nominees should unexpectedly decline or be unable to serve as a director, the proxies may be voted for a substitute
nominee to be designated by the Board of Directors. The Board of Directors has no reason to believe that any nominee will become
unavailable and has no present intention to nominate persons in addition to or in lieu of those named above.
None
of the Company’s directors, nominees for election as directors listed above, or executive officers listed on page 3 of this
proxy statement, 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 between any two or more of the directors,
nominees for director, or executive officers. Except as disclosed above, 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. None of the nominees were 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.
Recommendation
of Management
The Board
of Directors recommends a vote “FOR” each of the nine (9) nominees listed above.
CORPORATE
GOVERNANCE
Our
Board of Directors and management are dedicated to the standard of exemplary corporate governance and believe that corporate governance
is vital to the continued success of the Company. The Board of Directors annually reviews and updates the charters of the committees
of the Board of Directors in response to evolving “best practices” and the results of changes in the regulatory environment.
Director
Independence
Our
Board of Directors has determined that each of our non-employee directors (excluding David E. Ritchie, Jr.) is independent. Each
of our Audit, Nominating and Compensation Committees is composed only of independent directors.
Our
Board of Directors has adopted certain standards to assist it in assessing the independence of each of our directors. A director
who otherwise meets the definition of independence under applicable NASDAQ listing standards may be deemed “independent”
by the Board of Directors after consideration of all of the relationships between the Company and the director, or any of his
or her immediate family members (as defined in the NASDAQ listing rules), or any entity with which the director or any of his
or her immediate family members is affiliated by reason of being a partner, officer or a significant shareholder thereof. However,
ordinary banking relationships (such as depository, lending, and other services readily available from other financial institutions)
are not considered by the Board of Directors in determining a director’s independence, as the Board of Directors considers
these relationships to be immaterial. A banking relationship is considered “ordinary” if:
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the
relationship is on substantially the same terms as those prevailing at the time for comparable
transactions with non-affiliated persons;
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with
respect to an extension of credit, it has been made in compliance with applicable law,
including Regulation O of the Board of Governors of the Federal Reserve System and Section
13(k) of the Securities Exchange Act of 1934;
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no
event of default has occurred and is continuing beyond any period of cure; and
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the
relationship has no other extraordinary characteristics.
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In
assessing the independence of our directors, our Board of Directors carefully considered all of the business relationships between
the Company and our directors or their affiliated companies, other than ordinary banking relationships. This review was based
primarily on responses of the directors to questions in a directors’ and officers’ questionnaire regarding employment,
business, familial, compensation and other relationships with the Company and our management. Where business relationships other
than ordinary banking relationships existed, the Board of Directors determined that, except in the case of Mr. Ritchie, none
of the relationships between the Company and the directors or the directors’ affiliated companies impair the directors’
independence because the amounts involved are immaterial to the directors or to those companies when compared to their annual
income or gross revenues. The Board of Directors also determined for all of the relationships between the Company and our directors
or the directors’ affiliated companies, that none of the relationships had unique characteristics that could influence the
director’s impartial judgment as a director of the Company.
Code of Ethics
The
Company has adopted a Code of Ethics that complies with the rules promulgated by the Securities and Exchange Commission pursuant
to the Sarbanes-Oxley Act of 2002 and applicable NASDAQ listing rules. The Code of Ethics requires that the Company’s directors,
officers (including the principal executive, financial and accounting officers, or controller and persons performing similar functions)
and employees conduct business in accordance with the highest ethical standards and in compliance with all laws, rules and regulations
applicable to the Company. The Code of Ethics is intended to supplement the provisions of any other personnel policies of the
Company or codes of conduct, which may establish additional standards of ethical behavior applicable to the Company’s directors,
officers and employees.
The
Code of Ethics was filed as Exhibit 14.1 to the Company’s 2003 Annual Report on Form 10-K and may be accessed through the
Company’s website by following the instructions for accessing reports filed with the Securities and Exchange Commission
hereafter in this proxy statement under the heading “Website” or a copy is available, free of charge, upon written
request to Mitchell A. Derenzo, American River Bankshares, 3100 Zinfandel Drive, Suite 450, Rancho Cordova, CA 95670.
Leadership
Structure
The
positions of the Chairman of the Board of Directors and the President and Chief Executive Officer (“CEO”) are filled
by different persons. Mr. Fite, an independent director, serves as the Board of Directors Chairman, while Mr. Ritchie serves as
President and CEO. The Board of Directors believes that separating the roles of Chairman and President and CEO is preferable and
in the best interests of shareholders because it enhances the Board of Directors’ ability to fulfill its oversight responsibilities,
inclusive of senior management. Separating the positions also provides an independent viewpoint and focus at meetings of the Board
of Directors, and improves communication between management and the Board of Directors by giving our President and CEO a single
initial source for Board of Directors-level communication and input on significant decisions.
Risk Oversight
Risk
management is the responsibility of management and risk oversight is the responsibility of the Board of Directors. The Board of
Directors administers its risk oversight function principally through its division of responsibility within its committee structure,
with each committee being responsible for overseeing risk within its area of responsibility. For example, the Loan Committee of
American River Bank (the “Loan Committee”) plays an important role in overseeing our loan functions and monitoring
related risks. Responsibilities of our various committees are discussed under each committee in this proxy statement. Significant
risk oversight matters considered by the committees are reported to and considered by the Board of Directors. Some significant
risk oversight matters are reported directly to the Board of Directors, 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 cybersecurity, credit, interest rate,
liquidity, and compliance risks, and other 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 of Directors and its committees generally include information
with respect to risk. The Board of Directors 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 of Directors and its committees also
raise risk issues on their own initiative.
To
assist the Company with respect to enterprise risk management, and to assist the Board of Directors and its committees with respect
to risk oversight, the Company has an Enterprise Risk Management Committee made up of appropriate management personnel that works
to identify and assess risks across all operations of the Company. The Enterprise Risk Management Committee reports to the Board
of Directors and all of its members attend either Board of Directors and/or other committee meetings as needed.
The
Company does not believe the risk oversight function of the Board of Directors has had a significant effect on the leadership
structure, although a change in leadership structure could result in changes in the implementation of the risk oversight function.
Review of Risk Associated With
Compensation Plans
The
Company develops and implements compensation plans that provide strategic direction to the participants and engages them in the
Company’s success, which contributes to shareholder value. We believe our approach to goal setting, establishing targets
with payouts at multiple levels of performance, evaluation of performance results and our discretion to approve or disapprove
the payout of incentive compensation helps to mitigate excessive risk-taking that could harm Company value or reward poor judgment
by our executive officers. Compensation policies and practices are determined by reviewing compensation analyses including industry/market
benchmarking reports to determine competitive pay packages. The Company’s variable pay programs are designed to reward outstanding
individual and team performance while mitigating risk taking behavior that might affect financial results. Performance incentive
compensation rewards for all plans continue to be focused on results that possibly impact earnings, profitability, credit quality,
loan growth, deposit growth, sound operations and compliance, sustainable culture, and leadership excellence. Incentive compensation
plans, which are reviewed and revised on an annual basis, have defined terms and conditions which enable the Company to adjust
the final scoring and payments under the plans. Generally, there is more oversight of plans that have a higher degree of risk,
larger payouts, and that could have the greatest negative impact on the Company and American River Bank’s safety and soundness,
such as credit related risks. Plan reviews and approvals increase before any payments are made as the risks associated with a
plan increase.
The
Compensation Committee met with senior management officers, including the Human Resources Officer, of the Company to review the
2017 incentive compensation plans and concluded that, based on the controls described above and elsewhere in this proxy statement,
those plans do not present risks that are reasonably likely to have a material adverse effect on the Company.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors, executive officers and any persons
beneficially owning ten percent or more of the Company’s common stock to timely file initial reports of ownership and reports
of changes in that ownership with the Securities and Exchange Commission. Such persons are required by Securities and Exchange
Commission regulations to send copies of such reports to the Company. To the Company’s knowledge, based solely on a review
of the copies of such reports furnished to the Company and written representations that no other reports were required during
the fiscal year ended December 31, 2017, the Company believes all such filing requirements applicable to its directors, executive
officers and ten percent shareholders were met.
Committees
of the Board of Directors
Nominating
Committee.
The Nominating Committee, whose members are Charles D. Fite (Chairman), Stephen H. Waks and Michael A. Ziegler,
has the responsibility to assist the Board of Directors by (a) establishing criteria for candidates and identifying, evaluating,
and recommending candidates, including candidates proposed by shareholders, for election to the Board of Directors, and (b) periodically
reviewing and making recommendations on the composition of the Board of Directors. The Nominating Committee met twice in 2017.
All members of the Nominating Committee are “independent,” as that term is defined under applicable NASDAQ listing
rules, including Director Fite from whom the Company has leased one of its bank premises since 1985. The current lease terms and
the Company’s policy are disclosed under “Transactions with Related Persons” on page 36 of this proxy statement.
Candidates are selected in accordance with a Nominating Charter. The Nominating Charter includes a policy for consideration of
candidates proposed by shareholders. Any recommendations by shareholders will be evaluated by the Board of Directors in the same
manner as any other recommendation and in each case in accordance with the Nominating Charter. Shareholders that desire to recommend
candidates for consideration by the Company’s Board of Directors should mail or deliver written recommendations to the Company
addressed as follows: Board of Directors, American River Bankshares, 3100 Zinfandel Drive, Suite 450, Rancho Cordova, CA 95670.
Each recommendation should include biographical information indicating the background and experience of the candidate that qualifies
the candidate for consideration as a director for evaluation by the Board of Directors. In addition to minimum standards of independence
for non-employee directors and financial literacy, the Board of Directors considers various other criteria including the candidate’s
experience and expertise, financial resources, ability to devote the time and effort necessary to fulfill the responsibilities
of a director and involvement in community activities in the market areas served by the Company that may enhance the reputation
of the Company.
The provisions of our Nominating Committee Charter regarding diversity,
as a matter of practice, may seek or favor a candidate with particular areas of expertise that complement our existing Board of
Directors composition or satisfy legal requirements. In general, our objective is for the Board of Directors to reflect a diversity
of perspectives and a broad range of experiences through individuals that possess the background, skills, expertise, and commitment
necessary to make a significant contribution to our Company. Qualified candidates are considered without regard to race, color,
religion, sex, ancestry, national origin, disability, or any other factor that qualifies the candidate as a member of a protected
class under applicable law.
The
Company operates in a highly regulated industry and is subject to the supervision, regulation and periodic examination by state
and federal banking regulatory authorities including the Board of Governors of the Federal Reserve System, California Department
of Business Oversight and Federal Deposit Insurance Corporation. Directors of the Company are subject to certain rules and regulations
and potential liabilities not otherwise applicable to directors of non-banking organizations. Consequently, evaluation of candidates
by the Company’s Board of Directors may include more extensive inquiries into personal background information including
confirmation of the accuracy and completeness of background information by (a) requiring candidates to complete questionnaires
to elicit information of the type required to be disclosed by the Company in reports filed with the Securities and Exchange Commission,
NASDAQ, or such state and federal banking regulatory authorities, (b) conducting background investigations by qualified independent
organizations experienced in conducting criminal and civil investigatory reviews, and (c) such other personal and financial reviews
and analyses as the Board of Directors may deem appropriate in connection with the consideration of candidates.
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 Board of Directors, are required to comply with the advance notice and any other requirements
of the Company’s bylaws, applicable laws and regulations. The Board of Directors may elect to use third parties in the future
to identify or evaluate candidates for consideration by the Board of Directors. The Nominating Charter adopted by the Board of
Directors is attached to this proxy statement as ANNEX A. The Nominating Committee recommended the slate of nominees described
in “Proposal No. 1, Election of Directors” on pages 4 through 6 of this proxy statement.
Compensation
Committee.
The Compensation Committee, whose members include Charles D. Fite, Jeffery Owensby, Michael A. Ziegler (Chairman),
and William A. Robotham, oversees the performance and reviews the compensation of the executive officers and the directors of
the Company and American River Bank. The Compensation Committee met eight (8) times during 2017. See the Compensation Discussion
and Analysis on page 17 and the Compensation Committee Charter attached to this proxy statement as ANNEX B for additional information
regarding the functions of the Compensation Committee.
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Compensation
Committee Interlocks and Insider Participation
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The
CEO is a non-voting invited guest to the Compensation Committee meetings and can be present
at discussions regarding compensation matters relative to non-CEO executive officers
or directors. The CEO cannot be present during deliberations or voting on CEO compensation
matters.
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The
Board of Directors has determined that all members of the Compensation Committee are
“independent,” as that term is defined under applicable NASDAQ listing rules
including Director Fite from whom the Company has leased one of its bank premises since
1985. The current lease terms and the Company’s policy are disclosed under “Transactions
with Related Persons” on page 36 of this proxy statement.
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Audit
Committee.
The Audit Committee, whose members are William A. Robotham (Chairman), Michael A. Ziegler and Philip A. Wright,
oversees the Company’s independent registered public accounting firm, analyzes the results of internal and regulatory examinations
and monitors the financial and accounting organization and reporting. Director Robotham has been designated by the Board of Directors
as an “audit committee financial expert” as defined under rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002. The Audit Committee met five (5) times in 2017 and held one (1) “executive session”
which only the non-employee directors attended, each of whom is “independent” as defined under applicable NASDAQ listing
rules. In addition, each other member of the Audit Committee is “financially literate” as defined under applicable
NASDAQ listing rules. See the Audit Committee Report on page 39 and the Audit Committee Charter attached to this proxy statement
as ANNEX C for additional information regarding the functions of the Audit Committee. Effective March 22, 2018, Nicolas C. Anderson
replaced Michael A. Ziegler on the Audit Committee.
Finance
and Capital Committee.
The Finance and Capital Committee, whose members include Jeffery Owensby, Stephen H. Waks
(Chairman), and Michael A. Ziegler, has the responsibility to (a) oversee asset liability management and the investment portfolio
including recommending to the Board of Directors the annual investment strategy; (b) recommend to the Board of Directors the annual
operating budget for the Company; and (c) review premises leases and capital expenditures over $100,000 for recommendation to
the Board of Directors. David E. Ritchie, Jr. serves an alternate committee member. The Finance and Capital Committee met five
(5) times during 2017.
Executive
Committee
. The Executive Committee, whose members include Charles D. Fite (Chairman), David E. Ritchie, Jr., William A.
Robotham, Stephen H. Waks, and Michael A. Ziegler oversees long range planning, formulates and recommends broad policy positions
for the Board of Directors to consider and is responsible for evaluating and recommending to the Board of Directors matters pertaining
to mergers and acquisitions. The Executive Committee did not have a meeting in 2017.
Loan
Committee of American River Bank.
The Loan Committee has the responsibility for establishing loan policy, approving loans
which exceed certain dollar limits and reviewing the outside loan review firm’s examinations of the loan portfolios. The
Loan Committee includes Kimberly A. Box (Chairman), Charles D. Fite, Stephen H. Waks, and Philip A. Wright. David E. Ritchie,
Jr. serves as an alternate committee member. The Loan Committee met seventeen (17) times during 2017.
During
2017, the Company’s Board of Directors held twelve (12) regular meetings and one (1) special meeting via teleconference.
In addition, the Company’s Board of Directors held eight (8) “executive sessions” which only the non-employee
directors attended, each of whom is “independent” as defined under applicable NASDAQ listing rules. All directors,
except Mr. Anderson, who joined the Board of Directors in March 2018, attended at least 75% of the aggregate of the total number
of meetings of the Board of Directors and the number of meetings of the committees on which they served.
See
“Detail of Director Compensation Elements – Cash Compensation” on page 13 of this proxy statement for information
regarding fees paid to directors during 2017 for Board of Directors and committee meetings.
Shareholder
Communications
A
majority of the members of the Board of Directors, each of whom is “independent” as defined under applicable NASDAQ
listing rules, has established procedures for receipt and delivery of shareholder communications addressed to the Board of Directors.
Any such shareholder communications, including communications by employees of the Company solely in their capacity as shareholders,
should be mailed or delivered to the Company addressed as follows: Board of Directors, American River Bankshares, 3100 Zinfandel
Drive, Suite 450, Rancho Cordova, CA 95670.
Annual
Meeting Attendance
The
Company requires
members of its Board of Directors to attend the Company’s annual meeting of shareholders each year.
All directors attended the Company’s annual meeting of shareholders held in 2017, with the exception of Mr. Anderson and
Mr. Ritchie, who were not directors at the time of the meeting.
DIRECTOR
COMPENSATION
Director Compensation Program
The
Compensation Committee of the Board of Directors (the “Compensation Committee”) oversees the Company’s director
compensation program. The compensation program includes elements that are designed specifically for the non-employee directors
(excluding David E. Ritchie, Jr.). Additionally, the Compensation Committee is charged with the review, and recommendation to
the Board of Directors, of all annual compensation decisions relating to the directors.
The
Compensation Committee’s compensation philosophy was developed to balance and align the interests of the directors and shareholders.
The three primary elements of compensation for our directors are cash compensation, long-term equity-based incentive compensation,
and retirement benefits.
In
2016, the Compensation Committee, upon approval of the Board of Directors, consulted with McLagan Consulting, a business unit
of AON PLC. (“McLagan”), a compensation and benefits consulting firm, to evaluate the Board of Directors compensation
for 2017. McLagan served as an independent compensation consultant to advise the Compensation Committee on all matters related
to the Board of Directors compensation and general compensation programs including guidance on industry best practices. Based
on discussions with McLagan, the Compensation Committee recommended, and the Board of Directors approved, no change in the cash
retainers or equity portion of director compensation for 2017. The elements of director compensation are described below.
For
the analysis of the 2017 director compensation, the Compensation Committee, with the help of McLagan, selected eighteen publicly-traded
banking companies headquartered on the West Coast (the “Peer Group”). The Peer Group is used to benchmark compensation
levels against companies that are similar in breadth and scope to our Company. The following eighteen companies have assets between
$350 million and $1.3 billion as of March 31, 2016 and comprise the Peer Group: 1
st
Capital Bank, Anchor Bancorp, Bank
of Commerce Holdings, Broadway Financial Corp, Central Valley Community Bancorp, Community West Bancshares, First Financial Northwest
Inc., First Northern Community Bancorp, FNB Bancorp, Idaho Independent Bank, Oak Valley Bancorp, Pacific Financial Corp, Pacific
Mercantile Bancorp, Plumas Bancorp, Riverview Bancorp Inc., Sound Financial Bancorp Inc., Summit State Bank and United Security
Bancshares.
The
Company targets total compensation to be at or above the Peer Group average. The goal of the cash compensation is to be close
to the Peer Group average, while long-term incentive compensation and retirement benefits are targeted at or above the Peer Group
averages. The decisions by the Board of Directors about director compensation are based on analysis of the Peer Group averages,
the directors’ completion of continuing education programs, attendance at Board of Directors and committee meetings and
prompt responses to management’s requests for information required to complete and timely file regulatory filings.
