COLUMBIA BANKING SYSTEM, INC. appointed new CEO

Item 5.02 
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. 


Board of Directors 

At the Effective Time, in accordance with the terms of the Merger Agreement, Columbia expanded the size of the Board to fourteen (14) directors. Seven (7) former directors of Columbia were appointed to continue service as directors of Columbia, in each case effective as of the Effective Time: Craig D. Eerkes, Clint E. Stein, Mark A. Finkelstein, Eric S. Forrest, Randal L. Lund, S. Mae Fujita Numata and Elizabeth W. Seaton, and seven (7) former directors of Umpqua were appointed to serve as directors of Columbia, in each case effective as of the Effective Time: Cort L. O'Haver, Peggy Y. Fowler, Luis F. Machuca, Maria M. Pope, John F. Schultz, Hilliard C. Terry, III and Anddria Varnado (such former directors of Umpqua, the "New Directors"). Other than the Merger Agreement, and in the case of Mr. O'Haver, the Amended and Restated Bylaws and the O'Haver Letter Agreement (as defined below), there are no arrangements between the New Directors and any other person pursuant to which the New Directors were selected as directors. There are no transactions in which any New Director has an interest requiring disclosure under Item 404(a) of Regulation S-K. 

In connection with the completion of the transactions contemplated by the Merger Agreement, Laura A. Schrag, Tracy Mack-Askew, Michelle M. Lantow and Janine Terrano resigned effective as of the Effective Time, and Ford Elsaesser retired from the Board effective as of the Effective Time. 

Biographical Information. Biographical information related to the New Directors can be found in the annual report on Form 10-K filed by Umpqua with the SEC on February 24, 2023. 


Board Committee Assignments after the Merger. The Audit Committee, Compensation Committee, Enterprise Risk Management Committee, and Nominating and Governance Committee of the Board are comprised of the following members, in each case effective as of the Effective Time: 


Audit Committee

Compensation Committee

Enterprise Risk

Management Committee

Nominating and

Governance Committee


Randal L. Lund (Chair) Luis F. Machuca (Chair) Elizabeth W. Seaton (Chair) Peggy Y. Fowler (Chair) 

 Eric S. Forrest Mark A. Finkelstein S. Mae Fujita Numata Eric S. Forrest 

 S. Mae Fujita Numata Peggy Y. Fowler Mark A. Finkelstein Mark A. Finkelstein 

 Maria M. Pope Elizabeth W. Seaton Randal L. Lund Luis F. Machuca 

 John F. Schultz Maria M. Pope Luis F. Machuca John F. Schultz 

 Elizabeth W. Seaton John F. Schultz Maria M. Pope Hilliard C. Terry, III 

 Hilliard C. Terry, III Anddria Varnado Hilliard C. Terry, III Anddria Varnado 


Lead Independent Director. Pursuant to the Merger Agreement, Craig D. Eerkes was appointed as the Lead Independent Director of the Board effective as of the Effective Time. 

Director Compensation. In connection with the Closing, the Board approved the following compensation for non-employee directors for the 12-month period following Columbia's 2022 annual meeting of stockholders, as permitted by the formula set forth in Columbia's 2018 Equity Incentive Plan and prorated for the partial year served from the date of the Closing until the expiration of such 12-month period. 


Annual Cash Retainer
 $ 54,400 


Annual Lead Independent Director Retainer
 $ 52,000 


Committee Member Annual Retainers


Audit
 $ 9,200 


Compensation
 $ 6,900 


All other committees and Financial Pacific Leasing and Columbia Trust Company board service
 $ 4,600 


Committee Chair Annual Retainers


Audit
 $ 17,300 


Compensation
 $ 13,900 


All other committees and Financial Pacific Leasing and Columbia Trust Company board service
 $ 10,400 


Annual Equity Retainer
 $ 81,000 


The Annual Equity Retainer comprises a restricted stock award under Columbia's 2018 Equity Incentive Plan, with an annual grant date value of $81,000, which amount is prorated for the number of days between the March 1, 2023 and May 25, 2023. Such restricted stock award will vest in full on the earlier of the date of Columbia's 2023 annual meeting of stockholders and May 25, 2023. 

