|
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
|
|
|
Filed
by the registrant O
|
|
|
Filed
by a party other than the registrant Q
|
|
|
Check
the appropriate box:
|
|
|
Q
|
Preliminary
proxy statement
|
|
Q
|
Confidential,
for use of the Commission only (as permitted by Rule
14a-6(e)(2))
|
|
O
|
Definitive
proxy statement
|
|
Q
|
Definitive
additional materials
|
|
Q
|
Soliciting
material pursuant to '
240.14a-12
|
|
TIMBERLAND
BANCORP, INC.
|
|
|
(Name
of registrant as specified in its charter)
|
|
|
(Name
of person(s) filing proxy statement, if other than the
registrant)
|
|
|
Payment
of filing fee (Check the appropriate box):
|
|
|
O
|
No
fee required.
|
|
Q
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
|
|
(1)
|
Title
of each class of securities to which transaction
applies:
|
|
N/A
|
|
|
(2)
|
Aggregate
number of securities to which transactions applies:
|
|
N/A
|
|
|
(3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
|
|
N/A
|
|
|
(4)
|
Proposed
maximum aggregate value of transaction:
|
|
N/A
|
|
|
(5)
|
Total
fee paid:
|
|
N/A
|
|
|
Q
|
Fee
paid previously with preliminary materials:
|
|
N/A
|
|
|
Q
|
Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount
previously paid:
|
|
N/A
|
|
|
(2)
|
Form,
schedule or registration statement no.:
|
|
N/A
|
|
|
(3)
|
Filing
party:
|
|
N/A
|
|
|
(4)
|
Date
filed:
|
|
N/A
|
|
 |
December
18, 2008
Dear
Shareholder:
You are
cordially invited to attend the annual meeting of shareholders of Timberland
Bancorp, Inc. to be held at the Hoquiam Timberland Library, located at 420
7th
Street, Hoquiam, Washington, on Tuesday, January 27, 2009 at 1:00 p.m., local
time.
The
Notice of Annual Meeting of Shareholders and Proxy Statement appearing on the
following pages describe the formal business to be transacted at the
meeting. During the meeting, we will also report on our
operations. Directors and officers of Timberland Bancorp, Inc., as
well as a representative of McGladrey & Pullen, LLP, our independent auditor
for the fiscal year ended September 30, 2008, will be present to respond to
appropriate questions of shareholders.
It
is important that your shares are represented at the meeting, whether or not you
attend in person and regardless of the number of shares you own. To
make sure your shares are represented, we urge you to complete and mail the
enclosed proxy card. If you attend the meeting, you may vote in
person even if you have previously mailed a proxy card.
We look
forward to seeing you at the meeting.
| Sincerely, | |
| /s/Clarence E. Hamre | |
| Clarence E. Hamre | |
| Chairman of the Board |
TIMBERLAND
BANCORP, INC.
624
SIMPSON AVENUE
HOQUIAM,
WASHINGTON 98550
(360)
533-4747
TO
BE HELD ON JANUARY 27, 2009
Notice is
hereby given that the annual meeting of shareholders of Timberland Bancorp, Inc.
will be held at the Hoquiam Timberland Library, located at 420 7th Street,
Hoquiam, Washington, on Tuesday, January 27, 2009, at 1:00 p.m., local time, for
the following purpose:
|
Proposal 1.
|
Election
of three directors of Timberland Bancorp, Inc. to each serve for a term of
three years.
|
We will
also consider and act upon such other business as may properly come before the
meeting, or any adjournment or postponement thereof. As of the date
of this notice, we are not aware of any other business to come before the annual
meeting.
The Board
of Directors has fixed the close of business on December 3, 2008 as the record
date for the annual meeting. This means that shareholders of record
at the close of business on that date are entitled to receive notice of, and to
vote at the meeting and any adjournment thereof. To ensure that your shares are
represented at the meeting, please take the time to vote by signing, dating and
mailing the enclosed proxy card which is solicited by the Board of
Directors. The proxy will not be used if you attend and vote at the
annual meeting in person. Regardless of the number of shares you own,
your vote is very important. Please act today.
| BY ORDER OF THE BOARD OF DIRECTORS | |
| /s/ DEAN J. BRYDON | |
| DEAN J. BRYDON | |
| CORPORATE SECRETARY |
Hoquiam,
Washington
December
18, 2008
PROXY
STATEMENT
OF
TIMBERLAND
BANCORP, INC.
624
SIMPSON AVENUE
HOQUIAM,
WASHINGTON 98550
(360)
533-4747
JANUARY
27, 2009
The Board
of Directors of Timberland Bancorp, Inc. is using this proxy statement to
solicit proxies from our shareholders for use at the annual meeting of
shareholders. We are first mailing this Proxy Statement and the
enclosed form of proxy to our shareholders on or about December 18,
2008.
The
information provided in this Proxy Statement relates to Timberland Bancorp, Inc.
and its wholly-owned subsidiary, Timberland Bank. Timberland Bancorp,
Inc. may also be referred to as ATimberland@ and
Timberland Bank may also be referred to as the ABank.@ References
to Awe,@ Aus@ and Aour@ refer to
Timberland and, as the context requires, Timberland Bank.
Time
and Place of the Annual Meeting
Our
annual meeting will be held as follows:
| Date: | Tuesday, January 27, 2009 |
|
Time:
|
1:00
p.m., local time
|
|
Place:
|
Hoquiam
Timberland Library, 420 7th
Street, Hoquiam, Washington
|
Matters
to Be Considered at the Annual Meeting
At the
meeting, you will be asked to consider and vote upon the following
proposal:
|
Proposal 1.
|
Election
of three directors of Timberland Bancorp, Inc. to each serve for a term of
three years.
|
We also
will transact any other business that may properly come before the annual
meeting. As of the date of this Proxy Statement, we are not aware of
any other business to be presented for consideration at the annual meeting other
than the matters described in this Proxy Statement.
Who
is Entitled to Vote?
We have
fixed the close of business on December 3, 2008 as the record date for
shareholders entitled to notice of and to vote at our annual
meeting. Only holders of record of Timberland=s common
stock on that date are entitled to notice of and to vote at the annual
meeting. You are entitled to one vote for each share of Timberland
common stock you own. On December 3, 2008, there were 6,980,329
shares of Timberland common stock outstanding and entitled to vote at the annual
meeting.
How
Do I Vote at the Annual Meeting?
Proxies
are solicited to provide all shareholders of record on the voting record date an
opportunity to vote on matters scheduled for the annual meeting and described in
these materials. You are a shareholder of record if your shares
Shares of
Timberland common stock can only be voted if the shareholder is present in
person or by proxy at the annual meeting. To ensure your
representation at the annual meeting, we recommend you vote by proxy even if you
plan to attend the annual meeting. You can always change your vote at
the meeting if you are a shareholder of record.
Voting
instructions are included on your proxy card. Shares of Timberland
common stock represented by properly executed proxies will be voted by the
individuals named on the proxy card in accordance with the shareholder=s
instructions. Where properly executed proxies are returned to us with
no specific instruction as how to vote at the annual meeting, the persons named
in the proxy will vote the shares AFOR@ the
election of each of our director nominees. If any other matters are
properly presented at the annual meeting for action, the persons named in the
enclosed proxy and acting thereunder will have the discretion to vote on these
matters in accordance with their best judgment. We do not currently
expect that any other matters will be properly presented for action at the
annual meeting.
You may
receive more than one proxy card depending on how your shares are
held. For example, you may hold some of your shares individually,
some jointly with your spouse and some in trust for your children. In
this case, you will receive three separate proxy cards to vote.
What
if My Shares Are Held in Street Name?
If you
are the beneficial owner of shares held in street name by a broker, your broker,
as the record holder of the shares, is required to vote the shares in accordance
with your instructions. If your common stock is held in street name,
you will receive instructions from your broker that you must follow in order to
have your shares voted. Your broker may allow you to deliver your
voting instructions via the telephone or the Internet. Please see the
instruction form that accompanies this Proxy Statement. If you do not
give instructions to your broker, your broker may nevertheless vote the shares
with respect to discretionary items, but will not be permitted to vote your
shares with respect to non-discretionary items, pursuant to current industry
practice. In the case of non-discretionary items, shares not voted
are treated as Abroker
non-votes.@ The
proposal to elect directors described in this proxy statement is considered a
discretionary item under the rules of The Nasdaq Stock Market LLC (ANasdaq@).