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Overview
of Director Compensation Elements
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The
Company’s Director Compensation Program consists of several compensation elements, as illustrated in the table below.
Pay
Element
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What
the Pay Element Rewards
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Purpose
of the Pay Element
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Cash
Compensation
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Director
contribution to the governance of the Company.
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Provide
fixed compensation based on competitive market practice.
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Long-Term
Incentive
Compensation
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Stock
Options:
·
The
Company’s stock price performance; and
·
Continued
role with the Company during a five- year vesting period.
Restricted
Stock:
·
The
Company’s stock price performance; and
·
Continued
role with the Company during the vesting period.
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·
Maximize
stock price performance;
·
Increase
director ownership in the Company; and
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Promote
a long-term Company outlook.
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Retirement
Benefits
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·
The
Deferred Fee Plan is a nonqualified voluntary deferral program that allows the directors to tax-defer a portion (up to
100%) of their cash compensation.
·
The
Director Emeritus Plan provides the director with retirement benefits for ongoing consulting.
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·
Provides
a tax-deferred retirement savings program (1).
·
The
Director Emeritus Plan makes available benefits for the directors to secure their consulting services following their
retirement from the Company (1).
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(1)
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See
“Detail of Director Compensation Elements – Retirement Benefits” beginning
on page 14 of this proxy statement for information regarding the details of the Deferred
Fee Plan and the Director Emeritus Plan.
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The
use of these compensation elements enables us to reinforce our pay for performance philosophy, as well as strengthen our ability
to attract and retain highly qualified directors.
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Detail
of Director Compensation Elements
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The
Compensation Committee believes the total compensation and benefits program for the directors should consist of the following:
cash compensation, long-term incentive compensation and retirement benefits.
The
cash compensation paid to non-employee directors of American River Bankshares during 2017 included a retainer of $1,500.00 per
month, a fee of $300.00 for attendance at each committee meeting, other than the Loan Committee whose outside director members
received a fee of $400.00 for each meeting attended. The fee for attendance at each American River Bank Board of Directors meeting
was $275.00.
In
addition to the fees received as non-employee directors in connection with the attendance at Board of Directors and committee
meetings, the Chairman of the Board of Directors received an additional retainer fee of $1,000.00 per month, and the Chairman
of the Audit Committee, the Chairman of the Finance and Capital Committee, the Chairman of the Compensation Committee, and the
Chairman of the Loan Committee each received an additional retainer fee of $375 per month and the Chairman of the Nominating Committee
received an additional retainer of $291.67 per month.
Effective
April 1, 2018, the retainer fee increased from $1,500.00 per month to $1,833.33 per month and the additional retainer received
by the Chairman of the Audit Committee, the Chairman of the Finance and Capital Committee, the Chairman of the Compensation Committee,
and the Chairman of the Loan Committee increased from of $375.00 per month to $416.67 per month. In addition, the fee for attendance
at each committee meeting, other than the Loan Committee increased from $300.00 for attendance at each committee meeting, to $450.00
for attendance at each committee meeting and the Loan Committee whose outside director members fees increased from $400.00 for
attendance at each Loan Committee meeting to $500.00 for attendance at each Loan Committee meeting. The fees paid in 2017 by American
River Bankshares and American River Bank to all directors are disclosed in the “Director Compensation Table” on page
15 of this proxy statement.
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Long-Term
Incentive Compensation
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The
long-term incentive compensation element has historically been provided in the form of stock options that vest and become exercisable
ratably over five years. In 2010, restricted stock was added as another form of long-term incentive compensation. The Compensation
Committee believes the use of stock options and restricted stock, rather than other forms of long-term incentive compensation,
creates value for the director only if the shareholder value is increased through an increased stock price. The Compensation
Committee believes that this creates strong alignment between the interests of the directors and shareholders.
On
March 17, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan was
approved by the Company’s shareholders on May 20, 2010. In 2000, the Board of Directors approved the American River Bankshares
2000 Stock Option Plan (the “2000 Stock Option Plan”). The 2000 Stock Option Plan was approved by the shareholders
in September 2000. The 2000 Stock Option Plan terminated the award of stock options on April 25, 2010. No new awards can
be issued under the 2000 Stock Option Plan, however, awards outstanding and unexercised remain outstanding until exercised or
terminated. Both plans allow for performance-related awards for directors, executive officers and other key employees. The fair
value related to stock option and restricted stock awards to directors is shown in the “Director Compensation Table”
on page 15 of this proxy statement.
Awards
to the directors and are generally made annually, at the same time as awards to the general eligible officer population. Award
recommendations are made at Compensation Committee meetings scheduled in advance to meet appropriate deadlines for compensation
related decisions. The Compensation Committee then recommends the awards to the Board of Directors for their approval. The Board
of Directors approves all awards of equity compensation at regularly scheduled meetings. The meetings are held after the close
of the U.S. stock markets and the Board of Directors sets the exercise price for each stock option, or in the case of restricted
stock, the total value of the award, using the closing price of the Company’s common stock on the date of the award, with
the exception of performance-based stock awards which use the thirty (30) calendar-day trailing average closing stock price to
set the target value of each award. See also the “Long-Term Incentive Compensation” on page 24 of this proxy statement
for more information regarding performance-based restricted stock awards.
There
is a limited term in which the director can exercise stock options, known as the option term. The option term is generally ten
years from the date of award. At the end of the option term, the right to purchase any unexercised options expires. Option holders
generally forfeit any unvested options upon separation with the Company. In certain instances, stock options may vest on an accelerated
schedule. Restricted stock awarded to the director will fully vest after a one-year term. A change in control may trigger accelerated
vesting. In this instance, all unvested options and restricted stock will vest as of the date of the change in control.
Director
equity awards are made after review of their performance for the preceding calendar year. The targeted awards are made based on
factors including: (a) attendance at Board of Directors and committee meetings (30% of award target), (b) completion of a specified
number of continuing education hours (40% of award target), and (c) prompt responses to management’s requests for information
required to complete and timely file regulatory filings (30% of award target). On May 18, 2017, Directors Box, Robotham, Waks,
Wright and Ziegler were each awarded 1,247 shares of restricted stock with a value of $17,246 and Director Fite was awarded 1,627
shares of restricted stock with a value of $22,501, in each case based on the Company’s closing stock price on May 18, 2017
of $13.83 per share. See also the “Director Compensation Table” on page 15 and the “Grants of Plan-Based Awards
Table” for Directors on page 15 of this proxy statement for more information regarding director equity awards.
Effective
December 20, 2001, a Deferred Fee Plan was established for the purpose of providing the directors an opportunity to defer tax
on director fees. Participating directors may elect to defer a portion, up to 100%, of their monthly cash compensation. The Company
bears the administration costs and pays interest on the deferred balances at a rate equal to the five-year U.S. Treasury Bond
plus 4.0%, but does not make contributions to the deferred account balances. For 2017, the rate credited was 5.93%. The amounts
deferred and the earnings thereon are unfunded and unsecured and subject to the claims of general creditors. During 2017, only
Director Ziegler participated in the Deferred Fee Plan and deferred $31,200.
In
January 2003, the Board of Directors approved a Directors Retirement Plan and in June 2004, this Directors Retirement Plan was
replaced with a Director Emeritus Plan, whereby each non-employee director (excluding David Ritchie and former CEO, David Taber)
is entitled, upon full retirement from the Board of Directors of the Company or its subsidiaries, to receive installment payments
over a 24 month period following retirement which are equal to the total Board of Director and committee fees received by a director
for such service during the two full calendar years prior to retirement. To qualify for the payments, a director participating
in the Director Emeritus Plan must continue to support the Company by making himself/herself available for consultation with management
and/or the Board of Directors, continue to be a referral source for business to the Company and attend Company functions such
as annual meetings for a period of two years after retirement. The Director Emeritus Plan contains a ten-year vesting component.
A director vests 10% for each year of service on the Board of Directors of the Company or its subsidiaries. During 2017, there
$43,161 in payments under the Director Emeritus Plan to two retired directors. Effective July 1, 2012, benefit accruals were suspended
under the Director Emeritus Plan, but the benefits that had been previously earned continued in effect and there have been no
new participants in the Director Emeritus Plan after July 1, 2012.
Director Compensation
Table
The
following table shows the compensation of the Company’s non-employee directors (excluding David Ritchie and former CEO,
David Taber) during the fiscal year 2017.
Name
|
|
Fees Earned or
Paid in Cash
($)
|
|
|
Stock Awards
($) (1)
|
|
|
Option Awards
($) (2)
|
|
|
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (3)
|
|
|
Total
($)
|
|
Nicolas
C. Anderson (4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kimberly
A. Box
|
|
$
|
32,600
|
|
|
$
|
17,246
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
49,846
|
|
Charles
D. Fite
|
|
$
|
35,500
|
|
|
$
|
22,501
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
58,001
|
|
Robert
J. Fox (5)
|
|
$
|
26,111
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
26,111
|
|
Jeffery
Owensby
|
|
$
|
24,325
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
24,325
|
|
William
A. Robotham
|
|
$
|
29,400
|
|
|
$
|
17,246
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
46,646
|
|
Stephen
H. Waks
|
|
$
|
33,800
|
|
|
$
|
17,246
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
51,046
|
|
Philip
A. Wright
|
|
$
|
27,525
|
|
|
$
|
17,246
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
44,771
|
|
Michael
A. Ziegler
|
|
$
|
31,200
|
(6)
|
|
$
|
17,246
|
|
|
|
—
|
|
|
$
|
11,096
|
|
|
$
|
59,542
|
|
|
|
(1)
|
The
amount reported in this column represents the fair value determined in accordance with
FASB ASU 2016-09 of 1,247 shares of restricted stock awarded to Ms. Box, Mr. Robotham,
Mr. Waks, Mr. Wright, and Mr. Ziegler and 1,627 shares of restricted stock awarded to
Mr. Fite, each awarded on May 18, 2017. Please refer to footnote 2 to our audited
financial statements included in our annual report to shareholders for the year ended
December 31, 2017 for a discussion of the assumptions related to the calculation of such
value.
|
(2)
|
There
were no stock options awarded to any of the non-employee directors during 2017. As of
December 31, 2017, the aggregate number of unexercised stock options (all of which are
vested) held by each director is as follows: Ms. Box, zero; Mr. Fite, 5,570; Mr. Fox,
zero; Mr. Owensby, zero; Mr. Robotham, 5,570; Mr. Waks, 5,570; Mr. Wright, 4,360, and
Mr. Ziegler, 5,570. The exercise price on all of the stock options held by the directors
exceeded the Company’s closing stock price of $15.24 per share on December 31,
2017, except 15,500 stock options, 13,925 of which were awarded on February 18, 2009,
and have an exercise price of $8.50 per share and 1,575 which were awarded on May 21,
2008, and have an exercise price of $12.38. The 13,925 stock options awarded on February
18, 2009 are held as to 2,785 shares each by Mr. Fite, Mr. Robotham, Mr. Waks, Mr. Wright,
and Mr. Ziegler. The 1,575 shares awarded on May 21, 2008 are held by Mr. Wright. On
February 20, 2018, 11,140 unexercised stock options expired. These 11,140 stock options
were held as to 2,785 shares each by Mr. Fite, Mr. Robotham, Mr. Waks, and Mr. Ziegler.
As a result of Mr. Fox’s resignation, effective March 27, 2017, he had 90 days
in which to decide whether to exercise his remaining stock options or they would be forfeited.
He exercised 2,785 stock options and 2,785 stock options were forfeited as the exercise
price was higher than the market value.
|
(3)
|
Amount
represents the preferential rate paid on amounts deferred under the Deferred Fee Plan.
See discussion above on page 14 of this proxy statement under “Retirement Benefits
for discussion of the Deferred Fee Plan.”
|
(4)
|
Mr.
Anderson joined the Board in March 2018 and did not receive any fees or stock awards
in 2017.
|
(5)
|
Mr.
Fox retired from the Board of Directors effective March 27, 2017 and his fees earned
in 2017 included $17,711 for service on the Board of Directors and $8,400 under the Director
Emeritus Plan.
|
(6)
|
Mr.
Ziegler deferred $31,200 of the total fees he earned in 2017, under the Deferred Fee
Plan. See page 14 of this proxy statement under Retirement Benefits for discussion of
the Deferred Fee Plan.
|
Grants
of Plan-Based Awards Table for Directors
The
following table summarizes the equity stock awards pursuant to the Company’s 2010 Plan to the Company’s non-employee
directors (excluding David Ritchie and former CEO, David Taber) in the fiscal year ended December 31, 2017. Shareholders approved
the 2010 Plan on May 20, 2010. All of the awards were made on May 18, 2017. All restricted stock awarded to the directors fully
vests one year after the award date. Restricted stock may become vested in full in the event of a change in control as defined
in the 2010 Plan. There were no other awards made to any non-employee director during 2017 under the Company’s 2010 Plan.
Grants
of Plan-Based Awards Table
Name
|
|
Award
Date
|
|
All Other
Stock Awards:
Number of
Shares of
Stock or
Units (#) (1)
|
|
|
Exercise
or
Base Price
of Option
Awards
($/Sh)
|
|
|
Grant
Date Fair
Value of Stock and
Option Awards
($) (2)
|
|
Kimberly
A. Box
|
|
5/18/17
|
|
|
1,247
|
|
|
|
—
|
|
|
$
|
17,246
|
|
Charles
D. Fite
|
|
5/18/17
|
|
|
1,627
|
|
|
|
—
|
|
|
$
|
22,501
|
|
William
A. Robotham
|
|
5/18/17
|
|
|
1,247
|
|
|
|
—
|
|
|
$
|
17,246
|
|
Stephen
H. Waks
|
|
5/18/17
|
|
|
1,247
|
|
|
|
—
|
|
|
$
|
17,246
|
|
Philip
A. Wright
|
|
5/18/17
|
|
|
1,247
|
|
|
|
—
|
|
|
$
|
17,246
|
|
Michael
A. Ziegler
|
|
5/18/17
|
|
|
1,247
|
|
|
|
—
|
|
|
$
|
17,246
|
|
(1)
|
It
is the Company’s policy that each restricted stock award is based on the market
price per share of the Company’s common stock on the date of award. There is no
dollar amount of consideration paid by the director on the award date or vesting date
of a restricted stock award.
|
(2)
|
The
amount reported in this column represents the fair value of restricted stock awarded
during the year shown in accordance with FASB ASU 2016-09. Please refer to footnote
2 to our audited financial statements included in our annual report to shareholders for
the year ended December 31, 2017 for a discussion of the assumptions related to the calculation
of such value.
|
EXECUTIVE
OFFICERS
The
executive officers of the Company during 2017 were the following persons:
Name
|
Age
|
Officer
Since
|
Principal
Occupation During the Past Five Years
|
David
E. Ritchie, Jr.
|
59
|
November
2017
|
President
and Chief Executive Officer, American River Bank and American River Bankshares since November 2017. From 2014 to
2017, Mr. Ritchie served as Senior Vice President and Regional Manager of US Bank’s Commercial Banking office in Torrance,
California and from 2011 to 2014, he was the Executive Vice President and Regional Manager of One West Bank’s Commercial
Banking offices in Orange County and San Diego, California.
|
David
T. Taber
|
57
|
1985
to October 2017
|
Former
President and Chief Executive Officer, American River Bankshares from 1995 until his resignation on October 31, 2017. Chief
Executive Officer of American River Bank from 2004 until October 31, 2017.
|
Mitchell
A. Derenzo
|
56
|
1992
|
Executive
Vice President and Chief Financial Officer of American River Bankshares since 1995. Chief Financial Officer of American River
Bank since 1992.
|
Kevin
B. Bender
|
54
|
1999
|
Executive
Vice President and Chief Operating Officer since 2009. Executive Vice President and Chief Information Officer of
American River Bankshares and American River Bank from 2005 to 2009.
|
Loren
E. Hunter
|
59
|
2014
to January 2018
|
Former
Executive Vice President and Chief Credit Officer of American River Bankshares and American River Bank from May 12, 2014 until
his resignation on January 3, 2018. From 2007 to 2014, Mr. Hunter served as Vice President, Regional Credit Officer
for Rabobank N.A., the California banking division of Rabobank Group, a global financial services provider.
|
Dennis
F. Raymond, Jr.
|
52
|
December
2017
|
Executive
Vice President and Chief Lending Officer, American River Bank and American River Bankshares since December 2017. From
2011 to 2017, Mr. Raymond served as Senior Vice President, Market Manager with Farmers & Merchants Bank of Central California.
|
COMPENSATION
DISCUSSION AND ANALYSIS
Oversight of Executive Compensation
Program
The
Compensation Committee of the Board of Directors (the “Compensation Committee”) oversees the Company’s compensation
programs. The compensation programs include elements that are designed specifically for the executive officers, which include
the Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) and the other executive officers
named in the “Summary Compensation Table” on page 32 of this proxy statement. Additionally, the Compensation Committee
is charged with the review and recommendation to the Board of Directors of all annual compensation decisions relating to the executive
officers.
The
Compensation Committee is composed entirely of non-employee members of the Board of Directors. The Board of Directors has determined
that each member of the Compensation Committee is independent under applicable NASDAQ listing rules. No Compensation Committee
member participates in any of the Company’s employee compensation programs. The CEO of the Company was not present during
the Compensation Committee voting or deliberations regarding his compensation.
