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Section 1: DEFC14A (DEFINITIVE CONTESTED PROXY STATEMENT)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

____________________

SCHEDULE 14A

____________________

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant S

Filed by a Party other than the Registrant £

Check the appropriate Box:

£

 

Preliminary Proxy Statement

£

 

Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

S

 

Definitive Proxy Statement

£

 

Definitive Additional Materials

£

 

Soliciting Material Pursuant to §240.14a-12

HomeStreet, Inc.

(Name of Registrant as Specified In Its Charter)

_____________________________________________________________

Payment of Filing Fee (Check the appropriate box):

S

 

No fee required.

£

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(l) and 0-11.

   

(1)

 

Title of each class of securities to which transaction applies:

       

   

(2)

 

Aggregate number of securities to which transaction applies:

       

   

(3)

 

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing is calculated and state how it was determined):

       

   

(4)

 

Proposed maximum aggregate value of transaction:

       

   

(5)

 

Total Fee Paid:

       

£

 

Fee paid previously with preliminary materials.

£

 

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:

       

   

(2)

 

Form, Schedule or Registration Statement No.:

       

   

(3)

 

Filing Party:

       

   

(4)

 

Date Filed:

       

 

May 16, 2019

It is my distinct pleasure to invite you to attend the 2019 annual meeting of shareholders of HomeStreet, Inc. (including any adjournments or postponements thereof, the “Annual Meeting”). The Annual Meeting will be held at 10:00 a.m. Pacific Time on June 20, 2019 at the downtown Seattle Hilton Hotel, 1301 Sixth Avenue, Seattle, Washington 98101. With this letter, we are including the notice for the Annual Meeting, the proxy statement, a WHITE proxy card and our annual report for the fiscal year ended December 31, 2018. You may also find copies of these items online at www.homestreet.com/proxy.

The matters to be voted on are: (1) the election of three Class II directors, (2) the approval on an advisory (non-binding) basis of the compensation of HomeStreet’s named executive officers, (3) the ratification on an advisory (non-binding) basis of the appointment of our independent auditors for 2019, (4) the ratification of an amendment to our Amended & Restated Bylaws to select Washington State as the exclusive forum for shareholder actions against HomeStreet, (5) the approval of an amendment to our Second Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) to declassify the Board of Directors, (6) the approval of an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes and (7) two shareholder proposals. Our Board of Directors recommends that you vote in accordance with the Board’s recommendations on each of these proposals, as described in the enclosed Proxy Statement for the Annual Meeting, using the enclosed WHITE proxy card.

Your vote will be especially important this year because Blue Lion Opportunity Master Fund, L.P., a Cayman Islands limited partnership (“BLOMF”), and certain of its affiliates, including Roaring Blue Lion Capital Management, L.P. (“Roaring Blue Lion Capital”) and Charles W. Griege, Jr. (collectively, the “Blue Lion Parties”) have provided notice to HomeStreet of their intent to nominate two directors for election to the Board and present two shareholder proposals at the Annual Meeting. Mr. Griege has filed a notice of change in control with the Washington State Department of Financial Institutions (the “DFI”) in connection with the Blue Lion Parties’ intent to obtain proxies for 25% or more of HomeStreet’s outstanding shares. Mr. Griege’s notice is subject to DFI review and non-disapproval or denial after a completed filing is made. If Mr. Griege’s notice is denied by the DFI and the Blue Lion Parties obtain proxies to vote 25% or more of HomeStreet’s outstanding shares, such proxies will be “ineffective and void” pursuant to Section 30A.04.405(7) of the Revised Code of Washington. Under these circumstances, shares represented by proxies granted to the Blue Lion Parties would not be voted at the Annual Meeting.

OUR BOARD OF DIRECTORS URGES YOU TO VOTE “FOR” THE BOARD’S NOMINEES BY USING THE ENCLOSED WHITE PROXY CARD, AND TO DISREGARD ANY MATERIALS, AND NOT TO SIGN, RETURN OR VOTE ON ANY PROXY CARD, THAT MAY BE SENT TO YOU BY OR ON BEHALF OF THE BLUE LION PARTIES OR ANY OF THEIR AFFILIATES. If you have already voted using a proxy card sent to you by the Blue Lion Parties, you can revoke it by: (i) executing and delivering the WHITE proxy card, (ii) voting over the Internet using the Internet address on the WHITE proxy card, (iii) voting by telephone using the toll-free number on the WHITE proxy card or (iv) voting in person at the Annual Meeting. Only your latest dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in the accompanying proxy statement.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote by the Internet or telephone. Returning your WHITE proxy card will not prevent you from voting in person, but will ensure that your vote is counted if you are unable to attend.

If you would like to receive electronic notification of documents we file with the Securities and Exchange Commission and our issuance of press releases, you may subscribe to our e-mail alerts at http://ir.homestreet.com.

Thank you for your ongoing support of, and continued interest in, HomeStreet.

Sincerely,

 

   

Mark K. Mason

   

Chairman of the Board, President and

   

Chief Executive Officer

 

____________________

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

to be held on June 20, 2019

____________________

The 2019 annual meeting of shareholders (including any adjournments or postponements thereof, the “Annual Meeting”) of HomeStreet, Inc., a Washington corporation (the “Company”), will be held at 10:00 a.m., Pacific Time, on June 20, 2019, at the downtown Seattle Hilton Hotel, 1301 Sixth Avenue, Seattle, Washington 98101, in order to consider and vote upon the following matters:

1.      The election of three Class II directors to serve until the 2022 annual meeting of shareholders, or until their respective successors are elected and qualified;

2.      The approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers;

3.      The ratification on an advisory (non-binding) basis of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2019;

4.      The ratification of a bylaw amendment adopted by the Company in 2018, providing that Washington State shall be the exclusive forum for shareholder actions against the Company;

5.      The approval of an amendment to the Second Amended and Restated Articles of Incorporation of the Company, as amended (the “Articles of Incorporation”) to declassify the Board of Directors and provide for the annual election of directors;

6.      The approval of an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes; and

7.      The consideration of two shareholder proposals.

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice. We also will transact any other business that may properly come before the Annual Meeting, but are not aware of any such additional matters.

Only shareholders of record at the close of business on May 13, 2019, are entitled to notice of, and to vote at, the Annual Meeting.

It is important that your voice be heard and your shares be represented at the Annual Meeting whether or not you are able to attend in person. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote by the Internet or telephone. Please submit a proxy as soon as possible, so that your shares can be voted at the Annual Meeting in accordance with your instructions. Please refer to “Information about the Annual Meeting” on page 5 of the attached Proxy Statement and the instructions on the WHITE proxy card. Additionally, we hope that you can attend the Annual Meeting in person. All persons attending the Annual Meeting will be required to present a form of government-issued picture identification. If you are a holder of record and attend the Annual Meeting, you may vote by ballot in person even if you have previously returned your proxy card. If you hold your shares in “street name” and wish to vote in person, you must provide a “legal proxy” from your bank, broker or other nominee and proof of ownership (such as a recent brokerage statement).

 

IMPORTANT

On April 19, 2019, Blue Lion Opportunity Master Fund, L.P., a Cayman Islands limited partnership (“BLOMF”), and certain of its affiliates, including Roaring Blue Lion Capital Management, L.P. (“Roaring Blue Lion Capital”) and Charles W. Griege, Jr. (collectively, the “Blue Lion Parties”) provided notice to the Company of their intent to nominate two directors for election to the Board and present two shareholder proposals at the Annual Meeting. The Company is not responsible for the accuracy of any information provided by or relating to the Blue Lion Parties or any of their affiliates contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Blue Lion Parties or any of their affiliates or any other statements that they may otherwise make.

Mr. Griege has filed a notice of change in control with the Washington State Department of Financial Institutions (the “DFI”) in connection with the Blue Lion Parties’ intent to obtain proxies for 25% or more of the Company’s outstanding shares. Mr. Griege’s notice is subject to DFI review and non-disapproval or denial after a completed filing is made. If Mr. Griege’s notice is denied by the DFI and the Blue Lion Parties obtain proxies to vote 25% or more of the Company’s outstanding shares, such proxies will be “ineffective and void” pursuant to Section 30A.04.405(7) of the Revised Code of Washington. Under these circumstances, shares represented by proxies granted to the Blue Lion Parties would not be voted at the Annual Meeting.

THE COMPANY’S BOARD OF DIRECTORS URGES YOU TO DISREGARD ANY MATERIALS, AND NOT TO SIGN, RETURN OR VOTE ON ANY PROXY CARD, THAT MAY BE SENT TO YOU BY OR ON BEHALF OF THE BLUE LION PARTIES OR ANY OF THEIR AFFILIATES. If you have already signed any proxy card provided by or on behalf of the Blue Lion Parties, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote by the Internet or telephone. Only your latest-dated proxy will count.

If you have any questions or need any assistance in voting your shares, please contact our proxy solicitor:

OKAPI PARTNERS LLC

1212 Avenue of the Americas, 24th Floor

New York, NY 10036

Toll-Free: (877) 566-1922

Email: [email protected]

 

   

Godfrey B. Evans

   

Executive Vice President, General Counsel,

   

Chief Administrative Officer and Corporate Secretary

May 16, 2019

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 20, 2019: THE PROXY STATEMENT FOR THE ANNUAL MEETING AND THE ANNUAL REPORT ON FORM 10-K AND FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018 ARE AVAILABLE FREE OF CHARGE ON OUR WEBSITE AT WWW.HOMESTREET.COM.

 

____________________

PROXY STATEMENT

____________________

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board” or the “Board of Directors”) of HomeStreet, Inc., a Washington corporation, for use at our 2019 annual meeting of shareholders (including any postponements or adjournments thereof, the “Annual Meeting”). This Proxy Statement, the accompanying Notice of Annual Meeting of Shareholders, the enclosed WHITE proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 are first being mailed to our shareholders of record on or about May 16, 2019. References in this Proxy Statement to “HomeStreet,” the “Company,” “we,” “us,” “our” and similar terms refer to HomeStreet, Inc.

 

Page

PROXY STATEMENT SUMMARY

 

1

     

INFORMATION ABOUT THE ANNUAL MEETING

 

5

     

BACKGROUND TO THE SOLICITATION

 

13

     

PROPOSAL 1 ELECTION OF DIRECTORS

 

18

Introduction

 

18

The Board of Directors

 

18

Nominees for Election as Directors at the Annual Meeting

 

19

Directors Continuing in Office

 

21

     

SHAREHOLDER ENGAGEMENT

 

24

2017 and 2018 Shareholder Outreach

 

24

Roaring Blue Lion Capital Management

 

25

How to Provide Feedback to the Board

 

25

     

CORPORATE GOVERNANCE

 

26

Code of Ethics

 

26

Whistleblower Policy

 

26

Principles of Corporate Governance

 

27

Director Independence

 

27

Board Diversity

 

27

Board Leadership Structure

 

27

Board Role in Risk Oversight

 

28

Employee Compensation Risks

 

29

Board Meetings and Committees

 

29

Executive Committee

 

29

Audit Committee

 

30

Enterprise Risk Management Committee

 

30

Human Resources and Corporate Governance Committee

 

31

Attendance at Annual Meetings of Shareholders by the Board of Directors

 

34

Insider Trading Policy and Rule 10b5-1 Trading Plans

 

34

Contacting the Board of Directors

 

34

Director Compensation

 

34

     

EXECUTIVE OFFICERS

 

37

i

 

Page

EXECUTIVE COMPENSATION

 

40

Introduction

 

40

Executive Summary

 

40

Summary of Executive Compensation Practices

 

43

Compensation Philosophy and Practices

 

44

Elements of the Executive Compensation Program

 

44

Total Direct Compensation

 

45

The Decision-Making Process

 

46

     

2018 EXECUTIVE COMPENSATION PROGRAM

 

49

Base Salary

 

49

Commissioned NEOs Incentive Plan Arrangements

 