Appointment of Executive Chair of the Board of Directors 

Effective as of the Effective Time, in accordance with the terms of the Merger Agreement, Cort L. O'Haver, the former President and Chief Executive Officer of Umpqua, was appointed Executive Chair of the board of directors of Columbia (the "Board") and of Umpqua Bank. Mr. O'Haver, age 60, served from 2017 through the Closing Date as President and Chief Executive Officer of Umpqua after having served as Umpqua's Executive Vice President of Commercial Banking from 2010 to 2013, Senior Vice President of Commercial Banking from 2013 to 2014 and President of Commercial Banking from 2014 to 2016. 

As previously described in the S-4 Registration Statement, Columbia entered into a letter agreement with Mr. O'Haver, dated October 11, 2021, setting forth the terms of his employment with, and service to, Columbia following the consummation of the Merger (the "O'Haver Letter Agreement"). For a description the O'Haver Letter Agreement, please see the subsection in the S-4 Registration Statement entitled "-Columbia Letter Agreement with Cort O'Haver" in the section entitled "Interests of Certain Umpqua Directors and Executive Officers in the Mergers." Such description is incorporated into this Item 5.02 by reference. 

Other than the Merger Agreement, the Amended and Restated Bylaws and the O'Haver Letter Agreement, there are no arrangements or understandings between Mr. O'Haver and any person pursuant to which he was selected as the Executive Chair of Columbia and of Umpqua Bank. 


There are no family relationships between Mr. O'Haver and any of Columbia's directors, executive officers or persons nominated or chosen by Columbia to become a director or executive officer, and Mr. O'Haver is not a party to any transaction requiring disclosure under Item 404(a) of Regulation S-K. 

The foregoing description of the O'Haver Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the O'Haver Letter Agreement, which is attached hereto as Exhibit 10.1, and incorporated herein by reference. 

Appointment of Chief Financial Officer 

Effective as of March 1, 2023, Ronald L. Farnsworth was appointed as Chief Financial Officer of Columbia and Executive Vice President and Chief Financial Officer of Umpqua Bank. 

Mr. Farnsworth, age 52, served from 2008 through the Closing Date as Executive Vice President and Chief Financial Officer of Umpqua and Umpqua Bank and from May 2007 through the Closing Date as and Principal Financial Officer of Umpqua. 

In connection with his appointment as Chief Financial Officer, Columbia entered into a letter agreement with Mr. Farnsworth, dated March 1, 2023 (the "Farnsworth Letter Agreement"), which provides for a cash retention award of $1,800,000 (the "Farnsworth Integration Award"), with 34% of such award vesting on the Core Operating and Business Banking Treasury Management systems conversion date of the banking operation of Umpqua and Columbia (the "Systems Conversion Date") and 33% vesting on each of the first and second anniversaries of the Systems Conversion Date, subject to continued employment through each such date. Upon a termination of Mr. Farnsworth's employment, any unvested portion of the Farnsworth Integration Award will be forfeited, except that, upon a termination of Mr. Farnsworth by Columbia other than for Cause, by Mr. Farnsworth for Good Reason or due to death or Disability (as each such term is defined in the Farnsworth Letter Agreement, and each, where such term is defined as in the applicable letter agreement, a "Qualifying Termination"), any unvested portion of the Farnsworth Integration Award will vest in full, subject to Mr. Farnsworth's (or, as applicable, Mr. Farnsworth's estate's) execution and the effectiveness of a release of claims. 

Following expiration of Mr. Farnsworth's existing employment agreement no later than the second anniversary of the Closing (or on such earlier date on which Columbia implements new employment or severance agreements, plans or arrangements for similarly situated executives), Mr. Farnsworth will be eligible to enter into a new employment or severance agreement that includes change in control severance benefits no less favorable than those under Mr. Farnsworth's existing employment agreement, on the same basis as similarly situated executives. 