Over
the years, the Compensation Committee has taken the following actions to improve the links between executive officer pay and performance
including:
|
·
|
Established
performance-based awards in the Company’s incentive compensation programs;
|
|
·
|
Retained
independent compensation consultants to advise on executive officer compensation issues
and help the Compensation Committee take a longer view of the multiple facets of its
responsibility;
|
|
·
|
Designed
and updated a more clearly defined competitive pay strategy which would be useful over
multiple years and more strictly based on a shareholder benefit model; and
|
|
·
|
Reviewed
and approved an industry specific peer group for more precise performance comparisons.
|
The
responsibilities of the Compensation Committee, as stated in its charter, include the following:
|
·
|
Conduct
oversight of the Company’s overall compensation strategy and objectives pursuant
to the goals of the Company including, but not limited to, assessment of the risks, if
any, to the Company from such compensation strategy and related compensation incentives,
strategies and objectives and a determination of whether any risks are presented thereby
which are reasonably likely to have a material adverse effect on the Company. If the
Compensation Committee determines that any risks are presented which are reasonably likely
to have a material adverse effect on the Company, then the Compensation Committee will
recommend to the Board of Directors alternative compensation incentives, strategies and
objectives intended to mitigate such risks.
|
|
·
|
Review
and recommend to the Board of Directors changes to the structure and design of the compensation
elements for executive officers including annual base salary, annual cash incentive compensation,
long-term equity incentive compensation, retirement plans (e.g. 401(k), deferred compensation,
and salary continuation agreements), and change in control benefits and severance.
|
|
·
|
Review
and recommend to the Board of Directors changes in the structure and design of the compensation
elements for directors of the Company and its subsidiaries and any committees thereof,
including cash (e.g., meeting fees and retainers), and the long-term equity incentive
compensation plans.
|
|
·
|
Review
and recommend to the Board of Directors the appropriate peer group to be used in benchmarking
executive officer and director compensation.
|
|
·
|
Annually
recommend to the Board of Directors the compensation of the CEO, including base salary,
annual cash incentive compensation opportunity and changes to other compensation elements.
|
|
·
|
Annually
recommend to the Board of Directors, the compensation of other executive officers (based
on the recommendation of the CEO) including base salary, annual cash incentive compensation
opportunity and changes to other compensation elements.
|
|
·
|
Recommend
to the Board of Directors the performance metrics and applicable weightings as required
by the Company’s Executive Annual Incentive Compensation Plan.
|
|
·
|
Recommend
to the Board of Directors changes to the compensation of directors of the Company and/or
any subsidiary of the Company.
|
|
·
|
Recommend
to the Board of Directors annual equity awards to directors, executive officers and other
key employees, pursuant to Board of Directors approved equity awards methodology.
|
|
·
|
Recommend
to the Board of Directors the participants in the Company’s Deferred Compensation
Plan.
|
|
·
|
Recommend
to the Board of Directors employment and/or severance agreements for the executive officers.
|
|
·
|
Periodically
review and recommend to the Board of Directors changes to executive officer retirement
benefits, employment agreements, change in control benefits and severance plans.
|
|
·
|
Periodically
review the Company succession plans relating to positions held by the executive officers
and make recommendations to the Board of Directors regarding the process for selecting
the individuals to fill these positions.
|
|
·
|
Evaluate
the CEO’s performance relative to the goals and objectives of the Company and discuss
evaluations of other executive officers with the CEO.
|
|
·
|
Annually
review and recommend to the Board of Directors for approval such changes to this Charter,
if any, as may be deemed necessary.
|
|
·
|
Prepare
and submit an appropriate “Compensation Committee Report” pursuant to applicable
regulations of the Securities and Exchange Commission for inclusion in the management
proxy statement for each annual meeting of shareholders, stating, among other matters,
whether (a) the Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management; and (b) the Compensation Committee has recommended to the
Board of Directors that the Compensation Discussion and Analysis be included in such
proxy statement and the Company’s Annual Report on Form 10-K.
|
|
·
|
Perform
such other duties and responsibilities as may be required by the rules and regulations
which govern the Company and are consistent with the purpose of the Compensation Committee,
or as the Board of Directors may deem appropriate.
|
Overview of Compensation Philosophy
The
Compensation Committee’s compensation philosophy was developed to balance and align the interests of the executive officers
and shareholders. The philosophy is intended to attract, motivate, reward and retain the most qualified management talent required
to achieve corporate objectives and increase shareholder value, while at the same time the compensation philosophy seeks to make
the most efficient use of shareholder resources. To this end, the compensation philosophy emphasizes rewards for performance.
The
three primary components of compensation for the executive officers are base salary, annual cash incentive compensation opportunity
and long-term, equity-based incentive compensation. The Company also provides the executive officers with retirement benefits
that are earned over time.
To
be effective, the compensation philosophy must reflect the corporate mission, culture, and long-term goals of the Company. In
order to recruit and retain the most qualified and competent individuals as executive officers, the Company strives to maintain
a compensation program that is competitive in its peer industry labor market. The purpose of the compensation program is to reward
individual performance tied to the achievement of Company objectives. The following objectives are considered in setting the compensation
programs for the executive officers:
|
·
|
reward
performance which supports the Company’s core values of performance, integrity,
teamwork, and advancement opportunities;
|
|
·
|
provide
a significant percentage of total compensation that is at-risk, or variable, based on
predetermined performance criteria;
|
|
·
|
design
competitive total compensation and rewards programs to enhance the Company’s ability
to attract and retain knowledgeable and experienced executive officers; and
|
|
·
|
set
compensation and incentive compensation levels that reflect competitive market practices.
|
Compensation Consultant
In
2016, the Compensation Committee, consulted with McLagan Consulting, a business unit of AON PLC. (“McLagan”), a compensation
and benefits consulting firm, to evaluate executive officer compensation for 2017. McLagan served as an independent compensation
consultant to advise the Compensation Committee on all matters related to the executive officers’ compensation. McLagan
also provided guidance on industry best practices and assisted the Compensation Committee by providing comparative market data
on compensation practices and programs for the executive officers based on an analysis of peer competitors. McLagan advised the
Compensation Committee in (1) determining base salaries, (2) setting performance goals and award levels for the Company’s
Executive Incentive Compensation Plan (the “Incentive Compensation Plan”), (3) determining the appropriateness
of individual grant levels for equity awards, (4) evaluating the retirement plans and benefit amounts, (5) evaluating the
perquisite program and allowances provided, and (6) determining the appropriateness of the change in control and termination benefits.
Other
than compensation related consulting, McLagan did not provide any other services. The Board of Directors and management do not
believe the services provided by McLagan created a conflict of interest. No compensation services performed by McLagan exceeded
in the aggregate, more than $120,000 in the last fiscal year.
Peer Group and Benchmark
Targets
For
the analysis of the 2017 executive officer compensation, the Compensation Committee, with the help of McLagan, selected eighteen
publicly-traded banking companies headquartered on the West Coast (the “Peer Group”). The Peer Group was used to benchmark
executive officer compensation levels against companies that have executive officer positions with responsibilities similar in
breadth and scope to the Company and that compete with the Company for executive officer talent. The following eighteen companies
have assets between $350 million and $1.3 billion as of March 31, 2016 and comprise the Peer Group: 1
st
Capital Bank,
Anchor Bancorp, Bank of Commerce Holdings, Broadway Financial Corp, Central Valley Community Bancorp, Community West Bancshares,
First Financial Northwest Inc., First Northern Community Bancorp, FNB Bancorp, Idaho Independent Bank, Oak Valley Bancorp, Pacific
Financial Corp, Pacific Mercantile Bancorp, Plumas Bancorp, Riverview Bancorp Inc., Sound Financial Bancorp Inc., Summit State
Bank and United Security Bancshares. The Compensation Committee reviews data obtained from McLagan to ensure that the total executive
officer compensation program continues to be fair to the shareholders and competitive for the executive officers.
Compensation Benchmarking
Relative to Market
Using
the data provided by McLagan, the Compensation Committee considered “market” at the median of this data. The Compensation
Committee targets total compensation at-market, tied to excellent Company and individual performance. Base compensation, annual
incentive compensation, long-term incentive compensation, retirement and other benefits are targeted at close to market.
Decisions
by the Compensation Committee about the compensation elements are based on data provided by McLagan as well as Company performance
and the executive officers level of responsibility, skill level, experience and contributions to the Company.
Review of Executive Officer Performance
The
Compensation Committee reviews, on an annual basis, each compensation element for each executive officer. In each case, the Compensation
Committee takes into account the scope of responsibilities and years of experience and balances these against competitive salary
levels. The Compensation Committee has the opportunity to interact with the executive officers at various times during the year,
which allows the Compensation Committee to form its own assessment of each individual’s performance.
In
addition, each year the CEO presents to the Compensation Committee an evaluation of each executive officer, which includes a review
of individual contribution, performance against specific targets, and strengths and weaknesses. Following this presentation and
discussions with the compensation consultant, the Compensation Committee makes its own assessments and approves the compensation
for each executive officer.
At
the 2011 and 2017 Annual Meetings of Shareholders, the Board of Directors recommended and shareholders approved proposals for
an advisory vote to (a) approve the compensation of the executive officers and (b) establish an annual frequency for future advisory
votes on compensation for the executive officers. At the 2012 through 2016 Annual Meetings of Shareholders, the shareholders
of the Company approved the advisory vote proposal to approve the compensation of the executive officers. This proxy statement
also includes “Proposal No. 3, Advisory (Non-binding) Vote to Approve Named Executive Officer Compensation” at page
40 of this proxy statement. The Compensation Committee, as well as the Board of Directors, reviews and considers the results
of these shareholder advisory votes on the compensation for the executive officers in connection with the implementation of Company
compensation programs for executives officers.
In
2016, based on review of the data provided by McLagan, the Compensation Committee recommended to the Board of Directors increases
to the base salary effective April 1, 2017, but no changes were recommended to the long-term incentive compensation or retirement
benefits nor were any modifications made to the percentage available to the executive officers under the Company’s Annual
Cash Incentive Compensation Plan. See also the “Long-Term Incentive Compensation” on page 24 of this proxy statement
for more information regarding the performance-based restricted stock awards.
Overview
of Executive Officers Compensation Elements
The
Company’s compensation program for executive officers consists of several compensation elements, as illustrated in the table
below.
Pay
Element
|
What
the Pay Element Rewards
|
Purpose
of the Pay Element
|
Base
Salary
|
Core
competence in the executive officer’s role relative to skills, years of experience and contributions to the Company.
|
·
Provide
fixed compensation based on competitive market salary levels.
|
Annual
Cash
Incentive Compensation
|
Contributions
toward the Company’s achievement of specified profitability, growth, and quality.
|
·
Provides
focus on meeting annual goals that lead to the long-term success of the Company;
·
Stresses
annual performance-based cash incentive compensation; and
·
Motivates
achievement of critical annual performance metrics.
|
Long-Term
Incentive Compensation
|
Stock
Options and Restricted Stock:
·
The
Company’s stock price performance; and
·
Continued
employment with the Company during a specified vesting or performance period.
|
·
Maximize
stock price performance;
·
Increase
executive officer ownership in the Company; and
·
Retention
in a challenging business environment and competitive labor market.
|
Retirement
Benefits
|
The Company’s employee
benefit plans are available to eligible employees, including the executive officers; to reward long-term service to the
Company, and include both tax-qualified and nonqualified retirement plans.
·
The
Company offers a qualified 401(k) program that the executive officers are eligible to participate in.
·
The
Deferred Compensation Plan is a nonqualified voluntary deferral program that allows the executive officers to defer a
portion of their base salary and annual cash incentive compensation. Deferred amounts and earnings are unfunded.
·
The
Salary Continuation Agreements are nonqualified, noncontributory plans that provide retirement benefits.
|
·
Encourages
retention of executive officers for the balance of his/her career.
·
Provides
a tax-deferred retirement savings plan subject to IRS limitations on qualified plans. The 401(k) Plan is described in
more detail on page 26 of this proxy statement.
·
Provides
a tax-deferred retirement savings alternative for amounts exceeding IRS limitations on qualified programs. The deferred
compensation plan is described in more detail on page 27 of this proxy statement.
·
The
Salary Continuation Agreements make available retirement benefits comparable to peer group executive officers. The Salary
Continuation Agreements are described in more detail on page 27 of this proxy statement.
|
Health and Welfare
Benefits
|
Executive officers
participate in employee benefit plans generally available to all employees, including medical, health, life insurance,
disability plans, and vacation and personal absence time.
|
·
These
benefits are part of a broad-based, competitive total compensation program.
|
Additional Benefits and
Perquisites
|
Active participation in business
promotional activities on behalf of the Company.
|
·
The
Chief Executive Officer is provided the use of a Company owned vehicle to promote Company business in the Company’s
market area and for incidental personal use.
|
Change in Control and
Termination Benefits
|
The employment agreements
provide severance benefits if an executive officers’ employment is terminated within two years after a change in
control.
|
·
Change
in control severance benefits are designed to retain the executive officers and provide continuity of management in the
event of an actual or threatened change in control. The employment agreements are described in more detail on page 29
of this proxy statement.
|
The
use of the above compensation elements enables the Company to reinforce its pay for performance philosophy, as well as strengthen
the ability to attract and retain highly qualified executive officers. The Compensation Committee believes that this combination
of the compensation elements provides an appropriate mix of fixed and variable pay, balances short-term operational performance
with long-term shareholder value, and encourages recruitment and maximizes retention of the executive officers.
Detail
of Executive Officer Compensation Elements
The
Compensation Committee believes the total compensation and benefits program for the executive officers should consist of the following:
base salary, annual cash incentive compensation, long-term incentive compensation, retirement plans, health and welfare benefits,
perquisite allowance payments and change in control benefits, as more fully described below.
Base
Salary
Increases
to base salaries, if any, are driven primarily by individual performance and compensation information provided by McLagan to the
Compensation Committee, including an analysis of the data from the Peer Group discussed at page 19 of this proxy statement. Individual
performance is evaluated by reviewing each executive officer’s success in achieving business results, promoting core values,
focusing on the keys to business success and demonstrating leadership abilities.
In
setting the base salary of the executive officers for fiscal year 2017, the Compensation Committee reviewed the compensation information
provided by McLagan. The Compensation Committee also considered the Company’s level of success in its short- and long-term
goals to:
|
·
|
achieve
specific profitability, growth and asset quality targets;
|
|
·
|
communicate
strategy and financial results effectively; and
|
|
·
|
increase
emphasis on employee satisfaction.
|
The
Compensation Committee based its compensation decisions on the Company’s performance related to the objectives listed above.
The Compensation Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance
of the executive officers. The Compensation Committee reviews the information provided by the compensation consultant, general
economic conditions and marketplace compensation trends. The Compensation Committee usually adjusts base salaries for executive
officers when:
|
·
|
the
current compensation demonstrates a significant deviation from the data from the Peer
Group;
|
|
·
|
recognizing
outstanding individual performance; or
|
|
·
|
recognizing
an increase in responsibility.
|
In
line with the compensation philosophy outlined above, the Compensation Committee strives to reward the successful Company’s
executive officers with a total compensation package in which a majority of the incentive compensation portion is based upon the
variable portion of the compensation elements. The base salaries paid to the executive officers during fiscal year 2017 are shown
in the “Summary Compensation Table” on page 32 of this proxy statement.
Annual
Cash Incentive Compensation
The
annual cash incentive compensation is administered under the Incentive Compensation Plan and provide executive officers with the
opportunity to earn cash incentive compensation based on the achievement of specific Company-wide, division, and individual performance
goals. The Compensation Committee designs the annual incentive compensation component to align executive officers compensation
with annual (short-term) performance. Incentive compensation payments are generally paid in cash in March of each year for the
prior fiscal year’s performance provided that the executive officer remains in the Company’s employ at the time of
payment.
The
Compensation Committee approves a target incentive compensation payout as a percentage of the base salary earned during the incentive
compensation period for each executive officer. These targets are based on competitive practices for each comparable position
and the compensation information provided by the consultant to the Compensation Committee. The incentive compensation target percentage
in the table below represents the executive officer’s annual incentive compensation opportunity if the annual performance
goals are achieved.
Messrs.
|
|
Taber
|
|
|
Derenzo
|
|
|
Bender
|
|
|
Hunter
|
|
|
Raymond
|
|
Target
Incentive Compensation (% of Base Salary) *
|
|
|
50%
|
|
|
|
30%
|
|
|
|
30%
|
|
|
|
30%
|
|
|
|
30%
|
|
*Mr. Ritchie’s
employment agreement set the incentive compensation for 2017 and 2018 at $160,000 per year, thereafter, the target will be set
at 50% of base salary.
The
Incentive Compensation Plan establishes a set of metrics that are selected to drive annual performance. Each metric has a weight
within the Incentive Compensation Plan, and the sum of the weights is 100%.
Several
financial metrics are commonly referenced in defining Company performance for executive officer compensation. These metrics are
defined below and their use in the Incentive Compensation Plan is further described below.
|
o
|
Return
on Equity Relative to Peers and to Internal Targets
|
To
ensure compensation is proportional to the return on investment earned by shareholders, we use a return on equity target as a
metric in the Incentive Compensation Plan. The return on equity is measured against the Peer Group selected by the Compensation
Committee as well as relative to an internal target. Return on equity is a key driver for earnings per share.
|
o
|
Loan
Growth Relative to Peers
|
To
ensure long-term growth of the Company, growth in loans is essential. The Incentive Compensation Plan metrics for loan growth
are based on how well the Company grows in loans on an annual basis as measured against the Peer Group.
|
·
|
Risk
Management Measures
|
|
o
|
Quality
of Bank Performance
|
To
ensure long-term growth of the Company, the quality of bank performance is essential. The Incentive Compensation Plan metrics
for quality of bank performance is based upon how well the Company performs during audits of key risk management areas.
Incentive
Compensation Plan Weightings for 2017
The following
chart indicates the weight of each metric as a percent of the total incentive compensation opportunity.
Messrs.
(1)
|
|
Taber
|
|
|
Derenzo
|
|
|
Hunter
|
|
|
Bender
|
|
ROE
Relative to Peers (2)
|
|
|
41.25
|
%
|
|
|
37.50
|
%
|
|
|
37.50
|
%
|
|
|
37.50
|
%
|
Loan
Growth Relative to Peers (2)
|
|
|
25.00
|
%
|
|
|
10.00
|
%
|
|
|
10.00
|
%
|
|
|
10.00
|
%
|
ROE
Relative to Internal Target (3)
|
|
|
33.75
|
%
|
|
|
42.50
|
%
|
|
|
42.50
|
%
|
|
|
32.50
|
%
|
Quality
of Bank Performance
|
|
|
—
|
|
|
|
10.00
|
%
|
|
|
10.00
|
%
|
|
|
20.00
|
%(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr.
Ritchie is not included in this chart as his incentive compensation target for 2017 was
set at $160,000 and Mr. Raymond is not included in this chart as his hire date was December
7, 2017 so he did not qualify for the incentive compensation program due to duration
of employment with the Company.
|
(2)
|
The
target for the ROE Relative to Peers and Loan Growth Relative to Peers is the 50
th
percentile and would result in attaining 100% of the available payout. Attaining
the 30
th
percentile would result in a payout of 50% of the available payout
and attaining the 75
th
percentile would result in a payout of 150% of the
available payout. Results achieved between the minimum and maximum would result in a
pro rata share of the incentive compensation available.
|
(3)
|
The
ROE Relative to Internal Target metric minimum is set at 85% of the target and results
in incentive compensation equal to 50% of the available payout. The maximum for this
metric is set at 120% of the target and results in incentive compensation equal to a
150% of the available payout for this metric. Results achieved between the minimum and
maximum would result in a pro rata share of the incentive compensation available.
|
(4)
|
If
this metric is met the weighting will drop to 10% for Quality of Bank Performance and
the payout for ROE Relative to Internal Target will increase from 32.50% to 42.50%.
|
The
amount of incentive compensation paid to each executive officer under the Incentive Compensation Plan is adjusted based on how
well the Company performs against the stated performance goal of each metric. If the Company exceeds the target by 120% the amount
available increases to an amount up to 75% of base salary in the case of Mr. Taber and up to 45% of base salary in the case of
Messrs. Derenzo, Hunter, and Bender. If the Company attains 85% of target the amount available decreases to 25% of base salary
in the case of Mr. Taber and to 15% of base salary in the case of Messrs. Derenzo, Hunter, and Bender. The Incentive Compensation
Plan also establishes minimum funding thresholds. If performance on any metric falls below 85%, no incentive compensation will
be paid for that metric and if the results of the Quality of Bank Performance metric is not met then no incentive compensation
will be earned on any of the metrics. The Incentive Compensation Plan requires the executive officer to remain employed by the
Company on the date of payment. Mr. Taber resigned from the Company on October 31, 2017, and he was paid an amount equal to his
pro-rated portion of the incentive compensation he earned for 2016 in the amount of $114,252.32. Mr. Hunter resigned from the
Company on January 3, 2018, and forfeited his 2017 incentive compensation.