52

Long-Term Incentives

 

53

     

OTHER PRACTICES, POLICIES AND GUIDELINES

 

56

Clawback Provisions

 

56

Health and Welfare Benefits

 

56

401(k) Savings Plan

 

56

Perquisites and Other Personal Benefits

 

56

Risk Assessment

 

56

Tax Considerations

 

56

Executive Employment Agreements

 

57

     

HUMAN RESOURCES AND CORPORATE GOVERNANCE COMMITTEE REPORT

 

59

     

2018 Summary Compensation Table

 

60

     

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

64

Employment Agreements

 

64

Severance and Change in Control Agreement

 

64

2014 Plan

 

65

2014 Plan Award Agreements

 

65

     

PROPOSAL 2 ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

 

69

Overview

 

69

Vote Required and Board Recommendation

 

69

     

AUDIT COMMITTEE REPORT

 

70

     

PROPOSAL 3 ADVISORY (NON-BINDING) RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

71

Overview

 

71

Fees of Independent Registered Public Accounting Firm

 

71

Pre-Approval of Audit and Non-Audit Services

 

71

Vote Required and Board Recommendation

 

72

     

PROPOSAL 4 RATIFICATION OF AN AMENDMENT TO THE BYLAWS TO SELECT WASHINGTON STATE AS THE EXCLUSIVE FORUM FOR SHAREHOLDER ACTIONS AGAINST THE COMPANY

 

73

Text and Legal Effect of Amendment

 

73

Vote Required and Board Recommendation

 

74

ii

 

Page

PROPOSAL 5 APPROVAL OF AN AMENDMENT TO THE ARTICLES OF INCORPORATION TO DECLASSIFY THE BOARD AND PROVIDE FOR THE ANNUAL ELECTION OF DIRECTORS

 

75

Overview

 

75

Text and Legal Effect of Proposed Amendment

 

75

Vote Required and Board Recommendation

 

75

     

Proposal 6 APPROVAL OF AMENDMENT TO THE ARTICLES OF INCORPORATION TO ELIMINATE THE SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MAJOR CORPORATE CHANGES

 

76

Overview

 

76

Current Shareholder Vote Requirement

 

76

Text and Legal Effect of Proposed Amendment

 

76

Vote Required and Board Recommendation

 

77

SHAREHOLDER PROPOSALS

 

78

Overview

 

78

Vote Required and Board Recommendation

 

78

Proposal 7: Shareholder Proposal Related to Amendments to the Bylaws

 

78

Proposal 8: Shareholder Proposal Related to the Independence of the Chairman of the Board

 

78

     

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

79

Loans

 

79

Transaction Involving Rich Bennion

 

79

Indemnification Agreements

 

79

Procedures for Approval of Related Party Transactions

 

79

     

PRINCIPAL SHAREHOLDERS

 

81

Section 16(a) Beneficial Ownership Reporting Compliance

 

83

     

INFORMATION REGARDING EQUITY COMPENSATION PLANS

 

84

Equity Compensation Plan Information

 

84

     

OTHER MATTERS

 

85

Participants in the Solicitation

 

85

Costs of Solicitation

 

85

Shareholders Sharing the Same Address

 

85

Appraisal Rights

 

86

Shareholder List

 

86

Shareholders Proposals and Director Nominations for the 2020 Annual Meeting

 

86

Availability of the Form 10-K and Other Filings

 

87

Forward-Looking Statements

 

87

     

APPENDIX A ADDITIONAL INFORMATION REGARDING PARTICIPANTS IN THE SOLICITATION

 

88

Directors and Nominees

 

88

Officers and Employees

 

88

Information Regarding Ownership of the Company’s Securities by Participants

 

88

Information Regarding Transactions in the Company’s Securities by Participants

 

88

Miscellaneous Information Concerning Participants

 

90

iii

PROXY STATEMENT SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all the information that you should consider in connection with the matters before the Annual Meeting. Please read the entire Proxy Statement carefully before voting your shares.

THE ANNUAL MEETING

Date

 

June 20, 2019

Time

 

10:00 a.m. Pacific Time

Place

 

Downtown Seattle Hilton Hotel, 1301 Sixth Avenue, Seattle, Washington 98101

Record Date

 

May 13, 2019

Voting

 

Shareholders at the close of business on the record date will be entitled to vote at the Annual Meeting. As of the record date for the Annual Meeting, 26,968,046.6 shares of our common stock are expected and entitled to vote at the Annual Meeting. Shareholders are entitled to one vote for each share of common stock held. For more information on voting, attending the Annual Meeting and other meeting information, please see “Information about the Annual Meeting” on page 5 of this Proxy Statement.

     

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible so that your shares are represented. We urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the enclosed, postage pre-paid envelope provided or following the instructions on the enclosed WHITE proxy card to vote by the Internet or telephone. Returning your WHITE proxy card will not prevent you from voting in person, but will ensure that your vote is counted if you are unable to attend.

AGENDA AND BOARD RECOMMENDATIONS

 

Unanimous Board Recommendation

 

See Page

Proposal 1: Election of three Class II directors

 

FOR the
Board’s nominees

 

18

Proposal 2: Approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers

 

FOR

 

69

Proposal 3: Ratification on an advisory (non-binding) basis of the appointment of our independent registered public accounting firm for 2019

 

FOR

 

71

Proposal 4: Ratification of an amendment to the Bylaws to select Washington State as the exclusive forum for shareholder actions against the Company

 

FOR

 

73

Proposal 5: Approval of an amendment to the Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors

 

FOR

 

75

Proposal 6: Approval of an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes

 

FOR

 

76

Proposals 7 and 8: Approval of two shareholders proposals

 

AGAINST

 

78

1

DIRECTOR NOMINEES

Our Board is currently comprised of 10 directors, who are currently divided into three director classes. Director Victor Indiek, who currently serves on Class II of the Board, will not stand for reelection at the Annual Meeting. The Board has taken action to reduce the size of the Board to nine directors effective immediately at Mr. Indiek’s retirement.

You are therefore being asked to elect three Class II directors to serve on the Board until the 2022 annual meeting of shareholders, until their respective successors are duly elected and qualified or until their earlier resignation or removal. For more information about the background and qualifications of the director nominees and the entire Board of Directors, please see “Proposal 1 — Election of Directors” on page 18 of this Proxy Statement. The Board’s nominees are:

Name

 

Age

 

Tenure

 

Committees

Sandra A. Cavanaugh

 

64

 

1 year

 

Human Resources and Corporate Governance
Enterprise Risk Management (Chair)

Mark K. Mason
(Chairman and CEO)

 

60

 

9 years

 

Executive (Chair)

Donald R. Voss
(Lead Independent Director)

 

68

 

4 years

 

Executive Audit
Enterprise Risk Management

CORPORATE GOVERNANCE HIGHLIGHTS

P      Lead Independent Director with clearly-defined responsibilities

P      9 of 10 directors are independent

P      Each Board committee, other than the Executive Committee, is comprised of independent directors

P      Average director tenure is five years

P      Average age of directors is 65

P      Board diversity policy

P      Two new directors appointed in 2018

P      Directors can be removed without “cause”

P      Shareholders with at least 10% of outstanding shares are permitted to call a special meeting of shareholders

P      Majority voting standard for uncontested director elections with a director resignation policy

P      Proposal to eliminate all supermajority shareholder vote requirements in the Articles of Incorporation

P      Proposal to declassify the Board of Directors and provide for the annual election of directors

P      Proposal to ratify the exclusive forum provision of the Bylaws

P      Board policy limits director membership on other public company boards

P      Regular Board, committee and director evaluations

P      Regular comprehensive succession planning for management

P      Directors attended 75% or more of all Board meetings in 2018

P      Policies prohibiting hedging and pledging

P      Meaningful stock ownership and retention guidelines for directors

2

SHAREHOLDER ENGAGEMENT HIGHLIGHTS

The Board welcomes feedback from shareholders on our Board composition, governance practices and policies, executive compensation framework and other matters related to our strategy and performance. In the summer and fall of each year, we reach out directly to our shareholders to solicit this feedback. As part of this program, in 2018 we contacted shareholders holding 52.2% of our shares offering direct engagement with independent members of the Board, resulting in a number of productive conversations. In addition, members of our Board (including our independent directors) and our management team regularly attend industry conferences, host shareholders at our offices and engage in one-on-one discussions with our shareholders, investment analysts, and proxy advisory firms throughout the year. This ongoing dialogue informs our Board’s agenda, contributes to our governance and compensation enhancements and helps us address the issues that matter most to our shareholders. We encourage you to visit our investor relations website at http://ir.homestreet.com to learn more about the Company and to reach out directly to the Board at [email protected]

How We’ve Responded to Shareholder Feedback

What We Heard

     

What We Did

We received feedback that the Board’s classified structure could limit shareholders’ ability to provide annual feedback on the performance of each director

 

 

We have proposed an amendment to our Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors (Proposal 5)

         

We received feedback that the supermajority shareholder vote requirements in our Articles of Incorporation could limit shareholders’ ability to act on critical matters before the Company

 

 

We have proposed an amendment to our Articles of Incorporation to eliminate all supermajority shareholder vote requirements (Proposal 6)

         

We received feedback that the responsibilities of our Lead Independent Director could be more clearly defined

 

 

We amended our Bylaws and Principles of Corporate Governance to provide a clear description of the role of the Lead Independent Director

         

Shareholders indicated that they would like to see increased diversity on the Board

 

 

In response to feedback received in 2017, we revised our Principles of Corporate Governance to add a robust Board diversity policy. We began taking action to implement this policy with the appointment of Sandra Cavanaugh in May 2018.

         

Shareholders noted that they would like to see increased director stock ownership to promote alignment of interests between the Board and all shareholders

 

 

We increased our director stock ownership requirements to require each non-executive director to own at least three times the annual retainer fee at all times after their third year on the Board

         

Some shareholders expressed a preference for performance-based goals for long-term incentive awards that were more closely linked to shareholder returns than to the return on tangible equity goals

 

 

Our HRCG Committee determined to use total shareholder return as the basis for a performance goal over the three-year measurement period for performance share units (PSUs) starting in 2019

3

EXECUTIVE COMPENSATION HIGHLIGHTS

2018 Executive Compensation

•    Average increase for the top five (5) NEOs was 0.6%. Four (4) of five (5) NEOs did not receive an increase.

•    Corporate component of the Annual Incentive Plan attained 86.82% of target performance, which resulted in a reduced payout for that component of the incentive plan.

•    Performance Share Units for the performance period 2016-2018 did not vest due to the Company not achieving threshold performance

•    Engaged with and considered shareholder input in designing our executive pay programs

•    Used independent, external compensation consultant for making compensation program decisions

•    Conducted annual risk assessment of incentive compensation programs

Summary of Executive Compensation Practices

What We Do

 

What We Don’t Do

P      Engage with and consider shareholder input in designing our executive pay programs

 

O      No short-selling, hedging or pledging of Company securities; these are prohibited by our insider trading policy and we discourage holding Company shares in margin accounts

P      Short-term incentives that are designed to be aligned with short-term objectives

 

O      No employment arrangements that provide for multi-year guaranteed salary increases or non-performance-based cash incentive awards for executive officers

P      PSU awards that are designed to be aligned with long-term objectives and the creation of shareholder value

 

O      No supplemental executive retirement plans

P      Substantial portion of compensation opportunity is variable

 

O      No grants of exclusively time-based annual awards to our executive officers

P      Our CEO’s equity awards vest over at least a three-year period

 

O      No severance benefits to our executive officers exceeding three times base salary and their annual cash incentive award

P      Independent, external compensation consultant

 

O      No “golden parachute” excise tax gross ups

P      Clawback features are incorporated into the short-term annual cash incentive programs for all executive officers

 

O      No repricing, buyout or exchange of underwater stock options

P      Use of multiple performance measures and caps on potential incentive payments

 

O      No excessive perquisites

P      Our Amended and Restated 2014 Equity Incentive Plan, as amended (the “2014 Plan”) requires minimum one-year vesting period for 95% of share-based awards granted under the 2014 Plan

 

O      Our currently outstanding unvested equity awards are not subject to single trigger acceleration of vesting in the event of a change of control

P      Annual risk assessment of incentive compensation programs

   

P      Double-trigger acceleration of all vesting for all currently outstanding unvested equity awards in connection with a change in control

   

4

INFORMATION ABOUT THE ANNUAL MEETING

1.      Why am I receiving these materials?

Our Board has sent you this Proxy Statement and the accompanying WHITE proxy card to ask for your vote, as a shareholder of HomeStreet, on certain matters that will be voted on at the Annual Meeting. As a shareholder, you are invited to attend and are entitled to and requested to vote on the proposals set forth in this Proxy Statement. For more information on the participants in the Board’s solicitation, please see “Participants in the Solicitation” on page 77 of this Proxy Statement.