If your
shares are held in street name, you will need proof of ownership to be admitted
to the annual meeting. A recent brokerage statement or letter from
the record holder of your shares are examples of proof of
ownership. If you want to vote your shares of common stock held in
street name in person at the annual meeting, you will have to get a written
proxy in your name from the broker, bank or other nominee who holds your
shares.
How
Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be
Voted?
We
maintain the Timberland Bank Employee Stock Ownership and 401(k) Plan (AESOP and
401(k) Plan@) for the
benefit of our employees. Each participant may instruct the trustee
how to vote the shares of Timberland common stock allocated to his or her
account under the ESOP portion of the plan by completing the voting instruction
sheet distributed by the administrator. If a participant properly
executes the voting instruction sheet, the administrator will instruct the
trustee to vote the participant=s shares in
accordance with the participant=s
instructions. Unallocated shares of Timberland common stock held in
the ESOP portion of the plan and allocated shares for which proper voting
instructions are not received will be voted by trustee in the same proportion as
shares for which the trustee has received voting instructions.
How
Many Shares Must Be Present to Hold the Meeting?
A quorum
must be present at the meeting for any business to be conducted. The
presence at the meeting, in person or by proxy, of at least a majority of the
shares of Timberland common stock entitled to vote at the annual meeting as of
the record date will constitute a quorum. Proxies received but marked
as abstentions or broker non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.
2
What
if a Quorum Is Not Present at the Meeting?
If a
quorum is not present at the scheduled time of the meeting, a majority of the
shareholders present or represented by proxy may adjourn the meeting until a
quorum is present. The time and place of the adjourned meeting will
be announced at the time the adjournment is taken, and no other notice will be
given unless the adjourned meeting is set to be held 120 days or more after the
original meeting. An adjournment will have no effect on the business
that may be conducted at the meeting.
Vote
Required to Approve Proposal 1: Election of Directors
Directors
are elected by a plurality of the votes cast, in person or by proxy, at the
annual meeting by holders of Timberland common stock. Accordingly,
the three nominees for election as directors who receive the highest number of
votes actually cast will be elected. Pursuant to our Articles of
Incorporation, shareholders are not permitted to cumulate their votes for the
election of directors. Votes may be cast for or withheld from each
nominee. Votes that are withheld will have no effect on the outcome
of the election because the nominees receiving the greatest number of votes will
be elected. Our
Board of Directors unanimously recommends that you vote AFOR@ the election of each of its director
nominees.
May
I Revoke My Proxy?
You may
revoke your proxy before it is voted by:
|
$
|
submitting
a new proxy with a later date;
|
|
$
|
notifying
the Corporate Secretary of Timberland in writing before the annual meeting
that you have revoked your proxy;
or
|
|
$
|
voting
in person at the annual meeting.
|
If you
plan to attend the annual meeting and wish to vote in person, we will give you a
ballot at the annual meeting. However, if your shares are held in
street name, you must bring a validly executed proxy from the nominee indicating
that you have the right to vote your shares.
The
following table sets forth, as of December 3, 2008, the voting record date,
information regarding share ownership of:
|
$
|
those
persons or entities (or groups of affiliated person or entities) known by
management to beneficially own more than five percent of Timberland=s
common stock other than directors and executive
officers;
|
|
$
|
each
director and director nominee of
Timberland;
|
|
$
|
each
executive officer of Timberland or Timberland Bank named in the Summary
Compensation Table appearing under AExecutive
Compensation@ below
(known as Anamed
executive officers@);
and
|
|
$
|
all
current directors and executive officers of Timberland and Timberland Bank
as a group.
|
Persons
and groups who beneficially own in excess of five percent of Timberland=s common
stock are required to file with the Securities and Exchange Commission (ASEC@), and
provide us a copy, reports disclosing their ownership pursuant to the Securities
Exchange Act of 1934. To our knowledge, no other person or entity,
other than the ones set
3
Beneficial
ownership is determined in accordance with the rules and regulations of the
SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a
person is deemed to be the beneficial owner of any shares of common stock if he
or she has voting and/or investment power with respect to those
shares. Therefore, the table below includes shares owned by spouses,
other immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, unvested shares in our
Management Recognition and Development Plan, shares held in the ESOP portion of
our ESOP and 401(k) Plan, and other forms of ownership, over which shares the
persons named in the table may possess voting and/or investment
power. In addition, in computing the number of shares beneficially
owned by a person and the percentage ownership of that person, shares of common
stock subject to outstanding options that are currently exercisable or
exercisable within 60 days after the voting record date are included in the
number of shares beneficially owned by the person and are deemed outstanding for
the purpose of calculating the person=s percentage
ownership. These shares, however, are not deemed outstanding for the
purpose of computing the percentage ownership of any other person.
As of the
voting record date, there were 6,980,329 shares of Timberland common stock
outstanding.
|
Number
of Shares
|
Percent
of Shares
|
|||
|
Name
|
Beneficially
Owned (1)
|
Outstanding
(%)
|
||
|
Beneficial
Owners of More Than 5%
|
||||
|
Timberland
Bank Employee Stock Ownership and 401(k) Plan (2)
|
889,001
|
12.7
|
||
|
624
Simpson Avenue
|
||||
|
Hoquiam,
Washington 98550
|
||||
|
Dimensional
Fund Advisors LP
|
612,410
(3)
|
8.8
|
||
|
1299
Ocean Avenue
|
||||
|
Santa
Monica, California 90401
|
||||
|
Royce
& Associates, LLC
|
469,200
(4)
|
6.7
|
||
|
1414
Avenue of the Americas
|
||||
|
New
York, New York 10019
|
||||
|
Directors
|
||||
|
Andrea
M. Clinton
|
18,953
|
*
|
||
|
Clarence
E. Hamre
|
161,178
|
2.3
|
||
|
James
C. Mason
|
17,119
|
*
|
||
|
Jon
C. Parker
|
60,063
|
*
|
||
|
Ronald
A. Robbel
|
49,199
|
*
|
||
|
David
A. Smith
|
73,343
|
1.0
|
||
|
Named
Executive Officers
|
||||
|
Michael
R. Sand (5)
|
154,991
|
2.2
|
||
|
Dean
J. Brydon
|
79,835
|
1.1
|
||
|
Robert
A. Drugge
|
18,453
|
*
|
||
|
John
P. Norawong
|
18,362
|
*
|
||
|
Patrick
K. Horan
|
6,394
|
*
|
||
|
All
Executive Officers and Directors as a Group (14 persons)
|
689,286
|
9.6
|
||
|
(Footnotes
appear on following page)
|
||||
4
___________
*Less
than one percent of shares outstanding.
|
(1)
|
The
amounts shown also include the following number of shares which the
indicated individuals have the right to acquire within 60 days of the
voting record date through the exercise of stock options: Mr. Parker,
20,678 shares; Mr. Robbel, 41,714 shares; Mr. Smith, 56,638 shares; Mr.
Sand, 22,500 shares; Mr. Brydon, 42,900 shares; and all executive officers
and directors as a group, 190,630 shares.
|
|
(2)
|
Represents
shares held in the ESOP portion of the ESOP and 401(k) Plan. As
of the voting record date, 518,702 shares in the ESOP portion of the plan
have been allocated to participants=
accounts.
|
|
(3)
|
Based
solely on a Schedule 13G/A dated February 6, 2008, regarding shares owned
as of December 31, 2007. According to this filing, Dimensional Fund
Advisors LP (ADimensional@), an
investment adviser registered under Section 203 of the Investment Advisors
Act of 1940, furnishes investment advice to four investment companies
registered under the Investment Company Act of 1940, and serves as
investment manager to certain other commingled group trusts and separate
accounts (collectively, the AFunds@). In
its role as investment advisor or manager, Dimensional possesses
investment and/or voting power over the shares reported, and may be deemed
to be the beneficial owner of the shares held by the Funds. However, the
shares reported are owned by the Funds. Dimensional disclaims beneficial
ownership of these shares.
|
|
(4)
|
Based
solely on a Schedule 13G/A dated January 30, 2008, regarding shares owned
as of December 31, 2007. According to this filing, various accounts
managed by Royce & Associates, LLC, an investment registered under
Section 203 of the Investment Advisors Act of 1940, have the right to
receive or the power to direct the receipt of dividends from or the
proceeds from the sale of the shares reported.
|
|
(5)
|
Mr.
Sand is also a director of
Timberland.
|
Our Board of Directors consists of seven members and is divided into three classes. Approximately one-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. Effective October 31, 2008, Harold L. Warren retired from the Board of Directors. As a result of Mr. Warren=s retirement, the Board of Directors reduced the size of the Board from eight to seven.