For
2017, the Company’s actual results compared to target are as follows:
Metric
|
Result
|
ROE
Relative to Peers
|
Did
not meet the minimum or the target
|
Loan
Growth Relative to Peers
|
Did
not meet the minimum or the target
|
ROE
Relative to Internal Target
|
Exceeded
the target
|
Quality
of Bank Performance
|
Met
target
|
As
a result of meeting or exceeding the Company targets for ROE Relative to Internal Target and Quality of Bank Performance, incentive
compensation was earned in 2017 for each of the executive officers listed below.
The
table below represents the 2017 target amount of cash compensation available for each metric and the amount earned by Messrs.
Derenzo and Bender. Mr. Ritchie is not included in this table as his incentive compensation target for 2017 was set at $160,000.
Mr. Taber is not included in this table as the Separation and Release Agreement between the Company and Mr. Taber required an
amount of $114,252.32 to be paid to him in lieu of his 2017 incentive compensation payment. Mr. Hunter is not included in this
table as he resigned on January 3, 2018 and forfeited his incentive compensation at that time. Mr. Raymond is not included in
this table as his hire date was December 7, 2017 and he did not qualify for the incentive compensation program due to the short
duration of his employment with the Company.
Metric
|
|
Target
Payout-
Derenzo
|
|
|
Actual
Payout-
Derenzo
|
|
|
Target
Payout-
Bender
|
|
|
Actual
Payout-
Bender
|
|
ROE
Relative to Peers
|
|
$
|
26,815
|
|
|
$
|
—
|
|
|
$
|
26,815
|
|
|
$
|
—
|
|
Loan
Growth Relative to Peers
|
|
$
|
6,310
|
|
|
$
|
—
|
|
|
$
|
6,310
|
|
|
$
|
—
|
|
ROE
Relative to Internal Target
|
|
$
|
23,661
|
|
|
$
|
28,022
|
|
|
$
|
23,661
|
|
|
$
|
28,022
|
|
Quality
of Bank Performance
|
|
$
|
6,310
|
|
|
$
|
6,310
|
|
|
$
|
6,310
|
|
|
$
|
6,310
|
|
In
January 2018, the Board of Directors approved the weight of each metric as a percent of the total incentive compensation opportunity
for the 2018 plan year as follows:
|
|
Chief
Financial
Officer
|
|
|
Chief
Operating
Officer
|
|
|
Chief
Lending
Officer
|
|
|
Chief
Credit
Officer
|
|
Pretax/Pre
Provision for Loan and Lease Losses
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
Net
Income After Tax
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
|
|
25.00
|
%
|
ROE
Relative to Internal Target
|
|
|
20.00
|
%
|
|
|
20.00
|
%
|
|
|
20.00
|
%
|
|
|
20.00
|
%
|
Credit
Quality
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
Quality
of Bank Performance
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
|
|
15.00
|
%
|
The
Pretax/Pre Provision for Loan and Lease Losses, Net Income after Tax, ROE Relative to Internal Target and Credit Quality metrics
minimum are set at 80% of the target and results in incentive compensation equal to 50% of the available payout. The maximum for
these metrics is set at 115% of the target and results in incentive compensation equal to a 150% of the available payout. Results
achieved between the minimum and maximum would result in a pro rata share of the incentive compensation available. The Chief Executive
Officer is not included in this table as Mr. Ritchie’s incentive compensation target for 2018 has been set at a flat $160,000.
Long-Term
Incentive Compensation
An
important objective of the long-term incentive compensation program is to strengthen the relationship between the long-term value
of the Company’s stock performance and the potential financial gain for employees. The long-term incentive compensation
component has historically been provided in the form of stock options that vest and become exercisable ratably over five years.
In 2010, the Compensation Committee added restricted stock as another form of long-term incentive compensation. The restricted
stock awarded to the executive officers also vests over time. The Compensation Committee has used stock options and restricted
stock, rather than other forms of long-term incentive compensation, because they create value for the executive officers when
shareholder value is increased through an increased stock price. The Compensation Committee believes that this creates strong
alignment between the interests of the executive officers and shareholders. The stock options and restricted stock help
the Company attract and retain talented executive officers.
Stock
options provide the executive officers with the opportunity to purchase the Company’s common stock at a price fixed on the
date of award regardless of future market prices. Restricted stock provides the executive officers a common stock award that increases
in value when the stock price increases. The Compensation Committee’s objective is to provide the executive officers with
awards that are consistent with the compensation information provided by the compensation consultant and based on each executive
officer’s individual performance. A stock option becomes valuable only if the Company’s common stock price
increases above the option exercise price and the holder of the option remains employed during the period required for the option
to vest, which provides an incentive for the executive officer to remain employed by the Company. Restricted stock becomes more
valuable as the Company’s common stock price increases during the period required for the award to vest as the restrictions
lapse, which provides an incentive for the executive officer to remain employed by the Company. In addition, stock options and
restricted stock link a portion of each executive officer’s compensation to shareholders’ interests by providing an
incentive to make decisions designed to increase the market price of the Company’s common stock. The performance-based restricted
stock is directly tied to the performance of the Company’s stock price.
On
March 17, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan was
approved by the Company’s shareholders on May 20, 2010. In 2000, the Board of Directors approved the American River Bankshares
2000 Stock Option Plan (the “2000 Stock Option Plan”). The 2000 Stock Option Plan was approved by the shareholders
in September 2000. The intent of the 2010 Plan and the 2000 Stock Option Plan was to provide for performance-related awards
for directors, executive officers and other key employees. The 2000 Stock Option Plan terminated the award of stock options on
April 25, 2010. Awards outstanding and unexercised remain outstanding until exercised or terminated.
There
were no stock options awarded to the executive officers in 2017. Restricted stock awards were made to the Messrs. Taber, Derenzo,
Bender and Hunter during 2017, subject to certain restrictions including certain performance metrics that must be met to earn
the awards and a vesting period of one year and one day after the end of the performance period. Restricted stock awards made
to Mr. Ritchie were subject to a three year vesting period. Additional information on these stock option and restricted stock
awards is shown in the “Summary Compensation Table,” in the “Grants of Plan-Based Awards Table” and in
the “Outstanding Equity Awards at Fiscal Year-End Table” on pages 32, 33 and 34, respectively, in this proxy statement.
Awards
of equity compensation to the executive officers and directors generally are awarded annually. Award recommendations are made
at Compensation Committee meetings scheduled in advance to meet appropriate deadlines for compensation related decisions. The
Compensation Committee then recommends the awards to the Board of Directors for their approval. The Company’s practice is
that the Board of Directors approves all equity compensation awards at regularly scheduled meetings. The meetings are held after
the close of the U.S. stock markets and the Board of Directors sets the exercise price for each stock option, or in the case of
restricted stock, the total value of the award, using the closing price per share of the Company’s common stock on the date
of the award, with the exception of the performance-based stock awards which use the thirty (30) calendar-day trailing average
closing stock price to set the target value of each award.
There
is a limited term in which the executive officer can exercise stock options, known as the option term. The option term is generally
ten years from the date of award. At the end of the option term, the right to purchase any unexercised options expires. Restricted
stock also carries a term. Typically, restricted stock will vest over a three to five-year period, with the exception of the performance-based
stock awards which vest one year and one day after the end of the performance period. Holders of stock options or restricted stock
generally forfeit any unvested awards if their employment with the Company terminates.
In
certain instances, stock options and restricted stock may vest on an accelerated schedule. A change in control may trigger accelerated
vesting. In this instance, all unvested options and restricted stock will vest as of the date of the change in control.
In
February 2016, the Board of Directors approved a performance-based restricted stock awards program for the executive officers.
Restricted stock awards are earned based upon the share price increase of Company common stock, adjusted for stock splits or stock
and cash dividends (the “Total Return”) compared to the Total Return of the financial institutions included within
a group of financial institutions (the “Peer Group”) selected by the Company’s Compensation Committee (“Compensation
Committee”). The Compensation Committee selected the following financial institutions to comprise the Peer Group for the
2016-2017 Performance Periods: CU Bancorp, Heritage Oaks Bancorp, Central Valley Community Bancorp, Pacific Mercantile Bancorp,
Bank of Commerce Holdings, First Northern Community Bancorp, FNB Bancorp, Pacific Financial Corporation, Oak Valley Bancorp, United
Security Bancshares, Community West Bancshares, 1st Century Bancshares, Inc., Plumas Bancorp, Sound Financial Bancorp, Inc., and
Northwest Bancorporation, Inc. The Compensation Committee selected the following financial institutions to comprise the Peer Group
for the 2017-2018 Performance Periods: 1
st
Capital Bank, Anchor Bancorp, Bank of Commerce Holdings, Broadway Financial
Corp, Central Valley Community Bancorp, Community West Bancshares, First Financial Northwest Inc., First Northern Community Bancorp,
FNB Bancorp, Idaho Independent Bank, Oak Valley Bancorp, Pacific Financial Corp, Pacific Mercantile Bancorp, Plumas Bancorp, Riverview
Bancorp Inc., Sound Financial Bancorp Inc., Summit State Bank and United Security Bancshares. If any company in the Peer Group
is acquired or otherwise ceases to conduct business as an independent entity during the Performance Period (described below),
such company will be excluded from the Total Return calculations of the Peer Group. The Performance Periods are two (2) years
commencing January 1 of each Performance Period.
The
Total Return will be calculated for the Company and the Peer Group by reference to the stock prices prior to the commencement
of each Performance Period and at the end of each Performance Period. The beginning stock prices for the Company and the Peer
Group will be set using the thirty (30) calendar-day trailing average closing stock prices prior to the commencement of a Performance
Period. The ending stock prices will be set using the thirty (30) calendar-day trailing average closing stock prices at the end
of the Performance Period. The determination of the Total Return for the Company and the Peer Group will result in placement of
the Company within the overall ranking of the combined results for the Company and the Peer Group.
The
final amount of the restricted stock award to which a participant may be entitled, subject to vesting requirements, is based upon
the following calculation:
|
·
|
The
participant’s annual base salary is multiplied by the participant’s target
percentage of base salary established by the Compensation Committee prior to the commencement
of the Performance Period (the “Target”). Targets for the 2016-2017 Performance
Periods were as follows: Mr. Taber, 25% of annual salary, and Messrs. Derenzo, Hunter
and Bender, 15% of annual salary. For the 2017-2018 Performance Period the Targets for
Messrs. Derenzo, Hunter and Bender were increased from 15% of annual salary to 20% of
annual salary and Mr. Taber’s Target remained at 25% of annual salary.
|
|
·
|
Each
such Target amount is then divided by the thirty (30) calendar-day trailing average closing
stock price of Company common stock prior to the commencement of the Performance Period
to determine the number of shares subject to the award.
|
|
·
|
The
number of shares subject to the restricted stock award is then further adjusted to reflect
the result of the Company stock price ranking compared with the Peer Group at the end
of a Performance Period in order to determine the final number of restricted performance
shares of Company stock earned by the participant over the Performance Period as follows:
|
|
·
|
75
th
percentile Company performance ranking = 150% of the award.
|
|
·
|
50
th
percentile Company performance ranking = 100% of the award.
|
|
·
|
30
th
percentile Company performance ranking = 50% of the award.
|
|
·
|
Company
performance ranking at less than the 30
th
percentile would result in forfeiture
of the entire award.
|
Awards
are adjusted (interpolated) for Company performance ranking between 30
th
and 75
th
percentile levels. The
awards vest one year and a day after the end of the two (2) year Performance Period.
Performance-Based
Restricted Stock Awards for 2016-2017
The
following chart indicates the potential number of performance-based restricted stock awards for the 2016-2017 Performance Period.
Messrs.
(1)
|
|
Taber(2)
|
|
|
Derenzo(2)
|
|
|
Hunter(2)
|
|
|
Bender(2)
|
|
Maximum (75th
percentile or higher)
|
|
|
12,104
|
|
|
|
4,406
|
|
|
|
4,047
|
|
|
|
4,406
|
|
Target (50th percentile
or higher)
|
|
|
8,069
|
|
|
|
2,937
|
|
|
|
2,698
|
|
|
|
2,937
|
|
Minimum (30th percentile
or higher)
|
|
|
4,035
|
|
|
|
1,469
|
|
|
|
1,349
|
|
|
|
1,469
|
|
Less than 30th percentile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Based
on 30-day average trailing stock price prior to commencement of Performance Period of
$9.45 per share of the Company’s common stock.
|
|
(2)
|
The
average stock price for the two-year Performance Period ended December 31, 2017 was below
the minimum 30
th
percentile and resulted in the restricted shares that were
awarded in February 2016 being forfeited on December 31, 2017.
|
In
February 2017, the Board of Directors set the potential number of performance-based restricted stock awards for the 2017-2018
Performance Period as follows:
Messrs.
(1)
|
|
Taber(2)
|
|
|
Derenzo
|
|
|
Hunter(3)
|
|
|
Bender
|
|
Maximum (75th
percentile or higher)
|
|
|
8,222
|
|
|
|
3,989
|
|
|
|
3,773
|
|
|
|
3,989
|
|
Target (50th percentile
or higher)
|
|
|
5,481
|
|
|
|
2,659
|
|
|
|
2,515
|
|
|
|
2,659
|
|
Minimum (30th percentile
or higher)
|
|
|
2,741
|
|
|
|
1,330
|
|
|
|
1,258
|
|
|
|
1,330
|
|
Less than 30th percentile
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Based
on 30-day average trailing stock price prior to commencement of Performance Period of
$10.47 per share of the Company’s Common Stock.
|
|
(2)
|
These
restricted awards were forfeited by Mr. Taber upon his resignation from the Company on
October 31, 2017.
|
|
(3)
|
These
restricted awards were forfeited by Mr. Hunter upon his resignation from the Company
on January 3, 2018.
|
In
February 2018, the Board of Directors, at the recommendation of McLagan, awarded time-vested restricted stock to the executive
officers in lieu of performance-based restricted stock awards. Mr. Ritchie received an award of 4,330 shares of common stock equivalent
to 25% of his annual salary. Messrs. Derenzo and Bender each received an award of 2,810 shares of common stock equivalent to 20%
of their respective annual salary. The restricted stock awarded to the executive officers vests ratably at 33.33% per year.
Retirement
Benefits
The
Company offers retirement programs that are intended to supplement the employee’s personal savings and social security.
The programs include the American River Bankshares 401(k) Plan (“401(k) Plan”), the American River Bankshares Deferred
Compensation Plan (“Deferred Compensation Plan”) and the Messrs. Taber, Derenzo, Bender, and Hunter are covered under
Salary Continuation Agreements (“SCAs”). All employees working at least twenty (20) hours per week, including the
executive officers, are generally eligible to participate in the 401(k) Plan. Only the executive officers and a limited number
of selected senior managers are eligible for the Deferred Compensation Plan. The SCAs are intended to provide retirement benefits
for executive officers and certain key employees.
|
·
|
American
River Bankshares 401(k) Plan
|
The
Company adopted the 401(k) Plan to enable employees to save for retirement through a tax-advantaged combination of employee and
Company contributions and to provide employees the opportunity to directly manage their retirement plan assets through a variety
of investment options. The 401(k) Plan allows eligible employees, including the executive officers, to elect to contribute from
1% to 100% of their eligible compensation to an investment trust. Eligible compensation generally means all wages, salaries and
fees for services from the Company. Employee contributions are matched in cash by the Company at the rate of $1.00 per $1.00 of
employee contribution for the first 3% and $0.50 per $1.00 of employee contribution for the next 2% of the employee’s salary.
Such contributions vest immediately. The 401(k) Plan provides for multiple investment options, for which the participant has sole
discretion in determining how both the employer and employee contributions are invested. The 401(k) Plan does not provide the
employees the option to invest directly in the Company’s common stock. The 401(k) Plan offers in-service withdrawals in
the form of loans, hardship distributions, after-tax account distributions and age 59.5 distributions. The 401(k) Plan benefits
are payable pursuant to the participant’s election in the form of a single lump sum.
|
·
|
American
River Bankshares Deferred Compensation Plan
|
Effective
May 1, 1998, the American River Bank Deferred Compensation Plan was established for the purpose of providing the executive officers
and selected senior managers, an opportunity to defer compensation. Effective December 20, 2000, the Deferred Compensation
Plan was renamed the American River Bankshares Deferred Compensation Plan. Participants in the Plan may elect to defer annually
a minimum of $5,000 or up to a maximum of eighty percent of their base salary and all of their annual cash incentive compensation.
At the time of election to defer compensation, the participants must also elect a distribution method as described in the Plan.
The Plan permits distributions upon reaching a specified age; upon passage of a specified number of years; upon separation from
service, or upon the earlier or later to occur of (A) separation from service or (B) passage of a specified number of years, in
each case as elected by the participant. The participant shall also elect to receive all amounts payable to him or her in a lump
sum or in equal monthly installments over a designated period of sixty (60), one hundred twenty (120) or one hundred eighty (180)
months. The Company bears all administration costs, but does not make contributions to the Deferred Compensation Plan. The Deferred
Compensation Plan requires the Company to pay interest on the deferred balances at a rate equal to the five-year U.S. Treasury
Bond plus 4.0%, set annually at the beginning of each year. For 2017, the rate credited was 5.93%. The amounts deferred and the
earnings thereon are unfunded and unsecured and subject to the claims of general creditors.
|
·
|
Salary
Continuation Agreements
|
In
2003, Salary Continuation Agreements were entered into to provide retirement benefits to Messrs. Taber and Derenzo. The terms
of the agreements include the amounts Messrs. Taber and Derenzo receive upon the occurrence of certain specified events, including
formal retirement on or after a specified age. The agreements generally provide for annual retirement benefit payments of One
Hundred Thousand Dollars ($100,000) to Mr. Taber and Fifty Thousand Dollars ($50,000) to Mr. Derenzo. The annual retirement
benefit amount is payable in equal monthly installments over a fifteen (15) year period. In the event of their death, all remaining
amounts due are anticipated to be paid to their respective designated beneficiaries over the remaining payout period. Other events
which may alter when payment of the annual retirement benefit is to begin, or the amount which is to be paid, include termination
following a “change in control,” in which case the annual benefit payment is payable in equal monthly installments
for fifteen (15) years beginning with the seventh (7
th
) month following the termination in connection with the “change
in control” equal to Eighty Thousand Dollars ($80,000) for Mr. Taber and Thirty-Two Thousand Four Hundred and Eighty-Five
Dollars ($32,485) for Mr. Derenzo. In 2007, the Company modified these agreements to include an annual vesting provision
whereby the annual retirement benefit described above vests at a rate of 8% per year for Mr. Taber and 5% per year for Mr. Derenzo,
effective January 1, 2007. If the amount vested is greater than the change in control benefit, then the amount vested would be
paid. As a result of Mr. Taber’s resignation on October 31, 2017, his entitlement under the Salary Continuation Agreement
excludes any change in control benefits and is limited to the vested retirement benefit in the amount of $80,000 per year for
a period of fifteen (15) years. It is anticipated that these payments will begin in May 2018.