2.      Who are the Blue Lion Parties?

On April 19, 2019, Blue Lion Opportunity Master Fund, L.P., a Cayman Islands limited partnership (“BLOMF”), and certain of its affiliates, including Roaring Blue Lion Capital Management, L.P. (“Roaring Blue Lion Capital”) and Charles W. Griege, Jr. (collectively, the “Blue Lion Parties”) provided notice to HomeStreet of their intent to nominate two directors for election to the Board and present shareholder proposals at the Annual Meeting. You may receive proxy solicitation materials from the Blue Lion Parties. The Company is not responsible for the accuracy of any information provided by or relating to the Blue Lion Parties or any of their affiliates contained in any proxy solicitation materials filed or disseminated by, or on behalf of, the Blue Lion Parties or any of their affiliates or any other statements that they may otherwise make. Please also note that Mr. Griege has filed a notice of change in control with the Washington State Department of Financial Institutions (the “DFI”) in connection with the Blue Lion Parties’ intent to obtain proxies for 25% or more of the Company’s outstanding shares. Mr. Griege’s notice is subject to DFI review and non-disapproval or denial after a completed filing is made. If Mr. Griege’s notice is denied by the DFI and the Blue Lion Parties obtain proxies to vote 25% or more of the Company’s outstanding shares, such proxies will be “ineffective and void” pursuant to Section 30A.04.405(7) of the Revised Code of Washington. Under these circumstances, shares represented by proxies granted to the Blue Lion Parties would not be voted at the Annual Meeting.

The Company’s Board of Directors does not endorse any of the Blue Lion Parties’ nominees and unanimously recommends that you vote “FOR” the election of each of the Board’s nominees and the Company’s proposals recommended by your Board on the enclosed WHITE proxy card. The Board also recommends that you vote “AGAINST” the Blue Lion Parties’ proposal regarding declassification of the Board, as the Company has made its own proposal regarding declassification, and makes no recommendation with respect to the remainder of the Blue Lion Parties’ proposals. The Board urges you to disregard any materials and NOT to sign, return or vote on any proxy card sent to you by or on behalf of the Blue Lion Parties. Voting to “withhold” with respect to any of the Blue Lion Parties’ nominees on a proxy card sent to you by the Blue Lion Parties is not the same as voting for the Board of Directors’ nominees, because a vote to “withhold” with respect to any of the Blue Lion Parties’ nominees on the Blue Lion Parties’ proxy card will revoke any WHITE proxy you may have previously submitted. To support the Board’s nominees, you should vote “FOR” the Board’s nominees on the WHITE proxy card. If you have already signed any proxy card provided by or on behalf of the Blue Lion Parties, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage-paid envelope provided or to change your vote using the Internet or telephone by following the instructions on the WHITE proxy card or by voting in person at the Annual Meeting. Only your latest-dated proxy will count.

3.      Who is entitled to vote?

All shareholders of record of HomeStreet common stock at the close of business on May 13, 2019 (the “Record Date”) are entitled to notice of and to vote at the Annual Meeting.

4.      How many shares are entitled to vote at the Annual Meeting?

As of the Record Date, 26,968,046.6 shares of our common stock were issued, outstanding and entitled to vote at the Annual Meeting.

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5.      How many votes do I have?

Each share of common stock you owned on the Record Date is entitled to one vote for each director candidate. You may NOT cumulate votes relating to the election of directors. For the other matters presented at this meeting, you are entitled to one vote for each share of common stock you owned of record on the Record Date.

6.      Who is a registered shareholder and who is a beneficial shareholder?

Registered Shareholders:    A “registered shareholder” is a person or entity whose name appears in the Company’s registered list of shareholders as an owner of one or more shares of the Company’s common stock. If you are a registered shareholder, these proxy materials are being sent directly to you.

Beneficial Shareholders:    A “beneficial shareholder” is a person or entity whose shares of the Company’s common stock are held by a bank, broker or other nominee (a.k.a. in “street name”). Most holders of our common stock hold their shares beneficially through a bank, broker or other nominee rather than of record directly in their own name. If you are a beneficial shareholder, these proxy materials are being forwarded to you by your bank, broker or other nominee who is considered the registered shareholder of those shares. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares and you are also invited to attend the Annual Meeting. Your bank, broker or other nominee has enclosed a voting instruction form for you to use in directing your bank, broker or other nominee as to how to vote your shares. You must follow these instructions in order for your shares to be voted. Your nominee is required to vote those shares in accordance with your instructions. Because of the contested nature of the proposals, if you do not give instructions to your broker, your broker will not be able to vote your shares with respect to the election of directors or any of the other proposals. We urge you to instruct your broker or other nominee, by following the instructions on the enclosed WHITE voting instruction form, to vote your shares in line with the Board’s recommendations.

7.      What is a proxy?

A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. We have designated Mark R. Ruh, our Chief Financial Officer, and Godfrey B. Evans, our Corporate Secretary, General Counsel and Chief Administrative Officer, as the Company’s proxies for the Annual Meeting.

8.      How do I vote?

Registered Shareholders:    If you are a “registered shareholder,” you can vote your shares in the following four ways:

•        By Internet:    You may vote by submitting a proxy over the Internet. Go to www.voteproxy.com and follow the instructions. You should have your proxy card, including your control number, in hand when you access the website.

•        By Telephone:    Shareholders located in the United States that receive proxy materials by mail may vote by submitting a proxy by telephone by calling the toll-free telephone number on the WHITE proxy card or voting instruction form and following the instructions.

•        By Mail:    If you received proxy materials by mail, you can vote by submitting a proxy by mail by completing, signing and dating the WHITE proxy card and mailing it in the enclosed, postage pre-paid envelope.

•        In Person at the Annual Meeting:    If you attend the Annual Meeting, you may deliver your completed WHITE proxy card in person or you may vote by completing a ballot, which we will provide to you at the Annual Meeting. You are encouraged to complete, sign and date the WHITE proxy card and mail it in the enclosed postage pre-paid envelope regardless of whether you plan to attend the Annual Meeting.

Beneficial Shareholders:    If you are a “beneficial shareholder,” then you will receive instructions from your bank, broker or other nominee on how to vote your shares.

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Pursuant to New York Stock Exchange (“NYSE”) rules applicable to brokers, if a broker receives competing proxy materials from the Blue Lion Parties (in addition to the Company’s proxy materials), the broker will be prohibited from exercising discretionary authority with respect to any of the proposals to be voted on if the broker did not receive voting instructions from the beneficial shareholder. This is referred to as a “broker non-vote.” In these cases, those shares will not be counted for the purpose of determining whether a quorum is present and will not be considered votes cast on the proposals to be considered at the Annual Meeting.

If you are a “beneficial shareholder,” you will need proof of ownership to be admitted to the Annual Meeting. For more information, please see “Information about the Annual Meeting — How do I attend the Annual Meeting” on page 9 of this Proxy Statement.

9.      What should I do if I receive more than one WHITE proxy card or set of proxy materials from the Company?

Your shares may be owned through more than one brokerage or other share ownership account. In order to vote all of the shares that you own, you must either sign and return all of the WHITE proxy cards or follow the instructions for any alternative voting procedure on each of the WHITE proxy cards that you receive.

If the Blue Lion Parties proceed with their previously announced nominations and proposals, the Company will likely conduct multiple mailings prior to the Annual Meeting date to ensure shareholders have the Company’s latest proxy information and materials to vote. The Company will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. We encourage you to vote every WHITE proxy card you receive. The latest dated proxy you submit will be counted, and, if you wish to vote as recommended by the Board of Directors, then you should only submit a WHITE proxy card.

10.    What should I do if I receive a proxy card or other proxy materials from the Blue Lion Parties?

The Blue Lion Parties have notified the Company that they intend to solicit proxies in support of two directors proposed by the Blue Lion Parties for election to the Board and two shareholder proposals. The Blue Lion Parties have since filed preliminary proxy materials with the SEC indicating their intent to solicit proxies in support of the two directors proposed by the Blue Lion Parties for election to the Board and two of the three shareholder proposals. You may receive proxy solicitation materials from the Blue Lion Parties. The Company is not responsible for the accuracy of any information provided by or relating to the Blue Lion Parties or their nominees contained in proxy materials filed or disseminated by or on behalf of the Blue Lion Parties or any other statements that the Blue Lion Parties may make.

The Company’s Board of Directors does not endorse any of the Blue Lion Parties’ nominees and unanimously recommends that you vote “FOR” the election of each of the Board’s nominees and the Company’s proposals on the enclosed WHITE proxy card. The Board also recommends that you vote “AGAINST” the Blue Lion Parties’ two shareholder proposals. The Board urges you to disregard any materials and NOT to sign, return or vote any proxy card sent to you by or on behalf of the Blue Lion Parties. Voting to “withhold” with respect to any of the Blue Lion Parties’ nominees on a proxy card sent to you by the Blue Lion Parties is not the same as voting for the Board of Directors’ nominees, because a vote to “withhold” with respect to any of the Blue Lion Parties’ nominees on the Blue Lion Parties’ proxy card will revoke any WHITE proxy you may have previously submitted. To support the Board’s nominees, you should vote “FOR” the Board’s nominees on the WHITE proxy card. If you have already signed any proxy card provided by or on behalf of the Blue Lion Parties, you have every legal right to change your vote by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage-paid envelope provided or to vote using the Internet or telephone by following the instructions on the WHITE proxy card. Only your latest-dated proxy will count.

If you have any questions or need assistance voting, please contact Okapi Partners LLC (“Okapi”), our proxy solicitor assisting us in connection with the Annual Meeting. Shareholders, banks and brokers may call toll free at (877) 566-1922.

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11.    Can I revoke my proxy?

Yes. You can revoke your proxy and/or change your vote at any time prior to the Annual Meeting. Only your latest dated proxy will count.

Registered Shareholders:    If you are a “registered shareholder” who has properly executed and delivered a proxy, you may revoke such proxy at any time before the Annual Meeting in any of the following ways:

•        submitting another proxy with a later date by telephone, by Internet or by signing, dating and returning your proxy card using the instructions on your proxy card;

•        sending a written notice of revocation to our Corporate Secretary at HomeStreet, Inc., 601 Union Street, Suite 2000, Seattle, Washington 98101; or

•        voting in person at the Annual Meeting.

Beneficial Shareholders:    If you are a “beneficial shareholder,” you may change your vote by submitting new voting instructions to your nominee in accordance with such nominee’s procedures.

If you have already signed any proxy card provided by or on behalf of the Blue Lion Parties, you have every legal right to change your vote by using the enclosed WHITE proxy card to vote TODAY by telephone or by Internet using the instructions on the WHITE proxy card or by signing, dating and returning the WHITE proxy card in the postage-paid envelope provided. Please note that voting to “withhold” with respect to any of the Blue Lion Parties’ nominees on a proxy card sent to you by the Blue Lion Parties is not the same as voting for the Board of Directors’ nominees, because a vote to “withhold” with respect to any of the Blue Lion Parties’ nominees on the Blue Lion Parties’ proxy card will revoke any WHITE proxy you may have previously submitted. To support the Board’s nominees, you should vote “FOR” the Board’s nominees on the WHITE proxy card.