The table
below sets forth information regarding each director of Timberland and each
nominee for director. The Nominating Committee of the Board of
Directors selects nominees for election as directors and has nominated for
election as directors Clarence E. Hamre, Andrea M. Clinton and Ronald A. Robbel,
each to serve for a three-year term, or until their respective
successors have been elected and qualified. Each of our nominees
currently serves as Timberland directors, and has consented to being named in
this Proxy Statement and has agreed to serve if elected. If a nominee
is unable to stand for election, the Board of Directors may either reduce the
number of directors to be elected or select a substitute nominee. If
a substitute nominee is selected, the proxy holders will vote your shares for
the substitute nominee, unless you have withheld authority. At this
time, we are not aware of any reason why a nominee might be unable to serve if
elected; however, it is Timberland=s policy for
directors to retire at the end of the month in which they reach age 75 and Mr.
Hamre will turn 75 in February. The Board has not yet determined
whether it will reduce the size of the Board or appoint a new
director.
The
Board of Directors recommends a vote AFOR@ the
election of Mr. Hamre, Ms. Clinton and Mr. Robbel.
|
Age
as of
|
Year
First Elected or
|
Term
to
|
||||
|
Name
|
September
30, 2008
|
Appointed
Director (1)
|
Expire
|
|||
|
Board
Nominees
|
||||||
|
Clarence
E. Hamre
|
74
|
1969
|
2012
(2)
|
|||
|
Andrea
M. Clinton
|
51
|
1996
|
2012
(2)
|
|||
|
Ronald
A. Robbel
|
67
|
2002
|
2012
(2)
|
|||
|
(Table
continues on following page)
|
||||||
5
|
Name
|
Age
as of
September
30, 2008
|
Year
First Elected or
Appointed
Director (1)
|
Term
to
Expire
|
|||
|
Directors
Continuing in Office
|
||||||
|
Michael
R. Sand
|
54
|
1993
|
2010
|
|||
|
David
A. Smith
|
53
|
2000
|
2010
|
|||
|
Jon
C. Parker
|
59
|
1992
|
2011
|
|||
|
James
C. Mason
|
53
|
1993
|
2011
|
|||
____________
|
(1)
|
Includes
prior service on the Board of Directors of Timberland Bank. Each member of
our Board of Directors is also a member of the Board of
Directors of the Bank.
|
|
(2)
|
Assuming
re-election.
|
Set forth
below is the principal occupation of each nominee for director and each director
continuing in office. All nominees and directors have held their
present positions for at least five years unless otherwise
indicated.
Clarence E. Hamre is Chairman
of the Board of Timberland and Timberland Bank, and has been affiliated with us
since 1969. He began serving as President and Chief Executive Officer
of Timberland Bank in 1969 and as President and Chief Executive Officer of
Timberland upon its inception in 1997. In January 2003, Mr. Hamre
retired as our President and in September 2003, he retired as our Chief
Executive Officer. Following his retirement, Mr. Hamre remained an
employee through February 2004 and provided consulting services.
Andrea M. Clinton, an
interior designer, is the owner of AMC Interiors, Olympia,
Washington.
Ronald A. Robbel is a
licensed Certified Public Accountant and is retired.
Michael R. Sand has been
affiliated with Timberland Bank since 1977 and has served as our President since
January 23, 2003. On September 30, 2003, he was appointed as our
Chief Executive Officer. Prior to his appointment as President and
Chief Executive Officer, Mr. Sand had served as Executive Vice President and
Secretary of Timberland Bank since 1993 and as Executive Vice President and
Secretary of Timberland since its formation in 1997.
David A. Smith is a
pharmacist and the owner of Harbor Drug, Inc., a retail pharmacy located in
Hoquiam, Washington.
Jon C. Parker is a member of
the law firm of Parker, Johnson & Parker P.S., Hoquiam, Washington, which
serves as general counsel to Timberland and Timberland Bank.
James C. Mason is the
President and owner of the following companies: Mason Timber Inc., Mason
Trucking Inc., Masco Petroleum Inc., Aloha Jet Inc., Mason Aviation, Inc.,
Trailer Services Inc., Shine Quarry Inc., Mason Properties LLC, Masco Maritime
LLC, Grass Island LLC, Masco Oil Warehouse LLC, 110 Commerce Street LLC, 1100
Basich Blvd LLC, 954 Anderson Drive LLC, 2012 Ind Pkwy LLC, 1020 Anderson Dr.
LLC, 1104 Basich Blvd LLC, 200 Myrtle LLC and Shelton Renal Care LLC, all of
which are headquartered in Aberdeen Washington.
AND
CORPORATE GOVERNANCE MATTERS
Board
of Directors
The
Boards of Directors of Timberland and Timberland Bank conduct their business
through board and committee meetings. Both Boards generally meet on a
monthly basis, holding additional special meetings as needed. During
the fiscal year ended September 30, 2008, the Board of Directors of Timberland
held 12 meetings and the Board
6
Committees
and Committee Charters
The Board
of Directors of Timberland has standing Audit and Nominating
Committees. The Board has adopted written charters for these
Committees, copies of which are available on our website at
www.timberlandbank.com. You may also obtain a copy of these documents
free of charge by writing to: Dean J. Brydon, Corporate Secretary,
Timberland Bancorp, Inc., 624 Simpson Avenue, Hoquiam, Washington 98550, or by
calling (360) 533-4747. Because Timberland does not have its own
employees, the Compensation Committee of the Timberland Bank Board of Directors
serves as our compensation committee. This Committee has not adopted
a written charter.
Audit
Committee. The Audit Committee currently consists of Directors
Robbel, Smith and Mason. Director Warren was a member of the Audit
Committee until his retirement on October 31, 2008. The Committee
meets at least quarterly and on an as needed basis to evaluate the effectiveness
of our internal controls for safeguarding assets and ensuring the integrity of
the financial reporting. The Committee also appoints the independent
auditor and reviews the audit report prepared by the independent
auditor. The Audit Committee met 11 times during the year ended
September 30, 2008.
Each
member of the Audit Committee is Aindependent@ in
accordance with the requirements for companies listed on
Nasdaq. Director Robbel has been designated by the Board of Directors
as the Aaudit
committee financial expert,@ as defined
by the SEC. Director Robbel is a licensed Certified Public
Accountant.
Nominating
Committee. The Nominating Committee consists of all
independent directors who do not have terms expiring at the next annual
meeting. The Nominating Committee meets annually and on an as needed
basis, and is responsible for selecting qualified individuals to fill expiring
directors= terms and
openings on the Board of Directors. Final approval of director
nominees is determined by the full Board, based on the recommendations of the
Nominating Committee. This Committee met once during the year ended
September 30, 2008 and met on October 28, 2008 to determine the nominees for
election at the annual meeting.
Only
those nominations made by the Committee or properly presented by shareholders
will be voted upon at the annual meeting. In its deliberations for
selecting candidates for nominees as director, the Nominating Committee
considers the candidate=s knowledge
of the banking business and involvement in community, business and civic
affairs, and also considers whether the candidate would provide for adequate
representation of Timberland Bank=s market
area. Any nominee for director made by the Committee must be highly
qualified with regard to some or all these attributes. In searching
for qualified director candidates to fill vacancies on the Board, the Committee
solicits its current Board of Directors for names of potentially qualified
candidates. Additionally, the Committee may request that members of
the Board of Directors pursue their own business contacts for the names of
potentially qualified candidates. The Committee would then consider
the potential pool of director candidates, select the candidate it believes best
meets the then-current needs of the Board, and conduct a thorough investigation
of the proposed candidate=s background
to ensure there is no past history that would cause the candidate not to be
qualified to serve as one of our directors. Although the Nominating
Committee charter does not specifically provide for the consideration of
shareholder nominees for directors, the Committee will consider director
candidates recommended by a shareholder that are submitted in accordance with
our Articles of Incorporation. Because our Articles of Incorporation
provide a process for shareholder nominations, the Committee did not believe it
was necessary to provide for shareholder nominations of directors in its
charter. If a shareholder submits a proposed nominee, the Committee
would consider the proposed nominee, along with any other proposed nominees
recommended by members of our Board of Directors, in the same manner in which
the Committee would evaluate its nominees for director. For a
description of the proper procedure for shareholder nominations, see AShareholder
Proposals@ in this
Proxy Statement.