In
2007, the Company entered into a Salary Continuation Agreement to provide retirement benefits to Mr. Bender. The terms of the
agreement include the amounts Mr. Bender will receive upon the occurrence of certain specified events, including formal retirement
on or after a specified age. The agreement generally provides for annual retirement benefit payments of Fifty Thousand Dollars
($50,000) to Mr. Bender. On December 31, 2012, Mr. Bender’s agreement was modified to increase the annual retirement
benefit period from equal monthly installments payable over a ten (10) year period to equal monthly installments payable over
fifteen (15) years. The annual benefit described above vests at a rate of 5% per year. In the event of Mr. Bender’s death, all
remaining amounts due are anticipated to be paid to Mr. Bender’s designated beneficiary over the remaining payout period. Other
events which may alter when payment of the annual retirement benefit is to begin, or the amount which is to be paid, include termination
following a “change in control,” in which case he is entitled to receive the annual benefit payment in equal monthly
installments for fifteen (15) years beginning with the seventh (7
th
) month following the termination in connection
with the “change in control” equal to Thirty-Two Thousand Four Hundred and Eighty-Five Dollars ($32,485). If the amount
vested is greater than the change in control benefit, then the amount vested would be paid.
In
2014, the Company entered into a Salary Continuation Agreement to provide retirement benefits to Mr. Hunter. The terms of the
agreement include the amounts Mr. Hunter will receive upon the occurrence of certain specified events, including formal retirement
on or after a specified age. The agreement generally provides for annual retirement benefit payments equal to $2,500 per year
of service with the Company, subject to certain vesting periods. The annual retirement benefit amount is payable in equal monthly
installments over a fifteen (15) year period. Other events which may alter when payment of the annual retirement benefit is to
begin, or the amount which is to be paid, include termination following a “change in control,” in which case he is
entitled to receive the annual benefit payment in equal monthly installments for fifteen (15) years beginning with the seventh
(7
th
) month following the termination in connection with the “change in control” equal to Thirty-Two Thousand
Four Hundred and Eighty-Five Dollars ($32,485). If the amount vested is greater than the change in control benefit, then the amount
vested would be paid. As a result of Mr. Hunter’s resignation on January 3, 2018, his entitlement under the Salary Continuation
Agreement excludes any change in control benefits and is limited to the vested retirement benefit in the amount of $7,500 per
year for a period of fifteen (15) years. It is anticipated that these payments will begin in August 2018.
Health
and Welfare Benefits
The
Company offers a variety of health and welfare programs to all eligible employees. The executive officers generally are eligible
for the same benefit programs on the same basis as the rest of the broad-based employees. The health and welfare programs are
intended to protect employees against catastrophic loss and encourage a healthy lifestyle. The health and welfare programs include
medical, pharmacy, dental, vision, life insurance, accidental death and disability, paid vacation and personal absence time. Coverage
under the life and accidental death and disability programs offer benefit amounts specific to each executive officer.
The
Company contributes a set dollar amount for employees, including the executive officers, who elect medical coverage based on the
coverage tier selected. For the period October 1, 2016 through September 30, 2017, the Company made the following monthly
contributions by coverage tier: Employee Only, $617.96; Employee + Spouse, $1,103.96; Employee + Child(ren), $1,004.06;
and Family, $1,371.26. For the period October 1, 2017 through September 30, 2018, the Company monthly contributions by coverage
tier are as follows: Employee Only, $617.96; Employee + Spouse, $1,104.16; Employee + Child(ren), $1,004.19; and Family,
$1,371.31. Benefit premiums over and above those contributed by the Company are paid by the employees, including the executive
officers, through payroll deduction.
Beginning
October 1, 2017, the Company contribution for executive officers was 70% of health benefits elected for the employee and their
dependents. For the period October 1, 2017 through December 31, 2017, the following monthly Company contributions were made on
behalf of each of the following executive officers: Mr. Ritchie $1,766.38, Mr. Taber $1,722.32, Mr. Bender $1,555.55, and Mr.
Raymond $1,616.46. Messrs. Derenzo and Hunter have chosen not to cover their dependents and therefore have elected to stay on
the Company contribution schedule available to all employees.
During
2017, the Company offered voluntary long-term disability programs that provides income replacement to employees and executive
officers. All executive officers participated in the voluntary plan and are eligible, after a 90-day disability period, to receive
benefits at a rate of 50%-60%, depending on each executive officer’s plan election, of their basic monthly earnings up to
a maximum of between $5,000 and $10,000, depending on each executive officer’s plan election, until age 65 or recovery per
the terms and conditions of the program. The program is contributory and all participating employees, including executive
officers, pay premiums through payroll deduction.
Perquisites
and Perquisite Allowance Payments
The
Compensation Committee annually reviews the perquisite program and allowances provided to each executive officer to determine
if adjustments are appropriate. Mr. Ritchie is provided, and Mr. Taber was provided up until his resignation, a Company owned
vehicle for his use to attend various events in the Company’s market area, for business development purposes on behalf of
the Company, and for incidental personal use, including commuting to and from his home. The perquisites do not exceed $10,000
per year individually or in the aggregate.
Other
Payments
In
October 2017, the Company entered into an employment agreement with Mr. Ritchie. This agreement included a reimbursement for relocation
and moving expenses for up to $50,000, as incurred. During 2017, these expenses totaled $14,568.
Change
in Control and Termination Benefits
Mr.
Ritchie’s employment agreement provides for an original term of two years subject to automatic one-year extensions thereafter
unless terminated in accordance with the terms of the agreement. The agreement provides for a base salary which is disclosed in
the “Summary Compensation Table” on page 32 of this proxy statement. The agreement may be terminated with or without
cause, but if the agreement is terminated without cause including, without limitation, automatic termination due to the occurrence
of circumstances that make it impossible or impractical for the Company to conduct or continue its business, the loss by the Company
of its legal capacity to contract or the Company’s breach of the terms of the agreement, Mr. Ritchie is entitled to receive
severance compensation equal to twelve (12) months of the existing base salary, less applicable withholding deductions (in addition
to salary, incentive compensation, or other payments, if any, due to Mr. Ritchie), a pro-rated portion of his prior year’s
incentive compensation, and reimbursement for health insurance coverage for a period of eighteen (18) months. The agreement further
provides that in the event of a “change in control” as defined therein and within a period of two years following
consummation of such change in control (i) the his employment is terminated; or (ii) any adverse change occurs in the nature and
scope of his salary or benefits; or (iii) any event occurs which reasonably constitutes a constructive termination of employment,
by resignation or otherwise, then he will be entitled to receive severance compensation in an amount equal to twenty-four (24)
months of his annual base salary, less applicable withholding deductions (in addition to salary, incentive compensation, or other
payments, if any, due to him), an incentive compensation payment in an amount equal to the average of the previous three year
incentive compensation amounts, and reimbursement for health insurance coverage for a period of eighteen (18) months. Mr. Ritchie’s
annual salary at December 31, 2017 was $265,000. Also, in the event of a change in control, certain equity awards may become fully
vested, as described under “Long-Term Incentive Compensation” on page 24 of this proxy statement and disclosed in
the table on page 34 of this proxy statement titled “Outstanding Equity Awards at Fiscal Year-End.” Based on the December
31, 2017 stock price of $15.24 the value of restricted stock that has not yet vested would be approximately $111,755.
In
June 2006, the Company entered into an employment agreement with Mr. Taber. The agreement provides for an original term of two
years subject to automatic one-year extensions thereafter unless terminated in accordance with the terms of the agreement. The
agreement provides for a base salary which is disclosed in the “Summary Compensation Table” on page 32 of this proxy
statement. The agreement may be terminated with or without cause, but if the agreement is terminated without cause including,
without limitation, automatic termination due to the occurrence of circumstances that make it impossible or impractical for the
Company to conduct or continue its business, the loss by the Company of its legal capacity to contract or the Company’s
breach of the terms of the agreement, the Mr. Taber is entitled to receive severance compensation equal to six (6) months of the
existing base salary, less applicable withholding deductions (in addition to salary, incentive compensation, or other payments,
if any, due to him). The agreement further provides that in the event of a “change in control” as defined therein
and within a period of two years following consummation of such change in control (i) his employment is terminated; or (ii) any
adverse change occurs in the nature and scope of his salary or benefits; or (iii) any event occurs which reasonably constitutes
a constructive termination of employment, by resignation or otherwise, then he will be entitled to receive severance compensation
in an amount equal to eighteen (18) months of his annual base salary, less applicable withholding deductions (in addition to salary,
incentive compensation, or other payments, if any, due him). Also, in the event of a change in control, certain equity awards
may become fully vested, as described under “Long-Term Incentive Compensation” on page 24 of this proxy statement
and disclosed in the table on page 34 of this proxy statement titled “Outstanding Equity Awards at Fiscal Year-End.”
As a result of Mr. Taber’s resignation on October 31, 2017, his employment agreement was terminated and the Company agreed
to pay him an amount equal to his annual salary of $334,900, payable semi-monthly beginning November 2017 and ending in October
2018, his medical insurance premiums for a period of eighteen (18) months beginning November 2018 at a rate of $2,463.42 per month,
and an incentive compensation payment in the amount of $114,352.32. He is not entitled to any other benefits under his employment
agreement.
In
September 2006, the Company entered into employment agreements with Messrs. Derenzo and Bender. The agreements have no stated
term and can be terminated at any time by the Company or by the employee, with or without cause. The agreements provide a base
salary which is disclosed in the “Summary Compensation Table” on page 32 of this proxy statement. The agreements may
be terminated with or without cause, but if an agreement is terminated without cause, including, without limitation, automatic
termination due to the occurrence of circumstances that make it impossible or impractical for the Company to conduct or continue
its business, the loss by the Company of its legal capacity to contract or the Company’s breach of the terms of an agreement,
Messrs. Derenzo and Bender each would be entitled to receive severance compensation equal to six (6) months of their existing
base salary. The agreements further provide that in the event of a “change in control” as defined therein and within
a period of two years following consummation of such change in control (i) their employment is terminated; or (ii) any adverse
change occurs in the nature and scope of their salary or benefits; or (iii) any event occurs which reasonably constitutes a constructive
termination of employment, by resignation or otherwise, then they would be entitled to receive severance compensation in an amount
equal to twelve (12) months of their annual base salary, less applicable withholding deductions (in addition to salary, incentive
compensation, or other payments, if any, due the employee). The salaries for Messrs. Derenzo and Bender at December 31, 2017 were
each $215,000. Also, in the event of a change in control, certain equity awards may become fully vested, as described under “Long-Term
Incentive Compensation” on page 24 of this proxy statement and disclosed in the table on page 34 of this proxy statement
titled “Outstanding Equity Awards at Fiscal Year-End.” Based on the December 31, 2017 stock price of $15.24 the value
of unexercised stock options would be approximately $104,088 for Mr. Derenzo and approximately $118,639 for Mr. Bender and the
value of restricted stock that has not yet vested would be approximately $123,078 for Mr. Derenzo and approximately $120,853 for
Mr. Bender. In addition, vesting under Messrs. Derenzo’s and Bender’s salary continuation agreements will accelerate
in accordance with provisions of the agreement upon such a change in control as described under “Salary Continuation Agreements”
on page 27 of this proxy statement which would result in a payment of $32,485 for each of them.
In
May 2014, the Company entered into an employment agreement with Mr. Hunter. The agreement has no stated term and can be terminated
at any time by the Company or Mr. Hunter, with or without cause. The agreement provides a base salary which is disclosed in the
“Summary Compensation Table” on page 32 of this proxy statement. The agreement may be terminated with or without cause,
but if an agreement is terminated without cause, including, without limitation, automatic termination due to the occurrence of
circumstances that make it impossible or impractical for the Company to conduct or continue its business, the loss by the Company
of its legal capacity to contract or the Company’s breach of the terms of an agreement, Mr. Hunter is entitled to receive
severance compensation equal to six (6) months of the existing base salary. The agreements further provide that in the event of
a “change in control” as defined therein and within a period of two years following consummation of such change in
control (i) his employment is terminated; or (ii) any adverse change occurs in the nature and scope of his salary or benefits;
or (iii) any event occurs which reasonably constitutes a constructive termination of his employment, by resignation or otherwise,
then he will be entitled to receive severance compensation in an amount equal to twelve (12) months of his annual base salary,
less applicable withholding deductions (in addition to salary, incentive compensation, or other payments, if any, due to him).
Mr. Hunter’s salary at December 31, 2017 was $196,730. Also, in the event of a change in control, certain equity awards
may become fully vested, as described under “Long-Term Incentive Compensation” on page 24 of this proxy statement
and disclosed in the table on page 34 of this proxy statement titled “Outstanding Equity Awards at Fiscal Year-End.”
Based on the December 31, 2017 stock price of $15.24 the value of unexercised stock options would be approximately $15,989 and
the value of restricted stock that has not yet vested would be approximately $120,853. In addition, vesting under Mr. Hunter’s
salary continuation agreement will accelerate in accordance with provisions of the agreement upon such a change in control as
described under “Salary Continuation Agreements” on page 27 of this proxy statement which would result in a payment
of $32,485. As a result of Mr. Hunter’s resignation on January 3, 2017, his employment agreement was terminated and he forfeited
any benefits under his employment agreement.
In
December 2017, the Company entered into an employment agreement with Mr. Raymond. The agreement has no stated term and can be
terminated at any time by the Company or Mr. Raymond, with or without cause. The agreement provides a base salary which is disclosed
in the “Summary Compensation Table” on page 32 of this proxy statement. The agreement may be terminated with or without
cause, but if the agreement is terminated without cause, including, without limitation, automatic termination due to the occurrence
of circumstances that make it impossible or impractical for the Company to conduct or continue its business, the loss by the Company
of its legal capacity to contract or the Company’s breach of the terms of an agreement, Mr. Raymond is entitled to receive
severance compensation equal to six (6) months of his existing base salary. The agreement further provides that in the event of
a “change in control” as defined therein and within a period of two years following consummation of such change in
control (i) his employment is terminated; or (ii) any adverse change occurs in the nature and scope of his salary or benefits;
or (iii) any event occurs which reasonably constitutes a constructive termination of his employment, by resignation or otherwise,
then he will be entitled to receive severance compensation in an amount equal to twelve (12) months of his annual base salary,
less applicable withholding deductions (in addition to salary, incentive compensation, or other payments, if any, due to him).
Mr. Raymond’s salary at December 31, 2017 was $210,000. Also, in the event of a change in control, certain equity awards
may become fully vested, as described under “Long-Term Incentive Compensation” on page 24 of this proxy statement
and disclosed in the table on page 34 of this proxy statement titled “Outstanding Equity Awards at Fiscal Year-End;”
however as of December 31, 2017, Mr. Raymond has not yet been awarded any stock options or restricted stock.
Pay
Ratio Disclosure
The
annual total compensation for 2017 was $55,689 for our median employee, $540,049 for CEO Ritchie, and $672,744 for former CEO
Taber. Mr. Ritchie and Mr. Taber were not employed by the Company for the entire year of 2017 and their respective annual compensation
has been annualized to a full year; however, we excluded one-time severance related payments to Mr. Taber in connection to his
resignation on October 31, 2017, in the amount of $330,359. The resulting ratio comparing the annual total compensation for 2017
earned by CEO Ritchie and by our median employee is 9.7 to 1. The resulting ratio comparing the annual total compensation for
2017 earned by former CEO Taber and by our median employee is 12.1 to 1.
We
identified the median employee by examining the 2017 total compensation for all individuals (excluding Mr. Ritchie and Mr. Taber)
who were employed by us on December 29, 2017, the last day of our payroll year. We included all employees, whether employed on
a full-time, part-time or seasonal basis and we annualized the compensation for full-time employees that were not employed by
us for all of 2017.
We
calculated the median employee’s annual total compensation using the same methodology we use for our named executive officers
as set forth in the Summary Compensation Table in this proxy statement. Our median employee participated in a cash incentive
compensation plan that paid periodically during 2017 or earned incentive compensation in 2016 that was paid in 2017 and we used
these amounts received in 2017 for median employee annual total compensation. CEO Ritchie earned an incentive compensation of
$160,000 in 2017 and former CEO Taber earned an incentive compensation of $114,252.32 in 2017. These incentive payments
to Mr. Ritchie and Mr. Taber were used to calculate their respective annual total compensation for 2017.
COMPENSATION
COMMITTEE REPORT
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 FOLLOWING REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
The
Compensation Committee reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management.
Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in this proxy statement and the Company’s Annual Report on Form 10-K for filing with the Securities
and Exchange Commission.
Submitted
by the Compensation Committee of American River Bankshares Board of Directors:
|
|
|
|
Charles
D. Fite
|
Michael
A. Ziegler
|
Jeffrey
Owensby
|
William
A. Robotham
|
|
Chairman
|
|
|
EXECUTIVE
COMPENSATION
The
following table shows the cash and non-cash compensation for the years indicated awarded to or earned by individuals who served
as our chief executive officer, chief financial officer and each of our other most highly compensated executive officers.