If Mr. Farnsworth's employment is terminated by Columbia without Cause within two years following the Closing, subject to execution and effectiveness of a release of claims, any outstanding equity awards granted at or after the Closing will vest in full with respect to any service vesting requirement, and any awards subject to a performance-vesting condition will remain outstanding and eligible to be earned in full based on the level of performance achieved, as if Mr. Farnsworth had remained employed for the duration of the performance period. 

Other than the Farnsworth Letter Agreement, there are no arrangements or understandings between Mr. Farnsworth and any person pursuant to which he was selected as Columbia's Chief Financial Officer or Umpqua Bank's Executive Vice President and Chief Financial Officer. 

There are no family relationships between Mr. Farnsworth and any of Columbia's directors, executive officers or persons nominated or chosen by Columbia to become a director or executive officer, and Mr. Farnsworth is not a party to any transaction requiring disclosure under Item 404(a) of Regulation S-K. 

The foregoing description of the Farnsworth Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Farnsworth Letter Agreement, which is attached hereto as Exhibit 10.2, and incorporated herein by reference. 

Appointment of Principal Accounting Officer 

Effective as of March 1, 2023, Lisa White was appointed as Corporate Controller, Principal Accounting Officer of Columbia. 

Ms. White, age 40, served from January 2020 through the Closing as Senior Vice President/Corporate Controller of Umpqua and Umpqua Bank, and Principal Accounting Officer of Umpqua. She had previously served as Umpqua Bank's Senior Vice President/Bank Controller from April 2015 to January 2020. 

In connection with her appointment as Corporate Controller, Principal Accounting Officer, Columbia entered into a letter agreement with Ms. White, dated March 1 (the "White Letter Agreement"), which provides for a cash retention award of $75,000 (the "White Integration Award"), with 34% of such award vesting on the Systems Conversion Date and 33% vesting on each of the first and second anniversaries of the Systems Conversion Date, subject to continued employment through each such date. Upon a termination of Ms. White's employment, any unvested portion of the White Integration Award will be forfeited, except that upon a Qualifying Termination, any unvested portion of the White Integration Award will vest in full, subject to Ms. White (or, as applicable, Ms. White's estate's) execution and the effectiveness of a release of claims. 


Following expiration of Ms. White's existing employment agreement two years following the Closing, Ms. White may be eligible to enter into a new employment or severance agreement that provides change of control severance benefits no less favorable than those under Ms. White's existing employment agreement, on the same basis as similarly situated executives. 

Other than the White Letter Agreement, there are no arrangements or understandings between Ms. White and any person pursuant to which she was selected as Corporate Controller, Principal Accounting Officer of Columbia. 

There are no family relationships between Ms. White and any of Columbia's directors, executive officers or persons nominated or chosen by Columbia to become a director or executive officer, and Ms. White is not a party to any transaction requiring disclosure under Item 404(a) of Regulation S-K. 

The foregoing description of the White Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the White Letter Agreement, which is attached hereto as Exhibit 10.3, and incorporated herein by reference. 

Transition of Brock M. Lakely 

In connection with the Closing, Brock M. Lakely ceased serving as Senior Vice President and Chief Accounting Officer of Columbia and going forward will serve as Senior Vice President and Accounting and Reporting Integration Officer of Umpqua Bank. 

Termination of Andrew L. McDonald 

Effective as of the Closing, Andrew L. McDonald, the Company's Executive Vice President and Chief Credit Officer, terminated employment with the Company. Mr. McDonald received the benefits pursuant to his existing change of control agreement with the Company, as described in the Company's definitive proxy statement, filed with the SEC on March 18, 2022. 