Compensation
Committee. The Compensation Committee consists of Directors
Parker, Mason and Clinton. The Committee meets annually and on an as
needed basis and makes recommendations to the full Board of Directors regarding
personnel, compensation and benefits related matters. The
Compensation Committee also meets, outside of the presence of Mr. Sand, to
discuss his compensation and make its recommendation to the full Board, which
then votes
7
Corporate
Governance
We are
committed to establishing and maintaining high standards of corporate
governance. Our executive officers and Board of Directors have worked
together to establish a comprehensive set of corporate governance initiatives
that they believe will serve the long-term interests of our shareholders and
employees. These initiatives are intended to comply with the
provisions contained in the Sarbanes-Oxley Act of 2002, the rules and
regulations of the SEC adopted thereunder, and Nasdaq rules. Our
Board of Directors will continue to evaluate and improve our corporate
governance principles and policies as necessary and as required.
Director
Independence. Our common stock is listed on the Nasdaq Global
Market. In accordance with Nasdaq requirements, at least a majority
of our directors must be independent directors. The Board has
determined that six of our seven directors are independent, as defined by
Nasdaq. Directors Clinton, Hamre, Mason, Parker, Robbel and Smith are
all independent. Only Michael R. Sand, who is our President and Chief
Executive Officer, is not independent.
Code of Ethics. The
Board of Directors has adopted codes of ethics for each of our (1) principal
executive officers and senior financial officers, (2) directors and (3) officers
and other employees. The codes of ethics require individuals to
maintain the highest standards of professional conduct. Our Code of
Ethics for Principal Executive Officers and Senior Financial Officers was filed
with the SEC as Exhibit 14 to our Annual Report on Form 10-K for the fiscal year
ended September 30, 2003 and is available on our website at
www.timberlandbank.com.
Shareholder Communication with the
Board of Directors. The Board of Directors maintains a process
for shareholders to communicate with the Board. Shareholders wishing
to communicate with the Board of Directors may do so by mailing a letter marked
AConfidential@ to the
Board of Directors, Timberland Bancorp, Inc., 624 Simpson Avenue, Hoquiam,
Washington 98550. Any communication must state the number of shares
beneficially owned by the shareholder making the communication.
Annual Meeting Attendance by
Directors. We do not have a policy regarding Board member
attendance at annual meetings of shareholders. All members of the
Board of Directors attended the 2008 annual meeting of
shareholders.
Related Party
Transactions. We have followed a policy of granting loans to
our employees, officers and directors, which fully complies with all applicable
federal regulations. Loans to our directors and executive officers
are made in the ordinary course of business and on the same terms and conditions
as those of comparable transactions with non-insider employees prevailing at the
time, unless the loan or extension of credit is made under a benefit program
generally available to all other employees and does not give preference to any
insider over any other employee. Under Timberland Bank=s current
employee and director loan benefit program, all employees and directors are
entitled to the following preferred terms:
|
$
|
Adjustable rate mortgage for
personal residence: interest rate is 1.5% above Timberland
Bank=s cost
of funds (subject to a floor of 5.25% for loans originated after August 1,
2006); no loan fee is charged.
|
|
$
|
Fixed rate mortgage for
personal residence: interest rate is set at the current Federal
Home Loan Mortgage Corporation par rate; no loan fee is
charged.
|
|
$
|
Consumer loans: normal
interest rates apply; no loan fee is
charged.
|
|
$
|
Personal computer
purchases: interest rate is currently 3.0%; no loan fee is
charged.
|
8
The
following directors and executive officers had loans in excess of $120,000
outstanding under the loan benefit program:
|
Name
|
Type
of
Loan
|
Amount
Involved
in
the
Transaction
($)(1)
|
Amount
Outstanding
as
of
September
30,
2008
($)
|
Principal
Paid
During
the
Year
Ended
September
30,
2008
($)
|
Interest
Paid
During
the
Year
Ended
September
30,
2008
($)
|
Interest
Rate
(%)
|
||||||
|
Ronald
A. Robbel
|
First
Mortgage
|
240,850
|
236,600
|
4,250
|
12,601
|
5.250
|
||||||
|
David
A. Smith
|
First
Mortgage
|
431,016
|
421,968
|
9,048
|
19,752
|
4.250
|
||||||
|
Jon
C. Parker
|
First
Mortgage
|
197,421
|
194,462
|
2,959
|
10,294
|
5.250
|
||||||
|
Clarence
E. Hamre
|
First
Mortgage
|
266,181
|
260,260
|
5,921
|
12,190
|
4.250
|
||||||
|
Home
Equity
|
||||||||||||
|
Line
of Credit
|
39,435
|
36,666
|
17,334
|
1,625
|
8.000
|
|||||||
|
Michael
R. Sand
|
First
Mortgage
|
99,766
|
98,345
|
1,421
|
5,205
|
5.250
|
||||||
|
Home
Equity
|
||||||||||||
|
Line
of Credit
|
36,801
|
34,844
|
1,957
|
665
|
5.000
|
|||||||
|
John
P. Norawong
|
First
Mortgage
|
504,441
|
496,840
|
7,601
|
26,304
|
5.250
|
||||||
|
Robert
A. Drugge
|
First
Mortgage
|
330,000
|
327,198
|
2,802
|
16,146
|
5.250
|
||||||
|
Kathie
M. Bailey
|
First
Mortgage
|
150,734
|
146,152
|
4,852
|
6,876
|
4.250
|
||||||
|
First
Mortgage
|
49,113
|
47,579
|
1,534
|
3,575
|
5.875
|
|||||||
| _______________ |
|
(1)
|
Consists
of the largest aggregate amount of principal outstanding during the year
ended September 30, 2008.
|
Loans to
directors and executive officers are made in accordance with the same
underwriting guidelines for non-insider customers and do not involve more than
the normal risk of collectibility, or present other unfavorable
features. Loans to directors and executive officers are approved by
the Board of Directors, with the director involved excluded from the
vote. Loans and available lines of credit to all directors and
executive officers and their associates totaled approximately $3.1 million at
September 30, 2008, which was 4.1% of our equity at that date. All
loans to directors and executive officers were performing in accordance with
their terms at September 30, 2008.
Director
Parker is a member of the law firm of Parker, Johnson & Parker, P.S., which
serves as general counsel to Timberland Bank and Timberland. We paid
legal fees of $62,459 to Parker, Johnson & Parker, P.S. for
services it rendered during the fiscal year ended September 30,
2008. Of this amount, Director Parker=s interest
was $62,459.
The
following table shows the compensation paid to our non-employee directors for
the fiscal year ended September 30, 2008. Compensation for Michael R.
Sand, who is our President and Chief Executive Officer, is included in the
section below entitled AExecutive
Compensation.@ We
do not have any non-equity incentive plans or defined benefit plans, nor do we
permit deferral of compensation on a basis that is not
tax-qualified.
9
| Name |
Fees
Earned or
Paid
in Cash
($)
|
Stock
Awards
($)(1)(2)
|
Option
Awards
($)(1)(3)
|
All
Other
Compensation
($)(4)
|
Total
($)
|
|||||
|
Andrea
M. Clinton
|
24,800
|
3,072
|
--
|
386
|
28,258
|
|||||
|
Clarence
E. Hamre
|
24,300
|
3,072
|
--
|
24,386
|
51,758
|
|||||
|
James
C. Mason
|
24,300
|
3,072
|
--
|
386
|
27,758
|
|||||
|
Jon
C. Parker
|
24,800
|
3,072
|
--
|
386
|
28,258
|
|||||
|
Ronald
A. Robbel
|
29,600
|
3,072
|
1,909
|
386
|
34,967
|
|||||
|
David
A. Smith
|
29,600
|
3,072
|
--
|
386
|
33,058
|
|||||
|
Harold
L. Warren
|
29,600
|
3,072
|
1,909
|
386
|
34,967
|
|||||
______________
|
(1)
|
Represents
the dollar amount of expense recognized for financial statement reporting
purposes in fiscal 2008 for awards made in fiscal 2008 and prior years and
being earned by the director ratably over the vesting period of the award.