Summary
Compensation Table
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Change
in
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Pension
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Value
and
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Nonqualified
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Option
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Non-Equity
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Deferred
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Stock
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Incentive
Plan
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Compensation
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All
Other
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Name and
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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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Principal
Position
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($)
(1)
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($)
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($)
(2)
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($)
(3)
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($)
(4)
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($)
(5)
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($)
(6)
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($)
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David
E. Ritchie, Jr. (7)
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2017
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$
|
41,155
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—
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$
|
109,702
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|
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—
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|
$
|
160,000
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—
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|
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$
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19,915
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$
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330,772
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President and
Chief Executive
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2016
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—
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—
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—
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—
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—
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—
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—
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—
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Officer
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2015
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—
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—
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—
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—
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—
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—
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—
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—
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|
|
|
|
|
|
|
|
|
|
|
David T. Taber
(8)
|
|
|
2017
|
|
|
$
|
276,252
|
|
|
|
—
|
|
|
$
|
83,256
|
|
|
|
—
|
|
|
$
|
114,252
|
|
|
$
|
204,168
|
|
|
$
|
266,527
|
|
|
$
|
944,455
|
|
Former President
and
|
|
|
2016
|
|
|
$
|
321,218
|
|
|
|
—
|
|
|
$
|
76,285
|
|
|
|
—
|
|
|
$
|
137,178
|
|
|
$
|
155,072
|
|
|
$
|
29,044
|
|
|
$
|
718,797
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
$
|
311,862
|
|
|
|
—
|
|
|
$
|
113,003
|
|
|
$
|
37,069
|
|
|
$
|
100,381
|
|
|
$
|
133,770
|
|
|
$
|
25,974
|
|
|
$
|
722,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell A. Derenzo
|
|
|
2017
|
|
|
$
|
210,317
|
|
|
|
—
|
|
|
$
|
40,390
|
|
|
|
—
|
|
|
$
|
34,332
|
|
|
$
|
39,326
|
|
|
$
|
17,886
|
|
|
$
|
342,251
|
|
Executive Vice
President and
|
|
|
2016
|
|
|
$
|
194,837
|
|
|
|
—
|
|
|
$
|
27,764
|
|
|
|
—
|
|
|
$
|
50,775
|
|
|
$
|
36,784
|
|
|
$
|
16,584
|
|
|
$
|
326,744
|
|
Chief Financial
Officer
|
|
|
2015
|
|
|
$
|
189,163
|
|
|
|
—
|
|
|
$
|
43,526
|
|
|
$
|
15,886
|
|
|
$
|
39,015
|
|
|
$
|
31,212
|
|
|
$
|
16,958
|
|
|
$
|
335,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Bender
|
|
|
2017
|
|
|
$
|
210,317
|
|
|
|
—
|
|
|
$
|
40,390
|
|
|
|
—
|
|
|
$
|
34,332
|
|
|
$
|
23,715
|
|
|
$
|
24,875
|
|
|
$
|
333,629
|
|
Executive Vice President
and
|
|
|
2016
|
|
|
$
|
194,837
|
|
|
|
—
|
|
|
$
|
27,764
|
|
|
|
—
|
|
|
$
|
50,775
|
|
|
$
|
21,501
|
|
|
$
|
22,281
|
|
|
$
|
317,158
|
|
Chief Operating Officer
|
|
|
2015
|
|
|
$
|
189,163
|
|
|
|
—
|
|
|
$
|
42,560
|
|
|
$
|
14,923
|
|
|
$
|
36,177
|
|
|
$
|
19,463
|
|
|
$
|
20,214
|
|
|
$
|
322,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loren E. Hunter
(9)
|
|
|
2017
|
|
|
$
|
193,949
|
|
|
|
—
|
|
|
$
|
38,203
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
20,682
|
|
|
$
|
11,251
|
|
|
$
|
264,085
|
|
Former Executive Vice
President and
|
|
|
2016
|
|
|
$
|
182,979
|
|
|
|
—
|
|
|
$
|
25,517
|
|
|
|
—
|
|
|
$
|
47,685
|
|
|
$
|
18,549
|
|
|
$
|
8,780
|
|
|
$
|
283,510
|
|
Chief Credit Officer
|
|
|
2015
|
|
|
$
|
173,825
|
|
|
|
—
|
|
|
$
|
34,509
|
|
|
$
|
9,121
|
|
|
$
|
35,851
|
|
|
$
|
16,591
|
|
|
$
|
10,652
|
|
|
$
|
280,549
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis F. Raymond,
Jr. (10)
|
|
|
2017
|
|
|
$
|
14,318
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
2,189
|
|
|
$
|
16,507
|
|
Executive Vice
President and
|
|
|
2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Chief Lending
Officer
|
|
|
2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Includes
amounts deferred at the discretion of the named executive officers pursuant to the American
River Bankshares 401(k) Plan and the American River Bankshares Deferred Compensation
Plan, as applicable.
|
|
(2)
|
The
amount reported in this column represents the fair value of restricted stock awarded
during the years shown in accordance with FASB ASU 2016-09. Please refer to footnote
2 to our audited financial statements included in our annual report to shareholders for
the year ended December 31, 2017 for a discussion of the assumptions related to the calculation
of such value. During 2017, Mr. Ritchie was awarded 7,333 shares of restricted stock,
Mr. Taber was awarded 5,481 shares of restricted stock, Mr. Derenzo was awarded 2,659
shares of restricted stock, Mr. Bender was awarded 2,659 shares of restricted stock,
Mr. Hunter was awarded 2,515 shares of restricted stock, and Mr. Raymond was not awarded
any shares of restricted stock. During 2016, Mr. Taber was awarded 7,501 shares of restricted
stock, Mr. Derenzo was awarded 2,730 shares of restricted stock, Mr. Bender was awarded
2,730 shares of restricted stock, Mr. Hunter was awarded 2,509 shares of restricted stock
and Messrs. Ritchie and Raymond were not awarded any restricted stock. During 2015, Mr.
Taber was awarded 11,947 shares of restricted stock, Mr. Derenzo was awarded 4,599 shares
of restricted stock, Mr. Bender was awarded 4,498 shares of restricted stock, Mr. Hunter
was awarded 3,652 shares of restricted stock and Messrs. Ritchie and Raymond were not
awarded any restricted stock.
|
|
(3)
|
The
amount reported in this column represents the fair value of stock options awarded during
the years shown in accordance with FASB ASU 2016-09. Please refer to footnote 2
to our audited financial statements included in our annual report to shareholders for
the year ended December 31, 2017 for a discussion of the assumptions related to the calculation
of such value. There were no stock options awarded to the named executive officers in
2017.
|
|
(4)
|
Incentive
compensation payments are generally paid in cash in March of each year for the prior
fiscal year’s performance provided that the named executive officer remains in
the Company’s employ at the time of payment, with the exception of Mr. Taber, who
received his incentive compensation in November 2017 following his resignation on October
31, 2017. Mr. Hunter forfeited his 2017 incentive compensation upon his resignation from
the Company on January 3, 2018.
|
|
(5)
|
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 agreement
and 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
2017, the interest rate credited was 5.93% and the market rate was determined to be 3.17%.
The individuals may not be entitled to the benefit amounts included as the salary continuation
agreement is not fully vested (see description of the salary continuation agreements
on page 27 of this proxy statement) and the deferred compensation plan is not funded.
|
|
(6)
|
Amounts
include 401(k) matching contributions and Company paid health and welfare benefits. Health
and welfare benefits for 2017 were $3,533 for Mr. Ritchie; $19,069 for Mr. Taber; $7,443
for Mr. Derenzo; $14,431 for Mr. Bender; $1,586 for Mr. Hunter and $1,616 for Mr. Raymond.
The amounts for 2017 for Mr. Taber include the value of the use of a Company-owned vehicle
($5,034), in addition to accrued vacation and paid time off in the amount of $175,808,
and severance payments totaling $55,817, both of which were paid upon his termination.
In the case of Mr. Ritchie, amounts include relocation expenses of $14,568.
|
|
(7)
|
Mr.
Ritchie joined the Company on November 6, 2017. His annual salary for 2017 was $265,000,
of which he received a prorated amount of $41,155 during 2017.
|
|
(8)
|
Mr.
Taber resigned from the Company on October 31, 2017.
|
|
(9)
|
Mr.
Hunter resigned from the Company on January 3, 2018.
|
|
(10)
|
Mr.
Raymond joined the Company on December 7, 2017. His annual salary for 2017 was $210,000,
of which he received a prorated amount of $14,318 during 2017.
|
GRANTS
OF PLAN-BASED AWARDS
The
following table summarizes the equity awards that were made pursuant to the Company’s 2010 Equity Incentive Plan (the “2010
Plan”) to the Company’s executive officers named in the “Summary Compensation Table” on page 32 of this proxy
statement in the fiscal year ended December 31, 2017. Shareholders approved the 2010 Stock Option Plan on May 20, 2010. The Company
also has a 2000 Stock Option Plan (the “2000 Stock Option Plan”). The 2000 Stock Option Plan was approved by the shareholders
on September 21, 2000. The 2000 Stock Option Plan terminated the award of stock options on April 25, 2010; however, awards
outstanding and unexercised remain outstanding until exercised or terminated. The Company does not have any other equity-based
plans.
Grants
of Plan-Based Awards Table
|
|
|
|
|
Estimated
Future Payouts
Under Non-Equity Incentive
Plan Awards
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) (1)
|
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise
or
Base Price
of Option
Awards
($/Sh) (1)
|
|
|
Grant
Date
Fair Value
of Stock
and Option
Awards
($) (2)
|
|
Name
|
|
Award
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
|
Target
(#) (2)
|
|
|
Maximum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
E. Ritchie, Jr.
|
|
|
11/15/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,333
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
109,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David T. Taber (3)
|
|
|
2/15/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,741
|
|
|
|
5,481
|
|
|
|
8,222
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
83,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mitchell A. Derenzo
|
|
|
2/15/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,330
|
|
|
|
2,659
|
|
|
|
3,989
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin B. Bender
|
|
|
2/15/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,330
|
|
|
|
2,659
|
|
|
|
3,989
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
40,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loren E. Hunter
(4)
|
|
|
2/15/17
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,258
|
|
|
|
2,515
|
|
|
|
3,773
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
38,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis F. Raymond,
Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
It
is the Company’s policy that the exercise price for each stock option and the per
share value for restricted stock awards is the market value of the Company’s common
stock based on the closing price on the date of the award, with the exception of the
performance-based stock awards which uses the thirty (30) calendar-day trailing average
closing stock price to set the target value of each award. See also the “Long-Term
Incentive Compensation” on page 24 of this proxy statement for more information
regarding the performance-based restricted stock awards. There is no dollar amount of
consideration paid by the named executive officer on the award or vesting date of restricted
stock.
|
|
(2)
|
The
amount reported in this column represents the fair value of restricted stock and stock
options awarded during the year shown for estimated future payouts for target performance
for the period of 2017 to 2018 in accordance with FASB ASU 2016-09. Please refer
to footnote 2 to our audited financial statements included in our annual report to shareholders
for the year ended December 31, 2017 for a discussion of the assumptions related to the
calculation of such value.
|
|
(3)
|
Mr.
Taber’s stock award received in 2017 was forfeited upon his resignation from the
Company on October 31, 2017.
|
|
(4)
|
Mr.
Hunter’s stock award received in 2017 was forfeited upon his resignation from the
Company on January 3, 2018.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table shows the outstanding stock option and restricted stock awards under the Company’s 2000 Stock Option Plan
and the 2010 Equity Incentive Plan held at the end of fiscal year 2017 by the executive officers named in the “Summary Compensation
Table” on page 32 of this proxy statement.
Outstanding
Equity Awards at Fiscal Year-End Table
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Incentive
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
Awards:
|
|
|
Market
or
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number
of
|
|
|
Payout
Value
|
|
|
|
Number
of
|
|
|
Number
of
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Unearned
|
|
|
of
Unearned
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Shares
or
|
|
|
Shares or
|
|
|
Shares,
Units
|
|
|
Shares,
Units
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Units
of
|
|
|
Units
of
|
|
|
or
Other
|
|
|
or
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Rights
That
|
|
|
Rights
That
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
Have
Not
|
|
|
Have
Not
|
|
|
Have
Not
|
|
|
Have
Not
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($) (14)
|
|
|
(#)
|
|
|
($)
|
|
David
E Ritchie, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,333
|
(8)
|
|
$
|
111,755
|
|
|
|
—
|
|
|
|
—
|
|
David
T. Taber
|
|
|
8,614
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
|
|
$
|
16.19
|
|
|
|
2/20/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,672
|
(2)
|
|
|
—
|
(2)
|
|
|
—
|
|
|
$
|
8.85
|
|
|
|
5/22/2024
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,288
|
(2)
|
|
|
—
|
(2)
|
|
|
—
|
|
|
$
|
9.56
|
|
|
|
5/21/2025
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Mitchell
A. Derenzo
|
|
|
4,116
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
|
|
$
|
16.19
|
|
|
|
2/20/2018
|
|
|
|
738
|
(9)
|
|
$
|
11,247
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,066
|
(3)
|
|
|
—
|
(3)
|
|
|
—
|
|
|
$
|
8.50
|
|
|
|
2/18/2019
|
|
|
|
3,671
|
(10)
|
|
$
|
55,946
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,226
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
|
|
$
|
7.07
|
|
|
|
5/16/2022
|
|
|
|
1,008
|
(11)
|
|
$
|
15,362
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4,009
|
(5)
|
|
|
2
673
|
(5)
|
|
|
—
|
|
|
$
|
8.85
|
|
|
|
5/22/2024
|
|
|
|
2,659
|
(12)
|
|
$
|
40,523
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,961
|
(6)
|
|
|
2,942
|
(6)
|
|
|
—
|
|
|
$
|
9.56
|
|
|
|
5/21/2025
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Kevin
B. Bender
|
|
|
4,116
|
(1)
|
|
|
—
|
(1)
|
|
|
—
|
|
|
$
|
16.19
|
|
|
|
2/20/2018
|
|
|
|
663
|
(9)
|
|
$
|
10,104
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4,116
|
(3)
|
|
|
—
|
(3)
|
|
|
—
|
|
|
$
|
8.50
|
|
|
|
2/18/2019
|
|
|
|
3,671
|
(10)
|
|
$
|
55,946
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,226
|
(4)
|
|
|
—
|
(4)
|
|
|
—
|
|
|
$
|
7.07
|
|
|
|
5/16/2022
|
|
|
|
937
|
(11)
|
|
$
|
14,280
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
3,604
|
(5)
|
|
|
2
402
|
(5)
|
|
|
—
|
|
|
$
|
8.85
|
|
|
|
5/22/2024
|
|
|
|
2,659
|
(12)
|
|
$
|
40,523
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
1,842
|
(6)
|
|
|
2,764
|
(6)
|
|
|
—
|
|
|
$
|
9.56
|
|
|
|
5/21/2025
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Loren
E. Hunter
|
|
|
1,126
|
(7)
|
|
|
1,659
|
(7)
|
|
|
—
|
|
|
$
|
9.56
|
|
|
|
5/21/2025
|
|
|
|
3,373
|
(10)
|
|
$
|
51,405
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
573
|
(13)
|
|
$
|
8,733
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,515
|
(13)
|
|
$
|
38,329
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
F. Raymond, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
These
stock options vest at a rate of 20% per year; 100% were vested as of February 20, 2013.
|
|
(2)
|
Mr.
Taber’s stock options were 100% vested on December 31, 2017 and were exercised
in January 2018.
|
|
(3)
|
These
stock options vest at a rate of 20% per year; 100% were vested as of February 18, 2014.
|
|
(4)
|
These
stock options vest at a rate of 20% per year; 100% were vested as of May 16, 2017.
|
|
(5)
|
These
stock options vest at a rate of 20% per year; 60% were vested as of May 22, 2017 with
remaining vesting dates of May 22, 2018 and 2019.
|
|
(6)
|
These
stock options vest at a rate of 20% per year; 40% were vested as of May 21, 2017 with
remaining vesting dates of May 22, 2018, 2019 and 2020.
|
|
(7)
|
Mr.
Hunter’s 1,126 stock options were 100% vested on December 31 2017 and were exercised
in March 2018 and his 1,659 stock options were unvested at December 31, 2017 and were
forfeited upon his resignation on January 3, 2018.
|
|
(8)
|
These
restricted stock awards vest at a rate of 33.33% per year, with remaining vesting dates
of November 15, 2018, 2019, and 2020.
|
|
(9)
|
These
restricted stock awards vest at a rate of 20% per year, with remaining vesting dates
of May 22, 2018 and 2019.
|
|
(10)
|
These
performance-based restricted stock awards vested on January 1, 2018.
|
|
(11)
|
These
restricted stock awards vest at a rate of 20% per year, with remaining vesting dates
of May 21, 2018, 2019 and 2020.
|
|
(12)
|
These
performance-based restricted stock awards vest on January 1, 2020, subject to the Company’s
share price increase relative to a selected group of financial institutions. These awards
may increase, decrease, or forfeit based on the Company’s share price performance.
See also the “Long-Term Incentive Compensation” on page 24 of this proxy
statement for more information regarding the performance-based restricted stock awards.
|
|
(13)
|
These
restricted stock awards were forfeited upon Mr. Hunter’s resignation on January
3, 2018.
|
|
(14)
|
Market
value is based on the closing price of $15.24 per share of the Company’s common
stock on December 31, 2017.
|
OPTION
EXERCISES AND STOCK VESTED
The
following table summarizes information with respect to stock option awards exercised during fiscal year 2017 and the amount of
restricted stock vested during fiscal year 2017 for each of the executive officers named in the “Summary Compensation Table”
on page 32 of this proxy statement.
Option
Exercises and Stock Vested Table
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of Shares
Acquired
on Exercise
(#)
|
|
|
Value
Realized
on Exercise
($) (1)
|
|
|
Number
of Shares
Acquired
on Vesting
(#)
|
|
|
Value
Realized
on Vesting
($) (2)
|
|
David
E. Ritchie, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
David
T. Taber
|
|
|
33,753
|
|
|
$
|
185,526
|
|
|
|
14,286
|
|
|
$
|
210,534
|
|
Mitchell
A. Derenzo
|
|
|
2,050
|
|
|
$
|
11,130
|
|
|
|
911
|
|
|
$
|
12,464
|
|
Kevin
B. Bender
|
|
|
—
|
|
|
|
—
|
|
|
|
854
|
|
|
$
|
11,691
|
|
Loren
E. Hunter
|
|
|
—
|
|
|
|
—
|
|
|
|
191
|
|
|
$
|
2,611
|
|
Dennis
F. Raymond, Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Value
realized is calculated based on the Company’s common stock market price on the
date of exercise less the exercise price multiplied by the number of shares exercised.
|
|
(2)
|
Value
realized is calculated based on the Company’s common stock market price on the
date of vesting multiplied by the number of shares vested.
|
PENSION
BENEFITS
The
following table summarizes information with respect to each plan that provides for payments or other benefits at, following, or
in connection with the retirement of any of the executive officers named in the “Summary Compensation Table” on page
32 of this proxy statement.
Pension
Benefits Table
Name
|
|
Plan Name
(1)
|
|
Number
of Years
Credited
Service
(#) (2)
|
|
|
Present
Value
of
Accumulated
Benefit
($) (3)
|
|
|
Payments
During Last
Fiscal Year
($)
|
|
David
T. Taber (4)
|
|
Salary
Continuation Agreement
|
|
|
14.3
|
|
|
$
|
801,833
|
|
|
|
—
|
|
Mitchell A. Derenzo
|
|
Salary Continuation
Agreement
|
|
|
14.4
|
|
|
$
|
179,975
|
|
|
|
—
|
|
Kevin B. Bender
|
|
Salary Continuation
Agreement
|
|
|
11.0
|
|
|
$
|
147,076
|
|
|
|
—
|
|
Loren E. Hunter
(5)
|
|
Salary Continuation
Agreement
|
|
|
3.6
|
|
|
$
|
64,866
|
|
|
|
—
|
|
|
(1)
|
The
salary continuation agreements are more fully described on page 27 of this proxy statement.
|
|
(2)
|
Years
of credited service represents the number of years the named executive officer has participated
in the pension benefit plan.
|
|
(3)
|
Includes
amounts which the named executive officer may not be currently entitled to receive because
the salary continuation agreements are only partially vested.
|
|
(4)
|
Mr.