12.    How will my shares be voted if I return the WHITE proxy card?

The shares represented by any proxy card that is properly executed and received by the Company prior to or at the Annual Meeting will be voted in accordance with the specifications made on that proxy card. Where a choice has been specified on the WHITE proxy card with respect to the proposals, the shares represented by the WHITE proxy card will be voted in accordance with the specifications.

The Board is not aware of any matters that are expected to come before the Annual Meeting other than those described in this Proxy Statement. If any other matter should be presented at the Annual Meeting upon which a vote may be properly taken, shares represented by all WHITE proxy cards received by the Board will be voted with respect thereto at the discretion of the person or persons named as proxies in the enclosed WHITE proxy card.

13.    What happens if I sign and return my WHITE proxy card, but don’t mark my votes?

If you return a validly executed WHITE proxy card without indicating how your shares should be voted on a matter and you do not revoke your proxy, your proxy will be voted: “FOR” the election of the three director nominees of the Board set forth on the WHITE proxy card (Proposal 1); “FOR” the approval of the advisory (non-binding) resolution on the compensation of the Company’s named executive officers as described in the Proxy Statement under “Executive Compensation” (Proposal 2); “FOR” the ratification on an advisory (non-binding) basis of the appointment of Deloitte & Touche LLP (“Deloitte & Touche” or “Deloitte”) as the independent registered public accounting firm of the Company for the year ending December 31, 2019 (Proposal 3); “FOR” the ratification of an amendment to the Bylaws to adopt Washington State as the exclusive forum for shareholders actions against the Company (Proposal 4); “FOR” the approval of an amendment to the Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors (Proposal 5); “FOR” the approval of an amendment to our Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes (Proposal 6); “AGAINST” the shareholder proposal related to amendment of the Bylaws (Proposal 7); and “AGAINST” the shareholder proposal related to the independence of the Chairman of the Board (Proposal 8).

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14.    Will my shares be voted if I do nothing?

No.

If your shares are registered in your name, you must sign and return a proxy card in order for your shares to be voted, unless you vote via telephone or the Internet or vote in person at the Annual Meeting. Pursuant to NYSE rules applicable to brokers, if a broker receives competing proxy materials from the Blue Lion Parties (in addition to the Company’s proxy materials), the broker will be prohibited from exercising discretionary authority with respect to any of the proposals to be voted on if the broker did not receive voting instructions from the beneficial shareholder. This is referred to as a “broker non-vote.” In these cases, those shares will not be counted for the purpose of determining whether a quorum is present and will not be considered votes cast on the proposals to be considered at the Annual Meeting. Please also note that declining to vote will have the effect of a vote “against” the proposals to amend the Articles of Incorporation, as approval of those proposals requires the affirmative vote of two-thirds of our outstanding shares, regardless of the number of shares that are present in person or by proxy at the Annual Meeting.

YOUR VOTE IS VERY IMPORTANT.    To assure that your shares are represented at the Annual Meeting, we urge you to vote TODAY by completing, signing and dating the enclosed WHITE proxy card and promptly mailing it in the postage-paid envelope provided, or to vote using the Internet or telephone by following the instructions on the WHITE proxy card, whether or not you plan to attend the Annual Meeting. You can revoke your proxy at any time before the proxy or proxies you appointed cast your votes. If your bank, broker or other nominee is the holder of record of your shares (i.e., your shares are held in “street name”), you will receive voting instructions from such holder of record. You must follow these instructions in order for your shares to be voted. We urge you to instruct your broker or other nominee, by following the instructions on the enclosed WHITE voting instruction form, to vote your shares in line with the Board’s recommendations on the WHITE voting instruction form.

15.    How do I attend the Annual Meeting?

Only HomeStreet shareholders or their duly authorized and constituted proxies may attend the Annual Meeting. Proof of ownership of our common stock must be presented in order to be admitted to the Annual Meeting. If you are a beneficial shareholder and you plan to attend the Annual Meeting in person, you must bring a brokerage statement, the proxy card mailed to you by your bank, broker or other nominee or other proof of ownership as of the close of business on May 13, 2019, the Record Date, to be admitted to the Annual Meeting. Otherwise, proper documentation of a duly authorized and constituted proxy must be presented. This proof can be a brokerage statement or letter from a broker, bank or other nominee indicating ownership on the Record Date, a proxy card, or a valid, legal proxy provided by your broker, bank or other nominee.

After the chairman of the meeting opens the Annual Meeting, further entry will be prohibited. No cameras, recording equipment, electronic devices, large bags, briefcases or packages will be permitted in the Annual Meeting. The use of mobile phones during the Annual Meeting is also prohibited. All persons attending the Annual Meeting will be required to present a valid government-issued picture identification, such as a driver’s license or passport, to gain admittance to the Annual Meeting.

16.    What constitutes a “quorum”?

A majority of the outstanding shares of common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Votes withheld and abstentions will be counted as present or represented for purposes of determining the presence or absence of a quorum at the Annual Meeting. Broker non-votes (to the extent that the Blue Lion Parties deliver competing proxy materials with respect to the Annual Meeting) will not be counted as present or represented for purposes of determining the presence or absence of a quorum at the Annual Meeting. Without a quorum, no business may be transacted at the Annual Meeting. If less than a quorum of the outstanding shares is represented at the Annual Meeting, a majority of the shares so represented may adjourn the Annual Meeting without further notice.

17.    What is the effect of abstentions, withhold votes and broker non-votes?

If you specify that you wish to “abstain” or “withhold” from voting on an item, then your shares will not be voted on that particular item.

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Withhold votes will not have an effect on the election of directors (Proposal 1) because, pursuant to our Amended and Restated Bylaws (the “Bylaws”), directors are elected by a plurality of the votes cast in a contested election. Because the votes cast in favor of the action must exceed the votes cast opposing the action in order to approve Proposals 2, 3, 4, 7 and 8 at the Annual Meeting, abstentions will not have an effect on the outcome of those proposals. Because the affirmative vote of at least two thirds of the outstanding shares of the Company is required to approve Proposals 5 and 6, abstentions will have the effect of a vote against those proposals.

If a broker receives competing proxy materials, such broker will be prohibited from exercising discretionary authority with respect to any of the proposals to be voted on if such broker did not receive voting instructions from the beneficial shareholder. This is referred to as a “broker non-vote.” In these cases, those shares will not be counted for the purpose of determining whether a quorum is present and will not be considered votes cast on the proposals to be considered at the Annual Meeting.

We urge you to provide voting instructions on a WHITE proxy card or a provided voting instruction form to the nominee that holds your shares by carefully following the instructions provided in their notice to you.

18.    What vote is required to approve each of the matters to be voted on at the Annual Meeting?

Proposal

 

Vote Required

 

Broker Discretionary Voting

Proposal 1:    Election of three Class II directors

 

Plurality of votes cast*

 

No

Proposal 2:    Approval on an advisory (non-binding) basis of the compensation of the Company’s named executive officers

 

Number of votes cast in favor exceeds number of votes cast against

 

No

Proposal 3:    Ratification of an advisory (non-binding) basis of the appointment of our independent auditors for 2019

 

Number of votes cast in favor exceeds number of votes cast against

 

No**

Proposal 4:    Ratification of an amendment to the Bylaws to select Washington State as the exclusive forum for shareholder actions against the Company

 

Number of votes cast in favor exceeds number of votes cast against

 

No

Proposal 5:    Approval of an amendment to the Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors

 

The affirmative vote of two-thirds of the outstanding shares

 

No

Proposal 6:    Approval of an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes

 

The affirmative vote of two-thirds of the outstanding shares

 

No

Proposal 7:    Shareholder proposal related to declassification of the Board

 

Number of votes cast in favor exceeds number of votes cast against

 

No

Proposal 8:    Shareholder proposal related to the independence of the Chairman of the Board

 

Number of votes cast in favor exceeds number of votes cast against

 

No

____________

*        Under the Bylaws, the voting standard in a contested election is a plurality vote standard. See “What vote is required to elect directors?” below.

**      No broker discretionary voting allowed on this proposal to the extent the broker receives competing proxy materials (in addition to the Company’s proxy materials) with respect to the Annual Meeting.

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19.    What vote is required to elect directors?

Our Bylaws provide that an election is considered “contested,” and will be subject to a plurality vote standard, if the Secretary of the Company receives a notice that a shareholder has nominated a person for election to the Board in compliance with the advance notice requirements for shareholder nominees set forth in Sections 1.12 and 1.13 of our Bylaws and such nomination has not been withdrawn by the advance notice deadline set forth in that section.

The Company received notice from the Blue Lion Parties of their intent to nominate two individuals for election to the Board in compliance with the advance notice requirements of the Bylaws, which notice was not withdrawn prior to the advance notice deadline for the Annual Meeting. As a result, the election of directors at the Annual Meeting will be conducted under a plurality vote standard. Therefore, the three candidates receiving the largest number of votes cast for the Class II director positions will be elected. You may vote “for” or “withhold” with respect to each nominee for election to the Board. Withhold votes will have no effect on the election of directors at the Annual Meeting.

The following will not be votes cast and will have no effect on the election of any director nominee: (i) a share whose ballot is marked as withheld; (ii) a share otherwise present at the Annual Meeting but for which there is an abstention; and (iii) a share otherwise present at the Annual Meeting as to which a shareholder gives no authority or direction (other than a share voted pursuant to a signed proxy card on which the shareholder has not indicated any voting direction).

You may not cumulate votes relating to the election of directors.

20.    What vote is required to approve the advisory (non-binding) proposal on the compensation of the Company’s named executive officers?

The proposal to approve, on an advisory (non-binding) basis, the compensation of the Company’s named executive officers will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal.

21.    What vote is required to approve the advisory (non-binding) proposal on the ratification of the appointment of the Company’s independent registered public accountants?

The proposal to approve, on an advisory (non-binding) basis, the appointment of Deloitte & Touche, LLP as HomeStreet’s independent registered public accounting firm for the year ending December 31, 2019 will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal.

22.    What vote is required for the ratification of an amendment to the Bylaws to make Washington State the exclusive forum for shareholder actions against the Company?

The proposal to ratify an amendment to the Bylaws to make Washington State the exclusive forum for shareholder actions against the Company will be adopted if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposal.

23.    What vote is required for the approval of an amendment to the Articles of Incorporation to declassify the Board of Directors?

The proposal to approve an amendment to the Articles of Incorporation to declassify the Board of Directors and provide for the annual election of directors will be approved if two-thirds of the outstanding shares of the Company are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have the effect of a vote against this proposal.

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24.    What vote is required for the approval of an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to approve major corporate changes?

The proposal to approve an amendment to the Articles of Incorporation to eliminate the supermajority shareholder vote requirement to authorize certain extraordinary transactions will be approved if two-thirds of the outstanding shares of the Company are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have the effect of a vote against this proposal.

25.    What vote is required for the approval of the Blue Lion Parties’ shareholder proposals?

The Blue Lion Parties’ shareholder proposals will be approved if a majority of the votes present in person or by proxy and voting on this matter are cast “for” the proposal. You may vote “for,” “against” or “abstain” from approving the proposal. Abstentions will have no effect on the outcome of the proposals.

26.    Who will count the votes?

IVS Associates, Inc. will serve as the independent inspector of election and, in such capacity, will count and tabulate the votes.

27.    Where can I find the results of the Annual Meeting?

We intend to announce preliminary voting results at the Annual Meeting and intend to publish final results in a Current Report on Form 8-K, which we will file with the Securities and Exchange Commission (the “SEC”) within four business days after the Annual Meeting.