Amounts are calculated pursuant to the provisions of Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 123
(revised 2004), AShare-Based
Payment@
(AFAS
123R@). For
a discussion of valuation assumptions, see Note 15 of the Notes to
Consolidated Financial Statements in Timberland=s
Annual Report on Form 10-K for the year ended September 30,
2008.
|
|
(2)
|
Consists
of an award to each non-employee director of 440 shares of restricted
stock on October 24, 2006 (aggregate grant date fair value of $8,026) and
545 shares of restricted stock on October 23, 2007 (aggregate grant date
fair value of $8,006).
|
|
(3)
|
Consists
of an award to each of Mr. Robbel and Mr. Warren of 28,340 stock options
granted on March 13, 2003 with an aggregate grant date fair value of
$64,556.
|
|
(4)
|
Consists
of restricted stock dividends. For Mr. Hamre, also consists of payments
under his deferred compensation/non-competition agreement, as described
below.
|
For the
year ended September 30, 2008, each of the non-employee directors received a
retainer of $1,500 per month, $500 for each regular Board meeting attended, $500
for each Audit Committee meeting attended and $300 for each other committee
meeting attended. In addition, each non-employee director may receive
a discretionary stock-based award based on attendance criteria. Each
non-employee director was granted 1,168 shares of restricted common stock under
Timberland=s Management
Recognition and Development Plan in December 2008 for meeting the attendance
criteria during the year ended September 30, 2008.
Timberland
Bank entered into a deferred compensation/non-competition agreement in 1994 with
Clarence E. Hamre, its former Chief Executive Officer, which provides monthly
payments of $2,000 per month upon retirement. Payments under this
agreement began in March 2004 and will continue until Mr. Hamre=s death, at
which time payments will continue to his surviving spouse until the earlier of
her death or for 60 months. The present value of the payments as of
September 30, 2008 and 2007, $129,000 and $153,000, respectively, has been
accrued under the agreement and is included in other liabilities on the
consolidated balance sheets. The Bank=s obligation
to make payments under the agreement is subject to the condition that Mr. Hamre
not compete with the Bank for a period of 15 years after the termination of his
employment.
Compensation
Discussion and Analysis
Compensation
Committee. The Compensation Committee of Timberland Bank
administers all policies that govern executive compensation for Timberland and
Timberland Bank. Because Timberland has no employees other than Bank
employees who perform services on behalf of Timberland without additional
compensation, the Bank=s
Compensation Committee evaluates individual executive performance, compensation
policies and salaries. This Committee is responsible for evaluating
the performance of our Chief Executive Officer, while the Chief Executive
Officer evaluates the performance of other senior officers of Timberland Bank
and makes recommendations to the Committee regarding their compensation
levels.
10
Objectives and Overview of the
Compensation Program. Our executive compensation policies are
designed to establish an appropriate relationship between executive pay and the
annual and long-term performance of Timberland and Timberland
Bank. The principles underlying our executive compensation policies
are:
|
$
|
to
attract and retain key executives who are vital to our long-term
success;
|
|
$
|
to
provide levels of compensation competitive with those offered throughout
the banking industry and consistent with our level of performance;
and
|
|
$
|
to
motivate executives to enhance long-term shareholder value by building
their equity interest in
Timberland.
|
In making
its recommendations for executive compensation, the Committee considers numerous
factors, including the past service of the executive, the present and potential
contributions of the executive to our success, and other factors deemed
relevant, including the executive=s number of
years of service and position with Timberland and Timberland Bank. In
addition, the Committee may review compensation reports prepared by third
parties of companies and banks that are of a similar size and in a similar
location in order to make their recommendations. The Committee does
not apply a formula assigning specific weights to any of these factors when
making its determinations.
Elements of
Compensation. The Compensation Committee focuses primarily on
the following three components in forming the total compensation package for our
executive officers:
|
$
|
base
salary;
|
|
$
|
annual
bonus; and
|
|
$
|
long-term
incentive compensation.
|
The
current compensation plans involve a combination of salary and annual bonus to
reward short-term performance, and equity awards and contributions to the
Timberland Bank ESOP and 401(k) Plan as long-term incentive compensation, as
well as to provide employees with a retirement benefit. There is no
formula whereby one element of compensation is used to offset another
element.
Base Salary. Base
salary is intended to create a secure base of cash compensation for executives
and to reward an executive=s ongoing
performance. Base salaries are standard in the banking industry for
most positions, including executive positions. Timberland Bank=s Board of
Directors approves an annual base salary for all senior officers and executive
officers, based upon recommendations from the Compensation
Committee. Annual base salaries are generally effective October 1st
of each year. Factors considered in setting base salaries include the
executive=s
performance, our overall performance and compensation levels in the financial
industry, among other factors.
The
salary levels of our executive officers are designed to be competitive with
those of executives at similarly-sized institutions in our market
area. Each year, management reviews the Northwest Financial Industry
Salary Survey prepared by Milliman USA and provides salary range information to
the Compensation Committees. Executive salaries generally fall within
the ranges provided by the survey data; however, individual salaries may fall
outside the range depending on an individual=s
qualifications and contributions. Individual annual performance is
reviewed by the Compensation Committee (in the case of the Chief Executive
Officer) or the Chief Executive Officer (in the case of the other executive
officers) to determine adjustments to compensation. The Compensation
Committee also evaluates compensation in light of our annual financial
performance. Material changes in compensation are rare but may be
made to reward an executive for his or her contributions to our
success.
In the
past, we have also engaged compensation consultants to review the base salaries
of our executives. Watson Wyatt was engaged in 2002 to provide a
market analysis of compensation for the majority of the positions with
Timberland Bank. The study was used to determine if Timberland=s
compensation practices resulted in the payment of competitive
salaries. John Parry and Alexander was engaged in October 2004 to
develop an incentive compensation plan
11
Annual
Bonus. Bonuses are intended to reward performance in
furthering our financial goals. Annual bonuses supplement base salary
and allow us to provide a competitive pay package to our executive
officers. We maintain a discretionary bonus plan, which is primarily
based on Timberland Bank=s net income
and various loan goals for each fiscal year. The bonuses are
typically paid in December following the September 30th year end.
The Chief
Executive Officer receives a bonus equal to one-half of one percent of
Timberland Bank=s net
income. The Chief Financial Officer receives a bonus based on the
recommendation of the Chief Executive Officer. For the fiscal year
ending September 30, 2009 and future years, the Chief Financial Officer may
receive a bonus of up to one-quarter of one percent of Timberland Bank=s net
income. This bonus will be awarded based on subjective factors and
the Bank=s net
income. The other named executive officers have the potential to earn
up to $45,000 in annual bonuses. These bonuses are awarded based on a
subjective determination, but objective factors such as net income, lenders
meeting established goals, loan quality and deposit growth will also be
considered.
Long-Term Incentive
Compensation. Long-term incentive compensation is intended to
reward executives for their performance, while encouraging them to remain
employed by Timberland and Timberland Bank. We grant long-term
compensation in the form of equity awards and contributions to the Timberland
Bank ESOP and 401(k) Plan.
Equity-based
compensation functions as long-term incentive because awards are generally made
with a five-year vesting schedule. In addition, the value of awards
varies in part as a function of our financial performance. Awards are
made either in the form of stock options or restricted stock. We
maintain the 1999 Stock Option Plan, the 2003 Stock Option Plan and the
Management Recognition and Development Plan, each of which was approved by our
shareholders. These are administered and interpreted by the
Compensation Committee. Under the plans, the Committee determines
which officers and key employees will receive awards, the number of shares
subject to each option or shares of restricted stock awarded, and the vesting of
the awards. In addition, newly hired employees may receive awards at
the time of their employment. The per share exercise price of an
option will equal at least 100% of the fair market value of a share of common
stock on the date the option is granted. All equity-based awards are
subject to the approval of the Board of Directors.
Timberland
Bank also maintains an ESOP and 401(k) Plan, which is for the benefit of
employees with one year of service who have attained age 21. Each
year, we make a contribution of up to five percent of each participant=s eligible
compensation to the 401(k) portion of the plan. Each year shares held
in the ESOP are released for allocation as debt of the ESOP is
repaid. The released shares are allocated based on the percentage of
a participant=s salary in
relation to total salaries of all eligible participants.
Other
Considerations. We have not adopted a formal policy or any
employment agreement provisions that enable recovery of incentive awards in the
event of misstated or restated financial results. However, Section 304 of the
Sarbanes-Oxley Act of 2002 provides some ability to recover incentive awards in
certain circumstances. If we are required to restate our financials
due to noncompliance with any financial reporting requirements as a result of
misconduct, the Chief Executive Officer and Chief Financial Officer must
reimburse us for (1) any bonus or other incentive- or equity-based compensation
received during the 12 months following the first public issuance of the
non-complying document, and (2) any profits realized from the sale of Timberland
securities during those 12 months.
The
Compensation Committee does not have a formal written policy guiding the timing
of equity grants. All equity grants were made after formal Board
approval. We have reviewed our equity grant practices and have
confirmed that all past equity grants have been consistent with SEC
guidelines.