Taber resigned from the Company on October 31, 2017 and will begin receiving payments
in 2018 under his Salary Continuation Agreement at a rate of $80,000 per year for fifteen
years.
|
|
(5)
|
Mr.
Hunter resigned from the Company on January 3, 2018 and will begin receiving payments
in 2018 under his Salary Continuation Agreement in at a rate of $7,500 per year for fifteen
years.
|
NONQUALIFIED
DEFERRED COMPENSATION
The
Deferred Compensation Plan was established for the purpose of providing the executive officers and selected senior managers, an
opportunity to defer compensation. Participants may elect to defer annually, a minimum of $5,000 or a maximum of eighty percent
of their base salary and all of their annual cash incentive compensation.
The
following table summarizes information for the fiscal year 2017 with respect to participation in the Deferred Compensation Plan
(the Company’s only nonqualified deferred compensation plan) by the executive officers named in the “Summary Compensation
Table” on page 32 of this proxy statement.
Nonqualified
Deferred Compensation Table
Name
|
|
Executive
Contributions
in Last
Fiscal Year
($) (3)
|
|
|
Registrant
Contributions
in Last
Fiscal Year
($)
|
|
|
Aggregate
Earnings
in Last
Fiscal Year
($) (1) (3)
|
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
|
Aggregate
Balance at
Last Fiscal
Year-End
($) (2) (3)
|
|
David E. Ritchie,
Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
David
T. Taber
|
|
|
—
|
|
|
|
—
|
|
|
$
|
123,825
|
|
|
|
—
|
|
|
$
|
2,155,802
|
|
Mitchell A. Derenzo
|
|
$
|
36,694
|
|
|
|
—
|
|
|
$
|
34,580
|
|
|
|
—
|
|
|
$
|
617,125
|
|
Kevin B. Bender
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Loren E. Hunter
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Dennis F. Raymond,
Jr.
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Earnings
credited to the accounts are based upon the terms of the Deferred Compensation Plan,
which is equal to the five-year U.S. Treasury Note plus 4.0%. The rate credited for 2017
was 5.93%.
|
|
(2)
|
The
Deferred Compensation Plan is an unfunded plan. For more information on the Deferred
Compensation Plan, please see page 27 of this proxy statement.
|
|
(3)
|
Amounts
included in the contributions and earnings columns and the aggregate balance at last
fiscal year-end are reported as compensation to the named executive officer in the “Summary
Compensation Table” on page 32 of this proxy statement for the years indicated.
|
EQUITY
COMPENSATION PLAN INFORMATION
The
chart below summarizes information under which shares of the Company’s common stock are authorized for issuance through
the 2010 Equity Incentive Plan and the 2000 Stock Option Plan as of December 31, 2017. Both the 2010 Equity Incentive Plan and
the 2000 Stock Option Plan were approved by the Company’s shareholders. The Company has no other equity compensation plan
and there are no warrants or other rights outstanding that would result in the issuance of shares of the Company’s common
stock.
Plan
Category
|
|
Number
of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
|
Number
of securities remaining
available for future issuance under
equity compensation plans
(excluding securities reflected
in
column (a))
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
97,543
|
(1)
|
|
$
|
11.26
|
|
|
|
1,223,297
|
(2)
|
Equity
compensation plans not approved by security holders
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
|
97,543
|
|
|
$
|
11.26
|
|
|
|
1,223,297
|
|
|
(1)
|
Represents
shares reserved but unissued under the 2000 Stock Option Plan and the 2010 Equity Incentive
Plan. The 2000 Stock Option Plan terminated the award of stock options on April 25, 2010.
No new award of stock options can be made under the 2000 Stock Option Plan and any shares
reserved will either be exercised or will be forfeited. As of December 31, 2017, there
were 43,073 outstanding stock options awarded under the 2010 Equity Incentive Plan.
|
|
(2)
|
Represents
shares that were eligible for award as of December 31, 2017, under the 2010 Equity Incentive
Plan. This amount does not include 49,053 shares of restricted stock and 43,073 stock
options that were awarded, but have not yet vested or been exercised.
|
TRANSACTIONS
WITH RELATED PERSONS
The
Company has a policy that it does not enter into any transactions covered under Item 404 of Regulation S-K with the exception
of loans made by the Company’s subsidiary, American River Bank, (see “Indebtedness of Management” immediately
following this section) and a lease transaction described below that was entered into in 1985, and subsequently renewed, with
Bradshaw Plaza, Associates, Inc., a California corporation doing business as Bradshaw Plaza, which is owned in part by Charles
D. Fite, a director of the Company, in addition to ownership by other family members.
American
River Bank leases the premises at 9750 Business Park Drive, Sacramento, California and uses the premises for one of its branch
locations. The lease term is 3 years and expires on November 30, 2019. The premises consist of 3,711 square feet on the ground
floor. The current monthly rent is $6,308. The approximate aggregate rental payments for the period from January 1, 2018 through
the lease term expiring on November 30, 2019 will be $145,100. The Board of Directors has evaluated this transaction and the lease
relationship and has determined that is does not impair the independence of Mr. Fite, as defined under applicable NASDAQ listing
rules. The Board of Directors also determined that they would not expand the existing lease relationship nor would they enter
into any new leases for any location other than the current location with Mr. Fite or any of his related companies.
Other
than the lease transaction with Director Fite, there have been no transactions, or series of similar transactions, since January
1, 2017, or any currently proposed transaction, or series of similar transactions, to which American River Bankshares or American
River Bank was or is to be a party, in which the amount involved exceeded or will exceed $120,000 and in which any director, director-nominee
or executive officer of American River Bankshares or American River Bank, any shareholder owning of record or beneficially 5%
or more of American River Bankshares common stock, or any member of the immediate family of any of the foregoing persons, had,
or will have, a direct or indirect material interest.
Indebtedness
of Management
American
River Bankshares, through American River Bank, has had, and expects in the future to have banking transactions in the ordinary
course of its business with many of American River Bankshares’ directors and officers and their associates, including transactions
with corporations of which such persons are directors, officers or controlling shareholders, on substantially the same terms (including
interest rates and collateral) as those prevailing for comparable transactions with unrelated persons. Management believes that
in 2017 such transactions comprising loans did not involve more than the normal risk of collectability or present other unfavorable
features. Loans to executive officers of American River Bankshares and American River Bank are subject to limitations as to amount
and purposes prescribed in part by the Federal Reserve Act, as amended, and the regulations of the Federal Deposit Insurance Corporation.
PROPOSAL
NO. 2
RATIFICATION
OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
independent registered public accounting firm of Crowe Horwath LLP (“Crowe”) served the Company as its independent
registered public accountants and auditors for the fiscal years ended December 31, 2017 and 2016, at the direction of the Audit
Committee and the Board of Directors of the Company. Crowe does not have any interests, financial or otherwise, in the Company.
The services rendered by Crowe during the 2017 and 2016 fiscal years were audit services, consultation in connection with various
accounting matters, and preparation of the Company’s income tax returns.
The
table below summarizes the services rendered to the Company by Crowe during and for the 2017 and 2016 fiscal years.
|
|
2017
|
|
|
2016
|
|
Audit
Fees (1)
|
|
$
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233,800
|
|
|
$
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172,500
|
|
Audit-Related Fees
(2)
|
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12,900
|
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|
|
12,900
|
|
Tax Fees (3)
|
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|
21,900
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|
|
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20,500
|
|
All Other Fees (4)
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|
|
—
|
|
|
|
4,000
|
|
Total
Accounting Fees
|
|
$
|
268,600
|
|
|
$
|
209,900
|
|
|
(1)
|
Audit
fees consisted of services rendered by Crowe for the audit of the Company’s consolidated
financial statements included in the Annual Report on Form 10-K and for reviews of the
financial statements included in the Company’s quarterly reports on Form 10-Q for fiscal
years 2017 and 2016. For 2017, these fees also included the audit of the Company’s
internal control over financial reporting, based on criteria established in Internal
Control – Integrated Framework: (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”).
|
|
(2)
|
Audit-related
fees represent fees for professional services in connection with the audit of the Company’s
401(k) plan.
|
|
(3)
|
Tax
fees consisted principally of services rendered by Crowe for assistance relating to tax
compliance and reporting for fiscal years 2017 and 2016.
|
|
(4)
|
All
other fees, if any, are professional services related to consultation.
|
The
Audit Committee approved each professional service rendered by Crowe during the 2017 and 2016 fiscal years and considered whether
the provision of such services is compatible with Crowe maintaining its independence. The approval of such professional services
included pre-approval of all audit and permissible non-audit services provided by Crowe. These services included audit, tax and
other services described above. The Audit Committee Charter attached as ANNEX C includes a policy of pre-approval of all services
provided by the Company’s independent registered public accountants. The Audit Committee approved one hundred percent (100%)
of all such professional services provided by Crowe during the 2017 and 2016 fiscal years. It is anticipated that one or more
representatives of Crowe will be present at the Meeting and will be able to make a statement if they so desire and answer appropriate
questions.
The
ratification of the selection of Crowe as the Company’s independent registered public accountants requires approval of a majority
of the total number of shares voting at the Meeting. In the event such selection is not ratified, the adverse vote will be deemed
to be an indication to the Board of Directors that it should consider selecting other independent registered public accountants
for the fiscal year ended December 31, 2018. Because of the difficulty and expense of making any substitution of accounting firms
after the beginning of the current year, it is the current intention of the Board of Directors that the selection of Crowe for
the fiscal year ended December 31, 2018 will remain in effect; however, the Board of Directors also retains the power to select
another independent registered public accounting firm to replace the accountants ratified by the shareholders in the event the
Board of Directors determines that the interests of the Company and its shareholders require such a change.
Recommendation
of Management
The
Board of Directors has selected Crowe Horwath LLP to serve as the Company’s independent registered public accounting firm
for the fiscal year ending December 31, 2018 and recommends that shareholders vote “FOR” the ratification of the selection
of Crowe Horwath LLP.
AUDIT
COMMITTEE REPORT
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 FOLLOWING REPORT SHALL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE INTO ANY SUCH FILING.
The
Audit Committee consists of the following members of the Company’s Board of Directors: Philip A. Wright, Michael A. Ziegler
and William A. Robotham (Chairman and Audit Committee Financial Expert). Each such member of the Audit Committee is “independent”
as defined under applicable NASDAQ listing rules.
The
Audit Committee operates under a written charter adopted by the Board of Directors, which among other matters, delineates the
responsibilities of the Audit Committee. The Audit Committee’s responsibilities include responsibility for the appointment,
compensation, retention and oversight of the work of the Company’s independent registered public accountants (including
resolution of disagreements between management and the independent registered public accountants regarding financial reporting)
engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company.
The Company’s independent registered public accountants report directly to the Audit Committee. The written Audit Committee
charter adopted by the Board of Directors is attached to this proxy statement as ANNEX C.
The
Audit Committee has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December
31, 2017 with management and Crowe Horwath LLP, the Company’s independent registered public accountants. The Audit
Committee has also discussed with Crowe Horwath LLP, the matters required to be discussed by Auditing Standard No. 1301 (Communications
with Audit Committees) as may be modified or supplemented. The Audit Committee has also received the written disclosures
and the letter from Crowe Horwath LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding
the independent public accountants’ communications with the Audit Committee concerning independence and the Audit Committee
has discussed the independence of Crowe Horwath LLP with that firm.
Based
on the Audit Committee’s review and discussions noted above, the Audit Committee recommended to the Board of Directors that
the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2017 for filing with the Securities and Exchange Commission.
Submitted
by the Audit Committee of American River Bankshares Board of Directors:
|
|
|
Philip
A. Wright
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Michael
A. Ziegler
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William
A. Robotham
|
PROPOSAL
NO. 3
ADVISORY
(NON-BINDING) VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
The
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) provides shareholders with
the opportunity to vote on an advisory (non-binding) basis, to approve the compensation of our named executive officers as further
described in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this
proxy statement, including the related compensation tables and narrative discussion. This proposal, commonly known as a “Say
on Pay” proposal, provides our shareholders the opportunity to express their views on our executive officer compensation
program, as it relates to our named executive officers. This vote is not intended to address any specific item of compensation,
but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this
proxy statement.
We
ask our shareholders to indicate their support for our executive officer compensation program for our named executive officers
and vote “FOR” the following resolution at the Meeting:
“RESOLVED,
that the Company’s shareholders approve, on an advisory basis, the compensation paid to the Company’s named executive
officers as disclosed in this proxy statement pursuant to Item 402 of Regulation S-K, including the discussion in the “Compensation
Discussion and Analysis” and “Executive Compensation” sections of this proxy statement and the related compensation
tables and narrative discussion.”
Because
your vote is advisory, it will not be binding upon the Board of Directors or the Compensation Committee and may not be construed
as overruling any decision by the Board of Directors or the Compensation Committee. However, the Board of Directors and the Compensation
Committee may, in their respective sole discretion, take into account the outcome of the vote when considering future executive
officer compensation arrangements.
Shareholders
are encouraged to carefully review the “Compensation Discussion and Analysis” and “Executive Compensation”
sections of this proxy statement and the related compensation tables and narrative discussion for a detailed discussion of the
Company’s executive officer compensation program for our named executive officers.
Recommendation
of Management
The
Board of Directors unanimously recommends a vote “FOR” the approval of Proposal No. 3 and the compensation for our
named executive officers.
ANNUAL
REPORT
The
Annual Report of the Company containing audited financial statements for the fiscal year ended December 31, 2017 is being
mailed or made available electronically to shareholders simultaneously with this proxy statement.
ANNUAL
DISCLOSURE STATEMENT
American
River Bank has prepared an Annual Disclosure Statement as required by FDIC regulations, a copy of which may be obtained upon written
request to Stephen H. Waks, Secretary, American River Bankshares, 3100 Zinfandel Drive, Suite 450, Rancho Cordova, CA 95670.
FORM
10-K
A
COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, IS AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST TO STEPHEN H. WAKS, SECRETARY,
AMERICAN RIVER BANKSHARES, 3100 ZINFANDEL DRIVE, SUITE 450, RANCHO CORDOVA, CA 95670.
WEBSITE
Information
regarding the Company may be obtained from the Company’s website at
www.americanriverbank.com
. Copies of the Company’s
Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and Section 16 reports by Company insiders,
including exhibits and amendments thereto, are available free of charge on the Company’s website as soon as they are published
by the Securities and Exchange Commission through a link to the reporting system maintained by the Securities and Exchange Commission.
To access Company filings, select the “Investor Relations” link on the menu item on the Company website, then select
the “Company News” link and then the “SEC Filings” link to view or download copies of reports including
Form 10-K, 10-Q or 8-K, or the “Section 16 Filings” link to view or download reports on Forms 3, 4 or 5 of insider
transactions in Company securities.
SHAREHOLDERS’
PROPOSALS
The
2019 Annual Meeting of Shareholders will be held on May 16, 2019. The deadline for shareholders to submit proposals for inclusion
in the proxy statement and form of proxy for the 2019 Annual Meeting of Shareholders is December 8, 2018. Management of the Company
will have discretionary authority to vote proxies obtained by it in connection with any shareholder proposal not submitted on
or before the deadline. All proposals should be submitted by Certified Mail - Return Receipt Requested, to Stephen H. Waks, Secretary,
American River Bankshares, 3100 Zinfandel Drive, Suite 450, Rancho Cordova, CA 95670.
OTHER
MATTERS
The
Board of Directors knows of no other matters, which will be brought before the Meeting, but if such matters are properly presented
to the Meeting, proxies solicited hereby will be voted in accordance with the discretion of the persons holding such proxies.
All shares represented by duly executed proxies will be voted at the Meeting and at any and all postponements or adjournments
thereof in accordance with the terms of such proxies.
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Dated:
April 6, 2018
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AMERICAN RIVER BANKSHARES
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|
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|
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|
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By:
|
|
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|
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Stephen H. Waks
|
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Corporate Secretary
|
ANNEX
A
AMERICAN
RIVER BANKSHARES
BOARD
OF DIRECTORS
NOMINATING
COMMITTEE CHARTER
|
|
The
Board of Directors of American River Bankshares (the “Company”), upon recommendation
of the Chair of the Company, shall appoint a Nominating Committee of at least three (3)
members and shall designate one member as chairperson. The members of the Nominating
Committee shall serve at the discretion of the Board of Directors. The members of the
Nominating Committee must be independent directors and their independence shall be determined
in accordance with applicable rules of the Securities and Exchange Commission and the
NASDAQ Stock Market rules.
|
|
|
The purpose
of the Nominating Committee is to assist the Board of Directors by (a) establishing criteria
for candidates and identifying, evaluating and recommending candidates, including candidates
proposed by shareholders, for election to the Board of Directors, and (b) periodically
reviewing and making recommendations on the composition of the Board of Directors.
|
|
1.
|
Candidates
shall be evaluated based on the criteria established by the Nominating Committee which
may include (a) satisfactory results of any background investigation, (b) experience
and expertise, (c) financial resources, (d) time availability, (e) community involvement,
and (f) such other criteria as the Nominating Committee may determine to be relevant.
Candidates selected for consideration as nominees must meet with the Nominating Committee
and thereafter with the Board of Directors.
|
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2.
|
Any
candidate nominated for election to the Board of Directors must (a) be recommended to
the Board of Directors by the unanimous vote of approval of the members of the Nominating
Committee and (b) receive a majority of votes in favor of nomination from independent
members of the Board of Directors. Directors who are not independent shall not vote,
but may be present.
|
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3.
|
Each
candidate recommended by the Nominating Committee shall be required to complete one or
more questionnaires and provide such additional information as the Nominating Committee
shall deem necessary or appropriate. Such information shall include a personal financial
statement and a background investigation using an outside firm which shall, among other
matters, (a) verify the accuracy of information provided by the candidate including that
the name and social security number is consistent with other information provided, (b)
conduct a review of criminal history records, and (c) verify addresses associated with
the applicant and identification of persons with whom the applicant has shared addresses.