28.    Who can help answer any other questions I may have?

If you have any questions or require any assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:

OKAPI PARTNERS LLC

1212 Avenue of the Americas, 24th Floor

New York, NY 10036

Toll-Free: (877) 566-1922

Email: [email protected]

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BACKGROUND TO THE SOLICITATION

Between 2012 and 2017, the Company’s senior management team spoke with representatives of Roaring Blue Lion Capital on numerous occasions as part of the Company’s engagement and investor outreach efforts.

In February 2017, when Roaring Blue Lion Capital or entities related thereto owned approximately 1% of the outstanding shares of Company common stock, Charles W. Griege, Jr., Roaring Blue Lion Capital’s founder, offered to join the Board. The Company considered this offer and declined to appoint Mr. Griege as a director at that time.

From September 26, 2017 through November 16, 2017, Roaring Blue Lion Capital and related entities purchased 1,152,576 shares of Company common stock, increasing its beneficial ownership of Company common stock from 347,744 shares (just over 1% of the outstanding shares) to 1,500,320 shares (approximately 5.58% of the outstanding shares) as of November 20, 2017.

On November 20, 2017, Mr. Griege sent a letter to Mr. Mason expressing Mr. Griege’s concerns regarding the Company’s business strategy, stock price performance, growth and diversification plans and the growth of the Company’s mortgage banking business. The letter stated, “we want to revisit our offer of representation on your board” and that “if we cannot amicably reach an agreement on our request, we intend to exercise our rights as shareholders.” Mr. Griege also requested a meeting with Mr. Mason and the Board. On the same day, Mr. Griege filed a copy of this letter as an exhibit to a Schedule 13D filed jointly with Roaring Blue Lion Capital.

Over the course of the next two months, the Board and Mr. Mason engaged extensively with Mr. Griege, inviting him to present to the full Board and to interview as a director candidate, and considered his request to be added as a director of the Company. During his presentation to the Board on December 21, 2017, Mr. Griege stated that if the Board did not appoint him to the Board, Roaring Blue Lion Capital would seek to obtain two Board seats through a proxy contest.

On January 8, 2018, the HRCG Committee (comprised of Victor H. Indiek, Thomas E. King, George “Judd” Kirk and Douglas I. Smith), Scott M. Boggs, in his capacity as lead independent director of the Board, and Mr. Mason met with Mr. Griege in Seattle for several hours to interview him as a director candidate. Following the interview, and after extensive review of his background, experience and qualifications, along with information provided by Mr. Griege, including during both the January 8, 2018 interview and his December 21, 2017 presentation to the Board, the HRCG Committee concluded that appointing Mr. Griege to the Board was not in the best interest of all shareholders and voted unanimously not to recommend Mr. Griege as a director candidate to the Board.

On January 10, 2018, Mr. Griege returned a completed copy of his director questionnaire, which was immediately distributed to the Board as part of the materials for consideration prior to the January 11, 2018 special meeting of the Board.

On January 11, 2018, the Board held a special meeting to consider Mr. Griege’s request to be appointed to the Board. In considering such request, the Board took into account the information received from and provided by Mr. Griege to date and the unanimous recommendation against his appointment by the HRCG Committee in addition to the fact that Mr. Griege was not a diverse candidate, and the Board unanimously voted to decline Mr. Griege’s request to join the Board as not in the best interests of all shareholders.

Also on January 11, 2018, the Company sent a letter to Mr. Griege, informing him that the Board had decided not to appoint him as a director. On the same day, the Company also issued a letter to shareholders, filed as an exhibit to a Current Report on Form 8-K filed with the SEC that same day, announcing and explaining the Board’s decision not to appoint Mr. Griege to the Board.

Throughout the remainder of January and February, Mr. Griege publicly expressed his views relating to the Company’s performance relative to its peers, results of operations and intention to nominate candidates for election. The Company continued to provide opportunities for Mr. Griege to speak directly with management and members of the Board, including a conference call with the Company’s Chief Executive Officer, Chief Financial Officer and Director of Investor Relations to discuss the fourth quarter and year-end results from 2017 with Mr. Griege and his associates.

On February 23, 2018, the eve of the deadline for shareholder nominations and proposals for the Company’s 2018 annual meeting of shareholders (the “2018 Annual Meeting”), an affiliate of Roaring Blue Lion Capital delivered a letter to the Board (the “2018 Notice Letter”) purporting to give notice of its nomination of two director candidates and three shareholder proposals at the Company’s 2018 Annual Meeting. On March 1, 2018, the Company advised

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Roaring Blue Lion Capital that the notice failed to comply with the requirements of the Bylaws. After the notice deadline under the Bylaws, Roaring Blue Lion Capital attempted to correct the deficiencies. However, the Company informed Roaring Blue Lion Capital that the notice failed to satisfy the requirements of the Bylaws, it was expected that the chairman of the 2018 Annual Meeting would disregard Roaring Blue Lion Capital’s nominees and proposals.

On March 13, 2018, Roaring Blue Lion Capital and related entities filed suit against the Company in the Superior Court of Washington in and for King County (the “Court”) seeking a declaratory judgment that the Notice Letter complied with the Bylaws, along with a motion for a preliminary injunction enjoining the Company from rejecting the Notice Letter as invalid.

On March 30, 2018, at a hearing before the Court with respect to Roaring Blue Lion Capital’s motion for preliminary injunction, the Court ruled in favor of the Company, affirming the Company’s position that Roaring Blue Lion Capital failed to comply with the Bylaw requirements for notice of director nominations and shareholder proposals.

Following the Court’s determination, Roaring Blue Lion Capital and related entities announced that they would no longer solicit proxies for their own nominees or proposals but would instead be filing a proxy statement that it would use to solicit votes “against” certain Board nominees and one or more of the Company’s proposals.

On May 8, 2018, the Company received a notice from the DFI that Roaring Blue Lion Capital had been provided with a copy of the Interpretive Statement by the DFI as of that date.

On May 21, 2018, Roaring Blue Lion Capital disclosed that it had received a notice from the DFI regarding the requirement to file an application prior to soliciting proxies for 25% or more of the Company’s common stock and that it would therefore be encouraging shareholders to vote on the Company’s white proxy card rather than seeking to solicit additional proxies on its blue proxy card.

On May 24, 2018, at the 2018 Annual Meeting, the Company’s shareholders re-elected each of the Company’s director candidates with more than a majority of votes cast for each director, and approved each of the Company’s proposals. Mr. Griege was given an opportunity to address shareholders at the 2018 Annual Meeting. The Company counted votes on blue proxy cards on a provisional basis, subject to the final determination as to the validity of the blue proxy cards. Notably, whether or not votes on blue proxy cards are counted, all of the Board’s nominees were reelected by a majority of the votes cast and all of the Company’s proposals have been approved.

On June 7, 2018, the Company’s two newest directors, Sandra A. Cavanaugh and Mark Patterson, had a telephone call with Mr. Griege. On June 12, 2018, Mr. Griege followed up with a letter, to which the Company’s regular outside corporate counsel, Orrick, Herrington & Sutcliffe LLP, responded on October 19, 2018.

On June 22, 2018, representatives of Roaring Blue Lion Capital, including Mr. Griege, spoke by telephone with Mr. Mason, Mr. Ruh and a representative from the Company’s investor relations department to discuss the Company’s recently announced strategic initiative to close or sell certain home lending operations in Arizona and parts of California as well as other questions from Mr. Griege and his colleagues regarding the Company’s operations, forecasted cost savings, corporate governance matters and strategic direction.

On July 12, 2018, representatives of Roaring Blue Lion Capital, including Mr. Griege, again spoke by telephone with Mr. Mason, Mr. Ruh and a representative from the Company’s investor relations department to discuss the Company’s announced sale of mortgage servicing rights and the recently announced change in the Company’s Lead Independent Director from Scott Boggs to Donald Voss.

On July 31, 2018, Justin Hughes of Roaring Blue Lion Capital had informal meetings with Mr. Ruh and a representative of the Company’s investor relations department at the KBW Community Bank Investor Conference.

On August 8, 2018, the Corporate Secretary of the Company received an email from Mr. Griege requesting a telephone call between representatives of Roaring Blue Lion Capital and Mr. Voss and providing specific questions that he wished to discuss with Mr. Voss.

On August 16, 2018, Mr. Griege followed up on his email of August 8, 2018. On the same day, the Corporate Secretary replied to Mr. Griege apologizing that he had not responded to the email as he was out on personal matters and noting that the request and questions had been forwarded to Mr. Voss and a response was in process.

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On August 27, 2018, Mr. Voss provided detailed response to the questions asked by Mr. Griege in his email from August 8, 2018. Mr. Voss further offered a follow-up call if Mr. Griege had additional questions he wished to discuss.

From August 28 through September 19, 2018, as part of the Company’s shareholder engagement process, representatives of the Company’s investor relations department contacted the Company’s significant shareholders to offer a meeting or telephone call to discuss shareholder questions and concerns outside of the annual meeting cycle. Roaring Blue Lion Capital was included in this outreach.

On September 12, 2018, Mr. Griege sent an email to the Company’s Corporate Secretary requesting a telephone call with Mr. Voss following up on the communications between Mr. Griege and Mr. Voss. This email was forwarded to Mr. Voss.

On September 18, 2018, the Corporate Secretary provided a response to Mr. Griege to advise him that the Company was working with Mr. Voss to find times that he would be available for such a call.

On October 17, 2018, Mr. Griege sent an email to the Company’s Corporate Secretary requesting a meeting with the Board following the release of the Company’s third quarter 2018 earnings release and prior to November 15, 2018 to discuss with the Board to the Company’s strategic plans, procedures for calling a special meeting and management accountability.

Also on October 17, 2018, Mr. Griege sent a letter to Mr. Mason criticizing the Company’s performance, alleging that Mr. Voss had refused to meet with Blue Lion Capital, criticizing the Company for the revised special meeting procedures adopted by the Board in July 2018 and shareholder engagement procedures and requesting a meeting with the full Board. On the same day, Roaring Blue Lion Capital filed an amendment to their Form 13D, attaching the letter to Mr. Mason as an exhibit thereto.

On October 22, 2018, Mr. Mason sent a letter to Mr. Griege responding to his letter of October 17, 2018 and providing a summary of the many meetings Mr. Griege and Roaring Blue Lion Capital have had with the Board and management team of the Company since the initial filing of Roaring Blue Lion Capital’ Schedule 13D, in addition to the Company’s public response to many of the letters and other filings provided by Roaring Blue Lion Capital in that time. Mr. Mason noted in his letter that the Board would consider his request for a meeting at the next regularly scheduled Board meeting. On the same day, the Company filed a copy of this letter with the SEC as an exhibit to a Current Report on Form 8-K.

On October 31, 2018, Mr. Mason, Lead Independent Director, Donald Voss, and independent director, Mark Patterson, along with members of the Company’s investor relations and legal departments, spoke by telephone with Mr. Griege and his associates from Roaring Blue Lion Capital. Mr. Voss answered Mr. Griege’s questions regarding his background and qualifications, and Messrs. Voss, Patterson and Mason then discussed the Company’s operations, strategic plans, diversification strategy, stock price performance and expectations, and shareholder engagement. During the course of this call, Mr. Voss communicated to Mr. Griege that the Board had determined it would not be appropriate or productive at that time to have Mr. Griege and Roaring Blue Lion Capital meet with the full Board, especially given the amount of access Roaring Blue Lion Capital has had to the Board, individual directors and management in the prior year.

On November 1, 2018, a representative of the Company’s investor relations department emailed Mr. Hughes to arrange an additional conversation to discuss the Company’s third quarter results following the issuance of the Company’s earnings release.

On November 9, 2018, Mr. Griege and Mr. Hughes spoke by telephone with Mr. Mason, Mr. Ruh and a representative of the Company’s investor relations department to discuss third quarter earnings and financial and operational results.

On January 18, 2019, the Company announced that it had approved a one-time waiver and changes to the window for shareholders to provide timely advance notice of any director nomination or shareholder proposal under the Bylaws in connection with the Annual Meeting, and that to be timely any such notice must be received between March 31, 2019 and April 30, 2019.