12
Compensation
Committee Report
The
Compensation Committee of the Board of Directors of Timberland Bank has
submitted the following report for inclusion in this Proxy
Statement:
We have
reviewed and discussed the Compensation Discussion and Analysis contained in
this Proxy Statement with management. Based on the Committee=s review of
and the discussion with management with respect to the Compensation Discussion
and Analysis, we recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement.
The
foregoing report is provided by the following directors, who constitute the
Compensation Committee:
| Compensation Committee: | Jon C. Parker |
| James C. Mason | |
| Andrea M. Clinton | |
This
report shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not
otherwise be deemed filed under such acts.
Summary
Compensation Table
The
following table shows information regarding compensation earned during the
fiscal years ended September 30, 2008 and 2007 by our named executive
officers: (1) Michael R. Sand, our principal executive officer; (2) Dean J.
Brydon, our principal financial officer; (3) our three other most highly
compensated officers who earned in excess of $100,000, who are Robert A. Drugge,
John P. Norawong and Patrick K. Horan. We do not have any non-equity
incentive plans or defined benefit plans, nor do we permit deferral of
compensation on a basis that is not tax-qualified. The named
executive officers do not have any unvested stock options
outstanding.
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
All
Other
Compen-
sation
($)(2)
|
Total ($)
|
||||||
|
Michael
R. Sand
|
2008
|
210,000
|
20,812
|
2,693
|
18,450
|
251,955
|
||||||
|
President
and Chief Executive
|
2007
|
200,000
|
40,607
|
--
|
60,798
|
301,405
|
||||||
|
Officer
of Timberland and
|
||||||||||||
|
Timberland
Bank
|
||||||||||||
|
Dean
J. Brydon
|
2008
|
157,500
|
10,406
|
2,693
|
12,206
|
182,805
|
||||||
|
Executive
Vice President,
|
2007
|
120,000
|
20,000
|
--
|
39,161
|
179,161
|
||||||
|
Chief
Financial Officer and
|
||||||||||||
|
Secretary
of Timberland and
|
||||||||||||
|
Timberland
Bank
|
||||||||||||
|
Robert
A. Drugge
|
2008
|
157,500
|
14,000
|
44,067
|
18,099
|
233,666
|
||||||
|
Executive
Vice President and
|
2007
|
150,000
|
16,000
|
24,633
|
8,476
|
199,109
|
||||||
|
Business
Banking Manager
|
||||||||||||
|
of
Timberland Bank
|
||||||||||||
|
(Table
continues on following page)
|
||||||||||||
13
|
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)(1)
|
All
Other
Compen-
sation
($)(2)
|
Total ($)
|
||||||
|
John
P. Norawong
|
2008
|
157,500
|
14,000
|
44,067
|
16,595
|
232,162
|
||||||
|
Executive
Vice President and
|
2007
|
150,000
|
16,000
|
24,633
|
3,000
|
193,633
|
||||||
|
Community
Banking Division
|
||||||||||||
|
Manager
of Timberland Bank
|
||||||||||||
|
Patrick
K. Horan
|
2008
|
100,000
|
8,000
|
1,347
|
7,806
|
117,153
|
||||||
|
Senior
Vice President and
|
2007
|
96,300
|
12,672
|
--
|
11,179
|
120,151
|
||||||
|
Commercial
Lending Regional
|
||||||||||||
|
Manager
of Timberland Bank
|
||||||||||||
______________
|
(1)
|
Represents
the dollar amount of expense recognized for financial statement reporting
purposes in fiscal 2008 for awards made in fiscal 2008 and prior years and
being earned by the officer ratably over the vesting period of the award.
Amounts are calculated pursuant to the provisions of FAS 123R. For a
discussion of valuation assumptions, see Note 15 of the Notes to
Consolidated Financial Statements in Timberland=s
Annual Report on Form 10-K for the year ended September 30,
2008.
|
|
(2)
|
Please
see the table below for more information on the other compensation paid to
our executive officers in the year ended September 30,
2008.
|
All Other
Compensation. The following table sets forth details of AAll Other
Compensation,@ as
presented above in the Summary Compensation Table.
|
Name
|
401(k)
Plan
Contribu-
tion
($)
|
ESOP
Contribu-
tion
($)
|
Restricted
Stock
Dividends
($)
|
Life
Insurance
Premiums
($)
|
Country
Club
Dues
($)
|
Personal
Use
of
Company
Vehicle
($)
|
Total
($)
|
|||||||
|
Michael
R. Sand
|
11,250
|
3,100
|
430
|
1,104
|
2,298
|
268
|
18,450
|
|||||||
|
Dean
J. Brydon
|
8,875
|
2,445
|
430
|
456
|
--
|
--
|
12,206
|
|||||||
|
Robert
A. Drugge
|
8,675
|
2,390
|
5,074
|
1,960
|
--
|
--
|
18,099
|
|||||||
|
John
P. Norawong
|
8,675
|
2,390
|
5,074
|
456
|
--
|
--
|
16,595
|
|||||||
|
Patrick
K. Horan
|
5,634
|
1,552
|
215
|
405
|
--
|
--
|
7,806
|
Employment
Agreements. We entered into employment agreements with Michael
R. Sand and Dean J. Brydon on April 13, 2007. Each agreement has an
initial term of three years and on each anniversary beginning on April 13,
2008, the term of the agreements will be extended for an additional year
provided that (1) neither the executive nor Timberland has given notice to the
other at least 90 days prior to the anniversary date and (2) prior to the
anniversary date, the Board or a Board committee with delegated authority
reviews and approves the extension. The current base salaries of Mr.
Sand and Mr. Brydon under their agreements are $210,000 and $157,500,
respectively, and are subject to annual review. Under the agreement,
the executives are eligible to participate in all bonus programs, benefit plans
and fringe benefits offered to other executive officers of Timberland and
Timberland Bank. The agreements provide that compensation may be paid
in the event of disability, death, involuntary termination or a change in
control, as described below under APotential
Payments Upon Termination.@
Grants
of Plan-Based Awards
The
following table shows information regarding grants of plan-based awards made to
our named executive officers for the fiscal year ended September 30,
2008. We did not grant any stock options or Aincentive
plan awards,@ as defined
by the SEC.
14
|
Name
|
Grant
Date
|
All
Other Stock Awards:
Number
of Shares of
Stock
or Units (#)(1)
|
Grant
Date Fair
Value
of Stock and Option
Awards
($)
|
|||||||
|
Michael
R. Sand
|
10/23/07
|
1,000
|
14,690
|
|||||||
|
Dean
J. Brydon
|
10/23/07
|
1,000
|
14,690
|
|||||||
|
Robert
A. Drugge
|
06/24/08
|
3,000
|
24,495
|
|||||||
|
10/23/07
|
1,000
|
14,690
|
||||||||
|
John
P. Norawong
|
06/24/08
|
3,000
|
24,495
|
|||||||
|
10/23/07
|
1,000
|
14,690
|
||||||||
|
Patrick
K. Horan
|
10/23/07
|
500
|
7,345
|
|||||||
____________
| (1) |
Stock
awards vest ratably over the five-year period from the grant date, with
the first 20% vesting one year after the grant
date.
|
Outstanding
Equity Awards
The
following information with respect to outstanding equity awards as of September
30, 2008 is presented for the named executive officers.
|
Option
Awards (1)
|
Stock
Awards (2)
|
|||||||||||||
|
Number
of Securities
Underlying
Unexercised
|
Number
of Securities
Underlying
Unexercised
|
Option
|
Option
|
Number
of
Shares
or
Units
of Stock
That
|
Market
Value
of
Shares or
Units
of Stock
|
|||||||||
|
Grant
|
Options
(#)
|
Options
(#)
|
Exercise
|
Expiration
|
Have
Not
|
That
Have Not
|
||||||||
|
Name
|
Date
|
Exercisable
|
Unexercisable
|
Price
($)
|
Date
|
Vested
(#)
|
Vested
($)
|
|||||||
|
Michael
R. Sand
|
01/29/99
|
22,500
|
--
|
6.00
|
1/29/09
|
--
|
--
|
|||||||
|
10/23/07
|
--
|
--
|
--
|
--
|
1,000
|
7,550
|
||||||||
|
Dean
J. Brydon
|
01/29/99
|
42,900
|
--
|
6.00
|
1/29/09
|
--
|
--
|
|||||||
|
10/23/07
|
--
|
--
|
--
|
--
|
1,000
|
7,550
|
||||||||
|
Robert
A. Drugge
|
07/25/06
|
--
|
--
|
--
|
--
|
3,600
|
27,180
|
|||||||
|
06/26/07
|
--
|
--
|
--
|
--
|
4,800
|
36,240
|
||||||||
|
10/23/07
|
--
|
--
|
--
|
--
|
1,000
|
7,550
|
||||||||
|
06/24/08
|
--
|
--
|
--
|
--
|
3,000
|
22,650
|
||||||||
|
John
P. Norawong
|
07/25/06
|
--
|
--
|
--
|
--
|
3,600
|
27,180
|
|||||||
|
06/26/07
|
--
|
--
|
--
|
--
|
4,800
|
36,240
|
||||||||
|
10/23/07
|
--
|
--
|
--
|
--
|
1,000
|
7,550
|
||||||||
|
06/24/08
|
--
|
--
|
--
|
--
|
3,000
|
22,650
|
||||||||
|
Patrick
K. Horan
|
10/23/07
|
--
|
--
|
--
|
--
|
500
|
3,775
|
|||||||
______________
|
(1)
|
Option
awards vest over a ten-year period from grant date. The vesting, however,
may be doubled in years that Timberland meets certain performance
criteria.