Additional Executive Letter Agreements 

Deer Letter Agreement. In connection with the Closing, Aaron Deer ceased serving as Executive Vice President and Chief Financial Officer of Columbia and going forward will serve as Chief Strategy and Innovation Officer of Columbia. Columbia entered into a letter agreement with Aaron Deer, dated March 1, 2023 (the "Deer Letter Agreement"), which provides that in lieu of any entitlements under Mr. Deer's existing change in control agreement with Columbia, which, from and after his entry into the Deer Letter Agreement, terminated and became of no force or effect, other than provisions expressly made to survive in the Deer Letter Agreement, $840,000 will be deposited into a deferred compensation account in Mr. Deer's name. Of that amount, 50% of such amount will vest on the first anniversary of the Closing and 50% will vest on the second anniversary of the Closing, subject to continued employment through the applicable date. 

Upon a termination of Mr. Deer's employment, any unvested portion of this amount will be forfeited, except that upon a Qualifying Termination, any unvested portion will vest in full. Any vested amounts will be payable in installments following a separation of service. If, prior to the payment of the final installment, Mr. Deer violates any restrictive covenant by which he is bound pursuant to the Deer Letter Agreement, Columbia may, among other remedies, forfeit any amount not yet paid and claw back previously paid installments. 

No later than the second anniversary of the Closing (or on such earlier date on which Columbia implements new employment or severance agreements, plans or arrangements for similarly situated executives), Mr. Deer will be eligible to enter into a new employment or severance agreement that provides change in control severance benefits no less favorable than those under Mr. Deer's prior change in control agreement with Columbia, on the same basis as similarly situated executives. 

If Mr. Deer's employment is terminated by Columbia without Cause within two years following the Closing, subject to execution and effectiveness of a release of claims, any outstanding equity awards granted at or after the Closing will vest in full with respect to any service vesting requirement, and any awards subject to a performance-vesting condition will remain outstanding and eligible to be earned in full based on the level of performance achieved, as if Mr. Deer had remained employed for the duration of the performance period. 

The foregoing description of the Deer Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Deer Letter Agreement, which is attached hereto as Exhibit 10.4, and incorporated herein by reference. 

Eid Letter Agreement. In connection with the Closing, Eric Eid ceased serving as Executive Vice President, Chief Digital and Technology Officer of Columbia and going forward will serve as Chief Integration Officer of Columbia. Columbia entered into a letter agreement with Mr. Eid, dated March 1, 2023 (the "Eid Letter Agreement"), which provides for a cash retention award of $300,000 (the "Eid Integration Award"), with 34% of such award vesting on the Systems Conversion Date and 66% vesting on the first anniversary of the Systems Conversion Date, subject to continued employment through such date. Upon a termination of Mr. Eid's employment, any unvested portion of the Eid Integration Award will be forfeited, except that upon a Qualifying Termination, any unvested portion of the Eid Integration Award will vest in full, subject to Mr. Eid's (or, as applicable, Mr. Eid's estate's) execution and the effectiveness of a release of claims. 


In lieu of any entitlements under Mr. Eid's existing change in control agreement with Columbia, which, from and after his entry into the Eid Letter Agreement, terminated and became of no force or effect, other than provisions expressly made to survive in the Eid Letter Agreement, $710,000 will be deposited into a deferred compensation account in Mr. Eid's name. Of that amount, 50% of such amount will vest on the first anniversary of the Closing and 50% will vest on March 1, 2024, subject to continued employment through the applicable date. 

Upon a termination of Mr. Eid's employment, any unvested portion of this amount will be forfeited, except that upon a Qualifying Termination, any unvested portion will vest in full, subject to Mr. Eid's (or, as applicable, Mr. Eid's estate's) execution and the effectiveness of a release of claims. Any such vested amounts will be payable in installments following a separation of service. If, prior to the payment of the final installment, Mr. Eid violates any restrictive covenant by which he is bound pursuant to the Eid Letter Agreement, Columbia may, among other remedies, forfeit any amount not yet paid and claw back previously paid installments. 