Also on January 18, 2019, representatives of Roaring Blue Lion Capital spoke by telephone with representatives of Sidley Austin LLP, the Company’s outside legal counsel (“Sidley”), to present a proposal from Roaring Blue Lion Capital. The terms of this proposal included (i) the appointment of two directors selected by Roaring Blue Lion

15

Capital, (ii) the resignation of two incumbent directors, (iii) the creation of a new Board committee charged with evaluating a reconfiguration of the Company’s strategy and business, in particular, related to the mortgage business, to be comprised of the two directors designated by Roaring Blue Lion Capital and two incumbent directors, and (iv) the reimbursement of Roaring Blue Lion Capital’s expenses in connection with their shareholder activism campaign against the Company. The proposal also contemplated that Roaring Blue Lion Capital would agree to a standstill with respect to proxy contests, transactions and similar matters and not to disparage the Company, in each case for a period of approximately one year.

On January 28, 2019, representatives of Sidley spoke by telephone with representatives of Roaring Blue Lion Capital to indicate that the Board had considered the proposal of Roaring Blue Lion Capital and believed that it was not in the best interests of all shareholders, but that the Board remained open to continuing discussions with Roaring Blue Lion Capital in order to reach an agreeable resolution.

On February 15, 2019, the Company announced that it would seek buyers to acquire the stand-alone home loan center mortgage originating business and related mortgage servicing rights. On the same day, Roaring Blue Lion Capital issued a press release commending the Company for its announcement.

On February 20, 2019, Mr. Griege, Mr. Hughes and Johnny Guerry of Roaring Blue Lion Capital spoke by telephone with Mr. Mason, Mr. Ruh and a representative of the Company’s investor relations department to discuss the Company’s fourth quarter and 2018 year-end earnings announcement as well as the proposed sale of the stand-alone home loan center mortgage origination business and related mortgage servicing rights.

On April 3, 2019, Mr. Griege requested a copy of the Company’s director and officer questionnaire with respect to the Annual Meeting and indicated that Roaring Blue Lion Capital intended to nominate directors for election at the Annual Meeting.

On April 4, 2019, the Company announced that it had entered into an agreement providing for the sale of substantially all of the assets related to up to 50 stand-alone, satellite and fulfillment offices related to the Bank’s home loan center-based single family mortgage operations for a purchase price of approximately $4.9 million, subject to adjustment (the “Home Loan Center Disposition”). The Company announced that it expected to complete the Home Loan Center Disposition in the second quarter of 2019. The Company further announced that it had sold a significant portion of its mortgage servicing rights related to single family mortgage loans for a total purchase price of approximately $14.3 billion (the “Mortgage Servicing Rights Disposition”). The Company announced that it expected to complete the Mortgage Servicing Rights Disposition in the third quarter of 2019. In connection with the Home Loan Center Disposition and the Mortgage Servicing Rights Disposition, the Company also stated that the Board has approved a plan of exit, pursuant to which the Company will no longer consider mortgage banking to be a separate reportable segment of its financial statements under generally accepted accounting principles applicable to the Company.

On April 11, 2019, Mr. Griege submitted an Interagency Change in Control Notification to the DFI relating to Roaring Blue Lion Capital’s intent to solicit proxies with respect to the Annual Meeting (the “DFI Notification”).

On April 12, 2019, Roaring Blue Lion Capital provided the Company with a copy of the DFI Notification.

On April 19, 2019, an affiliate of Roaring Blue Lion Capital provided notice to the Company of their intent to nominate Mr. Griege and Ronald Tanemura for election to the Board and to present three shareholder proposals at the Annual Meeting (the “2019 Notice Letter”).

On April 22, 2019, Roaring Blue Lion Capital filed an amendment to their Schedule 13D to update their beneficial ownership and provide disclosure regarding the notice of intent to nominate directors and present shareholder proposals for the Annual Meeting.

On April 24, 2019, the Company issued a press release confirming receipt of the 2019 Notice Letter and addressing recent engagements with Roaring Blue Lion Capital.

On May 1, 2019, Sidley delivered a letter to Roaring Blue Lion Capital on behalf of the Company confirming that, assuming the accuracy of the disclosures therein, the 2019 Notice Letter complied with the requirements of the Bylaws with respect to proper notice of director nominations and shareholder proposals for consideration at the Annual Meeting.

16

On May 3, 2019, the Company filed the preliminary version of this Proxy Statement.

On May 7, 2019, the Blue Lion Parties filed preliminary proxy materials with the SEC indicating their intent to solicit proxies in support of the election of Mr. Griege and Mr. Tanemura and in support of two shareholder proposals.

On May 9, 2019, Mr. Griege filed an update to the DFI Notification to provide additional information. On the same day, the DFI deemed the DFI Notification to be complete and accepted it for processing.

On May 10, 2019, the Blue Lion Parties filed the first amendment to the preliminary version of their proxy statement with the SEC.

On May 10, 2019, the Company filed an amended preliminary version of this Proxy Statement with the SEC.

On May 14, 2019, the Blue Lion Parties filed the second amendment to the preliminary version of their proxy statement with the SEC.

Also on May 14, 2019, an affiliate of Roaring Blue Lion Capital provided the Company with an update to the 2019 Notice Letter. Among other things, in the update, the Blue Lion Parties withdrew their proposal relating to the declassification of the Board.

On May 16, 2019, the Company filed the definitive version of this Proxy Statement with the SEC.

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PROPOSAL 1
ELECTION OF DIRECTORS

Introduction

Our Articles of Incorporation currently provide that directors are elected for three-year terms, with one-third of the Board elected at each annual meeting of shareholders. Each director holds office until that director’s successor is duly elected and qualified, or until his or her earlier death or resignation. Our directors are currently classified into the following three classes:

•        Class I directors are Scott M. Boggs, Mark R. Patterson and Douglas I. Smith and their terms will expire at the annual meeting of the shareholders to be held in 2021.

•        Class II directors are Sandra A. Cavanaugh, Victor H. Indiek, Mark K. Mason and Donald R. Voss, and their terms will expire at the Annual Meeting.

•        Class III directors are David A. Ederer, Thomas E. King and George “Judd” Kirk and their terms will expire at the annual meeting of the shareholders to be held in 2020.

Our Bylaws provide that an election is considered “contested,” and will be held under a plurality vote standard, if the Secretary of the Company receives a notice that a shareholder has nominated a person for election to the Board in compliance with the advance notice requirements for shareholder nominees set forth in our Bylaws and such nomination has not been withdrawn by the advance notice deadline set forth in that section, and the Board has not determined before the notice of meeting is given that the shareholder’s nominees do not create a bona fide election contest.

On April 19, 2019, the Blue Lion Parties provided notice to HomeStreet of their intent to nominate two directors for election to the Board at the Annual Meeting in compliance with the advance notice requirements, which notice was not withdrawn prior to the advance notice deadline set forth in our Bylaws, as revised by the Board of Directors for the Annual Meeting. As a result, the election of directors at the Annual Meeting will be conducted under a plurality vote standard.

OUR BOARD OF DIRECTORS URGES YOU TO VOTE “FOR” THE BOARD’S NOMINEES BY USING THE ENCLOSED WHITE PROXY CARD, AND TO DISREGARD ANY MATERIALS, AND NOT TO SIGN, RETURN OR VOTE ON ANY PROXY CARD, THAT MAY BE SENT TO YOU BY OR ON BEHALF OF THE BLUE LION PARTIES OR ANY OF THEIR AFFILIATES.

The Board of Directors

The following table sets forth certain information with respect to HomeStreet’s Board of Directors, including each director’s age as of April 15, 2019.

Director

 

Age

 

Director Since

 

Class

 

Term Expiration

Mark K. Mason, Chairman

 

60

 

2010

 

Class II

 

2019 Annual Meeting

David A. Ederer, Chairman Emeritus

 

76

 

2005

 

Class III

 

2020 Annual Meeting

Donald R. Voss, Lead Independent Director

 

68

 

2015

 

Class II

 

2019 Annual Meeting

Scott M. Boggs

 

64

 

2012

 

Class I

 

2021 Annual Meeting

Sandra A. Cavanaugh(1)

 

64

 

2018

 

Class II

 

2019 Annual Meeting

Victor H. Indiek(2)

 

81

 

2012

 

Class II

 

2019 Annual Meeting

Thomas E. King

 

75

 

2012

 

Class III

 

2020 Annual Meeting

George “Judd” Kirk

 

73

 

2012

 

Class III

 

2020 Annual Meeting

Mark R. Patterson

 

52

 

2018

 

Class I

 

2021 Annual Meeting

Douglas I. Smith

 

55

 

2012

 

Class I

 

2021 Annual Meeting

____________

(1)      Ms. Cavanaugh was appointed to fill a newly created vacancy in Class II of the Board in May 2018; pursuant to the Bylaws, the term of any director appointed to fill a newly created position runs until the next annual meeting of shareholders.

(2)      Mr. Indiek will not stand for reelection at the Annual Meeting.

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HomeStreet’s Board currently consists of 10 members. Our Board is divided into three classes and approximately one-third of our directors are elected each year to serve for a three-year term, until their respective successors are duly elected and qualified or until their earlier resignation or removal. Under our Bylaws, any director nominee’s eligibility to serve as a director of the Company is subject to any required notification to, or approval, nonobjection or requirement of, the Board of Governors of the Federal Reserve System, the DFI or any other regulatory entity having jurisdiction over the Company.

The number of directors may be increased or decreased from time to time by our Board, provided that a reduction in the number of directors may not shorten the term of an incumbent. Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board may be filled solely by the affirmative vote of a majority of the remaining directors then in office, unless otherwise provided by law or by resolution of the Board. All of our directors, except for Mr. Mason, satisfy the definition of “independent director” under the corporate governance rules of the Nasdaq Global Select Market (“Nasdaq”).

Key Qualifications

We review the qualifications and skills of our directors each year as part of our annual Board evaluation and refreshment process. The following table sets forth certain key qualifications and skills of our Board. The lack of a mark for a particular item does not mean that the director does not possess that qualifications, characteristic, skill or experience. We look to each director to be knowledgeable in these areas; however, the mark indicates that the item is a particularly prominent qualification, characteristic, skill or experience that the director brings to our Board. Our Board composition reflects our Board’s desire that directors have the broad expertise and perspective needed to govern our business and strengthen and support senior management.

 

Mark Mason

 

David Ederer

 

Donald Voss

 

Scott Boggs

 

Sandra Cavanaugh

 

Victor Indiek

 

Thomas King

 

George “Judd” Kirk

 

Mark Patterson

 

Doug Smith

Corporate Governance

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

Business Operations

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

Financial Expertise/Literacy

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

Strategic Planning

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

Public Company Board Experience

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

 

P

Industry Experience

 

P

     

P

     

P

 

P

 

P

     

P

   

Accounting

 

P

 

P

 

P

 

P

     

P

 

P

 

P

 

P

 

P

Audit

 

P

 

P

 

P

 

P

     

P

 

P

 

P

 

P

 

P

Marketing

 

P

     

P

     

P

 

P

 

P

 

P

     

P

Regulatory/Risk Management

 

P

     

P

     

P

 

P

 

P

 

P

 

P

 

P

Public Company Executive Experience

 

P

     

P

 

P

 

P

 

P

 

P

           

Capital Management

 

P

                 

P

 

P

     

P

 

P

Technology/Cybersecurity

             

P

     

P

               

Nominees for Election as Directors at the Annual Meeting

Ms. Cavanaugh was appointed to the Board of Directors to fill a vacancy created by a resolution of the Board to expand to ten members in May 2018. Our Bylaws provide that in the event a director is appointed by the Board to fill a vacancy resulting from an increase in the number of directors, the term of such director will expire at the next shareholder meeting at which directors are elected, which is the Annual Meeting. Our Bylaws permit our Board of Directors to establish by resolution the authorized number of directors, which shall be between 7 and 13 directors. Our Board is currently composed of 10 members. However, Victor Indiek is no longer eligible for election to the Board because he has passed the mandatory retirement age in the Company’s Principles of Corporate Governance, as amended on July 26, 2018 (the “Principles of Corporate Governance”). He will therefore not stand for reelection at the Annual Meeting, and the Board has taken action to reduce the size of the Board to nine directors effective at Mr. Indiek’s retirement at the Annual Meeting.