|
|
(2)
|
Stock
awards vest ratably over the five-year period from the grant date, with
the first 20% vesting one year after the grant
date.
|
15
Option
Exercised and Stock Vested
The
following table shows the value realized upon exercise of stock options and
vesting of stock awards for our named executive officers in the year ended
September 30, 2008.
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Number
of
|
Number
of
|
|||||||||||||||
|
Shares
|
Value
|
Shares
|
Value
|
|||||||||||||
|
Acquired
on
|
Realized
on
|
Acquired
on
|
Realized
on
|
|||||||||||||
|
Name
|
Exercise
(#)
|
Exercise
($)
|
Vesting
(#)
|
Vesting
($)
|
||||||||||||
|
Michael
R. Sand
|
22,500 | 149,625 | -- | -- | ||||||||||||
|
Dean
J. Brydon
|
-- | -- | -- | -- | ||||||||||||
|
Robert
A. Drugge
|
-- | -- | 2,400 | 18,450 | ||||||||||||
|
John
P. Norawong
|
-- | -- | 2,400 | 18,450 | ||||||||||||
|
Patrick
K. Horan
|
-- | -- | -- | -- | ||||||||||||
Potential
Payments Upon Termination
We have
entered into agreements with the named executive officers that provide for
potential payments upon disability, termination and death. In
addition, our equity plans also provide for potential payments upon termination.
The following table shows, as of September 30, 2008, the value of potential
payments and benefits following a termination of employment under a variety of
scenarios.
|
Involuntary
Termination
($)
|
Involuntary
Termination
Following
Change
in
Control ($)
|
Death
($)
|
Disability
($)
|
|||||
|
Michael R.
Sand
|
||||||||
|
Employment
Agreement
|
550,067
|
1,199,999
|
--
|
--
|
||||
|
Equity
Plans
|
--
|
7,550
|
7,550
|
7,550
|
||||
|
Dean J.
Brydon
|
||||||||
|
Employment
Agreement
|
413,437
|
487,217
|
--
|
--
|
||||
|
Equity
Plans
|
--
|
7,550
|
7,550
|
7,550
|
||||
|
Robert A.
Drugge
|
||||||||
|
Equity
Plans
|
--
|
97,620
|
97,620
|
97,620
|
||||
|
John P.
Norawong
|
||||||||
|
Equity
Plans
|
--
|
97,620
|
97,620
|
97,620
|
||||
|
Patrick K.
Horan
|
||||||||
|
Equity
Plans
|
--
|
3,775
|
3,775
|
3,775
|
Employment
Agreements. The employment agreements with Mr. Sand and Mr.
Brydon provide for payments in the event of disability, death or
termination. If either executive becomes entitled to benefits under
the terms of our then-current disability plan, if any, or becomes otherwise
unable to fulfill his duties under his employment agreement, he shall be
entitled to receive such group and other disability benefits as are then
provided for executive employees. In the event of the executive=s
disability, his employment agreement will not be suspended, except that the
obligation to pay his salary shall be reduced in accordance with the amount of
any disability income benefits he receives such that, on an after-tax basis, he
realizes from the sum of disability income benefits and his salary the same
amount as he would realize on an after-tax basis from his salary if he had not
become disabled. Upon a resolution adopted by a majority of the
disinterested members of the Board of Directors or an authorized committee, we
may discontinue payment of the
16
In the
event of either of the executive=s death
while employed under his employment agreement and prior to any termination of
employment, we will pay to his estate, or such person as he may have previously
designated, the salary which was not previously paid to him and which he would
have earned if he had continued to be employed under the agreement through the
last day of the month in which he died, together with the benefits provided
under the employment agreement through that date.
The
employment agreements also provide for benefits in the event of the
executives= involuntary
termination. If the executive=s employment
is terminated for any reason other than cause, or change in control, or the
executive terminates his own employment because of a material diminution of or
interference with his duties, responsibilities or benefits, including if the
termination occurs within 30 days of any of the following actions unless
consented to: (1) a requirement that he be based at any place other than
Hoquiam, Washington, or within a radius of 35 miles from the location of
Timberland=s
administrative offices; (2) a material demotion; (3) a material reduction in the
number or seniority of personnel reporting to him or a material reduction in the
frequency with which, or in the nature of the matters with respect to which such
personnel are to report to him; (4) a reduction in his salary or a material
adverse change in his perquisites, benefits or vacation; (5) a material
permanent increase in the required hours of work or his workload; or (6) the
failure of the Board of Directors to elect him as President and Chief Executive
Officer (in the case of Mr. Sand) or Chief Financial Officer (in the case of Mr.
Brydon) or any action by the Board removing him from this office, he is entitled
to payment and benefits. In the event of an involuntary termination,
we must pay to the executive during the remaining term of his employment
agreement the salary at the rate in effect immediately prior to the date of
termination. We must also provide to the executive during the
remaining term of his agreement substantially the same group life insurance,
hospitalization, medical, dental, prescription drug and other health benefits,
and long-term disability insurance (if any) for the benefit of the executive and
his dependents and beneficiaries who would have been eligible for such benefits
if he had not suffered involuntary termination.
If the
employment of Mr. Sand or Mr. Brydon is terminated following a change in control
of Timberland or Timberland Bank, or if either executive terminates his own
employment following a change in control for any of the reasons listed in the
previous paragraph, we must pay him a lump sum equal to 299% of his base amount
(as defined in Section 280G of the Internal Revenue Code) and must provide
during the remaining term of the employment agreement substantially the same
group life insurance, hospitalization, medical, dental, prescription drug and
other health benefits, and long-term disability insurance (if any) for the
benefit of the executive and his dependents and beneficiaries who would have
been eligible for such benefits if he had not suffered involuntary
termination.
Equity Plans. Our
Management Recognition and Development Plan, 1999 Stock Option Plan and 2003
Stock Option Plan provide for accelerated vesting of awards in certain
circumstances. If a change in control occurs prior to the vesting of
an award, the vesting date will be accelerated to the effective date of the
change in control. In addition, if an award recipient dies or becomes
disabled prior to vesting of his awards, the vesting date will be accelerated
upon the occurrence of such event.
Compensation
Committee Interlocks and Insider Participation
The
members of the Compensation Committee are Directors Parker, Mason and
Clinton. No members of this Committee were officers or employees of
Timberland or any of its subsidiaries during the year ended September 30, 2008,
nor were they formerly Timberland officers or had any relationships otherwise
requiring disclosure.
17
The Audit
Committee reports as follows with respect to Timberland=s audited
financial statements for the fiscal year ended September 30, 2008:
|
$
|
The
Audit Committee has completed its review and discussion of the 2008
audited financial statements with
management;
|
|
$
|
The
Audit Committee has discussed with the independent auditor, McGladrey
& Pullen, LLP, the matters required to be discussed by Statement on
Auditing Standards (ASAS@) No.
61, Communication with
Audit Committees, as amended, as adopted by the Public Company
Accounting Oversight Board in Rule
3200T;
|
|
$
|
The
Audit Committee has received written disclosures and the letter from the
independent auditor required by Independence Standards Board Standard No.