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4.
|
The
Nominating Committee considers diversity in identifying director nominees including differences
of viewpoint, professional experience, education and skill that contributes to the Board
of Directors heterogeneity in addition to considerations of race, gender and national
origin. The effectiveness of the Board of Directors is measured through each director’s
participation and contribution in freely open, give and take discussions that
enables the Board of Directors to function well as a unit.
|
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5.
|
Each
existing member of the Board of Directors whose term is ending must be reviewed for recommendation
for re-election by the Nominating Committee. This review will include a number of factors,
including but not limited to a review of attendance, participation, continuing education,
investment in shares, business development and community involvement. In lieu of the
information required to be provided by new candidates for election to the Board of Directors
described above in paragraph 3, the Nominating Committee may rely upon the information
contained in the most recent annual Directors and Officers Questionnaire completed by
the existing member of the Board of Directors, subject to such updated information as
the Nominating Committee may deem appropriate.
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6.
|
Nominations
for existing members of the Board of Directors must receive a majority of votes in favor
of nomination from the other independent directors.
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IV.
|
Frequency
of Meetings
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The
Nominating Committee shall meet at such times as it may deem appropriate, but not less
frequently than annually.
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Any
conflicts between the provisions of this Charter and the provisions of the Company’s
bylaws shall be resolved in favor of the bylaw provisions and nothing contained herein
shall be construed as an amendment of the Company’s bylaws.
|
ANNEX
B
AMERICAN
RIVER BANKSHARES
COMPENSATION
COMMITTEE CHARTER
1.
Membership
.
The Board of Directors of American River Bankshares (the “Company”), upon recommendation of
the Chair of the Company, shall appoint a Compensation Committee of at least three (3) members, consisting entirely of independent
directors, and shall designate one member as chairperson. The members of the Compensation Committee shall serve at the discretion
of the Board of Directors. For purposes hereof, an “independent” director is a director who qualifies as independent
under the definition of “independence” contained in applicable rules promulgated by the Securities and Exchange Commission
pursuant to the Sarbanes-Oxley Act of 2002 and the NASDAQ Listing Rules, as amended, including (a) the definition of independence
under NASDAQ Rule 5605(a)(2); (b) the requirement that the director not accept directly or indirectly any consulting, advisory
or other compensatory fee from the Company or any subsidiary thereof; provided, that compensatory fees shall not include (i) fees
received as a member of the Compensation Committee, the Board of Directors or any other Board of Directors committee, or (ii)
the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with
the Company (provided that such compensation is not contingent in any way on continued service); and (c) the determination by
the Board of Directors of whether a director is eligible to serve on the Compensation Committee after consideration of any affiliation
by the director with the Company, with any of the Company’s subsidiaries, or with any affiliate of a subsidiary of the Company
and whether any such affiliation would impair the director’s judgment as a member of the Compensation Committee.
2.
Purpose, Duties and Responsibilities
.
The purpose of the Compensation Committee is to (a) discharge the responsibilities
of the Board of Directors relating to compensation of the Company’s executive officers and directors, and, in the case of equity
compensation, other key employees; and (b) review and approve the annual report on compensation for inclusion in the Company’s
proxy statement for the annual meeting of shareholders under the caption, “Compensation Committee Report.”
The
duties and responsibilities of the Compensation Committee shall include the actions described below.
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·
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Conduct
oversight of the Company’s overall compensation strategy and objectives pursuant
to the goals of the Company including, but not limited to, assessment of the risks, if
any, to the Company from such compensation strategy and related compensation incentives,
strategies and objectives and a determination of whether any risks are presented thereby
which are reasonably likely to have a material adverse effect on the Company. If the
Compensation Committee determines that any risks are presented which are reasonably likely
to have a material adverse effect on the Company, then the Compensation Committee will
recommend to the Board of Directors alternative compensation incentives, strategies and
objectives intended to mitigate such risks.
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·
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Review
and recommend to the Board of Directors changes to the structure and design of the compensation
elements for executive officers including annual base salary, annual cash incentive compensation,
long-term equity incentive compensation, retirement plans (e.g. 401(k), deferred compensation,
and salary continuation agreements), and change in control benefits and severance.
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·
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Review
and recommend to the Board of Directors changes in the structure and design of the compensation
elements for directors of the Company and its subsidiaries and any committees thereof,
including cash (e.g., meeting fees and retainers), and the long-term equity incentive
compensation plans.
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·
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Review
and recommend to the Board of Directors the appropriate peer group to be used in benchmarking
executive officer and director compensation.
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·
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Annually
recommend to the Board of Directors the compensation of the Chief Executive Officer (“CEO”),
including base salary, annual cash incentive compensation opportunity and changes to
other compensation elements.
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·
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Annually
recommend to the Board of Directors, the compensation of other executive officers (based
on the recommendation of the CEO) including base salary, annual cash incentive compensation
opportunity and changes to other compensation elements.
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·
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Recommend
to the Board of Directors the performance metrics and applicable weightings as required
by the Company’s Executive Annual Incentive Compensation Plan.
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·
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Recommend
to the Board of Directors changes to the compensation of directors of the Company and/or
any subsidiary of the Company.
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·
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Recommend
to the Board of Directors annual equity awards to directors, executive officers and other
key employees, pursuant to Board of Directors approved equity awards methodology.
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·
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Recommend
to the Board of Directors the participants in the Company’s Deferred Compensation
Plan.
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·
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Recommend
to the Board of Directors employment and/or severance agreements for the executive officers.
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·
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Periodically
review and recommend to the Board of Directors changes to executive officer retirement
benefits, employment agreements, change in control benefits and severance plans.
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·
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Periodically
review the Company succession plans relating to positions held by the executive officers
and make recommendations to the Board of Directors regarding the process for selecting
the individuals to fill these positions.
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·
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Evaluate
the CEO’s performance relative to the goals and objectives of the Company and discuss
evaluations of other executive officers with the CEO.
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·
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Annually
review and recommend to the Board of Directors for approval such changes to this Charter,
if any, as may be deemed necessary.
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·
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Prepare
and submit an appropriate “Compensation Committee Report” pursuant to applicable
regulations of the Securities and Exchange Commission for inclusion in the management
proxy statement for each annual meeting of shareholders, stating, among other matters,
whether (a) the Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis with management; and (b) the Compensation Committee has recommended to the
Board of Directors that the Compensation Discussion and Analysis be included in such
proxy statement and the Company’s Annual Report on Form 10-K.
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|
·
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Perform
such other duties and responsibilities as may be required by the rules and regulations
which govern the Company and are consistent with the purpose of the Compensation Committee,
or as the Board of Directors may deem appropriate.
|
3.
Subcommittees
.
The Compensation Committee may delegate any of the foregoing duties and responsibilities to a subcommittee
of the Compensation Committee consisting of not less than two (2) members of the Compensation Committee.
4.
Authority
.
The Compensation Committee shall have the following authority in order to discharge its duties and responsibilities:
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·
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The
Compensation Committee may, in its sole discretion, retain or obtain the advice of a
compensation consultant, legal counsel or other adviser. In furtherance of this authority,
the Compensation Committee shall have authority to retain and terminate any such adviser
and to approve reasonable compensation and the terms and conditions applicable to the
services of the adviser.
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·
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The
Compensation Committee shall be directly responsible for the oversight of the work of
any compensation consultant, legal counsel and other adviser retained by the Compensation
Committee.
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·
|
The
Company must provide for appropriate funding, as determined by the Compensation Committee,
for payment of reasonable compensation to a compensation consultant, legal counsel or
any other adviser retained by the Compensation Committee.
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·
|
The
Compensation Committee may select, or receive advice from, a compensation consultant,
legal counsel or other adviser to the Compensation Committee, other than in-house legal
counsel, only after taking into consideration the following factors:
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(a)
|
the
provision of other services to the Company by the person that employs the compensation
consultant, legal counsel or other adviser;
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(b)
|
the
amount of fees received from the Company by the person that employs the compensation
consultant, legal counsel or other adviser, as a percentage of the total revenue of the
person that employs the compensation consultant, legal counsel or other adviser;
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(c)
|
the
policies and procedures of the person that employs the compensation consultant, legal
counsel or other adviser that are designed to prevent conflicts of interest;
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(d)
|
any
business or personal relationship of the compensation consultant, legal counsel or other
adviser with a member of the Compensation Committee;
|
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(e)
|
any
stock of the Company owned by the compensation consultant, legal counsel or other adviser;
and
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(f)
|
any
business or personal relationship of the compensation consultant, legal counsel, other
adviser or the person employing the adviser with an executive officer of the Company.
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|
·
|
Nothing
in this Charter shall be construed to (a) require the Compensation Committee to implement
or act consistently with the advice or recommendations of the compensation consultant,
legal counsel or other adviser to the Compensation Committee; or (b) affect the ability
or obligation of a Compensation Committee to exercise its own judgment in fulfillment
of the duties of the Compensation Committee.
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|
·
|
Nothing
in this Charter requires a compensation consultant, legal counsel or other compensation
adviser to be independent, only that the Compensation Committee consider the above enumerated
independence factors before selecting, or receiving advice from, a compensation adviser.
The Compensation Committee may select, or receive advice from, any compensation adviser
the Compensation Committee prefers, including advisers that are not independent, after
considering the six independence factors enumerated above.
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|
·
|
The
Compensation Committee is not required to conduct an independence assessment for a compensation
adviser that acts in a role limited to the following activities for which no disclosure
is required under Item 407(e)(3)(iii) of Regulation S-K: (a) consulting on any broad-based
plan that does not discriminate in scope, terms, or operation, in favor of executive
officers or directors of the Company, and that is available generally to all salaried
employees; and/or (b) providing information that either is not customized for the Company
or that is customized based on parameters that are not developed by the adviser, and
about which the adviser does not provide advice.
|
5.
Meetings
.
The Compensation Committee will meet as often as may be deemed necessary or appropriate either in person
or telephonically, and at such times and places as the Compensation Committee determines, but in no event less frequently than
three times per year. A majority of the members of the Compensation Committee shall constitute a quorum for all purposes. The
CEO is an invited guest to the Compensation Committee meetings and can be present but not vote at discussions regarding compensation
matters regarding other executive officers or directors. The CEO cannot be present during deliberations or voting on CEO compensation
matters.
The
Compensation Committee Chairperson may also invite compensation consultants or other advisers and members of management to attend
any meeting and to provide pertinent information as necessary. The Compensation Committee will report regularly to the Board of
Directors with respect to the meetings and activities of the Compensation Committee described in this Charter.
ANNEX
C
AMERICAN
RIVER BANKSHARES
AUDIT
COMMITTEE CHARTER
The
Audit Committee (“Committee”) is appointed by the Board of Directors to assist the Board of Directors, among other
matters, in monitoring the following:
1. The
integrity of the Company’s financial statements, financial reporting processes and internal controls regarding finance,
accounting, regulatory and legal compliance;
2. The
independence, qualifications and performance of the Company’s Independent Registered Public Accounting Firm (“independent
public accountants”);
3. The
performance of the Company’s independent internal control, loan and compliance auditors;
4. Communications
among the independent public accountants, management, independent internal control auditors, and the Board of Directors; and
5. Procedures
for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls
or auditing matters, including procedures for the confidential, anonymous submission by the Company’s employees of concerns
regarding questionable accounting or auditing matters.
COMMITTEE
MEMBERSHIP
The
Committee shall be comprised of at least three directors. Each member of the Committee shall have the following attributes, subject
to permissible exceptions:
1. Independence,
as defined in applicable rules promulgated by the Securities and Exchange Commission pursuant to the Sarbanes-Oxley Act of 2002,
and applicable NASDAQ listing rules, including that a member shall not have participated in the preparation of the financial statements
of the Company or any current subsidiary of the Company at any time during the past three years; and
2. The
ability to read and understand fundamental financial statements, including the Company’s balance sheet, income statement,
and cash flow statement.
At
least one member of the Committee shall be an “Audit Committee Financial Expert” as defined in the rules promulgated
by the Securities and Exchange Commission, or in the event that no member of the Committee qualifies as an Audit Committee Financial
Expert, at least one member of the Committee shall be “financially sophisticated” as defined in applicable NASDAQ
listing rules. The members of the Committee shall be appointed by the Board of Directors and serve at the pleasure of the Board
of Directors.
MEETINGS
The
Committee shall meet as often as it determines necessary, but not less frequently than quarterly each fiscal year. The Committee
shall meet periodically with the Company’s management, independent public accountants and independent internal control,
loan and compliance auditors.
The
Committee may request any officer or employee of the Company, or the Company’s counsel, or independent public accountants,
or independent internal control, loan and compliance auditors, to attend a meeting of the Committee or to meet with any members
of, or advisors to, the Committee.
COMMITTEE
AUTHORITY AND RESPONSIBILITIES
The
Committee, in its capacity as a committee of the Board of Directors, shall be directly responsible for the appointment of the
independent public accountants (subject, if applicable, to shareholder ratification) and for the retention, compensation and oversight
of the work of the independent public accountants (including resolution of disagreements between management and the independent
public accountants regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other
audit, review or attest services for the Company. The independent public accountant shall report directly to the Committee.
The
Committee shall pre-approve all audit services and permissible non-audit services to be performed for the Company by the independent
public accountants, subject to any permitted exceptions for pre-approval of non-audit services pursuant to rules and regulations
of the Securities and Exchange Commission and/or NASDAQ.
The
Committee shall have the authority, to the extent it deems necessary or appropriate, to retain independent legal, accounting or
other advisors. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation
to the independent public accountants for the purpose of preparing or issuing an audit report or performing other audit, review
or attest services and to any other advisors employed by the Committee.
The
Committee shall establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters, including procedures for the confidential, anonymous submission
by the Company’s employees of concerns regarding questionable accounting or auditing matters.
The
Committee shall make regular reports to the Board of Directors. The Committee shall review and reassess the adequacy of this Charter
annually and recommend any proposed changes to the Board of Directors for approval.
The
Committee, to the extent required by applicable rules or regulations of the Securities and Exchange Commission and/or NASDAQ,
or as the Committee deems necessary or appropriate, shall perform the following:
1. Financial
Statement and Disclosure Matters
(a) Review
with management and the independent public accountants the annual audited financial statements, including disclosures made in
the Company’s Annual Report on Form 10-K.
(b) Review
with management, the independent public accountants, the independent internal control auditors and Company counsel any certification
provided by management related to the Company’s financial statements. Review with management, the independent public accountants,
and the independent internal control auditors management’s assertion regarding the design effectiveness and operation efficiency
of the Company’s internal controls over financial reporting and compliance with the applicable laws and regulations.
(c) Review
with management and the independent public accountants significant financial reporting issues and judgments made in connection
with the preparation of the Company’s financial statements, including any significant changes in the Company’s selection
or application of accounting principles, any material issues as to the adequacy of the Company’s internal controls and any
actions taken or adopted in light of material control deficiencies.
(d) Review
a report by the independent public accountants concerning (i) all critical accounting policies and practices to be used; (ii)
alternative treatments of financial information within GAAP that have been discussed with management, ramifications of the use
of such alternative disclosures and treatments, and the treatment preferred by the independent public accountants; and (iii) any
other material written communications between the independent public accountants and the Company’s management.
(e) Review
with management and the independent public accountants the effect of regulatory and accounting initiatives as well as off-balance
sheet structures on the Company’s financial statements.
(f)
Review with management the Company’s major financial risk exposures and the actions management has taken to monitor
and control such exposures, including the Company’s risk assessment and risk management policies.
(g) Review
with the independent public accountants (i) the matters required to be discussed by Auditing Standard No. 1301 (Communications
with Audit Committees) and Auditing Standard No. 2410 (Related Parties), as amended, modified or supplemented; (ii) the written
disclosures and the letter from the independent public accountants required by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent public accountants’ communications with the Audit Committee concerning independence
and the Audit Committee has discussed the independence of the independent public accountants’; and (iii) matters relating
to the conduct of the audit, including any difficulties encountered in the course of the audit work, any restrictions on the scope
of activities or access to requested information, and any significant disagreements with management.
(h) Review
disclosures made to the Committee by the Company’s Chief Executive Officer and Chief Financial Officer during their certification
about any significant deficiencies in the design or operation of internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in the Company’s internal controls.
2. Independent
Public Accountant Oversight
(a) Review
the length of time the lead and concurring partner of the independent public accountants team has been engaged to audit the Company.
(b) On
an annual basis, the Committee shall review and discuss with the independent public accountants (i) all relationships they have
with the Company that could impair the independent public accountant’s independence, (ii) the independent public accountant’s
internal quality control procedures, and (iii) any material issues raised by the most recent internal quality control review or
peer review of the independent public accountant’s firm or by any inquiry or investigation by governmental or professional
authorities, within the preceding five years, respecting one or more independent audits carried out by the independent public
accountant’s firm, and the steps taken to deal with those issues.
(c) Ensure
the rotation of the lead audit partner of the independent public accountants having primary responsibility for the Company’s
audit and the audit partner responsible for reviewing the audit to the extent required by applicable law or regulation.
(d) Prohibit,
to the extent required by applicable law or regulation, the hiring of any employee of the independent public accountants who was
engaged on the Company’s account and who would be employed by the Company in a financial reporting oversight role.
(e) Meet
with the independent public accountants prior to the Company’s audit to discuss the planning and staffing of the audit.
3. Internal
Audit Oversight
(a) Approve
the appointment and replacement of the independent firm of independent internal control auditors; including the independence and
authority of the auditors’ reporting obligations.
(b) Review
significant reports to management prepared by the auditors and management’s responses.
(c) Review
with the auditors and management the auditors’ responsibilities, budget and staffing and any recommended changes in the
planned scope of the independent internal control audit.
(d) Review
the audit scope and audit staffing plan and discuss the completeness of coverage and effective use of audit resources with both
the auditors and the independent public accountants.
(e) Review
with the auditors a progress report on the internal audit plan and any significant changes with explanations for any changes from
the original plan.
(f) Receive
confirmation from both the auditors and the independent public accountants that no limitations have been placed on the scope or
nature of their audit process or procedures.
4. Compliance
and Internal Control Oversight
(a) Review
reports and disclosures of insider and related/affiliated party transactions.
(b) Review
with management and the independent public accountants any correspondence with regulators or governmental agencies and any published
reports which raise material issues regarding the Company’s internal controls, financial statements or accounting policies.
(c) Review
legal matters that may have a material impact on the financial statements or the Company’s compliance policies with the
Company’s counsel.
(d) Review
the adequacy and effectiveness of the Company’s internal controls and security matters with management, the independent
internal control auditors and the independent public accountants.
DIRECTIONS
TO ANNUAL MEETING OF SHAREHOLDERS
Thursday,
May 17, 2018 - 3:00 p.m. Pacific Time
Rancho
Cordova City Hall
American
River Room North
2729
Prospect Park Drive
Rancho
Cordova, CA 95670
Directions:
East
HWY 50 East
Exit Zinfandel
Drive
Continue
on Gold Center Drive
Turn Right
on Prospect Park Drive
Destination
will be on the right
West
HWY 50 West
Exit Zinfandel
Drive
Turn Left
at Zinfandel Drive
Turn Left
on White Rock Road
Turn Left
on Prospect Park Drive
Destination
will be immediately on the left
Map:
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