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Upon recommendation of the HRCG Committee, the Board has nominated Sandra A. Cavanaugh, Mark K. Mason and Donald R. Voss for re-election to the Board as Class II directors with a term set to expire at the Company’s annual meeting of shareholders to be held in 2022. Biographical information about each of the nominees is contained in the following section. A discussion of the qualifications, attributes and skills of each nominee that led our Board and the HRCG Committee to the conclusion that they should continue to serve as directors appears following each of the director and nominee biographies. Each of the Board’s nominees have consented to be named in this Proxy Statement and to serve as a director of the Company if elected.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF SANDRA A. CAVANAUGH, MARK K. MASON AND DONALD R. VOSS ON THE WHITE PROXY CARD.

Sandra A. Cavanaugh, Director

Ms. Cavanaugh was appointed to our Board in May 2018 by a unanimous vote of the other directors to fill a vacancy created by the expansion of the Board. Ms. Cavanaugh has more than 30 years of experience in the financial services, banking and mutual fund industries. As president and CEO of U.S. Private Client Services of Russell Investments from January 2010 until her retirement in June 2016, Ms. Cavanaugh oversaw a $45 billion mutual fund business in the U.S. Prior to joining Russell Investments, Ms. Cavanaugh was an executive vice president at SunTrust Bank in 2009, and held senior executive positions at Washington Mutual/JP Morgan Chase from 2007 to 2009, including as president of WM Funds Distributor and Shareholder Services from 1997 to 2007. Ms. Cavanaugh also held various senior positions with AIM Mutual Funds, First Interstate Bank and American Savings Bank. Since her retirement from Russell Investments, Ms. Cavanaugh has provided consulting services to help financial services companies build and execute brand, product and distribution strategies. In addition to her executive career, Ms. Cavanaugh holds several board and advisory roles. She received her bachelor’s degree in History with a minor in business from California State University, Fresno and previously held active NASD/FINRA Securities Licenses Series 7, 24 and 53.

Ms. Cavanaugh was appointed to serve as a director because of her executive management, business and financial experience and her background as an expert in the financial services industry.

Mark K. Mason, Director, Chairman, Chief Executive Officer and President

Mr. Mason has been the Company’s Chief Executive Officer (“CEO”) and a member of the Company’s Board and HomeStreet Bank’s Chairman of the Board and Chief Executive Officer since January 2010. He became Chairman of the Board of the Company in March 2015 after serving as Vice Chairman of the Board since January 2010. Mr. Mason brings extensive business, managerial and leadership experience to our Board. From 1998 to 2002, Mr. Mason was president, chief executive officer and chief lending officer for Bank Plus Corporation and its wholly owned banking subsidiary, Fidelity Federal Bank, where Mr. Mason also served as the chief financial officer from 1994 to 1995 and as chairman of the board of directors from 1998 to 2002. From February 2008 to October 2008, Mr. Mason also served as president of a startup energy company, TEFCO, LLC. He has served on the boards of directors of Hanmi Financial Corp., San Diego Community Bank and The Bjurman Barry Family of Mutual Funds. Mr. Mason is on the boards of directors of the Pacific Bankers Management Institute (the parent company of the Pacific Coast Banking School) and The Washington Bankers Association, and is an advisory board member of Seattle University’s Albers School of Business and Economics. Mr. Mason is a certified public accountant (inactive) and holds a bachelor’s degree in business administration with an emphasis in Accounting from California State Polytechnic University.

Mr. Mason was selected to serve as a director because of his position as our CEO and his significant experience as an executive officer, director and consultant to other banks and mortgage companies, his credit and lending experience, finance and accounting education, and experience and relationships in the banking industry and capital markets.

Donald R. Voss, Lead Independent Director

Mr. Voss was appointed as a member of the Board on March 1, 2015 in connection with the closing of our acquisition of Simplicity Bancorp in Southern California and was named Lead Independent Director by the independent directors of the Board in June 2018. He previously served as a director of Simplicity Bancorp and a member of its audit committee beginning in 2011, and served as chairman of the board of directors from October 2013 until the acquisition of that company by HomeStreet in March 2015. Prior to joining Simplicity’s board of directors, Mr. Voss held a variety of positions in a 25-year career with First Interstate Bank, culminating as an executive vice president and manager of the U.S. Banking Division. Much of his banking experience was with domestic and international financial institutions.

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Mr. Voss is a member of the board of trustees and the executive board and serves as chair of the Planning Committee of Descanso Gardens Guild, Inc., is a member of the board of directors of Valley Water Company, and a member of the executive board of the La Cañada Flintridge Sister Cities Association. He was an elected council member of the City of La Cañada Flintridge from 2006 until March 2015, and served as its mayor from 2010 to 2011. Prior to his election to the City Council, Mr. Voss served for five years as the city’s treasurer. Mr. Voss was a member of the board of the San Gabriel Valley Chapter of the American Red Cross, including three years as chairman of that board, and also served on its audit and executive committees. He also served on the governing boards of the Los Angeles County Division of the League of California Cities, the Sanitation Districts of Los Angeles County, the Southern California Association of Governments, the California Contract Cities Association and the San Gabriel Valley Council of Governments, as well as the advisory board of the Santa Monica Mountains Conservancy, an agency of the state of California. Mr. Voss holds a bachelor’s degree in business administration from the University of Washington and a graduate degree in banking from the Stonier Graduate School of Banking.

Mr. Voss was selected to serve as a director because of his general business, financial, credit and risk management, treasury management, and governance skills and because of his civic involvement.

Directors Continuing in Office

Scott M. Boggs, Director

Mr. Boggs joined HomeStreet Bank in 2006 as a member of its board of directors and became a director of the Company following the closing of our initial public offering in February 2012. Mr. Boggs served as the Lead Independent Director of the Board from March 2015 through June 2018. Prior to joining HomeStreet Bank’s board of directors, Mr. Boggs was employed by Microsoft Corporation from 1993 to 2003 where he served in a variety of positions, including vice president, corporate controller from 1998 to 2003. Mr. Boggs was also an adjunct professor for the Seattle University Albers School of Business and Economics, teaching accounting and information systems from 2004 until 2009. Mr. Boggs previously served as a trustee and chair of the audit committee and budget and investments committee of the Financial Executives Research Foundation from 2002 to 2008, as director, chair of the pension committee and a member of the audit committee of the Cascade Natural Gas Corporation from 2004 to 2007, and director, vice chair of audit committee and designated financial expert of the Safeco family of mutual funds from 2002 to 2004. He is a former member of the Seattle University Internal Audit Advisory Board, the King County Strategic Technology Advisory Council, the Seattle University Accounting Advisory Board and the Financial Executives International. Mr. Boggs started his career as a certified public accountant (currently inactive) with Deloitte, Haskins & Sells from 1977 to 1985, and he received his bachelor’s degree in Accounting from the University of Washington.

Mr. Boggs was selected to serve as a director because of his significant accounting and financial experience, his accounting credentials and degree, and his experience as a designated financial expert on audit committees.

David A. Ederer, Director and Chairman Emeritus of the Board

Mr. Ederer joined HomeStreet Bank in 2004 as a member of its board of directors and in 2005 also became a member of the Board of the Company. Mr. Ederer was elected chairman of our Board in 2009 and served in that role until March 2015, after which he has held the title of Chairman Emeritus. Since 1974 Mr. Ederer has served as the chairman of Ederer Investment Company, a private investment company, and he serves on the board of directors of the Prostate Cancer Foundation (formerly CaPCURE), CRISTA Ministries and the University of Washington Medical Institute for Prostate Cancer Research. Mr. Ederer has previously served as a director of a number of public and private companies, organizations and institutions, including Cascade Natural Gas, University Savings Bank, Farmers New World Life Insurance Company, Children’s Hospital, Patrons of Northwest Civic, Cultural and Charitable Organizations (PONCHO) and Seattle Pacific University. Mr. Ederer is a certified public accountant (inactive) and managed consulting, accounting and auditing services for Price Waterhouse from 1965 to 1974. Mr. Ederer received a bachelor’s degree in business administration from the University of Washington.

Mr. Ederer was selected to serve as a director because of his experience as a director on public company boards, his experience on board committees, his financial expertise and his professional degrees and training in business and management.

21

Thomas E. King, Director

Mr. King joined the board of directors of HomeStreet Bank in 2010 and became a director of the Company following the closing of our initial public offering in February 2012. Prior to joining HomeStreet Bank’s board, Mr. King served as president and chief executive officer, chief credit officer and director of San Diego Community Bank from 2001 to 2006. Since retiring from San Diego Community Bank following its sale to First Banks, Inc. in 2006, Mr. King has provided consulting services to banks and other financial services companies. Prior to joining San Diego Community Bank, he served as executive vice president and chief operating officer of Fullerton Community Bank from 1997 to 1998, president, chief executive officer and director of the Bank of Southern California from 1994 to 1996, and president, chief executive officer and director of Capitol Bank Sacramento from 1992 to 1994. From 1969 to 1992, Mr. King held various senior positions in commercial lending, real estate lending, credit administration, corporate and merchant banking and retail banking at Security Pacific National Bank. He received a bachelor’s degree in business administration from California State University, Northridge.

Mr. King was selected to serve as a director because of his experience as an executive officer, director and consultant to banks and financial services companies, his commercial banking relationships, his financial experience, and his commercial lending and credit administration experience.

George “Judd” Kirk, Director

Mr. Kirk has served as a member of the board of directors of HomeStreet Bank since 2008 and became a director of the Company following the closing of our initial public offering in February 2012. From February 2012 until March 2015, Mr. Kirk served as Lead Independent Director of HomeStreet Bank’s board of directors. Mr. Kirk served as president of Port Blakely Communities, Inc., a residential and mixed-use real estate development company, from 1997 to 2007 and as its chief executive officer from 2007 to 2008. Prior to joining Port Blakely Communities, he served as president of Skinner Development Company and from 1975 until 1986, chaired the Real Estate Department of Davis Wright Tremaine LLP in Seattle. Mr. Kirk is a past member of the Washington State Bar Association. He has previously served as a member of the Urban Land Institute (CDC Council), American College of Real Estate Lawyers, and the Pacific Real Estate Institute. He has also been a member of the boards of directors of several community organizations, including University of Washington Physicians and the Cascade Land Conservancy. Mr. Kirk previously served as the chairman of the WSBA Real Property, Probate and Trust Section, President of the Issaquah Chamber of Commerce and President of the University of Washington Alumni Association. Mr. Kirk received a bachelor’s degree in finance from the University of Washington and a law degree cum laude from Harvard Law School.

Mr. Kirk was selected to serve as a director because of his business and management experience, his real estate development experience, his knowledge of real estate and real estate finance and his legal experience, as well as his civic and community service involvement.

Mark R. Patterson, Director

Mr. Patterson joined the Board in 2018. Mr. Patterson served as Managing Director and Equity Analyst of NWQ Investment Management Co., LLC, an investment management company (“NWQ”), from 1997 until his retirement in 2014. At NWQ, he conducted fundamental research and valuation analysis of public companies within the financial services sector. Prior to joining NWQ, Mr. Patterson was at U.S. Bancorp from 1989 to 1997, including serving as Vice President, Investor Relations, where he was a primary contact between the bank holding company and the investment community. In that role he also performed detailed valuation and capital planning financial analysis that informed the company’s strategic direction. Prior to that position, Mr. Patterson served as a financial analyst in U.S. Bank’s Financial Consulting Division/Planning & Forecasting Department. He is a Chartered Financial Analyst and holds an MBA from The Anderson School at UCLA and a bachelor’s degree in business & mathematics from Linfield College. Mr. Patterson serves on the Board of Trustees of Linfield College, where he is a member of the financial affairs and executive committees and chair of the investment committee. Mr. Patterson was a director of FBR & Co. from 2015 until the company’s sale in 2017, serving on its audit and compensation committees.