If Mr. Eid's employment is terminated by Columbia without Cause within two years following the Closing, subject to execution and effectiveness of a release of claims, any outstanding equity awards granted at or after the Closing will vest in full with respect to any service vesting requirement, and any awards subject to a performance-vesting condition will remain outstanding and eligible to be earned in full based on the level of performance achieved, as if Mr. Eid had remained employed for the duration of the performance period. 

The foregoing description of the Eid Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Eid Letter Agreement, which is attached hereto as Exhibit 10.5, and incorporated herein by reference. 

Merrywell Letter Agreement. In connection with the Closing, Christopher Merrywell ceased serving as Executive Vice President and Chief Operating Officer of Columbia and going forward will serve as Senior Executive Vice President of Columbia. Columbia entered into a letter agreement with Mr. Merrywell, dated March 1, 2023 (the "Merrywell Letter Agreement"), which provides for a cash retention award of $1,000,000 (the "Merrywell Integration Award"), with 34% of such award vesting on the Systems Conversion Date and 33% vesting on each of the first and second anniversaries of the Systems Conversion Date, subject to continued employment through each such date. Upon a termination of Mr. Merrywell's employment, any unvested portion of the Merrywell Integration Award will be forfeited, except that upon a Qualifying Termination, any unvested portion of the Merrywell Integration Award will vest in full, subject to Mr. Merrywell's (or, as applicable, Mr. Merrywell's estate's) execution and the effectiveness of a release of claims. 

In lieu of any entitlements under Mr. Merrywell's existing change in control agreement with Columbia, which, from and after his entry into the Merrywell Letter Agreement, terminated and became of no force or effect, other than provisions expressly made to survive in the Merrywell Letter Agreement, $1,030,000 will be deposited into a deferred compensation account in Mr. Merrywell's name. Of that amount, 50% of such amount will vest on the first anniversary of the Closing and 50% will vest on the second anniversary of the Closing, subject to continued employment through the applicable date. 

Upon a termination of Mr. Merrywell's employment, any unvested portion of this amount will be forfeited, except that upon a Qualifying Termination, any unvested portion will vest in full. Any vested amounts will be payable in installments following a separation of service. If, prior to the payment of the final installment, Mr. Merrywell violates any restrictive covenant by which he is bound pursuant to the Merrywell Letter Agreement, Columbia may, among other remedies, forfeit any amount not yet paid and claw back previously paid installments. 

No later than the second anniversary of the Closing (or on such earlier date on which Columbia implements new employment or severance agreements, plans or arrangements for similarly situated executives), Mr. Merrywell will be eligible to enter into a new employment or severance agreement that includes change in control severance benefits no less favorable than those under Mr. Merrywell's prior change in control agreement with Columbia, on the same basis as similarly situated executives. 

If Mr. Merrywell's employment is terminated by Columbia without Cause within two years following the Closing, subject to execution and effectiveness of a release of claims, any outstanding equity awards granted at or after the Closing will vest in full with respect to any service vesting requirement, and any awards subject to a performance-vesting condition will remain outstanding and eligible to be earned in full based on the level of performance achieved, as if Mr. Merrywell had remained employed for the duration of the performance period. 

The foregoing description of the Merrywell Letter Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merrywell Letter Agreement, which is attached hereto as Exhibit 10.6, and incorporated herein by reference. 

2023 Deferred Compensation Plan 

Effective March 1, 2023, the Company established the Columbia Banking System, Inc. 2023 Deferred Compensation Plan (the "DCP"). The DCP has been established to govern the deferred compensation elements contemplated by the O'Haver Letter Agreement, White Letter Agreement, Deer Letter Agreement, Eid Letter Agreement and Merrywell Letter Agreement (as such elements are described above), and provides consistent vesting and distribution terms and conditions as are provided in such letter agreements. 


The foregoing description of the DCP does not purport to be complete and is qualified in its entirety by reference to the full text of the DCP, which is attached hereto as Exhibit 10.7, and incorporated herein by reference.