1, Independence
Discussions with Audit Committee, as adopted by the
Public Company Accounting Oversight Board in Rule 3600T, and has discussed
with the independent auditor the auditor=s
independence; and
|
|
$
|
The
Audit Committee has, based on its review and discussions with management
of the 2008 audited financial statements and discussions with the
independent auditor, recommended to the Board of Directors that
Timberland=s
audited financial statements for the year ended September 30, 2008 be
included in its Annual Report on Form
10-K.
|
The
foregoing report is provided by the following directors, who constitute the
Audit Committee:
| Audit Committee: | Ronald A. Robbel, Chairman |
| David A. Smith | |
| James C. Mason |
This
report shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not
otherwise be deemed filed under such acts.
Section
16(a) of the Securities Exchange Act requires our directors and executive
officers, and persons who own more than 10% of Timberland=s common
stock to report their initial ownership of the common stock and any subsequent
changes in that ownership to the SEC. Directors, executive officers
and greater than 10% shareholders are required by regulation to furnish us with
copes of all Section 16(a) forms they file. The SEC has established
filing deadlines for these reports and we are required to disclose in this Proxy
Statement any late filings or failures to file. Based solely on our
review of the copies of such forms we have received and written representations
provided to us by the above referenced persons, we believe that, during the
fiscal year ended September 30, 2008, all filing requirements applicable to our
reporting officers, directors and greater than 10% shareholders were properly
and timely complied with.
McGladrey
& Pullen, LLP served as our independent auditor for the fiscal year ended
September 30, 2008. The Audit Committee has not yet selected an
independent auditor for the fiscal year ending September 30, 2009.
The Audit
Committee operates under a written charter adopted by the Board of
Directors. In fulfilling its oversight responsibility of reviewing
the services performed by Timberland=s
independent auditor, the Committee
18
A
representative of McGladrey & Pullen, LLP is expected to attend the meeting
to respond to appropriate questions and will have an opportunity to make a
statement if he or she so desires.
The
following table sets forth the aggregate fees billed to Timberland and
Timberland Bank by McGladrey & Pullen, LLP for professional services
rendered for the fiscal years ended September 30, 2008 and 2007.
|
Year
Ended
|
||||||||
|
September
30,
|
||||||||
|
2008
|
2007
|
|||||||
|
Audit
Fees
(1)
|
$ | 249,172 | $ | 250,455 | ||||
|
Audit-Related
Fees
(2)
|
11,500 | 21,750 | ||||||
|
Tax
Fees
(3)
|
15,856 | 11,500 | ||||||
_____________
| (1) |
Includes
fees for the annual audit and quarterly reviews of the consolidated
financial statements. Also includes fees related to compliance
with Section 404 of the Sarbanes-Oxley Act of 2002, regarding our internal
control over financial reporting.
|
|
| (2) |
Includes
fees for audits of our employee benefit plans.
|
|
| (3) |
Includes
fees for the preparation of federal tax
returns.
|
The Audit
Committee pre-approves all audit and permissible non-audit services to be
provided by the independent auditor and the estimated fees for these services in
connection with its annual review of its charter. Pre-approval may be
granted by action of the full Audit Committee or by delegated authority to one
or more members of the Audit Committee. If this authority is
delegated, all approved non-audit services will be presented to the Audit
Committee at its next meeting. In considering non-audit services, the
Audit Committee or its delegate will consider various factors, including but not
limited to, whether it would be beneficial to have the service provided by the
independent auditor and whether the service could compromise the independence of
the independent auditor. All of the services provided by McGladrey
& Pullen, LLP described above were approved by the Audit
Committee.
The Board
of Directors is not aware of any business to come before the annual meeting
other than those matters described in this Proxy Statement. However,
if any other matters should properly come before the meeting, it is intended
that proxies in the accompanying form will be voted in respect thereof in
accordance with the judgment of the person or persons voting the
proxies.
We will
pay the cost of soliciting proxies. In addition to this mailing, our
directors, officers and employees may also solicit proxies personally,
electronically or by telephone without additional compensation. We
will also reimburse brokers and other nominees for their expenses in sending
these materials to you and obtaining your voting instructions.
Our
annual report to shareholders, including financial statements, will be mailed on
or about December 18, 2008 to all shareholders of record as of the close of
business on the record date. Any shareholder who has not received a
copy of the annual report may obtain a copy by writing to the Corporate
Secretary, Timberland Bancorp, Inc., 624 Simpson Avenue, Hoquiam, Washington
98550. The annual report is not to be treated as part of the proxy
solicitation material or as having been incorporated herein by
reference. In addition, a copy our Annual Report on Form 10-K for the
fiscal year ended September 30, 2008 is available to each record and beneficial
owner of Timberland=s common
stock without charge upon written request to the Corporate Secretary at the
address given above.
19
Proposals
of shareholders intended to be presented at next year=s annual of
shareholders must be received at the executive office at 624 Simpson Avenue/P.O.
Box 697, Hoquiam, Washington 98550, no later than August 20,
2009. Any such proposals shall be subject to the requirements of the
proxy rules adopted under the Securities Exchange Act, and as with any
shareholder proposal (regardless of whether included in our proxy materials),
our Articles of Incorporation and Bylaws.
Our
Articles of Incorporation provide that in order for a shareholder to make
nominations for the election of directors or proposals for business to be
brought before a meeting, a shareholder must deliver notice of such nominations
and/or proposals to the Corporate Secretary not less than 30 nor more than 60
days prior to the date of the meeting; provided that if less than 31 days= notice of
the meeting is given to shareholders, such written notice must be delivered not
later than the close of the tenth day following the day on which notice of the
meeting was mailed to shareholders. We anticipate that, in order to
be timely, shareholder nominations or proposals intended to be made at the
annual meeting must be made by December 26, 2008. As specified in the
Articles of Incorporation, the notice with respect to nominations for election
of directors must set forth certain information regarding each nominee for
election as a director, including the person=s name, age,
business address and number of shares of common stock held, a written consent to
being named in the Proxy Statement as a nominee and to serving as a director, if
elected, and certain other information regarding the shareholder giving such
notice. The notice with respect to business proposals to be brought
before the annual meeting must state the shareholder=s name,
address and number of shares of common stock held, a brief discussion of the
business to be brought before the annual meeting, the reasons for conducting
such business at the meeting, and any interest of the shareholder in the
proposal.
| BY ORDER OF THE BOARD OF DIRECTORS | |
| /s/ DEAN J. BRYDON | |
| DEAN J. BRYDON | |
| CORPORATE SECRETARY |
Hoquiam,
Washington
December
18, 2008
20
REVOCABLE
PROXY
TIMBERLAND
BANCORP, INC.
ANNUAL
MEETING OF SHAREHOLDERS
JANUARY
27, 2009
The
undersigned hereby appoints the official Proxy Committee of the Board of
Directors of Timberland Bancorp, Inc. (ATimberland@) with full
powers of substitution, as attorneys and proxies for the undersigned, to vote
all shares of common stock of Timberland which the undersigned is entitled to
vote at the annual meeting of shareholders, to be held at the Hoquiam Timberland
Library, located at 420 7th Street,
Hoquiam, Washington, on Tuesday, January 27, 2009, at 1:00 p.m., local
time, and at any and all adjournments thereof, as indicated.
|
FOR
|
VOTE
WITHHELD
|
||||
| 1. |
The election as
director of the nominees
|
[ ] |
[ ]
|
||
| listed below (except as marked to the | |||||
| contrary below). | |||||
| Clarence E. Hamre | |||||
| Andrea M. Clinton | |||||
| Ronald A. Robbel | |||||
|
INSTRUCTIONS:
To withhold your vote
for
any individual nominee, write the
nominee’s
name on the line below.
|
|||||
| __________________________________ | |||||
| __________________________________ | |||||
| 2. | In their discretion, upon such other matters as may | ||||
| properly come before the meeting. | |||||
| The Board of Directors recommends a vote “FOR” the above proposal. | |||||
THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS
Should
the undersigned be present and elect to vote at the annual meeting or at any
adjournment thereof and after notification to the Corporate Secretary of
Timberland at the meeting of the shareholder=s decision
to terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The
undersigned acknowledges receipt from Timberland prior to the execution of this
proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement for the
annual meeting of shareholders, and the 2008 Annual Report to
Shareholders.
Dated:
______________________________
|
____________________________________
|
____________________________________
|
|
PRINT
NAME OF SHAREHOLDER
|
PRINT
NAME OF SHAREHOLDER
|
|
____________________________________
|
____________________________________
|
|
SIGNATURE
OF SHAREHOLDER
|
SIGNATURE
OF SHAREHOLDER
|
Please
sign exactly as your name appears on this proxy. When shares are held
jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as such. If
the signer is a corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
Please
complete, date, sign and mail this proxy promptly in the enclosed postage-paid
envelope.