Mr. Patterson was selected to serve as a director due to his experience in banking operations, perspective as an investor in financial institutions and finance expertise.

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Douglas I. Smith, Director

Mr. Smith joined our Board upon the closing of our initial public offering in February 2012. Mr. Smith is a director of and has worked for Miller and Smith Inc., a privately held residential land development and home building company in metropolitan Washington, D.C. since 1992, and has served as its president since 2002. He is also the managing member of Miller and Smith LLC, and Silent Tree Partners LLC, both of which invest in real estate development and management of those development projects. He has also been a board member of Home Aid Northern Virginia since 2001. Mr. Smith holds an MBA from Harvard Business School and a bachelor’s degree in economics from DePauw University.

Mr. Smith was selected to serve as a director because of his experience in the residential construction lending area as well as his experience in the home building and land development industries.

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SHAREHOLDER ENGAGEMENT

Overview

The Board welcomes feedback from shareholders on our Board composition, governance practices and policies, executive compensation framework and other matters related to our strategy and performance. In the summer and fall of each year, we reach out directly to our shareholders to solicit this feedback. In addition, members of our Board (including our independent directors) and our management team regularly attend industry conferences, host shareholders at our offices and engage in one-on-one discussions with our shareholders, investment analysts, and proxy advisory firms throughout the year. This ongoing dialogue informs our Board’s agenda, contributes to our governance and compensation enhancements and helps us address the issues that matter most to our shareholders. We encourage you to visit our investor relations website at http://ir.homestreet.com to learn more about the Company and to reach out directly to the Board at [email protected] to share your thoughts.

2017 and 2018 Shareholder Outreach

As a result of deliberations, advice from our consultants, and feedback based on our discussions with shareholders over the past two years, in 2018 the Board of Directors:

•        appointed Sandra A. Cavanaugh to the Board in May 2018 as part of our ongoing effort to increase Board diversity (which also included the addition of a robust diversity policy to our Principles of Corporate Governance in 2017);

•        adopted updated Principles of Corporate Governance to, among other things,

•        memorialize and clarify the responsibilities of the Lead Independent Director;

•        memorialize the Board’s commitment to undertake an annual assessment of its leadership, including an annual evaluation of whether the it continues to be in the best interests of our shareholders to have an executive Chairman of the Board and a separate Lead Independent Director;

•        increase the required number of executive sessions for independent directors per year from twice a year to quarterly, noting that in practice the independent directors meet more than once per quarter; and

•        increase independent director share ownership guidelines to three times the annual retainer paid to directors, to be achieved within three years of joining the Board;

•        added the Lead Independent Director as a clearly defined role in our Bylaws;

•        adopted clear Shareholder Engagement Procedures and Practices;

•        considered and, in 2019, implemented changes to our performance goals for long term incentive awards; and

•        clarified some of our compensation practices in our Compensation Disclosure and Analysis covering executive compensation for the year ended December 31, 2018.

At our 2018 annual meeting of shareholders, directors Mark R. Patterson, Scott M. Boggs and Douglas I. Smith received support from 92.18%, 62.42% and 80.40% of votes cast, respectively. Following the vote, the members of the Board and management team sought shareholder feedback in order to understand the underlying cause of any shareholder concerns and to ensure the issues were promptly and fully addressed.

As part of those efforts, during the latter half of 2018 we invited institutional shareholders of the Company representing 52.2% of the Company’s outstanding shares as of June 30, 2018, to discuss corporate governance and strategy with members of our Board, including our Chairman of the Board, Lead Independent Director, Chairman of the Human Resources And Corporate Governance Committee, and members of the Executive Committee. These conversations included discussions about the long-term strategy of the company, director and officer compensation practices, long-term incentives, board composition, diversity and refreshment. We solicited their views regarding our specific situation with respect to current corporate governance topics including a classified board, the combined role of the chairman and CEO, executive compensation, and board diversity.

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Also during 2018, members of management hosted discussions with two proxy advisory firms, Institutional Shareholder Services (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”). These conversations were focused on communicating the Company’s philosophies on corporate governance, shareholder rights and access, and board composition and refreshment, as well as providing feedback on the conversations with our institutional shareholders.

In keeping with the feedback from our shareholders during our 2018 engagement cycle, the Board determined that it would be in the best interests of our shareholders to submit proposals at the Annual Meeting to:

•        ratify our Bylaw amendment to make Washington State the exclusive forum for shareholder actions against the Company;

•        amend our Articles of Incorporation to declassify our Board of Directors; and

•        amend our Articles of Incorporation to remove supermajority shareholder vote requirements to approve major corporate changes, which will eliminate all supermajority shareholder vote requirements in our Articles of Incorporation and Bylaws.

Roaring Blue Lion Capital Management

For information on our engagement with the Blue Lion Parties, please see “Background to the Solicitation” on page 12 of this Proxy Statement.

How to Provide Feedback to the Board

We encourage all of our shareholders to reach out to us with questions or comments they may have regarding the Company, and we will continue to seek out shareholders through our existing outreach programs. We maintain an investor relations website at http://ir.homestreet.com, and shareholders can reach our investor relations department by email at [email protected], by phone at (206) 389-7773, and by mail at HomeStreet Inc., Attn: Investor Relations, 601 Union Street Suite 2000, Seattle, WA 98101. Shareholders can also find our Shareholder Engagement Procedures and Practices on our investor relations website, which provides guidelines for how shareholders can communicate with our Board.

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CORPORATE GOVERNANCE

As a bank holding company, we believe it is important to foster an operating environment that articulates a strong focus on compliance and ethical standards, and our Board sets this tone from the top. Our Board is actively engaged in designing, monitoring and enforcing compliance with high governance standards. We discuss our most important corporate governance policies and practices below. Each of our corporate governance policies is reviewed by the committee responsible for that policy and the full Board at least once every year, and more frequently if warranted.

Code of Ethics

The Board has established a code of ethics as defined under the Exchange Act, which applies to all HomeStreet directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller. A copy of our Code of Business Conduct and Ethics (“Code of Ethics”) is available on our website at http://ir.homestreet.com. We will post on our website any amendments to, or waivers (with respect to our principal executive officer, principal financial officer and principal accounting officer or controller) from, this Code of Ethics within four business days of any such amendment or waiver. Among other things, the Code of Ethics addresses the following principles:

•        complying with laws and regulations;

•        prohibiting insider trading;

•        avoiding conflicts of interest;

•        avoiding questionable gifts or favors;

•        maintaining accurate and complete records;

•        treating others in an ethical manner;

•        maintaining integrity of consultants, agents and representatives; and

•        protecting proprietary information and proper use of assets.

We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of this Code of Ethics by posting such information on our corporate website, at the address and location specified above and, to the extent required by the listing standards of the Nasdaq Global Select Market, by filing a Current Report on Form 8-K with the SEC disclosing such information.

Whistleblower Policy

In addition to our Code of Ethics, we maintain a whistleblower policy which is intended to provide guidance to employees, shareholders and others who may be aware of or concerned about potential violations of our Code of Ethics or other forms of misconduct and wish to report such concerns to our General Counsel in his role as Chief Ethics Officer, either directly or anonymously through our whistleblower hotline or website.

We have crafted our whistleblower policy to make clear our commitment to providing a confidential process in which individuals can raise questions and concerns about potential misconduct, including potential violations of law, regulation or Company policy, and report potential misconduct while strictly prohibiting any attempt by any director, officer or employee of the Company to identify whistleblowers or retaliate or attempt to retaliate against any whistleblower, anonymous or otherwise. Nothing in the policy is intended to prohibit or impede the reporting of alleged accounting irregularities or securities violations, or anything else covered by the Sarbanes-Oxley Act, the Dodd-Frank Act or any other applicable law directly to the SEC whether or not an initial report is made internally to the Company. The Company has also amended all of its severance agreements and confidentiality agreements with employees to provide similar assurances to employees and former employees.

We provide information on how to access our third-party whistleblower hotline, EthicsPoint, by telephone or through the Internet on both our internal human resources website and our external investor relations website. In 2017, we redesigned both of those websites to make the information on how to access EthicsPoint more prominent and easy to find and to include the reminder that reports can be made through the hotline on an anonymous basis.

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Beginning with our initial public offering in 2012, at each regular meeting the Audit Committee has discussed all current whistleblower reports with the General Counsel in his role as Chief Ethics Officer, including all new reports received since the last meeting, any ongoing whistleblower investigations and the resolution of any closed investigation.

Principles of Corporate Governance

The Company has adopted Principles of Corporate Governance, which are available on the Company’s website at http://ir.homestreet.com. Shareholders may request a free copy of the Principles of Corporate Governance at the address and phone numbers set forth above.

Director Independence

The Board has determined that, with the exception of Mark Mason, our Chief Executive Officer, all of its members are “independent directors” as that term is defined in the listing standards of Nasdaq and, where applicable, the regulations adopted under Sections 10A and 10C of the Exchange Act. In the course of determining the independence of each nonemployee director, the Board considered the annual amount of HomeStreet’s sales to, or purchases from, any company where a nonemployee director serves as an executive officer as well as all other relevant facts and circumstances, including the director’s commercial, accounting, legal, banking, consulting, charitable and familial relationships.

Board Diversity

In 2017, our Board amended our Principles of Corporate Governance to add a commitment to diversity as a guideline for our director nomination process as described earlier. In particular, the amendment provided that the HRCG Committee “will actively seek to include highly qualified women and individuals from minority groups in the pool of candidates from which nominees for director positions are chosen, and in choosing between equally qualified candidates will give extra weight to diversity of the candidates.” In May 2018, following a targeted candidate search intended to identify a board candidate who met the gender diversity goals set by the Board, the directors unanimously appointed Sandra Cavanaugh to the Board. The HRCG Committee, which acts as our nominating committee, will continue to consider diversity as an important goal in board refreshment going forward, consistent with the diversity expectations we heard from our shareholders in our engagement process in the fall of 2018.

Board Leadership Structure

Our Board believes that it is in the best interests of the Company for the Board to retain discretion to make a determination regarding whether or not to separate the roles of Chairman of the Board and CEO based upon varying circumstances. The Board is currently chaired by Mr. Mason, our CEO, who is subject to re-appointment as Chairman of the Board each year by the Board. Our Principles of Corporate Governance provide that if the Chairman of the Board is an executive of the Company, the independent directors shall elect a Lead Independent Director.

Since our initial public offering in 2012, the Board has maintained a Lead Independent Director to facilitate discussion, coordinate and reflect the views of the independent directors and, most importantly, to ensure that the Company’s governance practices are aligned in the best interests of all shareholders. Mr. Voss was appointed by the independent directors of the Board in 2018 and currently serves in that role. The Board reviews the appointment of our Lead Independent Director position each year.

The Board believes that this leadership structure provides balance and currently is in the best interests of the Company and its shareholders. The role given to the Lead Independent Director helps to ensure a strong, independent and active board, while Mr. Mason serving as the Chairman of the Board enables the Company and the Board to continue to benefit from his skills and expertise, including his extensive knowledge of the Company and its industry and his experience successfully navigating the Company through both strong and challenging operating periods.

In 2018, the Board amended the Company’s Bylaws and Principles of Corporate Governance to provide a clear description of the role of the Lead Independent Director. As described in these documents, the Lead Independent Director is responsible for presiding over all executive sessions of independent or non-management directors, and in the absence of the Chairman of the Board, to preside over shareholder meetings and Board meetings. The Lead Independent Director also serves as the liaison between the Chairman and the independent directors, meets with the

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Chairman pri